Exhibit 99.3
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SERVICING AGREEMENT
THIS SERVICING AGREEMENT (this "Agreement") is made as of November 29,
2005, by and among CONEXANT SYSTEMS, INC., a Delaware corporation ("Conexant"
or, in its capacity as initial servicer hereunder, "Servicer"), and CONEXANT
USA, LLC, a Delaware limited liability company ("Purchaser").
A. Conexant and Purchaser have entered into the Purchase Agreement,
pursuant to which Seller has agreed to sell, and Purchaser has agreed
to purchase, from time to time, certain of Seller's Accounts Receivable
(as more fully defined below, the "Purchased Receivables").
B. Purchaser desires to have Servicer administer and service the Purchased
Receivables commencing on the Closing Date until the Program
Termination Date, and Servicer desires to so administer and service the
Purchased Receivables, all pursuant to the terms and conditions of this
Agreement.
C. In the Purchase Agreement, Purchaser and Seller (i) have acknowledged
that certain, but not necessarily all, of the Accounts Receivable from
time to time owing by a given Account Debtor may be sold to Purchaser
and that each such Account Debtor may experience confusion at a given
time over to whom it should make payment on such Accounts Receivable
and (ii) have agreed that, to mitigate this risk of confusion and the
associated delay in collecting such Accounts Receivable (both Purchased
Receivables and Unsold Receivables), Seller may direct those Account
Debtors who have been pre-approved by the Underwriter and whose
Accounts Receivable are nominally eligible for purchase by Purchaser to
make payment on Unsold Receivables to the Lockbox. Purchaser and
Servicer desire to establish the terms and conditions of Servicer's
obligations with respect to the payment of collections on such Unsold
Receivables to Seller.
NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Servicer and Purchaser agree as
follows:
ARTICLE I
DEFINITIONS
1.01 Certain Definitions. Unless otherwise defined herein, all terms
with their initial letters capitalized shall have the meanings given such terms
in that certain Credit and Security Agreement dated the date hereof (as the same
may be amended, restated, supplemented, or otherwise modified from time to time,
the "Credit Agreement"), by and between Purchaser and Wachovia Bank, National
Association (the "Lender").
1.02 Accounting Terms and Determinations. Unless otherwise specified
herein, all terms of an accounting character used herein shall be interpreted,
all accounting determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be prepared, in accordance
with GAAP, applied on a basis consistent (except for changes concurred in by the
Public Accountants or otherwise required by a change in GAAP) with the most
recent audited consolidated financial statements of Conexant and its
Subsidiaries.
1.03 References. Unless otherwise indicated, references in this
Agreement to "articles," "exhibits," "schedules," "sections," and other
subdivisions are references to articles, exhibits, schedules, sections and other
subdivisions hereof.
1.04 Terminology. The terms "herein," "hereof," and "hereunder" and
other words of similar import refer to this Agreement as a whole and not to any
particular section, paragraph or subdivision. Any pronoun used shall be deemed
to cover all genders. Unless the context otherwise clearly indicates, words used
in the singular include the plural and words used in the plural include the
singular. In the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including" and the words "to"
and "until" each means "to but excluding." All references to statutes and
related regulations shall include any amendments of same and any successor
statutes and regulations. All references to any of the Program Documents shall
include any and all amendment or modifications thereto and any and all
restatements, extensions or renewals thereof. All references to any Person shall
mean and include the successors and permitted assigns of such Person. All
references to "including" and "include" shall be understood to mean "including,
without limitation." All references to the time of day shall mean the time of
day on the day in question in Philadelphia, Pennsylvania, unless otherwise
expressly provided in this Agreement. A Default or an Event of Default shall be
deemed to exist at all times during the period commencing on the date that such
Default or Event of Default occurs to the date on which such Default or Event of
Default is waived in writing pursuant to this Agreement or, in the case of a
Default, is cured within any period of cure expressly provided in this
Agreement; and an Event of Default shall "continue," be "continuing," or "in
existence" until such Event of Default has been waived in writing by Lender or
cured. Whenever the phrase "to the best of Purchaser's knowledge" or words of
similar import relating to the knowledge or the awareness of any Purchaser are
used herein, such phrase shall mean and refer to the actual knowledge of a
Senior Officer of Purchaser. All references to "acceptable" or "satisfactory"
shall, unless expressly provided otherwise, be deemed to mean "reasonably
acceptable" or "reasonably satisfactory." All calculations of money values shall
be in Dollars. To the extent that any party hereto shall have the right to
consent to the taking of any action hereunder, such consent shall not be
unreasonably withheld or delayed (unless otherwise specifically indicated).
ARTICLE II
SERVICES AND PROCEDURES
2.01 Services.
(a) Subject to the terms of this Agreement and commencing on the
Closing Date, Servicer shall provide, using the same degree of skill and
attention that Servicer has exercised with respect to its Accounts Receivable
prior to the date hereof and, except as otherwise expressly noted herein, in all
material respects in accordance with the Policy and the credit and collection
policies and procedures delivered to Lender on or before the Closing Date (as
the same may be amended from time to time as provided herein, the "Policies and
Procedures"), all of the services with respect to the Purchased Receivables as
Conexant provided with respect to its own Accounts Receivable immediately prior
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to the date hereof and as otherwise provided herein, including, without
limitation, the servicing, processing, collection, and administration of the
Purchased Receivables and the services specified in Exhibit A (collectively, the
"Services").
(b) Servicer acknowledges and agrees that certain collections on Unsold
Receivables may be directed to the Lockbox (for purposes of mitigating Account
Debtor confusion over to whom such Account Debtors should direct payment).
Servicer and Purchaser agree that all items of payment or other collections on
Unsold Receivables received into the Lockbox will be endorsed over to Purchaser
and deposited in the Purchaser's Account and, on each Settlement Date, such
items of payment or other collections will be paid over to Seller, in full, in
accordance with Seller's lawful instructions provided from time to time to
Purchaser, Servicer, and Lender, to the extent such items of payment or other
collections (i) have been reasonably identified as payment on an Unsold
Receivable, (ii) have cleared the customary bank collection process for payments
of like kind, and (iii) were identified in the IRPF Receivables Report delivered
on the Preparation Date immediately preceding such Settlement Date. In the event
any collections received in the Lockbox are not identifiable as to any given
Account Receivable, Servicer shall maintain such collections in the Purchaser's
Account until such time as Purchaser and Seller have agreed on the identity of
the Account Receivable to which such collections relate, and, on the following
Settlement Date (subject to satisfaction of the conditions described above in
clauses (i) through (iii)), such collections will be paid over to the Obligee
related thereto. Servicer agrees to cooperate with Purchaser and Seller in
identifying the Person to whom any such collections should be paid and shall
promptly forward to Seller any notices, writings, or other information actually
received by Servicer with respect to any Unsold Receivable; provided, however,
that Servicer is not under any obligation whatsoever to enforce payment or
collection of any Unsold Receivable and that Servicer has no duty or obligation
with respect to any Unsold Receivable other than as expressly set forth in this
Section 2.01. Moreover, Servicer agrees that it will not take any action with
respect to any Unsold Receivable (other than as expressly set forth herein)
without Seller's consent. If requested by Purchaser, Servicer will make its
books and records reasonably available to Seller from time to time for purposes
of ensuring Servicer's compliance with the terms of this Agreement and the
Servicer's proper direction of collections received in the Lockbox and
Purchaser's Account.
2.02 Policies and Procedures. Subject to the provisions of Section
2.03, Servicer shall specifically identify, and provide access to, those of
Servicer's manuals and records in which the Policies and Procedures are codified
or documented and permit inspection of the same by Purchaser, Lender, and
Underwriter or as required by law or regulatory authorities. Servicer shall
provide copies of specific Policies or Procedures applicable to the Purchased
Receivables on or prior to the Closing Date, and thereafter as Purchaser
reasonably requests.
2.03 Access to Premises. During the term of this Agreement, Servicer
will, (i) so long as there is then no Servicing Agreement Event of Default or
Event of Default in existence, during Seller's regular business hours and with
reasonable prior notice, not more than two (2) times per Fiscal Year, and during
the existence of a Servicing Agreement Event of Default or an Event of Default,
at any time without prior notice, provide Purchaser (or its designee) with
access (a) to the location where the Services are being performed; (b) to those
of Servicer's employees providing Services; and (c) to all facilities, data,
applicable software, records, files and Books and Records relating to the
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Purchased Receivables and their Related Rights and Property, for the purpose of
monitoring compliance with this Agreement. No Person shall be granted such
access unless such Person is bound (directly or indirectly) by Section 7.04 or
by an effective confidentiality agreement containing terms substantively similar
to the terms set forth in Section 7.04, with such conforming changes as are
necessary to reflect the agreement of Servicer and such Person; provided,
however, that such Person and Servicer may, but neither shall be obligated to,
agree on different terms respecting such confidential treatment.
2.04 Collection of Purchased Receivables. Except as specifically
provided in this Agreement, Servicer shall undertake on Purchaser's behalf to
collect all payments of Purchased Receivables in accordance with the Policies
and Procedures and the Services. Servicer shall not have the power and authority
to permit or agree to any Deduction without the Purchaser's prior consent
(except as may otherwise be expressly contemplated in the Purchase Agreement or
Credit Agreement). Servicer shall cause all Account Debtors of the Purchased
Receivables to remit their payment on the Purchased Receivables to the Lockbox.
2.05 Ownership of Accounts. Purchaser shall be the owner and holder of
all Purchased Receivables and their Related Rights and Property and shall have
all rights, powers, and privileges with respect thereto as such owner and
holder. Servicer acknowledges and agrees that it has (i) no right, title, or
interest in or to the Purchased Receivables, their Related Rights and Property,
outstanding balances on the Purchased Receivables, or payments made by Account
Debtors with respect to the Purchased Receivables, and (ii) no right, privilege,
or power to establish or modify any terms or conditions of the Underlying
Contract or other instruments relating to the Purchased Receivables. From the
Closing Date through the Program Termination Date, Servicer shall maintain all
information relating to the Purchased Receivables in a format that will allow
Servicer to segregate, and Servicer shall segregate, the Purchased Receivables
from other Accounts Receivable that Servicer, either in its capacity as Servicer
or as Conexant, as applicable, may be servicing, so that access to such
information is readily available and each Purchased Receivable is segregated,
clearly marked, and readily identified as being segregated, from other of the
Servicer's Accounts Receivable.
2.06 Compliance With Laws; Notice of Litigation. Servicer shall provide
all Services in compliance in all material respects with applicable
international, federal, and state laws and regulations. Servicer shall promptly
advise Purchaser in writing of any actual or threatened litigation or regulatory
investigation of which it has knowledge and which relates to the Purchased
Receivables, their Related Rights and Property, or the Program Documents.
2.07 Maintenance of Business and Personnel. Throughout the term hereof,
Servicer shall preserve its business organization and business (as conducted on
the Closing Date) and keep available the equipment, facilities, and work force
of personnel of a quality and quantity capable of rendering Services in
accordance with the Policies and Procedures and at a level of quality comparable
to the services it currently provides with respect to the collection of its
Accounts Receivable. Without the prior written approval of Purchaser and Lender,
Servicer may not outsource all or any portion of the Services other than with
respect to the Lockbox.
2.08 Bankrupt Account Debtors; Notice of Payment Issues. Upon receipt
by Servicer of a petition filed in bankruptcy by an Account Debtor of a
Purchased Receivable, Servicer shall (i) promptly notify Purchaser and Lender of
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the petition; (ii) promptly forward a copy of such petition to Purchaser and
Lender; (iii) promptly submit a claim under the Policy and fully and diligently
cooperate with Underwriter in all matters relating to the prosecution of that
claim; and (iv) if such claim is not paid by Underwriter, fully and diligently
assist Purchaser in connection with the continued prosecution of the claim,
including, without limitation, any re-submission of the claim, or any appeal of
denial of coverage under the Policy, or assisting Purchaser in filing suit over
Underwriter's denial of coverage. Servicer shall promptly forward to Lender,
Purchaser, and Seller all notices relating to a Purchased Receivable which
Servicer receives and which in any way implicate the corresponding Account
Debtor's willingness or ability to pay on such Purchased Receivable.
2.09 Negative Covenants.
(a) Legal Action. Servicer shall not initiate any litigation with
respect to collection of any Purchased Receivable without prior approval of (i)
if no Servicing Agreement Event of Default or Event of Default is in existence,
the Purchaser and (ii) at all other times, Purchaser and Lender. Servicer shall
not, and shall not be obligated to, initiate or maintain any litigation if doing
so would conflict with or violate the terms of the Policy or otherwise render
the Policy ineffective, in whole or in part. In any event, Purchaser shall be
responsible for paying the related expenses of such action.
(b) Other Action. Subject to Section 2.09(a), Servicer shall not take
any action or fail to take any action under this Agreement with respect to any
Purchased Receivable which could reasonably be expected to impair any rights of
Lender, Purchaser, or Underwriter in and to such Purchased Receivable and its
Related Rights and Property and such Persons' respective rights under the
Policy, and Servicer shall not amend, terminate, or otherwise modify or
prejudice any of Purchaser's rights with respect to any terms or conditions of
any Purchased Receivable or its related Underlying Contract (to the extent
applicable to such Purchased Receivable) without Purchaser's, Lender's, and
Underwriter's prior written consent. Servicer shall promptly correct any errors
that become known to Servicer with respect to any aspect of the servicing of the
Purchased Receivables and shall notify Purchaser, Lender, and Underwriter
immediately in writing of any material errors, including, without limitation,
errors that may have occurred prior to the Closing Date.
(c) Change in Policies and Procedures. During the term hereof, Servicer
shall not make any change in the Policies and Procedures in any material respect
or in any way which would cause the Policy to become ineffective in whole or in
part without Purchaser's, Lender's, and Underwriter's written consent, which
consent shall not be unreasonably withheld or delayed.
(d) Chief Executive Office. Servicer will not change its chief
executive office, its state of organization, or the location where it maintains
its Books and Records (each as stated in Section 5.01(e)) without the prior
written consent of Purchaser and Lender.
2.10 Affirmative Covenants. Servicer hereby covenants and agrees that:
(a) Servicer shall continue to use throughout the term of this
Agreement the contingency procedures which were delivered to Lender on or about
the Closing Date, including but not limited to contingency procedures for data
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processing, telecommunications, payment processing, and off-site maintenance and
retention of Purchased Receivables and their related Books and Records, as the
same may be amended from time to time with, in cases where any such amendment is
material, the consent of Purchaser, Lender, and Underwriter, which consent of
the Purchaser and the Lender shall not be unreasonably withheld.
(b) Servicer shall directly provide all Services related to the
Purchased Receivables pursuant to systems, software, and applications used by
Servicer. Other than (i) the agreements regarding the Lockbox and (ii) any
licensing or use agreements relating to any software used by Servicer in the
performance of its duties hereunder, Servicer has no agreements, contracts, or
other understandings or arrangements with any third party relating to the
administration or collection of its Accounts Receivable or the Purchased
Receivables.
2.11 Grant of License. Pursuant to the Receivables Purchase Agreement,
Seller, among other things, granted Purchaser a limited license (which Purchaser
may not exploit in its own right, but rather may only assign such license to
certain third parties) to use any of Seller's tradenames, trademarks, or service
marks for the limited purposes of billing, collecting, settling, compromising,
or otherwise disposing of any Purchased Receivable purchased by Purchaser from
Seller and its Related Rights and Property. Pursuant to the terms of the
Receivables Purchase Agreement, Purchaser hereby assigns such limited license to
Servicer for purposes of Servicer's performing its duties under this Agreement.
ARTICLE III
FEES, PAYMENTS AND SETTLEMENT
3.01 Servicing Fees. In consideration for the performance of Services
in accordance herewith, Purchaser shall pay to Servicer a weekly servicing fee
("Servicing Fee"), payable on each Settlement Date (other than the initial
Settlement Date), in an amount equal to one percent (1%) (on a per annum basis,
based on an assumed year of 360 days for the actual number of days elapsed since
the immediately preceding Settlement Date) of the Uncollected Value of all
Purchased Receivables as of such Settlement Date (including the Accounts
Receivable purchased by Purchaser on such Settlement Date).
3.02 Settlement. Servicer shall prepare and deliver to Purchaser and
Lender (and to Underwriter upon its reasonable request) on each Preparation Date
(with all data to be included therein to be calculated as of the opening of
business on such Preparation Date), a fully completed and executed report, in
form substantially similar to Exhibit B, attached hereto and made a part hereof,
certified by a Senior Officer of Servicer (each, an "IRPF Receivables Report"),
with the following information (provided, however, that any information required
below which is also required to be reported on the form of Settlement Report
need not be reported in the IRPF Receivables Report, unless Purchaser or Lender
shall make a reasonable request to the contrary):
(a) each of the Purchased Receivables which were purchased prior to
such Preparation Date and remain Purchased Receivables as of such Preparation
Date, their respective Uncollected Values, their respective due dates, invoice
number, Borrowing Base value, and any Deductions which may have been granted on
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or earned with respect to such Purchased Receivables (or the Account Debtors
related thereto) before such Preparation Date;
(b) the aging of each Purchased Receivable as of such Preparation Date;
(c) each of the Purchased Receivables which became Discharged
Receivables or Designated Receivables since the immediately preceding
Preparation Date and their respective Uncollected Values as of such Preparation
Date;
(d) all collections, Policy Proceeds, and payments received as of such
Preparation Date on account of any Purchased Receivable, Designated Receivable,
Discharged Receivable, or Unsold Receivable received since the immediately
preceding Preparation Date;
(e) the outstanding principal balance and accrued, but unpaid interest
on the Subordinated Note, (i) as of the opening of such Preparation Date and
(ii) after giving effect to all payments to be paid on the Subordinated Note on
the immediately following Settlement Date in accordance with Sections 2.08(d)
and (e) of the Credit Agreement, as applicable;
(f) the amount of any insurance premiums which are or will be due and
payable on the immediately following Settlement Date or which have accrued as of
such Preparation Date but are not yet payable and will not be due and payable on
such immediately following Settlement Date;
(g) the amount of any Lockbox fees which are or will be due and payable
on the immediately following Settlement Date;
(h) a detailed accounting of any modifications or adjustments which
have been, or are required to be, made with respect to any prior IRPF
Receivables Reports; and
(i) the amount of any Commitment Fee required to be paid by Purchaser
for the Settlement Period ending on the immediately following Settlement Date.
Each IRPF Receivables Report shall be delivered no later than 3:00 P.M.
(Richmond, Virginia, time) on each Preparation Date and shall be accompanied by
copies of all supporting documentation and such additional back-up information,
in each case, as Purchaser, Lender, or Underwriter shall reasonably request and
is reasonably available to Servicer; provided that such IRPF Receivables Report
shall be delivered to Underwriter only if it has requested such delivery.
Servicer shall also assist Purchaser in preparing those Settlement Reports which
it is required to submit under the Credit Agreement and shall deliver to
Purchaser or Lender such other reports as Purchaser or Lender may reasonably
request from time to time. The requirements of this Section are subject to
change as mutually agreed among Purchaser, Conexant, Servicer, and Lender,
pending further review and familiarity with the Servicer's accounting operation.
3.03 Collections. Servicer agrees that all collections received by
Servicer on account of the Purchased Receivables will be deemed to be held in
trust for Purchaser and promptly deposited in the Purchaser's Account. Servicer
agrees that all collections received by Servicer on account of any Unsold
Receivables will be deemed to be held in trust for Seller and will be promptly
deposited in the Purchaser's Account, pending payment over to Seller on the next
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Settlement Date in accordance with the terms of the Program Documents.
3.04 Funds Received by Servicer After Program Termination Date. After
the Program Termination Date, Servicer shall within three Business Days after
receipt, forward, or cause to be forwarded, to the Lockbox or the Purchaser's
Account all funds received by or credited to Servicer related to the Purchased
Receivables and all correspondence received by Servicer which relates directly
or indirectly to the Purchased Receivables. In the event Purchaser receives
funds or correspondence relating to any Account Receivable which is not a
Purchased Receivable, Purchaser shall within three Business Days after receipt,
forward, or cause to be forwarded, to Servicer all such funds and
correspondence. The obligation to transmit funds shall survive termination of
this Agreement. Servicer hereby appoints and empowers Purchaser as its true and
lawful attorney-in-fact solely to endorse any check or instrument made payable
to Servicer and submitted as payment on any Purchased Receivable.
ARTICLE IV
TERM AND TERMINATION; REPLACEMENT
4.01 Term and Termination; Replacement.
(a) Term. Except as otherwise provided herein, this Agreement shall
commence on the Closing Date and shall continue in full force and effect until
the Program Termination Date, with the parties acknowledging that any extension
or termination of the Program Termination Date by Purchaser and Lender in
accordance with the Credit Agreement shall cause a corresponding extension or
termination of the term of this Agreement. The termination of this Agreement
shall not terminate, affect, or impair any rights, obligations, or liabilities
of either party hereto which may accrue prior to such termination or which,
under the terms of this Agreement, continue after the Program Termination Date.
(b) Early Termination. This Agreement may be terminated, reserving all
other remedies and rights hereunder in whole or in part, by (i) either party
upon the occurrence of a Servicing Agreement Event of Default caused by the
other party and (ii) Purchaser upon the occurrence and during the continuance of
an Event of Default under the Credit Agreement; provided that, in either case,
no termination of this Agreement shall be effective until Lender shall have
received written notice of such intent to terminate and shall have consented to
such termination, which consent shall not be delayed beyond that time required
for Purchaser and Lender to engage the services of a successor Servicer.
(c) For purposes of this Agreement, a "Servicing Agreement Event of
Default" shall mean the occurrence of any one or more of the following events:
(i) a party to this Agreement fails to make a payment in
accordance with Article III (other than pursuant to a bona fide dispute over the
amount which is payable) when such payment becomes due and payable and such
failure continues for a period of three Business Days; or
(ii) a party to this Agreement defaults in the performance of any
of its other duties or obligations under this Agreement and such default is not
cured within fifteen days from the date of notice of such default from the other
party; or
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(iii) the filing of any petition in bankruptcy or for
reorganization or debt consolidation under the federal bankruptcy laws or under
any comparable law by or against a party to this Agreement, or upon the making
of an assignment by a party of its assets for the benefit of creditors, or upon
the application of a party for the appointment of a receiver or trustee of its
assets; or
(iv) any representation or warranty made by a party to this
Agreement is determined to have been false in any material respect when made.
(d) Servicer agrees that Lender may, but shall have no obligation to do
so, cure any Servicing Agreement Event of Default where Purchaser is the
defaulting party.
(e) The Servicer and Purchaser agree that, if Lender, in the exercise
of its commercially reasonable judgment, determines that the Services are not
being provided according to the standards set forth herein (regardless of
whether any Servicing Agreement Event of Default then has occurred or is
continuing) or that an event or series of events occurs which has a reasonable
likelihood of preventing Servicer from providing the Services in the manner
required herein, Lender may, by notice to both Purchaser and Servicer and after
consultation with each of them, and subject to clause (g) below, replace the
current Servicer with a replacement Servicer reasonably acceptable to Lender
(and once appointed by Lender, such replacement Servicer shall not be subject to
replacement by Purchaser except upon the occurrence and during the continuance
of a Servicing Agreement Event of Default caused by such replacement Servicer).
(f) In conjunction with any termination of this Agreement by Purchaser,
Purchaser shall engage the services of a replacement Servicer of its choosing,
subject to clause (g), below.
(g) Any replacement Servicer selected by Lender or Purchaser (i) must
be reasonably acceptable to Lender, (ii) may not be a competitor or direct
customer of Conexant, and (iii) must provide, as a substantial part of, and in
the ordinary course of, its business, services similar to the Services.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Representations and Warranties of Servicer. Servicer represents
and warrants to Purchaser as follows:
(a) Organization. Servicer is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware.
(b) Capacity; Authority; Validity. Servicer has all necessary power and
authority to enter into this Agreement and to perform all of the obligations to
be performed by it under this Agreement. This Agreement and the performance by
Servicer of its obligations hereunder have been duly and validly authorized by
all necessary corporate action of Servicer, and this Agreement has been duly
executed and delivered by Servicer and, assuming the due authorization,
execution, and delivery thereof by Purchaser, constitutes the valid and binding
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obligation of Servicer, enforceable against Servicer in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors' rights
generally or by general principles of equity.
(c) Conflicts; Defaults; Etc. Neither the execution and delivery of
this Agreement by Servicer nor the performance by Servicer of its obligations
hereunder will (i) conflict with, result in the breach of, constitute an event
which would, or with the lapse of time or action by a third party or both would,
result in a default under, or accelerate the performance required by, the terms
of any contract, instrument, agreement, or commitment to which Servicer is a
party or by which it is bound, where such conflict, breach, or event could
reasonably be expected to have a material adverse effect on Servicer and its
Subsidiaries taken as a whole, the consummation of the transactions contemplated
herein, or the enforceability of this Agreement, (ii) violate the articles of
incorporation or by-laws, or any other equivalent organizational document, of
Servicer, (iii) result in the creation of any Lien, upon any of Servicer's
assets other than Permitted Encumbrances, or (iv) require any consent or
approval under any judgment, order, writ, decree, permit or license, to which
Servicer is a party or bound, or to which Servicer or any of its assets are
subject, where the failure to obtain such consent could reasonably be expected
to have a material adverse effect on Servicer and its Subsidiaries taken as a
whole, the consummation of the transactions contemplated herein, or the
enforceability of this Agreement.
(d) Consents. No consent, authorization or approval of, or exemption
by, or filing with, any Governmental Body or any other Person is required to be
obtained by Servicer in connection with the execution and delivery by Servicer
of this Agreement or Servicer's performance of its obligations hereunder.
(e) Chief Executive Office; Filing Data. Servicer's federal taxpayer
identification number is 00-0000000 and its organizational identification number
is 2650153. Servicer's chief executive office is located at 0000 XxxXxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxx, XX 00000, and all of Servicer's Books and Records
relating to the Purchased Receivables are kept at such location. Servicer is
organized under the laws of the State of Delaware and its exact legal name is:
CONEXANT SYSTEMS, INC.
5.02 Representations and Warranties of Purchaser. Purchaser represents
and warrants to Servicer as follows:
(a) Organization. Purchaser is a limited liability company, validly
existing, and in good standing under the laws of the State of Delaware.
(b) Capacity; Authority; Validity. Purchaser has all necessary power
and authority to enter into this Agreement and to perform all of the obligations
to be performed by it under this Agreement. This Agreement and the performance
by Purchaser of its obligations hereunder have been duly and validly authorized
by all necessary limited liability company action of Purchaser, and this
Agreement has been duly executed and delivered by Purchaser, and, assuming the
due authorization, execution and delivery thereof by Servicer, constitutes the
valid and binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting creditors' rights generally or by general principles of equity.
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(c) Conflicts; Defaults; Etc. Neither the execution and delivery of
this Agreement by Purchaser nor the performance by Purchaser of its obligations
hereunder will (i) conflict with, result in the breach of, constitute an event
which would, or with the lapse of time or action by a third party or both would,
result in a default under, or accelerate the performance required by, the terms
of any contract, instrument, agreement, or commitment to which Purchaser is a
party or by which it is bound, (ii) violate the articles of incorporation or
bylaws, or any other equivalent organizational document, of Purchaser, (iii)
result in the creation of any Lien upon any of Purchaser's assets other than
Permitted Encumbrances, or (iv) require any consent or approval under any
judgment, order, writ, decree, permit or license, to which Purchaser is a party
or bound, or to which Purchaser or any of its assets are subject the failure of
which to obtain could reasonably be expected to have a Material Adverse Effect.
(d) Consents. No consent, authorization or approval of, or exemption
by, or filing with, any Governmental Body or any other Person is required to be
obtained by Purchaser in connection with the execution and delivery by Purchaser
of this Agreement or Purchaser's performance of its obligations hereunder.
ARTICLE VI
INDEMNIFICATION
6.01 Servicer's Indemnification Obligations. Servicer shall be liable
to and shall indemnify, defend, and hold each of Purchaser, Lender, and
Underwriter and their respective officers, directors, employees, subcontractors
and permitted assigns, harmless from and against any and all Losses arising from
or relating to (i) breach by Servicer of any representation, warranty, or
covenant of Servicer hereunder, (ii) failure by Servicer to perform its
obligations hereunder; (iii) the failure by Servicer or its agents, directors,
officers, servants, or employees to comply with any international, federal,
state, or local law or regulation; (iv) any other act, omission, or
misrepresentation by Servicer or its agents, directors, officers, servants or
employees with respect to any Purchased Receivables, the Policies and
Procedures, or the Services; provided, however, that (x) Servicer shall not be
required to indemnify any of the aforementioned indemnitees (each, and
"Indemnitee") for Losses arising from such Indemnitee's own gross negligence or
willful misconduct and (y) nothing in this Article VI shall be deemed to provide
indemnification to Purchaser for credit losses due to defaulted Accounts
Receivable.
6.02 Survival of Indemnification Obligations. The obligations of the
parties set forth in this Article 6 shall survive the Program Termination Date.
ARTICLE VII
MISCELLANEOUS
7.01 Cooperation. Purchaser shall furnish or cause to be furnished to
Servicer all powers of attorney and other documents necessary or appropriate to
enable Servicer to carry out its servicing duties hereunder. Each party shall
provide such reasonable cooperation and assistance to the other party as may be
necessary to enable Servicer to perform the servicing obligations hereunder and
to enable Purchaser to monitor the Purchased Receivables and the servicing
obligations of Servicer.
11
7.02 Notices. All notices and other communications by Purchaser,
Servicer, or Lender hereunder shall be in writing to the other parties (and to
Lender) and shall be deemed to have been duly given when delivered in person or
to an overnight courier service, receipt requested, or sent via telecopy
transmission, receipt requested or when posted by the United States registered
or certified mail, with postage prepaid, addressed as follows:
If to Purchaser, to:
Conexant USA, LLC
0000 XxxXxxxxx Xxxxxxxxx
Xxxxxxx Xxxxx, XX 00000
Attn: Xxxxx X. Xxxxx, Vice President and Treasurer
Fax: 000-000-0000
Confirmation: 000-000-0000
with copy to:
Wachovia Bank, National Association
000 X. Xxxx Xxxxxx
0xx Xxxxx, XX0000
Xxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxx, Structured Trade Finance
Fax: 000-000-0000
Confirmation: 000-000-0000
If to Servicer, to:
Conexant Systems, Inc.
0000 XxxXxxxxx Xxxxxxxxx
Xxxxxxx Xxxxx, XX 00000
Attn: Xxxxxxx Xxxxx, Executive Director, Finance, WorldWide Sales
Controller
Fax: 000-000-0000
Confirmation: 000-000-0000
with copy to:
Wachovia Bank, National Association (at the address shown above).
or in accordance with such other address information as the party to receive
notice (or copy thereof) may provide in writing to the other party in accordance
with the above notice provisions. Any notice given by any other method will be
deemed to have been duly given upon receipt thereof.
12
7.03 Assignment.
(a) The rights of any party under this Agreement shall not be assigned
or transferred by any party without the prior written approval of the other
party hereto and Lender; provided, however, that the parties hereto acknowledge
and agree that:
(i) Purchaser intends (A) to finance, in part, its purchase of the
Purchased Receivables through extensions of credit from Lender and (B) to insure
the collection of such Purchased Receivables under the Policy;
(ii) Purchaser may assign its rights under this Agreement, each
other Program Document, and the Purchased Receivables to Lender in connection
with such financing; and
(iii) to the extent a Purchased Receivable is paid under the
Policy, Purchaser may, with respect to such Purchased Receivable, assign its
rights under this Agreement, each other Program Document, and such Purchased
Receivable to Underwriter, to the extent such rights affect, or are related to,
such Purchased Receivable.
(b) During the continuation of any Event of Default, Servicer agrees
that Lender shall have all the rights (but none of the obligations) of Purchaser
hereunder, to the same extent as Purchaser, and that Servicer shall continue to
perform its obligations hereunder for the benefit of Lender until the Program
Termination Date, unless Servicer is otherwise released from its obligation to
perform in accordance with this Agreement.
(c) Servicer agrees that Lender and Underwriter are third-party
beneficiaries to this Agreement (in each case, to the extent described in this
Section 7.03) and shall be entitled to and have standing to enforce the rights
of Purchaser hereunder (in each case, to the extent described in this Section
7.03). Any attempt by any party to assign or transfer this Agreement contrary to
the terms and conditions of this section shall be null and void.
7.04 Confidentiality.
(a) Each party hereto agrees to the following confidentiality terms
(with it being understood that, for purposes of this Section 7.04, the
"Recipient" shall mean the Person to whom any Confidential Information is
provided, the "Provider" means the Person who provides such Confidential
Information to the Recipient, and "Confidential Information" (as further defined
below) means the Confidential Information of the Provider):
(i) The Recipient will receive, maintain and hold the Confidential
Information in confidence and will use at least the same level of care in
safeguarding the Confidential Information that it uses with respect to other
confidential information in its possession but in no event less than reasonable
care under the circumstances;
(ii) The Recipient agrees to take all steps reasonably necessary
and appropriate to ensure that its employees or other persons to whom disclosure
is authorized hereunder treat the Confidential Information as confidential and
to ensure that such employees or other persons to whom disclosure is authorized
13
hereunder act in accordance with and abide by the terms of this letter regarding
the Confidential Information;
(iii) The Recipient will use the Confidential Information solely
for purposes of the Program and matters reasonably related thereto and may
disclose Confidential Information to the Underwriter; and
(iv) The Recipient will not disclose, reproduce, distribute,
transmit, reverse engineer, decompile, disassemble or transfer, directly or
indirectly, the Confidential Information, except as authorized in this letter,
as otherwise authorized in writing by the Provider in conjunction with the
Program, or unless otherwise agreed by the Provider.
(b) The Recipient agrees that it shall not (without the prior written
consent of the Provider) disclose to any third party, except (i) its affiliates,
officers, employees and legal counsel on a confidential basis, (ii) as required
by law, regulation or other applicable judicial or governmental order, (iii) on
a limited basis as is reasonably necessary to prepare any claim or defense
arising from or in connection with the Program or the Program Documents, or (iv)
as expressly contemplated in the Program Documents: (A) the Confidential
Information or (B) the fact that Confidential Information with respect to the
Program has been disclosed or made available.
(c) As used herein, "Confidential Information" means all information
disclosed or provided by the Provider to the Recipient or its agents or
representatives in connection with the Program and all information regarding the
Provider's business, assets, affiliates, and customers, so long as such
information is marked confidential or otherwise of a type considered
confidential in the ordinary course of business, but does not include
information that: (i) is generally available to the public, (ii) hereafter,
through no breach of this Section 7.04 by the Recipient or its agents or
representatives, becomes generally available to the public, (iii) corresponds in
substance to information furnished to the Recipient hereafter on a
non-confidential basis by any third party having a legal right to do so, or (iv)
was developed by, or for, the Recipient independently of any disclosure or use
of the Confidential Information.
(d) At any time upon the written request of the Provider, the
Confidential Information, including all copies and embodiments thereof
(including all copies and/or any other form or reproduction and/or description
thereof made by the Recipient), in the possession of the Recipient, shall, at
Recipient's option, be promptly returned to the Provider or promptly destroyed,
except that the portion of the Confidential Information that may be found in
analyses, compilations, studies or other documents prepared by the Recipient or
its agents, attorneys or employees, oral or electronic Confidential Information,
and any Confidential Information not so requested and returned will be held by
the Recipient and kept subject to the terms of this letter or destroyed to the
extent practicable and permitted by law. Whether the Confidential Information or
other embodiments of the Confidential Information is to be returned or destroyed
pursuant to this paragraph, such return or destruction shall, upon written
request of the Provider, be certified in writing by an authorized officer of the
Recipient. The return or destruction of the Confidential Information or other
embodiments of the Confidential Information shall not relieve the Recipient of
its confidentiality obligations contained in this letter.
14
(e) The Recipient acknowledges that the disclosure or unauthorized use
of all or any part of the Confidential Information disclosed could result in
irreparable harm to the Provider, for which there may be no adequate remedy at
law. In the event of an unauthorized disclosure of the Confidential Information
by the Recipient, or other unauthorized use thereof, the Provider shall be
entitled to seek equitable relief, including an injunction to restrain the
unauthorized disclosure or unauthorized use and to prevent further breach of
this letter. The foregoing remedy of injunctive relief shall not be the sole and
exclusive remedy available to the Provider, and the Provider shall be entitled
to damages occasioned by the unauthorized disclosure or use to the extent
determined by law.
(f) Neither this Section 7.04 nor any disclosure made hereunder by the
Provider shall be deemed, by implication or otherwise, to vest in the Recipient
any license or other ownership rights to or under any of the Confidential
Information, patents, copyrights, trademark rights, intellectual property,
know-how or trade secrets, or any other proprietary rights whatsoever.
(g) The confidentiality provisions set forth in this Section 7.04 shall
(i) survive the Program Termination Date and (ii) terminate upon the earliest to
occur of five (5) years after the Program Termination Date or such other date
mutually agreed upon by the parties hereto.
7.05 Severability. If any provision or portion thereof of this
Agreement is held invalid, illegal, void, or unenforceable by reason of any rule
of law, administrative or judicial provision, or public policy, such provision
shall be ineffective only to the extent invalid, illegal, void, or
unenforceable, and the remainder of such provision and all other provisions of
this Agreement shall nevertheless remain in full force and effect.
7.06 Entire Agreement; Amendments. This Agreement, together with the
Exhibits and Schedules hereto, constitute the entire agreement between the
Servicer on the one hand and the Purchaser on the other relating to the subject
matter herein. This Agreement may be amended only by a written document signed
by each of the parties and with the prior written consent of Lender and, to the
extent such amendment relates to the Policy or the administration thereof, or
the satisfaction of any requirements or conditions contained in the Policy,
Underwriter. This Agreement and the rights and obligations created under it
shall be binding upon and inure solely to the benefit of the parties hereto and
their respective successors and permitted assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement except as
expressly set forth herein.
7.07 Waivers. One party hereto may, by a signed written notice to the
other party hereto and with the Lender's prior written consent, (a) extend the
time for the performance of any of the obligations or other actions of the other
party under this Agreement; (b) waive any inaccuracies in the representations or
warranties of the other party contained in this Agreement or in any document
delivered pursuant to this Agreement; (c) waive compliance with any of the
conditions or covenants of the other party contained in this Agreement; or (d)
waive or modify performance of any of the obligations of the other party under
this Agreement. Except as provided in the preceding sentence, no action taken
pursuant to this Agreement, including without limitation, any investigation by
or on behalf of one party, shall be deemed to constitute a waiver by such party
15
of compliance with any of the representations, warranties, covenants,
conditions, or agreements contained in this Agreement. The waiver by one party
hereto of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach. No party may consent to the
waiver of any term or condition in this Agreement which relates to the Policy or
the administration thereof, or the satisfaction of any requirements or
conditions contained in the Policy, without the Lender's and Underwriter's prior
written consent.
7.08 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York without regard to its
conflict of laws rules (other than Section 5-1401 of the New York General
Obligations Laws).
7.09 Books and Records. During the term of this Agreement and for any
period required by applicable law, each party shall maintain books of account
and records, in accordance with GAAP, of all transactions arising in connection
with its obligations pursuant to this Agreement.
7.10 Expenses. Except as otherwise expressly set forth herein, any
costs, expenses, or other charges incurred by either of the parties hereto shall
be borne by the party incurring such cost, expense, or charge.
7.11 Relationship of the Parties. The parties agree that in performing
their responsibilities pursuant to this Agreement, they are in the position of
independent contractors. This Agreement is not intended to create, nor does it
create, and shall not be construed to create, a relationship of partner or joint
venture or any association for profit between or among any of Lender, Servicer,
Seller, or Purchaser.
7.12 Headings. The headings contained herein are for convenience of
reference only and are not intended to define, limit, expand, or describe the
scope or intent of any provisions of this Agreement.
7.13 Counterparts. This Agreement may be executed in counterparts, each
of which shall be an original, but together shall constitute one and the same
instrument. This Agreement may be executed and delivered via facsimile
signatures.
7.14 WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION. EACH OF THE PARTIES
HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF THIS AGREEMENT OR
ANY OTHER PROGRAM DOCUMENT; (B) SUBMITS TO THE NONEXCLUSIVE PERSONAL
JURISDICTION IN THE XXXXX XXXXXX XX XXX XXXXX XX XXX XXXX AND THE SOUTHERN
DISTRICT OF NEW YORK FOR THE ENFORCEMENT OF THIS AGREEMENT AND THE OTHER PROGRAM
DOCUMENTS; (C) WAIVES ANY AND ALL PERSONAL RIGHTS UNDER THE LAW OF ANY
JURISDICTION TO OBJECT ON ANY BASIS (INCLUDING, WITHOUT LIMITATION,
INCONVENIENCE OF FORUM) TO JURISDICTION OR VENUE WITHIN THE STATE AND DISTRICT
DESCRIBED ABOVE FOR THE PURPOSE OF LITIGATION TO ENFORCE THIS AGREEMENT OR THE
OTHER PROGRAM DOCUMENTS; AND (D) AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON
16
IT IN THE MANNER PRESCRIBED IN SECTION 7.02. NOTHING HEREIN CONTAINED, HOWEVER,
SHALL PREVENT ANY PARTY FROM BRINGING ANY ACTION OR EXERCISING ANY RIGHTS
AGAINST ANY SECURITY AND AGAINST ANY OTHER PARTY PERSONALLY, AND AGAINST ANY
ASSETS OF SUCH OTHER PARTY, WITHIN ANY OTHER STATE OR JURISDICTION.
[SIGNATURES ON FOLLOWING PAGE]
17
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Servicing Agreement on the day and year first above written.
CONEXANT USA, LLC
By: /s/ Xxxxx X. Xxxxx
---------------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President and Treasurer
CONEXANT SYSTEMS, INC.
By: /s/ J. Xxxxx Xxxxxx
---------------------------------------
Name: J. Xxxxx Xxxxxx
Title: Senior Vice President and
Chief Financial Officer
18
Exhibit A
Services
Servicer shall perform, or shall cause the performance of (to the
extent permitted in this Agreement), each of the following (collectively, the
"Services"):
(a) At the request of Purchaser, prepare and deliver to Lender Advance
Requests containing payment instructions as directed by Purchaser;
(b) Carry on all dealings with Underwriter on behalf of Purchaser
regarding the enforcement, maintenance, and administration of the Policy,
including, without limitation, (i) assist Purchaser in causing the timely
payment of any premiums under the Policy; (ii) submitting Purchased Receivables
for payment under the Policy and assisting in identifying, collecting, and
delivering supporting documentation to Underwriter for processing of any claim;
(iii) resubmitting claims initially denied under the Policy; (iv) assisting
Purchaser in enforcing its rights under the Policy against Underwriter; (v)
assisting in the settlement of disputes between Underwriter and Purchaser; (vi)
assisting Purchaser in submitting to Underwriter all information and materials
requested by it or required under the Policy; and (vii) assisting Purchaser in
complying with all obligations of Purchaser under the Policy;
(c) Prepare and deliver IRPF Receivables Reports as prescribed in the
Program Documents;
(d) Respond to Lender's inquiries, and otherwise cooperate with Lender,
regarding the Purchased Receivables, the Policy, the Program, and the Program
Documents and all transactions contemplated therein;
(e) Cause the Lockbox and the Purchaser's Account to be maintained in
accordance with the Program Documents, including, without limitation, ensuring
that all associated fees are timely paid;
(f) Assist Purchaser in calculating the Borrowing Base and preparing
and delivering each Settlement Report; and
(g) Xxxx, collect, and process all collections on the Purchased
Receivables and otherwise administer to the collection of the Purchased
Receivables, including, without limitation, identifying collections, applying
collections to particular Purchased Receivables, maintaining aging reports of
the Purchased Receivables, identifying all Designated Receivables and
calculating the Settlement Price thereof, ensuring Designated Receivables and
their Related Rights and Property are conveyed to Conexant upon receipt of the
Settlement Price, and ensuring that Deductions are, as applicable, (i)
authorized, earned, and applied appropriately, (ii) accord with the terms of the
Program Documents, and (iii) documented by credit memoranda or similar papers.
19
Exhibit B
Form of IRPF Receivables Report
[TO BE ATTACHED]
20
