<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 25, 1996
REGISTRATION NO. 333-08453
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 3 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
INGRAM MICRO INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 5045 62-1644402
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
1600 E. ST. ANDREW PLACE
SANTA ANA, CA 92705
(714) 566-1000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
JAMES E. ANDERSON, JR., ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
INGRAM MICRO INC.
1600 E. ST. ANDREW PLACE
SANTA ANA, CA 92705
(714) 566-1000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
WINTHROP B. CONRAD, JR., ESQ. LARRY W. SONSINI, ESQ.
DAVIS POLK & WARDWELL WILSON SONSINI GOODRICH & ROSATI
450 LEXINGTON AVENUE 650 PAGE MILL ROAD
NEW YORK, NEW YORK 10017 PALO ALTO, CALIFORNIA 94304
(212) 450-4000 (415) 493-9300
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
As soon as practicable after the Registration Statement becomes effective.
------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ___________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ___________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
NUMBER OF MAXIMUM MAXIMUM
SHARES OFFERING AGGREGATE AMOUNT OF
TITLE OF SECURITIES TO BE TO BE PRICE PER OFFERING REGISTRATION
REGISTERED REGISTERED(1) SHARE(2) PRICE(2) FEE(3)
- ------------------------------------------------------------------------------------------------------
Class A Common Stock, par value
$0.01 per share............... 23,200,000 $16.00 $371,200,000 $112,139
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes 3,000,000 shares that are being registered in connection with an
over-allotment option granted to the U.S. Underwriters.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457.
(3) Of such amount, $111,035 has been previously paid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
EXPLANATORY NOTE
This Registration Statement contains three forms of prospectus. Two forms
of prospectus will be used by the Underwriters in connection with offerings of
Common Stock: (i) one to be used in connection with an offering by the U.S.
Underwriters in the United States and Canada (the "U.S. Prospectus") and (ii)
the other to be used in connection with a concurrent offering by the
International Underwriters outside of the United States and Canada (the
"International Prospectus"). The U.S. Prospectus and the International
Prospectus are identical in all respects except for the front cover page of the
International Prospectus, which is included herein after the final page of the
U.S. Prospectus and is labeled "Alternate Page for International Prospectus."
The third form of prospectus (the "Company Prospectus") will be used in
connection with an offering of 200,000 shares of Common Stock directly by the
Company to Mr. Jerre L. Stead, the Company's Chief Executive Officer and
Chairman of the Board of Directors. The Company Prospectus is identical in all
respects to the U.S. Prospectus except for (i) the front cover page of the
Company Prospectus, which is included herein after the front cover page of the
International Prospectus and is labeled "Alternate Page for Company Prospectus,"
and (ii) the fact that the information in "Underwriters" is not applicable to
purchases pursuant to the Company Prospectus. Final forms of each of the
Prospectuses will be filed with the Securities and Exchange Commission under
Rule 424(b).
i
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
PROSPECTUS (Subject to Completion)
Issued October 25, 1996
20,000,000 Shares
LOGO
CLASS A COMMON STOCK
---------------------------
OF THE 20,000,000 SHARES OF CLASS A COMMON STOCK (THE "COMMON STOCK") OFFERED
HEREBY, 16,000,000 SHARES ARE BEING OFFERED INITIALLY IN THE UNITED STATES AND
CANADA BY THE U.S. UNDERWRITERS, AND 4,000,000 SHARES ARE BEING OFFERED
INITIALLY OUTSIDE THE UNITED STATES AND CANADA BY THE INTERNATIONAL
UNDERWRITERS. SEE "UNDERWRITERS." UP TO 2,250,000 OF THE SHARES OF COMMON
STOCK OFFERED HEREBY ARE BEING RESERVED FOR SALE TO CERTAIN INDIVIDUALS
AND INGRAM INDUSTRIES INC. SEE "EMPLOYEE AND PRIORITY OFFERS." ALL SUCH
SHARES ARE BEING OFFERED ON THE SAME TERMS AND CONDITIONS AS THE SHARES
BEING OFFERED TO THE PUBLIC GENERALLY, AND ANY PURCHASERS OF SUCH
SHARES WHO ARE AFFILIATES OF THE COMPANY WILL REPRESENT THAT ANY
PURCHASES ARE BEING MADE FOR INVESTMENT PURPOSES ONLY. ALL OF THE
SHARES OF COMMON STOCK OFFERED HEREBY ARE BEING ISSUED AND SOLD BY
THE COMPANY. PRIOR TO THIS OFFERING, THERE HAS BEEN NO PUBLIC
MARKET FOR THE COMMON STOCK OF THE COMPANY. IT IS CURRENTLY
ESTIMATED THAT THE INITIAL PUBLIC OFFERING PRICE WILL BE BETWEEN
$14 AND $16 PER SHARE. SEE "UNDERWRITERS" FOR A DISCUSSION OF THE
FACTORS TO BE CONSIDERED IN DETERMINING THE INITIAL PUBLIC
OFFERING PRICE. THE COMPANY HAS TWO CLASSES OF AUTHORIZED
COMMON STOCK, THE COMMON STOCK OFFERED HEREBY AND THE CLASS B
COMMON STOCK (THE "CLASS B COMMON STOCK," AND COLLECTIVELY
WITH THE COMMON STOCK, THE "COMMON EQUITY"). THE RIGHTS OF
HOLDERS OF COMMON STOCK AND CLASS B COMMON STOCK ARE
IDENTICAL EXCEPT FOR VOTING AND CONVERSION RIGHTS AND
RESTRICTIONS ON TRANSFERABILITY. HOLDERS OF THE COMMON
STOCK ARE ENTITLED TO ONE VOTE PER SHARE, AND HOLDERS OF
THE CLASS B COMMON STOCK ARE ENTITLED TO TEN VOTES
PER SHARE ON MOST MATTERS SUBJECT TO STOCKHOLDER
VOTE. UPON THE CLOSING OF THIS OFFERING, THE INGRAM
FAMILY STOCKHOLDERS (AS DEFINED HEREIN) WILL HAVE
APPROXIMATELY 80.7% OF THE COMBINED VOTING POWER
OF THE COMMON EQUITY (80.5% IF THE U.S.
UNDERWRITERS EXERCISE THEIR OVER-ALLOTMENT
OPTION IN FULL). THE COMMON STOCK HAS BEEN
APPROVED FOR LISTING, SUBJECT TO OFFICIAL
NOTICE OF ISSUANCE, ON THE NEW YORK STOCK
EXCHANGE UNDER THE SYMBOL "IM."
---------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF CERTAIN
RISKS ASSOCIATED WITH THIS OFFERING.
---------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------------
PRICE $ A SHARE
---------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
---------------------------------------------------------------
<S> <C> <C> <C>
Per Share.............................. $ $ $
Total(3)............................... $ $ $
</TABLE>
- ------------
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(2) Before deducting expenses payable by the Company estimated at $1,400,000.
(3) The Company has granted to the U.S. Underwriters an option, exercisable
within 30 days of the date hereof, to purchase up to an aggregate of
3,000,000 additional Shares at the price to public less underwriting
discounts and commissions, for the purpose of covering over-allotments,
if any. If the U.S. Underwriters exercise such option in full, the total
price to public, underwriting discounts and commissions, and proceeds to
Company will be $ , $ and $ , respectively. See
"Underwriters."
---------------------------
The Shares are offered, subject to prior sale, when, as and if accepted by
the Underwriters named herein and subject to approval of certain legal matters
by Wilson Sonsini Goodrich & Rosati, counsel for the Underwriters. It is
expected that delivery of the Shares will be made on or about , 1996
at the office of Morgan Stanley & Co. Incorporated, New York, New York, against
payment therefor in immediately available funds.
---------------------------
MORGAN STANLEY & CO.
Incorporated
THE ROBINSON-HUMPHREY COMPANY, INC.
ALEX. BROWN & SONS
INCORPORATED
HAMBRECHT & QUIST
J.C. BRADFORD & CO.
, 1996
<PAGE> 4
INGRAM
MICRO LEADING THE WAY IN WORLDWIDE DISTRIBUTION(TM)
LOGO
SUPPLYING OVER 36,000 PRODUCTS
FROM 1,100 VENDORS WORLDWIDE
[LOGOS OF VARIOUS VENDORS]
PCS, PERIPHERALS, WORKSTATIONS
[LOGOS OF VARIOUS VENDORS]
SOFTWARE
[LOGOS OF VARIOUS VENDORS]
NETWORKING
WORLDWIDE PRESENCE
CUSTOMERS IN 120 COUNTRIES
[FACILITIES MAP]
SUPERIOR EXECUTION AND
VALUE-ADDED SERVICES
<TABLE>
<S> <C> <C>
LOGISTICS BANKING
- Warehousing - Credit
- Order Fulfillment - Financing Programs
- Product Tracking COST-EFFICIENT
- Bullet-Proof Shipping SALES & SERVICES
- Configuration - Telesales
- Labeling - Field Sales
- Returns - Customer Service
- Forecasting - Marketing
</TABLE>
PRODUCT KNOWLEDGE
<TABLE>
<S> <C> <C>
- Cross-Platform - Customer Information
Technical Support Systems
- Technical Training
</TABLE>
<PAGE> 5
OVER 100,000 RESELLER
CUSTOMERS IN 3 MARKET SECTORS
- Commercial
- Corporate Resellers
- Dealer Affiliates
- Direct Marketers
- VAR
- Systems Integrators
- Application VARs
- OEMs
- Government/Education Resellers
- Consumer
- Computer Superstores
- Office Product Superstores
- Mass Merchants
- Consumer Electronics Stores
- Warehouse Clubs
IMPULSE
WORLD CLASS
INFORMATION SYSTEMS
COMPETITIVE ADVANTAGE
THROUGH REAL-TIME
WORLDWIDE INFORMATION
ACCESS AND PROCESSING
- - 12 million on-line transactions per day
- - 26,000 orders per day
- - 37,000 shipments per day
[GLOBE]
<PAGE> 6
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS
PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO
MAKE SUCH OFFERING OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE IMPLY THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
------------------------
UNTIL , 1996 (25 DAYS AFTER COMMENCEMENT OF THIS OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY
REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS
WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
------------------------
For investors outside the United States: No action has been or will be
taken in any jurisdiction by the Company or by any Underwriter that would permit
a public offering of the Common Stock or possession or distribution of this
Prospectus in any jurisdiction where action for that purpose is required, other
than in the United States. Persons into whose possession this Prospectus comes
are required by the Company and the Underwriters to inform themselves about and
to observe any restrictions as to the offering of the Common Stock and the
distribution of this Prospectus.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary..................... 3
Risk Factors........................... 5
The Company............................ 15
Use of Proceeds........................ 17
Dividend Policy........................ 17
Capitalization......................... 18
Dilution............................... 19
Selected Consolidated Financial Data... 20
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 21
Business............................... 31
Management............................. 49
<CAPTION>
PAGE
----
<S> <C>
Employee and Priority Offers........... 60
Certain Transactions................... 61
The Split-Off and the Reorganization... 62
Principal Stockholders................. 67
Description of Capital Stock........... 68
Shares Eligible for Future Sale........ 72
Certain U.S. Federal Income Tax
Considerations....................... 74
Underwriters........................... 76
Legal Matters.......................... 79
Experts................................ 79
Additional Information................. 80
Index to Consolidated Financial
Statements........................... F-1
</TABLE>
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
------------------------
Ingram Micro and the Ingram Micro logo are registered trademarks of the
Company. Ingram Alliance, IMpulse, "Leading the Way in Worldwide Distribution,"
and "Partnership America" are trademarks of the Company. All other trademarks or
tradenames referred to in this Prospectus are the property of their respective
owners.
------------------------
Unless the context otherwise requires, the "Company" or "Ingram Micro"
refers to Ingram Micro Inc., a Delaware corporation, and its consolidated
subsidiaries. In addition, unless otherwise indicated, all information in this
Prospectus assumes (i) the occurrence of the Split-Off (as defined herein)
immediately prior to the closing of this offering, (ii) the purchase of 200,000
shares in the Company Offering (as defined herein), and (iii) no exercise of the
U.S. Underwriters' over-allotment option. See "Underwriters." The fiscal year of
the Company is a 52- or 53-week period ending on the Saturday nearest to
December 31. Unless the context otherwise requires, references in this
Prospectus to "1991," "1992," "1993," "1994," and "1995" represent the fiscal
years ended December 28, 1991 (52 weeks), January 2, 1993 (53 weeks), January 1,
1994 (52 weeks), December 31, 1994 (52 weeks), and December 30, 1995 (52 weeks),
respectively. The Company's next 53-week fiscal year will be fiscal year 1997.
2
<PAGE> 7
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements and the notes thereto
appearing elsewhere in this Prospectus.
THE COMPANY
Ingram Micro is the leading wholesale distributor of microcomputer products
worldwide. The Company markets microcomputer hardware, networking equipment, and
software products to more than 100,000 reseller customers in approximately 120
countries worldwide. Ingram Micro distributes microcomputer products through
warehouses in eight strategic locations in the continental United States and 22
international warehouses located in Canada, Mexico, most countries of the
European Union, Norway, Malaysia, and Singapore. The Company believes that it is
the market share leader in the United States, Canada, and Mexico, and the second
largest full-line distributor in Europe. In 1995, approximately 31% of the
Company's net sales were derived from operations outside the United States.
Ingram Micro offers one-stop shopping to its reseller customers by providing a
comprehensive inventory of more than 36,000 products from over 1,100 suppliers,
including most of the microcomputer industry's leading hardware manufacturers,
networking equipment suppliers, and software publishers. The Company's suppliers
include Apple Computer, Cisco Systems, Compaq Computer, Creative Labs,
Hewlett-Packard, IBM, Intel, Microsoft, NEC, Novell, Quantum, Seagate, 3Com,
Toshiba, and U.S. Robotics.
The Company conducts business with most of the leading resellers of
microcomputer products around the world, including, in the United States,
AmeriData, CDW Computer Centers, CompuCom, CompUSA, Computer City, Electronic
Data Systems, En Pointe Technologies, Entex Information Services, Micro
Warehouse, Sam's Club, Staples, and Vanstar. The Company's international
reseller customers include Complet Data A/S, Consultores en Diagnostico
Organizacional y de Sistemas, DSG Retail Ltd., 06 Software Centre Europe, B.V.,
GE Capital Technologies, Jump Ordenadores, Maxima S.A., Norsk Datasenter, Owell
Svenska AB, SNI Siemens Nixdorf Infosys AG, and TC Sistema SPA.
The Company has grown rapidly over the past five years, with net sales and
net income increasing to $8.6 billion and $84.3 million, respectively, in 1995
from $2.0 billion and $30.2 million, respectively, in 1991, representing
compound annual growth rates of 43.8% and 29.3%, respectively. The Company's
growth during this period reflects substantial expansion of its existing
domestic and international operations, resulting from the addition of new
customers, increased sales to the existing customer base, the addition of new
product categories and suppliers, and the establishment of Ingram Alliance
Reseller Company ("Ingram Alliance"), the Company's master reseller business
launched in late 1994, as well as the successful integration of ten acquisitions
worldwide. Because of intense price competition in the microcomputer products
wholesale distribution industry, the Company's margins have historically been
narrow and are expected in the future to continue to be narrow. In addition, the
Company is highly leveraged and has relied heavily on debt financing for its
increasing working capital needs in connection with the expansion of its
business.
The Company is currently a subsidiary of Ingram Industries Inc. ("Ingram
Industries"). Immediately prior to the closing of this offering, Ingram
Industries will consummate the Split-Off (as defined herein), and all
information in this Prospectus assumes the occurrence of the Split-Off at such
time. See "The Company" and "The Split-Off and the Reorganization." The
consummation of the Split-Off is a non-waiveable condition to the closing of
this offering.
3
<PAGE> 8
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered(1):
U.S. Offering................................... 16,000,000 Shares
International Offering.......................... 4,000,000 Shares
Company Offering(2)............................. 200,000 Shares
Total......................................... 20,200,000 Shares
Common Equity to be outstanding after this
offering(1)(3):
Common Stock.................................... 20,200,000 Shares
Class B Common Stock(4)......................... 109,813,762 Shares
Total......................................... 130,013,762 Shares
Voting rights:
Common Stock.................................... One vote per share
Class B Common Stock............................ Ten votes per share
Use of proceeds................................... To repay certain outstanding indebtedness. See
"Use of Proceeds."
NYSE Symbol....................................... IM
</TABLE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THIRTY-NINE WEEKS ENDED
FISCAL YEAR -----------------------------
---------------------------------------------------- SEPTEMBER 30, SEPTEMBER 28,
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales....................... $2,016.6 $2,731.3 $4,044.2 $5,830.2 $8,616.9 $ 6,070.7 $ 8,474.7
Gross profit.................... 185.4 227.6 329.6 439.0 605.7 422.5 574.5
Income from operations.......... 67.6 68.9 103.0 140.3 186.9 123.9 175.9(5)
Net income(6)................... 30.2 31.0 50.4 63.3 84.3 56.3 77.6(5)
Earnings per share.............. 0.25 0.26 0.42 0.53 0.70 0.47 0.64(5)
Weighted average common shares
outstanding(7)................ 120.6 120.6 120.6 120.6 120.6 120.6 120.9
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 28, 1996
-------------------------------------------
AS AS FURTHER
ACTUAL ADJUSTED(8) ADJUSTED(8)(9)
-------- ----------- --------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital........................................... $ 828.1 $ 668.1 $ 657.3
Total assets.............................................. 2,843.7 2,706.3 2,706.3
Total debt(10)............................................ 625.0 487.6 202.5
Stockholders' equity...................................... 366.0 366.0 640.3
</TABLE>
- ---------------
(1) Assumes no exercise of the U.S. Underwriters' over-allotment option.
(2) The Company is offering 200,000 shares of Common Stock to its Chief
Executive Officer, Jerre L. Stead, at the initial public offering price set
forth on the cover page of this Prospectus (the "Company Offering"). Such
shares would be purchased directly from the Company, with no underwriting
discounts or commission payable thereon. As used herein, the term "Combined
Offering" includes both the Company Offering and the underwritten initial
public offering. See "Management -- Employment Agreements" and "Employee
and Priority Offers -- Employee Directed Offer."
(3) See "Principal Stockholders." Excludes approximately 21,000,000 shares of
Common Equity issuable in connection with outstanding stock options. See
"Management -- 1996 Plan -- Options" and "-- Rollover Plan; Incentive Stock
Units."
(4) Each share of Class B Common Stock is convertible, at any time at the
option of the holder, into one share of Common Stock. In addition, the
Class B Common Stock will be automatically converted into Common Stock upon
the occurrence of certain events. See "Description of Capital Stock."
(5) Reflects a non-cash compensation charge of $8.9 million ($5.4 million, or
$0.04 per share, net of tax) in connection with the granting of the
Rollover Stock Options (as defined herein). See "The Split-Off and the
Reorganization -- The Split-Off" and Note 11 of Notes to Consolidated
Financial Statements.
(6) The 1992 results reflect the adoption of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("FAS 109").
(7) See Note 2 of Notes to Consolidated Financial Statements.
(8) As adjusted to reflect (i) the assumption by the Company of the accounts
receivable securitization program of Ingram Industries in partial
satisfaction of amounts due to Ingram Industries (resulting in a $160.0
million decrease in each of working capital and total debt) and (ii)
approximately $22.6 million of indebtedness to be incurred by the Company
in connection with the acquisition of certain facilities currently utilized
by the Company, as if such transactions had occurred on September 28, 1996.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources" and "Certain
Transactions."
(9) As further adjusted to give effect to the issuance of the Common Stock
offered by the Company in the Combined Offering, the repayment of certain
indebtedness with the estimated net proceeds therefrom, and the estimated
additional $10.8 million non-cash compensation charge related to certain
Rollover Stock Options (as defined herein). See "Use of Proceeds,"
"Capitalization," and "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Overview."
(10) Includes long-term debt, current maturities of long-term debt, and amounts
due to Ingram Industries.
4
<PAGE> 9
RISK FACTORS
In evaluating the Company's business, prospective investors should
carefully consider the following factors in addition to the other information
contained in this Prospectus.
Intense Competition. The Company operates in a highly competitive
environment, both in the United States and internationally. The microcomputer
products distribution industry is characterized by intense competition, based
primarily on price, product availability, speed and accuracy of delivery,
effectiveness of sales and marketing programs, credit availability, ability to
tailor specific solutions to customer needs, quality and breadth of product
lines and services, and availability of technical and product information. The
Company's competitors include regional, national, and international wholesale
distributors, as well as hardware manufacturers, networking equipment
manufacturers, and software publishers that sell directly to resellers and large
resellers who resell to other resellers. There can be no assurance that the
Company will not lose market share in the United States or in international
markets, or that it will not be forced in the future to reduce its prices in
response to the actions of its competitors and thereby experience a further
reduction in its gross margins. See "-- Narrow Margins" and
"Business -- Competition."
The Company entered the "aggregator" or "master reseller" business by
launching Ingram Alliance in late 1994. See "Business -- Ingram Alliance." The
Company competes with other master resellers, which sell to groups of affiliated
franchisees and third-party dealers. Many of the Company's competitors in the
master reseller business are more experienced and have more established contacts
with affiliated resellers, third-party dealers, or suppliers, which may provide
them with a competitive advantage over the Company.
The Company is constantly seeking to expand its business into areas closely
related to its core microcomputer products distribution business. As the Company
enters new business areas, it may encounter increased competition from current
competitors and/or from new competitors, some of which may be current customers
of the Company. For example, the Company intends to distribute media in the new
digital video disc format and may compete with traditional music and printed
media distributors. In addition, certain services the Company provides may
directly compete with those provided by the Company's reseller customers. There
can be no assurance that increased competition and adverse reaction from
customers resulting from the Company's expansion into new business areas will
not have a material adverse effect on the Company's business, financial
condition, or results of operations. See "Business -- The Industry" and "--
Competition."
Narrow Margins. As a result of intense price competition in the
microcomputer products wholesale distribution industry, the Company's margins
have historically been narrow and are expected in the future to continue to be
narrow. See "-- Intense Competition." These narrow margins magnify the impact on
operating results of variations in operating costs. The Company's gross margins
have declined from 8.1% for 1993 to 6.8% for the thirty-nine weeks ended
September 28, 1996. The Company receives purchase discounts from suppliers based
on a number of factors, including sales or purchase volume and breadth of
customers. These purchase discounts directly affect gross margins. Because many
purchase discounts from suppliers are based on percentage increases in sales of
products, it may become more difficult for the Company to achieve the percentage
growth in sales required for larger discounts due to the current size of the
Company's revenue base. The Company's gross margins have been further reduced by
the Company's entry into the master reseller business through Ingram Alliance,
which has lower gross margins than the Company's traditional wholesale
distribution business. See "-- Risks Associated with Ingram Alliance" and
"Business -- Ingram Alliance." The Company has taken a number of steps intended
to address the challenges of declining gross margins, particularly by
continually improving and enhancing its information systems and implementing
procedures and systems designed to provide greater warehousing efficiencies and
greater accuracy in shipping. However, there can be no assurance that these
steps will prevent gross margins from continuing to decline. If the Company's
gross margins continue to decline, the Company will be required to reduce
operating expenses as a percentage of net sales further in order to maintain or
increase its operating margins. While the Company will continue to explore ways
to improve gross margins and reduce operating expenses as a percentage of net
sales, there can be no assurance that the Company will be successful in such
efforts or that the Company's margins will not decline in the future. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
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Fluctuations in Quarterly Results. The Company's quarterly net sales and
operating results have varied significantly in the past and will likely continue
to do so in the future as a result of seasonal variations in the demand for the
products and services offered by the Company, the introduction of new hardware
and software technologies and products offering improved features and
functionality, the introduction of new products and services by the Company and
its competitors, the loss or consolidation of a significant supplier or
customer, changes in the level of operating expenses, inventory adjustments,
product supply constraints, competitive conditions including pricing, interest
rate fluctuations, the impact of acquisitions, currency fluctuations, and
general economic conditions. The Company's narrow margins may magnify the impact
of these factors on the Company's operating results.
Specific historical seasonal variations in the Company's operating results
have included a reduction of demand in Europe during the summer months,
increased Canadian government purchasing in the first quarter, and pre-holiday
stocking in the retail channel during the September to November period. In
addition, as was the case with the introduction of Microsoft Windows 95 in
August 1995, the product cycle of major products may materially impact the
Company's business, financial condition, or results of operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Quarterly Data; Seasonality." Changes in supplier supported
programs may also have a material impact on the Company's quarterly net sales
and operating results. The Company may be unable to adjust spending sufficiently
in a timely manner to compensate for any unexpected sales shortfall, which could
materially adversely affect quarterly operating results. Accordingly, the
Company believes that period-to-period comparisons of its operating results
should not be relied upon as an indication of future performance. In addition,
the results of any quarterly period are not indicative of results to be expected
for a full fiscal year. In certain future quarters, the Company's operating
results may be below the expectations of public market analysts or investors. In
such event, the market price of the Common Stock would be materially adversely
affected.
Capital Intensive Nature of Business; High Degree of Leverage. The
Company's business requires significant levels of capital to finance accounts
receivable and product inventory that is not financed by trade creditors. The
Company is highly leveraged and has relied heavily on debt financing for its
increasing working capital needs in connection with the expansion of its
business. At December 30, 1995 and September 28, 1996, the Company's total debt
was $850.5 million and $625.0 million, respectively, and represented 73.6% and
63.0%, respectively, of the Company's total capitalization. Pro forma for the
Combined Offering, the application of the estimated net proceeds therefrom, and
the incurrence of approximately $22.6 million of indebtedness in connection with
the acquisition of certain facilities currently utilized by the Company, as of
September 28, 1996, the Company's total debt would have been $202.5 million and
would have represented 24.0% of the Company's total capitalization ($160.0
million and 19.0% assuming the U.S. Underwriters' over-allotment option is
exercised in full). See "Use of Proceeds," "Capitalization," and "Management's
Discussion and Analysis of Financial Condition and Results of Operations." In
order to continue its expansion, the Company will need additional financing,
including debt financing, which may or may not be available on terms acceptable
to the Company, or at all. While a portion of the Company's historical financing
needs has been satisfied through internally generated funds and trade creditors,
a substantial amount has come from intercompany borrowings under debt facilities
and an accounts receivable securitization facility maintained by Ingram
Industries. No assurance can be given that the Company will continue to be able
to borrow in adequate amounts for these or other purposes on terms acceptable to
the Company, and the failure to do so could have a material adverse effect on
the Company's business, financial condition, and results of operations.
The Company has a commitment from NationsBank of Texas N.A. and The Bank of
Nova Scotia providing for a $1 billion credit facility (the "Credit Facility")
with a syndicate of lenders, for whom such banks will act as Agents, and the
Company expects to enter into a formal agreement prior to the closing of this
offering. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources." Concurrently with the
Split-Off, the Company intends to use borrowings under the Credit Facility to
repay (i) intercompany indebtedness in partial satisfaction of amounts due to
Ingram Industries (the Company is assuming Ingram Industries' accounts
receivable securitization program in satisfaction of the remaining amounts due
to Ingram Industries) and (ii) outstanding revolving indebtedness related to
amounts drawn by certain of the Company's subsidiaries, as participants in
Ingram Industries'
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<PAGE> 11
existing unsecured credit facility, which will terminate concurrently with the
closing of this offering. The net proceeds from the Combined Offering will be
used to repay a portion of the borrowings under the Credit Facility. See "Use of
Proceeds." The Company's ability in the future to satisfy its debt obligations
will be dependent upon its future performance, which is subject to prevailing
economic conditions and financial, business, and other factors, including
factors beyond the Company's control. See "-- Fluctuations in Quarterly
Results," "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources," "Certain
Transactions," and "The Split-Off and the Reorganization -- The Reorganization."
Management of Growth. The rapid growth of the Company's business has
required the Company to make significant recent additions in personnel and has
significantly increased the Company's working capital requirements. Although the
Company has experienced significant sales growth in recent years, such growth
should not be considered indicative of future sales growth. Such growth has
resulted in new and increased responsibilities for management personnel and has
placed and continues to place a significant strain upon the Company's
management, operating and financial systems, and other resources. There can be
no assurance that the strain placed upon the Company's management, operating and
financial systems, and other resources will not have a material adverse effect
on the Company's business, financial condition, and results of operations, nor
can there be any assurance that the Company will be able to attract or retain
sufficient personnel to continue the expansion of its operations. Also crucial
to the Company's success in managing its growth will be its ability to achieve
additional economies of scale. There can be no assurance that the Company will
be able to achieve such economies of scale, and the failure to do so could have
a material adverse effect on the Company's business, financial condition, and
results of operations.
To manage the expansion of its operations, the Company must continuously
evaluate the adequacy of its management structure and its existing systems and
procedures, including, among others, its data processing, financial, and
internal control systems. When entering new geographic markets, the Company will
be required to implement the Company's centralized IMpulse information
processing system on a timely and cost-effective basis, hire personnel,
establish suitable distribution centers, and adapt the Company's distribution
systems and procedures to these new markets. There can be no assurance that
management will adequately anticipate all of the changing demands that growth
could impose on the Company's systems, procedures, and structure. In addition,
the Company will be required to react to changes in the microcomputer
distribution industry, and there can be no assurance that it will be able to do
so successfully. Any failure to adequately anticipate and respond to such
changing demands may have a material adverse effect on the Company's business,
financial condition, or results of operations. See "-- Dependence on Information
Systems" and "Business -- Information Systems."
Dependence on Information Systems. The Company depends on a variety of
information systems for its operations, particularly its centralized IMpulse
information processing system which supports more than 40 operational functions
including inventory management, order processing, shipping, receiving, and
accounting. At the core of IMpulse is on-line, real-time distribution software
which supports basic order entry and processing and customers' shipments and
returns. The Company's information systems require the services of over 350 of
the Company's associates with extensive knowledge of the Company's information
systems and the business environment in which the Company operates. Although the
Company has not in the past experienced significant failures or downtime of
IMpulse or any of its other information systems, any such failure or significant
downtime could prevent the Company from taking customer orders, printing product
pick-lists, and/or shipping product and could prevent customers from accessing
price and product availability information from the Company. In such event, the
Company could be at a severe disadvantage in determining appropriate product
pricing or the adequacy of inventory levels or in reacting to rapidly changing
market conditions, such as a currency devaluation. A failure of the Company's
information systems which impacts any of these functions could have a material
adverse effect on the Company's business, financial condition, or results of
operations. In addition, the inability of the Company to attract and retain the
highly skilled personnel required to implement, maintain, and operate IMpulse
and the Company's other information systems could have a material adverse effect
on the Company's business, financial condition, or results of operations. In
order to react to changing market conditions, the Company must continuously
expand and
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<PAGE> 12
improve IMpulse and its other information systems. From time to time the Company
may acquire other businesses having information systems and records which must
be converted and integrated into IMpulse or other Company information systems.
This can be a lengthy and expensive process that results in a significant
diversion of resources from other operations. The inability of the Company to
convert the information systems of any acquired businesses to the Company's
information systems and to train its information systems personnel in a timely
manner and on a cost-effective basis could materially adversely affect the
Company's business, financial condition, or results of operations. There can be
no assurance that the Company's information systems will not fail, that the
Company will be able to attract and retain qualified personnel necessary for the
operation of such systems, that the Company will be able to expand and improve
its information systems, or that the information systems of acquired companies
will be successfully converted and integrated into the Company's information
systems on a timely and cost-effective basis. See "Business -- Information
Systems."
Exposure to Foreign Markets; Currency Risk. The Company, through its
subsidiaries, operates in a number of countries outside the United States,
including Canada, Mexico, most of the countries of the European Union, Norway,
Malaysia, and Singapore. In 1994, 1995, and the first three quarters of 1996,
29.3%, 30.7%, and 30.0%, respectively, of the Company's net sales were derived
from operations outside of the United States, and the Company expects its
international net sales to increase as a percentage of total net sales in the
future. See "Business -- Geographic Tactics." The Company's international net
sales are primarily denominated in currencies other than the U.S. dollar.
Accordingly, the Company's international operations impose risks upon its
business as a result of exchange rate fluctuations. Although the Company
attempts to mitigate the effect of exchange rate fluctuations on its business,
primarily by attempting to match the currencies of sales and costs, as well as
through the use of foreign currency borrowings and derivative financial
instruments such as forward exchange contracts, the Company does not seek to
remove all risk associated with such fluctuations. Accordingly, there can be no
assurance that exchange rate fluctuations will not have a material adverse
effect on the Company's business, financial condition, or results of operations
in the future. In certain countries outside the United States, operations are
accounted for primarily on a U.S. dollar denominated basis. In the event of an
unexpected devaluation of the local currency in those countries, the Company may
experience significant foreign exchange losses. For example, the devaluation of
the Mexican peso, which began in December 1994, significantly affected the
Company's Mexican operations. The primary impact on the Company's operating
results was a foreign exchange pre-tax charge of approximately $6.9 million and
$7.8 million in 1994 and 1995, respectively. In addition, the Company's net
sales in Mexico were adversely affected in 1995 as a result of the general
economic impact of the devaluation of the Mexican peso. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
The Company's international operations are subject to other risks such as
the imposition of governmental controls, export license requirements,
restrictions on the export of certain technology, political instability, trade
restrictions, tariff changes, difficulties in staffing and managing
international operations, difficulties in collecting accounts receivable and
longer collection periods, and the impact of local economic conditions and
practices. As the Company continues to expand its international business, its
success will be dependent, in part, on its ability to anticipate and effectively
manage these and other risks. There can be no assurance that these and other
factors will not have a material adverse effect on the Company's international
operations or its business, financial condition, and results of operations as a
whole.
Dependence on Key Individuals. The Company is dependent in large part on
its ability to retain the services of its executive officers, especially Messrs.
Jerre L. Stead (Chief Executive Officer and Chairman of the Board of Directors),
Jeffrey R. Rodek (Worldwide President and Chief Operating Officer), and David R.
Dukes (Vice Chairman of Ingram Micro and Chief Executive Officer of Ingram
Alliance). The loss of any of the Company's executive officers could have a
material adverse effect on the Company. The Company does not have employment
agreements with most of its executive officers, although it does have
agreements, primarily relating to severance arrangements, with certain of the
Named Executive Officers (as defined herein). See "Management -- Employment
Agreements." Several of the Company's executive officers currently perform
functions for both the Company and Ingram Industries, including Michael J.
Grainger, the Company's Executive Vice President and Worldwide Chief Financial
Officer, and James E. Anderson, Jr., the
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<PAGE> 13
Company's Senior Vice President, Secretary, and General Counsel. Concurrently
with the Split-Off, each of Messrs. Grainger and Anderson will resign from
Ingram Industries. See "Management -- Executive Officers and Directors." The
Company's continued success is also dependent upon its ability to retain and
attract other qualified employees to meet the Company's needs. See
"Business -- Employees."
Effective August 27, 1996, the Company appointed Jerre L. Stead as its
Chief Executive Officer and Chairman of the Board. Linwood A. (Chip) Lacy, Jr.,
the Company's Chief Executive Officer since 1985, resigned effective May 31,
1996. Although the Company believes that one of its distinguishing
characteristics is the strength of its senior and middle management personnel,
there can be no assurance that the Company will not experience a material
adverse effect on its business, financial condition, or results of operations as
a result of the resignation of Mr. Lacy. See "Management -- Employment
Agreements."
Product Supply; Dependence on Key Suppliers. The ability of the Company to
obtain particular products or product lines in the required quantities and to
fulfill customer orders on a timely basis is critical to the Company's success.
In most cases, the Company has no guaranteed price or delivery agreements with
its suppliers. As a result, the Company has experienced, and may in the future
continue to experience, short-term inventory shortages. In addition,
manufacturers who currently distribute their products through the Company may
decide to distribute, or to substantially increase their existing distribution,
through other distributors, their own dealer networks, or directly to resellers.
Further, the personal computer industry experiences significant product supply
shortages and customer order backlogs from time to time due to the inability of
certain manufacturers to supply certain products on a timely basis. There can be
no assurance that suppliers will be able to maintain an adequate supply of
products to fulfill the Company's customer orders on a timely basis or that the
Company will be able to obtain particular products or that a product line
currently offered by suppliers will continue to be available. The failure of the
Company to obtain particular products or product lines in the required
quantities or fulfill customer orders on a timely basis could have a material
adverse effect on its business, financial condition, or results of operations.
Although Ingram Micro regularly stocks products and accessories supplied by
over 1,100 suppliers, approximately 36.5%, 41.4%, 53.2%, and 55.2% of the
Company's net sales in 1993, 1994, 1995, and the first three quarters of 1996,
respectively, were derived from products provided by its ten largest suppliers.
In 1995, 32.9% of the Company's net sales were derived from sales of products
from Microsoft (12.7%), Compaq Computer (10.7%), and Hewlett-Packard (9.5%). In
the first three quarters of 1996, 33.2% of the Company's net sales were derived
from sales of products from Compaq Computer (13.7%), Microsoft (10.4%), and
Hewlett-Packard (9.1%). Certain of the Company's non-U.S. operations are even
more dependent on a limited number of suppliers. In addition, many services that
the Company provides to its reseller customers, such as financing and technical
training, are dependent on supplier support. The loss of a major supplier, the
deterioration of the Company's relationship with a major supplier, the loss or
deterioration of supplier support for certain Company-provided services, the
decline in demand for a particular supplier's product, or the failure of the
Company to establish good relationships with major new suppliers could have a
material adverse effect on the Company's business, financial condition, or
results of operations. Such a loss, deterioration, decline, or failure could
also have a material adverse effect on the sales by the Company of products
provided by other suppliers.
The Company's ability to achieve increases in net sales or to sustain
current net sales levels depends in part on the ability and willingness of the
Company's suppliers to provide products in the quantities the Company requires.
Although the Company has written distribution agreements with many of its
suppliers, these agreements usually provide for nonexclusive distribution rights
and often include territorial restrictions that limit the countries in which
Ingram Micro is permitted to distribute the products. The agreements are also
generally short term, subject to periodic renewal, and often contain provisions
permitting termination by either party without cause upon relatively short
notice. The termination of an agreement may have a material adverse impact on
the Company's business, financial condition, or results of operations. See
"Business -- Products and Suppliers."
Risks Associated with Ingram Alliance. Ingram Micro entered the master
reseller (also known as "aggregation") business in late 1994 through the launch
of Ingram Alliance. Ingram Alliance is designed to
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<PAGE> 14
offer resellers access to products supplied by certain of the industry's leading
hardware manufacturers at competitive prices by utilizing a low-cost business
model that depends upon a higher average order size, lower product returns
percentage, and supplier-paid financing. The master reseller business is
characterized by gross margins and operating margins that are even narrower than
those of the U.S. microcomputer products wholesale distribution business and by
competition based almost exclusively on price, programs, and execution. In the
master reseller business, the Company has different supply arrangements and
financing terms than in its traditional wholesale distribution business. There
can be no assurance that the Company will be able to compete successfully in the
master reseller business. A failure by Ingram Alliance to compete successfully
could have a material adverse effect on the Company's business, financial
condition, or results of operations.
A substantial portion of Ingram Alliance's net sales (approximately 89.9%
during 1995 and 92.5% during the thirty-nine weeks ended September 28, 1996) is
derived from the sale of products supplied by Compaq Computer, IBM, Toshiba,
NEC, and Apple Computer. As a result, Ingram Alliance's business is dependent
upon price and related terms and availability of products provided by these key
suppliers. Although the Company considers Ingram Alliance's relationships with
these suppliers to be good, there can be no assurance that these relationships
will continue as presently in effect or that changes by one or more of such key
suppliers in their volume discount schedules or other marketing programs would
not adversely affect the Company's business, financial condition or results of
operations. Termination or nonrenewal of Ingram Alliance's agreements with key
suppliers would have a material adverse effect on the Company's business,
financial condition, or results of operations.
Although the Company's wholesale distribution division sells
Hewlett-Packard products, Ingram Alliance does not currently have authorization
to sell Hewlett-Packard products in the master reseller market. Because of
Hewlett-Packard's position as a major supplier of microcomputer hardware
products, the Company believes that sales of Hewlett-Packard products likely
account for a substantial portion of sales at Ingram Alliance's major
competitors in the master reseller business. The inability to offer
Hewlett-Packard products places Ingram Alliance at a competitive disadvantage to
its competitors because it is unable to provide a full range of products to its
customers. The continued inability of Ingram Alliance to receive authorization
to sell Hewlett-Packard products could have a material adverse effect on Ingram
Alliance's business, financial condition, or results of operations. See
"Business -- Ingram Alliance."
Acquisitions. As part of its growth strategy, the Company pursues the
acquisition of companies that either complement or expand its existing business.
As a result, the Company is continually evaluating potential acquisition
opportunities, which may be material in size and scope. Acquisitions involve a
number of risks and difficulties, including expansion into new geographic
markets and business areas, the requirement to understand local business
practices, the diversion of management's attention to the assimilation of the
operations and personnel of the acquired companies, the integration of the
acquired companies' management information systems with those of the Company,
potential adverse short-term effects on the Company's operating results, the
amortization of acquired intangible assets, and the need to present a unified
corporate image.
The Company does not currently have any commitments or agreements with
respect to any material acquisitions. The Company is currently in negotiations
regarding potential acquisitions or joint ventures, none of which, if
consummated, would be material to the Company's business. The Company
anticipates that one or more potential acquisition opportunities, including some
that could be material to the Company, may become available in the future. The
Company may issue equity securities to consummate acquisitions, which may cause
dilution to investors purchasing Common Stock in the Combined Offering. In
addition, the Company may be required to utilize cash or increase its borrowings
to consummate acquisitions. No assurance can be given that the Company will have
adequate resources to consummate any acquisition, that any acquisition by the
Company will or will not occur, that if any acquisition does occur it will not
have a material adverse effect on the Company, its business, financial
condition, or results of operations or that any such acquisition will be
successful in enhancing the Company's business. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
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<PAGE> 15
Risk of Declines in Inventory Value. The Company's business, like that of
other wholesale distributors, is subject to the risk that the value of its
inventory will be adversely affected by price reductions by suppliers or by
technological changes affecting the usefulness or desirability of the products
comprising the inventory. It is the policy of most suppliers of microcomputer
products to protect distributors such as the Company, who purchase directly from
such suppliers, from the loss in value of inventory due to technological change
or the supplier's price reductions. Under the terms of many distribution
agreements, suppliers will credit the distributor for inventory losses resulting
from the supplier's price reductions if the distributor complies with certain
conditions. In addition, under many such agreements, the distributor has the
right to return for credit or exchange for other products a portion of the
inventory items purchased, within a designated period of time. A supplier who
elects to terminate a distribution agreement generally will repurchase from the
distributor the supplier's products carried in the distributor's inventory. The
industry practices discussed above are sometimes not embodied in written
agreements and do not protect the Company in all cases from declines in
inventory value. No assurance can be given that such practices will continue,
that unforeseen new product developments will not materially adversely affect
the Company, or that the Company will be able to successfully manage its
existing and future inventories. The Company's risk of declines in inventory
value could be greater outside the United States where agreements with suppliers
are more restrictive with regard to price protection and the Company's ability
to return unsold inventory. The Company establishes reserves for estimated
losses due to obsolete inventory in the normal course of business. Historically,
the Company has not experienced losses due to obsolete inventory materially in
excess of established inventory reserves. However, significant declines in
inventory value in excess of established inventory reserves could materially
adversely affect the Company's business, financial condition, or results of
operations.
The Company sometimes purchases from suppliers, usually at significant
discounts, quantities of products that are nearing the end of their product life
cycle. In addition, the Company's purchasing staff also seeks opportunities to
purchase quantities of products from suppliers at discounts larger than those
usually available. When the Company negotiates these purchases, it seeks to
secure favorable terms for the return to suppliers of products unwanted by
resellers and end-users. Because some of these purchase agreements contain terms
providing for a 60-day time limit on returns to suppliers, end-user or reseller
delays in returning the product to the Company may make it difficult for the
Company to meet the deadline for returns to suppliers, and the Company could be
left with unwanted product. Additionally, some suppliers may be unwilling or
unable to pay the Company for products returned to them under purchase
agreements, and this trend may accelerate as consolidation in the industry
increases. For products offered by major suppliers, each of these events, were
they to occur, could materially adversely impact the Company's business,
financial condition, or results of operations. See "Business -- Products and
Suppliers."
Dependence on Independent Shipping Companies. The Company relies almost
entirely on arrangements with independent shipping companies for the delivery of
its products. Products are shipped from suppliers to the Company through Skyway
Freight Systems, Yellow Freight Systems, APL Land Transport Services, and ABF
Freight Systems. Currently, Federal Express Corporation ("FedEx"), United Parcel
Service ("UPS"), Western Package Service, General Parcel Services, Roadway
Parcel Services, and Purolator Courier deliver the substantial majority of the
Company's products to its reseller customers in the United States and Canada. In
other countries, the Company typically relies on one or two shipping companies
prominent in local markets. The termination of the Company's arrangements with
one or more of these independent shipping companies, or the failure or inability
of one or more of these independent shipping companies to deliver products from
suppliers to the Company or products from the Company to its reseller customers
or their end-user customers could have a material adverse effect on the
Company's business, financial condition, or results of operations. For instance,
an employee work stoppage or slow-down at one or more of these independent
shipping companies could materially impair that shipping company's ability to
perform the services required by the Company. There can be no assurance that the
services of any of these independent shipping companies will continue to be
available to the Company on terms as favorable as those currently available or
that these companies will choose or be able to perform their required shipping
services for the Company. See "Business -- Operations -- Shipping."
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<PAGE> 16
Rapid Technological Change; Alternate Means of Software Distribution. The
microcomputer products industry is subject to rapid technological change, new
and enhanced product specification requirements, and evolving industry
standards. These changes may cause inventory in stock to decline substantially
in value or to become obsolete. In addition, suppliers may give the Company
limited or no access to new products being introduced. Although the Company
believes that it has adequate price protection and other arrangements with its
suppliers to avoid bearing the costs associated with these changes, no assurance
can be made that future technological or other changes will not have a material
adverse effect on the business, financial condition, or results of operations of
the Company. Outside North America, the supplier contracts can be more
restrictive and place more risks on the Company.
Net sales of software products have decreased as a percentage of total net
sales in recent years due to a number of factors, including bundling of software
with microcomputers; sales growth in Ingram Alliance, which is a hardware-only
business; declines in software prices; and the emergence of alternative means of
software distribution, such as site licenses and electronic distribution. The
Company expects this trend to continue. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Overview" and
"Business -- Products and Suppliers."
Relationship with Ingram Industries, Ingram Entertainment, and the Ingram
Family Stockholders. The Company has historically depended on Ingram Industries
and other subsidiaries of Ingram Industries for financing, cash management, tax
and payroll administration, property/casualty insurance, employee benefits
administration, and certain other administrative services. In conjunction with
the Split-Off, the Company, Ingram Industries, and Ingram Entertainment Inc.
("Ingram Entertainment"), a wholly-owned subsidiary of Ingram Industries, will
enter into agreements for the continued provision after the Split-Off of certain
services formerly shared among such entities (collectively, the "Transitional
Service Agreements"), as well as a tax sharing and tax services agreement. See
"The Split-Off and the Reorganization -- The Reorganization." The Company
believes that the terms of the Transitional Service Agreements will be on a
basis as favorable to the Company as those that would have been obtained from
third parties on an arm's length basis and that they will be adequate to allow
the Company to continue its business as previously conducted on an independent
basis. The Company's historical financial statements reflect an allocation of
expenses in connection with the services covered by the Transitional Service
Agreements. Although the Company expects the costs and fees to be paid by it in
connection with the Transitional Service Agreements to be higher than its
historical allocated costs, it does not believe the increase in costs will be
material to its results of operations. In addition, the Transitional Service
Agreements generally terminate on December 31, 1996, although payroll services
under the Transitional Service Agreements will be provided through December 31,
1997. After such termination, the Company will be required to provide such
services internally or find a third-party provider of such services. There can
be no assurance that the Company will be able to secure the provision of such
services on acceptable terms. Either the additional costs and fees associated
with the Transitional Service Agreements or the failure to obtain acceptable
provision of services upon termination of the Transitional Service Agreements
could have a material adverse effect on the Company's business, financial
condition, or results of operations. After the Split-Off, each of the Company
and Ingram Industries will be controlled by the Ingram Family Stockholders (as
defined herein). See "-- Control by Ingram Family Stockholders; Certain
Anti-takeover Provisions." After the Split-Off, Ingram Entertainment will
continue to be a wholly-owned subsidiary of Ingram Industries. Although there
can be no assurance, it is contemplated that, on or after June 20, 1997, certain
remaining stockholders of Ingram Industries will exchange their remaining shares
of Ingram Industries common stock for shares of Ingram Entertainment common
stock. See "The Split-Off and the Reorganization -- The Reorganization."
Furthermore, the Company has incurred, and anticipates incurring in the
future, higher payroll costs associated with the hiring of certain additional
personnel and the addition of certain officers, previously paid by Ingram
Industries, to the Company's payroll. There can be no assurance that the
Company's results of operations will not be materially adversely affected by
such additional costs. See "-- Capital Intensive Nature of Business; High Degree
of Leverage," "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources," "Certain
Transactions," and "The Split-Off and the Reorganization -- The Reorganization."
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<PAGE> 17
In connection with the Split-Off, the Company made a $20.0 million
distribution to Ingram Industries in the second quarter of 1996. Additionally,
the Company may declare a dividend, which would be paid to Ingram Industries and
the other holders of Class B Common Stock prior to the Split-Off, in an amount
yet to be determined. The Company does not expect the dividend, if paid, to be
material in relation to the Company's stockholders' equity or cash available for
operations.
Control by Ingram Family Stockholders; Certain Anti-takeover
Provisions. Immediately after the Split-Off and the closing of this offering,
69.6% of the outstanding Common Equity (and 80.7% of the outstanding voting
power) will be held by the Ingram Family Stockholders (68.0% and 80.5%,
respectively, if the U.S. Underwriters' over-allotment option is exercised in
full). Martha R. Ingram, her children, certain trusts created for their benefit,
and two charitable trusts and a foundation created by the Ingram family
(collectively, the "Ingram Family Stockholders") are expected to enter into a
Board Representation Agreement (as defined herein) with the Company, which
provides that certain types of corporate transactions, including transactions
involving the potential sale or merger of the Company; the issuance of
additional equity, warrants, or options; certain acquisitions; or the incurrence
of significant indebtedness, may not be entered into without the written
approval of at least a majority of the voting power held by certain of the
Ingram Family Stockholders acting in their sole discretion. See "The Split-Off
and the Reorganization -- The Split-Off," "Principal Stockholders," and
"Description of Capital Stock." Voting control by the Ingram Family Stockholders
may discourage certain types of transactions involving an actual or potential
change of control of the Company, including transactions in which the holders of
the Company's Common Stock might receive a premium for their shares over the
prevailing market price of the Common Stock.
Section 203 of the Delaware General Corporation Law (as amended from time
to time, the "DGCL"), which is applicable to the Company, prohibits certain
business combinations with certain stockholders for a period of three years
after they acquire 15% or more of the outstanding voting stock of a corporation.
See "Description of Capital Stock -- Section 203 of the DGCL." In addition, the
authorized but unissued capital stock of the Company includes 1,000,000 shares
of preferred stock. The Board of Directors is authorized to provide for the
issuance of such preferred stock in one or more series and to fix the
designations, preferences, powers and relative, participating, optional or other
rights and restrictions thereof. Accordingly, the Company may issue a series of
preferred stock in the future that will have preference over the Common Equity
with respect to the payment of dividends and upon liquidation, dissolution or
winding-up or which could otherwise adversely affect holders of the Common
Equity or discourage or make difficult any attempt to obtain control of the
Company. See "Description of Capital Stock -- Preferred Stock."
Shares Eligible for Future Sale. Upon completion of the Combined Offering,
the Company will have outstanding 20,200,000 shares of Common Stock (23,200,000
shares if the U.S. Underwriters' over-allotment option is exercised in full) and
109,813,762 shares of Class B Common Stock, and an additional approximately
16,200,000 shares of Common Stock and approximately 4,800,000 shares of Class B
Common Stock will be reserved for issuance upon exercise of outstanding stock
options held by employees and directors of the Company, Ingram Industries, and
Ingram Entertainment. See "Management." The 20,200,000 shares of Common Stock to
be sold by the Company in the Combined Offering will be freely tradable without
restriction. The Company and its directors and executive officers, and certain
stockholders of the Company, have agreed, subject to certain exceptions, not to
offer, sell, contract to sell or otherwise dispose of any Common Equity for a
period of 180 days after the date of this Prospectus without the prior written
consent of Morgan Stanley & Co. Incorporated. Morgan Stanley & Co. Incorporated
has informed the Company that it has no present intention to consent to any such
transactions. Despite these limitations, the sale of a significant number of
these shares could have an adverse impact on the price of the Common Stock or on
any trading market that may develop. See "Shares Eligible for Future Sale."
Absence of Public Market; Possible Volatility of Stock Price. Prior to this
offering, there has been no public market for the Common Stock or the Class B
Common Stock. There can be no assurance that an active trading market for the
Common Stock will develop, or, if one does develop, that it will be sustained
following this offering or that the market price of the Common Stock will not
decline below the initial public offering price. The initial public offering
price will be determined by negotiations between the Company and the
Representatives of the Underwriters. See "Underwriters -- Pricing of Offering."
The market price of the
13
<PAGE> 18
Common Stock could be subject to wide fluctuations in response to quarterly
variations in the Company's results of operations, changes in earnings estimates
by research analysts, conditions in the personal computer industry, or general
market or economic conditions, among other factors. In addition, in recent years
the stock market has experienced extreme price and volume fluctuations. These
fluctuations have had a substantial effect on the market prices of many
technology companies, often unrelated to the operating performance of the
specific companies. Such market fluctuations could materially adversely affect
the market price for the Common Stock.
Dilution. The initial public offering price of the shares of Common Stock
offered hereby will be substantially higher than the net tangible book value per
share of the Common Equity. Therefore, purchasers of Common Stock in the
Combined Offering will experience an immediate and substantial dilution in net
tangible book value per share. See "Dilution."
14
<PAGE> 19
THE COMPANY
Ingram Micro is the leading wholesale distributor of microcomputer products
worldwide. The Company markets microcomputer hardware, networking equipment, and
software products to more than 100,000 reseller customers in approximately 120
countries worldwide in three principal market sectors: the VAR sector,
consisting of value-added resellers, systems integrators, network integrators,
application VARs, and original equipment manufacturers; the Commercial sector,
consisting of corporate resellers, direct marketers, independent dealers, and
owner-operated chains; and the Consumer sector, consisting of consumer
electronics stores, computer superstores, mass merchants, office product
superstores, software-only stores, and warehouse clubs. As a wholesale
distributor, the Company markets its products to each of these types of
resellers as opposed to marketing directly to end-user customers.
The Company conducts business with most of the leading resellers of
microcomputer products around the world, including, in the United States,
AmeriData, CDW Computer Centers, CompuCom, CompUSA, Computer City, Electronic
Data Systems, En Pointe Technologies, Entex Information Services, Micro
Warehouse, Sam's Club, Staples, and Vanstar. The Company's international
reseller customers include Complet Data A/S, Consultores en Diagnostico
Organizacional y de Sistemas, DSG Retail Ltd., 06 Software Centre Europe, B.V.,
GE Capital Technologies, Jump Ordenadores, Maxima S.A., Norsk Datasenter, Owell
Svenska AB, SNI Siemens Nixdorf Infosys AG, and TC Sistema SPA.
Ingram Micro offers one-stop shopping to its reseller customers by
providing a comprehensive inventory of more than 36,000 products from over 1,100
suppliers, including most of the microcomputer industry's leading hardware
manufacturers, networking equipment suppliers, and software publishers. The
Company's broad product offerings include: desktop and notebook personal
computers ("PCs"), servers, and workstations; mass storage devices; CD-ROM
drives; monitors; printers; scanners; modems; networking hubs, routers, and
switches; network interface cards; business application software; entertainment
software; and computer supplies. The Company's suppliers include Apple Computer,
Cisco Systems, Compaq Computer, Creative Labs, Hewlett-Packard, IBM, Intel,
Microsoft, NEC, Novell, Quantum, Seagate, 3Com, Toshiba, and U.S. Robotics.
Ingram Micro distributes microcomputer products worldwide through
warehouses in eight strategic locations in the continental United States and 22
international warehouses located in Canada, Mexico, most countries of the
European Union, Norway, Malaysia, and Singapore. The Company believes that it is
the market share leader in the United States, Canada, and Mexico, and the second
largest full-line distributor in Europe. In 1995, approximately 31% of the
Company's net sales were derived from operations outside the United States. The
Export Division fulfills orders from U.S. exporters and from foreign customers
in countries where the Company does not operate a distribution subsidiary,
including much of Latin America, the Middle East, Africa, Australia, and parts
of Europe and Asia. The Company participates in the master reseller business in
the United States through Ingram Alliance.
The Company's principal objective is to enhance its position as the
preeminent wholesale distributor of microcomputer products worldwide. The
Company is focused on providing a broad range of products and services, quick
and efficient order fulfillment, and consistent on-time and accurate delivery to
its reseller customers around the world. The Company believes that IMpulse, the
Company's on-line information system, provides a competitive advantage through
real-time worldwide information access and processing capabilities. This
information system, coupled with the Company's exacting operating procedures in
telesales, credit support, customer service, purchasing, technical support, and
warehouse operations, enables the Company to provide its reseller customers with
superior service in an efficient and low cost manner. In addition, to enhance
sales and support its suppliers and reseller customers, the Company provides a
wide range of value-added services, such as technical training, order
fulfillment, tailored financing programs, systems configuration, and marketing
programs.
The Company has grown rapidly over the past five years, with net sales and
net income increasing to $8.6 billion and $84.3 million, respectively, in 1995
from $2.0 billion and $30.2 million, respectively, in 1991, representing
compound annual growth rates of 43.8% and 29.3%, respectively. The Company's
growth during this period reflects substantial expansion of its existing
domestic and international operations, resulting from
15
<PAGE> 20
the addition of new customers, increased sales to the existing customer base,
the addition of new product categories and suppliers, and the establishment of
Ingram Alliance, as well as the successful integration of ten acquisitions
worldwide. Because of intense price competition in the microcomputer products
wholesale distribution industry, the Company's margins have historically been
narrow and are expected in the future to continue to be narrow. In addition, the
Company is highly leveraged and has relied heavily on debt financing for its
increasing working capital needs in connection with the expansion of its
business. See "Risk Factors -- Narrow Margins" and "-- Capital Intensive Nature
of Business; High Degree of Leverage."
The Company is currently a subsidiary of Ingram Industries, a company
controlled by the Ingram Family Stockholders. The Company, Ingram Industries,
and Ingram Entertainment will enter into certain agreements, pursuant to which
the operations of the three companies will be reorganized (the
"Reorganization"). In the Reorganization, the Company, Ingram Industries, and
Ingram Entertainment will allocate certain liabilities and obligations among
themselves. Immediately prior to the closing of this offering, Ingram Industries
will consummate an exchange, pursuant to which certain existing stockholders of
Ingram Industries will exchange all or a portion of their shares of Ingram
Industries common stock for shares of Class B Common Stock of the Company in
specified ratios. Immediately after the Split-Off and the closing of this
offering, none of the Common Equity will be held by Ingram Industries, other
than the approximately 250,000 shares to be purchased by Ingram Industries in
the Priority Offer. See "Employee and Priority Offers -- Priority Offer." At
such time, 69.6% of the outstanding Common Equity (and 80.7% of the outstanding
voting power) will be held by the Ingram Family Stockholders (68.0% and 80.5%,
respectively, if the U.S. Underwriters' over-allotment option is exercised in
full). See "Risk Factors -- Control by Ingram Family Stockholders; Certain
Anti-takeover Provisions." Such exchange of shares of Ingram Industries common
stock for shares of Class B Common Stock of the Company, together with those
elements of the Reorganization contemplated to occur prior to the closing of
this offering, are referred to herein as the "Split-Off." The consummation of
the Split-Off is a non-waiveable condition to the closing of this offering. See
"Principal Stockholders" and "The Split-Off and the Reorganization." After the
Split-Off, Ingram Entertainment will continue to be a wholly-owned subsidiary of
Ingram Industries. Although there can be no assurance, it is contemplated that,
on or after June 20, 1997, certain remaining stockholders of Ingram Industries
will exchange their remaining shares of Ingram Industries common stock for
shares of Ingram Entertainment common stock. See "The Split-Off and the
Reorganization."
The Company's earliest predecessor began business in 1979 as a California
corporation named Micro D, Inc. This company and its parent, Ingram Micro
Holdings Inc. ("Holdings"), grew through a series of acquisitions, mergers and
internal growth to encompass the Company's current operations. Ingram Micro Inc.
was incorporated in Delaware on April 29, 1996, in order to effect the
reincorporation of the Company in Delaware. The successor to Micro D, Inc. and
Holdings were merged into Ingram Micro Inc. in October 1996. The Company's
principal executive office is located at 1600 East St. Andrew Place, Santa Ana,
California 92705, and its telephone number is (714) 566-1000.
16
<PAGE> 21
USE OF PROCEEDS
The net proceeds to the Company from the Combined Offering, after deducting
estimated underwriting discounts and commissions and estimated offering
expenses, are assumed to be approximately $285.1 million ($327.6 million if the
U.S. Underwriters' over-allotment option is exercised in full). At September 28,
1996, the Company had total outstanding debt of $625.0 million, of which $479.7
million was due to Ingram Industries. Concurrently with the Split-Off, the
Company will assume Ingram Industries' accounts receivable securitization
program (expected to aggregate $173.0 million at the closing of this offering)
in partial satisfaction of amounts due to Ingram Industries. The Company intends
to use borrowings under the Credit Facility to repay (i) the remaining
intercompany indebtedness to Ingram Industries, which was incurred for general
corporate purposes, primarily working capital needs in connection with the
expansion of the Company's business and (ii) outstanding revolving indebtedness
related to amounts drawn by certain of the Company's subsidiaries ($82.4 million
at September 28, 1996), as participants in Ingram Industries' existing $380
million unsecured credit facility, which will terminate concurrently with the
closing of this offering.
The net proceeds from the Combined Offering will be used to repay a portion
of the borrowings under the Credit Facility. After giving effect to the
foregoing transactions, including the application of the net proceeds from the
Combined Offering, borrowings under the Credit Facility would have been
approximately $89.6 million on a pro forma basis at September 28, 1996. See
"Capitalization," "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources," and Note 6 of
Notes to Consolidated Financial Statements.
DIVIDEND POLICY
The Company has never declared or paid any dividends on the Common Equity
other than the distribution made to Ingram Industries in connection with the
Split-Off. See "Risk Factors -- Relationship with Ingram Industries, Ingram
Entertainment, and the Ingram Family Stockholders." The Company currently
intends to retain its future earnings to finance the growth and development of
its business and therefore does not anticipate declaring or paying cash
dividends on the Common Equity for the foreseeable future other than a dividend
that may be paid to Ingram Industries and the other holders of Class B Common
Stock in connection with and prior to the Split-Off. Any future determination to
declare or pay dividends will be at the discretion of the Board of Directors and
will be dependent upon the Company's financial condition, results of operations,
capital requirements, and such other factors as the Board of Directors deems
relevant. In addition, the Credit Facility and the Company's other debt
facilities will contain restrictions on the declaration and payment of
dividends.
17
<PAGE> 22
CAPITALIZATION
The following table sets forth, as of September 28, 1996, (i) the actual
short-term debt and capitalization of the Company, (ii) such short-term debt and
capitalization as adjusted to give effect to the Split-Off, and (iii) such as
adjusted short-term debt and capitalization as further adjusted to reflect the
sale of the shares of Common Stock offered by the Company in the Combined
Offering at an assumed initial public offering price of $15.00 per share (after
deducting estimated underwriting discounts and commissions and estimated
offering expenses) and the application of the estimated net proceeds therefrom.
See "Use of Proceeds."
<TABLE>
<CAPTION>
SEPTEMBER 28, 1996
----------------------------------------
AS AS FURTHER
ACTUAL ADJUSTED(1) ADJUSTED(1)(2)
-------- ----------- --------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C>
Short-term debt:
Current maturities of long-term debt........................... $ 16,458 $ 16,458 $ 16,458
========== ======== ========
Long-term debt:
Long-term debt................................................. $128,855 $ 471,142 $186,042
Due to Ingram Industries....................................... 479,703 0 0
---------- -------- --------
Total long-term debt........................................ 608,558 471,142 186,042
Redeemable Class B Common Stock.................................. 17,223 17,223 17,223
---------- -------- --------
Stockholders' equity(3)(4):
Preferred Stock, $0.01 par value; 1,000,000 shares authorized;
0, 0, and 0 shares issued and outstanding, respectively..... 0 0 0
Class A Common Stock, $0.01 par value; 265,000,000 shares
authorized;
0, 0, and 20,200,000 shares issued and outstanding,
respectively................................................ 0 0 202
Class B Common Stock, $0.01 par value; 135,000,000 shares
authorized; 109,813,762 shares issued and outstanding
(including 2,460,400 redeemable shares)..................... 1,074 1,074 1,074
Additional paid in capital..................................... 23,140 23,140 308,038
Retained earnings.............................................. 339,689 339,689 328,877
Cumulative translation adjustment.............................. 2,680 2,680 2,680
Unearned compensation.......................................... (594) (594) (594)
---------- -------- --------
Total stockholders' equity.................................. 365,989 365,989 640,277
---------- -------- --------
Total capitalization........................................ $991,770 $ 854,354 $843,542
========== ======== ========
</TABLE>
- ---------------
(1) As adjusted to reflect (i) the assumption by the Company of the accounts
receivable program of Ingram Industries in satisfaction of amounts due to
Ingram Industries (resulting in an increase of $319.7 million in long-term
debt, a decrease of $479.7 million in amounts due to Ingram Industries, and
a decrease of $160.0 million in trade accounts receivable not reflected in
this table) and (ii) approximately $22.6 million of indebtedness to be
incurred by the Company in connection with the acquisition of certain
facilities currently utilized by the Company (resulting in an increase of
$22.6 million in long-term debt, which is reflected in this table, and a
similar increase in property and equipment, which is not reflected in this
table), as if such transactions had occurred on September 28, 1996. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and "Certain Transactions."
(2) As further adjusted to give effect to the issuance of the Common Stock
offered by the Company in the Combined Offering at an assumed initial public
offering price of $15.00 per share (after deducting estimated underwriting
discounts and commissions and estimated offering expenses), the repayment of
certain revolving indebtedness including certain amounts outstanding under
the Credit Facility with the entire net proceeds therefrom, and the
additional estimated $10.8 million non-cash charge related to certain
Rollover Stock Options. See "Use of Proceeds" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Overview."
(3) Each share of Class B Common Stock is convertible, at any time at the option
of the holder, into one share of Common Stock. In addition, the Class B
Common Stock will be automatically converted into Common Stock upon the
occurrence of certain events. See "Description of Capital Stock."
(4) Excludes approximately 21,000,000 shares of Common Equity issuable in
connection with outstanding stock options. See "Management -- 1996
Plan -- Options" and "-- Rollover Plans; Incentive Stock Units."
18
<PAGE> 23
DILUTION
The net tangible book value of the Common Equity of the Company as of
September 28, 1996 was $354.4 million or $3.23 per share of Common Equity. Net
tangible book value represents the amount of total tangible assets less total
liabilities.
Dilution per share to new investors represents the difference between the
amount per share paid by purchasers of Common Stock in the Combined Offering and
the pro forma net tangible book value per share of Common Equity immediately
after the closing of this offering. After giving effect to the sale of
20,200,000 shares of Common Stock offered hereby by the Company at an assumed
initial public offering price of $15.00 per share and after deducting estimated
underwriting discounts and commissions and estimated offering expenses and the
application of the estimated net proceeds therefrom, the pro forma net tangible
book value of the Company as of September 28, 1996 would have been $628.7
million or $4.84 per share of Common Equity. This represents an immediate
increase in net tangible book value of $1.61 per share of Common Equity to
existing stockholders and an immediate dilution of $10.16 per share of Common
Equity to purchasers of Common Stock in the Combined Offering. The following
table illustrates the per share dilution to new investors:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............................. $15.00
Net tangible book value per share of Common
Equity as of September 28, 1996........................................ $3.23
Increase attributable to new investors.................................... 1.61
-----
Net tangible book value per share of Common Equity after this offering...... 4.84
------
Dilution per share of Common Equity to new investors........................ $10.16
======
</TABLE>
The following table summarizes, as of September 28, 1996, the difference
(before deducting estimated underwriting discounts and commissions and estimated
offering expenses) between existing stockholders and the purchasers of shares of
Common Stock in the Combined Offering (at an assumed initial public offering
price of $15.00 per share) with respect to: (i) the number of shares of Common
Equity purchased from the Company; (ii) the effective cash consideration paid;
and (iii) the average price paid per share of Common Equity.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
----------------------- ------------------------ PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
----------- ------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders(1)........... 109,813,762 84.5% $ 83,783,800 21.7% $ 0.76
New investors...................... 20,200,000 15.5 303,000,000 78.3 15.00
----------- ----- ------------ -----
Total.................... 130,013,762 100.0% $386,783,800 100.0%
=========== ===== ============ =====
</TABLE>
- ---------------
(1) Excludes options issued under the Company's 1996 Plan and Rollover Plan, to
purchase an aggregate of 21,000,000 shares of Common Equity. To the extent
any of these options are exercised, there will be further dilution to new
investors. See "Management -- 1996 Plan -- Options" and "-- Rollover Plan;
Incentive Stock Units."
19
<PAGE> 24
SELECTED CONSOLIDATED FINANCIAL DATA
The following table presents selected consolidated financial data of the
Company. The information set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the historical consolidated financial statements and notes
thereto included elsewhere in this Prospectus. The consolidated statement of
income data set forth below for each of the three years in the period ended
December 30, 1995 and the consolidated balance sheet data at December 31, 1994
and December 30, 1995 are derived from, and are qualified by reference to, the
audited consolidated financial statements included elsewhere in this Prospectus,
and should be read in conjunction with those financial statements and the notes
thereto. The consolidated balance sheet data as of January 1, 1994 are derived
from the audited consolidated balance sheet of the Company as of January 1,
1994, which is not included in this Prospectus. The consolidated statement of
income data for each of the two years in the period ended January 2, 1993 and
the consolidated balance sheet data as of December 28, 1991 and January 2, 1993
are derived from unaudited consolidated financial statements not included in
this Prospectus. The consolidated financial data as of and for the thirty-nine
weeks ended September 30, 1995, and as of and for the thirty-nine weeks ended
September 28, 1996, have been derived from unaudited consolidated financial
statements of the Company which are included in this Prospectus and which, in
the opinion of the Company, reflect all adjustments, consisting only of
adjustments of a normal and recurring nature, necessary for a fair presentation.
Results for the thirty-nine weeks ended September 28, 1996 are not necessarily
indicative of results for the full year. The historical consolidated financial
data may not be indicative of the Company's future performance and do not
necessarily reflect what the financial position and results of operations of the
Company would have been had the Company operated as a separate, stand-alone
entity during the periods covered. See "Consolidated Financial Statements."
<TABLE>
<CAPTION>
THIRTY-NINE WEEKS ENDED
FISCAL YEAR -----------------------------
-------------------------------------------------------------- SEPTEMBER 30, SEPTEMBER 28,
1991 1992 1993 1994 1995 1995 1996
INCOME STATEMENT DATA: ---------- ---------- ---------- ---------- ---------- ------------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales........................ $2,016,586 $2,731,272 $4,044,169 $5,830,199 $8,616,867 $ 6,070,722 $ 8,474,710
Cost of sales.................... 1,831,140 2,503,702 3,714,527 5,391,224 8,011,181 5,648,210 7,900,223
---------- ---------- ---------- ---------- ---------- ---------- ----------
Gross profit..................... 185,446 227,570 329,642 438,975 605,686 422,512 574,487
Expenses:
Selling, general and
administrative............... 116,793 157,306 225,047 296,330 415,344 296,079 386,492
Charges allocated from Ingram
Industries................... 1,030 1,330 1,567 2,355 3,461 2,561 3,259
Non-cash compensation charge... 0 0 0 0 0 0 8,859(2)
---------- ---------- ---------- ---------- ---------- ---------- ----------
117,823 158,636 226,614 298,685 418,805 298,640 398,610(2)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income from operations........... 67,623 68,934 103,028 140,290 186,881 123,872 175,877(2)
Other (income) expense:
Interest income................ (256) (103 ) (407) (937) (3,479) (3,049) (1,188)
Interest expense............... 3,233 5,556 5,003 8,744 13,451 8,918 10,608
Interest expense charged by
Ingram Industries............ 11,859 12,405 16,089 24,189 32,606 22,977 30,912
Net foreign currency exchange
loss......................... 0 0 111 6,873 7,751 6,572 447
Other.......................... 324 2,574 (623) 716 1,936 405 1,689
---------- ---------- ---------- ---------- ---------- ---------- ----------
15,160 20,432 20,173 39,585 52,265 35,823 42,468
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes and
minority interest.............. 52,463 48,502 82,855 100,705 134,616 88,049 133,409(2)
Provision for income taxes....... 22,286 17,529 31,660 39,604 53,143 34,755 55,459
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before minority
interest....................... 30,177 30,973 51,195 61,101 81,473 53,294 77,950(2)
Minority interest................ 0 0 840 (2,243) (2,834) (2,986) 383
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income(1).................... $ 30,177 $ 30,973 $ 50,355 $ 63,344 $ 84,307 $ 56,280 $ 77,567(2)
========== ========== ========== ========== ========== ========== ==========
Earnings per share............... $ 0.25 $ 0.26 $ 0.42 $ 0.53 $ 0.70 $ 0.47 $ 0.64(2)
========== ========== ========== ========== ========== ========== ==========
Weighted average common shares
outstanding.................... 120,554 120,554 120,554 120,554 120,554 120,554 120,891
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 28, JANUARY 2, JANUARY 1, DECEMBER 31, DECEMBER 30, SEPTEMBER 28,
1991 1993 1994 1994 1995 1996
BALANCE SHEET DATA: ------------ ---------- ---------- ------------ ------------ -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Cash....................................... $ 15,510 $ 25,276 $ 44,391 $ 58,369 $ 56,916 $ 43,196
Working capital............................ 288,462 334,913 471,616 663,049 1,019,639 828,084
Total assets............................... 670,649 915,590 1,296,363 1,974,289 2,940,898 2,843,712
Total debt(3).............................. 244,785 295,389 398,929 552,283 850,548 625,016
Stockholder's equity....................... 78,972 109,418 155,459 221,344 310,795 365,989
</TABLE>
- ---------------
(1) The 1992 results reflect the adoption of FAS 109.
(2) Reflects a non-cash compensation charge of $8.9 million ($5.4 million, or
$0.04 per share, net of tax) in connection with the granting of Rollover
Stock Options. See Note 11 of Notes to Consolidated Financial Statements.
(3) Includes long-term debt, current maturities of long-term debt, and amounts
due to Ingram Industries.
20
<PAGE> 25
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Ingram Micro is the leading wholesale distributor of microcomputer products
worldwide. The Company's net sales have grown to $8.6 billion in 1995 from $2.0
billion in 1991. This sales growth reflects substantial expansion of its
existing domestic and international operations, resulting from the addition of
new customers, increased sales to the existing customer base, the addition of
new product categories and suppliers, and the establishment of Ingram Alliance,
as well as the successful integration of ten acquisitions worldwide. Net income
has grown to $84.3 million in 1995 from $30.2 million in 1991.
The microcomputer wholesale distribution industry in which the Company
operates is characterized by narrow gross and operating margins, which have
declined industry-wide in recent years, primarily due to intense price
competition. The Company's gross margins declined to 7.0% in 1995 from 9.2% in
1991. To partially offset the decline in gross margins, the Company has
continually instituted operational and expense controls which have reduced
selling, general, and administrative ("SG&A") expenses (including charges
allocated from Ingram Industries) as a percentage of net sales to 4.8% in 1995
from 5.8% in 1991. As a result, the Company's operating margins and net margins
have declined less than gross margins. Operating margins declined to 2.2% in
1995 from 3.4% in 1991, and net margins declined to 1.0% in 1995 from 1.5% in
1991. There can be no assurance that the Company will be able to continue to
reduce operating expenses as a percentage of net sales to mitigate further
reductions in gross margins. Although the Company's international operations
have historically had similar gross margins to the Company's U.S. traditional
wholesale operations, the Company's international operations have historically
had lower operating margins due in part to greater economies of scale in the
U.S. operations. See "Risk Factors -- Narrow Margins."
Ingram Micro entered the master reseller (also known as "aggregation")
business in late 1994 through the launch of Ingram Alliance. Ingram Alliance is
designed to offer resellers access to certain of the industry's leading hardware
manufacturers at competitive prices by utilizing a lower cost business model
that depends upon a higher average order size, lower product returns percentage,
and supplier-paid financing. In 1995, Ingram Alliance contributed over $700
million of net sales to the Company. Since its inception in late 1994, Ingram
Alliance has operated with lower gross margins, lower SG&A expenses as a
percentage of net sales, and lower financing costs than the Company's
traditional wholesale distribution business. Accordingly, if Ingram Alliance's
sales continue to grow as a percentage of the Company's total net sales, the
Company expects such increase to cause its overall gross margins to decline.
The Company sells microcomputer hardware, networking equipment, and
software products. Sales of hardware products (including networking equipment)
represent a majority of total net sales and have historically generated a higher
operating margin than sales of software products, although operating margins on
both hardware products and software products have historically declined.
Hardware products and networking equipment have comprised an increasing
percentage, and software products a decreasing percentage, of the Company's net
sales in recent years, and the Company expects this trend to continue. Net sales
of software products have decreased as a percentage of total net sales in recent
years due to a number of factors, including bundling of software with
microcomputers; sales growth in Ingram Alliance, which is a hardware-only
business; declines in software prices; and the emergence of alternative means of
software distribution, such as site licenses and electronic distribution. See
"Risk Factors -- Rapid Technological Change; Alternate Means of Software
Distribution" and "Business -- Products and Suppliers."
Historically, the Company's sources of capital have primarily been
borrowings from Ingram Industries through debt facilities maintained by Ingram
Industries and guaranteed by the Company. The Company has a commitment providing
for the $1 billion Credit Facility, and the Company expects to enter into a
formal agreement prior to the closing of this offering. See "-- Liquidity and
Capital Resources." Concurrently with the Split-Off, the Company intends to use
borrowings under the Credit Facility to repay (i) intercompany indebtedness in
partial satisfaction of amounts due to Ingram Industries (the Company is
assuming Ingram Industries' accounts receivable securitization program in
satisfaction of the remaining amounts due to Ingram Industries) and (ii)
outstanding revolving indebtedness related to amounts drawn by certain of the
Company's
21
<PAGE> 26
subsidiaries, as participants in Ingram Industries' existing unsecured credit
facility, which will terminate concurrently with the closing of this offering.
The net proceeds from the Combined Offering will be used to repay a portion of
the borrowings under the Credit Facility. See "Use of Proceeds." The Company has
historically depended on Ingram Industries and other subsidiaries of Ingram
Industries for financing, management, tax and payroll administration,
property/casualty insurance, employee benefits administration, and certain other
administrative services. In conjunction with the Reorganization, the Company,
Ingram Industries, and Ingram Entertainment will enter into the Transitional
Service Agreements, as well as a tax sharing and tax services agreement. See
"The Split-Off and the Reorganization -- The Reorganization." The Company
believes that the terms of the Transitional Service Agreements will be on a
basis as favorable to the Company as those that would have been obtained from
third parties on an arm's length basis. The Company's historical financial
statements reflect an allocation of expenses in connection with the services
covered by the Transitional Service Agreements. Although the Company expects the
costs and fees to be paid by it in connection with the Transitional Service
Agreements to be higher than its historical allocated costs, it does not believe
the increase in costs will be material to its results of operations. On a
long-term basis, the Company will be required to hire personnel to perform such
services or contract with one or more independent third parties to provide such
services. See "Risk Factors -- Relationship with Ingram Industries, Ingram
Entertainment, and the Ingram Family Stockholders."
The microcomputer wholesale distribution business is capital intensive. The
Company's business requires significant levels of capital to finance accounts
receivable and product inventory that is not financed by trade creditors. The
Company is highly leveraged and has relied heavily on debt financing for its
increasing working capital needs in connection with the expansion of its
business. The Company will need additional capital to finance its product
inventory and accounts receivable as it expands its business. The Company's
interest expense for any current or future indebtedness will be subject to
fluctuations in interest rates and may cause fluctuations in the Company's net
income. In connection with the Split-Off, the Company will assume Ingram
Industries' accounts receivable securitization program, and financing costs
associated with this program will be classified as other expense. Prior to the
Split-Off, such expenses were reflected as interest expense charged by Ingram
Industries. While this structure will not increase the Company's cost of
financing, this change in the classification of financing costs will result in
an increase in the Company's other expenses of approximately $10.5 million per
year and a corresponding decrease in its interest expense.
In connection with the Split-Off, certain outstanding Ingram Industries
options, incentive stock units ("ISUs"), and stock appreciation rights ("SARs")
held by certain employees of Ingram Industries, Ingram Entertainment, and Ingram
Micro will be exchanged or converted to options to purchase up to an aggregate
of approximately 11,000,000 shares of Common Stock ("Rollover Stock Options").
See "Management -- Rollover Plan; Incentive Stock Units." The Company has
recorded a pre-tax non-cash compensation charge of approximately $8.9 million
($5.4 million net of tax) in the first three quarters of 1996 related to the
vested portion of certain of the Rollover Stock Options as the terms and grants
of the Rollover Stock Options were established in the first quarter of 1996.
This charge was based on the difference between the estimated fair value of such
options in the first quarter of 1996 and the exercise price of such options or
SARs. In addition, at the time of this offering, the Company will be required by
applicable accounting rules to record a non-cash compensation charge with
respect to the vested portion of approximately 1,300,000 formula plan Rollover
Stock Options included in the 11,000,000 shares. This non-cash charge is
expected to be approximately $10.8 million based on the difference between the
average exercise price of $2.63 per share and $15.00 per share, the assumed
initial public offering price of the Common Stock. The Company will be required
by applicable accounting rules to record additional non-cash compensation
charges over the remaining vesting periods of the Rollover Stock Options. The
Company expects these additional charges to be $1.0 million ($0.6 million net of
tax) for the fourth quarter of 1996, $6.4 million ($5.0 million net of tax) for
1997 and $4.3 million ($3.2 million net of tax) for 1998.
22
<PAGE> 27
RESULTS OF OPERATIONS
The following table sets forth the Company's net sales by geographic region
(excluding intercompany sales), and the percentage of total net sales
represented thereby, for each of the periods indicated.
<TABLE>
<CAPTION>
THIRTY-NINE WEEKS ENDED
FISCAL YEAR --------------------------------
-------------------------------------------------- SEPTEMBER 30, SEPTEMBER 28,
1993 1994 1995 1995 1996
-------------- -------------- -------------- -------------- --------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET SALES BY GEOGRAPHIC REGION(1):
United States................. $ 3,118 77.1% $ 4,122 70.7% $ 5,970 69.3% $ 4,287 70.6% $ 5,930 70.0%
Europe........................ 485 12.0 1,078 18.5 1,849 21.4 1,239 20.4 1,745 20.6
Other international........... 441 10.9 630 10.8 798 9.3 545 9.0 800 9.4
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total......................... $ 4,044 100.0% $ 5,830 100.0% $ 8,617 100.0% $ 6,071 100.0% $ 8,475 100.0%
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
- ---------------
(1) Net sales are classified by location of the Company entity. For example,
products sold through Ingram Alliance or the U.S. Export Division are
classified as United States sales.
The following table sets forth certain items from the Company's
Consolidated Statement of Income as a percentage of net sales, for each of the
periods indicated.
<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES
---------------------------------------------------------
THIRTY-NINE WEEKS ENDED
FISCAL YEAR -----------------------------
------------------------- SEPTEMBER 30, SEPTEMBER 28,
1993 1994 1995 1995 1996
----- ----- ----- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net sales.................................. 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales.............................. 91.9 92.5 93.0 93.0 93.2
------ ------ ------ ------ ------
Gross profit............................... 8.1 7.5 7.0 7.0 6.8
Expenses:
SG&A expenses and charges allocated from
Ingram Industries..................... 5.6 5.1 4.8 5.0 4.6
Non-cash compensation charge............. 0.0 0.0 0.0 0.0 0.1
------ ------ ------ ------ ------
Income from operations..................... 2.5 2.4 2.2 2.0 2.1
Other expense, net......................... 0.5 0.7 0.6 0.5 0.5
------ ------ ------ ------ ------
Income before income taxes and minority
interest................................. 2.0 1.7 1.6 1.5 1.6
Provision for income taxes................. 0.8 0.6 0.6 0.6 0.7
Minority interest.......................... 0.0 0.0 0.0 0.0 0.0
------ ------ ------ ------ ------
Net income................................. 1.2% 1.1% 1.0% 0.9% 0.9%
====== ====== ====== ====== ======
</TABLE>
FIRST THREE QUARTERS 1996 COMPARED TO FIRST THREE QUARTERS 1995
Consolidated net sales increased 39.6% to $8.5 billion in the first three
quarters of 1996 from $6.1 billion in the first three quarters of 1995.
Microsoft Windows 95 was launched in the third quarter of 1995 and sales of
Microsoft Windows 95 accounted for $289.1 million of consolidated net sales in
the first three quarters of 1995. The increase in worldwide net sales was
attributable to growth in the microcomputer products industry in general, the
addition of new customers, increased sales to the existing customer base, and
expansion of the Company's product offerings.
Net sales from U.S. operations increased 38.3% to $5.9 billion in the first
three quarters of 1996 from $4.3 billion in the first three quarters of 1995. In
addition to the factors above that impacted net sales worldwide, U.S. net sales
were positively impacted by the strong growth in Ingram Alliance sales. Net
sales from European operations increased 40.8% to $1.7 billion in the first
three quarters of 1996 from $1.2 billion in the first three quarters of 1995.
Other international net sales increased 46.9% to $799.8 million in the first
three quarters of 1996 from $544.5 million in the first three quarters of 1995,
principally due to the growth in net sales from the Company's Canadian
operations. In the first three quarters of 1996, net sales from U.S. operations
accounted for 70.0% of consolidated net sales, net sales from European
operations accounted for 20.6% of consolidated net sales, and other
international net sales accounted for 9.4% of consolidated net sales.
23
<PAGE> 28
In the first three quarters of 1995, net sales from U.S. operations accounted
for 70.6% of consolidated net sales, net sales from European operations
accounted for 20.4% of consolidated net sales, and other international net sales
accounted for 9.0% of consolidated net sales.
Cost of sales as a percentage of net sales increased to 93.2% in the first
three quarters of 1996 from 93.0% in the first three quarters of 1995. This
increase was largely attributable to competitive pricing pressures, especially
in Europe, and the increase as a percentage of net sales of the lower gross
margin Ingram Alliance business, which more than offset an increase in worldwide
purchase discounts and rebates from the Company's suppliers.
Total SG&A expenses and charges allocated from Ingram Industries increased
30.5% to $389.8 million in the first three quarters of 1996 from $298.6 million
in the first three quarters of 1995, but decreased as a percentage of net sales
to 4.6% in the first three quarters of 1996 from 5.0% in the first three
quarters of 1995. The increased level of spending was attributable to expenses
required to support expansion of the Company's business, consisting primarily of
incremental personnel and support costs, lease payments relating to new
operating facilities, and expenses associated with the development and
maintenance of information systems. The decrease in operating expenses as a
percentage of net sales was primarily attributable to the growth of Ingram
Alliance, which utilizes a lower cost business model, and economies of scale
from higher sales volumes.
During the first three quarters of 1996, the Company recorded a non-cash
compensation charge of $8.9 million or 0.1% of net sales in connection with the
Rollover Stock Options. The Company did not record any such charge during the
first three quarters of 1995.
Excluding the $8.9 million non-cash compensation charge in the first three
quarters of 1996, total income from operations increased as a percentage of net
sales to 2.2% in the first three quarters of 1996 from 2.0% in the first three
quarters of 1995. Income from operations in the United States increased as a
percentage of net sales to 2.7% in the first three quarters of 1996 from 2.6% in
the first three quarters of 1995. Income from operations in Europe decreased as
a percentage of net sales to 0.5% in the first three quarters of 1996 from 0.7%
in the first three quarters of 1995. This decrease was offset by an increase in
income from operations as a percentage of net sales for geographic regions
outside the United States and Europe to 2.0% in the first three quarters of 1996
from 0.7% in the first three quarters of 1995. The first three quarters of 1995
included the negative impact of an inventory valuation loss of $3.8 million
related to the decline in value of the Mexican peso and the associated impact on
the Mexican economy.
For the reasons set forth above, income from operations, including the $8.9
million non-cash compensation charge, increased 42.0% to $175.9 million in the
first three quarters of 1996 from $123.9 million in the first three quarters of
1995, and, as a percentage of net sales, increased to 2.1% in the first three
quarters of 1996 from 2.0% in the first three quarters of 1995.
Other expense, net, which consists primarily of net interest expense
(including interest expense charged by Ingram Industries), foreign currency
exchange losses, and miscellaneous non-operating expenses, increased 18.5% to
$42.5 million in the first three quarters of 1996 from $35.8 million in the
first three quarters of 1995, but remained constant as a percentage of net sales
at 0.5%. The increase in other expense was largely attributable to a higher
level of borrowings to finance the Company's worldwide business expansion,
partially offset by a period-over-period decrease in the amount of foreign
currency losses which were primarily related to the 1995 Mexican peso
devaluation.
The provision for income taxes increased 59.6% to $55.5 million in the
first three quarters of 1996 from $34.8 million in the first three quarters of
1995, reflecting the 51.5% increase in the Company's income before income taxes
and minority interest. The Company's effective tax rate was 41.6% in the first
three quarters of 1996 compared to 39.5% in the first three quarters of 1995.
The increase in the effective tax rate was primarily due to the effect of
certain international taxes in 1996.
Excluding the $5.4 million (net of tax) non-cash compensation charge, net
income increased 47.4% to $83.0 million in the first three quarters of 1996 from
$56.3 million in the first three quarters of 1995 and, as a percentage of net
sales, increased to 1.0% in the first three quarters of 1996 from 0.9% in the
first three quarters of 1995. Net income, including the $5.4 million (net of
tax) non-cash compensation charge,
24
<PAGE> 29
increased 37.8% to $77.6 million in the first three quarters of 1996 from $56.3
million in the first three quarters of 1995, but remained constant as a
percentage of net sales at 0.9%.
1995 COMPARED TO 1994
Consolidated net sales increased 47.8% to $8.6 billion in 1995 from $5.8
billion in 1994. The increase in worldwide net sales was attributable to growth
in the microcomputer products industry in general, the addition of new
customers, increased sales to the existing customer base, and expansion of the
Company's product offerings, as well as to the release of significant new
products, including the Microsoft Windows 95 operating system in August 1995.
Net sales from U.S. operations increased 44.8% to $6.0 billion in 1995 from
$4.1 billion in 1994. The increase in U.S. net sales was largely attributable to
the growth of Ingram Alliance in 1995, its first full year of operations, as
well as an increase in the Company's customer base and product lines. Net sales
from European operations increased 71.5% to $1.8 billion in 1995 from $1.1
billion in 1994. In addition to factors affecting sales worldwide, European net
sales were positively impacted by the full year contribution in 1995 of the
Company's Scandinavian operations, which were acquired in September 1994. Other
international net sales increased 26.7% to $798.0 million in 1995 from $629.6
million in 1994. The increase in net sales from other international operations
was entirely attributable to an increase in Canadian sales, partially offset by
a decrease in Mexican net sales resulting from the distressed Mexican economy
and the related peso devaluation. In 1995, net sales from U.S. operations
accounted for 69.3% of consolidated net sales, net sales from European
operations accounted for 21.4% of consolidated net sales, and other
international net sales accounted for 9.3% of consolidated net sales. In 1994,
net sales from U.S. operations accounted for 70.7% of consolidated net sales,
net sales from European operations accounted for 18.5% of consolidated net
sales, and other international net sales accounted for 10.8% of consolidated net
sales.
Cost of sales as a percentage of net sales increased to 93.0% in 1995 from
92.5% in 1994. This increase was largely attributable to competitive pricing
pressures worldwide and the growth of Ingram Alliance, which is characterized by
lower gross margins than the Company's traditional wholesale distribution
business. Gross margin was favorably impacted by effective operational controls
and an increase in worldwide purchase discounts and rebates from the Company's
suppliers.
Total SG&A expenses and charges allocated from Ingram Industries increased
40.2% to $418.8 million in 1995 from $298.7 million in 1994, but decreased as a
percentage of net sales to 4.8% in 1995 from 5.1% in 1994. The increased level
of spending was attributable to expenses required to support expansion of the
Company's business, consisting primarily of incremental personnel and support
costs, lease payments relating to new facilities, and expenses associated with
the development and maintenance of information systems. The decreased level of
spending as a percentage of net sales was primarily attributable to economies of
scale resulting from higher sales volumes, increased operating efficiencies, and
the growth of Ingram Alliance, which is characterized by lower SG&A expenses as
a percentage of net sales than the Company's traditional wholesale distribution
business.
For the reasons set forth above, income from operations increased 33.2% to
$186.9 million in 1995 from $140.3 million in 1994, but decreased as a
percentage of net sales to 2.2% in 1995 from 2.4% in 1994. Income from U.S.
operations decreased as a percentage of net sales to 2.6% in 1995 from 3.0% in
1994. This decrease was partially offset by an increase in income from European
operations as a percentage of net sales to 1.1% in 1995 from 0.7% in 1994.
Other expense, net increased 32.0% to $52.3 million in 1995 from $39.6
million in 1994, but decreased as a percentage of net sales to 0.6% in 1995 from
0.7% in 1994. The increase in other expense was largely attributable to a higher
level of borrowings to finance the Company's worldwide business expansion. The
Company was also negatively impacted by the continued effect of the distressed
Mexican economy and the related peso devaluation. Primarily due to events in
Mexico, the Company sustained a net foreign currency exchange loss of $7.8
million in 1995 as compared to a $6.9 million loss in 1994.
The provision for income taxes increased 34.2% to $53.1 million in 1995
from $39.6 million in 1994, reflecting the 33.7% increase in the Company's
income before income taxes and minority interest. The Company's effective tax
rate was 39.5% in 1995 as compared to 39.3% in 1994.
25
<PAGE> 30
Net income increased 33.1% to $84.3 million in 1995 from $63.3 million in
1994, but decreased as a percentage of net sales to 1.0% in 1995 from 1.1% in
1994.
1994 COMPARED TO 1993
Consolidated net sales increased 44.2% to $5.8 billion in 1994 from $4.0
billion in 1993. The increase in worldwide net sales was attributable to growth
in the microcomputer products industry in general, the acquisition of four
international distributors, the addition of new customers, increased sales to
the existing customer base, and expansion of the Company's product offerings.
Net sales from U.S. operations increased 32.2% to $4.1 billion in 1994 from
$3.1 billion in 1993. The increase in U.S. net sales was primarily attributable
to the same factors favorably impacting worldwide consolidated net sales. Net
sales from European operations increased 122.3% to $1.1 billion in 1994 from
$485.1 million in 1993. The increase in European net sales was due to improved
operating performance by several of the European subsidiaries (including the
addition of some of the Company's suppliers to the German operation), as well as
the Company's entry through acquisitions into the Spanish market in April 1994
and the Scandinavian market in September 1994. Net sales from other
international operations increased 42.9% to $629.6 million in 1994 from $440.7
million in 1993. The increase in net sales from other international operations
was largely attributable to the continued development of the Company's
operations in Canada and Mexico. In 1994, net sales from U.S. operations
accounted for 70.7% of consolidated net sales, net sales from European
operations accounted for 18.5% of consolidated net sales, and net sales from
other international operations accounted for 10.8% of consolidated net sales. In
1993, net sales from U.S. operations accounted for 77.1% of consolidated net
sales, net sales from European operations accounted for 12.0% of consolidated
net sales, and other international net sales accounted for 10.9% of consolidated
net sales.
Cost of sales as a percentage of net sales increased to 92.5% in 1994 from
91.9% in 1993. This increase was primarily attributable to competitive pricing
pressures worldwide.
Total SG&A expenses and charges allocated from Ingram Industries increased
31.8% to $298.7 million in 1994 from $226.6 million in 1993 but decreased as a
percentage of net sales to 5.1% in 1994 from 5.6% in 1993. The increased level
of spending was attributable to expenses required to support expansion of the
Company's business, consisting primarily of incremental personnel and support
costs, lease payments relating to new facilities, and expenses associated with
the development and maintenance of information systems. The decreased level of
spending as a percentage of net sales was primarily attributable to economies of
scale resulting from higher sales volumes, as well as increased operating
efficiencies.
For the reasons set forth above, income from operations increased 36.2% to
$140.3 million in 1994 from $103.0 million in 1993, but decreased as a
percentage of net sales to 2.4% in 1994 from 2.5% in 1993. Contributing to the
increase in income from operations was income from the European operations of
$8.1 million, compared to a $3.2 million loss from such operations in 1993.
Other expense, net increased 96.2% to $39.6 million in 1994 from $20.2
million in 1993, and increased as a percentage of net sales to 0.7% in 1994 from
0.5% in 1993. The increase in other expense was largely attributable to a higher
level of borrowings to finance the Company's worldwide business expansion,
including acquisitions, and foreign currency exchange losses of $6.9 million
primarily related to Mexico in 1994.
The provision for income taxes increased 25.1% to $39.6 million in 1994
from $31.7 million in 1993, reflecting the 21.5% increase in the Company's
income before income taxes and minority interest. The Company's effective tax
rate was 39.3% in 1994 as compared to 38.2% in 1993.
Net income increased 25.8% to $63.3 million in 1994 from $50.4 million in
1993, but decreased as a percentage of net sales to 1.1% in 1994 from 1.2% in
1993.
QUARTERLY DATA; SEASONALITY
The Company's quarterly net sales and operating results have varied
significantly in the past and will likely continue to do so in the future as a
result of seasonal variations in the demand for the products and services
offered by the Company, the introduction of new hardware and software
technologies and products offering improved features and functionality, the
introduction of new products and services by the Company
26
<PAGE> 31
and its competitors, the loss or consolidation of a significant supplier or
customer, changes in the level of operating expenses, inventory adjustments,
product supply constraints, competitive conditions including pricing, interest
rate fluctuations, the impact of acquisitions, currency fluctuations, and
general economic conditions. The Company's narrow operating margins may magnify
any such fluctuations. Specific historical seasonal variations in the Company's
operating results have included a reduction of demand in Europe during the
summer months, increased Canadian government purchasing in the first quarter,
and pre-holiday stocking in the retail channel during the September to November
period. In addition, as was the case with the introduction of Microsoft Windows
95 in August 1995, the product cycle of major products may materially impact the
Company's business, financial condition, or results of operations.
The following table sets forth certain unaudited quarterly historical
consolidated financial data for each of the eleven quarters up to the period
ended September 28, 1996. This unaudited quarterly information has been prepared
on the same basis as the annual information presented elsewhere herein and, in
the Company's opinion, includes all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of the selected
quarterly information. This information should be read in conjunction with the
consolidated financial statements and notes thereto included elsewhere in this
Prospectus. The operating results for any quarter shown are not necessarily
indicative of results for any future period.
<TABLE>
<CAPTION>
INCOME BEFORE
INCOME INCOME TAXES AND
FROM MINORITY NET EARNINGS
NET SALES GROSS PROFIT OPERATIONS INTEREST INCOME PER SHARE
--------- ------------ ---------- ---------------- ------ ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
FISCAL YEAR ENDED DECEMBER 31, 1994
THIRTEEN WEEKS ENDED:
April 2, 1994............ $1,266.6 $ 92.4 $ 26.1 $ 19.4 $11.6 $0.10
July 2, 1994............. 1,298.9 96.8 28.3 19.5 12.1 0.10
October 1, 1994.......... 1,387.0 105.1 32.9 24.3 14.6 0.12
December 31, 1994........ 1,877.7 144.7 53.0 37.5 25.0 0.21
FISCAL YEAR ENDED DECEMBER 30, 1995
THIRTEEN WEEKS ENDED:
April 1, 1995............ $1,879.5 $132.4 $ 38.5 $ 24.3 $17.1 $0.14
July 1, 1995............. 1,859.6 138.9 40.2 30.0 18.4 0.15
September 30, 1995....... 2,331.6 151.2 45.2 33.8 20.8 0.17
December 30, 1995........ 2,546.2 183.2 63.0 46.5 28.0 0.23
FISCAL YEAR ENDED DECEMBER 28, 1996
THIRTEEN WEEKS ENDED:
March 30, 1996........... $2,752.7 $186.6 $ 54.9(1) $ 39.6(1) $23.8 (1) $0.20(1)
June 29, 1996............ 2,790.4 190.5 59.5(2) 44.9(2) 26.8 (2) 0.22(2)
September 28, 1996....... 2,931.5 197.5 61.4(3) 48.9(3) 26.9 (3) 0.22(3)
</TABLE>
- ---------------
(1) Reflects a non-cash compensation charge of $6.7 million ($4.1 million, or
$0.03 per share, net of tax) in connection with the granting of the Rollover
Stock Options.
(2) Reflects a non-cash compensation charge of $1.1 million ($0.7 million, or
less than $0.01 per share, net of tax) in connection with the granting of
the Rollover Stock Options.
(3) Reflects a non-cash compensation charge of $1.1 million ($0.6 million, or
less than $0.01 per share, net of tax) in connection with the granting of
the Rollover Stock Options.
As indicated in the table above, the increases in the Company's net sales
in the fourth quarter of each fiscal year have generally been higher than those
in the other three quarters in the same fiscal year. The trend of higher fourth
quarter net sales is attributable to calendar year-end business purchases and
holiday period purchases made by customers. Additionally, gross profit in the
fourth quarter of each year has historically been favorably impacted by
attractive year-end product buying opportunities which have often resulted in
higher purchase discounts. Net sales in the third quarter of 1995 were
positively impacted by the release of Microsoft Windows 95. However, gross and
operating margins were lower in the third quarter of 1995 due to the significant
volume of Microsoft Windows 95 sales, which had lower than average gross
margins.
27
<PAGE> 32
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its growth and cash needs largely through income
from operations and borrowings (primarily from Ingram Industries), as well as
from trade and supplier credit.
Cash provided by operating activities increased to $273.3 million in the
first three quarters of 1996 from $32.5 million in the first three quarters of
1995. The significant increase in cash provided by operating activities was
partially due to higher net income and the difference between accounts
receivable, inventory levels, and accounts payable in the first three quarters
of 1996 as compared to the first three quarters of 1995 due to the launch of
Microsoft Windows 95 in the third quarter of 1995. Net cash used by investing
activities was $64.5 million and $36.1 million in the first three quarters of
1996 and 1995, respectively. The increase was due to the Company's expansion of
warehouse and other facilities. Net cash used for financing activities increased
to $221.6 million from $17.1 million in the first three quarters of 1996 and
1995, respectively, as a result of higher repayments on borrowings from Ingram
Industries and the $20.0 million distribution to Ingram Industries, both in the
first three quarters of 1996.
Net cash used by operating activities was $251.3 million, $87.1 million,
and $41.7 million in 1995, 1994, and 1993, respectively. The significant
increase in cash used by operating activities in 1995 over 1994 was due to the
increased levels of inventory which accounted for a use of $580.1 million in
1995 as compared to $345.5 million in 1994 and an increase in accounts
receivable which accounted for a use of $320.2 million in 1995 as compared to
$232.3 million in 1994. Cash provided by accounts payable of $543.8 million in
1995 and $411.0 million in 1994 partially offset the use related to inventory
and accounts receivable. The increase in the difference between inventory levels
and accounts payable in 1995 as compared to 1994 was primarily due to the launch
of Microsoft Windows 95.
Net cash used by investing activities of $48.8 million, $42.6 million, and
$40.7 million in 1995, 1994, and 1993, respectively, was due to the Company's
expansion of warehouse and other facilities in each year and the acquisitions of
operations in four European countries in 1994 and the acquisition of operations
in three countries in Europe and in Mexico in 1993.
Net cash provided by financing activities was $298.3 million, $143.3
million, and $101.4 million in 1995, 1994, and 1993, respectively. The increase
in each period was primarily provided by an increase in borrowings from Ingram
Industries.
The Company's sources of capital have primarily been borrowings from Ingram
Industries. As of September 28, 1996, the Company had total debt outstanding of
$625.0 million, including $479.7 million due to Ingram Industries. The Company
has a commitment from NationsBank of Texas N.A. and The Bank of Nova Scotia with
respect to the $1 billion Credit Facility, and the Company expects to enter into
a formal agreement, which will contain standard provisions for agreements of its
type, prior to the closing of this offering. Under the Credit Facility, the
Company can borrow up to $750 million in foreign currencies through negotiated
arrangements with individual lenders in the syndicate. The Company can use up to
$250 million of the Credit Facility for letters of credit. The Company will be
required to comply with certain financial covenants, including minimum net
worth, restrictions on funded debt, current ratio and interest coverage, which
will be tested as of the end of each fiscal quarter. The Credit Facility also
restricts the Company's ability to pay dividends. Borrowings will be subject to
the satisfaction of customary conditions, including the absence of any material
adverse change in the Company's business or financial condition. Concurrently
with the Split-Off, the Company will assume Ingram Industries' accounts
receivable securitization program in partial satisfaction of amounts due to
Ingram Industries. The Company intends to use borrowings under the Credit
Facility to repay (i) the remaining intercompany indebtedness and (ii)
outstanding revolving indebtedness related to amounts drawn by certain of the
Company's subsidiaries, as participants in Ingram Industries' existing unsecured
credit facility, which will terminate concurrently with the closing of this
offering.
The net proceeds from the Combined Offering will be used to repay a portion
of the borrowings under the Credit Facility. After giving effect to the
foregoing transactions, including the application of the net proceeds from the
Combined Offering, borrowings under the Credit Facility would have been
approximately $89.6 million on a pro forma basis at September 28, 1996. See "Use
of Proceeds." After giving effect to the foregoing
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transactions and the application of the net proceeds from the Combined Offering,
the Company would have had available approximately $910.4 million under the
Credit Facility. The aggregate amount of long-term debt outstanding after the
Split-Off, and before application of the proceeds from the Combined Offering,
will be substantially similar to the long-term debt and debt due to Ingram
Industries immediately prior to the Split-Off, except as adjusted for the
accounts receivable securitization program to be assumed by the Company and the
incurrence of an additional $22.6 million of indebtedness in connection with the
acquisition of lease agreements related to certain facilities currently utilized
by the Company. See "Certain Transactions."
Effective February 1993, the Company entered into an agreement with Ingram
Industries whereby the Company sold all of its domestic trade accounts
receivable to Ingram Industries on an ongoing basis. Ingram Industries
transferred certain trade accounts receivable from the Company and other Ingram
Industries affiliates to a trust which sold certificates representing undivided
interests in the total pool of trade receivables without recourse. As of
September 28, 1996, Ingram Industries had sold $160 million of fixed rate
certificates and a variable rate certificate, under which $13.0 million was
outstanding. Ingram Industries' arrangement with the trust extended to December
31, 1997, renewable biannually under an evergreen provision up to a maximum term
of 20 years. In connection with the Split-Off, in partial satisfaction of
amounts due to Ingram Industries, the Ingram Industries accounts receivable
securitization program will be assumed by the Company, which will be the sole
seller of receivables. Under the amended program, certain of the Company's
domestic receivables will no longer be transferred to the trust. The Company
believes the amended program will contain sufficient trade accounts receivable
to support the outstanding fixed rate certificates and an unspecified amount of
the variable rate certificates. Assumption of the securitization program results
in a $160 million reduction of trade accounts receivable and due to Ingram
Industries. See Note 4 of Notes to Consolidated Financial Statements.
The Company and its foreign subsidiaries have uncommitted lines of credit
and short-term overdraft facilities in various currencies which aggregated
$114.1 million as of September 28, 1996. These facilities are used principally
for working capital and bear interest at market rates. See Note 6 of Notes to
Consolidated Financial Statements.
The Company believes that the net proceeds from the Combined Offering,
together with net cash provided by operating activities, supplemented as
necessary with funds available under credit arrangements (including the Credit
Facility), will provide sufficient resources to meet its present and future
working capital requirements and other cash needs for at least the next 12
months, or earlier if the Company were to engage in any corporate transactions
not currently anticipated, in which event the Company anticipates that
additional debt or equity financing would be required.
The Company presently expects to spend approximately $90 million in each of
1996 and 1997 for capital expenditures due to the continued expansion of its
business.
ASSET MANAGEMENT
The Company maintains sufficient quantities of product inventories to
achieve high order fill rates. The Company believes that the risks associated
with slow moving and obsolete inventory are substantially mitigated by
protection and stock return privileges provided by suppliers. In the event of a
supplier price reduction, the Company generally receives a credit for products
in its inventory. In addition, the Company has the right to return a certain
percentage of purchases, subject to certain limitations. Historically, price
protection, stock return privileges, and inventory management procedures have
helped to reduce the risk of decline in the value of inventory. The Company's
risk of decline in the value of inventory could be greater outside the United
States, where agreements with suppliers are more restrictive with regard to
price protection and the Company's ability to return unsold inventory. The
Company establishes reserves for estimated losses due to obsolete inventory in
the normal course of business. Historically, the Company has not experienced
losses due to obsolete inventory materially in excess of established inventory
reserves. Inventory levels may vary from period to period, due in part to the
addition of new suppliers or new lines with current suppliers and large cash
purchases of inventory due to advantageous terms offered by suppliers. See "Risk
Factors -- Risk of Inventory Losses."
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The Company offers various credit terms to qualifying customers as well as
prepay, credit card, and COD terms. The Company closely monitors customers'
creditworthiness through its on-line computer system which contains detailed
information on each customer's payment history and other relevant information.
In addition, the Company participates in a national credit association which
exchanges credit rating information on customers of association members. In most
markets, the Company utilizes various levels of credit insurance to allow sales
expansion and control credit risks. The Company establishes reserves for
estimated credit losses in the normal course of business. Historically, the
Company has not experienced credit losses materially in excess of established
credit loss reserves.
CHANGES IN ACCOUNTING STANDARDS
The Company will adopt Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of " ("FAS 121") in 1996. The Company does not expect the adoption
of FAS 121 to have a material effect on its financial condition or results of
operations.
The Company will adopt Statement of Financial Accounting Standards No. 123,
"Accounting for Stock Based Compensation" ("FAS 123") in 1996. As permitted by
FAS 123, the Company will continue to measure compensation cost in accordance
with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees." Therefore, the adoption of FAS 123 will have no impact on the
Company's financial condition or results of operations.
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BUSINESS
OVERVIEW
Ingram Micro is the leading wholesale distributor of microcomputer products
worldwide. The Company markets microcomputer hardware, networking equipment, and
software products to more than 100,000 reseller customers in approximately 120
countries in three principal market sectors: the VAR sector, consisting of
value-added resellers, systems integrators, network integrators, application
VARs, and original equipment manufacturers; the Commercial sector, consisting of
corporate resellers, direct marketers, independent dealers, and owner-operated
chains; and the Consumer sector, consisting of consumer electronics stores,
computer superstores, mass merchants, office product superstores, software-only
stores, and warehouse clubs. As a wholesale distributor, the Company markets its
products to each of these types of resellers as opposed to marketing directly to
end-user customers.
The Company conducts business with most of the leading resellers of
microcomputer products around the world, including, in the United States,
AmeriData, CDW Computer Centers, CompuCom, CompUSA, Computer City, Electronic
Data Systems, En Pointe Technologies, Entex Information Services, Micro
Warehouse, Sam's Club, Staples, and Vanstar. The Company's international
reseller customers include Complet Data A/S, Consultores en Diagnostico
Organizacional y de Sistemas, DSG Retail Ltd., 06 Software Centre Europe, B.V.,
GE Capital Technologies, Jump Ordenadores, Maxima S.A., Norsk Datasenter, Owell
Svenska AB, SNI Siemens Nixdorf Infosys AG, and TC Sistema SPA.
Ingram Micro offers one-stop shopping to its reseller customers by
providing a comprehensive inventory of more than 36,000 products from over 1,100
suppliers, including most of the microcomputer industry's leading hardware
manufacturers, networking equipment suppliers, and software publishers. The
Company's broad product offerings include: desktop and notebook PCs, servers,
and workstations; mass storage devices; CD-ROM drives; monitors; printers;
scanners; modems; networking hubs, routers, and switches; network interface
cards; business application software; entertainment software; and computer
supplies. The Company's suppliers include Apple Computer, Cisco Systems, Compaq
Computer, Creative Labs, Hewlett-Packard, IBM, Intel, Microsoft, NEC, Novell,
Quantum, Seagate, 3Com, Toshiba, and U.S. Robotics.
Ingram Micro distributes microcomputer products through warehouses in eight
strategic locations in the continental United States and 22 international
warehouses located in Canada, Mexico, most countries of the European Union,
Norway, Malaysia and Singapore. The Company believes that it is the market share
leader in the United States, Canada, and Mexico, and the second largest
full-line distributor in Europe, based on publicly available data and
management's knowledge of the industry. In 1995, approximately 31% of the
Company's net sales were derived from operations outside the United States. The
Export Division fulfills orders from U.S. exporters and from foreign customers
in countries where the Company does not operate a distribution subsidiary,
including much of Latin America, the Middle East, Africa, Australia, and parts
of Europe and Asia. The Company participates in the master reseller business in
the United States through Ingram Alliance.
The Company's principal objective is to enhance its position as the
preeminent wholesale distributor of microcomputer products worldwide. The
Company's belief that it is the preeminent wholesale distributor of
microcomputer products is based on publicly available data and management's
knowledge of the industry. The Company is focused on providing a broad range of
products and services, quick and efficient order fulfillment, and consistent
on-time and accurate delivery to its reseller customers around the world. The
Company believes that IMpulse provides a competitive advantage through real-time
worldwide information access and processing capabilities. This on-line
information system, coupled with the Company's exacting operating procedures in
telesales, credit support, customer service, purchasing, technical support, and
warehouse operations, enables the Company to provide its reseller customers with
superior service in an efficient and low cost manner. In addition, to enhance
sales and to support its suppliers and reseller customers, the Company provides
a wide range of value-added services, such as technical training, order
fulfillment, tailored financing programs, systems configuration, and marketing
programs.
The Company has grown rapidly over the past five years, with net sales and
net income increasing to $8.6 billion and $84.3 million, respectively, in 1995
from $2.0 billion and $30.2 million, respectively, in 1991, representing
compound annual growth rates of 43.8% and 29.3%, respectively. For the
thirty-nine weeks ended
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September 28, 1996, the Company's net sales and net income increased 39.6% and
37.8%, respectively, as compared to the net sales and net income levels achieved
in the thirty-nine weeks ended September 30, 1995. The Company's growth during
these periods reflects substantial expansion in its existing domestic and
international operations, resulting from the addition of new customers,
increased sales to the existing customer base, the addition of new product
categories and suppliers, the establishment of Ingram Alliance, and the
successful integration of ten acquisitions worldwide. Because of intense price
competition in the microcomputer products wholesale distribution industry, the
Company's margins have historically been narrow and are expected in the future
to continue to be narrow. In addition, the Company is highly leveraged and has
relied heavily on debt financing for its increasing working capital needs in
connection with the expansion of its business. See "Risk Factors -- Narrow
Margins" and "-- Capital Intensive Nature of Business; High Degree of Leverage."
THE INDUSTRY
The worldwide microcomputer products distribution industry generally
consists of suppliers, which sell directly to wholesalers, resellers, and
end-users; wholesale distributors, which sell to resellers; and resellers, which
sell to other resellers and directly to end-users. A variety of reseller
categories exists, including corporate resellers, VARs, systems integrators,
original equipment manufacturers, direct marketers, independent dealers,
owner-operated chains, franchise chains, and computer retailers. Different types
of resellers are defined and distinguished by the end-user market they serve,
such as large corporate accounts, small and medium-sized businesses, or home
users, and by the level of value they add to the basic products they sell.
Wholesale distributors generally sell only to resellers and purchase a wide
range of products in bulk directly from manufacturers. Different wholesale
distribution models have evolved in particular countries and geographies
depending on the characteristics of the local reseller environment, as well as
other factors specific to a particular country or region. The United States, for
example, is distinguished by the presence of master resellers, or aggregators,
which are functionally similar to wholesale distributors, but which focus on
selling relatively few product lines -- typically high volume, brand name
hardware systems -- to a network of franchised dealers and affiliates.
The growth of the microcomputer products wholesale distribution industry
continues to exceed that of the microcomputer industry as a whole. Faced with
the pressures of declining product prices and the increasing costs of selling
direct to a large and diverse group of resellers, suppliers are increasingly
relying upon wholesale distribution channels for a greater proportion of their
sales. To minimize costs and focus on their core capabilities in manufacturing,
product development, and marketing, many suppliers are also outsourcing an
increasing portion of certain functions such as distribution, service, technical
support, and final assembly to the wholesale distribution channel. Growing
product complexity, shorter product life cycles, and an increasing number of
microcomputer products due to the emergence of open systems architectures and
the recognition of certain industry standards have led resellers to depend on
wholesale distributors for more of their product, marketing, and technical
support needs. In addition, resellers are relying to an increasing extent on
wholesale distributors for inventory management and credit to avoid stocking
large inventories and maintaining credit lines to finance their working capital
needs. The Company believes that new opportunities for growth in the
microcomputer products wholesale distribution industry will emerge as new
product categories, such as computer telephone integration ("CTI") and the
digital video disc format, arise from the ongoing convergence of computing,
communications, and consumer electronics.
International markets, which represent over half of the microcomputer
industry's sales, are characterized by a more fragmented wholesale distribution
channel than in the United States. Increasingly, suppliers and resellers
pursuing global growth are seeking wholesale distributors with international
sales and support capabilities. In addition, the microcomputer products industry
in international markets is less mature and growing more rapidly than in the
United States, and as such, international growth opportunities for microcomputer
wholesaler distributors are significant.
The evolution of open sourcing during the past several years is a
phenomenon specific to the U.S. microcomputer products wholesale distribution
market. Historically, branded computer systems from large suppliers such as
Apple Computer, Compaq Computer, Hewlett-Packard, and IBM were sold in the
United
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States only through authorized master resellers. Under this single sourcing
model, resellers were required to purchase these products exclusively from one
master reseller. Over the past few years, competitive pressures have led some of
the major computer suppliers to authorize second sourcing, in which resellers
may purchase a supplier's product from a source other than their primary master
reseller, subject to certain restrictive terms and conditions (such as higher
prices or the elimination of floor planning subsidies). More recently, certain
computer manufacturers have authorized open sourcing, a model under which
resellers can purchase the supplier's product from any source on equal terms and
conditions. The trend toward open sourcing has blurred the distinction between
wholesale distributors and master resellers, which are increasingly able to
serve the same reseller customers, whereas previously master resellers had a
captive reseller customer base. The Company believes that continued movement
towards second sourcing and open sourcing puts the largest and most efficient
distributors of microcomputer products, which provide the highest value through
superior service and pricing, in the best position to compete for reseller
customers.
The dynamics of the microcomputer products wholesale distribution business
favor the largest distributors which have access to financing and are able to
achieve economies of scale, breadth of geographic coverage, and the strongest
vendor relationships. Consequently, the distributors with these characteristics
are tending to take share from smaller distributors as the industry undergoes a
process of consolidation. The need for wholesale distributors to implement high
volume/low cost operations on a worldwide basis is continuing to grow due to
ongoing price competition, the increasing demand for value-added services, the
trend toward open sourcing, and the increasing globalization of the
microcomputer products industry. In summary, the microcomputer wholesale
distribution industry is growing rapidly while simultaneously consolidating,
creating an industry environment in which market share leadership and cost
efficiency are of paramount importance.
BUSINESS STRATEGY
The Company is the preeminent worldwide wholesale distributor of
microcomputer products and services and believes that it has developed the
capabilities and scale of operations critical for long-term success in the
microcomputer products distribution industry.
The Company's strategy of offering a full line of products and services
provides reseller customers with one-stop shopping. The Company generally is
able to purchase products in large quantities and to avail itself of special
purchase opportunities from a broad range of suppliers. This allows the Company
to take advantage of various discounts from its suppliers, which in turn enables
the Company to provide competitive pricing to its reseller customers. The
Company's international market presence provides suppliers with access to a
broad base of geographically dispersed resellers, serviced by the Company's
extensive network of distribution centers and support offices. The Company's
size has permitted it to attract highly qualified associates and increase
investment in personnel development and training. Also, the Company benefits
from being able to make large investments in information systems, warehousing
systems, and infrastructure. Further, the Company is able to spread the costs of
these investments across its worldwide operations.
The Company is pursuing a number of strategies to further enhance its
leadership position within the microcomputer marketplace. These include:
EXPAND WORLDWIDE MARKET COVERAGE. Ingram Micro is committed to extending
its already extensive worldwide market coverage through internal growth in all
domestic and international markets in which it currently participates. In
addition, the Company intends to pursue acquisitions, joint ventures, and
strategic relationships outside the United States in order to take advantage of
growth opportunities and to leverage its strong systems, infrastructure, and
international management skills.
The Company believes that its skills in warehouse operations, purchasing,
sales, credit management, marketing, and technical support enable it to expand
effectively and quickly into new markets. The Company integrates acquired
operations by incorporating its management philosophies and exacting operating
procedures, implementing its IMpulse information system, applying its functional
expertise, and training personnel on the Ingram Micro business model. Based upon
these capabilities, the Company believes it is in the best position to serve
global resellers, which are increasingly seeking a single source for
microcomputer products and services.
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By providing greater worldwide market coverage, Ingram Micro also increases
the scale of its business, which results in more cost economies. In addition, as
it increases its global reach, the Company diversifies its business across
different markets, reducing its exposure to individual market downturns. The
Company has grown its international operations principally through acquisitions
and currently has operations in 18 countries outside the United States: Canada,
Mexico, most countries of the European Union, Norway, Malaysia, Singapore,
Japan, Argentina, and Ecuador. The Company believes that it is the market share
leader in the United States, Canada, and Mexico, and the second largest
full-line distributor in Europe, based on publicly available data and
management's knowledge of the industry. The Company's objective is to achieve
the number one market share in each of the markets in which it operates.
Ingram Micro will continue to focus on expansion of its operations through
acquisitions, joint ventures, and strategic relationships in order to take
advantage of significant growth opportunities around the world, both in
established and developing markets.
EXPLOIT INFORMATION SYSTEMS LEADERSHIP. Ingram Micro continually invests in
its information systems which are crucial in supporting the Company's growth and
its ability to maintain high service and performance levels. The Company has
developed a scalable, full-featured information system, IMpulse, which the
Company believes is critical to its ability to deliver worldwide, real-time
information to both suppliers and reseller customers. IMpulse is a single,
standardized information system, used across all markets worldwide, that has
been customized to suit local market requirements. The Company believes that it
is the only full-line wholesale distributor of microcomputer products in the
world with such a centralized global system.
IMpulse allows the Company's telesales representatives to deliver real-time
information on product pricing, inventory, availability, and order status to
reseller customers. Telesales representatives utilize the Company's Sales
Adjusted Gross Profit ("SAGP") pricing system to make informed pricing decisions
for each order through access to specific product and order related costs.
Considering the industry's narrow margins, the Company's ability to make
thousands of informed pricing decisions daily represents a competitive
advantage. In addition, the Company has a number of supporting systems,
including its Decision Support System ("DSS"), a multidimensional sales and
profitability analysis application. The Company continuously seeks to make
system modifications to provide greater capability and flexibility to the
Company's individual business units and markets.
The Company intends to continue to develop and expand the use of its
Customer Information Systems ("CIS"), which packages the full range of Ingram
Micro's electronic services into a single solution. CIS is designed to improve
the information flow from supplier to distributor to reseller to end-user in
order to conduct business in a cost-effective manner. It addresses the dynamic
requirements of various customer markets by offering a core group of services
through a number of different electronic media. By using CIS, resellers can
place orders directly, without the assistance of a telesales representative. The
Company plans further expansion in electronic links with reseller customers and
suppliers to provide better access to the Company's extensive database for
pricing, product availability, and technical information.
The Company will continue to invest in the enhancement and expansion of its
systems to create additional applications and functionality.
PROVIDE SUPERIOR EXECUTION FOR RESELLER CUSTOMERS. Ingram Micro continually
refines its systems and processes to provide superior execution and service to
reseller customers. The Company believes that the level of service achieved with
its systems and processes is a competitive advantage and has been a principal
contributor to its success to date.
Providing superior execution involves, among other factors, rapid response
to customer calls, quick access to relevant product information, high order fill
rates, and on-time, accurate shipments. The Company's information systems enable
telesales representatives to provide reseller customers with real-time inventory
and pricing information. Ingram Micro strives to maintain high order fill rates
by keeping extensive supplies of product in its 29 distribution centers
worldwide. In the United States and Canada, the Company has implemented control
systems and processes referred to as Bulletproof Shipping, which include
stock-keeping unit ("SKU") bar coding
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for all products and on-line quality assurance methods. As a result of this
program, substantially all orders in the United States received by 5:00 p.m. are
shipped on the same day, with highly accurate shipping performance.
Ingram Micro will continue to invest in the development of systems and
processes to improve execution. In the United States, the Company is currently
implementing CTI technology, which will provide automatic caller identification,
onscreen call waiting, and abandoned call management capabilities to telesales
and customer service associates. Also in the United States, the recently
installed POWER system will improve response time to reseller customers' product
returns and other customer service requests. To support future customer
requirements, the Company continues to expand and upgrade its distribution
network. For example, a new warehouse is under construction in Millington,
Tennessee. In Canada, a new returns center will be added near Toronto, Ontario.
The Company is implementing formal systems for evaluating and tracking key
performance metrics such as responsiveness to customers, process accuracy, order
processing cycle time, and order fulfillment efficiency. Ingram Micro will use
this customer satisfaction monitoring system to identify potential areas of
improvement as part of the Company's focus on providing superior service.
DELIVER WORLD-CLASS VALUE-ADDED SERVICES TO SUPPLIERS AND RESELLERS. Ingram
Micro is committed to providing a diverse range of value-added wholesaling and
"for fee" services to its supplier and reseller customers. Together, these
services are intended to link reseller customers and suppliers to Ingram Micro
as a one-stop provider of microcomputer products and related services, while
meeting demand by suppliers and resellers to outsource non-core business
activities and thereby lower their operating costs.
The Company's value-added wholesaling services include final assembly and
configuration of products, technical education programs, pre- and post-sale
technical support, order fulfillment, and product demo evaluation.
In addition to these value-added wholesaling services, the Company offers a
variety of "for fee" services for its reseller customers and suppliers. These
services include: contract configuration, contract fulfillment, contract
warehousing, contract telesales, contract credit/accounts receivable management,
contract inventory management, and contract technical support for customers. The
Company is focused on identifying and developing services that directly meet
reseller customer and supplier needs.
MAINTAIN LOW COST LEADERSHIP THROUGH CONTINUOUS IMPROVEMENTS IN SYSTEMS AND
PROCESSES. The microcomputer products industry is characterized by intense
competition and narrow margins, and as a result, achieving economies of scale
and controlling operating expenses are critical to achieving and maintaining
profitable growth.
Over the last five years, the Company has been successful in reducing SG&A
expenses (including expenses allocated from Ingram Industries) as a percentage
of net sales, from 5.8% in 1991 to 4.8% in 1995. The Company has embarked on a
number of programs that are designed to continue to reduce operating expenses as
a percentage of net sales.
Many U.S. developed programs continue to be adapted for implementation in
the Company's international operations. These programs include: (i) the use of
advanced inventory processes and techniques to reduce the number of shipments
from multiple warehouses to fulfill a single order; (ii) the use of proprietary
warehouse productivity programs, such as Bulletproof Shipping and Pick
Assignment; (iii) the enhancement of associates' productivity through the use of
technology such as CTI, and the expanded use of multimedia workstations for
functions such as Telesales and Customer Service; and (iv) the electronic
automation of the ordering and information delivery process through CIS to
decrease the number of non-order telesales calls. See "-- Information Systems."
The Company believes that the continued development of the IMpulse system
and related distribution processes represents an opportunity for the Company to
leverage operating costs across additional areas of the Company's operations.
DEVELOP HUMAN RESOURCES FOR EXCELLENCE AND TO SUPPORT FUTURE GROWTH. Ingram
Micro's growth to date is a result of the talent, dedication, and teamwork of
its associates. Future growth and success will be
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substantially dependent upon the retention and development of existing
associates, as well as the recruitment of superior talent.
The Company has invested in a number of programs and systems designed to
assist in the development and retention of its associates. The Company recently
formed its Leadership Institute to provide training on a global basis in areas
such as personal leadership and basic business fundamentals. In addition, the
Company provides specific functional training for associates through Company
programs such as the Sales, Purchasing, and Marketing Academies. Transferring
functional skills and implementing cross-training programs across all Ingram
Micro locations have proven to be important factors in the Company's growth and
international expansion. In conjunction with these programs, the Company intends
to expand its human resource systems to provide enhanced career planning,
training support, applicant tracking, and benefits administration. Also, the
Company continues to seek top quality associates worldwide through local,
professional, and college recruiting programs.
CUSTOMERS
Ingram Micro sells to more than 100,000 reseller customers in approximately
120 countries worldwide. No single customer accounted for more than 3% of Ingram
Micro's net sales in 1993, 1994, 1995, or the first three quarters of 1996.
The Company conducts business with most of the leading resellers of
microcomputer products around the world, including, in the United States,
AmeriData, CDW Computer Centers, CompuCom, CompUSA, Computer City, Electronic
Data Systems, En Pointe Technologies, Entex Information Services, Micro
Warehouse, Sam's Club, Staples, and Vanstar. The Company's international
reseller customers include Complet Data A/S, Consultores en Diagnostico
Organizacional y de Sistemas, DSG Retail Ltd., 06 Software Centre Europe, B.V.,
GE Capital Technologies, Jump Ordenadores, Maxima S.A., Norsk Datasenter, Owell
Svenska AB, SNI Siemens Nixdorf Infosys AG, and TC Sistema SPA. The Company has
certain limited contracts with its reseller customers, although most such
contracts have a short term, or are terminable at will, and have no minimum
purchase requirements. The Company's business is not substantially dependent on
any such contracts.
Ingram Micro is firmly committed to maintaining a strong customer focus in
all of the markets it serves. To best meet this key business objective, the
Company is organized along the lines of the three market sectors it serves: VAR,
Commercial, and Consumer. This organization permits the Company to identify and
address the varying and often unique requirements of each customer group, as
opposed to applying a uniform approach to distinctly different reseller
channels. This organization model is most fully developed in the United States
and Canada, and is described as follows:
- VAR sector. VARs develop computer solutions for their customers by adding
tangible value to a microcomputer product. These computer solutions range
from tailored software development to systems integration that meet
specific customer needs. Systems integrators, network integrators,
application VARs, and original equipment manufacturers ("OEMs") are
classified in this sector. In 1995, this sector contributed over 27% of
Ingram Micro's U.S. net sales (inclusive of Ingram Alliance and the
Export Division).
- Commercial sector. The Commercial sector includes chain/independent
dealers, corporate resellers, and direct marketers that sell a variety of
computer products. This sector continues to be Ingram Micro's largest
channel and contributed over 53% of the Company's 1995 U.S. net sales.
- Consumer sector. The Consumer sector includes computer superstores,
office product superstores, mass merchants, consumer electronics stores,
and warehouse clubs. In 1995, over 17% of the Company's U.S. net sales
came from this sector.
In addition to focusing on the VAR, Commercial, and Consumer market
sectors, the Company also has specialized strategic business units ("SBUs")
designed to provide additional focused marketing and support for specific
product categories or within specific markets. These product-focused SBUs
address the needs of resellers and suppliers for in-depth support of particular
product categories. These SBUs include the Technical
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Products Division, the Macintosh and Apple Computer Division, the Enterprise
Computing Division, and the Mass Storage Division. The Company's market-focused
SBUs, which include the Consumer Markets Division, the Education Division, and
the Government Division, are designed to meet the needs of resellers and VARs
who have chosen to concentrate on a particular customer market.
Customer organization along the VAR, Commercial, and Consumer market
sectors has been implemented to varying degrees throughout the Company's
worldwide operations and may not be as well defined as in the United States and
Canada. Specific market circumstances vary from country to country. In some
markets, a few large resellers dominate; in others, the customer base is more
diversified.
SALES AND MARKETING
Ingram Micro's telesales department is comprised of approximately 1,400
telesales representatives worldwide, of whom more than 800 representatives are
located in the United States. These telesales representatives assist resellers
with product specifications, system configuration, new product/service
introductions, pricing, and availability. The two main United States telesales
centers are located in Santa Ana, California and Buffalo, New York and are
supported by an extensive national field sales organization. Currently, Ingram
Micro has more than 130 field sales representatives worldwide, including more
than 50 in the United States.
In addition to customer organization along the VAR, Commercial, and
Consumer market sectors, the Company utilizes a variety of product-focused
groups specializing in specific product types. Specialists in processors, mass
storage, networks, and other product categories promote sales growth and
facilitate customer contacts for their particular product group. Ingram Micro
also offers a variety of marketing programs tailored to meet specific supplier
and reseller customer needs. Services provided by the Company's in-house
marketing services group include advertising, direct mail campaigns, market
research, retail programs, sales promotions, training, and assistance with trade
shows and other events.
In Canada, Ingram Micro has been organized along customer sector lines to
render more specialized service to each customer sector. Additionally, a
Montreal telesales center was opened in 1995 specifically to cover the
French-speaking market. The Corporate Reseller Division has 13 dedicated field
sales representatives to focus efforts on increasing penetration and protecting
market share. The VAR accounts have received increasing coverage from field
sales representatives, now one for each geographic region, along with dedicated
telesales operations in Vancouver and Montreal. Retail customers served by the
Consumer Markets Division benefit from usage of the electronic ordering systems
and manufacturer/customer symposiums tailored specifically to the Consumer
sector. The Company offers a myriad of marketing programs targeted at the
respective customer markets and are similar to the United States programs that
offer a graduated level of services based on monthly purchase volume.
In Europe, Ingram Micro relies more heavily on telesales to cover its
customer base than in the United States and Canada. In addition, the Company
maintains a relatively small field sales organization to serve larger customers
in each country. Many of the country operations have Technical Products
Divisions that employ dedicated technical sales representatives. The European
operation is expanding the presence of other product-specific divisions such as
the Mass Storage Division and the Macintosh Division. Ingram Micro employs many
of the same marketing tools in Europe as in the United States and Canada,
including product guides, catalogues, and showcases used to promote selected
manufacturers' product lines.
In Mexico, the sales team is comprised of both field sales representatives
and telesales representatives serving Mexico City, Merida, Guadalajara, Puebla,
Monterrey, Leon, and Hermosillo. Complementing this sales group are marketing
associates assigned to key supplier product lines. To best meet the
individualized needs of its increasingly diverse customer group, the Company is
in the process of realigning its sales and marketing workforce along VAR,
Commercial, and Consumer sectors throughout the branch network. This is
anticipated to be a strategic advantage as the trend toward greater customer
focus on particular markets continues to evolve in Mexico.
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Ingram Micro's Asia Pacific sales force is responsible for growing the
Company's sales in Singapore, Malaysia, Indonesia, The Philippines, Thailand,
India, and Hong Kong. Marketing support for this sales effort is based on
product line, but will eventually be aligned along VAR, Commercial, and Consumer
sectors. To provide greater focus on the Japanese market, the Company opened a
sales office in Tokyo during the third quarter of 1995.
The Company's Export Division is supported by a team of sales
representatives located in Miami, Florida and Santa Ana, California. The Miami
office covers the Caribbean, Puerto Rico, Ecuador, Colombia, Venezuela, Peru,
Chile, Argentina, Uruguay, and Brazil, while the Santa Ana Export
representatives sell and market Ingram Micro products and services to Japan, the
Middle East, and Australia. The Belgian Export office, which is part of the
Company's European operations, serves Africa and areas of Europe where Ingram
Micro does not have an in-country sales and distribution operation. In addition,
the Export Division has field sales representatives based in Buenos Aires,
Argentina and Quito, Ecuador.
PRODUCTS AND SUPPLIERS
Ingram Micro believes that it has the largest inventory of products in the
industry, based on a review of publicly available data with respect to its major
competitors. The Company distributes and markets more than 36,000 products from
the industry's premier microcomputer hardware manufacturers, networking
equipment suppliers, and software publishers worldwide. Product assortments vary
by market, and the relative importance of manufacturers to Ingram Micro varies
from country to country. On a worldwide basis, the Company's sales mix is more
heavily weighted toward hardware products and networking equipment than software
products. Net sales of software products have decreased as a percentage of total
net sales in recent years due to a number of factors, including bundling of
software with microcomputers; sales growth in Ingram Alliance, which is a
hardware-only business; declines in software prices; and the emergence of
alternative means of software distribution, such as site licenses and electronic
distribution. The Company believes that this is a trend that applies to the
microcomputer products distribution industry as a whole, and the Company expects
it to continue. See "Risk Factors -- Rapid Technological Change; Alternate Means
of Software Distribution" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Overview."
In the United States, Ingram Micro's suppliers include almost all of the
leading microcomputer hardware manufacturers, networking equipment
manufacturers, and software publishers such as Apple Computer, Cisco Systems,
Compaq Computer, Creative Labs, Hewlett-Packard, IBM, Intel, Microsoft, NEC,
Novell, Quantum, 3Com, Seagate, Toshiba, and U.S. Robotics. Internationally,
Ingram Micro has secured distribution agreements with most of the leading
suppliers, and products are added to the Company's mix in response to local
market demands.
New products are continually evaluated and added to the Company's product
mix upon meeting Ingram Micro's business and technical standards. The Company
evaluates on average 160 products monthly. Each Ingram Micro entity has its own
procedure for assessing new products based on local market characteristics, but
all follow general guidelines utilizing certain business and technical criteria
including market size, demand, perceived value, industry positioning, support
required, ease of set-up, packaging quality, and error handling procedures. The
Company proactively pursues products representing the leading edge of
technology.
The Company's suppliers generally warrant the products distributed by the
Company and allow the Company to return defective products, including those that
have been returned to the Company by its customers. The Company does not
independently warrant the products it distributes.
The Company's business, like that of other wholesale distributors, is
subject to the risk that the value of its inventory will be affected adversely
by suppliers' price reductions or by technological changes affecting the
usefulness or desirability of the products comprising the inventory. It is the
policy of most suppliers of microcomputer products to protect distributors, such
as the Company, who purchase directly from such suppliers, from the loss in
value of inventory due to technological change or the supplier's price
reductions. Although the Company has written distribution agreements with many
of its suppliers, these agreements usually provide for nonexclusive distribution
rights and often include territorial restrictions that limit the countries in
which Ingram Micro is permitted to distribute the products. The agreements are
also generally
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short term, subject to periodic renewal, and often contain provisions permitting
termination by either party without cause upon relatively short notice. The
Company does not believe that its business is substantially dependent on the
terms of any such agreements. Under the terms of many distribution agreements,
suppliers will credit the distributor for declines in inventory value resulting
from the supplier's price reductions if the distributor complies with certain
conditions. In addition, under many such agreements, the distributor has the
right to return for credit or exchange for other products a portion of those
inventory items purchased, within a designated period of time. A supplier who
elects to terminate a distribution agreement generally will repurchase from the
distributor the supplier's products carried in the distributor's inventory.
While the industry practices discussed above are sometimes not embodied in
written agreements and do not protect the Company in all cases from declines in
inventory value, management believes that these practices provide a significant
level of protection from such declines. No assurance can be given, however, that
such practices will continue or that they will adequately protect the Company
against declines in inventory value. The Company's risk of inventory loss could
be greater outside the United States, where agreements with suppliers are more
restrictive with regard to price protection and the Company's ability to return
unsold inventory. The Company establishes reserves for estimated losses due to
obsolete inventory in the normal course of business. Historically, the Company
has not experienced losses due to obsolete inventory materially in excess of
established inventory reserves. See "Risk Factors -- Product Supply; Dependence
on Key Suppliers."
VALUE-ADDED SERVICES
The Company believes that there is a trend among wholesale distributors of
microcomputer products to increase available services for suppliers and
customers, and the Company is committed to being in the forefront of this trend.
Ingram Micro offers a myriad of programs and services to its supplier and
reseller customers as an integral part of its wholesaling efforts. The Company
categorizes these services into value-added wholesale distribution and "for fee"
services. Together, these services are intended to link reseller customers and
suppliers to Ingram Micro as a one-stop provider of microcomputer products and
related services, while meeting demand by suppliers and resellers to outsource
non-core business activities and thereby lower their operating costs.
The Company's value-added wholesaling services are an important complement
to its distribution activities and include final assembly and configuration of
products, technical education programs, pre- and post-sale technical support,
order fulfillment, and product demo evaluation.
Ingram Micro offers a selection of "for fee" services which reseller
customers and suppliers may avail themselves of, independent of product purchase
transactions. Many of the value-added wholesaling services are also included in
this set of "for fee" services, which include: contract configuration, contract
fulfillment, contract warehousing, contract telesales, contract inventory
management, and contract technical support for reseller customers and end-users.
Management remains focused on adding more value-added "for fee" services to meet
reseller customer and supplier needs.
Ingram Micro's value-added services for its reseller customers and
suppliers include:
- System Configuration. Final assembly and configuration of microcomputer
products for suppliers and reseller customers.
- Order Fulfillment. Fulfillment of end-user orders on behalf of suppliers
and reseller customers. This may include order-taking, configuration,
shipping, and collection.
- Electronic Services. Various electronic ordering and information delivery
media integrated under the Company's CIS program which enable suppliers
and reseller customers to interface directly with the Company's database.
- Technical Support. Pre- and post-sale technical support for reseller
customers.
- Tailored Marketing Services. A range of offerings including trade show
and symposium development, promotional advertising, end-user briefings,
and joint sales calls performed by Ingram Micro Sales and Marketing staff
for the benefit of reseller customers and suppliers.
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- Financial Services. Includes accounts receivable financing, a purchase
order program, and credit insurance provided or arranged by Ingram
Financial Services Company for reseller customers.
- Inventory Management. A variety of services conducted for reseller
customers that includes contract warehousing, inventory tracking by
serial number, and other services.
- Telesales. Telesales performed by the Company for suppliers and reseller
customers.
- Warehousing. Leasing of warehouse space to suppliers and reseller
customers.
- Technical Education. Various computer-based and self-study training
programs, some leading to certification from suppliers.
- Warranty and Repair. Comprehensive warranty coverage on end-user systems.
This service is sub-contracted by Ingram Micro to third-party repair
businesses for reseller customers.
All of these services are currently available in the Company's U.S.
operations. The degree of implementation of these value-added services in Ingram
Micro's international operations varies depending on particular market
circumstances. Although the Company believes that value-added services are
important as a complement to its core business, such services do not, and are
not in the future expected to, generate a material percentage of the Company's
net sales. In addition, such value-added services do not, and are not in the
future expected to, require a material portion of the Company's resources.
INGRAM ALLIANCE
Ingram Micro entered the master reseller (also known as "aggregation")
business in late 1994 with the launch of Ingram Alliance. Ingram Alliance is
designed to offer resellers access to the industry's leading hardware
manufacturers at competitive prices by utilizing a lower cost business model
that depends upon a higher average order size, lower product returns percentage,
and supplier-paid financing. See "Risk Factors -- Narrow Margins" and "-- Risks
Associated with Ingram Alliance."
The Company believes that it has been able to leverage its leading
traditional wholesale distribution business in the United States to establish
its master reseller business. Over 95% of Ingram Alliance's sales are funded by
floor plan financing companies. The Company typically receives payment from
these financing institutions within three business days from the date of the
sale, allowing Ingram Alliance to operate at much lower relative working capital
levels than the Company's wholesale distribution business. Such floor plan
financing is typically subsidized for Ingram Alliance's reseller customers by
its suppliers.
Since its inception, Ingram Alliance has experienced rapid growth. In 1995,
Ingram Alliance achieved net sales in excess of $700 million, and it currently
has 12 suppliers and more than 800 reseller customers. Ingram Alliance's success
has, to a large degree, been attributable to its ability to leverage Ingram
Micro's distribution infrastructure and capitalize on strong supplier
relationships.
To support additional growth, Ingram Alliance remains committed to further
developing relations with key suppliers. These efforts are largely driven by
joint supplier/distributor sales calls, proposal and bid development programs,
and tailored marketing campaigns carried out by Ingram Alliance supplier program
teams.
Ingram Alliance pursues an integrated sales and marketing strategy to gain
new customers and grow its business. A fully-dedicated telesales team is in
place, which in conjunction with the Company's field sales representatives aims
to cultivate important relationships with reseller customers. Further, Ingram
Alliance provides a wide range of high quality "for fee" value-added services
for its customers including technical training and certification, warranty and
repair, fulfillment, technical support, contract warehousing, and configuration
services. Special promotional activities and creative financing packages are
additional incentives for resellers to do business with Ingram Alliance.
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INFORMATION SYSTEMS
The Company's information system, IMpulse, is central to its ability to
provide superior execution to its customers, and as such, the Company believes
that it represents an important competitive advantage. See "Risk
Factors -- Dependence on Information Systems."
Ingram Micro's systems are primarily mainframe-based in order to provide
the high level of scalability and performance required to manage such a large
and complex business operation. IMpulse is a single, standardized, real-time
information system and operating environment, used across all of the Company's
worldwide operations. It has been customized as necessary for use in every
country in which the Company operates and has the capability to handle multiple
languages and currencies. On a daily basis, the Company's systems typically
handle 12 million on-line transactions, 26,000 orders, and 37,000 shipments. The
Company has designed IMpulse as a scalable system that has the capability to
support increased transaction volume. The overall on-line response time for the
Company's network of over 8,000 user stations (terminals, printers, personal
computers, and radio frequency hand held terminals) is less than one-half
second.
Worldwide, Ingram Micro's centralized processing system supports more than
40 operational functions including receiving, order processing, shipping,
inventory management, and accounting. At the core of the IMpulse system is
on-line, real-time distribution software to which considerable enhancements and
modifications have been made to support the Company's growth and its low cost
business model. The Company makes extensive use of advanced telecommunications
technologies with customer service-enhancing features, such as Automatic Call
Distribution to route customer calls to the telesales representatives. The
Telesales Department relies on its Sales Wizard system for on-line, real-time
tracking of all customer calls and for status reports on sales statistics such
as number of customer calls, customer call intentions, and total sales
generated. IMpulse allows the Company's telesales representatives to deliver
real-time information on product pricing, inventory, availability, and order
status to reseller customers. The SAGP pricing system enables telesales
representatives to make informed pricing decisions through access to specific
product and order related costs for each order. Considering the industry's
narrow margins, these pricing decisions are particularly important, and the
Company believes that its ability to make thousands of informed pricing
decisions daily represents a competitive advantage.
In the United States, the Company is in the process of implementing CTI
technology, which will provide the telesales and customer service
representatives with Automatic Number Identification capability and advanced
telecommunications features such as on-screen call waiting and automatic call
return, thereby reducing the time required to process customer orders and
customer service requests.
To complement Ingram Micro's telesales, customer service, and technical
support capabilities, IMpulse supports CIS, which integrates all of the
Company's electronic services into a single solution. CIS offers a number of
different electronic media through which customers can conduct business with the
Company, such as the Customer Automated Purchasing System ("CAPS"), Electronic
Data Interchange ("EDI"), the Bulletin Board Service, and the Ingram Micro Web
site. The Company's latest additions to CIS are its Internet-based Electronic
Catalog and Manufacturer Information Library. The Electronic Catalog provides
reseller customers with real-time access to product pricing and availability,
with the capability to search by product category, name, or manufacturer. The
Manufacturer Information Library is a comprehensive multi-manufacturer database
of timely and accurate product, sales, marketing, and technical information,
which is updated nightly for new information. Ingram Micro believes it is the
first microcomputer wholesale distributor to offer electronic access to
real-time product pricing, availability, and information on the World Wide Web.
All of Ingram Micro's CIS offerings are constantly being reviewed for
enhancement. For instance, a faster local network intranet solution to access
the Manufacturer Information Library is currently being tested, and ordering and
configuration capabilities through the Internet are under consideration.
The Company's warehouse operations use extensive bar-coding technology and
radio frequency technology for receiving and shipping, and real-time links to
UPS and FedEx for freight processing and shipment tracking. The Customer Service
Department uses the POWER System for on-line documentation and faster processing
of customer product returns. To ensure that adequate inventory levels are
maintained, the Company's buyers depend on the Purchasing system to track
inventory on a continual basis. Many other
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features of IMpulse help to expedite the order processing cycle and reduce
operating costs for the Company as well as its reseller customers and suppliers.
To support and augment the Company's mainframe-based systems, the Company
utilizes a number of client-server applications. Examples are the Marketing
On-line Management System, a software application that provides management,
accountability, and financial controls for over 6,000 marketing projects;
APImage, an application that facilitates imaging of invoices and related
documents in the Accounts Payable department, substantially reducing paper
processing and improving document work flow; and DSS, a data warehousing
application that enables multidimensional sales and profitability analysis. In
the United States, over 330 associates across all functions have access to 75
million lines of data through DSS. DSS is used for, among other tasks, pricing
decisions and analysis of profitability by customer market and product category.
DSS is currently being implemented in Canada and the U.K., with plans to add
other international locations thereafter. The Company has also begun to deploy
other PC-based tools for both the United States and international locations,
including workstations in Telesales and Purchasing to assist with product
acquisition and pricing decisions.
The Company employs various security measures and backup systems designed
to protect against unauthorized use or failure of its information systems.
Access to the Company's information systems is controlled through the use of
passwords and additional security measures are taken with respect to especially
sensitive information. The Company has a five year contract with Sungard
Recovery Services for disaster recovery and twice per year performs a complete
systems test, including applications and database integrity. In addition, the
Company has backup power sources for emergency power and also has the capability
to automatically reroute incoming calls, such as from its Santa Ana (West Coast
sales) facility to its Buffalo (East Coast sales) facility. The Company has not
in the past experienced significant failures or downtime of IMpulse or any of
its other information systems, but any such failure or significant downtime
could prevent the Company from taking customer orders, printing product
pick-lists, and/or shipping product and could prevent customers from accessing
price and product availability information from the Company. See "Risk
Factors -- Dependence on Information Systems."
Over 350 experienced information technology professionals support the daily
maintenance and continuous development of the Company's systems.
OPERATIONS
ORDER ENTRY
The order entry process begins with the entry of a customer account number
by a telesales representative. With this input, IMpulse automatically displays
the customer's name, address, credit terms, financing arrangements, and
preferred shipping method. The telesales representative assists the customer
on-line with product lookups, real-time inventory availability, price inquiries,
and status of previous orders. As an order is entered, key information is filled
in by the system, such as product description, price, availability, and adjusted
gross margin. The closest warehouse to the customer with available product is
automatically determined, and the corresponding product quantity is reserved.
The system totals the order and automatically checks the customer's credit
status. The order is released for processing, unless credit limits are exceeded
or the order falls outside acceptable profit levels. In the latter case, the
order is put on hold and immediately elevated for review by credit or sales
management.
Reseller customers can also conduct business electronically through the
Company's CIS offerings such as CAPS, EDI, and IM On Line. By using CIS,
resellers can access the Company's database and place orders directly without
the assistance of a telesales representative. See "-- Information Systems."
SHIPPING
In most of Ingram Micro's operations, the Company's objective is to ship
substantially all orders received by 5:00 p.m. on the same day. In Canada,
France, Belgium, the U.K. and the Netherlands, the cut-off time for same day
shipment is 6:00 p.m. When an order is released, it is immediately available for
processing in the designated warehouse. IMpulse ensures cost efficient order
processing through a system called Pick Assignment which determines pick lists
based on the warehouse location of items ordered. In the distribution
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centers, Ingram Micro relies on a sophisticated bar code reading system and a
flexible automated package handling system for picking, packing, and shipping
products accurately and cost effectively. In addition, IMpulse provides on-line
shipping, manifesting, freight costing, invoicing and package tracking
information.
The Company's warehouse inventories are maintained automatically by IMpulse
which updates stock levels and feeds this information to the purchasing system
for restocking as soon as an order is received. On-line quality assurance done
during receipt of inbound product and prior to the shipment of orders ensures
the integrity of warehouse stock inventory and the accuracy of shipments to
customers. See "Risk Factors -- Dependence on Independent Shipping Companies."
PURCHASING
To monitor product inventory, the purchasing staff, numbering over 260
worldwide, uses the IMpulse system inventory reports, which provide product
inventory levels, six months' sales history, month-to-date, and year-to-date
sales statistics by SKU and by warehouse location. Buyers carefully analyze
current and future inventory positions and profitability potential. Several
factors, such as inventory carrying cost, payment terms, purchase rebates,
volume discounts, and marketing funds are considered in negotiating deals with
suppliers. Buyers enter purchase orders into the IMpulse system, indicating the
SKU number, the quantity to be ordered, and the warehouse locations to which the
order should be shipped. Cost information and supplier terms and conditions are
automatically entered on the purchase order; and can be modified if different
terms have been negotiated. The IMpulse system automatically generates purchase
orders for each inventory warehouse location and transmits these orders directly
to the suppliers via EDI or facsimile. See "Risk Factors -- Risk of Declines in
Inventory Value."
A number of purchasing programs have been developed to exploit
opportunities unique to certain of the Company's operations. In Europe, the
country managers work together as a group to obtain the best available supplier
terms. The European "Inventory Sharing" program, when fully implemented, will
allow sales personnel in one market to order products that are out of stock or
otherwise unavailable in the local country from another European Ingram Micro
business unit. Benefits of this program include lower inventory costs, better
inventory turnover, and improved margins. In Canada, the U.S. Direct Fulfillment
Program allows the fulfillment of individual Canadian orders from the United
States as necessary. See "-- Geographic Tactics -- Canada" and "-- Europe."
GEOGRAPHIC TACTICS
Ingram Micro operates worldwide with a set of common, global strategies.
Recognizing the varying requirements of the Company's different geographic
markets, the Company has developed specific tactics to address local market
conditions. However, the Company's non-U.S. operations are subject to certain
additional risks. See "Risk Factors -- Exposure to Foreign Markets; Currency
Risk."
UNITED STATES
In the United States, the Company has undertaken a number of key
initiatives to enhance its position in the wholesale microcomputer marketplace:
- In an effort to capture an increased share of the VAR sector, the Company
will seek to convey to the market its superior ability to supply basic
wholesaling services to VARs, as well as its breadth of product offerings
to support vertical VAR customer sets. The Premier VAR Plus program has
been developed as the prime marketing vehicle for all VAR programs and
services. This program provides VARs with graduated levels of business
services based on monthly purchase volume. Such services include a
dedicated technical sales force, end-user leads, technology seminars, and
marketing symposiums.
- As a cornerstone of the Company's VAR efforts, the Enterprise Computing
Division continues to expand its penetration in markets for high-end
technical products such as UNIX, document imaging, and networking
equipment. This will be accomplished by developing programs which
institute a
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Company-wide commitment to the UNIX VAR market, providing a sophisticated
sales force experienced in complex networking technology solutions,
partnering with key suppliers of high-end technical products, and
leveraging the Company's core competencies in electronic ordering and
configuration.
- In order to increase its share of the Consumer sector, the Company
maintains a team of sales account managers and business development
specialists dedicated to the Consumer account base. The aim of the
Consumer Markets Division is to provide a variety of value-added services
including inventory mix management, store personnel training, marketing
programs, and administration of supplier programs.
CANADA
While the Company's Canadian operation closely mirrors the U.S. operation,
initiatives unique to the Canadian operating environment have been developed and
are described below:
- The U.S. Direct Fulfillment Program has been instituted in Canada to take
advantage of its proximity to the United States. Through this program,
Canadian customers are currently able to receive products directly from
the Chicago distribution center. The expanded use of the U.S. Direct
Fulfillment Program will allow for greater breadth of SKUs and
manufacturers represented in the Canadian marketplace.
- As part of its overall strategy to grow share in the retail market, the
Canadian operation periodically employs Dealer Development
Representatives who provide product education, display set-up and other
on-site assistance as a special service to retail customers.
EUROPE
One of the Company's key objectives is to become the market share leader in
Europe. The Company entered Europe in 1989 with an acquisition in Belgium. See
"Risk Factors -- Acquisitions." Through a series of small acquisitions, it has
rapidly grown to a pan-European presence with aggregate net sales of $1.8
billion in 1995, covering 11 countries: Austria, Belgium, Denmark, France,
Germany, Italy, the Netherlands, Norway, Sweden, Spain, and the United Kingdom.
The Company believes that it has the second largest market share position in
Europe and that it has a strong base for future growth and increased
profitability. Particular areas of focus in Europe include:
- The Company will seek to enhance gross margin in the European operation
through increased emphasis on high-end and higher margin technical
product sales and the implementation of the SAGP system.
- A program unique to Ingram Micro is Inventory Sharing. This program
allows sales personnel in one European market to order products that are
out of stock or otherwise unavailable in the local country from another
Ingram Micro business unit. The billing is done in the local currency
with all value-added taxes, tax reporting, and similar functions managed
automatically by the IMpulse system. Inventory sharing allows the Company
to expand its sales base without an expansion of inventory investment or
individual country expansion of stock product assortment. Benefits of the
program include lower inventory costs, better inventory turnover, and
improved gross margin. An important initiative is to add more country
operations to the inventory sharing program and to enhance the program
through coordinated purchasing among several countries.
- Continued cost reduction, as a percentage of net sales, and cost control
are important for boosting profitability in the European operation. The
Company aims to further reduce expense ratios of the individual business
units through increased sales volume, the continued development and
refinement of operations and management processes, and the increasing use
of selected U.S. and Canadian business programs.
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MEXICO/ASIA PACIFIC
Mexico. Ingram Dicom, a 70%-owned subsidiary of Ingram Micro, is the
leading wholesale distributor of microcomputer products in Mexico. Ingram Dicom
offers over 6,000 products to more than 5,900 reseller customers in Mexico. In
1995, over 85% of Ingram Dicom's net sales came from 1,100 resellers who
primarily service the country's major banks and businesses. Additionally, Ingram
Dicom also sells to a small but growing VAR client base and to mass merchant
retailers (e.g., Sam's Club, Sanborn's, Price Club).
As the local high technology market becomes more sophisticated, Ingram
Dicom intends to add higher volume, more specialized technical (e.g., UNIX,
networking) products to its inventory. Other important initiatives include
adding a wider selection of technical education courses, extending CAPS
electronic ordering throughout the entire Ingram Dicom operation, and offering a
broader range of financing options for reseller customers. The Company will also
continue to negotiate supplier terms and conditions aimed at limiting the
Company's exposure to foreign currency fluctuations.
Asia Pacific. Ingram Micro's Asia Pacific operations, supported by its
Singapore office and warehouse, focus on serving the Singapore, Malaysia,
Indonesia, Philippines, Thailand, India, and Hong Kong markets. Over 800
customers are currently served from the Singapore base, with approximately 64%
of these customers concentrated in the local Singapore market. The Company
operates a sales office in Tokyo serving the Japanese market. In addition, the
Company has recently acquired a distributor in Malaysia.
In building a solid regional Asia Pacific business, the Company intends to
leverage its systems capability, financial strength, management experience, and
excellent relationships with key suppliers. The initial aim of the Asia Pacific
strategy is to recruit new suppliers and reseller customers while further adding
experienced managers in key functional areas of the business. The Company is
currently exploring the possibility of establishing additional operations
through joint ventures or acquisitions. See "Risk Factors -- Acquisitions."
EXPORT MARKETS
Ingram Micro's Export Division continues to expand in international markets
where the Company does not have a stand-alone, in-country presence. The Miami,
Santa Ana, and Belgium offices serve more than 2,500 resellers in over 100
countries. In addition, the Export Division has field sales representatives
based in Buenos Aires, Argentina and Quito, Ecuador.
Key strategic objectives for the Export Division include increasing sales
and market share in each of the regions it serves primarily by providing a broad
product assortment, further cultivating key supplier relationships, and
expanding reseller service offerings. The Company will continue to position
itself as a global distributor of microcomputer products providing resellers in
all markets access to the Company's vast selection of products via its extensive
network of international and U.S. warehouses.
COMPETITION
The Company operates in a highly competitive environment, both in the
United States and internationally. The microcomputer products distribution
industry is characterized by intense competition, based primarily on price,
product availability, speed and accuracy of delivery, effectiveness of sales and
marketing programs, credit availability, ability to tailor specific solutions to
customer needs, quality and breadth of product lines and service, and
availability of technical and product information. The Company believes it
competes favorably with respect to each of these factors. As price points have
declined, the Company believes that value-added services capabilities (such as
configuration, innovative financing programs, order fulfillment, contract
telesales, and contract warehousing) will become more important competitive
factors.
The Company entered the master reseller business through Ingram Alliance in
late 1994. See "-- Ingram Alliance." The Company competes with other master
resellers, which sell to groups of affiliated franchisees and third-party
dealers. Many of the Company's competitors in the master reseller business are
more experienced and have more established contacts with affiliated resellers,
third-party dealers, or suppliers, which may provide them with a competitive
advantage over the Company.
The Company is constantly seeking to expand its business into areas closely
related to its core microcomputer products distribution business. As the Company
enters new business areas, it may encounter
45
<PAGE> 50
increased competition from current competitors and/or from new competitors, some
of which may be current customers of the Company. For example, the Company
intends to distribute media in the new digital video disc format and may compete
with traditional music and printed media distributors. In addition, certain
services the Company provides may directly compete with those provided by the
Company's reseller customers. There can be no assurance that increased
competition and adverse reaction from customers resulting from the Company's
expansion into new business areas will not have a material adverse effect on the
Company's business, financial condition, or results of operations. See "Risk
Factors -- Intense Competition."
Ingram Micro's primary competitors include large U.S.-based international
distributors such as Merisel, Tech Data, and Arrow Electronics (a worldwide
industrial electronics distributor), as well as national distributors such as
AmeriQuest Technologies (majority owned by Computer 2000), Handleman, Navarre,
and Avnet. Ingram Alliance's principal competitors include such master resellers
as Intelligent Electronics, MicroAge, Datago, InaCom, and recent entrant Tech
Data Elect, a division of Tech Data. Ingram Micro competes internationally with
a variety of national and regional distributors. European competitors include
international distributors such as Computer 2000 (owned by German conglomerate
Viag AG), CHS Electronics, and Softmart/Tech Data, and several local and
regional distributors, including Actebis, Scribona, and Microtech. In Canada,
Ingram Micro competes with Merisel, Globelle, Beamscope, and Tech Data. Ingram
Dicom is the leading distributor in Mexico, competing with such companies as
MPS, CHS Electronics, Intertec, and Dataflux. In the Asia Pacific market, Ingram
Micro faces both regional and local competitors, of whom the largest is Tech
Pacific, a division of First Pacific Holdings, which operates in more than five
Asia Pacific markets.
Ingram Micro also competes with hardware manufacturers and software
publishers that sell directly to reseller customers and end-users.
FACILITIES
Ingram Micro's worldwide executive headquarters, as well as its West Coast
sales and support offices, are located in Santa Ana, California. The Company
also maintains an East Coast operations center in Buffalo, New York. A new
United States distribution center in Millington, Tennessee is expected to be
completed in April 1997, adding 600,000 square feet to the Company's warehouse
capacity. This distribution center will be strategically located near several
major transportation hubs and is expected to benefit from lower regional labor
costs. The U.S. network of distribution centers permits Ingram Micro to keep an
extensive supply of product close to its reseller customers, which enables the
Company to provide substantially all of its U.S. reseller customers with one- or
two-day ground delivery.
The principal properties of the Company consist of the following:
<TABLE>
<CAPTION>
APPROXIMATE
LOCATION PRINCIPAL USE FLOOR AREA IN SQ. FT.
- ------------------------------ ----------------------------------------- ---------------------
<S> <C> <C>
UNITED STATES
Santa Ana, CA................. Executive offices 398,245
Buffalo, NY................... Offices 188,341
Nashville, TN................. Data Processing Center 11,782
Millington, TN................ Distribution Center (under construction) 600,000
Chicago/Carol Stream, IL...... Distribution Centers 456,139
Fullerton, CA................. Distribution Center 401,394
Harrisburg, PA................ Distribution Center 230,000
Memphis, TN................... Distribution Center 160,000
Fremont, CA................... Distribution Center 141,540
Carrollton, TX................ Distribution Center 121,654
Atlanta, GA................... Distribution Center 83,049
Miami, FL..................... Distribution Center, Offices 52,080
</TABLE>
46
<PAGE> 51
<TABLE>
<CAPTION>
APPROXIMATE
LOCATION PRINCIPAL USE FLOOR AREA IN SQ. FT.
- ------------------------------ ----------------------------------------- ---------------------
<S> <C> <C>
Santa Ana, CA................. Returns Center, Offices 219,500
Fremont, CA................... Freight Consolidation Center 58,435
EUROPE
Brussels, Belgium............. Offices 33,600
Horsholm, Denmark............. Offices 39,682
Ballerup, Denmark............. Distribution Center 58,104
Lesquin, France............... Offices 37,088
Paris, France................. Offices 4,250
Roncq, France................. Distribution Center 96,000
Ottobrunn, Germany............ Offices 32,221
Kirchheim, Germany............ Distribution Center 75,904
Milan, Italy.................. Offices 17,114
Milan, Italy.................. Distribution Center 44,669
Rome, Italy................... Offices, Distribution Center 10,225
Utrecht, Netherlands.......... Offices 30,999
Vianen, Netherlands........... Distribution Center 61,149
Oslo, Norway.................. Offices, Distribution Center 53,595
Madrid, Spain................. Offices, Distribution Center 17,689
Barcelona, Spain.............. Offices, Distribution Center 74,508
Kista, Sweden................. Offices 26,371
Sollentuna, Sweden............ Distribution Center 43,126
Milton Keynes, U.K............ Offices, Distribution Center 211,992
CANADA
Toronto, Ontario.............. Offices, Distribution Center 274,376
Vancouver, B.C................ Offices, Distribution Center 87,148
Montreal, Quebec.............. Offices 12,000
MEXICO
Mexico City, D.F.............. Offices, Distribution Center 65,695
Puebla, Puebla................ Offices, Distribution Center 11,679
Leon, Guanajuato.............. Offices, Distribution Center 11,206
Guadalajara, Jalisco.......... Offices, Distribution Center 9,967
Merida, Yucatan............... Offices, Distribution Center 6,437
Monterrey, Nuevo Leon......... Offices, Distribution Center 6,039
Hermosillo, Sonora............ Offices, Distribution Center 5,156
ASIA
Singapore..................... Offices, Distribution Center 20,989
Kuala Lumpur, Malaysia........ Offices, Distribution Center 6,000
Tokyo, Japan.................. Offices 720
</TABLE>
All of the Company's facilities, with the exception of the Brussels office
and the distribution centers in Chicago and Roncq, France, are leased. These
leases have varying terms. The Company does not anticipate any material
difficulty in renewing any of its leases as they expire or securing replacement
facilities, in each case on commercially reasonable terms. The Company has
recently purchased three undeveloped properties in Santa Ana, California
totaling approximately 23.27 acres.
47
<PAGE> 52
TRADEMARKS AND SERVICE MARKS
The Company holds various trademarks and service marks, including, among
others, "Ingram Micro," "IMpulse," the Ingram Micro logo, "Partnership America,"
and "Leading the Way in Worldwide Distribution." Certain of these marks are
registered, or are in the process of being registered, in the United States and
various foreign countries. Even though the Company's marks may not be registered
in every country where the Company conducts business, in many cases the Company
has acquired rights in those marks because of its continued use of them.
Management believes that the value of the Company's marks is increasing with the
development of its business but that the business of the Company as a whole is
not materially dependent on such marks.
EMPLOYEES
As of September 28, 1996, the Company had approximately 8,036 associates
located as follows: United States -- 4,924, Europe -- 1,840, Canada -- 797,
Mexico -- 405, and Asia-Pacific -- 70. Ingram Micro believes that its success
depends on the skill and dedication of its associates. The Company strives to
attract, develop, and retain outstanding personnel. None of the Company's
associates in the United States, Europe, Canada, Malaysia, and Singapore are
represented by unions. In Mexico, Ingram Dicom has collective bargaining
agreements with one of the national unions. The Company considers its employee
relations to be good.
LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company is a
party or to which any of its property is subject.
48
<PAGE> 53
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information with respect to each
person who is an executive officer or director of the Company:
<TABLE>
<CAPTION>
NAME AGE PRESENT AND PRIOR POSITIONS HELD(1)
- ------------------------ --- ------------------------------------- YEARS POSITIONS HELD
----------------------------
<S> <C> <C> <C> <C> <C>
Jerre L. Stead(2) 53 Chief Executive Officer and Chairman Aug. 1996 - Present
of the Board
Chief Executive Officer and Chairman Jan. 1995 - Aug. 1995
of the Board, Legent Corporation, a
software development company
Executive Vice President, Chairman May 1993 - Dec. 1994
and Chief Executive Officer, AT&T
Corp. Global Information Solutions
(NCR Corp.), a computer
manufacturer
President and Chief Executive Sept. 1991 - Apr. 1993
Officer, AT&T Corp. Global Business
Communication Systems, a
communications company
Chairman, President and Chief Sept. 1988 - Aug. 1991
Executive Officer, Square D Co., an
electronics manufacturer
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Jeffrey R. Rodek(3) 43 Worldwide President; Chief Operating Dec. 1994 - Present
Officer; Director
Senior Vice President, Americas and July 1991 - Sept. 1994
Caribbean, Federal Express, an
overnight courier firm
Senior Vice President, Central Dec. 1989 - July 1991
Support Services, Federal Express
David R. Dukes(3)(4) 52 Vice Chairman Apr. 1996 - Present
Co-Chairman Jan. 1992 - Apr. 1996
Chief Executive Officer, Ingram Jan. 1994 - Present
Alliance
Chief Operating Officer Sept. 1989 - Dec. 1993
Director Sept. 1989 - Present
President Sept. 1989 - Dec. 1991
Sanat K. Dutta 47 Executive Vice President; President, Oct. 1996 - Present
Ingram Micro U.S.
Executive Vice President Aug. 1994 - Oct. 1996
Senior Vice President, Operations May 1988 - Aug. 1994
John Wm. Winkelhaus, II 46 Executive Vice President; President,
Ingram Micro Europe Jan. 1996 - Present
Senior Vice President, Ingram Micro Feb. 1992 - Dec. 1995
Europe
Senior Vice President, Sales Apr. 1989 - Jan. 1992
Michael J. Grainger 44 Executive Vice President; Oct. 1996 - Present
Worldwide Chief Financial Officer
Chief Financial Officer May 1996 - Oct. 1996
Vice President and Controller, Ingram July 1990 - Present
Industries
</TABLE>
49
<PAGE> 54
<TABLE>
<CAPTION>
NAME AGE PRESENT AND PRIOR POSITIONS HELD(1)
- ------------------------ --- ------------------------------------- YEARS POSITIONS HELD
----------------------------
<S> <C> <C> <C> <C> <C>
James E. Anderson, Jr. 49 Senior Vice President, Secretary, and Jan. 1996 - Present
General Counsel
Vice President, Secretary, and Sept. 1991 - Present
General Counsel, Ingram Industries
Partner, Dearborn & Ewing, a law firm Jan. 1986 - Sept. 1991
Douglas R. Antone 43 Senior Vice President; President, June 1994 - Present
Ingram Alliance
Senior Vice President, Worldwide Nov. 1993 - May 1994
Sales and Marketing, Borland
International, a software
development company
Senior Vice President, Worldwide July 1990 - Nov. 1993
Sales, Borland International
Larry L. Elchesen 46 Senior Vice President June 1994 - Present
President, Ingram Micro Canada May 1989 - Present
Philip D. Ellett 42 Senior Vice President; Chief Oct. 1996 - Present
Operating Officer, Ingram Micro
Europe
Senior Vice President; General Jan. 1996 - Oct. 1996
Manager, U.S. Consumer Markets
Division
President, Gates/Arrow, an Aug. 1994 - Dec. 1995
electronics distributor
President and Chief Executive Oct. 1991 - Aug. 1994
Officer, Gates/F.A. Distributing,
Inc.
President and Chief Operating Oct. 1990 - Oct. 1991
Officer, Gates/F.A. Distributing,
Inc.
David M. Finley 56 Senior Vice President, Human July 1996 - Present
Resources
Senior Vice President, Human May 1995 - July 1996
Resources, Budget Rent a Car, a car
rental company
Vice President, Human Resources, The Jan. 1977 - May 1995
Southland Corporation, a
convenience retail company
Robert Furtado 40 Senior Vice President, Operations Aug. 1994 - Present
Vice President, Operations July 1989 - Aug. 1994
Robert Grambo 32 Senior Vice President, Telesales Oct. 1995 - Present
Vice President, Sales Apr. 1994 - Sept. 1995
Vice President, Product Marketing Apr. 1993 - Mar. 1994
President, Bloc Publishing Corp., a Apr. 1992 - Apr. 1993
software publishing firm
Senior Director, Purchasing, Ingram Jan. 1990 - Apr. 1992
Micro
Ronald K. Hardaway 52 Senior Vice President; Chief Jan. 1992 - Present
Financial Officer, Ingram Micro
U.S.
Senior Vice President and Controller June 1990 - Jan. 1992
Gregory J. Hawkins 42 Senior Vice President, Sales Oct. 1995 - Present
Vice President, Sales Jan. 1993 - Oct. 1995
Vice President, Major Accounts Aug. 1992 - Jan. 1993
Director, Major Accounts, Consumer June 1992 - Aug. 1992
Markets
Director, Marketing Jan. 1991 - June 1992
James M. Kelly 60 Senior Vice President, Management Feb. 1991 - Present
Information Systems
</TABLE>
50
<PAGE> 55
<TABLE>
<CAPTION>
NAME AGE PRESENT AND PRIOR POSITIONS HELD(1)
- ------------------------ --- ------------------------------------- YEARS POSITIONS HELD
----------------------------
<S> <C> <C> <C> <C> <C>
David W. Rutledge 43 Senior Vice President, Asia Pacific, Jan. 1996 - Present
Latin America and Export Markets
Senior Vice President, Administration Sept. 1991 - Dec. 1995
Vice President, Secretary, and Jan. 1986 - Sept. 1991
General Counsel, Ingram Industries
Martha R. Ingram(5)(6) 61 Director May 1996 - Present
Chairman of the Board of Directors May 1996 - Aug. 1996
Chairman of the Board of Directors, June 1995 - Present
Ingram Industries
Director, Ingram Industries 1981 - Present
Chief Executive Officer, Ingram Apr. 1996 - Present
Industries
Director of Public Affairs, Ingram 1979 - June 1995
Industries
John R. Ingram(5) 35 Director Dec. 1994 - Present
Acting Chief Executive Officer May 1996 - Aug. 1996
Co-President, Ingram Industries Jan. 1996 - Present
President, Ingram Book Company Jan. 1995 - Present
Vice President, Purchasing, Ingram Jan. 1994 - Dec. 1994
Micro Europe
Vice President, Management Services, July 1993 - Dec. 1993
Ingram Micro Europe
Director of Management Services, Jan. 1993 - June 1993
Ingram Micro Europe
Director of Purchasing Apr. 1991 - Dec. 1992
David B. Ingram(5) 33 Director May 1996 - Present
Chairman and President, Ingram Mar. 1996 - Present
Entertainment
President and Chief Operating Aug. 1994 - Mar. 1996
Officer, Ingram Entertainment
Vice President, Major Accounts, Nov. 1993 - Aug. 1994
Ingram Entertainment
Assistant Vice President, Sales, June 1992 - Nov. 1993
Ingram Entertainment
Director, Sales, Ingram Entertainment July 1991 - June 1992
Philip M. Pfeffer 51 Director 1986 - Present
President and Chief Operating May 1996 - Present
Officer, Random House Inc., a
publishing company
Executive Vice President, Ingram Dec. 1981 - Mar. 1996
Industries
Chairman and Chief Executive Officer, Dec. 1981 - Dec. 1995
Ingram Distribution Group Inc.
Chairman, Ingram Micro Holdings Inc. Apr. 1989 - Oct. 1995
</TABLE>
51
<PAGE> 56
<TABLE>
<CAPTION>
NAME AGE PRESENT AND PRIOR POSITIONS HELD(1)
- ------------------------ --- ------------------------------------- YEARS POSITIONS HELD
----------------------------
<S> <C> <C> <C> <C> <C>
J. Phillip Samper(3)(7) 62 Director Nominee Oct. 1996 - Present
Chairman and Chief Executive Officer, May 1995 - Mar. 1996
Cray Research, Inc., a computer
products company
President and Chief Executive Jan. 1994 - Mar. 1995
Officer, Sun Microsystems Computer
Company, a division of Sun
Microsystems, Inc., a computer
products company
Managing Partner, FRN Group, a Feb. 1991 - Jan. 1994
private investment and consulting
firm
President and Chief Executive May 1990 - Feb. 1991
Officer, Kindercare Learning
Centers, Inc., a child care and
educational company
Joe B. Wyatt(3)(8) 61 Director Nominee Oct. 1996 - Present
Chancellor, Vanderbilt University July 1982 - Present
</TABLE>
- ---------------
(1) The first position and any other positions not given a separate corporate
identification are with the Company.
(2) Jerre L. Stead is a director of Armstrong World Industries, Inc. and TJ
International, Inc.
(3) Messrs. Samper and Wyatt have agreed to serve as directors, with their
service to begin as of the date of this Prospectus. Messrs. Rodek and Dukes
will resign from the Board of Directors at such time.
(4) David R. Dukes is a director of National Education Corporation.
(5) Martha R. Ingram is the mother of David B. Ingram and John R. Ingram. There
are no other family relationships among the above individuals.
(6) Martha R. Ingram is a director of Baxter International Inc., First American
Corporation, and Weyerhaeuser Co.
(7) J. Phillip Samper is a director of Armstrong World Industries, Inc., The
Interpublic Group of Companies, Inc., Sylvan Learning Systems, Inc., Network
Storage Corp., and Scitex Corporation, Ltd.
(8) Joe B. Wyatt is a director of Sonat, Inc. and Reynolds Metals Company.
BOARD OF DIRECTORS
The Board of Directors currently consists of Mr. Stead, Mrs. Ingram and
Messrs. John R. Ingram, Rodek, Dukes, David B. Ingram, and Pfeffer. Messrs.
Samper and Wyatt have agreed to serve as directors, with their service to begin
as of the date of this Prospectus. Messrs. Rodek and Dukes will resign from the
Board of Directors at such time. So long as the Ingram Family Stockholders and
their permitted transferees (as defined in the Board Representation Agreement)
own in excess of 25,000,000 shares of the outstanding Common Equity, the Board
Representation Agreement will provide for the designation of (i) not more than
three directors designated by the Ingram Family Stockholders, (ii) one director
designated by the Chief Executive Officer of the Company, and (iii) four or five
additional directors ("Independent Directors") who are not members of the Ingram
family or executive officers or employees of the Company. Directors designated
by the Ingram Family Stockholders may include Martha R. Ingram, any of her legal
descendants, or any of their respective spouses. See "The Split-Off and the
Reorganization -- The Split-Off." Mr. Pfeffer is an Independent Director, and
Messrs. Samper and Wyatt will be Independent Directors. It is expected that one
or two additional Independent Directors will be designated as soon as
practicable after the closing of this offering.
COMMITTEES. The Board Representation Agreement provides for the formation
of certain committees of the Board of Directors. The Bylaws of the Company
specifically provide for four committees: an Executive Committee, a Nominating
Committee, an Audit Committee, and a Compensation Committee.
The Executive Committee will consist of three directors, one of whom will
be a director designated by the Ingram Family Stockholders, one of whom will be
the director designated by the Chief Executive Officer of the Company, and one
of whom will be an Independent Director. The Executive Committee may approve
management decisions requiring the immediate attention of the Board of Directors
during the period of time between each regularly scheduled meeting of the Board.
The Executive Committee will not have authority to approve any of the following
items, all of which require the approval of the Board: (i) any action that would
require the approval of the holders of a majority of the stock held by certain
of the Ingram Family
52
<PAGE> 57
Stockholders or that would require approval of the holders of a majority of the
Common Equity under applicable law or under the Certificate of Incorporation or
Bylaws of the Company; (ii) any acquisition with a total aggregate consideration
in excess of 2% of the Company's stockholders' equity; (iii) any action outside
the ordinary course of business of the Company; or (iv) any other action
involving a material shift in policy or business strategy for the Board.
The Nominating Committee will consist of three directors, two of whom will
be directors designated by the Ingram Family Stockholders, and one of whom will
be the director designated by the Chief Executive Officer of the Company. The
function of the Nominating Committee will be to recommend to the full Board of
Directors nominees for election as directors of the Company and to elect members
of committees of the Board of Directors. The Nominating Committee will name the
respective members of an Audit Committee and a Compensation Committee.
The Audit Committee will consist of at least three directors, and a
majority of the members of the Audit Committee will be Independent Directors.
The functions of the Audit Committee will be to recommend annually to the Board
of Directors the appointment of the independent auditors of the Company, discuss
and review in advance the scope and the fees of the annual audit and review the
results thereof with the independent auditors, review and approve non-audit
services of the independent auditors, review compliance with existing major
accounting and financial reporting policies of the Company, review the adequacy
of the financial organization of the Company, and review management's procedures
and policies relating to the adequacy of the Company's internal accounting
controls and compliance with applicable laws relating to accounting practices.
The Compensation Committee will consist of three directors, one of whom
will be a director designated by the Ingram Family Stockholders and two of whom
will be Independent Directors. The functions of the Compensation Committee will
be to review and approve annual salaries, bonuses, and grants of stock options
pursuant to the 1996 Plan for all executive officers and key members of the
Company's management staff and to review and approve the terms and conditions of
all employee benefit plans or changes thereto.
COMPENSATION OF DIRECTORS. Directors who are not Independent Directors will
not receive any additional compensation for serving on the Board of Directors,
but will be reimbursed for expenses incurred in attending meetings of the Board
of Directors and committees thereof. Each Independent Director will be granted,
at the beginning of his or her service as a director (for Mr. Pfeffer, on the
date of this Prospectus), options to purchase 45,000 shares of Common Stock.
These options will have an exercise price per share equal to the market price of
the Common Stock on the date of grant and will vest in equal installments on the
first, second, and third anniversaries of the date of grant. Independent
Directors will not receive any other compensation for their service, but will be
reimbursed for expenses incurred in attending meetings of the Board of Directors
and committees thereof.
53
<PAGE> 58
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table provides information
relating to compensation for the year ended December 30, 1995 for the Company's
former Chief Executive Officer and the other four most highly compensated
executive officers of the Company (collectively, the "Named Executive Officers")
for services rendered by each Named Executive Officer during the year ended
December 30, 1995. A portion of this compensation was paid by Ingram Industries
and was included as a factor in the determination of intercompany charges paid
by the Company to Ingram Industries.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
---------------
AWARDS
--------------- ALL
ANNUAL COMPENSATION SECURITIES OTHER
-------------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION(S) YEAR(1) SALARY($)(2) BONUS($)(3) OPTIONS/SARS(#) ($)(4)
- ----------------------------------- ------- ------------ ----------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Linwood A. (Chip) Lacy, Jr.(5)..... 1995 $558,000 $ 414,057 -- $ 28,617
Former Chief Executive Officer
and Former Chairman of the Board
of Directors
Jeffrey R. Rodek................... 1995 392,820 267,089 240,258(6) 163,649
Worldwide President, Chief
Operating Officer, and Director
David R. Dukes..................... 1995 260,130 205,611 -- 10,607
Vice Chairman of the Company,
Chief Executive Officer of Ingram
Alliance, and Director
Sanat K. Dutta..................... 1995 263,500 213,593 -- 12,365
Executive Vice President and
President, Ingram Micro U.S.
John Wm. Winkelhaus, II............ 1995 250,000 130,441 -- 124,287
Executive Vice President and
President, Ingram Micro Europe
</TABLE>
- ---------------
(1) Under rules promulgated by the Securities and Exchange Commission, since the
Company was not a reporting company during the three immediately preceding
fiscal years, only the information with respect to the most recent completed
fiscal year is reported in the Summary Compensation Table.
(2) Includes amounts deferred under qualified and nonqualified defined
contribution compensation plans and pretax insurance premium amounts.
(3) Reflects amounts paid in 1996 in respect of the fiscal year ended December
30, 1995.
(4) Includes the following amounts: Mr. Lacy (group term life insurance, $3,600;
employer thrift plan contributions, $20,625; relocation, $4,392); Mr. Rodek
(group term life insurance, $1,632; employer thrift plan contributions,
$11,631; relocation, $150,386); Mr. Dukes (group term life insurance,
$1,152; employer thrift plan contributions, $9,455); Mr. Dutta (group term
life insurance, $2,784; employer thrift plan contributions, $9,581); and Mr.
Winkelhaus (group term life insurance, $1,006; employer thrift plan
contributions, $6,211; and expatriate compensatory payments, $117,070).
(5) Mr. Lacy was an employee of Ingram Industries at all times during 1995. All
amounts shown for Mr. Lacy were paid by Ingram Industries, and a portion of
such amounts is reflected in the Company's consolidated statement of income
under charges allocated from Ingram Industries.
(6) Represents options exercisable for 175,000 shares of Ingram Industries
common stock, which will be converted into options exercisable for 240,258
shares of Common Stock in connection with the Split-Off.
54
<PAGE> 59
STOCK OPTION/SAR GRANTS IN LAST FISCAL YEAR. The following table provides
information relating to stock options granted to the Named Executive Officers
for the year ended December 30, 1995.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1) POTENTIAL
------------------------------------------------- REALIZABLE
% OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS/SARS ANNUAL RATES OF
SECURITIES GRANTED TO STOCK PRICE
UNDERLYING EMPLOYEES OF EXERCISE APPRECIATION FOR
OPTIONS/ THE COMPANY OR BASE OPTION TERM
SARS IN FISCAL PRICE EXPIRATION -------------------
NAME GRANTED YEAR ($/SH) DATE 5%($) 10%($)
- ---------------------------------- ---------- ------------ -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Linwood A. (Chip) Lacy, Jr. ...... -- -- -- -- -- --
Jeffrey R. Rodek(2)............... 240,258 22.95% $ 2.85 1/1/03 $326,532 $782,100
David R. Dukes.................... -- -- -- -- -- --
Sanat K. Dutta.................... -- -- -- -- -- --
John Wm. Winkelhaus, II........... -- -- -- -- -- --
</TABLE>
- ---------------
(1) The Company has, since December 30, 1995, granted certain options to
purchase Class B Common Stock, including options to purchase 150,000,
35,000, 40,000, and 40,000 shares, respectively, to Messrs. Rodek, Dukes,
Dutta, and Winkelhaus. Additionally, options to purchase Common Stock are
expected to be granted to certain officers of the Company, including options
to purchase 200,000, 150,000, 125,000, and 75,000 shares, respectively, to
Messrs. Rodek, Dukes, Dutta, and Winkelhaus, concurrently with this offering
at the initial public offering price set forth on the cover page of this
Prospectus. See "-- 1996 Plan -- Options."
(2) Represents options exercisable for 175,000 shares of Ingram Industries
common stock, which will be converted into options exercisable for 240,258
shares of Common Stock in connection with the Split-Off. Mr. Rodek's options
vest according to the following schedule: 34,324 shares on January 1, 1997,
60,064 shares on January 1, 1998, 60,064 shares on January 1, 1999, 60,064
shares on January 1, 2000, and 25,742 shares on January 1, 2001.
STOCK OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES. The following table provides information relating to stock
options and ISUs exercised by the Named Executive Officers during the year ended
December 30, 1995, as well as the number and value of securities underlying
unexercised stock options held by the Named Executive Officers as of December
30, 1995.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS/SARS OPTIONS/SARS
ON AT YEAR END AT YEAR END
EXERCISE VALUE ------------------- -----------------
DURING REALIZED EXERCISABLE/ EXERCISABLE/
NAME 1995(1)(2) ($)(3) UNEXERCISABLE(2) UNEXERCISABLE
- ------------------------------ --------- ---------- ------------------- -----------------
<S> <C> <C> <C> <C>
Linwood A. (Chip) Lacy,
Jr. ........................ 1,613,158(4) $2,917,808 46,875/372,315(5) $119,844/$810,153(5)
Jeffrey R. Rodek.............. -- -- 0/274,580 0/214,400
David R. Dukes................ -- 518,063 30,032/243,861 71,921/540,609
Sanat K. Dutta................ -- -- 0/258,105 0/455,656
John Wm. Winkelhaus, II....... -- 278,600 0/244,376 0/450,216
</TABLE>
- ---------------
(1) Excludes Ingram Industries ISUs held by Messrs. Lacy, Dukes, and Winkelhaus
that matured in 1995 and were settled in cash.
(2) Reflects the conversion of shares of Ingram Industries common stock, or
options exercisable for shares of Ingram Industries common stock, into
shares of Class B Common Stock, or options exercisable for shares of Common
Stock, in connection with the Split-Off.
(3) Includes $830,408, $518,063, and $278,600 paid to Messrs. Lacy, Dukes, and
Winkelhaus, respectively, in connection with the settlement of ISUs.
(4) 1,544,513 of such shares were acquired from the E. Bronson Ingram Charitable
8% Remainder Unitrust and were deemed to be acquired from the Company.
(5) Excludes options exercisable for 12,731/101,121 shares of Ingram Industries
common stock with a value of $44,687/$302,084.
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<PAGE> 60
PENSION PLAN
None of the Named Executive Officers other than Mr. Lacy participates in
the tax-qualified Ingram Retirement Plan and the non-qualified Ingram
Supplemental Executive Retirement Plan (the "Retirement Plans") sponsored by
Ingram Industries. At the time he left the Company, Mr. Lacy had earned one year
of credited service under the Retirement Plans.
Mr. Lacy's benefit from the Retirement Plans will be in the form of a
deferred annuity. At age 65, his life only annuities would be $178.70 per month
from the Ingram Retirement Plan and $539.70 per month from the Ingram
Supplemental Executive Retirement Plan. It is anticipated that the Company will
establish a qualified plan similar to the Ingram Industries qualified plan. None
of the Named Executive Officers will participate in the Company's qualified
retirement plan.
EMPLOYMENT AGREEMENTS
In August 1996, the Company entered into an agreement with Mr. Stead
pursuant to which he agreed to serve as Chief Executive Officer and Chairman of
the Board of the Company. The agreement provides for the grant to Mr. Stead of
options at the initial public offering price set forth on the cover page of this
Prospectus exercisable for 3,600,000 shares of Common Stock. Such options will
vest over an extended period, as described below. In lieu of receipt of 200,000
of such options, Mr. Stead may purchase 200,000 shares of Common Stock directly
from the Company at the initial public offering price set forth on the cover
page of this Prospectus. See "-- 1996 Plan -- Options" and "Employee and
Priority Offers -- Employee Directed Offer." Mr. Stead will not receive any
salary, bonus, or other cash compensation during the vesting period of such
options; however, the Company has agreed to compensate Mr. Stead in a mutually
agreeable manner in the event that the initial public offering price set forth
on the cover page of this Prospectus exceeds $14.00. The Company has also agreed
to provide Mr. Stead and his spouse with lifetime healthcare coverage, with a
lifetime cap of $2.0 million, as well as certain other perquisites.
In December 1994, the Company entered into an agreement with Mr. Rodek
pursuant to which he agreed to serve as President and Chief Operating Officer of
the Company and as a member of the Company's Board of Directors. The agreement
provides for a base salary, participation in the Company's Executive Incentive
Bonus Plan, and participation in the Company's health and benefit programs. Mr.
Rodek will receive a severance benefit equal to his annual base salary if the
Company terminates his employment without cause prior to January 1, 1998. Mr.
Rodek currently serves as Worldwide President and Chief Operating Officer.
In April 1988, the Company entered into an agreement with Mr. Dutta
pursuant to which he agreed to serve as Senior Vice President, Operations. The
agreement provides for a base salary, participation in the Company's Executive
Incentive Bonus Plan, and participation in the Company's health and benefit
programs. Mr. Dutta will receive a severance benefit of nine months' base salary
if he is terminated without cause or 12 months' base salary if he is
involuntarily terminated or has a substantial change in title or reduction of
salary within 12 months of a change in control (as defined in the agreement).
Mr. Dutta currently serves as Executive Vice President and President, Ingram
Micro U.S.
In June 1991, the Company entered into an agreement with Mr. Winkelhaus
pursuant to which he agreed to serve as Senior Vice President, Ingram Micro
Europe. The agreement provides for a base salary, a housing cost and goods and
services differential, participation in the Company's Executive Incentive Bonus
Plan, and participation in the Company's health and benefit programs. Mr.
Winkelhaus currently serves as Executive Vice President and President, Ingram
Micro Europe.
Mr. Lacy resigned as Chairman and Chief Executive Officer of the Company
effective May 31, 1996. Pursuant to an agreement (the "Severance Agreement"),
Mr. Lacy resigned from all positions with the Company, and resigned from all
positions with Ingram Industries and its other subsidiaries, except that Mr.
Lacy will remain a director of Ingram Industries until December 31, 1997, unless
earlier removed in accordance with the bylaws of Ingram Industries. In addition,
Mr. Lacy has agreed to serve as a director of the Company, if so requested by
Ingram Industries, until December 31, 1997.
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<PAGE> 61
Pursuant to the Severance Agreement, Mr. Lacy has agreed to cooperate with
the Company and Ingram Industries in connection with the consummation of the
Split-Off and this offering. Mr. Lacy has also agreed not to use or disclose
confidential information relating to the Company. Furthermore, Mr. Lacy has
agreed that until November 30, 1998, he will not compete with the Company or
solicit for hire any person who was or becomes an employee of the Company
between December 1, 1995 and June 1, 1998. Mr. Lacy has also agreed to similar
restrictions with respect to the businesses of Ingram Industries and its other
subsidiaries.
The Company has agreed to pay Mr. Lacy one year's salary at the level in
effect as of the date of his resignation, and has paid Mr. Lacy $272,000, his
earned bonus for the first five months of 1996. In addition, the Severance
Agreement provides for the continuation of certain health and life insurance
benefits for a period of 12 months from the date thereof. Mr. Lacy will also
receive certain payments from Ingram Industries.
The shares of Ingram Industries common stock owned by Mr. Lacy will be
converted into shares of Class B Common Stock in connection with the Split-Off.
These shares have been placed in an escrow account, although Mr. Lacy will be
permitted to sell such shares, subject to applicable tax and securities laws,
provided that the after-tax proceeds of such sales remain in the escrow account.
If at any time prior to December 1, 1998, Mr. Lacy breaches the terms and
conditions of the Severance Agreement, the Company shall have the right to be
reimbursed for its damages from this escrow account. Furthermore, Ingram
Industries and the Company may suspend any payments or obligations otherwise
owed to Mr. Lacy. If not earlier released due to the death of Mr. Lacy or a
Change of Control (as defined therein), fifty percent of the escrow account will
be released on June 1, 1998 and the remainder on December 1, 1998.
KEY EMPLOYEE STOCK PURCHASE PLAN
As of April 30, 1996, the Board of Directors of the Company adopted, and
Ingram Industries, as the sole stockholder of the Company, approved, the Key
Employee Stock Purchase Plan (the "Stock Purchase Plan"). The Company has
reserved 4,000,000 shares of Class B Common Stock to cover awards under the
Stock Purchase Plan.
Employee Offering. In the second quarter of 1996, the Company offered (the
"Employee Offering") 2,775,000 shares of its Class B Common Stock, of which
2,510,400 shares were purchased, in reliance upon Regulation D and Regulation S
under the Securities Act of 1933, as amended (the "Securities Act"), for
$17,572,800, to certain of its officers. Such shares are subject to vesting,
certain restrictions on transfer, and repurchase by the Company upon termination
of the holder's employment. As of the date of this Prospectus, 50,000 of such
shares have been repurchased by the Company.
Restricted Stock Grants. The Company also made grants pursuant to the
Stock Purchase Plan of an aggregate of 107,000 restricted shares of Class B
Common Stock to certain officers and employees of the Company, which shares will
vest 25% on April 1, 1998 and each year thereafter through 2001. Prior to
vesting, such shares are subject to forfeiture to the Company, with no
consideration paid to the holder thereof, upon termination of the holder's
employment. As of the date of this Prospectus, 5,000 of such shares have been
forfeited to the Company.
1996 PLAN
As of April 30, 1996, the Board of Directors of the Company adopted, and
Ingram Industries, as the sole stockholder of the Company, approved, the 1996
Equity Incentive Plan (the "1996 Plan"). The Company has amended the 1996 Plan,
effective as of the date of this Prospectus, primarily to increase the number of
shares available for grant from 10,000,000 shares to 12,000,000 shares, as well
as to change the allowable vesting schedule for options granted under the 1996
Plan and to permit options to be granted to purchase shares of Common Stock in
addition to Class B Common Stock. Options granted prior to the date of this
Prospectus will continue to be governed by the 1996 Plan as in effect prior to
the amendment of the 1996 Plan.
The purpose of the 1996 Plan is to attract and retain key personnel and to
enhance their interest in the Company's continued success.
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<PAGE> 62
The 1996 Plan is administered by the Board of Directors of the Company or a
committee appointed thereby (the "Committee"). The Committee has broad
discretion, subject to contractual restrictions affecting the Company, as to the
specific terms and conditions of each award and any rules applicable thereto,
including but not limited to the effect thereon of the death, retirement, or
other termination of employment of the participant.
The 1996 Plan permits the granting of (i) stock options that qualify as
"Incentive Stock Options" under the U.S. Internal Revenue Code of 1986, as
amended (the "Code"), (ii) options other than Incentive Stock Options
("Nonqualified Stock Options"), (iii) SARs granted either alone or in tandem
with other awards under the 1996 Plan, (iv) restricted stock and restricted
stock units, (v) performance awards, and (vi) other stock-based awards. The
Company has reserved 12,000,000 shares of Common Equity (which may be either
Common Stock or Class B Common Stock) to cover awards under the 1996 Plan.
The Board of Directors may amend, alter, or terminate the 1996 Plan at any
time, provided that stockholder approval generally must be obtained for any
change that would require stockholder approval under Rule 16b-3 under the
Exchange Act or any other regulatory or tax requirement that the Board deems
desirable to comply with or obtain relief under and subject to the requirement
that no rights under an outstanding award may be impaired by such action without
the consent of the holder thereof. The Committee may amend or modify the terms
of any outstanding award but only with the consent of the participant if such
amendment would impair his rights. In the event of certain corporate
transactions or events affecting the shares or the structure of the Company, the
Committee may make certain adjustments as set forth in the 1996 Plan.
The 1996 Plan is not subject to any provision of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and is not qualified under
Section 401(a) of the Code.
Options. On June 25, 1996, the Company granted options to purchase an
aggregate of approximately 4,800,000 shares of Class B Common Stock under the
1996 Plan to all full-time employees of the Company who had at such time been
continuously employed by the Company since January 1, 1996, as well as to
certain employees of the Company, at the director level and above, who began
employment with the Company at a later date. The exercise price of these options
is $7.00 per share. These options, which are Incentive Stock Options to the
extent permitted under the terms of the 1996 Plan and the Code, will vest as
follows: (i) for officers of the Company, in four equal annual installments
commencing on April 1, 1998, and (ii) for non-officers, in five equal annual
installments commencing on April 1, 1997, in each case subject to continued
employment with the Company.
Concurrently with the closing of this offering, it is expected that the
Board of Directors will grant options under the 1996 Plan to purchase
approximately 5,150,000 shares of Common Stock to certain executive officers,
employees, and Independent Directors of the Company. The exercise price of these
options will be equal to the initial public offering price set forth on the
cover page of this Prospectus. Of such options, options to purchase 3,400,000
shares will be granted to Mr. Stead pursuant to the employment agreement
described above. See "-- Employment Agreements." Of the total options being
granted to Mr. Stead, options to purchase 200,000 shares will vest immediately,
and options to purchase an additional 1,600,000 shares will vest in four equal
installments beginning April 1, 1998. The remaining options to purchase an
additional 1,600,000 shares granted to Mr. Stead, as well as the options to
purchase approximately 970,000 shares to be granted to other executive officers
and employees of the Company, will vest over a fixed term, subject to continued
employment with the Company; however, such options will vest earlier if the
Company achieves certain performance criteria. The Company also intends to grant
to the Independent Directors, concurrently with this offering, options to
purchase an aggregate of 135,000 shares of Common Stock at the initial public
offering price set forth on the cover page of this Prospectus. See "-- Board of
Directors -- Compensation of Directors." The Company has also granted options to
purchase an aggregate of approximately 645,000 shares of Common Stock to certain
officers of the Company, in connection with the hiring or promotion of such
officers. All of such options have or will have an exercise price equal to the
initial public offering price set forth on the cover page of this Prospectus and
otherwise have terms similar to those of the options granted in June 1996.
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<PAGE> 63
1996 EMPLOYEE STOCK PURCHASE PLAN
The Company intends to make available to its employees the opportunity to
purchase shares of Common Stock under its 1996 Employee Stock Purchase Plan (the
"ESPP"). The ESPP was adopted by the Board of Directors and stockholders in
October 1996. The ESPP is intended to qualify under Section 423 of the Code and
permits eligible employees of the Company to purchase Common Stock through
payroll deductions, provided that no employee may accrue the right to purchase
more than $25,000 worth of stock under all employee stock purchase plans of the
Company in any calendar year. Up to 1,000,000 shares of Common Stock will be
initially available for sale under the various offerings under the ESPP. The
amount of additional shares of Common Stock that will be made available for sale
under the ESPP, if any, has not been determined. The initial offering period
will commence on or about the date of this Prospectus and will end on the last
market trading day on or before December 31, 1998, and the right to purchase
shares of Common Stock will accrue in an amount not to exceed $13,000 per
employee during the offering period. The price of Common Stock offered under the
initial offer under the ESPP will be 100% of the lower of the fair market value
of the Common Stock on the first or last day of the offering period. The price
of Common Stock offered under subsequent ESPP offerings, the duration of which
will be determined by the Committee, will be from 85% to 100% of the lower of
the fair market value of the Common Stock on the first or last day of each
offering period, as determined by the Committee. Employees may end their
participation in the ESPP at any time during an offering period, and they will
be paid their payroll deductions accumulated to date. Participation ends
automatically on termination of employment with the Company.
Rights granted under the ESPP are not transferable by a participant other
than by will, the laws of descent and distribution, or as otherwise provided
under the ESPP.
The Board may amend or terminate the ESPP at any time. The ESPP will
terminate in all events on the last business day in October 2006.
EXECUTIVE INCENTIVE BONUS PLAN
All officers of the Company are eligible to participate in the Company's
Executive Incentive Bonus Plan (the "Bonus Plan"). Pursuant to the Bonus Plan,
officers receive bonus payments based on the Company's meeting or exceeding
budgeted results, as well as individual achievement of previously agreed upon
goals.
ROLLOVER PLAN; INCENTIVE STOCK UNITS
In connection with the Split-Off, Ingram Industries options held by the
Company's employees and certain other Ingram Industries options and SARs will be
converted to Ingram Micro options ("Rollover Stock Options") to purchase shares
of Common Stock. In addition, holders of approximately 300,000 Ingram Industries
ISUs will have the option to exchange a portion of their ISUs for Rollover Stock
Options. See "The Split-Off and the Reorganization -- The Split-Off." Upon
conversion, assuming all eligible ISUs are exchanged, approximately 11,000,000
Rollover Stock Options will be outstanding, with exercise prices ranging from
$0.66 to $3.32 per share. See "The Split-Off and the Reorganization -- The
Split-Off." The majority of these options will be fully vested by the year 2000
and expire no later than ten years from the date of grant. These vested options
generally become exercisable, if otherwise vested, upon the earlier of (i) nine
months after the Split-Off or (ii) a public offering of the shares, in each case
subject to the optionee's continued employment with any of the Company, Ingram
Industries, or Ingram Entertainment.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors of the Company does not currently maintain a
separate compensation committee. Historically, base compensation of officers of
the Company, and Mr. Lacy's compensation under the Bonus Plan, has been
determined by the Executive Compensation Committee of the Ingram Industries
board of directors, which in 1995 consisted of E. Bronson Ingram, until his
resignation from the Board in May, and Messrs. Lacy and Pfeffer. Mr. Lacy did
not participate in the determination of his compensation. Compensation under the
Bonus Plan for all officers of the Company other than Mr. Lacy was determined by
the entire Board of Directors of the Company.
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EMPLOYEE AND PRIORITY OFFERS
EMPLOYEE DIRECTED OFFER
Up to 500,000 shares of Common Stock offered in this offering (the
"Employee Shares") have been reserved for certain employees of the Company (the
"Employee Directed Offer"). Each such employee may apply to purchase a number of
shares of Common Stock within a specified range at the initial public offering
price set forth on the cover page of this Prospectus and on the same terms and
conditions as the shares being offered to the general public. To the extent any
shares are not sold in the Priority Offer (as defined below), such shares may be
included in the Employee Directed Offer. In addition, Mr. Stead may purchase
200,000 shares of Common Stock directly from the Company in the Company
Offering, with no underwriting discounts or commissions payable thereon. Any
purchasers who are affiliates of the Company will represent that any purchases
are being made for investment purposes only.
Any shares of Common Stock to be sold in Canada pursuant to the Employee
Directed Offer will be sold by the Company directly to its employees in Canada
at the initial public offering price set forth on the cover page of this
Prospectus. The Company will pay the Underwriters an advisory fee which will be
equal to the underwriting discounts and commissions which would have been
payable to the Underwriters had such shares been sold by the Underwriters
instead of directly by the Company.
In the event that the demand for Employee Shares exceeds the number of
shares of Common Stock available under the Employee Directed Offer, the maximum
number of Employee Shares available to each individual will be reduced to the
extent necessary so that the total subscriptions equal the number of available
Employee Shares. Any application for a number of shares that is less than the
employee's new maximum individual application size will be unaffected thereby.
PRIORITY OFFER
Up to 1,750,000 of the shares of Common Stock offered in this offering (the
"Priority Shares") have been reserved pursuant to a priority allocation offer
(the "Priority Offer"). The Priority Offer is being made to certain customers
and vendors of the Company, to certain other individuals, including certain
employees of Ingram Industries and Ingram Entertainment, and to Ingram
Industries. Ingram Industries may purchase approximately 250,000 shares of
Common Stock in connection with its obligations under certain deferred
compensation plans which relate to the performance of the Common Stock. Each
other such person may apply to purchase a number of shares of Common Stock
within a range based on certain individual factors relating to such person at
the initial public offering price set forth on the cover page of this Prospectus
and on the same terms and conditions as the shares being offered to the general
public. Any purchasers who are affiliates of the Company will represent that any
purchases are being made for investment purposes only.
In the event that the demand for Priority Shares exceeds the number of
shares of Common Stock available under the Priority Offer, the maximum number of
Priority Shares available to each purchaser other than Ingram Industries will be
reduced to the extent necessary so that the total subscriptions equal the number
of available Priority Shares. Any application for a number of shares that is
less than the applicant's new maximum individual application size will be
unaffected thereby.
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CERTAIN TRANSACTIONS
Historically, Ingram Industries has provided certain administrative
services to the Company. The Company is allocated a portion of the costs of
these administrative services. This allocation totaled $1.6 million, $2.4
million, $3.5 million, and $3.3 million in 1993, 1994, 1995, and the first three
quarters of 1996, respectively. In connection with the Split-Off, the Company
will enter into the Transitional Service Agreements with Ingram Industries
relating to the continued provision of certain administrative services. The
Company believes that the terms of the Transitional Service Agreements will be
on a basis as favorable as those that would be obtained from third parties on an
arm's length basis. The Transitional Service Agreements generally terminate on
December 31, 1996, although payroll services under the Transitional Service
Agreements will be provided through December 31, 1997. After such termination,
the Company will be required to provide such services internally or find a
third-party provider of such services.
Additionally, Ingram Industries has provided a large portion of the debt
financing required by the Company in connection with its expansion. As of
December 31, 1994, December 30, 1995, and September 28, 1996, $449.4 million,
$673.8 million, and $479.7 million, respectively, was outstanding to Ingram
Industries. Interest on such debt has been charged based on Ingram Industries'
domestic weighted average cost of funds. See Note 6 of Notes to Consolidated
Financial Statements. In connection with the Split-Off, substantially all of the
debt facilities of Ingram Industries guaranteed by the Company will be assumed
by the Company in satisfaction of amounts due to Ingram Industries. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
The Company leases certain office space near Buffalo, New York from a
partnership owned by certain members of the Ingram family. The lease agreement
expires January 31, 2013 and requires annual rental payments of approximately
$1.6 million. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources." The Company
currently subleases its facilities in Santa Ana, California and Harrisburg,
Pennsylvania from Ingram Industries pursuant to a sublease which expires March
1, 2007. The sublease agreement requires annual rental payments of approximately
$2.1 million. In connection with the Reorganization, the Company intends to
acquire ownership of these facilities for an aggregate amount of approximately
$22.6 million, utilizing borrowings under the Credit Facility. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources." The Company's lease for its
distribution center in Millington, Tennessee is guaranteed by Ingram Industries.
This guarantee provides for the release of Ingram Industries' guarantee upon
satisfaction by the Company of certain financial requirements specified in the
guarantee including consummation of an initial public offering of at least $300
million. Certain of the Company's other leases are guaranteed by Ingram
Industries. The Company anticipates that such guarantees will be released in
connection with the Split-Off.
The Company extended a loan during 1995 to one of its senior executive
officers. This loan has been repaid in full. The largest aggregate amount
outstanding at any time during 1995 was $450,000. This loan bore interest at the
intercompany rate of interest paid by the Company to Ingram Industries.
In connection with the Split-Off, it is expected that agreements relating
to board representation and registration rights with respect to Common Stock
held by the Ingram Family Stockholders (including shares of Common Stock issued
upon conversion of Class B Common Stock) will be entered into by the Company and
the Ingram Family Stockholders. See "The Split-Off and the Reorganization."
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THE SPLIT-OFF AND THE REORGANIZATION
Immediately prior to the closing of this offering, Ingram Industries will
consummate the Split-Off. The consummation of the Split-Off is a non-waiveable
condition to the closing of this offering. The Company, Ingram Industries, and
Ingram Entertainment have also entered into certain agreements to effect the
Reorganization. The following is a summary of certain of the material terms of
the Split-Off.
THE SPLIT-OFF
Immediately prior to the closing of this offering, Ingram Industries will
consummate an exchange under an Exchange Agreement (the "Exchange Agreement"),
pursuant to which certain existing stockholders of Ingram Industries may
exchange a specified number of their shares of Ingram Industries common stock
for shares of Class B Common Stock of the Company of equivalent value to the
shares of Ingram Industries so exchanged. The exchange of shares of Ingram
Industries common stock for shares of Class B Common Stock of the Company,
together with those elements of the Reorganization contemplated to occur prior
to the closing of this offering, are referred to herein as the "Split-Off." See
"Principal Stockholders." If all eligible stockholders were to exchange all of
their shares of Ingram Industries common stock eligible to be exchanged, they
would receive 107,251,362 shares of Class B Common Stock. The exchange values
were determined by the board of directors of Ingram Industries, which relied in
part on an opinion of a financial advisor to the effect that the Split-Off was
fair to all involved parties. In the Exchange Agreement, the Company covenants
that, during the two-year period following the Split-Off, it will not (i)
liquidate, merge, or consolidate with any other person, or sell, exchange,
distribute, or dispose of any material asset other than in the ordinary course
of business, (ii) with certain limited exceptions, redeem or reacquire any of
its capital stock transferred in the Split-Off, (iii) cease to conduct the
principal active trade or business conducted by it during the five years
immediately preceding the Split-Off, or (iv) otherwise take any actions
inconsistent with the facts and representations set forth in the private letter
ruling from the U.S. Internal Revenue Service (the "IRS") regarding certain
federal income tax consequences of the Reorganization and the Split-Off, in each
case unless it first obtains an opinion from recognized tax counsel or a ruling
from the IRS that such action will not affect the qualification of the
transactions contemplated by the Exchange Agreement for tax-free treatment. All
such covenants were necessary to obtain the private letter ruling from the IRS.
After the Exchange, Ingram Entertainment will continue to be a wholly-owned
subsidiary of Ingram Industries. Although there can be no assurance, it is
contemplated that, pursuant to the Exchange Agreement, on or after June 20,
1997, certain remaining stockholders of Ingram Industries will exchange their
remaining shares of Ingram Industries common stock for shares of Ingram
Entertainment common stock.
Certain outstanding Ingram Industries options and SARs will be converted
to, and certain Ingram Industries ISUs may be exchanged for, Rollover Stock
Options. The exchange values for these options, SARs, and ISUs are primarily
based on the exchange value for the underlying common stock. The option, SAR,
and ISU exchange values were determined by the board of directors of Ingram
Industries in accordance with the respective plans under which they were issued.
If all eligible ISUs are exchanged, the total number of Rollover Stock Options
outstanding would be exercisable for approximately 11,000,000 shares of Common
Stock. See "Management -- Rollover Plan; Incentive Stock Units."
The Company and the Ingram Family Stockholders are expected to enter into
the Board Representation Agreement. So long as the Ingram Family Stockholders
and their permitted transferees (as defined in the Board Representation
Agreement) own in excess of 25,000,000 shares of the outstanding Common Equity,
the Board Representation Agreement will provide for the designation of (i) not
more than three directors designated by the Ingram Family Stockholders, (ii) one
director designated by the Chief Executive Officer of the Company, and (iii)
four or five additional Independent Directors (collectively, the "Designated
Nominees").
The Ingram Family Stockholders will be required to vote their shares of
Common Equity for the election of the Designated Nominees. In addition, certain
types of corporate transactions, including transactions involving the potential
sale or merger of the Company; the issuance of additional equity, warrants, or
options;
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acquisitions involving aggregate consideration in excess of 10% of the Company's
stockholders' equity; any guarantee of indebtedness of an entity other than a
subsidiary of the Company exceeding 5% of the Company's stockholders' equity;
and the incurrence of indebtedness in a transaction which could reasonably be
expected to reduce the Company's investment rating (i) lower than one grade
below the rating in effect immediately following this offering or (ii) below
investment grade, may not be entered into without the written approval of at
least a majority of the voting power deemed to be held (for purposes of the
Board Representation Agreement) by certain of the Ingram Family Stockholders,
acting in their sole discretion.
The Board Representation Agreement will terminate on the date on which the
Ingram Family Stockholders and their permitted transferees collectively cease to
beneficially own at least 25,000,000 shares of the Common Equity of the Company
(as such number may be equitably adjusted to reflect stock splits, stock
dividends, recapitalization, and other transactions in the capital stock of the
Company). All decisions for the Ingram Family Stockholders that are trusts or
foundations will be made by the trustees thereof, who in some cases are members
of the Ingram family.
The Ingram Family Stockholders and the other stockholders of Ingram
Industries who will receive shares of Class B Common Stock in the Split-Off will
enter into a registration rights agreement (the "Registration Rights Agreement")
which grants the E. Bronson Ingram QTIP Marital Trust (the "QTIP Trust") demand
registration rights following the closing of this offering. Such demand
registration rights may be exercised with respect to all or any portion (subject
to certain minimum thresholds) of the shares of Class B Common Stock owned by
the QTIP Trust, one or more of the other Ingram Family Stockholders and certain
of their permitted transferees on up to three occasions during the 84-month
period following the closing of this offering; provided that the Company shall
not be obligated to effect (i) any registration requested by the QTIP Trust
unless the QTIP Trust has furnished the Company with an opinion of counsel to
the effect that such registration and any subsequent sale will not affect the
tax-free nature of the Split-Off or (ii) more than one demand registration
during any 12-month period.
The Registration Rights Agreement also grants one demand registration right
(subject to certain minimum thresholds) to members of the Ingram family (which
may only be exercised during the 84-month period following the closing of this
offering) and one demand registration right to certain minority stockholders of
the Company if a change of control of the Company occurs following the closing
of this offering but prior to the second anniversary of the Split-Off Date. The
minority stockholders will not be entitled to this registration right if they
were offered the opportunity to participate in the change of control
transaction.
The Registration Rights Agreement restricts the exercise by any party
thereto of a demand registration right, and provides that the Company will not
grant any registration rights to any other person that are more favorable than
those granted pursuant to the Registration Rights Agreement or that provide for
the exercise of demand registration rights sooner than three months following a
public offering in which such person was entitled to include its shares, unless
the number of shares requested to be included in such public offering exceeded
125% of the number of shares actually included.
In addition, the Registration Rights Agreement provides that the parties
thereto shall be entitled to unlimited "piggyback" registration rights in
connection with any proposed registration of equity securities by the Company
(with certain specified exceptions) during the 84-month period following the
completion of this offering. Employees who received shares in the Employee
Offering, and persons who have exercised Rollover Stock Options, are bound by
the provisions of the Registration Rights Agreement as if such employees were
parties thereto, and are entitled to the "piggyback" registration rights
provided therein, with respect to the portion of their shares of Class B Common
Stock that is no longer subject to restrictions.
The Registration Rights Agreement contains provisions regarding reduction
of the size of an offering that has been determined by the underwriters to have
exceeded its maximum potential size and contains certain customary provisions,
including those relating to holdback arrangements, registration procedures,
indemnification, contribution and payment of fees and expenses.
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<PAGE> 68
Pursuant to an agreement (the "Thrift Plan Liquidity Agreement") with the
Ingram Thrift Plan (the "Thrift Plan"), which will receive 10,007,000 shares of
Class B Common Stock in the Split-Off, during the 90-day period following each
of (i) the closing of this offering and (ii) the first anniversary of the
closing of this offering, the Company may elect to file a registration statement
under the Securities Act covering such number of shares as are required to be
sold by the Thrift Plan in order to comply with the requirements of ERISA or are
necessary to fund distributions to Thrift Plan participants ("Registrable
Securities"). If a registration statement covering the Registrable Securities
has not become effective during either such 90-day period, the Thrift Plan may
elect to sell any of such Registrable Securities to the Company during the
90-day period thereafter at the then-current fair market value of the Common
Stock; provided that the Company's obligation in any fiscal year to purchase
shares not required to fund distributions by the Thrift Plan will be limited to
the lesser of $10,000,000 or 3% of the Company's stockholders' equity as of the
beginning of such fiscal year. In addition, the Thrift Plan may elect to sell to
the Company one time each calendar month, such number of shares as are necessary
to fund distributions to Thrift Plan participants, except during such periods
when the Company has notified the Thrift Plan of the filing of a registration
statement covering Registrable Securities or when such a registration statement
is effective. The Company will not be obligated to make any repurchase pursuant
to the Thrift Plan Liquidity Agreement if it determines that to do so would
adversely affect the tax-free nature of the Split-Off or if such repurchase
would be prohibited by a credit facility of the Company. Of the 10,007,000
shares of Class B Common Stock to be received by the Thrift Plan, 9,207,000
shares will be subject to a lock-up agreement in connection with this offering.
See "Shares Eligible for Future Sale" and "Underwriters."
THE REORGANIZATION
The Company is currently a subsidiary of Ingram Industries, a company
controlled by the Ingram Family Stockholders. Ingram Industries is engaged in
various businesses in addition to that of the Company, including inland marine
transportation; the production and transport of specification commercial sand;
insurance; and the distribution of books, prerecorded video cassettes, laser
discs, video games, and spoken-word audio cassettes. The businesses of the
Company, Ingram Industries, and Ingram Entertainment (each, an "Ingram Company")
and their respective subsidiaries will be reorganized as described below. In
conjunction with the Split-Off, the Company will assume Ingram Industries'
accounts receivable securitization program in partial satisfaction of amounts
due to Ingram Industries. The Company will repay the remaining intercompany
indebtedness with borrowings under the Credit Facility. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
Pursuant to a reorganization agreement (the "Reorganization Agreement"),
each Ingram Company has agreed to retain or assume, at the time of the
Reorganization, certain liabilities and obligations, including the following:
(i) liabilities and obligations incurred by such Ingram Company (other than
certain general corporate level liabilities of Ingram Industries) with respect
to periods ending on or prior to the closing of the Split-Off, other than
liabilities or obligations arising as a result of any intentional act which is
tortious or as a result of any illegal act (each, a "Designated Action")
committed by (x) a corporate officer of Ingram Industries (except for actions
that are believed by such person to be in furtherance of his duties as an
officer or employee of the Company, Ingram Entertainment, or their respective
subsidiaries, or the other subsidiaries or business operating units of Ingram
Industries), (y) any other employee of Ingram Industries whose responsibilities
are not primarily associated with the Company, Ingram Entertainment, or their
respective subsidiaries, or the other subsidiaries or business operating units
of Ingram Industries or (z) an employee (other than general corporate level
employees of Ingram Industries) of any other Ingram Company; (ii) liabilities
and obligations (other than general corporate level liabilities of Ingram
Industries) incurred by any other Ingram Company with respect to periods ending
on or prior to the closing of the Split-Off as a result of any Designated Action
committed by an employee of any such Ingram Company or certain subsidiaries or
business operating units of such Ingram Company; (iii) in the case of Ingram
Industries, certain general corporate level liabilities and obligations up to an
aggregate of $100,000 incurred by Ingram Industries with respect to certain
periods ending on or prior to the closing of the Split-Off and recorded under
Ingram Industries' internal accounting system as "home office" liabilities, to
the extent that such liabilities and obligations are extraordinary in nature and
arise out of the ordinary course of business and were not accrued on
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<PAGE> 69
Ingram Industries' year end 1995 balance sheet; (iv) specified liabilities and
obligations related to certain asset dispositions and the settlement of certain
claims; and (v) liabilities and obligations incurred by such Ingram Company with
respect to periods beginning after the closing of the Split-Off. In addition,
certain contingent assets or liabilities, as well as fees and costs incurred in
connection with the Split-Off, will be shared 23.01% by Ingram Industries,
72.84% by the Company, and 4.15% by Ingram Entertainment. These contingent
liabilities include (i) liabilities and obligations arising as a result of any
Designated Action committed by a corporate officer of Ingram Industries (except
for actions that are believed by such person to be in furtherance of his duties
as an officer or employee of the Company, Ingram Entertainment, or their
respective subsidiaries or other designated affiliates, or the other
subsidiaries or designated affiliates of Ingram Industries), or any other
employee of Ingram Industries whose responsibilities are not primarily
associated with the Company, Ingram Entertainment, or their respective
subsidiaries, or the other subsidiaries or business operating units of Ingram
Industries; (ii) certain general corporate level liabilities and obligations, if
the aggregate of such liabilities and obligations incurred by Ingram Industries
exceeds $100,000, incurred by Ingram Industries with respect to periods ending
on or prior to the closing of the Split-Off and recorded under Ingram
Industries' internal accounting system as "home office" liabilities, to the
extent that such liabilities and obligations are extraordinary and non-recurring
in nature and arise out of the ordinary course of business and were not accrued
on Ingram Industries' 1995 balance sheet; (iii) certain liabilities and
obligations incurred by Ingram Industries in respect of specified individuals
pursuant to certain deferred compensation plans of Ingram Industries; and (iv)
assets, liabilities, and obligations arising in connection with certain
specified asset dispositions. The Company will not be responsible for any
liabilities except to the extent that the Company's share of such liabilities,
fees or costs and certain other amounts (net of any contingent assets) exceeds,
in the aggregate, $20,778,000. The Company is not currently aware of any such
liabilities, fees or costs that will require any further payment by the Company
(other than those which will be satisfied by a dividend, if any, to be paid to
stockholders of the Company in connection with and prior to the Split-Off, which
dividend, if paid, is not expected to be material in relation to the Company's
stockholders' equity or cash available for operations). There can be no
assurance that any further payment, which could be material, will not be
required in the future.
Pursuant to the Reorganization Agreement, each Ingram Company will agree to
conduct its business, from the date of the Reorganization Agreement until the
closing of the Split-Off in the ordinary course of business consistent with past
practice. The Reorganization Agreement provides that at or prior to the closing
of the Split-Off, the Company will enter into bank repurchase agreements with
respect to securities of the Company received in connection with the Exchange
Agreement in exchange for shares of Ingram Industries common stock currently
held as collateral for certain loans made to stockholders of Ingram Industries.
If securities of Ingram Industries are exchanged for securities of Ingram
Entertainment, as contemplated in "-- The Split-Off " above, Ingram
Entertainment has agreed to enter into similar agreements with respect to such
securities.
Pursuant to the Reorganization Agreement, each Ingram Company has agreed to
indemnify each other Ingram Company from any and all damage, loss, liability,
and expense incurred as a result of any breach by such party of any covenant or
agreement pursuant to the Reorganization Agreement or the failure by such party
to perform its obligations with respect to any liability retained or assumed by
such party pursuant to the Reorganization Agreement.
The Ingram Companies will also enter into an employee benefits transfer and
assumption agreement (the "Employee Benefits Agreement"). The Employee Benefits
Agreement provides for the allocation of employee benefit assets and liabilities
generally on a pro rata basis in respect of each Ingram Company's current and
former employees. Each Ingram Company will indemnify the other parties with
respect to such party's benefit-related assumed or retained assets and
liabilities.
In connection with the Reorganization, the Ingram Companies will enter into
a tax sharing and tax services agreement (the "Tax Sharing Agreement"). Under
the Tax Sharing Agreement, the Company agrees that it will be liable for (i) its
allocable share of the consolidated federal income tax liability and any
consolidated state income tax liability for the year that includes the Split-Off
and (ii) generally, 72.84% of any adjustment in excess of reserves already
established by Ingram Industries for federal or state income tax
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liabilities of Ingram Industries, Ingram Entertainment, or the Company (x)
relating to tax periods ending on or prior to the Split-Off or (y) resulting
from a failure (other than due to a breach of certain representations or
covenants) of either the Split-Off or the subsequent exchange of securities of
Ingram Industries for securities of Ingram Entertainment to qualify for tax-free
treatment. However, no liability with respect to the subsequent exchange
involving Ingram Entertainment will be allocated to the Company if such exchange
is not completed in accordance with the provisions of the Exchange Agreement or
if the facts and circumstances of such exchange are materially different from
those on which the private letter ruling received by Ingram Industries (see "The
Split-Off and the Reorganization -- Conditions to the Split-Off") is based,
unless a supplemental private letter ruling reasonably satisfactory to the
Company addressing such differences is obtained prior to such exchange. Subject
to certain consultation rights and certain limited rights on the part of the
Company to consent to a settlement, Ingram Industries will have the right to
control any audit or proceeding relating to the Company for periods ending prior
to the Split-Off. The Company will share in any refunds received in respect of
the carryback of any future tax losses or credits it may suffer or receive. In
addition, Ingram Industries and Ingram Entertainment have each agreed that, upon
the exercise by one of its employees of an option granted in connection with the
Split-Off, it will pay the Company an amount equal to the tax benefit, if any,
received from any compensation deduction in respect of such exercise.
Furthermore, if the Split-Off or the contemplated exchange of Ingram
Entertainment common stock fails to qualify for tax-free treatment as a result
of a breach by one of the Ingram Companies of specified representations or
covenants contained in the Exchange Agreement, any resulting deficiency shall be
borne by such breaching Ingram Company.
In addition, until 1999, the Company will provide data processing services
to Ingram Industries and Ingram Entertainment for a fee to be determined. The
Ingram Companies have also entered into the Transitional Service Agreements
relating to the continued provision of certain administrative services
(including cash management, insurance, employee benefits, and payroll
administration). The Transitional Service Agreements are expected to be on terms
as favorable as those that would be obtained from third parties on an arm's
length basis.
CONDITIONS TO THE SPLIT-OFF
The Split-Off is subject to the satisfaction or waiver of certain
conditions including, without limitation, (i) receipt of a private letter ruling
from the IRS satisfactory to Ingram Industries and certain of the Ingram Family
Stockholders as to the tax-free nature of the Split-Off and a determination by
the board of directors of Ingram Industries and each of the Ingram Family
Stockholders that nothing has come to their attention that causes them to
conclude that significant questions exist as to the validity of the ruling as
applied to the Reorganization or the Split-Off; (ii) the absence of any law,
judgment, injunction, order or decree which prohibits consummation of the
Split-Off; (iii) the effectiveness of certain ancillary agreements; (iv) receipt
of required regulatory approvals and third-party consents; (v) consummation of
the scheduled refinancing and assumption of debt; and (vi) settlement of
intercompany receivables and payables. On October 16, 1996, Ingram Industries
received from the IRS a private letter ruling as to the tax-free nature of the
Split-Off. The Exchange Agreement may be terminated by the board of directors of
Ingram Industries or the holders of a majority of the outstanding shares of
Ingram Industries common stock at any time prior to the closing of the
Split-Off.
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PRINCIPAL STOCKHOLDERS
The following table sets forth certain information, as of September 28,
1996, as adjusted for (i) the Split-Off and (ii) the issuance of the Common
Stock in the Combined Offering as if such transactions had occurred on September
28, 1996, with respect to the beneficial ownership of each class of the Common
Equity by (a) each person known by the Company to own beneficially more than
five percent of the outstanding shares of either class of the Common Equity; (b)
each director; (c) each of the Named Executive Officers; and (d) all executive
officers and directors of the Company as a group. See "Management" and "Certain
Transactions."
<TABLE>
<CAPTION>
COMMON
CLASS B COMMON STOCK COMMON STOCK EQUITY
------------------------------ ------------------------------ ------------
SHARES SHARES PERCENTAGE
BENEFICIALLY PERCENTAGE BENEFICIALLY PERCENTAGE OF TOTAL
NAME OWNED OF CLASS OWNED OF CLASS VOTING POWER
- ---------------------------------------------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C>
E. Bronson Ingram QTIP Marital Trust(1)(2).... 69,099,259 62.9% -- -- 61.8%
Ingram Thrift Plan(1)......................... 10,007,000 9.1 -- -- 8.9
David B. Ingram(1)(2)......................... 72,377,210(3)(4) 65.9 13,750(5)(6) * 64.7
Robin Ingram Patton(1)(2)..................... 71,646,916(3)(4) 65.2 --(6) -- 64.0
Orrin H. Ingram(1)(2)......................... 73,157,670(3)(4) 66.6 56,250(5)(6) * 65.4
Roy E. Claverie(1)............................ 10,859,083(3)(7) 9.9 150,000(5)(6) * 9.7
SunTrust Banks, Inc.(8)....................... 12,115,391 11.0 --(6) -- 10.8
Jerre L. Stead................................ -- -- 400,000(9) 2.0 *
Jeffrey R. Rodek.............................. 285,000 * -- -- *
David R. Dukes................................ 65,000 * 73,279(5) * *
Sanat K. Dutta................................ 85,000 * 37,412(5) * *
John Wm. Winkelhaus, II....................... 85,000 * 42,560(5) * *
Martha R. Ingram(2)........................... 83,740,788(3)(4) 76.2 --(6) -- 74.9
John R. Ingram(2)............................. 71,875,978(3)(4) 65.4 29,500(5)(6) * 64.3
Philip M. Pfeffer............................. 1,972,476(4) 1.8 21,250(5) * 1.8
J. Phillip Samper............................. -- -- -- -- --
Joe B. Wyatt.................................. -- -- 193,065(5) * *
All executive officers and directors as
a group (23 persons)(2)(10)................. 91,067,943(3)(4) 82.9 1,149,577(5)(6) 5.4 81.5
Linwood A. (Chip) Lacy, Jr.................... 1,390,062 1.3 110,500(5) * 1.3
</TABLE>
- ---------------
* Less than one percent.
(1) The address for the indicated parties is: c/o Ingram Industries Inc., One
Belle Meade Place, 4400 Harding Road, Nashville, Tennessee 37205.
(2) David B. Ingram, Robin Ingram Patton, Orrin H. Ingram, John R. Ingram, and
Martha R. Ingram are trustees of the QTIP Trust, and accordingly could each
be deemed to be the beneficial owner of the shares held by the QTIP Trust.
(3) Includes 71,286,290; 71,266,588; 71,286,290; 10,387,004; 71,286,290;
81,702,786; and 83,870,115 shares, for David B. Ingram, Robin Ingram
Patton, Orrin H. Ingram, Roy E. Claverie, John R. Ingram, Martha R. Ingram,
and all executive officers and directors as a group, respectively, which
shares are held by various trusts or foundations of which these individuals
are trustees. Such individuals could each be deemed to be the beneficial
owner of the shares held by such trusts of which he or she is a trustee.
(4) Excludes for David B. Ingram 5,132,080 shares held by one or more trusts of
which he and/or his children are beneficiaries; for Robin Ingram Patton
2,932,917 shares held by one or more trusts of which she is a beneficiary;
for Orrin H. Ingram 1,441,856 shares held by one or more trusts of which he
and/or his children are beneficiaries; for John R. Ingram 2,732,815 shares
held by one or more trusts of which he and/or his children are
beneficiaries; for Mr. Lacy 223,097 shares held by a trust of which his
children are beneficiaries; for Mr. Pfeffer 234,348 shares held by his
children or one or more trusts of which his children are beneficiaries; and
for Mr. Claverie 244,912 shares held by his children or one or more trusts
of which he and/or his children are beneficiaries. Each such individual
disclaims beneficial ownership as to such shares.
(5) Represents Rollover Stock Options exercisable within 60 days of the date of
the table for shares of Common Stock.
(6) Excludes approximately 250,000 shares of Common Stock that may be purchased
by Ingram Industries in this offering. As principal stockholders of Ingram
Industries, the indicated stockholders may be deemed to be beneficial
owners of the shares held by Ingram Industries.
(7) Includes 10,007,000 shares held by the Ingram Thrift Plan. Mr. Claverie may
be deemed to be the beneficial owner of such shares, because he is a
trustee of the Ingram Thrift Plan.
(8) The address for SunTrust Banks, Inc. ("SunTrust") is 25 Park Place, NE,
Atlanta, Georgia 30303. All shares are held by SunTrust Bank Atlanta, a
subsidiary of SunTrust, as trustee for certain individuals. SunTrust and
certain of its subsidiaries may be deemed beneficial owners of such shares;
however, SunTrust and such subsidiaries disclaim any beneficial interest in
such shares.
(9) Includes options to purchase 200,000 shares of Common Stock, which
represent the immediately exercisable portion of the options to be granted
to Mr. Stead effective upon the closing of this offering. See
"Management -- 1996 Plan -- Options."
(10) Excludes shares beneficially owned by Mr. Lacy, the Company's former Chief
Executive Officer and former Chairman of the Board of Directors.
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<PAGE> 72
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 265,000,000 shares
of Class A Common Stock, par value $0.01 per share, of which 20,200,000 shares
will be issued and outstanding upon the closing of the Combined Offering
(assuming no exercise of the U.S. Underwriters' over-allotment option), and
135,000,000 shares of Class B Common Stock, par value $0.01 per share, of which
109,813,762 shares will be issued and outstanding upon the closing of the
Combined Offering. In addition, the Company's Certificate of Incorporation (the
"Certificate of Incorporation") authorizes the issuance by the Company of up to
1,000,000 shares of preferred stock, par value $0.01 per share (the "Preferred
Stock"), on terms determined by the Company's Board of Directors. The following
description is a summary of the capital stock of the Company and is subject to
and qualified in its entirety by reference to the provisions of the Certificate
of Incorporation and the Amended and Restated Bylaws (the "Bylaws") of the
Company, which are included as exhibits to the Registration Statement of which
this Prospectus forms a part.
COMMON EQUITY
The shares of Common Stock and Class B Common Stock are identical in all
respects, except for voting rights and certain conversion rights, as described
below.
VOTING RIGHTS. Each share of Common Stock entitles the holder to one vote
on each matter submitted to a vote of the Company's stockholders, including the
election of directors, and each share of Class B Common Stock entitles the
holder to ten votes on each such matter. Except as required by applicable law,
holders of the Common Stock and Class B Common Stock vote together as a single
class on all matters submitted to a vote of the stockholders of the Company.
There is no cumulative voting. See "Risk Factors -- Control by Ingram Family
Stockholders."
Subject to New York Stock Exchange requirements, for so long as there are
any shares of Class B Common Stock outstanding, any action that may be taken at
a meeting of the stockholders may be taken by written consent in lieu of a
meeting if the Company receives consents signed by stockholders having the
minimum number of votes that would be necessary to approve the action at a
meeting at which all shares entitled to vote on the matter were present and
voted. This could permit certain holders of Class B Common Stock to take action
regarding certain matters without providing other stockholders the opportunity
to voice dissenting views or raise other matters. The right to take such action
by written consent of stockholders will expire at such time as all outstanding
shares of Class B Common Stock cease to be outstanding.
DIVIDENDS, DISTRIBUTIONS, AND STOCK SPLITS. Holders of Common Stock and
Class B Common Stock are entitled to receive dividends at the same rate if, as,
and when such dividends are declared by the Board of Directors out of assets
legally available therefor after payment of dividends required to be paid on
shares of Preferred Stock, if any.
In the case of dividends or distributions payable in Common Stock or Class
B Common Stock, only shares of Common Stock will be distributed with respect to
the Common Stock and only shares of Class B Common Stock will be distributed
with respect to the Class B Common Stock. In the case of dividends or other
distributions consisting of other voting shares of the Company, the Company will
declare and pay such dividends in two separate classes of such voting
securities, identical in all respects, except that the voting rights of each
such security paid to the holders of the Common Stock shall be one-tenth of the
voting rights of each such security paid to the holders of Class B Common Stock,
and such security paid to the holders of Class B Common Stock shall convert into
the security paid to the holders of the Common Stock upon the same terms and
conditions applicable to the Class B Common Stock. In the case of dividends or
other distributions consisting of securities convertible into, or exchangeable
for, voting securities of the Company, the Company will provide that such
convertible or exchangeable securities and the underlying securities be
identical in all respects, except that the voting rights of each security
underlying the convertible or exchangeable security paid to the holders of the
Common Stock shall be one-tenth of the voting rights of each security underlying
the convertible or exchangeable security paid to the holders of Class B Common
Stock, and such underlying securities paid to the holders of Class B Common
Stock shall convert into the security paid to the holders of the Common Stock
upon the same terms and conditions applicable to the Class B Common Stock.
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<PAGE> 73
Neither the Common Stock nor the Class B Common Stock may be subdivided or
combined in any manner unless the other class is subdivided or combined in the
same proportion.
CONVERSION. The Common Stock has no conversion rights.
The Class B Common Stock is convertible into Common Stock, in whole or in
part, at any time and from time to time at the option of the holder, on the
basis of one share of Common Stock for each share of Class B Common Stock
converted. Each share of Class B Common Stock will also automatically convert
into one share of Common Stock upon the earliest to occur of (i) the fifth
anniversary of the closing of the Split-Off; (ii) the sale or transfer of such
share of Class B Common Stock (a) by a holder that is a party to the Board
Representation Agreement to any person that is not an affiliate, spouse or
descendant of such holder, their estates or trusts for their benefit or any
other party to the Exchange Agreement or (b) by any other holder, to a holder
that is not the spouse or descendant of such holder or their estates or trusts
for the benefit thereof; and (iii) the date on which the number of shares of
Class B Common Stock then outstanding is less than 25% of the aggregate number
of shares of Common Equity then outstanding.
LIQUIDATION. In the event of any dissolution, liquidation, or winding up of
the affairs of the Company, whether voluntary or involuntary, after payment of
the debts and other liabilities of the Company and making provision for the
holders of Preferred Stock, if any, the remaining assets of the Company will be
distributed ratably among the holders of the Common Stock and the Class B Common
Stock, treated as a single class.
MERGERS AND OTHER BUSINESS COMBINATIONS. Upon a merger, combination, or
other similar transaction of the Company in which shares of Common Equity are
exchanged for or changed into other stock or securities, cash and/or any other
property, holders of each class of Common Equity will be entitled to receive an
equal per share amount of stock, securities, cash, and/or any other property, as
the case may be, into which or for which each share of any other class of Common
Equity is exchanged or changed; provided that in any transaction in which shares
of capital stock are distributed, such shares so exchanged for or changed into
may differ as to voting rights and certain conversion rights to the extent and
only to the extent that the voting rights and certain conversion rights of
Common Stock and Class B Common Stock differ at that time.
OTHER PROVISIONS. The holders of the Common Stock and Class B Common Stock
are not entitled to preemptive rights. There are no redemption provisions or
sinking fund provisions applicable to the Common Stock or the Class B Common
Stock.
PREFERRED STOCK
The Board of Directors is authorized, subject to any limitations prescribed
by the DGCL, or the rules of any quotation system or national securities
exchange on which stock of the Company may be quoted or listed, to provide for
the issuance of shares of Preferred Stock in one or more series; to establish
from time to time the number of shares to be included in each such series; to
fix the rights, powers, preferences, and privileges of the shares of each series
and any qualifications and restrictions thereon; and, to the extent permitted by
the DGCL, to increase or decrease the number of shares of such series, without
any further vote or action by the stockholders. Depending upon the terms of the
Preferred Stock established by the Board of Directors, any or all series of
Preferred Stock could have preference over the Common Stock with respect to
dividends and other distributions and upon liquidation of the Company or could
have voting or conversion rights that could adversely affect the holders of the
outstanding Common Stock. The Company has no present plans to issue any shares
of Preferred Stock.
LIMITATION OF LIABILITY; INDEMNIFICATION
As permitted by the DGCL, the Certificate of Incorporation provides that
directors of the Company shall not be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director to
the fullest extent permitted by the DGCL (which currently provides that such
liability may be so limited, except for liability (i) for any breach of the
director's duty of loyalty to the Company or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of the law, (iii) under Section 174 of the DGCL, relating to
prohibited dividends or distributions or the repurchase or redemption of stock,
or (iv) for any transaction from which the director derives an improper personal
benefit).
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Each person who is or was a party to any action by reason of the fact that
such person is or was a director or officer of the Company shall be indemnified
and held harmless by the Company to the fullest extent permitted by the DGCL.
This right to indemnification also includes the right to have paid by the
Company the expenses incurred in connection with any such proceeding in advance
of its final disposition, to the fullest extent permitted by the DGCL. In
addition, the Company may, by action of the Board of Directors, provide
indemnification to such other employees and agents of the Company to such extent
as the Board of Directors determines to be appropriate under the DGCL.
As a result of this provision, the Company and its stockholders may be
unable to obtain monetary damages from a director for breach of his duty of
care. Although stockholders may continue to seek injunctive or other equitable
relief for an alleged breach of fiduciary duty by a director, stockholders may
not have any effective remedy against the challenged conduct if equitable
remedies are unavailable. The Company also reserves the right to purchase and
maintain directors' and officers' liability insurance.
OTHER CERTIFICATE OF INCORPORATION AND BYLAW PROVISIONS
The Bylaws provide that a majority of the total number of directors shall
constitute a quorum for the transaction of business. The Board of Directors may
act by unanimous written consent. The Board Representation Agreement contains
additional provisions relating to corporate governance. See "The Split-Off and
the Reorganization -- The Split-Off."
Annual meetings of stockholders shall be held to elect the Board of
Directors and transact such other business as may be properly brought before the
meeting. Special meetings of stockholders may be called by the chairman and
shall be called by the secretary on the written request of stockholders having
10% of the voting power of the Company. The stockholders may act by written
consent in lieu of a meeting of stockholders until such time as all shares of
Class B Common Stock cease to be outstanding.
The Certificate of Incorporation may be amended with the approval of the
Board of Directors (by the vote required as described above), and for so long as
any shares of Class B Common Stock remain outstanding, in addition to any vote
required by law, any such amendment also requires the approval of the holders of
a majority of the Company's outstanding voting power and a majority of the
members of the Board of Directors. However, any amendment to the provisions of
the Certificate of Incorporation relating to the Common Equity also requires the
consent of a majority of the outstanding voting power held by the Ingram Family
Stockholders. The Bylaws may be amended with the approval of three-quarters of
the entire Board of Directors or by the holders of 75% of the Company's voting
power present and entitled to vote at any annual or special meeting of
stockholders at which a quorum is present.
The number of directors which shall constitute the whole Board of Directors
shall be fixed by resolution of the Board of Directors. The number of directors
shall in no event be less than seven nor more than nine; provided, however, that
when the Board of Directors is expanded to eight directors, it may not be
subsequently reduced in size. The size of the initial Board is fixed at seven
members, but will be increased to eight or nine in accordance with the Board
Representation Agreement. The vote of a majority of the entire Board is required
for all actions of the Board. The directors shall be elected at the annual
meeting of the stockholders, except for filling vacancies. Directors may be
removed with the approval of the holders of a majority of the Company's voting
power present and entitled to vote at a meeting of stockholders. Vacancies and
newly created directorships on the Board of Directors resulting from any
increase in the number of directors may be filled by a majority of the directors
then in office, although less than a quorum, a sole remaining director, or the
holders of a majority of the voting power present and entitled to vote at a
meeting of stockholders. So long as the Ingram Family Stockholders and their
permitted transferees own at least 25,000,000 shares of the Common Equity, the
Bylaws will provide for the appointment of the Designated Nominees.
The presence, in person or by proxy, of the holders of a majority of the
votes entitled to be cast by the stockholders entitled to vote generally, shall
constitute a quorum for stockholder action at any meeting.
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<PAGE> 75
SECTION 203 OF THE DGCL
After this offering, the Company will be subject to Section 203 of the DGCL
which, subject to certain exceptions, prohibits a Delaware corporation from
engaging in a business combination (as defined therein) with an "interested
stockholder" (defined generally as any person who beneficially owns 15% or more
of the outstanding voting stock of the Company or any person affiliated with
such person) for a period of three years following the date that such
stockholder became an interested stockholder, unless (i) prior to such date the
board of directors of the corporation approved either the business combination
or the transaction that resulted in the stockholder becoming an interested
stockholder; (ii) upon consummation of the transaction that resulted in the
stockholder becoming an interested stockholder, the interested stockholder owned
at least 85% of the voting stock of the corporation at the time the transaction
commenced (excluding for purposes of determining the number of shares
outstanding those shares owned (a) by directors who are also officers of the
corporation and (b) by employee stock plans in which employee participants do
not have the right to determine confidentially whether shares held subject to
the plan will be tendered in a tender or exchange offer); or (iii) on or
subsequent to such date the business combination is approved by the board of
directors of the corporation and authorized at a meeting of stockholders by the
affirmative vote of at least 66 2/3% of the outstanding voting stock of the
corporation not owned by the interested stockholder.
TRANSFER AGENT
The transfer agent and registrar for the Common Stock is First Chicago
Trust Company of New York.
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<PAGE> 76
SHARES ELIGIBLE FOR FUTURE SALE
Upon the closing of the Combined Offering, the Company will have
outstanding an aggregate of 20,200,000 shares of Common Stock (23,200,000 shares
if the U.S. Underwriters' over-allotment option is exercised in full), and
109,813,762 shares of Class B Common Stock. Of the total outstanding shares of
Common Equity, only the shares of Common Stock sold in the Combined Offering
will be freely tradable without restriction or further registration under the
Securities Act, unless purchased by "affiliates" of the Company, as that term is
defined in Rule 144 under the Securities Act (which sales would be subject to
certain volume limitations and other restrictions described below).
The remaining shares of Common Equity held by existing stockholders upon
completion of this offering will be "restricted securities" as that term is
defined in Rule 144 under the Securities Act. In general, under Rule 144 as
currently in effect, a person (or persons whose shares are aggregated),
including an affiliate, who has beneficially owned shares for at least two years
(including, if the shares are transferred, the holding period of any prior owner
except an affiliate) is entitled to sell in "broker's transactions" or to market
makers, within any three-month period commencing 90 days after the date of this
Prospectus, a number of shares that does not exceed the greater of (i) 1% of the
then outstanding shares of such class of the Common Equity (approximately
1,098,138 shares immediately after this offering) or (ii) generally, the average
weekly trading volume in such class of the Common Stock during the four calendar
weeks preceding the filing of a Form 144 with respect to such sale, and subject
to certain other limitations and restrictions. In addition, a person who is not
deemed to have been an affiliate of the Company at any time during the three
months preceding a sale, and who has beneficially owned the shares proposed to
be sold for at least three years, would be entitled to sell such shares under
Rule 144(k) without regard to the volume and other requirements described above.
Shares of Common Equity that would otherwise be deemed "restricted securities"
could be sold at any time through an effective registration statement relating
to such shares of Common Equity.
Of the 109,813,762 shares of Class B Common Stock outstanding as of the
closing of the Combined Offering, 2,562,400 shares were acquired in July 1996
pursuant to the Employee Offering and the concurrent grant of restricted stock
awards, and 107,251,362 shares will have been acquired pursuant to the
Split-Off. Under current law, absent registration or an exemption from
registration other than Rule 144, (a) no shares of Class B Common Stock will be
eligible for sale as of the date of this Prospectus; (b) 107,251,362 shares of
Class B Common Stock will be eligible for sale two years from the effective date
of the Split-Off, and (c) the 2,562,400 shares of Class B Common Stock sold in
the Employee Offering in July 1996 (or granted concurrently therewith), and not
repurchased or forfeited, will be eligible for sale upon the later of (i) July
1998 and (ii) for those shares pledged to secure purchase money loans for such
shares, two years after the release of such pledge. In addition, the 2,562,400
shares of Class B Common Stock issued in July 1996 are subject to contractual
vesting restrictions, which restrictions begin to lapse in April 1998.
Pursuant to the Registration Rights Agreement, the QTIP Trust, which after
the Split-Off will hold 69,099,259 shares of Class B Common Stock, has certain
demand registration rights with respect to all or any portion (subject to
certain minimum thresholds) of the shares of Class B Common Stock owned by the
QTIP Trust, one or more of the other Ingram Family Stockholders and certain of
their permitted transferees on up to three occasions during the 84-month period
following the closing of this offering; provided that the Company shall not be
obligated to effect (i) any registration requested by the QTIP Trust unless the
QTIP Trust has furnished the Company with an opinion of counsel to the effect
that such registration and any subsequent sale will not affect the tax-free
nature of the Split-Off or (ii) more than one demand registration during any
12-month period. The Registration Rights Agreement also grants one demand
registration right (subject to certain minimum thresholds) to members of the
Ingram family holding, at the time of the Split-Off, approximately 18,210,000
shares of Class B Common Stock (which may only be exercised within the 84-month
period following the closing of this offering). All holders of such demand
registration rights are subject to the lock-up agreements described below, and
therefore are restricted from selling any shares during the 180-day period
following the date of this Prospectus. In addition, the Registration Rights
Agreement grants one demand registration right to certain minority stockholders
of the Company, if a change of control of the Company occurs following the
closing of this offering but prior to the second anniversary of the Split-Off
Date. The minority stockholders will not be entitled to this registration right
if they were offered the opportunity to participate in the change of control
transaction.
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<PAGE> 77
In addition, the Registration Rights Agreement provides that the recipients
of Class B Common Stock received in the Split-Off will be entitled to unlimited
"piggyback" registration rights in connection with any proposed registration of
equity securities by the Company (with certain specified exceptions) during the
84-month period following the closing of this offering. Employees who received
shares in the Employee Offering, holders of restricted stock granted at the time
of the Employee Offering, and persons who have exercised Rollover Stock Options,
are bound by the provisions of the Registration Rights Agreement as if such
employees were parties thereto, and are entitled to the "piggyback" registration
rights provided therein, with respect to the portion of their shares of Common
Equity that is no longer subject to restrictions.
Pursuant to the Thrift Plan Liquidity Agreement, the Thrift Plan has
certain rights to require the Company to purchase such shares of Class B Common
Stock as are required to be sold by the Thrift Plan in order to comply with the
requirements of ERISA or are necessary to fund distributions to Thrift Plan
participants, if the Company does not arrange for the registration of such
shares. Of the 10,007,000 shares of Class B Common Stock held by the Thrift
Plan, 9,207,000 shares will be subject to the lock-up agreements described
below.
Immediately following the closing of the Combined Offering, there will be
outstanding options exercisable for approximately 21,000,000 shares of Common
Equity. Of such options, approximately 2,600,000 Rollover Stock Options and
200,000 options granted to Mr. Stead will be exercisable immediately after the
closing of the Combined Offering for shares of Common Stock, although shares
issuable upon exercise of approximately 1,000,000 of such options will be
subject to the lock-up agreements described below. In addition, approximately
1,350,000 Rollover Stock Options will become exercisable on or prior to May 1,
1997, although the shares issuable upon exercise of approximately 600,000 of
such Rollover Stock Options will be subject to the lock-up agreements described
below. In addition, on April 1, 1997, options granted to non-officers of the
Company pursuant to the 1996 Plan will become exercisable for approximately
700,000 shares of Class B Common Stock, none of which will be subject to the
lock-up agreements described below. The Company has filed a registration
statement on Form S-1 under the Securities Act covering shares issuable upon
exercise of Rollover Stock Options exercisable on or prior to January 1, 1997.
The Company also intends to file a registration statement on Form S-8 covering
all Rollover Stock Options held by employees of the Company, as well as a
registration statement on Form S-8 covering all options granted under the 1996
Plan. Shares registered under such registration statements will, subject to Rule
144 volume limitations applicable to affiliates, be available for sale in the
open market, unless such shares are subject to vesting restrictions with the
Company or the lock-up agreements described below. See "Management -- 1996 Plan"
and "-- Rollover Plan; Incentive Stock Units."
The Company and its directors and executive officers, and certain
stockholders of the Company, have agreed, subject to certain exceptions, not to
offer, sell, contract to sell or otherwise dispose of any Common Stock for a
period of 180 days after the date of this Prospectus without the prior written
consent of Morgan Stanley & Co. Incorporated. Morgan Stanley & Co. Incorporated
has informed the Company that it has no present intention to consent to any such
transactions. Of the 107,251,362 shares of Class B Common Stock to be received
in the Split-Off, all but 3,855,892 shares are subject to such lock-up
agreements. Each holder of shares received in the Split-Off, in order to obtain
the private letter ruling from the IRS, has represented in the Exchange
Agreement that there is no plan or intention by such holder to sell, exchange,
transfer by gift or otherwise dispose of any of such holder's Class B Common
Stock subsequent to the Split-Off. As described above, all such shares are
subject to restrictions on resale under Rule 144, including a two-year holding
period. However, 800,000 of such 3,855,892 shares are held by the Thrift Plan,
which has the registration rights described above, and therefore such shares may
be registered and be eligible for immediate resale under certain limited
circumstances. In addition, certain minority stockholders may have demand
registration rights under the Registration Rights Agreement upon a change of
control, as described above.
Prior to this offering, there has not been any public market for either
class of the Common Equity. No prediction can be made as to the effect, if any,
that market sales of shares or the availability of shares for sale will have on
the market price prevailing from time to time. Sales of substantial additional
amounts of Common Equity in the public market, or the perception that such sales
could occur, could adversely affect the prevailing market price of the Common
Stock.
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<PAGE> 78
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a discussion of the material U.S. federal income and
estate tax consequences of the ownership and disposition of Common Stock by a
"Non-U.S. Holder." A "Non-U.S. Holder" is a person or entity that, for U.S.
federal income tax purposes, is a non-resident alien individual, a foreign
corporation, a foreign partnership, or a non-resident fiduciary of a foreign
estate or trust.
This discussion is based on the Code, and administrative interpretations as
of the date hereof, all of which are subject to change, including changes with
retroactive effect. This discussion does not address all aspects of U.S. federal
income and estate taxation that may be relevant to Non-U.S. Holders in light of
their particular circumstances and does not address any tax consequences arising
under the laws of any state, local or foreign jurisdiction.
Proposed United States Treasury Regulations were issued on April 15, 1996
(the "Proposed Regulations") which, if adopted, would affect the United States
taxation of dividends paid to a Non-U.S. Holder on Common Stock. The Proposed
Regulations are generally proposed to be effective with respect to dividends
paid after December 31, 1997, subject to certain transition rules. The
discussion below is not intended to be a complete discussion of the provisions
of the Proposed Regulations, and prospective investors are urged to consult
their tax advisors with respect to the effect the Proposed Regulations would
have if adopted.
Prospective holders should consult their tax advisors with respect to the
particular tax consequences to them of owning and disposing of Common Stock,
including the consequences under U.S. federal law as well as under the laws of
any state, local or foreign jurisdiction.
DIVIDENDS
Subject to the discussion below, dividends paid to a Non-U.S. Holder of
Common Stock generally will be subject to withholding tax at a 30% rate or such
lower rate as may be specified by an applicable income tax treaty. For purposes
of determining whether tax is to be withheld at a 30% rate or at a reduced rate
as specified by an income tax treaty, the Company ordinarily will presume that
dividends paid to an address in a foreign country are paid to a resident of such
country absent knowledge that such presumption is not warranted.
Under the Proposed Regulations, to obtain a reduced rate of withholding
under a treaty, a Non-U.S. Holder would generally be required to provide a Form
W-8 certifying such Non-U.S. Holder's entitlement to benefits under a treaty.
The Proposed Regulations would also provide special rules to determine whether,
for purposes of determining the applicability of a tax treaty, dividends paid to
a Non-U.S. Holder that is an entity should be treated as paid to the entity or
those holding an interest in that entity.
There will be no withholding tax on dividends paid to a Non-U.S. Holder
that are effectively connected with the Non-U.S. Holder's conduct of a trade or
business within the United States if the Non-U.S. Holder files a valid Form 4224
(or, if and when the Proposed Regulations become effective, a Form W-8) stating
that the dividends are so connected. Instead, the effectively connected
dividends will be subject to regular U.S. income tax in the same manner as if
the Non-U.S. Holder were a U.S. resident. A non-U.S. corporation receiving
effectively connected dividends may also be subject to an additional "branch
profits tax" which is imposed, under certain circumstances, at a rate of 30% (or
such lower rate as may be specified by an applicable treaty) of the non-U.S.
corporation's effectively connected earnings and profits, subject to certain
adjustments.
Generally, the Company must report to the IRS the amount of dividends paid,
the name and address of the recipient, and the amount, if any, of tax withheld.
A similar report is sent to the holder. Pursuant to tax treaties or certain
other agreements, the IRS may make its reports available to tax authorities in
the recipient's country of residence.
Dividends paid to a Non-U.S. Holder at an address within the United States
may be subject to backup withholding imposed at a rate of 31% if the Non-U.S.
Holder fails to establish that it is entitled to an exemption or to provide a
correct taxpayer identification number and certain other information. The
Proposed Regulations would, if adopted, alter the foregoing rules in certain
respects, including by providing certain
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presumptions under which a Non-U.S. Holder would be subject to backup
withholding in the absence of the certification from the holder as to non-U.S.
status, regardless of whether dividends are paid to a U.S. or non-U.S. address.
GAIN ON DISPOSITION OF COMMON STOCK
A Non-U.S. Holder generally will not be subject to U.S. federal income tax
with respect to gain realized on a sale or other disposition of Common Stock
unless (i) the gain is effectively connected with a trade or business of such
holder in the United States, (ii) in the case of certain Non-U.S. Holders who
are non-resident alien individuals and hold the Common Stock as a capital asset,
such individual is present in the United States for 183 or more days in the
taxable year of the disposition, (iii) the Non-U.S. Holder is subject to tax
pursuant to the provisions of the Code regarding the taxation of U.S.
expatriates, or (iv) the Company is or has been a "U.S. real property holding
corporation" within the meaning of Section 897(c)(2) of the Code at any time
within the shorter of the five-year period preceding such disposition or such
holder's holding period. The Company is not, and does not anticipate becoming, a
U.S. real property holding corporation.
INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING ON DISPOSITION OF
COMMON STOCK
Under current United States federal income tax law, information reporting
and backup withholding imposed at a rate of 31% will apply to the proceeds of a
disposition of Common Stock paid to or through a U.S. office of a broker unless
the disposing holder certifies as to its non-U.S. status or otherwise
establishes an exemption. Generally, U.S. information reporting and backup
withholding will not apply to a payment of disposition proceeds if the payment
is made outside the United States through a non-U.S. office of a non-U.S.
broker. However, U.S. information reporting requirements (but not backup
withholding) will apply to a payment of disposition proceeds outside the United
States if (A) the payment is made through an office outside the United States of
a broker that is either (i) a U.S. person, (ii) a foreign person which derives
50% or more of its gross income for certain periods from the conduct of a trade
or business in the United States or (iii) a "controlled foreign corporation" for
U.S. federal income tax purposes and (B) the broker fails to maintain
documentary evidence that the holder is a Non-U.S. Holder and that certain
conditions are met, or that the holder otherwise is entitled to an exemption.
The Proposed Regulations would, if adopted, alter the foregoing rules in
certain respects. Among other things, the Proposed Regulations would provide
certain presumptions under which a Non-U.S. Holder would be subject to backup
withholding in the absence of certification from the holder as to non-U.S.
status.
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained, provided that the required information is furnished to the IRS.
FEDERAL ESTATE TAX
An individual Non-U.S. Holder who is treated as the owner of, or has made
certain lifetime transfers of, an interest in the Common Stock will be required
to include the value thereof in his gross estate for U.S. federal estate tax
purposes, and may be subject to U.S. federal estate tax unless an applicable
estate tax treaty provides otherwise.
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UNDERWRITERS
Under the terms and subject to the conditions in an Underwriting Agreement
dated the date hereof (the "Underwriting Agreement"), the U.S. Underwriters
named below, for whom Morgan Stanley & Co. Incorporated, The Robinson-Humphrey
Company, Inc., Alex. Brown & Sons Incorporated, Hambrecht & Quist LLC, and J.C.
Bradford & Co. are serving as U.S. Representatives, and the International
Underwriters named below, for whom Morgan Stanley & Co. International Limited,
The Robinson-Humphrey Company, Inc., Alex. Brown & Sons Incorporated, Hambrecht
& Quist LLC, and J.C. Bradford & Co. are serving as International
Representatives, have severally agreed to purchase, and the Company has agreed
to sell to them severally, the respective number of shares of Common Stock set
forth opposite the name of each Underwriter below:
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
----------------------------------------------------------------- ----------
<S> <C>
U.S. Underwriters:
Morgan Stanley & Co. Incorporated..............................
The Robinson-Humphrey Company, Inc.............................
Alex. Brown & Sons Incorporated................................
Hambrecht & Quist LLC..........................................
J.C. Bradford & Co. ...........................................
----------
Subtotal.................................................... 16,000,000
----------
International Underwriters:
Morgan Stanley & Co. International Limited.....................
The Robinson-Humphrey Company, Inc.............................
Alex. Brown & Sons Incorporated................................
Hambrecht & Quist LLC..........................................
J.C. Bradford & Co. ...........................................
----------
Subtotal.................................................... 4,000,000
----------
Total.................................................. 20,000,000
=========
</TABLE>
The U.S. Underwriters and the International Underwriters are collectively
referred to as the "Underwriters." The U.S. Representatives and the
International Representatives are collectively referred to as the
"Representatives." The Underwriting Agreement provides that the obligations of
the several Underwriters to pay for and accept delivery of the shares of Common
Stock offered hereby are subject to the approval of certain legal matters by
their counsel and to certain other conditions. The Underwriters are obligated to
take and pay for all the shares of Common Stock offered hereby (other than those
covered by the over-allotment option described below) if any such shares are
taken.
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Pursuant to the Agreement Between U.S. and International Underwriters, each
U.S. Underwriter has represented and agreed that, with certain exceptions set
forth below, (a) it is not purchasing any U.S. Shares (as defined below) for the
account of anyone other than a United States or Canadian Person (as defined
below) and (b) it has not offered or sold, and will not offer or sell, directly
or indirectly, any U.S. Shares or distribute any prospectus outside the United
States and Canada or to anyone other than a United States or Canadian Person.
Pursuant to the Agreement Between U.S. and International Underwriters, each
International Underwriter has represented and agreed that, with certain
exceptions set forth below, (a) it is not purchasing any International Shares
(as defined below) for the account of any United States or Canadian Person and
(b) it has not offered or sold, and will not offer or sell, directly or
indirectly, any International Shares or distribute any prospectus relating to
the International Shares within the United States or Canada or to any United
States or Canadian Person. With respect to any of The Robinson-Humphrey Company,
Inc., Alex. Brown & Sons Incorporated, Hambrecht & Quist LLC, and J.C. Bradford
& Co., the foregoing representations or agreements (i) made by it in its
capacity as a U.S. Underwriter shall apply only to shares of Common Stock
purchased by it in its capacity as a U.S. Underwriter, (ii) made by it in its
capacity as an International Underwriter shall apply only to shares of Common
Stock purchased by it in its capacity as an International Underwriter, and (iii)
shall not restrict its ability to distribute any prospectus relating to the
shares of Common Stock to any person. The foregoing limitations do not apply to
stabilization transactions or to certain transactions specified in the Agreement
Between U.S. and International Underwriters. As used herein, "United States or
Canadian Person" means any national or resident of the United States or Canada,
or any corporation, pension, profit-sharing or other trust or other entity
organized under the laws of the United States or Canada or of any political
subdivision thereof (other than a branch located outside the United States and
Canada of any United States or Canadian Person) and includes any United States
or Canadian branch of a person who is otherwise not a United States or Canadian
Person. All shares of Common Stock to be purchased by the U.S. Underwriters and
the International Underwriters are referred to herein as the "U.S. Shares" and
the "International Shares," respectively.
Pursuant to the Agreement Between U.S. and International Underwriters,
sales may be made between the U.S. Underwriters and International Underwriters
of any number of shares of Common Stock to be purchased pursuant to the
Underwriting Agreement as may be mutually agreed. The per share price of any
shares so sold shall be the Price to Public set forth on the cover page hereof,
in United States dollars, less an amount not greater than the per share amount
of the concession to dealers set forth below.
Pursuant to the Agreement Between U.S. and International Underwriters, each
U.S. Underwriter has represented that it has not offered or sold, and has agreed
not to offer or sell, any shares of Common Stock, directly or indirectly, in
Canada in contravention of the securities laws of Canada or any province or
territory thereof and has represented that any offer of shares of Common Stock
in Canada will be made only pursuant to an exemption from the requirement to
file a prospectus in the province or territory of Canada in which such offer is
made. Each U.S. Underwriter has further agreed to send to any dealer who
purchases from it any shares of Common Stock a notice stating in substance that,
by purchasing such shares of Common Stock, such dealer represents and agrees
that it has not offered or sold, and will not offer or sell, directly or
indirectly, any of such shares of Common Stock in Canada or to, or for the
benefit of, any resident of Canada in contravention of the securities laws of
Canada or any province or territory thereof and that any offer of shares of
Common Stock in Canada will be made only pursuant to an exemption from the
requirement to file a prospectus in the province or territory of Canada in which
such offer is made, and that such dealer will deliver to any other dealer to
whom it sells any of such shares of Common Stock a notice to the foregoing
effect.
Pursuant to the Agreement Between U.S. and International Underwriters, each
International Underwriter has represented and agreed that (i) it has not offered
or sold and during the period of six months after the date hereof will not offer
or sell any shares of Common Stock to persons in the United Kingdom except to
persons whose ordinary activities involve them in acquiring, holding, managing,
or disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted and will not
result in an offer to the public in the United Kingdom within the meaning of
Public Offers of Securities Regulations 1995 (the "Regulations"); (ii) it has
complied and will comply with all applicable provisions of the Financial
Services Act 1986 and the Regulations with respect to anything done by it in
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relation to the shares of Common Stock offered hereby in, from or otherwise
involving the United Kingdom; and (iii) it has only issued or passed on and will
only issue or pass on to any person in the United Kingdom any document received
by it in connection with the offer of the shares of Common Stock, other than any
document which consists of, or is part of, listing particulars, supplementary
listing particulars, or any other document required or permitted to be published
by listing rules under Article IV of the Financial Services Act 1986, if that
person is of a kind described in Article 11(3) of the Financial Services Act
1986 (Investment Advertisements) (Exemptions) Order 1995, or is a person to whom
such document may otherwise lawfully be issued or passed on.
Pursuant to the Agreement Between U.S. and International Underwriters, each
International Underwriter has represented and agreed that it has not offered or
sold, and will not offer or sell, directly or indirectly, in Japan or to or for
the account of any resident thereof, any of the shares of Common Stock acquired
in connection with this offering, except for offers or sales to Japanese
International Underwriters or dealers and except pursuant to any exemption from
the registration requirements of the Securities and Exchange Law of Japan. Each
International Underwriter has further agreed to send to any dealer who purchases
from it any of the shares of Common Stock a notice stating in substance that
such dealer may not offer or sell any of such shares, directly or indirectly, in
Japan or to or for the account of any resident thereof except pursuant to any
exemption from the registration requirements of the Securities and Exchange Law
of Japan, and that such dealer must send to any other dealer to whom it sells
any of such shares of Common Stock a notice to the foregoing effect.
The Underwriters initially propose to offer part of the shares of Common
Stock directly to the public at the price to public set forth on the cover page
hereof and part to certain dealers at a price that represents a concession not
in excess of $ per share under the price to public. The Underwriters
may allow, and such dealers may reallow, a concession not in excess of
$ per share to other Underwriters or to certain dealers. After the
initial offering of the shares of Common Stock, the offering price and other
selling terms may from time to time be varied by the Representatives.
Pursuant to the Underwriting Agreement, the Company has granted to the U.S.
Underwriters an option, exercisable for 30 days from the date hereof, to
purchase up to 3,000,000 additional shares of Common Stock at the price to
public set forth on the cover page of this Prospectus, less underwriting
discounts and commissions. The U.S. Underwriters may exercise such option solely
for the purpose of covering over-allotments, if any, incurred in the sale of the
shares of Common Stock offered hereby. To the extent that such option is
exercised, each U.S. Underwriter will become obligated, subject to certain
conditions, to purchase approximately the same percentage of such additional
shares as the number of shares to be purchased and offered by such U.S.
Underwriter in the above table bears to the total number of initial shares to be
purchased by the U.S. Underwriters.
The Common Stock has been approved for listing, subject to official notice
of issuance, on the New York Stock Exchange under the symbol "IM." The
Underwriters intend to sell shares of the Common Stock to a minimum of 2,000
beneficial owners in lots of 100 or more so as to meet the distribution
requirements of such listing.
At the Company's request, the Underwriters have reserved for sale, at the
price to public set forth on the cover page hereof, up to 2,250,000 shares
offered hereby for directors, officers, employees, business associates, and
related persons of the Company and its subsidiaries. The number of shares of
Common Stock available for sale to the general public will be reduced to the
extent such persons purchase such reserved shares. Any reserved shares which are
not so purchased will be offered by the Underwriters to the general public on
the same basis as the other shares offered hereby. See "Employee and Priority
Offers."
The Company and its directors and executive officers, and certain
stockholders of the Company, have agreed that they will not (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right, or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock, or (ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Common Stock, whether any such
78
<PAGE> 83
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise, for a period of
180 days after the date of this Prospectus, without the prior written consent of
Morgan Stanley & Co. Incorporated, other than (i) the sale to the Underwriters
of any shares of Common Stock pursuant to the Underwriting Agreement, (ii) the
grant of options or issuance of stock upon the exercise of outstanding stock
options pursuant to the Company's stock option plans or (iii) an exception for
the Thrift Plan allowing for the sale of up to 800,000 shares. See "Shares
Eligible for Future Sale." Morgan Stanley & Co. Incorporated has informed the
Company that it has no present intention to provide a waiver from the 180-day
lock-up period for the Company and its directors, executive officers and
stockholders who have agreed to such lock-ups.
The Representatives have informed the Company that the Underwriters do not
intend sales to discretionary accounts to exceed five percent of the total
number of shares of Common Stock offered by them.
The Company and the Underwriters have agreed in the Underwriting Agreement
to indemnify each other against certain liabilities, including liabilities under
the Securities Act.
From time to time each of Morgan Stanley & Co. Incorporated, The
Robinson-Humphrey Company, Inc., and J.C. Bradford & Co. has provided, and
continues to provide, investment banking services to Ingram Industries and the
Company.
PRICING OF OFFERING
Prior to this offering, there has been no public market for the shares of
Common Stock of the Company. Consequently, the initial public offering price
will be determined by negotiations between the Company and the Representatives.
Among the factors considered in determining the initial public offering price
will be the Company's record of operations, the Company's current financial
condition and future prospects, the experience of its management, the economics
of the industry in general, the general condition of the equity securities
market, and the market prices of similar securities of companies considered
comparable to the Company. There can be no assurance that a regular trading
market for the shares of Common Stock will develop after this offering or, if
developed, that a public trading market can be sustained. There can be no
assurance that the prices at which the Common Stock will sell in the public
market after this offering will not be lower than the price at which it is
issued by the Underwriters in this offering.
LEGAL MATTERS
Certain legal matters with respect to the Common Stock offered hereby will
be passed upon for the Company by Davis Polk & Wardwell, New York, New York and
for the Underwriters by Wilson Sonsini Goodrich & Rosati, Palo Alto, California.
EXPERTS
The consolidated financial statements as of December 31, 1994 and December
30, 1995 and for each of the three fiscal years in the period ended December 30,
1995 included in this Prospectus have been so included in reliance on the report
of Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.
79
<PAGE> 84
ADDITIONAL INFORMATION
Prior to this offering, the Company has not been subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (together with any amendments
thereto, the "Registration Statement") under the Securities Act of 1933, as
amended, with respect to the shares of Common Stock being offered hereby. This
Prospectus, which is part of the Registration Statement, does not contain all of
the information set forth in the Registration Statement and the exhibits and
schedules thereto, certain items of which are omitted as permitted by the Rules
and Regulations of the Commission. Statements contained in this Prospectus as to
the contents of any contract or other document referred to herein are not
necessarily complete, and in each instance in which a copy of such contract or
other document has been filed as an exhibit to the Registration Statement,
reference is made to such copy and each such statement is qualified in all
respects by such reference.
As a result of this offering, the Company will be subject to the
informational requirements of the Exchange Act, and, in accordance therewith,
will file reports and other information with the Commission. A copy of the
Registration Statement, the exhibits and schedules forming a part thereof and
the reports and other information filed by the Company in accordance with the
Exchange Act may be inspected without charge at the offices of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 and at certain regional offices
of the Commission located at Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center, 13th
Floor, New York, New York 10048. Copies of such material may also be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of the fees prescribed by the Commission.
Such material may also be accessed electronically by means of the Commission's
home page on the Internet at http://www.sec.gov.
80
<PAGE> 85
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants..................................................... F-2
Consolidated Balance Sheet as of December 31, 1994, December 30, 1995 and September
28, 1996 (unaudited)................................................................ F-3
Consolidated Statement of Income for the years ended January 1, 1994, December 31,
1994 and December 30, 1995 and the thirty-nine weeks ended September 30, 1995 and
September 28,
1996 (unaudited).................................................................... F-4
Consolidated Statement of Stockholder's Equity for the years ended January 1, 1994,
December 31, 1994 and December 30, 1995 and the thirty-nine weeks ended September
28, 1996 (unaudited)................................................................ F-5
Consolidated Statement of Cash Flows for the years ended January 1, 1994, December 31,
1994 and December 30, 1995 and the thirty-nine weeks ended September 30, 1995 and
September 28, 1996 (unaudited)...................................................... F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>
F-1
<PAGE> 86
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Stockholder of Ingram Micro Inc.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of stockholder's equity and of cash flows
present fairly, in all material respects, the financial position of Ingram Micro
Inc. (a wholly-owned subsidiary of Ingram Industries Inc.) and its subsidiaries
at December 31, 1994 and December 30, 1995, and the results of their operations
and their cash flows for each of the three years in the period ended December
30, 1995, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
Nashville, Tennessee
February 29, 1996, except
Note 12 as to which the date is September 9, 1996
F-2
<PAGE> 87
INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL PERIOD END
------------------------- SEPTEMBER 28,
1994 1995 1996
---------- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash............................................. $ 58,369 $ 56,916 $ 43,196
Trade accounts receivable (less allowances of
$25,668 in 1994, $30,791 in 1995 and $38,069 in
1996).......................................... 745,910 1,071,275 1,127,937
Inventories...................................... 995,880 1,582,922 1,382,122
Other current assets............................. 68,717 88,503 115,243
---------- ---------- ----------
Total current assets........................ 1,868,876 2,799,616 2,668,498
Property and equipment, net......................... 58,285 89,126 127,984
Goodwill, net....................................... 33,481 29,871 27,785
Other............................................... 13,647 22,285 19,445
---------- ---------- ----------
Total assets................................ $1,974,289 $2,940,898 $ 2,843,712
========== ========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable................................. $1,100,598 $1,652,073 $ 1,670,358
Accrued expenses................................. 94,505 121,572 153,598
Current maturities of long-term debt............. 10,724 6,332 16,458
---------- ---------- ----------
Total current liabilities................... 1,205,827 1,779,977 1,840,414
Long-term debt................................... 92,204 170,424 128,855
Due to Ingram Industries......................... 449,355 673,792 479,703
Other............................................ 3,434 5,697 8,572
---------- ---------- ----------
Total liabilities........................... 1,750,820 2,629,890 2,457,544
Minority interest................................... 2,125 213 2,956
Commitments and contingencies (Note 8)
Redeemable Class B Common Stock..................... -- -- 17,223
Stockholder's equity:
Preferred Stock, $0.01 par value, 1,000,000
shares authorized; no shares issued and
outstanding.................................... -- -- --
Class A Common Stock, $0.01 par value,
265,000,000 shares authorized; no shares issued
and outstanding................................ -- -- --
Class B Common Stock, $0.01 par value,
135,000,000 shares authorized; 109,813,762
shares issued and outstanding (including
2,460,400 redeemable shares)................... 1,073 1,073 1,074
Additional paid in capital....................... 22,427 22,427 23,140
Retained earnings................................ 197,815 282,122 339,689
Cumulative translation adjustment................ 29 5,173 2,680
Unearned compensation............................ -- -- (594)
---------- ---------- ----------
Total stockholder's equity.................. 221,344 310,795 365,989
---------- ---------- ----------
Total liabilities and stockholder's
equity.................................... $1,974,289 $2,940,898 $ 2,843,712
========== ========== ==========
</TABLE>
See accompanying notes to these consolidated financial statements.
F-3
<PAGE> 88
INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)
CONSOLIDATED STATEMENT OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THIRTY-NINE WEEKS ENDED
FISCAL YEAR ---------------------------------
---------------------------------------- SEPTEMBER 30, SEPTEMBER 28,
1993 1994 1995 1995 1996
---------- ---------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Net sales................. $4,044,169 $5,830,199 $8,616,867 $6,070,722 $8,474,710
Cost of sales............. 3,714,527 5,391,224 8,011,181 5,648,210 7,900,223
---------- ---------- ---------- -------------- --------------
Gross profit.............. 329,642 438,975 605,686 422,512 574,487
Expenses:
Selling, general and
administrative....... 225,047 296,330 415,344 296,079 386,492
Charges allocated from
Ingram Industries.... 1,567 2,355 3,461 2,561 3,259
Non-cash compensation
charge............... 8,859
---------- ---------- ---------- -------------- --------------
226,614 298,685 418,805 298,640 398,610
---------- ---------- ---------- -------------- --------------
Income from operations.... 103,028 140,290 186,881 123,872 175,877
Other (income) expense:
Interest income......... (407) (937) (3,479) (3,049) (1,188)
Interest expense........ 5,003 8,744 13,451 8,918 10,608
Interest expense charged
by Ingram
Industries........... 16,089 24,189 32,606 22,977 30,912
Net foreign currency
exchange loss........ 111 6,873 7,751 6,572 447
Other................... (623) 716 1,936 405 1,689
---------- ---------- ---------- -------------- --------------
20,173 39,585 52,265 35,823 42,468
---------- ---------- ---------- -------------- --------------
Income before income taxes
and minority interest... 82,855 100,705 134,616 88,049 133,409
Provision for income
taxes................... 31,660 39,604 53,143 34,755 55,459
---------- ---------- ---------- -------------- --------------
Income before minority
interest................ 51,195 61,101 81,473 53,294 77,950
Minority interest......... 840 (2,243) (2,834) (2,986) 383
---------- ---------- ---------- -------------- --------------
Net income................ $ 50,355 $ 63,344 $ 84,307 $ 56,280 $ 77,567
========= ========= ========= ========== ==========
Earnings per share........ $ 0.42 $ 0.53 $ 0.70 $ 0.47 $ 0.64
========= ========= ========= ========== ==========
</TABLE>
See accompanying notes to these consolidated financial statements.
F-4
<PAGE> 89
INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
CLASS A CLASS B
COMMON STOCK COMMON STOCK ADDITIONAL CUMULATIVE
------------------- -------------------- PAID IN RETAINED TRANSLATION UNEARNED
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS ADJUSTMENT COMPENSATION TOTAL
---------- ------ ----------- ------ ---------- -------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
JANUARY 2, 1993...... 107,251,362 $1,073 $ 22,427 $84,116 $ 1,802 $109,418
Translation
adjustment......... (4,314) (4,314)
Net income........... 50,355 50,355
---------- ------ ----------- ------ ------- -------- ------ -------- --------
JANUARY 1, 1994...... 107,251,362 1,073 22,427 134,471 (2,512) 155,459
Translation
adjustment......... 2,541 2,541
Net income........... 63,344 63,344
---------- ------ ----------- ------ ------- -------- ------ -------- --------
DECEMBER 31, 1994.... 107,251,362 1,073 22,427 197,815 29 221,344
Translation
adjustment......... 5,144 5,144
Net income........... 84,307 84,307
---------- ------ ----------- ------ ------- -------- ------ -------- --------
DECEMBER 30, 1995.... 107,251,362 1,073 22,427 282,122 5,173 310,795
Distribution to
Ingram Industries
(unaudited)........ (20,000 ) (20,000)
Grant of restricted
Class B Common
Stock
(unaudited)........ 102,000 1 713 (714)
Amortization of
unearned
compensation
(unaudited)........ 120 120
Translation
adjustment
(unaudited)........ (2,493) (2,493)
Net income
(unaudited)........ 77,567 77,567
---------- ------ ----------- ------ ------- -------- ------ -------- --------
SEPTEMBER 28, 1996
(UNAUDITED)........ 107,353,362 $1,074 $ 23,140 $339,689 $ 2,680 $ (594) $365,989
========== ====== =========== ====== ======= ======== ====== ======== ========
</TABLE>
See accompanying notes to these consolidated financial statements.
F-5
<PAGE> 90
INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THIRTY-NINE WEEKS ENDED
FISCAL YEAR -------------------------------
------------------------------ SEPTEMBER 30, SEPTEMBER 28,
1993 1994 1995 1995 1996
-------- -------- -------- -------------- --------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH PROVIDED (USED) BY OPERATING
ACTIVITIES:
Net income........................... $ 50,355 $ 63,344 $ 84,307 $ 56,280 $ 77,567
Adjustments to reconcile net income
to cash provided by operating
activities:
Depreciation and amortization..... 12,918 18,675 25,394 17,829 25,253
Deferred income taxes............. (5,719) (4,668) (8,632) (8,475) (3,144)
Minority interest................. 840 (2,243) (2,834) (2,986) 383
Non-cash compensation charge...... 8,859
Changes in operating assets and
liabilities, net of effects of
acquisitions:
Trade accounts receivable......... (161,097) (232,268) (320,177) (151,854) (63,799)
Inventories....................... (143,738) (345,511) (580,116) (481,072) 194,288
Other current assets.............. (2,881) (12,846) (15,877) (20,929) (16,280)
Accounts payable.................. 184,787 411,012 543,822 612,038 25,890
Accrued expenses.................. 22,830 17,452 22,828 11,651 24,235
-------- -------- -------- -------------- --------------
Cash provided (used) by operating
activities...................... (41,705) (87,053) (251,285) 32,482 273,252
CASH PROVIDED (USED) BY INVESTING
ACTIVITIES:
Purchase of property and equipment... (21,311) (31,286) (52,985) (37,219) (62,503)
Acquisitions, net of cash acquired... (21,447) (15,088)
Other................................ 2,062 3,765 4,188 1,124 (2,034)
-------- -------- -------- -------------- --------------
Cash used by investing
activities...................... (40,696) (42,609) (48,797) (36,095) (64,537)
CASH PROVIDED (USED) BY FINANCING
ACTIVITIES:
Proceeds from sale of Class B Common
Stock............................. 17,223
Increase (decrease) in borrowings
from Ingram Industries............ 83,635 103,580 224,437 (36,196) (194,090)
Proceeds (repayment) of debt......... 1,410 (4,930) (838) 97 2,481
Net borrowings under revolving credit
facility.......................... 16,388 44,636 74,666 19,039 (29,612)
Distribution to Ingram Industries.... (20,000)
Minority interest investment......... 2,400
-------- -------- -------- -------------- --------------
Cash provided (used) by financing
activities...................... 101,433 143,286 298,265 (17,060) (221,598)
Effect of exchange rate changes on
cash................................. 84 354 364 399 (837)
-------- -------- -------- -------------- --------------
Increase (decrease) in cash............ 19,116 13,978 (1,453) (20,274) (13,720)
Cash, beginning of year................ 25,275 44,391 58,369 58,369 56,916
-------- -------- -------- -------------- --------------
Cash, end of period or year............ $ 44,391 $ 58,369 $ 56,916 $ 38,095 $ 43,196
======== ======== ======== ========== ==========
Supplementary disclosure of cash flow
information:
CASH PAYMENTS DURING THE PERIOD:
Interest............................. $ 20,738 $ 32,528 $ 45,164 $ 31,066 $ 41,814
Income taxes......................... 34,906 47,152 54,506 38,843 60,090
Cash payments include payments made to Ingram Industries for interest and U.S. income taxes
</TABLE>
See accompanying notes to these consolidated financial statements.
F-6
<PAGE> 91
INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 1 -- ORGANIZATION AND BASIS OF PRESENTATION
Ingram Micro Inc. (the "Company" or "Ingram Micro"), formerly Ingram Micro
Holdings Inc. (refer to Note 12), is primarily engaged in wholesale distribution
and marketing of microcomputer hardware and software products. The Company
conducts the majority of its operations in North America and Europe. The Company
is a wholly-owned subsidiary of Ingram Industries Inc. ("Ingram Industries"). In
September 1995, Ingram Industries announced its intention to reorganize into
three separate companies in a tax-free reorganization. As part of the
reorganization (the "Reorganization"), Ingram Industries will split-off the
Company. The plan of reorganization is subject to, among other things, receipt
of a satisfactory tax ruling from the Internal Revenue Service. The plan
contemplates that certain of the Ingram Industries stockholders will exchange
(the "Exchange") all or some of their shares of Ingram Industries for the
outstanding shares of the Company held by Ingram Industries. The Exchange and
those elements of the Reorganization contemplated to occur prior to the closing
of the Company's initial public offering are referred to herein as the
"Split-Off."
The accompanying consolidated financial statements have been prepared as if
the Company had operated as an independent stand alone entity for all periods
presented except the Company generally has not had significant borrowings in
North America other than amounts due Ingram Industries. Refer to Notes 6 and 10
regarding related party transactions.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The Company's significant accounting policies which conform to generally
accepted accounting principles applied on a consistent basis between years, are
described below:
Basis of Consolidation
The consolidated financial statements include the accounts of the Company,
its wholly-owned and majority-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.
Fiscal Year
The fiscal year of the Company is a 52 or 53 week period ending on the
Saturday nearest to December 31. All references herein to "1993," "1994" and
"1995" represent the 52 week fiscal years ended January 1, 1994, December 31,
1994 and December 30, 1995, respectively.
Accounting Estimates
Preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements, disclosure of contingent liabilities at financial
statement date and reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Cash
Outstanding checks of $119,627 in 1994 and $72,868 in 1995 are included in
accounts payable.
F-7
<PAGE> 92
INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Revenue Recognition
Revenue is recognized at the time of product shipment. The Company, under
specified conditions, permits its customers to return or exchange products. The
provision for estimated sales returns is recorded concurrently with the
recognition of revenue.
Vendor Programs
Funds received from vendors for price protection, product rebates,
marketing or training programs are recorded net of direct costs as adjustments
to product costs, reduction of selling, general and administrative expenses or
revenue according to the nature of the program.
The Company does not provide warranty coverage of its product sales.
However, to maintain customer relations, the Company facilitates domestic vendor
warranty policies by accepting for exchange, with the Company's prior approval,
most defective products within 90 days of invoicing. Defective products received
by the Company are subsequently returned to the vendor for credit or
replacement.
The Company generated approximately 17% of its sales in fiscal 1993, 18% in
1994 and 23% in 1995 from products purchased from two vendors.
Inventories
Inventories are stated at the lower of average cost or market.
Property and Equipment
Property and equipment are recorded at cost and depreciated using the
straight-line method over the following estimated useful lives. Leasehold
improvements are amortized over the shorter of the lease term or the estimated
useful life:
<TABLE>
<S> <C>
Leasehold improvements....................................... 3-12 years
Distribution equipment....................................... 5-7 years
Computer equipment........................................... 2-5 years
</TABLE>
Maintenance, repairs and minor renewals are charged to expense as incurred.
Additions, major renewals and betterments to property and equipment are
capitalized. Realization of carrying value is assessed periodically.
Goodwill
Goodwill is amortized on a straight-line basis over periods ranging from
five to twenty years. Accumulated amortization was $9,846 at December 31, 1994
and $13,576 at December 30, 1995. The Company evaluates the recoverability of
goodwill and reviews the amortization periods on an annual basis. Recoverability
is measured on the basis of anticipated undiscounted cash flows from operations.
At December 31, 1994 and December 30, 1995, no impairment was indicated.
Income Taxes
The temporary differences between the financial reporting basis and the
income tax basis of the Company's assets and liabilities are provided in
accordance with Statement of Financial Accounting Standards No. 109.
F-8
<PAGE> 93
INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Foreign Currency Translation
Financial statements of foreign subsidiaries are translated into U.S.
dollars using the exchange rate at each balance sheet date for assets and
liabilities and a weighted average exchange rate for each period for results of
foreign operations. Translation adjustments are recorded as a separate component
of stockholder's equity when the local currency is the functional currency.
Translation adjustments are recorded in income when the U.S. dollar is the
functional currency. The U.S. dollar is the functional currency for the
Company's subsidiaries in Mexico and Singapore.
Financial Instruments
The carrying amounts of cash, accounts receivable, accounts payable and
other accrued expenses approximate fair value because of the short maturity of
these items.
The carrying amounts of intercompany payables and debt issued pursuant to
bank credit agreements approximate fair value because interest rates on these
instruments approximate current market interest rates.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of trade accounts receivable
and derivative financial instruments. Credit risk with respect to trade accounts
receivable is limited due to the large number of customers and their dispersion
across geographic areas. The Company sells its products primarily in the United
States, Europe, Canada and Mexico. The Company performs ongoing credit
evaluations of its customers' financial condition, utilizes flooring
arrangements with third party financing companies, obtains credit insurance in
certain locations and requires collateral in certain circumstances. The Company
maintains an allowance for potential credit losses.
Derivative Financial Instruments
The Company operates internationally with distribution facilities in
various locations around the world. The Company uses derivative financial
instruments to reduce its exposure to fluctuations in interest rates and foreign
exchange rates by creating offsetting positions through the use of derivative
financial instruments. The market risk related to the foreign exchange
agreements is offset by changes in the valuation of the underlying items being
hedged. The majority of the Company's derivative financial instruments have
terms of 90 days or less. The Company currently does not use derivative
financial instruments for trading or speculative purposes, nor is the Company a
party to leveraged derivatives.
Derivative financial instruments are accounted for on an accrual basis.
Income and expense are recorded in the same category as that arising from the
related asset or liability being hedged. Gains and losses resulting from
effective hedges of existing assets, liabilities or firm commitments are
deferred and recognized when the offsetting gain and losses are recognized on
the related hedged items. Written foreign currency options are used to mitigate
currency risk in conjunction with purchased options. Gains or losses on written
foreign currency options are adjusted to market value at the end of each
accounting period and have not been material to date.
The notional amount of forward exchange contracts and options is the amount
of foreign currency bought or sold at maturity. The notional amount of currency
interest rate swaps is the underlying principal and currency amounts used in
determining the interest payments exchanged over the life of the swap. Notional
amounts are indicative of the extent of the Company's involvement in the various
types and uses of derivative financial instruments and are not a measure of the
Company's exposure to credit or market risks through its
F-9
<PAGE> 94
INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
use of derivatives. The estimated fair value of derivative financial instruments
represents the amount required to enter into like off-setting contracts with
similar remaining maturities based on quoted market prices.
Credit exposure is limited to the amounts, if any, by which the
counterparties' obligations under the contracts exceed the obligations of the
Company to the counterparties. Potential credit losses are minimized through
careful evaluation of counterparty credit standing, selection of counterparties
from a limited group of high quality institutions and other contract provisions.
Derivative financial instruments comprise the following:
<TABLE>
<CAPTION>
1994 1995
----------------------- -----------------------
NOTIONAL ESTIMATED NOTIONAL ESTIMATED
AMOUNTS FAIR VALUE AMOUNTS FAIR VALUE
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Foreign exchange forward contracts....... $ 44,586 $ (384) $109,218 $ (1,971)
Purchased foreign currency options....... 55,979 699 75,928 485
Written foreign currency options ........ 77,298 (25) 121,183 (615)
Currency interest rate swaps............. 9,823 (543) 25,655 (1,056)
</TABLE>
Employee Benefits
The Company participates in Ingram Industries' defined contribution plan
covering substantially all U.S. employees. The plan permits eligible employees
to make contributions up to certain limits and receive employer matching at
stipulated percentages. The Company's contributions charged to expense were $716
in fiscal 1993, $764 in 1994 and $1,399 in 1995.
As a result of the Split-Off described in Note 1, the Company will
establish its own employee benefit plans.
Earnings Per Share
Historical earnings per share data reflects the Company's capital structure
as a result of the formation of the Delaware corporation in preparation for the
Split-Off described in Notes 1 and 12. Earnings per share is determined based on
the number of shares the Company is expected to have after the Split-Off
(107,251,362) in addition to all dilutive common stock and common stock
equivalent shares issued within 12 months of the public offering. Pursuant to
the Securities and Exchange Commission Staff Accounting Bulletins and Staff
policy, such shares are treated as if they were outstanding for all periods
presented using the treasury stock method (13,302,151). The number of common
shares used to compute the earnings per share amounts for each of the three
fiscal years in the period ended December 30, 1995 and the thirty-nine weeks
ended September 30, 1995 and September 28, 1996 was 120,553,513, 120,553,513,
and 120,890,711, respectively.
Supplementary Earnings Per Share
Supplementary per share data (unaudited) is presented to give effect to the
repayment of certain indebtedness assumed by the Company in satisfaction of
amounts due to Ingram Industries. Net income is adjusted by $13,519 and $9,394
for 1995 and the thirty-nine weeks ended September 28, 1996, respectively, to
reflect the reduction in interest expense (net of tax) related to the
indebtedness assumed by the Company.
The weighted average shares outstanding used to calculate supplementary pro
forma earnings per share are based on weighted average shares outstanding at
December 30, 1995 and September 28, 1996, respectively, as adjusted for
20,200,000 shares of Class A Common Stock being sold in the Company's initial
public offering to repay certain indebtedness of the Company.
F-10
<PAGE> 95
INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Unaudited supplementary pro forma earnings per share for the fiscal periods
ended December 30, 1995 and September 28, 1996 is $0.69 and $0.62, respectively.
Interim Financial Information
The accompanying interim financial statements have been prepared without
audit, and certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted, although the Company believes that
the disclosures herein are adequate to make information presented not
misleading. These statements should be read in conjunction with the Company's
financial statements for the year ended December 30, 1995. The results of
operations for the thirty-nine week period is not necessarily indicative of
results for the full year.
In the opinion of management, the accompanying interim financial statements
contain all adjustments of a normal and recurring nature necessary for a fair
presentation of the Company's financial position as of September 28, 1996, its
results of operations for the thirty-nine weeks ended September 30, 1995 and
September 28, 1996, and its cash flows for the thirty-nine weeks ended September
30, 1995 and September 28, 1996.
NOTE 3 -- ACQUISITIONS
The Company acquired 70% of the stock of Distribuidora de Computo, S.A. de
C.V. ("Dicom"), in January 1993, for $9,327 cash and amounts payable to the
sellers of $2,475. Dicom is located in Mexico and is engaged in wholesale
distribution. The assets acquired were $32,383 and liabilities assumed were
$21,468.
The Company also acquired four separate wholesale distributors in Germany,
the United Kingdom, Belgium and the Netherlands in 1993. The combined
consideration for the assets or common stock purchased was $12,120 cash and
$2,364 of notes payable to sellers. The acquired companies had assets of $10,810
and liabilities of $80.
In April and August 1994, the Company acquired two separate wholesale
distributors (Keylan S.A. and Datateam Sverige AB) with operations in Spain,
Sweden, Denmark and Norway. The combined consideration paid was $15,088 cash and
$5,279 of notes payable to the sellers. The acquired companies had assets of
$48,748 and liabilities of $35,034.
The acquisitions described above have been accounted for using the purchase
method of accounting. The purchase price has been allocated to the assets
purchased and liabilities assumed based on fair values at the date of
acquisition. The excess of the purchase price over fair value of net assets
acquired in 1993 was $7,916 and in 1994 was $6,653 and was recorded as goodwill.
The operating results of these acquired businesses have been included in
the consolidated statement of income from the date of acquisition. Pro forma
results of operations have not been presented because the effects of these
acquisitions were not significant.
NOTE 4 -- ACCOUNTS RECEIVABLE
Effective February 1993, the Company entered into an arrangement with
Ingram Industries whereby the Company sells all of its domestic trade accounts
receivable to Ingram Industries on an ongoing basis ($665,325 at December 30,
1995). Ingram Industries transfers certain trade accounts receivable from the
Company and other Ingram Industries affiliates to a trust which sells
certificates representing undivided interests in the total pool of trade
receivables without recourse. Ingram Industries' arrangement with the trust
extends to December 31, 1997 and renews biannually under an evergreen provision
up to a maximum term of
F-11
<PAGE> 96
INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
twenty years. At December 31, 1994 and December 30, 1995, the accounts
receivable and due to Ingram Industries amounts in the Company's consolidated
balance sheet have not been reduced to reflect the sale of such receivables. As
a result of the Split-Off described in Note 1, it is anticipated that Ingram
Industries' accounts receivable securitization agreement will be assumed by the
Company.
NOTE 5 -- PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
FISCAL PERIOD END
--------------------- SEPTEMBER 28,
1994 1995 1996
-------- -------- --------------
(UNAUDITED)
<S> <C> <C> <C>
Land............................................. $ 2,274 $ 2,359 $ 11,431
Leasehold improvements........................... 17,448 26,381 47,588
Distribution equipment........................... 39,814 62,462 76,173
Computer equipment............................... 40,579 59,161 76,922
------- ------- -------
100,115 150,363 212,114
Accumulated depreciation......................... (41,830) (61,237) (84,130)
------- ------- -------
$ 58,285 $ 89,126 $127,984
======= ======= =======
</TABLE>
Depreciation expense was $10,927 in fiscal 1993, $15,756 in 1994 and
$21,785 in 1995.
NOTE 6 -- LONG-TERM DEBT AND DUE TO INGRAM INDUSTRIES
Ingram Industries manages most treasury activities, including the
arrangement of short-term and long-term financing on a centralized, consolidated
basis. Using a centralized cash management system, the Company's domestic cash
receipts are remitted to Ingram Industries and domestic cash disbursements are
funded by Ingram Industries on a daily basis. The Company's historical financial
statements reflect funding provided by Ingram Industries to the Company, and net
cash used by the Company, as amounts due to Ingram Industries. At December 31,
1994 and December 30, 1995, amounts due to Ingram Industries are classified as
long-term due to the terms of the underlying debt at Ingram Industries.
Ingram Industries charges the Company interest expense on the outstanding
intercompany balance based on Ingram Industries' domestic weighted average cost
of funds. The average rate was 6.93% in fiscal 1993, 6.99% in 1994 and 7.38% in
1995.
The Company and other Ingram Industries affiliates participate in Ingram
Industries' unsecured revolving credit agreement with a syndicate of banks.
Under this agreement, Ingram Industries and its affiliates may borrow in various
currencies up to $380,000 at various money market and bid rates. The weighted
average borrowing rate was 6.84% at December 31, 1994 and 7.00% at December 30,
1995. The agreement extends to December 31, 1999, and is renewable for an
additional two year period during the year prior to expiration. The agreement is
guaranteed by certain subsidiaries of the Company and other Ingram Industries
affiliates. At December 30, 1995, outstanding aggregate borrowings were
$229,716, of which $167,176 is specifically related to amounts drawn by the
Company's subsidiaries.
The Company's subsidiaries outside the United States have lines of credit
and short-term overdraft facilities aggregating $93,527 various banks worldwide.
Most of these arrangements are reviewed periodically for renewal. At December
30, 1995, the Company had $5,782 outstanding under these facilities.
F-12
<PAGE> 97
INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
In addition to the guarantee described above, the Company has guaranteed
certain other borrowings of Ingram Industries totaling $328,572. Included within
this amount are (i) amounts outstanding on an unsecured temporary revolving
credit facility that provides for borrowings up to $200,000 at specified
variable rates and expires on the earlier of December 31, 1996 or five days
after the successful completion of an initial public offering and (ii) $192,900
of fixed maturity, privately placed debt with maturities from November 1, 1996
to November 1, 2002. As a result of the Split-Off described in Notes 1 and 12,
it is anticipated that certain of the debt facilities guaranteed will be assumed
by the Company in satisfaction of the amounts payable to Ingram Industries.
Under the most restrictive provisions of the loan agreements, Ingram
Industries is required to maintain certain levels of stockholders' equity, a
certain current ratio and a certain debt to capital ratio and is subject to
certain dividend restrictions. During 1994 and 1995, Ingram Industries was in
compliance with the provisions of these agreements.
Long-term debt consists of the following:
<TABLE>
<CAPTION>
FISCAL PERIOD END
--------------------- SEPTEMBER 28,
1994 1995 1996
-------- -------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Revolving credit facility........................ $ 61,913 $141,521 $ 100,195
Overdraft facilities............................. 10,724 5,782 13,184
Other............................................ 30,291 29,453 31,934
-------- -------- --------
102,928 176,756 145,313
Less current maturities of long-term debt........ (10,724) (6,332) (16,458)
-------- -------- --------
$ 92,204 $170,424 $ 128,855
======== ======== ========
</TABLE>
Annual maturities of long-term debt as of December 30, 1995 are as follows:
<TABLE>
<S> <C>
1996.............................................................. $ 6,332
1997.............................................................. 10,187
1998.............................................................. 388
1999.............................................................. 157,743
2000 and thereafter............................................... 2,106
--------
$176,756
========
</TABLE>
NOTE 7 -- INCOME TAXES
The components of income before taxes and minority interest consist of the
following:
<TABLE>
<CAPTION>
FISCAL YEAR
---------------------------------
1993 1994 1995
------- -------- --------
<S> <C> <C> <C>
United States....................................... $85,044 $ 99,701 $124,277
Foreign............................................. (2,189) 1,004 10,339
------- -------- --------
Total..................................... $82,855 $100,705 $134,616
======= ======== ========
</TABLE>
F-13
<PAGE> 98
INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
FISCAL YEAR
-------------------------------
1993 1994 1995
------- ------- -------
<S> <C> <C> <C>
Current:
Federal............................................. $30,268 $35,989 $44,615
State............................................... 4,721 4,060 9,544
Foreign............................................. 2,390 4,223 7,616
------- ------- -------
37,379 44,272 61,775
Deferred:
Federal............................................. (1,929) (2,472) (4,082)
State............................................... (198) 136 (949)
Foreign............................................. (3,592) (2,332) (3,601)
------- ------- -------
(5,719) (4,668) (8,632)
------- ------- -------
Total income tax provision............................ $31,660 $39,604 $53,143
======= ======= =======
</TABLE>
Deferred income taxes reflect the tax effect of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
FISCAL PERIOD END
-------------------------------
1993 1994 1995
------- ------- -------
<S> <C> <C> <C>
Deferred tax assets:
Tax in excess of book basis of foreign operations... $ 9,837 $13,816 $19,511
Accruals not currently deductible................... 7,840 9,275 12,734
Inventories......................................... 2,724 3,538 5,876
Other............................................... 293 263 492
------- ------- -------
Total....................................... $20,694 $26,892 $38,613
======= ======= =======
Deferred tax liabilities:
Depreciation........................................ $ 1,324 $ 958 $ 1,564
======= ======= =======
</TABLE>
Current deferred tax assets of $15,130 and $19,307 are included in other
current assets at December 31, 1994 and December 30, 1995, respectively.
Non-current deferred tax assets of $11,762 and $19,306 are included in other
assets at December 31, 1994 and December 30, 1995, respectively.
Reconciliation of the statutory U.S. federal income tax rate to the
Company's effective rate is as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
----------------------
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
U.S. statutory rate............................................ 35.0% 35.0% 35.0%
State income taxes, net of federal income tax benefit.......... 3.3 2.8 3.9
Other.......................................................... (.1) 1.5 .6
---- ---- ----
- - -
Effective tax rate............................................. 38.2% 39.3% 39.5%
===== ===== =====
</TABLE>
F-14
<PAGE> 99
INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
The Company is included in the consolidated federal income tax return filed
by Ingram Industries. Taxes related to the Company are determined on a separate
entity basis and taxes payable are remitted to Ingram Industries every two
months. Taxes payable to Ingram Industries of $4,089 at December 31, 1994 and
$14,303 at December 30, 1995 are included in accrued expenses in the
consolidated balance sheet.
At December 30, 1995, the Company had foreign net operating tax loss
carryforwards of $49,264 of which approximately one third have no expiration
date.
The Company does not provide for U.S. federal income taxes on undistributed
earnings of foreign subsidiaries as such earnings are intended to be permanently
reinvested in those operations.
NOTE 8 -- COMMITMENTS AND CONTINGENCIES
There are various claims, lawsuits and pending actions against the Company
incident to the Company's operations. It is the opinion of management that the
ultimate resolution of these matters will not have a material effect on the
Company's financial position or results of operations.
The Company has arrangements with certain finance companies which provide
accounts receivable and inventory financing facilities for its customers. The
Company assesses the financial stability of the finance companies and payment
terms are within 3 to 30 days of product shipment. In conjunction with certain
of these arrangements, the Company has inventory repurchase agreements with the
finance companies that would require it to repurchase certain inventory which
might be repossessed from the customers by the finance companies. Such
repurchases have been insignificant to date.
The Company leases the majority of its facilities and certain equipment
under noncancelable operating leases. Renewal and purchase options at fair
values exist for a substantial portion of the leases. Rental expense for the
years ended January 1, 1994, December 31, 1994 and December 30, 1995 was
$11,939, $16,574 and $28,367, respectively. Future minimum rental commitments on
operating leases that have remaining noncancelable lease terms in excess of one
year as of December 30, 1995 are as follows:
<TABLE>
<S> <C>
1996............................................................... $21,507
1997............................................................... 18,614
1998............................................................... 16,693
1999............................................................... 14,912
2000............................................................... 9,912
Later years........................................................ 54,104
</TABLE>
F-15
<PAGE> 100
INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 9 -- SEGMENT INFORMATION
The Company operates predominantly in a single industry segment as a
wholesale distributor of microcomputer hardware and software. Geographic areas
in which the Company operates include the United States (United States and the
majority of the Company's exports), Europe (Belgium, Denmark, France, Germany,
Italy, the Netherlands, Norway, Spain, Sweden and the United Kingdom) and Other
(Canada, Mexico and Singapore). Transfers between geographic areas primarily
represent intercompany sales and are accounted for based on established sales
prices between the related companies. Net sales, income (loss) from operations
and identifiable assets by geographic area are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
------------------------------------
1993 1994 1995
---------- ---------- ----------
<S> <C> <C> <C>
NET SALES:
United States:
Sales to unaffiliated customers............... $3,118,316 $4,122,338 $5,969,749
Transfers between geographic areas............ 60,358 76,696 86,961
Europe........................................... 485,126 1,078,250 1,849,129
Other............................................ 440,727 629,611 797,989
Eliminations..................................... (60,358) (76,696) (86,961)
---------- ---------- ----------
Total.................................... $4,044,169 $5,830,199 $8,616,867
========== ========== ==========
INCOME (LOSS) FROM OPERATIONS:
United States.................................... $ 98,669 $ 123,796 $ 156,749
Europe........................................... (3,246) 8,079 19,576
Other............................................ 7,605 8,415 10,556
---------- ---------- ----------
Total.................................... $ 103,028 $ 140,290 $ 186,881
========== ========== ==========
IDENTIFIABLE ASSETS:
United States.................................... $ 945,699 $1,381,798 $1,996,642
Europe........................................... 190,892 393,346 669,309
Other............................................ 159,772 199,145 274,947
---------- ---------- ----------
Total.................................... $1,296,363 $1,974,289 $2,940,898
========== ========== ==========
</TABLE>
No single customer accounts for 10% or more of the Company's net sales.
NOTE 10 -- TRANSACTIONS WITH RELATED PARTIES
Ingram Industries provides certain corporate, general and administrative
services to the Company in addition to treasury activities described in Note 6
(including, but not limited to, legal, tax, employee benefits and electronic
data processing services). Charges for these services are based upon utilization
and at amounts which management believes are less than the amounts which the
Company would incur as a stand-alone entity. Such amounts are reflected as
charges allocated from Ingram Industries on the consolidated statement of
income.
Ingram Industries also provides guarantees to certain of the Company's
vendors and for certain of the Company's leases; no charges from Ingram
Industries have been reflected in the Company's financial statements for such
guarantees.
F-16
<PAGE> 101
INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
The Company leases warehouse and office space from certain stockholders of
Ingram Industries. Total rental payments were $729 in fiscal 1993, $784 in 1994
and $1,645 in 1995.
Other transactions with Ingram Industries affiliates includes sales of
$1,664 in fiscal 1993, $3,056 in 1994 and $5,281 in 1995.
NOTE 11 -- STOCK OPTIONS AND INCENTIVE PLANS
Certain of the Company's employees participate in Ingram Industries'
qualified and non-qualified stock option and SAR plans. Ingram Industries' plans
provide for the grant of options and SARs at fair value. In conjunction with the
Split-Off, Ingram Industries options held by the Company's employees and certain
other Ingram Industries options and SARs will be converted to Ingram Micro
options ("Rollover Stock Options") to purchase Class A Common Stock. Upon
conversion, approximately 11,000,000 Rollover Stock Options will be outstanding.
The Rollover Stock Options have exercise prices ranging from $0.66 to $3.32 per
share, the majority will be fully vested by the year 2000 and no such options
expire later than 10 years from the date of grant. The Company recorded a
non-cash compensation charge of approximately $8,859 or $5,404 net of tax, in
the first three quarters of 1996 related to the vested portion of certain
Rollover Stock Options. This charge was based on the difference between the
estimated fair value of such options in the first quarter of 1996 and the
exercise price of such options.
The Company will adopt Statement of Financial Accounting Standards No. 123,
"Accounting for Stock Based Compensation" ("FAS 123") in 1996. As permitted by
FAS 123, the Company will continue to measure compensation cost in accordance
with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees." Therefore, the adoption of FAS 123 will have no impact on the
Company's financial condition or results of operations.
The Company has two Incentive Stock Unit ("ISU") plans available to grant
up to 1,575,000 ISUs to certain key employees. Subject to continued employment,
these stock appreciation awards vest over five years and actual cash payout is
based on the increase in book value from date of award grant. Outstanding ISUs
at January 1, 1994, December 31, 1994 and December 30, 1995 were 748,200,
221,000 and 25,100, respectively. The amounts charged to expense related to
these incentive stock unit plans totaled $3,354 in fiscal 1993, $2,163 in 1994
and $695 in 1995. There were no grants made under the ISU plans in 1995.
The Company will establish its separate stock option and incentive plans in
conjunction with the Split-Off. Refer to Note 12.
NOTE 12 -- SUBSEQUENT EVENTS
Formation of Ingram Micro Inc.
On April 29, 1996, a Delaware corporation, Ingram Micro Inc., was formed to
hold all of the outstanding stock of Ingram Micro Holdings Inc. ("Holdings"). It
is the Company's plan to merge with and into such Delaware corporation prior to
the effective date of a registration statement on Form S-1 filed with the
Securities and Exchange Commission. The proposed merger will not impact the
Company's financial statements, as the Company's historical financial statements
reflect the capital structure described herein.
Ingram Micro Inc., a Delaware corporation, has two classes of common stock,
consisting of 265,000,000 shares of $0.01 par value Class A Common Stock and
135,000,000 shares of $0.01 par value Class B Common Stock, and 1,000,000 shares
of $0.01 par value Preferred Stock. Class A stockholders are entitled to one
vote on each matter to be voted on by the stockholders whereas the Class B
stockholders are entitled to ten votes on each matter to be voted on by the
stockholders. The two classes of stock have similar
F-17
<PAGE> 102
INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
rights in all other respects. Each share of Class B Common Stock may at any time
be converted to a share of Class A Common Stock; however, conversion will occur
automatically on the earliest to occur of (i) the fifth anniversary of the
consummation of the Split-Off pursuant to the Exchange Agreement; (ii) the sale
of such share of Class B Common Stock to any person not provided for under the
provisions of the Board Representation Agreement; or (iii) the date on which the
number of shares of Class B Common Stock then outstanding represents less than
25% of the aggregate number of shares of Class A Common Stock and Class B Common
Stock then outstanding. The capital structure resulting from the formation of
the Delaware corporation was finalized on September 9, 1996 and the Company has
107,251,362 shares of Class B Common Stock outstanding.
Key Employee Stock Purchase Plan
As of April 30, 1996, the Company adopted the Key Employee Stock Purchase
Plan (the "Plan") which provides for the issuance of up to 4,000,000 shares of
Class B Common Stock to certain employees. In June 1996, the Company offered
2,775,000 shares of its Class B Common Stock to certain employees pursuant to
the Plan, and subsequently sold 2,510,400 shares with proceeds of approximately
$17,573. The shares sold thereby are subject to vesting and certain restrictions
on transfer, may be redeemable prior to vesting and are subject to repurchase by
the Company upon termination of employment. The Company has repurchased 50,000
of such shares. In addition, the Company granted, pursuant to this Plan, 107,000
restricted shares of Class B Common Stock to certain officers and employees of
the Company. These shares are subject to vesting. Prior to vesting, these
restricted grant shares are subject to forfeiture to the Company without
consideration, upon termination of employment. 5,000 of such shares have been
forfeited to the Company.
1996 Equity Incentive Plan
As of April 30, 1996, the Company adopted the 1996 Equity Incentive Plan
and Ingram Industries approved the grant of options under this plan. In June
1996, the Company issued options at $7.00 per share to purchase an aggregate of
approximately 4,800,000 shares of Class B Common Stock under its Equity
Incentive Plan to all eligible employees of the Company. These options vest and
generally become exercisable over five years from the issue date and expire
eight years after the issue date.
Split-Off, Reorganization and Exchange
The Company plans to engage in a Split-Off, consisting of a Reorganization
and an Exchange, from Ingram Industries and Ingram Entertainment. Pursuant to
the Reorganization Agreement it is contemplated that the Company will retain all
of the assets and liabilities associated with the Company's business and will
indemnify Ingram Industries and Ingram Entertainment for all liabilities related
to the Company's business and operations or otherwise assigned to the Company.
In addition, the Reorganization Agreement provides for the sharing by the
Company of approximately 73% of certain contingent assets and liabilities not
allocated to one of the parties. The Company will assume a portion of Ingram
Industries' debt in return for the extinguishment of intercompany indebtedness.
The debt to be assumed by the Company includes an accounts receivable
securitization program which will be transferred to the Company subsequent to
the Split-Off. The Company will also enter into a $1 billion Credit Facility.
In connection with the Reorganization Agreement, the Company is expected to
enter into an employee benefits transfer and assumption agreement with Ingram
Industries and Ingram Entertainment which will provide for the allocation of
employee benefit assets and liabilities on a pro rata basis to each of the
parties of the Split-Off. It is also contemplated that the Company will enter
into a Tax Sharing Agreement. This Agreement will hold the Company liable for
its allocable share of the consolidated federal and state income
F-18
<PAGE> 103
INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
tax liability for the year that includes the Split-Off and approximately 73% of
any adjustment in excess of reserves already established by Ingram Industries
for past federal or state tax liabilities of the Company, Ingram Industries or
Ingram Entertainment. In addition, the Company will share in any refunds
received. The Company will also enter into Transitional Service Agreements
related to certain administration services including data processing.
In conjunction with the Reorganization, the Company will consummate an
exchange pursuant to which certain existing stockholders of Ingram Industries
may exchange all or a portion of their shares of Ingram Industries common stock
for shares of Class B Common Stock of the Company of equivalent value. If all
stockholders were to exchange all eligible shares, they would receive
107,251,362 shares of Class B Common Stock. Pursuant to a Transfer Restrictions
Agreement, the shares of Class B Common Stock received by employees of the
Company, Ingram Industries or Ingram Entertainment in the Exchange are expected
to be subject to repurchase by the Company upon termination of employment. The
repurchase feature lapses upon consummation of an initial public offering.
Although there can be no assurance, it is also contemplated that, on or after
June 20, 1997, certain remaining stockholders of Ingram Industries will exchange
their remaining shares of Ingram Industries common stock for shares of Ingram
Entertainment common stock.
F-19
<PAGE> 104
LOGO
<PAGE> 105
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
PROSPECTUS (Subject to Completion)
Issued October 25, 1996
20,000,000 Shares
LOGO
CLASS A COMMON STOCK
---------------------------
OF THE 20,000,000 SHARES OF CLASS A COMMON STOCK (THE "COMMON STOCK") OFFERED
HEREBY, 4,000,000 SHARES ARE BEING OFFERED INITIALLY OUTSIDE THE UNITED STATES
AND CANADA BY THE INTERNATIONAL UNDERWRITERS, AND 16,000,000 SHARES ARE BEING
OFFERED INITIALLY IN THE UNITED STATES AND CANADA BY THE U.S. UNDERWRITERS.
SEE "UNDERWRITERS." UP TO 2,250,000 OF THE SHARES OF COMMON STOCK OFFERED
HEREBY ARE BEING RESERVED FOR SALE TO CERTAIN INDIVIDUALS AND INGRAM
INDUSTRIES INC. SEE "EMPLOYEE AND PRIORITY OFFERS." ALL SUCH SHARES ARE
BEING OFFERED ON THE SAME TERMS AND CONDITIONS AS THE SHARES BEING
OFFERED TO THE PUBLIC GENERALLY, AND ANY PURCHASERS OF SUCH SHARES WHO
ARE AFFILIATES OF THE COMPANY WILL REPRESENT THAT ANY PURCHASES ARE
BEING MADE FOR INVESTMENT PURPOSES ONLY. ALL OF THE SHARES OF
COMMON STOCK OFFERED HEREBY ARE BEING ISSUED AND SOLD BY THE
COMPANY. PRIOR TO THIS OFFERING, THERE HAS BEEN NO PUBLIC MARKET
FOR THE COMMON STOCK OF THE COMPANY. IT IS CURRENTLY ESTIMATED
THAT THE INITIAL PUBLIC OFFERING PRICE WILL BE BETWEEN $14 AND
$16 PER SHARE. SEE "UNDERWRITERS" FOR A DISCUSSION OF THE FACTORS
TO BE CONSIDERED IN DETERMINING THE INITIAL PUBLIC OFFERING
PRICE. THE COMPANY HAS TWO CLASSES OF AUTHORIZED COMMON STOCK,
THE COMMON STOCK OFFERED HEREBY AND THE CLASS B COMMON STOCK
(THE "CLASS B COMMON STOCK," AND COLLECTIVELY WITH THE COMMON
STOCK, THE "COMMON EQUITY"). THE RIGHTS OF HOLDERS OF COMMON
STOCK AND CLASS B COMMON STOCK ARE IDENTICAL EXCEPT FOR
VOTING AND CONVERSION RIGHTS AND RESTRICTIONS ON
TRANSFERABILITY. HOLDERS OF THE COMMON STOCK ARE
ENTITLED TO ONE VOTE PER SHARE, AND HOLDERS OF THE
CLASS B COMMON STOCK ARE ENTITLED TO TEN VOTES PER
SHARE ON MOST MATTERS SUBJECT TO STOCKHOLDER VOTE.
UPON THE CLOSING OF THIS OFFERING, THE INGRAM FAMILY
STOCKHOLDERS (AS DEFINED HEREIN) WILL HAVE
APPROXIMATELY 80.7% OF THE COMBINED VOTING POWER
OF THE COMMON EQUITY (80.5% IF THE U.S.
UNDERWRITERS EXERCISE THEIR OVER-ALLOTMENT
OPTION IN FULL). THE COMMON STOCK HAS BEEN
APPROVED FOR LISTING, SUBJECT TO OFFICIAL
NOTICE OF ISSUANCE, ON THE NEW YORK STOCK
EXCHANGE UNDER THE SYMBOL "IM."
---------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF CERTAIN
RISKS ASSOCIATED WITH THIS OFFERING.
---------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------------
PRICE $ A SHARE
---------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
---------------------------------------------------------------
<S> <C> <C> <C>
Per Share.............................. $ $ $
Total(3)............................... $ $ $
</TABLE>
- ------------
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(2) Before deducting expenses payable by the Company estimated at $1,400,000.
(3) The Company has granted to the U.S. Underwriters an option, exercisable
within 30 days of the date hereof, to purchase up to an aggregate of
3,000,000 additional Shares at the price to public less underwriting
discounts and commissions, for the purpose of covering over-allotments,
if any. If the U.S. Underwriters exercise such option in full, the total
price to public, underwriting discounts and commissions, and proceeds to
Company will be $ , $ and $ , respectively. See
"Underwriters."
---------------------------
The Shares are offered, subject to prior sale, when, as and if accepted by
the Underwriters named herein and subject to approval of certain legal matters
by Wilson Sonsini Goodrich & Rosati, counsel for the Underwriters. It is
expected that delivery of the Shares will be made on or about ,
1996 at the office of Morgan Stanley & Co. Incorporated, New York, New York,
against payment therefor in immediately available funds.
---------------------------
MORGAN STANLEY & CO.
International
THE ROBINSON-HUMPHREY COMPANY, INC.
ALEX. BROWN & SONS
INTERNATIONAL
HAMBRECHT & QUIST
J.C. BRADFORD & CO.
, 1996
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
<PAGE> 106
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY
NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR
SHALL
THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
[ALTERNATE PAGE FOR COMPANY PROSPECTUS]
PROSPECTUS (Subject to Completion)
Issued October 25, 1996
200,000 Shares
LOGO
CLASS A COMMON STOCK
---------------------------
OFFERING TO THE COMPANY'S
CHIEF EXECUTIVE OFFICER AND
CHAIRMAN OF THE BOARD OF DIRECTORS
---------------------------
THE SHARES ARE BEING OFFERED DIRECTLY BY THE COMPANY. COMMON STOCK SOLD PURSUANT
TO THIS OFFERING WILL BE ISSUED BY THE COMPANY AND WILL NOT BE UNDERWRITTEN OR
SUBJECT TO THE ARRANGEMENTS DESCRIBED HEREIN UNDER "UNDERWRITING."
ACCORDINGLY, THE INFORMATION IN THE PUBLIC PROSPECTUS ON THE COVER PAGE
AND IN THE CAPTION "UNDERWRITING" IS NOT APPLICABLE. ALL PROCEEDS FROM
THIS OFFERING WILL BE PAYABLE TO THE COMPANY AND WILL BE USED FOR
GENERAL CORPORATE PURPOSES. THIS OFFERING IS CONDITIONED UPON THE
COMPLETION OF THE COMPANY'S INITIAL PUBLIC OFFERING AND IS
EXPECTED TO BE CONSUMMATED CONCURRENTLY WITH SUCH INITIAL
PUBLIC OFFERING.
---------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF CERTAIN
RISKS ASSOCIATED WITH THIS OFFERING.
---------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------------
PRICE $ A SHARE
---------------------------
, 1996
<PAGE> 107
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
An itemized statement of the estimated amount of the expenses, other than
underwriting discounts and commissions, incurred and to be incurred in
connection with the issuance and distribution of the securities registered
pursuant to this Registration Statement is as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee.............. $ 112,139
NYSE listing fee................................................. 151,100
NASD filing fee.................................................. 30,500
Printing and engraving expenses.................................. 250,000
Accounting fees and expenses..................................... 130,000
Legal fees and expenses.......................................... 600,000
Transfer Agent fees and expenses................................. 20,000
Blue Sky fees and expenses and legal fees........................ 70,000
Miscellaneous.................................................... 36,261
----------
Total.................................................. $1,400,000
==========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") provides,
in effect, that any person made a party to any action by reason of the fact that
he is or was a director, officer, employee or agent of the Company may and, in
certain cases, must be indemnified by the Company against, in the case of a non-
derivative action, judgments, fines, amounts paid in settlement and reasonable
expenses (including attorneys' fees) incurred by him as a result of such action,
and in the case of a derivative action, against expenses (including attorneys'
fees), if in either type of action he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company. This indemnification does not apply, in a derivative action, to matters
as to which it is adjudged that the director, officer, employee or agent is
liable to the Company, unless upon court order it is determined that, despite
such adjudication of liability, but in view of all the circumstances of the
case, he is fairly and reasonably entitled to indemnity for expenses, and, in a
non-derivative action, to any criminal proceeding in which such person had
reasonable cause to believe his conduct was unlawful.
Section 102 of the DGCL allows the Company to eliminate or limit the
personal liability of a director to the Company or to any of its stockholders
for monetary damage for a breach of fiduciary duty as a director, except in the
case where the director (i) breaches such person's duty of loyalty to the
Company or its stockholders, (ii) fails to act in good faith, engages in
intentional misconduct or knowingly violates a law, (iii) authorizes the payment
of a dividend or approves a stock purchase or redemption in violation of Section
174 of the DGCL or (iv) obtains an improper personal benefit. Article Tenth of
the Company's Certificate of Incorporation includes a provision which eliminates
directors' personal liability to the fullest extent permitted under the Delaware
General Corporation Law.
Article Tenth of the Company's Certificate of Incorporation provides that
the Company shall indemnify any person (and the heirs, executors or
administrators of such person) who was or is a party or is threatened to be made
a party to, or is involved in any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that such person is or was a director or officer of the
Company or is or was serving at the request of the Company as a director or
officer of another corporation, partnership, joint venture, trust or other
enterprise, to the fullest extent permitted by Delaware Law. Each such
indemnified party shall have the right to be paid by the Company for any
expenses incurred in
II-1
<PAGE> 108
connection with any such proceeding in advance of its final disposition to the
fullest extent authorized by Delaware Law. Article Tenth of the Company's
Certificate of Incorporation also provides that the Company may, by action of
its Board of Directors, provide indemnification to such of the employees and
agents of the Company to such extent and to such effect as the Board of
Directors shall determine to be appropriate and authorized by Delaware Law.
Reference is made to the underwriting agreement filed as an Exhibit hereto,
pursuant to which the Underwriters will agree to indemnify officers and
directors of the Company against certain liabilities under the Securities Act.
As permitted by Delaware Law and the Company's Certificate of
Incorporation, the Company maintains insurance covering its directors and
officers against certain liabilities incurred by them in their capacities as
such, including among other things, certain liabilities under the Securities Act
of 1933, as amended.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
In the second quarter of 1996, the Company offered 2,775,000 shares of its
Class B Common Stock to certain of its employees, of which 2,510,400 shares were
purchased for $17.6 million. The shares were issued without registration under
the Securities Act in reliance upon the exemptions from registration afforded by
Section 4(2) of the Securities Act, and Regulation D and Regulation S
promulgated under the Securities Act. All such shares were issued pursuant to
the Company's Key Employee Stock Purchase Plan and are subject to certain
restrictions.
Reference is made to "Management -- Rollover Plan; Incentive Stock Units"
and "The Split-Off and the Reorganization -- The Split-Off " regarding shares,
and options exercisable for shares, of the Company's Common Equity, to be issued
in connection with the Split-Off, the purchasers thereof and the consideration
therefor. Such issuances will occur without registration under the Securities
Act in reliance upon the exemptions from registration afforded by Section 4(2)
of the Securities Act and Regulation D promulgated under the Securities Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) LIST OF EXHIBITS.
<TABLE>
<C> <C> <S>
1.01 -- Form of Underwriting Agreement*
3.01 -- Form of Certificate of Incorporation of the Registrant+
3.02 -- Form of Bylaws of the Registrant+
3.03 -- Form of Amended and Restated Bylaws of the Registrant
4.01 -- Specimen Certificate for the Class A Common Stock, par value $0.01 per share,
of the Registrant
5.01 -- Opinion of Davis Polk & Wardwell
10.01 -- Ingram Micro Inc. Executive Incentive Bonus Plan+
10.02 -- Ingram Micro Inc. Management Incentive Bonus Plan+
10.03 -- Ingram Micro Inc. General Employee Incentive Bonus Plan+
10.04 -- Agreement dated as of December 21, 1994 between the Company and Jeffrey R.
Rodek+
10.05 -- Agreement dated as of April 25, 1988 between the Company and Sanat K. Dutta+
10.06 -- Agreement dated as of June 21, 1991 between the Company and
John Wm. Winkelhaus, II+
10.07 -- Ingram Micro Inc. Rollover Stock Option Plan+
10.08 -- Ingram Micro Inc. Key Employee Stock Purchase Plan+
10.09 -- Ingram Micro Inc. 1996 Equity Incentive Plan+
10.10 -- Ingram Micro Inc. Amended and Restated 1996 Equity Incentive Plan
</TABLE>
II-2
<PAGE> 109
<TABLE>
<C> <C> <S>
10.11 -- Severance Agreement dated as of June 1, 1996 among the Company, Ingram
Industries, Linwood A. Lacy, Jr., and NationsBank, N.A., as trustee of the
Linwood A. Lacy, Jr. 1996 Irrevocable Trust dated February 1996+
10.12 -- Form of Credit Agreement dated as of October , 1996 among the Company and
Ingram European Coordination Center N.V., Ingram Micro Singapore Pte Ltd., and
Ingram Micro Inc., as Borrowers and Guarantors, certain financial
institutions, as the Lenders, NationsBank of Texas, N.A., as Administrative
Agent for the Lenders and The Bank of Nova Scotia as Documentation Agent for
the Lenders
10.13 -- Form of Amended and Restated Reorganization Agreement dated as of October 17,
1996 among the Company, Ingram Industries, and Ingram Entertainment
10.14 -- Form of Registration Rights Agreement to be dated as of the closing date of
the Split-Off among the Company and the persons listed on the signature pages
thereof+
10.15 -- Form of Board Representation Agreement to be dated as of the closing date of
the Split-Off among the Company and the persons listed on the signature pages
thereof
10.16 -- Form of Thrift Plan Liquidity Agreement to be dated as of the closing date of
the Split-Off among the Company and the Ingram Thrift Plan+
10.17 -- Form of Tax Sharing and Tax Services Agreement to be dated as of the closing
date of the Split-Off among the Company, Ingram Industries, and Ingram
Entertainment
10.18 -- Form of Master Services Agreement, to be dated as of the closing date of the
Split-Off between the Company and Ingram Industries
10.19 -- Form of Employee Benefits Transfer and Assumption Agreement to be dated as of
the closing date of the Split-Off among the Company, Ingram Industries, and
Ingram Entertainment
10.20 -- Form of Data Center Services Agreement to be dated as of the closing date of
the Split-Off among the Company, Ingram Book Company, and Ingram
Entertainment+
10.21 -- Form of Amended and Restated Exchange Agreement dated as of October 17, 1996
among the Company, Ingram Industries, Ingram Entertainment and the other
parties thereto
10.22 -- Agreement dated as of August 26, 1996 between the Company and Jerre L. Stead+
10.23 -- Definitions for Ingram Funding Master Trust Agreements
10.24 -- Asset Purchase and Sale Agreement dated as of February 10, 1993 between Ingram
Industries and Ingram Funding
10.25 -- Pooling and Servicing Agreement dated as of February 10, 1993 among Ingram
Funding, Ingram Industries and Chemical Bank
10.26 -- Amendment No. 1 to the Pooling and Servicing Agreement dated as of February
12, 1993, the Asset Purchase and Sale Agreement dated as of February 12, 1993,
and the Liquidity Agreement dated as of February 12, 1993
10.27 -- Certificate Purchase Agreement dated as of July 23, 1993
10.28 -- Schedule of Certificate Purchase Agreements
10.29 -- Series 1993-1 Supplement to Ingram Funding Master Trust Pooling and Servicing
Agreement dated as of July 23, 1993
10.30 -- Schedule of Supplements to Ingram Funding Master Trust Pooling and Servicing
Agreement dated as of July 23, 1993
10.31 -- Letter of Credit Reimbursement Agreement dated as of February 10, 1993
10.32 -- Liquidity Agreement dated as of February 10, 1993
10.33 -- Amendment No. 2 to the Pooling and Servicing Agreement dated as of February
12, 1993, the Asset Purchase and Sale Agreement dated as of February 12, 1993,
and the Liquidity Agreement dated as of February 12, 1993*
</TABLE>
II-3
<PAGE> 110
<TABLE>
<C> <C> <S>
10.34 -- Agreement dated as of October 10, 1996 between the Company and Michael J.
Grainger
21.01 -- Subsidiaries of the Registrant
23.01 -- Consent of Price Waterhouse LLP
23.02 -- Consent of Davis Polk & Wardwell (included in their opinion filed as Exhibit
5.01)
24.01 -- Powers of Attorney of certain officers and directors of the Registrant+
24.02 -- Power of Attorney of Jerre L. Stead+
27.01 -- Financial Data Schedule (EDGAR version only)
99.01 -- Consent of J. Phillip Samper
99.02 -- Consent of Joe B. Wyatt
</TABLE>
- ---------------
* To be filed by amendment.
+ Previously filed.
(b) FINANCIAL STATEMENT SCHEDULES
See Schedule II on page S-1. All other schedules for which provision is
made in the applicable accounting regulations of the Securities and Exchange
Commission are not required under the related instructions or are inapplicable
or the information is contained in the Consolidated Financial Statements and
related notes and therefore have been omitted.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes that:
(1) It will provide to the underwriters at the closing specified in
the underwriting agreements certificates in such denominations and
registered in such names as required by the underwriters to permit prompt
delivery to each purchaser.
(2) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise,
the Company has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Company of expenses incurred or paid by a director,
officer or controlling person of the Company in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
(3) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(4) For the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-4
<PAGE> 111
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Ingram Micro
Inc. has duly caused this Amendment No. 3 to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Santa Ana, State of California, on this 24th day of October, 1996.
INGRAM MICRO INC.
By: /s/ MICHAEL J. GRAINGER
-----------------------------------
Name: Michael J. Grainger
Title: Chief Financial Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 3 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN
THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------------ ------------------
<S> <C> <C>
</TABLE>
<TABLE>
<S> <C> <C>
* Chief Executive Officer (Principal October 24, 1996
- ------------------------------------------ Executive Officer); Chairman of the
Jerre L. Stead Board of Directors
/s/ MICHAEL J. GRAINGER Executive Vice President; October 24, 1996
- ------------------------------------------ Chief Financial Officer
Michael J. Grainger (Principal Financial Officer and
Principal Accounting Officer)
* President and Chief Operating October 24, 1996
- ------------------------------------------ Officer; Director
Jeffrey R. Rodek
* Vice Chairman; Director October 24, 1996
- ------------------------------------------
David R. Dukes
* Director October 24, 1996
- ------------------------------------------
Martha R. Ingram
* Director October 24, 1996
- ------------------------------------------
John R. Ingram
* Director October 24, 1996
- ------------------------------------------
David B. Ingram
* Director October 24, 1996
- ------------------------------------------
Philip M. Pfeffer
* Pursuant to Power of Attorney previously
filed with the Commission.
/s/ MICHAEL J. GRAINGER Attorney-in-Fact October 24, 1996
- ------------------------------------------
Michael J. Grainger
</TABLE>
II-5
<PAGE> 112
INGRAM MICRO INC.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND AT END OF
DESCRIPTION OF YEAR EXPENSES OTHER(*) DEDUCTIONS YEAR
- ----------------------------------- ---------- ---------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts
receivable and sales returns:
1995............................. $ 25,668 $ 24,168 $ 673 $(19,718) $ 30,791
1994............................. 18,594 20,931 (4) (13,853) 25,668
1993............................. 12,928 17,492 2,343 (14,169) 18,594
Inventory obsolescence:
1995............................. $ 10,706 $ 13,199 $ 207 $(11,867) $ 12,245
1994............................. 9,431 9,410 257 (8,392) 10,706
1993............................. 6,076 6,587 121 (3,353) 9,431
</TABLE>
- ---------------
* Other includes recoveries, acquisitions and the effect of fluctuations in
foreign currency.
S-1
<PAGE> 113
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NO. DESCRIPTION PAGE NO.
- ------- ------------------------------------------------------------------------- ----------
<C> <C> <S> <C>
1.01 -- Form of Underwriting Agreement*
3.01 -- Form of Certificate of Incorporation of the Registrant+
3.02 -- Form of Bylaws of the Registrant+
3.03 -- Form of Amended and Restated Bylaws of the Registrant
4.01 -- Specimen Certificate for the Class A Common Stock, par value $0.01 per
share, of the Registrant
5.01 -- Opinion of Davis Polk & Wardwell
10.01 -- Ingram Micro Inc. Executive Incentive Bonus Plan+
10.02 -- Ingram Micro Inc. Management Incentive Bonus Plan+
10.03 -- Ingram Micro Inc. General Employee Incentive Bonus Plan+
10.04 -- Agreement dated as of December 21, 1994 between the Company and
Jeffrey R. Rodek+
10.05 -- Agreement dated as of April 25, 1988 between the Company and Sanat K.
Dutta+
10.06 -- Agreement dated as of June 21, 1991 between the Company and John Wm.
Winkelhaus, II+
10.07 -- Ingram Micro Inc. Rollover Stock Option Plan+
10.08 -- Ingram Micro Inc. Key Employee Stock Purchase Plan+
10.09 -- Ingram Micro Inc. 1996 Equity Incentive Plan+
10.10 -- Ingram Micro Inc. Amended and Restated 1996 Equity Incentive Plan
10.11 -- Severance Agreement dated as of June 1, 1996 among the Company, Ingram
Industries, Linwood A. Lacy, Jr., and NationsBank, N.A., as trustee of
the Linwood A. Lacy, Jr. 1996 Irrevocable Trust dated February 1996+
10.12 -- Form of $1,000,000,000 Credit Agreement dated as of October , 1996
among the Company, Ingram European Coordination Center N.V., Ingram Micro
Singapore Pte Ltd. and Ingram Micro Inc., as Borrowers and Guarantors,
certain financial institutions, as the Lenders, NationsBank of Texas,
N.A., as Administrative Agent for the Lenders and The Bank of Nova Scotia
as Documentation Agent for the Lenders
10.13 -- Form of Amended and Restated Reorganization Agreement dated as of October
17, 1996 among the Company, Ingram Industries, and Ingram Entertainment
10.14 -- Form of Registration Rights Agreement to be dated as of the closing date
of the Split-Off among the Company and the persons listed on the
signature pages thereof+
10.15 -- Form of Board Representation Agreement to be dated as of the closing date
of the Split-Off among the Company and the persons listed on the
signature pages thereof
10.16 -- Form of Thrift Plan Liquidity Agreement to be dated as of the closing
date of the Split-Off among the Company and the Ingram Thrift Plan+
10.17 -- Form of Tax Sharing and Tax Services Agreement to be dated as of the
closing date of the Split-Off among the Company, Ingram Industries, and
Ingram Entertainment
10.18 -- Form of Master Services Agreement to be dated as of the closing date of
the Split-Off between the Company and Ingram Industries
10.19 -- Form of Employee Benefits Transfer and Assumption Agreement to be dated
as of the closing date of the Split-Off among the Company, Ingram
Industries, and Ingram Entertainment
</TABLE>
<PAGE> 114
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NO. DESCRIPTION PAGE NO.
- ------- ------------------------------------------------------------------------- ----------
<C> <C> <S> <C>
10.20 -- Form of Data Center Services Agreement to be dated as of the closing date
of the Split-Off among the Company, Ingram Book Company, and Ingram
Entertainment+
10.21 -- Form of Amended and Restated Exchange Agreement dated as of October 17,
1996 among the Company, Ingram Industries, Ingram Entertainment and the
other parties thereto
10.22 -- Agreement dated as of August 26, 1996 between the Company and Jerre L.
Stead+
10.23 -- Definitions for Ingram Funding Master Trust Agreements
10.24 -- Asset Purchase and Sale Agreement dated as of February 10, 1993 between
Ingram Industries and Ingram Funding
10.25 -- Pooling and Servicing Agreement dated as of February 10, 1993 among
Ingram Funding, Ingram Industries and Chemical Bank
10.26 -- Amendment No. 1 to the Pooling and Servicing Agreement dated as of
February 12, 1993, the Asset Purchase and Sale Agreement dated as of
February 12, 1993, and the Liquidity Agreement dated as of February 12,
1993
10.27 -- Certificate Purchase Agreement dated as of July 23, 1993
10.28 -- Schedule of Certificate Purchase Agreements
10.29 -- Series 1993-1 Supplement to Ingram Funding Master Trust Pooling and
Servicing Agreement dated as of July 23, 1993
10.30 -- Schedule of Supplements to Ingram Funding Master Trust Pooling and
Servicing Agreement dated as of July 23, 1993
10.31 -- Letter of Credit Reimbursement Agreement dated as of February 10, 1993
10.32 -- Liquidity Agreement dated as of February 10, 1993
10.33 -- Amendment No. 2 to the Pooling and Servicing Agreement dated February 12,
1993, the Asset Purchase and Sale Agreement dated as of February 12,
1993, and the Liquidity Agreement dated as of February 12, 1993*
10.34 -- Agreement dated as of October 10, 1996 between the Company and Michael J.
Grainger
21.01 -- Subsidiaries of the Registrant
23.01 -- Consent of Price Waterhouse LLP
23.02 -- Consent of Davis Polk & Wardwell (included in their opinion filed as
Exhibit 5.01)
24.01 -- Powers of Attorney of certain officers and directors of the Registrant+
24.02 -- Power of Attorney of Jerre L. Stead+
27.01 -- Financial Data Schedule (EDGAR version only)
99.01 -- Consent of J. Phillip Samper
99.02 -- Consent of Joe B. Wyatt
</TABLE>
- ---------------
* To be filed by amendment.
+ Previously filed.
<PAGE> 1
EXHIBIT 21.01
SUBSIDIARIES OF INGRAM MICRO INC.
<TABLE>
<CAPTION>
STATE/COUNTRY
SUBSIDIARY OF INCORPORATION
- ---------- ----------------
<S> <C>
Ingram Export Company Ltd. Barbados
Ingram Micro Inc. Canada
CD Access Inc. Iowa
Ingram Micro Delaware Inc. Delaware
Ingram Micro Management Company Delaware
Ingram Dicom S.A. de C.V. Mexico
Export Services Inc. California
Ingram European Coordination Center S.A./N.V. Belgium
Lifetree France S.A.R.L. France
Ingram Micro S.A.R.L. France
Ingram Micro N.V. Belgium
Ingram Micro B.V. The Netherlands
Micro Communication Services B.V. The Netherlands
Ingram Micro S.p.A. Italy
Ingram Micro GmbH Germany
Ingram Micro Holdings Limited United Kingdom
Ingram Micro (UK) Limited United Kingdom
Mirai Networks Limited United Kingdom
Metrocom Computer Systems Limited United Kingdom
Document Technology Limited United Kingdom
Software Limited United Kingdom
Ingram Micro Singapore Inc. California
Ingram Micro Japan Inc. Delaware
Ingram Micro S.A. Spain
Ingram Micro AB Sweden
Ingram Micro A/S Denmark
Ingram Micro A.S. Norway
Datateam Norm AB Sweden
Oy Datateam AB Finland
Ingram Micro SA/AG Switzerland
Ingram Micro Malaysia Sdn Bhd Malaysia
Ingram Micro GmbH Zweigniederlassung Osterreich Austria
IMI Washington Inc. Delaware
Ingram Micro Singapore Pte Ltd Singapore
</TABLE>
<PAGE> 1
EXHIBIT 23.01
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 (333-08453) of our report dated February 29,
1996, except as to Note 12 which is dated as of September 9, 1996, relating to
the financial statements of Ingram Micro Inc., which appears in such Prospectus.
We also consent to the application of such report to the Financial Statement
Schedules for the three years ended December 30, 1995 listed under Item 16(b) of
this Registration Statement when such schedules are read in conjunction with the
financial statements referred to in our report. The audits referred to in such
report also included these schedules. We also consent to the reference to us
under the heading "Experts" in such Prospectus.
Price Waterhouse LLP
Nashville, Tennessee
October 22, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF INGRAM MICRO INC. FOR THE PERIODS ENDED DECEMBER 30,
1995 AND SEPTEMBER 28, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 9-MOS
<FISCAL-YEAR-END> DEC-30-1995 DEC-28-1996
<PERIOD-START> JAN-01-1995 DEC-31-1995
<PERIOD-END> DEC-30-1995 SEP-28-1996
<CASH> 56,916 43,196
<SECURITIES> 0 0
<RECEIVABLES> 1,102,066 1,127,937
<ALLOWANCES> 30,791 38,069
<INVENTORY> 1,582,922 1,382,122
<CURRENT-ASSETS> 2,799,616 2,668,498
<PP&E> 150,363 212,114
<DEPRECIATION> 61,237 84,130
<TOTAL-ASSETS> 2,940,898 2,843,712
<CURRENT-LIABILITIES> 1,779,977 1,840,414
<BONDS> 0 0
0 0
0 0
<COMMON> 1,073 1,074
<OTHER-SE> 309,722 364,915
<TOTAL-LIABILITY-AND-EQUITY> 2,940,898 2,843,712
<SALES> 8,616,867 8,474,710
<TOTAL-REVENUES> 8,616,867 8,474,710
<CGS> 8,011,181 7,900,223
<TOTAL-COSTS> 8,429,986 8,298,833
<OTHER-EXPENSES> 9,687 2,136
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 46,057 41,520
<INCOME-PRETAX> 134,616 133,409
<INCOME-TAX> 53,143 55,459
<INCOME-CONTINUING> 84,307 77,567
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 84,307 77,567
<EPS-PRIMARY> 0.70 0.64
<EPS-DILUTED> 0 0
</TABLE>
<PAGE> 1
EXHIBIT 99.01
CONSENT
The undersigned, J. Phillip Samper, hereby consents, pursuant to Rule 438 under
the Securities Act of 1933, as amended, to being named in the Registration
Statement on Form S-1 (File No. 333-08453) (the "Registration Statement") of
Ingram Micro Inc. (the "Registrant") as a person about to become a director of
the Registrant, and to the filing of this Consent as an exhibit to the
Registration Statement.
/s/ J. PHILLIP SAMPER
--------------------------------------
J. Phillip Samper
October 24, 1996
<PAGE> 1
EXHIBIT 99.02
CONSENT
The undersigned, Joe B. Wyatt, hereby consents, pursuant to Rule 438 under the
Securities Act of 1933, as amended, to being named in the Registration Statement
on Form S-1 (File No. 333-08453) (the "Registration Statement") of Ingram Micro
Inc. (the "Registrant") as a person about to become a director of the
Registrant, and to the filing of this Consent as an exhibit to the Registration
Statement.
/s/ JOE B. WYATT
--------------------------------------
Joe B. Wyatt
October 24, 1996
EXHIBIT 3.03
AMENDED AND RESTATED
BYLAWS OF
INGRAM MICRO INC.
* * * * *
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office shall be
in the City of Wilmington, County of New Castle, State of Delaware.
Section 2. Other Offices. The Corporation may also have
offices at such other places both within and without the State of Delaware as
the Board of Directors may from time to time determine or the business of the
Corporation may require.
Section 3. Books. The books of the Corporation may be kept
within or without the State of Delaware as the Board of Directors may from
time to time determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Time and Place of Meetings. All meetings of
stockholders shall be held at such place, either within or without the State
of Delaware, on such date and at such time as may be determined from time to
time by the Board of Directors (or the chief executive officer in the absence
of a designation by the Board of Directors).
Section 2. Annual Meetings. Annual meetings of stockholders,
commencing with the year 1997, shall be held to elect the Board of Directors
and transact such other business as may properly be brought before the meeting.
Section 3. Special Meetings. Special meetings of stockholders
may be called by the Board of Directors or the chairman of the Board of
Directors and shall be called by the secretary at the request in writing of
stockholders having at least ten percent of the outstanding voting power of
the Corporation. Such request shall state the purpose or purposes of the
proposed meeting.
Section 4. Notice of Meetings and Adjourned Meetings; Waivers
of Notice. (a) Whenever stockholders are required or permitted to take any
action at a meeting, a written notice of the meeting shall be given which
shall state the place, date and hour of the meeting, and, in the case of a
special meeting, the purpose or purposes for which the meeting is called.
Unless otherwise provided by the General Corporation Law of the State of
Delaware as the same exists or may hereafter be amended ("Delaware Law"), such
notice shall be given not less than 10 nor more than 60 days before the date
of the meeting to each stockholder of record entitled to vote at such meeting.
Business transacted at any special meeting of stockholders shall be limited to
the purposes stated in the notice. Unless these Bylaws otherwise require,
when a meeting is adjourned to another time or place (whether or not a quorum
is present), notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken;
provided that if the adjournment is for more than 30 days, or after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting. At the adjourned meeting, the Corporation may transact
any business which might have been transacted at the original meeting.
(b) A written waiver of any such notice signed by the person
entitled thereto, whether before or after the time stated therein, shall be
deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends
the meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not
lawfully called or convened.
Section 5. Quorum. Unless otherwise provided under the
certificate of incorporation or these Bylaws and subject to Delaware Law, the
presence, in person or by proxy, of the holders of a majority of the votes
entitled to be cast by the stockholders entitled to vote generally, shall
constitute a quorum for the transaction of business at any meeting of the
stockholders; provided that in the case of any vote to be taken by classes,
the holders of a majority of the votes entitled to be cast by the stockholders
of a particular class shall constitute a quorum for the transaction of business
by such class.
Section 6. Voting. (a) Unless otherwise provided by Delaware
Law or by the certificate of incorporation, each stockholder of record of any
class or series of capital stock of the Corporation shall be entitled to such
number of votes for each share of such stock as may be fixed in the
certificate of incorporation or in the resolution or resolutions adopted by
the Board of Directors providing for the issuance of such stock.
(b) Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to a corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy, but no such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period.
(c) Unless otherwise provided by Delaware Law, the
certificate of incorporation or these Bylaws, the affirmative vote of shares
of capital stock of the Corporation representing a majority of the outstanding
voting power of the Corporation present, in person or by proxy, at a meeting
of stockholders and entitled to vote on the subject matter shall be the act of
the stockholders.
Section 7. Action by Consent. (a) Unless otherwise provided
in the certificate of incorporation, any action required to be taken at any
special meeting of stockholders, or any action which may be taken at any
special meeting of stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent or consents in writing, setting forth
the action so taken, shall be signed by the holders of outstanding capital
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted and shall be delivered to the Corporation
by delivery to its registered office in Delaware, its principal place of
business, or an officer or agent of the Corporation having custody of the book
in which proceedings of meetings of stockholders are recorded. Delivery made
to the Corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
(b) Every written consent shall bear the date of signature of
each stockholder who signs the consent, and no written consent shall be
effective to take the corporate action referred to therein unless, within 60
days of the earliest dated consent delivered to the Corporation in the manner
required by this Section 7 of Article II and Delaware Law, written consents
signed by a sufficient number of holders to take action are delivered to the
Corporation by delivery to its registered office in Delaware, its principal
place of business, or an officer or agent of the Corporation having custody of
the book in which proceedings of meetings of stockholders are recorded.
Delivery made to the Corporation's registered office shall be by hand or by
certified or registered mail, return receipt requested.
Section 8. Organization. At each meeting of stockholders, the
chairman of the Board of Directors, if one shall have been elected, (or in his
absence or if one shall not have been elected, the chief executive officer)
shall act as chairman of the meeting. The secretary (or in his absence or
inability to act, the person whom the chairman of the meeting shall appoint
secretary of the meeting) shall act as secretary of the meeting and keep the
minutes thereof.
Section 9. Order of Business. The order of business at all
meetings of stockholders shall be as determined by the chairman of the meeting.
ARTICLE III
DIRECTORS
Section 1. General Powers. Except as otherwise provided in
Delaware Law or the certificate of incorporation, the business and affairs of
the Corporation shall be managed by or under the direction of the Board of
Directors. Each member of the Board of Directors, and all committees of the
Board of Directors, shall have at all times full access to the books and
records of the Corporation and all minutes of stockholder, Board of Directors
and committee meetings, proceedings and actions. Each member of the Board of
Directors shall have the right to add items to any agenda for a meeting of the
Board of Directors.
Section 2. Number, Election and Term of Office. The number of
directors which shall constitute the whole Board of Directors shall be fixed
from time to time by resolution of the Board of Directors but shall in no
event be less than seven nor more than nine; provided, however, that once the
Board of Directors is expanded to eight directors, it shall not be contracted
to a smaller size. At a time when seven or eight directors comprise the Board
of Directors, the Board of Directors may be expanded up to nine members by the
affirmative vote of a majority of the seven or eight directors, as the case
may be. Such eighth or ninth director shall be Independent, as provided in
Section 3(a)(iii) of this Article III and shall be nominated by a majority of
the Nominating Committee. After the initial qualification and election of
such eighth or ninth director as set forth in this Section 2 of Article III,
any vacancy created by the death, disability, resignation or removal of such
director shall be filled pursuant to Section 13 of this Article III. The
directors shall be elected at the annual meeting of the stockholders, except
as provided in this Section 2 or Section 13 of this Article III, and each
director so elected (including any such director elected pursuant to Section
13 of this Article III) shall hold office for a term commencing with the
election of such director and ending at such time after the next annual
meeting of stockholders as such director's successor is elected and qualified
or until such director's earlier death, disability, resignation or removal in
accordance with these Bylaws or as provided under Delaware Law.
Section 3. Qualifications. (a) Directors shall possess the
following qualifications: (i) three individuals who are designated by the
Family Stockholders, as hereinafter defined, and who need not be Independent,
as hereinafter defined, and may be Family Stockholders (the "Family
Directors"); (ii) one individual who is designated by the chief executive
officer of the Corporation, who need not be Independent and who may be the
chief executive officer of the Corporation (the "Management Director"); and
(iii) three (in the case of a Board of Directors consisting of seven
directors), four (in the case of a Board of Directors consisting of eight
directors) or five (in the case of a Board of Directors consisting of nine
directors) individuals, as the case may be from time to time, who shall be
Independent (the "Independent Directors"). Directors need not be
stockholders.
(b)(i) As used in these Bylaws, "Independent" means an individual
other than an executive officer or other employee of the Corporation or
Martha R. Ingram, her descendants (including adopted persons and their
descendants) and their respective spouses.
(ii) As used in these Bylaws, "Family Stockholders" means the
following and all of their Permitted Transferees (as hereinafter defined):
o QTIP Marital Trust created under the E. Bronson Ingram Revocable Trust
Agreement dated January 4, 1995
o Martha R. Ingram
o Orrin H. Ingram, II
o John R. Ingram
o David B. Ingram
o Robin B. Ingram Patton
o E. Bronson Ingram 1995 Charitable Remainder 5% Unitrust
o E. Bronson Ingram 1994 Charitable Lead Annuity Trust.
o Martha and Bronson Ingram Foundation
o Trust for Orrin Henry Ingram, II, under Agreement with E. Bronson
Ingram dated October 27, 1967
o Trust for Orrin Henry Ingram, II, under Agreement with E. Bronson
Ingram dated June 14, 1968
o Trust for Orrin Henry Ingram, II, under Agreement with Hortense B.
Ingram dated December 22, 1975
o The Orrin H. Ingram Irrevocable Trust dated July 9, 1992
o Trust for the Benefit of Orrin H. Ingram established by Martha R.
Rivers under Agreement of Trust originally dated April 30, 1982, as
amended
o Trust for John Rivers Ingram, under Agreement with E. Bronson Ingram
dated October 27, 1967
o Trust for John Rivers Ingram, under Agreement with E. Bronson Ingram
dated June 14, 1968
o Trust for John Rivers Ingram, under Agreement with Hortense B.
Ingram dated December 22, 1975
o The John R. Ingram Irrevocable Trust dated July 9, 1992
o Trust for the Benefit of John R. Ingram established by Martha R. Rivers
under Agreement of Trust originally dated April 30, 1982, as amended
o The John and Stephanie Ingram Family 1996 Generation Skipping Trust
o Trust for David B. Ingram, under Agreement with E. Bronson Ingram
dated October 27, 1967
o Trust for David B. Ingram, under Agreement with E. Bronson Ingram
dated June 14, 1968
o Trust for David B. Ingram, under Agreement with Hortense B. Ingram
dated December 22, 1975
o The David B. Ingram Irrevocable Trust dated July 9, 1992
o Trust for the Benefit of David B. Ingram established by Martha R.
Rivers under Agreement of Trust originally dated April 30, 1982, as
amended
o David and Sarah Ingram Family 1996 Generation Skipping Trust
o Trust for Robin Bigelow Ingram, under Agreement with E. Bronson
Ingram dated October 27, 1967
o Trust for Robin Bigelow Ingram, under Agreement with E. Bronson
Ingram dated June 14, 1968
o Trust for Robin Bigelow Ingram, under Agreement with Hortense B.
Ingram dated December 22, 1975
o The Robin Ingram Patton Irrevocable Trust dated July 9, 1992
o Trust for the Benefit of Robin B. Ingram established by Martha R.
Rivers under Agreement of Trust originally dated April 30, 1982, as
amended
(iii) As used in these Bylaws, "Permitted Transferee" means, with
respect to any Family Stockholder, including any Approving Family Stockholder,
as hereinafter defined, any of the other Family Stockholders or any of their
respective spouses, descendants (including adopted persons and their
descendants), estates, affiliates or any trust or other entities for the
benefit of any of the foregoing persons, and beneficiaries of the QTIP Marital
Trust created under the E. Bronson Ingram Revocable Trust Agreement dated
January 4, 1995 upon the death of Martha R. Ingram, whether the transfer
occurs voluntarily during life or at death, whether by appointment, will or
intestate descent or distribution. Without limiting the generality of the
foregoing, transfers from the QTIP Marital Trust created under the E. Bronson
Ingram Revocable Trust Agreement dated January 4, 1995 to the Martha and
Bronson Ingram Foundation, the Ingram Charitable Fund or any of the other
beneficiaries thereof shall be deemed to be transfers to Permitted Transferees.
Section 4. Quorum and Manner of Acting. (a) Unless the
certificate of incorporation or these Bylaws require a greater number, a
majority of the entire Board of Directors shall constitute a quorum for the
transaction of business, and the affirmative vote of a majority of the entire
Board of Directors shall be the act of the Board of Directors.
(b) When a meeting is adjourned to another time or place
(whether or not a quorum is present), notice need not be given of the
adjourned meeting if the time and place thereof are announced at the meeting
at which the adjournment is taken. At the adjourned meeting, the Board of
Directors may transact any business which might have been transacted at the
original meeting. If a quorum shall not be present at any meeting of the
Board of Directors the directors present thereat may adjourn the meeting, from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present.
Section 5. Time and Place of Meetings. The Board of Directors
shall hold its meetings at such place, either within or without the State of
Delaware, and at such time as may be determined from time to time by the Board
of Directors (or the chief executive officer in the absence of a determination
by the Board of Directors).
Section 6. Annual Meeting. The Board of Directors shall meet
for the purpose of organization, the election of officers and the transaction
of other business, as soon as practicable after each annual meeting of
stockholders, on the same day and at the same place where such annual meeting
shall be held. Notice of such meeting need not be given. In the event such
annual meeting is not so held, the annual meeting of the Board of Directors
may be held at such place either within or without the State of Delaware, on
such date and at such time as shall be specified in a notice thereof given as
hereinafter provided in Section 8 of this Article III or in a waiver of notice
thereof signed by any director who chooses to waive the requirement of notice.
Section 7. Regular Meetings. After the place and time of
regular meetings of the Board of Directors shall have been determined and
notice thereof shall have been once given to each member of the Board of
Directors, regular meetings may be held without further notice being given.
Section 8. Special Meetings. Special meetings of the Board of
Directors may be called by the chief executive officer and shall be called by
the secretary on the written request of three directors. Notice of special
meetings of the Board of Directors shall be given to each director at least
three days before the date of the meeting in such manner as is determined by
the Board of Directors.
Section 9. Committees. (a) The Board of Directors shall have
at least four committees with the designations, qualifications, powers and
composition set forth in this Section 9 of Article III, which four committees
shall be: (i) an Executive Committee, (ii) a Nominating Committee, (iii) a
Compensation Committee, and (iv) an Audit Committee. All committees of the
Board of Directors shall act by a majority vote of the entire number of
directors which constitute any such committee.
(b) The Executive Committee shall consist of three directors, one
of whom shall be a Family Director, one of whom shall be the Management
Director and one of whom shall be an Independent Director. During the period
of time between each regularly scheduled meeting of the Board of Directors,
management decisions requiring the immediate attention of the Board of
Directors may be made with the approval of a majority of the members of the
Executive Committee; provided, however, that the Executive Committee shall
not have the authority to approve any of the following items, all of which
require the approval of the Board of Directors: (i) any action that would
require approval pursuant to Article V of these Bylaws or that would require
approval of a majority of the outstanding voting power held by the
stockholders entitled to vote thereon at any annual or special meeting under
applicable law or under the certificate of incorporation or Bylaws of the
Corporation (provided, however, that subject to applicable law, the Board of
Directors shall be entitled to delegate to the Executive Committee the
authority to negotiate and finalize actions, the general terms of which have
been approved by the Board of Directors); (ii) any acquisition with a total
aggregate consideration in excess of 2% of the Corporation's stockholders'
equity calculated in accordance with generally accepted accounting principles
for the most recent fiscal quarter for which financial information is
available (after taking into account the amount of any indebtedness to be
assumed or discharged by the Corporation or any of its subsidiaries and any
amounts required to be contributed, invested or borrowed by the Corporation or
any of its subsidiaries); (iii) any action outside of the ordinary course of
business of the Corporation; or (iv) any other action involving a material
shift in policy or business strategy for the Corporation.
(c) The Nominating Committee shall consist of three directors, two
of whom shall be Family Directors, and one of whom shall be the Management
Director. All nominations of persons for election to the Board of Directors
shall be made by the Nominating Committee, and the Nominating Committee shall
name the directors to serve on the Board committees, pursuant to the
qualification requirements set forth in Section 3 of this Article III.
Subject to the provisions of this Section 9(c), the Nominating Committee shall
be appointed by the Board of Directors. The Nominating Committee shall
fulfill such other roles, with respect to the filling of vacancies and
otherwise, as are set forth in these Bylaws.
(d) The Compensation Committee shall consist of three directors,
one of whom shall be a Family Director, and two of whom shall be Independent
Directors. The Compensation Committee shall establish the compensation of all
executive officers of the Corporation and shall administer all stock option,
purchase and equity incentive plans.
(e) The Audit Committee shall consist of at least three directors,
at least a majority of whom shall be Independent Directors. The Audit
Committee shall have the primary responsibility to: (i) recommend to the Board
of Directors the firm to be employed by the Corporation as its independent
auditor, (ii) consult with the independent auditors with regard to the plan of
audit, (iii) review (in consultation with the independent auditors) the report
of audit or proposed report and the accompanying management letter of the
independent auditors, and (iv) consult with the independent auditors
periodically, as appropriate, out of the presence of management, with regard to
the adequacy of the internal controls and, if need be, to consult also with
the internal auditors.
(f) No committee of the Board of Directors shall have the power or
authority in reference to amending the certificate of incorporation, adopting
an agreement of merger or consolidation, recommending to the stockholders the
sale, lease or exchange of all or substantially all of the Corporation's
property and assets, recommending to the stockholders a dissolution of the
Corporation or a revocation of a dissolution, amending the Bylaws of the
Corporation, or authorizing any action required pursuant to these Bylaws to be
authorized or approved by a majority of the entire Board of Directors; and
unless the resolution of the Board of Directors, the certificate of
incorporation or these Bylaws expressly so provide, no such committee shall
have the power or authority to declare a dividend or to authorize the issuance
of capital stock by the Corporation. Each committee shall keep regular
minutes of its meetings and report the same to the Board of Directors when
required.
(g) The Board of Directors may, by resolution passed by a majority
of the entire Board of Directors, designate one or more additional committees,
each such committee to consist of one or more directors of the Corporation.
Any such additional committee, to the extent provided in the resolution of the
Board of Directors and subject to Section 9(f) of this Article III, shall have
and may exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation and may authorize
the seal of the Corporation to be affixed to all papers which may require it.
Notwithstanding the foregoing, no committee designated by the Board of
Directors pursuant to this Section 9(g) shall have powers or authority which
conflict with or impinge or encroach upon the powers and authority granted to
the committees designated in Sections 9(b), 9(c), 9(d) or 9(e) of this Article
III.
Section 10. Action by Consent. Unless otherwise restricted by
the certificate of incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all members of the Board
or committee, as the case may be, consent thereto in writing, and the writing
or writings are filed with the minutes of proceedings of the Board or
committee.
Section 11. Telephonic Meetings. Unless otherwise restricted
by the certificate of incorporation or these Bylaws, members of the Board of
Directors, or any committee designated by the Board of Directors, may
participate in a meeting of the Board of Directors, or such committee, as the
case may be, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
Section 12. Resignation. Any director may resign at any time
by giving written notice to the Board of Directors or to the secretary of the
Corporation. The resignation of any director shall take effect upon receipt
of notice thereof or at such later time as shall be specified in such notice;
and unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
Section 13. Vacancies. Unless otherwise provided in the
certificate of incorporation, if, as a result of the death, disability,
resignation or removal of a director, a vacancy is created on the Board of
Directors, the vacancy shall be filled in the following manner with
individuals with the following qualifications: (a) if the vacancy resulted
from the death, disability, resignation or removal of a Family Director, the
vacancy shall be filled by a person qualifying to be a Family Director as
designated by a majority of the remaining Family Directors; (b) if the vacancy
resulted from the death, disability, resignation or removal of the Management
Director, the vacancy shall be filled by a person qualifying to be a
Management Director as designated by the chief executive officer of the
Corporation; and (c) if the vacancy resulted from the death, disability,
resignation or removal of an Independent Director, the vacancy shall be filled
by a person qualifying to be an Independent Director nominated by the
Nominating Committee and approved by a majority of the entire Board of
Directors then in office. If such vacancy on the Board of Directors also
creates a vacancy on any committee thereof, the Nominating Committee shall
appoint such replacement director elected in accordance with Sections 9 and 13
of this Article III to fill the committee position or positions held by his or
her predecessor. If there are no Family Directors in office (in the case of
filling a vacancy previously held by a Family Director), then an election of
directors may be held in accordance with these Bylaws and Delaware Law.
Unless otherwise provided in the certificate of
incorporation, a vacancy created on the Board of Directors as a result of
the increase in the number of directors to seven, eight or nine as provided
in Section 2 of this Article III may be filled in each case in a manner
consistent with the provisions of Sections 2, 3 and 13 of this Article III.
Section 14. Removal. Any director or the entire Board of
Directors may be removed, with or without cause, at any time by the
affirmative vote of the holders of a majority of the outstanding voting power
of all of the shares of capital stock of the Corporation then entitled to vote
generally for the election of directors, voting together as a single class,
and the vacancies thus created shall be filled in accordance with Section 13
of this Article III. A Committee member shall be subject to removal from his
or her position as a Committee member by the affirmative vote of a majority
of the members of the Nominating Committee, and the vacancies thus created
shall be filled in accordance with Sections 9 and 13 of this Article III.
Section 15. Compensation. Unless otherwise restricted by the
certificate of incorporation or these Bylaws, the Board of Directors shall
have authority to fix the compensation of directors, including fees and
reimbursement of expenses.
ARTICLE IV
OFFICERS
Section 1. Principal Officers. The principal officers of the
Corporation shall be a chief executive officer, a president, one or more vice
presidents, a treasurer and a secretary who shall have the duty, among other
things, to record the proceedings of the meetings of stockholders and
directors in a book kept for that purpose. The Corporation may also have such
other principal officers, including a chairman, a vice chairman or one or more
controllers, as the Board of Directors may in its discretion appoint. One
person may hold the offices and perform the duties of any two or more of said
offices, except that no one person shall hold the offices and perform the
duties of president and secretary.
Section 2. Election, Term of Office and Remuneration. The
principal officers of the Corporation shall be elected annually by the Board
of Directors at the annual meeting thereof. Each such officer shall hold
office until his successor is elected and qualified, or until his earlier
death, disability, resignation or removal. The remuneration of all officers
of the Corporation shall be fixed by the Board of Directors. Any vacancy in
any office shall be filled in such manner as the Board of Directors shall
determine.
Section 3. Subordinate Officers. In addition to the principal
officers enumerated in Section 1 of this Article IV, the Corporation may have
one or more assistant treasurers, assistant secretaries and assistant
controllers and such other subordinate officers, agents and employees as the
Board of Directors may deem necessary, each of whom shall hold office for such
period as the Board of Directors may from time to time determine. The Board
of Directors may delegate to any principal officer the power to appoint and to
remove any such subordinate officers, agents or employees.
Section 4. Removal. Except as otherwise permitted with
respect to subordinate officers, any officer may be removed, with or without
cause, at any time, by the Board of Directors.
Section 5. Resignations. Any officer may resign at any time
by giving written notice to the Board of Directors (or to a principal officer
if the Board of Directors has delegated to such principal officer the power to
appoint and to remove such officer). The resignation of any officer shall
take effect upon receipt of notice thereof or at such later time as shall be
specified in such notice; and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
Section 6. Powers and Duties. The officers of the Corporation
shall have such powers and perform such duties incident to each of their
respective offices and such other duties as may from time to time be conferred
upon or assigned to them by the Board of Directors.
ARTICLE V
ACTIONS REQUIRING CONSENT OF
APPROVING FAMILY STOCKHOLDERS
Section 1. Definitions. As used in these Bylaws, the following
terms shall have the meanings specified below:
(a) "Approving Family Stockholders" means the following and all of
their Permitted Transferees:
o QTIP Marital Trust created under the E. Bronson Ingram Revocable Trust
Agreement dated January 4, 1995
o Martha R. Ingram
o Orrin H. Ingram, II
o John R. Ingram
o David B. Ingram
o Robin B. Ingram Patton
o E. Bronson Ingram 1995 Charitable Remainder 5% Unitrust
o Martha and Bronson Ingram Foundation
o Trust for Orrin Henry Ingram, II, under Agreement with E. Bronson
Ingram dated October 27, 1967
o Trust for Orrin Henry Ingram, II, under Agreement with E. Bronson
Ingram dated June 14, 1968
o Trust for Orrin Henry Ingram, II, under Agreement with Hortense B.
Ingram dated December 22, 1975
o The Orrin H. Ingram Irrevocable Trust dated July 9, 1992
o Trust for the Benefit of Orrin H. Ingram established by Martha R.
Rivers under Agreement of Trust originally dated April 30, 1982, as
amended
o Trust for John Rivers Ingram, under Agreement with E. Bronson Ingram
dated October 27, 1967
o Trust for John Rivers Ingram, under Agreement with Hortense B.
Ingram dated December 22, 1975
o The John R. Ingram Irrevocable Trust dated July 9, 1992
o Trust for the Benefit of John R. Ingram established by Martha R. Rivers
under Agreement of Trust originally dated April 30, 1982, as amended
o The John and Stephanie Ingram Family 1996 Generation Skipping Trust
o Trust for David B. Ingram, under Agreement with Hortense B. Ingram
dated December 22, 1975
o The David B. Ingram Irrevocable Trust dated July 9, 1992
o Trust for the Benefit of David B. Ingram established by Martha R.
Rivers under Agreement of Trust originally dated April 30, 1982, as
amended
o David and Sarah Ingram Family 1996 Generation Skipping Trust
o Trust for Robin Bigelow Ingram, under Agreement with E. Bronson
Ingram dated October 27, 1967
o Trust for Robin Bigelow Ingram, under Agreement with Hortense B.
Ingram dated December 22, 1975
o The Robin Ingram Patton Irrevocable Trust, dated July 9, 1992
o Trust for the Benefit of Robin B. Ingram established by Martha R.
Rivers under Agreement of Trust originally dated April 30, 1982, as
amended.
(b) "Approving Voting Power" means, as of any date, the number of
votes able to be cast pursuant to this Article V by the Approving Family
Stockholders. With respect to any vote pursuant to this Article V, and as of
any given date, each Approving Family Stockholder shall be entitled to cast a
number of votes equal to (i) the Outstanding Voting Power, as hereinafter
defined, of all capital stock of the Corporation owned of record by such
Approving Family Stockholder, plus (ii) the attributed voting power set forth
in Section 1(c) of this Article V.
(c)(i) Martha R. Ingram shall be attributed and entitled to cast a
number of votes equal to the Outstanding Voting Power of all capital stock of
the Corporation owned by the Trust for John Rivers Ingram, under an Agreement
with E. Bronson Ingram dated June 14, 1968, plus the Outstanding Voting Power
of all capital stock of the Corporation owned by the Trust for David B.
Ingram, under an Agreement with E. Bronson Ingram dated October 27, 1967, plus
the Outstanding Voting Power of all capital stock of the Corporation owned by
the Trust for the Benefit of David Bronson Ingram, dated June 14, 1968, plus
the Outstanding Voting Power of all capital stock of the Corporation owned by
the Trust for Robin Bigelow Ingram, under an Agreement with E. Bronson Ingram
dated June 14, 1968;
(ii) Orrin H. Ingram, II shall be attributed and entitled to cast a
number of votes equal to twenty-five percent (25%) of the Outstanding Voting
Power of all capital stock of the Corporation owned by the E. Bronson Ingram
1994 Charitable Lead Annuity Trust;
(iii) John R. Ingram shall be attributed and entitled to cast a
number of votes equal to twenty-five percent (25%) of the Outstanding Voting
Power of all capital stock of the Corporation owned by the E. Bronson Ingram
1994 Charitable Lead Annuity Trust;
(iv) David B. Ingram shall be attributed and entitled to cast a
number of votes equal to twenty-five percent (25%) of the Outstanding Voting
Power of all capital stock of the Corporation owned by the E. Bronson Ingram
1994 Charitable Lead Annuity Trust; and
(v) Robin B. Ingram Patton shall be attributed and entitled to cast
a number of votes equal to twenty-five percent (25%) of the Outstanding Voting
Power of all capital stock of the Corporation owned by the E. Bronson Ingram
1994 Charitable Lead Annuity Trust.
(d) "Outstanding Voting Power" means, as of any date, the number of
votes able to be cast for the election of directors represented by all the
shares of common stock of the Corporation, including the Class A common stock
and the Class B common stock, par value $0.01 per share, of the Corporation.
Section 2. Significant Actions. (a) In addition to any vote
required by applicable law or the certificate of incorporation, the following
actions ("Significant Actions") will not be taken by or on behalf of the
Corporation without the written approval of Approving Family Stockholders,
acting in their sole discretion, holding at least a majority of the Approving
Voting Power held by all of the Approving Family Stockholders:
(i) any sale or other disposition or transfer of all or
substantially all of the assets of the Corporation (considered
together with its subsidiaries);
(ii) any merger, consolidation or share exchange involving the
Corporation, other than mergers effected for administrative reasons
of subsidiaries owned at least 90% by the Corporation which under
applicable law can be effected without stockholder approval;
(iii) any issuance (or transfer from treasury) of additional
equity, convertible securities, warrants or options with respect to
the capital stock of the Corporation, or any of its subsidiaries, or
the adoption of any additional equity plans by or on behalf of the
Corporation or any of its subsidiaries except for (A) options granted
or stock sold in the ordinary course of business pursuant to plans
approved by the Approving Family Stockholders or adopted prior to the
initial public offering of the Corporation's capital stock, and (B)
the issuance of capital stock of the Corporation valued at Fair
Market Value, as hereinafter defined, in acquisitions as to which no
approval is required under subsection (iv) of this Section 2 of
Article V or as to which approval has been obtained under subsection
(iv) of this Section 2 of Article V;
(iv) any acquisition by or on behalf of the Corporation or one
of its subsidiaries involving a total aggregate consideration in
excess of 10% of the Corporation's stockholders' equity calculated
in accordance with generally accepted accounting principles for the
most recent fiscal quarter for which financial information is
available (after taking into account the amount of any indebtedness
for borrowed money to be assumed or discharged by the Corporation or
any of its subsidiaries and any amounts required to be contributed,
invested or borrowed by the Corporation or any of its subsidiaries if
such contribution, investment or borrowing is reasonably contemplated
by the Corporation to be necessary within 12 months after the date of
the acquisition);
(v) any guarantee of indebtedness of an entity other than a
subsidiary of the Corporation exceeding 5% of the Corporation's
stockholders' equity calculated in accordance with generally accepted
accounting principles for the most recent fiscal quarter for which
financial information is available;
(vi) incurrence of indebtedness by the Corporation after the
consummation of the initial public offering of the Corporation's
capital stock (other than indebtedness incurred after the initial
public offering of the Corporation which renews or replaces a
previously existing facility so long as the aggregate amount of
indebtedness is not increased) in a transaction which could be
reasonably expected to reduce the Corporation's investment rating
lower than one grade below the ratings of the Corporation by Moody's
Investors Service ("Moody's"), Fitch Investors Service, L.P.
("Fitch") or Standard & Poor's Rating Group ("Standard & Poor's")
immediately following the initial public offering, but in any event
incurrence of indebtedness by the Corporation after the consummation
of the initial public offering which could be reasonably expected to
reduce such investment rating lower than Baa by Moody's; BBB- by
Fitch; or BBB- by Standard & Poor's; and
(vii) any other transaction having substantially the same
effect as a transaction described in clauses (i) through (vi) of this
Section 2(a) of Article V.
(b) As used in Section 2(a)(iii) of this Article V, "Fair Market
Value" means with respect to the capital stock of the Corporation, as of any
given date or dates, the reported closing price of a share of such class of
capital stock on such exchange or market as is the principal trading market
for such class of capital stock. If such class of capital stock is not traded
on an exchange or principal trading market on such date, the Fair Market Value
of a share of the capital stock of the Corporation shall be determined by the
Board of Directors in good faith taking into account as appropriate the recent
sales of the capital stock of the Corporation, recent valuations of the
capital stock of the Corporation, the lack of liquidity of the capital stock
of the Corporation, the fact that certain shares of the capital stock of the
Corporation may represent a minority interest and such other factors as the
Board of Directors shall in its discretion deem relevant or appropriate.
ARTICLE VI
GENERAL PROVISIONS
Section 1. Fixing the Record Date. (a) In order that the
Corporation may determine the stockholders entitled to notice of or to vote at
any meeting of stockholders or any adjournment thereof, the Board of Directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted by the Board of Directors,
and which record date shall not be more than 60 nor less than 10 days before
the date of such meeting. If no record date is fixed by the Board of
Directors, the record date for determining stockholders entitled to notice of
or to vote at a meeting of stockholders shall be at the close of business on
the day next preceding the day on which notice is given, or, if notice is
waived, at the close of business on the day next preceding the day on which
the meeting is held. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided that the Board of Directors may fix a new
record date for the adjourned meeting.
(b) In order that the Corporation may determine the
stockholders entitled to consent to corporate action in writing without a
meeting, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
adopted by the Board of Directors, and which date shall not be more than 10
days after the date upon which the resolution fixing the record date is
adopted by the Board of Directors. If no record date has been fixed by the
Board of Directors, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting, when no prior action
by the Board of Directors is required by Delaware Law, shall be the first date
on which a signed written consent setting forth the action taken or proposed
to be taken is delivered to the Corporation by delivery to its registered
office in Delaware, its principal place of business, or an officer or agent of
the Corporation having custody of the book in which proceedings of meetings
of stockholders are recorded. Delivery made to the Corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the Board of Directors and
prior action by the Board of Directors is required by Delaware Law, the record
date for determining stockholders entitled to consent to corporate action in
writing without a meeting shall be at the close of business on the day on
which the Board of Directors adopts the resolution taking such prior action.
(c) In order that the Corporation may determine the
stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights or the stockholders entitled to exercise any rights
in respect of any change, conversion or exchange of stock, or for the purpose
of any other lawful action, the Board of Directors may fix a record date,
which record date shall not precede the date upon which the resolution fixing
the record date is adopted, and which record date shall be not more than 60
days prior to such action. If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto.
Section 2. Dividends. Subject to limitations contained in
Delaware Law and the certificate of incorporation, the Board of Directors may
declare and pay dividends upon the shares of capital stock of the Corporation,
which dividends may be paid either in cash, in property or in shares of the
capital stock of the Corporation.
Section 3. Fiscal Year. The fiscal year of the Corporation
shall commence on the day following the end of the preceding fiscal year of
the Corporation and end on the Saturday nearest December 31 of each year.
Section 4. Corporate Seal. The corporate seal shall have
inscribed thereon the name of the Corporation, the year of its organization
and the words "Corporate Seal, Delaware". The seal may be used by causing it
or a facsimile thereof to be impressed, affixed or otherwise reproduced.
Section 5. Voting of Stock Owned by the Corporation. The Board
of Directors may authorize any person, on behalf of the Corporation, to
attend, vote at and grant proxies to be used at any meeting of stockholders of
any corporation (except this Corporation) in which the Corporation may hold
stock.
Section 6. Amendments. (a) So long as the Family
Stockholders and their Permitted Transferees together hold beneficially at
least 25,000,000 shares of the capital stock of the Corporation (as such
number is equitably adjusted to reflect stock splits, stock dividends,
recapitalizations or other transactions in the capital stock of the
Corporation) (i) the stockholders may alter, amend, restate or repeal these
Bylaws or any of them, or make new bylaws, only by the affirmative vote of 75%
of the votes entitled to be cast thereon at any annual or special meeting
and (ii) the Board of Directors may alter, amend, restate or repeal these
Bylaws or any of them, or make new bylaws, only by the affirmative vote of
three-quarters (3/4) of the members of the entire Board of Directors.
(b) Beginning on the first date on which the Family Stockholders
and their Permitted Transferees together hold beneficially less than
25,000,000 shares of the capital stock of the Corporation (as such number is
equitably adjusted to reflect stock splits, stock dividends, recapitalizations
or other transactions in the capital stock of the Corporation) (i) the
stockholders may alter, amend, restate or repeal these Bylaws or any of them,
or make new bylaws, by the affirmative vote of a majority of the votes entitled
to be cast thereon at any annual or special meeting and (b) the Board of
Directors may alter, amend, restate or repeal these Bylaws or any of them, or
make new bylaws, by the affirmative vote of a majority of the members of the
entire Board of Directors.
(c) Notwithstanding sections (a) and (b) of this Section 6 of
Article VI, if the Board Representation Agreement between the Corporation and
certain other persons signatory thereto dated _____, 1996, shall be
adjudicated to be void or terminated and of no further force and effect by the
final, non-appealable order of a court of competent jurisdiction or shall be
terminated and made to be of no further force and effect by the unanimous,
written consent of the Family Stockholders and their Permitted Transferees
then holding stock of the Corporation, beginning on the date such final order
becomes non-appealable or the date such unanimous, written consent is
delivered to the Secretary of the Corporation, as the case may be, (i) the
stockholders may alter, amend, restate or repeal these Bylaws or any of them,
or make new bylaws, by the affirmative vote of a majority of the votes
entitled to be cast thereon at any annual or special meeting and (ii) the
Board of Directors may alter, amend, restate or repeal these Bylaws or any of
them, or make new bylaws, by the affirmative vote of a majority of the members
of the entire Board of Directors.
EXHIBIT 4.01
[LOGO]
CLASS A INGRAM MICRO INC. CLASS A
COMMON STOCK COMMON STOCK
NUMBER SHARES
Incorporated under the laws CUSIP 457153 10 4
of the State of Delaware See Reverse for
Certain Definitions
This certificate
transferable in
Nashville, Tennessee
or New York, New York
This Certifies that
is the owner of
fully paid and non-assessable Shares of the Class A Common Stock, Par Value
$0.01 per Share of Ingram Micro Inc. transferable on the books of the
Corporation by the holders hereof in person or by duly authorized attorney
upon surrender of this Certificate properly endorsed.
This Certificate is not valid unless countersigned by the Transfer Agent
and registered by the Registrar.
Witness the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
COUNTERSIGNED AND REGISTERED:
FIRST CHICAGO TRUST COMPANY
(New York, New York) TRANSFER AGENT AND REGISTRAR
AUTHORIZED SIGNATURE
INGRAM MICRO INC. (seal)
Dated: /s/ James E. Anderson, Jr. /s/ Jeffrey R. Rodek
--------------------------- ----------------------------------
President Secretary
INGRAM MICRO INC.
This Corporation will furnish without charge to each stockholder who so
requests a statement of the powers, designations, preferences and relative,
participating, optional, or other special rights of each class of stock or
series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
______________________________________________________________________________
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entries
JT TEN - as joint tenants with right of survivorship and
not as tenants in common
UNIF TRANS MIN ACT-______________________ Custodian______________________
(Cust) (Minor)
Under Uniform Transfers to Minors
Act _________________________________________
(State)
Additional abbreviations may also be used though not in the above list.
For Value received, ________________________ hereby sell, assign and transfer
unto
Please insert Social Security or
other identifying number of
assignee
______________________________________________________________________________
______________________________________________________________________________
Please print or type/write name and address of assignee
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
_______________________________________________________________________Shares
of the Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint ___________________________________________
__________________________________________________________________Attorney, to
transfer the said shares on the books of the within named Corporation with
full power of substitution.
Dated,_________________
X______________________________________________________
X______________________________________________________
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME(S) AS WRITTEN UPON THE FACE
OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER.
Signature(s) Guaranteed:______________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION, (BANK, STOCKBROKER, SAVINGS AND
LOAN ASSOCIATION AND CREDIT UNIONS WITH MEMBERSHIP IN
AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM),
PURSUANT TO S.E.C. RULE 17A1-15.
KEEP THIS CERTIFICATE IN A SAFE PLACE, IF IT IS LOST, STOLEN, OR DESTROYED,
THE CORPORATION MAY REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE
ISSUANCE OF A REPLACEMENT CERTIFICATE.
EXHIBIT 5.01
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
(212) 450-4000
Fax: (212) 450-4800
October 21, 1996
Ingram Micro Inc.
1600 E. St. Andrew Place
Santa Ana, CA 92705
Ladies and Gentlemen:
Re: Ingram Micro Inc. Registration Statement on Form S-1
(File No. 333-08453)
We have acted as counsel to Ingram Micro Inc. (the "Company") in
connection with the Company's Registration Statement on Form S-1 (the
"Registration Statement") filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "Securities Act"),
for the registration of 23,200,000 shares of the Company's Class A Common
Stock, par value $0.01 per share (the "Common Stock"), including 3,000,000
shares subject to an over-allotment option (collectively, the "Shares").
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments as we have deemed
necessary for the purposes of rendering this opinion.
On the basis of the foregoing and
assuming the due execution and delivery of certificates representing the
Shares, we are of the opinion that the Shares have been duly authorized
and, when issued and delivered against payment therefor in accordance with
the terms of the Underwriting Agreement referred to in the prospectus that
is part of the Registration Statement, will be validly issued, fully
paid and non-assessable.
If the Company files an abbreviated registration statement (the
"Rule 462(b) Registration Statement"), which incorporates the Registration
Statement, to register additional shares of Common Stock (the "Additional
Shares") pursuant to Rule 462(b) under the Securities Act, and assuming the
due authorization of the Additional Shares by the Company, for purposes of
the preceding opinion, any reference therein to the "Shares" shall be
deemed to include the Additional Shares.
We are members of the Bar of the State of New York and the
foregoing opinion is limited to the laws of the State of New York, the
federal laws of the United States of America and the General Corporation
Law of the State of Delaware.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement, and if filed, the Rule 462(b) Registration
Statement. We also consent to the reference to our name under the caption
"Legal Matters" in the Prospectus contained in the Registration Statement,
and if filed, the Rule 462(b) Registration Statement.
Very truly yours,
/s/ Davis Polk & Wardwell
EXHIBIT 10.10
INGRAM MICRO INC.
Amended and Restated
1996 Equity Incentive Plan
SECTION 1. Purpose. The purposes of the Amended and Restated
Ingram Micro Inc. 1996 Equity Incentive Plan are to promote the interests of
Ingram Micro Inc. and its stockholders by (i) attracting and retaining
exceptional directors, executive personnel and other key employees of Micro
and its Affiliates, as defined below; (ii) motivating such employees and
directors by means of performance-related incentives to achieve longer-range
performance goals; and (iii) enabling such employees and directors to
participate in the long-term growth and financial success of Micro.
SECTION 2. Definitions. As used in the Plan, the following
terms shall have the meanings set forth below:
"Affiliate" means (i) any entity that is, directly or
indirectly, controlled by Micro and (ii) any other entity in which Micro has a
significant equity interest or which has a significant equity interest in
Micro, in either case as determined by the Committee.
"Award" means any Option, Stock Appreciation Right, Restricted
Stock Award, Performance Award or Other Stock-Based Award.
"Award Agreement" means any written agreement, contract, or
other instrument or document evidencing any Award, which may, but need not, be
executed or acknowledged by a Participant.
"Board" means the Board of Directors of Micro.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time.
"Committee" means a committee of the Board designated by the
Board to administer the Plan and composed of not less than the minimum number
of persons from time to time required by Rule 16b-3, each of whom, to the
extent necessary to comply with Rule 16b-3 only, is a "Non-Employee Director"
within the meaning of Rule 16b-3. Until otherwise determined by the Board,
the Compensation Committee designated by the Board shall be the Committee
under the Plan.
"Employee" means an employee of Micro or any Affiliate and any
member of the Board.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Executive Officer" means, at any time, an individual who is an
executive officer of Micro within the meaning of Exchange Act Rule 3b-7 or who
is an officer of Micro within the meaning of Exchange Act Rule 16a-1(f).
"Fair Market Value" means with respect to the Shares, as of any
given date or dates, the reported closing price of a share of such class of
common stock on such exchange or market as is the principal trading market for
such class of common stock. If such class of common stock is not traded on
an exchange or principal trading market on such date, the fair market value of
a Share shall be determined by the Committee in good faith taking into account
as appropriate recent sales of the Shares, recent valuations of the Shares,
the lack of liquidity of the Shares, the fact that the Shares may represent a
minority interest and such other factors as the Committee shall in its
discretion deem relevant or appropriate.
"Incentive Stock Option" means a right to purchase Shares
from Micro that is granted under Section 6 of the Plan and that is intended
to meet the requirements of Section 422 of the Code or any successor
provision thereto.
"Ingram Family" means Martha Ingram, her descendants (including
any adopted persons and their descendants) and their respective spouses.
"Micro" means Ingram Micro Inc., together with any successor
thereto.
"Non-Qualified Stock Option" means a right to purchase Shares
from Micro that is granted under Section 6 of the Plan and that is not
intended to be an Incentive Stock Option.
"Option" means an Incentive Stock Option or a Non-Qualified
Stock Option.
"Other Stock-Based Award" means any right granted under Section
10 of the Plan.
"Participant" means any Employee selected by the Committee to
receive an Award under the Plan (and to the extent applicable, any heirs or
legal representatives thereof).
"Performance Award" means any right granted under Section 9 of
the Plan.
"Person" means any individual, corporation, limited liability
company, partnership, association, joint-stock company, trust, unincorporated
organization, government or political subdivision thereof or other entity.
"Plan" means this Ingram Micro Inc. 1996 Equity Incentive Plan.
"Purchase Agreement" means an agreement substantially in the
form attached hereto as Exhibit A to be executed by Micro and a Participant as
a condition to the exercise, prior to a Public Offering, by such Participant
of any Option granted hereunder.
"Restricted Stock" means any Share granted under Section 8 of
the Plan.
"Restricted Stock Unit" means any unit granted under Section 8
of the Plan.
"Rule 16b-3" means Rule 16b-3 as promulgated and interpreted by
the SEC under the Exchange Act, or any successor rule or regulation thereto as
in effect from time to time.
"SEC" means the Securities and Exchange Commission or any
successor thereto.
"Shares" means shares of Class A common stock and Class B
common stock, $.01 par value, of Micro or such other securities as may be
designated by the Committee from time to time.
"Stock Appreciation Right" means any right granted under
Section 7 of the Plan.
"Substitute Awards" means Awards granted in assumption of,
or in substitution for, outstanding awards previously granted by a company
acquired by Micro or with which Micro combines.
SECTION 3. Administration.
(a) Authority of Committee. The Plan shall be administered by
the Committee. Subject to the terms of the Plan, applicable law and
contractual restrictions affecting Micro, and in addition to other express
powers and authorizations conferred on the Committee by the Plan, the
Committee shall have full power and authority to: (i) designate Participants;
(ii) determine the type or types of Awards to be granted to an eligible
Employee; (iii) determine the number of Shares to be covered by, or with
respect to which payments, rights, or other matters are to be calculated in
connection with, Awards; (iv) determine the terms and conditions of any Award,
Award Agreement and Purchase Agreement; (v) determine whether, to what extent,
and under what circumstances Awards may be settled or exercised in cash,
Shares, other securities, other Awards or other property, or cancelled,
forfeited, or suspended and the method or methods by which Awards may be
settled, exercised, cancelled, forfeited, or suspended; (vi) determine
whether, to what extent, and under what circumstances cash, Shares, other
securities, other Awards, other property, and other amounts payable with
respect to an Award shall be deferred either automatically or at the election
of the holder thereof or of the Committee; (vii) interpret and administer the
Plan and any instrument or agreement relating to, or Award made under, the
Plan; (viii) establish, amend, suspend, or waive such rules and regulations
and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; and (ix) make any other determination and take any
other action that the Committee deems necessary or desirable for the
administration of the Plan.
(b) Committee Discretion Binding. Unless otherwise expressly
provided in the Plan, all designations, determinations, interpretations, and
other decisions under or with respect to the Plan or any Award shall be within
the sole discretion of the Committee, may be made at any time and shall be
final, conclusive and binding upon all Persons, including Micro, any
Affiliate, any Participant, any holder or beneficiary of any Award, any
shareholder and any Employee.
SECTION 4. Shares Available for Awards.
(a) Shares Available. Subject to adjustment as provided in
Section 4(b) and 4(c), the number of Shares with respect to which Awards may
be granted under the Plan shall be 12,000,000. If, after the effective date
of the Plan, any Shares covered by an Award granted under the Plan or to which
such an Award relates, are forfeited, or if such an Award is settled for cash
or otherwise terminates or is cancelled without the delivery of Shares, then
the Shares covered by such Award, or to which such Award relates, or the
number of Shares otherwise counted against the aggregate number of Shares with
respect to which Awards may be granted, to the extent of any such settlement,
forfeiture, termination or cancellation, shall, in the calendar year in which
such settlement, forfeiture, termination or cancellation occurs, again become
Shares with respect to which Awards may be granted unless any dividends have
been paid thereon prior to such settlement, forfeiture, termination or
cancellation. Notwithstanding the foregoing and subject to adjustment as
provided in Section 4(b), no Employee of Micro may receive Awards under the
Plan in any calendar year that relate to more than 3,600,000 Shares.
(b) Adjustments. In the event that the Committee determines
that any dividend or other distribution (whether in the form of cash, Shares,
other securities or other property), recapitalization, stock split, reverse
stock split, reorganization, reclassification, merger, consolidation,
split-up, spin-off, combination, repurchase, or exchange of Shares or other
securities of Micro, issuance of warrants or other rights to purchase Shares
or other securities of Micro, or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Committee to
be appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number of Shares of Micro (or number and kind of other securities or
property) with respect to which Awards may thereafter be granted, (ii) the
number of Shares or other securities of Micro (or number and kind of other
securities or property) subject to outstanding Awards, and (iii) the grant or
exercise price with respect to any Award, or, if deemed appropriate, make
provision for a cash payment to the holder of an outstanding Award; provided,
in each case, that except to the extent deemed desirable by the Committee (A)
with respect to Awards of Incentive Stock Options no such adjustment shall be
authorized to the extent that such authority would cause the Plan to violate
Section 422(b)(1) of the Code, as from time to time amended and (B) with
respect to any Award no such adjustment shall be authorized to the extent that
such authority would be inconsistent with the Plan's meeting the requirements
of Section 162(m) of the Code, as from time to time amended.
(c) Substitute Awards. Any Shares underlying Substitute
Awards shall not, except in the case of Shares with respect to which
Substitute Awards are granted to Employees who are officers or directors of
Micro for purposes of Section 16 of the Exchange Act or any successor section
thereto, be counted against the Shares available for Awards under the Plan.
(d) Sources of Shares Deliverable Under Awards. Any Shares
delivered pursuant to an Award may consist, in whole or in part, of authorized
and unissued Shares or of treasury Shares.
SECTION 5. Eligibility. Any Employee, including any
officer or employee-director of Micro or any Affiliate, and any member of
the Board, shall be eligible to be designated a Participant.
SECTION 6. Stock Options.
(a) Grant. Subject to the provisions of the Plan and
contractual restrictions affecting Micro, the Committee shall have sole and
complete authority to determine the Employees to whom Options shall be
granted, the number of Shares to be covered by each Option, the option price
therefor and the conditions and limitations applicable to the exercise of the
Option. The Committee shall have the authority to grant Incentive Stock
Options, or to grant Non-Qualified Stock Options, or to grant both types of
options. In the case of Incentive Stock Options, the terms and conditions of
such grants shall be subject to and comply with such rules as may be
prescribed by Section 422 of the Code, as from time to time amended, and any
regulations implementing such statute.
(b) Exercise Price. The Committee in its sole discretion
shall establish the exercise price at the time each Option is granted.
(c) Exercise. Each Option shall be exercisable at such times
and subject to such terms and conditions as the Committee may, in its sole
discretion, specify in the applicable Award Agreement or thereafter. The
Committee may impose such conditions with respect to the exercise of Options,
including without limitation, any relating to the application of Federal or
state securities laws, as it may deem necessary or advisable.
(d) Payment. No Shares shall be delivered pursuant to any
exercise of an Option until payment in full of the option price therefor is
received by Micro. Such payment may be made: (i) in cash; (ii) in Shares
already owned by the Participant (the value of such Shares shall be their
Fair Market Value on the date of exercise); (iii) by a combination of cash
and Shares; (iv) if approved by the Committee, in accordance with a
cashless exercise program under which either (A) if so instructed by the
Participant, Shares may be issued directly to the Participant's broker or
dealer upon receipt of the purchase price in cash from the broker or
dealer, or (B) Shares may be issued by Micro to a Participant's broker or
dealer in consideration of such broker's or dealer's irrevocable commitment
to pay to Micro that portion of the proceeds from the sale of such Shares
that is equal to the exercise price of the Option(s) relating to such
Shares, or (v) in such other manner as permitted by the Committee at the
time of grant or thereafter.
SECTION 7. Stock Appreciation Rights.
(a) Grant. Subject to the provisions of the Plan and
contractual restrictions affecting Micro, the Committee shall have sole and
complete authority to determine the Employees to whom Stock Appreciation
Rights shall be granted, the number of Shares to be covered by each Stock
Appreciation Right Award, the grant price thereof and the conditions and
limitations applicable to the exercise thereof. Stock Appreciation Rights
may be granted in tandem with another Award, in addition to another Award,
or freestanding and unrelated to another Award. Stock Appreciation Rights
granted in tandem with or in addition to an Award may be granted either at
the same time as the Award or at a later time. Stock Appreciation Rights
shall not be exercisable earlier than six months after grant and shall have
a grant price as determined by the Committee on the date of grant.
(b) Exercise and Payment. A Stock Appreciation Right shall
entitle the Participant to receive an amount equal to the excess of the
Fair Market Value of a Share on the date of exercise of the Stock
Appreciation Right over the grant price thereof, provided that the
Committee may for administrative convenience determine that, with respect
to any Stock Appreciation Right which is not related to an Incentive Stock
Option and which can only be exercised for cash during limited periods of
time in order to satisfy the conditions of Rule 16b-3, the exercise of such
Stock Appreciation Right for cash during such limited period shall be
deemed to occur for all purposes hereunder on the last day of such limited
period and the Fair Market Value of the Shares subject to such stock
appreciation right shall be deemed to be equal to the average of the high
and low prices during such period on each day the Shares are traded on any
stock exchange on which Shares are listed or on any over-the-counter market
on which Shares are then traded. Any such determination by the Committee
may be changed by the Committee from time to time and may govern the
exercise of Stock Appreciation Rights granted prior to such determination
as well as Stock Appreciation Rights thereafter granted. The Committee
shall determine whether a Stock Appreciation Right shall be settled in
cash, Shares or a combination of cash and Shares.
(c) Other Terms and Conditions. Subject to the terms of the
Plan and any applicable Award Agreement, the Committee shall determine, at or
after the grant of a Stock Appreciation Right, the term, methods of exercise,
methods and form of settlement, and any other terms and conditions of any
Stock Appreciation Right. Any such determination by the Committee may be
changed by the Committee from time to time and may govern the exercise of
Stock Appreciation Rights granted or exercised prior to such determination as
well as Stock Appreciation Rights granted or exercised thereafter. The
Committee may impose such conditions or restrictions on the exercise of any
Stock Appreciation Right as it shall deem appropriate.
SECTION 8. Restricted Stock and Restricted Stock Units.
(a) Grant. Subject to the provisions of the Plan and
contractual provisions affecting Micro, the Committee shall have sole and
complete authority to determine the Employees to whom Shares of Restricted
Stock and Restricted Stock Units shall be granted, the number of Shares of
Restricted Stock and/or the number of Restricted Stock Units to be granted to
each Participant, the duration of the period during which, and the conditions
under which, the Restricted Stock and Restricted Stock Units may be forfeited
to Micro, and the other terms and conditions of such Awards.
(b) Payment. Each Restricted Stock Unit shall have a value
equal to the Fair Market Value of a Share. Restricted Stock Units shall be
paid in cash, Shares, other securities or other property, as determined in the
sole discretion of the Committee, upon the lapse of the restrictions
applicable thereto, or otherwise in accordance with the applicable Award
Agreement.
(c) Dividends and Distributions. Dividends and other
distributions paid on or in respect of any Shares of Restricted Stock may be
paid directly to the Participant, or may be reinvested in additional Shares of
Restricted Stock or in additional Restricted Stock Units, as determined by the
Committee in its sole discretion.
SECTION 9. Performance Awards.
(a) Grant. Subject to the provisions of the Plan and
contractual provisions affecting Micro, the Committee shall have sole and
complete authority to determine the Employees who shall receive a "Performance
Award", which shall consist of a right which is (i) denominated in cash or
Shares, (ii) valued, as determined by the Committee, in accordance with the
achievement of such performance goals during such performance periods as the
Committee shall establish, and (iii) payable at such time and in such form as
the Committee shall determine.
(b) Terms and Conditions. Subject to the terms of the Plan,
any contractual provisions affecting Micro and any applicable Award Agreement,
the Committee shall determine the performance goals to be achieved during any
performance period, the length of any performance period, the amount of any
Performance Award and the amount and kind of any payment or transfer to be
made pursuant to any Performance Award.
(c) Payment of Performance Awards. Performance Awards may be
paid in a lump sum or in installments following the close of the performance
period or, in accordance with procedures established by the Committee, on a
deferred basis.
SECTION 10. Other Stock-Based Awards. The Committee shall
have authority to grant to eligible Employees an "Other Stock-Based Award",
which shall consist of any right which is (i) not an Award described in
Sections 6 through 9 above and (ii) an Award of Shares or an Award
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on or related to, Shares (including, without limitation,
securities convertible into Shares), as deemed by the Committee to be
consistent with the purposes of the Plan; provided that any such rights
must comply with applicable law, and to the extent deemed desirable by the
Committee, with Rule 16b-3. Subject to the terms of the Plan, any
contractual provisions affecting Micro and any applicable Award Agreement,
the Committee shall determine the terms and conditions of any such Other
Stock-Based Award.
SECTION 11. Termination or Suspension of Employment or
Service. The following provisions shall apply in the event of the
Participant's termination of employment or service unless the Committee shall
have provided otherwise, either at the time of the grant of the Award or
thereafter.
(a) Nonqualified Stock Options and Stock Appreciation Rights.
(i) Termination of Employment or Service. Except as the
Committee may at any time otherwise provide or as required to comply with
applicable law, if the Participant's employment or services with Micro or
its Affiliates is terminated for any reason other than death, disability,
or retirement, the Participant's right to exercise any Nonqualified Stock
Option or Stock Appreciation Right shall terminate, and such Option or
Stock Appreciation Right shall expire, on the earlier of (A) the sixtieth
day following such termination of employment or service or (B) the date
such Option or Stock Appreciation Right would have expired had it not been
for the termination of employment or services. The Participant shall have
the right to exercise such Option or Stock Appreciation Right prior to such
expiration to the extent it was exercisable at the date of such termination
of employment or service and shall not have been exercised.
(ii) Death, Disability or Retirement. Except as the Committee
may at any time otherwise provide or as required to comply with applicable
law, if the Participant's employment or services with Micro or its Affiliates
is terminated by reason of death, disability, or retirement, the Participant
or his successor (if employment or service is terminated by death) shall have
the right to exercise any Nonqualified Stock Option or Stock Appreciation
Right during the one-year period following such termination of employment or
service, to the extent it was exercisable and outstanding at the date of such
termination of employment or service, but in no event shall such option be
exercisable later than the date the Option would have expired had it not been
for the termination of such employment or services. The meaning of the terms
"disability" and "retirement" shall be determined by the Committee.
(iii) Acceleration or Extension of Exercisability.
Notwithstanding the foregoing, the Committee may, in its discretion, provide
at any time (A) that an Option granted to a Participant may terminate at a
date earlier than that set forth above, (B) that an Option granted to a
Participant may terminate at a date later than that set forth above, provided
such date shall not be beyond the date the Option would have expired had it
not been for the termination of the Participant's employment or service and
(C) that an Option or Stock Appreciation Right may become immediately
exercisable when it finds that such acceleration would be in the best
interests of Micro.
(b) Incentive Stock Options. Except as otherwise determined
by the Committee at the time of grant or otherwise or as required to comply
with applicable law, if the Participant's employment with Micro and its
Affiliates is terminated for any reason, the Participant shall have the right
to exercise any Incentive Stock Option and any related Stock Appreciation
Right during the 90 days after such termination of employment to the extent it
was exercisable at the date of such termination, but in no event later than
the date the Option would have expired had it not been for the termination of
such employment. If the Participant does not exercise such Option or related
Stock Appreciation Right to the full extent permitted by the preceding
sentence, the remaining exercisable portion of such Option automatically will
be deemed a Nonqualified Stock Option, and such Option and the related Stock
Appreciation Right will be exercisable during the period set forth in Section
11(a) of the Plan, provided that in the event that employment is terminated
because of death or the Participant dies in such 90-day period the Option will
continue to be an Incentive Stock Option to the extent provided by Section 421
or Section 422 of the Code, or any successor provision, and any regulations
promulgated thereunder.
(c) Restricted Stock. Except as otherwise determined by the
Committee at the time of grant or as required to comply with applicable law,
upon termination of employment or service for any reason during the
restriction period, all shares of Restricted Stock still subject to
restriction shall be forfeited by the Participant and reacquired by Micro at
the price (if any) paid by the Participant for such Restricted Stock; provided
that in the event of Participant's retirement, disability, or death, or in
cases of special circumstances, the Committee may, in its sole discretion,
when it finds that a waiver would be in the best interests of Micro, waive in
whole or in part any or all remaining restrictions with respect to such
participant's shares of Restricted Stock. Any time spent by a participant in
the status of "leave without pay" shall extend the period otherwise required
for purposes of determining the extent to which any Award or portion thereof
has vested or otherwise become exercisable or nonforfeitable.
(d) Except as the Committee may otherwise determine, for
purposes hereof any termination of a Participant's employment or service for
any reason shall occur on the date Participant ceases to perform services for
Micro or any Affiliate without regard to whether Participant continues
thereafter to receive any compensatory payments therefrom or is paid salary
thereby in lieu of notice of termination or, with respect to a member of the
Board who is not also an employee of Micro or any Affiliate, the date such
Participant is no longer a member of the Board.
SECTION 12. Merger. In the event of a merger of Micro with or
into another corporation, each outstanding Award may be assumed or an
equivalent award may be substituted by such successor corporation or a parent
or subsidiary of such successor corporation. If, in such event, an Award is
not assumed or substituted, the Award shall terminate as of the date of the
closing of the merger. For the purposes of this paragraph, the Award shall be
considered assumed if, following the merger, the Award confers the right to
purchase or receive, for each Share subject to the Award immediately prior to
the merger, the consideration (whether stock, cash, or other securities or
property) received in the merger by holders of Common Stock for each Share
held on the effective date of the transaction (and if the holders are offered
a choice of consideration, the type of consideration chosen by the holders of
a majority of the outstanding Shares). If such consideration received in the
merger is not solely common stock of the successor corporation or its parent,
the Committee may, with the consent of the successor corporation, provide for
the consideration to be received upon the exercise of the Award, for each
Share subject to the Award, to be solely common stock of the successor
corporation or its parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger.
SECTION 13. Amendment and Termination.
(a) Amendments to the Plan. The Board may amend, alter,
suspend, discontinue, or terminate the Plan or any portion thereof at any
time; provided that no such amendment, alteration, suspension, discontinuation
or termination shall be made without shareholder approval if such approval is
necessary to comply with any tax or regulatory requirement, including for
these purposes any approval requirement which is a prerequisite for exemptive
relief from Section 16(b) of the Exchange Act, for which or with which the
Board deems it necessary or desirable to qualify or comply. Notwithstanding
anything to the contrary herein, the Committee may amend the Plan in such
manner as may be necessary so as to have the Plan conform with local rules and
regulations in any jurisdiction outside the United States.
(b) Amendments to Awards. Subject to the terms of the Plan
and applicable law, the Committee may waive any conditions or rights under,
amend any terms of, or alter, suspend, discontinue, cancel or terminate, any
Award theretofore granted, prospectively or retroactively; provided that any
such waiver, amendment, alteration, suspension, discontinuance, cancellation
or termination that would adversely affect the rights of any Participant or
any holder or beneficiary of any Award theretofore granted shall not to that
extent be effective without the consent of the affected Participant, holder or
beneficiary.
(c) Cancellation. Any provision of this Plan or any Award
Agreement to the contrary notwithstanding, the Committee may cause any Award
granted hereunder to be cancelled in consideration of a cash payment or
alternative Award made to the holder of such cancelled Award equal in value to
the Fair Market Value of such cancelled Award.
SECTION 14. General Provisions.
(a) Dividend Equivalents. In the sole and complete discretion
of the Committee, an Award, whether made as an Other Stock-Based Award under
Section 10 or as an Award granted pursuant to Sections 6 through 9 hereof, may
provide the Participant with dividends or dividend equivalents, payable in
cash, Shares, other securities or other property on a current or deferred
basis.
(b) Nontransferability. No Award shall be assigned,
alienated, pledged, attached, sold or otherwise transferred or encumbered by a
Participant, except by will or the laws of descent and distribution.
(c) No Rights to Awards. No Employee, Participant or other
Person shall have any claim to be granted any Award, and there is no
obligation for uniformity of treatment of Employees, Participants, or holders
or beneficiaries of Awards. The terms and conditions of Awards need not be
the same with respect to each recipient.
(d) Share Certificates. All certificates for Shares or
other securities of Micro or any Affiliate delivered under the Plan
pursuant to any Award or the exercise thereof shall be subject to such stop
transfer orders and other restrictions as the Committee may deem advisable
under the Plan or the rules, regulations and other requirements of the
Securities and Exchange Commission or any stock exchange upon which such
Shares or other securities are then listed and any applicable laws or rules
or regulations, and the Committee may cause a legend or legends to be put
on any such certificates to make appropriate reference to such
restrictions.
(e) Withholding. A Participant may be required to pay to
Micro or any Affiliate, and Micro or any Affiliate shall have the right and is
hereby authorized to withhold from any Award, from any payment due or transfer
made under any Award or under the Plan or from any compensation or other
amount owing to a Participant the amount (in cash, Shares, other securities,
other Awards or other property) of any applicable withholding taxes in respect
of an Award, its exercise, or any payment or transfer under an Award or under
the Plan and to take such other action as may be necessary in the opinion of
Micro to satisfy all obligations for the payment of such taxes. The Committee
may provide for additional cash payments to holders of Awards to defray or
offset any tax arising from any such grant, lapse, vesting, or exercise of any
Award.
(f) Award Agreements. Each Award hereunder shall be evidenced
by an Award Agreement which shall be delivered to the Participant and shall
specify the terms and conditions of the Award and any rules applicable
thereto.
(g) No Limit on Other Compensation Arrangements. Nothing
contained in the Plan shall prevent Micro or any Affiliate from adopting or
continuing in effect other compensation arrangements, which may, but need not,
provide for the grant of options, restricted stock, Shares and other types of
Awards provided for hereunder (subject to shareholder approval if such
approval is required), and such arrangements may be either generally
applicable or applicable only in specific cases.
(h) No Right to Employment. The grant of an Award shall not
be construed as giving a Participant the right to be retained in the employ or
service of Micro or any Affiliate. Further, Micro or an Affiliate may at any
time dismiss a Participant from employment or service, free from any liability
or any claim under the Plan, unless otherwise expressly provided in the Plan
or in any Award Agreement.
(i) Rights as a Stockholder. Subject to the provisions of the
applicable Award, no Participant or holder or beneficiary of any Award shall
have any rights as a stockholder with respect to any Shares to be issued under
the Plan until he or she has become the holder of such Shares.
Notwithstanding the foregoing, in connection with each grant of Restricted
Stock hereunder, the applicable Award shall specify if and to what extent the
Participant shall not be entitled to the rights of a stockholder in respect of
such Restricted Stock.
(j) Governing Law. The validity, construction, and effect of
the Plan and any rules and regulations relating to the Plan and any Award
Agreement shall be determined in accordance with the laws of the State of
Delaware.
(k) Severability. If any provision of the Plan or any
Award is or becomes or is deemed to be invalid, illegal, or unenforceable
in any jurisdiction or as to any Person or Award, or would disqualify the
Plan or any Award under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to the applicable
laws, or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan
or the Award, such provision shall be stricken as to such jurisdiction,
Person or Award and the remainder of the Plan and any such Award shall
remain in full force and effect.
(l) Other Laws. The Committee may refuse to issue or transfer
any Shares or other consideration under an Award if, acting in its sole
discretion, it determines that the issuance or transfer of such Shares or such
other consideration might violate any applicable law or regulation or entitle
Micro to recover the same under Section 16(b) of the Exchange Act, and any
payment tendered to Micro by a Participant in connection therewith shall be
promptly refunded to the relevant Participant, holder or beneficiary. Without
limiting the generality of the foregoing, no Award granted hereunder shall be
construed as an offer to sell securities of Micro, and no such offer shall be
outstanding, unless and until the Committee in its sole discretion has
determined that any such offer, if made, would be in compliance with all
applicable requirements of the U.S. federal securities laws and any other laws
to which such offer, if made, would be subject.
(m) No Trust or Fund Created. Neither the Plan nor any Award
shall create or be construed to create a trust or separate fund of any kind or
a fiduciary relationship between Micro or any Affiliate and a Participant or
any other Person. To the extent that any Person acquires a right to receive
payments from Micro or any Affiliate pursuant to an Award, such right shall be
no greater than the right of any unsecured general creditor of Micro or any
Affiliate.
(n) No Fractional Shares. No fractional Shares shall be
issued or delivered pursuant to the Plan or any Award, and the Committee shall
determine whether cash or other securities or other property shall be paid or
transferred in lieu of any fractional Shares or whether such fractional Shares
or any rights thereto shall be cancelled, terminated, or otherwise eliminated.
(o) Transfer Restrictions. Shares acquired hereunder may not
be sold, assigned, transferred, pledged or otherwise disposed of, except as
provided in the Plan, the applicable Award Agreement or the applicable
Purchase Agreement.
(p) Headings. Headings are given to the Sections and
subsections of the Plan solely as a convenience to facilitate reference. Such
headings shall not be deemed in any way material or relevant to the
construction or interpretation of the Plan or any provision thereof.
SECTION 15. Term of the Plan.
(a) Effective Date. The Plan shall be effective as of [IPO
Effective Date], subject to approval by the shareholders of Micro. Awards may
be granted hereunder prior to such shareholder approval subject in all cases,
however, to such approval.
(b) Expiration Date. No Incentive Stock Option shall be
granted under the Plan after December 31, 2005. Unless otherwise expressly
provided in the Plan or in an applicable Award Agreement, any Award granted
hereunder may, and the authority of the Board or the Committee to amend,
alter, adjust, suspend, discontinue, or terminate any such Award or to waive
any conditions or rights under any such Award shall, continue after the
authority for grant of new Awards hereunder has been exhausted.
EXHIBIT 10.12
K&S DRAFT
10/22/96
US $1,000,000,000
CREDIT AGREEMENT
dated as of October __, 1996
among
INGRAM MICRO INC.,
INGRAM EUROPEAN COORDINATION CENTER N.V.,
INGRAM MICRO SINGAPORE PTE LTD.
and
INGRAM MICRO INC. (Canada),
as Borrowers and Guarantors,
CERTAIN FINANCIAL INSTITUTIONS,
as the Lenders,
NATIONSBANK OF TEXAS, N.A.,
as Administrative Agent
for the Lenders,
and
THE BANK OF NOVA SCOTIA,
as Documentation Agent for the Lenders,
and
THE CHASE MANHATTAN BANK,
DG BANK, NEW YORK BRANCH,
THE FIRST NATIONAL BANK OF CHICAGO,
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, ATLANTA AGENCY
and
ROYAL BANK OF CANADA,
as Co-Agents
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1. Defined Terms.......................................................3
1.2. Use of Defined Terms...............................................30
1.3. Cross-References...................................................30
1.4. Accounting and Financial Determinations............................30
1.5. Calculations.......................................................31
ARTICLE II
COMMITMENTS, ETC.
2.1. Commitments........................................................31
2.2. Extensions of the Commitment Termination Date......................32
2.3. Reductions of the Commitment Amounts...............................34
ARTICLE III
BORROWING PROCEDURES,
LETTERS OF CREDIT AND REGISTERS
3.1. Borrowing Procedure for Pro-Rata Revolving Loans...................35
3.2. Pro-Rata Letter of Credit Issuance Procedures......................36
3.2.1. Other Lenders' Participation.......................................36
3.2.2. Disbursements......................................................37
3.2.3. Reimbursement......................................................38
3.2.4. Deemed Disbursements...............................................38
3.2.5. Nature of Reimbursement Obligations................................38
3.3. Non-Rata Revolving Loan Facility...................................39
3.3.1. Non-Rata Revolving Loans...........................................39
3.3.2. Ineligible Currencies..............................................40
3.3.3. Limitations on Making Non-Rata Revolving Loans.....................40
3.3.4. Procedure for Making Non-Rata Revolving Loans......................40
3.3.5. Maturity of Non-Rata Revolving Loans...............................41
3.3.6. Non-Rata Revolving Loan Records....................................41
3.3.7. Quarterly Report...................................................41
3.4. Non-Rata Letter of Credit Facility.................................42
3.4.1. Non-Rata Letters of Credit.........................................42
3.4.2. Ineligible Currencies..............................................42
3.4.3. Limitations on Issuing Non-Rata Letters of Credit..................42
3.4.4. Procedures for Issuing Non-Rata Letters of Credit..................42
3.4.5. Disbursements......................................................42
3.4.6. Reimbursement......................................................43
3.5. Bid Rate Facility..................................................43
3.5.1. Bid Rate Loans.....................................................43
3.5.2. Quote Request......................................................43
3.5.3. Submission of Quotes...............................................44
3.5.4. Acceptance of Quotes...............................................44
3.5.5. Bid Rate Loan......................................................45
3.5.6. Maturity of Bid Rate Loans.........................................45
3.5.7. Bid Rate Loan Records..............................................45
3.5.8. Limitations on Making Bid Rate Loans...............................45
ARTICLE IV
PRINCIPAL, INTEREST AND FEE PAYMENTS
4.1. Repayments and Prepayments of Pro-Rata Revolving Loans.............46
4.2. Interest Provisions................................................47
4.2.1. Rates..............................................................47
4.2.2. Post-Maturity Rates................................................48
4.2.3. Continuation and Conversion Elections..............................48
4.2.4. Payment Dates......................................................48
4.2.5. Interest Rate Determination........................................49
4.2.6. Additional Interest on LIBO Rate Loans.............................49
4.3. Fees...............................................................50
4.3.1. Administration and Documentation Fees..............................50
4.3.2. Facility Fees......................................................50
4.3.3. Letter of Credit Fees..............................................51
4.4. Rate and Fee Determinations........................................52
4.5. Obligations in Respect of Non-Rata Credit Extensions...............52
ARTICLE V
CERTAIN PAYMENT PROVISIONS
5.1. Illegality; Currency Restrictions..................................52
5.2. Deposits Unavailable...............................................53
5.3. Increased Credit Extension Costs, etc..............................54
5.4. Funding Losses.....................................................54
5.5. Increased Capital Costs............................................55
5.6. Discretion of Lenders as to Manner of Funding......................55
5.7. Taxes..............................................................55
5.8. Payments...........................................................57
5.8.1. Pro-Rata Credit Extensions.........................................57
5.8.2. Non-Rata Obligations...............................................58
5.9. Sharing of Payments................................................59
5.10. Right of Set-off...................................................60
5.11. Judgments, Currencies, etc.........................................61
5.12. Replacement of Lenders.............................................61
5.13. Change of Lending Office...........................................61
ARTICLE VI
CONDITIONS TO MAKING CREDIT EXTENSIONS
AND ACCESSION OF ACCEDING BORROWERS
6.1. Initial Credit Extension...........................................62
6.1.1. Resolutions, etc...................................................62
6.1.2. Effective Date Certificate.........................................62
6.1.3. Delivery of Notes..................................................63
6.1.4. Guaranties, etc....................................................63
6.1.5. Financial Information, etc.........................................63
6.1.6. Compliance Certificate.............................................63
6.1.7. Payment of Outstanding Indebtedness................................63
6.1.8. Consents, etc......................................................63
6.1.9. Closing Fees, Expenses, etc........................................64
6.1.10. Opinions of Counsel................................................64
6.1.11. Investment Prospectus..............................................64
6.1.12. Senior Executive Officer's Certificate.............................64
6.1.13. Satisfactory Legal Form............................................65
6.2. All Credit Extensions..............................................65
6.2.1. Compliance with Warranties, No Default, etc........................65
6.2.2. Credit Extension Request...........................................66
6.2.3. Non-Rata Revolving Loans...........................................66
6.2.4. Non-Rata Letters of Credit.........................................66
6.2.5. Bid Rate Loans.....................................................67
6.3. Acceding Borrowers.................................................67
6.3.1. Resolutions, etc...................................................67
6.3.2. Delivery of Accession Request and Acknowledgment and Notes.........67
6.3.3. Guaranties, etc....................................................68
6.3.4. Compliance Certificate.............................................68
6.3.5. Consents, etc......................................................68
6.3.6. Opinions of Counsel................................................68
6.4. Waiver of Notice under Existing Industries Credit Agreement........68
6.5. Waiver of Notice under Existing Micro Credit Agreement.............68
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
7.1. Organization, etc..................................................69
7.2. Due Authorization, Non-Contravention, etc..........................69
7.3. No Default.........................................................69
7.4. Government Approval, Regulation, etc...............................70
7.5. Validity, etc......................................................70
7.6. Financial Information..............................................70
7.7. No Material Adverse Effect.........................................70
7.8. Litigation, Labor Controversies, etc...............................71
7.9. Subsidiaries.......................................................71
7.10. Ownership of Properties............................................71
7.11. Taxes..............................................................71
7.12. Pension and Welfare Plans..........................................71
7.13. Environmental Warranties...........................................72
7.14. Outstanding Indebtedness...........................................72
7.15. Accuracy of Information............................................72
7.16. Patents, Trademarks, etc...........................................73
7.17. Margin Stock.......................................................73
ARTICLE VIII
COVENANTS
8.1. Affirmative Covenants..............................................74
8.1.1. Financial Information, Reports, Notices, etc.......................74
8.1.2. Compliance with Laws, etc..........................................76
8.1.3. Maintenance of Properties..........................................76
8.1.4. Insurance..........................................................77
8.1.5. Books and Records..................................................77
8.1.6. Environmental Covenant.............................................77
8.1.7. Use of Proceeds....................................................78
8.1.8. Pari Passu.........................................................78
8.1.9. Guarantee or Suretyship............................................78
8.1.10. Additional Guaranty................................................78
8.1.11. Intra-Group Agreement, etc.........................................79
8.2. Negative Covenants.................................................79
8.2.1. Restriction on Incurrence of Indebtedness..........................79
8.2.2. Restriction on Incurrence of Liens.................................80
8.2.3. Financial Condition................................................82
8.2.4. Dividends..........................................................82
8.2.5. Consolidation, Merger, Asset Acquisitions, etc.....................82
8.2.6. Transactions with Affiliates.......................................84
8.2.7. Limitations on Margin Stock Acquisitions...........................85
8.2.8. Limitation on Sale of Trade Accounts Receivable....................85
8.2.9. Sale of Assets.....................................................85
8.2.10. Limitation on Businesses...........................................87
ARTICLE IX
EVENTS OF DEFAULT
9.1. Listing of Events of Default.......................................87
9.1.1. Non-Payment of Obligations.........................................87
9.1.2. Breach of Warranty.................................................87
9.1.3. Non-Performance of Certain Covenants and Obligations...............87
9.1.4. Non-Performance of Other Covenants and Obligations.................87
9.1.5. Default on Indebtedness............................................87
9.1.6. Judgments..........................................................88
9.1.7. Pension Plans......................................................88
9.1.8. Ownership; Board of Directors......................................88
9.1.9. Bankruptcy, Insolvency, etc........................................89
9.1.10. Guaranties.........................................................89
9.2. Action if Bankruptcy...............................................90
9.3. Action if Other Event of Default...................................90
9.4. Action by Terminating Lender.......................................90
9.5. Cash Collateral....................................................90
ARTICLE X
THE ADMINISTRATIVE AGENT AND
DOCUMENTATION AGENT
10.1. Authorization and Actions..........................................91
10.2. Funding Reliance, etc..............................................91
10.3. Exculpation........................................................92
10.4. Successor..........................................................92
10.5. Credit Extensions by NationsBank and Scotiabank....................93
10.6. Credit Decisions...................................................93
10.7. Copies, etc........................................................93
10.8. Reporting of Non-Rata Credit Extensions............................93
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. Waivers, Amendments, etc...........................................94
11.2. Notices............................................................95
11.3. Payment of Costs and Expenses......................................95
11.4. Indemnification....................................................96
11.5. Survival...........................................................97
11.6. Severability.......................................................97
11.7. Headings...........................................................97
11.8. Execution in Counterparts, Effectiveness; Entire Agreement.........97
11.9. Governing Law; Submission to Jurisdiction..........................97
11.10. Successors and Assigns.............................................98
11.11. Assignments and Transfers of Interests.............................99
11.11.1. Assignments........................................................99
11.11.2. Participations....................................................100
11.12. Other Transactions................................................101
11.13. Further Assurances................................................101
11.14. Waiver of Jury Trial..............................................101
11.15. Confidentiality...................................................101
11.16. Release of Subsidiary Guarantors and Supplemental Borrowers.......102
11.17. Collateral........................................................103
Schedule I - Disclosure Schedule
- Item 7.8
- Item 7.9
- Item 7.11
- Item 7.12
- Item 7.14
- Item 8.2.1(a)(ii)
- Item 8.2.2(a)
- Annex A
Schedule II - Lending Offices
Exhibit A-1 - Form of Revolving Note
Exhibit A-2 - Form of Bid Rate Note
Exhibit A-3 - Form of Non-Rata Revolving Note
Exhibit B - Form of Borrowing Request
Exhibit C - Form of Issuance Request
Exhibit D - Form of Continuation/Conversion Notice
Exhibit E - Form of Compliance Certificate
Exhibit F - Form of Effective Date Certificate
Exhibit G-1 - Form of Coordination Center Guaranty
Exhibit G-2 - Form of Intra-Group Agreement
Exhibit H - Form of Micro Guaranty
Exhibit I-1 - Form of Micro Canada Guaranty (Coordination Center/Micro
Singapore)
Exhibit I-2 - Form of Micro Canada Guaranty (Micro)
Exhibit I-3 - Form of Micro Singapore Guaranty
Exhibit J - Form of Additional Guaranty
Exhibit K - Form of Lender Assignment Agreement
Exhibit L - Form of Quarterly Report
Exhibit M - Form of Opinion of the General Counsel of Micro
Exhibit N - Form of Opinion of Davis Polk & Wardwell, Special counsel to
Micro
Exhibit O - Form of Opinion of Special Belgian counsel to Coordination
Center
Exhibit P - Form of Opinion of Special Canadian counsel to Micro Canada
Exhibit Q - Form of Opinion of Special Singapore counsel to Micro
Singapore
Exhibit R - Form of Opinion of counsel to the Agents
Exhibit S - Form of Commitment Extension Request
Exhibit T - Form of Accession Request and Acknowledgment
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of October __, 1996, among INGRAM MICRO
INC., a Delaware corporation ("Micro"), INGRAM EUROPEAN COORDINATION CENTER
N.V., a company organized and existing under the laws of The Kingdom of
Belgium ("Coordination Center"), INGRAM MICRO SINGAPORE PTE LTD., a
corporation organized and existing under the laws of Singapore ("Micro
Singapore"), INGRAM MICRO INC., a corporation organized and existing under
the laws of Ontario, Canada ("Micro Canada", and, collectively with
Coordination Center and Micro Singapore, the "Supplemental Borrowers"), the
financial institutions parties hereto (together with their respective
successors and permitted assigns and any branch or affiliate of a financial
institution funding a Loan as permitted by Section 5.6, collectively, the
"Lenders"), NATIONSBANK OF TEXAS, N.A. ("NationsBank"), as administrative
agent for the Lenders (in such capacity, the "Administrative Agent"), THE
BANK OF NOVA SCOTIA ("Scotiabank"), as documentation agent for the Lenders
(in such capacity, the "Documentation Agent" and, collectively with the
Administrative Agent, the "Agents"), and THE CHASE MANHATTAN BANK, DG BANK,
NEW YORK BRANCH, THE FIRST NATIONAL BANK OF CHICAGO, THE INDUSTRIAL BANK OF
JAPAN, LIMITED, ATLANTA AGENCY, and ROYAL BANK OF CANADA, as co-agents
(collectively in such capacity, the "Co-Agents").
WHEREAS, Micro and its Subsidiaries (such capitalized term and all other
capitalized terms used herein having the meanings provided in Section 1.1) are
engaged primarily in the business of the wholesale distribution of
microcomputer software and hardware products, multimedia products, customer
financing, assembly and configuration and other related wholesaling,
distribution and service activities; and
WHEREAS, Micro wishes to obtain:
(a) for itself Commitments from all the Lenders for Pro-Rata
Credit Extensions to be made prior to the Commitment Termination Date in
an aggregate amount in Dollars not to exceed the Total Credit Commitment
Amount at any one time outstanding, such Credit Extensions being
available on a committed basis as
(i) Pro-Rata Revolving Loans, and
(ii) Pro-Rata Letters of Credit in an aggregate amount at
any time issued and outstanding not to exceed $250,000,000;
(b) for itself and each other Borrower a protocol whereby each
such Borrower may, prior to the Commitment Termination Date and to the
extent the aggregate Commitments shall be unused and available from time
to time, request that any Lender make Non-Rata Revolving Loans and issue
Non-Rata Letters of Credit in any Available Currency, subject to a limit
on all Outstanding Credit Extensions consisting of Non-Rata Credit
Extensions of $750,000,000 in the aggregate; and
(c) for itself and each other Borrower a protocol whereby each
such Borrower may, prior to the Commitment Termination Date and to the
extent the aggregate Commitments shall be unused and available from time
to time, request that the Lenders make Bid Rate Loans, subject to a
limit on all Outstanding Credit Extensions consisting of Non-Rata Credit
Extensions of $750,000,000 in the aggregate; and
WHEREAS, each Borrower is willing to guarantee all Obligations of each
other Borrower on a joint and several basis; and
WHEREAS, the Lenders are willing, pursuant to and in accordance with the
terms of this Agreement:
(a) to extend severally Commitments to make, from time to time
prior to the Commitment Termination Date, Pro-Rata Credit Extensions in
an aggregate amount at any time outstanding not to exceed the excess of
the Total Credit Commitment Amount over the then Outstanding Credit
Extensions;
(b) to consider from time to time prior to the Commitment
Termination Date, in each Lender's sole and absolute discretion and
without commitment, making Non-Rata Revolving Loans and issuing Non-Rata
Letters of Credit in an aggregate principal amount not to exceed the
excess of the Total Credit Commitment Amount over the then Outstanding
Credit Extensions, subject to a limit on all Outstanding Credit
Extensions consisting of Non-Rata Credit Extensions of $750,000,000 in
the aggregate; and
(c) to consider quoting bids to make from time to time prior to
the Commitment Termination Date, in each Lender's sole and absolute
discretion and without commitment, Bid Rate Loans in an aggregate
principal amount not to exceed the excess of the Total Credit Commitment
Amount over the then Outstanding Credit Extensions, subject to a limit
on all Outstanding Credit Extensions consisting of Non-Rata Credit
Extensions of $750,000,000 in the aggregate; and
WHEREAS, the proceeds of the initial Credit Extensions will be used
either (a) through repayment of intercompany advances to refinance all amounts
outstanding under the Existing Industries Credit Agreement, and to repay other
Indebtedness required to be repaid and to make other payments required to be
made, in each case in connection with the consummation of the transactions
referred to in Section 6.1.12, or (b) to refinance all amounts outstanding
under the Existing Micro Credit Agreement, as the case may be, and the
proceeds of all subsequent Credit Extensions will be used for general
corporate purposes (including, working capital, Acquisitions (so long as such
Borrower has complied with Section 8.1.7), and liquidity support for commercial
paper borrowings) of each Borrower and its Subsidiaries;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms. The following terms (whether or not in
bold type) when used in this Agreement, including its preamble and
recitals, shall, except where the context otherwise requires, have the
following meanings (such meanings to be equally applicable to the singular
and plural forms thereof):
"Absolute Interest Rate" is defined in Section 3.5.3.
"Absolute Interest Rate Auction" means a solicitation of Quotes setting
forth Absolute Interest Rates pursuant to Section 3.5.3.
"Absolute Interest Rate Loans" means Bid Rate Loans, the interest rate
on which is determined on the basis of Absolute Interest Rates pursuant to an
Absolute Interest Rate Auction.
"Acceding Borrower" is defined in Section 6.3.
"Accession Request and Acknowledgment" means a request for accession
duly completed and executed by an Authorized Person of the applicable Acceding
Borrower and acknowledged by an Authorized Person of each Guarantor,
substantially in the form of Exhibit T hereto.
"Acquisition" shall mean any transaction, or any series of related
transactions, by which Micro and/or any of its Subsidiaries directly or
indirectly (a) acquires any ongoing business or all or substantially all of
the assets of any Person or division thereof, whether through purchase of
assets, merger or otherwise, (b) acquires (in one transaction or as the most
recent transaction in a series of transactions) control of at least a majority
in ordinary voting power of the securities of a Person which have ordinary
voting power for the election of directors or (c) otherwise acquires control
of a more than 50% ownership interest in any such Person.
"Additional Guarantor" means each other Subsidiary of Micro as shall
from time to time become a Guarantor in accordance with Section 8.1.10.
"Additional Guaranty" is defined in Section 8.1.10. and means a
guaranty, in the form of Exhibit J attached hereto, duly executed and
delivered by an Authorized Person of each Additional Guarantor, as amended,
supplemented, restated or otherwise modified from time to time.
"Additional Permitted Liens" means, as of any date, Liens securing
Indebtedness and not described in clauses (a) through (l) of Section 8.2.2,
but only to the extent that the sum (without duplication) of (a) the Amount of
Additional Liens on such date plus (b) the Total Indebtedness of Subsidiaries
(other than any Subsidiary that is a Guarantor) on such date does not exceed
fifteen percent (15%) of Consolidated Tangible Net Worth on such date.
"Administrative Agent" is defined in the preamble and includes each
other Person as shall have subsequently been appointed as the successor
Administrative Agent pursuant to Section 10.4.
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power:
(a) to vote, in the case of any Lender Party, ten percent (10%)
or more or, in the case of any other Person, thirty-five percent (35%)
or more, of the securities (on a fully diluted basis) having ordinary
voting power, for the election of directors or managing general
partners; or
(b) in the case of any Lender Party or any other Person, to
direct or cause the direction of the management and policies of such
Person whether by contract or otherwise.
"Affiliate Transaction" is defined in Section 8.2.6.
"Agents" is defined in the preamble.
"Agreement" means this Credit Agreement, as amended, supplemented,
restated or otherwise modified from time to time in accordance with its terms.
"Amount of Additional Liens" means, at any date, the aggregate principal
amount of Indebtedness secured by Additional Permitted Liens on such date.
"Applicable Margin" means, for any LIBO Rate Loan or Pro-Rata Letter of
Credit (i) for any day during the period from and including the Effective
Date, through and including the date the Administrative Agent shall receive
the reports and financial statements of Micro and its Consolidated
Subsidiaries required to be delivered pursuant to Section 8.1.1(a) hereof
(together with the Compliance Certificate required to be delivered
contemporaneously therewith pursuant to Section 8.1.1(d) hereof) for the
Fiscal Year ending on the Saturday nearest December 31, 1996, .250 of 1% per
annum and (ii) for any day subsequent to the date the Administrative Agent
shall receive the reports, financial statements and Compliance Certificate
described in the preceding clause (i), the corresponding rate per annum set
forth in the table below, determined by reference to: (a) the lower of the
two highest ratings from time to time assigned to Micro's long-term senior
unsecured debt by S&P, Moody's and Fitch and either published or otherwise
evidenced in writing by the applicable rating agency and made available to the
Administrative Agent (including both "express" and "indicative" or "implied"
(or equivalent) ratings) or (b) the ratio (calculated pursuant to clause (c)
of Section 8.2.3) of Consolidated Funded Debt to Consolidated EBITDA for the
Fiscal Period most recently ended prior to such day, for which financial
statements and reports have been received by the Administrative Agent pursuant
to Section 8.1.1(a) or (b), whichever results in the lower Applicable Margin:
<TABLE>
<CAPTION>
Micro's Long-Term Senior
Unsecured Debt Ratings Ratio of Consolidated LIBO Rate
by S&P, Moody's and Funded Debt to Loan Applicable
Fitch, respectively Consolidated EBITDA Margin
_________________________ _____________________ _______________
<S> <C> <C>
A-, A3 or A- (or higher) Less than 1.5 .160%
BBB+, Baa1 or BBB+ Greater than or equal to 1.5, but less than 2.0. .215%
BBB, Baa2 or BBB Greater than or equal to 2.0, but less than 2.5. .250%
BBB-, Baa3 or BBB- Greater than or equal to 2.5, but less than 3.0. .275%
BB+, Ba1 or BB+ Greater than or equal to 3.0, but less than 3.25. .400%
Lower than BB+, Ba1 or BB+ Greater than or equal to 3.25. .625%
</TABLE>
Any change in the Applicable Margin pursuant to clause (ii)(a) above, will be
effective as of the day subsequent to the date on which S&P, Moody's or Fitch,
as the case may be, releases the applicable change in its rating of Micro's
long-term senior unsecured debt.
"Authorized Person" means those officers or employees of each Obligor
whose signatures and incumbency shall have been certified to the
Administrative Agent pursuant to Section 6.1.1.
"Available Credit Commitment" means, relative to any Lender at any time,
the excess of such Lender's Percentage multiplied by the then Total Credit
Commitment Amount over such Lender's then Outstanding Credit Extensions (it
being understood that no reduction shall be made for any Non-Rata Credit
Extension).
"Available Currency" means for the purposes of any Non-Rata Revolving
Loans and Non-Rata Letters of Credit, Dollars, Canadian Dollars, Singapore
Dollars, Hong Kong Dollars, Swiss Francs, Belgian Francs, French Francs,
Guilders, Sterling, Marks, Lira, Mexican Pesos, Pesetas, Yen, Krona, Danish
Krone, Norwegian Krone, Schillings, Ringgit, Won, European Currency Units and
other mutually agreed currencies.
"Belgian Francs" means the lawful currency of The Kingdom of Belgium.
"Bid Rate Borrowing" has the meaning set forth in Section 3.5.2.
"Bid Rate Loan" means a loan made to a Borrower under Section 3.5.
"Bid Rate Note" means a promissory note of a Borrower payable to a
Lender, in the Form of Exhibit A-2 hereto (as such promissory note may be
amended, endorsed or otherwise modified from time to time), evidencing the
aggregate Indebtedness of such Borrower to such Lender resulting from Bid Rate
Loans, and also means all other promissory notes accepted from time to time in
substitution therefor or as a renewal thereof.
"Board Representation Agreement" means the Board Representation
Agreement delivered to the Administrative Agent pursuant to Section 6.1.1(c),
among Micro and the "Family Stockholders" (as defined therein) listed on the
signature pages thereof, as in effect on the date so delivered without giving
effect to any amendment, waiver, supplement or modification thereafter, except
for any such amendment, waiver, supplement or modification that does not
materially alter the terms thereof (excluding from such exception however, any
such amendment, waiver, supplement or modification that in any way expands the
scope of or materially affects the definition of "Family Stockholders" set
forth therein).
"Borrowers" means, collectively, Micro and the Supplemental Borrowers
party to this Agreement from time to time, together with their respective
successors and assigns.
"Borrower's Account" means such account maintained by a Borrower for
purposes of Section 3.5.5, as such Borrower may notify the Lenders from time
to time.
"Borrowing" means the Pro-Rata Revolving Loans of the same Type and, in
the case of any LIBO Rate Loan, having the same Interest Period, made by all
Lenders on the same Business Day and pursuant to the same Borrowing Request in
accordance with Section 2.1.
"Borrowing Request" means a loan request and certificate for Pro-Rata
Revolving Loans duly completed and executed by an Authorized Person of Micro,
substantially in the form of Exhibit B hereto.
"Business Day" means:
(a) any day which is neither a Saturday or Sunday nor a legal
holiday on which banks are authorized or required to be closed in New
York City or Dallas, Texas;
(b) relative to the making of any payment in respect of any
Credit Extension denominated in an Available Currency other than
Dollars, any day on which dealings in such Available Currency are
carried on in the relevant local money market;
(c) relative to the making, continuing, prepaying or repaying of
any LIBO Rate Loans, any day which is a Business Day described in clause
(a) above and which is also a day on which dealings in Dollars are
carried on in the London interbank eurodollar market; and
(d) with respect to any payment, notice or other event relating
to any Non-Rata Credit Extension, any day on which banks are open for
business in the location of the lending office of the Lender making such
Non-Rata Credit Extension available.
"Canadian Dollars" means lawful currency of Canada.
"Capitalized Lease Liabilities" of any Person means, at any time, any
obligation of such Person at such time to pay rent or other amounts under a
lease of (or other agreement conveying the right to use) real and/or personal
property, which obligation is, or in accordance with GAAP (including FASB
Statement 13) is required to be, classified and accounted for as a capital
lease on a balance sheet of such Person at the time incurred; and for purposes
of this Agreement the amount of such obligation shall be the capitalized
amount thereof determined in accordance with such FASB Statement 13.
"Co-Agents" is defined in the preamble.
"Code" means the Internal Revenue Code of 1986, as amended and as in
effect from time to time, and any rules and regulations promulgated thereunder.
"Commitment" means, relative to each Lender, its obligation under
clause (a) of Section 2.1 to make Pro-Rata Revolving Loans and under clause
(b) of Section 2.1 to participate in Pro-
Rata Letters of Credit and drawings thereunder.
"Commitment Extension Request" means a request for the extension of the
Commitment Termination Date duly executed by an Authorized Person of Micro,
substantially in the form of Exhibit S attached hereto.
"Commitment Termination Date" means the fifth anniversary of the date
hereof, or the earlier date of termination in whole of the Commitments
pursuant to Section 2.3, 9.2 or 9.3.
"Compliance Certificate" means a report duly completed, with
substantially the same information as set forth in Exhibit E attached hereto,
as such Exhibit E may be amended, supplemented, restated or otherwise modified
from time to time.
"consolidated", "consolidating" and any derivative thereof each means,
with reference to the accounts or financial reports of any Person, the
consolidated accounts or financial reports of such Person and each Subsidiary
of such Person determined in accordance with GAAP, including principles of
consolidation, consistent with those applied in the preparation of the
consolidated financial statements of Micro referred to in Section 7.6.
"Consolidated Assets" means, at any date, the total assets of Micro and
its Consolidated Subsidiaries as at such date in accordance with GAAP.
"Consolidated Current Assets" means, at any date, all amounts which
would be included as current assets on a consolidated balance sheet of Micro
and its Consolidated Subsidiaries as at such date in accordance with GAAP.
"Consolidated Current Liabilities" means, at any date, all amounts which
would be included as current liabilities on a consolidated balance sheet of
Micro and its Consolidated Subsidiaries as at such date in accordance with
GAAP, excluding any such current liabilities constituting Current Maturities
of Funded Debt at such date.
"Consolidated Current Ratio" means, at any date, the ratio of:
(a) Consolidated Current Assets as at such date, to
(b) Consolidated Current Liabilities as at such date.
"Consolidated EBITDA" means, for any period, Consolidated Net Income
adjusted by adding thereto the amount of Consolidated Interest Charges that
were deducted in arriving at Consolidated Net Income for such period and all
amortization of intangibles, taxes, depreciation and any other non-cash
charges that were deducted in arriving at Consolidated Net Income for such
period.
"Consolidated Funded Debt" means, as of any date of determination, the
total of all Funded Debt of Micro and its Consolidated Subsidiaries
outstanding on such date, after eliminating all offsetting debits and credits
between Micro and its Subsidiaries and all other items required to be
eliminated in the course of the preparation of consolidated financial
statements of Micro and its Subsidiaries in accordance with GAAP.
"Consolidated Interest Charges" means, with respect to any period, the
sum (without duplication) of the following (in each case, eliminating all
offsetting debits and credits between Micro and its Subsidiaries and all other
items required to be eliminated in the course of the preparation of
consolidated financial statements of Micro and its Subsidiaries in accordance
with GAAP):
(a) aggregate net interest expense in respect of Indebtedness of
Micro and its Subsidiaries (including imputed interest on Capitalized
Lease Liabilities) deducted in determining Consolidated Net Income for
such period plus, to the extent not deducted in determining Consolidated
Net Income for such period, the amount of all interest previously
capitalized or deferred that was amortized during such period, and
(b) all debt discount and expense amortized or required to be
amortized in the determination of Consolidated Net Income for such
period, and
(c) all attributable interest and fees in lieu of interest
associated with any securitizations by Micro or any of its Subsidiaries.
"Consolidated Liabilities" means, at any date, the sum of all
obligations of Micro and its Consolidated Subsidiaries as at such date in
accordance with GAAP.
"Consolidated Net Income" means, for any period, the consolidated net
income of Micro and its Consolidated Subsidiaries as reflected on a statement
of income of Micro and its Consolidated Subsidiaries for such period in
accordance with GAAP.
"Consolidated Retained Receivables" means, at any date, the face amount
(calculated in Dollars but net of any amount allocated to the relevant Trade
Account Receivable with respect to any reserve or similar allowance for
doubtful payment) of all Trade Accounts Receivable of Micro and its
Consolidated Subsidiaries outstanding as at such date (including, in the case
of any receivables that have been sold, assigned or otherwise transferred to a
trust, the amount of such receivables net of any amount of Consolidated
Transferred Receivables determined with respect thereto, it being agreed for
the avoidance of doubt that Consolidated Retained Receivables shall not
include any Consolidated Transferred Receivables).
"Consolidated Stockholders' Equity" means, at any date:
(a) Consolidated Assets as at such date, less
(b) Consolidated Liabilities as at such date.
"Consolidated Subsidiary" means any Subsidiary whose financial
statements are required in accordance with GAAP to be consolidated with the
consolidated financial statements delivered by Micro from time to time in
accordance with Section 8.1.1.
"Consolidated Tangible Net Worth" means, at any date:
(a) Consolidated Stockholders' Equity as at such date plus the
accumulated after-tax amount of non-cash charges and adjustments to
income and Consolidated Stockholders' Equity attributable to employee
stock options and stock purchases through such date, less
(b) goodwill and other Intangible Assets of Micro and its
Consolidated Subsidiaries.
"Consolidated Transferred Receivables" means, at any date, the face
amount (calculated in Dollars but net of any amount allocated by Micro or any
of its Consolidated Subsidiaries to the relevant Trade Account Receivable with
respect to any reserve or similar allowance for doubtful payment) of all Trade
Accounts Receivable originally payable to the account of Micro or any of its
Consolidated Subsidiaries, which have not been discharged at such date and in
respect of which Micro's or any such Consolidated Subsidiary's rights and
interests, have, on or prior to such date, been sold, assigned or otherwise
transferred, in whole or in part, to any Person other than Micro or any of its
Consolidated Subsidiaries (either directly or by way of such Person holding an
undivided interest in a specified amount of Trade Accounts Receivable sold,
assigned or otherwise transferred to a trust).
"Contingent Liability" means any agreement, undertaking or arrangement
by which any Person guarantees, endorses or otherwise becomes or is
contingently liable (by direct or indirect agreement, contingent or otherwise)
to provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or obligation or any other liability of any other Person (other than
by endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other
person, if the primary purpose or intent thereof by the Person incurring the
Contingent Liability is to provide assurance to the obligee of such obligation
of another Person that such obligation of such other Person will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such obligation will be protected (in whole or in part)
against loss in respect thereof. The amount of any Person's obligation under
any Contingent Liability shall (subject to any limitation set forth therein)
be deemed to be the outstanding principal amount of the debt, obligation or
other liability guaranteed thereby.
"Continuation/Conversion Notice" means a notice of continuation or
conversion and certificate for Pro-Rata Revolving Loans duly completed and
executed by an Authorized Person of Micro, substantially in the form of
Exhibit D attached hereto.
"Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with Micro,
are treated as a single employer under Section 414(b) or 414(c) of the Code or
Section 4001 of ERISA.
"Coordination Center" is defined in the preamble.
"Coordination Center Guaranty" means a guaranty, in the form of Exhibit
G-1 attached hereto, duly executed and delivered by an Authorized Person of
Coordination Center, as amended, supplemented, restated or otherwise modified
from time to time.
"Credit Commitment Amount" means, relative to any Lender at any time,
such Lender's Percentage multiplied by the then Total Credit Commitment Amount
as in effect at such time.
"Credit Extension" means, as the context may require,
(a) any Pro-Rata Credit Extension; or
(b) the making of a Non-Rata Credit Extension by the relevant
Lender.
"Credit Extension Request" means, as the context may require, a
Borrowing Request, a Continuation/Conversion Notice or an Issuance Request.
"Current Maturities of Funded Debt" means, at any time and with respect
to any item of Funded Debt, the portion of such Funded Debt outstanding at
such time which by the terms of such Funded Debt or the terms of any
instrument or agreement relating thereto is due on demand or within one year
from such time (whether by sinking fund, other required prepayment or final
payment at maturity) and is not directly or indirectly renewable, extendible
or refundable at the option of the obligor under an agreement or firm
commitment in effect at such time to a date one year or more from such time.
"Danish Krone" means the lawful currency of Denmark.
"Default" means any Event of Default or any condition, occurrence or
event which, after notice or lapse of time or both, would constitute an Event
of Default.
"Disbursement Date" is defined in Section 3.2.2.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I, as the same may be amended, supplemented or otherwise modified
from time to time by Micro with the consent of the Administrative Agent and
the Required Lenders.
"Documentation Agent" is defined in the preamble and includes each other
Person as shall have subsequently been appointed as the successor
Documentation Agent pursuant to Section 10.4.
"Dollar" and the sign "$" each mean the lawful currency of the United
States.
"Dollar Amount" means, at any date:
(a) with respect to an amount denominated in Dollars, such
amount as at such date; and
(b) with respect to an amount denominated in any other Available
Currency, the amount of Dollars into which such Available Currency is
convertible into Dollars, as at such date and on the terms herein
provided.
"Effective Date" is defined in Section 11.8.
"Effective Date Certificate" means a certificate duly completed and
executed by an Authorized Person of Micro, substantially in the form of
Exhibit F hereto.
"Eligible Assignee" means (i) a commercial bank organized under the laws
of the United States, or any State thereof; (ii) a commercial bank organized
under the laws of any other country that is a member of the Organization for
Economic Cooperation and Development or has concluded special lending
arrangements with the International Monetary Fund associated with its General
Arrangements to Borrow, or a political subdivision of any such country,
provided that such bank is acting through a branch or agency located in the
United States; (iii) the central bank of any country that is a member of the
Organization for Economic Cooperation and Development; (iv) any Lender; or (v)
solely during the occurrence and continuance of a Default, a finance company,
insurance company or other financial institution or fund (whether a
corporation, partnership or other entity) engaged generally in making,
purchasing and otherwise investing in commercial loans in the ordinary course
of its business; provided, however, that (A) any Person described in clause
(i), (ii) or (iii) above shall also (x) have outstanding unsecured indebtedness
that is rated A- or better by S&P, A3 or better by Moody's or A- or better by
Fitch (or an equivalent rating by another nationally recognized credit rating
agency of similar standing if such corporations are no longer in the business
of rating unsecured indebtedness of entities engaged in such businesses), (y)
have combined capital and surplus (as established in its most recent report
of condition to its primary regulator) of not less than $250,000,000 (or its
equivalent in foreign currency) and (z) be reasonably acceptable to the
Administrative Agent and, so long as no Default shall have occurred and be
continuing, Micro, (B) any Person described in clause (v) above shall (x) have
combined capital and surplus (as established in its most recent report of
condition to its primary regulator) of not less than $250,000,000 (or its
equivalent in foreign currency) and (y) be reasonably acceptable to the
Administrative Agent and Micro and (C) any Person described in clause (ii),
(iii) or (v) above shall, on the date on which it is to become a Lender
hereunder, be entitled to receive payments hereunder without deduction or
withholding of any United States Federal income taxes.
"Entertainment" means Ingram Entertainment Inc., a Tennessee corporation.
"Environmental Laws" means any and all applicable statutes, laws,
ordinances, codes, rules, regulations and binding and enforceable guidelines
(including consent decrees and administrative orders binding on any Obligor or
any of their respective Subsidiaries), in each case as now or hereafter in
effect, relating to human health and safety, or the regulation or protection
of the environment, or to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals or toxic or hazardous
substances or wastes into the indoor or outdoor environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants,
chemicals or toxic or hazardous substances or wastes issued (presently or in
the future) by any Federal, state, or local authority in the United States or
any foreign jurisdiction in which any Obligor or any of their respective
Subsidiaries is conducting its business.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the rules
and regulations promulgated thereunder, in each case as in effect from time to
time. References to sections of ERISA also refer to any successor sections.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the F.R.S. Board, as in effect from time to time.
"European Currency Units" means the composite currency unit designated
as such by the European Community.
"Event of Default" is defined in Section 9.1.
"Excess Amount" is defined in clause (d) of Section 5.9.
"Existing Industries Credit Agreement" means the Amended and Restated
Credit Agreement, dated as of May 5, 1995, among the Borrowers (other than
Micro Singapore), Industries, Entertainment, Ingram Ohio Barge Co., Ingram
Micro Singapore Inc., the various financial institutions parties thereto, and
the co-agents, lead managers and European agent named therein, as amended.
"Existing Micro Credit Agreement" means that certain Credit Agreement,
among the Borrowers, the various financial institutions parties thereto, and
the co-agents, lead managers and European agent named therein, which may
replace (with respect to the Borrowers) the Existing Industries Credit
Agreement on or prior to the Effective Date.
"FASB" means the Financial Accounting Standards Board.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to:
(a) the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is not
a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York; or
(b) if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three federal
funds brokers of recognized standing selected by it.
In the case of a day which is not a Business Day, the Federal Funds Rate for
such day shall be the Federal Funds Rate for the next preceding Business Day.
For purposes of this Agreement, any change in the Reference Rate due to a
change in the Federal Funds Rate shall be effective on the effective date of
such change in the Federal Funds Rate.
"Fee Letter" means that certain confidential letter, dated as of the
date hereof, among Scotiabank and NationsBank and Micro, relating to certain
fees to be paid in connection with this Agreement.
"Fiscal Period" means a fiscal period of Micro or any of its
Subsidiaries, which shall be either a calendar quarter or an aggregate period
comprised of three (3) consecutive periods of four (4) weeks and five (5)
weeks (or, on occasion, six (6) weeks instead of five), currently commencing
on or about each January 1, April 1, July 1 or October 1.
"Fiscal Year" means, with respect to any Person, the fiscal year of such
Person. The term Fiscal Year, when used without reference to any Person,
shall mean a Fiscal Year of Micro, which currently ends on the Saturday
nearest December 31.
"Fitch" means Fitch Investors Service, L.P.
"French Francs" means the lawful currency of France.
"F.R.S. Board" is defined in Section 7.17.
"Funded Debt" means, with respect to any Person, all Indebtedness of
such Person which by its terms or by the terms of any instrument or agreement
relating thereto matures, or which is otherwise payable or unpaid, one year or
more from, or is directly or indirectly renewable or extendible at the option
of the obligor in respect thereto to a date one year or more (including,
without limitation, an option of such obligor under a revolving credit or
similar agreement obligating the lender or lenders to extend credit over a
period of one year or more) from, the date of the creation thereof, provided
that Funded Debt shall include, as at any date of determination, Current
Maturities of Funded Debt.
"GAAP" is defined in Section 1.4.
"Guarantee Letter of Credit Obligations" means any contingent legal
obligations of any Person to reimburse any financial institution for draws on
letters of credit (including those issued pursuant to this Agreement) issued
for the account of such Person to support or ensure payment or performance of
Indebtedness or obligations of some other Person provided no such draws have
been made and such obligation to reimburse is not then due and payable; it
being understood that no obligation with respect to any letter of credit
(including those issued pursuant to this Agreement) may be treated as both a
Reimbursement Obligation and a Guarantee Letter of Credit Obligation.
"Guaranties" means, collectively,
(a) the Micro Guaranty;
(b) the Coordination Center Guaranty;
(c) the Micro Canada Guaranty (Micro);
(d) the Micro Canada Guaranty (Coordination Center/Micro
Singapore);
(e) the Micro Singapore Guaranty; and
(f) each Additional Guaranty.
"Guarantors" means, collectively, the Borrowers and each Additional
Guarantor.
"Guilders" means the lawful currency of the Kingdom of the Netherlands.
"Hazardous Material" means:
(a) any pollutant or contaminant or hazardous, dangerous or
toxic chemical, material or substance that is presently or hereafter
becomes defined as or included in the definition of "hazardous
substances", "hazardous wastes", "hazardous materials", "extremely
hazardous wastes", "restricted hazardous wastes", "toxic substances",
"toxic pollutants", "contaminants", "pollutants", or terms of similar
import within the meaning of any Environmental Law; or
(b) any other chemical or other material or substance, exposure
to which is presently or hereafter prohibited, limited or regulated
under any Environmental Law.
"herein", "hereof", "hereto", "hereunder" and similar terms contained in
this Agreement or any other Loan Document refer to this Agreement or such
other Loan Document, as the case may be, as a whole and not to any particular
Article, Section, clause, paragraph or provision of this Agreement or such
other Loan Document.
"Hong Kong Dollars" means the lawful currency of Hong Kong.
"Impermissible Qualifications" means, relative to the opinion of
certification of any independent public accountant engaged by Micro as to any
financial statement of Micro and its Consolidated Subsidiaries, any
qualification or exception to such opinion or certification:
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination of matters
relevant to such financial statement; or
(c) which relates to the treatment or classification of any
item in such financial statement and which, as a condition to its
removal, would require an adjustment to such item the effect of which
would be to cause Micro to be in default of any of its obligations under
Section 8.2.3 or 8.2.8.
"including" and "include" mean including without limiting the generality
of any description preceding such term.
"Indebtedness" of any Person means and includes the sum of the following
(without duplication):
(a) all obligations of such Person for borrowed money, all
obligations evidenced by bonds, debentures, notes, investment repurchase
agreements or other similar instruments, and all securities issued by
such Person providing for mandatory payments of money, whether or not
contingent;
(b) all obligations of such Person pursuant to revolving credit
agreements or similar arrangements to the extent then outstanding;
(c) all obligations of such Person to pay the deferred purchase
price of property or services, except (i) trade accounts payable arising
in the ordinary course of business, (ii) other accounts payable arising
in the ordinary course of business in respect of such obligations the
payment of which has been deferred for a period of 270 days or less,
(iii) other accounts payable arising in the ordinary course of business
none of which shall be, individually, in excess of $200,000 and (iv)
leases of personal property not required to be capitalized under FASB
Statement 13;
(d) all obligations of such Person as lessee under Capitalized
Lease Liabilities;
(e) all obligations of such Person to purchase securities (or
other property) which arise out of or in connection with the sale of the
same or substantially similar securities or property excluding any such
sales or exchanges for a period of less than 45 days;
(f) all obligations with respect to letters of credit (other
than trade letters of credit) and bankers' acceptances issued for the
account of such Person;
(g) all Indebtedness of others secured by a Lien of any kind on
any asset of such Person, whether or not such Indebtedness is assumed by
such Person; provided, that the amount of any Indebtedness attributed
to any Person pursuant to this clause (g) shall be limited, in each
case, to the lesser of (i) the fair market value of the assets of such
Person subject to such Lien and (ii) the amount of the other Person's
Indebtedness secured by such Lien; and
(h) all guarantees, endorsements and other Contingent
Liabilities of or in respect of, or obligations to purchase or otherwise
acquire, the Indebtedness of another Person;
provided, however, that it is understood and agreed that the following are not
"Indebtedness":
(i) obligations to pay the deferred purchase price for the
acquisition of any business (whether by way of merger, sale of
stock or assets or otherwise) to the extent that such obligations
are contingent upon attaining performance criteria such as
earnings and such criteria shall not have been achieved;
(ii) obligations to repurchase securities (A) issued to
employees pursuant to any Plan or other contract or arrangement
relating to employment upon the termination of their employment or
other events, or (B) that may arise out of the transactions
contemplated by the Transition Agreements;
(iii) obligations to match contributions of employees under
any Plan; and
(iv) guarantees of any Obligor or any of their respective
Subsidiaries that are guarantees of performance, reclamation or
similar bonds or, in lieu of such bonds, letters of credit used
for such purposes issued in the ordinary course of business for
the benefit of any Subsidiary of Micro, which would not be included
on the consolidated financial statements of any Obligor.
"Indemnified Liabilities" is defined in Section 11.4.
"Indemnified Parties" is defined in Section 11.4.
"Industries" means Ingram Industries Inc., a Tennessee corporation.
"Ineligible Currency" means, with respect to any Non-Rata Revolving Loan
denominated in an Available Currency (other than Dollars), a determination by
the relevant Lender that the currency in which such Loan is denominated has
ceased to be (a) freely convertible into Dollars or (b) a currency for which
there is an active foreign exchange and deposit market in New York City.
"Intangible Assets" means, with respect to any Person, that portion of
the book value of the assets of such Person which would be treated as
intangibles under GAAP, including all items such as goodwill, trademarks,
trade names, brands, trade secrets, customer lists, copyrights, patents,
licenses, franchise conversion rights and rights with respect to any of the
foregoing and all unamortized debt or equity discount and expenses.
"Interest Period" means, for any LIBO Rate Loan, the period beginning on
(and including) the date on which such LIBO Rate Loan is made, continued or
converted and ending on (but excluding) the last day of the period selected by
Micro pursuant to the provisions below. The duration of each such Interest
Period shall be one, three or six months from (and including) the date of such
LIBO Rate Loan, ending on (but excluding) the day which numerically
corresponds to such date (or, if such month has no numerically corresponding
day, on the last Business Day of such month), as Micro may select in its
relevant notice pursuant to Section 3.1 or 4.2.3; provided, however, that
(a) Micro shall not be permitted to select Interest Periods for
LIBO Rate Loans to be in effect at any one time which have expiration
dates occurring on more than 20 different dates;
(b) Interest Periods commencing on the same date for Loans
comprising part of the same Borrowing shall be of the same duration;
(c) if such Interest Period would otherwise end on a day which
is not a Business Day, such Interest Period shall end on the next
following Business Day (unless, if such Interest Period applies to a
LIBO Rate Loan, such next following Business Day is the first Business
Day of a calendar month, in which case such Interest Period shall end on
the Business Day next preceding such numerically corresponding day); and
(d) no Interest Period for any LIBO Rate Loan may end, with
respect to each Lender making a part of such Loan, later than the
Commitment Termination Date.
"Intra-Group Agreement" means the Intra-Group Agreement, in the form of
Exhibit G-2 hereto, duly executed and delivered by Authorized Persons of each
Borrower that is a Guarantor, as amended, supplemented, restated or otherwise
modified from time to time.
"Investment" means an increase since January 1, 1996 in Consolidated
Tangible Net Worth by at least $220,000,000 from (i) an initial public
offering by Micro; (ii) other equity offerings or issuances of capital stock;
(iii) the exercise of stock options on Micro stock held by present or former
employees of Micro, Industries or Entertainment (or any of their respective
Subsidiaries); (iv) an irrevocable contribution of cash to the capital of
Micro; or (v) a combination of the events described in clauses (i) through
(iv) above.
"Investment Prospectus" is defined in Section 6.1.11.
"Issuance Request" means an issuance request for Pro-Rata Letters of
Credit duly completed and executed by an Authorized Person of Micro,
substantially in the form of Exhibit C hereto.
"Issuer" means either NationsBank or Scotiabank, in its capacity as
issuer of the Pro-Rata Letters of Credit, or any Lender in its capacity as
issuer of a Non-Rata Letter of Credit. At the request of the Agents, another
Lender or an Affiliate of NationsBank or Scotiabank may issue one or more
Pro-Rata Letters of Credit hereunder.
"Krona" means the lawful currency of Sweden.
"Lenders" is defined in the preamble.
"Lender Assignment Agreement" means a Lender Assignment Agreement
substantially in the form of Exhibit K attached hereto.
"Lender Party" means any of the Lenders, Agents, Co-Agents or Issuers.
"Lending Office" means, relative to any LIBO Rate Loan of a Lender, the
LIBOR Office of such Lender designated as such below its signature hereto or
in a Lender Assignment Agreement or by notice to the Administrative Agent and
Micro from time to time and relative to any Non-Rata Credit Extension, the
office that such Lender shall designate.
"Letter of Credit Commitment Amount" means, on any date, a maximum
amount of $250,000,000, as such amount may be reduced from time to time
pursuant to Section 2.3.
"Letter of Credit Outstandings" means, on any date, the sum (without
duplication) of the Dollar Amounts of
(a) the then aggregate amount which is undrawn and available
under all Pro-Rata Letters of Credit issued and outstanding (assuming
that all conditions for drawing have been satisfied);
plus
(b) the then aggregate amount of all unpaid and outstanding
Pro-Rata Reimbursement Obligations.
"Letters of Credit" shall mean, collectively, all Pro-Rata Letters of
Credit issued and outstanding and Non-Rata Letters of Credit issued and
outstanding.
"LIBO Auction" means a solicitation of Quotes setting forth LIBO Margins
based on the LIBO Rate pursuant to Section 3.5.3.
"LIBO Margin" is defined in Section 3.5.3.
"LIBO Market Loan" means a Bid Rate Loan the interest rate on which is
determined on the basis of a LIBO Rate pursuant to a LIBO Auction.
"LIBO Rate" means, relative to any Interest Period for LIBO Rate Loans,
the rate of interest equal to the average (rounded upwards, if necessary, to
the nearest 1/16 of 1% per annum) of the rates per annum at which Dollar
deposits in immediately available funds are offered to each Reference Lender's
LIBOR Office in the London interbank market at or about 11:00 a.m., London
time, two Business Days prior to the beginning of such Interest Period for
delivery on the first day of such Interest Period, and in an amount
approximately equal to the amount of each such Reference Lender's LIBO Rate
Loan and for a period approximately equal to such Interest Period.
"LIBO Rate Loan" means a Pro-Rata Revolving Loan bearing interest, at
all times during the Interest Period applicable thereto, at a fixed rate of
interest determined by reference to the LIBO Rate.
"LIBOR Reserve Percentage" means, for any Lender, relative to any
Interest Period for LIBO Rate Loans, the reserve percentage (expressed as a
decimal) equal to the maximum aggregate reserve requirements (including all
basic, emergency, supplemental, marginal and other reserves and taking into
account any transitional adjustments or other scheduled changes in reserve
requirements) specified under regulations issued from time to time by the
F.R.S. Board and then applicable to assets or liabilities consisting of and
including Eurocurrency Liabilities having a term approximately equal or
comparable to such Interest Period.
"Lien" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against, valid claim on or interest in property to secure payment of a
debt or performance of an obligation or other priority or preferential
arrangement of any kind or nature whatsoever (including, without limitation,
(a) the lien or retained security title of a conditional vendor, and (b) under
any agreement for the sale of Trade Accounts Receivable, the interest of the
purchaser (or any assignee of such purchaser which has financed the relevant
purchase) in a percentage of receivables of the seller not so sold, held by
the purchaser (or such assignee) as a reserve for (i) interest rate protection
in the event of a liquidation of the receivables sold, (ii) expenses that
would be incurred upon a liquidation of the receivables sold, (iii) losses
that might be incurred in the event the amount actually collected from the
receivables sold is less than the amount represented in the relevant
receivables purchase agreement as collectible, or (iv) any similar purpose
(but excluding the interest of a trust in such receivables to the extent that
the beneficiary of such trust is Micro or a Subsidiary of Micro).
"Lira" means the lawful currency of the Republic of Italy.
"Loan" means a Pro-Rata Revolving Loan or a Non-Rata Revolving Loan or
a Bid Rate Loan.
"Loan Document" means this Agreement, each Note, each Credit Extension
Request, each Letter of Credit, the Intra-Group Agreement, each Guaranty, the
most recently delivered Compliance Certificate (specifically excluding any
other Compliance Certificate previously delivered), any Accession Request and
Acknowledgment and any other agreement, document or instrument (excluding any
documents delivered solely for the purpose of satisfying disclosure
requirements or requests for information) required in connection with this
Agreement or the making or maintaining of any Credit Extension and delivered
by an Authorized Person.
"Margin Stock" means "margin stock", as such term is defined and used in
Regulation U.
"Marks" means the lawful currency of the Federal Republic of Germany.
"Material Adverse Effect" means an event, act, occurrence or other
circumstance which results in a material adverse effect on the business,
results of operations or financial condition of Micro and its Consolidated
Subsidiaries, taken as a whole.
"Material Asset Acquisition" is defined in Section 8.2.5(b).
"Material Subsidiary" means: (a) with respect to any Subsidiary of Micro
as of the date hereof, a Subsidiary of Micro that (as of any date of
determination), (i) on an average over the three (3) most recently preceding
Fiscal Years contributed at least five percent (5%) to Consolidated Net
Income, or (ii) on an average at the end of the three (3) most recently
preceding Fiscal Years owned assets constituting at least five percent (5%) of
Consolidated Assets; and (b) with respect to any Subsidiary of Micro organized
or acquired subsequent to the date hereof, a Subsidiary of Micro that as of
(i) the date it becomes a Subsidiary of Micro, would have owned (on a pro
forma basis if such Subsidiary had been a Subsidiary of Micro at the end of
the preceding Fiscal Year) assets constituting at least five percent (5%) of
Consolidated Assets at the end of the Fiscal Year immediately prior to the
Fiscal Year in which it is organized or acquired, or (ii) any date of
determination thereafter, (A) on an average over the three (3) most recently
preceding Fiscal Years (or, if less, since the date such Person became a
Subsidiary of Micro) contributed at least five percent (5%) to Consolidated
Net Income, or (B) on an average at the end of the three (3) (or, if less,
such number of Fiscal Year-ends as have occurred since such Person became a
Subsidiary of Micro) most recently preceding Fiscal Years owned assets
constituting at least five percent (5%) of Consolidated Assets; provided that
Ingram Funding Inc., Distribution Funding Corporation and any other special
purpose financing vehicle shall not be Material Subsidiaries.
"Maturity" of any Obligation means the earliest to occur of
(a) the date on which such Obligation expressly becomes due and
payable pursuant hereto or any other Loan Document or, in the case of
any Obligation incurred in respect of any Non-Rata Revolving Loan or Bid
Rate Loan, pursuant to the arrangements entered into by the relevant
Borrower and the relevant Lender in connection therewith but in no event
beyond the then Commitment Termination Date with respect to such Lender,
(b) the Stated Maturity Date (in the case of Pro-Rata Revolving
Loans) where no such due date is specified, and
(c) the date on which such Obligation becomes due and payable
pursuant to Section 9.2 or 9.3 or 9.4.
"Mexican Pesos" means the lawful currency of the United States of
Mexico.
"Micro" is defined in the preamble.
"Micro Canada" is defined in the preamble.
"Micro Canada Guaranty (Coordination Center/Micro Singapore)" means a
guaranty, in the form of Exhibit I-1 attached hereto, duly executed and
delivered by an Authorized Person of Micro Canada, as amended, supplemented,
restated or otherwise modified from time to time.
"Micro Canada Guaranty (Micro)" means a guaranty, in the form of Exhibit
I-2 attached hereto, duly executed and delivered by an Authorized Person of
Micro Canada, as amended, supplemented, restated or otherwise modified from
time to time.
"Micro Guaranty" means the Guaranty, in the form of Exhibit H attached
hereto, duly executed and delivered by an Authorized Person of Micro, as
amended, supplemented, restated or otherwise modified from time to time.
"Micro Singapore" is defined in the preamble.
"Micro Singapore Guaranty" means the Guaranty, in the form of Exhibit
I-3 attached hereto, duly executed and delivered by an Authorized Person of
Micro Singapore, as amended, supplemented, restated or otherwise modified from
time to time.
"Moody's" means Moody's Investors Service, Inc.
"NationsBank" is defined in the preamble.
"Non-Rata Credit Extension" means, collectively,
(a) the making of a Non-Rata Revolving Loan by any Lender;
(b) the issuance by any Lender of a Non-Rata Letter of Credit;
and
(c) the making of a Bid Rate Loan by any Lender.
"Non-Rata Disbursement Date" is defined in Section 3.4.5.
"Non-Rata Letter of Credit" is defined in Section 3.4.1.
"Non-Rata Reimbursement Obligations" is defined in Section 3.4.6.
"Non-Rata Revolving Loans" is defined in Section 3.3.1.
"Non-Rata Revolving Note" means a promissory note of a Borrower payable
to a Lender, in the form of Exhibit A-3 hereto (as such promissory note may be
amended, endorsed or otherwise modified from time to time), evidencing the
aggregate Indebtedness of such Borrower to such Lender resulting from
outstanding Non-Rata Revolving Loans, and also means all other promissory
notes accepted from time to time in substitution therefor or renewal thereof.
"Norwegian Krone" means the lawful currency of Norway.
"Note" means, as the context may require, a Revolving Note, a Non-Rata
Revolving Note, a Bid Rate Note, or any promissory note of Coordination
Center that may be issued from time to time to evidence Non-Rata Revolving
Loans made by any Lender to Coordination Center.
"Obligations" means, individually and collectively: (a) the Loans; (b)
all Letter of Credit Outstandings and (c) all other indebtedness, liabilities,
obligations, covenants and duties of any Borrower owing to the Agents and/or
the Lenders of every kind, nature and description, under or in respect of this
Agreement or any of the other Loan Documents including, without limitation,
any fees, whether direct or indirect, absolute or contingent, due or not due,
contractual or tortious, liquidated or unliquidated, and whether or not
evidenced by any note.
"Obligors" means, collectively, the Borrowers and Guarantors.
"Organic Documents" means, relative to any Obligor, any governmental
filing or proclamation pursuant to which such Person shall have been created
and shall continue in existence (including a charter or certificate or
articles of incorporation or organization, and, with respect to Coordination
Center, the Royal Decree) and its by-laws (or, if applicable, partnership or
operating agreement) and all material shareholder agreements, voting trusts
and similar arrangements to which such Obligor is a party that are applicable
to the voting of any of its authorized shares of capital stock (or, if
applicable, other ownership interests therein).
"Outstanding Credit Extensions" means, relative to any Lender at any
date and without duplication, the sum of the Dollar Amounts of
(a) the aggregate principal amount of all outstanding Loans of
such Lender at such date,
plus
(b) such Lender's Percentage of the aggregate Stated Amount of
all Pro-Rata Letters of Credit which are outstanding and undrawn (or
drawn and unreimbursed) at such date,
plus
(c) the aggregate Stated Amount of all Non-Rata Letters of
Credit issued by such Lender which are outstanding and undrawn (or drawn
and unreimbursed) at such date.
"Participant" is defined in Section 11.11.2.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan", as such term is defined in
section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multiemployer plan as defined in section 4001(3) of ERISA), and to which any
Obligor or any corporation, trade or business that is, along with Obligor, a
member of a Controlled Group, may have liability, including any liability by
reason of having been a substantial employer within the meaning of section
4063 of ERISA at any time during the preceding five years, or by reason of
being deemed to be a contributing sponsor within the meaning of section 4069
of ERISA.
"Percentage" of any Lender means in the case of (a) each Lender which
is a signatory to this Agreement, the percentage set forth opposite such
Lender's signature hereto under the caption "Percentage", subject to any
modification necessary to give effect to any sale, assignment or transfer made
pursuant to Section 11.11.1, or (b) any Transferee Lender, effective upon the
occurrence of the relevant purchase by, or assignment to, such Transferee
Lender, the portion of the Percentage of the selling, assigning or
transferring Lender allocated to such Transferee Lender. With respect to any
Lender at any time, "Percentage" shall express the ratio of such Lender's then
Available Credit Commitments to the then aggregate Available Credit
Commitments of all the Lenders.
"Person" means any natural person, company, partnership, firm, limited
liability company or partnership, association, trust, government, governmental
agency or any other entity, whether acting in an individual, fiduciary or
other capacity.
"Pesetas" means the lawful currency of Spain.
"Plan" means any Pension Plan or Welfare Plan.
"Pro-Rata Credit Extension" means, collectively,
(a) the making of Pro-Rata Revolving Loans by the Lenders; and
(b) the issuance by any Issuer of a Pro-Rata Letter of Credit.
"Pro-Rata Distribution Event" is defined in clause (c) of Section 5.9.
"Pro-Rata Letter of Credit" means an irrevocable letter of credit issued
pursuant to Section 3.2.
"Pro-Rata Letter of Credit Commitment" means, with respect to any Issuer
of Pro-Rata Letters of Credit, such Issuer's obligations to issue Pro-Rata
Letters of Credit pursuant to Section 3.2 and, with respect to each of the
other Lenders, the obligations of each such Lender to participate in Pro-Rata
Letters of Credit pursuant to such Section.
"Pro-Rata Revolving Loans" is defined in clause (a) of Section 2.1.
"Pro-Rata Reimbursement Obligation" is defined in Section 3.2.3.
"Quarterly Payment Date" means the last day of March, June, September
and December of each calendar year or, if any such day is not a Business Day,
the next succeeding Business Day.
"Quarterly Report" means a report duly completed, substantially in the
form of Exhibit L attached hereto (including, in addition to the information
expressly described in Exhibit L hereto, information (including calculations
in accordance with the provisions of the last sentence of Section 2.1)
regarding the values of the Available Currencies (other than the Dollar) of
all Outstanding Credit Extensions consisting of Non-Rata Credit Extensions as
of the end of the applicable Fiscal Period), as such Exhibit L may be amended,
supplemented, restated or otherwise modified from time to time.
"Quote" means an offer in accordance with Section 3.5.3 by a Lender to
make a Bid Rate Loan with one single specified interest rate.
"Quote Request" has the meaning set forth in Section 3.5.2.
"Receiving Lender Party" is defined in clause (d) of Section 5.9.
"Reference Lenders" means Scotiabank, NationsBank, The First National
Bank of Chicago and The Chase Manhattan Bank.
"Reference Rate" means, on any date and with respect to all Reference
Rate Loans, a fluctuating rate of interest per annum equal to
(a) at all times other than the last five Business Days of each
calendar quarter, the rate of interest most recently announced or
established by NationsBank as its reference rate for Dollar loans; and
(b) during the last five Business Days of each calendar quarter,
the higher of (i) the rate set forth in the preceding clause (a) and
(ii) the Federal Funds Rate plus 1/2 of 1%.
The Reference Rate is not necessarily intended to be the lowest rate of
interest determined by NationsBank in connection with extensions of credit.
Changes in the rate of interest on that portion of any Pro-Rata Revolving
Loans maintained as Reference Rate Loans will take effect simultaneously with
each change in the Reference Rate. The Administrative Agent will give notice
promptly to Micro and the Lenders of changes in the Reference Rate.
"Reference Rate Loan" means a Pro-Rata Revolving Loan bearing interest
at a fluctuating rate of interest determined by reference to the Reference
Rate.
"Regulation U" is defined in Section 7.17.
"Regulatory Change" means any change after the date hereof in any (or
the promulgation after the date hereof of any new):
(a) law applicable to any class of banks (of which any Lender
Party is a member) issued by (i) any competent authority in any country
or jurisdiction, or (ii) any competent international or supra-national
authority; or
(b) regulation, interpretation, directive or request (whether or
not having the force of law) applicable to any class of banks (of which
any Lender Party is a member) of any court, central bank or governmental
authority or agency charged with the interpretation or administration of
any law referred to in clause (a) of this definition or of any fiscal,
monetary or other authority having jurisdiction over any Lender Party.
"Reimbursement Obligations" shall mean, collectively, all Pro-Rata
Reimbursement Obligations and Non-Rata Reimbursement Obligations.
"Release" means a "release", as such term is defined in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended and as in effect from time to time (42 United States Code Section
9601 et seq.), and any rules and regulations promulgated thereunder.
"Relevant Issuer" is defined in Section 8.2.7.
"Remaining Lender" is defined in clause (a) of Section 2.2.
"Replacement Notice" is defined in Section 5.12.
"Required Currency" is defined in Section 5.8.2.
"Required Lenders" means, at any time, Lenders having an aggregate
Percentage of at least 65%.
"Revolving Note" means a promissory note of Micro payable to a Lender,
in the form of Exhibit A-1 hereto (as such promissory note may be amended,
endorsed or otherwise modified from time to time), evidencing the aggregate
Indebtedness of Micro to such Lender resulting from outstanding Pro-Rata
Revolving Loans, and also means all other promissory notes accepted from time
to time in substitution therefor or renewal thereof.
"Ringgit" means the lawful currency of Malaysia.
"Royal Decree" means the Royal Decree of The Kingdom of Belgium
recognizing Coordination Center as a coordination center under Belgian law, as
the same may from time to time be amended, supplemented or otherwise modified
by any new Royal Decree relating to the recognition of the Coordination Center
as a coordination center under Belgium law.
"S&P" means Standard & Poor's Rating Services, a division of The
McGraw-Hill Companies, Inc.
"Schillings" means the lawful currency of the Republic of Austria.
"Scotiabank" is defined in the preamble.
"Singapore Dollars" means the lawful currency of Singapore.
"Stated Amount" for any Letter of Credit on any day means the amount
which is undrawn and available under such Letter of Credit on such day (after
giving effect to any drawings thereon on such day).
"Stated Expiry Date" is defined in Section 3.2.
"Stated Maturity Date" means, for each Lender, in the case of any
Pro-Rata Revolving Loan, the then-effective Commitment Termination Date.
"Sterling" means the lawful currency of the United Kingdom of England
and Wales.
"Subject Lender" is defined in Section 5.12.
"Subsidiary" means, with respect to any Person, any corporation, company,
partnership or other entity of which more than fifty percent (50%) of the
outstanding shares or other ownership interests having by the terms thereof
ordinary voting power to elect a majority of the board of directors of, or
other persons performing similar functions for, such corporation, company,
partnership or other entity (irrespective of whether at the time shares or
other ownership interests of any other class or classes of such corporation,
company, partnership or other entity shall or might have voting power upon the
occurrence of any contingency) is at the time directly or indirectly owned by
such Person, by such Person and one or more other Subsidiaries of such Person,
or by one or more other Subsidiaries of such Person.
"Supplemental Borrowers" is defined in the preamble, and such term shall
include any Acceding Borrowers party to this Agreement from time to time,
together with their respective successors and assigns.
"Swiss Francs" means the lawful currency of Switzerland.
"Tax Credit" is defined in Section 5.7.
"Tax Payment" is defined in Section 5.7.
"Taxes" is defined in Section 5.7.
"Total Credit Commitment Amount" means, at any time, $1,000,000,000, as
such amount may be reduced from time to time pursuant to Section 2.3.
"Total Indebtedness" means, at any date, the aggregate of all
Indebtedness on such date of Micro and its Subsidiaries, without duplication
and after eliminating all offsetting debits and credits between Micro and its
Subsidiaries and all other items required to be eliminated in accordance with
GAAP.
"Total Indebtedness of Subsidiaries" means, at any date, the aggregate
of all Indebtedness on such date of all the Subsidiaries of Micro, without
duplication and after eliminating all offsetting debits and credits between
each of such Subsidiaries or between such a Subsidiary and Micro and all other
items required to be eliminated in accordance with GAAP, excluding (a) all
Indebtedness of any Subsidiary of Micro outstanding on the date hereof or
incurred pursuant to any commitment or line of credit in its favor in effect
on the date hereof, and any renewals or replacements thereof, so long as such
renewals or replacements do not increase the amount of such Indebtedness or
such commitments or lines of credit and (b) any Indebtedness of Ingram Funding
Inc., Distribution Funding Corporation or any other special purpose financing
vehicle incurred in connection with their purchase, directly or indirectly,
from Micro or any of Micro's other Subsidiaries, of Trade Accounts Receivable
or interests therein.
"Trade Accounts Receivable" means, with respect to any Person, all
rights of such Person to the payment of money arising out of any sale, lease
or other disposition of goods or rendition of services by such Person.
"Transferee Lender" is defined in Section 11.11.1.
"Transition Agreements" means those agreements and other instruments
entered into by Micro, Industries, Entertainment and certain other Persons on
or before the date hereof in connection with a series of related transactions
through which Micro and Entertainment cease to be Subsidiaries of Industries,
in each case as summarized in the annexes attached to the certificate referred
to in Section 6.1.12, each as in effect on the date hereof (or, if later, the
date the Investment is consummated), without giving effect to any amendment,
modification or supplement thereafter except for such amendments,
modifications or supplements after the date hereof, which, individually or
taken as whole, do not materially alter the terms of such Transition Agreement
or adversely affect Micro or any of its Subsidiaries.
"Type" means, relative to any Loan, the portion thereof, if any, being
maintained as a Reference Rate Loan or a LIBO Rate Loan.
"United States" or "U.S." means the United States of America, its fifty
States and the District of Columbia.
"Voting Stock" means, (a) with respect to a corporation, the stock of
such corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect members of the board of directors (or other
governing body) of such corporation, (b) with respect to any partnership, the
partnership interests in such partnership the owners of which are entitled to
manage the affairs of the partnership or vote in connection with the
management of the affairs of the partnership or the designation of another
Person as the Person entitled to manage the affairs of the partnership, and
(c) with respect to any limited liability company, the membership interests
in such limited liability company the owners of which are entitled to manage
the affairs of such limited liability company or entitled to elect managers of
such limited liability company (it being understood that, in the case of any
partnership or limited liability company, "shares" of Voting Stock shall refer
to the partnership interests or membership interests therein, as the case may
be).
"Welfare Plan" means a "welfare plan", as such term is defined in
section 3(1) of ERISA.
"Withdrawing Lender" is defined in clause (a) of Section 2.2.
"Won" means the lawful currency of the Republic of Korea.
"Yen" means the lawful currency of Japan.
SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and
in each Credit Extension Request, each other Loan Document, and each notice
and other communication delivered from time to time in connection with this
Agreement or any other Loan Document.
SECTION 1.3. Cross-References. Unless otherwise specified, references
in this Agreement and in each other Loan Document to any Article, Section,
clause or definition are references to such clause or definition of this
Agreement or such other Loan Document, as the case may be, and, unless
otherwise specified, references in any Article, Section, clause or
definition to any section are references to such section of such Article,
Section, clause or definition.
SECTION 1.4. Accounting and Financial Determinations.
(a) Unless otherwise specified, all accounting terms used herein
or in any other Loan Document shall be interpreted, and all accounting
determinations and computations hereunder or thereunder (including under
Section 8.2.3) shall be made, in accordance with those U.S. generally
accepted accounting principles ("GAAP") as applied in the preparation of
the financial statements of Micro and its Consolidated Subsidiaries
delivered pursuant to clause (a) of Section 6.1.5; provided, however,
that the financial statements required to be delivered pursuant to
clauses (a) and (b) of Section 8.1.1 shall be prepared in accordance
with GAAP as in effect from time to time and the quarterly financial
statements required to be delivered pursuant to clause (b) of Section
8.1.1 are not required to contain footnote disclosures required by GAAP
and shall be subject to ordinary year-end adjustments.
(b) If, after the date hereof, there shall be any change to the
Borrower's Fiscal Year, or any modification in GAAP used in the
preparation of the financial statements delivered pursuant to clause (a)
of Section 6.1.5 (whether such modification is adopted or imposed by
FASB, the American Institute of Certified Public Accountants or any other
professional body) which changes result in a change in the method of
calculation of financial covenants, standards or terms found in this
Agreement, the parties hereto agree promptly to enter into negotiations
in order to amend such financial covenants, standards or terms so as to
reflect equitably such changes, with the desired result that the
evaluations of the Borrower's financial condition shall be the same
after such changes as if such changes had not been made; provided,
however, that until the parties hereto have reached a definitive
agreement on such amendments, the Borrower's financial condition shall
continue to be evaluated on the same principles as those used in the
preparation of the financial statements delivered pursuant to clause (a)
of Section 6.1.5.
SECTION 1.5. Calculations. Unless otherwise expressly stated to the
contrary in this Agreement or in any other Loan Document, all calculations
made for purposes of this Agreement, each other Loan Document and the
transactions contemplated hereby and thereby shall be made to two decimal
places.
ARTICLE II
COMMITMENTS, ETC.
SECTION 2.1. Commitments. On the terms and subject to the conditions
of this Agreement (including ARTICLE VI), each Lender severally agrees that it
will, from time to time on any Business Day occurring prior to the Commitment
Termination Date,
(a) make loans in Dollars ("Pro-Rata Revolving Loans") to Micro
equal to such Lender's Percentage of the aggregate amount of the
Borrowing to be made on such Business Day, all in accordance with
Section 3.1; provided, however, that no Lender shall be permitted or
required to make any Pro-Rata Revolving Loan if, after giving effect
thereto,
(i) such Lender's Outstanding Credit Extensions (excluding
for this calculation Non-Rata Credit Extensions) would exceed an
amount equal to such Lender's Percentage multiplied by the then
Total Credit Commitment Amount, or
(ii) the aggregate Outstanding Credit Extensions of all the
Lenders would exceed the then Total Credit Commitment Amount; and
(b) purchase participation interests in Dollars equal to its
Percentage in each Pro-Rata Letter of Credit issued upon the application
of Micro pursuant to Section 3.2; provided, however, that no Issuer
(with respect to Pro-Rata Letters of Credit) shall issue a Pro-Rata
Letter of Credit if, after giving effect thereto,
(i) the aggregate Letter of Credit Outstandings would
exceed the then Letter of Credit Commitment Amount, or
(ii) the aggregate Outstanding Credit Extensions of all the
Lenders would exceed the then Total Credit Commitment Amount.
All Pro-Rata Revolving Loans and Pro-Rata Letters of Credit (and drawings
thereunder) shall be denominated solely in, and repaid in, Dollars. On and
subject to the conditions hereof, Micro may from time to time borrow, prepay
and reborrow Pro-Rata Revolving Loans and may apply for, extinguish or
reimburse drawings made under and re-apply for Pro-Rata Letters of Credit.
For purposes of this Section 2.1 and Section 3.3.3, the Dollar Amount on any
date of Non-Rata Revolving Loans denominated in an Available Currency (other
than Dollars) shall be calculated based upon the spot rate at which Dollars
are offered on such day for such Available Currency which appears on Telerate
Page 3740 at approximately 11:00 a.m. (London time) (and if such spot rate is
not available on Telerate Page 3740 as of such time, such spot rate as quoted
by NationsBank, in London at approximately 11:00 a.m. (London time)).
SECTION 2.2. Extensions of the Commitment Termination Date.
(a) If the Commitment Termination Date has not occurred, Micro
may, on any Business Day occurring not earlier than May 1st, nor later
than June 30th of the year immediately preceding the year in which the
then-effective Commitment Termination Date occurs, deliver by registered
or certified mail, return receipt requested, or by overnight courier
service in the case of domestic deliveries (or the equivalent courier
service in the case of deliveries outside of the United States) in which
an acknowledgment of receipt of delivery is required from the recipient
thereof, to each Lender (with a copy thereof to the Administrative
Agent) three counterparts of a Commitment Extension Request
appropriately completed. Not later than July 31st of the year
immediately preceding the year in which the then-effective Commitment
Termination Date occurs, each Lender shall, by appropriately completing,
executing and delivering to Micro and the Administrative Agent the
Commitment Extension Request delivered to it, indicate whether or not it
intends to extend its Commitment pursuant to this Section 2.2. Any
Lender failing to return its Commitment Extension Request to Micro as
provided in the preceding sentence shall be deemed to have declined the
extension of its Commitments as contemplated by this Section 2.2. Not
later than August 15th of the year immediately preceding the year in
which the then-effective Commitment Termination Date occurs, the
Administrative Agent shall notify all of the Lenders as to the identity
of those Lenders that have indicated their intention not to extend their
respective Commitments (each a "Withdrawing Lender") and those Lenders
that have extended their Commitments (each a "Remaining Lender").
(b) In the event that, as of the date the Administrative Agent
delivers the notice provided for in the last sentence of paragraph (a)
above, (i) neither NationsBank nor Scotiabank shall be a Remaining
Lender and (ii) the Remaining Lenders shall hold, in the aggregate, less
than 75% of the Commitments, then from such date until a date not later
than August 31st of the year immediately preceding the year in which the
then-effective Commitment Termination Date occurs, each Remaining Lender
shall have the right to revoke (by delivering written notice thereof to
Micro and the Administrative Agent) its consent to such extension of its
Commitment provided pursuant to paragraph (a) of this Section (thereby
becoming a Withdrawing Lender hereunder as of the day of such
revocation). From and after the date the Administrative Agent delivers
the notice provided for in the last sentence of paragraph (a) of this
Section until a date not later than September 15th of the year
immediately preceding the year in which the then-effective Commitment
Termination Date occurs, the Remaining Lenders shall have the right to
assume the Commitments of any Withdrawing Lenders in proportion to their
respective share of the Commitments of such Remaining Lenders. If, as
of September 30th of the year immediately preceding the year in which
the then-effective Commitment Termination Date occurs, the Remaining
Lenders hold, in the aggregate, less than 75% of the Commitments (after
giving effect to any assumptions of the Commitments of Withdrawing
Lenders completed in accordance with the preceding sentence on or prior
to such date), the Commitments of all Lenders shall terminate and any
Outstanding Credit Extensions will mature and be payable in full on the
then-effective Commitment Termination Date.
(c) If, as of September 30th of the year immediately preceding
the year in which the then-effective Commitment Termination Date occurs,
the Remaining Lenders hold, in the aggregate, 75% or more of the
Commitments (after giving effect to any assumptions of the Commitments
of Withdrawing Lenders completed in accordance with the penultimate
sentence of paragraph (b) above on or prior to such date), the
Commitments of each Remaining Lender (including any Commitments assumed
by any Remaining Lender in accordance with the penultimate sentence of
paragraph (b) above) shall be extended for a period of one year (365
days or, if appropriate, 366 days) from the then-effective Commitment
Termination Date, subject to the satisfaction of the conditions
precedent to extension of the Commitments set forth in paragraph (f) of
this Section. In the event the requirements for extension of the
Commitments set forth in the preceding sentence shall be satisfied, from
and after October 1st of the year immediately preceding the year in
which the then-effective Commitment Termination Date occurs until a date
not later than 30 days prior to the then-effective Commitment
Termination Date, Micro may enter into an agreement with one or more new
financial institutions reasonably acceptable to the Agents or with any
Remaining Lender to assume the Commitments of the Withdrawing Lenders
which have not been assumed in accordance with the penultimate sentence
of paragraph (b) above. Any Commitments assumed by Remaining Lenders or
new financial institutions in accordance with the preceding sentence
shall be extended for a period of one year (365 days or, if appropriate,
366 days) from the then-effective Commitment Termination Date, subject
to the satisfaction of the conditions precedent to extension of the
Commitments set forth in paragraph (f) of this Section.
(d) In the event the Commitments are extended in accordance with
this Section, the Outstanding Credit Extensions made by any Withdrawing
Lender that are not assumed or purchased pursuant to paragraph (b) or
(c) of this Section will mature and be payable in full on the
then-effective Commitment Termination Date, and the Commitments of each
such Withdrawing Lender shall thereupon terminate. On the
then-effective Commitment Termination Date, the Total Credit Commitment
Amount will be automatically reduced by an amount equal to the product of
(i) the sum of the Percentages of all the Withdrawing
Lenders that were not assumed or purchased pursuant to paragraph
(b) or (c) of this Section, and
(ii) the Total Credit Commitment Amount on such Commitment
Termination Date immediately prior to such calculation.
The Percentages of the Remaining Lenders shall be adjusted by the
Administrative Agent based upon each such Remaining Lender's pro rata
share of the remaining Total Credit Commitment Amount.
(e) The decision of each Lender to extend its Commitments or
assume or purchase the Commitments of any Withdrawing Lender pursuant to
this Section 2.2 shall be exercised by it in its sole and absolute
discretion, including without reference to any or all of the stated
desires of any other Lender Party or Micro. All assignments made
pursuant to this Section 2.2 shall be made in accordance with Section
11.11.1, except that any such assignment may be in any minimum amount or
multiple thereof which results from the operation of this Section 2.2
and shall not require the consent of Micro or the Administrative Agent.
(f) Any extension of the Commitments in accordance with this
Section shall become effective only upon (i) the satisfaction of the
requirements for extension set forth herein and (ii) the delivery by
Micro to the Administrative Agent and each Lender, on or prior to the
then-effective Commitment Termination Date, of (A) executed replacement
Notes reflecting, without limitation, any changes in the identity or
Percentages of the Lender Parties and the Total Credit Commitment
Amount, and (B) copies of such other legal opinions, approvals,
instruments or documents as the Administrative Agent or any Remaining
Lender may reasonably request. Upon their receipt of the replacement
Notes required to be delivered pursuant to clause (A) above, the
Remaining Lenders shall mark the relevant predecessor Notes "exchanged"
and deliver the same to Micro.
SECTION 2.3. Reductions of the Commitment Amounts. Micro may, from
time to time on any Business Day, voluntarily reduce the Total Credit
Commitment Amount or the Letter of Credit Commitment Amount; provided,
however, that
(a) all such reductions shall require at least three and not
more than five Business Days' prior notice to the Administrative Agent
and shall be permanent, and any partial reduction thereof shall be in a
minimum amount of $10,000,000 and in an integral multiple of $1,000,000
(or, if less, in an amount equal to the Total Credit Commitment Amount
at such time); and
(b) Micro shall not voluntarily reduce the Total Credit
Commitment Amount or the Letter of Credit Commitment Amount pursuant to
this Section to an amount which, on the date of proposed reduction,
is less than the aggregate Outstanding Credit Extensions of all the
Lenders.
ARTICLE III
BORROWING PROCEDURES,
LETTERS OF CREDIT AND REGISTERS
SECTION 3.1. Borrowing Procedure for Pro-Rata Revolving Loans.
(a) On any Business Day occurring on or prior to the Commitment
Termination Date, Micro may from time to time irrevocably request, by
delivering on or prior to 1:00 p.m., Eastern time, on such Business Day
a Borrowing Request to the Administrative Agent, (i) in the case of LIBO
Rate Loans, not less than three nor more than five Business Days before
the date of the proposed Borrowing, or (ii) in the case of Reference
Rate Loans, on or before the Business Day of but not more than three
Business Days before the date of the proposed Borrowing, that a
Borrowing be made in a minimum amount of $25,000,000 and an integral
multiple of $1,000,000, or if less, in the unused amount of the Total
Credit Commitment Amount. Upon the receipt of each Borrowing
Request, the Administrative Agent shall give prompt notice thereof to
each Lender on the same day such Borrowing Request is received. On
the terms and subject to the conditions of this Agreement, each
Borrowing shall be comprised of the Type of Loans, and shall be made
on the Business Day, specified in such Borrowing Request. On or
before 2:30 p.m., Eastern time, on such Business Day, each Lender
shall deposit with the Administrative Agent (to an account specified
by the Administrative Agent to each Lender from time to time) same
day funds in an amount equal to such Lender's Percentage of the
requested Borrowing.
To the extent funds are received from the Lenders, the
Administrative Agent shall make such funds available to Micro by wire
transfer to the accounts Micro shall have specified in its Borrowing
Request. No Lender's obligation to make any Pro-Rata Revolving Loan
shall be affected by any other Lender's failure to make any Pro-Rata
Revolving Loan.
(b) Each Lender's Pro-Rata Revolving Loans shall be evidenced by
a single Revolving Note payable to such Lender. Micro hereby
irrevocably authorizes each Lender to make (or cause to be made)
appropriate entries and endorsements on Schedule I to the Revolving Note
payable to such Lender, which entries, if made, shall evidence, inter
alia, the date of, the Type of, the advance period (if applicable) of,
the Maturity of, the outstanding principal of, interest payable on and
any repayments of Pro-Rata Revolving Loans made by such Lender to Micro
pursuant hereto. Any such entries indicating the outstanding principal
amount of such Lender's Pro-Rata Revolving Loans and interest payable
thereon shall be prima facie evidence of the principal amount thereof
owing and unpaid and interest payable thereon, but the failure to make
any such entry shall not limit or otherwise affect the obligations of
Micro hereunder to make payments of principal of or interest on such
Pro-Rata Revolving Loans when due.
SECTION 3.2. Pro-Rata Letter of Credit Issuance Procedures. By
delivering to the Administrative Agent an Issuance Request on or before
1:00 p.m., Eastern time, on any Business Day occurring prior to the
Commitment Termination Date, Micro may from time to time request that an
Issuer (with respect to Pro-Rata Letters of Credit) issue a Pro-Rata Letter
of Credit. Each such request shall be made on not less than two Business
Days' notice (or such shorter period as may be agreed to by the
Administrative Agent), and not less than 30 days prior to the Commitment
Termination Date. Upon receipt of an Issuance Request, the Administrative
Agent shall promptly on the same day notify the applicable Issuer (if other
than NationsBank or Scotiabank) and each Lender thereof. Each Pro-Rata
Letter of Credit shall by its terms be denominated in Dollars and be stated
to expire (whether originally or after giving effect to any extension) on a
date (its "Stated Expiry Date") no later than three days prior to the
Commitment Termination Date. Micro and the relevant Issuer may amend or
modify any issued Pro-Rata Letter of Credit upon written notice to the
Administrative Agent only; provided, however, that any amendment
constituting an extension of such Pro-Rata Letter of Credit's Stated Expiry
Date shall comply with the provisions of the immediately preceding sentence
and may be made only if the Commitment Termination Date has not occurred
and any amendment constituting an increase in the Stated Amount of such
Pro-Rata Letter of Credit shall be deemed a request for the issuance of a
new Pro-Rata Letter of Credit and shall comply with the foregoing
provisions of this paragraph.
Upon satisfaction of the terms and conditions hereunder, the relevant
Issuer will issue each Pro-Rata Letter of Credit to be issued by it and will
make available to the beneficiary thereof the original of such Pro-Rata Letter
of Credit.
SECTION 3.2.1. Other Lenders' Participation. Automatically, and
without further action, upon the issuance of each Pro-Rata Letter of
Credit, each Lender (other than the Issuer of such Pro-Rata Letter of
Credit) shall be deemed to have irrevocably purchased from the relevant
Issuer, to the extent of such Lender's Percentage (and without giving
effect to the outstanding Non-Rata Credit Extensions, if any, of any
Lender), a participation interest in such Pro-Rata Letter of Credit
(including any Pro-Rata Reimbursement Obligation and any other Contingent
Liability with respect thereto), and such Lender shall, to the extent of
its Percentage, be responsible for reimbursing promptly (and in any event
within one Business Day after receipt of demand for payment from the
Issuer, together with accrued interest from the day of such demand) the
relevant Issuer for any Pro-Rata Reimbursement Obligation which has not
been reimbursed in accordance with Section 3.2.3. In addition, such Lender
shall, to the extent of its Percentage, be entitled to receive a ratable
portion of the Pro-Rata Letter of Credit participation fee payable pursuant
to clause (a) of Section 4.3.3 with respect to each Pro-Rata Letter of
Credit and a ratable portion of any interest payable pursuant to Sections
3.2.2. and 4.2.
SECTION 3.2.2. Disbursements. Subject to the terms and provisions of
each Pro-Rata Letter of Credit and this Agreement, upon presentment under any
Pro-Rata Letter of Credit to the Issuer thereof for payment, such Issuer shall
make such payment to the beneficiary (or its designee) of such Pro-Rata Letter
of Credit on the date designated for such payment (the "Disbursement Date").
Such Issuer will promptly notify Micro and each of the Lenders of the
presentment for payment of any such Pro-Rata Letter of Credit, together with
notice of the Disbursement Date thereof. Prior to 12:00 noon, Eastern time,
on the next Business Day following the Disbursement Date, Micro will reimburse
the Administrative Agent, for the account of such Issuer, for all amounts
disbursed under such Pro-Rata Letter of Credit, together with all interest
accrued thereon since the Disbursement Date. To the extent the Administrative
Agent does not receive payment in full, on behalf of the relevant Issuer on
the Disbursement Date, Micro's Pro-Rata Reimbursement Obligation shall accrue
interest at a fluctuating rate equal to the Reference Rate plus 1/2 of 1% per
annum, payable on demand. In the event Micro fails to notify the
Administrative Agent and the relevant Issuer prior to 1:00 p.m., Eastern time,
on the Disbursement Date that Micro intends to pay the Administrative Agent,
for the account of such Issuer, for the amount of such drawing with funds
other than proceeds of Pro-Rata Revolving Loans, or the Administrative Agent
does not receive such reimbursement payment from Micro prior to 1:00 p.m.,
Eastern time on the Disbursement Date (or if the relevant Issuer must for any
reason return or disgorge such reimbursement), the Administrative Agent shall
promptly notify the Lenders, and Micro shall be deemed to have given a timely
Borrowing Request as of the Disbursement Date for Pro-Rata Revolving Loans in
an aggregate principal amount equal to such Pro-Rata Reimbursement Obligation
and the Lenders (including the relevant Issuer) shall, on the terms and
subject to the conditions of this Agreement (including, without limitation,
Sections 6.1 and 6.2 hereof), make Pro-Rata Revolving Loans in the amount of
such Pro-Rata Reimbursement Obligation which shall be Reference Rate Loans as
provided in Section 3.1; provided, however, that for the purpose of
determining the availability of any unused Total Credit Commitment Amount
immediately prior to giving effect to the application of the proceeds of such
Pro-Rata Revolving Loans, such Pro-Rata Reimbursement Obligation shall be
deemed not to be outstanding at such time. In the event that the conditions
precedent to any Pro-Rata Revolving Loans deemed requested by Micro as
provided in the preceding sentence shall not be satisfied at the time of such
deemed request, the Lenders (including the relevant Issuer) shall make demand
loans on such date for the benefit of Micro, ratably, in accordance with their
respective Percentages, which loans shall: (a) aggregate in principal amount
an amount equal to the applicable Pro-Rata Reimbursement Obligations; (b) be
applied solely to the prompt satisfaction of such Pro-Rata Reimbursement
Obligations; (c) be payable by Micro upon demand; and (d) accrue interest on
the unpaid principal amount thereof from (and including) the date on which
such demand loan is made until the date such loan is paid by Micro in full, at
a rate per annum equal to the Reference Rate plus 2% per annum.
SECTION 3.2.3. Reimbursement. The obligation (the "Pro-Rata
Reimbursement Obligation") of Micro under Section 3.2.2. to reimburse the
relevant Issuer with respect to each disbursement under a Pro-Rata Letter
of Credit (including interest thereon), and, upon the failure of Micro to
reimburse such Issuer, the obligation of each Lender to reimburse such
Issuer, shall be absolute and unconditional under any and all circumstances
and irrespective of any set-off, counterclaim or defense to payment which
Micro or such Lender, as the case may be, may have or have had against the
relevant Issuer or any Lender, including any defense based upon the failure
of any disbursement under a Pro-Rata Letter of Credit to conform to the
terms of the applicable Pro-Rata Letter of Credit (if, in the relevant
Issuer's good faith opinion, such disbursement is determined to be
appropriate) or any non-application or misapplication by the beneficiary of
the proceeds of such Pro-Rata Letter of Credit; provided, however, that
nothing herein shall require Micro or such Lender, as the case may be, to
reimburse an Issuer for any wrongful disbursement made by such Issuer under
a Pro-Rata Letter of Credit as a result of acts or omissions finally
determined by a court of competent jurisdiction to constitute gross
negligence or willful misconduct on the part of such Issuer.
SECTION 3.2.4. Deemed Disbursements. Upon the occurrence and during
the continuation of any Event of Default of the type described in Section
9.1.9 or, with notice from the Administrative Agent given at the direction
of the Required Lenders, upon the occurrence and during the continuation of
any other Event of Default, an amount equal to the then aggregate amount of
all Letters of Credit (including Non-Rata Letters of Credit) which are
undrawn and available under all issued and outstanding Letters of Credit
shall, without demand upon or notice to Micro, be deemed to have been paid
or disbursed by the Issuer under such Letters of Credit (notwithstanding
that such amount may not in fact have been so paid or disbursed) and Micro
shall be immediately obligated to pay to the Issuer of each Letter of
Credit an amount equal to such amount. Any amounts so payable by Micro
pursuant to this Section shall be deposited in cash with the Administrative
Agent and held in trust (for the sole benefit of the relevant Issuer and
the Lenders) for payment of the Obligations arising in connection with such
Letters of Credit. If such Event of Default shall have been cured or
waived (and provided no other Default has occurred and is continuing and
the Obligations have not been accelerated pursuant to Section 9.2 or 9.3),
the Administrative Agent shall promptly return to Micro all amounts
deposited by it with the Administrative Agent pursuant to this clause
(together with accrued interest thereon at the Federal Funds Rate or such
other interest rate based upon a cash equivalent investment (in the form of
obligations issued by or guaranteed by the U.S. government, commercial
paper of a domestic corporation rated A-1 by S&P or a comparable rating
from another nationally recognized rating agency or certificates of deposit
of a U.S. or Canadian bank with (x) a credit rating of Aa or better by S&P
or a comparable rating from another nationally recognized rating agency and
(y) a combined capital and surplus greater than $250,000,000) which is
agreed to between the relevant Issuer and Micro), net of any amount (which
may include accrued interest) applied to the payment of any Obligations
with respect to the Pro-Rata Letters of Credit.
SECTION 3.2.5. Nature of Reimbursement Obligations. Micro and, to the
extent set forth in Section 3.2.1, each Lender shall assume all risks of
the acts, omission or misuse of any Letter of Credit by the beneficiary
thereof. No Issuer (with respect to Pro-Rata Letters of Credit and Non-Rata
Letters of Credit) or any Lender (except to the extent of its own
gross negligence or willful misconduct) shall be responsible for:
(a) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any party in connection with
the application for an issuance of a Letter of Credit, even if it should
in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged;
(b) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any instrument transferring or assigning or purporting
to transfer or assign a Letter of Credit or the rights or benefits
thereunder or the proceeds thereof in whole or in part, which may prove
to be invalid or ineffective for any reason;
(c) failure of the beneficiary to comply fully with conditions
required in order to demand payment under a Letter of Credit; provided,
however, if a payment is made pursuant to such Letter of Credit when a
beneficiary has failed to comply with the conditions therefor and such
failure to comply is manifest on the face of such Letter of Credit or
the documents submitted by the beneficiary in connection therewith,
Micro shall be required to indemnify the Issuer in connection therewith
only if, and to the extent, Micro or any of its Subsidiaries has
received the benefit of such payment on such Letter of Credit by one or
more of their obligations being satisfied, either in whole or in part;
(d) errors, omissions, interruptions or delays in transmission
or delivery of any messages, by mail, telecopy or otherwise; or
(e) any loss or delay in the transmission or otherwise of any
document or draft required in order to make a disbursement under a
Letter of Credit.
None of the foregoing shall affect, impair or prevent the vesting of any of
the rights or powers granted to any Issuer or any Lender hereunder. In
furtherance and extension and not in limitation or derogation of any of the
foregoing (but subject to the limitations set forth in clause (c) above), any
action taken or omitted to be taken by an Issuer in good faith (and not
constituting gross negligence or willful misconduct as finally determined by a
court of competent jurisdiction) shall be binding upon Micro and, with respect
to Pro-Rata Letters of Credit, each Lender, and shall not put such Issuer
under any resulting liability to Micro or, with respect to Pro-Rata Letters of
Credit, any Lender.
SECTION 3.3. Non-Rata Revolving Loan Facility.
SECTION 3.3.1. Non-Rata Revolving Loans. Any Borrower may from time
to time, on any Business Day prior to the Commitment Termination Date,
request that any Lender make a Loan (relative to such Lender, a "Non-Rata
Revolving Loan") denominated in any Available Currency. The Borrower shall
make such request to the applicable office of such Lender set forth on
Schedule II or to such other office as a Lender may notify the Borrowers
pursuant to Section 11.2. Such Lender may in its sole and absolute
discretion agree to make or not make such Non-Rata Revolving Loan, it being
understood and agreed that the Lenders' Commitments only require the making
by them of Pro-Rata Revolving Loans and participation in or issuance of
Pro-Rata Letters of Credit (subject to the terms and conditions contained
herein). Except as otherwise provided herein and subject in each case to
the satisfaction of the applicable conditions precedent set forth in
Sections 6.1 and 6.2 hereof, each Non-Rata Revolving Loan shall be made on
the terms and conditions agreed to between the relevant Borrower and the
relevant Lender; provided, however, that the Obligations of Micro with
respect to each Pro-Rata Credit Extension shall rank pari passu with the
Obligations of each Borrower with respect to each Non-Rata Revolving Loan.
SECTION 3.3.2. Ineligible Currencies. Notwithstanding any other
provision contained in this Agreement, if, at any time prior to the Commitment
Termination Date, the relevant Lender of a Non-Rata Revolving Loan determines
that the Available Currency in which such Non-Rata Revolving Loan has been
made is an Ineligible Currency, then such Lender may (in its sole discretion)
at any time notify the relevant Borrower of the same. Promptly after
receiving such notice and, in any event, within five Business Days of
receiving the same, such Borrower will notify such Lender as to what Available
Currency it desires such Non-Rata Revolving Loan to be converted into and
promptly thereafter such Lender shall so convert such Loans. If the relevant
Borrower fails to select another Available Currency as provided in the
preceding sentence, such other Available Currency shall be selected by the
relevant Lender. Such conversion shall be effected at the relevant spot rate
at which such Ineligible Currency is offered on such day for the selected
Available Currency which appears on Telerate Page 3740 at approximately 11:00
a.m. (London time) (and if such spot rate is not available on Telerate Page
3740 as of such time, such spot rate as quoted by NationsBank, in London at
approximately 11:00 a.m. (London time)), or, if no such spot rate shall exist,
such other rate of exchange as the relevant Lender shall reasonably determine.
SECTION 3.3.3. Limitations on Making Non-Rata Revolving Loans.
Subject to the last sentence of Section 2.1, no Lender shall be permitted
to make any Non-Rata Revolving Loan if, after giving effect thereto, either
the aggregate Outstanding Credit Extensions of all the Lenders would exceed
the then Total Credit Commitment Amount or the aggregate Outstanding Credit
Extensions consisting of Non-Rata Credit Extensions would exceed
$750,000,000.
SECTION 3.3.4. Procedure for Making Non-Rata Revolving Loans. Subject
to the terms and conditions of this Agreement, including Section 3.3.1, the
terms of each Non-Rata Revolving Loan shall be mutually agreed upon between
the relevant Borrower and the relevant Lender. If the relevant Borrower
and the relevant Lender agree to an interest rate for a Non-Rata Revolving
Loan by reference to a fixed rate of interest (such as, for example, the
LIBO Rate) to be subsequently determined and such Lender subsequently
determines (which determination shall be conclusive and binding on the
relevant Borrower and such Lender) on or prior to the scheduled date of
making such Non-Rata Revolving Loan and promptly notifies the relevant
Borrower that such interest rate is unascertainable or that deposits in the
relevant interbank market are not available to such Lender in the relevant
Available Currency, then such Lender (except to the extent otherwise agreed
between such Lender and the relevant Borrower) shall not be obligated to
make such Non-Rata Revolving Loan. In connection with each Lender agreeing
to make a Non-Rata Revolving Loan calculated based upon a fixed rate of
interest, such Lender shall, in accordance with its customary practices,
attempt to determine the relevant interest rate or obtain the relevant
deposits in the relevant Available Currency necessary to make such Non-Rata
Revolving Loan.
SECTION 3.3.5. Maturity of Non-Rata Revolving Loans. Subject to
Section 3.3.2, each Non-Rata Revolving Loan shall be repaid in the
Available Currency in which such Loan was made on the Maturity thereof or
on any earlier date agreed upon by the relevant Borrower and the relevant
Lender or required by the other terms and conditions of this Agreement.
Each Borrower may prepay any Non-Rata Revolving Loan on such terms and
conditions as such Borrower and the relevant Lender may agree.
SECTION 3.3.6. Non-Rata Revolving Loan Records. Subject to Section
3.3.7, each Lender's Non-Rata Revolving Loans shall be evidenced by a loan
account maintained by such Lender. Each Borrower hereby irrevocably
authorizes the relevant Lender to make (or cause to be made) appropriate
account entries, which account entries, if made, shall evidence, inter
alia, the date of, the Type of, the currency of, the advance period (if
applicable) of, the Maturity of, the outstanding principal of, interest
payable on and any repayments of Non-Rata Revolving Loans made by such
Lender to such Borrower pursuant hereto. Any such account entries
indicating the outstanding principal amount of such Lender's Non-Rata
Revolving Loans and interest payable thereon shall be prima facie evidence
of the principal amount thereof owing and unpaid and interest payable
thereon, but the failure to make any such entry shall not limit or
otherwise affect the obligations of any Borrower hereunder to make payments
of principal of or interest on such Non-Rata Revolving Loans when due.
SECTION 3.3.7. Quarterly Report. During the period commencing on the
date hereof and ending on the Commitment Termination Date, Micro shall submit
(together with each set of reports and financial statements of Micro and its
Consolidated Subsidiaries delivered pursuant to Section 8.1.1 (a) and (b)) a
Quarterly Report to the Administrative Agent in respect of the most recently
ended Fiscal Period. In addition, Micro agrees to provide to the
Administrative Agent updates with respect to the information provided in the
Quarterly Reports at such other times as the Administrative Agent may
reasonably request from time to time.
SECTION 3.4. Non-Rata Letter of Credit Facility.
SECTION 3.4.1. Non-Rata Letters of Credit. Any Borrower may from
time to time, on any Business Day prior to the Commitment Termination Date,
request that any Lender issue a letter of credit (relative to such Lender,
a "Non-Rata Letter of Credit") denominated in any Available Currency. Such
Lender may in its sole and absolute discretion agree to issue or not issue
such Non-Rata Letter of Credit, it being understood and agreed that the
Lenders' Commitments only require the making by them of Pro-Rata Revolving
Loans and participation in or issuance of Pro-Rata Letters of Credit
(subject to the terms and conditions contained herein). Except as
otherwise provided herein and subject in each case to the satisfaction of
the applicable conditions precedent set forth in Sections 6.1 and 6.2
hereof, each Non-Rata Letter of Credit shall be issued on the terms and
conditions agreed to between the relevant Borrower and the relevant Lender;
provided, however, that the Obligations of Micro with respect to each
Pro-Rata Credit Extension shall rank pari passu with the Obligations of each
Borrower with respect to each Non-Rata Letter of Credit.
SECTION 3.4.2. Ineligible Currencies. Notwithstanding any other
provision contained in this Agreement, if, at any time prior to the Commitment
Termination Date, the relevant Issuer of a Non-Rata Letter of Credit
determines that the Available Currency in which such Non-Rata Letter of Credit
has been issued is an Ineligible Currency, then such Issuer may (in its sole
discretion) at any time notify the relevant Borrower of the same. Such
Borrower shall use reasonable efforts to cause the beneficiary of such
Non-Rata Letter of Credit to accept a substitution for such Non-Rata Letter of
Credit with another Non-Rata Letter of Credit in an Available Currency
acceptable to such Borrower and such Issuer.
SECTION 3.4.3. Limitations on Issuing Non-Rata Letters of Credit.
Subject to the last sentence of Section 2.1, no Lender shall be permitted
to issue any Non-Rata Letters of Credit if, after giving effect thereto,
either the aggregate Outstanding Credit Extensions of all the Lenders would
exceed the then Total Credit Commitment Amount or the aggregate Outstanding
Credit Extensions consisting of Non-Rata Credit Extensions would exceed
$750,000,000.
SECTION 3.4.4. Procedures for Issuing Non-Rata Letters of Credit.
Subject to the terms and conditions of this Agreement, including Section
3.4.1, the terms of each Non-Rata Letter of Credit shall be mutually agreed
upon between the relevant Borrower and the relevant Issuer.
SECTION 3.4.5. Disbursements. Subject to the terms and provisions of
each Non-Rata Letter of Credit and this Agreement, upon presentment of any
Non-Rata Letter of Credit to the relevant Issuer thereof for payment, such
Issuer shall make such payment to the beneficiary (or its designee) of such
Non-Rata Letter of Credit on the date designated for such payment (the
"Non-Rata Disbursement Date"). Such Issuer will promptly notify the
relevant Borrower of the presentment for payment of any such Non-Rata
Letter of Credit, together with notice of the Non-Rata Disbursement Date
thereof. Prior to 12:00 noon, Eastern time, on the next Business Day
following the Non-Rata Disbursement Date, the relevant Borrower will
reimburse such Issuer for all amounts disbursed under such Non-Rata Letter
of Credit, together with all interest, if any, that such Borrower shall
have agreed to pay that shall have accrued thereon since the Non-Rata
Disbursement Date.
SECTION 3.4.6. Reimbursement. The obligation (the "Non-Rata
Reimbursement Obligation") of the relevant Borrower under Section 3.4.5. to
reimburse an Issuer with respect to each disbursement under a Non-Rata
Letter of Credit (including interest thereon) issued by such Issuer, shall
be absolute and unconditional under any and all circumstances and
irrespective of any set-off, counterclaim or defense to payment which such
Borrower or any other Borrower may have or have had against such Issuer,
including any defense based upon the failure of any disbursement under a
Non-Rata Letter of Credit to conform to the terms of the applicable
Non-Rata Letter of Credit (if, in the applicable Issuer's good faith
opinion, such disbursement is determined to be appropriate) or any
non-application or misapplication by the beneficiary of the proceeds of
such Non-Rata Letter of Credit; provided, however, that nothing herein
shall require such Borrower to reimburse the applicable Issuer for any
wrongful disbursement made by such Issuer under a Non-Rata Letter of Credit
as a result of acts or omissions finally determined by a court of competent
jurisdiction to constitute gross negligence or willful misconduct on the
part of such Issuer. Subject to Section 3.4.2, each Non-Rata Letter of
Credit shall be reimbursed in the Available Currency in which such Non-Rata
Letter of Credit was issued.
SECTION 3.5. Bid Rate Facility.
SECTION 3.5.1. Bid Rate Loans. Any Borrower may, on the terms and
conditions of this Agreement, request the Lenders to make offers to make
Bid Rate Loans to such Borrower. The Lenders may, but shall have no
obligation to, make such offers and the relevant Borrower may, but shall
have no obligation to, accept any such offers in the manner set forth in
this Section 3.5. Except as otherwise provided herein and subject in each
case to the satisfaction of the applicable conditions precedent set forth
in Sections 6.1 and 6.2 hereof, each Bid Rate Loan shall be made on the
terms and conditions agreed to between the relevant Borrower and the
relevant Lender; provided, however, that the Obligations of Micro with
respect to each Pro-Rata Credit Extension shall rank pari passu with the
Obligations of each Borrower with respect to each Bid Rate Loan.
SECTION 3.5.2. Quote Request. When a Borrower wishes to request
offers to make Bid Rate Loans, it shall give each of the Lenders (excluding
any Lender that has previously notified the Borrowers that it will not
participate in any LIBO Auctions or Absolute Interest Rate Auctions) notice
by telephone or telecopy (a "Quote Request") so as to be received at the
applicable office of each such Lender set forth on Schedule II or to such
other office as a Lender may notify the Borrowers pursuant to Section 11.2
no later than (a) 3:00 p.m., Eastern time, on the fourth Business Day prior
to the date of borrowing proposed therein, in the case of a LIBO Auction or
(b) 11:00 a.m., Eastern time, on the date of borrowing proposed therein, in
the case of an Absolute Interest Rate Auction. The relevant Borrower may
request offers to make Bid Rate Loans for up to five different Interest
Periods in a single notice; provided, however, that the request for each
separate Interest Period shall be deemed to be a separate Quote Request for
a separate borrowing (a "Bid Rate Borrowing"). Each Bid Rate Borrowing
shall be at least $10,000,000 (or an integral multiple of $1,000,000 in
excess thereof).
SECTION 3.5.3. Submission of Quotes. Each Lender may submit one or
more Quotes, each containing an offer to make a Bid Rate Loan in response
to any Quote Request; provided, however, that, if the relevant Borrower's
request under Section 3.5.2 specified more than one Interest Period, such
Lender may make a single submission containing one or more Quotes for each
such Interest Period. Each Quote must be submitted to the relevant
Borrower not later than (a) 11:00 a.m., Eastern time, on the third Business
Day immediately prior to the proposed date of borrowing, in the case of a
LIBO Auction or (b) 12:00 noon, Eastern time, on the proposed date of
borrowing, in the case of an Absolute Interest Rate Auction. Subject to
Sections 5.1 through 5.5 and 6.2 and Article IX, any Quote so made shall be
irrevocable. Each Quote shall specify: (i) the proposed date of borrowing
and the Interest Period therefor; (ii) the principal amount of the Bid
Rate Loan for which each such offer is being made, which principal amount
shall be at least $10,000,000 (or an integral multiple of $1,000,000 in
excess thereof); provided, however, that the aggregate principal amount of
all Bid Rate Loans for which a Lender submits Quotes may not exceed the
principal amount of the Bid Rate Borrowing for a particular Interest Period
for which offers were requested; (iii) in the case of a LIBO Auction, the
margin above or below the applicable LIBO Rate (the "LIBO Margin") offered
for each such Bid Rate Loan, ex pressed as a percentage (rounded upwards,
if necessary, to the nearest 1/100th of 1%) to be added to or subtracted
from the applicable LIBO Rate; (iv) in the case of an Absolute Interest
Rate Auction, the rate of interest per annum offered for each such Bid Rate
Loan (the "Absolute Interest Rate"); and (v) the identity of the quoting
Lender. No Quote shall contain qualifying, conditional or similar language
or propose terms other than or in addition to those of the Quote Request
and, in particular, no Quote may be conditioned upon acceptance by the
relevant Borrower of all (or some specified minimum) of the principal
amount of the Bid Rate Loan for which such Quote is being made.
SECTION 3.5.4. Acceptance of Quotes. Not later than (a) 11:00 a.m.,
Eastern time, on the second Business Day immediately prior to the proposed
date of borrowing, in the case of a LIBO Auction or (b) 2:00 p.m., Eastern
time, on the proposed date of borrowing, in the case of an Absolute
Interest Rate Auction, the relevant Borrower shall notify each Lender by
telephone or telecopy of such Borrower's acceptance or nonacceptance of the
Quotes submitted to such Borrower by such Lender. The failure of the
relevant Borrower to give such notice by such time shall constitute
nonacceptance of any such Quote. Such Borrower may accept any Quote in
whole or in part (provided that any Quote accepted in part shall be at
least $10,000,000 or an integral multiple of $1,000,000 in excess thereof);
provided, however, that: (i) subject to the limitations set forth in
clause (ii), (iii) or (iv) of this proviso, if two or more Lenders submit
Quotes for any Interest Period at identical pricing and the relevant
Borrower accepts any of such offers but does not wish to (or by reason of
the limitations set forth in clause (ii), (iii) or (iv) of this proviso,
cannot) accept the aggregate principal amount of the Bid Rate Loans offered
by such Lenders, such Borrower shall accept Bid Rate Loans from all of such
Lenders in amounts allocated among them pro rata according to the
respective principal amounts of the respective Bid Rate Loans originally
offered by such Lenders (or as nearly pro rata as shall be practicable in
light of the limitations set forth in clauses (ii), (iii) and (iv) of this
proviso), (ii) the aggregate principal amount of each Bid Rate Borrowing
may not exceed the applicable amount set forth in the related Quote
Request; (iii) the aggregate principal amount of each Bid Rate Borrowing
shall be at least $10,000,000 (or an integral multiple of $1,000,000 in
excess thereof) but shall not cause the limits specified in Section 3.5.8
to be violated; and (iv) the relevant Borrower may not accept any offer
that fails to comply with Section 3.5.3 or otherwise fails to comply with
the requirements of this Agreement.
SECTION 3.5.5. Bid Rate Loan. Any Lender whose offer to make any Bid
Rate Loan has been accepted shall, not later than 3:00 p.m., Eastern time,
on the date specified for the making of such Loan and subject to the other
terms and conditions of this Agreement, make the amount of such Bid Rate
Loan available to the relevant Borrower at such Borrower's Account in
immediately available funds.
SECTION 3.5.6. Maturity of Bid Rate Loans. Each Bid Rate Loan shall be
repaid on the Maturity thereof or on any earlier date agreed upon by the
relevant Borrower and the relevant Lender or required by the other terms and
conditions of this Agreement. The relevant Borrower may prepay any Bid Rate
Loan on such terms and conditions as such Borrower and the relevant Lender may
agree.
SECTION 3.5.7. Bid Rate Loan Records. Each Lender's Bid Rate Loans,
if any, shall be evidenced by a loan account maintained by such Lender.
Each Borrower hereby irrevocably authorizes the relevant Lender to make (or
cause to be made) appropriate account entries, which account entries, if
made, shall evidence, inter alia, the date of, the Type of, the currency
of, the advance period (if applicable) of, the Maturity of, the outstanding
principal of, interest payable on and any repayments of Bid Rate Loans made
by such Lender to such Borrower pursuant hereto. Any such account entries
indicating the outstanding principal amount of such Lender's Bid Rate Loans
and interest payable thereon shall be prima facie evidence of the principal
amount thereof owing and unpaid and interest payable thereon, but the
failure to make any such entry shall not limit or otherwise affect the
obligations of any Borrower hereunder to make payments of principal of or
interest on such Bid Rate Loans when due.
SECTION 3.5.8 Limitations on Making Bid Rate Loans. Subject to the
last sentence of Section 2.1, no Lender shall be permitted to make any Bid
Rate Loan if, after giving effect thereto, either the aggregate Outstanding
Credit Extensions of all the Lenders would exceed the then Total Credit
Commitment Amount or the aggregate Outstanding Credit Extensions consisting
of Non-Rata Credit Extensions would exceed $750,000,000.
ARTICLE IV
PRINCIPAL, INTEREST AND FEE PAYMENTS
SECTION 4.1. Repayments and Prepayments of Pro-Rata Revolving Loans.
Micro shall repay in full the unpaid principal amount of each Pro-Rata
Revolving Loan outstanding to it at the Maturity thereof. Prior thereto,
Micro:
(a) may, from time to time on any Business Day, make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of
any Pro-Rata Revolving Loan; provided, however, that:
(i) any such prepayment of any Pro-Rata Revolving Loan
shall be allocated to each Lender pro rata according to such
Lender's Percentage (calculated on the date such Pro-Rata
Revolving Loans were made) of the Pro-Rata Revolving Loans so
prepaid (and, for the avoidance of doubt, no such prepayment shall
be allocated to any Lender which did not participate in the making
of the Pro-Rata Revolving Loans to be prepaid);
(ii) no such prepayment of any Pro-Rata Revolving Loan that
is a LIBO Rate Loan may be made on any day other than the last day
of the Interest Period then applicable to such LIBO Rate Loan
unless all the losses or expenses incurred by the Lenders in
connection therewith pursuant to Section 5.4 are paid in full
contemporaneously with such prepayments;
(iii) all such voluntary prepayments shall require prior
notice to the Administrative Agent of (x) at least three but no
more than five Business Days in the case of LIBO Rate Loans and
(y) not more than three Business Days but no later than the date
of such voluntary prepayment in the case of Reference Rate Loans;
and
(iv) all such voluntary prepayments shall, if other than a
prepayment in whole, be in an aggregate minimum amount of
$10,000,000 and an integral multiple of $1,000,000;
(b) shall determine if the aggregate Outstanding Credit
Extensions of all the Lenders exceed the Total Credit Commitment Amount
(i) at the end of each Fiscal Period and (ii) on the date of each
request for a Credit Extension (excluding any request submitted in
respect of any continuation or conversion of any Borrowing previously
made hereunder), and promptly thereafter (and in any event (A) in
respect of any determination made pursuant to clause (i) above, no later
than the next date on which Micro shall be required to submit a
Quarterly Report in accordance with Section 3.3.7 or (B) in respect of
any determination made pursuant to clause (ii) above, prior to the
proposed date of such requested Credit Extension), Micro shall make a
mandatory prepayment of the outstanding principal amount of such Loans
as Micro may select in an amount equal to such excess, such prepayment
to be allocated to the Lenders in such manner as Micro may elect
(provided; that a prepayment of a Pro-Rata Revolving Loan shall be
allocated to the Lenders in the manner set forth in clause (a)(i)
above); and
(c) shall, on each date when any reduction or termination in the
Total Credit Commitment Amount shall become effective, including
pursuant to Section 2.3, make a mandatory prepayment of all Pro-Rata
Revolving Loans equal to the excess, if any, of the then aggregate
Outstanding Credit Extensions of all the Lenders over the Total Credit
Commitment Amount as so reduced, such prepayment to be allocated to the
Lenders in the manner set forth in clause (a)(i).
SECTION 4.2. Interest Provisions. Each Pro-Rata Revolving Loan shall
bear interest from and including the day when made until (but not
including) the day such Pro-Rata Revolving Loan shall be paid in full, and
such interest shall accrue and be payable in accordance with this Section
4.2.
SECTION 4.2.1. Rates.
(a) Pro-Rata Revolving Loans. Subject to Section 4.2.2 and
pursuant to an appropriately completed and delivered Borrowing Request
or Continuation/Conversion Notice, Micro may elect that Pro-Rata
Revolving Loans comprising a Borrowing accrue interest at the following
rates per annum:
(i) Reference Rate Loans. On that portion of such
Borrowing maintained from time to time as a Reference Rate Loan,
equal to the Reference Rate from time to time in effect.
(ii) LIBO Rate Loans. On that portion of such Borrowing
maintained from time to time as a LIBO Rate Loan, during each
Interest Period applicable thereto, the sum of the LIBO Rate for
such Interest Period plus the Applicable Margin.
(b) Non-Rata Revolving Loans. Pursuant to the terms agreed to
between the relevant Borrower and the relevant Lender, each Borrower
shall pay interest on the aggregate principal amount of any Non-Rata
Revolving Loan outstanding to any Lender from time to time prior to and
at Maturity at a rate agreed between each such Borrower and such Lender
pursuant to Section 3.3 in connection with the making of such Non-Rata
Revolving Loan. Such interest rate shall include any compensation for
reserves or similar costs incurred in connection with such Non-Rata
Revolving Loan.
SECTION 4.2.2 Post-Maturity Rates. After the date any principal amount
of any Loan is due and payable (whether at Maturity, upon acceleration or
otherwise), or after any other monetary Obligation of Micro or any other
Borrower shall have become due and payable, Micro or each such other Borrower
shall pay, but only to the extent permitted by law, interest (after as well as
before judgment) on such amounts at a rate per annum equal to the Reference
Rate plus 2%.
SECTION 4.2.3. Continuation and Conversion Elections. Micro may from
time to time by delivering a Continuation/Conversion Notice to the
Administrative Agent on or before 1:00 p.m., Eastern time, on a Business
Day, irrevocably elect, in the case of LIBO Rate Loans, on not less than
three nor more than five Business Days' notice, and in the case of
Reference Rate Loans, on such Business Day, that all, or any portion in an
aggregate minimum amount of $25,000,000 and an integral multiple of
$1,000,000 of the Loans, be, in the case of Reference Rate Loans, converted
into LIBO Rate Loans or be, in the case of LIBO Rate Loans, converted into
Reference Rate Loans or continued as LIBO Rate Loans (in the absence of
delivery of a Continuation/Conversion Notice with respect to any LIBO Rate
Loan, at least three Business Days (but not more than five Business Days)
before the last day of the then current Interest Period with respect
thereto, each such LIBO Rate Loan shall, on such last day, automatically
convert to a Reference Rate Loan); provided, however, that (1) each such
conversion or continuation shall be pro rated among the applicable
outstanding Pro-Rata Revolving Loans of all Lenders, and (2) no portion of
the outstanding principal amount of any Pro-Rata Revolving Loans may be
continued as, or be converted into, a LIBO Rate Loan with an Interest
Period longer than one month while any Default has occurred and is
continuing.
SECTION 4.2.4. Payment Dates.
(a) Pro-Rata Revolving Loans. Interest accrued on each Pro-Rata
Revolving Loan shall be payable, without duplication:
(i) on the Stated Maturity Date therefor;
(ii) on the date of any payment or prepayment, in whole or
in part, of principal outstanding on such Pro-Rata Revolving Loan
(but only on the principal amount so paid or prepaid);
(iii) with respect to each Reference Rate Loan, on each
Quarterly Payment Date;
(iv) with respect to each Reference Rate Loan that is
converted into a LIBO Rate Loan on a day when interest would not
otherwise have been payable pursuant to clause (iii), on the date
of such conversion;
(v) with respect to each LIBO Rate Loan, on the last day
of each applicable Interest Period (and, if such Interest Period
shall exceed three months, on each three month anniversary of the
date of the commencement of such Interest Period); and
(vi) on that portion of any Loans the Stated Maturity Date
of which is accelerated pursuant to Section 9.2 or 9.3,
immediately upon such acceleration.
Interest accrued on Pro-Rata Revolving Loans or other monetary
Obligations arising under this Agreement or any other Loan Document
after the date such Pro-Rata Revolving Loans or other Obligations are
due and payable (whether on the Stated Maturity Date, upon acceleration
or otherwise) shall be payable upon demand.
(b) Non-Rata Revolving Loans. Subject to Section 3.3.2, each
Borrower shall pay interest on the aggregate principal amount of any
Non-Rata Revolving Loan outstanding in the Available Currency in which
such Loan was made to the relevant Lender from time to time prior to and
at Maturity on such dates agreed between such Borrower and such Lender
pursuant to Section 3.3 in connection with the making of such Non-Rata
Revolving Loan.
(c) Bid Rate Loans. Each Borrower shall pay interest on the
aggregate principal amount of any Bid Rate Loan outstanding to the
relevant Lender from time to time prior to and at Maturity on such dates
agreed between such Borrower and such Lender pursuant to Section 3.5 in
connection with the making of such Bid Rate Loan.
SECTION 4.2.5. Interest Rate Determination. The Administrative Agent
and the Reference Lenders shall, in accordance with each of their customary
practices, attempt to determine the relevant interest rates applicable to
each LIBO Rate Loan requested to be made pursuant to each Borrowing Request
duly completed and delivered by Micro and each LIBO Market Loan from time
to time in accordance with the terms hereof, and each Reference Lender
agrees to furnish the Administrative Agent timely information for the
purpose of determining the LIBO Rate. If any Reference Lender fails to
timely furnish such information to the Administrative Agent for any such
interest rate, the Administrative Agent shall determine such interest rate
on the basis of the information furnished by the other Reference Lenders.
SECTION 4.2.6. Additional Interest on LIBO Rate Loans. For so long as
the cost to a Lender of making or maintaining its LIBO Rate Loans is
increased as a result of any imposition or modification of any reserve
required to be maintained by such Lender against Eurocurrency Liabilities
(or any other category of liabilities which includes deposits by reference
to which the interest rate on LIBO Rate Loans is determined or any category
of extensions of credit or other assets which includes loans by a non-United
States office of such Lender to United States residents), then such
Lender may require Micro to pay, contemporaneously with each payment of
interest on the LIBO Rate Loans, additional interest on the related LIBO
Rate Loan of such Lender at a rate per annum up to but not exceeding the
excess of (i) (A) the applicable LIBO Rate divided by (B) one minus the
LIBOR Reserve Percentage over (ii) the applicable LIBO Rate. Any Lender
wishing to require payment of such additional interest shall so notify
Micro and the Administrative Agent (which notice shall set forth the amount
(as determined by such Lender) to which such Lender is then entitled under
this Section 4.2.6 (which amount shall be consistent with such Lender's
good faith estimate of the level at which the related reserves are
maintained by it and which determination shall be conclusive and binding
for all purposes, absent demonstrable error) and shall be accompanied by
such information as to the computation set forth therein as Micro may
reasonably request), in which case such additional interest on the LIBO
Rate Loans of such Lender shall be payable on the last day of each Interest
Period thereafter (commencing with the Interest Period beginning at least
three Business Days after the giving of such notice) to such Lender at the
place indicated in such notice. Each Lender that receives any payment in
respect of increased costs pursuant to this Section shall promptly notify
Micro of any change with respect to such costs which affects the amount of
additional interest payable pursuant to this Section in respect thereof.
SECTION 4.3. Fees. Micro (and, in the case of Section 4.3.3(d), each
relevant Borrower) agrees to pay the fees set forth in this Section 4.3.
All such fees shall be non-refundable and shall be paid to each such Lender
or the relevant Issuer at its office specified for such purpose on the
signature pages hereof.
SECTION 4.3.1. Administration and Documentation Fees. Micro agrees to
pay directly to the Administrative Agent and the Documentation Agent, for
their own accounts, an annual administration and documentation fee,
respectively, in the amounts and on the dates set forth in the Fee Letter.
SECTION 4.3.2. Facility Fees. Micro agrees to pay directly to each
Lender (including any portion thereof when the Lenders may not extend any
Credit Extensions by reason of the inability of Micro to satisfy any
condition of Section 6.1 or 6.2): (a) for each day during the period
commencing on the date hereof and continuing through and including the date
the Administrative Agent shall receive the reports and financial statements
of Micro and its Consolidated Subsidiaries required to be delivered
pursuant to Section 8.1.1(a) hereof (together with the Compliance
Certificate required to be delivered contemporaneously therewith pursuant
to Section 8.1.1(d) hereof) for the Fiscal Year ending on the Saturday
nearest December 31, 1996, a fee to each Lender on its Credit Commitment
Amount on such day (without taking into account usage) at a rate of .125 of
1% per annum and (b) for each day during the period commencing on the date
immediately following the date the Administrative Agent shall receive the
reports, financial statements and Compliance Certificate referred to in
clause (a) above, until but excluding the Commitment Termination Date, a
fee to each Lender on its Credit Commitment Amount on such day (without
taking into account usage) at the corresponding rate per annum set forth
below, determined by reference to: (i) the lower of the two highest
ratings from time to time assigned to Micro's long-term senior unsecured
debt by S&P, Moody's and Fitch and either published or otherwise evidenced
in writing by the applicable rating agency and made available to the
Administrative Agent (including both "express" and "indicative" or
"implied" (or equivalent) ratings) or (ii) the ratio (calculated pursuant
to clause (c) of Section 8.2.3) of Consolidated Funded Debt to Consolidated
EBITDA for the Fiscal Period most recently ended prior to, such day, for
which financial statements and reports have been received by the
Administrative Agent pursuant to Section 8.1(a) or (b), whichever results
in the lower rate:
<TABLE>
<CAPTION>
Micro's Long-Term Senior Unsecured
Debt Ratings by S&P, Moody's or Fitch, Ratio of Consolidated Funded Debt to
respectively Consolidated EBITDA Facility Fee
______________________________________ _______________________________________________ ____________
<S> <C> <C>
A-, A3 or A- (or higher) Less than 1.5 .090%
BBB+, Baa1 or BBB+ Greater than or equal to 1.5, but less than 2.0. .110%
BBB, Baa2 or BBB Greater than or equal to 2.0, but less than 2.5. .125%
BBB-, Baa3 or BBB- Greater than or equal to 2.5, but less than 3.0. .150%
BB+, Ba1 or BB+ Greater than or equal to 3.0, but less than 3.25. .200%
Lower than BB+, Ba1 or BB+ Greater than or equal to 3.25. .250%
</TABLE>
Such fee shall be calculated by Micro as at each Quarterly Payment Date,
commencing on the first Quarterly Payment Date to occur after the date hereof,
and on the Commitment Termination Date and shall be payable by Micro in
arrears on each Quarterly Payment Date and on the Commitment Termination Date.
Each Lender agrees to promptly notify the Administrative Agent of the failure
of Micro to pay any fee as provided in this Section.
SECTION 4.3.3. Letter of Credit Fees.
(a) Micro agrees to pay directly to each Lender (including the
relevant Issuer) a Pro-Rata Letter of Credit participation fee equal to
each Lender's Percentage of the average daily Stated Amount of each
Pro-Rata Letter of Credit during the applicable period multiplied by the
Applicable Margin then in effect for any LIBO Rate Loan. Such
participation fee shall accrue from the date of issuance of any Pro-Rata
Letter of Credit until the date such Pro-Rata Letter of Credit is drawn
in full or terminated, and shall be payable in arrears on each Quarterly
Payment Date and on the date that the Commitments terminate in their
entirety.
(b) Micro agrees to pay directly to the Issuer of each Pro-Rata
Letter of Credit a Pro-Rata Letter of Credit issuance fee of .125 of 1%
per annum of the average daily Stated Amount of such Pro-Rata Letter of
Credit during the applicable period, such fee to be payable to the
relevant Issuer in quarterly installments in arrears on each Quarterly
Payment Date and on the date that the Commitments terminate in their
entirety. Micro agrees to reimburse each Issuer, on demand, for all
usual out-of-pocket costs and expenses incurred in connection with the
issuance or maintenance of any Pro-Rata Letter of Credit issued by such
Issuer.
(c) Each Lender and Issuer agrees to promptly notify the
Administrative Agent of the failure of Micro to pay any letter of credit
fees pursuant to this Section.
(d) Each Borrower agrees to pay directly to the relevant Issuer
of each Non-Rata Letter of Credit requested by such Borrower an
issuance fee equal to such amount and at such times as such Borrower
and the applicable Issuer shall agree in connection with the issuance
of such Non-Rata Letter of Credit.
SECTION 4.4. Rate and Fee Determinations. Interest on each LIBO Rate
Loan shall be computed on the basis of a year consisting of 360 days and
interest on each Reference Rate Loan and fees shall be computed on the
basis of a year consisting of 365 or 366 days, as the case may be, in each
case paid for the actual number of days elapsed, calculated as to each
period from and including the first day thereof to but excluding the last
day thereof. All determinations by the Administrative Agent of the rate of
interest payable with respect to any Pro-Rata Revolving Loan shall be
conclusive and binding in the absence of demonstrable error.
SECTION 4.5. Obligations in Respect of Non-Rata Credit Extensions.
Micro hereby acknowledges and agrees that notwithstanding any provision
hereof or of any other Loan Document to the contrary, all Obligations of
the Obligors in respect of any Non-Rata Credit Extensions shall be the
joint and several liabilities of Micro.
ARTICLE V
CERTAIN PAYMENT PROVISIONS
SECTION 5.1. Illegality; Currency Restrictions.
(a) If, as the result of any Regulatory Change, any Lender shall
determine (which determination shall, in the absence of demonstrable
error, be conclusive and binding on each Borrower), that it is unlawful
for such Lender to make any LIBO Rate Loan, issue any Non-Rata Letter of
Credit or continue any LIBO Rate Loan previously made by it hereunder,
as the case may be, the obligations of such Lender to make any such LIBO
Rate Loan, issue any such Non-Rata Letter of Credit or continue any such
LIBO Rate Loan, as the case may be, shall, upon the giving of notice
thereof to the Administrative Agent, Micro and any other applicable
Borrower, forthwith be suspended and each applicable Borrower shall, if
requested by such Lender and if required by such Regulatory Change, on
such date as shall be specified in such notice, prepay to such Lender in
full all of such LIBO Rate Loans or convert all of such LIBO Rate Loans
into a Loan of another Type that is not unlawful, in each case on the
last day of the Interest Period applicable thereto (unless otherwise
required by applicable law) and without any penalty whatsoever (but
subject to Section 5.4); provided, however, such Lender shall make as
Reference Rate Loans all Loans that such Lender would otherwise be
obligated to make as LIBO Rate Loans and convert into or continue as
Reference Rate Loans all Loans that such Lender would otherwise be
required to convert into or continue as LIBO Rate Loans, in each case
during the period any such suspension is effective. Such suspension
shall continue to be effective until such Lender shall notify the
Administrative Agent and Micro that the circumstances causing such
suspension no longer exist, at which time the obligations of such Lender
to make any such LIBO Rate Loan, issue any Non-Rata Letter of Credit
or continue any LIBO Rate Loan, as the case may be, shall be
reinstated.
(b) If any central bank or other governmental authorization in
the country of the proposed Available Currency of any proposed Non-Rata
Revolving Loan is required to permit the use of such Available Currency
by a Lender (through its Lending Office) for such Non-Rata Revolving
Loan and such authorization has not been obtained (provided that such
Lender has used reasonable endeavors to obtain such authorization) or is
not in full force and effect, the obligation of such Lender to provide
such Non-Rata Revolving Loans shall be suspended so long as such
authorization is required and has not been obtained by such Lender.
SECTION 5.2. Deposits Unavailable.
(a) If prior to the date on which all or any portion of any LIBO
Rate Loan is to be made, maintained or continued the Administrative
Agent shall have determined (which determination shall be conclusive and
binding), with respect to such LIBO Rate Loan that:
(i) Dollar deposits in the relevant amount and for the
relevant Interest Period are available to none of the Reference
Lenders in the relevant market; or
(ii) by reason of circumstances affecting the London
interbank market, adequate means do not exist for ascertaining the
interest rate applicable hereunder to such LIBO Rate Loan,
then, upon notice from the Administrative Agent to Micro and the
Lenders, the obligations of the Lenders to make or continue any Pro-Rata
Revolving Loan as a LIBO Rate Loan under Sections 3.1 and 4.2.3 shall
forthwith be suspended until the Administrative Agent shall notify Micro
and the Lenders that the circumstances causing such suspension no longer
exist; provided, however, that, for so long as any such suspension shall
be effective, unless the Borrower shall notify the Administrative Agent
prior to 1:00 p.m., Eastern Time, on the date of any proposed Borrowing
that was to be comprised of LIBO Rate Loans that it does not wish to
obtain such Loans as Reference Rate Loans, any proposed Borrowing that
would have been comprised of LIBO Rate Loans but for the terms of this
Section shall be made on the date of such proposed Borrowing as
Reference Rate Loans.
(b) The obligation of any Lender to make a Non-Rata Revolving
Loan shall be suspended under the circumstances provided for pursuant to
Section 3.3.4.
SECTION 5.3. Increased Credit Extension Costs, etc. Each Borrower
agrees to reimburse each Lender upon demand for any increase in the cost to
such Lender of, or any reduction in the amount of any sum receivable by
such Lender in respect of, making, maintaining, participating, issuing or
extending (or of its obligation to make, maintain, participate, issue or
extend) any Credit Extension to the extent such increased cost or reduced
amount is due to a Regulatory Change. Such Lender shall provide to the
Administrative Agent and the relevant Borrower a certificate stating, in
reasonable detail, the reasons for such increased cost or reduced amount
and the additional amount required fully to compensate such Lender for such
increased cost or reduced amount. Such additional amounts shall be payable
by the relevant Borrower directly to such Lender upon its receipt of such
notice, and such notice shall be rebuttable presumptive evidence of the
additional amounts so owing. In determining such amount, such Lender shall
act reasonably and in good faith and may use any method of averaging and
attribution that it customarily uses for its other borrowers with a similar
credit rating as Micro. Such Lender may demand reimbursement for such
increased cost or reduced amount only for the 360-day period immediately
preceding the date of such written notice, and Micro shall have liability
only for such period.
SECTION 5.4. Funding Losses. In the event any Lender shall incur
any loss or expense (including any loss or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender to make, continue or extend any portion of the principal amount of
any Loan) as a result of:
(a) any repayment or prepayment of the principal amount of any
Loan on a date other than the scheduled last day of the Interest Period
or, in the case of any Non-Rata Revolving Loan, other relevant funding
period applicable thereto, whether pursuant to Section 4.1 or otherwise;
(b) any conversion of a LIBO Rate Loan into a Reference Rate
Loan on a date other than the scheduled last day of the Interest Period
applicable thereto; or
(c) any Loan not being made, continued or converted in
accordance with the Credit Extension Request therefor in the case of any
Pro-Rata Credit Extension Request or the instructions of the relevant
Borrower to the relevant Lender in the case of any Non-Rata Credit
Extension as a consequence of any action taken, or failed to be
taken, by any Obligor,
then, upon the written notice of such Lender to the relevant Borrower (with a
copy to the Administrative Agent), such Borrower shall, within five days of
its receipt thereof, pay directly to such Lender such amount as will (in the
reasonable determination of such Lender) reimburse such Lender for such loss
or expense. Such written notice (which shall include calculations in
reasonable detail) shall be rebuttable presumptive evidence of the amount of
any such loss or expense that has been so incurred.
SECTION 5.5. Increased Capital Costs. If any Regulatory Change
affects or would affect the amount of capital required or expected to be
maintained by any Lender or any Person controlling such Lender, and such
Lender determines (in its sole and absolute discretion) that the rate of
return on its or such controlling Person's capital as a consequence of its
participation in this Agreement or the making, continuing, participating in
or extending of any Credit Extension is reduced to a level below that which
such Lender or such controlling Person could have achieved but for the
occurrence of any such circumstance, then, in any such case, upon the
relevant Borrower's receipt of written notice thereof from such Lender
(with a copy to the Administrative Agent), such Borrower shall pay directly
to such Lender additional amounts sufficient to compensate such Lender or
such controlling Person for such reduction in rate of return. A statement
of such Lender as to any such additional amounts (including calculations
thereof in reasonable detail) shall be rebuttable presumptive evidence of
the additional amounts so owing. In determining such amount, such Lender
may use any method of averaging and attribution that it shall deem
applicable. Such Lender may demand payment for such additional amounts
that have accrued only during the 360-day period immediately preceding the
date of such written notice and Micro shall have liability only for such
period.
SECTION 5.6. Discretion of Lenders as to Manner of Funding.
Notwithstanding any provision of this Agreement to the contrary, the Lenders
shall be entitled to fund and maintain their funding of all or any part of
their Loans and other Credit Extensions in any manner they elect, it being
understood, however, that for the purposes of this Agreement all
determinations hereunder with respect to a Pro-Rata Revolving Loan shall be
made as if each Lender had actually funded and maintained each Loan through
its Lending Office and through the purchase of deposits having a maturity
corresponding to the maturity of such Pro-Rata Revolving Loan. Any Lender
may, if it so elects, fulfill any commitment or obligation to make or
maintain Loans or other Credit Extensions by causing a branch or affiliate
to make or maintain such Loans or other Credit Extensions; provided,
however, that in such event such Loans or other Credit Extensions shall be
deemed for the purposes of this Agreement to have been made by such Lender
through its applicable Lending Office, and the obligation of Micro to repay
such Loans shall nevertheless be to such Lender at its Lending Office and
shall be deemed held by such Lender through its applicable Lending Office,
to the extent of such Loan, for the account of such branch or affiliate.
SECTION 5.7. Taxes. All payments by any Obligor of principal of, and
interest and fees on, any Credit Extension and all other amounts payable
hereunder or under any other Loan Document shall be made free and clear of and
without deduction for any present or future income, excise, stamp or franchise
taxes and other taxes, fees, duties, withholdings or other charges of any
nature whatsoever imposed by any taxing authority with respect to such
payments, but excluding first, franchise taxes and taxes imposed on or
measured by any Lender Party's gross or net income, profits or receipts and,
second, taxes or other charges of any nature imposed by any taxing authority
on any Lender Party which do not result from any Regulatory Change and which
are not imposed on any class of bank having the same general characteristics
as such Lender Party (such non-excluded items being called "Taxes"). In the
event that any withholding or deduction from any payment to be made by any
Obligor hereunder is required in respect of any Taxes pursuant to any
applicable law, rule or regulation, then such Obligor will:
(a) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(b) promptly forward to the relevant Lender Party an official
receipt or other documentation satisfactory to such Lender Party
evidencing such payment to such authority; and
(c) pay directly to the relevant Lender Party for its own
account such additional amount or amounts as is or are necessary to
ensure that the net amount actually received by such Lender Party will
equal the full amount such Lender Party would have received had no such
withholding or deduction been required.
Moreover, if any Taxes are directly asserted against any Lender Party with
respect to any payment received by such Lender Party hereunder, such Lender
Party may pay such Taxes and the relevant Obligor will promptly pay such
additional amounts (including any penalties, interest or expenses) as is
necessary in order that the net amount received by such Lender Party after the
payment of such Taxes (including any Taxes on such additional amount) shall
equal the amount such Lender Party would have received had not such Taxes been
asserted.
If the relevant Obligor fails to pay any Taxes when due to the
appropriate taxing authority or fails to remit to the relevant Lender Parties
entitled thereto the required receipts or other required documentary evidence,
such Obligor shall indemnify such Lender Parties for any incremental Taxes,
interest or penalties that may become payable by any Lender Party as a result
of any such failure.
Each Lender Party organized under the laws of a jurisdiction outside the
United States: (a) either on or prior to (i) the date of its execution and
delivery of this Agreement in the case of each such Lender Party listed on the
signature pages hereof, or (ii) the date on which it becomes a Lender Party in
the case of each such other Lender Party; (b) on or prior to the date of any
change in any such Lender Party's Lending Office; and (c) from time to time
thereafter if requested in writing by Micro (but only so long as such Lender
Party remains lawfully able to do so), shall provide Micro and the
Administrative Agent with Internal Revenue Service Form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Lender Party is entitled to benefits under an income tax
treaty to which the United States is a party which exempts the Lender Party
from United States withholding tax or, except in the case of the initial such
form so delivered hereunder by such Lender Party, reduces the rate of
withholding tax on payments of interest for the account of such Lender Party or
certifying that the income receivable by such Lender Party pursuant to this
Agreement is effectively connected with the conduct of a trade or business in
the United States. For any period with respect to which a Lender Party
organized under the laws of a jurisdiction outside the United States has
failed to provide Micro and the Administrative Agent with the applicable
Internal Revenue Service form required to be so provided in accordance with
this Section 5.7 (unless such failure is due to a change in treaty, law or
regulation occurring subsequent to the date on which such form originally was
required to be provided), such Lender Party shall not be entitled to
indemnification under this Section 5.7 with respect to United States
withholding tax; provided that if a Lender Party which is otherwise exempt
from or subject to a reduced rate of withholding tax becomes subject to United
States withholding tax because of its failure to deliver an Internal Revenue
Service form required hereunder, Micro shall take such steps as such Lender
Party shall reasonably request to assist such Lender Party to recover such
United States withholding tax.
If any Obligor pays any additional amount under this Section 5.7 (a "Tax
Payment") and any Lender Party or Affiliate thereof effectively obtains a
refund of tax or credit against tax by reason of the Tax Payment (a "Tax
Credit") and such Tax Credit is, in the reasonable judgment of such Lender
Party or Affiliate, attributable to the Tax Payment, then such Lender Party,
after actual receipt of such Tax Credit or actual receipt of the benefits
thereof, shall promptly reimburse such Obligor for such amount as such Lender
Party shall reasonably determine to be the proportion of the Tax Credit as
will leave such Lender Party (after that reimbursement) in no better or worse
position than it would have been in if the Tax Payment had not been required;
provided, however, that no Lender Party shall be required to make any such
reimbursement if it reasonably believes the making of such reimbursement would
cause it to lose the benefit of the Tax Credit or would adversely affect in
any other respect its tax position. Subject to the other terms hereof, any
claim by a Lender Party for a Tax Credit shall be made in a manner, order and
amount as such Lender Party determines in its sole and absolute discretion.
Except to the extent necessary for Micro to evaluate any Tax Credit, no Lender
Party shall be obligated to disclose information regarding its tax affairs or
computations to any Obligor, it being understood and agreed that in no event
shall any Lender Party be required to disclose information regarding its tax
position that it deems to be confidential (other than with respect to the Tax
Credit).
SECTION 5.8. Payments. All payments by an Obligor pursuant to this
Agreement or any other Loan Document, whether in respect of principal,
interest, fees or otherwise, shall be made as set forth in this Section 5.8.
SECTION 5.8.1. Pro-Rata Credit Extensions.
(a) All payments (whether in respect of principal, interest or
otherwise) pursuant to this Agreement or any other Loan Document with
respect to Pro-Rata Credit Extensions or any other amount payable
hereunder (other than amounts payable with respect to Non-Rata Revolving
Loans, Bid Rate Loans, Non-Rata Reimbursement Obligations, fees payable
pursuant to Section 4.3 (which fees shall be paid directly by Micro or
the relevant Borrower to the relevant payee), 11.3 or 11.4 and payments
made to a Terminating Lender pursuant to Section 9.4), shall be made by
Micro to the Administrative Agent for the account of each Lender based
upon its Percentage in the case of Pro-Rata Letters of Credit and its
Percentage in the case of any Pro-Rata Revolving Loan (such Percentage
to be calculated on the date each such Pro-Rata Revolving Loan was
made). All such payments required to be made to the Administrative
Agent shall be made, without set-off, deduction or counterclaim, not
later than 1:00 p.m., Eastern time, on the date when due, in same day or
immediately available funds, to such account as the Administrative Agent
shall specify from time to time by notice to Micro. Funds received
after that time shall be deemed to have been received by the
Administrative Agent on the next succeeding Business Day. The
Administrative Agent shall promptly remit in same day funds to each
Lender its share, if any, of such payments received by the
Administrative Agent for the account of such Lender. Whenever any
payment hereunder shall be stated to be due on a day other than a
Business Day, such payment shall, except as otherwise required pursuant
to clause (d) of the definition of Interest Period, be made on the next
succeeding Business Day, and such extension of time shall in such case
be included in the computation of payment of interest or fees, as the
case may be.
(b) In the case of any payment made pursuant to the preceding
clause (a) by Micro to the Administrative Agent, unless the
Administrative Agent shall have received notice from Micro prior to the
date on which any such payment is due hereunder that Micro will not make
such payment in full, the Administrative Agent may assume that Micro has
made such payment in full to the Administrative Agent on such date and
the Administrative Agent may, in reliance upon such assumption, cause to
be distributed to each Lender on such due date an amount equal to the
amount then due to such Lender. If Micro shall not have so made such
payment in full to the Administrative Agent, each Lender shall repay to
the Administrative Agent forthwith on demand any such amount distributed
to the Lender to the extent that such amount was not paid by Micro to the
Administrative Agent together with interest thereon, for each day from
the date such amount is distributed to such Lender until the date such
Lender repays such amount to the Administrative Agent, at the Federal
Funds Rate.
SECTION 5.8.2. Non-Rata Obligations. All payments (whether in respect
of principal, interest, fees or otherwise) by any Borrower pursuant to this
Agreement or any other Loan Document with respect to the Non-Rata Credit
Extensions shall be made by such Borrower, in the currency in which the
Obligation was denominated (the "Required Currency") and in same day or
immediately available funds, to the relevant Lender or Issuer, as the case may
be (for its own account), at an account specified by such Lender or Issuer, as
the case may be, from time to time by notice to the relevant Borrower. All
such payments on account of Non-Rata Revolving Loans or Non-Rata Reimbursement
Obligations shall be made on the date due, without set-off, deduction or
counterclaim and at the times agreed to between the relevant Borrower and the
relevant Lender or Issuer, as the case may be. Each Lender that has made a
Non-Rata Revolving Loan or Bid Rate Loan agrees to give the Administrative
Agent prompt notice of any payment or failure to pay when due of any amounts
owing with respect to each such Non-Rata Revolving Loan or Bid Rate Loan.
Each Issuer that has issued a Non-Rata Letter of Credit agrees to give the
Administrative Agent prompt notice of any payment or failure to pay when due
any Non-Rata Reimbursement Obligations or any other amounts owing with respect
to such Non-Rata Letter of Credit.
SECTION 5.9. Sharing of Payments.
(a) Prior to the occurrence of a Pro-Rata Distribution Event,
the Administrative Agent shall remit payments made by Micro to it
pursuant to Section 5.8.1, and each Lender shall retain for its own
account all payments received by it pursuant to Section 5.8.2.
(b) Upon the occurrence and continuation of a Pro-Rata
Distribution Event,
(i) the Lenders shall share all collections and recoveries
in respect of the Credit Extensions and Obligations hereunder on a
pro rata basis, based on the respective Outstanding Credit
Extensions of each Lender, including unpaid principal, interest,
indemnities and fees payable with respect thereto; and
(ii) Micro, each other Borrower and each other Obligor
shall make payment of all amounts owing hereunder (whether in
respect of principal, interest, fees or otherwise or on account of
any Pro-Rata Credit Extension or Non-Rata Credit Extension) to the
Administrative Agent for the account of the Lenders as provided in
the preceding clause (i). The Administrative Agent shall promptly
remit in same day funds to each Lender its share, if any, of all
payments received by the Administrative Agent for the account of
such Lender.
(c) For purposes of the foregoing, a "Pro-Rata Distribution
Event" shall mean the first to occur of an Event of Default pursuant to
Section 9.1.1 or 9.1.9 or any Default if, in connection therewith, the
Required Lenders shall have notified the Administrative Agent (and, upon
receipt of any such notice, the Administrative Agent shall promptly
notify Micro and the Lenders of the same) of the occurrence of such
Default and shall have instructed the Administrative Agent that
payments hereunder shall be allocated as provided in the preceding
clause (b).
(d) If at any time the proportion which any Lender Party (the
"Receiving Lender Party") has received or recovered (whether by set-off
or otherwise) in respect of its portion of any sum due from any Borrower
hereunder or under any other Loan Document is in excess of (the amount
of such excess being herein referred to as the "Excess Amount") the
proportion of such sum thereof which the Receiving Lender Party is
entitled to receive pursuant to clause (b)(i), then the Receiving Lender
Party shall promptly notify the Administrative Agent thereof and:
(i) the Receiving Lender Party shall promptly and in any
event within ten days of receipt or recovery of the Excess Amount
pay to the Administrative Agent an amount equal to the Excess
Amount;
(ii) the Administrative Agent shall treat such payment as
if it were a payment by the relevant Borrower on account of a sum
owed to the Receiving Lender Party and shall pay the same to the
relevant Lender Parties entitled to share in such payment
(including the Receiving Lender Party) as provided in clause
(b)(i); and
(iii) as between the relevant Borrower and the Receiving
Lender Party the Excess Amount shall be treated as not having been
paid, while as between such Borrower and each Lender Party
referred to in the preceding clause (d)(ii), it shall be treated
as having been paid by such Borrower to the extent received by such
Lender Party;
provided, however, that where a Receiving Lender Party is subsequently
required to repay to any Obligor any amount received or recovered by it
and paid to the other Lender Parties pursuant to this clause (d), each
relevant Lender Party shall promptly repay to the Administrative Agent
for the account of the Receiving Lender Party the portion of such amount
distributed to it pursuant to this clause (d), together with interest
thereon at a rate sufficient to reimburse the Receiving Lender Party for
any interest which it has been required to pay to such Obligor in
respect of such portion of such amount.
SECTION 5.10. Right of Set-off. Upon the occurrence and during the
continuance of any Default, after providing notice to Micro with respect
thereto (which notice shall not be required during any period when an Event of
Default shall have occurred and be continuing), each Lender Party is hereby
authorized at any time and from time to time, to the fullest extent permitted
by law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final but excluding, for the avoidance of doubt, any
payment received pursuant to this Agreement by the Administrative Agent in its
capacity qua Administrative Agent on behalf of the Lenders) at any time held
and other indebtedness at any time due and owing by such Lender Party (in any
currency and at any branch or office) to or for the credit or the account of
any Obligor against any and all of the Obligations of such Obligor now or
hereafter existing under this Agreement or any other Loan Document that are at
such time due and owing, irrespective of whether or not such Lender Party
shall have made any demand under this Agreement or such other Loan Document
(other than any notice expressly required hereby). The rights of each Lender
Party under this Section 5.10 are in addition to other rights and remedies
(including other rights of set-off) which such Lender Party may have.
SECTION 5.11. Judgments, Currencies, etc. The obligation of each
Obligor to make payment of all Obligations in the Required Currency shall
not be discharged or satisfied by any tender, or any recovery pursuant to
any judgment, which is expressed in or converted into any currency other
than the Required Currency, except to the extent such tender or recovery
shall result in the actual receipt by the recipient at the office required
hereunder of the full amount of the Required Currency expressed to be
payable under this Agreement or any other Loan Document. Without limiting
the generality of the foregoing, each Obligor authorizes the Administrative
Agent (or in the case of a Non-Rata Revolving Loan or any other amount
required to be paid to any Lender directly, the relevant Lender) on any
tender or recovery in a currency other than the Required Currency to
purchase in accordance with normal banking procedures the Required Currency
with the amount of such other currency so tendered or recovered. The
obligation of each Obligor to make payments in the Required Currency shall
be enforceable as an alternative or additional cause of action for the
purpose of recovery in the Required Currency of the amount (if any) by
which such actual receipt shall fall short of the full amount of the
Required Currency expressed to be payable under this Agreement or any other
Loan Document, and shall not be affected by judgment being obtained for any
other sums due under this Agreement or such other Loan Document.
SECTION 5.12. Replacement of Lenders. Each Lender hereby severally
agrees that if such Lender (a "Subject Lender") makes demand upon any
Borrower for (or if any Borrower is otherwise required to pay) amounts
pursuant to Section 4.2.6, 5.3, 5.5 or 5.7, or if the obligation of such
Lender to make LIBO Rate Loans is suspended pursuant to Section 5.1(a),
such Borrower may, so long as no Event of Default shall have occurred and
be continuing, replace such Subject Lender with another financial
institution pursuant to an assignment in accordance with Section 11.11.1;
provided that (i) unless such financial institution is a Lender or an
Affiliate of a Lender, such financial institution shall become a Lender
only with the prior written consent of the Administrative Agent, which
consent shall not be unreasonably withheld, and (ii) the purchase price
paid by such designated financial institution shall be in the amount of
such Subject Lender's Loans and its Percentage of outstanding Reimbursement
Obligations, together with all accrued and unpaid interest and fees in
respect thereof, plus all other amounts (including the amounts demanded and
unreimbursed under Sections 4.2.6, 5.3, 5.5 and 5.7), owing to such Subject
Lender hereunder. Upon the effective date of such assignment, the relevant
Borrower shall issue a replacement Note to such designated financial
institution and such institution shall become a Lender for all purposes
under this Agreement and the other Loan Documents and the relevant Subject
Lender shall deliver to Micro all of its Notes, such Notes to be canceled
by Micro.
SECTION 5.13. Change of Lending Office. If Micro or any other Obligor
is required to pay additional amounts to or for the account of any Lender
Party pursuant to Section 4.2.6, 5.3, 5.5 or 5.7, or if the obligation of
any Lender to make or continue LIBO Rate Loans is suspended pursuant to
Section 5.1(a), then such Lender Party will change the jurisdiction of its
Lending Office if, in the judgment of such Lender Party, such change (i)
will eliminate or reduce any such additional payment which may thereafter
accrue or will avoid such suspension and (ii) is not otherwise
disadvantageous to such Lender Party.
ARTICLE VI
CONDITIONS TO MAKING CREDIT EXTENSIONS
AND ACCESSION OF ACCEDING BORROWERS
SECTION 6.1. Initial Credit Extension. The obligation of each Lender
and, if applicable, any Issuer to make the initial Credit Extension shall be
subject to the prior or concurrent satisfaction of each of the conditions
precedent set forth in this Section 6.1.
SECTION 6.1.1. Resolutions, etc. The Administrative Agent shall have
received from each Obligor a certificate, dated the Effective Date and with
counterparts for each Lender, duly executed and delivered by the Secretary,
Assistant Secretary or other authorized representative of such Obligor as to:
(a) resolutions of its Board of Directors or its Executive
Committee, as the case may be, then in full force and effect authorizing
the execution, delivery and performance of this Agreement and the
Guaranty and each other Loan Document to be executed by it;
(b) the incumbency and signatures of those of its officers
authorized to act with respect to this Agreement and the Guaranty and
each other Loan Document to be executed by it; and
(c) the Organic Documents of such Obligor (including, without
limitation, with respect to Micro, a copy of the executed Board
Representation Agreement),
upon which certificate each Lender may conclusively rely until the
Administrative Agent shall have received a further certificate of the
Secretary of the relevant Obligor canceling or amending such prior
certificate. In addition, each Obligor shall have delivered to the
Administrative Agent a good standing certificate from the relevant
governmental regulatory institution of its jurisdiction of incorporation, each
such certificate to be dated a date reasonably near (but prior to) the date
of the initial Credit Extension.
SECTION 6.1.2. Effective Date Certificate. The Administrative Agent
shall have received, with counterparts for each Lender, the Effective Date
Certificate, dated the Effective Date and duly executed and delivered by the
chief executive officer, an Authorized Person or the Treasurer of Micro. All
documents and agreements required to be appended to the Effective Date
Certificate shall be in form and substance satisfactory to the Lenders.
SECTION 6.1.3. Delivery of Notes. The Administrative Agent shall have
received, for the account of each Lender, such Lender's Revolving Note, Bid
Rate Note and Non-Rata Revolving Note, duly executed and delivered by the
Obligor party thereto, as the case may be.
SECTION 6.1.4. Guaranties, etc. The Administrative Agent shall have
received, with counterparts for each Lender, (a) each of the Guaranties in
effect as of the Effective Date, dated the date hereof, duly executed and
delivered by an Authorized Person of the relevant Guarantor and (b) the
Intra-Group Agreement, dated the date hereof and duly executed by each
Borrower that is a Guarantor.
SECTION 6.1.5. Financial Information, etc. The Administrative Agent
shall have received true and correct copies for each Lender, of
(a) audited consolidated financial statements of Micro and its
Consolidated Subsidiaries for its last Fiscal Year, prepared in
accordance with GAAP free of any Impermissible Qualifications; and
(b) unaudited consolidated financial statements for Micro and
its Consolidated Subsidiaries for the first two Fiscal Periods of the
1996 Fiscal Year, prepared in accordance with GAAP.
SECTION 6.1.6. Compliance Certificate. The Administrative Agent shall
have received, with counterparts for each Lender, an initial Compliance
Certificate, dated as of the Effective Date.
SECTION 6.1.7. Payment of Outstanding Indebtedness. The Administrative
Agent shall have received evidence satisfactory to it that
contemporaneously with the making of the initial Credit Extension (a) all
"Obligations" (including those in respect of Indebtedness thereunder and
accrued interest with respect thereto) under the Existing Industries Credit
Agreement or the Existing Micro Credit Agreement (whichever shall be in
effect on the date of the initial Credit Extension, as the case may be)
shall be satisfied in full, whether through the application, directly or
indirectly, of any portion of the proceeds of such initial Credit Extension
or through the application of other moneys, and (b) all "Commitments" under
the Existing Industries Credit Agreement or the Existing Micro Credit
Agreement (whichever shall be in effect on the date of the initial Credit
Extension, as the case may be) shall be terminated.
SECTION 6.1.8. Consents, etc. The Administrative Agent shall have
received evidence satisfactory to it as to the receipt by each Obligor of
any necessary consents or waivers under any agreement applicable to such
Obligor in order to enable such Obligor to enter into this Agreement and
any other Loan Document, to perform its obligations hereunder and
thereunder and, in the case of each Borrower, to obtain Credit Extensions
hereunder.
SECTION 6.1.9. Closing Fees, Expenses, etc. The Administrative Agent
and each Lender shall have received payment in full of all fees, costs and
expenses due and payable pursuant to Sections 4.3 and 11.3 (to the extent
then invoiced).
SECTION 6.1.10. Opinions of Counsel. The Administrative Agent shall
have received opinions of counsel, dated the Effective Date and addressed
to the Documentation Agent, the Administrative Agent and all the Lenders,
from:
(a) James E. Anderson, General Counsel of Micro, covering the
matters set forth in Exhibit M hereto;
(b) Davis Polk & Wardwell, special counsel to Micro, covering
the matters set forth in Exhibit N hereto;
(c) Baker & McKenzie, special Belgian counsel to Coordination
Center, substantially in the form of Exhibit O hereto;
(d) Fogler, Rubinoff, special Canadian counsel to Micro Canada,
substantially in the form of Exhibit P hereto;
(e) Yeo Wee Kiong and Partners, special Singapore counsel to
Micro Singapore, substantially in the form of Exhibit Q hereto; and
(f) King & Spalding, counsel to the Agents, substantially in the
form of Exhibit R hereto.
SECTION 6.1.11. Investment Prospectus. The Administrative Agent shall
have received a true and correct copy of the final Prospectus (filed or to
be filed with the Securities and Exchange Commission pursuant to Rule
424(b) under the Securities Act of 1933, as amended) (the "Investment
Prospectus") and comprising a part of the registration statement on Form
S-1 (Registration No. 333-08453) filed with the Securities and Exchange
Commission in connection with the Investment.
SECTION 6.1.12. Senior Executive Officer's Certificate. The
Administrative Agent shall have received, with counterparts for each
Lender, a certificate, dated the Effective Date and duly executed and
delivered by a senior executive officer of Micro stating that (i) the First
Closing (as defined in the Amended and Restated Exchange Agreement referred
to below) has occurred of the share exchanges contemplated by that certain
Amended and Restated Exchange Agreement to be entered into among
Industries, Entertainment, Micro and certain shareholders of Industries,
(ii) each of Ingram Micro Holdings Inc., a California corporation, and
Ingram Micro Inc., a California corporation, has merged into Micro, (iii)
the Investment has been successfully completed or will be successfully
completed concurrently with the initial Credit Extension hereunder; (iv)
since December 31, 1995, there has occurred no event or events which,
singly or in the aggregate, has resulted in a Material Adverse Effect; and
(v) the descriptions of the Transition Agreements and the transactions
contemplated thereby set forth in the annexes attached thereto, when taken
as a whole, do not include any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
SECTION 6.1.13. Satisfactory Legal Form. All documents executed or
submitted pursuant to this ARTICLE VI by or on behalf of each Obligor shall
be satisfactory in form and substance to the Administrative Agent (who may
rely upon the advice of its legal counsel with respect to legal matters in
making such determination) and the Administrative Agent shall have received
such additional information, approvals, opinions, documents or instruments
as the Administrative Agent or the Required Lenders may reasonably request.
SECTION 6.2. All Credit Extensions. The obligation of each Lender to
make any Credit Extension (including the initial Credit Extension) shall be
subject to the satisfaction of each of the additional conditions precedent
set forth in this Section 6.2.
SECTION 6.2.1. Compliance with Warranties, No Default, etc. Both
before and after giving effect to such Credit Extension other than any
continuation or conversion (except as otherwise set forth in the final
proviso to this Section) of a Borrowing (but, if any Default of the nature
referred to in Section 9.1.5 shall have occurred with respect to any other
Indebtedness, without giving effect to the application, directly or
indirectly, of the proceeds of such Credit Extension to such other
Indebtedness), the following statements shall be true and correct:
(a) the representations and warranties of each Obligor set forth
in ARTICLE VII (excluding, however, those contained in Section 7.8) and
in any other Loan Document shall be true and correct with the same
effect as if then made (unless stated to relate solely to an earlier
date, in which case such representations and warranties shall be true
and correct as of such earlier date); provided, however, that if any of
the financial statements delivered pursuant to clause (b) of Section
8.1.1 do not present fairly the consolidated financial condition of the
Persons covered thereby as of the dates thereof and the results of their
operations for the periods then ended and Micro subsequently delivers
one or more financial statements pursuant to clause (a) or (b) of
Section 8.1.1 which, in the opinion of the Required Lenders, effectively
cures any omission or misstatement contained in such prior delivered
financial statement, the representation and warranty contained in
Section 7.6 as it relates to such prior delivered financial statement
shall be deemed satisfied for purposes hereof (it being understood and
agreed that such subsequent delivered financial statements shall be
deemed to have cured such earlier delivered inaccurate financial
statements unless the Required Lenders raise an objection with respect
thereto);
(b) except as disclosed in Item 7.8 (Litigation) of the
Disclosure Schedule:
(i) no labor controversy, litigation, arbitration or
governmental investigation or proceeding shall be pending or, to
the knowledge of any Obligor, threatened against any Obligor, or
any of their respective Consolidated Subsidiaries in respect of
which there exists a reasonable possibility of an outcome that
would result in a Material Adverse Effect or that would affect the
legality, validity or enforceability of this Agreement or any
other Loan Document; and
(ii) no development shall have occurred in any labor
controversy, litigation, arbitration or governmental investigation
or proceeding so disclosed in respect of which there exists a
reasonable possibility of an outcome that would result in a
Material Adverse Effect;
(c) no Default shall have occurred and be continuing, and no
Obligor, nor any of their respective Subsidiaries, shall be in violation
of any law or governmental regulation or court order or decree which,
singly or in the aggregate, results in, or would reasonably be expected
to result in, a Material Adverse Effect; and
(d) the Outstanding Credit Extensions of all the Lenders do not
exceed the Total Credit Commitment Amount (as such amount may be reduced
from time to time pursuant to Section 2.3);
provided however, that, in the case of any continuation or conversion of a
Borrowing, no Event of Default shall have occurred and be continuing.
SECTION 6.2.2. Credit Extension Request. In the case of any Pro-Rata
Credit Extension the Administrative Agent shall have received the relevant
Credit Extension Request in a timely manner as herein provided for such
Pro-Rata Credit Extension. Delivery of a Credit Extension Request and the
acceptance by Micro or any other Borrower of the proceeds of any Pro-Rata
Credit Extension shall constitute a representation and warranty by each
Obligor that, on the date of making such Pro-Rata Credit Extension (both
immediately before and after giving effect to the making of such Pro-Rata
Credit Extension and the application of the proceeds thereof), the
statements made in Section 6.2.1 are true and correct.
SECTION 6.2.3. Non-Rata Revolving Loans. In the case of any requested
Non-Rata Revolving Loan, each of the applicable conditions set forth in
Sections 3.3 and 6.2 or otherwise specified by the relevant Lender in
connection with such Non-Rata Revolving Loan shall have been satisfied.
SECTION 6.2.4. Non-Rata Letters of Credit. In the case of any
requested Non-Rata Letter of Credit, each of the applicable conditions set
forth in Sections 3.4 and 6.2 or otherwise specified by the relevant Issuer
(with respect to Non-Rata Letters of Credit) in connection with such
Non-Rata Letter of Credit shall have been satisfied.
SECTION 6.2.5. Bid Rate Loans. In the case of any requested Bid Rate
Loan, each of the applicable conditions set forth in Sections 3.5 and 6.2 or
otherwise specified by the relevant Lender in connection with such Bid Rate
Loan shall have been satisfied.
SECTION 6.3. Acceding Borrowers. Subject to the prior or concurrent
satisfaction of the conditions precedent set forth in this Section 6.3, any
Subsidiary of Micro may become a party hereto and a Supplemental Borrower and
an Obligor hereunder subsequent to the Effective Date (each such Subsidiary of
Micro, an "Acceding Borrower"), entitled to all the rights and subject to all
the obligations incident thereto and each Acceding Borrower may request the
Lenders to make Non-Rata Credit Extensions on the terms and subject to the
conditions of this Agreement.
SECTION 6.3.1. Resolutions, etc. The Administrative Agent shall have
received from such Acceding Borrower a certificate, dated the date such
Acceding Borrower is accepted by the Administrative Agent as a Supplemental
Borrower hereunder and with counterparts for each Lender, duly executed and
delivered by the Secretary, Assistant Secretary or other authorized
representative of such Acceding Borrower as to:
(a) resolutions of its Board of Directors or its Executive
Committee, as the case may be, then in full force and effect authorizing
the execution, delivery and performance of this Agreement and the
Guaranty and each other Loan Document to be executed by it;
(b) the incumbency and signatures of those of its officers
authorized to act with respect to this Agreement and the Guaranty and
each other Loan Document to be executed by it; and
(c) the Organic Documents of such Acceding Borrower,
upon which certificate each Lender may conclusively rely until the
Administrative Agent shall have received a further certificate of the
Secretary of such Acceding Borrower canceling or amending such prior
certificate. In addition, each Acceding Borrower shall have delivered to the
Administrative Agent a good standing certificate from the relevant
governmental regulatory institution of its jurisdiction of organization, each
such certificate to be dated a date reasonably near (but prior to) the date
such Acceding Borrower becomes a Supplemental Borrower hereunder.
SECTION 6.3.2. Delivery of Accession Request and Acknowledgment and
Notes. The Administrative Agent shall have received (a) an original
Accession Request and Acknowledgment duly completed and executed and
delivered by such Acceding Borrower and originals of any other instruments
evidencing accession of such Acceding Borrower hereunder as the
Administrative Agent may reasonably request, in each case effective as of
the date such Acceding Borrower becomes a Supplemental Borrower hereunder
and (b) for the account of each Lender (unless illegal (or otherwise likely
to result in consequences materially adverse to such Acceding Borrower)
under any local law, rule or regulation applicable to such Acceding
Borrower, in which case such Acceding Borrower shall provide prior notice
thereof to the Lenders and shall provide (prior to the date such Acceding
Borrower becomes a Supplemental Borrower hereunder) other evidence of such
Indebtedness or other documentation acceptable to the Required Lenders)
such Lender's Bid Rate Note and Non-Rata Revolving Note, duly executed and
delivered by such Acceding Borrower and in effect on the date such Acceding
Borrower becomes a Supplemental Borrower hereunder.
SECTION 6.3.3. Guaranties, etc. The Administrative Agent shall have
received, with counterparts for each Lender, (a) an Additional Guaranty
executed by such Acceding Borrower, in effect as of the date such Acceding
Borrower becomes a Supplemental Borrower hereunder, duly executed and
delivered by an Authorized Person of such Acceding Borrower and (b) such
instruments and documents evidencing accession of such Acceding Borrower under
the Intra-Group Agreement as the Administrative Agent may reasonably
request, in each case effective with respect to such Acceding Borrower as
of the date such Acceding Borrower becomes a Supplemental Borrower
hereunder.
SECTION 6.3.4. Compliance Certificate. The Administrative Agent shall
have received, with counterparts for each Lender, a Compliance Certificate
from Micro, dated the date such Acceding Borrower becomes a Supplemental
Borrower hereunder.
SECTION 6.3.5. Consents, etc. The Administrative Agent shall have
received evidence satisfactory to it as to the receipt by such Acceding
Borrower of any necessary consents or waivers under any agreement
applicable to such Acceding Borrower in order to enable such Acceding
Borrower to enter into this Agreement and any other Loan Document, to
perform its obligations hereunder and thereunder and to obtain Credit
Extensions hereunder.
SECTION 6.3.6. Opinions of Counsel. The Administrative Agent shall
have received an opinion of counsel, dated the date such Acceding Borrower
becomes a Supplemental Borrower hereunder and addressed to the
Documentation Agent, the Administrative Agent and all the Lenders, from the
General Counsel of Micro, or such other counsel as shall be reasonably
satisfactory to the Administrative Agent, covering the matters set forth in
Exhibit M hereto as to such Acceding Borrower.
SECTION 6.4. Waiver of Notice under Existing Industries Credit
Agreement. By its execution of this Agreement, each Lender that is a party
to the Existing Industries Credit Agreement (if in effect on the date of
the initial Credit Extension) agrees to waive the requirements set forth in
Sections 2.3 and 4.1 of the Existing Industries Credit Agreement for the
provision of advance notice by Industries and any other borrower thereunder
to the administrative agent thereunder in respect of the consummation of
the transactions contemplated by Section 6.1.7 hereof.
SECTION 6.5. Waiver of Notice under Existing Micro Credit Agreement.
By its execution of this Agreement, each Lender that is a party to the
Existing Micro Credit Agreement (if in effect on the date of the initial
Credit Extension) agrees to waive the requirements set forth in Sections
2.3 and 4.1 of the Existing Micro Credit Agreement for the provision of
advance notice by Micro and any other borrower thereunder to the
administrative agent thereunder in respect of the consummation of the
transactions contemplated by Section 6.1.7 hereof.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
In order to induce the Lender Parties to enter into this Agreement and
to make Credit Extensions hereunder, each Borrower represents and warrants
unto the Administrative Agent and each Lender with respect to itself and the
other Obligors as set forth in this ARTICLE VII.
SECTION 7.1. Organization, etc. Each of the Obligors and each of their
respective Subsidiaries is a company or corporation, as the case may be,
validly organized and existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, is duly qualified to do
business and is in good standing as a foreign corporation in each jurisdiction
where the nature of its business requires such qualification and where the
failure to so qualify and to maintain such good standing, singularly or in the
aggregate, has resulted in, or would reasonably be expected to result in, a
Material Adverse Effect, and has full power and authority and holds all
requisite governmental licenses, permits, authorizations and other approvals
to enter into and perform its Obligations under this Agreement and each other
Loan Document to which it is a party and to own and hold under lease its
property and to conduct its business substantially as currently conducted by
it, excluding any such governmental licenses, permits or other approvals in
respect of which the failure to so obtain, hold or maintain has not caused,
and would not reasonably be expected to result in, a Material Adverse Effect.
SECTION 7.2. Due Authorization, Non-Contravention, etc. The execution,
delivery and performance by each Obligor of this Agreement and each other Loan
Document executed or to be executed by it are within such Obligor's corporate
powers, have been duly authorized by all necessary corporate action,
and do not
(a) contravene such Obligor's Organic Documents;
(b) contravene any law or governmental regulation or court
decree or order binding or affecting such Obligor; or
(c) result in, or require the creation or imposition of, any
Lien on any of such Obligor's properties.
SECTION 7.3. No Default. None of the Obligors, nor any of their
respective Subsidiaries, is in default in the performance of any
obligation, agreement or condition contained in any bond, debenture, note,
or in any indenture, loan agreement, or other agreement, in connection with
or as a result of which default there exists a reasonable possibility that
a Material Adverse Effect could arise. The execution, delivery and
performance by each Obligor of this Agreement and each other Loan Document
executed or to be executed by such Obligor will not conflict with, or
constitute a breach of, or a default under, any such bond, debenture, note,
indenture, loan agreement or other agreement to which any Obligor or any of
their respective Subsidiaries is a party or by which it is bound, in
connection with, or as a result of which, conflict, breach or default,
there exists a reasonable possibility that a Material Adverse Effect could
arise.
SECTION 7.4. Government Approval, Regulation, etc. No action by, and
no notice to or filing with, any governmental authority or regulatory body or
other Person and no payment of any stamp or similar tax, is required for the
due execution, delivery or performance by any Obligor of this Agreement or any
other Loan Document to which it is a party. No Obligor, nor any of their
respective Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "Investment Company Act"), or
a "holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding Company Act of
1935, as amended.
SECTION 7.5. Validity, etc. This Agreement constitutes, and each other
Loan Document executed by any Obligor will, on the due execution and delivery
thereof, constitute, the legal, valid and binding obligations of each Obligor
party thereto, enforceable against such Obligor in accordance with their
respective terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws relating to or
limiting creditors' rights generally or by general principles of equity.
SECTION 7.6. Financial Information. The financial statements of Micro
and its Consolidated Subsidiaries to be delivered pursuant to Section 6.1.5
will have been prepared in accordance with GAAP and present fairly
(subject, in the case of such financial statements delivered pursuant to
clause (b) thereof (which financial statements, in accordance with Section
1.4(a) hereof, are not required to contain certain footnote disclosures
required by GAAP), to ordinary year-end adjustments) the consolidated
financial condition of the Persons covered thereby as at the dates thereof
and the results of their operations for the periods then ended. All the
financial statements delivered pursuant to clauses (a) and (b) of Section
8.1.1 have been and will be prepared in accordance with GAAP consistently
applied, and do or will present fairly (subject, in the case of such
financial statements delivered pursuant to clause (b) thereof (which
financial statements, in accordance with Section 1.4(a) hereof, are not
required to contain certain footnote disclosures required by GAAP), to
ordinary year-end adjustments) the consolidated financial condition of the
Persons covered thereby as of the dates thereof and the results of their
operations for the periods then ended.
SECTION 7.7. No Material Adverse Effect. Since December 31, 1995, there
has been no event or events which, singly or in the aggregate, have resulted
in a Material Adverse Effect.
SECTION 7.8. Litigation, Labor Controversies, etc. Except as
disclosed in Item 7.8 (Litigation) of the Disclosure Schedule, there is no
pending or, to the knowledge of any Obligor, threatened litigation, action,
proceeding or labor controversy affecting any Obligor, or any of their
respective Subsidiaries, or any of their respective properties, businesses,
assets or revenues, in respect of which there exists a reasonable
possibility of an outcome that would result in a Material Adverse Effect or
that would affect the legality, validity or enforceability of this
Agreement or any other Loan Document.
SECTION 7.9. Subsidiaries. As of the date hereof, Micro has no
Subsidiaries, except those Subsidiaries which are identified in Item 7.9
(Existing Subsidiaries) of the Disclosure Schedule and certain other
Subsidiaries that are shell corporations that do not conduct any business and
do not in the aggregate have a net worth exceeding $1,000,000.
SECTION 7.10. Ownership of Properties. Each Obligor and each of their
respective Subsidiaries owns good and marketable title (or their respective
equivalents in any applicable jurisdiction) to all of its properties and
assets, real and personal, tangible and intangible, of any nature whatsoever,
free and clear of all Liens, charges or claims except as permitted pursuant to
Section 8.2.2, except where such failure or failures to own, singly or in the
aggregate, has not resulted in, or would not reasonably be expected to result
in, a Material Adverse Effect.
SECTION 7.11. Taxes. Each Obligor and each of their respective
Subsidiaries has filed all material tax returns and reports it reasonably
believes are required by law to have been filed by it and has paid all taxes
and governmental charges thereby shown to be owing, except as disclosed in
Item 7.11 (Taxes) of the Disclosure Schedule and except for any such taxes or
charges which are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on its books; provided, however, that with respect to any
Subsidiary that is not a Material Subsidiary this representation and warranty
shall be satisfied if the tax returns or reports not so filed or the taxes or
governmental charges owing by each such Subsidiary are not with respect to any
income, sales or use tax and the amount so owing (or which would be so owing
if such tax returns or reports were duly filed) with respect to all such
Subsidiaries, does not exceed in the aggregate $1,000,000 at any time.
SECTION 7.12. Pension and Welfare Plans. Except to the extent that
any such termination, liability, penalty or fine would not (either
individually or in the aggregate) reasonably be expected to have a Material
Adverse Effect, (a) during the twelve-consecutive-month period prior to the
date hereof and prior to the date of any Credit Extension hereunder, except
as disclosed in Item 7.12 (Employee Benefit Plans) of the Disclosure
Schedule, no steps have been taken to terminate any Pension Plan, and no
contribution failure has occurred with respect to any Pension Plan
sufficient to give rise to a Lien under section 302(f) of ERISA, (b) no
condition exists or event or transaction has occurred with respect to any
Pension Plan which might result in the incurrence by any Obligor or any
member of the related Controlled Group of any material liability with
respect to any contribution thereto, fine or penalty, and (c) except as
disclosed in Item 7.12 (Employee Benefit Plans) of the Disclosure Schedule,
neither any Obligor nor any member of the related Controlled Group has any
material contingent liability with respect to any post-retirement benefit
under a Welfare Plan, other than liability for continuation coverage
described in Part 6 of Title I of ERISA.
SECTION 7.13. Environmental Warranties.
(a) Each Obligor and each of their respective Subsidiaries has
obtained all environmental, health and safety permits, licenses and
other authorizations required under all Environmental Laws to carry on
its business as now being or as proposed to be conducted, except to the
extent failure to have any such permit, license or authorization would
not (either individually or in the aggregate) reasonably be expected to
have a Material Adverse Effect. Each of such permits, licenses and
authorizations is in full force and effect and each Obligor and each of
their respective Subsidiaries is in compliance with the terms and
conditions thereof, and is also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in any
applicable Environmental Law or in any plan, judgment, injunction,
notice or demand letter issued, entered or approved thereunder,
except to the extent failure to comply therewith would not (either
individually or in the aggregate) reasonably be expected to have a
Material Adverse Effect.
(b) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed,
no penalty has been assessed and no investigation or review is pending
or, to the knowledge of any Obligor, threatened by any governmental or
other entity with respect to any alleged failure by any Obligor or any
of their respective Subsidiaries to have any environmental, health or
safety permit, license or other authorization required under any
Environmental Law in connection with the conduct of the business of any
Obligor or any of their respective Subsidiaries or with respect to any
generation, treatment, storage, recycling, transportation, discharge or
disposal, or any Release of any Hazardous Materials generated by any
Obligor or any of their respective Subsidiaries, except to the extent
failure to have any such permit, license or authorization would not
(either individually or in the aggregate) reasonably be expected to have
a Material Adverse Effect.
SECTION 7.14. Outstanding Indebtedness. As of the date hereof neither
Micro nor any of its Subsidiaries has any outstanding Indebtedness other than
Indebtedness disclosed in Item 7.14 (Outstanding Indebtedness) of the
Disclosure Schedule and Indebtedness that could be incurred pursuant to clause
(ii) of Section 8.2.1 (a).
SECTION 7.15. Accuracy of Information.
(a) Except as otherwise set forth in paragraph (b) of this
Section, all factual information furnished by or on behalf of any
Obligor to any Lender Party for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, when taken as a
whole, to the best of the knowledge of each Borrower, and all other
factual information hereafter furnished by or on behalf of any Obligor
to any Lender Party will be, when taken as a whole, to the best of the
knowledge of each Borrower, true and accurate in all material respects
on the date as of which such information is dated or certified and (in
the case of any such information furnished prior to the date hereof) as
of the date hereof (unless such information relates to an earlier date,
in which case such information, when taken as a whole, shall be true and
accurate in all material respects as of such earlier date), and is not,
or shall not be, as the case may be, when taken as a whole, incomplete
by omitting to state any material fact necessary to make such
information not misleading.
(b) The information (i) describing the Transition Agreements and
the transactions contemplated thereby set forth in the annexes to the
certificate delivered to the Administrative Agent pursuant to Section
6.1.12, when considered as a whole, does not and will not include any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, (ii) contained in any
financial projections furnished hereunder is and will be based upon
assumptions and information believed by Micro to be reasonable, and
(iii) furnished with express written disclaimers with regard to the
accuracy thereof, is and shall be subject to such disclaimers.
SECTION 7.16. Patents, Trademarks, etc. Each Obligor and each of their
respective Subsidiaries owns and possesses, or has a valid and existing
license of, or other sufficient interest in, all such patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service marks,
service mark rights and copyrights as is necessary for the conduct of the
business of each such Obligor or its Subsidiaries as now conducted, without,
to the best of the knowledge of each such Obligor, any infringement upon
rights of other Persons, which infringement results in or would reasonably be
expected to result in a Material Adverse Effect, and there is no license or
other interest or right, the loss of which results in, or would reasonably be
expected to result in, a Material Adverse Effect.
SECTION 7.17. Margin Stock. No part of the proceeds of any Credit
Extension shall be used at any time by any Obligor or any of their
respective Subsidiaries for the purpose, whether immediate, incidental or
ultimate, of buying or carrying Margin Stock (within the meaning of
Regulation U (as amended, modified, supplemented or replaced and in effect
from time to time, "Regulation U") promulgated by the F.R.S. Board of
Governors of the Federal Reserve System (together with any successor
thereto, the "F.R.S. Board")) or to extend credit to others for the
purpose of purchasing or carrying any Margin Stock if any such use or
extension of credit described in this Section 7.17 would cause any of the
Lender Parties to violate the provisions of Regulation U. Neither any
Obligor nor any of their respective Subsidiaries is engaged principally, or
as one of its important activities, in the business of extending credit for
the purposes of purchasing or carrying any such Margin Stock within the
meaning of Regulation U. Not more than 25% of the value of the assets of
any Obligor or any Subsidiary of any Obligor is, as of the date hereof,
represented by Margin Stock. No part of the proceeds of any Credit
Extension will be used by any Obligor or any of their respective
Subsidiaries for any purpose which violates, or which is inconsistent with,
any regulations promulgated by the F.R.S. Board, including Regulation U.
ARTICLE VIII
COVENANTS
SECTION 8.1. Affirmative Covenants. Each Borrower agrees with the
Agents and each Lender that, until all the Commitments have terminated and all
Obligations have been paid and performed in full, each Borrower will perform
its respective obligations set forth in this Section 8.1.
SECTION 8.1.1. Financial Information, Reports, Notices, etc. Micro will
furnish, or will cause to be furnished, to each Lender Party copies of the
following financial statements, reports, notices and information:
(a) as soon as available and in any event within 120 days after
the end of each Fiscal Year of Micro, a copy of the annual audit report
for such Fiscal Year for Micro and its Consolidated Subsidiaries,
including therein consolidated balance sheets of Micro and its
Consolidated Subsidiaries as of the end of such Fiscal Year and
consolidated statements of earnings, stockholders' equity and cash flow
of Micro and its Consolidated Subsidiaries for such Fiscal Year, setting
forth in each case, in comparative form, the figures for the preceding
Fiscal Year, in each case certified (without any Impermissible
Qualification, except that (i) qualifications relating to
pre-acquisition balance sheet accounts of Person(s) acquired by Micro or
any of its Subsidiaries and (ii) statements of reliance in the auditor's
opinion on another accounting firm shall not be deemed an Impermissible
Qualification) in a manner satisfactory to the Securities and Exchange
Commission (under applicable United States securities law) by Price
Waterhouse or its successors or other independent public accountants of
national reputation;
(b) as soon as available and in any event within 60 days after
the end of each of the first three Fiscal Periods occurring during any
Fiscal Year of Micro, a copy of the unaudited consolidated and
consolidating financial statements of Micro and its Consolidated
Subsidiaries, consisting of (i) a balance sheet as of the close of such
Fiscal Period and (ii) related statements of earnings and cash flows for
such Fiscal Period and from the beginning of such Fiscal Year to the end
of such Fiscal Period, in each case certified by an officer who is an
Authorized Person of Micro as to (A) being a complete and correct copy
of such financial statements which have been prepared in accordance with
GAAP consistently applied as provided in Section 1.4, and (B)
presenting fairly the financial position of Micro and its
Consolidated Subsidiaries;
(c) at the time of delivery of each financial statement required
by clause (a) or (b), a certificate signed by an Authorized Person of
Micro stating that no Default has occurred and is continuing (or if a
Default has occurred and is continuing, and without prejudice to any
rights or remedies of any Lender Party hereunder in connection therewith,
a statement of the nature thereof and the action which Micro has taken
or proposes to take with respect thereto);
(d) at the time of delivery of each financial statement required
by clause (a) or (b), a Compliance Certificate showing compliance with
the financial covenants set forth in Section 8.2;
(e) to the extent not otherwise disclosed in a report on Form
10-K, Form 10-Q or Form 8-K filed with the Securities and Exchange
Commission and previously furnished pursuant to clause (f) below, as
soon as possible after the occurrence of any material adverse
development with respect to any litigation, action, proceeding, or labor
controversy disclosed in Item 7.8 (Litigation) of the Disclosure
Schedule, or the commencement of any labor controversy, litigation,
action, proceeding of the type described in Section 7.8, notice thereof;
(f) promptly after the filing thereof, copies of (i) any
registration statements (other than the exhibits thereto and excluding
any registration statement on Form S-8 and any other registration
statement relating exclusively to stock, bonus, option, 401(k) and other
similar plans for officers, directors and employees of Micro,
Industries, Entertainment or any of their respective Subsidiaries),
(ii) any amendments or supplements to the Investment Prospectus and
(iii) all reports on Form 10-K, Form 10-Q or Form 8-K (or any
respective successor forms thereto) which Micro or any Subsidiary of
Micro is required to file with the Securities and Exchange Commission
(or any successor authority) or any national securities exchange
(including, in each case, any exhibits thereto requested by any
Lender Party);
(g) to the extent not otherwise disclosed in a report on Form
10-K, Form 10-Q or Form 8-K filed with the Securities and Exchange
Commission and previously furnished pursuant to clause (f) above,
immediately upon becoming aware of the institution of any steps by any
Obligor or any other Person to terminate any Pension Plan other than
pursuant to Section 4041(b) of ERISA, or the failure to make a required
contribution to any Pension Plan if such failure is sufficient to give
rise to a Lien under Section 302(f) of ERISA, or the taking of any
action with respect to a Pension Plan which could result in the
requirement that any Obligor furnish a bond or other security to the
PBGC or such Pension Plan, or the occurrence of any other event with
respect to any Pension Plan which, in any such case, results in, or
would reasonably be expected to result in, a Material Adverse Effect,
notice thereof and copies of all documentation relating thereto;
(h) as soon as possible and in any event within three Business
Days after becoming aware of the occurrence of a Default or any
inaccuracy in the financial statements delivered pursuant to clause (a)
or (b) of Section 8.1.1 if the result thereof is not to present fairly
the consolidated financial condition of the Persons covered thereby as
of the dates thereof and the results of their operations for the periods
then ended, a statement of an Authorized Person of Micro setting forth
the details of such Default or inaccuracy and the action which Micro has
taken or proposes to take with respect thereto;
(i) in the case of each Borrower, promptly following the
consummation of any transaction described in Section 8.2.5, a
description in reasonable detail regarding the same; and
(j) such other information respecting the condition or
operations, financial or otherwise, of each Borrower, or any of their
respective Subsidiaries as any Lender through the Administrative Agent
may from time to time reasonably request.
SECTION 8.1.2. Compliance with Laws, etc. Each Borrower will (and each
Borrower will cause each of its Subsidiaries to) comply in all respects with
all applicable laws, rules, regulations and orders the noncompliance with
which results in, or would reasonably be expected to result in, a Material
Adverse Effect, such compliance to include (without limitation):
(a) except as may be otherwise permitted pursuant to Section
8.2.5, the maintenance and preservation of its corporate existence (and
in the case of Coordination Center, its status as a coordination center)
in accordance with the laws of the jurisdiction of its incorporation and
qualification as a foreign corporation (subject to the materiality
standard referred to above); and
(b) the payment, before the same become delinquent, of all
taxes, assessments and governmental charges imposed upon it or upon its
property except to the extent being diligently contested in good faith
by appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books; provided, however,
that with respect to any Subsidiary that is not a Material Subsidiary
this covenant shall be satisfied if the taxes, assessments or other
governmental charges owing by each such Subsidiary is not with respect
to any income, sales or use tax and the amount so owing with respect to
all such Subsidiaries does not exceed in the aggregate $1,000,000 at any
time.
SECTION 8.1.3. Maintenance of Properties. Each Borrower will (and each
Borrower will cause each of its Subsidiaries to) maintain, preserve, protect
and keep its material properties in good repair, working order and condition,
and make necessary and proper repairs, renewals and replacements so that its
business carried on in connection therewith may be properly conducted at all
times, unless such Borrower or such Subsidiary determines in good faith that
the continued maintenance of any of its properties is no longer economically
desirable.
SECTION 8.1.4. Insurance. Each Borrower will (and each Borrower will
cause each of its Subsidiaries to) maintain, or cause to be maintained with
responsible insurance companies or through such Borrower's own program of
self-insurance, insurance with respect to its properties and business against
such casualties and contingencies and of such types and in such amounts as is
customary in the case of similar businesses and will, upon request of the
Administrative Agent, furnish to each Lender at reasonable intervals a
certificate of an Authorized Person of such Borrower setting forth the nature
and extent of all insurance maintained by such Borrower and each of its
Subsidiaries in accordance with this Section 8.1.4.
SECTION 8.1.5. Books and Records. Each Borrower will (and each
Borrower will cause each of its Subsidiaries to) keep books and records
which accurately reflect all of its business affairs and transactions and
permit the Administrative Agent and each Lender, or any of their respective
representatives, at reasonable times and intervals, to visit all of its
offices, to discuss its financial matters with its officers and independent
public accountants (and each Borrower hereby authorizes such independent
public accountants to discuss the financial matters of such Borrower and its
Subsidiaries with the Administrative Agent and each Lender or its
representatives whether or not any representative of such Borrower is present
but provided that an officer of such Borrower is afforded a reasonable
opportunity to be present at any such discussion) and to examine any of its
relevant books or other corporate records. Micro will pay all expenses
associated with the exercise of any Lender Party's rights pursuant to this
Section 8.1.5 at any time during the occurrence and continuance of any Event
of Default.
SECTION 8.1.6. Environmental Covenant. Each Borrower will (and each
Borrower will cause each of its Subsidiaries to):
(a) use and operate all of its facilities and properties in
compliance with all Environmental Laws which, by their terms, apply to
such use and operation, keep all necessary permits, approvals,
certificates, licenses and other authorizations relating to
environmental matters in effect and remain in compliance therewith, and
handle all Hazardous Materials in compliance with all Environmental Laws
which, by their terms, apply to such Hazardous Materials, in each case
so that the non-compliance with any of the foregoing does not result in,
or would not reasonably be expected to result in, either singly or in
the aggregate, a Material Adverse Effect;
(b) immediately notify the Administrative Agent and provide
copies upon receipt of all written claims, complaints, notices or
inquiries relating to the condition of its facilities and properties or
compliance with Environmental Laws which, singly or in the aggregate,
result in, or would reasonably be expected to result in, a Material
Adverse Effect, and shall promptly cure and have dismissed with
prejudice any actions and proceedings relating to compliance with
Environmental Laws where the failure to so cure or have dismissed,
singularly or in the aggregate, results in, or would reasonably be
expected to result in, a Material Adverse Effect (it being understood
that this clause (b) shall not be construed to restrict any Borrower or
any of its Subsidiaries from challenging or defending any such action or
proceeding which it, in its sole discretion, deems advisable or
necessary); and
(c) provide such information and certifications which the
Administrative Agent may reasonably request from time to time to
evidence compliance with this Section 8.1.6.
SECTION 8.1.7. Use of Proceeds. Each Borrower shall apply the
proceeds of each Credit Extension in accordance with the last recital of
this Agreement and shall not use directly and immediately, any proceeds to
acquire, or finance the acquisition of, any equity interest in Coordination
Center.
SECTION 8.1.8. Pari Passu. Each Borrower shall ensure that such
Borrower's Obligations rank at least pari passu with all other unsecured
Indebtedness of such Borrower.
SECTION 8.1.9. Guarantee or Suretyship. If any Borrower or any of its
Subsidiaries becomes a party to any contract of guarantee or suretyship which
would constitute Indebtedness, or if any of its assets becomes subject to such
a contract, that contract will be disclosed in the next financial information
to be provided by Micro pursuant to clause (c) of Section 8.1.1; provided,
however, that any failure to comply with the disclosure obligations of this
Section 8.1.9 shall not constitute a Default unless the existence of the
contract or contracts of guarantee or suretyship which Micro fails to disclose
would result in a Default under clause (c) of Section 8.2.3.
SECTION 8.1.10. Additional Guaranty. Micro (a) may cause any of its
Subsidiaries to execute and deliver from time to time in favor of the
Lender Parties additional guaranties (each an "Additional Guaranty") for
the repayment of the Obligations and (b) shall, concurrently or promptly after
any of its Subsidiaries (i) guarantees any Indebtedness of Micro or any
other Obligor or (ii) satisfies (at any time) the requirements hereunder
which describe a Material Subsidiary, cause such Subsidiary to execute and
deliver in favor of the Lender Parties an Additional Guaranty for the
repayment of the Obligations. Each Additional Guaranty (including, without
limitation, any Additional Guaranty executed and delivered by an Acceding
Borrower pursuant to Section 6.3.3) shall be in substantially the form of
Exhibit J attached hereto, shall be governed by the laws of a State of the
United States and shall contain such other terms and provisions as the
Administrative Agent determines to be necessary or appropriate (after
consulting with legal counsel) in order that such Additional Guaranty
complies with local laws, rules and regulations and is fully enforceable
(at least to the extent of such Additional Guaranty) against such
Additional Guarantor; provided, that, in the event it shall be illegal
under any local law, rule or regulation for any Additional Guaranty to be
governed by the law of any State of the United States, and the
Administrative Agent shall have received evidence of such illegality
(including, if the Administrative Agent shall so request, an opinion of
local counsel as to such matters, which counsel and the form and substance
of such opinion shall be reasonably satisfactory to the Administrative
Agent) reasonably satisfactory to it, the Administrative Agent shall
consent to such Additional Guaranty being governed by the laws of a
jurisdiction outside of the United States, which jurisdiction shall be
subject to the prior approval of the Administrative Agent.
In connection with the delivery of any such Additional Guaranty by an
Additional Guarantor there shall be delivered an opinion of counsel (which
counsel and the form and substance of such opinion shall be reasonably
satisfactory to the Administrative Agent and the Required Lenders, it being
agreed that if the Additional Guaranty is governed by the laws of any State of
the United States, the General Counsel of Micro shall be satisfactory counsel
for purposes hereof) addressed to the Documentation Agent, the Administrative
Agent and the Lenders addressing the matters set forth in Exhibit M, as it
relates to such Additional Guarantor and Additional Guaranty.
SECTION 8.1.11. Intra-Group Agreement, etc. Except to add additional
Subsidiaries of Micro as parties thereto, the terms of the Intra-Group
Agreement shall not be amended or otherwise modified without the prior consent
of the Administrative Agent on behalf of and as directed by the requisite
Lenders, such consent not to be unreasonably withheld. In addition, no Person
a party to the Intra-Group Agreement shall assign any of its rights or
obligations thereunder without the prior consent of the Administrative Agent,
such consent not to be unreasonably withheld.
SECTION 8.2. Negative Covenants. Each Borrower agrees with the
Administrative Agent and each Lender that, until all the Commitments have
terminated and all Obligations have been paid and performed in full, each
Borrower will perform its respective obligations set forth in this
Section 8.2.
SECTION 8.2.1. Restriction on Incurrence of Indebtedness.
(a) No Borrower will (and no Borrower will permit any of its
Subsidiaries to) create, incur, assume or suffer to exist or otherwise
become or be liable in respect of any Indebtedness, other than the
following:
(i) Indebtedness in respect of the Credit Extensions;
(ii) Indebtedness existing as of the date hereof or
incurred pursuant to commitments or lines of credit in effect on
the date hereof (or any renewal or replacement thereof, so long as
such renewals or replacements do not increase the amount of such
Indebtedness or such commitments or lines of credit), in any case
identified in Item 8.2.1(a)(ii) (Ongoing Indebtedness) of the
Disclosure Schedule; and
(iii) additional Indebtedness if after giving effect to the
incurrence thereof the Borrowers are in compliance with Section
8.2.3, calculated as of the date of the incurrence of such
additional Indebtedness, on a pro forma basis.
(b) Micro will not at the end of any Fiscal Period permit the
sum of (i) Total Indebtedness of Subsidiaries (other than any Guarantor)
and (ii) the Amount of Additional Liens to exceed fifteen percent (15%)
of Consolidated Tangible Net Worth.
SECTION 8.2.2 Restriction on Incurrence of Liens. No Borrower will
(and no Borrower will permit any of its Subsidiaries to) create, incur,
assume or suffer to exist any Lien upon any of its property, revenues or
assets, whether now owned or hereafter acquired, except:
(a) Liens existing as of the date hereof and identified in Item
8.2.2(a) (Existing Liens) of the Disclosure Schedule and Liens resulting
from the extension, renewal or replacement of any such Liens in respect
of the same property theretofore subject to such Lien; provided,
however, that no property shall become subject to such extended,
renewed or replacement Lien that was not subject to the Lien extended,
renewed or replaced, the aggregate principal amount of Indebtedness
secured by any such extended, renewed or replacement Lien shall not be
increased by such extension, renewal or replacement, the Indebtedness
secured by such Lien shall be incurred in compliance with the applicable
terms hereof, including Section 8.2.3, and both immediately before and
after giving effect thereto, no Default shall exist;
(b) Liens for taxes, assessments or other governmental charges
or levies not at the time delinquent or thereafter payable without
penalty or being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books;
(c) Liens of carriers, warehousemen, mechanics, materialmen and
landlords incurred in the ordinary course of business for sums not
overdue or being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books;
(d) Liens incurred in the ordinary course of business in
connection with worker's compensation, unemployment insurance or other
forms of governmental insurance or benefits, or to secure performance of
statutory obligations, leases and contracts (other than for borrowed
money) entered into in the ordinary course of business or to secure
obligations on surety or appeal bonds;
(e) judgment Liens of less than $60,000,000 in the aggregate, or
with respect to which execution has been stayed or the payment of which
is covered in full (subject to a customary deductible) by insurance
maintained with responsible insurance companies and for which, within 30
days of such judgment, the insurance carrier has acknowledged coverage
in writing;
(f) Liens on property purchased or constructed after the date
hereof securing Indebtedness used to purchase or construct such
property; provided, however, that no such Lien shall be created in or
attach to any other asset at the time owned by Micro or any of its
Subsidiaries if the aggregate principal amount of the Indebtedness
secured by such property would exceed the fair market value of such
property and assets, taken as a whole, the aggregate outstanding
principal amount of Indebtedness secured by all such Liens shall not at
any time exceed one hundred percent (100%) of the fair market value of
such property at the time of the purchase or construction thereof, and
each such Lien shall have been incurred within two hundred seventy (270)
days of the purchase or completion of construction of such property;
(g) Liens resulting from utility easements, building
restrictions and such other encumbrances or charges against real
property as are of a nature generally existing with respect to
properties of a similar character and which do not in any material way
affect the marketability of the same or interfere with the use thereof
in the business of any Borrower or any of its Subsidiaries;
(h) Liens incurred in the normal course of business in
connection with bankers' acceptance financing or used in the ordinary
course of trade practices, statutory lessor and vendor privilege liens
and liens in connection with ad valorem taxes not yet due, good faith
bids, tenders and deposits;
(i) Liens on all goods held for sale on consignment;
(j) Liens granted by any Subsidiary of Micro in favor of Micro
or in favor of another Subsidiary of Micro that is the parent of such
Subsidiary granting the Lien, other than Liens granted by a Guarantor to
a Subsidiary of Micro that is not a Guarantor; provided, however, that
no Person that is not a Subsidiary of Micro shall be secured by or
benefit from any such Lien;
(k) Liens of the nature referred to in clause (b) of the
definition of the term "Lien" and granted to a purchaser or any assignee
of such purchaser which has financed the relevant purchase of Trade
Accounts Receivable of any Borrower or any of their respective
subsidiaries;
(l) Liens on accounts receivable of Micro Canada with respect to
any accounts receivable securitization program; and
(m) Additional Permitted Liens.
SECTION 8.2.3. Financial Condition. Micro will not permit any of the
following:
(a) the Consolidated Current Ratio as at the end of any Fiscal
Period to be less than 1.0 to 1.0; or
(b) the ratio of (i) Consolidated EBITDA for any period of four
consecutive Fiscal Periods to (ii) Consolidated Interest Charges for
such period to be less than 3.5 to 1.0; or
(c) the ratio of (i) the average daily balances of Consolidated
Funded Debt during any Fiscal Period to (ii) Consolidated EBITDA for the
period of four Fiscal Periods ending on the last day of such Fiscal
Period to exceed 3.5 to 1.0; provided that, for purposes of calculating
this ratio, Consolidated Funded Debt on any day shall be the amount
otherwise determined pursuant to the definition thereof plus the amount
of Consolidated Transferred Receivables on such day.
(d) the Consolidated Tangible Net Worth as at the end of any
Fiscal Period to be less than the sum of (i) the greater of (A)
$500,000,000 and (B) an amount equal to 90% of Consolidated Tangible Net
Worth as at the end of the Fiscal Year ending nearest to December 31,
1996, plus (ii) as at the end of each Fiscal Year commencing with the
Fiscal Year ending closest to December 31, 1997, 67% of Consolidated Net
Income (without taking into account any losses incurred in any Fiscal
Year) since the beginning of the Fiscal Year which began closest to
December 31, 1996.
SECTION 8.2.4. Dividends. Except for dividends paid, or redemptions
made, in any Fiscal Year that do not exceed fifty percent (50%) of
Consolidated Net Income for the immediately preceding Fiscal Year, Micro
will not declare or pay any dividends (in cash, property or obligations) or
any other payments or distributions on account of, or set apart money for a
sinking or analogous fund for, or purchase, redeem, retire or otherwise
acquire for value, any shares of its capital stock now or hereafter
outstanding or any warrants, options or other rights to acquire the same;
return any capital to its stockholders as such; or make any distribution of
assets to its stockholders as such; provided, however, that Micro may
redeem, purchase or acquire any of its capital stock (i) issued to
employees pursuant to any Plan or other contract or arrangement relating to
employment upon the termination of employment or other events or (ii) in a
transaction contemplated by the Transition Agreements.
SECTION 8.2.5. Consolidation, Merger, Asset Acquisitions, etc.
(a) No Borrower will liquidate or dissolve, consolidate with, or
merge into or with, or exchange shares with, any other Person, or sell,
transfer, lease or otherwise dispose of all or substantially all of its
assets to any Person, except, if no Default has occurred and is
continuing or would occur after giving effect thereto:
(i) any Obligor (except Micro) may liquidate or dissolve
voluntarily into any other Obligor and may merge into or with or
exchange shares with any other Person or sell, transfer, lease or
otherwise dispose of all or substantially all of its assets to any
other Person, so long as the surviving entity or such transferee of
such assets shall continue to be an Obligor;
(ii) Micro may merge into or with any other Person;
provided, that: (A) either (1) Micro is the surviving entity or
(2) the surviving entity formed by such consolidation or into
which Micro shall be merged (which entity shall be a Person
organized, existing and in good standing under the laws of a State
of the United States) shall expressly assume Micro's Obligations
in a written agreement or undertaking satisfactory in form and
substance to Lenders holding, in the aggregate, 85% of the
Commitments and (B) Micro can demonstrate (in a manner and in such
scope and detail as are acceptable to either (1) if such merger
satisfies the requirements of subclause (1) of clause (A) above,
the Required Lenders, or (2) if such merger satisfies the
requirements of subclause (2) of clause (A) above, Lenders
holding, in the aggregate, 85% of the Commitments) that the
surviving entity (x) will be, immediately upon and following the
consummation of such proposed transaction, in compliance with each
of the covenants set forth in Sections 8.2.1 and 8.2.2 and (y) on
a pro forma basis, assuming such proposed transaction had been
consummated on the first day of the most recently ended period of
four Fiscal Periods for which financial statements have been or
are required to have been delivered pursuant to Section 8.1.1,
would have been in compliance with each of the covenants set forth
in Section 8.2.3 as of the last day of such period; and
(iii) Micro may exchange shares with any Person; provided,
that (A) either (1) Micro is the surviving entity of the
transaction in which such shares were exchanged, or (2) if Micro
shall not continue to exist following such transaction, the
surviving entity of such transaction (which entity shall be a
Person organized, existing and in good standing under the laws of
a State of the United States) shall expressly assume Micro's
Obligations in a written agreement or undertaking satisfactory in
form and substance to Lenders holding, in the aggregate, 85% of the
Commitments or (B) the entity resulting from such transaction or
the entity with whose shareholders Micro's shares were exchanged
in such transaction shall, following such transaction, be a
Subsidiary of Micro or shall be a Person in which Micro shall, as
a result of such transaction, have acquired a direct or indirect
interest permitted to be held by Micro hereunder.
(b) No Borrower will purchase or otherwise acquire (in one
transaction or a series of related transactions) from any other Person
property or assets the aggregate purchase price of which (calculated in
Dollars) paid in cash or property (other than property consisting of
equity shares or interests or other equivalents of corporate stock of, or
partnership or other ownership interests in, any Obligor), equals or
exceeds twenty-five percent (25%) of the sum (calculated without giving
effect to such purchase or acquisition) of (i) Consolidated Funded Debt
determined as at the end of the then most recently ended Fiscal Period
plus (ii) Consolidated Stockholders' Equity determined as at the end of
the then most recently ended Fiscal Period, plus any increase thereof
attributable to any equity offerings or issuances of capital stock
occurring subsequent to the end of such Fiscal Period and prior to any
such purchase or acquisition (any such purchase or acquisition, a
"Material Asset Acquisition")), except, if no Default has occurred and
is continuing or would occur after giving effect thereto, Micro may make
a Material Asset Acquisition; provided that, prior to the consummation
of any proposed Material Asset Acquisition, Micro shall (x) notify the
Administrative Agent that it intends to make such proposed Material
Asset Acquisition and that it reasonably believes that it will be able
to certify as required by clause (y) below and (y) deliver to the
Administrative Agent a certificate duly executed and delivered by an
Authorized Person of Micro, certifying that (1) immediately upon and
following the consummation of such proposed Material Asset Acquisition,
Micro will be in compliance with each of the covenants set forth in
Sections 8.2.1 and 8.2.2 and (2) on a pro forma basis, assuming such
proposed Material Asset Acquisition had been consummated on the first
day of the most recently ended period of four Fiscal Periods for which
financial statements have been or are required to have been delivered
pursuant to Section 8.1.1, Micro would have been in compliance with each
of the covenants set forth in Section 8.2.3 as of the last day of such
period; provided further, that no purchase or acquisition of property
or assets of the character described in and permitted pursuant to clause
(c) of Section 8.2.9 shall constitute a Material Asset Acquisition.
SECTION 8.2.6. Transactions with Affiliates. No Borrower will (and no
Borrower will permit any of its Subsidiaries to), except in the ordinary
course of business, directly or indirectly, pay any funds to or for the
account of, make any investment (whether by acquisition of stock or
indebtedness, by loan, advance, transfer of property, guarantee or other
agreement to pay, purchase or service, directly or indirectly, any
Indebtedness, or otherwise) in, lease, sell, transfer or otherwise dispose of
any assets, tangible or intangible, to, or participate in, or effect, any
transaction with, any Affiliate (any such payment, investment, lease, sale,
transfer, other disposition or transaction, an "Affiliate Transaction") except
on an arms-length basis on terms at least as favorable to such Borrower (or
such Subsidiary) as terms that could have been obtained from a third party who
was not an Affiliate; provided that the foregoing provisions of this Section
shall not prohibit (i) agreements with or for the benefit of employees of such
Borrower or any of its Subsidiaries regarding bridge home loans and other
loans necessitated by the relocation of such Borrower's or such Subsidiary's
business or employees, or regarding short-term hardship advances, (ii) loans
to officers or employees of such Borrower or any of its Subsidiaries in
connection with the exercise of rights under such Borrower's stock option or
stock purchase plan, (iii) any such Person from declaring or paying any lawful
dividend or other payment ratably in respect of all of its capital stock of
the relevant class so long as, in the case of Micro, after giving effect
thereto, no Default shall have occurred and be continuing, (iv) any Affiliate
Transaction pursuant to a Transition Agreement or disclosed in the Investment
Prospectus, (v) any Affiliate Transaction between Micro and any of its
Subsidiaries or between any Subsidiaries of Micro or (vi) any Affiliate
Transaction (other than any Affiliate Transaction described in clauses (i)
through (v)) in which the amount involved does not exceed $50,000; provided,
further, however, the Borrowers shall not, nor shall they permit any of their
respective Subsidiaries to, participate in or effect any Affiliate
Transactions otherwise permitted pursuant to this Section which either
individually or in the aggregate may involve obligations that are reasonably
likely to have a Material Adverse Effect. The approval by the independent
directors of the Board of Directors of the relevant Borrower (or the relevant
Subsidiary thereof) of any Affiliate Transaction to which such or such
Borrower (or the relevant Subsidiary thereof) is a party shall create a
rebuttable presumption that such Affiliate Transaction is on an arms-length
basis on terms at least as favorable to such Borrower (or the relevant
Subsidiary thereof) as terms that could have been obtained from a third party
who was not an Affiliate.
SECTION 8.2.7. Limitations on Margin Stock Acquisitions. Without first
providing the notice to the Administrative Agent and the Lenders required by
this Section 8.2.7, the Borrowers shall not (and shall not permit their
respective Subsidiaries to) acquire any outstanding stock of any U.S. or
non-U.S. corporation, limited company or similar entity of which the shares
constitute Margin Stock if after giving effect to such acquisition, Micro and
its Affiliates shall hold, in the aggregate, more than five percent (5%) of
the total outstanding stock of the issuer of such Margin Stock (the "Relevant
Issuer"). Such notice shall include the name and jurisdiction of organization
of the Relevant Issuer, the market on which such stock is traded, the total
percentage of the Relevant Issuer's stock currently held, and the purpose for
which the acquisition is being made. If any Lender Party notifies Micro,
within five Business Days of its receipt of any notice described in this
Section 8.2.7, that it elects not to fund any further Credit Extension for the
reason that such Lender Party has a substantial relationship with the Relevant
Issuer or any of its Subsidiaries or Affiliates, where, in each case, such
Credit Extension would be used to acquire or carry Margin Stock of the
Relevant Issuer, then, and notwithstanding anything to the contrary contained
in this Agreement, and subject to the consent of Micro (which consent shall
not be unreasonably withheld), such Lender Party shall have no further
obligation with respect to any Credit Extension requested after the date of
such notice from such Lender Party, the proceeds of which would be used
directly or indirectly for the purchase or carrying of such Margin Stock (it
being understood and agreed, however, that in no event shall any Lender be
required to fund more than its Percentage of any proposed Borrowing). The
acceptance by each Borrower of the proceeds of any Credit Extension shall
constitute a representation and warranty by each Borrower that no part of any
such Credit Extension will be used directly or indirectly to make any further
acquisition of the stock of any Relevant Issuer.
SECTION 8.2.8. Limitation on Sale of Trade Accounts Receivable.
Notwithstanding anything to the contrary in this Agreement, no Borrower will
(and no Borrower will permit any of its Subsidiaries to) sell, assign, grant a
Lien in, or otherwise transfer any interest in its Trade Accounts Receivable
to any Person if, after giving effect thereto, the ratio (expressed as a
percentage) of Consolidated Transferred Receivables, to the sum of
Consolidated Retained Receivables plus Consolidated Transferred Receivables
shall exceed 40%.
SECTION 8.2.9. Sale of Assets. No Obligor will (and no Obligor will
permit any of its Subsidiaries to) Dispose of any property or assets other
than in the ordinary course of business, except that:
(a) Micro or any Subsidiary of Micro may Dispose of any of its
assets so long as the proceeds thereof are either (i) utilized to repay
or prepay (in accordance with the provisions of ARTICLE IV hereof)
Pro-Rata Revolving Loans (provided, that in the event the amount of such
proceeds shall exceed the aggregate principal amount of all Pro-Rata
Revolving Loans outstanding hereunder at such time, such excess proceeds
may be utilized to repay or prepay (in accordance with the provisions
hereof) other loans outstanding at such time) or (ii) so long as no
Default has occurred and is continuing or would occur after giving
effect thereto, reinvested in one or more of the businesses in which
Micro or any of its Subsidiaries is principally engaged in accordance
with Section 8.2.10 hereof;
(b) Micro or any Subsidiary of Micro may Dispose of assets which
are worn out, obsolete or surplus or otherwise have no further useful
life to Micro or any of its Subsidiaries; and
(c) so long as no Default has occurred and is continuing or
would occur after giving effect thereto, Micro and any Subsidiary of
Micro may Dispose of assets in transactions exclusively among Micro and
any of its Subsidiaries or among Subsidiaries of Micro that satisfy the
requirements of Section 8.2.6; provided, that, notwithstanding any
provision hereof to the contrary, in the event that, immediately after
giving effect to any Disposition described in this clause (c) to a
Subsidiary of Micro, such Subsidiary shall own assets constituting at
least ten percent (10%) of Consolidated Assets determined as of the last
day of the most recently completed Fiscal Period, such Subsidiary of
Micro shall be deemed a Material Subsidiary for all purposes hereunder
as of the date of such Disposition and Micro shall cause any such
Material Subsidiary promptly to execute and deliver an Additional
Guaranty in favor of the Lender Parties in accordance with Section
8.1.10; provided further, that, notwithstanding the foregoing, so long
as no Event of Default has occurred and is continuing or would occur
after giving effect thereto, (i) any Subsidiary of Micro which is not at
the time of such Disposition an Obligor may Dispose of assets in
transactions exclusively with (A) Micro, (B) any Subsidiary of Micro
which, at the time of such Disposition, is an Obligor and (C) any other
Subsidiary of Micro which is not at the time of such Disposition an
Obligor, unless, immediately after giving effect to such Disposition,
such other Subsidiary of Micro would become a Material Subsidiary and
such other Subsidiary does not, promptly after such Disposition, execute
an Additional Guaranty in accordance with Section 8.1.10 and (ii) Micro
or any Subsidiary of Micro which is at the time of such Disposition also
an Obligor may Dispose of assets in transactions exclusively with (A)
Micro and (B) any other Subsidiary of Micro which, at the time of such
Disposition, is also an Obligor.
For purposes of this Section 8.2.9 "Dispose" means sell, lease, transfer or
otherwise dispose of property but shall not include any public taking or
condemnation, and "Disposition" and "Disposed of" have corresponding meanings
to Dispose. Such terms shall not include an exchange of assets, provided that
the assets involved in such exchange are similar in function in that after
giving effect to such exchange there has not been (i) a Material Adverse
Effect, (ii) any material deterioration of cash flow generation from or in
connection with such assets, or (iii) any material deterioration in the
overall quality of plant, property and equipment of any Obligor. An
"exchange" shall be deemed to have occurred for purposes hereof if each of the
transactions involved shall have been consummated within a six month period.
SECTION 8.2.10. Limitation on Businesses. Micro and its Subsidiaries,
considered as a whole, will not engage principally in businesses other than
those conducted by Micro and its Subsidiaries on the date hereof, as described
in the Preamble of this Agreement.
ARTICLE IX
EVENTS OF DEFAULT
SECTION 9.1. Listing of Events of Default. Any of the following events
or occurrences described in this Section 9.1 shall constitute an "Event of
Default".
SECTION 9.1.1. Non-Payment of Obligations. A default shall occur in
the payment or prepayment when due by any Borrower of any principal of any
Loan, by any Borrower of any interest on any Loan, by any Borrower of any
Reimbursement Obligation or any deposit of cash for collateral purposes
pursuant to Section 3.2.2 or 3.2.4 or by any Guarantor of any Guaranteed
Obligation (as defined in such Guarantor's Guaranty), and in the case of
clause (b), (c) or (d), such default shall continue unremedied for a period of
five Business Days.
SECTION 9.1.2. Breach of Warranty. Any representation or warranty of
any Obligor made or deemed to be made hereunder or in any other Loan Document
executed by it or in any other writing or certificate furnished by or on
behalf of any Obligor to the Administrative Agent or any Lender for the
purposes of or in connection with this Agreement or any such other Loan
Document (including any certificates delivered pursuant to ARTICLE VI) is or
shall be incorrect when made in any material respect.
SECTION 9.1.3. Non-Performance of Certain Covenants and Obligations.
Any Obligor shall default in the due performance and observance of any of its
obligations under Section 8.2.2, 8.2.3, 8.2.4 or 8.2.5 (excluding any default
by Micro in the performance of its obligation to deliver, prior to the
consummation of any Material Asset Acquisition, the certificate required to
be so delivered in connection therewith pursuant to clause (y) of paragraph
(b) of Section 8.2.5).
SECTION 9.1.4. Non-Performance of Other Covenants and Obligations. Any
Obligor shall default in the payment when due of any fee or any other
Obligation not subject to Section 9.1.1, or the due performance and observance
of any other covenant, agreement or obligation contained herein or in any
other Loan Document, and such default shall continue unremedied for a period
of 30 days after Micro obtains actual knowledge thereof or notice thereof
shall have been given to Micro by the Administrative Agent or any Lender.
SECTION 9.1.5. Default on Indebtedness. A default shall occur in the
payment when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any Indebtedness of any Obligor or any of its
Subsidiaries (other than Indebtedness described in Section 9.1.1 or
Indebtedness which is non-recourse to any Obligor, or any Subsidiary of any
Obligor) having an outstanding aggregate principal amount in excess of the
lesser of (a) (i) 5% of Consolidated Tangible Net Worth for the then most
recently ended Fiscal Period, individually, or (ii) 10% of Consolidated
Tangible Net Worth for the then most recently ended Fiscal Period, in the
aggregate and (b) $75,000,000 (or the equivalent thereof in any other
currency), or a default shall occur in the performance or observance of any
obligation or condition with respect to such Indebtedness if the effect of
such default is to cause, or (with the giving of any notice or lapse of
time or both) to permit the holder or holders of such Indebtedness, or any
trustee or agent for such holders to cause, the maturity of any such
Indebtedness to be accelerated or such Indebtedness to be prepaid,
redeemed, purchased, defeased or otherwise to become due and payable prior
to its expressed maturity.
SECTION 9.1.6. Judgments. Any judgment or order for the payment of
money in excess of (individually or in the aggregate) $60,000,000 (or the
equivalent thereof in any other currency), shall be rendered against any
Obligor or any of their respective Subsidiaries and either:
(a) enforcement proceedings shall have been commenced and be
continuing by any creditor upon such judgment or order for any period of
10 consecutive days; or
(b) there shall be any period during which a stay of enforcement
of such judgment or order, by reason of a pending appeal or otherwise,
shall not be in effect.
SECTION 9.1.7. Pension Plans. Any of the following events shall occur
with respect to any Pension Plan:
(a) the institution of any steps by any Obligor, any member of
its Controlled Group or any other Person to terminate a Pension Plan if,
as a result of such termination, any such Obligor or any such member
could be required to make a contribution in excess of $60,000,000 (or
the equivalent thereof in any other currency), to such Pension Plan, or
could reasonably expect to incur a liability or obligation in excess of
$60,000,000 (or the equivalent thereof in any other currency), to such
Pension Plan; or
(b) a contribution failure occurs with respect to any Pension
Plan sufficient to give rise to a Lien under section 302(f) of ERISA.
SECTION 9.1.8. Ownership; Board of Directors. Any Person or two or more
Persons (excluding the Family Stockholders (as defined in the Board
Representation Agreement)) acting in concert shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended (or any
successor regulation)) of capital stock of Micro having more than 25% of the
ordinary voting power of all capital stock of Micro then outstanding; and at
any time during any period of 25 consecutive calendar months commencing on or
after the date of this Agreement, a majority of the Board of Directors of
Micro shall no longer be composed of individuals (i) who were members of such
Board of Directors on the first day of such period, (ii) whose election or
nomination to such Board of Directors was approved by individuals referred to
in clause (i) above constituting at the time of such election or nomination at
least a majority of such Board of Directors or (iii) whose election or
nomination to such Board of Directors was approved by individuals referred to
in clauses (i) and (ii) above constituting at the time of such election or
nomination at least a majority of such Board of Directors.
SECTION 9.1.9. Bankruptcy, Insolvency, etc. Any Obligor or any Material
Subsidiary shall:
(a) become insolvent or generally fail to pay, or admit in
writing its inability to pay, debts as they become due;
(b) apply for, consent to, or acquiesce in, the appointment of a
trustee, receiver, administrative receiver, sequestrator, liquidator or
other custodian for it, its property, or make a general assignment for
the benefit of creditors;
(c) in the absence of such application, consent or acquiescence,
permit or suffer to exist the appointment of a trustee, administrative
receiver, receiver, sequestrator, liquidator or other custodian for it
or for a substantial part of its property, and such trustee, receiver,
sequestrator, liquidator or other custodian shall not be discharged
within 60 days, provided that each Obligor and each Material Subsidiary
hereby expressly authorizes each Lender Party to appear in any court
conducting any relevant proceedings during such 60-day period to
preserve, protect and defend its rights under this Agreement and the
other Loan Documents;
(d) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement or other case or
proceeding under any bankruptcy or insolvency law, or any
dissolution, winding up or liquidation proceeding, in respect of any
Obligor or any Subsidiary thereof, as the case may be, and, if any
such case or proceeding is not commenced by such Person, such case or
proceeding shall be consented to or acquiesced in by such Obligor or
Material Subsidiary, as the case may be, or shall result in the entry
of an order for relief or shall remain for 60 days unstayed or
undismissed, provided that each Obligor and each Material Subsidiary
hereby expressly authorizes each Lender Party to appear in any court
conducting any such case or proceeding during such 60-day period to
preserve, protect and defend its rights under this Agreement and the
other Loan Documents; or
(e) take any action authorizing, or in furtherance of, any of
the foregoing.
SECTION 9.1.10. Guaranties. Any of the Guaranties or any provisions
thereof shall be found or held invalid or unenforceable by a court of
competent jurisdiction or shall have ceased to be effective because of the
merger, dissolution or liquidation of a Guarantor (other than as may result
from a transaction permitted pursuant to Section 8.2.5 hereof or by reason
of a merger of a Guarantor under one Guaranty into the Guarantor under
another Guaranty) or any Guarantor shall have repudiated its obligations
under a Guaranty.
SECTION 9.2. Action if Bankruptcy. If any Event of Default described in
Section 9.1.9 shall occur, the Commitments (if not theretofore terminated)
shall automatically terminate and the outstanding principal amount of all
outstanding Loans and all other Obligations shall automatically be and become
immediately due and payable, without notice or demand.
SECTION 9.3. Action if Other Event of Default. If any Event of Default
(other than any Event of Default described in Section 9.1.9) shall occur for
any reason, whether voluntary or involuntary, and be continuing, the
Administrative Agent, upon the direction of the Required Lenders, shall by
notice to Micro declare all or any portion of the outstanding principal amount
of the Loans and all other Obligations to be due and payable and/or the
Commitments to be terminated, whereupon the full unpaid amount of the Loans
and all other Obligations which shall be so declared due and payable shall be
and become immediately due and payable, without further notice, demand or
presentment, and/or, as the case may be, the Commitments shall terminate.
SECTION 9.4. Action by Terminating Lender. If an Event of Default
shall occur because the Borrowers have failed to pay in full a Terminating
Lender, for any reason, voluntary or involuntary, the Terminating Lender
may by notice to Micro declare all or any portion of the outstanding
principal amount of the Loans made by such Terminating Lender and all other
Obligations owed to such Terminating Lender to be due and payable and/or
its commitment to be terminated, whereupon the full unpaid amount of such
Loans and all such other Obligations which shall be so declared due and
payable shall be and become immediately due and payable, without further
notice, demand or presentment, and/or, as the case may be, its Commitment
shall terminate.
SECTION 9.5. Cash Collateral. If any Event of Default shall occur for
any reason, whether voluntary or involuntary, and shall not have been cured
or waived and shall be continuing and the Obligations are or have been
declared due and payable under Section 9.2 or 9.3, the Administrative Agent
may apply any cash collateral held by the Administrative Agent pursuant to
Section 3.2.4 to the payment of the Obligations in any order in which the
Majority Lenders may elect.
ARTICLE X
THE ADMINISTRATIVE AGENT AND
DOCUMENTATION AGENT
SECTION 10.1. Authorization and Actions. Each Lender hereby appoints
NationsBank as the Administrative Agent and Scotiabank as the Documentation
Agent under, and for the purposes set forth in, this Agreement and each other
Loan Document. Each Lender authorizes each Agent to act on behalf of such
Lender under this Agreement and each other Loan Document and, in the absence
of other written instructions from the Required Lenders received from time to
time by the Agents (with respect to which each Agent agrees that it will
comply, except as otherwise provided in this Section 10.1 or as otherwise
advised by counsel), to exercise such powers hereunder and thereunder as are
specifically delegated to or required of the Agents by the terms hereof and
thereof, together with such powers as may be reasonably incidental thereto.
Each Lender hereby indemnifies (which indemnity shall survive any termination
of this Agreement) each Agent from and against such Lender's Percentage of any
and all liabilities, obligations, losses, damages, claims, costs or expenses
of any kind or nature whatsoever which may at any time be imposed on, incurred
by, or asserted against, each such Agent in any way relating to or arising out
of this Agreement or any other Loan Document (including any such liability,
etc. incurred as a result of each Agent's reliance on any information
contained in any Quarterly Report or update with respect thereto), including
reasonable attorneys' fees, and as to which either Agent is not reimbursed by
Micro or the other Obligors; provided, however, that no Lender shall be liable
for the payment of any portion of such liabilities, obligations, losses,
damages, claims, costs or expenses which are determined by a court of
competent jurisdiction in a final proceeding to have resulted solely from
either Agent's gross negligence or willful misconduct. No Agent shall be
required to take any action hereunder or under any other Loan Document, or to
prosecute or defend any suit in respect of this Agreement or any other Loan
Document, unless it is indemnified hereunder to its satisfaction. If any
indemnity in favor of either Agent shall be or become, in either Agent's
determination, inadequate, such Agent may call for additional indemnification
from the Lenders and cease to do the acts indemnified against hereunder until
such additional indemnity is given.
SECTION 10.2. Funding Reliance, etc. Unless the Administrative Agent
shall have been notified by telephone, confirmed in writing, by any Lender
by 5:00 p.m., Eastern time, on the day prior to the making of a Pro-Rata
Revolving Loan that such Lender will not make available the amount which
would constitute its Percentage of such requested Pro-Rata Revolving Loan
on the date specified therefor, the Administrative Agent may assume that
such Lender has made such amount available to the Administrative Agent and,
in reliance upon such assumption, make available to Micro a corresponding
amount. If and to the extent that such Lender shall not have made such
amount available to the Administrative Agent, such Lender and Micro
severally agree to repay the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the
date the Administrative Agent made such amount available to Micro to the
date such amount is repaid to the Administrative Agent at an interest rate
equal to the Federal Funds Rate for the first day that the Administrative
Agent made such amounts available and thereafter at a rate of interest
equal to the interest rate applicable at the time to the requested Pro-Rata
Revolving Loan.
SECTION 10.3. Exculpation. Neither Agent nor any of their respective
directors, officers, employees or agents shall be liable to any Lender for any
action taken or omitted to be taken by it under this Agreement or any other
Loan Document, or in connection herewith or therewith, except for its own
willful misconduct or gross negligence, nor be responsible for any recitals or
warranties herein or therein, nor for the effectiveness, enforceability,
validity or due execution of this Agreement or any other Loan Document, nor to
make any inquiry respecting the performance by any Obligor of its obligations
hereunder or under any other Loan Document. Any such inquiry which may be
made by either Agent shall not obligate it to make any further inquiry or to
take any action. Each Agent shall be entitled to rely upon advice of counsel
concerning legal matters and upon any notice, consent, certificate, statement
or writing which each such Agent believes to be genuine and to have been
presented by a proper Person.
SECTION 10.4. Successor. Either Agent may resign as such at any time
upon at least 30 days' prior notice to Micro and all the Lenders. If
either Agent shall at any time resign, the Required Lenders, after
consultations with Micro, may appoint another Lender as a successor
Administrative Agent or Documentation Agent, as the case may be, whereupon
such Lender shall become an Administrative Agent or Documentation Agent
hereunder, as the case may be. If no successor Administrative Agent or
Documentation Agent shall have been so appointed by the Required Lenders,
and shall have accepted such appointment, within 30 days after the retiring
Administrative Agent's or Documentation Agent's giving notice of
resignation, then the retiring Administrative Agent or Documentation Agent
may, on behalf of the Lenders, after consultations with Micro, appoint a
successor Administrative Agent or Documentation Agent, as the case may be,
which shall be one of the Lenders or a commercial banking institution
organized under the laws of the United States (or any State thereof) or a
U.S. branch or agency of a commercial banking institution, and having a
combined capital and surplus of at least $500,000,000. Upon the acceptance
of any appointment as Administrative Agent or Documentation Agent
hereunder, as the case may be, by a successor Administrative Agent or
Documentation Agent, as the case may be, such successor Administrative
Agent or Documentation Agent shall be entitled to receive from the retiring
Administrative Agent or Documentation Agent such documents of transfer and
assignment as such successor Administrative Agent or Documentation Agent
may reasonably request, and shall thereupon succeed to and become vested
with all rights, powers, privileges and duties of the retiring
Administrative Agent or Documentation Agent, as the case may be, and the
retiring Administrative Agent or Documentation Agent shall be discharged
from its duties and obligations under this Agreement. No resignation or
removal of either the Administrative Agent or Documentation Agent pursuant
to this Section 10.4 shall be effective until the appointment of a
successor Administrative Agent or Documentation Agent, as the case may be,
has become effective. After any retiring Administrative Agent's or
Documentation Agent's resignation hereunder as an Administrative Agent or
Documentation Agent, as the case may be, the provisions of:
(a) this ARTICLE X shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was the Administrative Agent
or Documentation Agent under this Agreement; and
(b) Sections 11.3 and 11.4 shall continue to inure to its
benefit.
SECTION 10.5. Credit Extensions by NationsBank and Scotiabank.
NationsBank and Scotiabank shall each have the same rights and powers with
respect to the Credit Extensions made by it or any of its Affiliates in its
capacity as a Lender and may exercise the same as if it were not an Agent
hereunder. Each of NationsBank, Scotiabank and their respective Affiliates
may accept deposits from, lend money to, and generally engage in any kind
of business with any Obligor or any Subsidiary of any thereof as if it were
not an Agent hereunder.
SECTION 10.6. Credit Decisions. Each Lender acknowledges that it has,
independently of the Agents and each other Lender, and based on such Lender's
review of the financial information of each Obligor, this Agreement, the other
Loan Documents (the terms and provisions of which being satisfactory to such
Lender) and such other documents, information and investigations as such
Lender has deemed appropriate, made its own credit decision to make available
its Commitment and to make available any Non-Rata Credit Extensions. Each
Lender also acknowledges that it will, independently of the Agents and each
other Lender, and based on such other documents, information and
investigations as it shall deem appropriate at any time, continue to make its
own credit decisions as to exercising or not exercising from time to time any
rights and privileges available to it under this Agreement or any other Loan
Document.
SECTION 10.7. Copies, etc. The Administrative Agent shall give prompt
notice to each Lender of each notice or request required or permitted to be
given to the Administrative Agent by any Obligor pursuant to the terms of this
Agreement or any other Loan Document (unless concurrently delivered to the
Lenders by such Obligor). The Administrative Agent will distribute to each
Lender each document or instrument received for its account, and copies of all
other communications received by the Administrative Agent from any Obligor,
for distribution to the Lenders by the Administrative Agent in accordance with
the terms of this Agreement or any other Loan Document.
SECTION 10.8. Reporting of Non-Rata Credit Extensions. Each Borrower
agrees to provide the Administrative Agent with written notice of each
Non-Rata Credit Extension concurrently with or promptly after the making of
such Non-Rata Credit Extension, which notice shall set forth, among other
things: (a) the date thereof; (b) the principal amount thereof stated in
the relevant Available Currency (and, with respect to all Available
Currencies other than the Dollar, the corresponding Dollar Amount thereof);
(c) the Interest Period applicable thereto; (d) the aggregate Dollar
Amount of such Lender's outstanding or undrawn Non-Rata Credit Extensions
as of such date; and (e) the identity of the relevant Lender. Each Lender
agrees to provide the Administrative Agent with written confirmation within
five calendar days following the last day of each calendar month (from the
date hereof until the Commitment Termination Date) of the Outstanding
Credit Extensions comprised of Non-Rata Credit Extensions made by such
Lender as of the end of such calendar month, which confirmation shall set
forth, among other things: (a) the date of each such Non-Rata Credit
Extension; (b) the principal amount or Stated Amount, as the case may be,
of each such Non-Rata Credit Extension stated in the relevant Available
Currency (and the corresponding Dollar Amount thereof), and the aggregate
Dollar Amount of all such Non-Rata Credit Extensions; (c) the respective
Interest Periods applicable thereto; and (d) the Identity of such Lender.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1. Waivers, Amendments, etc. The provisions of this
Agreement and of each other Loan Document may from time to time be amended,
modified or waived, if such amendment, modification or waiver is in writing
and consented to by each Borrower and the Required Lenders; provided,
however, that no such amendment, modification or waiver which would:
(a) modify any requirement hereunder that any particular action
be taken by all the Lenders or by the Required Lenders shall be
effective unless consented to by each Lender;
(b) modify this Section 11.1, change the definitions of
Percentage or Required Lenders, increase the Total Credit Commitment
Amount or the Credit Commitment Amount or Percentage of any Lender,
extend the Commitment Termination Date, or, subject to Section 8.2.5,
release any Guarantor from any of its payment obligations under the
Guaranty entered into by it, shall be made without the consent of each
Lender;
(c) extend the due date for, or reduce the amount of, any
scheduled repayment or prepayment of principal of or interest on any
Pro-Rata Credit Extension or the amount of any fee payable under Section
4.3 shall be made without the consent of each Lender;
(d) affect adversely the interests, rights or obligations of the
Administrative Agent in its capacity as Administrative Agent shall be
made without the consent of the Administrative Agent; or
(e) affect adversely the interests, rights or obligations of the
Documentation Agent in its capacity as the Documentation Agent shall be
made without the consent of the Documentation Agent.
No failure or delay on the part of any Lender Party in exercising any power or
right under this Agreement or any other Loan Document 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 any Obligor in any case shall
entitle it to any notice or demand in similar or other circumstances. No
waiver or approval by any Lender Party under this Agreement or any other Loan
Document shall, except as may be otherwise stated in such waiver or approval,
be applicable to subsequent transactions. No waiver or approval hereunder
shall require any similar or dissimilar waiver or approval thereafter to be
granted hereunder.
SECTION 11.2. Notices. Unless otherwise specified to the contrary, all
notices and other communications provided to any party hereto under this
Agreement or any other Loan Document shall be in writing or by facsimile and
addressed, delivered or transmitted to such party at its address or facsimile
number set forth below its signature hereto or at such other address or
facsimile number as may be designated by such party in a notice to the other
parties. All notices, if mailed and properly addressed with postage prepaid
or if properly addressed and sent by prepaid courier service, shall be deemed
given when received; all notices if transmitted by facsimile shall be deemed
given when transmitted and the appropriate receipt for transmission received
by the sender thereof.
SECTION 11.3. Payment of Costs and Expenses. Micro agrees to pay on
demand all reasonable expenses (inclusive of value added tax or any other
similar tax imposed thereon) of the Agents (including the reasonable fees and
out-of-pocket expenses of the single counsel to the Agents and of local
counsel, if any, who may be retained by such counsel to the Agents) in
connection with the negotiation, preparation, execution and delivery of this
Agreement and of each other Loan Document (including schedules, exhibits, and
forms of any document or instrument relevant to this Agreement or any other
Loan Document), and any amendments, waivers, consents, supplements or other
modifications to this Agreement or any other Loan Document as may from time to
time hereafter be required, whether or not the transactions contemplated hereby
are consummated.
Micro further agrees to pay, and to save the Lender Parties harmless
from all liability for, any stamp or other taxes (including, without
limitation, any registration duty imposed by Belgian law) which may be payable
in connection with the execution, delivery or enforcement of this Agreement or
any other Loan Document, and in connection with the making of any Credit
Extensions and the issuing of any Letters of Credit hereunder. Micro also
agrees to reimburse each Lender Party upon demand for all out-of-pocket
expenses (inclusive of value added tax or any other similar tax imposed
thereon and including attorneys' fees and legal expenses (including the actual
cost to such Lender Party of its in-house counsel) on a full indemnity basis)
incurred by each such Lender Party in connection with (x) the negotiation of
any restructuring or "work-out", whether or not consummated, of any
Obligations and (y) the enforcement of any Obligations; provided, however,
that Micro shall reimburse each Lender Party for the fees and legal
expenses of only one counsel for such Lender Party.
SECTION 11.4. Indemnification. In consideration of the execution and
delivery of this Agreement by each Lender Party and the extension of the
Commitments, the Obligors hereby jointly and severally indemnify, exonerate
and hold each Lender Party and each of their respective officers, directors,
employees and agents (collectively, the "Indemnified Parties") free and
harmless from and against any and all actions, causes of action, suits,
losses, costs, liabilities and damages, and expenses incurred in connection
therewith (irrespective of whether any such Indemnified Party is a party to
the action for which indemnification hereunder is sought), including
reasonable attorneys' fees and disbursements, which shall include the actual
cost to such Indemnified Party of its in-house counsel but shall not include
the fees and expenses of more than one counsel to such Indemnified Party
(collectively, the "Indemnified Liabilities"), incurred by the Indemnified
Parties or any of them as a result of, or arising out of, or relating to:
(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Credit Extension;
(b) the entering into and performance of this Agreement and any
other Loan Document by any of the Indemnified Parties (excluding,
however, any action successfully brought by or on behalf of Micro or any
other Borrower with respect to any determination by any Lender not to
fund any Credit Extension or not to comply with Section 11.15 of this
Agreement or any action by the Required Lenders to terminate or reduce
the Commitments or accelerate the Loans in violation of the terms of
this Agreement);
(c) any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by any Obligor, or any of their
respective Subsidiaries of all or any portion of the stock or assets of
any Person, whether or not any Indemnified Party is party thereto;
(d) any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to the
protection of the environment or the Release by any Obligor, or any of
their respective Subsidiaries of any Hazardous Material; or
(e) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real
property owned or operated by any Obligor, or any of their respective
Subsidiaries of any Hazardous Material (including any losses,
liabilities, damages, injuries, costs, expenses or claims asserted or
arising under any Environmental Law), regardless of whether caused by,
or within the control of such Person;
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's
gross negligence or willful misconduct. If and to the extent that the
foregoing undertaking may be unenforceable for any reason, the Obligors
hereby jointly and severally agree to make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.
SECTION 11.5. Survival. The obligations of Micro and each other Obligor
under Sections 5.3, 5.4, 5.5, 5.7, 11.3 and 11.4, and the obligations of the
Lenders under Sections 10.1 and 11.15, shall in each case survive any
termination of this Agreement, the payment in full of all Obligations and the
termination of the Commitments. The representations and warranties made by
Micro and each other Obligor in this Agreement and in each other Loan Document
shall survive the execution and delivery of this Agreement and each such other
Loan Document.
SECTION 11.6. Severability. Any provision of this Agreement or any
other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such provision and such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement or such Loan
Document or affecting the validity or enforceability of such provision in
any other jurisdictions.
SECTION 11.7. Headings. The various headings of this Agreement and of
each other Loan Document are inserted for convenience only and shall not
affect the meaning or interpretation of this Agreement or such other Loan
Document or any provisions hereof or thereof.
SECTION 11.8. Execution in Counterparts, Effectiveness; Entire
Agreement. This Agreement may be executed by the parties hereto in several
counterparts, each of which shall be deemed to be an original and all of
which shall constitute together but one and the same agreement. This
Agreement shall become effective on the date when (a) counterparts hereof
executed on behalf of Micro, each Supplemental Borrower, the Agents and
each Lender (or notice thereof satisfactory to the Administrative Agent)
shall have been received by the Administrative Agent and notice thereof
shall have been given by the Administrative Agent to each Borrower and each
Lender and (b) the Administrative Agent shall have received evidence
reasonably satisfactory to it that the mergers described in clause (ii) of
Section 6.1.12 have been consummated; provided, however, that no Lender
shall have any obligation to make the initial Credit Extension until the
date (the "Effective Date") that the applicable conditions set forth in
Sections 6.1 and 6.2 have been satisfied as provided herein. This
Agreement and the other Loan Documents constitute the entire understanding
among the parties hereto with respect to the subject matter hereof and
supersede any prior agreements, written or oral, with respect thereto.
SECTION 11.9. Governing Law; Submission to Jurisdiction. THIS
AGREEMENT AND EACH OTHER LOAN DOCUMENT (OTHER THAN THE COORDINATION CENTER
GUARANTY, MICRO CANADA GUARANTY (MICRO) AND MICRO CANADA GUARANTY
(COORDINATION CENTER/MICRO SINGAPORE)) SHALL EACH BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (OTHER THAN THE COORDINATION
CENTER GUARANTY, MICRO CANADA GUARANTY (MICRO) AND MICRO CANADA GUARANTY
(COORDINATION CENTER/MICRO SINGAPORE)), OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS (OTHER THAN WITH
RESPECT TO THE COORDINATION CENTER GUARANTY, MICRO CANADA GUARANTY (MICRO)
OR MICRO CANADA GUARANTY (COORDINATION CENTER/MICRO SINGAPORE)) OF THE
AGENTS, THE LENDERS, MICRO OR ANY OTHER OBLIGOR SHALL BE BROUGHT AND
MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. MICRO
AND EACH OTHER OBLIGOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED
STATED DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, FOR THE PURPOSE OF ANY SUCH LITIGATION
AS SET FORTH ABOVE, AND IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL
PROCESS IN SUCH LITIGATION BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH
OBLIGOR AT ITS ADDRESS FOR NOTICES SPECIFIED PURSUANT TO SECTION 11.2
HEREOF, IN EACH SUCH CASE MARKED FOR THE ATTENTION OF GENERAL COUNSEL,
INGRAM MICRO INC., OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF
NEW YORK IN A MANNER PERMITTED BY THE LAWS OF EACH SUCH STATE. MICRO AND
EACH OTHER OBLIGOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION WHICH IT MAY HAVE OR
HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN
ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT MICRO OR ANY
OTHER OBLIGOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION
OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,
ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE)
WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH SUCH OBLIGOR HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN THE COORDINATION CENTER
GUARANTY, MICRO CANADA GUARANTY (MICRO) AND MICRO CANADA GUARANTY
(COORDINATION CENTER/MICRO SINGAPORE)).
SECTION 11.10. Successors and Assigns. This Agreement and each other
Loan Document shall be binding upon and shall inure to the benefit of the
parties hereto and thereto and their respective successors and assigns;
provided, however, that:
(a) no Obligor may assign or transfer its rights or obligations
hereunder or under any other Loan Document without the prior written
consent of all the Lender Parties;
(b) the rights of sale, assignment and transfer of the Lenders
are subject to Section 11.11; and
(c) the rights of the Administrative Agent and the Documentation
Agent with respect to resignation or removal are subject to Section
10.4.
SECTION 11.11. Assignments and Transfers of Interests. No Lender may
assign or sell participation interests in its Commitment or any of its Credit
Extensions or any portion thereof to any Persons except in accordance with
this Section 11.11.
SECTION 11.11.1. Assignments. Any Lender may at any time assign or
transfer to one or more Eligible Assignees, to any of its Affiliates, to
any other Lender or to any Federal Reserve Bank (each Person described in
either of the foregoing clauses as being the Person to whom such assignment
or transfer is available to be made, being hereinafter referred to as a
"Transferee Lender") all or any part of such Lender's total Credit
Extensions and Commitment (which assignment and delegation shall be of a
constant, and not a varying, percentage of all the assigning Lender's
Credit Extensions and Commitment) in a minimum aggregate amount of
$10,000,000 (or if less, the entire amount of such Lender's total Credit
Extensions and Commitment); provided, however, that, each Obligor and the
Agents shall be entitled to continue to deal solely and directly with such
Lender in connection with the interests so assigned and delegated to a
Transferee Lender until:
(a) notice of such assignment or transfer, together with payment
instructions, addresses and related information with respect to such
Transferee Lender, shall have been given to Micro and each Agent by such
Lender and such Transferee Lender;
(b) the Transferee Lender shall have executed and delivered to
Micro and each Agent, a Lender Assignment Agreement; and
(c) the processing fee described below shall have been paid.
From and after the effective date of such Lender Assignment Agreement, (x) the
Transferee Lender thereunder shall be deemed automatically to have become a
party hereto and to the extent that rights and obligations hereunder have been
assigned and delegated to such Transferee Lender in connection with such
Lender Assignment Agreement, shall have the rights and obligations of a Lender
hereunder and under the other Loan Documents, and (y) the assignor Lender, to
the extent that rights and obligations hereunder have been assigned and
delegated by it in connection with such Lender Assignment Agreement, shall be
released from its obligations hereunder and under the other Loan Documents.
Within five Business Days after its receipt pursuant to clauses (a) and (b)
above of notice of such assignment and transfer and an executed Lender
Assignment Agreement, Micro shall execute and deliver to the Administrative
Agent (for delivery to the relevant Transferee Lender) new Notes evidencing
such Transferee Lender's assigned Credit Extensions and Commitments and, if
the assignor Lender has retained Credit Extensions and Commitments hereunder,
replacement Notes in the principal amount of the Credit Extensions and
Commitments retained by the assignor Lender hereunder (such Notes to be in
exchange for, but not in payment of, the Notes then held by such assignor
Lender). Each such Note shall be dated the date of the respective predecessor
Note. The assignor Lender shall mark each predecessor Note "exchanged" and
deliver each of them to Micro. Accrued interest and accrued fees shall be
paid at the same time or times provided in each predecessor Note and in this
Agreement. The Transferee Lender shall pay a processing fee in the amount of
$3,500 to the Administrative Agent upon delivery of its Lender Assignment
Agreement to the Administrative Agent. Any attempted assignment and
delegation not made in accordance with this Section 11.11.1 shall be null and
void.
SECTION 11.11.2. Participations. Any Lender may at any time sell to
one or more commercial banks or other Persons (each of such commercial
banks and other Persons being herein called a "Participant") participating
interests in any of its Credit Extensions and Commitments hereunder;
provided, however, that
(a) no participation contemplated in this Section 11.11.2 shall
relieve such Lender from its Commitments or its other obligations
hereunder or under any other Loan Document;
(b) such Lender shall remain solely responsible for the
performance of its Commitments and such other obligations;
(c) each Borrower and each other Obligor and the Agents shall
continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement and each other
Loan Document;
(d) no Participant, unless such Participant is an Affiliate of
such Lender or is itself a Lender, shall be entitled to require such
Lender to take or refrain from taking any action hereunder or under any
other Loan Document, except that such Lender may agree with any
Participant that such Lender will not, without such Participant's
consent, take any actions of the type described in clause (a), (b) or
clause (c) of Section 11.1;
(e) no Borrower shall be required to pay any amount under this
Agreement that is greater than the amount which it would have been
required to pay had no participating interest been sold; and
(f) the aggregate amount of participating interests sold by any
Lender in its Credit Extensions comprised of Bid Rate Loans shall not
exceed, at any time, an amount equal to such Lender's Commitment at such
time multiplied by three.
The Borrower acknowledges and agrees that each Participant, for purposes of
Sections 5.3, 5.4, 5.5, 5.7, 5.9, 5.10, 11.3 and 11.4, shall be considered a
Lender.
SECTION 11.12. Other Transactions. Nothing contained herein shall
preclude any Lender Party from engaging in any transaction, in addition to
those contemplated by this Agreement or any other Loan Document, with any
Obligor or any of its Affiliates in which such Obligor or such Affiliate is
not restricted hereby from engaging with any other Person.
SECTION 11.13. Further Assurances. Each Obligor agrees to do such
further acts and things and to execute and deliver to each Lender Party
such additional assignments, agreements, powers and instruments, as such
Lender Party may reasonably require or deem advisable to carry into effect
the purposes of this Agreement or any other Loan Document or to better
assure and confirm unto such Lender Party its rights, powers and remedies
hereunder and thereunder.
SECTION 11.14. Waiver of Jury Trial. THE AGENTS, THE LENDERS, MICRO
AND EACH OTHER OBLIGOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE
LENDER PARTIES OR MICRO OR ANY OTHER OBLIGOR. MICRO AND EACH OTHER OBLIGOR
ACKNOWLEDGE AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF THIS
AGREEMENT AND EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER PARTIES ENTERING
INTO THIS AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT TO WHICH IT IS A
PARTY.
SECTION 11.15. Confidentiality. Each of the Lender Parties hereby
severally agrees with each Borrower that it will keep confidential all
information delivered to such Lender Party by or on behalf of each Borrower
or any of their respective Subsidiaries which information is known by such
Lender Party to be proprietary in nature, concerns the terms and conditions
of this Agreement or any other Loan Document, or is clearly marked or
labeled or otherwise adequately identified when received by such Lender
Party as being confidential information (all such information, collectively
for purposes of this Section, "confidential information"); provided, that,
each Lender Party shall be permitted to deliver or disclose "confidential
information": (a) to its directors, officers, employees and affiliates;
(b) to authorized agents, attorneys, auditors and other professional advisors
retained by such Lender Party that have been apprised of such Lender
Party's obligation under this Section 11.15 and have agreed to hold
confidential the foregoing information substantially in accordance with the
terms of this Section; (c) in connection with the prospective assignment or
transfer of all or any part of, or the sale of a participating interest in,
such Lender Party's Credit Extensions and Commitment, to any prospective
Transferee Lender or Participant that has been apprised of such Lender
Party's obligation under this Section 11.15 and has agreed to hold
confidential the foregoing information in accordance with the terms of this
Section; (d) to any federal or state regulatory authority having jurisdiction
over such Lender Party; (e) or to any other Person to which such delivery or
disclosure may be necessary or appropriate (i) to effect compliance with
any law, rule, regulation or order applicable to such Lender Party, (ii) in
response to any subpoena or other legal process (provided, that the
relevant Borrower shall be given notice of any such subpoena or other legal
process as soon as possible and in any event prior to production (unless
provision of any such notice would result in a violation of any such
subpoena or other legal process), and the Lender Party receiving such
subpoena or other legal process shall cooperate with such Borrower, at such
Borrower's expense, in seeking a protective order to prevent or limit such
disclosure), or (iii) in connection with any litigation to which such
Lender Party is a party.
For purposes hereof, the term "confidential information" does not
include any information that: (A) was publicly known or otherwise known by any
Lender Party on a non-confidential basis from a source other than the relevant
Borrower prior to the time such information is delivered or disclosed to such
Lender Party by the relevant Borrower; (B) subsequently becomes publicly known
through no act or omission by any Lender Party or any Person acting on behalf
of any Lender Party; (C) otherwise becomes known to a Lender Party other than
through disclosure by the relevant Borrower (or any Subsidiary thereof) or
through someone subject, to such Lender Party's knowledge, to a duty of
confidentiality to the relevant Borrower; or (D) constitutes financial
statements that are otherwise publicly available.
SECTION 11.16. Release of Subsidiary Guarantors and Supplemental
Borrowers.
(a) Upon receipt by the Agents of (i) a certificate from a
senior officer of Micro certifying as of the date thereof that, after
the consummation of the transaction or series of transactions described
in such certificate (which transactions, individually and in the
aggregate, shall be certified to be in compliance with the terms and
conditions of this Agreement, including the covenants contained in
Sections 8.2.5, 8.2.6 and 8.2.9), the Guarantor identified in such
certificate is no longer a Subsidiary of Micro, and (ii) such additional
information, approvals, opinions, documents or instruments relating to
the matters addressed in such certificate as the Agents shall reasonably
request, such Guarantor's Guaranty shall automatically terminate so long
as there shall exist no Default immediately prior to, as a result of, or
after giving effect to, such termination. In all events, all other
Guaranties shall remain in full force and effect. Each Lender Party
shall, at Micro's expense, execute such documents as Micro shall
reasonably request to evidence such termination.
(b) Upon receipt by the Agents of (i) a certificate from a
senior officer of Micro certifying as of the date thereof that, after
the consummation of the transaction or series of transactions described
in such certificate (which transactions, individually and in the
aggregate, shall be certified to be in compliance with the terms and
conditions of this Agreement, including the covenants contained in
Sections 8.2.5, 8.2.6 and 8.2.9), the Supplemental Borrower identified
in such certificate is no longer a Subsidiary of Micro, (ii) such
additional information, approvals, opinions, documents or instruments
relating to the matters addressed in such certificate as the Agents
shall reasonably request, and (iii) payment in full of any Outstanding
Credit Extensions made by any Lender in favor of such Supplemental
Borrower and satisfaction of any Obligations of such Supplemental
Borrower under the Loan Documents, such Supplemental Borrower shall
automatically cease to be a party to this Agreement so long as there
shall exist no Default immediately prior to, as a result of, or after
giving effect to, such cessation. In all events, this Agreement shall
remain in full force and effect as among the remaining parties hereto.
Each Lender Party shall, at Micro's expense, execute such documents as
Micro shall reasonably request to evidence such cessation.
SECTION 11.17. Collateral. Each of the Lenders represents to the
Administrative Agent and each of the other Lenders that it in good faith is
not relying upon any Margin Stock as collateral in the extension or
maintenance of the credit provided for in this Agreement.
[Signatures Commence on Next Page.]
EXHIBIT 10.13
AMENDED AND RESTATED REORGANIZATION AGREEMENT
among
INGRAM INDUSTRIES INC.,
INGRAM MICRO INC.,
and
INGRAM ENTERTAINMENT INC.
TABLE OF CONTENTS(1)
Page
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions...................................... 1
_________________
(1) The Table of Contents is not a part of this Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE PARTIES
SECTION 2.1. Corporate Existence and Power.................... 3
SECTION 2.2. Corporate Authorization.......................... 3
SECTION 2.3. Governmental Authorization....................... 3
SECTION 2.4. Non-Contravention................................ 4
ARTICLE 3
CERTAIN LIABILITIES; CERTAIN ASSETS
SECTION 3.1. Assumed Liabilities.............................. 4
SECTION 3.2. Certain Contingent Assets........................ 8
SECTION 3.3. Certain Adjustments.............................. 9
ARTICLE 4
GENERAL COVENANTS
SECTION 4.1. Conduct of the Business.......................... 10
SECTION 4.2. Access; Confidentiality.......................... 11
SECTION 4.3. Best Efforts; Further Assurances................. 12
SECTION 4.4. Loans; Repurchase Agreements..................... 12
SECTION 4.5. Cross-Guarantees................................. 13
SECTION 4.6. Public Announcements............................. 14
SECTION 4.7. Notices of Certain Events........................ 14
ARTICLE 5
SURVIVAL; INDEMNIFICATION
SECTION 5.1. Survival......................................... 15
SECTION 5.2. Indemnification.................................. 15
SECTION 5.3. Procedures....................................... 15
ARTICLE 6
TERMINATION
SECTION 6.1. Grounds for Termination.......................... 17
SECTION 6.2. Effect of Termination............................ 17
ARTICLE 7
MISCELLANEOUS
SECTION 7.1. Headings......................................... 17
SECTION 7.2. Entire Agreement................................. 17
SECTION 7.3. Notices.......................................... 18
SECTION 7.4. Applicable Law................................... 18
SECTION 7.5. Severability..................................... 18
SECTION 7.6. Successors, Assigns, Transferees................. 18
SECTION 7.7. Counterparts..................................... 19
SECTION 7.8. Amendments and Waivers........................... 19
SECTION 7.9. Consent to Jurisdiction.......................... 19
EXHIBITS
Exhibit I - Form of Master Services Agreement
Exhibit II - Form of Risk Management Agreement
Exhibit III - Form of Data Center Services Agreement
Exhibit IV - Form of Tax Sharing and Tax Services Agreement
Exhibit V - Form of Employee Benefits Transfer and Assumption
Agreement
AMENDED AND RESTATED REORGANIZATION AGREEMENT
AGREEMENT dated as of September 4, 1996, as amended and
restated as of October 17, 1996, among Ingram Industries Inc., a Tennessee
corporation ("Industries"), Ingram Micro Inc., a Delaware corporation
("Micro"), and Ingram Entertainment Inc., a Tennessee corporation
("Entertainment" and, together with Industries and Micro, the "Ingram
Companies").
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions. (a) The following terms, as
used herein, have the following meanings:
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under common
control with such other Person; provided that for purposes of this
Agreement no Ingram Company shall be deemed an Affiliate of any other
Ingram Company. For purposes of this definition, the term "control", when
used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through ownership of voting
securities, by contract or otherwise, and the terms "controlling",
"controlled by" and "under common control with" have meanings correlative
to the foregoing.
"Ancillary Agreements" means (i) the Master Services Agreement
substantially in the form attached as Exhibit I hereto, (ii) the Risk
Management Agreement substantially in the form attached as Exhibit II
hereto, (iii) the Data Center Services Agreement substantially in the form
attached as Exhibit III hereto, (iv) the Tax Sharing and Tax Services
Agreement substantially in the form attached as Exhibit IV hereto and (v)
the Employee Benefits Transfer and Assumption Agreement substantially in
the form attached as Exhibit V hereto. [Names of these Agreements will be
changed to reflect amendments and restatements thereof, if necessary.]
"Carrying Cost" means, with respect to any investment, the
carrying cost of such investment from the date specified in Article 3 with
respect to such investment to the date of disposition of such investment,
calculated by Industries on the basis of the average borrowing rate of
Industries during such period as published from time to time by the
Industries treasury department as applied to the amount of Industries'
invested capital from time to time with respect to such investment.
"Covered Person" means (i) with respect to Micro, each
Subsidiary of Micro, (ii) with respect to Entertainment, each Subsidiary of
Entertainment and (iii) with respect to Industries, each business operating
unit of Industries and each Subsidiary of Industries (other than Micro,
Entertainment and their respective Subsidiaries); provided that "Covered
Person" shall in no event include Cactus, Magnolia or IMS.
"Effective Time" means the effective time of the First
Closing as defined in the Exchange Agreement.
"Exchange Agreement" means the Amended and Restated Exchange
Agreement dated as of September 4, 1996, as amended and restated as of
October 17, 1996, among each Ingram Company and the Persons listed on the
signature pages thereof.
"Material Adverse Effect" means, with respect to any Ingram
Company, a material adverse effect on the business, assets, condition
(financial or otherwise) or result of operations of the business of such
Ingram Company and its Subsidiaries taken as a whole.
"Person" means an individual, corporation, partnership,
association, trust, limited liability company or other entity or
organization, including a government or political subdivision or an agency
or instrumentality thereof.
"Second Closing" shall have the meaning set forth in the
Exchange Agreement.
"Subsidiary" means, with respect to Industries, Entertainment
or Micro, any entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors
or other persons performing similar functions are directly or indirectly
owned by such Person immediately after the Closing.
(b) Each of the following terms is defined in the Section
set forth opposite such term:
Term Section
----- -------
Cactus 3.2
Cooper Agreement 3.2
Currently Pledged Stock 4.4
IMS 3.1
Indemnified Party 5.3
Indemnifying Party 5.3
IOBC 3.1
IPSI 3.2
Loss 5.2
Magnolia 3.1
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE PARTIES
Each party represents and warrants to each other party as of
September 4, 1996, as of October 17, 1996 and as of the Effective Time that:
SECTION 2.1. Corporate Existence and Power. Such party is
a corporation duly incorporated, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, and has all
corporate powers and all governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now conducted,
except where the failure to have such governmental licenses,
authorizations, permits, consents and approvals does not have a Material
Adverse Effect or would not prevent such party from performing any of its
obligations hereunder or under the Ancillary Agreements.
SECTION 2.2. Corporate Authorization. The execution,
delivery and performance by such party of this Agreement and each of the
Ancillary Agreements to which such party is a party are within its
corporate powers and have been duly authorized by all necessary corporate
and stockholder action on its part. This Agreement constitutes, and when
executed and delivered, each of the Ancillary Agreements to which such
party is a party will constitute, a valid and binding agreement of such
party.
SECTION 2.3. Governmental Authorization. The execution,
delivery and performance by such party of this Agreement and each of the
Ancillary Agreements to which such party is a party require no action by or
in respect of, or filing with, any governmental body, agency or official
other than (i) compliance with any applicable requirements of the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder and (ii) such other matters where
the failure to take such action or make such filing would not have a
Material Adverse Effect or prevent such party from performing any of its
obligations hereunder or the Ancillary Agreements.
SECTION 2.4. Non-Contravention. The execution, delivery
and performance by such party of this Agreement and each of the Ancillary
Agreements to which such party is a party do not (i) violate the
certificate of incorporation or bylaws of such party, (ii) assuming
compliance with the matters referred to in Section 2.3, violate any
applicable law, rule, regulation, judgment, injunction, order or decree,
(iii) constitute a default under or give rise to any right of termination,
cancellation or acceleration of any right or obligation of any party or to
a loss of any benefit relating to the business of such party to which any
party is entitled under any permit or license or any provision of any
agreement, contract or other instrument binding upon any party or by which
any of the assets of such party is or may be bound or (iv) result in the
creation or imposition of any lien on any asset of such party, except, in
the case of clauses (ii) through (iv), as would not, individually or in the
aggregate, have a Material Adverse Effect or prevent such party from
performing in any material respect any of its obligations hereunder or
under the Ancillary Agreements.
ARTICLE 3
CERTAIN LIABILITIES; CERTAIN ASSETS
SECTION 3.1. Assumed Liabilities. (a) Upon the terms and
subject to the conditions of this Agreement and except as otherwise
provided in the Ancillary Agreements, each party agrees, at the Effective
Time, to assume, or remain liable for, as the case may be, and shall
thereafter pay, perform and discharge, the following liabilities and
obligations:
(i) liabilities and obligations incurred by such party (in
the case of Micro and Entertainment) and its Covered Persons, or by
any Covered Person of such party (in the case of Industries), with
respect to periods ending on or prior to the Effective Time, other
than liabilities and obligations arising directly or indirectly as a
result of (1) any intentional act which is tortious or (2) any
illegal act, in either case committed by (x) a corporate officer of
Industries (except for actions that are believed by such person to
be in furtherance of his duties as an officer or employee of Micro,
Entertainment, any of their respective Covered Persons or a Covered
Person of Industries), (y) any other employee of Industries whose
responsibilities are not primarily associated with Micro,
Entertainment, any of their respective Covered Persons or a Covered
Person of Industries, or (z) any other employee or agent of another
party;
(ii) liabilities and obligations incurred by any other party
(if such other party is Micro or Entertainment) and its Covered
Persons, or by any Covered Person of any other party (if such other
party is Industries), with respect to periods ending on or prior to
the Effective Time arising directly or indirectly as a result of (x)
any intentional act which is tortious or (y) any illegal act, in
either case committed by an employee or agent of such party or its
Covered Persons (in the case of Micro or Entertainment) or by a
Covered Person of such party (in the case of Industries);
(iii) in the case of Industries and subject to Section
3.1(b)(ii), general corporate level liabilities and obligations
recorded under Industries' internal accounting system as "home
office" liabilities up to an aggregate amount of $100,000 incurred by
Industries with respect to periods ending on or prior to the
Effective Time, to the extent that such liabilities and obligations
(x) are not attributable to Micro, Entertainment, any of their
respective Covered Persons or any Covered Person of Industries, (y)
have not been reserved for on the December 31, 1995 balance sheet of
any Ingram Company and (z) are extraordinary and non-recurring in
nature and arise other than in the ordinary course of business;
(iv) in the case of Micro, in the event that the net proceeds
from a disposition by Industries of its investment in common stock
of Stream, Inc. are less than $500,580, liabilities and
obligations in an amount equal to the sum of (x) such shortfall
and (y) the Carrying Cost of such investment from and after
December 31, 1995.
(v) in the case of Industries, (x) the first $4,500,000 of
liabilities and obligations payable in connection with the
settlement following December 31, 1995 of Bluewater Insurance,
Ltd. claims arising under the treaties listed on Schedule
3.1(a)(v) and (y) liabilities and obligations payable in
connection with the settlement following December 31, 1995 of such
Bluewater Insurance, Ltd. claims in excess of the second
$4,500,000 of such liabilities and obligations; and
(vi) liabilities and obligations incurred by such party and
its Covered Persons with respect to periods beginning after the
Effective Time.
(b) Upon the terms and subject to the conditions of this
Agreement, each of Industries, Micro and Entertainment agrees, at the
Effective Time, to assume (or retain, as the case may be) 23.01%, 72.84%
and 4.15%, respectively, of the following liabilities and obligations:
(i) liabilities and obligations incurred by any party or any
of its Covered Persons with respect to periods ending on or prior
to the Effective Time arising directly or indirectly as a result
of (x) any intentional act which is tortious or (y) any illegal
act, in either case committed by a corporate officer of Industries
(except for actions that are believed by such person to be in
furtherance of his duties as an officer or employee of Micro,
Entertainment, any of their respective Covered Persons or a
Covered Person of Industries), or any other employee of Industries
whose responsibilities are not primarily associated with Micro,
Entertainment, any of their respective Covered Persons or a
Covered Person of Industries;
(ii) general corporate level liabilities and obligations
recorded under Industries' internal accounting system as "home
office" liabilities in excess of an aggregate amount of $100,000
incurred by Industries with respect to periods ending on or prior
to the Effective Time to the extent that such liabilities and
obligations (x) are not attributable to Micro, Entertainment, any
of their respective Covered Persons or any Covered Person of
Industries, (y) have not been reserved for on the December 31,
1995 balance sheet of any Ingram Company and (z) are extraordinary
and non-recurring in nature and arise other than in the ordinary
course of business (in which case, all of such liabilities and
obligations in excess of $1.00 shall be assumed or retained
pursuant to this Section 3.1(b)(ii) and Industries shall be
reimbursed for any excess amounts paid in respect of such
liabilities and obligations pursuant to Section 3.1(a)(iii));
(iii) (x) liabilities and obligations, to the extent
accrued on December 31, 1995 (and not otherwise included in
amounts to be allocated to the parties hereto pursuant to the
provisions of Section 6.5 or Section 7.12 of the Exchange
Agreement), incurred by Industries under the Ingram Industries
Inc. Supplemental Executive Retirement Plan and the Ingram
Supplemental Thrift Plan in respect of E. Bronson Ingram, Neil N.
Diehl, Linwood A. Lacy, Jr., John M. Donnelly, David F.
Sampsell and Philip M. Pfeffer and (y) liabilities and
obligations incurred by Industries in an amount equal to (A) the
aggregate purchase price paid by Industries for up to 135,000
shares of common stock of Micro purchased by Industries in the
initial public offering of Micro common stock, plus (B) if
Industries does not purchase 135,000 shares of Micro common stock
in such initial public offering, the product of (1) 135,000, less
the number of shares actually purchased in such initial public
offering, and (2) the price of one share of Micro common stock
sold in such initial public offering;
(iv) liabilities and obligations incurred by Industries in
an amount equal to the loss recognized in connection with the
disposition and winding up of the business by Industries of Ingram
Merchandising Services Inc. ("IMS") to the extent that such loss
causes the equity of IMS as reported on a stand alone basis to be
less than $8,956,000;
(v) liabilities and obligations incurred by Industries in
an amount equal to the sum of (x) the loss recognized in
connection with the disposition by Industries of its partnership
interest in Magnolia Coal Terminal ("Magnolia") or a disposition
by Magnolia of all or substantially all of its assets (which loss
shall be calculated after taking into account (A) expenses
incurred, and indemnification payments received, after December
31, 1995 in connection with environmental matters relating to such
investment, (B) distributions received after December 31, 1995 in
respect of such investment and (C) contributions made after
December 31, 1995 with respect to such investment) and (y) the
Carrying Cost of such investment from and after December 31, 1995;
(vi) liabilities and obligations up to an aggregate amount
of $4,500,000 payable in connection with the settlement following
December 31, 1995 of Bluewater Insurance, Ltd. claims arising
under the treaties set forth on Schedule 3.1(a)(v), in excess of
the first $4,500,000 of such liabilities and obligations; and
(vii) liabilities and obligations up to an aggregate amount
of $2,500,000 incurred by Industries or Ingram Ohio Barge Co.
("IOBC") pursuant to the guarantees by Industries and IOBC of the
obligations of IOBC under the 1974 charter agreement with Mellon
Bank, as Owner Trustee, and the 1975 charter agreement with Fleet
National Bank of Connecticut (formerly U.S. Trust), as such
guarantees may be amended, modified or supplemented from time to
time.
[(c) Notwithstanding anything herein to the contrary, each
party hereto agrees that, following the Effective Time and prior to the
Second Closing, Industries and Entertainment will be liable on a joint and
several basis for the obligations of Industries and Entertainment under
Section 3.1(a) and 3.1(b).]
(d) Without limiting the generality of the last sentence of
Section 7.6, nothing in this Agreement shall be deemed to give rise to, or
accelerate the performance of, any obligation of any party owing to a Person
other than a party to this Agreement.
SECTION 3.2. Certain Contingent Assets.
Upon the terms and subject to the conditions of this Agreement, the parties
hereto agree that each of the following assets shall be allocated 23.01% to
Industries, 72.84% to Micro and 4.15% to Entertainment:
(i) the amount by which the gain recognized in connection
with the disposition by Industries of its partnership interest in
Magnolia or a disposition by Magnolia of all or substantially all of
its assets (which gain shall be calculated after taking into account
(x) expenses incurred, and indemnification payments received, after
December 31, 1995 in connection with environmental matters relating
to such investment, (y) distributions received after December 31,
1995 in connection with such investment and (z) contributions made
after December 31, 1995 with respect to its investment in Magnolia)
exceeds the Carrying Cost of such investment from and after December
31, 1995;
(ii) the amount by which the proceeds recognized by
Industries in connection with the disposition by Industries of its
investment in common stock of Stream, Inc. as of December 31, 1995
exceed the sum of (x) $500,580 plus (y) the Carrying Cost of such
investment from and after December 31, 1995; and
(iii) the amount of net cash flow distributed to Industries
resulting from the sale and liquidation of the ownership interest
of Ingram Petroleum Service Inc. ("IPSI") in Ingram Cactus
Company ("Cactus") (net of applicable income taxes and after
liquidation of assets and liabilities of IPSI inclusive of the
cost of liquidating the Cactus subsidiaries), minus the book value
(net equity of IPSI calculated in accordance with generally
accepted accounting principles at December 31, 1995), minus the
Carrying Cost of Industries' equity investment in IPSI from and
after December 31, 1995. It is understood and agreed by the
parties that (1) an initial allocation of the net amount referred
to in this clause (iii) shall be made among the parties 30 days
after final determination of the working capital adjustment as
provided for in Section 1.11 (a) of the Purchase Agreement (the
"Cooper Agreement") with Cooper Cameron dated March 28, 1996,
which shall provide for Cactus' remaining unliquidated liabilities
and (2) a final allocation among the parties shall be made at such
time thereafter as all significant liabilities have been resolved
or the parties have mutually agreed on final provisions for all
significant unresolved liabilities; provided that the parties
shall use all reasonable efforts to cause such liabilities to be
resolved no later than 24 months after consummation of the
transactions contemplated by the Cooper Agreement.
SECTION 3.3. Certain Adjustments.
(a) Notwithstanding anything herein to the contrary, the
parties agree that, in consideration of distributions to Industries
previously made by Micro and Entertainment, no amounts shall be allocated
to, and no liabilities or obligations shall be assumed or borne by, Micro
or Entertainment pursuant to Section 6.5(a) or Section 7.12 of the Exchange
Agreement or pursuant to Article 3 of this Agreement, until the aggregate
of such amounts, costs, expenses, liabilities and obligations shall exceed
$20,778,000, in the case of Micro, or $1,160,000, in the case of
Entertainment, in which event such allocation or assumption shall be made
only to the extent of such excess. To the extent that the aggregate of
such costs, expenses, liabilities and obligations is less than $20,778,000
in the case of Micro, or $1,160,000 in the case of Entertainment,
Industries shall make a payment in the amount of such difference to Micro
or Entertainment, as the case may be.
(b) Notwithstanding anything herein to the contrary, the
amount of any gain or loss to be allocated among the Ingram Companies
pursuant to this Article 3 shall be determined after taking into account
the actual tax consequences of the recognition of such gain or loss to the
party recognizing such gain or loss (which consequences shall include, in
the case of any such gain, the amount of any tax imposed thereon and, in
the case of any such loss, any deduction to which such party becomes
entitled as a result thereof).
ARTICLE 4
GENERAL COVENANTS
Each party hereto agrees that:
SECTION 4.1. Conduct of the Business. From September 4,
1996 until the Second Closing (or, with respect to Micro, until the
Effective Time), such party shall conduct its business in the ordinary
course consistent with past practice and the published policies and
procedures of the Ingram Companies and use its best efforts to preserve
intact the business organizations and relationships with third parties and
keep available the services of the present employees of its business.
Without limiting the generality of the foregoing, from September 4, 1996
until the Second Closing (or, with respect to Micro, until the Effective
Time) and except in connection with the transactions contemplated hereby or
by the Ancillary Agreements (or, with respect to actions taken prior to the
Effective Time, as otherwise approved by the board of directors of
Industries), such party will not:
(a) enter into any lease, contract, agreement, commitment,
arrangement or transaction, other than in the ordinary course of business
consistent with past practice;
(b) sell, lease, license or otherwise dispose of any assets
except (i) pursuant to existing contracts or commitments or (ii) in the
ordinary course of business consistent with past practice;
(c) modify, amend, cancel, terminate, forfeit, assign or
encumber in any material manner, other than in the ordinary course of
business consistent with past practice, any existing material franchise,
license, permit, consent, authority, operating right, lease, contract,
agreement, commitment or arrangement;
(d) incur, assume or guarantee any indebtedness for borrowed
money other than in the ordinary course of business consistent with past
practice;
(e) declare, set aside or pay any dividend or other
distribution with respect to any shares of capital stock, or issue,
repurchase, redeem or otherwise acquire any outstanding shares of capital
stock or other ownership interests, other than in the ordinary course of
business consistent with past practice;
(f) amend any material term of any outstanding security;
(g) create or assume any lien on any material asset other
than in the ordinary course of business consistent with past practice;
(h) make any loan, advance or capital contribution to or
investment in any Person other than loans, advances or capital contributions
to or investments in wholly-owned subsidiaries or employees or as otherwise
made in the ordinary course of business consistent with past practice;
(i) (A) grant any severance or termination pay to any
director or officer, (B) enter into any individual employment, deferred
compensation or other similar agreement (or any amendment to any such
existing agreement) with any director, officer or employee, (C) change
benefits payable under existing severance or termination pay policies or
employment agreements or (D) change compensation, bonus or other benefits
payable to directors, officers or employees, other than, in the case of
each of clauses (A) through (D) above, in the ordinary course of business
consistent with past practice; or
(j) agree or commit to do any of the foregoing.
SECTION 4.2. Access; Confidentiality. (a) Each party
will, at and after the Effective Time, afford to each other party and its
agents reasonable access to its properties, books, records, employees and
auditors to the extent necessary to permit such other party to determine
any matter relating to its rights and obligations hereunder or to any
period ending at or before the Effective Time. Each of Industries and
Entertainment will, at and after the Second Closing, afford to the other
and its agents reasonable access to its properties, books, records,
employees and auditors to the extent necessary to permit such other party
to determine any matter relating to its rights and obligations hereunder or
to any period ending at or before the Second Closing.
(b) After the Effective Time, each party will hold, and will
use its best efforts to cause its respective officers, directors,
employees, accountants, counsel, consultants, advisors, agents and
Affiliates to hold, in confidence, unless compelled to disclose by judicial
or administrative process or by other requirements of law, all confidential
documents and information concerning the business of the other parties,
except (i) to the extent that such information can be shown to have been
(A) in the public domain through no fault of such party or (B) later
lawfully acquired by such party on a non-confidential basis or (ii) to the
extent that such documents and information are required to be furnished to
the lenders of such party in connection with guarantees of indebtedness
owing to such lenders that are furnished by such other parties. The
obligation of such party and its Affiliates to hold any such information in
confidence shall be satisfied if they exercise the same care with respect
to such information as they would take to preserve the confidentiality of
their own similar information.
SECTION 4.3. Best Efforts; Further Assurances. Subject to
the terms and conditions of this Agreement, the parties hereto will use their
best efforts (but without the payment of money) to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary or desirable
under applicable laws and regulations to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements. Each party
agrees to execute and deliver such other documents, certificates, agreements
and other writings and to take such other actions as may be reasonably
necessary or desirable in order to consummate or implement expeditiously the
transactions contemplated by this Agreement and the Ancillary Agreements.
SECTION 4.4. Loans; Repurchase Agreements. (a) Loans
that have been made by Industries to certain employees of Micro and
Entertainment shall be transferred by Industries as of the Effective Time to
Micro (with respect to employees of Micro) and to Entertainment (with respect
to employees of Entertainment), in each case in consideration for the
principal balance (plus accrued interest) of each such loan. Loans that have
been made after the Effective Time by Industries to certain employees of
Entertainment shall be transferred by Industries as of the Second Closing to
Entertainment, in consideration for the principal balance (plus accrued
interest) of each such loan.
(b) At or prior to the Effective Time, Micro shall enter into
bank repurchase agreements effective as of the Effective Time with respect to
the Micro securities to be received pursuant to the Exchange Agreement in
exchange for shares of Industries Common Stock (the "Currently Pledged Stock")
currently pledged as collateral for loans made by First American National
Bank, NationsBank, N.A. or NationsBank of Tennessee, N.A. to certain
stockholders of Industries. At or prior to the Second Closing, Entertainment
shall enter into bank repurchase agreements effective as of the Second Closing
with respect to the Entertainment securities to be received pursuant to the
Exchange Agreement in exchange for shares of Currently Pledged Stock. Such
repurchase agreements shall be in form and substance satisfactory to Micro or
Entertainment, as the case may be, it being understood that such repurchase
agreements shall be similar to Industries' current bank repurchase agreements.
Industries shall be released from its obligations under Industries' current
bank repurchase agreements with respect to the Currently Pledged Stock
exchanged in the Exchange. Such release shall be effective at the Effective
Time (with respect to shares of Currently Pledged Stock exchanged pursuant to
the Exchange Agreement at the Effective Time) and at the Second Closing (with
respect to shares of Currently Pledged Stock exchanged pursuant to the
Exchange Agreement at the Second Closing).
SECTION 4.5. Cross-Guarantees. Each of Industries and
Entertainment hereby agrees, upon the request of Micro, to guarantee, for
the fees and on the other terms and conditions set forth on Schedule 4.5,
(i) indebtedness incurred by Micro pursuant to credit facilities of Micro
entered into at or prior to the Effective Time or pursuant to any
replacements, refinancings or renewals thereof which do not increase the
aggregate amount of the indebtedness guaranteed and are on terms
substantially the same as the prior facilities or otherwise reasonably
acceptable to Industries and Entertainment, (ii) indebtedness incurred by
Micro the proceeds of which are used by Micro to repay indebtedness owing
to Industries, Entertainment or their respective Subsidiaries and (iii)
amounts payable by Micro under the Master Lease dated as of December 20,
1995 by and between Lease Plan North America, Inc. and Ingram Micro L.P.
Commencing at the Effective Time, Micro shall reimburse Entertainment or
Industries, as the case may be, for the difference between (x) the actual
cost of indebtedness incurred by Entertainment or Industries in connection
with any type of financing transaction (up to an amount of such financing
equal to the amount of indebtedness guaranteed by Entertainment or
Industries, as the case may be), and the amount which such portion of such
financing would have cost had all such guarantees been released at such
time and (y) any increased cost of existing indebtedness of Industries or
Entertainment arising as a result of the failure to have all guarantees
released at such time. Each of Entertainment and Industries agrees to give
Micro 75 days prior written notice of the incurrence by it of any
indebtedness (other than indebtedness incurred pursuant to facilities
entered into as of the Effective Time) subject to reimbursement as
described above. Such written notice shall set forth the proposed amount
of such indebtedness and shall specify the material terms and conditions of
such indebtedness being proposed at such time, to the extent known by
Entertainment or Industries at the time of such notice. Fees payable to
Industries and Entertainment pursuant to Schedule 4.5 for any month shall
be allocated between them in accordance with their relative book values as
of the end of the prior month.
SECTION 4.6. Public Announcements. The parties agree to
consult with each other before issuing any press release or making any public
statement with respect to this Agreement, the Ancillary Agreements or the
consummation of the transactions contemplated hereby and thereby and, except
as may be required by applicable law or any listing agreement with any
national securities exchange, will not issue any such press release or make
any such public statement without the prior written consent of all of the
parties hereto, which will not unreasonably be withheld.
SECTION 4.7. Notices of Certain Events. Each party hereto
shall promptly notify each other party of:
(i) any notice or other communication from any Person
alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement;
(ii) any notice or other communication from any governmental
or regulatory agency or authority in connection with the transactions
contemplated by this Agreement;
(iii) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge threatened, against, relating to or
involving or otherwise affecting such party challenging this
Agreement or any Ancillary Agreement or the transactions contemplated
hereby or thereby or seeking to prohibit, alter, prevent or
materially delay the Effective Time; and
(iv) any materially adverse developments affecting the
business and operations of such party which become known to it,
including without limitation any change which has had or is
reasonably likely to have a Material Adverse Effect on such party.
ARTICLE 5
SURVIVAL; INDEMNIFICATION
SECTION 5.1. Survival. The representations and warranties
of the parties hereto contained in this Agreement or in any certificate or
other writing delivered pursuant hereto or in connection herewith shall not
survive the Effective Time. The covenants and agreements to be performed
hereunder shall remain in full force and effect in accordance with their
terms (or, if no survival period is specified, indefinitely).
Notwithstanding the preceding sentence, any covenant or agreement in
respect of which indemnity may be sought under this Agreement shall survive
the time at which it would otherwise terminate pursuant to the preceding
sentence, if notice of the breach thereof giving rise to such right to
indemnity shall have been given to the party against whom such indemnity
may be sought prior to such time.
SECTION 5.2. Indemnification. Each party hereby
indemnifies each other party and its Affiliates against and agrees to hold
each of them harmless from any and all damage, loss, liability and expense
(including without limitation reasonable expenses of investigation and
reasonable attorneys' fees and expenses in connection with any action, suit
or proceeding, including any expenses incurred in connection with the
enforcement of rights of any party pursuant to this Agreement)
(collectively, "Loss") incurred or suffered by such other party or any of
its Affiliates arising out of:
(i) any breach of any covenant or agreement to be performed
by such party pursuant to this Agreement; and
(ii) the failure of such party to perform its obligations with
respect to any liability assumed (or retained) by such party pursuant
to Section 3.1.
SECTION 5.3. Procedures. (a) The party seeking
indemnification under Section 5.2 (the "Indemnified Party") shall give prompt
written notice to the party against whom indemnity is sought (the
"Indemnifying Party") of any claim, assertion, event or proceeding of which
such Indemnified Party has knowledge concerning any Loss as to which such
Indemnified Party may request indemnification under such Section; provided
that the failure to give such notice shall not relieve the Indemnifying Party
from any liability under Section 5.2, except to the extent that the
Indemnifying Party has been prejudiced by such failure.
(b) With respect to any such claim or proceeding by or in
respect of a third party, the Indemnifying Party shall have the right to
direct, through counsel of its own choosing, reasonably satisfactory to the
Indemnified Party, the defense or settlement thereof at its own expense. If
the Indemnifying Party elects to assume the defense of any such claim or
proceeding, the Indemnifying Party thereby waives its right to contest its
obligation to indemnify the Indemnified Party pursuant to this Section with
respect to such claim or proceeding and the Indemnified Party may participate
in such defense, but in such case the expenses of the Indemnified Party shall
be paid by the Indemnified Party. The Indemnified Party shall provide the
Indemnifying Party with reasonable access to its records and personnel
relating to any such claim, assertion, event or proceeding during normal
business hours and shall otherwise cooperate with the Indemnifying Party in
the defense or settlement thereof, and the Indemnifying Party shall reimburse
the Indemnified Party for all of its reasonable out-of-pocket expenses in
connection therewith. Upon assumption of the defense of any such claim or
proceeding by the Indemnifying Party, the Indemnified Party shall not pay, or
permit to be paid, any part of any claim or demand arising from such asserted
liability for so long as the Indemnifying Party is diligently defending such
claim or demand, unless the Indemnifying Party consents in writing to such
payment or unless a final judgment from which no appeal may be taken is
entered against the Indemnified Party for such liability. If the Indemnifying
Party shall fail to assume and pursue the defense, the Indemnified Party shall
have the right to undertake the defense or settlement thereof at the
Indemnifying Party's expense (subject to the liability of the Indemnifying
Party pursuant to Section 5.2). No third party claim may be settled by the
Indemnified Party without the written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld. Any such settlement shall include
as an unconditional term thereof the giving by the claimant or the plaintiff
to the Indemnified Party of a release of the Indemnified Party from all
liability in respect of such claim; provided that if the Indemnifying Party
submits to the Indemnified Party a bona fide settlement offer from the third
party claimant of any claim (which settlement offer shall include as an
unconditional term of it the release by the claimant or the plaintiff to the
Indemnified Party from all liability in respect of such claim) and the
Indemnified Party refuses to consent to such settlement, then thereafter the
Indemnifying Party's liability to the Indemnified Party for indemnification
with respect to such claim shall not exceed the settlement amount included in
said bona fide settlement offer, and the Indemnified Party shall either assume
the defense of such claim or pay the Indemnifying Party's attorney's fees and
other out-of-pocket costs incurred thereafter in continuing the defense of
such claim.
(c) Each payment made pursuant to Section 5.2 of an amount
equal to $1,000,000 or more shall be made promptly following final
determination of such claim and each such payment of an amount of less than
$1,000,000 shall be made no later than the end of the calendar quarter next
following the date on which the amount of such claim was finally determined.
Any such payment shall be limited to the amount of any liability or damage
that remains after deducting therefrom any indemnity, contribution or other
similar payment recoverable by the Indemnified Party from any third party with
respect thereto.
ARTICLE 6
TERMINATION
SECTION 6.1. Grounds for Termination. This Agreement shall
terminate in its entirety upon the termination of the Exchange Agreement
pursuant to Section 7.6(a) of the Exchange Agreement. Section 4.1
[others?] of this Agreement shall terminate upon the termination of the
Exchange Agreement pursuant to Section 7.6(b) of the Exchange Agreement.
SECTION 6.2. Effect of Termination. If this Agreement is
terminated as permitted by Section 6.1, such termination shall be without
liability of any party (or any stockholder, director, officer, employee,
agent, member, consultant or representative of such party) to the other
parties to this Agreement.
ARTICLE 7
MISCELLANEOUS
SECTION 7.1. Headings. The headings in this Agreement are
for convenience of reference only and shall not control or affect the
meaning or construction of any provision hereof.
SECTION 7.2. Entire Agreement. This Agreement, the
Ancillary Agreements, the Exchange Agreement, the Related Agreements (as
defined in the Exchange Agreement) and the Board Representation Agreement
(as defined in the Exchange Agreement) constitute the entire agreement and
understanding of the parties hereto in respect of the subject matter
contained herein and therein. This Agreement and such other agreements
supersede all prior agreements and understandings between the parties
hereto with respect to the subject matter hereof and thereof.
SECTION 7.3. Notices. Any notice, request, instruction or
other document to be given hereunder by any party hereto to another party
hereto shall be in writing (including telecopier or similar writing) and
shall be given to such party at its address set forth on the signature
pages hereof, or to such other address as the party to whom notice is to be
given may provide in a written notice to the party giving such notice, a
copy of which written notice shall be on file with the Secretary of
Industries. If notice is given pursuant to this Section of a permitted
successor or assign of a party to this Agreement, then notice shall
thereafter be given as set forth above to such successor or assign of such
party to this Agreement. Each such notice, request or other communication
shall be effective (i) if given by telecopy, when such telecopy is
transmitted to the telecopy number specified on the signature pages hereof
and electronic or oral confirmation of receipt is received, (ii) if given
by mail, at the close of business on the third business day hours after
such communication is deposited in the mails with first class postage
prepaid addressed as aforesaid or (iii) if given by any other means, when
delivered at the address specified in this Section 7.3.
SECTION 7.4. Applicable Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of
Tennessee without regard to the conflicts of law rules of such state.
SECTION 7.5. Severability. The invalidity or
unenforceability of any provision of this Agreement in any jurisdiction
shall not affect the validity, legality or enforceability of the remainder
of this Agreement in such jurisdiction or the validity, legality or
enforceability of this Agreement, including any such provision, in any
other jurisdiction, it being intended that all rights and obligations of
the parties hereunder shall be enforceable to the fullest extent permitted
by law.
SECTION 7.6. Successors, Assigns, Transferees. No party
may assign or otherwise transfer any of its rights under this Agreement
without the consent of each other party. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and
their respective heirs, successors and permitted assigns. Neither this
Agreement nor any provision hereof shall be construed so as to confer any
right or benefit upon any Person other than the parties to this Agreement,
those who agree to be bound hereby and their respective successors and
permitted assigns.
SECTION 7.7. Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be an original with the
same effect as if the signatures thereto and hereto were upon the same
instrument.
SECTION 7.8. Amendments and Waivers. (a) Any provision of
this Agreement may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed, in the case of an amendment, by each
party to this Agreement, or in the case of a waiver, by the party against
whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
SECTION 7.9. Consent to Jurisdiction. Each party hereto
irrevocably submits to the non-exclusive jurisdiction of any Tennessee
State Court or United States Federal Court sitting in the Middle District
of Tennessee over any suit, action or proceeding arising out of or relating
to this Agreement. Each party hereto waives any right it may have to
assert the doctrine of forum non conveniens or to object to venue to the
extent any proceeding is brought in accordance with this Section 7.9.
Nothing in this paragraph shall affect or limit any right to serve process
in any manner permitted by law, to bring proceedings in the courts of any
jurisdiction or to enforce in any lawful manner a judgment obtained in one
jurisdiction in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of
the day and year first above written.
INGRAM INDUSTRIES INC.
By:____________________________
Name:
Title:
One Belle Meade Place
4400 Harding Road
Nashville, TN 37205
Telecopy: (615) 298-8242
INGRAM MICRO INC.
By:____________________________
Name:
Title:
1600 East Saint Andrew Place
Santa Ana, CA 92705
Telecopy: 714-566-7900
INGRAM ENTERTAINMENT INC.
By:____________________________
Name:
Title:
Two Ingram Blvd.
La Vergne, TN 37086
Telecopy: 615-287-4985
EXHIBIT 10.15
BOARD REPRESENTATION AGREEMENT
AGREEMENT dated as of __________ among Ingram Micro Inc., a Delaware
corporation ("Micro"), and each Person listed on the signature pages hereof.
WHEREAS, Micro believes it is in the best interest of Micro and its
stockholders to become a free standing corporation rather than a subsidiary of
Ingram Industries Inc. ("Industries"); and
WHEREAS, Micro believes that the proposed Split-Off (as defined herein)
from Industries will facilitate its ability to raise capital, including its
initial public offering, and will allow Micro to more effectively design
incentives for its employees, all to the benefit of Micro and its
stockholders; and
WHEREAS, the Family Stockholders (as defined herein) are willing to
relinquish certain rights in exchange for the bargained for provisions of this
Agreement (all of which are, and are intended to be, an inducement for the
Family Stockholders to effect the Split-Off); and
WHEREAS, the parties hereto desire to provide for certain rights and
obligations relating to the composition and qualifications of the board of
directors of Micro following the date hereof;
Accordingly, in consideration of the mutual promises herein contained
and other good and valuable consideration, the receipt, sufficiency and
mutuality of which are hereby acknowledged by each of the parties hereto, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 Definitions.
(a) The following terms, as used herein, have the following meanings:
"Approving Family Stockholders" means the QTIP Marital Trust created
under the E. Bronson Ingram Revocable Trust Agreement dated January 4, 1995,
Martha R. Ingram, Orrin H. Ingram, II, John R. Ingram, David B. Ingram, Robin
B. Ingram Patton, E. Bronson Ingram 1995 Charitable Remainder 5% Unitrust,
Martha and Bronson Ingram Foundation, Trust for Orrin Henry Ingram, II, under
Agreement with E. Bronson Ingram dated October 27, 1967, Trust for the Benefit
of Orrin Henry Ingram, II, under Agreement with E. Bronson Ingram dated June
14, 1968, Trust for Orrin Henry Ingram, II, under Agreement with Hortense B.
Ingram dated December 22, 1975, The Orrin H. Ingram Irrevocable Trust dated
July 9, 1992, Trust for the Benefit of Orrin H. Ingram established by Martha
R. Rivers under Agreement of Trust originally dated April 30, 1982, as
amended, Trust for John Rivers Ingram, under Agreement with E. Bronson Ingram
dated October 27, 1967, Trust for John Rivers Ingram, under Agreement with
Hortense B. Ingram dated December 22, 1975, The John R. Ingram Irrevocable
Trust dated July 9, 1992, Trust for the Benefit of John R. Ingram established
by Martha R. Rivers under Agreement of Trust originally dated April 30, 1982,
as amended, The John and Stephanie Ingram Family 1996 Generation Skipping
Trust, Trust for David B. Ingram, under Agreement with Hortense B. Ingram
dated December 22, 1975, The David B. Ingram Irrevocable Trust dated July 9,
1992, Trust for the Benefit of David B. Ingram established by Martha R.
Rivers under Agreement of Trust originally dated April 30, 1982, as amended,
David and Sarah Ingram Family 1996 Generation Skipping Trust, Trust for Robin
Bigelow Ingram, under Agreement with E. Bronson Ingram dated October 27, 1967,
Trust for Robin Bigelow Ingram, under Agreement with Hortense B. Ingram dated
December 22, 1975, The Robin Ingram Patton Irrevocable Trust, dated July 9,
1992 and Trust for the Benefit of Robin B. Ingram established by Martha R.
Rivers under Agreement of Trust originally dated April 30, 1982, as amended,
and all Permitted Transferees of each such Person.
"Approving Voting Power" means, as of any date, the number of votes able
to be cast pursuant to Section 2.5(d) by the Approving Family Stockholders
consistent with Exhibit A hereto.
"Board" means the board of directors of Micro.
"Fair Market Value" means with respect to the Micro Common Shares, as of
any given date or dates, the reported closing price of a share of such class
of common stock on such exchange or market as is the principal trading market
for such class of common stock. If such class of common stock is not traded
on an exchange or principal trading market on such date, the fair market value
of a Micro Common Share shall be determined by the Board in good faith taking
into account as appropriate recent sales of the Micro Common Shares, recent
valuations of the Micro Common Shares, the lack of liquidity of the Micro
Common Shares, the fact that the Micro Common Shares may represent a minority
interest and such other factors as the Committee shall in its discretion deem
relevant or appropriate.
"Family Agent" means a Person appointed by a majority of the Approving
Voting Power of the Approving Family Stockholders from time to time as
provided in Section 3.13 of this Agreement.
"Family Stockholders" means the Persons listed on the signature pages
hereof (other than Micro) and all Permitted Transferees of each such Person.
"Independent" means, with respect to any Person, a Person who shall (i)
not be an executive officer or other employee of Micro and (ii) not be a
member of the Ingram Family.
"Ingram Family" means Martha R. Ingram, her descendants (including
adopted persons and their descendants) and their respective spouses.
"Micro Common Shares" means the shares of common stock of Micro,
including the Class B common stock and the Class A common stock, par value
$0.01 per share, of Micro.
"Outstanding Voting Power" means, as of any date, the number of votes
able to be cast for the election of directors represented by all Micro Common
Shares outstanding on such date.
"Permitted Transferee" means, with respect to any Family Stockholder,
any of the other Family Stockholders or any of their respective spouses,
descendants (including adopted persons and their descendants), estates,
affiliates or any trust or other entities for the benefit of any of the
foregoing Persons and beneficiaries of the E. Bronson Ingram QTIP Marital Trust
upon the death of Martha R. Ingram, whether the transfer occurs voluntarily
during life or at death, whether by appointment, will or intestate descent or
distribution. Without limiting the generality of the foregoing, transfers
from the QTIP Marital Trust created under the E. Bronson Ingram Revocable
Trust Agreement dated January 4, 1995 to the Martha and Bronson Ingram
Foundation, the Ingram Charitable Fund or any of the other beneficiaries
thereof shall be deemed to be transfers to Permitted Transferees.
"Person" means an individual, corporation, partnership, limited
liability company, trust, association or any other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
"Split-Off" means the contemplated distribution by Industries of all the
stock of Micro and Ingram Entertainment Inc. to certain stockholders of
Industries effected in accordance with Section 355 of the Internal Revenue
Code of 1986, as amended.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
<TABLE>
<S> <C> <C>
Term Section
---- -------
Approving Family Stockholder Notice.... 2.5
Date of Confirmation................... 2.5
Family Directors....................... 2.2
Independent Directors.................. 2.2
Management Director.................... 2.2
Significant Actions.................... 2.5
</TABLE>
ARTICLE 2
BOARD COMPOSITION AND CORPORATE GOVERNANCE
SECTION 2.1 Number of Directors; Term; Quorum; Vote. The bylaws of
Micro shall provide for a Board consisting of at least seven and no more than
nine members. The term of each director will be one year, commencing
immediately following the annual meeting of stockholders at which such
director is to be elected and ending at such time after the next annual
meeting of stockholders as his or her successor is elected and qualified or
upon such director's death, or earlier resignation or removal in accordance
with this Agreement or applicable law. Except as otherwise provided herein,
the bylaws of Micro shall provide that the vote of a majority of the entire
Board of directors shall be required for all actions of the Board.
SECTION 2.2 Qualifications of Directors; Subsequent Nominations of
Directors.
(a) Composition and Qualifications of the Board. The Family
Stockholders agree to vote their shares of Micro Common Shares to cause the
Board, from and after the date of this Agreement and until their successors
and additional directors are duly elected and qualified in accordance with law
and the terms of this Agreement, to consist of the chief executive officer of
Micro, three individuals named by the Family Stockholders and who may be Family
Stockholders, and three individuals who shall be Independent and who shall
have been approved by the Family Stockholders. All subsequent nominations of
persons for election to the Board contained in proxy soliciting material
distributed on behalf of Micro during the term of this Agreement will be made
by the Nominating Committee, and all persons proposed to fill vacancies on the
Board, shall in each case be consistent with the provisions of Micro's bylaws
which shall provide the following qualifications for directors:
(i) Three individuals who are designated by the Family Stockholders
and who need not be Independent and may be Family Stockholders
(the "Family Directors");
(ii) One individual who is designated by the chief executive officer of
Micro, who need not be Independent and who may be the chief
executive officer of Micro (the "Management Director"); and
(iii) Three (in the case of a board consisting of seven directors), four
(in the case of a board consisting of eight directors) or five (in
the case of a board consisting of nine directors) individuals, as
the case may be from time to time, who shall be Independent (the
"Independent Directors").
(b) Addition of Eighth or Ninth Director. After the election and
qualification of the seven directors as set forth in this Section 2.2 above,
the Board may be expanded to eight or nine directors by the affirmative vote
of a majority of such seven or eight directors, as the case may be. Such
eighth and ninth directors shall have the qualifications of being nominated
by a majority of the Nominating Committee and shall be Independent. After the
initial qualification and election of such eighth and ninth directors as set
forth in this Section 2.2(b), any vacancy created by the death, resignation or
removal of such director shall be filled pursuant to Section 2.3 below.
SECTION 2.3 Filling of Vacancies. The bylaws of Micro shall provide
that if, as a result of the death, resignation or removal of a director, a
vacancy is created on the Board, the vacancy shall be filled in the following
manner with individuals with the following qualifications: (a) if the vacancy
resulted from the death, resignation or removal of a Family Director, the
vacancy shall be filled by vote of a majority of the remaining Family
Directors; (b) if the vacancy resulted from the death, resignation or removal
of the Management Director, the vacancy shall be filled by a person qualifying
to be a Management Director as designated by the chief executive officer of
Micro; and (c) if the vacancy resulted from the death, resignation or removal
of an Independent Director, the vacancy shall be filled by a person qualifying
to be an Independent Director nominated by the Nominating Committee and
approved by a majority of the entire Board then in office. The bylaws of Micro
shall provide that if such vacancy on the Board also creates a vacancy on any
committee thereof, the Board will appoint such replacement director elected in
accordance with this Section 2.3 to fill the committee position or positions
held by his or her predecessor.
SECTION 2.4 Committees.
(a) General. The bylaws of Micro shall provide for the designation,
qualification and composition of the Board committees as set forth below and
shall provide that all committees shall act by vote of the majority of the
entire number of directors which constitute the committee.
i. Nominating Committee. The Nominating Committee will consist
of three (3) directors, two of whom will be Family
Directors, and one of whom will be the Management Director.
ii. Executive Committee. The Executive Committee will consist
of three (3) directors, one of whom will be a Family
Director, one of whom will be the Management Director and
one of whom will be an Independent Director.
iii. Compensation Committee. The Compensation Committee will
consist of three (3) directors, one of whom will be a Family
Director, and two of whom will be Independent Directors.
The Compensation Committee shall establish the
compensation of all executive officers of Micro and shall
administer all stock option, purchase and equity
incentive plans.
iv. Audit Committee. The Audit Committee will consist of at
least three (3) directors. At least a majority of the
members of the Audit Committee will be Independent
Directors.
(b) Selection and Removal of Committee Members. The bylaws shall
provide that the Nominating Committee shall name the directors to serve on the
Board committees and shall direct the Nominating Committee to follow the
qualification requirements set forth in Sections 2.2 and 2.4(a). A Committee
member shall be subject to removal from his or her position as a Committee
member by the vote of a majority of the members of the Nominating Committee.
SECTION 2.5 Actions Requiring Consent of Approving Family Stockholders.
(a) Significant Actions. In addition to any vote required by
applicable law, the bylaws shall provide that so long as this Agreement
remains effective, the following actions ("Significant Actions") will not be
taken by or on behalf of Micro without the written approval of Approving
Family Stockholders, acting in their sole discretion, holding at least a
majority of the Approving Voting Power held by all of the Approving Family
Stockholders:
(i) any sale or other disposition or transfer of all or
substantially all of the assets of Micro (considered together with its
subsidiaries);
(ii) any merger, consolidation or share exchange involving Micro,
other than mergers effected for administrative reasons of subsidiaries
owned at least 90% by Micro which under applicable law can be effected
without stockholder approval;
(iii) any issuance (or transfer from treasury) of additional
equity, convertible securities, warrants or options with respect to the
capital stock of Micro, or any of its subsidiaries, or the adoption of
any additional equity plans by or on behalf of Micro or any of its
subsidiaries except for (A) options granted or stock sold in the
ordinary course of business pursuant to plans approved by the Family
Stockholders, and (B) the issuance of Micro Common Shares valued at
Fair Market Value in acquisitions as to which no approval is required
under subsection (iv) of this Section or as to which approval has been
obtained under subsection (iv) of this Section;
(iv) any acquisition by or on behalf of Micro or one of its
subsidiaries involving a total aggregate consideration in excess of 10%
of Micro's stockholders' equity calculated in accordance with generally
accepted accounting principles for the most recent quarter for which
financial information is available (after taking into account the amount
of any indebtedness for borrowed money to be assumed or discharged by
Micro or any of its subsidiaries and any amounts required to be
contributed, invested or borrowed by Micro or any of its subsidiaries if
such contribution, investment or borrowing is reasonably contemplated by
Micro to be necessary within 12 months after the date of the
acquisition);
(v) guaranteeing indebtedness of an entity other than a
subsidiary of Micro exceeding 5% of Micro's stockholders' equity
calculated in accordance with generally accepted accounting principles
for the most recent quarter for which financial information is available;
(vi) incurrence of indebtedness by Micro after the consummation
of the initial public offering of Micro Common Shares (other than
indebtedness incurred after the initial public offering of Micro which
renews or replaces a previously existing facility so long as the
aggregate amount of indebtedness is not increased) in a transaction which
could be reasonably expected to reduce Micro's investment rating lower
than one grade below the ratings of Micro by Moody's Investors Service
("Moody's"), Fitch Investors Service, L.P. ("Fitch") or Standard &
Poor's Rating Group ("Standard & Poor's") immediately following the
initial public offering, but in any event incurrence of indebtedness by
Micro after the consummation of the initial public offering which could
be reasonably expected to reduce such investment rating lower than Baa
by Moody's; BBB- by Fitch; or BBB- by Standard & Poor's; and
(vii) any other transaction having substantially the same effect
as a transaction described in clauses (i) through (vi) of this Section
2.5.
(b) Notices and Information Required To Be Given. Micro shall give
notice to each of the Approving Family Stockholders of any potential, proposed
or contemplated Significant Action, along with all information that Micro
believes in good faith that an Approving Family Stockholder might reasonably
consider to be material in deciding whether or not to approve such Significant
Action (an "Approving Family Stockholder Notice"). An Approving Family
Stockholder Notice will be given by Micro to each of the Approving Family
Stockholders as soon as is practicable under the circumstances, but in no
event later than five (5) days prior to the date on which the Significant
Action is expected to occur. Micro shall be deemed to have given the required
Approving Family Stockholder Notice to each Approving Family Stockholder when
the Family Agent receives such Approving Family Stockholder Notice consistent
with the requirements of Sections 2.5 and 3.3 and a copy of such Approving
Family Stockholder Notice is delivered to Bass, Berry & Sims PLC, Attention:
Leigh Walton, by telecopy to (615) 742-6298 or by physical delivery to 2700
First American Center, Nashville, TN 37238-2700.
(c) Consent Deemed to be Given. The approval of each Significant
Action required to be given by the Approving Family Stockholders consistent
with Section 2.5(a) will be deemed to have been given by the Approving Family
Stockholders if Micro does not receive communications from the Family Agent
withholding such approval within five (5) business days from the Date of
Confirmation. For purposes of this Section 2.5(c) "Date of Confirmation"
means the day Micro confirms the actual receipt of such Approving Family
Stockholder Notice by the Family Agent and Bass, Berry & Sims PLC consistent
with the requirements of Sections 2.5 and 3.3.
(d) Approving Family Stockholder Voting Power. With respect to any
vote pursuant to Section 2.5, and as of any given date, each Approving Family
Stockholder shall be entitled to cast a number of votes equal to (i) the
Outstanding Voting Power of all Micro Common Shares owned of record by such
Approving Family Stockholder, plus (ii) any voting power attributed to such
Approving Family Stockholder under Exhibit A hereto.
SECTION 2.6 Other Corporate Governance Provisions; Liability Insurance.
(a) Governance by Board. Micro will be managed by or under the
direction of its Board. The bylaws of Micro shall provide that each member of
the Board, and all committees of the Board, shall have at all times full
access to the books and records of Micro and all minutes of stockholder, Board
and committee meetings, proceedings and actions and that each member of the
Board shall have the right to add items to any agenda for a meeting of the
Board. The bylaws of Micro shall also provide that during the period of time
between each regularly scheduled meeting of the Board, management decisions
requiring the immediate attention of the Board may be made with the approval
of a majority of the members of the Executive Committee; provided, however,
that the Executive Committee will not have the authority to approve any of the
following items, all of which require the approval of the Board: (i) any
action that would require the approval of the holders of a majority of the
Approving Voting Power held by the Approving Family Stockholders under Section
2.5 above or that would require approval of the holders of a majority of the
Micro Common Shares under applicable law or under the certificate of
incorporation or bylaws of Micro (provided, however, that subject to
applicable law, the Board shall be entitled to delegate to the Executive
Committee the authority to negotiate and finalize actions, the general terms
of which have been approved by the Board); (ii) any acquisition with a total
aggregate consideration in excess of 2% of Micro's stockholders' equity
calculated in accordance with generally accepted accounting principles for the
most recent quarter for which financial information is available (after taking
into account the amount of any indebtedness to be assumed or discharged by
Micro or any of its subsidiaries and any amounts required to be contributed,
invested or borrowed by Micro or any of its subsidiaries); (iii) any action
outside of the ordinary course of business of Micro; or (iv) any other action
involving a material shift in policy or business strategy for the Board.
(b) Directors' Liability Insurance. Unless otherwise agreed by the
written consent of the Family Stockholders, Micro shall maintain, to the
extent commercially available at reasonable rates, for the benefit of the
directors adequate directors' liability insurance to cover the reasonably
anticipated risks associated with their positions. Micro shall enter into
contracts with directors which assure them of indemnification to the full
extent allowable by law both while they serve as directors and thereafter and
the Micro certificate of incorporation will include all applicable provisions
necessary to effect the maximum protection provided by Section 102(b)(7) of
the Delaware General Corporation Law.
SECTION 2.7 Agreement to Vote; Best Efforts.
(a) Generally. Each party to this Agreement agrees (i) to use its
best efforts to take all actions necessary to cause the Family Directors, the
Management Director and the Independent Directors to be elected or appointed
to the Board, (ii) to act in a manner consistent with the intent of this
Agreement in nominating and electing persons to be directors and in filling
any vacancy in the membership of the Board, and (iii) to take such other
necessary or appropriate actions as may be required to give effect to the
provisions of this Agreement.
(b) Amendment of Class A and B Shares. The provisions of the
certificate of incorporation of Micro relating to the Micro Common Shares will
not be altered without the consent of a majority of the Outstanding Voting
Power held by the Family Stockholders.
(c) Amendment of Bylaws. The bylaws of Micro shall provide that,
during the term of this Agreement, (i) the stockholders may alter, amend,
restate or repeal such bylaws or any of them, or make new bylaws, only by the
affirmative vote of the holders of 75 % of the voting power of the then
outstanding Micro Common Shares and (ii) the Board may alter, amend, restate
or repeal such bylaws or any of them, or make new bylaws, only by the
affirmative vote of three-quarters (3/4) of the members of the entire Board.
(d) No Conflicting Provisions of Certificate of Incorporation or
Bylaws. Except as may be required by applicable law, during the term of this
Agreement, the parties hereto agree to use their best efforts to prevent any
provision of Micro's certificate of incorporation or bylaws from containing
any terms inconsistent with the provisions of this Agreement, and from being
amended, modified, supplemented, restated or repealed in a manner inconsistent
with the provisions of this Agreement.
SECTION 2.8 Termination. This Agreement will terminate and be of no
further force or effect on the first date on which the Family Stockholders and
their Permitted Transferees together hold beneficially less than 25,000,000
Micro Common Shares (as such number is equitably adjusted to reflect stock
splits, stock dividends, recapitalizations or other transactions in the
capital stock of Micro).
ARTICLE 3
MISCELLANEOUS
SECTION 3.1 Headings. The headings in this Agreement are for
convenience of reference only and shall not control or affect the meaning or
construction of any provisions hereof.
SECTION 3.2 Entire Agreement. This Agreement constitutes the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. This Agreement supersedes all prior agreements and
understandings between the parties hereto with respect to the subject matter
hereof.
SECTION 3.3 Notices. Any notice, request, instruction or other
document to be given hereunder by any party hereto to another party hereto
shall be in writing (including telecopier or similar writing) and shall be
given to such party at its address set forth on the signature pages hereof, or
to such other address as the party to whom notice is to be given may provide
in a written notice to the party giving such notice, a copy of which written
notice shall be on file with the Secretary of Micro. Except as otherwise
provided herein, each such notice, request or other communication shall be
effective (i) if given by telecopy, when such telecopy is transmitted to the
telecopy number specified on the signature pages hereof and the appropriate
confirmation is received, (ii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid
addressed as aforesaid or (iii) if given by any other means, when delivered at
the address specified in this Section 3.3.
SECTION 3.4 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard
to the conflicts of law rules of such state.
SECTION 3.5 Severability. The invalidity or unenforceability of any
provisions of this Agreement in any jurisdiction shall not affect the
validity, legality or enforceability of the remainder of this Agreement in
such jurisdiction or the validity, legality or enforceability of this
Agreement, including any such provision, in any other jurisdiction, it being
intended that all rights and obligations of the parties hereunder shall be
enforceable to the fullest extent permitted by law.
SECTION 3.6 Successors, Assigns, Transferees. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, successors and permitted assigns. Notwithstanding
the foregoing, neither this Agreement nor any right, remedy, obligation or
liability arising hereunder or by reason hereof shall be assignable by any
party hereto; provided that each Family Stockholder agrees that, in connection
with any transfer by such Family Stockholder of Micro Common Shares after the
Split-Off to a Permitted Transferee (as defined herein), such Family
Stockholder shall assign its rights hereunder with respect to the shares so
transferred to the transferee of such Micro Common Shares. In such event, such
transferee shall execute and deliver to Micro an instrument or instruments
substantially in the form of Exhibit B hereto confirming that the transferee
has agreed to be bound, to the same extent and in the same manner as the
transferor, by the terms of this Agreement, a copy of which instrument shall
be maintained on file with the Secretary of Micro and shall include the
address of such transferee to which notices hereunder shall be sent. Neither
this Agreement nor any provision hereof shall be construed so as to confer any
right or benefit upon any Person other than the parties to this Agreement,
those who agree to be bound hereby and their respective successors and
permitted assigns.
SECTION 3.7 Amendments; Waivers.
(a) No failure or delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
(b) Neither this Agreement nor any term or provision hereof may be
amended or waived except by an instrument in writing signed, in the case of an
amendment, by each of the parties hereto and, in the case of waiver, by the
party against whom the enforcement of such waiver is sought.
SECTION 3.8 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original with the same effect as if
the signatures thereto and hereto were upon the same instrument.
SECTION 3.9 Remedies. The parties hereby acknowledge and agree that in
the event of any breach of this Agreement, the parties would be irreparably
harmed and could not be made whole by monetary damages. Each party hereto
accordingly agrees (i) not to assert by way of defense or otherwise that a
remedy at law would be adequate, and (ii) in addition to any other remedy to
which the parties may be entitled, that the remedy of specific performance of
this Agreement is appropriate in any action in court.
SECTION 3.10 Consent to Jurisdiction. Each party hereto irrevocably
submits to the non-exclusive jurisdiction of any court of the State of
Delaware or any United States Federal Court sitting in the State of Delaware
over any suit, action or proceeding arising out of or relating to this
Agreement. Each party hereto waives any right it may have to assert the
doctrine of forum non conveniens or to object to venue to the extent any
proceeding is brought in accordance with this Section 3.10. Nothing in this
paragraph shall affect or limit any right to serve process in any manner
permitted by law, to bring proceedings in the courts of any jurisdiction or to
enforce in any lawful manner a judgment obtained in one jurisdiction in any
other jurisdiction.
SECTION 3.11 Reliance on Corporate Records of Micro. For purposes of
this Agreement, Micro shall be entitled to determine the identity or existence
of one or more Family Stockholders, Approving Family Stockholders and their
Permitted Transferees by relying on the shareholder and other records of Micro.
SECTION 3.12 Actions by Family Stockholders. Except as otherwise
provided herein, all actions required to be taken hereunder by the Family
Stockholders shall be taken by the holders of a majority of the Outstanding
Voting Power held by the Family Stockholders.
SECTION 3.13 Actions by the Approving Family Stockholders; Family Agent.
(a) All actions required to be taken hereunder by the Approving Family
Stockholders shall be taken by the holders of a majority of the Approving
Voting Power held by the Approving Family Stockholders.
(b) The Approving Family Stockholders agree to appoint a Person to serve
as Family Agent on or before the date of the Split-Off, and to maintain a
Family Agent for the duration of this Agreement. The appointment of a Person
to serve as Family Agent shall become effective upon the receipt by Micro of a
written notice pursuant to Section 3.3 of such appointment by the holders of
a majority of the Approving Voting Power held by the Approving Family
Stockholders. The Family Agent is authorized to report the decisions of the
Approving Family Stockholders, and Micro shall be entitled to rely on a
written statement from the Family Agent as to actions taken by the Approving
Family Stockholders.
(c) A Family Agent shall serve in the agency capacity set forth in this
Agreement until (i) this Agreement terminates pursuant to Section 2.8 or (ii)
Micro receives notice from the holders of a majority of the Approving Voting
Power held by the Approving Family Stockholders that another Person has been
appointed as the Family Agent.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
INGRAM MICRO INC.
By:_________________________________
Name:
Title:
1600 East Saint Andrew Place
Santa Ana, California 92705
Telecopy: 714-566-7900
_______________________________________
Martha R. Ingram
120 Hillwood Drive
Nashville, TN 37215
_______________________________________
Orrin H. Ingram, II
1475 Moran Road
Franklin, TN 37069
_______________________________________
John R. Ingram
311 Jackson Boulevard
Nashville, TN 37205
_______________________________________
David B. Ingram
4417 Tyne Boulevard
Nashville, TN 37215
______________________________________
Robin B. Ingram Patton
1600 Chickering Road
Nashville, TN 37215
QTIP MARITAL TRUST CREATED UNDER
THE E. BRONSON INGRAM REVOCABLE
TRUST AGREEMENT DATED JANUARY 4, 1995
By: MARTHA R. INGRAM, ORRIN H.
INGRAM, JOHN R. INGRAM,
DAVID B. INGRAM AND ROBIN B. INGRAM
PATTON, as Co-Trustees
By:_________________________________
Name: Martha R. Ingram
Title: Co-Trustee
Address: 120 Hillwood Drive
Nashville, TN 37215
By:__________________________________
Name: Orrin H. Ingram
Title: Co-Trustee
Address: 1475 Moran Road
Franklin, TN 37069
By:__________________________________
Name: John R. Ingram
Title: Co-Trustee
Address: 311 Jackson Boulevard
Nashville, TN 37205
By:__________________________________
Name: David B. Ingram
Title: Co-Trustee
Address: 4417 Tyne Boulevard
Nashville, TN 37215
By:__________________________________
Name: Robin B. Ingram Patton
Title: Co-Trustee
Address: 1600 Chickering Road
Nashville, TN 37215
E. BRONSON INGRAM 1995 CHARITABLE
REMAINDER 5% UNITRUST
By: MARTHA R. INGRAM, as Trustee
By:____________________________________
Name: Martha R. Ingram
Title: Trustee
Address: 120 Hillwood Drive
Nashville, TN 37215
MARTHA AND BRONSON INGRAM
FOUNDATION
By: ORRIN H. INGRAM, JOHN R. INGRAM,
DAVID B. INGRAM, AND ROBIN BIGELOW
INGRAM PATTON, as Co-Trustees
By:____________________________________
Name: Orrin H. Ingram
Title: Co-Trustee
Address: 1475 Moran Road
Franklin, TN 37069
By:____________________________________
Name: John R. Ingram
Title: Co-Trustee
Address: 311 Jackson Boulevard
Nashville, TN 37205
By:____________________________________
Name: David B. Ingram
Title: Co-Trustee
Address: 4417 Tyne Boulevard
Nashville, TN 37215
By:____________________________________
Name: Robin Bigelow Ingram Patton
Title: Co-Trustee
Address: 1600 Chickering Road
Nashville, TN 37215
E. BRONSON INGRAM 1994
CHARITABLE LEAD ANNUITY TRUST
By: ORRIN H. INGRAM, JOHN R. INGRAM,
DAVID B. INGRAM, AND ROBIN B.
INGRAM PATTON, as Co-Trustees
By:____________________________________
Name: Orrin H. Ingram
Title: Co-Trustee
Address: 1475 Moran Road
Franklin, TN 37069
By:____________________________________
Name: John R. Ingram
Title: Co-Trustee
Address: 311 Jackson Boulevard
Nashville, TN 37205
By:____________________________________
Name: David B. Ingram
Title: Co-Trustee
Address: 4417 Tyne Boulevard
Nashville, TN 37215
By:____________________________________
Name: Robin B. Ingram Patton
Title: Co-Trustee
Address: 1600 Chickering Road
Nashville, TN 37215
TRUST FOR ORRIN HENRY INGRAM, II,
UNDER AGREEMENT WITH E. BRONSON
INGRAM DATED OCTOBER 27, 1967
By: SUNTRUST BANK, ATLANTA,
MARTHA R. INGRAM AND FREDERIC
B. INGRAM, AS CO-TRUSTEES
By:____________________________________
Name:
Title:
Address: SunTrust Bank, Atlanta
Attn: Thomas A. Shanks, Jr.
Trust Company Tower
25 Park Place, 2nd Floor
Atlanta, GA 30303
By:____________________________________
Name: Martha R. Ingram
Title: Co-Trustee
Address: 120 Hillwood Drive
Nashville, TN 37215
By:_____________________________________
Name: Frederic B. Ingram
Title: Co-Trustee
Address: 813 Greenway Dr.
Beverly Hills, CA 90210
TRUST FOR ORRIN HENRY INGRAM, II, UNDER
AGREEMENT WITH E. BRONSON INGRAM DATED
JUNE 14, 1968
By: SUNTRUST BANK, ATLANTA, AND
MARTHA R. INGRAM, AS CO-TRUSTEES
By:____________________________________
Name:
Title:
Address: SunTrust Bank, Atlanta
Attn: Thomas A. Shanks, Jr.
Trust Company Tower
25 Park Place, 2nd Floor
Atlanta, GA 30303
By:____________________________________
Name: Martha R. Ingram
Title: Co-Trustee
Address: 120 Hillwood Drive
Nashville, TN 37215
TRUST FOR ORRIN HENRY INGRAM, II, UNDER
AGREEMENT WITH HORTENSE B. INGRAM DATED
DECEMBER 22, 1975
By: SUNTRUST BANK, ATLANTA,
Trustee
By:____________________________________
Name:
Title:
Address: SunTrust Bank, Atlanta
Attn: Thomas A. Shanks, Jr.
Trust Company Tower
25 Park Place, 2nd Floor
Atlanta, GA 30303
THE ORRIN H. INGRAM IRREVOCABLE TRUST
DATED JULY 9, 1992
By: ROY E. CLAVERIE, as Trustee
By:____________________________________
Name: Roy E. Claverie
Title: Trustee
Address: 6107 Hickory Valley Road
Nashville, TN 37205
TRUST FOR THE BENEFIT OF ORRIN H. INGRAM
ESTABLISHED BY MARTHA R. RIVERS UNDER
AGREEMENT OF TRUST ORIGINALLY
DATED APRIL 30, 1982, AS AMENDED
By: ROY E. CLAVERIE, as Trustee
By:____________________________________
Name: Roy E. Claverie
Title: Trustee
Address: 6107 Hickory Valley Road
Nashville, TN 37205
TRUST FOR JOHN RIVERS INGRAM, UNDER
AGREEMENT WITH E. BRONSON INGRAM DATED
OCTOBER 27, 1967
By: SUNTRUST BANK, ATLANTA, MARTHA R.
INGRAM AND FREDERIC B. INGRAM, AS
CO-TRUSTEES
By:___________________________________
Name:_________________________________
Title:__________________________________
Address: SunTrust Bank, Atlanta
Attn: Thomas A. Shanks, Jr.
Trust Company Tower
25 Park Place, 2nd Floor
Atlanta, GA 30303
By:_______________________________________
Name: Martha R. Ingram
Title: Co-Trustee
Address: 120 Hillwood Drive
Nashville, TN 37215
By:________________________________________
Name: Frederic B. Ingram
Title: Co-Trustee
Address: 813 Greenway Dr.
Beverly Hills, CA 90210
TRUST FOR JOHN RIVERS INGRAM, UNDER
AGREEMENT WITH E. BRONSON INGRAM DATED
JUNE 14, 1968
By: SUNTRUST BANK, ATLANTA AND MARTHA R.
INGRAM, AS CO-TRUSTEES
By:____________________________________
Name:________________________________
Title:_________________________________
Address: SunTrust Bank, Atlanta
Attn: Thomas A. Shanks, Jr.
Trust Company Tower
25 Park Place, 2nd Floor
Atlanta, GA 30303
By:_______________________________________
Name: Martha R. Ingram
Title: Co-Trustee
Address: 120 Hillwood Drive
Nashville, TN 37215
TRUST FOR JOHN RIVERS INGRAM, UNDER
AGREEMENT WITH HORTENSE B. INGRAM DATED
DECEMBER 22, 1975
By: SUNTRUST BANK, ATLANTA, Trustee
By:__________________________________
Name:________________________________
Title:_________________________________
Address: SunTrust Bank, Atlanta
Attn: Thomas A. Shanks, Jr.
Trust Company Tower
25 Park Place, 2nd Floor
Atlanta, GA 30303
THE JOHN R. INGRAM IRREVOCABLE TRUST DATED
JULY 9, 1992
By: ROY E. CLAVERIE, as Trustee
By:________________________________
Name: Roy E. Claverie
Title: Trustee
Address: 6107 Hickory Valley Road
Nashville, TN 37205
TRUST FOR THE BENEFIT OF JOHN R. INGRAM
ESTABLISHED BY MARTHA R. RIVERS UNDER
AGREEMENT OF TRUST ORIGINALLY DATED APRIL
30, 1982, AS AMENDED
By: ROY E. CLAVERIE, as Trustee
By:_________________________________
Name: Roy E. Claverie
Title: Trustee
Address: 6107 Hickory Valley Road
Nashville, TN 37205
THE JOHN AND STEPHANIE INGRAM FAMILY 1996
GENERATION SKIPPING TRUST
By: WILLIAM S. JONES, as Trustee
By:____________________________________
Name: William S. Jones
Title: Trustee
Address: c/o Ingram Industries Inc.
4400 Harding Road
Nashville, TN 37205
TRUST FOR DAVID B. INGRAM, UNDER AGREEMENT
WITH E. BRONSON INGRAM DATED OCTOBER 27,
1967
By: SUNTRUST BANK, ATLANTA, MARTHA R.
INGRAM AND FREDERIC B. INGRAM, AS
CO-TRUSTEES
By:____________________________________
Name:
Title:
Address: SunTrust Bank, Atlanta
Attn: Thomas A. Shanks, Jr.
Trust Company Tower
25 Park Place, 2nd Floor
Atlanta, GA 30303
By:______________________________________
Name: Martha R. Ingram
Title: Co-Trustee
Address: 120 Hillwood Drive
Nashville, TN 37215
By:_______________________________________
Name: Frederic B. Ingram
Title: Co-Trustee
Address: 813 Greenway Dr.
Beverly Hills, CA 90210
TRUST FOR DAVID B. INGRAM, UNDER AGREEMENT
WITH E. BRONSON INGRAM DATED JUNE 14, 1968
By: SUNTRUST BANK, ATLANTA AND MARTHA R.
INGRAM, AS CO-TRUSTEES
By:____________________________________
Name:
Title:
Address: SunTrust Bank, Atlanta
Attn: Thomas A. Shanks, Jr.
Trust Company Tower
25 Park Place, 2nd Floor
Atlanta, GA 30303
By:______________________________________
Name: Martha R. Ingram
Title: Co-Trustee
Address: 120 Hillwood Drive
Nashville, TN 37215
TRUST FOR DAVID B. INGRAM, UNDER AGREEMENT
WITH HORTENSE B. INGRAM DATED DECEMBER
22, 1975
By: SUNTRUST BANK, ATLANTA, Trustee
By:____________________________________
Name:
Title:
Address: SunTrust Bank, Atlanta
Attn: Thomas A. Shanks, Jr.
Trust Company Tower
25 Park Place, 2nd Floor
Atlanta, GA 30303
THE DAVID B. INGRAM IRREVOCABLE
TRUST DATED JULY 9, 1992
By: ROY E. CLAVERIE, as Trustee
By:____________________________________
Name: ROY E. CLAVERIE
Title: Trustee
Address: 6107 Hickory Valley Road
Nashville, TN 37205
TRUST FOR THE BENEFIT OF DAVID B. INGRAM
ESTABLISHED BY MARTHA R. RIVERS UNDER
AGREEMENT OF TRUST ORIGINALLY DATED APRIL
30, 1982, AS AMENDED
By: ROY E. CLAVERIE, as Trustee
By:____________________________________
Name: Roy E. Claverie
Title: Trustee
Address: 6107 Hickory Valley Road
Nashville, TN 37205
DAVID AND SARAH INGRAM FAMILY 1996
GENERATION SKIPPING TRUST
By: THOMAS H. LUNN, AS TRUSTEE
By:_____________________________________
Name: Thomas H. Lunn
Title: Trustee
Address: 509 Sugartree Lane
Franklin, TN 37064
TRUST FOR ROBIN BIGELOW INGRAM, UNDER
AGREEMENT WITH E. BRONSON INGRAM DATED
OCTOBER 27, 1967
By: SUNTRUST BANK, ATLANTA MARTHA R.
INGRAM AND FREDERIC B. INGRAM, AS
CO-TRUSTEES
By:___________________________________
Name:______________________________
Title:_______________________________
Address: SunTrust Bank, Atlanta
Attn: Thomas A. Shanks, Jr.
Trust Company Tower
25 Park Place, 2nd Floor
Atlanta, GA 30303
By:______________________________________
Name: Martha R. Ingram
Title: Co-Trustee
Address: 120 Hillwood Drive
Nashville, TN 37215
By:_______________________________________
Name: Frederic B. Ingram
Title: Co-Trustee
Address: 813 Greenway Dr.
Beverly Hills, CA 90210
TRUST FOR ROBIN BIGELOW INGRAM, UNDER
AGREEMENT WITH E. BRONSON INGRAM DATED
JUNE 14, 1968
By: SUNTRUST BANK, ATLANTA AND MARTHA R.
INGRAM, AS CO-TRUSTEES
By:______________________________________
Name:_________________________________
Title:________________________________
Address: SunTrust Bank, Atlanta
Attn: Thomas A. Shanks, Jr.
Trust Company Tower
25 Park Place, 2nd Floor
Atlanta, GA 30303
By:_______________________________________
Name: Martha R. Ingram
Title: Co-Trustee
Address: 120 Hillwood Drive
Nashville, TN 37215
TRUST FOR ROBIN BIGELOW INGRAM, UNDER
AGREEMENT WITH HORTENSE B. INGRAM DATED
DECEMBER 22, 1975
By: SUNTRUST BANK, ATLANTA, Trustee
By:______________________________________
Name:_________________________________
Title:________________________________
Address: SunTrust Bank, Atlanta
Attn: Thomas A. Shanks, Jr.
Trust Company Tower
25 Park Place, 2nd Floor
Atlanta, GA 30303
THE ROBIN INGRAM PATTON IRREVOCABLE
TRUST DATED JULY 9, 1992
By: ROY E. CLAVERIE, as Trustee
By:_______________________________
Name: Roy E. Claverie
Title: Trustee
Address: 6107 Hickory Valley Road
Nashville, TN 37205
TRUST FOR THE BENEFIT OF ROBIN B. INGRAM
ESTABLISHED BY MARTHA R. RIVERS UNDER
AGREEMENT OF TRUST ORIGINALLY DATED APRIL
30, 1982, AS AMENDED
By: ROY E. CLAVERIE, as Trustee
By:_________________________________
Name: Roy E. Claverie
Title: Trustee
Address: 6107 Hickory Valley Road
Nashville, TN 37205
EXHIBIT A
Attribution of Approving Voting Power
1. With respect to any vote pursuant to Section 2.5, and as of any
given date, Martha R. Ingram shall be attributed and entitled to cast a number
of votes equal to the Outstanding Voting Power of all Micro Common Shares
owned by Trust for John Rivers Ingram, under an Agreement with E. Bronson
Ingram dated June 14, 1968, plus the Outstanding Voting Power of all Micro
Common Shares owned by Trust for David B. Ingram, under an Agreement with E.
Bronson Ingram dated October 27, 1967, plus the Outstanding Voting Power of
all Micro Common Shares owned by Trust for the Benefit of David Bronson
Ingram, dated June 14, 1968, plus the Outstanding Voting Power of all Micro
Common Shares owned by Trust for Robin Bigelow Ingram, under an Agreement with
E. Bronson Ingram dated June 14, 1968.
2. With respect to any vote pursuant to Section 2.5, and as of any
given date, Orrin H. Ingram, II shall be attributed and entitled to cast a
number of votes equal to twenty-five percent (25%) of the Outstanding Voting
Power of all Micro Common Shares owned by E. Bronson Ingram 1994 Charitable
Lead Annuity Trust.
3. With respect to any vote pursuant to Section 2.5, and as of any
given date, John R. Ingram shall be attributed and entitled to cast a number
of votes equal to twenty-five percent (25%) of the Outstanding Voting Power of
all Micro Common Shares owned by E. Bronson Ingram 1994 Charitable Lead
Annuity Trust.
4. With respect to any vote pursuant to Section 2.5, and as of any
given date, David B. Ingram shall be attributed and entitled to cast a number
of votes equal to twenty-five percent (25%) of the Outstanding Voting Power of
all Micro Common Shares owned by E. Bronson Ingram 1994 Charitable Lead
Annuity Trust.
5. With respect to any vote pursuant to Section 2.5, and as of any
given date, Robin B. Ingram Patton shall be attributed and entitled to cast a
number of votes equal to twenty-five percent (25%) of the Outstanding Voting
Power of all Micro Common Shares owned by E. Bronson Ingram 1994 Charitable
Lead Annuity Trust.
EXHIBIT B
FORM OF AGREEMENT TO BE BOUND
[DATE]
To the Parties to the Board Representation Agreement
Dated as of _______, ____
Ladies and Gentlemen:
Reference is made to the Board Representation Agreement (the
"Agreement") dated as of __________ among Ingram Micro Inc. and the Persons
listed on the signature pages thereof.
In consideration of the transfer to the undersigned of Micro Common
Shares (as defined in the Agreement), the undersigned hereby confirms and
agrees to be bound by all of the provisions of the Agreement applicable to the
transferor.
This letter shall be construed and enforced in accordance with the laws
of the State of Delaware without regard to the conflicts of law rules of such
state.
Very truly yours,
Permitted Transferee
EXHIBIT 10.17
Tax Sharing and Tax Services
Agreement
This Agreement is entered into the day of , 1996,
by and among Ingram Industries Inc. ("Industries"), Ingram Entertainment
Inc. ("Entertainment") and Ingram Micro Inc. ("Micro") (Entertainment
and Micro are sometimes hereinafter referred to collectively as the
"Subsidiaries" and individually as a "Subsidiary").
WHEREAS, Industries is the common parent corporation of an
affiliated group of corporations (the "Affiliated Group") within the
meaning of section 1504(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), which files consolidated federal income tax returns
("Consolidated Federal Returns");
WHEREAS, the Subsidiaries are currently wholly-owned subsidiaries of
Industries and members of the Affiliated Group;
WHEREAS, Industries files consolidated, combined or unitary state
income tax returns (collectively, "Consolidated State Returns") in certain
states for groups of corporations which include the Subsidiaries;
WHEREAS, Industries is distributing all of its stock in each of the
Subsidiaries to certain of the shareholders of Industries in split-off
transactions (each, a "Split-off" and together, the "Split-offs");
WHEREAS, the parties hereto desire to set forth their agreement
concerning the manner in which various matters relating to federal state
and foreign taxes based upon income (collectively, "Income Taxes") will be
handled after the dates of the Split-offs;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, the parties agree as follows:
1. Termination of Other Income Tax Sharing Agreements. Any existing
Income Tax sharing agreements or arrangements, whether written or
unwritten, between Industries and a Subsidiary shall terminate on the date
of the Split-off of such Subsidiary, (the "Subsidiary's Split-off Date"),
and this Agreement shall thereafter constitute the sole Income Tax sharing
agreement between Industries and such Subsidiary.
2. Filing of Income Tax Returns and Payment of Tax Liability.
(a) Federal Income Tax Returns.
(i) Return for Affiliated Group. Industries will prepare and file
the Consolidated Federal Return for the Affiliated Group for the taxable year
which includes a Subsidiary's Split-off Date.
(ii) Separate Federal Income Tax Returns. Industries shall prepare
on behalf of each Subsidiary, in consideration of a fee to be negotiated by
the parties, a separate federal income tax return for the short taxable year
of such Subsidiary which begins immediately after such Subsidiary's Split-off
Date.
(b) State Income Tax Returns.
(i) Consolidated State Income Tax Returns. Industries shall
prepare and file state income tax returns for the taxable year which includes
a Subsidiary's Split-off Date for those states in which Consolidated State
Returns are filed.
(ii) Separate State Income Tax Returns. With respect to those
states in which a Subsidiary files a separate income tax return, Industries
shall prepare on behalf of such Subsidiary, in consideration of a fee to be
negotiated by the parties, an income tax return for the taxable year of the
Subsidiary which includes such Subsidiary's Split-off Date. With respect to
those states in which Consolidated State Returns are filed in accordance with
Section 2(b)(i) above, Industries shall prepare on behalf of each Subsidiary,
in consideration of a fee to be negotiated by the parties, a separate income
tax return for the short taxable year of the Subsidiary which begins
immediately after such Subsidiary's Split-off Date.
(c) In preparing the Consolidated Federal Return and any Consolidated
State Returns for the taxable period which includes a Subsidiary's Split-off
Date, the items attributable to such Subsidiary for the portion of such
taxable period ending on the Subsidiary's Split-off Date shall be determined
by closing the books of the Subsidiary as of the Subsidiary's Split-off Date.
All such returns shall be prepared using the same procedures and on the same
basis as returns for prior periods, except as the parties hereto may otherwise
agree.
(d) Payment of Tax.
(i) Consolidated Federal and State Returns. Within thirty (30)
days after the Consolidated Federal Return and each Consolidated State
Return for the taxable year which includes a Subsidiary's Split-off Date is
filed, Industries shall notify such Subsidiary of the amount of the tax
liability reflected on such return which is allocable to such Subsidiary.
Such Subsidiary shall pay to Industries, within ten (10) days after the
date of such notice, the excess of the amount of tax liability reflected on
such tax return which is allocable to the Subsidiary over the amount
previously paid by such Subsidiary to Industries with respect to the
Subsidiary's tax liability for such taxable year, together with interest,
at the intercompany rate of interest determined by Industries' Treasury
Department (the "Inter-Company Rate") for such period, on such excess
amount for the period from the date the tax return is filed until the date
of payment by the Subsidiary. In the event that the amount of tax
liability reflected on such tax return which is allocable to the Subsidiary
is less than the amount previously paid by such Subsidiary to Industries
with respect to the Subsidiary's tax liability for such taxable year,
Industries shall pay such Subsidiary the difference, together with interest
at the Inter-Company Rate on such amount for the period from the date the
tax return is filed until the date of payment to the Subsidiary; provided,
however, that interest shall only be paid to the extent such Subsidiary's
overpayment was used to fund an underpayment by Industries or another
Subsidiary or interest on such overpayment was actually received from the
relevant taxing authority. Industries shall allocate the tax liability
reflected on the Consolidated Federal Return and each Consolidated State
Return in accordance with the method prescribed in Treas. Reg. Section
1.1552-1(a)(3).
(ii) Separate Federal and State Returns. Each Subsidiary
shall be responsible for the payment of any Income Tax liability reflected
on the Separate Income Tax returns prepared by Industries on behalf of such
Subsidiary pursuant to Sections 2(a)(ii) and 2(b)(ii) of this Agreement.
3. Subsequent Adjustments.
(a) In the event that adjustments are made to a Consolidated Federal
Return, a Consolidated State Return or a foreign or separate state Income
Tax return of Industries or a Subsidiary for any taxable year or portion
thereof ending on or before the date of the Split-off of Micro (the "Micro
Split-off Date"), whether by reason of an audit, amended return or
otherwise, and such adjustments result in an increase in the Income Tax
liability for such taxable period, the responsibility for the payment of
such increase in Income Tax liability and any interest, penalties, or
additions to tax imposed with respect to such increase (collectively, a
"Deficiency") shall, except as provided Section 3(c) and Section 4(b)
below, be determined in the following manner:
(i) The amount of a Deficiency shall first be offset against and
reduce the amount reflected in the reserve for taxes recorded on the books of
Industries as of the Micro Split-off Date (the "Reserve"). Industries shall be
responsible for payment of the amount of such Deficiency which is offset
against the Reserve in accordance with this Section 3(a)(i).
(ii) To the extent that the amount of a Deficiency exceeds the
balance in the Reserve (after giving effect to any prior reduction in the
Reserve made pursuant to this Agreement), the parties hereto shall be
responsible for the payment of the amount of such excess in the following
proportions:
Industries 23.01 percent
Micro 72.84 percent
Entertainment 4.15 percent;
(iii) Provided, however, that in the event that a Deficiency
involves a timing issue and results in a decrease in income or an increase
in a deduction, credit or other tax attribute (an "Offsetting Adjustment")
for a taxable period or portion thereof beginning after the Micro Split-off
Date, the amount of the Deficiency to be taken into account for purposes of
applying Sections 3(a)(i) and 3(a)(ii) above shall be reduced by the
present value (using a discount rate equal to 10 percent) of the tax
benefit (based on the applicable maximum corporate tax rate in effect on
the date of such adjustment) which will result from the Offsetting
Adjustment and the Subsidiary benefiting from such Offsetting Adjustment
shall pay 100 percent of the foregoing reduction in the Deficiency.
(b) In the event that a Deficiency is imposed with respect to a
Consolidated Federal Return or Consolidated State Return, or a foreign or a
separate state Income Tax Return of Entertainment, and any portion of such
Deficiency is attributable to items of Entertainment for the period beginning
immediately after the Micro Split-off Date and ending on the date of the
Split-off of Entertainment (the "Interim Period"), such portion of the
Deficiency (the "Interim Period Deficiency") shall first be offset against and
reduce the amount reflected in the reserve for taxes recorded on the books of
Industries for the Interim Period (the "Interim Period Reserve"), which shall
be established using the same procedures and on the same basis as in prior
periods. Industries shall be responsible for payment of the amount of any
Interim Period Deficiency which is offset against the Interim Reserve pursuant
to this Section 3(b). To the extent that the Interim Period Deficiency exceeds
the balance in the Interim Period Reserve (after giving effect to any prior
reduction in the Interim Period Reserve made under this Agreement),
Entertainment shall be solely responsible for the payment of the amount of
such excess.
(c) Notwithstanding the provisions of Section 3(a) or 3(b), (i) if
either the Split-off of Micro or the Split-off of Entertainment fails to
qualify for tax-free treatment under Section 355 of the Code as the result
of the breach by one of Industries, Micro or Entertainment of a
representation or covenant contained in Section 6.2 or Section 6.3 of the
Amended and Restated Exchange Agreement dated September 4, 1996, as amended
and restated on October 17, 1996 (the "Exchange Agreement"), to which
Industries and the Subsidiaries are parties, the responsibility for the
payment of any resulting Deficiency shall be borne solely by the
corporation which committed such breach; and in the event the Deficiency
results from the breach by more than one of the corporations of such
representations or covenants, the responsibility for the payment of the
Deficiency shall be shared by each of the corporations which committed such
breach in the proportion which the percentage specified for such
corporation in Section 3(a)(ii) bears to the sum of the percentages
specified therein for each of the corporations which committed such breach;
and (ii) if a Deficiency is attributable to a transaction, other than the
Split-offs, which was consummated pursuant to the Amended and Restated
Reorganization Agreement dated September 4, 1996, as amended and restated
on October 17, 1996 (the "Reorganization Agreement"), among Industries,
Micro and Entertainment, the responsibility for the payment of such
Deficiency shall be borne 23.01 percent by Industries, 72.84 percent by
Micro and 4.15 percent by Entertainment, as determined after the
application of the procedures set forth in Section 3(a)(iii), if
appropriate.
(d) In the event that the Split-off of Entertainment fails to
qualify for tax-free treatment under Section 355 of the Code and Section
3(c)(i) of this Agreement is not applicable, the amount of the resulting
Deficiency shall first be offset against and reduce the amount reflected in
the Interim Reserve and, to the extent that such Deficiency exceeds the
balance in the Interim Reserve (after giving effect to any prior reduction
in the Interim Reserve made under this Agreement), shall then be offset
against and reduce the balance reflected in the Reserve (after giving
effect to any prior reduction in the Reserve made under this Agreement);
provided, however, that no such offset against and reduction of the Reserve
shall be permitted if (i) the Split-off of Entertainment was not completed
in accordance with the provisions of the Exchange Agreement and the
Reorganization Agreement, or (ii) the facts and circumstances of the Split-
off of Entertainment differed in any material respect from the description
thereof (including the representations relating thereto) set forth in the
private letter ruling dated October 16, 1996 from the Internal Revenue
Service regarding the Split-offs unless a supplemental private letter
ruling reasonably satisfactory to Micro addressing any such differences is
obtained prior to such Split-off. Industries shall be responsible for the
payment of the amounts of such resulting Deficiency which are offset
against the Interim Reserve and the Reserve in accordance with this Section
3(d). To the extent that the amount of the resulting Deficiency exceeds
the amount offset against the Interim Reserve and the Reserve under this
Section 3(d), the responsibility for the payment of such excess amount
shall be borne 23.01 percent by Industries, 72.84 percent by Micro and 4.15
percent by Entertainment. In all other instances, the Deficiency shall be
borne 84.72 percent by Industries and 15.28 percent by Entertainment.
4. Refunds.
(a) In the event that a refund of Income Tax (other than a
refund attributable to a carryback of a loss or tax credit) is received by
Industries with respect to a Federal Consolidated Return or a State
Consolidated Return for any taxable year or portion thereof ending on or
before a Subsidiary's Split-off Date, the portion of such refund which is
attributable to items of a Subsidiary shall be promptly paid by Industries
to such Subsidiary, together with any interest received on such portion;
provided, however, that in the event that a refund is received with respect
to an amount of a Deficiency which was paid by Industries or a Subsidiary
in accordance with Section 3 above, Industries and each Subsidiary shall be
entitled to the portion of such refund, together with interest thereon,
which is the same as the proportion of the Deficiency which was paid by
such party.
(b) In the event that a Subsidiary has a net operating loss, net
capital loss or credits against tax for a taxable year beginning after such
Subsidiary's Split-off Date which, under applicable federal or state law,
may be carried back to a Consolidated Federal Return or State Consolidated
Return for a taxable period or portion thereof of the Subsidiary which ends
on or before such Subsidiary's Split-off Date, Industries shall pay to such
Subsidiary, within ten (10) days of the receipt of such refund, the amount
of the Income Tax benefit actually received by the Affiliated Group or the
applicable state consolidated, combined or unitary group, as the case may
be, as a result of such carryback. The tax benefit received as a result of
a carryback shall be considered to be equal to the excess of (i)
the Income Taxes which would have been payable for the taxable period to which
the loss or credit is carried in the absence of such carryback over (ii) the
Income Taxes actually payable for such period after taking such carryback into
effect. In the event that any portion of a carryback is disallowed following
payment to a Subsidiary of the tax benefit received from such carryback, the
Subsidiary shall repay to Industries the amount which would not have been
payable to the Subsidiary hereunder if only the portion of the carryback
actually allowed had been taken into account.
5. Allocation of Items. In the case of an assessment or refund
which is imposed or received with respect to an Income Tax Refund filed for
a taxable period that includes but does not end on a Subsidiary's Split-off
Date, the amount of the assessment or refund which relates to the portion
of the taxable period ending on such Subsidiary's Split-off Date shall be
determined by allocating the items to which the assessment or refund
relates to the date on which such items are properly taken into account for
Income Tax purposes, and in the case of any item which cannot be allocated
to a specific date, by ratably allocating such item between the portion of
the taxable period ending on such Subsidiary's Split-off Date and the
portion of the taxable period beginning immediately after such Subsidiary's
Split-off Date based on the number of days in such respective portions.
6. Certain Changes. Following a Subsidiary's Split-off Date, neither
Industries nor such Subsidiary shall, without the prior written consent of the
other parties to this Agreement, make or change any Income Tax election, adopt
or change any accounting method, file any amended Income Tax Return or agree
to or settle any claim, proposed adjustment or assessment if such action would
result in an increase in Income Tax liability or a reduction in any deduction,
credit, loss or other Income Tax attribute for any taxable period or portion
thereof of Industries or such Subsidiary which ends on or before such
Subsidiary's Split-off Date.
7. Deductions Related to Options. It is agreed by the parties that
where an option to purchase stock of Industries which is held by an
employee of Industries or Entertainment is converted in connection with the
Micro Split-off into an option to purchase stock of Micro, and Micro issues
its stock to such employee pursuant to the exercise of the converted
option, then, to the extent that Industries or Entertainment is entitled to
an Income Tax deduction for the amount of compensation which results to the
employee from exercise of the converted option, Industries or Entertainment
shall pay to Micro the amount of the tax benefit received by such
corporation from the compensation deduction.
8. Contests. Industries shall have the right to control any audit,
administrative or judicial proceeding involving a claim, proposed
adjustment, assessment or other contest with respect to a Consolidated
Federal Return, Consolidated State Return, or a separate Income Tax return
filed by Industries or a Subsidiary for any taxable period or portion
thereof ending on or prior to such Subsidiary's Split-off Date, and
Industries shall have the right to determine when to settle such claim,
adjustment, assessment or contest; provided, however, that Industries shall
consult with a Subsidiary regarding any such proceeding to the extent that
such proceeding may affect the tax liability of such Subsidiary for a
taxable period or portion thereof beginning after such Subsidiary's Split-
off Date and shall obtain the consent of a Subsidiary, which consent shall
not be unreasonably withheld, to any proposed settlement if such settlement
would increase the tax liability of such Subsidiary for a taxable period or
portion thereof beginning after such Subsidiary's Split-off Date. The
legal fees and other expenses incurred by Industries in connection with any
such proceeding shall be borne 23.01 percent by Industries, 72.84 percent
by Micro and 4.15 percent by Entertainment for proceedings related to
periods ending on or before the Micro Split-off Date. For proceedings
relating to the Interim Period, any such fees and expenses shall be borne
84.72 percent by Industries and 15.28 percent by Entertainment. Industries
shall allow a Subsidiary and its counsel to participate in any such
proceeding to the extent that the proceeding relates to such Subsidiary,
and the legal fees and other expenses incurred by a Subsidiary in this
regard shall be borne by the parties in the same proportions set forth in
the immediately preceding sentence.
9. Cooperation and Assistance. Industries and each Subsidiary agree
to provide each other with such cooperation and information as either of
them may reasonably request in connection with the preparation of Income
Tax returns, amended returns, claims for refunds or other income tax
filings or the conduct of any audit, administrative or judicial proceeding
relating to Income Taxes. Industries and each Subsidiary further agree to
retain all books, records, documents, accounting data or other information
which relate to Income Tax returns for taxable periods ending on or prior
to or which include such Subsidiary's Split-off Date, until the expiration
of the applicable statute of limitations (giving effect to any extension,
waiver or mitigation thereof).
10. Governing Law. This Agreement shall be construed under and governed
by the laws of the State of Tennessee.
11. Headings. The headings contained in this Agreement are for
reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
12. Entire Agreement; Amendment; Waiver. This Agreement
constitutes the entire agreement between the parties with respect to the
subject matter hereof and may not be altered or amended except in writing
signed by the parties. The failure of a party hereto at any time to
require the performance of any provision hereunder shall in no manner
affect the right to enforce the same. No waiver by any party hereto of any
condition, or of the breach of any provision of this Agreement shall be
deemed or construed as a further or continuing waiver of any such condition
or of the breach of any other provision herein contained.
13. Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. This Agreement shall not be construed so as
to benefit any person other than the parties hereto and such successors and
assigns.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement on the date first written above.
INGRAM INDUSTRIES INC.
By: ___________________________
Title: ________________________
INGRAM ENTERTAINMENT INC.
By: ___________________________
Title: ________________________
INGRAM MICRO HOLDINGS INC.
By: ___________________________
Title: ________________________
EXHIBIT 10.18
MASTER SERVICES AGREEMENT
AGREEMENT dated as of [ ], 1996,(1) between Ingram
Industries Inc., a Tennessee corporation ("Industries") and Ingram Micro Inc.,
a Delaware corporation ("Micro").
In consideration of the mutual agreements contained herein, and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound, the parties hereto
agree as follows:
ARTICLE 1
PERFORMANCE OF SERVICES
SECTION 1.1. Provision of Services. (a) On the terms and
subject to the conditions of this Agreement, during the term of this Agreement
Industries agrees to provide to Micro and its Subsidiaries, or procure the
provision to Micro and its Subsidiaries of, and Micro (on behalf of itself and
its Subsidiaries) agrees to purchase from Industries, the services described
on the Schedules attached hereto (the "Services"), including without
limitation Services in connection with the administration of certain employee
benefit plans and arrangements set forth on such Schedules (the "Plans").
Notwithstanding anything herein to the contrary, Industries shall only perform
Services involving the administration of the Micro Thrift Plan (as defined in
the Employee Benefits Transfer and Assumption Agreement dated as of [ ],
1996 among the parties hereto) upon the written request of Micro (or an
appropriate committee designated thereby) and on the condition that the terms
of the Micro Thrift Plan are acceptable to Industries. Unless otherwise
specifically agreed by the parties, the Services to be provided or procured by
Industries hereunder shall be substantially similar in scope, quality and
nature to those provided to, or procured on behalf of, Micro and its
Subsidiaries prior to the date hereof.
_________________
(1) To be dated the Closing Date under the Exchange Agreement.
(b) Any administration of the Plans by Industries pursuant to
the terms hereof shall be subject to applicable regulatory requirements and
the terms of the governing plan documents as interpreted by the appropriate
plan fiduciaries. The parties shall cooperate fully with each other in the
administration and coordination of regulatory and administrative
requirements associated with the Plans. Such coordination, upon request,
will include (but not be limited to) the following: sharing payroll data
for determination of highly compensated associates, providing census
information (including accrued benefits) for purposes of running
discrimination tests, providing actuarial reports for purposes of
determining the funded status of any plan, review and coordination of
insurance and other independent third party contracts, and providing for
review of all summary plan descriptions, requests for determination
letters, insurance contracts, Forms 5500, financial statement disclosures
and plan documents.
SECTION 1.2. Service Fees; Expenses. (a) The Schedules
hereto indicate, with respect to each Service listed thereon, the method by
which fees (the "Service Fees") to be charged to Micro for such Service
will be determined. Micro agrees to pay to Industries in the manner set
forth in Section 1.3 the Service Fees applicable to each of the Services
provided by Industries to Micro (and its Subsidiaries) pursuant to the
terms hereof.
(b) In addition to any other amounts payable to Industries
hereunder, Micro shall reimburse Industries in the manner set forth in
Section 1.3 for (i) all out-of-pocket expenses (including without
limitation travel expenses, professional fees, printing and postage)
incurred by Industries in connection with the performance of Services
pursuant to this Agreement, to the extent that such expenses have not
already been taken into account in determining the Service Fees applicable
to such Services and (ii) without duplication, all costs and expenses
(including without limitation any contributions, premium costs and third-
party expenses), incurred by Industries in connection with its
administration of the Plans.
(c) In addition to any other amounts payable to Industries
hereunder, Micro shall reimburse Industries in the manner set forth in
Section 1.3 for any taxes, excises, imposts, duties, levies, withholdings
or other similar charges (excepting any charges for taxes due on
Industries' income) that Industries and its Subsidiaries may be required to
pay on account of Micro (and its Subsidiaries) in connection with the
performance of Services or with respect to payments made by Micro for such
Services pursuant to this Agreement.
SECTION 1.3. Invoicing and Settlement of Costs. (a)
Industries will deliver an invoice to Micro on a monthly basis (not later
than the fifth day of each accounting month) for (i) Service Fees in
respect of Services provided during the prior accounting month to Micro
(and its Subsidiaries) and (ii) other amounts owing to Industries pursuant
to Section 1.2. Except as otherwise provided in this Agreement, each such
invoice will be prepared and delivered in a manner substantially consistent
with the billing practices used in connection with services provided to
Micro prior to the date hereof; provided that each such invoice shall (A)
provide sufficient detail to identify each Service, the fee therefor and
the method of calculating such fee, (B) identify all third party costs
included in the invoice to the extent specifically billed and (C) include
such other data as may be reasonably requested by Micro. In addition,
Micro shall have the right to examine any and all books and records as it
reasonably requests in order to confirm and verify the calculation of the
amount of any payment pursuant to this Section and Industries shall
cooperate in any reasonable manner in such examination as Micro shall
request.
(b) Payment (including payment of any amounts disputed
pursuant to Section 1.3(c)) of each invoice shall be due from Micro on the
day (or the next business day, if such day is not a business day) that is
the later of (i) the third day prior to the end of the accounting month in
which such invoice was received and (ii) the tenth day after the receipt of
such invoice (each, a "Payment Date"), by wire transfer of immediately
available funds payable to the order of Industries. If Micro fails to make
any payment within 30 days of the relevant Payment Date, the party that has
failed to make such payment shall be obligated to pay, in addition to the
amount due on such Payment Date, interest on such amount at the prime, or
best rate announced by Nationsbank of Texas, N.A. per annum compounded
annually from the relevant Payment Date through the date of payment.
(c) In the event that Micro disputes any charges invoiced by
Industries pursuant to this Agreement, Micro shall deliver a written
statement describing the dispute to Industries within 15 days following
receipt of the disputed invoice. The statement shall provide a
sufficiently detailed description of the disputed items. The parties
hereto shall use their best efforts to resolve any such disputes. Amounts
not so disputed shall be deemed accepted. Disputed amounts resolved in
favor of Micro (together with interest on such amounts at the prime, or
best rate announced by Nationsbank of Texas, N.A. per annum compounded
annually from the date such disputed amounts were paid to Industries to the
next relevant Payment Date) shall be credited against payments owing by
Micro to Industries on the next relevant Payment Date.
(d) Unless otherwise specified on the Schedules hereto, in
the event that the actual utilization of a Service is less than the period
specified on such Schedules with respect to such Service, then the Service
Fees for such Service shall be prorated on the basis of actual utilization
of such Service; provided that the monthly charges shall not be prorated on
any period of time less than one day, the per diem charge shall not be
prorated on any period of time less than one-half day, and the hourly
charges shall not be prorated on any period of time less than one hour.
SECTION 1.4. Term. (a) The term of this Agreement shall
commence on the date hereof and shall end on December 31, 1996 (or, with
respect to payroll services provided to Micro, on December 31, 1997), unless
earlier terminated pursuant to the terms hereof. The provisions of Section
1.2 (with respect to amounts accrued prior to such termination) shall survive
any termination of this Agreement.
(b) At any time, Micro may request Industries to discontinue
performing all or any portion of the Services upon 45 days' prior written
notice.
SECTION 1.5. Limited Warranty. Industries will provide
the Services hereunder in good faith, with the care and diligence that it
exercises in the performance of such services for its divisions and
Subsidiaries. Micro hereby acknowledges that Industries does not regularly
provide to third parties services such as the Services as part of its
business and that, except as set forth in Section 1.1 or in this Section
1.5, Industries does not otherwise warrant or assume any responsibility for
its Services. The warranty stated above is in lieu of and exclusive of all
other representations and warranties of any kind whatsoever. EXCEPT AS
STATED ABOVE, THERE ARE NO WARRANTIES RELATING TO THE SERVICES OF ANY KIND,
EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
SECTION 1.6. Performance Remedy. In the event that
Industries fails to provide a Service hereunder, or the quality of a
Service is not in accordance with Section 1.1 or Section 1.5, Micro may
give Industries prompt written notice thereof. Industries will then have
thirty days to cure the defective Service. If after such period Industries
has failed to cure the defective Service, Micro may seek an alternative
provider for such Service and Industries shall discontinue performing such
Service at the written request of Micro. Micro shall be liable to
Industries for any Service performed by Industries after Industries has
been given written notice of termination of such Service pursuant to this
Section 1.6, except for any out-of-pocket costs incurred by Industries in
connection with the cessation of such Services or the transfer of such
Services back to Micro or its designees. Except as otherwise expressly
provided in Article 2, the provisions of this Section 1.6 will provide the
exclusive remedy for any misrepresentation, breach of warranty, covenant or
other agreement or other claim arising out of this Agreement or the
Services to be performed hereunder.
ARTICLE 2
INDEMNIFICATION
SECTION 2.1. Limitation of Liability. Micro agrees that
none of Industries, any of its Subsidiaries or any of their respective
directors, officers, agents and employees (each, an "Industries Indemnified
Person") shall have any liability, whether direct or indirect, in contract,
tort or otherwise, to Micro arising out of or attributable to the performance
or nonperformance of Services pursuant to this Agreement.
SECTION 2.2. Indemnification. (a) Micro agrees to and
does hereby indemnify and hold each Industries Indemnified Person harmless
from and against any and all damage, loss, liability and expense (including
without limitation reasonable expenses of investigation and reasonable
attorneys' fees and expenses in connection with any action, claim, suit or
proceeding, including any expenses incurred in connection with the
enforcement of the rights of such Industries Indemnified Person pursuant to
this Agreement) to which such Industries Indemnified Person may be
subjected as a result of a claim made by a third party arising out of or
attributable, directly or indirectly, (i) to the performance or
nonperformance for Micro of any Services or (ii) otherwise in connection
with this Agreement.
(b) The parties agree to follow the procedures set forth in
Section 5.3(a) and 5.3(b) of the Amended and Restated Reorganization
Agreement dated as of September 4, 1996, as amended and restated as of
October 17, 1996, among the parties hereto and Ingram Entertainment Inc.
with respect to any claim for indemnification made pursuant to this Section
2.2.
SECTION 2.3. Ownership of Work Product. (a) Except for
the data provided by Micro to Industries and the reports produced by
Industries for Micro pursuant to this Agreement, all proprietary tools and
methodologies and all written material including programs, tapes, listing
and other programming documentation which were preexisting or originated
and prepared by Industries pursuant to this Agreement shall belong to
Industries except as otherwise agreed by the parties in a separate written
agreement signed by each party.
(b) No license under any trade secrets, copyrights, or other
rights is granted by this Agreement or any disclosure hereunder.
(c) Micro shall have reasonable access to all data, records,
files, statements, records, invoices, billings, and other information
generated by or in custody of Industries relating to the Services provided
pursuant to this Agreement. Unless otherwise specified by Micro or
required by law, Industries shall maintain all such business records
pertaining to the Services and will retain the records pertaining to each
Service for a period of twelve months after the cessation of such Service.
At the request of Micro, Industries shall provide copies of records
pertaining to the Services.
ARTICLE 3
GENERAL PROVISIONS
SECTION 3.1. Parties. Nothing in this Agreement, express
or implied, is intended to confer upon any person not a party any rights and
remedies hereunder.
SECTION 3.2. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of
Tennessee, without regard to its conflict of laws provisions.
SECTION 3.3. Headings. The Section and other headings
contained in this Agreement are for reference purposes only and shall not in
any way affect the meaning or interpretation of this Agreement.
SECTION 3.4. Entire Agreement. This Agreement constitutes
the entire agreement between the parties in respect of the subject matter
contained herein and neither this Agreement nor any term or provision
hereof may be amended or waived except by an instrument in writing signed,
in the case of an amendment, by each party and, in the case of a waiver, by
the party against whom the waiver is to be effective.
SECTION 3.5. Assignments. This Agreement shall not be
assignable by either party without the written consent of the other parties
hereto. No assignment of any right or benefit hereunder shall relieve any
obligation of the assignor hereunder without the written consent of the other
parties.
SECTION 3.6. Notices. Any notice, request, instruction or
other document to be given hereunder by either party hereto to the other
party hereto shall be in writing (including telecopier or similar writing)
and shall be given to such party at its address set forth on the signature
pages hereof, or to such other address as the party to whom notice is to be
given may provide in a written notice to the party giving such notice, a
copy of which written notice shall be on file with the Secretary of
Industries. Each such notice, request or other communication shall be
effective (i) if given by telecopy, when such telecopy is transmitted to
the telecopy number specified on the signature pages hereof and the
appropriate confirmation is received, (ii) if given by mail, 72 hours after
such communication is deposited in the mails with first class postage
prepaid addressed as aforesaid or (iii) if given by any other means, when
delivered at the address specified in this Section 3.6.
SECTION 3.7. Definitions. Terms used but not defined
herein shall have the meanings set forth in the Amended and Restated
Reorganization Agreement dated as of September 4, 1996, as amended and
restated as of October 17, 1996 among the parties hereto and Ingram
Entertainment Inc.
SECTION 3.8. Severability. The invalidity or
unenforceability of any provisions of this Agreement in any jurisdiction
shall not affect the validity, legality or enforceability of the remainder
of this Agreement in such jurisdiction or the validity, legality or
enforceability of this Agreement, including any such provision, in any
other jurisdiction, it being intended that all rights and obligations of
the parties hereunder shall be enforceable to the fullest extent permitted
by law.
SECTION 3.9. Independent Contractors. The parties hereto
are independent contractors. Nothing in this Agreement is intended or
shall be deemed to constitute a partnership, agency, franchise or joint
venture relationship between the parties. No party shall incur any debts
or make any commitments for the others, except to the extent, if at all,
specifically provided herein.
SECTION 3.10. Remedies. The parties hereby acknowledge and
agree that in the event of any breach of this Agreement, the parties would
be irreparably harmed and could not be made whole by monetary damages.
Each party hereto agrees (i) not to assert by way of defense or otherwise
that a remedy at law would be adequate, and (ii) in addition to any other
remedy to which the parties may be entitled, that the remedy of specific
performance of this Agreement is appropriate in any action in court.
SECTION 3.11. Consent to Jurisdiction. Each party hereto
irrevocably submits to the non-exclusive jurisdiction of any Tennessee
State Court or United States Federal Court sitting in the Middle District
of Tennessee over any suit, action or proceeding arising out of or relating
to this Agreement. Each party hereto waives any right it may have to
assert the doctrine of forum non conveniens or to object to venue to the
extent any proceeding is brought in accordance with this Section 3.11.
Nothing in this paragraph shall affect or limit any right to serve process
in any manner permitted by law, to bring proceedings in the courts of any
jurisdiction or to enforce in any lawful manner a judgment obtained in one
jurisdiction in any other jurisdiction.
SECTION 3.12. Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be an original with the
same effect as if the signatures thereto and hereto were upon the same
instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
INGRAM INDUSTRIES INC.
By:____________________________
Name:
Title:
One Belle Meade Place
4400 Harding Road
Nashville, TN 32705
Telecopy: (615) 298-8242
INGRAM MICRO INC.
By:____________________________
Name:
Title:
1600 East Saint Andrew Place
Santa Ana, CA 92705
Telecopy: (714) 566-7900
EXHIBIT 10.19
EMPLOYEE BENEFITS TRANSFER and ASSUMPTION
AGREEMENT
AGREEMENT dated as of [ ], 1996,(1) among Ingram
Industries Inc., a Tennessee corporation ("Industries"), Ingram Micro Inc., a
Delaware corporation ("Micro"), and Ingram Entertainment Inc., a Tennessee
corporation ("Entertainment" and, together with Industries and Micro, the
"Ingram Companies").
NOW, THEREFORE, it is agreed as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. (a) The following terms, as used
herein, shall have the following meanings:
"Code" means the Internal Revenue Code of 1986, as amended, and
the rules and regulations thereunder.
"Employee Benefit Plan" means any "employee benefit plan" (as
defined in Section 3(3) of ERISA) maintained at any time by any of the Ingram
Companies or their Subsidiaries.
"Entertainment Employees" means those individuals listed on the
payroll records of Entertainment or any Subsidiary thereof immediately after
the Second Closing.
"Entertainment Group" means all Entertainment Employees and
Entertainment Retirees, including their respective beneficiaries.
"Entertainment Retiree" means each individual who was employed
by Entertainment or any Subsidiary thereof immediately prior to such
individual's retirement or other termination of employment from all Ingram
Companies and their Subsidiaries or is otherwise listed on Schedule 3 as an
Entertainment Retiree.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations thereunder.
"Exchange Agreement" means the Amended and Restated Exchange
Agreement dated as of September 4, 1996, as amended and restated as of October
17, 1996, among the Ingram Companies and the other persons listed on the
signature pages thereof.
_________________
(1) To be dated the First Closing Date under the Exchange Agreement.
"First Closing" and "First Closing Date" shall have the
meanings ascribed thereto in the Exchange Agreement.
"Industries Employees" means those individuals listed on the
payroll records of Industries or any Subsidiary thereof immediately after the
First Closing.
"Industries Equity-Based Plans" means the plans identified as
such on Schedule 6 hereto.
"Industries Group" means all Industries Employees and
Industries Retirees, including their respective beneficiaries.
"Industries Retiree" means each individual who was employed by
Industries or any Subsidiary thereof immediately prior to such individual's
retirement or other termination of employment from all Ingram Companies and
their Subsidiaries and who is not otherwise a member of the Micro Group or
Entertainment Group.
"Micro Common Stock" means shares of Class B common stock, par
value $.01 per share, of Micro.
"Micro Employees" means those individuals listed on the payroll
records of Micro or any Subsidiary thereof immediately after the First
Closing.
"Micro Group" means all Micro Employees and Micro Retirees,
including their respective beneficiaries.
"Micro Retiree" means each individual who was employed by Micro
or any Subsidiary thereof immediately prior to such individual's retirement or
other termination of employment from all Ingram Companies and their
Subsidiaries or is otherwise listed on Schedule 3 as a Micro Retiree.
"Person" means an individual, corporation, limited liability
company, partnership, association, trust, or other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
"Reorganization Agreement" shall have the meaning set forth in
the Exchange Agreement.
"Second Closing" and "Second Closing Date" shall have the
meanings ascribed thereto in the Exchange Agreement.
"Subsidiary" means, (i) with respect to Entertainment or Micro,
any entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are directly or indirectly owned by such Person
immediately after the First Closing and (ii) with respect to Industries, any
entity (other than Entertainment or its Subsidiaries) of which securities or
other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are
directly or indirectly owned by Industries immediately after the First Closing.
(b) Each of the following terms is defined in the Section set
forth opposite such term:
Terms Sections
- ----- --------
Actuarial Valuation 3.03
Entertainment Assumed Liabilities 3.04
Entertainment Indemnified Person 5.01
Entertainment Plan Participants 3.03
Entertainment Retirement Plan 3.03
Entertainment Supplemental Retirement
Assets and Liabilities 3.02
Entertainment Supplemental Thrift
Assets and Liabilities 3.02
Entertainment Thrift Plan 3.01
ERP Amount 3.03
ERP Transition Period 3.03
Industries Indemnified Person 5.01
Industries Retained Liabilities 3.04
Industries Retirement Plan 3.03
Industries Supplemental Executive Retirement Plan 3.02
Industries Supplemental Thrift Plan 3.02
Industries Thrift Plan 3.01
IRS 3.01
Loss 5.02
Micro Assumed Liabilities 3.04
Micro Indemnified Person 5.02
Micro Plan Participants 3.03
Micro Retirement Plan 3.03
Micro Supplemental Retirement
Assets and Liabilities 3.02
Micro Supplemental Thrift Assets
and Liabilities 3.02
Micro Thrift Plan 3.01
MRP Amount 3.03
MRP Transition Period 3.03
PBGC 3.03
Retained Retirement Assets and Liabilities 3.03
Retained Supplemental Assets
and Liabilities 3.02
Retained Thrift Assets and Liabilities 3.01
ARTICLE II
EMPLOYEES;
CERTAIN AGREEMENTS
SECTION 2.01. Employees. Subject to the terms and conditions
of this Agreement, effective at the time of the First Closing, Industries,
Micro and Entertainment or their respective Subsidiaries shall employ each
Industries Employee, Micro Employee or Entertainment Employee,
respectively. No provision of this Agreement, however, shall require any
Ingram Company or any of their respective Subsidiaries to continue the
employment of any of their respective employees following the First
Closing.
SECTION 2.02. Certain Agreements. (a) Except as provided
in Section 2.02(b), this Agreement shall not apply or be deemed to apply to
the Industries Equity-Based Plans and any options, awards, grants or sales
made or to be made thereunder shall not be deemed to be Micro Assumed
Agreements or Entertainment Assumed Agreements.
(b) Micro shall assume all liability relating to, and be
responsible for, all incentive stock units granted to Mr. Lawrence
Elcheson, under the Industries Equity-Based Plans. Industries shall inform
Micro on a quarterly basis of the status of such liability, including any
changes thereto.
ARTICLE III
ALLOCATION OF ASSETS AND LIABILITIES
SECTION 3.01. Industries Thrift Plan. (a) (i) As soon as
practicable after and effective as of the First Closing, Micro shall adopt
or designate a profit-sharing plan with a salary reduction arrangement that
covers the Micro Group and meets the requirements of Sections 401(a) and
401(k) of the Code ("Micro Thrift Plan"). Micro agrees that all service
credited under the Ingram Thrift Plan ("Industries Thrift Plan") as of the
First Closing with respect to the Micro Group shall be credited under the
Micro Thrift Plan for all plan purposes, including eligibility and vesting.
(ii) Within 30 days after the adoption or designation of
the Micro Thrift Plan by Micro or as soon as practicable thereafter,
Industries shall cause an amount, in cash or in kind as Industries and
Micro shall agree, equivalent to the account balances of all members of the
Micro Group under the Industries Thrift Plan as of the date of the
transfer, to be transferred from the trust maintained under the Industries
Thrift Plan to the trust maintained under the Micro Thrift Plan. Such
transfer shall include the number of shares of Micro Common Stock allocable
or attributable to the account balances of all members of the Micro Group.
Such transfer of assets shall be made only after Micro has supplied to
Industries either (A) a copy of an Internal Revenue Service ("IRS")
determination letter finding the Micro Thrift Plan to be a qualified plan
meeting the requirements of Sections 401(a) and 401(k) of the Code or (B)
an opinion of counsel or written representation from Micro (with
appropriate indemnities), in either case, to the effect that the Micro
Thrift Plan has been established in accordance with the Code and ERISA, and
an agreement that Micro will request a determination letter from the IRS
and make any and all changes to the Micro Thrift Plan necessary to receive
a favorable determination letter. Micro and Industries shall cooperate
with each other during the period beginning on the date hereof and ending
on the date the assets are transferred to the trust maintained under the
Micro Thrift Plan to ensure the ongoing operation and administration of the
Micro Thrift Plan and the Industries Thrift Plan with respect to the Micro
Group.
(iii) Notwithstanding anything herein to the contrary, each
transfer to the Micro Thrift Plan of shares of Micro Common Stock pursuant
to this Section shall be made in compliance with the provisions of the
Transfer Restrictions Agreement, if any, of even date herewith among Micro
and each of the other parties thereto, including Sections 2.1 and 3.7
thereof.
(b) (i) Not later than the Second Closing, Entertainment
shall adopt or designate a profit-sharing plan with a salary reduction
arrangement that covers the Entertainment Group and meets the requirements
of Sections 401(a) and 401(k) of the Code ("Entertainment Thrift Plan").
Entertainment agrees that all service credited under the Industries Thrift
Plan as of such adoption or designation with respect to the Entertainment
Group shall be credited under the Entertainment Thrift Plan for all plan
purposes, including eligibility and vesting.
(ii) Within 30 days after the adoption or designation of
the Entertainment Thrift Plan by Entertainment or as soon as practicable
thereafter, Industries shall cause an amount, in cash or in kind as
Industries and Entertainment shall agree, equivalent to the account
balances of all members of the Entertainment Group under the Industries
Thrift Plan as of the date of transfer to be transferred from the trust
maintained under the Industries Thrift Plan to the trust maintained under
the Entertainment Thrift Plan. Such transfer shall include the number of
shares of Micro Common Stock allocable or attributable to the account
balances of all members of the Entertainment Group. Such transfer of
assets shall be made only after Entertainment has supplied to Industries
either (A) a copy of an IRS determination letter finding the Entertainment
Thrift Plan to be a qualified plan meeting the requirements of Sections
401(a) and 401(k) of the Code or (B) an opinion of counsel or written
representation from Entertainment (with appropriate indemnities), in either
case, to the effect that the Entertainment Thrift Plan has been established
in accordance with the Code and ERISA, and an agreement that Entertainment
will request a determination letter from the IRS and make any and all
changes to the Entertainment Thrift Plan necessary to receive a favorable
determination letter. Entertainment and Industries shall cooperate with
each other during the period beginning on the date hereof and ending on the
date the assets are transferred to the trust maintained under the
Entertainment Thrift Plan to ensure the ongoing operation and
administration of the Entertainment Thrift Plan and the Industries Thrift
Plan with respect to the Entertainment Group.
(iii) Notwithstanding anything herein to the contrary, each
transfer to the Entertainment Thrift Plan of shares of Micro Common Stock
pursuant to this Section shall be made in compliance with the provisions of
the Transfer Restrictions Agreement, if any, of even date herewith among
Entertainment and each of the other parties thereto, including Sections 2.1
and 3.7 thereof.
(c) Industries shall retain all assets and liabilities
under the Industries Thrift Plan except as otherwise provided in Section
3.01(a) and (b) ("Retained Thrift Assets and Liabilities").
SECTION 3.02. Industries Supplemental Plans. (a) All
liabilities under the Ingram Supplemental Thrift Plan ("Industries
Supplemental Thrift Plan") and the Ingram Industries Inc. Supplemental
Executive Retirement Plan ("Industries Supplemental Retirement Plan") to
the extent applicable to any member of the Micro Group and any assets
allocable to such liabilities shall be transferred to and assumed by Micro
as of the First Closing ("Micro Supplemental Assets and Liabilities").
(b) All liabilities under the Industries Supplemental
Thrift Plan and the Industries Supplemental Retirement Plan to the extent
applicable to any member of the Entertainment Group and any assets
allocable to such liabilities shall be transferred to and assumed by
Entertainment not later than the Second Closing ("Entertainment
Supplemental Assets and Liabilities").
(c) Industries shall retain all assets and liabilities
under the Industries Supplemental Thrift Plan and the Industries
Supplemental Retirement Plan except as otherwise provided in Section
3.02(a) and (b) hereof and Article 3 of the Reorganization Agreement
("Retained Supplemental Assets and Liabilities").
SECTION 3.03. Industries Retirement Plan. (a) (i) As
soon as practicable after and effective as of the First Closing, Micro
shall adopt or designate a defined benefit plan ("Micro Retirement Plan")
that covers the members of the Micro Group listed as participants therein
on Schedule 2 and Schedule 3 ("Micro Plan Participants") and meets the
requirements of Section 401(a) of the Code. Micro agrees that all service
credited under the Ingram Retirement Plan (as amended effective January 1,
1989 and restated December 31, 1994) ("Industries Retirement Plan") as of
the First Closing with respect to the Micro Plan Participants shall be
credited under the Micro Retirement Plan for all plan purposes, including
eligibility, vesting and benefit accrual; provided, however, that those
individuals determined to be highly compensated employees under Section
414(q) of the Code shall accrue their benefits on and after the First
Closing under an unfunded defined benefit plan that is not qualified under
Section 401(a) of the Code.
(ii) Within 30 days after the adoption or designation of
the Micro Retirement Plan by Micro or as soon as practicable thereafter,
Industries shall cause an amount in cash or in kind determined as of the
First Closing pursuant to subparagraph (iii) below (the "MRP Amount"),
adjusted as set forth therein, to be transferred from the trust maintained
under the Industries Retirement Plan to the trust maintained under the
Micro Retirement Plan. Such transfer of assets shall be made only after
Micro has supplied to Industries (x) either (A) a copy of an IRS
determination letter finding the Micro Retirement Plan to be a qualified
plan meeting the requirements of Section 401(a) of the Code or (B) an
opinion of counsel or a written representation from Micro (with appropriate
indemnities), in either case, to the effect that the Micro Retirement Plan
has been established in accordance with the Code and ERISA, and an
agreement that Micro will request a determination letter from the IRS and
make any and all changes to the Micro Retirement Plan necessary to receive
a favorable determination letter and (y) information enabling the enrolled
actuary for the Industries Retirement Plan to issue the certification
required by Section 414(l) of the Code (Form 5310-A). Micro and Industries
shall cooperate with each other during the period beginning on the date
hereof and ending on the date the assets are transferred to the trust
maintained under the Micro Retirement Plan ("MRP Transition Period") to
ensure the ongoing operation and administration of the Micro Retirement
Plan and the Industries Retirement Plan with respect to the Micro Plan
Participants.
(iii) The MRP Amount shall be equal to that portion of the
total value of the assets held in the Industries Retirement Plan, valued as
of the First Closing Date or as soon as practicable thereafter, that bears
the same relation to such total as the aggregate present value of benefits
(vested and non-vested, including special early retirement benefits and
death benefit coverage both before and after the expected retirement ages
of Micro Plan Participants) accrued under the Industries Retirement Plan
for Micro Plan Participants, as determined in the Industries Retirement
Plan actuarial valuation as of January 1, 1996 (the "Actuarial Valuation"),
shall bear to the aggregate present value of such benefits accrued under
the Industries Retirement Plan for all participants therein, in each case
determined by Industries' enrolled actuary, using the projected unit credit
funding method and based on the actuarial assumptions used for funding
purposes as set forth in the Actuarial Valuation. The MRP Amount shall be
adjusted as may be required by the Pension Benefit Guaranty Corporation
("PBGC") and the IRS to maintain the status of the Industries Retirement
Plan or the Micro Retirement Plan as an employee pension plan meeting the
requirements of Section 401(a) of the Code. Within at least 30 days prior
to the First Closing or as soon as practicable thereafter, Industries and
Micro shall make any required governmental filings necessary to effect the
asset transfers described herein, including the filing of IRS Form 5310-A.
(iv) The assets to be transferred to the trust maintained
under the Micro Retirement Plan shall be held, invested and distributed as
required under the Industries Retirement Plan and the related trust
thereunder for the benefit of Micro Plan Participants during the MRP
Transition Period, pending the transfer to the trust maintained under the
Micro Retirement Plan pursuant to this Section 3.03(a). Industries and
Micro shall use their best efforts to effectuate the above transfer as
promptly as possible following the First Closing.
(b) (i) Not later than the Second Closing, Entertainment
shall adopt or designate a defined benefit plan that covers the
Entertainment Employees and members of the Entertainment Group listed on
Schedule 3 ("Entertainment Plan Participants") and meets the requirements
of Section 401(a) of the Code ("Entertainment Retirement Plan").
Entertainment agrees that all service credited under the Industries
Retirement Plan as of such adoption or designation with respect to the
Entertainment Plan Participants shall be credited under the Entertainment
Retirement Plan for all plan purposes, including eligibility, vesting and
benefit accrual.
(ii) Within 30 days after the adoption or designation of
the Entertainment Retirement Plan by Entertainment or as soon as
practicable thereafter, Industries shall cause an amount in cash or in kind
determined as of the Second Closing pursuant to subparagraph (iii) below
(the "ERP Amount"), adjusted as set forth therein, to be transferred from
the trust maintained under the Industries Retirement Plan to the trust
maintained under the Entertainment Retirement Plan. Such transfer of
assets shall be made only after Entertainment has supplied to Industries
(x) either (A) a copy of an IRS determination letter finding the
Entertainment Retirement Plan to be a qualified plan meeting the
requirements of Section 401(a) of the Code or (B) an opinion of counsel or
a written representation from Entertainment (with appropriate indemnities),
in either case, to the effect that the Entertainment Retirement Plan has
been established in accordance with the Code and ERISA, and an agreement
that Entertainment will request a determination letter from the IRS and
make any and all changes to the Entertainment Retirement Plan necessary to
receive a favorable determination letter and (y) information enabling the
enrolled actuary for the Industries Retirement Plan to issue the
certification required by Section 414(l) of the Code (Form 5310-A).
Entertainment and Industries shall cooperate with each other during the
period beginning on the date hereof and ending on the date the assets are
transferred to the trust maintained under the Entertainment Retirement Plan
(the "ERP Transition Period") to ensure the ongoing operation and
administration of the Entertainment Retirement Plan and the Industries
Retirement Plan with respect to the Entertainment Plan Participants.
(iii) The ERP Amount shall be equal to that portion of the
total value of the assets held in the Industries Retirement Plan, valued as
of the adoption or designation referred to in (i) above or as soon as
practicable thereafter, that bears the same relation to such total as the
aggregate present value of benefits (vested and non-vested, including
special early retirement benefits and death benefit coverage both before
and after the expected retirement ages of Entertainment Plan Participants)
accrued under the Industries Retirement Plan for Entertainment Plan
Participants, as determined in the Actuarial Valuation or such later
valuation to the extent one is available, shall bear to the aggregate
present value of such benefits accrued under the Industries Retirement Plan
for all participants therein, in each case determined by Industries'
enrolled actuary using the projected unit credit funding method and based
on the actuarial assumptions used for funding purposes as set forth in the
Actuarial Valuation. The ERP Amount shall be adjusted as may be required
by the PBGC and the IRS to maintain the status of the Industries Retirement
Plan or the Entertainment Retirement Plan as an employee pension plan
meeting the requirements of Section 401(a) of the Code. Within at least 30
days prior to the Second Closing or as soon as practicable thereafter,
Industries and Entertainment shall make any required governmental filings
necessary to effect the asset transfers described herein, including the
filing of IRS Form 5310-A.
(iv) The assets to be transferred to the trust maintained
under the Entertainment Retirement Plan shall be held, invested and
distributed as required under the Industries Retirement Plan and the
related trust thereunder for the benefit of Entertainment Plan Participants
during the ERP Transition Period, pending the transfer to the trust
maintained under the Entertainment Retirement Plan pursuant to this Section
3.03(b). Industries and Entertainment shall effectuate the above transfer
on such date as Industries and Entertainment shall agree but not later than
the Second Closing.
(c) Industries shall retain all assets and liabilities
under the Industries Retirement Plan except as otherwise provided in
Section 3.03(a) and (b) ("Retained Retirement Assets and Liabilities").
SECTION 3.04. Assumption of Liabilities Generally. (a)
Subject to the terms and conditions of this Agreement, effective as of the
First Closing, Micro shall assume and agree to pay when due, honor and
discharge, the following ("Micro Assumed Liabilities"):
(i) all obligations and liabilities arising under any
employment, separation or retirement agreement or arrangement to
the extent applicable to any member of the Micro Group which has
been established or entered into by any of the Ingram Companies or
any of their Subsidiaries, whether or not listed on any Schedule
attached hereto;
(ii) all obligations and liabilities arising under the Micro
Thrift Plan, the Micro Supplemental Assets and Liabilities and the
Micro Retirement Plan;
(iii) all obligations and liabilities arising under the welfare
benefit plans and other arrangements listed on or otherwise
described in Schedule 4 hereto to the extent applicable to any
member of the Micro Group;
(iv) all obligations and liabilities arising under any other
employee benefit plan or arrangement maintained at any time by any
of the Ingram Companies or any of their Subsidiaries to the extent
applicable to any member of the Micro Group;
(v) all obligations and liabilities to any member of the
Micro Group in respect of the continuation of coverage rules under
Sections 601 through 608 of ERISA and Section 4980B of the Code,
including all liabilities and obligations relating to qualifying
events that have occurred on or prior to the First Closing;
(vi) all obligations and liabilities arising under any
federal, state, local or foreign law, order or regulation
(including, without limitation, ERISA and the Code) to the extent
they relate to participation by any member of the Micro Group in
any Employee Benefit Plan, whether relating to events occurring on
or prior to the First Closing or arising by reason of the
transactions contemplated by this Agreement or otherwise; and
(vii) all statutory obligations and liabilities to any member
of the Micro Group, which arise, directly or indirectly, by reason
of the transactions contemplated by this Agreement.
(b) Subject to the terms and conditions of this Agreement,
effective as of such date as Industries and Entertainment shall agree but
not later than the Second Closing, Entertainment shall assume and agree to
pay when due, honor and discharge, the following ("Entertainment Assumed
Liabilities"):
(i) all obligations and liabilities arising under any
employment, separation or retirement agreement or arrangement to
the extent applicable to any member of the Entertainment Group
which has been established or entered into by any Ingram Company
or any of their Subsidiaries, whether or not listed on any
Schedule attached hereto;
(ii) all obligations and liabilities arising under the
Entertainment Thrift Plan, the Entertainment Supplemental Assets
and Liabilities and the Entertainment Retirement Plan;
(iii) all obligations and liabilities arising under the welfare
benefit plans and other arrangements listed on or otherwise
described in Schedule 4 hereto to the extent applicable to any
member of the Entertainment Group;
(iv) all obligations and liabilities arising under any other
employee benefit plan or arrangement maintained at any time by any
of the Ingram Companies or any of their Subsidiaries to the extent
applicable to any member of the Entertainment Group;
(v) all obligations and liabilities to any member of the
Entertainment Group in respect of the continuation of coverage
rules under Sections 601 through 608 of ERISA and Section 4980B of
the Code, including all liabilities and obligations relating to
qualifying events that have occurred on or prior to the Second
Closing;
(vi) all obligations and liabilities arising under any
federal, state, local or foreign law, order or regulation
(including, without limitation, ERISA and the Code) to the extent
they relate to participation by any member of the Entertainment
Group in any Employee Benefit Plan, whether relating to events
occurring on or prior to the Second Closing or arising by reason
of the transactions contemplated by this Agreement or otherwise;
and
(vii) all statutory obligations and liabilities to any member
of the Entertainment Group which arises, directly or indirectly,
by reason of the transactions contemplated by this Agreement.
(c) Subject to the terms and conditions of this Agreement,
effective as of the First Closing, Industries shall retain and agree to pay
when due, honor and discharge, the following ("Industries Retained
Liabilities"):
(i) all obligations and liabilities arising under any
employment, separation or retirement agreement or arrangement to
the extent applicable to any member of the Industries Group which
has been established or entered into by any of the Ingram
Companies or any of their Subsidiaries, whether or not listed on
any Schedule attached hereto;
(ii) obligations and liabilities arising under the Retained
Thrift Assets and Liabilities, the Retained Supplemental Assets
and Liabilities, and the Retained Retirement Assets and
Liabilities;
(iii) all obligations and liabilities arising under the welfare
benefit plans and other arrangements listed on or otherwise
described in Schedule 4 hereto to the extent applicable to any
member of the Industries Group;
(iv) all obligations and liabilities arising under any other
employee benefit plan or arrangement maintained at any time by any
Ingram Company or any of their Subsidiaries to the extent
applicable to any member of the Industries Group;
(v) all obligations and liabilities to any member of the
Industries Group in respect of the continuation of coverage rules
under Sections 601 through 608 of ERISA and Section 4980B of the
Code, including all liabilities and obligations relating to
qualifying events that have occurred on or prior to the First
Closing;
(vi) all obligations and liabilities arising under any
federal, state, local or foreign law, order or regulation
(including, without limitation, ERISA and the Code) to the extent
they relate to participation by any member of the Industries Group
in any Employee Benefit Plan, whether relating to events occurring
on or prior to the First Closing or arising by reason of the
transactions contemplated by this Agreement or otherwise; and
(vii) all statutory obligations and liabilities to any member
of the Industries Group, which arise, directly or indirectly, by
reason of the transactions contemplated by this Agreement.
(d) Subject to the terms and conditions of this Agreement,
effective as of the Second Closing Industries shall confirm to Entertainment
the retention by and agreement of Industries to pay when due, honor and
discharge the Industries Retained Liabilities.
(e) All obligations, liabilities and responsibilities arising
out of or relating to workers' compensation shall be transferred among and
assumed by the parties pursuant to the terms of the Risk Management Agreement
dated as of the First Closing among Industries, Micro and Entertainment.
SECTION 3.05. Method of Settlement. Notwithstanding anything
herein to the contrary, any transfer or assumption of liabilities pursuant to
this Article III shall be effected through a corresponding adjustment in the
relevant intercompany account balances of the parties hereto.
SECTION 3.06. Further Assurances. (a) On and after the date
hereof, Industries will, at the reasonable request of Micro, execute,
acknowledge and deliver all such endorsements, assurances, consents,
assignments, transfers, conveyances, powers of attorney and other instruments
and documents, and take such other actions necessary (i) to assign, transfer,
convey and deliver to Micro, acting in its fiduciary capacity, all the assets
to be transferred to Micro pursuant to Article III hereof and (ii) to assist
Micro in obtaining the consent and approval of all governmental bodies and
other Persons required to be obtained by Micro to effect the transfer thereof
and the assumption of the Micro Assumed Liabilities by Micro or otherwise
appropriate to carry out the transactions contemplated hereby.
(b) On and after the date hereof, Industries will, at the
reasonable request of Entertainment, execute, acknowledge and deliver all
such endorsements, assurances, consents, assignments, transfers,
conveyances, powers of attorney and other instruments and documents, and
take such other actions necessary (i) to assign, transfer, convey and
deliver to Entertainment, acting in its fiduciary capacity, all the assets
to be transferred to Entertainment pursuant to Article III hereof, and (ii)
to assist Entertainment in obtaining the consent and approval of all
governmental bodies and other Persons required to be obtained by
Entertainment to effect the transfer thereof and the assumption of the
Entertainment Assumed Liabilities by Entertainment or otherwise appropriate
to carry out the transactions contemplated hereby.
(c) On and after the date hereof, each of Micro and
Entertainment will, at the reasonable request of Industries, execute,
acknowledge and deliver all such assumptions, endorsements and other
instruments and documents, and take such other actions necessary (i) to
assume, pay, honor and discharge the Micro Assumed Liabilities and
Entertainment Assumed Liabilities, respectively, and (ii) to assist
Industries in obtaining the consent and approval of all governmental bodies
and other Persons required to be obtained by Industries to effect the
transfer of the assets to be transferred to Micro or Entertainment pursuant
to Article III hereof, respectively, and the assumption of the Micro
Assumed Liabilities and Entertainment Assumed Liabilities by Micro and
Entertainment, respectively, or otherwise appropriate to carry out the
transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Certain Industries Representations.
Industries hereby represents and warrants to Micro and Entertainment on the
date hereof, and to Entertainment on the date of the adoption or
designation of the Entertainment Thrift Plan and the Entertainment
Retirement Plan, that the Industries Thrift Plan and the Industries
Retirement Plan have been established in accordance with the Code and
ERISA, are qualified under Section 401(a) of the Code, have been so
qualified during the period from their adoption to the date hereof and each
will be so qualified as of the date of the transfers referred to in Section
3.01 and 3.03 respectively, and that each trust forming a part thereof is
exempt from tax pursuant to Section 501(a) of the Code.
ARTICLE V
INDEMNIFICATION
SECTION 5.01. Indemnification by Micro. Micro agrees to
indemnify and hold harmless Entertainment and its Subsidiaries and their
respective directors, officers, agents and employees (each, an
"Entertainment Indemnified Person") and Industries, its Subsidiaries and
their respective directors, officers, agents and employees (each, an
"Industries Indemnified Person") from any and all damage, loss, liability
and expense (including, without limitation, reasonable expenses of
investigation and reasonable attorneys' fees and expenses in connection
with any action, suit or proceeding) (collectively, "Loss") incurred or
suffered by such Entertainment Indemnified Person or Industries Indemnified
Person, as the case may be, arising out of or related to the Micro Assumed
Liabilities.
SECTION 5.02. Indemnification by Entertainment.
Entertainment agrees to indemnify and hold harmless Micro and its
Subsidiaries and their respective directors, officers, agents and employees
(each, a "Micro Indemnified Person") and each Industries Indemnified Person
from any and all Losses, incurred or suffered by such Micro Indemnified
Person or Industries Indemnified Person, as the case may be, arising out of
or related to the Entertainment Assumed Liabilities.
SECTION 5.03. Indemnification by Industries. Industries
agrees to indemnify and hold harmless each Entertainment Indemnified Person
and each Micro Indemnified Person from any and all Losses, incurred or
suffered by such Micro Indemnified Person or Industries Indemnified Person,
as the case may be, arising out of or related to the Industries Retained
Liabilities.
ARTICLE VI
GENERAL PROVISIONS
SECTION 6.01. Parties. Nothing in this Agreement, express
or implied, is intended to confer upon any person not a party any rights
and remedies hereunder.
SECTION 6.02. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of
Tennessee, without regard to its conflict of laws provisions.
SECTION 6.03. Headings. The Section and other headings
contained in this Agreement are for reference purposes only and shall not
in any way affect the meaning or interpretation of this Agreement.
SECTION 6.04. Entire Agreement. This Agreement constitutes
the entire agreement between the parties in respect of the subject matter
contained herein and neither this Agreement nor any term or provision
hereof may be amended or changed except by an instrument in writing signed
by Industries, Micro and Entertainment. Industries shall deliver prompt
written notice to each other party hereto of any amendment to this
Agreement approved pursuant to this Section.
SECTION 6.05. Assignments. This Agreement shall not be
assignable by any party, without the written consent of the other parties
hereto. No assignment of any right or benefit hereunder shall relieve any
obligation of the assignor hereunder without the written consent of the
other party.
SECTION 6.06. Notices. Any notice, request, instruction or
other document to be given hereunder by any party hereto to another party
hereto shall be in writing (including telecopier or similar writing) and
shall be given to such party at its address set forth on the signature
pages hereof, or to such other address as the party to whom notice is to be
given may provide in a written notice to the party giving such notice, a
copy of which written notice shall be on file with the Secretary of
Industries. Each such notice, request or other communication shall be
effective (i) if given by telecopy, when such telecopy is transmitted to
the telecopy number specified on the signature pages hereof and the
appropriate confirmation is received, (ii) if given by mail, 72 hours after
such communication is deposited in the mails with first class postage
prepaid addressed as aforesaid or (iii) if given by any other means, when
delivered at the address specified in this Section 6.06.
SECTION 6.07. Severability. The invalidity or
unenforceability of any provisions of this Agreement in any jurisdiction
shall not affect the validity, legality or enforceability of the remainder
of this Agreement in such jurisdiction or the validity, legality or
enforceability of this Agreement, including any such provision, in any
other jurisdiction, it being intended that all rights and obligations of
the parties hereunder shall be enforceable to the fullest extent permitted
by law.
SECTION 6.08. Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be an original with the
same effect as if the signatures thereto and hereto were upon the same
instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
INGRAM INDUSTRIES INC.
By:____________________________
Name:
Title:
One Belle Meade Place
4400 Harding Road
Nashville, TN 32705
Telecopy: (615) 298-8242
INGRAM MICRO INC.
By:____________________________
Name:
Title:
1600 East Saint Andrew Place
Santa Ana, CA 92705
Telecopy: (714) 566-7900
INGRAM ENTERTAINMENT INC.
By:____________________________
Name:
Title:
Two Ingram Boulevard
La Vergne, TN 37086
Telecopy: (615) 287-4985
SCHEDULES TO EMPLOYEE BENEFIT
ASSUMPTION AND SERVICES AGREEMENT
Schedule 1 [RESERVED]
Schedule 2 Current Micro Retirement Plan Participants
Schedule 3 Allocation of Certain Current or Former
Employees
Schedule 4 Welfare Benefit Plans and Other
Arrangements
Schedule 5 [RESERVED]
Schedule 6 Industries' Equity-Based Plans
SCHEDULE 1
[RESERVED]
SCHEDULE 2
CURRENT MICRO RETIREMENT PLAN PARTICIPANTS
[Final List to be provided as of Closing]
MICRO PLAN PARTICIPANTS
Antonucci, Maureen J.
Atkinson, Caryn Ann
Baldwin, Susan C.
Blueweiss, Lynn L.
Browning, Frank E.
Buchnowski, Barbara
Convertini, Philip A.
Cook, Michael J.
Cooney, Lynn Anne
Crowe, Mary Jane C.
Dean, Celeste
DiCarlo, Geraldine
DiMarco, Peter F.
Dixon, Kent W.
Elkington, Robert S.
Evans, David T.
Gajewski, Cheryl A.
Gilcart, Daughn M.
Healy, Patrick J.
Henning, Thomas P.
Hinshaw, Sylvia Y.
Hiser, March D.
Imiola, Donna
Johnson, Paul D.
Kalman, Rob P.
Lepore, Robert J.
Lewis-Johnson, Karen
Long, Geraldine
Mesel, James D.
Montgomery, Robert L.
Morehouse, Elizabeth
Pelino, Gary
Rockey, Emerson T.
Rung, Leon P.
Rutan, William H.
Scherrer, Henry
Schmidt, Wallace M.
Schwind, Robert A.
Sherwood, Donna M.
Taravella, Stephen
Thornton, Lynne M.
Trinca, Joseph S.
Tuzzo, Mark
Wendt, Janet E.
Willoughby, Donald D.
Wiser, Brian D.
"Highly Compensated Employees" (as determined under Section 414(q) of the
Code) will not accrue additional benefits under the Micro Retirement Plan
following the First Closing. Accordingly, Credited Service, Final Average
Earnings and Final Excess Average Earnings will not increase for any member of
the Micro Group during any Plan Year that such individual is a Highly
Compensated Employee as determined under such Plan. Highly Compensated
Employees will accrue benefits following the First Closing under an unfunded
non-qualified defined benefit plan.
SCHEDULE 3
ALLOCATION OF CERTAIN CURRENT OR FORMER EMPLOYEES
EMPLOYEES DUE BENEFITS AND NOT CURRENTLY ACCRUING FUTURE
BENEFITS UNDER RETIREMENT PLAN
[Final List to be provided as of First Closing]
ENTERTAINMENT GROUP
Soc Sec No Name
---------- ----
V 415703657 J.H. Baker
V 409274568 M. Barrett
V 409337748 T. Barrett
V 342441493 L. Barringer
V 409648748 N.C. Batte
V 429822792 D.K. Bishop
V 467490589 M. Blum
V 002368165 J.G. Bradley
V 477069515 R. Burcholz
V 546881493 M. Cherry
V 412887970 S.B. Close
V 410113680 T. Cunningham
V 499845882 T. Davis
V 477901882 D. Decker
V 554157389 R. Delayo
V 285520744 C.E. Dodson
V 415623250 I. Donelson II
V 415373976 K. Dowell
V 294466866 K. Eades
V 415152522 L. Ferrell
V 408984163 V.R. Green
V 541047950 E.M. Hoffmann
V 453804355 H. Hoffner
V 414333411 K. Mallory
V 086381549 C. Morse
V 410700318 D. Mullins
V 408113807 R.L. Parker
V 414291830 S. Pennington
V 524190712 K. Perry
V 409295428 C. Potts
V 416609204 K. Rabinovitz
V 474545997 M.J. Silsbee
V 242157161 J.K. Smith
V 541763931 J. Stabler
V 542568688 M.O. Stewart
R 515148768 G.J. Sullivan
V 573610828 C. Varbosa
V 257372813 L. White
MICRO GROUP
Soc Sec No Name
---------- ----
V 133640502 B.R. Atkinson
V 097500603 L. Balash
V 603104521 R.M. Barragan
V 075608147 J.M. Bax
V 122669921 J. Bellamy
V 557948682 C. Benavines
V 098423660 T.T. Booker
V 411922893 M.R. Briggs
V 117506731 W.M. Brooks
V 116606554 J.J. Burket
V 105486357 E. Bush
V 072565601 M.C. Cameron
V 546414899 R. Carbonniere
V 090524387 L.M. Close
V 341527490 A. Cobb
V 059642350 T. Colombo
V 085567893 C. Curley-Rolan
V 087547829 R. Daniels
V 126489159 J. Davis
V 064445120 D.M. Dillon
V 095661919 L. Dolan
V 098340724 M. Dominguez
V 103323285 W. Drescher Jr
V 055623522 R.F. Drumsta
V 140401850 R. Eisner
V 050669556 E.M. Elkington
V 088606541 R. Ensminger
V 096508617 M.A. Fatta
V 083525241 K.T. Flanagan
V 088562528 J. Fleshler
V 054564648 W.P. Flynn
V 093626371 M. Fohl
V 129563761 R. Franklin
V 125382674 L.D. Gorbaty
V 118489104 G. Harris
V 081586434 A. Hecht
V 080440395 G.J. Henzler
V 126488210 P.J. Hickman
V 064446032 K. Holley
V 034481251 M. Islam
V 111603530 C. Joensen
V 126488560 D.M. Kempa
V 114522171 M.R. Kipler
V 057408654 A. Kosowski
V 122561866 P.J. Kozlowski
Soc Sec No Name
---------- ----
V 094600762 L.A. Kubik
V 117403527 S. Kuhn
V 088540003 P.M. Kuhn
V 061462495 M. Laudan
V 083520461 K.L. Lintner
V 075344931 A. Lombardo
V 083508444 D.E. Maefs
V 134568725 J.P. Marchiano
V 075565613 B. Maynard
V 090265795 F. McCarthy
V 557822649 D. Messerli
V 116509083 N.F. Meyer
V 080529496 H. Mis
V 106584443 R. Nelson
V 509447415 M.L. Newcomb
V 093608315 J.A. Oberther
V 128505759 J. Oexle
V 121627308 B.A. Orlow
V 105608203 M. Pawliske
V 064380586 R. G. Perryman
V 063568828 C.E. Petrosian
V 086647849 T. Pitts
V 073641965 P.R. Porto
V 096546594 L. Pratt
V 093441685 C.M. Prible
V 099404220 J.L. Ptak
V 057563872 S. Quick
V 574164708 L.S. Ricci
V 116509656 A. Roberto
V 052604564 T.J. Sager
V 562472771 L. Schneider
V 105483237 C. Siembida
V 095485350 B. Singleteary
V 075665471 M.J. Sterry
V 082521426 J.F. Tabbi
V 111648494 B.J. Trinca
V 092624756 J. Vigneron
V 052509346 S.A. Wadsworth
V 094520519 L. Wesolowski
V 210263090 G. Will
V 128426423 L.D. Williams
V 050469043 D. Willoughby
V 120407126 M.F. Witkowski
SCHEDULE 4
WELFARE BENEFIT PLANS AND OTHER ARRANGEMENTS
Industries Plans and Arrangements
Ingram Health Care Plan
Ingram Dental Care Plan
Ingram DMO (Cigna) Plan
Ingram Vision Care Plan
Ingram Long Term Disability Plan
Ingram Industries Dependent Care Plan
Ingram Industries Flexible Benefits Plan
Group Life Plan for All Employees
Group AD&D Plan for All Employees
Ingram Assistance Plan
Accrued Vacation Benefits
Accrued Sick Leave
Micro Plans and Arrangements
Ingram Micro Health Care Plan
Ingram Micro Dental Care Plan
Ingram Micro DMO (Cigna) Plan
Ingram Micro Vision Care Plan
Ingram Micro Long Term Disability Plan
Ingram Micro Dependent Care Plan
Ingram Micro Flexible Benefits Plan
Ingram Micro Group Life Plan for All Employees
Ingram Micro Group AD&D Plan for All Employees
Ingram Micro Assistance Plan
Accrued Vacation Benefits
Accrued Sick Leave
Entertainment Plans and Arrangements
Ingram Entertainment Health Care Plan
Ingram Entertainment Dental Care Plan
Ingram Entertainment DMO (Cigna) Plan
Ingram Entertainment Vision Care Plan
Ingram Entertainment Long Term Disability Plan
Ingram Entertainment Dependent Care Plan
Ingram Entertainment Flexible Benefits Plan
Ingram Entertainment Group Life Plan for All Employees
Ingram Entertainment Group AD&D Plan for All Employees
Ingram Entertainment Assistance Plan
Accrued Vacation Benefits
Accrued Sick Leave
SCHEDULE 5
[RESERVED]
SCHEDULE 6
INDUSTRIES EQUITY-BASED PLANS
Ingram Industries Inc. 1994 Nonqualified Stock Option Plan
Ingram Industries Inc. 1994 Incentive Stock Option Plan
Ingram Industries Inc. 1990 Nonqualified Stock Option Plan
Ingram Industries Inc. 1990 Incentive Stock Option Plan
Ingram Industries Inc. 1986 Employee Incentive Stock Option Plan
Ingram Industries Inc. 1985 Employee Incentive Stock Option Plan
Ingram Industries Inc. 1992 Incentive Stock Unit Plan
Ingram Industries Inc. 1990 Incentive Stock Unit Plan
Ingram Industries Inc. 1987 Executive Incentive Plan
Ingram Industries Inc. 1986 Executive Incentive Plan
Ingram Micro Holdings Inc. 1992 Incentive Stock Unit Plan
Ingram Micro D Inc. (Delaware) Incentive Stock Unit Plan
EXHIBIT 10.21
AMENDED AND RESTATED EXCHANGE AGREEMENT
among
INGRAM INDUSTRIES INC.,
INGRAM MICRO INC.,
INGRAM ENTERTAINMENT INC.,
AND
THE PERSONS IDENTIFIED
ON THE SIGNATURE PAGES HEREOF
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions.................................. 1
ARTICLE 2
EXCHANGE
SECTION 2.1. Exchange by Holders.......................... 3
SECTION 2.2. The First Closing............................ 4
SECTION 2.3. The Second Closing........................... 6
SECTION 2.4. Other Holders................................ 6
SECTION 2.5. Exercising Optionholders..................... 6
SECTION 2.6. Acknowledgement and Release.................. 7
SECTION 2.7. Surrender of Existing Certificates........... 8
SECTION 2.8. Certain Representations and
Warranties.................................. 8
SECTION 2.9. Legend....................................... 9
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF EACH HOLDER
SECTION 3.1. Private Placement............................ 9
SECTION 3.2. Ownership.................................... 10
SECTION 3.3. Tax Matters.................................. 10
SECTION 3.4. Community Property........................... 11
SECTION 3.5. Representation of the Thrift Plan............ 11
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF EACH PARTY
SECTION 4.1. Authority; No Other Action................... 11
SECTION 4.2. Binding Effect............................... 12
ARTICLE 5A
CONDITIONS TO FIRST CLOSING
SECTION 5A.1. Conditions to Obligations of the
Parties.................................... 12
SECTION 5A.2. Conditions to Obligation of the Ingram
Companies.................................. 13
SECTION 5A.3. Conditions to Obligation of the
Holders.................................... 14
SECTION 5A.4. Conditions to Obligation of Certain
Stockholders............................... 15
SECTION 5A.5. Conditions to Obligation of the Thrift
Plan....................................... 15
ARTICLE 5B
CONDITIONS TO SECOND CLOSING
SECTION 5B.1. Conditions to Obligations of the
Parties.................................... 16
SECTION 5B.2. Conditions to Obligation of Industries and
Entertainment.............................. 16
SECTION 5B.3. Conditions to Obligation of Certain
Holders.................................... 17
SECTION 5B.4. Conditions to Obligation of David B.
Ingram..................................... 18
ARTICLE 6
CERTAIN AGREEMENTS; TAX MATTERS
SECTION 6.1. Tax Representation of the Holders............ 18
SECTION 6.2. Tax Representation of the Ingram
Companies.................................. 18
SECTION 6.3. Tax Covenant................................. 19
SECTION 6.4. Agreements of Investment Manager............. 19
SECTION 6.5. True-Up...................................... 20
SECTION 6.6. Termination of Stock Purchase Agreement
Obligations................................ 22
SECTION 6.7. Cooperation.................................. 22
SECTION 6.8. Issuance of Entertainment Common
Stock...................................... 22
ARTICLE 7
MISCELLANEOUS
SECTION 7.1. Headings..................................... 22
SECTION 7.2. Entire Agreement............................. 23
SECTION 7.3. Notices...................................... 23
SECTION 7.4. Applicable Law............................... 23
SECTION 7.5. Severability................................. 23
SECTION 7.6. Termination.................................. 24
SECTION 7.7. Successors, Assigns, Transferees............. 24
SECTION 7.8. Amendments; Waivers.......................... 24
SECTION 7.9. Counterparts................................. 26
SECTION 7.10. Remedies..................................... 26
SECTION 7.11. Consent to Jurisdiction...................... 26
SECTION 7.12. Expenses..................................... 26
Exhibit A - Form of Transfer Restrictions Agreement
Exhibit B - Form of Registration Rights Agreement
Exhibit C - Form of Board Representation Agreement
Exhibit D - Form of Amended and Restated Stock Option, SAR/ISU
Conversion and Exchange Agreement
Exhibit E - Form of Certificate of Incorporation of Micro
Exhibit F - Form of Bylaws of Micro
Exhibit G - Form of Thrift Plan Liquidity Agreement
Annex I - Industries stockholders and optionholders as of
12/31/95
Annex II - Family Stockholders
AMENDED AND RESTATED EXCHANGE AGREEMENT
AGREEMENT dated as of September 4, 1996, as amended and
restated as of October 17, 1996, among Ingram Industries Inc., a Tennessee
corporation ("Industries"), Ingram Micro Inc., a Delaware corporation
("Micro"), Ingram Entertainment Inc., a Tennessee corporation ("Entertainment"
and, together with Industries and Micro, the "Ingram Companies"), and each
Person listed on the signature pages hereof.
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions. (a) The following terms, as
used herein, have the following meanings:
"Board Representation Agreement" means the Board Representation
Agreement substantially in the form attached as Exhibit C hereto.
"Entertainment Common Stock" means shares of common stock,
without par value, of Entertainment.
"Exchange" means the exchange of Industries Common Stock
pursuant to Article 2.
"Exchange Securities" means the shares of Industries Common
Stock to be exchanged pursuant to Article 2.
"Family Stockholders" means the Family Stockholders set forth
on Annex II hereto.
"First Closing" means the closing of the transactions
contemplated by Section 2.2.
"Group" means any Stockholder Group, which includes the Micro
Group, the Entertainment Group, the Industries Group, the Family Group, and
the Industries Optionholder Group, in each case as indicated on Annex I
hereto.
"Holder" means each Person listed on the signature pages hereof
(other than any Ingram Company), each Person who becomes a party to this
Agreement pursuant to Section 2.4 or 2.5, or all of them, as the context
requires; provided that any Person who withdraws from this Agreement pursuant
to Section 7.8(d) shall cease to be a Holder effective on the date of such
withdrawal.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Industries Common Stock" means shares of Class A common stock
and Class B common stock, without par value, of Industries.
"Investment Manager" means State Street Bank and Trust Company,
in its capacity as investment manager with respect to the Thrift Plan.
"Micro Common Stock" means shares of Class B common stock, par
value $0.01 per share, of Micro.
"Person" means an individual, corporation, partnership, limited
liability company, trust, association or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"QTIP" means the E. Bronson Ingram Qtip Marital Trust.
"Related Agreements" means the Transfer Restrictions Agreement
substantially in the form attached as Exhibit A hereto, the Registration
Rights Agreement substantially in the form attached as Exhibit B hereto, the
Amended and Restated Stock Option, SAR and ISU Conversion and Exchange
Agreement substantially in the form attached as Exhibit D hereto and the
Thrift Plan Liquidity Agreement.
"Reorganization Agreement" means the Amended and Restated
Reorganization Agreement dated as of September 4, 1996, as amended and
restated as of October 17, 1996, among Industries, Micro and Entertainment.
"Second Closing" means the closing of the transactions
contemplated by Section 2.3.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" means, (i) with respect to Entertainment or Micro,
any entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are directly or indirectly owned by such Person
immediately after the First Closing and (ii) with respect to Industries, any
entity (other than Entertainment or its Subsidiaries) of which securities or
other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are
directly or indirectly owned by Industries immediately after the First Closing.
"Thrift Plan" means the Ingram Thrift Plan.
"Thrift Plan Liquidity Agreement" means the Thrift Plan
Liquidity Agreement substantially in the form attached as Exhibit G hereto.
(b) Each of the following terms is defined in the Section set
forth opposite such term:
Term Section
---- -------
Adjustment Amount 6.5
Affected Group 7.8
Charitable Trusts and
Foundation 7.8
Claims 2.6
Entertainment Tax Ruling 5B.2
Exercising Optionholder 2.5
First Closing Date 2.2
HLH&Z 5.5
Holder's Fraction 2.1
Initial Adjustment Period 6.5
Micro Tax Ruling 5A.2
Offer Period 2.4
Option Record Date 2.5
Other Holder 2.4
Required Holders 7.8
Second Closing Date 2.3
Unexchanged Shares 2.1
ARTICLE 2
EXCHANGE
SECTION 2.1. Exchange by Holders. On the terms and
subject to the conditions set forth herein, each Holder who is a member of the
Stockholder Groups hereby agrees to exchange the number of shares of
Industries Common Stock set forth opposite the name of such Holder under the
heading "III Common Stock To Be Exchanged" on Annex I; provided that the
number of shares of Industries Common Stock to be exchanged for shares of
Micro Common Stock by each Holder that is a member of the Family Group shall
be increased by an amount equal to the product of
(a) the sum (the "Unexchanged Shares") of (x) the product of
.7599 and the aggregate number of shares of Industries Common Stock set forth
under the heading "III Common Stock Owned" on Annex I opposite the name of each
Holder that is a member of the Industries Group identified under such heading
who does not elect to participate in the Exchange pursuant to Section 2.4; and
(y) the product of .7284 and the aggregate number of shares of Industries
Common Stock acquired upon exercise after December 31, 1995 of options held as
of December 31, 1995 as set forth under the heading "III Common Stock Owned"
on Annex I opposite the name of each Holder that is a member of the Industries
Optionholder Group who does not elect to participate in the Exchange pursuant
to Section 2.4; and
(b) a fraction (the "Holder's Fraction"), the numerator of
which shall equal the number of shares of Industries Common Stock set forth
opposite the name of such Holder that is a member of the Family Group under the
heading "III Common Stock Owned" on Annex I and the denominator of which shall
equal the total number of shares of Industries Common Stock set forth opposite
the name of all Holders that are members of the Family Group under the heading
"III Common Stock Owned" on Annex I.
Except as otherwise determined by the Board of Directors of
Industries, if the Exchange Securities of any Holder constitute less than 100%
of such Holder's Industries Common Stock, the Exchange Securities of such
Holder shall, to the extent practicable, consist of 90% of Class B common
stock of Industries and 10% of Class A common stock of Industries.
SECTION 2.2. The First Closing. (a) The First Closing
shall take place at the executive offices of Industries in Nashville,
Tennessee or at such other place, and at such time, as the Ingram Companies
may agree following satisfaction or waiver of the conditions set forth in
Article 5A. The date and time of such closing are referred to herein as the
"First Closing Date". The First Closing shall take place in two phases as
specified below.
(b) In the first phase, the following actions shall take
place simultaneously:
(i) the Thrift Plan, pursuant to the written instructions of
the Investment Manager, shall deliver to Industries (x) certificates
representing the Exchange Securities of the Thrift Plan, duly endorsed
in blank or accompanied by a duly executed stock power and (y)
executed counterpart signature pages to each Related Agreement; and
(ii) Industries shall deliver to the Thrift Plan certificates
representing the number of shares of Micro Common Stock, rounded up
to the nearest whole share, which the Thrift Plan is entitled to
receive as set forth opposite the name of the Thrift Plan on Annex I
thereto.
(c) Immediately following the first phase, the following
actions shall take place simultaneously in the second phase:
(i) The Exchange Securities to be exchanged pursuant to
Section 2.2(c)(ii) and the other related documents tendered pursuant
to Section 2.7 shall be released from escrow to Industries;
(ii) Industries shall deliver to each Holder (other than the
Thrift Plan), certificates representing the number of shares of Micro
Common Stock which such Holder is entitled to receive as set forth
opposite the name of such Holder on Annex I, rounded up to the
nearest whole share, plus with respect to each Holder that is a
member of the Family Group, the number of shares of Micro Common
Stock, rounded up to the nearest whole share, represented by the
product of (A) such Holder's Fraction and (B) the product of 1.3729
and the Unexchanged Shares; and
(iii) Industries shall deliver to Micro for cancellation all of
the shares of Micro Common Stock that have not been delivered to the
Thrift Plan pursuant to Section 2.2(b) or to the Holders pursuant to
Section 2.2(c).
(d) If pursuant to Section 2.7 any Holder (other than a
Holder that is a member of the Entertainment Group) has delivered to
Industries certificates representing a greater number of shares of Industries
Common Stock than the number of Exchange Securities of such Holder, at the
First Closing, Industries shall deliver to such Holder a new certificate
representing the number of shares (if any) of the class of Industries Common
Stock, rounded up to the nearest whole share, to be retained by such Holder
immediately following the Exchange.
SECTION 2.3. The Second Closing. The Second Closing shall
take place at the executive offices of Industries in Nashville, Tennessee or
at such other place, and at such time, as Industries and Entertainment may
agree following satisfaction or waiver of the conditions set forth in Article
5B. The date and time of closing are referred to herein as the "Second
Closing Date". At the Second Closing:
(i) The Exchange Securities to be exchanged pursuant to
Section 2.3(ii) and the other related documents tendered pursuant to
Section 2.7 shall be released from escrow to Industries;
(ii) Industries shall deliver to each Holder identified on
Annex I hereto as being a member of the Entertainment Group,
certificates representing the number of shares of Entertainment
Common Stock, rounded up to the nearest whole share, which such
Holder is entitled to receive as set forth opposite the name of such
Holder on Annex I hereto; and
(iii) Industries shall deliver to Entertainment for
cancellation all of the shares of Entertainment Common Stock that
have not been delivered to the Holders pursuant to Section 2.3(ii).
SECTION 2.4. Other Holders. Within 15 days following
September 4, 1996, Industries shall offer each stockholder of Industries set
forth on Annex I that has not signed this Agreement on September 4, 1996
(each, an "Other Holder") the opportunity to participate in the Exchange by
exchanging the Exchange Securities of such Person on the terms and conditions
set forth on Annex I. Each Other Holder may elect to participate in the
Exchange by delivering to Industries no later than 20 business days following
the date on which the offer is made or such later date as Industries may
specify in its sole discretion following September 4, 1996 (the "Offer
Period"), an executed counterpart signature page to this Agreement and the
documents referred to in Section 2.7. Upon execution and delivery thereof to
Industries, such Other Holder shall become a party to this Agreement effective
as of September 4, 1996 and shall be bound by all of the provisions hereof.
SECTION 2.5. Exercising Optionholders. Industries shall
offer each Person listed on Annex I as being a member of the Entertainment
Group who acquires shares of Industries Common Stock upon exercise of stock
options after the First Closing Date and prior to a date (the "Option Record
Date") fixed by the board of directors of Industries, which date shall not be
more than 30 business days prior to the Second Closing Date (an "Exercising
Optionholder"), the opportunity to exchange such shares of Industries Common
Stock on the terms and conditions set forth in Sections 2.1 and 2.3 for shares
of Entertainment Common Stock. Industries shall deliver notice of the Option
Record Date promptly following determination thereof to each such Person
holding stock options that will be exercisable prior to such Option Record
Date. Each Exercising Optionholder may elect to participate in the Exchange by
delivering to Industries, no later than 20 business days following the Option
Record Date, an executed counterpart signature page to this Agreement and the
documents referred to in Section 2.7. Upon execution and delivery thereof to
Industries, such Exercising Optionholder shall become a party to this
Agreement effective as of September 4, 1996 and shall be bound by all of the
provisions hereof.
SECTION 2.6. Acknowledgement and Release. (a) Each
Holder hereby agrees that, as of September 4, 1996, the fair value of the
securities to be received by such Holder in the Exchange is equal to the fair
value of such Holder's Exchange Securities. Each Holder hereby acknowledges
that an initial public offering of Micro Common Stock is contemplated, but no
assurance can be given as to whether such public offering will be consummated
or as to the market value of the Micro securities to be sold in such public
offering or whether a market for such securities will develop or be maintained.
(b) In consideration of the Exchange and effective at the
First Closing (in the case of each Holder, with respect to Exchange Securities
of such Holder that are exchanged at the First Closing) and at the Second
Closing (in the case of each Holder that is a member of the Entertainment
Group, with respect to Exchange Securities of such Holder that are exchanged
at the Second Closing), each Holder hereby unconditionally and irrevocably
releases and discharges each Ingram Company and each other Person directly or
indirectly controlling, controlled by, or under common control with, such
Ingram Company and any and all directors, officers and shareholders of any of
the foregoing, of any claim, obligation or liability, in law or in equity,
that such Holder had in the past, now has or hereafter shall or may have for,
upon or by reason of any event, matter or thing which has occurred from the
beginning of the world to the First Closing Date or the Second Closing Date,
respectively (the "Claims"), arising out of or relating to such Holder's
ownership of Industries Common Stock, including without limitation (i) Claims
alleging that such Holder has a right to receive additional or different
consideration in the Exchange and (ii) Claims against directors of any Ingram
Company alleging a breach of fiduciary duty of such directors arising in
connection with the transactions contemplated hereby or by the Board
Representation Agreement, the Related Agreements, the Reorganization Agreement
or the Ancillary Agreements (as defined in the Reorganization Agreement) or
any other agreement referred to herein or therein, except that no Holder shall
agree hereby to waive any such Claim to the extent that any such director was
not acting in good faith.
SECTION 2.7. Surrender of Existing Certificates. (a)
Except as otherwise provided in Section 2.7(b), concurrently with the
execution by each Holder (other than the Thrift Plan) of this Agreement, such
Holder will deliver to Industries in escrow pending the consummation of the
First Closing or the Second Closing, as applicable, executed counterpart
signature pages to each Related Agreement and all certificates representing
the Exchange Securities owned by such Holder. Each certificate representing
such Exchange Securities shall be duly endorsed in blank or accompanied by a
duly executed stock power. Each Holder that is an Exercising Optionholder
also will deliver to Industries in escrow pending the consummation of the
Second Closing executed counterpart signature pages to an agreement pursuant
to which such Holder would be subject to certain restrictions on the ability
of such Holder to transfer shares of Entertainment Common Stock to be received
by such Holder in the Exchange (which restrictions will be similar to the
restrictions applicable to the Exchange Securities of Holder immediately prior
to the Second Closing).
(b) Notwithstanding anything to the contrary in Section
2.7(a), (i) no later than two days prior to the First Closing Date, each of
the Family Stockholders, the QTIP and the Charitable Trusts and Foundation
will deliver to Industries in escrow pending consummation of the First Closing
all certificates representing the Exchange Securities owned by such Holder,
duly endorsed in blank or accompanied by a duly executed stock power, and (ii)
all certificates representing Exchange Securities which are currently pledged
to Nationsbank, N.A., Nationsbank of Tennessee, N.A. or First American
National Bank shall be delivered by the pledgee to Industries at the First
Closing (or, in the case of Exchange Securities to be exchanged at the Second
Closing pursuant to Section 2.3, at the Second Closing), duly endorsed as
described above.
(c) Certificates representing Exchange Securities held in
escrow pursuant to this Section 2.7 shall promptly be returned to the Holder
thereof upon any termination of this Agreement pursuant to Section 7.6.
SECTION 2.8. Certain Representations and Warranties.
Micro represents and warrants to each Holder as of September 4, 1996 and as of
the First Closing Date that the shares of Micro Common Stock to be delivered
pursuant to Section 2.2 are validly issued, fully paid and non-assessable.
Entertainment represents and warrants to each Holder as of September 4, 1996
and as of the Second Closing Date that the shares of Entertainment Common
Stock to be delivered pursuant to Section 2.3 are validly issued, fully paid
and non-assessable.
SECTION 2.9. Legend. Each certificate representing a
share of Micro Common Stock or Entertainment Common Stock to be acquired
pursuant to this Agreement shall (except as provided below) include any
legends required pursuant to applicable securities laws and a legend in
substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE OR FOREIGN SECURITIES LAWS
AND MAY NOT BE OFFERED OR SOLD EXCEPT IN COMPLIANCE THEREWITH.
Any Holder or transferee of a share of Micro Common Stock or Entertainment
Common Stock may, upon providing evidence (including without limitation an
opinion of counsel) reasonably satisfactory to Micro or Entertainment,
respectively, that such share either is not a "restricted security" (as
defined in Rule 144 promulgated under the Securities Act) or may be sold
pursuant to Rule 144(k) promulgated under the Securities Act, exchange the
certificate representing such share for a new certificate that does not bear
such legend.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF EACH HOLDER
Each Holder hereby represents and warrants to each Ingram
Company as of September 4, 1996, as of October 17, 1996, as of the First
Closing Date and, in the case of any Holder that is a member of the
Entertainment Group, as of the Second Closing Date, as follows:
SECTION 3.1. Private Placement. (a) Such Holder
understands that (i) the Exchange and the delivery of securities in the
Exchange as contemplated hereby is intended to be exempt from registration
under the Securities Act pursuant to Section 4(2) of the Securities Act and
(ii) there is no existing public or other market for such securities and,
except as otherwise provided in the Related Agreements, there can be no
assurance that such Holder will be able to sell or dispose of the securities
delivered to such Holder pursuant to the terms hereof.
(b) The securities to be acquired by such Holder pursuant to
this Agreement are being acquired for its own account for investment and
without a view to the public distribution of such securities or any interest
therein.
(c) Unless Industries has been notified in writing to the
contrary prior to September 4, 1996, such Holder is an "Accredited Investor"
as such term is defined in Regulation D promulgated under the Securities Act.
(d) Such Holder has sufficient knowledge and experience in
financial and business matters so as to be capable of evaluating the merits
and risks of its investment in the securities to be acquired by such Holder
pursuant to this Agreement and such Holder is capable of bearing the economic
risks of such investment, including a complete loss of its investment in such
securities, since such securities may not be transferred except as provided in
the Related Agreements.
(e) Such Holder has been given the opportunity to ask
questions of, and receive answers from the Ingram Companies concerning the
Ingram Companies, the securities to be acquired by such Holder pursuant to
this Agreement, the transactions contemplated hereby and by the Reorganization
Agreement and other related matters. Such Holder further represents and
warrants to each Ingram Company that such Ingram Company has made available to
such Holder or its agents all documents and information relating to an
investment in such securities requested by or on behalf of such Holder. In
evaluating the suitability of an investment in such securities, such Holder
has not relied upon any other representations or other information (whether
oral or written) made by or on behalf of any Ingram Company.
(f) Such Holder understands that (i) the securities to be
acquired by such Holder pursuant to this Agreement may not be transferred
except in compliance with the provisions of the Related Agreements and (ii)
such securities will bear a legend to such effect.
SECTION 3.2. Ownership. Except as set forth on Schedule
3.2, such Holder is the record and beneficial owner of the Exchange Securities
of such Holder. Except as set forth on Schedule 3.2, such Exchange Securities
are and, as of the First Closing (and, if such Holder is a member of the
Entertainment Group, as of the Second Closing) will be, free and clear of any
lien, pledge, charge, security interest or encumbrance of any kind and any
other limitation or restriction (including without limitation any restriction
on the right to vote, sell or otherwise dispose of such Exchange Securities).
SECTION 3.3. Tax Matters. There is no plan or intention
by such Holder to sell, exchange, transfer by gift or otherwise dispose of any
of such Holder's stock in any of the Ingram Companies subsequent to the
Exchange.
SECTION 3.4. Community Property. If such Holder's
Exchange Securities constitute community property, this Agreement has been
executed and delivered by such Holder's spouse, who shall be bound hereby, and
the representations and warranties contained in Article 3 (other than the
first sentence of Section 3.2), Article 4 and Section 6.2 are true and correct
as to such spouse.
SECTION 3.5. Representation of the Thrift Plan. If such
Holder is the Thrift Plan, the Investment Manager has made the determination
as of September 4, 1996 that the exchange of the Thrift Plan's shares of
Industries Common Stock for Micro Common Stock is prudent and in the best
interest of the Thrift Plan participants and beneficiaries.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF EACH PARTY
Each party hereto hereby represents and warrants to each other
party hereto as of September 4, 1996, as of October 17, 1996, as of the First
Closing Date and, in the case of Entertainment, Industries and each Holder
that is a member of the Entertainment Group, as of the Second Closing Date, as
follows:
SECTION 4.1. Authority; No Other Action. (a) Such
Person, if an individual, has the legal capacity to enter into this Agreement
and each Related Agreement. If such Person is not an individual, the
execution, delivery and performance by such Person of this Agreement and each
Related Agreement are within such Person's powers and have been duly
authorized on its part by all requisite action.
(b) No action by or in respect of, or filing with, any
governmental authority, agency or official is required for the execution,
delivery and performance by such Person of this Agreement and each Related
Agreement, other than compliance with any applicable requirements of the HSR
Act. The execution, delivery and performance by such Person of this Agreement
and each Related Agreement do not (i) contravene or conflict with or
constitute a violation of any provision of any existing law, regulation,
judgment, injunction, order or decree binding upon or applicable to such
Person or (ii) after giving effect to the actions to be taken in connection
with the First Closing and, if applicable, the Second Closing, require any
further consent, approval or other action by any other Person or constitute a
default under any provision of any material agreement, contract, indenture,
lease or other instrument binding upon such Person or any material license,
franchise, permit or other similar authorization held by such Person which
would have a material adverse effect on the business, financial condition or
prospects of any such Person.
SECTION 4.2. Binding Effect. This Agreement has been duly
executed by such Person and constitutes, and, when executed and delivered,
each Related Agreement shall constitute, a valid and binding agreement of such
Person.
ARTICLE 5A
CONDITIONS TO FIRST CLOSING
SECTION 5A.1. Conditions to Obligations of the Parties.
The obligations of each party to consummate the First Closing are subject to
the satisfaction of the following conditions:
(i) any applicable waiting period under the HSR Act
relating to the consummation of the First Closing and the
transactions contemplated by the Reorganization Agreement and the
other agreements referred to herein or therein shall have expired or
been terminated;
(ii) no provision of any applicable law or regulation and
no judgment, injunction, order or decree shall prohibit the
consummation of the First Closing or the transactions contemplated by
the Reorganization Agreement and the other agreements referred to
herein or therein;
(iii) all actions by or in respect of or filings with any
governmental body, agency, official or authority required to permit
the consummation of the First Closing and the transactions
contemplated by the Reorganization Agreement and the other agreements
referred to herein or therein shall have been taken, made or obtained;
(iv) the Related Agreements, the Board Representation
Agreement, the Reorganization Agreement and the Ancillary Agreements
(as defined in the Reorganization Agreement) shall have been executed
and delivered by each of the parties thereto and shall be in full
force and effect; and
(v) the certificate of incorporation and bylaws of Micro
shall be substantially in the forms attached as Exhibits E and F,
respectively.
SECTION 5A.2. Conditions to Obligation of the Ingram
Companies. The obligation of each Ingram Company to consummate the First
Closing is subject to the satisfaction of the following further conditions:
(i) (A) each Holder shall have performed in all material
respects all of its obligations under this Agreement and any other
agreement, certificate or other writing delivered in connection
herewith required to be performed by it on or prior to the First
Closing Date and (B) the representations and warranties of each
Holder contained in this Agreement and in any other agreement,
certificate or other writing delivered in connection herewith shall
be true at and as of the First Closing Date, as if made at and as of
such date;
(ii) (A) a ruling (the "Micro Tax Ruling") with respect to the
federal income tax consequences of the transactions contemplated by
Section 2.2 and by the Reorganization Agreement and the other
agreements referred to herein and therein in form and substance
reasonably satisfactory to Industries (and which may be in the same
ruling as the Entertainment Tax Ruling) shall have been received and
shall not have been revoked and (B) nothing shall have come to the
attention of the Board of Directors of Industries that causes them to
conclude, after consideration of advice of tax counsel and all other
facts and circumstances that they deem appropriate, that significant
questions exist as to the validity of the Micro Tax Ruling as applied
to the transactions contemplated hereby and by the Reorganization
Agreement and the other agreements referred to herein and therein;
(iii) each Ingram Company shall have received an opinion of
McDermott, Will & Emery, counsel to the Investment Manager, dated the
date of the First Closing, to the effect that the transactions
contemplated to be entered into by the Thrift Plan at the First
Closing and the consummation thereof will not constitute prohibited
transactions under Section 406 of the Employee Retirement Income
Security Act of 1974, as amended, or Section 4975 of the Internal
Revenue Code of 1986, as amended;
(iv) all third party non-governmental consents, authorizations
and approvals required in connection with the consummation of the
First Closing and the transactions contemplated by the Reorganization
Agreement and the other agreements referred to herein or therein
shall have been received, in each case in form and substance
reasonably satisfactory to Industries, and no such consent,
authorization or approval shall have been revoked;
(v) all receivables, payables and other liabilities (other
than loans made to or by any stockholder of Industries and other than
purchases and sales of goods in the ordinary course of business)
owing between Industries, Entertainment or any of their respective
Subsidiaries, on the one hand, and Micro or any of its Subsidiaries,
on the other hand, shall have been settled and repaid;
(vi) agreements relating to the transactions referred to on
Schedule 5A.2(vi) shall have been executed and delivered by the
parties thereto and shall be in full force and effect, and the
conditions to closing of each such agreement shall have been
satisfied;
(vii) the Offer Period referred to in Section 2.4 shall have
expired; and
(viii) the exchanges and conversions contemplated to occur on
or prior to the First Closing by the Amended and Restated Stock
Option, SAR and ISU Conversion and Exchange Agreement substantially
in the form attached as Exhibit D hereto shall have occurred (or
shall occur concurrently with the First Closing).
SECTION 5A.3. Conditions to Obligation of the Holders. The
obligation of each Holder to consummate the First Closing is subject to the
satisfaction of the following further conditions that (i) each Ingram Company
shall have performed in all material respects all of its obligations under
this Agreement and any other agreement, certificate or other writing delivered
in connection herewith required to be performed by it at or prior to the First
Closing Date and (ii) the representations and warranties of each Ingram
Company contained in this Agreement and in any other agreement, certificate or
other writing delivered in connection herewith shall be true at and as of the
First Closing Date, as if made at and as of such date.
SECTION 5A.4. Conditions to Obligation of Certain
Stockholders. The obligation of each of the Family Stockholders and the QTIP
to consummate the First Closing is subject to the satisfaction of the further
conditions that (i) the Micro Tax Ruling, in form and substance reasonably
satisfactory to each of the Family Stockholders and the QTIP, shall have been
received and shall not have been revoked and (ii) nothing shall have come to
the attention of any Family Stockholder or the QTIP that causes them to
conclude, after consideration of advice of tax counsel and all other facts and
circumstances that they deem appropriate, that significant questions exist as
to the validity of the Micro Tax Ruling as applied to the transactions
contemplated hereby and by the Reorganization Agreement and the other
agreements referred to herein and therein.
SECTION 5A.5. Conditions to Obligation of the Thrift Plan.
The obligation of the Thrift Plan to consummate the First Closing is subject
to the satisfaction of the following further conditions:
(i) the Thrift Plan shall have received an opinion dated the
date of the First Closing of McDermott, Will & Emery, counsel to the
Investment Manager, in form and substance satisfactory to the
trustees of the Thrift Plan, to the effect that the transactions to
be entered into by the Thrift Plan, at the First Closing and the
consummation thereof will not constitute prohibited transactions
under Section 406 of the Employee Retirement Income Security Act of
1974, as amended, or Section 4975 of the Internal Revenue Code of
1986, as amended;
(ii) the Investment Manager of the Thrift Plan shall have
received a written opinion from Houlihan, Lokey, Howard & Zukin
("HLH&Z") to the effect that (A) the fair market value of the shares
of Micro Common Stock to be received by the Thrift Plan pursuant to
Section 2.2 is at least equal to the fair market value of the
Exchange Securities of the Thrift Plan and (B) the terms and
conditions of the Exchange are fair and reasonable to the Thrift Plan
from a financial point of view;
(iii) the Investment Manager shall have provided the written
direction to the trustees of the Thrift Plan contemplated under
Section 2.2(b)(i); and
(iv) Nothing shall have come to the attention of the
Investment Manager that causes it to conclude that its decision to
exchange the Thrift Plan's shares of Industries Common Stock for
Micro Common Stock was not prudent or in the best interest of the
Thrift Plan participants and beneficiaries.
ARTICLE 5B
CONDITIONS TO SECOND CLOSING
SECTION 5B.1. Conditions to Obligations of the Parties.
The obligations of Industries, Entertainment and each Holder that is a member
of the Entertainment Group to consummate the Second Closing are subject to the
satisfaction of the following conditions:
(i) any applicable waiting period under the HSR Act
relating to the consummation of the Second Closing and the
transactions contemplated by the Reorganization Agreement and the
other agreements referred to herein or therein shall have expired or
been terminated;
(ii) no provision of any applicable law or regulation and
no judgment, injunction, order or decree shall prohibit the
consummation of the Second Closing or the transactions contemplated
by the Reorganization Agreement and the other agreements referred to
herein or therein; and
(iii) all actions by or in respect of or filings with any
governmental body, agency, official or authority required to permit
the consummation of the Second Closing and the transactions
contemplated by the Reorganization Agreement and the other agreements
referred to herein or therein shall have been taken, made or obtained.
SECTION 5B.2. Conditions to Obligation of Industries and
Entertainment. The obligation of Industries and Entertainment to consummate
the Second Closing is subject to the satisfaction of the following further
conditions:
(i) (A) each Holder that is a member of the Entertainment
Group shall have performed in all material respects all of its
obligations under this Agreement and any other agreement, certificate
or other writing delivered in connection herewith required to be
performed by it on or prior to the Second Closing Date and (B) the
representations and warranties of each Holder that is a member of the
Entertainment Group contained in this Agreement and in any other
agreement, certificate or other writing delivered in connection
herewith shall be true at and as of the Second Closing Date, as if
made at and as of such date;
(ii) (A) a ruling (the "Entertainment Tax Ruling") with
respect to the federal income tax consequences of the transactions
contemplated by Section 2.3 and the other agreements referred to
herein in form and substance reasonably satisfactory to Industries
(and which may be in the same ruling as the Micro Tax Ruling) shall
have been received and shall not have been revoked and (B) nothing
shall have come to the attention of the Board of Directors of
Industries that causes them to conclude, after consideration of
advice of tax counsel and all other facts and circumstances that they
deem appropriate, that significant questions exist as to the validity
of the Entertainment Tax Ruling as applied to the transactions
contemplated hereby and the other agreements referred to herein;
(iii) all third party non-governmental consents,
authorizations and approvals required in connection with the
consummation of the Second Closing and the transactions contemplated
by the Reorganization Agreement and the other agreements referred to
herein or therein shall have been received, in each case in form and
substance reasonably satisfactory to Industries, and no such consent,
authorization or approval shall have been revoked;
(iv) all receivables, payables and other liabilities (other
than loans made to or by any stockholder of Industries and other than
purchases and sales of goods in the ordinary course of business)
owing between Industries or any of its Subsidiaries, on the one hand,
and Entertainment or any of its Subsidiaries, on the other hand,
shall have been settled and repaid; and
(v) the exchanges and conversions contemplated to occur on
or prior to the Second Closing by the Amended and Restated Stock
Option, SAR and ISU Conversion and Exchange Agreement substantially
in the form attached as Exhibit D hereto shall have occurred (or
shall occur concurrently with the Second Closing).
SECTION 5B.3. Conditions to Obligation of Certain Holders.
The obligation of each Holder that is a member of the Entertainment Group to
consummate the Second Closing is subject to the satisfaction of the following
further conditions that (i) each of Industries and Entertainment shall have
performed in all material respects all of its obligations under this Agreement
and any other agreement, certificate or other writing delivered in connection
herewith required to be performed by it at or prior to the Second Closing Date
and (ii) the representations and warranties of Industries and Entertainment
contained in this Agreement and in any other agreement, certificate or other
writing delivered in connection herewith shall be true at and as of the Second
Closing Date, as if made at and as of such date.
SECTION 5B.4. Conditions to Obligation of David B. Ingram.
The obligation of David B. Ingram to consummate the Second Closing is subject
to the satisfaction of the further conditions that (i) the Entertainment Tax
Ruling, in form and substance reasonably satisfactory to David B. Ingram,
shall have been received and shall not have been revoked and (ii) nothing
shall have come to the attention of David B. Ingram that causes him to
conclude, after consideration of all other facts and circumstances that he
deems appropriate, that significant questions exist as to the validity of the
Entertainment Tax Ruling as applied to the transactions contemplated hereby
and the other agreements referred to herein.
ARTICLE 6
CERTAIN AGREEMENTS; TAX MATTERS
SECTION 6.1. Tax Representation and Covenant of the
Holders. Each Holder hereby represents and warrants to each Ingram Company as
of September 4, 1996, as of the First Closing Date and, if such Holder is a
member of the Entertainment Group, as of the Second Closing Date, that there
is no plan or intention by such Holder to sell, exchange, transfer by gift or
otherwise dispose of any of such Holder's stock in any of the Ingram Companies
subsequent to the Exchange. Each Holder that is a member of the Entertainment
Group hereby agrees not to sell, exchange, or otherwise transfer any of such
Holder's shares of Entertainment Common Stock subsequent to the Second Closing
to any entity formed for the purpose of holding all of the outstanding shares
of Entertainment Common Stock unless such Holder first obtains an opinion from
recognized tax counsel acceptable to the Ingram Companies, or a ruling from the
Internal Revenue Service, that such sale, exchange, transfer or other
disposition will not affect the qualification of the transactions contemplated
by this Agreement for tax-free treatment under Section 355 of the Internal
Revenue Code of 1986, as amended.
SECTION 6.2. Tax Representation of the Ingram Companies.
Each Ingram Company represents and warrants to each Holder as of September 4,
1996 and as of the First Closing Date that such Ingram Company has no plan or
intention to liquidate, merge or consolidate with any other Person, or to sell
or otherwise dispose of its assets other than in the ordinary course of
business following the First Closing. Each of Industries and Entertainment
further represents and warrants to each Holder as of September 4, 1996 and as
of the Second Closing Date that it has no plan or intention to liquidate,
merge or consolidate with any other Person, or to sell or otherwise dispose of
its assets other than in the ordinary course of business following the Second
Closing.
SECTION 6.3. Tax Covenant. Each Ingram Company covenants
that, during the two-year period following the First Closing (and, with
respect to Industries and Entertainment, during the two-year period following
the Second Closing), it will not, and will not enter into any agreement to,
(i) liquidate, merge or consolidate with any other Person, or sell, exchange,
distribute or otherwise dispose of any material asset other than in the
ordinary course of business; (ii) redeem or reacquire any of its capital stock
transferred pursuant to this Agreement (except for the redemption of the stock
held by an employee or by the Thrift Plan on behalf of an employee upon the
employee's termination or death in accordance with the terms of (x) an
applicable stock purchase agreement or a repurchase agreement referred to in
Section 4.4 of the Reorganization Agreement, (y) Section 2.6 or Section
2.7(a)(ii) of the Transfer Restrictions Agreement or (z) the Thrift Plan
Liquidity Agreement) or, in the case of Industries, any of the Industries
common stock outstanding as of the First Closing or the Second Closing, as the
case may be, that is not transferred pursuant to this Agreement (except for the
redemption of the stock held by an employee upon such employee's termination
or death in accordance with the terms of an applicable stock purchase
agreement or a repurchase agreement referred to in Section 4.4 of the
Reorganization Agreement); (iii) cease to conduct the principal active trade
or business conducted by it during the five years immediately preceding the
First Closing or the Second Closing, as the case may be; or (iv) otherwise
take any actions inconsistent with the facts and representations set forth in
the Tax Ruling; provided that such Ingram Company may take an action
inconsistent with any of the foregoing covenants if it first obtains an
opinion from recognized tax counsel acceptable to the other Ingram Companies,
or a ruling from the Internal Revenue Service, that such action will not
affect the qualification of the transactions contemplated by this Agreement
for tax-free treatment under Section 355 of the Internal Revenue Code of 1986,
as amended.
SECTION 6.4. Agreements of Investment Manager. (a) The
Investment Manager represents and warrants to each Holder as of September 4,
1996 that it has received written confirmation, attached hereto as Schedule
6.4, from HLH&Z that HLH&Z will deliver the opinion contemplated pursuant to
Section 5A.5(ii), provided that, immediately after the First Closing (and
without giving effect to any shares of Micro Common Stock to be issued in the
initial public offering of Micro), the Thrift Plan will own shares of Micro
Common Stock representing not less than 9.1% (as adjusted to reflect rounding
and any sale of Micro Common Stock to the Chief Executive Officer of Micro) of
all shares of Micro Common Stock outstanding at such time.
(b) The Investment Manager hereby agrees to cooperate with
the Ingram Companies and HLH&Z in connection with obtaining the opinion from
HLH&Z referred to in Section 5A.5(ii). The Investment Manager hereby further
agrees to deliver the written direction to the trustees of the Thrift Plan
referred to in Section 2.2(b)(i) and 5A.5(iii) promptly following receipt of
such HLH&Z opinion.
(c) The Investment Manager hereby agrees (i) to deliver to
the trustees of the Thrift Plan the written direction contemplated pursuant to
Section 2.2(b)(i), provided that the applicable conditions to the obligation of
the Thrift Plan set forth in Article 5A are satisfied or waived and (ii) to
direct the trustees of the Thrift Plan to enter into the Exchange Agreement on
behalf of the Thrift Plan.
SECTION 6.5. True-Up. (a) (i) Subject to Section 6.5(b),
each Ingram Company hereby agrees that, at or immediately prior to the First
Closing, the Adjustment Amount (as defined below) shall be allocated 23.01% to
Industries, 72.84% to Micro and 4.15% to Entertainment. Such allocation shall
be made through appropriate adjustments effected by way of dividends or capital
contributions to balance (A) the actual amount which each of Industries, Micro
and Entertainment and their respective Subsidiaries have contributed to the
Adjustment Amount with (B) the respective share of the Adjustment Amount to be
allocated to each of them pursuant to the foregoing sentence. As used herein,
"Adjustment Amount" shall mean the sum of (i) consolidated net income as
reported in Industries' unaudited interim financial statements for the period
(the "Initial Adjustment Period") commencing January 1, 1996 and ending (x) on
the last day of the full accounting month ended immediately prior to the First
Closing Date (if the First Closing Date occurs later than the 15th day of the
month) or (y) the last day of the second full accounting month ended prior to
the First Closing Date (if the First Closing Date occurs on or prior to the
15th day of the month) and (ii) the consolidated net income of Industries, as
projected by Industries, for the period commencing on the first day following
the end of the Initial Adjustment Period and ending on the last day of the
fiscal year, assuming for purposes of this clause (ii) that the First Closing
does not occur during such fiscal year; provided that the Adjustment Amount
shall be determined without giving effect to (a) any net income or losses
related to IMS or IPSI (each, as defined in the Reorganization Agreement), (b)
the after-tax effect of the Industries LIFO provision for such period, (c) any
accrual for expenses related to the transactions contemplated hereby, by the
Related Agreements, by the Reorganization Agreement or by the Ancillary
Agreements (as defined in the Reorganization Agreement), (d) any non-cash
charges related to Micro's stock option plans or (e) any expenses referred to
in Section 7.12 of this Agreement; provided further that the Adjustment Amount
shall be increased or decreased by such other amounts as the Ingram Companies
may agree.
(ii) Subject to Section 6.5(b), each of Industries and
Entertainment hereby agree that, at or prior to the Second Closing, the
Adjustment Amount shall be recalculated; provided that for purposes of such
recalculation, the consolidated net income of Industries for the period
commencing on the first day following the end of the Initial Adjustment Period
and ending on the last day of the fiscal year during which the First Closing
occurred shall be based on the actual net income of Industries and its
Subsidiaries and Entertainment and its Subsidiaries during such period (with
the net income of Micro and its Subsidiaries continuing to be as projected in
Section 6.5(a)). Such recalculation shall continue to assume that the First
Closing did not occur during such fiscal year. Following such recalculation,
appropriate adjustments shall be made between Industries and Entertainment in
the manner described in Section 6.5(a)(i) such that, after taking into account
any adjustments made at or immediately prior to the First Closing pursuant to
Section 6.5(a)(i), the recalculated Adjustment Amount shall (to the extent
possible) be allocated 23.01% to Industries and 4.15% to Entertainment.
(b) Notwithstanding anything herein to the contrary, the
parties agree that, in consideration of distributions to Industries previously
made by Micro and Entertainment, no costs and expenses shall be allocated to,
and no liabilities or obligations shall be assumed or borne by, Micro or
Entertainment pursuant to Section 6.5(a) or Section 7.12 of this Agreement or
pursuant to Article 3 of the Reorganization Agreement, until the aggregate of
such costs, expenses, liabilities and obligations shall exceed $20,778,000, in
the case of Micro, or $1,160,000, in the case of Entertainment, in which event
such allocation or assumption shall be made only to the extent of such excess.
To the extent that the aggregate of such costs, expenses, liabilities and
obligations is less than $20,778,000 in the case of Micro, or $1,160,000 in
the case of Entertainment, Industries shall make a payment in the amount of
such difference to Micro or Entertainment, as the case may be.
SECTION 6.6. Termination of Stock Purchase Agreement
Obligations. Industries and each Holder who is a party to a stock purchase
agreement with Industries hereby acknowledges that all obligations of the
other party to such stock purchase agreement will cease with respect to all
shares of Industries common stock of such Holder that are exchanged for shares
of Micro Common Stock or Entertainment Common Stock pursuant to this
Agreement. Such cessation shall be effective at the First Closing with
respect to shares of Industries common stock exchanged for Micro Common Stock
and at the Second Closing with respect to shares of Industries common stock
exchanged for Entertainment Common Stock.
SECTION 6.7. Cooperation. Each Holder agrees to cooperate
with Micro in connection with the initial registered public offering of shares
of Micro Common Stock. Without limiting the generality of the foregoing, each
Holder agrees to execute and deliver such documents, certificates, agreements
and other writings (including without limitation any lock-up agreement
requested by the underwriters) and to take such other actions requested by
Micro in connection with the consummation of such initial public offering.
SECTION 6.8. Issuance of Entertainment Common Stock. The
parties hereto agree that if a stock option of Industries is exercised by a
Person listed on Annex I as being a member of the Entertainment Group after
the First Closing Date and prior to the Option Record Date, Industries shall
subscribe for, and shall cause Entertainment to issue, 3.68 shares of
Entertainment Common Stock for each option to purchase one share of Industries
Common Stock that is so exercised (which aggregate number of shares of
Entertainment Common Stock issued in respect of the exercise of stock options
by any such member of the Entertainment Group shall be rounded up to the
nearest whole share). In consideration for such issuance, Industries shall
make a capital contribution to Entertainment in an amount equal to the sum of
(i) the aggregate exercise price received by Industries in connection with any
such exercise and (ii) the estimated tax benefit to be realized by Industries
as a result of any such exercise of nonqualified options.
ARTICLE 7
MISCELLANEOUS
SECTION 7.1. Headings. The headings in this Agreement are
for convenience of reference only and shall not control or affect the meaning
or construction of any provision hereof.
SECTION 7.2. Entire Agreement. This Agreement, the Board
Representation Agreement, the Related Agreements, the Reorganization Agreement
and the Ancillary Agreements (as defined in the Reorganization Agreement)
constitute the entire agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein. This Agreement
and such other agreements supersede all prior agreements and understandings
between the parties hereto and thereto with respect to the subject matter
hereof and thereof.
SECTION 7.3. Notices. Any notice, request, instruction or
other document to be given hereunder by any party hereto to another party
hereto shall be in writing (including telecopier or similar writing) and shall
be given to such party at its address set forth on the signature pages hereof,
or to such other address as the party to whom notice is to be given may
provide in a written notice to the party giving such notice, a copy of which
written notice shall be on file with the Secretary of Industries. If notice
is given pursuant to this Section of a permitted successor or assign of a
party to this Agreement, then notice shall thereafter be given as set forth
above to such successor or assign of such party to this Agreement. Each such
notice, request or other communication shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified
on the signature pages hereof and electronic or oral confirmation of receipt
is received, (ii) if given by mail, at the close of business on the third
business day after such communication is deposited in the mails with first
class postage prepaid addressed as aforesaid or (iii) if given by any other
means, when delivered at the address specified in this Section 7.3.
SECTION 7.4. Applicable Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of
Tennessee without regard to the conflicts of law rules of such state.
SECTION 7.5. Severability. The invalidity or
unenforceability of any provisions of this Agreement in any jurisdiction shall
not affect the validity, legality or enforceability of the remainder of this
Agreement in such jurisdiction or the validity, legality or enforceability of
this Agreement, including any such provision, in any other jurisdiction, it
being intended that all rights and obligations of the parties hereunder shall
be enforceable to the fullest extent permitted by law.
SECTION 7.6. Termination. (a) This Agreement may be
terminated in its entirety at any time prior to the First Closing at the
election of Industries or the holders of a majority of the outstanding shares
of Industries Common Stock for any reason or for no reason without any
liability to any Person.
(b) This Agreement may be terminated with respect to the
transactions contemplated to take place at the Second Closing at any time
prior to the Second Closing at the election of Industries or the holders of a
majority of the outstanding shares of Industries Common Stock or David B.
Ingram for any reason or for no reason without any liability to any Person.
This Agreement shall terminate with respect to the transactions contemplated
to take place at the Second Closing if the Second Closing does not occur prior
to December 31, 1997.
SECTION 7.7. Successors, Assigns, Transferees. No Holder
or Ingram Company may assign or otherwise transfer any of its rights under
this Agreement without the consent of each Ingram Company. This Agreement is
binding upon the parties to this Agreement and their respective legal
representatives, heirs, devisees, legatees, beneficiaries and successors and
permitted assigns and inures to the benefit of the parties to this Agreement
and their respective permitted legal representatives, heirs, devisees,
legatees, beneficiaries and other permitted successors and assigns, if any.
Neither this Agreement nor any provision hereof shall be construed so as to
confer any right or benefit upon any Person other than the parties to this
Agreement, those who agree to be bound hereby and their respective permitted
legal representatives, heirs, devisees, legatees, beneficiaries and other
permitted successors and assigns. References to a party to this Agreement are
also references to any permitted successor or assign of such party and, when
appropriate to effect the binding nature of this Agreement for the benefit of
another party, any other successor or assign of a party.
SECTION 7.8. Amendments; Waivers. (a) No failure or
delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
(b) Neither this Agreement nor any term or provision hereof
may be amended or waived except by an instrument in writing:
(i) signed by (x) each of the Family Stockholders, (y) each
Ingram Company, following approval of such amendment or waiver by the
Board of Directors of such Ingram Company and (z) the Thrift Plan;
provided that the Thrift Plan is materially adversely affected by
such amendment or waiver; and
(ii) approved by the Holders that are members of each Group
which is materially adversely affected by such amendment or waiver
(an "Affected Group"); provided that the approval referred to in this
clause (ii) shall be deemed to have been received with respect to any
Affected Group (A) if Industries has not received written notice of
disapproval within ten business days after effective delivery of the
proposed amendment or waiver signed by (x) the Holders of at least
66% of the shares of Industries Common Stock (other than shares held
by the Family Stockholders and the Thrift Plan) held by all members
of such Affected Group (other than the Family Stockholders and the
Thrift Plan) and (y) at least 66% of the members (other than the
Family Stockholders and the Thrift Plan) of each such Affected Group
(the Persons referred to in clause (x) and (y) above are hereinafter
referred to as the "Required Holders"), or (B) if the amendment or
waiver is signed by the Holders of more than 33% of the shares of
Industries Common Stock (other than shares held by the Family
Stockholders and the Thrift Plan) held by the members of such
Affected Group or by more than 33% of the members (other than the
Family Stockholders or the Thrift Plan) of such Affected Group;
provided further that for purposes of this clause (ii), the Micro
Group shall be divided into two Groups, the first of which shall
include the E. Bronson Ingram 1995 Charitable Remainder 5% Unitrust,
the Martha and Bronson Ingram Foundation, the E. Bronson Ingram 1994
Charitable Lead Annuity Trust (collectively, the "Charitable Trusts
and Foundation") and the QTIP, and the second of which shall include
all other members of the Micro Group (other than the Family
Stockholders and the Thrift Plan).
(c) Industries shall deliver prompt written notice to each
other party hereto of any amendment or waiver to this Agreement approved
pursuant to this Section.
(d) Any Holder (other than an Ingram Stockholder, the QTIP,
the Charitable Trusts and Foundation or the Thrift Plan) who is materially
adversely affected by an amendment approved pursuant to this Section and who
did not execute such amendment pursuant to clause (b) above shall have the
right to withdraw as a party to this Agreement by written notice to Industries
delivered within 10 days following receipt of the notice described in clause
(c) above, in which event such Holder shall not participate in the Exchange
and shall retain its shares of Industries Common Stock.
SECTION 7.9. Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be an original with the
same effect as if the signatures thereto and hereto were upon the same
instrument.
SECTION 7.10. Remedies. The parties hereby acknowledge and
agree that in the event of any breach of this Agreement, the parties would be
irreparably harmed and could not be made whole by monetary damages. Each party
hereto accordingly agrees (i) not to assert by way of defense or otherwise
that a remedy at law would be adequate, and (ii) in addition to any other
remedy to which the parties may be entitled, that the remedy of specific
performance of this Agreement is appropriate in any action in court.
SECTION 7.11. Consent to Jurisdiction. Each party hereto
irrevocably submits to the non-exclusive jurisdiction of any Tennessee State
Court or United States Federal Court sitting in the Middle District of
Tennessee over any suit, action or proceeding arising out of or relating to
this Agreement. Each party hereto (other than any Ingram Company) hereby
irrevocably appoints CT Corporation System as its authorized agent to accept
and acknowledge on its behalf service of any and all process which may be
served in any such suit, action or proceeding in any such court and represents
and warrants that such agent has accepted such appointment. Each party hereto
consents to process being served in any such suit, action or proceeding by
serving a copy thereof upon the agent for service of process, provided that to
the extent lawful and possible, written notice of such service shall also be
mailed to such party. Each party hereto waives any right it may have to
assert the doctrine of forum non conveniens or to object to venue to the
extent any proceeding is brought in accordance with this Section 7.11.
Nothing in this paragraph shall affect or limit any right to serve process in
any manner permitted by law, to bring proceedings in the courts of any
jurisdiction or to enforce in any lawful manner a judgment obtained in one
jurisdiction in any other jurisdiction.
SECTION 7.12. Expenses. (a) Subject to Section 6.5(b), all
costs and expenses of the Ingram Companies (i) incurred as a result of
services provided by third parties in connection with the preparation of this
Agreement, the Reorganization Agreement, the Ancillary Agreements (as defined
in the Reorganization Agreement) and the Related Agreements and the
consummation of the transactions contemplated hereby and thereby (including
without limitation (x) rating agency fees incurred in connection with the
refinancings referred to in Section 5.2(vi), (y) expenses incurred in
connection with the Tax Ruling and (z) fees charged by software vendors in
connection with the transfer or replacement (but not enhancement), directly as
a result of the consummation of the transactions contemplated hereby, of
software packages currently used by the Ingram Companies and related equipment
costs) and (ii) incurred by the party providing services pursuant to the
Ancillary Agreements as a result of the cessation of such services, shall be
borne 23.01% by Industries, 72.84% by Micro and 4.15% by Entertainment, except
as otherwise specifically provided in this Agreement, the Reorganization
Agreement, any Ancillary Agreement or any Related Agreement; provided that (A)
to the extent that any of the costs and expenses referred to in clause (i) or
(ii) above are incurred as a result of arrangements pertaining solely to the
transactions contemplated by the Second Closing, and to the extent that Micro
did not participate in the negotiation of such arrangements, such costs and
expenses shall be borne 84.72% by Industries and 15.28% by Entertainment, (B)
all costs and expenses incurred in connection with the initial public offering
of Micro and the adoption and grant of awards under the 1996 Equity Incentive
Plan and 1996 Key Employee Stock Purchase Plan of Micro shall be borne by
Micro and (C) rating agency fees incurred in connection with all financings
(other than those referred to in Section 5.2(vi)) shall be borne by the party
undertaking such financing.
(b) All costs and expenses incurred by the parties to this
Agreement (other than the Ingram Companies) in connection with the preparation
of this Agreement, the Reorganization Agreement, the Ancillary Agreements and
the Related Agreements and the consummation of the transactions contemplated
hereby and thereby shall be borne by the party incurring such costs and
expenses, except as otherwise specifically provided herein or therein.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
INGRAM INDUSTRIES INC.
By:________________________________________
Name:
Title:
Address: One Belle Meade Place
4400 Harding Road
Nashville, TN 37205
Telecopy: (615) 298-8242
INGRAM MICRO INC.
By:________________________________________
Name:
Title:
Address: 1600 East Saint Andrew Place
Santa Ana, CA 92705
Telecopy: 714-566-7900
INGRAM ENTERTAINMENT INC.
By:________________________________________
Name:
Title:
Address: Two Ingram Blvd.
La Vergne, TN 37086
Telecopy: 615-287-4985
STATE STREET BANK & TRUST COMPANY
By:________________________________________
Name: Kelly Q. Driscoll
Title: Vice President
Address: Batterymarch Park III
3 Pinehill Drive
Quincy, MA 02169
Telecopy: 617-376-7313
HOLDERS E. BRONSON INGRAM
Q-TIP MARITAL TRUST
By: MARTHA R. INGRAM, ORRIN H. INGRAM,
JOHN R. INGRAM, DAVID B. INGRAM AND
ROBIN I. PATTON, as Co-Trustees
By:________________________________________
Name: Martha R. Ingram
Title: Co-Trustee
Address: 120 Hillwood Drive
Nashville, TN 37215
By:________________________________________
Name: Orrin H. Ingram
Title: Co-Trustee
Address: 1475 Moran Road
Franklin, TN 37069
By:________________________________________
Name: John R. Ingram
Title: Co-Trustee
Address: 311 Jackson Boulevard
Nashville, TN 37205
By:________________________________________
Name: David B. Ingram
Title: Co-Trustee
Address: 4417 Tyne Boulevard
Nashville, TN 37215
By:________________________________________
Name: Robin I. Patton
Title: Co-Trustee
Address: 1600 Chickering Road
Nashville, TN 37215
E. BRONSON INGRAM 1995 CHARITABLE
REMAINDER 5% UNITRUST
By: MARTHA R. INGRAM, as Trustee
By:________________________________________
Name: Martha R. Ingram
Title: Trustee
Address: 120 Hillwood Drive
Nashville, TN 37215
MARTHA AND BRONSON INGRAM FOUNDATION
By:________________________________________
Name: John R. Ingram
Title: President
Address: c/o Ingram Industries Inc.
4440 Harding Road
Nashville, TN 37205
(615) 298-8200
E. BRONSON INGRAM 1994
CHARITABLE LEAD ANNUITY TRUST
By: ORRIN H. INGRAM, JOHN R. INGRAM,
DAVID B. INGRAM, AND ROBIN B.
INGRAM PATTON, as Co-Trustees
By:________________________________________
Name: Orrin H. Ingram
Title: Co-Trustee
Address: 1475 Moran Road
Franklin, TN 37069
By:________________________________________
Name: John R. Ingram
Title: Co-Trustee
Address: 311 Jackson Boulevard
Nashville, TN 37205
By:________________________________________
Name: David B. Ingram
Title: Co-Trustee
Address: 4417 Tyne Boulevard
Nashville, TN 37215
By:________________________________________
Name: Robin B. Ingram Patton
Title: Co-Trustee
Address: 1600 Chickering Road
Nashville, TN 37215
INGRAM THRIFT PLAN
By: W.M. HEAD, R.E. CLAVERIE
AND T.H. LUNN, as Co-Trustees
By:________________________________________
Name: William M. Head
Title: Co-Trustee
Address: 1229 Nichol Lane
Nashville, TN 37205
By:________________________________________
Name: R.E. Claverie
Title: Co-Trustee
Address: 6107 Hickory Valley Road
Nashville, TN 37205
By:________________________________________
Name: T.H. Lunn
Title: Co-Trustee
Address: 509 Sugartree Lane
Franklin, TN 37064
___________________________________________
Linwood A. Lacy, Jr.
2304 Cranborne Road
Midlothian, VA 23113
LINWOOD A. LACY, JR.
1996 IRREVOCABLE TRUST DATED
MARCH 24, 1996
By: NATIONSBANK, N.A, as Trustee
By:________________________________________
Name:
Title:
Address: NationsBank, N.A.
Attention: Phil Rudder,
Vice President
12th and Main, 12th Floor
Richmond, VA 23261
____________________________ ___________________________________________
Spouse David W. Rutledge
34 Deerwood East
Irvine, CA 92714
____________________________ ___________________________________________
Spouse Ronald K. Hardaway
2 Moss Glen
Irvine, CA 92715
___________________________________________
Victoria L. Cotten
8 Medici
Aliso Viejo, CA 92656
___________________________________________
David B. Ingram
4417 Tyne Boulevard
Nashville, TN 37215
DAVID AND SARAH INGRAM
FAMILY 1996 GENERATION SKIPPING TRUST
By: THOMAS H. LUNN, as Trustee
By:________________________________________
Name: Thomas H. Lunn
Title: 509 Sugartree Lane
Address: Franklin, TN 37064
TRUST FOR THE BENEFIT OF
DAVID BRONSON INGRAM,
DATED OCTOBER 27, 1967
By: TRUST COMPANY BANK,
as Successor Trustee
By:________________________________________
Name: Thomas A. Shanks, Jr.
Title: First Vice President
Address: Trust Company Bank
Trust Company of Georgia
Attn: Thomas A. Shanks, Jr.
Trust Company Tower
25 Park Place, 2nd Floor
Atlanta, GA 30303
TRUST FOR THE BENEFIT OF
DAVID BRONSON INGRAM,
DATED JUNE 14, 1968
By: TRUST COMPANY BANK,
as Successor Trustee
By:________________________________________
Name: Thomas A. Shanks, Jr.
Title: First Vice President
Address: Trust Company Bank
Trust Company of Georgia
Attn: Thomas A. Shanks, Jr.
Trust Company Tower
25 Park Place, 2nd Floor
Atlanta, GA 30303
TRUST FOR THE BENEFIT OF
DAVID B. INGRAM, DATED DECEMBER 22, 1975
By: TRUST COMPANY BANK,
as Successor Trustee
By:____________________________
Name: Thomas A. Shanks, Jr.
Title: First Vice President
Address: Trust Company Bank
Trust Company of Georgia
Attn: Thomas A. Shanks, Jr.
Trust Company Tower
25 Park Place, 2nd Floor
Atlanta, GA 30303
DAVID B. INGRAM IRREVOCABLE TRUST
DATED AUGUST 16, 1988
By: ROY E. CLAVERIE, as Trustee
By:________________________________________
Name: Roy E. Claverie
Title: Trustee
Address: 6107 Hickory Valley Road
Nashville, TN 37205
1994 DAVID BRONSON INGRAM TRUST
By: ROY E. CLAVERIE, as Trustee
By:________________________________________
Name: Roy E. Claverie
Title: Trustee
Address: 6107 Hickory Valley Road
Nashville, TN 37205
___________________________________________
Thomas H. Lunn
509 Sugartree Lane
Franklin, TN 37064
LUNN FAMILY PARTNERS, L.P.
By: LUNN INVESTMENT COMPANY,
as General Partner
By:________________________________________
Name: Thomas H. Lunn
Title: President
Address: 509 Sugartree Lane
Franklin, TN 37064
___________________________________________
Philip M. Pfeffer
836 Treemont Court
Nashville, TN 37220
PFEFFER FAMILY PARTNERS, L.P.
By:
as General Partner
By:________________________________________
Name:
Title:
Address: 836 Treemont Court
Nashville, TN 37220
TRUST AGREEMENT OF JUNE 11, 1987
BETWEEN BRONSON AND MARTHA INGRAM,
GRANTORS, AND EDWARD G. NELSON,
TRUSTEE FOR THE BENEFIT OF
JOHN-LINDELL PHILIP PFEFFER
By: EDWARD G. NELSON, as Trustee
By:________________________________________
Name: Edward G. Nelson
Title: Trustee
Address: Nelson Capital Corp.
3401 West End Avenue
Nashville, TN 37203
___________________________________________
John-Lindell Philip Pfeffer
Rue General Potton, 29
1050 Brussels
Belgium
TRUST AGREEMENT OF JUNE 11, 1987
BETWEEN BRONSON AND MARTHA INGRAM,
GRANTORS, AND EDWARD G. NELSON, TRUSTEE
FOR THE BENEFIT OF DAVID MAURICE PFEFFER
By: EDWARD G. NELSON, as Trustee
By:________________________________________
Name: Edward G. Nelson
Title: Trustee
Address: Nelson Capital Corp.
3401 West End Avenue
Nashville, TN 37203
TRUST AGREEMENT OF JUNE 11, 1987
BETWEEN BRONSON AND MARTHA INGRAM,
GRANTORS, AND EDWARD G. NELSON,
TRUSTEE FOR THE BENEFIT OF
JAMES HOWARD PFEFFER
By: EDWARD G. NELSON, as Trustee
By:________________________________________
Name: Edward G. Nelson
Title: Trustee
Address: Nelson Capital Corp.
3401 West End Avenue
Nashville, TN 37203
___________________________________________
Roy E. Claverie
6107 Hickory Valley Road
Nashville, TN 37205
ROY E. CLAVERIE, JR.
1996 VESTED TRUST
By: WILLIAM S. JONES, as Trustee
By:________________________________________
Name: William S. Jones
Title: Trustee
Address: 6015 Wellesley Way
Brentwood, TN 37027
ROY E. CLAVERIE, JR.
1996 GENERATION SKIPPING TRUST
By: WILLIAM S. JONES, as Trustee
By:________________________________________
Name: William S. Jones
Title: Trustee
Address: 6015 Wellesley Way
Brentwood, TN 37027
KEITH J. CLAVERIE, JR.
1996 VESTED TRUST
By: WILLIAM S. JONES, as Trustee
By:________________________________________
Name: William S. Jones
Title: Trustee
Address: 6015 Wellesley Way
Brentwood, TN 37027
KEITH J. CLAVERIE, JR.
1996 GENERATION SKIPPING TRUST
By: WILLIAM S. JONES, as Trustee
By:________________________________________
Name: William S. Jones
Title: Trustee
Address: 6015 Wellesley Way
Brentwood, TN 37027
TRUST AGREEMENT OF JUNE 11, 1987
BETWEEN BRONSON AND MARTHA INGRAM,
GRANTORS, AND EDWARD G. NELSON,
TRUSTEE FOR THE BENEFIT OF
KEITH JOSEPH CLAVERIE
By: EDWARD G. NELSON, as Trustee
By:________________________________________
Name: Edward G. Nelson
Title: Trustee
Address: Nelson Capital Corp.
3401 West End Avenue
Nashville, TN 37203
TRUST AGREEMENT OF JUNE 11, 1987
BETWEEN BRONSON AND MARTHA INGRAM,
GRANTORS, AND EDWARD G. NELSON,
TRUSTEE FOR THE BENEFIT OF
ROY EDWARD CLAVERIE, JR.
By: EDWARD G. NELSON, as Trustee
By:________________________________________
Name: Edward G. Nelson
Title: Trustee
Address: Nelson Capital Corp.
3401 West End Avenue
Nashville, TN 37203
___________________________________________
Roy E. Claverie, Jr.
6107 Hickory Valley Road
Nashville, TN 37205
___________________________________________
David F. Sampsell
420 Welshwood #47
Nashville, TN 37211
___________________________________________
Steven J. Mason
1318 Chickering Road
Nashville, TN 37215
THE DAVID C. MASON
1996 GENERATION SKIPPING TRUST
By: LINDA L. MASON AND
MICHAEL G. MASON, as Co-Trustees
By:________________________________________
Name: Linda L. Mason
Title: Co-Trustee
Address: 1318 Chickering Road
Nashville, TN 37215
By:________________________________________
Name: Michael G. Mason
Title: Co-Trustee
Address: 1318 Chickering Road
Nashville, TN 37215
THE MICHAEL G. MASON
1996 GENERATION SKIPPING TRUST
By: LINDA L. MASON AND
STEVEN J. MASON, JR., as Co-Trustees
By:________________________________________
Name: Linda L. Mason
Title: Co-Trustee
Address: 1318 Chickering Road
Nashville, TN 37215
By:________________________________________
Name: Steven J. Mason, Jr.
Title: Co-Trustee
Address: 1318 Chickering Road
Nashville, TN 37215
THE STEVEN J. MASON, JR.
1996 GENERATION SKIPPING TRUST
By: LINDA L. MASON AND DAVID C. MASON,
as Co-Trustees
By:________________________________________
Name: Linda L. Mason
Title: Co-Trustee
Address: 1318 Chickering Road
Nashville, TN 37215
By:________________________________________
Name: David C. Mason
Title: Co-Trustee
Address: 1318 Chickering Road
Nashville, TN 37215
___________________________________________
Neil N. Diehl
6 Castle Rising
Nashville, TN 37215
___________________________________________
W. Michael Head
1229 Nichol Lane
Nashville, TN 37205
___________________________________________
David L. Hettinger
5010 Woodland Hills Drive
Nashville, TN 37211
___________________________________________
Lavona G. Russell
9549 Butler Drive
Brentwood, TN 37027
___________________________________________
Michael F. Lovett
1013 Beech Grove Road
Brentwood, TN 37027
___________________________________________
William S. Jones
6015 Wellesley Way
Brentwood, TN 37027
___________________________________________
James F. Neal
c/o Neal & Harwell
2000 One Nashville Place
150 Fourth Avenue, North
Nashville, TN 37219
___________________________________________
Martha R. Ingram
120 Hillwood Drive
Nashville, TN 37215
___________________________________________
Orrin H. Ingram, II
1475 Moran Road
Franklin, TN 37069
TRUST FOR THE BENEFIT OF ORRIN HENRY
INGRAM, II, DATED
OCTOBER 27, 1967
By: TRUST COMPANY BANK,
as Successor Trustee
By:________________________________________
Name: Thomas A. Shanks, Jr.
Title: First Vice President
Address: Trust Company Bank
Trust Company of Georgia
Attn: Thomas A. Shanks, Jr.
Trust Company Tower
25 Park Place, 2nd Floor
Atlanta, GA 30303
TRUST FOR THE BENEFIT OF ORRIN HENRY
INGRAM, II, DATED JUNE 14, 1968
By: TRUST COMPANY BANK,
as Successor Trustee
By:________________________________________
Name: Thomas A. Shanks, Jr.
Title: First Vice President
Address: Trust Company Bank
Trust Company of Georgia
Attn: Thomas A. Shanks, Jr.
Trust Company Tower
25 Park Place, 2nd Floor
Atlanta, GA 30303
TRUST FOR THE BENEFIT OF ORRIN H.
INGRAM, II, DATED DECEMBER 22, 1975
By: TRUST COMPANY BANK,
as Successor Trustee
By:________________________________________
Name: Thomas A. Shanks, Jr.
Title: First Vice President
Address: Trust Company Bank
Trust Company of Georgia
Attn: Thomas A. Shanks, Jr.
Trust Company Tower
25 Park Place, 2nd Floor
Atlanta, GA 30303
ORRIN H. INGRAM IRREVOCABLE
TRUST DATED AUGUST 16, 1988
By: ROY E. CLAVERIE, as
Trustee
By:________________________________________
Name: Roy E. Claverie
Title: Trustee
Address: 6107 Hickory Valley Road
Nashville, TN 37205
1994 ORRIN HENRY INGRAM TRUST
By: ROY E. CLAVERIE, as Trustee
By:________________________________________
Name: Roy E. Claverie
Title: Trustee
Address: 6107 Hickory Valley Road
Nashville, TN 37205
________________________________________
John R. Ingram
311 Jackson Boulevard
Nashville, TN 37205
THE JOHN AND STEPHANIE INGRAM
FAMILY 1996 GENERATION SKIPPING TRUST
By: WILLIAM S. JONES, as Trustee
By:________________________________________
Name: William S. Jones
Title: Trustee
Address: 6015 Wellesley Way
Brentwood, TN 37027
TRUST FOR THE BENEFIT OF JOHN
RIVERS INGRAM, DATED OCTOBER 27, 1967
By: TRUST COMPANY BANK,
as Successor Trustee
By:________________________________________
Name: Thomas A. Shanks, Jr.
Title: First Vice President
Address: Trust Company Bank
Trust Company of Georgia
Attn: Thomas A. Shanks, Jr.
Trust Company Tower
25 Park Place, 2nd Floor
Atlanta, GA 30303
TRUST FOR THE BENEFIT OF JOHN RIVERS
INGRAM, DATED JUNE 14, 1968
By: TRUST COMPANY BANK,
as Successor Trustee
By:________________________________________
Name: Thomas A. Shanks, Jr.
Title: First Vice President
Address: Trust Company Bank
Trust Company of Georgia
Attn: Thomas A. Shanks, Jr.
Trust Company Tower
25 Park Place, 2nd Floor
Atlanta, GA 30303
TRUST FOR THE BENEFIT OF JOHN R.
INGRAM, DATED DECEMBER 22, 1975
By: TRUST COMPANY BANK,
as Successor Trustee
By:________________________________________
Name: Thomas A. Shanks, Jr.
Title: First Vice President
Address: Trust Company Bank
Trust Company of Georgia
Attn: Thomas A. Shanks, Jr.
Trust Company Tower
25 Park Place, 2nd Floor
Atlanta, GA 30303
JOHN R. INGRAM IRREVOCABLE TRUST
DATED AUGUST 16, 1988
By: ROY E. CLAVERIE, as Trustee
By:________________________________________
Name: Roy E. Claverie
Title: Trustee
Address: 6107 Hickory Valley Road
Nashville, TN 37205
1994 JOHN RIVERS INGRAM TRUST
By: ROY E. CLAVERIE, as Trustee
By:________________________________________
Name: Roy E. Claverie
Title: Trustee
Address: 6107 Hickory Valley Road
Nashville, TN 37205
___________________________________________
Robin B. Ingram Patton
1600 Chickering Road
Nashville, TN 37215
TRUST FOR THE BENEFIT OF ROBIN
INGRAM, DATED OCTOBER 27, 1967
By: TRUST COMPANY BANK,
as Successor Trustee
By:________________________________________
Name: Thomas A. Shanks, Jr.
Title: First Vice President
Address: Trust Company Bank
Trust Company of Georgia
Attn: Thomas A. Shanks, Jr.
Trust Company Tower
25 Park Place, 2nd Floor
Atlanta, GA 30303
TRUST FOR THE BENEFIT OF ROBIN
BIGELOW INGRAM, DATED JUNE 14, 1968
By: TRUST COMPANY BANK,
as Successor Trustee
By:________________________________________
Name: Thomas A. Shanks, Jr.
Title: First Vice President
Address: Trust Company Bank
Trust Company of Georgia
Attn: Thomas A. Shanks, Jr.
Trust Company Tower
25 Park Place, 2nd Floor
Atlanta, GA 30303
TRUST FOR THE BENEFIT OF
ROBIN B. INGRAM, DATED DECEMBER 22, 1975
By: TRUST COMPANY BANK,
as Successor Trustee
By:________________________________________
Name: Thomas A. Shanks, Jr.
Title: First Vice President
Address: Trust Company Bank
Trust Company of Georgia
Attn: Thomas A. Shanks, Jr.
Trust Company Tower
25 Park Place, 2nd Floor
Atlanta, GA 30303
ROBIN B. INGRAM IRREVOCABLE
TRUST DATED AUGUST 16, 1988
By: ROY E. CLAVERIE, as Trustee
By:________________________________________
Name: Roy E. Claverie
Title: Trustee
Address: 6107 Hickory Valley Road
Nashville, TN 37205
1994 ROBIN INGRAM PATTON TRUST
By ROY E. CLAVERIE, as Trustee
By:________________________________________
Name: Roy E. Claverie
Title: Trustee
Address: 6107 Hickory Valley Road
Nashville, TN 37205
___________________________________________
Pankaj B. Shah
1201 Parker Place
Brentwood, TN 37027-7002
___________________________________________
S. Ray Taylor
3280 Central Valley Road
Murfreesboro, TN 37219
___________________________________________
Jacob S. Sherman
215 Lauderdale Road
Nashville, TN 37205
___________________________________________
Susan R. Flaster
144 September Drive
La Vergne, TN 37086
ANNEX II
Family Stockholders
David B. Ingram
David and Sarah Ingram Family 1996 Generation Skipping Trust
Trust for the Benefit of David Bronson Ingram,
Dated October 27,1967
Trust for the Benefit of David Bronson Ingram,
Dated June 14, 1968
Trust for the Benefit of David B. Ingram,
Dated December 22, 1975
David B. Ingram Irrevocable Trust
Dated August 16, 1988
1994 David Bronson Ingram Trust
Martha R. Ingram
Orrin H. Ingram, II
Trust for the Benefit of Orrin Henry Ingram, II,
Dated October 27, 1967
Trust for the Benefit of Orrin Henry Ingram, II,
Dated June 14, 1968
Trust for the Benefit of Orrin H. Ingram, II,
Dated December 22, 1975
Orrin H. Ingram Irrevocable Trust
Dated August 16, 1988
1994 Orrin Henry Ingram Trust
John R. Ingram
John and Stephanie Ingram Family
1996 Generation Skipping Trust
Trust for the Benefit of John Rivers Ingram,
Dated October 27, 1967
Trust for the Benefit of John Rivers Ingram,
Dated June 14, 1968
Trust for the Benefit of John R. Ingram,
Dated December 22, 1975
John R. Ingram Irrevocable Trust
Dated August 16, 1988
1994 John Rivers Ingram Trust
Robin B. Ingram Patton
Trust for the Benefit of Robin Ingram,
Dated October 27, 1967
Trust for the Benefit of Robin Bigelow Ingram,
Dated June 14, 1968
Trust for the Benefit of Robin B. Ingram,
Dated December 22, 1975
Robin B. Ingram Irrevocable Trust
Dated August 16, 1988
1994 Robin Ingram Patton Trust
EXHIBIT 10.23
Annex X
INGRAM FUNDING MASTER TRUST
DEFINITIONS
As used herein the following terms shall include in the singular number
the plural and in the plural number the singular:
"Account Collateral" shall have the meaning assigned to such term in
Section 1 (iii) of the Security Agreement.
"Accrued Interest Component", when used with respect to the Commercial
Paper, shall mean, for any period of determination thereof, the Interest
Component of all Commercial Paper outstanding at any time during such
period which has accrued from the first day through the last day of such
period, whether or not such Commercial Paper matures during such period or
thereafter. For purposes of the immediately preceding sentence, the
portion of the Interest Component of any Commercial Paper accrued in a
period shall be expressed as a fraction the numerator of which is the
number of days elapsed that such Commercial Paper was Outstanding during
such period and the denominator of which is the number of days such
Commercial Paper was or is scheduled to be Outstanding.
"Adjusted Eligible Receivables" shall mean, for any Business Day, the
aggregate amount of Eligible Receivables minus the sum of (i) the aggregate
amount of Eligible Receivables for any Obligor in excess of the Concentration
Limit for such Obligor at the end of the prior Business Day and (ii) the
aggregate amount of Excess Term Receivables for such Business Day, provided,
that to the extent that the amount of an Eligible Receivable could be included
in both clauses (i) and (ii) above, for purposes of calculating Adjusted
Eligible Receivables the amount of such Eligible Receivable shall only be
excluded from the aggregate amount of Eligible Receivables once.
"Adjusted Eligible Principal Receivables" shall mean, for any Business
Day, the product of (i) Adjusted Eligible Receivables for such Business Day,
multiplied by (ii) 100% minus the Discount Factor as of the most recent
Determination Date.
"Adjusted Liquidity Commitment" shall mean, on any day, the obligation
of the Banks to make Loans in an aggregate principal amount at any one time
outstanding not to exceed the amount set forth in clauses (i) or (ii), as
applicable, of the definition of Liquidity Commitment, in each case minus
the aggregate amount of all LOC Disbursements outstanding on such day.
"Advance Rate" shall mean on any day 100% minus the Discount Factor on
such day.
"Advances" shall mean at the time any determination thereof is made (1)
the Principal Component of all Outstanding Commercial Paper, plus (2) the
aggregate principal amount of outstanding Loans, less (3) the proceeds of
Commercial Paper issued or to be issued on the day of determination (to the
extent such Commercial Paper is included in clause (1) above) to be applied on
such day to the payment of the Principal Component of any Outstanding
Commercial Paper or to the payment of the principal amount of outstanding
Loans, less (4) the collected funds then on deposit in the Commercial Paper
Account for application on the day of determination to the payment of the
Principal Component of any Outstanding Commercial Paper, except to the extent
that the funds described under this clause (4) are (x) included in clause (3)
above or (y) then subject to any writ, order, stay, judgment, warrant of
attachment, execution or similar process, less (5) the funds then on deposit
in the Principal Account of the Collateral Account and less (6) the proceeds
of Loans made or to be made on the day of determination to be applied on such
day to the repayment of Commercial Paper to the extent that such Loans are
included in clause (2) above.
"Adverse Claim" shall mean any lien, claim, security interest, mortgage,
deed of trust, priority, pledge, charge, conditional sale, title retention
agreement, financing lease, encumbrance, option or similar right of any other
Person or any agreement to give any of the foregoing other than as expressly
permitted under the Facilities Documents.
"Affiliate" of any Person shall mean any other Person controlling,
controlled by or under common control with such Person or, in any event, a
Person which has the power to vote 25% or more of the securities having
ordinary voting power for the election of directors of the specified Person.
As used herein, "control" of a specified Person shall mean the ability to
direct or cause the direction of the management and policies of the specified
Person, whether through the direct or indirect ownership of the voting
securities of such specified Person, by contract or otherwise.
"Aggregate CP Matured Value" shall mean, on any date, the sum of the CP
Matured Values of all Commercial Paper Outstanding on such date.
"Aggregate Eligible Principal Receivables" shall mean, for any
Business Day, the dollar ammount of the Aggregate Principal Receivables
held in the Trust that were Eligible Receivables at the end of the prior
Business Day.
"Aggregate Invested Amount" shall mean the sum of the Invested Amounts
with respect to all Series of Investor Certificates then issued and
outstanding.
"Aggregate Invested Percentage" shall mean the sum of the applicable
Invested Percentages with respect to all Series of Investor Certificates then
issued and outstanding.
"Aggregate Principal Receivables" shall mean, for any Business Day, the
aggregate dollar amount of Principal Receivables held in the Trust at the end
of the prior Business Day.
"Allocated Collections" shall have the meaning specified in Section
4.03(b)(vi) of the Pooling and Servicing Agreement.
"Amortization" shall have, with respect to the Variable Funding
Certificate and each Series, the meaning specified in the applicable
Supplement.
"Amortization Period" shall mean: (i) with respect to any Series, the
period following the Non-Amortization Period beginning on the earlier of the
date specified in the applicable Supplement or the occurrence of an Event
of Termination with respect to such Series; and (ii) with respect to the
Variable Funding Certificate, the period following the Non-Amortization
Period beginning on the earlier of the date specified in the Variable
Funding Supplement or the occurrence of an Event of Termination with
respect to the Variable Funding Certificate.
"Amortization Period Commencement Date" shall mean with respect to any
Series or the Variable Funding Certificate, the day on which the Amortization
Period with respect thereto commences.
"Applicable Margin" shall mean (i) in the case of Base Rate Loans, 0%
per annum, (ii) in the case of Eurodollar Loans, 1% per annum, (iii) in the
case of C/D Rate Loans, 1% per annum, and (iv) in the case of Charge-Off
Drawings, 0.25% per annum, provided, that on and after the occurrence of an
Event of Termination with respect to the Variable Funding Certificate, no
Loans may be made other than Refunding Loans that are Base Rate Loans (as
set forth in Section 3.02 of the Liquidity Agreement), and Applicable
Margins shall mean (A) in the case of Refunding Loans, 0.50% per annum, and
(y) in the case of Charge-Off Drawings, 0.50% per annum.
"Applicable Minimum Percentage" shall mean the highest Applicable
Minimum Percentage specified in any Supplement relating to Certificates
that are outstanding at the time such percentage is computed, but in no
event less than 15%.
"Applicants" shall have the meaning specified in Section 6.07 of the
Pooling and Servicing Agreement.
"Appointment Date" shall have the meaning specified in Section 9.03 of
the Pooling and Servicing Agreement.
"Assessment Rate" shall mean for any day the annual assessment rate in
effect on such day which is payable by a member of the Bank Insurance Fund
classified as well capitalized and within supervisory subgroup "BB" (or a
comparable successor assessment risk classification) within the meaning of
12 C.F.R. S 327.3(d) (or any successor provision) to the Federal Deposit
Insurance Corporation (or any successor) for such Corporation's (or such
successor's) insuring time deposits at offices of such institution in the
United States. The Adjusted CD Rate shall be adjusted automatically on and
as of the effective date of any change in the Assessment Rate.
"Assigned Agreement" shall have the meaning assigned to such term in
Section l(ii) of the Security Agreement.
"Assigned Collateral" shall have the meaning assigned to such term in
Section l(ii) of the Security Agreement.
"Assignee" shall have the meaning assigned to such term in Section 10.05
of the Liquidity Agreement.
"Assignment and Acceptance" shall be an assignment and acceptance
between a Bank and an Assignee, in the form of Exhibit F to the Liquidity
Agreement.
"Authenticating Representatives" shall have the meaning assigned to such
term in Section 2 of the Depositary Agreement.
"Authorized Agents" shall have the meaning assigned to such term in
Section 2 of the Depositary Agreement.
"Authorized Newspaper" shall mean any one or more newspapers of general
circulation in the Borough of Manhattan, The City of New York, New York, and
printed in the English language and customarily published on each Business
Day, whether or not published on Saturdays, Sundays and holidays.
"Authorized Representative" shall have the meaning assigned to such term
in Section 2 of the Depositary Agreement.
"Available Liquidity Commitment" shall mean, (A) for any date prior to
the Amortization Period Commencement Date with respect to the Variable
Funding Certificate, the lesser of (i) the Borrowing Base on such date and
(ii) the Adjusted Liquidity Commitment on such date, each as set forth in
the Daily Report or Settlement Statement delivered for such date and (B)
for any date on or after the Amortization Period Commencement Date with
respect to the Variable Funding Certificate, the lesser of (i) the Issuer
Amount on such date and (ii) the Adjusted Liquidity Commitment on such
date, each as set forth in the Daily Report or Settlement Statement
delivered for such date.
"Available LOC Amount" shall equal, with respect to the LOCs in the
aggregate, on any Business Day, an amount equal to the lesser of (i) 10% of
the Issuer Amount on such Business Day or (ii) 10% of the greatest Issuer
Amount in effect since the Initial Closing Date minus all LOC Disbursements
on such LOCs made prior to such Business Day, plus the sum of all amounts
paid to the LOC Issuers (subject to any delay in recognition thereof
provided for in the LOC Reimbursement Agreement) in reimbursement of LOC
Disbursements prior to such Business Day.
"Bank" shall have the meaning assigned to such term in the first
paragraph of the Liquidity Agreement.
"Bank Commitment Amount" shall mean for each Bank the amount set forth
opposite such Bank's name on Schedule I to the Liquidity Agreement or to the
applicable Assignment and Assumption Agreement, as such amount may be reduced
or increased pursuant to Sections 4.01 or 10.05(b), respectively, of the
Liquidity Agreement.
"Base Rate" shall mean for any day, a rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to (i) Chemical's Prime Rate
in effect on such day, or (ii), with respect to the last five Business Days
of March, June, September and December of each year, the greater of (a)
Chemical's Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/21. For purposes hereof,
Federal Funds Effective Rate. shall mean, for any day, the weighted average
of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published on
the next succeeding Business Day by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by
Chemical Bank from three Federal Funds brokers of recognized standing
selected by it. If for any reason Chemical Bank shall have determined
(which determination shall be rebuttable presumptive evidence as to such
matter) that it is unable to ascertain the Federal Funds Effective Rate for
any reason, including the inability or failure of Chemical Bank to obtain
sufficient quotations in accordance with the terms hereof, the Base Rate
shall be determined without regard to clause (b) of the first sentence of
this definition, as appropriate, until the circumstances giving rise to
such inability no longer exist. Any change in the Base Rate due to a
change in Chemical's Prime Rate (each such change being effective on the
date such change is announced) or the Federal Funds Effective Rate shall be
effective on the effective date of such change in Chemical's Prime Rate or
the Federal Funds Effective Rate, respectively.
"Base Rate Loans" shall mean the Loans the rate of interest applicable
to which is based upon the Base Rate.
"Benefit Plan" shall mean, at a particular time and with respect to any
Person, any employee benefit plan which is covered by ERISA and in respect of
which such Person or an ERISA Affiliate of such Person is (or, if such Plan
were terminated at such time, would under Section 4069 of ERISA be deemed to
be) an "employer" as defined in Section 3(5) of ERISA.
"BEO Note Fee Schedule" shall have the meaning specified in Section lO(h)
of the Depositary Agreement.
"BEO Notes" shall have the meaning specified in the Depositary Agreement.
"BEO Noteholder" shall mean, with respect to a BEO Note, the Person who
is the beneficial owner of such BEO Note, as reflected on the books of the
Clearing Agency, or on the books of a Person maintaining an account with such
Clearing Agency (directly or as an indirect participant, in accordance with
the rules of such Clearing Agency).
"Board" shall mean the Board of Governors of the Federal Reserve System
of the United States or any successor thereto.
"Book-Entry Certificates" shall mean certificates evidencing a
beneficial interest in the Investor Certificates, ownership and transfers
of which shall be made through book entries by a Clearing Agency as
described in Section 6.11 of the Pooling and Servicing Agreement; provided,
that after the occurrence of a condition whereupon book-entry registration
and transfer are no longer permitted and Investor Certificates are to be
issued to the Certificate Owners, such certificates shall no longer be
book-Entry Certificates".
"Borrowing" shall mean the aggregate of Revolvinq Loans or Refunding
Loans to be made by the Banks on a given date pursuant to Section 3.01 of the
Liquidity Agreement.
"Borrowing Base" shall mean, on any day, an amount equal to (i) the
Adjusted Eligible Principal Receivables on such day plus (ii) the product
of (x) the amount, if any, held in the Transferor Account on such day
(after giving effect to all deposits thereto on such day) multiplied by (y)
100% minus the Discount Factor as of the most recent Determination Date
minus (iii) the Transferor Minimum Amount minus (iv) the Aggregate Invested
Amount, all as set forth on the Daily Report delivered for such day.
"Borrowing Base Deficiency" shall mean on any day, the excess, if any,
of Advances over the Borrowing Base.
"Business Day" shall mean any day other than (a) a Saturday or a Sunday,
or (b) any other day on which banking institutions or trust companies in the
State of New York generally or The City of New York, New York, or the State of
Tennessee are authorized or obligated by law, executive order or governmental
decree to be closed.
"Buyer" shall mean Ingram Funding Inc., a corporation incorporated in the
State of Delaware.
"Capital Ratio" shall mean on any day the sum of (i) Shareholder's Equity
and (ii) the principal amount of the Subordinated Capital Note divided by the
aggregate Unpaid Balance of all Receivables sold by Ingram to Funding under
the Purchase Agreement and in existence on the date of determination
(excluding any such Receivables reconveyed to Ingram pursuant to the Purchase
Agreement).
"Capitalized Interest Component" shall mean, at the time any
determination thereof is to be made, the Interest Component of all
Commercial Paper which matured subsequent to the last day of the
Settlement Period immediately preceding the date of determination
(including Commercial Paper which matures on the date of determination)
and has been paid (or is being paid on the date of determination) with the
proceeds of Loans or of the sale of Commercial Paper issued or being
issued on the maturity date(s) of such matured or maturing Commercial
Paper.
"Carrying Cost Daily Amount" shall mean, with respect to any day, the
full accrual for such day of the actual Carrying Costs for the Settlement
Period in which such day occurs (based on information then available to the
Servicer), necessary to cause the full amount of any Carrying Cost to have
been paid and deposited in the Collateral Account, no later than the day on
which such amount is required to be paid, provided, that with respect to
any Facilities Costs required to be paid as part of Carrying Costs, the
accrual thereof, and the inclusion of amounts related thereto in the
Carrying Cost Daily Amount, shall not be required prior to the ninth
Business Day preceding the Business Day on which payment of such Facilities
Costs is to be made (although the Servicer may, in its discretion, elect to
accrue for any such Facilities Costs over a longer period). The Carrying
Cost Daily Amount shall be adjusted immediately at any time that the
Servicer obtains knowledge that a different accrual amount will be required
in order to cause any Carrying Cost to have been paid as part of the
Carrying Cost Daily Amount by the due date therefor, including without
limitation any adjustment required to take account of the Capitalized
Interest Component incurred during any Settlement Period.
"Carrying Cost Daily Factor" shall mean (i) for any day, the percentage
equal to a fraction, the numerator of which is the Carrying Cost Daily Amount
for such day and the denominator of which is the outstanding Advances on such
day, and (ii) as of any Determination Date for the related Settlement Period,
the percentage equal to a fraction, the numerator of which is the average
Carrying Cost Daily Amount during such Settlement Period and the denominator
of which is the average of the outstanding Advances during such Settlement
Period.
"Carrying Costs" shall mean, for a Settlement Period, in each case
determined on an accrual basis in accordance with GAAP, the sum of (i) the
accrued interest during such Settlement Period on the outstanding principal
amount of the Liquidity Loans and LOC Disbursements, (ii) the Accrued
Interest Component during such Settlement Period with respect to Commercial
Paper Outstanding during such Settlement Period, and (iii) the Facilities
Costs for such Settlement Period, in each case whether or not any such
amount is payable during such period.
"Cash Portion" shall mean that portion of the Purchase Price paid in
cash, (i) on the Closing Date for those Receivables conveyed on the Closing
Date, and (ii) on the Date of Processing for each Receivable created
thereafter.
"C/D Assessment Rate" shall mean for any day as applied to any C/D Rate
Loans the average of the net annual assessment rates (rounded upward to the
nearest 1/1OOth of one percent) determined by the Liquidity Agents to be
payable on such day to the Federal Deposit Insurance Corporation or any
successor (the "FDIC") for the FDIC's insuring time deposits made in Dollars.
"C/D Base Rate" shall mean with respect to each day during each Interest
Period pertaining to a C/D Rate Loan the rate of interest per annum determined
by the Liquidity Agent to be the arithmetic average (rounded upward to the
nearest 1/16th of 1%) of the respective rates notified to the Liquidity Agent
by each of the Reference Banks as the average rate bid at 9:00 a.m. (New York
City time) or as soon thereafter as practicable, on the first day of such
Interest Period by a total of three certificate of deposit dealers of
recognized standing selected by such Reference Bank for the purchase at face
value from such Reference Bank of its certificates of deposit in an amount
comparable to the C/D Rate Loan of such Reference Bank to which such Interest
Period applies and having a maturity comparable to such Interest Period.
"C/D Rate" with respect to each day during each Interest Period
pertaining to a C/D Rate Loan shall mean a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/lOOth of 1%):
C/D Base Rate + C/D Assessment Rate
-----------------------------
1.00 - C/D Reserve Percentage
"C/D Rate Loans" shall mean Revolving Loans the rate of interest
applicable to which is based upon the C/D Rate.
"C/D Rate Tranche" shall have the meaning as signed to such term in
the definition of "Tranche".
"C/D Reserve Percentage" shall mean for any day as applied to any C/D
Rate Loan that percentage (expressed as a decimal) which is in effect on
such day, as prescribed by the Board for determining the maximum reserve
requirement for a member bank of the Federal Reserve System in New York
City with deposits exceeding one billion Dollars in respect of new non-
personal time deposits in Dollars in New York City having a maturity
comparable to the Interest Period for such C/D Rate Loan and in an amount
of $100,000 or more.
"Certificate" shall mean one of any Series of Investor Certificates, the
Variable Funding Certificate or the Transferor Certificate.
"Certificate Owner" shall mean, with respect to a Book-Entry Certificate,
the Person who is the owner of such Book-Entry Certificate, as reflected on
the books of the Clearing Agency, or on the books of a Person maintaining an
account with such Clearing Agency (directly or as-an indirect participant, in
accordance with the rules of such Clearing Agency).
"Certificate Rate" shall mean, with respect to any Series of
Certificates, the percentage (or formula on the basis of which such rate
shall be determined) stated in the applicable Supplement, which rate shall
be calculated on the basis of the actual number of days in each year and
the actual number of days in each month unless otherwise stated in such
Supplement.
"Certificate Register" shall mean the register maintained pursuant to
Section 6.03 of the Pooling and Servicing Agreement, providing for the
registration of the Certificates and transfer and exchanges thereof.
"Certificated Notes" shall have the meaning specified in the Depositary
Agreement.
"Certificateholder" shall mean the Person in whose name a Certificate is
registered in the Certificate Register.
"Charge-Off Drawing" shall have the meaning specified in Section 2.02(a)
of the LOC Reimbursement Agreement.
"Charge-Off Ratio" shall mean, at any Determination Date with reference
to the respective Receivables originated by the Ingram Book Company
division of Ingram or by any Designated Subsidiary (each, an "Originator"),
the percentage equivalent of a fraction the numerator of which is the
aggregate Unpaid Balance of all Receivables originated by such Originator
which were charged off as uncollectible during the three Settlement Periods
immediately preceding such Determination Date and the denominator of which
is the aggregate Unpaid Balance of all Receivables originated by such
Originator during each of the three Settlement Periods preceding such
Determination Date; provided, however, that at the Determination Date for
the initial Settlement Period the Charge-Off Ratio shall be determined
solely with reference to such initial Settlement Period, and at the
Determination Date for the immediately succeeding Settlement Period, the
Charge-Off Ratio shall be determined solely with reference to the initial
Settlement Period and such succeeding Settlement Period.
"Chemical's Prime Rate" shall mean the rate per annum announced by
Chemical Bank from time to time as its prime rate in effect at its principal
office on a 365/66 day basis; each change in Chemical's Prime Rate shall be
effective on the date such change is announced to become effective.
"Clearing Agency" shall mean an organization registered as a Clearing
agency. pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended.
"Clearing Agency Participant" shall mean a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with
the Clearing Agency.
"Closing Date" shall mean, when used in the Pooling and Servicing
Agreement with respect to any Series or the Variable Funding Certificate,
the date of issuance of such Series or the Variable Funding Certificate and
when used in any of the Facilities Documents other than the Pooling and
Servicing Agreement, the date of initial issuance of Commercial Paper.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder.
"Collateral" shall have the meaning specified in Section 1 of the
Security Agreement.
"Collateral Account" shall have the meaning assigned to such term in
Section 4 of the Security Agreement.
"Collateral Agent" shall mean Chemical Bank and any successor Collateral
Agent appointed pursuant to the Security Agreement as agent for the benefit of
the Secured Parties.
"Collateral Agent Fee" shall mean the fee of the Collateral time to time
pursuant to the letter agreement between the CP Issuer and the Collateral
Agent dated as of February 10, 1993, as in effect on the date hereof.
"Collection Account" shall have the meaning specified in Section 4.02 of
the Pooling and Servicing Agreement.
"Collections" shall mean, with respect to the Receivables on any Business
Day, all amounts received by the Servicer since the prior Business Day in
collected funds in payment of or in respect of the Receivables, including,
without limitation, all cash proceeds (as such term is defined in the UCC) of
any Related Security therefor and all amounts to be deposited into the
Collection Account as a Transfer Deposit Amount pursuant to Section 2.04(c) or
3.03, or as proceeds of the sale of Receivables pursuant to Section 9.03 or
Article XII, of the Pooling and Servicing Agreement.
"Commercial Paper", "Commercial Paper Notes" or "Notes". shall mean the
promissory in the form of Exhibit A to the Depositary Agreement, issued
by the Q Issuer on a discount basis in the commercial paper market, secured
by the Variable Funding Certificate and having the benefit of the LOCs.
"Commercial Paper Account" shall mean the Commercial Paper Account
established pursuant to the Depositary Agreement.
"Commercial Paper Deficit" shall have the meaning assigned to such
term in Section 3.03(a) of the Liquidity Agreement.
"Commercial Paper Percentage" shall mean, with respect to Advances,
the ratio, expressed as a percentage, of the Principal Component of
Outstanding Commercial Paper to the aggregate amount of Advances.
"Commitment Fee" shall mean the amounts described as payable to the
Liquidity Agent for the account of each Bank in Section 3.07 of the
Liquidity Agreement.
"Commtron's Discount" shall mean for any day, by reference to the
immediately preceding Determination Date, an amount equal to the decimal
equivalent of the sum of (i) 0.50%, (ii) the product of (A) the Base Rate
per annum on the preceding Determination Date and (B) a fraction the
numerator of which is the number of Days Sales Outstanding (solely with
reference to Receivables originated by Commtron Corp. (or Ingram
Entertainment Inc., as successor by merger thereto, if applicable)) as of
the preceding Determination Date and the denominator of which is 365, and
(iii) the product of (A) 0.25% and (B) the same fraction as in the
preceding clause (ii)(B), plus, in the event that the Charge-Off Ratio
(solely with reference to Receivables originated-by Commtron Corp. (or
Ingram Entertainment Inc., as successor, by merger thereto, if applicable))
for such Determination Date exceeds 0.50%, an amount equal to such excess.
"Concentration Limit" shall mean at any time (i) for any Obligor the
long-term unsecured senior debt obligations of which are rated at least
"AA" and "AA" by Standard & Poor's and Fitch, respectively, or the short
term deposits or commercial paper of which is rated at least "A-1+" and
"F-1+" by Standard & Poor's and Fitch, respectively, up to 10%, provided, that
the aggregate concentration of all Obligors who individually exceed 2.5% by
virtue of this clause (i) shall not exceed 50%, (ii) for any Obligor the
long-term unsecured senior debt obligations of which are rated at least "A"
and "A" by Standard & Poor's and Fitch, respectively, or the short term
deposits or commercial paper of which is rated at least "A-1" and "F-1" by
Standard & Poor's and Fitch, respectively, up to 5%, provided, that the
aggregate concentration of all Obligors who individually exceed 2.5% by
virtue of this clause (ii) shall not exceed 20%, and (iii) for any other
Obligor, 2.5%, in each case multiplied by the sum of the Issuer Amount and
the Aggregate Invested Amount, less any portion of the Aggregate Invested
Amount not rated by the Rating Agencies. Initially, Obligors covered by
clause (i) of the preceding sentence shall include Wal-Mart, at 10%, and
Obligors covered by clause (ii) of the preceding sentence shall include
Walden Books and IT&T, at 5% each.
"consolidated", "consolidating" and any derivative thereof each means,
with reference to the accounts or financial reports of any Person, the
consolidated accounts or financial reports of such Person and each Subsidiary
of such Person determined in accordance with GAAP, including principles of
consolidation, consistent with those applied in the preparation of the
consolidated financial statements of Ingram.
"Consolidated Assets" means, at any date, the total assets of Ingram and
its Consolidated Subsidiaries as at such date.
"Consolidated Current Assets" means, at any date, all amounts which would
be included as current assets on a consolidated balance sheet of Ingram and
its Consolidated Subsidiaries as at such date.
"Consolidated Current Liabilities" means, at any date, all amounts which
would be included as current liabilities on a consolidated balance sheet of
Ingram and its Consolidated Subsidiaries as at such date.
"Consolidated Current Ratio" means, at any date, the ratio of:
(a) Consolidated Current Assets as at such date, to
(b) Consolidated Current Liabilities as at such date.
"Consolidated Fixed Charges" means, at any date, the sum of
(a) the aggregate annualized amount of fixed rentals payable by
Ingram and its Consolidated Subsidiaries with respect to all leases of real
and personal property having an original initial term of more than three
(3) years (including any required renewals or renewals at the sole option
of the lessor or lessee) in effect as of such date (other than capitalized
lease liabilities and leases between Ingram and its Consolidated
Subsidiaries),
(b) the aggregate annualized interest charges payable on the
aggregate principal amount of consolidated Debt of Ingram outstanding as of
such date (using for the purpose of such calculation the interest rate with
respect to such Debt in effect at such date), and
(c) the aggregate annualized amount of any other fixed charges
payable by Ingram and its Consolidated Subsidiaries with respect to other
financial undertakings of Ingram or any of its Consolidated Subsidiaries
outstanding as of such date with a remaining term of more than one year
from the date as of which the calculation of Consolidated Fixed Charges is
made if such aggregate annualized amount exceeds one percent (1%) of
Consolidated Net Income of Ingram for the preceding Fiscal Year excluding,
however,
(i) any payment made on a routine and periodic basis pursuant
to a contract calling for payments in an aggregate amount of $500,000
or less at the time of incurrence and that are payable in a lump sum
or over a period of three (3) years or less,
(ii) any royalty payments,
(iii) any payments for the removal of natural resources that are
removed for resale,
(iv) in the case of any Insurance Subsidiary, premiums for
reinsurance incurred in the normal course of business, or
(v) capitalized lease liabilities and other obligations between
Ingram and its Consolidated Subsidiaries.
"Consolidated Leverage Ratio" means, at any date, the ratio of:
(a) consolidated Debt as at such date, to
(b) consolidated Stockholders' Equity as at such date.
"Consolidated Liabilities" means, at any date, the sum of all obligations
of Ingram and its Consolidated Subsidiaries as at such date.
"Consolidated Net Income Available for Fixed Charges" means, for any
period, consolidated net income of Ingram for such period before deducting
therefrom each of Consolidated Fixed Charges for such period and provisions
for taxes in respect of Consolidated Net Income for such period.
"Consolidated Stockholders' Equity means, at any date:
(a) Consolidated Assets as at such date, less
(b) Consolidated Liabilities as at such date.
"Consolidated Subsidiary" means any Subsidiary whose financial statements
are required in accordance with GAAP to be consolidated with the consolidated
financial statements of Ingram.
"Connsolidated Working Capital" means, at any date:
(a) Consolidated Current Assets as at such date, less
(b) Consolidated Current Liabilities as at such date.
"Contract" shall mean either a written agreement between Ingram or a
Designated Subsidiary and another Person, or an invoice pursuant to an open
account or a written agreement of a Person, pursuant to which such Person
is obligated to pay for goods, merchandise and/or services.
"Controlling Party" shall mean the Liquidity Agent acting at the
direction of the Required Banks; and after the Liquidity Commitment has
been terminated or reduced to zero and there are no Loans outstanding, the
holders of 51% of the Commercial Paper then Outstanding; and if there is no
Commercial Paper Outstanding, the Depositary; and if no amounts remain
owing to the Depositary, the Required LOC Issuers.
"Conveyance Papers" shall have the meaning specified in Section 4.1(b) of
the Purchase Agreement.
"Corporate Trust Office" shall mean the principal office of the
Trustee at which at any particular time its corporate trust business shall
be administered, which office at the date of the execution of the Pooling
and Servicing Agreement is located at 450 West 33rd Street, New York, New
York 10001 (Attention: Corporate Trust Department).
"CP Dealer" shall mean Merrill Lynch Money Markets Inc. as dealer for the
Commercial Paper or any successor dealer for the Commercial Paper appointed by
the CP Issuer.
"CP Dealer Agreement" shall mean the CP Dealer Agreement, dated as of
February 10, 1993, between the CP Issuer and the CP Dealer, as amended from
time to time.
"CP Issuer" shall mean Distribution Funding Corporation, a Delaware
corporation, or any other Holder of the Variable Funding Certificate.
"CP Matured Value" shall mean the face amount of Outstanding Commercial
Paper.
"CPMS System" shall have the meaning assigned to such term in Section
3 of the Depositary Agreement.
"Credit and Collection Policy" shall mean the Servicer's credit
extension policies and procedures and collection practices relating to
Receivables and Contracts as in effect on the Initial Closing Date, as set
forth in Exhibit G to the Pooling and Servicing Agreement, and as the same
may be modified from time to time in accordance with Section 3.03(k) of the
Pooling and Servicing Agreement.
"Credit Utilization" shall have the meaning assigned to such term in
Section 6.02 of the Liquidity Agreement.
"Credits" shall mean an amount equal to the sum, without duplication,
of (a) the aggregate reduction effected on any date of determination in the
Unpaid Balances of any Receivables attributable to any defective, rejected
or returned goods, merchandise or services, any cash or other discount, or
any other adjustment granted with respect thereto by the Servicer, (b) the
aggregate reduction effected on such date in the Unpaid Balances of any
Receivables resulting from any setoff in respect of any claim by any
Obligor thereunder against Ingram or the Designated Subsidiary which
originated the Receivable (whether or not such claim is related to the
transaction giving rise to the related Receivable), (c) the aggregate
reduction effected on any date in the Unpaid Balances of any Receivables
resulting from any setoff by Ingram or the Designated Subsidiary which
originated the Receivable of a claim against Ingram or such Designated
Subsidiary in favor of the Obligor under such Receivable against the
Receivable of such Obligor (whether or not such claim is related to the
transaction giving rise to the related Receivable), but not to the extent
that any Receivable so reduced would, on the date of such Credit,
constitute a Defaulted Receivable, (d) the aggregate Unpaid Balances of any
Receivables which on such date become subject to an Adverse Claim or with
respect to which the Buyer, pursuant to the Purchase Agreement, or the
Trustee, pursuant to the Pooling and Servicing Agreement does not acquire
or ceases to have a valid transfer and assignment of all right, title and
interest therein and (e) all offsets, discounts and other charges to any
Receivable resulting from sales and marketing activities of Ingram and the
Obligor, including, without limitation, offsets or discounts for rapid
payment, coupon collection, display allowances or cooperative advertising.
"Cut-Off Date" shall mean February 10, 1993.
"Daily Report" shall mean a report showing the date and making the
computations included in the form of the Daily Report attached as Exhibit E to
the Pooling and Servicing Agreement.
"Date of Processing" shall mean, with respect to any transaction by
Ingram or a Designated Subsidiary which generates a Receivable, the date
that such transaction has been or should have been first recorded on the
computer master file of Receivables maintained by the Servicer (without
regard to the effective date of such recordation).
"Days Sales Outstanding" shall mean, at any Determination Date, the
amount determined by multiplying (i) 30.42 by (ii) a fraction, the numerator
of which is equal to the average of the beginning and ending Unpaid Balance of
Receivables for the preceding Settlement Period, and the denominator of which
is equal to net sales for the preceding Settlement Period.
"Debt of any Person means and includes the sum of the following (without
duplication):
(a) all obligations of such Person for borrowed money, all
obligations evidenced by bonds, debentures, notes, investment repurchase
agreements or other similar instruments, and all securities issued by such
Person providing for mandatory payments of money, whether or not
contingent;
(b) all obligations of such Person pursuant to revolving credit
agreements or similar arrangements to the extent then outstanding;
(c) all obligations of such Person to pay the deferred purchase
price of property or services, except trade accounts payable arising in the
ordinary course of business and leases of personal property not required to be
capitalized under FASB Statement 13;
(d) all obligations of such Person as lessee under capitalized
lease liabilities calculated in accordance with GAAP;
(e) all obligations of such Person to purchase securities (or other
property) which arise out of or in connection with the sale of the same or
substantially similar securities or property;
(f) all obligations to reimburse for outstanding disbursements
made under all letters of credit and bankers' acceptances issued for the
account of such Person;
(g) all Debt of others secured by a Lien of any kind on any asset
of such Person, whether or not such Debt is assumed by such Person; and
(h) all guarantees, endorsements and other contingent
liabilities of or in respect of, or to purchase or otherwise acquire, the
Debt of another Person;
provided, however, that it is understood and agreed that the following are
not "Debt":
(i) obligations to pay the deferred purchase price for the
acquisition of any business (whether by way of merger, sale of stock or
assets or otherwise) to the extent that such obligations are contingent
upon attaining performance criteria such as earnings and such criteria
shall not have been achieved;
(ii) obligations to repurchase securities issued to
employees pursuant to any Plan upon the termination of their
employment or other events, to the extent that the amount of such
obligations does not exceed thirty percent (30%) of Consolidated
Stockholders' Equity as at the date of calculation of Debt;
(iii) obligations to match contributions of employees under any
Plan;
(iv) any contingent obligations with respect to letters of
credit;
(v) the obligations of any Insurance Subsidiary to any
relevant lender for financing of balances due under premium finance
contracts entered into by such Insurance Subsidiary, provided such
obligations are not covered by a guarantee of any Obligor or any of
their respective Subsidiaries (excepting each such Insurance
Subsidiary or any of their immediate parents (other than any of the
Obligors)); and
(vi) guarantees of any Obligor or any of their respective
Subsidiaries that are guarantees of (x) contingent obligations covered
by guarantees of any Insurance Subsidiary in the form of insurance
policies, surety bonds or similar assurances issued by each such
Insurance Subsidiary in the ordinary course of business and for which
each such Insurance Subsidiary is compensated, or (y) performance,
reclamation or similar bonds issued for the benefit of any Subsidiary
of Ingram, which would not be included on the consolidated financial
statements of any Obligor.
"Debtor Relief Laws" shall mean the Bankruptcy Code of the United States
of America and all other applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization,
suspension of payments, readjustment of debt, marshaling of assets or similar
debtor relief laws of the United States, any state or any foreign country from
time to time in effect affecting the rights of creditors generally.
"Default" shall mean any of the events specified in Section 8.01 of
the Liquidity Agreement, whether or not any requirement for the giving of
notice, the lapse of time, or both, or any other condition, has been
satisfied.
"Default Ratio" shall mean, at any Determination Date, the percentage
equivalent of a fraction the numerator of which is the Unpaid Balance of
Adjusted Eligible Receivables which first became Defaulted Receivables
during the three Settlement Periods immediately preceding such
Determination Date and the denominator of which is the sum of the Unpaid
Balance of all Adjusted Eligible Receivables held in the Trust at the end
of each of the three Settlement Periods preceding such Determination Date;
provided, however, that at the Determination Date for the initial
Settlement Period the Default Ratio shall be determined solely with
reference to such initial Settlement Period, and at the Determination Date
for the immediately succeeding Settlement Period, the Default Ratio shall
be determined solely with reference to the initial Settlement Period and
such succeeding Settlement Period.
"Defaulted Amount" shall mean, with respect to any Determination Date,
the sum of the amount of Principal Receivables which were Eligible
Receivables at the time such Principal Receivables were created which
became Defaulted Receivables in the Settlement Period relating to such
Determination Date, less the full amount of such Defaulted Receivables
which have been actually reassigned to the Transferor under Section 2.04(c)
of the Pooling and Servicing Agreement or to the Servicer under Section
3.03 of the Pooling and Servicing Agreement with respect to such Settlement
Period; provided, however, that if one of the events described in Section
9.01(iii) or Section 9.02(iii) of the Pooling and Servicing Agreement
occurs with respect to the Transferor, the amounts of such Defaulted
Receivables to the extent not recovered which are subject to transfer
pursuant to Section 2.04(c) of the Pooling and Servicing Agreement shall
not be so subtracted and, if any of the events described in Section
10.01(d) of the Pooling and Servicing Agreement occur with respect to the
Servicer, the amount of such Defaulted Receivables to the extent not
recovered which are subject to transfer pursuant to Section 3.03 of the
Pooling and Servicing Agreement shall not be so subtracted.
"Defaulted Receivable" shall mean a Receivable (i) which remains
unpaid on the 91st day after the Contract due date for such Receivable or
(ii) the Obligor on which becomes subject to or seeks the benefit of any
Debtor Relief Law.
"Definitive Certificates" shall have the meaning specified in Section
6.11 of the Pooling and Servicing Agreement.
"Delinquent Receivable" shall mean any Eligible Receivable that is not a
Defaulted Receivable as to which all or any part of the outstanding balance
remains unpaid more than 60 days past the Contract due date.
"Depositary" shall mean Chemical Bank and any successor Depositary
appointed pursuant to the terms of the Depositary Agreement.
"Depositary Agreement" shall mean the Depositary Agreement, dated as of
February 10, 1993, between the CP Issuer and Chemical Bank, as depositary, as
amended from time to time.
"Depositary Authorization Letter" shall have the meaning assigned to
such term in Section 2 of the Depositary Agreement.
"Depositary Fee" shall mean the fee of the Depositary, payable from
time to time pursuant to the letter agreement between the CP Issuer and the
Depositary dated February 10, 1993, as in effect on the date hereof.
"Deposited Funds" shall mean all funds then on deposit in the Collateral
Account (including Permitted Investments thereof) as provided in the Security
Agreement.
"Designated Persons" shall have the meaning assigned to such term in
Section 2 of the Depositary Agreement.
"Designated Subsidiary" shall mean each Subsidiary which is designated
as a Designated Subsidiary pursuant to Section 2.2 of the Purchase
Agreement and which has not (i) been removed as a Designated Subsidiary in
accordance with Section 2.2 of the Purchase Agreement, or (ii) ceased to
be a Subsidiary. The Designated Subsidiaries shall initially consist of
Ingram Micro Inc. (a California corporation) and Commtron Corp. (or
Ingram Entertainment Inc. as successor by merger thereto, if applicable).
"Determination Date" shall mean, with respect to any Settlement Period,
the tenth day of the next calendar month or if such day is not a Business Day,
the next succeeding Business Day.
"Dilution Ratio" shall mean, at any Determination Date, the percentage
equivalent of a fraction the numerator of which is the aggregate amount of
Credits with respect to Adjusted Eligible Receivables which occurred
during the three Settlement Periods immediately preceding such
Determination Date and the denominator of which is the sum of the Unpaid
Balance of all Adjusted Eligible Receivables held in the Trust at the end
of each of the three Settlement Periods preceding such Determination Date;
provided, however, that at the Determination Date for the initial
Settlement Period the Dilution Ratio shall be determined solely with
reference to such initial Settlement Period, and at the Determination Date
for the immediately succeeding Settlement Period, the Dilution
Ratio shall be determined solely with reference to the initial Settlement
Period and such succeeding Settlement Period.
"Discount Factor" shall mean for any day, by reference to the
Determination Date immediately preceding such day, 10.0% plus:
(a) in the event that the highest Default Ratio in effect for
any of the preceding 12 Settlement Periods (or since the Initial Closing
Date until 12 Settlement Periods shall have elapsed) (the "Base Default
Ratio") for such Determination Date exceeds 1.36%, an amount equal to the
product of (A) 10 and (B) such Base Default Ratio minus 1.36%; plus
(b) in the event the Carrying Cost Daily Factor (expressed on a per
annum basis which is equal to the Carrying Cost Daily Factor multiplied by
365) on such Determination Date or either of the Carrying Cost Daily Factors
(expressed on a per annum basis) on the two preceding Determination Dates (the
greatest of such three being referred to as the "Base Factor") exceeds
10%, an amount equal to the product of (A) the excess of the Base Factor
over 10% and (B) the Days Sales Outstanding for the preceding Settlement
Period divided by the number of days in the current year.
"Dollars" and USA shall mean dollars in lawful currency of the United
States of America.
"Domestic Dollar Loans" shall be the collective reference to C/D Rate
Loans and Base Rate Loans.
"Domestic Lending Office" shall mean, initially, the office of a Bank
designated as such in Schedule I to the Liquidity Agreement; thereafter,
such other office of such Bank, if any, which shall be making C/D Rate
Loans and Base Rate Loans.
"Drawing Certificate" shall mean a certificate in the form of Annex A or
Annex B of the LOC Reimbursement Agreement.
"DTC" shall have the meaning specified in the Depositary Agreement.
"DTC's CP Program" shall have the meaning specified in the Depositary
Agreement.
"Eligible Institution" shall mean a depository institution (which may be
the Trustee) organized under the laws of the United States or any one of the
states thereof, including the District of Columbia, which either (i) at all
times has a long-term unsecured debt rating of at least AAA. by Standard ~
Poor's and, if rated by Fitch, "AAA" by Fitch, and which is a member of the
FDIC or (ii) maintains the applicable account as a fully segregated trust
account with the trust department of such institution and is rated "BBB-" or
"A-3" or higher by Standard & Poor's and, if rated by Fitch, is rated
"BBB-" or "F-3" or higher by Fitch.
"Eligible Receivable" shall mean a Receivable:
(i) that has arisen in the ordinary course of business from
the sale of Ingram's or a Designated Subsidiary's goods, merchandise
or services;
(ii) with respect to which the Obligor's obligation to pay is
evidenced by a Contract and such Contract provides for full payment of
the amount thereof in accordance With the Credit and Collection Policy
(subject to any applicable Sales and Marketing Discount and normal
return policy), the delivery of the goods or merchandise or the
rendering of the services giving rise to such Receivable has been
completed and such goods or merchandise or such services have been
accepted by the Obligor;
(iii) that is not, as of the date of transfer to the Trust,
a Delinquent Receivable or a Defaulted Receivable
(iv) which does not constitute an obligation of the United
States, or, to the extent any applicable law would prohibit the
assignment of any such Receivable to the Trust, any state or other
political subdivision thereof, or any agency, instrumentality or
subdivision of any of the foregoing;
(v) that was created in compliance, in all material
respects, with the Credit and Collection Policy and all Requirements
of Law applicable to Ingram or the applicable Designated Subsidiary
and pursuant to a Contract that complies, in all material respects,
with the Credit and Collection Policy and all Requirements of Law
applicable to Ingram or the applicable Designated Subsidiary, that was
purchased by Funding in accordance with the Purchase Agreement, and,
as of the date of transfer under the Purchase Agreement and the
Pooling and Servicing Agreement, the terms of which have not been
extended or modified except in accordance with the Credit and
Collection Policy;
(vi) with respect to which all consents, licenses, approvals
or authorizations of, or registrations or declarations with, any
Governmental Authority required to be obtained, effected or given by
Ingram or the applicable Designated Subsidiary in connection with the
creation of such Receivable or the execution, delivery and performance
by Ingram or the applicable Designated Subsidiary of the related
Contract, have been duly obtained, effected or Given and are in full
force and effect as of such date of creation;
(vii) as to which, at the time of the creation and transfer
to Funding of such Receivable, Ingram or a Designated Subsidiary had
good and marketable title thereto free and clear of all Liens and
Adverse Claims;
(viii) that arises under a Contract which has been duly
authorized and which, together with such Receivable, is in full force
and effect and such Contract, together with such Receivable,
constitutes the legal, valid and binding payment obligation of the
Obligor with respect thereto, enforceable against such Obligor in
accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws, now or hereafter in effect,
affecting the enforcement of creditors' rights in general and except
as such enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity);
(ix) neither such Receivable nor the related Contract is
subject to any dispute, offset, defense or counterclaim (other than a
Sales and Marketing Discount or normal return policy) with respect to
the underlying obligation which has been communicated to the Seller or
about which the Seller has knowledge;
(x) that is an account receivable representing all or part
of the sales price of merchandise, insurance or services (within the
meaning of Section 3(c)(5) of the Investment Company Act of 1940, as
amended);
(xi) that is denominated and payable only in United States
dollars and payable to a Lock-Box Account in the United States of
America;
(xii) the Obligor of which (A) is not bankrupt, insolvent,
undergoing composition or adjustment of debts or unable to make
payment of its obligations when due, (B) is located (within the
meaning of Section 9-103 of the applicable UCC) within the United
States of America and (C) is not an Affiliate of Ingram;
(xiii) that constitutes an "account" under and as defined in
Section 9-106 of the UCC as then in effect in the States of New York,
California, Tennessee and Delaware; and
(xiv) that arises out of any Existing Business or any New
Business of Ingram or a Designated Subsidiary.
An Eligible Receivable which becomes a Defaulted Receivable after it has
been transferred to the Trust shall no longer constitute an Eligible
Receivable, provided, that so long as such Eligible Receivable was not, as
of the date of transfer to the Trust, a Delinquent Receivable or a
Defaulted Receivable, neither the Seller nor the Transferor shall have any
obligation under the Purchase Agreement, the Pooling and Servicing
Agreement or otherwise to repurchase such Receivable.
"Eligible Servicer" shall mean Ingram or an entity (which may include
the Trustee) which, at the time of its appointment as Servicer, (i) is
servicing a portfolio of trade receivables, (ii) is legally qualified and
has the capacity to service the Receivables, (iii) has demonstrated the
ability to service professionally and completely a portfolio of similar
accounts in accordance with high standards of skill and care, (iv) shall
have a net worth of at least $100,000,000; (v) is qualified and, if
required, licensed to use the software that the Servicer is then currently
using to service the Receivables or obtains the right to use or has
software which is adequate to perform its duties under the Pooling and
Servicing Agreement (including pursuant to a license from or other
agreement with Ingram or any of its Affiliates); provided, however, that no
such entity shall be deemed to be an Eligible Servicer if it is a direct
competitor of Ingram or any Designated Subsidiary thereof.
"ERISA" shall mean the Employee Retirement Income Security~Act of
1974, as amended from time to time, and the regulations promulgated
thereunder.
"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 Internal Revenue Code.
"Eurodollar Lending Office" shall mean, initially, the office of a
Bank designated as such in Schedule I to the Liquidity Agreement;
thereafter, such other office of such Bank, if any, which shall be making
Eurodollar Loans.
"Eurodollar Loans" shall mean Revolving Loans that bear interest for the
Interest Period applicable thereto at an interest rate based upon the LIBOR
Rate (Reserve Adjusted).
"Eurodollar Tranche" shall have the meaning assigned to such term in the
definition of "Tranche".
"Event of Default" shall mean any of the events specified in Section
8.01 of the Liquidity Agreement, provided that any requirement for the
giving of notice, the lapse of time, or both, or any other condition, has
been satisfied.
"Event of Termination" shall have, with respect to any Series or the
Variable Funding Certificate, the meaning specified in Section 9.01 or
9.02 of the Pooling and Servicing Agreement, respectively.
"Excess Amount Allocation" shall have the meaning specified in Section
4.03(b)(vi) of the Pooling and Servicing Agreement.
"Excess Term Receivables" shall mean for any day, by reference to the
Determination Date immediately preceding such day, commencing with the
Determination Date in April 1993, those Eligible Receivables (as designated by
the Servicer) held in the Trust as of the last Business Day of the related
Settlement Period and having an Original Term in excess of 60 days, which, if
excluded from the Eligible Receivables held in the Trust as of such last
Business Day, would result in the Weighted Average Term as of such last
Business Day being not more than 60 days to the extent such Weighted Average
Term would otherwise exceed 60 days, provided, however, that to the extent
that it is necessary to designate Excess Term Receivables by reason of the
calculation performed on any Determination Date, in lieu of waiting for the
nest succeeding Determination Date to recalculate such requirement as provided
above, the Servicer may, at its election, perform such calculation as often as
daily, in each case with reference to the Eligible Receivables held in the
Trust as of the end of the prior Business Day, until such Excess Term
Receivables are no longer required.
"Existing Businesses" shall mean those businesses in which Ingram or
any Designated Subsidiary are engaged on the Initial Closing Date (or, in
the case of a Designated Subsidiary which becomes a Designated Subsidiary
after the Initial Closing Date (and with the consent of all of the Banks),
those businesses in which such Designated Subsidiary is engaged on the date
on which such Designated Subsidiary becomes a Designated Subsidiary).
"Exiting Bank" shall have the meaning specified in Section 4.02(c) of the
Liquidity Agreement.
"Exiting LOC Issuer" shall have the meaning specified in Section 2.01(e)
of the LOC Reimbursement Agreement.
"Expiration Date" with respect to a Bank shall mean December 31, 1995 or,
if such Bank's Percentage of the Liquidity Commitment is extended pursuant to
Section 4.02(a) of the Liquidity Agreement, two years after the date of the
Expiration Date in effect for such Bank immediately prior to the time of the
most recent extension for such Bank.
"Extension Period" shall have the meaning set forth in Section 4.02(a) of
the Liquidity Agreement.
"Facilities Costs" shall mean, collectively, Facilities Costs 1,
Facilities Costs 2, Facilities Costs 3, Facilities Costs 4 and Facilities
Costs 5.
"Facilities Costs 1" shall have the meaning assigned to such term in
Section 9(a) of the Security Agreement.
"Facilities Costs 2" shall have the meaning assigned to such term in
Section 9(a) of the Security Agreement.
"Facilities Costs 3" shall have the meaning assigned to such term in
Section 9(a) of the Security Agreement.
"Facilities Costs 4" shall have the meaning assigned to such term in
Section 9(a) of the Security Agreement.
"Facilities Costs 5" shall have the meaning assigned to such term in
Section 9(a) of the Security Agreement.
"Facilities Costs Account" shall mean the subaccount of the Collateral
Account into which a portion of the payments with respect to the Variable
Funding Certificate will be deposited and held for the payment of Facilities
Costs and such other applications as are provided for in the Security
Agreement.
"Facilities Documents" shall mean the Liquidity Agreement, the Loan
Notes, the Pooling and Servicing Agreement, including the Variable Funding
Supplement thereto, the Depositary Agreement, the LOC Reimbursement
Agreement, the LOC, the CP Dealer Agreement, the Management Agreement and
the Security Agreement.
"Final Trust Termination Date" shall have the meaning specified in
Section 12.01 of the Pooling and Servicing Agreement.
"Fiscal Year" shall mean each fiscal year of the CP Issuer.
"Fitch" shall mean Fitch Investors Service, Inc.
"Funding" shall mean Ingram Funding Inc. a Delaware corporation.
"GAAP" or generally accepted accounting principles. shall mean as of
the date of any determination with respect thereto, generally accepted
accounting principles as used by the Financial Accounting Standards Board
and/or the American Institute of Certified Public Accountants on such date.
"General Account" shall mean the sub-account of the Collateral Account
into which amounts initially transferred to the Collateral Account are held
until transferred into another sub-account or otherwise used in accordance
with the Security Agreement.
"Governmental Authority" shall mean the United States of America, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Holder" shall mean, in the case of the Certificates, the Person in
whose name a Certificate is registered as owner in the Certificate
Register.
"Imputed Yield" shall mean with respect to any date of determination the
product of the Unpaid Balances of the Receivables and the Discount Factor.
"Imputed Yield Collections" shall have the meaning specified in Section
4.03(b) of the Pooling and Servicing Agreement.
"Incumbency Certificate" shall have the meaning assigned to such term in
Section 2 of the Depositary Agreement.
"Indebtedness" of a Person shall mean such Person's (i) obligations for
borrowed money, (ii) obligations representing the deferred purchase price of
property other than accounts payable arising in the ordinary course of such
Person's business on terms customary in the trade, (iii) obligations, whether
or not assumed, secured by Liens or payable out of the proceeds or production
from property now or hereafter owned or acquired by such Person, (iv)
obligations which are evidenced by notes, acceptances, or other instruments,
(v) obligations for which such Person is obligated pursuant to a guaranty and
(vi) obligations in respect of a lease of property which is required to be
capitalized in accordance with GAAP.
"Indemnitee" shall have the meaning assigned to such term in Section
10.04(b) of the Liquidity Agreement.
"Ingram" shall mean Ingram Industries Inc., a Tennessee corporation.
"Initial Closing Date" shall mean February 10, 1993.
"Initial Invested Amount" shall mean, with respect to any Series, the
excess of (a) the amount stated as such in the applicable Supplement over (b)
the initial principal amount of any Certificate of such Series delivered to
the Trustee pursuant to Section 2.09 of the Pooling and Servicing Agreement.
"Initial Issuer Amount" shall mean, with respect to the Variable
Funding Certificate, the amount stated in the Variable Funding Supplement.
"Insolvency" shall mean, with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"Insolvency" shall mean having the condition of Insolvency.
"Insurance Subsidiary" means any Subsidiary of Ingram that is a licensed
insurance company under all applicable laws and shall initially include PGA
Service Corporation, Permanent Assurance Corporation, Permanent General
Assurance Corporation of Ohio and Tennessee In
surance Company.
"Interest Account" shall mean the sub-account of the Collateral Account
into which the proceeds of the Collateral to be used to pay the Interest
Component and accrued interest on Loans and LOC Disbursements will be
deposited and held exclusively for payment of such Interest Component.
"Interest Component" shall mean when used with respect to Commercial
Paper issued on a discount basis the excess of the CP Matured Value over
the purchase price with respect thereto.
"Interest Funding Account" shall mean, for any Series, the account, if
any, established pursuant to the related Supplement in which amounts
representing interest payable on the Investor Certificates of such Series will
be deposited and held until paid to Certificateholders.
"Interest Payment Date" shall mean (a) as to any Base Rate Loan, each
Business Day to occur after any such Loan is made under the Liquidity
Agreement, (b) as to any Eurodollar Tranche having an Interest Period of one,
two or three months, and any C/D Rate Tranche having an Interest Period of 30,
60 or 90 days, the last day of the applicable Interest Period with respect
thereto and (c) as to any Eurodollar Tranche or C/D Rate Tranche having an
Interest Period of six months or 180 days, respectively, the date which is
three months or 90 days, respectively, after the commencement of such Interest
Period and the last day of such Interest Period.
"Interest Period" shall mean
(a) with respect to any Eurodollar Loan:
(i) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months thereafter, as selected
by the CP Issuer in a notice of borrowing or notice of conversion, as
the case may be, given with respect thereto in accordance with the
Liquidity Agreement and
(ii) thereafter, each period commencing on the last day of
the next preceding Interest Period applicable to such Eurodollar Loan
and ending one, two, three or six months thereafter, as selected by
the CP Issuer in a notice of conversion or notice of continuation, as
the case may be, given with respect thereto in accordance with the
Liquidity Agreement;
(b) with respect to any C/D Rate Loan:
(i) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such C/D Rate
Loan and ending 30, 60, 90 or 180 days thereafter, as selected by the
CP Issuer in its notice of borrowing or notice of conversion, as the
case may be, given with respect thereto in accordance with the
Liquidity Agreement; and
(ii) thereafter, each period commencing on the last day of
the next preceding Interest Period applicable to such C/D Rate Loan
and ending 30, 60, 90 or 180 days thereafter, as selected by the CP
Issuer in a notice of conversion or continuation, given with respect
thereto and in accordance with the Liquidity Agreement;
provided that the foregoing provisions relating to Interest Periods
are subject to the following:
(i) if any Interest Period relating to a C/D Rate Loan would
otherwise end on a day which is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day;
(ii) if any Interest Period with respect to any Eurodollar
Loan would otherwise end on a day which is not a Working Day, such
Interest Period shall be extended to the next succeeding Working Day,
unless the result of such extension would be to carry such Interest
Period into another calendar month, in which event such Interest
Period shall end on the immediately preceding Working Day;
(iii) any Interest Period that would otherwise extend beyond
the Scheduled Maturity Date shall end on such date;
(iv) any Interest Period with respect to a Eurodollar Loan
which begins on the last Working Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last
Working Day of a calendar month; and
(v) the CP Issuer shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan or C/D Rate Loan
during an Interest Period for such Loan.
"Invested Amount" shall mean, for any day when used with respect to any
Series, an amount equal to (a) the Initial Invested Amount minus (b) the
aggregate amount of payments of principal paid with respect to such Series of
Certificates prior to such day (including any amounts paid to the Investor
Certificateholders with respect to Investor Default Amounts) minus (c) the
excess, if any, of the aggregate amount of Investor Charge-Offs of such Series
over such Investor Charge-Offs which have been reimbursed prior to such day
and minus (d) the principal amount of any Investor Certificate cancelled
pursuant to Section 2.09 of the Pooling and Servicing Agreement.
"Invested Percentage" shall mean, with respect to any Series for any
day, (i) except as set forth in clause (ii) below, the decimal equivalent
of a fraction the numerator of which is the Invested Amount as of the end
of the preceding Business Day and the denominator of which is the sum of
(A) Adjusted Eligible Principal Receivables and (B) the product of (x) the
amount, if any, held in the Transferor Account for such preceding Business
Day multiplied by (y) 100% minus the Discount Factor as of the most recent
Determination Date; and (ii) when used in respect of Principal Receivables
during the related Amortization Period, the decimal equivalent of a
fraction the numerator of which is the Invested Amount at the end of the
last day prior to the related Amortization Period Commencement Date and the
denominator of which is the greater of (a) the sum of (1) Adjusted
Eligible Principal Receivables and (2) the product of (x) the amount, if
any, held in the Transferor Account at the end of the last day of the prior
Settlement Period multiplied by (y) 100% minus the Discount Factor as of
the most recent Determination Date and (b) the sum of the initial numerator
of each fraction used to determine such Invested Percentage for all
outstanding Series of Investor Certificates and the Maximum Program Amount
as the numerator used to determine the corresponding Issuer Percentage.
"Investor Certificate" shall mean a certificate issued under Section 6.01
of the Pooling and Servicing Agreement hereof by the Transferor and
authenticated by or-on behalf of the Trustee, substantially in the form of
Exhibit A to the Pooling and Servicing Agreement.
"Investor Certificateholder" shall mean the Holder of record of an
Investor Certificate as indicated in the Certificate Register.
"Investor Charqe-Offs" shall mean with respect to each Series for any
Payment Date, the excess, if any, of the Investor Default Amount for such
Payment Date over the Investor Default Amount that may be reimbursed from
that portion of Imputed Yield Collections available therefor pursuant to
the Pooling and Servicing Agreement, or from any other source specified in
the applicable Supplement.
"Investor Default Amount" shall mean, with respect to each Series for
any Determination Date, an amount equal to the product of (a) the Defaulted
Amount for such Determination Date and (b) the Invested Percentage with
respect to such Series for such Determination Date.
"Investor Interest" shall have the meaning specified in Section 4.01 of
the Pooling and Servicing Agreement.
"Issuance Date" shall have the meaning, with respect to the Variable
Funding Certificate or any Series issued pursuant to Section 6.09 of the
Pooling and Servicing Agreement, stated in such Section.
"Issuance Notice" shall have the meaning, with respect to the Variable
Funding Certificate or any Series issued pursuant to Section 6.09 of the
Pooling and Servicing Agreement, stated in such Section.
"Issuer Additional Amount" shall have the meaning specified in Section
6.10 of the Pooling and Servicing Agreement.
"Issuer Amount" shall mean for any day when used with respect to the
Variable Funding Certificate, an amount equal to (a) the Initial Issuer
Amount, plus (b) the aggregate principal amount of the purchases by the Holder
of the Variable Funding Certificate of any Issuer Additional Amounts through
the end of the preceding Business Day pursuant to Section 6.10 of the Pooling
and Servicing Agreement, minus (c) the aggregate amount of payments of
principal paid to the Holder of the Variable Funding Certificate prior to such
day (including any amounts paid to the Holder of the Variable Funding
Certificate under Sections 4.05(c) and (I) of the Pooling and Servicing
Agreement as set forth in the Variable Funding Supplement), minus (d) the
Issuer Charge-Offs as of the end of the preceding Business Day.
"Issuer Charge-Offs" shall mean with respect to the Variable Funding
Certificate for any Business Day, the excess, if any, of the Issuer Default
Amount for such Business Day over the Issuer Default Amount that may be
reimbursed from that portion of Imputed Yield Collections available therefor
pursuant to the Pooling and Servicing Agreement, or from any other source
specified in the Variable Funding Supplement.
"Issuer Default Amount" shall mean, with respect to the Variable
Funding Certificate for any Busi ness Day, an amount equal to the product
of (a) the Defaulted Amount for the Determination Date on or immediately
prior to such Business Day, (b) the Issuer Percentage for such Business Day
and (c) a fraction the numerator of which is the number of calendar days
from the Business Day preceding such Business Day to such Business Day and
the denominator of which is the number of days in the Settlement Period in
which such Determination Date occurs.
"Issuer Default Deficiency Amount" shall have the meaning specified in
Section 4.05(f) of the Pooling and Servicing Agreement, as set forth in the
Variable Funding Supplement.
"Issuer Imputed Yield Collections" shall have the meaning specified in
Section 4.05(a) of the Variable Funding Supplement.
"Issuer Interest" shall have the meaning specified in Secition 4.01 of
the Pooling and Servicing Agreement.
"Issuer's Interest Rate" shall mean with respect to a Settlement
Period, a per annum interest rate which if multiplied by the weighted
average Issuer Amount with respect to each day during such Settlement
Period would produce, on the basis of a 365 or 366-day year, as the case
may be, an amount equal to the Carrying Costs for such Settlement Period.
"Issuer Percentage" shall mean with respect to the Variable Funding
Certificate for any Business Day, (i) except as set forth in clause (ii)
below, the decimal equivalent of a fraction the numerator of which is the
Issuer Amount as of the end of the preceding Business Day and the
denominator of which is the sum of (A) Adjusted Eligible Principal
Receivables and (B.) the product of (x) the amount, if any, held in the
Transferor Account for such preceding Business Day multiplied by (y) 100%
minus the Discount Factor as of the most recent Determination Date; and
(ii) when used in respect of Principal Receivables during the Amortization
Period, the decimal equivalent of a fraction the numerator of which is the
Issuer Amount as of the end of the last day prior to the Amortization
Period Commencement Date and the denominator of which is the greater of (a)
the sum of (1) Adjusted Eligible Principal Receivables and (2) the product
of (x) the amount, if any, held in the Transferor Account on the last day
of the prior Settlement Period multiplied by (y) 100% minus the Discount
Factor as of the most recent Determination Date and (b) the sum of the
Maximum Program Amount as the numerator used to determine such Issuer
Percentage and the initial numerators for each fraction used to determine
the corresponding Invested Percentages for all outstanding Series of
Investor Certificates.
"Letter" shall have the meaning specified in Section 10(a) of the
Depositary Agreement.
"Letter of Representations" shall mean the agreement among the
Transferor, the Trustee and the initial Clearing Agency, with respect to
any Book-Entry Certificates.
"LIBOR Rate" shall mean, relative to any Interest Period for LIBOR Rate
Loans, the rate of interest equal to the average (rounded upwards, if
necessary, to the nearest 1/16 of 1%) of the rates per annum at which
Dollar deposits in immediately available funds are offered to each
Reference Bank's LIBOR office in the London interbank market as at or about
11:00 a.m., London time, two Business Days prior to the beginning of such
Interest Period for delivery on the first day of such Interest Period, and
in an amount approximately equal to the amount of each such Reference
Bank's Eurodollar Rate Loan and for a period approximately equal to such
Interest Period.
"LIBOR Rate (Reserve Adjusted)" means, relative to any Loan to be made,
continued or maintained as, or converted into, a Eurodollar Rate Loan for any
Interest Period, a rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) determined pursuant to the following formula:
LIBOR Rate LIBOR Rate
--------------------
(Reserve Adjusted) 1.00 - LIBOR Reserve
Percentage
The LIBOR Rate (Reserve Adjusted) for any interest Period for
Eurodollar Rate Loans will be determined by the Liquidity Agent on the
basis of the LIBOR Reserve Percentage in effect on, and the applicable
rates furnished to and received by the Liquidity Agent from the Reference
Banks, two Business Days before the first day of such Interest Period.
"LIBOR Reserve Percentage" means, relative to any Interest Period for
Eurodollar Rate Loans, the reserve percentage (expressed as a decimal)
equal to the maximum aggregate reserve requirements (including all basic,
emergency, supplemental, marginal and other reserves and taking into
account any transitional adjustments or other scheduled changes in reserve
requirements) specified under regulations issued from time to time by the
P.R.S. Board and then applicable to assets or liabilities consisting of
and including "Eurocurrency Liabilities", as currently defined in
Regulation D of the F.R.S. Board, having a term approximately equal or
comparable to such Interest Period.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever, including, without limitation, any
conditional sale or other title retention agreement, any financing lease
having substantially the same economic effect as any of the foregoing and the
filing of any financing statement under the UCC or-comparable law of any
jurisdiction to evidence any of the foregoing; provided, however, that any
assignment permitted by Sections 6.03(b), 7.02, or 7.04 of the Pooling and
Servicing Agreement shall not be deemed to constitute a Lien; provided,
further, however, that the lien created by the Pooling and Servicing Agreement
shall not be deemed to constitute a Lien.
"Liquidity Agent" shall mean Chemical Bank and any successor Liquidity
Agent appointed pursuant to the Liquidity Agreement.
"Liquidity Agreement" shall mean the Liquidity Agreement, dated as of
February 10, 1993, among the CP Issuer, Ingram, Funding, the banks named
therein and the Liquidity Agent, as amended from time to time.
"Liquidity Banks" shall mean the banks making or having the obligation to
make Liquidity Loans pursuant to the Liquidity Agreement.
"Liquidity Commitment shall mean the obligation of the Banks to make
Loans in an aggregate principal amount at any one time outstanding not to
exceed (i) prior to the Amortization Period Commencement Date with respect
to the Variable Funding Certificate, $150,000, 000 and (ii) on the
Amortization Period Commencement Date with respect to the Variable Funding
Certificate and on each date thereafter, the Requisite Commitment Level on
such date.
"Liquidity Fee" shall mean the fees payable to the Liquidity Banks
pursuant to Section 3.07 of the Liquidity Agreement.
"Liquidity Loan" shall have the meaning as signed to the term "Loan"
in the Liquidity Agreement, as in effect on the Initial Closing Date.
"Liquidity Loan Percentage" shall mean the ratio, expressed as a
percentage, of the outstanding principal amount of the Liquidity Loans
(including those made by an Exiting Bank) to the aggregate amount of
Advances.
"Loan Documents" shall have the meaning specified in Section 2 of the
Security Agreement.
"Loan Notes" shall mean all the Revolving Loan Notes and the Refunding
Loan Notes.
"Loan Obligations" shall have the meaning specified in Section 2 of the
Security Agreement.
"Loans" shall mean the Revolving Loans and the Refunding Loans.
"LOC" shall mean, with respect to the Commercial Paper, each
irrevocable letter of credit in favor of the Collateral Agent for the
benefit of holders of Commercial Paper.
"LOC Commitment" shall mean the aggregate stated amount of the LOCs,
as reduced and reinstated from time to time as provided in the LOC
Reimbursement Agreement, and shall initially equal $15,000,000.
"LOC Commitment Amount" shall mean, with respect to the LOC of each
LOC Issuer, the stated amount thereof which shall equal such LOC Issuer's
Percentage of the LOC Commitment.
"LOC Disbursement" shall mean any amount paid under the LOC In respect
of a Charge-Off Drawing (but shall not include interest or any other
amounts payable with respect to the amount so paid).
"LOC Escrow Account" shall mean a segregated trust account established
and maintained by the Collateral Agent for the purposes described in Section
2.03 of the LOC Reimbursement Agreement.
"LOC Expiration Date" shall mean, with respect to an LOC Issuer,
December 31, 1995, or, if such LOC Issuer's Percentage of the LOC
Commitment is extended pursuant to Section 2.01(c) of the LOC Reimbursement
Agreement, two years after the date of such LOC Expiration Date in effect
at the time of such extension.
"LOC Extension Period" shall have the meaning set forth in Section
2.01(c) of the LOC Reimbursement Agreement.
"LOC Fee" shall mean, with respect to the LOC, the fee payable pursuant
to the LOC Reimbursement Agreement for each LOC Issuer in respect of its LOC.
"LOC Issuer" shall mean the Person or Persons specified as such in the
LOC Reimbursement Agreement.
"LOC Payment Account" shall have the meaning assigned to such term in
Section 2.04(d) of the LOC Reimbursement Agreement.
"LOC Reimbursement Agreement" shall mean the letter of credit
reimbursement agreement dated as of February 10, 1993, among the LOC
Issuers, Funding, Ingram, the Collateral Agent and the CP Issuer, as
amended from time to time.
"Lock-Box Account" shall mean an account in the name of Funding
maintained pursuant to a Lock-Box Agreement.
"Lock-Box Agreements" shall mean the collective reference to each
agreement attached as Exhibit I to the Pooling and Servicing Agreement,
between Funding and a Lock-Box Bank (provided, that for a period not to
exceed 30 days following the Initial Closing Date, Ingram or a Designated
Subsidiary may be party to any such agreement rather than Funding),
pursuant to which such Lock-Box Bank receives or will receive Collections
from time to time as provided therein, and any other future agreement
substantially in the form of Exhibit J to the Pooling and Servicing
Agreement with any other Lock-Box Bank.
"Lock-Box Banks" shall mean any of the banks listed in Exhibit B to the
Purchase Agreement and Exhibit K to the Pooling and Servicing Agreement
(including their successors) and any other bank which becomes a Lock-Box Bank
pursuant to Section 2.06(i) of the Pooling and Servicing Agreement and which
is a party to a Lock-Box Agreement and pursuant thereto holds or may in the
future hold one or more lock-box accounts for receiving Collections.
"Lock-Box Notice" shall mean a notice, substantially in the form of
Exhibit L to the Pooling and Servicing Agreement, from Ingram or a Designated
Subsidiary to a Lock-Box Bank.
"Management Agreement" shall mean the Management Agreement dated as of
February 10, 1993, between the CP-Issuer and the Manager, as from time to
time amended.
"Manager" shall mean Merrill Lynch Money Markets Inc., as manager under
the Management Agreement.
"Margin Stock" shall have the meaning provided such term in Regulation
U of the Board.
"Master Note Certificate" shall have the meaning assigned to such
term in Section lO(b) of the Depositary Agreement.
"Material Subsidiary" shall mean on any day, a Designated Subsidiary the
Principal Receivables of which constitute 20% or more of all Aggregate
Principal Receivables on such day.
"Matured Default" shall mean any Event of Default (i) specified in
Section 8.01 of the Liquidity Agreement with respect to which the Liquidity
Commitment shall automatically terminate and the Loans shall automatically
become due and payable, or the Liquidity Agent shall terminate the
Liquidity Commitment and declare the Loans to be immediately due and
payable or (ii) specified in Section 2.10 of the LOC Reimbursement
Agreement following certain actions specified therein.
"Maximum Program Amount" shall initially be $150,000,000 Aggregate CP
Matured Value. Subject to the satisfaction of certain conditions provided for
therein, the Maximum Program Amount may be changed by amending the Variable
Funding Supplement, the Liquidity Agreement, the LOC Reimbursement Agreement
and the LOCs.
"Micro's Discount" shall mean for any day, by reference to the
immediately preceding Determination Date, an amount equal to the decimal
equivalent of the sum of (i) 0.50%, and (ii) the product of (A) the Base
Rate per annum on the preceding Determination Date and (B) a fraction the
numerator of which is the number of Days Sales Outstanding (solely with
reference to Receivables originated by Ingram Micro Inc., a California
corporation) as of the preceding Determination Date and the denominator of
which is 365, and (iii) the product of (A) 0.25% and (B) the same fraction
as in the preceding clause (ii)(B), plus, in the event that the Charge-Off
Ratio (solely with reference to Receivables originated by Ingram Micro
Inc., a California corporation) for such Determination Date exceeds 0.50%,
an amount equal to such excess.
"Minimum Adjusted Eligible Principal Receivables" shall mean at any
day an amount equal to (i) the sum of the Aggregate Invested Amount and the
Issuer Amount, divided by (ii) 1 minus the Applicable Minimum Percentage.
"Minimum Capital Ratio" shall mean for any day, by reference to amounts
set forth on the Daily Report for such day, a percentage equal to a fraction,
the numerator of which shall be the sum of the following amounts:
(a) (i) 60% of Standard & Poor's DIANA. credit support level
(as applicable to credit losses) and 40t of Standard & Poor's aAAA. credit
support level (as applicable to dilutions) multiplied by (ii) the aggregate
Unpaid Balance of Adjusted Eligible Receivables;
(b) (i) 40% of Standard & Poor's DIANA. credit support level
(solely as applicable to dilutions and not to credit losses) multiplied by
(ii) the aggregate Unpaid Balance of Eligible Receivables in excess of the
Concentration Limits applicable to the Obligors thereunder with respect to
Obligors having a long-term unsecured debt rating from Standard & Poor's of
"BBB-" or better;
(c) 100% of the aggregate Unpaid Balance of Eligible Receivables
in excess of the Concentration Limits applicable to the Obligors thereunder
with respect to Obligors not having a long-term unsecured debt rating from
Standard & Poor's of "BBB-". or better; and
(d) 100% of the aggregate Unpaid Balance of Receivables that are
not Eligible Receivables,
and the denominator of which shall be the sum of the amounts described in
(a)(ii), (b)(ii), (c) and (d) above, in each case with reference to all
Receivables sold by Ingram to Funding under the Purchase Agreement and in
existence on the date of determination (excluding any such Receivables
reconveyed to Ingram pursuant to the Purchase Agreement). For purposes of this
definition, Standard & Poor's "AAA" credit support level (as appllcable to
credit losses) shall initially equal 14%, increased by the same percentage as
any increase in the Discount Factor above 10% attributable solely to the
operation of subparagraph (a) of the definition of Discount Factor, and
Standard & Poor's BAA credit support level (as applicable to dilutions) shall
initially equal 21%, increased by the same percentage as any increase in the
Applicable Mininum Percentage above 15%.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of VISA to which contributions are or have been made
during the preceding five (5) years by any Person or any ERISA Af filiate
of such Person.
"New Business" shall mean any business (i) the products of which are
distributed in distribution chains substantially the same as those used with
respect to products of the Existing Businesses and (ii) are sold with terms
that are substantially the same as those relating to products of the Existing
Businesses.
"Non-Amortization Period" shall mean, with respect to each Series or
the Variable Funding Certificate, the period from and including the Closing
Date for such Series or the Variable Funding Certificate, up to
and including the day prior to the Amortization Period Commencement Date for
such Series or the Variable Funding Certificate.
"Non Pro-Rata Refunding Loan" shall have the meaning assigned to such
term in Section 3.03(e) of the Liquidity Agreement.
"Non-Rata Loan" shall mean a loan by any Bank to the CP Issuer under
Section 3.19 of the Liquidity Agreement and refers to a loan that bears
interest at the Transaction Rate pursuant to the Liquidity Agreement.
"Notice of Borrowing" shall mean a Notice of Refunding Borrowing or a
Notice of Revolving Borrowing.
"Notice of Revolving Borrowing" shall have the meaning specified in
Section 3.02 of the Liquidity Agreement.
"Notice Office" shall mean the office of the Liquidity Agent or a
Liquidity Bank specified in or referred to in Section 10.06 of the
Liquidity Agreement, or such other office as such Liquidity Bank may
designate in writing to the CP Issuer and the Liquidity Agent as the Notice
Office.
"Obligor" shall mean, with respect to any Receivable, the Person or
Persons obligated to make payments with respect to such Receivable under a
Contract.
"Obligated Parties" shall mean the "Borrowers" and the Guarantors un er
that certain Credit Agreement, dated as of December 15, 1992, among the
Borrowers, Guarantors and Lenders named therein, as such Credit Agreement may
be amended from time to time, together with such other Affiliates of Ingram as
may from time to time become either a Borrower or a Guarantor thereunder.
"Officer's Certificate" shall mean a certificate signed by the
Chairman of the Board, President, Treasurer, Controller or any Vice
President of the Transferor or the Servicer or, in the case of a Successor
Servicer, a certificate signed by a Vice President (or an officer holding
an office with equivalent or more senior responsibilities) of such
Successor Servicer, and delivered to the Trustee.
"Official Body" shall mean any government or political subdivision or
any agency, authority, bureau, central bank, commission, department or
instrumentality thereof, or any court, tribunal, grand jury or arbitrator,
in each case whether foreign or domestic.
"One Month Dilution Ratio" shall mean at any Determination Date, the
percentage equivalent of a fraction the numerator of which is the aggregate
amount of Credits with respect to Adjusted Eligible Receivables which
occurred in the Settlement Period immediately preceding such Determination
Date and the denominator of which is the Unpaid Balance of all Adjusted
Eligible Receivables in the Trust at the end of such Settlement Period.
"Opinion of Counsel" shall mean a written opinion of counsel, who may
be an employee of the Transferor or the Servicer and who shall be
reasonably acceptable to the Trustee.
"Original Term" shall mean, for each Eligible Receivable, the stated term
allowed to the related Obligor for payment of such Eligible Receivable at the
time such Eligible Receivable was created and transferred to the Trust.
"Outstanding" shall mean, with respect to the Commercial Paper Notes,
all Commercial Paper Notes issued and authenticated pursuant to the
Depositary Agreement, other than those Commercial Paper Notes that have
been paid in full or which have matured and for the payment of which funds
equal to the CP Matured Value are available and are on deposit in the
Commercial Paper Account.
"Outstanding Series" shall have the meaning specified in Section
4.03(b)(vi) of the Pooling and Servicing Agreement.
"Paying Agent" shall mean any paying agent appointed pursuant to Section
6.06 of the Pooling and Servicing Agreement and shall initially be the
Trustee.
"Payment Date" shall mean with respect to any Series or the Variable
Funding Certificate the date specified as such in the applicable
Supplement.
"Payment Office" shall mean the office of the Liquidity Agent as
specified in Section 10.06 of the Liquidity Agreement or such other office
as the Liquidity Agent may designate in writing to the CP Issuer and the
Liquidity Banks.
"Payment Sharing Notice" shall mean a written notice from the CP Issuer
or any Bank informing the Liquidity Agent that an Event of Default has
occurred and is continuing and directing the Liquidity Agent to allocate
payments received from the CP Issuer in accordance with the Liquidity
Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation (or any
successor).
"Percentage" shall mean (a) in the case of a Bank:
(i) at any time with respect to any payments to be made
under the Facilities Documents to any Bank other than an Exiting Bank,
and for determinations of Required Banks with respect to such Bank, a
fraction, expressed as a percentage, the numerator of which is the Bank
Commitment Amount of such Bank in effect at such time and the
denominator of which is the Liquidity Commitment in effect at such
time;
(ii) at any time that there is an Exiting Bank, with respect to
determinations by the Required Banks in which the Exiting Bank is
entitled to participate, such Exiting Bank's "Percentage" shall be a
fraction, expressed as a percentage, the numerator of which is equal to
the principal amount of such Exiting Bank's Loans outstanding at such
time and the denominator of which is equal to the sum of (i) the
Liquidity Commitment in effect at such time and (ii) the aggregate
principal amount of Loans made by all then Exiting Banks outstanding at
such time; and
(b) in the case of an LOC Issuer:
(i) at any time with respect to any payments to be made under
the Facilities Documents to any LOC Issuer other than an Exiting LOC
Issuer, and for determinations of Required LOC Issuers with respect to
such LOC Issuer, a fraction, expressed as a percentage, the numerator
of which is the LOC Commitment Amount of such LOC Issuer in effect at
such time and the denominator of which is the LOC Commitment in effect
at such time;
(ii) at any time that there is an Exiting LOC Issuer, with
respect to determinations by the Required LOC Issuers in which the
Exiting LOC Issuer is entitled to participate, such Exiting LOC
Issuer's "Percentage" shall be a fraction, expressed as a percentage,
the numerator of which is equal to the principal amount of such Exiting
LOC Issuer's LOC Disbursements outstanding at such time and the
denominator of which is equal to the sum of (i) the LOC Commitment in
effect at such time and (ii) the aggregate principal amount of LOC
Disbursements made by all then Exiting LOC Issuers outstanding at such
time.
"Permitted Investments" shall mean: (a) negotiable instruments or
securities represented by instruments in bearer or registered form which
evidence (i) obligations fully guaranteed as to timely payment by the
United States of America; (ii) certificates of deposit of, or bankers'
acceptances (having original maturities of not more than 180 days) issued
by, any depository institution or trust company and subject to supervision
and examination by federal or state banking or depository institution
authorities; provided, however, that at the time of the Trust's investment
or contractual commitment to invest therein, such depository institution or
trust company shall have a commercial paper credit rating, if any, and a
long-term unsecured debt obligation (other than such obligations whose
rating is based on the credit of a person or entity other than such
institution or trust company) credit rating of at least "WA-1+" by S&P and,
if rated by Fitch, "F-1" by Fitch, in the case of commercial paper, and a
rating not lower than "AAA" by S&P and, if rated by Fitch, "AAA" by Fitch,
in the case of long-term unsecured debt obligations, or such deposits are
fully insured by the FDIC; (iii) commercial paper (having original
maturities of not more than 180 days) having, at the time of the Trust's
investment or contractual commitment to invest therein, a rating of at
least "A-l+" by S&P and, if rated by Fitch, "F-l+" by Fitch; (iv)
investments in money market funds having a rating of at least "AAA" by SOP
and, if rated by Fitch, "F-1+" by Fitch; and (v) any other investment, if
the applicable Rating Agency confirms in writing that such investment will
not adversely affect any ratings with respect to any Series of Investor
Certificates, and which shall be acceptable to the Trustee and (b) demand
deposits or time deposits in the name of the Trust or the Trustee in any
depository institution or trust company referred to in (a)(ii) above.
"Permitted Lien" shall mean: (i) Liens in favor of-the Collateral Agent
created pursuant to the Security Agreement; and (ii) Liens which are in all
respects junior under the applicable UCC to the Liens created by the Security
Agreement and which secure the payment of taxes, assessments and governmental
charges or levies, either (a) not delinquent or (b) being contested in good
faith by appropriate legal or administrative proceedings and as to which
adequate reserves in accordance with GAAP shall have been established, but
only so long as such proceedings could not subject the CP Issuer, any
Liquidity Bank or the Collateral Agent to any civil or criminal penalty or
liability or involve any risk of the loss, sale or forfeiture of any of the
Collateral.
"Person" shall mean any legal person, including any individual,
corporation, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, governmental entity or other entity of
similar nature.
"Plan" shall mean, with respect to any Person, any employee pension
benefit plan that (a) is maintained by such Person or any ERISA Affiliate
of such Person, or to which contributions by any such Person are required
to be made or under which such Person has or could have any liability, (b)
is subject to the provisions of Title IV of ERISA and (c) is not a
Multiemployer Plan.
"Plan Event" shall mean, with respect to any Person, (a) the provision
of a notice of intent to terminate any Plan under Section 4041 of ERISA
other than in a "standard termination", (b) the receipt of any notice by any
Plan to the effect that the PBGC intends to apply for the appointment of a
trustee to administer any Plan, (c) the termination of any Plan which
results in any material liability of such Person, (d) the withdrawal of
such Person or any ERISA Affiliate of such Person from any Plan described
in Section 4063 of ERISA which could be reasonably expected to result in a
material liability of such Person, (e) the complete or partial withdrawal
of such Person or any ERISA Affiliate of such Person from any Multiemployer
Plan which can be reasonably anticipated to result in a material liability
of such Person, (f) a Reportable Event or an event described in Section
4068(f) of ERISA which may result in a material liability of such Person,
and (g) any other event or condition which under ERISA or the Code could be
reasonably expected to constitute grounds for the imposition of a lien on
the assets of such Person in respect of any Plan or Multiemployer Plan.
"Pool Factor" shall mean, with respect to any Series and any Record Date,
a number carried out to eight decimals representing the ratio of the related
Invested Amount as of such Record Date (determined after taking into account
any reduction in the applicable Invested Amount which will occur on the
following Payment Date) to the related Initial Invested Amount.
"Pooling and Servicing Agreement" shall mean the Pooling and Servicing
Agreement, dated as of February 10, 1993, by and among the Transferor, the
Servicer, and the Trustee, and all amendments thereof and supplements
thereto, including any Supplement.
"Portfolio Yield" with respect to any Series shall have the meaning (if
any) specified in the applicable Supplement.
"Post-Default Rate" shall mean with respect to all or any portion of any
Loan not paid when due (whether at the stated maturity, by acceleration or
otherwise, a rate per annum for each day during the period (the "Default
Period") commencing on the due date of all or such portion of such Loan until
such Loan or such portion is paid in full (after as well as before judgment)
equal to 2% above (a) if such Loan is a Eurodollar Loan or C/D Rate Loan
continued or converted pursuant to the Liquidity Agreement, the Applicable
Margin plus the LIBO Rate or C/D Rate for Interest Periods during the Default
Period or (b) if such Loan is a Base Rate Loan, the Applicable Margin plus the
Base Rate.
"Principal Account" shall mean the sub-account of the Collateral Account
Into which the proceeds of Commercial Paper not retained in the Commercial
Paper Account and the proceeds of the Collateral to be used (i) to pay the
Principal Component of the Commercial Paper (including any Capitalized
Interest Component), outstanding principal on Loans and LOC Disbursements, and
(ii) to purchase Issuer Additional Amounts, will be deposited and held
exclusively for such purposes.
"Principal Collections" shall have the meaning specified in Section
4.03(b) of the Pooling and Servicing Agreement.
"Principal Component" shall mean when used with respect to Commercial
Paper issued on a discount basis the excess of the CP Matured Value over
the Interest Component thereof.
"Principal Funding Account" shall mean, for any Series, the account,
if any, established pursuant to the related Supplement in which amounts
representing principal payable on the Investor Certificates of such Series
will be deposited and held until paid to Certificateholders.
"Principal Receivables" shall mean the Unpaid Balance of Receivables less
the amount thereof allocable to Imputed Yield. Principal Receivables shall be
calculated by subtracting from the Unpaid Balance of Receivables the product
of such Unpaid Balance and the Discount Factor.
"Principal Terms" shall have the meaning specified in Section 6.09(b) of
the Pooling and Servicing Agreement.
"Private Placement Exemption" shall have the meaning specified in Section
6.02 of the Pooling and Servicing Agreement.
"Proprietary Information" shall have the meaning specified in Section
10.15(b) of the Liquidity Agreement.
"Proprietary Event of Termination" shall have the meaning specified in
Section 2.03(m) of the Pooling and Servicing Agreement.
"Purchase Agreement" shall mean the Asset Purchase and Sale Agreement,
dated as of February 10, 1993 by and between Funding, as buyer, and Ingram,
as seller, and all amendments and supplements thereto.
"Purchase Date" shall mean the date on which a Receivable is conveyed to
the Buyer and the Purchase Price therefor is due and payable.
"Purchase Price" shall have the meaning as signed to such term in
Section 3.1 of the Purchase Agreement.
"Rating Agency" shall mean, with respect to each Series or the Commercial
Paper supported by the Variable Funding Certificate, the rating agency or
rating agencies that rated the Series or such Commercial Paper, as the case
may be, at the request of the Servicer.
"Rating Agency Fees" shall mean the periodic fees of the Rating Agency.
"Reassignment" shall have the meaning specified in Section 2.04 of the
Pooling and Servicing Agreement.
"Receivable" shall mean each account receivable that is owing upon
creation to (i) the Ingram Book Company division of Ingram (and is
identified on the separate computer system of such division by a seven
digit account number commencing with the numerals "20") or (ii) a
Designated Subsidiary by an Obligor under a Contract arising from a sale of
goods, merchandise and/or services by Ingram or such Designated Subsidiary,
including all obligations of such Obligor with respect thereto and all
rights of a secured party (as such term is defined in the UCC) with respect
to such Unpaid Balance, including, without limitation, all proceeds of the
foregoing, but not including a Reconveyed Receivable. A Receivable shall
be deemed to have been created at the end of the day on the Date of
Processing of such Receivable.
"Receivables Documents" shall mean all Contracts giving rise to the
Receivables and other evidences of Receivables including, without
limitation, tapes, discs, punch cards and related property and rights.
"Reconveyed Receivable" shall have the meaning specified in Section
6.1(a)(i) of the Purchase Agreement.
"Record Date" shall have the meaning specified in the applicable
Supplement.
"Recoveries" shall mean all amounts (including proceeds of credit
insurance, if any) received by the Servicer with respect to Receivables
which have previously become Defaulted Receivables.
"Reference Banks" shall mean initially Chemical Bank, NationsBank of
North Carolina, N.A. and The Bank of Nova Scotia and thereafter, each
Liquidity Bank appointed and acting as a Reference Bank pursuant to Section
3.11 of the Liquidity Agreement.
"Refunding Loan" shall mean a loan made by a Bank pursuant to Section
3.03 of the Liquidity Agreement, the proceeds of which are to be used by
the CP Issuer to repay maturing Commercial Paper or an outstanding Revolving
Loan. All Refunding Loans shall be Base Rate Loans. Refunding Loans shall
include any Non-Pro Rata Refunding Loan.
"Refunding Loan Note" shall mean a promissory note of the CP Issuer,
substantially in the form of Exhibit B to the Liquidity Agreement,
evidencing Refunding Loans.
"Regulatory Change" shall mean, as to any class of banks, any change
after the date hereof in any (or the adoption after the date hereof of any
new):
(a) Federal or state law or foreign law applicable to such class of
banks; or
(b) regulation, interpretation, directive or request (whether or
not having the force of law) applying to such class of banks of any court,
central bank or governmental authority or agency charged with the
interpretation or administration of any law referred to in clause (a) of
this definition or of any fiscal, monetary or other authority having
jurisdiction over such class of banks.
"Related Security" shall mean with respect to any Receivable the right,
title and interest of the Seller, when such term is used in the Purchase
Agreement, and of the Transferor, when such term is used in the Pooling and
Servicing Agreement, in the merchandise (including returned merchandise),
if any, relating to the sale which gave rise to such Receivable, (b) all
other Liens and property subject thereto from time to time purporting to
secure payment of such Receivable, whether pursuant to the Contract related
to such Receivable or otherwise, (c) the assignment for the benefit of the
Buyer, when such term is used in the Purchase Agreement, or the Trustee,
when such term is used in the Pooling and Servicing Agreement, of all UCC
financing statements or similar instruments covering any collateral
securing payment of such Receivable, (d) all of the Transferor's right,
title and interest in, to and under the Purchase Agreement, (e) all
guarantees, insurance and other agreements or arrangements of whatever
character from time to time supporting or securing payment of such
Receivable whether pursuant to the Contract related to such Receivable or
otherwise, and (f) all other instruments and all rights under the
Receivables Documents relating to such Receivables and all rights (but not
obligations) relating to such Receivables.
"Reorganization" shall mean, with respect to any Multiemployer Plan, the
condition that such Plan is in reorganization within the meaning of Section
4241 of ERISA.
"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty-day notice
period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC
Regulation Section 2615.
"Repurchase Terms" shall mean, with respect to any Series or the Variable
Funding Certificate, the terms and conditions, if any, under which the
Transferor may repurchase such Series or the Variable Funding Certificate
pursuant to Section 12.02 of the Pooling and Servicing Agreement as stated as
such in the applicable Supplement.
"Required Banks" shall mean Banks whose Percentages are, in the
aggregate, more than 65%.
"Required LOC Issuers" shall mean LOC Issuers whose Percentages are,
in the aggregate, more than 65%.
"Requirements of Law" for any Person shall mean the certificate of
incorporation or articles of association and by-laws or other
organizational or governing documents of such Person, and any law, treaty,
rule or regulation, or determination of an arbitrator or Governmental
Authority, in each case applicable to or binding upon such Person or to
which such Person is subject, whether Federal, state or local (including,
without limitation, usury laws, the Federal Truth in Lending Act and
Regulation Z and Regulation B of the Board).
"Requisite Commitment Level" shall mean, as of any date, an amount
equal to the sum of (i) the Aggregate CP Matured Value, (ii) the aggregate
principal amount of all outstanding Loans (such sum to be rounded upward to
the nearest multiple of $1,000,000), and (iii) the aggregate amount of all
LOC Disbursements outstanding on such day, subject to a maximum amount of
$150,000, 000.
"Reserve Fund" shall mean the reserve fund established for the benefit of
any Series of Certificates or the Variable Funding Certificate, as specified
in the applicable Supplement, which reserve fund may be a subaccount of the
Collection Account.
"Responsible Officer", when used with respect to the Trustee, shall
mean any officer within the Corporate Trust Office (or any successor group
of the Trustee) with direct responsibility for the administration of the
Pooling and Servicing Agreement, or to whom any corporate trust matter is
referred at the Trustee's Corporate Trust Office because of his knowledge
of and familiarity with the particular subject and, when used with respect
to the Collateral Agent, shall mean any officer within the Corporate Trust
Office (or any successor group of the Collateral Agent) with direct
responsibility for the administration of the Security Agreement.
"Retired Series" shall have the meaning specified in Section
4.03(b)(vi) of the Pooling and Servicing Agreement.
"Revolving Loan" shall mean a loan made by a Bank pursuant to Section
3.02 of the Liquidity Agreement and shall be (i) a Base Rate Loan, (ii) a
Eurodollar Loan or (iii) a C/D Rate Loan.
"Revolving Note" shall mean the note in the form annexed to the
Purchase Agreement as Exhibit A issued to Ingram by Funding in connection
with the purchase of Receivables pursuant to Section 2.1 of the Purchase
Agreement.
"Scheduled Maturity Date" shall mean with respect to any Series, the
date specified as such in the related Supplement.
"Secured Parties" shall have the meaning specified in the Security
Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Security Agreement" shall mean the Pledge and Security Agreement, dated
as of February 10, 1993 among the CP Issuer and the Collateral Agent and,
solely for the limited purpose described therein, the Depositary, the
Liquidity Agent, each LOC Issuer, the CP Dealer and the Manager, as amended
from time to time.
"Seller" shall mean Ingram.
"Seller's Discount" shall mean for any day, by reference to the
immediately preceding Determination Date, an amount equal to the decimal
equivalent of the sum of (i) 0.50%, (ii) the product of (A) the Base Rate
per annum on the preceding Determination Date and (B) a fraction the
numerator of which is the number of Days Sales Outstanding as of the
preceding Determination Date and the denominator of which is 365, and (iii)
the product of (A) 0.25% and (B) the same fraction as in the preceding
clause (ii)(B), plus, in the event that the Charge-Off Ratio (calculated on
a weighted average basis with reference to the Ingram Book Company division
of Ingram and each Designated Subsidiary) for such Determination Date
exceeds 0.50%, an amount equal to such excess.
"Sender" shall have the meaning specified in Section 10(i) of the
Depositary Agreement.
"Series" shall mean any series of Investor Certificates issued under
Section 6.09 of the Pooling and Servicing Agreement but not the Variable
Funding Certificate.
"Series Termination Date" shall mean, with respect to any Series, the
date stated as such in the applicable Supplement.
"Service Transfer" shall have the meaning specified in Section 10.01
of the Pooling and Servicing Agreement.
"Servicer" shall initially mean Ingram and thereafter any Person
appointed as successor as provided in the Pooling and Servicing Agreement to
service the Receivables.
"Servicer Default" shall have the meaning specified in Section 10.01
of the Pooling and Servicing Agreement.
"Servicing Fee" shall have the meaning specified in Section 3.02 of
the Pooling and Servicing Agreement.
"Servicing Fee Deficiency Amount" shall have the meaning specified in
Section 4.05(b) of the Pooling and Servicing Agreement as set forth in the
Variable Funding Supplement.
"Servicing Fee Percentage" shall mean, with respect to any Series or the
Variable Funding Certificate, the percentage specified as such in the
applicable Supplement.
"Servicing Officer" shall mean any officer or employee of the Servicer
involved in, or responsible for, the administration and servicing of the
Receivables whose name appears on a list furnished to the Trustee by the
Servicer, as such list may from time to time be amended.
"Settlement Date" shall mean, with respect to any Determination Date, the
Business Day immediately succeeding such Determination Date.
"Settlement Period" shall mean a calendar month; provided, however,
that, in the case of the initial Settlement Period, "Settlement Period"
shall mean the period from and including the Initial Closing Date to and
including the last day of the calendar month in which the Initial Closing
Date occurs.
"Settlement Statement" shall mean a report for each Determination Date,
issued on each Settlement Date, showing the items and making the computations
included in the form of the Settlement Statement attached as Exhibit H to the
Pooling and Servicing Agreement.
"Shareholder's Equity" as of any day shall mean the amount shown (or
that would be shown) as "shareholder's equity" on a balance sheet of Funding
as of such date prepared in accordance with GAAP.
"Special Drawing" shall have the meaning specified in Section 2.03(a) of
the LOC Reimbursement Agreement.
"Specified Eligible Receivables" shall have the meaning assigned to such
term in Section 3.01(c) of the Liquidity Agreement.
"Standard & Poor's" or SAP" shall mean Standard & Poor's Corporation.
"Statutory Reserves" shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves),
expressed as decimals, established by the Board and any other Governmental
Authority to which any Liquidity Bank is subject for new negotiable
nonpersonal time deposits in dollars of over $100,000 with maturities
approximately equal to three months. Such reserve percentages shall
include those imposed pursuant to Regulation D of the Board. Statutory
Reserves shall be adjusted automatically on and as of the effective date of
any change in any reserve percentage.
"Subordinated Capital Note" shall mean the note in the form annexed to
the Purchase Agreement as Exhibit F issued by Funding to Ingram in
connection with the maintenance of capital pursuant to Section 3.5 of the
Purchase Agreement.
"Subsidiary" shall mean any corporation 50% or more of the outstanding
voting securities of which shall at the time be owned or controlled,
directly or indirectly, by Ingram or by one or more Subsidiaries, or by
Ingram and one or more Subsidiaries, or any similar business organization
which is so owned or controlled.
"Subsidiary Purchase Agreement" shall mean any asset purchase and sale
agreement entered into between Ingram, as buyer, and a Designated Subsidiary,
as seller, for the purchase and sale of Receivables created by such Designated
Subsidiary, substantially in the form attached as Exhibit G to the Purchase
Agreement, and all amendments and supplements thereto.
"Successor Servicer" shall have the meaning specified in Section 10.02
of the Pooling and Servicing Agreement.
"Supplement" shall mean, with respect to any Series or the Variable
Funding Certificate, a supplement to the Pooling and Servicing Agreement
complying with the terms of Section 6.09 thereof.
"Supplemental Payments" shall mean, with respect to the Variable
Funding Certificate, an amount equal to the sum of any prepayment penalty
pursuant to Section 5.02(b) of the Liquidity Agreement, any expense or
liability of the CP Issuer in respect of Facilities Costs 4 and Facilities
Costs 5 and any other cost, expense or liability of the CP Issuer not
otherwise included in Carrying Costs.
"Taxes" shall have the meaning assigned to such term in Section 3.10(a)
of the Liquidity Agreement.
"Termination Date" shall have the meaning set forth in Section 8.1 of the
Purchase Agreement.
"Termination Notice" shall have the meaning specified in Section 10.01 of
the Pooling and Servicing Agreement.
"Tranche" shall mean the collective reference to Eurodollar Loans or C/D
Rate Loans, as the case may be, the Interest Periods with respect to all of
which begin on the same date and end on the same later date (whether or not
such Loans shall originally have been made on the same day); Tranches may be
identified as "Eurodollar Tranches" or "C/D Rate Tranches", as applicable.
"Transaction Rate" shall mean the rate or rates as the CP Issuer and any
Bank may agree on from time to time with respect to any portion of such Bank's
Note which is made, maintained or converted into a Non-Rata Loan.
"Transfer Agent and Registrar" shall have the meaning specified in
Section 6.03 of the Pooling and Servicing Agreement and shall initially be
the Trustee.
"Transfer Date" shall mean, with respect to any Payment Date, the
Business Day next preceding such Payment Date.
"Transfer Deposit Amount" shall mean, with respect to any Reconveyed
Receivable for any Business Day, an amount equal to the amount of the Unpaid
Balance of the Reconveyed Receivable at the end of the preceding Business Day.
"Transferor" shall mean Ingram Funding Inc., a Delaware corporation.
"Transferor Account" shall mean the account provided for in Section
4.02 of the Pooling and Servicing Agreement.
"Transferor Account Deposit Amount" shall mean, with reference to any
day on which the Transferor Eligible Amount is, or would be, less than the
Transferor Minimum Amount, or the Adjusted Eligible Principal Receivables
are, or would be, less than the Minimum Adjusted Eligible Principal
Receivables, an amount equal to (a) the difference between the Transferor
Minimum Amount and the Transferor Eligible Amount, or the difference
between Minimum Adjusted Eligible Principal Receivables and Adjusted
Eligible Principal Receivables, divided by (b) 100% minus the Discount
Factor as of the most recent Determination Date.
"Transferor Amount" shall mean for any day, the excess, if any, of (1)
the sum of (a) Aggregate Principal Receivables for the prior Business Day
(or the Initial Closing Date) and (b) the product of (i) the amount, if
any, held in the Transferor Account multiplied by (ii) 100% minus the
Discount Factor as of the most recent Determination Date over (2) the sum
of the Issuer Amount and the Aggregate Invested Amounts for such day.
"Transferor Certificate" shall mean the certificate executed by the
Transferor and authenticated by the Trustee, substantially in the form of
Exhibit C to the Pooling and Servicing Agreement.
"Transferor Eligible Amount" shall mean for any day the excess, if
any, of (1) the sum of (a) Adjusted Eligible Principal Receivables for the
prior Business Day (or the Initial Closing Date) and (b) the product of (i)
the amount, if any, held in the Transferor Account multiplied by (ii) 100%
minus the Discount Factor as of the most recent Determination Date over (2)
the sum of the Issuer Amount and the Aggregate Invested Amount for such
day.
"Transferor Eligible Receivables Amount" shall mean, with respect to any
Business Day, the amount of Adjusted Eligible Principal Receivables minus the
Issuer Amount minus the Aggregate Invested Amount for such day.
"Transferor Interest" shall have the meaning specified in Section 4.01 of
the Pooling and Servicing Agreement.
"Transferor Minimum Amount" shall mean, with respect to any Business Day,
an amount equal to (i) a fraction, the numerator of which is the sum of the
Issuer Amount and the Aggregate Invested Amount and the denominator of
which is equal to 100% minus the Applicable Minimum Percentage minus (ii)
the sum of the Issuer Amount and the Aggregate Invested Amount; provided,
that as of the Amortization Period Commencement Date for the Variable
Funding Certificate or any Series, the Transfer or Minimum Amount,
expressed as a dollar amount, shall be held constant at the Transferor
Minimum Amount required as of such Amortization Period Commencement Date
until the Amortization with respect to the Variable Funding Certificate or
such Series shall have been effected.
"Transferor Minimum Receivables Amount" shall mean, with respect to any
Business Day, an amount equal to 1/3 of the Transferor Minimum Amount
required on such day.
"Transferor Percentage" shall mean, with respect to the Transferor
Certificate for any day, the excess on such day, if any, of (a) 100% over
(b) the sum of (1) the Aggregate Invested Percentage and (2) the Issuer
Percentage.
"Trust" shall mean the trust created by the Pooling and Servicing
Agreement.
"Trust Assets" shall have the meaning specified in Section 7751 of the
Pooling and Servicing Agreement.
"Trustee" shall mean the institution executing the Pooling and Servicing
Agreement as trustee, or its successor in interest, or any successor trustee
appointed as provided in the Pooling and Servicing Agreement.
"Type" shall mean, as to any Loan, its nature as a Base Rate Loan, a
Eurodollar Loan or a C/D Rate Loan.
"UCC" shall mean the Uniform Commercial Code, as amended from time to
time, as in effect in any specified or applicable jurisdiction.
"Unallocated Collections" shall have the meaning specified in Section
4.03(b](vi) of the Pooling and Servicing Agreement.
"Undistributed Issuer Imputed Yield Collections" shall have the
meaning specified in Section 4.05(k) of the Pooling and Servicing Agreement
as modified by the Variable Funding Supplement.
"Undivided Interest" shall mean the undivided interest of any Investor
Certificateholder or the Holder of the Variable Funding Certificate in the
Trust. Such Undivided Interest is to be measured, in the case of any Investor
Certificateholder, by such Holder's pro rata share of the Invested Amount of
the related Series, and in the case of the Holder of the Variable Funding
Certificates, the Issuer Amount.
"Unearned Amounts" shall mean on each Determination Date the excess of
amounts paid on the Variable Funding Certificate pursuant to Section 4.05(a)
of the Pooling and Servicing Agreement as set forth in the Variable Funding
Supplement during the related Settlement Period over the amount of interest
accrued on the Variable Funding Certificate at the Issuer's Interest Rate
during such period.
"Unpaid Balance" shall mean at any time, with respect to the Variable
Funding Certificate, the Issuer Amount as of such day without reference to
clause (d) of the definition of "Issuer Amounts" and, with respect to a
Receivable, the outstanding amount of the indebtedness of the related Obligor
incurred in connection with a particular purchase under or evidenced by the
related Contract, exclusive of any sales or other tax, if any, included or
payable with respect to such purchase.
"Unpaid Certificate Balance" shall mean, for any day and with respect to
any Investor Certificate, the Invested Amount of such Certificate as of such
day without reference to clause (c) of the definition of "Invested-Amount".
"Unreimbursed Disbursement Rate" shall have the meaning specified in
Section 2.03 of the LOC Reimbursement Agreement.
"Unutilized Liquidity Commitment" shall mean at any time the Available
Liquidity Commitment less the sum of the principal amount of the Loans and the
Aggregate CP Matured Value of the Commercial Paper Outstanding at such time.
"Variable Funding Certificate" shall mean a certificate issued
pursuant to Section 6.09 of the Pooling and Servicing Agreement,
substantially in the form of Exhibit B to the Pooling and Servicing
Agreement.
"Variable Funding Supplement" shall mean, with respect to the Variable
Funding Certificate, a Supplement to the Pooling and Servicing Agreement
complying with the terms of Section 6.09 thereof.
"Vice President" when used with respect to the Transferor or the Servicer
shall mean any vice president whether or not designated by a number or word
or words added before or after the title "vice president".
"Weighted Average Term" shall mean for any day, with respect to all
Eligible Receivables held in the Trust on such day, the number of days
calculated by (a) multiplying, with respect to Eligible Receivables grouped
by sales terms category, (i) the average number of days that Eligible
Receivables in such category remain outstanding based on the Original Term
thereof by (ii) the aggregate Unpaid Balances of the Eligible Receivables
in such category (expressed as a numeral), (b) adding each of the products
calculated pursuant to clause (a) to derive the total thereof, and (c)
dividing such total amount by the aggregate Unpaid Balances of all such
Eligible Receivables (expressed as a numeral).
"Working Day" shall mean any Business Day on which dealings in foreign
currencies and exchange between banks or in Dollar deposits in the Eurodollar
market may be carried on in London, England.
"written" or "in writing" shall mean any form of written
communication, including, without limitation, by means of telex, telecopier
device, telegraph or cable.
EXHIBIT 10.24
============================================================================
INGRAM FUNDING INC.
Buyer
and
INGRAM INDUSTRIES INC.
Seller
============================================================================
ASSET PURCHASE AND SALE AGREEMENT
Dated as of February 10, 1993
ASSET PURCHASE AND SALE AGREEMENT
ASSET PURCHASE AND SALE AGREEMENT, dated as of February 10, 1993, by and
between INGRAM INDUSTRIES INC., a Tennessee corporation (the "Seller"), and
INGRAM FUNDING INC., a Delaware corporation (the "Buyer").
W I T N E S S E T H :
WHEREAS, the Buyer desires to purchase from time to time certain trade
accounts receivable of certain obligers generated on or before the Cut-Off
Date (as hereinafter defined) or to be generated after the Cut-Off Date by
the Seller or a Designated Subsidiary (as hereinafter defined) in the
normal course of their respective businesses pursuant to written agreements
or with invoices on open accounts;
WHEREAS, the Seller desires to sell from time to time and assign certain
trade accounts receivable to the Buyer upon the terms and conditions
hereinafter set forth;
WHEREAS, the Seller and the Buyer are entering into this Agreement with
the intention that the transactions contemplated hereby will be executed;
WHEREAS, the Buyer is an affiliate of the Seller;
NOW, THEREFORE, it is hereby agreed by and between the Buyer and the
Seller as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. For all purposes of this Agreement, except
as otherwise expressly provided herein or unless the context otherwise
requires, capitalized terms not otherwise defined herein shall have the
meanings assigned to such terms in the Definitions by reference herein,
attached hereto as Annex X. All other capitalized terms used herein shall
have the meanings specified herein.
Section 1.2 Other Definitional Provisions. The words "hereof,"
"herein" and "hereunder" and words of similar import when used in this
Agreement or any Conveyance Paper shall refer to this Agreement as a whole
and not to any particular provision of this Agreement; and Section,
Subsection, Schedule and Exhibit references contained in this Agreement are
references to Sections, Subsections, Schedules and Exhibits in or to this
Agreement unless otherwise specified.
[END OF ARTICLE I]
ARTICLE II
PURCHASE, CONVEYANCE AND SERVICING OF RECEIVABLES;
DESIGNATED SUBSIDIARIES
Section 2.1 Sale. (a) Upon the terms and subject to the conditions
set forth herein, the Seller hereby sells, assigns, transfers and conveys
to the Buyer, and the Buyer hereby purchases from the Seller, on the terms
and subject to the conditions specifically set forth herein, all of the
Seller's right, title and interest, whether now owned or hereafter
acquired, in, to and under (i) all Receivables outstanding on the Cut-Off
Date and thereafter created by the Ingram Book Company division of the
Seller or by a Designated Subsidiary, in each case, together with all
Related Security and all other instruments and all rights under the
Receivables Documents relating to such Receivables and all rights (but not
the obligations) relating to such Receivables, (ii) with respect to the
Receivables, all accounts, chattel paper, general intangibles and
instruments (each, as defined in the applicable UCC) outstanding on the
Cut-Off Date and thereafter created by the Ingram Book Company division of
the Seller or a Designated Subsidiary, and all rights (but not the
obligations) relating thereto, (iii) all monies due or to become due with
respect thereto, and (iv) all proceeds of the foregoing. The foregoing
sale, assignment, transfer and conveyance does not constitute an assumption
by the Buyer of any obligations of the Seller, any Designated Subsidiary or
any other Person to Obligors or to any other Person in connection with the
Receivables or under any Related Security or other agreement and instrument
relating to the Receivables.
(b) In connection with the foregoing sale, the Seller agrees to
record and file, at its own expense, a financing statement or statements
with respect to the Receivables (including Receivables originated by any
Designated Subsidiary) and the other property described in clauses (i),
(ii), (iii) and (iv) of Section 2.1(a) sold by the Seller hereunder meeting
the requirements of applicable state law in such manner and in such
jurisdictions as are necessary to perfect and protect the interests of the
Buyer created hereby under the applicable UCC against all creditors of and
purchasers from the Seller and each Designated Subsidiary, and to deliver a
filestamped copy of such financing statements or other evidence of such
filings to the Buyer within 10 days after the Initial Closing Date.
(c) The Buyer shall not purchase Receivables hereunder if the Seller
shall become an involuntary party to (or be made the subject of) any
proceeding provided for by any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating
to the Seller or relating to all or substantially all of its property (an
"Involuntary Case') upon receipt by the Seller at its head corporate office
of notice of such Involuntary Case.
(d) The Buyer shall not purchase Receivables hereunder if the Seller
shall admit in writing its in ability to pay its debts as they are due, or
the Seller shall commence a voluntary case under the federal bankruptcy
laws, as now or hereafter in effect, or any present or future federal or
state bankruptcy, insolvency or similar law, or the Seller shall consent to
the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Seller or of any substantial part of its property or the Seller shall make
an assignment for the benefit of creditors or the Seller shall fail
generally to pay its debts as such debts become due or the Seller shall
take corporate action in furtherance of any of the foregoing.
(e) In connection with the sale and conveyance hereunder, the Seller
agrees, at its own expense, on or prior to the Initial Closing Date and on
each Business Day thereafter, to indicate clearly and unambiguously in its
computer and microfiche files that such Receivables and the other property
described in clauses (i), (ii) and (iii) of Section 2.1(a) have been conveyed
to the Buyer pursuant to this Agreement as of the Cut-Off Date or such
Business Day as applicable.
(f) It is the express intent of the Seller and the Buyer that the
conveyance of the Receivables by the Seller to the Buyer pursuant to this
Agreement be construed as a sale of such Receivables by the Seller to the
Buyer. It is, further, not the intention of the Seller and the Buyer that
such conveyance be deemed a grant of a security interest in the Receivables
by the Seller to the Buyer to secure a debt or other obligation of the
Seller. However, in the event that, notwithstanding the intent of the
parties, the Receivables are held to continue to be property of the Seller,
then (i) this Agreement also shall be deemed to be and hereby is a security
agreement within the meaning of the UCC; and (ii) the conveyance by the
Seller provided for in this Agreement shall be deemed to be and the Seller
hereby grants to the Buyer a security interest in and to all of the
Seller's right, title and interest in (w) all Receivables outstanding on
the Cut-Off Date and thereafter created by the Ingram Book Company division
of the Seller or by a Designated Subsidiary, in each case, together with
all Related Security and all other instruments and rights under the
Receivables Documents relating to such Receivables and all rights (but not
the obligations) relating to such Receivables, (x) with respect to the
Receivables, all accounts, chattel paper, general intangibles and
instruments (each, as defined in the applicable UCC) outstanding on the
Cut-Off Date and thereafter created by the Ingram Book Company division of
the Seller or a Designated Subsidiary, and all rights (but not the
obligations) relating thereto, (y) all monies due or to become due with
respect thereto and (z) all proceeds of the foregoing to secure (1) the
rights of the Buyer and (2) a loan to the Seller in the amount of the
Purchase Price as set forth in this Agreement (the "Secured Obligations").
The Seller and the Buyer shall, to the extent consistent with this
Agreement, take such actions as may be necessary to ensure that, if this
Agreement were deemed to create a security interest in the Receivables,
such security interest would be deemed to be a perfected security interest
of first priority in favor of the Buyer under applicable law and will be
maintained as such throughout the term of this Agreement. The Seller and
the Buyer may rely upon an Opinion of Counsel addressed to them as to what
is required to provide the Buyer with such security interest and any such
Opinion of Counsel shall permit the Certificateholders and the Rating
Agencies to rely on it.
Section 2.2 Designated Subsidiaries. The Seller may (i) remove one or
more Subsidiaries then designated as Designated Subsidiaries by delivering
written notice to the Buyer and, upon delivery of such notice, such
Designated Subsidiary shall cease to be a Designated Subsidiary for
purposes of this Agreement, or (ii) with the prior written consent of the
Buyer, designate one or more additional Subsidiaries, which shall be and
remain members of Ingram Distribution Group Inc. as Designated Subsidiaries
subject to such conditions (including, without limitation, delivery of
satisfactory Subsidiary Purchase Agreements, corporate resolutions and
other documents and legal opinions (including covering the matters referred
to in Section 4.2(a)(ii) hereof) and filing of UCC-1 financing statements
with respect to such Designated Subsidiary) as the Buyer may require;
Provided, however, that in the case of (i) and (ii) such removal or
addition, other than in connection with any merger or other combination
between Commtron Corp. and Ingram Entertainment Inc., shall not be
effective unless each Rating Agency first shall have confirmed in writing
that such removal or addition will not result in such Rating Agency
reducing or withdrawing its rating on any outstanding Series or on the
Commercial Paper; provided, further, however, that in the case of (i) and
(ii) the Seller shall cause all necessary UCC filings to be made in
connection with such removal or addition.
[END OF ARTICLE II]
ARTICLE III
CONSIDERATION AND PAYMENT
Section 3.1 Purchase Price. The Purchase Price for the Receivables and
related property conveyed to the Buyer under this Agreement shall be a dollar
amount equal to (a) for Receivables transferred on the Initial Closing Date,
the aggregate Unpaid Balance of all Receivables as of the Cut-Off Date,
multiplied by the excess of one over the then applicable Seller's Discount,
and (b) for Receivables transferred on any date thereafter, the aggregate
Unpaid Balance of the Receivables so transferred on such date multiplied by
the excess of one over the Seller's Discount on such date.
Section 3.2 Payment of Purchase Price. Subject to Section 3.4, the
Purchase Price for the Receivables and related property shall be paid on the
Initial Closing Date with respect to the Receivables existing on the Cut-Off
Date and on each Business Day thereafter on which Receivables are transferred
hereunder, by payment in cash in immediately available funds to the extent
available and the remainder of the Purchase Price shall be paid by increasing
the principal amount of the Revolving Note by notation thereon; provided,
however, that the principal amount of the Revolving Note shall not be
increased at any time and for so long as the Capital Ratio is less than the
Minimum Capital Ratio, in which case such remaining amount shall increase the
principal amount of the Subordinated Capital Note.
Section 3.3 Settlement. On each Business Day, the Seller shall deliver to
the Buyer a Daily Report showing the aggregate Purchase Price of Receivables
generated on the preceding Business Day and to be created on such Business Day
and the aggregate repurchase price of Receivables to be repurchased on such
Business Day pursuant to Section 6.1.
Section 3.4 Capital Contribution. $3,000,000 of the Receivables (after
giving effect to the Seller's Discount) transferred as of the Initial Closing
Date are to be conveyed by the Seller to the Buyer as a capital contribution
to the Buyer in exchange for 100 shares of common stock of the Buyer, which
100 shares represent all of the outstanding common stock of the Buyer.
Section 3.5 Subordinated Capital Note. On the Initial Closing Date,
the Seller shall make a loan to the Buyer in cash, Receivables, or a
combination thereof in an initial amount of $172,296,681.05, such loan to
be evidenced by the Subordinated Capital Note, substantially in the form
attached hereto as Exhibit F. The principal amount of the Subordinated
Capital Note shall increase or decrease and payments of principal and
interest thereon (including prepayments) shall be made as provided therein.
[END OF ARTICLE III]
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Seller's Representations and Warranties. The Seller
represents and warrants to the Buyer as of the Initial Closing Date, and shall
be deemed to represent and warrant as of the date of the creation of any
Receivable sold to the Buyer hereunder, that:
(a) Organization, Good Standing and Due Qualification. The Seller
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Tennessee and has full corporate power,
authority and legal right to execute, deliver and perform its obligations
under this Agreement, any Subsidiary Purchase Agreement, and each other
document or instrument to be delivered by it hereunder, and, in all
material respects, to own its property and conduct its business as such
properties are presently owned and as such business is presently conducted.
Each Designated Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has full corporate power, authority and legal right to
execute, deliver and perform its obligations under any Subsidiary Purchase
Agreement to which it is a party, to own or lease all of its properties and
assets and to carry on its business as it is now being conducted. Each of
the Seller and any Designated Subsidiary is duly qualified to do business
and is in good standing as a foreign corporation (or is exempt from such
requirements), and has obtained all necessary licenses and approvals with
respect to the Seller and any Designated Subsidiary, in each other
jurisdiction where the failure to obtain such license or approval would, if
not remedied, render any Contract or any Receivable unenforceable by the
Seller or any Designated Subsidiary (as the case may be) or the Buyer or
would, if not remedied, have a material adverse effect on such Contract or
Receivable or on the Buyer.
(b) Authorization; Valid Agreement. The execution, delivery and
performance of this Agreement, each Subsidiary Purchase Agreement, and each
other document or instrument to be delivered by the Seller hereunder
(collectively, the "Conveyance Papers"), and the consummation of the
transactions provided in the Conveyance Papers have been duly authorized by
all the necessary corporate action on the part of the Seller, and the
Conveyance Papers constitute legal, valid and binding obligations of the
Seller, enforceable against it in accordance with their terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereinafter in effect, affecting the enforcement of
creditors rights in general and except as such enforceability may be
limited by general principles of equity (whether considered in a proceeding
at law or in equity).
(c) No Conflicts. The execution, delivery and performance by the
Seller of this Agreement and the other Conveyance Papers do not and will
not (a) contravene its charter or By-Laws, (b) violate any provision of, or
require any filing (except for the filings under the UCC required by this
Agreement, each of which has been duly made and is in full force and
effect), registration, consent or approval under, any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or
award presently in effect having applicability to the Seller, except for
such filings, registrations, consents or approvals as have already been
obtained and are in full force and effect, (c) result in a breach of or
constitute a default or require any consent under any indenture or loan or
credit agreement or any other agreement, lease or instrument to which the
Seller is a party or by which it or its properties may be bound or
affected, except those as to which a consent or waiver has been obtained
and is in full force and effect and an executed copy of which has been
delivered to the Buyer, or (d) result in, or require, the creation or
imposition of any lien upon or with respect to any of the properties now
owned or hereafter acquired by the Seller other than as specifically
contemplated by this Agreement.
(d) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of the Seller, threatened against the
Seller or any Designated Subsidiary, before any court, regulatory body,
administrative agency, or other tribunal or governmental instrumentality
(i) asserting the invalidity of this Agreement or the other Conveyance
Papers, (ii) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or the other Conveyance Papers, (iii)
seeking any determination or ruling that, in the reasonable judgment of the
Seller, would materially and adversely affect the performance by the Seller
of its obligations under this Agreement or any other Conveyance Papers, or
(iv) seeking any determination or ruling that would materially and
adversely affect the validity or enforceability of this Agreement or any
other Conveyance Papers or the rights of the Buyer hereunder.
(e) All Consents Required. All approvals, authorizations, consents,
orders or other actions of any Person or of any Governmental Authority
required in connection with the execution and delivery by the Seller of
this Agreement or any other Conveyance Papers, the performance by the
Seller of the transactions contemplated by this Agreement or any other
Conveyance Papers and the fulfillment by the Seller of the terms hereof and
thereof, have been obtained and are in full force and effect.
(f) Taxes. The Seller has filed all material tax returns (federal,
state and local) which it reasonably believes are required to be filed and
has paid or made adequate provision for the payment of all taxes,
assessments and other governmental charges due from the Seller or is
contesting any such tax, assessment or other governmental charge in good
faith through appropriate proceedings. The Seller knows of no basis for
any material additional tax assessment for any fiscal year for which
adequate reserves have not been established.
(g) Place of Business. The principal place of business of the
Seller if it has only one place of business or its chief executive office
(as that term is used in the UCC) if it has more than one place of business
is as set forth on Schedule 1 hereto and the offices where the Seller keeps
its records concerning the Receivables and related Contracts are as set
forth on Schedule 1 hereto. Such offices shall not be changed without 10
days' prior written notice to the Buyer.
(h) Financial Condition. Since September 30, 1992 there has been no
material adverse change in the ability of the Seller to service and collect
the Receivables and the Related Security. As of the Initial Closing Date,
there has been no material adverse change in the financial condition of the
Seller and its Subsidiaries, taken as a whole, since September 30, 1992.
(i) Use of Proceeds. No proceeds of the sale of any Receivable
hereunder received by the Seller will be used by the Seller to acquire any
security in a transaction that is subject to Sections 13 and 14 of the
Securities Exchange Act of 1934, as amended, or to purchase or carry any
margin security in violation of applicable laws and regulations.
(j) Lock-Box Banks and Accounts. The Lock-Box Banks are the only
institutions holding any lock-box accounts for the receipt of payments from
Obligors in respect of Receivables, and all Obligors under all Receivables
have been instructed to make payments only to banks which are Lock-Box
Banks and such instructions are in full force and effect and all Obligors,
and only such Obligors, have been instructed to make payments only to Lock-
Box Accounts and such instructions are in full force and effect.
(k) Not an Investment Company. Each of the Seller and any Designated
Subsidiary is either not an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or is exempt from all provisions
of such Act.
(1) ERISA. No Plan of the Seller or any of its ERISA Affiliates has
any "accumulated funding deficiency" (within the meaning of Section 302 of
ERISA or Section 412 of the code), whether or not waived. The Seller and
each ERISA Affiliate of the Seller has timely made all contributions
required to be made by it to any Plan and Multiemployer Plan of the Seller
or any of its ERISA Affiliates, and no event requiring notice to the PBGC
under Section 302(f) of ERISA has occurred and is continuing or could
reasonably be expected to occur with respect to any such Plan, in each case
that could reasonably be expected to result, directly or indirectly, in any
lien being imposed on the property of the Seller or the payment of any
material amount to avoid such Lien. No Plan Event with respect to the
Seller or any of its ERISA Affiliates has occurred or could reasonably be
expected to occur that could reasonably be expected to result, directly or
indirectly, in any lien being imposed on the property of the Seller or the
payment of any material amount to avoid such lien.
The representations and warranties set forth in this Section 4.1
shall survive the sale of the Receivables to the Buyer. Upon discovery by
the Seller or the Buyer of a material breach of any of the foregoing
representations and warranties, the party discovering such breach shall
give prompt written notice thereof to the other and to the Rating Agencies.
Section 4.2 Seller's Representations and Warranties Regarding
Receivables.
(a) Valid Sale, etc. The Seller represents and warrants to the
Buyer as of the Initial Closing Date with respect to the Receivables
outstanding on the Cut-Off Date and shall be deemed to represent and warrant
as of the date of the creation and transfer to the Buyer hereunder of any
Receivables with respect to such Receivables that:
(i) the Seller is not insolvent;
(ii) the Seller is the legal and beneficial owner of all right, title
and interest in and to each such Receivable, and each such Receivable has
been or will be transferred to the Buyer free and clear of any Lien;
(iii) all consents, licenses, approvals or authorizations of or
registrations or declarations with any Governmental Authority or Person
required to be obtained, effected or given by the Seller or any Designated
Subsidiary in connection with the transfer of such Receivables and other
related property with respect thereto transferred hereunder to the Buyer have
been duly obtained, effected or given and are in full force and effect;
(iv) the Seller has clearly and unambiguously marked all its computer
records and all microfiche storage files regarding such Receivables and
other related property with respect thereto transferred hereunder as the
property of the Buyer. This Agreement constitutes a valid sale, transfer
and assignment to the Buyer of all right, title and interest of the Seller
in the Receivables now existing and hereafter created and in the Related
Security and Collections with respect thereto, all proceeds (as defined in
the UCC as in effect in the State of New York) of each Receivable free and
clear of any Adverse Claim or interest of any Person. Upon the filing of
any financing statements described in Section 7.1(d) and, in the case of
the Receivables hereafter created or transferred to the Buyer and the
proceeds thereof, upon the creation or transfer thereof, the Buyer shall
have a first priority perfected security interest in such property;
provided, however, that the Seller makes no representation or warranty with
respect to the effect of Section 9-306(4) of the UCC on the rights of the
Buyer to proceeds held by the Seller at the time insolvency proceedings are
instituted by or against the seller of the Receivables to which the
proceeds relate;
(v) as of the close of business on February 10, 1993, the aggregate
Unpaid Balance for all Receivables was $499,869,877.08; as of the close of
business on February 10, 1993, the aggregate Unpaid Balance for all Eligible
Receivables was $472,970,158.42;
(vi) each such Receivable and Related Security and Collections with
respect thereto has been or will be transferred to the Buyer free and clear
of any Adverse Claim of any Person;
(vii) each account receivable conveyed pursuant to Section 2.01(a)
hereof is on the date of creation of such account receivable a Receivable,
and each Receivable classified as an "Eligible Receivable" by the Seller in
any document or report delivered hereunder will satisfy the requirements of
eligibility contained in the definition of Eligible Receivable at such
time;
(viii) each Receivable is or will be at the time of purchase an
account receivable arising out of the Seller's or any Designated
Subsidiary's performance in accordance with the terms of the Contract
giving rise to such Receivable. The Seller has no knowledge of any fact
which should have led it to expect at the time of the initial creation of
an interest in any Receivable hereunder that such Receivable would not be
paid in full when due except with respect to any sales and marketing
discount then available to Obligors; and
(ix) with respect to each Receivable purchased by the Seller from a
Designated Subsidiary, the related Subsidiary Purchase Agreement is in full
force and effect and such Receivable was purchased in accordance with the
terms thereof.
(b) Notice of Breach. The representations and warranties set forth in
this Section 4.2 shall survive the transfer and assignment of the Receivables
and the Related Security and Collections with respect thereto to the Buyer.
Upon discovery by the Seller or the Buyer of a breach of any of the
representations and warranties set forth in this Section 4.2, the party
discovering such breach shall give prompt written notice thereof to the other.
Section 4.3 Representations and Warranties of the Buyer. As of the date
hereof and as of the Initial Closing Date, the Buyer hereby represents and
warrants to, and agrees with, the Seller and shall be deemed to represent and
warrant as of the date of the creation of any Receivable sold to the Buyer
hereunder that:
(a) Organization and Good Standinq. The Buyer is a corporation duly
organized and validly existing in good standing under the laws of the State of
Delaware and has full corporate power, authority, and right to own its
properties and to conduct its business as such properties are currently owned
and such business is currently conducted, and to execute, deliver, and perform
its obligations under the Conveyance Papers.
(b) Due Qualification. The Buyer is not required to qualify, or to
register, as a foreign corporation in any state in order to conduct its
business, except in such states in which it has qualified or registered,
and has obtained all necessary licenses and approvals with respect to the
Buyer required under federal and Delaware law.
(c) Due Authorization. The execution and delivery of the Conveyance
Papers and the consummation of the transactions provided for in the Conveyance
Papers have been duly authorized by the Buyer by all necessary corporate
action on the part of the Buyer.
(d) No Conflict. The execution and delivery of the Conveyance Papers,
the performance of the transactions contemplated by the Conveyance Papers and
the fulfillment of the terms of the Conveyance Papers will not conflict with,
result in any breach of any of the material terms and provisions of, or
constitute (with or without notice or lapse of time or both) a material
default under, any indenture, contract, agreement, mortgage, deed of trust, or
other instrument to which the Buyer is a party or by which it or any of its
properties are bound.
(e) No Violation. The execution and delivery of the Conveyance Papers,
the performance of the transactions contemplated by the Conveyance Papers, and
the fulfillment of the terms of the Conveyance Papers will not conflict with
or violate any Requirements of Law applicable to the Buyer.
(f) No Proceedings. There are no proceedings or investigations pending
or, to the best knowledge of the Buyer, threatened against the Buyer, before
any Governmental Authority (i) asserting the invalidity of the Conveyance
Papers, (ii) seeking to prevent the consummation of any of the transactions
contemplated by the Conveyance Papers, (iii) seeking any determination or
ruling that, in the reasonable judgment of the Buyer, would materially and
adversely affect the performance by the Buyer of its obligations under the
Conveyance Papers, or (iv) seeking any determination or ruling that would
materially and adversely affect the validity or enforceability of the
Conveyance Papers to which the Buyer is a party.
(g) All Consents Required. All approvals, authorizations, licenses,
consents, orders, or other actions of any Person or of any Governmental
Authority required in connection with the execution and delivery of the
Conveyance Papers, the performance of the transactions contemplated by the
Conveyance Papers, and the fulfillment of the terms of the Conveyance Papers
have been obtained.
The representations and warranties set forth in this Article IV shall
survive the conveyance of the Receivables to the Buyer, and termination of
the rights and obligations of the Buyer and the Seller under this
Agreement. Upon discovery by the Buyer or the Seller of a breach of any of
the foregoing representations and warranties, the party discovering such
breach shall give prompt written notice to the other.
[END OF ARTICLE IV]
ARTICLE V
COVENANTS OF SELLER AND BUYER
Section 5.1 Seller Covenants. The Seller hereby covenants and agrees
with the Buyer as follows:
During the term of this Agreement, and until all Receivables sold to the
Buyer shall have been paid in full or written-off, and all amounts owed by the
Seller pursuant to this Agreement have been paid, unless the Buyer otherwise
consents, in writing, the Seller covenants and agrees as follows:
(a) Compliance with Laws, etc. The Seller shall, and shall cause each
Designated Subsidiary to, duly satisfy all obligations on their part to be
fullfilled under or in connection with the Receivables, will, and will
cause each Designated Subsidiary to, maintain in effect all qualifications
required under Requirements of Law in order to properly convey the
Receivables and the related property to be conveyed hereunder and will, and
will cause each Designated Subsidiary to, comply in all material respects
with all Requirements of Law in connection with creating the Receivables
the failure to comply with which would have a material adverse effect on
the Buyer or its interest in the Receivables.
(b) Preservation of Corporate Existence. The Seller and each
Designated Subsidiary (i) shall preserve and maintain its corporate
existence, rights, franchises and privileges in the jurisdiction of its
incorporation, and (ii) shall 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 would, if not remedied, materially adversely affect the
interests of the Buyer or its interests in the Receivables, or the ability
of the Seller to perform its obligations hereunder in the case of (ii) and
where such failure shall remain unremedied for a period of 30 days or such
failure has a material adverse effect on the interests of the Buyer or its
interests in the Receivables or on the ability of the Seller to perform its
obligations hereunder.
(c) Audits. At any time and from time to time during the Seller's
regular business hours, on reasonable prior notice and for a purpose
reasonably related to this Agreement, the Seller shall, in response to any
reasonable request of the Buyer, permit the Buyer, or its agents or
representatives, at the cost and expense of the Seller, (a) to examine 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 relating to the Receivables, the Related
Security and the related Contracts and (b) to visit the offices and
properties of the Seller for the purpose of examining such materials and to
discuss matters relating to the Receivables or the Seller's performance
hereunder with any of the officers or employees of the Seller having
knowledge thereof or the Seller's independent accountants.
(d) Keeping of Records and Books of Account. The Seller shall
maintain and implement administrative and operating procedures (including,
without limitation, the ability to recreate records evidencing the
Receivables and the related property with respect thereto conveyed
hereunder in the event of the destruction of the originals thereof), and
keep and maintain all documents, books, microfiche, computer records and
other information reasonably necessary or advisable for the collection of
all the Receivables and such related property. Such books, microfiche and
computer records shall reflect all facts giving rise to the Receivables,
all payments and credits with respect thereto, and the computer records
shall be clearly marked to show the interests of the Buyer in the
Receivables and such related property.
(e) Performance and Compliance with Receivables and Contracts. At
its expense the Seller shall, and shall cause each Designated Subsidiary
to, timely and fully perform and comply with all material provisions,
covenants and other promises required to be observed by them under the
Contracts related to the Receivables.
(f) Continuous Perfection. The Seller shall not and shall not
permit any Designated Subsidiary to change its name, identity or structure
in any manner which might make any financing or continuation statement
filed hereunder or under any Subsidiary Purchase Agreement misleading
within the meaning of Section 9-402(7) of the UCC (or any other then
applicable provision of the UCC) unless the Seller shall have given the
Buyer at least 90 days' prior written notice thereof (or such shorter
period as may be acceptable to the Buyer, including with respect to any
merger or other combination between Commtron Corp. and Ingram Entertainment
Inc.) and shall have taken all action 60 days prior to making such change
(or made arrangements to take such action substantially simultaneously with
such change if it is impossible to take such action in advance) necessary
or advisable in the opinion of the Buyer or its Permitted Assignees to
amend such financing statement or continuation statement so that it is not
misleading. The Seller shall not and shall not permit any Designated
Subsidiary to change its chief executive office or change the location of
its principal records concerning the Receivables, the Related Security and
the Collections from the locations specified in Section 4.1(h) unless it
has given the Buyer at least 60 days' prior written notice of its intention
to do so (or such shorter period as may be acceptable to the Buyer,
including with respect to any merger or other combination between Commtron
Corp. and Ingram Entertainment Inc.) and has taken such action as is
necessary or advisable to cause the interest of the Buyer in the
Receivables, the Related Security and the Collections to continue to be
perfected with the priority required by this Agreement. The Seller will at
all times maintain its principal executive office and any other office at
which it maintains records relating to the Receivables and the Related
Security within the United States of America.
(g) Credit and Collection Policy and Extension or Amendment of
Receivables. (i) The Seller shall not, and shall not permit any
Designated Subsidiary to, extend, amend or otherwise modify the terms of
any Receivable, or amend, modify or waive any term or condition of any
Contract related thereto in any manner which would have a material adverse
effect on the interests of the Buyer, (ii) the Seller shall, and shall
cause each Designated Subsidiary to, comply in all material respects with
the Credit and Collection Policy in regard to each Receivable and the
related Contract, and (iii) the Seller shall not, and shall not permit any
Designated Subsidiary to, make any change in the Credit and Collection
Policy that could reasonably be expected to have a material adverse effect
on the interests of the Buyer or its interests in the Receivables, or the
ability of the Seller to perform its obligations under this Agreement,
including, but not limited to, extending the due dates, or impairing the
collectibility of the Receivables, without the prior written consent of the
Buyer (which consent shall not be unreasonably withheld) and without the prior
written confirmation from each Rating Agency that such change will not result
in such Rating Agency reducing or withdrawing its rating on any outstanding
Series or the Commercial Paper; provided, however, that if no Event of
Termination shall have occurred and be continuing, the Seller may, in
accordance with the Credit and Collection Policy (i) extend the maturity or
adjust the Unpaid Balance of any Receivable as the Seller may determine to be
appropriate to maximize Collections thereof and (ii) adjust the Unpaid Balance
of any Receivable to reflect Credits.
(h) Reports. Subsidiary Purchase Agreement. The Seller shall
furnish to the Buyer promptly after the replacement or any material
modification of any computer, automation or other operating systems (in
respect of hardware or software) used to make any calculations or reports
hereunder, notification of any such replacement or modification. The
Seller agrees that it will not amend, modify or waive any provision of any
Subsidiary Purchase Agreement in any manner which would have a material
adverse effect on the interests of the Buyer or its interests in the
Receivables without the prior written consent of the Buyer and without the
prior written confirmation from each Rating Agency that such amendment,
modification or waiver will not result in such Rating Agency reducing or
withdrawing its rating on any outstanding Series or the Commercial Paper.
(i) Certain Documentation. The Seller shall hold in trust for the
account of the Buyer (to the extent of its interest therein) any document
evidencing or securing a Receivable and the related Contract, other than
instruments (as such term is used in the UCC), if any, that shall have been
delivered to the Buyer hereunder. Such holding in trust by the Seller shall be
deemed to be the holding thereof by the Buyer for purposes of perfecting the
Buyer's rights therein as provided in the UCC. The Seller shall, upon the
Buyer's request, deliver to the Buyer any document held by the Seller in trust
hereunder.
(j) Assessments. The Seller will promptly pay and discharge all taxes,
assessments, levies and other governmental charges imposed on it which may
materially and adversely affect any of the Receivables or the Buyer's
rights with respect thereto.
(k) Change in Lock-Box Banks or Instructions. The Seller may add or
terminate any bank as a Lock-Box Bank from those listed in Exhibit 8 hereto
or, make any change in the Lock-Box Agreements or in its existing
instructions to Obligors regarding payments to be made to any Lock-Box Bank
(so long as such Obligors remain instructed to make payments on the
Receivables to a Lock-Box Bank), but in each case only upon written notice
from the Seller to the Buyer; provided that any bank (including their
successors), added as a Lock-Box Bank shall have short term debt ratings of
A-1 by SP and, if rated by Fitch, F-1 by Fitch, at the time it becomes a
Lock-Box Bank or the addition of such bank as a Lock-Box Bank shall have
been consented to by the Buyer. The Seller shall give notice to the Buyer
of the name and address of each additional Lock-Box Bank. In the event
that the Seller or the Buyer enters into a Lock-Box Agreement with a Lock-
Box Bank with respect to which the Seller had not entered into a Lock-Box
Agreement at the Initial Closing Date, the Seller shall deliver to the
Buyer a copy of the executed Lock-Box Agreement prior to instructing any
Obligors to make payment to such Lock-Box Bank. If the Seller terminates
any Bank as a Lock-Box Bank, the Seller shall make arrangements to insure
that all payments which may be forwarded to such terminated Lock-Box Bank
are promptly deposited with another Lock-Box Bank or into the Collection
Account.
(1) Further Action. The Seller shall, and shall cause each
Designated Subsidiary to, make, execute or endorse, acknowledge, and file
or deliver to the Buyer from time to time such schedules, confirmatory
assignments, conveyances, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such
further steps relating to the Receivables, the Related Security and the
Collections and other rights covered by this Agreement, as the Buyer may
request and reasonably require including executing and delivering to the
Buyer any instruments, financing or continuation statements or other
writings reasonably necessary or desirable to maintain the perfection or
priority of its ownership interest in the Receivables, the Related Security
and the Collections under the UCC or other applicable law. At any time at
the request of the Buyer, the Seller shall, and shall cause each Designated
Subsidiary to, from time to time, deliver to, and sign any bills,
statements and letters directed to the Obligors on the Receivables or other
writings necessary to carry out the terms and provisions of this Agreement
and to facilitate the collection of the Receivables.
(m) No Transfer. The Seller shall not, and shall not permit any
Designated Subsidiary to, sell, assign, pledge, convey or otherwise transfer
any Eligible Receivable or any interest therein except for the transfer of
such Eligible Receivable to the Buyer as provided herein (or, in the case of a
Designated Subsidiary, to the seller), and shall defend and hold harmless the
Buyer from any Adverse Claim in or to any Eligible Receivable except to the
extent the Seller is otherwise required to repurchase such Receivable
hereunder.
(n) Indemnification. The Seller agrees to indemnify, defend and
hold the Buyer harmless from and against any and all loss, liability,
damage, judgment, claim, deficiency, or expense (including interest,
penalties, reasonable attorneys' fees and amounts paid in settlement) to
which the Buyer may become subject insofar as such loss, liability, damage,
judgment, claim, deficiency, or expense arises out of or is based upon a
breach by the Seller of its representations, warranties and covenants
contained herein, or any information certified in any Schedule delivered by
the Seller hereunder, being untrue in any respect at any time. The
obligations of the Seller under this Section 5.1(n) shall be considered to
have been relied upon by the Buyer and shall survive the execution,
delivery, performance and termination of this Agreement regardless of any
investigation made by the Buyer or on its behalf.
(o) Sale. The Seller agrees to treat this conveyance for all purposes
(including, without limitation, tax and financial accounting purposes) as
a sale on all relevant books, records, tax returns, financial statements
and other applicable documents.
(p) ERISA. The Seller will promptly give the Buyer notice of the
following events, as soon as possible and in any event within 30 days after
the Seller or any ERISA Affiliate knows or has reason to know thereof: (i)
the occurrence or expected occurrence of any Reportable Event with respect
to any Plan of the Seller or any ERISA Affiliate, or any withdrawal from,
or the termination, Reorganization or Insolvency of any Multiemployer Plan
or (ii) the institution of proceedings or the taking of any other action by
the PBGC or the Seller or any ERISA Affiliates or any such Multiemployer
Plan with respect to the withdrawal from, or the terminating,
Reorganization or Insolvency of, any such Plan.
(q) Performance. The Seller agrees that its obligations to make all
payments hereunder are absolute and unconditional and are independent of
the performance by the Buyer of any of its obligations hereunder or the
realization by the Seller of the benefits sought by the transaction
contemplated hereby and that the Seller will make all payments hereunder
regardless of (i) the validity of the organization of the Buyer, the
termination of the existence of the Buyer or the illegality, invalidity or
unenforceability of this Agreement, (ii) any defense, claim, set-off,
recoupment, abatement or other right, existing or future, which the Seller
may have against the Buyer, or (iii) any inaccuracy of any representation,
warranty or statement made by or on behalf of Buyer.
(r) Capital Maintenance. The Seller agrees that within 50 days
after January 31, April 30, July 31 and October 31 of each year (each a
"Quarterly Date"), the Seller shall determine whether the Capital Ratio as
of such date equaled or exceeded the Minimum Capital Ratio. If, as of any
such date, the Capital Ratio was less than the Minimum Capital Ratio, from
and after the date of such determination the Seller shall not increase the
principal amount of the Revolving Note until the sum of shareholder's
equity and the amount of the Subordinated Capital Note are sufficient such
that, had such amounts been in place on such Quarterly Date, the Capital
Ratio would at least have equaled the Minimum Capital Ratio on such
Quarterly Date.
(s) The Seller shall record and file, at its expense, within 10 days
after the Initial Closing Date any financing statement with respect to the
Receivables now existing and hereafter created for the transfer of accounts
(as defined in Section 9-106 of the UCC) generated by the Seller or any
Designated Subsidiary meeting the requirements of applicable state law in
such manner and in such jurisdictions as are necessary under the applicable
UCC to perfect the sale of the Receivables from the Seller to the Buyer,
and shall deliver a filestamped copy of such financing statements or other
evidence of such filings (which may, for purposes of this paragraph,
consist of telephone confirmations of such filings) to the Buyer.
Section 5.2 Buyer Covenant Regarding Sale Treatment. The Buyer
agrees to treat this conveyance for all purposes (including, without
limitation, tax and financial accounting purposes) as a sale on all
relevant books, records, tax returns, financial statements and other
applicable documents.
[END OF ARTICLE V]
ARTICLE VI
REPURCHASE OBLIGATION
Section 6.1 Mandatory Repurchase.
(a) Transfer upon Breach of Warranty. In the event of a breach with
respect to a Receivable of any of the representations and warranties set
forth in Section 4.2(a)(ii) through (ix) which cannot be cured by the
Business Day following the first day on which the Seller has knowledge
thereof, to the extent necessary to maintain the Minimum Transferor
Interest of the Buyer under the Pooling and Servicing Agreement each such
Receivable (a "Reconveyed Receivable") shall be reconveyed (without further
action) from the Buyer to the Seller and the Seller shall pay, in the
manner set forth below, to the Buyer an amount equal to the Transfer
Deposit Amount. Upon each reconveyance of a Reconveyed Receivable from the
Buyer, the Buyer shall automatically and without further action be deemed
to transfer, assign, set-over and otherwise convey to or upon the order of
the Seller, without recourse, representation or warranty, all the right,
title and interest of the Buyer in and to such Reconveyed Receivable, all
Related Security and Collections with respect thereto and all proceeds
thereof. The Buyer shall execute such documents and instruments of
transfer or assignment and take such other actions as shall reasonably be
requested by the Seller to effect the conveyance of such Reconveyed
Receivable pursuant to this Section. Except to the extent provided in
Section 5.1(n), the obligation of the Seller set forth in this Section, and
the reconveyance of such Receivable from the Buyer shall constitute the
sole remedy respecting any breach of the representations and warranties set
forth in the above-referenced Section with respect to such Receivable
available to the Buyer. The Seller shall pay for any Reconveyed Receivable
under this Section 6.1(a) pursuant to a reduction of the principal amount
of the Revolving Note unless (i) the principal amount of the Revolving Note
is zero or (ii) the Transferor is required pursuant to Section 2.04(c) of
the Pooling and Servicing Agreement to make a deposit to the Collection
Account due to a breach of such representation and warranty, in which case
the Seller shall pay for each Reconveyed Receivable in cash and, in the
case of clause (ii) above, in an amount equal to the amount required to be
deposited in the Collection Account pursuant to Section 2.04(c) of the
Pooling and Servicing Agreement (such payment to be made on the Business Day
following the first day the Seller has knowledge of the breach giving rise to
the Reconveyed Receivable).
(b) Reassignment of the Sold Assets. In the event of a breach in
any material respect of any of the representations and warranties set forth
in Section 4.1(a), 4.1(b) or 4.2(a)(i), the Buyer by notice given in
writing to the Seller may direct the Seller to accept reassignment of the
Receivables at the amount specified below within 30 days after receipt by
the Seller of such notice, or within such longer period as may be specified
in such notice not to exceed 120 days, and the Seller shall be obligated to
accept reassignment of the Receivables within such applicable period on the
terms and conditions set forth below; provided, however, that no such
reassignment shall be required to be made if, at any time during such
applicable period, the Seller delivers to the Buyer an Officer's
Certificate stating that the representations and warranties contained in
Section 4.1(a), 4.1(b) or 4.2(a)(i) are then true and correct in all
material respects as if made on such day. The Seller shall pay to the
Buyer on the day of such reassignment an amount equal to the Unpaid Balance
of the Receivables. On the day on which such amount has been paid, each
Receivable and the Related Security and Collections with respect thereto
shall be released to the Seller, and the Buyer shall execute and deliver
such instruments of transfer or assignment, in each case without recourse,
representation or warranty, as shall be reasonably requested by the Seller
to vest in the Seller, or its designee or assignee, all right, title and
interest of the Buyer in and to each Receivable and the Related Security
and Collections with respect thereto. The obligation of the Seller to
accept reassignment of each Receivable and the Related Security and
Collections with respect thereto pursuant to this Section shall constitute
the sole remedy available to the Buyer for a breach of the representations
and warranties contained in Sections 4.1(a), 4.1(b) or 4.2(a)(i).
Section 6.2 [Reserved].
Section 6.3 Conveyance of Repurchased Receivables. At any time
requested by the Seller, the Buyer shall execute and deliver to the Seller
a reconveyance substantially in such form and upon such terms as shall be
acceptable to the Seller, pursuant to which the Buyer evidences the
conveyance to the Seller of all of the Buyer's right, title, and interest
in any Receivables reconveyed to the Seller pursuant to Section 6.1. The
Buyer shall (and shall cause the Trustee to) execute such other documents
or instruments of conveyance or take such other actions as the Seller may
reasonably require to effect any repurchase of Receivables pursuant to this
Article VI.
Section 6.4 Credits. If the Unpaid Balance of any Receivable is
adjusted for any Credit, the principal amount of the Revolving Note shall,
on the Business Day following such adjustment, be reduced by the amount of
such adjustment. In the event and to the extent that (i) such reduction
would cause the principal amount of the Revolving Note to be less than
zero, (ii) such reduction would not be permitted under any Requirement of
Law, or (iii) the Transferor is required pursuant to Section 3.09 of the
Pooling and Servicing Agreement to deposit funds in the Transferor Account,
the Seller shall pay to the Buyer, in immediately available funds by the
close of business on the Business Day following the Business Day on which
such adjustment occurs, an amount equal to the amount by which such
reduction would cause the principal amount of the Revolving Note to be less
than zero in the case of clause (i); the amount by which the principal
amount of the Revolving Note would have been reduced but for such
Requirement of Law in the case of clause (ii); or, in the case of the event
described in clause (iii), an amount equal to the amount required to be
deposited into the Transferor Account pursuant to Section 3.09 of the
Pooling and Servicing Agreement.
[END OF ARTICLE VI]
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1 Conditions to the Buyer's Obligations Regarding
Receivables. The obligations of the Buyer to accept the transfer of the
Receivables on any Business Day shall be subject to the satisfaction of the
following conditions:
(a) All representations and warranties of the Seller contained in
this Agreement shall be true and correct on the Initial Closing Date and on
the day of creation of any Receivable with the same effect as though such
representations and warranties had been made on such date;
(b) All information concerning the Receivables provided to the Buyer
shall be true and correct in all material respects as of the Cut-Off Date,
in the case of Receivables transferred on the Initial Closing Date, or the
Date of Processing, in the case of Receivables created after the Initial
Closing Date;
(c) At the Initial Closing Date, the Seller shall have substantially
performed all other obligations required to be performed by the provisions of
this Agreement;
(d) With respect to Receivables transferred on or after the tenth
day following the Initial Closing Date, the Seller shall have filed the
financing statement required to be filed pursuant to Section 5.1(s); and
(e) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Buyer, and the Buyer shall have
received from the Seller copies of all documents (including, without
limitation, records of corporate proceedings) relevant to the transactions
herein contemplated as the Buyer may reasonably have requested.
Section 7.2 Conditions Precedent to the Seller's Obligations. The
obligations of the Seller to sell Receivables on any Business Day shall be
subject to the satisfaction of the following conditions:
(a) All representations and warranties of the Buyer contained in this
Agreement shall be true and correct with the same effect as though such
representations and warranties had been made on such date;
(b) Payment or provision for payment of the Purchase Price in accordance
with the provisions of Section 3.3 hereof shall have been made; and
(c) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Seller, and the Seller shall have
received from the Buyer copies of all documents (including, without
limitation, records of corporate proceedings) relevant to the transactions
herein contemplated as the Seller may reasonably have requested.
[END OF ARTICLE VII]
ARTICLE VIII
TERM AND TERMINATION
Section 8.1 Term. This Agreement shall commence as of the date of
execution and delivery hereof and shall continue in full force and effect
until the earlier of: (a) a date which shall be seven years from the
Initial Closing Date, subject to automatic extensions of one year periods
unless otherwise agreed to in writing by the Seller and the Buyer; or (b)
upon the occurrence of any of the following events: the Buyer or the Seller
shall (i) become insolvent, (ii) fail to pay its debts generally as they
become due, (iii) voluntarily seek, consent to, or acquiesce in the benefit
or benefits of any Debtor Relief Law, (iv) become a party to (or be made
the subject of) any proceeding provided for by any Debtor Relief Law, other
than as a creditor or claimant, and, in the event such proceeding is
involuntary, the petition instituting same is not dismissed within 60 days
after its filing, provided, however, that the Buyer shall have no duty to
continue to purchase Receivables from and after the filing of an
involuntary petition but prior to dismissal, or (v) become unable for any
reason to convey or reconvey Receivables in accordance with the provisions
of this Agreement (any such date set forth in clause (a) or (b) hereof
being a "Termination Date"); provided, however, that the termination of
this Agreement pursuant to this subsection 8.1(b) hereof shall not
discharge any Person from any obligations incurred prior to such
termination, including, without limitation, any obligations to repurchase
Receivables sold prior to such termination pursuant to Section 6.1 hereof.
Section 8.2 Effect of Termination. No termination or rejection or
failure to assume the executory obligations of this Agreement in the
bankruptcy of the Seller or the Buyer shall be deemed to impair or affect
the obligations pertaining to any executed sale or executed obligations,
including, without limitation, pretermination breaches of representations
and warranties by the Seller or the Buyer. Without limiting the foregoing,
prior to termination, the failure of the Seller to deliver computer records
of Receivables or Settlement Statements shall not render such transfer or
obligation executory, nor shall the continued duties of the parties
pursuant to Section 5 or Section 9.1 of this Agreement render an executed
sale executory.
[END OF ARTICLE VIII]
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.1 Amendment. This Agreement and any other Conveyance Papers
and the rights and obligations of the parties hereunder may not be changed
orally, but only by an instrument in writing signed by the Buyer and the
Seller. This Agreement and any other Conveyance Papers may be amended from
time to time by the Buyer and the Seller to correct or supplement any
provisions herein which may be inconsistent with any other provisions
herein or in any other Conveyance Papers or to add any other provisions
with respect to matters or questions arising under this Agreement or any
other Conveyance Papers which shall not be inconsistent with the provisions
of this Agreement or any other Conveyance Papers. The Seller shall furnish
written notification of the substance of any such amendment to each Rating
Agency; provided, however, that neither this Agreement nor any other
Conveyance Paper may be amended if such amendment would have a material
adverse effect on the interests of the Buyer or its interests in the
Receivables, without the prior written confirmation from each Rating Agency
that such amendment, modification or waiver will not result in such Rating
Agency reducing or withdrawing its rating on any outstanding Series or the
Commercial Paper. Any Supplemental Conveyance or Reconveyance executed in
accordance with the provisions hereof shall not be considered amendments to
this Agreement.
Section 9.2 Governing Law. THIS AGREEMENT AND THE OTHER CONVEYANCE
PAPERS SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF THE
NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 9.3 Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by registered mail, return receipt requested, to:
(a) in the case of the Buyer, to:
Ingram Funding Inc.
1105 North Market Street
Wilmington, Delaware 19801
Attention: President
Telephone: 302-427-7650
Telecopy: 302-427-7663
(b) in the case of the Seller, to:
Ingram Industries Inc.
One Belle Meade Place
4400 Harding Road
Nashville, Tennessee 37205
Attention: Treasurer
Telephone: 615-298-8200
Telecopy: 615-298-8242
or, as to each party, at such other address as shall be designated by such
party in a written notice to each other party.
Section 9.4 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement or any other
Conveyance Paper shall for any reason whatsoever be held invalid, then such
covenants, agreements, provisions, or terms shall be deemed severable from the
remaining covenants, agreements, provisions, or terms of this Agreement or any
other Conveyance Paper and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of any other
Conveyance Paper.
Section 9.5 Assignment. This Agreement and all other Conveyance Papers
may not be assigned by the parties hereto except by the Buyer in connection
with a transfer of substantially all of the Receivables to the Trustee, or to
another person approved in writing by the Seller (each, a "Permitted
Assignee").
Section 9.6 Further Assurances. The Buyer and the Seller agree to do
and perform, from time to time, any and all acts and to execute any and all
further instruments required or reasonably requested by the other party
more fully to effect the purposes of this Agreement and the other
Conveyance Papers, including, without limitation, the execution of any
financing statements or continuation statements or equivalent documents
relating to the Receivables for filing under the provisions of the UCC or
other laws of any applicable jurisdiction.
Section 9.7 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Buyer or the Seller, any
right, remedy, power or privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof
or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges herein provided are cumulative and
not exhaustive of any rights, remedies, powers and privilege provided by
law.
Section 9.8 Counterparts. This Agreement and all other Conveyance Papers
may be executed in two or more counterparts including telefax transmission
thereof (and by different parties on separate counterparts), each of which
shall be an original, but all of which together shall constitute one and the
same instrument.
Section 9.9 Binding Effect; Third-Partv Beneficiaries. This
Agreement and the other Conveyance Papers will inure to the benefit of and
be binding upon the parties hereto and their respective successors and
permitted assigns. Any Permitted Assignee shall be considered a third-
party beneficiary of this Agreement.
Section 9.10 Merger and Integration. Except as specifically stated
otherwise herein, this Agreement and the other Conveyance Papers set forth
the entire understanding of the parties relating to the subject matter
hereof, and all prior understandings, written or oral, are superseded by
this Agreement and the other Conveyance Papers. This Agreement and the
other Conveyance Papers may not be modified, amended, waived or
supplemented except as provided herein.
Section 9.11 Headings. The headings herein are for purposes of reference
only and shall not otherwise affect the meaning or interpretation of any
provision hereof.
Section 9.12 Schedules and Exhibits. The schedules and exhibits
attached hereto and referred to herein shall constitute a part of this
Agreement and are incorporated into this Agreement for all purposes.
Section 9.13 No Bankruptcy Petition Against the Buyer. The Seller
hereby covenants and agrees that, prior to the date which is one year and
one day after the payment in full of the Issuer Amount and all Invested
Amounts, it will not institute against or join any other Person in
instituting against the Buyer any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or other similar proceeding under the
laws of the United States or any state of the United States.
IN WITNESS WHEREOF, the Buyer and the Seller each have caused this
Agreement to be duly executed by their respective officers as of the day and
year first above written.
INGRAM INDUSTRIES INC.,
as Seller
By: /s/
___________________________
Title:
INGRAM FUNDING INC.,
as Buyer
By: /s/
___________________________
Title:
EXHIBIT A
REVOLVING NOTE
This Revolving Note, dated as of February 12, 1993, by Ingram Funding
Inc., a Delaware corporation (the "Borrower") to Ingram Industries Inc., a
Tennessee corporation (the "Lender").
The Lender and the Borrower have entered into an Asset Purchase and Sale
Agreement (the "Purchase Agreement") dated as of February 12, 1993 providing
for the purchase from time to time by the Borrower of certain trade accounts
receivable (the "Receivables"). Except as otherwise expressly provided herein
or unless the context otherwise requires, capitalized terms not otherwise
defined herein shall have the meanings assigned to such terms in Annex X to
the Purchase Agreement.
1. The Note. For value received, the Borrower hereby promises to pay
to the order of the Lender at its offices at One Belle Meade Place, 4400
Harding Road, Nashville, Tennessee 37205, the principal amount of
$192,929,750.61 (the "Initial Loan") or so much of the aggregate principal
amount of all Loans (as hereinafter defined) made by the Lender to the
Borrower under the terms of this Note as remains unpaid, as shown in the
schedule attached hereto and any continuations thereof, on the day which is
one year and a day after the payment in full of the Issuer Amount and all
Invested Amounts (the "Maturity Date"). The Borrower shall pay interest on
the unpaid principal amount of the Loans as provided herein.
2. The Loans. (a) From time to time between the date of this Note and the
Maturity Date, and subject to the restrictions on lending under this Note
contained in the Purchase Agreement, the Lender may lend to the Borrower
additional sums (each a "Loan" and, together with the Initial Loan, the
"Loans"), as provided herein.
(b) The obligation of the Borrower to repay the aggregate
unpaid principal amount of the Loans outstanding shall be evidenced by this
Note and the schedule attached hereto. The Lender is hereby authorized to
endorse on the schedule or on a continuation of such schedule, appropriate
notations regarding each Loan evidenced by this Note; provided, however,
that the failure to make, or error in making, any notation shall not limit
or otherwise affect the obligation of the Borrower hereunder.
(c) When the Borrower requests a Loan in connection with the
acquisition of any Receivables, the Borrower shall notify the Lender by
telephone specifying the amount and the date on which such Loan is requested.
Unless otherwise specified, the maturity of each such Loan shall be the
Maturity Date.
(d) The Seller agrees that within 50 days after January 31, April
30, July 31 and October 31 of each year (each a "Quarterly Date"), the Seller
shall determine whether the Capital Ratio as of such date equaled or exceeded
the Minimum Capital Ratio. If, as of any such date, the Capital Ratio was less
than the Minimum Capital Ratio, from and after the date of such determination
the Seller shall not increase the principal amount of this Revolving Note
until the sum of shareholder's equity and the amount of the Subordinated
Capital Note are sufficient such that, had such amounts been in place on such
Quarterly Date, the Capital Ratio would at least have equaled the Minimum
Capital Ratio on such Quarterly Date.
3. Interest. Each Loan shall bear interest at the intercompany rate
paid by the Lender on funds it holds for the account of its subsidiaries,
or such other rate as the Borrower and Lender may agree upon, from time to
time. Interest shall be due and payable quarterly on the last day of
January, April, July and October of each year (each, an "Interest Payment
Date")' commencing on April 30, 1993. If the Note is prepaid as permitted
from time to time herein, in whole or in part, accrued but unpaid interest
with respect to the amount so prepaid to but not including the date of
prepayment shall become due and payable.
4. Payment. Subject to the limitations on payment set forth in
Section 5 hereof, the Lender shall be entitled to and may require the
Borrower to, make a payment of the loans, in whole or in part, on any day
upon providing one Business Day's written notice to the Borrower.
5. Subordination of Obligations. The Lender irrevocably agrees that
the obligations of the Borrower under this Note with respect to the payment
of principal and interest are and shall be fully and irrevocably
subordinate in right of payment and subject to the prior payment or
provision for payment in full of all Senior Indebtedness, that such
obligations may only be satisfied to the extent of cash or other assets of
the Borrower then available for such purpose after giving effect to all
required payments in respect of Senior Indebtedness, and that such
obligations shall not constitute a claim against the Borrower at any time
that, and for so long as, cash or such other assets available therefor are
insufficient. "Senior Indebtedness" means the principal of and interest,
including post-default interest, on any indebtedness of or guaranteed by
the Borrower, whether outstanding or guaranteed on the date hereof or
thereafter created, incurred, assumed or guaranteed for money borrowed or
for the deferred purchase price of property purchased by any person
including, for this purpose, all obligations of the Borrower under
capitalized leases or purchase money mortgages, and, in each such case, all
renewals, extensions and refundings thereof including, without limitation,
all obligations of the Borrower arising under or in respect of the Pooling
and Servicing Agreement; provided, however, that Senior Indebtedness shall
not include any obligation of or guarantee by the Borrower, whether
outstanding or guaranteed on the date hereof or thereafter created,
incurred, assumed or guaranteed that by agreement, operation of law or by
its terms is subordinate in right of payment to this Note, including, but
not limited to, the Subordinated Capital Note. In the event of the
appointment of a receiver or trustee of the Borrower or in the event of its
insolvency, bankruptcy, assignment for the benefit of creditors or
reorganization, whether or not pursuant to the bankruptcy laws, or any
other marshalling of the assets and liabilities of the Borrower, the Lender
shall not be entitled to participate or share, ratably or otherwise, in the
distribution of the assets of the Borrower until all claims of all other
present and future creditors of the Borrower, whose claims are senior
hereto, have been fully satisfied, or provisions have been made therefor.
6. Acceleration Upon Certain Events. The Borrower's obligation to
pay the unpaid principal amount hereof shall forthwith mature, together
with interest accrued thereon, in the event of any receivership,
insolvency, liquidation, bankruptcy, assignment for the benefit of
creditors, reorganization whether or not pursuant to bankruptcy laws, or
any other marshalling of the assets and liabilities of the Borrower, but
payment of the same shall remain subordinate as hereinabove set forth.
7. Effect or Default. Default in any payment hereunder, including
the payment of interest, shall not accelerate the maturity hereof except as
herein specifically provided, and the obligation to make payments shall
remain subordinated as hereinabove set forth.
8. Upon Whom Bindinq. The provisions of this Note shall be binding upon
the Lender, its successors and assigns and upon the Borrower.
9. Governing Law. This Note shall be deemed to have been made under, and
shall be governed by, the laws of the State of New York in all respects.
10. Cancellation. This Note shall not be subject to cancellation by
either party.
11. No Security. The Lender agrees that it is not taking and will not
take or assert as security for the payment of this Note any security interest
in or lien upon, whether created by contract, statute or otherwise, any
property of the Borrower or any property in which the Borrower may have an
interest, which is or at any time may be in possession or subject to the
control of the Lender. The Lender hereby waives, and further agrees that it
will not seek to obtain payment of this Note in whole or in any part by
exercising any right of set-off it may assert or possess whether created by
contract, statute or otherwise. Any agreement between the Borrower and the
Lender (whether in the nature of a general loan and collateral agreement, a
security or pledge agreement or otherwise), shall be deemed amended hereby to
the extent necessary so as not to be inconsistent with the provisions of this
Note.
12. Assignment. This Note shall inure to the benefit of and be
binding upon the parties hereto and each of their respective successors and
assigns. The Borrower may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of the Lender.
13. No Bankruptcy Petition Against the Borrower. The Lender (in its
capacity as Lender, but in no other capacity), by its acceptance of this
Note, hereby covenants and agrees that, prior to the date which is one year
and one day after the payment in full of the Issuer Amount and all Invested
Amounts, it will not institute against or join any other Person in
instituting against the Borrower any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar
proceeding under the laws of the United States or any state of the United
States.
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed
by its officers or employees thereunto duly authorized and directed by
appropriate corporate authority.
INGRAM FUNDING INC.
By: __________________________
Title: _______________________
THE TERMS AND CONDITIONS
HEREOF ARE HEREBY
ACKNOWLEDGED AND ACCEPTED:
INGRAM INDUSTRIES INC.
By: __________________________
Title: _______________________
EXHIBIT B
FORM OF DAILY REPORT
(See Exhibit E of the Pooling and Servicing Agreement)
EXHIBIT D
LOCK-BOX BANKS
(See Exhibit K of the Pooling & Servicing Agreement)
EXHIBIT E
SUBORDINATED CAPITAL NOTE
This Subordinated Capital Note, dated as of February 12, 1993, by Ingram
Funding Inc., a Delaware corporation (the "Borrower") to Ingram Industries
Inc., a Tennessee corporation (the "Lender").
The Lender and the Borrower have entered into an Asset Purchase and Sale
Agreement (the "Purchase Agreement") dated as of February 12, 1993 providing
for the purchase from time to time by the Borrower of certain trade accounts
receivable (the "Receivables"). Except as otherwise expressly provided herein
or unless the context otherwise requires, capitalized terms not otherwise
defined herein shall have the meanings assigned to such terms in Annex X
to the Purchase Agreement.
1. The Note. For value received, the Borrower hereby promises to pay
to the order of the Lender at its offices at One Belle Meade Place, 4400
Harding Road, Nashville, Tennessee 37205, the principal amount of
$172,296,681.95 (the "Initial Loan") or so much of the aggregate principal
amount of all Loans (as hereinafter defined) made by the Lender to the
Borrower under the terms of this Note as remains unpaid, as shown in the
schedule attached hereto and any continuations thereof, on the day which is
one year and a day after the payment in full of the Issuer Amount, all
Invested Amounts and the Revolving Note (the "Maturity Date"). The
Borrower shall pay interest on the unpaid principal amount of the Loans as
provided herein.
2. The Loans. (a) From time to time between the date of this Note
and the Maturity Date the Lender may lend to the Borrower additional sums
(each a "Loan" and, together with the Initial Loan, the "Loans"), as
provided herein.
(b) The obligation of the Borrower to repay the aggregate
unpaid principal amount of the Loans outstanding shall be evidenced by this
Note and the schedule attached hereto. The Lender is hereby authorized to
endorse on the schedule or on a continuation of such schedule, appropriate
notations regarding each Loan evidenced by this Note; provided, however,
that the failure to make, or error in making, any notation shall not limit
or otherwise affect the obligation of the Borrower hereunder.
(c) When the Borrower requests a Loan, in connection with the
acquisition of any Receivables or otherwise, the Borrower shall notify the
Lender by telephone specifying the amount and the date on which such
Loan is requested. Unless otherwise specified, the maturity of each such Loan
shall be the Maturity Date.
3. Interest. Each Loan shall bear interest at the intercompany rate paid
by the Lender on funds it holds for the account of its subsidiaries, or such
other rate as the Borrower and Lender may agree upon, from time to time.
Interest shall be due and payable quarterly on the last day of January, April,
July and October of each year (each, an "Interest Payment Date"), commencing
on April 30, 1993. If the Note is prepaid as permitted from time to time
herein, in part or whole, accrued but unpaid interest with respect to the
amount so prepaid to but not including the date of prepayment shall become due
and payable.
4. Payment. (a) If the Capital Ratio exceeded the Minimum Capital
Ratio as computed with respect to the most recent Interest Payment Date
based on the balance sheet of the Borrower as of such Interest Payment
Date, which determination shall be made, and shall be effective, no later
than 50 days following such Interest Payment Date, the Lender shall be
entitled to, and may require the Borrower to make, a payment of the Loans,
in whole or in part, on any day upon providing one Business Day's written
notice to the Borrower.
(b) Notwithstanding anything to the contrary herein contained,
the obligation of the Borrower to pay the principal amount hereof on the
Maturity Date or following any determination made with respect to an
Interest Payment Date as provided above shall be suspended and the
obligation shall not mature for any period of time during which, after
giving effect to such payment (together with the payment of any other
obligation of the Borrower payable at or prior to the payment hereof), the
Borrower does not meet the Minimum Capital Ratio as computed with respect
to the most recent Interest Payment Date.
5. Subordination of Obligations. The Lender irrevocably agrees that
the obligations of the Borrower under this Note with respect to the payment
of principal and interest are and shall be fully and irrevocably
subordinate in right of payment and subject to the prior payment or
provision for payment in full of all Senior Indebtedness, that such
obligations may only be satisfied to the extent of cash or other assets of
the Borrower than available for such purpose after giving effect to all
required payments in respect of Senior Indebtedness, and that such
obligations shall not constitute a claim against the Borrower at any time
that, and for so long as, cash or such other assets available therefor are
insufficient. "Senior Indebtedness" means the principal of and interest,
including post-default interest, on any indebtedness of or guaranteed by
the Borrower, whether outstanding or guaranteed on the date hereof or
thereafter created, incurred, assumed or guaranteed for money borrowed or
for the deferred purchase price of property purchased by any person
including, for this purpose, all obligations of the Borrower under
capitalized leases or purchase money mortgages, and, in each such case, all
renewals, extensions and refundings thereof, including but not limited to
all obligations of the Borrower arising under or in respect of the Pooling
and Servicing Agreement and the Revolving Note; provided, however, that
Senior Indebtedness shall not include any obligation of or guarantee by the
Borrower, whether outstanding or guaranteed on the date hereof or
thereafter created, incurred, assumed or guaranteed that by agreement,
operation of law or by its terms is subordinate in right of payment to this
Note. In the event of the appointment of a receiver or trustee of the
Borrower or in the event of its insolvency, bankruptcy, assignment for the
benefit of creditors or reorganization, whether or not pursuant to the
bankruptcy laws, or any other marshalling of the assets and liabilities of
the Borrower, the Lender shall not be entitled to participate or share,
ratably or otherwise, in the distribution of the assets of the Borrower
until all claims of all other present and future creditors of the Borrower,
whose claims are senior hereto, have been fully satisfied, or provisions
have been made therefor.
6. Acceleration Upon Certain Events. The Borrower's obligation to
pay the unpaid principal amount hereof shall forthwith mature, together
with interest accrued thereon, in the event of any receivership,
insolvency, liquidation, bankruptcy, assignment for the benefit of
creditors, reorganization whether or not pursuant to bankruptcy laws, or
any other marshalling of the assets and liabilities of the Borrower, but
payment of the same shall remain subordinate as hereinabove set forth.
7. Effect of Default. Default in any payment hereunder, including the
payment of interest, shall not accelerate the maturity hereof except as herein
specifically provided, and the obligation to make payments shall remain
subordinated as hereinabove set forth.
8. Status of Proceeds; Capital. The proceeds of the Loans evidenced
hereby shall be dealt with in all respects as capital of the Borrower,
shall be subject to the risks of its business, and may be deposited in an
account or accounts in the Borrower's name in any bank or trust company.
9. Upon Whom Binding. The provisions of this Note shall be binding upon
the Lender, its successors and assigns and upon the Borrower.
10. Governing Law. This Note shall be deemed to have been made
under, and shall be governed by, the laws of the State of New York in all
respects.
11. Cancellation. This Note shall not be subject to cancellation by
either party.
12. No Security. The Lender agrees that it is not taking and will
not take or assert as security for the payment of this Note any security
interest in or lien upon, whether created by contract, statute or
otherwise, any property of the Borrower or any property in which the
Borrower may have an interest, which is or at any time may be in possession
or subject to the control of the Lender. The Lender hereby waives, and
further agrees that it will not seek to obtain payment of this Note in
whole or in any part by exercising, any right of set-off it may assert or
possess whether created by contract, statute or otherwise. Any agreement
between the Borrower and the Lender (whether in the nature of a general
loan and collateral agreement, a security or pledge agreement or
otherwise), shall be deemed amended hereby to the extent necessary so as
not to be inconsistent with the provisions of this Note.
13. Assignment. This Note shall inure to benefit of and be binding
upon the parties hereto and each of their respective successors and
assigns. The Borrower may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of the Lender.
14. No Bankruptcy Petition Against the Buyer. The Seller, by its
acceptance of this Note, hereby covenants and agrees that, prior to the date
which is one year and one day after the payment in full of the Issuer Amount,
all Invested Amounts and the Revolving Note, it will not institute against or
join any other Person in instituting against the Buyer any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceeding under the laws of the United States or any state of the
United States.
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed
by its officers or employees thereunto duly authorized and directed by
appropriate corporate authority.
INGRAM FUNDING INC.
By: __________________________
Title: _______________________
THE TERMS AND CONDITIONS
HEREOF ARE HEREBY ACKNOWLEDGED
AND ACCEPTED:
INGRAM INDUSTRIES INC.
By: __________________________
Title: _______________________
EXHIBIT 10.25
===========================================================================
INGRAM FUNDING INC.,
Transferor,
INGRAM INDUSTRIES INC.,
Servicer
and
CHEMICAL BANK,
Trustee
on behalf of the Certificateholders
===========================================================================
INGRAM FUNDING MASTER TRUST
POOLING AND SERVICING AGREEMENT
Dated as of February 10, 1993
===========================================================================
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
Section 1.01 Definitions . . . . . . . . . . . 1
Section 1.02 Other Definitional Provisions . . 1
Section 1.03 Calculations and Payments . . . . 2
ARTICLE II CONVEYANCE OF RECEIVABLES; ISSUANCE
OF CERTIFICATES
Section 2.01 Conveyance of Receivables . . . . 3
Section 2.02 Acceptance by Trustee . . . . . . 4
Section 2.03 Representations and Warranties of
the Transferor Relating to the
Transferor. . . . . . . . . . . 5
Section 2.04 Representations and Warranties of
the Transferor Relating to the
Agreement, any Supplement and the
Receivables; Reassignment of
Receivables . . . . . . . . . . 10
Section 2.05 [Reserved] . . . . . . . . . . . 16
Section 2.06 Covenants of the Transferor . . . 16
Section 2.07 Authentication of Certificates . 23
Section 2.08 Tax Treatment . . . . . . . . . . 23
Section 2.09 Cancellation of the Certificates
of any Series . . . . . . . . . 24
Section 2.10 Transferor Minimum Amount; Minimum
Adjusted Eligible Principal
Receivables . . . . . . . . . . 24
ARTICLE III ADMINISTRATION AND SERVICING OF
RECEIVABLES
Section 3.01 Acceptance of Appointment and
Other Matters Relating to the
Servicer . . . . . . . . . . . . 25
Section 3.02 Servicing Compensation . . . . . . 27
Section 3.03 Representations, Warranties and
Covenants of the Servicer. . . . 29
Section 3.04 Reports and Records for the
Trustee; Bank Account
Statements . . . . . . . . . . . 35
Section 3.05 Annual Servicer's Certificate. . . 36
Section 3.06 Annual Independent Public
Accountants' Servicing Report. . 36
Section 3.07 [Reserved] . . . . . . . . . . . . 38
Section 3.08 Notices to the Transferor. . . . . 38
Section 3.09 Credits . . . . . . . . . . . . . 38
Section 3.10 Covenant to Maintain Privileges. . 38
ARTICLE IV RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF
COLLECTIONS
Section 4.01 Rights of Certificateholders . . . 39
Section 4.02 Establishment of Collection
Account and Transferor Account . . 39
Section 4.03 Collections and Allocations. . . . 42
Section 4.04 Payments of Imputed Yield
Collections to Investor
Certificateholders. . . . . . . 46
Section 4.05 Payments of Imputed Yield
Collections with Respect to the
Variable Funding Certificate . . 46
Section 4.06 Payment of Principal Collections . 46
Section 4.07 Defaulted Receivables. . . . . . . 47
Section 4.08 [Reserved] . . . . . . . . . . . . 47
Section 4.09 Removal of Funds from Lock-Box
Accounts . . . . . . . . . . . . 47
ARTICLE V DISTRIBUTIONS AND REPORTS TO
CERTIFICATEHOLDERS
Section 5.01 Distributions . . . . . . . . . . 49
Section 5.02 Monthly Investor Certificate
holders' Statement; Annual Tax
Statement. . . . . . . . . . . 49
ARTICLE VI THE CERTIFICATES
Section 6.01 The Certificates . . . . . . . . . 51
Section 6.02 Authentication of Certificates . . 52
Section 6.03 Registration of Transfer and
Exchange of Certificates . . . . 53
Section 6.04 Mutilated, Destroyed, Lost or
Stolen Certificates. . . . . . . 57
Section 6.05 Persons Deemed Owners. . . . . . . 57
Section 6.06 Appointment of Paying Agent . . . .58
Section 6.07 Access to List of Certificates
holders' Names and Addresses . . 59
Section 6.08 Authenticating Agent. . . . . . . .59
Section 6.09 Delivery of Additional Series of
Investor Certificates or the
Variable Funding Certificate . . 61
Section 6.10 Issuer Additional Amounts. . . . . 64
Section 6.11 Book-Entry Certificates. . . . . . 65
Section 6.12 Notices to Clearing Agency . . . . 66
Section 6.13 Definitive Certificates. . . . . . 67
ARTICLE VII OTHER MATTERS RELATING TO THE
TRANSFEROR
Section 7.01 Liability of the Transferor. . . . 68
Section 7.02 Merger or Consolidation of, or
Assumption of the Obligations of,
the Transferor . . . . . . . . . 68
Section 7.03 Limitation on Liability of the
Transferor . . . . . . . . . . . 69
Section 7.04 Liabilities. .. . . . . . . . . . 70
ARTICLE VIII OTHER MATTERS RELATING TO THE
SERVICER
Section 8.01 Liability of the Servicer. . . . . 71
Section 8.02 Merger or Consolidation of, or
Assumption of the Obligations of,
the Servicer . . . . . . . . . . 71
Section 8.03 Limitation on Liability of the
Servicer and Others . . . . . . .72
Section 8.04 Servicer Indemnification of the
Trust and the Trustee. . . . . . 72
Section 8.05 The Servicer Not to Resign. . . . .74
Section 8.06 Access to Certain Documentation
and Information Regarding the
Receivables. . . . . . . .. . . 74
Section 8.07 Delegation of Duties. . . . . . . 75
Section 8.08 Examination of Records. . . . . . 75
Section 8.09 Successor Servicer Indemnification
of Transferor. . . . . . . . . . 75
ARTICLE IX EVENTS OF TERMINATION
Section 9.01 Events of Termination with Respect
to any Series. . . . . . . . . . 76
Section 9.02 Events of Termination with Respect
to the Variable Funding
Certificate. . . . . . . . . . . 78
Section 9.03 Additional Rights Upon the
Occurrence of Certain Events. . .82
ARTICLE X SERVICER DEFAULTS
Section 10.01 Servicer Defaults. . . . . . . . . 85
Section 10.02 Trustee to Act; Appointment of
Successor. . . . . . . . . . . . 88
Section 10.03 Notification to Certificate
holders. . . . . . . . . . . . . 90
Section 10.04 Waiver of Past Defaults. . . . . . 90
ARTICLE XI THE TRUSTEE
Section 11.01 Duties of Trustee. . . . . . . . . 92
Section 11.02 Certain Matters Affecting the
Trustee. . . . . . . . . . . . . 95
Section 11.03 Trustee Not Liable for Recitals in
Certificates. . . . . . . . . . 97
Section 11.04 Trustee May Own Certificates. . . .98
Section 11.05 The Servicer to Pay Trustee's Fees
and Expenses. . . . . . . . . . .98
Section 11.06 Eligibility Requirements for
Trustee. . . . . . . . . . . . . 98
Section 11.07 Resignation or Removal of
Trustee. . . . . . . . . . . . . 99
Section 11.08 Successor Trustee. . . . . . . . . 100
Section 11.09 Merger or Consolidation of
Trustee. . . . . . . . . . . . . 100
Section 11.10 Appointment of Co-Trustee or
Separate Trustee. . . . . . . . 101
Section 11.11 Tax Returns. . . . . . . . . . . . 103
Section 11.12 Trustee May Enforce Claims Without
Possession of Certificates. . .. 103
Section 11.13 Suits for Enforcement. . . . . . . 104
Section 11.14 Rights of Certificateholders to
Direct Trustee. . . . . . . . .. 104
Section 11.15 Representations and Warranties of
Trustee . . . . . . . . . . . .. 105
Section 11.16 Maintenance of Office or Agency. . 105
Section 11.17 Notices . . . . . . . . . . . . .. 106
ARTICLE XII TERMINATION
Section 12.01 Termination of Trust . . . . . . . 107
Section 12.02 Optional Purchase and Series
Termination Date of Investor
Certificates of any Series or the
Variable Funding Certificate. . .108
Section 12.03 Final Payment . . . . . . . . . . .109
Section 12.04 Transferor's Termination Rights . .111
ARTICLE XIII MISCELLANEOUS PROVISIONS
Section 13.01 Amendment . . . . . . .. . . . . .112
Section 13.02 Protection of Right, Title and
Interest of Trust. . . . . . . .114
Section 13.03 Limitation on Rights of
Certificateholders. . . . . . . .115
Section 13.04 Governing Law . . . . . . . . . . .116
Section 13.05 Notices . . . . . . . . . . . . . .116
Section 13.06 Severability of Provisions . . . . 117
Section 13.07 Assignment . . . . . . . . . . . . 117
Section 13.08 Certificates Nonassessable and
Fully Paid . . . . . . . . . . . 117
Section 13.09 Further Assurances . . . . . . . . 118
Section 13.10 No Waiver; Cumulative Remedies . . 118
Section 13.11 Counterparts . . . . . . . . . . . 118
Section 13.12 Third-Party Beneficiaries. . . . . 118
Section 13.13 Actions by Certificateholders . .. 118
Section 13.14 Merger and Integration . . . . . . 119
Section 13.15 Headings . . . . . . . . . . . . . 120
Section 13.16 No Bankruptcy Petition Against the
Transferor . . . . . . . . . . . 120
EXHIBITS
- --------
Exhibit A: Form of Investor Certificate
Exhibit B: Form of Variable Funding Certificate
Exhibit C: Form of Transferor Certificate
Exhibit D: Form of Supplement
Exhibit E: Form of Daily Report
Exhibit F: Form of Annual Servicer's
Certificate
Exhibit G: Credit and Collection Policy
Exhibit H: Form of Settlement Statement
Exhibit I: Lock-Box Agreements
Exhibit J: Form of Lock-Box Agreement
Exhibit K: List of Lock-Box Banks
Exhibit L: Omitted
Exhibit M: Form of Annual Opinion of Counsel
(Section 13.02(c))
SCHEDULES
- ---------
Schedule 1. Identification of the
Collection Account
and Transferor
Account
Schedule 2. List of Days In 1993
on Which Ingram is
Closed
ANNEX
- -----
Annex X. Definitions
POOLING AND SERVICING AGREEMENT, dated as of February 10, 1993, by and
among INGRAM FUNDING INC., a Delaware corporation, as Transferor, INGRAM
INDUSTRIES INC., a Tennessee corporation, as Servicer, and CHEMICAL BANK, a
New York banking corporation, as Trustee.
This Pooling and Servicing Agreement shall be applicable to the formation
of the Trust and the issuance of the Transferor Certificate and, upon the
execution of any Supplement, shall apply also to the issuance of any Series of
Certificates or the Variable Funding Certificate issued thereby.
In consideration of the mutual agreements herein contained, each party
agrees as follows for the benefit of the other parties, for the benefit of the
Certificateholders and for the benefit of any credit enhancer with respect to
any Series or the Variable Funding Certificate to the extent provided herein:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. For all purposes of this Agreement, except as
otherwise expressly provided herein or unless the context otherwise requires,
capitalized terms not otherwise defined herein shall have the meanings
assigned to such terms in the Definitions attached hereto as Annex X which is
incorporated by reference herein. All other capitalized terms used herein
shall have the meanings specified herein.
"Agreement" shall mean this Pooling and Servicing Agreement as it may
from time to time be amended, supplemented or otherwise modified in accordance
with the terms hereof, including by any Supplement.
Section 1.02 Other Definitional Provisions.
(a) All terms defined in any Supplement or this Agreement shall
have the defined meanings when used in any certificate or other document made
or delivered pursuant hereto unless otherwise defined therein.
(b) As used herein and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined
in Annex X or otherwise defined herein, and accounting terms partly defined
in Annex X or otherwise defined herein, to the extent not defined, shall
have the respective meanings given to them under GAAP. To the extent that
the definitions of accounting terms herein or in Annex X are inconsistent
with the meanings of such terms under GAAP, the definitions contained
herein or in Annex X shall control.
(c) The agreements, representations and warranties of Ingram in
this Agreement in its capacity as Servicer shall be deemed to be the
agreements, representations and warranties of Ingram solely in such capacity.
(d) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement or any Supplement shall refer to
such Supplement or this Agreement, as the case may be, as a whole and not to
any particular provision of such Supplement or this Agreement, as the case may
be; and Section, Schedule and Exhibit references contained in this Agreement
or any Supplement are references to Sections, Schedules and Exhibits in or to
this Agreement or such Supplement unless otherwise specified.
Section 1.03 Calculations and Payments. All computations of Imputed Yield
shall be made on the basis of the actual number of days in each year and the
actual number of days elapsed (including the first and excluding the last day)
in the period for which such calculations are being made. Unless otherwise
specified herein, expressions of a time of day refer to such time in New York,
New York. All amounts payable hereunder shall be paid in immediately available
funds. Whenever any reference is made to an amount or time the determination
or calculation of which is governed by this Section 1.03, the provisions of
this Section 1.03 shall be applicable to such determination or calculation,
whether or not reference is specifically made to this Section 1.03, unless
some other method of determination or calculation is expressly specified in
the particular provision.
[END OF ARTICLE I]
ARTICLE II
CONVEYANCE OF RECEIVABLES; ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of Receivables. (a) By execution of this
Agreement, the Transferor does hereby assign, transfer and otherwise convey
to the Trust from time to time, without recourse (except as specifically
provided herein), all its right, title and interest, whether now owned or
hereafter acquired, in, to and under (i) all Receivables in each case sold
or otherwise transferred to the Transferor pursuant to the Purchase
Agreement prior to the Final Trust Termination Date, (ii) with respect to
such Receivables, all accounts, chattel paper, general intangibles, and
instruments (each, as defined in the applicable Uniform Commercial code),
and all rights (but not the obligations) relating thereto, (iii) all
Related Security and all other instruments and all rights under the
Receivables Documents (but not the obligations) relating to such
Receivables and all rights (but not the obligations) relating to such
Receivables, (iv) all monies due or to become due with respect to any of the
foregoing, and (v) all proceeds of any of the foregoing. Such property,
together with all monies on deposit in the Lock-Box Accounts, the
Collection Account, the Transferor Account, any Interest Funding Account,
any Principal Funding Account or any Reserve Fund (with respect to each
account or fund, other than net investment earnings), shall constitute the
assets of the Trust (the "Trust Assets"). The foregoing transfer,
assignment, set-over and conveyance does not constitute and is not intended
to result in the creation, or an assumption by the Trust, the Trustee or
any Investor Certificateholder, of any obligation of Ingram, any Designated
Subsidiary, the Transferor or any other Person in connection with the
Receivables or under any agreement or instrument relating thereto,
including, without limitation, any obligation to any Obligors, merchants or
any Affiliate of or other Person to whom the Servicer may delegate
servicing duties hereunder or insurers.
(b) In connection with such transfer, the Transferor agrees to
record and file, at its own expense, any financing statements (and
continuation statements with respect to such financing statements when
applicable) required to be filed with respect to the Receivables now
existing and hereafter created and the other Trust Assets meeting the
requirements of applicable state law in such manner and in such
jurisdictions as are necessary under the applicable UCC to perfect the
transfer and assignment of the Receivables and the other Trust Assets to
the Trust, and to deliver a file-stamped copy of such financing statements
or other evidence of such filings to the Trustee within 10 days of the
Initial Closing Date (excluding such continuation and similar statements,
which shall be delivered promptly after filing). The Trustee shall be
under no obligation whatsoever to file such financing or continuation
statements or make any other filings under the UCC in connection with such
conveyance.
(c) In connection with such transfer, on the fifth Business Day
following (i) the date on which the Servicer receives a Termination Notice
pursuant to Section 10.01 or (ii) the Amortization Period Commencement Date if
attributable to the occurrence of an Event of Termination, the Servicer shall
deliver to the Trustee a true and complete file or list of all Receivables
outstanding on such date, specifying for each such Receivable the name of the
Obligor thereunder and its aggregate Unpaid Balance as of the date on which
the Termination Notice is delivered. Each such file or list shall be marked as
a schedule hereto.
(d) It is intended by the Transferor that the interest of the
Transferor transferred to the Trustee hereunder constitute a security interest
under Section 1-201 of the UCC (as defined in the UCC as in effect in the
States of New York and Delaware, respectively). The Transferor hereby
grants to the Trustee on the terms and conditions of this Agreement a first
priority security interest in and against all of the Transferor's right,
title and interest in the Receivables and the other Trust Assets for the
purpose of (i) securing the rights of the Trustee for the benefit of the
Certificateholders under this Agreement and (ii) securing the right,
ability and obligation of the Trustee to make all payments required to be
made in accordance with the terms and conditions of this Agreement (the
"Secured Obligations"),
Section 2.02 Acceptance by Trustee.
(a) The Trustee hereby acknowledges its acceptance on behalf of
the Trust of all right, title and interest to the property, now existing and
hereafter created, conveyed to the Trust pursuant to Section 2.01, and
declares that, subject to the terms and conditions hereof and of any
Supplement, it shall maintain such right, title and interest, upon the
trust herein set forth, for the benefit of all Certificateholders.
(b) The Trustee hereby agrees not to disclose, except as may
be required by law, to any Person any of the information contained in any
computer files or microfiche lists delivered to the Trustee by the
Transferor pursuant to Sections 2.01 or 2.06(c) except as is required in
connection with the performance of its duties hereunder or in enforcing the
rights of the Certificateholders or to a Successor Servicer appointed
pursuant to Section 10.02 or to a prospective Successor Servicer. The
Trustee agrees to take such measures as shall be reasonably requested by
the Transferor to protect and maintain the security and confidentiality of
such information and, in connection therewith, shall allow the Transferor
to inspect the Trustee's security and confidentiality arrangements from
time to time during normal business hours. The Trustee shall use its best
efforts to provide the Transferor with written notice at least five
Business Days prior to any disclosure pursuant to this Section 2.02(b).
(c) The Trustee hereby agrees not to use any information it
obtains pursuant to this Agreement, including without limitation, any of
the information contained in any computer files or microfiche lists
delivered by the Transferor to the Trustee pursuant to Sections 2.01 or
2.06(c), to compete or assist any Person in competing with the Transferor,
Ingram or any Designated Subsidiary in their respective businesses and to
use such information only in connection with its responsibilities under
this Agreement.
Section 2.03 Representations and Warranties of the Transferor Relating to
the Transferor. The Transferor hereby represents and warrants, as of the
Initial Closing Date and, with respect to any Series, as of the date of any
Supplement and the related Closing Date, unless otherwise stated in such
Supplement, that:
(a) Organization and Good Standing. The Transferor is a
corporation duly organized and validly existing in good standing under the
laws of the State of Delaware, and has full corporate power, authority and
legal right to execute, deliver and perform its obligations under the
Purchase Agreement, this Agreement and any Supplement and to execute and
deliver to the Trustee pursuant hereto the Certificates, to conduct its
business as such business is presently conducted, and in all material
respects, to own its property and conduct its other businesses as such
properties are presently owned and such businesses are presently conducted.
(b) Due Qualification. The Transferor is duly qualified to do
business and is in good standing as a foreign corporation (or is exempt from
such requirements), and has obtained all necessary licenses and approvals with
respect to the Transferor, in each jurisdiction in which failure to so qualify
or to obtain such licenses and approvals would render any Contract or any
Receivable unenforceable by the Transferor or the Trust or would have a
material adverse effect on the Certificateholders.
(c) Due Authorization. The execution, delivery and performance
of the Purchase Agreement, this Agreement and any Supplement and the execution
and delivery to the Trustee of the Certificates by the Transferor and the
consummation of the transactions provided for in this Agreement and any
Supplement, have been duly authorized by the Transferor by all necessary
corporate action on the part of the Transferor.
(d) Binding Obligation. Each of the Purchase Agreement, this
Agreement and each Supplement constitutes the legal, valid and binding
obligation of the Transferor, enforceable against it in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereinafter in effect, affecting the enforcement of creditors' rights in
general and except as such enforceability may be limited by general principles
of equity (whether considered in a proceeding at law or in equity).
(e) No Conflicts. The execution, delivery and performance
of this Agreement and any Supplement and the Certificates, the performance
of the transactions contemplated by this Agreement and any Supplement and
the fulfillment of the terms hereof by the Transferor, do not (a)
contravene its certificate of incorporation or By-Laws, (b) violate any
provision of, or require any filing (except for the filings under the UCC
required by this Agreement, each of which will be duly made and will be in
full force and effect within 10 days after the Initial Closing Date),
registration, consent or approval under, any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award presently in
effect having applicability to the Transferor, except for such filings,
registrations, consents or approvals as have already been obtained and are
in full force and effect, (c) result in a breach of or constitute a default
or require any consent under any indenture or loan or credit agreement or
any other agreement, lease or instrument to which the Transferor is a party
or by which it or its properties may be bound or affected except those as
to which a consent or waiver has been obtained and is in full force and
effect and an executed copy of which has been delivered to the Trustee, or
(d) result in, or require, the creation or imposition of any lien upon or
with respect to any of the properties now owned or hereafter acquired by
the Transferor other than as specifically contemplated by this Agreement.
(f) Taxes. The Transferor has filed all material tax returns
(federal, state and local) which it reasonably believes are required to be
filed and has paid or made adequate provision for the payment of all taxes,
assessments and other governmental charges due from the Transferor or is
contesting any such tax, assessment or other governmental charge in good
faith through appropriate proceedings. The Transferor knows of no basis
for any material additional tax assessment for any fiscal year for which
adequate reserves have not been established.
(g) No Proceedings. There are no proceedings or
investigations pending or, to the best knowledge of the Transferor,
threatened against the Transferor, before any court, regulatory body,
administrative agency, or other tribunal or governmental instrumentality
(i) asserting the invalidity of the Purchase Agreement, this Agreement or
any Supplement or the Certificates, (ii) seeking to prevent the issuance of
the Certificates or the consummation of any of the transactions
contemplated by this Agreement or any Supplement or the Certificates, (iii)
seeking any determination or ruling that, in the reasonable judgment of the
Transferor, would materially and adversely affect the performance by the
Transferor of its obligations under the Purchase Agreement,
this Agreement or any Supplement, (iv) seeking any determination or ruling
that would materially and adversely affect the validity or enforceability of
the Purchase Agreement, this Agreement or any Supplement or the Certificates,
or (v) seeking to assert any tax liability against the Trust under the United
States Federal or New York State income tax systems.
(h) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person or of any Governmental
Authority required in connection with the execution and delivery by the
Transferor of this Agreement, any Supplement, the Purchase Agreement and
the Certificates, the performance by the Transferor of the transactions
contemplated by this Agreement and any Supplement and the fulfillment by
the Transferor of the terms hereof, have been obtained and are in full
force and effect; provided, however, that the Transferor makes no
representation or warranty regarding state securities or "blue sky" laws in
connection with the distribution of the Certificates.
(i) Place of Business. The principal place of business of the
Transferor if it has only one place of business or its chief executive office
Has that term is used in the UCC) if it has more than one place of business is
in Wilmington, Delaware. The records concerning the Receivables and related
Contracts are kept in offices of the Servicer or of the Designated
Subsidiaries acting as subservicers located in Tennessee, California and New
York.
(j) Use of Proceeds. No proceeds of the issuance of any
Certificate will be used by the Transferor to acquire any security in a
transaction that is subject to sections 13 and 14 of the Securities Exchange
Act of 1934, as amended, or to purchase or carry any margin security in
violation of any applicable law or regulation.
(k) Lock-Box Banks and Accounts. The Lock-Box Banks are the only
institutions holding any lock-box accounts for the receipt of payments from
Obligors in respect of Receivables (subject to such changes as may be made
from time to time in accordance with Section 2.06(i)) and all Obligors, and
only such Obligors, have been instructed to make payments only to Lock-Box
Accounts and such instructions are in full force and effect.
(l) Event of Termination. As of the Initial Closing Date, no
Event of Termination and no condition that with the giving of notice and/or
the passage of time would constitute an Event of Termination (a "Prospective
Event of Termination"), has occurred and is continuing.
(m) Not an Investment Company. The Transferor is not an
"investment company" or a company controlled by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, or is exempt
from all provisions of such Act.
(n) ERISA. No Plan maintained by the Transferor or any of its
ERISA Affiliates has any "accumulated funding deficiency" (within the meaning
of Section 302 of ERISA or Section 412 of the Internal Revenue code), whether
or not waived. The Transferor and each ERISA Affiliate of the Transferor has
timely made all contributions required to be made by it to any Plan and
Multiemployer Plan to which contributions are or have been required to be made
during the preceding five years by the Transferor or such ERISA Affiliate, and
no event requiring notice to the PBGC under Section 302(f) of ERISA has
occurred and is continuing or could reasonably be expected to occur with
respect to any such Plan, in any case, that could reasonably be expected to
result, directly or indirectly, in any lien being imposed on the property of
the Transferor or the payment of any material amount to avoid such lien.
No Plan Event with respect to the Transferor or any of its ERISA Affiliates
has occurred or could reasonably be expected to occur that could
reasonably be expected to result, directly or indirectly, in any Lien
being imposed on the property of the Transferor or the payment of any
material amount to avoid such Lien.
The representations and warranties set forth in this Section
2.03 shall survive the transfer and assignment of the Receivables to the
Trust. Upon discovery by the Transferor, the Servicer or a Responsible
Officer of the Trustee of a material breach of any of the foregoing
representations and warranties, the party discovering such breach shall
give written notice thereof to the others and to the Rating Agencies within
three Business Days of such discovery.
Section 2.04 Representations and Warranties of the Transferor Relating
to the Agreement, any Supplement and the Receivables; Reassignment of
Receivables.
(a) Representations and Warranties. The Transferor (x) hereby
represents and warrants as of the Initial Closing Date, with respect to the
Receivables created on or prior to, and outstanding on, such date and (y)
shall be deemed to represent and warrant as of the date of the creation and
transfer to the Trust of any Receivables with respect to such Receivables,
that:
(i) the Transferor is not insolvent;
(ii) the Transferor is the legal and beneficial owner of all
right, title and interest in and to each such Receivable and each such
Receivable has been or will be transferred to the Trust free and clear of any
Lien;
(iii) all consents, licenses, approvals or authorizations of or
registrations or declarations with any Governmental Authority or Person
required to be obtained, effected or given by the Transferor in connection
with the transfer of Trust Assets to the Trust have been duly obtained,
effected or given and are in full force and effect;
(iv) the Transferor has clearly and unambiguously marked all its
computer records and all its microfiche storage files, if any, regarding such
Receivables as the property of the Trust and shall maintain such records in
a manner such that the Trust shall have a perfected interest of first
priority in the Receivables. This Agreement constitutes either (i) a valid
transfer and assignment to the Trust of all right, title and interest of
the Transferor in the Receivables now existing and hereafter created and in
the Related Security and Collections with respect thereto, all proceeds (as
defined in the UCC as in effect in the State of New York) of each Receivable
and such funds as are deposited from time to time in the Collection
Account, and such property will be free and clear of any Adverse Claim or
interest of any Person not holding through the Trust, or (ii) a grant of a
"security interest" (as defined in the UCC as in effect in the State of New
York) in such property to the Trust as provided in Section 2.02(c), which,
in the case of existing Receivables and the Related Security and
Collections with respect thereto and the proceeds thereof, is enforceable
upon execution and delivery of this Agreement, and which will be
enforceable with respect to such Receivables hereafter created and the
proceeds thereof upon such creation. Upon the filing of any financing
statements described in Section 2.01 and, in the case of the Receivables
hereafter created or transferred to the Trust and the proceeds thereof,
upon the creation or transfer thereof, the Trust shall have a first
priority perfected security interest in such property; provided, however,
that such security interest in proceeds shall remain perfected after 10
days from their receipt by the Transferor only to the extent that such
proceeds are identifiable cash proceeds or they come into the Trust's
possession within the applicable 10-day period; and provided, further, that
the Transferor makes no representation or warranty with respect to the
effect of Section 9-306(4) of the UCC on the rights of the Trust to
proceeds held by the Transferor at the time insolvency proceedings are
instituted by or against the seller of the Receivables to which the
proceeds relate. Except as otherwise provided in this Agreement, neither
the Transferor nor any Person claiming through or under the Transferor has
any claim to or interest in the Collection Account;
(v) on the fifth Business Day following (i) the date the
Servicer receives a Termination Notice pursuant to Section 10.01 or (ii) the
Amortization Period Commencement Date if attributable to the occurrence of an
Event of Termination, the Transferor shall cause the Servicer to deliver a
Schedule to this Agreement which will be an accurate and complete listing of
all the Receivables in all material respects as of such day and the
information contained therein with respect to the identity of each
Receivable and the Unpaid Balance existing thereunder will be true and
correct in all material respects as of such day; as of the close of
business on February 10, 1993, the aggregate Unpaid Balance for all
Receivables was $499,889,865.08; as of the close of business on February
10, 1993 the aggregate Unpaid Balance for all Eligible Receivables was
$486,234,178.85;
(vi) each such Receivable and Related Security and Collections
with respect thereto has been or will be transferred to the Trust free and
clear of any Adverse Claim or interest of any Person not holding through the
Trust;
(vii) each account receivable conveyed pursuant to Section 2.01
hereof is on the date of creation of such account receivable a Receivable and
each Receivable classified as an "Eligible Receivable" by the Transferor in
any document or report delivered hereunder will satisfy the requirements
contained in the definition of Eligible Receivable;
(viii) each Receivable is or will be at the time of transfer to
the Trust an account receivable arising out of the performance by the Ingram
Book Company division of Ingram or any Designated Subsidiary in accordance
with the terms of the Contract giving rise to such Receivable. The Transferor
has no knowledge of any fact which should have led it to expect at the time of
the initial creation of an interest in any Receivable hereunder that such
Receivable would not be paid in full when due except with respect to any sales
and marketing discount then available to Obligors. Each Receivable classified
as an "Eligible Receivable" by the Transferor in any document or report
delivered hereunder will satisfy the requirements of eligibility contained in
the definition of Eligible Receivable; and
(ix) each such Receivable was purchased in accordance with the
terms of the Purchase Agreement, which is in full force and effect.
(b) Notice of Breach. The representations and warranties
set forth in this Section 2.04 shall survive the transfer and assignment of
the Trust Assets to the Trust. Upon discovery by the Transferor, the
Servicer or a Responsible Officer of the Trustee of a material breach of
any of the representations and warranties set forth in this Section
2.04(a)(i) through (ix), the party discovering such breach shall give
written notice to the others and to the Rating Agencies within three
Business Days of such discovery.
(c) Transfer Upon Breach of Warranty. In the event of a
breach with respect to a Receivable of any of the representations and
warranties set forth in Section 2.04(a)(ii) through (ix) above which cannot
be cured by the Business Day following the first day on which the
Transferor has knowledge thereof, such Receivable (a "Reconveyed
Receivable") shall be removed from the Trust (without further action) by
deducting the Unpaid Balance of each such Reconveyed Receivable from the
Eligible Receivables in the Trust and decreasing the Transferor Amount. On
and after the date of such removal, each Reconveyed Receivable so removed
shall not be included in the calculation of any Invested Percentage, the
Issuer Percentage, the Transferor Percentage, any Invested Amount, the
Issuer Amount or the Transferor Amount. To the extent that the exclusion
of a Reconveyed Receivable from the calculation of the Transferor Amount
would cause the Transferor Eligible Amount to be reduced below the
Transferor Minimum Amount or would otherwise not be permitted by any
Requirement of Law, the Transferor shall make or cause to be made a deposit
in the Collection Account in immediately available funds by the close of
business on the Business Day following the first day the Transferor has
knowledge of the existence of a Reconveyed Receivable in an amount equal to
the related Transfer Deposit Amount remaining due. Such deposit shall be
considered a payment in full of the Reconveyed Receivable during the
Settlement Period to which such payment relates and shall be allocated in
accordance with Section 4.03. Upon each removal of a Reconveyed Receivable
from the Trust, the Trust shall automatically and without further action be
deemed to transfer, assign, set-over and otherwise convey to or upon the
order of the Transferor, without recourse, representation or warranty,
all the right, title and interest of the Trust in and to such Reconveyed
Receivable, all Related Security and Collections with respect thereto and all
proceeds thereof The Trustee shall execute such documents and instruments of
transfer or assignment as shall be prepared by the Transferor, and shall take
such other actions as shall reasonably be requested by the Transferor, to
effect the conveyance of such Reconveyed Receivable pursuant to this Section.
The obligation of the Transferor set forth in this Section, or the automatic
removal of such Receivable from the Trust, as the case may be, shall
constitute the sole remedy respecting any breach of the representations and
warranties set forth in the above referenced Section with respect to such
Receivable available to the Investor Certificateholders, the Holder of the
Variable Funding Certificate or the Trustee on behalf of the Investor
Certificateholders or such Holder.
(d) Reassignment of Trust Portfolio. In the event of a
breach of any of the representations and warranties set forth in
subsections 2.03(a), (b), (c) or (d) or subsection 2.04(a)(i) with respect
to any Series, any of the Trustee, the Holder of the Variable Funding
Certificate or the Holders of Investor Certificates evidencing Undivided
Interests aggregating more than 50% of the Aggregate Invested Amount of
such Series, by notice then given in writing to the Transferor (with a copy
thereof to the Rating Agencies) and to the Trustee and the Servicer (if
given by the Investor Certificateholders or the Holder of the Variable
Funding Certificate), may direct the Transferor to accept reassignment of
an amount of Principal Receivables equal to the face amount of the Invested
Amount and/or Issuer Amount to be repurchased (as specified below) within
60 days of such notice, and the Transferor shall be obligated to accept
reassignment of such Principal Receivables on a Payment Date specified by
the Transferor (such Payment Date, the "Reassignment Date") occurring
within such applicable period on the terms and conditions set forth below;
provided, however, that no such reassignment shall be required to be made
if, at any time during such applicable period, the Servicer shall provide
the Trustee with an Officer's Certificate to the effect that the
representations and warranties contained in subsections 2.03(a), (b), (c)
and (d) and subsection 2.04(a)(i) shall then be true and correct in all
material respects. The Transferor shall, on the Business Day immediately
preceding the Reassignment Date, deposit an amount (in next day funds)
equal to the reassignment deposit amount for such Series and/or the
Variable Funding Certificate in the Collection Account, as provided in the
related Supplement, for distribution to the Investor Certificateholders
and/or to the Holder of the Variable Funding Certificate pursuant to
Article XII. The reassignment deposit amount with respect to any Series
and/or the Variable Funding Certificate, unless otherwise stated in the
related Supplement, shall be equal to (i) the Invested Amount of such
Series and/or the Issuer Amount at the end of the Record Date preceding the
Reassignment Date; plus (ii) an amount equal to all interest accrued but
unpaid on the Investor Certificates of such Series at the applicable
Certificate Rate and/or on the Variable Funding Certificate through the
Record Date for the Payment Date on which the distribution of such deposit
is scheduled to be made pursuant to Section 12.03, less the amount, if any,
previously allocated for payment of interest to the Certificateholders of
such Series and/or to the Holder of the Variable Funding Certificate on the
related Payment Date in the month in which the Reassignment Date occurs
provided, however, any such payment made with respect to the Variable
Funding Certificate shall also include such additional amounts, if any,
necessary to pay the Interest Component of all Outstanding Commercial Paper
of the CP Issuer maturing subsequent to such Reassignment Date. Payment of
the reassignment deposit amount with respect to any Series, and/or on the
Variable Funding Certificate, and all other amounts in the Collection
Account, shall be considered a prepayment in full of the Receivables
represented by the Investor Certificates of such Series and/or the Variable
Funding Certificate. On the Payment Date following the date on which such
amount has been deposited in full into the Collection Account, the
Receivables and all monies due or to become due with respect thereto and
all proceeds of the Receivables allocated to the Receivables pursuant to
the related Supplement shall be released to the Transferor after payment of
all amounts otherwise due hereunder on or prior to such dates and the
Trustee shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, representation or warranty, as
shall be prepared by and as are reasonably requested by the Transferor to
vest in the Transferor, or its designee or assignee, all right, title and
interest of the Trust in and to such Receivables, all monies due or to
become due with respect thereto and all proceeds of such Receivables
allocated to such Receivables pursuant to the related Supplement. If the
Trustee or the Investor Certificate holders of any Series and/or the Holder
of the Variable Funding Certificate give(s) notice directing the Transferor
to accept reassignment as provided above, the obligation of the Transferor
to accept reassignment of the applicable Receivables and pay the
reassignment deposit amount pursuant to this subsection 2.04(d) shall
constitute the sole remedy respecting a breach of the representations and
warranties contained in subsections 2.03(a), (b), (c) and (d) and
2.04(a)(i) available to the Investor Certificateholders of such Series
and/or the Holder of the Variable Funding Certificate or the Trustee on
behalf of the Investor Certificateholders of such Series and/or the Holder
of the Variable Funding Certificate. The Trustee shall have no duty to
conduct any affirmative investigation as to the occurrence of any condition
requiring the repurchase of any Receivable by the Transfer pursuant to
this Agreement or any Supplement or the eligibility of any Receivable for
purposes of this Agreement or any Supplement.
Section 2.05 [Reserved].
Section 2.06 Covenants of the Transferor. During the term of this
Agreement, and until (i) the Invested Amount and the Issuer Amount are
reduced to zero, (ii) the Investor Certificateholders and the Holder of the
Variable Funding Certificate shall have received all accrued interest on
the applicable Certificate, and (iii) all amounts owed by the Transferor
pursuant to this Agreement have been paid, the Transferor covenants and
agrees as follows:
(a) Compliance with Laws, etc. The Transferor shall duly satisfy
all obligations on its part to be fulfilled under or in connection with the
Receivables, will maintain in effect all qualifications required under
Requirements of Law in order to properly purchase and convey the
Receivables and other Trust Assets and will comply in all material respects
with all Requirements of Law in connection with purchasing and conveying
the Receivables the failure to comply with which would have a material
adverse effect on the Trust or its interests in the Receivables.
(b) Preservation of Corporate Existence. The Transferor (i)
shall preserve and maintain its corporate existence, rights, franchises and
privileges in the jurisdiction of its incorporation and (ii) shall 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 would, if not remedied,
materially adversely affect the interests of the Holder of the Variable
Funding Certificate and the Investor Certificateholders hereunder or in the
Receivables, or the ability of the Transferor or the Servicer to perform
its obligations hereunder in the case of (ii) and where such failure shall
remain unremedied for a period of 30 days or such failure shall have a
material adverse effect on the interests of the Trust or the
Certificateholders or the Trust's interests in the Receivables, or the
ability of the Transferor or the Servicer to perform its obligations
hereunder.
(c) Audits. At any time and from time to time during the
Transferor's regular business hours, on reasonable prior notice and for a
purpose reasonably related to this Agreement, the Transferor shall, in
response to any reasonable request of the Trustee, permit the Trustee, or
its agents or representatives, (i) to examine 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 Transferor relating to the Receivables, the Related Security
and the related Contracts and (ii) to visit the offices and properties of
the Transferor for the purpose of examining such materials and to discuss
matters relating to the Receivables or the Transferor's performance
hereunder with any of the officers or employees of the Transferor having
knowledge thereof. Any such examination or visit made pursuant to this
Section 2.06(c) shall be at the cost and expense of the party or parties
making such examination or visit.
(d) Continuous Perfection. The Transferor shall not change
its name, identity or structure in any manner which might make any
financing or continuation statement filed hereunder misleading within the
meaning of Section 9-402(7) of the UCC (or any other then applicable
provision of the UCC) unless the Transferor shall have given the Trustee at
least 90 days' prior written notice thereof and shall have taken all action
60 days prior to making such change (or made arrangements to take such
action substantially simultaneously with such change if it is impossible to
take such action in advance) necessary or advisable to amend such financing
statement or continuation statement so that it is not misleading. The
Transferor shall not change its chief executive office or change the
location of its principal records concerning the Receivables, the Related
Security or the Collections from the locations specified in Section 2.03(i)
unless it has given the Trustee at least 60 days' prior written notice of
its intention to do so and has taken such action as is necessary or
advisable to cause the interest of the Trustee in the Receivables and the
other Trust Assets to continue to be perfected with the priority required
by this Agreement. The Transferor will at all times maintain its principal
executive office and any other office at which it maintains records
relating to the Receivables and the Related Security within the United
States of America. The Transferor shall provide notice to the Rating
Agencies confirming that WCC-1 financing statements to be filed within 10
days of the Initial Closing Date shall have been filed.
(e) Extension or Amendment of Receivables. The Transferor
shall not extend, amend or other wise modify the terms of any Receivable,
or amend, modify or waive any term or condition of any Contracts related
thereto in any manner which would have a material adverse effect on the
interests of the Certificateholders.
(f) Reports. The Transferor shall furnish to the Trustee and to
each Rating Agency as soon as possible and in any event within five
Business Days after the occurrence of each Event of Termination or the
Transferor's knowledge of a Prospective Event of Termination, the statement
of a senior financial officer of the Transferor setting forth the details
of such Event of Termination or Prospective Event of Termination and the
action taken, or which the Transferor proposes to take, with respect
thereto.
(g) Certain Documentation. The Transferor shall hold for
the account of the Trust (to the extent of its interest therein) any
document evidencing or securing a Receivable and the related Contract,
other than instruments (as such term is used in the WCC), if any, that
shall have been delivered to the Trustee contemporaneously with the
conveyance to the Trust hereunder. Such holding by the Transferor shall be
in trust and shall be deemed to be the holding thereof by the Trustee for
purposes of perfecting the Trust's rights therein as provided in the UCC.
(h) Assessments. The Transferor will promptly pay and discharge
all taxes, assessments, levies and other governmental charges imposed on it
which may adversely affect any of the Receivables or the Trust's rights with
respect thereto.
(i) Change in Lock-Box Banks or Instructions. The
Transferor may permit Ingram to add or terminate any bank as a Lock-Box
Bank from those listed in Exhibit K hereto, or make any change in the Lock-
Box Agreements or in its existing instructions to Obligors regarding
payments to be made to any Lock-Box Bank (so long as an Obligor remains
instructed to make payments on a Receivable to a Lock-Box Account and so
long as any such change shall not change the Transferor as the owner of the
Lock-Box Account), but in each case only upon written notice from Ingram to
the Trustee and the Transferor; provided that any bank, other than those
banks listed on Exhibit K hereto (including their successors), added as a
Lock-Box Bank shall have short-term debt ratings of A-1 by S&P and, if
rated by Fitch, F-1 by Fitch at the time it becomes a Lock-Box Bank or the
addition of such bank as a Lock-Box Bank shall have been consented to by
the Required Banks. The Transferor shall give notice to the Trustee of the
name and address of each additional Lock-Box Bank. In the event that the
Transferor or Ingram enters into a Lock-Box Agreement with a Lock-Box Bank
with respect to which the Transferor or Ingram had not entered into a Lock-
Box Agreement at the Initial Closing Date, the Transferor shall deliver, or
cause Ingram to deliver, to the Trustee a copy of the executed Lock-Box
Agreement prior to instructing any Obligors to make payment to such Lock-
Box Bank. The Transferor shall provide notice to the Rating Agencies
confirming that all Lock-Box Agreements have been amended to name the
Transferor as the party thereto within 30 days of the Initial Closing Date.
(j) Further Action. The Transferor shall, from time to
time, execute and deliver to the Trustee any instruments, financing or
continuation statements or other writings reasonably necessary or
desirable to maintain the perfection or priority of the Trustee's ownership
or security interest in the Receivables, the Related Security and the
Collections under the UCC or other applicable law. The Transferor shall,
from time to time, execute and deliver to the Obligors on the Receivables
any bills, statements and letters or other writings necessary to carry out
the terms and provisions of this Agreement and to facilitate the collection
of the Receivables.
(k) Additional Indebtedness. The Transferor shall not
create, incur, assume or suffer to exist any indebtedness (including,
without limitation, any guaranty) or expense (whether or not accounted for
as a liability) except (i) indebtedness hereunder, under the Purchase
Agreement, the Investor Certificates, the Variable Funding Certificate, or
any agreements, contracts or instruments which relate thereto, (ii)
indebtedness or other expense to its professional advisers and its counsel,
not exceeding $50,000, (iii) where that Person to whom such indebtedness or
expense will be owing has delivered to the Transferor an undertaking that
it will not institute against, or join any other Person in instituting
against, the Transferor any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding, or other proceeding under any federal
or state bankruptcy or similar law, for one year and a day after the
Variable Funding Certificate and all Investor Certificates are paid in
full, and (iv) other indebtedness and expenses, not exceeding $4,750 at any
one time outstanding, on account of incidentals or services supplied or
furnished to the Transferor; provided, that the obligations of the
Transferor to Certificateholders hereunder, solely with respect to the
payment of interest and the repayment of principal under such Certificate,
shall be payable solely from the Trust Assets in accordance herewith and
the Certificateholders shall not look to any other property or assets of
the Transferor in respect of such obligations and such obligations shall
not constitute a claim against the Transferor in the event that the Trust
Assets are insufficient to pay in full such interest and principal;
provided, that the obligations of the Transferor to Certificateholders
hereunder with respect to amounts other than interest and principal under
the Certificates shall be payable from the Trust Assets or any other assets
of the Transferor, except that all such obligations of the Transferor to
Certificateholders shall be suspended at any time that, and for so long as,
the Transferor's assets are insufficient to pay in full such obligations,
and that all such obligations are fully subordinated to the Transferor's
obligations with respect to the payment of interest and principal under the
Investor Certificates and the Variable Funding Certificate, and the
security interest of the Trustee in the Trust Assets with respect to such
interest and principal obligations.
(l) No Transfer. The Transferor agrees that it shall not
sell, assign, pledge, convey or otherwise transfer any Receivable or any
interest therein or any other Trust Asset, except for the transfer of the
Trust Assets to the Trust as provided herein, and shall defend and hold
harmless the Trustee from any Adverse Claim in or to any Eligible
Receivable, except to the extent the Transferor is otherwise required to
repurchase such Receivable hereunder.
(m) No Other Business. The Transferor agrees to engage in no
business other than the business contemplated hereunder and under the Purchase
Agreement without the prior written confirmation from each Rating Agency that
such change in business will not result in such Rating Agency reducing or
withdrawing its rating on any outstanding Series or the Commercial Paper.
(n) Enforcement and No Modification of Purchase Agreement. The
Transferor agrees to take all action necessary and appropriate to enforce
its rights and claims under the Purchase Agreement. The Transferor agrees
not to amend or modify the Purchase Agreement without the prior written
consent of the Holder of the Variable Funding Certificate and the Holders
of Investor Certificates evidencing fractional undivided interests
aggregating not less than 65% of the Invested Amount and without the prior
written confirmation from each Rating Agency that such amendment will not
result in such Rating Agency reducing or withdrawing its rating on any
outstanding Series or the Commercial Paper.
(o) Separate Business. The Transferor shall at all times (a) to
the extent the Transferor's office is located in the offices of Ingram or any
Affiliate of Ingram, pay fair market rent for its executive office space
located in the offices of Ingram or any Affiliate of Ingram, (b) maintain the
Transferor's books, financial statements, accounting records and other
corporate documents and records separate from those of Ingram or any other
entity, (c) not commingle the Transferor's assets with those of Ingram or any
other entity; provided that the foregoing restriction shall not preclude the
Transferor from lending its excess cash balances to Ingram for investment
(which may include inter-affiliate loans made by Ingram) by Ingram on a pooled
basis as part of the cash management system maintained by Ingram for its
consolidated group so long as all such transactions are properly reflected on
the books and records of the Transferor and Ingram, (d) act solely in its
corporate name and through its own authorized officers and agents, (e) make
investments directly or by brokers engaged and paid by the Transferor or its
agents (provided that if any such agent is an Affiliate of the Transferor it
shall be compensated at a fair market rate for its services), (f)
separately manage the Transferor's liabilities from those of Ingram or any
affiliates of Ingram and pay its own liabilities, including all
administrative expenses, from its own separate assets, except that Ingram
may pay the organizational expenses of the Transferor, and (g) pay from the
Transferor's assets all obligations and indebtedness of any kind incurred
by the Transferor. The Transferor shall abide by all corporate
formalities, including the maintenance of current minute books, and the
Transferor shall cause its financial statements to be prepared in
accordance with generally accepted accounting principles in a manner that
indicates the separate existence of the Transferor and its assets and
liabilities. The Transferor shall (i) pay all its liabilities, (ii) not
assume the liabilities of Ingram or any affiliate of Ingram, and (iii) not
guarantee the liabilities of Ingram or any affiliates of Ingram. The
officers and directors of the Transferor (as appropriate) shall make
decisions with respect to the business and daily operations of the
Transferor independent of and not dictated by any con trolling entity.
(p) Corporate Documents. The Transferor shall not amend, alter,
change or repeal Articles III, V, IX, XI, XII and XIII of its Certificate of
Incorporation without the prior written consent of each of its Independent
Directors and the Trustee and without the prior written confirmation by each
Rating Agency that such amendment will not result in such Rating Agency
reducing or withdrawing its rating on any outstanding Series or on the
Commercial Paper.
(q) Designated Subsidiaries. From and after the Initial Closing
Date, the Transferor shall not consent to the designation of additional
Designated Subsidiaries by Ingram without the prior written consent of the
Required Banks.
(r) ERISA. The Transferor shall promptly give the Trustee notice
of the following events, as soon as possible and in any event within 30 days
after the Transferor or any of its ERISA Affiliates knows or has reason to
know thereof: (i) the occurrence or expected occurrence of any Reportable
Event with respect to any Plan to which the Transferor or any of its ERISA
Affiliates contributed, or any withdrawal from, or the termination,
Reorganization or Insolvency of any Multiemployer Plan to which the Transferor
or any of its ERISA Affiliates contributes or to which contributions have
been required to be made by the Transferor or such ERISA Affiliate during
the preceding five years or (ii) the institution of proceedings or the
taking of any other action by the PBGC or the Transferor or any of its
ERISA Affiliates or any such Multiemployer Plan with respect to the
withdrawal from, or the termination, Reorganization or Insolvency of, any
such Plan or Multiemployer Plan.
(s) Purchase Agreement Notices, Waivers, Etc. The
Transferor (i) shall promptly give the Trustee copies of any notices,
reports or certificates given or delivered to the Transferor under the
Purchase Agreement and (ii) shall not, without the prior consent of the
Holder of the Variable Funding Certificate and Holders of Investor
Certificates evidencing fractional undivided interests aggregating not less
than 65% of the Invested Amount, enter into any amendment, supplement or
other modification to, or waiver of any provision of, the Purchase
Agreement or consent to the addition of a Designated Subsidiary thereunder.
(t) Payments from Lock-Box Accounts. The Transferor,
promptly on the Business Day on which any Collections deposited into the
Lock-Box Accounts shall have become good available funds, shall remit or
cause to be remitted such Collections to the Collection Account.
Section 2.07 Authentication of Certificates. Pursuant to the request
of the Transferor, the Trustee has caused Certificates in authorized
denominations evidencing the entire beneficial ownership of the Trust to be
duly authenticated and delivered to or upon the order of the Transferor
pursuant to Section 6.02.
Section 2.08. Tax Treatment. The Transferor has entered into this
Agreement, and the Variable Funding Certificate and the Investor
Certificates have been (or will be) issued, with the intention that such
Investor Certificates and Variable Funding Certificate will qualify under
applicable tax law as indebtedness of the Transferor. The Transferor, the
Holder of the Variable Funding Certificate, each Investor Certificateholder
by acceptance of its Investor Certificate and each Certificate Owner by
acquiring an interest in an Investor Certificate agrees to treat the
Variable Funding Certificate or the Investor Certificates, as the case may
be, as indebtedness of the Transferor, for purposes of federal, state
and local income or franchise taxes and for any other tax imposed on or
measured by income. In accordance with the foregoing, the Transferor agrees
that it will report its income for such federal, state, and local income or
franchise taxes, or for other taxes on or measured by income, on the basis
that it is the owner of the Receivables. Furthermore, the Trustee hereby
agrees to treat the Trust as a security device only, and shall not file tax
returns or obtain an employer identification number on behalf of the Trust.
Section 2.09 Cancellation of the Certificates of any Series. The
Transferor may acquire any Certificate of any Series and deliver it to the
Trustee for cancellation under this Section. Upon such delivery, the
Trustee shall cancel such Investor Certificate as provided in Section
12.03(c). As a result of such delivery and cancellation, the Transferor
Amount shall be increased by the principal amount of such Investor
Certificate and the Invested Percentages with respect to such Series, the
Minimum Aggregate Principal Receivables and any other defined term herein
or in the applicable Supplement, the definition of which depends upon an
assumption that such Investor Certificate had been issued as a part of such
Series, shall be recomputed on the basis of the assumption that such
Investor Certificate had not been issued as part of such Series. Upon such
delivery, such Certificate shall be accompanied by an Officer's Certificate
of the Transferor stating the recomputed amounts of the defined terms
referred to in the preceding sentence.
Section 2.10 Transferor Minimum Amount; Minimum Adjusted Eligible
Principal Receivables. If, with respect to any Series or the Variable
Funding Certificate, on any Business Day (A) the Transferor Eligible
Amount as of the end of the preceding Business Day is less than the
Transferor Minimum Amount for such preceding Business Day or (B) the
Adjusted Eligible Principal Receivables as of the end of the preceding
Business Day are less than the Minimum Adjusted Eligible Principal
Receivables an of the end of such preceding Business Day, the Transferor
shall make or cause to be made a deposit in the Transferor Account in
immediately available funds by the close of business on the next Business
Day, in an amount equal to the Transferor Account Deposit Amount.
[END OF ARTICLE II]
ARTICLE III
ADMINISTRATION AND SERVICING
OF RECEIVABLES
Section 3.01 Acceptance of Appointment and Other Matters Relating to the
Servicer.
(a) Ingram agrees to act, and is hereby appointed by the Trustee
and the Transferor to act, as the Servicer under this Agreement, and all
Certificate holders, including the Transferor, by their acceptance of the
Certificates consent to Ingram acting as Servicer. The Servicer shall
service and administer the Receivables and shall collect payments due under
the Receivables in accordance with its customary and usual servicing
procedures for servicing receivables owned by it and comparable to the
Receivables and in accordance with the Credit and Collection Policy and
shall have full power and authority, acting alone or through any party
properly designated by it hereunder, to do any and all things in connection
with such servicing and administration which it may deem necessary or
desirable; provided, however, that if Ingram is no longer the Servicer, the
Servicer shall service the Receivables in accordance with the standards
that would be employed by a prudent institution in servicing comparable
receivables for its own account. Without limiting the generality of the
foregoing and subject to Section 10.01, the Servicer is hereby authorized
and empowered (i) to instruct the Trustee to make withdrawals and payments
from the Collection Account as set forth in this Agreement or any
Supplement, (ii) to execute and deliver, on behalf of the Trust for the
benefit of the Certificateholders, any and all instruments of satisfaction
or cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Receivables and, after the
delinquency of any Receivable and to the extent permitted under and in
compliance with applicable law and regulations, to commence enforcement
proceedings with respect to such Receivable, and (iii) to make any filings,
reports, notices, applications, registrations with, and to seek any consent
or authorizations from, the Securities and Exchange Commission and any
state securities authority on behalf of the Trust as may be necessary or
advisable to comply with any federal or state securities or reporting
requirements or laws.
(b) The Servicer shall not, and no Successor Servicer shall,
be obligated to use separate servicing procedures, offices, employees or
accounts for servicing the Receivables from the procedures, offices,
employees and accounts used by the Servicer or such Successor Servicer, as
the case may be, in connection with servicing other receivables of the same
type.
(c) Each of the Transferor and the Trustee hereby appoints the
Servicer as its agent to enforce its respective rights and interest in and
under the Receivables, the related Contracts and the Related Security. If
Ingram is not the Servicer, Ingram shall promptly deliver to the Servicer, and
the Servicer shall hold in trust for the Transferor and the Trustee in
accordance with their respective interests, all documents, instruments and
records (including, without limitation, computer tapes or disks) that evidence
or relate to Receivables.
(d) Provided no Event of Termination shall have occurred and be
continuing, the Servicer may, in accordance with the Credit and Collection
Policy, (i) extend the maturity or adjust the Unpaid Balance of any Receivable
as the Servicer may determine to be appropriate to maximize Collections
thereof and (ii) adjust the Unpaid Balance of any Receivable to reflect
Credits.
(e) Except to the extent that, in accordance with the
Credit and Collection Policy, Credits may be applied toward future
purchases and not as a reduction of the Unpaid Balance of an existing
Receivable, or to the extent that Collections on Receivables that are not
Eligible Receivables or are in excess of the Concentration Limit are deemed
to be Collections on Adjusted Eligible Receivables or as otherwise required
by law, Credits and Collections shall be applied to the Receivables to
which they relate.
(f) The Servicer shall provide all reports and documentation
required by Section 3.04.
(g) In the event that the Transferor is unable for any
reason to transfer Receivables to the Trust in accordance with the
provisions of this Agreement (including, without limitation, by reason of
any court of competent jurisdiction ordering that the Transferor not
transfer any additional Receivables to the Trust) then, in any such event,
(A) the Servicer agrees to allocate and pay to the Trust, after the date of
such inability, all Collections with respect to Receivables transferred to
the Trust prior to the occurrence of such event, and all amounts that would
have constituted Collections with respect to accounts receivable that would
have been Receivables but for the Transferor's inability to transfer such
accounts receivable to the Trust (up to an aggregate amount equal to the
amount of Receivables in the Trust as of such date); and (B) the Servicer
agrees to have such amounts applied as Collections in accordance with
Section 4.03. For the purpose of the immediately preceding sentence of
this Section 3.01(g), unless otherwise specifically directed by the
Obligor, the Servicer shall treat the first received Collections with
respect to the Receivables as allocable to the Trust for the benefit of all
Certificateholders until the Trust shall have been allocated and paid
Collections in an amount sufficient to pay the aggregate amount of
Receivables in the Trust as of the date of occurrence of such event.
(h) Obligors shall be instructed by the Transferor, the Servicer
or a Designated Subsidiary to make all payments on the Receivables to Lock-Box
Accounts maintained by Lock-Box Banks pursuant to Lock-Box Agreements and
all Collections on Receivables of amounts due and owing will, pending
remittance by the Servicer to the Collection Account, be held for the
benefit of the Trust and shall be payable to the Collection Account not
later than the Business Day on which funds are available following receipt
thereof. Any payments on the Receivables made by Obligors directly to the
Servicer shall be mailed by the Servicer to the appropriate Lock-Box Bank
not later than the Business Day following receipt thereof or shall be
deposited in the Collection Account not later than the Business Day
following the date on which funds are available.
Section 3.02 Servicinq Compensation. As compensation for its
servicing activities hereunder and reimbursement for its expenses as set
forth in the immediately following paragraph, the Servicer shall be
entitled to receive a servicing fee in respect of each day prior to the
termination of the Trust pursuant to Section 12.01 (the "Servicing Fee"),
payable in arrears on each date specified in the applicable Supplement,
equal to the product of (i) a fraction, the numerator of which is the
actual number of days in the measuring period specified in the applicable
Supplement and the denominator of which is the actual number of days in the
year, (ii) the weighted average Servicing Fee Percentage (based upon the
Servicing Fee Percentage for each Certificate and the Principal Receivables
allocated thereto) and (iii) the daily average aggregate Unpaid Balances of
all Principal Receivables over the term of such measuring period. The
share of the Servicing Fee allocable to each Series or the Variable Funding
Certificate with respect to any date of payment shall be equal to the
product of (i) a fraction, the numerator of which is the actual number of
days in the measuring period specified in the applicable Supplement and the
denominator of which is the actual number of days in the year, (ii) the
applicable Servicing Fee Percentage for such Series or the Variable Funding
Certificate and (iii) the Issuer Amount or the Invested Amount of such
Series, as appropriate, as of the date of determination for such payment as
specified in the applicable Supplement. The remainder of the Servicing Fee
shall be paid by the Transferor, or retained by the Servicer as provided in
Article IV, and in no event shall the Trust, the Trustee or the Investor
Certificateholders be liable for the share of the Servicing Fee to be paid
by the Transferor. Any Servicing Fees shall be payable to the Servicer
solely pursuant to the terms of, and to the extent amounts are available
for payment as provided in, Section 4.04 as set forth in the Supplement
relating to any Series and Section 4.05 as set forth in the Variable
Funding Supplement. In the event a Successor Servicer is appointed
pursuant to Section 10.02 hereto, the Servicing Fee with respect to such
Successor Servicer shall, unless otherwise agreed, be at least 0.25% per
annum of the daily average Unpaid Balances of the Receivables.
The Servicer's expenses include the amounts due to the Trustee pursuant
to Section 11.05, the reasonable fees and disbursements of independent
accountants, all other expenses incurred by the Servicer in connection with
its activities hereunder, and all other fees and expenses of the Trust not
expressly stated herein to be for the account of the Certificateholders;
provided that in no event shall the Servicer be liable for any federal, state
or local income or franchise tax, or any interest or penalties with respect
thereto, assessed on the Trust, the Trustee or the Certificateholders except
as expressly provided herein. In the event that the Servicer fails to pay
the amounts due to the Trustee pursuant to Section 11.05, the Trustee shall
be entitled to deduct and re ceive such amounts from the Servicing Fee,
prior to the payment thereof to the Servicer. The Servicer shall be
required to pay expenses for its own account and shall not be entitled to
any payment or reimbursement therefor other than the Servicing Fee.
Section 3.03 Representations, Warranties and Covenants of the
Servicer. Ingram, as initial Servicer, and any Successor Servicer by its
appointment hereunder, hereby represent and warrant, in the case of the
initial Servicer, as of the Initial Closing Date and, with respect to any
Series and the Variable Funding Certificate as of the date of any
Supplement and the related Closing Date, and in the case of any Successor
Servicer, as of the date of its appointment and, with respect to any Series
issued after such date, as of the date of the related Supplement and the
related Closing Date, in each case unless otherwise stated in such
Supplement, and covenant (except that no representation, warranty or
covenant is made by any Successor Servicer with respect to paragraphs (l),
(o) and (q) below):
(a) Organization and Good Standing. The Servicer is a
corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation, and has full corporate power, authority
and legal right to execute, deliver and perform its obligations under this
Agreement and any Supplement and, in all material respects, to own its
property and conduct its business as such properties are presently owned and
as such business is presently conducted.
(b) Due Qualification. The Servicer is duly qualified to do
business and is in good standing as a foreign corporation (or is exempt from
such requirements), and has obtained all necessary licenses and approvals in
each jurisdiction in which the failure to obtain such license or approval
would have a material adverse affect upon the Certificateholders or upon the
ability of the Servicer to perform its obligations under this Agreement.
(c) Due Authorization. The execution, delivery and
performance of this Agreement and any Supplement, and the consummation or
the transactions provided in this Agreement and any Supplement, have been
duly authorized by the Servicer by all necessary corporate action on the
part of the Servicer.
(d) Binding Obligation. Each of this Agreement and any
Supplement constitute legal, valid and binding obligations of the Servicer,
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereinafter in effect, relating to the
enforcement of creditors' rights in general and, with respect to any
Successor Servicer which is a national banking association, the rights of
creditors of national banks under United States law and except as such
enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity).
(e) No Violation. The execution and delivery of this
Agreement and any Supplement by the Servicer, and the performance of the
transactions contemplated by this Agreement and any Supplement and the
fulfillment of the terms hereof applicable to the Servicer, will not
conflict with, violate, result in any breach of any of the material terms
and provisions of, or constitute (with or without notice or lapse of time
or both) a default under, or require any consent, approval or registration
under, any Requirement of Law applicable to the Servicer or any indenture,
contract, agreement, mortgage, deed of trust or other instrument to which
the Servicer is a party or by which it is bound.
(f) No Proceeding. There are no proceedings or
investigations pending or, to the best knowledge of the Servicer,
threatened against the Servicer before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality (i)
seeking to prevent the issuance of the Certificates or the consummation of
any of the transactions contemplated by this Agreement or any Supplement,
(ii) seeking any determination or ruling that, in the reasonable judgment
of the Servicer, would materially and adversely affect the performance by
the Servicer of its obligations under this Agreement or any Supplement, or
(iii) seeking any determination or ruling that would materially and
adversely affect the validity or enforceability of this Agreement or any
Supplement.
(g) Compliance with Requirements of Law. The Servicer shall
duly satisfy all obligations on its part to be fulfilled under or in
connection with the Receivables and the Related Security, will maintain in
effect all qualifications required under Requirements of Law in order to
service properly the Receivables and the Related Security and will comply
in all material respects with all Requirements of Law in connection with
servicing the Receivables and the Related Security the failure to comply
with which would have a material adverse effect on Certificateholders.
(h) No Rescission or Cancellation. The Servicer shall not
permit any rescission or cancellation of a Receivable or a Contract except
(i) as ordered by a court of competent jurisdiction or other Governmental
Authority or (ii) in the ordinary course of its business and in accordance
with the Credit and Collection Policy.
(i) Protection of Certificateholders' Rights. Except as
contemplated by Section 3.01(d), the Servicer shall take no action which, nor
omit to take any action the omission of which, would substantially impair the
rights of Certificateholders in any Receivable or the Related Security.
(j) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person or of any Governmental
Authority required in connection with the execution and delivery by the
Servicer of this Agreement and any Supplement, the performance by the
Servicer of the transactions contemplated by this Agreement and any
Supplement and the fulfillment by the Servicer of the terms hereof and
thereof, have been obtained; provided, however, that the Servicer makes no
representation or warranty regarding state securities or "blue sky" laws in
connection with the distribution of the Certificates.
(k) Credit and Collection Policy. The Servicer, (i) except as
otherwise permitted in Section 3.01(d), shall not extend, amend or otherwise
modify the terms of any Receivable, or amend, modify or waive any term or
condition of any Contract related thereto, in any manner which would have a
material adverse effect on the interests of the Certificateholders or the
Trust, including, but not limited to, extending the due dates, or impairing
the collectibility of the Receivables, (ii) if Ingram, shall comply in all
material respects with the Credit and Collection Policy in regard to each
Receivable and the related Contract, and (iii) if Ingram, shall not without
the prior consent of the Required Banks make any change in the Credit and
Collection Policy that could reasonably be expected to have a material
adverse effect on the collectibility of the Receivables taken as a whole,
or the ability of the Servicer to perform its obligations hereunder.
(1) No Change in Ability to Service. With respect to the initial
Servicer only, since September 30, 1992, there has been no material adverse
change in the ability of the Servicer to service and collect the
Receivables and the Related Security.
(m) Modification of Systems. The Servicer agrees, promptly
after the replacement or any material modification of any computer,
automation or other operating systems (in respect of hardware or software)
used to provide the Servicer's services as Servicer or to make any
calculations or reports hereunder, to give notice of any such replacement
or modification to the Trustee.
(n) Business Days. No later than December 1 of each year, the
Servicer shall furnish the Trustee with a list of days other than Saturday and
Sunday, on which the Servicer shall be closed during the immediately
succeeding year, except that with respect to the calendar year 1993, the
Servicer shall furnish such list to the Trustee on or before the Initial
Closing Date.
(o) Payments from Lock-Box Accounts. The Servicer or, if Ingram
is no longer the Servicer, Ingram, shall (i) on or prior to the Initial
Closing Date, cause each party to a Lock-Box Agreement (other than the
Lock-Box Banks parties to such agreements) to direct each Lock-Box Bank to
make payments to Lock-Box Accounts maintained in the name of, and under the
sole control, dominion and ownership of the Transferor; and (ii) within 30
days after the Initial Closing Date, cause each party to a Lock-Box
Agreement, to amend each such Lock-Box Agreement to substitute Funding as
the party thereto.
(p) Keeping of Records and Books of Account. The Servicer shall
maintain and implement administrative and operating procedures (including,
without limitation, the ability to recreate records evidencing the
Receivables in the event of the destruction of the originals thereof), and
keep and maintain all documents, books, microfiche, computer records and
other information reasonably necessary or advisable for the collection of
all the Receivables and the Related Security. Such books, microfiche, and
computer records shall reflect all facts giving rise to the Receivables and
the Related Security, all payments and credits with respect thereto, and
the computer records shall be clearly marked to show the interests of the
Trust in the Receivables.
(q) Performance and Compliance with Ingram's Contracts. The
Servicer shall or, if Ingram is no longer the Servicer, Ingram shall timely
and fully perform and comply with all material provisions, cove
nants and other promises required to be observed by it under the Contracts
related to the Receivables.
(r) No Servicer Default. No Servicer Default has occurred or is
continuing.
(s) No Event of Termination. No Event of Termination has
occurred or is continuing.
(t) Change in Separate Receivables System. The Servicer, or if
Ingram is no longer the Servicer, Ingram, shall maintain separate books and
computer coding systems with respect to Receivables generated by the Ingram
Book Company division of Ingram and receivables generated by any other
division of Ingram.
In the event there is any breach of any of the representations,
warranties or covenants of the Servicer contained in Section 3.03(g), (h), (i)
or (o) with respect to any Receivable and as a result thereof the rights of
the Trust in, to or under any such Receivable or its proceeds are impaired or
the proceeds of any such Receivable are not available to the Trust, then upon
the expiration of 30 days from the earlier to occur of the discovery of any
such event by the Servicer, or receipt by the Servicer of written notice of
such event given by the Trustee (such notice to be given within three Business
Days of the discovery thereof by a Responsible Officer of the Trustee), the
Servicer shall accept the trans fer of all the Receivables as to which such
event relates on the terms and conditions set forth below; provided,
however, that proceeds shall not be deemed to be impaired hereunder for the
sole reason that the proceeds are held by the Servicer for more than the
applicable period under Section 9-306(3) of the UCC; provided, further,
that no such removal shall be required to be made with respect to a
Receivable if, within such 30-day period, such representations, warranties
or covenants with respect to such Receivable shall be true and correct or
shall have been complied with, in all material respects; and provided,
further, that no Successor Servicer shall have any obligation to repurchase
any Receivable as a result of any breach of the representations, warranties
or covenants set forth in Section 3.03(o). The Servicer or, with respect
to Section 3.03(o), if Ingram is not the Servicer, Ingram shall accept the
transfer of a Receivable and the Related Security and Collections with
respect thereto by making or causing to be made a deposit into the
Collection Account in immediately available funds on or prior to the
Transfer Date following the expiration of the 30-day period set-forth in
this Section in an amount equal to the Transfer Deposit Amount for such
Receivables, which deposit shall be allocated in accordance with Section
4.03. Upon each such transfer of a Receivable to the Servicer, the Trustee
shall automatically and without further action be deemed to transfer,
assign, and set over, and otherwise convey to or upon the order of the
Servicer, without recourse, representation or warranty, all right, title
and interest of the Trust in and to such Receivable, the Related Security
and Collections with respect thereto and all proceeds thereof; and such
Receivable shall be treated by the Trustee as collected in full as of the
Settlement Period to which such Transfer Deposit Amount relates. The
Trustee shall execute such documents and instruments of transfer or
assignment as shall be prepared by the Servicer, and shall take such other
actions as shall be reasonably requested by the Servicer, to effect the
.onveyance of any Receivable pursuant to this Section. The obligation of
the Servicer to accept the transfer of any such Receivables, the Related
Security and Collections shall constitute the sole remedy respecting any
breach of the representations, warranties and covenants set forth in
Section 3.03(g), (h), (i) or (o) with respect to such Receivables, the
Related Security and Collections available to Certificateholders or the
Trustee on behalf of Certificateholders.
Section 3.04 Reports and Records for the Trustee. Bank Account
Statements.
(a) Daily Records. Upon reasonable prior notice by the Trustee,
the Servicer shall make available at an office of the Servicer selected by the
Servicer for inspection by the Trustee or its agent on a Business Day during
the Servicer's normal business hours a record setting forth (i) the
Collections on each Receivable and (ii) the amount of Receivables for the
Business Day preceding the date of the inspection. The Servicer shall, at all
times, maintain its computer files with respect to the Receivables in such a
manner so that the Receivables may be specifically identified and, upon
reasonable prior request of the Trustee, shall make available to the Trustee,
at an office of the Servicer selected by the Servicer, on any Business Day
during the Servicer's normal business hours any computer programs necessary to
make such identification.
(b) Daily Report.
(i) On each Business Day, the Servicer shall prepare, or, if
Ingram is not the Servicer, Ingram shall prepare on behalf of the Successor
Servicer, a completed Daily Report.
(ii) The Servicer (or if Ingram is not the Servicer, Ingram)
shall deliver to the Trustee (with copies to the Depositary and the Collateral
Agent if either of such Persons is not also the Trustee) the Daily Report by
10:00 a.m. (New York City time) on each Business Day with respect to activity
in the Receivables for the prior Business Day (or, in the case of a Daily
Report delivered on the second Business Day following a Saturday, Sunday or
other non-Business Day, the aggregate activity for the preceding Business Day
and such non-Business Days).
(iii) Upon discovery of any error or receipt of notice of any
error in any Daily Report, the Servicer, Ingram (if not the Servicer), the
Transferor and the Trustee shall arrange to confer and shall agree upon any
adjustments necessary to correct any such errors. Until correction of such
error, the Servicer or the Trustee, as the case may be, shall retain all
Collections (or such lesser amount as the Trustee and the Servicer shall
agree to be necessary to cover any error) in the Collection Account.
Unless the Trustee has received written notice of any discrepancy, the
Trustee may rely on each Daily Report delivered to it for all purposes
hereunder.
(c) Settlement Statement. On each Determination Date, the
Servicer shall, or if Ingram is not the Servicer, the Successor Servicer shall
with information provided by Ingram, perform the calculations to be made on
such Determination Date and reported on the related Settlement Statement
and, prior to 10:00 a.m. (New York City time) on the Settlement Date,
deliver to the Trustee (with copies to the Depositary and the Collateral
Agent if either of such Persons is not also the Trustee), the Rating
Agencies and Ingram (if prepared by a Successor Servicer), the Settlement
Statement for the related Settlement Period.
Section 3.05 Annual Servicer's Certificate. The Servicer will deliver to
the Trustee and the Rating Agencies on or before April 30 of each calendar
year, beginning with April 30, 1994, an Officers' Certificate substantially in
the form of Exhibit F stating that (a) a review of the activities of the
Servicer during the preceding fiscal year of the Servicer (or shorter period
from the Initial Closing Date) and of its performance under this Agreement and
any Supplement was made under the supervision of the officers signing such
certificate and (b) to the best of such officers' knowledge, based on such
review, the Servicer has fully performed or has caused to be fully performed
all of its obligations under this Agreement and any Supplement throughout such
year, or, if there has been a default in the performance of any such
obligation, specifying each such default known to such officer and the nature
and status thereof. A copy of such certificate may be obtained by any
Certificateholder by a request in writing to the Trustee addressed to the
Corporate Trust Office.
Section 3.06 Annual Independent Public Accoun-tants' Servicing Report.
(a) On or before April 30 of each calendar year, beginning
with April 30, 1994, the Servicer shall cause a firm of nationally
recognized independent public accountants (who may also render other
services to the Servicer or the Transferor) to furnish a report (which
report shall cover the period from January 1 of the prior calendar year to
and including December 31 of such calendar year or such shorter period as
may have elapsed since the Initial Closing Date to and including December
31, 1993) addressed to the Board of Directors of the Transferor, providing
that such report also may be delivered to the Trustee and each Rating
Agency, to the effect that they have applied certain procedures agreed upon
with the Servicer and examined certain documents and records relating to
the servicing of Receivables under this Agreement, and that, based upon
such agreed-upon procedures, nothing has come to the attention of such
accountants that caused them to believe that the servicing (including,
without limitation, the allocation of Collections) has not been conducted
in compliance with the terms and conditions set forth in Sections 3.04,
4.02, 4.03, 4.04, 4.06, 4.07 and 12.01 of this Agreement and in compliance
with any Supplement, except for such exceptions as they believe to be
immaterial and such other exceptions as shall be set forth in such
statement. In addition, prior to the delivery of each such report, such
accountants shall set forth proposed procedures, subject to the reasonable
consent of the Liquidity Agent and the Trustee. A copy of such report may
be obtained by any Certificateholder by a request in writing to the Trustee
addressed to the Corporate Trust Office.
(b) On or before April 30 of each calendar year, beginning
with April 30, 1994, the Servicer shall cause a firm of nationally
recognized independent public accountants (who may also render other
services to the Servicer or the Transferor) to furnish a report to the
Trustee to the effect that they have compared the mathematical calculations
of each amount set forth in the Settlement Statements forwarded by the
Servicer pursuant to Section 3.04(c) during the period covered by such
report (which shall be the period from January 1 of the prior calendar year
to and including December 31 of such calendar year or such shorter period
as may have elapsed from the Initial Closing Date to and including December
31, 1993) with the Servicer's computer reports which were the source of
such amounts and that on the basis of such comparison, such accountants
have found that such amounts are in agreement, except for such exceptions
as they believe to be immaterial and such other exceptions as shall be set
forth in such statement. The Servicer shall promptly forward a copy of
such report to each Rating Agency. A copy of such report may be obtained
by any Certificateholder by a request in writing to the Trustee addressed
to the Corporate Trust Office.
Section 3.07 [Reserved].
Section 3.08 Notices to the Transferor. The Servicer shall deliver or
make available to the Transferor each certificate and report required to be
prepared, forwarded or delivered pursuant to Sections 3.04, 3.05 and 3.06.
Section 3.09 Credits. If the Unpaid Balance of any Receivable is adjusted
by the Servicer for any Credit, the Transferor Amount with respect to the
Business Day following the Business Day on which such adjustment takes
place will be reduced by the amount of the adjustment allocable to
Principal Receivables. In connection with such reduction, the amount of
Principal Receivables used in the denominator in the calculation of the
Invested Percentage with respect to any Series and the Issuer Percentage
for the Business Day following the Business Day on which such adjustment
occurs shall also be reduced. In the event that such adjustment would
cause the Transferor Eligible Amount to be less than the Transferor Minimum
Amount or would not be permitted by any Requirement of Law, the Transferor
shall make or cause to be made by the close of business on the Business Day
following the Business Day on which such adjustment occurs a deposit in the
Transferor Account in immediately available funds in the Transferor Account
Deposit Amount.
Section 3.10 Covenant to Maintain Privileges. The Servicer shall maintain
all of its rights, powers and privileges material to the collectibility of the
Receivables.
[END OF ARTICLE III]
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND ALLOCATION
AND APPLICATION OF COLLECTIONS
Section 4.01 Rights of Certificateholders. Each Series shall
represent an Undivided Interest in the Trust, and the right to receive
Collections and other amounts at the times and in the amounts specified in
this Article IV to be deposited in the Collection Account or paid to or on
behalf of the Investor Certificateholders (the "Investor Interest"). The
Variable Funding Certificate shall represent an Undivided Interest in the
Trust and the right to receive Collections and other amounts at the times
and in the amounts specified in this Article IV to be deposited in the
Collection Account or paid to or on behalf of the Holder of the Variable
Funding Certifi cate (the "Issuer Interest"). The Transferor Certificate
shall represent the remaining interest in the Trust, including the right to
receive Collections and other amounts at the times and in the amounts
specified in this Article IV to be paid to or on behalf of the Holder of
the Transferor Certificate (the "Transferor Interest"); provided, however,
that such certificate shall not represent any interest in the Collection
Account (except to the extent provided in this Agreement) and neither the
Transferor nor the Servicer shall have the right to withdraw funds from the
Collection Account or to receive funds on deposit therein except as and
when provided by this Agreement.
Section 4.02 Establishment of Collection Account and Transferor
Account.
(a) The Collection Account. The Trustee, for the benefit
of Certificateholders, including the Holder of the Variable Funding
Certificate, shall establish or shall cause to be established and
maintained with an Eligible Institution (which may be the Trustee) in the
name of the Trustee, on behalf of the Trust, a fully segregated trust
account which may be a sub-account of the Collateral Account with the trust
department of such institution (the "Collection Account"), bearing a
designation clearly indicating that the funds deposited therein are held
for the benefit of the Certificateholders. Except as provided in this
Agreement, the Collection Account shall be under the sole dominion and
control of the Trustee for the benefit of the Certificateholders.
If, at any time, the institution holding the Collection Account ceases to be
an Eligible Institution, the Trustee shall within 30 days of a Responsible
Officer learning of such event establish a new Collection Account meeting the
conditions specified above with an Eligible Institution, transfer any cash
and/or any investments to such new Collection Account and from the date such
new Collection Account is established, it shall be the "Collection Account".
Neither the Transferor nor the Servicer, nor any Person claiming by, through
or under the Transferor or Servicer, shall have any right, title or interest
in, or any right to withdraw any amount from, the Collection Account except
to the extent provided in this Agreement. Pursuant to the authority granted to
the the Servicer pursuant to Section 3.01(a), the Servicer shall have the
revocable power to instruct the Trustee to make withdrawals and payments from
the Collection Account for the purposes of carrying out the Servicer's duties
hereunder.
(b) The Transferor Account. The Trustee, for the benefit
of Certificateholders, including the Holder of the Variable Funding
Certificate, shall establish or shall cause to be established and
maintained with the same Eligible Institution maintaining the Collection
Account in accordance with subparagraph (a), in the name of the Trustee, on
behalf of the Trust, a fully segregated trust account (which may be a sub-
account of the Collateral Account) with the trust department of such
institution (the "Transferor Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Certificateholders. Except as provided in this Agreement, the Transferor
Account shall be under the sole dominion and control of the Trustee for the
benefit of the Certificateholders. If, at any time, the institution
holding the Transferor Account ceases to be an Eligible Institution, the
Trustee shall, concurrently with the establishment of a new Collection
Account in accordance with subparagraph (a), establish a new Transferor
Account meeting the conditions specified above with the same Eligible
Institution, transfer any cash and/or any investments to such new
Transferor Account and from the date such new Transferor Account is
established, it shall be the "Transferor Account". Neither the Transferor
nor the Servicer, nor any Person claiming by, through or under the
Transferor or the Servicer, shall have any right, title or interest in, or
any right to withdraw any amount from, the Transferor Account except to the
extent provided in this Agreement. Pursuant to the authority granted to
the Servicer pursuant to Section 3.01(a), the Servicer shall have the
revocable power to instruct the Trustee to make withdrawals and payments
from the Transferor Account for the purposes of carrying out the Servicer's
duties hereunder. The amount to be deposited in the Transferor Account on
any day shall equal the Transferor Account Deposit Amount. All amounts
from time to time held in the Transferor Account (other than investment
earnings) shall constitute Trust Assets.
(c) Administration of the Collection Account and the
Transferor Account. Funds on deposit in the Collection Account (other than
investment earnings and amounts deposited pursuant to Sections 2.04(c),
3.03, 9.03 or Article XII) shall at the direction of the Servicer be
invested by the Trustee in Permitted Investments that will mature so that
such funds will be available prior to the Payment Date following such
investment, except that in the case of funds representing Collections with
respect to any Settlement Period, such Permitted Investments may mature so
that such funds will be available no later than the Business Day prior to
the Payment Date for such Settlement Period. Funds on deposit in the
Transferor Account shall at the direction of the Servicer be invested by
the Trustee in Permitted Investments that will mature so that such funds
will be available prior to the date on which the Transferor is expected to
be entitled to the release of such amounts in accordance with Section
4.03(b)(vii), provided, that once invested, such amounts may not be
released pursuant to Section 4.03(b)(vii) or otherwise until such Permitted
Invest ments mature. Any funds on deposit in the Collection Account or the
Transferor Account to be so invested shall be invested solely in Permitted
Investments. Any request by the Servicer to invest funds on deposit in the
Collection Account or the Transferor Account shall be in writing and shall
certify that the funds requested to be invested may be so invested pursuant
to the terms hereof, and that the requested investment is a Permitted
Investment which matures at or prior to the time required hereby. The
Trustee shall maintain possession of the negotiable instruments or
securities, if any, evidencing the Permitted Investments described in
clause (a) of the definition thereof from the time of purchase thereof
until maturity. All interest and earnings (net of losses and investment
expenses) on funds on deposit in the Collection Account or the Transferor
Account shall be paid by the Trustee to the Transferor on each Payment
Date. Neither the Transferor nor the Servicer shall deposit any of their
funds in the Collection Account at any time except for funds
unconditionally required to be paid on account of the purchase price of
Certificates or the Transfer Deposit Amount of Reconveyed Receivables
pursuant to this Agreement; provided, however that the Transferor shall be
permitted to make a cash contribution to the Trust to repay the Variable
Funding Certificate or any Series to the extent permitted by the terms of
the related Supplement, including under Section 12.02, in connection with
which the Issuer Amount or applicable Invested Amount, as the case may be,
shall be reduced and the Transferor Amount shall be increased accordingly.
(d) Identification of Collection Account and Transferor
Account. Schedule 1, which is hereby incorporated into and made part of
this Agreement, identifies the Collection Account and the Transferor
Account by setting forth the account number of each such account, the
account designation of each such account and the name and location of the
institution with which each such account has been established.
Section 4.03 Collections and Allocations.
(a) Collections. The Servicer will allocate, pay or deposit
all Collections with respect to the Receivables (all of which Collections,
subject to Section 4.09, shall be deemed to relate to, and to be received
with respect to, Adjusted Eligible Receivables) for each Business Day as
described in this Article IV. No later than the second Business Day
following the receipt of any Collections in a Lock Box Account, the
Servicer shall deposit such Collections into the Collection Account and
shall allocate or pay such Collections as indicated in Section 4.03(b).
(b) Payments and Allocations. On each Business Day, the
Servicer shall allocate the aggregate amount of Collections available in
the Collection Account on such Business Day and not previously allocated
hereunder (x) to the extent of the product of the total amount of such
Collections and the Discount Factor on such Business Day to Imputed Yield
(the "Imputed Yield Collections") and (y) to the extent of the total amount
of such Collections minus the amount described in clause (x) to Principal
Receivables (the "Principal Collections"). On each Business Day, the
Servicer shall determine with respect to each Series and the Variable
Funding Certificate whether an Amortization Period has commenced on or
prior to such Business Day, and based upon such determination, shall
determine the amounts or percentages of the Collections to be withdrawn
from the Collection Account on such Business Day and shall pay or allocate
such Collections to or among each Series, the Variable Funding Certificate
and the Transferor Certificate as provided below.
(i) For any Series in its Non-Amortization Period:
(A) Allocate to each such Series an amount equal to the
product of (1) the Invested Percentage for such Series and (2) the
Imputed Yield Collections for such Business Day.
(B) Allocate and pay to the Holder of the Transferor
Certificate an amount equal to the product of (1) the Invested
Percentage for such Series and (2) the Principal Collections for such
Business Day.
(ii) For any Series in its Amortization Period:
(A) Allocate to each such Series an amount equal to the
product of (1) the Invested Percentage for such Series and (2) the
Imputed Yield Collections for such Business Day.
(B) Allocate to each such Series an amount equal to the
product of (1) the Invested Percentage for such Series and (2) the
Principal Collections for such Business Day.
(iii) For the Variable Funding Certificate in its
Non-Amortization Period:
(A) Allocate to the Variable Funding Certificate an amount
equal to the product of (1) the Issuer Percentage and (2)
the Imputed Yield Collections for such Business Day.
(B) Allocate the product of (1) the Issuer Percentage and (2)
the Principal Collections for such Business Day to the Variable
Funding Certificate and apply such product in the manner set forth in
the Variable Funding Supplement.
(iv) For the Variable Funding Certificate in its Amortization
Period:
(A) Allocate to the Variable Funding Certificate an amount
equal to the product of (1) the Issuer Percentage and (2) the aggregate
amount of Imputed Yield Collections for such Business Day.
(B) Allocate to the Variable Funding Certificate the product
of (1) the Issuer Percentage and (2) the Principal Collections for
such Business Day.
(v) For the Transferor Certificate throughout the existence of
the Trust: allocate and pay to the Holder of the Transferor Certificate an
amount equal to the product of (A) the Transferor Percentage on such
Business Day and (B) the aggregate amount of Imputed Yield Collections and
Principal Collections for such Business Day; provided, however, that the
Servicer shall retain from such amounts on each Business Day an amount
equal to the portion of the Servicing Fee to be paid by the Transferor
accrued to such Business Day and not previously paid to or retained by the
Servicer.
(vi) Unallocated Collections: If, as of any day on which
Collections are allocated, paid or deposited:
(A) pursuant to Section 4.03(b)(ii)(B), the payment or
allocation of Principal Collections with respect to any Series would cause
such Series (a "Retired Series") to be paid in full, or
(B) pursuant to Sections 4.03(b)(ili)(B), 4.03(b)(v) or
4.03(b)(iv)(B), the allocation of Principal Collections to the Holder
of the Transferor Certificate or the Holder of the Variable Funding
Certificate, respectively, would cause the Transferor Eligible Amount
to be less than the Transferor Minimum Amount or the Issuer Amount to
be less than zero, after taking into account the increase in the
Transferor Amount or the Issuer Amount resulting from the transfer of
any new Receivables to the Trust as of such day (any such Collections
to the extent applied to reduce any Invested Amount or the Issuer
Amount to zero or the Transferor Eligible Amount to the Transferor
Minimum Amount being referred to as "Allocated Collections"), then any
Imputed Yield Collections or Principal Collections allocated to a
Retired Series or to the Holder of the Transferor Certificate or the
Holder of the Variable Funding Certificate in excess of Allocated
Collections ("Unallocated Collections") shall be reallocated among all
Series, other than the Retired Series, if any, unless only one Series
would be affected thereby and then only to that Series (pursuant to
Section 4.03(b)(ii)), and the Variable Funding Certificate if the
Issuer Amount is greater than zero (pursuant to Sections 4.03(b)(iii)
and (iv)) (any such reallocation, an "Excess Amount Allocation," and
any such Series or the Variable Funding Certificate, for this purpose
only, an "Outstanding Series"); provided, however, that such
reallocation of Unallocated Collections may only be made to the extent
permitted under the related Supplement, and, to the extent not
permitted under the related Supplement, shall be held in the
Transferor Account in an amount not in excess of the Transferor
Account Deposit Amount. Any Excess Amount Allocation shall be
performed assuming that (a) the characterization of Unallocated
Collections as either Principal Collections or Imputed Yield
Collections shall not be altered, (b) the Invested Percentages with
respect to any Outstanding Series and the Issuer Percentage shall be
recalculated assuming that the Retired Series has been retired and
that only the Outstanding Series are outstanding, (c) Allocated
Collections have been paid to the Holders of the Retired Series, the
Holder of the Transferor Certificate or the Holder of the Variable
Funding Certificate, as the case may be, and (d) if Allocated
Collections cause an Event of Termination to occur, Unallocated
Collections shall be allocated as if such Event of Termination has
occurred.
(vii) Transferor Account: Allocate and pay, with respect to each
Series, the Variable Funding Certificate and the Transferor Certificate
in accordance with subsection (b) of this Section 4.03, as Principal
Collections or Imputed Yield Collections, as applicable, amounts held in
the Transferor Account to the extent the Transferor Eligible Amount
exceeds the Transferor Minimum Amount.
Section 4.04 Payments of Imputed Yield Collections to Investor
Certificateholders. Payments of Imputed Yield Collections to Investor
Certificateholders shall be made in the manner set forth in the related
Supplement.
Section 4.05 Payments of Imputed Yield Collections with Respect to the
Variable Funding Certificate. Payments of Imputed Yield Collections with
respect to the Variable Funding Certificate shall be made in the manner set
forth in the Variable Funding Supplement.
Section 4.06 Payment of Principal Collections. With respect to each
Series, unless otherwise specified in the related Supplement:
(a) Commencing on the Determination Date for the Payment Date
relating to the Settlement Period in which the Amortization Period with
respect to such Series of Investor Certificates begins, and on each
Determination Date with respect to such Series thereafter until the end of
such Amortization Period, the Servicer shall instruct the Trustee in
writing to withdraw, and on each related Transfer Date the Trustee shall in
accordance with such instructions withdraw, from the Collection Account the
amount allocated to such Series pursuant to Section 4.03(b)(ii)(B) in
respect of the preceding Settlement Period and on the related Transfer Date
the Trustee shall pay such amounts to the Paying Agent. On each Payment
Date, the Paying Agent shall distribute such amount to the
Certificateholders of such Series (referred to herein as "Amortization").
(b) Payments of Principal Collections with respect to the
Variable Funding Certificate shall be made in the manner set forth in the
Variable Funding Supplement.
Section 4.07 Defaulted Receivables. (a) On each day specified in the
Supplement related to any Series, the Servicer shall calculate the Investor
Default Amount and Investor Charge-Offs with respect to the related
Series, and the Invested Amount of such Series shall be reduced by the
applicable Investor Charge-Offs.
(b) On each day specified in the Variable Funding
Supplement, the Servicer shall calculate the Issuer Default Amount, Issuer
Charge-Offs, Defaulted Amount and Issuer Default Deficiency Amount, and the
Issuer Amount shall be reduced by the Issuer Charge-Offs.
Section 4.08 [Reserved].
Section 4.09 Removal of Funds from Lock-Box Accounts. In the event that
the Trustee shall have received amounts in respect of payments made by any
Person on an account receivable or other obligation which has not been
transferred to the Trust or has been reconveyed therefrom to the
Transferor, the Trustee shall, as soon as practicable and as instructed in
the most recently delivered Daily Report or Settlement Statement, forward
such amounts, in the manner specified in writing by Ingram, to Ingram or
such other Person as Ingram designates and, pending the forwarding of such
amounts, hold such amounts in trust for Ingram or such other Person
designated by Ingram. The Trustee will, if requested in writing by Ingram,
acknowledge and confirm the foregoing to any Person designated by Ingram.
In the absence of such instructions, all Collections shall be deemed to
relate to, and be received with respect to, Adjusted Eligible Receivables.
If, at any time, the Servicer has the ability to identify and segregate
Collections relating to Receivables other than Adjusted Eligible
Receivables, the Servicer shall have the right to withhold or withdraw such
Collections from the Collection Account; provided that each Rating Agency
confirms in writing that the adoption of such servicing procedures will not
result in such Rating Agency reducing or withdrawing its rating on any
outstanding Series or the Commercial Paper.
[END OF ARTICLE IV]
ARTICLE V
DISTRIBUTIONS AND REPORTS TO
CERTIFICATEHOLDERS
Section 5.01 Distributions. On each Payment Date, the Paying Agent shall
distribute (in accordance with the Settlement Statement delivered by the
Servicer to the Trustee on the preceding Determination Date pursuant to
Section 3.04(c)) (i) to the Holder of the Variable Funding Certificate the
amount on deposit in the Collection Account and payable to the Holder of the
Variable Funding Certificate pursuant to Sections 4.05 and 4.06(b), and (ii)
to each Investor Certificateholder of record of any Series on the preceding
Record Date (other than as provided in Section 2.04(d) or in Section
12.03(b) hereof respecting a final distribution) such Certificateholder's
pro rata share (based on the aggregate Undivided Interests represented by
Investor Certificates of such Series held by such Certificateholders of
amounts on deposit in the Collection Account as are payable to the Investor
Certificateholders of such Series pursuant to Sections 4.04 and 4.06(a).
Such distribution shall be made by check mailed to each Certificateholder
or, if so stated in any Supplement, by wire transfer to each
Certificateholder so qualified as stated therein, except that if all
Investor Certificates are registered in the name of CEDE & Co., the nominee
registrar for The Depository Trust Company, such distribution to Investor
Certificateholders shall be made in immediately available funds to The
Depository Trust Company. All payments on account of principal and
interest to Certificateholders shall be made from amounts on deposit in the
Collection Account.
Section 5.02 Monthly Investor Certificateholders' Statement; Annual
Tax Statement.
(a) On the day of each calendar month specified in the related
Supplement, the Paying Agent shall forward to each Investor Certificateholder
of each Series a statement relating to such Series prepared by the Servicer
substantially in the form of the "Monthly Investor Certificateholder's
Statement" attached to the applicable Supplement.
(b) Annual Certificateholders' Tax Statement. On or before
April 30 of each calendar year, beginning with calendar year 1994, the
Servicer shall deliver to the Paying Agent, which shall thereupon furnish
to each Person who at any time during the preceding calendar year was a
Certificateholder, a statement prepared by the Servicer containing the
information which is required to be contained in the regular monthly report
to Investor Certificateholders or the Holder of the Variable Funding
Certificate, as the case may be, as set forth in Section 5.02(a),
aggregated for such calendar year or the applicable portion thereof during
which such Person was a Certificateholder, together with such other
information as is required to be provided by an issuer of indebted ness
under the Code and such other customary information as the Servicer deems
necessary or desirable to enable the Certificateholders to prepare their
tax returns. Such obligation of the Paying Agent shall be deemed to have
been satisfied to the extent that substantially comparable information
shall be provided by the Paying Agent pursuant to this Agreement or to any
requirements of the Code as from time to time in effect.
[END OF ARTICLE V]
ARTICLE VI
THE CERTIFICATES
Section 6.01 The Certificates. The Investor Certificates of each Series,
the Variable Funding Certificate and the Transferor Certificate shall be
substantially in the form of Exhibits A, B and C, respectively, hereto (with
such changes as may be specified in the relevant Supplement) and shall, upon
issuance pursuant hereto or to Section 6.09, be executed and delivered by the
Transferor to the Trustee for authentication and redelivery as provided in
Section 6.02. Investor Certificates shall be issued in the minimum
denominations indicated in the related Supplement; provided that unless and
until the Transferor delivers to the Trustee an Opinion of Counsel addressed
to the Trustee to the effect that the Trust is not an "investment company" as
defined in the Investment Company Act of 1940, as amended, no Series of
Certificates shall be issued and no Certificate of a Series shall be sold or
transferred, unless at the time of such issuance, sale or transfer the
Transferor shall deliver to the Trustee an Officer's Certificate certifying to
the Trustee that such issuance, sale or transfer will not cause the aggregate
number of "beneficial owners" (as defined in Section 3 of the Investment
Company Act of 1940, as amended) of the Certificates of such Series and all
outstanding Series to exceed 97 or such lower number as the Transferor may
determine (and shall notify the Trustee in writing with respect thereto). For
purposes of this Section 6.01, the Transferor shall determine the number of
"beneficial owners" of a Series and of all outstanding Series by dividing the
Initial Invested Amount of such Series by the minimum denomination with
respect to such Series and adding the results of each such calculation. The
Variable Funding Certificate and the Transferor Certificate shall each
initially be issued in one certificate to the CP Issuer and to the Transferor,
respectively. Each Certificate shall be executed by manual or facsimile
signature on behalf of the Transferor by any of its Chairman of the Board, its
Vice Chairman of the Board, its President or any Vice President. Certificates
bearing the manual or facsimile signature of the individual who was, at the
time when such signature was affixed, authorized to sign on behalf of the
Transferor or the Trustee shall not be rendered invalid, notwithstanding that
such individual has ceased to be so authorized prior to the authentication and
delivery of such Certificates or does not hold such office at the date of
such Certificates. No Certificate shall be entitled to any benefit under
this Agreement or any applicable Supplement, or be valid for any purpose,
unless there appears on such Certificate a certificate of authentication
substantially in the form provided for herein executed by or on behalf of
the Trustee by the manual signature of a duly authorized signatory, and
such certificate upon any Certificate shall be conclusive evidence, and the
only evidence, that such Certificate has been duly authenticated and
delivered hereunder. All Certificates shall be dated the date of their
authentication.
Section 6.02 Authentication of Certificates. Contemporaneously with the
assignment and transfer of the Receivables, whether now existing or hereafter
created, and the other Trust Assets to the Trust, the Trustee shall
authenticate and deliver the Transferor Certificate to the Transferor and,
upon the execution of any Supplement and the satisfaction of the conditions
provided in Section 6.09, shall authenticate and deliver the Series of
Investor Certificates or the Variable Funding Certificate to be issued
thereunder as provided in Section 6.09. The Certificates of each Series shall
be duly authenticated by or on behalf of the Trustee as provided for herein
and in the applicable Supplement, in authorized denominations equal to (in the
aggregate) the Initial Invested Amount of such Series specified in such
Supplement. As provided in any Supplement, Investor Certificates of any Series
may be issued and sold pursuant to an effective registration statement under
the Securities Act, or pursuant to an exemption therefrom. In such former
case, such Series of Certificates may be delivered in book-entry form as
provided in Sections 6.11 through 6.13 and, in the latter case, may not be so
delivered. Further, if any such Series is sold pursuant to an exemption from
registration under the Securities Act pursuant to Section 4(2) of the
Securities Act or its substantial equivalent (the "Private Placement
Exemption") as stated in the applicable Supplement, the Certificates of such
Series may only be transferred as provided in Section 6.03(e).
Section 6.03 Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at the office or agency
to be maintained by a transfer agent and registrar (which may be the Trustee)
(the "Transfer Agent and Registrar") in accordance with the provisions of
subsection 6.03(c) a register (the "Certificate Register") in which, subject
to such reasonable regulations as it may prescribe, the Transfer Agent and
Registrar shall provide for the registration of each Series of the Investor
Certificates, the Transferor Certificate and the Variable Funding Certificate
and of transfers and exchanges of such Certificates as herein provided. The
Trustee is hereby initially appointed Transfer Agent and Registrar for the
purpose of registering each Series of Investor Certificates, the Transferor
Certificate and the Variable Funding Certificate and of registering transfers
and exchanges of the Investor Certificates, the Transferor Certificate and the
Variable Funding Certificate as herein provided. The Trustee shall be
permitted to resign as Transfer Agent and Registrar upon 30 days' written
notice to the Transferor and the Servicer; provided, however, that such
resignation shall not be effective and the Trustee shall continue to perform
its duties as Transfer Agent and Registrar until the Servicer has appointed a
successor Transfer Agent and Registrar acceptable to the Transferor. The
Trustee shall initially register the Transferor Certificate in the name of the
Transferor and the Variable Funding Certificate in the name of the CP Issuer.
Upon surrender for registration of transfer of any Investor
Certificate of a Series at any office or agency of the Transfer Agent and
Registrar maintained for such purpose, the Transferor shall execute,
and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Investor Certificates of
such Series in authorized denominations of like aggregate Undivided Interests
in the Trust; provided, however, that any Investor Certificate of any Series
sold pursuant to the Private Placement Exemption shall satisfy the conditions
provided in Section 6.03(e) prior to such registration of transfer.
At the option of an Investor Certificateholder, Investor
Certificates of a Series may be exchanged for other Investor Certificates
of such Series of authorized denominations of like aggregate Undivided
Interests in the Trust, upon surrender of the Investor Certificates to be
exchanged at any office or agency of the Transfer Agent and Registrar
maintained for such purpose. Whenever any Investor Certificates are so
surrendered for exchange, the Transferor shall execute, and the Trustee
shall authenticate and deliver, the Investor Certificates which the
Investor Certificateholder making the exchange is entitled to receive.
Every Investor Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of
transfer in a form satisfactory to the Trustee and the Transfer Agent and
Registrar duly executed by the Certificateholder thereof or his attorney
duly authorized in writing.
No service charge shall be made for any registration of transfer
or exchange of Investor Certificates, but the Transfer Agent and Registrar may
require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of Investor
Certificates.
All Investor Certificates surrendered for registration of
transfer or exchange shall be cancelled by the Transfer Agent and
Registrar and disposed of in a manner satisfactory to the Trustee.
(b) It is the understanding of the parties to this Agreement
that Ingram has particular expertise in performing the functions given by this
Agreement to the Servicer and that the Certificateholders will be purchasing
the Certificates relying on Ingram's exercising such expertise in performing
such functions. Except as provided in Sections 6.09, 6.10 and 7.02 hereof,
neither the Transferor Certificate nor any interest represented thereby shall
be sold, transferred, assigned, exchanged, participated, pledged or otherwise
conveyed unless such sale, transfer, assignment, exchange, participation,
pledge or conveyance would not reduce the Transferor Eligible Amount below the
Transferor Minimum Amount and the Trustee shall have received (i) an Opinion
of Counsel addressed to the Trustee to the effect that such transfer will not
adversely affect the status of any Series of Investor Certificates or the
Variable Funding Certificate as debt for Federal and applicable state income
tax purposes and (ii) the written consent of (A) the Holder of the Variable
Funding Certificate and (B) Investor Certificateholders having Undivided
Interests aggregating more than 50% of the Aggregate Invested Amount.
(c) Notwithstanding anything herein to the contrary, except for
a pledge to one or more financial institutions (or a collateral agent
acting on their behalf) providing liquidity or credit support for the
Commercial Paper as described in the Variable Funding Supplement (which
pledge, or the exercise by the pledger of its remedies pursuant thereto,
shall not be required to meet the conditions set forth in clauses (i) or
(ii) below), the Variable Funding Certificate may not be transferred,
assigned, exchanged, pledged or otherwise conveyed unless (i) the Trustee
shall have received an Opinion of Counsel addressed to the Trustee to the
effect that the Certificates and the Commercial Paper shall continue to be
treated as debt for Federal income tax purposes, (ii) the Transferor has
given its written consent to such transfer, assignment, exchange, pledge or
other conveyance and (iii) each Rating Agency confirms that such transfer,
assignment, exchange, pledge or other conveyance will not result in such
Rating Agency reducing or withdrawing its rating on the Commercial Paper.
Notwithstanding anything herein to the contrary, the Trustee shall not
exchange the Variable Funding Certificate for another Variable Funding
Certificate of like aggregate Undivided Interest in the Trust or register
any transfer of the Variable Funding Certificate except upon receipt of
written instructions from the Transferor to effect such exchange or
registration of transfer upon receipt by the Transferor of reasonable
assurances that such proposed exchange or transfer complies with the
provisions of the Securities Act.
(d) The Transfer Agent and Registrar will maintain at its
expense in the Borough of Manhattan, the City of New York, an office or
offices or agency or agencies where Certificates may be surrendered for
registration of transfer or exchange.
(e) Until such time as the Trustee shall receive an Officer's
Certificate of the Transferor certifying that a Series of Investor
Certificates has been registered under the Securities Act and qualified
under all applicable state securities laws, neither the Trustee nor the
Transfer Agent and Registrar shall register a transfer of any Investor
Certificates of such Series or any interest therein unless such transfer is
to be made in a transaction that does not require such registration or
qualification. Until such time as such Series of Investor Certificates
shall be registered pursuant to a registration statement filed under the
Securities Act, such Series of Investor Certificates shall bear a legend to
the effect set forth in the preceding sentence. In the event that
registration of a transfer is to be made in reliance upon an exemption of
the transfer from the Securities Act, the Trustee shall require, in order
to assure compliance with the Securities Act and the Investment Company Act
of 1940, as amended, the transferee to deliver to the Trustee and the
Transferor an Opinion of Counsel reasonably satisfactory to the Transferor
and the Trustee that such transfer may be made pursuant to an exemption
from the Securities Act and applicable state securities laws and would not
subject the Trust to the registration requirements of the Investment
Company Act of 1940, as amended. Any such Opinion of Counsel shall be
obtained at the expense of the prospective transferor or transferee, and
not at the expense of the Trustee or the Transferor, and shall be delivered
to the Trustee and the Transferor prior to or contemporaneously with any
such transfer. Neither the Transferor nor the Trustee shall be obligated
to register any Series of Investor Certificates under any state securities
laws or under the Securities Act or to take any other action not otherwise
required under this Agreement to permit the transfer of such Series without
registration. -
Notwithstanding anything to the contrary contained herein, in no
event shall an Investor Certificate of any Series which is either (a) not sold
pursuant to an effective registration statement under the Securities Act or
(b) so sold but not intended to be sold to more than 100 Persons, as evidenced
by disclosure in the disclosure document with respect thereto or any interest
therein, be transferred to an employee benefit plan, trust or account subject
to ERISA, or described in Section 4975(e)(1) of the Code. Each Holder of an
Investor Certificate of any such Series, by its acceptance thereof, represents
and warrants that it is not (i) an employee benefit plan (as defined in
Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA,
(ii) a plan described in Section 4975(e)(1) of the Code or (iii) an entity
which is using assets to purchase such Investor Certificate which
constitute plan assets by reason of a plan's investment in such Holder.
Section 6.04 Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate is surrendered to the Transfer Agent and Registrar,
or the Transfer Agent and Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any such Certificate and (b) there is
delivered to the Transfer Agent and Registrar, the Trustee and the Transferor
such security or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Trustee that such Certificate
has been acquired by a bona fide purchaser, the Transferor shall execute and
the Trustee shall authenticate and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Certificate, a new Certificate of
like tenor and aggregate Undivided Interest, if applicable. In connection with
the issuance of any new Certificate under this Section 6.04, the Trustee or
the Transfer Agent and Registrar may require the payment by the
Certificateholder of a sum sufficient to cover any tax or other expenses
(including the fees and expenses of the Trustee and Transfer Agent and
Registrar) connected therewith. Any duplicate Certificate issued pursuant to
this Section 6.04 shall constitute complete and indefeasible evidence of
ownership in the Trust, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time.
Section 6.05 Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Trustee, the Paying Agent, the
Transfer Agent and Registrar and any agent of any of them may treat the Person
in whose name any Certificate is registered as the owner of such Certificate
for the purpose of receiving distributions pursuant to Section 5.01 and for
all other purposes whatsoever, and neither the Trustee, the Paying Agent, the
Transfer Agent and Registrar nor any agent of any of them shall be affected by
any notice to the contrary; provided, however, that in determining
whether the Holders of the requisite Undivided Interests have given any
request, demand, authorization, direction, notice, consent or waiver
hereunder, Certificates owned by the Transferor, the Servicer or any affiliate
(as defined in Rule 405 under the Securities Act) thereof, shall be
disregarded and deemed not to be outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only
Certificates which a Responsible Officer of the Trustee knows to be so
owned shall be so disregarded. Certificates so owned which have been
pledged in good faith shall not be disregarded and may be regarded as
outstanding if the pledgee establishes to the satisfaction of the Trustee
the pledgee's right so to act with respect to such Certificates and that
the pledgee is not the Transferor, the Servicer or an affiliate (as defined
above) thereof.
Section 6.06 Appointment of Paying Agent. The Paying Agent shall (i) have
a rating of at least A by Fitch and (ii) have a rating of at least A by
Standard & Poor's or, (iii) if not so rated in (i) and/or (ii), Fitch and/or
S&P, as applicable, shall confirm in writing that the lack of such rating(s)
will not result in such Rating Agency reducing or withdrawing its respective
rating on any outstanding Series or on the Commercial Paper, and, in any case,
shall be a depositary institution organized under the laws of the United
States or any one of the states thereof, including the District of Columbia.
The Paying Agent shall make distributions to Certificateholders from the
Collection Account pursuant to Section 5.01. Any Paying Agent shall have the
revocable power to withdraw funds from the Collection Account for the purpose
of making distributions referred to above. The Trustee may revoke such power
and remove any Paying Agent if the Trustee determines in its sole discretion
that the Paying Agent shall have failed to perform its obligations under this
Agreement in any material respect. The Paying Agent shall initially be the
Trustee. The Paying Agent shall be permitted to resign as Paying Agent upon 30
days' written notice to the Trustee, the Servicer and the Transferor;
provided, however, that such resignation shall not be effective and the Paying
Agent shall continue to perform its duties until the Trustee has appointed,
and such appointment has been accepted by, a successor Paying Agent. The
Trustee shall cause the resigning Paying Agent and each successor Paying Agent
to execute and deliver to the Trustee an instrument in which such resigning or
successor Paying Agent or additional Paying Agent shall agree with the Trustee
that, as Paying Agent, such resigning or successor Paying Agent or additional
Paying Agent will hold all sums, if any, held by it for payment to the
Certificateholders in trust for the benefit of the Certificateholders
entitled thereto until such sums shall be paid to such Certificateholders.
The Paying Agent shall return all unclaimed funds to the Trustee and upon
removal shall also return all funds in its possession to the Trustee. The
provisions of Sections 11.01, 11.02 and 11.03 shall apply to the Trustee in
its role as Paying Agent.
Section 6.07 Access to List of Certificateholders' Names and Addresses.
The Trustee shall furnish or instruct the Transfer Agent and Registrar to
furnish to the Servicer or the Paying Agent, within five Business Days
after receipt by the Trustee of a request therefor from the Servicer or the
Paying Agent, respectively, in writing, a list in such form as the Servicer
or the Paying Agent may reasonably require, of the names and addresses of
the Certificateholders. If three or more Holders of Investor Certificates
of any Series or holders representing Undivided Interests in the Trust
aggregating not less than 5% of the Invested Amount of the Investor
Certificates of any Series (the "Applicants") apply in writing to the
Trustee, and such application states that the Applicants desire to
communicate with other Investor Certificateholders of any Series with
respect to their rights under this Agreement or under the Investor
Certificates and is accompanied by a copy of the communication which such
Applicants propose to transmit, then the Trustee, after having been
indemnified to its satisfaction by such Applicants for its costs and
expenses, shall afford or shall instruct the Transfer Agent and Registrar
to afford such Applicants access during normal business hours to the most
recent list of Certificateholders held by the Trustee, within five Business
Days after the receipt of such application. Such list shall be as of a
date no more than 30 days prior to the date of receipt of such Applicants'
request. Every Certificateholder agrees with the Trustee that neither the
Trustee, the Transfer Agent and Registrar, nor any of their respective
agents shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Certificateholders
hereunder, regardless of the sources from which such information was
derived.
Section 6.08 Authenticating Agent.
(a) The Trustee may appoint one or more authenticating agents
with respect to the Certificates which shall be authorized to act on behalf of
the Trustee in authenticating the Certificates in connection with the
issuance, delivery, registration of transfer, exchange or repayment of the
Certificates. Whenever reference is made in this Agreement to the
authentication of Certificates by the Trustee or the Trustee's certificate
of authentication, such reference shall be deemed to include authentication
on behalf of the Trustee by an authenticating agent and a certificate of
authentication executed on behalf of the Trustee by an authenticating
agent. Each authenticating agent must be acceptable to the Transferor.
(b) Any institution succeeding to all or substantially all of
the corporate agency business of an authenticating agent shall continue to be
an authenticating agent without the execution or filing of any paper or any
further act on the part of the Trustee or such authenticating agent.
(c) An authenticating agent may at any time resign by giving
written notice of resignation to the Trustee and to the Transferor. The
Trustee may at any time terminate the agency of an authenticating agent by
giving notice of termination to such authenticating agent and to the
Transferor. Upon receiving such a notice of resignation or upon such a
termination, or in case at any time an authenticating agent shall cease to
be acceptable to the Trustee or the Transferor, the Trustee promptly may
appoint a successor authenticating agent. Any successor authenticating
agent upon acceptance of its appointment hereunder shall become vested with
all the rights, powers and duties of its predecessor hereunder, with like
effect as if originally named as an authenticating agent. No successor
authenticating agent shall be appointed unless acceptable to the Trustee
and the Transferor.
(d) The Servicer agrees to pay, on behalf of the Trust, to each
authenticating agent from time to time reasonable compensation for its services
under this Section 6.08.
(e) The provisions of Sections 11.01, 11.02 and 11.03 shall be
applicable to any authenticating agent.
(f) Pursuant to an appointment made under this Section 6.08, the
Certificates may have endorsed thereon, in lieu of the Trustee's
certificate of authentication, an alternate certificate of authentication
in substantially the following form:
This is one of the Certificates described in the Pooling and Servicing
Agreement.
Chemical Bank, as Trustee
by
_____________________________________
as Authenticating Agent
for the Trustee,
by
_____________________________________
Authorized Officer
Section 6.09 Delivery of Additional Series of Investor Certificates or
the Variable Funding Certificate.
(a) Upon delivery to the Trustee of an Officer's Certificate of
the Transferor (a) requesting the authentication of a new Series of Investor
Certificates or requesting the authentication of the Variable Funding
Certificate and (b) stating the date upon which such Series or the Variable
Funding Certificate is to be issued (such date, the "Issuance Date" and
such notice, the "Issuance Notice") and certifying the satisfaction of the
conditions stated in this Section and Section 6.01, the Trustee shall,
subject to Section 6.09(b), authenticate pursuant to Section 6.02 and
deliver to or upon the order of the Transferor on such Issuance Date such
new Series of Investor Certificates or the Variable Funding Certificate;
provided, however, that each Rating Agency shall have confirmed in writing
that the issuance of such new Series of Investor Certificates will not
result in such Rating Agency reducing or withdrawing its rating on any
outstanding Series or on the Commercial Paper. Any such Series of Investor
Certificates shall be substantially in the form of Exhibit A hereto and
shall bear, upon its face, the designation for such Series to which
it belongs so selected by the Transferor and set forth in the related
Supplement. The Variable Funding Certificate shall be in substantially the
form of Exhibit B hereto. Unless otherwise specified in the related
Supplement, the Investor Certificates of any Series and the Variable Funding
Certificate shall be issued in definitive physical form (and not as Book-
Entry Certificates). All Investor Certificates of any Series shall be
identical in all respects except for the denominations thereof and shall be
equally and ratably entitled among themselves and with the Variable Funding
Certificate as provided herein to the benefits of this Agreement and any
Supplement thereof without preference, priority or distinction on account of
the actual time or times of authentication and delivery, all in accordance
with the terms and provisions of this Agreement and such Supplement. No new
Series of Investor Certificates issued pursuant to the provisions of this
Section shall adversely affect the method of allocating Imputed Yield
Collections or Principal Collections of any other Series of Certificates or
the Variable Funding Certificate for any period over which such Series or the
Variable Funding Certificate shall be outstanding.
(b) On the Issuance Date, the Trustee shall authenticate and
deliver any such new Series or the Variable Funding Certificate upon delivery
to it of the following: (i) a Supplement substantially in the form of Exhibit
D and in form reasonably satisfactory to the Trustee executed by the
Transferor and the Servicer and specifying the items provided in Section
6.09(c) (the "Principal Terms"), (ii) an Opinion of Counsel to the effect that
the newly issued Series or the Variable Funding Certificate, as the case may
be, will be treated as debt or as a partnership interest for Federal and
applicable state income tax purposes under existing law and will not adversely
affect the status of any Series of Investor Certificates or the Variable
Funding Certificate as debt for Federal and applicable state income tax
purposes, (iii) written confirmation from each Rating Agency that the issuance
of such new Series or the Variable Funding Certificate, as the case may be,
will not result in the Rating Agency's reducing or withdrawing its rating on
any then outstanding Series rated by it or would result in the Rating Agency's
reducing or withdrawing its rating on the Commercial Paper, and (iv) such
other closing documents, certificates and Opinions of Counsel as may be
required by the applicable Supplement. Notwithstanding the foregoing, the
Trustee shall not authenticate and deliver any new Series hereunder unless
it also receives on or prior to the Issuance Date, an Officer's Certificate
of the Transferor stating: (a) the size of the Transferor Amount prior to
such issuance, (b) the Initial Invested Amount of the new Series or Initial
Issuer Amount in the case of the issuance of the Variable Funding
Certificate, which shall be less than the amount given in clause (a), and
(c) the size of the Transferor Amount after giving effect to such issuance.
(c) The Principal Terms of any Series or the Variable Funding
Certificate shall consist of: (i) with respect to any Series, the name or
designation of the Series, (ii) the Initial Invested Amount thereof or the
Initial Issuer Amount, in the case of the issuance of the Variable Funding
Certificate, (iii) the Certificate Rate of such Series (or the formula for the
determination thereof, which may provide that such rate is a floating rate) in
the case of the issuance of a Series of Investor Certificates, (iv) the method
of allocating Collections with respect to Principal Receivables for such
Series or the Variable Funding Certificate, as the case may be, (v) the
Servicing Fee Percentage for such Series or the Variable Funding Certificate,
as the case may be, (vi) the Series Termination Date, (vii) the Repurchase
Terms, if any, and (viii) with respect to any Series or the Variable Funding
Certificate, the scheduled Amortization Period Commencement Date.
(d) Any Supplement relating to an additional Series or the
Variable Funding Certificate may define or make provision with respect to
the Series or the Variable Funding Certificate to be issued pursuant
thereto for: (i) a new Applicable Minimum Percentage, (ii) a new Minimum
Aggregate Principal Receivables, (iii) the establishment of one or more
accounts held at an Eligible Institution for holding Collections on the
Receivables as specified in the Supplement or for other purposes specified
therein, (iv) the deposit of funds into any such accounts, (v) the use of a
guaranteed in vestment contract, surety bond, interest rate protection,
swap or other similar agreement with respect to the Series, (vi) any
extension or other evergreen feature with respect to the Series, (vii) any
amendments or modifications of any Events of Termination relating to such
Series or the Variable Funding Certificate, as the case may be, and (viii)
such other provisions which the Transferor may, in its sole discretion,
wish to incorporate and which shall be acceptable to the Trustee insofar as
they affect the rights, duties and obligations of the Trustee hereunder or
under any Supplement.
Section 6.10 Issuer Additional Amounts.
(a) The CP Issuer agrees, by acceptance of the Variable Funding
Certificate, that the Transferor may from time to time prior to the
commencement of the Amortization Period for the Variable Funding Certificate
require that the CP Issuer acquire as of any Business Day an additional
undivided interest in the Trust in a specified amount (the "Issuer Additional
Amount") not to exceed, after giving effect thereto, an amount equal to the
Aggregate Eligible Principal Receivables minus the greater of (a) the sum of
(i) the Aggregate Invested Amount as of such day and (ii) the Issuer Amount as
of such day and (iii) the Transferor Minimum Amount as of such day or (b) the
Minimum Adjusted Eligible Principal Receivables. The CP Issuer's obligation to
acquire any such Issuer Additional Amount shall be conditioned on the CP
Issuer's ability to obtain funds to acquire such interest. If such Issuer
Additional Amount, together with the existing Issuer Amount, shall exceed the
Maximum Program Amount, the CP Issuer and the Transferor shall comply with the
provisions of Section 6.10(b) hereof. If the CP Issuer acquires such
additional interest, then in consideration of the CP Issuer's payment of
the Issuer Additional Amount, the Servicer shall appropriately note such
Issuer Additional Amount on the related Daily Report or Settlement
Statement and direct the Trustee to pay to the Transferor such Issuer
Additional Amounts and the Issuer Amount will be equal to the Issuer Amount
stated in such Daily Report or Settlement Statement, as the case may be.
(b) In addition to the conditions specified in subsection
(a) above, if the Issuer Amount is to be increased on any day by an Issuer
Additional Amount in accordance with subsection (a) above resulting in the
Issuer Amount exceeding the Maximum Program Amount, then the addition of
such interest in the Trust shall be subject to the following additional
conditions:
(i) as of such day, there shall exist no Issuer Default
Deficiency Amounts under Section 4.05(g) as set forth in the Variable Funding
Supplement or Issuer Charge-Offs;
(ii) such increase in the Issuer Amount shall be covered by the
Available Liquidity Commitment and the Available LOC Amount;
(iii) the CP Issuer shall have received written confirmation of
the then existing ratings of the Commercial Paper, if any, from each Rating
Agency after giving effect to such increase in the Issuer Amount, and any
other changes required pursuant to the applicable Supplement, and the CP
Issuer shall have provided copies thereof to the Transferor, the Servicer, the
Trustee, and any other parties as may be required by the Variable Funding
Supplement;
(iv) the Transferor shall have obtained written confirmation
from each Rating Agency that such increase in the Issuer Amount will not
result in the Rating Agency's reducing or withdrawing its rating on any
outstanding Series rated by it;
(v) the CP Issuer and the Transferor shall have satisfied
such additional conditions as may be specified in the Variable Funding
Supplement; and
(vi) the Trustee shall have received an Opinion of Counsel to
the effect that the increase in the Issuer Amount in excess of the Maximum
Program Amount will be treated as debt for Federal and applicable state
income tax purposes under existing law and will not adversely affect the
status of any Series of Investor Certificates or the Variable Funding
Certificate as debt for Federal and applicable state income tax purposes.
Section 6.11 Book-Entry Certificates. If provided in any Supplement, the
Investor Certificates of any Series, upon original issuance, will be issued in
the form of one or more typewritten Certificates representing the Book-Entry
Certificates, to be delivered to The Depository Trust Company, the initial
Clearing Agency, by, or on behalf of, the Transferor. The Investor
Certificates of such Series shall initially be registered on the Certificate
Register in the name of CEDE & Co., the nominee of The Depository Trust
Company, which shall be the initial Clearing Agency, and no Certificate Owner
will receive a definitive certificate representing such Certificate Owners
interest in the Investor Certificates, except as provided in Section 6.13.
Unless and until definitive, fully registered Investor Certificates (the
"Definitive Certificates") have been issued to Certificate Owners pursuant to
Section 6.13:
(i) the provision of this Section 6.11 shall be in full force
and effect;
(ii) the Transferor, the Servicer, the Paying Agent, the
Transfer Agent and Registrar and the Trustee may deal with the Clearing
Agency and the Clearing Agency Participants for all purposes (including the
making of distributions on the Investor Certificates) as the authorized
representatives of the Certificate Owners;
(iii) to the extent that the provisions of this Section 6.11
conflict with any other provisions of this Agreement, the provisions of this
Section 6.11 shall control; and
(iv) the rights of Certificate Owners shall be exercised only
through the Clearing Agency and the Clearing Agency Participants and shall be
limited to those established by law and agreements between such Certificate
Owners and the Clearing Agency and/or the Clearing Agency Participants.
Pursuant to the Letter of Representations, unless and until Definitive
Certificates are issued pursuant to Section 6.13, the initial Clearing Agency
will make book-entry transfers among the Clearing Agency Participants
and receive and transmit distributions of principal and interest on the
Investor Certificates to such Clearing Agency Participants.
Section 6.12 Notices to Clearing Agency. Whenever notice or other
communication to the Investor Certificateholders of any Series delivered as
provided in Section 6.11 is required under this Agreement, unless and until
Definitive Certificates shall have been issued to Certificate Owners pursuant
to Section 6.13, the Trustee, the Servicer and the Paying Agent shall give all
such notices and communications specified herein to be given to Holders of the
Investor Certificates of such Series to the Clearing Agency.
Section 6.13 Definitive Certificates. If (i)(A) the Transferor advises
the Trustee in writing that the Clearing Agency is no longer willing or able
to properly discharge its responsibilities under any Letter of
Representations, and (B) the Transferor is unable to locate a qualified
successor, (ii) the Transferor, at its option, advises the Trustee in writing
that, with respect to any Series, it elects to terminate the book-entry system
through the Clearing Agency or (iii) after the occurrence of a Servicer
Default of any Series, Certificate Owners representing beneficial interests
aggregating not less than 50% of the Invested Amount of such Series advise the
Trustee and the Clearing Agency through the Clearing Agency Participants in
writing that the continuation of a book-entry system through the Clearing
Agency is no longer in the best interests of the Certificate Owners of such
Series, the Trustee shall notify the Clearing Agency of the occurrence of any
such event and of the availability of Definitive Certificates of such Series
to Certificate Owners of such Series requesting the same. Upon surrender to
the Trustee of the Investor Certificates of such Series by the Clearing
Agency, accompanied by registration instructions from such Clearing Agency for
registration, the Trustee shall authenticate and deliver Definitive
Certificates of such Series. Neither the Transferor, the Transfer Agent and
Registrar nor the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying
on, such instructions. Upon the issuance of Definitive Certificates of any
Series, all references herein to obligations with respect to such Series
imposed upon or to be performed by the Clearing Agency shall be deemed to be
imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Certificates and the Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder.
[END OF ARTICLE VI]
ARTICLE VII
OTHER MATTERS RELATING
TO THE TRANSFEROR
Section 7.01 Liability of the Transferor. The Transferor shall be liable
for each obligation, covenant, representation and warranty of the Transferor
arising under or related to this Agreement or any Supplement and shall be
liable only to such extent.
Section 7.02 Merger or Consolidation of, or Assumption of the Obligations
of, the Transferor.
(a) The Transferor shall not consolidate with or merge into any other
corporation or convey or transfer its properties and assets substantially as
an entirety to any Person unless:
(i) the corporation formed by such consolidation or into which
the Transferor is merged or the Person which acquires by conveyance or
transfer the properties and assets of the Transferor substantially as an
entirety shall be, if the Transferor is not the surviving entity, organized
and existing under the laws of the United States of America or any state or
the District of Columbia, and, if the Transferor is not the surviving entity,
shall expressly assume, by an agreement supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, the performance
of every covenant and obligation of the Transferor hereunder and under the
other Facilities Documents;
(ii) the Transferor shall have delivered to the Trustee an
Officers' Certificate of the Transferor and an Opinion of Counsel, each
stating that such consolidation, merger, conveyance or transfer and such
supplemental agreement comply with this Section 7.02 and that all
conditions precedent herein provided for relating to such transaction have
been complied with and, in the case of the Opinion of Counsel, that such
supplemental agreement is legal, valid and binding; and
(iii) each Rating Agency shall have confirmed in writing that
the rating of any outstanding Series or on the Commercial Paper will not be
reduced or withdrawn.
(b) The obligations of the Transferor hereunder shall not be
assignable nor shall any Person succeed to the obligations of the Transferor
hereunder except in each case in accordance with the provisions of Section
7.02(a).
Section 7.03 Limitation on Liability of the Transferor. Subject to
Sections 7.01 and 7.04 with respect to the Transferor, except as
specifically provided herein or in any Supplement, neither the Transferor
nor any of the directors or officers or employees or agents of the
Transferor in its capacity as Transferor shall be under any liability to
the Trust, the Trustee, the Certificateholders or any other Person for any
action taken or for refraining from the taking of any action in the
capacity as Transferor pursuant to this Agreement whether arising from
express or implied duties under this Agreement or any Supplement or
otherwise; provided, however, that this provision shall not protect the
Transferor or any such person against any liability which would otherwise
be imposed by reason of willful misfeasance, bad faith or gross negligence
in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. The Transferor and any director or
officer or employee or agent of the Transferor may rely in good faith on
any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder. Each of the Trustee and
the Servicer agrees that the obligations of the Transferor to the Trustee,
the Servicer, the Certificateholders and the Trust hereunder, including
without limitation the obligation of the Transferor in respect of
indemnities pursuant to Section 7.04 hereof, shall be payable from the
Trust Assets (and, solely with respect to the payment of interest and
repayment of principal under the Certificates, solely from the Trust
Assets) in accordance with the provisions of this Agreement and any
Supplement or such other assets of the Transferor as may be available;
provided that such obligations (other than in respect of principal and
interest on the Certificates) shall be suspended at any time solely to the
extent that, and for so long as, the Transferor's assets are insufficient
to pay in full such obligations; and provided, further, that such
obligations (other than in respect of principal and interest on the
Certificates) are fully subordinated to the Transferor's obligations with
respect to the payment of interest and principal under the Certificates,
and the security interest of the Trustee in the Trust Assets with respect
to such interest and principal obligations.
Section 7.04 Liabilities. By entering into this Agreement, the Transferor
agrees to pay, directly to the injured party, the entire amount of any losses,
claims, damages or liabilities (other than those incurred by a
Certificateholder in the Investor Certificates of any Series or, in the case
of the CP Issuer, the Variable Funding Certificate, as a result of defaults or
other losses (including, without limitation, Issuer Charge-Offs and Investor
charge-offs) with respect to the Receivables) arising out of or based on the
arrangements created by this Agreement or any Supplement as though this
Agreement and each Supplement created a partnership among the Transferor and
the Certificateholders under the Uniform Partnership Act in effect in the
State of New York in which the Transferor is a general partner; provided, that
in such capacity the Transferor shall be entitled to the rights of
contribution and indemnification under the Uniform Partnership Act as in
effect in the State of New York. The Transferor agrees to pay, indemnify and
hold harmless (and, solely with respect to the payment of interest and the
repayment of principal under the Certificates, solely from the Trust Assets)
in accordance with the provisions of this Agreement and any Supplement or from
such other assets of the Transferor as may be available each Investor
Certificateholder of any Series and the Holder of the Variable Funding
Certificate against and from any and all such losses, claims, damages and
liabilities except to the extent that they arise from any action by such
Investor Certificateholder or the Holder of the Variable Funding Certificate
causing such losses, claims, damages or liabilities; provided, however, that
such obligations shall be suspended at any time solely to the extent that, and
for so long as, the Transferor's assets are insufficient to pay in full such
obligations; and provided, further, that such obligations under this Section
7.04 other than in respect of principal and interest on the Certificates are
fully subordinated to the Transferor's obligations with respect to the payment
of interest and principal under the Certificates, and the security interest of
the Trustee in the Trust Assets with respect to such interest and principal
obligations.
[END OF ARTICLE VII]
ARTICLE VIII
OTHER MATTERS RELATING
TO THE SERVICER
Section 8.01 Liability of the Servicer. The Servicer shall be liable
under this Agreement only to the extent of the obligations specifically
undertaken by the Servicer in its capacity as Servicer.
Section 8.02 Merger or Consolidation of, or Assumption of the Obligations
of, the Servicer.
(a) The Servicer shall not consolidate with or merge into any
other corporation or convey or transfer its properties and assets
substantially as an entirety to any Person, unless:
(i) the corporation formed by such consolidation or into which
the Servicer is merged or the Person which acquires by conveyance or transfer
the properties and assets of the Servicer substantially as an entirety shall
be a corporation organized and existing under the laws of the United States of
America or any State or the District of Columbia, and, if the Servicer is not
the surviving entity, such corporation shall qualify as an Eligible Servicer
and shall expressly assume, by an agreement supplemental hereto executed and
delivered to the Trustee in a form satisfactory to the Trustee, the
performance of every covenant and obligation of the Servicer hereunder and
under the other Facilities Documents;
(ii) the Servicer has delivered to the Trustee an Officer's
Certificate of the Servicer and an Opinion of Counsel each stating that such
consolidation, merger, conveyance or transfer and such supplemental agreement
comply with this Section 8.02 and that all conditions precedent herein
provided for relating to such transaction have been complied with and, in the
case of the Opinion of Counsel, that such supplemental agreement is legal,
valid and binding; and
(iii) each Rating Agency shall have confirmed in writing that
the rating of any outstanding Series or on the Commercial Paper will not be
reduced or withdrawn.
Section 8.03 Limitation on Liability of the Servicer and Others. Subject
to Section 8.04 with respect to the Servicer, except as otherwise
specifically provided herein or in any Supplement, neither the Servicer nor
any of the directors or officers or employees or agents of the Servicer
shall be under any liability to the Trust, the Trustee, the
Certificateholders or any other Person for any action taken or for
refraining from the taking of any action in its capacity as Servicer,
whether arising from express or implied duties under this Agreement or any
Supplement or otherwise; provided, however, that this provision shall not
protect the Servicer or any such Person against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard
of obligations and duties hereunder. The Servicer and any director or
officer or employee or agent of the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder. The Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action
which is not incidental to its duties to service the Receivables in
accordance with this Agreement or any Supplement which in its reasonable
opinion may involve it in any expense or liability.
Section 8.04 Servicer Indemnification of the Trust and the Trustee. The
Servicer shall indemnify and hold harmless the Trustee (and each of its
directors, officers, employees and agents) and the Trust, individually
and for the benefit of the Certificateholders and the CP Issuer, from
and against any loss, liability, expense, damage or injury suffered or
sustained by reason of any acts, omissions or alleged acts or omissions
arising out of activities of the Trustee or the Trust pursuant to this
Agreement or any Supplement, including those arising from acts or omissions of
the Servicer pursuant to this Agreement or any Supplement, or otherwise
arising out of this Agreement or any Supplement, including but not limited to
any judgment, award, settlement, reasonable attorneys' fees and other costs or
expenses incurred in connection with the defense of any actual or threatened
action, proceeding or claim; provided, however, that the Servicer shall not
indemnify the Trustee or the Trust if such acts, omissions or alleged acts
or omissions constitute fraud, negligence, breach of fiduciary duty or
willful misconduct by the Trustee; and provided, further, that the Servicer
shall not indemnify the Trust, the Investor Certificateholders or the CP
Issuer (x) for any liabilities, costs or expenses of the Trust with respect
to any action taken by the Trustee at the request of any Investor
Certificateholder or the Holder of the Variable Funding Certificate or (y)
with respect to any federal, state or local income or franchise taxes or
any other taxes imposed on or measured by income (or any interest or
penalties or additions with respect thereto) required to be paid by the
Trust or the Investor Certificateholders or the Holder of the Variable
Funding Certificate in connection herewith to any taxing authority, or (z)
with respect to any liabilities, losses, costs or expenses incurred by any
Certificateholder in the Investor Certificates of any Series or, in the
case of the CP Issuer, the Variable Funding Certificate as a result of
defaults or other losses (including, without limitation, Investor
Charge-Offs and Issuer Charge-Offs) with respect to the Receivables not
specifically indemnified or represented to hereunder arising out of or
based on the arrangement created by this Agreement or any Supplement.
Subject to Sections 7.01 and 10.02(b), any indemnification pursuant to this
Section shall only be from the assets of the Servicer. The provisions of
such indemnity shall run directly to and be enforceable by an injured party
subject to the limitations hereof. The provisions of this Section shall
survive the resignation or removal of the Trustee and the termination of
the Trust. The Servicer shall indemnify, defend and hold harmless the
Trustee (and each of its directors, officers, employees and agents) from
and against all costs, expenses, losses, claims, damages and liabilities
(including but not limited to any judgment, award, settlement, reasonable
attorneys' fees and other costs or expenses incurred in connection with
the defense of any actual or threatened action, proceeding or claim)
arising out of or incurred in connection with the acceptance or performance
of their respective duties contained in this Agreement, except to the
extent that such cost, expense, loss, claim, damage or liability: (a) is
due to the willful misconduct, breach of fiduciary duties, acts or
omissions which constitute constructive fraud, or negligence of the Person
indemnified, (b) arises from the Trustee's breach of any of its
representations and warranties set forth in Section 11.15 of this
Agreement, or (c) shall arise out of or be incurred in connection with the
performance by the Trustee of the duties of the Successor Servicer
hereunder.
Section 8.05 The Servicer Not to Resign. The Servicer shall not resign
from the obligations and duties hereby imposed on it except upon determination
that (i) the performance of its duties hereunder is no longer permissible
under applicable law and (ii) there is no reasonable action which the Servicer
could take to make the performance of its duties hereunder permissible under
applicable law. Any such determination permitting the resignation of the
Servicer shall be evidenced as to clause (i) above by an Opinion of Counsel to
such effect delivered to the Trustee. No such resignation shall become
effective until the Trustee or a Successor Servicer shall have assumed the
responsibilities and obligations of the Servicer in accordance with Section
10.02 hereof; provided, that if within one hundred twenty (120) days of the
date that the Servicer notifies the Trustee of its resignation in accordance
with this Section 8.05 and delivers to the Trustee the Opinion of Counsel
referred to above the Trustee does not receive any bids from Eligible
Servicers in accordance with Section 10.02(c) to act as Successor Servicer,
then the Trustee shall automatically be appointed Successor Servicer in
accordance with Section 10.02 (but shall have the continued authority to
appoint another Person as Successor Servicer).
Section 8.06 Access to Certain Documentation and Information Regarding
the Receivables. The Servicer shall provide to the Trustee and the Collateral
Agent and their respective representatives access to the documents, books,
microfiche, computer records and other information regarding the Receivables
and the other Trust Assets in such cases where the Trustee is required in
connection with the enforcement of the rights of the Certificateholders, or by
applicable statutes or regulations, to review such documentation, such access
being afforded without charge but only (i) upon reasonable request, (ii)
during normal business hours and (iii) subject to the Servicer's normal
security and confidentiality procedures. Nothing in this Section 8.06 shall
derogate from the obligation of the Transferor, the Trustee or the Servicer to
observe any applicable law prohibiting disclosure of information regarding the
Obligors and the failure of the Servicer to provide access as provided in
this Section 8.06 as a result of such obligation shall not constitute a breach
of this Section 8.06.
Section 8.07 Delegation of Duties. In the ordinary course of business,
the Servicer may at any time delegate any duties hereunder to any Person who
agrees to conduct such duties in accordance with the Credit and Collection
Policy and this Agreement or any Supplement; provided, however, if any
significant delegation is to a Person other than Ingram, a Lock-Box Bank or
other Affiliate of the Transferor and is not in the ordinary course of the
Servicer's business, written notice shall be given to each Rating Agency, the
Trustee and the Liquidity Agent of such delegation. Any delegation shall not
relleve the Servicer of its liability and responsibility with respect to such
duties and shall not constitute a resignation within the meaning of Section
8.05 hereof.
Section 8.08 Examination of Records. The Transferor and the Servicer
shall, prior to the sale or transfer to a third party of any receivable,
contract or invoice held in its custody, examine its computer and other
records to determine that such receivable, contract or invoice is not part of
the Trust Assets.
Section 8.09 Successor Servicer Indemnification of Transferor. In the
event of a Service Transfer, the Successor Servicer will indemnify and hold
harmless the Transferor for any losses, claims, damages and liabilities of
the Transferor arising from the fraud, gross negligence, breach of
fiduciary duty or willful misconduct of such Successor Servicer.
[END OF ARTICLE VIII]
ARTICLE IX
EVENTS OF TERMINATION
Section 9.01 Events of Termination with Respect to any Series. If any
one of the following events shall occur at such time as there shall be at
least one outstanding Investor Certificate:
(i) failure (A) on the part of the Transferor or the Servicer to
make any payment or deposit required by the terms of this Agreement or any
Supplement on or before five Business Days after the date such payment or
deposit is required to be made herein; or (B) on the part of the Transferor
to duly observe or perform in any material respect the covenant of the
Transferor set forth in Section 2.06(b), or (C) on the part of the
Transferor to duly observe or perform in any material respect any other
covenants or agreements of the Transferor set forth in this Agreement or
any Supplement, which, in the case of clause (C), continues unremedied for
a period of 30 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Transferor
by the Trustee, or to the Transferor and the Trustee by the Holders of
Investor Certificates evidencing Undivided Interests aggregating not less
than 10% of the Invested Amount of the applicable Series;
(ii) any representation or warranty made by the Transferor in
this Agreement or any Supplement or any information contained in a computer
file, microfiche list or hard copy list required to be delivered by the
Transferor pursuant to Section 2.01 shall prove to have been incorrect in any
material respect when made or when delivered, which continues to be incorrect
in any material respect for a period of 60 days after the date on which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Transferor by the Trustee, or to the Transferor and the
Trustee by the Holders of Investor Certificates evidencing Undivided Interests
aggregating not less than 10% of the Invested Amount of the related Series and
as a result of which the interests of the Certificateholders of such Series
are materially and adversely affected; provided, however, that an Event
of Termination pursuant to this Section 9.01(a)(ii) shall not be deemed to
have occurred hereunder with respect to any such Series if the Transferor has
accepted the transfer of the related Receivable, or all of such Receivables,
if applicable, in accordance with Section 2.04(c) during such 60-day period
(or such longer period as the Trustee may specify) in accordance with the
provisions hereof;
(iii) Ingram or the Transferor voluntarily seeks, consents to or
acquiesces in the benefit or benefits of any Debtor Relief Law or becomes a
party to (or is made the subject of) any proceeding provided for by any Debtor
Relief Law, other than as creditor or claimant, and in the event such
proceeding is involuntary, the petition instituting same is not dismissed
within 60 days of its filing; or the Transferor shall become unable for any
reason to transfer Receivables to the Trust in accordance with the provisions
of this Agreement, or Ingram shall become unable for any reason to sell
Receivables to the Transferor in accordance with the provisions of the
Purchase Agreement;
(iv) the Discount Factor shall exceed 501;
(v) the Trust shall become an "investment company" within the
meaning of the Investment Company Act of 1940, as amended;
(vi) the Trustee has not accepted a bid from an Eligible
Servicer within 60 days after any Servicer Default with respect to which a
Termination Notice has been issued;
(vii) the Default Ratio shall exceed 5%;
(viii) the Transferor Eligible Amount shall be less than the
Transferor Minimum Amount or Adjusted Eligible Principal Receivables shall be
less than Minimum Adjusted Eligible Principal Receivables for five consecutive
days;
(ix) the Transferor Eligible Receivables Amount shall be less
than the Transferor Minimum Receivables Amount for five consecutive days; or
(x) the Purchase Agreement shall terminate in accordance with
its terms;
then, (a) in the case of any event described in subparagraph (i) (other than
clause (B) thereof), (ii), (vi) and (viii) after any applicable grace period
set forth in such subparagraphs, either the Trustee or the Holders of Investor
Certificates of the related Series evidencing Undivided Interests aggregating
more than 65% of the related Invested Amount of such Series by notice then
given in writing to the Transferor and the Servicer (and to the Trustee if
given by the Certificateholders) may declare that an Event of Termination has
occurred (A) with respect to all Series of Certificates (in the case of notice
given by the Trustee) or (B) such Series (in the case of notice given by
Investor Certificateholders) as of the date of such notice, or (b) in the case
of any event described in clause (B) of subparagraph (i) or in subparagraphs
(iii), (iv), (v), (vii), or (ix) an Event of Termination with respect to all
Series shall occur without any notice or other action on the part of the
Trustee or any Certificateholder immediately upon the occurrence of such
event.
Section 9.02 Events of Termination with Respect to the Variable
Funding Certificate. If any one of the following events shall occur during
the NonAmortization Period with respect to the Variable Funding
Certificate:
(i) failure (A) on the part of the Transferor or the Servicer to
make any payment or deposit required by the terms of this Agreement or the
related Supplement on or before five Business Days after the date such payment
or deposit is required to be made herein or in such Supplement; or (B) on the
part of the Transferor to duly observe or perform in any material respect the
covenant of the Transferor set forth in Section 2.06(b), or (C) on the part of
the Transferor to duly observe or perform in any material respect any other
covenants or agreements of the Transferor set forth in this Agreement or the
related Supplement, which, in the case of clause (C), continues unremedied for
a period of 30 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Transferor
by the Trustee, or to the Transferor and the Trustee by the CP Issuer, the
Controlling Party or the Collateral Agent;
(ii) any representation or warranty made by the Transferor in
this Agreement or the related Supplement or any information contained in a
computer file, microfiche list or hard copy list required to be delivered
by the Transferor pursuant to Section 2.01 shall prove to have been
incorrect in any material respect when made or when delivered, which
continues to be incorrect in any material respect for a period of 60 days
after the date on which written notice of such failure, requiring the same
to be remedied, shall have been given to the Transferor by the Trustee, or
to the Transferor and the Trustee by the CP Issuer, the Controlling Party
or the Collateral Agent and as a result of which the interests of such
Person giving such notice are materially and adversely affected;
(iii) Ingram or the Transferor voluntarily seeks, consents to or
acquiesces in the benefit or benefits of any Debtor Relief Law or becomes a
party to (or is made the subject of) any proceeding provided for by any Debtor
Relief Law, other than as creditor or claimant, and in the event such
proceeding is involuntary, the petition instituting same is not dismissed
within 60 days of its filing; or the Transferor shall become unable for any
reason to transfer Receivables to the Trust in accordance with the provisions
of this Agreement, or Ingram shall become unable for any reason to sell
Receivables to the Transferor in accordance with the provisions of the
Purchase Agreement;
(iv) the CP Issuer, the Transferor or the Trust shall become an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended;
(v) the Trustee has not accepted a bid from an Eligible Servicer
within 60 days after any Servicer Default with respect to which a Termination
Notice has been issued;
(vi) Ingram shall fail to make any payment or deposit required
to be made pursuant to the terms of the Purchase Agreement on or before three
Business Days after the date such payment or deposit is required to be made
thereunder;
(vii) the Discount Factor shall equal or exceed 50%;
(viii) the Lien created in favor of the Trust on all the Trust
Assets shall cease to be a perfected, first priority enforceable Lien thereon,
or the Transferor, the CP Issuer or Ingram shall so assert in writing (and
such Receivables are not repurchased pursuant to Section 2.04(c));
(ix) the Servicer shall fail to deliver the Daily Report or
Settlement Statement to the Trustee and such failure continues for a period of
three Business Days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Servicer by
the Trustee or the Controlling Party; Provided, however that a delay in or
failure to deliver any such Daily Report or Settlement Statement for a period
of five Business Days shall not constitute an Event of Termination until the
expiration of such five Business Days if such delay or failure could not be
prevented by the exercise of reasonable diligence by the Servicer and such
delay or failure was caused by an Act of God, the public enemy, acts of
declared or undeclared war, public disorder, rebellion or sabotage, epidemics,
landslides, lightning, fire, hurricane, earthquakes, floods or similar causes;
(x) a Material Subsidiary shall voluntarily seek, consent to or
acquiesce in the benefit or benefits of any Debtor Relief Law or becomes a
party to (or is made the subject of) any proceeding provided for by any Debtor
Relief Law, other than as creditor or claimant, and in the event such
proceeding is involuntary, the petition instituting same is not dismissed
within 60 days of its filing; or a Material Subsidiary shall become unable for
any reason to sell Receivables to Ingram in accordance with the provisions of
the applicable Subsidiary Purchase Agreement;
(xi) the Default Ratio shall exceed 5%;
(xii) the Transferor Eligible Amount shall be less than the
Transferor Minimum Amount or Adjusted Eligible Principal Receivables shall be
less than Minimum Adjusted Eligible Principal Receivables for five consecutive
days;
(xiii) an "Event of Default" shall have occurred and shall be
continuing under the Liquidity Agreement and/or the LOC Reimbursement
Agreement;
(xiv) the Transferor Eligible Receivables Amount shall be less
than the Transferor Minimum Receivables Amount for five consecutive days; or
(xv) the Purchase Agreement shall terminate in accordance with
its terms;
then, (y) after any applicable grace period, in the case of any event
described in subparagraph (i) (other than clause (B) thereof), (ii), (v),
(vi), (ix), (x), (xii), or (xiii), any of the Trustee or the Holder of the
Variable Funding Certificate by notice then given in writing to the
Transferor and the Servicer (and to the Trustee if given by the Holder of
the Variable Funding Certificate) may declare that an Event of Termination
has occurred as of the next succeeding Payment Date with respect to the
Variable Funding Certificate, or (z) in the case of any event described in
clause (B) of subparagraph (i) or in subparagraphs (iii), (iv), (vii),
(viii), (xi), (xiv) or (xv), an Event of Termination with respect to the
Variable Funding Certificate shall occur as of the next succeeding Payment
Date without any notice or other action on the part of the Trustee or any
other Person, immediately upon the occurrence of such event. Notice of any
Event of Termination with respect to the Variable Funding Certificate known
to a Responsible Officer of the Trustee shall be given by the Trustee to
the Persons specified in the applicable Supplement.
Section 9.03 Additional Rights Upon the Occurrence of Certain Events.
(a) If the Transferor voluntarily (i) seeks, consents to or
acquiesces in the benefit or benefits of any Debtor Relief Law or becomes a
party to (or is made the subject of) any proceeding provided for by any Debtor
Relief Law, other than as creditor or claimant, and in the event such
proceeding is involuntary, the petition instituting the same is not dismissed
within 60 days of its filing or (ii) goes into liquidation or any other Person
shall be appointed as a bankruptcy trustee or receiver or conservator of the
Transferor, the Transferor shall on the day of such event (the "Appointment
Date") immediately cease to transfer Receivables to the Trust and shall
promptly give notice to the Trustee of such event. Notwithstanding any
cessation of the transfer to the Trust of additional Receivables, Receivables
transferred to the Trust prior to the occurrence of such voluntary or
involuntary event and Collections in respect of such Receivables whenever
created, accrued in respect of such Receivables, shall continue to be a part
of the Trust. Within 15 days of the day on which a Responsible Officer of the
Trustee first receives written notice of the occurrence of the Appointment
Date, the Trustee shall (i) publish a notice in Authorized Newspapers that a
receiver or conservator of the Transferor has been appointed or that a
voluntary liquidation of the Transferor has occurred and that the Trustee
intends to sell, dispose of or otherwise liquidate the Receivables on
commercially reasonable terms and in a commercially reasonable manner and (ii)
send written notice to the Holder of the Variable Funding Certificate and the
Investor Certificateholders describing the provisions of this Section 9.03 and
requesting instructions from such Holders. Unless within 60 days from the day
written notice pursuant to clause (ii) above is first sent the Trustee shall
have received written instructions of the Holder of the Variable Funding
Certificate and Holders of Investor Certificates representing Undivided
Interests aggregating more than 50% of the Invested Amount of each Series and
in the case of a Series having more than one Class, more than 50` of the
Invested Amount of each Class of such Series, to the effect that such
Certificateholders disapprove of the liquidation of the Receivables and wish
to continue receiving Receivables under the Trust as before such appointment,
or unless the Trustee shall have received an Opinion of Counsel addressed to
the Trustee to the effect that any such sale, disposition or liquidation is
prohibited by law, the Trustee shall proceed to sell, dispose of, or
otherwise liquidate the Receivables in a commercially reasonable manner
and, to the best of its ability, on commercially reasonable terms, which
shall include the solicitation of competitive bids. The Trustee may
obtain, and shall be fully protected in relying on, a prior determination
from such bankruptcy trustee or receiver that the terms and manner of any
proposed sale, disposition or liquidation hereunder are commercially
reasonable. The provisions of Section 9.01, 9.02 and 9.03 shall not be
deemed to be mutually exclusive.
(b) The proceeds from the sale, disposition or liquidation of
the Receivables pursuant to subsection (a) above, net of all reasonable
expenses incurred by the Trustee in connection with such sale, liquidation
or other disposition, which shall be paid to the Trustee from such process,
shall be treated as Collections of the Receivables and shall be allocated
in accordance with the provisions of Section 4.03. On the day following
the Payment Date on which such proceeds are distributed to the Holder of
the Variable Funding Certificate and the Investor Certificateholders, the
Trust shall terminate.
(c) Upon the occurrence of an event specified in Section
9.03(a), if the Trustee has not sold the Receivables as provided therein
within 120 days after the Appointment Date, the Trustee, upon the written
instructions of the Holder of the Variable Funding Certificate or all of the
Holders of Investor Certificates of any Series shall sell, dispose of or
otherwise liquidate Receivables on a best efforts basis, selected on a random
basis from all Receivables in the Trust, in an amount equal to (i) in the case
of any such Series of Investor Certificates, the product of the Aggregate
Principal Receivables and the aggregate percentage Undivided Interest in the
Trust represented by all Series so instructing the Trustee and (ii) in the
case of the Variable Funding Certificate, the product of the Aggregate
Principal Receivables and the Undivided Interest in the Trust represented by
the Variable Funding Certificate; provided that the Rating Agency has advised
the Transferor and the Trustee in writing that such sale shall not adversely
affect the then existing rating of any such Series or, if the Holder of the
Variable Funding Certificate has not so instructed the Transferor, the
Commercial Paper. The proceeds from such sale, net of all reasonable
expenses incurred by the Trustee in connection with such sale, liquidation
or other disposition, which shall be paid to the Trustee, shall be
deposited in the Collection Account by the Trustee and shall be treated as
Collections of Receivables allocable to the Series or to the Variable
Funding Certificate so instructing the Transferor and shall be allocated in
accordance with Section 4.03. Upon distribution of such proceeds in
accordance with Article IV, such Series or the Variable Funding
Certificate, as the case may be, shall be deemed paid in full and no
further amounts shall be allocated thereto under Section 4.03.
[END OF ARTICLE IX]
ARTICLE X
SERVICER DEFAULTS
Section 10.01 Servicer Defaults. If any one of the following events (a
"Servicer Default") shall occur and be continuing:
(a) failure by the Servicer to make any payment, transfer or
deposit or to give instructions or to give notice to the Trustee to make such
payment, transfer or deposit on or before the date occurring three Business
Days after the date such payment, transfer or deposit or such instruction or
notice is required to be made or given, as the case may be, under the terms of
this Agreement or any Supplement;
(b) failure on the part of the Servicer duly to observe or
perform any other covenants or agreements of the Servicer set forth in this
Agreement or any Supplement which has a material adverse effect on the
Certificateholders, which continues unremedied for a period of 30 days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Trustee, or to the
Servicer and the Trustee by the CP Issuer if the Holder of the Variable
Funding Certificate is adversely affected thereby, or by the Holders of
Investor Certificates evidencing Undivided Interests in the Trust aggregating
not less than 50% of the Invested Amount of any Series adversely affected
thereby; or the Servicer shall assign its duties under this Agreement, except
as permitted by Sections 8.02, 8.05 and 8.07;
(c) any representation, warranty or certification made by the
Servicer in this Agreement, any Supplement or in any certificate or report
delivered pursuant to this Agreement or any Supplement shall prove to have
been incorrect when made, which has a material adverse effect on the rights of
the Certificateholders and which material adverse effect continues for a
period of 30 days after the date on which written notice thereof, requiring
the same to be remedied, shall have been given to the Servicer by the Trustee,
or to the Servicer and the Trustee by the CP Issuer or by the Holders of
Investor Certificates evidencing Undivided Interests in the Trust aggregating
not less than 50% of the Invested Amount of any Series adversely affected
thereby; or
(d) the Servicer shall voluntarily seek, consent to or acquiesce
in the benefit or benefits of any Debtor Relief Law or becomes a party to (or
be made the subject of) any proceeding provided for under any Debtor Relief
Law, other than as creditor or claimant, and in the event such proceeding is
involuntary, the petition instituting same is not dismissed within 60 days of
its filing;
then, in the event of any Servicer Default, so long as the Servicer Default
shall not have been remedied, either (i) the Trustee, (ii) the CP Issuer
(but not if the CP Issuer is a subsidiary or other Affiliate of the
Servicer) or the Collateral Agent or (iii) the Holders of Investor
Certificates evidencing Undivided Interests aggregating more than 50% of
the Invested Amount of any Series materially and adversely affected
thereby, by notice then given in writing to the Servicer and the Transferor
(with a copy thereof to each Rating Agency) and to the Trustee if given by
a Person other than the Trustee (a "Termination Notice"), may terminate
the rights and obligations of the Servicer as Servicer under this Agreement
and in and to the Receivables and the proceeds thereof.
After receipt by the Servicer of a Termination Notice, and on the date
that a Successor Servicer shall have been appointed pursuant to Section 10.02,
all authority and power of the Servicer under this Agreement and each
Supplement shall pass to and be vested in a Successor Servicer (a "Service
Transfer"); and, without limitation, the Trustee is hereby authorized
and empowered (upon the failure of the Servicer to cooperate) to execute
and deliver, on behalf of the Servicer, as attorney-in-fact or otherwise,
all documents and other instruments upon the failure of the Servicer to
execute or deliver such documents or instruments, and to do and accomplish
all other acts or things necessary or appropriate to effect the purposes
of such Service Transfer. The Servicer agrees to cooperate with the
Trustee, the Transferor and such Successor Servicer in effecting the
termination of the responsibilities and rights of the Servicer to conduct
servicing hereunder, including, without limitation, the transfer to such
Successor Servicer of all authority of the Servicer to service the
Receivables and the Related Security provided for under this Agreement,
including, without limitation, all authority over all Collections which
shall on the date of transfer be held by the Servicer for deposit, or which
have been deposited by the Servicer in the Collection Account, or which
shall thereafter be received with respect to the Receivables and the
Related Security, and in assisting the Successor Servicer. The Servicer
shall promptly transfer, to the extent it is permitted by applicable law to
do so, its electronic records relating to the Receivables and the Related
Security to the Successor Servicer in such electronic form as the Successor
Servicer may reasonably request and shall promptly transfer, to the extent
it is permitted by applicable law to do so, to the Successor Servicer all
other records, correspondence and documents necessary for the continued
servicing of the Receivables and the Related Security in the manner and at
such times as the Successor Servicer shall reasonably request and shall, to
the extent not prohibited by licensing restrictions, provide access to or
copies of computer software, including by means of sublicensing
arrangements if applicable, to the extent necessary for the continued
servicing of the Receivables and the Related Security; provided, however,
that the Servicer shall not be required, to the extent it has an ownership
interest in any electronic records, computer software or licenses, to
transfer, assign, set-over or otherwise convey such ownership interest(s)
to the Successor Servicer. The Servicer shall provide the Successor
Servicer with access to any computer hardware in its possession for a
reasonable time after the Servicer's termination to the extent necessary
for the uninterrupted servicing of the Receivables. Notwithstanding the
foregoing, the Servicer shall not be required to provide such access,
whether with respect to computer hardware or software, if to provide such
access would violate applicable contractual restrictions (including
pursuant to any licensing arrangements to which Ingram or any Designated
Subsidiary is a party); Provided, however, that Ingram shall use all
reasonable efforts and act in good faith in seeking consents or waivers
necessary to permit the Successor Servicer to have such access. To the
extent that compliance with this Section 10.01 shall require the Servicer
to disclose to the Successor Servicer information of any kind which the
Servicer reasonably deems to be confidential, the Successor Servicer shall
be required to enter into such customary licensing and confidentiality
agreements as the Servicer shall deem necessary to protect its interest.
Notwithstanding the foregoing, a delay in or failure of performance under
Section l0.0l(a) shall not constitute a Servicer Default if such delay or
failure could not be prevented by the exercise of reasonable diligence by
the Servicer and such delay or failure was caused by an Act of God, the
public enemy, acts of declared or undeclared war, public disorder,
rebellion or sabotage, epidemics, landslides, lightning, fire, hurricanes,
earthquakes, floods or similar causes and no funds have been remitted
to Ingram or the Transferor. The preceding sentence shall not relieve the
Servicer from using reasonable efforts to perform its obligations in a timely
manner in accordance with the terms of this Agreement and each Supplement, and
the Servicer shall provide the Trustee, the Rating Agencies, the Transferor,
the CP Issuer and the Investor Certificateholders with an Officer's
Certificate giving prompt notice of such failure or delay by it, together with
a description of its efforts to so perform its obligations. The Servicer shall
immediately notify the Trustee in writing of any Servicer Default. In
connection with any Service Transfer, all reasonable costs and expenses
(including attorneys' fees) incurred in connection with transferring the
Receivables and the Related Security to the Successor Servicer and amending
this Agreement to reflect such succession as Successor Servicer pursuant to
this Section 10.01 and Section 10.02 shall be paid by the Servicer upon
presentation of reasonable documentation of such costs and expenses.
Section 10.02 Trustee to Act; Appointment of Successor.
(a) On and after the receipt by the Servicer of a Termination
Notice pursuant to Section 10.01, the Servicer shall continue to perform all
servicing functions under this Agreement and any Supplement until the date
specified in the Termination Notice or as otherwise specified by the
Trustee in writing or, if no such date is specified in such Termination
Notice, or as otherwise specified by the Trustee, until a date mutually
agreed upon by the Servicer and Trustee. The Trustee shall as promptly as
possible after the giving of a Termination Notice appoint an Eligible
Servicer as a successor servicer (the "Successor Servicer") and such
Successor Servicer shall have obtained written confirmation from each
Rating Agency that the then current rating on the Commercial Paper or on
any outstanding Series will not be reduced or withdrawn and shall accept
its appointment by a written assumption and agreement to perform all of the
duties, obligations and liabilities of the Servicer hereunder in a form
acceptable to the Trustee. In the event that a Successor Servicer has not
been appointed or has not accepted its appointment at the time when the
Servicer ceases to act as Servicer, or upon the occurrence of the events
specified in Section 8.05, the Trustee without further action shall
automatically be appointed the Successor Servicer. The Trustee may
delegate any of its servicing obligations to an affiliate or agent of the
Servicer or the Trustee in accordance with Section 3.01(a).
Notwithstanding the above, the Trustee shall, if it is legally unable so to
act, petition a court of competent jurisdiction to appoint any established
institution having a net worth of not less than $50,000,000. The Trustee
shall promptly give notice to each Rating Agency of the appointment of a
Successor Servicer upon such appointment.
(b) Upon its appointment, the Successor Servicer shall be the
successor in all respects to the Servicer with respect to servicing functions
under this Agreement and shall be subject to all the responsibilities,
duties and liabilities relating thereto placed on the Servicer by the
terms and provisions hereof, and all references in this Agreement and any
Supplement to the Servicer shall be deemed to refer to the Successor Servicer
except for the references in Sections 3.03, 8.04 and ll.O5 and the last
sentence of Section 10.01 which shall continue to refer to Ingram.
(c) In connection with any Termination Notice, the Trustee will
review any bids which it obtains from Eligible Servicers and shall be permitted
to appoint any Eligible Servicer submitting such a bid as a Successor Servicer
for servicing compensation not in excess of the Servicing Fee permitted for a
Successor Servicer pursuant to Section 3.02; provided, however, that Ingram
shall be responsible for payment of all servicing compensation in excess of the
Servicing Fee, and that no such monthly compensation paid out of Collections
shall be in excess of the Servicing Fee permitted to a Successor Servicer
pursuant to Section 3.02.
(d) All authority and power granted to the Successor Servicer
under this Agreement shall automatically cease and terminate upon
termination of the Trust pursuant to Section 12.01, and shall pass to and
be vested in the Transferor and, without limitation, the Transferor is
hereby authorized and empowered to execute and deliver, on behalf of the
Successor Servicer, as attorney-in-fact or otherwise, all documents and
other instruments, and to do and accomplish all other acts or things
necessary or appropriate to effect the purposes of such transfer of
servicing rights. The Successor Servicer agrees to cooperate with the
Transferor in effecting the termination of the responsibilities and rights
of the Successor Servicer to conduct servicing of the Receivables and the
Related Security, including, without limitation, all authority over
Collections then held by the Successor Servicer or which shall thereafter
be received by the Successor Servicer. The Successor Servicer shall
promptly transfer its electronic records relating to the Receivables to the
Transferor in such electronic form as the Transferor may reasonably request
and shall promptly transfer all other records, correspondence and documents
to the Transferor in the manner and at such times as the Transferor shall
reasonably request. To the extent that compliance with this Section 10.02
shall require the Successor Servicer to disclose to the Transferor
information of any kind which the Successor Servicer deems to be
confidential, the Transferor shall be required to enter into such customary
licensing and confidentiality agreements as the Successor Servicer shall
deem necessary to protect its interests.
Section 10.03 Notification to Certificateholders. Upon the occurrence of
any Servicer Default, the Servicer shall give prompt written notice thereof
to the Trustee and, upon receipt of such written notice, the Trustee shall
give notice to the CP Issuer, each Rating Agency and the Investor
Certificateholders at their respective addresses appearing in the
Certificate Register. Upon any termination or appointment of a Successor
Servicer pursuant to this Article X, the Trustee shall give prompt written
notice thereof to the CP Issuer and the Investor Certificateholders at
their respective addresses appearing in the Certificate Register.
Section 10.04 Waiver of Past Defaults. The CP Issuer may, on behalf of
itself if it is adversely affected by any default by the Servicer or the
Transferor, and the Holders of Investor Certificates evidencing Undivided
Interests aggregating more than 65% of the Invested Amount of any Series
materially adversely affected by any default by the Servicer or Transferor
may, on behalf of all Certificateholders of such affected Series,
respectively waive any default by the Servicer or the Transferor in the
performance of their obligations hereunder and its consequences, except a
default in the failure to make any required deposits or payments of
interest or principal with respect to any Series of Certificates. Upon any
such waiver of a past default, such default shall cease to exist, and any
default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereon except to the
extent expressly so waived. Upon the waiver by the CP Issuer of any
default, the CP Issuer shall provide notice of such waiver, except waivers
with respect to the timely delivery of reports and notices and the
performance of ministerial functions hereunder.
[END OF ARTICLE X]
ARTICLE XI
THE TRUSTEE
Section 11.01 Duties of Trustee. (a) The Trustee, prior to the occurrence
of a Servicer Default of which a Responsible Officer of the Trustee has
knowledge and after the curing of all Servicer Defaults which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If to the knowledge of a Responsible
Officer of the Trustee a Servicer Default has occurred (which has not been
cured or waived), the Trustee shall exercise such of the rights and powers
vested in it by this Agreement or any Supplement, as the case may be, and use
the same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such prudent
person's own affairs.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee which are specifically required to be furnished
pursuant to any provision of this Agreement or any Supplement, shall examine
them to determine whether they substantially conform to the requirements of
this Agreement or any Supplement. The Trustee shall give prompt written notice
to the Certificateholders of any material lack of conformity of any such
instrument to the applicable requirements of this Agreement or any Supplement
discovered by the Trustee which would entitle a specified percentage of the
Certificateholders to take any action pursuant to this Agreement or any
Supplement.
(c) Subject to Section ll.0l(a), no provision of this Agreement
or any Supplement shall be construed to relieve the Trustee from liability for
its own negligent action, its own negligent failure to act or its own willful
misconduct; provided, however, that:
(i) The Trustee shall not be personally liable for an
error of judgment made in good faith by a Responsible Officer or
Responsible Officers of the Trustee, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(ii) The Trustee shall not be personally liable with respect to
any action taken, suffered or omitted to be taken by it in good faith in
accordance with, unless otherwise specified herein, the direction of the CP
Issuer (if it is adversely affected thereby) or the Holders of Investor
Certificates evidencing Undivided Interests in the Trust aggregating more than
50% of the Invested Amount of any Series relating to the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this Agreement
or any Supplement;
(iii) The Trustee shall not be charged with knowledge of any
failure by the Servicer to comply with the obligations of the Servicer
referred to in clauses (a), (b) or (c) of Section 10.01, or of the occurrence
of any Event of Termination, unless a Responsible Officer of the Trustee
obtains actual knowledge of such failure or the Trustee receives written
notice of such failure from the Servicer, the CP Issuer or any Holders of
Investor Certificates evidencing Undivided Interests aggregating not less than
10% of the Invested Amount of any Series adversely affected thereby; and
(iv) Prior to the occurrence of a Servicer Default of which a
Responsible Officer has knowledge, and after the curing or waiver of such
Servicer Defaults that may have occurred, the duties and obligations of the
Trustee shall be determined solely by the express provisions of this Agreement
and any Supplements, the Trustee shall not be liable except for the
performance of such duties and obligations as shall be specifically set forth
in this Agreement and any Supplement, no implied covenants or obligations
shall be read into this Agreement or any Supplement against the Trustee and,
in the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished to
the Trustee and, if specifically required to be furnished pursuant to any
provision of this Agreement or any Supplement, conforming to the requirements
of this Agreement or such Supplement.
(d) The Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers, if there
is reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement or any Supplement shall in
any event require the Trustee to perform, or be responsible for the manner of
performance of, any obligations of the Servicer under this Agreement or any
Supplement except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Servicer in accordance with the terms of this Agreement or any Supplement.
(e) Except for actions expressly authorized by this Agreement
or any Supplement, the Trustee shall take no action reasonably likely to
impair the interests of the Trust in any Receivable now existing or
hereafter created or to impair the value of any Receivable now existing or
hereafter created.
(f) Except as specifically provided in this Agreement or any
Supplement, the Trustee shall have no power to vary the corpus of the Trust.
(g) If, to the knowledge of a Responsible Officer of the
Trustee, the Paying Agent or the Transfer Agent and Registrar shall fail to
perform any obligation, duty or agreement in the manner or on the day
required to be performed by the Paying Agent or the Transfer Agent and
Registrar, as the case may be, under this Agreement, the Trustee shall be
obligated as soon as possible after such Responsible Officer obtains
knowledge thereof and receives appropriate records, if any, to perform such
obligation, duty or agreement in the manner so required.
(h) If the Transferor has agreed to transfer any of its
receivables (other than the Receivables) to another Person, upon the written
request of the Transferor, the Trustee will enter into such intercreditor
agreements with the transferee of such receivables as are customary and
necessary to identify separately the rights of the Trust and such other
Person in the Transferor's receivables; provided that the Trustee shall not
be required to enter into any intercreditor agreement which could adversely
affect the interests of the Certificateholders or the Trustee and, upon the
request of the Trustee, the Transferor will deliver an Opinion of Counsel
on any matters relating to such intercreditor agreement, reasonably
requested by the Trustee.
(i) Except as specifically otherwise provided in this Agreement,
any action, suit or proceeding brought in respect of one or more particular
Series or the Variable Funding Certificate shall have no effect on the
Trustee's rights, duties and obligations hereunder with respect to any one or
more Series or the Variable Funding Certificate not the subject of such
action, suit or proceeding.
Section 11.02 Certain Matters Affecting the Trustee. Except as otherwise
provided in Section 11.01:
(a) The Trustee may rely on and shall be protected in acting on,
or in refraining from acting in accordance with, any resolution, Officers'
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document believed by it to be genuine and to have
been signed or presented to it pursuant to this Agreement or any Supplement
by the proper party or parties;
(b) The Trustee may consult with counsel and any advice or
Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such advice or Opinion of Counsel;
(c) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement or any Supplement, or to
institute, conduct or defend any litigation hereunder or in relation hereto or
any Supplement, at the request, order or direction of any of the
Certificateholders, pursuant to the provisions of this Agreement or any
Supplement, unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses
and liabilities which may be incurred therein or thereby; nothing
contained herein shall, however, relieve the Trustee of the obligation, upon
the occurrence of a Servicer Default (which has not been cured) of which a
Responsible Officer has knowledge, to exercise such of the rights and
powers vested in it by this Agreement or any Supplement, and to use the
same degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of such prudent
person's own affairs;
(d) Except as provided in Section 11.01(c)(3), the Trustee shall
not be personally liable for any action taken, suffered or omitted by it in
good faith and believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Agreement or any Supplement;
(e) The Trustee shall not be bound to make any investigation
into the facts of matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing so to do by
the CP Issuer if it could be adversely affected if the Trustee does not
perform such acts, or by Holders of Investor Certificates evidencing
Undivided Interests aggregating more than 10% of the Invested Amount of any
Series which could be adversely affected if the Trustee does not perform
such acts; provided, however, that if the payment within a reasonable time
to the Trustee of the costs, expenses or liabilities likely to be incurred
by it in the making of such investigation shall be, in the opinion of the
Trustee, not reasonably - assured to the Trustee by the security afforded
to it by the terms of this Agreement, the Trustee may require reasonable
indemnity against such cost, expense or liability as a condition to so
proceeding. The reasonable expense of every such examination shall be paid
by the Servicer (or, if Ingram is no longer the Servicer, by Ingram) or, if
paid by the Trustee, shall be reimbursed by the Servicer (or if Ingram is
no longer the Servicer, by Ingram) upon demand;
(f) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or custodians, and the Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent, attorney or
custodian appointed with due care by it hereunder;
(g) Except as may be required by Section ll.0l(a) hereof, the
Trustee shall not be required to make any initial or periodic examination of
any documents or records related to the Receivables for the purpose of
establishing the presence or absence of defects, the compliance by the
Transferor or the Servicer with their representations and warranties or for
any other purpose; and
(h) The right of the Trustee to perform any discretionary act
enumerated in this Agreement or any Supplement shall not be construed as a
duty, and the Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of any such act.
Section 11.03 Trustee Not Liable for Recitals in Certificates. The
Trustee assumes no responsibility for the correctness of the recitals
contained herein and in the Certificates (other than the certificate of
authentication on the Certificates). Except as set forth in Section 11.15, the
Trustee makes no representations as to the validity or sufficiency of this
Agreement or any Supplement or of the Certificates (other than the certificate
of authentication on the Certificates) or of any Receivable or related
document. The Trustee shall not be accountable for the use or application by
the Transferor of any of the Certificates or of the proceeds of such
Certificates, or for the use or application of any funds paid to the
Transferor in respect of the Receivables or deposited in the Collection
Account or other accounts now or hereafter established to effectuate the
transactions contemplated herein and in accordance with the terms hereof.
The Trustee shall have no duty to conduct any affirmative investigation
as to the occurrence of any condition requiring the repurchase of any
Receivable by the Transferor or the Servicer pursuant to this Agreement or any
Supplement or the eligibility of any Receivable for purposes of this Agreement
or any Supplement. The Trustee shall have no responsibility for filing any
financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder (unless the Trustee shall have become the Successor
servicer) or to prepare or file any Securities and Exchange Commission
filing for the Trust or to record this Agreement or any Supplement.
Section 11.04 Trustee May Own Certificates. The Trustee in its individual
or any other capacity may become the owner or pledgee of Investor Certificates
and may deal with the Transferor and the Servicer in banking transactions with
the same rights as it would have if it were not the Trustee.
Section 11.05 The Servicer to Pay Trustee's Fees and Expenses. The
Servicer covenants and agrees to pay to the Trustee from time to time, and the
Trustee shall be entitled to receive, reasonable compensation (which shall not
be limited by any provision of law in regard to the compensation of a trustee
of an express trust) for all services rendered by it in the execution of the
trust hereby created and in the exercise and performance of any of the powers
and duties hereunder or under any Supplement of the Trustee, and, subject to
Section 8.04, the Servicer will pay or reimburse the Trustee upon its request
for all reasonable expenses, disbursements and advances incurred or made by
the Trustee in accordance with any of the provisions of this Agreement or any
Supplement (including the reasonable fees and expenses of its agents and
counsel) except any such expense, disbursement or advance as may arise from
its negligence or bad faith and except as provided in the following sentence.
If the Trustee is appointed Successor Servicer pursuant to Section 10.02, the
provisions of this Section 11.05 shall not apply to expenses, disbursements
and advances made or incurred by the Trustee in its capacity as Successor
Servicer, which shall be covered out of the Servicing Fee. The provisions of
this paragraph and Sections 8.04 and 8.09 shall survive the termination of the
Trust and the resignation or removal of the Trustee.
Section 11.06 Eligibility Requirements for Trustee. The Trustee hereunder
shall at all times be a corporation organized and doing business under the laws
of the United States or any state thereof, including the District of Columbia,
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000 and subject to
supervision or examination by Federal or state authority. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purpose of this Section 11.06, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. In case at any time
the Trustee shall cease to be eligible in accordance with the provisions of
this Section 11.06, the Trustee shall resign immediately in the manner and
with the effect specified in Section 11.07.
Section 11.07 Resignation or Removal of Trustee.
(a) The Trustee may at any time resign and be discharged from
the trust hereby created by giving written notice thereof to the Transferor,
the Servicer, CP Issuer and the Rating Agencies. Upon receiving such notice of
resignation, the Servicer shall promptly appoint a successor trustee by
written instrument, copies of which instrument shall be delivered to the
resigning Trustee, the successor trustee, the Transferor and the Rating
Agencies. If no successor trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 11.06 hereof and shall fail to
resign after written request therefor by the Servicer, or if at any time the
Trustee shall be legally unable to act, or shall be adjudged a bankrupt or
insolvent, or if a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee
or of its property or affairs for the purpose of rehabilitation, conservation
or liquidation, then the Servicer may remove the Trustee and promptly appoint
a successor trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to the
successor trustee.
(c) Any resignation or removal of the Trustee pursuant to any of
the provisions of this Section 11.07 shall not become effective until either
(i) the Trust has been completely liquidated in accordance with Article XII of
this Agreement and all proceeds of such liquidation have been distributed
pursuant to the terms of this Agreement or (ii) acceptance of appointment
by a successor trustee having the qualifications set forth in Section
26(a)(1) of the Investment Company Act of 1940 and Section 11.06 as
provided in Section 11.08 hereof.
Section 11.08 Successor Trustee.
(a) Any successor trustee appointed as provided in Section
11.07 hereof shall execute, acknowledge and deliver to the Transferor and
to its predecessor Trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor
Trustee shall become effective and such successor trustee, without any
further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder and
under any Supplement with like effect as if originally named as Trustee
herein. The predecessor Trustee shall deliver to the successor trustee all
documents or copies thereof, at the expense of the Servicer, and statements
held by it hereunder; and the Transferor and the predecessor Trustee shall
execute and deliver such instruments and do such other things as may
reasonably be required for fully and certainly vesting and confirming in
the successor trustee all such rights, powers, duties and obligations. The
Servicer shall immediately give notice to the Rating Agency upon the
appointment of a successor trustee.
(b) No successor trustee shall accept appointment as provided in
this Section 11.08 unless at the time of such acceptance such successor
trustee shall be eligible under the provisions of Section 11.06 hereof.
(c) Upon acceptance of appointment by a successor trustee as
provided in this Section 11.08 hereof, such successor trustee shall mail
notice of such succession hereunder to all Certificateholders at their
addresses as shown in the Certificate Register.
Section 11.09 Merger or Consolidation of Trustee. Any Person into which
the Trustee may be merged or converted or with which it may be consolidated,
or any Person resulting from any merger, conversion or consolidation to which
the Trustee shall be a party, or any Person succeeding to all or substantially
all of the corporate trust business of the Trustee, shall be the successor of
the Trustee hereunder, provided such corporation shall be eligible under
the provisions of Section 11.06 hereof, without the execution or filing of
any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
Section 11.10 Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Agreement or
any Supplement, at any time, for the purpose of meeting any legal requirements
of any jurisdiction in which any part of the Trust may at the time be located,
the Trustee shall have the power and may execute and deliver all instruments
to appoint, with the prior written consent of the Servicer, one or more
persons to act as a co-trustee or co-trustees, or separate trustee or
separate trustees, of all or any part of the Trust, and to vest in such
Person or Persons, in such capacity and for the benefit of the
Certificateholders, such title to the Trust, or any part thereof, and,
subject to the other provisions of this Section 11.10, such powers, duties,
obligations, rights and trusts as the Trustee may consider necessary or
desirable. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 11.06
and no notice to Certificateholders of the appointment of any co-trustee or
separate trustee shall be required under Section 11.08 hereof. Any such
appointment of a co-trustee shall not relieve the Trustee of its
obligations under this Agreement.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly (it
being understood that such separate trustee or co-trustee is not authorized to
act separately without the Trustee joining in such act), except to the extent
that under any law of any jurisdiction in which any particular act or acts are
to be performed (whether as Trustee hereunder or as successor to the Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust Assets or any portion thereof
in any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the Trustee;
(ii) No trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder; and
(iii) The Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every
instrument appointing any separate trustee or co-trustee shall refer to
this Agreement and the conditions of this Article XI. Each separate
trustee and co-trustee, upon its acceptance of the trusts conferred, shall
be vested with the estates or property specified in its instrument of
appointment, either jointly with the Trustee or separately, as may be
provided therein, subject to all the provisions of this Agreement or any
Supplement, specifically including every provision of this Agreement or any
Supplement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Every such instrument shall be filed
with the Trustee and a copy thereof given to the Servicer.
(d) Any separate trustee or co-trustee may at any time
constitute the Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or
in respect to this Agreement or any Supplement on its behalf and in its name.
If any separate trustee or co-trustee shall die, become incapable of acting,
resign or be removed, all of its estates, properties, rights, remedies and
trusts shall vest in and be exercised by the Trustee, to the extent permitted
by law, without the appointment of a new or successor trustee.
Section 11.11 Tax Returns. No federal income tax return shall be filed on
behalf of the Trust unless either (i) the Trustee or the Servicer shall
receive an Opinion of Counsel that the Code requires such a filing or (ii) the
Internal Revenue Service shall determine that the Trust is required to file
such a return. In the event the Trust shall be required to file tax returns,
the Servicer shall prepare or shall cause to be prepared any tax returns
required to be filed by the Trust and shall remit such returns to the Trustee
for signature at least five days before such returns are due to be filed; the
Trustee shall promptly sign such returns and deliver such returns after
signature to the Servicer and such returns shall be filed by the Servicer. The
Servicer in accordance with Section 5.02(b) shall also prepare or shall cause
to be prepared all tax information required by law to be distributed to
Investor Certificateholders and the CP Issuer. The Trustee, upon request, will
furnish the Servicer with all such information known to the Trustee as may be
reasonably required in connection with the preparation of all tax returns of
the Trust, and shall, upon request, execute such returns. In no event shall
the Trustee, the Servicer or the Transferor be liable for any liabilities,
costs or expenses of the Trust, the CP Issuer, the Investor Certificateholders
or the Certificate Owners arising out of the application of any tax law,
including without limitation federal, state or local income or excise taxes or
any other tax imposed on or measured by income (or any interest, penalty or
addition with respect thereto or arising from a failure to comply therewith).
Section 11.12 Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or any
Supplement or the Certificates may be prosecuted and enforced by the Trustee
without the possession of any of the Certificates or the production thereof in
any proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee. Any recovery of judgment
shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
be for the ratable benefit of the Certificateholders in respect of which such
judgment has been obtained.
Section 11.13 Suits for Enforcement. If a Servicer Default of which a
Responsible Officer has knowledge shall occur and be continuing, the Trustee in
its discretion may, subject to the provisions of Section 10.01, proceed to
protect and enforce its rights and the rights of the Certificateholders under
this Agreement or any Supplement by suit, action or proceeding in equity or at
law or otherwise, whether for the specific performance of any covenant or
agreement contained in this Agreement or any Supplement or in aid of the
execution of any power granted in this Agreement or any Supplement or for the
enforcement of any other legal, equitable or other remedy as the Trustee,
being advised by counsel, shall deem most effectual to protect and enforce any
of the rights of the Trustee or the Certificateholders. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to
or accept or adopt on behalf of any Certificateholder any plan of
reorganization, arrangement, adjustment or composition affecting the
Certificates or the rights of any holder thereof, or authorize the Trustee to
vote in respect of the claim of any Certificateholder in any such proceeding.
Section 11.14 Rights of Certificateholders to Direct Trustee. The CP
Issuer with respect to matters affecting the Variable Funding Certificate,
Holders of Investor Certificates evidencing Undivided Interests aggregating
more than 50% of the Invested Amount of any Series with respect to matters
affecting the related Series, or both the CP Issuer and the Holders of
Certificates aggregating together more than 50% of the affected Undivided
Interests with respect to matters affecting more than one Series or one or
more Series and the Variable Funding Certificate, shall have the right to
direct the time, method and place at or by which the Trustee conducts any
proceeding for any remedy available to the Trustee, or exercises any such
trust or power conferred upon the Trustee; provided, however, that, subject to
Section 11.01, the Trustee shall have the right to decline to follow any such
direction if the Trustee being advised by counsel determines that the action
so directed may not lawfully be taken, or if the Trustee in good faith shall,
by a Responsible Officer or Responsible Officers of the Trustee, determine
that the proceedings so directed would be illegal or involve it in personal
liability or be unduly prejudicial to the rights of Certificateholders not
parties to such direction; and provided further that nothing in this Agreement
or any Supplement shall impair the right of the Trustee to take any action
deemed proper by the Trustee and which is not inconsistent with such
direction of the Certificateholders.
Section 11.15 Representations and Warranties of Trustee. The Trustee
represents and warrants, as of the Initial Closing Date and, with respect to
any Series, as of the related Closing Date, that:
(i) The Trustee is a banking corporation organized, existing
and in good standing under the laws of the State of New York;
(ii) The Trustee has full power, authority and right to
execute, deliver and perform this Agreement, and has taken all necessary
action to authorize the execution, delivery and performance by it of this
Agreement;
(iii) This Agreement has been duly executed and delivered by the
Trustee;
(iv) The Trustee is not required to obtain, other than those
that have already been obtained, any authorization, consent, approval,
exemption or license from, or to file any registration with, any Governmental
Authority having jurisdiction over the trust powers of the Trustee, as a
condition to the validity of, or for the execution and delivery of, this
Agreement, or to the performance by the Trustee of its obligations under this
Agreement; and
(v) This Agreement constitutes the legal, valid and binding
obligation of the Trustee, enforceable in accordance with its terms
(subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights
generally).
Section 11.16 Maintenance of Office or Agency. The Trustee will
maintain at its expense in the Borough of Manhattan, The City of New York,
an office or offices or agency or agencies where notices and demands to or
upon the Trustee in respect of the Certificates and this Agreement may be
served. The Trustee initially appoints the Corporate Trust Office as its
office for such purposes in New York. The Trustee will give prompt written
notice to the Servicer and to Certificateholders of any change in the
location of the Certificate Register or any such office or agency.
Section 11.17 Notices. The Trustee shall promptly deliver to the
Transferor and the Servicer any notices it receives in connection with the
Facilities Documents which are not otherwise delivered to such parties
unless a Responsible Officer of the Trustee reason ably believes that a
copy of such notice has previously been so delivered.
[END OF ARTICLE XI]
ARTICLE XI I
TERMINATION
Section 12.01 Termination of Trust. (a) The respective obligations and
responsibilities of the Seller, the Servicer and the Trustee created hereby
(other than the obligation of the Trustee to make payments to
Certificateholders as hereafter set forth) shall terminate, except with
respect to the duties described in Sections 8.04, 11.05 and 12.03(b), on the
Business Day after the day on which funds shall have been deposited in the
Collection Account at the times and in the amounts provided for in this
Agreement (including, without limitation, Sections 2.04, 12.01(b), 12.02 and
Article IV hereof) sufficient to pay the Aggregate Invested Amount plus the
Issuer Amount plus interest accrued at the applicable Certificate Rates or
Issuer's Interest Rate through the last day of the month preceding the next
Payment Date in full with respect to each Series of Certificates and the
Variable Funding Certificate; provided, however, that in no event shall the
trust created by this Agreement continue beyond the expiration of 21 years
from the death of the last survivor of the descendants, living on the date of
this Agreement, of George Herbert Walker Bush, former President of the United
States of America (the "Final Trust Termination Date"). The Servicer shall
promptly notify the Trustee of any prospective termination pursuant to this
Section 12.01(a) ten days in advance.
(b) If on the Transfer Date in the month immediately preceding
the month in which the Final Trust Termination Date occurs (after giving
effect to all transfers, withdrawals, deposits and drawings to occur on such
date and the payment of principal on the Variable Funding Certificate or any
Series of Investor Certificates to be made on the related Payment Date
pursuant to Section 4.06) the sum of the Issuer Amount and Invested Amount of
any Series would be greater than zero, the Servicer on behalf of the Trust
shall sell in a commercially reasonable manner within 30 days of such Transfer
Date all of the Receivables and the Related Security. The proceeds of such
sale, net of all reasonable expenses of the Trustee incurred in connection
with such sale, which shall be paid to the Trustee from such proceeds, shall
be treated as Collections of the Receivables and shall be allocated in
accordance with Section 4.03. During such 30-day period, the Servicer
shall continue to collect Collections on the Receivables and allocate such
payments in accordance with the provisions of Section 4.03.
Section 12.02 Optional Purchase and Series Termination Date of Investor
Certificates of any Series or the Variable Funding Certificate.
(a) If provided in any Supplement, on a Payment Date the
Transferor may, but shall not be obligated to, purchase any Series of
Investor Certificates or the Variable Funding Certificate by depositing
into the Collection Account, on the preceding Transfer Date, an amount
equal to the Invested Amount thereof or the Issuer Amount, as the case may
be, plus interest accrued and unpaid thereon at the applicable Certificate
Rate or Issuer's Interest Rate, as applicable through the Record Date
preceding the Payment Date on which the purchase will be made; provided,
however that no such purchase of any Certificates shall occur unless the
Transferor shall deliver to the Trustee an Opinion of Counsel reasonably
acceptable to the Trustee to the effect that such purchase of any
Certificates would not constitute a fraudulent conveyance of the
Transferor.
(b) The amount deposited pursuant to Section 12.02(a) shall be
paid to the Investor Certificateholders of the related Series or the Holder
of the Variable Funding Certificate, as applicable, pursuant to Sections
4.04, 4.05 and 4.06 on the Payment Date following the date of such deposit.
All Certificates which are purchased by the Transferor pursuant to Section
12.02(a) shall be delivered by the Transferor upon such purchase to, and be
cancelled by, the Transfer Agent and Registrar and be disposed of in a
manner satisfactory to the Trustee and the Transferor. The Variable
Funding Certificate once retired may be reissued under Section 6.09 hereof
as if it had never been issued prior to its reissuance.
(c) All principal or interest with respect to any Series of
Investor Certificates and the Variable Funding Certificate shall be due and
payable no later than the Series Termination Date with respect to such Series
or the Variable Funding Certificate. Unless otherwise provided in a
Supplement, in the event that (i) the Invested Amount of any Series of
Certificates or (ii) the Issuer Amount is greater than zero on its Series
Termination Date, the Trustee will use its best efforts to sell or cause to be
sold in a commercially reasonable manner, and pay the proceeds (net of all
reasonable expenses of the Trustee incurred in connection with such sale,
which shall be paid to the Trustee from such proceeds), to the extent
necessary, to all Certificateholders of such Series pro rata or to the Holder
of the Variable Funding Certificate, as applicable, in final payment of all
principal of and accrued interest on such Series of Certificates or the
Variable Funding Certificate, an amount of Receivables and Related Security up
to 110% of (i) the Invested Amount of such Series or (ii) the Issuer
Amount, as applicable, at the close of business on such date; provided,
however, that no selection procedures believed to be adverse to
Certificateholders shall be used in selecting such Receivables and in no
event shall the amount of Receivables and Related Security sold cause the
Transferor Amount to be less than or equal to zero. Any proceeds of such
sale in excess of such principal and interest paid and the expenses of the
Trustee shall be paid to the Transferor. Upon payment of the proceeds of
such sale as provided in this Section 12.02(c), all principal of and
accrued interest on such Series or the Variable Funding Certificate shall
be deemed for all purposes to have been paid in full. Upon such Series
Termination Date, or (if applicable) on the first Payment Date following
the sale of Receivables and Related Security called for above in this
Section 12.02(c), with respect to the applicable Series of Certificates or
the Variable Funding Certificate, final payment of all amounts allocable to
any Investor Certificates of such Series or the Variable Funding
Certificate, as applicable, shall be made in the manner provided in Section
12.03.
Section 12.03 Final Payment.
(a) Written notice of any termination, specifying the
Payment Date upon which the Holder of the Variable Funding Certificate or
the Investor Certificateholders of any Series may surrender their
Certificates for payment of the final distribution with respect to the
Variable Funding Certificate or such Series and cancellation, shall be
given (subject to at least ten days' prior notice from the Servicer to the
Trustee) by the Trustee to the CP Issuer or the Investor Certificateholders
of such Series mailed not later than the fifth day of the month of such
final distribution specifying (i) the Payment Date (which shall be the
Payment Date in the month in which the deposit is made pursuant to Section
2.04 or 12.02(a)) upon which final payment of the Variable Funding
Certificate or such Investor Certificates will be made upon presentation
and surrender of such Certificates at the office or offices therein
designated, (ii) the amount of any such final payment and (iii) that the
Record Date otherwise applicable to such Payment Date is not applicable,
payments being made only upon presentation and surrender of the Investor
Certificates at the office or offices therein specified. The Servicer's
notice to the Trustee in accordance with the preceding sentence shall be
accompanied by an Officers' Certificate setting forth the information
specified in Section 5.02(a), as applicable, covering the period during the
then current calendar year through the date of such notice and setting
forth the date of such final distribution. The Trustee shall give such
notice to the Transfer Agent and Registrar and the Paying Agent at the time
such notice is given to such Certificateholders. Any final payment of the
Variable Funding Certificate shall be made upon presentation thereof by
wire transfer in immediately available funds.
(b) Notwithstanding the termination of the Trust pursuant to
Section 12.01(a) or the occurrence of the Series Termination Date with respect
to any Series pursuant to Section 12.02, all funds then on deposit in the
Collection Account shall continue to be held in trust for the benefit of the
Certificateholders and the Paying Agent or the Trustee shall pay such funds to
the Certificateholders upon surrender of their Certificates. In the event that
all of the Investor Certificateholders of all, or the applicable, Series,
shall not surrender their Certificates for cancellation within six months after
the date specified in the above-mentioned written notice, the Trustee shall
give a second written notice to the remaining Investor Certificateholders, upon
receipt of the appropriate records from the Transfer Agent and Registrar to
surrender their Certificates for cancellation and receive the final
distribution with respect thereto. If within one year after the second notice
all, or the applicable Investor Certificates of such Series shall not have
been surrendered for cancellation, the Trustee may take appropriate steps, or
may appoint an agent to take appropriate steps, to contact the remaining
Investor Certificateholders concerning surrender of their Certificates, and the
cost thereof shall be paid out of the funds in the Collection Account held
for the benefit of such Investor Certificateholders.
(c) All Certificates surrendered for payment of the final
distribution with respect to such Certificates and cancellation, shall be
cancelled by the Transfer Agent and Registrar and be disposed of in a manner
satisfactory to the Trustee. Upon the termination of the Trust, the Transferor
shall return the Transferor Certificate to the Trustee, and the Trustee shall
dispose of such Certificates in a manner satisfactory to the Trustee.
Section 12.04 Transferor's Termination Rights. Upon the termination of
the Trust pursuant to Section 12.01 and the surrender of the Transferor
Certificate, the Trustee shall return to the Transferor (without recourse,
representation or warranty) all right, title and interest of the Trust in
the Receivables and the other Trust Assets, whether then existing or
thereafter created, all moneys due or to become due with respect thereto,
and all proceeds thereof except for amounts held by the Trustee pursuant to
Section 12.03(b). The Trustee shall execute and deliver such instruments
of transfer and assignment, in each case prepared by the Transferor and
without recourse, representation or warranty, as shall be reasonably
requested by the Transferor to vest in the Transferor all right, title and
interest which the Trust had in the Receivables and other Trust Assets.
[END OF ARTICLE XII]
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01 Amendment.
(a) This Agreement or any Supplement may be amended from
time to time by the Servicer, the Transferor and the Trustee, without the
consent of any of the Certificateholders, to cure any ambiguity, to correct
or supplement any provisions herein which may be inconsistent with any
other provisions herein or to add any other provisions with respect to
matters or questions raised under this Agreement which shall not be
inconsistent with the provisions of this Agreement; provided, however, that
such action shall not, as evidenced by an Opinion of Counsel delivered to
the Trustee, adversely affect in any material respect the interests of the
CP Issuer or the Investor Certificateholders.
(b) This Agreement and any Supplement may also be amended from
time to time by the Servicer, the Transferor and the Trustee with the prior
consent of (i) the Holder of the Variable Funding Certificate, if it would be
adversely affected by such amendment and (ii) the Holders of Investor
Certificates evidencing Undivided Interests aggregating not less than 65% of
the Invested Amount of all Series materially adversely affected thereby, for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Variable Funding Certificate or the Investor
Certificateholders of any Series then issued and outstanding; provided,
however, that no such amendment under this subsection shall (i) reduce in any
manner the amount of, or delay the timing of, distributions which are required
to be made (x) on the Variable Funding Certificate or (y) any Investor
Certificate of such Series without the consent of the Holder of the Variable
Funding Certificate or the related Investor Certificateholder, respectively;
(ii) change the definition of or the manner of calculating the interest of (x)
the Variable Funding Certificate or (y) any Investor Certificate without the
consent of the Holder of the Variable Funding Certificate or the related
Investor Certificateholders, respectively; (iii) reduce the aforesaid
percentage required to consent to any such amendment by the Investor
Certificateholders, in each case without the consent of all such Investor
Certificateholders; (iv) without the consent of the Required Banks and the
Required LOC Issuers, amend (A) Article IV as it relates to the Variable
Funding Supplement (including such portions of Article IV which may be
restated in the Variable Funding Supplement) or any definition to the extent
used therein, (B) the definition of Discount Factor in a manner which shall
cause a reduction thereof, or (C) Section 9.02 or (v) be effective unless each
Rating Agency first shall have confirmed in writing that such amendment will
not result in such Rating Agency reducing or withdrawing its rating on any
outstanding Series or on the Commercial Paper.
(c) Promptly after the execution of any such amendment or
consent the Trustee shall furnish written notification of the substance of
such amendment to the Holder of the Variable Funding Certificate and each
Investor Certificateholder, and the Servicer shall furnish written
notification of the substance of such amendment to any Rating Agency.
(d) It shall not be necessary for the consent of the Investor
Certificateholders under this Section 13.01 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by the Persons required
to consent under Section 13.01 shall be subject to such reasonable
requirements as the Trustee may prescribe.
(e) [Reserved].
(f) Prior to the execution of any amendment to this Agreement or
any Supplement, the Trustee shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such amendment is authorized
or permitted by this Agreement and that all conditions precedent to the
execution and delivery of such amendment have been satisfied and, if
applicable, the Opinion of Counsel required by Section 13.02(c). The Trustee
may, but shall not be obligated to, enter into any such amendment which
affects the Trustee's own rights, duties or immunities under this Agreement,
any Supplement or otherwise.
Section 13.02 Protection of Right, Title and Interest of Trust.
(a) The Servicer shall cause this Agreement, any
Supplement, all amendments hereto or thereto and/or all financing
statements and continuation statements and any other necessary documents
covering the Certificateholders and the Trustee's right, title and interest
to the Trust Assets to be promptly recorded, registered and filed, and at
all times to be kept recorded, registered and filed, all in such manner and
in such places as may be required by law fully to preserve and protect the
right, title and interest of the Trustee hereunder to all property
comprising the Trust Assets. The Servicer shall deliver to the Trustee
file-stamped copies of, or filing receipts for, any document recorded,
registered or filed as provided above, as soon as available following such
recording, registration or filing. The Transferor shall cooperate fully
with the Servicer in connection with the obligations set forth above and
will execute any and all documents reasonably required to fulfill the
intent of this Section 13.02(a).
(b) The Servicer will give the Trustee prompt written notice of
any relocation of any office from which it services Receivables or keeps
records concerning the Receivables or of its principal place of business or
chief executive office and whether, as a result of such relocation, the
applicable provisions of the UCC would require the filing of any amendment of
any previously filed financing or continuation statement or of any new
financing statement and shall file such financing statements or amendments as
may be necessary to perfect or to continue the perfection of the Trust's
ownership or security interest in the Receivables and the other Trust Assets.
The Servicer will at all times maintain each office from which it services
Receivables and the Related Security and its principal executive office within
the United States of America.
(c) The Servicer will deliver to the Trustee: (i) upon the
execution and delivery of each amendment of Articles I, II, III or IV hereof
other than amendments pursuant to Section 13.01(a), and (ii) on or before
April 30 of each year, beginning with 1994, an Opinion of Counsel (which may
be in-house counsel), substantially in the form of Exhibit M hereto, dated as
of a date between January 1 and April 30 of such year.
(d) If at any time the Servicer is no longer Ingram, the
Transferor shall deliver to the Successor Servicer powers-of-attorney such
that such Successor Servicer may perform the obligations set forth in
Sections 13.02(a), 13.02(b) and 13.02(c).
Section 13.03 Limitation on Rights of Certificateholders.
(a) The death or incapacity of any Certificateholder shall
not operate to terminate this Agreement or the Trust, nor shall such death
or incapacity entitle such Certificateholders' legal representatives or
heirs to claim an accounting or to take any action or commence any
proceeding in any court for a partition or winding up of the Trust, nor
otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
(b) No Certificateholder shall have any right to vote
(except as specifically provided in this Agreement or any Supplement) or in
any manner otherwise control the operation and management of the Trust, or
the obligations of the parties hereto, nor shall anything herein set forth,
or contained in the terms of the Certificates, be construed so as to
constitute the Certificateholders from time to time as partners or members
of an association; nor shall any Certificateholder be under any liability
to any third person by reason of any action taken by the parties to this
Agreement pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of
any provisions of this Agreement or any Supplement to institute any suit,
action or proceeding in equity or at law upon or under or with respect to
this Agreement, unless the Holder of the Variable Funding Certificate (if
it may be adversely affected but for the institution of such suit, action
or proceeding), or the Holders of Investor Certificates evidencing
Undivided Interests in the Trust aggregating more than 50% of the Invested
Amount of any Series which may be materially adversely affected but for the
institution of such suit, action or proceeding shall have made written
request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee hereunder and shall have offered to the Trustee
such reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request and offer of indemnity, shall
have neglected or refused to institute any such action, suit or proceeding;
it being understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that
no one or more Certificateholders shall have any right in any manner
whatever by virtue or by availing itself or themselves of any provisions of
this Agreement or any Supplement to affect, disturb or prejudice the rights
of the Certificateholders of any other of the Certificates, or to obtain or
seek to obtain priority over or preference to any other such
Certificateholder, or to enforce any right under this Agreement or any
Supplement, except in the manner herein provided and for the equal, ratable
and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section 13.03, each and every
Certificateholder and the Trustee shall be entitled to such relief as can
be given either at law or in equity.
Section 13.04 Governing Law. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
Section 13.05 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given
if personally delivered at or five days after mailing by certified or
registered mail, return receipt requested, (a) in the case of Ingram to One
Belle Meade Place, 4400 Harding Road, Nashville, Tennessee 37205,
Attention: Treasurer; (b) in the case of the Trustee, to the Corporate
Trust Office; (c) in the case of the Transferor to 1105 North Market
Street, Wilmington, Delaware 19801, Attention: President; (d) in the case
of the Holder of the Variable Funding Certificate to c/o Merrill Lynch,
World Financial Center, South Tower, 225 Liberty Street, 8th Floor, New
York, New York 10080-6108 Attention: Gary Carlin, Treasurer; or, as to
each party, at such other address as shall be designated by such party in a
written notice to each other party. Any notice required or permitted to be
mailed to a Certificateholder shall be given by first class mail, postage
prepaid, at the address of such Certificateholder as shown in the
Certificate Register. Notwithstanding any other provision hereof, any
notice or consent hereunder to be given or made by the Holder of or with
respect to the Variable Funding Certificate shall be effective if made by
or to the Collateral Agent. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not the Certificateholder receives such notice.
Copies of all notices, reports, certificates and amendments
required to be delivered to the Rating Agencies hereunder shall be mailed
to the Rating Agencies as follows: Fitch Investors Service, Inc., One
State Street Plaza, New York, NY 10007, Attention: Asset-Backed
Surveillance Group and Standard & Poor's Corporation, 26 Broadway, 15th
Floor, New York, NY 10004, Attention: Asset-Backed Surveillance Group.
Section 13.06 Severability of Provisions. If any one or more
of the covenants, agreements, provisions or terms of this Agreement shall
for any reason whatsoever be held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no way
affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or rights of the Certificateholders
thereof.
Section 13.07 Assignment. Notwithstanding anything to the
contrary contained herein, except as provided in Sections 8.02 or 8.05,
this Agreement, including any Supplement, may not be assigned by the
Servicer without the prior consent of the Holder of the Variable Funding
Certificate, and the Holders of Investor Certificates evidencing Undivided
Interests aggregating not less than 65% of the Invested Amount of the
Investor Certificates of each Series.
Section 13.08 Certificates Nonassessable and Fully Paid. It is
the intention of the parties to this Agreement that the Certificateholders
shall not be personally liable for obligations of the Trust, that the
interests in the Trust represented by the Certificates shall be
nonassessable for any losses or expenses of the Trust or for any reason
whatsoever, and that Certificates upon authentication thereof by the
Trustee pursuant to Sections 2.07 and 6.02 are and shall be deemed fully
paid.
Section 13.09 Further Assurances. The Transferor and the
Servicer agree to do and perform, from time to time, any and all acts and
to execute any and all further instruments required or reasonably requested
by the Trustee more fully to effect the purposes of this Agreement,
including, without limitation, the execution of any financing statements or
continuation statements relating to the Receivables and the other Trust
Assets for filing under the provisions of the UCC of any applicable
jurisdiction.
Section 13.10 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Trustee or the
Certificateholders, any right, remedy, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, remedy, power
or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exhaustive of any rights, remedies, powers and
privileges provided by law.
Section 13.11 Counterparts. This Agreement and any
Supplement may be executed in two or more counterparts (and by different
parties on separate counter parts), each of which shall be an original, but
all of which together shall constitute one and the same instrument.
Section 13.12 Third-Party Beneficiaries. This Agreement and any
Supplement will inure to the benefit of and be binding upon the parties
hereto, and, in addition, shall inure to the benefit of the Certificateholders
and their respective successors and permitted assigns. Except as otherwise
provided in this Article XIII or Section 7.04, no other Person will have any
right or obligation hereunder.
Section 13.13 Actions by Certificateholders.
(a) Wherever in this Agreement or any Supplement, a
provision is made that an action may be taken or a notice, demand or
instruction given by Investor Certificateholders, such action, notice or
instruction may be taken or given by any Investor Certificate holder of any
Series, unless such provision requires a specific percentage of Investor
Certificateholders of a certain Series or all Series.
(b) Any request, demand, authorization, direction, notice,
consent, waiver or other act by a Certificateholder shall bind such
Certificateholder and every subsequent holder of such Certificate issued upon
the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done or omitted to be done by the Trustee or
the Servicer in reliance thereon, whether or not notation of such action is
made upon such Certificate.
(c) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement or any
Supplement to be given or taken by Certificateholders may be embodied in
and evidenced by one or more instruments of substantially similar tenor
signed by such Certificateholders in person or by agent duly appointed in
writing; and except as herein otherwise expressly provided, such action
shall become effective when such instrument or instruments are delivered to
the Trustee and, when required, to the Transferor or the Servicer. Proof
of execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Agreement or any
Supplement and conclusive in favor of the Trustee, the Transferor and the
Servicer, if made in the manner provided in this Section.
(d) The fact and date of the execution by any
Certificateholder of any such instrument or writing may be proved in any
reasonable manner which the Trustee deems sufficient.
(e) The Trustee may require such additional proof of any
matter referred to in this Section as it shall deem necessary.
Section 13.14 Merger and Integration. Except as specifically
stated otherwise herein, this Agreement sets forth the entire understanding
of the parties relating to the subject matter hereof, and all prior
understandings, written or oral, are superseded by this Agreement. This
Agreement may not be modified, amended, waived or supplemented except as
provided herein.
Section 13.15 Headings. The headings herein are for purposes
of reference only and shall not otherwise affect the meaning or
interpretation of any provision hereof.
Section 13.16 No Bankruptcy Petition Against the Transferor.
The Trustee (solely as Trustee, Paying Agent and successor Servicer, if
applicable), any Paying Agent other than the Trustee, the Servicer and by
its acceptance of its Certificate, the Holder of the Variable Funding
Certificate and each Holder of an Investor Certificate, severally and not
jointly, each hereby covenants and agrees that, prior to the date which is
one year and one day after the payment in full of the Issuer Amount and all
Invested Amounts, it will not institute against, or join any other Person
in instituting against, the Transferor any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar
proceeding under the laws of the United States or any state of the United
States.
[END OF ARTICLE XIII]
IN WITNESS WHEREOF, Ingram Funding Inc., Ingram Industries Inc.
and the Trustee have caused this Agreement to be duly executed by their
respective officers as of the day and year first above written.
INGRAM FUNDING INC.,
as Transferor
/s/
By _______________________________
Name:
Title:
INGRAM INDUSTRIES INC.
as Servicer
/s/
By _______________________________
Name:
Title:
CHEMICAL BANK,
as Trustee
/s/
By _______________________________
Name:
Title:
EXHIBIT E
[CHART TO BE INSERTED HERE]
EXHIBIT F
FORM OF ANNUAL SERVICER'S CERTIFICATE
INGRAM FUNDING MASTER TRUST
The undersigned, a duly authorized representative of Ingram Industries,
Inc. ("Ingram"), as Servicer pursuant to the Pooling and Servicing
Agreement dated as of February 10, 1993 (the "Pooling and Servicing
Agreement") by and among Ingram Funding Inc. (the "Transferor"), Ingram as
Servicer and Chemical Bank, as trustee (the "Trustee") does hereby certify
that:
1. Ingram is Servicer under the Pooling and Servicing Agreement.
2. The undersigned is duly authorized pursuant to the Pooling and
Servicing Agreement to execute and deliver this Certificate to the Trustee.
3. This Certificate is delivered pursuant to Section 3.05 of the Pooling
and Servicing Agreement.
4. A review of the activities of the Servicer during (the period from the
Closing Date until) (the approximately twelve month period ended) [ ], 19_ and
of its performance under the Pooling and Servicing Agreement was conducted
under our supervision.
5 To the best of our knowledge, based on such review, the Servicer has, or
has caused to be, fully performed all its obligations under the Pooling and
Servicing Agreement throughout such period and no default in the performance
of such obligations has occurred or is continuing except as set forth in
paragraph 6 below.
6. The following is a description of each default in the performance of
the Servicer's obligations under the provisions of the Pooling and
Servicing Agreement, including any Supplement, known to us to have been
made during such period which sets forth in detail (i) the nature of each
such default, (ii) the action taken by the Servicer, if any, to remedy each
such default and (iii) the current status of each such default:
[If applicable, insert "None."]
IN WITNESS WHEREOF, the undersigned has duly executed this
certificate this _ day of _____________, _________ .
INGRAM INDUSTRIES INC.
_______________________________
Name:
Title:
SCHEDULE I
CERTIFICATE OF TRUSTEE AS TO
COLLECTION ACCOUNT AND TRANSFEROR ACCOUNT
This Certificate is being provided pursuant to Section 6.01(n)(i) of the
Liquidity Agreement, dated as of February 10, 1993, among Distribution Funding
Corporation, Ingram Funding Inc., Ingram Industries Inc., the banks named
therein, and Chemical Bank, as Liquidity Agent. Capitalized terms used herein
and not otherwise defined shall have the meanings assigned to them in the
Liquidity Agreement.
I do hereby certify on behalf of Chemical Bank, as Trustee (the
"Trustee"), under the Pooling and Servicing Agreement, dated as of February
10, 1993, among the Trustee, Ingram Industries Inc., and Ingram Funding
Inc., that the Trustee has established the following trust accounts in
accordance with Section 4.02(a) of the Pooling and Servicing Agreement:
Collection Account, Trust Account No. 323-300065; and Transferor Account,
Trust Account NO. 323-300634.
CHEMICAL BANK,
as Trustee
/s/
By: _______________________________
Name: Thomas C. Monahan
Title: Assistant Vice President
EXHIBIT K
INGRAM FUNDING INC.
Lockbox Listing
January 11, 1993
INGRAM FUNDING INC. - BOOK INGRAM FUNDING INC. - MICRO
PO Box 65155 PO Box 98874
Charlotte, NC 28265-0155 Chicago, IL 60693
(Nations Bank) (Continental Bank)
INGRAM FUNDING INC. - BOOK INGRAM FUNDING INC. - MICRO
PO Box 845361 File #31135
Dallas, TX 75285 Los Angeles, CA 90074-1135
(NationsBank) (Bank of America)
INGRAM FUNDING INC. - ENTERTAINMENT INGRAM FUNDING INC. - MICRO
PO Box 651493 File #72452
Charlotte, NC 28265-1493 PO Box 60000
(NationsBank) San Francisco, CA 94160-2452
(Bank of America)
INGRAM FUNDING INC. - ENTERTAINMENT
PO Box 841354
Dallas, TX 75284-1354
(NationsBank)
INGRAM FUNDING INC. - ENTERTAINMENT
PO Box 91407 & 91728 (UPS only)
Chicago, IL 60693-1407
(Continental Bank)
INGRAM FUNDING INC. - MICRO
PO Box 1188 (UPS only)
Buffalo, NY 14240
(Marine Midland)
INGRAM FUNDING INC. - MICRO
PO Box 65610
Charlotte, NC 28265
(Nations Bank)
INGRAM FUNDING INC. - MICRO
PO Box 841381
Dallas, TX 75284 1381
(NationsBank)
EXHIBIT M
FORM OF ANNUAL OPINION OF COUNSEL
The opinion set forth below, which is to be delivered pursuant to
subsection 13.02(c)(ii) of the Pooling and Servicing Agreement, may be
subject to certain qualifications, assumptions, limitations and exceptions
taken or made in the opinion of counsel delivered on the Initial Closing
Date with respect to similar matters.
No filing or other action, other than such filing or action described in
such opinion, is necessary from the date of such opinion through [date
between January l and April 30] of the following year to continue the
perfected status of the interest of the Trust in the collateral described
in the financing statements referred to in such opinion.
EXHIBIT 10.26
AMENDMENT NO. 1
This AMENDMENT NO. 1 amends each of
(i) the Pooling and Servicing Agreement dated as of February 12, 1993 (the
"Pooling and Servicing Agreement"), as supplemented by the Variable
Funding Supplement dated as of February 12, 1993, the Series 1993-1
Supplement dated as of July 23, 1993 (the "Series 1993-1 Supplement")
and the Series 1993-2 Supplement dated as of July 23, 1993 (the
"Series 1993-2 Supplement"), each among Ingram Funding Inc.
("Funding"), Ingram Industries Inc. ("Ingram") and Chemical Bank,
as Trustee (the "Trustee"),
(ii) the Asset Purchase and Sale Agreement dated as of February 12, 1993
(the "Micro Purchase Agreement") between Ingram Micro Inc. ("Micro")
and Ingram,
(iii) the Asset Purchase and Sale Agreement dated as of February 12, 1993
(the "Commtron Purchase Agreement") between Commtron Corp.
("Commtron) and Ingram,
(iv) the Asset Purchase and Sale Agreement dated as of February 12, 1993
(the "Purchase Agreement") between Funding and Ingram, and
(v) the Liquidity Agreement dated as of February 12, 1993 (the "Liquidity
Agreement") among Distribution Funding Corporation (the "CP
Issuer"), Funding, Ingram, Chemical Bank ("Chemical"), NationsBank
of North Carolina, N.A. ("NationsBank"), The Bank of Nova Scotia
("BNS" and, together with Chemical and NationsBank, the "Banks"),
Chemical, as agent for the Banks, with BNS, NationsBank and the
Industrial Bank of Japan, Limited, Atlanta Agency, as Lead Managers,
and is entered into as of January 31, 1994 by and among each of the above-
named parties to the Pooling and Servicing Agreement, the Micro Purchase
Agreement, the Commtron Purchase Agreement, the Purchase Agreement and the
Liquidity Agreement (collectively, the "Agreements").
WHEREAS, the parties to each of the Agreements desire to enter into
certain amendments thereto and to consent to all such amendments to all such
Agreements,
NOW, THEREFORE, in consideration of the foregcing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. Defined Terms. Capitalized terms used and not otherwise defined
herein shall have the meanings assigned thereto in, or for purposes of, the
Agreement(s) in which such term is used.
2. Amendments to Pooling and Servicing Agreement. The Pooling and
Servicing Agreement shall be amended as follows:
(a) Consents.
(i) Sections 2.06(i), 2.06(q) and 3.03(k) thereof are hereby
amended by deleting from each such Section the provision which requires the
consent of the Required Banks ("Bank Consent") to certain actions described
therein, and by substituting in lieu thereof a provision requiring consent
("Aggregate Consent") from the holders of not less than 65% of the Third-
Party Interests in the Trust. The "Third Party Interests" in the Trust
shall mean the sum of (1) the aggregate Invested Amount of all Series of
Investor Certificates (subject to paragraph (ii) below) and (2) the
Applicable Liquidity Commitment of the Banks. The "Applicable Liquidity
Commitment" of the Banks will mean the Liquidity Commitment then in effect,
provided, that if at any time pursuant to the Liquidity Agreement the CP
Issuer is not permitted to effect an additional Credit Utilization either
through issuance of additional Commercial Paper or incurrence of additional
Revolving Loans, whether by reason of Section 2.01 or Section 6.02 of the
Liquidity Agreement or otherwise, then for so long as such Credit
Utilization remains unavailable to the CP Issuer, the Applicable Liquidity
Commitment shall mean the amount of the Liquidity Commitment corresponding
to the Aggregate CP Matured Value of Outstanding Commercial Paper and the
principal amount of outstanding Loans and LOC Disbursements under the LOC,
if any, as to which the Banks remain at risk. In determining whether at
least 65% of the holders of Third-Party Interests have consented,
each Holder of an Investor Certificate may vote its Invested Amount
relative to the aggregate Third-Party Interests, and each Bank may vote its
allocable share of the Applicable Liquidity Commitment relative to the
aggregate Third-Party Interests.
(ii) For purposes of all provisions requiring the vote of
Holders of Investor Certificates (whether in respect of obtaining Series
Consent under either the Series 1993-1 Supplement or the Series 1993-2
Supplement or Aggregate Consent or with respect to any other provision of
the Pooling and Servicing Agreement or otherwise), for so long as Class B
Certificates of Series 1993-1, Class B Certificates of Series 1993-2 or
Investor Certificates of any other Series are held by the Transferor,
Ingram or any Affiliate thereof, such Certificates shall not be voted in
connection with any such vote, and the Invested Amount thereof shall be
deducted from the aggregate Invested Amount of the Series 1993-1
Certificates, the Series 1993-2 Certificates and any other Series of
Investor Certificates for purposes of calculating such aggregate Invested
Amount entitled to vote.
(b) Successor Servicer; Servicing Fee.
(i) The Trustee and Ingram hereby confirm that the intention
of Sections 3.02 and 10.02 of the Pooling and Servicing Agreement with
respect to the selection of a Successor Servicer and responsibility for
payment of the Servicing Fee thereto, and the agreement of the Trustee and
Ingram with respect to such matters, is as follows:
Qualifications. Section 10.02(a) provides that the Trustee shall as
promptly as possible after the giving of a Termination Notice appoint
an Eligible Servicer as a Successor Servicer. Accordingly, any such
Successor Servicer initially must satisfy the definition of "Eligible
Servicer". Section 10.02(a) further provides that such Successor
Servicer must have obtained confirmation from each Rating Agency that
the then outstanding rating on the Commercial Paper or any outstanding
Series will not be reduced or withdrawn.
Selection. Section 10.02(c) contemplates that the Trustee would
obtain bids from Eligible Servicers connection with selecting a
Successor Servicer. The Transferor and Ingram could participate in
obtaining such bids. The Trustee could select among any Eligible
Servicers providing bids not greater than the "Trust Servicing Fee"
described below and, if only one Eligible Servicer submitted such a
bid, the Trustee would select such Eligible Servicer. If no Eligible
Servicer submits a bid for less than or equal to the Trust Servicing
Fee, then the Trustee shall select the Eligible Servicer submitting
the bid that least exceeds the Trust Servicing Fee. Notwithstanding
the foregoing, Ingram could direct the Trustee to select an Eligible
Servicer that would otherwise not be selected by reason of submitting
a higher bid so long as Ingram agreed to be responsible for the
Servicing Fee in excess of the Trust Servicing Fee.
Servicing Fee. Section 3.02 provides that unless otherwise agreed,
the Servicing Fee with respect to a Successor Servicer shall be at
least 0.25% per annum of the daily average Unpaid Balances of the
Receivables (the "Trust Servicing Fee"). Pursuant to Section
10.02(c), the Trust Servicing Fee is the highest Servicing Fee that
can be paid to a Successor Servicer from Imputed Yield Collection
allocable to either the Variable Funding Certificate or any Series
unless otherwise provided in the related Supplement or subsequently
agreed to by all Certificateholders affected thereby. As described
above, an Eligible Servicer could submit a bid for less than the
Trust Servicing Fee. If all bids from Eligible Servicers exceed the
Trust Servicing Fee, then (1) a Successor Servicer shall be selected
based on the bids received as described above, (2) the consent of
Ingram is not required in order to select a Successor Servicer
charging a Servicing Fee in excess of the Trust Servicing Fee, and
(3) pursuant to Section 10.02(c) Ingram will be responsible for the
payment to such Successor Servicer of the portion of its Servicing
Fee in excess of the Trust Servicing Fee.
(ii) The Trustee and Ingram agree that any Successor Servicer
selected as described above must be ratified by Aggregate Consent.
(c) Consent to Successor Trustee.
Ingram agrees that any Successor Trustee selected by Ingram in
accordance with Section 11.07 of the Pooling and Servicing Agreement must
be ratified by Aggregate Consent.
(d) Certain Technical Corrections.
Funding, Ingram and the Trustee agree that the following provisions of
the Pooling and Servicing Agreement, including Annex X thereto, are hereby
modified and shall be construed as indicated:
(i) The cross-reference to "Section 2.02(c)" in line 6 on page
11 of the Agreement shall be changed to "Section 2.01(d)";
(ii) In Sections 12.01 and 12.02 of the Agreement, interest
shall be required to be deposited to but excluding the next Payment Date
rather than through the last day of the month and the Record Date,
respectively, preceding the Payment Date;
(iii) The rating of "F-1" in clause (ii) of the definition of
"Permitted Investments" shall be changed to "F-1+";
(iv) Section 4.02(a) shall be amended to provide that the
Collection Account shall not be a subaccount or otherwise part of the
Collateral Account;
(v) For purposes of Section 2.10, the reference therein to
"Adjusted Eligible Principal Receivables" shall be changed to read "the sum
of (i) the Adjusted Eligible Principal Receivables as of the end of the
preceding Business Day and (ii) the product of (x) the amount, if any, held
in the Transferor Account as of the end of the preceding Business Day
multiplied by (y) 100% minus the Discount Factor as of the most recent
Determination Date"; and
(vi) For purposes of the definition of "Transferor Account
Deposit Amount", each reference therein to "Adjusted Eligible Principal
Receivables" shall be changed to read "the sum of (i) the Adjusted Eligible
Principal Receivables and (ii) the product of (x) the amount, if any, held
in the Transferor Account multiplied by (y) 100% minus the Discount Factor
as of the most recent Determination Date"
3. Amendments to Purchase Agreements. The Micro Purchase Agreement, the
Commtron Purchase Agreement and the Purchase Agreement shall be amended as
follows:
(a) Each such Purchase Agreement is hereby amended by deleting clause
(a) of Section 8.1 of each thereof, and by substituting in lieu thereof the
following new clause (a):
(a) December 15, 2001, subject to automatic extensions of one year
periods unless otherwise agreed to in writing by the Seller and
the Buyer;
(b) Section 3.2 of each of the Micro Purchase and the Commtron Purchase
Agreement is hereby amended to read as follows:
The Purchase Price for the Receivables and related property shall be
paid on the Initial Closing Date with respect to the Receivables
existing on the Cut-Off Date and on each Business Day thereafter on
which Receivables are transferred hereunder, at the Buyer's election,
either by payment in cash in immediately available funds, creation
of a receivable due from the Buyer to the Seller on demand, or by
reduction of amounts owed by the Seller to the Buyer unrelated to
this Agreement.
4. Amendments to Liquidity Agreement. The Liquidity Agreement shall be
amended as follows:
(a) Section 7.02(g)(iv) is hereby amended to read as follows:
Consolidated Working Capital at any Lime to be less than or
equal to one hundred and ten per cent (110%) of the sum of loans
and face amount of any letters of credit outstanding in excess
of $80,000,000 under the Credit Agreement, dated December 15,
1992 among the Obligated Parties, Lenders and Agents named
therein, as such Agreement may be amended, supplemented,
modified and replaced from time to time."
(b) Section 8.01(b) is hereby amended to read as follows:
The CP Issuer shall fail to perform or observe in any material
respect any of the covenants or agreements set forth in this
Agreement, the Security Agreement or the CP Dealer Agreement or
Ingram shall fail to perform or observe in any material respect any
of the covenants or agreements set forth in this Agreement if such
breach shall remain unremedied for 30 days after the date on which
written notice of such breach shall have been given to the CP Issuer
and Ingram by the Liquidity Agent, the Collateral Agent or the CP
Dealer.
(c) Section 8.01(i) is hereby amended to read as follows:
The Servicer, the Transferor or Ingram shall fail to perform or
observe any other term, covenant or agreement in any Facilities
Document or Purchase Agreement to which it is a party and such
failure to perform or observe shall continue unremedied for 30 days
after the date on which written notice of such breach shall have been
given to such Person by the Liquidity Agent or the Collateral Agent.
5. Consent to Amendments. Each party hereto hereby consents to each
amendment to each Agreement provided for in this Amendment No. 1.
6. Ratification of Agreements. As amended by this Amendment No. 1, each
Agreement is in all respects ratified and confirmed.
7. Counterparts. This Amendment No. 1 may be executed in any number
of counterparts, which may include facsimile counterparts, each of which so
executed shall be deemed to be an original, but all of such counterparts
shall together constitute but one and the same instrument.
8. Governing Law. THIS AMENDMENT NO. 1 SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF
LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
9. Confirmation of Ratings. This Amendment No. 1 shall not become
effective unless and until the Trustee shall have received written
confirmation from each Rating Agency that the effectiveness hereof will
not result in either the reduction or withdrawal of the ratings currently
assigned by such Rating Agency to both the Commercial Paper and the Class A
Certificates of both Series 1993-1 and Series 1993-2.
IN WITNESS WHEREOF, each of the parties to the Agreements has caused
this Amendment No. 1 to be executed by its duly authorized officer as of
the date set forth above.
INGRAM FUNDING INC.
By: /s/ Thomas H. Lunn
-------------------------
Name: Thomas H. Lunn
Title: Asst. Treasurer
INGRAM INDUSTRIES INC.
By: /s/ Thomas H. Lunn
-------------------------
Name: Thomas H. Lunn
Title: V.P. and Treasurer
CHEMICAL BANK, as Trustee
By: /s/ T. C. Monahan
-------------------------
Name: T. C. Monahan
Title: Asst. Vice President
INGRAM MICRO INC.
By: /s/ Thomas H. Lunn
-------------------------
Name: Thomas H. Lunn
Title: Asst. Treasurer
INGRAM ENTERTAINMENT INC.,
as successor to
COMMTRON CORP.
By: /s/ Thomas H. Lunn
-------------------------
Name: Thomas H. Lunn
Title: Treasurer
DISTRIBUTION FUNDING
CORPORATION
By: /s/ Hans Bald
-------------------------
Name: Hans Bald
Title: Vice President
CHEMICAL BANK,
as the Liquidity Agent
and as a Bank
By: /s/ John D. Mindnich
-------------------------
Name: John D. Mindnich
Title: Vice President
NATIONSBANK OF
NORTH CAROLINA, N.A.
By: /s/ John E. Ball
-------------------------
Name: John E. Ball
Title: Senior Vice President
THE BANK OF NOVA SCOTIA
By: /s/ P. M. Brown
-------------------------
Name: P. M. Brown
Title: Representative
EXHIBIT 10.27
=============================================================================
INGRAM FUNDING MASTER TRUST
6.19% ASSET-BACKED CERTIFICATES,
SERIES 1993-1, CLASS A
CERTIFICATE PURCHASE AGREEMENT
July 23, 1993
=============================================================================
July 23, 1993
Purchasers named on the
signature pages hereto
Ladies and Gentlemen:
1. Introduction. Pursuant to the Pooling and Servicing Agreement (as
defined below), Ingram Funding Inc. (the "Transferor") has caused Ingram
Funding Master Trust (the "Trust") to issue 6.19% Asset-Backed Certificates,
Series 1993-1, Class A (the "Class A Certificates") to be sold by the
Transferor.
The Class A Certificates will be issued pursuant to a Pooling and
Servicing Agreement dated as of February 12, 1993 among the Transferor,
Ingram Industries Inc. ("Ingram"), as servicer (the "Servicer"), and
Chemical Bank, as trustee (the "Trustee"), as supplemented by the Series
1993-1 Supplement dated as of July 23, 1993 among the Transferor, the
Servicer and the Trustee (collectively, the "Pooling and Servicing
Agreement"). The Transferor has conveyed to the Trustee for the benefit of
the holders of the Class A Certificates, a pool of trade accounts
receivable generated from trade accounts of customers of the Ingram Book
Company division of Ingram and certain designated subsidiaries of Ingram
(the "Receivables"), and certain other property (the Receivables and such
other property, the "Trust Assets").
The placement of the Class A Certificates has been arranged by Chemical
Securities Inc., as placement agent (the "Placement Agent"), pursuant to an
agreement dated as of May 25, 1993 (the "Placement Agency Agreement") among
the Transferor, the Servicer and the Placement Agent.
The Transferor has furnished to each of the purchasers of Class A
Certificates named on the signature pages hereto (the "Purchasers" and,
individually, a "Purchaser") a final private placement memorandum dated
July 23, 1993, describing, among other things, the Class A Certificates,
the Trust Assets, the Trust, the Transferor, the Servicer and the Pooling
and Servicing Agreement. Such final private placement memorandum is
herein referred to as the "Memorandum."
The Transferor hereby agrees with each of the Purchasers as follows:
2. Purchase, Sale. Payment and Delivery of the Class A Certificates. On
the basis of the representations, warranties and agreements contained herein,
but subject to the terms and conditions set forth herein, the Transferor
agrees to sell to each Purchaser, and each Purchaser agrees to purchase from
the Transferor, on July 23, 1993 or on such other date as shall be mutually
agreed upon by the Transferor and the Purchasers (the "Closing Date"), the
aggregate principal amount of the Class A Certificates set forth on such
Purchaser's Attachment I annexed hereto (the "Designated Class A
Certificates"). Each Designated Class A Certificate shall be purchased at a
purchase price equal to 100% of the principal amount thereof.
The closing of the sale of the Class A Certificates (the "Closing")
shall be held at the offices of Skadden, Arps, Slate, Meagher & Flom at 919
Third Avenue, New York, New York 10022, at 10:00 a.m., New York City time,
on the Closing Date. Payment of the aggregate purchase price for the Class
A Certificates shall be made on the Closing Date by wire transfer of
immediately available funds to an account to be designated in writing to
each Purchaser by the Transferor at least two business days prior to the
Closing Date, against delivery of the Class A Certificates at the Closing
on the Closing Date. The denominations of the Designated Class A
Certificates to be delivered to the Purchasers and the name or names in
which each such Designated Class A Certificate is to be registered shall be
in accordance with the information set forth on Attachment I with respect
to such Purchaser designated by each Purchaser by notice in writing
delivered to the Transferor at least two business days prior to the Closing
Date or, if any such Purchaser shall fail to give such notice, delivery
shall be made to such Purchaser in the form of one Class A Certificate
registered in such Purchaser's name.
3. Representations and Warranties of the Transferor. The Transferor
represents and warrants to, and agrees with, each Purchaser that, as of the
date hereof:
a. The Transferor has been duly organized and is validly existing
as a corporation under the laws of the State of Delaware with full power
and authority to issue, sell and deliver the Class A Certificates and to
conduct its business as such business is currently conducted, and to
execute, deliver and perform its oblications under this Agreement, the
Pooling and Servicing Agreement and the Class A Certificates;
b. The Transferor is not required to be qualified to do business in any
jurisdiction in which the failure to so qualify would impair the validity or
enforceability of any Document (as defined below), to which the Transferor is
a party; the Transferor has neither conducted nor engaged in any business
other than as allowed pursuant to the terms of the Pooling and Servicing
Agreement;
c. This Agreement has been duly authorized, executed and delivered by
the Transferor and constitutes a valid and binding agreement of the
Transferor, enforceable against the Transferor in accordance with its terms,
except that the enforceability thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally and (ii) general principles
of equity (regardless of whether enforcement is considered in a proceeding in
equity or at law) and the discretion of the court before which any proceeding
for such enforcement may be brought;
d. Any Document to which the Transferor is a party has been duly
authorized, executed and delivered by the Transferor and, assuming due
authorization, execution and delivery thereof by the other parties thereto,
will constitute a valid and binding agreement of the Transferor,
enforceable against the Transferor in accordance with its terms, except
that the enforceability thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law) and the discretion of the
court before which any proceeding for such enforcement may be brought;
e. The Class A Certificates have been duly authorized and executed by
the Transferor and, when authenticated by the Trustee in accordance with
the Pooling and Servicing Agreement and delivered against payment therefor as
provided herein, will be entitled the benefits of the Pooling and Servicing
Agreement, subject to (1) bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors'
rights generally and (ii) general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law) and
the discretion of the court before which any proceeding for such
enforcement may be brought;
f. The Memorandum as of its date did not, and as of the Closing Date
will not, contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and
no written information supplied by the Transferor to (i) Standard & Poor's
Corporation or Fitch Investors Service, Inc. (collectively, the "Rating
Agencies") in connection with obtaining a rating for the Class A
Certificates or (ii) the Purchasers contained any material misstatement of
a material fact or omitted to state any fact necessary to make the material
statements contained therein not materially misleading, as of the date as
of which such information was dated or certified, in each case considered
in the aggregate with all other information furnished to the Rating
Agencies or the Purchasers, as applicable, pursuant to or in connection
with obtaining of a rating (in the case of the Rating Agencies) or pursuant
to or in connection with any Document or any transaction contemplated
hereby or thereby (in the case of the Purchasers) and giving effect to
written revisions and updates of such information furnished to the Rating
Agencies or the Purchasers, as applicable, prior to the Closing Date;
g. Subject to Section 3.j. with respect to federal and state
securities laws, neither the execution and delivery of any Document to
which the Transferor is a party or the issuance or sale of the Class A
Certificates, the consummation of the transactions contemplated thereby nor
the fulfillment of any of the terms and conditions thereof conflicts or
will conflict with, results or will result in a breach or violation of any
of the terms or provisions of, or constitutes or will constitute a default
under (i) the Pooling and Servicing Agreement, (ii) any law or statute
currently applicable to the Transferor or (iii) any decree, order, rule or
regulation currently applicable to the Transferor of any court or
regulatory, administrative or governmental agency, body or authority, or
arbitrator having jurisdiction over the Transferor or its properties;
h. There are no legal, regulatory, administrative or governmental
proceedings pending to which the Transferor is a party or to which any of
its properties is subject or, to the knowledge of the Transferor,
threatened against the Transferor or any of its properties that, if
determined adversely to the Transferor would, in the aggregate, have a
material adverse effect on the ability of the Transferor to perform its
obligations under any Document to which it is a party or to consummate the
transactions contemplated hereunder or thereunder, or on the financial
condition, affairs or properties of the Transferor;
i. Subject to Section 3.j. with respect to federal and state
securities laws, no consent, approval, authorization or order of or
declaration or filing with any government, governmental instrumentality or
court or other person is required for the issuance or sale of the Class A
Certificates or the consummation of the other transactions contemplated by
any Document to which the Transferor is a party, except such as have been
duly made or obtained;
j. Under the circumstances contemplated by the Memorandum, the Pooling
and Servicing Agreement, this Agreement and the Placement Agency Agreement,
the offer and sale of the Class A Certificates are transactions exempt from
the registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"); and the Pooling and Servicing Agreement is not required to
be qualified under the Trust Indenture Act of 1939, as amended (the "1939
Act");
k. The Transferor is not and will not be required as a result of the
offer and sale of the Class A certificates under the circumstances
contemplated by the Memorandum, the Pooling and Servicing Agreement, this
Agreement and the Placement Agency Agreement to register as an "investment
company" under the Investment Company Act of 1940, as amended (the "1940
Act"), and the Transferor is not "controlled" by an "investment company"
as defined in the 1940 Act;
1. There is no fact known to the Transferor that materially adversely
affects the ability of the Transferor to perform its obligations under the
Documents to which it is a party;
m. Except for Chemical Securities Inc., the Transferor has not dealt
with any broker, investment banker, or other person who may be entitled to any
commission or compensation in connection with the sale of the Class A
Certificates, and the fees of Chemical Securities Inc. shall be payable, and
shall be paid, by the Transferor from proceeds of the sale of the Class A
Certificates and the Purchasers shall have no liability therefor;
n. The Transferor has not transferred its interests in the Trust Assets
to the Trustee with an actual intent to hinder, delay or defraud any creditor;
the Transferor is solvent (as that term is utilized under applicable
bankruptcy, insolvency and fraudulent conveyance laws) and has not been
rendered insolvent by the transfer and assignment of the Trust Assets;
o. At the time of the transfer of the Trust Assets from the Transferor
to the Trustee, the Transferor owned the Trust Assets free and clear of any
liens, claims (including but not limited to claims of ownership) or
encumbrances, including, but not limited to federal tax liens, ERISA liens and
claims arising pursuant to 31 U.S.C. Section 3713;
p. The Transferor has irrevocably assigned to the Trustee for the
benefit of the Certificateholders (as defined in the Pooling and Servicing
Agreement) all of the Transferor's right, title and interest in and to the
Trust Assets;
q. Assuming the accuracy of the representations and warranties of
the Purchasers contained herein, the execution and delivery of this
Agreement and the issue and sale of the Class A Certificates by the
Transferor does not and will not involve any transaction by the Transferor
that is prohibited under Section 406(a) of ERISA or in connection with which
an excise tax could be imposed pursuant to Section 4975(a) or (b) of the
Code by reason of the prohibited transactions described in Section 4975(c)
(I) (A), (B), (C), or (D) of the Code;
r. None of the transactions contemplated in this Agreement (including,
without limitation, the use of proceeds from the sale of the Class A
Certificates) will result in a violation of Section 7 of the Securities
Exchange Act of 1934, as amended, or any regulations issued pursuant thereto,
including Regulations G, T, U and X of the Board of Governors of the Federal
Reserve System, 12 C.F.R., Chapter II; and
s. No event has occurred and is continuing that constitutes, or with the
passage of time or the giving of notice or both would constitute, a Servicer
Default or an Event of Termination with respect to the Class A Certificates
under, and as defined in, the Pooling and Servicing Agreement.
4. Representations and Warranties of the Purchasers. Each Purchaser
represents and warrants to, and agrees with, the Transferor, as of the date
hereof and as of the Closing Date, that:
a. It has received all information concerning the Class A Certificates,
the Transferor, the Servicer, the Trust, the Trust Assets, the Pooling and
Servicing Agreement and any other matters relevant to its decision to purchase
the Class A Certificates that it has requested, including, but not limited to
the Memorandum. It has had an opportunity to discuss fully the Transferor's
business, management and financial affairs, and the terms and conditions of
the proposed purchase, with the Transferor and its representatives;
b. It is not acquiring its Class A Certificates with a view to or
for sale in connection with any distribution thereof within the meaning of
the Securities Act, provided that the disposition of its property shall at
all times be and remain within its control. No part of the funds being
used by it to pay the Purchase Price of the Class A Certificates being
purchased by it hereunder will constitute assets allocated to any separate
account maintained by it. For purposes of this paragraph (b), the term
"separate account" shall have the meaning specified in Section 3 of the
Employee Retirement Income Security Act Of 1974, as amended. It is an
"insurance company" as defined in Section 2(13) of the Securities Act
c. It understands that the Class A Certificates have not been and
will not be registered or qualified under the Securities Act or any
applicable state securities laws or the securities laws of any other
jurisdiction and are being offered only in a transaction not involving any
public offering within the meaning of the Securities Act, and that the
Class A Certificates initially will bear the legend and be subject to the
restrictions on transfer described in the Memorandum;
d. It understands that the Class A Certificates are subject to
restrictions on transfer set forth in Section 6.03 of the Pooling and
Servicing Agreement;
e. It intends to treat the Class A Certificates as indebtedness of the
Transferor for federal income tax purposes.
Each Purchaser understands that the Transferor, the Placement Agent, and,
for purposes of the opinions to be delivered to the Purchasers pursuant to
Section 5.d., Skadden, Arps, Slate, Meagher & Flom, will rely upon the
accuracy and truth of the foregoing representations, and each Purchaser hereby
consents to such reliance.
5. Conditions of the Obligations of the Purchasers. The obligations
of each Purchaser to purchase and pay for the Class A Certificates shall be
subject to the accuracy, as of the date hereof and as of the Closing Date,
of the representations and warranties of the Transferor herein, the
performance by the Transferor of its obligations hereunder and the
following additional conditions:
a. On the Closing Date, this Agreement, the Pooling and Servicing
Agreement, the Placement Agency Agreement, the Purchase Agreement (as defined
in the Pooling and Servicing Agreement) and the Class A Certificates
duly authorized, executed and delivered by the Parties thereto, shall be in
full force and effect and no default shall exist thereunder. The Documents
shall be in the forms heretofore provided to the Purchasers.
b. On the Closing Date, each Purchaser shall have received a certificate
from the Trustee, dated the Closing Date, stating that the Pooling and
Servicing Agreement has been duly authorized, executed and delivered by the
Trustee and the Class A Certificates have been duly authenticated by the
Trustee in accordance with the Pooling and Servicing Agreement.
c. All documents (other than opinions of counsel which will be delivered
as set forth herein) incident hereto and to the Pooling and Servicing
Agreement shall be reasonably satisfactory in form and substance to the
Purchasers.
d. The Purchasers shall have received opinions, dated the Closing Date,
addressed to the Purchasers, of Skadden, Arps, Slate, Meagher & Flom, special
counsel to the Transferor, and of James E. Anderson, Jr., counsel to the
Servicer, reasonably satisfactory in form and substance to the Purchasers.
e. The Purchasers shall have received an opinion, dated the Closing
Date, addressed to the Purchasers of Pryor, Cashman, Sherman & Flynn, counsel
to the Trustee, reasonably satisfactory in form and substance to the
Purchasers.
f. Each of the other Purchasers shall have purchased, and the Transferor
shall have received payment in full for, the Class A Certificates to be
purchased by it.
g. The Transferor shall have irrevocably assigned to the Trustee for the
benefit of the Certificateholders all of the Transferor's right, title and
interest in and to the Trust Assets.
h. The Purchasers' purchase of the Class A Certificates (a) shall
not be prohibited by any applicable law or governmental regulation, (b)
shall not subject any Purchaser to any penalty under or pursuant to any
applicable law or governmental regulation, (c) shall be permitted by the
laws and regulations of the jurisdictions to which the Purchasers are
subject, and shall qualify without reference to any "basket" or "leeway"
provisions permitting investment without restriction as to the character of
the particular investment. The Transferor shall have delivered to each
Purchaser factual certificates or other evidence, in form and substance
satisfactory to each Purchaser, to enable each Purchaser to establish
compliance with this condition, as may be reasonably requested.
i. The Transferor shall have received all consents, permits and
other authorizations, and made all such filings and declarations, as may be
required from any Person, pursuant to any law, statute, regulation or rule
(Federal, state, local and foreign) in connection with the transactions
contemplated by this Agreement.
j. The Purchasers shall have received a true and correct copy of a
letter from Standard & Poor's Corporation and Fitch Investors Service, Inc.
confirming that the Class A Certificates have been rated "AAA" and "AAA",
respectively.
k. The Purchasers shall have received evidence, reasonably satisfactory
to the Purchasers, of the payment, if any, of all taxes, fees and other
governmental charges, if any, incidental to the issuance of the Class A
Certificates and to the consummation of the transactions contemplated
hereunder and under the Pooling and Servicing Agreement.
1. The Purchasers shall have received receipts or other documents
acknowledging receipt by the Transferor of the purchase price of the Class A
Certificates upon confirmation by the Transferor of receipt thereof.
m. The Purchasers shall have received reliance letters from Skadden,
Arps, Slate, Meagher & Flom, James E. Anderson, Jr. and Pryor, Cashman,
Sherman & Flynn with respect to the opinions delivered by them in connection
with the initial closing under the Pooling and Servicing Agreement.
n. The Transferor shall have delivered a certificate signed by an
authorized officer of the Transferor, dated the Closing Date, certifying
that (i) the Transferor has filed an application with Standard & Poor's
Corporation CUSIP Service Bureau for assignment of a private placement
number with respect to the Class A Certificates and (ii) all fees and
expenses payable in connecticn with said application have been paid in
full.
If, on the Closing Date, any condition specified in this Agreement
shall not have been fulfilled when and as required in this Agreement or
waived by the Purchasers, or the Transferor shall fail to tender any
Purchaser such Purchaser's Class A Certificates, the Purchasers' obligation
to purchase the Class A Certificates pursuant to this Agreement may be
terminated by notice to the Transferor, given to the Transferor in writing
or by facsimile. Nothing in this paragraph shall operate to relieve the
Transferor from any of its obligations hereunder or otherwise waive any of
the Purchasers' rights against the Transferor.
6. Expenses. Whether or not the Class A Certificates are sold, the
Transferor will pay the reasonable fees and disbursements of the
Purchasers' special counsel, Cadwalader, Wickersham & Taft. The Transferor
will also pay (i) the fees and expenses, if any, of the Rating Agencies in
connection with obtaining a credit rating for the Class A Certificates,
whether or not such credit rating is actually obtained, and (ii) the fees
and expenses of Standard & Poor's Corporation in connection with obtaining
a private placement number with respect to the Class A Certificates. The
Transferor further agrees that it will pay or cause to be paid, promptly
upon demand, (i) any reasonable out-of-pocket expenses incurred by any
Purchaser in connection with the making of any amendment to, or the giving
of any release, consent or waiver in respect of, this Agreement and any
Document executed pursuant hereto or thereto, including the reasonable fees
and disbursements of one (and in no event more than one) outside counsel
for all Purchasers in connection therewith, in each case that are related
to or arising out of a request of, or an action taken by, or that are
otherwise required by, either the Transferor or Ingram (but not to the
extent that any such request, action or requirement of either the
Transferor or Ingram arises by reason of its obligation to respond to a
request, action or requirement instigated by a Purchaser or other third
party), and (ii) any reasonable out-of-pocket expenses incurred by any
Purchaser in connection with the enforcement of its rights and remedies
under the Pooling and Servicing Agreement if either a Servicer Default or
an Event of Termination shall occur and be continuing, including the
reasonable fees and disbursements of one (and in no event more than one)
outside counsel for all Purchasers in connection therewith.
7. Survival. The respective representations, warranties and agreements
made by the Transferor and the Purchasers herein or in any certificate or
other instrument delivered pursuant hereto shall survive the delivery of and
payment for the Class A Certificates notwithstanding any investigation made by
or on behalf of any party hereto.
8. Notices. All communications provided for or permitted hereunder shall
be in writing and shall be deemed to have been duly given if personally
delivered, sent by overnight courier or mailed by registered mail, postage
prepaid and return receipt requested, or transmitted by confirmed telex,
telegraph or telecopier, if to a Purchaser, addressed to such Purchaser at the
address set forth on such Purchaser's signature page hereto, or to such other
address as such Purchaser may designate in writing to the Transferor, and if
to the Transferor, addressed to Ingram Funding Inc., 1105 North Market Street,
Wilmington, Delaware 19801, Attention: President or to such other address as
the Transferor may designate in writing to the Purchasers, with a copy to
Ingram Industries Inc., One Belle Meade Place, 4400 Harding Road, Nashville,
Tennessee 37205, Attention: Treasurer.
9. Successors. This Agreement shall inure to the benefit of and be
binding upon the Transferor, the Purchasers and their respective successors
and assigns. Nothing expressed herein is intended or shall be construed to
give any person other than the persons referred to in the preceding sentence
any legal or equitable right, remedy or claim under or in respect of this
Agreement.
10. Severability of Provisions. Any covenant, provision, agreement
or term of this Agreement that is prohibited or is held to be void or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
Invalidating the remaining provisions hereof.
11. Miscellaneous. This Agreement constitutes the entire agreement
and understanding of the parties hereto with respect to the matters and
transactions contemplated hereby and supersedes all prior agreements and
understandings whatsoever relating to such matters and transactions.
Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought. The headings in this Agreement are for
the purpose of reference only and shall not limit or otherwise affect the
meaning hereof. This Agreement may be executed in counterparts, which may
include facsimile counterparts, each of which shall constitute an original,
but all of which shall together constitute one instrument.
12. Applicable Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.
13. Counterparts. This Agreement may be executed in two or more
counterparts, and all such counterparts taken together shall be deemed to
constitute one and the same agreement.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicate hereof,
whereupon it will become a binding agreement between the undersigned in
accordance with its terms.
Very truly yours,
INGRAM FUNDING INC.
By: /s/ Thomas H. Lunn
---------------------------
Name: Thomas H. Lunn
Title: Assistant Treasurer
Agreed and accepted as of
the date first above written.
GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY
By: /s/ Bruce L. Hoyt
--------------------------------
Name: Bruce L. Hoyt
Title: Manager
Private Placement Investments
By: /s/ E. A. Marr
--------------------------------
Name: E.A. Marr
Title: Assistance Vice President
Private Placement Investments
It the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicate hereof,
whereupon it will become a binding agreement between the undersigned in
accordance with its terms.
Very truly yours,
INGRAM FUNDING INC.
By: /s/ Thomas H. Lunn
------------------------
Name: Thomas H. Lunn
Title: Assistant Treasurer
Agreed and accepted as of
the date first above written.
PACIFIC CORINTHIAN LIFE
INSURANCE COMPANY
By: /s/ Larry J. Card
--------------------------------
Name: Larry J. Card
Title: Sr. Vice President
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicate hereof,
whereupon it will become a binding agreement between the undersigned in
accordance with its terms.
Very truly yours,
INGRAM FUNDING INC.
By: /s/ Thomas H. Lunn
-------------------------
Name: Thomas H. Lunn
Title: Assistant Treasurer
Agreed and accepted as of
the date first above written.
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: /s/ Catherine M. Holmes
--------------------------------
Name: Catherine M. Holmes
Title:
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicate hereof,
whereupon it will become a binding agreement between the undersigned in
accordance with its terms.
Very truly yours,
INGRAM FUNDING INC.
By: /s/ Thomas H. Lunn
--------------------------
Name: Thomas H. Lunn
Title: Assistant Treasurer
Agreed and accepted as of
the date first above written.
PACIFIC CORINTHIAN LIFE
INSURANCE COMPANY
By: /s/ Larry J. Card
--------------------------------
Name: Larry J. Card
Title: Sr. Vice President
By: /s/ David R. Carmichael
--------------------------------
Name: David R. Carmichael
Title: General Counsel &
Assistant Secretary
Aggregate Requested
Purchaser Principal Balance Denomination
- --------- ----------------- -------------
The Prudential Insurance
Company of America
Series 1993-1 $30,000,000. 00 $30,000,000.00
Registered Owner: The Prudential Insurance Company of America
(1) All payments on account of Notes held by such purchaser shall be made by
wire transfer of immediately available funds for credit to:
Account No. 050-54-526
Morgan Guaranty Trust
23 Wall Street
New York, York 10015
(ABA NO.: 021-000-238)
Each such wire transfer shall set forth the name of the Issuer, the full
title (including the coupon rate and final maturity date) of the Notes, a
reference to "Security No. 457192\\A0", and the due date and application (as
among principal and interest of the payment being made.
(2) Address for all notices relating to payments:
The Prudential Insurance Company of America
c/o The Prudential Specialized Finance Group
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102-4369
Attention: Manager, Investment Information &
Accounting Services
(3) Address for all other communications and notices:
The Prudential Insurance Company of America
c/o The Prudential Specialized Finance Group
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102-4069
(4) Recipient of telephonic prepayment notices:
Manager, Investment Information &
Accounting Services
(201) 802-7500
(5) Tax Identification No.: 22-1211670
ATTACHMENT I
Number/Denomination of Class A Certificate to be pruchased by Purchaser:
Series 1993-1 $20,000,000
Name of Purchaser:
Great-West Life & Annuity Insurance Company
8515 East Orchard Road
3rd Floor, Tower 2
Englewood, Colorado 80111
Tax I. D. #84-0467907
Payments of Principal and Interest
Wire Instructions:
Norwest Bank Minnesota, N. A.
ABA #091000019
For Credit to Trust Clearing Accourt #08-40-245
Re: GWL&A for Account #7-34688-00-5
Special Instructions: l) cusip or security description,
2) allocation of payment between
principal and interest, and
3) confirmation of principal balance.
Notice of Such Payments
Norwest Bank Minnesota, N.A.
733 Marquette Ave., Investors Bldg., 5th Floor
Minneapolis, Minnesota 55479-0047
Attn: Income Collections
Notice for Other Communications
Great-West Life & Annuity Insurance Company
8515 East Orchard Road
3rd Floor, Tower 2
Englewood, Colorado 80111
Attention: U.S. Private Placements
Telecopier: (303) 689-6193
Physical Delivery of Securities - New Issue
Norwest Bank Minnesota, N.A.
Attn: Security Clearance
733 Marquette Ave., 5th Floor
Mineapolis, Minnesota 55479-0047
DTC Settlement
Bank DTC participant acct. #0947
Agent ID #20947
Agent interested acct. #7-34688-00-5
Institution ID #58502
Attachment I
REGISTERED NAME EBENCO
TAX ID# 95-6025815
PACIFIC CORINTHIAN LIFE INSURANCE COMPANY
Number/Denomination of Class A Certificate to be purchased by Purchaser:
Series 1993-1 $10,000,000
Delivery Instructions for Private Placements
For Private Placements Registered in Nominee Name
(EBENCO):
Bank of America Clearing & Services Corp.
2 Rector Street, 3rd Floor - Window #2
New York, NY 10006
For A/C of Sec Pac state TrCo./CPR
Account #4-09353CPR
SPCSC - Pasadena
SPSTC Customer Account #QE-7-15520-1
Wire Transfer Instructions Income and Other Distributions:
Bank of America
ABA #121000358
SPSTC-CPR ADVANTAGE GROUP
ACCOUNT: 1257603433
ATT: Patti Davis (818) 405-3425
Sender's Nate:
Further Credit to: Account #QE-7-15520-1
PACIFIC CORINTHIAN LIFE INSURANCE
COMPANY-PHYSICAL
Separate Notification of payments should be addressed to:
Pacific Corinthian Life insurance Company
Attn: Securities Administration
Sharon Goldberg
P.O. B0X 9000
Newport Beach, California 92658-9000
Telefax # (714) 640-3199
Telephone # (714) 640-3312
All Financials and any other correspondence should be addressedd to:
Pacific Mutual Life Insurance Company
Attn: Fixed Income Securities Dept.
P. O. Box 9000
Newport Boach, California 92658-9000
Telefax # (714) 640-3199
Telephone # (714) 640-3312
EXHIBIT 10.28
Schedule of Certificate Purchase Agreements
The documents described in this Schedule are materially identical to the
Certificate Purchase Agreement included as Exhibit 10.27 to this
Registration Statement, except as noted below:
Certificate Purchase Agreement, July 23, 1993, 6.61% Asset-Backed
Certificates, Series 1993-2, Class A. Purchasers: Prudential Insurance
Company of America, Pacific Mutual Life Insurance Company, Great-West Life
& Annuity Insurance Company.
Certificate Purchase Agreement, March 24, 1994, 6.57% Asset-Backed
Certificates, Series 1994-1, Class A. Purchasers: Prudential Insurance
Company of America.
Certificate Purchase Agreement, March 24, 1994, 6.91% Asset-Backed
Certificates, Series 1994-2, Class A. Purchasers: Prudential Insurance
Company of America, Great-West Life & Annuity Insurance Company.
Certificate Purchase Agreement, 7.17% Asset-Backed Certificates, Series
1994-3, Class A. Purchasers: Prudential Insurance Company of America,
Pacific Mutual Life Insurance Company.
EXHIBIT 10.29
- ---------------------------------------------------------------------------
INGRAM FUNDING INC.,
Transferor,
INGRAM INDUSTRIES INC.,
Servicer,
and
CHEMICAL BANK,
Trustee
on behalf of the Certficateholders
___________________
SERIES 1993-1 SUPPLEMENT
Dated as of July 23, 1993
to
INGRAM FUNDING MASTER TRUST
POOLING AND SERVICING AGREEMENT
Dated as of February 12, 1993
___________________
6.19% ASSET-BACKED CERTIFICATES,
Series 1993-1, CLASS A
6.19% ASSET-BACKED CERTIFICATES,
Series 1993-1, CLASS B
- ---------------------------------------------------------------------------
Series 1993-l SUPPLEMENT, dated as of July 23, 1993 (this "Supplement")
among INGRAM FUNDING INC., a Delaware corporation, as Transferor (the
"Transferor"), INGRAM INDUSTRIES INC., a Tennessee corporation, as Servicer
("Ingram" or the "Servicer"), and CHEMICAL BANK, a New York banking
corporation, as trustee (together with its successors in trust thereunder as
provided in the Pooling and Servicing Agreement referred to below, the
"Trustee") , under the Pooling and Servicing Agreement, dated as of February
12, 1993 (the "Agreement") among the Transferor, the Servicer and the Trustee.
PRELIMINARY STATEMENT
Section 6.09 of the Agreement provides, among other things, that the
Transferor and the Trustee may at any time and from time to time enter into
a supplement to the Agreement for the purpose of authorizing the issuance
of Investor Certificates. The Transferor has delivered the Issuance Notice
required by Section 6.09 of the Agreement and hereby enters into this
Supplement with the Servicer and the Trustee as required by Section 6.09(b)
of the Agreement to provide for the issuance, authentication and delivery
of the 6.19% Asset-Backed Certificates, Series 1993-1, Class A (the "Class
A Certificates") and the 6.19% Asset-Backed Certificates, Series 1993-1,
Class B (the "Class B Certificates" and, together with the Class A
Certificates, the "Series 1993-1 Certificates"). In the event that any
term or provision contained herein shall conflict with or be inconsistent
with any term or provision contained in the Agreement, the terms and
provisions of this Supplement shall govern.
All capitalized terms not otherwise defined herein are defined in Annex
X to the Agreement. All Article, Section or Subsection references herein shall
mean Article, Section or Subsections of the Agreement, as amended and
supplemented by this Supplement, except as otherwise provided herein.
Any reference to the Amortization Period or the Non-Amortization Period
in this Supplement shall refer only to such periods as they relate to the
Series 1993-1 Certificates.
SECTION 1. Designation.
The Class A Certificates shall be designated generally as 6.19%
Asset-Backed Certificates, Series 1993-1, Class A or the Class A
Certificates. The Class B Asset-Backed Certificates, Series 1993-1, Class
B or the Class B Certificates together shall be designated generally as the
Series 1993-1 Certificates.
SECTION 2. Agreement Modifications.
The following terms of the Agreement are hereby modified solely with
respect to the Series 1993-1 Certificates issued pursuant to this Supplement
as follows:
Section 4.02 is modified to add the following:
(e) The Certificate Account. The Trustee, for the benefit of
Certificateholders holding the Series 1993-1 Certificates (the "Series 1993-1
Certificateholders"), shall establish or shall cause to be established and
maintained with an Eligible Institution (which may be the Trustee) in the name
of the Trustee, on behalf of the Trust, a segregated trust account (the
"Certificate Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Series 1993-1
Certificateholders. The Certificate Account shall have two sub-accounts, the
"Principal Funding Account" and the "Interest Funding Account". The
Certificate Account shall be under the sole dominion and control of the
Trustee for the benefit of the Series 1993-1 Certificateholders. If, at any
time, the institution holding the Certificate Account ceases to be an Eligible
Institution, the Trustee shall within 30 days of a Responsible Officer
learning of such event establish a new Certificate Account meeting the
conditions specified above with an Eligible Institution, transfer any cash
and/or any investments to such new Certificate Account and from the date such
new Certificate Account is established, it shall be the "Certificate Account".
Neither the Transferor nor the Servicer, nor any person or entity claiming by,
through or under the Transferor or Servicer, shall have any right, title or
interest in, or any right to withdraw any amount from, the Certificate Account
except to the extent provided in the Agreement as modified by this Supplement.
Pursuant to the authority granted to the Servicer pursuant to Section 3.01(a),
the Servicer shall have the revocable power to instruct the Trustee to make
withdrawals and payments from the Certificate Account for the purposes of
carrying out the Servicer's duties under the Agreement.
(f) Administration of the Certificate Account. Funds on deposit in the
Certificate Account shall at the direction of the Servicer be invested by the
Trustee in Permitted Investments that will mature so that such funds will be
available prior to the Payment Date following such investment. Any funds on
deposit in the Certificate Account to be so invested shall be invested solely
in Permitted Investments. Any request by the Servicer to invest funds on
deposit in the Certificate Account shall be in writing and shall certify that
the requested investment is a Permitted Investment which matures at or prior
to the time required hereby. The Trustee shall maintain possession of the
negotiable instruments or securities, if any, evidencing the Permitted
Investments described in clause (a) of the definition thereof from the time of
purchase thereof until maturity. All interest and earnings (net of losses and
investment expenses) on funds on deposit in the Certificate Account shall be
paid by the Trustee to the Transferor on each Payment Date.
(g) Identification of Certificate Account. Schedule A, which is hereby
incorporated into and made a part of this Supplement, identifies the
Certificate Account by setting forth the account number of such account, the
account designation of such account and the name and location of the
institution with which such account has been established.
Section 4.04 is modified in its entirety to read as follows:
Section 4.04 Payments of Imputed Yield Collections with Respect to the
Series 1993-1 Certificates.
Daily Settlement
On each Business Day, the Servicer shall deliver to the Trustee a
Daily Report in which it shall instruct the Trustee to withdraw with
respect to the Series 1993-1 Certificates and pay, and the Trustee, acting
in accordance with such instructions, shall withdraw and pay or cause to be
withdrawn and paid on each Business Day (to the extent, solely with respect
to Section 4.04(b) in the case of the Servicing Fee, and Sections 4.04(c),
(d), (f), (g) and (h) in the case of amounts payable to the Holder of the
Transferor Certificate, the Servicer has not effected any such payment by
deduction of such amount from net Collections remitted to the Collection
Account on such Business Day as set forth in the Daily Report), the amounts
required to be withdrawn and paid from the Collection Account pursuant to
Sections 4.04(a), (b), (c), (e) and (f) and, on each Business Day other
than a Settlement Date, the amounts required to be withdrawn and paid from
the Collection Account pursuant to Sections 4.04(d), (g), and (h).
(a) Class A Certificate Interest. Subject to the last sentence of
this Section 4.04(a), on each of the last l0 Business Days of the month
preceding the month in which each Payment Date occurs, the Trustee, acting
in accordance with instructions from the Servicer, shall deposit into the
Interest Funding Account, with respect to the Class A Certificates and from
Imputed Yield Collections in the Collection Account which are allocated to
the Series 1993-1 Certificates pursuant to Sections 4.03(b)(i)(A) or
(ii)(A), as applicable (the "Series 1993-1 Imputed Yield Collections"), (i)
first, one-tenth of the aggregate interest that has accrued and will accrue
at the Class A Certificate Rate for each day from and including the
preceding Payment Date to but not including the next succeeding Payment
Date on the Class A Invested Amount after giving effect to payments made on
the preceding Payment Date (without regard to Class A Charge-Offs, if any,
incurred subsequent to such preceding Payment Date) and (ii) second, the
amount of the unpaid Class A Deficiency Amount (as defined below) on the
previous Business Day. The cumulative excess, if any, of the amounts
required to be paid under (i) and (ii) above over the sum of (x) the
available Series 1993-1 Imputed Yield Collections, (y) Undistributed Class
B Interest (as defined in Section 4.04(e)) and (z) Subordinated Series
1993-1 Principal Collections (as defined in Section 4.06(a)) on any day
shall be referred to as the "Class A Deficiency Amount" with respect to the
Series 1993-1 Certificates. Interest shall not accrue on the Class A
Deficiency Amount. Notwithstanding the first sentence of this
Section 4.04(a), (i) if a Class A Deficiency Amount exists at the end of
the last Business Day of the month preceding the month in which a Payment
Date occurs, then on each Business Day of such succeeding month through and
including such Payment Date, or such lesser number of days as shall elapse
until such Class A Deficiency Amount is satisfied in full, Series 1993-1
Imputted Yield Collections, together with Undistributed Class B Interest
and Subordianted Series 1993-1 Principal Collections if required, shall be
applied to such Class A Deficiency Amount and deposited or reallocated in
the Interest Funding Account with respect thereto and (ii) during the
Amortization Period, in addition to any amounts required to be deposited
pursuant to clause (i) of this sentence, interest shall be deposited in the
Interest Funding Account on each Business Day during the month preceding
each Payment Date in a pro-rated amount based on the number of Business
Days in such month.
(b) Servicing Fee with respect to the Series 1993-l Certificates.
On each Business Day, after giving effect to the payments required pursuant
to Section 4.04(a) (including any payments from Undistributed Class B
Interest and Subordinated Series 1993-1 Principal Collections with respect
thereto), the Trustee, acting in accordance with instructions from the
Servicer, shall pay to the Servicer, from available Series 1993-1 Imputed
Yield Collections, (i) first, the Servicing Fee allocable to the Series
1993-1 Certificates accrued at the applicable Servicing Fee Percentage for
each day from and including the preceding day on which payments were made
pursuant to this Section 4.04(b) to but not including the current Business
Day on the Series 1993-1 Invested Amount at the end of such preceding day
and (ii) second, the amount of the unpaid Servicing Fee Deficiency Amount
(as defined below) on the previous Business Day. The cumulative excess, if
any, of the amounts required to be paid under (i) and (ii) above over the
sum of (x) the available Series 1993-1 Imputed Yield Collections, (y) the
available Undistributed Class B Interest and (z) the available Subordinated
Series 1993-1 Principal Collections on any day shall be referred to as the
"Servicing Fee Deficiency Amount" with respect to the Series 1993-1
Certificates. Interest shall not accrue on the Servicing Fee Deficiency
Amount.
(c) Class A Default Amounts. On each Business Day, after giving effect
to the payments required pursuant to Sections 4.04(a) and (b) (including any
payments from Undistributed Class B Interest and Subordinated Series 1993-1
Principal Collections with respect thereto), the Trustee, acting in accordance
with instructions from the Servicer, shall, pursuant to clause (i) or (ii)
below, from available Series 1993-1 Imputed Yield Collections and with respect
to an amount equal to the Class A Default Amount for such day, if any (without
regard to the aggregate amount of Class A Charge-Offs outstanding from previous
days), (i) during the Non-Amortization Period, pay such Class A Default Amount
to the Holder of the Transferor Certificate to the extent of such Series
1993-1 Imputed Yield Collections (and, if required, from available
Undistributed Class B Interest and Subordinated Series 1993-1 Principal
Collections), and (ii) during the Amortization Period, deposit such Class A
Default Amount to the extent of available Series 1993-1 Imputed Yield
Collections (and, if required, from available Undistributed Class B Interest
and Subordinated Series 1993-1 Principal Collections) into the Principal
Funding Account. The excess, if any, of the Class A Default Amount on any day
over the sum of (x) the available Series 1993-1 Imputed Yield Collections, (y)
the available Undistributed Class B Interest and (z) the available
Subordinated Series 1993-1 Principal Collections on such day, shall be
referred to as a "Class A Charge-Off" and shall constitute a reduction to the
Class A Invested Amount. Any amounts paid under this Section 4.04(c) shall be
treated, for all purposes hereunder, as payments in respect of Principal
Receivables.
(d) Daily Reimbursement of Class A Charge-Offs. On each Business Day
other than a Settlement Date, after giving effect to the payments required
pursuant to Sections 4.04(a), (b) and (c) (including any payments from
Undistributed Class B Interest and Subordinated Series 1993-1 Principal
Collections with respect thereto), the Trustee, acting in accordance with
instructions from the Servicer, shall, from available Series 1993-1 Imputed
Yield Collections, and with respect to the aggregate amount of Class A
Charge-Offs, if any, which have not theretofore been reimbursed pursuant to
this Section 4.04(d) or Section 4.04(j) (i) during the Non-Amortization
Period, pay such amounts to the extent of available Series 1993-1 Imputed
Yield Collections (and, if required, from available Undistributed Class B
Interest and Subordinated Series 1993-1 Principal Collections), to the Holder
of the Transferor Certificate and (ii) during the Amortization Period, deposit
such amounts, to the extent of available Series 1993-1 Imputed Yield
Collections (and, if required, from available Undistributed Class B Interest
and Subordinated Series 1993-1 Principal Collections), into the Principal
Funding Account, and the amount of such payment or deposit shall constitute an
increase of the Class A Invested Amount. Any amounts paid under this Section
4.04(d) shall be treated, for all purposes hereunder, as payments in respect
of Principal Receivables.
(e) Class B Certificate Interest. On each of the last 10 Business
Days of the month preceding the month in which each Payment Date occurs,
after giving effect to the payments required pursuant to Sections 4.04(a),
(b), (c) and (d), and (i) and (j) if a Settlement Date, the Trustee, acting
in accordance with instructions from the Servicer, shall deposit into the
Interest Funding Account, with respect to Class B Certificates and solely
from Series 1993-1 Imputed Yield Collections (i) first, one-tenth of the
aggregate interest that has accrued and will accrue at the Class B
Certificate Rate for each day from and including the preceding Payment Date
to but not including the next succeeding Payment Date on the Class B
Invested Amount after giving effect to payments made on the preceding
Payment Date (without regard to Class B Charge-Offs, if any, incurred
subsequent to such preceding Payment Date) and (ii) second, the amount of
the unpaid Class B Deficiency Amount (as defined below) on the previous
Business Day. The cumulative excess, if any, of the amounts required to be
paid under (i) and (ii) above over the available Series 1993-1 Imputed
Yield Collections on any day shall be referred to as the "Class B
Deficiency Amount" with respect to the Series 1993-1 Certificates.
Interest shall not accrue on the Class B Deficiency Amount. Any and all
amounts deposited in the Interest Funding Account with respect to interest
on the Class B Certificates but not actually distributed to the Class B
Certificateholders ("Undistributed Class B Interest"), shall, to the extent
of any amounts required to be deposited or paid with respect to the Class A
Certificates on any Business Day pursuant to Sections 4.04(a), (b), (c),
(d), (i) and (j) which are not provided for in full by available Series
1993-1 Imputed Yield Collections on such day, be reallocated and, if
applicable, paid or deposited in satisfaction of such amounts for the
benefit of the Class A Certificateholders. Any Undistributed Class B
Interest which is so reallocated shall give rise to a corresponding Class B
Deficiency Amount on the day so reallocated.
(f) Class B Default Amounts. On each Business Day, after giving
effect to the payments required pursuant to Sections 4.04(a), (b), (c),
(d), (i) and (j) if a Settlement Date, and (e), the Trustee, acting in
accordance with instructions from the Servicer, shall, pursuant to clause
(i) or (ii) below, solely from available Series 1993-1 Imputed Yield
Collections and with respect to an amount equal to the Class B Default
Amount for such day, if any (without regard to the aggregate amount of
Class B Charge-Offs outstanding from previous days), (i) during the Non-
Amortization Period, pay such Class B Default Amount to the Holder of the
Transferor Certificate, to the extent of such Series 1993-1 Imputed Yield
Collections, and (ii) during the Amortization Period, deposit such Class B
Default Amount (to the extent of available Series 1993-1 Imputed Yield
Collections) into the Principal Funding Account. The excess, if any, of
the Class B Default Amount on any day over the available Series 1993-1
Imputed Yield Collections on such day shall be referred to as a "Class B
Charge-Off" and shall constitute a reduction to the Class B Invested
Amount. Any amounts paid under this Section 4.04(f) shall be treated, for
all purposes hereunder, as payments in respect of Principal Receivables.
Notwithstanding anything to the contrary in this Section 4.04(f), from and
after the Amortization Period Commencement Date, until the Class A Invested
Amount and all accrued interest thereon has been paid to, or deposited for
the benefit of, the Class A Certificateholders, no allocation of available
Series 1993-1 Imputed Yield Collections to the Class B Default Amount shall
be made under this Section 4.04(f).
(g) Daily Reimbursement of Class B Charge-Offs; Late Charge. On
each Business Day other than a Settlement Date, after giving effect to the
payments required pursuant to Sections 4.04(a), (b), (c), (d), (e) and (f),
the Trustee, acting in accordance with instructions from the Servicer,
shall, solely from available Series 1993-1 Imputed Yield Collections and
with respect to the aggregate amount of Class B Charge-Offs, if any, which
have not theretofore been reimbursed pursuant to this Section 4.04(g) or
Section 4.04(1) (i) during the Non-Amortization Period, pay such amounts,
to the extent of available Series 1993-1 Imputed Yield Collections, to the
Holder of the Transferor Certificate and (ii) during the Amortization
Period, deposit such amounts, to the extent of available Series 1993-1
Imputed Yield Collections, into the Principal Funding Account, and the
amount of such payment or deposit shall constitute an increase to the Class
B Invested Amount. Any amounts paid under this Section 4.04(g) shall be
treated, for all purposes hereunder, as payments in respect of Principal
Receivables. Notwithstanding anything to the contrary in this Section
4.04(g), from and after the Amortization Period Commencement Date, until
the Class A Invested Amount and all accrued interest thereon has been paid
to, or deposited for the benefit of, the Class A Certificateholders, no
allocation of available Series 1993-1 Imputed Yield Collections to
reimbursement of Class B Charge-Offs shall be made under this Section
4.04(g).
On each Business Day other than a Settlement Date, after giving
effect to the payments required pursuant to Sections 4.04(a), (b), (c),
(d), (e), (f) and the preceding paragraph of this subsection (g), the
Trustee, acting in accordance with instructions from the Servicer, shall
deposit into the Interest Funding Account and pay to the Class A
Certificateholders an amount equal to the lesser of (i) all remaining
Series 1993-1 Imputed Yield Collections and (ii) the amount of the unpaid
Late Charge, if any, payable pursuant to Section 26 of the Series 1993-1
Supplement.
(h) Daily Payments and Deposits of Excess Series 1993-1 Imputed
Yield Collections. On each Business Day other than a Settlement Date,
after giving effect to the payments required pursuant to Sections 4.04(a),
(b), (c), (d), (e), (f) and (g), the Trustee, acting in accordance with
instructions from the Servicer, shall pay or deposit, as applicable, all
remaining Series 1993-1 Imputed Yield Collections (i) if the Transferor
Eligible Amount as of the end of the preceding Business Day is greater than
or equal to the Transferor Minimum Amount, to the Holder of the Transferor
Certificate and (ii) if the Transferor Eligible Amount as of the end of the
preceding Business Day is less than the Transferor Minimum Amount, first to
the Transferor Account to the extent required to cause the Transferor
Eligible Amount to be not less than the Transferor Minimum Amount, and
second, any remaining Series 1993-l Imputed Yield Collections, to the
Holder of the Transferor Certificate. Notwithstanding the preceding
sentence, from and after the Amortization Period Commencement Date, all
excess Series 1993-1 Imputed Yield Collections shall first be allocated to
the payment of the unpaid Make-Whole Amount, if any, owing to the Class A
Certificateholders pursuant to Section 19 of the Series 1993-1 Supplement
and, if sufficient funds have been allocated to fully satisfy such unpaid
Make-Whole Amount, remaining excess Series 1993-1 Imputed Yield Collections
shall be characterized as Principal Collections in respect of the Series
1993-1 Certificates and deposited into the Principal Funding Account.
Monthly Settlement
On each Settlement Date, the Servicer shall deliver to the Trustee a
Settlement Statement. On each Settlement Date, the Servicer also shall
deliver to the Trustee a Daily Report in which it shall instruct the
Trustee to withdraw with respect to the Series 1993-1 Certificates and pay,
and the Trustee, acting in accordance with such instructions, shall
withdraw and pay or cause to be withdrawn and paid on such day (to the
extent, solely with respect to Sections 4.04(i), (j), (k), (1), (m) and (n)
in the case of amounts payable to the Holder of the Transferor Certificate,
the Servicer has not effected any such payment by deduction of such amount
from net Collections remitted to the Collection Account on such Business
Day as set forth in the Daily Report), the amounts required to be withdrawn
and paid from the Collection Account pursuant to Sections 4.04(i), (j),
(k), (1), (m) and (n).
(i) Class A Certificate Defaults. On each Settlement Date, after
giving effect to the payments required pursuant to Sections 4.04(a), (b)
and (c) (including any payments from Undistributed Class B Interest and
Subordinated Series 1993-1 Principal Collections with respect thereto), the
Trustee, acting in accordance with instructions from the Servicer, shall
pay, from available Series 1993-1 Imputed Yield Collections, an amount
equal to the excess, if any, of (i) the product of (x) the Defaulted Amount
for the preceding Settlement Period as determined on the preceding
Determination Date and (y) the average Class A Invested Percentage during
such preceding Settlement Period over (ii) the aggregate Class A Default
Amounts for each Business Day in the preceding Settlement Period (in each
case, without regard to the aggregate amount of Class A Charge-Offs
outstanding from previous days) (the "Class A Default Deficiency Amount"),
(i) to the Holder of the Transferor Certificate, during the Non-
Amortization Period to the extent of available Series 1993-1 Imputed Yield
Collections (and, if required, from Undistributed Class B Interest and
Subordinated Series 1993-1 Principal Collections) and (ii) to the Principal
Funding Account, during the Amortization Period to the extent of available
Series 1993-1 Imputed Yield Collections (and, if required, from
Undistributed Class B Interest and Subordinated Series 1993-1 Principal
Collections). If available Series 1993-1 Imputed Yield Collections are
less than the Class A Default Deficiency Amount, the Trustee, acting in
accordance with instructions from the Servicer, shall determine the
aggregate amount paid to the Holder of the Transferor Certificate during
the preceding Settlement Period pursuant to Section 4.04(h) and shall deem
such payments to have been made in satisfaction of such Class A Default
Deficiency Amount, up to the amount thereof. Any amounts recharacterized
as payments of the Class A Default Deficiency Amount shall be treated, for
all purposes hereunder, as payments in respect of Principal Receivables.
(j) Settlement Date Adjustment and Reimbursement of Class A Charge-
Offs. On each Settlement Date, the Trustee, acting in accordance with
instructions from the Servicer, shall reduce the aggregate amount of Class
A Charge-Offs, if any, and correspondingly increase the Class A Invested
Amount, to the extent of the excess, if any, of (i) the aggregate Class A
Default Amounts for each Business Day in the preceding Settlement Period
over (ii) the product of (x) the Defaulted Amount for the preceding
Settlement Period as determined on the preceding Determination Date and (y)
the average Class A Invested Percentage during such preceding Settlement
Period. On each Settlement Date, after giving effect to such reduction and
to the payments required pursuant to Sections 4.04(a), (b), (c) and (i)
(including any payments from Undistributed Class B Interest and
Subordinated Series 1993-1 Principal Collections with respect thereto), the
Trustee, acting in accordance with instructions from the Servicer, shall
pay, from available Series 1993-1 Imputed Yield Collections, an amount equal
to the sum of (x) the aggregate amount of Class A Charge-Offs, if any,
which have not theretofore been reimbursed pursuant to Section 4.04(d) and
this Section 4.04(j) and (y) the excess, if any, of the amount determined
pursuant to the first sentence of Section 4.04(i) over the amount paid or
characterized as having been paid with respect thereto pursuant to the
first and second sentences of Section 4.04(i) ("Unreimbursed Class A
Charge-Offs"), (i) to the Holder of the Transferor Certificate, during the
Non-Amortization Period to the extent of available Series 1993-1 Imputed
Yield Collections (and, if required, from Undistributed Class B Interest
and Subordinated Series 1993-1 Principal Collections), and (ii) to the
Principal Funding Account, during the Amortization Period to the extent of
Series 1993-1 Imputed Yield Collections (and, if required, from
Undistributed Class B Interest and Subordinated Series 1993-1 Principal
Collections), and the Class A Invested Amount shall be increased by the
amount so paid or deposited. Any such amounts paid under this Section
4.04(j) shall be treated, for all purposes hereunder, as payments in
respect of Principal Receivables.
(k) Class B Certificate Defaults. On each Settlement Date, after
giving effect to the payments required pursuant to Sections 4.04(a), (b),
(c), (i), (j), (e) and (f), the Trustee, acting in accordance with
instructions from the Servicer, shall pay, solely from available Series
1993-1 Imputed Yield Collections, an amount equal to the excess, if any, of
(i) the product of (x) the Defaulted Amount for the preceding Settlement
Period as determined on the preceding Determination Date and (y) the
average Class B Invested Percentage during such preceding Settlement Period
over (ii) the aggregate Class B Default-Amounts for each Business Day in
the preceding Settlement Period (in each case, without regard to the
aggregate amount of Class B Charge-Offs outstanding from previous days)
(the "Class B Default Deficiency Amount"), (i) to the Holder of the
Transferor Certificate, during the Non-Amortization Period to the extent of
available Series 1993-l Imputed Yield Collections, and (ii) to the
Principal Funding Account, during the Amortization Period to the extent of
available Series 1993-1 Imputed Yield Collections. If available Series
1993-1 Imputed Yield Collections are less than the Class B Default
Deficiency Amount, the Trustee, acting in accordance with instructions from
the Servicer, shall determine the aggregate amount paid to the Holder of
the Transferor Certificate during the preceding Settlement Period
pursuant to Section 4.04(h) and shall deem such payments to have been made
in satisfaction of such Class B Default Deficiency Amount, up to the amount
thereof. Any amounts recharacterized as payments of the Class B Default
Deficiency Amount shall be treated, for all purposes hereunder, as payments
in respect of Principal Receivables. Notwithstanding anything to the
contrary in this Section 4.04(k), from and after the Amortization Period
Commencement Date, until the Class A Invested Amount and all accrued
interest thereon has been paid to, or deposited for the benefit of, the
Class A Certificateholders, no allocation of available Series 1993-1
Imputed Yield Collections to the Class B Default Deficiency Amount shall be
made under this Section 4.04(k).
(l) Settlement Date Adjustment and Reimbursement of Class B Charge-
Offs. On each Settlement Date, the Trustee, acting in accordance with
instructions from the Servicer, shall reduce the aggregate amount of Class
B Charge-Offs, if any, and correspondingly increase the Class B Invested
Amount, to the extent of the excess, if any, of (i) the aggregate Class B
Default Amounts for each Business Day in the preceding Settlement Period
over (ii) the product of (x) the Defaulted Amount for the preceding
Settlement Period as determined on the preceding Determination Date and (y)
the average Class B Invested Percentage during such preceding Settlement
Period. On each Settlement Date, after giving effect to such reduction and
to the payments required pursuant to Sections 4.04(a), (b), (c), (i), (j),
(e), (f) and (k), the Trustee, acting in accordance with instructions from
the Servicer, shall pay, solely from available Series 1993-1 Imputed Yield
Collections, an amount equal to the sum of (x) the aggregate amount of
Class B Charge-Offs, if any, which have not theretofore been reimbursed
pursuant to Section 4.04(g) and this Section 4.04(l) and (y) the excess, if
any, of the amount determined pursuant to the first sentence of Section
4.04(k) over the amount paid or characterized as having been paid with
respect thereto pursuant to the first and second sentences of Section
4.04(k) ("Unreimbursed Class B Charge-offs"), (i) to the Holder of the
Transferor Certificate, during the Non-Amortization Period to the extent of
available Series 1993-1 Imputed Yield Collections, and (ii) to the
Principal Funding Account, during the Amortization Period to the extent of
Series 1993-1 Imputed Yield Collections, and the Class B Invested Amount
shall be increased by the amount so paid or deposited. Any amounts paid
under A. s Section 4.04(l) shall be treated, for all purposes hereunder, as
payments in respect of Principal Receivables. Notwithstanding anything to
the contrary in this Section 4.04(l), from and after the Amortization
Period Commencement Date, until the Class A Invested Amount and all accrued
interest thereon has been paid to, or deposited for the benefit of, the
Class A Certificateholders, no allocation of available Series 1993-1
Imputed Yield Collections to Unreimbursed Class B Charge-Offs shall be made
under this Section 4.04(1).
(m) Settlement Date Payments and Deposits of Excess Series 1993-1
Imputed Yield Collections. On each Settlement Date, after giving effect to
the payments required pursuant to Sections 4.04(a), (b), (c), (i), (j),
(e), (f), (k) and (l), the Trustee, acting in accordance with instructions
from the Servicer, shall pay or deposit, as applicable, all remaining
Series 1993-1 Imputed Yield Collections (i) if the Transferor Eligible
Amount as of the end of the preceding Business Day is greater than or equal
to the Transferor Minimum Amount, to the Holder of the Transferor
Certificate and (ii) if the Transferor Eligible Amount as of the end of the
preceding Business Day is less than the Transferor Minimum Amount, first,
to the Transferor Account to the extent required to cause the Transferor
Eligible Amount to be not less than the Transferor Minimum Amount, and
second, any remaining Series 1993-1 Imputed Yield Collections, to the
Holder of the Transferor Certificate. Notwithstanding the preceding
sentence, from and after the Amortization Period Commencement Date, all
excess Series 1993-1 Imputed Yield Collections shall be recharacterized as
Principal Collections in respect of the Series 1993-1 Certificates and, at
the written direction of the Servicer, shall be deposited into the
Principal Funding Account.
(n) Undistributed Series 1993-1 Imputed Yield Collections. If, as
of the end of any day on which Series 1993-1 Imputed Yield Collections are
to be distributed pursuant to Sections 4.04(c), (d), (f), (g), (h), (i),
(j), (k), (l) or (m), such payments would cause the Transferor Eligible
Amount, after taking into account payments to the Transferor pursuant to
Section 4.03 and Sections 4.04(c), (d), (f), (g), (h), (i), (j), (k), (l)
and (m) and the increase in the Transferor Eligible Amount resulting from
the transfer of any new Receivables to the Trust as of such day, to be less
than the Transferor Minimum Amount (any such Series 1993-1 Imputed Yield
Collections to the extent applied to reduce the Transferor Eligible Amount
to the Transferor Minimum Amount being referred to as "Distributed Series
1993-1 Imputed Yield Collections"), then the Trustee, acting in accordance
with instructions from the Servicer, shall pay or deposit, as applicable,
any Series 1993-1 Imputed Yield Collections allocated to the Holder of the
Transferor Certificate in excess of Distributed Series 1993-1 Imputed Yield
Collections ("Undistributed Series A Imputed Yield Collections"), first, to
the Transferor Account to the extent required to cause the Transferor
Eligible Amount to be not less than the Transferor Minimum Amount, and
second, any remaining Series 1993-1 Imputed Yield Collections to the Holder
of the Transferor Certificate. Notwithstanding the preceding sentence,
from and after the Amortization Period Commencement Date, all Undistributed
Series 1993-1 Imputed Yield Collections shall be recharacterized as
Principal Collections in respect of the Series 1993-1 Certificates and, at
the written direction of the Servicer, deposited into the Principal Funding
Account.
Payments on Payment Dates
On each Payment Date, the Servicer with respect to the Series 1993-1
Certificates shall instruct the Trustee to withdraw and pay and the
Trustee, acting in accordance with such instructions shall withdraw and pay
or cause to be withdrawn and paid on such day, the amounts required to be
withdrawn and paid from the Interest Funding Account pursuant to Sections
4.04(o) and (p).
(o) Payments to Class A Certificateholders. On each Payment Date,
after giving effect to the payments and deposits required pursuant to this
Section 4.04(a) through (n) (including any payments from Subordinated
Series 1993-1 Principal Collections), the Trustee, acting in accordance
with instructions from the Servicer, shall apply from the amount on deposit
in the Interest Funding Account an amount equal to the sum of the Class A
Interest Distribution Amount and the unpaid Late Charge, if any, not
previously paid under Section 4.04(g) and shall pay such amount to the
Class A Certificateholders.
(p) Payments to Class B Certificateholders. On each Payment Date,
after giving effect to the payments and deposits required pursuant to this
Section 4.04(a) through (o), the Trustee, acting in accordance with
instructions from the Servicer, shall apply from the amount on deposit in
the Interest Funding Account an amount equal to the Class B Interest
Distribution Amount and shall pay such amount to the Class B
Certificateholders, provided, however, that from and after the Amortization
Period Commencement Date, until the Class A Invested Amount and all accrued
interest thereon, unpaid Late Charges, if any, and the Make-Whole Amount
and the Other Series Make-Whole Amount (as hereinafter defined), if any,
have been paid to the Class A Certificateholders, no distribution of
interest on the Class B Certificates shall be made under this Section
4.04(p) and amounts allocated to such interest and deposited in the
Interest Funding Account pursuant to Section 4.04(e) shall be retained in
the Interest Funding Account. After the Class A Invested Amount, all
interest thereon and any Late Charges have been paid in full, amounts in
respect of interest on the Class B Certificates retained in the Interest
Funding Account pursuant to the preceding sentence shall be applied to pay
the Make-Whole Amount and Other Series Make-Whole Amount, if any, prior to
distribution of any such amount to the Class B Certificateholders.
Notwithstanding anything to the contrary, payment shall not be made to the
Class B Certificateholders on any Payment Date unless the Class A
Certificateholders shall be paid all amounts owed to them on such Payment
Date, including Late Charges, if any.
Section 4.06 is modified in its entirety to read as follows:
Section 4.06. Payment of Principal.
Daily Payments and Deposits
(a) On each Business Day prior to the commencement of the
Amortization Period, the Servicer shall instruct the Trustee to pay the
amount allocated pursuant to Section 4.03(b)(i)(B) (the "Series 1993-1
Principal Collections") (without duplication of amounts to be paid
pursuant to Sections 4.04(c), (d), (f), (g), (h), (i), (j), (k), (l), (m)
and (n)), and the Trustee shall pay such amount, to the Holder of the
Transferor Certificate; provided, however, that if as of the beginning of
the preceding Business Day, the Transferor Eligible Amount was less than
the Transferor Minimum Amount, the Servicer shall direct the Trustee to pay
(to the extent available) to the Transferor Account at least an amount
equal to such deficiency. Notwithstanding the preceding sentence
(including the proviso thereto), on each Business Day prior to the
commencement of the Amortization Period, Series 1993-1 Principal
Collections not exceeding the Class B Invested Amount on such day (the
"Subordinated Series 1993-1 Principal Collections") shall, to the extent of
any amounts required to be deposited or paid with respect to the Class A
Certificates on any Business Day pursuant to Sections 4.04(a), (b), (c),
(d), (i) and (j) which are not provided for in full by available Series
1993-1 Imputed Yield Collections on such day or by Undistributed Class B
Interest reallocated on such day pursuant to Section 4.04(e), be
reallocated and, if applicable, paid or deposited in satisfaction of such
amounts for the benefit of the Class A Certificateholders. Any
Subordinated Series 1993-1 Principal Collections which are so allocated
shall give rise to a corresponding Class B Charge-Off on the day so
allocated.
(b) Commencing on the first Business Day in the Amortization Period
and on each Business Day thereafter until the end of such Amortization
Period, the Servicer shall instruct the Trustee in writing to withdraw, and
the Trustee shall withdraw, from the Collection Account the amount
allocated and deposited pursuant to Section 4.03(b)(ii)(B) (without
duplication of amounts to be paid pursuant to Sections 4.04(c), (d), (f),
(g), (h), (i), (j), (k), (l), (m) and (n)), and after giving effect to any
required payments from Subordinated Series 1993-1 Principal Collections the
Trustee shall deposit such amount, together with the amounts to be paid
pursuant to Sections 4.04(c), (d), (f), (g), (h), (i), (j), (k), (l), (m)
and (n) in the Principal Funding Account on behalf of the Holders of the
Series 1993-1 Certificates.
Payments on Each Payment Date
(c) On each Payment Date during the Amortization Period, after
giving effect to the deposits required pursuant to this Section 4.06(b),
the Trustee, acting in accordance with instructions from the Servicer,
shall pay the amount on deposit in the Principal Funding Account through
such Payment Date to the Class A Certificateholders until the Class A
Invested Amount is paid in full, then shall pay the amount remaining on
deposit in the Principal Funding Account through such Payment Date to the
Class A Certificateholders in an amount not to exceed the unpaid Make-Whole
Amount, if any, and finally shall pay the amount remaining on deposit in
the Principal Funding Account through such Payment Date to the Class A
Certificateholders of Series 1993-2 in an amount not to exceed the unpaid
Make-Whole Amount (the "Other Series Make-Whole Amount") owed to such Class
A Certificateholders under the Series 1993-2 Supplement, if any.
(d) On each Payment Date during the Amortization Period on or after
the Class A Certificateholders have been paid in full, including the Make-
Whole Amount, if any, owed to the Class A Certificateholders and the Other
Series Make-Whole Amount, if any, has been paid in full and after giving
effect to the deposits required pursuant to this Section 4.06(b), the
Trustee, acting in accordance with instructions from the Servicer, shall
pay the amount remaining on deposit in the Principal Funding Account
through such Payment Date to the Class B Certificate-holders.
Section 9.01 is modified as follows:
The following events, numbered as indicated, also shall constitute
Events of Termination thereunder:
(xi) Ingram shall fail to make any payment or deposit required to
be made pursuant to the terms of the Purchase Agreement on or before
three Business Days after the date such payment or deposit is required
to be made thereunder;
(xii) the Lien created in favor of the Trust on all the Trust
Assets shall cease to be a perfected, first priority enforceable Lien
thereon, or the Transferor or Ingram shall so assert in writing (and
such Receivables are not repurchased pursuant to Section 2.04(c));
(xiii) the Servicer shall fail to deliver the Daily Report or
Settlement Statement to the Trustee and such failure continues for a
period of three Business Days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given
to the Servicer by the Trustee; provided, however, that a delay in or
failure to deliver any such Daily Report or Settlement Statement for a
period of five Business Days shall not constitute an Event of
Termination until the expiration of such five Business Days if such
delay or failure could not be prevented by the exercise of reasonable
diligence by the Servicer and such delay or failure was caused by an Act
of God, the public enemy, acts of declared or undeclared war, public
disorder, rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricane, earthquakes, floods, telecommunications disruptions, computer
failures or similar causes;
(xiv) a Material Subsidiary shall voluntarily seek, consent to or
acquiesce in the benefit or benefits of any Debtor Relief Law or becomes
a party to (or is made the subject of) any proceeding provided for by
any Debtor Relief Law, other than as creditor or claimant, and in the
event such proceeding is involuntary, the petition instituting same is
not dismissed within 60 days of its filing; or a Material Subsidiary
shall become unable for any reason to sell Receivables to Ingram in
accordance with the provisions of the applicable Subsidiary Purchase
Agreement; or
(xv) payment of interest with respect to the Class A Certificates
is not made on the Payment Date (without regard to any grace period)
more than two times prior to the scheduled Amortization Period
Commencement Date when the full amount of funds that would be required
to make such payment are not on deposit in the Interest Funding Account
on such Payment Date, provided, however, that failure to make payment on
a Payment Date shall not be a cause of an Event of Termination under
this subparagraph (xv) if reasonably attributable to either (A) any
action taken or not taken by the Trustee in respect of such payment,
unless the Trustee's action or lack of action was the direct result of
misdirection, or lack of required direction, by Ingram or (B) an Act of
God, the public enemy, acts of declared or undeclared war, public
disorder, rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes, floods, telecommunications disruptions,
computer failures, disruptions to the federal wire transfer system or
similar causes.
The final text which follows the listing of Events of Termination is modified
in its entirety to read as follows:
then, (a) in the case of any event described in subparagraph (i) (other
than clause (B) thereof), (ii), (vi), (viii), (xi), (xiii), (xiv) or (xv)
after any applicable grace period set forth in such subparagraphs, either
the Trustee or the Holders of Investor Certificates of the related Series
evidencing Undivided Interests aggregating more than 65% of the related
Invested Amount of such Series by notice then given in writing to the
Transferor and the Servicer (and to the Trustee if given by the
Certificateholders) may declare that an Event of Termination has occurred
(A) with respect to all Series of Certificates (in the case of notice given
by the Trustee) or (B) such Series (in the case of notice given by the
Investor Certificateholders) as of the date of such notice, or (b) in the
case of any event described in clause (B) of subparagraph (i) or in
subparagraphs (iii), (iv), (v), (vii), (ix), (x) or (xii) an Event of
Termination with respect to all Series shall occur without any notice or
other action on the part of the Trustee or any certificateholder
immediately upon the occurrence of such event.
SECTION 3. Initial Invested Amount of the Series 1993-1 Certificates.
The Initial Invested Amount of the Series 1993-1 Certificates shall be
$66,000,000. The Initial Invested Amount of the Class A Certificates shall be
$60,000,000 (the "Class A Inertial Invested Amount"). The Initial Invested
Amount of the Class B Certificates shall be $6,000,000 (the "Class B Initial
Invested Amount").
SECTION 4. Series 1993-1 Certificate Rates.
The Certificate Rate for the Class A Certificates shall be 6.19% per
annum (the "Class A Certificate Rate"). The Certificate Rate for the Class B
Certificates shall be 6.19% per annum (the "Class B Certificate Rate").
SECTION 5. Servicing Fee.
The Servicing Fee Percentage applicable to the Series 1993-1
Certificates shall be 0.25% per annum.
SECTION 6. Applicable Minimum Percentage and Minimum Adjusted Eligible
Principal Receivables.
The Applicable Minimum Percentage with respect to the Series 1993-1
Certificates shall be 15%, subject to increase in accordance with the
following sentence. If, on any Determination Date, the Base Dilution
exceeds 8%, then the Applicable Minimum Percentage shall be increased,
effective as of such Determination Date, by 0.034% for each 0.01% that the
Base Dilution exceeds 8%. As used herein, "Base Dilution" means the
greater of (i) the One Month Dilution Ratio for the Settlement Period in
the prior calendar year that corresponds with the Settlement Period in
which such Determination Date occurs and (ii) the Dilution Ratio at such
Determination Date. If the foregoing calculation, which shall be made on
each Determination Date, results in a reduction in the Applicable Minimum
Percentage from such Percentage then in effect, such reduction shall be
effective as of such Determination Date, but in no event shall the
Applicable Minimum Percentage be reduced to less than 15%. Upon final
payment of the Series 1993-1 Certificates, the Minimum Adjusted Eligible
Principal Receivables shall he computed in a manner consistent with the
Agreement or any Future Supplement, as appropriate.
SECTION 7. Calculation of Transferor Minimum Amount.
For purposes of calculating the Transferor Minimum Amount with respect
to the Series 1993-1 Certificates during the Amortization Period, the Series
1993-1 Invested Amount shall be deemed to remain constant at the amount in
effect at the commencement of the Amortization Period, regardless of any
partial payment of principal with respect thereto on any Payment Date, until
the Payment Date on which the Class A Certificates are paid in full, provided,
however, that to the extent that the Transferor Minimum Amount with respect to
the Series 1993-1 Certificates would at any time exceed 100% of the Class A
Invested Amount by reason of this sentence, the Transferor Minimum Amount with
respect to the Series 1993-1 Certificates may be reduced to an amount not less
than 100% of such Class A Invested Amount if calculation thereof under the
Agreement without regard to this Section 7 would otherwise permit such.
reduction.
SECTION 8. Amortization Period Commencement Date.
The Amortization Period Commencement Date is June 1, 1998.
SECTION 9. Series Termination Date.
The Series Termination Date for the Series 1993-1 Certificates shall be
December 15, 1999.
SECTION 10. Repurchase Terms.
Pursuant to Article 12 of the Agreement, the Class A Certificates may
be repurchased by the Transferor on any Payment Date on or after the day on
which the Class A Invested Amount is reduced to an amount less than or
equal to $6,000,000 upon the satisfaction of the conditions described in
Section 12.02(a) of the Agreement. The repurchase price shall be equal to
the Class A Invested Amount plus accrued and unpaid interest on the Class A
Certificates through the day preceding the Payment Date on which the
repurchase occurs. Notwithstanding the above, no repurchase of the Class A
Certificates may be made pursuant to this Section 10 if, after giving
effect to such repurchase, the unpaid Make-Whole Amount is greater than
zero.
SECTION 11. Delivery and Payment for the Series 1993-1 Certificates.
The Trustee shall deliver the Series 1993-1 Certificates to the
Transferor when authenticated upon the written direction of the Transferor.
SECTION 12. Minimum Authorized Denominations; Special Rule on Transfer and
Exchange.
The Class A Certificates shall be issued in fully registered form in
denominations of $5,000,000 and $500,000 integral multiples in excess
thereof, provided that, as directed by the Transferor, the Trustee may on
the Closing Date authenticate Class A Certificates in denominations of less
than $5,000,000. No registration of transfer or exchanges shall be
permitted in a manner that would permit any Class A Certificate initially
issued in a denomination of $5,000,000 or less to be registered upon
transfer or exchange in any denomination less than the amount of such Class
A Certificate (or predecessor Class A Certificate) upon the issuance
thereof on the Closing Date. The Class B Certificates shall be issued in
fully registered form in denominations of $1,000,000 and $500,000 integral
multiples in excess thereof, provided that, as directed by the Transferor,
the Trustee may on the Closing Date authenticate Class B Certificates in
denominations of less than $1,000,000. No registration of transfer or
exchanges shall be permitted in a manner that would permit any Class B
Certificate initially issued in a denomination of $1,000,000 or less to be
registered upon transfer or exchange in any denomination less than the
amount of such Class B Certificate (or predecessor Class B Certificate)
upon the issuance thereof on the Closing Date.
SECTION 13. Transferee Certification.
Attached hereto as Exhibit 1 is the form of certification to be
delivered by a proposed transferee as a condition to any transfer of a Series
1993-1 Certificate made pursuant to Section 6.03 of the Agreement.
Notwithstanding anything to the contrary in Section 6.03 of the
Agreement, no Opinion of Counsel shall be required in connection with the
transfer of a Series 1993-1 Certificate of the proposed transferee delivers
such certification.
SECTION 14. Definitions.
For the purposes of the Agreement and this Supplement, the following
capitalized terms shall be defined as follows and shall supersede, with
respect to the Series 1993-1 Certificates, any definitions stated in Article I
of the Agreement or Annex X thereto:
"Class A Default Amount" for any day shall mean the product of (i) the
portion of the Investor Default Amount in respect of the Series 1993-1
Certificates incurred on such day and (ii) the decimal equivalent of a
fraction, the numerator of which is the Class A Invested Amount on such day
and the denominator of which is the Series 1993-1 Invested Amount on such day.
"Class A Interest Distribution Amount" shall mean, with respect to any
Payment Date, the product of the Class A Certificate Rate and the Class A
Invested Amount on the first day of the preceding Series 1993-1 Interest
Accrual Period.
"Class A Invested Amount" shall mean, when used with respect to any day,
an amount equal to (a) the Class A Initial Invested Amount, minus (b) the
aggregate amount of principal payments made to Class A Certificateholders
prior to such day and minus (c) the excess, if any, of the aggregate amount of
Class A Charge-Offs over Class A Charge-Offs reimbursed pursuant to Sections
4.04(d) and (j).
"Class B Default Amount" for any day shall mean the product of (i) the
portion of the Investor Default Amount in respect of the Series 1993-1
Certificates incurred on such day and (ii) the decimal equivalent of a
fraction, the numerator of which is the Class B Invested Amount on such day
and the denominator of which is the Series 1993-1 Invested Amount on such day.
"Class B Interest Distribution Amount" shall mean, with respect to any
Payment Date, the product of the Class B Certificate Rate and the Class B
Invested Amount on the first day of the preceding Series 1993-1 Interest
Accrual Period.
"Class B Invested Amount" shall mean, when used with respect to any day,
an amount equal to (a) the Class B Initial Invested Amount, minus (b) the
aggregate amount of principal payments made to Class B Certificateholders
prior to such day and minus (c) the excess, if any, of the aggregate amount of
Class B Charge-Offs over Class Charge-Offs reimbursed pursuant to Sections
4.04(g) and (1).
"Payment Date" shall mean (i) on or before the Amortization Period
Commencement Date, the 15th day of each March, June, September and December
(or if such day is not a Business Day, the next succeeding Business Day) or
(ii) during the Amortization Period, the 15th day of each month (or if such
day is not a Business Day, the next succeeding Business Day).
"Record Date" shall mean, with respect to any Payment Date, the last day
of the month immediately preceding such Payment Date.
"Series 1993-1 Interest Accrual Period" shall mean, with respect to any
Payment Date, the period from and including the preceding Payment Date to but
not including such Payment Date, provided, that the first such Interest
Accrual Period shall be the period from and including the Closing Date to but
not including the first Payment Date.
"Series 1993-1 Invested Amount" shall mean, on any day, the sum of the
Class A Invested Amount and the Class B Invested Amount on such day.
The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Supplement shall refer to this Series Supplement
or the Agreement as a whole and not to any particular provision of this
Supplement or the Agreement, as the case may be; and Section, Schedule and
Exhibit references contained in this Agreement or this Series Supplement
are references to Sections, Schedules and Exhibits in or to the Agreement
or this Series Supplement unless otherwise specified.
SECTION 15. Accrual of Interest on the Series 1993-1 Certificates.
Interest shall accrue on the Series 1393-1 Certificate from the date
hereof.
SECTION 16. Distributions.
The Trustee shall use its best efforts to send distributions to the
Series 1993-1 Certificateholders under Section 5.01 of the Agreement to
each such Certificateholder by 12:30 p.m. (New York City time) on each
Payment Date by wire transfer of immediately available funds to an account
or accounts designated by such Certificateholders, by written notice to the
Trustee and the Paying Agent given at least five days prior to any Payment
Date (such notice to remain effective with respect to a Holder until
different instructions from such Holder are received by the Trustee), or if
no such notice is given, by check mailed as provided in Section 5.01 of the
Agreement. The Trustee acknowledges that it has received, on the Closing
Date, a copy of such notice by means of a copy of the certificate purchase
agreement(s) between the Transferor and each initial Holder of a Series
1993-1 Certificate.
SECTION 17. Notices, Reports and Certificates.
(a) The Trustee agrees that it will furnish to each Holder of a
Class A Certificate all notices, reports and certificates that are either
prepared or received by the Trustee pursuant to the Agreement, without any
need for request for any such materials by any such Holder, on the same
date as any such materials are otherwise distributed, in the case of
materials prepared by the Trustee, or within one Business Day of receipt by
the Trustee, in the case of materials prepared by others, including without
limitation, the Settlement Statement, the Officer's Certificate
contemplated by Section 3.05 of the Agreement and the reports contemplated
by Section 3.06 of the Agreement, provided, however, that this sentence
shall not apply to the Daily Report delivered by the Servicer to the
Trustee. Materials furnished by the Trustee pursuant to this paragraph (a)
will be sent by first class mail, postage prepaid, to each Holder at the
address shown for it in the Certificate Register maintained by the Trustee.
(b) In order to enable the Trustee to furnish materials to each Holder
of a Class A Certificate in accordance with paragraph (a) above, the Servicer
agrees that it will furnish to the Trustee all notices, reports and
certificates that are either prepared or received by the Servicer under the
Agreement and are not otherwise required to be delivered to the Trustee,
including without limitation any notices to the Rating Agencies, as well as
any notice of a Default or Event of Default under Section 8.01 of the
Liquidity Agreement received by the Servicer.
(c) If, on any day on which the Daily Report is delivered to the
Trustee the Servicer is unable to make the certification called for therein
without exception thereto, then the Servicer shall also provide a copy of
such Daily Report to each Class A Certificateholder by means of either (i)
Federal Express or similar overnight courier service, (ii) certified mail,
return receipt requested, or (iii) facsimile transmission (subject to
confirmation of receipt by an authorized officer of such Class A
Certificateholder), in any case dispatched by the Servicer on the same day
as such Daily Report is delivered to the Trustee to the address of such
Holder shown for it in the Certificate Register maintained by the Trustee.
The Transferor also shall furnish to each Class A Certificateholder the
statement contemplated by Section 2.06(f) of the Agreement within the time
permitted under such Section by one of the means described in the preceding
sentence. In the event that the Servicer does not provide the Daily Report
to the Class A Certificateholders on a timely basis if required to do so by
this Section 17(c), then for each day that elapses from the date on which
such Daily Report was required to be provided to Class A Certificateholders
until and including the date on which such Daily Report is in fact
provided, the grace or cure period provided to the Transferor under
subclause (C) of clause (i) or under clause (ii) of Section 9.01 (to the
extent that a grace or cure period is applicable to the matters disclosed
in such Daily Report) before a Prospective Event of Termination becomes an
Event of Termination or the grace or cure period provided to the Servicer
under clauses (b) and (c) of Section l0.01 (to the extent that a grace or
cure period is applicable to the matters disclosed in such Daily Report)
before a prospective Servicer Default becomes a Servicer Default shall, as
applicable, be reduced by each day of such delay. In the event that the
Liquidity Agreement is terminated or otherwise is no longer in effect, then
the Transferor and the Servicer agree to modify the form of certification
set forth in the Daily Report to include a certification that there is no
Servicer Default or prospective Servicer Default (i.e., without regard to
any grace period) in existence on such day.
(d) The Servicer agrees that as soon as available and, in any case,
within 100 days after the end of each fiscal year, it will provide to each
Holder of a Class A Certificate the audited consolidated financial statements
of the Servicer and its Subsidiaries, consisting of the audited consolidated
balance sheet of the Servicer and its Subsidiaries as of the end of such
fiscal year and the audited consolidated statements of income, changes in
stockholders' equity and cash flows of the Servicer and its Subsidiaries for
such fiscal year, certified by the independent public accountants of the
Servicer and its Subsidiaries.
(e) The Servicer agrees that as soon as available and, in any case,
within 50 days after the end of each fiscal month in each fiscal quarter in
each fiscal year (or, if the Servicer elects to provide quarterly
information as hereinafter described, within 50 days after the end of each
fiscal quarter), it will provide to each Holder of a Class A Certificate
the consolidated and consolidating financial statements of the Servicer and
its Subsidiaries, consisting of the unaudited consolidated and
consolidating balance sheet of the Servicer and its Subsidiaries as of the
end of such fiscal month (or, at the option of the Servicer and upon
written notice to the Class A Certificateholders, as of the end of each
fiscal quarter) and the unaudited consolidated and consolidating statements
of income, changes in stockholders' equity and cash flows of the Servicer
and its Subsidiaries for such fiscal month (or, at the option of the
Servicer and upon written notice to the Class A Certificate-holders, as of
the end of each such quarter) and for the fiscal year to date, setting
forth in each case in comparative form, the figures for the corresponding
periods of the preceding fiscal year, all in reasonable detail and
certified by the Chief Financial Officer or the Treasurer of the Servicer
as being a complete and correct copy of the Servicer's financial statements
which have been prepared in accordance with generally accepted accounting
principles consistently applied (except as otherwise disclosed therein and
without the information normally provided in the accompanying footnotes),
and which present fairly the financial position of the Servicer and its
Subsidiaries and the results of operations and cash flows thereof subject,
in each case, to changes resulting from year-end audit adjustments;
provided, however, that at such time and so long as the Servicer shall be
required to file reports with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended, the delivery
of its Quarterly Report on Form 10-Q shall satisfy the requirements of this
Section 17 with respect to consolidated financial statements.
(f) In the event of a change in servicing procedures which would
allow the Servicer to withhold or withdraw Collections relating to
Receivables other than Adjusted Eligible Receivables as contemplated by
Section 4.09 of the Agreement, the Servicer agrees that, not less than five
Business Days prior to giving effect to such changed procedures, the
Servicer will give notice to each Holder of a Class A Certificate of the
intended change in procedures together with an Officer's Certificate of the
Servicer to the effect that such change will not have a material adverse
effect on the rights of such Holders.
SECTION 18. Audit and Inspection Rights.
(a) The Transferor agrees that the audit rights of the Trustee
provided for in Section 2.06(c) of the Agreement may be exercised by the
Class A Certificateholders, and the Servicer agrees that the inspection
rights of the Trustee provided for in Section 8.06 of the Agreement may be
exercised by the Class A Certificateholders, subject in each case, however,
to each of the following conditions:
(i) for purposes of this Section 18, references to the Class A
Certificateholders shall mean, collectively, the Holders of Class A
Certificates of Series 1993-1 together with the Holders of Class A
Certificates of Series 1993-2, and a Holder of Class A Certificates of both
Series will be treated as only one Class A Certificateholder;
(ii) such rights may not be exercised more than one time in any
consecutive 12 month period by (A) each Class A Certificateholder that is
an Initial Purchaser or (B) Class A Certificateholders, in the aggregate,
that are not Initial Purchasers in accordance with clause (iv) below,
provided, that the foregoing limitation shall not apply if and for so long
as a prospective Servicer Default (i.e., a condition that with the giving
of notice and/or the passage of time would constitute a Servicer Default),
Servicer Default, Prospective Event of Termination or Event of Termination
shall have occurred and shall be continuing under the Agreement;
(iii) for purposes of clause (ii) above, multiple Class A
Certificateholders under common management shall be treated collectively as
only one Class A Certificateholder;
(iv) for purposes of clause (ii) above, all transferees of any of The
Prudential Insurance Company of America, Pacific Mutual Life Insurance, or The
Great-West Life & Annuity Insurance Company (or any Class A Certificateholder
managed by any thereof and treated collectively therewith in accordance with
clause (iii) above) (collectively, the "Initial Purchasers"), and successive
transferees thereafter, shall be treated collectively as one Class A
Certificateholder and, in order to exercise the rights provided for in
paragraph (a), must act collectively through an agent or representative
appointed to act for all by a vote of not less than 65% of the Invested Amount
of all Class A Certificateholders excluding the Initial Purchasers and must
hold, in the aggregate, not less than 25% of the aggregate Invested Amount of
the Class A Certificates of Series 1993-1 and Series 1993-2; and
(v) such rights may not be exercised (and the Transferor or the
Servicer, as applicable, may deny access to the relevant information) by any
Holder reasonably believed by the Transferor or the Servicer in good faith to
be a competitor of the Servicer or any Subsidiary, or by any Holder which the
Transferor or the Servicer reasonably believes in good faith might violate or
otherwise undermine the confidentiality of the materials to be reviewed,
provided, that the Transferor and the Servicer each hereby acknowledge that
none of the Initial Purchasers will be subject to objection by the Transferor
or the Servicer for reasons of competition or confidentiality.
SECTION 19. Removal of Designated Subsidiaries; Make-Whole Amount.
(a) Subject to the Agreement and the Purchase Agreement, Ingram shall
have the right at any time co remove a Designated Subsidiary or the Ingram
Book Company Division as an originator of Receivables (whether by reason of
sale or other disposition of such Designated Subsidiary or division or
otherwise), provided, that in the event that within twelve months following
any such removal of a Designated Subsidiary or the Ingram Book Company
Division as an originator of Receivables an Event of Termination other than
an Event of Termination arising under clauses (i)(B) or (C), (ii), (iii),
(v), (vi), (x), (xii), (xiii) or (xiv) of Section 9.01 (any such Event of
Termination not so excluded, an "Applicable Event of Termination") shall
occur and, as a result thereof, the Amortization Period Commencement Date
with respect to the Series 1993-1 Certificates shall occur, then in
addition to all other amounts required to be paid to the Class A
Certificateholders under the Agreement, the Class A Certificateholders
shall be entitled to receive an additional Make-Whole Amount (as
hereinafter defined). The Make-Whole Amount shall be payable pursuant to
Sections 4.04(h) and (p) and 4.06(c) of the Agreement as set forth in this
Supplement. The Trustee agrees that if any of the events described in the
provisions of Section 9.01 which are excluded as a basis for an Applicable
Event of Termination as set forth above in the definition of such term
shall occur within twelve months following the voluntary removal by Ingram
of a Designated Subsidiary or the Ingram Book Company Division as an
originator of Receivables, then unless the occurrence of such event shall
automatically result in an Event of Termination in accordance with Section
9.01, the Trustee will not give notice or otherwise declare an Event of
Termination with respect to this Series without obtaining the consent of
the Holders of not less than 65% of the Class A Invested Amount.
(b) The "Make-Whole Amount" shall mean, with respect to any Class A
Certificate, an amount equal to the excess, if any, of the Discounted Value
of such Class A Certificate over the sum of (i) the Invested Amount of such
Class A Certificate on the day preceding the Call Date plus (ii) interest
accrued thereon as of (including interest due on) the Call Date. The Make-
Whole Amount shall be calculated on the Make-Whole Calculation Date (as
defined below) and shall in no event be less than zero. From and after the
Make-Whole Calculation Date, if either the Make-Whole Amount or the Other
Series Make-Whole Amount is greater than zero no amounts held in either the
Interest Funding Account or the Principal Funding Account shall be
distributed to the Class B Certificateholders until the Make-Whole Amount
and the Other Series Make Whole Amount have been fully paid to the Class A
Certificateholders and the Class A Certificateholders of Series 1993-2, as
applicable. For purposes of calculating the "Make-Whole Amount," the
following definitions shall apply;
"Call Date" shall mean the first Payment Date following an Amortization
Period Commencement Date which results from an Applicable Event of Termination
and on which principal is payable on the Class A Certificates.
"Discounted Value" shall mean, with respect to any Class A
Certificate, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Class A Certificate from their respective
scheduled due dates (assuming that the scheduled due date of the principal
amount of such Class A Certificate is the Scheduled Payment Date) to the
Call Date, in accordance with accepted financial practice and at a discount
factor (applied on the same periodic basis as that on which interest on the
Class A Certificates is payable) equal to the Reinvestment Yield.
"Reinvestment Yield" shall mean, with respect to any Class A
Certificate, the Spread Amount, if any, plus the yield to maturity implied
by (i) the yields reported, as of 10 a.m. (New York City time) on the
Business Day next following the date on which the Servicer has actual
knowledge of the declaration of an Applicable Event of Termination (the
"Make-Whole Calculation Date"), on the display designated as "Page 678" on
the Telerate Service (or such other display as may replace Page 678 on the
Telerate Service) for actively traded U.S. Treasury securities having a
maturity equal to the Remaining Average Life of such Class A Certificate as
of such Make-Whole Calculation Date, or if such yields shall not be
reported as of such time or the yields reported as of such time shall not
be ascertainable, (ii) the Treasury constant Maturity Series yields
reported, for the latest day for which such yields shall have been so
reported as of such Make-Whole Calculation Date, in Federal Reserve
Statistical Release H.15(519) (or any comparable successor publication)
for actively traded U.S. Treasury securities having a constant maturity
equal to the Remaining Average Life of such Class A Certificate, as of such
Make-Whole Calculation Date. Such implied yield shall be determined, if
necessary, by (a) converting U.S. Treasury bill quotations to bond-
equivalent yields in accordance with accepted financial practice and (b)
interpolating linearly between yields reported for various maturities.
"Remaining Average Life" shall mean, with respect to any Class A
Certificate, the number of years (calculated to the nearest one-twelfth year)
obtained by dividing (i) the Invested Amount for such Class A Certificate into
(ii) the product obtaining by multiplying (a) the Invested Amount (but not
interest thereon) by (b) the number of years (calculated to the nearest
one-twelfth year) which will elapse between the Call Date and the Scheduled
Payment Date.
"Remaining Scheduled Payments" shall mean, with respect to any Class A
Certificate, all payments of principal and interest thereon that would be due
on or after the Call Date if no payment of principal on such Class A
Certificate were made prior to the Scheduled Payment Date.
"Scheduled Payment Date" shall mean, with respect to any Class A
Certificate, the first Payment Date following the scheduled Amortization
Period Commencement Date specified in Section 8 of this Supplement.
"Spread" shall mean (i) 0% if the related Applicable Termination Event
for the Class A Certificates occurs within twelve months of the removal by
Ingram (including sale to an Affiliate) of a Designated Subsidiary or the
Ingram Book Company Division as an originator of Receivables that is not a
Third Party Sale, (ii) 0% if the related Applicable Termination Event occurs
within nine months of the removal by Ingram of a Designated Subsidiary or the
Ingram Book Company Division as an originator of Receivables that is a Third
Party Sale and (iii) .25% if the related Applicable Termination Event occurs
between nine and twelve months of the removal by Ingram of a Designated
Subsidiary or the Ingram Book Company Division as an originator of Receivables
that is a Third Party Sale.
"Third Party Sale" shall mean a sale or other disposition of an interest
in a Designated Subsidiary or the Ingram Book Company Division sufficient such
that such Designated Subsidiary or the Ingram Book Company Division may no
longer be consolidated with Ingram for accounting purposes in accordance with
GAAP.
SECTION 20. Consents.
(a) The Agreement currently provides that certain actions under
Sections 2.06(i), 2.06(q) and 3.03(k) thereof are subject to the consent of
the Required Banks ("Bank Consent"). The Transferor and the Servicer
covenant that they will use reasonable efforts to obtain, within 90 days
from the date hereof, the consent of the Banks and all other consents that
would be required under the Agreement, to an amendment to the Agreement
(referred to herein as the "Amendment") that would substitute, in lieu of
all existing provisions relating to Bank Consent, a provision requiring
consent ("Aggregate Consent") from the holders of not less than 65% of the
Third-Party Interests in the Trust. The "Third Party Interests" in the
Trust will be defined as the sum of (i) the aggregate Invested Amount of
all Series of Investor Certificates (subject to paragraph (c) below) and
(ii) the Applicable Liquidity Commitment of the Banks. The "Applicable
Liquidity Commitment" of the Banks will mean the Liquidity Commitment then
in effect, provided, that if at any time pursuant to the Liquidity
Agreement the Commercial Paper Issuer is not permitted to effect an
additional Credit Utilization either through issuance of additional
Commercial Paper or incurrence of additional Revolving Loans, whether by
reason of Section 2.01 or Section 6.02 of the Liquidity Agreement or
otherwise, then for so long as such Credit Utilization remains unavailable
to the CP Issuer, the Applicable Liquidity Commitment will mean the amount
of the Liquidity Commitment corresponding to the Aggregate CP Matured Value
of Outstanding Commercial Paper and the principal amount of outstanding
Loans and LOC Disbursements under the LOC, if any, as to which the Banks
remain at risk. In determining whether at least 65% of the holders of
Third-Party Interests have consented, each Holder of an Investor
Certificate may vote its Invested Amount relative to the aggregate Third-
Party Interests, and each Bank may vote its allocable share of the
Applicable Liquidity Commitment relative to the aggregate Third-Party
Interests.
(b) Unless and until the Transferor and the Servicer are able to obtain
the Amendment contemplated by paragraph (a) above, then in each case specified
above in which an action under the Agreement requires Bank Consent, such
action will also require the consent of Holders of not less than 51% of the
aggregate Invested Amount of the combined Series 1993-1 Certificates and the
Series 1993-2 Certificates (the "Series Consent"). By its acceptance thereof,
each Holder of a Series 1993-1 Certificate agrees that if the Amendment is
obtained, then upon the effective date thereof each provision in this
Supplement providing for Series Consent shall be void and of no effect so long
as such action is subject to Aggregate Consent under the terms of the
Amendment.
(c) For purposes of all provisions requiring the vote of Holders of
Investor Certificates (whether in respect of obtaining Series Consent or
Aggregate Consent or with respect to any other provision of the Agreement or
otherwise), for so long as Class B Certificates of this Series, Class B
Certificates of Series 1993-2 or Investor Certificates of any other Series are
held by the Transferor, Ingram or any Affiliate thereof, such Certificates
shall not be voted in connection with any such vote, and the Invested Amount
thereof shall be deducted from the aggregate Invested Amount of the Series
1993-1 Certificates, the Series 1993-2 Certificates and any other Series of
Investor Certificates for purposes of calculating such aggregate Invested
Amount entitled to vote.
SECTION 21. Cancellation of Certificates.
The Transferor agrees that if it proposes to acquire any Class A
Certificate(s) from the Holder(s) thereof in accordance with Section 2.09 of
the Agreement, it will make a pro rata offer to all Holders of Class A
Certificates for the Invested Amount to be acquired.
SECTION 22. Successor Servicer; Servicing Fee.
(a) The Trustee and Ingram hereby confirm that the intention of Sections
3.02 and 10.02 of the Agreement with respect to the selection of a Successor
Servicer and responsibility for payment of the Servicing Fee thereto, and the
agreement of the Trustee and Ingram with respect to such matters, is as
follows:
Qualifications. Section 10.02(a) provides that the Trustee shall as
promptly as possible after the giving of a Termination Notice appoint an
Eligible Servicer as a Successor Servicer. Accordingly, any such
Successor Servicer initially must satisfy the definition of "Eligible
Servicer". Section 10.02(a) further provides that such Successor
Servicer must have obtained confirmation from each Rating Agency that
the then outstanding rating on the Commercial Paper or any outstanding
Series will not be reduced or withdrawn.
Selection. Section 10.02(c) contemplates that the Trustee would obtain
bids from Eligible Servicers in connection with selecting a Successor
Servicer. The Transferor and Ingram could participate in obtaining such
bids. The Trustee could select among any Eligible Servicers providing
bids not greater than the "Trust Servicing Fee" described below and, if
only one Eligible Servicer submitted such a bid, the Trustee would
select such Eligible Servicer. If no Eligible Servicer submits a bid for
less than or equal to the Trust Servicing Fee, then the Trustee shall
select the Eligible Servicer submitting the bid that least exceeds the
Trust Servicing Fee. Notwithstanding the foregoing, Ingram could direct
the Trustee to select an Eligible Servicer that would otherwise not be
selected by reason of submitting a higher bid so long as Ingram agreed
to be responsible for the Servicing Fee in excess of the Trust Servicing
Fee.
Servicing Fee. Section 3.02 provides that unless otherwise agreed,
the Servicing Fee with respect to a Successor Servicer shall be at
least 0.25% per annum of the daily average Unpaid Balances of the
Receivables (the "Trust Servicing Fee"). Pursuant to Section
10.02(c), the Trust Servicing Fee is the highest Servicing Fee that
can be paid to a Successor Servicer from Imputed Yield Collection
allocable to either the Variable Funding Certificate or any Series
unless otherwise provided in the related Supplement or subsequently
agreed to by all Certificateholders affected thereby. As described
above, an Eligible Servicer could submit a bid for less than the
Trust Servicing Fee. If all bids from Eligible Servicers exceed the
Trust Servicing Fee, then (i) a Successor Servicer shall be selected
based on the bids received as described above, (ii) the consent of
Ingram is not required in order to select a Successor Servicer
charging a Servicing Fee in excess of the Trust Servicing Fee, and
(iii) pursuant to Section 10.02(c) Ingram will be responsible for
the payment to such Successor Servicer of the portion of its
Servicing Fee in excess of the Trust Servicing Fee.
(b) The Trustee and Ingram agree that any Successor Servicer selected as
described above must be ratified by Series Consent unless and until the
Amendment providing for Aggregate Consent thereto is obtained, in which case
such ratification shall be by Aggregate Consent.
SECTION 23. Opinions of Counsel.
The Transferor and Ingram agree that Opinions of Counsel required to be
provided under Sections 6.03(b) and 13.01 of the Agreement shall be delivered
by Bass, Berry & Sims or other nationally recognized outside counsel.
SECTION 24. Certificateholder Indemnity.
In any case in which security or indemnity is required to be provided by
a Class A Certificateholder to either the Trustee, the Transfer Agent and
Registrar, the Transferor or the Servicer (an "Indemnified Party") as a
condition to such Indemnified Party taking, or not taking, any action, the
unsecured indemnity of any such Class A Certificateholder that is an Initial
Purchaser or is an institutional purchaser with an unsecured debt rating or
claims paying ability of at least "BBB" or its equivalent shall be deemed to
satisfy such requirement for security or indemnity.
SECTION 25. Certificateholder List.
Notwithstanding Section 6.07 of the Agreement, each Class A
Certificateholder shall have access to the list of Holders of Series 1993-1
Certificates without regard to the requirement set forth in such Section that
otherwise would require application by three or more Holders or by Holders
representing not less than 5% of the Invested Amount of the Investor
Certificates of any Series, but otherwise subject to the terms and conditions
of Section 6.07.
SECTION 26. Late Charge.
In the event that payment of interest or principal with respect to
the Class A Certificates is not made on the Payment Date (without regard to
any grace period) when the funds required to make such payment are then on
deposit in the Interest Funding Account or the Principal Funding Account,
as applicable, then unless such failure to pay is attributable to the
circumstances described in either clause (A) or clause (B) of subparagraph
(xv) of Section 9.01, the Transferor shall pay to each Class A
Certificateholder a late charge (the "Late Charge") calculated on a per
diem basis on the amount of such late payment for each day following the
Payment Date until and including the date on which paid, at a rate equal to
the greater of (i) the Class A Certificate Rate plus 200 basis points per
annum and (ii) Chemical's Prime Rate then in effect, such Late Charge to
be payable pursuant to Sections 4.04(g) and (o) of the Agreement as set
forth in this Supplement.
SECTION 27. Consent to Successor Trustee.
Ingram agrees that any Successor Trustee selected by Ingram in
accordance with Section 11.07 of the Agreement must be ratified by Series
Consent unless and until the Amendment providing for Aggregate Consent
thereto is obtained, in which case such ratification shall be by Aggregate
Consent.
SECTION 28. Final Payment; Surrender of Certificates.
Notwithstanding Section 12.03 of the Agreement, final payment on the
Series 1993-1 Certificates shall be made to each Holder in the same manner
in which prior payments are made to such Holder and without any need for
such Holder to physically surrender its Class A Certificate(s) to the
Trustee as provided in such Section; provided, that at such time as final
payment, or provision for final payment, of the Series 1993-1 Certificates
shall have been made, such Certificates shall be deemed cancelled and of no
effect and shall not represent any further claim on or interest in the
Trust Assets notwithstanding any failure on the part of the Holder thereof
to physically surrender such Certificate(s). Each Class A
Certificateholder shall be obligated, and by its acceptance of its
Certificate(s) hereby agrees, to surrender its physical Certificates to the
Trustee for cancellation within 30 days of its receipt of the final payment
with respect thereto.
SECTION 29. Permitted Investments.
The Trustee, the Transferor and Ingram agree that investments described
in clause (v) of the definition of Permitted Investments will not be utilized
unless the specific proposed investment is consented to by Series Consent,
provided, that such consent shall not be unreasonably withheld and that any
request therefor not otherwise rejected within 30 days shall be deemed to have
been granted.
SECTION 30. Servicing Transfer.
Section 10.01 of the Agreement provides that if compliance therewith
shall require the Servicer to disclose to the Successor Servicer
information of any kind which the Servicer reasonably deems to be
confidential, the Successor Servicer shall be required to enter into such
customary licensing and confidentiality agreements as the Servicer shall
deem necessary to protect its interest. Ingram and the Trustee hereby
confirm that they have entered into a confidentiality agreement that would
be applicable if the Trustee were to act as Successor Servicer and that
would satisfy the confidential requirements of Ingram as contemplated by
Section 10.01.
SECTION 31. Certain Technical Corrections.
For purposes of, and to the extent applicable to, the Series 1993-1
Certificates, the Transferor, the Servicer and the Trustee agree that the
following provisions of the Agreement shall be modified and construed as
indicated:
(i) The cross-reference to "Section 2.02(c)" in line 6 on page 11 of the
Agreement shall be changed to "Section 2.01(d)";
(ii) In Sections 12.01 and 12.02 of the Agreement, interest shall be
required to be deposited to but excluding the next Payment Date rather than
through the last day of the month preceding the Payment Date;
(iii) The rating of "F-1" in clause (ii) of the definition of "Permitted
Investments" shall be changed to "F-1+"; and
(iv) The Collection Account shall not be a subaccount or otherwise part
of the Collateral Account.
SECTION 32. Term of Purchase Agreement.
In connection with the Amendment, the Transferor and Ingram covenant to
use reasonable efforts to obtain any consents necessary to enable them to
enter into an amendment to the Purchase Agreement extending the term thereof
to at least December 15, 2001.
SECTION 33. Amendment to this Supplement.
The Transferor, the Servicer and the Trustee agree that to the extent
the Amendment contemplated by Section 20 of this Supplement contains
provisions addressing the matters covered by this Supplement, they will
enter into an appropriate amendment to this Supplement (or, alternatively,
will enter into an Amended and Restated Supplement) in order to make
changes to this Supplement conforming to the provisions of the Amendment.
SECTION 34. Ratification of Agreement.
As supplemented by this supplement, the Agreement is in all respects
ratified and confirmed and the Agreement as so supplemented by this
Supplement shall be read, taken, and construed as one and the same
instrument.
SECTION 35. The Trustee.
The Trustee shall not be responsible in any manner whatsoever for or in
respect of the validity or sufficiency of this Supplement or for or in respect
of the Preliminary Statement contained herein, all of which recitals are made
solely by the Transferor.
SECTION 36. Instructions in Writing.
All instructions given by the Servicer to the Trustee pursuant to this
Supplement shall be in writing, and may be included in a Daily Report or
Settlement Statement.
SECTION 37. Counterparts.
This Supplement may be executed in any number of counterparts, which
may include facsimile counterparts, each of which so executed shall be
deemed to be an original, but all of such counterparts shall together
constitute but one and the same instrument.
SECTION 38. Governing Law.
THIS SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 39. Modifications to Remittance Procedures.
In lieu of the procedures for daily remittance of Collections
provided for in the Pooling and Servicing Agreement, including Sections
4.04 and 4.06 thereof as set forth in this Supplement, the Servicer may
propose and adopt procedures for the remittance of Collections on a less
frequent basis, subject to obtaining the written consent of the Trustee and
written confirmation from each Rating Agency that the adoption of such
procedures will not result in the reduction or withdrawal of the then
rating on the Class A Certificates and, if the then rating on the Class A
Certificates is not "AAA" or its equivalent, that such procedures would not
preclude the assignment of a "AAA" rating or its equivalent to the Class A
Certificates.
IN WITNESS WHEREOF, the Transferor, the Servicer and the Trustee have
caused this Supplement to be duly executed by their respective officers
thereunto duly authorized as of the date first above written.
INGRAM FUNDING INC.,
as Transferor
By_______________________________________
Name:
Title: Assistant Treasurer
INGRAM INDUSTRIES INC.,
as Servicer
By_______________________________________
Name:
Title: Vice President & Treasurer
CHEMICAL BANK,
as Trustee
By_______________________________________
Name:
Title: Assistant Vice President
EXHIBIT 10.30
Schedule of Supplements to Ingram Funding Master Trust Pooling and Servicing
Agreement
The documents described in this Schedule are materially identical to the
Ingram Funding Master Trust Pooling and Servicing Agreement included as
Exhibit 10.29 to this Registration Statement, except as noted below:
Series 1993-2 Supplement, dated as of July 23, 1993, for 6.61% Asset-Backed
Certificates, Series 1993-2, Class A and 6..61% Asset-Backed Certificates,
Series 1993-2, Class B. Amortization Period Commencement Date is June 1,
2000; Series Termination Date is December 15, 2001.
Series 1994-1 Supplement, dated as of March 24, 1994, for 6.57% Asset-
Backed Certificates, Series 1994-1, Class A and 6.57% Asset-Backed
Certificates, Series 1994-1, Class B. Amortization Period Commencement
Date is February 1, 1999; Series Termination Date is August 15, 2000.
Series 1994-2 Supplement, dated as of March 24, 1994, for 6.91% Asset-
Backed Certificates, Series 1994-2, Class A and 6.91% Asset-Backed
Certificates, Series 1994-2, Class B. Amortization Period Commencement
Date is February 1, 2001; Series Termination Date is August 15, 2002.
Series 1994-3 Supplement, dated as of March 24, 1994, for 7.17% Asset-
Backed Certificates, Series 1994-3, Class A and 7.17% Asset-Backed
Certificates, Series 1994-3, Class B. Amortization Period Commencement
Date is February 1, 2004; Series Termination Date is August 15, 2005.
EXHIBIT 10.31
LETTER OF CREDIT
REIMBURSEMENT AGREEMENT
Dated as of February 10, 1993
Among
DISTRIBUTION FUNDING CORPORATION,
INGRAM INDUSTRIES INC.,
INGRAM FUNDING INC.,
CHEMICAL BANK, as Collateral Agent,
and
THE LOC ISSUERS NAMED HEREIN
with
THE BANK OF NOVA SCOTIA,
NATIONSBANK OF NORTH CAROLINA, N.A. and
THE INDUSTRIAL BANK OF JAPAN, LIMITED, ATLANTA AGENCY,
as Lead Managers
LETTER OF CREDIT REIMBURSEMENT AGREEMENT
LETTER OF CREDIT REIMBURSEMENT AGREEMENT dated as of February 10, 1993,
among CHEMICAL BANK, NATIONSBANK OF NORTH CAROLINA, N.A. and THE BANK OF NOVA
SCOTIA (each, an "LOC Issuer", and together, the "LOC Issuers"), DISTRIBUTION
FUNDING CORPORATION (the "CP Issuer"), INGRAM FUNDING INC. ("Funding" or the
"Transferor"), INGRAM INDUSTRIES INC. ("Ingram" or the "Servicer"), and
CHEMICAL BANK, as collateral agent under the Pledge and Security Agreement
referred to herein (the "Collateral Agent"), with The Bank of Nova Scotia,
NationsBank of North Carolina, N.A. and the Industrial Bank of Japan, Limited,
Atlanta Agency, as Lead Managers.
W I T N E S S E T H :
WHEREAS, the CP Issuer proposes to acquire from Funding the Variable
Funding Certificate issued by Ingram Funding Master Trust pursuant to a
Pooling and Servicing Agreement dated as of February 10, 1993 among
Funding, as Transferor, Ingram, as Servicer, and Chemical Bank, as Trustee;
WHEREAS, the CP Issuer, Funding, Ingram, certain banks (the "Banks") and
Chemical Bank, as agent for the Banks (in such capacity, the "Liquidity
Agent"), have entered into a Liquidity Agreement, dated as of February 10,
1993, as amended from time to time (the "Liquidity Agreement"), pursuant to
which the Banks have agreed to make Loans to the CP Issuer from time to time,
and the CP Issuer will issue its Commercial Paper;
WHEREAS, the CP Issuer will utilize the proceeds of the Revolving Loans
and the proceeds of the Commercial Paper to acquire the Initial Issuer Amount,
and from time to time Issuer Additional Amounts, in respect of the Variable
Funding Certificate and to pay certain fees and expenses of the CP Issuer;
WHEREAS, the Banks have agreed to make Refunding Loans to the CP Issuer
for the sole purpose of enabling the CP Issuer to satisfy its obligations in
respect of the Commercial Paper;
WHEREAS, as a condition to the CP Issuer's acquisition of the Variable
Funding Certificate, Funding has made application to each LOC Issuer to
issue an irrevocable letter of credit in favor of the Collateral Agent,
which irrevocable letters of credit shall constitute credit support for the
Variable Funding Certificate;
WHEREAS, Ingram has conveyed the Receivables supporting the Variable
Funding Certificate to the Transferor (prior to the Transferor's conveyance of
such Receivables to the Trust), will act as Servicer thereof, and is
willing to make certain agreements for the benefit of the LOC Issuers as
provided herein;
WHEREAS, the CP Issuer and the Collateral Agent and, solely for the
limited purpose described therein, the Liquidity Agent, the LOC Issuers, the
Depositary, the CP Dealer and the Manager are entering into a Pledge and
Security Agreement, dated as of February 10, 1993, as amended from time to
time (the "Security Agreement"); and
WHEREAS, subject to the terms and conditions set forth herein, each LOC
Issuer is willing to issue its LOC to the Collateral Agent.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. As used in this Letter of Credit
Reimbursement Agreement and unless the context requires a different meaning,
capitalized terms used herein and not otherwise defined have the meanings
assigned to such terms in Annex X hereto which is incorporated by reference
herein and shall include in the singular number the plural and in the plural
number the singular.
"Agreement" shall mean this Letter of Credit Reimbursement Agreement as
it may from time to time be amended, supplemented or otherwise modified in
accordance with the terms hereof.
ARTICLE II
ISSUANCE OF THE LOCs;
REIMBURSEMENT OBLIGATION
Section 2.01. Issuance of LOCs; Substitute LOCs; Extensions of the
LOCs. (a) Each LOC Issuer hereby severally agrees, on the terms and
subject to the conditions hereinafter set forth, to issue to the Collateral
Agent for the benefit of the Holder of the Variable Funding Certificate,
the holders of Commercial Paper and the Liquidity Banks, as their interests
may appear, on the Initial Closing Date its irrevocable letter of credit
(including any letter of credit issued by such LOC Issuer in replacement
thereof and as such letter of credit may be supplemented, amended, or
modified from time to time, the "LOC" and together, the "LOCs") in the form
of Exhibit A hereto, completed in accordance with such form and the terms
of this Section 2.01. Each LOC shall be dated its date of issuance and
shall be issued by the related LOC Issuer in the initial stated amount
(such respective amounts, each an "LOC Commitment Amount") equal to the
dollar equivalent of its Percentage (set forth on Schedule 1 hereto) of
$15,000,000 on the date of issuance for a term expiring on the LOC
Expiration Date, subject to extension as set forth in Section 2.01(c) and
early termination as set forth in Sections 2.03(d) and 2.08.
(b) Promptly following the appointment and qualification of any
successor to the Collateral Agent and upon compliance with the terms of the
LOC regarding transfers, each LOC Issuer shall deliver to such successor
Collateral Agent, in exchange for the outstanding LOC of such LOC Issuer held
by the predecessor Collateral Agent, a substitute irrevocable letter of credit
substantially in the form of Exhibit A hereto, having terms identical to the
then outstanding LOC of such LOC Issuer but in favor of such successor
Collateral Agent.
(c) Subject to the other provisions of this Agreement permitting or
requiring earlier termination hereof, an LOC Issuer's Percentage of the LOC
Commitment shall terminate on the LOC Expiration Date then in effect with
respect to such LOC Issuer unless such LOC Issuer elects in its sole
discretion to extend its Percentage of the LOC Commitment for an additional
two-year period following such LOC Expiration Date (each such period, an "LOC
Extension Period"). On any Business Day occurring not earlier than July
31st nor later than August 30 of the year immediately preceding the year in
which the LOC Expiration Date occurs, the CP Issuer may, by written notice
to each LOC Issuer, request such LOC Issuer to extend its Percentage of the
LOC Commitment for an additional LOC Extension Period. Not later than
October 31 of the year immediately preceding the year in which the
Expiration Date occurs, each Bank shall respond to the request to extend
its Percentage of the LOC Commitment by executing and delivering to the CP
Issuer a written notice indicating whether or not such LOC Issuer will
extend its Percentage of the LOC Commitment for such additional LOC
Extension Period, and such notice, once given, shall be irrevocable. If
any LOC Issuer does not give such notice by the time specified in the
preceding sentence, its Percentage of the LOC Commitment shall be deemed to
have been so extended. If any LOC Issuer elects, in its sole discretion,
to extend, or has been deemed to have extended, the LOC Expiration Date
with respect to its Percentage of the LOC Commitment, such LOC Expiration
Date shall be extended for two additional years, and such LOC Issuer shall,
prior to the existing Expiration Date, either (i) issue to the Collateral
Agent in exchange for its then outstanding LOC a substitute letter of
credit having terms identical to those of its then outstanding LOC but
expiring on the LOC Expiration Date, as so extended, or (ii) deliver to the
Collateral Agent an amendment to its then outstanding LOC to reflect such
extension of the LOC Expiration Date.
(d) Not later than November 15 of the year immediately
preceding the year in which the expiration Date occurs, the CP Issuer shall
notify all the LOC Issuers as to those LOC Issuers that have elected to
extend or have been deemed to have extended and those LOC Issuers that have
elected not to extend. If any LOC Issuer notifies the CP Issuer that it
does not consent to the extension of the LOC Expiration Date pursuant to
Section 2.01(c), the CP Issuer may, upon receipt of such notice, request
another LOC Issuer or obtain a successor letter of credit bank or letter of
credit banks to issue one of more replacement letters of credit and to
assume such non-extending LOC Issuer's Percentage of the LOC Commitment
under this Agreement; provided, that the addition of such successor letter
of credit bank and the withdrawal of such non-extending LOC Issuer will not
result in the reduction or withdrawal of the then current rating of the
Commercial Paper as confirmed in writing by each Rating Agency. Upon the
effectiveness of such assumption, the LOC Expiration Date then in effect
shall be extended for an LOC Extension Period.
(e) If any LOC Issuer does not extend its Percentage of the LOC
Commitment after the LOC Expiration Date then in effect pursuant to Section
2.01(c) hereof (such LOC Issuer, an "Exiting LOC Issuer"), any outstanding LOC
Disbursements made by such Exiting LOC Issuer shall continue to be required to
be paid from the reimbursement to the Holder of the Variable Funding
Certificate of Issuer Charge-Offs pursuant to Sections 4.05(d) and (g) of the
Pooling and Servicing Agreement as set forth in the Variable Funding
Supplement in accordance with this Agreement and the LOC of such Exiting LOC
Issuer. Interest on LOC Disbursements made by an Exiting LOC Issuer shall
continue to accrue and be required to be paid in accordance with this
Agreement and the LOC issued by such Exiting LOC Issuer. After all payments of
principal and interest have been paid in respect of such Exiting LOC Issuer's
LOC Disbursements, the CP Issuer shall have no further obligation to such LOC
Issuer (except with respect to obligations expressly stated herein to survive
payment of the LOC Disbursements).
(f) Any Exiting LOC Issuer shall be deemed to be an LOC Issuer for
purposes of Section 5.06 hereof for determination in matters affecting such
Exiting LOC Issuer until all LOC Disbursements made by, and other amounts
owing hereunder to, such Exiting LOC Issuer have been paid in full.
Section 2.02. Charge-off Drawings. (a) At or before 11:00 a.m.
(New York City time) on the day on which a drawing is to be made under the
LOCs, pursuant to Section 8(f) of the Security Agreement, the Collateral
Agent shall make a drawing (a "Charge-Off Drawing") under each LOC by
delivering to each LOC Issuer a duly completed drawing certificate (a
"Drawing Certificate") in the form attached as Annex A to the related LOC
in the amount of such LOC Issuer's Percentage of the aggregate amount
identified, and as otherwise instructed in the Servicer's Daily Report
delivered on such day with respect to the Variable Funding Certificate. An
LOC may be drawn upon, and the Servicer shall instruct the Collateral Agent
in writing to draw upon the LOC, only to the extent that Issuer Charge-Offs
have been allocated to the Variable Funding Certificate pursuant to Section
4.05(c) of the Pooling and Servicing Agreement as set forth in the Variable
Funding Supplement, resulting in a write-down of the Variable Funding
Certificate, in an amount equal to the amount of such write-down; provided,
that the LOCs shall only be drawn upon for such purpose on a day on which
Commercial Paper matures or on a day on which principal payments in respect
of Loans are either due or permitted to be made.
(b) Each LOC Issuer shall, promptly following its receipt thereof,
examine all documents purporting to represent a demand by the Collateral Agent
for an LOC Disbursement to ascertain that the same appear on their face to be
in conformity with the terms and conditions of its LOC. If, after examination,
an LOC Issuer shall have determined that a demand for an LOC Disbursement does
not conform to the terms and conditions of its LOC, then such LOC Issuer
shall, without delay, give telephonic notice (promptly confirmed in writing)
to the CP Issuer and the Collateral Agent to the effect that the demand was
not in accordance with the terms and conditions of its LOC, stating the
reasons therefor and that the relevant documents are being held at the
disposal of the Collateral Agent or are being returned to the Collateral
Agent, as such LOC Issuer may elect. The Collateral Agent shall attempt to
correct any such non-conforming demand for payment under such LOC on or before
the LOC Expiration Date.
(c) It is understood and agreed that in making any payment under
its LOC, each LOC Issuer's exclusive reliance on the documents presented or
otherwise delivered to such LOC Issuer under its LOC as to any and all matters
set forth therein, including, without limitation, reliance on the amount of
any draft presented under its LOC, whether or not the amount due to the
beneficiary equals the amount of such draft and whether or not any document
presented pursuant to its LOC proves to be insufficient in any respect, if
such document on its face appears to be in order, and whether or not any other
statement or any other document presented pursuant to its LOC proves to be
forged or invalid or any statement therein proves to be inaccurate or untrue
in any respect whatsoever, shall not be deemed wilful misconduct or gross
negligence of such LOC Issuer.
(d) Upon receipt of a duly completed Drawing Certificate by 11:00
a.m. (New York City time) on any Business Day, each LOC Issuer shall make
payment to the Collateral Agent by 3:00 p.m. (New York City time) on such
Business Day in an amount equal to the lesser of (i) the amount so demanded
by the Collateral Agent, which shall be such LOC Issuer's Percentage of the
amount specified by the Servicer in the Daily Report and (ii) such LOC
Issuer's Percentage of the Available LOC Amount.
Section 2.03. Downgrading of LOC Issuer; Special Drawings. (a) If a
Responsible Officer of the Collateral Agent obtains knowledge, from the
Servicer or the Depositary or otherwise, that the short-term debt rating of
any LOC Issuer by S&P or Fitch has been reduced, below A-1 or F-1,
respectively, suspended or withdrawn (a "Downgraded LOC Issuer"), the
Collateral Agent shall promptly make a drawing of the full amount of the
Available LOC Amount of the Downgraded LOC Issuer (a "Special Drawing")
under the LOC of such Downgraded LOC Issuer, establish a non-interest
bearing trust account with the trust department of the Collateral Agent,
such account to be in the name of the Collateral Agent for the purpose of
holding the proceeds of such Special Drawing (the "LOC Escrow Account"),
and deposit the funds of such Special Drawing into such LOC Escrow Account,
unless the Rating Agencies shall previously have confirmed in writing to
the Collateral Agent that the then current rating of the Commercial Paper
will not be reduced, suspended or withdrawn by such Rating Agencies because
of such reduction, suspension or withdrawal of the short-term debt rating
of such Downgraded LOC Issuer; provided, however, that if necessary to
prevent the imposition of increased regulatory capital requirements upon
such Downgraded LOC Issuer as a result of such Special Drawing, then upon
request of such Downgraded LOC Issuer the related LOC Escrow Account may be
established and maintained by the Collateral Agent in the name of the
Collateral Agent with the trust department of such Downgraded LOC Issuer.
If, after a Special Drawing has been made with respect to a Downgraded LOC
Issuer, the debt rating of such Downgraded LOC Issuer is reinstated and a
replacement letter of credit or other arrangement has not been obtained,
the Collateral Agent shall withdraw from the LOC Escrow Account funds in an
amount equal to the amount of such Special Drawing, and pay such amount to
the related LOC Issuer upon written confirmation of the reinstatement of
such LOC Issuer's LOC, or delivery of a new LOC, in such amount.
(b) The funds deposited into the LOC Escrow Account shall not
be deemed to be an LOC Disbursement, and interest shall not accrue and
shall not be payable on such funds, unless such funds are drawn upon by the
Collateral Agent in accordance with this subsection (b). The LOC Escrow
Account shall serve as a source of funds in lieu of the Percentage of the
LOC Commitment of the Downgraded LOC Issuer and may be drawn upon in
accordance with the terms and provisions hereof and for the same purposes
as an LOC may be drawn upon as provided in Section 2.02. Any disbursements
made from the funds of the LOC Escrow Account shall be treated as an LOC
Disbursement, accrue interest and be payable as provided herein, with any
repayment of such LOC Disbursement to be redeposited in the LOC Escrow
Account.
(c) Funds in an LOC Escrow Account may be invested by the
Collateral Agent in specified Permitted Investments with maturities not later
than the next Business Day; provided that Collateral Agent shall only make
such Permitted Investments upon receipt of express written directions with
respect thereto from such Downgraded LOC Issuer. Any earnings (net of losses
and investment expenses) on such invested funds shall inure to the benefit of
the Downgraded LOC Issuer.
(d) In the event one or more banks or other financial
institutions agree to provide a commitment or other arrangement with a
stated amount equal to the LOC Commitment of the Downgraded LOC Issuer
which each Rating Agency confirms in writing to the Collateral Agent would
not cause a reduction or withdrawal of the then current rating of the
Commercial Paper, this Agreement shall be so amended and the old LOC shall
be surrendered and cancelled and a replacement LOC which includes the new
LOC Issuer shall be issued; provided, however, that any reimbursement
obligation pursuant to Section 2.04 hereof shall survive such termination.
In such event, the Collateral Agent shall withdraw funds on deposit in the
LOC Escrow Account and pay such amount to such former LOC Issuer. The
Downgraded LOC Issuer shall be entitled to the LOC Fee (as defined below)
with respect to the funds in the LOC Escrow Account.
Section 2.04. Reimbursement. (a) In order to provide for
reimbursement to the LOC Issuers for any disbursement made under the LOCs
or any funds otherwise made available by the LOC Issuers pursuant to the
LOCs (each an "LOC Disbursement"), including interest thereon and the
payment of certain other amounts due hereunder, Ingram agrees to perform on
a timely basis each of its obligations set forth in the Pooling and
Servicing Agreement in accordance with its terms. The CP Issuer
acknowledges and agrees that the LOC Issuers shall be reimbursed for LOC
Disbursements, the LOC Fees and all other amounts due to the LOC Issuers
hereunder in accordance with the terms hereof. Each LOC Disbursement made
by an LOC Issuer not repaid in full prior to 5:00 p.m. (New York City
time), on the date when made, any LOC Fee not paid on the due date thereof,
and any other amount payable to an LOC Issuer under this Agreement not paid
by the 30th day after the date notice thereof is given by such LOC Issuer
to the Collateral Agent, shall bear interest from and including the date of
the making of such LOC Disbursement, the date such LOC Fee was due or the
date of such notice, as applicable, until paid in full (but excluding the
date of repayment) on the unpaid amount thereof from time to time
outstanding at a rate per annum (computed on the basis of the actual days
elapsed and a year of 365/66 days) equal to the Base Rate plus the
Applicable Margin or such other rate as may subsequently be agreed to by
the CP Issuer and the respective LOC Issuer. The Collateral Agent, on
behalf of the CP Issuer, shall pay the LOC Issuers such amounts as may be
available for repayment in accordance with Sections 8(a)(iii) and 8(b)(iv)
of the Security Agreement.
(b) Unless otherwise specified herein, all payments to be made
hereunder (including amounts owing with respect to the fees pursuant to
Section 2.06 hereof) shall be made to each LOC Issuer at its address specified
in Section 5.04 hereof (or at such other address as an LOC Issuer may have
specified for such purpose in a written notice to the Collateral Agent and the
CP Issuer) in immediately available funds. All payments hereunder shall be
made not later than 5:00 p.m. (New York City time) on the date due, and funds
received after that hour shall be deemed to have been received by such LOC
Issuer on the next succeeding Business Day.
(c) Except as provided in Section 2.04(d), upon reimbursement of an
LOC Issuer for any LOC Disbursement pursuant to the provisions of this
Agreement, the amount so reimbursed shall be reinstated immediately in such
LOC Issuer's Percentage of the Available LOC Amount.
(d) Chemical Bank, as an LOC Issuer, shall open and maintain a
separate account (the "LOC Payment Account") for the sole purposes of
receiving and accounting for disbursements, reimbursements and other payments
from the Collateral Agent or the CP Issuer for the account of Chemical Bank.
All payments to be made hereunder to Chemical Bank as an LOC Issuer (including
amounts owing with respect to the fees pursuant to Section 2.06 hereof) shall
be deposited into the LOC Payment Account not later than 3:00 P.M. (New York
City time) on the date due, and funds received after that hour shall be deemed
to have been received by Chemical Bank on the next succeeding Business Day;
provided, however, that on any day on which funds intended for deposit into
the LOC Payment Account have been received by the Collateral Agent under the
Security Agreement prior to 3:00 p.m. such amounts shall be deemed to have
been received in the LOC Payment Account prior to 3:00 p.m. on such day,
whether or not the Collateral Agent has actually transferred funds thereto
prior to 3.00 p.m. LOC Disbursements shall stop accruing interest on the date
on which amounts representing repayment thereof are received (or, in
accordance with the preceding sentence, deemed to be received) in the LOC
Payment Account to the extent of the funds so received. Chemical Bank shall
disburse and account for such funds only as provided herein. Chemical Bank
shall apply all funds in the LOC Payment Account as a reimbursement on
Wednesday of each week, except that when the balance of the funds in the LOC
Payment Account exceeds $100,000, the LOC Agent shall apply such funds as a
reimbursement immediately. The amount available under the LOC of Chemical Bank
shall be reinstated in accordance with the foregoing sentence; provided,
however, that if a Drawing Certificate is delivered for a Charge-Off Drawing
in an amount which is in excess of Chemical Bank's LOC Issuer's Percentage of
the Available LOC Amount of Chemical Bank on such day as shown by the records
of Chemical Bank, Chemical Bank shall immediately apply any available funds in
the LOC Payment Account on such day as a reimbursement of an LOC Disbursement
to the extent of such excess. Upon making an LOC Disbursement, Chemical
Bank shall debit the LOC Payment Account in the amount of such LOC
Disbursement. If the funds in the LOC Payment Account are insufficient to
cover such debit, an overdraft in such amount shall be incurred and shall
bear interest at the same rate as an LOC Disbursement.
Section 2.05. No Recourse; Obligations Absolute. Each LOC Issuer agrees
that with respect to the CP Issuer's reimbursement obligation with respect to
any LOC Disbursement, it shall have no right of set-off or banker's lien
against the CP Issuer, the Collateral Agent or any Affiliate, officer or
director of any of them. Subject to and without limiting the foregoing
provisions of this Section 2.05, the obligations of the CP Issuer under
Section 2.04 hereof and the right of each LOC Issuer to be paid in full its
LOC Disbursements, interest thereon and all other amounts payable to each LOC
Issuer under this Agreement shall be absolute, unconditional and irrevocable,
and shall be performed strictly in accordance with the terms of this
Agreement, irrespective of any of the following circumstances (except as
expressly provided to the contrary below):
(a) any lack of validity or enforceability of any LOC, this
Agreement, the Depositary Agreement, the Liquidity Agreement or the
Security Agreement;
(b) any amendment or waiver of, or consent to or departure from,
any LOC, this Agreement, the Depositary Agreement, the Liquidity Agreement
or the Security Agreement;
(c) the existence of any claim, set-off, defense or other rights
which the Servicer, the Transferor or the CP Issuer may have at any time
against the Collateral Agent, any beneficiary or any transferee of any LOC
(or any Persons for whom the Collateral Agent, any such beneficiary or any
such transferee may be acting), any LOC Issuer or any other Person, whether
in connection with any LOC, this Agreement, the Depositary Agreement, the
Liquidity Agreement, the Security Agreement or any unrelated transactions;
(d) any statement or any document presented under any LOC proving
to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect whatsoever,
provided, that such LOC Issuer's reliance on such statement or documents
shall not have constituted gross negligence or willful misconduct of such
LOC Issuer;
(e) payment by any LOC Issuer under its LOC against presentation of
a Drawing Certificate or other draft or document which does not comply with
the terms of such LOC or this Agreement; provided, that such payment shall
not have constituted gross negligence or willful misconduct of the related
LOC Issuer;
(f) the bankruptcy or insolvency of the Transferor, the CP Issuer
or the Servicer; and
(g) any other circumstances or happening whatsoever, whether or not
similar to any of the foregoing; provided, that the same shall not have
constituted gross negligence or willful misconduct of the related LOC
Issuer.
Section 2.06. Facility Fees. (a) The CP Issuer hereby agrees to pay to
each LOC Issuer on the Initial Closing Date, a one-time arrangement fee upon
the issuance of its LOC in the amount of 0.10% multiplied by such LOC Issuer's
Percentage of the LOC Commitment.
(b) The CP Issuer hereby agrees to pay to each LOC Issuer a letter
of credit fee (the "LOC Fee") for the period from and including the Initial
Closing Date to and including the LOC Expiration Date, computed at a rate
equal to 1.00% per annum, calculated on such LOC Issuer's Percentage of the
LOC Commitment less the weighted average LOC Disbursements outstanding during
the prior quarter. The LOC Fee shall be payable in arrears commencing on the
Settlement Date following the third month anniversary of the Initial Closing
Date, quarterly thereafter, and on the date on which the LOC Commitment shall
be terminated as provided herein. The LOC Fee shall be calculated on the basis
of actual days elapsed and a year of 365/66 days.
(c) The CP Issuer hereby agrees to pay to each LOC Issuer a
transfer fee in the amount of $250 as a condition to the transfer of the
related LOC to a different beneficiary.
Section 2.07. Liability of LOC Issuers. Neither any LOC Issuer nor
any of its officers or directors shall be liable or responsible for: (a)
the use which may be made of its LOC or any acts or omissions of the
Collateral Agent or any transferee in connection therewith; (b) the
validity, sufficiency or genuineness of documents (other than its LOC), or
of any endorsement thereon, even if such documents should prove to be in
any or all respects invalid, insufficient, fraudulent or forged; (c)
payment by such LOC Issuer against presentation of documents which do not
comply with the terms of its LOC, including failure of any documents to
bear any reference or adequate reference to such LOC; (d) the deferral of
honoring a drawing because of conflicting instructions pursuant to Section
2.11 hereof; or (e) any other circumstances whatsoever in making or failing
to make payment under such LOC; provided, that the CP Issuer and the
Collateral Agent shall have a claim against such LOC Issuer, and such LOC
Issuer shall be liable to the CP Issuer and the Collateral Agent, to the
extent of any direct, as opposed to consequential, damages suffered by the
CP Issuer or the Collateral Agent that were caused by (i) such LOC Issuer's
willful misconduct or gross negligence in determining whether documents
presented under its LOC comply with the terms of such LOC or (ii) such LOC
Issuer's gross negligence in failing to make or willful failure to make
lawful payment under its LOC after the timely presentation to such LOC
Issuer by the Collateral Agent of a Drawing Certificate strictly complying
with the terms and conditions of its LOC. In furtherance and not in
limitation of the foregoing, an LOC Issuer may accept documents that appear
on their face to be in order, without responsibility for further
investigation; provided, that an LOC Issuer shall not be excused from its
willful misconduct or gross negligence in determining whether documents
presented under its LOC comply with the terms of such LOC.
Section 2.08. Surrender of LOCs. With respect to any LOC Issuer, provided
that such LOC Issuer is not then in default under its LOC by reason of its
having wrongfully failed to honor a demand for payment previously made by
the Collateral Agent under such LOC, the Collateral Agent shall surrender
such LOC to such LOC Issuer, promptly following the earlier of (i) the LOC
Expiration Date of such LOC Issuer and (ii) the termination of the Trust.
Section 2.09. Increased Costs and Taxes.
(a) Increased Costs. Subject to Section 2.12, if after the date
hereof, the adoption of any law or guideline or any amendment or change in the
administration, interpretation or application of any existing or future law or
guideline by any Official Body charged with the administration, interpretation
or application thereof, or the compliance with any request or directive of any
Official Body (whether or not having the force of law):
(i) shall subject any LOC Issuer to any tax, duty or other charge
with respect to this Agreement or any payments made hereunder, or shall
change the basis of taxation of payments to any LOC Issuer of any
amounts due under this Agreement (except for changes in the rate of tax
on the overall net income of such LOC Issuer imposed by any jurisdiction
having authority over such LOC Issuer; or
(ii) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board) against assets of, deposits with or
for the account of, or credit extended by, any LOC Issuer or shall
impose on any LOC Issuer or on the United States market for certificates
of deposit or the London interbank market any other condition affecting
this Agreement; or
(iii) imposes upon any LOC Issuer any other condition or expense
(including, without limitation, (i) loss of margin and (ii) reasonable
attorneys' fees and expenses, and expenses of litigation or preparation
therefor in contesting any of the foregoing) with respect to this
Agreement or any payments made hereunder,
and the result of any of the foregoing is to increase the cost to any LOC
Issuer of maintaining its LOC, or to reduce the amount of any sum received or
receivable by any LOC Issuer under this Agreement, by an amount deemed by such
LOC Issuer to be material, then, the CP Issuer shall pay such LOC Issuer such
additional amount or amounts as will compensate such LOC Issuer for such
increased cost or reduction. If such LOC Issuer becomes entitled to claim any
additional amounts pursuant to this Section 2.09, it shall promptly notify the
CP Issuer of the event by reason of which it has become so entitled. A
certificate as to any additional amounts payable pursuant to this Section
submitted by an officer of such LOC Issuer to the CP Issuer shall be
rebuttable presumptive evidence of the amount due. This covenant shall survive
the termination of this Agreement and the payment of all amounts payable
hereunder.
(b) If any LOC Issuer shall have determined that, after the
date hereof, the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any Official Body, or any
request or directive regarding capital adequacy (whether or not having the
force of law) of any such Official Body, has or would have the effect of
reducing the rate of return on capital of such LOC Issuer (or its parent),
as a consequence of its LOC or such LOC Issuer's obligations hereunder, to
a level below that which such LOC Issuer (or its parent) could have
achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an amount
deemed by such LOC Issuer to be material, then from time to time the CP
Issuer shall, or shall instruct the Collateral Agent, for the account of
the CP Issuer, to pay such LOC Issuer such additional amount or amounts as
will compensate such LOC Issuer (or its parent) for such reduction.
(c) Each LOC Issuer shall promptly notify the Collateral Agent and
the CP Issuer of any event of which it has knowledge, occurring after the date
hereof, which will entitle such LOC Issuer to compensation pursuant to this
Section. A certificate of any LOC Issuer claiming compensation under this
Section and setting forth the additional amount or amounts to be paid to it
hereunder shall be rebuttable presumptive evidence of the amount due. In
determining any such amount, each LOC Issuer may use any reasonable
averaging and attributing methods.
(d) Taxes. (A) All payments made under this Agreement shall be made free
and clear of, and without reduction for or on account of, any present or
future income, stamp or other taxes, levies, imposts, duties, charges,
fees, deductions or withholdings now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority excluding, in
the case of any LOC Issuer, net income and franchise taxes based upon net
income imposed on any LOC Issuer by the jurisdiction under the laws of
which it is organized or in which is located any office from or at which
such LOC Issuer is honoring any Drawing Certificate or any political
subdivision or taxing authority thereof or therein (all such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions and withholdings
being hereinafter called "Taxes"). If any Taxes are required to be
withheld from any amounts payable to any LOC Issuer hereunder, the amounts
so payable to such LOC Issuer shall be increased to the extent
necessary to yield to such LOC Issuer (after payment of all Taxes) interest
or any such other amounts payable hereunder at the rates or in the amounts
specified in this Agreement. Whenever any Taxes are payable by the CP
Issuer, as promptly as possible thereafter the CP Issuer shall send to the
applicable LOC Issuer a certified copy of the original official receipt, if
any, received by the CP Issuer showing payment thereof.
(B) If the CP Issuer fails to pay any Taxes when due to the
appropriate taxing authority or fails to remit to an LOC Issuer the required
receipts or other required documentary evidence, the CP Issuer shall indemnify
such LOC Issuer for any incremental taxes, interest or penalties that may
become payable by such LOC Issuer as a result of any such failure. The
agreements in this subsection shall survive the termination of this Agreement
and the payment of all amounts payable hereunder.
Section 2.10. Events of Default. Upon the occurrence of any of the
following events (each an "Event of Default"), and so long as such Event of
Default shall continue unremedied:
(a) Payments. The LOC Issuers are not paid when and as due (whether
on the due date thereof or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise) (i) any amount payable with respect to any
LOC Disbursements within five Business Days after the due date thereof, (ii)
interest payable on any LOC Disbursements or the LOC Fee within five Business
Days after the due date thereof, or (iii) any other payment under this
Agreement to be paid within five Business Days following the due date thereof;
provided, that amounts specified in item (iii) shall not be deemed due until
the 30th day after notice thereof has been given to the CP Issuer; or
(b) Representations. Any representation or warranty or
statement made by the Servicer in this Agreement or in the Pooling and
Servicing Agreement or made by the CP Issuer in this Agreement or in the
other Facilities Documents shall prove to have been incorrect in any
material respect when made, which continues to be incorrect in any material
respect for a period of 60 days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given to
the Servicer or the CP Issuer, as the case may be, by an LOC Issuer; or
(c) Covenants. Failure by the CP Issuer to observe or perform in
any material respect any covenant or agreement contained herein or in the
other Facilities Documents and not constituting an Event of Default under any
other clause of this Section 2.10 which continues unremedied for a period of
30 days after the earlier of actual knowledge or the date on which written
notice of such failure shall have been given; or
(d) Voluntary Bankruptcy Proceedings of the Servicer or the CP
Issuer. Either (i) an order for relief under Title 11 of the United States
Code shall be entered in a case in which the Servicer or the CP Issuer is a
debtor, or the Servicer or the CP Issuer shall become insolvent or generally
fail to pay, or admit in writing its inability to pay, its debts as they
become due, or shall voluntarily commence any proceeding or file any petition
under any bankruptcy, insolvency or similar law or seeking dissolution or
reorganization or the appointment of a receiver, trustee, custodian or
liquidator for itself or a substantial portion of its property, assets or
business or to effect a plan or other arrangement with its creditors, or
shall file any answer admitting the jurisdiction of the court and the
material allegations of an involuntary petition filed against it in any
bankruptcy, insolvency or similar proceeding, or shall be adjudicated
bankrupt, or shall make a general assignment for the benefit of creditors,
or shall consent to, or acquiesce in the appointment of, a receiver,
trustee, custodian or liquidator for itself or a substantial portion of its
property, assets or business or (ii) action shall be taken by the Servicer
or the CP Issuer for the purpose of effectuating any of the foregoing; or
(e) Involuntary Bankruptcy Proceedings against the Servicer or the
CP Issuer. Involuntary proceedings or an involuntary petition shall be
commenced or filed against the Servicer or the CP Issuer under any bankruptcy,
insolvency or similar law or seeking the dissolution or reorganization of the
Servicer or the CP Issuer or the appointment of a receiver, trustee, custodian
or liquidator for the Servicer or the CP Issuer or of a substantial part of
the property, assets or business of the Servicer, or any writ, order,
judgment, warrant of attachment, execution or similar process shall be issued
or levied against a substantial part of the property, assets or business of
the Servicer or the CP Issuer, and such proceeding or petition shall not be
dismissed, or such writ, order, judgment, warrant of attachment, execution or
similar process shall not be released, vacated or fully bonded, within 60 days
after commencement, filing or levy, as the case may be;
(f) No Valid Agreement. This Agreement or any other Facilities
Document (or any provision thereof material to the holding of the Variable
Funding Certificate) shall, at any time after its execution and delivery, for
any reason cease to be in full force and effect (unless such occurrence is in
accordance with its terms) or shall be declared to be null and void, or the
validity or enforceability thereof shall be contested by Ingram, the
Collateral Agent, or the CP Issuer, as the case may be, or the Servicer, the
Collateral Agent, or the CP Issuer shall deny that it has any or further
liability or obligation thereunder;
(g) Security. The Security Interest purported to be created by the
Security Agreement shall fail to be a valid and enforceable perfected first
priority security interest in favor of the Collateral Agent in any of the
Collateral;
(h) Servicer Default. A Servicer Default shall have occurred and be
continuing or the Servicer shall be changed from Ingram (or any successor
Servicer to which each LOC Issuer has consented) without the consent of each
LOC Issuer; or
(i) Matured Default. A Matured Default under the Liquidity
Agreement shall have occurred;
then, and in any such event, the Required LOC Issuers may (i) except with
respect to paragraphs (d) and (e) which shall be automatic and require no
notice by the Required LOC Issuers, give notice to the CP Issuer, the
Transferor, the Collateral Agent, the CP Dealer and the Servicer of the
occurrence of the Event of Default, and (ii) pursue, to the extent permitted
by applicable law, any other remedy available at law or in equity, including,
without limitation, the remedy of specific performance of any covenant or
agreement herein contained (any such Event of Default, followed (except in the
case of paragraphs (d) and (e)) by the notice specified in item (i) above, a
"Matured Default").
Section 2.11. Conflicting Instructions from the Collateral Agent.
Notwithstanding any other provision of this Agreement, in the event an LOC
Issuer (i) receives a demand for a drawing to be made under the LOC and
(ii) receives any communication purportedly from the Collateral Agent or
any of its officers, employees or agents, which communication indicates
that such demand is not in order, such LOC Issuer may defer honoring such
demand until it receives further written instructions from the Collateral
Agent as to the disposition of such demand; provided that such LOC Issuer
shall not be liable for such deferral in accordance with Section 2.07
hereof. Such LOC Issuer shall promptly notify the Collateral Agent of any
such deferral.
Section 2.12. No Recourse. The obligations of the CP Issuer under this
Agreement and the LOCs are solely the corporate obligations of the CP Issuer.
No recourse shall be had for the payment of any amount owing in respect of any
LOC Disbursements or for the payment of any fee hereunder or any other
obligation or claim arising out of or based upon this Agreement and the LOCs
against any stockholder, employee, officer, director or incorporator of the CP
Issuer. Each of the LOC Issuers and the Collateral Agent also agrees that the
obligations of the CP Issuer to the LOC Issuers and the Collateral Agent
hereunder, including without limitation all obligations of the CP Issuer in
respect of fees and indemnity pursuant to Sections 2.09, 5.02 and 5.03, shall
be payable solely from the Collateral in accordance with the Security
Agreement, that the LOC Issuers and the Collateral Agent shall not look to any
other property or assets of the CP Issuer in respect of the obligations
arising under such Sections and that such obligations shall not constitute a
claim against the CP Issuer in the event that the CP Issuer's assets are
insufficient to pay in full such obligations, and that such obligations are
fully subordinated to the CP Issuer's obligations under the Commercial Paper
and the Loans.
Section 2.13. Pro Rata Treatment and Payments. Each drawing by the
Collateral Agent on behalf of the CP Issuer from the LOC Issuers hereunder,
except a Special Drawing pursuant to Section 2.03, and each payment by the CP
Issuer on account of any LOC Disbursement or fee payable hereunder and any
reduction of the LOC Commitment of the LOC Issuer shall be made pro rata
according to the respective Percentages of the LOC Issuers.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.01. Representations and Warranties of the CP Issuer. In order
to induce the LOC Issuers to enter into this Agreement and to provide the
credit facilities provided for herein, the CP Issuer herein makes the
representations and warranties contained in the Security Agreement (which are
hereby incorporated by reference in this Article III) and the following
additional representations and warranties to the LOC Issuers:
(a) Organization; Powers. The CP Issuer (a) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has all requisite power and authority to
own its property and assets and to carry on its business as now conducted and
as proposed to be conducted, (c) is qualified to do business in every
jurisdiction where such qualification is required, and (d) has the
corporate power and authority to execute, deliver and perform its
obligations under each of the Facilities Documents and each other agreement
or instrument contemplated thereby to which it is or will be a party, to
borrow hereunder and to grant the Liens on the Collateral pursuant to the
Security Agreement.
(b) Authorization. The execution, delivery and performance by
the CP Issuer of each of the Facilities Documents and the other
transactions contemplated hereby and thereby (a) have been duly authorized
by all requisite corporate and, if required, stockholder action and (b)
will not (i) violate (1) any provision of law, statute, rule or regulation,
or of the certificate or articles of incorporation or other constitutive
documents or by-laws of the CP Issuer, (2) any order of any Governmental
Authority or (3) any provision of any indenture, agreement or other
instrument to which the CP Issuer is a party or by which it or any of its
property is or may be bound, (ii) conflict with, result in a breach of or
constitute (alone or with notice or lapse of time or both) a default under
any such indenture, agreement or other instrument or (iii) result in the
creation or imposition of any Lien upon or with respect to any property or
assets now owned or hereafter acquired by the CP Issuer, except the Lien
created pursuant to the Security Agreement in favor of the Collateral
Agent.
(c) Enforceability. This Agreement has been duly executed and
delivered by the CP Issuer and constitutes, and each other Facilities
Document when executed and delivered by the CP Issuer will constitute, a
legal, valid and binding obligation of the CP Issuer enforceable against
the CP Issuer in accordance with its terms except as such enforceability is
subject to applicable bankruptcy, reorganization, insolvency, moratorium or
other laws affecting creditors' rights generally, and to the general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(d) Governmental Approvals. No action, consent or approval of,
registration or filing with or any other action by any Governmental Authority
is or will be required in connection with the execution and performance of the
Facilities Documents, except such as have been made or obtained and are in
full force and effect.
(e) Federal Reserve Regulations.
(i) The CP Issuer is not engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying Margin Stock.
(ii) No part of the proceeds of any Loan will be used, whether
directly or indirectly, and whether immediately, incidentally or
ultimately, (i) to purchase or carry Margin Stock or to extend credit to
others for the purpose of purchasing or carrying Margin Stock or to
refund indebtedness originally incurred for such purpose or (ii) for any
purpose that entails a violation of, or that is inconsistent with, the
provisions of the Regulations of the Board, including Regulation G, U
or X.
(f) Investment Company Act; Public Utility Holding Company Act.
The CP Issuer is not (i) an "investment company," or an "affiliated person"
of, or "principal underwriter" or "promoter" for, an "investment company,"
as such terms are defined in, or subject to regulation under, the
Investment Company Act of 1940, as amended, or (ii) a "holding company" as
defined in, or subject to regulation under, the Public Utility Holding
Company Act of 1935.
(g) Subsidiaries. The CP Issuer has no Subsidiaries.
(h) Defaults. With respect to the CP Issuer, no Event of Default
under this Agreement, no Event of Default under the Liquidity Agreement, and
no event, which with the lapse of time or notice or both would become any of
such events, has occurred and is continuing.
Section 3.02. Representations and Warranties of Funding. In order to
induce the LOC Issuers to enter into this Agreement and to provide the credit
facilities provided for herein, Funding herein makes the following
representations and warranties to the LOC Issuers:
(a) Organization; Powers. Funding (i) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (ii) has all requisite power and authority
to own its property and assets and to carry on its business as now conducted
and as proposed to be conducted, (iii) is qualified to do business in every
jurisdiction where such qualification is required and where failure to so
qualify would have a material adverse effect on the Holders of Commercial
Paper and (iv) has the corporate power and authority to execute, deliver
and perform its obligations under each of the Facilities Documents and each
other agreement or instrument contemplated thereby to which it is or will
be a party.
(b) Authorization. The execution, delivery and performance by
Funding of each of the Facilities Documents to which it is a party and the
other transactions contemplated hereby and thereby (i) have been duly
authorized by all requisite corporate and, if required, stockholder action
and (ii) will not (a) violate (1) any provision of law, statute, rule or
regulation, or of the certificate or articles of incorporation or other
constitutive documents or by-laws of Funding, (2) any order of any
Governmental Authority or (3) any provision of any indenture, agreement or
other instrument to which Funding is a party or by which it or any material
part of its property is or may be bound, (b) conflict with, result in a
breach of or constitute (alone or with notice or lapse of time or both) a
default under any such indenture, agreement or other instrument or (c)
result in the creation or imposition of any Lien upon or with respect to
any material part of the property or assets now owned or hereafter acquired
by Funding.
(c) Enforceability. This Agreement has been duly executed and
delivered by Funding and constitutes, and each other Facilities Document to
which it is a party when executed and delivered by Funding will constitute,
a legal, valid and binding obligation of Funding enforceable against
Funding in accordance with its terms except as such enforceability is
subject to applicable bankruptcy, reorganization, insolvency, moratorium or
other laws affecting creditors' rights generally, and to the general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(d) Governmental Approvals. No action, consent or approval of,
registration or filing with or any other action by any Governmental Authority
is or will be required in connection with the execution and performance of the
Facilities Documents to which Funding is a party, except such as have been
made or obtained and are in full force and effect.
(e) Federal Reserve Regulations. Funding is not engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying Margin Stock.
(f) With respect to Funding, no Event of Default under this
Agreement, no Event of Default under the Liquidity Agreement, and no event,
which with the lapse of time or notice or both would become any of such
events, has occurred and is continuing.
Section 3.03. Representations and Warranties of Ingram. In order to
induce the LOC Issuers to enter into this Agreement and to provide the credit
facilities provided for herein, Ingram herein makes the following
representations and warranties to the LOC Issuers:
(a) Organization; Powers. Ingram (i) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (ii) has all requisite power and
authority to own its property and assets and to carry on its business as
now conducted and as proposed to be conducted, (iii) is qualified to do
business in every jurisdiction where such qualification is required and
where failure to so qualify would have a material adverse effect on the
Holders of Commercial Paper and (iv) has the corporate power and authority
to execute, deliver and perform its obligations under each of the
Facilities Documents and each other agreement or instrument contemplated
thereby to which it is or will be a party.
(b) Authorization. The execution, delivery and performance by
Ingram of each of the Facilities Documents to which it is a party and the
other transactions contemplated hereby and thereby (i) have been duly
authorized by all requisite corporate and, if required, stockholder action and
(ii) will not (a) violate (1) any provision of law, statute, rule or
regulation, or of the certificate or articles of incorporation or other
constitutive documents or by-laws of Ingram, (2) any order of any
Governmental Authority or (3) any provision of any indenture, agreement or
other instrument to which Ingram is a party or by which it or any material
part of its property is or may be bound, (b) conflict with, result in a
breach of or constitute (alone or with notice or lapse of time or both) a
default under any such indenture, agreement or other instrument or (c)
result in the creation or imposition of any Lien upon or with respect to
any material part of the property or assets now owned or hereafter acquired
by Ingram.
(c) Enforceability. This Agreement has been duly executed and
delivered by Ingram and constitutes, and each other Facilities Document to
which it is a party when executed and delivered by Ingram will constitute,
a legal, valid and binding obligation of Ingram enforceable against Ingram
in accordance with its terms except as such enforceability is subject to
applicable bankruptcy, reorganization, insolvency, moratorium or other laws
affecting creditors' rights generally, and to the general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law).
(d) Governmental Approvals. No action, consent or approval of,
registration or filing with or any other action by any Governmental
Authority is or will be required in connection with the execution and
performance of the Facilities Documents to which Ingram is a party, except
such as have been made or obtained and are in full force and effect.
(e) Federal Reserve Regulations. Ingram is not engaged principally,
or as one of Its Important activities, in the business of extending credit
for the purpose of purchasing or carrying Margin Stock.
(f) Defaults. With respect to Ingram, no Event of Default under
this Agreement, no Event of Default under the Liquidity Agreement, and no
event, which with the lapse of time or notice or both would become any of such
events has occurred and is continuing.
Section 3.04. Additional Representations. Ingram represents and warrants
that the representations and warranties made by it in Section 3.03 of the
Pooling and Servicing Agreement are true and correct as of the dates there
so made.
Section 3.05. Covenants of Servicer. The Servicer (including, other than
with respect to subparagraph (e), any Successor Servicer) covenants and agrees
that, so long as any LOC shall remain in effect or any monetary obligation
arising hereunder or under the Pooling and Servicing Agreement shall remain
unpaid, unless each LOC Issuer shall otherwise consent in writing, it shall:
(a) for the benefit of the LOC Issuers and for so long as this
Agreement shall be in effect, perform and comply with each of its
respective agreements, warranties and indemnities contained in this
Agreement and the Pooling and Servicing Agreement; provided, that the
remedy for the breach of this clause (a) as to warranties of the
Servicer in the Pooling and Servicing Agreement, shall, to the extent
that the remedy for such breach is limited in the Pooling and
Servicing Agreement, be so limited herein;
(b) not amend or waive or consent to any amendment to or waiver
of (i) Article IV of the Pooling and Servicing Agreement as it
relates to the Variable Funding Supplement (including such portions
of Article IV which may be restated in the Variable Funding
Supplement) or any definition to the extent used therein, (ii) the
definition of Discount Factor in a manner which could cause a
reduction thereof, (iii) Section 9.02 of the Pooling and Servicing
Agreement or (iv) any other provision of the Pooling and Servicing
Agreement or any other Facilities Document to the extent an LOC
Issuer would be materially adversely affected thereby; provided,
that the addition of a Supplement for a Series will not in and of
itself cause a material adverse effect on any LOC Issuer;
(c) deliver to the LOC Issuers a copy of each amendment or
supplement to the Pooling and Servicing Agreement or of any
Supplement, the Purchase Agreement or any of the other agreements
contemplated hereby;
(d) execute and deliver to the LOC Issuers all such documents
and instruments and do all such other acts and things as may be
necessary or reasonably required by the LOC Issuers or the
Collateral Agent to enable the Collateral Agent or the LOC Issuers
to exercise and enforce their respective rights under this Agreement
and the Security Agreement and to realize thereon, and record and
file and rerecord and refile all such documents and instruments, at
such time or times in such manner and at such place or places, all
as may be necessary or reasonably required by the Collateral Agent
or the LOC Issuers to validate, preserve and protect the position of
the CP Issuer and the LOC Issuers under this Agreement and the
Security Agreement;
(e) not sell all or substantially all of its property and
assets to, or consolidate with or merge into, any other corporation;
(f) furnish to the LOC Issuers a copy of each certificate,
report, statement, notice or other communication (other than
investment instructions) furnished by or on behalf of the Transferor
or the Servicer to Certificateholders, the Collateral Agent or the
Rating Agencies concurrently therewith and furnish to each LOC
Issuer promptly after receipt thereof, a copy of each notice, demand
or other communication received by Ingram Funding Inc., as
Transferor, or the Servicer from the Collateral Agent, the
Certificateholders or the Rating Agencies with respect to the
Variable Funding Certificate, its LOC, this Agreement, the Security
Agreement or the Pooling and Servicing Agreement; and furnish such
other information as the LOC Issuers may reasonably request;
(g) promptly advise the LOC Issuers of the occurrence of any
Event of Termination or Servicer Default under the Pooling and
Servicing Agreement;
(h) with respect to the Receivables, promptly notify the LOC
Issuers of any material changes in the Credit and Collection Policy,
and in any event will not, except as required by law, make any
material change to the Credit and Collection Policy which could
reasonably be expected to have a material adverse effect on the
collectibility of the Receivables, taken as a whole or on the rights
of any LOC Issuer;
(i) upon reasonable written notice from an LOC Issuer, allow
employees and agents of such LOC Issuer, during the Servicer's
normal business hours, to audit the Servicer's books and records
concerning the Receivables, and the servicing thereof; provided,
however, that such audit is performed without unreasonable
disruption of the Servicer's operations; and provided, further, that
such audit may be conducted at the Servicer's expense only once each
calendar year, and all costs and expenses of any audit after the
first in any calendar year shall be paid by such LOC Issuer; and
(j) perform on a timely basis all of its obligations under the
Pooling and Servicing Agreement.
Section 3.06. Covenants of the CP Issuer. The CP Issuer covenants and
agrees that, so long as any LOC shall remain in effect or any monetary
obligation arising hereunder or under any of the other Facilities Documents
to which the CP Issuer is a party shall remain unpaid, unless each LOC Issuer
shall otherwise consent in writing, it shall:
(a) for the benefit of the LOC Issuers and for so long as this
Agreement shall be in effect, perform and comply with each of its respective
agreements, warranties and indemnities contained in this Agreement and the
other Facilities Documents to which the CP Issuer is a party; provided, that
the remedy for the breach of this clause (a) as to warranties of the CP Issuer
in the other Facilities Documents to which the CP Issuer is a party, shall, to
the extent that the remedy for such breach is limited in the other Facilities
Documents to which the CP Issuer is a party, be so limited herein;
(b) The CP Issuer shall not, without the consent of the LOC
Issuers, amend or waive or consent to any amendment to or waiver of any
provision of any Facilities Document to the extent the LOC Issuers would be
materially adversely affected thereby;
(c) deliver to the LOC Issuers a copy of each amendment or
supplement to the Liquidity Agreement or any of the other agreements
contemplated hereby;
(d) execute and deliver to the LOC Issuers all such documents and
instruments and do all such other acts and things as may be necessary or
reasonably required by the LOC Issuers or the Collateral Agent to enable the
Collateral Agent or the LOC Issuers to exercise and enforce their respective
rights under this Agreement and the Security Agreement and to realize thereon,
and record and file and rerecord and refile all such documents and
instruments, at such time or times, in such manner and at such place or
places, all as may be necessary or reasonably required by the Collateral Agent
or the LOC Issuers to validate, preserve and protect the position of the CP
Issuer and the LOC Issuers under this Agreement and the Security Agreement;
(e) not sell all or substantially all of its property and assets
to, or consolidate with or merge into, any other corporation, without the
consent of the LOC Issuers;
(f) upon reasonable written notice from an LOC Issuer, allow
employees and agents of such LOC Issuer, during the CP Issuer's normal
business hours, to audit the CP Issuer's books and records concerning the
Variable Funding Certificate; provided, however, that such audit is performed
without unreasonable disruption of the CP Issuer's operations; and provided,
further, that such audit may be conducted at the CP Issuer's expense only once
each calendar year, and all costs and expenses of any audit after the first in
any calendar year shall be paid by such LOC Issuer.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent to Effectiveness. The following
constitute conditions precedent to the obligation of each LOC Issuer to issue
its LOC on the Initial Closing Date:
(a) Each of the LOC Issuers shall have received a fully
executed original counterpart of this Agreement, each of the other
Facilities Documents and all related documents, and such agreements
shall be in form and substance satisfactory to the LOC Issuers.
(b) On the date of issuance of the LOCs, all representations
and warranties of the CP Issuer, Funding and Ingram contained in
this Agreement and the Pooling and Servicing Agreement shall be true
and correct, and the LOC Issuers shall have received a certificate
from each of the CP Issuer, Funding and Ingram to such effect.
(c) On the date of issuance of the LOCs, the CP Issuer and
Ingram shall not be in default of any obligation under this
Agreement or any of the other Facilities Documents.
(d) Each of the LOC Issuers shall have received the favorable
written opinion(s) of counsel to Ingram (who may be an employee of
Ingram) and the CP Issuer, dated the Closing Date, with respect to
the matters reasonably requested by the LOC Issuers.
(e) Each of the LOC Issuers shall have received (i) a copy of
the resolutions of the Executive Committee of the Board of Directors
of Ingram, certified as of the Closing Date by the Secretary or
Assistant Secretary thereof, authorizing the execution, delivery and
performance of this Agreement, the other Facilities Documents to
which it is a party and the procurement of the LOCs, (ii) copies of
the Charter and By-laws of the Servicer, (iii) an incumbency
certificate of the Servicer with respect to its officers authorized
to execute this Agreement, the other Facilities Documents to which
it is a party and the documents required hereby, (iv) a copy of the
resolutions of the Board of Directors of the Transferor, certified
as of the Closing Date by the Secretary or Assistant Secretary
thereof, authorizing the execution, delivery and performance of this
Agreement, the other Facilities Documents to which it is a party and
the procurement of the LOCs, (v) copies of the Charter and By-laws
of the Transferor, (vi) an incumbency certificate of the Transferor
with respect to its officers authorized to execute this Agreement,
the other Facilities Documents to which it is a party and the
documents required hereby, (vii) a copy of the resolutions of the
Board of Directors of the CP Issuer, certified as of the Closing
Date by the Secretary or Assistant Secretary thereof, authorizing
the execution, delivery and performance of this Agreement and the
other Facilities Documents to which it is a party, (viii) copies of
the Charter and By-laws of the CP Issuer and (ix) an incumbency
certificate of the CP Issuer with respect to its officers authorized
to execute this Agreement, the other Facilities Documents to which
it is a party and the documents required hereby.
(f) The Pooling and Servicing Agreement shall be in full force
and effect and all conditions precedent to the issuance of the
Variable Funding Certificate contained therein shall have been
satisfied.
(g) Each of the LOC Issuers shall have received such other
documents, certificates, instruments, approvals and opinions
(including, without limitation, an opinion of Orrick, Herrington &
Sutcliffe, counsel to the LOC Issuers) as the LOC Issuers may
reasonably request.
(h) All fees pursuant to Section 2.06(a) shall have been paid.
ARTICLE V
MISCELLANEOUS
Section 5.01. [reserved]
Section 5.02. Expenses. Subject to Section 2.12, the CP Issuer
agrees to pay all reasonable out-of-pocket costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses), if any,
incurred by any LOC Issuer in connection with the negotiation, preparation,
execution, delivery, amendment, modification, waiver and enforcement of
this Agreement, the Pooling and Servicing Agreement and any other agreement
delivered in connection herewith or therewith.
Section 5.03. Indemnity. (a) Subject to Sections 2.09 and 2.12, the
CP Issuer agrees to indemnify and hold harmless each LOC Issuer and its
respective officers, directors, employees and agents (each LOC Issuer, its
respective officers, directors, employees and agents shall be individually
referred to herein as an "Indemnitee") from and against any and all claims,
damages, losses, liabilities, costs or expenses whatsoever which any such
Indemnitee may incur (or which may be claimed against any such Indemnitee)
by reason of or in connection with the execution and delivery or assignment
of, or payment under, its LOC or this Agreement or any transactions
contemplated hereby or by the Facilities Documents, or by reason of any
default in the reimbursement of any LOC Disbursement except to the extent
that any such claim, damage, loss, liability, cost or expense is caused by
the willful misconduct or gross negligence of any such Indemnitee. The
foregoing indemnity shall include any claims, damages, losses, liabilities,
costs and expenses to which any LOC Issuer may become subject under the
Securities Act of 1933, as amended (the "Act"), the Securities Exchange Act
of 1934, as amended, or other federal or state law or regulation. This
covenant shall survive the termination of this Agreement and the expiration
of the LOCs.
(b) The Servicer shall not assign (whether voluntarily or as a
result of a Servicer Default) any of its rights or obligations hereunder or
under the Pooling and Servicing Agreement (except as permitted by Section
8.07 of the Pooling and Servicing Agreement) to any Person unless (i) the
prior written consent of the LOC Issuers shall have been obtained, and (ii)
prior to the effective date of such assignment, such Person shall have
executed and delivered to the LOC Issuers a written agreement in form and
substance reasonably satisfactory to the LOC Issuers in which such Person
agrees to be bound by the terms, covenants and conditions contained herein
and in the Pooling and Servicing Agreement applicable to the Servicer, as
Servicer, and subject to the duties and obligations of the Servicer
hereunder after the effective date of its appointment and shall agree to
indemnify and hold harmless each LOC Issuer from and against any and all
claims, damages, losses, liabilities, costs or expenses whatsoever which
such LOC Issuer may incur (or which may be claimed against such LOC Issuer)
by reason of the gross negligence or willful misconduct of the Successor
Servicer in exercising its powers and carrying out its obligations herein
and under the Pooling and Servicing Agreement. Any Successor Servicer
appointed pursuant to the Pooling and Servicing Agreement shall likewise
agree to the terms set forth in clause (ii). As of the date of its
acceptance, such Successor Servicer shall be deemed to have made with
respect to itself the representations and warranties made by the Servicer
in Section 3.03. Following the effective date of appointment, the Servicer
shall be released from all duties and liabilities as Servicer hereunder,
but such release shall not affect any obligations of the Servicer that
arose prior to such date or the obligations of the Servicer under Section
2.06, this Section 5.03 or 3.05(f) (in the case of Section 3.05(f),
excluding any documents received by the Successor Servicer from anyone
other than the Servicer and also excluding any documents received by the
Servicer from the Successor Servicer) or 3.05(i) (to the extent the
Servicer retains the records referred to therein) of this Agreement,
whether arising before or after such date.
Section 5.04. Notices. Except where telephonic instructions or
notices are authorized herein to be given, all notices, demands,
instructions and other communication required or permitted to be given to
or made upon any party hereto shall be in writing and shall be personally
delivered or sent by registered, certified or express mail, postage
prepaid, return receipt requested, or by prepaid Telex, TWX, facsimile or
telegram (with messenger delivery specified in the case of a telegram)
(any notice sent by telex, TWX, facsimile or telegram will be confirmed by
mail as provided herein) and shall be deemed to be given for purposes of
this Agreement on the day that such writing is delivered or sent to the
intended recipient thereof in accordance with the provisions of this
Section 5.04. Unless otherwise specified in a notice sent or delivered in
accordance with the foregoing provision of this Section 5.04, notices,
demands, instructions and other communications shall be given to or made
upon the respective parties hereto at their respective addresses (or to
their respective Telex, facsimile or TWX numbers) indicated below:
If to the LOC to the respective addresses set forth
Issuers: underneath their respective
names on Schedule 2 hereto
If to the CP Issuer: Distribution Funding Corporation
c/o Merrill Lynch
World Financial Center, South
225 Liberty Street, 8th Floor
New York, New York 10080-6108
Attention: Gary Carlin, Treasurer
Telephone: (212) 236-7200
Telecopy: (212) 236-7584
If to the Servicer: Ingram Industries Inc.
One Belle Meade Plaza
4400 Harding Road
Nashville, Tennessee 37205
Attention: Treasurer
Telephone: (615) 298-8242
Telecopy: (615) 298-8200
If to the Transferor: Ingram Funding Inc.
1105 North Market Street
Wilmington, Delaware 19801
Attention: President
Telephone: (302) 427-7650
Telecopy: (302) 427-7663
If to the Collateral: Chemical Bank
Agent: 450 West 33rd Street,
15th Floor
New York, New York 10041
Attention: Corporate Trustee
Administration Department
Telephone: (212) 971-3350
Telecopy: (212) 613-7799
Section 5.05. Governing Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
Section 5.06. Waivers, etc. Neither any failure nor any delay on the
part of any LOC Issuer in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall a single or partial
exercise thereof preclude any other or further exercise or the exercise of
any other right, power or privilege. No provision of this Agreement shall
be waived, amended or supplemented except by a written instrument executed
by the parties hereto.
Section 5.07. Severability. Any provisions of this Agreement which
are prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceable without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
Section 5.08. Term. This Agreement shall remain in full force and
effect until the later to occur of (a) the payment of all the LOC
Disbursements and any and all other amounts payable hereunder,
notwithstanding the earlier termination of the related LOCs or (b) the
termination of all of the LOCs. The provisions of Sections 2.04, 2.09,
5.02 and 5.03 hereof shall survive termination of this Agreement.
Section 5.09. Successors and Assigns. (a) This Agreement shall be
binding upon each LOC Issuer, the CP Issuer, the Servicer, the Transferor
and the Collateral Agent and their respective successors and assigns;
provided that no party hereto may assign any of its obligations under this
Agreement or its Percentage of the LOC Commitment, as applicable, without
the prior written consent of each other party hereto; provided, further
that no assignment hereunder or under the LOC will be effective until the
Collateral Agent and the CP Issuer have received written confirmation from
each of S&P and Fitch to the effect that such assignment would not result
in a withdrawal or reduction of the then current rating of Commercial Paper
by such rating agency.
"Assignee" shall mean any bank or other financial institution which has been
assigned a portion of the LOC Commitment. Notwithstanding the foregoing,
subject to the prior written consent of Ingram, any LOC Issuer and any
Participant (as defined below) may, at any time, grant participations, or any
existing Participant may assign all or part of its participation, to any other
person, firm or corporation (a "Participant") in all or part of its rights
under this Agreement except that the CP Issuer shall not be obligated to any
Participant for amounts under Sections 2.09, 5.02 and 5.03 hereof in excess of
such amounts which would have been owing to such LOC Issuer thereunder had
such participation not been effected unless the CP Issuer has given its prior
written consent to the participation of such Participant; provided, however,
that the amount of any participation granted to any Participant by any LOC
Issuer shall not be less than $400,000 (unless the CP Issuer shall otherwise
agree in writing) and the amount of the participation of such LOC Issuer
remaining after any such participation shall not be less than $400,000 (unless
the CP Issuer shall otherwise agree in writing). Each LOC Issuer hereby
acknowledges and agrees that any such disposition will not alter or affect
such LOC Issuer's direct obligations to the Collateral Agent, and that neither
the Servicer, the Transferor nor the Collateral Agent shall have any
obligation to communicate with or maintain a relationship with any Participant
in order to enforce such obligations of such LOC Issuer hereunder and under
its LOC. All agreements, representations and warranties made herein shall
survive the execution and delivery of this Agreement.
(b) Each LOC Issuer may furnish any information concerning the CP
Issuer, the Trust, the Transferor, Ingram or any Trust Assets in the
possession of such LOC Issuer from time to time to Assignees and
Participants (including the prospective Assignees and Participants) only
with the prior written consent of Ingram, which consent shall be deemed to
have been so given to the Participants set forth in Schedule 3 upon the
execution of an agreement by each such Participant agreeing to abide by the
terms of the covenant set forth in Section 5.13(e). As a condition
thereto, any Assignee or Participant (other than those set forth in
Schedule 3) or proposed Assignee or Participant shall agree in writing
prior to receiving any such information to the terms set
forth in the covenant contained in Section 5.13(e) hereof.
(c) Any agreement pursuant to which any LOC Issuer may grant a
participating interest shall provide that (i) each Participant shall be
entitled to vote on any and all matters on which LOC Issuers are entitled
to vote hereunder, including without limitation any approval, consent or
waiver; (ii) such vote shall be counted based upon the percentage that
such Participant's amount of participation bears to the LOC Commitment (a
"Participant's Voting Percentage) except that on matters which require the
consent of each such LOC Issuer, such LOC Issuer shall not be entitled to
cast its vote approving such matters without the approval of each of its
Participants; (iii) such LOC Issuer shall promptly advise each Participant
in writing (or by telephone confirmed promptly thereafter in writing) of
any matters which require the approval, vote or consent of the LOC Issuers;
(iv) when voting, such LOC Issuer shall vote its Percentage severally to
reflect the manner in which it has been instructed in writing (or by
telephone confirmed promptly thereafter in writing) to vote the
Participant's Voting Percentage of each of such LOC Issuer's Participants;
and (v) each Participant agrees to the terms set forth in the covenants in
Section 5.13(e).
Section 5.10. Counterparts. This Agreement may be executed in one
or more counterparts, including a telefax transmission thereof, and by the
different parties hereto on the same or separate counterparts, each of
which shall be deemed to be an original instrument.
Section 5.11. Further Assurances. Each of the CP Issuer and the
Servicer agrees to do such further acts and things and to execute and
deliver to the LOC Issuers or the Collateral Agent such additional
assignments, agreements, powers and instruments as are required by the LOC
Issuers or the Collateral Agent to carry into effect the purposes of this
Agreement or to better assure and confirm unto the LOC Issuers or the
Collateral Agent their respective rights, powers and remedies hereunder.
Section 5.12. Captions. 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.
Section 5.13. Representations, Warranties and Covenants of the LOC
Issuers. Each LOC Issuer hereby represents, warrants and covenants to the
Servicer, the Transferor, the CP Issuer and the Collateral Agent that:
(a) it is duly authorized to enter into and perform this Agreement
and to issue its LOC for the LOC Issuer's Percentage of the LOC Commitment,
and has duly executed and delivered this Agreement, and upon the issuance
and delivery of its LOC in accordance with Section 2.01, its LOC will be
duly executed and delivered;
(b) this Agreement constitutes and, upon the issuance thereof, its
LOC will constitute, the legal, valid and binding obligations of such LOC
Issuer, enforceable in accordance with their respective terms (subject to
applicable bankruptcy, reorganization, insolvency and similar laws and to
moratorium laws and other similar laws affecting creditors' rights
generally from time to time in effect and to general equitable principles,
whether enforcement is sought at law or in equity); and
(c) no registration with or consent or approval of or other action
by any state or local government authority or regulatory body having
jurisdiction over such LOC Issuer is required in connection with the
execution, delivery or performance by it of this Agreement or its LOC other
than as may be required under the blue sky laws of any state.
(d) on the Closing Date, it will provide to the Collateral Agent,
the Depositary, the Liquidity Agent, the Liquidity Banks and the Servicer
the favorable written opinion of its counsel and of Orrick, Herrington &
Sutcliffe (as to federal law and New York law), special counsel to the LOC
Issuers, to the effect that its LOC has been duly authorized, executed and
delivered and will constitute the legal, valid and binding obligations of
such LOC Issuer, enforceable against it in accordance with its terms
(subject, as to the enforcement of remedies in case of the insolvency of
such LOC Issuer, to applicable bankruptcy, reorganization, insolvency and
similar laws and to moratorium laws and other similar laws affecting
creditors' rights generally from time to time in effect and to general
equitable principles, whether enforcement is sought at law or in equity);
and
(e) unless otherwise agreed to in writing by the CP Issuer and Ingram,
the LOC Issuers hereby agree to keep all Proprietary Information (as
defined below) confidential and not to disclose or reveal any Proprietary
Information to any Person other than such LOC Issuer's directors, officers,
employees, Affiliates and agents, and subject to Section 5.09(b), actual or
potential Assignees and actual or potential participants; provided,
however, that any of the LOC Issuers may disclose Proprietary Information
(i) as required by law, rule, regulation or judicial process, (ii) to its
attorneys and accountants who are expected to become engaged in rendering
advice or assistance in connection therewith, (iii) as requested or
required by any state, Federal or foreign authority or examiner regulating
banks or banking or (iv) in connection with any enforcement of any of their
rights under the Facilities Documents. For purposes of this Agreement, the
term "Proprietary Information" shall include all information about the CP
Issuer, Ingram, or any of their Affiliates which has been furnished or made
available by the CP Issuer, Ingram, or any of their Affiliates, whether
furnished or made available before or after the date hereof, and regardless
of the manner in which it is furnished or made available; provided,
however, that Proprietary Information does not include information which
(x) is or becomes generally available to the public other than as a result
of a disclosure by any of the LOC Issuers not permitted by this Agreement,
(y) was available to any of the LOC Issuers on a nonconfidential basis
prior to its disclosure to any of the LOC Issuers by the CP Issuer, Ingram,
or any of their Affiliates or (z) becomes available to any of the LOC
Issuers on a nonconfidential basis from a Person other than the CP Issuer,
Ingram, or any of their Affiliates who, to the best knowledge of any of the
LOC Issuers, is not otherwise bound by a confidentiality agreement with the
CP Issuer, Ingram, or any of their Affiliates, or is not otherwise
prohibited from transmitting the information to any of the LOC Issuers.
Section 5.14. Survival of Representations, Indemnities, Warranties
and Agreements. All agreements, representations, indemnities and
warranties made herein shall survive the execution and delivery of this
Agreement.
Section 5.15. Tax Forms. Each LOC Issuer agrees to provide the CP
Issuer (with a copy to the Servicer) with (i) two duly completed copies of
United States Internal Revenue Service Form 1001 or 4224 or successor
applicable form, as the case may be, and (ii) an Internal Revenue Service
Form W-8 or w-9 or successor applicable forms or other manner of
certification, as the case may be, on or before the date that any such form
expires or becomes obsolete or after the occurrence of any event requiring
a change in the most recent form previously delivered by it to the
Servicer, and such extensions or renewals thereof as may reasonably be
requested by the Servicer or the CP Issuer. Each LOC Issuer shall certify
(i) in the case of a Form 1001 or 4224, that it is entitled to receive
payments under this Agreement without deduction or withholding of any
United States federal income taxes, unless in any such case an event
(including, without limitation, any change in treaty, law or regulation)
has occurred prior to the date on which any such delivery would otherwise
be required which renders all such forms inapplicable or which would
prevent such LOC Issuer from duly completing and delivering any such form
with respect to it and such LOC Issuer advises the Servicer that it is not
capable of so receiving payments without any deduction or withholding, and
(ii) in the case of a Form W-8 or W-9, that it is entitled to an exemption
from United States backup withholding tax. If any LOC Issuer grants a
participation pursuant to Section 5.09 hereof, such LOC Issuer shall obtain
from its Participant and shall furnish to the Servicer (with a copy to the
CP Issuer and the Collateral Agent) the form described in this Section
5.15.
Section 5.16. Jurisdiction. Each of the LOC Issuers, the Servicer,
the Transferor, the CP Issuer and the Collateral Agent hereby submits to
the non-exclusive jurisdiction of the Supreme Court of the State of New
York, County of New York and the United States District Court for the
Southern District of New York (collectively, the "Subject Courts") in
respect of any suit, action or proceeding arising out of this Agreement,
the Security Agreement, the Pooling and Servicing Agreement and the other
agreements contemplated hereby and thereby. Each of the Servicer and the
CP Issuer hereby waives any objection it may have to the laying of venue of
any such suit, action or proceeding in any of the Subject Courts, and to
the fullest extent permitted by applicable law, any claim that any such
suit, action or proceeding brought in any of the Subject Courts has been
brought in an inconvenient forum. Each of the Servicer, the Transferor,
the CP Issuer and the Collateral Agent agrees that service of all writs,
process and summonses in any suit, action or proceeding may be delivered by
the mailing thereof by first-class mail, postage prepaid, to the Servicer,
the Transferor, the CP Issuer or the Collateral Agent respectively, at its
address set forth in Section 5.04 hereof.
Section 5.17. Limitation of Liability and Collateral Agent's
Obligations. It is expressly understood and agreed by the parties hereto
that, with respect to Chemical Bank acting in its capacity as Collateral
Agent and not in its capacity as LOC Issuer, this Agreement is executed by
Chemical Bank not in its corporate and individual capacity but solely as
Collateral Agent under the Security Agreement in the exercise of the power
and authority conferred and vested in it as such Collateral Agent. It is
further understood and agreed that Chemical Bank as Collateral Agent shall
not be personally liable for any breach of any representation, warranty or
covenant of the CP Issuer, or the LOC Issuers and the holders of Commercial
Paper, contained herein or in any of the certificates, notices or
agreements delivered hereunder and nothing herein contained shall be
construed as creating any liability on Chemical Bank in its corporate and
individual capacity (other than in its capacity as an LOC Issuer hereunder)
to make any payment or to perform any covenant, agreement or undertaking
contained herein, all such liability being expressly waived by each of the
parties hereto, and that the parties hereto shall look solely to the
Variable Funding Certificate for the payment of any amounts due and payable
on account of any LOC and for the payment, performance or other
satisfaction of this Agreement and any claim against the CP Issuer or the
Collateral Agent by reason of the transactions contemplated hereby.
Section 5.18. No Bankruptcy Petition Against the CP Issuer. Each LOC
Issuer (solely in its capacity as LOC Issuer) and the Collateral Agent
(solely in its capacity as Collateral Agent) severally and not jointly,
hereby covenants and agrees that, prior to the date which is one year and
one day after the payment in full of all outstanding Commercial Paper, Loan
Notes and LOC Disbursements, it will not institute against, or join any
other Person in instituting against, the CP Issuer any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceeding under the laws of the United States or any state of the
United States.
Section 5.19. Amendment and Waiver. (a) The CP Issuer shall not
consent to any amendment, waiver, supplement, restatement, or other
modification to any provision hereof or any other Facilities Document, the
Purchase Agreement or any Subsidiary Purchase Agreement unless the same
shall be consented to by the Required LOC Issuers; provided that any
amendment that would (i) increase the amount of the LOC Commitment, (ii)
reduce any fees or commissions, (iii) result in a reduction in any interest
rate, extension of the date for any repayments of any LOC Disbursements, or
forgiveness of any debt, (iv) alter the allocation or priority of payment
of Collections set forth in Sections 8 and 9 of the Security Agreement, (v)
release the Lien of any Collateral (except as expressly permitted by the
Facilities Documents), (vi) change this Section or the percentage specified
in the definition of Required LOC Issuers, (vii) extend the Expiration
Date, or (viii) decrease the percentage set forth in the definition of
Discount Factor, may only be amended, waived, supplemented, restated,
discharged or terminated with the prior written consent of the CP Issuer
and each LOC Issuer.
(b) No amendment, waiver, supplement, restatement, discharge or
termination contemplated under this Section 5.19 shall be effective without
prior written notice from each of S&P and Fitch, respectively, to the
effect that such amendment, waiver, supplement, restatement, discharge or
termination would not result in a withdrawal or reduction of the then-
current rating on the Commercial Paper by such rating agency.
Section 5.20. Waiver And Jury Trial. EACH OF THE CP ISSUER, THE
COLLATERAL AGENT, AND EACH OF THE LOC ISSUERS HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO ANY OF THE FACILITIES DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY.
Please signify your agreement and acceptance of the foregoing by executing
this Agreement in the space provided below.
DISTRIBUTION FUNDING CORPORATION
/s/
By: _____________________________
Authorized Signatory
INGRAM INDUSTRIES INC.,
/s/
By: _____________________________
Authorized Signatory
INGRAM FUNDING INC.,
/s/
By: _____________________________
Authorized Signatory
CHEMICAL BANK, as Collateral Agent
/s/
By: _____________________________
Authorized Signatory
CHEMICAL BANK, as LOC Issuer
/s/
By: _____________________________
Authorized Signatory
NATIONSBANK OF NORTH CAROLINA, N.A.
as LOC Issuer
/s/
By: _____________________________
Authorized Signatory
EXHIBIT A
to the Letter of Credit
Reimbursement Agreement
IRREVOCABLE LETTER OF CREDIT
[Name of LOC Issuer]
[Address]
February 10, 1993
Letter of Credit No. _
TO: Chemical Bank
in its capacity as Collateral Agent
450 W. 33rd Street
15th Floor
New York, New York 10001
Attention: Corporate Trustee Administration
Department
At the request and on the instructions of Distribution Funding
Corporation (the "CP Issuer"), the undersigned issuing bank (the "LOC
Issuer") hereby establishes in your favor, as Collateral Agent, pursuant to
that certain Letter of Credit Reimbursement Agreement, dated as of February
10, 1993 (as amended from time to time, the "LOC Reimbursement Agreement"),
among the LOC Issuers named therein, you, the Transferor, the Servicer, and
the CP Issuer, this irrevocable Letter of Credit (hereinafter the "LOC") in
the amount of $______ (the "LOC Commitment Amount"), as reduced and reinstated
from time to time as herein provided, effective immediately and expiring at
4:30 p.m. on December 31, 1995 [unless otherwise extended] (the "LOC
Expiration Date"). All capitalized terms used herein and not otherwise
defined shall have the meanings assigned thereto in the LOC Reimbursement
Agreement and Annex X thereto.
Only you may make drawings under this LOC. Upon payment of the
amount specified in a Drawing Certificate (as defined below) and sight
draft (if required) hereunder, the LOC Issuer shall be fully discharged of
its obligation under this LOC to the extent of such Drawing Certificate
and sight draft (if required), and the LOC Issuer shall not thereafter be
obligated to make any further payments under this LOC with respect to such
drawing. By: paying to you or for your account any amount drawn in
accordance with this LOC, the LOC Issuer makes no representation as to the
correctness of the amount drawn.
The amount available to be drawn under this LOC, at any time, shall
equal the amount of the LOC Commitment (as in effect from time to time),
shall be reduced by an amount equal to each drawing honored by the LOC
Issuer, and shall be reinstated [upon the reimbursement to the LOC Issuer
of any drawing (or portion thereof) by the amount of such reimbursement]
[For Chemical Bank -- (a) on each Wednesday, to the extent of funds in the
LOC Payment Account on such day, and (b) at any other time that funds in
the LOC Payment Account equal or exceed $100,000, to the extent of such
funds; provided, however, that if a Drawing Certificate for a Charge-Off
Drawing is in excess of the LOC Commitment Amount in effect on such day the
LOC Commitment Amount shall be reinstated to the extent of such funds in
the LOC Payment Account on such day. LOC Disbursements under this LOC, the
reimbursement of which has not caused a reinstatement of this LOC pursuant
to the previous sentence, shall not, in the aggregate, exceed the LOC
Commitment Amount. Drawings hereunder may be made from and after the date
of issuance hereof to and including the LOC Expiration Date.
Subject to the further provisions of this LOC, drawings may be made
by you from time to time hereunder by presentation to the LOC Issuer of a
drawing certificate (a "Drawing Certificate") in the form of Annex A
(completed) with respect to Charge-Off Drawings or Annex B (completed) with
respect to Special Drawings either (i) in the form of a letter on your
letterhead accompanied by your sight draft stating on its face "Drawn Under
Irrevocable Letter of Credit, [Name of LOC Issuer No. ______________]"
or (ii) in the form of a writing transmitted by authenticated
teletransmission. Such Drawing Certificate and sight draft (if required)
shall be dated the date of presentation and shall be presented at the
Office of the LOC Issuer located at ___________________ , Attention
______________________, Telephone: (_____________) ____________________,
Telecopier (_____________) ___________________.
The LOC Issuer hereby agrees that all drawings hereunder made in
compliance with the terms of this LOC will be duly honored upon delivery of
the Drawing Certificate and sight draft (if required) as specified above
and if presented at the LOC Issuer's aforesaid office on or before the LOC
Expiration Date. Drawings may be made by you under this LOC at any time
during the LOC Issuer's business hours of 8:30 A.M. to 4:30 P.M. at its
aforesaid address, on a Business Day. If a Drawing Certificate and sight
draft (if required) is presented by you hereunder at or prior to 11:00 A.M.
(New York City time) on any Business Day and provided that such demand for
payment and the documents presented in connection therewith conform to the
terms and conditions hereof, payment shall be made to you of the amount
demanded, in immediately available funds by 3:00 P.M. New York City time
on such Business Day. If a Drawing Certificate and sight draft (if
required) presented to the LOC Issuer by you hereunder does not, in any
instance, conform to the terms and conditions of this LOC, the LOC Issuer
shall give you prompt notice that such Drawing Certificate and/or sight
draft does not comply with the terms and conditions of this LOC, stating
the reasons therefor and that it is holding any documents at your disposal
or is returning the same to you, as the LOC Issuer may elect.
This LOC shall terminate on the earlier to occur of (a) the LOC
Expiration Date or (b) upon receipt by the LOC Issuer from the beneficiary
of a duly completed and executed certificate in the form of Annex C
attached hereto. Unless the LOC Issuer is in default with respect to its
obligations under this LOC, you shall surrender this LOC to the LOC Issuer
promptly following the LOC Expiration Date.
You may transfer your rights under this LOC in their entirety (but
not in part) to any transferee who has succeeded to you as Collateral Agent
and such transferred rights may be successively transferred. Transfer of
your rights under this LOC to any such transferee shall be effected upon
the presentation to the LOC Issuer of this LOC accompanied by a transfer
letter in the form attached hereto as Annex D. This LOC shall be governed
by and construed in accordance with the laws of the State of New York. As
to matters not covered by the laws of the State of New York, this LOC shall
be subject to the Uniform Customs and Practice for Documentary Credits
(1983 Revision), International Chamber of Commerce, Publication No. 400
(the "Uniform Customs"). Communications with respect to this LOC shall be
in writing and shall be addressed to the LOC Issuer at its address set
forth above, specifically referring therein to this LOC.
This LOC sets forth in full the undertaking of the LOC Issuer, and
such undertaking shall not in any way be modified, amended, amplified or
limited by reference to any document, instrument or agreement referred to
herein; and any such reference shall not be deemed to incorporate herein by
reference any document, instrument or agreement or provision thereof except
for such definitions.
Very truly yours,
_________________________________
[Name of LOC Issuer]
By: _____________________________
Authorized Signatory
ANNEX A TO
LETTER OF CREDIT
CERTIFICATE FOR "CHARGE-OFF DRAWING"
__________________, 19__
[Name of LOC Issuer]
[Address]
Attention:
Re: Irrevocable Letter of Credit No.
Gentlemen:
The undersigned, a duly authorized officer of Chemical Bank, as collateral
agent (the "Collateral Agents) under a certain Security Agreement, dated as
of February 10, 1993, hereby certifies to [Name of LOC Issuer] with
reference to Irrevocable Letter of Credit No. _________ (the "LOC") (any
capitalized term used herein and not defined shall have the meaning set
forth in the LOC) issued by the LOC Issuer, in favor of the Collateral
Agent, that:
1. The undersigned is the Collateral Agent under the Security
Agreement.
2. As of the date set forth above, pursuant to the Daily Report
delivered to the under-signed on the date hereof, the drawing
requested hereunder does not exceed the LOC Issuer's Percentage of
the Available LOC Amount.
3. Ingram Industries Inc., as Servicer under the Pooling and
Servicing Agreement or a successor thereto, has instructed the
undersigned pursuant to Section 4.05(a) of the Pooling and Servicing
Agreement with respect to the [Payment Date] [Determination Date]
occurring on [insert applicable Determination Date or Payment Date]
that (a) losses have been allocated to the Variable Funding
Certificate, resulting in a write-down of $______ and (b) $______
should be drawn under the LOC in accordance with Section 2.02(a) of
the LOC Reimbursement Agreement.
4. The undersigned hereby requests payment of a Charge-Off
Drawing under the LOC in the amount of $______, and directs that such
payment be made to its account no. _________ at [Name of Bank].
5. All amounts received by the Collateral Agent from the LOC
Issuer in respect of this certificate shall be deposited in the
Collateral Account for disposition in accordance with the Security
Agreement.
IN WITNESS WHEREOF, the Collateral Agent has executed and delivered this
certificate as of this ____________ day of ___________, 19__.
CHEMICAL BANK, as Collateral Agent
By: _____________________________
Authorized Signatory
ANNEX B TO
LETTER OF CREDIT NO.
CERTIFICATE FOR "SPECIAL DRAWING"
__________________, 19__
[Name of LOC Issuer]
[Address]
Attention:
Re: Irrevocable Letter of Credit No.
Gentlemen:
The undersigned, a duly authorized officer of Chemical Bank, as Collateral
Agent (the "Collateral Agent") under a certain Security Agreement, dated as
of February 10, 1993, hereby certifies to [Name of Downgraded LOC Issuer]
(the "Downgraded LOC Issuer") with reference to irrevocable Letter of
Credit No. _________ (the "LOC") (any capitalized term used herein and not
defined shall have the meaning set forth in the LOC) issued, in favor of
the Collateral Agent that:
1. The Collateral Agent is the Collateral Agent under the
Security Agreement.
2. A Responsible Officer of the Collateral Agent has obtained
knowledge that the shortterm debt rating of the Downgraded LOC
Issuer has been reduced, suspended or withdrawn and the Rating
Agencies have not confirmed that the then current rating of the
Commercial Paper will not be reduced, suspended or withdrawn by such
Rating Agencies because of such reduction, suspension or withdrawal
of such rating of the Downgraded LOC Issuer.
3. The undersigned hereby requests payment of a Special
Drawing under the LOC in the amount of $______, which amount equals
the Downgraded LOC Issuer's Percentage of the LOC Commitment on the
Business Day preceding the date hereof, as specified in the Daily
Report or Settlement Statement delivered by the Servicer pursuant to
Section 3.04 of the Pooling and Servicing Agreement (and after
giving effect to any contemporaneous drawings under the LOC being
made with respect to the related Settlement Date or Payment Date).
4. All amounts received by the Collateral Agent from the
Downgraded LOC Issuer in respect of this certificate shall be
deposited in the LOC Escrow Account and applied in accordance with
Section 2.03 of the LOC Reimbursement Agreement.
IN WITNESS WHEREOF, the Collateral Agent has executed and delivered
this certificate as of this _____________ day of __________________, 19__.
CHEMICAL BANK, as Collateral Agent
By: _____________________________
Authorized Signatory
ANNEX C TO
LETTER OF CREDIT NO.
CERTIFICATE FOR THE TERMINATION
OF LETTER OF CREDIT NO. __________
[Name of LOC Issuer]
[Address]
Attention:
The undersigned, a duly authorized officer of Chemical Bank (the
"Collateral Agent"), hereby certifies to [Name of LOC Issuer], with
reference to Irrevocable Letter of Credit No. __________ (the "LOC"; any
capitalized terms used herein and not defined shall have the meaning set
forth in the LOC) issued by [Name of LOC Issuer] in favor of the Collateral
Agent, that the LOC shall terminate on [Date of Termination]. Accordingly,
we herewith return to you for cancellation the LOC, which is terminated, as
of the date hereof, pursuant to its terms.
Dated: ________________
CHEMICAL BANK, as Collateral Agent
By: _____________________________
Authorized Officer
ANNEX D TO
LETTER OF CREDIT NO. ____________
__________________, 19__
[Name of LOC Issuer]
[Address]
Re: Irrevocable Letter of Credit No. ____________
Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably transfers
to:
__________________________
(Name of Transferee)
__________________________
(Address)
all rights of the undersigned beneficiary to draw under the above-captioned
Letter of Credit (the "LOC"). The transferee has succeeded the undersigned as
Collateral Agent under the Security Agreement (as defined in the LOC).
By: this transfer, all rights of the undersigned beneficiary in the LOC
are transferred to the transferee and the transferee shall hereafter have
the sole rights as beneficiary thereof, including sole rights relating to
any amendments whether increases or extensions or other amendments and
whether now existing or hereafter made. All amendments are to be advised
direct to the transferee without necessity of any consent of or notice to
the undersigned beneficiary.
The transferee hereby directs you to make all payments of drafts
drawn by it under the LOC in immediately available funds to account number
__________ at ______________________________.
We ask you to endorse the transfer on the reverse thereof, and forward it
directly to the transferee with your customary notice of transfer.
Yours very truly,
SIGNATURE AUTHENTICATED
_____________________________ _____________________________
(Bank) Signature of Beneflclary
_____________________________
(Authorized Signature)
SIGNATURE AUTHENTICATED
_____________________________ _____________________________
(Bank) Signature of Transferee
_____________________________
(Authorized Signature)
Schedule 1
Percentage of LOC Commitment
Chemical Bank 77.1430%
NationsBank of North Carolina, N.A. 11.4285%
The Bank of Nova Scotia 11.4285%
Schedule 2
Notices
NATIONSBANK OF NORTH CAROLINA, N.A.
NationsBank of North Carolina, N.A.
One NationsBank Plaza
Charlotte, North Carolina 28255
Attention: Corporate Lending Support,
Elizabeth A. Garver
Telephone: 704-386-8382
Telecopy: 704-386-8694
with a copy to
NationsBank of North Carolina, N.A.
One NationsBank Plaza
Fifth Floor
Nashville, TN 37239-1697
Attention: Samuel J. Belk, Vice President
Telephone: 615-749-3862
Telecopy: 615-749-4112
THE BANK OF NOVA SCOTIA
The Bank of Nova Scotia
Atlanta Agency
#55 Park Place
Suite 650
Atlanta, GA 30303
Attention: Patrick M. Brown, Representative
Telephone: 404-581-0807
Telecopy: 404-525-3833
CHEMICAL BANK
Notices pertaining to funding or payment obligations of Chemical:
Chemical Bank
270 Park Avenue, 10th Floor
New York, New York 10017
Attention: Andrew Stasiw
Telephone: 212-270-3867
Telecopy: 212-682-8937
All other notices to:
Chemical Bank
270 Park Avenue, 10th Floor
New York, New York 10017
Attention: John D. Mindnich, Jr., Vice President
Telephone: 212-270-3637
Telecopy: 212-270-3279
Schedule 3
Initial Participants
The Industrial Bank of Japan, Limited,
Atlanta Agency
NBD Bank, N.A.
First American National Bank
First Bank National Association
DG Bank
The First National Bank of Louisville
Third National Bank
Credit Lyonnais Atlanta/
Credit Lyonnais Cayman Island Branch
Bank of Scotland
ABN AMRO Bank N.V.
Generale Banque, New York Branch
EXHIBIT 10.32
LIQUIDITY AGREEMENT
Dated as of February 10, 1993
Among
DISTRIBUTION FUNDING CORPORATION,
INGRAM FUNDING INC.,
INGRAM INDUSTRIES INC.,
THE BANKS NAMED HEREIN
and
CHEMICAL BANK,
as Liquidity Agent
with
THE BANK OF NOVA SCOTIA,
NATIONSBANK OF NORTH CAROLINA, N.A. and
THE INDUSTRIAL BANK OF JAPAN, LIMITED., ATLANTA AGENCY,
as Lead Managers
TABLE OF CONTENTS
PAGE
----
ARTICLE I
Definitions and Accounting Terms
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . 2
SECTION 1.02. Accounting and Financial Determinations . . 2
ARTICLE II
Commercial Paper Operations
SECTION 2.01. Issuance of Commercial Paper . . . . . . . . 3
SECTION 2.02. Commercial Paper Account; Payment of
Commercial Paper. . . . . . . . . . . . . . 5
ARTICLE III
Loans
SECTION 3.01. The Revolving Loans and the Refunding
Loans. . . . . . . . . . . . . . . . . . . 6
SECTION 3.02. Revolving Loans . . . . . . . . . . . . . . 8
SECTION 3.03. Refunding Loans . . . . . . . . . . . . . . 9
SECTION 3.04. Disbursement of Funds . . . . . . . . . . . 11
SECTION 3.05. The Loan Notes . . . . . . . . . . . . . . 13
SECTION 3.06. Interest . . . . . . . . . . . . . . . . . 14
SECTION 3.07. Commitment Fees . . . . . . . . . . . . . . 14
SECTION 3.08. Minimum Amounts of Tranches . . . . . . . . 15
SECTION 3.09. Requirements of Law . . . . . . . . . . . . 15
SECTION 3.10. Taxes . . . . . . . . . . . . . . . . . . . 18
SECTION 3.11. Computation of Interest and Fees . . . . . 20
SECTION 3.12. Pro Rata Treatment and Payments . . . . . . 21
SECTION 3.13. Inability to Determine Interest Rate. . . . 22
SECTION 3.14. Downgrading of Banks. . . . . . . . . . . . 23
SECTION 3.15. Illegality. . . . . . . . . . . . . . . . . 24
SECTION 3.16. Indemnity . . . . . . . . . . . . . . . . . 24
SECTION 3.17. Revolving Loan Conversion and
Continuation Options . . . . . . . . . . . 25
SECTION 3.18. Eurodollar Reserve Costs. . . . . . . . . . 26
SECTION 3.19. Procedure for Non-Rata Loans. . . . . . . . 27
SECTION 3.20. Procedure for Loans when Non-Rata Loans
Outstanding. . . . . . . . . . . . . . . . 28
ARTICLE IV
Other Credit Terms
SECTION 4.01. Reduction and Termination of Liquidity
Commitment . . . . . . . . . . . . . . . . 29
SECTION 4.02. Expiration of Liquidity Commitment. . . . . 30
SECTION 4.03. Use of Proceeds . . . . . . . . . . . . . . 32
ARTICLE V
Payments
SECTION 5.01. Payments on Nonbusiness Days. . . . . . . . 33
SECTION 5.02. Optional and Mandatory Prepayments. . . . . 33
SECTION 5.03. Attachments . . . . . . . . . . . . . . . . 36
SECTION 5.04. Method and Place of Payment, etc. . . . . . 36
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Effectiveness . . . . . . . . 37
SECTION 6.02. Conditions to Each Credit Utilization . . . 43
SECTION 6.03. Conditions Precedent to the Making of
Each Refunding Loan. . . . . . . . . . . . 46
ARTICLE VII
Covenants
SECTION 7.01. Covenants of the CP Issuer. . . . . . . . . 47
SECTION 7.02. Covenants of Ingram . . . . . . . . . . . . 52
SECTION 7.03. Covenants of Transferor . . . . . . . . . . 56
ARTICLE VIII
Events of Default
SECTION 8.01. Events of Default . . . . . . . . . . . . . 56
ARTICLE IX
Representations and Warranties
SECTION 9.01. Representations and Warranties of the
CP Issuer. . . . . . . . . . . . . . . . . 60
SECTION 9.02. Representations and Warranties of
Ingram . . . . . . . . . . . . . . . . . . 62
SECTION 9.03. Representations and Warranties
of Funding . . . . . . . . . . . . . . . . 63
ARTICLE X
Miscellaneous
SECTION 10.01. Computations . . . . . . . . . . . . . . . 65
SECTION 10.02. Exercise of Rights . . . . . . . . . . . . 65
SECTION 10.03. Amendment and Waiver . . . . . . . . . . . 66
SECTION 10.04. Expenses; Indemnity. . . . . . . . . . . . 67
SECTION 10.05. Successors and Assigns; Descriptive
Headings. . . . . . . . . . . . . . . . . 69
SECTION 10.06. Notices, Requests, Demands . . . . . . . . 73
SECTION 10.07. Survival of Representations and
Warranties . . . . . . . . . . . . . . . 76
SECTION 10.08. Counterparts . . . . . . . . . . . . . . . 76
SECTION 10.09. Adjustments. . . . . . . . . . . . . . . . 76
SECTION 10.10. Further Assurances . . . . . . . . . . . . 77
SECTION 10.11. No Bankruptcy Petition Against the CP
Issuer. . . . . . . . . . . . . . . . . . 77
SECTION 10.12. No Recourse. . . . . . . . . . . . . . . . 78
SECTION 10.13. Appointment and Rights of the Liquidity
Agent . . . . . . . . . . . . . . . . . . 78
SECTION 10.14. Resignation by the Liquidity Agent . . . . 82
SECTION 10.15. Representation and Warranty and
Covenants of the Banks and the
Liquidity Agent . . . . . . . . . . . . . 82
SECTION 10.16. [Reserved] . . . . . . . . . . . . . . . . 84
SECTION 10.17. Third-Party Beneficiaries. . . . . . . . . 84
SECTION 10.18. Governing Law. . . . . . . . . . . . . . . 84
SECTION 10.19. Waiver And Jury Trial. . . . . . . . . . . 84
SECTION 10.20. Jurisdiction; Consent to Service of
Process . . . . . . . . . . . . . . . . . 85
SECTION 10.21. Entire Agreement . . . . . . . . . . . . . 85
SECTION 10.22. Acknowledgements . . . . . . . . . . . . . 86
EXHIBIT A Form of Revolving Loan Note
EXHIBIT B Form of Refunding Loan Note
EXHIBIT C Form of Pooling and Servicing Agreement
EXHIBIT D Form of Depositary Agreement
EXHIBIT E Form of Security Agreement
EXHIBIT F Form of Assignment and Acceptance
EXHIBIT G Form of Notice of Revolving Borrowing
EXHIBIT H Form of Notice of Refunding Borrowing
EXHIBIT I Form of Opinion of Counsel to the CP Issuer
EXHIBIT J Form of Opinion of Counsel to the Trustee
EXHIBIT K Form of Opinion of Counsel to the Banks
EXHIBIT L Form of Opinion of Domestic Counsel to the LOC
Issuers
EXHIBIT M Form of Opinion of Foreign Counsel to the LOC
Issuers
SCHEDULE 1 Percentage of Liquidity Commitments
SCHEDULE 2 Notices
SCHEDULE 3 List of Initial Participants
ANNEX X Definitions
LIQUIDITY AGREEMENT dated as of February 10, 1993, among DISTRIBUTION
FUNDING CORPORATION, a Delaware corporation (the "CP Issuer"), INGRAM
FUNDING INC., a Delaware corporation (the "Transferor" or "Funding"),
INGRAM INDUSTRIES INC., a Tennessee corporation ("Ingram"), the banks
from time to time parties hereto (each, together with its successors and
assigns, a "Bank" and collectively, together with their successors and
assigns, the "Banks") and CHEMICAL BANK, as agent for the Banks (together
with its successors and assigns in such capacity, the "Liquidity Agent"),
with The Bank of Nova Scotia, NationsBank of North Carolina, N.A. and the
Industrial Bank of Japan, Limited, Atlanta Agency, as Lead Managers.
WHEREAS, the CP Issuer proposes to issue and sell its promissory notes in
the commercial paper market and to utilize the net proceeds thereof to
acquire from the Transferor the Variable Funding Certificate issued by
Ingram Funding Master Trust pursuant to a Pooling and Servicing Agreement
dated as of February 10, 1993 among the Transferor, as Transferor, Ingram,
as Servicer, and Chemical Bank, as Trustee;
WHEREAS, as a condition to the CP Issuer's acquisition of the Variable
Funding Certificate, the Transferor has made application to the Banks for
the commitment of the Banks to make loans to the CP Issuer, the proceeds of
which shall be used in accordance with Section 4.03;
WHEREAS, Ingram has conveyed the Receivables supporting the Variable
Funding Certificate to the Transferor (prior to the Transferor's conveyance
of such Receivables to the Trust), will act as Servicer thereof, and is
willing to make certain agreements for the benefit of the Banks as provided
herein; and
WHEREAS, subject to the terms and conditions set forth herein, the
Banks are willing to make loans to the CP Issuer.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions and Accounting Terms
SECTION 1.01 Definitions. All capitalized terms used herein and not
otherwise defined shall have the meanings assigned thereto in Annex X
annexed hereto.
SECTION 1.02 Accounting and Financial Determinations. (a) Unless
otherwise specified, all accounting terms used herein or in any other
Facilities Document shall be interpreted, and all accounting determinations
and computations hereunder or thereunder shall be made, in accordance with
those U.S. generally accepted accounting principles ("GAAP") as applied in
the preparation of the financial statements of Ingram and its consolidated
Subsidiaries or of the CP Issuer as the case may be.
(b) If, after the Closing Date, there shall be any change to
Ingram's fiscal year, or any modification in GAAP used in the preparation
of the financial statements delivered pursuant to the Facilities Documents
(whether such modification is adopted or imposed by FASB, the American
Institute of Certified Public Accounts, the U.S. Securities and Exchange
Commission or any other professional or governmental body) which changes
result in a change in the method of calculation of financial covenants,
standards or terms found in this Agreement, the parties hereto agree
promptly to enter into negotiations in order to amend such financial
covenants, standards or terms so as to reflect equitably such changes, with
the desired result that the evaluations of Ingram or, as the case may be,
any of its affiliates' financial condition shall be the same after such
changes as if such changes had not been made; provided, however, that until
the parties hereto have reached a definitive agreement on such amendments,
Ingram's or, as the case may be, each such affiliates' financial condition
shall continue to be evaluated on the same principles as those used in the
preparation of the financial statements previously delivered pursuant to
the Facilities Documents.
ARTICLE II
Commercial Paper Operations
SECTION 2.01 Issuance of Commercial Paper.
(a) Subject to the provisions of this Agreement and the
other Facilities Documents, the CP Issuer may, from time to time on or
after the Closing Date and prior to the fifth Business Day preceding the
latest Expiration Date then in effect, issue and sell Commercial Paper.
Notwithstanding the foregoing, if the CP Issuer, the CP Dealer and the
Depositary are in receipt of instructions then in effect from the Liquidity
Agent, given in accordance with this Section 2.01(a), not to issue or
deliver Commercial Paper because (i) the Liquidity Commitment shall have
been terminated hereunder pursuant to Section 4.01(a) or 4.01(b), (ii) the
Liquidity Commitment is otherwise terminated in whole for any reason in
accordance herewith, (iii) the issuance of Commercial Paper is prohibited
by the provisions of Section 5.03, (iv) the conditions precedent specified
in Section 6.02 with respect to the issuance of Commercial Paper have not
been satisfied, or (v) the rating by S&P or Fitch on the Commercial Paper
shall be withdrawn or reduced below A-1 or F-1, respectively (provided,
that if such reduction or withdrawal results from the withdrawal or
downgrading of a Bank's rating by S&P or Fitch, the CP Issuer shall not be
prohibited from issuing Commercial Paper pursuant to this clause (v) until
the 60th day after the first date on which such rating of such Bank was
withdrawn or downgraded, and then only if during such period the rating(s)
on the Commercial Paper so withdrawn or reduced shall not have been
restored); then, in all cases described in (i) through (v) above, the CP
Issuer shall, in addition to any other prohibition contained herein or in
any other Facilities Document, be prohibited from issuing Commercial Paper
and shall not issue Commercial Paper, other than (1) all Commercial Paper
sold by the CP Dealer prior to the receipt of such instructions from the
Liquidity Agent, (2) Commercial Paper sold after receipt of instructions
from the Liquidity Agent in accordance with Section 4(e) of the CP Dealer
Agreement after the time of receipt of such instructions and (3) the
Commercial Paper sold in compliance with the parenthetical in clause (v)
above; provided, that the Liquidity Agent shall have no obligation to
deliver any such instructions except promptly upon the instructions of the
Required Banks; provided, further, that any delivery by the Liquidity Agent
of any such Instructions shall be subject to the provisions of Section
10.13(c). Any instructions from the Liquidity Agent to the CP Issuer, the
CP Dealer and the Depositary in accordance with this Section 2.01(a) shall
specify one or more of the events described in clauses (i) through (v) as
being the reason(s) to cease issuing and delivering Commercial Paper. The
Liquidity Agent agrees that it shall only instruct the CP Issuer, the CP
Dealer and the Depositary not to issue and sell Commercial Paper if there
shall have occurred one or more of the events described in clauses (i)
through (v) of this Section 2.01(a). Additionally, if the CP Issuer has
actual knowledge that one or more of the events described in clauses (i)
through (v) above has occurred, the CP Issuer agrees that it shall not sell
or issue Commercial Paper, unless the CP Issuer shall have notified the
Liquidity Agent of the occurrence of such event and the Liquidity Agent (as
directed by the Required Banks) shall not have instructed the CP Issuer,
the Depositary and the CP Dealer to cease issuing Commercial Paper.
Concurrently with the giving of any such instructions to the CP Issuer, the
CP Dealer, and the Depositary, the Liquidity Agent shall give notice
thereof to the Collateral Agent, the Trustee, the Transferor and the Rating
Agencies known to it to have provided investment ratings with respect to
the Commercial Paper, but failure to do so shall not impair the
effectiveness of such instructions.
(b) The CP Issuer agrees that each note constituting
Commercial Paper shall (i) be in the form of Exhibit A to the Depositary
Agreement and be completed in accordance with this Agreement and the
Depositary Agreement, (ii) be dated the date of issuance thereof, (iii) be
made payable to the order of a named payee or bearer, (iv) subject to the
penultimate sentence of this Section 2.01(b), have a maturity date which
shall not be later than the fifth Business Day prior to the latest
Expiration Date then in effect, (v) have a CP Matured Value of $250,000 or
an integral multiple of $1,000 in excess of S250,000 and (vi) be exempt
from the registration requirements of the Securities Act pursuant to
Section 4(2) thereof; provided, that no issuance of Commercial Paper shall
be made if, after giving effect to such issuance and the use of the
proceeds thereof, Advances would exceed the sum of (i) the Available
Liquidity Commitment and (ii) the Capitalized Interest Component on the
date of issuance; provided, further, that no issuance of Commercial Paper
shall be made if, after giving effect to such issuance and the use of the
proceeds thereof, the sum of (i) Advances and (ii) the Interest Component
of all Outstanding Commercial Paper would exceed the Adjusted Liquidity
Commitment; and provided, further, (i) that no Commercial Paper shall have
a maturity date later than the 180th day next succeeding the date of
issuance of such Commercial Paper, and (ii) on any day no more than 75% of
all Outstanding Commercial Paper shall have a maturity date of later than
the 90th day next succeeding such date. If any Bank has notified the
Liquidity Agent pursuant to Section 4.02(a) hereof that such Bank will not
extend its Percentage of the Liquidity Commitment beyond the Expiration
Date then in effect with respect to such Bank and such Bank has not been
replaced by the CP Issuer, then (A) the Aggregate CP Matured Value of
Outstanding Commercial Paper maturing on or after such Expiration Date
shall not exceed the Adjusted Liquidity Commitment then in effect minus
such Bank's Percentage thereof (the "Reduced Commitment Amount") and (B) in
connection therewith, during the period commencing on the 60th day prior to
such Expiration Date and ending on such Expiration Date, the CP Issuer
shall manage the issuance and maturities of the Commercial Paper such that
the Aggregate CP Matured Value of Outstanding Commercial Paper during such
60-day period shall be gradually reduced to less than or equal to the
Reduced Commitment Amount. Subject to the provisions of the Depositary
Agreement, all Commercial Paper shall be delivered and issued against
payment therefor in immediately available funds on the date of issuance,
and otherwise in accordance with the terms of this Agreement and the
Depositary Agreement.
SECTION 2.02 Commercial Paper Account; Payment of Commercial Paper.
Contemporaneously with the execution and delivery by the CP Issuer of the
Depositary Agreement, and for the purposes of this Agreement, the Security
Agreement and of the Depositary Agreement, the Depositary shall establish
at its corporate trust office in the City of New York a segregated trust
account for the exclusive benefit of the holders of the outstanding
Commercial Paper (said account being referred to herein and in the
Depositary Agreement as the Commercial Paper Account"), over which the
Depositary shall have exclusive control and sole right of withdrawal.
Proceeds of the sale of Commercial Paper shall be deposited in the
Commercial Paper Account only to the extent necessary to pay matured and
concurrently maturing Commercial Paper, whether or not presented to the
Depositary for payment; otherwise proceeds of the sale of Commercial Paper
shall be deposited in the Collateral Account and applied according to the
terms of the Security Agreement.
ARTICLE III
Loans
SECTION 3.01 The Revolving Loans and the Refunding Loans; LOC
Disbursements.
(a) Subject to and upon the terms and conditions herein set
forth, each Bank severally agrees at any time and from time to time prior
to (i) the Amortization Period Commencement Date with respect to the
Variable Funding Certificate, to make Revolving Loans to the CP Issuer
(provided, that no Revolving Loan shall be made as a C/D Rate Loan or a
Eurodollar Rate Loan after the day that is 30 days or one month,
respectively, prior to-any known Amortization Period Commencement Date) and
(ii) the Expiration Date then applicable to it, to make Refunding Loans to
the CP Issuer, which Loans may be repaid and reborrowed in accordance with
the provisions hereof and shall be made by the Banks pro rata on the basis
of their respective Percentages. Notwithstanding anything to the contrary
contained herein or in any writing delivered pursuant hereto, none of the
Banks shall be committed or obligated to make any Non-Rata Loans to the CP
Issuer at any time and the decision to make any Non-Rata Loan shall be
within the sole and absolute discretion of each of the Banks. Any Non-Rata
Loans that are made shall reduce the total amount available for Loans under
the Liquidity Commitment, but shall not reduce the commitment of any Bank
other than the Bank making the Non-Rata Loan.
(b) No Bank shall be required to make a Revolving Loan on
any day if such amount could be obtained through the issuance of Commercial
Paper on such day having an implied annual rate of interest less than the
sum of the Base Rate plus five percent on such day or to the extent that
the principal amount of such Revolving Loan would exceed, after giving
effect to such Revolving Loan and the use of the proceeds thereof, an
amount equal to such Bank's Percentage of the Unutilized Liquidity
Commitment; provided, that no Bank shall be required to make a Revolving
Loan if, after giving effect to such Revolving Loan, the aggregate
principal amount of such Bank's Loans (including Refunding Loans) would
exceed such Bank's Percentage of the Adjusted Liquidity Commitment.
(c) No Bank shall be required to make a Refunding Loan on
any day to the extent that, after giving effect to such Refunding Loan and
the use of the proceeds thereof, the principal amount of such Refunding
Loan, together with (i) the aggregate principal amount of such Bank's
Percentage of all other outstanding Loans (exclusive of Non-Rata Loans),
(ii) the principal amount of Non-Rata Loans outstanding from such Bank, and
(iii) such Bank's pro rata portion (determined by reference to its
Percentage) of the Principal Component of Outstanding Commercial Paper
would exceed the sum of
(A) such Bank's Percentage of (1) the Available Liquidity
Commitment plus (2) the Capitalized Interest Component on the date of the
making of such Refunding Loan,
(B) the lesser of (i) the excess of the Transferor Minimum
Amount over the Transferor Eligible Amount on such day, and (ii) the amount
of Credits on such day, and
(C) Specified Eligible Receivables on such day (without
duplication of amounts included under clause (B) above);
provided, that no Bank shall be required to make a Refunding Loan if, after
giving effect to such Loan and the use of the proceeds thereof, the
aggregate principal amount of such Bank's Loans (including Revolving Loans)
would exceed such Bank's Percentage of the Adjusted Liquidity Commitment.
For purposes of this Section 3.01(c), "Specified Eligible Receivables"
means at any day of calculation the aggregate amount of Principal
Receivables which are not Adjusted Eligible Principal Receivables on such
day but which were counted as Adjusted Eligible Principal Receivables on
the date on which any Loan or Commercial Paper maturing on such day of
calculation was made or issued (excluding Principal Receivables which have
been paid or which have become Defaulted Receivables). On any day on
which a Refunding Loan shall be requested, if the amount calculated under
(A) above is insufficient to permit such Refunding Loan to be made for the
full amount requested, the Liquidity Agent shall immediately determine and
advise the Banks as to the existence of amounts, if any, under subparagraph
(B) or (C) above.
(d) All Charge-Off Drawings made under the LOCs shall be
applied to reduce outstanding Advances (which application shall be deemed
to be simultaneous) so that, after giving effect to the application of the
proceeds of any Charge-Off Drawing, outstanding Advances together with the
aggregate outstanding LOC Disbursements shall not exceed the Liquidity
Commitment.
SECTION 3.02 Revolving Loans. (a) The CP Issuer shall give the
Liquidity Agent at the Notice Office written notice substantially in the
form of Exhibit G hereto (a "Notice of Revolving Borrowing") of each
Borrowing to be comprised of Revolving Loans, no later than 11:00 a.m.
(New York City time) (a) three Working Days prior to the proposed date of
such Borrowing, if all or any part of the requested Revolving Loans are to
be initially Eurodollar Loans, (b) two Business Days prior to the proposed
date of such Borrowing, if all or any part of the requested Revolving Loans
are to be initially C/D Rate Loans, or (c) on the proposed date of such
Borrowing, if all of the requested Revolving Loans are to be initially Base
Rate Loans. Each Notice of Revolving Borrowing shall specify (i) the
principal amount of such Borrowing, which shall be equal to (x) in the case
of Base Rate Loans, $5,000,000 or a whole multiple of $1,000,000 in excess
thereof (or, if the then Available Liquidity Commitment is less than
$5,000,000, such lesser amount) and (y) in the case of Eurodollar Loans or
C/D Rate Loans, $10,000,000 or a whole multiple of $1,000,000 in excess
thereof, (ii) the date of such Borrowing (which shall be a Business Day, in
the case of Domestic Dollar Loans, or a Working Day, in the case of
Eurodollar Loans), (iii) that the Commercial Paper market is unavailable to
the CP Issuer or that the imputed annual rate of interest for Commercial
Paper Notes that could have been issued on the date of the Notice of
Revolving Borrowing would have been in excess of the sum of the Base Rate
plus five per cent, (iv) that such Borrowing is to be a Revolving
Borrowing, (v) whether the Borrowing is to be of Eurodollar Loans, Base
Rate Loans, C/D Rate Loans or a combination thereof and (vi) if the
Borrowing is to be entirely or partly of Base Rate Loans, Eurodollar Loans
or C/D Rate Loans, the respective amounts of each such Type of Loan and the
respective lengths of the initial Interest Periods therefor. Subject to
and upon the terms and conditions herein set forth each Bank shall make a
Revolving Loan in a principal amount equal to its Percentage of the amount
requested in such Notice of Revolving Borrowing.
(b) Each Notice of Revolving Borrowing, once given, shall
not be revocable by the CP Issuer. The CP Issuer shall also deliver to the
Trustee and the Transferor a copy of such notices. The Liquidity Agent
shall notify each Bank of its receipt of a Notice of Revolving Borrowing by
12:00 noon (New York City time) on the day such notice is given.
(c) Each outstanding Revolving Loan shall mature on the
Expiration Date applicable to the Bank making such Loan; provided, however,
that such Revolving Loan made by such Bank shall be prepayable on any
Interest Payment Date without breakage costs and any other Business Day in
accordance with and upon payment of the breakage costs required by Sections
3.16 and 5.02.
(d) No Revolving Loan shall be made on or after the
Amortization Period Commencement Date. Any Revolving Loan outstanding on
the Amortization Period Commencement Date, if not repaid in full upon the
expiration of the then Interest Period applicable thereto, shall be
refinanced with a Refunding Loan.
SECTION 3.03 Refunding Loans. (a) If, on any Business Day that
Commercial Paper matures, the amount required to pay in full the CP Matured
Value of all Commercial Paper maturing on such day is more than the sum of
(i) the net amount obtained by the maximum issuance of Commercial Paper on
such day permitted under this Agreement and the other Facilities Documents
plus (ii) the amount available for payment of such Commercial Paper in the
Commercial Paper Account and the Collateral Account, after giving effect to
all transfers on such Business Day to such accounts required by the
Security Agreement (the amount of such excess, the "Commercial Paper
Deficit"), the Banks shall, upon the request of the CP Issuer or the
Depositary, as attorney-in-fact for the CP Issuer pursuant to Section 5(b)
of the Depositary Agreement, in accordance with Section 3.03(b), and
subject to and upon the terms and conditions of Section 6.03 and as
otherwise herein set forth, make Refunding Loans in an aggregate principal
amount equal to the lesser of (i) the Commercial Paper Deficit and (ii) the
maximum amount of Refunding Loans able to be made without contravening the
provisions of Section 3.01(c). For the purposes of this Section,
Commercial Paper maturing on any day which has been paid from an advance
made by the Depositary shall nonetheless be deemed to be unpaid. Refunding
Loans shall be made only as Base Rate Loans provided, that subject to
Section 3.02 and the other conditions thereto provided for in this
Agreement, Refunding Loans may be refinanced with Revolving Loans.
(b) The CP Issuer or the Depositary, as attorney-in-fact for
the CP Issuer pursuant to Section 5(b) of the Depositary Agreement, shall
give the Liquidity Agent telephonic notice promptly confirmed in writing at
the Notice Office substantially in the form of Exhibit H hereto (a "Notice
of Refunding Borrowing") of each Borrowing that is to be comprised of
Refunding Loans. Each such Notice of Refunding Borrowing shall set forth
(i) the aggregate principal amount of such Borrowing and (ii) that such
Borrowing is to be a Refunding Borrowing. Subject to and upon the terms
and conditions hereof, each Bank shall make a Refunding Loan in a principal
amount equal to its Percentage of the amount requested in such Notice of
Refunding Borrowing (x) if such Notice of Refunding Borrowing is received
by the Liquidity Agent prior to 12:00 noon (New York City time) on any
Business Day, on such Business Day, and (y) if such Notice of Refunding
Borrowing is not received by the Liquidity Agent prior to 12:00 noon (New
York City time) on any Business Day, on the Business Day next succeeding
such Business Day.
(c) Each Notice of Refunding Borrowing, once given, shall
not thereafter be revocable by the CP Issuer. The Liquidity Agent shall
also deliver to the Trustee and the Transferor a copy of such notices. The
Liquidity Agent shall notify each Bank of its receipt of a Notice of
Refunding Borrowing by 12:30 p.m., New York City time, on the day such
notice is given.
(d) Each outstanding Refunding Loan and Non-Pro Rata
Refunding Loan made by a Bank shall mature on the Expiration Date for such
Bank; provided, however that such Refunding Loan and Non-Pro Rata Refunding
Loan shall be prepayable (or refinanceable) at any time in accordance
herewith.
(e) If, on the fifth Business Day prior to the Expiration
Date with respect to any Bank which has notified the Liquidity Agent that
it will not extend its Percentage of the Liquidity Commitment pursuant to
Section 4.02(a) and if, notwithstanding the penultimate sentence of Section
2.01(b), the Aggregate CP Matured Value of Commercial Paper Outstanding on
such fifth prior Business Day exceeds the Reduced Commitment Amount, as
defined in such penultimate sentence, (such excess, the "Reduced Commitment
Excess") then, in accordance with the time periods contained in this
Section 3.03, the CP Issuer or the Depositary as its attorney-in-fact shall
request of the Liquidity Agent a Refunding Loan to be made by each such
Exiting Bank (a "Non Pro-Rata Refunding Loan") in an amount equal to such
Exiting Bank's allocable share (relative to other Banks, if any, not
extending their respective Percentages of the Liquidity Commitment based on
their respective existing Percentages of the Liquidity Commitment) of such
Reduced Commitment Excess to be made on such fifth prior Business Day.
Such notice shall be given by telephone, promptly confirmed in writing, and
shall be substantially in the form of Exhibit H hereto with appropriate
modifications. The Liquidity Agent shall, by 12:30 p.m., New York City
time, notify each Bank which is to make a Non Pro-Rata Refunding Loan on
such day. Each Bank shall make available the proceeds of its Loan in
accordance with Section 3.04(b). The Liquidity Agent shall notify the
Depositary of the amount, if any, of any such Non-Pro-Rata Refunding Loan
made or to be made on such fifth Business Day.
(f) Each Notice of Non Pro-Rata Refunding Borrowing, once
given, shall not thereafter be revocable by the CP Issuer. The Liquidity
Agent shall also deliver to the Trustee and the Transferor a copy of such
notices.
SECTION 3.04 Disbursement of Funds. (a) Not later than 2:30 p.m.
(New York City time) on the date specified in each Notice of Revolving
Borrowing as the proposed date of the Borrowing, each Bank, so long as such
Bank has received notice from the Liquidity Agent in accordance with the
final sentence of Section 3.02(b), will notify the Liquidity Agent whether
such Bank will make funds available by 3:00 p.m. and will make available in
freely transferable U.S. dollars and in immediately available or same day
funds its Percentage of such Revolving Loan at the Payment Office by 3:00
p.m. Unless the Liquidity Agent determines that any condition specified in
Section 6.02 has not been satisfied, the Liquidity Agent will remit the
aggregate of the amounts so made available by the Banks to the Collateral
Account not later than 3:00 p.m. (New York City time).
(b) Not later than 2:30 p.m. (New York City time) on the date
for a Refunding Loan, each Bank will notify the Liquidity Agent whether such
Bank will make funds available by 3:00 p.m. and will, so long as such Bank has
received notice from the Liquidity Agent in accordance with the last sentence
of Section 3.03(c), make available in freely transferable U.S. dollars and in
immediately available or same day funds its Percentage of such Refunding Loan
at the Payment Office by 3:00 p.m. Unless the Liquidity Agent determines that
any condition specified in Section 3.03(a) or 6.03 has not been satisfied, the
Liquidity Agent will promptly remit the aggregate amount of such funds made
available by the Banks to the Commercial Paper Account not later than 3:00
p.m. (New York City time).
(c) If any Bank shall not fund a Loan as described in
Section 3.04(a) or Section 3.04(b), the Liquidity Agent shall not have any
obligation to fund such Loan. Unless the Liquidity Agent shall have
received written notice from a Bank prior to the time such Bank is required
to make funds available to the Liquidity Agent pursuant to Section 3.04(a)
or 3.04(b), as the case may be, that such Bank will not make such funds
available to the Liquidity Agent, the Liquidity Agent may (but in no event
shall be required to) assume that such Bank has made such funds available
to the Liquidity Agent on the date of such payment in accordance with
Section 3.04(a) or Section 3.04(b), as the case may be, and the Liquidity
Agent may (but in no event shall be required to), in reliance upon such
assumption, remit a corresponding amount in accordance with the last
sentence of Section 3.04(a) or 3.04(b), as the case may be. If and to the
extent such Bank shall not have so made such funds available to the
Liquidity Agent, such Bank irrevocably and unconditionally agrees to repay
to the Liquidity Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such
remittance is made by the Liquidity Agent until the date such amount is
repaid to the Liquidity Agent, an amount equal to the product of (i) the
daily average federal funds rate during such period as quoted by the
Liquidity Agent, times (ii) the amount of such Bank's Percentage of the
Borrowing, times (iii) a fraction the numerator of which is the number of
days that elapse from and including the Borrowing date to the date on which
such Bank's Percentage of such Borrowing shall have become immediately
available to the Liquidity Agent and the denominator of which is 360. The
failure of any Bank to make a Loan shall not affect the obligation of any
other Bank to make a Loan as required hereunder. No Bank shall be
responsible for the failure of any other Bank to make any Loan to be made
by such other Bank on the date of any Borrowing. A certificate of the
Liquidity Agent submitted to any Bank with respect to any amounts owing
under this Section 3.04(c) shall be conclusive in the absence of manifest
error. If such Bank's Percentage of such Borrowing is not in fact made
available to the Liquidity Agent by such Bank within three Business Days of
the proposed date of such Borrowing, the Liquidity Agent shall be entitled
to recover such amount with interest thereon at the rate per annum
applicable to Base Rate Loans hereunder, on demand, from the CP Issuer.
SECTION 3.05 The Loan Notes. The Revolving Loans and Refunding Loans
made by each Bank shall be evidenced by a Revolving Loan Note and a
Refunding Loan Note, duly executed on behalf of the CP Issuer, in
substantially the form attached hereto as Exhibits A and B, respectively,
with the blanks appropriately filled, payable to the order of such Bank and
each of which shall: (i) be dated the Initial Closing Date; (ii)
collectively be in an aggregate principal amount equal to the Liquidity
Commitment and individually be in a principal amount equal to such Bank's
Percentage of the Liquidity Commitment; subject, however, to the provisions
of such Loan Note to the effect that the principal amount payable
thereunder at any time shall not exceed the then unpaid principal amount of
all Loans and Non-Rata Loans made by such Bank; (iii) be stated to mature
on the Expiration Date; (iv) bear interest as provided in Section 3.06;
(v) be payable to the order of such Bank; and (vi) be entitled to the
benefits of this Agreement and the Security Agreement. The Notes, amended
or supplemented as may be necessary to reflect the terms thereof, shall
also evidence all Non-Rata Loans made by such Bank. Each Bank
shall, and is hereby authorized to, endorse on the schedule attached to
each Loan Note (or on a continuation of such schedule attached to such Loan
Note and made a part thereof or otherwise to record in such Bank's internal
records), an appropriate notation evidencing the date and the amount of
each Loan from such Bank and the date of each payment or prepayment of
principal thereon (which notations shall be conclusive in the absence of
manifest error) and, prior to any transfer of its Loan Note, such Bank
shall endorse the outstanding principal amount of its Loans on the
applicable Loan Note on the schedule attached thereto; provided, however,
that the failure of any Bank to make such notation or any failure therein
shall not affect the obligation of the CP Issuer to repay the Loans made by
such Bank in accordance with the terms of this Agreement and the applicable
Loan Notes or otherwise adversely affect such Bank's rights with respect to
any Loan.
SECTION 3.06 Interest. (a) The CP Issuer agrees to pay interest in
respect of the unpaid principal amount of each Loan from the date the
proceeds thereof are made available to the CP Issuer until maturity
(whether by acceleration or otherwise), at a rate per annum which shall
equal (x) in the case of a Refunding Loan the Base Rate plus the Applicable
Margin and (y) in the case of a Revolving Loan a rate equal to (at the
option of the CP Issuer): (i) the Base Rate plus the Applicable Margin,
(ii) the C/D Rate plus the Applicable Margin or (iii) the Eurodollar Rate
plus the Applicable Margin.
(b) If all or a portion of (i) the principal amount of any
Loan or (ii) any interest payable thereon shall not be paid when due
(whether at the Expiration Date with respect to a Bank, by acceleration or
otherwise), such overdue amount shall bear interest at a rate per annum
equal to (x) in the case of overdue principal, the Post-Default Rate or (y)
in the case of overdue interest, 2% above the Base Rate plus the Applicable
Margin, in each case from the date of such non-payment until such amount is
paid in full (both before and after judgment).
(c) Interest on each Loan shall be payable in arrears on
each Interest Payment Date applicable thereto, at maturity and upon payment
(including prepayment) in full thereof, provided that interest payable
pursuant to paragraph (b) of this subsection shall be payable on demand.
SECTION 3.07 Commitment Fees. The CP Issuer agrees to pay to the
Liquidity Agent, for the account of each Bank pro rata in accordance with
its Percentage (i) on the Initial Closing Date a commitment fee equal to
0.10% of the Liquidity Commitment minus the LOC Commitment and (ii)
quarterly thereafter beginning on the Settlement Date following the third
month anniversary of the Initial Closing Date and on the date on which the
Liquidity Commitment shall be terminated as provided herein, a commitment
fee of 0.375% per annum, payable in arrears, on the average daily amount of
the Liquidity Commitment minus the LOC Commitment less the average daily
amount of the Loans (plus the amount of any Non-Rata Loans) outstanding
during the preceding three Settlement Periods (or longer or shorter period,
as the case may be, with respect to the first and last payment under clause
(ii) above); provided, that Non-Rata Loans made by any Bank shall be
allocated only to such Bank in reduction of the commitment fee payable to
such Bank. All fees shall be computed on the basis of the actual number of
days elapsed in a year of 365/366 days. The fees due to the Banks under
clause (ii) of the preceding sentence shall commence to accrue on the
Initial Closing Date, shall cease to accrue on the earlier of the
Expiration Date and the termination of the Liquidity Commitment as provided
herein, and shall be paid in accordance with Section 9 of the Security
Agreement.
SECTION 3.08 Minimum Amounts of Tranches. All borrowings, conversions
and continuations of Loans hereunder and all selections of Interest Periods
hereunder shall be in such amounts and be made pursuant to such elections
so that, after giving effect thereto, the aggregate principal amount of the
Revolving Loans comprising (i) each Eurodollar Tranche shall be equal to
$10,000,000 or a whole multiple of $1,000,000 in excess thereof, (ii) each
C/D Rate Tranche shall be equal to $10,000,000 or a whole multiple of
$1,000,000 in excess thereof and (iii) each Base Rate Loan shall be equal
to $5,000,000 or whole multiples of $1,000,000 in excess thereof.
SECTION 3.09 Requirements of Law. (a) In the event that any
Regulatory Change:
(i) shall subject any Bank or its Domestic Lending Office or
Eurodollar Lending Office to any tax of any kind whatsoever with respect to
this Agreement, any Note or any Eurodollar Loan or C/D Rate Loan made by
it, or changes the basis of taxation of payments to such Bank or its
Domestic Lending Office or Eurodollar Lending Office in respect thereof
(except for taxes covered by Section 3.10 and changes in the rate of tax on
the overall net income of such Bank);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of, advances,
loans or other extensions of credit by, or any other acquisition of funds
by or for the account of, any office of such Bank which is not otherwise
included in the determination of the LIBO Rate or the C/D Rate hereunder;
or
(iii) shall impose on such Bank or its Domestic Lending Office
or Eurodollar Lending Office any other condition;
and the result of any of the foregoing is to increase the cost of such
Bank or its Domestic Lending Office or Eurodollar Lending Office, by an
amount which such Bank deems to be material, of making, converting
into, continuing or maintaining Eurodollar Loans or C/D Rate Loans, or
to reduce any amount receivable by it in respect of its Eurodollar
Loans or C/D Rate Loans, then, in any such case (unless such Bank has
been compensated for such increase or reduction by an increase in
interest or otherwise by Regulatory Change), provided that, in
accordance with Section 10.12, all payment obligations of the CP Issuer
with respect to Commercial Paper, Loan Notes and LOC Disbursements
attributable to Refunding Drawings are then satisfied or provided for,
the CP Issuer shall promptly pay such Bank, upon its demand (a copy of
such request, describing such Regulatory Change and setting forth a
calculation of such additional cost or reduction to be sent by such
Bank to the CP Issuer and the Liquidity Agent), any additional amounts
necessary to compensate such Bank for such additional cost or reduced
amount receivable as determined by such Bank. If any Bank becomes
entitled to claim any additional amounts pursuant to this Section
3.09, it shall promptly notify the CP Issuer, through the Liquidity
Agent, of the event by reason of which it has become so entitled. A
certificate as to any additional amounts payable pursuant to this
Section 3.09(a) submitted by an officer of a Bank, through the
Liquidity Agent, to the CP Issuer shall be rebuttable presumptive
evidence of the amount due. If any Bank requests payment of increased
costs from the CP Issuer, such Bank shall, upon request of the CP
Issuer, use reasonable efforts to change its Domestic Lending Office or
Eurodollar Lending Office, as the case may be, for the purpose of
minimizing such increased costs; provided that nothing herein shall
obligate such Bank to change its Domestic Lending Office or Eurodollar
Lending Office, as the case may be, or to take any other steps, which
the Bank considers in its sole judgment to be adverse to its interests.
This covenant shall survive the termination of this Agreement and the
payment of the Loan Notes and all other amounts payable hereunder.
(b) In the event that any Bank shall have determined that any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Bank or any
corporation controlling such Bank with any request or directive regarding
capital adequacy (whether or not having the force of law) from any
Governmental Authority made subsequent to the date hereof does or shall
have the effect of reducing the rate of return on such Bank's or such
corporation's capital as a consequence of its obligations hereunder to a
level below that which such Bank could have achieved but for such change
or compliance (taking into consideration such Bank's or such
corporation's policies with respect to capital adequacy) by any amount
deemed by such Bank to be material, then from time to time, within 15
days after demand by such Bank (with a copy to the Liquidity Agent),
provided that, in accordance with Section 10.12, all payment obligations
of the CP Issuer with respect to Commercial Paper, Loan Notes and LOC
Disbursements attributable to Refunding Drawings are then satisfied or
provided for, the CP Issuer shall pay to such Bank such additional
amount or amounts as will compensate such Bank for such reduction. A
certificate as to any additional amounts payable pursuant to this
Section 3.09(b) submitted by an officer of such Bank shall be rebuttable
presumptive evidence of the amount due. If the CP Issuer becomes
obligated to pay additional amounts described in this Section 3.09(b) as
a result of any condition described in this Section 3.09(b) and payment
of such amount is demanded by any Bank, then the CP Issuer may, on ten
Business Days' prior written notice to the Liquidity Agent and such
Bank, cause such Bank to (and such Bank shall) assign pursuant to
Section 10.05 all of its rights and obligations under this Agreement to
a bank or financial institution selected by the CP Issuer, provided that
in no event shall the assigning Bank be required to pay or surrender to
such purchasing Bank or other bank or financial institution any of the
fees received by such assigning Bank pursuant to this Agreement.
(c) In the event that the CP Issuer shall be required to pay
additional amounts pursuant to Sections 3.09(a) or (b) above and any Bank
shall receive, after the payment of such additional amounts to it by the CP
Issuer, a tax credit or benefit relating to the event which required the CP
Issuer to pay such additional amounts, the CP Issuer shall be reimbursed by
such Bank in an amount equal to such tax credit or benefit; provided, however,
that such amount shall not exceed the additional amount paid to such Bank by
the CP Issuer.
SECTION 3.10 Taxes. (a) All payments made by the CP Issuer under this
Agreement and the Loan Notes shall be made free and clear of, and without
reduction or withholding for or on account of, any present or future income,
stamp or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority, excluding, in the case of the
Liquidity Agent and each Bank, net income and franchise taxes based upon net
income imposed on the Liquidity Agent, or such Bank, as the case may be, by
the jurisdiction under the laws of which it is organized or in which is
located any office from or at which such Bank is making or maintaining its
Loans, or any political subdivision or taxing authority thereof or therein
(all such non-excluded taxes, levies, imposts, duties, charges, fees,
deductions and withholdings being hereinafter called Taxes). If any Taxes
are required to be withheld from any amounts payable to the Liquidity Agent or
any Bank hereunder or under the Loan Notes, provided that, in accordance with
Section 10.12, all payment obligations of the CP Issuer with respect to
Commercial Paper, Loan Notes and LOC Disbursements attributable to Refunding
Drawings are then satisfied or provided for, the amounts so payable to the
Liquidity Agent or such Bank shall be increased to the extent necessary to
yield to the Liquidity Agent or such Bank (after payment of all Taxes)
interest or any other amounts payable hereunder at the rates or in the
amounts specified in this Agreement and the Notes. Whenever any Taxes are
payable by the CP Issuer, as promptly as possible thereafter the CP Issuer
shall send to the Liquidity Agent for its own account or for the account of
such Liquidity Agent or Bank, as the case may be, a certified copy of the
original official receipt, if any, received by the CP Issuer showing
payment thereof. If the CP Issuer fails to pay any Taxes when due to the
appropriate taxing authority or fails to remit to the Liquidity Agent the
required receipts or other required documentary evidence, the CP Issuer
shall, subject to Section 10.12, indemnify the Liquidity Agent and the
Banks for any incremental taxes, interest or penalties that may become
payable by the Liquidity Agent or any Bank as a result of any such failure.
The agreements in this subsection shall survive the termination of this
Agreement and the payment of the Loan Notes and all other amounts payable
hereunder.
(b) Each Bank that is not incorporated under the laws of the United States
of America or a state thereof agrees that prior to the Closing Date it will
deliver to the CP Issuer and the Liquidity Agent (i) two duly completed copies
of United States Internal Revenue Service Form 1001 or 4224 or successor
applicable form, as the case may be, or (ii) an Internal Revenue Service Form
W-8 or W-9, as applicable, or successor applicable form. Each such Bank also
agrees to deliver to the CP Issuer and the Liquidity Agent two further copies
of the said Form 1001 or 4224 or Form W-8 or W-9, as applicable, or successor
applicable forms or other manner of certification, as the case may be, on or
before the date that any such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent form previously
delivered by it to the CP Issuer and the Liquidity Agent, and such extensions
or renewals thereof as may reasonably be requested by the CP Issuer or the
Liquidity Agent. Such Bank shall certify (i) in the case of a Form 1001 or
4224, that it is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes, unless in
any such case an event (including, without limitation, any change in treaty,
law or regulation) has occurred prior to the date on which any such delivery
would otherwise be required which renders all such forms inapplicable or
which would prevent such Bank from duly completing and delivering any such
form with respect to it and such Bank advises the CP Issuer that it is not
capable of so receiving payments without any deduction or withholding, or
(ii) in the case of a Form W-8 or W-9, that it is entitled to an exemption
from United States backup withholding tax.
SECTION 3.11 Computation of Interest and Fees. (a) Interest on Base
Rate Loans and the Liquidity Fee shall be calculated on the basis of a 365-
(or 366-, as the case may be) day year for actual days elapsed. Interest
on Eurodollar Loans and C/D Rate Loans shall be calculated on the basis of
a 360-day year for the actual days elapsed. The Liquidity Agent will, as
soon as practicable, notify the CP Issuer and the Banks of each
determination of a Eurodollar Rate and a C/D Rate. Any change in the
interest rate on a Loan resulting from a change in the Base Rate, the C/D
Assessment Rate or the C/D Reserve Percentage shall become effective as of
the opening of business on the day on which such change in the Base Rate is
announced or such change in the C/D Assessment Rate or the C/D Reserve
Percentage becomes effective, as the case may be. The Liquidity Agent
shall as soon as practicable notify the CP Issuer and the Banks of the
effective date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Liquidity
Agent pursuant to any provision of this Agreement shall be rebuttable
presumptive evidence of the correctness of such interest rate.
(c) If any Reference Bank's Percentage of the Liquidity
Commitment or all of its Loans shall be assigned for any reason whatsoever,
such Reference Bank shall thereupon cease to be a Reference Bank, and, if, as
a result of the foregoing, there shall only be one Reference Bank remaining,
such remaining Reference Bank (after consultation with Ingram, the CP Issuer,
the Banks and the Liquidity Agent) shall, by notice to the CP Issuer, each
Bank and the Liquidity Agent (subject to the prior written consent of each of
Ingram and the CP Issuer which consent shall not be unreasonably withheld),
designate another Bank as a Reference Bank so that there shall at all relevant
times be at least two Reference Banks.
(d) Each Reference Bank shall use its best efforts to furnish
quotations of rates to the Liquidity Agent as contemplated hereby. If any
Reference Bank shall be unable or shall otherwise fail to supply such rates to
the Liquidity Agent upon its request, the rate of interest shall, subject to
the provisions of Section 3.13, be determined on the basis of the quotation
of the remaining Reference Banks.
(e) Supplemental Payments that are not paid within 30 days after
a demand has been made therefor pursuant to this Agreement shall accrue
interest at a rate per annum equal to the Base Rate, payment of which interest
may be made only if, in accordance with Section 10.12, all payment obligations
of the CP Issuer with respect to Commercial Paper, Loan Notes and Refunding
Drawings are then satisfied or provided for.
SECTION 3.12 Pro Rata Treatment and Payments. (a) Each borrowing by the
CP Issuer of Loans from the Banks hereunder and, except with respect to
payments to a Bank pursuant to Section 3.09(b), each payment by the CP Issuer
on account of any Loan or fee payable hereunder and any reduction of the
Liquidity Commitment of the Banks shall be made pro rata according to the
respective Percentages of the Banks.
(b) Whenever any payment received by the Liquidity Agent under
this Agreement or any Note is insufficient to pay in full all amounts then due
and payable to the Liquidity Agent and the Banks under this Agreement and the
Notes, and the Liquidity Agent has not received a Payment Sharing Notice (or
the Liquidity Agent has received a Payment Sharing Notice but the Event of
Default specified in such Payment Sharing Notice has been cured or waived),
such payment shall be distributed and applied by the Liquidity Agent and the
Banks in the following order: first, to the payment of fees and expenses due
and payable to the Liquidity Agent under and in connection with this
Agreement; second, to the payment of interest then due and payable under the
Loan Notes, ratably among the Banks in accordance with the aggregate amount of
interest owed to each such Bank; third, to the payment of fees due and payable
under Section 3.07, ratably among the Banks in accordance with their
Percentages; fourth, to the payment of the principal amount of the Loan Notes
which is then due and payable, ratably among the Banks in accordance with the
aggregate principal amount owed to each such Bank; and fifth, to the payment
of all expenses due and payable under Sections 3.09, 3.10, 3.15, 3.16, 3.18,
5.02 and 10.04, ratably among the Banks in accordance with the aggregate
amount of such payments owed to each such Bank.
(c) After the Liquidity Agent has received a Payment Sharing
Notice which remains in effect, all payments received by the Liquidity Agent
under this Agreement or any other Facilities Document shall be distributed and
applied by the Liquidity Agent and the Banks in the following order: first, to
the payment of fees and expenses due and payable to the Liquidity Agent under
and in connection with this Agreement; second, to the payment of the interest
accrued on the principal amount of all of the Loan Notes, regardless of
whether any such amount is then due, ratably among the Banks in accordance
with the aggregate accrued interest; third, to the payment of fees due and
payable under Section 3.07, ratably among the Banks in accordance with their
Percentages; fourth, to the aggregate principal amount of the Loan Notes owed
to such Bank, regardless of whether any such amount is then due, ratably among
the Banks in accordance with the aggregate principal amount owed to each such
Bank; and fifth, to the payment of all expenses due and payable under Sections
3.09, 3.10, 3.15, 3.16, 3.18, 5.02 and 10.04, ratably among the Banks in
accordance with the aggregate amount of such payments owed to each such Bank.
SECTION 3.13 Inability to Determine Interest Rate. In the event that
prior to the first day of any Interest Period:
(a) the Liquidity Agent shall have determined after use of
reasonable endeavors (which determination shall be conclusive and binding upon
the CP Issuer) that by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the LIBOR Rate or
the C/D Rate for such Interest Period, or
(b) the Liquidity Agent shall have received notice from the
Required Banks that the LIBOR Rate or the C/D Rate determined or to be
determined for such Interest Period will not adequately and fairly reflect the
cost to such Banks (as conclusively certified by such Banks) of making or
maintaining their affected Loans during such interest period,
the Liquidity Agent shall give telex, telecopy or telephonic notice thereof
to the CP Issuer and the Banks as soon as practicable thereafter. If such
notice is given (x) any Eurodollar Loans or C/D Rate Loans, as the case may
be, requested to be made on the first day of such Interest Period shall be
made as Base Rate Loans, (y) any Revolving Loans that were to have been
converted on the first day of such Interest Period to Eurodollar Loans or
C/D Rate Loans, as the case may be, shall be converted to or continued as
Base Rate Loans and (z) any outstanding Eurodollar Loans or C/D Rate Loans,
as the case may be, shall be converted, on the first day of such Interest
Period, to Base Rate Loans. Until such notice has been withdrawn by the
Liquidity Agent, no further Eurodollar Loans or C/D Rate Loans, as the case
may be, shall be made or continued as such, nor shall the CP Issuer have
the right to convert Revolving Loans to Eurodollar Loans or C/D Rate Loans,
as the case may be.
SECTION 3.14 Downgrading of Banks. If at any time the credit rating
assigned to the short-term obligations of any Bank by S&P or Fitch is
withdrawn or downgraded below A-1 or F-1, respectively, such Bank shall
immediately notify the CP Issuer, the Collateral Agent, the Liquidity
Agent, the CP Dealer and the Depositary of such withdrawal or downgrade,
and the CP Issuer may, upon five Business Days' prior written notice given
to the Trustee, the Transferor, the Depositary, the Liquidity Agent and
such affected Bank, either (a) replace such affected Bank with another bank
having ratings of at least A-1 assigned by S&P and, if rated by Fitch, F-1
assigned by Fitch, to its short-term obligations or with a Bank already a
party to this Agreement whose short-term obligations have been assigned
such ratings (and the affected Bank and the replacing bank shall execute an
Assignment and Acceptance, which shall provide for a transfer to such
replacement bank of the entire Percentage of the Liquidity Commitment and
all outstanding Loans of such Bank (if any), and deliver it to the
Liquidity Agent and the Depositary), but no such replacement pursuant to
this clause (a) shall be effective unless S&P and Fitch shall have
confirmed in writing to the CP Issuer and the Liquidity Agent that such
replacement would not result in a withdrawal or reduction of the rating by
S&P and Fitch of the Commercial Paper below A-1 and F-1, respectively; or
(b) subject to compliance with Section 4.01(b), terminate such affected
Bank's Percentage of the Liquidity Commitment and reduce the Liquidity
Commitment by such amount except that in no event shall any such action
under this clause (b) be effective hereunder if the sum of (i) the
Aggregate CP Matured Value and (ii) the outstanding principal amount of all
Loans hereunder would exceed the Liquidity Commitment as so reduced.
SECTION 3.15 Illegaligy. Notwithstanding any other provision hereunder,
if any change in any Requirement of Law or in the interpretation or application
thereof shall make it unlawful for any Bank or its Eurodollar Lending Office
to make or maintain Eurodollar Loans as contemplated by this Agreement, (a)
the commitment of such Bank hereunder to make Eurodollar Loans, continue
Eurodollar Loans as such and convert Domestic Dollar Loans to Eurodollar Loans
shall forthwith be canceled and (b) such Bank's Loans then outstanding as
Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans
on the respective last days of the then current Interest Periods with respect
to such Loans or within such earlier period as may be required by law. If any
such conversion of a Eurodollar Loan occurs on a day which is not the last day
of the then-current Interest Period with respect thereto, the CP Issuer shall
pay to such Bank such amounts, if any, as may be required pursuant to Section
3.16 provided that, in accordance with Section 10.12, all payment obligations
of the CP Issuer with respect to Commercial Paper, Loan Notes and LOC
Disbursements attributable to Refunding Drawings are then satisfied or
provided for.
SECTION 3.16 Indemnity. Subject to Section 10.12, the CP Issuer agrees to
indemnify each Bank for, and to hold such Bank harmless from, any loss or
expense which such Bank may sustain or incur as a consequence of (a) default
by the CP Issuer in payment when due of the principal amount of or interest on
any Eurodollar Loan or C/D Rate Loan, (b) default by the CP Issuer in making a
borrowing of, conversion into or continuance of Eurodollar Loans or C/D Rate
Loans after the CP Issuer has given a notice requesting the same in accordance
with the provisions of this Agreement or (c) default by the CP Issuer in
making any prepayment after the CP Issuer has given a notice thereof in
accordance with the provisions of this Agreement, including, without
limitation, in each case, any such loss or expense arising from the
reemployment of funds obtained by it or from fees payable to terminate the
deposits from which such funds were obtained. A certificate as to any
additional amounts payable pursuant to the foregoing sentence submitted by
an officer of a Bank, through the Liquidity Agent, to the CP Issuer shall
be rebuttable presumptive evidence of the amount due. This covenant shall
survive termination of this Agreement and payment of the Loan Notes and all
other amounts payable hereunder.
SECTION 3.17 Revolving Loan Conversion and Continuation Options. (a)
With respect to Revolving Loans outstanding, the CP Issuer may elect from
time to time to convert Eurodollar Loans or C/D Rate Loans to Base Rate
Loans, and/or to convert Eurodollar Loans or Base Rate Loans to C/D Rate
Loans, by giving the Liquidity Agent at least two Business Days' prior
irrevocable notice of such election, provided that any such conversion of
Eurodollar Loans or C/D Rate Loans may only be made on the last day of any
Interest Period with respect thereto. The CP Issuer may elect from time to
time to convert Base Rate Loans or C/D Rate Loans to Eurodollar Loans by
giving the Liquidity Agent at least three Working Days' prior irrevocable
notice of such election, provided that any such conversion of C/D Rate
Loans may, subject to the third succeeding sentence, only be made on the
last day of an Interest Period with respect thereto. Any such notice of
conversion to Eurodollar Loans or C/D Rate Loans shall specify the length
of the initial Interest Period or Interest Periods therefor. Upon receipt
of any such notice the Liquidity Agent shall promptly notify each Bank
thereof. If the last day of the then current Interest Period with respect
to C/D Rate Loans that are to be converted to Eurodollar Loans is not a
Working Day, such conversion shall be made on the next succeeding Working
Day, and during the period from such last day to such succeeding Working
Day such Loans shall bear interest as if they were Base Rate Loans. All or
any part of outstanding Eurodollar Loans, Base Rate Loans and C/D Rate
Loans may be converted as provided herein, provided that (i) no Loan may be
converted into a Eurodollar Loan or a C/D Rate Loan when any Event of
Default has occurred and is continuing and the Liquidity Agent or the
Required Banks have determined that such a conversion is not appropriate,
(ii) any such conversion may only be made if, after giving effect thereto,
Section 3.08 shall not have been contravened and (iii) no Loan may be
converted into a Eurodollar Loan or a C/D Rate Loan at the expiration of
the then applicable Interest Period with respect thereto if the
Amortization Period Commencement Date with respect to the Variable Funding
Certificate shall have occurred.
(b) Any Eurodollar Loans or C/D Rate Loans may be continued
as such upon the expiration of the then current Interest Period with
respect thereto by the CP Issuer giving notice to the Liquidity Agent, in
accordance with the applicable provisions of the term "Interest Period" of
the length of the next Interest Period to be applicable to such Loans,
provided that no Eurodollar Loan or C/D Rate Loan may be continued as such
(i) when any Event of Default has occurred and is continuing and the
Liquidity Agent or the Required Banks have determined that such a
continuation is not appropriate, (ii) if, after giving effect thereto,
Section 3.08 would be contravened or (iii) at the expiration of the then
applicable Interest Period with respect thereto if the Amortization Period
Commencement Date with respect to the Variable Funding Certificate shall
have occurred and provided, further, that if the CP Issuer shall fail to
give any required notice as described above in this paragraph such Loans
shall be automatically converted to Base Rate Loans on the last day of such
then expiring Interest Period.
(c) Subject to Section 3.02 and the other conditions thereto
provided for in this Agreement, Refunding Loans which are Base Rate Loans
may be refinanced with Revolving Loans which shall then be subject to this
Section 3.17.
SECTION 3.18 Eurodollar Reserve Costs. Provided that, in accordance
with Section 10.12, all payment obligations of the CP Issuer with respect
to Commercial Paper, Loan Notes and LOC Disbursements attributable to
Refunding Drawings are then satisfied or provided for, the CP Issuer agrees
to pay to each Bank which requests compensation under this Section 3.18, on
the last day of each Interest Period with respect to any Eurodollar Loan
made by such Bank, so long as such Bank, together with all other banks
similarly situated which maintain loans comparable to such Eurodollar Loan,
shall be required to maintain reserves against "Eurocurrency liabilities"
under Regulation D of the Board (or, so long as such Bank, together with
such other banks similarly situated, may be required by the Board or by any
other Governmental Authority to maintain reserves against any other
category of liabilities which includes deposits by reference to which the
interest rate on Eurodollar Loans is determined as provided in this
Agreement or against any category of extensions of credit or other assets
of such Bank (or such other banks) which includes any Eurodollar Loans),
an additional amount (determined by such Bank and notified to the CP Issuer)
representing such Bank's calculation or, if an accurate calculation is
impracticable, reasonable estimate (using such reasonable means of allocation
as such Bank shall determine) of the actual costs, if any, incurred by such
Bank during such Interest Period as a result of the applicability of the
foregoing reserves to such Eurodollar Loans, which amount in any event shall
not exceed the product of the following for each day of such Interest Period:
(i) the principal amount of the Eurodollar Loans made by such
Bank to which such Interest Period relates outstanding on such day; and
(ii) the difference between (x) a fraction the numerator of
which is the Eurodollar Rate (expressed as a decimal) applicable to such
Eurodollar Loan and the denominator of which is one minus the maximum
rate (expressed as a decimal) at which such reserve requirements are
imposed by the Board or other Governmental Authority on such date minus
(y) such numerator; and
(iii) a fraction the numerator of which is one and the
denominator of which is 360.
A certificate as to amounts payable pursuant to this Section 3.18
submitted by an officer of a Bank to the CP Issuer, through the Liquidity
Agent, shall be rebuttable presumptive evidence of the amounts due.
SECTION 3.19 Procedure for Non-Rata Loans. At the CP Issuer's request any
Bank may, from time to time, agree to make Non-Rata Loans to the CP Issuer
without a ratable Borrowing from any other Bank. The amount, Transaction Rate
and fees payable with respect to such Non-Rata Loans, if any, shall be as
agreed to from time to time by the CP Issuer and each Bank making a Non-Rata
Loan. A Non-Rata Loan shall only reduce the total dollar commitment of the
Bank making such Non-Rata Loan.
SECTION 3.20 Procedure for Loans when Non-Rata Loans Outstandinq.
(a) If the CP Issuer requests a Loan at any time when there
are Non-Rata Loans outstanding, each Bank shall, to the extent its
Percentage of the Commitment exceeds its percentage of the outstanding
balance of all Loans and Non-Rata Loans, fund such excess to the Liquidity
Agent up to a maximum of its Percentage of such requested Loans. To the
extent such excess is not equal to or greater than such Bank's Percentage
of such requested Loans, the CP Issuer shall, by written notice to the
Liquidity Agent prior to the date of such requested Loans, advise the
Liquidity Agent that it has Non-Rata Loans outstanding with one or more of
the Banks and that it is electing to take a credit against its request for
such Loans by maintaining all or a portion of the requested Loans as Non-
Rata Loans to the extent necessary in order for the Banks holding those
Non-Rata Loans to meet their obligation to fund up to their respective
Percentage of the requested Loans.
(b) At any time when requested Loans have been funded in
whole or in part by Non-Rata Loans as provided in Section 3.19, the CP
Issuer shall provide to the Liquidity Agent and the other Banks a weekly
report detailing its records concerning the dates, maturities, amounts,
balances, payment amounts and payment schedules of all Loans and Non-Rata
Loans as of a date within two Business Days of the end of the calendar
week. Such report shall also identify specifically those Non-Rata Loans
used to fund all or a portion of any Loans in accordance with Section 3.19.
Such report shall be delivered (i) with each Notice of Borrowing and (ii)
more often if requested by the Liquidity Agent. The Liquidity Agent is
hereby authorized to rely on such report in determining the appropriate
distribution of payments of principal and interest on all Loans in
accordance herewith. Delivery of the report required by this Section 3.20
shall constitute the CP Issuer's representation and warranty that the
information contained in such report is true, correct and complete in all
material respects as of the date of such report.
(c) Each Bank and the CP Issuer agree to indemnify and hold
the Liquidity Agent harmless from any misdirection of funds due to the
Liquidity Agent's reliance on the report submitted by the CP Issuer
pursuant to Section 3.20(b). In the event an error in disbursement to the
Banks is reported to the Liquidity Agent by any Bank, the CP Issuer and the
Bank or Banks reporting the error shall separately recompute the
disbursements using information supplied by the CP Issuer and the Banks.
The Liquidity Agent shall resolve any discrepancies to the best of its
ability and report the same to the CP Issuer and the Banks. Absent
manifest error, the resolution reported by the Liquidity Agent shall be
binding upon the CP Issuer and the Banks. The CP Issuer agrees to provide,
on demand, such additional funds as may be necessary to correct any
Borrowings in excess of amounts permitted hereunder in accordance with the
Liquidity Agent's resolution.
(d) Notwithstanding the CP Issuer's election to take a
credit against its request for Loans and the corresponding credit against
any Bank's obligation to fund all or a portion of any Loans by maintaining
Non-Rata Loans, such Non-Rata Loans shall for all purposes be treated as
Non-Rata Loans.
ARTICLE IV
Other Credit Terms
SECTION 4.01 Reduction and Termination of Liquidity Commitment. (a)
The CP Issuer may, upon at least three Business Days' prior irrevocable
written notice to the Trustee, the Transferor, the Liquidity Agent (who
shall promptly give written notice thereof to each Bank), the CP Dealer and
the Depositary, terminate the Liquidity Commitment in whole on or after the
first date on which (i) the CP Issuer shall have ceased issuing Commercial
Paper (as evidenced by an Officer's Certificate of the CP Issuer) and (ii)
no Commercial Paper or Loans are outstanding.
(b) The CP Issuer shall have the right, at any time and from
time to time, to permanently reduce the Liquidity Commitment by an amount of
$5,000,000 or integrals of $1,000,000 in excess thereof. Any such reduction
shall be without penalty, and shall be made by giving at least three Business
Days' prior irrevocable written notice to the Liquidity Agent (who shall
promptly give written notice thereof to each Bank), the CP Dealer and the
Depositary specifying the scheduled date (which shall be a Business Day) of
such reduction and the amount of such reduction. Such partial reduction of
the Liquidity Commitment shall be effective on the scheduled date specified
in the CP Issuer's notice; provided, however, that no such reduction shall
be effective (i) unless S&P and Fitch shall have confirmed in writing to
the CP Issuer and the Liquidity Agent that such reduction would not result
in the withdrawal or reduction of the then current rating by S&P and Fitch
of the Commercial Paper, and (ii) to the extent that, on the scheduled date
of such reduction, the Requisite Commitment Level would exceed the Adjusted
Liquidity Commitment as so reduced.
(c) On any day from and after the Amortization Period
Commencement Date with respect to the Variable Funding Certificate, the
Liquidity Commitment shall be automatically reduced by an amount equal to the
excess, if any, of (i) the Liquidity Commitment in effect on such day over
(ii) the Requisite Commitment Level determined for such day.
(d) The Liquidity Agent shall give notice to the Rating
Agencies, the CP Dealer and each Bank as to any change in the Liquidity
Commitment promptly after any reduction or increase thereof made pursuant to
Section 4.01 or 10.16, and to the CP Dealer and each Bank as to any change in
the outstanding aggregate principal amount of Loans, promptly after giving
effect to such change.
SECTION 4.02 Expiration of Liquidity Commitment. (a) Subject to the other
provisions of this Agreement permitting or requiring earlier termination
hereof, a Bank's Percentage of the Liquidity Commitment shall terminate on the
Expiration Date then in effect with respect to such Bank unless such Bank
elects in its sole discretion to extend its Percentage of the Liquidity
Commitment for an additional two-year period following such Expiration Date
(each such period, an "Extension Period"). On any Business Day occurring not
earlier than July 31st nor later than August 30 of the year immediately
preceding the year in which the then Expiration Date occurs, the CP Issuer or
the Liquidity Agent may, by written notice to each Bank, request such Bank to
extend its Percentage of the Liquidity Commitment for an additional Extension
Period. Not later than October 31 of the year immediately preceding the year
in which the then Expiration Date occurs, each Bank shall respond to the
request to extend its Percentage by executing and delivering to the CP Issuer
and the Liquidity Agent a written notice indicating whether or not such Bank
will extend its Percentage of the Liquidity Commitment for such additional
Extension Period and such notice, once given, shall be irrevocable. If any
Bank does not give such notice as provided in the preceding sentence, its
Percentage of the Liquidity Commitment shall be deemed to have been so
extended. If any Bank elects not to extend its Percentage of the Liquidity
Commitment for such Extension Period, the Liquidity Agent shall promptly
notify the CP Issuer and the Depositary at the end of such notice period.
(b) Not later than November 15 of the year immediately preceding the
year in which the Expiration Date occurs, the Liquidity Agent shall notify
all the Banks as to those Banks that have elected to extend or have been
deemed to have elected to extend and of those Banks that have elected not
to extend. If any Bank does not consent to the extension of the Expiration
Date pursuant to Section 4.02(a), the CP Issuer may upon such failure to
extend, request another Bank or obtain a successor bank or hanks to assume
such non-extending Bank's Percentage of the Liquidity Commitment pursuant
to an Assignment and Acceptance Agreement entered into in accordance with
Section 10.05 (except that the minimum amounts set forth in Section
10.05(b) shall not apply), provided that the addition of such successor
bank and the withdrawal of such non-extending Bank will not result in the
downgrading or withdrawal of the rating of the Commercial Paper as
confirmed in writing by each Rating Agency. Upon the effectiveness of such
assumption, the Expiration Date then in effect shall be extended for an
Extension Period.
(c) If any Bank does not extend its Percentage of the Liquidity
Commitment after the Expiration Date then in effect for such Bank pursuant to
Section 4.02(a) hereof and (i) such Bank's Percentage of the Liquidity
Commitment is not acquired in accordance with Section 4.02(b) hereof and (ii)
Loans made by such Bank or other amounts payable to it hereunder are
outstanding sixty days prior to such Expiration Date, such Bank shall be
deemed to be an "Exiting Bank" on the first day after such sixtieth day. On
each Business Day thereafter, an Exiting Bank shall be paid, from Principal
Collections received after such Expiration Date and allocated to the
Variable Funding Certificate pursuant to Section 4.03(b)(iii)(B) and
4.03(b)(iv)(B) of the Pooling and Servicing Agreement, an amount equal to:
(i) prior to the Amortization Period Commencement Date for the
Variable Funding Certificate, such Exiting Bank's pro rata share of such
Principal Collections, based on a fraction, the numerator of which shall
be the amount equal to such Exiting Bank's Percentage of the Liquidity
Commitment expressed in Dollars, and the denominator of which shall be
the Liquidity Commitment, in each case in effect at the Expiration Date
for such Exiting Bank; and
(ii) from and after the Amortization Period Commencement Date
for the Variable Funding Certificate, such Exiting Bank's pro rata share
of such Principal Collections, based on a fraction, the numerator of
which is equal to the outstanding principal amount of Loans made by such
Exiting Bank (as shown on the Daily Report with respect to such
Principal Collections), and the denominator of which is equal to the sum
of (x) the Liquidity Commitment in effect, and (y) all Loans made by
Exiting Banks outstanding at the Amortization Period Commencement Date,
each as determined on the Amortization Period Commencement Date.
Interest on Loans made by an Exiting Bank shall continue to accrue and be
required to be paid in accordance with this Agreement and such Exiting
Bank's Loan Notes. After all payments of principal, interest and
Supplemental Payments have been paid in respect to such Exiting Bank's
Loans, the CP Issuer shall have no further obligation to such Bank (except
with respect to obligations expressly stated herein to survive payment of
the Loans).
(d) Any Exiting Bank shall be deemed to be a Bank for purposes
of Section 10.03 hereof for determination in matters affecting such Exiting
Bank until all Loans made by, and other amounts owing hereunder to, such
Exiting Bank have been paid in full.
SECTION 4.03 Use of Proceeds. The proceeds of the Loans and Commercial
Paper shall only be used for the following purposes:
(a) the proceeds of the issuance of any Commercial Paper issued
on the Closing Date shall be used to purchase the Initial Issuer Amount in
respect of the Variable Funding Certificate;
(b) the proceeds of subsequent issuances of Commercial Paper
shall be used to repay maturing Commercial Paper, to repay Loans, to purchase
Issuer Additional Amounts in respect to the Variable Funding Certificate (so
long as no Borrowing Base Deficiency shall exist following such payment), and
for deposit into the Collateral Account;
(c) the proceeds of any Refunding Loan shall be used to repay
maturing Commercial Paper or to refinance an outstanding Revolving Loan after
the Amortization Period Commencement Date; and
(d) the proceeds of any Revolving Loan shall be used to purchase
Issuer Additional Amounts from the Trust, to refinance an outstanding
Refunding Loan (so long as no Borrowing Base Deficiency shall exist following
such payment) or to refinance an outstanding Revolving Loan.
ARTICLE V
Payments
SECTION 5.01 Payments on Nonbusiness Days. If any payment hereunder
(other than payments on the Eurodollar Loans) becomes due and payable on a
day other than a Business Day, such payment shall be extended to the next
succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension. If any payment on a Eurodollar Loan becomes due and payable on
a day other than a Working Day, the maturity thereof shall be extended to
the next succeeding Working Day unless the result of such extension would
be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Working Day.
SECTION 5.02 Optional and Mandatory Prepayments. (a) The CP Issuer may,
subject to Section 3.16, at any time and from time to time, prepay the
Revolving Loans then outstanding, in whole or in part, upon at least three
Working Days' irrevocable notice to the Liquidity Agent, in the case of
Eurodollar Loans, upon at least two Business Days' irrevocable notice to
the Liquidity Agent, in the case of C/D Rate Loans and by giving
irrevocable notice to the Liquidity Agent not later than 10:00 a.m., New
York City time, on the date of such prepayment, in the case of Base Rate
Loans, each such notice to specify (i) the date and amount of such
prepayment, (ii) whether the prepayment is of Eurodollar Loans, C/D Rate
Loans, Base Rate Loans, or a combination thereof, and, if of a combination
thereof, the amount of prepayment allocable to each and (iii) the original
amount of the Revolving Loan or Revolving Loans which are to be prepaid and
the date or dates such Revolving Loan or Revolving Loans were made,
provided that the CP Issuer may not both prepay Base Rate Loans under this
subsection 5.02(a) and borrow Base Rate Loans on the same day. Upon
receipt of any such notice, the Liquidity Agent shall promptly notify each
Bank thereof. If any such notice is given, the CP Issuer will make the
prepayment specified therein, and such prepayment shall be due and payable
on the date specified therein, together with accrued interest to such date
on the amount prepaid. Each partial prepayment of the Loans pursuant to
this paragraph (a) shall be in an amount equal to $5,000,000 or a greater
whole multiple of $1,000,000; provided that unless the Eurodollar Loans or
C/D Rate Loans comprising any Tranche are prepaid in full, no prepayment
shall be made in respect of Eurodollar Loans or C/D Rate Loans if, after
giving effect to such prepayment, the aggregate principal amount of the
Loans comprising any Tranche shall be less than $5,000,000.
(b) If the CP Issuer makes a prepayment (whether optional or
mandatory, including any prepayment made as a result of the Loans being
declared due and payable prior to their stated maturity pursuant to Section
8.01) in respect of Revolving Loans (other than Base Rate Loans), provided
that, in accordance with Section 10.12, all payment obligations of the CP
Issuer with respect to Commercial Paper, Loan Notes and LOC Disbursements
attributable to Refunding Drawings are then satisfied or provided for, the
CP Issuer agrees to pay to the Liquidity Agent for the account of each
Bank, a prepayment fee in an amount determined by the Liquidity Agent
(which determination shall be rebuttable presumptive evidence of the amount
due) and specified by the Liquidity Agent to the CP Issuer as the excess,
if any, of (i) an amount equal to the present value (discounted at the Base
Rate in effect on the date of such prepayment) of the aggregate amount of
interest which would have accrued at the interest rate in effect in respect
of such Revolving Loan (other than the Base Rate Loans) on the date of such
prepayment on the principal amount of the Revolving Loans being prepaid
from the date of such prepayment if such amount had remained outstanding
and been repaid on the last day of the Interest Period for such Revolving
Loan during which such prepayment was made over (ii) an amount equal to the
present value (discounted at the Base Rate in effect on the date of such
prepayment) of the aggregate amount of interest which would accrue on the
principal amount of the Revolving Loans (other than the Base Rate Loans) so
prepaid if such principal amount were invested on the date of such
prepayment until the last day of such Interest Period at the Treasury Rate
(as hereinafter defined) plus 0.50%. For purposes of this Section 5.02(b),
the term "Treasury Rate" shall mean a percentage amount equal to:
(i) The current yield to maturity, on an annual equivalent
bond basis (recalculated to a 360-day year basis), of a U.S. Treasury
bill, note or bond currently actively traded in the secondary market
("Treasury Note") maturing closest to the last day of the Interest Period
in respect of the Revolving Loans being prepaid, but in no event maturing
more than two months prior to or after such last day; if such a Treasury
Note is not outstanding, then
(ii) The current yield to maturity, on an annual equivalent
bond basis (recalculated to a 360-day year basis), of Treasury Notes
which the Liquidity Agent shall, in its sole discretion, determine as
being appropriate to determine the Treasury Rate (provided that in the
event two or more issues of such Treasury Notes mature on the same day,
then the Liquidity Agent shall at its reasonable discretion select one
of such issues for purposes of determining the Treasury Rate).
SECTION 5.03 Attachments. Anything herein to the contrary
notwithstanding, the CP Issuer shall not be permitted to issue or sell
Commercial Paper after the CP Issuer has received notice that the
Commercial Paper Account or any funds on deposit in, or otherwise to the
credit of, the Commercial Paper Account are or have become subject to any
stay, writ, judgment, warrant of attachment, execution or similar process,
unless such stay, writ, judgment, warrant or attachment, execution or
similar process does not, in the sole judgment of the Required Banks,
materially impair the fulfillment of the transactions contemplated by this
Agreement.
SECTION 5.04 Method and Place of Payment, etc. (a) All payments by
the CP Issuer under this Agreement and the Loan Notes owing to the Banks
shall be made to the Liquidity Agent for the pro rata account of each Bank,
without setoff or counterclaim, not later than 11:00 a.m. (New York City
time) for any payments made pursuant to Sections 7 and 8 of the Security
Agreement and 3:00 p.m. (New York City time) for all other payments on the
date when due and shall be made in freely transferable U.S. dollars and in
immediately available funds at the Payment Office. Payments by the CP
Issuer shall be distributed by the Liquidity Agent to the Banks in
accordance with their respective Percentages as soon as possible after the
same have been received by the Liquidity Agent but in no event later than
the close of business on the Business Day on which received.
(b) On any date on which a payment by the CP Issuer of any
amount owing by it hereunder is due and payable, the Liquidity Agent may
(but in no event shall be required to) assume that the CP Issuer has made
such payment available to the Liquidity Agent on the date of such payment
in accordance with this Section 5.04, and the Liquidity Agent may (but in
no event shall be required to), in reliance upon such assumption, make
payment of a corresponding amount to the Banks. If and to the extent the
CP Issuer shall not have so made such payment available to the Liquidity
Agent, each Bank irrevocably and unconditionally agrees to repay to the
Liquidity Agent forthwith on demand the amount of such payment received by
such Bank together with interest thereon, for each day from the date such
payment is made by the Liquidity Agent until the date such amount is repaid
to the Liquidity Agent, at a rate per annum equal to the federal funds
effective rate.
(c) Any payments received after 3:00 p.m. (New York City
time) on the date when due shall be deemed for purposes of calculating
interest pursuant to Section 3.06 hereof to have been paid on the next
succeeding Business Day (or Working Day in the case of Eurodollar Loans),
and interest shall be payable at the applicable rate through and including
the day immediately preceding such Business Day (or Working Day in the case
of Eurodollar Loans).
ARTICLE VI
Conditions Precedent
SECTION 6.01 Conditions to Effectiveness. This Agreement shall become
effective if the following conditions have been satisfied:
(a) Agreement. Each Bank, the Liquidity Agent, Funding,
Ingram and the CP Issuer shall have signed a counterpart copy of this
Agreement and delivered the same to the Liquidity Agent.
(b) Depositary Agreement, Pooling and Servicing Agreement
and Variable Funding Certificate. (i) The CP Issuer and the Depositary
shall have executed and delivered the Depositary Agreement, (ii) the
Transferor, the Trustee and Ingram shall have executed and delivered the
Pooling and Servicing Agreement and the Variable Funding Supplement, and
the Liquidity Agent shall have received a fully executed counterpart of
each thereof, and (iii) the Transferor shall have issued, executed and
delivered and the Trustee shall have authenticated the Variable Funding
Certificate, and the Liquidity Agent shall have received a copy thereof.
(c) The Revolving Loan Notes and the Refunding Loan Notes.
There shall have been delivered to the Liquidity Agent for the account of
each Bank the appropriate Revolving Loan Note and Refunding Loan Note
payable to the order of such Bank in the amount and as otherwise provided
for in Article III.
(d) Purchase Agreement. The Transferor and Ingram shall
have executed and delivered the Purchase Agreement and Ingram and each
Designated Subsidiary shall have executed and delivered each Subsidiary
Purchase Agreement, and the Liquidity Agent shall have received fully
executed counterparts thereof and a copy of the Revolving Note.
(e) Security Agreement. The CP Issuer, the Depositary, the
Collateral Agent and the Liquidity Agent shall have executed and delivered
to the Collateral Agent, for the benefit of the parties secured thereby,
the Security Agreement, which shall be in full force and effect, and the
Liquidity Agent shall have received a fully executed counterpart thereof
and the CP Issuer shall have delivered the Variable Funding Certificate to
the Collateral Agent.
(f) LOC Reimbursement Agreement and LOC. Each of the LOC
Issuers shall have executed its LOC delivered it to the Collateral Agent,
and shall have executed the LOC Reimbursement Agreement, and the Liquidity
Agent shall have received a photocopy of such executed LOCs and a fully
executed counterpart of the LOC Reimbursement Agreement.
(g) Other Agreements. The CP Issuer shall have executed and
delivered the other Facilities Documents and the Liquidity Agent shall have
received a fully executed counterpart of each Facilities Document.
(h) No Default. There shall exist no Default, Event of
Default under this Agreement, Prospective Event of Termination, Event of
Termination, Servicer Default of Event of Default under the LOC
Reimbursement Agreement or any event which would, with the giving of
notice, the lapse of time, or both, constitute a Servicer Default or an
Event of Default under the LOC Reimbursement Agreement.
(i) Representations and Warranties. All representations and
warranties of (i) the CP Issuer contained in this Agreement and in the
other Facilities Documents to which it is a party or in any document,
certificate or financial or other statement executed and delivered in
connection herewith or therewith, (ii) the Transferor contained in the
Facilities Documents to which it is a party and the Purchase Agreement,
(iii) Ingram contained in this Agreement and in the Purchase Agreement and
(iv) each Designated Subsidiary contained in each Subsidiary Purchase
Agreement shall (in each case) be true and correct and with the same force
and effect as though such representations and warranties had been made as
of such time, except to the extent any such representations and warranties
relate solely to an earlier date.
(j) Opinions of Counsel. The Liquidity Agent shall have
received, in sufficient quantities for each Bank, the Liquidity Agent, the
CP Issuer and the Depositary, favorable opinions dated the Initial Closing
Date and addressed to the Banks, from (i) Skadden, Arps, Slate, Meagher &
Flom, special counsel to the CP Issuer, the Transferor and Ingram,
substantially in the forms attached hereto as Exhibit I, (ii) Pryor,
Cashman, Sherman & Flynn, counsel to the Trustee, substantially in the form
attached hereto as Exhibit J, (iii) counsel to each Bank and Orrick,
Herrington & Sutcliffe, special counsel to the Banks, substantially in the
form attached hereto as Exhibit L and Exhibit M, respectively, (iv)
Skadden, Arps, Slate, Meagher & Flom, special counsel to the Transferor and
Ingram regarding certain true sale and bankruptcy matters, in each case, in
form and substance satisfactory to the Liquidity Agent and (v) James
Anderson, general counsel to the Servicer.
(k) Closing Certificates. The Liquidity Agent shall have
received in sufficient quantities for each Bank a certificate, dated the
Closing Date and executed by the president, treasurer, controller,
assistant treasurer or other authorized officer of each of the CP Issuer,
the Transferor, each Designated Subsidiary and Ingram, stating that all of
the conditions specified in Sections 6.01(h) and (i) as applicable to it
are then satisfied.
(1) Filings, etc. The Liquidity Agent shall have received
(i) Officer's Certificates of (A) the CP Issuer with respect to the
Collateral certifying as to the absence of Liens thereon, except the Liens
created pursuant to the Security Agreement in favor of the Collateral Agent
and (B) the Transferor certifying as to the absence of Liens on any of its
property or assets, except the Liens created pursuant to the Pooling and
Servicing Agreement in favor of the Trustee, and (ii) reports of UCC-1 and
other searches of (A) Ingram reflecting the absence of Liens on the
property conveyed by it under the Purchase Agreement, except for filings
made in connection with the Purchase Agreement in favor of the Transferor,
and (B) each Designated Subsidiary reflecting the absence of Liens on the
property conveyed by them under the Subsidiary Purchase Agreements, except
for filings made in connection with the Subsidiary Purchase Agreements in
favor of Ingram, (iii) executed copies of all documents, filings and
financing statements in form acceptable to the Collateral Agent and the
Liquidity Agent to release all security interests and other rights of any
Person in the Collateral or the Trust Assets previously granted by Ingram,
each Designated Subsidiary, the Transferor or the CP Issuer, as the case
may be, and (iv) all such UCC-1 financing statements and other instruments
and documents as the Liquidity Agent or counsel shall have requested as
necessary or advisable to perfect or protect the Liens intended to be
created pursuant to the Subsidiary Purchase Agreements, the Purchase
Agreement, the Pooling and Servicing Agreement and the Security Agreement.
All documents or instruments to be filed or recorded by the transactions
contemplated hereby shall have been completed with respect to the
Subsidiary Purchase Agreements, the Purchase Agreement, the Pooling and
Servicing Agreement and the Security Agreement in connection with the
property conveyed under such Purchase Agreement, the Trust Assets and the
Collateral, respectively, in such jurisdictions as may be required or
permitted by law to establish, perfect, protect and preserve the rights,
title, interest, remedies, powers, privileges, liens and security interests
of the Transferor, as contemplated by the Subsidiary Purchase Agreements
and the Purchase Agreement, the Trustee as contemplated by the Pooling and
Servicing Agreement and the Collateral Agent in the Collateral covered by
the Security Agreement and any giving of notice or the taking of any other
action to such end (whether similar or dissimilar) required or permitted by
law shall have been given or taken. On or prior to the Closing Date, the
CP Issuer, the Liquidity Agent and the Collateral Agent shall have received
satisfactory evidence as to any such filing, recording, registration,
giving of notice or other action so taken or made.
(m) Documentation and Proceedings. The Liquidity Agent
shall have received
(i) a copy of the certificate or articles of incorporation,
including all amendments thereto, of Ingram, each Designated Subsidiary,
the Transferor and the CP Issuer, certified in each case as of a recent
date by the Secretary of State of the state of its organization, and a
certificate as to the good standing of Ingram and each Designated
Subsidiary, and certificates as to the legal existence of the Transferor
and the CP Issuer as of a recent date, from such Secretary of State;
(ii) certificates of the Secretaries or Assistant Secretaries
of Ingram, each Designated Subsidiary, the Transferor and the CP Issuer, in
each case dated the Initial Closing Date and certifying (A) that attached
thereto is a true and complete copy of the bylaws of Ingram, each
Designated Subsidiary, the Transferor or the CP Issuer, as the case may be,
as in effect on the Initial Closing Date and at all times since a date
prior to the date of the resolutions described in clause (B) below, (B)
that attached thereto is a true and complete copy of resolutions duly
adopted by the Executive Committee of the Board of Directors of Ingram, and
by the Board of Directors of each Designated Subsidiary, the Transferor or
the CP Issuer, as the case may be, authorizing the execution, delivery and
performance of the Facilities Documents to which it is a party and, in the
case of Ingram, each Designated Subsidiary and the Transferor, the Purchase
Agreement to which it is a party and the grant of any Liens contemplated
thereby and, with respect to the CP Issuer, the borrowings hereunder and
pursuant to the Commercial Paper and the grant of the Liens pursuant to the
Security Agreement, and that such resolutions have not been modified,
rescinded or amended and are in full force and effect, (C) that the
certificate of incorporation of Ingram, each Designated Subsidiary, the
Transferor or the CP Issuer, as the case may be, has not been amended since
the date of the last amendment thereto shown on the certificate of good
standing furnished pursuant to clause (i) above and (D) as to the
incumbency and specimen signature of each officer executinq any Facilities
Document and, in the case of Ingram, each Designated Subsidiary, and the
Transferor, the Purchase Agreement to which it is a party or any other
document delivered in connection herewith or therewith on behalf of Ingram,
each Designated Subsidiary, the Transferor or the CP Issuer, as the case
may be;
(iii) a certificate of another officer as to the incumbency
and specimen signature of the Secretary or Assistant Secretary executing
the certificate pursuant to (ii) above; and
(iv) such other documents, certificates and opinions as any
Bank or its counsel may reasonably request.
(n) Bank Accounts; Lock-Box Accounts.
(i) The Liquidity Agent shall have received evidence
satisfactory to it that the Commercial Paper Account, the Collateral
Account, the Collection Account and the Transferor Account have been
established, which evidence may be certificates of the Depositary, the
Collateral Agent and the Trustee with respect to the Commercial Paper
Account, the Collateral Account, the Collection Account and the Transferor
Account, respectively, setting forth, among other things, the name and
number of each such Account.
(ii) The Liquidity Agent shall have received (i) true and
correct copies of each Lock-Box Agreement in effect on the Initial Closing
Date and (ii) evidence satisfactory to it that each Lock-Box Account
maintained thereunder is in the name of the Transferor.
(o) Opinions of Counsel of the Banks. Each Bank shall have
provided to the CP Issuer, the Transferor, the CP Dealer and the Depositary
an opinion of counsel (both domestic and, if applicable, foreign),
substantially in the form attached hereto as Exhibit K dated the Initial
Closing Date to the effect that this Agreement is a legal and validly
binding obligation of such Bank and is enforceable against such Bank in
accordance with its terms.
(p) Rating Letters. The Liquidity Agent shall have received
a letter from each of Fitch and S&P to the effect that the Commercial Paper
shall have been given a rating of at least "A-1" by S&P and at least
"F-1" by Fitch, which ratings shall be in full force and effect.
(q) Purchase Agreement Conditions. All conditions to the
obligations of the Seller and the Buyer under the Purchase Agreement and of
each Designated Subsidiary and Ingram under the Subsidiary Purchase
Agreements shall have been satisfied in all respects.
(r) Pooling and Servicing Agreement Conditions. All
conditions to the obligations of the Transferor, the Servicer and the
Trustee under the Pooling and Servicing Agreement shall have been satisfied
in all respects.
(s) Offering Materials. Each offering circular, offering
memorandum or information circular to be used by the CP Issuer or the CP
Dealer in connection with the offer or sale of Commercial Paper, insofar as
it describes or refers to the Liquidity Agent or any Bank, shall be
reasonably acceptable to the Liquidity Agent or Bank in its sole discretion
on and as of the Initial Closing Date.
(t) Consents, etc. The Liquidity Agent shall have received
true and correct copies of all consents, licenses and approvals required by
Ingram, each Designated Subsidiary, the Transferor or the CP Issuer in
connection with its execution, delivery and performance of the Facilities
Documents to which it is a party, and, in the case of Ingram, each
Designated Subsidiary and the Transferor, the Purchase Agreement to which
it is a party.
(u) Capital Contributions by Ingram. The Liquidity Agent
shall have received evidence satisfactory to it that Ingram has made the
capital contribution to the Transferor described in the Purchase Agreement
between Ingram and the Transferor.
(v) Other Closing Documents. The Liquidity Agent shall have
received a copy of each of the other documents, certificates or instruments
delivered on the Initial Closing Date pursuant to each other Facilities
Document.
SECTION 6.02 Conditions to Each Credit Utilization. The obligation of
any Bank to make any Revolving Loan hereunder and the right of the CP
Issuer to issue Commercial Paper other than to refinance Commercial Paper
maturing on the day such Commercial Paper is issued and which does not
increase the Aggregate CP Matured Value over that of the preceding day (any
of the foregoing, a "Credit Utilization") are subject at the time of such
Credit Utilization to the satisfaction of the following conditions. Each
delivery of a Notice of Revolving Borrowing and each Credit Utilization
shall constitute a representation and warranty by the CP Issuer that the
conditions specified in this Section 6.02 are then satisfied.
(a) No Event of Default. At the time of such Credit
Utilization and after giving effect thereto, there shall exist no Default
or Event of Default.
(b) Representations and Warranties. At the date of such
Credit Utilization and after giving effect thereto, all representations and
warranties of the CP Issuer, the Transferor or Ingram contained in this
Agreement, in the Security Agreement or in any other Facilities Document to
which it is a party or, in the case of Ingram, the Purchase Agreement or in
any document, certificate or financial or other statement delivered in
connection herewith or therewith shall be true and correct in all material
respects with the same force and effect as though such representations and
warranties had been made as of such date, except to the extent any such
representations and warranties relate solely to an earlier date.
(c) No Event of Termination. At the time of such Credit
Utilization and after giving effect thereto, there shall exist no Event of
Termination or Prospective Events of Termination with respect to the
Variable Funding Certificate.
(d) No Bankruptcy Proceeding. Neither the CP Issuer nor
Ingram shall have voluntarily commenced any proceeding or filed any
petition under any bankruptcy, insolvency, reorganization or similar law
seeking the dissolution, liquidation, winding up, arrangement or adjustment
of debts or reorganization of the CP Issuer or Ingram or taken any
corporate action for the purpose of effectuating any of the foregoing, and
no involuntary proceedings or involuntary petition shall have been
commenced or filed against the CP Issuer or Ingram by any Person under any
bankruptcy, insolvency, reorganization or similar law seeking the
dissolution, liquidation, winding up, arrangement or adjustment of debts or
reorganization of the CP Issuer or Ingram that shall not have been
dismissed.
(e) No Borrowing Base Deficiency; Available Commitment. In
reliance on the most recent Dally Report or Settlement Statement delivered
by the Servicer, a Borrowing Base Deficiency shall not exist and the making
of such Credit Utilization would not (after giving effect to the use of
proceeds thereof) result in a Borrowing Base Deficiency. After giving
effect to such Credit Utilization, if an issuance of Commercial Paper, the
first proviso of Section 2.01(b) shall not be contravened and if in the
making of the Revolving Loan, Section 3.01(b) shall not have been
contravened.
(f) Commercial Paper Unavailable. If the Credit Utilization
is a Revolving Loan, the Servicer shall have given notice that the CP
Dealer has given notice under Section 4(f) of the CP Dealer Agreement with
respect to the unavailability of the Commercial Paper market or under
Section 4(g) of the CP Dealer Agreement that the issuance of Commercial
Paper Notes would be at a discount the imputed annual rate of interest of
which is in excess of the sum of the Base Rate plus 5 percent.
(9) Receipt of Daily Report or Settlement Statement. With
respect only to the issuance of Commercial Paper, the Liquidity Agent shall
have received a Daily Report or Settlement Statement most recently due
prior to a Credit Utilization.
(h) Ratings. At the time of each Credit Utilization, the
Commercial Paper shall be rated at least A-1 and F-1 by S&P and Fitch,
respectively, unless, as provided in the parenthetical to clause (v) in
Section 2.01(a), such Commercial Paper shall not be so rated as a result of
the withdrawal or downgrading of a Bank's rating by S&P or Fitch.
(i) LOC; LOC Issuer. At the date of such Credit
Utilization, each of the LOCs shall be in full force and effect, each LOC
Issuer with respect to its LOC shall not be insolvent or have taken any
action to repudiate or contest in any way its obligation to make payments
under its LOC, and the Available LOC Amount shall be not less than 10% of
Advances after giving effect to such Credit Utilization.
(j) Receipt of Notice of Revolving Borrowing. With respect
to the making of Revolving Loans, the Liquidity Agent shall have received
the Notice of Revolving Borrowing in accordance with the terms of this
Agreement.
SECTION 6.03 Conditions Precedent to the Makinq of Each Refunding
Loan. The obligation of any Bank to make any Refunding Loan shall be
subject to the satisfaction of the following conditions: (a) the Liquidity
Agent shall have received Notice of a Refunding Borrowing in accordance
with the terms of this Agreement, (b) after the making of such Refunding
Loan, Section 3.01(c) shall not have been contravened and (c) the CP Issuer
shall not have voluntarily commenced any proceeding or filed any petition
under any bankruptcy, insolvency or similar law seeking the dissolution,
liquidation or reorganization of the CP Issuer or taken any corporate
action for the purpose of effectuating any of the foregoing, and no
involuntary proceedings or involuntary petition shall have been commenced
or filed against the CP Issuer by any Person under any bankruptcy,
insolvency or similar law seeking the dissolution, liquidation or
reorganization of the CP Issuer that shall not have been dismissed;
provided, however, that, if a Designated Person of the Depositary shall not
have received written notice from any Bank, by 9:00 a.m. (New York City
time) on any day on which Commercial Paper is maturing, that the Banks have
no obligation to make Refunding Loans because a condition set forth in
clause (c) above is not satisfied, and if the Depositary shall advance the
funds to pay such Commercial Paper on such day pursuant to Section 5(c) of
the Depositary Agreement prior to its receipt of such a notice from any
Bank, the Banks shall be deemed (solely for purposes of satisfying the
conditions precedent in this Section) to have waived such conditions with
respect to Refunding Loans in an aggregate principal amount not to exceed
the amount of such advances made by the Depositary prior to its receipt of
such notice; and further provided, that the Transferor and Ingram, upon
obtaining actual knowledge, shall each be obligated to give the Liquidity
Agent and a Designated Person of the Depositary immediate notice of any
event which would cause a condition set forth in clause (c) above not to be
satisfied. Each delivery of a Notice of Refunding Borrowing and each
Refunding Loan Borrowing shall constitute a representation and warranty by
the CP Issuer that the conditions specified in clauses (b) and (c) of this
Section 6.03 have been satisfied. The Banks' obligations to make Refunding
Loans in accordance with the terms of this Agreement are primary,
irrevocable, absolute and, except as set forth in this Section 6.03,
unconditional and the failure of the CP Issuer to perform any covenant or
obligation hereunder, except as set forth in this Section 6.03, or the
breach of any representation or warranty by the CP Issuer hereunder shall
not in any way affect or limit the Banks' obligations to make Refunding
Loans. Each Bank waives any and all defenses (except for satisfaction of
the conditions precedent set forth in this Section 6.03), rights of
rescission, counterclaims or setoff with respect to its obligations to make
Refunding Loans.
ARTICLE VII
Covenants
SECTION 7.01 Covenants of the CP Issuer. While this Agreement is in
effect and until all indebtedness and all other amounts owing hereunder,
under the Loan Notes and under the Commercial Paper shall have been paid in
full and the Liquidity Commitment has been terminated, the CP Issuer
covenants and agrees as follows:
(a) Compliance with Laws. The CP Issuer shall comply in all
material respects with all applicable laws, regulations, rules and orders
of any Government Authority, whether now in effect or hereinafter enacted,
except those contested in good faith by appropriate proceedings diligently
conducted and for which adequate reserves in accordance with GAAP have been
set aside; provided, however, that the CP Issuer will promptly give the
Collateral Agent and the Liquidity Agent written notice of such contest and
of any developments related thereto and provided, further that there shall
be no Lien (other than Permitted Liens) on, or any material danger of the
sale, forfeiture or loss of, any Collateral in respect thereof.
(b) Corporate Existence. The CP Issuer (i) shall preserve
and maintain its corporate existence, rights, franchises and privileges in
the jurisdiction of its incorporation, and (ii) shall 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 would, if not remedied, materially
adversely affect the ability of the CP Issuer to perform its obligations
hereunder in the case of (ii) and where such failure shall remain
unremedied for a period of 30 days or such failure shall have a material
adverse effect on the ability of the CP Issuer to perform its obligations
hereunder.
(c) Payment of Taxes and Obligations. The CP Issuer shall
pay and discharge all indebtedness and other obligations promptly before
the same shall become delinquent or in default and pay and discharge
promptly when due all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its
property, and other claims which might give rise to a Lien, before the same
shall become delinquent or in default, except those contested in good faith
and by appropriate proceedings diligently conducted and for which adequate
reserves in accordance with GAAP have been set aside, provided that there
shall be no Lien (other than Permitted Liens) on or any material danger of
the sale, forfeiture or loss of any Collateral in respect thereof.
(d) Notice. Unless such parties have otherwise received
notice, the CP Issuer shall notify the Trustee, the Collateral Agent and
the Liquidity Agent or give them copies, as the case may be, of the
following:
(i) promptly following knowledge thereof, any Default or
Event of Default or Event of Termination or Prospective Event of
Termination, specifying the nature and extent thereof and the corrective
action (if any) proposed to be taken with respect thereto;
(ii) copies of any notices received by the CP Issuer under
any other Facilities Document upon receipt thereof;
(iii) any proceedings or petition commenced or filed by the
CP Issuer or against the CP Issuer by any Person under any Debtor Relief
Law seeking the dissolution, liquidation or reorganization of the CP Issuer
within one day of such commencement or filing;
(iv) promptly following knowledge thereof, any material Lien
(other than the Lien created pursuant to the Security Agreement) on or
claim asserted against any of the Collateral; and
(v) promptly following knowledge thereof, any litigation,
investigation or proceeding which may exist at any time between
the CP Issuer and any Person which could reasonably be expected to have a
material adverse effect on the Receivables taken as a whole.
(e) Business and Properties. The CP Issuer shall do or cause
to be done all things necessary to obtain, preserve, renew, extend and keep
in full force and effect the rights, licenses, permits, franchises,
authorizations, patents, copyrights, trademarks, trade names and all
consents material to the conduct of its business, if any, and maintain and
operate such business as a special purpose corporation with the limited
purposes set forth in its Certificate of Incorporation.
(f) Use of Proceeds. The CP Issuer will use the proceeds of
the Loans only for the purposes specified in this Agreement.
(g) Servicer Performance. The CP Issuer will use its
reasonable efforts to cause the Servicer to perform all obligations of the
Servicer under the Facilities Documents.
(h) Negative Covenants. The CP Issuer
shall not:
(i) Create or permit to exist any Liens or encumbrances on
any of its assets, other than Permitted Liens;
(ii) Declare or pay, directly or indirectly, any dividend or
make any other distribution (by reduction of capital or otherwise),
whether in cash, property, securities or a combination thereof, with
respect to any shares of its capital stock or directly or indirectly
redeem, purchase, retire or otherwise acquire for value any shares of
any class of its capital stock or set aside any amount for any such
purpose;
(iii) Amend its Certificate of Incorporation or By-Laws;
(iv) Issue (other than in connection with its
incorporation), or consent to the transfer to any entity of, any of its
capital stock;
(v) Sell or otherwise dispose of any property or assets
other than pursuant to the Security Agreement;
(vi) Invest in (by capital contribution or otherwise),
suffer to exist any investment in, or acquire or purchase or make any
commitment to purchase the obligations or capital stock of, or other
indicia of equity rights in, or make any loan, advance or extension of
credit to, or purchase any bonds, notes, debentures or other securities of,
any Person other than its acquisition of the Variable Funding Certificate,
or enter into any joint venture, syndicate or other combination with any
other Person;
(vii) Make any expenditure (by long-term or operating lease
or otherwise) for capital assets (either realty or personalty);
(viii) Wind-up, liquidate or dissolve its affairs or enter
into any transaction of merger or consolidation;
(ix) Engage in any business, or enter into any contract,
agreement or transaction, except as contemplated by its Certificate of
Incorporation and By-Laws and the Facilities Documents;
(x) create, incur, assume or suffer to exist any indebtedness
(including, without limitation, any guaranty) or expense (whether or not
accounted for as a liability) except (i) indebtedness hereunder, or under
any of the other Facilities Documents or the Management Agreement to which
it is a party, or agreements, contracts or instruments which relate
thereto, (ii) indebtedness or other expense to its professional advisers
and its counsel, and (iii) other indebtedness and expenses, not exceeding
$4,750 at any one time outstanding, on account of incidentals or services
supplied or furnished to the CP Issuer;
(xi) Include any material relating to either Liquidity Agent
or any Bank or the Liquidity Commitment in any offering circular, offering
memorandum or information circular to be used by the CP Issuer or the CP
Dealer in connection with the offer or sale of Commercial Paper unless such
material is approved in writing by such Liquidity Agent or Bank prior to
its inclusion in such offering circular, or distribute any such offering
circular unless its contents have been approved in writing by such
Liquidity Agent or Bank;
(xii) While solvent, institute proceedings to be adjudicated
a bankrupt or insolvent, or consent to the institution of such
proceedings against it, or file a petition for reorganization or relief
under any applicable law relating to bankruptcy, or consent to the
appointment of a receiver or other similar official of it or any of its
property, or make any assignment for the benefit of creditors, or take
any action in furtherance of any of the foregoing; and
(xiii) purchase Issuer Additional Amounts if a Borrowing Base
Deficiency would result therefrom or an Event of Default has occurred and
is continuing or would result therefrom.
(i) Keening of Books. The CP Issuer shall keep proper books
of record and account, which shall be maintained or caused to be maintained
by the CP Issuer and shall be separate and apart from those of any
Affiliate of the CP Issuer, in which full and correct entries shall be made
of all financial transactions and the assets and business of the CP Issuer
in accordance with GAAP consistently applied, and keep and maintain or
cause to be kept and maintained all documents, books, records and other
information reasonably necessary or advisable for the monitoring of
payments on the Variable Funding Certificate and otherwise under the
Security Agreement and upon reasonable prior notice, make available to any
Bank such documents, books, records and other information.
(j) Sole Owner. On the date of purchase by the CP Issuer of
the Variable Funding Certificate issued pursuant to the Pooling and
Servicing Agreement and on each date of purchase of Issuer Additional
Amounts the CP Issuer will own the Variable Funding Certificate free and
clear of all Liens other than Permitted Liens.
SECTION 7.02 Covenants of Ingram. While this Agreement is in effect
and until all indebtedness and all other amounts owing hereunder and the
Loan Notes and under the Commercial Paper shall have been paid in full and
the Liquidity Commitment has been terminated, Ingram covenants and agrees
as follows:
(a) Compliance with Laws. Ingram shall comply in all
material respects with all applicable laws, regulations, rules and orders
of any Governmental Authority, the failure to comply with which would have
a material adverse effect on the Receivables taken as a whole or the
ability of Ingram to perform its obligations hereunder and under the
Pooling and Servicing Agreement, whether now in effect or hereafter
enacted, except those contested in good faith by appropriate proceedings
diligently conducted and for which adequate reserves in accordance with
GAAP have been set aside; provided, however, that Ingram will promptly give
the Collateral Agent and the Liquidity Agent written notice of such contest
and of any developments related thereto and provided, further that there
shall be no Lien (other than Permitted Liens) on, or any material danger of
the sale, forfeiture or loss of, any Collateral in respect thereof.
(b) Corporate Existence. Ingram (i) shall preserve and
maintain its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and (ii) shall 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 would, if not remedied, materially
adversely affect the ability of Ingram to perform its obligations hereunder
and under the Pooling and Servicing Agreement in the case of (ii) and where
such failure shall remain unremedied for a period of 30 days or such
failure shall have a material adverse effect on the ability of Ingram to
perform its obligations hereunder and under the Pooling and Servicing
Agreement.
(c) Payment of Taxes and Obligations Ingram shall pay and
discharge all indebtedness and other obligations to the extent in excess of
$10,000,000 in the aggregate promptly before the same shall become
delinquent or in default and pay and discharge promptly when due all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or in respect of its property, and other claims which
might give rise to a Lien, before the same shall become delinquent or in
default, except those contested in good faith and by appropriate
proceedings diligently conducted and for which adequate reserves in
accordance with GAAP have been set aside, provided that there shall be no
Lien (other than Permitted Liens) on or any material danger of the sale,
forfeiture or loss of any Collateral in respect thereof.
(d) Notice. Unless such parties have otherwise received
notice, Ingram shall notify the Trustee, the CP Issuer, the Collateral
Agent, the Liquidity Agent and the Rating Agencies or give them copies, as
the case may be, of the following:
(i) promptly following knowledge thereof, any Default or
Event of Default or Event of Termination or Prospective Event of
Termination, specifying the nature and extent thereof and the corrective
action (if any) proposed to be taken with respect thereto;
(ii) copies of any notices received by Ingram under any other
Facilities Document upon receipt thereof;
(iii) any proceedings or petition commenced or filed by
Ingram or against Ingram by any Person under any Debtor Relief Law seeking
the dissolution, liquidation or reorganization of Ingram within one day
after Ingram has received notice of such commencement or filing;
(iv) promptly following knowledge thereof, any material Lien
(other than the Lien created pursuant to the Security Agreement) on or
claim asserted against any of the Collateral; and
(v) promptly following knowledge thereof, any litigation,
investigation or proceeding which may exist at any time between Ingram and
any Person which could reasonably be expected to have a material adverse
effect on the Receivables taken as a whole.
(e) Business and Properties. Ingram shall do or cause to be
done all things necessary to obtain, preserve, renew, extend and keep in
full force and effect the rights, licenses, permits, franchises,
authorizations, patents, copyrights, trademarks, trade names and all
consents material to the conduct of its business.
(f) Negative Covenants. Ingram shall not:
(i) Wind-up, liquidate or dissolve its affairs;
(ii) Engage in any business, or enter into any contract,
agreement or transaction, except as contemplated by its Certificate of
Incorporation and By-Laws; and
(iii) While solvent, institute proceedings to be adjudicated
a bankrupt or insolvent, or consent to the institution of such proceedings
against it, or file a petition for reorganization or relief under any
applicable law relating to bankruptcy, or consent to the appointment of a
receiver or other similar official of it or any of its property, or make
any assignment for the benefit of creditors, or take any corporate action
in furtherance of any of the foregoing.
(g) Financial Covenants. Ingram will not permit:
(i) its Consolidated Current Ratio at any time to be less
than 1.0:1.0;
(ii) its Consolidated Stockholders' Equity, at any time to be
less than the sum of (i) $125,000,000, plus (ii) an amount equal to the
sum of:
(x) fifty percent (50%) of the consolidated net income of
Ingram and the Consolidated Subsidiaries, for the period commencing
on January 1, 1989 and ending on (and including) the date of
determination of Consolidated Stockholders' Equity (measured
cumulatively, but excluding those months where consolidated net
income of Ingram and the Consolidated Subsidiaries is a negative
number); plus
(y) twenty five percent (25%) of the aggregate consolidated net
income of Ingram and the Consolidated Subsidiaries for any period or
periods commencing on or after January 1, 1989 and ending on or
prior to the end of the month immediately preceding the date of
determination of Consolidated Stockholders' Equity and during which
the Consolidated Leverage Ratio was greater than 1.8:1.0;
(iii) the Consolidated Net Income Available for Fixed Charges
(calculated on the basis of the financial statements for the twelve
(12) calendar months prior to the date of determination of Consolidated
Net Income Available for Fixed Charges) to be less than one hundred and
thirty five percent (135%) of Consolidated Fixed Charges (calculated on
the date of determination of Consolidated Net Income Available for
Fixed Charges); or
(iv) Consolidated Working Capital at any time to be less
than or equal to one hundred and ten percent (110%) of loans and face
amount of any letters of credit outstanding under the Credit Agreement,
dated December 15, 1992, among the Obligated Parties, Lenders and
Agents named therein, as such agreement may be amended, supplemented,
modified and replaced from time to time.
SECTION 7.03 Covenants of Transferor. While this Agreement is in
effect and until all indebtedness and all other amounts owing hereunder and
the Loan Notes and under the Commercial Paper shall have been paid in full
and the Liquidity Commitment has been terminated, the Transferor covenants
and agrees as follows:
(a) Additional Designated Subsidiaries. The Transferor
shall not consent to the addition of Additional Designated Subsidiaries
pursuant to Section 2.2 of the Purchase Agreement without the consent of
each of the Banks.
(b) Maintenance of Transferor Minimum Amount. The
Transferor shall comply with its obligations pursuant to Sections 2.10 and
3.09 of the Pooling and Servicing Agreement with respect to the deposit of
funds into the Transferor Account to cause the Transferor Eligible Amount
to equal the Transferor Minimum Amount.
ARTICLE VIII
Events of Default
SECTION 8.01 Events of Default. If any of the following events shall
occur (each an "Event of Default"): (a) the Banks or the holders of the
Commercial Paper are not paid when and as due (whether on the due date
thereof or at a date fixed for prepayment thereof or by acceleration
thereof or otherwise) (i) any amount payable with respect to principal on
the Loan Notes or on the Commercial Paper within five Business Days after
the due date thereof, (ii) interest payable on the Loan Notes or the
Liquidity Fee within five Business Days after the due date thereof, or
(iii) Supplemental Payments on the due date thereof; provided that
Supplemental Payments shall not be deemed due until 30 days following
demand therefor;
(b) The CP Issuer shall fail to perform or observe in any
material respect any of the covenants or agreements set forth in this
Agreement, the Security Agreement or the CP Dealer Agreement or Ingram
shall fail to perform or observe in any material respect any of the
covenants or agreements set forth in this Agreement if such breach shall
remain unremedied for 30 days after the earlier of actual knowledge or
the date on which written notice of such breach shall have been given to
the CP Issuer and Ingram by the Liquidity Agent, the Collateral Agent or
the CP Dealer;
(c) Any representation or warranty made by the CP Issuer or
Ingram herein shall prove to have been incorrect in any material respect
when made and such failure shall continue to be incorrect in such material
respect for a period of 30 days after an officer of the CP Issuer or
Ingram, as the case may be, shall acquire knowledge thereof;
(d) Any Lien created by any Facilities Document on the
property encumbered thereby shall cease to be a valid and enforceable first
priority perfected security interest in favor of the Collateral Agent (in
the case of the Security Agreement), or any of Ingram, the Transferor or
the CP Issuer shall so assert in writing, or any of the Collateral shall be
subject to any Lien other than Permitted Liens;
(e) Notwithstanding any deemed waiver by the Banks under
Section 6.03 hereof, the CP Issuer, the Transferor or Ingram shall
generally not pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally as they become due, or
shall make a general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against the CP Issuer, the Transferor,
or Ingram seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, appointment of a receiver, trustee, liquidator or custodian,
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 any order for relief or the appointment of a receiver,
trustee, or other similar official for it or for any substantial part of
its property or assets, which, in the case of proceedings instituted
against the CP Issuer, the Transferor, or Ingram, is consented to or
acquiesced in by such Person or remains undismissed, undischarged or
unbended for a period of 60 days; or the CP Issuer, the Transferor, or
Ingram shall take any corporate action to authorize any of the actions set
forth above in this subsection (e);
(f) Any material provision of any of the Facilities
Documents shall, for any reason, cease to be valid and binding on the CP
Issuer, the Transferor or Ingram, or the CP Issuer, the Transferor or
Ingram shall so state in writing;
(g) Any judgment or order as to a liability or debt for the
payment of money in excess of $4,750 shall be rendered against the CP
Issuer which is not satisfied and either (i) enforcement proceedings shall
have been commenced and shall be continuing by any creditor upon such
judgment or order or (ii) there shall be any period of 60 consecutive days
during which a stay of enforcement of such judgment or order, by reason of
a pending appeal or otherwise, shall not be in effect;
(h) The CP Issuer shall become an "investment company"
under the Investment Company Act of 1940, as amended;
(i) the Servicer, the Transferor or Ingram shall fail to
perform or observe any other term, covenant or agreement in any Facilities
Document or Purchase Agreement to which it is a party and such failure to
perform or observe shall continue unremedied for 30 days after the earlier
of actual knowledge by an officer of such Person or the date on which
written notice of such breach shall have been given to such Person by the
Liquidity Agent or the Collateral Agent;
(j) Any Person shall engage in any nonexempt "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Benefit Plan of the CP Issuer, Ingram or any ERISA
Affiliate thereof, (ii) any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect to
any Plan of the CP Issuer, Ingram or any of their respective ERISA
Affiliates, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall
be appointed, to administer or to terminate, any Plan of the CP Issuer,
Ingram or any of their respective ERISA Affiliates, which Reportable Event
or commencement of proceedings or appointment of a trustee is, in the
reasonable opinion of the Required Banks, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any Plan
of the CP Issuer, Ingram or any ERISA Affiliate thereof shall
terminate for purposes of Title IV of ERISA, (v) the CP Issuer, Ingram or
any ERISA Affiliate thereof shall, or in the reasonable opinion of the
Required Banks is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist, with
respect to a Benefit Plan of the CP Issuer, Ingram or any ERISA Affiliate
thereof; and in each case in clauses (i) through (vi) above, such event or
condition, together with all other such events or conditions, if any, would
have a material adverse effect on the Collateral and the rights of the
Banks with respect thereto;
(k) an Event of Termination with respect to any Series then
outstanding or the Variable Funding Certificate shall occur;
(l) a Termination Notice shall be delivered pursuant to
Section 10.01 of the Pooling and Servicing Agreement; or
(m) The Transferor shall fail (i) to pay any amount required
to be paid pursuant to Section 7.03(b) on the date such amount was required
to be paid, and such breach shall not be remedied within five Business
Days, or (ii) to observe in any material respect the covenant set forth in
Section 7.03(a), and such breach shall not be remedied within 30 days;
then, and in any such event, (x) if such event is an Event of Default
specified in subsection 8.01(a)(i), (e) or (h) above, the Liquidity
Commitment shall automatically and immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under
this Agreement and the Loan Notes shall immediately become due and payable,
and (y) if such event is any other Event of Default, either or both of the
following actions may be taken (any such Event of Default followed by any
of the following actions, a "Matured Default"): (i) upon the request of the
Required Banks, the Liquidity Agent shall, by notice to the CP Issuer,
declare the Liquidity Commitment to be terminated forthwith, whereupon the
Liquidity Commitment shall immediately terminate; and (ii) upon the request
of the Required Banks, the Liquidity Agent shall, by notice of default to
the CP Issuer, declare the Loans (with accrued interest thereon) and all
other amounts owing under this Agreement and the Notes to be due and
payable forthwith, whereupon the same shall immediately become due and
payable, provided, however, that no termination of the Liquidity Commitment
pursuant to this Section 8.01 shall be effective with respect to
Outstanding Commercial Paper as of the date of such termination to the
extent of the Requisite Commitment Level. Except as expressly provided
above in this Section 8.01, presentment, demand, protest and all other
notices of any kind are hereby expressly waived.
ARTICLE IX
Representations and Warranties
SECTION 9.01 Representations and Warranties of the CP Issuer. In
order to induce the Banks to enter into this Agreement and to provide the
credit facilities provided for herein, the CP Issuer herein makes the
representations and warranties contained in the Security Agreement (which
are hereby incorporated by reference in this Article IX) and the following
additional representations and warranties to the Banks:
(a) Organization; Powers. The CP Issuer (a) is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, (b) has all requisite power
and authority to own its property and assets and to carry on its business
as now conducted and as proposed to be conducted, (c) is qualified to do
business in every jurisdiction where such qualification is required, and
(d) has the corporate power and authority to execute, deliver and perform
its obligations under each of the Facilities Documents and each other
agreement or instrument contemplated thereby to which it is or will be a
party, to borrow hereunder and to grant the Liens on the Collateral
pursuant to the Security Agreement.
(b) Authorization. The execution, delivery and performance
by the CP Issuer of each of the Facilities Documents and the other
transactions contemplated hereby and thereby (a) have been duly authorized
by all requisite corporate and, if required, stockholder action and (b)
will not (i) violate (1) any provision of law, statute, rule or regulation,
or of the certificate or articles of incorporation or other constitutive
documents or by-laws of the CP Issuer, (2) any order of any Governmental
Authority or (3) any provision of any indenture, agreement or other
instrument to which the CP Issuer is a party or by which it or any of its
property is or may be bound, (ii) conflict with, result in a breach of or
constitute (alone or with notice or lapse of time or both) a default under
any such indenture, agreement or other instrument or (iii) result in the
creation or imposition of any Lien upon or with respect to any property or
assets now owned or hereafter acquired by the CP Issuer, except the Liens
created pursuant to the Security Agreement in favor of the Collateral
Agent.
(c) Enforceability. This Agreement has been duly executed
and delivered by the CP Issuer and constitutes, and each other Facilities
Document when executed and delivered by the CP Issuer will constitute, a
legal, valid and binding obligation of the CP Issuer enforceable against
the CP Issuer in accordance with its terms except as such enforceability is
subject to applicable bankruptcy, reorganization, insolvency, moratorium or
other laws affecting creditors' rights generally, and to the general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(d) Governmental Approvals. No action, consent or approval
of, registration or filing with or any other action by any Governmental
Authority is or will be required in connection with the execution and
performance of the Facilities Documents, except such as have been made or
obtained and are in full force and effect.
(e) Federal Reserve Regulations.
(i) The CP Issuer is not engaged principally, or as one of
its important activities, in the business of extending credit for the
purpose of purchasing or carrying Margin Stock.
(ii) No part of the proceeds of any Loan will be used,
whether directly or indirectly, and whether immediately, incidentally or
ultimately, (i) to purchase or carry Margin Stock or to extend credit to
others for the purpose of purchasing or carrying Margin Stock or to
refund indebtedness originally incurred for such purpose or (ii) for any
purpose that entails a violation of, or that is inconsistent with, the
provisions of the Regulations of the Board, including Regulation G, U
or X.
(f) Investment Company Act; Public Utility Holding Company
Act. The CP issuer is not (i) an "investment company," or an "affiliated
person" of, or "principal underwriter" or "promoter" for, an "investment
company," as such terms are defined in, or subject to regulation under, the
Investment Company Act of 1940, as amended, or (ii) a holding company" as
defined in, or subject to regulation under, the Public Utility Holding
Company Act of 1935.
(g) Subsidiaries. The CP Issuer has no Subsidiaries.
SECTION 9.02 Representations and Warranties of Ingram. In order to
induce the Banks to enter into this Agreement and to provide the credit
facilities provided for herein, Ingram herein makes the following
representations and warranties to the Banks:
(a) Organization; Powers. Ingram (i) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (ii) has all requisite power and
authority to own its property and assets and to carry on its business as
now conducted and as proposed to be conducted, (iii) is qualified to do
business in every jurisdiction where such qualification is required and
where failure to so qualify would have a material adverse effect on the
Holders of Commercial Paper and (iv) has the corporate power and authority
to execute, deliver and perform its obligations under each of the
Facilities Documents and each other agreement or instrument contemplated
thereby to which it is or will be a party.
(b) Authorization. The execution, delivery and performance
by Ingram of each of the Facilities Documents to which it is a party and
the other transactions contemplated hereby and thereby (i) have been duly
authorized by all requisite corporate and, if required, stockholder action
and (ii) will not (a) violate (1) any provision of law, statute, rule or
regulation, or of the certificate or articles of incorporation
or other constitutive documents or by-laws of Ingram, (2) any order of any
Governmental Authority or (3) any provision of any indenture, agreement or
other instrument to which Ingram is a party or by which it or any material
part of its property is or may be bound, (b) conflict with, result in a
breach of or constitute (alone or with notice or lapse of time or both) a
default under any such indenture, agreement or other instrument or (c)
result in the creation or imposition of any Lien upon or with respect to
any material part of the property or assets now owned or hereafter acquired
by Ingram.
(c) Enforceability. This Agreement has been duly executed
and delivered by Ingram and constitutes, and each other Facilities Document
to which it is a party when executed and delivered by Ingram will
constitute, a legal, valid and binding obligation of Ingram enforceable
against Ingram in accordance with its terms except as such enforceability
is subject to applicable bankruptcy, reorganization, insolvency, moratorium
or other laws affecting creditors' rights generally, and to the general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(d) Governmental Approvals. No action, consent or approval
of, registration or filing with or any other action by any Governmental
Authority is or will be required in connection with the execution and
performance of the Facilities Documents to which Ingram is a party, except
such as have been made or obtained and are in full force and effect.
(e) Federal Reserve Regulations. Ingram is not engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying Margin Stock.
(f) Status of Designated Subsidiaries. Each of the entities
which is named a Designated Subsidiary meets the terms of the definition of
Designated Subsidiary.
SECTION 9.03 Representations and Warranties of Funding. In order to
induce the Banks to enter into this Agreement and to provide the credit
facilities provided for herein, Funding herein makes the following
representations and warranties to the Banks:
(a) Organization; Powers. Funding (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (ii) has all requisite power and
authority to own its property and assets and to carry on its business as
now conducted and as proposed to be conducted, (iii) is qualified to do
business in every jurisdiction where such qualification is required and
where failure to so qualify would have a material adverse effect on the
Holders of Commercial Paper and (iv) has the corporate power and authority
to execute, deliver and perform its obligations under each of the
Facilities Documents and each other agreement or instrument contemplated
thereby to which it is or will be a party.
(b) Authorization. The execution, delivery and performance
by Funding of each of the Facilities Documents to which it is a party and
the other transactions contemplated hereby and thereby (i) have been duly
authorized by all requisite corporate and, if required, stockholder action
and (ii) will not (a) violate (1) any provision of law, statute, rule or
regulation, or of the certificate or articles of incorporation or other
constitutive documents or by-laws of Funding, (2) any order of any
Governmental Authority or (3) any provision of any indenture, agreement or
other instrument to which Funding is a party or by which it or any material
part of its property is or may be bound, (b) conflict with, result in a
breach of or constitute (alone or with notice or lapse of time or both) a
default under any such indenture, agreement or other instrument or (c)
result in the creation or imposition of any Lien upon or with respect to
any material part of the property or assets now owned or hereafter acquired
by Funding.
(c) Enforceability. This Agreement has been duly executed
and delivered by Funding and constitutes, and each other Facilities
Document to which it is a party when executed and delivered by Funding will
constitute, a legal, valid and binding obligation of Funding enforceable
against Funding in accordance with its terms except as such enforceability
is subject to applicable bankruptcy, reorganization, insolvency, moratorium
or other laws affecting creditors' rights generally, and to the general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(d) Governmental Approvals. No action, consent or approval
of, registration or filing with or any other action by any Governmental
Authority is or will be required in connection with the execution and
performance of the Facilities Documents to which Funding is a party, except
such as have been made or obtained and are in full force and effect.
(e) Federal Reserve Regulations. Funding is not engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying Margin Stock.
(f) Subsidiaries. Funding has no Subsidiaries.
ARTICLE X
Miscellaneous
SECTION 10.01 Computations. Unless otherwise specified herein, all
computations of interest hereunder and under the Loan Notes shall be made
on the basis of the actual number of days elapsed over a year of 365/66
days.
SECTION 10.02 Exercise of Rights. No failure or delay on the part of
the Liquidity Agent, the Collateral Agent or any Bank to exercise any
right, power or privilege under this Agreement, any other Facilities
Document or any Purchase Agreement and no course of dealing between the CP
Issuer and the Liquidity Agent, the Collateral Agent or any Bank shall
operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which the Liquidity
Agent, the Collateral Agent or the Banks would otherwise have pursuant to
law or equity. No notice to or demand on any party in any case shall
entitle such party to any other or further notice or demand in similar or
other circumstances, or constitute a waiver of the right of the other party
to any other or further action in any circumstances without notice or
demand.
SECTION 10.03 Amendment and Waiver. (a) The CP Issuer shall not
consent to any amendment, waiver, supplement, restatement, or other
modification to any provision hereof or any other Facilities Document, the
Purchase Agreement or any Subsidiary Purchase Agreement, or take any action
which it is permitted to take thereunder, unless the same shall be
consented to by the Required Banks; provided that any amendment that would
(i) increase the amount of the Liquidity Commitment or the LOC Commitment
or change the Percentage of any Bank or LOC Issuer, (ii) reduce any fees or
commissions payable to the Banks hereunder or under any other Facilities
Document, (iii) result in a reduction in any interest rate (or any change
in the method of calculating the interest rate), extension of the maturity
date of any Loan, or forgiveness of any debt, (iv) alter the allocation or
priority of payment of Collections set forth in Sections 8 and 9 of the
Security Agreement, (v) release the Lien of any Collateral (except as
expressly permitted by the Facilities Documents), (vi) change this Section
(or any provision of this Agreement or any other Facilities Document that
requires the unanimous consent of the Banks) or the percentage specified in
the definition of Required Banks, (vii) extend any scheduled principal or
interest payment or the Expiration Date, (viii) change the maximum duration
of interest periods, or (ix) decrease the percentage set forth in the
definition of Discount Factor, may only be amended, waived, supplemented,
restated, discharged or terminated with the prior written consent of the CP
Issuer and each Bank. Any amendment, waiver, supplement, restatement or
other modification to any provision hereof that would affect the rights,
duties or obligations of the Liquidity Agent shall not be effective without
the Liquidity Agent's consent. No amendment, waiver, supplement,
restatement or any other modification to any provision hereof that would
materially increase the amount of any costs payable hereunder shall not be
effective without the consent of the LOC Issuer. Each Bank and each
subsequent holder of a Loan Note shall be bound by any waiver, amendment or
modification authorized by this Section regardless of whether its Loan
Notes shall have been marked to make reference thereto, and any consent by
any Bank or holder of Loan Notes pursuant to this Section shall bind any
Person subsequently acquiring a Loan Note from it, whether or not such Loan
Note shall have been so marked.
(b) No amendment, waiver, supplement, restatement, discharge
or termination contemplated under this Section 10.03 shall be effective
until the CP Issuer and the Liquidity Agent shall have received written
notice from each of S&P and Fitch, respectively, to the effect that such
amendment, waiver, supplement, restatement, discharge or termination would
not result in a withdrawal or reduction of the then-current rating on the
Commercial Paper by such rating agency.
(c) The CP Issuer may, upon five Business Days' prior
written notice given to the Liquidity Agent, replace any Bank not agreeing
to a proposed amendment of the Pooling and Servicing Agreement, the
Security Agreement or this Agreement with a financial institution having
short term credit ratings of at least A-1 by S&P and, if rated by Fitch, F-
1 by Fitch, respectively, to its short-term obligations, and such financial
institution shall execute an Assignment and Acceptance and deliver it to
the Liquidity Agent and shall comply with all the provisions of this
Agreement, including, but not limited to, Section 10.05 hereof. No such
replacement pursuant to this paragraph (c) shall be effective unless S&P
and Fitch shall have confirmed in writing to the CP Issuer and the
Liquidity Agent that such replacement would not result in a withdrawal or
reduction of the then-current rating on the Commercial Paper.
SECTION 10.04 Expenses; Indemnity. (a) Provided that, in accordance
with Section 10.12, all payment obligations of the CP Issuer with respect
to Commercial Paper, Loan Notes and LOC Disbursements attributable to
Refunding Drawings are then satisfied or provided for, the CP Issuer agrees
to pay all reasonable out-of-pocket expenses (including reasonable
attorneys' fees and expenses) incurred by the Liquidity Agent in connection
with the preparation, negotiation, execution and delivery of this
Agreement, the other Facilities Documents, the Purchase Agreement and any
Subsidiary Purchase Agreement and the other documents delivered in
connection herewith or therewith or in connection with any amendments,
modifications or waivers of the provisions hereof or thereof (whether or
not the transactions hereby or thereby contemplated shall be consummated),
and the reasonable out-of-pocket expenses (including reasonable attorneys'
fees and expenses) incurred by the Liquidity Agent or any Bank in
connection with the enforcement or protection of their rights in connection
with this Agreement, the other Facilities Documents, the Purchase Agreement
and any Subsidiary Purchase Agreement or in connection with the Loans made
or the Loan Notes issued hereunder, including, but not limited to,
reasonable out-of-pocket costs and expenses in connection with the
Liquidity Agent's optional annual field audits and the monitoring of
assets. Subject to Section 10.12, the CP Issuer further agrees that it
shall indemnify the Banks from and hold them harmless against any
documentary taxes, assessments or charges made by any Governmental
Authority by reason of the execution, delivery or performance of this
Agreement or any of the other Facilities Documents, the Purchase Agreement
or any Subsidiary Purchase Agreement.
(b) Subject to the express limitations of Sections 3.09,
3.10, 3.15, 3.16, 3.18 and 5.02, and further subject to Section 10.12, the
CP Issuer agrees to indemnify the Liquidity Agent, each Bank and its
directors, officers, employees and agents (each such Person being called an
"Indemnitee") against, and to hold each Indemnitee harmless from, any and
all losses, claims, damages, liabilities and related expenses, including
reasonable counsel fees and expenses, incurred by or asserted against any
Indemnitee arising out of, in any way connected with, or as a result of (i)
the execution, delivery or performance of this Agreement, any of the other
Facilities Documents, the Purchase Agreement, any Subsidiary Purchase
Agreement or any agreement or instrument contemplated hereby or thereby,
(ii) the use of the proceeds of the Advances or (iii) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
or to the performance by the parties hereto of their respective obligations
hereunder or thereunder or to the consummation of the transactions
contemplated hereby or thereby; provided that such indemnity shall not, as
to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses result from the gross negligence
or wilful misconduct of such Indemnitee.
(c) The provisions of this Section shall remain operative
and in full force and effect regardless of the expiration or termination of
the term of this Agreement, the consummation of the transactions
contemplated hereby and in the other Facilities Documents, the payment or
prepayment of any of the Loans, the termination of the Liquidity
Commitment, the invalidity or unenforceability of any term or provision of
this Agreement or any other Facilities Documents or any investigation made
by or on behalf of the Liquidity Agent or any Bank. All amounts due under
this Section shall be payable on demand therefor in accordance with Section
9(a)seventh or (b)sixth of the Security Agreement, provided that, in
accordance with Section 10.12, all payment obligations of the CP Issuer
with respect to Commercial Paper, Loan Notes and LOC Disbursements
attributable to Refunding Drawings are then satisfied or provided for.
SECTION 10.05 Successors and Assigns; Descriptive Headings. (a) This
Agreement shall bind, and the benefits hereof shall inure to, the CP
Issuer, the Liquidity Agent, Ingram, Funding and the Banks and their
respective successors and assigns; provided that the CP Issuer may not
transfer or assign any or all of its rights and obligations hereunder
without the prior written consent of each Bank.
(b) Any Bank may with the consent of the Transferor, Ingram
and the Liquidity Agent, which may be withheld in the sole discretion of
Ingram, the Transferor and the Liquidity Agent (except that no such consent
shall be required for an assignment by any Bank to any of its Affiliates),
assign to any Bank or other financial institution (each an "Assignee"), all
or any portion of its obligation to make Loans hereunder, if (i) the short-
term obligations of the bank proposing to purchase such obligation are
rated not lower than A-1 by S&P and, if rated by Fitch, F-1 by Fitch,
respectively, (ii) such bank delivers an opinion of counsel in a form
reasonably acceptable to the CP Issuer, the Transferor, the CP Dealer, and
the Depositary as to matters referred to in Section 6.01(o) and (iii) S&P
and Fitch shall have confirmed prior to such sale, transfer or assignment
in writing to the CP Issuer and the Liquidity Agent that such sale,
transfer or assignment would not result in a withdrawal or reduction of the
then-current rating by S&P and Fitch, respectively, of the Commercial
Paper, (iv) as a result of such sale, transfer or assignment, neither S&P
nor Fitch would require an increase in the Liquidity Commitment or other
credit enhancement or any other amendment to the Facilities Documents and
(v) the parties to each such assignment shall execute and deliver to the
Liquidity Agent, for its acceptance, an Assignment and Acceptance, together
with a processing fee of $250 (which shall not be an obligation of the CP
Issuer); provided, however, that the amount of the Percentage of the
Liquidity Commitment of the assigning Bank subject to each assignment
(determined as of the date of the Assignment and Acceptance with respect to
such assignment is delivered to the Liquidity Agent) shall not be less than
$5,000,000 (unless the CP Issuer and the Liquidity Agent shall otherwise
agree in writing) and the amount of the Percentage of the Liquidity
Commitment of such Bank remaining after such assignment shall not be less
than $5,000,000 or zero (unless the CP Issuer and the Liquidity Agent shall
otherwise agree in writing). Upon such execution, delivery and acceptance
from and after the effective date specified in each Assignment and
Acceptance, (x) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, have the rights and obligations
of a Bank hereunder and (y) the Bank assignor thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an
assigning Bank's rights and obligations under this Agreement, such Bank
shall cease to be a party hereto but shall continue to be entitled to the
benefit of indemnities arising with respect to events or circumstances
arising while a party hereunder). Any such Assignee shall make the
representation and warranty contained in Section 10.15(a) hereof and shall
agree to be bound by the provisions of Section 10.11 hereof.
(c) By executing and delivering an Assignment and
Acceptance, the Bank assignor thereunder and the Assignee thereunder
confirm to and agree with each other and the other parties hereto as
follows: (i) other than as provided in such Assignment and Acceptance,
such assigning Bank makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any of the
other Facilities Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any
of the other Facilities Documents or any other instrument or document
furnished pursuant hereto other than that it is the legal and beneficial
owner of the interest being assigned by it thereunder and that such
interest is free and clear of any Liens granted by such assigning Bank;
(ii) such assigning Bank makes no representation or warranty and assumes no
responsibility with respect to the financial condition or creditworthiness
of the CP Issuer, the Trust, the Transferor, Ingram or any Trust Assets or
the performance or observance by the CP Issuer, the Trustee, the Transferor
or Ingram of any of their respective obligations in any of the Facilities
Documents or the Purchase Agreement, in the case of Ingram, or any other
instrument or document furnished pursuant hereto or thereto to which it is
a party; (iii) such Assignee will, independently and without reliance upon
the Liquidity Agent, such assigning Bank or any other Bank and based on
such documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance;
(iv) such Assignee will, independently and without reliance upon either
Liquidity Agent, such assigning Bank or any other Bank and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decision in taking or not taking action
under this Agreement and any other Facilities Document; (v) such Assignee
appoints and authorizes the Liquidity Agent and the Collateral Agent to
take such action as agent on its behalf and to exercise such powers under
this Agreement and the other Facilities Documents as are delegated to each
of them by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto; and (vi) such Assignee agrees that it will
perform in accordance with their terms all of the obligations which by the
terms of this Agreement are required to be performed by it as a Bank.
(d) Upon its receipt of an Assignment and Acceptance
executed by an assigning Bank and an Assignee, and the processing fee
referred to in Section 10.05(b), the Liquidity Agent (i) may, if such
Assignment and Acceptance has been completed and is in substantially the
form of Exhibit F hereto, accept such Assignment and Acceptance and (ii) if
it shall so accept such Assignment and Acceptance, shall give prompt notice
thereof to the CP Issuer. Within five Business Days after its receipt of
such notice, the CP Issuer shall execute and deliver to the Liquidity Agent
in exchange for the surrendered Loan Notes new Loan Notes to the order of
such Assignee in an amount equal to the amount of the Percentage of the
Liquidity Commitment assumed by it pursuant to such Assignment and
Acceptance and, if the assigning Bank has retained any Percentage of the
Liquidity Commitment here under, new Loan Notes to the order of the
assigning Bank in an amount equal to the Percentage of the Liquidity
Commitment retained by it hereunder. Such Loan Notes shall be in an
aggregate principal amount equal to the aggregate principal amount
outstanding under such surrendered Loan Notes, shall be dated the Initial
Closing Date and shall otherwise be in substantially the form of the Loan
Notes subject to such assignments.
(e) Subject to written consent by Ingram, each Bank and any
Participant (as defined below) may, at any time, grant participations, or
any existing Participant may assign all or part of its participation to any
other person, firm or corporation (a "Participant") in any amount of
$4,000,000 or greater in all or any part of any Loan or Loans, in which
event the Participant shall not have any rights under the Loan Documents
(the Participant's rights against such Bank in respect of participation to
be those set forth in the agreement executed by such Bank in favor of the
Participant relating thereto) and all amounts payable by the CP Issuer
hereunder shall be determined as if such Bank had not sold such
participation; provided that any such Participant shall be entitled to the
benefits of the payments required to be made by the CP Issuer pursuant to
Sections 3.09, 3.10, 3.15, 3.16, 3.18, 5.02 and 10.04 hereof only to the
extent the Bank selling such participation is entitled thereto. In the
event of any such sale by a Bank of participating interests to a
Participant, such Bank's obligations under this Agreement shall remain
unchanged, such Bank shall remain solely responsible for the performance
thereof, such Bank shall remain the holder of any such Loan Note for all
purposes under this Agreement, and the CP Issuer and the Liquidity Agent
shall continue to deal solely and directly with such Bank in connection
with such Bank's rights and obligations under this Agreement except that
each Participant shall be entitled to vote on any and all matters on which
a Bank is entitled to vote as set forth in Section lO.O5(f).
(f) Any agreement pursuant to which any Bank may grant a
participating interest shall provide that (i) each Participant shall be
entitled to vote on any and all matters on which Banks are entitled to vote
hereunder; (ii) such vote shall be counted based upon the percentage that
such Participant's amount of participation bears to the Liquidity
Commitment (the "Participant's Voting Percentage") except that on matters
hereunder which require the consent of each Bank, such Bank shall not be
entitled to cast its vote approving such matters without the approval of
each of its Participants, (iii) such Bank shall promptly advise each
Participant in writing (or by telephone confirmed promptly thereafter in
writing) of any matters which require the approval, vote or consent of the
Banks, (iv) when voting such Bank shall cast its Percentage severally to
reflect the manner in which it has been instructed in writing (or by
telephone confirmed promptly thereafter in writing) to vote the
Participant's Voting Percentage of each of such Bank's Participants and (v)
each Participant shall agree to the terms set forth in the covenants
contained in Section 10.15(b). The voting rights of the Participants set
forth in this Section 10.05(f) shall include, without limitation, the right
to approve any amendment, modification or waiver of any provision of this
Agreement.
(g) Each Bank may furnish any information concerning the CP
Issuer, the Trust, the Transferor, Ingram or any Trust Assets in the
possession of such Bank from time to time to Assignees and Participants
(including the prospective Assignees and Participants) only with the prior
written consent of Ingram, which consent shall be deemed to have been so
given to each of the Participants set forth in Schedule 3 hereto upon the
execution of an agreement by each such Participant agreeing to abide by the
terms of Section 10.15(b). As a condition thereto, any Assignee or
Participant (other than those set forth in Schedule 3) or proposed Assignee
or Participant shall have agreed in writing prior to receiving any such
information to the terms set forth in the covenant contained in Section
10.15(b) hereof.
(h) The descriptive headings of the various sections of this
Agreement are inserted for convenience of reference only and shall not be
deemed to affect the meaning or construction of any of the provisions
hereof.
SECTION 10.06 Notices, Requests, Demands. Except where telephonic
instructions or notices are expressly authorized herein to be given, all
notices, demands, instructions, requests, consents and other communications
required or permitted to be given to or made upon any party hereto or other
Person listed below shall be in writing and shall be personally delivered
or sent by registered, certified or express mail, postage prepaid, return
receipt requested, or by telex, facsimile transmission, TWX or prepaid
telegram (with messenger delivery specified in the case of a telegram) and
shall be deemed to be given for purposes of this Agreement on the day that
such writing is received by the intended recipient thereof in accordance
with the provisions of this Section. Unless otherwise specified in a
notice sent or delivered in accordance with the foregoing provisions of
this Section, notices, demands, instructions, requests, consents and other
communications in writing shall be given to or made upon the respective
parties hereto or other Person listed below at their respective addresses
(or to their respective telex, facsimile transmission or TWX numbers)
indicated below and, in the case of telephonic instructions or notices, by
calling the telephone number or numbers indicated for such party below or
such other Person or at any other address (including any other telex,
facsimile transmission or TWX numbers) or telephone number or numbers, as
the case may be, as any party hereto or such other Person may notify to the
other parties hereto or other Person in accordance with the provisions of
this Section 10.06.
If to the CP Issuer, to it at:
Distribution Funding Corporation
c/o Merrill Lynch
World Financial Center,
South Tower
225 Liberty Street, 8th Floor
New York, New York 10080-6108
Attention: Gary Carlin, Treasurer
Tel. No. (212) 236-7200
Telecopy No. (212) 236-7584
If to the Liquidity Agent, to it at:
the address set forth in Schedule I hereto
If to the Banks, to the respective addresses set forth
underneath their respective names on the signature pages
hereto.
If to the CP Dealer, to it at:
Merrill Lynch Money Markets Inc.
Merrill Lynch World Headquarters
World Financial Center - North Tower
250 Vesey Street - 10th Floor
New York, New York 10281-1218
Attention: CP Product Management
Tel. No. (212) 449-0332
Telecopy No. (212) 449-1787
If to the Depositary:
Chemical Bank
450 West 33rd Street
New York, New York 10001
Attention: Corporate Trust Department
Tel. No. (212) 971-3350
Telecopy No. (212) 613-7799
If to the Transferor:
Ingram Funding Inc.
1105 North Market Street
Wilmington, Delaware 19801
Attention: President
Tel. No. (302) 427-7650
Telecopy No. (302) 427-7663
If to Ingram:
Ingram Industries Inc.
One Belle Meade Plaza
4400 Harding Road
Nashville, Tennessee 37205
Attention: Treasurer
Tel. No. (615) 298-8200
Telecopy No. (615) 298-8242
If to Fitch:
Fitch Investors Service, Inc.
One State Street Plaza
New York, New York 10007
Attention: Steven Schoen
Tel. No . (212) 908-0500
Telecopy No. (212) 480-4430
If to S&P:
Standard & Poor's Corporation
26 Broadway (15th Floor)
New York, New York 10004
Attention: Asset Backed Surveillance
Department
Tel. No. (212) 208-1370
Telecopy No. (212) 412-0225
SECTION 10.07 Survival of Representations and Warranties. All
covenants, agreements, representations and warranties made by the CP Issuer
herein and in the certificates or other instruments prepared or delivered
in connection with or pursuant to this Agreement or any other Facilities
Document shall be considered to have been relied upon by the Banks and the
Liquidity Agent and shall survive the execution and delivery of this
Agreement and the making by the Banks of the Loans, and the execution and
delivery to the Banks of the Loan Notes evidencing such Loans, regardless
of any investigation made by any Bank or the Liquidity Agent or on their
behalf and shall continue so long as and until such time as all
indebtedness hereunder and under the Commercial Paper and the Loan Notes
shall have been paid in full and the Liquidity Commitment has been
terminated.
SECTION 10.08 Counterparts. This Agreement may be executed in any
number of counterparts, including telefax transmission thereof and by the
different parties hereto on the same or separate counterparts, each of
which shall be deemed to be an original instrument but all of which
together shall constitute one and the same agreement. Complete
counterparts of this Agreement shall be lodged with the CP Issuer and the
Liquidity Agent.
SECTION 10.09 Adjustments. Each Bank agrees that if it shall,
pursuant to a secured claim under Section 506 of Title 11 of the United
States Code or other security or interest arising from, or in lieu of, such
secured claim, received by such Bank under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means, obtain
payment (voluntary or involuntary) in respect of any Loan or Loans as a
result of which the unpaid principal portion of its Loans shall be
proportionately less than the unpaid principal portion of the Loans of any
other Bank, it shall be deemed simultaneously to have purchased from such
other Bank at face value, and shall promptly pay to such other Bank the
purchase price for, a participation in the Loans of such other Bank, so
that the aggregate unpaid principal amount of the Loans and participations
in Loans held by each Bank shall be in the same proportion to the aggregate
unpaid principal amount of all Loans then outstanding as the principal
amount of its Loans prior to such event was to the principal amount of all
Loans outstanding prior to such event; provided, however, that, if any such
purchase or purchases or adjustments shall be made pursuant to this Section
and the payment giving rise thereto shall thereafter be recovered, such
purchase or purchases or adjustments shall be rescinded to the extent of
such recovery and the purchase price or prices or adjustment restored
without interest. The CP Issuer expressly consents to the foregoing
arrangements.
SECTION 10.10 Further Assurances. The CP Issuer agrees to do such
further acts and things and to execute and deliver to the Liquidity Agent
such additional assignments, agreements, powers and instruments as the
Liquidity Agent may require or deem advisable to carry into effect the
purposes of this Agreement or better to assure and confirm unto the
Liquidity Agent the rights, powers and remedies of the Liquidity Agent and
the Banks hereunder.
SECTION 10.11 No Bankruptcy Petition Against the CP Issuer. The
Liquidity Agent and each Bank severally and not jointly, hereby covenants
and agrees that, prior to the date which is one year and one day after the
payment in full of all outstanding Commercial Paper and Loan Notes, it will
not institute against, or join any other Person in instituting against, the
CP Issuer any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceeding under the laws of the
United States or any state of the United States.
SECTION 10.12 No Recourse. The obligations of the CP Issuer under
this Agreement and the Loan Notes, are solely the corporate obligations of
the CP Issuer. No recourse shall be had for the payment of any amount
owing in respect of Loans or for the payment of any fee hereunder or any
other obligation or claim arising out of or based upon this Agreement and
the Loan Notes against any stockholder, employee, officer, director or
incorporator of the CP Issuer. Each of the Banks and the Liquidity Agent
also agrees that the obligations of the CP Issuer to the Banks and the
Liquidity Agent hereunder, including without limitation all obligations of
the CP Issuer in respect of fees and indemnity pursuant to Section 3.09,
3.10, 3.15, 3.16, 3.18, 5.02 and 10.04, shall be payable solely from the
Collateral in accordance with the Security Agreement and that the Banks and
the Liquidity Agent shall not look to any other property or assets of the
CP Issuer in respect of the obligations arising under such Sections and
that such obligations shall not constitute a claim against the CP Issuer in
the event that the CP Issuer's assets are insufficient to pay in full such
obligations and that such obligations are fully subordinated to the CP
Issuer's obligations under the Commercial Paper and the Loan Notes.
SECTION 10.13 Appointment and Rights of the Liquidity Agent. (a)
Each Bank hereby irrevocably appoints Chemical Bank as its Liquidity Agent
hereunder and under the other Facilities Documents and hereby authorizes
the Liquidity Agent to take such action on its behalf and to exercise such
rights, remedies, powers and privileges hereunder or thereunder as are
specifically authorized to be exercised by the Liquidity Agent by the terms
hereof or thereof, together with such rights, remedies, powers and
privileges as are reasonably incidental thereto. The Liquidity Agent may
execute any of their duties hereunder and under any other Facilities
Document by or through agents or employees. The relationship between the
Liquidity Agent and each Bank is that of agent and principal only, and
nothing herein shall be deemed to constitute the Liquidity Agent a trustee
for any Bank or impose on the Liquidity Agent any obligations other than
those for which express provision is made herein or in any other Facilities
Document. The Liquidity Agent is solely an agent of the Banks and shall
not have any obligation to any holder of Commercial Paper, whether as
agent, trustee or otherwise.
(b) The obligations of the Liquidity Agent are only those
expressly set forth herein or in the other Facilities Documents. Without
limiting the generality of the foregoing, the Liquidity Agent shall not be
required to take any action with respect to any Event of Default or Event
of Termination, except as expressly provided in Article VIII hereof.
(c) Neither the Liquidity Agent nor any of its directors,
officers, agents or employees, shall be liable for any action taken or
omitted to be taken by them hereunder or under any other Facilities
Document, or in connection herewith or therewith, (i) with the consent or
at the request of the Required Banks or (ii) in the absence of their own
gross negligence or wilful misconduct. The Liquidity Agent may consult
with legal counsel (including counsel for the CP Issuer, the Transferor or
Ingram), independent public accountants and other experts selected by them
and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts. Neither the Liquidity Agent nor any of its directors, officers,
agents or employees shall be responsible for or have any duty to ascertain,
inquire into or verify (i) any statements, warranties or representations
made (whether written or oral) in or in connection with this Agreement, any
other Facilities Document, the Purchase Agreement, any Subsidiary Purchase
Agreement or any other document furnished pursuant hereto or thereto or in
connection herewith or therewith; (ii) the performance, observance or
satisfaction of any of the terms, covenants or conditions of this
Agreement, any other Facilities Document, the Purchase Agreement, any
Subsidiary Purchase Agreement on the part of any party hereto or thereto or
to inspect the property (including the books and records) of the CP Issuer,
the Transferor, Ingram, any Designated Subsidiary or the Trust; or (iii)
the execution, legality, validity, enforceability, genuineness, sufficiency
or value of this Agreement, any other Facilities Document, the Purchase
Agreement, any Subsidiary Purchase Agreement or any other instrument or
document furnished pursuant hereto or thereto. Without limiting the
generality of the foregoing, the Liquidity Agent shall not be deemed to
have notice or knowledge of the existence of any Event of Default or Event
of Termination unless (x) the Liquidity Agent is notified of such Event of
Default or Event of Termination in accordance with the terms of the
Facilities Documents or (y) an officer of the Liquidity Agent who has
ongoing responsibility for the administration of the Liquidity Agent's
activities in such capacity has actual knowledge of such Event. If the
Liquidity Agent obtains such knowledge it will promptly notify the Banks,
and any Bank obtaining knowledge of the existence of an Event of Default or
Event of Termination as aforesaid (other than by notice from the Liquidity
Agent) will notify the Liquidity Agent. The Liquidity Agent (i) shall
incur no liability under or in respect of this Agreement or any other
Facilities Document, the Purchase Agreement, any Subsidiary Purchase
Agreement by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telegram, TWX or Telex) or
telephonic instruction, to the extent authorized herein or therein,
believed by it to be genuine and signed or sent by the proper party or
parties and (ii) may treat the payee of any Loan Note as the holder thereof
until the Liquidity Agent receives an Assignment and Acceptance signed by
the assigning Bank and the Assignee and all the conditions precedent to the
effectiveness thereof have been satisfied.
(d) Each Bank hereby agrees, in the ratio that such Bank's
Percentage of the Liquidity Commitment hereunder bears to the Liquidity
Commitment, to indemnify and hold harmless the Liquidity Agent, from and
against any and all losses, liabilities (including liabilities for
penalties), actions, suits, judgments, demands, damages, costs and expenses
of any kind whatsoever (including, without limitation, fees and expenses of
attorneys, accountants and experts) incurred or suffered by the Liquidity
Agent in its capacity as Liquidity Agent hereunder as a result of any
action taken or omitted to be taken by the Liquidity Agent in such capacity
or otherwise incurred or suffered by, made upon, or assessed against the
Liquidity Agent in such capacity; provided, that no Bank shall be liable
for any portion of any such losses, liabilities (including liabilities for
penalties), actions, suits, judgments, demands, damages, costs or expenses
resulting from or attributable to gross negligence or wilful misconduct on
the part of the Liquidity Agent or its officers, employees or agents, as
determined by a court of competent jurisdiction by final and nonappealable
judgment. Without limiting the generality of the foregoing, each Bank
hereby agrees, in the ratio aforesaid, to reimburse the Liquidity Agent
promptly following its demand for any out-of-pocket expenses (including,
without limitation, attorneys' fees and expenses) incurred by the
Liquidity Agent hereunder or under any other Facilities Document, the
Purchase Agreement or any Subsidiary Purchase Agreement in connection with
the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings
or otherwise) of, or legal advice in respect of rights or responsibilities
hereunder or under such Agreements, and not promptly reimbursed to the
Liquidity Agent by the CP Issuer. Each Bank's obligations under this
paragraph shall survive the termination of this Agreement and the discharge
of the CP Issuer's obligations hereunder.
(e) The Banks agree that Chemical Bank and its Affiliates
shall have the same rights and powers hereunder as any other Bank or holder
of a Loan Note and may exercise or refrain from exercising the same as
though Chemical Bank were not the Liquidity Agent and the terms "Banks,"
holders of Loan Notes," or any similar terms shall, unless the context
clearly otherwise indicates, include Chemical Bank, in its individual
capacity. Chemical Bank and its Affiliates may accept deposits from, lend
money to, and generally engage in any kind of banking, trust or other
business with the CP Issuer or any of its Affiliates or any Person who may
do business with or own securities of the CP Issuer or any Obligor or any
of their respective Affiliates as if it were not the Liquidity Agent
hereunder and may accept fees and other consideration from the CP Issuer,
or any of its Affiliates for services in connection with this Agreement and
otherwise without having to account for the same to any Bank.
(f) Each Bank expressly agrees that the Liquidity Agent
shall enter into the Security Agreement on its behalf, and expressly
consents to the priority of payments set forth in the Security Agreement.
Each Bank recognizes that applicable laws, rules, regulations or
guidelines of Governmental Authorities may require the Liquidity Agent to
determine whether the transactions contemplated hereby should be classified
as "highly leveraged" or assigned any similar or successor classification,
and that such determination may be binding upon the Banks. Each Bank
understands that any such determination shall be made solely by the
Liquidity Agent based upon such factors (which may include the Liquidity
Agent's internal policies and prevailing market practices) as the Liquidity
Agent shall deem relevant and agrees that the Liquidity Agent shall have no
liability for the consequences of any such determination.
SECTION 10.14 Resignation by the Liquidity Agent. The Liquidity Agent
may resign as such at any time upon at least 30 days' prior written notice
to the CP Issuer, the Depositary, the Collateral Agent, the Banks, the CP
Dealer and the Rating Agencies, and the Liquidity Agent shall be obligated
to resign upon at least 30 days' prior written notice from the CP Issuer
after the Liquidity Agent shall have become an affected Bank that the CP
Issuer has elected to replace pursuant to Section 3.14 hereof; provided,
however, that the resignation of the Liquidity Agent shall not be effective
until the later of (i) the date upon which the Banks shall have agreed to
the appointment of another Bank to perform the duties of the Liquidity
Agent hereunder and the CP Issuer shall have consented to such appointment,
which consent shall not be unreasonably withheld, and (ii) if the Liquidity
Agent is an affected Bank under Section 3.14 hereof, the date on which the
Liquidity Agent ceases to be a Bank. In the event of such resignation, the
Required Banks shall as promptly as practicable appoint a successor agent
to replace the Liquidity Agent. Notwithstanding the resignation of the
Liquidity Agent hereunder, the provisions of Section 10.13 shall continue
to inure to the benefit of the Liquidity Agent in respect of any action
taken or omitted to be taken by the Liquidity Agent in its capacity as such
while it was such under this Agreement.
SECTION 10.15 Representation and Warranty and Covenants of the Banks
and the Liquidity Agent.
(a) Each Bank and the Liquidity Agent hereby represents and
warrants that this Agreement has been duly authorized, executed and
delivered by it.
(b) Unless otherwise agreed to in writing by each of the CP
Issuer and Ingram, the Liquidity Agent and the Banks hereby agree to keep
all Proprietary Information (as defined below) confidential and not to
disclose or reveal any Proprietary Information to any Person other than the
Liquidity Agent's or such Bank's directors, officers, employees, Affiliates
and agents, and subject to Section 10.05(f), actual or potential Assignees
and actual or potential participants; provided, however, that the Liquidity
Agent or any of the Banks may disclose Proprietary Information (i) as
required by law, rule, regulation or judicial process, (ii) to its
attorneys and accountants who are expected to become engaged in rendering
advice or assistance in connection therewith, (iii) as requested or
required by any state, Federal or foreign authority or examiner regulating
banks or banking or (iv) in connection with any enforcement of any of their
rights under the Facilities Documents. For purposes of this Agreement, the
term "Proprietary Information" shall include all information about the CP
Issuer, Ingram, or any of their Affiliates which has been furnished or made
available by the CP Issuer, Ingram, or any of their Affiliates, whether
furnished or made available before or after the date hereof, and regardless
of the manner in which it is furnished or made available; provided,
however, that Proprietary Information does not include information which
(x) is or becomes generally available to the public other than as a result
of a disclosure by the Liquidity Agent or any of the Banks not permitted by
this Agreement, (y) was available to the Liquidity Agent or any of the
Banks on a nonconfidential basis prior to its disclosure to the Liquidity
Agent or any of the Banks by the CP Issuer, Ingram, or any of their
Affiliates or (z) becomes available to the Liquidity Agent or any of the
Banks on a nonconfidential basis from a Person other than the CP Issuer,
Ingram, or any of their Affiliates who, to the best knowledge of the
Liquidity Agent or any of the Banks, as the case may be, is not otherwise
bound by a confidentiality agreement with the CP Issuer, Ingram, or any of
their Affiliates, or is not otherwise prohibited from transmitting the
information to the Liquidity Agent or any of the Banks.
(c) Each Bank represents to the Liquidity Agent, and each of
the other Banks that it in good faith is not relying on any Margin Stock as
collateral in the extension or maintenance of the credit provided for in
this Agreement.
(d) Each Bank acknowledges that it has, independently and
without reliance upon the Liquidity Agent or any other Bank, and based on
such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and to make Loans
hereunder. Each Bank also acknowledges that it will, independently and
without reliance on the Liquidity Agent or any other Bank, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking any
action under this Agreement.
(e) Except as otherwise expressly provided herein, the
Liquidity Agent agrees to deliver to each Bank (i) by the close of business
on the day of receipt a copy of each Settlement Statement, (ii) promptly
after such Bank's request, a copy of each Daily Report requested and (iii)
promptly after receipt, each opinion, certificate, notice or other document
delivered to the Liquidity Agent under any Facilities Document or the
Purchase Agreement.
SECTION 10.16 [Reserved].
SECTION 10.17 Third-Party Beneficiaries. This Agreement shall inure
to the benefit of and be binding upon, the parties hereto and their
respective successors and permitted assigns. The Liquidity Agent and the
Banks hereby acknowledge that (i) pursuant to the Security Agreement, the
CP Issuer has granted to the Collateral Agent for the benefit of the
Secured Parties, including the holders of Commercial Paper, a security
interest in the Collateral and (ii) the Depositary and the Commercial Paper
holders are third-party beneficiaries of such rights of the CP Issuer to
the extent of such security interest in the Collateral, provided that (a)
the holders of Commercial Paper shall have no greater rights against the
Liquidity Agent or the Banks in respect of the Collateral than the CP
Issuer, and (b) the Liquidity Agent and the Banks shall have no greater
obligations to such holders in respect of the Collateral than the Liquidity
Agent and the Banks have to the CP Issuer.
SECTION 10.18 Governing Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND UNDER THE LOAN NOTES SHALL
BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
SECTION 10.19 Waiver And Jury Trial. EACH OF THE CP ISSUER, THE
LIQUIDITY AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO ANY OF THE FACILITIES DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY.
SECTION 10.20 Jurisdiction; Consent to Service of Process. (a) The
CP Issuer hereby irrevocably and unconditionally submits, for itself and
its property, to the non-exclusive jurisdiction of any New York State court
and Federal courts of the United States sitting in New York State and each
Bank which is authorized to transact business in New York State hereby
irrevocably and unconditionally submits to the nonexclusive jurisdiction of
any New York State court or Federal court of the United States of America
sitting in New York City, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this Agreement, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of
any such action or proceeding may be heard and determined in such New York
State or, to the extent permitted by law, in such Federal court. Each of
the parties hereto agrees that a 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.
(b) The CP Issuer hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement in any
New York State or Federal court. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of
an inconvenient forum to the maintenance of such action or proceeding in
any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 10.06.
Nothing in this Agreement will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
SECTION 10.21 Entire Agreement. This Agreement completely sets forth
the agreements between the parties and fully supersedes all prior
agreements, both written and oral, relating to all matters set forth herein
except to the extent set forth in other Facilities Documents or (as to the
amounts of certain fees) in various letters referred to in the Facilities
Documents.
SECTION 10.22 Acknowledgements. The CP Issuer hereby acknowledges
that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the Loan Notes;
(b)neither the Liquidity Agent nor any Bank has any fiduciary
relationship to the CP Issuer, and the relationship between the Liquidity
Agent and the Banks, on the one hand, and the CP Issuer, on the other hand,
is solely that of debtor and creditor; and
(c) no joint venture exists among the Banks or among the CP
Issuer and the Banks.
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the
date first above written.
DISTRIBUTION FUNDING CORPORATION
/s/
By ___________________________
Name: Hans Bald
Title: Vice President
CHEMICAL BANK,
as the Liquidity Agent and as a Bank
/s/
By ____________________________
Title: Vice President
Attn:
NATIONSBANK OF NORTH CAROLINA, N . A.
/s/
By ____________________________
Title: Vice President
Attn:
THE BANK OF NOVA SCOTIA
/s/
By ___________________________
Name: P.M. Brown
Title: Representative
INGRAM INDUSTRIES INC.
/s/
By ___________________________
Name:
Title:
INGRAM FUNDING INC.
/s/
By ___________________________
Name:
Title:
EXHIBIT A
FORM OF REVOLVING LOAN NOTE
$ * New York, New York _____________, 19__
On the Expiration Date the undersigned, a Delaware corporation (the
"CP Issuer"), FOR VALUE RECEIVED, promises to pay to the order of
_________________________ (the "Bank"), or its registered assigns at the
office of Chemical Bank (the "Liquidity Agentn) at 277 Park Avenue, New
York, New York 10017, the principal sum of ______** United States Dollars
(U.S. $______) or, if less, the aggregate unpaid principal amount of all
Revolving Loans made by the Bank to the CP Issuer pursuant to the Liquidity
Agreement referred to below.
- -----------------
* Insert amount equal to the Percentage of the Liquidity Commitment of the
appropriate Bank in figures.
** Insert amount equal to the Percentage of the Liquidity Commitment of the
appropriate Bank in words.
The CP Issuer also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until
maturity (whether by acceleration or otherwise) at the rates per annum
specified in Section 3.06(a) of the Liquidity Agreement and, after
maturity, until paid, at the rates per annum specified in Section 3.06(b)
and, in each case to the extent applicable, Section 3.18 of the Liquidity
Agreement, said interest to be payable to the Bank at the aforesaid office
of the Liquidity Agent on such dates as are specified in the Liquidity
Agreement and at maturity (whether by acceleration or otherwise).
Payments of both principal and interest are to be made in lawful money
of the United States of America and in immediately available funds in
accordance with the Liquidity Agreement.
This Revolving Loan Note evidences indebtedness incurred under, and is
subject to the terms and provisions of and entitled to the benefits of, a
Liquidity Agreement, dated as of February 10, 1993 (as from time to time
amended, the "Liquidity Agreement"), among the CP Issuer, certain lenders
(including the Bank) and the Liquidity Agent. Terms defined in Annex X to
the Liquidity Agreement are used herein as therein defined. Reference is
hereby made to the Liquidity Agreement for a statement of its terms and
provisions, including those under which this Revolving Loan Note may be
paid prior to its due date or its due date may be accelerated.
This Revolving Loan Note is secured by and is entitled to the benefits
of a Security Agreement, dated as of February 10, 1993, as from time to
time further amended, among the CP Issuer and the Collateral Agent and,
solely for the limited purpose described therein, the Depositary, the
Liquidity Agent, each LOC Issuer, the CP Dealer and the Manager.
All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest and notice of
dishonor.
THIS REVOLVING LOAN NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
DISTRIBUTION FUNDING CORPORATION
By _____________________________
Authorized Signatory
SCHEDULE
Amount and Type Unpaid Name of
of Revolving Amount of Principal Person
Loan Made or Prinicipal Balance Making
Date Converted Paid of Note Notation
---- --------------- ---------- --------- --------
EXHIBIT B
B FORM OF REFUNDING LOAN NOTE
$ * New York, New York
_____________, 19__
On the Expiration Date the undersigned, a Delaware corporation (the
"CP Issuer"), FOR VALUE RECEIVED, promises to pay to the order of (the
"Bank"), or its registered assigns at the office of Chemical Bank (the
Liquidity Agentn) at 277 Park Avenue, New York, New York 10017, the
principal sum of ** United States Dollars (U.S. $______)
or, if less, the aggregate unpaid principal amount of all Refunding Loans
made by the Bank to the CP Issuer pursuant to the Liquidity Agreement
referred to below.
- -----------------
* Insert amount equal to the Percentage of the Liquidity Commitment of the
appropriate Bank in figures.
** Insert amount equal to the Percentage of the Liquidity Commitment of the
appropriate Bank in words.
The CP Issuer also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until
maturity (whether by acceleration or otherwise) at the rates per annum
specified in Section 3.06(a) of the Liquidity Agreement and, after
maturity, until paid, at the rate per annum specified in Section 3.06(b)
and, in each case to the extent applicable, Section 3.18 of the Liquidity
Agreement, said interest to be payable to the Bank at the aforesaid office
of the Liquidity Agent on such dates as are specified in the Liquidity
Agreement and at maturity (whether by acceleration or otherwise).
Payments of both principal and interest are to be made in lawful money
of the United States of America and in immediately available funds in
accordance with the Liquidity Agreement.
This Refunding Loan Note evidences indebtedness incurred under, and is
subject to the terms and provisions of and entitled to the benefits of, a
Liquidity Agreement, dated as of February 10, 1993 (as from time to
time amended, the "Liquidity Agreement"), among the CP Issuer, certain
lenders
(including the Bank) and the Liquidity Agent. Terms defined in Annex X to the
Liquidity Agreement are used herein as therein defined.
Reference is hereby made to the Liquidity Agreement for a statement of
its terms and provisions, including those under which this Refunding Loan Note
may be paid prior to its due date or its due date may be accelerated.
This Refunding Loan Note is secured by and is entitled to the benefits of
a Security Agreement, dated as of February 10, 1993, as from time to time
amended, among the CP Issuer, Chemical Bank, as Collateral Agent under such
Security Agreement, Chemical Bank, as Depositary and the Liquidity Agent.
All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor.
THIS REFUNDING LOAN NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
DISTRIBUTION FUNDING CORPORATION
By _____________________________
Authorized Signatory
SCHEDULE
Unpaid Name of
Amount Amount of Principal Person
of Refunding Prinicipal Balance Making
Date Loan Paid of Note Notation
---- --------------- ---------- --------- --------
EXHIBIT C
SEE TAB ONE
EXHIBIT D
SEE TAB FOURTEEN
EXHIBIT E
SEE TAB TWELVE
EXHIBIT F
FORM OF ASSIGNMENT AND ACCEPTANCE
Dated as of: ___________, 199_
Reference is made to the Liquidity Agreement dated as of February 10,
1993 (as restated, amended, modified, supplemented and in effect from time
to time, the "Liquidity Agreement"), among Distribution Funding
Corporation, a Delaware corporation (the CP Issuer"), the Banks named
therein, Chemical Bank, as agent for the Banks (the "Liquidity Agent").
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Liquidity Agreement. This
Assignment and Acceptance between the Assignor (as set forth on Schedule I
hereto and made a part hereof) and the Assignee (as set forth on Schedule I
hereto made a part hereof) is dated as of the Effective Date (as set forth
on Schedule I hereto and made a part hereof).
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocable
purchases and assumes from the Assignor without recourse to the Assignor,
as of the Effective Date set forth on Schedule I hereto, an undivided
interest (the "Assigned Interest") in and to all the Assignor's rights and
obligations under the Liquidity Agreement respecting those and only those,
credit facilities contained in the Liquidity Agreement as are set forth on
Schedule I (the "Assigned Facilities"), in a principal amount for each
Assigned Facility as set forth on Schedule I.
2. The Assignor (i) makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or
representations made in or in connection with the Liquidity Agreement, or
any other of the Facilities Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Liquidity
Agreement, any other of the Facilities Documents or any other instrument or
document furnished pursuant thereto, other than that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any Liens granted by such assigning
Bank; (ii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition or creditworthiness
of the CP Issuer, the Trust, the Transferor, Ingram or any Trust
Assets or the performance or observance by the CP Issuer, the Trustee, the
Transferor or Ingram of any of their respective obligations under the
Liquidity Agreement, any of the other Facilities Documents or the Purchase
Agreement in the case of Ingram or any other instrument or document
furnished pursuant thereto; and (iii) requests that the Liquidity Agent
request that the CP Issuer exchange each Loan Note held by it evidencing
the Assigned Facilities for a new Loan Note payable to the Assignor (if the
Assignor has retained any interest in the Assigned Facility) and a new Loan
Note or Loan Notes payable to the Assignee in the respective amounts which
reflect the assignment being made hereby (and after giving effect to any
other assignments which have become effective on the Effective Date).
3. The Assignee (i) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (ii) confirms
that it has received a copy of the Liquidity Agreement, together with
copies of such other documents and information as it has deemed appropriate
to make its own credit analysis independently and without reliance on the
Liquidity Agent, the Assignor or any other Bank; (iii) agrees that it
will, independently and without reliance upon the Liquidity Agent, the
Assignor or any other Bank and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Liquidity Agreement;
(iv) appoints and authorizes the Liquidity Agent and the Collateral Agent
to take such action as agent on its behalf and to exercise such powers
under the Liquidity Agreement and the other Facilities Documents as are
delegated to the Liquidity Agent, and the Collateral Agent by the terms
thereof, together with such powers as are reasonably incidental thereto;
(v) agrees that it will be bound by the provisions of the Liquidity
Agreement (including, without limitation, Sections 10.11, 10.13(d) and
lO.l5(b) thereof) and will perform in accordance with its terms all the
obligations which by the terms of the Liquidity Agreement are required to
be performed by it as a Bank; (vi) has attached hereto (A) evidence that
the short-term obligations of the Assignee are rated at least A-1 by S&P
and, if rated by Fitch, F-1 by Fitch, or, if lower, the current rating on
the Commercial Paper by such rating agency (but not lower than A-1 by S&P
and, if rated by Fitch, F-1 by Fitch, respectively),* (B) an opinion of
counsel in a form reasonably acceptable to S&P, Fitch and the CP Issuer to
the effect that, upon the effectiveness of this Assignment and Acceptance,
the Liquidity Agreement is the legal, valid and binding obligation of the
Assignee, enforceable against it in accordance with its terms, (C) evidence
that S&P and Fitch have confirmed that the assignment contemplated hereby
would not result in the withdrawal or reduction of the current rating by
S&P and Fitch, respectively, of the Commercial Paper; (vii) has supplied
the information requested on the administrative questionnaire attached
hereto as Exhibit A and (viii) if applicable, has provided the Internal
Revenue Service forms required to be delivered under Section 3.10(b) of the
Liquidity Agreement.
4. This Assignment and Acceptance, following its execution and, if
necessary, the execution by the Liquidity Agent, will be delivered to the
Liquidity Agent, together with a processing and recordation fee of S3,000,
for effectiveness as of the Effective Date (which Effective Date shall,
unless otherwise agreed to by the Liquidity Agent, be at least ten Business
Days after the execution of this Assignment and Acceptance).
5. From and after the Effective Date, the Liquidity Agent shall make
all payments in respect of the Assigned Interest (including payments or
principal, interest, fees and other amounts) to the Assignee, whether such
amounts have accrued prior to the Effective Date or accrue subsequent to
the Effective Date. The Assignor and Assignee shall make all appropriate
adjustments in payments for periods prior to the Effective Date by the
Liquidity Agent or with respect to the making of this assignment directly
between themselves.
6. From and after the Effective Date, (i) the Assignee shall be a
party to the Liquidity Agreement and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations of a Bank
thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Liquidity Agreement.
- -----------------
* Bracketed language to be included if assignment is pursuant to Section
3.10(i) or Section 3.13.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed by their respective duly authorized officers on
Schedule I hereto.
Schedule I to Assignment and Acceptance
Respecting the Liquidity Agreement,
dated as of February 10, 1993 among
Distribution Funding Corporation,
the Banks named herein
and
Chemical Bank,
as Liquidity Agent
Legal Name of Assignor:
Legal Name of Assignee:
Effective Date of Assignment:
Percentage Assigned (to at least
Bank Commitment eight decimals) shown as a
Amount Assigned percentage of the Liquidity Commitment
_______________________________________________________________________
$ _______________ _______________%
ACCEPTED (if required under
Liquidity Agreement):
________________________________
as Assignor
Chemical Bank,
as Liquidity Agent
By ________________________________ By ________________________________
Name: Name:
Title: Title:
________________________________
as Assignee
________________________________
Name:
Title:
Distribution Funding Corporation
By _____________________________
Name:
Title:
EXHIBIT A
to
Assignment And
Acceptance
[Name of CP Issuer]
ADMINISTRATIVE DETAILS REPLY FORM
Liquidity Agreement dated as of February 10, 1993
1. LENDING OFFICES
Domestic Lendinq Office
Name of Lending Entity: _____________________________________________
Address: _____________________________________________
_____________________________________________
Telex No. _____________________________________________
Fax No. _____________________________________________
Eurodollar Lending
Office
Name of Lending Entity: _____________________________________________
Address: _____________________________________________
_____________________________________________
Telex No. _____________________________________________
Fax No. _____________________________________________
2. CONTACTS - Credit Matter
Name of Person: _____________________________________________
Address: _____________________________________________
_____________________________________________
Telephone: _____________________________________________
Telex No. _____________________________________________
Telecopier No. _____________________________________________
3. CONTACTS - OPERATIONS/
ADMINISTRATION
Name of Person: _____________________________________________
Address: _____________________________________________
_____________________________________________
Telephone: _____________________________________________
Telex No. _____________________________________________
Telecopier No. _____________________________________________
4. PAYMENT INSTRUCTION
Pay To: _____________________________________________
(Name of Bank): _____________________________________________
Address: _____________________________________________
_____________________________________________
ABA Number: _____________________________________________
Acct. Number: _____________________________________________
Acct. Name: _____________________________________________
Reference: _____________________________________________
Please forward this completed form to:
Attention:
[Name of Liquidity Bank]
[Address]
EXHIBIT G
FORM OF NOTICE OF REVOLVING BORROWING
_____________, 199_
TO: Each Bank that is a party to the Liquidity Agreement referred to below
Gentlemen:
The undersigned, Distribution Funding Corporation (the "CP Issuer")
refers to the Liquidity Agreement, dated as of February 10, 1993 (the
"Liquidity Agreement," the terms defined therein being used herein as
therein defined), among the CP Issuer, Chemcial Bank as Liquidity Agent and
the Banks listed on the signature pages thereof, and hereby gives you
notice pursuant to Section 3.02 of the Liquidity Agreement and in that
connection sets forth below the information relating to such Revolving
Borrowing (the "Proposed Borrowing") as required by Section 3.02 of the
Liquidity Agreement:
(i) The requested [Business] [Working] Day of the Proposed
Borrowing is ____________, 199_;
(ii) The aggregate amount of the Proposed Borrowing is $______;
(iii) The Type[s] of Loan[s] requested for such Proposed
Borrowing [is] [are] [Base Rate] [and] [C/D] [and] [Eurodollar].
The CP Issuer hereby represents and warrants that the conditions
precedent to this Borrowing set forth in Section 6.02 of the Liquidity
Agreement have been on the date hereof and on the date of such Borrowing
will be, met.
Very truly yours,
DISTRIBUTION FUNDING CORPORATION
By _____________________________
Authorized Officer
EXHIBIT H
FORM OF NOTICE OF REFUNDING BORROWING
_____________, 199_
TO: Each Bank that is a party to the Liquidity Agreement referred to below
Gentlemen:
The undersigned, Chemical Bank, as Depositary and Attorney-in-fact for
Distribution Funding Corporation (the "CP Issuers") refers to the Liquidity
Agreement, dated as of February 10, 1993 (the "Liquidity Agreement," the
terms defined therein being used herein as therein defined), among the CP
Issuer, Chemical Bank as Liquidity Agent and the Banks listed on the
signature pages thereof, and hereby gives you notice pursuant to Section
3.03 of the Liquidity Agreement and in that connection sets forth below the
information relating to such Refunding Borrowing (the "Proposed Borrowing")
as required by Section 3.03 of the Liquidity Agreement:
(i) The requested Business Day of the Proposed Borrowing is
_____________, 199_;
(ii) The aggregate amount of the Proposed Borrowing is $______.
The CP Issuer hereby represents and warrants that the conditions
precedent to this Borrowing set forth in Section 6.03 of the Liquidity
Agreement have been on the date hereof and on the date of such Borrowing
will be, met.
Very truly yours,
DISTRIBUTION FUNDING CORPORATION
By _____________________________
Authorized Officer
[or
Very truly yours,
DISTRIBUTION FUNDING CORPORATION
By CHEMICAL BANK, as Depositary
and Attorney-in-Fact
By _____________________________
Authorized Officer]
Schedule 1
Percentage of Liquidity Commitment
Chemical Bank 77.1430% $115,714,500
NationsBank of North Carolina, N.A. 11.4285% $ 17,142,750
The Bank of Nova Scotia 11.4285% $ 17,142,750
Schedule 2
Notices
NATIONSBANK OF NORTH CAROLINA, N.A.
NationsBank of North Carolina, N.A.
One NationsBank Plaza
Charlotte, North Carolina 28255
Attention: Corporate Lending Support, Elizabeth A. Garver
Telephone: 704-386-8382
Telecopy: 704-386-8694
with a copy to
NationsBank of North Carolina, N.A.
One NationsBank Plaza
Fifth Floor
Nashville, TN 37239-1697
Attention: Samuel J. Belk, Vice President
Telephone: 615-749-3862
Telecopy: 615-749-4112
THE BANK OF NOVA SCOTIA
The Bank of Nova Scotia
Atlanta Agency
#55 Park Place
Suite 650
Atlanta, GA 30303
Attention: Patrick M. Brown, Representative
Telephone: 404-581-0807
Telecopy: 404-525-3833
CHEMICAL BANK
Notices pertaining to funding or payment obligations of Chemical:
Chemical Bank
270 Park Avenue, 10th Floor
New York, New York 10017
Attention: Andrew Stasiw
Telephone: 212-270-3867
Telecopy: 212-682-8937
All other notices to:
Chemical Bank
270 Park Avenue, 10th Floor
New York, New York 10017
Attention: John D. Mindnich, Jr., Vice President
Telephone: 212-270-3637
Telecopy: 212-270-3279
Schedule 3
Initial Participants
The Industrial Bank of Japan, Limited,
Atlanta Agency
NBD Bank, N.A.
First American National Bank
First Bank National Association DG Bank
The First National Bank of Louisville
Third National Bank
Credit Lyonnais Atlanta/ Credit Lyonnais Cayman Island Branch
Bank of Scotland
ABN AMRO Bank N.V.
Generale Banque, New York Branch
EXHIBIT 10.34
October 10, 1996
Michael Grainger
Ingram Micro Inc.
1600 E. St. Andrew Place
Santa Ana, CA 92799
Dear Mike:
This letter will confirm Ingram Micro's offer of employment to you. The
Board of Directors will be requested to elect you to the position of
Executive Vice President and Chief Financial Officer--Worldwide, at its
next meeting. You will report directly to me, the Chairman and Chief
Executive Officer.
Your base salary will be $25,000 per month ($300,000 annualized) effective
October 1, 1996, to be paid on the Company's monthly Executive payroll
cycle. You will have your next performance and merit review in December,
1997 and annually thereafter. You will also be eligible to participate in
the standard health and employee benefit programs of Ingram Micro Inc.,
(information explaining the health and benefits programs and participatory
requirements is enclosed with this letter.)
You will continue to be considered on temporary assignment through January
31, 1997 and Ingram Micro will pay all temporary living expenses through
that date.
Effective October 1, 1996, you will also be eligible to participate in the
Executive Incentive Bonus Plan, and your Target Bonus percentage will be
60% of your base earned salary. For 1996, your participation will be
guaranteed at 100% of the 60% Target Bonus based on salary earned from
October 1, 1996, through December 31, 1996. The bonus payout will be paid
in March 1997. For 1997, participation will be based on the 1997 Executive
Incentive Bonus Plan. The provisions of the current Plan are as follows:
Sixty percent (60%) of your eligible incentive bonus award will be
automatically calculated based on the Company's pre-tax, pre-bonus profit
performance against financial targets. The remaining forty percent (40%)
will be based on your individual performance against personal goals and
objectives, subject to pre-tax, pre-bonus achievement. You are eligible to
earn up to 150% of the Target Bonus percentage if the Company performs
exceptionally well. The earned bonus payout will be paid in March of each
year following completion of the Plan year and you must be employed at the
time of payout to be eligible.
The Stock Option Committee of the Ingram Micro Board of Directors will be
requested to grant you stock options on 200,000 shares of Ingram Micro
Common Stock. (These are in addition to the shares you previously
purchased under the terms of the Key Employee Stock Purchase Plan.) The
Committee will be requested to make the options effective the date of the
Initial Public Offering (I.P.O.) of the Common Stock at the Company and the
exercise price for these options will be the I.P.O. price. The options
will vest 25% effective April 1, 1998 and an additional 25% on April 1,
1999, April 1, 2000 and April 1, 2001, provided that you continue to be
employed by Ingram Micro on each of those dates.
In addition to the foregoing, the Stock Option Committee will be requested
to grant you options on another 100,000 shares of Ingram Micro Common Stock
effective the date of the I.P.O. at the I.P.O. price. These options will
vest as certain specified Company financial objectives are achieved, but in
no case earlier than April 1, 1998 nor later than the ninth anniversary of
the I.P.O. date.
For 1996, the Company will provide Executive Tax Assistance through Price
Waterhouse, Nashville, Tennessee.
Ingram Micro agrees to assist you with relocation of you and your family to
Orange County, in accordance with our standard officer relocation
assistance package in effect at the date with your relocation. In no
event, will the relocation allowance be less than that provided in the
current policy, (see attached current Relocation Assistance Agreement.)
Ingram Micro will give you a two (2) year period to make the decision to
relocate.
Notwithstanding any provision of your "Rollover Option" Agreement to the
contrary, if at any time Ingram Micro terminates your employment without
Cause (as Cause is defined in the Ingram Micro Inc. Rollover Stock Option
Plan), Ingram Micro shall cause all unvested "Rollover Options" to become
100% vested. Such "Rollover Options" must be exercised, if at all, within
two years of the date of such termination. Notwithstanding any provision
of the Purchase Agreement relating to shares purchased under the Key
Employee Stock Purchase Plan, upon such termination all restrictions
thereunder applicable to such shares shall lapse.
Ingram Micro employs on an at will basis. Continued employment is based on
job performance; that is, successfully meeting expectations and
requirements established for the job and for continued success of Ingram
Micro's business activity.
If the above confirms your understanding of the terms and conditions of
your employment, please sign both copies of this letter and return the
original to David Finley, Senior Vice President Human Resources, Worldwide,
keeping the copy for your files.
We are really looking forward to your joining our team and know that you
will make significant contributions to building an even greater Company.
Very best regards,
/s/
______________________________
Jerre L. Stead
Chairman and Chief Executive Officer
I have received a copy of this letter and accept the offer as outlined above.
/s/ 10/16/96
______________________________ __________________
Michael Grainger Date
Attachment
cc: Jerre Stead Michael Head
David R. Dukes Tom Berry
Jeff Rodek Main Files
David Finley
