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by and among
DCC FUNDING LLC,
DIEBOLD CREDIT CORPORATION,
as Originator and as Servicer,
DIEBOLD, INCORPORATED,
as Guarantor,
RECEIVABLES CAPITAL CORPORATION,
as Conduit Investor,
BANK OF AMERICA,
NATIONAL ASSOCIATION,
as Agent, as Administrator and as an Alternate Investor,
and
THE OTHER ALTERNATE INVESTORS
FROM TIME TO TIME PARTIES HERETO
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[BANK OF AMERICA LOGO]
Transfer and Administration Agreement
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS................................................................................1
Section 1.1 Certain Defined Terms.................................................................1
Section 1.2 Other Terms..........................................................................26
Section 1.3 Computation of Time Periods..........................................................26
ARTICLE II PURCHASES AND SETTLEMENTS.................................................................27
Section 2.1 Transfer of Affected Assets; Intended Characterization...............................27
Section 2.2 Purchase Price.......................................................................28
Section 2.3 Investment Procedures................................................................29
Section 2.4 [IS RESERVED AND IS SPECIFIED IN SCHEDULE I.]........................................31
Section 2.5 Yield, Fees and Other Costs and Expenses.............................................31
Section 2.6 Deemed Collections...................................................................31
Section 2.7 Payments and Computations, Etc.......................................................31
Section 2.8 Reports..............................................................................32
Section 2.9 Collection Account...................................................................32
Section 2.10 Sharing of Payments, Etc.............................................................32
Section 2.11 Right of Setoff......................................................................33
Section 2.12 [IS RESERVED AND IS SPECIFIED IN SCHEDULE II]
Section 2.13 [IS RESERVED AND IS SPECIFIED IN SCHEDULE II]
Section 2.14 [IS RESERVED AND IS SPECIFIED IN SCHEDULE II]
Section 2.15 [IS RESERVED AND IS SPECIFIED IN SCHEDULE II]
ARTICLE III ADDITIONAL ALTERNATE INVESTOR PROVISIONS..................................................33
Section 3.1 Assignment to Alternate Investors....................................................33
Section 3.2 Downgrade of Alternate Investor......................................................35
Section 3.3 Non-Renewing Alternate Investors.....................................................37
ARTICLE IV REPRESENTATIONS AND WARRANTIES............................................................38
Section 4.1 Representations and Warranties of the SPV and the Servicer...........................38
Section 4.2 Additional Representations and Warranties of the Servicer............................43
Section 4.3 Representations and Warranties of the Guarantor......................................44
ARTICLE V CONDITIONS PRECEDENT......................................................................45
Section 5.1 Conditions Precedent to Closing......................................................45
Section 5.2 Conditions Precedent to All Investments and Reinvestments............................48
ARTICLE VI COVENANTS.................................................................................48
Section 6.1 Affirmative Covenants of the SPV and Servicer........................................48
Section 6.2 Negative Covenants of the SPV and Servicer...........................................53
Section 6.3 Hedging on Pool Receivables..........................................................55
ARTICLE VII ADMINISTRATION AND COLLECTIONS............................................................59
Section 7.1 Appointment of Servicer..............................................................59
Section 7.2 Duties of Servicer...................................................................60
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(i) Transfer and Administration Agreement
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Section 7.3 Blocked Account Arrangements.........................................................62
Section 7.4 Enforcement Rights After Designation of New Servicer.................................63
Section 7.5 Servicer Default.....................................................................64
Section 7.6 Servicing Fee........................................................................64
Section 7.7 Protection of Ownership Interest of the Investors....................................65
ARTICLE VIII TERMINATION EVENTS........................................................................65
Section 8.1 Termination Events...................................................................65
Section 8.2 Termination..........................................................................67
ARTICLE IX NDEMNIFICATION; EXPENSES; RELATED MATTERS.................................................68
Section 9.1 Indemnities by the SPV...............................................................68
Section 9.2 Indemnity for Taxes, Reserves and Expenses...........................................70
Section 9.3 Taxes................................................................................72
Section 9.4 Other Costs and Expenses; Breakage Costs.............................................73
Section 9.5 Reconveyance Under Certain Circumstances.............................................74
Section 9.6 Indemnities by the Servicer..........................................................74
Section 9.7 Substitution of Investor.............................................................74
ARTICLE X THE AGENT.................................................................................75
Section 10.1 Appointment and Authorization of Agent...............................................75
Section 10.2 Delegation of Duties.................................................................76
Section 10.3 Liability of Agent...................................................................76
Section 10.4 Reliance by Agent....................................................................76
Section 10.5 Notice of Termination Event, Potential Termination Event or Servicer Default.........77
Section 10.6 Credit Decision; Disclosure of Information by the Agent..............................77
Section 10.7 Indemnification of the Agent.........................................................78
Section 10.8 Agent in Individual Capacity.........................................................78
Section 10.9 Resignation of Agent.................................................................78
Section 10.10 Payments by the Agent................................................................79
ARTICLE XI MISCELLANEOUS.............................................................................79
Section 11.1 Term of Agreement....................................................................79
Section 11.2 Waivers; Amendments..................................................................79
Section 11.3 Notices; Payment Information.........................................................80
Section 11.4 Governing Law; Submission to Jurisdiction; Appointment of Service Agent..............80
Section 11.5 Integration..........................................................................81
Section 11.6 Severability of Provisions...........................................................81
Section 11.7 Counterparts; Facsimile Delivery.....................................................81
Section 11.8 Successors and Assigns; Binding Effect...............................................81
Section 11.9 Confidentiality......................................................................84
Section 11.10 No Bankruptcy Petition Against the Conduit Investor..................................86
Section 11.11 Resetting of Three-Month Average Delinquency Ratio...................................86
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(ii) Transfer and Administration Agreement
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SCHEDULES
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Schedule I Yield and Rate Periods
Schedule II Settlement Procedures
Schedule 4.1(g) List of Actions and Suits
Schedule 4.1(i) Location of Certain Offices and Records
Schedule 4.1(s) List of Blocked Account Banks and Blocked Accounts
Schedule 11.3 Address and Payment Information
EXHIBITS
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Exhibit A Form of Assignment and Assumption Agreement
Exhibit B Form of Contracts
Exhibit C Credit and Collection Policies and Practices
Exhibit D Form of Investment Request
Exhibit E Form of Blocked Account Agreement
Exhibit F Form of Servicer Report
Exhibit G Form of SPV Secretary's Certificate
Exhibit H Form of Originator/Servicer/Guarantor Secretary's Certificate
Exhibit I Form of Opinion of Counsel for the SPV, Originator and Servicer
Exhibit J Form of Hedging Agreement
(iii) Transfer and Administration Agreement
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TRANSFER AND ADMINISTRATION AGREEMENT
This TRANSFER AND ADMINISTRATION AGREEMENT (this "AGREEMENT"), dated as
of March 30, 2001, by and among DCC FUNDING LLC, a Delaware limited liability
company (the "SPV"), DIEBOLD CREDIT CORPORATION, a Delaware corporation,
individually (the "ORIGINATOR") and as initial Servicer, DIEBOLD, INCORPORATED,
an Ohio corporation, as Guarantor ("GUARANTOR"), RECEIVABLES CAPITAL
CORPORATION, a Delaware corporation, as the Conduit Investor, BANK OF AMERICA,
NATIONAL ASSOCIATION, a national banking association ("BANK OF AMERICA"), as the
Agent for the Investors, as Administrator and as an Alternate Investor, and the
financial institutions from time to time parties hereto as Alternate Investors.
ARTICLE I
DEFINITIONS
Section 1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings:
"ADCB" means, on any date of determination, the sum of (i) the
Discounted Contract Balance of each Eligible Receivable (excluding all Defaulted
Receivables) included in the Asset Interest as of the date of such determination
MINUS (ii) the portion of the Discounted Contract Balance of any Pool
Receivable, which when aggregated with the Discounted Contract Balances of each
other applicable Pool Receivable, exceeds any applicable Portfolio Concentration
Criteria.
"ADDITIONAL COSTS" is defined in Section 9.2(d).
"ADDITIONAL RECEIVABLES" means all Receivables purchased after the
Closing Date.
"ADMINISTRATION FEE RATE" is defined in the Fee Letter.
"ADMINISTRATOR" means Bank of America or an Affiliate thereof, as
Administrator for the Conduit Investor or Bank of America or an Affiliate
thereof, as administrator for any Conduit Assignee.
"ADVERSE CLAIM" means a lien, security interest, charge or encumbrance,
or other right or claim in, of or on any Person's assets or properties in favor
of any other Person (including any UCC financing statement or any similar
instrument filed against such Person's assets or properties).
"AFFECTED ASSETS" means, collectively, (a) the Pool Receivables, (b)
the Related Security, (c) all rights and remedies of the SPV under the First
Tier Agreement, together with all financing statements filed by the SPV against
the Originator in connection therewith, (d) the Hedge Collateral, (e) all
Blocked Accounts and all funds and investments therein and all Blocked Account
Agreements, and (f) all proceeds of the foregoing.
Transfer and Administration Agreement
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"AFFILIATE" means, as to any Person, any other Person which, directly
or indirectly, owns, is in control of, is controlled by, or is under common
control with, such Person, in each case whether beneficially, or as a trustee,
guardian or other fiduciary. A Person shall be deemed to control another Person
if the controlling Person possesses, directly or indirectly, the power to direct
or cause the direction of the management or policies of the other Person,
whether through the ownership of voting securities or membership interests, by
contract, or otherwise.
"AGENT" means Bank of America, in its capacity as agent for the
Investors, and any successor thereto appointed pursuant to ARTICLE X.
"AGENT-RELATED PERSONS" means the Agent, together with its Affiliates,
and the officers, directors, employees, agents and attorneys-in-fact of such
Persons and their respective Affiliates.
"AGGREGATE UNPAIDS" means, at any time, an amount equal to the sum of
(a) the aggregate unpaid Yield accrued and to accrue to maturity with respect to
all Rate Periods at such time, (b) the Net Investment at such time and (c) all
other amounts owed (whether or not then due and payable) hereunder and under the
other Transaction Documents by the SPV, the Originator and the Guarantor to the
Agent, the Administrator, the Investors or the Indemnified Parties at such time.
"AGREEMENT" is defined in the PREAMBLE.
"AGREEMENT ACCOUNTING PRINCIPLES" means generally accepted accounting
principles as in effect on the Closing Date in the United States, applied in a
manner consistent with the audited consolidated financial statements of the
Guarantor and its Subsidiaries for the fiscal year ending December 31, 1998;
PROVIDED, HOWEVER, that, if generally accepted accounting principles in the
United States of America shall require the Guarantor to adopt other principles,
then the financial statements required to be delivered hereunder may be prepared
on the basis of such other principles but when delivered shall also be
accompanied by a reconciliation, reasonably satisfactory in scope and detail to
the Agent, to permit the review of such financial statements as if they were
prepared in accordance with Agreement Accounting Principles.
"ALTERNATE INVESTOR PERCENTAGE" means, at any time, a fraction,
expressed as a percentage, the numerator of which is the portion of the Net
Investment funded by the Alternate Investors and the denominator of which is the
Net Investment at such time; PROVIDED that at all times on and after the first
Assignment Date occurring on or after the Conduit Investment Termination Date,
the Alternate Investor Percentage means 100%.
"ALTERNATE INVESTORS" means Bank of America and each other financial
institution identified as such on the signature pages hereof and any other
financial institution that shall become a party to this Agreement pursuant to
SECTION 11.8.
"Alternate Rate" is defined in Section 2.4.
"AMEX" means American Express TRS Inc.
"ANNUAL DEFAULT RATIO" means, with respect to any Collection Period,
the fraction, expressed as a percentage, equal to (a) the aggregate Discounted
Contract Balance of Pool
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Receivables that became Defaulted Receivables during the twelve most recent
Collection Periods, divided by (b) the average for the twelve most recent
Collection Periods of the Discounted Contract Balances of all Pool Receivables
as of the last day of each such Collection Period.
"Asset Interest" is defined in Section 2.1(b).
"ASSIGNMENT AMOUNT" means, with respect to an Alternate Investor at the
time of any assignment pursuant to SECTION 3.1, an amount equal to the least of
(a) such Alternate Investor's Pro Rata Share of the Net Investment requested by
the Conduit Investor to be assigned at such time; (b) such Alternate Investor's
unused Commitment (minus the unrecovered principal amount of such Alternate
Investor's investments in the Asset Interest pursuant to the Program Support
Agreement to which it is a party); and (c) in the case of an assignment on or
after the Conduit Investment Termination Date, the sum of such Alternate
Investor's Pro Rata Share of the Conduit Investor Percentage of, without
duplication, (i) the ADCB, PLUS (ii) all Collections received by the Servicer
but not yet remitted by the Servicer to the Agent, PLUS (iii) any amounts in
respect of Deemed Collections required to be paid by the SPV at such time.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" means an Assignment and
Assumption Agreement substantially in the form of EXHIBIT A.
"Assignment Date" is defined in Section 3.1(a).
"BALLOON PAYMENTS" means, as to any Receivable, the final scheduled
installment payment thereunder, if such payment exceeds the regular level
monthly installment payment amount.
"Bank of America" is defined in the preamble.
"BANKRUPTCY CODE" means the Bankruptcy Reform Act of 1978, 11
U.S.C.ss.ss. 101 et seq.
"BASE RATE" is defined in Section 2.4.
"BLOCKED ACCOUNT" means an account maintained by the Servicer in the
name of the SPV at a Blocked Account Bank for the purpose of receiving
Collections, set forth in SCHEDULE 4.1(S) or any account added as a Blocked
Account pursuant to and in accordance with SECTION 4.1(S) and which, if not
maintained at and in the name of the Agent, is subject to a Blocked Account
Agreement.
"BLOCKED ACCOUNT AGREEMENT" means an agreement among the Servicer, the
SPV, the Agent and a Blocked Account Bank in substantially the form of EXHIBIT
E.
"BLOCKED ACCOUNT BANK" means each of the banks set forth in SCHEDULE
4.1(s), as such SCHEDULE 4.1(S) may be modified pursuant to SECTION 4.1(s).
"BLOCKED ACCOUNT INTERCREDITOR AGREEMENT" means the Blocked Account
Intercreditor Agreement dated as of March 30, 2001, among the Originator, the
Servicer, the SPV, the Agent and the Guarantor.
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"BOOKED RESIDUAL" means, with respect to any Pool Receivable, the
expected Residual as set forth on the Servicer's books at the time of sale of
such Pool Receivable to the SPV.
"BUSINESS DAY" means any day excluding Saturday, Sunday and any day on
which banks in New York, New York, Charlotte, North Carolina, Chicago, Illinois,
San Francisco, California or Canton, Ohio are authorized or required by law to
close, and, when used with respect to the determination of any Offshore Rate or
any notice with respect thereto, any such day which is also a day for trading by
and between banks in United States dollar deposits in the London interbank
market.
"CAPITALIZED LEASE" of a Person means any lease of property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with GAAP.
"CAPITAL STOCK" means (i) in the case of any corporation, all capital
stock and any securities exchangeable for or convertible into capital stock and
any warrants, rights or other options to purchase or otherwise acquire capital
stock or such securities or any other form of equity securities, (ii) in the
case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock, (iii) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited) and (iv) any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
Person.
"CASUALTY LOSS" means, with respect to any item of Equipment, the loss,
theft, damage beyond repair or governmental condemnation or seizure of such item
of Equipment.
"CATEGORY I" means the related Obligor has a long-term, unsecured debt
rating of A2 or A or higher by Moody's or S&P, respectively.
"CATEGORY II" means the related Obligor has a long-term, unsecured debt
rating of Baa2 or BBB or higher by Moody's or S&P, respectively, but is not in
Category I.
"CLOSING DATE" means March 30, 2001.
"CODE" means the Internal Revenue Code of 1986.
"COLLATERAL VALUATION RESERVE" is defined in Section 6.3(a).
"COLLECTION ACCOUNT" is defined in Section 2.9.
"COLLECTION PERIOD" means, as to any Reporting Date, the calendar month
ended immediately prior to such Reporting Date.
"COLLECTIONS" means, with respect to Pool Receivables, all cash
collections and other cash proceeds of such Receivables, including all finance
charges, if any, Prepayments, Insurance Proceeds and Recoveries and cash
proceeds of Related Security, all Deemed Collections, all Guaranteed Residuals
and all funds received by the SPV or the Servicer pursuant to any Hedging
Agreements, but excluding Excluded Amounts.
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"COMMERCIAL PAPER" means the promissory notes issued or to be issued by
the Conduit Investor in the commercial paper market.
"COMMITMENT" means, with respect to each Alternate Investor, as the
context requires, (a) the commitment of such Alternate Investor to make
Investments and to pay Assignment Amounts in accordance herewith in an amount
not to exceed the amount described in the following CLAUSE (b), and (b) the
dollar amount set forth opposite such Alternate Investor's signature on the
signature pages hereof under the heading "COMMITMENT" (or in the case of an
Alternate Investor which becomes a party hereto pursuant to an Assignment and
Assumption Agreement, as set forth in such Assignment and Assumption Agreement),
MINUS the dollar amount of any Commitment or portion thereof assigned by such
Alternate Investor pursuant to an Assignment and Assumption Agreement, PLUS the
dollar amount of any increase to such Alternate Investor's Commitment consented
to by such Alternate Investor prior to the time of determination; PROVIDED,
HOWEVER, that, except as otherwise provided in SECTION 3.3(b), in the event that
the Facility Limit is reduced, the aggregate of the Commitments of all the
Alternate Investors shall be reduced in a like amount and the Commitment of each
Alternate Investor shall be reduced in proportion to such reduction.
"COMMITMENT TERMINATION DATE" means March 29, 2002, or such later date
to which the Commitment Termination Date may be extended by the SPV, the Agent
and some or all of the Alternate Investors (in their sole discretion).
"CONDUIT ASSIGNEE" means any commercial paper conduit administered by
Bank of America or any of its Affiliates and designated by Bank of America from
time to time to accept an assignment from the Conduit Investor of all or a
portion of the Net Investment.
"CONDUIT INVESTMENT TERMINATION DATE" means the date of the delivery by
the Conduit Investor to the SPV of written notice that the Conduit Investor
elects, in its sole discretion, to commence the amortization of the Net
Investment funded by it or otherwise liquidate its interest in the Asset
Interest.
"CONDUIT INVESTOR" means Receivables Capital Corporation and any
Conduit Assignee thereof.
"CONDUIT INVESTOR PERCENTAGE" means, at any time, 100%, LESS the
Alternate Investor Percentage at such time.
"CONTRACT" means, in relation to any Receivable, any and all contracts,
instruments, agreements, leases, invoices, notes, or other writings pursuant to
which such Receivable arises or which evidence such Receivable or under which an
Obligor becomes or is obligated to make payment in respect of such Receivable,
which Contracts are in one of the forms attached hereto as EXHIBIT B.
"CP Rate" is defined in Section 2.4.
"CREDIT AND COLLECTION POLICY" means the Originator's credit and
collection policy or policies and practices relating to Contracts and
Receivables as in effect on the Closing Date and set forth in EXHIBIT C, as
modified, from time to time, in compliance with SECTIONS 6.1(a)(vii) and
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6.2(C); PROVIDED that, prior to January 1, 2000, "Credit and Collection Policy"
means the Originator's credit and collection policy or policies and practices,
relating to Contracts and Receivables as in effect from time to time.
"CREDIT AGREEMENT" means the Loan Agreement, dated as of December 1,
1999 among Diebold, Incorporated, the subsidiary borrowers party thereto, the
lenders party thereto and Bank One, Michigan, as agent, as amended, waived or
otherwise modified from time to time.
"CUT OFF DATE" means March 29, 2001.
"DEEMED COLLECTIONS" means any Collections on any Pool Receivable
deemed to have been received pursuant to SECTION 2.6.
"DEFAULTED RECEIVABLE" means a Receivable (a) as to which any Scheduled
Payment, or part thereof, remains unpaid for 151 days or more from the original
due date for such Scheduled Payment; (b) as to which an Event of Bankruptcy has
occurred and is continuing with respect to the Obligor thereof; (c) which has
been identified by the SPV, the Originator or the Servicer as uncollectible; or
(d) which, consistent with the Credit and Collection Policy, would be written
off as uncollectible.
"DEFAULTING ALTERNATE INVESTOR" is defined in Section 2.3(f).
"DELINQUENCY RATIO" means the ratio (expressed as a percentage)
computed as of each Determination Date by dividing (a) the aggregate Discounted
Contract Balance of all Pool Receivables that are Delinquent Receivables as of
such date, BY (b) the aggregate Discounted Contract Balance of all Pool
Receivables as of such date.
"DELINQUENT RECEIVABLE" means a Receivable: (a) as to which any
Scheduled Payment, or part thereof, remains unpaid for more than 60 days from
the original due date for such Scheduled Payment and (b) which is not a
Defaulted Receivable.
"DETERMINATION DATE" means the last day of each Collection Period.
"DILUTION" means a reduction in the Unpaid Balance of any Pool
Receivable attributable to any non-cash items including credits, rebates,
billing errors, sales or similar taxes, cash discounts, volume discounts,
allowances, disputes, set-offs, counterclaims, chargebacks, returned or
repossessed goods, sales and marketing discounts, warranties, any unapplied
credit memos and other adjustments that are made in respect of Obligors, except
any write-off in respect of a Defaulted Receivable.
"DISCOUNTED CONTRACT BALANCE" means, (1) with respect to any Existing
Receivable, (i) as of the Cut Off Date, the present value of all remaining
Scheduled Payments other than Excluded Scheduled Payments then due but not yet
received or to become due under such Existing Receivable after the Cut Off Date
discounted monthly at the Sale Discount Rate and (ii) as of any other date of
determination, the sum of (A) the present value of all remaining Scheduled
Payments other than Excluded Scheduled Payments then due but not yet received or
to become due under such Receivable after such date of determination discounted
monthly at the Sale Discount Rate of such Receivable and (B) the aggregate
amount of all Scheduled Payments other
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than Excluded Scheduled Payments that have become due and payable on or prior to
such date of determination that remain unpaid on such date of determination; and
(2) with respect to any Additional Receivable, (i) as of the related Investment
Date, the present value of all remaining Scheduled Payments other than Excluded
Scheduled Payments discounted monthly at the Sale Discount Rate and (ii) as of
any other date of determination, the sum of (A) the present value of all
remaining Scheduled Payments other than Excluded Scheduled Payments then due but
not yet received or to become due under such Additional Receivable after such
date of determination discounted monthly at the Sale Discount Rate of such
Receivable and (B) the aggregate amount of all Scheduled Payments other than
Excluded Scheduled Payments that have become due and payable on or prior to such
date of determination that remain unpaid on such date of determination. The
"Discounted Contract Balance" for each Receivable shall be calculated assuming:
(a) all payments due in any Collection Period are due on the last day of the
Collection Period; (b) payments are discounted on a monthly basis using a 30 day
month and a 360 day year; and (c) all security deposits and drawings under
letters of credit, if any, issued in support of a Receivable are applied to
reduce the Scheduled Payments in inverse order of the due date thereof.
For purposes of calculating the sum described in CLAUSE (1)(ii) or
(2)(ii) above on any date other than the last day of a Collection Period, the
Discounted Contract Balance of a Receivable shall be as of the last day of the
preceding Collection Period.
"DOLLAR" or "$" means the lawful currency of the United States.
"DOWNGRADE COLLATERAL ACCOUNT" is defined in Section 3.2(a).
"DOWNGRADE DRAW" is defined in Section 3.2(a).
"EBIT" means, for any period, the sum of (a) the consolidated net
income (or loss) of the Guarantor and its Subsidiaries for such period
determined in conformity with Agreement Accounting Principles, PLUS (b) to the
extent deducted in determining such net income, income taxes, and Interest
Expense, and any extraordinary and non-recurring losses and non-cash charges and
related tax effects in accordance with Agreement Accounting Principles, MINUS
(c) to the extent included in determining such net income, each of the
following, without duplication: (i) the income of any Person (other than a
Wholly Owned Subsidiary of the Guarantor) in which any Person other than the
Guarantor or any of its Subsidiaries has a joint interest or a partnership
interest or other ownership interest, except to the extent of the amount of
dividends or other distributions actually paid to the Guarantor or any of its
Subsidiaries by such Person during such period, (ii) the income of any Person
accrued prior to the date it becomes a Subsidiary of the Guarantor or is merged
into or consolidated with the Guarantor or any of its Subsidiaries or the
Person's assets are acquired by the Guarantor or any of its Subsidiaries, (iii)
gains from the sale, exchange, transfer or other disposition of property or
assets not in the ordinary course of business of the Guarantor and its
Subsidiaries and related tax effects in accordance with Agreement Accounting
Principles, (iv) any other extraordinary or non-recurring gains or other income
not from the continuing operations of the Guarantor or its Subsidiaries, and
related tax effects in accordance with the Agreement Accounting Principles and
(v) the income of any Subsidiary of the Guarantor (other than Subsidiaries which
are not material in the aggregate as agreed upon between the Guarantor and the
Agent) to the extent that the declaration
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or payment of dividends or similar distributions by the Subsidiary of that
income is not at the time permitted by operation of the terms of its charter or
any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary.
"ELIGIBLE INVESTMENTS" means highly rated short-term debt or the other
highly rated liquid investments in which the Conduit Investor is permitted to
invest cash pursuant to its commercial paper program documents.
"ELIGIBLE RECEIVABLE" means, at any time, any Receivable:
(a) which was originated by the Originator in the ordinary
course of its business;
(b) which (i) arises pursuant to a Contract with respect to
which the Originator has performed all obligations required to be
performed by it thereunder, including shipment of the merchandise
and/or the performance of the services purchased thereunder; (ii) has
been billed to the relevant Obligor; and (iii) the Discounted Contract
Balance thereof, as reported in the Servicer Reports, does not include
Excluded Scheduled Payments;
(c) which (i) satisfies all applicable requirements of the
Credit and Collection Policy and (ii) satisfies such other criteria and
requirements as the Agent may from time to time specify to the SPV
following thirty (30) days' notice;
(d) which has been sold or contributed to the SPV pursuant to
(and in accordance with) the First Tier Agreement and to which the SPV
has good and marketable title, free and clear of all Adverse Claims
other than Permitted Adverse Claims;
(e) as to which the Agent has not notified the SPV that either
such Receivable or any class of Receivables of which such Receivable is
a part is not acceptable for purchase hereunder;
(f) the Obligor of which is a United States resident is not an
Affiliate or employee of any of the parties hereto, and is not an
Official Body; PROVIDED that Obligors related to Receivables the
aggregate Discounted Contract Balances of which represent not more than
5% of the aggregate Discounted Contract Balances of the Eligible
Receivables included in the Asset Interest (other than Defaulted
Receivables) may not be United States residents so long as the
Scheduled Payments included in the Discounted Contract Balances of such
Receivables are covered by a "hell-or-high-water" unconditional credit
insurance policy issued by the Export-Import Bank of the United States;
(g) the Obligor of which has been directed to make all
payments to a Blocked Account;
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(h) which under the related Contract and applicable Law is
assignable without the consent of, or notice to, the Obligor thereunder
unless such consent has been obtained and is in effect or such notice
has been given;
(i) which, together with the related Contract, is in full
force and effect and constitutes the legal, valid and binding
obligation of the related Obligor enforceable against such Obligor in
accordance with its terms and is not subject to any litigation,
dispute, offset, counterclaim or other defense;
(j) which is denominated and payable only in Dollars in the
United States;
(k) which is not a Defaulted Receivable at the time of the
purchase thereof by the Agent, on behalf of the Investors, hereunder;
(l) which is not a Delinquent Receivable at the time of the
purchase thereof by the Agent, on behalf of the Investors, hereunder;
(m) which has not been compromised, adjusted or modified
(including by the extension of time for payment or the granting of any
discounts, allowances or credits except as permitted herein at a time
when such Receivable was not delinquent or in default);
(n) which is "chattel paper" and is not evidenced by an
instrument within the meaning of Article 9 of the UCC of all applicable
jurisdictions;
(o) which is an "eligible asset" as defined in Rule 3a-7 under
the Investment Company Act of 1940;
(p) which, together with the Contract related thereto, does
not contravene in any material respect any Laws applicable thereto
(including Laws relating to truth in lending, fair credit billing, fair
credit reporting, equal credit opportunity, fair debt collection
practices and privacy) and with respect to which no part of the
Contract related thereto is in violation of any such Law in any
material respect;
(q) the assignment of which under the First Tier Agreement by
the Originator to the SPV and hereunder by the SPV to the Agent does
not violate, conflict or contravene any applicable Law or any
contractual or other restriction, limitation or encumbrance;
(r) which (together with the Related Security related thereto)
has been the subject of either a valid transfer and assignment from, or
the grant of a first priority perfected security interest therein
(other than in the Equipment) by, the SPV to the Agent, on behalf of
the Investors, of all of the SPV's right, title and interest therein,
effective until the Final Payout Date (unless repurchased by the SPV at
an earlier date pursuant to this Agreement);
(s) as to which either the related Obligor has made at least
one Scheduled Payment with respect thereto, the related Obligor has
delivered an acceptance certificate
9 Transfer and Administration Agreement
<PAGE> 14
for the related Equipment or the Equipment has been deemed accepted
under the terms of the related Contract;
(t) with respect to which there is only one manually executed
original of the related Contract (other than those manually executed
originals that have been marked "COPY" or otherwise legended that they
are copies), which original shall have been delivered to the Servicer;
(u) which contains customary and enforceable provisions such
that the rights and remedies of the holder or assignee thereof shall be
adequate as determined by the Servicer in its reasonable discretion for
realization against the Equipment;
(v) with respect to which the information set forth in the
Investment Request is true and correct in all material respects as of
the close of business on each applicable Investment Date;
(w) as to which, immediately after the transfers and
conveyances to the SPV as contemplated in the First Tier Agreement, all
necessary action will have been taken by the Originator to validly
convey to the SPV (A) all right, title and interest of the Originator
in and to each Receivable and all Scheduled Payments to become due
thereunder and (B) all right, title and interest of the Originator in
and to the related Equipment and other Affected Assets;
(x) (i) which has not been satisfied, canceled, subordinated,
in whole or in part, or rescinded, (ii) with respect to which the
related Equipment has not been released from the lien granted by the
related Contract in whole or in part, nor has any instrument been
executed that would effect any such satisfaction, release,
cancellation, subordination or rescission and (iii) with respect to
which neither the Originator nor any other obligated party has or will
be suspended or has reduced or will reduce any Scheduled Payments or
obligations due or to become due thereunder by reason of a default by
the other party to such Receivable;
(y) with respect to which, unless the related Obligor
self-insures in accordance with the proviso set forth in CLAUSE (aa)
below, the Servicer, in accordance with its customary procedures, has
confirmed that at the time of origination the Equipment was covered by
a policy of insurance, insuring against loss and damage due to fire,
theft, collision, and pursuant to which the Obligor is required to
maintain the applicable insurance naming the Originator and its
successors and assigns as a loss payee. Such insurance requires the
related insurer to notify the Originator prior to cancellation;
(z) with respect to which there is no Adverse Claim that is
not a Permitted Adverse Claim against the related Equipment for
delinquent taxes;
(aa) with respect to which, at the time that any item of the
Equipment is assigned, transferred and contributed pursuant to the
terms of the First Tier Agreement, the Originator has no knowledge that
such Equipment has suffered any loss or damage except for such
Equipment that has been restored to its original value, ordinary wear
and tear excepted, and such Receivable requires the Obligor thereunder
to maintain insurance
10 Transfer and Administration Agreement
<PAGE> 15
on the Equipment subject thereto in an amount at least equal to the
replacement value thereof and, upon the occurrence of a Casualty Loss,
to pay any difference between the proceeds of such insurance and the
present value of the Unpaid Balance (calculated or determined in the
manner specified or provided in such Contract) plus any past due
amounts as of the date of determination; PROVIDED that, if the
related Obligor is in Category I or Category II, such related Obligor
may be permitted to self-insure under the related Contract;
(bb) with respect to which the obligation of each Obligor to
make Scheduled Payments throughout the term thereof is and will be
absolute and unconditional, without any right of setoff by such Obligor
and without regard to any event affecting the Equipment subject
thereto, the obsolescence of such Equipment, any claim of such Obligor
against the SPV, the Originator or the Servicer or any change in
circumstances of such Obligor or any other circumstances whatsoever
except to the extent that, in the event of a casualty of any item of
Equipment or early termination of such Receivable, the Obligor is
obligated to pay, in lieu of all future Scheduled Payments with respect
to such item, an amount which equals the amount required to be prepaid
with respect to such Receivable in accordance with the contract between
the Obligor and the Originator. Such g requires that the
Obligor shall, at the Obligor's sole cost and expense and in addition
to the scheduled payments due under such Receivable or schedule
thereto, promptly pay all taxes, assessments, license fees, permit
fees, registration fees, fines, interest, penalties and all other
governmental charges (including, without limitation, gross receipts,
sales, use, excise, personal property, ad valorem, stamp, documentary
and other taxes), whether levied, assessed or imposed on the Obligor,
the Originator, the Equipment or otherwise, relating to the Equipment
or the delivery, leasing, operations, ownership, possession, purchase,
registration, rental, sales or use thereof during the term of the
Receivable or schedule thereto, or the interest of the Obligor in the
Equipment or under the Receivable or schedule thereto, or the rental or
other payments thereunder or earnings arising therefrom (excepting only
taxes on the Originator's net income). Such Receivable is
noncancellable by the Obligor during the term of such Receivable. The
Originator has no knowledge that the obligations of any Obligor under
such Receivable will not be paid in full;
(cc) such Receivable is not part of a master lease unless all
Receivables subject to such master lease have been sold to the SPV
under the First Tier Agreement and then to the Agent hereunder;
(dd) which provides that the Originator has no obligation to
assemble, install, test, adjust or service the Equipment related to
such Receivable. Such Receivable provides that the Obligor, at its sole
expense, at all times during the term of the Receivable and until
return of the Equipment, will maintain the Equipment in good operating
order, repair, condition and appearance and protect the Equipment from
deterioration and provide all accessories, upgrades, repairs,
replacement parts and service required therefor;
(ee) which does not constitute an "operating lease" under
GAAP;
11 Transfer and Administration Agreement
<PAGE> 16
(ff) with respect to which the Originator and the Servicer
will cause their respective records to be marked to reflect the
transfer of such Receivable to the SPV;
(gg) which is net to the Originator of any maintenance, taxes,
insurance or other expenses and contains provisions requiring the
Obligor to assume all risk of loss or malfunction of the related
Equipment;
(hh) which obligates the related Obligor to make all Scheduled
Payments thereunder in full notwithstanding the collection by the
Originator of a security deposit with respect thereto. The calculation
of the Unpaid Balance and Discounted Contract Balance of such
Receivable does not include any security deposits or advance payments
collected by or on behalf of the Originator which are applied to
Scheduled Payments;
(ii) with respect to which the sale, transfer, assignment and
conveyance contemplated by the First Tier Agreement are not subject to
and will not result in any tax, fee or governmental charge payable by
the Originator to any federal, state or local government ("TRANSFER
TAXES") other than Transfer Taxes which have been or will be paid by
the Originator as due. In the event that the SPV receives actual
notices of any Transfer Taxes arising out of such transfer, assignment
and conveyance, on written demand by the SPV, or upon the Originator's
otherwise being given notice thereof, the Originator shall pay, and
otherwise indemnify and hold the SPV, the Agent and the Investors
harmless, on an after-tax basis, from and against any and all such
Transfer Taxes (it being understood that the Investors and the Agent
shall have no obligation to pay such Transfer Taxes);
(jj) the Obligor thereunder has represented to the Originator
that such Obligor has accepted the related Equipment, that such
Equipment is in good working order and the Originator has not been
notified of any defects therein;
(kk) with respect to such Receivable, the Originator has no
material performance obligation in favor of the Obligor (it being
understood that covenants of quiet enjoyment, purchase options,
obligations to accept return of the property at end of lease term, and
like obligations of a lessor typical of a "triple net" lease, shall not
be deemed "material performance obligations" for purposes of this
eligibility criterion);
(ll) which is not under any sub-lease agreement, nor does the
Contract permit any subleasing of the related Equipment;
(mm) which does not arise from a sale originated by an
independent sales organization;
(nn) with respect to which the Unpaid Balance and Discounted
Contract Balance provided in any Servicer Report do not include any
Residual other than a Guaranteed Residual; and
(oo) with respect to which Scheduled Payments are due on a
monthly basis; PROVIDED that Receivables the aggregate Discounted
Contract Balances of which represent no more than 5% of the aggregate
Discounted Contract Balance of the Eligible
12 Transfer and Administration Agreement
<PAGE> 17
Receivables included in the Asset Interest (other than Defaulted
Receivables) may have Scheduled Payments that are due quarterly or
annually and Receivables the aggregate Discounted Contract Balances of
which represent no more than 1% of the aggregate Discounted Contract
Balances of the Eligible Receivables included in the Asset Interest
(other than Defaulted Receivables) may have Scheduled Payments that are
due annually.
"EQUIPMENT" means the tangible assets financed or leased by an Obligor
pursuant to a Receivable and/or, unless the context otherwise requires, a
security interest in such assets.
"ERISA" means the U.S. Employee Retirement Income Security Act of 1974
and any regulations promulgated and rulings issued thereunder.
"ERISA AFFILIATE" means, with respect to any Person, any corporation,
partnership, trust, sole proprietorship or trade or business which, together
with such Person, is treated as a single employer under Section 414(b) or (c) of
the Code or, with respect to any liability for contributions under Section
302(c) of ERISA, Section 414(m) or Section 414(o) of the Code.
"EVALUATION MATERIAL" is defined in Section 11.9.
"EVENT OF BANKRUPTCY" means, with respect to any Person, (a) that such
Person or any Subsidiary of such Person (i) shall generally not pay its debts as
such debts become due or (ii) shall make a general assignment for the benefit of
creditors; (b) any proceeding shall be instituted by or against such Person or
any Subsidiary of such Person seeking to adjudicate it as bankrupt or insolvent,
or seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee or other
similar official for it or any substantial part of its property and, in the case
of any such proceeding instituted against the Originator, the Servicer or the
Guarantor, such proceeding shall not be dismissed within 60 days after the
filing or commencement thereof or an order for relief shall be entered with
respect thereto; or (c) such Person or any Subsidiary of such Person shall take
any corporate, partnership or other similar appropriate action to authorize any
of the actions set forth in the preceding CLAUSES (a) or (b).
"EXCLUDED AMOUNTS" means (i) any collections representing maintenance
premiums in respect of Equipment related to Pool Receivables ("MAINTENANCE
PREMIUMS") that are payable to the Guarantor and have been identified by the
Servicer as such, and (ii) all Residuals other than Guaranteed Residuals.
"EXCLUDED RECEIVABLES" is defined in Section 1.1 of the First Tier
Agreement.
"EXCLUDED SCHEDULED PAYMENTS" means, (i) with respect to any
Receivable, those Scheduled Payments that are due after the date that is 96
months after the Investment Date or Reinvestment Date for such Receivable; (ii)
with respect to any Receivable for which the related Obligor is not a United
States resident, that portion of Scheduled Payments that are not covered by a
"hell-or-high-water" unconditional credit insurance policy issued by the
Export-Import Bank of the United States, and (iii) any Scheduled Payment of the
Receivable with the latest dated Scheduled Payment which, when included in the
Discounted Contract Balance of such
13 Transfer and Administration Agreement
<PAGE> 18
Receivable shall cause the weighted average remaining term of Scheduled Payments
included in the Discounted Contract Balances of Pool Receivables to exceed 60
months.
"EXCLUDED TAXES" is defined specified in SECTION 9.3.
"EXISTING RECEIVABLE" means each Receivable that is purchased by the
Agent hereunder on the Closing Date.
"FACILITY FEE RATE" is defined in the Fee Letter.
"FACILITY LIMIT" means $102,000,000, as such amount may be reduced in
accordance with SECTION 3.3(b).
"FEDERAL FUNDS RATE" is defined in Section 2.4.
"FEE LETTER" means the confidential letter agreement dated the date
hereof among the SPV, the Originator, the Conduit Investor and the Agent with
respect to the fees to be paid by the SPV and the Originator, as amended from
time to time.
"FINAL PAYOUT DATE" means the date, after the Termination Date, on
which the Net Investment has been reduced to zero, all accrued Servicing Fees
have been paid in full, all other Aggregate Unpaids have been paid in full in
cash and each Hedge Transaction has been terminated and each Hedge Counterparty
has received all amounts owing to it under its respective Hedging Agreement.
"FINANCIAL CONTRACTS" of a Person means (a) any exchange-traded or
over-the-counter futures, forward, swap or option contract or other financial
instrument with similar characteristics or (b) any Rate Hedging Agreement.
"FIRST TIER AGREEMENT" means the Sale Agreement dated as of March 30,
2001 between the Originator and the SPV.
"FITCH" means Fitch Investors Service, Inc.
"FLUCTUATION FACTOR" is defined in Section 2.4.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
accounting profession, in effect from time to time.
"GUARANTEED OBLIGATIONS" is defined in Section 6.1A.
"GUARANTEED RESIDUAL" means, with respect to any Pool Receivable, the
proceeds of the sale of the related Equipment to the related Obligor in
accordance with the related Contract if such Obligor is required to purchase
such Equipment following the expiration or termination of the related Contract
pursuant to the terms of such Contract.
14 Transfer and Administration Agreement
<PAGE> 19
"GUARANTOR" means Diebold, Incorporated, an Ohio corporation.
"GUARANTY" means, with respect to any Person, any agreement by which
such Person assumes, guarantees, endorses, contingently agrees to purchase or
provide funds for the payment of, or otherwise becomes liable upon, the
obligation of any other Person, or agrees to maintain the net worth or working
capital or other financial condition of any other Person or otherwise assures
any other creditor of such other Person against loss, including any comfort
letter, limited liability company agreement or take-or-pay contract and shall
include the contingent liability of such Person in connection with any
application for a letter of credit.
"GUARANTY PARTIES" is defined in Section 6.1A.
"HEDGE BREAKAGE COSTS" means, for any Hedge Transaction, any amount
payable under the Hedging Agreement by the SPV for the early termination of that
Hedge Transaction or any portion thereof.
"HEDGE COLLATERAL" is defined in Section 6.3(b).
"HEDGE COUNTERPARTY" means Bank of America, National Association, or
any other entity which (a) on the date of entering into any Hedge Transaction
(i) is an interest rate swap dealer that has been approved in writing by the
Agent (which approval shall not be unreasonably withheld or delayed) and (ii)
has a long-term senior unsecured debt rating of not less than "AA-" by S&P and
not less than "Aa3" by Moody's ("RATING REQUIREMENT") or such other long-term
rating or short-term rating as has been approved by the Agent in writing in its
sole discretion and (b) in a Hedging Agreement (i) consents to the assignment of
the SPV's rights under the Hedging Agreement to the Agent pursuant to SECTION
6.3(b) and (ii) agrees that in the event that Moody's or S&P reduces its
long-term or short-term senior unsecured debt rating below the applicable Rating
Requirement, within 15 Business Days of the downgrade below any of these levels
or withdrawal of rating it shall transfer its rights and obligations under each
Hedging Transaction to another entity that meets the requirements of CLAUSE (a)
and (b) hereof and has entered into a Hedging Agreement with the SPV on or prior
to the date of such transfer.
"HEDGE NOTIONAL AMOUNT" means, for any Investment, the aggregate
notional amount in effect on any day under all Hedge Transactions entered into
pursuant to SECTION 6.3 for that Investment.
"HEDGE RATE" means, for any Pool Receivable to which an Investment or
Reinvestment relates, (i) the "Fixed Rate" of the Hedge Transaction, which Fixed
Rate shall be used in computing the Sale Discount Rate of that Pool Receivable
or, (ii) if no Hedge Transaction is in place, the rate, determined by the Agent,
which is the midpoint between the bid and ask rates set forth on Telerate page
19901 of the interpolated rate based on the weighted average life of the Pool
Receivables, as calculated in the Servicer Report; PROVIDED that if such
weighted average life of the Pool Receivables is less than two years, the rate
will be the midpoint between the bid and ask two-year rates set forth on
Telerate page 19901.
"HEDGE TRANSACTION" means each interest rate swap (or, if agreed to by
the Agent, swap or collar) transaction between the SPV and a Hedge Counterparty
which is entered into pursuant to SECTION 6.3(a) and is governed by a Hedging
Agreement.
15 Transfer and Administration Agreement
<PAGE> 20
"HEDGING AGREEMENT" means each agreement between the SPV and a Hedge
Counterparty which governs one or more Hedge Transactions entered into pursuant
to SECTION 6.3, which agreement shall consist of a "Master Agreement" in a form
published by the International Swaps and Derivatives Association, Inc., together
with a "Schedule" thereto substantially in the form of EXHIBIT J or such other
form as the Agent shall approve in writing, and each "Confirmation" thereunder
confirming the specific terms of each such Hedge Transaction.
"INDEBTEDNESS" means, without duplication, with respect to any Person
such Person's (a) obligations for borrowed money, (b) obligations representing
the deferred purchase price of property other than accounts payable arising in
the ordinary course of such Person's business on terms customary in the trade,
(c) obligations, whether or not assumed, secured by liens or payable out of the
proceeds or products of property now or hereafter owned or acquired by such
Person, (d) obligations which are evidenced by notes, acceptances (including
bankers acceptances), or other instruments, (e) Capitalized Lease obligations,
(f) obligations for which such Person is obligated pursuant to a Guaranty, (g)
reimbursement obligations with respect to any letters of credit and (h) any
other liabilities which would be treated as indebtedness in accordance with
GAAP.
"INDEMNIFIED AMOUNTS" is defined specified in Section 9.1.
"INDEMNIFIED PARTIES" is defined in Section 9.1.
"INSURANCE POLICY" means, with respect to any Receivable, any insurance
policy covering physical damage or loss to the related Equipment.
"INSURANCE PROCEEDS" means any amounts payable, or any payments made,
to the Originator, the Servicer or the SPV under any Insurance Policy.
"INTEREST COMPONENT" means, at any time of determination, the aggregate
Yield accrued and to accrue through the end of the current Rate Period for the
Portion of Investment accruing Yield calculated by reference to the CP Rate at
such time (determined for such purpose using the CP Rate most recently
determined by the Administrator, MULTIPLIED BY the Fluctuation Factor).
"INTEREST COVERAGE RATIO" means, as of the end of any fiscal quarter,
the ratio of (a) EBIT to (b) Interest Expense, in each case calculated for the
four consecutive fiscal quarters then ending, on a consolidated basis for the
Guarantor and its Subsidiaries in accordance with Agreement Accounting
Principles.
"INTEREST EXPENSE" means, with respect to any period, the aggregate of
all interest expense reported by the Guarantor and its Subsidiaries in
accordance with Agreement Accounting Principles during such period, net of any
cash interest income received by the Guarantor and its Subsidiaries during such
period from investments. As used in this definition, the term "interest" shall
include, without limitation, all interest, fees and costs payable with respect
to the obligations under the Credit Agreement (other than fees and costs which
may be capitalized as transaction costs in accordance with Agreement Accounting
Principles), any discount in respect of sales of accounts receivable and/or
related contract rights and the interest portion of Capitalized Lease payments
during such period, all as determined in accordance with Agreement
16 Transfer and Administration Agreement
<PAGE> 21
Accounting Principles. As used in this definition, "investments" of a Person
means any loan, advance (other than commission, travel and similar advances to
officers and employees made in the ordinary course of business), extension of
credit (other than accounts receivables and/or accrued expenses arising in the
ordinary course of business payable in accordance with customary practices and
loans to employees in the ordinary course of business) or contribution of
capital by such Person; stocks, bonds, mutual funds, partnership interests,
notes, debentures or other securities owned by such Person; any deposit accounts
and certificates of deposit owned by such Person; and structured notes,
derivative financial instruments and other similar instruments or contracts
owned by such Person (other than Financial Contracts).
"INTERPOLATED ADCB" means, on any date of determination, the sum of (i)
the Interpolated Discounted Contract Balance of each Eligible Receivable
(excluding all Defaulted Receivables) included in the Asset Interest as of the
date of such determination MINUS (ii) the recalculation, using the Interpolated
Discount Rate, of the present value of that portion of the Discounted Contract
Balance of any Pool Receivable, which when aggregated with the Discounted
Contract Balances of each other applicable Pool Receivable, exceeds any
applicable Portfolio Concentration Criteria.
"INTERPOLATED DISCOUNT RATE" means a rate equal to the sum of (i) the
greater of (A) the Offshore Rate (using a Rate Period of one month) and (B) the
rate, determined by the Agent, which is the midpoint between the bid and ask
rates set forth on Telerate page 19901 of the interpolated rate based on the
weighted average life of the Pool Receivables, as calculated in the Servicer
Report; PROVIDED that if such weighted average life of the Pool Receivables is
less than two years, the rate will be the midpoint between the bid and ask rates
of the two-year rate set forth on Telerate page 19901, (ii) the Liquidity
Margin, and (iii) the Servicing Fee Rate.
"INTERPOLATED DISCOUNTED CONTRACT BALANCE" means, (1) with respect to
any Existing Receivable, (i) as of the Cut Off Date, the present value of all
remaining Scheduled Payments other than Excluded Scheduled Payments then due but
not yet received or to become due under such Existing Receivable after the Cut
Off Date discounted monthly at the Interpolated Discount Rate and (ii) as of any
other date of determination, the sum of (A) the present value of all remaining
Scheduled Payments other than Excluded Scheduled Payments then due but not yet
received or to become due under such Receivable after such date of determination
discounted monthly at the Interpolated Discount Rate of such Receivable and (B)
the aggregate amount of all Scheduled Payments other than Excluded Scheduled
Payments that have become due and payable on or prior to such date of
determination that remain unpaid on such date of determination; and (2) with
respect to any Additional Receivable, (i) as of the related Investment Date, the
present value of all remaining Scheduled Payments other than Excluded Scheduled
Payments discounted monthly at the Interpolated Discount Rate and (ii) as of any
other date of determination, the sum of (A) the present value of all remaining
Scheduled Payments other than Excluded Scheduled Payments then due but not yet
received or to become due under such Additional Receivable after such date of
determination discounted monthly at the Interpolated Discount Rate of such
Receivable and (B) the aggregate amount of all Scheduled Payments other than
Excluded Scheduled Payments that have become due and payable on or prior to such
date of determination that remain unpaid on such date of determination. The
"Interpolated Discounted Contract Balance" for each Receivable shall be
calculated assuming: (a) all payments due in any Collection Period are due on
the last day of the Collection Period; (b) payments are discounted
17 Transfer and Administration Agreement
<PAGE> 22
on a monthly basis using a 30 day month and a 360 day year; and (c) all security
deposits and drawings under letters of credit, if any, issued in support of a
Receivable are applied to reduce the Scheduled Payments in inverse order of the
due date thereof.
For purposes of calculating the sum described in CLAUSE (1)(ii) or
(2)(ii) above on any date other than the last day of a Collection Period, the
Interpolated Discounted Contract Balance of a Receivable shall be as of the last
day of the preceding Collection Period.
"INVESTMENT" is defined in Section 2.2(a).
"INVESTMENT DATE" is defined in Section 2.3(a).
"INVESTMENT DEFICIT" is defined in Section 2.3(f).
"INVESTMENT REQUEST" means each request substantially in the form of
EXHIBIT D.
"INVESTOR(S)" means the Conduit Investor and/or the Alternate
Investors, as the context may require.
"LAW" means any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, order, injunction, writ, decree, judgment
or award of any Official Body.
"LIQUIDATION EXPENSES" means, with respect to any Receivable, the
aggregate amount of all out-of-pocket expenses reasonably incurred by the
Servicer (including amounts paid to any subservicer) in accordance with the
Servicer's customary procedures in connection with the repossession,
refurbishing and disposition of any related Equipment upon or after the
expiration or early termination of such Receivable or after such Receivable has
become a Defaulted Receivable and other out-of-pocket costs related to the
liquidation of any such Equipment, including the attempted collection of any
amount owing pursuant to such Receivable if it is a Defaulted Receivable.
"LIQUIDITY MARGIN" is defined in Section 2.4.
"MAINTENANCE PREMIUMS" is defined in the definition of "Excluded
Amounts."
"MAJORITY INVESTORS" means, at any time, the Agent and those Alternate
Investors which hold Commitments aggregating in excess of 66?% of the Facility
Limit as of such date (or, if the Commitments shall have been terminated, the
Agent and one or more Alternate Investors whose aggregate PRO RATA shares of the
Net Investment exceed 66?% of the Alternate Investor Percentage of the Net
Investment).
"MATERIAL ADVERSE EFFECT" means any event or condition which would have
a material adverse effect on (a) the collectibility of the Pool Receivables, (b)
the condition (financial or otherwise), businesses or properties of the SPV, the
Servicer, the Originator or the Guarantor or (c) the ability of the SPV, the
Servicer, the Originator or the Guarantor to perform its obligations under the
Transaction Documents to which it is a party.
"MAXIMUM NET INVESTMENT" means $100,000,000.
18 Transfer and Administration Agreement
<PAGE> 23
"MOODY'S" means Moody's Investors Service, Inc., or any successor that
is a nationally recognized statistical rating organization.
"MULTIEMPLOYER PLAN" is defined in Section 4001(a)(3) of ERISA.
"NET INVESTMENT" at any time means (a) the sum of the cash amounts paid
to the SPV pursuant to SECTIONS 2.2 and 2.3, together with the amount of any
funding under a Program Support Agreement allocated to the Interest Component at
the time of such funding, less (b) the aggregate amount of Collections
theretofore received and applied by the Agent to reduce such Net Investment
pursuant to 2.12; PROVIDED that the Net Investment shall be restored and
reinstated in the amount of any Collections so received and applied if at any
time the distribution of such Collections is rescinded or must otherwise be
returned for any reason; and PROVIDED FURTHER, that the Net Investment shall be
increased by the amount described in SECTION 3.1(b) as described therein.
"NON-DEFAULTING ALTERNATE INVESTOR" is defined in Section 2.3(f).
"OBLIGOR" means, with respect to any Receivable, the Person obligated
to make payments in respect of such Receivable pursuant to a Contract.
"OFFICIAL BODY" means any government or political subdivision or any
agency, authority, bureau, central bank, commission, department or
instrumentality of any such government or political subdivision, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
"OFFSHORE RATE" is defined in Section 2.4.
"ORIGINATOR" is defined in the PREAMBLE.
"OTHER SPV" means any Person other than the SPV that has entered into a
receivables purchase agreement, loan and security agreement, note purchase
agreement, transfer and administration agreement or any other similar agreement
with the Conduit Investor.
"PENSION PLAN" means an employee pension benefit plan as defined in
Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
Multiemployer Plan) and to which the Originator, the SPV or an ERISA Affiliate
of either may have any liability, including any liability by reason of having
been a substantial employer within the meaning of Section 4063 of ERISA or by
reason of being deemed to be a contributing sponsor under Section 4069 of ERISA.
"PERMITTED ADVERSE CLAIMS" means (i) Adverse Claims in favor of the SPV
created pursuant to the First Tier Agreement assigned to the Agent pursuant to
this Agreement; (ii) Adverse Claims in favor of the Agent created pursuant to
this Agreement; (iii) Adverse Claims that secure the payment of taxes,
assessments and governmental charges or levies, if such taxes are either (a) not
delinquent or (b) being contested in good faith and as to which adequate
reserves have been provided in accordance with GAAP; and (iv) Adverse Claims
imposed by law, such as landlord's, carriers', warehousemen's, and mechanics'
liens and other similar liens arising in the ordinary course of business that
secure payment of obligations not more than 60
19 Transfer and Administration Agreement
<PAGE> 24
days past due or that are being contested in good faith and as to which adequate
reserves have been provided in accordance with GAAP.
"PERMITTED INVESTMENT DATE" means each Settlement Date.
"PERSON" means an individual, partnership, limited liability company,
corporation, joint stock company, trust (including a business trust),
unincorporated association, joint venture, firm, enterprise, Official Body or
any other entity.
"POOL RECEIVABLE" means each Receivable other than Excluded
Receivables.
"PORTFOLIO CONCENTRATION CRITERIA" means, at any time, the following
concentration limitations measured at such time:
(i) the sum of the Discounted Contract Balances of the Pool
Receivables related to any Obligor other than AMEX or any Obligor in
Category I or Category II (including all Affiliates of such Obligor)
does not exceed 2.0% of the aggregate Discounted Contract Balances of
the Eligible Receivables included in the Asset Interest (other than
Defaulted Receivables); or
(ii) the sum of the Discounted Contract Balances of the Pool
Receivables for which AMEX is the related Obligor does not exceed
$65,000,000; or
(iii) the sum of the Discounted Contract Balances of the Pool
Receivables related to an Obligor in Category I other than AMEX does
not exceed 10% of the aggregate Discounted Contract Balances of the
Eligible Receivables included in the Asset Interest (other than
Defaulted Receivables); or
(iv) the sum of the Discounted Contract Balances of the Pool
Receivables related to an Obligor in Category II other than AMEX does
not exceed 5% of the aggregate Discounted Contract Balances of the
Eligible Receivables included in the Asset Interest (other than
Defaulted Receivables); or
(v) the sum of the Discounted Contract Balances of the Pool
Receivables related to Obligors classified, consistent with prior
practice, as retail customers by the Servicer in its records does not
exceed 30% of the aggregate Discounted Contract Balances of the
Eligible Receivables included in the Asset Interest (other than
Defaulted Receivables); or
(vi) the present value of the sum of all remaining Scheduled
Payments that are due more than 72 months but not more than 96 months
after the Investment Date or Reinvestment Date for the related
Receivables discounted monthly at the Sale Discount Rate does not
exceed 5% of the aggregate Discounted Contract Balances of the Eligible
Receivables included in the Asset Interest (other than Defaulted
Receivables).
"PORTION OF INVESTMENT" is defined in Section 2.4(a).
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<PAGE> 25
"POTENTIAL TERMINATION EVENT" means an event which but for the lapse of
time or the giving of notice, or both, would constitute a Termination Event.
"PREPAYMENTS" means any and all partial and full prepayments on a
Receivable (including, with respect to any Receivable and any Collection Period,
any Scheduled Payment or portion thereof which is due in a subsequent Collection
Period which the Servicer has received, and expressly permitted the related
Obligor to make, in advance of its scheduled due date, and which will be applied
to such Scheduled Payment when received).
"PRO RATA SHARE" means, for an Alternate Investor, the Commitment of
such Alternate Investor, DIVIDED BY the sum of the Commitments of all Alternate
Investors (or, if the Commitments shall have been terminated, its PRO RATA share
of the Alternate Investor Percentage of the Net Investment).
"PROGRAM FEE RATE" is defined in the Fee Letter.
"PROGRAM SUPPORT AGREEMENT" means and includes any agreement entered
into by any Program Support Provider providing for the issuance of one or more
letters of credit for the account of the Conduit Investor, the issuance of one
or more surety bonds for which the Conduit Investor is obligated to reimburse
the applicable Program Support Provider for any drawings thereunder, the sale by
the Conduit Investor to any Program Support Provider of the Asset Interest (or
portions thereof or participations therein) and/or the making of loans and/or
other extensions of credit to the Conduit Investor in connection with the
Conduit Investor's commercial paper program, together with any letter of credit,
surety bond or other instrument issued thereunder.
"PROGRAM SUPPORT PROVIDER" means and includes any Person now or
hereafter extending credit or having a commitment to extend credit to or for the
account of, or to make purchases from, the Conduit Investor or issuing a letter
of credit, surety bond or other instrument to support any obligations arising
under or in connection with the Conduit Investor's commercial paper program.
"PURCHASE PRICE PERCENTAGE" means (A) 100% MINUS (B) the Required
Credit Enhancement Percentage.
"PURCHASE TERMINATION DATE" is defined in Section 7.1 of the First Tier
Agreement.
"RATE HEDGING AGREEMENT" means an agreement, device or arrangement
providing for payments which are related to fluctuations of interest rates,
exchange rates or forward rates, including, but not limited to,
dollar-denominated or cross-currency interest rate exchange agreements, forward
currency exchange agreements, interest rate cap or collar protection agreements,
forward rate currency or interest rate options, puts and warrants.
"RATE PERIOD" is defined in Section 2.4.
"RATE TYPE" is defined in Section 2.4.
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<PAGE> 26
"RECEIVABLE" means any and all indebtedness and other obligations owed,
including Scheduled Payments, by any Obligor to the Originator (without giving
effect to any transfer under the First Tier Agreement) under a Contract or any
right of the SPV to payment from or on behalf of an Obligor, whether
constituting an account, chattel paper, instrument or general intangible,
arising in connection with the sale or lease of goods or the rendering of
services by the Originator, and includes the obligation to pay any finance
charges, fees and other charges with respect thereto.
"RECIPIENT" is defined in Section 2.10.
"RECORDS" means all Contracts and other documents, purchase orders,
invoices, agreements, books, records and any other media, materials or devices
for the storage of information (including tapes, disks, punch cards, computer
programs and databases and related property) maintained by the SPV, the
Originator or the Servicer with respect to the Pool Receivables, any other
Affected Assets or the Obligors.
"RECOVERIES" means, with respect to a Defaulted Receivable, proceeds
from the sale, lease, re-lease or refinancing of the related Equipment, proceeds
of any related Insurance Policy and any other recoveries with respect to such
Defaulted Receivable and the related Equipment and related property, and other
amounts representing late fees and penalties, net of Liquidation Expenses and
amounts, if any, so received that are required to be refunded to the Obligor on
such Defaulted Receivable.
"REINVESTMENT" is defined in Section 2.2(b).
"REINVESTMENT DATE" is defined in Section 2.2(b).
"REINVESTMENT PERIOD" means the period commencing on the Closing Date
and ending on the Termination Date.
"RELATED COMMERCIAL PAPER" means, at any time of determination,
Commercial Paper the proceeds of which are then allocated by the Administrator
as the source of funding the acquisition or maintenance of, the Asset Interest.
"RELATED SECURITY" means, with respect to any Pool Receivable, all of
the Originator's (without giving effect to any transfer under the First Tier
Agreement) or the SPV's rights, title and interest in, to and under:
(a) the Equipment, any other property securing the Obligor's
obligations under any Pool Receivable and any guarantees or similar
credit enhancement for the Obligor's obligations under any Pool
Receivable (including all rights of the Originator in any security
deposits), and all UCC financing statements or other filings relating
thereto, including all rights and remedies against any Vendor
(including the Originator) of the Equipment related to the Pool
Receivables (including any security interest of the Originator in any
of the foregoing);
(b) all other security interests or liens and property subject
thereto from time to time, if any, purporting to secure payment of such
Pool Receivable, whether pursuant
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<PAGE> 27
to the Contract related to such Pool Receivable or otherwise, together
with all financing statements and other filings signed by an Obligor
relating thereto;
(c) the Contract and all guarantees, indemnities, warranties,
insurance (and proceeds and premium refunds thereof) or other
agreements or arrangements of any kind from time to time supporting or
securing payment of such Pool Receivable, whether pursuant to the
Contract related to such Pool Receivable or otherwise;
(d) all Records related to such Pool Receivable; and
(e) all Collections on and other proceeds of any of the
foregoing.
"REPORTABLE EVENT" means any event, transaction or circumstance which
is required to be reported with respect to any Pension Plan under Section 4043
of ERISA and the applicable regulations thereunder.
"REPORTING DATE" is defined in Section 2.8.
"REPRESENTATIVES" is defined in Section 11.9.
"REQUIRED CREDIT ENHANCEMENT PERCENTAGE" means the greater of:
(i) 10%;
(ii) the product of (x) 3 TIMES (y) the Annual Default Ratio
for the most recent Collection Period TIMES (z) the weighted average
life of the Pool Receivables.
"REQUIRED DOWNGRADE ASSIGNMENT PERIOD" is defined in Section 3.2(a).
"REQUIRED RESERVES" means, at any date of determination, an amount
equal to the sum of (i) the greater of (x) the product of (A) the Required
Credit Enhancement Percentage TIMES (B) the ADCB and (y) $4,000,000, and (ii)
the Collateral Valuation Reserve, if any, required to be maintained pursuant to
SECTION 6.3.
"RESIDUAL" means, with respect to any Pool Receivable, the proceeds of
any sale, lease or disposition of the Equipment related thereto following the
expiration of the full term of the related Contract.
"RESTRICTED PAYMENTS" is defined in Section 6.2(k).
"SALE DISCOUNT RATE" means, a rate per annum calculated by the Servicer
(i) in the case of Existing Receivables, as of March 29, 2001, and (ii) in the
case of any Pool Receivable included in the Asset Interest other than the
Existing Receivables, as of the last Business Day of the Collection Period in
which such inclusion occurred, in each case, equal to the sum of (i) the Hedge
Rate for that Pool Receivable, (ii) the Liquidity Margin, and (iii) the
Servicing Fee Rate.
"SCHEDULED PAYMENTS" means, on any Determination Date with respect to
any Pool Receivable, (a) each monthly, quarterly, annual or other periodic rent
or financing (whether
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<PAGE> 28
principal or principal and interest) payment, scheduled to be made by the
Obligor thereof after such Determination Date under the terms of such Contract,
and (b) any payment specified in CLAUSE (a) above due from the Obligor of such
Pool Receivable at the expiration or other termination of such Pool Receivable;
it being understood that Scheduled Payments do not include any Residuals other
than Guaranteed Residuals and any supplemental or additional payments, including
late fees, required by the terms of such Pool Receivable with respect to sales
and other taxes, insurance, maintenance, purchase option payments, ancillary
products and services and other specific charges.
"SERVICER" is defined in Section 7.1.
"SERVICER DEFAULT" is defined in Section 7.5.
"SERVICER REPORT" means a report, in substantially the form attached
hereto as EXHIBIT F or in such other form as is mutually agreed to by the SPV,
the Servicer and the Agent, furnished by the Servicer pursuant to SECTION 2.8.
"SERVICING FEE" means the fees payable to the Servicer from
Collections, in an amount equal to either (i) at any time when the Servicer is
the Originator or any of its Affiliates, the Servicing Fee Rate MULTIPLIED BY
the weighted daily average of the ADCB for the related Collection Period, or
(ii) at any time when the Servicer is not the Originator or any of its
Affiliates, the amount determined upon the agreement of such Person and the
Agent, payable in arrears on each Settlement Date from Collections pursuant to,
and subject to the priority of payments set forth in, SECTION 2.12. With respect
to any Portion of Investment, the Servicing Fee allocable thereto shall be equal
to the Servicing Fee determined as set forth above, TIMES a fraction, the
numerator of which is the amount of such Portion of Investment and the
denominator of which is the Net Investment.
"SERVICING FEE RATE" means 0.80% per annum.
"SETTLEMENT DATE" means (a) prior to the Termination Date, the 12th day
of each calendar month (or, if such day is not a Business Day, the immediately
succeeding Business Day) or such other day as the SPV and the Agent may from
time to time mutually agree, and (b) for any Portion of Investment on and after
the Termination Date, each day selected from time to time by the Agent (it being
understood that the Agent may select such Settlement Date to occur as frequently
as daily) or, in the absence of any such selection, the date that would be the
Settlement Date for such Portion of Investment pursuant to CLAUSE (a) of this
definition.
"S&P" means Standard & Poor's Credit Markets Services, a division of
The McGraw-Hill Companies, Inc., or any successor that is a nationally
recognized statistical rating organization.
"SPV" means DCC Funding LLC, a Delaware limited liability company.
"SUBSIDIARY" means, with respect to any Person, any corporation or
other Person (a) of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or other
Persons performing similar functions are at the time directly or indirectly
owned by such Person or (b) that is directly or indirectly controlled by such
Person within the meaning of control under Section 15 of the Securities Act of
1933.
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<PAGE> 29
"TAXES" shall have the meaning specified in SECTION 9.3.
"TERMINATION DATE" means the earliest of (a) the Business Day
designated by the SPV to the Agent as the Termination Date at any time following
not less than sixty (60) days' written notice to the Agent, (b) unless the
Administrator elects otherwise, the date of termination of the commitment of any
Program Support Provider under a Program Support Agreement, (c) the day upon
which the Termination Date is declared or automatically occurs pursuant to
SECTION 8.2, (d) the day which is five (5) Business Days prior to the Commitment
Termination Date, (e) the Conduit Investment Termination Date (unless the
Conduit Investor's interest in the Net Investment and the Asset Interest has
been assigned to the Alternate Investors) and (f) the Purchase Termination Date.
"TERMINATION EVENT" is defined in Section 8.1.
"TRANSACTION" means the transaction contemplated by the Transaction
Documents.
"TRANSACTION COSTS" is defined in Section 9.4(a).
"TRANSACTION DOCUMENTS" means, collectively, this Agreement, the First
Tier Agreement, the Fee Letter, the Blocked Account Agreements, the Blocked
Account Intercreditor Agreement, Hedging Agreements and all of the other
instruments, documents and other agreements executed and delivered by the
Servicer, the Originator or the SPV in connection with any of the foregoing.
"UCC" means the Uniform Commercial Code as in effect in the applicable
jurisdiction or jurisdictions.
"UNHEDGED DISCOUNTED CONTRACT BALANCES" means, as of any date of
determination, (i) the sum of the Discounted Contract Balances of the unhedged
Pool Receivables that are Eligible Receivables (other than such unhedged Pool
Receivables that constitute Defaulted Receivables), MINUS (ii) the portion of
the Discounted Contract Balances of any such unhedged Pool Receivables, which
when aggregated with the Discounted Contract Balances of the other Pool
Receivables, exceeds any applicable Portfolio Concentration Criteria.
"UNHEDGED INTERPOLATED CONTRACT BALANCES" means (i) the sum of the
Interpolated Discounted Contract Balances of the unhedged Pool Receivables that
are Eligible Receivables (other than such unhedged Pool Receivables that
constitute Defaulted Receivables), MINUS (ii) the recalculation, using the
Interpolated Discount Rate, of the present value of that portion of the
Discounted Contract Balances of any such unhedged Pool Receivables, which when
aggregated with the Discounted Contract Balances of the other Pool Receivables,
exceeds any applicable Portfolio Concentration Criteria.
"UNPAID BALANCE" of any Receivable means, at any time, the sum of the
unpaid Scheduled Payments thereof.
"U.S." or "UNITED STATES" means the United States of America.
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<PAGE> 30
"VENDOR" means, with respect to any Receivable, the equipment
manufacturer, dealer of distributor or other Person that provided financing
under such Receivable in connection with the related Obligor's use of such
party's Equipment.
"VOTING STOCK" of a Person means all classes of Capital Stock of such
Person then outstanding and normally entitled (without regard to the occurrence
of any contingency) to vote in the election of directors, managers, trustees or
similar persons thereof.
"WHOLLY OWNED SUBSIDIARY" of a Person means any other Person of which
100% of the outstanding Voting Stock of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more Wholly Owned
Subsidiaries of such Person, or by such Person and one or more Wholly Owned
Subsidiaries of such Person.
"YIELD" is defined in SECTION 2.4.
SECTION 1.2 OTHER TERMS. All terms defined directly or by incorporation
herein shall have the defined meanings when used in any certificate or other
document delivered pursuant thereto unless otherwise defined therein. For
purposes of this Agreement and all such certificates and other documents, unless
the context otherwise requires: (a) accounting terms not otherwise defined
herein, and accounting terms partly defined herein to the extent not defined,
shall have the respective meanings given to them under, and shall be construed
in accordance with, GAAP; (b) terms used in Article 9 of the UCC in the State of
New York, and not specifically defined herein, are used herein as defined in
such Article 9; (c) references to any amount as on deposit or outstanding on any
particular date means such amount at the close of business on such day; (d) the
words "hereof," "herein" and "hereunder" and words of similar import refer to
this Agreement (or the certificate or other document in which they are used) as
a whole and not to any particular provision of this Agreement (or such
certificate or document); (e) references to any Section, Schedule or Exhibit are
references to Sections, Schedules and Exhibits in or to this Agreement (or the
certificate or other document in which the reference is made) and references to
any paragraph, subsection, clause or other subdivision within any Section or
definition refer to such paragraph, subsection, clause or other subdivision of
such Section or definition; (f) the term "including" means "including without
limitation"; (g) references to any Law refer to that Law as amended from time to
time and include any successor Law; (h) references to any agreement refer to
that agreement as from time to time amended or supplemented or as the terms of
such agreement are waived or modified in accordance with its terms; (i)
references to any Person include that Person's successors and permitted assigns;
and (j) headings are for purposes of reference only and shall not otherwise
affect the meaning or interpretation of any provision hereof.
SECTION 1.3 COMPUTATION OF TIME PERIODS. Unless otherwise stated in
this Agreement, in the computation of a period of time from a specified date to
a later specified date, the word "from" means "from and including", the words
"to" and "until" each means "to but excluding", and the word "within" means
"from and excluding a specified date and to and including a later specified
date".
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ARTICLE II
PURCHASES AND SETTLEMENTS
Section 2.1 TRANSFER OF AFFECTED ASSETS; INTENDED CHARACTERIZATION.
SALE OF ASSET INTEREST. In consideration of the payment by the Agent (on behalf
of either the Conduit Investor or the Alternate Investors as determined pursuant
to Section 2.3) of the amount of the initial Net Investment on the Closing Date
and the Agent's agreement (on behalf of either the Conduit Investor or the
Alternate Investors as determined below) to make payments to the SPV from time
to time in accordance with Section 2.2, effective upon the SPV's receipt of
payment for such initial Net Investment on the Closing Date, the SPV hereby
sells, conveys, transfers and assigns to the Agent, on behalf of the Conduit
Investor or the Alternate Investors, as applicable, (i) all Existing Receivables
and all Receivables arising or acquired by the SPV from time to time after the
Closing Date and prior to the Final Payout Date but excluding Excluded
Receivables, and (ii) all other Affected Assets, whether existing on the Closing
Date or thereafter arising at any time.
(a) PURCHASE OF ASSET INTEREST. Subject to the terms and conditions
hereof, the Agent (on behalf of the Conduit Investor and/or the Alternate
Investors as applicable) hereby purchases and accepts from the SPV the Pool
Receivables and all other Affected Assets sold, assigned and transferred
pursuant to SUBSECTION (a). The Agent's right, title and interest in and to the
Pool Receivables and all other Affected Assets hereunder is herein called the
"ASSET INTEREST". The Agent shall hold the Asset Interest on behalf of the
Conduit Investor and the Alternate Investors in accordance with the Conduit
Investor Percentage and the Alternate Investor Percentage, respectively, from
time to time. To the extent the Agent holds the Asset Interest on behalf of the
Alternate Investors, except as otherwise provided in SECTION 3.3(b), the Agent
shall hold the Alternate Investor Percentage of the Asset Interest on behalf of
the Alternate Investors PRO RATA in accordance with their respective outstanding
portions of the Net Investment funded by them.
(b) OBLIGATIONS NOT ASSUMED. The foregoing sale, assignment and
transfer does not constitute and is not intended to result in the creation, or
an assumption by the Agent, the Administrator or any Investor, of any obligation
of the SPV, the Originator, or any other Person under or in connection with the
Pool Receivables or any other Affected Asset, all of which shall remain the
obligations and liabilities of the SPV and the Originator.
(c) Intended Characterization; Grant of Security Interest.
(i) The SPV, the Agent and the Investors intend that the sale,
assignment and transfer of the Affected Assets to the Agent (on behalf
of the Conduit Investor and/or the Alternate Investors as applicable)
hereunder shall be treated as a sale for all purposes, other than
federal and state income tax purposes. If notwithstanding the intent of
the parties, the sale, assignment and transfer of the Affected Assets
to the Agent is not treated as a sale for all purposes, other than
federal and state income tax purposes, the sale, assignment and
transfer of the Affected Assets shall be treated as the grant of, and
the SPV hereby does grant, a security interest in the Affected Assets
to secure the payment and performance of the SPV's obligations to the
Agent (on behalf of the Conduit Investor
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<PAGE> 32
and/or the Alternate Investors as applicable) hereunder and under the
other Transaction Documents or as may be determined in connection
therewith by applicable Law.
(ii) Each of the parties hereto further expressly acknowledges
and agrees that the Commitments of the Alternate Investors hereunder,
regardless of the intended true sale nature of the overall transaction,
are financial accommodations (within the meaning of Section 365(c)(2)
of the Bankruptcy Code) to or for the benefit of SPV.
(iii) Without limiting the generality of SECTION 2.1(d)(i), no
party other than the SPV shall claim depreciation deductions or other
Tax benefits with respect to the Equipment related to the Pool
Receivables.
SECTION 2.2 PURCHASE PRICE. Subject to the terms and conditions hereof,
including ARTICLE V, in consideration for the sale, assignment and transfer of
the Affected Assets by the SPV to the Agent (on behalf of the Conduit Investor
and/or the Alternate Investors as applicable) hereunder:
(a) INVESTMENTS. On the Closing Date, and thereafter from time to time
during the Reinvestment Period, on request of the SPV in accordance with SECTION
2.3, the Agent (on behalf of the Conduit Investor or the Alternate Investors as
determined pursuant to SECTION 2.3) shall pay to the SPV an amount equal in each
instance to the lesser of (i) the amount requested by the SPV under SECTION
2.3(a), and (ii) the largest amount that will not cause (A) the Net Investment
to exceed the Maximum Net Investment and (B) the sum of the Net Investment and
Required Reserves to exceed the ADCB. Each such payment is herein called an
"INVESTMENT".
(b) REINVESTMENTS. On each Business Day during the Reinvestment Period
the Servicer, on behalf of the Agent (for the benefit of the Conduit Investor
and/or the Alternate Investors as applicable), shall pay to the SPV, out of
Collections of Pool Receivables, the amount available for Reinvestment in
accordance with Section 2.12(a)(iii). Each such payment is hereinafter called a
"REINVESTMENT" and the date of each such Reinvestment is hereinafter called a
"REINVESTMENT DATE". All Reinvestments with respect to the Alternate Investor
Percentage of the Asset Interest shall be made ratably on behalf of the
Alternate Investors PRO RATA in accordance with their respective outstanding
portions of the Alternate Investor Percentage of the Net Investment funded by
them and all Reinvestments with respect to the Conduit Investor Percentage of
the Asset Interest shall be made on behalf of the Conduit Investor.
(c) DEFERRED PURCHASE PRICE. On each Business Day on and after the
Final Payout Date the Servicer, on behalf of the Agent, shall pay to the SPV an
amount equal to the Collections of Pool Receivables received by the SPV less the
accrued and unpaid Servicing Fee (and the SPV (or the Servicer on its behalf)
shall apply such Collections in the manner described in SECTION 2.14).
(d) SPV PAYMENTS LIMITED TO COLLECTIONS. Notwithstanding any provision
contained in this Agreement to the contrary, the Agent shall not, and shall not
be obligated (whether on behalf of the Conduit Investor or the Alternate
Investors), to pay any amount to the SPV as the purchase price of the Asset
Interest pursuant to SUBSECTIONS (b) and (c) above except to the extent of
Collections on Pool Receivables available for distribution to the SPV in
accordance with this
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<PAGE> 33
Agreement. Any amount which the Agent (whether on behalf of the Conduit Investor
or the Alternate Investors) does not pay pursuant to the preceding sentence
shall not constitute a claim (as defined in ss. 101 of the Bankruptcy Code)
against or corporate obligation of the Agent for any such insufficiency unless
and until such amount becomes available for distribution to the SPV under
SECTION 2.12.
SECTION 2.3 INVESTMENT PROCEDURES.
(a) NOTICE. The SPV shall request an Investment hereunder, by request
to the Agent given by facsimile in the form of an Investment Request at least
two (2) Business Days prior to the proposed date of any Investment (including
the initial Investment). Each such Investment Request shall specify (i) the
desired amount of such Investment (which shall be at least $1,000,000 or an
integral multiple of $500,000 in excess thereof or, to the extent that the then
available unused portion of the Maximum Net Investment is less than such amount,
such lesser amount equal to such available unused portion of the Maximum Net
Investment), and (ii) the desired date of such Investment (the "INVESTMENT
DATE") which shall be a Permitted Investment Date.
(b) CONDUIT INVESTOR ACCEPTANCE OR REJECTION; INVESTMENT REQUEST
IRREVOCABLE.
(i) The Agent will promptly notify the Conduit Investor of the
Agent's receipt of any Investment Request. If the Investment Request is
received prior to the Conduit Investment Termination Date, the Conduit
Investor shall instruct the Agent to accept or reject such Investment
Request by notice given to the SPV and the Agent by telephone or
facsimile by no later than the close of its business on the Business
Day following its receipt of any such Investment Request.
(ii) Each Investment Request shall be irrevocable and binding
on the SPV, and the SPV shall indemnify each Investor against any loss
or expense incurred by such Investor, either directly or indirectly
(including, in the case of the Conduit Investor, through a Program
Support Agreement) as a result of any failure by the SPV to complete
such Investment, including any loss (excluding loss of profit) or
expense incurred by the Agent or any Investor, either directly or
indirectly (including, in the case of the Conduit Investor, pursuant to
a Program Support Agreement) by reason of the liquidation or
reemployment of funds acquired by such Investor (or the applicable
Program Support Provider(s)) (including funds obtained by issuing
commercial paper or promissory notes or obtaining deposits or loans
from third parties) in order to fund such Investment.
(c) ALTERNATE INVESTOR'S COMMITMENT. Subject to SECTION 2.2(b)
concerning Reinvestments, at no time will the Conduit Investor have any
obligation to fund an Investment or Reinvestment. At all times on and after the
Conduit Investment Termination Date, all Investments and Reinvestments shall be
made by the Agent on behalf of the Alternate Investors. At any time when the
Conduit Investor has rejected a request for Investment, the Agent shall so
notify the Alternate Investors and the Alternate Investors shall make such
Investment, on a PRO RATA basis, in accordance with their respective Pro Rata
Shares. Notwithstanding anything contained in this SECTION 2.3(c) or elsewhere
in this Agreement to the contrary, no Alternate Investor shall be obligated to
provide the Agent or the SPV with funds in connection with an
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Investment in an amount that would result in the portion of the Net Investment
then funded by it exceeding its Commitment then in effect (minus the unrecovered
principal amount of such Alternate Investor's investments in the Asset Interest
pursuant to the Program Support Agreement to which it is a party). The
obligation of each Alternate Investor to remit its Pro Rata Share of any such
Investment shall be several from that of each other Alternate Investor, and the
failure of any Alternate Investor to so make such amount available to the Agent
shall not relieve any other Alternate Investor of its obligation hereunder.
(d) PAYMENT OF INVESTMENT. On any Investment Date, the Conduit Investor
or each Alternate Investor, as the case may be, shall remit its share of the
aggregate amount of such Investment (determined pursuant to SECTION 2.2(a)) to
the account of the Agent specified therefor from time to time by the Agent by
notice to such Persons by wire transfer of same day funds. Following the Agent's
receipt of funds from the Investors as aforesaid, the Agent shall remit such
funds received to the SPV's account at the location indicated in SECTION 11.3,
by wire transfer of same day funds
(e) AGENT MAY ADVANCE FUNDS. Unless the Agent shall have received
notice from any Investor that such Person will not make its share of any
Investment available on the applicable Investment Date therefor, the Agent may
(but shall have no obligation to) make any such Investor's share of any such
Investment available to the SPV in anticipation of the receipt by the Agent of
such amount from the applicable Investor. To the extent any such Investor fails
to remit any such amount to the Agent after any such advance by the Agent on
such Investment Date, such Investor, on the one hand, and the SPV, on the other
hand, shall be required to pay such amount to the Agent for its own account,
together with interest thereon at a PER ANNUM rate equal to the Federal Funds
Rate, in the case of such Investor, or the Base Rate, in the case of the SPV, to
the Agent upon its demand therefor (PROVIDED that the Conduit Investor shall
have no obligation to pay such interest amounts except to the extent that it
shall have sufficient funds to pay the face amount of its Commercial Paper in
full). Until such amount shall be repaid, such amount shall be deemed to be Net
Investment paid by the Agent and the Agent shall be deemed to be the owner of an
interest in the Asset Interest hereunder to the extent of such Investment. Upon
the payment of such amount to the Agent (i) by the SPV, the amount of the
aggregate Net Investment shall be reduced by such amount or (ii) by such
Investor, such payment shall constitute such Person's payment of its share of
the applicable Investment.
(f) DEFAULTING ALTERNATE INVESTOR. If, by 2:00 p.m. (New York City
time), whether or not the Agent has advanced the amount of the applicable
Investment, one or more Alternate Investors (each, a "DEFAULTING ALTERNATE
INVESTOR", and each Alternate Investor other than any Defaulting Alternate
Investor being referred to as a "NON-DEFAULTING ALTERNATE INVESTOR") fails to
make its Pro Rata Share of any Investment available to the Agent pursuant to
SECTION 2.3(d) or any Assignment Amount payable by it pursuant to SECTION 3.1
(the aggregate amount not so made available to the Agent being herein called in
either case the "INVESTMENT DEFICIT"), then the Agent shall, by no later than
2:30 p.m. (New York City time) on the applicable Investment Date or the
applicable Assignment Date, as the case may be, instruct each Non-Defaulting
Alternate Investor to pay, by no later than 3:00 p.m. (New York City time), in
immediately available funds, to the account designated by the Agent, an amount
equal to the lesser of (i) such Non-Defaulting Alternate Investor's
proportionate share (based upon the relative Commitments of the Non-Defaulting
Alternate Investors) of the Investment Deficit and (ii) its unused
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Commitment. A Defaulting Alternate Investor shall forthwith, upon demand, pay to
the Agent for the ratable benefit of the Non-Defaulting Alternate Investors all
amounts paid by each Non-Defaulting Alternate Investor on behalf of such
Defaulting Alternate Investor, together with interest thereon, for each day from
the date a payment was made by a Non-Defaulting Alternate Investor until the
date such Non-Defaulting Alternate Investor has been paid such amounts in full,
at a rate PER ANNUM equal to the sum of the Base Rate, PLUS 2.00% PER ANNUM. In
addition, if, after giving effect to the provisions of the immediately preceding
sentence, any Investment Deficit with respect to any Assignment Amount continues
to exist, each such Defaulting Alternate Investor shall pay interest to the
Agent, for the account of the Conduit Investor, on such Defaulting Alternate
Investor's portion of such remaining Investment Deficit, at a rate PER ANNUM,
equal to the sum of the Base Rate, PLUS 2.00% PER ANNUM, for each day from the
applicable Assignment Date until the date such Defaulting Alternate Investor
shall pay its portion of such remaining Investment Deficit in full to the
Conduit Investor.
SECTION 2.4 [IS RESERVED AND IS SPECIFIED IN SCHEDULE I.]
SECTION 2.5 YIELD, FEES AND OTHER COSTS AND EXPENSES. Notwithstanding
any limitation on recourse herein, the SPV, the Originator or the Guarantor, as
applicable, shall pay, as and when due in accordance with this Agreement, all
fees hereunder and under the Fee Letter, Yield, all amounts payable pursuant to
ARTICLE IX, if any, and the Servicing Fees, all solely to the extent that the
SPV, the Originator or the Guarantor is otherwise obligated to make any such
payment hereunder or under the Fee Letter. On each Settlement Date, to the
extent not paid pursuant to SECTION 2.12 for any reason, the SPV shall pay to
the Agent, on behalf of the Conduit Investor or the Alternate Investors, as
applicable, an amount equal to the accrued and unpaid Yield for the related Rate
Period together with, to the extent the Asset Interest is held on behalf of the
Conduit Investor, an amount equal to the interest or discount accrued on the
Conduit Investor's Commercial Paper to the extent such Commercial Paper was
issued in order to fund the Asset Interest in an amount in excess of the amount
of any Investment.
SECTION 2.6 DEEMED COLLECTIONS. DILUTIONS. If on any day the Unpaid
Balance of a Pool Receivable is reduced or such Pool Receivable is canceled as a
result of any Dilution, the SPV shall be deemed to have received on such day a
Collection of such Pool Receivable in the amount of the Unpaid Balance (as
determined immediately prior to such Dilution) of such Pool Receivable (if such
Pool Receivable is canceled) or, otherwise in the amount of such reduction, and
the SPV shall pay to the Servicer an amount equal to such Deemed Collection and
such amount shall be applied by the Servicer as a Collection in accordance with
SECTION 2.12.
(a) BREACH OF REPRESENTATION OR WARRANTY. If on any day any of the
representations or warranties in ARTICLE IV was untrue when made or deemed made
with respect to a Pool Receivable (whether on or after the date of transfer
thereof to the Agent, for the benefit of the Investors, as contemplated
hereunder), the SPV shall be deemed to have received on such day a Collection of
such Pool Receivable in full and the SPV shall on such day pay to the Servicer
an amount equal to the Unpaid Balance of such Pool Receivable and such amount
shall be allocated and applied by the Servicer as a Collection in accordance
with SECTION 2.12.
SECTION 2.7 PAYMENTS AND COMPUTATIONS, ETC. All amounts to be paid or
deposited by the SPV or the Servicer hereunder shall be paid or deposited in
accordance with the terms
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hereof no later than 12:00 noon (New York City time) on the day when due in
immediately available funds; if such amounts are payable to the Agent (whether
on behalf of any Investor or otherwise) they shall be paid or deposited in the
account indicated under the heading "Payment Information" in SCHEDULE 11.3,
until otherwise notified by the Agent. The SPV shall, to the extent permitted by
Law, pay to the Agent, for the benefit of the Investors, upon demand, interest
on all amounts not paid or deposited when due hereunder at a rate equal to 2.00%
PER ANNUM, PLUS the Base Rate. All computations of Yield and all PER ANNUM fees
hereunder shall be made on the basis of a year of 360 days (or 365 days with
respect to Yield computed at the Base Rate) for the actual number of days
(including the first but excluding the last day) elapsed. Any computations by
the Agent of amounts payable by the SPV hereunder shall be binding upon the SPV
absent manifest error.
SECTION 2.8 REPORTS. By no later than 4:00 p.m. (New York City time) on
the 8th day of each calendar month, or if such day is not a Business Day then on
the next succeeding Business Day (and, after the occurrence of a Termination
Event, within two (2) Business Days after a request from the Agent or the
Administrator) (each, a "REPORTING DATE"), Servicer shall prepare and forward to
the Agent and the Administrator a Servicer Report, certified by the SPV and the
Servicer.
SECTION 2.9 COLLECTION ACCOUNT. The Agent shall establish in its name
on the day of the initial Investment hereunder and shall maintain a segregated
account (the "COLLECTION ACCOUNT"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the Agent, on
behalf of the Investors. The Agent shall have exclusive dominion and control
over the Collection Account and all monies, instruments and other property from
time to time in the Collection Account. On and after the occurrence of a
Termination Event or a Potential Termination Event, the Servicer shall remit
within two (2) Business Days of receipt to the Collection Account all
Collections received. Funds on deposit in the Collection Account (other than
investment earnings) shall be invested by the Agent, in the name of the Agent,
in Eligible Investments that will mature so that such funds will be available so
as to permit amounts in the Collection Account to be paid and applied on the
next Settlement Date and otherwise in accordance with the provisions of SECTION
2.12; PROVIDED that such funds shall not reduce the Net Investment or accrued
Yield hereunder until so applied under SECTION 2.12. On each Settlement Date,
all interest and earnings (net of losses and investment expenses) on funds on
deposit in the Collection Account shall be applied as Collections set aside for
the Agent in accordance with SECTION 2.12. On the Final Payout Date, any funds
remaining on deposit in the Collection Account shall be paid to the SPV.
SECTION 2.10 SHARING OF PAYMENTS, ETC. If any Investor (for purposes of
this Section only, being a "RECIPIENT") shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of setoff, or
otherwise) on account of the portion of the Asset Interest owned by it (other
than pursuant to the Fee Letter, SECTION 3.3(b) or ARTICLE IX and other than as
a result of the differences in the timing of the applications of Collections
pursuant to SECTION 2.12 and other than a result of the different methods for
calculating Yield) in excess of its ratable share of payments on account of the
Asset Interest obtained by the Investors entitled thereto, such Recipient shall
forthwith purchase from the Investors entitled to a share of such amount
participations in the portions of the Asset Interest owned by such Persons as
shall be necessary to cause such Recipient to share the excess payment ratably
with each such other Person entitled
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thereto; PROVIDED, HOWEVER, that if all or any portion of such excess payment is
thereafter recovered from such Recipient, such purchase from each such other
Person shall be rescinded and each such other Person shall repay to the
Recipient the purchase price paid by such Recipient for such participation to
the extent of such recovery, together with an amount equal to such other
Person's ratable share (according to the proportion of (a) the amount of such
other Person's required payment to (b) the total amount so recovered from the
Recipient) of any interest or other amount paid or payable by the Recipient in
respect of the total amount so recovered.
Section 2.11 RIGHT OF SETOFF. Without in any way limiting the provisions of
SECTION 2.10, each of the Agent and each Investor is hereby authorized (in
addition to any other rights it may have) at any time after the occurrence of
the Termination Date due to the occurrence of a Termination Event to set-off,
appropriate and apply (without presentment, demand, protest or other notice
which are hereby expressly waived) any deposits and any other indebtedness held
or owing by the Agent or such Investor to, or for the account of, the SPV
against the amount of the Aggregate Unpaids owing by the SPV to such Person or
to the Agent on behalf of such Person (even if contingent or unmatured).
[THE REMAINDER OF ARTICLE II IS RESERVED AND IS
SPECIFIED IN SCHEDULE II (SETTLEMENT PROCEDURES).]
ARTICLE III
ADDITIONAL ALTERNATE INVESTOR PROVISIONS
SECTION 3.1 ASSIGNMENT TO ALTERNATE INVESTORS.
(a) ASSIGNMENT AMOUNTS. At any time on or prior to the Commitment
Termination Date, if the Administrator on behalf of the Conduit Investor so
elects, by written notice to the Agent, the SPV hereby irrevocably requests and
directs that the Conduit Investor assign, and the Conduit Investor does hereby
assign effective on the Assignment Date referred to below all or such portions
as may be elected by the Conduit Investor of, its interest in the Net Investment
and the Asset Interest at such time to the Alternate Investors pursuant to this
SECTION 3.1 and the SPV hereby agrees to pay the amounts described in SECTION
3.1(b); PROVIDED, HOWEVER, that unless such assignment is an assignment of all
of the Conduit Investor's interest in the Net Investment and the Asset Interest
in whole on or after the Conduit Investment Termination Date, no such assignment
shall take place pursuant to this SECTION 3.1 if a Termination Event described
in SECTION 8.1(g) shall then exist; and PROVIDED, FURTHER, that no such
assignment shall take place pursuant to this SECTION 3.1 at a time when an Event
of Bankruptcy with respect to the Conduit Investor exists. No further
documentation or action on the part of the Conduit Investor or the SPV shall be
required to exercise the rights set forth in the immediately preceding sentence,
other than the giving of the notice by the Administrator on behalf of the
Conduit Investor referred to in such sentence and the delivery by the Agent of a
copy of such notice to each Alternate Investor (the date of the receipt by the
Agent of any such notice being the "ASSIGNMENT DATE"). Each Alternate Investor
hereby agrees, unconditionally and irrevocably and under all circumstances,
without setoff, counterclaim or defense of any kind, to pay the full amount of
its Assignment Amount on such Assignment Date to the Conduit Investor in
immediately available funds to an account designated by the Agent. Upon payment
of its Assignment Amount, each
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Alternate Investor shall acquire an interest in the Asset Interest and the Net
Investment equal to its PRO RATA share (based on the outstanding portions of the
Net Investment funded by it) of the Alternate Investor Percentage thereof. Upon
any assignment in whole by the Conduit Investor to the Alternate Investors on or
after the Conduit Investment Termination Date as contemplated hereunder, the
Conduit Investor shall cease to make any additional Investments or Reinvestments
hereunder. At all times prior to the Conduit Investment Termination Date,
nothing herein shall prevent the Conduit Investor from making a subsequent
Investment or Reinvestment hereunder, in its sole discretion, following any
assignment pursuant to this SECTION 3.1 or from making more than one assignment
pursuant to this SECTION 3.1.
(b) SPV'S OBLIGATION TO PAY CERTAIN AMOUNTS; ADDITIONAL ASSIGNMENT
AMOUNT. The SPV shall pay to the Agent, for the account of the Conduit Investor,
in connection with any assignment by the Conduit Investor to the Alternate
Investors pursuant to this SECTION 3.1, an aggregate amount equal to all Yield
to accrue through the end of the current Rate Period to the extent attributable
to the portion of the Net Investment so assigned to the Alternate Investors
(which Yield shall be determined for such purpose using the CP Rate most
recently determined by the Administrator) (as determined immediately prior to
giving effect to such assignment), PLUS all other Aggregate Unpaids owing to the
Conduit Investor (other than the Net Investment and other than any Yield not
described above). If the SPV fails to make payment of such amounts at or prior
to the time of assignment by the Conduit Investor to the Alternate Investors,
such amount shall be paid by the Alternate Investors (in accordance with their
respective Pro Rata Shares) to the Conduit Investor as additional consideration
for the interests assigned to the Alternate Investors and the amount of the "Net
Investment" hereunder held by the Alternate Investors shall be increased by an
amount equal to the additional amount so paid by the Alternate Investors.
(c) ADMINISTRATION OF AGREEMENT AFTER ASSIGNMENT FROM CONDUIT INVESTOR
TO ALTERNATE INVESTORS FOLLOWING THE CONDUIT INVESTMENT TERMINATION DATE. After
any assignment in whole by the Conduit Investor to the Alternate Investors
pursuant to this Section 3.1 at any time on or after the Conduit Investment
Termination Date (and the payment of all amounts owing to the Conduit Investor
in connection therewith), all rights of the Administrator set forth herein shall
be given to the Agent on behalf of the Alternate Investors instead of the
Administrator.
(d) PAYMENTS TO AGENT'S ACCOUNT. After any assignment in whole by the
Conduit Investor to the Alternate Investors pursuant to this SECTION 3.1 at any
time on or after the Conduit Investment Termination Date, all payments to be
made hereunder by the SPV or the Servicer to the Conduit Investor shall be made
to the Agent's account as such account shall have been notified to the SPV and
the Servicer.
(e) RECOVERY OF NET INVESTMENT. In the event that the aggregate of the
Assignment Amounts paid by the Alternate Investors pursuant to this SECTION 3.1
on any Assignment Date occurring on or after the Conduit Investment Termination
Date is less than the Net Investment of the Conduit Investor on such Assignment
Date, then to the extent Collections thereafter received by the Agent hereunder
in respect of the Net Investment exceed the aggregate of the unrecovered
Assignment Amounts and Net Investment funded by the Alternate Investors, such
excess shall be
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remitted by the Agent to the Conduit Investor (or to the Administrator on its
behalf) for the account of the Conduit Investor.
SECTION 3.2 DOWNGRADE OF ALTERNATE INVESTOR. DOWNGRADES GENERALLY. If
at any time on or prior to the Commitment Termination Date, the short term debt
rating of any Alternate Investor shall be "A-2" or "P-2" or "F-2" from S&P or
Moody's or Fitch, respectively, with negative credit implications, such
Alternate Investor, upon request of the Agent, shall, within thirty (30) days of
such request, assign its rights and obligations hereunder to another financial
institution (which institution's short term debt shall be rated at least "A-2"
or "P-2" or "F-2" from S&P or Moody's or Fitch, respectively, and which shall
not be so rated with negative credit implications and which is acceptable to the
Conduit Investor and the Agent). If the short term debt rating of an Alternate
Investor shall be "A-3" or "P-3" or "F-3", or lower, from S&P or Moody's or
Fitch, respectively (or such rating shall have been withdrawn by S&P or Moody's
or Fitch), such Alternate Investor, upon request of the Agent, shall, within
five (5) Business Days of such request, assign its rights and obligations
hereunder to another financial institution (which institution's short term debt
shall be rated at least "A-2" or "P-2" or "F-2", from S&P or Moody's or Fitch,
respectively, and which shall not be so rated with negative credit implications
and which is acceptable to the Conduit Investor and the Agent). In either such
case, if any such Alternate Investor shall not have assigned its rights and
obligations under this Agreement within the applicable time period described
above (in either such case, the "REQUIRED DOWNGRADE ASSIGNMENT PERIOD"), the
Administrator on behalf of the Conduit Investor shall have the right to require
such Alternate Investor to pay upon one (1) Business Day's notice at any time
after the Required Downgrade Assignment Period (and each such Alternate Investor
hereby agrees in such event to pay within such time) to the Agent an amount
equal to such Alternate Investor's unused Commitment (a "DOWNGRADE DRAW") for
deposit by the Agent into an account, in the name of the Agent (a "DOWNGRADE
COLLATERAL ACCOUNT"), which shall be in satisfaction of such Alternate
Investor's obligations to make Investments and to pay its Assignment Amount upon
an assignment from the Conduit Investor in accordance with SECTION 3.1;
PROVIDED, HOWEVER, that if, during the Required Downgrade Assignment Period,
such Alternate Investor delivers a written notice to the Agent of its intent to
deliver a direct pay