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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
December 26, 1996
Date of Report (Date of earliest event reported)
VANSTAR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-14192 94-2376431
(State or other jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
5964 W. Las Positas Blvd.
Pleasanton, California 94588
(Address of principal executive offices) (Zip Code)
(510) 734-4000
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets.
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On December 26, 1996, but effective December 20, 1996, the Registrant
consummated a revolving funding trade receivables securitization facility (the
"Securitization Facility") with Pooled Accounts Receivable Capital Corporation,
a commercial paper conduit sponsored by the Bank of Montreal (the "Pool"), which
provides the Company with up to $175 million in available credit. Immediately
after establishing the Securitization Facility, the Registrant, through a wholly
owned subsidiary, Vanstar Finance Co., sold an undivided interest in certain
covered accounts receivable (the "Covered Accounts Receivables") to the Pool,
resulting in net proceeds to the Registrant of approximately $130.5 million, of
which approximately $105.5 million was used to repay a portion of the Company's
indebtedness to IBM Credit Corporation. The remaining availability under the
Securitization Facility is intended to be used to provide working capital to the
Registrant and for potential future acquisitions of, or investments in, one or
more businesses by the Registrant. The Securitization Facility contemplates
reinvestment by the Pool from time to time in undivided interests in additional
Covered Accounts Receivable of the Registrant, to the extent of proceeds
received by the Pool with regard to previously purchased interests. The Pool
purchases the undivided interests in Covered Accounts Receivable for a purchase
price based upon, among other things, prevailing market interest rates at the
time of reinvestment.
Item 5. Other Events.
Attached as an exhibit to this Current Report on Form 8-K a press release
issued by the Registrant on or about January 10, 1997 and incorporated herein by
reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit No. Document
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10.1 Receivables Purchase Agreement, dated as of
December 20, 1996, among Vanstar Finance Co., as
Seller, the Registrant, as Servicer, Pooled
Accounts Receivable Capital Corporation, as
Purchaser and Nesbitt Burns Securities, Inc., as
Agent (filed herewith)
10.2 Purchase and Contribution Agreement, dated as of
December 20, 1996, between the Registrant and
Vanstar Finance Co. (filed herewith)
10.3 Amendment No. 6 to Second Amended and Restated
Financing Program Agreement between the Registrant
and
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IBM Credit Corporation (filed herewith)
10.4 Intercreditor Agreement, dated as of December 20,
1996 among PAR Accounts Receivable Capital
Corporation, the Registrant, Vanstar Finance Co.
and Nesbitt Burns Securities Inc. (filed herewith)
99.1 Press release issued by the
Registrant on January 10, 1997
(filed herewith)
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
VANSTAR CORPORATION
DATE: January 10, 1997 BY: /s/ H. CHRISTOPHER COVINGTON
-----------------------------
H. Christopher Covington
Senior Vice President
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EXHIBIT INDEX
Doc. No. Document Description
10.1 Receivables Purchase Agreement, dated as of December 20, 1996,
among Vanstar Finance Co., as Seller, the Registrant, as
Servicer, Pooled Accounts Receivable Capital Corporation, as
Purchaser and Nesbitt Burns Securities, Inc., as Agent (filed
herewith)
10.2 Purchase and Contribution Agreement, dated as of December 20,
1996, between the Registrant and Vanstar Finance Co. (filed
herewith)
10.3 Amendment No. 6 to Second Amended and Restated Financing Program
Agreement between the Registrant and IBM Credit Corporation
(filed herewith)
10.4 Intercreditor Agreement, dated as of December 20, 1996 among PAR
Accounts Receivable Capital Corporation, the Registrant, Vanstar
Finance Co. and Nesbitt Burns Securities Inc. (filed herewith)
99.1 Press release issued by the Registrant on
January 10, 1997 (filed herewith)
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RECEIVABLES PURCHASE AGREEMENT
among
VANSTAR FINANCE CO.,
as Seller,
VANSTAR CORPORATION,
as Servicer,
POOLED ACCOUNTS RECEIVABLE CAPITAL CORPORATION
as Purchaser,
and
NESBITT BURNS SECURITIES INC.,
as Agent.
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TABLE OF CONTENTS
PAGE
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ARTICLE I. AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. Purchase Facility . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Making Purchases. . . . . . . . . . . . . . . . . . . . . 2
Section 1.3. Participation Computation . . . . . . . . . . . . . . . . 3
Section 1.4. Settlement Procedures . . . . . . . . . . . . . . . . . . 3
Section 1.5. Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 1.6. Payments and Computations, Etc. . . . . . . . . . . . . . 8
Section 1.7. Dividing or Combining Portions of the Investment
of the Participation. . . . . . . . . . . . . . . . . . . 8
Section 1.8. Increased Costs . . . . . . . . . . . . . . . . . . . . . 8
Section 1.9. Additional Discount on Portions of Participation
Bearing a Eurodollar Rate . . . . . . . . . . . . . . . . 9
Section 1.10. Requirements of Law . . . . . . . . . . . . . . . . . . . 10
Section 1.11. Inability to Determine Eurodollar Rate. . . . . . . . . . 11
ARTICLE II. REPRESENTATIONS AND WARRANTIES; COVENANTS;
TERMINATION EVENTS
Section 2.1. Representations and Warranties; Covenants . . . . . . . . 12
Section 2.2. Termination Events. . . . . . . . . . . . . . . . . . . . 12
ARTICLE III. INDEMNIFICATION
Section 3.1. Indemnities by the Seller . . . . . . . . . . . . . . . . 12
ARTICLE IV. ADMINISTRATION AND COLLECTIONS
Section 4.1. Appointment of Servicer . . . . . . . . . . . . . . . . . 15
Section 4.2. Duties of Servicer. . . . . . . . . . . . . . . . . . . . 16
Section 4.3. Establishment and Use of Certain Accounts . . . . . . . . 17
Section 4.4. Enforcement Rights. . . . . . . . . . . . . . . . . . . . 18
Section 4.5. Responsibilities of the Seller. . . . . . . . . . . . . . 19
Section 4.6. Servicing Fee . . . . . . . . . . . . . . . . . . . . . . 20
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TABLE OF CONTENTS
(CONTINUED)
PAGE
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ARTICLE V. MISCELLANEOUS
Section 5.1. Amendments, Etc.. . . . . . . . . . . . . . . . . . . . . 20
Section 5.2. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.3. Assignability . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.4. Costs, Expenses and Taxes . . . . . . . . . . . . . . . . 21
Section 5.5. No Proceedings; Limitation on Payments. . . . . . . . . . 22
Section 5.6. Confidentiality . . . . . . . . . . . . . . . . . . . . . 23
Section 5.7. GOVERNING LAW AND JURISDICTION. . . . . . . . . . . . . . 23
Section 5.8. Execution in Counterparts . . . . . . . . . . . . . . . . 24
Section 5.9. Survival of Termination . . . . . . . . . . . . . . . . . 24
Section 5.10. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . 24
Section 5.11. Entire Agreement. . . . . . . . . . . . . . . . . . . . . 24
Section 5.12. Headings. . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.13. Purchaser's Liabilities . . . . . . . . . . . . . . . . . 25
EXHIBIT I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . I-1
EXHIBIT II CONDITIONS OF PURCHASES . . . . . . . . . . . . . . . . . . .II-1
EXHIBIT III REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . III-1
EXHIBIT IV COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . .IV-1
EXHIBIT V TERMINATION EVENTS. . . . . . . . . . . . . . . . . . . . . . V-1
EXHIBIT VI COLLECTION ACCOUNT AGREEMENT. . . . . . . . . . . . . . . . .VI-1
EXHIBIT VII LIQUIDATION ACCOUNT AGREEMENT . . . . . . . . . . . . . . . VII-1
EXHIBIT VIII PORTFOLIO CERTIFICATE . . . . . . . . . . . . . . . . . . . . .IX
SCHEDULE I CREDIT AND COLLECTION POLICY. . . . . . . . . . . . . . . . . I-1
SCHEDULE II LOCKBOX BANKS AND LOCKBOX ACCOUNTS. . . . . . . . . . . . . .II-1
SCHEDULE III TRADE NAMES . . . . . . . . . . . . . . . . . . . . . . . . III-1
ANNEX A FORM OF LOCKBOX AGREEMENT
ANNEX B FORM OF NOTICE OF PURCHASE
ANNEX C FORM OF CORPORATE OPINION
ANNEX D FORM OF BANKRUPTCY OPINION
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TABLE OF CONTENTS
(CONTINUED)
PAGE
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ANNEX E FORM OF SERVICER REPORT
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RECEIVABLES PURCHASE AGREEMENT
This RECEIVABLES PURCHASE AGREEMENT (this "AGREEMENT") is entered into as
of December 20, 1996 among VANSTAR FINANCE CO., a Delaware corporation, as
seller (the "SELLER"), VANSTAR CORPORATION, a Delaware corporation ("VANSTAR"),
as initial servicer (in such capacity, together with its successors and
permitted assigns in such capacity, the "SERVICER"), POOLED ACCOUNTS RECEIVABLE
CAPITAL CORPORATION, a Delaware corporation ("PAR") (together with its
successors and permitted assigns, the "PURCHASER"), and NESBITT BURNS SECURITIES
INC., a Delaware corporation ("NESBITT BURNS") as agent for the Purchaser (in
such capacity, together with its successors and assigns in such capacity, the
"AGENT").
PRELIMINARY STATEMENTS. Certain terms that are capitalized and used
throughout this Agreement are defined in EXHIBIT I to this Agreement.
References in the Exhibits hereto to "the Agreement" refer to this Agreement, as
amended, modified or supplemented from time to time.
The Seller desires to sell, transfer and assign an undivided variable
percentage interest in a pool of receivables, and the Purchaser desires to
acquire such undivided variable percentage interest, as such percentage interest
shall be adjusted from time to time based upon, in part, reinvestment payments
which are made by the Purchaser and additional incremental payments made to the
Seller.
In consideration of the mutual agreements, provisions and covenants
contained herein, the parties hereto agree as follows:
ARTICLE I.
AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. PURCHASE FACILITY. (a) On the terms and conditions
hereinafter set forth, the Purchaser hereby agrees to purchase and make
reinvestments of undivided percentage ownership
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interests with regard to the Participation from the Seller from time to time
during the period from the date hereof to the Facility Termination Date.
Under no circumstances shall the Purchaser make any such purchase or
reinvestment if, after giving effect to such purchase or reinvestment, the
aggregate outstanding Investment of the Participation would exceed the
Purchase Limit.
(b) The Seller may, upon at least 30 Business Days' notice to the Agent,
terminate the purchase facility provided in this SECTION 1 in whole or, from
time to time, irrevocably reduce in part the unused portion of the Purchase
Limit; PROVIDED that each partial reduction shall be in the amount of at least
$5,000,000, or an integral multiple of $500,000 in excess thereof; provided
further that after giving effect to such partial reduction, the sum of the
Investment plus the unused portion of the Purchase Limit shall not be less than
$50,000,000.
Section 1.2. MAKING PURCHASES. (a) Each purchase (but not reinvestments)
of undivided ownership interests with regard to the Participation hereunder
shall be made upon the Seller's irrevocable written notice in the form of Annex
B delivered to the Agent in accordance with SECTION 5.2 (which notice must be
received by the Agent prior to noon, Chicago time) on the second Business Day
next preceding the date of such proposed purchase. Each such notice of any such
proposed purchase shall specify the desired amount and date of such purchase and
the desired duration of the initial Yield Period for the resulting
Participation. The Agent shall select the duration of such initial Yield
Period, and each subsequent Yield Period in its discretion; PROVIDED that it
shall use reasonable efforts, taking into account market conditions, to
accommodate Seller's preferences.
(b) On the date of each purchase (but not reinvestment) of undivided
ownership interests with regard to the Participation hereunder, the Purchaser
shall, upon satisfaction of the applicable conditions set forth in EXHIBIT II
hereto, make available to the Agent at its office at 111 West Monroe Street,
Chicago, Illinois 60603, the amount of such purchase in same day funds, and
after the Agent's receipt of such funds, the Agent shall make such funds
immediately available to the Seller at such office.
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(c) Effective on the date of each purchase pursuant to this SECTION 1.2
and each reinvestment pursuant to SECTION 1.4, the Seller hereby sells and
assigns to the Purchaser an undivided percentage ownership interest in (i) each
Pool Receivable then existing, (ii) all Related Security with respect to such
Pool Receivables, and (iii) Collections with respect to, and other proceeds of,
such Pool Receivables and Related Security.
(d) To secure all of the Seller's obligations (monetary or otherwise)
under this Agreement and the other Transaction Documents to which it is a party,
whether now or hereafter existing or arising, due or to become due, direct or
indirect, absolute or contingent, the Seller hereby grants to the Purchaser a
security interest in all of the Seller's right, title and interest (including
without limitation any undivided interest of the Seller) in, to and under all of
the following, whether now or hereafter owned, existing or arising: (A) all
Pool Receivables, (B) all Related Security with respect to each such Pool
Receivable, (C) all Collections with respect to each such Pool Receivable, (D)
the Lock-Box Accounts, Collection Account and Liquidation Account, any reserve
account established by a Lock-Box Bank, Collection Account Bank or Liquidation
Account Bank, and all amounts on deposit therein representing Collections and
other proceeds of the foregoing and all certificates and instruments, if any,
from time to time, evidencing such Lock-Box Accounts, Collection Account and
Liquidation Account and amounts on deposit therein, (E) all rights of the Seller
under the Purchase and Contribution Agreement, and (F) all proceeds of, and all
amounts received or receivable under any or all of, the foregoing. The
Purchaser shall have, with respect to the property described in this
SECTION 1.2(D), and in addition to all the other rights and remedies available
to the Purchaser, all the rights and remedies of a secured party under any
applicable UCC.
Section 1.3. PARTICIPATION COMPUTATION. The Participation shall be
initially computed on the date of the initial purchase hereunder. Thereafter
until the Termination Date, the Participation shall be automatically recomputed
(or deemed to be recomputed) on each Business Day other than a Termination Day.
The Participation, as computed (or deemed recomputed) as of the day immediately
preceding the Termination Date, shall thereafter remain constant. The
Participation shall become zero when the
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Investment thereof and Discount thereon shall have been paid in full, all the
amounts owed by the Seller hereunder to the Purchaser, the Agent, and any
other Indemnified Party or Affected Person are paid in full and the Servicer
shall have received the accrued Servicing Fee thereon.
Section 1.4. SETTLEMENT PROCEDURES. (a) Collection of the Pool
Receivables shall be administered by the Servicer in accordance with the terms
of this Agreement. The Seller shall provide to the Servicer (if other than the
Seller) on a timely basis all information needed for such administration,
including notice of the occurrence of any Termination Day and current
computations of the Participation.
(b) The Servicer shall, on each day on which Collections of Pool
Receivables are received (or deemed received) pursuant to this Agreement by the
Seller or Servicer, transfer such Collections in available funds from the Lock-
Box Accounts and deposit such Collections into the Collection Account. With
respect to such Collections on such day, the Servicer shall:
(i) transfer from the Collection Account to the Liquidation Account,
set aside for the benefit of the Purchaser, out of the percentage of such
Collections represented by the Participation, FIRST an amount equal to the
Discount accrued through such day for each Portion of Investment and not
previously set aside and SECOND, to the extent funds are available
therefor, an amount equal to the Servicing Fee (if the Originator or any
Affiliate thereof is not the Servicer), the Commitment Fee and the Program
Fee accrued through such day for the Participation and not previously set
aside; and
(ii) subject to SECTION 1.4(F), if such day is not a Termination Day,
remit to the Seller, on behalf of the Purchaser, the remainder of the
percentage of such Collections, represented by the Participation, to the
extent representing a return on the Investment; such Collections shall be
automatically reinvested in Pool Receivables, and in the Related Security
and Collections and other proceeds with respect thereto, and the
Participation shall be automatically recomputed pursuant to SECTION 1.3; IT
BEING
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UNDERSTOOD, that prior to remitting to the Seller the remainder of such
Collections by way of reinvestment in Pool Receivables, the Servicer
shall have calculated the Participation on such day, and if such
Participation shall exceed 100% of the Net Receivables Pool Balance on such
day, such Collections shall not be remitted to the Seller but shall be
transferred to the Liquidation Account for the benefit of the Purchaser in
accordance with PARAGRAPH (iii) below;
(iii) if such day is a Termination Day, transfer to the Liquidation
Account for the Purchaser the entire remainder of the percentage of the
Collections represented by the Participation; PROVIDED that so long as the
Facility Termination Date has not occurred if any amounts are so
transferred to the Liquidation Account on any Termination Day and
thereafter, the conditions set forth in SECTION 2 of EXHIBIT II are
satisfied or are waived by the Agent, such previously set aside amounts
shall, to the extent representing a return on the Investment, be reinvested
in accordance with the preceding PARAGRAPH (ii) on the day of such
subsequent satisfaction or waiver of conditions; and
(iv) during such times as amounts are required to be reinvested in
accordance with the foregoing PARAGRAPH (ii) or the proviso to PARAGRAPH
(iii), release to the Seller (subject to SECTION 1.4(f)) for its own
account any Collections in excess of (x) such amounts, (y) the amounts that
are required to be transferred to the Liquidation Account pursuant to
PARAGRAPH (i) above and (z) in the event the Seller is not the Servicer,
all reasonable and appropriate out-of-pocket costs and expenses of such
Servicer of servicing, collecting and administering the Pool Receivables.
(c) (i) The Servicer shall deposit into the Purchaser's Account (or such
other account designated by the Agent), on each Servicer Report Date:
(A) Collections held on deposit in the Liquidation Account for the
benefit of the Purchaser pursuant to SECTION 1.4(b)(i) in respect of
accrued Discount and the Program
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Fees and Commitment Fees with respect to such Portion of Investment;
(B) Collections held on deposit in the Liquidation Account for the
benefit of the Purchaser pursuant to SECTION 1.4(f) with respect to such
Portion of Investment; and
(C) the lesser of (x) the amount of Collections then held on deposit
in the Liquidation Account for the benefit of the Purchaser pursuant to
SECTION 1.4(b)(iii) and (y) such Portion of Investment.
(ii) The Servicer shall deposit to its own account from Collections held on
deposit in the Liquidation Account pursuant to SECTION 1.4(b)(i) in respect of
the accrued Servicing Fee, an amount equal to such accrued Servicing Fee on each
Servicer Report Date.
(d) Upon receipt of funds deposited into the Purchaser's Account pursuant
to SECTION 1.4(c)(i) with respect to any Portion of Investment, the Agent shall
cause such funds to be distributed as follows:
(i) if such distribution occurs on a day that is not a Termination
Day, FIRST to the Purchaser in payment in full of all accrued Discount with
respect to such Portion of Investment, SECOND, to the Purchaser in payment
of accrued and unpaid Program Fees and Commitment Fees, and THIRD, if the
Servicer has set aside amounts in respect of the Servicing Fee pursuant to
SECTION 1.4(b)(i), to the Servicer (payable in arrears on the last day of
each calendar month) in payment in full of accrued Servicing Fees so set
aside with respect to such Portion of Investment; and
(ii) if such distribution occurs on a Termination Day, FIRST to the
Purchaser in payment in full of all accrued Discount with respect to such
Portion of Investment, SECOND to the Purchaser in payment of accrued and
unpaid Program Fees and Commitment Fees, THIRD, to the Purchaser in payment
in full of such Portion of Investment, FOURTH, if Vanstar or any of its
Affiliates is not the Servicer, to the Servicer in payment in full of all
accrued Servicing Fees with
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respect to such Portion of Investment, and FIFTH, if the Investment and
accrued Discount with respect to each Portion of Investment have been
reduced to zero, and all accrued Servicing Fees payable to the Servicer
(if other than the Seller or an Affiliate of the Seller) have been paid
in full, to the Purchaser, the Agent and any other Indemnified Party or
Affected Person in payment in full of any other amounts owed thereto by
the Seller hereunder and then to the Servicer (if the Servicer is the
Seller or an Affiliate of the Seller) in payment in full of all accrued
Servicing Fees.
After the Investment, Program Fees, Discount and Servicing Fees with respect to
the Participation, and any other amounts payable by the Seller to the Purchaser,
the Agent or any other Indemnified Party or Affected Person hereunder, have been
paid in full, all additional Collections with respect to the Participation shall
be paid to the Seller for its own account.
(e) For the purposes of this SECTION 1.4:
(i) if on any day the Outstanding Balance of any Pool Receivable is
reduced or adjusted as a result of any defective, rejected, returned,
repossessed or foreclosed goods or services, or any discount, rebate or
other adjustment (other than any adjustment relating to Ineligible Amounts)
made by the Originator, Seller or Servicer, or any setoff or dispute
between the Seller, Originator or the Servicer and an Obligor, the Seller
shall be deemed to have received on such day a Collection of such Pool
Receivable in the amount of such reduction or adjustment;
(ii) if on any day any of the representations or warranties in
PARAGRAPHS (g) or (m) of SECTION A of EXHIBIT III is not true with respect
to any Pool Receivable, the Seller shall be deemed to have received on such
day a Collection of such Pool Receivable in full;
(iii) except as provided in PARAGRAPH (i) or (ii) of this
SECTION 1.4(e), or as otherwise required by applicable law or the relevant
Contract, all Collections received from an Obligor of any Receivable shall
be applied to the
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Receivables of such Obligor in the order of the age of such Receivables,
starting with the oldest such Receivable, unless such Obligor designates
in writing or otherwise specifies its payment for application to
specific Receivables; and
(iv) if and to the extent the Agent or the Purchaser shall be
required for any reason to pay over to an Obligor (or any trustee,
receiver, custodian or similar official in any Insolvency Proceeding) any
amount received by it hereunder, such amount shall be deemed not to have
been so received but rather to have been retained by the Seller and,
accordingly, the Agent or the Purchaser, as the case may be, shall have a
claim against the Seller for such amount, payable when and to the extent
that any distribution from or on behalf of such Obligor is made in respect
thereof.
(f) If at any time the Seller shall wish to cause the reduction of a
Portion of Investment (but not to commence the liquidation, or reduction to
zero, of the entire Investment of the Participation), the Seller may do so as
follows:
(i) the Seller shall give the Agent at least two Business Days' prior
written notice thereof (including the amount of such proposed reduction and
the proposed date on which such reduction will commence),
(ii) on the proposed date of commencement of such reduction and on
each day thereafter, the Servicer shall cause Collections with respect to
such Portion of Investment not to be reinvested until the amount thereof
not so reinvested shall equal the desired amount of reduction, and
(iii) the Servicer shall hold such Collections in the Liquidation
Account for the benefit of the Purchaser, for payment to the Agent on the
last day of the current Settlement Period relating to such Portion of
Investment, and the applicable Portion of Investment shall be deemed
reduced in the amount to be paid to the Agent only when in fact finally so
paid;
provided that,
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A. the amount of any such reduction shall be not less than
$1,000,000 and shall be an integral multiple of $500,000 (except in
connection with a reduction to zero of such Portion of Investment),
B. the Seller shall choose a reduction amount, and the date of
commencement thereof, so that to the extent practicable such reduction
shall commence and conclude in the same Yield Period, and
C. if two or more Portions of Investment shall be outstanding at the
time of any proposed reduction, such proposed reduction shall be applied,
unless the Seller shall otherwise specify in the notice given pursuant to
SECTION 1.4(f)(i), to the Portion of Investment with the shortest remaining
Yield Period.
Section 1.5. FEES. The Seller shall pay to the Agent certain fees in the
amounts and on the dates set forth in a letter dated December 20, 1996 between
the Seller and the Agent (as the same may be amended, amended and restated,
supplemented or modified, the "FEE LETTER") delivered pursuant to SECTION 1 of
EXHIBIT II, as such letter agreement may be amended, supplemented or otherwise
modified from time to time.
Section 1.6. PAYMENTS AND COMPUTATIONS, ETC. (a) All amounts to be paid
or deposited by the Seller or the Servicer to, or for the benefit of, the Agent
or the Purchaser hereunder shall be paid or deposited no later than noon
(Chicago time) on the day when due in same day funds to the Purchaser's Account.
All amounts received after 2:00 p.m. (Chicago time) will be deemed to have been
received on the immediately succeeding Business Day.
(b) The Seller shall, to the extent permitted by law, pay interest on any
amount not paid or deposited by the Seller or Servicer when due hereunder, at an
interest rate equal to 2.0% PER ANNUM above the Base Rate, payable on demand.
(c) All computations of interest under SUBSECTION (b) above and all
computations of Discount, fees, and other amounts hereunder shall be made on the
basis of a year of 360 days for the actual number of days elapsed. Whenever any
payment or
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deposit to be made hereunder shall be due on a day other than a Business Day,
such payment or deposit shall be made on the next succeeding Business Day and
such extension of time shall be included in the computation of such payment
or deposit.
Section 1.7. DIVIDING OR COMBINING PORTIONS OF THE INVESTMENT OF THE
PARTICIPATION. The Seller may, on the last day of any Yield Period, either (i)
divide the Investment of the Participation into two or more portions, but not to
exceed (x) five (5) portions with a Yield Period of thirty days or less and (y)
five portions with a yield Period of greater than 30 days, in each case, in
effect at any time (each, a "PORTION OF INVESTMENT"), equal, in aggregate, to
the Investment of the Participation, PROVIDED that after giving effect to such
division the amount of each such Portion of Investment shall be not less than
$1,000,000, or (ii) combine any two or more Portions of Investment outstanding
on such last day and having Yield Periods ending on such last day into a single
Portion of Investment equal to the aggregate of the Investment of such Portions
of Investment.
Section 1.8. INCREASED COSTS. (a) If the Agent, the Purchaser, any
Liquidity Bank, any other Program Support Provider or any of their respective
Affiliates (each an "AFFECTED PERSON") determines that the existence of or
compliance with (i) any law or regulation or any change therein or in the
interpretation or application thereof, in each case adopted, issued or occurring
after the date hereof or (ii) any request, guideline or directive from any
central bank or other Governmental Authority (whether or not having the force of
law) issued or occurring after the date of this Agreement affects or would
affect the amount of capital required or expected to be maintained by such
Affected Person and such Affected Person determines that the amount of such
capital is increased by or based upon the existence of any commitment to make
purchases of or otherwise to maintain the investment in Pool Receivables related
to this Agreement or any related liquidity facility or credit enhancement
facility and other commitments of the same type, then, upon demand by such
Affected Person (with a copy to the Agent), the Seller shall immediately pay to
the Agent, for the account of such Affected Person, from time to time as
specified by such Affected Person, additional amounts sufficient to compensate
such Affected Person in the light of
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such circumstances, to the extent that such Affected Person reasonably
determines such increase in capital to be allocable to the existence of any
of such commitments. A certificate as to such amounts submitted to the
Seller and the Agent by such Affected Person shall be conclusive and binding
for all purposes, absent manifest error.
(b) If, due to either (i) the introduction of or any change (other than
any change by way of imposition or increase of reserve requirements referred to
in SECTION 1.9) in or in the interpretation of any law or regulation or (ii)
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there shall be
any increase in the cost to any Affected Person of agreeing to purchase or
purchasing, or maintaining the ownership of the Participation in respect of
which Discount is computed by reference to the Eurodollar Rate, then, upon
demand by such Affected Person, the Seller shall immediately pay to such
Affected Person, from time to time as specified, additional amounts sufficient
to compensate such Affected Person for such increased costs to the extent that
such Affected Person reasonably determines such increased costs are allocable to
the Seller. A certificate as to such amounts submitted to the Seller by such
Affected Person shall be conclusive and binding for all purposes, absent
manifest error.
Section 1.9. ADDITIONAL DISCOUNT ON PORTIONS OF PARTICIPATION BEARING A
EURODOLLAR RATE. The Seller shall pay to any Affected Person, so long as such
Affected Person shall be required under regulations of the Board of Governors of
the Federal Reserve System to maintain reserves with respect to liabilities or
assets consisting of or including "Eurocurrency Liabilities", additional
Discount on the unpaid Investment of the applicable Portion of Investment during
each Yield Period in respect of which Discount is computed by reference to the
Eurodollar Rate, for such Yield Period, at a rate per annum equal at all times
during such Yield Period to the remainder obtained by subtracting (i) the
Eurodollar Rate for such Yield Period from (ii) the rate obtained by dividing
such Eurodollar Rate referred to in clause (i) above by that percentage equal to
100% minus the Eurodollar Rate Reserve Percentage for such Yield Period, payable
on each date on which Discount is payable on the applicable
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Portion of Investment. Such additional Discount shall be determined by the
Affected Person and notified to the Seller through the Agent within 30 days
after any Discount payment is made with respect to which such additional
Discount is requested. A certificate as to such additional Discount
submitted to the Seller by the Affected Person shall be conclusive and
binding for all purposes, absent manifest error.
Section 1.10. REQUIREMENTS OF LAW. In the event that any Affected Person
determines that the existence of or compliance with (i) any law or regulation or
any change therein or in the interpretation or application thereof, in each case
adopted, issued or occurring after the date hereof or (ii) any request,
guideline or directive from any central bank or other Governmental Authority
(whether or not having the force of law) issued or occurring after the date of
this Agreement:
(i) does or shall subject such Affected Person to any tax of any kind
whatsoever with respect to this Agreement, any increase in the
Participation or in the amount of Investment relating thereto, or does or
shall change the basis of taxation of payments to such Affected Person on
account of Collections, Discount or any other amounts payable hereunder
(excluding taxes imposed on the overall net income of such Affected Person,
and franchise taxes imposed on such Affected Person, by the jurisdiction
under the laws of which such Affected Person is organized or a political
subdivision thereof);
(ii) does or shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held
by, or deposits or other liabilities in or for the account of, purchases,
advances or loans by, or other credit extended by, or any other acquisition
of funds by, any office of such Affected Person which are not otherwise
included in the determination of the Eurodollar Rate or the Base Rate
hereunder; or
(iii) does or shall impose on such Affected Person any other
condition;
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and the result of any of the foregoing is (x) to increase the cost to such
Affected Person of acting as Agent, or of agreeing to purchase or purchasing or
maintaining the ownership of undivided ownership interests with regard to the
Participation (or interests therein) or any Portion of Investment in respect of
which Discount is computed by reference to the Eurodollar Rate or the Base Rate
or (y) to reduce any amount receivable hereunder (whether directly or
indirectly) funded or maintained by reference to the Eurodollar Rate or the Base
Rate, then, in any such case, upon demand by such Affected Person the Seller
shall pay such Affected Person any additional amounts necessary to compensate
such Affected Person for such additional cost or reduced amount receivable to
the extent that such Affected Person reasonably determines such additional cost
or reduced amount receivable is allocable to the Seller. All such amounts shall
be payable as incurred. A certificate from such Affected Person to the Seller
certifying, in reasonably specific detail, the basis for, calculation of, and
amount of such additional costs or reduced amount receivable shall be conclusive
in the absence of manifest error; PROVIDED, however, that no Affected Person
shall be required to disclose any confidential or tax planning information in
any such certificate.
Section 1.11. INABILITY TO DETERMINE EURODOLLAR RATE. In the event that
the Agent shall have determined prior to the first day of any Yield Period
(which determination shall be conclusive and binding upon the parties hereto) by
reason of circumstances affecting the interbank Eurodollar market, either (a)
dollar deposits in the relevant amounts and for the relevant Yield Period are
not available, (b) adequate and reasonable means do not exist for ascertaining
the Eurodollar Rate for such Yield Period or (c) the Eurodollar Rate determined
pursuant hereto does not accurately reflect the cost to the Purchaser (as
conclusively determined by the Agent) of maintaining any Portion of Investment
during such Yield Period, the Agent shall promptly give telephonic notice of
such determination, confirmed in writing, to the Seller prior to the first day
of such Yield Period. Upon delivery of such notice (a) no Portion of Investment
shall be funded thereafter at the Bank Rate determined by reference to the
Eurodollar Rate, unless and until the Agent shall have given notice to the
Seller that the circumstances giving rise to such determination no longer exist,
and (b) with respect to any
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outstanding Portions of Investment then funded at the Bank Rate determined by
reference to the Eurodollar Rate, such Bank Rate shall automatically be
converted to the Bank Rate determined by reference to the Base Rate at the
respective last days of the then-current Yield Periods relating to such
Portions of Investment.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES; COVENANTS;
TERMINATION EVENTS
Section 2.1. REPRESENTATIONS AND WARRANTIES; COVENANTS. Each of the
Seller and the Servicer hereby makes the representations and warranties, and
hereby agrees to perform and observe the covenants, in each case applicable to
it, set forth in EXHIBITS III and IV, respectively hereto.
Section 2.2. TERMINATION EVENTS. If any of the Termination Events set
forth in EXHIBIT V hereto shall occur, the Agent may, by notice to the Seller,
declare the Facility Termination Date to have occurred (in which case the
Facility Termination Date shall be deemed to have occurred); PROVIDED that,
automatically upon the occurrence of any event (without any requirement for the
passage of time or the giving of notice) described in SUBSECTION (e), (g), (h),
(i) or (k) of EXHIBIT V, the Facility Termination Date shall occur. Upon any
such declaration, occurrence or deemed occurrence of the Facility Termination
Date, the Purchaser and the Agent shall have, in addition to the rights and
remedies which they may have under this Agreement, all other rights and remedies
provided after default under the UCC and under other applicable law, which
rights and remedies shall be cumulative.
ARTICLE III.
INDEMNIFICATION
Section 3.1. INDEMNITIES BY THE SELLER. Without limiting any other rights
that any Affected Person or any of its respective Affiliates, employees, agents,
successors, transferees
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or assigns (each, an "INDEMNIFIED PARTY") may have hereunder or under
applicable law, the Seller hereby agrees to indemnify each Indemnified Party
from and against any and all claims, damages, expenses, losses and
liabilities (including Attorney Costs) (all of the foregoing being
collectively referred to as "INDEMNIFIED AMOUNTS") arising out of or
resulting from this Agreement or other Transaction Documents (whether
directly or indirectly) or the use of proceeds of purchases or reinvestments
or the ownership of the Participation, or any interest therein, or in respect
of any Receivable or any Contract, excluding, however, (a) Indemnified
Amounts to the extent resulting from gross negligence or willful misconduct
on the part of such Indemnified Party, (b) recourse (except as otherwise
specifically provided in this Agreement) for uncollectible Receivables to be
written off consistent with the Credit and Collection Policy, (c) to the
extent that this facility is terminated prior to the scheduled Facility
Termination Date, fees or margin (other than the Termination Fee and other
amounts then due and owing by the Seller or Servicer under this Agreement or
any other Transaction Document) which would have accrued after such date had
the facility not been terminated, or (d) any overall net income taxes or
franchise taxes imposed on such Indemnified Party by the jurisdiction under
the laws of which such Indemnified Party is organized or any political
subdivision thereof. Without limiting or being limited by the foregoing, and
subject to the exclusions set forth in the preceding sentence, the Seller
shall pay on demand to each Indemnified Party any and all amounts necessary
to indemnify such Indemnified Party from and against any and all Indemnified
Amounts relating to or resulting from any of the following:
(i) the failure of any Receivable included in the calculation of the
Net Receivables Pool Balance as an Eligible Receivable to be an Eligible
Receivable, the failure of any information contained in a Servicer Report
to be true and correct, or the failure of any other information provided by
the Seller or the Servicer to the Purchaser or the Agent with respect to
Receivables or this Agreement to be true and correct;
(ii) the failure of any representation or warranty or statement made
or deemed made by the Seller (or any of its
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officers) under or pursuant to this Agreement to have been true and correct
in all respects when made;
(iii) the failure by the Seller to comply with any applicable law,
rule or regulation with respect to any Pool Receivable or the related
Contract; or the failure of any Pool Receivable or the related Contract to
conform to any such applicable law, rule or regulation;
(iv) the failure to vest in the Purchaser a valid and enforceable (A)
perfected undivided percentage ownership interest, to the extent of the
Participation, in the Receivables in, or purporting to be in, the
Receivables Pool and the Related Security and Collections with respect
thereto and (B) first priority perfected security interest in the items
described in SECTION 1.2(d), in each case, free and clear of any Adverse
Claim;
(v) the failure to have filed, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to any
Receivables in, or purporting to be in, the Receivables Pool and the
Related Security and Collections in respect thereof, whether at the time of
any purchase or reinvestment or at any subsequent time;
(vi) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of the Obligor to the payment of any Receivable
in, or purporting to be in, the Receivables Pool (including, without
limitation, a defense based on such Receivable or the related Contract not
being a legal, valid and binding obligation of such Obligor enforceable
against it in accordance with its terms), or any other claim resulting from
the sale of the goods or services related to such Receivable or the
furnishing or failure to furnish such goods or services or relating to
collection activities with respect to such Receivable (if such collection
activities were performed by the Seller or any of its Affiliates acting as
Servicer or by any agent or independent contractor retained by the Seller
or any of its Affiliates);
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(vii) any failure of the Seller to perform its duties or obligations
in accordance with the provisions hereof or to perform its duties or
obligations under the Contracts;
(viii) any products liability or other claim, investigation,
litigation or proceeding arising out of or in connection with merchandise,
insurance or services which are the subject of any Contract;
(ix) the commingling of Collections of Pool Receivables at any time
with other funds;
(x) any investigation, litigation or proceeding related to this
Agreement or the use of proceeds of purchases or reinvestments or the
ownership of the Participation or in respect of any Receivable, Related
Security or Contract;
(xi) any reduction in Investment as a result of the distribution of
Collections pursuant to SECTION 1.4(D), in the event that all or a portion
of such distributions shall thereafter be rescinded or otherwise must be
returned for any reason; or
(xii) any tax or governmental fee or charge (other than any tax upon
or measured by net income or gross receipts), all interest and penalties
thereon or with respect thereto, and all out-of-pocket costs and expenses,
including the reasonable fees and expenses of counsel in defending against
the same, which may arise by reason of the purchase or ownership of the
Participation, or other interests in the Receivables Pool or in any Related
Security or Contract.
ARTICLE IV.
ADMINISTRATION AND COLLECTIONS
Section 4.1. APPOINTMENT OF SERVICER. (a) The servicing, administering
and collection of the Pool Receivables shall be conducted by the Person so
designated from time to time as
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Servicer in accordance with this SECTION 4.1. Until the Agent gives notice to
the Seller and the Servicer (in accordance with this SECTION 4.1) of the
designation of a new Servicer, Vanstar is hereby designated as, and hereby
agrees to perform the duties and obligations of, the Servicer pursuant to the
terms hereof. Upon the occurrence of a Termination Event, the Agent may
designate as Servicer any Person (including itself) to succeed the Servicer
or any successor Servicer, on the condition in each case that any such Person
so designated shall agree to perform the duties and obligations of the
Servicer pursuant to the terms hereof.
(b) Upon the designation of a successor Servicer as set forth in
SECTION 4.1(A) hereof, the Servicer agrees that it will terminate its
activities as Servicer hereunder in a manner which the Agent determines will
facilitate the transition of the performance of such activities to the new
Servicer, and the Servicer shall cooperate with and assist such new Servicer.
Such cooperation shall include (without limitation) access to and transfer
of records and use by the new Servicer of all licenses, hardware or software
necessary or desirable to collect the Pool Receivables and the Related
Security.
(c) The Servicer acknowledges that, in making their decision to execute
and deliver this Agreement, the Agent and the Purchaser have relied on the
Servicer's agreement to act as Servicer hereunder. Accordingly, the Servicer
agrees that it will not voluntarily resign as Servicer.
(d) The Servicer may delegate its duties and obligations hereunder to
Quantum Information Corporation to the extent currently delegated and to any
other subservicer (each, a "SUB-SERVICER"); provided that, in each such
future delegation, (i) such Sub-Servicer shall agree in writing to perform
the duties and obligations of the Servicer pursuant to the terms hereof, (ii)
the Servicer shall remain primarily liable to the Purchaser and the Agent for
the performance of the duties and obligations so delegated, (iii) the Seller,
the Agent and the Purchaser shall have the right to look solely to the
Servicer for performance (iv) the terms of any agreement with any
Sub-Servicer shall provide that the Agent may terminate such agreement upon
the termination of the Servicer hereunder by giving notice of its
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desire to terminate such agreement to the Servicer (and the Servicer shall
provide appropriate notice to such Sub-Servicer) and (v) with respect to the
delegation of material duties to a Sub-Servicer after the date of the initial
purchase hereunder, the Servicer shall have received the prior written
consent of the Agent.
Section 4.2. DUTIES OF SERVICER. (a) The Servicer shall take or cause
to be taken all such action as the Servicer determines may be necessary or
advisable to collect each Pool Receivable from time to time, all in
accordance with this Agreement and all applicable laws, rules and
regulations, with the same degree of care and diligence as the Servicer would
use if it owned the Pool Receivables, and in accordance with the Credit and
Collection Policy. The Servicer shall set aside for the accounts of the
Seller and the Purchaser the amount of the Collections to which each is
entitled in accordance with ARTICLE II hereto. The Servicer may, in
accordance with the Credit and Collection Policy, extend the maturity of any
Pool Receivable (but not beyond thirty (30) days) and extend the maturity or
adjust the Outstanding Balance of any Defaulted Receivable as the Servicer
may determine to be appropriate to maximize Collections thereof; PROVIDED,
HOWEVER, that (i) such extension or adjustment shall not alter the status of
such Pool Receivable as a Delinquent Receivable or a Defaulted Receivable or
limit the rights of the Purchaser or the Agent under this Agreement and (ii)
if a Termination Event has occurred and Seller or any of its Affiliates is
still serving as Servicer, the Seller may make such extension or adjustment
only upon the prior written approval of the Agent. The Seller shall deliver
to the Servicer and the Servicer shall hold for the benefit of the Seller and
the Agent (for the benefit of the Purchaser and individually) in accordance
with their respective interests, all records and documents (including without
limitation computer tapes or disks) with respect to each Pool Receivable.
Notwithstanding anything to the contrary contained herein, the Agent may
direct the Servicer to commence or settle any legal action to enforce
collection of any Pool Receivable or to foreclose upon or repossess any
Related Security; PROVIDED, HOWEVER, that no such direction may be given
unless either (i) a Termination Event has occurred or (ii) the Agent believes
in good faith that failure to commence, settle, or effect such legal action,
foreclosure or repossession could
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adversely effect Receivables constituting a material portion of the Pool
Receivables.
(b) Following notification from the Originator to the Servicer or
discovery by the Servicer that any amounts not constituting Collections or
other proceeds of Pool Receivables or Related Security have been deposited
into a Lock-Box Account or Collection Account, within two Business Days after
such misapplied collections have been identified by the Servicer (and upon
the occurrence of and continuation of a Termination Event, after the Servicer
provides the Agent evidence of such misapplication satisfactory to the
Agent), Servicer shall remit to the Originator (or shall permit the
Originator to withdraw from the appropriate Lock-Box Account) all such
misapplied collections less all reasonable costs and expenses, if any,
incurred by Servicer in collecting such amounts; PROVIDED, HOWEVER, that no
such amounts shall be so remitted (or withdrawn) unless any amounts required
to be transferred to a Lock-Box Account pursuant to Section 7.2(a) of the
Purchase and Contribution Agreement have been (or are concurrently)
transferred to such Lock-Box Account.
(c) The Servicer's obligations hereunder shall terminate on the Final
Payout Date.
After such termination, the Servicer shall promptly deliver to the
Seller all books, records and related materials that the Seller previously
provided to the Servicer in connection with this Agreement.
Section 4.3. ESTABLISHMENT AND USE OF CERTAIN ACCOUNTS.
(a) LOCK-BOX ACCOUNTS. Prior to the initial purchase hereunder, the
Seller shall enter into Lock-Box Agreements establishing the Lock-Box
Accounts listed on SCHEDULE II with all of the Lock-Box Banks, and deliver
original counterparts thereof to the Agent.
(b) COLLECTION ACCOUNT. The Servicer agrees to establish the
Collection Account on or before the date of the first purchase hereunder.
The Collection Account shall be used to accept the transfer of Collections of
Pool Receivables from the
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Lock-Box Accounts pursuant to SECTION 1.4(B) and for such other purposes
described in the Transaction Documents.
(c) LIQUIDATION ACCOUNT. The Servicer agrees to establish the
Liquidation Account on or before the date of the first purchase hereunder.
The Liquidation Account shall be used to receive transfers of certain amounts
of the Purchaser's share of Collections of Pool Receivables prior to the
Settlement Dates and for such other purposes described in the Transaction
Documents. No funds other than those transferred in accordance with SECTION
1.4 shall be intentionally transferred into the Liquidation Account.
(d) PERMITTED INVESTMENTS. Any amounts in the Liquidation Account or
the Collection Account, as the case may be, may be invested by the
Liquidation Account Bank or Collection Account Bank, respectively, at
Servicer's direction, in Permitted Investments, so long as Purchaser's
interest in such Permitted Investments is perfected and such Permitted
Investments are subject to no Adverse Claims other than those of the
Purchaser provided hereunder.
(e) CONTROL OF LOCK-BOX ACCOUNTS. Upon the occurrence of any
Termination Event or Unmatured Termination Event, the Agent may give notice
to each Lock-Box Bank, the Collection Account Bank and the Liquidation
Account Bank that the Agent is exercising its rights under the Lock-Box
Agreements, the Collection Account Agreement and the Liquidation Account
Agreement to do any or all of the following: (i) to have the exclusive
ownership and control of the Lock-Box Accounts, the Collection Account and
the Liquidation Account transferred to the Agent and to exercise exclusive
dominion and control over the funds deposited therein, (ii) to have the
proceeds that are sent to the respective Lock-Box Accounts be redirected
pursuant to its instructions rather than deposited in the applicable Lock-Box
Account, and (iii) to take any or all other actions permitted under the
applicable Lock-Box Agreement, the Collection Account Agreement and the
Liquidation Account Agreement. The Seller hereby agrees that if the Agent at
any time takes any action set forth in the preceding sentence, the Agent
shall have exclusive control of the proceeds (including Collections) of all
Pool Receivables and the Seller hereby further agrees to take any
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other action that the Agent may reasonably request to transfer such control.
Any proceeds of Pool Receivables received by the Seller, as Servicer or
otherwise, thereafter shall be sent immediately to the Agent. The parties
hereto hereby acknowledge that if at any time the Agent takes control of any
Lock-Box Account, the Collection Account and the Liquidation Account, the
Agent shall not have any rights to the funds therein in excess of the unpaid
amounts due to the Agent, the Purchaser or any other Person hereunder; it
being understood that the Agent and the Purchaser shall have no rights
hereunder with respect to any misapplied collections referred to in SECTION
4.2(B) above.
Section 4.4. ENFORCEMENT RIGHTS. (a) At any time following the
occurrence of a Termination Event or Unmatured Termination Event:
(i) the Agent may direct the Obligors that payment of all amounts
payable under any Pool Receivable be made directly to the Agent or its
designee;
(ii) the Agent may instruct the Seller or the Servicer to give notice
of the Purchaser's interest in Pool Receivables to each Obligor, which
notice shall direct that payments be made directly to the Agent or its
designee, and upon such instruction from the Agent, the Seller or the
Servicer, as applicable, shall give such notice at the expense of the
Seller; provided, that if the Seller or the Servicer fails to so notify
each Obligor, the Agent may so notify the Obligors; and
(iii) the Agent may request the Seller or the Servicer to, and upon
such request the Seller or the Servicer, as applicable, shall, (A) assemble
all of the records necessary or desirable to collect the Pool Receivables
and the Related Security, and transfer or license to any new Servicer the
use of all software necessary or desirable to collect the Pool Receivables
and the Related Security, and make the same available to the Agent or its
designee at a place selected by the Agent, and (B) segregate all cash,
checks and other instruments received by it from time to time constituting
Collections with respect to the Pool Receivables in a manner acceptable to
the Agent and, promptly upon receipt, remit
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all such cash, checks and instruments, duly endorsed or with duly executed
instruments of transfer, to the Agent or its designee.
(b) The Seller hereby authorizes the Agent, and irrevocably appoints
the Agent as its attorney-in-fact with full power of substitution and with
full authority in the place and stead of the Seller, which appointment is
coupled with an interest, to take any and all steps in the name of the Seller
and on behalf of the Seller necessary or desirable, in the determination of
the Agent, to collect any and all amounts or portions thereof due under any
and all Pool Receivables or Related Security, including, without limitation,
endorsing the name of the Seller on checks and other instruments representing
Collections and enforcing such Pool Receivables, Related Security and the
related Contracts. Notwithstanding anything to the contrary contained in this
SUBSECTION (b), none of the powers conferred upon such attorney-in-fact
pursuant to the immediately preceding sentence shall subject such
attorney-in-fact to any liability if any action taken by it shall prove to be
inadequate or invalid, nor shall they confer any obligations upon such
attorney-in-fact in any manner whatsoever.
Section 4.5. RESPONSIBILITIES OF THE SELLER. Anything herein to the
contrary notwithstanding, the Seller shall (i) perform all of its
obligations, if any, under the Contracts related to the Pool Receivables to
the same extent as if interests in such Pool Receivables had not been
transferred hereunder, and the exercise by the Agent or the Purchaser of its
rights hereunder shall not relieve the Seller from such obligations and (ii)
pay when due any taxes, including, without limitation, any sales taxes
payable in connection with the Pool Receivables and their creation and
satisfaction. The Agent and the Purchaser shall not have any obligation or
liability with respect to any Pool Receivable, any Related Security or any
related Contract, nor shall any of them be obligated to perform any of the
obligations of the Seller under any of the foregoing.
Section 4.6. SERVICING FEE. The Servicer shall be paid a fee, through
distributions contemplated by SECTION 1.4(d), in an amount equal to 0.50% PER
annum of the average Outstanding Balance of Pool Receivables.
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ARTICLE V.
MISCELLANEOUS
Section 5.1. AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement or consent to any departure by the Seller or Servicer
therefrom shall be effective unless in a writing signed by the Agent, and, in
the case of any amendment, by the Seller and the Servicer and then such
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; PROVIDED, HOWEVER, that no
material amendment of this Agreement (other than an amendment to extend the
scheduled Facility Termination Date) shall be effective unless the Purchaser
(or the Agent on its behalf) shall have received written confirmation by the
Rating Agencies that such amendment shall not cause the rating on the then
outstanding Notes to be downgraded or withdrawn. No failure on the part of
the Purchaser or Agent to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right.
Section 5.2. NOTICES, ETC. All notices and other communications
hereunder shall, unless otherwise stated herein, be in writing (which shall
include facsimile communication) and sent or delivered, to each party hereto,
at its address set forth under its name on the signature pages hereof or at
such other address as shall be designated by such party in a written notice
to the other parties hereto. Notices and communications by facsimile shall
be effective when sent (and shall be followed by hard copy sent by first
class mail), and notices and communications sent by other means shall be
effective when received.
Section 5.3. ASSIGNABILITY. (a) This Agreement and the Purchaser's
rights and obligations herein (including ownership of the Participation)
shall be assignable, in whole or in part, by the Purchaser and its successors
and assigns to any Person that is not a competitor of Vanstar with the prior
written consent of the Seller; PROVIDED, HOWEVER, that no such consent shall
be
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required if the assignment is made to any Affiliate of the Purchaser, any
Liquidity Bank or other Program Support Provider or any Person which is (i)
in the business of issuing Notes and (ii) associated with or administered by
the Agent or any Affiliate of the Purchaser (each such Person, a "NOTE
ISSUER"). Subject to SECTION 5.6, each assignor may, in connection with the
assignment, disclose to the applicable assignee any information relating to
the Seller or the Pool Receivables furnished to such assignor by or on behalf
of the Seller, the Purchaser or the Agent. Upon the assignment by the
Purchaser in accordance with this SECTION 5.3(a), the assignee receiving such
assignment shall have all of the rights and, to the extent so assigned, the
obligations (which, in any case, shall include the obligations referred to in
SECTION 5.6 herein) of the Purchaser with respect to the Transaction
Documents and the Investment (or such portion thereof as has been assigned).
(b) The Purchaser may at any time grant to one or more banks or other
institutions that are not competitors of Vanstar (each a "LIQUIDITY BANK")
party to the Liquidity Agreement or to any other Program Support Provider
participating interests or security interests in the Participation. In the
event of any such grant by the Purchaser of a participating interest to a
Liquidity Bank or other Program Support Provider, the Purchaser shall remain
responsible for the performance of its obligations hereunder. The Seller
agrees that each Liquidity Bank or other Program Support Provider shall be
entitled to the benefits of SECTIONS 1.8, 1.9 and 1.10.
(c) This Agreement and the rights and obligations of the Agent
hereunder shall be assignable, in whole or in part, by the Agent and its
successors and assigns to any Person that is not a competitor of Vanstar;
PROVIDED, HOWEVER, that if such assignment is to any Person that is not an
Affiliate of the Agent, a Person designated by Capital Markets Assurance
Corporation or a Program Support Provider; the Agent must receive the prior
written consent of the Seller (which consent shall not be unreasonably
withheld).
(d) Except as provided in SECTION 4.1(d), neither the Seller nor the
Servicer may assign its rights or delegate its
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obligations hereunder or any interest herein without the prior written consent
of the Agent.
(e) Without limiting any other rights that may be available under
applicable law, the rights of the Purchaser may be enforced through it or by
its agents.
Section 5.4. COSTS, EXPENSES AND TAXES. (a) In addition to the rights
of indemnification granted under SECTION 3.1 hereof, the Seller agrees to pay
on demand all costs and expenses in connection with the preparation,
execution, delivery and administration (including periodic auditing of Pool
Receivables) of this Agreement, the Liquidity Agreement, and the other
documents and agreements to be delivered hereunder, including all costs and
expenses relating to the amending, amending and restating, modifying or
supplementing of this Agreement, the Liquidity Agreement and the other
documents and agreements to be delivered hereunder and the waiving of any
provisions thereof, and including in all cases, without limitation,
reasonable Attorney Costs for the Agent, the Purchaser, Capital Markets
Assurance Corporation and their respective Affiliates and agents with respect
thereto and with respect to advising the Agent, the Purchaser, Capital
Markets Assurance Corporation and their respective Affiliates and agents as
to their rights and remedies under this Agreement and the other Transaction
Documents, and all costs and expenses, if any (including reasonable Attorney
Costs), of the Agent, the Purchaser, Capital Markets Assurance Corporation
and their respective Affiliates and agents, in connection with the
enforcement of this Agreement and the other Transaction Documents.
(b) In addition, the Seller shall pay on demand any and all stamp and
other taxes and fees payable in connection with the execution, delivery,
filing and recording of this Agreement or the other documents or agreements
to be delivered hereunder, and agrees to save each Indemnified Party harmless
from and against any liabilities with respect to or resulting from any delay
in paying or omission to pay such taxes and fees.
Section 5.5. NO PROCEEDINGS; LIMITATION ON PAYMENTS. (a) Each of the
Seller, the Servicer, the Agent, each assignee of the Participation or any
interest therein, and each Person which
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enters into a commitment to purchase the Participation or interests therein,
hereby covenants and agrees that it will not institute against, or join any
other Person in instituting against, any Note Issuer, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding, or other
proceeding under any federal or state bankruptcy or similar law, for one year
and one day after the latest maturing Note issued by any such Note Issuer is
paid in full.
(b) Notwithstanding any provisions contained in this Agreement to the
contrary, the Purchaser shall not, and shall not be obligated to, pay any
amount pursuant to this Agreement unless (i) the Purchaser has excess cash
flow from operations or has received funds with respect to such obligation
which may be used to make such payment and which funds or excess cash flow
are not required to repay the Notes when due and (ii) each "Participation"
owned by the Purchaser pursuant to any receivables purchase agreement
(including this Agreement) is less than or equal to 100%. Any amount which
the Purchaser does not pay pursuant to the operation of the preceding
sentence shall not constitute a claim against the Purchaser for any such
insufficiency unless and until the conditions described in CLAUSES (i) and
(ii) of the preceding sentence are satisfied. Nothing in this SUBSECTION (b)
shall be construed to forgive or cancel any obligations of the Purchaser
hereunder
Section 5.6. CONFIDENTIALITY. The Seller, the Servicer, the Purchaser
and the Agent each agrees to take normal and reasonable precautions and
exercise due care to maintain the confidentiality of this Agreement, the
other Transaction Documents (and all drafts thereof), all reports and other
information delivered by Seller or Vanstar in connection with the
transactions contemplated by this Agreement or any other Transaction Document
and all other information provided after the date hereof and identified as
"confidential" or "secret" by the Seller or Vanstar and provided to the other
parties by the Seller or Vanstar and no such person nor any of their
respective Affiliates shall use any such information other than in connection
with or in enforcement of this Agreement and the other Transaction Documents,
except to the extent such information (i) was or becomes generally available
to the public other than as a result of disclosure by such Person, or (ii)
was or becomes
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available on a non-confidential basis from a source other than such Person,
provided that such source is not bound by a confidentiality agreement with
respect thereto; PROVIDED, HOWEVER, that any Person may disclose such
information (A) at the request or pursuant to any requirement of any
Governmental Authority to which such Person is subject or in connection with
an examination of such Person by any such authority; (B) pursuant to subpoena
or other court process; (C) when required to do so in accordance with the
provisions of any applicable requirement of law (including, without
limitation, in connection with any public filing with (whether or not
required by) the Securities and Exchange Commission); (D) to the extent
reasonably required in connection with any litigation or proceeding to which
such Person or its Affiliates may be party; (E) to the extent reasonably
required in connection with the exercise of any remedy hereunder or under any
other Transaction Document; (F) to such Person's independent auditors and
other professional advisors; (G) to the Rating Agencies; (H) to any assignee,
Purchaser, or assignee or participant of a Purchaser, actual or potential,
provided that such Person agrees in writing to keep such information
confidential to the same extent required hereunder; (I) with the prior
consent of the Agent, in a press release by the Seller or the Servicer and
(J) as expressly permitted under the terms of any other document or agreement
regarding confidentiality to which such Person and any of the other parties
hereto is party.
Section 5.7. GOVERNING LAW AND JURISDICTION. (a) THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF),
EXCEPT TO THE EXTENT THAT THE PERFECTION (OR THE EFFECT OF PERFECTION OR
NON-PERFECTION) OF THE INTERESTS OF THE PURCHASER IN THE POOL RECEIVABLES AND
THE OTHER ITEMS DESCRIBED IN SECTION 1.2(d) IS GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY
BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR
THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE PURCHASER, THE SELLER, THE SERVICER AND THE AGENT
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE PURCHASER, THE SELLER,
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THE SERVICER AND THE AGENT IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT
PERMITTED BY LAW, ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.
THE PURCHASER, THE SELLER, THE SERVICER AND THE AGENT EACH WAIVE PERSONAL
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY
OTHER MEANS PERMITTED BY NEW YORK LAW.
Section 5.8. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one
and the same agreement.
Section 5.9. SURVIVAL OF TERMINATION. The provisions of SECTIONS 1.8,
1.9, 1.10, 3.1, 5.4, 5.5, 5.6, 5.7 and 5.10 shall survive any termination of
this Agreement.
Section 5.10. WAIVER OF JURY TRIAL. THE PURCHASER, THE SELLER, THE
SERVICER AND THE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES
AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS,
TORT CLAIMS OR OTHERWISE. THE PURCHASER, THE SELLER, THE SERVICER AND THE
AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, EACH OF THE
PARTIES HERETO FURTHER AGREES THAT ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IS
WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT.
Section 5.11. ENTIRE AGREEMENT. This Agreement and the other
Transaction Documents embody the entire agreement and understanding between
the Purchaser, the Seller, the Servicer and the Agent, and supersede all
prior or contemporaneous agreements
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and understandings of such Persons, verbal or written, relating to the
subject matter hereof and thereof, except for any prior arrangements made
with respect to the payment by the Purchaser of (or any indemnification for)
any fees, costs or expenses payable to or incurred (or to be incurred) by or
on behalf of the Seller, the Servicer and the Agent.
Section 5.12. HEADINGS. The captions and headings of this Agreement
and in any Exhibit hereto are for convenience of reference only and shall not
affect the interpretation hereof or thereof.
Section 5.13. PURCHASER'S LIABILITIES. The obligations of the
Purchaser under this Agreement are solely the corporate obligations of the
Purchaser. No recourse shall be had for any obligation or claim arising out
of or based upon this Agreement against any stockholder, employee, officer,
director or incorporator of the Purchaser, and provided, however, that this
Section 5.13 shall not relieve any such Person of any liability it might
otherwise have for its own gross negligence or willful misconduct. The
agreements provided in this Section 5.13 shall survive termination of this
Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the
date first above written.
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VANSTAR FINANCE CO., as Seller
By: /s/ John J. Dunican, Jr.
-------------------------------------
Name: John J. Dunican, Jr.
Title: Treasurer
Address:
Attention:
---------------------------
Telephone:
---------------------------
Facsimile:
---------------------------
VANSTAR CORPORATION, as Servicer
By: /s/ John J. Dunican, Jr.
-------------------------------------
Name: John J. Dunican, Jr.
Title: Treasurer
Address:
Attention:
---------------------------
Telephone:
---------------------------
Facsimile:
---------------------------
NESBITT BURNS SECURITIES INC., as Agent
By: /s/ Mark A. Roche
-------------------------------------
Name: Mark A. Roche
Title: Managing Director
By: /s/ Thomas C. Wright
-------------------------------------
Name: Thomas C. Wright
Title: Senior Executive Vice President
<PAGE>
NESBITT BURNS SECURITIES INC.
111 West Monroe Street
Chicago, Illinois 60603
Attention:
Facsimile:
<PAGE>
POOLED ACCOUNTS RECEIVABLE CAPITAL
CORPORATION, as Purchaser
By: /s/ Richard L. Taiano
-------------------------------------
Name: Richard L. Taiano
Title: Vice President
Pooled Accounts Receivable Capital
Corporation
c/o Broadstreet Contract Services,
Inc.
Two Wall Street
New York, New York 10005
Attention:
---------------------------
Telephone:
---------------------------
Facsimile:
---------------------------
<PAGE>
EXHIBIT I
DEFINITIONS
As used in the Agreement (including its Exhibits), the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined). Unless otherwise
indicated, all Section, Annex, Exhibit and Schedule references in this
Exhibit are to Sections of and Annexes, Exhibits and Schedules to the
Agreement.
"ADVERSE CLAIM" means a lien, security interest or other charge or
encumbrance, or any other type of preferential arrangement, it being
understood that a lien, security interest or other charge or encumbrance, or
any other type of preferential arrangement, in favor of the Purchaser shall
not constitute an Adverse Claim.
"AFFECTED PERSON" has the meaning set forth in SECTION 1.8.
"AFFILIATE" means, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by or is under common
control with such Person or is a director or officer of such Person, except
that with respect to the Purchaser, Affiliate shall mean the holder(s) of a
majority of its capital stock.
"AGENT" has the meaning set forth in the preamble to the Agreement.
"APPLICABLE MARGIN" has the meaning set forth in the Fee Letter.
"ASSIGNMENT OF CLAIMS ACT" means the Assignment of Claims Act of
1990 (31 U.S.C. Section 3727 and 41 U.S.C. Section 15), as amended from time
to time.
"ATTORNEY COSTS" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the
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allocated cost of internal legal services and all disbursements of internal
counsel, to be paid as set forth in the Fee Letter.
"AVERAGE DAYS SALES OUTSTANDING" means, as of any day, the quotient
of (a) the sum of (i) the aggregate Outstanding Balance of Pool Receivables
that remain outstanding 0 to 30 days from their respective original invoice
dates TIMES 30; PLUS (i) the aggregate Outstanding Balance of Pool
Receivables that remain outstanding 1 to 30 days from their respective
original due dates TIMES 60; PLUS (iii) the aggregate Outstanding Balance of
Pool Receivables that remain outstanding 31 to 60 days from their respective
original due dates TIMES 90; PLUS (iv) the aggregate Outstanding Balance of
Pool Receivables that remain outstanding 61 to 90 days from their respective
original due dates TIMES 120; PLUS (v) the aggregate Outstanding Balance of
Pool Receivables that remain outstanding 91 to 120 days from their respective
original due dates TIMES 150; PLUS (vi) the aggregate Outstanding Balance of
Pool Receivables that remain outstanding 121 to 150 days from their
respective original due dates TIMES 180; PLUS the aggregate Outstanding
Balance of Pool Receivables that remain outstanding more than 151 days from
their respective original due dates TIMES 210; DIVIDED BY (b) the aggregate
Outstanding Balance of all Pool Receivables.
"AVERAGE MATURITY" means at any time that period of days equal to
the Average Days Sales Outstanding of the Pool Receivables calculated by the
Servicer in the then most recent Servicer Report; PROVIDED, that if such
calculation is not made according to the formula set forth in the definition
of Average Days Sales Outstanding or is incorrectly calculated under such
formula, the Agent may recalculate such Average Maturity, and any such
recalculation in accordance with such formula shall be prima facie evidence
of such Average Maturity.
"BANK OF MONTREAL" means Bank of Montreal, a Canadian chartered
bank.
"BANK RATE" for any Yield Period for any Portion of Investment of
the Participation means an interest rate PER ANNUM equal to the Applicable
Margin above the Eurodollar Rate for such Yield Period; provided, further,
that in the case of
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(i) any Yield Period on or prior to the first day of which the
Agent shall have been notified by a Liquidity Bank or the Purchaser
that the introduction of or any change in or in the interpretation of
any law or regulation makes it unlawful, or any central bank or other
Governmental Authority asserts that it is unlawful, for such Liquidity
Bank or the Purchaser to fund any Portion of Investment (based on the
Eurodollar Rate) set forth above (and such Liquidity Bank or the
Purchaser, as applicable, shall not have subsequently notified the
Agent that such circumstances no longer exist),
(ii) any Yield Period of one to (and including) 13 days,
(iii) any Yield Period as to which the Agent does not receive
notice, by no later than 12:00 noon (Chicago time) on (w) the second
Business Day preceding the first day of such Yield Period that the
Seller desires that the related Portion of Investment be funded at the
CP Rate, (x) the third Business Day preceding the first day of such
Yield Period that the Seller desires that the related Portion of
Investment be funded at the Bank Rate, or (y) the Seller has given the
notice contemplated by clause (w) of this CLAUSE (iii) and the Agent
shall have notified the Seller that funding the related Portion of
Investment at the CP Rate is unacceptable to the Purchaser, or
(iv) any Yield Period relating to a Portion of Investment which
is less than $1,000,000.
the "BANK RATE" for each such Yield Period shall be an interest rate per
annum equal to the Base Rate in effect on each day of such Yield Period.
Notwithstanding the foregoing, the "BANK RATE" for each day in a Yield Period
occurring during the continuance of a Termination Event shall be an interest
rate equal to 1.5% PER ANNUM above the Base Rate in effect on such day.
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"BANKRUPTCY CODE" means the United States Bankruptcy Reform Act of
1978 (11 U.S.C. Section 101, ET SEQ.), as amended from time to time.
"BASE RATE" means for any day, a fluctuating interest rate per annum
as shall be in effect from time to time, which rate shall be at all times equal
to the higher of: (x) the rate of interest most recently announced by Bank of
Montreal at its branch in Chicago, Illinois as its prime commercial rate for
United States loans made in the United States and (y) 0.50% per annum above the
latest Federal Funds Rate.
"BUSINESS DAY" means any day on which (i) both (A) the Agent at its
branch office in Chicago, Illinois is open for business and (B) commercial banks
in New York City are not authorized or required to be closed for business, and
(ii) if this definition of "Business Day" is utilized in connection with the
Eurodollar Rate, dealings are carried out in the London interbank market.
"CAPITAL LEASE" means, with respect to any Person, any lease of (or
other agreement conveying the right to use) any real or personal property by
such Person that, in conformity with generally accepted accounting principles,
is accounted for as a capital lease on the consolidated balance sheet of such
Person.
"CHANGE IN CONTROL" means
(a) the acquisition by any Person (other than Warburg Pincus Capital
Company and its Affiliates), or two or more Persons acting in concert, of
beneficial ownership (within the meaning of Rule 13d-3 of the Securities
and Exchange Commission under the Securities and Exchange Act of 1934) of
37.5% or more of any outstanding shares of voting stock of Vanstar having
ordinary voting power in the election of directors of Vanstar or (ii)
obtain the power (whether or not exercised) to elect a majority of
Vanstar's directors; or
(b) the failure of Vanstar to own, free and clear of all liens or
other encumbrances, at least 100% of the outstanding shares of voting stock
of the Seller, subject to
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the pledge of IBM Credit Corporation under the IBM Financing Agreement.
"CLASS-1 OBLIGOR" means any Obligor (other than a Special Obligor) any
Rated Debt of which has an actual rating (or, if provided in writing to the
Agent by the Rating Agencies, an implied rating) of at least AA- or A-1, as
applicable, by S&P and Aa3 or P-1, as applicable, by Moody's.
"CLASS-2 OBLIGOR" means any Obligor (other than a Special Obligor or a
Class-1 Obligor) any Rated Debt of which has an actual rating (or, if provided
in writing to the Agent by the Rating Agencies, an implied rating) of at least
A- or A-2, as applicable, by S&P and A3 or P-2, as applicable, by Moody's.
"CLASS-3 OBLIGOR" means any Obligor (other than a Special Obligor, a
Class-1 Obligor or a Class-2 Obligor) any Rated Debt of which has an actual
rating (or, if provided in writing to the Agent by the Rating Agencies, an
implied rating) of at least BBB- or A-3, as applicable, by S&P and Baa3 or P-2,
as applicable, by Moody's.
"COLLECTION ACCOUNT" means that certain bank account (x) numbered 099-
0761 maintained at Mellon Bank, N.A. or (y) such other bank approved by the
Agent, in either case, which is (i) identified as the "VANSTAR FINANCE CO.
COLLECTION ACCOUNT," (ii) in the Seller's name, (iii) pledged, on a first-
priority basis, to the Purchaser pursuant to SECTION 1.2(d), and (iv) is
governed by the Collection Account Agreement.
"COLLECTION ACCOUNT AGREEMENT" means a letter agreement, in the form
of EXHIBIT VI to the Agreement, among the Seller, the Agent and the Collection
Account Bank, as the same may be amended, supplemented, amended and restated, or
otherwise modified from time to time in accordance with the Agreement.
"COLLECTION ACCOUNT BANK" means the bank holding the Collection
Account.
"COLLECTION DELAY PERIOD" means 0.5 times the Average Maturity or such
other number of days not exceeding the Average
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Maturity as the Agent may from time to time reasonably select upon three
Business Days' notice to the Seller.
"COLLECTIONS" means, with respect to any Pool Receivable, (a) all
funds which are received by the Seller, an Originator or the Servicer in payment
of any amounts owed in respect of such Pool Receivable (including, without
limitation, purchase price, finance charges, interest and all other charges), or
applied to amounts owed in respect of such Pool Receivable (including, without
limitation, insurance payments and net proceeds of the sale or other disposition
of repossessed goods or other collateral or property of the related Obligor or
any other Person directly or indirectly liable for the payment of such Pool
Receivable and available to be applied thereon), (b) all Collections deemed to
have been received pursuant to SECTION 1.4(e) and (c) all other proceeds of such
Pool Receivable.
"COMMITMENT FEE" has the meaning set forth in the Fee Letter.
"COMPANY NOTE" has the meaning set forth in Section 3.2 of the
Purchase and Contribution Agreement.
"COMPUTATION PERIOD" means any period of four Fiscal quarters ending
on the last day of a Fiscal Quarter.
"CONSOLIDATED NET INCOME" means, with respect to the Originator and
its Subsidiaries for any Period, the net income (or loss) of the Originator and
its Subsidiaries for such period calculated in conformance with generally
accepted accounting principles and as reported on the consolidated financial
statements of Vanstar.
"CONSOLIDATED NET WORTH" means, with respect to any Person, all items
which would be included under stockholders' equity on a consolidated balance
sheet of such Person plus any amounts included on such consolidated balance
sheet in respect of the preferred stock of such Person (except to the extent
that such preferred stock is mandatorily redeemable at the option of the holder
thereof or upon the happening of any contingency on or prior to the scheduled
Facility Termination Date) plus, if such
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Person is Vanstar, any amounts included on such consolidated balance sheet in
respect of the Convertible Preferred Trust Interests.
"CONTRACT" means, with respect to any Pool Receivable, any and all
contracts, understandings, instruments, agreements, leases, invoices, notes, or
other writings pursuant to which such Pool Receivable arises or which evidences
such Pool Receivable or under which an Obligor becomes or is obligated to make
payment in respect of such Pool Receivable.
"CONVERTIBLE PREFERRED TRUST INTERESTS" means the 6 3/4% Trust
Convertible Preferred Securities issued by the Vanstar Financing Trust described
in the Offering Circular dated September 26, 1996.
"CP RATE" for any Yield Period for any Portion of Investment of the
Participation means, to the extent the Purchaser funds such Portion of
Investment for such Yield Period by issuing Notes, a rate PER ANNUM equal to the
sum of (i) the rate (or if more than one rate, the weighted average of the
rates) at which Notes of the Purchaser having a term equal to such Yield Period
and to be issued to fund such Portion of Investment may be sold by any placement
agent or commercial paper dealer selected by the Agent on behalf of the
Purchaser, as agreed between each such agent or dealer and the Agent and
notified by the Agent to the Servicer; PROVIDED, that if the rate (or rates) as
agreed between any such agent or dealer and the Agent with regard to any Yield
Period for such Portion of Investment is a discount rate (or rates), then such
rate shall be the rate (or if more than one rate, the weighted average of the
rates) resulting from converting such discount rate (or rates) to an interest-
bearing equivalent rate per annum, PLUS (ii) the commissions and charges charged
by such placement agent or commercial paper dealer with respect to such Notes,
expressed as a percentage of such face amount and converted to an interest-
bearing equivalent rate PER ANNUM.
"CREDIT AND COLLECTION POLICY" means those receivables credit and
collection policies and practices relating to Product Business Receivables
(other than Excluded Receivables) of the
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Servicer in effect on the date of the Agreement and described in SCHEDULE I
hereto, as modified in compliance with the Agreement.
"DEBT" means (i) indebtedness for borrowed money, (ii) obligations
evidenced by bonds, debentures, notes or other similar instruments, (iii)
obligations to pay the deferred purchase price of property or services, (iv)
obligations as lessee under leases which shall have been or should be, in
accordance with generally accepted accounting principles, recorded as capital
leases, (v) obligations under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of kinds referred to in CLAUSES (i) through (iv) above,
and (vi) liabilities in respect of unfunded vested benefits under plans covered
by Title IV of ERISA.
"DEFAULT RATIO" means the ratio (expressed as a percentage and rounded
upward to the nearest 1/100 of 1%) computed as of the last day of each calendar
month by dividing (i) the sum (without duplication) of (a) the aggregate
Outstanding Balance (without subtracting any amounts in respect of credit
memoranda) of Pool Receivables that were outstanding 121 to 150 days after their
respective original due dates, as determined as of such day PLUS (b) the
aggregate Outstanding Balance of Pool Receivables that were written off as
uncollectible during the calendar month ending on such day and that, if not so
written off, would have been outstanding not more than 150 days after their
respective original due dates, net of recoveries in respect of Pool Receivables
that were previously written off as uncollectible, as determined as of such day
by (ii) the aggregate amount payable pursuant to invoices giving rise to Pool
Receivables that were generated by the Originator during the calendar month that
occurred four calendar months prior to the calendar month ending on such day.
"DEFAULTED RECEIVABLE" means, without duplication, a Pool Receivable:
(i) as to which any payment, or part thereof, remains unpaid for
at least 121 days from the original due date for such payment;
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(ii) as to which the Obligor thereof or any other Person
obligated thereon has taken any action, or suffered any event to
occur, of the type described in PARAGRAPH (g) of EXHIBIT V hereto; or
(iii) which, consistent with the Credit and Collection Policy,
would be written off the Seller's books as uncollectible.
"DELINQUENCY RATIO" means the ratio (expressed as a percentage and
rounded upward to the nearest 1/100 of 1%) computed as of the last day of each
calendar month by dividing (i) the portion of the aggregate Outstanding Balance
(without subtracting any amounts in respect of credit memoranda) of all Pool
Receivables that remained outstanding 31 to 60 days after their respective
original due dates on such day by (ii) the aggregate Outstanding Balance of all
Pool Receivables on such day (without subtracting any amounts in respect of
credit memoranda).
"DELINQUENT RECEIVABLE" means a Pool Receivable which is not a
Defaulted Receivable as to which any payment, or part thereof, remains unpaid
for at least 31 days from the original due date for such payment.
"DESIGNATED EXCLUDED OBLIGOR" means IBM Corporation, Merisel FAB,
their respective Affiliates, and any other Excluded Obligor designated in
writing by the Agent to the Seller and the Servicer as such; it being understood
that no Excluded Obligor shall be a "Designated Excluded Obligor" unless and
until the Originator shall have implemented arrangements satisfactory to the
Agent for collections and other proceeds of all Receivables generated by such
Excluded Obligor to be remitted to an account other than any Lock-Box Account
and shall have taken such other actions and provided such other information as
required by the Agent in connection with such designation.
"DILUTION PERCENTAGE" means the greater of (a) 8% and (b) the Dilution
Reserve Ratio.
"DILUTION RATIO" means, for any calendar month, the ratio (expressed
as a percentage and rounded upwards to the nearest 1/100th of 1%) of (a) the
portion of the aggregate
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<PAGE>
Outstanding Balance of all Pool Receivables during such period that have been
reduced or adjusted as a result of any defective, rejected, returned,
repossessed or foreclosed goods or services, or any discount or adjustment
made by the Originator, Seller or Servicer (other than any adjustment
relating to Ineligible Amounts) or any setoff or dispute between the Seller,
Originator or the Servicer and an Obligor, to (b) the aggregate amounts
payable pursuant to invoices giving rise to Pool Receivables that were
generated by the Originator during the preceding calendar month.
"DILUTION RESERVE" for the Participation at any time means an amount
equal to the product of (a) the quotient obtained by dividing (x) the Dilution
Percentage by (y) 1 minus the Dilution Percentage and (b) the sum of the
Investment, the Discount Reserve and the Servicing Fee Reserve at such time.
"DILUTION RESERVE RATIO" means, as calculated as of the last day of
each calendar month, the product (expressed as a percentage) of (a) 1.5,
multiplied by (b) the average of the Dilution Ratios for each of the three
consecutive calendar months ending on such day multiplied by (c) a fraction
having (i) a numerator equal to the aggregate amount of Pool Receivables
generated by the Originator during the calendar month preceding the calendar
month ending on such day and (ii) a denominator equal to the aggregate
Outstanding Balance of all Eligible Receivables, as determined as of such day.
"DISCOUNT" means:
(i) for the Portion of Investment of the Participation for any
Yield Period to the extent the Purchaser will be funding such Portion
of Investment on the first day of such Yield Period through the
issuance of Notes,
CPR x I x ED + TF
--
360
(ii) for the Portion of Investment of the Participation for any
Yield Period to the extent the
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<PAGE>
Purchaser will not be funding such Portion of Investment on the first
day of such Yield Period through the issuance of Notes,
ED
--
BR x I x 360 + TF
where:
BR = the Bank Rate for the Portion of Investment of the
Participation for such Yield Period
I = the Portion of Investment of the Participation during such
Yield Period
CPR = the CP Rate for the Portion of Investment of the
Participation for such Yield Period
ED = the actual number of days during such Yield Period
TF = the Termination Fee, if any, for the Portion of Investment
of the Participation for such Yield Period
; PROVIDED, that no provision of the Agreement shall require the payment or
permit the collection of Discount in excess of the maximum permitted by
applicable law; and PROVIDED, FURTHER, that Discount for the Portion of
Investment of the Participation shall not be considered paid by any distribution
to the extent that at any time all or a portion of such distribution is
rescinded or must otherwise be returned for any reason.
"DISCOUNT RESERVE" for the Participation at any time means the sum of
(i) the Termination Discount at such time for the Participation, and (ii) the
then accrued and unpaid Discount for the Participation.
"DIVIDENDS" means any dividend or distribution (in cash or
obligations) on any shares of any class of Seller's capital stock or any
warrants, options or other rights with respect to shares of any class of
Seller's capital stock.
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<PAGE>
"ELIGIBLE RECEIVABLES" means, at any time, Pool Receivables:
(i) the Obligor of which is not an Excluded Obligor, is not an
Affiliate of the Seller (unless (x) supported by a letter of credit in
a face amount at least equal to the Outstanding Balance of such
Receivables issued for the benefit of the Liquidity Banks and/or the
Purchaser and in a form acceptable to the Agent and Liquidity Agent
and issued by a financial institution with a short-term unsecured
credit rating of at least A-1/P-1 by the Rating Agencies which is
acceptable to the Agent and the Liquidity Agent or (y) approved by the
Purchaser, the Liquidity Agent and the Rating Agencies), is not
subject to any action of the type described in PARAGRAPH (g) of
EXHIBIT V;
(ii) which are denominated and payable only in U.S. dollars in
the United States;
(iii) which have a stated maturity and which stated maturity is
not more than 60 days after the date on which such Receivable was
generated;
(iv) which arise under a Contract which is in full force and
effect and which is a legal, valid and binding obligation of the
related Obligor, enforceable against such Obligor in accordance with
its terms;
(v) which conform with all applicable laws, rulings and
regulations in effect;
(vi) which are not the subject of any asserted dispute, offset,
hold back defense, Adverse Claim or other claim and which do not arise
from the sale of inventory which is subject to any Adverse Claim
(other than a Permitted IBMCC Claim or a Permitted Inventory Claim);
(vii) which comply with the requirements of the Credit and
Collection Policy and the payment and other terms of the Contract
related to the Receivable are
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<PAGE>
consistent with customary terms for the Originator and Product
Business Receivables (other than Excluded Receivables);
(viii) which arise from the sale and delivery of goods or
performance of services in the ordinary course of an Originator's
business;
(ix) which are not subject to any "exchange agreement" with the
Seller or Originator thereof or any contingent performance
requirements of an Originator;
(x) which do not require the consent of the related Obligor to
be sold or assigned;
(xi) which have not been modified or restructured since their
creation, except as permitted pursuant to SECTION 4.2 of the
Agreement;
(xii) in which the Seller owns good and marketable title and
which are freely assignable by the Seller;
(xiii) for which the Purchaser shall have a valid and
enforceable undivided percentage ownership interest, to the extent of
the Participation, and a valid and enforceable first priority
perfected security interest therein and in the Related Security and
Collections with respect thereto, in each case free and clear of any
Adverse Claim;
(xiv) which constitute accounts as defined in the UCC, and which
are not evidenced by instruments or chattel paper;
(xv) which are not Defaulted Receivables or which are not
Receivables the payment of which remains unpaid for more than 90 days
past the original due date for such payment;
(xvi) the Obligor of which is not the Obligor of Defaulted
Receivables in an aggregate amount in excess
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<PAGE>
of 20% of the aggregate Outstanding Balance of all Receivables of
such Obligor;
(xvii) which do not constitute "bill and hold" receivables; and
(xviii) which do not constitute "re-stocking fee" receivables;
PROVIDED, HOWEVER, that Ineligible Amounts shall be deducted from the Eligible
Receivables of each Obligor when calculating the aggregate Outstanding Balance
of Eligible Receivables.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute of similar import, together
with the regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA also refer to any successor sections.
"ERISA AFFILIATE" shall mean with respect to any Person, at any time,
each trade or business (whether or not incorporated) that would, at the time, be
treated together with such Person as a single employer under Section 4001 of
ERISA or Sections 414(b), (c), (m) or (o) of the Code.
"EURODOLLAR RATE" means, for any Yield Period, an interest rate per
annum (rounded upward to the nearest 1/16th of 1%) determined pursuant to the
following formula:
Eurodollar Rate = LIBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"EURODOLLAR RESERVE PERCENTAGE" means, for any Yield Period, the
maximum reserve percentage (expressed as a decimal, rounded upward to the
nearest 1/100th of 1%) in effect on the date LIBOR for such Yield Period is
determined under regulations issued from time to time by the Federal
Reserve Board for determining the maximum reserve requirement (including
any emergency, supplemental or other
I-14
<PAGE>
marginal reserve requirement) with respect to "Eurocurrency" funding
(currently referred to as "Eurocurrency liabilities") having a term
comparable to such Yield Period; and
"LIBOR" means the rate of interest per annum determined by the
Liquidity Agent to be the arithmetic mean (rounded upward to the nearest
1/16th of 1%) of the rates of interest per annum notified to the Liquidity
Agent as the rate of interest at which dollar deposits in the approximate
amount of the Investment associated with such Yield Period would be offered
to major banks in the London interbank market at their request at or about
11:00 a.m. (London time) on the second Business Day prior to the
commencement of such Yield Period.
"EXCLUDED OBLIGOR" means IBM Corporation, Merisel FAB and their
respective Affiliates and any other Obligor, so designated in writing as such by
the Agent in its sole discretion to the Seller, from time to time, it being
understood that from time to time the Agent may revoke its designation of one or
more Obligors as Excluded Obligors by written notice to the Seller.
"EXCLUDED RECEIVABLE" means a Receivable, the related Obligor of which
is a Designated Excluded Obligor.
"EXTENDED MATURITY EXCESS AMOUNT" means, at any time, the amount by
which (A) the aggregate Outstanding Balance of all Extended Maturity Receivables
exceeds (B) 10% of the Outstanding Balance of all Eligible Receivables then in
the Receivables Pool.
"EXTENDED MATURITY RECEIVABLE" means an Eligible Receivable which has
a stated maturity of greater than 30 days after the date on which such
Receivable was generated.
"FACILITY TERMINATION DATE" means the earlier to occur of (x) December
7, 2001, (y) the scheduled termination date of any Program Support Agreement, as
extended from time to time, and (z) the date determined pursuant to SECTION 2.2.
"FEDERAL FUNDS RATE" means, for any period, the PER ANNUM rate set
forth in the weekly statistical release designated
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<PAGE>
as H.15(519), or any successor publication, published by the Federal Reserve
Board (including any such successor, "H.15(519)") for such day opposite the
caption "Federal Funds (Effective)". If on any relevant day such rate is not
yet published in H.15(519), the rate for such day will be the rate set forth
in the daily statistical release designated as the Composite 3:30 p.m.
Quotations for U.S. Government Securities, or any successor publication,
published by the Federal Reserve Bank of New York (including any such
successor, the "Composite 3:30 p.m. Quotation") for such day under the
caption "Federal Funds Effective Rate." If on any relevant day the
appropriate rate for such previous day is not yet published in either
H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day will
be the arithmetic mean as determined by the Agent of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York
time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Agent.
"FEDERAL OBLIGOR" means an Obligor that is the United States or any
agency, department or instrumentality thereof.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System, or any entity succeeding to any of its principal functions.
"FEE LETTER" has the meaning set forth in SECTION 1.5.
"FINAL PAYOUT DATE" means 92 days after the date following the
Facility Termination Date on which no Investment or Discount in respect of the
Participation under the Agreement shall be outstanding and all other amounts
payable by the Originator, the Seller or the Servicer to the Purchaser, the
Agent or any other Affected Person under the Transaction Documents shall have
been paid in full.
"FISCAL QUARTER" means a fiscal quarter of a Fiscal Year.
"FISCAL YEAR" means the fiscal year of the Originator and its
Subsidiaries, which period shall be the 12-month period ending on April 30 of
each year.
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<PAGE>
"FOREIGN OBLIGOR RECEIVABLE" means an Eligible Receivable the Obligor
of which is not a United States Resident unless (A) such Receivable is backed by
an irrevocable letter of credit issued by a bank or financial institution that
is rated at least "A" by S&P and "A2" by Moody's or (B) the Obligor of such
Receivable has a rating of at least Investment Grade with respect to its Rated
Debt.
"FOREIGN RECEIVABLE EXCESS AMOUNT" means, at any time, the amount by
which (A) the aggregate Outstanding Balance of all Foreign Obligor Receivables
exceeds (B) 10% of the Outstanding Balance of all Eligible Receivables then in
the Receivables Pool.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any body or entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including without limitation any court, and any Person owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"GOVERNMENT RECEIVABLE EXCESS AMOUNT" means, at any time, the amount
by which (A) the aggregate Outstanding Balance of all Eligible Receivables the
Obligors of which are a government or governmental subdivision or agency exceeds
(B) 10% of the Outstanding Balance of all Eligible Receivables then in the
Receivables Pool.
"IBM FINANCING AGREEMENT" means the Second Amended and Restated
Financing Program Agreement, dated as of April 30, 1995, as amended or otherwise
modified, by and between IBMCC and Vanstar.
"IBMCC" means IBM Credit Corporation, a Delaware corporation.
"INDEMNIFIED AMOUNTS" has the meaning set forth in SECTION 3.1.
"INDEMNIFIED PARTY" has the meaning set forth in SECTION 3.1.
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<PAGE>
"INELIGIBLE AMOUNTS" means, with respect to any Pool Receivable, any
amounts outstanding with respect to interest charges, finance charges, "t-
debits", re-stocking fees, "bill and hold" amounts, intra-company adjustments,
and charges to suppliers to reflect price protection credit provided to
Obligors.
"INSOLVENCY PROCEEDING" means (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidations, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; in each case (a) and (b) undertaken under U.S. Federal, state or
foreign law, including the Bankruptcy Code.
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement, dated as
of December 20, 1996, among IBMCC, the Agent, the Purchaser, the Seller and
Vanstar, as amended or otherwise modified from time to time.
"INTEREST COVERAGE RATIO" means the ratio of (a) Consolidated Net
Income before deducting Interest Expense and income tax expense for any
Computation Period to (b) Interest Expense for such Computation Period; provided
that for any period prior to the first anniversary of each of the Vanstar IPO,
the issuance of the Convertible Preferred Trust Interests, and the transactions
contemplated by this Agreement and the other Transaction Documents, the Interest
Coverage Ratio for the portion of such period prior to each such anniversary
shall be calculated on a pro forma basis as if the Vanstar IPO, the issuance of
the Convertible Preferred Trust Interests, or the transactions contemplated by
this Agreement and the other Transaction Documents, as applicable, had been
effective during all of such period.
"INTEREST EXPENSE" means for any period the consolidated interest
expense of Vanstar and its Subsidiaries for such period (including all imputed
interest on Capital Leases and before giving effect to any capitalization of
interest but
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<PAGE>
excluding amortization of deferred financing costs) excluding any interest
expense of Vanstar pursuant to the Indenture, dates as of October 2, 1996,
between Vanstar and Wilmington Trust Company, as Trustee entered into in
connection with the issuance of the Convertible Preferred Trust Interests, in
each case, calculated in conformity with generally accepted accounting
principles and as reported on the consolidated financial statements of
Vanstar.
"INVESTMENT" means the amount paid to the Seller in respect of the
Participation by the Purchaser pursuant to the Agreement, or such amount divided
or combined in accordance with SECTION 1.7, in each case reduced from time to
time by Collections distributed and applied on account of such Investment
pursuant to SECTION 1.4(d) and increased from time to time by reinvestments
pursuant to SECTION 1.4(b)(ii); PROVIDED, that if such Investment shall have
been reduced by any distribution and thereafter all or a portion of such
distribution is rescinded or must otherwise be returned for any reason, such
Investment shall be increased by the amount of such rescinded or returned
distribution, as though it had not been made.
"INVESTMENT GRADE" means with respect to any Person's Rated Debt, an
actual rating (or, if provided in writing to the Agent by the Rating Agencies,
an implied rating) of at least BBB- or A-3, as applicable, by S&P and Baa3 or
P-3, as applicable, by Moody's; PROVIDED, that if such Person's Rated Debt is
rated by both S&P and Moody's, then each Rating Agency shall have given a rating
at least equal to the rating specified above.
"LIQUIDATION ACCOUNT" means that (x) certain bank account numbered
099-1086 maintained at Mellon Bank, N.A. or (y) such other bank approved by the
Agent, in either case, which is (i) identified as the "VANSTAR FINANCE CO.
LIQUIDATION ACCOUNT," (ii) in the Seller's name, (iii) pledged, on a first-
priority basis, to the Purchaser pursuant to SECTION 1.2(d), and (iv) is
governed by the Liquidation Account Agreement.
"LIQUIDATION ACCOUNT AGREEMENT" means a letter agreement, in the form
of EXHIBIT VII to the Agreement, among the Seller, the Agent and the Liquidation
Account Bank, as the same may be amended, supplemented, amended and restated, or
otherwise modified from time to time in accordance with the Agreement.
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<PAGE>
"LIQUIDATION ACCOUNT BANK" means the bank holding the Liquidation
Account.
"LIQUIDITY AGENT" means Bank of Montreal in its capacity as Liquidity
Agent pursuant to the Liquidity Agreement.
"LIQUIDITY AGREEMENT" means that certain Liquidity Asset Purchase
Agreement in form and substance satisfactory to the Rating Agencies and the
Agent and entered into among Bank of Montreal, such other financial institutions
as may be parties thereto, Bank of Montreal, as Liquidity Agent, Nesbitt Burns,
as servicing agent, and PAR, as amended, amended and restated, supplemented or
otherwise modified from time to time.
"LIQUIDITY BANK" has the meaning set forth in SECTION 5.3(b).
"LOCAL GOVERNMENT OBLIGOR" means an Obligor that is a State or any
agency, department, instrumentality or municipality thereof.
"LOCK-BOX ACCOUNT" means an account maintained at a bank or other
financial institution for the purpose of receiving Collections established
pursuant to SECTION 4.3 and as listed on SCHEDULE II.
"LOCK-BOX AGREEMENT" means an agreement, in substantially the form of
ANNEX A, between the Seller and each Lock-Box Bank.
"LOCK-BOX BANK" means any of the banks or other financial institutions
holding one or more Lock-Box Accounts.
"LOSS PERCENTAGE" means, on any date, the greatest of (i) 3 times the
highest Default Ratio as of the last day of each of the three (3) calendar
months ended immediately preceding such date, (ii) the Loss Reserve Ratio, (iii)
6% and (iv) 3 times the Normal Concentration Percentage.
"LOSS RESERVE" means, for the Participation, on any date, an amount
equal to the product of (a) the quotient obtained by dividing (x) the Loss
Percentage by (y) 1 minus the Loss
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Percentage and (b) the sum of the Investment, the Discount Reserve and the
Servicing Fee Reserve at such time.
"LOSS RESERVE RATIO" means, as calculated as of the last day of each
calendar month, a percentage equal to (a) 1.5 multiplied by (b) the highest
average of the Default Ratios for any three consecutive calendar months that
occurred during the twelve consecutive calendar months ending on such last day,
multiplied by (c) a fraction having (i) a numerator equal to the sum of the
aggregate amount of Pool Receivables generated by the Originator during the four
consecutive calendar months ending on such day and (y) 10% of the sum of the
aggregate amount of Pool Receivables generated by the Originator during the
month which was four months prior to the month ending on such day, and (ii) a
denominator equal to the Net Receivables Pool Balance, as determined as of such
day.
"MATERIAL ADVERSE EFFECT" means, with respect to any event or
circumstance, a material adverse effect on:
(i) the business, assets, or financial condition of the Seller or the
Servicer (if it is the Originator) and its subsidiaries, taken as a whole;
(ii) the ability of the Originator or the Servicer (if it is the
Originator) to perform its obligations under the Transaction Documents to
which it is a party or the performance of any such obligations;
(iii) the validity or enforceability of, or collectibility of amounts
payable under, the Receivables Purchase Agreement or any other Transaction
Document;
(iv) the rights and remedies of the Purchaser, the Agent, any Program
Support Provider or any of their respective Affiliates under the
Receivables Purchase Agreement or any other Transaction Document;
(v) the status, existence, perfection, priority or enforceability of
the Seller's or Purchaser's interest in the Pool Receivables, Related
Rights, or Related Security; or
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(vi) the validity, enforceability or collectibility of the Pool
Receivables.
"MOODY'S" means Moody's Investors Services, Inc.
"NET RECEIVABLES POOL BALANCE" means at any time an amount equal to
the excess of (a) the aggregate Outstanding Balances of Eligible Receivables
then in the Receivables Pool MINUS (b) the sum of (i) the aggregate amount by
which the Outstanding Balance of the Eligible Receivables of each Obligor then
in the Receivables Pool (or, if such Obligor is a Supplier Obligor, the Supplier
Obligor Net Amount) exceeds the product of (A) the Permitted Concentration
Percentage for such Obligor multiplied by (B) the aggregate Outstanding Balances
of all Eligible Receivables then in the Receivables Pool, plus (ii) the Extended
Maturity Excess Amount at such time, plus (iii) the Foreign Receivable Excess
Amount at such time, plus (iv) the Government Receivable Excess Amount at such
time.
"NORMAL CONCENTRATION PERCENTAGE" means, at any time, 2%.
"NOTE ISSUER" has the meaning set forth in SECTION 5.3(a).
"NOTES" means short-term promissory notes issued or to be issued by
any Note Issuer (including, without limitation, PAR) to fund its investments in
accounts receivable or other financial assets.
"OBLIGOR" means, with respect to any Receivable, the Person obligated
to make payments pursuant to the Contract relating to such Receivable.
"ORIGINATOR" has the meaning set forth in the Purchase and
Contribution Agreement.
"ORIGINATOR NOTE" has the meaning set forth in Section 1.4 of the
Purchase and Contribution Agreement.
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"OUTSTANDING BALANCE" of any Receivable at any time means the then
outstanding principal balance thereof.
"PAR" has the meaning set forth in the Preamble to this Agreement.
"PARTICIPATION" means, at any time, the undivided percentage ownership
interest in (i) each and every Pool Receivable now existing or hereafter
arising, other than any Pool Receivable that arises on or after the Facility
Termination Date, (ii) all Related Security with respect to such Pool
Receivables, and (iii) all Collections with respect to, and other proceeds of,
such Pool Receivables and Related Security. Such undivided percentage interest
shall be computed as
I + DR + LR + DIR + SFR
-----------------------
NRB
where:
I = the Investment of the Participation at the time of
computation.
DR = the Discount Reserve of the Participation at the time of
computation.
LR = the Loss Reserve of the Participation at the time of
computation.
DIR = the Dilution Reserve of the Participation at the time of the
computation.
SFR = the Servicing Fee Reserve of the Participation at the time
of computation.
NRB = the Net Receivables Pool Balance at the time of computation.
The Participation shall be determined from time to time pursuant to the
provisions of SECTION 1.3.
"PERMITTED INVENTORY CLAIM" means an Adverse Claim in favor of a
supplier of inventory to Originator upon or with
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respect to inventory of Originator and proceeds thereof, but only to the
extent that such supplier has executed a release of its security interest in
form and substance acceptable to the Agent pursuant to which such Adverse
Claim upon or with respect to Pool Receivables, Related Rights, Collections
and proceeds of the foregoing is automatically and irrevocably released upon
each sale, purported sale, contribution, transfer, conveyance or assignment
of such Pool Receivables, Related Rights, Collections and proceeds of the
foregoing by Originator to Seller pursuant to the Purchase and Contribution
Agreement from time to time.
"PERMITTED CONCENTRATION PERCENTAGE" means for any Obligor, at any
time, (i) if such Obligor is a Special Obligor, such percentage as has been so
designated in writing by the Agent to the Seller as the "Permitted Concentration
Percentage" for such Obligor, (ii) if such Obligor is a Class-1 Obligor, 8%,
(iii) if such Obligor is a Class-2 Obligor, 6%, (iv) if such Obligor is a
Class-3 Obligor, 4% and (v) for all other Obligors, the Normal Concentration
Percentage.
"PERMITTED IBMCC CLAIM" means any Adverse Claim in favor of IBMCC to
the extent such claim is permitted pursuant to the Intercreditor Agreement.
"PERMITTED INVESTMENTS" means certificates of deposit that are not
represented by instruments, have a maturity of one week or less and (x) are
rated at least A-1 by S&P and P-1 by Moody's or (y) are issued by, or maintained
by, the Collection Account Bank or Liquidation Account Bank (with respect to the
investment of funds in the Collection Account or Liquidation Account,
respectively); PROVIDED that such investments are rated at least A-1 by S&P and
P-1 by Moody's and, if not rated A-1+ by S&P, do not in the aggregate principal
amount exceed 20% of that portion of the Investment that is funded with Notes;
PROVIDED, HOWEVER, that the Agent (on behalf of Purchaser) may, from time to
time, upon three Business Days' prior written notice to Servicer, remove from
the scope of "Permitted Investments" certificates of deposit of any such bank(s)
and specify to be within such scope, certificates of deposit of any other bank;
provided that such bank (or the certificates of deposit issued or maintained by
such bank) meet the requirements set forth above.
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"PERSON" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, limited liability company or other entity, or a government or any
political subdivision or agency thereof.
"POOL RECEIVABLE" means a Receivable in the Receivables Pool.
"PORTFOLIO CERTIFICATE" means a certificate substantially in the form
of EXHIBIT VIII to the Agreement.
"PORTION OF INVESTMENT" has the meaning set forth in SECTION 1.7. In
addition, at any time when the Investment of the Participation is not divided
into two or more portions, "Portion of Investment" means 100% of the Investment
of the Participation.
"PRODUCT BUSINESS RECEIVABLE" means a Receivable which arises from the
sale to an obligor of (x) personal computers, network products, computer
peripherals and software manufactured or licensed by third parties, (y) product
configuration, distribution, installation, cabling and connectivity services
related to the sales referred to in CLAUSE (x) hereof and (z) services related
to the selection, design, planning and execution of a network project and
training; IT BEING UNDERSTOOD that Product Business Receivables shall not
include any Receivables arising from the provision of ongoing support and
consulting services related to computer networks provided through the "Service
Business" of the Originator unless approved in writing by the Agent.
"PROGRAM FEE" has the meaning set forth in the Fee Letter.
"PROGRAM SUPPORT AGREEMENT" means and includes the Liquidity Agreement
and any other agreement entered into by any Program Support Provider providing
for the issuance of one or more letters of credit for the account of the
Purchaser, the issuance of one or more surety bonds for which the Purchaser is
obligated to reimburse the applicable Program Support Provider for any drawings
thereunder, the sale by the Purchaser to any Program Support Provider of the
Participation (or portions
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thereof) and/or the making of loans and/or other extensions of credit to the
Purchaser in connection with the Purchaser's securitization program, together
with any letter of credit, surety bond or other instrument issued thereunder.
"PROGRAM SUPPORT PROVIDER" means and includes any Liquidity Bank and
any other or additional Person (other than any customer of the Purchaser) now or
hereafter extending credit or having a commitment to extend credit to or for the
account of, or to make purchases from, the Purchaser or issuing a letter of
credit, surety bond or other instrument to support any obligations arising under
or in connection with PAR's securitization program.
"PURCHASE AND CONTRIBUTION AGREEMENT" means the Purchase and
Contribution Agreement, dated as of December 20, 1996, among the Originator and
the Seller, as the same may be modified, supplemented, amended and amended and
restated from time to time in accordance with the Transaction Documents.
"PURCHASE AND CONTRIBUTION TERMINATION EVENT" has the meaning set
forth in Section 8.1 of the Purchase and Contribution Agreement.
"PURCHASE LIMIT" means $175,000,000, as such amount may be reduced
pursuant to SECTION 1.1(b); PROVIDED, HOWEVER, that following the written
request of the Seller, the Purchaser may, in its sole and absolute discretion,
increase the Purchase Limit. References to the unused portion of the Purchase
Limit shall mean, at any time, the Purchase Limit minus the then outstanding
Investment of the Participation under the Agreement.
"PURCHASER" has the meaning set forth in the preamble to the
Agreement.
"PURCHASER'S ACCOUNT" means the special account (account number
3729688) of the Purchaser maintained at the office of Harris Trust and Savings
Bank in Chicago, Illinois (ABA #071-000288), or such other account as may be so
designated in writing by the Agent to the Seller and the Servicer.
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"RATE VARIANCE FACTOR" means 1.50; PROVIDED, that the "Rate Variance
Factor" may be changed from time to time upon at least five days' prior notice
from the Agent to the Servicer.
"RATED DEBT" means with respect to any Person, (a) the long term
senior unsecured and uncredit-enhanced debt securities of such Person or (b) the
short term senior unsecured and uncredit-enhanced debt securities of such
Person.
"RATING AGENCIES" means Moody's and S&P.
"RECEIVABLE" means any indebtedness and other obligations owed to the
Originator or Seller or any right of the Seller or Originator 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 of goods
or the rendering of services by the Originator or Seller, and includes, without
limitation, the obligation to pay any finance charges, fees and other charges
with respect thereto. Indebtedness and other obligations arising from any one
transaction, including, without limitation, indebtedness and other obligations
represented by an individual invoice or agreement, shall constitute a Receivable
separate from a Receivable consisting of the indebtedness and other obligations
arising from any other transaction.
"RECEIVABLES POOL" means at any time all of the then outstanding
Product Business Receivables other than Excluded Receivables.
"RELATED SECURITY" means, with respect to any Receivable:
(i) all of the Seller's interest in any goods (including
returned goods), and documentation or title evidencing the shipment or
storage of any goods (including returned goods), relating to any sale
giving rise to such Pool Receivable;
(ii) all other security interests or liens and property subject
thereto from time to time purporting to secure payment of such Pool
Receivable, whether
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pursuant to the Contract related to such Pool Receivable or otherwise,
together with all UCC financing statements or similar filings signed
by an Obligor relating thereto; and
(iii) all guaranties, indemnities, insurance and other agreements
(including the related Contract) or arrangements of whatever character
from time to time supporting or securing payment of such Pool
Receivable or otherwise relating to such Pool Receivable whether
pursuant to the Contract related to such Pool Receivable or otherwise.
"RESTRICTED PAYMENTS" has the meaning set forth in clause (o) of
EXHIBIT IV of the Agreement.
"S&P" means Standard and Poor's Ratings Services.
"SELLER" has the meaning set forth in the preamble to the Agreement.
"SERVICER" has the meaning set forth in the preamble to the Agreement.
"SERVICER REPORT" means a report, in substantially the form of ANNEX E
hereto, furnished by the Servicer to the Agent pursuant to the Agreement.
"SERVICER REPORT DATE" means the 15th day of each month, or if such
day is not a Business Day, the next Business Day.
"SERVICING FEE" shall mean the fee referred to in SECTION 4.6.
"SERVICING FEE RESERVE" for the Participation at any time means the
sum of (i) the unpaid Servicing Fee relating to the Participation accrued to
such time, plus (ii) an amount equal to (a) the Outstanding Balance of the
Receivables Pool at the time of computation multiplied by (b) the product of (x)
1.0% times (y) a fraction having the sum of the Average Maturity plus
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the Collection Delay Period (each as in effect at such date) as its numerator
and 360 as its denominator.
"SETTLEMENT PERIOD" for each Portion of Investment means each period
commencing on the first day and ending on the last day of each Yield Period for
such Portion of Investment and, on and after the Termination Date, such period
(including, without limitation, a period of one day) as shall be selected from
time to time by the Agent.
"SOLVENT" means, with respect to any Person, that such Person (i) is
and shall continue to be able to pay all of its liabilities as such liabilities
mature, (ii) does not have unreasonably small capital with which to engage in
its current and in its anticipated business and (iii) is not "insolvent" as such
term is defined in each of the Bankruptcy Code, the Uniform Fraudulent Transfers
Act as from time to time in effect in the applicable jurisdiction, and the
Uniform Fraudulent Conveyances Act as from time to time in effect in the
applicable jurisdiction.
"SPECIAL OBLIGOR" means an Obligor, so designated in writing by the
Agent, and with respect to which each of the Rating Agencies shall have provided
a notice in writing to the Agent to the effect that the inclusion of such
Obligor as a Special Obligor with the proposed Permitted Concentration
Percentage will not result in the downgrading or withdrawal of such Rating
Agencies' current rating of the Notes; it being understood that the Seller may
request from time to time that the Agent designate additional Obligors as
Special Obligors.
"SUBSIDIARY" means, with respect to any Person, a corporation of which
such Person and/or its other Subsidiaries own, directly or indirectly, such
number of outstanding shares as have more than 50% of the ordinary voting power
for the election of directors. Unless the content otherwise requires, each
reference to Subsidiaries herein shall be a reference to Subsidiaries of the
Originator.
"SUPPLIER OBLIGOR" means an Obligor that sells, leases or otherwise
provides goods or services to the Originator.
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"SUPPLIER OBLIGOR NET AMOUNT" means as of any date, for any Supplier
Obligor, the excess of (i) the aggregate Outstanding Balances of all Eligible
Receivables of such Supplier Obligor over (i) the aggregate outstanding amount
owed by the Originator to such Supplier Obligor for goods or services provided
to the Originator by such Supplier Obligor.
"TANGIBLE NET WORTH" means total stockholders' equity minus goodwill,
patents, trade names, trade marks, copyrights, prepaid insurance and prepaid
taxes and such other assets as are properly classified as "intangible assets",
for any corporation as determined in accordance with generally accepted
accounting principals.
"TERMINATION DATE" means the earlier of (i) the Business Day which the
Seller so designates by notice to the Agent at least 30 Business Days in advance
and (ii) the Facility Termination Date.
"TERMINATION DAY" means (i) each day on which the conditions set forth
in SECTION 2 of EXHIBIT II are not satisfied and (ii) each day which occurs on
or after the Termination Date.
"TERMINATION DISCOUNT" means, for the Participation on any date, an
amount equal to the Rate Variance Factor on such date multiplied by the product
of (i) the Investment of the Participation on such date and (ii) the product of
(a) the Base Rate for the Participation plus 2% per annum for a 30-day Yield
Period deemed to commence on such date and (b) a fraction having as its
numerator the greater of (1) two TIMES the Average Maturity (as in effect at
such date) and (2) the Weighted Average CP Maturity and 360 as its denominator.
"TERMINATION EVENT" has the meaning specified in EXHIBIT V.
"TERMINATION FEE" means, for any Yield Period during which a
Termination Day occurs, the amount, if any, by which (i) the additional Discount
(calculated without taking into account any Termination Fee or any shortened
duration of such Yield Period pursuant to CLAUSE (iv) of the definition thereof)
which would have accrued during such Yield Period on the reductions of
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Investment of the Participation relating to such Yield Period had such
reductions remained as Investment, exceeds (ii) the income, if any, received by
the Purchaser from the Purchaser investing the proceeds of such reductions of
Investment, as determined by the Agent, which determination shall be binding and
conclusive for all purposes, absent manifest error.
"TRANSACTION DOCUMENTS" means the Agreement, the Lock-Box Agreements,
the Collection Account Agreement, the Liquidation Account Agreement, the
Purchase and Contribution Agreement and all other certificates, instruments, UCC
financing statements, reports, notices, agreements and documents executed or
delivered under or in connection with the Agreement, in each case as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with the Agreement.
"UCC" means the Uniform Commercial Code as from time to time in effect
in the applicable jurisdiction.
"UNMATURED TERMINATION EVENT" means an event which, with the giving of
notice or lapse of time, or both, would constitute a Termination Event; it being
understood that an event or condition described in PARAGRAPH (e) of EXHIBIT V
shall constitute an "Unmatured Termination Event" during any applicable grace
period described therein.
"VANSTAR IPO" means the initial public offering of the common stock of
Vanstar on March 11, 1996.
"WEIGHTED AVERAGE CP MATURITY" means, as of any day, the REMAINDER of
(a) the SUM of the PRODUCTS obtained by multiplying each Portion of Investment
outstanding which is funded through the issuance of Notes by the number of days
remaining in the Yield Period for such Portion of Investment DIVIDED BY (b) the
aggregate amount of all Portions of Investment then outstanding which are funded
through the issuance of Notes.
"YIELD PERIOD" means, with respect to each Portion of Investment:
(a) initially the period commencing on the date of a purchase
pursuant to SECTION 1.2 and ending such number of
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days as the Seller shall select, subject to the approval of the Agent
pursuant to SECTION 1.2, up to 60 days after such date; and
(b) thereafter each period commencing on the last day of the
immediately preceding Yield Period for any Portion of Investment of the
Participation and ending such number of days (not to exceed 60 days) as the
Seller shall select, subject to the approval of the Agent pursuant to
SECTION 1.2, on notice by the Seller received by the Agent (including
notice by telephone, confirmed in writing) not later than noon (Chicago
time) on such last day, EXCEPT that if the Agent shall not have received
such notice or approved such period on or before noon (Chicago time) on
such last day, such period shall be one day; PROVIDED, that
(i) any Yield Period in respect of which Discount is computed by
reference to the Bank Rate shall be a period from one to and including
60 days;
(ii) any Yield Period (other than of one day) which would
otherwise end on a day which is not a Business Day shall be extended
to the next succeeding Business Day; PROVIDED, HOWEVER, if Discount in
respect of such Yield Period is computed by reference to the
Eurodollar Rate, and such Yield Period would otherwise end on a day
which is not a Business Day, and there is no subsequent Business Day
in the same calendar month as such day, such Yield Period shall end on
the next preceding Business Day;
(iii) in the case of any Yield Period of one day, (A) if such
Yield Period is the initial Yield Period for a purchase pursuant to
SECTION 1.2, such Yield Period shall be the day of purchase of the
Participation; (B) any subsequently occurring Yield Period which is
one day shall, if the immediately preceding Yield Period is more than
one day, be the last day of such immediately preceding Yield Period,
and, if the immediately preceding Yield Period is one day, be the day
next following such immediately preceding Yield Period; and (C) if
such Yield Period
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occurs on a day immediately preceding a day which is not a Business
Day, such Yield Period shall be extended to the next succeeding
Business Day; and
(iv) in the case of any Yield Period for any Portion of
Investment of the Participation which commences before the Termination
Date and would otherwise end on a date occurring after the Termination
Date, such Yield Period shall end on such Termination Date and the
duration of each Yield Period which commences on or after the
Termination Date shall be of such duration as shall be selected by the
Agent.
OTHER TERMS. All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting principles. All
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.
Unless the context otherwise requires, "or" means "and/or," and "including" (and
with correlative meaning "include" and "includes") means including without
limiting the generality of any description preceding such term.
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EXHIBIT II
CONDITIONS OF PURCHASES
1. CONDITIONS PRECEDENT TO INITIAL PURCHASE. The initial purchase
under the Agreement is subject to the conditions precedent that the Agent shall
have received on or before the date of such purchase the following, each in form
and substance (including the date thereof) satisfactory to the Agent:
(a) A counterpart of this Agreement and the other Transaction
Documents duly executed by the parties thereto, together with each of the
closing documents required to be delivered under any Transaction Document.
(b) Certified copies of (i) the resolutions of the Board of Directors
of each of the Seller, the Servicer, and any Originator authorizing the
execution, delivery, and performance by the Seller, the Servicer and any
Originator of the Agreement and the other Transaction Documents, (ii) all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to the Agreement and the other Transaction
Documents and (iii) the certificate of incorporation and by-laws of the Seller,
the Servicer, and any Originator.
(c) A certificate of the Secretary or Assistant Secretary of the
Seller, the Servicer, and any Originator certifying the names and true
signatures of the officers of the Seller, the Servicer, and any Originator
authorized to sign the Agreement and the other Transaction Documents. Until the
Agent receives a subsequent incumbency certificate from the Seller, the
Servicer, and any other Originator in form and substance satisfactory to the
Agent, the Agent shall be entitled to rely on the last such certificate
delivered to it by the Seller, the Servicer, and any Originator.
(d) Acknowledgment copies, or time-stamped receipt copies of proper
financing statements, duly filed on or before the date of such initial purchase
under the UCC or any comparable law of all jurisdictions that the Agent may deem
necessary or
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desirable in order to perfect the interests of the Purchaser contemplated by
the Agreement and other Transaction Documents.
(e) Acknowledgment copies, or time-stamped receipt copies of proper
financing statements, if any, necessary to release all security interests and
other rights of any Person in the Pool Receivables, Contracts or Related
Security previously granted by the Seller.
(f) Completed UCC requests for information, dated on or before the
date of such initial purchase, listing the financing statements referred to in
SUBSECTION (e) above and all other effective financing statements filed in the
jurisdictions referred to in SUBSECTION (e) above that name the Seller or any
Originator as debtor, together with copies of such other financing statements
(none of which shall cover any Pool Receivables, Contracts or Related Security),
and similar search reports with respect to federal tax liens and liens of the
Pension Benefit Guaranty Corporation in such jurisdictions as the Agent may
request, showing no such liens on any of the Pool Receivables, Contracts or
Related Security.
(g) Copies of executed (i) Lock-Box Agreements with the Lock-Box
Banks, (ii) the Collection Account Agreement with the Collection Account Bank,
and (iii) the Liquidation Account Agreement with the Liquidation Account Bank.
(h) Favorable opinions of Arter & Hadden, counsel for the Seller,
substantially in the form of Annex C hereto and as to corporate and such other
matters as the Agent may reasonably request.
(i) Favorable opinions of Arter & Hadden, counsel for the Seller,
substantially in the form of Annex D and as to bankruptcy matters.
(j) Servicer Report representing the performance of the portfolio
purchased through the Purchase and Contribution Agreement and the Agreement for
the month prior to closing.
(k) Evidence (i) of the execution and delivery by each of the parties
thereto of the Purchase and Contribution Agreement
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and all documents, agreements and instruments contemplated thereby (which
evidence shall include copies, either original or facsimile, of each of such
documents, instruments and agreements), (ii) that each of the conditions
precedent to the execution and delivery of the Purchase and Contribution
Agreement has been satisfied to the Administrator's satisfaction, and (iii)
that the initial purchases under the Purchase and Contribution Agreement have
been consummated.
(l) Evidence of payment by the Seller of all accrued and unpaid fees
(including those contemplated by the Fee Letter), costs and expenses to the
extent then due and payable on the date thereof, together with Attorney Costs of
the Agent to the extent invoiced prior to or on such date, plus such additional
amounts of Attorney Costs as shall constitute the Agent's reasonable estimate of
Attorney Costs incurred or to be incurred by it through the closing proceedings;
including any such costs, fees and expenses arising under or referenced in
SECTION 5.4.
(m) The Fee Letter between the Seller and the Agent contemplated by
SECTION 1.5.
(n) Good standing certificates with respect to each of the Seller,
the Servicer and Originator issued by the Secretaries of the States of Delaware
and each other jurisdiction where the nature of its business requires it to be
so qualified and where the failure to so qualify would be reasonably expected to
have a Material Adverse Effect.
(o) Letters from the Rating Agencies confirming in effect that the
existing ratings of the Notes will remain in effect after giving effect to the
transactions contemplated hereby.
(p) An Intercreditor Agreement, duly executed by the Purchaser, the
Agent and IBM Credit Corporation.
(q) Releases of security interests in form and substance acceptable
to the Agent executed by each of the following suppliers of inventory to
Originator: (i) Compaq Computer Corporation, (ii) Hewlett Packard Company (iii)
Apple Computers Inc. and (iv) IBM Corporation.
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(r) Such other approvals, opinions or documents as the Agent may
reasonably request.
2. CONDITIONS PRECEDENT TO ALL PURCHASES AND REINVESTMENTS. Each
purchase (including the initial purchase) and each reinvestment shall be subject
to the further conditions precedent that:
(a) in the case of each purchase, the Servicer shall have delivered
to the Agent on or prior to such purchase, in form and substance satisfactory to
the Agent, a completed Servicer Report with respect to the immediately preceding
calendar month, dated within 4 days prior to the date of such purchase together
with a listing by Obligor of all Pool Receivables and such additional
information as may reasonably be requested by the Agent;
(b) on the date of such purchase or reinvestment the following
statements shall be true (and acceptance of the proceeds of such purchase or
reinvestment shall be deemed a representation and warranty by the Seller that
such statements are then true):
(i) the representations and warranties contained in EXHIBIT III
are true and correct on and as of the date of such purchase or reinvestment
as though made on and as of such date; and
(ii) in the case of each purchase, no event has occurred and is
continuing, or would result from such purchase, that constitutes a
Termination Event or an Unmatured Termination Event; and
(iii) in the case of each reinvestment, no event has occurred
and is continuing, or would result from such reinvestment that constitutes
(x) any Termination Event or (y) an Unmatured Termination Event under
CLAUSE (g) or (i) of EXHIBIT V to the Receivables Purchase Agreement; and
(iv) the Termination Date has not occurred; and
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(c) the Agent shall have received such other approvals, opinions or
documents as it may reasonably request and which the Seller or the Servicer can
provide without unreasonable burden or expense.
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EXHIBIT III
REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents
and warrants as follows:
(a) The Seller is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, and is duly
qualified to do business, and is in good standing, as a foreign corporation in
every jurisdiction where the nature of its business requires it to be so
qualified and where the failure to so qualify would be reasonably expected to
have a Material Adverse Effect.
(b) The execution, delivery and performance by the Seller of the
Agreement and the other Transaction Documents to which each is a party,
including the Seller's use of the proceeds of purchases and reinvestments, (i)
are within the Seller's corporate powers, (ii) have been duly authorized by all
necessary corporate action, (iii) do not contravene or result in a default under
or conflict with (1) the Seller's charter or by-laws, (2) any law, rule or
regulation applicable to the Seller, (3) any contractual restriction binding on
or affecting the Seller or its property or (4) any order, writ, judgment, award,
injunction or decree binding on or affecting the Seller or its property, and
(iv) do not result in or require the creation of any Adverse Claim upon or with
respect to any of its properties. The Agreement and the other Transaction
Documents to which it is a party have been duly executed and delivered by the
Seller.
(c) No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority or other Person is required for the
due execution, delivery and performance by the Seller of the Agreement or any
other Transaction Document to which it is a party other than (x) those
previously obtained or UCC filings and (y) in respect of enforceability against
(1) a Federal Obligor, any filings required under the Assignment of Claims Act
and (2) a Local
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Government Obligor, any filings required by any applicable state or local
Governmental Authority.
(d) Each of the Agreement and the other Transaction Documents to
which it is a party constitutes the legal, valid and binding obligation of the
Seller enforceable against the Seller in accordance with its terms except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditor's rights generally and by
general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
(e) Since its date of formation, there has been no change in the
business, operations, property or financial or other condition or operations of
the Seller, the ability of the Seller to perform its obligations under the
Agreement or the other Transaction Documents to which it is a party or the
collectibility of the Pool Receivables, or which affects the legality, validity
or enforceability of the Agreement or the other Transaction Documents, in any
case, which would be reasonably expected to have a Material Adverse Effect.
(f) There is no pending or threatened action or proceeding affecting
the Seller before any Governmental Authority or arbitrator which would
reasonably be expected to have a Material Adverse Effect.
(g) The Seller is the legal and beneficial owner of the Pool
Receivables and Related Security, free and clear of any Adverse Claim; upon each
purchase or reinvestment, the Purchaser shall acquire a valid and enforceable
perfected undivided percentage ownership interest, to the extent of the
Participation, in each Pool Receivable then existing or thereafter arising and
in the Related Security and Collections and other proceeds, with respect
thereto, free and clear of any Adverse Claim; the Agreement creates a security
interest in favor of the Purchaser in the items described in SECTION 1.2(d), and
the Purchaser has a first priority perfected security interest in such items,
free and clear of any Adverse Claims. No effective financing statement or other
instrument similar in effect covering any Contract or any Pool Receivable or the
Related
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Security or Collections with respect thereto or any Lock-Box Account is on
file in any recording office, except those filed in favor of the Purchaser
relating to the Agreement.
(h) Each Servicer Report, information, exhibit, financial statement,
document, book, record or report furnished or to be furnished at any time by or
on behalf of the Seller to the Agent in connection with the Agreement is or will
be accurate in all material respects as of its date or (except as otherwise
disclosed to the Agent at such time) as of the date so furnished, and no such
item contains or will contain any untrue statement of a material fact or omits
or will omit to state a material fact necessary in order to make the statements
contained therein, in the light of the circumstances under which they were made,
not misleading.
(i) The principal place of business and chief executive office (as
such terms are used in the UCC) of the Seller and the office where the Seller
keeps its records concerning the Pool Receivables are located at the address
referred to in PARAGRAPH (b) of EXHIBIT IV.
(j) The names and addresses of all the Lock-Box Banks, together with
the account numbers of the Lock-Box Accounts of the Seller at such Lock-Box
Banks, are specified in SCHEDULE II to the Agreement (or at such other Lock-Box
Banks and/or with such other Lock-Box Accounts as have been notified to the
Agent in accordance with the Agreement) and all Lock-Box Accounts are subject to
Lock-Box Agreements. All Obligors have been directed to make all payment with
respect to each Contract to a Lock-Box Account.
(k) The Seller is not in violation of any order of any court,
arbitrator or Governmental Authority.
(l) Neither the Seller nor any Affiliate of the Seller has any direct
or indirect ownership or other financial interest in the Purchaser.
(m) Each Pool Receivable included as an Eligible Receivable in the
calculation of the Net Receivables Pool Balance is an Eligible Receivable as of
the date of such calculation.
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(n) No event has occurred and is continuing, or would result from a
purchase in respect of, or reinvestment in respect of, the Participation or from
the application of the proceeds therefrom, which constitutes a Termination
Event.
(o) The Seller (and the Servicer) have complied in all material
respects with the Credit and Collection Policy with regard to each Pool
Receivable.
(p) The Seller has complied with all of the terms, covenants and
agreements contained in the Agreement and the other Transaction Documents and
applicable to it.
(q) The Seller's complete corporate name is set forth in the preamble
to the Agreement, and the Seller does not use and has not during the last six
years used any other corporate name, trade name, doing-business name or
fictitious name, except as set forth on SCHEDULE III and except for names first
used after the date of the Agreement and set forth in a notice delivered to the
Agent pursuant to PARAGRAPH (l)(ix) of EXHIBIT IV.
(r) The authorized capital stock of Seller consists of 1000 shares of
common stock, without par value, 100 shares of which are currently issued and
outstanding. All of such outstanding shares are validly issued, fully paid and
nonassessable and are owned (beneficially and of record) by Vanstar, subject to
a pledge to IBM Credit Corporation under the IBM Financing Agreement.
(s) Seller has filed all federal and other tax returns and reports
required by law to have been filed by it and has paid all taxes and governmental
charges thereby shown to be owing.
(t) The Seller is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
B. REPRESENTATIONS AND WARRANTIES OF THE SERVICER. The Servicer
represents and warrants as follows:
(a) The Servicer is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, and is duly
qualified to do business, and is in good
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standing, as a foreign corporation in every jurisdiction where the nature of
its business requires it to be so qualified and where the failure to so
qualify would be reasonably expected to have a Material Adverse Effect.
(b) The execution, delivery and performance by the Servicer of the
Agreement and the other Transaction Documents to which it is a party, (i) are
within the Servicer's corporate powers, (ii) have been duly authorized by all
necessary corporate action, (iii) do not contravene or result in a default under
or conflict with (1) the Servicer's charter or by-laws, (2) any law, rule or
regulation applicable to the Servicer, (3) any contractual restriction binding
on or affecting the Servicer or its property or (4) any order, writ, judgment,
award, injunction or decree binding on or affecting the Servicer or its
property, and (iv) do not result in or require the creation of any Adverse Claim
upon or with respect to any of its properties. The Agreement and the other
Transaction Documents to which it is a party have been duly executed and
delivered by the Servicer.
(c) No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority or other Person is required for the
due execution, delivery and performance by the Servicer of the Agreement or any
other Transaction Document to which it is a party.
(d) Each of the Agreement and the other Transaction Documents to
which it is a party constitutes the legal, valid and binding obligation of the
Servicer enforceable against the Servicer in accordance with its terms except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditor's rights generally and by
general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
(e) The consolidated balance sheets of the Servicer and its
subsidiaries as at April 30, 1996, a copy of which has been furnished to the
Agent, fairly presents the financial condition of the Servicer and its
subsidiaries, as at such date, and the consolidated balance sheets of the
Servicer and its subsidiaries as at July 31, 1996, a copy of which has been
III-5
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delivered to the Agent, fairly presents the financial condition of the Servicer
and its subsidiaries as at such date, and since April 30, 1996 there has been no
change in the ability of the Servicer to perform its obligations under the
Agreement or the other Transaction Documents to which it is a party or the
collectibility of the Pool Receivables, or which affects the legality, validity
or enforceability of the Agreement or the other Transaction Documents which
would be reasonably expected to have a Material Adverse Effect.
(f) There is no pending or threatened action or proceeding affecting
the Servicer before any Governmental Authority or arbitrator which would be
reasonably expected to have a Material Adverse Effect.
(g) The Servicer has complied in all material respects with the
Credit and Collection Policy with regard to each Pool Receivable.
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EXHIBIT IV
COVENANTS
COVENANTS OF THE SELLER AND THE SERVICER. Until the latest of the Facility
Termination Date, the date on which no Investment of or Discount in respect of
the Participation shall be outstanding or the date all other amounts owed by the
Seller under the Agreement to the Purchaser, the Agent and any other Indemnified
Party or Affected Person shall be paid in full:
(a) COMPLIANCE WITH LAWS, ETC. Each of the Seller and the Servicer
shall comply with all applicable laws, rules, regulations and orders, and
preserve and maintain its corporate existence, rights, franchises,
qualifications, and privileges except to the extent that the failure so to
comply with such laws, rules and regulations or the failure so to preserve and
maintain such existence, rights, franchises, qualifications, and privileges
would not be reasonably expected to have a Material Adverse Effect.
(b) OFFICES, RECORDS AND BOOKS OF ACCOUNT, ETC. The Seller (i) shall
keep its principal place of business and chief executive office (as such terms
are used in the UCC) at the address of the Seller set forth under its name on
the signature page to the Agreement and each of the Seller and the Servicer
shall keep the offices where it keeps its records concerning the Pool
Receivables at the addresses set forth in SCHEDULE IV hereto or, upon at least
60 days' prior written notice of a proposed change to the Agent, at any other
locations in jurisdictions where all actions reasonably requested by the Agent
to protect and perfect the interest of the Purchaser in the Pool Receivables and
related items (including without limitation the items described in SECTION
1.2(d)) have been taken and completed and (ii) shall provide the Agent with at
least 60 days' written notice prior to making any change in the Seller's name or
making any other change in the Seller's identity or corporate structure
(including a merger) which could render any UCC financing statement filed in
connection with this Agreement "seriously misleading" as such term is used in
the UCC; each notice to the Agent pursuant to this sentence shall set forth the
applicable
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change and the effective date thereof. The Servicer, on behalf of the
Seller, also will maintain and implement administrative and operating
procedures (including, without limitation, an ability to recreate records
evidencing Pool Receivables and related Contracts in the event of the
destruction of the originals thereof), and keep and maintain all documents,
books, records, computer tapes and disks and other information reasonably
necessary or advisable for the collection of all Pool Receivables (including,
without limitation, records adequate to permit the daily identification of
each Pool Receivable and all Collections of and adjustments to each existing
Pool Receivable).
(c) PERFORMANCE AND COMPLIANCE WITH CONTRACTS AND CREDIT AND
COLLECTION POLICY. The Seller shall, at its expense, (or shall cause the
Servicer on its behalf, to) timely and fully perform and comply with all
material provisions, covenants and other promises required to be observed by it
under the Contracts related to the Pool Receivables, and timely and fully comply
in all material respects with the Credit and Collection Policy with regard to
each Pool Receivable and the related Contract except to the extent that all such
failures to comply therewith would not be reasonably expected to have a Material
Adverse Effect.
(d) OWNERSHIP INTEREST, ETC. The Seller shall, at its expense, take
all action necessary or desirable to establish and maintain a valid and
enforceable undivided ownership interest, to the extent of the Participation, in
the Pool Receivables and the Related Security and Collections and other proceeds
with respect thereto, and a first priority perfected security interest in the
items described in SECTION 1.2(d), in each case free and clear of any Adverse
Claim, in favor of the Purchaser, including, without limitation, taking such
action to perfect, protect or more fully evidence the interest of the Purchaser
under the Agreement as the Purchaser, through the Agent, may request.
(e) SALES, LIENS, ETC. Except as provided in PARAGRAPHS (i) AND (j)
of this EXHIBIT IV, the Seller shall not sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create or suffer to exist any Adverse
Claim upon or with respect to, any or all of its right, title or interest in, to
or under, any item described in SECTION 1.2(d) (including without limitation the
Seller's undivided interest in any Pool
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Receivable, Related Security, or Collections, or upon or with respect to any
account to which any Collections of any Pool Receivables are sent), or assign
any right to receive income in respect of any items contemplated by this
PARAGRAPH (e).
(f) EXTENSION OR AMENDMENT OF RECEIVABLES. Except as provided in the
Agreement, neither the Seller nor the Servicer shall extend the maturity or
adjust the Outstanding Balance or otherwise modify the terms of any Pool
Receivable, or amend, modify or waive any term or condition of any related
Contract (which term or condition relates to payments under, or the enforcement
of, such Contract).
(g) CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY. Neither the
Seller nor the Servicer shall make any material change in the character of its
business or in the Credit and Collection Policy that would (i) adversely affect
the collectibility of the Receivables Pool, (ii) create a material defense to
the payment of any Pool Receivable in the Receivables Pool or (iii) adversely
affect the credit criteria used in approving customers that are potential
Obligors of Product Business Receivables. Neither the Seller nor the Servicer
shall make any other change in the Credit and Collection Policy without the
prior written consent of the Agent if such change would be reasonably expected
to have a Material Adverse Effect.
(h) AUDITS. (i) At any time and from time to time (but not more than
three audits during any calendar year during the term of this Agreement and so
long as no Termination Event has occurred and is continuing shall be paid for by
Seller) during regular business hours, upon reasonable prior notice, permit the
Agent, or its agents or representatives, (A) to examine, audit and make copies
of and abstracts from all books, records and documents (including, without
limitation, computer tapes and disks) in the possession or under the control of
the Seller or the Servicer relating to the Pool Receivables and Related
Security, including, without limitation, the related Contracts and other
agreements related thereto, and (B) to visit offices and properties of the
Seller and the Servicer for the purpose of examining such materials described in
the foregoing CLAUSE (A) and discussing matters relating to the Pool Receivables
and Related Security or the Seller's or Servicer's
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performance hereunder or under the Contracts with any of the officers or
employees of the Seller or the Servicer having knowledge of such matters; and
(ii) without limiting the provisions of CLAUSE (i) next above, from time to
time on request of the Agent, permit certified public accountants or other
auditors acceptable to the Agent to conduct a review of its books and records
with respect to the Pool Receivables and Related Security.
(i) CHANGE IN LOCK-BOX BANKS, LOCK-BOX ACCOUNTS AND PAYMENT
INSTRUCTIONS TO OBLIGORS. Neither the Seller nor the Servicer shall add or
terminate any bank as a Lock-Box Bank or any account as a Lock-Box Account from
those listed in Schedule II to the Agreement, or make any change in its
instructions to Obligors regarding payments to be made to the Seller or the
Servicer or payments to be made to any Lock-Box Account (or related post office
box), unless the Agent shall have consented thereto in writing and the Agent
shall have received copies of all agreements and documents (including without
limitation Lock-Box Agreements) that it may request in connection therewith.
(j) DEPOSITS TO LOCK-BOX ACCOUNTS. The Seller shall, or shall cause
the Servicer to, (i) instruct all Obligors to make payments of all Pool
Receivables to one or more Lock-Box Accounts or to post office boxes to which
only Lock-Box Banks have access (and shall instruct the Lock-Box Banks to cause
all items and amounts relating to such Pool Receivables received in such post
office boxes to be removed and deposited into a Lock-Box Account on a daily
basis), and (ii) deposit, or cause to be deposited, any Collections of Pool
Receivables received by it or the Servicer into Lock-Box Accounts not later than
one Business Day after receipt thereof. Each Lock-Box Account, the Collection
Account and the Liquidation Account shall at all times be subject to a Lock-Box
Agreement, Collection Account Agreement or Liquidation Account Agreement,
respectively. Neither the Seller nor the Servicer will deposit or otherwise
credit, or cause or permit to be so deposited or credited, to any Lock-Box
Account cash or cash proceeds other than Collections of Pool Receivables; it
being understood that misapplied collections shall be remitted as set forth
under SECTION 4.2(b).
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(k) MARKING OF RECORDS. At its expense, each of the Servicer and the
Seller (or the Servicer on its behalf) shall mark its master data processing
records relating to Pool Receivables and related Contracts, including with a
legend evidencing that the undivided percentage ownership interests with regard
to the Participation related to such Pool Receivables and related Contracts have
been sold in accordance with the Agreement.
(l) REPORTING REQUIREMENTS. The Seller or the Servicer, as
applicable, will provide to the Agent (in multiple copies, if requested by the
Agent) the following:
(i) as soon as available and in any event within 45 days after
the end of the first three quarters of each fiscal year of the Seller,
consolidated balance sheets of the Seller as of the end of such quarter and
statements of income, retained earnings and cash flows of the Seller for
the period commencing at the end of the previous fiscal year and ending
with the end of such quarter, certified by the chief financial officer of
the Seller;
(ii) as soon as available and in any event within 90 days after
the end of each fiscal year of the Seller, a copy of the annual report for
such year for the Seller, containing financial statements for such year
audited by Ernst & Young, LLP or other independent certified public
accountants acceptable to the Agent;
(iii) as soon as available and in any event within 45 days after
the end of the first three quarters of each fiscal year of the Servicer, (a)
consolidated balance sheets of the Servicer and its subsidiaries as of the end
of such quarter and statements of income, retained earnings and cash flows of
the Servicer and its subsidiaries for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, in each case,
prepared in accordance with the rules and regulations of the Securities and
Exchange Commission then in effect for preparation of a Form 10-Q, and (b) a
compliance certificate setting forth a calculation of the financial ratios
referred to in CLAUSES (l) and (m) of EXHIBIT V and verifying
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<PAGE>
compliance therewith, each certified by the chief financial officer of the
Servicer;
(iv) as soon as available and in any event within 90 days after
the end of each fiscal year of the Servicer, (a) a copy of the annual report for
such year for the Servicer and its subsidiaries, containing financial statements
for such year prepared in accordance with the rules and regulations of the
Securities and Exchange Commission then in effect for preparation of a Form
10-K, audited by Ernst & Young, LLP or other independent certified public
accountants acceptable to the Agent, and (b) a compliance certificate setting
forth a calculation of the financial ratios referred to in CLAUSES (l) and (m)
of EXHIBIT V and verifying compliance therewith, each certified by the chief
financial officer of Vanstar;
(v) as soon as available and in any event no later than the last
Business Day of each week, a weekly Portfolio Certificate;
(vi) as soon as available and in any event not later than the
Servicer Report Date, a Servicer Report as of the calendar month ended
immediately prior to such Servicer Report Date;
(vii) as soon as possible and in any event within three Business
Days after the Seller or Servicer has knowledge (or a reasonable
expectation) of the occurrence of each Termination Event or Unmatured
Termination Event, a statement of the chief financial officer of the Seller
(in the case of such event primarily related to the Seller) and the chief
financial officer of Vanstar (in all other cases) setting forth details of
such Termination Event or event and the action that the Seller or Vanstar,
as applicable, has taken and proposes to take with respect thereto;
(viii) promptly after the filing or receiving thereof, copies of
all reports and notices that the Seller or any Affiliate files under ERISA
with the Internal Revenue Service or the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor or that the Seller or any
Affiliate receives from any of the foregoing or from any multiemployer
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plan (within the meaning of Section 4001(a)(3) of ERISA) to which the
Seller or any Affiliate is or was, within the preceding five years, a
contributing employer, in each case in respect of the assessment of
withdrawal liability or an event or condition which would be reasonably
expected to have, in the aggregate, result in the imposition of
liability on the Seller and/or any such Affiliate in excess of $100,000;
(ix) at least thirty days prior to any change in the Seller's
name or any other change requiring the amendment of UCC financing
statements, a notice setting forth such changes and the effective date
thereof;
(x) promptly after the sending or filing thereof, copies of all
financial reports that Vanstar sends to any of its public security holders,
and copies of all reports (without exhibits) on forms 10-K, 10-Q or 8-K and
all proxy statements and all registration statements that Vanstar files
with the Securities and Exchange Commission or any national securities
exchange (unless otherwise provided pursuant to any other clause of this
PARAGRAPH (l));
(xi) such other information respecting the Pool Receivables
(including a Servicer's Report on a more frequent basis than provided in
CLAUSE (vi) above) or the condition or operations, financial or otherwise,
of the Seller, the Servicer, Originator or any of their respective
Affiliates as the Agent may from time to time reasonably request;
(xii) promptly after the Seller or Servicer obtains knowledge
thereof, notice of any (a) litigation, investigation or proceeding which
may exist at any time between the Seller, the Servicer or any Originator,
on the one hand, and any Governmental Authority which, if not cured or if
adversely determined, as the case may be, would be reasonably expected to
have a Material Adverse Effect or, (b) litigation or proceeding adversely
affecting the Seller, the Servicer or any of its subsidiaries, or any
Originator, as the case may be, in which the amount involved is $100,000 or
more and not covered by insurance or for which adequate
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reserves are not maintained on the financial statements of such Person
or the consolidated balance sheet of Vanstar or in which injunctive or
similar relief is sought or (c) litigation or proceeding relating to any
Transaction Document; and
(xiii) promptly after the occurrence thereof, notice of a change
in the business, operations, property or financial or other condition of
the Seller which could be reasonably expected to have a Material Adverse
Effect.
(m) SEPARATE CORPORATE EXISTENCE. Each of the Seller and the Servicer
hereby acknowledges that Purchaser and the Agent are entering into the
transactions contemplated by the Agreement and the Transaction Documents in
reliance upon the Seller's identity as a legal entity separate from the Servicer
and the Originator. Therefore, from and after the date hereof, the Seller and
the Servicer shall take all reasonable steps to continue the Seller's identity
as a separate legal entity and to make it apparent to third Persons that the
Seller is an entity with assets and liabilities distinct from those of the
Servicer, the Originator and any other Person, and is not a division of the
Servicer or the Originator or any other Person. Without limiting the generality
of the foregoing and in addition to and consistent with the covenant set forth
in PARAGRAPH (a) of this EXHIBIT IV, the Seller and the Servicer shall take such
actions as shall be required in order that:
(i) The Seller will be a limited purpose corporation whose
primary activities are restricted in its certificate of incorporation to
purchasing Receivables from the Originator, entering into agreements for
the servicing of such Receivables, selling undivided interests in such
Receivables and conducting such other activities as it deems necessary or
appropriate to carry out its primary activities;
(ii) Not less than one member of Seller's Board of Directors
(the "INDEPENDENT DIRECTORS") shall be individuals who are not direct,
indirect or beneficial stockholders, officers, directors, employees,
affiliates, associates, customers or suppliers of the Originator or any
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of its Affiliates. The Seller's Board of Directors shall not approve,
or take any other action to cause the commencement of a voluntary case
or other proceeding with respect to the Seller under any applicable
bankruptcy, insolvency, reorganization, debt arrangement, dissolution or
other similar law, or the appointment of or taking possession by, a
receiver, liquidator, assignee, trustee, custodian, or other similar
official for the Seller unless in each case the Independent Directors
shall approve the taking of such action in writing prior to the taking
of such action. The Independent Directors' fiduciary duty shall be to
the Seller (and creditors) and not to the Seller's shareholders in
respect of any decision of the type described in the preceding sentence.
In the event an Independent Director resigns or otherwise ceases to be
a director of the Seller, there shall be selected a replacement
Independent Director who shall not be an individual within the
proscriptions of the first sentence of this CLAUSE (ii) or any
individual who has any other type of professional relationship with the
Originator or any of its Affiliates or any management personnel of any
such Person or Affiliate and who shall be (x) a tenured professor at a
business or law school, (y) a retired judge or (z) an established
independent member of the business community, having a sound reputation
and experience relative to the duties to be performed by such individual
as an Independent Director;
(iii) No Independent Director shall at any time serve as a
trustee in bankruptcy for Originator or any Affiliate thereof;
(iv) Any employee, consultant or agent of the Seller will be
compensated from the Seller's own bank accounts for services provided to
the Seller except as provided herein in respect of the Servicer's Fee. The
Seller will engage no agents other than a Servicer for the Receivables,
which Servicer will be fully compensated for its services to the Seller by
payment of the Servicer's Fee;
(v) The Seller will contract with the Servicer to perform for
the Seller all operations required on a daily
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basis to service its Receivables. The Seller will pay the Servicer a
monthly fee based on the level of Receivables being managed by the
Servicer. The Seller will not incur any material indirect or overhead
expenses for items shared between the Seller and the Originator or any
Affiliate thereof which are not reflected in the Servicer's Fee. To the
extent, if any, that the Seller and the Originator or any Affiliate
thereof share items of expenses not reflected in the Servicer's Fee,
such as legal, auditing and other professional services, such expenses
will be allocated to the extent practical on the basis of actual use or
the value of services rendered, and otherwise on a basis reasonably
related to the actual use or the value of services rendered, it being
understood that Originator shall pay all expenses relating to the
preparation, negotiation, execution and delivery of the Transaction
Documents, including, without limitation, legal and other fees;
(vi) The Seller's operating expenses will not be paid by
Originator or any Affiliate thereof unless the Seller shall have agreed in
writing with such Person to reimburse such Person for any such payments;
(vii) The Seller will have its own separate mailing address and
stationery;
(viii) The Seller's books and records will be maintained
separately from those of the Originator or any Affiliate thereof;
(ix) Any financial statements of the Originator or any Affiliate
thereof which are consolidated to include the Seller will contain detailed
notes clearly stating that the Seller is a separate corporate entity and
has sold ownership interests in the Seller's accounts receivable;
(x) The Seller's assets will be maintained in a manner that
facilitates their identification and segregation from those of the
Originator and any Affiliate thereof;
(xi) The Seller will strictly observe corporate formalities in
its dealings with the Originator and any
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Affiliate thereof, and funds or other assets of the Seller will not be
commingled with those of the Originator or any Affiliate thereof. The
Seller shall not maintain joint bank accounts or other depository
accounts to which the Originator or any Affiliate thereof (other than
Vanstar in its capacity as Servicer) has independent access. None of
the Seller's funds will at any time be pooled with any funds of the
Originator or any Affiliate thereof;
(xii) The Seller shall pay to the Originator the marginal
increase (or, in the absence of such increase, the market amount of its
portion) of the premium payable with respect to any insurance policy that
covers the Seller and any Affiliate thereof, but the Seller shall not,
directly or indirectly, be named or enter into an agreement to be named, as
a direct or contingent beneficiary or loss payee, under any such insurance
policy, with respect to any amounts payable due to occurrences or events
related to the Originator or any Affiliate thereof; and
(xiii) The Seller will maintain arm's length relationships with
the Originator and any Affiliate thereof. The Originator or any Affiliate
thereof that renders or otherwise furnishes services to the Seller will be
compensated by the Seller at market rates for such services. Neither the
Seller nor any Originator or any Affiliate thereof will be or will hold
itself out to be responsible for the debts of the other or the decisions or
actions respecting the daily business and affairs of the other.
(n) MERGERS, ACQUISITIONS, SALES, ETC.
(i) The Seller shall not
(A) be a party to any merger or consolidation, or directly or
indirectly purchase or otherwise acquire, whether in one or a series
of transactions, all or substantially all of the assets or any stock
of any class of, or any partnership or joint venture interest in, any
other Person, or sell, transfer, assign, convey or lease any of its
property and assets (including,
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without limitation, any Pool Receivable or any interest therein)
other than pursuant to this Agreement;
(B) make, incur or suffer to exist an investment in, equity
contribution to, loan, credit or advance to, or payment obligation in
respect of the deferred purchase price of property from, any other
Person, except for obligations incurred pursuant to the Transaction
Documents; or
(C) create any direct or indirect Subsidiary or otherwise
acquire direct or indirect ownership of any equity interests in any
other Person.
(o) RESTRICTED PAYMENTS.
(i) GENERAL RESTRICTION. Except in accordance with this
SUBPARAGRAPH (i), the Seller shall not (A) purchase or redeem any shares of
its capital stock, (B) declare or pay any Dividend or set aside any funds
for any such purpose, (C) prepay, purchase or redeem any subordinated
indebtedness of the Seller, (D) lend or advance any funds, including in
respect of the Originator Note, or (E) repay any loans or advances to, for
or from the Originator. Actions of the type described in this CLAUSE (i)
are herein collectively called "RESTRICTED PAYMENTS".
(ii) TYPES OF PERMITTED PAYMENTS. Subject to the limitations
set forth in CLAUSE (III) below, the Seller may make Restricted Payments so
long as such Restricted Payments are made only to the Originator (or IBMCC,
if permitted pursuant to the Intercreditor Agreement) and only in one or
more of the following ways:
(A) Seller may make cash payments (including prepayments) on the
Company Note in accordance with its terms; and
(B) if no amounts are then outstanding under the Company Note,
the Seller may (1) declare and pay Dividends and (2) make demand loans
to Vanstar, so long as each such loan is evidenced by the Originator
Note.
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(iii) SPECIFIC RESTRICTIONS. The Seller may make Restricted
Payments only out of Collections paid or released to the Seller pursuant to
SECTIONS 1.4(b). Furthermore, the Seller shall not pay, make or declare
(A) any Dividend if, after giving effect thereto, Seller's
Tangible Net Worth would be less than Twenty-Five Million Dollars
($25,000,000); or
(B) any Restricted Payment (including any Dividend) if, after
giving effect thereto, any Termination Event or Unmatured Termination
Event shall have occurred and be continuing.
(p) USE OF SELLER'S SHARE OF COLLECTIONS. The Seller shall apply its
share of Collections to make payments in the following order of priority:
FIRST, the payment of its expenses (including, without limitation, the
obligations payable to Purchaser, the Affected Persons and the Agent under the
Transaction Documents), SECOND, the payment of accrued and unpaid interest on
the Company Note, THIRD, the payment of the outstanding principal amount of the
Company Note, and FOURTH, other legal and valid corporate purposes, including,
without limitation, the payment of dividends as permitted by PARAGRAPH (o)
above.
(q) AMENDMENTS TO CERTAIN DOCUMENTS.
(i) The Seller shall not amend, supplement, amend and restate,
or otherwise modify the Purchase and Contribution Agreement, the Company
Note, the Originator Note, any other document executed under the Purchase
and Contribution Agreement, the Collection Account Agreement, the Lock-Box
Agreements, the Liquidation Account Agreement or the Seller's certificate
of incorporation or by-laws, except (A) in accordance with the terms of
such document, instrument or agreement and (B) with the advance written
consent of the Agent.
(ii) The Originator shall not enter into or otherwise become
bound by, any agreement, instrument, document or other arrangement that
restricts its right to
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amend, supplement, amend and restate or otherwise modify, or to extend or
renew, or to waive any right under, this Agreement or any other Transaction
Document.
(r) INCURRENCE OF INDEBTEDNESS. The Seller shall not (i) create,
incur or permit to exist, any Debt or liability or (ii) cause or permit to be
issued for its account any letters of credit or bankers' acceptances, except for
Debt incurred pursuant to the Company Note and liabilities incurred pursuant to
or in connection with the Transaction Documents or otherwise permitted therein.
(s) USE OF PROCEEDS. No proceeds of any purchase or reinvestment
will be used in connection with any hostile tender offer. No proceeds of any
purchase or reinvestment will be used for any purpose that violates any
applicable law, rule or regulation, including, without limitation, Regulations G
or U of the Federal Reserve Board.
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EXHIBIT V
TERMINATION EVENTS
Each of the following shall be a "Termination Event":
(a) (i) The Servicer shall fail to make when due any payment or
deposit to be made by it under the Agreement and such failure shall remain
unremedied for two Business Days or (ii) the Servicer shall fail to perform or
observe any other term, covenant or agreement under the Agreement and any such
failure shall remain unremedied for 30 days after the earlier of (x) the date on
which the Servicer shall have knowledge thereof and (y) notice to the Servicer
from the Agent (or, with respect to a failure to deliver the Servicer Report or
the Portfolio Certificate pursuant to the Agreement, such failure shall remain
unremedied for two Business Days, with respect to a Portfolio Certificate, and
five business Days, with respect to a Servicer Report);
(b) The Seller shall fail (i) to transfer to any successor Servicer
when required any rights, pursuant to the Agreement, which the Seller then has
as Servicer and such failure shall remain unremedied for two Business Days, or
(ii) to make any payment required under the Agreement and such failure shall
remain unremedied for two Business Days; or
(c) Any representation or warranty made or deemed made by the Seller
or the Servicer (or any of their respective officers) under or in connection
with the Agreement or any information or report delivered by the Seller or the
Servicer pursuant to the Agreement shall prove to have been incorrect or untrue
in any material respect when made or deemed made or delivered; or
(d) The Seller shall fail to perform or observe any other term,
covenant or agreement contained in the Agreement on its part to be performed or
observed and any such failure shall remain unremedied for 30 days after the
earlier of (x) the date
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on which the Seller shall have knowledge thereof and (y) notice to the Seller
from the Agent; or
(e) The Originator or any of its subsidiaries shall fail to pay any
principal of or premium or interest on any of its Debt which is outstanding in a
principal amount of at least $10,000,000 in the aggregate when the same becomes
due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall continue after the
applicable grace period, if any, specified in the instrument, mortgage,
indenture or other agreement relating to such Debt; or any other event shall
occur or condition shall exist under any instrument, mortgage, indenture or
other agreement relating to any such Debt and shall continue after the
applicable grace period, if any, specified in such instrument, mortgage,
indenture or other agreement, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or any
such Debt shall be declared to be due and payable, or required to be prepaid,
redeemed, purchased or defeased, or an offer to repay, redeem, purchase or
defease such Debt shall be required to be made in each case prior to the stated
maturity thereof (other than by a regularly scheduled required payment or in
connection with sales of assets or the issuance of Debt or other securities, if
the instrument, mortgage, indenture or other agreement relative to such Debt
requires the prepayment, redemption, purchase or defeasance of such Debt in
connection with such sale or issuance and the proceeds from such sale or
issuance are used to prepay, redeem, purchase or defease such Debt in accordance
with its terms); or
(f) The Agreement or any purchase or any reinvestment pursuant to the
Agreement shall for any reason (other than pursuant to the terms hereof) (i)
cease to create, or the Participation shall for any reason cease to be, a valid
and enforceable perfected undivided percentage ownership interest to the extent
of the Participation in each Pool Receivable and the Related Security and
Collections and other proceeds with respect thereto, free and clear of any
Adverse Claim or (ii) cease to create with respect to the items described in
SECTION 1.2(d), or the interest of the Purchaser with respect to such items
shall
V-2
<PAGE>
cease to be, a valid and enforceable first priority perfected security
interest, free and clear of any Adverse Claim; or
(g) The Originator or Seller shall generally not pay its debts as
such debts become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against the Originator or Seller
seeking to adjudicate it a 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, custodian or other similar
official for it or for any substantial part of its property and, in the case of
any such proceeding instituted against it (but not instituted by it), either
such proceeding shall remain undismissed or unstayed for a period of 60 days, or
any of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of its
property) shall occur; or the Originator or Seller shall take any corporate
action to authorize any of the actions set forth above in this PARAGRAPH (g); or
(h) As of the last day of any calendar month, (i)(x) the arithmetic
average of the Default Ratios for the most recent three calendar months ending
on such day shall exceed 2.5% or (y) the Default Ratio calculated as of such day
shall exceed 4%, (ii) the arithmetic average of the Delinquency Ratio for the
most recent three calendar months ending on such day shall exceed 11% or
(iii)(x) the average of the Dilution Ratios for the most recent three calendar
months ending on such day shall exceed 8% or (y) the Dilution Ratio calculated
on such day shall exceed 11%; or
(i) The Participation shall exceed 100% and such condition shall
continue unremedied for three consecutive Business Days; or
(j) A Change in Control shall occur; or
V-3
<PAGE>
(k) The Internal Revenue Service shall file notice of a lien pursuant
to Section 6323 of the Internal Revenue Code with regard to any assets of Seller
and such lien shall not have been released within ten Business Days or the
Pension Benefit Guaranty Corporation shall, or shall indicate its intention to,
file notice of a lien pursuant to Section 4068 of ERISA with regard to any of
the assets of Seller or any Originator; or
(l) The Interest Coverage Ratio of Vanstar and its Subsidiaries
calculated on a consolidated basis shall be less than 2.0 to 1 for the most
recently ended Computation Period.
(m) The Consolidated Net Worth of Vanstar and its Subsidiaries at the
end of any Fiscal Quarter shall be less than $300,000,000.
(n) The Tangible Net Worth of the Seller shall be less than
$20,000,000.
(o) A Purchase and Contribution Termination Event shall occur.
V-4
<PAGE>
EXHIBIT VI
COLLECTION ACCOUNT AGREEMENT
VI-1
<PAGE>
EXHIBIT VII
LIQUIDATION ACCOUNT AGREEMENT
VII-1
<PAGE>
EXHIBIT VIII
PORTFOLIO CERTIFICATE
VII-2
<PAGE>
SCHEDULE I
CREDIT AND COLLECTION POLICY
Schedule I-1
<PAGE>
SCHEDULE II
LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS
LOCK-BOX BANK LOCK-BOX ACCOUNT
- ------------- ----------------
Mellon Bank, N.A. 099-0753
Three Mellon Bank Center 099-0930
Room 3119 099-0809
Pittsburgh, PA 15259 099-0948
Schedule II-1
<PAGE>
SCHEDULE III
TRADE NAMES
Schedule III-1
<PAGE>
ANNEX A
FORM OF LOCK-BOX AGREEMENT
[Letterhead of Seller]
LOCK-BOX AGREEMENT
___________, 199__
[Name and Address of
Lock-Box Bank]
Gentlemen:
Reference is made to our [lock-box](1) account[s] no[s]. maintained
with you (the "Account[s]"). Pursuant to a Receivables Purchase Agreement
dated as of December 20, 1996, among us, as Seller, Vanstar Corporation, as
Servicer, Pooled Accounts Receivable Capital Corporation, as purchaser
(Pooled Accounts Receivable Capital Corporation, or any successors and
assigns in such capacity, the "Purchaser"), and Nesbitt Burns Securities
Inc., as agent (the "Agent"), we have assigned and/or may hereafter assign to
the Purchaser one or more undivided percentage ownership interests in
accounts, chattel papers, instruments or general intangibles (collectively,
"Receivables") with respect to which payments are or may hereafter be made to
the Account[s], and have granted to the Purchaser a security interest in such
Receivables, the Account[s], amounts on deposit therein and related property.
Your execution of this letter agreement is a condition precedent to our
continued maintenance of the Account[s] with you.
- --------------------
(1) Delete in the case of direct wire transfer accounts.
Annex A-1
<PAGE>
We hereby transfer exclusive ownership and control of the Account[s] to
the Agent on behalf of the Purchaser, subject only to the condition
subsequent that the Agent shall have given you notice of its election to
assume such ownership and control, which notice may be in the form attached
hereto as Exhibit A or in any other form that gives you reasonable notice of
such election.
We hereby irrevocably instruct you, at all times from and after the date
of your receipt of notice from the Agent as described above, to make all
payments to be made by you out of or in connection with the Account[s]
directly to the Agent, at its address set forth below its signature hereto or
as the Agent otherwise notifies you, for the account of the Purchaser
(account #__________, ABA #_________), or otherwise in accordance with the
instructions of the Agent.
We also hereby notify you that, at all times from and after the date of
your receipt of notice from the Agent as described above, the Agent shall be
irrevocably entitled to exercise in our place and stead any and all rights in
respect of or in connection with the Account[s], including, without
limitation, (a) the right to specify when payments are to be made out of or
in connection with the Account[s] and (b) the right to require preparation of
duplicate monthly bank statements on the Account[s] for the Agent's audit
purposes and mailing of such statements directly to an address specified by
the Agent.
Notice from the Agent may be personally served or sent by Telex,
facsimile or U.S. mail, certified return receipt requested, to the address,
[Telex] or facsimile number set forth under your signature to this letter
agreement (or to such other address, [Telex] or facsimile number as to which
you shall notify the Agent in writing). If notice is given by [Telex] or
facsimile, it will be deemed to have been received when the notice is sent
[and the answerback is received (in the case of Telex)] or receipt is
confirmed by telephone or other electronic means (in the case of facsimile).
All other notices will be deemed to have been received when actually received
or, in the case of personal delivery, delivered.
Annex A-2
<PAGE>
By executing this letter agreement, you acknowledge and consent to the
existence of the Agent's right to ownership and control of the Account[s] and
the Purchaser's security interest in the Account[s] and amounts from time to
time on deposit therein and agree that from the date hereof the Account[s]
shall be maintained by you for the benefit of, and amounts from time to time
therein held by you as agent for, the Agent on the terms provided herein.
The Account[s] [is/are] to be titled "[Name of Seller] and Nesbitt Burns
Securities Inc. as the Agent for Pooled Accounts Receivable Capital
Corporation, its successors and assigns, as their interests may appear."
Except as otherwise provided in this letter agreement, payments to the
Account[s] are to be processed in accordance with the standard procedures
currently in effect. All service charges and fees with respect to the
Account[s] shall continue to be payable by us as under the arrangements
currently in effect.
By executing this letter agreement, you irrevocably waive and agree not
to assert, claim or endeavor to exercise, irrevocably bar and estop yourself
from asserting, claiming or exercising, and acknowledge that you have not
heretofore received a notice, writ, order or any form of legal process from
any other person or entity asserting, claiming or exercising, any right of
set-off, banker's lien or other purported form of claim with respect to
[any of] the Account[s] or any funds from time to time therein. Except for
your right to payment of your service charges and fees and to make deductions
for returned items, you shall have no rights in the Account[s] or funds
therein. To the extent you may ever have such rights, you hereby expressly
subordinate all such rights to all rights of the Agent.
You may terminate this letter agreement by cancelling the Account[s]
maintained with you, which cancellation and termination shall become
effective only upon thirty days' prior written notice thereof from you to the
Agent. Incoming [mail addressed to] [wire transfers to] the Account[s]
received after such cancellation shall be forwarded in accordance with the
Agent's instructions. This letter agreement may also be terminated upon
written notice to you by the Agent stating that the Receivables Purchase
Agreement pursuant to which this letter agreement was obtained is no longer
in effect. Except as otherwise provided in this paragraph, this letter
agreement may
Annex A-3
<PAGE>
not be terminated or amended without the prior written consent of the Agent.
This letter agreement may be executed in any number of counterparts, and by
the parties hereto on separate counterparts, each of which when so executed
shall be deemed to be an original and all of which when taken together shall
constitute one and the same agreement.
Please acknowledge your agreement to the terms set forth in this letter
agreement by signing the two copies of this letter agreement enclosed
herewith in the space provided below, sending one such signed copy to the
Agent at its address provided above and returning the other signed copy to us.
Very truly yours,
[NAME OF SELLER]
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Acknowledged and agreed to as of
the date first written above:
NESBITT BURNS SECURITIES INC.,
as Agent
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Address for notice:
111 West Monroe Street
Floor 20 East
Chicago, Illinois 60603
Attention: James P. Walsh, Director
Annex A-4
<PAGE>
Telephone:
Facsimile: (312) 461-6327
[NAME OF LOCK-BOX BANK]
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Address for notice:
Attention:
Telex No.:
(Answerback:)
Telephone:
Facsimile:
Annex A-5
<PAGE>
EXHIBIT A to
Lock-Box Agreement
[Nesbitt Burns Securities Inc.]
[Name and Address
of Lock-Box Bank]
Re: [Name of Seller]
[LOCK-BOX]* ACCOUNT NO[S]. [AND ]
---------------------------------------------
Gentlemen:
Reference is made to the letter agreement dated ______________, 199__
(the "Letter Agreement") among [Name of Seller], Vanstar Corporation, as
Servicer, Pooled Accounts Receivable Capital Corporation (Pooled Accounts
Receivable Capital Corporation, or any successors and assigns thereof, the
"Purchaser"), the undersigned, as Agent and you concerning the above
described [lock-box]* account[s] (the "Account[s]"). We hereby give you
notice of our assumption of ownership and control of the Account[s] as
provided in the Letter Agreement.
We hereby instruct you to make all payments to be made by you out of
or in connection with the Account[s] [directly to the undersigned, at
[our address set forth above], for the account of the Purchaser (account no.
____________)].
[other instructions]
Very truly yours,
NESBITT BURNS SECURITIES INC.,
as Agent
- --------------------
* Delete in the case of direct wire transfer accounts.
Annex A-6
<PAGE>
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Annex A-7
<PAGE>
ANNEX C
FORM OF CORPORATE OPINIONS
<PAGE>
ANNEX D
FORM OF BANKRUPTCY OPINION
<PAGE>
ANNEX E
FORM OF SERVICER REPORT
<PAGE>
PURCHASE AND CONTRIBUTION AGREEMENT
Dated as of December 20, 1996
between
VANSTAR CORPORATION
and
VANSTAR FINANCE CO.
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I
AGREEMENT TO PURCHASE AND CONTRIBUTE
1.1. Agreement to Purchase and Sell . . . . . . . . . . . . . . . . 2
1.2. Timing of Purchases. . . . . . . . . . . . . . . . . . . . . . 3
1.3. Consideration for Purchases. . . . . . . . . . . . . . . . . . 3
1.4. Company Agreement to Make Demand Loans . . . . . . . . . . . . 3
1.5. Purchase and Contribution Termination Date . . . . . . . . . . 3
1.6. Intention of the Parties . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
CALCULATION OF PURCHASE PRICE
2.1. Calculation of Purchase Price. . . . . . . . . . . . . . . . . 4
2.2. Definitions and Calculations Related to
Purchase Discount . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III
CONTRIBUTION OF RECEIVABLES;
PAYMENT OF PURCHASE PRICE
3.1. Contribution of Receivables. . . . . . . . . . . . . . . . . . 7
3.2. Initial Purchase Price Payment . . . . . . . . . . . . . . . . 8
3.3. Subsequent Purchase Price Payments . . . . . . . . . . . . . . 8
3.4. Settlement as to Specific Receivables. . . . . . . . . . . . . 8
3.5. Reconveyance of Receivables. . . . . . . . . . . . . . . . . . 10
ARTICLE IV
CONDITIONS OF PURCHASES
4.1. Conditions Precedent to Initial Purchase . . . . . . . . . . . 10
4.2. Certification as to Representations and
Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . 12
<PAGE>
TABLE OF CONTENTS
(continued)
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ORIGINATOR
5.1. Organization, Good Standing and Due
Qualification . . . . . . . . . . . . . . . . . . . . . . . . 12
5.2. Power and Authority; Due Authorization . . . . . . . . . . . . 12
5.3. Valid Sale or Contribution; Binding
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.4. No Violation . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.5. Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.6. Bulk Sales Act . . . . . . . . . . . . . . . . . . . . . . . . 13
5.7. Government Approvals . . . . . . . . . . . . . . . . . . . . . 13
5.8. Financial Condition. . . . . . . . . . . . . . . . . . . . . . 13
5.9. Quality of Title . . . . . . . . . . . . . . . . . . . . . . . 14
5.10. Accuracy of Information. . . . . . . . . . . . . . . . . . . . 14
5.11. Offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.12. Trade Names. . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.13. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.14. Licenses and Labor Controversies . . . . . . . . . . . . . . . 15
5.15. Compliance with Applicable Laws. . . . . . . . . . . . . . . . 15
5.16. Reliance on Separate Legal Identity. . . . . . . . . . . . . . 16
5.17. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VI
COVENANTS OF ORIGINATOR
6.1. Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . 16
6.2. Reporting Requirements . . . . . . . . . . . . . . . . . . . . 18
6.3. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VII
ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF THE RECEIVABLES
-ii-
<PAGE>
TABLE OF CONTENTS
(continued)
7.1. Rights of the Company . . . . . . . . . . . . . . . . . . . . 20
7.2. Responsibilities of Originator. . . . . . . . . . . . . . . . 20
7.3. Further Action Evidencing Purchases . . . . . . . . . . . . . 21
7.4. Application of Collections. . . . . . . . . . . . . . . . . . 22
ARTICLE VIII
PURCHASE AND CONTRIBUTION TERMINATION EVENTS
8.1. Purchase and Contribution Termination
Events . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.2. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE IX
INDEMNIFICATION
9.1. Indemnities by Originator . . . . . . . . . . . . . . . . . . 24
ARTICLE X
MISCELLANEOUS
10.1. Amendments, etc . . . . . . . . . . . . . . . . . . . . . . . 26
10.2. Notices, etc. . . . . . . . . . . . . . . . . . . . . . . . . 26
10.3. No Waiver; Cumulative Remedies. . . . . . . . . . . . . . . . 26
10.4. Binding Effect; Assignability . . . . . . . . . . . . . . . . 26
10.5. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 27
10.6. Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . 27
10.7. Submission to Jurisdiction. . . . . . . . . . . . . . . . . . 27
10.8. Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . 28
10.9. Captions and Cross References;
Incorporation by Reference . . . . . . . . . . . . . . . . . 28
10.10. Execution in Counterparts . . . . . . . . . . . . . . . . . . 28
10.11. Acknowledgment and Agreement. . . . . . . . . . . . . . . . . 28
-iii-
<PAGE>
TABLE OF CONTENTS
(continued)
PAGE
----
SCHEDULES
SCHEDULE 5.13 Office Locations
SCHEDULE 5.14 Trade Names
EXHIBITS
EXHIBIT A Form of Purchase Report
EXHIBIT B Form of Company Note
EXHIBIT C Form of Opinion of Originator's Counsel
EXHIBIT D Form of Originator Note
-iv-
<PAGE>
PURCHASE AND CONTRIBUTION AGREEMENT
THIS PURCHASE AND CONTRIBUTION AGREEMENT (as amended, supplemented or
modified from time to time, this "AGREEMENT"), dated as of December 20, 1996,
is between VANSTAR CORPORATION, a Delaware corporation ("ORIGINATOR"), as
seller and contributor, and VANSTAR FINANCE CO., a Delaware corporation (the
"COMPANY"), as purchaser and contributee.
DEFINITIONS
Unless otherwise indicated, certain terms that are capitalized and used
throughout this Agreement are defined in EXHIBIT I to the Receivables
Purchase Agreement of even date herewith (as amended, supplemented or
otherwise modified from time to time, the "RECEIVABLES PURCHASE AGREEMENT"),
among the Company, Originator, as initial Servicer, POOLED ACCOUNTS
RECEIVABLE CAPITAL CORPORATION, as purchaser (together with its successors
and assigns, the "PURCHASER"), and NESBITT BURNS SECURITIES, INC., as agent
for Purchaser (together with its successors and assigns, the "AGENT").
BACKGROUND
1. The Company is a special purpose corporation, all of the capital
stock of which is wholly-owned by Originator.
2. On the Closing Date, Originator is transferring certain Pool
Receivables and Related Rights to the Company as a contribution to the
Company in return for 100 shares of the common stock of the Company.
3. In order to finance its business, Originator wishes to sell certain
Pool Receivables and Related Rights from time to time to the Company, and the
Company is willing, on the terms and subject
<PAGE>
to the conditions set forth herein, to purchase such Pool Receivables and
Related Rights from Originator.
4. The Company intends to sell to Purchaser an undivided variable
percentage interest in its Pool Receivables and Related Rights pursuant to
the Receivables Purchase Agreement in order to finance its purchases of
certain Pool Receivables and Related Rights hereunder.
5. Originator and the Company understand that Pool Receivables sold or
contributed to the Company hereunder shall not include Excluded Receivables.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
AGREEMENT TO PURCHASE AND CONTRIBUTE
1.1. AGREEMENT TO PURCHASE AND SELL. On the terms and subject to the
conditions set forth in this Agreement (including ARTICLE IV), and in
consideration of the Purchase Price, Originator agrees to sell to the
Company, and does hereby sell to the Company, and the Company agrees to
purchase from Originator, and does hereby purchase from Originator, all of
Originator's right, title and interest in and to:
(a) each Pool Receivable of Originator that existed and was owing to
Originator as of the close of Originator's business on December 20, 1996 (the
"CLOSING DATE") (other than the Pool Receivables and Related Rights
contributed by Originator to the Company pursuant to Section 3.1 (the
"CONTRIBUTED RECEIVABLES"));
(b) each Pool Receivable created or originated by Originator from the
close of Originator's business on the Closing Date to and including the
Purchase and Contribution Termination Date;
(c) all rights to, but not the obligations under, all Related Security;
-2-
<PAGE>
(d) all monies due or to become due with respect to any of the foregoing;
(e) all books and records related to any of the foregoing; and
(f) all proceeds thereof (as defined in the UCC) received on or after
the date hereof including, without limitation, all funds which either are
received by Originator, the Company or the Servicer from or on behalf of the
Obligors in payment of any amounts owed (including, without limitation,
finance charges, interest and all other charges) in respect of Pool
Receivables, or are applied to such amounts owed by the Obligors (including,
without limitation, insurance payments, if any, that Originator or the
Servicer (if other than Originator) applies in the ordinary course of its
business to amounts owed in respect of any Pool Receivable).
All purchases and contributions hereunder shall be made without recourse, but
shall be made pursuant to and in reliance upon the representations,
warranties and covenants of Originator, in its capacity as seller and
contributor, set forth in each Transaction Document. The Company's foregoing
commitment to purchase such Pool Receivables and the proceeds and rights
described in SUBSECTIONS (C) through (F) of this SECTION 1.1 (collectively,
the "RELATED RIGHTS") is herein called the "PURCHASE FACILITY."
1.2. TIMING OF PURCHASES.
(a) CLOSING DATE PURCHASES. Originator's entire right, title and
interest in (i) each Pool Receivable that existed and was owing to Originator
as of the close of Originator's business on the Closing Date, (other than
Contributed Receivables), (ii) all Related Rights with respect thereto shall
be deemed to have been sold to the Company on the Closing Date.
(b) REGULAR PURCHASES. After the Closing Date, each Pool Receivable
created or originated by Originator and described in SECTION 1.1(B) hereof
and all Related Rights shall be purchased and owned by the Company (without
any further action) upon the creation or origination of such Pool Receivable.
1.3. CONSIDERATION FOR PURCHASES. On the terms and subject to the
conditions set forth in this Agreement, the Company agrees to
-3-
<PAGE>
make all Purchase Price payments to Originator, and to reflect all
contributions, in accordance with ARTICLE III.
1.4. COMPANY AGREEMENT TO MAKE DEMAND LOANS. On the terms and subject
to the conditions set forth in this Agreement and in the Receivables Purchase
Agreement, the Company agrees to make demand loans (each such loan being
herein called an "ORIGINATOR LOAN") to Vanstar prior to the Purchase and
Contribution Termination Date in such amounts as Vanstar may request from
time to time; PROVIDED, HOWEVER, that:
(a) the Originator Loans made to Vanstar shall be evidenced by a demand
promissory note in the form of EXHIBIT D to this Agreement issued by Vanstar
to the order of the Company (such demand promissory note, as it may be
amended, supplemented, endorsed or otherwise modified from time to time in
accordance with the Transaction Documents, together with all promissory notes
issued from time to time in substitution therefor or renewal thereof in
accordance with the Transaction Documents, being called the "ORIGINATOR
NOTE");
(b) no Originator Loan shall be made to Vanstar to the extent that the
making of such Originator Loan would violate CLAUSE (O) of EXHIBIT IV to the
Receivables Purchase Agreement.
1.5. PURCHASE AND CONTRIBUTION TERMINATION DATE. The "PURCHASE AND
CONTRIBUTION TERMINATION DATE" shall be the Final Payout Date; or, if
earlier, the day following the Termination Date when a Termination Event
under CLAUSE (N) of EXHIBIT V of the Receivables Purchase Agreement shall
have occurred and be continuing.
As used herein, "PAYMENT DATE" means (i) the Closing Date and (ii) each
Business Day thereafter that Originator is open for business.
1.6. INTENTION OF THE PARTIES. It is the express intent of the parties
hereto that the transfers of the Pool Receivables (other than Contributed
Receivables) and Related Rights by the Originator to the Company, as
contemplated by this Agreement be, and be treated as, sales and not as
secured loans secured by the Pool Receivables
-4-
<PAGE>
and Related Rights. If, however, notwithstanding the intent of the parties,
such transactions are deemed to be loans, Originator hereby grants to the
Company a first priority security interest in all of Originator's right,
title and interest in and to the Pool Receivables and the Related Rights now
existing and hereafter created, all monies due or to become due and all
amounts received with respect thereto, and all proceeds thereof, to secure
all of Originator's obligations hereunder.
ARTICLE II
CALCULATION OF PURCHASE PRICE
2.1. CALCULATION OF PURCHASE PRICE. On each Servicer Report Date, the
Servicer shall deliver to the Company, the Agent and Originator (if the
Servicer is other than Originator) a report in substantially the form of
EXHIBIT A (each such report being herein called a "PURCHASE REPORT") with
respect to the matters set forth therein and the Company's purchases of Pool
Receivables from Originator
(a) that are to be made on the Closing Date (in the case of the
Purchase Report to be delivered on the Closing Date), or
(b) that were made during the period covered by the Servicer Report
required to be delivered on such Servicer Report Date to (but not including)
such Servicer Report Date (in the case of each subsequent Purchase Report).
The "PURCHASE PRICE" (to be paid to Originator in accordance with the terms
of ARTICLE III) for the Pool Receivables and the Related Rights that are
purchased on any Business Day hereunder shall be determined in accordance
with the following formula:
PP = OB - PD
WHERE:
PP = Purchase Price for each Pool Receivable as calculated on the
relevant Business Day.
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OB = the Outstanding Balance of such Pool Receivable.
PD = The Purchase Discount as measured on such Business Day pursuant
to SECTION 2.2.
2.2. DEFINITIONS AND CALCULATIONS RELATED TO PURCHASE DISCOUNT.
(a) PURCHASE DISCOUNT. "PURCHASE DISCOUNT" for the Pool Receivables
and Related Assets that were purchased from Originator on each Business Day
shall be determined in accordance with the following formula:
PD = OB x (WALD + FD)
WHERE:
PD = the Purchase Discount as measured on such Business Day
OB, in respect of Originator, has the meaning set forth in SECTION 2.1;
WALD = the Weighted Average Loss Discount as measured on such Business
Day, as determined pursuant to PARAGRAPH (b) below; and
FD = the Funding Discount as measured on such Business Day, as
determined pursuant to PARAGRAPH (c) below.
(b) WEIGHTED AVERAGE LOSS DISCOUNT. "WEIGHTED AVERAGE LOSS DISCOUNT" as
measured on any Business Day means the Weighted Average Loss Discount over the
last three calendar months ending on the last day of the calendar month ended
immediately preceding such Business Day calculated as the QUOTIENT of
(i) the SUM of (A) a rate equal to three times the Loss-to-
Liquidation Ratio for the most recent calendar month, PLUS (B) a
rate equal to two times the Loss-to-Liquidation Ratio for the
second most recent calendar month, PLUS, (C) a rate equal to the
actual Loss-to-Liquidation Ratio for the third most recent
calendar month, DIVIDED by
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(ii) six.
"LOSS TO LIQUIDATION RATIO" means the ratio (expressed as a percentage)
computed as of the last day of each month by dividing (i) the aggregate
Outstanding Balance of all Pool Receivables originated by Originator that were
charged-off as uncollectible during the most recent calendar month then ended by
(ii) the aggregate Collections (other than deemed Collections) received by the
Company or Originator during such month.
(c) Funding Discount. "Funding Discount" as measured on any Business Day
means a percentage determined in accordance with the following formula:
FD = (OTD/360) x FR
WHERE:
FD = the Funding Discount as measured on such Business Day;
OTD = the "ORIGINATOR TURNOVER DAYS" for Originator, which shall be
equal to the PRODUCT of (x) the QUOTIENT of (i) the aggregate
Outstanding Balance of Pool Receivables originated by Originator
as of the last day of the calendar month which occurs two months
prior to the month in which such Business Day occurs, DIVIDED by
(ii) the aggregate amount of the Collections received during the
month ending on the last day of the calendar month ended
immediately preceding such Business Day on Pool Receivables
originated by Originator, MULTIPLIED by (y) the number of days in
the month ending on the last day of the most recently ended
calendar month; and
FR = the Funding Rate as measured on such Business Day, as determined
pursuant to PARAGRAPH (d) below, or, in the case of the initial
purchase, a Funding Rate equal to 5.85% per annum
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(d) FUNDING RATE. "FUNDING RATE" as measured on any Business Day means a
per annum percentage rate determined in accordance with the following formula:
FR = 0.02% + DRP + SFP + EXP
WHERE:
FR = the Funding Rate as measured on such Business Day;
DRP = the "DISCOUNT RATE PERCENTAGE", which shall be equal to a
fraction (expressed as a percentage) (x) the NUMERATOR of which
is the SUM of the PRODUCTS obtained by MULTIPLYING (A) each CP
Rate or Bank Rate applicable to each Portion of Investment
outstanding as of such Business Day, TIMES (B) the amount of the
Portion of Investment to which such CP Rate or Bank Rate applied
on such day, and (y) the DENOMINATOR of which is the aggregate
outstanding amount of Investment on such day;
SFP = the "SERVICER'S FEE PERCENTAGE", which shall be equal to the per
annum percentage rate contemplated by the definition of Servicing
Fee; and
EXP = the amount, expressed as a per annum percentage rate, of any
fees, costs and expenses incurred by the Company on such Business
Day (and not accounted for in the Discount Rate Percentage),
including without limitation reserve costs, tax payments and
indemnity obligations of the Company for which the Company is not
indemnified pursuant to this Agreement; PROVIDED, HOWEVER, that,
for purposes of minimizing fluctuations in the rate calculated as
the Funding Rate, the Servicer may allocate and spread any
unscheduled or unaccruable costs and expenses of the Company over
several months at the Servicer's reasonable discretion, subject
to the requirement that such allocation be reasonably calculated
to allow the Company to recover such costs and expenses over a
reasonable period of time.
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ARTICLE III
CONTRIBUTION OF RECEIVABLES;
PAYMENT OF PURCHASE PRICE
3.1. CONTRIBUTION OF RECEIVABLES. On the Closing Date, Originator shall,
and hereby does, contribute to the capital of the Company, Pool Receivables and
Related Rights with respect thereto consisting of each Pool Receivable of
Originator that existed and was owing to Originator on the Closing Date,
beginning with the oldest of such Pool Receivables and continuing
chronologically thereafter, and all or an undivided interest in the most recent
of such contributed Pool Receivables such that the aggregate Outstanding Balance
of all such contributed Pool Receivables shall be equal to $30,000,000.
3.2. INITIAL PURCHASE PRICE PAYMENT. On the terms and subject to the
conditions set forth in this Agreement, the Company agrees to pay to Originator
the Purchase Price for the purchase of Pool Receivables to be made on the
Closing Date, partially in cash in the amount of the proceeds of the Purchase
made by the Purchaser on the Closing Date under the Receivables Purchase
Agreement, and partially by issuing a promissory note in the form of EXHIBIT B
to Originator with an initial principal balance equal to the remaining Purchase
Price (as such promissory note may be amended, supplemented, indorsed or
otherwise modified from time to time, together with all promissory notes issued
from time to time in substitution therefor or renewal thereof in accordance with
the Transaction Documents, being herein called the "COMPANY NOTE").
3.3. SUBSEQUENT PURCHASE PRICE PAYMENTS. On each Business Day falling
after the Closing Date and on or prior to the Purchase and Contribution
Termination Date, on the terms and subject to the conditions set forth in this
Agreement, the Company shall pay to Originator the Purchase Price for the Pool
Receivables sold by Originator to the Company on such Business Day in cash, to
the extent provided under SECTION 1.2 of the Receivables Purchase Agreement,
SECOND, to the extent any of such Purchase Price remains unpaid, the principal
amount outstanding under the Originator Note shall be reduced and deemed paid in
an amount equal to such remaining Purchase Price, until such outstanding
principal amount is reduced to zero, and THIRD, to the extent any portion of the
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Purchase Price remains unpaid such remaining portion of such Purchase Price
shall be paid by means of an automatic increase to the outstanding principal
amount of the Company Note.
Servicer shall make all appropriate record keeping entries with respect to
the Company Note or otherwise to reflect the foregoing payments and adjustments
pursuant to SECTION 3.4, and Servicer's books and records shall constitute
rebuttable presumptive evidence of the principal amount of and accrued interest
on the Company Note at any time. Furthermore, Servicer shall hold the Company
Note for the benefit of Originator, and all payments under the Company Note
shall be made to Originator. Originator hereby irrevocably authorizes Servicer
to mark the Company Note "CANCELLED" and to return the Company Note to the
Company upon the final payment thereof after the occurrence of the Purchase and
Contribution Termination Date.
3.4. SETTLEMENT AS TO SPECIFIC RECEIVABLES AND DILUTION.
(a) If on the day of purchase or contribution of any Pool Receivable from
Originator hereunder, any of the representations or warranties set forth in
SECTION 5.4 or 5.11 is not true with respect to such Pool Receivable or as a
result of any action or inaction of Originator, on any day any of the
representations or warranties set forth in SECTION 5.4 or 5.11 is no longer true
with respect to such a Pool Receivable, then the Purchase Price (or in the case
of a Contributed Receivable, the Outstanding Balance of such Pool Receivable
(the "CONTRIBUTED VALUE")) with respect to such Receivables shall be reduced by
an amount equal to the Outstanding Balance of such Pool Receivable and shall be
accounted to Originator as provided in SUBSECTION (c) below; PROVIDED, that if
the Company thereafter receives payment on account of Collections due with
respect to such Pool Receivable, the Company promptly shall deliver such funds
to Originator.
(b) If, on any day, the Outstanding Balance of any Pool Receivable
(including any Contributed Receivable) purchased (or contributed) hereunder is
reduced or adjusted as a result of any defective, rejected, or returned goods or
services, or any discount or other adjustment made by Originator, Company or
Servicer or any setoff or dispute between the Seller, Originator or the Servicer
and an Obligor as indicated on the books of the Company (or, for periods
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prior to the Closing Date, the books of Originator), then the Purchase Price
or the Contributed Value, as the case may be, with respect to such Pool
Receivable shall be reduced by the amount of such net reduction and shall be
accounted to Originator as provided in SUBSECTION (c) below.
(c) Any reduction in the Purchase Price (or Contributed Value) of any Pool
Receivable pursuant to SUBSECTION (a) or (b) above shall be applied as a credit
for the account of the Company against the Purchase Price of Pool Receivables
subsequently purchased by the Company from Originator hereunder; PROVIDED,
HOWEVER if there have been no purchases of Pool Receivables (or insufficiently
large purchases of Pool Receivables) to create a Purchase Price sufficient to so
apply such credit against, the amount of such credit
(i) shall be paid in cash to the Company by Originator in the manner
and for application as described in the following proviso, or
(ii) shall be deemed to be a payment under, and shall be deducted
from the principal amount outstanding under, the Company Note, to the
extent that such payment is permitted under CLAUSE (o) of EXHIBIT IV of the
Receivables Purchase Agreement;
PROVIDED, FURTHER, that at any time (y) when a Termination Event or Unmatured
Termination Event exists or (z) on or after the Purchase and Contribution
Termination Date, the amount of any such credit shall be paid by Originator to
the Company by deposit in immediately available funds into the Collection
Account for application by Servicer to the same extent as if Collections of the
applicable Pool Receivable in such amount had actually been received on such
date.
(d) Each Purchase Report (other than the Purchase Report delivered on the
Closing Date) shall include, in respect of the Pool Receivables previously
generated by Originator (including the Contributed Receivables), a calculation
of the aggregate reductions described in SUBSECTION (a) or (b) relating to such
Pool Receivables since the last Purchase Report delivered hereunder, as
indicated on the books of the Company (or, for such period prior to the Closing
Date, the books of Originator).
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3.5. RECONVEYANCE OF RECEIVABLES. In the event that Originator has paid
to the Company the full Outstanding Balance of any Pool Receivable pursuant to
SECTION 3.4, the Company shall reconvey such Pool Receivable to Originator,
without representation or warranty, but free and clear of all liens created by
the Company.
ARTICLE IV
CONDITIONS OF PURCHASES
4.1. CONDITIONS PRECEDENT TO INITIAL PURCHASE. The initial purchase
hereunder is subject to the condition precedent that the Company shall have
received, on or before the Closing Date, the following, each (unless otherwise
indicated) dated the Closing Date, and each in form, substance and date
satisfactory to the Company:
(a) A counterpart of this Agreement and the other Transaction Documents
duly executed by the parties hereto and thereto, together with each of the
closing documents required to be delivered under any Transaction Document;
(b) Certified copies of (i) the resolutions of the Board of Directors of
each of the Company and Originator authorizing the execution, delivery, and
performance by the Company and Originator of this Agreement and the other
Transaction Documents to which it is a party, (ii) all documents evidencing
other necessary corporate action and governmental approvals, if any, with
respect to this Agreement and such other Transaction Documents and (iii) the
certificate of incorporation and by-laws of the Company and Originator;
(c) A certificate of the Secretary or Assistant Secretary of each of the
Company and Originator certifying the names and true signatures of the officers
of the Company and Originator authorized to sign this Agreement and the other
Transaction Documents to which it is a party. Until the Company and the
Servicer (if not the Originator) receives a subsequent incumbency certificate
from Originator, in form and substance satisfactory to the Company (and the
Servicer), the Company and the Servicer shall be entitled to rely on the last
such certificate delivered to it by Originator;
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(d) Copies of the proper financing statements (Form UCC-1) that have been
duly executed and name Originator as the assignor and the Company as the
assignee (and Purchaser as assignee of the Company) of the Pool Receivables
generated by Originator and Related Rights or other, similar instruments or
documents, as may be necessary or, in Servicer's or the Agent's opinion,
desirable under the UCC of all appropriate jurisdictions or any comparable law
of all appropriate jurisdictions to perfect the Company's ownership interest in
all Pool Receivables and Related Rights in which an ownership interest may be
assigned to it hereunder;
(e) Completed UCC requests for information, dated on or before the date of
such initial purchase, listing the financing statements referred to in
SUBSECTION (d) above and all other effective financing statements filed in the
jurisdictions referred to in SUBSECTION (d) above that name the Company or any
Originator as debtor, together with copies of such other financing statements
(none of which shall cover any Pool Receivables, Contracts or Related Security),
and similar search reports with respect to federal tax liens and liens of the
Pension Benefit Guaranty Corporation in such jurisdictions as the Servicer and
the Agent may request, showing no such liens on any of the Pool Receivables,
Contracts or Related Security;
(f) Favorable opinions of Arter & Hadden, special counsel to Originator,
in the form of EXHIBIT C;
(g) Evidence (i) of the execution and delivery by each of the parties
thereto of each of the other Transaction Documents to be executed and delivered
in connection herewith and (ii) that each of the conditions precedent to the
execution, delivery and effectiveness of such other Transaction Documents has
been satisfied to the Company's satisfaction; and
(h) A certificate from an officer of Originator to the effect that
Servicer and Originator have placed on the most recent, and have taken all steps
reasonably necessary to ensure that there shall be placed on subsequent, summary
master control data processing reports the following legend (or the substantive
equivalent thereof): "THE POOL RECEIVABLES DESCRIBED HEREIN HAVE BEEN SOLD TO
VANSTAR FINANCE CO. PURSUANT TO A PURCHASE AND CONTRIBUTION AGREEMENT, DATED AS
OF DECEMBER 20, 1996, BETWEEN VANSTAR FINANCE
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CO. AND VANSTAR CORPORATION; AND AN INTEREST IN THE POOL RECEIVABLES
DESCRIBED HEREIN HAS BEEN GRANTED TO POOLED ACCOUNTS RECEIVABLE CAPITAL
CORPORATION, PURSUANT TO A RECEIVABLES PURCHASE AGREEMENT, DATED AS OF
DECEMBER 20, 1996, AMONG VANSTAR CORPORATION, VANSTAR FINANCE CO., POOLED
ACCOUNTS RECEIVABLE CAPITAL CORPORATION, AND NESBITT BURNS SECURITIES, INC.,
AS AGENT."
4.2. CERTIFICATION AS TO REPRESENTATIONS AND WARRANTIES. Originator, by
accepting the Purchase Price related to each purchase of Pool Receivables (and
Related Rights) shall be deemed to have certified that the representations and
warranties contained in ARTICLE V are true and correct on and as of such day,
with the same effect as though made on and as of such day.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ORIGINATOR
In order to induce the Company to enter into this Agreement and to make
purchases and accept contributions hereunder, Originator, in its capacity as
seller under this Agreement, hereby makes the representations and warranties set
forth in this ARTICLE V.
5.1. ORGANIZATION, GOOD STANDING AND DUE QUALIFICATION. Originator is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and is duly qualified to do business, and is in
good standing, as a foreign corporation in every jurisdiction where the nature
of its business requires it to be so qualified and where the failure to so
qualify would be reasonably expected to have a Material Adverse Effect.
5.2. POWER AND AUTHORITY; DUE AUTHORIZATION. Originator has (a) all
necessary corporate power, authority and legal right (i) to execute and deliver,
and perform its obligations under, each Transaction Document to which it is a
party, as seller, and (ii) to generate, own, sell, contribute and assign Pool
Receivables and Related Rights on the terms and subject to the conditions herein
and therein provided; and (b) duly authorized such execution and delivery and
such sale, contribution and assignment and the performance of such obligations
by all necessary corporate action.
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5.3. VALID SALE OR CONTRIBUTION; BINDING OBLIGATIONS. Each sale or
contribution, as the case may be, of Pool Receivables and Related Rights made by
Originator pursuant to this Agreement shall constitute a valid sale or
contribution, as the case may be, transfer, and assignment thereof to the
Company, enforceable against creditors of, and purchasers from, Originator; and
this Agreement constitutes, and each other Transaction Document to be signed by
Originator, as seller, when duly executed and delivered, will constitute, a
legal, valid, and binding obligation of Originator, enforceable in accordance
with its terms; except in each case as enforceability may be limited by
bankruptcy, insolvency, reorganization, or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
5.4. NO VIOLATION. The consummation of the transactions contemplated by
this Agreement and the other Transaction Documents to which Originator is a
party as seller, and the fulfillment of the terms hereof or thereof will not (a)
conflict with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time or both) a default under (i)
Originator's certificate of incorporation or by-laws, or (ii) any indenture,
loan agreement, mortgage, deed of trust, or other agreement or instrument to
which it is a party or by which it is bound, (b) result in the creation or
imposition of any Adverse Claim upon any of its properties pursuant to the terms
of any such indenture, loan agreement, mortgage, deed of trust, or other
agreement or instrument, other than the Transaction Documents, or (c) violate
any law or any order, rule, or regulation applicable to it of any court or of
any federal, state or foreign regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over it or any of its
properties.
5.5. PROCEEDINGS. There is no litigation or, to Originator's knowledge,
any proceeding or investigation pending before any Governmental Authority (a)
asserting the invalidity of any Transaction Document to which Originator is a
party as seller, (b) seeking to prevent the sale or contribution of Pool
Receivables and Related Rights to the Company or the consummation of any of the
other transactions contemplated by any Transaction Document to which Originator
is a party as seller, or (c) seeking any determination or
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ruling that could reasonably be expected to have a Material Adverse Effect.
5.6. BULK SALES ACT. No transaction contemplated hereby requires
compliance with any bulk sales act or similar law.
5.7. GOVERNMENT APPROVALS. Except for (x) the filing of the UCC financing
statements referred to in ARTICLE IV, all of which, at the time required in
ARTICLE IV, shall have been duly made and shall be in full force and effect, and
(y) in respect of enforceability against (1) a Federal Obligor, any filings
required under the Assignment of Claims Act and (2) a Local Government Obligor,
any filings required by any applicable state or local Governmental Authority no
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required for Originator's due
execution, delivery and performance of any Transaction Document to which it is a
party, as seller.
5.8. FINANCIAL CONDITION.
(a) On the date hereof, and on the date of each sale of Pool Receivables
by Originator to the Company (both before and after giving effect to such sale),
Originator shall be Solvent.
(b) The consolidated balance sheets of Originator and its consolidated
subsidiaries as at April 30, 1996, a copy of which has been furnished to the
Company, fairly presents the financial condition of Originator and its
subsidiaries, as at such date, the consolidated balance sheets of Originator and
its subsidiaries as at July 31, 1996, a copy of which has been delivered to the
Company, fairly presents the financial condition of Originator and its
subsidiaries as at such date, and since April 30, 1996 there has been no change
in the ability of Originator to perform its obligations under the Agreement or
the other Transaction Documents to which it is a party or the collectibility of
the Pool Receivables, or which affects the legality, validity or enforceability
of the Agreement or the other Transaction Documents which would be reasonably
expected to have a Material Adverse Effect.
5.9. QUALITY OF TITLE.
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(a) Each Pool Receivable (together with the Related Rights) which is to be
sold or contributed to the Company hereunder is or shall be owned by Originator,
free and clear of any Adverse Claim (other than any Permitted IBMCC Claim or any
Permitted Inventory Claim which, in either case, is automatically and
irrevocably released upon any transfer hereunder). Whenever the Company makes a
purchase, or accepts a contribution, hereunder, it shall have acquired a valid
and perfected ownership interest (free and clear of any Adverse Claim) in all
Pool Receivables generated by Originator and all Collections related thereto,
and in Originator's entire right, title and interest in and to the other Related
Rights with respect thereto.
(b) No effective financing statement or other instrument similar in effect
covering any Pool Receivable generated by Originator or any right related to any
such Pool Receivable is on file in any recording office except such as may be
filed in favor of the Company or Originator, as the case may be, in accordance
with this Agreement or in favor of the Purchaser in accordance with the
Receivables Purchase Agreement.
5.10. ACCURACY OF INFORMATION. Each report, information, exhibit,
financial statement, document, book, record or report furnished or to be
furnished at any time by Originator to the Company, the Purchaser or the Agent
in connection with this Agreement or any Transaction Document is or will be
accurate in all material respects as of its date or (except as otherwise
disclosed at such time) as of the date so furnished, and no such item contains
or will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements contained
therein, in the light of the circumstances under which they were made, not
misleading.
5.11. OFFICES. Originator's principal place of business and chief
executive office is located at the address set forth under Originator's
signature hereto, and the offices where Originator keeps all its books, records
and documents evidencing the Pool Receivables, the related Contracts and all
other agreements related to such Pool Receivables are located at the addresses
specified on SCHEDULE 5.13 (or at such other locations, notified to Servicer (if
other than Originator) and the Agent in accordance with SECTION
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6.1(f), in jurisdictions where all action required by SECTION 7.3 has been
taken and completed).
5.12. TRADE NAMES. Except as disclosed on SCHEDULE 5.14, Originator does
not use any trade name other than its actual corporate name. From and after the
date that fell five (5) years before the date hereof, Originator has not been
known by any legal name other than its corporate name as of the date hereof, nor
has Originator been the subject of any merger or other corporate reorganization
except as disclosed on SCHEDULE 5.14.
5.13. TAXES. Originator has filed all tax returns and reports required by
law to have been filed by it and has paid all taxes and governmental charges
thereby shown to be owing, except any such taxes which are not yet delinquent or
are being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with generally accepted accounting
principles shall have been set aside on its books.
5.14. LICENSES AND LABOR CONTROVERSIES.
(a) Originator has not failed to obtain any licenses, permits, franchises
or other governmental authorizations necessary to the ownership of its
properties or to the conduct of its business, which violation or failure to
obtain would be reasonably expected to have a Material Adverse Effect; and
(b) There are no labor controversies pending against Originator that have
had (or are reasonably likely to have) a Material Adverse Effect.
5.15. COMPLIANCE WITH APPLICABLE LAWS. Originator is in compliance, in
all material respects, with the requirements of (i) all applicable laws, rules,
regulations, and orders of all governmental authorities (including, without
limitation, Regulation Z, laws, rules and regulations relating to usury, truth
in lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy and all other consumer
laws applicable to the Pool Receivables and related Contracts) (excluding with
respect to environmental matters which are covered by CLAUSE (ii)), and (ii) to
the best of its knowledge,
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all applicable environmental laws, rules, regulations and orders of all
governmental authorities.
5.16. RELIANCE ON SEPARATE LEGAL IDENTITY. Originator is aware that
Purchaser and the Agent are entering into the Transaction Documents to which
they are parties in reliance upon the Company's identity as a legal entity
separate from Originator.
5.17. PURCHASE PRICE. The purchase price payable by the Company to the
Originator hereunder is intended by the Originator and Company to be consistent
with the terms that would be obtained in an arm's length sale. The Servicer's
Fee payable to the Originator is intended to be consistent with terms that would
be obtained in an arm's length servicing arrangement.
ARTICLE VI
COVENANTS OF ORIGINATOR
6.1. AFFIRMATIVE COVENANTS. From the date hereof until the first day
following the Final Payout Date, Originator will, unless the Company and the
Agent shall otherwise consent in writing:
(a) COMPLIANCE WITH LAWS, ETC. Comply in with all applicable laws, rules,
regulations and orders, including those with respect to the Pool Receivables
generated by it and the related Contracts and other agreements related thereto
except to the extent that the failure so to comply with such laws, rules,
regulations and orders would not be reasonably expected to have a Material
Adverse Effect.
(b) PRESERVATION OF CORPORATE EXISTENCE. Preserve and maintain its
corporate existence, rights, franchises and privileges in the jurisdiction of
its incorporation, and qualify and remain qualified in good standing as a
foreign corporation in each jurisdiction where the failure to preserve and
maintain such existence, rights, franchises, privileges and qualification could
reasonably be expected to have a Material Adverse Effect.
(c) RECEIVABLES REVIEW. (i) At any time and from time to time (but not
more than three audits during any calendar year during the
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term of this Agreement and so long as no Termination Event has occurred and
is continuing shall be paid for by Seller) during regular business hours,
upon reasonable prior notice, permit the Company and/or the Agent, or their
respective agents or representatives, (A) to examine, to audit and make
copies of and abstracts from all books, records and documents (including,
without limitation, computer tapes and disks) in the possession or under the
control of Originator relating to the Pool Receivables and Related Rights,
including, without limitation, the Contracts and other agreements related
thereto, and (B) to visit Originator's offices and properties for the purpose
of examining such materials described in the foregoing CLAUSE (A) and
discussing matters relating to the Pool Receivables and Related Rights or
Originator's performance hereunder with any of the officers or employees of
Originator having knowledge of such matters; and (ii) without limiting the
provisions of CLAUSE (i) next above, from time to time on request of the
Agent, permit certified public accountants or other auditors acceptable to
the Agent to conduct a review of its books and records with respect to the
Pool Receivables and Related Rights.
(d) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Maintain an ability to
recreate records evidencing the Pool Receivables in the event of the destruction
of the originals thereof.
(e) PERFORMANCE AND COMPLIANCE WITH RECEIVABLES AND CONTRACTS. Originator
shall, at its expense, timely and fully perform and comply with all material
provisions, covenants and other promises required to be observed by it under the
Contracts related to the Pool Receivables, and timely and fully comply in all
material respects with the Credit and Collection Policy with regard to each Pool
Receivable and the related Contract except to the extent that all such failures
to comply therewith would not be reasonably expected to have a Material Adverse
Effect.
(f) LOCATION OF RECORDS. Keep its principal place of business and chief
executive office, and the offices where it keeps its records concerning or
related to Pool Receivables and Related Rights, at the address(es) referred to
in SCHEDULE 5.13 or, upon 60 days' prior written notice to the Company and the
Agent, at such other locations in jurisdictions where all action required by
SECTION 7.3 shall have been taken and completed.
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(g) SEPARATE CORPORATE EXISTENCE OF THE COMPANY. Take such actions as
shall be required in order that:
(i) the Company's operating expenses (other than certain
organization expenses and fees and expenses incurred in connection with
the preparation, negotiation and delivery of the Transaction Documents)
will not be paid by Originator;
(ii) the Company's books and records will be maintained separately
from those of Originator;
(iii) all financial statements of Originator that are consolidated to
include the Company will contain detailed notes clearly stating that (A)
all of the Company's assets are owned by the Company, and (B) the Company
is a separate entity with creditors who have received interests in the
Company's assets;
(iv) Originator will strictly observe corporate formalities in its
dealing with the Company;
(v) Originator shall not commingle its funds with any funds of the
Company;
(vi) Originator will maintain arm's length relationships with the
Company, and Originator will be compensated at market rates for any
services it renders or otherwise furnishes to the Company; and
(vii) Originator will not be, and will not hold itself out to be,
responsible for the debts of the Company or the decisions or actions in
respect of the daily business and affairs of the Company (other than with
respect to such decisions or actions of the Originator in its capacity as
Servicer).
(h) RECEIPT OF COLLECTIONS. Originator shall promptly remit to the
applicable post office box related to the Lock-Box Accounts (or cause to be
deposited directly to such Lock-Box Accounts) all Collections received by
Originator.
6.2. REPORTING REQUIREMENTS. From the date hereof until the first day
following the Purchase and Contribution Termination Date,
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Originator shall, unless the Agent and the Company shall otherwise consent in
writing, furnish to the Company and the Agent:
(a) PROCEEDINGS. Promptly after Originator has knowledge thereof, written
notice to the Company and the Agent of (a) litigation, investigation or
proceeding which may exist at any time Originator, on the one hand, and any
Governmental Authority which, if not cured or if adversely determined, as the
case may be, would be reasonably expected to have a Material Adverse Effect or,
(b) litigation or proceeding adversely affecting Originator in which the amount
involved is $100,000 or more and not covered by insurance or for which adequate
reserves are not maintained on the financial statements of such Person or the
consolidated balance sheet of Vanstar or in which injunctive or similar relief
is sought or (c) litigation or proceeding relating to any Transaction Document;
(b) OTHER. Promptly, from time to time, such other information,
documents, records or reports respecting the Pool Receivables, the Related
Rights or Originator's performance hereunder that the Company or the Agent may
from time to time reasonably request in order to protect the interests of the
Company, the Purchaser, the Agent or any other Affected Party under or as
contemplated by the Transaction Documents.
6.3. NEGATIVE COVENANTS. From the date hereof until the date following
the Final Payout Date, Originator agrees that, unless the Agent and the Company
shall otherwise consent in writing, it shall not:
(a) SALES, LIENS, ETC. Except as otherwise provided herein or in any
other Transaction Document, (i) sell, assign (by operation of law or otherwise)
or otherwise dispose of, or create or suffer to exist any Adverse Claim upon or
with respect to, the Company Note (other than any Permitted IBMCC Claim), the
Originator Note, any Pool Receivable or related Contract, Collections or Related
Security, or any interest therein, or assign any right to receive income in
respect thereof, or (ii) create or suffer to exist any Adverse Claim (other than
any Permitted IBMCC Claim or Permitted Inventory Claim which, in either case, is
automatically and irrevocably released upon any transfer hereunder) upon or with
respect to any proceeds of its inventory.
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(b) EXTENSION OR AMENDMENT OF RECEIVABLES. Except as otherwise permitted
in SECTION 4.2(a) of the Receivables Purchase Agreement or in accordance with
the Credit and Collection Policy, extend, amend or otherwise modify the terms of
any Pool Receivable in any material respect, or amend, modify or waive, in any
material respect, any term or condition of any Contract related thereto (which
term or condition relates to payments under, or the enforcement of, such
Contract).
(c) CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY. Make any material
change in the character of its business or in the Credit and Collection Policy
that would (i) adversely affect the collectibility of the Receivables Pool, (ii)
create a material defense to the payment of any Pool Receivable in the
Receivables Pool or (iii) adversely affect the credit criteria used in approving
customers that are potential Obligors of Product Business Receivables.
Originator shall not make any other change in the Credit and Collection Policy
without the prior written consent of the Agent if such change would be
reasonably expected to have a Material Adverse Effect.
(d) RECEIVABLES NOT TO BE EVIDENCED BY PROMISSORY NOTES OR CHATTEL PAPER.
Take any action to cause or permit any Pool Receivable generated by it to become
evidenced by any "instrument" or "chattel paper" (as defined in the applicable
UCC) unless such "instrument" or "chattel paper" shall be delivered to the
Company (which in turn shall deliver the same to the Purchaser (or the Agent on
its behalf)).
(e) MERGERS, ACQUISITIONS, SALES, ETC. Merge or consolidate with another
Person (except pursuant to a merger or consolidation involving Originator where
Originator is the surviving corporation), or convey, transfer, lease or
otherwise dispose of (whether in one or in a series of transactions), all or
substantially all of its assets (whether now owned or hereafter acquired), other
than pursuant to this Agreement.
(f) LOCK-BOX BANKS. Make any changes in its instructions to Obligors
regarding Collections or add or terminate any Lock-Box Bank unless the
requirements of CLAUSE (i) of EXHIBIT IV of the Receivables Purchase Agreement
have been met.
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(g) ACCOUNTING FOR PURCHASES. Account for or treat (whether in financial
statements or otherwise) the transactions contemplated hereby in any manner
other than as sales of the Pool Receivables and Related Security by Originator
to the Company.
(h) TRANSACTION DOCUMENTS. Enter into, execute, deliver or otherwise
become bound by any agreement, instrument, document or other arrangement that
restricts the right of Originator to amend, supplement, amend and restate or
otherwise modify, or to extend or renew, or to waive any right under, this
Agreement or any other Transaction Documents.
(i) USE OF PROCEEDS. Use any proceeds of any sale hereunder (x) in
connection with any hostile tender offer or (y) for any purpose that violates
any applicable law, rule or regulation, including, without limitation,
Regulations G or U of the Federal Reserve Board.
ARTICLE VII
ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF THE RECEIVABLES
7.1. RIGHTS OF THE COMPANY. Originator hereby authorizes the Company and
the Servicer (if other than Originator) or their respective designees to take
any and all steps in Originator's name necessary or desirable, in their
respective determination, to collect all amounts due under any and all Pool
Receivables and Related Rights, including, without limitation, endorsing
Originator's name on checks and other instruments representing Collections and
enforcing such Pool Receivables and the provisions of the related Contracts that
concern payment and/or enforcement of rights to payment.
7.2. RESPONSIBILITIES OF ORIGINATOR. Anything herein to the contrary
notwithstanding:
(a) Originator agrees to direct, and hereby grants to each of the Company
and the Agent (to the extent permitted in the Receivables Purchase Agreement)
the authority to direct, all Obligors to make payments of Pool Receivables
directly to a Lock-Box Account at a Lock-Box Bank. Originator further agrees to
transfer
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any Collections that it receives directly to Servicer (for deposit to such a
Lock-Box Account) within two Business Days of receipt thereof, and agrees
that all such Collections shall be deemed to be received in trust for the
Company.
(b) Originator shall perform its obligations hereunder, and the exercise
by the Company or its designee of its rights hereunder shall not relieve
Originator from such obligations.
(c) None of the Company, Servicer (if other than the Originator),
Purchaser or the Agent shall have any obligation or liability to any Obligor or
any other third Person with respect to any Pool Receivables, Contracts related
thereto or any other related agreements, nor shall the Company, Servicer (if
other than the Originator), Purchaser or the Agent be obligated to perform any
of the obligations of Originator thereunder.
(d) Originator hereby grants to Servicer (if other than Originator) an
irrevocable power of attorney, with full power of substitution, coupled with an
interest, to take in the name of Originator all steps necessary or advisable to
indorse, negotiate or otherwise realize on any writing or other right of any
kind held or transmitted by Originator or transmitted or received by the Company
(whether or not from Originator) in connection with any Pool Receivable or
Related Right.
7.3. FURTHER ACTION EVIDENCING PURCHASES. Originator agrees that from
time to time, at its expense, it will promptly execute and deliver all further
instruments and documents, and take all further action that the Company or
Servicer may reasonably request in order to perfect, protect or more fully
evidence the Pool Receivables (and the Related Rights) purchased by, or
contributed to, the Company hereunder, or to enable the Company to exercise or
enforce any of its rights hereunder or under any other Transaction Document.
Without limiting the generality of the foregoing, upon the request of the
Company, Originator will:
(a) execute and file such financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or
notices, as may be necessary or appropriate; and
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(b) mark the summary master control data processing records with the
legend set forth in SECTION 4.1(i).
Originator hereby authorizes the Company or its designee to file one or more
financing or continuation statements, and amendments thereto and assignments
thereof, relative to all or any of the Pool Receivables (and the Related Rights)
now existing or hereafter generated by Originator. If Originator fails to
perform any of its agreements or obligations under this Agreement, the Company
or its designee may (but shall not be required to) itself perform, or cause
performance of, such agreement or obligation, and the expenses of the Company or
its designee incurred in connection therewith shall be payable by Originator as
provided in SECTION 10.6.
7.4. APPLICATION OF COLLECTIONS. Any payment by an Obligor in respect of
any indebtedness owed by it to Originator shall, except as otherwise specified
by such Obligor or otherwise required by contract or law and unless otherwise
instructed by the Company or the Agent, be applied FIRST, as a Collection of any
Pool Receivables of such Obligor, in the order of the age of such Pool
Receivables, starting with the oldest of such Pool Receivables, and SECOND, to
any other indebtedness of such Obligor.
ARTICLE VIII
PURCHASE AND CONTRIBUTION TERMINATION EVENTS
8.1. PURCHASE AND CONTRIBUTION TERMINATION EVENTS. Each of the following
events or occurrences described in this SECTION 8.1 shall constitute a "PURCHASE
AND CONTRIBUTION TERMINATION EVENT":
(a) The Facility Termination Date (as defined in the Receivables Purchase
Agreement) shall have occurred; or
(b) Originator shall fail to make any payment or deposit to be made by it
hereunder when due and such failure shall remain unremedied for two Business
Days; or
(c) Any representation or warranty made or deemed to be made by Originator
(or any of its officers) under or in connection with this Agreement, any other
Transaction Document or any other
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information or report delivered pursuant hereto or thereto shall prove to
have been false or incorrect in any material respect when made or deemed
made; or
(d) Originator shall fail to perform or observe in any material respect
any agreement contained in any of SECTIONS 6.1(g) or 6.3; or
(e) Originator shall fail to perform or observe any other term, covenant
or agreement contained in this Agreement on its part to be performed or observed
and such failure shall remain unremedied for thirty (30) days after the earlier
of (x) the date on which Originator shall have knowledge thereof and (y) notice
thereof shall have been given by Servicer, the Agent or the Company to
Originator; or
(f) The Originator or any of its subsidiaries shall fail to pay any
principal of or premium or interest on any of its Debt which is outstanding in a
principal amount of at least $10,000,000 in the aggregate when the same becomes
due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall continue after the
applicable grace period, if any, specified in the instrument, mortgage,
indenture or other agreement relating to such Debt; or any other event shall
occur or condition shall exist under any instrument, mortgage, indenture or
other agreement relating to any such Debt and shall continue after the
applicable grace period, if any, specified in such instrument, mortgage,
indenture or other agreement, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or any
such Debt shall be declared to be due and payable, or required to be prepaid,
redeemed, purchased or defeased, or an offer to repay, redeem, purchase or
defease such Debt shall be required to be made in each case prior to the stated
maturity thereof (other than by a regularly scheduled required payment or in
connection with sales of assets or the issuance of Debt or other securities, if
the instrument, mortgage, indenture or other agreement relative to such Debt
requires the prepayment, redemption, purchase or defeasance of such Debt in
connection with such sale or issuance and the proceeds from such sale or
issuance are used to prepay, redeem, purchase or defease such Debt in accordance
with its terms); or
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(g) The Internal Revenue Service shall file notice of a lien pursuant to
Section 6373 of the Internal Revenue Code with regard to any of assets of
Originator and such lien shall not have been released within ten Business Days,
or the Pension Benefit Guaranty Corporation shall, or shall indicate its
intention to, file notice of a lien pursuant to Section 4068 of ERISA with
regard to any of the assets of the Originator; or
(h) A Termination Event under the Receivables Purchase Agreement shall
have occurred.
8.2. REMEDIES.
(i) OPTIONAL TERMINATION. Upon the occurrence of a Purchase and
Contribution Termination Event, the Company (and not Servicer) shall have
the option by notice to Originator (with a copy to the Agent) to declare
the Purchase and Contribution Termination Date to have occurred.
(ii) REMEDIES CUMULATIVE. Upon any termination of the Facility
pursuant to this SECTION 8.2, the Company shall have, in addition to all
other rights and remedies under this Agreement or otherwise, all other
rights and remedies provided under the UCC of each applicable jurisdiction
and other applicable laws, which rights shall be cumulative. Without
limiting the foregoing, the occurrence of the Purchase and Contribution
Termination Date shall not deny the Company any remedy in addition to
termination of the Purchase Facility to which the Company may be otherwise
appropriately entitled, whether at law or equity.
ARTICLE IX
INDEMNIFICATION
9.1. INDEMNITIES BY ORIGINATOR. Without limiting any other rights which
the Company may have hereunder or under applicable law, Originator hereby agrees
to indemnify the Company and each of its assigns, officers, directors, employees
and agents (each of the foregoing Persons being individually called a "PCA
INDEMNIFIED PARTY"), forthwith on demand, from and against any and all damages,
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losses, claims, judgments, liabilities and related costs and expenses, including
reasonable attorneys' fees and disbursements (all of the foregoing being
collectively called "PURCHASE AND CONTRIBUTION INDEMNIFIED AMOUNTS") awarded
against or incurred by any of them arising out of or as a result of the
following:
(a) the transfer by Originator of an interest in any Pool Receivable or
Related Right to any Person other than the Company;
(b) the breach of any representation or warranty made by Originator under
or in connection with this Agreement or any other Transaction Document, or any
information or report delivered by Originator pursuant hereto or thereto which
shall have been false or incorrect in any material respect when made or deemed
made;
(c) the failure by Originator to comply with any applicable law, rule or
regulation with respect to any Pool Receivable or the related Contract, or the
nonconformity of any Pool Receivable or the related Contract with any such
applicable law, rule or regulation;
(d) the failure to vest and maintain vested in the Company an ownership
interest in the Pool Receivables generated by Originator and Related Rights free
and clear of any Adverse Claim, other than an Adverse Claim arising solely as a
result of an act of the Company, whether existing at the time of the purchase or
contribution of such Pool Receivables or at any time thereafter;
(e) the failure of Originator to file with respect to itself, or any delay
by Originator in filing, financing statements or other similar instruments or
documents under the UCC of any applicable jurisdiction or other applicable laws
with respect to any Pool Receivables or purported Pool Receivables generated by
Originator or Related Rights, whether at the time of any purchase or
contribution or at any subsequent time;
(f) any dispute, claim, offset or defense (other than discharge in
bankruptcy) of the Obligor to the payment of any Pool Receivable or purported
Pool Receivable generated by Originator (including, without limitation, a
defense based on such Pool Receivables or the related Contracts not being a
legal, valid and binding obligation of such Obligor enforceable against it in
accordance with its terms), or any other claim resulting from the
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goods or services related to any such Pool Receivable or the furnishing of or
failure to furnish such goods or services;
(g) any product liability claim arising out of or in connection with goods
or services that are the subject of any Pool Receivable;
(h) any litigation, proceeding or investigation against Originator;
(i) any tax or governmental fee or charge (other than any tax excluded
pursuant to the proviso below), all interest and penalties thereon or with
respect thereto, and all out-of-pocket costs and expenses, including the
reasonable fees and expenses of counsel in defending against the same, which may
arise by reason of the purchase, contribution or ownership of the Pool
Receivables or any Related Right connected with any such Pool Receivables; and
(j) any failure of Originator, individually or as Servicer, to perform its
duties or obligations in accordance with the provisions of this Agreement or any
other Transaction Document;
EXCLUDING, HOWEVER, (i) Purchase and Contribution Indemnified Amounts to the
extent resulting from gross negligence or willful misconduct on the part of a
PCA Indemnified Party, (ii) any indemnification which has the effect of recourse
for non-payment of the Pool Receivables due to credit reasons to Originator
(except as otherwise specifically provided under this SECTION 9.1) and (iii) any
tax based upon or measured by net income or gross receipts.
If for any reason the indemnification provided above in this SECTION 9.1 is
unavailable to a PCA Indemnified Party or is insufficient to hold such PCA
Indemnified Party harmless, then Originator shall contribute to the amount paid
or payable by such PCA Indemnified Party as a result of such loss, claim, damage
or liability to the maximum extent permitted under applicable law.
ARTICLE X
MISCELLANEOUS
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10.1. AMENDMENTS, ETC.
(a) The provisions of this Agreement may from time to time be amended,
modified or waived, if such amendment, modification or waiver is in writing and
consented to by Originator, the Company, the Servicer (if other than Originator)
and the Agent; PROVIDED, HOWEVER, that no material amendment of this Agreement
shall be effective unless the Purchaser (or the Agent on its behalf) shall have
received written confirmation by the Rating Agencies that such amendment shall
not cause the rating on the then outstanding Notes to be downgraded or
withdrawn.
(b) No failure or delay on the part of the Company, Servicer, Originator
or any third party beneficiary in exercising any power or right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power or right preclude any other or further exercise thereof or the
exercise of any other power or right. No notice to or demand on the Company,
Servicer, or Originator in any case shall entitle it to any notice or demand in
similar or other circumstances. No waiver or approval by the Company or
Servicer under this Agreement shall, except as may otherwise be stated in such
waiver or approval, be applicable to subsequent transactions. No waiver or
approval under this Agreement shall require any similar or dissimilar waiver or
approval thereafter to be granted hereunder.
10.2. NOTICES, ETC. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing (including
facsimile communication) and shall be personally delivered or sent by express
mail or courier or by certified mail, postage-prepaid, or by facsimile, to the
intended party at the address or facsimile number of such party set forth under
its name on the signature pages hereof or at such other address or facsimile
number as shall be designated by such party in a written notice to the other
parties hereto. All such notices and communications shall be effective, (i) if
personally delivered or sent by express mail or courier or if sent by certified
mail, when received, and (ii) if transmitted by facsimile, when sent, receipt
confirmed by telephone or electronic means.
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10.3. NO WAIVER; CUMULATIVE REMEDIES. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
10.4. BINDING EFFECT; ASSIGNABILITY. This Agreement shall be binding upon
and inure to the benefit of the Company, Originator and its respective
successors and permitted assigns. Originator may not assign its rights
hereunder or any interest herein without the prior consent of the Company and
the Agent which consent is hereby given with respect to the assignment by
Vanstar to IBMCC of certain rights to the extent permitted by the Intercreditor
Agreement. This Agreement shall create and constitute the continuing
obligations of the parties hereto in accordance with its terms, and shall remain
in full force and effect until the date after the Purchase and Contribution
Termination Date on which Originator has received payment in full for all Pool
Receivables and Related Rights purchased pursuant to SECTION 1.1 hereof. The
rights and remedies with respect to any breach of any representation and
warranty made by Originator pursuant to ARTICLE V and the indemnification and
payment provisions of ARTICLE IX and SECTION 10.6 shall be continuing and shall
survive any termination of this Agreement.
10.5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF NEW YORK, EXCEPT TO THE
EXTENT THAT THE VALIDITY OR PERFECTION OF THE INTERESTS OF PURCHASER IN THE POOL
RECEIVABLES, OR REMEDIES HEREUNDER IN RESPECT THEREOF, ARE GOVERNED BY THE LAWS
OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
10.6. COSTS, EXPENSES AND TAXES. In addition to the obligations of
Originator under ARTICLE IX, Originator agrees to pay on demand:
(a) all reasonable costs and expenses in connection with the enforcement
of this Agreement and the other Transaction Documents; and
(b) all stamp and other similar taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and recording of this
Agreement or the other Transaction Documents, and agrees to indemnify each PCA
Indemnified Party
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against any liabilities with respect to or resulting from any delay in paying
or omission to pay such taxes and fees.
10.7. SUBMISSION TO JURISDICTION. EACH PARTY HERETO HEREBY IRREVOCABLY
(a) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE OR UNITED
STATES FEDERAL COURT SITTING IN NEW YORK, OVER ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO ANY TRANSACTION DOCUMENT; (b) AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE
OR UNITED STATES FEDERAL COURT; (c) WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO
THE MAINTENANCE OF SUCH ACTION OR PROCEEDING; (d) CONSENTS TO THE SERVICE OF ANY
AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF
SUCH PROCESS TO SUCH PERSON AT ITS ADDRESS SPECIFIED IN SECTION 10.2; AND (e) TO
THE EXTENT ALLOWED BY LAW, AGREES THAT A NONAPPEALABLE FINAL JUDGMENT IN ANY
SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
NOTHING IN THIS SECTION 10.7 SHALL AFFECT THE COMPANY'S RIGHT TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING ANY ACTION OR
PROCEEDING AGAINST ORIGINATOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTIONS.
10.8. WAIVER OF JURY TRIAL. EACH PARTY HERETO EXPRESSLY WAIVES ANY RIGHT
TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
UNDER THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, OR UNDER ANY AMENDMENT,
INSTRUMENT OR DOCUMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, AND AGREES THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
10.9. CAPTIONS AND CROSS REFERENCES; INCORPORATION BY REFERENCE. The
various captions (including, without limitation, the table of contents) in this
Agreement are included for convenience only and shall not affect the meaning or
interpretation of any provision of this Agreement. References in this Agreement
to any underscored Section or Exhibit are to such Section or Exhibit of this
Agreement, as the case may be. The Exhibits hereto are hereby incorporated by
reference into and made a part of this Agreement.
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10.10. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which when taken together shall constitute one and the same Agreement.
10.11. ACKNOWLEDGMENT AND AGREEMENT. By execution below, Originator
expressly acknowledges and agrees that all of the Company's rights, title, and
interests in, to, and under this Agreement shall be assigned by the Company to
the Purchaser pursuant to the Receivables Purchase Agreement, and Originator
consents to such assignment. Each of the parties hereto acknowledges and agrees
that the Agent and the Purchaser are third party beneficiaries of the rights of
the Company arising hereunder and under the other Transaction Documents to which
Originator is a party.
Section 10.12. NO PROCEEDINGS. Each of the Originator and the Company
hereby covenants and agrees that it will not institute against, or join any
other Person in instituting against, any Note Issuer, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding, or other
proceeding under any federal or state bankruptcy or similar law, for one year
and one day after the latest maturing Note issued by any such Note Issuer is
paid in full.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
VANSTAR FINANCE CO.
By: /s/ John J. Dunican, Jr.
--------------------------------------
Name: John J. Dunican, Jr.
Title: Treasurer
Address:
Attention:
-------------------------------
Telephone:
Facsimile:
VANSTAR CORPORATION
By: /s/ John J. Dunican, Jr.
--------------------------------------
Name: John J. Dunican, Jr.
Title: Treasurer
Address:
Attention:
-------------------------------
Telephone:
Facsimile:
<PAGE>
Acknowledged and consented by:
VANSTAR CORPORATION, as Servicer
By: /s/ John J. Dunican, Jr.
--------------------------------
Name: John J. Dunican, Jr.
------------------------------
Title: Treasurer
-----------------------------
Address:
Attention:
-------------------------
Telephone:
Facsimile:
<PAGE>
SCHEDULE 5.13
OFFICE LOCATIONS
<PAGE>
SCHEDULE 5.14
TRADE NAMES
<PAGE>
EXHIBIT A
FORM OF PURCHASE REPORT
<PAGE>
EXHIBIT B
FORM OF COMPANY NOTE
<PAGE>
EXHIBIT C
FORM OF OPINION OF ORIGINATOR'S COUNSEL
<PAGE>
EXHIBIT D
FORM OF ORIGINATOR NOTE
<PAGE>
DEMAND NOTE
Chicago, Illinois
___________, 1995
The undersigned, [NAME OF ORIGINATOR], a ____________ corporation (the
"ORIGINATOR"), for value received, promises to pay to the order of Vanstar
Finance Co., a Delaware corporation (the "COMPANY"), ON DEMAND, the aggregate
unpaid principal amount of all loans made by the Company to the Originator (the
"ORIGINATOR LOANS") together with accrued interest on such amounts from time to
time outstanding hereunder at the rate provided below. Such amounts as shown in
the records of the Servicer (as such term is defined in the Purchase and
Contribution Agreement referred to below) will be rebuttable presumptive
evidence of the principal amount owing under this Demand Note.
The unpaid principal amount of each Originator Loan from time to time
outstanding shall bear interest (which also shall be payable ON DEMAND) from
(and including) the date on which such Originator Loan was made to (but
excluding) the date on which such Originator Loan is paid in full (a) prior to
the final payment in full and in cash of the Senior Interests (as such term is
defined in the Company Note), at a variable rate PER ANNUM equal to the Discount
Rate Percentage, determined as of the then most recent Payment Date, and (b)
after such final payment, at a variable rate PER ANNUM equal to the Base Rate,
as determined by the Servicer. Interest hereunder shall be computed for the
actual number of days elapsed on the basis of a year consisting of 365 or, where
appropriate, 366 days.
This Demand Note is an Originator Note described in, and is subject to the
terms and conditions set forth in, that certain Purchase and Contribution
Agreement, dated as of December 20, 1996 (as the same may at any time be
amended, supplemented, or otherwise modified from time to time in accordance
with its terms, the "PURCHASE AND CONTRIBUTION AGREEMENT"), between the
Originator, the Servicer, and the Company. Reference is hereby made to the
Purchase and Contribution Agreement for a statement of certain other rights and
obligations of the Company. All capitalized terms used but not otherwise
defined herein have the meanings assigned thereto in the Purchase and
Contribution Agreement.
<PAGE>
All payments of principal and interest hereunder are to be made in lawful
money of the United States of America in same day funds to the account
designated from time to time by the Servicer to the Company.
In addition to and not in limitation of the foregoing, the Originator
further agrees, subject to any limitation imposed by applicable law, to pay all
expenses, including without limitation reasonable Attorney Costs, incurred by
the holder of this Demand Note in seeking to collect any amounts payable
hereunder which are not paid when due.
No failure or delay on the part of the Company or any other holder of this
Demand Note in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power or right
preclude any other or further exercise thereof or the exercise of any other
power or right. No notice to or demand on the Originator shall entitle it to
any notice or demand in similar or other circumstances. No amendment,
modification or waiver of, or consent with respect to, any provision of this
Demand Note shall in any event be effective unless (i) the same shall be in
writing and signed and delivered by the holder hereof and (ii) all consents
required for such action under the Transaction Documents shall have been given
by the appropriate Persons.
Upon the occurrence of any Insolvency Proceeding with respect to the
Originator, the principal balance hereof and all interest accrued hereon shall
be immediately due and payable, without demand, presentment, protest or notice
of dishonor.
Notwithstanding anything in this Demand Note to the contrary, the
Originator shall never be required to pay unearned interest on any amount
outstanding hereunder, and shall never be required to pay interest on the
principal amount outstanding hereunder, at a rate in excess of the maximum
nonusurious interest rate that may be contracted for, charged or received under
applicable federal or state law.
THIS DEMAND NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
PRINCIPLES THEREOF).
<PAGE>
[NAME OF ORIGINATOR]
By:
----------------------------------
Title:
-------------------------------
<PAGE>
AMENDMENT #6 TO VANSTAR CORPORATION
SECOND AMENDED AND RESTATED FINANCING PROGRAM AGREEMENT
This Amendment to Vanstar Corporation Second Amended and Restated
Financing Program Agreement (this "Amendment") is made as of December 20,
1996, by and between Vanstar Corporation, a Delaware corporation ("Borrower")
and IBM Credit Corporation, a Delaware corporation ("IBM Credit").
RECITALS
A. Borrower and IBM Credit have entered into that certain Vanstar
Corporation Second Amended and Restated Financing Program Agreement dated as
of April 30, 1995 (as amended by Amendment #1 dated as of September 15, 1995,
Amendment #2 dated as of October 26, 1995, Amendment #3 dated as of November
10, 1995, Amendment #4 dated as of July 24, 1996, Amendment #5 dated as of
September 25, 1996, and as the same may be further amended, supplemented or
as otherwise modified from time to time, the "Agreement").
B. Borrower proposes to enter into the Securitization Transaction (as
such term is defined in Section 3.Z. of this Amendment), with sufficient
proceeds from the sale of the initial portion of receivables sold by Borrower
pursuant to the Securitization Transaction being used to reduce Borrower's
outstanding indebtedness to IBM Credit under the Agreement such that Borrower
is thereafter in compliance with the provisions of the Agreement. Borrower
has requested IBM Credit to consent to the consummation of the Securitization
Transaction and to enter into this Amendment in order to amend the Agreement
to reflect the consummation thereof, which IBM Credit is willing to do on the
basis set forth herein.
C. The parties have agreed to modify the Agreement as more
specifically set forth below, upon and subject to the terms and conditions
set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Borrower and IBM Credit hereby agree as follows:
Section 1. DEFINITIONS. All capitalized terms not otherwise defined
herein shall have the respective meanings set forth in the Agreement.
Section 2. CONSENT. IBM Credit hereby consents to the consummation by
Borrower of the Securitization Transaction. At the closing of the
Securitization Transaction, Borrower shall promptly remit to IBM Credit, for
application to Borrower's outstanding indebtedness to IBM Credit under the
Agreement, sufficient proceeds of the sale of the initial portion of the
receivables sold by Borrower pursuant to the Securitization Transaction such
that Borrower shall at all times be in compliance with the provisions of the
Agreement.
AMENDMENT #6 - PAGE 1
<PAGE>
Section 3. AMENDMENTS. Each of the following amendments shall be
effective upon the closing of the Securitization Transaction, provided such
closing occurs on or prior to January 8, 1997:
A. Section 1 of the Agreement is hereby amended by (i) deleting
from the third and fourth lines thereof the amount "Three Hundred Million
Dollars ($300,000,000)" and substituting, in lieu thereof, the amount of Two
Hundred Fifty Million Dollars ($250,000,000)" and (ii) deleting the following
clause from the 10th through the 14th lines thereof:
"(x) the aggregate outstanding principal amount of all Advances,
other than Advances made in respect of Ingram Micro Products
purchased or to be purchased by Borrower shall not exceed the
amount of the Line of Credit at such time less $11,500,000 and
(y)"
B. Section 2(A) of the Agreement is hereby amended by amending
the last sentence of such section to read as follows:
"Notwithstanding any other provision of this Agreement, Borrower
shall not be required to furnish to IBM Credit any financial
statements of VFT or, except as set forth in Section 11(b)(xxvi),
VFC."
C. Section 2(A)(i)(IX) of the Agreement is hereby amended by
adding the clause ", including any management letter prepared in connection
with an audit of VFC's financial statements" at the end of such subsection
(IX).
D. Section 2(B)(ii) of the Agreement is hereby amended to read in
its entirety as follows:
"(ii) [this section intentionally omitted]"
E. Section 2(B)(iii) of the Agreement is hereby amended by
deleting from the second and third lines thereof the clause "reports similar
to those described in (ii) above" and inserting the following in lieu thereof:
"reports setting forth a listing of all of Borrower's and the
Guarantor Subsidiaries' IBM Product Inventory (excluding
inventory in transit but not yet received by Borrower)"
F. Section 2(B)(viii) of the Agreement is hereby amended to read
in its entirety as follows:
"(viii) on or prior to the fifteenth (15) day of each calendar
month, a report setting forth for and as of the last day of the
immediately preceding calendar month a listing of all of
Borrower's and the Guarantor Subsidiaries' IBM Product inventory,
in form and substance satisfactory to
AMENDMENT #6 - PAGE 2
<PAGE>
IBM Credit, including for each model or product (1) the quantity
of products unsold, (2) the type, model and version of each model
or product, (3) the quantity of each model or product unsold and
(4) the extended cost of all such unsold models or products;"
G. Section 2(B)(x) of the Agreement is hereby amended to read in
its entirety as follows:
"(x) [this section intentionally omitted]"
H. Section 2(C) of the Agreement is hereby amended to read in its
entirety as follows:
"(C) Notwithstanding anything to the contrary contained in this
Agreement, Borrower shall report Supplemental Collateral,
Secondary Inventory and Secondary Accounts Receivable (as such
terms are defined in Section 3(d) of the Agreement) pursuant to
the provisions of Section 2(B)(iii), (ix) and (xi) of this
Agreement, and shall categorize Collateral as either Supplemental
Collateral, Secondary Inventory, Secondary Accounts Receivable or
Primary Collateral. IBM Credit reserves the right, upon written
notice to Borrower, to require Borrower to report Supplemental
Collateral, Secondary Inventory and Secondary Accounts Receivable
pursuant to the provisions of Section 2(B)(ii), (viii) and (x),
and upon receipt of such notice, Borrower shall categorize and
report Collateral as either Supplemental Collateral, Primary
Collateral, Secondary Inventory or Secondary Accounts Receivable
pursuant to such provisions. Notwithstanding any other provision
of the Section 2, with regard to inventory and accounts
receivable not constituting Collateral, Borrower shall not be
required to furnish any reports other than summaries showing
total amounts of such inventory and accounts receivable, except
upon the reasonable request of IBM Credit for more detailed
reports."
I. Section 3(a) of the Agreement is hereby amended by deleting
the words "one hundred fiftieth (150th)" where they appear in subsections
(ii), (iii) and (iv) thereof and inserting the words "one hundred twentieth
(120th)" in lieu thereof.
J. Section 3(d) of the Agreement is hereby amended by deleting
items (i) through (xiv) in their entirety and substituting, in lieu thereof,
the following:
"PRIMARY COLLATERAL
Primary Inventory
(i) All Financed Products constituting Collateral
(other than service parts, Financed Products on
display for demonstration purposes and
AMENDMENT #6 - PAGE 3
<PAGE>
Financed Products constituting clearance or returned
goods) and Eligible Ingram Micro Inventory (excluding
Excess Eligible Ingram Micro Inventory) 100%
(ii) Compaq Financed Inventory 100%
Primary Accounts Receivable
(iii) Eligible Merisel Receivables 100%
(iv) Eligible IBM Receivables 100%
(v) Eligible Leasing Receivables 100%
(vi) as to IBM Eligible Credits as defined in sub-item
(x) of the 1st sentence of the definition in this
Agreement of IBM Eligible Credits
(A) 0 to 90 days from the date of such return 100%
(B) 91 to 180 days from the date of such return 85%
(C) over 180 days from the date of such return 0%
(vii) as to IBM Eligible Credits as defined in sub-item
(y) of the 1st sentence of the definition in this
Agreement of IBM Eligible Credits 100%
SUPPLEMENTAL COLLATERAL
(viii) Service parts which are neither obsolete
nor defective 40%
SECONDARY INVENTORY
(ix) as to any other inventory constituting Collateral
(including any Ingram Micro Product not included
in clause (i) and any Compaq Product not included
in clause (ii) above) 50%
SECONDARY ACCOUNTS RECEIVABLE
(x) Eligible Receivables constituting Collateral
(other than Eligible Merisel Receivables and
Eligible IBM Receivables) 85%
AMENDMENT #6 - PAGE 4
<PAGE>
(xi) Equity in VFC 85%
For purposes of this Section 3(d), "Equity in VFC" shall mean, on
any date, an amount equal to the accounts receivable that would
constitute Eligible Receivables on such date but for the sale of
such accounts receivable pursuant to the Receivables Documents
LESS an amount equal to the Investment at such date plus the
accrued Discount (as such terms are defined in the Receivables
Documents) on such date. Notwithstanding any other provision of
this Agreement (a) the percentage set forth above for Equity in
VFC ("VFC Advance Rate") shall be immediately reduced to zero in
the event that Borrower ceases to be the Servicer under the
Receivables Purchase Agreement or any of the Receivables
Documents are amended or modified in any material respect without
Borrower having first given 10 days prior written notice of such
amendment or modification to IBM Credit and (b) IBM Credit shall
have the right to at any time reduce the VFC Advance Rate as it
may determine in its sole discretion. Each request for an
advance under this Agreement and each report of Value shall set
forth the Equity in VFC as of such date.
K. Section 3 of the Agreement is hereby amended by adding a new
Section 3(e) thereto to read in its entirety as follows:
"Notwithstanding any other provisions of this Section 3, the
interest rate applicable to Product Advances and Working Capital
Advances shall be (i) with respect to advances made with respect
to Primary Inventory and Secondary Inventory, an annual
percentage rate of interest equal to the Prime Rate, (ii) with
respect to advances made with respect to Primary Accounts
Receivable and Secondary Accounts Receivable, an annual
percentage rate of interest equal to the Prime Rate minus .80%,
and (iii) with respect to advances made with respect to
Supplemental Collateral, an annual percentage rate of interest
equal to the Prime Rate plus 1.50%; PROVIDED, HOWEVER, (x) in the
event that there is not sufficient Primary Accounts Receivable
and Secondary Accounts Receivable available on the applicable
advance date to support such advance, the applicable annual rate
of interest for that portion of such advance in excess of the
Value of the Primary Accounts Receivable and Secondary Accounts
Receivable, shall be equal to the Prime Rate and (y) in the event
that there is not sufficient Primary Inventory and Secondary
Inventory on the applicable advance date to support such advance,
the applicable annual rate of interest for that portion of such
advance in excess of the Value of the Primary Inventory and
Secondary Inventory shall be equal to the Prime Rate plus 1.50%."
AMENDMENT #6 - PAGE 5
<PAGE>
L. Section 6 of the Agreement is hereby amended as follows:
(1) by adding a new sentence at the end of Section 6(a) to read in
its entirety as follows:
"In addition, pursuant to a pledge agreement to be executed by
Borrower for the benefit of IBM Credit, Borrower shall, in order
to secure payment of all of Borrower's Obligations, grant a
security interest in, subject to the Intercreditor Agreement, (x)
all capital stock of VFC now or hereafter owned by Borrower and
all dividends, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of
or in exchange for any of such capital stock and (y) the VFC
Company Note and all amendments, renewals and modifications
thereof.";
(2) by amending Section 6(c) to read in its entirety as follows:
(c) For purposes of this Agreement, the term "First Lien
Collateral" means all Collateral of Borrower and the Guarantor
Subsidiaries (other than Collateral in which IBM Credit has
expressly subordinated its security interest in writing).
Subject to the rights of third parties who have senior security
interests in certain of the Collateral and proceeds thereof,
Borrower will and will cause each Guarantor Subsidiary to hold in
trust for IBM Credit and immediately remit to IBM Credit all
Collateral and proceeds of the same in accordance with the terms
of this Agreement, until Borrower has paid in full in cash all of
the Obligations. IBM Credit's title or Lien shall not be
impaired by payments, either of the invoice price or any other
amount, Borrower or any Guarantor Subsidiary may make to the
seller of any item of Collateral or Guarantor Subsidiary
Collateral, as the case may be, or anyone else, or by Borrower's
or any Guarantor Subsidiary's failure or refusal to account to
IBM Credit for proceeds thereof to the extent included in the
Collateral. Where permitted by law, IBM Credit may perfect its
security interest in the Collateral and the Guarantor Subsidiary
Collateral by filing a financing statement signed only by IBM
Credit. Borrower further agrees that a carbon, photographic or
other reproduction of this Agreement or of a financing statement
is sufficient as a financing statement Borrower hereby
authorizes IBM Credit, upon the occurrence and during the
continuance of an Event of Default, to apply any rebates,
discounts, credits and incentive payments that are or may become
due to Borrower with respect to any and all inventory or
equipment as to which a security interest has been granted to IBM
Credit against amounts owing by Borrower to IBM Credit and
authorizes and directs each Authorized Supplier to pay such
claims, monies and/or credits directly to IBM Credit. IBM Credit
shall give notice to Borrower of any such application."; and
AMENDMENT #6 - PAGE 6
<PAGE>
(3) by adding a new Subsection 6(d) to such section to read in its
entirety as follows:
"Subject to the terms of the Intercreditor Agreement, IBM
Credit's Security Interest in the Transferred Assets shall be
automatically and irrevocably terminated upon each sale,
purported sale, contribution, transfer, conveyance or assignment
of such Transferred Assets to VFC. In this regard, and
notwithstanding any other provision of this Agreement, the terms
"Collateral," "Accounts" and "First Lien Collateral" as used in
this Agreement shall not include the Transferred Assets, whether
now existing or hereafter created or arising."
M. Section 11(a)(xi) of the Agreement is hereby amended by
amending the second sentence of such section to read as follows:
"Other than the Guarantor Subsidiaries, VFT and VFC (none of
which shall in any event be a Guarantor Subsidiary), Borrower has
no direct or indirect subsidiaries that own, lease or possess any
assets or conduct any business."
N. Section 11(b)(ii) of the Agreement is hereby amended by adding a
new sentence at the end thereof to read as follows:
"Borrower shall also permit IBM Credit representatives to
discuss the financial condition of VFC with Borrower's
independent certified public accountants."
O. Section 11(b)(v) of the Agreement is hereby amended by adding the
words "evidencing Accounts" at the end of the second sentence thereof.
P. A new Section 11(b)(xxvi) is hereby added to the Agreement to
read as follows:
"(xxvi) Deliver to IBM Credit (A) immediately upon the
occurrence thereof, written notice of any Termination Event or
Purchase and Contribution Termination Event under any of the
Receivables Documents or the receipt by Borrower of any notice of
the occurrence of any Termination Event, Purchase and
Contribution Termination Event, Unmatured Termination Event or
[UNMATURED] Purchase and Contribution Event under any of the
Receivables Documents, (B) written notice of any material
amendment or modification of any of the Receivables Documents not
later than ten days before the entering into of such amendment or
modification, and (C) concurrently with any such notice, copies
of all reports, financial statements, or notices furnished by
Borrower or received by Borrower under the Receivables Documents
in connection therewith."
AMENDMENT #6 - PAGE 7
<PAGE>
Q. A new Section 11(b)(xxvii) is hereby added to the Agreement to
read in its entirety as follows:
"(xxvii) Borrower shall at all times maintain ownership,
directly or through a wholly-owned subsidiary, of 100% of the
outstanding equity securities of VFC."
R. Section 11(c)(iv) of the Agreement is hereby amended by adding
a new sentence at the end thereof to read as follows:
"This subsection (iv) shall not prohibit the sale of Transferred
Assets by Borrower or VFC pursuant to the Securitization
Transaction."
S. Section 11(c)(vi) of the Agreement is hereby amended by
amending subsection (B) thereof to read in its entirety as follows:
"(B) permit any Subsidiary other than the Guarantor Subsidiaries
set forth in Part II of Schedule 3, VFC (to the extent necessary
to carry out the transactions described in the Receivables
Documents) and VFT (to the extent necessary to carry out the
transactions described in the Offering Circular), to own, lease
or possess any assets or conduct any business;"
T. Section 11(c)(ix) of the Agreement is hereby amended by
deleting the clause "and (D) other dispositions of assets," where it appears
in the 10th line of such subsection and inserting the following clause in the
place thereof:
", (D) the sale of Pool Receivables and Related Security by
Borrower or VFC pursuant to the Securitization Transaction and
(E) other dispositions of assets,"
U. Section 11(c)(x) of the Agreement is hereby amended by adding
a new subsection (I) at the end thereof to read as follows:
"(I) any Investment by Borrower in VFC pursuant to the
Securitization Transaction."
V. Section 11(c)(xi) of the Agreement is hereby amended by
amending the clause at the beginning of such section to read as follows:
"Except for the VFT Transaction as described in the Offering
Circular and the Securitization Transaction and"
W. Section 11(c)(xiv) of the Agreement is hereby amended by
adding (a) the clause "except in connection with the Securitization
Transaction" at the end of clause (A) of such subsection (xiv) and (b) the
clause "(other than VFC in connection with the Securitization
AMENDMENT #6 - PAGE 8
<PAGE>
Transaction") after the word "Borrower" in the second line of such clause (B)
of such subsection (xiv).
X. A new Section 13(a)(xi) is hereby added to the Agreement to
read in its entirety as follows:
"(xi) a Termination Event or Purchase and Contribution
Termination Event shall have occurred under any of the
Receivables Documents and shall be continuing."
Y. Section 13(f) of the Agreement is hereby amended by adding the
words "with respect to the Collateral" after the words "following powers" in
the fifth line of such subsection.
Z. Section 19 of the Agreement is hereby amended as follows:
(1) by amending the following definition to read in its entirety
as follows:
"Accounts" shall mean "accounts" as defined in the Uniform
Commercial Code which are included in the Collateral";
(2) by adding the following clause at the end of the definition
of "Indebtedness":
", it being understood that Receivables Program Obligations
shall not be considered Indebtedness hereunder"; and
(3) by adding the following definitions thereto:
"Intercreditor Agreement" means the Intercreditor Agreement,
dated as of December 20, 1996, executed and delivered by IBM
Credit, Par Accounts Receivable Capital Corporation, Nesbitt
Burns Securities Inc., Borrower and VFC, as the same may from
time to time be amended or modified.
"Pool Receivables" has the meaning assigned to such
term in the Intercreditor Agreement.
"Purchase Agreement" shall mean the agreement described in
clause (i) of the definition of "Receivables Documents."
"Receivables Documents" means (i) the Purchase and
Contribution Agreement dated as of December 20, 1996 between
Borrower and VFC, (ii) the Receivables Purchase Agreement dated
as of December 20, 1996,
AMENDMENT #6 - PAGE 9
<PAGE>
among VFC, Borrower, Pooled Accounts Receivable Capital Corporation,
and Nesbitt Burns Securities Inc., (iii) such other agreements and
documents executed or delivered under or in connection with the
aforementioned agreements, as any such agreement referred to in
clauses (i) and (ii) above may be amended, supplemented or otherwise
modified from time to time.
"Receivables Program Obligations" means (a) all notes,
undivided interests, and other interests representing the right
to be paid a specified principal amount from the Transferred
Assets, and (b) related obligations of Borrower and VFC
(including, without limitation, rights in respect of interest or
yield, breach of warranty claims and expense reimbursement and
indemnity provisions).
"Receivables Purchase Agreement" shall mean the agreement
described in clause (ii) of the definition of "Receivables
Documents."
"Related Security" has the meaning assigned to such term in
the Intercreditor Agreement.
"Securitization Transaction" means the transactions
contemplated by the Receivables Documents.
"Transferred Assets" has the meaning assigned to such term
in the Intercreditor Agreement.
"VFC" shall mean Vanstar Finance Co., a Delaware
corporation.
"VFC Company Note" shall mean the "Company Note" payable by
VFC to Borrower provided for in Section 3.2 of the Purchase
Agreement.
AA. Schedule 3 to the Agreement is hereby amended to add VFC as a
Subsidiary of Borrower in Part 1 thereof.
Section 4. REPRESENTATIONS AND WARRANTIES. Borrower makes IBM Credit
the following representations and warranties all of which are material and
are made to induce IBM Credit to enter into this Amendment.
Section 4.1 ACCURACY AND COMPLETENESS OF WARRANTIES AND REPRESENTATIONS.
All representations made by Borrower in the Agreement were true and accurate
and complete in every respect as of the date made, and, as amended by this
Amendment, all representations made by Borrower in the Agreement are true,
accurate and complete in every material respect as of the date hereof, and do
not fail to disclose any material fact necessary to make representations not
misleading.
AMENDMENT #6 - PAGE 10
<PAGE>
Section 4.2 VIOLATION OF OTHER AGREEMENTS. The execution and delivery
of this Amendment and the performance and observance of the covenants to be
performed and observed hereunder do not violate or cause Borrower not to be
in compliance with the terms of any agreement to which Borrower is a party.
Section 4.3 LITIGATION. Except as has been disclosed by Borrower to IBM
Credit in writing, there is no litigation, proceeding, investigation or labor
dispute pending or threatened against Borrower, which if adversely
determined, would materially adversely affect Borrower's ability to perform
Borrower's obligations under the Agreement and the other documents,
instruments and agreements executed in connection therewith or pursuant
hereto.
Section 4.4 ENFORCEABILITY OF AMENDMENT. This Amendment has been duly
authorized, executed and delivered by Borrower and is enforceable against
Borrower in accordance with its terms.
Section 5. RATIFICATION OF AGREEMENT. Except as specifically amended
hereby, all of the provisions of the Agreement shall remain unamended and in
full force and effect. Borrower hereby, ratifies, confirms and agrees that
the Agreement, as amended hereby, represents a valid and enforceable
obligation of Borrower, and is not subject to any claims, offsets and or
defense.
Section 6. GOVERNING LAW. This Amendment shall be governed by and
interpreted in accordance with the laws of the State of California.
Section 7. COUNTERPARTS. This Amendment may be executed in any number
of counterparts, each of which shall be an original and all of which shall
constitute one agreement.
Section 8. CONFIDENTIALITY. All information contained in this
Amendment regarding the Securitization Transaction shall be maintained in
confidence by IBM Credit and shall not be publicly disclosed to any person or
entity.
IN WITNESS WHEREOF, this Amendment has been duly executed by the
authorized officers of the undersigned as of the day and year first above
written.
VANSTAR CORPORATION
By: /s/ John J. Dunican, Jr.
--------------------------------
Title: Treasurer
-----------------------------
ACCEPTED AND AGREED:
IBM CREDIT CORPORATION
By: /s/ Illegible
--------------------------------
Title: Manager--Credit Operations
-----------------------------
AMENDMENT #6 - PAGE 11
<PAGE>
INTERCREDITOR AGREEMENT
This INTERCREDITOR AGREEMENT, dated as of December 20, 1996 (this
"AGREEMENT") is executed and delivered by IBM CREDIT CORPORATION ("IBMCC"), PAR
ACCOUNTS RECEIVABLE CAPITAL CORPORATION ("PAR"), VANSTAR CORPORATION
("VANSTAR"), VANSTAR FINANCE CO. ("VFC"), and NESBITT BURNS SECURITIES INC.
("NESBITT BURNS").
RECITALS
WHEREAS, Vanstar and IBMCC are parties to the Second Amended and Restated
Financing Program Agreement, dated as of April 30, 1995 (as amended,
supplemented, restated or otherwise modified and in effect from time to time,
the "IBM FINANCING AGREEMENT");
WHEREAS, Vanstar is entering into the Purchase and Contribution Agreement,
dated as of December 20, 1996 (as amended, supplemented, restated or otherwise
modified and in effect from time to time, the "PURCHASE AGREEMENT"), among
Vanstar, as an originator (in such capacity, the "ORIGINATOR"), and VFC, as
initial purchaser. Pursuant to the Purchase Agreement, Vanstar will sell and
contribute to VFC all Pool Receivables and Related Security that it now owns and
from time to time hereafter will own;
WHEREAS, contemporaneously with the sale by Vanstar to VFC pursuant to the
Purchase Agreement, VFC will transfer its interests in the Pool Receivables,
Related Security and certain related assets more fully described in SECTION 1.2
of the Receivables Purchase Agreement (as defined below) to PAR pursuant to the
Receivables Purchase Agreement dated as of December 20, 1996 (as amended,
supplemented, restated or otherwise modified and in effect from time to time,
the "RECEIVABLES PURCHASE AGREEMENT") among VFC, Vanstar, as initial Servicer,
PAR, as purchaser, and Nesbitt Burns, as Agent (in such capacity, the "AGENT");
WHEREAS, to secure Vanstar's obligations under the IBM Financing Agreement,
Vanstar has granted a security interest in certain of its assets to IBMCC;
<PAGE>
WHEREAS, the execution and delivery of this Agreement is a condition
precedent to the effectiveness of the Purchase Agreement and the Receivables
Purchase Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. (a) Except as otherwise provided herein,
capitalized terms used herein (including the recitals hereto) have the meanings
provided in EXHIBIT I to the Receivables Purchase Agreement.
(b) As used herein:
"COLLECTIONS" means, with respect to any Pool Receivable, (a) all funds
which are received by the Seller, an Originator or the Servicer in payment of
any amounts owed in respect of such Pool Receivable (including, without
limitation,purchase price,finance charges, interest and all other charges), or
applied to amounts owed in respect of such Pool Receivable (including, without
limitation, insurance payments and net proceeds of the sale or other disposition
of repossessed goods or other collateral or property of the related Obligor or
any other Person directly or indirectly liable for the payment of such Pool
Receivable and available to be applied thereon), (b) all Collections deemed to
have been received pursuant to SECTION 1.4(e) of the Receivables Purchase
Agreement and (c) all other proceeds of such Pool Receivable.
"COMPANY NOTE" means the promissory note delivered to Vanstar by VFC
pursuant to the Purchase Agreement.
"CONTRACT" means, with respect to any Pool Receivable, any and all
contracts, understandings, instruments, agreements, leases, invoices, notes, or
other writings pursuant to which such Pool Receivable arises or which evidences
such Pool Receivable or under which an Obligor becomes or is obligated to make
payment in respect of such Pool Receivable.
"DESIGNATED EXCLUDED OBLIGOR" means IBM, Merisel and their respective
Affiliates and any other Excluded Obligor designated
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in writing by the Agent as such; it being understood that no Excluded Obligor
shall be a "Designated Excluded Obligor" unless and until the Originator
shall have implemented arrangements satisfactory to the Agent for collections
and other proceeds of all Receivables generated by such Excluded Obligor to
be remitted to an account other than any Lock Box Account and shall have
taken such other actions and provided such other information as required by
the Agent in connection with such designation.
"EXCLUDED OBLIGOR" means IBM, Merisel and their respective Affiliates and
any other Obligor, so designated in writing as such by the Agent in its sole
discretion to the Seller, from time to time, it being understood that from time
to time the Agent may revoke its designation of one or more Obligors as Excluded
Obligors by written notice to the Seller and IBMCC; it being understood that
such revocation shall not affect the rights of IBMCC with respect to any amounts
arising on or prior to the date which is 15 days after receipt by IBMCC of
notice of such revocation.
"EXCLUDED RECEIVABLE" means a Receivable, the related Obligor of which is a
Designated Excluded Obligor.
"FINAL PAYOUT DATE" means the date following the Facility Termination Date
on which no Investment or Discount in respect of the Participation under the
Agreement shall be outstanding and all other amounts payable by the Originator,
the Seller or the Servicer to the Purchaser, the Agent or any other Affected
Person under the Transaction Documents shall have been paid in full.
"OBLIGOR" means a Person obligated to make payments with respect to a Pool
Receivable, including any guarantor thereof.
"ORIGINATOR NOTE" means a demand promissory note issued by Originator to
the order of VFC as it may be amended, supplemented, endorsed or otherwise
modified from time to time.
"PERSON" means an individual, partnership, limited liability company,
corporation (including a business trust), joint stock company, trust,
unincorporated association, joint venture, government or any agency or political
subdivision thereof or any other entity.
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"POOL RECEIVABLE" means a Receivable in the Receivables Pool.
"PRODUCT BUSINESS RECEIVABLE" means a Receivable which arises from the sale
to an obligor of (x) personal computers, network products, computer peripherals
and software manufactured or licensed by third parties, (y) product
configuration, distribution, installation, cabling and connectivity services
related to the sales referred to in CLAUSE (x) hereof and (z) services related
to the selection, design, planning and execution of a network project and
training; IT BEING UNDERSTOOD that Product Business Receivables shall not
include any Receivables arising from the provision of ongoing support and
consulting services related to computer networks provided through the "Service
Business" of the Originator.
"RECEIVABLE" means any indebtedness and other obligations owed to the
Originator or Seller or any right of the Seller or Originator 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 of goods
or the rendering of services by the Originator or Seller, and includes, without
limitation, the obligation to pay any fiance charges, fees and other charges
with respect thereto. Indebtedness and other obligations arising from any one
transaction, including, without limitation, indebtedness and other obligations
represented by an individual invoice or agreement, shall constitute a Receivable
separate from a Receivable consisting of the indebtedness and other obligations
arising from any other transaction.
"RECEIVABLES POOL" means at any time all of the then outstanding Product
Business Receivables other than Excluded Receivables.
"RELATED RIGHTS" means (a) all rights to, but not the obligations under,
the Contracts and Related Security, (b) all rights under the Originator Notes,
(c) all monies due or to become due with respect to any Pool Receivable,
Contract and Related Security, (d) all books and records related to any of the
foregoing, and (e) all proceeds thereof (as defined in the UCC) received on or
after the date hereof including, without
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limitation, all funds which either are received by any Originator, the
Initial Purchaser or the Servicer from or on behalf of the Obligors in
payment of any amounts owed (including, without limitation, finance charges,
interest and all other charges) in respect of Pool Receivables, or are
applied to such amounts owed by the Obligors (including, without limitation,
insurance payments, if any, that Originator or the Servicer applies in the
ordinary course of its business to amounts owed in respect of any Pool
Receivable and net proceeds of sale or other disposition of repossessed goods
or other collateral or property of the Obligors or any other party directly
or indirectly liable for payment of such Pool Receivable and available to be
applied thereon.)
"RELATED SECURITY" means, with respect to any Pool Receivable: (i) any
goods (including returned goods), and documentation or title evidencing the
shipment or storage of any goods (including returned goods), relating to any
sale giving rise to such Pool Receivable; (ii) all other security interests or
liens and property subject thereto from time to time purporting to secure
payment of such Pool Receivable, whether pursuant to the Contract related to
such Pool Receivable or otherwise, together with all UCC financing statements or
similar filings signed by an Obligor relating thereto; and (iii) all guaranties,
indemnities, insurance and other agreements (including the related Contract) or
arrangements of whatever character from time to time supporting or securing
payment of such Pool Receivable or otherwise relating to such Pool Receivable
whether pursuant to the Contract related to such Pool Receivable or otherwise.
"VFC INTEREST" is defined in SECTION 4 of this Agreement.
SECTION 2. RELEASE OF TRANSFERRED ASSETS. (a) IBMCC hereby releases all
liens and security interest of any kind whatsoever that IBMCC holds in all Pool
Receivables, Related Rights, Collections and proceeds of the foregoing that may
be sold, purportedly sold, contributed, transferred, conveyed or assigned by
Vanstar to VFC and/or sold, purportedly sold, contributed, transferred, conveyed
or assigned by VFC to PAR from time to time (collectively, the "TRANSFERRED
ASSETS"); IT BEING UNDERSTOOD that such release shall be automatic and
irrevocable upon each
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such sale, purported sale, contribution, transfer, conveyance or assignment.
The Transferred Assets being released may include proceeds in any form of
property that remains subject to a lien in favor of IBMCC. It is understood
and agreed that IBMCC shall not have any rights to or in any such proceeds
that are Transferred Assets.
(b) Nothing in this SECTION 2 shall be deemed to constitute a release of
any lien, claim, encumbrance or security interest IBMCC may have as against any
interest of Vanstar in any other collateral securing Vanstar's obligations under
the IBM Financing Agreement not constituting Transferred Assets. Each of VFC
and PAR acknowledges that it does not have any ownership or security interest
in, or other claim or encumbrance on, any such collateral not constituting
Transferred Assets.
(c) Each of IBMCC and PAR agrees, upon request, to execute and deliver
partial release statements and other documents and instruments that may be
reasonably requested in order to evidence the release provided for in this
section; PROVIDED, HOWEVER, that failure to execute and deliver any partial
release statements, documents or instruments shall not affect or impair the
release provided in this section.
SECTION 3. ASSIGNMENT OF PAYMENT RIGHTS. (a) Vanstar hereby agrees that at
any time during the occurrence and continuation of an "Event of Default" as
defined in the IBM Financing Agreement, IBMCC shall have the right to instruct
the Servicer and VFC to make payment of any amounts due and owing to Vanstar
under the Purchase and Contribution Agreement and the Receivables Purchase
Agreement (including any Servicer Fee then due and owing to Vanstar) directly to
IBMCC (such amounts collectively, the "VANSTAR PAYMENT AMOUNTS").
(b) VFC and Vanstar, as Servicer, hereby agree that at any time after
receipt of written notice by IBMCC of (i) the occurrence and continuation of an
"Event of Default" as defined in the IBM Financing Agreement and (ii) its
request that all Vanstar Payment Amounts be paid to IBMCC, VFC and Vanstar, as
Servicer, shall pay all subsequent Vanstar Payment Amounts as directed by IBMCC
when any such Vanstar Payment Amount becomes due and owing; provided, however,
such payments shall only be
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made to the extent otherwise permitted pursuant to the Purchase and
Contribution Agreement and the Receivables Purchase Agreement.
SECTION 4. AGREEMENTS OF AGENT REGARDING VFC INTERESTS AND THE COMPANY
NOTE. IBMCC agrees that it shall not assign, transfer or otherwise dispose of
any ownership interest in VFC pledged to it (the "VFC INTEREST"), the Company
Note or any Vanstar Payment Rights. Further, IBMCC agrees (except as set forth
in the third sentence of this SECTION 4) that it shall not ask, demand, sue for
or otherwise exercise any right or remedy in respect of the VFC Interest, the
Company Note or any Vanstar Payment Rights, until the Final Payout Date.
Without limiting the generality of the foregoing, IBMCC agrees (except as set
forth in the third sentence of this SECTION 4) that it shall not, until the
Final Payout Date, exercise or assert any right to exercise any rights in
respect of the VFC Interest, the Company Note or any Vanstar Payment Rights,
exercise any power of attorney in respect of the VFC Interest, the Company Note
or the Vanstar Payment Rights, or otherwise assert any claim, right or remedy in
respect of the VFC Interest, Company Note or any Vanstar Payment Rights. Until
the Final Payout Date, the only rights of IBMCC in respect of the VFC Interest,
Company Note or Vanstar Payment Rights shall be that (x) the IBMCC Debt shall be
secured by the VFC Interest and Company Note and (y) to the extent such payments
are permitted pursuant to the Purchase and Contribution Agreement and the
Receivables Purchase Agreement, and subject to the limitations set forth in this
SECTION 4, IBMCC may redirect and collect payments of any Vanstar Payment Rights
as set forth in SECTION 3. IBMCC agrees that its rights with respect to the
Company Note are further limited as provided in the Company Note, which has been
provided to IBMCC.
SECTION 5. ADDITIONAL AGREEMENTS OF AGENT. IBMCC agrees that it:
(a) shall not (i) challenge any transfer of Transferred Assets from
Vanstar to VFC, whether on the grounds that such transfer was a disguised
financing or a fraudulent conveyance or fraudulent transfer or was not a
true sale or otherwise, or (ii) assert that VFC, on the one
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hand, and Vanstar, on the other hand, should be substantively consolidated;
(b) shall not, with respect to PAR or VFC, institute or join any
other Person in instituting a proceeding of the type referred to in the
definition of "Insolvency Proceeding" in EXHIBIT I to the Receivables
Purchase Agreement, so long as any Notes or other debt securities issued by
PAR shall be outstanding or there shall not have elapsed one year and one
day since the last day on which any such Note or other debt securities
shall have been outstanding; and
(c) shall not assign its rights or obligations under the IBM
Financing Agreement to any other Person unless such Person shall have
agreed in writing, for the benefit of PAR, VFC and the Agent to be bound by
the terms of this Agreement as if it were a party hereto.
SECTION 6. RELIANCE. This Agreement shall remain in effect until the
Final Payout Date except that SECTION 5 hereof shall remain in effect until the
period of one year and one day referred to in CLAUSE (b) thereof shall have
elapsed.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the day first above written.
NESBITT BURNS SECURITIES INC.,
as Agent
By: /s/ Mark A. Roche
--------------------------------
Title: Managing Director
By: /s/ Thomas C. Wright
--------------------------------
Title: Senior Executive--Vice President
POOLED ACCOUNTS RECEIVABLES CAPITAL CORPORATION
By: /s/ Richard L. Taiano
--------------------------------
Title: Vice President
IBM CREDIT CORPORATION
By: /s/ Illegible
--------------------------------
Title: Credit Manager
VANSTAR FINANCE CO.
By: /s/ John J. Dunican, Jr.
--------------------------------
Title: Treasurer
VANSTAR CORPORATION, individually
and as Servicer
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By: /s/ John J. Dunican, Jr.
--------------------------------
Title: Treasurer
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EXHIBIT 99.1
CONTACT
-------
Christine Mohrmann
Director of Investor Relations
Vanstar Corporation
(770) 522-4262
VANSTAR ANNOUNCES ACCOUNT
RECEIVABLE SECURITIZATION
PLEASANTON, Calif. January 10, 1997. Vanstar Corporation (NYSE:VST) today
announced the establishment, effective December 20, 1996, of a $175,000,000
accounts receivable-based financing arrangement between its wholly owned
subsidiary, Vanstar Finance Co., and PAR Capital, a commercial paper conduit
sponsored by the Bank of Montreal. Under the arrangement, Vanstar sold
certain of its designated accounts receivable to PAR Capital. Vanstar expects
to utilize proceeds from the transaction to repay a portion of its existing
long-term indebtedness and for general corporate purposes.
This transaction, effective December 20, 1996, completes Vanstar's
previously announced refinancing plan that included the October sale of
convertible preferred interests.
Vanstar Corporation is a $1.8 billion provider of services and products
to design, build, manage and enhance computer network infrastructures of
Fortune 1000 companies and other large enterprises. The company provides
customized, integrated solutions through comprehensive Life Cycle Services.
Through its Professional Services Organization, Vanstar offers extensive
consulting expertise with national practices focused on emerging
technologies. For more information on Vanstar contact the company's web site
at http://www.vanstar.com.
