<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________
FORM 10-Q
(Mark One)
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended March 26, 1994.
OR
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from to
Commission file number 1-8703
WESTERN DIGITAL CORPORATION
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 95-2647125
- - ------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
8105 Irvine Center Drive
Irvine, California 92718
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE (714) 932-5000
N/A
- - --------------------------------------------------------------------------------
Former name, former address and former fiscal year if changed since last report.
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___
Number of shares outstanding of Common Stock, as of April 30, 1994 is
44,773,002.
<PAGE> 2
WESTERN DIGITAL CORPORATION
INDEX
<TABLE>
<CAPTION>
Page No.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Operations - Three
Months Ended March 26, 1994 and March 27, 1993 . . . 3
Consolidated Statements of Operations - Nine
Months Ended March 26, 1994 and March 27, 1993 . . . 4
Consolidated Balance Sheets - March 26, 1994 and
June 30, 1993. . . . . . . . . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows - Nine
Months Ended March 26, 1994 and March 27, 1993 . . . 6
Notes to Consolidated Financial Statements . . . . . 7
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations . . . . . . . . 9
PART II OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . .. . . . . . . . . 11
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . 11
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . 12
Index to Exhibits . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
WESTERN DIGITAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE-MONTH PERIOD ENDED
------------------------
MARCH 26, MARCH 27,
1994 1993
--------- ---------
<S> <C> <C>
Revenues, net . . . . . . . . . . . . . . . $420,878 $325,407
Costs and expenses:
Cost of revenues . . . . . . . . . . . . 327,116 273,107
Research and development . . . . . . . . 27,542 24,946
Selling, general and administrative. . . 32,071 22,092
-------- --------
Total costs and expenses. . . . . . . 386,729 320,145
-------- --------
Operating income. . . . . . . . . . . . . . 34,149 5,262
Net interest expense. . . . . . . . . . . . 681 3,629
-------- --------
Income before income taxes. . . . . . . . . 33,468 1,633
Provision for income taxes. . . . . . . . . 5,020 --
-------- --------
Net income $ 28,448 $ 1,633
======== ========
Earnings per common and common
equivalent share (Note 2):
Primary . . . . . . . . . . . . . . . $ .64 $ .05
======== ========
Fully diluted . . . . . . . . . . . . $ .61 $ .05
======== ========
Common and common equivalent shares used
in computing per share amounts:
Primary . . . . . . . . . . . . . . . 44,480 35,302
======== ========
Fully diluted . . . . . . . . . . . . 48,863 35,306
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
WESTERN DIGITAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE-MONTH PERIOD ENDED
-----------------------
MARCH 26, MARCH 27,
1994 1993
--------- ---------
<S> <C> <C>
Revenues, net . . . . . . . . . . . . . . . . . . . . $1,077,448 $940,023
Costs and expenses:
Cost of revenues . . . . . . . . . . . . . . . . . 864,446 778,763
Research and development . . . . . . . . . . . . . 83,967 71,816
Selling, general and administrative. . . . . . . . 80,589 63,854
---------- --------
Total costs and expenses . . . . . . . . . . . 1,029,002 914,433
---------- --------
Operating income. . . . . . . . . . . . . . . . . . . 48,446 25,590
Net interest expense. . . . . . . . . . . . . . . . . 6,285 11,646
---------- --------
Income before income taxes. . . . . . . . . . . . . . 42,161 13,944
Provision for income taxes. . . . . . . . . . . . . . 6,324 1,231
---------- --------
Net income. . . . . . . . . . . . . . . . . . . . . . $ 35,837 $ 12,713
========== ========
Earnings per common and common
equivalent share (Note 2):
Primary . . . . . . . . . . . . . . . . . . . . $ .91 $ .39
========== ========
Fully diluted . . . . . . . . . . . . . . . . . $ .88 $ .39
========== ========
Common and common equivalent shares
used in computing per share amounts:
Primary . . . . . . . . . . . . . . . . . . . . 39,507 32,546
========== ========
Fully diluted . . . . . . . . . . . . . . . . . 44,917 32,681
========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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WESTERN DIGITAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
MARCH 26, JUNE 30,
1994 1993
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . $173,396 $ 33,837
Accounts receivable, less allowance for doubtful
accounts of $10,611 and $9,340. . . . . . . . . . . 185,555 159,478
Inventories (Notes 3 and 4). . . . . . . . . . . . . 73,465 112,516
Prepaid expenses. . . . . . . . . . . . . . . . . . . 13,133 12,626
-------- --------
Total current assets. . . . . . . . . . . . . . . . 445,549 318,457
Property and equipment, at cost, less accumulated
depreciation and amortization (Note 4). . . . . . . . 78,280 181,030
Intangible and other assets, net (Note 4) . . . . . . . 31,485 31,684
-------- --------
Total assets. . . . . . . . . . . . . . . . . . . . $555,314 $531,171
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . $133,069 $128,538
Accrued expenses (Note 4). . . . . . . . . . . . . . . 106,808 54,911
Current portion of long-term debt (Notes 4 and 5). . . -- 23,460
-------- --------
Total current liabilities. . . . . . . . . . . . . . 239,877 206,909
Other long-term debt, less current portion
(Notes 4 and 5) . . . . . . . . . . . . . . . . . . . -- 123,561
Convertible subordinated debentures. . . . . . . . . . . 58,870 59,000
Deferred income taxes. . . . . . . . . . . . . . . . . . 9,464 10,751
Commitments and contingent liabilities
Shareholders' equity:
Preferred stock, $.10 par value;
Authorized: 5,000 shares
Outstanding: None . . . . . . . . . . . . . . . . . -- --
Common stock, $.10 par value;
Authorized: 95,000 shares
Outstanding: 44,669 shares at March 26 and
35,338 shares at June 30 . . . . . . . 4,467 3,534
Additional paid-in capital . . . . . . . . . . . . . . 279,661 200,278
Accumulated deficit. . . . . . . . . . . . . . . . . . (37,025) (72,862)
-------- --------
Total shareholders' equity . . . . . . . . . . . . . 247,103 130,950
-------- --------
Total liabilities and shareholders' equity . . . . . $555,314 $531,171
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
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WESTERN DIGITAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE-MONTH PERIOD ENDED
------------------------
MARCH 26, MARCH 27,
1994 1993
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . $ 35,837 $ 12,713
Adjustments to reconcile net income to net
cash provided by (used for) operating activities:
Depreciation and amortization. . . . . . . . . . . 37,668 39,160
Changes in current assets and liabilities, net of
effects from the sale of facility (Note 4):
Accounts receivable. . . . . . . . . . . . . . (26,077) (42,510)
Inventories. . . . . . . . . . . . . . . . . . 29,903 17,169
Prepaid expenses . . . . . . . . . . . . . . . (2,346) (2,239)
Accounts payable and accrued expenses. . . . . 37,244 31,916
Other assets . . . . . . . . . . . . . . . . . . . (2,563) (2,335)
Deferred income taxes. . . . . . . . . . . . . . . (1,287) (61)
-------- --------
Net cash provided by operating activities. . . 108,379 53,813
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net . . . . . . . . . . . . . (13,337) (34,021)
Proceeds from the sale of facility (Note 4). . . . . 110,677 --
-------- --------
Net cash provided by (used for) investing
activities . . . . . . . . . . . . . . . . . 97,340 (34,021)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt. . . . . . . . . . . . . . . . . . (146,346) (62,453)
Proceeds from stock offering, net (Note 6) . . . . . 73,293 42,390
Exercise of stock options and warrants . . . . . . . 6,893 1,404
-------- --------
Net cash used for financing activities . . . . (66,160) (18,659)
-------- --------
Net increase in cash and cash equivalents. . . . . . 139,559 1,133
Cash and cash equivalents, beginning of period . . . 33,837 33,815
-------- --------
Cash and cash equivalents, end of period . . . . . . $173,396 $ 34,948
======== ========
SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for:
Interest . . . . . . . . . . . . . . . . . . . $ 4,889 $ 10,631
Income taxes . . . . . . . . . . . . . . . . . 1,419 1,026
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 7
WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accounting policies followed by the Company are set forth in Note 1 of
Notes to Consolidated Financial Statements included in the Company's Annual
Report on Form 10-K for the year ended June 30, 1993. Quarterly information
is reported on a 13 week fiscal period which ends the last Saturday of the
quarter.
2. Primary earnings per share amounts are based upon the weighted average
number of shares and dilutive common stock equivalents calculated using the
average price of the Company's common stock for each period presented.
Fully diluted earnings per share additionally reflect dilutive shares
assumed to be issued upon conversion of the Company's convertible
debentures.
3. Inventories comprised the following:
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<CAPTION>
MARCH 26, JUNE 30,
1994 1993
--------- --------
(IN THOUSANDS)
<S> <C> <C>
Finished goods . . . . . . . . . . . . . $24,993 $ 43,634
Work in process. . . . . . . . . . . . . 27,936 44,087
Raw materials and component parts. . . . 20,536 24,795
------- --------
$73,465 $112,516
======= ========
</TABLE>
4. In December 1993, the Company sold its Irvine, California silicon wafer
fabrication facility and certain tangible assets to the Semiconductor
Products Sector of Motorola, Inc. ("Motorola") for approximately $110.6
million ($103.9 million in cash and a $6.7 million note payable, which has
been paid as of March 26, 1994) plus certain other considerations, including
the assumption by Motorola of equipment leases and certain other liabilities
associated with the facility. Approximately $95.0 million of the proceeds
from the sale were used to reduce bank indebtedness. Concurrent with the
sale, the Company entered into a supply contract with Motorola under which
Motorola will supply silicon wafers to Western Digital for at least two
years.
The gain on the sale of the facility, which has been reduced to provide for
certain additional costs necessary to conform the Company's operations to an
environment without in-house wafer fabrication facilities, is not material
to the financial position of the Company and is being deferred and amortized
over the life of the supply contract with Motorola.
5. In January 1994, the Company entered into a $75.0 million accounts
receivable facility with certain financial institutions. The facility
consists of a $50.0 million three-year arrangement at Eurodollar or
reference rates of the participating banks and a $25.0 million one-year
committed arrangement at a rate approximating commercial paper rates. This
new facility is intended to serve as a source of working capital as may be
needed from time to time and replaces a credit facility secured by
substantially all of the Company's assets, the remaining borrowings under
which were repaid on December 31, 1993. In March 1994, the facility was
amended to increase the one-year commitment to $35.0 million, for a total of
$85.0 million available credit.
6. In February 1993, the Company issued 7,618,711 shares of its common stock in
a public common stock offering. Proceeds from the offering, net of
commissions and other related expenses totaling $4.2 million, were $73.3
million. The proceeds were used for working capital and other general
corporate purposes.
7
<PAGE> 8
WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. In the opinion of management, all adjustments necessary to fairly state the
results of operations for the three and nine months ended March 26, 1994 and
March 27, 1993 have been made. All such adjustments are of a normal
recurring nature. Certain information and footnote disclosures normally
included in the financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to
the rules and regulations of the Securities and Exchange Commission. These
consolidated financial statements should be read in conjunction with the
consolidated financial statements and the notes thereto included in the
Company's Annual Report.
8
<PAGE> 9
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLAR AMOUNTS IN MILLIONS)
RESULTS OF OPERATIONS
Net income for the third quarter of 1994 was $28.4 million, compared with net
income of $1.6 million in the corresponding quarter of the prior year and $12.5
million in the immediately preceding quarter. Net income for the nine months
ended March 26, 1994 was $35.8 million versus $12.7 million for the same period
a year ago. Revenue for the three month period ended March 26, 1994 increased
29% to $420.9 million from $325.4 million in the third quarter of 1993 and 13%
from $371.1 million in the second quarter of 1994. Gross margins for the
current fiscal quarter improved six percentage points to 22.3% from 16.1% in
the same quarter a year ago as gross profit margins for the disk drive and
microcomputer products ("MCP") businesses improved five and 20 percentage
points, respectively. As compared with the immediately preceding quarter,
gross margin improved approximately three percentage points, despite a six
percent decline in disk drive average selling prices ("ASPs"), reflecting the
Company's continuing effort to improve manufacturing efficiencies. For the
nine months ended March 26, 1994, the Company increased its revenue and gross
margins to $1.08 billion and 19.8%, respectively, reflecting significant
increases in the volume of disk drive unit shipments and lower component costs
in both the disk drive and MCP businesses.
Revenue for disk drive products totaled $387.3 million in the third quarter of
1994, an increase of $54.5 million or 16% from the second quarter of 1994, as a
result of a 19% increase in unit shipments. Revenue for drive products for the
three and nine months ended March 26, 1994 increased $105.9 million or 38% and
$157.9 million or 20%, respectively, over the corresponding periods of the
prior year. These increases were the result of a 69% and 45% increase in the
volume of drives shipped over the corresponding three and nine month periods,
respectively, of the prior year and a shift in the mix to higher-capacity
drives.
Revenue for MCP totaled $33.6 million in the third quarter of 1994, a decrease
of $4.7 million, or 12% from the second quarter of 1994, primarily due to a
decrease in storage controller product revenue as a result of reduced unit
shipments to one customer period to period. Revenue for MCP for the three and
nine months ended March 26, 1994 decreased $10.4 million or 24% and $20.5
million or 15%, respectively, as compared with the corresponding periods of
the prior year. The decline in revenue for both periods reflects decreases
across all products lines.
Disk drive gross margin for the three months ended March 26, 1994 increased
approximately three and five percentage points to 21.2% from 18.3% in the
immediately preceding quarter and from 16.2% in the third quarter of the prior
year. The increases in gross margin are primarily the result of increased unit
shipments which reduced per unit product costs, lower component costs and a
favorable product mix. Disk drive gross margin for the nine months ended March
26, 1994 remained relatively flat as compared with the corresponding period of
the prior year due to the pricing pressures experienced in the disk drive
industry in the first quarter of 1994.
MCP gross margin for the third quarter of 1994 increased approximately four
percentage points to 35.0% from 31.2% in the immediately preceding quarter as
the Company began to realize the cost benefits of selling its wafer fabrication
facility (see Note 4) and thereby reducing manufacturing costs. MCP gross
margin for the three and nine month periods of the current fiscal year
increased approximately 20 and 21 percentage points, respectively, from 15.3%
and 10.5% in the same periods of the prior year. These increases in MCP gross
margins were primarily attributable to reduced product costs as a result of
realizing the cost of benefits of selling the wafer fabrication facility and
continued improvements in manufacturing efficiencies.
9
<PAGE> 10
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLAR AMOUNTS IN MILLIONS)
Research and development expense ("R&D") for the third quarter of 1994
decreased approximately $2.5 million or 8% from the second quarter of 1994 as a
result of the timing of the completion of certain R&D related projects. R&D
expense for the three and nine months ended March 26, 1994 increased $2.6
million or 10% and $12.2 million or 17%, respectively, as compared with the
corresponding periods of the prior year. These increases were primarily
attributable to planned expenditures to support new product introductions for
the current fiscal year.
Selling, general and administrative ("SG&A") expense for the three months ended
March 26, 1994 increased $5.7 million or 21% from the preceding quarter. SG&A
expense for the three and nine month periods of the current year increased
$10.0 million or 45% and $16.7 million or 26%, respectively, as compared with
the three and nine month periods of 1993. The increases in SG&A expense for
all periods are primarily a result of increases in selling, marketing and other
related expenses in support of higher revenue levels and provisions made for
the Company's pay-for-performance plans.
Net interest expense decreased $1.9 million in the third quarter of
1994 as compared with the prior quarter due to significant reductions in debt
outstanding. Net interest expense decreased $2.9 million and $5.4 million from
the three and nine month periods of 1993, respectively, primarily due to lower
interest rates and significantly lower levels of debt outstanding during 1994
as compared with the prior periods.
FINANCIAL CONDITION
Cash and cash equivalents totaled $173.4 million at March 26, 1994 as compared
with $33.8 million at June 30, 1993. In the first nine months of 1994, the
Company generated $108.4 in cash from operations and $73.3 million in net
proceeds from the sale of 7,618,711 shares of common stock on February 8, 1994.
Cash flows from operations, along with approximately $95.0 million of proceeds
from the sale of the Company's wafer fabrication facility (see Note 4) were
used to reduce long-term debt by $146.3 million and to fund capital
expenditures of $13.3 million. Capital expenditures were incurred primarily
for increased disk drive manufacturing and wafer testing capacity.
In January 1994, the Company entered into a $75.0 million accounts receivable
facility with certain financial institutions. The facility consists of a $50.0
million three-year arrangement at Eurodollar or reference rates of the
participating banks and a $25.0 million one-year committed arrangement at a
rate approximating commercial paper rates. This new facility is intended to
serve as a source of working capital as may be needed from time to time and
replaces a credit facility secured by substantially all of the Company's
assets, the remaining borrowings under which were repaid on December 31, 1993.
In March 1994, the facility was amended to increase the one-year commitment to
$35.0 million, for a total of $85.0 million available credit.
Notwithstanding the significant improvements in financial position realized
over the past nine months, the ability of the Company to sustain its improved
working capital management and to continue operating profitably is dependent
upon a number of factors including competitive conditions in the marketplace,
general economic conditions, the efficiency of the Company's manufacturing
operations and the timely development and introduction of new products which
address market needs.
10
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 1. Legal Procedings
The Company is engaged in litigation with Amstrad plc, a British
computer maker. For a complete discussion of this matter see Part II,
Item 1, "Legal Procedings" in the Quarterly Report on Form 10-Q for
the quarter ended December 25, 1993.
ITEM 6. Exhibits and reports on Form 8-K.
(a) Exhibits:
<TABLE>
<S> <C>
10.30 Receivables Contribution and Sale Agreement, dated as of
January 7, 1994 by and between the Company, as seller, and
Western Digital Capital Corporation, as buyer.
10.31 Receivables Purchase Agreement, dated as of January 7, 1994,
by and among Western Digital Capital Corporation, as seller,
the Company, as servicer, the Financial Institutions listed
therein, as bank purchasers and J.P. Morgan Delaware, as
administrative agent.
10.32 First Amendment to Receivables Purchase Agreement, dated
March 23, 1994, by and between Western Digital Corporation, as
seller and the Financial Institutions listed therein as bank
purchasers and administrative agents.
10.32.1 Assignment Agreement, dated as of March 23, 1994, by and between
J.P. Morgan Delaware as Bank Purchaser and Assignor and the Bank
of California, N.A. and the Long-Term Credit Bank of Japan, LTD.,
Los Angeles Agency as Assignees.
11 Computation of Per Share Earnings.
</TABLE>
(b) Reports on Form 8-K:
On March 16, 1994, the Company filed a Current Report on Form 8-K
with the Securities and Exchange Commission reporting that a
proposed settlement of the pending class action securities
litigation against the Company received preliminary court
approval.
11
<PAGE> 12
SIGNATURES
- - ----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WESTERN DIGITAL CORPORATION
--------------------------------
Registrant
/s/ Scott Mercer
---------------------------------
D. Scott Mercer
Executive Vice President,
Chief Financial and
Administrative Officer
Date: May 9, 1994
12
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- -------------
<S> <C> <C>
10.30 Receivables Contribution and Sale Agreement, dated as of January 7, 1994 by and
between the Company, as seller, and Western Digital Capital Corporation, as buyer.
10.31 Receivables Purchase Agreement, dated as of January 7, 1994, by and among Western
Digital Capital Corporation, as seller, the Company, as servicer, the Financial
Institutions listed therein, as bank purchasers and J.P. Morgan Delaware, as
administrative agent.
10.32 First Amendment to Receivables Purchase Agreement, dated March 23, 1994, by and
between Western Digital Capital Corporation, as seller and the Financial Institutions
listed therein as bank purchasers and adminitrative agents.
10.32.1 Assignment Agreement, dated as of March 23, 1994, by and between J.P. Morgan Delaware
as Bank Purchaser and Assignor and The Bank of California, N.A. and The Long-Term
Credit Bank of Japan, LTD., Los Angeles Agency as Assignees.
11 Computation of Per Share Earnings.
</TABLE>
13
<PAGE> 1
Exhibit 10.30
RECEIVABLES CONTRIBUTION AND SALE AGREEMENT
dated as of January 7, 1994
Between
WESTERN DIGITAL CORPORATION,
as Receivable Seller
and
WESTERN DIGITAL CAPITAL CORPORATION,
as Receivable Buyer
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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Page
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ARTICLE I
DEFINITIONS: CONSTRUCTION
SECTION 1.01. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Interpretation and Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE II
PURCHASES AND SETTLEMENTS
SECTION 2.01. General Assignment and Conveyance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.02. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.03. Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.04. Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.05. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.06. Mandatory Repurchase, Repayments and Optional Repurchase Under Certain Circumstances . . . . . . . . . 13
SECTION 2.07. Sale Without Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. Conditions to Initial Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.02. Conditions to Subsequent Purchase of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE IV
PROTECTION OF THE RECEIVABLE BUYER
SECTION 4.01. Maintenance of Information and Computer Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4.02. Protection of the Interests of the Receivable Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4.03. Maintenance of Writings and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.04. Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.05. Performance of Undertakings Under the Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. General Representations and Warranties of the Receivable Seller . . . . . . . . . . . . . . . . . . . . 18
SECTION 5.02. Representations and Warranties of the Receivable Seller With Respect to the Sale of Receivables . . . . 22
</TABLE>
NY1-43658.1 i
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<TABLE>
<S> <C> <C>
ARTICLE VI
COVENANTS
SECTION 6.01. Affirmative Covenants of the Receivable Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 6.02. Negative Covenants of the Receivable Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VII
TERMINATION
SECTION 7.01. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 7.02. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 8.02. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 8.03. Holiday . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 8.04. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 8.05. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 8.06. No Implied Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 8.07. No Discharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 8.08. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 8.09. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 8.10. Governing Law; Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 8.11. Prior Understandings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 8.12. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 8.13. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 8.14. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 8.15. Waiver of Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 8.16. Payments Set Aside . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 8.17. No Petition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 8.18. No Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
EXHIBITS
<TABLE>
<S> <C>
Exhibit A Credit and Collection Policy
Exhibit B Description of Qualifying Receivables
Exhibit C Form of Opinion of Counsel to the Receivable
Seller
Exhibit D Form of Officer's Certificate
Exhibit E Information Regarding Chief Executive Office, Etc.
pursuant to Section 5.01(f)
Exhibit F Information Regarding Material Adverse Changes
pursuant to Section 5.01(j)
Exhibit G Information Regarding Litigation, Etc. pursuant to
Section 5.01(k)
Exhibit H Permitted Lockbox Banks, Lockbox Account Numbers
and Permitted Lockboxes
Schedule 1 List of Receivables
</TABLE>
NY1-43658.1 ii
<PAGE> 4
RECEIVABLES CONTRIBUTION AND SALE AGREEMENT
RECEIVABLES CONTRIBUTION AND SALE AGREEMENT, dated as of January
7, 1994, between WESTERN DIGITAL CORPORATION, a Delaware corporation (the
"Receivable Seller"), and WESTERN DIGITAL CAPITAL CORPORATION, a Delaware
corporation (the "Receivable Buyer").
RECITALS
WHEREAS, the Receivable Seller in the ordinary course of its
business generates trade receivables resulting from the sale of goods or
services to its customers;
WHEREAS, the Receivable Buyer desires from time to time to
purchase from the Receivable Seller Receivables (as defined below) pursuant to
and in accordance with the terms hereof; and
WHEREAS, the Receivable Buyer is a wholly-owned subsidiary of the
Receivable Seller;
WHEREAS, the Receivable Buyer shall, in order to finance its
purchase of Receivables from the Receivable Seller, in the future determine
from time to time to sell undivided interests in the Receivables pursuant to
and in accordance with the terms of the Receivables Purchase Agreement (as
defined below);
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS: CONSTRUCTION
SECTION 1.01. Certain Definitions. All capitalized terms not
otherwise defined herein shall have the meanings set forth in the Receivables
Purchase Agreement. As used in this Agreement, the following terms shall have
the following meanings:
"Affiliate" shall mean, with respect to a Person, any other
Person which directly or indirectly controls, is controlled by or is under
common control with, such Person. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement" shall mean this Receivables Contribution and Sale
Agreement, as the same may from time to time be amended, supplemented or
otherwise modified.
NY1-43658.1
<PAGE> 5
"Business Day" shall mean any day other than a Saturday, Sunday,
public holiday under the Laws of the State of Delaware, the State of California
or the State of New York or any other day on which banking institutions are
authorized or obligated to close in the State of Delaware, the State of
California or the State of New York.
"Capitalized Lease" of a Person shall mean any lease of property
by such Person as lessee which would be capitalized on a balance sheet of such
Person prepared in accordance with GAAP.
"Chief Executive Office" shall mean, with respect to the
Receivable Seller, the place where the Receivable Seller is located, within the
meaning of Section 9-103(3)(d), or any analogous provision, of the UCC, in
effect in the jurisdiction whose Law governs the perfection of the Receivable
Buyer's ownership interests in any Receivables.
"Collections" shall mean, for any Receivable as of any date, (i)
the sum of all amounts, whether in the form of cash, checks, drafts, or other
instruments, received by the Receivable Seller or in a Permitted Lockbox in
payment of, or applied to, any amount owed by an Obligor on account of such
Receivable (including but not limited to all amounts received on account of any
Defaulted Receivable) on or before such date, including, without limitation,
all amounts received on account of such Receivable, all Finance Charges, if
any, and other fees and charges, (ii) cash proceeds of Related Security with
respect to such Receivable and (iii) all amounts which the Receivable Seller
pursuant to Section 2.06(b) hereof is obligated to pay to Receivable Buyer as a
Collection and (iv) the Repurchase Price which the Receivable Seller pays to
Receivable Buyer pursuant to Section 2.06(a)(ii) or 2.06(c) hereof.
"Consolidated Subsidiary" shall mean, at any date, any Subsidiary
or other entity the accounts of which would be consolidated under GAAP with
those of the Receivable Seller in its consolidated financial statements as of
such date.
"Contract" shall mean a binding contract between the Receivable
Seller and an Obligor which gives rise to a (i) short-term trade receivable
with a maturity of not greater than 90 days or (ii) a short-term retail or
consumer receivable with a maturity of not greater than 3 months, in each case
arising from the sale by the Receivable Seller of goods or services (other than
software) in the ordinary course of the Receivable Seller's business.
"Credit and Collection Policy" shall mean the Receivable Seller's
credit, collection, enforcement and other policies and practices relating to
Contracts and Receivables that have been in use prior to, and are in use on,
the Initial Closing Date, as the same may be modified from time to time in
compliance with Section 6.02(e) hereof. Certain credit policies of the
NY1-43658.1 2
<PAGE> 6
Receivable Seller in use on the Initial Closing Date are set forth in Exhibit
A.
"Debt" of a Person shall mean such Person's (i) obligations for
borrowed money, (ii) obligations representing the deferred purchase price of
property or services, other than trade receivables arising in the ordinary
course, (iii) obligations, whether or not assumed, which are secured by Liens
on any assets of such Person, whether or not such Debt is otherwise an
obligation of such Person, which Debt, if Non-Recourse Debt to such Person,
shall be deemed to be in an amount equal to the lesser of the principal amount
of such obligation or the aggregate fair market value of such assets, (iv)
obligations which are evidenced by bonds, notes, debentures or other similar
instruments, (v) Capitalized Lease obligations, (vi) obligations pursuant to a
Guarantee and (vii) liabilities in respect of unfunded vested benefits under
plans covered by Title IV of ERISA.
"Defaulted Receivable" shall mean a Receivable (i) owed by an
Obligor that would not be eligible for any further extensions of credit, by
reason of any default or nonperformance by such Obligor, under the terms of the
Credit and Collection Policy, (ii) which has become uncollectible by reason of
such Obligor's inability to pay, as determined by the Receivable Buyer or the
Servicer, in either case in accordance with the Credit and Collection Policy,
(iii) in respect of which an Event of Bankruptcy has occurred with respect to
the related Obligor, (iv) as to which the Obligor thereof is deceased or (v)
which is more than 90 days past due, except that portion of the Outstanding
Balance of the Receivables of such Obligor which is the subject of a good faith
Dispute between the Receivable Seller and the Obligor as to the amount due on
the related Contract.
"Designated Contracts" shall mean each of the Contracts
generating any Receivable as listed on Schedule 1, as such schedule may be
supplemented from time to time by the Receivable Seller with the approval of
the Receivable Buyer and the Administrative Agent.
"Dilution Factors" shall mean credits, cancellations, cash
discounts, allowances, Disputes, rebates, charge backs, returned or repossessed
goods, and other deductions in amounts owing with respect to any Receivables
(including, without limitation, any special or other discounts or any
reconciliations) that are given to an Obligor in respect of any Receivables
theretofore sold by the Receivable Seller to the Receivable Buyer in accordance
with the Credit and Collection Policy.
"Dispute" shall mean any dispute, deduction, claim, offset,
defense, counterclaim, set-off or obligation of any kind, contingent or
otherwise, relating to a Receivable, including,
DC1-1106.8 3
<PAGE> 7
without limitation, any dispute relating to goods or services already paid for.
"Dollar" and "$" shall mean lawful currency of the United States
of America.
"Eligible Receivable" shall have the meaning set forth in the
Receivables Purchase Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time and any successor thereto, and the
regulations promulgated and rulings issued thereunder.
"ERISA Affiliate" shall mean any corporation or person which is a
member of any group of organizations (i) described in Section 414(b) or (c) of
the Internal Revenue Code of which the Receivable Seller is a member, or (ii)
solely for purposes of potential liability under Section 302(c)(11) of ERISA
and Section 412(c)(11) of the Internal Revenue Code and the lien created under
Section 302(f) of ERISA and Section 412(n) of the Internal Revenue Code,
described in Section 414(m) or (o) of the Internal Revenue Code, of which the
Receivable Seller is a member.
"Event of Bankruptcy" shall mean, for any Person:
(a) that such Person shall fail generally to, or admit in
writing its inability to, pay its debts as they become due; or
(b) a proceeding shall have been instituted in a court having
jurisdiction in the premises seeking a decree or order for relief in respect of
such Person in an involuntary case under any applicable bankruptcy, insolvency,
reorganization, suspension of payments, readjustment, marshalling of assets or
other similar Law now or hereafter in effect, or for the appointment of a
receiver, liquidator, assignee, trustee, custodian, sequestrator, conservator
(under the Bank Conservation Act, as amended from time to time, or otherwise)
or other similar official of such Person or for any substantial part of its
property, or for the winding-up or liquidation of its affairs and such
proceeding shall not have been dismissed within 60 days of the filing thereof;
or
(c) the commencement by such Person of a voluntary case under
any applicable bankruptcy, insolvency, reorganization, suspension of payments,
readjustment, marshalling of assets or other similar Law now or hereafter in
effect, or such Person's consent to the entry of an order for relief in an
involuntary case under any such Law, or consent to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator, conservator (under the Bank Conservation Act, as amended from
time to time, or otherwise) or other similar official of such Person or for any
substantial part of its
NY1-43658.1 4
<PAGE> 8
property, or any general assignment for the benefit of creditors; or
(d) if such Person is a corporation, such Person or any
Subsidiary of such Person shall take any corporate action to authorize,
generally or specifically, the actions set forth in the preceding clause (a),
(b) or (c).
"Event of Termination" shall mean (i) with respect to any Plan, a
reportable event, as defined in Section 4043(b) of ERISA, as to which the PBGC
has not by regulation waived the requirement of Section 4043(a) of ERISA that
it be notified within 30 days of the occurrence of such event, or (ii) the
withdrawal of the Receivable Seller or any ERISA Affiliate from a Plan during a
plan year in which it is a substantial employer, as defined in Section 4043(b)
of ERISA, or (iii) the failure by the Receivable Seller or any ERISA Affiliate
to meet the minimum funding standard of Section 412 of the Internal Revenue
Code or Section 302 of ERISA with respect to any Plan, including, without
limitation, the failure to make on or before its due date a required
installment under Section 412(m) of the Internal Revenue Code or Section 302(e)
of ERISA, or (iv) the distribution under Section 4041 of ERISA of a notice of
intent to terminate any Plan or any action taken by the Receivable Seller or
any ERISA Affiliate to terminate any Plan, or (v) the adoption of an amendment
to any Plan that pursuant to Section 401(a)(29) of the Internal Revenue Code or
Section 307 of ERISA would result in the loss of taxexempt status of the trust
of which such Plan is a part if the Receivable Seller or an ERISA Affiliate
fails to timely provide security to the Plan in accordance with the provisions
of said Sections, or (vi) the institution by the PBGC of proceedings under
Section 4042 of ERISA for the termination of, or the appointment of a trustee
to administer, any Plan, or (vii) the receipt by the Receivable Seller or any
ERISA Affiliate of a notice from a Multiemployer Plan that action of the type
described in the previous clause (vi) has been taken by the PBGC with respect
to such Multiemployer Plan, or (viii) the complete or partial withdrawal from a
Multiemployer Plan by the Receivable Seller or any ERISA Affiliate that results
in liability under Section 4201 or 4204 of ERISA (including the obligation to
satisfy secondary liability as a result of a purchaser default), or (ix) the
receipt by the Receivable Seller or any ERISA Affiliate of notice from a
Multiemployer Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA or that it intends to terminate or has terminated
under Section 4041A of ERISA, or (x) any event or circumstance exists which may
reasonably be expected to constitute grounds for the Receivable Seller or any
ERISA Affiliate to incur liability under Title IV of ERISA or under Sections
412(c)(11) or 412(n) of the Internal Revenue Code with respect to any Plan.
"Finance Charges" shall mean, with respect to a Contract, any
finance, interest, late or similar charges owing by an Obligor pursuant to such
Contract.
NY1-43658.1 5
<PAGE> 9
"GAAP" shall mean generally accepted accounting principles in the
United States of America, applied on a consistent basis and applied to both
classification of items and amounts, and shall include, without limitation, the
official interpretations thereof by the Financial Accounting Standards Board,
its predecessors and successors.
"Guarantee" shall mean, as applied to any Debt, (i) a guarantee
(other than by endorsement for collection in the ordinary course of business),
direct or indirect, in any manner, of any part or all of such Debt or (ii) an
agreement, direct or indirect, contingent or otherwise, providing assurance of
the payment or performance (or payment of damages in the event of
non-performance) of any part or all of such Debt. The amount of any Guarantee
shall be deemed to be the maximum amount of the Debt guaranteed for which the
guarantor could be held liable under such Guarantee.
"Initial Closing Date" shall mean January 10, 1994.
"Initial Cut-Off Date" shall mean January 10, 1994.
"Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended from time to time and any successor thereto, and the
regulations promulgated and rulings issued thereunder.
"Law" shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree
or award of any Official Body.
"Lien", in respect of the property of any Person, shall mean any
ownership interest of any other Person, any mortgage, deed of trust,
hypothecation, pledge, lien, security interest, grant of a power to confess
judgment, filing of any financing statement, charge or other encumbrance or
security arrangement of any nature whatsoever, including, without limitation,
any conditional sale or title retention arrangement, and any assignment,
deposit arrangement, consignment or lease intended as, or having the effect of,
security.
"Lockbox Account" shall mean a demand deposit account identified
on Exhibit H hereto maintained with a Permitted Lockbox Bank pursuant to the
Lockbox Servicing Instructions for the purpose of depositing payments made by
the Obligors or such other account as the Receivable Seller and the Receivable
Buyer may agree upon from time to time.
"Lockbox Servicing Instructions" shall mean the instructions
relating to lockbox services in connection with a Permitted Lockbox and related
Lockbox Account which are in compliance with Section 5.01(o) hereof and
otherwise in form and substance satisfactory to the Receivable Buyer, which
have been
NY1-43658.1 6
<PAGE> 10
executed and delivered by the Receivable Seller to a Permitted Lockbox Bank.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA which is or was at any time during the current
year or the immediately preceding five years contributed to by the Receivable
Seller or any ERISA Affiliate on behalf of its employees and which is covered
by Title V of ERISA.
"Obligor" shall mean, for any Receivable, each and every Person
who purchased goods or services on credit under a Contract and who is obligated
to make payments to the Receivable Seller pursuant to such Contract.
"Office" shall mean, when used in connection with the Receivable
Buyer or the Receivable Seller, their respective offices as set forth on the
signature pages hereto, or at such other office or offices of the Receivable
Buyer or the Receivable Seller or branch, Subsidiary or Affiliate of either
thereof as may be designated in writing from time to time by the Receivable
Buyer or the Receivable Seller to the Receivable Buyer, or the Receivable
Seller, as appropriate.
"Official Body" shall mean any government or political
subdivision or any agency, authority, bureau, central bank, commission,
department or instrumentality of either, or any court, tribunal, grand jury or
arbitrator, in each case whether foreign or domestic.
"Outstanding Balance" of any Receivable shall mean, at any time,
the then outstanding amount thereof, including any accrued and outstanding
Finance Charges related thereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and
any entity succeeding to any or all of its functions under ERISA.
"Permitted Lockbox" shall mean a post office box or other mailing
location identified on Exhibit H hereto maintained by a Permitted Lockbox Bank
pursuant to the Lockbox Servicing Instructions for the purpose of receiving
payments made by the Obligors for subsequent deposit into a related Lockbox
Account, or such other post office box or mailing location as the Receivable
Buyer and the Receivable Seller may agree upon from time to time.
"Permitted Lockbox Bank" shall mean a bank identified on Exhibit
H hereto or such other bank as the Receivable Seller and the Receivable Buyer
may agree upon from time to time.
"Person" shall mean an individual, corporation, partnership
(general or limited), trust, business trust,
NY1-43658.1 7
<PAGE> 11
unincorporated association, joint venture, joint-stock company, Official Body
or any other entity of whatever nature.
"Plan" shall mean any employee benefit or other plan which is or
was at any time during the current year or immediately preceding five years
established or maintained by the Receivable Seller or any ERISA Affiliate and
which is covered by Title IV of ERISA, other than a Multiemployer Plan.
"Purchase Price" shall have the meaning ascribed to such term in
Section 2.02 hereof.
"Ratio Commencement Date" shall have the meaning ascribed to such
term in subsection 6.02(h) hereof.
"Receivable" shall mean all indebtedness owed to the Receivable
Seller by any Obligor (without giving effect to any purchase hereunder by the
Receivable Buyer at any time) under a Contract, whether or not constituting an
account or a general intangible and whether or not evidenced by chattel paper
or an instrument, whether now existing or hereafter arising and wherever
located, arising in connection with the sale of goods or the rendering of
services by the Receivable Seller and conforming to the description set forth
on Exhibit B hereto, and including the right to payment of any Finance Charges
and other obligations of such Obligor with respect thereto, but excluding any
amount of sales tax, excise tax or other similar tax or charge incurred in
connection with the sale of the goods or services which gave rise to such
indebtedness.
"Receivables Purchase Agreement" shall mean the Receivable
Purchase Agreement dated as of January 7, 1994, among Western Digital Capital
Corporation, as Seller, Western Digital Corporation, in its individual capacity
and as Servicer, Delaware Funding Corporation and the financial institutions
listed therein, as Bank Purchasers and J.P. Morgan Delaware as Administrative
Agent.
"Records" shall mean correspondence, memoranda, computer
programs, tapes, discs, papers, books or other documents or transcribed
information of any type whether expressed in ordinary or machine readable
language.
"Related Security" shall mean with respect to any Receivable:
(a) all Contracts with respect to such Receivable;
(b) all of the Receivable Seller's interest, if any, in the
goods, merchandise (including returned merchandise) or equipment, if any, the
sale of which by the Receivable Seller gave rise to such Receivable;
NY1-43658.1 8
<PAGE> 12
(c) all other security interests or liens and property
subject thereto from time to time, if any, purporting to secure payment of such
Receivable, whether pursuant to the Contract related to such Receivable or
otherwise, together with all financing statements signed by an Obligor
describing any collateral securing such Receivable;
(d) all guarantees, insurance or other agreements or
arrangements of any kind from time to time supporting or securing payment of
such Receivable whether pursuant to the Contract related to such Receivable or
otherwise; and
(e) all Records relating to, and all service contracts and
any other contracts associated with, the Receivables, the Contracts or the
Obligors.
"Repurchase Price" shall have the meaning ascribed to such term
in Section 2.06(a) hereof.
"Responsible Officer" shall mean the chief executive officer,
chief financial officer, treasurer or any assistant treasurer of the Receivable
Seller.
"Secured Obligations" shall have the meaning ascribed to such
term in Section 2.01(c) hereof.
"Servicer" shall mean initially Western Digital Corporation, and
thereafter, any Person which succeeds to the functions of Western Digital
Corporation under the Receivables Purchase Agreement.
"Subsidiary" shall mean any corporation or other 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 at the time directly or indirectly owned by the Receivable
Seller.
"Termination Date" shall have the meaning ascribed to such term
in Section 7.01 hereof.
"Transferred Property" shall have the meaning ascribed to such
term in Section 2.01 hereof.
"Transaction Costs" shall have the meaning ascribed to such term
in Section 8.01 hereof.
"UCC" shall mean, with respect to any jurisdiction, the Uniform
Commercial Code, or any successor statute, or any comparable law, as the same
may from time to time be amended, supplemented or otherwise modified and in
effect in such jurisdiction.
SECTION 1.02. Interpretation and Construction. Unless the
context of this Agreement otherwise clearly requires,
NY1-43658.1 9
<PAGE> 13
references to the plural include the singular, the singular the plural and the
part the whole. The words "hereof", "herein", "hereunder" and similar terms in
this Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement. Unless otherwise stated in this Agreement, in the
computation of a period of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each means "to but excluding." The section and other headings contained in
this Agreement are for reference purposes only and shall not control or affect
the construction of this Agreement or the interpretation hereof in any respect.
Section, subsection and exhibit references are to this Agreement unless
otherwise specified. As used in this Agreement, the masculine, feminine or
neuter gender shall each be deemed to include the others whenever the context
so indicates. All accounting terms not specifically defined herein shall be
construed in accordance with GAAP. Terms not otherwise defined herein which
are defined in the UCC as in effect in the State of New York on the date hereof
shall have the respective meanings ascribed to such terms therein unless the
context otherwise clearly requires.
ARTICLE II
PURCHASES AND SETTLEMENTS
SECTION 2.01. General Assignment and Conveyance. (a) Upon the
terms and subject to the conditions set forth herein, the Receivable Seller
hereby bargains, grants, assigns, transfers and conveys to the Receivable
Buyer, and the Receivable Buyer hereby purchases and accepts assignment and
transfer from the Receivable Seller, on the terms and subject to the conditions
specifically set forth herein, all of the Receivable Seller's right, title and
interest in, to and under (i) all Receivables now existing under the Designated
Contracts, as identified on Schedule I hereto, and all Receivables hereafter
generated under such Designated Contracts, (ii) all Related Security, (iii) all
Collections with respect thereto and (iv) all proceeds of any of the foregoing
(the property described in clauses (i), (ii), (iii) and (iv) of this Section
2.01(a), collectively, the "Transferred Property"), provided, however that no
Receivables hereafter generated under any Designated Contract shall be sold by
the Receivable Seller to the Receivable Buyer pursuant hereto at any time that
the Investors are not obligated (after giving effect to such sale) to make an
Incremental Purchase or a reinvestment Purchase (all as defined in the
Receivable Purchase Agreement) of Receivables under the Receivables Purchase
Agreement. Notwithstanding anything to the contrary in this Agreement, the
Receivable Buyer shall have no rights in cash proceeds (as defined in the UCC)
of repossessed property. The foregoing bargain, grant, assignment, transfer
and conveyance does not constitute and is not intended to result in the
creation, or an assumption by the Receivable Buyer of any obligation of the
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Receivable Seller or any other Person in connection with the Receivables or
under any agreement or instrument relating thereto, including any obligation to
any Obligors or any Affiliate of or other Person to whom the Receivable Seller
may delegate servicing duties or to insurers.
(b) In connection with such bargain, grant, assignment,
transfer and conveyance, the Receivable Seller 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
Transferred Property sold or to be sold by the Receivable Seller hereunder,
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 Transferred Property to the
Receivable Buyer, and to deliver a file-stamped copy of such financing
statements or other evidence of such filings to the Receivable Buyer on or
prior to the Initial Closing Date (excluding such continuation and similar
statements, which shall be delivered promptly after filing).
(c) It is the express intent of the Receivable Seller and the
Receivable Buyer that the conveyance of the Transferred Property by the
Receivable Seller to the Receivable Buyer pursuant to this Agreement be
construed as a sale of the Transferred Property by the Receivable Seller to the
Receivable Buyer. However, in the event that, notwithstanding the intent of
the parties, the Transferred Property is determined by an Official Body with
jurisdiction in the premises and by appropriate proceedings to continue to be
property of the Receivable 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 Receivable Seller provided for in the Agreement
shall be deemed to be and hereby is a grant by the Receivable Seller to the
Receivable Buyer of a security interest in and to all of the Receivable
Seller's right, title and interest in, to and under the Transferred Property,
to secure the rights of the Receivable Buyer (the "Secured Obligations"). The
Receivable Seller and the Receivable 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 under applicable law and will be maintained as such throughout the
term of this Agreement.
(d) The Receivable Buyer shall not purchase Receivables
hereunder if an Event of Bankruptcy occurs with respect to, or an involuntary
petition to commence a bankruptcy or insolvency case or proceeding is filed
against, the Receivable Seller upon receipt of notice of such Event of
Bankruptcy or filing by the Receivable Seller. The Receivable Seller shall
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give prompt notice to the Receivable Buyer, S&P and Moody's of any Event of
Bankruptcy or any such filing.
(e) In connection with each sale and conveyance hereunder in
order to evidence the Receivable Buyer's interest in the Transferred Property,
the Receivable Seller further agrees, at its own expense, on or prior to the
Initial Closing Date and each date of subsequent purchase hereunder to (i)
indicate on its books and records (including any computer files) that all of
the Transferred Property has been sold to the Receivable Buyer pursuant to this
Agreement and (ii) deliver to the Receivable Buyer a computer file containing
(or modifications thereto) a true and complete list of all such Receivables
specifying for each Designated Contract, as of the Initial Cut-Off Date or date
of subsequent purchase, as the case may be, the aggregate unpaid balance of
such Receivable and the internal Western Digital Corporation number and name
identifying such Designated Contract. Such file shall be marked as Schedule I
to this Agreement, delivered to the Receivable Buyer as confidential and
proprietary and is hereby incorporated into and made a part of this Agreement.
The Receivable Seller further agrees not to alter the computer file designation
referenced in this paragraph with respect to any Designated Contract during the
term of this Agreement.
SECTION 2.02. Purchase Price. The "Purchase Price" for the
Receivables and other Transferred Property conveyed to the Receivable Buyer
under this Agreement shall be a dollar amount equal to (a) for Receivables
transferred on the Initial Closing Date, $91,052,617.24 (which is equal to 100%
of the aggregate Outstanding Balance, as of the Initial Cut-Off Date, of
Receivables conveyed by the Receivable Seller to the Receivable Buyer on the
Initial Closing Date), and (b) for Receivables transferred on any date
thereafter, 100% of the aggregate outstanding balance of the Receivables
conveyed.
SECTION 2.03. Payment of Purchase Price. Subject to Section
2.04, the Purchase Price for the Receivables and other Transferred Property
shall be paid (a) on the Initial Closing Date with respect to the Receivables
existing on the Initial Cut-Off Date, by a capital contribution by the
Receivable Seller to the Receivable Buyer, and (b) on each Business Day
thereafter on which Receivables are transferred hereunder, by payment in cash
in immediately available funds, provided, however, that to the extent, but only
to the extent, that the cash on hand of the Receivable Buyer would be less than
$20,000 after giving effect to such payment, the Purchase Price shall be deemed
to be a capital contribution by the Receivable Seller to the Receivable Buyer.
SECTION 2.04. Settlement. On each Business Day, the Receivable
Seller shall deliver to the Receivable Buyer a daily report showing the
aggregate Purchase Price of Receivables generated on the preceding Business Day
and the aggregate
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repurchase price of Receivables to be repurchased on such Business Day pursuant
to Section 2.06 hereof.
SECTION 2.05. [Reserved]
SECTION 2.06. Mandatory Repurchase, Repayments and Optional
Repurchase Under Certain Circumstances. (a) The Receivable Seller agrees to
repurchase from the Receivable Buyer (i) all Receivables if at any time the
Receivable Buyer shall cease to have a perfected ownership interest, or a first
priority perfected security interest, in the Receivables, free and clear of any
Lien (except for Liens created by any Investor as provided herein), and (ii)
any Receivable as to which a representation or warranty in Section 5.02 hereof
is determined not to have been true when made on the date such Receivable was
sold by the Receivable Seller to the Receivable Buyer. Any repurchase pursuant
to (i) in the preceding sentence shall be made within five days of receipt of
notice from the Receivable Buyer of such obligation and any repurchase pursuant
to (ii) in the preceding sentence shall be made by the close of business of the
day on which Receivable Seller is notified of the breach of representation or
warranty. The repurchase price shall be equal to the purchase price
theretofore paid by the Receivable Buyer for such Receivable (the "Repurchase
Price") and shall be paid in cash or by way of reduction of capital in the same
proportions as such purchase price was paid in cash or by way of capital
contribution.
(b) The Receivable Seller also agrees to pay to the
Receivable Buyer an amount equal to the amount by which the Outstanding Balance
of any Receivable is (w) reduced or cancelled as a result of any defective or
rejected goods or services, any cash discount or any adjustment in accordance
with the Credit and Collection Policy, or (x) reduced or cancelled as a result
of a set-off in respect of any claim by any Person (whether such claim arises
out of the same or a related transaction or an unrelated transaction), or (y)
reduced or cancelled as a result of any forgiveness of the obligation or of any
adjustment in accordance with the Credit and Collection Policy, or (z)
otherwise reduced or cancelled as a result of any Dilution Factor with respect
to such Receivable.
(c) The Receivable Seller shall have the right, in its sole
discretion, to repurchase from the Receivable Buyer any Receivable on any date
on and after such Receivable ceases to be an Eligible Receivable by paying to
the Receivable Buyer the Repurchase Price.
SECTION 2.07. Sale Without Recourse. Each sale of the
Receivables by the Receivable Seller hereunder shall be made without recourse
except as specifically provided herein.
SECTION 2.08. Non-Assumption by the Receivable Buyer of
Obligations. No obligation or liability of the Receivable
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Seller to any Obligor or any third party under any Receivable or Contract which
is part of the Receivables which the Receivable Buyer is purchasing shall be
assumed by the Receivable Buyer, and any such assumption is hereby expressly
disclaimed. The Receivable Buyer shall be indemnified by the Receivable Seller
in accordance with Section 8.02 hereof in respect of any losses, claims,
damages, liabilities, costs or expenses arising out of or incurred in
connection with any Obligor's assertion of such obligation or liability against
the Receivable Buyer.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. Conditions to Initial Closing. On or prior to the
date of the execution of this Agreement, the Receivable Seller shall deliver to
the Receivable Buyer the following documents and instruments, all of which
shall be in a form and substance acceptable to the Receivable Buyer and its
counsel (with such additional copies thereof as the Receivable Buyer and its
counsel may request):
(a) A copy of the resolutions of the Board of Directors of
the Receivable Seller, certified as of the date hereof by its corporate
secretary, authorizing the execution, delivery and performance of this
Agreement and the other documents to be delivered by the Receivable Seller
hereunder and approving the transactions contemplated hereby and thereby;
(b) The Certificate of Incorporation of the Receivable Seller
certified as of a date reasonably near the Initial Closing Date by the
Secretary of State or other similar official of the Receivable Seller's
jurisdiction of incorporation;
(c) A good standing certificate for the Receivable Seller
issued by the Secretary of State or other similar official of the Receivable
Seller's jurisdiction of incorporation, certificates of qualification as a
foreign corporation issued by the Secretaries of State or other similar
officials of each jurisdiction where such qualification is material to the
transactions contemplated by this Agreement and certificates of the appropriate
state official or lien search in each jurisdiction specified by the Receivable
Buyer as to the absence of any tax Liens against the Receivable Seller under
the Laws of such jurisdiction, each such certificate to be dated a date
reasonably near the date hereof;
(d) A certificate of the corporate secretary of the
Receivable Seller dated the date hereof and certifying (i) the name and
signatures of the officers authorized on its behalf to execute, and the
officers and other employees authorized to perform, this Agreement and any
other documents to be delivered by the Receivable Seller hereunder (on which
certificate the
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Receivable Buyer may conclusively rely until such time as the Receivable Buyer
shall receive from the Receivable Seller a revised certificate meeting the
requirements of this clause (d)(i)) and (ii) a copy of the Receivable Seller's
By-laws;
(e) Receipt-stamped copies (with acknowledgment copies to be
delivered as promptly as possible after the Initial Closing Date) of proper
financing statements (Form UCC-l) dated a date reasonably near to the Initial
Closing Date naming the Receivable Seller as the debtor of the Receivables and
the Receivable Buyer as the secured party or other similar instruments or
documents as may be necessary or, in the opinion of the Receivable Buyer,
desirable under the UCC of all appropriate jurisdictions to evidence or perfect
the Receivable Buyer's ownership interests in all Receivables;
(f) Receipt-stamped copies (with acknowledgment copies to be
delivered as promptly as possible after the Initial Closing Date) of proper
termination statements (Form UCC-3), if any, necessary under the laws of all
appropriate jurisdictions to release all security interests and other rights of
any person in Receivables previously granted by the Receivable Seller;
(g) Certified copies of requests for information or copies
(Form UCC-11) (or a similar search report certified by parties acceptable to
the Receivable Buyer) dated a date reasonably near the date of the Initial
Closing Date listing all effective financing statements which name the
Receivable Seller (under its present name or any previous name) as debtor and
which are filed in jurisdictions in which the filings were made pursuant to
item (e) above, together with copies of such financing statements (none of
which shall cover any Receivables or Contracts or inventory or goods the sale
of which may give rise to a Receivable, unless a termination statement shall
have been delivered with respect thereto pursuant to Section 3.01(f) hereof or
unless the secured party having a security interest in such inventory or goods
disclaims any interest in the Receivables, as proceeds of such inventory or
goods);
(h) A favorable opinion of Gibson, Dunn & Crutcher, counsel
for the Receivable Seller, dated the date hereof in substantially the form of
Exhibit C hereto and as to such other matters as the Receivable Buyer or its
counsel may reasonably request;
(i) All information concerning the Receivables provided to
the Receivable Buyer shall be true and correct in all material respects as of
the Initial Cut-Off Date, in the case of Receivables transferred on the Initial
Closing Date;
(j) The Receivable Seller shall have delivered to the
Receivable Buyer a computer file containing a true and complete list of all
Receivables identified by account number and account name and by aggregate
Outstanding Balance of each Receivable and
NY1-43658.1 15
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shall have substantially performed all other obligations required to be
performed by the provisions of this Agreement;
(k) An officer's certificate dated the date hereof in the
form of Exhibit D hereto executed by a Responsible Officer;
(l) A form of Contract or Contracts; and
(m) Such other documents as the Receivable Buyer shall
reasonably request.
SECTION 3.02. Conditions to Subsequent Purchase of Receivables.
The Receivable Buyer's obligation to make subsequent purchases of
hereafter-generated Receivables shall be subject to satisfaction of the
following conditions precedent: (i) the truth and correctness of (A) the
representations and warranties in Section 5.01 hereof as of the date of such
subsequent purchase as though made on and as of such date, and (B) the
representations and warranties in Section 5.02 of this Agreement, but only as
to the Receivables being purchased on such date; (ii) compliance with the
covenants and agreements in Articles II, IV and VI hereof; (iii) the
satisfactory completion of any due diligence conducted by the Receivable Buyer
with respect to any such Receivables and the related Obligors and Contracts
which are the subject of such purchase; and (iv) the receipt by the Receivable
Buyer of any approvals, opinions or other documents as the Receivable Buyer
shall have reasonably requested.
ARTICLE IV
PROTECTION OF THE RECEIVABLE BUYER
SECTION 4.01. Maintenance of Information and Computer Records.
The Receivable Seller will hold in trust and keep safely for the Receivable
Buyer all evidence of the Receivable Buyer's right, title and interest in and
to the Transferred Property. The Receivable Seller will, on or prior to the
Initial Closing Date, and with respect to all Receivables that are sold to the
Receivable Buyer after the Initial Closing Date, on each respective date such
Receivables are sold, place an appropriate code or notation in its Records to
indicate that the Receivable Buyer has purchased each and every Receivable in
order to evidence the Receivable Buyer's interest in the Transferred Property.
SECTION 4.02. Protection of the Interests of the Receivable
Buyer.
(a) The Receivable Seller will, from time to time and at
Receivable Seller's sole expense do and perform any and all acts and execute
any and all documents (including, without limitation, the obtaining of
additional search reports, the delivery of further opinions of counsel, the
execution, amendment
NY1-43658.1 16
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or supplementation of any financing statements, continuation statements and
other instruments and documents for filing under the provisions of the UCC of
any applicable jurisdiction, the execution, amendment or supplementation of any
instrument of transfer and the making of notations on the Records of the
Receivable Seller) as may be reasonably requested by the Receivable Buyer or
would be required in order to effect the purposes of this Agreement and the
sale of the Transferred Property hereunder, to protect or perfect the
Receivable Buyer's right, title and interest in the Transferred Property
against all Persons whomsoever or to enable the Receivable Buyer to exercise or
enforce any of their respective rights hereunder.
(b) To the fullest extent permitted by applicable Law, the
Receivable Seller hereby irrevocably grants to the Receivable Buyer an
irrevocable power of attorney, provided the Receivable Seller shall have failed
to sign and file such documents within five (5) Business Days after the
Receivable Buyer's request therefor (unless the Receivable Buyer shall have
determined, in its sole discretion, that a delay of five (5) Business Days
would materially adversely affect its perfected ownership interest in the
Transferred Property), with full power of substitution, coupled with an
interest, to sign and file in the name of the Receivable Seller, or in its own
name, such financing statements and continuation statements and amendments
thereto or assignments thereof as the Receivable Buyer deems reasonably
necessary or as would be required to protect or perfect the Transferred
Property.
(c) At any reasonable time and from time to time at the
Receivable Buyer's reasonable request upon notice to the Receivable Seller, the
Receivable Seller shall permit such Person as the Receivable Buyer may
designate to conduct audits or visit and inspect any of the properties of the
Receivable Seller to examine the Records, internal controls and procedures
maintained by the Receivable Seller or Servicer, as the case may be, and take
copies and extracts therefrom, and to discuss the Receivable Seller's affairs
with its officers, employees and independent accountants. The Receivable
Seller hereby authorizes such officers, employees and independent accountants
to discuss with the Receivable Buyer the affairs of the Receivable Seller. The
Receivable Seller shall reimburse the Receivable Buyer for all reasonable fees,
costs and expenses incurred by or on behalf of the Receivable Buyer in
connection with the foregoing actions promptly upon receipt of a written
invoice therefor.
(d) The Receivable Buyer shall have the right to do all such
acts and things as it may deem necessary to protect its interests, including,
without limitation, the right, following the occurrence of a Potential
Termination Event (but only while such Event is continuing), to confirm and
verify the existence, amount and status of the Receivables with the Obligors
thereunder.
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SECTION 4.03. Maintenance of Writings and Records. The
Receivable Seller will at all times keep or cause to be kept at its Chief
Executive Office, each writing or Record which evidences, and which is
necessary or desirable to establish or protect, including such books of account
and other Records as will enable the Receivable Buyer to determine at any time
the status of, the Receivables. The Receivable Seller shall at its own expense
prepare and maintain machine-readable magnetic tapes in such format as the
Receivable Seller customarily maintains its records.
SECTION 4.04. Information. The Receivable Seller will furnish
to the Receivable Buyer such additional information with respect to the
Receivables (including but not limited to the Receivable Seller's procedures
for selecting Receivables for sale and the Receivable Seller's standards and
procedures for selling goods or services on credit) as the Receivable Buyer may
reasonably request. The Receivable Seller will also furnish to the Receivable
Buyer all modifications, adjustments or supplements to the Credit and
Collection Policy; provided, however, the Seller shall not materially alter the
Credit and Collection Policy as in effect from time to time without the prior
written consent of the Receivable Buyer.
SECTION 4.05. Performance of Undertakings Under the Receivables.
The Receivable Seller will at all times observe and perform, or cause to be
observed and performed, all material obligations and undertakings to the
Obligors arising in connection with each Receivable or related Contract and
will not take any action or cause any action to be taken to impair the rights
of the Receivable Buyer in the Transferred Property.
SECTION 4.06. Collections. The Receivable Seller will remit all
Collections received by it to the Servicer no later than the Business Day next
following receipt thereof. The Receivable Seller acknowledges and agrees that
such Collections will be applied as provided in the Receivables Purchase
Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. General Representations and Warranties of the
Receivable Seller. The Receivable Seller, in addition to its other
representations and warranties contained herein or made pursuant hereto, hereby
represents and warrants to the Receivable Buyer on and as of the date hereof
and as of each date of subsequent purchase of Receivables hereunder:
(a) Organization and Qualification. The Receivable Seller is
a corporation duly organized, validly existing and in good standing under the
Laws of its jurisdiction of
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incorporation. The Receivable Seller is duly qualified to do business as a
foreign corporation in good standing in each jurisdiction in which the
ownership of its properties or the nature of its activities (including
transactions giving rise to Receivables), or both, requires it to be so
qualified, except for those jurisdictions, if any, in which the failure to
qualify to do business would not have a material adverse effect on its
financial condition or results of operations.
(b) Authorization. The Receivable Seller has the corporate
power and authority to execute and deliver this Agreement, to make the sales
provided for herein and to perform its obligations hereunder.
(c) Execution and Binding Effect. This Agreement has been
duly and validly executed and delivered by the Receivable Seller and (assuming
the due and valid execution and delivery thereof by the Receivable Buyer),
constitutes a legal, valid and binding obligation of the Receivable Seller
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization or other similar Laws
of general application relating to or affecting the enforcement of creditors'
rights or by general principles of equity, and will vest absolutely and
unconditionally in the Receivable Buyer a valid ownership interest in the
Transferred Property purported to be assigned thereby, subject to no Liens
whatsoever, except for Liens created by any Investor. Upon the filing of the
necessary financing statements under the UCC as in effect in the jurisdiction
whose Law governs the perfection of the Receivable Buyer's ownership interests
in the Transferred Property, such ownership interest will be perfected under
Article Nine of such UCC, prior to and enforceable against all creditors of and
purchasers from the Receivable Seller and all other Persons whatsoever.
(d) Authorizations and Filings. No authorization, consent,
approval, license, exemption or other action by, and no registration,
qualification, designation, declaration or filing with, any Official Body is or
will be necessary or, in the opinion of the Receivable Seller, advisable in
connection with the execution and delivery by the Receivable Seller of this
Agreement, the consummation by the Receivable Seller of the transactions herein
contemplated or the performance by the Receivable Seller of or the compliance
by the Receivable Seller with the terms and conditions hereof, to ensure the
legality, validity or enforceability hereof, or to ensure that the Receivable
Buyer will have an ownership interest in and to the Transferred Property which
is perfected and prior to all other Liens (excluding Liens created by any
Investor but including competing ownership interests), other than the filing of
financing statements under the UCC in the jurisdiction of the Receivable
Seller's Chief Executive Office.
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(e) Absence of Conflicts. Neither the execution and delivery
by the Receivable Seller of this Agreement nor the consummation by the
Receivable Seller of the transactions herein contemplated, nor the performance
by the Receivable Seller of or the compliance by the Receivable Seller with the
terms and conditions hereof, will (i) violate any Law or (ii) conflict with or
result in a breach of or a default under (A) the Certificate of Incorporation
or By-laws of the Receivable Seller or (B) any agreement or instrument,
including, without limitation, any and all indentures, debentures, loans or
other agreements to which the Receivable Seller is a party or by which it or
any of its properties (now owned or hereafter acquired) may be subject or
bound, which would have a material adverse effect on the financial position or
results of operations of the Receivable Seller or result in rendering any Debt
evidenced thereby due and payable prior to its maturity or result in the
creation or imposition of any Lien pursuant to the terms of any such instrument
or agreement upon any property (now owned or hereafter acquired) of the
Receivable Seller. The Receivable Seller has not entered into any agreement
with any Obligor prohibiting, restricting or conditioning the assignment of any
portion of the receivables.
(f) Location of Chief Executive Office, etc. As of the date
hereof: (i) the Receivable Seller's Chief Executive Office is located at the
address for notices set forth on the signature page hereof; (ii) the Receivable
Seller has only the Subsidiaries and divisions listed on Exhibit E hereto;
(iii) the offices where the Receivable Seller keeps all of its Records are
listed on Exhibit E hereto; and (iv) the Receivable Seller has, within the last
5 years, operated only under the trade names identified in Exhibit E hereto,
and, within the last 5 years, has not changed its name, merged or consolidated
with any other corporation or been the subject of any proceeding under Title
11, United States Code (Bankruptcy), except as disclosed in Exhibit E hereto.
(g) Accurate and Complete Disclosure. No information
furnished in writing by the Receivable Seller to the Receivable Buyer pursuant
to or in connection with this Agreement or any transaction contemplated hereby
is false or misleading in any material respect as of the date as of which such
information was furnished (including by omission of material information
necessary to make such information not misleading).
(h) No Proceedings. There are no proceedings or
investigations pending, or to the knowledge of the Receivable Seller,
threatened, before any Official Body (A) asserting the invalidity of this
Agreement, (B) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement, or (C) seeking any determination or ruling that
might materially and adversely affect (i) the performance by the Receivable
Seller of its obligations under this Agreement or
NY1-43658.1 20
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(ii) the validity or enforceability of this Agreement, the Contracts or any
material amount of the Receivables.
(i) Bulk Sales Act. No transaction contemplated hereby
requires compliance with any bulk sales act or similar law.
(j) Financial Condition. (x) The consolidated balance sheet
of the Receivable Seller and its Consolidated Subsidiaries as at June 30, 1993
and the related statements of income and cash flows of the Receivable Seller
and its Consolidated Subsidiaries for the fiscal year then ended, certified by
KPMG Peat Marwick, independent accountants, copies of which have been furnished
to the Receivable Buyer, fairly present the consolidated financial position of
the Receivable Seller and its Consolidated Subsidiaries as at such date and the
consolidated results of the operations and consolidated cash flows of the
Receivable Seller and its Consolidated Subsidiaries for the period ended on
such date, all in accordance with GAAP, (y) the unaudited consolidated balance
sheet of the Receivable Seller and its Consolidated Subsidiaries as at
September 25, 1993 and the related unaudited statements of income and cash
flows of the Receivable Seller and its Consolidated Subsidiaries for the
periods then ended, copies of which have been furnished to Receivable Buyer,
fairly present the consolidated financial position of the Receivable Seller and
its Consolidated Subsidiaries as at such date and the consolidated results of
the operations and consolidated cash flows of the Receivable Seller and its
Consolidated Subsidiaries for the periods ended on such date, all in accordance
with GAAP and (z) since September 25, 1993, there has been no material adverse
change in any such financial condition or results of operations or in the
Receivable Seller's ability to perform its obligations under this Agreement,
except as set forth on Exhibit F.
(k) Litigation. No injunction, decree or other decision has
been issued or made by any Official Body that prevents, and to the knowledge of
the Receivable Seller, no threat by any Person has been made to attempt to
obtain any such decision that would have a material adverse impact on, the
conduct by the Receivable Seller of a significant portion of the Receivable
Seller's business operations or any portion of its business operations
affecting the Transferred Property, and no litigation, investigation or
proceeding of the type referred to in Section 6.01(i) hereof exists except as
set forth on Exhibit G.
(l) Margin Regulations. The use of all funds acquired by the
Receivable Seller under this Agreement will not conflict with or contravene any
of Regulations G, T, U and X of the Board of Governors of the Federal Reserve
System, as the same may from time to time be amended, supplemented or otherwise
modified.
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(m) ERISA. No event or condition is occurring or exists with
respect to any Plan or Multiemployer Plan concerning which the Receivable
Seller would be under an obligation to furnish a report to the Receivable Buyer
in accordance with Section 6.01(o) hereof.
(n) Taxes. All United States Federal income tax returns of
the Receivable Seller and its Consolidated Subsidiaries have been examined and
closed through the Receivable Seller's fiscal year ended June 30, 1989. The
Receivable Seller and its Consolidated Subsidiaries have filed all United
States Federal income tax returns and all other material tax returns which are
required to be filed by them and have paid all taxes due pursuant to such
returns or pursuant to any assessment received by the Receivable Seller or any
of its Consolidated Subsidiaries, except any such assessment that is subject to
good-faith dispute by appropriate proceedings. The charges, accruals and
reserves on the books of the Receivable Seller and its Consolidated
Subsidiaries in respect of taxes and other governmental charges are, in the
opinion of the Receivable Seller, adequate.
(o) Lockbox Banks and Accounts. The Permitted Lockbox Banks
are the only institutions holding any lockbox accounts for the receipt of
payments from Obligors in respect of Receivables, and all Obligors have been
instructed by invoice to make payments only to a Permitted Lockbox and such
instructions are in full force and effect.
(p) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person or of any Official Body
required in connection with the execution and delivery by the Receivable Seller
of this Agreement, the performance by the Receivable Seller of the transactions
contemplated by this Agreement and the fulfillment by the Receivable Seller of
the terms hereof and thereof, have been obtained and are in full force and
effect.
(q) Bona Fide Receivables. Each Receivable is an obligation
of a customer of the Receivable Seller arising out of the Receivable Seller's
past, current or future performance in accordance with the terms of the
Contract giving rise to such Receivable. The Receivable 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
Dilution Factor.
(r) Books and Records. The Receivable Seller has indicated
on its books and records (including any computer files) that the Receivables
are property of the Receivable Buyer.
SECTION 5.02. Representations and Warranties of the Receivable
Seller With Respect to the Sale of Receivables. By
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selling the Transferred Property to the Receivable Buyer, the Receivable Seller
represents and warrants to the Receivable Buyer as of the Initial Closing Date
and as of each date of a subsequent purchase of Receivables hereunder (in
addition to its other representations and warranties contained herein or made
pursuant hereto) that:
(a) Assignment. This Agreement vests in the Receivable Buyer
all the right, title and interest of the Receivable Seller in and to the
Transferred Property, and constitutes a valid sale of the Transferred Property,
enforceable against, and creates an interest prior in right to, all creditors
of and purchasers from the Receivable Seller.
(b) No Liens. Each Receivable, together with the related
Contract and all purchase orders and other agreements related to such
Receivable, is owned by the Receivable Seller free and clear of any Lien,
except as provided herein, and by purchasing such Receivable hereby, the
Receivable Buyer shall acquire an ownership interest in such Receivable and in
the Related Security and the Collections with respect thereto free and clear of
any Lien, except for Liens created by any Investor and as provided herein. The
Receivable Seller has not and will not have sold, pledged, assigned,
transferred or subjected to a Lien any of the Receivables.
(c) Filings. Prior to each purchase evidenced hereby, all
financing statements and other documents required to be recorded or filed in
order to perfect and protect the Receivable Buyer's interest in the Transferred
Property against all creditors of and purchasers from the Receivable Seller and
all other Persons whatsoever will have been duly filed in each filing office
necessary for such purpose and all filing fees and taxes, if any, payable in
connection with such filings shall have been paid in full.
(d) Credit and Collection Policy. The Receivable Seller has
complied in all material respects with the Credit and Collection Policy in
regard to each Receivable and related Contract.
(e) Permitted Lockbox Banks and Lockbox Accounts. The names
and addresses of all Permitted Lockbox Banks, together with the numbers of all
Lockbox Accounts at such Permitted Lockbox Banks and the addresses of all
related Permitted Lockboxes, are specified in Exhibit H (or such other
Permitted Lockbox Banks, Lockbox Accounts and/or Permitted Lockboxes as have
been notified by the Receivable Seller to the Receivable Buyer and have been
consented to by the Receivable Buyer.
(f) Subsequent Purchase. For each subsequent purchase of
Receivables hereunder, the information concerning such Receivables supplied by
the Receivable Seller to the Receivable Buyer is true and correct as of the
date of such purchase.
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(g) Nature of Receivables. Each Receivable is, or will be,
an "eligible asset" within the meaning of Rule 3a-7 promulgated under the
Investment Company Act of 1940, as amended.
ARTICLE VI
COVENANTS
SECTION 6.01. Affirmative Covenants of the Receivable Seller.
In addition to its other covenants contained herein or made pursuant hereto,
the Receivable Seller covenants to the Receivable Buyer as follows:
(a) Notice of Material Adverse Change. Promptly upon
becoming aware thereof, the Receivable Seller shall give the Receivable Buyer
notice of any material adverse change in the business, operations or financial
condition of the Receivable Seller which could reasonably be expected to affect
adversely the collectibility of the Receivables or the ability of the Servicer
to service such Receivables. In order to verify compliance with this Section
6.01(a) and otherwise verify compliance with this Agreement, the Receivable
Seller shall, unless the Receivable Buyer shall otherwise consent in writing,
furnish the following to the Receivable Buyer:
(i) as soon as practicable and in any event within 50
days following the close of each fiscal quarter, excluding the last
fiscal quarter, of each fiscal year of the Receivable Seller during
the term of this Agreement, an unaudited consolidated balance sheet
of the Receivable Seller as at the end of such quarter and unaudited
consolidated statements of income and cash flows of the Receivable
Seller for such quarter and for the fiscal year through such
quarter, setting forth in comparative form the corresponding figures
for the corresponding quarter of the preceding fiscal year, together
with notes thereto as are required to be included therein in
accordance with GAAP or applicable Securities and Exchange
Commission requirements, all in reasonable detail and certified by a
Responsible Officer of the Receivable Seller, subject to adjustments
of the type which would occur as a result of a year-end audit, as
having been prepared in accordance with GAAP; and
(ii) as soon as practicable and in any event within 95
days after the close of each fiscal year during the term of this
Agreement, a consolidated balance sheet of the Receivable Seller as
at the close of such fiscal year and consolidated statements of
income and cash flows of the Receivable Seller for such fiscal year,
setting forth in comparative form the corresponding figures for the
preceding fiscal year, all in reasonable detail and certified (with
respect to the consolidated financial statements) by independent
certified public accountants of recognized
NY1-43658.1 24
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standing selected by the Receivable Seller and reasonably
satisfactory to the Receivable Buyer, whose certificate or opinion
accompanying such financial statements shall not contain any
qualification, exception or scope limitation not reasonably
satisfactory to the Receivable Buyer, and accompanied by any
management letter prepared by such accountants; and
(b) Preservation of Corporate Existence. The
Receivable Seller shall preserve and maintain its corporate existence, rights,
franchises and privileges in the jurisdiction of its incorporation, and qualify
and remain qualified in good standing as a foreign corporation in each
jurisdiction where the failure to preserve and maintain such existence, rights,
franchises, privileges and qualification would materially adversely affect (i)
the interests of the Receivable Buyer hereunder or (ii) the ability of the
Receivable Seller to perform its obligations under this Agreement.
(c) Compliance with Laws. The Receivable Seller shall
comply in all material respects with all Laws applicable to the Receivable
Seller, its business and properties, and all Receivables sold hereunder.
(d) Enforceability of Obligations. The Receivable
Seller shall take such actions as are reasonable and within its power to ensure
that, with respect to each Receivable, the obligation of any related Obligor to
pay the unpaid balance of such Receivable in accordance with the terms of the
related Contract remains legal, valid, binding and enforceable against such
Obligor.
(e) Books and Records. The Receivable Seller shall, to
the extent practicable, 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, Records and other
information reasonably necessary or advisable for the collection of all
Receivables (including, without limitation, Records adequate to permit the
identification of all Related Security and Collections and adjustments to each
existing Receivable).
(f) Fulfillment of Obligations. The Receivable Seller
will duly observe and perform, or cause to be observed or performed, all
material obligations and undertakings on its part to be observed and performed
under or in connection with the Receivables, will duly observe and perform all
material provisions, covenants and other promises required to be observed by it
under the Contracts related to the Receivables, will do nothing to impair the
rights, title and interest of the Receivable Buyer in and to the Transferred
Property and will pay when due any taxes, including without limitation any
sales tax,
NY1-43658.1 25
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excise tax or other similar tax or charge, payable in connection with the
Transferred Property and its creation and satisfaction.
(g) Customer List. The Receivable Seller shall at all
times maintain (or cause the Servicer to maintain) a current list (which may be
stored on magnetic tapes or disks) of all Obligors under Contracts related to
Receivables, including the name, address, telephone number and account number
of each such Obligor. The Receivable Seller shall deliver or cause to be
delivered a copy of such list to the Receivable Buyer as soon as practicable
following the Receivable Buyer's request.
(h) Copies of Reports Filings, Opinions, etc. The
Receivable Seller shall furnish to the Receivable Buyer, as soon as practicable
after the issuance, sending or filing thereof, copies of all proxy statements,
financial statements, reports and other communications which the Receivable
Seller sends to its security holders, and copies of all regular, periodic and
special reports which the Receivable Seller files with the Securities and
Exchange Commission or with any securities exchange on Forms 10-K, 10-Q, 8-K or
any successor forms thereto.
(i) Litigation. As soon as possible, and in any event
within ten Business Days of the Receivable Seller's knowledge thereof, the
Receivable Seller shall give the Receivable Buyer notice of (i) any litigation,
investigation or proceeding against the Receivable Seller which may exist at
any time which, in the reasonable judgment of the Receivable Seller, could have
a material adverse effect on the financial condition or results of operations
of the Receivable Seller or impair the ability of the Receivable Seller to
perform its obligations under this Agreement and (ii) any material adverse
development in any such previously disclosed litigation.
(j) Notice of Relocation. The Receivable Seller shall
give the Receivable Buyer 45 days' prior written notice of any relocation of
its Chief Executive Office if, as a result of such relocation, the applicable
provisions of the UCC of any applicable jurisdiction or other applicable Laws
would require the filing of any amendment of any previously filed financing
statement or continuation statement or of any new financing statement. The
Receivable Seller will at all times maintain its Chief Executive Office within
a jurisdiction in the United States in which Article Nine of the UCC (1972 or
later revision) is in effect as of the date hereof or the date of any such
relocation.
(k) Further Information. The Receivable Seller shall
furnish or cause to be furnished to the Receivable Buyer such other information
as promptly as practicable, and in such form and detail, as the Receivable
Buyer may reasonably request.
(l) Treatment of Purchase. For accounting and tax
purposes, the Receivable Seller shall treat the transfer of the Receivables
hereunder as a sale of Receivables. The Receivable
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Seller shall also maintain its records and books of account in a manner which
clearly reflects such sale of the Receivables to the Receivable Buyer.
(m) Fees, Taxes and Expenses. The Receivable Seller
shall pay all filing fees, stamp taxes, other taxes (other than taxes imposed
directly on the overall net income of the Receivable Buyer) and expenses,
including the fees and expenses set forth in Section 8.01 hereof, if any, which
may be incurred on account of or arise out of this Agreement and the documents
and transactions entered into pursuant to this Agreement.
(n) Administrative and Operating Procedures. The
Receivable Seller shall maintain and implement administrative and operating
procedures adequate to permit the identification of the Receivables and all
collections and adjustments attributable thereto and shall comply in all
material respects with the Credit and Collection Policy in regard to each
Receivable and related Contract.
(o) ERISA Events.
(i) Promptly upon becoming aware of the occurrence of
any Event of Termination which together with all other Events of
Termination occurring within the prior 12 months involve a payment
of money by or a potential aggregate liability of the Receivable
Seller or any ERISA Affiliate or any combination of such entities in
excess of $5,000,000, the Receivable Seller shall give the
Receivable Buyer, S&P and Moody's a written notice specifying the
nature thereof, what action the Receivable Seller or any ERISA
Affiliate has taken and, when known, any action taken or threatened
by the Internal Revenue Service, the Department of Labor or the PBGC
with respect thereto.
(ii) Promptly upon receipt thereof, the Receivable
Seller shall furnish to the Receivable Buyer copies of (i) all
notices received by the Receivable Seller or any ERISA Affiliate of
the PBGC'S intent to terminate any Plan or to have a trustee
appointed to administer any Plan; (ii) all notices received by the
Receivable Seller or any ERISA Affiliate from the sponsor of a
Multiemployer Plan pursuant to Section 4202 of ERISA involving a
withdrawal liability in excess of $5,000,000; and (iii) all funding
waiver requests filed by the Receivable Seller or any ERISA
Affiliate with the Internal Revenue Service with respect to any
Plan, the accrued benefits of which exceed the present value of the
plan assets as of the date the waiver request is filed by more than
$5,000,000, and all communications received by the Receivable Seller
or any ERISA Affiliate from the Internal Revenue Service with
respect to any such funding waiver request.
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(p) Collections. The Receivable Seller shall instruct
all Obligors to cause all Collections to be mailed to a Permitted Lockbox. The
Receivable Seller shall transfer any Collections received by it to the Servicer
no later than the Business Day after the receipt thereof.
(q) Insurance. The Receivable Seller shall, and shall
cause each of its Consolidated Subsidiaries to, keep insured by financially
sound and reputable insurers all property of a character usually insured by
corporations engaged in the same or similar business similarly situated against
loss or damage of the kinds and in the amounts customarily insured against by
such corporations and carry such other insurance as is usually carried by such
corporations.
(r) Statement for and Treatment of the Sales. The
Receivable Seller shall account, in its financial statements, for the
transactions contemplated hereby as a sale of the Transferred Property to the
Receivable Buyer.
SECTION 6.02. Negative Covenants of the Receivable
Seller. The Receivable Seller covenants that it will not, without the prior
written consent of the Receivable Buyer:
(a) [Reserved]
(b) No Rescissions or Modifications. Rescind or cancel
any Receivable or related Contract or modify any terms or provisions thereof or
grant any Dilution Factors to an Obligor, except in accordance with the Credit
and Collection Policy or otherwise with the prior written consent of the
Receivable Buyer.
(c) No Liens. Cause any of the Receivables or related
Contracts, or any inventory or goods (including software and other intellectual
property) the sale of which may give rise to a Receivable, whether or not such
sale gives rise to a Receivable (unless the secured party having a security
interest in such inventory or goods disclaims any interest in the Receivables,
as proceeds of such inventory or goods), or any Permitted Lockbox or Lockbox
Account or any right to receive any payments received therein or deposited
thereto, to be sold, pledged, assigned or transferred or to be subject to a
Lien, other than the sale and assignment of the Receivables therein to the
Receivable Buyer and the Liens created in connection with the transactions
contemplated by this Agreement.
(d) Consolidations, Mergers and Sales of Assets. (i)
Consolidate or merge with or into any other Person or (ii) sell, lease or
otherwise transfer all or substantially all of its assets to any other Person;
provided that the Receivable Seller may merge with another Person if (A) the
Receivable Seller is the corporation surviving such merger and (B) immediately
after and giving effect to such merger, no event in Section 7.01 shall have
occurred and be continuing.
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(e) No Changes. Make any change in the character of
its business or in the Credit and Collection Policy, which change would, in
either case, impair the collectibility of any Receivable, or make any material
change in the Credit and Collection Policy or in its current payment terms with
respect to the Receivables without prior written notification to the Receivable
Buyer and prior written consent of the Receivable Buyer, or change its name,
identity or corporate structure in any manner which would make any financing
statement or continuation statement filed in connection with this Agreement or
the transactions contemplated hereby seriously misleading within the meaning of
Section 9-402(7) of the UCC of any applicable jurisdiction or other applicable
Laws unless it shall have given the Receivable Buyer at least 45 days' prior
written notice thereof and unless prior thereto it shall have caused such
financing statement or continuation statement to be amended or a new financing
statement to be filed such that such financing statement or continuation
statement would not be seriously misleading.
(f) ERISA Matters. Permit any event or condition which
is described in any of clauses (i) through (vi), clause (viii) or clause (x) of
the definition of Event of Termination to occur or exist with respect to any
Plan or Multiemployer Plan if such event or condition, together with all other
events or conditions described in the definition of Event of Termination
occurring within the prior 12 months involves the payment of money by or an
incurrence of liability of the Receivable Seller or any ERISA Affiliate in an
amount in excess of $10,000,000.
(g) Change in Payments or Deposits of Payments. Except
with the prior written consent of the Administrative Agent, add or terminate
any Person as a Permitted Lockbox Bank from those Persons listed in Exhibit H
hereto, make or permit any change in the location of any Permitted Lockbox or
the location or account number of any Lockbox Account, or make any change in
the instructions to its Obligors regarding payments to be made to such Seller
or payments to be made to any Permitted Lockbox.
(h) Minimum Consolidated Tangible Net Worth. Permit
Consolidated Tangible Net Worth to be less than the following amounts at the
following dates: (i) at December 25, 1993, $90 million plus the Net Cash
Equity Proceeds of any sale of equity of Western Digital received after the
Closing Date but prior to or on December 25, 1993; (ii) at March 26, 1994, $95
million plus the Net Cash Equity Proceeds of any sale of equity of Western
Digital received during the fiscal quarter ended on such date plus the
principal amount of any debt security of Western Digital converted into capital
stock of Western Digital during such quarter; and (iii) at the end of any
subsequent fiscal quarter, the sum of (A) the Consolidated Tangible Net Worth
required to be maintained as of the end of the immediately preceding fiscal
quarter, plus (B) 80% of Western Digital's net income (after taxes) (but not
net losses) for such fiscal quarter, plus (C) the
NY1-43658.1 29
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Net Cash Equity Proceeds of any sale of equity of Western Digital received
during such fiscal quarter, plus (D) the principal amount (or, in the case of a
debt security issued at a discount, the then accreted value of such debt
security) of any debt security of Western Digital converted into capital stock
of Western Digital during such quarter. "Net Cash Equity Proceeds" means, with
respect to any sale of equity by Western Digital, the aggregate cash proceeds
of such issuance or sale received by Western Digital, net of (i) attorneys'
fees, accountants' fees, underwriters' fees, placement agents' fees, discounts
or commissions and brokerage, consultant, filing and other fees actually
incurred in connection with such sale, and (ii) taxes paid or payable as a
result thereof (other than capital gains taxes).
(i) Profitability. Permit more than two (2)
consecutive fiscal quarters of net losses.
(j) Leverage Ratio. Permit the ratio of Western
Digital's Debt to Consolidated Tangible Net Worth to exceed the following
amounts at the following dates: (i) at March 26, 1994, 1.60:1; (ii) at June
30, 1994 and September 24, 1994, 1.40:1; (iii) at December 24, 1994 and March
25, 1995, 1.20:1; and (iv) at June 30, 1995 and at the last day of each fiscal
quarter thereafter, 1.00:1.
ARTICLE VII
TERMINATION
SECTION 7.01. 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) the termination of the Receivable Purchase
Agreement and (b) upon the occurrence of any of the following events: the
Receivable Buyer or the Receivable Seller shall (i) become insolvent, (ii)
experience an Event of Bankruptcy, or (iii) 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 7.01(b) 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 2.06 hereof.
SECTION 7.02. Effect of Termination. No termination or
rejection or failure to assume the executory obligations of this Agreement in
the Event of Bankruptcy of the Receivable Seller or the Receivable 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
NY1-43658.1 30
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Receivable Seller or the Receivable Buyer. Without limiting the foregoing,
prior to termination, the failure of the Receivable Seller to deliver computer
records of Receivables shall not render such transfer or obligation executory,
nor shall the continued duties of the parties pursuant to Article VI of this
Agreement render an executed sale executory.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Expenses. The Receivable Seller agrees,
upon receipt of a written invoice, to pay or cause to be paid, and to save the
Receivable Buyer harmless against liability for the payment of, all reasonable
out-of-pocket expenses (including, without limitation, attorneys', accountant's
and other third parties' fees and expenses), and any filing fees and expenses
incurred by or on behalf of the Receivable Buyer (i) in connection with the
negotiation, execution, delivery and preparation of this Agreement and the
transactions contemplated by or undertaken pursuant to or in connection
herewith or therewith (including, without limitation, the perfection or
protection of the Receivable Buyer's ownership interest in the Transferred
Property) and (ii) from time to time (a) relating to any requested amendments,
waivers or consents under this Agreement, (b) arising in connection with the
Receivable Buyer's ownership interest or the enforcement or preservation of its
respective rights (including, without limitation, the perfection and protection
of the Receivable Buyer's ownership interest in the Transferred Property) under
this Agreement, or (c) arising in connection with any audit, dispute,
disagreement, litigation or preparation for litigation involving this
Agreement, which shall be referred to in this Agreement as "Transaction Costs."
SECTION 8.02. Indemnity.
(a) The Receivable Seller agrees to indemnify, defend
and save harmless the Receivable Buyer, its directors, officers, employees and
agents, other than for the indemnitee's own gross negligence or willful
misconduct, forthwith on demand, from and against any and all losses, claims,
damages, liabilities, out-of-pocket costs and expenses (including, without
limitation, all reasonable attorneys' fees and expenses, and out-of-pocket
expenses of settlement, litigation or preparation therefor) which the
Receivable Buyer may incur or which may be asserted against the Receivable
Buyer by any Person (including, without limitation, any Obligor or any other
Person whether on its own behalf or derivatively on behalf of the Receivable
Seller) arising from or incurred in connection with (i) any breach of a
representation, warranty or covenant by the Receivable Seller made hereunder or
in connection herewith or the transactions contemplated hereby or any written
statements made by any Responsible Officer of the Receivable Seller in
connection
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herewith or the transactions contemplated hereby which shall have been
incorrect in any material respect when made, (ii) any action taken or, if the
Receivable Seller is otherwise obligated to take action, failed to be taken, by
the Receivable Seller with respect to the Receivables or any of its obligations
hereunder (whether in its capacity as Receivable Seller or Servicer),
including, without limitation, the Receivable Seller's failure to comply with
an applicable law or regulation, (iii) any failure to vest and maintain vested
in the Receivable Buyer an ownership interest in the Receivables, free and
clear of any Lien (except for Liens created by any Investor) or other adverse
claim, whether existing at the time of Purchase of such Receivables or at any
time thereafter, (iv) any failure to pay when due any taxes, including without
limitation any sales tax, excise tax or other similar tax or charge payable in
connection with the Transferred Property and its creation or satisfaction, (v)
any products liability claim arising out of or which relates to the Receivables
or the related Contracts, or (vi) any dispute, suit, action, claim, proceeding
or governmental investigation, pending or threatened, whether based on statute,
regulation or order, on tort, on contract or otherwise, before any Official
Body which arises out of or relates to this Agreement, the Receivables or
related Contracts, or the use of the proceeds of the sale of the Receivables
pursuant hereto.
(b) Promptly upon receipt by any indemnified party
under this Section 8.02 of notice of the commencement of any suit, action,
claim, proceeding or governmental investigation against such indemnified party,
such indemnified party shall, if a claim in respect thereof is to be made
against the Receivable Seller hereunder, notify the Receivable Seller in
writing of the commencement thereof. The Receivable Seller may participate in
and assume the defense of any such suit, action, claim, proceeding or
investigation at its expense, and no settlement thereof shall be made without
the approval of the Receivable Seller and the indemnified party. The approval
of the Receivable Seller will not be unreasonably withheld or delayed. After
notice from the Receivable Seller to the indemnified party of its intention to
assume the defense thereof with counsel reasonably satisfactory to the
Receivable Buyer and so long as the Receivable Seller so assumes the defense
thereof in a manner reasonably satisfactory to the Receivable Buyer, the
Receivable Seller shall not be liable for any legal expenses of counsel unless
there shall be a conflict between the interests of the Receivable Seller and
the indemnified party.
SECTION 8.03. Holiday. Except as may be provided in
this Agreement to the contrary, if any payment due hereunder shall be due on a
day which is not a Business Day, such payment shall instead be due the next
succeeding Business Day.
SECTION 8.04. Records. All amounts calculated or due
hereunder shall be determined from the records of the Receivable
NY1-43658.1 32
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Buyer, which determinations shall be conclusive absent manifest error.
SECTION 8.05. Amendments and Waivers. The Receivable
Buyer and the Receivable Seller may from time to time, with the consent of the
Administrative Agent and the Majority Bank Purchasers, enter into agreements
amending, modifying or supplementing this Agreement, and the Receivable Buyer
may from time to time grant waivers of the provisions of this Agreement or
consents to a departure from the due performance of the obligations of the
Receivable Seller under this Agreement with the prior written consent of the
Majority Bank Purchasers. Any such agreement, waiver or consent must be in
writing and shall be effective only to the extent specifically set forth in
such writing, and no such amendment or waiver which has a material effect on
the rights or obligations of the parties hereto shall be effective unless S&P
and Moody's have given prior written confirmation that such amendment or waiver
would not result in the reduction or withdrawal of their respective
then-current ratings of the Commercial Paper. Any waiver of any provision
hereof, and any consent to a departure by the Receivable Seller from any of the
terms of this Agreement, shall be effective only in the specific instance and
for the specific purpose for which given.
SECTION 8.06. No Implied Waiver; Cumulative Remedies.
No course of dealing and no delay or failure of the Receivable Buyer in
exercising any right, power or privilege under this Agreement shall affect any
other or future exercise thereof or the exercise of any other right, power or
privilege; nor shall any single or partial exercise of any such right, power or
privilege or any abandonment or discontinuance of steps to enforce such a
right, power or privilege preclude any further exercise thereof or of any other
right, power or privilege. The rights and remedies of the Receivable Buyer
under this Agreement are cumulative and not exclusive of any rights or remedies
which the Receivable Buyer would otherwise have.
SECTION 8.07. No Discharge. The obligations of the
Receivable Seller under this Agreement shall be absolute and unconditional and
shall remain in full force and effect without regard to, and shall not be
released, discharged or in any way affected by (a) any exercise or nonexercise
of any right, remedy, power or privilege under or in respect of this Agreement
or applicable Law, including, without limitation, any failure to set-off or
release in whole or in part by the Receivable Buyer of any balance of any
deposit account or credit on its books in favor of the Receivable Seller or any
waiver, consent, extension, indulgence or other action or inaction in respect
of any thereof, or (b) any other act or thing or omission or delay to do any
other act or thing which would operate as a discharge of the Receivable Seller
as a matter of Law.
NY1-43658.1 33
<PAGE> 37
SECTION 8.08. Notices. All notices, requests, demands,
directions and other communications (collectively "notices") under the
provisions of this Agreement shall be in writing (including telexed or
facsimile communication) unless otherwise expressly permitted hereunder and
shall be sent by first-class mail, first-class express mail, or by telex or
facsimile with confirmation in writing mailed first-class mail, in all cases
with charges prepaid. Any such properly given notice shall be effective when
received. All notices shall be sent to the applicable party at the Office
stated on the signature page hereof or in accordance with the last unrevoked
written direction from such party to the other parties hereto.
SECTION 8.09. Severability. The provisions of this
Agreement are intended to be severable. If any provision of this Agreement
shall be held invalid or unenforceable in whole or in part in any jurisdiction,
such provision shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without in any manner affecting the
validity or enforceability of such provision in any other jurisdiction or the
remaining provisions hereof in any jurisdiction.
SECTION 8.10. Governing Law; Submission to Jurisdiction.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK. The Receivable Seller hereby submits to the
nonexclusive jurisdiction of the courts of the State of New York and the courts
of the United States located in the State of New York for the purpose of
adjudicating any claim or controversy arising in connection with this Agreement
or the transactions contemplated hereby, and for such purpose, to the extent it
may lawfully do so, waives any objection which it may now or hereafter have to
such jurisdiction or to venue therein and any claim of inconvenient forum with
respect thereto. Nothing in this Section 8.10 shall affect the right of the
Receivable Buyer to bring any action or proceeding against the Receivable
Seller or its property in the courts of other jurisdictions.
SECTION 8.11. Prior Understandings. This Agreement sets
forth the entire understanding of the parties relating to the subject matter
hereof, and supersedes all prior understandings and agreements, whether written
or oral.
SECTION 8.12. Survival. All representations and
warranties of the Receivable Seller contained herein or made in connection
herewith shall survive the making thereof, and shall not be waived by the
execution and delivery of this Agreement, any investigation by the Receivable
Buyer, the purchase, repurchase or payment of any Receivable, or any other
event or condition whatsoever (other than a written waiver complying with
Section 8.06 hereof). The covenants and agreements contained in or given
pursuant to this Agreement (including, without limitation, those contained in
Articles IV and VI hereof) shall continue in full force and effect until the
Termination Date.
NY1-43658.1 34
<PAGE> 38
SECTION 8.13. Counterparts. This Agreement may be
executed in any number of counterparts and by the different parties hereto on
separate counterparts each of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute but one and the same
instrument.
SECTION 8.14. Successors and Assigns. This Agreement
shall be binding on the parties hereto and their respective successors and
assigns; provided, however, that the Receivable Seller may not assign any of
its rights or delegate any of its duties hereunder without the prior written
consent of the Receivable Buyer and prior notice to S&P and Moody's. No
provision of this Agreement shall in any manner restrict the ability of the
Receivable Buyer to assign, participate, grant security interests in, or
otherwise transfer any portion of the Receivables owned by the Receivable
Buyer. The Receivable Seller hereby agrees and consents to the complete
assignment by the Receivable Buyer of all of its respective rights under,
interest in, title to and obligations under this Agreement to the Collateral
Agent (as such term is defined in the Receivables Purchase Agreement).
SECTION 8.15. Waiver of Confidentiality. The Receivable
Seller hereby consents to the disclosure of any non-public information with
respect to it to any of the parties to the Receivables Purchase Agreement, or
to the Program LOC Bank, the APA Agent, any APA Lending Bank, any APA
Purchaser.
SECTION 8.16. Payments Set Aside. To the extent that
the Receivable Seller or any Obligor makes a payment to the Receivable Buyer or
the Receivable Buyer exercises its rights of set-off and such payment or
set-off or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by, or is
required to be refunded, rescinded, returned, repaid or otherwise restored to
the Receivable Seller, such Obligor, a trustee, a receiver or any other Person
under any Law, including, without limitation, any bankruptcy law, any state or
federal law, common law or equitable cause, the obligation or part thereof
originally intended to be satisfied shall, to the extent of any such
restoration, be reinstated, revived and continued in full force and effect as
if such payment had not been made or such set-off had not occurred. The
provisions of this Section 8.16 shall survive the termination of this
Agreement.
SECTION 8.17. No Petition. The Receivable Seller agrees
that, prior to the date which is one year and one day after the date upon which
all obligations of the Receivable Seller to the Receivable Buyer hereunder are
paid in full and other indebtedness of the Receivable Buyer are paid in full,
it will not institute against, or join any other Person in instituting against,
the Receivable Buyer any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding
NY1-43658.1 35
<PAGE> 39
or other similar proceeding under the laws of the United States or any state of
the United States.
SECTION 8.18. No Recourse. The obligations of the
Receivable Buyer and the Receivable Seller under this Agreement are solely the
corporate obligations of the Receivable Buyer or the Receivable Seller, as the
case may be. No recourse shall be had for the payment of any amount owing in
respect of this Agreement or for the payment of any fee hereunder or for any
other obligation or claim arising out of or based upon this Agreement against
the Receivable Buyer and the Receivable Seller, any Affiliate of either of
them, or any employee, officer or director of any of the foregoing.
NY1-43658.1 36
<PAGE> 40
IN WITNESS WHEREOF, the parties hereto, by their duly authorized signatories,
have executed and delivered this Agreement as of the date first above written.
WESTERN DIGITAL CAPITAL CORPORATION
by: ________________________
Authorized Signatory
Chief Financial Officer
Title
Address for Notices: 8105 Irvine Center Drive, 4th Floor
Irvine, California 92718
Attention: Chief Financial Officer
Tel. No.: (714) 753-1084
WESTERN DIGITAL CORPORATION
by: ____________________________
Authorized Signatory
Vice President and Treasurer
Title
Address for Notices: 8105 Irvine Center Drive
Irvine, California 92718
Attention: Treasury Department
Tel. No.: (714) 932-5000
Fax No.: (714) 932-5899
Address for Funds Transfer: Morgan Guaranty Trust Company of
New York
ABA No. 021-111-00-238
for credit to Western Digital
Corporation
Account No. 066-58-865
NY1-43658.1 37
<PAGE> 41
Exhibit A
WESTERN DIGITAL
CORPORATION
<TABLE>
<S> <C> <C> <C>
SUBJECT EFFECTIVE DATE LAST REVISION DATE FIN. NUMBER
Credit Management 04/01/90 12/20/93 3550
</TABLE>
PURPOSE:
To establish guidelines for evaluating and granting credit limits to customers,
monitoring payment trends and ensuring maximized cash flow and revenue while
minimizing risk.
POLICY:
In establishing credit guidelines, the Company's goal is to satisfy the
customer's needs to purchase products at their convenience and to pay for those
purchases within a specified time frame, while minimizing potential losses.
Credit shall be granted to customers within the following stated guidelines and
limitations established by the Credit Department.
Sales shall only be made on open account to customers who have an approved,
available credit limit. The Credit Department must evaluate and grant credit
limits to potential customers, monitor payment trends and make collections
efforts as necessary. Sales to customers under letter of credit arrangements
are not covered by this policy.
PROCEDURE:
I. Establishment of Credit
A. The establishment of a credit limit is of utmost importance in terms of
serving the customer's needs and maintaining customer relations. Care
must be taken, however, to minimize the Company's exposure to potential
losses due to a financially unstable customer.
<PAGE> 42
Policy No. 3550
Page 2 of 4
B. Sufficient information must be obtained from the customer to permit an
adequate appraisal of the credit risk involved in establishing and
servicing the account.
1. All customers requesting credit should submit the following to the
Credit Department for evaluation:
a. A completed Credit Application (Exhibit A)
b. Customer Financial Statements
c. Bank References
d. Trade References
2. The following information may be used as additional sources for
evaluating the customer's credit worthiness
a. Dun & Bradstreet Report
b. Personal Interview
c. Sales Department input and knowledge
d. Trade Credit Associations (e.g. Reimer Assoc.)
C. Upon receipt of the potential customer's credit information, a customer
file will be created. This information, along with the following
tangible and subjective aspects, is then reviewed:
1. Character: The integrity and honesty of the customer, i.e. the
customer must be willing to pay within the established terms.
2. Capacity: The profitability of the customer's business, i.e. the
customer must not only be willing to pay, but must also be able to
meet its obligations.
3. Capital: The tangible aspects of the customer's credit worthiness
that can be measured with some exactness, i.e. the customer's
financial strength.
4. Conditions: Other items to consider in order to evaluate the
customer's credit worthiness such as, does the customer utilize
its profits to help expand its business, does the customer
generate sufficient levels of cash to cover its obligations such
as accounts payable and bank loans, does the customer have a
previous history of non-payment, etc.
<PAGE> 43
Policy No. 3550
Page 3 of 4
D. A credit limit will be established by the responsible Credit Manager
based on the evaluation of the customer's financial history and
determination of the customer's credit worthiness. The following
criteria should be taken into consideration when determining the amount
of the credit limit:
1. Status of the customer and the length of time in business, i.e.
the financial strength of the customer (both on a historical and a
go-forward basis)
2. Total credit exposure to the customer, i.e. the credit limit
should be established at a level whereby the customer can meet all
of its financial obligations within their stated terms
3. Potential of the customer, i.e. the customer's ability to purchase
product regularly from the Company, as well as the customer's
growth potential
4. Size of the customer's order, i.e. the amount of the credit limit
should be sufficient to cover the average order for the customer
E. All credit limits shall be approved by the Senior Credit Managers and
may be subject to review and approval by the Treasurer.
F. Once a customer is approved for credit, only the Credit Department can
update the Customer Master File with the customer's approved payment
terms and credit limit. This information is used for Invoice
Authorization and billing purposes. Orders that exceed a customer's
credit limit must be manually approved by the responsible Credit
Manager.
G. Reviews of credit limits are an on-going process. Factors taken into
consideration are profit and payment trends, business opportunities,
and strategic partnerships.
<PAGE> 44
Policy No. 3550
Page 4 of 4
II. Collections
A. Domestically the standard payment terms granted to each customer is Net
30 days from date of invoices. International terms may vary
geographically.
B. Communication regarding payment is a continuous process. Collection
efforts will occur according to established terms and current payment
trends. These efforts should be documented by entries into the call
sheet log (Exhibit B) or by copies of faxed correspondences kept in the
customer file.
C. In certain cases, it may be necessary to handle collections through the
responsible Sales Manager or Sales Representative who has a close
working relationship with the customer.
MAINTENANCE
This policy shall be reviewed annually by the Treasurer and Senior Credit
Managers to ensure that the policy meets the needs of both the Company and its
customers.
<PAGE> 45
EXHIBIT B
Description of Qualifying Receivable
Accounts receivables generated from the sale of computer-related merchandise
(other than software) by Western Digital Corporation.
B-1
<PAGE> 1
Exhibit 10.31
RECEIVABLES PURCHASE AGREEMENT
dated as of January 7, 1994
Among
WESTERN DIGITAL CAPITAL CORPORATION,
as Seller
and
WESTERN DIGITAL CORPORATION,
in its individual capacity and as Servicer
and
DELAWARE FUNDING CORPORATION
AND
THE FINANCIAL
INSTITUTIONS
LISTED HEREIN,
as Bank Purchasers
J.P. MORGAN DELAWARE,
as Administrative Agent
DC1-1121.9
<PAGE> 2
DRAFT
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
DEFINITIONS: CONSTRUCTION
--------------------------
1.01. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02. Interpretation and Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
1.03. Obligor Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE II
PURCHASES AND SETTLEMENTS
-------------------------
2.01. General Assignment and Conveyance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.02. Purchase Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.03. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.04. Deferred Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.05. Reinvestment Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.06. Funding of the Aggregate Net Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.07. Discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.08. Non-Liquidation Settlements and Other Payment Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.09. Liquidation Settlement Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2.10. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2.11. Optional Reduction of an Investor Group's Maximum Net Investment; Optional Reduction of the Bank or DFC Net
Investment; Repurchase by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
2.12. Mandatory Repurchase; Ratings of APA Purchasers Under Certain Circumstances; Mandatory Reduction in DFC
Purchasers' Maximum Net Investment; Ratings of APA Purchasers . . . . . . . . . . . . . . . . . . . . . . . 42
2.13. Payments and Computations Etc.: Allocation of Collections . . . . . . . . . . . . . . . . . . . . . . . . . 42
2.14. Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
2.15. Extension of DFC Expiration Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
2.16. Change in Circumstances-Unavailability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
2.17. Change in Circumstances-Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE III
CLOSING PROCEDURES
------------------
3.01. Purchase and Sale Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.02. Conditions to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
3.03. Conditions to Reinvestment and Incremental Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
</TABLE>
DC1-1121.9 i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE IV
PROTECTION OF THE INVESTORS;
ADMINISTRATION AND SERVICING OF RECEIVABLES; COLLECTIONS
--------------------------------------------------------
4.01. Acceptance of Appointment and Other Matters Relating to the Servicer . . . . . . . . . . . . . . . . . . . 49
4.02. Maintenance of Information and Computer Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
4.03. Protection of the Interests of the Investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
4.04. Maintenance of Writings and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
4.05. Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
4.06. Performance of Undertakings Under the Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
4.07. Administration and Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
4.08. Servicer Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
4.09. Complete Servicing Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
4.10. Lockboxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
4.11. Servicer Indemnification of Affected Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
5.01. General Representations and Warranties of the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
5.02. Representations and Warranties of the Seller With Respect to Each Sale of Receivables . . . . . . . . . . 64
5.03. Representations and Warranties of the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
5.04. Representation and Warranty of Western Digital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
ARTICLE VI
COVENANTS
---------
6.01. Affirmative Covenants of the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
6.02. Negative Covenants of the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
6.03. Covenants of the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
6.04. Negative Covenants of the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
6.05. Negative Covenants of Western Digital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
ARTICLE VII
TERMINATION
-----------
7.01. Termination Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
7.02. Consequences of a Termination Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
</TABLE>
DC1-1121.9 ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE VIII
THE ADMINISTRATIVE AGENT
------------------------
8.01. Authorization and Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
8.02. UCC Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
8.03. Administrative Agent's Reliance, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
8.04. Administrative Agent and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
8.05. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
8.06. Successor Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
ARTICLE IX
MISCELLANEOUS
-------------
9.01. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
9.02. Indemnity for Taxes Reserves and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
9.03. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
9.04. Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
9.05. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
9.06. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
9.07. Term of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
9.08. No Implied Waiver: Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
9.09. No Discharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
9.10. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
9.11. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
9.12. Governing Law: Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
9.13. Prior Understandings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
9.14. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
9.15. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
9.16. Set-Off; Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
9.17. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
9.18. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
9.19. Payments Set Aside . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
9.20. No Petition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
9.21. Tax Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
9.22. No Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
9.23. Limited Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
</TABLE>
Exhibits
<TABLE>
<S> <C>
Exhibit A Credit and Collection Policy
Exhibit B Description of Qualifying Receivables
Exhibit C Form of Purchase Notice for Incremental Purchase
Exhibit D Form of Tranche Selection Notice
Exhibit E Form of Report Showing Discount
Exhibit F List of Special Obligors
Exhibit G Form of Monthly Report
</TABLE>
DC1-1121.9 iii
<PAGE> 5
<TABLE>
<S> <C>
Exhibit H Form of Lockbox Account Transfer Letter
Exhibit I Form of Opinion of Counsel to the Seller, Servicer and Western Digital
Exhibit J Form of Officer's Certificate of Seller
Exhibit K Information Regarding Chief Executive Office, Etc. pursuant to Section 5.01(f)
Exhibit L Information regarding Material Adverse Changes pursuant to Section 5.04
Exhibit M Information regarding Litigation, Etc. pursuant to Section 5.01(l)
Exhibit N Permitted Lockbox Banks, Lockbox Account Numbers and Permitted Lockboxes
Exhibit O Form of Asset Purchase Agreement
Exhibit P Form of Officer's Certificate of Western Digital
Exhibit Q Financial Covenant Compliance Certificate
Schedule 1 List of Receivables
</TABLE>
DC1-1121.9 iv
<PAGE> 6
RECEIVABLES PURCHASE AGREEMENT
RECEIVABLES PURCHASE AGREEMENT, dated as of January 7, 1994, among
WESTERN DIGITAL CAPITAL CORPORATION, a Delaware corporation (the "Seller"),
WESTERN DIGITAL CORPORATION, a Delaware corporation, in its individual capacity
("Western Digital") and, as servicer (in such capacity, the "Servicer"),
DELAWARE FUNDING CORPORATION, a Delaware corporation ("DFC"), the financial
institutions listed on the signature pages hereof (individually, a "Bank
Purchaser", and collectively, the "Bank Purchasers", and together with DFC and
the APA Purchasers (as defined below), the "Investors") and J.P. MORGAN
DELAWARE, a Delaware banking corporation, as administrative agent (the
"Administrative Agent") for each of the Investors.
RECITALS
WHEREAS, the Seller in the ordinary course of its business
purchases trade receivables from Western Digital, each such trade receivable
resulting from the sale of goods or services by Western Digital to its
customers; and
WHEREAS, the Investors desire from time to time to purchase from
the Seller undivided percentage ownership interests in such receivables
pursuant to and in accordance with the terms hereof; and
WHEREAS, the Investors and the Seller desire to appoint Western
Digital as the Servicer under this Agreement and Western Digital desires to act
as Servicer; and
WHEREAS, DFC may in the future determine from time to time to sell
undivided interests in DFC's Investor Percentage Interest in the Purchased
Interest pursuant to and in accordance with the terms of the Asset Purchase
Agreement (each such term as defined below); and
WHEREAS, the Administrative Agent will act on behalf of the
Investors hereunder;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS: CONSTRUCTION
1.01. Certain Definitions. As used in this Agreement, the
following terms shall have the following meanings:
"Administrative Agent" shall mean J.P. Morgan Delaware, together
with its successors and assigns, or such other Person as
DC1-1121.9
<PAGE> 7
provided in this Agreement, in the capacity of administrative agent for the
Investors.
"Affected Party" shall mean any Investor, any assignee of an
Investor, the Collateral Agent, the Program LOC Bank, any APA Lending Bank, any
assignee of any of DFC's obligations to the APA Lending Banks or the Program
LOC Bank under the APA Credit Agreement and the Program Letter of Credit
Reimbursement Agreement, respectively, the APA Agent and the Administrative
Agent.
"Affiliate" shall mean, with respect to a Person, any other Person
which directly or indirectly controls, is controlled by or is under common
control with, such Person. The term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities,
by contract or otherwise.
"Aggregate Net Investment" shall mean, at any time of
determination, the sum of the DFC Net Investment and the Bank Net Investment.
"Aggregate Unpaids" shall mean, at any time of determination, an
amount equal to the sum of (i) the aggregate accrued and unpaid Discount with
respect to all Tranche Periods for all Tranches at such time, (ii) the
Aggregate Net Investment at such time, (iii) all fees accrued and unpaid
hereunder or under the Bank Rate Supplement or the DFC Rate Supplement at such
time and (iv) all other amounts owed (whether due or accrued) hereunder by the
Seller to any Investor or Investors at such time.
"Agreement" shall mean this Receivables Purchase Agreement, as the
same may from time to time be amended, supplemented or otherwise modified.
"Allowance for Collection Delays" shall mean 10 days.
"APA Agent" shall mean J.P. Morgan Delaware, together with its
successors and assigns, in its capacity as agent under the APA Credit
Agreement.
"APA Credit Agreement" shall mean the Credit Agreement dated as of
December 20, 1993 among DFC, the APA Agent and the lenders party thereto, as
the same may from time to time be amended, supplemented or otherwise modified.
"APA Lending Banks" shall mean the lenders party, from time, to the
APA Credit Agreement.
"APA Purchaser" shall mean each party (or assignee thereof) who has
executed a signature page of the Asset Purchase Agreement, which execution
obligates such party to become a
DC1-1121.9 2
<PAGE> 8
purchaser of, or an assignee of DFC's purchase obligation with respect to, all
or any part of DFC's Percentage Interest in the Purchased Interest at any time,
pursuant to the Asset Purchase Agreement or an assignee of DFC's obligations to
purchase from the Seller undivided percentage ownership interests in
Receivables.
"Asset Purchase Agreement" shall mean the Asset Purchase Agreement
dated as of January 7, 1994 among DFC, the Administrative Agent and each of the
APA Purchasers signatory thereto, as the same may from time to time be amended,
supplemented or otherwise modified.
"Average Collection Period" shall mean, at any time of
determination, a period of days equal to the product of (i) a fraction the
numerator of which shall be the amount set forth in the most recent Monthly
Report under the caption "Receivables, beginning of month" and the denominator
of which shall be the "Collections" as set forth in the most recent Monthly
Report and (ii) 30.
"Bank Deferred Purchase Price" shall mean, at any time of
determination, the sum of the Investor Deferred Purchase Prices for each of the
Bank Purchasers.
"Bank Expiration Date" shall mean the earliest of (i) January 10,
1997, (ii) the day on which the Administrative Agent delivers a Notice of
Termination with respect to the Bank Purchasers pursuant to Section 7.02 hereof
or (iii) a Termination Event described in Section 7.01(j) hereof occurs.
"Bank Investment" shall mean, at any time of determination, the sum
of the Investor Investments for each of the Bank Purchasers.
"Bank Net Investment" shall mean, at any time of determination, the
sum of the Investor Net Investments for each of the Bank Purchasers.
"Bank Percentage Interest" shall mean, at any time of
determination, a percentage equal to the sum of the Investor Percentage
Interests for each of the Bank Purchasers.
"Bank Purchasers" shall mean, at any time, each financial
institution listed on the signature pages hereof and all other owners by
assignment or succession of the Bank Purchasers' aggregate Investor Percentage
Interest in the Purchased Interest at such time.
"Bank Rate Supplement" shall mean the agreement dated as of January
7, 1994 among the Seller and each of the Bank Purchasers setting forth, among
other things, the fees payable to the Bank Purchasers and the rates at which
Discount shall accrue for the account of and be payable to the Bank Purchasers
in
DC1-1121.9 3
<PAGE> 9
connection with the Bank Purchasers' investment in the Receivables.
"Base Rate" shall mean, for any day, the higher of (i) the prime
rate announced from time to time by J.P. Morgan Delaware in effect on such day,
or (ii) (x) the rate equal to 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, if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day for such transactions
received by J.P. Morgan Delaware from three Federal funds brokers of recognized
standing selected by it, plus (y) one-half of one percent (1/2%).
"Business Day" shall mean any day other than a Saturday, Sunday,
public holiday under the Laws of the State of Delaware or the State of New York
or the State of California or any other day on which banking institutions are
authorized or obligated to close in the State of Delaware or the State of New
York or the State of California.
"Capitalized Lease" of a Person shall mean any capitalized lease of
property, real or personal, by such Person as lessee on a balance sheet of such
Person prepared in accordance with GAAP.
"Capitalized Lease Obligation" shall mean the capitalized amount at
any time of determination of the rental commitment under a Capitalized Lease
which in accordance with GAAP would at such time be required to be shown on a
balance sheet.
"Charge-Off" shall mean a Receivable (or any portion thereof): (i)
which has been identified by the Seller or the Servicer as uncollectible, or
(ii) which, in accordance with the Credit and Collection Policy, should be
written off as uncollectible or reserved against.
"Charge-Off Ratio" shall mean, for any period of determination, the
ratio (expressed as a percentage) of (i) the aggregate Outstanding Balance of
all Receivables which became Charge-Offs during such period (without giving
effect to any recoveries during such period), to (ii) the aggregate amount of
Collections during the period for which such ratio is being determined.
"Chief Executive Office" shall mean, with respect to the Seller or
the Servicer, the place where the Seller or Servicer, as the case may be, is
located, within the meaning of Section 9-103(3)(d), or any analogous provision
of the UCC in
DC1-1121.9 4
<PAGE> 10
effect in the jurisdiction whose Law governs the perfection of the Investors'
ownership interests in any Receivables.
"Closing Date" shall mean January 10, 1994.
"Co-Agents" shall mean J.P. Morgan Delaware and Bank of Boston, as
co-agents of the Bank Purchasers.
"Collateral Agent" shall mean J.P. Morgan Delaware, together with
its successors and assigns, as collateral agent under the Security Agreement.
"Collections" shall mean, for any Receivable as of any date, (i)
the sum of all amounts, whether in the form of cash, checks, drafts, or other
instruments, received by the Servicer or in a Permitted Lockbox in payment of,
or applied to, any amount owed by an Obligor on account of such Receivable
(including but not limited to all amounts received on account of any Defaulted
Receivable) on or before such date, including, without limitation, all amounts
received on account of such Receivable, all Finance Charges, if any, and other
fees and charges, (ii) cash proceeds of Related Security applied in respect of
such Receivable and (iii) all amounts deemed to have been received by the
Seller or the Servicer as a Collection pursuant to Section 2.08(c) or 2.08(d)
hereof.
"Commercial Paper" shall mean promissory notes of DFC issued by DFC
in the commercial paper market.
"Complete Servicing Transfer" shall have the meaning ascribed to
such term in Section 4.09 hereof.
"Concentration Factor" shall mean (i) for any Group A Obligor and
its Subsidiaries, 10% of an amount equal to the aggregate Outstanding Balances
of all Eligible Receivables, (ii) for any Group B Obligor and its Subsidiaries,
3% of an amount equal to the Outstanding Balances of all Eligible Receivables
and (iii) for any Special Obligor and its Subsidiaries and Affiliates listed on
Exhibit F hereto, the percentage set forth opposite such Special Obligor's name
on Exhibit F hereto of an amount equal to the Outstanding Balances of all
Eligible Receivables.
"Concentration Percentage" shall mean for any Obligor a fraction,
expressed as a percentage, the numerator of which is an amount equal to the
aggregate Outstanding Balances of the Eligible Receivables of the related
Obligor and its Subsidiaries and the denominator of which is an amount equal to
the Outstanding Balances of all Eligible Receivables.
"Consolidated Subsidiary" shall mean, at any date, any Subsidiary
or other entity the accounts of which would be consolidated under GAAP with
those of Western Digital in its consolidated financial statements as of such
date.
DC1-1121.9 5
<PAGE> 11
"Consolidated Tangible Net Worth" means at any calculation date the
consolidated stockholders' equity of Western Digital and its Consolidated
Subsidiaries less their consolidated Intangible Assets all determined as of
such date. For purposes of this definition "Intangible Assets" means the
amount (to the extent reflected in determining such consolidated stockholders'
equity) of (i) all write-ups (other than write-ups resulting from foreign
currency translations and write-ups of assets of a going concern business made
within twelve months after the acquisition of such business) subsequent to June
30, 1993 in the book value of any asset owned by Western Digital or a
Consolidated Subsidiary of Western Digital, (ii) all investments in
unconsolidated Subsidiaries of Western Digital and (iii) all unamortized debt
discount and expense, unamortized, deferred charges, goodwill, patents,
trademarks, service marks, trade names, copyrights, organization or
developmental expenses and other intangible assets.
"Contract" shall mean a binding contract between Western Digital
and an Obligor which gives rise to a (i) short-term trade receivable with a
maturity of not greater than 90 days or (ii) a short-term retail or consumer
receivable of not greater than three months, in each case arising from the sale
by Western Digital of goods or services (other than software) in the ordinary
course of Western Digital's business.
"Credit and Collection Policy" shall mean Western Digital's credit,
collection, enforcement and other policies and practices relating to Contracts
and Receivables that have been in use prior to, and are in use on, the Closing
Date, as the same may be modified from time to time in compliance with Sections
6.02(d) and 6.05(e) hereof. Certain credit policies of Western Digital in use
on the Closing Date are set forth in Exhibit A.
"Dealer" shall mean Merrill and Goldman.
"Debt" of any Person means at any date, without duplication, (i)
all obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, other than trade receivables arising in the ordinary
course, (iv) all obligations of such Person as lessee which are capitalized in
accordance with generally accepted accounting principles, (v) all Debt secured
by a Lien on any asset of such Person, whether or not such Debt is otherwise an
obligation of such Person which Debt, if Non-Recourse Debt to such Person,
shall be deemed to be in an amount equal to the lesser of the principal amount
of such obligations or the aggregate fair market value of such assets, and (vi)
all Debt of others Guaranteed by such person.
"Default Ratio" shall mean, for any monthly period, the ratio
(expressed as a percentage) calculated as at the end of the
DC1-1121.9 6
<PAGE> 12
preceding calendar month (the "Calculation Month") of (i) the aggregate
Outstanding Balance of all Receivables which were past due 91 to 120 days or
became Charge-Offs as of the last day of the Calculation Month to (ii) the
aggregate Outstanding Balance of all Receivables generated by Western Digital
during the calendar month that occurred four calendar months before the
Calculation Month, provided that if the sum of (a) the "WPT" as calculated
pursuant to the definition of "Loss Percentage" herein plus (b) 3 is greater
than 4, clause (ii) shall be the Outstanding Balance of all Receivables
generated by Western Digital during such number of calendar months before the
Calculation Month.
"Defaulted Receivable" shall mean a Receivable (i) owed by an
Obligor that would not be eligible for any further extensions of credit, by
reason of any default or nonperformance by such Obligor, under the terms of the
Credit and Collection Policy, (ii) which has become uncollectible by reason of
such Obligor's inability to pay, as determined by the Administrative Agent or
the Servicer, in either case in accordance with the Credit and Collection
Policy, (iii) in respect of which an Event of Bankruptcy has occurred with
respect to the related Obligor, (iv) as to which the Obligor thereof is
deceased or (v) which is more than 90 days past due, except that portion of the
Outstanding Balance of the Receivables of such Obligor which is the subject of
a good faith Dispute between the Seller or the Servicer, acting on behalf of
the Seller, and the Obligor as to the amount due on the related Contract.
"Deferred Purchase Price" shall mean, at any time of determination,
the Loss Percentage at such time multiplied by the Investment at such time.
"DFC Deferred Purchase Price" shall mean, at any time of
determination, the sum of the Investor Deferred Purchase Prices for each of the
DFC Purchasers.
"DFC Expiration Date" shall mean the earliest of (i) a date which
is 360 days from the date of this Agreement, as such date may be extended in
the sole discretion of DFC pursuant to Section 2.15 hereof, (ii) the date on
which all of the following shall have occurred (A) the date of termination of
the commitment of the Program LOC Bank under the Program Letter of Credit
Reimbursement Agreement, (B) the date of termination of the commitment of the
APA Lending Banks under the APA Credit Agreement, and (C) the date on which the
aggregate of the Maximum Purchases (as defined in the Asset Purchase Agreement)
of all of the APA Purchasers under the Asset Purchase Agreement is less than
$25,000,000 and (iii) the day on which the Administrative Agent delivers a
Notice of Termination with respect to the DFC Purchasers pursuant to Section
7.02 hereof or a Termination Event described in Section 7.01(j) hereof occurs.
DC1-1121.9 7
<PAGE> 13
"DFC Investment" shall mean, at any time of determination, the sum
of the Investor Investments for each of the DFC Purchasers.
"DFC Net Investment" shall mean, at any time, the sum of the
Investor Net Investments for each of the DFC Purchasers.
"DFC Percentage Interest" shall mean, at any time of determination,
a percentage equal to the sum of, without duplication, the Investor Percentage
Interests for each of the DFC Purchasers.
"DFC Purchasers" shall mean, at any time, DFC, each APA Purchaser,
if any, and all other owners by assignment or otherwise (except a Person who
has taken an interest therein by way of a participation) of DFC's aggregate
Investor Percentage Interest in the Purchased Interest at such time.
"DFC Rate Supplement" shall mean the agreement dated as of January
7, 1994 between the Seller and DFC setting forth, among other things, the fees
payable to the DFC Purchasers and the Referral Agent by the Seller in
connection with the DFC Purchasers' investment in the Seller's Receivables.
"Dilution Factors" shall mean credits, cancellations, cash
discounts, allowances, Disputes, rebates, charge backs, returned or repossessed
goods, and other deductions in amounts owing with respect to any Receivable,
including, without limitation, any special or other discounts or any
reconciliations that are given to an Obligor in accordance with the Credit and
Collection Policy.
"Dilution Percentage" shall mean, 10% for the period commencing on
the day of the initial Incremental Purchase through January 31, 1994, and for
each calendar month thereafter, the percentage calculated as of the end of the
preceding calendar month to be in effect for the succeeding calendar month,
equal to the positive difference between (i) the greater of (A) 10% or (B) the
highest average of the Dilution Ratios computed for any three consecutive
calendar months that occurred during the period of twelve consecutive calendar
months ending on the last day of the month as of the end of which Dilution
Percentage is calculated, and (ii) the Net Overconcentration Percentage, but in
no event greater than the percentage determined pursuant to clause (i).
"Dilution Ratio" shall mean, for any monthly period, the ratio,
expressed as a percentage, of (i) the aggregate Dilution Factors of all
Receivables as at the last day of such monthly period to (ii) the aggregate
Outstanding Balance of all Receivables as at the last day of such monthly
period.
"Discount" shall mean with respect to any Tranche Period for any
Tranche:
DC1-1121.9 8
<PAGE> 14
(TR + PF) x TNI x AD
--------------------
AP
Where:
TR = the Tranche Rate applicable to such Tranche Period for such Tranche;
PF = the Program Fee;
TNI = the amount of such Tranche; and
AD = the actual number of days (including the first but excluding the last
day) during such Tranche Period;
AP = the number of days in the annual period on the basis of which
Discount for such Tranche Period is calculated, being 360 if the
Tranche Rate for such Tranche Period is calculated by reference to
any rate other than Base Rate, and 365 or 366, as the case may be, if
the Tranche Rate for such Tranche Period is calculated by reference
to Base Rate;
provided, however, that no provision of this Agreement shall require the
payment or permit the collection of Discount in excess of the maximum permitted
by applicable law; and provided, further, that Discount shall not be considered
paid by any distribution if at any time such distribution is rescinded or must
be returned for any reason.
"Dispute" shall mean any dispute, deduction, claim, offset,
defense, counterclaim, set-off or obligation of any kind, contingent or
otherwise, relating to a Receivable, including, without limitation, any dispute
relating to goods or services already paid for.
"Dollar" and "$" shall mean lawful currency of the United States of
America.
"Eligible Account": Either (i) a segregated trust account with the
trust department of a depository institution organized under the laws of the
United States of America or any State thereof or the District of Columbia (or
any domestic branch of a foreign bank), having a long-term deposit rating of at
least Baa3 by Moody's, having trust powers and acting as trustee for funds
deposited in such account, or (ii) a segregated deposit account with a
depository institution organized under the laws of the United States of America
or any State thereof (or any domestic branch of a foreign bank) the long-term
deposit obligations of which are rated Aa3 or higher by Moody's and the
short-term debt obligations of which are rated "A-1+" by S&P and "P-1" by
Moody's.
DC1-1121.9 9
<PAGE> 15
"Eligible Investments": Book-entry securities,
negotiable instruments or securities represented by instruments in bearer or
registered form which evidence:
(a) obligations of the United States or any agency
thereof, provided such obligations are guaranteed as to the timely
payment of principal and interest by the full faith and credit of the
United States;
(b) general obligations of or obligations guaranteed by
any state of the United States or the District of Columbia that at
the time of acquisition thereof are assigned the highest rating by
S&P and Moody's;
(c) interests in any money market mutual fund which at
the date of investment in such fund has the highest fund rating by
each of Moody's and S&P which has issued a rating for such fund
(which, for S&P, shall mean a rating of AAAm or AAAmg);
(d) commercial paper which at the date of investment has
the highest unsecured short-term debt rating by S&P and Moody's
(including, without limitation, commercial paper meeting the
foregoing criteria issued by any of the Seller, the Servicer, any DFC
Purchaser, any Bank Purchaser or the Administrative Agent);
(e) certificates of deposit, demand or time deposits,
federal funds or banker's acceptances issued by any depository
institution or trust company incorporated under the laws of the
United States or of any state thereof (or any U.S. branch or agency
of a foreign bank) and subject to supervision and examination by
Federal or state banking authorities, provided that the short-term
unsecured deposit obligations of such depository institution or trust
company at the date of investment are then rated at least P-1 by
Moody's and A-1+ by S&P;
(f) demand or time deposits of, or certificates of
deposit issued by, any bank, trust company, savings bank or other
savings institution, which deposits are fully insured by the Federal
Deposit Insurance Corporation, provided that the long-term unsecured
debt obligations of such bank, trust company, savings bank or other
savings institution are rated at the date of investment at least Aa2
by Moody's and AA- by S&P;
(g) interests in any open-end or closed-end management
type investment company or investment trust (x)(1) registered under
the Investment Company Act of 1940, (2) the portfolio of which is
limited to the obligations of, or guaranteed by, the United States
and to agreements to repurchase such obligations, which agreements,
with respect to principal and interest, are at least 100%
collateralized
DC1-1121.9 10
<PAGE> 16
by such obligations marked to market on a daily basis and (3) the
investment company or investment trust shall take delivery of such
obligations either directly or through an independent custodian
designated in accordance with the Investment Company Act of 1940, and
(y) as will not result in the qualification, downgrading or
withdrawal of the rating then assigned to the Commercial Paper by
Moody's or S&P (as evidenced in writing by Moody's or S&P); and
(h) such other investments as will not result in the
qualification, downgrading or withdrawal of the rating then assigned
to the Commercial Paper by Moody's or S&P (as evidenced in writing by
Moody's or S&P).
"Eligible Receivable" shall mean, at any time, any
Receivable:
(a) which complies in all material respects with all
applicable Laws and other legal requirements, whether Federal, state or local,
including, without limitation, to the extent applicable, usury laws, the
Federal Consumer Credit Protection Act, the Fair Credit Billing Act, the
Federal Truth in Lending Act, and Regulation Z of the Board of Governors of the
Federal Reserve System;
(b) which constitutes an "account" or a "general
intangible", in each case as defined in the UCC as in effect in the State of
New York and the jurisdiction whose Law governs the perfection of the
Investors' ownership interest therein, or is evidenced by an "instrument", as
defined in the UCC as so in effect, which is in the possession of the
Administrative Agent;
(c) which was originated in connection with goods (other
than software) or the provision of services by Western Digital in the ordinary
course of Western Digital's business to an Obligor who was approved by Western
Digital in accordance with the Credit and Collection Policy, and which Obligor
is not an Affiliate of Western Digital;
(d) which (i) arises from a Contract and has been billed
to the related Obligor, or in respect of which the related Obligor is otherwise
liable, in accordance with the terms of such Contract and (ii) arises from a
Contract that (A) does not require the Obligor under such Contract to consent
to the transfer, sale or assignment of the rights and duties of Western Digital
under such Contract, or as to which the Obligor has consented to the transfer,
sale or assignment effected under the Receivables Contribution and Sale
Agreement and the transfer, sale or assignment effected hereunder, and (B) does
not contain any provision that restricts the ability of the Administrative
Agent or an Investor to exercise its rights under this Agreement, including
without limitation, its right to review the Contract;
DC1-1121.9 11
<PAGE> 17
(e) which constitutes, and which related Contract
constitutes, a legal, valid, binding and irrevocable payment obligation of the
related Obligor, enforceable in accordance with its terms, subject to no
offset, counterclaim or other defense;
(f) which is denominated and payable only in Dollars in
the United States by the related Obligor;
(g) as to which the Obligor thereof has been notified to
send payments thereon to a Permitted Lockbox;
(h) which has not been repurchased by or on behalf of
the Seller pursuant to the repurchase provisions of this Agreement;
(i) which is not a Defaulted Receivable;
(j) which has a related Obligor who (i) has not failed
to make, at the time of the sale of such Receivable by Western Digital to the
Seller under the Receivables Contribution and Sale Agreement and at the time of
sale of such Receivable by the Seller to the Investors under this Agreement, at
least the minimum payments on other Receivables, if any, required in order to
make such Obligor eligible for further extensions of credit under the terms of
the Credit and Collection Policy, and (ii) is not the subject of an Event of
Bankruptcy;
(k) which was not originated in or subject to the Laws
of a jurisdiction whose Laws would make such Receivable, the related Contract
or the sale of the Purchased Interest to the Investors hereunder unlawful,
invalid or unenforceable and is not subject to any legal limitation on
transfer;
(l) which is owned solely by the Seller free and clear
of all Liens, except for the Lien arising in connection with this Agreement and
the Security Agreement;
(m) on the date on which an interest in such Receivable
is first sold to the Investors hereunder by way of an Incremental Purchase or
reinvestment Purchase pursuant to Section 2.05 (the "First Purchase Date"), for
which there has been no rejection or return of, or warranty, claim or other
Dispute having risen with respect to, the goods or services which gave rise to
such Receivable and all goods and services or portion thereof required to be
delivered or performed and giving rise to a payment obligation in connection
therewith have been delivered to or performed and accepted by the Obligor
without Dispute existing on the First Purchase Date;
(n) which is not an obligation of the United States of
America, any State or any agency or instrumentality or political subdivision
thereof, unless otherwise agreed to in writing by the Servicer and the
Administrative Agent;
DC1-1121.9 12
<PAGE> 18
(o) which does not provide the Obligor with the right to
obtain any cash advance thereunder;
(p) as of the First Purchase Date, which is not a
Receivable as to which the Administrative Agent has notified the Seller that
the Administrative Agent has determined that such Receivable or class of
Receivables is not acceptable for purchase hereunder because of the nature of
the business of the Obligor or for credit reasons;
(q) which, if such Receivable is not interest bearing,
by its terms requires the first payment in respect thereof to be made no later
than 90 days after the date of the original invoice with respect thereto;
(r) which is owed by an Obligor not more than 25% of
whose aggregate Outstanding Balances of Receivables are more than 90 days past
due, except that portion of such Obligor's Outstanding Balances that constitute
Dilution Factors;
(s) which has an Obligor which is a Person domiciled
in the United States of America;
(t) which is an "eligible asset" within the meaning of
Rule 3a-7 promulgated under the Investment Company Act of 1940, as amended from
time to time; and
(u) the purchase of which with the proceeds of
Commercial Paper would constitute a "current transaction" within the meaning of
Section 3(a)(3) of the Securities Act of 1933, as amended from time to time.
"Eligible Servicer" shall mean Western Digital, the
Administrative Agent or an entity which, at the time of its appointment as
Servicer, (i) is servicing a portfolio of receivables, (ii) is legally
qualified and has the capacity to service the Receivables and (iii) has
demonstrated the ability to service professionally and completely a portfolio
of accounts receivable in accordance with high standards of skill and care in
the sole determination of the Administrative Agent; provided however, that no
such entity shall be deemed to be an Eligible Servicer if it is a competitor of
Western Digital or any of its Affiliates.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time and any successor thereto,
and the regulations promulgated and rulings issued thereunder.
"ERISA Affiliates" shall mean, with respect to any
Person, any corporation or person which is a member of any group of
organizations (i) described in Section 414(b) or (c) of the Internal Revenue
Code of which such Person is a member, or (ii) solely for purposes of potential
liability under Section
DC1-1121.9 13
<PAGE> 19
302(c)(11) of ERISA and Section 412(c)(11) of the Internal Revenue Code and the
lien created under Section 302(f) of ERISA and Section 412(n) of the Internal
Revenue Code, described in Section 414(m) or (o) of the Internal Revenue Code
of which such Person is a member.
"Eurodollar Business Day" shall mean any Business Day on
which commercial banks are open for dealings in Dollar deposits in London.
"Eurodollar Rate" shall have the meaning set forth in the
Bank Rate Supplement or DFC Rate Supplement, as applicable.
"Event of Bankruptcy" shall mean, for any Person:
(a) that such Person shall fall generally to, or admit
in writing its inability to, pay its debts as they become due; or
(b) a proceeding shall have been instituted in a court
having jurisdiction in the premises seeking a decree or order for relief in
respect of such Person in an involuntary case under any applicable bankruptcy,
insolvency, reorganization, suspension of payments, readjustment, marshalling
of assets or other similar Law now or hereafter in effect, or for the
appointment of a receiver, liquidator, assignee, trustee, custodian,
sequestrator, conservator (under the Bank Conservation Act, as amended from
time to time, or otherwise) or other similar official of such Person or for any
substantial part of its property, or for the winding-up or liquidation of its
affairs and, with respect to the Seller or Servicer, such proceeding shall not
have been dismissed within 60 days of the filing thereof; or
(c) the commencement by such Person of a voluntary case
under any applicable bankruptcy, insolvency, reorganization, suspension of
payments, readjustment, marshalling of assets or other similar Law now or
hereafter in effect, or such Person's consent to the entry of an order for
relief in an involuntary case under any such Law, or consent to the appointment
of or taking possession by a receiver, liquidator, assignee, trustee,
custodian, sequestrator, conservator (under the Bank Conservation Act, as
amended from time to time, or otherwise) or other similar official of such
Person or for any substantial part of its property, or any general Assignment
for the benefit of creditors; or
(d) if such Person is a corporation, such Person or any
Subsidiary of such Person shall take any corporate action to authorize,
generally or specifically, any of the actions set forth in the preceding clause
(a), (b) or (c).
"Event of Termination" shall mean, with respect to any
Person, (i) with respect to any Plan, a reportable event, as defined in Section
4043(b) of ERISA, as to which the PBGC has not by regulation waived the
requirement of Section 4043(a) of ERISA
DC1-1121.9 14
<PAGE> 20
that it be notified within 30 days of the occurrence of such event, or (ii) the
withdrawal of such Person or any ERISA Affiliate from a Plan during a plan year
in which it is a substantial employer, as defined in Section 4043(b) of ERISA,
or (iii) the failure by such Person or any ERISA Affiliate to meet the minimum
funding standard of Section 412 of the Internal Revenue Code or Section 302 of
ERISA with respect to any Plan, including, without limitation, the failure to
make on or before its due date a required installment under Section 412(m) of
the Internal Revenue Code or Section 302(e) of ERISA, or (iv) the distribution
under Section 4041 of ERISA of a notice of intent to terminate any Plan or any
action taken by such Person or any ERISA Affiliate to terminate any Plan, or
(v) the adoption of an amendment to any Plan that pursuant to Section
401(a)(29) of the Internal Revenue Code or Section 307 of ERISA would result in
the loss of tax-exempt status of the trust of which such Plan is a part if such
Person or an ERISA Affiliate fails to timely provide security to the Plan in
accordance with the provisions of said Sections, or (vi) the institution by the
PBGC of proceedings under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or (vii) the receipt by such
Person or any ERISA Affiliate of a notice from a Multiemployer Plan that action
of the type described in the previous clause (vi) has been taken by the PBGC
with respect to such Multiemployer Plan, or (viii) the complete or partial
withdrawal from a Multiemployer Plan by such Person or any ERISA Affiliate that
results in liability under Section 4201 or 4204 of ERISA (including the
obligation to satisfy secondary liability as a result of a purchaser default),
or (ix) the receipt by such Person or any ERISA Affiliate of notice from a
Multiemployer Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA or that it intends to terminate or has terminated
under Section 4041A of ERISA, or (x) any event or circumstance exists which may
reasonably be expected to constitute grounds for such Person or any ERISA
Affiliate to incur liability under Title IV of ERISA or under Sections
412(c)(11) or 412(n) of the Internal Revenue Code with respect to any Plan.
"Finance Charges" shall mean, with respect to a Contract,
any finance, interest, late or similar charges owed by an Obligor pursuant to
such Contract.
"GAAP" shall mean generally accepted accounting
principles in the United States of America, applied on a consistent basis and
applied to both classification of items and amounts, and shall include, without
limitation, the official interpretations thereof by the Financial Accounting
Standards Board, its predecessors and successors.
"Goldman" shall mean Goldman Sachs Money Markets L.P.
"Group A Obligor" shall mean any Obligor (i) whose
long-term debt is rated at least "A" by S&P and at least "A2" by
DC1-1121.9 15
<PAGE> 21
Moody's or (ii) whose short-term debt is rated at least "A-1" by S&P and at
least "P-1" by Moody's.
"Group B Obligor" shall mean any Obligor who is not a
Group A Obligor and who is not a Special Obligor.
"Guarantee" shall mean, as applied to any Debt, (i) a
guarantee (other than by endorsement for collection in the ordinary course of
business), direct or indirect, in any manner, of any part or all of such Debt
or (ii) a similar agreement, direct or indirect, contingent or otherwise,
providing for the payment or performance (or payment of damages in the event
of non-performance) of any part or all of such Debt. The amount of any
Guarantee shall be deemed to be the maximum amount of the Debt guaranteed for
which the guarantor could be held liable under such Guarantee.
"Incremental Purchase" shall have the meaning ascribed to
such term in Section 2.02 hereof.
"Indemnified Parties" shall have the meaning ascribed to
such term in Section 9.02(a) hereof.
"Internal Revenue Code" shall mean the Internal Revenue
Code of 1986, as amended from time to time and any successor thereto, and the
regulations promulgated and rulings issued thereunder.
"Investment" shall mean, at any time of determination,
the sum of the Aggregate Net Investment plus the Deferred Purchase Price, which
amount can also be computed as follows:
I = ANI
---------
1 - LP
Where:
ANI = the Aggregate Net Investment at such time; and
LP = the Loss Percentage at such time.
"Investment Percentage" shall mean, at any time of
determination, the Investment at such time divided by the Net Receivables
Balance at such time.
"Investor" shall mean, at any time, DFC, each APA
Purchaser, if any, each Bank Purchaser and all other owners by assignment or
otherwise of an interest in the Purchased Interest at such time.
"Investor Deferred Purchase Price" shall mean, at any
time of determination and for an Investor, the Loss Percentage at
DC1-1121.9 16
<PAGE> 22
such time multiplied by such Investor's Investor Investment at such time.
"Investor Group" shall mean either the DFC Purchasers or
the Bank Purchasers, as applicable.
"Investor Investment" shall mean, at any time of
determination and for an Investor, the sum of such Investor's Investor Net
Investment plus such Investor's Investor Deferred Purchase Price, which amount
can also be computed as follows:
II = INI
---------
1 - LP
Where:
INI = such Investor's Investor Net Investment at such time; and
LP = the Loss Percentage at such time.
"Investor Net Investment" shall mean, at any time of
determination, the sum of the amounts of Purchase Price paid to the Seller by
the Administrative Agent on behalf of an Investor for each Incremental Purchase
made by such Investor less the aggregate amount of Collections received and
applied by the Servicer or the Administrative Agent to reduce such Investor Net
Investment pursuant to Sections 2.08(b), 2.09 and 2.11(b) hereof; provided that
such Investor Net Investment shall be increased by the amount of Collections
received and applied if at any time the distribution of such Collections is
rescinded or must otherwise be returned or restored for any reason.
"Investor Percentage Interest" shall mean, at any time of
determination and for an Investor, a percentage equal to the following:
IAPI x INI
-------
ANI
Where:
IAPI = the Investors' Aggregate Percentage Interest at the time of such
determination;
INI = such Investor's Investor Net Investment at the time of such
determination; and
ANI = the Aggregate Net Investment at the time of such determination.
Notwithstanding the foregoing, on and after the DFC
Expiration Date or the Bank Expiration Date, as applicable for such Investor,
the Investor Percentage Interest for such Investor
DC1-1121.9 17
<PAGE> 23
shall be equal to the greater of (i) the Investor Percentage Interest for such
Investor on the first Business Day preceding the occurrence of the DFC
Expiration Date or the Bank Expiration Date, as applicable for such Investor,
and (ii) the Investor Percentage Interest for such Investor on each Business
Day after the occurrence of the DFC Expiration Date or the Bank Expiration
Date, as applicable.
"Investors' Aggregate Percentage Interest" shall mean, at
any time of determination, a percentage equal to the following:
ANI + DPP + ID + (DP x I) + (NOP x I)
-------------------------------------
NRB
Where:
ANI = the Aggregate Net Investment at the time of such determination;
DPP = the Deferred Purchase Price at the time of such determination;
ID = the Investors' Discount at the time of such determination;
DP = Dilution Percentage at the time of such determination;
I = Investment at the time of such determination;
NOP = Net Overconcentration Percentage at the time of such determination;
and
NRB = the Net Receivables Balance at the time of such determination.
Notwithstanding the foregoing computation, the Investors'
Aggregate Percentage Interest shall not exceed 100%. The Investors' Aggregate
Percentage Interest shall be calculated by the Servicer on the closing date of
the initial Incremental Purchase hereunder. The Investors' Aggregate
Percentage Interest shall be recomputed in Monthly Reports delivered pursuant
to Section 2.14 hereof, in Purchase Notices delivered pursuant to Section 2.03
hereof and otherwise in writing upon request of the Administrative Agent or
Seller made to the Servicer. Absent any error in calculation, the Investors'
Aggregate Percentage Interest shall be deemed to remain constant for purposes
of making the allocations required by Section 2.08 and shall remain constant
from the time as of which any such computation or recomputation is made until
the time as of which the next such recomputation shall be made, notwithstanding
any additional Receivables arising or any reinvestment Purchase made pursuant
to Sections 2.05 hereof and 2.08(a) hereof during any period between
computations of the Investors' Aggregate Percentage Interest. If
DC1-1121.9 18
<PAGE> 24
the Servicer shall fail to promptly calculate the Investors' Aggregate
Percentage Interest as required herein, the Administrative Agent may compute
the Investors' Aggregate Percentage Interest, which computation shall be
conclusive absent manifest error.
"Investors' Discount" shall mean, at any time of
determination, an amount equal to the following:
ANI x (TR + PF + RV) x (CP + CD)
--------------------------------
WAP
Where:
ANI = the Aggregate Net Investment at such time;
TR = the weighted-average Tranche Rate with respect to all Tranches then
outstanding;
PF = the Program Fee, if any;
RV = the Rate of Variance Factor;
CP = the Average Collection Period; and
CD = the Allowance for Collection Delays.
WAP = the weighted average number of days in the annual period for all
Tranches then outstanding, with Tranches having Tranche Rates
calculated by reference to a rating other than Base Rate having a
360-day annual period and Tranches having Tranche Rates calculated by
reference to the Base Rate having a 365- or 366-day, as the case may
be, annual period.
"JPM" shall have the meaning ascribed to such term in
Section 7.01(n) hereof.
"Law" shall mean any law (including common law),
constitution, statute, treaty, regulation, rule, ordinance, order, injunction,
writ, decree or award of any Official Body.
"Lien", in respect of the property of any Person, shall
mean any ownership interest of any other Person, any mortgage, deed of trust,
hypothecation, pledge, lien, security interest, grant of a power to confess
judgment, filing of any financing statement, charge or other encumbrance or
security arrangement of any nature whatsoever, including, without limitation,
any conditional sale or title retention arrangement, and any assignment,
deposit arrangement, consignment or lease intended as, or having the effect of,
security.
"Lockbox Account" shall mean a demand deposit account
identified on Exhibit N hereto maintained with a Permitted
DC1-1121.9 19
<PAGE> 25
Lockbox Bank pursuant to the Lockbox Servicing Instructions for the purpose of
depositing payments made by the Obligors or such other account as the Seller,
the Servicer and the Administrative Agent may agree upon from time to time.
"Lockbox Servicing Instructions" shall mean the
instructions relating to lockbox services in connection with a Permitted
Lockbox and related Lockbox Account which are in compliance with Section 4.10
hereof, which have been executed and delivered by the Seller and Servicer to a
Permitted Lockbox Bank.
"Lockbox Transfer Letter" shall have the meaning ascribed
to such term in Section 3.02(k) hereof.
"Loss Percentage" shall mean, 13% for the period
commencing on the day of the initial Incremental Purchase through January 31,
1994, and for each calendar month thereafter, the percentage calculated as of
the end of the preceding calendar month to be in effect for the succeeding
calendar month, equal to the greater of:
(i) 12%; or
(ii) 2.00 x DR x (WPT + 3)
Where:
DR = the highest average of the Default Ratios computed for any three
consecutive calendar months that occurred during the period of twelve
consecutive calendar months ending on the last day of the month in
which such Loss Percentage is established;
WPT = a fraction, rounded up or down to the nearest integer, (i) the
numerator of which is equal to the weighted average payment terms for
the Receivables as set forth in the most recent Monthly Report and
the denominator of which is 30.
"Majority Bank Purchasers" shall mean, at any time of
determination, those Bank Purchasers constituting in aggregate 50% or more of
the Maximum Net Investment with respect to the Bank Purchasers at such time.
"Majority DFC Purchasers" shall mean, at any time of
determination, those DFC Purchasers owning in aggregate more than 50% of the
DFC Percentage Interest in the Purchased Interest at such time.
"Majority Investors" shall mean, at any time of
determination, those Investors constituting in aggregate more than 50% of the
aggregate Maximum Net Investment at such time.
DC1-1121.9 20
<PAGE> 26
"Maximum Net Investment" shall mean, for the DFC
Purchasers, $25,000,000, and for the Bank Purchasers, $50,000,000 unless
otherwise increased with the consent of the DFC Purchasers or the Bank
Purchasers, as applicable, or reduced as provided in Section 2.11(a) hereof;
provided, however, that at all times on and after the Bank Expiration Date or
the DFC Expiration Date, as applicable, the "Maximum Net Investment" shall mean
the Bank Net Investment or the DFC Net Investment, as the case may be. The
aggregate of the Maximum Net Investments for the Investor Groups on the date
hereof is $75,000,000.
"Merrill" shall mean Merrill Lynch Money Markets, Inc.
"Minority Interest" shall mean owning or holding less
than a majority of the outstanding voting stock of any Person.
"Monthly Report" shall have the meaning ascribed to such
term in Section 2.14 hereof.
"Moody's" shall mean Moody's Investors Service, Inc.,
together with its successors.
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA which is or was at any time during the
current year or the immediately preceding five years contributed to by any
Person or any ERISA Affiliate on behalf of its employees and which is covered
by Title V of ERISA.
"Net Investment Percentage" shall mean, at any time of
determination, the Aggregate Net Investment at such time divided by the Net
Receivables Balance at such time.
"Net Overconcentration Percentage" shall mean 10% for the
period commencing on the day of the initial Incremental Purchase through
January 31, 1994, and for each calendar month thereafter, the lesser of (a) the
percentage determined as of the end of the preceding calendar month pursuant to
clause (i) of the definition of Dilution Percentage or (b) the percentage
calculated as of the end of the preceding calendar month to be in effect for
the succeeding calendar month, equal to:
NOC
---------
ANI
Where:
NOC = the sum of the amount by which, for each Obligor, the aggregate
Outstanding Balances of all Eligible Receivables of such Obligor
exceeds the Concentration Factor for such Obligor; and
ANI = Aggregate Net Investment at such time.
DC1-1121.9 21
<PAGE> 27
"Net Receivables Balance" shall mean, at any time of
determination, the Outstanding Balances of the Eligible Receivables at such
time reduced by the aggregate amount by which the Outstanding Balances of all
Receivables of each Obligor at such time exceeds the Concentration Factor for
such Obligor at such time.
"Non-Recourse Debt" means Debt or that portion of Debt of
Western Digital or a Subsidiary of Western Digital as to which (a) the holders
of such Debt agree that they will look solely to the property securing such
Debt for payment on or in respect of such Debt and (b) no default with respect
to such Debt would permit (after notice or passage of time or both) according
to the terms thereof, any holder of any Debt for money borrowed by Western
Digital or a Subsidiary of Western Digital to declare a default on such Debt or
cause the payment thereof to be accelerated or payable prior to stated
maturity.
"Notice of Termination" shall have the meaning ascribed
to such term in Section 7.02 hereof.
"Obligor" shall mean, for any Receivable, each and every
Person who is obligated to make payments pursuant to the related Contract.
"Office" shall mean, when used in connection with the
Administrative Agent, the Investors, the Seller or the Servicer, their
respective offices as set forth on the signature pages hereto, or at such other
office or offices of the Administrative Agent, the Investors, the Seller or
Servicer or branch, Subsidiary or Affiliate of any thereof as may be designated
in writing from time to time by the Administrative Agent, the Investors, the
Seller or the Servicer to the Administrative Agent, the Investors, the Seller
or Servicer, as appropriate.
"Official Body" shall mean any government or political
subdivision or any agency, authority, bureau, central bank, commission,
department or instrumentality of either, or any court, tribunal, grand jury or
arbitrator, in each case whether foreign or domestic.
"Outstanding Balance" of any Receivable shall mean, at
any time of determination, the then outstanding amount thereof, including any
accrued and outstanding Finance Charges related thereto.
"Participant" shall have the meaning set forth in Section
9.17(b) hereof.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation and any entity succeeding to any or all of its functions under
ERISA.
DC1-1121.9 22
<PAGE> 28
"Permitted Lockbox" shall mean a post office box or other
mailing location identified on Exhibit N hereto maintained by a Permitted
Lockbox Bank pursuant to the Lockbox Servicing Instructions for the purpose of
receiving payments made by the Obligors for subsequent deposit into a related
Lockbox Account, or such other post office box or mailing location as the
Administrative Agent, the Seller and the Servicer may agree upon from time to
time.
"Permitted Lockbox Bank" shall mean a bank identified on
Exhibit N hereto or such other bank as the Seller, the Servicer and the
Administrative Agent may agree upon from time to time.
"Person" shall mean an individual, corporation,
partnership (general or limited), trust, business trust, unincorporated
association, joint venture, joint-stock company, Official Body or any other
entity of whatever nature.
"Plan" shall mean any employee benefit or other plan
which is or was at any time during the current year or immediately preceding
five years established or maintained by any Person or any ERISA Affiliate and
which is covered by Title IV of ERISA, other than a Multiemployer Plan.
"Potential Termination Event" shall mean an event or
condition which with the giving of notice, the passage of time or any
combination of the foregoing, would constitute a Termination Event.
"Proceeds" shall mean "proceeds" as defined in Section
9-306(1) of the Uniform Commercial Code as in effect in the State of New York
and the jurisdiction whose Law governs the perfection of the Investors'
ownership interest therein.
"Program Fee" shall have the meaning set forth in the DFC
Rate Supplement.
"Program Letter of Credit" shall mean the letter of
credit issued by the Program LOC Bank under the Program Letter of Credit
Reimbursement Agreement.
"Program Letter of Credit Reimbursement Agreement" shall
mean the Amended and Restated Letter of Credit Reimbursement Agreement dated as
of December 20, 1993 between DFC and the Program LOC Bank, as the same may from
time to time be amended, supplemented or otherwise modified.
"Program LOC Bank" shall mean Morgan Guaranty Trust
Company of New York or such other Person, together with its successors or
assigns, as the party to the Program Letter of Credit Reimbursement Agreement
issuing the Program Letter of Credit.
DC1-1121.9 23
<PAGE> 29
"Pro Rata Share" shall mean, for each Bank Purchaser,
such Bank Purchaser's Purchase Commitment at such time divided by the Maximum
Net Investment for the Bank Purchasers at such time.
"Purchase" shall mean a purchase by the Administrative
Agent, on behalf of and for the benefit of an Investor, of an undivided
percentage ownership interest in Receivables hereunder, together with the
Related Security and Collections with respect thereto.
"Purchase Availability Amount" shall mean, for an
Investor Group as of any date, an amount equal to (i) the Maximum Net
Investment for such Investor Group as of such date minus (ii) the DFC Net
Investment or the Bank Net Investment, as applicable, as of such date.
"Purchase Availability Fee" shall have the meaning set
forth in the Bank Rate Supplement or the DFC Rate Supplement, as the case may
be.
"Purchase Commitment" shall mean, for each Bank
Purchaser, the amount set forth opposite the name of such Bank Purchaser on the
signature pages hereof, as such amount may be reduced pursuant to Sections
2.11, 7.02 and 9.17 hereof.
"Purchase Documents" shall mean this Agreement, the
Lockbox Servicing Instructions, the Lockbox Transfer Letters and such other
agreements, documents and instruments entered into and delivered by the Seller
in connection with the transactions contemplated by this Agreement.
"Purchase Notice" shall have the meaning ascribed to such
term in Section 2.03 hereof.
"Purchase Price" shall mean with respect to any
Incremental Purchase, the amount equal to the least of (i) the Purchase
Availability Amount with respect to the applicable Investor Group on the date
of such Incremental Purchase (without giving effect thereto) or (ii) the
greatest amount such that, after giving effect thereto, the Investor's
Aggregate Percentage Interest is not in excess of 100% or (iii) such lesser
amount as the Seller may request in the Purchase Notice related to such
Incremental Purchase, which amount will be paid to the Seller by the
Administrative Agent on behalf of the applicable Investor or Investors.
Purchase Price refers to an amount actually paid and does not include any
amount of Deferred Purchase Price with respect to such Incremental Purchase.
"Purchased Interest" shall mean, at any time of
determination, the aggregate undivided percentage ownership interest equal to
the Investors' Aggregate Percentage Interest, then or theretofore purchased by
the Administrative Agent, on behalf of and for the benefit of the Investors,
pursuant hereto (as adjusted for any reconveyance to the Seller of any part
DC1-1121.9 24
<PAGE> 30
thereof), in (i) each and every then outstanding Receivable, (ii) all Related
Security with respect to each such Receivable, (iii) all Collections with
respect thereto, and (iv) Proceeds of the foregoing. The Purchased Interest in
each Receivable, together with Related Security and Collections with respect
thereto, shall at all times be equal to the Purchased Interest in each other
Receivable, together with Related Security and Collections. To the extent that
the Purchased Interest shall decrease as a result of a recalculation of the
Investors' Aggregate Percentage Interest, the Administrative Agent, on behalf
of each Investor, ratably in accordance with the percentage of the Purchased
Interest owned by the Administrative Agent, for the benefit of such Investor,
shall be deemed to have reconveyed to the Seller an undivided percentage
ownership interest in each Receivable, together with Related Security and
Collections, in an amount equal to such decrease such that in each case the
Purchased Interest in each Receivable shall be equal to the Purchased Interest
in each other Receivable.
"Rate Supplements" shall mean the DFC Rate Supplement and
the Bank Rate Supplement.
"Rate Variance Factor" shall mean an interest rate
variance percentage, not to exceed one percent (1%) as the Administrative Agent
shall select from time to time in its sole discretion.
"Receivable" shall mean, all indebtedness owed to the
Seller (after giving effect to the sale by Western Digital to the Seller under
the Receivables Contribution and Sale Agreement) by any Obligor (without giving
effect to any purchase hereunder by the Investors at any time) under a
Contract, whether or not constituting an account or a general intangible and
whether or not evidenced by chattel paper or an instrument, whether now
existing or hereafter arising and wherever located, arising in connection with
the sale of goods or the rendering of services by Western Digital and
satisfying the description set forth on Exhibit B hereto, and including the
right to payment of any Finance Charges and other obligations of such Obligor
with respect thereto, but excluding any amount of sales tax, excise tax or
other similar tax or charge incurred in connection with the sale of the goods
or services which gave rise to such indebtedness. Notwithstanding the
foregoing, once a Receivable has been deemed collected pursuant to Section
2.08(f) hereof, it shall no longer constitute a Receivable hereunder.
"Receivables Contribution and Sale Agreement" shall mean
the Receivables Contribution and Sale Agreement dated as of January 7, 1994
between the Seller, as Receivable Buyer, and Western Digital, as Receivable
Seller, as the same may be amended, supplemented, restated or otherwise
modified from time to time.
DC1-1121.9 25
<PAGE> 31
"Records" shall mean correspondence, memoranda, computer
programs, tapes, discs, papers, books or other documents or transcribed
information of any type whether ordinary or machine readable language.
"Referral Agent" shall mean J.P. Morgan Delaware,
together with its successors or assigns, in its capacity as referral agent for
DFC under the Referral Agreement dated as of November 13, 1990 between DFC and
the Referral Agent, as the same may from time to time be amended, supplemented
or otherwise modified.
"Related Security" shall mean with respect to any
Receivable:
(a) all Contracts with respect to such Receivable;
(b) all of the Seller's right, title and interest in, to
and under the Receivables Contribution and Sale Agreement, including, without
limitation, all amounts due or to become due to the Seller from Western Digital
under such Agreement and all rights, remedies, powers, privileges and claims of
the Seller against Western Digital under the Receivables Contribution and Sale
Agreement (whether arising pursuant to the terms of the Receivables
Contribution and Sale Agreement or otherwise available to the Seller at law or
in equity);
(c) all of the Seller's interest, if any, in the goods,
merchandise (including returned merchandise) or equipment, if any, the sale of
which by Western Digital gave rise to such Receivable;
(d) all other security interests or liens and property
subject thereto from time to time, if any, purporting to secure payment of such
Receivable, whether pursuant to the Contract related to such Receivable or
otherwise, together with all financing statements signed by an Obligor
describing any collateral securing such Receivable;
(e) all guarantees, insurance or other agreements or
arrangements of any kind 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 Records relating to, and all service contracts
and any other contracts associated with, the Receivables, the Contracts or the
Obligors.
"Remainder" shall have the meaning ascribed to such term
in Section 2.08(a) hereof.
"Responsible Officer" shall mean the chief financial
officer, controller or treasurer of the Seller or the Servicer.
DC1-1121.9 26
<PAGE> 32
"Security Agreement" shall mean the Amended and Restated
Security Agreement dated as of December 20, 1993 between DFC and J.P. Morgan
Delaware, as collateral agent for, among other parties, the APA Purchasers, the
Program LOC Bank, the APA Lending Banks and the AP Agent, and the holders from
time to time of the Commercial Paper, as the same may from time to time be
amended, supplemented or otherwise modified.
"Seller's Fiscal Year" shall mean July 1 to June 30,
which is the fiscal year of the Seller for accounting purposes.
"Servicer" shall initially mean Western Digital, and
thereafter, any Person which succeeds to the functions performed by such
Servicer pursuant to a Complete Servicing Transfer pursuant to this Agreement.
"Servicer's Compensation" shall have the meaning ascribed
to such term in Section 4.07(f) hereof.
"Servicer Default" shall have the meaning specified in
Section 4.08 of this Agreement.
"Servicing Account" shall mean the Servicing Account
established and maintained pursuant to Section 4.07(c) hereof.
"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 Administrative
Agent by the Servicer, as such list may from time to time be amended.
"Special Obligor" shall mean any Obligor listed on
Exhibit F hereto.
"Subsidiary" shall mean any corporation or other 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 at the time directly or indirectly owned by Western
Digital.
"S&P" shall mean Standard & Poor's Ratings Group,
together with its successors.
"Successor Servicer" shall have the meaning specified in
Section 4.09 of this Agreement.
"Termination Event" shall have the meaning ascribed to in
Section 7.01 hereof.
"Tranche" shall mean an allocated portion of the Bank Net
Investment or the DFC Net Investment, as the case may be.
"Tranche Period" shall mean, with respect to any Tranche
DC1-1121.9 27
<PAGE> 33
(a) to which a portion of the Bank Net Investment has
been allocated, prior to the Bank Expiration Date,
(i) the Tranche Rate of which is determined by reference
to the Eurodollar Rate, each period commencing on the date a portion
of the Bank Net Investment is allocated to such Tranche pursuant to
Section 2.06 hereof and ending on the numerically corresponding day
in the first, second or third calendar month thereafter, except that
(x) if such day is not a Eurodollar Business Day, such Tranche Period
shall end on the next succeeding Eurodollar Business Day (provided
that if such Eurodollar Business Day is in a subsequent calendar
month, such Tranche Period shall end on the next preceding Eurodollar
Business Day) and (y) each period that commences on the last
Eurodollar Business Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Eurodollar Business
Day of the appropriate subsequent calendar month; and
(ii) the Tranche Rate of which is determined by
reference to the Base Rate, each period commencing on the date a
portion of the Bank Net Investment is allocated to such Tranche
pursuant to Section 2.06 hereof and ending on the last Business Day
on which any portion of the Bank Net Investment is allocated to such
Tranche,
and after the Bank Expiration Date, a period of one day (unless the
Administrative Agent, in any case other than the occurrence of the Bank
Expiration Date due to a Termination Event described in Section 7.01(j) hereof,
after consultation with each Bank Purchaser, agrees at such time to a longer
period); and
(b) to which a portion of the DFC Net Investment has
been allocated, prior to the DFC Expiration Date, a period of up to 90 days
requested by the Seller and determined by the Administrative Agent in
consultation with the relevant DFC Purchaser(s) commencing on the Business Day
requested by the Seller, and, after the DFC Expiration Date, a period of one
day (unless the Administrative Agent, in any case other than the occurrence of
the DFC Expiration Date due to a Termination Event described in Section
7.01(h), (i), (j) or (k) hereof, after consultation with the relevant DFC
Purchaser(s), agrees at such time to a longer period). If such Tranche Period
would end on a day which is not a Business Day, such Tranche Period shall end
on the next succeeding Business Day (provided, that for any Tranche funded by
reference to the Eurodollar Rate (as defined in the Asset Purchase Agreement),
if the next succeeding Business Day is in the next calendar month, such Tranche
Period shall end on the next preceding Business Day).
"Tranche Rate" shall mean, for any Tranche Period for any
Tranche:
DC1-1121.9 28
<PAGE> 34
(a) to which a portion of the Bank Net Investment has
been allocated, (i) the Eurodollar Rate or (ii) the Base Rate, as the case may
be; provided, however, that for any Tranche Period commencing on or after the
Bank Expiration Date which occurred for the reason set forth in clause (ii) of
the definition of such term, the Administrative Agent, after consultation with
each Bank Purchaser, may declare the "Tranche Rate" for any Tranche Period to
be equal to the Base Rate plus 1%; and
(b) to which a portion of the DFC Net Investment has
been allocated, a rate per annum (expressed as a percentage and an interest
yield equivalent and calculated on the basis of a 360-day year and the actual
days elapsed) equal to the rate of interest (or if more than one rate, the
weighted average of the rates) at which funds are borrowed, drawn down or
otherwise obtained during such Tranche Period, in connection with the issuance
of Commercial Paper, the provision of loans under the APA Credit Agreement, the
sale of Receivables by DFC pursuant to the Asset Purchase Agreement, the
assignment of DFC's purchase obligation hereunder pursuant to the Asset
Purchase Agreement, drawing under the Program Letter of Credit or otherwise, by
a DFC Purchaser for the purpose of making or maintaining its investment in such
Tranche, excluding from the computation of such rates any dealer's discount or
fees and excluding any and all other fees directly attributable to such
funding. In the case of the issuance of Commercial Paper, such rate of
interest shall equal the rate of interest (computed as described in the
preceding sentence) of Commercial Paper issued by DFC. In the case of
borrowings under the APA Credit Agreement or drawings under the Program Letter
of Credit, such rate of interest, at the option of DFC, may be determined by
the weighted average of such interest rates as applicable to all sellers of
receivables to DFC. In the case of a purchase of a DFC Percentage Interest by,
or the assignment of DFC's purchase obligation to, any APA Purchasers as
contemplated by the Asset Purchase Agreement, such rate shall be equal to the
weighted average of the Rates (as defined in the Asset Purchase Agreement)
payable under the Asset Purchase Agreement to the respective APA Purchasers.
At all times on and after the DFC Expiration Date occurring for the reason set
forth in clause (v) of the definition of such term (other than due to a
Termination Event described in Section 7.01(m) hereof), the Administrative
Agent, after consultation with each DFC Purchaser, may declare the "Tranche
Rate" for any Tranche Period to be equal to the Base Rate plus 1% per annum.
"Tranche Selection Notice" shall have the meaning
ascribed to such term in Section 2.06(b) hereof.
"Transaction Costs" shall have the meaning ascribed to
such term in Section 9.01 hereof.
"UCC" shall mean, with respect to any jurisdiction, the
Uniform Commercial Code, or any successor statute, or any comparable law, as
the same may from time to time be amended,
DC1-1121.9 29
<PAGE> 35
supplemented or otherwise modified and in effect in such jurisdiction.
"Western Digital's Fiscal Year" shall mean July 1 to June
30, which is the fiscal year of Western Digital for accounting purposes.
1.02. Interpretation and Construction. Unless the
context of this Agreement otherwise clearly requires, references to the plural
include the singular, the singular the plural and the part the whole.
References in this Agreement to "determination" by the Bank Purchasers, DFC,
the Administrative Agent or the Servicer shall be conclusive absent manifest
error and include good faith estimates by the Bank Purchasers, DFC, the
Administrative Agent or the Servicer, as the case may be (in the case of
quantitative determinations), and good faith beliefs by the Bank Purchasers,
DFC, the Administrative Agent or the Servicer, as the case may be (in the case
of qualitative determinations). The words "hereof", "herein", "hereunder" and
similar terms in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. Unless otherwise stated in this
Agreement, in the computation of a period of time from a specified date to a
later specified date, the word "from" means "from and including" and the words
"to" and "until" each means "to but excluding." The section and other headings
contained in this Agreement are for reference purposes only and shall not
control or affect the construction of this Agreement or the interpretation
hereof in any respect. Section, subsection and exhibit references are to this
Agreement unless otherwise specified. As used in this Agreement, the
masculine, feminine or neuter gender shall each be deemed to include the others
whenever the context so indicates. All accounting terms, whether or not
specifically defined herein, shall be construed in accordance with GAAP. Terms
not otherwise defined herein which are defined in the UCC as in effect in the
State of New York on the date hereof shall have the respective meanings
ascribed to such terms therein unless the context otherwise clearly requires.
1.03. Obligor Classification. In determining whether an
Obligor is a Group A Obligor or a Group B Obligor:
(a) long-term debt ratings shall be utilized in
determining the relevant Obligor classification if the weighted average
maturity of the Receivables of such Obligor is longer than 270 days; in all
other cases the short-term ratings may be utilized in determining the relevant
Obligor classification; provided, however, if there is only one type of rating
in effect for an Obligor, such rating shall be utilized in determining the
relevant Obligor classification notwithstanding the average maturity of the
Receivables of such Obligor;
(b) any debt rating of an Obligor which is based upon
credit enhancement provided by a third party or based upon collateral shall be
disregarded; and
DC1-1121.9 30
<PAGE> 36
(c) if more than one rating agency provides a rating of
any type of the Obligor's debt, the lowest rating for such type of debt shall
be utilized.
ARTICLE II
PURCHASES AND SETTLEMENTS
2.01. General Assignment and Conveyance. At the time of
each Incremental Purchase pursuant to Sections 2.02 and 2.03 hereof and each
reinvestment Purchase pursuant to Section 2.05 hereof, the Seller hereby
bargains, grants, assigns, transfers and conveys to the Administrative Agent,
for the benefit of the applicable Investor or Investors, and the applicable
Investor or Investors hereby causes the Administrative Agent, on behalf of such
Investor or Investors, to purchase and accept assignment and transfer from the
Seller of, all of the Seller's right, title and interest in and to the
Purchased Interest in the Receivables then existing as well as in any
additional Receivables thereafter arising. At the time of each recalculation
pursuant hereto of the Investors' Aggregate Percentage Interest, each Investor,
ratably in accordance with the percentage of the Purchased Interest owned by
the Administrative Agent, for the benefit of such Investor, hereby causes the
Administrative Agent, on behalf of such Investor, to reassign, retransfer and
reconvey to the Seller an undivided percentage ownership interest in each
Receivable, together with Related Security and Collections, equal to any
reduction of the Investors' Aggregate Percentage Interest effected by such
recalculation, in relation to the Investors' Aggregate Percentage Interest in
effect immediately prior to such recalculation.
2.02. Purchase Limits. Subject to the terms and
conditions hereof, the Seller may at any time and from time to time at its
option sell to the Administrative Agent, on behalf of the applicable Investor
or Investors, and the applicable Investor or Investors causes the
Administrative Agent, on behalf of such Investor or Investors, to purchase from
the Seller, undivided percentage ownership interests in each and every
Receivable (including any additional Receivables thereafter arising), together
with the Related Security and Collections with respect thereto (each an
"Incremental Purchase"). The Investors shall have no obligation to make an
Incremental Purchase on any day, to the extent that the amount of such purchase
shall cause the Investment Percentage (after giving effect to such purchase and
any purchase on such day by any other Investor or Investors) to exceed 100%.
Neither Investor Group shall be obligated to increase such Investor Group's
Maximum Net Investment. An Investor Group shall have no obligation to make an
Incremental Purchase on any day, to the extent that the amount of such purchase
shall exceed such Investor Group's Purchase Availability Amount and no Bank
Purchaser shall be obligated to make an Incremental Purchase on any day to the
extent that such Bank
DC1-1121.9 31
<PAGE> 37
Purchaser's Pro Rata Share of such Incremental Purchase plus the Investor Net
Investment for such Bank Purchaser shall exceed such Bank Purchaser's Purchase
Commitment. No Investor Group shall have an obligation to make any Incremental
Purchase at or after the reduction of such Investor Group's Maximum Net
Investment to zero pursuant to Section 2.11(a) hereof. The Bank Purchasers
shall have no obligation to make an Incremental Purchase if the Bank Expiration
Date has occurred, and the DFC Purchasers shall have no obligation to make an
Incremental Purchase if the DFC Expiration Date has occurred. The Purchase
Price for each Incremental Purchase shall be in an amount of $5,000,000 or any
higher multiple of $1,000,000.
Without prejudice to any of the provisions hereof, the
obligations of each of the Investors set forth in this Section 2.02 shall be
several obligations of each such Investor and not the joint obligation of the
Investors collectively.
2.03. Purchase Price. The Seller shall provide the
Administrative Agent with a notice in substantially the form of Exhibit C
hereto (a "Purchase Notice") (including the initial Incremental Purchase),
which notice shall indicate whether the Seller requests the Bank Purchasers,
the DFC Purchasers or each Investor Group to make an Incremental Purchase.
Such Purchase Notice shall be delivered by the Seller to the Administrative
Agent at least five Business Days before each Incremental Purchase requested to
be made by the DFC Purchasers and at least three Business Days before each
Incremental Purchase requested to be made by the Bank Purchasers, and in the
case of a request for an Incremental Purchase by Bank Purchasers, the
Administrative Agent shall promptly provide each Bank Purchaser with a copy of
such Purchase Notice. On the closing date for each Incremental Purchase, the
applicable Investor or Investors shall make available to the Administrative
Agent its share of the Purchase Price applicable to such Incremental Purchase
and the Administrative Agent, on behalf of such Investor or Investors, shall
deposit to the Seller's account at the location indicated on the signature page
hereof, in immediately available funds, an amount equal to the Purchase Price
for such Incremental Purchase, or such lesser amount as actually received by
the Administrative Agent from the applicable Investor or Investors. The
Purchase Price of the initial Incremental Purchase shall equal the initial
Aggregate Net Investment. Each Purchase Notice shall be irrevocable and
binding on the Seller and the Seller shall indemnify the applicable Investor or
Investors against any loss or expense incurred by the applicable Investor or
Investors, either directly or indirectly including, in the case of DFC, losses
and expenses incurred through the APA Credit Agreement as a result of any
failure by the Seller to complete such Incremental Purchase including, without
limitation, any loss (including loss of anticipated profits) or expense
incurred by the applicable Investor or Investors, either directly or indirectly
including, in the case of DFC, losses and expenses incurred through the APA
Credit Agreement by reason of the
DC1-1121.9 32
<PAGE> 38
liquidation or reemployment of funds acquired by the applicable Investor or
Investors (including, without limitation, funds obtained by issuing commercial
paper (in the case of DFC) or promissory notes or obtaining deposits as loans
from third parties) for the applicable Investor or Investors to fund such
Incremental Purchase. The applicable Investor or Investors shall notify the
Seller in writing of the amount determined by the applicable Investor or
Investors to be necessary to compensate such Investor or Investors for such
loss or expense showing in reasonable detail the amounts allocated and the
calculations therefor. Such amount shall be due and payable by or on behalf of
the Seller to the Administrative Agent for distribution to the applicable
Investor or Investors ten Business Days after such notice is given.
2.04. Deferred Purchase Price. The Seller acknowledges
that, at the time of each Incremental Purchase pursuant to Sections 2.02 and
2.03 and each reinvestment Purchase pursuant to Section 2.05, the Investors are
receiving a percentage ownership interest in the Receivables on account of the
Deferred Purchase Price, which is not paid in cash to the Seller at the time of
such Purchase. The Seller shall calculate the Investor Deferred Purchase Price
for each Investor as of the closing date for each Incremental Purchase and as
of the date of each Monthly Report and at such other times as the
Administrative Agent shall reasonably request in writing.
2.05. Reinvestment Purchases. On each Business Day
occurring after the initial Incremental Purchase hereunder and prior to the
Bank Expiration Date, in the case of the Bank Purchasers, and the DFC
Expiration Date, in the case of the DFC Purchasers, the Seller hereby bargains,
grants, sells, assigns, transfers and conveys to the Administrative Agent, for
the benefit of the applicable Investor or Investors, and subject to Section
3.03 hereof, such Investor or Investors hereby cause the Administrative Agent,
on behalf of such Investor or Investors, to purchase from the Seller additional
undivided percentage ownership interests in each and every Receivable
(including any additional Receivables thereafter arising), together with
Related Security and Collections with respect thereto, to the extent that
Collections are available for such Purchase in accordance with Section 2.08(a)
hereof, such that after giving effect to such Purchase, (i) the amount of the
Investor Net Investment for such Investor or Investors at the close of such
Investor's or Investors' business on such Business Day shall be equal to the
amount of the Investor Net Investment for such Investor or Investors at the
close of such Investor's or Investors' business on the Business Day immediately
preceding such Business Day, plus the Purchase Price paid by such Investor or
Investors with respect to any Incremental Purchase made on such day, if any,
minus the reduction in such Investor's or Investors' Investor Net Investment
pursuant to Section 2.08(b) or 2.11(b) hereof made on such day, if any, and
(ii) such Investor's or Investors' Investor Percentage Interest in the
Purchased Interest in each Receivable,
DC1-1121.9 33
<PAGE> 39
together with Related Security and Collections with respect thereto, shall be
equal to its Investor Percentage Interest in the Purchased Interest in each
other Receivable, together with Related Security and Collections with respect
thereto.
2.06. Funding of the Aggregate Net Investment.
(a) Bank Purchasers.
(i) At all times hereafter, but prior to the occurrence
of the Bank Expiration Date, the Seller shall, subject to the
limitations described below, request Tranche Periods and allocate a
portion of the Bank Net Investment to the related Tranche, so that
the aggregate amount of all such Tranches shall at all times equal
the Bank Net Investment; provided that the Bank Net Investment may be
allocated to no more than five (5) Tranches at any one time. The
Tranche Period corresponds to the funding term for each such Tranche
and the Seller shall not request a Tranche Period whose final day
would be a day on or after the Bank Expiration Date. The amount of
each Tranche selected by the Seller shall be in an amount of
$5,000,000 (or $100,000 in the case of a Tranche having interest
calculated at the Base Rate) or any integral multiple of $1,000,000
(except in the case of a Tranche having interest calculated at the
Base Rate) in excess thereof; notwithstanding the foregoing, no
minimums shall apply to Tranches with Tranche Periods commencing
after the Bank Expiration Date. The Seller shall give the
Administrative Agent a notice of each new requested Tranche Period
for any Tranche (each such notice shall be irrevocable, shall be in
the form of Exhibit D hereto and shall be referred to as a "Tranche
Selection Notice") in accordance with the provisions of clause (ii)
below; provided, however, that (x) if the Seller fails to provide
such a notice on a timely basis, the Tranche Rate shall be the Base
Rate or (y) if the Administrative Agent determines, after
consultation with the Bank Purchasers, that the Tranche Rate or
Tranche Period requested by the Seller is unavailable pursuant to
Section 2.16 or 2.17 hereof, the Tranche Rate shall be the Base Rate
and the related Tranche Period shall be the period prescribed for
Base Rate Tranche Periods.
(ii) Tranche Selection Notices delivered by the Seller
to the Administrative Agent in respect of the Bank Net Investment
shall be considered provided on a timely basis for purposes of
2.06(a)(i) hereof only if received by the Administrative Agent not
later than 1:00 p.m. (New York City time) on the day that is the
number of days prior to (or on) the first date of the requested
Tranche Periods set forth below:
DC1-1121.9 34
<PAGE> 40
<TABLE>
<CAPTION>
Notice Number of Days Prior
- - ------ --------------------
<S> <C>
Tranche Periods with an 3 Eurodollar Business Days
Eurodollar Rate
Tranche Rate
Tranche Periods with a First day of the
Base Rate Tranche Rate requested Tranche Period
</TABLE>
In the case of any Tranche Period ending after the Bank
Expiration Date, such Tranche Period shall end on the Bank Expiration Date and
thereafter all such Tranche Periods shall be a period of one day (unless the
Administrative Agent, after consultation with each Bank Purchaser, agrees at
such time to a longer period).
(iii) At all times on and after the Bank Expiration Date
occurring for the reason set forth in clause (ii) of the definition
of such term, the Administrative Agent, after consultation with each
Bank Purchaser, may declare the Tranche Rates applicable to the Bank
Net Investment to be equal to the Base Rate plus 1%.
(b) DFC Purchasers.
(i) At all times hereafter, but prior to the DFC
Expiration Date, DFC shall utilize its best efforts to issue
Commercial Paper prior to selling any interest in DFC's Investor
Percentage Interest in the Purchased Interest to APA Purchasers under
the Asset Purchase Agreement or obtaining a loan under the APA Credit
Agreement to fund the DFC Net Investment; provided, however, that,
except as set forth in this subsection (i), nothing herein shall
require DFC to issue Commercial Paper or limit the rights of DFC to
sell any interest in DFC's Investor Percentage Interest in the
Purchased Interest to APA Purchasers under the Asset Purchase
Agreement or obtain a drawing under the Program Letter of Credit or
to obtain a loan under the APA Credit Agreement to fund the DFC Net
Investment; provided, further, if any portion of the Purchased
Interest has been purchased by an APA Purchaser, such portion of the
Purchased Interest shall be funded using the Rates (as defined in the
Asset Purchase Agreement) for such APA Purchaser set forth in the
Asset Purchase Agreement. If DFC, in its sole discretion, determines
that it is not practicable or possible to issue Commercial Paper to
fund any purchase of Receivables DFC shall so notify the
Administrative Agent. The Administrative Agent shall promptly notify
the Agent under the Asset Purchase Agreement that DFC will be unable
to fund the purchases of Receivables, and, pursuant to the terms of
the Asset Purchase Agreement, the Agent will notify each APA
Purchaser that it is required to accept an assignment of its
DC1-1121.9 35
<PAGE> 41
requisite percentage of DFC's obligation to purchase the Purchased
Interest in Receivables.
(ii) At all times hereafter, but prior to the occurrence
of the DFC Expiration Date, the Seller shall, subject to the approval
of DFC and/or each APA Purchaser, as applicable, and the limitations
described below, request Tranche Periods and allocate a portion of
the DFC Net Investment to each selected Tranche Period, so that the
aggregate amount of all such Tranches shall at all times equal the
DFC Net Investment. The Tranche Period corresponds to the funding
term for each such Tranche and the Seller shall not request a Tranche
Period whose final day would be a day on or after the third Business
Day prior to the DFC Expiration Date. The Seller shall give the
Administrative Agent notice of a requested initial Tranche Period or
Periods for each Incremental Purchase to be made by the DFC
Purchasers at least three Business Days prior to each such
Incremental Purchase and a Tranche Selection Notice for each new
requested Tranche Period for any Tranche at least three Business Days
prior to the expiration of any then existing Tranche Period for such
Tranche (each such notice shall be irrevocable); provided, however,
that DFC and, if applicable, the Majority Purchasers (as defined in
the Asset Purchase Agreement), may select, after consultation with
the Seller, any such Tranche Period if (x) the Seller fails to
provide such notice on a timely basis or (y) DFC and, if applicable,
each APA Purchaser determines, in its sole discretion, that the
Tranche Period requested by the Seller is unavailable; and provided,
further, that if the Tranche Rate for any Tranche is to be determined
by any APA Purchaser based on the Eurodollar Rate, such Tranche shall
not commence until three Eurodollar Business Days after the APA
Purchasers' receipt of notice of such requested Rate. If DFC has
determined, in its sole discretion, to sell undivided ownership
interests in the portion of the DFC Percentage Interest allocated to
such Tranche to the APA Purchasers under the Asset Purchase Agreement
or to fund such portion of the DFC Investment by a loan under the APA
Credit Agreement, or if DFC has determined that it is not possible or
practicable to sell Commercial Paper to fund any purchase of
Receivables, DFC shall so notify the Administrative Agent which it
shall in turn notify the Agent under the Asset Purchase Agreement or
the APA Credit Agreement and take such other actions as are necessary
to effect Seller's request for a Tranche and Tranche Period to be
funded under either such Agreement. In the case of any Tranche
Period ending after the DFC Expiration Date, such Tranche Period
shall end on the DFC Expiration Date and thereafter, all such Tranche
Periods shall be a period of one day (unless the Administrative
Agent, in any case other than the occurrence of the DFC Expiration
Date due to a Termination Event described in Section 7.01(g), (h),
(i) or (j) hereof, after consultation
DC1-1121.9 36
<PAGE> 42
with each DFC Purchaser, agrees at such time to a longer period).
(iii) At all times on and after the DFC Expiration Date
occurring for the reason set forth in clause (iii) of the definition
of such term (other than due to a Termination Event described in
Section 7.01(m) hereof), the Administrative Agent, after consultation
with each DFC Purchaser, may declare the Tranche Rates applicable to
the DFC Net Investment to be equal to the Base Rate plus 1%.
2.07. Discount. The Administrative Agent will provide
the Seller and the Servicer with a report in substantially the form of Exhibit
E hereto showing the Discount attributable to each Tranche for its then current
Tranche Period prior to the third Business Day of each month and otherwise upon
the reasonable request of the Seller or the Servicer and setting forth the Rate
Variance Factor then in effect. The Tranche Rate, the Program Fee, if
applicable to such Tranche, and any other applicable fees, if any, with respect
to each Tranche payable to the Investors or the Administrative Agent shall
accrue on each day occurring during the Tranche Period related thereto and, to
the extent not paid by the Servicer pursuant to Section 2.08(a), the related
Discount shall be payable by or on behalf of the Seller on the last day of the
applicable Tranche Period. If any amount hereunder shall be payable on a day
which is not a Business Day, such amount shall be payable on the next
succeeding Business Day (unless the amount is payable in respect of a Tranche
the Tranche Rate of which is determined by reference to the Eurodollar Rate (as
defined herein) or the Eurodollar Rate (as defined in the Asset Purchase
Agreement) and the next succeeding Business Day is in the next calendar month,
in which event the amount shall be payable on the next preceding Business Day).
Discount payable hereunder shall be calculated for the actual days elapsed on
the basis of a 360-day year for all Tranche Periods other than Tranche Periods
with a Tranche Rate calculated by reference to the Base Rate and on the basis
of a 365 or 366-day year, as the case may be, for the Tranche Periods with a
Tranche Rate calculated by reference to the Base Rate. Nothing in this
Agreement shall limit in any way the obligations of the Seller to pay the
amounts set forth in this Section 2.07. The Administrative Agent shall pay to
each Investor such Investor's ratable share of all Discount received from the
Seller or the Servicer for each Tranche Period related to such Investor's
Investor Net Investment in accordance with such Investor's ratable share of the
Aggregate Net Investment allocated to the related Tranche.
2.08. Non-Liquidation Settlements and Other Payment
Procedures.
(a) On each day after the day of any Incremental
Purchase but prior to the Bank Expiration Date or the DFC Expiration Date, as
applicable, the Servicer shall allocate to
DC1-1121.9 37
<PAGE> 43
each Investor an amount of Collections equal to the product of (i) such
Investor's Investor Percentage Interest, expressed as a decimal and (ii)
Collections, if any, received on or prior to such day and not previously
applied or accounted for; provided, however, that the amount allocated to each
Investor on any day, together with all amounts previously allocated to such
Investor and not reinvested, shall not exceed the sum of (i) such Investor's
Investor Net Investment, plus (ii) accrued and unpaid Discount with respect to
such Investor's Investor Net Investment, plus (iii) all other Aggregate Unpaids
with respect to such Investor. The Servicer shall deposit in the Servicing
Account for the benefit of each Investor out of such amount in respect of such
Investor's Investor Net Investment an amount equal to all Discount accrued
through such day and not previously so deposited or paid. The remainder of
such amount (the "Remainder") in respect of such Investor's Investor Net
Investment shall, subject to the terms and conditions of this Agreement, be
utilized by the Servicer to make for the benefit of such Investor a
reinvestment Purchase of additional undivided percentage interests in each
Receivable pursuant to Section 2.05 hereof. On the last day of each Tranche
Period in respect of which a portion of an Investor's Investor Net Investment
has been allocated, from the amounts on deposit in the Servicing Account, the
Servicer shall transfer from the Servicing Account to the Administrative
Agent's account, for distribution to the applicable DFC Purchasers in
accordance with the provisions hereof or the Asset Purchase Agreement or to
Bank Purchasers in accordance with their Pro Rata Shares, as the case may be,
an amount equal to the accrued and unpaid Discount for such Tranche Period.
(b) If and for so long as any of the Remainder cannot be
reinvested in additional undivided percentage interests in Receivables pursuant
to Sections 2.05 and 2.08(a) hereof, the Servicer shall deposit in the
Servicing Account for the applicable Investor or Investors such Collections and
shall remit to the Administrative Agent, for distribution to the applicable
Investor or Investors, any such Collections not reinvested and not required to
pay Discount pursuant to Section 2.08(a) hereof on the next date on which
Discount is payable or on such other date as specified by the Administrative
Agent, the Majority Investors or the Seller. The receipt of such payment by
the Administrative Agent shall result in a reduction of the applicable
Investor's or Investors' Investor Net Investment and in the Aggregate Net
Investment.
(c) If, on any day, the Outstanding Balance of a
Receivable is (w) reduced or cancelled as a result of any defective or rejected
goods or services, any cash discount or any adjustment by the Servicer in
accordance with the Credit and Collection Policy, or (x) reduced or cancelled
as a result of a set-off in respect of any claim by any Person (whether such
claim arises out of the same or a related transaction or an unrelated
transaction), or (y) reduced or cancelled as a result of any forgiveness of the
obligation or of any adjustment by the
DC1-1121.9 38
<PAGE> 44
Servicer in accordance with the Credit and Collection Policy, or (z) otherwise
reduced or cancelled as a result of any Dilution Factor with respect to such
Receivable, the Seller shall be deemed to have received on such day a
Collection of such Receivable in the amount of such reduction or cancellation.
If on any day any of the representations or warranties in Section 5.02 hereof
was not true when made (that is, on the date an interest in such Receivable was
first sold by the Seller to any Investors pursuant to this Agreement) with
respect to a Receivable, the Seller shall be obligated to repurchase the
Investors' interest in such Receivable by paying to the Servicer an amount
equal to the Outstanding Balance thereof.
(d) The Seller has the option, to be exercised in its
sole and absolute discretion, to repurchase the Investors' interest in any
Receivable on and after the date on which such Receivable ceases to be an
Eligible Receivable, by delivering to the Servicer a repurchase amount equal to
the Outstanding Balance of such Receivable.
(e) Any Collections deemed to be received by the Seller
pursuant to Section 2.08(c) or 2.08(d) hereof shall be paid by the Seller to
the Servicer on the next date on which Discount is payable or on such other day
as specified by the Administrative Agent, and the Servicer shall hold or
distribute all Collections deemed received pursuant to Section 2.08(c) or
2.08(d) hereof to the same extent as if such Collections had actually been
received. So long as the Servicer shall hold any Collections or any deemed
Collections required to be paid to an Investor, it shall hold such Collections
in the Servicing Account in trust for such Investor.
(f) For purposes of this Section 2.08, the repurchase
amount payable by the Seller pursuant to subsection (c) or (d) hereof with
respect to any Receivable shall be deemed to be a Collection deemed received
with respect to such Receivable.
(g) On each day after the day of the initial Incremental
Purchase hereunder, the Servicer shall allocate and distribute to the Seller an
amount of Collections equal to the difference between (i) the aggregate amount
of Collections, if any, received on or prior to such day and not previously
allocated to the Investors or the Seller minus (ii) the amount of such
Collections allocated to the Investors on such day pursuant to the first
sentence of Section 2.08(a).
2.09. Liquidation Settlement Procedures. On the Bank
Expiration Date with respect to the Bank Purchasers, and on the DFC Expiration
Date with respect to the DFC Purchasers and on each day thereafter, the
Servicer shall deposit in the Servicing Account for the applicable Investors,
an amount equal to the product of (i) the Bank Percentage Interest and/or the
DFC Percentage Interest, as the case may be, expressed as a decimal and (ii)
Collections, if any, received on such day; provided,
DC1-1121.9 39
<PAGE> 45
however, that the amount allocated to the Bank Purchasers or the DFC
Purchasers, as applicable, on the Bank Expiration Date or the DFC Expiration
Date, as the case may be, together with all amounts previously allocated to the
applicable Purchasers, shall not exceed the sum of (i) the Bank Net Investment
or the DFC Net Investment, as applicable, (ii) accrued and unpaid Discount with
respect to such Bank Net Investment or DFC Net Investment, as applicable, plus
(iii) all other Aggregate Unpaids with respect to the applicable Purchasers.
On the last day of the Tranche Period for each Tranche (i) related to the Bank
Purchasers to occur on or after the Bank Expiration Date and (ii) related to
the DFC Purchasers to occur on or after the DFC Expiration Date, as the case
may be, the Servicer shall deposit into the Administrative Agent's account for
distribution to (x) the Bank Purchasers in accordance with each such Bank
Purchaser's Pro Rata Share, in the case of the occurrence of the Bank
Expiration Date and (y) the DFC Purchasers in accordance with the provisions
hereof and the Asset Purchase Agreement, in the case of the occurrence of the
DFC Expiration Date, the amounts set aside pursuant to the preceding sentence,
but not in excess of the Bank Net Investment or DFC Net Investment, as the case
may be, together with the aggregate amount of accrued and unpaid Discount and
all other Aggregate Unpaids. If there shall be insufficient funds on deposit
for the Administrative Agent to distribute funds in payment in full of the
aforementioned amounts to an Investor, the Administrative Agent shall
distribute funds first, in payment of all fees and expenses payable to such
Investor, second, in payment of the Discount due, third, in reduction of such
Investor's percentage of the Aggregate Net Investment allocated to such Tranche
Period, and fourth, in payment of all other Aggregate Unpaids (whether due or
accrued). Following the date on which the Aggregate Net Investment has been
reduced to zero and all Discount due and all other Aggregate Unpaids have been
paid in full, (i) the Deferred Purchase Price shall be deemed to have been paid
in full, (ii) the Investors' Aggregate Percentage Interest shall be deemed to
be zero, (iii) the Investors shall be deemed to have reconveyed, and hereby do
reconvey, to the Seller any remaining interest in the Receivables (including
the Purchased Interest), (iv) the Servicer shall pay to the Seller any
remaining Collections held in the Servicing Account pursuant to the first
sentence of this Section 2.09 and (v) the Administrative Agent and the
Investors, if necessary, shall execute and deliver to the Seller, at Seller's
expense, such documents or instruments as are reasonably necessary to terminate
the Investors' interest in the Receivables.
2.10. Fees. Notwithstanding any limitation on recourse
contained in this Agreement, the Seller shall pay, or cause to be paid, the
non-refundable fees set forth in each Rate Supplement.
Any of the fees described in the Bank Rate Supplement
which are accrued but unpaid on the Bank Expiration Date shall be paid in full
by or on behalf of the Seller on the Bank Expiration
DC1-1121.9 40
<PAGE> 46
Date. Any of the fees described in the DFC Rate Supplement which are accrued
but unpaid on the DFC Expiration Date shall be paid in full by or on behalf of
the Seller on the DFC Expiration Date.
2.11. Optional Reduction of an Investor Group's Maximum
Net Investment; Optional Reduction of the Bank or DFC Net Investment;
Repurchase by Seller.
(a) The Seller may reduce in whole or in part the
Maximum Net Investment of an Investor Group (but not below the Bank Net
Investment or the DFC Net Investment, as the case may be, existing at the time
of such reduction), by giving the Administrative Agent written notice thereof
at least five Business Days before such reduction is to take place; provided,
however, that any partial reduction shall be in an amount of $5,000,000 or any
higher multiple of $l,000,000. The Seller shall pay, or cause to be paid, to
the Administrative Agent for distribution to the applicable Investor or
Investors any accrued and unpaid Purchase Availability Fee on the date of such
reduction with respect to the reduction amount.
(b) The Seller may, subject to the terms of this subpart
(b), reduce the Bank Net Investment or the DFC Net Investment, in whole or in
part, that is allocated to any Tranche (other than a Base Rate Tranche) on the
last day of the related Tranche Period by giving the Administrative Agent at
least five Business Days' written notice. The Seller may reduce the Bank Net
Investment or the DFC Net Investment, in whole or in part, that is allocated to
a Base Rate Tranche on any Business Day, by giving the Administrative Agent
written notice on such Business Day. If the Seller delivers such a notice of
reduction, the Seller shall pay to the Administrative Agent for distribution to
(x) the Bank Purchasers in accordance with each such Bank Purchaser's Pro Rata
Share (or cause the Servicer to pay to the Administrative Agent), in the case
of a reduction in the Bank Net Investment, or (y) the DFC Purchasers in
accordance with the Asset Purchase Agreement (or cause the Servicer to pay to
the Administrative Agent), in the case of a reduction in the DFC Net
Investment, on the last day of such Tranche Period an amount equal to (i) the
amount of the proposed reduction, (ii) any Discount otherwise payable on such
date and (iii) if such reduction reduces the Bank Net Investment or the DFC Net
Investment, as the case may be, to zero, all other Aggregate Unpaids related to
such Investor Group; provided, however, that any partial reduction shall be in
an amount of $5,000,000 or any higher multiple of $l,000,000. Such reduction
shall become effective upon payment of the amounts in the preceding clauses
(i), (ii) and, if applicable, (iii).
(c) Before any reduction of the Maximum Net Investment
of any Investor Group, the Bank Net Investment or the DFC Net Investment shall
become effective pursuant to subpart (a) or (b) above, the Administrative Agent
shall give written notice thereof to S&P and Moody's.
DC1-1121.9 41
<PAGE> 47
2.12. Mandatory Repurchase; Ratings of APA Purchasers
Under Certain Circumstances; Mandatory Reduction in DFC Purchasers' Maximum Net
Investment; Ratings of APA Purchasers.
(a) The Seller agrees to repurchase from each Investor
the percentage of the Purchased Interest owned by such Investor in all
Receivables if at any time the Administrative Agent shall cease to have a
perfected ownership interest, or a first priority perfected security interest,
in the Receivables, free and clear of any Lien (except for Liens created by any
Investor and as provided herein), within five days of notice thereof by the
Administrative Agent. The repurchase price shall be paid by or on behalf of
the Seller to the Administrative Agent for distribution to the Investors on
such fifth day in an amount equal to the Aggregate Unpaids.
(b) If an APA Purchaser's Purchase Commitment (as
defined in the Asset Purchase Agreement) terminates and a DFC Expiration Date
does not occur pursuant to clause (ii)(C) of the definition thereof, the DFC
Purchasers' Maximum Net Investment shall be automatically reduced by the amount
of such Purchaser's Purchase Commitment. If, following such reduction of the
DFC Purchasers' Maximum Net Investment, the DFC Net Investment is greater than
the DFC Purchasers' Maximum Net Investment, the Seller agrees to repurchase
from the DFC Purchasers a portion of the DFC Net Investment equal to not less
than the excess of the DFC Net Investment over the DFC Purchasers' Maximum Net
Investment. The repurchase price shall be paid by or on behalf of the Seller
to the Administrative Agent for distribution to the DFC Purchasers on the date
of the termination of the APA Purchaser's Purchase Commitment.
(c) For so long as the Asset Purchase Agreement is in
effect and a DFC Termination Date has not occurred, DFC shall use its best
efforts to have APA Purchasers, each of which has short-term debt rated at
least "P-1" by Moody's and "A-1+" by S&P, with an aggregate Purchase Commitment
(as defined in the Asset Purchase Agreement) of $25,000,000.
2.13. Payments and Computations Etc.: Allocation of
Collections.
(a) All per annum fees payable under this Agreement
shall be calculated for the actual days elapsed on the basis of a 360-day year.
All amounts to be paid or deposited by or on behalf of the Seller or the
Servicer hereunder shall be paid or deposited in accordance with the terms
hereof no later than 12:00 p.m. (New York City time) on the day when due in
immediately available funds; if such amounts are payable to an Investor or the
Investors they shall be paid or deposited in the Administrative Agent's account
indicated on the signature page hereof, until otherwise notified by such
Investor or Investors. The Seller shall, to the extent permitted by Law, pay
to the Administrative Agent for the account of each Investor upon
DC1-1121.9 42
<PAGE> 48
demand, interest on all amounts not paid or deposited when due to the
Administrative Agent for the account of each Investor hereunder at a rate equal
to 2% per annum plus the Base Rate. All computations of interest hereunder
shall be made on the basis of a year of 360 days for the actual number of days
(including the first but excluding the last day) elapsed other than
computations of interest calculated by reference to the Base Rate which shall
be calculated on the basis of a 365- or 366-day year. Any computations of
amounts payable by the Seller hereunder made by DFC, the Administrative Agent,
the APA Agent, the Bank Purchasers or the Program LOC Bank shall be binding
absent manifest error.
(b) Any payment by an Obligor in respect of any
indebtedness owed by it to the Seller shall, except as otherwise specified by
such Obligor or otherwise required by Contract or Law and unless otherwise
instructed by the Administrative Agent, be applied as a Collection of any
Receivable of such Obligor included in the Purchased Interest (starting with
the oldest such Receivable) to the extent of any amounts then due and payable
thereunder before being applied to any other receivable or other indebtedness
of such Obligor to the Seller. Notwithstanding the provisions of this Section
2.13(b), upon deposit in the Servicing Account of any payment of an Obligor
without direction as to its application, the Servicer shall seek such direction
in accordance with the Credit and Collection Policy.
2.14. Reports.
(a) No later than the close of business on the sixth
Business Day of each month, the Servicer shall prepare and forward to the
Administrative Agent (i) a monthly report, substantially in the form of Exhibit
G (a "Monthly Report"), as of the close of business of the Servicer on the last
day of the immediately preceding month and (ii) if requested by the
Administrative Agent, a listing by Obligor of all Receivables together with an
aging of such Receivables and such other information concerning actual and
historical collections experience and such other matters as the Administrative
Agent may reasonably request.
(b) The Seller shall, or shall cause the Servicer to,
furnish to the Administrative Agent at any time and from time to time, such
other or further information in respect of the Receivables, the Seller, the
Servicer and the related Obligors as the Administrative Agent may reasonably
request.
2.15. Extension of DFC Expiration Date.
(a) Subject to subpart (b) of this Section 2.15 and
other provisions of this Agreement requiring earlier termination, this
Agreement shall terminate with respect to the DFC Purchasers on the date which
is 360 days from the date of this Agreement.
DC1-1121.9 43
<PAGE> 49
(b) If the Seller desires to extend the DFC Expiration
Date, then the Seller shall notify the Administrative Agent in writing at least
two months but not more than three months prior to the DFC Expiration Date of
the Seller's desire to extend the DFC Expiration Date for a period of an
additional eleven months. The Administrative Agent shall notify DFC of such
desired extension within one Business Day after receipt of such notice from the
Seller. DFC, in its sole discretion, and subject to the extension of (i) the
termination of the commitment of the Program LOC Bank under the Program Letter
of Credit Reimbursement Agreement, (ii) the commitment of the APA Lending Banks
under the APA Credit Agreement and (iii) the commitment of the APA Purchasers
under the Asset Purchase Agreement having Maximum Purchases in an aggregate
amount of not less than $25,000,000, may extend the DFC Expiration Date by
notifying the Administrative Agent at least 25 days before the DFC Expiration
Date. The Administrative Agent shall notify the Seller and the Servicer in
writing one Business Day after receipt of notice from DFC of DFC's desire to
extend the DFC Expiration Date and of the Maximum Net Investment following the
then current DFC Expiration Date. Such extension shall become effective upon
such notice to the Seller and the Servicer or, if the Maximum Net Investment
agreed to by DFC for the extension period is less than the Maximum Net
Investment requested by the Seller, upon notice by the Seller and the Servicer
to DFC and the Administrative Agent that such reduced Maximum Net Investment is
acceptable to them. Upon any such extension, the DFC Expiration Date shall be
360 days from the 30th day before the previous DFC Expiration Date, provided
that in no event shall the DFC Expiration Date be later than January 10, 1997.
The Administrative Agent shall give prompt written notice of the extension of
the DFC Expiration Date to S&P and Moody's.
2.16. Change in Circumstances-Unavailability. (a) If
with respect to any Tranche Period (x) deposits in Dollars (in the applicable
amounts) are not available to the Bank Purchasers generally in the London
interbank market for such Tranche Period or (y) the Majority Bank Purchasers
advise the Administrative Agent that the Adjusted LIBOR Rate (as defined in the
Bank Rate Supplement), as determined by the Administrative Agent, will not
adequately and fairly reflect the cost to such Bank Purchasers of maintaining
or funding Tranches based on the Eurodollar Rate, the Administrative Agent
shall forthwith give notice thereof to the Seller and the Servicer, whereupon
until the Administrative Agent notifies the Seller and the Servicer that such
circumstances no longer exist, the obligation of the Bank Purchasers to
allocate any portion of the Bank Net Investment to any Tranche based on the
Eurodollar Rate shall be suspended.
(b) The Administrative Agent shall also notify the
Seller and Servicer of a receipt of notice from the Agent under the Asset
Purchase Agreement of suspension of the Eurodollar Rate.
DC1-1121.9 44
<PAGE> 50
2.17. Change in Circumstances-Illegality. If, after the
date of this Agreement, the adoption of any applicable law, rule or regulation,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by any
Bank Purchaser with any request or directive (whether or not having the force
of law) made or issued after the date hereof by any such authority, central
bank or comparable agency shall make it unlawful or impossible for such Bank
Purchaser to allocate its Pro Rata Share of the Bank Net Investment to any
Tranche based on the Eurodollar Rate and such Bank Purchaser shall so notify
the Administrative Agent, then the Administrative Agent shall forthwith give
notice thereof to the other Bank Purchasers, the Seller and the Servicer,
whereupon until such Bank Purchaser notifies the Administrative Agent, the
Seller and the Servicer that such circumstances no longer exist, the obligation
of such Bank Purchaser to allocate its Pro Rata Share of the Bank Net
Investment to any Tranche based on the Eurodollar Rate shall be suspended. If
such Bank Purchaser shall determine that it may not lawfully continue to
allocate its Pro Rata Share of the Bank Net Investment to any outstanding
Tranche based on the Eurodollar Rate, then such Bank Purchaser's Pro Rata Share
of such Tranche shall be deemed to be a separate Tranche based on the Base
Rate.
ARTICLE III
CLOSING PROCEDURES
3.01. Purchase and Sale Procedures.
(a) General. Each Purchase hereunder shall constitute a
purchase of, and shall transfer ownership to the Administrative Agent, for the
benefit of the Investors, of, undivided percentage ownership interests in each
and every Receivable, together with Related Security and Collections with
respect thereto, then existing as well as each and every Receivable, together
with Related Security and Collections, which may arise at any time after the
date of such Purchase.
(b) Maximum Net Investment. If, on any closing date for
an Incremental Purchase, the Purchase Price to be paid by the Administrative
Agent, on behalf of the Bank Purchasers or the DFC Purchasers, as the case may
be, on such date for such Incremental Purchase would cause the Bank Net
Investment or the DFC Net Investment, as the case may be, to exceed the Maximum
Net Investment for such Investor Group, such Investor Group may, at its option,
either refuse to make such Incremental Purchase or make a smaller Incremental
Purchase such that, immediately after the payment of the smaller Purchase
Price, the Bank Net Investment or the DFC Net Investment, as the case may be,
would be equal to the respective Investor Group's Maximum Net Investment.
DC1-1121.9 45
<PAGE> 51
(c) Sale Without Recourse. The sale of the Purchased
Interest by the Seller hereunder shall be made without recourse except as
specifically provided herein.
(d) Grant of Security Interest. This Agreement also
constitutes a security agreement under the UCC. The Seller hereby grants to
the Administrative Agent (for the benefit of the Investors) a first priority
perfected security interest in and against all of the Seller's right, title and
interest in and to each and every Receivable (together with Related Security,
Collections and other Proceeds), whether now existing or hereafter arising, for
the purpose of securing the rights of the Investors under this Agreement.
(e) Non-Assumption by the Investors of Obligations. No
obligation or liability of the Seller to any Obligor or any third party under
any Receivable or Contract which is part of the Receivables in which an
Investor has a Purchased Interest shall be assumed by such Investor and any
such assumption is hereby expressly disclaimed. Each Investor and the
Administrative Agent shall be indemnified by the Seller in accordance with
Section 9.03 hereof in respect of any losses, claims, damages, liabilities,
costs or expenses arising out of or incurred in connection with any Obligor's
assertion of such obligation or liability against any Investor or the
Administrative Agent.
3.02. Conditions to Closing. On or prior to the date of
the execution of this Agreement (or at such other time specified herein), the
Seller shall deliver or cause to be delivered to the Administrative Agent the
following documents and instruments(with such additional copies thereof as the
Administrative Agent may request) and the following fees:
(a) Copies of the resolutions of the Board of Directors
of the Seller certified as of the date hereof by its corporate secretary or
assistant secretary authorizing the execution, delivery and performance of this
Agreement and the other documents to be delivered by the Seller hereunder and
approving the transactions contemplated hereby and thereby;
(b) Copies of the resolutions of the Board of Directors
of Western Digital, certified as of the date hereof by its Secretary or
assistant secretary authorizing the execution, delivery and performance of this
Agreement.
(c) The Certificate of Incorporation of each of the
Seller and Western Digital certified as of a date reasonably near the date
hereof by the Secretary of State or other similar official of each such party's
jurisdiction of incorporation which shall be in form and substance acceptable
to the Administrative Agent, and within [30] days of the Closing Date, an
amendment to the Certificate of Incorporation of the Seller providing that at
all times at least two (2) directors of the Seller shall be "Outside Directors"
(as defined therein);
DC1-1121.9 46
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(d) A good standing certificate for each of the Seller
and Western Digital issued by the Secretary of State or other similar official
of each such party's jurisdiction of incorporation, certificates of
qualification as a foreign corporation issued by the Secretaries of State or
other similar officials of each jurisdiction where such qualification is
material to the transactions contemplated by this Agreement and certificates of
the appropriate state official or lien search in each jurisdiction specified by
the Administrative Agent as to the absence of any tax Liens against each such
party under the Laws of such jurisdiction, each such certificate to be dated a
date reasonably near the date hereof which shall be in form and substance
acceptable to the Administrative Agent;
(e) A certificate of the corporate secretary or
assistant secretary of each of the Seller and Western Digital dated the date
hereof and certifying (i) the names and signatures of the officers authorized
on its behalf to execute, and the officers and other employees authorized to
perform, this Agreement and any other documents to be delivered by each such
party hereunder (on which certificate the Administrative Agent and each
Investor may conclusively rely until such time as the Administrative Agent
shall receive from the Seller or Western Digital a revised certificate meeting
the requirements of this clause (e)(i)) and (ii) copies of the By-laws of the
Seller and the Servicer;
(f) Receipt-stamped copies (with acknowledgment copies
to be delivered as promptly as possible after the Closing Date) of proper
financing statements (Form UCC-l) with respect to the Receivables dated a date
reasonably near to the date of the initial Incremental Purchase naming the
Seller as the debtor and J.P. Morgan Delaware, as Administrative Agent (for the
benefit of the Investors), as the secured party or other similar instruments or
documents as may be necessary or desirable under the UCC of all appropriate
jurisdictions to evidence or perfect the Investors' ownership interests in all
Receivables;
(g) Receipt-stamped copies (with acknowledgment copies
to be delivered as promptly as possible after the Closing Date) of proper
financing statements (Form UCC-1) naming Western Digital as the debtor and the
Seller, as the secured party, or other similar instruments or documents as may
be necessary or desirable under the UCC of all appropriate jurisdictions to
evidence the sale by Western Digital to the Seller of the Receivables under the
Receivables Contribution and Sale Agreement and to perfect the Seller's
ownership interests in the Receivables.
(h) Originals (with receipt-stamped and acknowledgment
copies to be delivered as promptly as possible after the Closing Date) of
proper termination statements (Form UCC-3), if any, necessary under the laws of
all appropriate jurisdictions to
DC1-1121.9 47
<PAGE> 53
release all security interests and other rights of any person in Receivables
previously granted by the Seller or Western Digital;
(i) Certified copies of requests for information or
copies (Form UCC-11) (or a similar search report certified by parties
acceptable to the Administrative Agent) dated a date reasonably near the date
of the initial Incremental Purchase listing all effective financing statements
which name the Seller or Western Digital (under its present name and any
previous name) as debtor and which are filed in jurisdictions in which the
filings were made pursuant to item (f) or (g) above, together with copies of
such financing statements (none of which shall cover any Receivables or
Contracts or inventory or goods the sale of which may give rise to a
Receivable, unless a termination statement has been delivered with respect
thereto pursuant to Section 3.02(h) hereof or unless the secured party having a
security interest in such inventory or goods disclaims any interest in the
Receivables as proceeds of such inventory or goods);
(j) Copies of Lockbox Servicing Instructions and all
other agreements previously given or entered into with each of the Permitted
Lockbox Banks;
(k) Undated duly executed letters (a "Lockbox Transfer
Letter") from Western Digital addressed to each Permitted Lockbox Bank
substantially in the form of Exhibit H hereto;
(l) A favorable opinion of Gibson, Dunn & Crutcher,
counsel for the Seller, Servicer and Western Digital, dated the date hereof in
substantially the form of Exhibit I hereto;
(m) The Seller shall have delivered to the
Administrative Agent a computer file containing a true and complete list of all
Receivables identified by account number and account name and by aggregate
Outstanding Balance of each Receivable;
(n) An officer's certificate of the Seller dated the
date hereof in the form of Exhibit J hereto executed by a Responsible Officer;
(o) An officer's certificate of Western Digital dated
the date hereof in the form of Exhibit P hereto executed by a Responsible
Officer;
(p) An executed copy of the Receivables Contribution and
Sale Agreement;
(q) The arrangement fees described in the Rate
Supplements;
DC1-1121.9 48
<PAGE> 54
(r) A Monthly Report for the immediately preceding month
(Part I, Schedule 3 to Part II, and Part III, Items A. through D. only);
(s) The Purchase Notice and the Tranche Selection Notice
for the initial Incremental Purchase hereunder, if any;
(t) A form of Contract or Contracts;
(u) The Rate Supplements; and
(v) Such other documents as the Investors may reasonably
request.
3.03. Conditions to Reinvestment and Incremental
Purchases. Each Investor's obligations to make any Incremental Purchase under
Sections 2.02 and 2.03 hereof and any reinvestment Purchase under Section 2.05
hereof shall be subject to satisfaction of the following conditions precedent:
(i) the truth and correctness of (A) the representations and warranties in
Section 5.01 hereof and in Section 5.01 of the Receivables Contribution and
Sale Agreement as of the date of the Incremental Purchase or reinvestment
Purchase referred to below as though made on and as of such date, and (B) the
representations and warranties in Section 5.02 of this Agreement and Section
5.02 of the Receivables Contribution and Sale Agreement, but only as to the
Receivables in which an interest is first sold by the Seller to the Investors
hereunder on such date; (ii) compliance with the covenants and agreements in
Articles II, IV and VI hereof and in Article VI of the Receivables Contribution
and Sale Agreement; (iii) the requirement that no Termination Event or
Potential Termination Event with respect to the applicable Investor Group shall
occur as a result of such Incremental Purchase or reinvestment Purchase by such
Investor Group; (iv) in the case of an Incremental Purchase, the satisfactory
completion of any due diligence conducted by the applicable Investor or
Investors with respect to the Receivables and the related Obligors and
Contracts which are the subject of such Purchase; and (v) the receipt by the
Administrative Agent of any approvals, opinions or other documents as the
Investors or the Administrative Agent shall have reasonably requested.
ARTICLE IV
PROTECTION OF THE INVESTORS;
ADMINISTRATION AND SERVICING OF RECEIVABLES; COLLECTIONS
4.01. Acceptance of Appointment and Other Matters Relating to the Servicer.
(a) Western Digital agrees to act, and is hereby
appointed by the Administrative Agent and the Seller to act, as the Servicer
under this Agreement, and all Investors consent to
DC1-1121.9 49
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Western Digital 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 Western Digital
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 4.08, the Servicer is hereby
authorized and empowered (i) to allocate, set aside and hold in trust for the
Investors, Collections as set forth in Article II and elsewhere in this
Agreement, (ii) to execute and deliver, on behalf of the Investors, 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 Investors 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) Subject to the rights retained by the Administrative
Agent pursuant to Section 4.09, each of the Seller, the Investors and the
Administrative Agent hereby appoints the Servicer to enforce its respective
rights and interests in and to the Purchased Interest in the Receivables. If
Western Digital is not the Servicer, Western Digital shall promptly deliver to
the Servicer, and the Servicer shall hold in trust for the Seller, the
Administrative Agent and the Investors, in accordance with their respective
interests, all documents, instruments and records (including computer tapes or
disks) that evidence or relate to Receivables.
(d) The Servicer shall provide all reports and
documentation required by Section 2.14.
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4.02. Maintenance of Information and Computer Records.
The Servicer will hold in trust and keep safely for the Investors all evidence
of the Administrative Agent's (for the benefit of the Investors) right, title
and interest in and to the Purchased Interest in the Receivables. The Servicer
will, on or prior to each Incremental Purchase, and with respect to all
Receivables that are added to the pool of Receivables in which the Investors
have a Purchased Interest after the initial Incremental Purchase, on each
respective date such Receivables are added, place an appropriate code or
notation in its Records, and cause the Seller to place an appropriate code or
notation in Seller's Records, to indicate that the Administrative Agent, for
the benefit of the Investors, has a Purchased Interest in each and every
Receivable in which the Administrative Agent, for the benefit of the Investors,
has an interest hereunder.
4.03. Protection of the Interests of the Investors.
(a) The Servicer will, from time to time and at the
Seller's sole expense, do and perform any and all acts and execute any and all
documents (including, without limitation, the obtaining of additional search
reports, the delivery of further opinions of counsel, the execution, amendment
or supplementation of any financing statements, continuation statements and
other instruments and documents for filing under the provisions of the UCC of
any applicable jurisdiction, the execution, amendment or supplementation of any
instrument of transfer and the making, or causing to be made, of notations on
the Records of the Seller or the Servicer) as may be reasonably requested by
the Administrative Agent in order to effect the purposes of this Agreement and
the sale of Purchased Interest hereunder, to protect or perfect the
Administrative Agent's (for the benefit of the Investors) right, title and
interest in the Purchased Interest in the Receivables, together with Related
Security and all Collections with respect thereto, against all Persons
whomsoever or to enable the Investors or the Administrative Agent to exercise
or enforce any of their respective rights hereunder.
(b) To the fullest extent permitted by applicable Law,
the Seller hereby irrevocably grants to the Servicer, the Administrative Agent
and the Referral Agent an irrevocable power of attorney, with full power of
substitution, coupled with an interest, to sign and file in the name of the
Seller, or in its own name, such financing statements and continuation
statements and amendments thereto or assignments thereof as the Administrative
Agent deems necessary to protect or perfect the Purchased Interest, provided
that the Seller shall have failed to sign and file such documents within five
(5) Business Days after request therefor (unless the Servicer, the
Administrative Agent or the Referral Agent, as the case may be, shall have
determined, in its sole discretion, that a delay of five (5) Business Days
would materially adversely affect the perfected Purchased Interest).
DC1-1121.9 51
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(c) At any reasonable time and from time to time during
normal business hours at the Administrative Agent's reasonable request upon
notice to the Seller and the Servicer, the Seller or the Servicer, as the case
may be, shall permit such Person as the Administrative Agent may designate to
conduct audits or visit and inspect any of the properties of the Seller or the
Servicer, as the case may be, to examine the Records, internal controls and
procedures maintained by the Seller or the Servicer, as the case may be, in
each case related to the Receivables or the Obligors, the Seller's or the
Servicer's ability to perform its respective obligations hereunder and take
copies and extracts therefrom, and to discuss the Seller's, or the Servicer's,
as the case may be, affairs with its designated officers and employees. Each
of the Seller and the Servicer shall use its best efforts to cause its
respective independent accountants to discuss the Seller's or the Servicer's,
as the case may be, affairs with such Person as the Administrative Agent may
designate. Each of the Seller and the Servicer, as the case may be, hereby
authorizes such officers and employees to discuss with the Administrative Agent
the affairs of the Seller or the Servicer, as the case may be. The Seller
shall, or shall cause the Servicer to, reimburse the Investors for all
reasonable fees, costs and expenses incurred by or on behalf of the Investors
in connection with the foregoing actions promptly upon receipt of a written
invoice therefor.
(d) The Administrative Agent shall have the right to do
all such acts and things as it may deem necessary to protect the interests of
the Investors, including, without limitation, the right following the
occurrence of a Potential Termination Event (but only while such Event is
continuing), to confirm and verify the existence, amount and status of the
Receivables with the Obligors thereunder.
4.04. Maintenance of Writings and Records. The Servicer
will at all times keep or cause to be kept at its Chief Executive Office, each
writing or Record which evidences, and which is necessary or desirable to
establish or protect, including such books of account and other Records as will
enable the Administrative Agent or its designee to determine at any time the
status of, the Purchased Interest of the Investors, in each Receivable. The
Servicer shall at its own expense prepare and maintain machine-readable
magnetic tapes in such format as the Servicer customarily maintains its
records; provided, however, that upon a Complete Servicing Transfer, the
Servicer shall within 15 days of such Complete Servicing Transfer prepare such
Records in such format as may be required to permit or facilitate the transfer
of such Records to the Successor Servicer.
4.05. Information. The Servicer will furnish, or cause
to be furnished, to the Administrative Agent such additional information with
respect to the Receivables (including but not limited to Western Digital's
procedures for selecting Receivables for sale and Western Digital's standards
and
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procedures for selling goods or services on credit) as the Administrative Agent
may reasonably request. The Servicer will also furnish to the Administrative
Agent, S&P and Moody's all modifications, adjustments or supplements to the
Credit and Collection Policy; provided, however, the Servicer shall not,
without the Administrative Agent's prior written consent, alter the Credit and
Collection Policy as in effect from time to time unless such alteration is in
compliance with Sections 6.02(d) and 6.04(d) hereof.
4.06. Performance of Undertakings Under the Receivables.
The Servicer will at all times observe and perform, or cause to be observed and
performed, all material obligations and undertakings to the Obligors arising in
connection with each Receivable or related Contract and will not take any
action or cause any action to be taken to impair the rights of the
Administrative Agent or any Investor to its Purchased Interest in the
Receivables.
4.07. Administration and Collections.
(a) General. The Servicer will be responsible for the
administration, servicing and collection of the Receivables; provided, however,
that upon written approval by the Administrative Agent, which shall not be
unreasonably withheld, and written confirmation from Moody's and S&P to the
effect that such delegation will not result in the reduction or withdrawal of
their then current ratings on any outstanding Commercial Paper, such duties may
be delegated by the Servicer, to an Affiliate of the Servicer, or a third party
(without impairment of the Servicer's obligations or liabilities hereunder).
If the Servicer receives items or monies that are not payments on account of
the Investors' interest in the Receivables, such items or moneys shall be
delivered promptly to the Seller after being so identified by the Servicer.
The Servicer agrees to exercise or cause such Affiliate or third party to
exercise the same degree of skill and care and apply the same standards,
policies, procedures and diligence that it applies to the performance of the
same functions with respect to accounts owned by the Servicer.
(b) Administration. The Servicer shall, to the full
extent permitted by Law, have the power and authority, on behalf of the
Administrative Agent and each Investor, to take such action in respect of any
Receivable as such Servicer may deem advisable, including the resale of any
repossessed, returned or rejected goods; provided, however, that the Servicer
may not under any circumstances compromise, rescind, cancel, adjust or modify
(including by extension of time for payment or granting any discounts,
allowances or credits) the Outstanding Balance of the related Contract for any
Receivable, except in accordance with the Credit and Collection Policy or
otherwise with the prior written consent of the Administrative Agent or
Majority Investors.
DC1-1121.9 53
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(c) Servicing Account. The Servicer shall maintain in
the name of the Administrative Agent, for the benefit of the Investors, the
Servicing Account for the purpose of receiving and disbursing all Collections
on the Receivables allocable to the Investors, all payments made by the Seller
pursuant to this Agreement and all other payments to be made into the Servicing
Account. The Servicer shall advise the Administrative Agent in writing of the
location of the Servicing Account. The Servicing Account will be an Eligible
Account maintained in the name of the Administrative Agent, for the benefit of
the Investors, and shall be used only for the collection of the amounts and for
application as described in Sections 2.08 and 2.09 of this Agreement. In the
event there shall have been deposited in the Servicing Account any amount not
required to be deposited therein and so identified to the Administrative Agent,
such amount shall be withdrawn from the Servicing Account, any provision herein
to the contrary notwithstanding, and any such amounts shall not be deemed to be
a part of the Servicing Account. If the Servicing Account ceases to be an
Eligible Account, the Servicer shall within ten days of receipt of notice of
such change in eligibility transfer the Servicing Account to an account meeting
the requirements of an Eligible Account.
The Servicer may invest the funds, if invested, in the
Servicing Account in Eligible Investments, held in the name of the
Administrative Agent, which shall mature no later than the Business Day
preceding the date on which such amounts are required to be remitted to the
Administrative Agent for distribution to the Investors. Any income or other
gain from such Eligible Investments shall be paid to the Servicer as an
addition to the Servicing Fee. Any losses on Eligible Investments shall be
made up by the Servicer.
The Servicer and the Seller agree to take all actions
reasonably necessary, including the filing of appropriate financing statements
and the giving of proper registration instructions, to protect the
Administrative Agent's and the Investors' interest in the Servicing Account and
any Eligible Investments acquired with moneys therein.
(d) Enforcement Proceedings. In the event of a default
under any Receivable before a Termination Event, the Servicer shall, at the
Seller's sole expense, to the full extent permitted by Law, have the power and
authority, on behalf of each Investor, to take any action in respect of any
such Receivable as the Servicer may deem advisable; provided, however, that the
Servicer shall take no enforcement action (judicial or otherwise) with respect
to such Receivable, except in accordance with the Credit and Collection Policy
or otherwise with the written consent of the Administrative Agent or the
Majority Investors. The Servicer will apply or will cause to be applied at all
times before a Termination Event the same standards and follow the same
procedures with respect to deciding to commence, and in prosecuting, litigation
on such Receivable as is applied and
DC1-1121.9 54
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followed with respect to like accounts not owned by the Investors. In no event
shall the Servicer be entitled to make or authorize any Person to make the
Administrative Agent or any Investor a party to any litigation without the
Administrative Agent's or such Investor's, as the case may be, express prior
written consent.
(e) Obligations of the Administrative Agent and the
Investors. The Investors may at any time following the occurrence of a
Termination Event or a Potential Termination Event, but shall have no
obligation to, take any action or commence any proceeding to realize upon any
Receivable, any such action or commencement of proceeding to be at the sole
expense of the Seller. At such time as the Servicer has any obligation to
pursue the collection of Receivables and the Administrative Agent or an
Investor possesses any documents necessary therefor, the Administrative Agent
or such Investor, as the case may be, agrees to furnish such documents to the
Servicer to the extent and for the period necessary for the Servicer to comply
with its obligations hereunder.
(f) Servicer's Compensation. The Servicer's
compensation (the "Servicer's Compensation") for performing its responsibility
as the Servicer with respect to any Receivable on any day shall be equal to the
quotient of (A) the product of (1) either (y) three tenths of one percent
(.30%) for so long as Western Digital or any of its Affiliates is the Servicer
hereunder, or (2) one percent (1%) if any other Person is the Servicer
hereunder, in either case expressed as a decimal, and (2) the Outstanding
Balances of all Receivables on such day, divided by (B) 360. Subject to
Section 4.09(a) hereof, the Servicer's Compensation shall be paid by the Seller
in arrears on the last Business Day of each month.
4.08. Servicer Defaults. A "Servicer Default" shall
mean the occurrence and continuance of one or more of the following events or
conditions:
(a) the Servicer shall fail to remit or fail to cause to
be remitted to the Administrative Agent or any Investor on any day any
Collections or other amounts required to be remitted by the Servicer to the
Administrative Agent or such Investor on such day; or
(b) the Servicer shall fail to deposit, or pay or fail
to cause to be deposited or paid when due any other amount due from the
Servicer hereunder; or
(c) any representation, warranty, certification or
statement made by the Servicer under this Agreement or in any agreement,
certificate, report, appendix, schedule or document furnished by the Servicer
to any Investor or the Administrative Agent pursuant to or in connection with
this Agreement shall prove to have been false or misleading in any respect
material to
DC1-1121.9 55
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this Agreement or the transactions contemplated hereby as of the time made or
deemed made (including by omission of material information necessary to make
such representation, warranty, certification or statement not misleading); or
(d) the Servicer shall fail to obtain the prior consent
of each of the Investors, the Majority Investors, the Majority Bank Purchasers,
the Majority DFC Purchasers or the Administrative Agent, as required, to any
action as to which such consent is required by the terms of this Agreement; or
(e) the Servicer shall default or fail in the
performance or observance of any other covenant, agreement or duty applicable
to it contained herein and such default or failure shall continue for seven
Business Days after either (i) any Responsible Officer of the Servicer becomes
aware thereof or (ii) notice thereof to the Servicer by the Administrative
Agent or the Majority Investors; or
(f) as long as Western Digital is the Servicer, Western
Digital or any of its Consolidated Subsidiaries shall fail to pay any Debt in
excess of $5,000,000 of Western Digital or any of its Consolidated
Subsidiaries, as the case may be, or any interest or premium on such Debt, in
either case, when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument
relating to such Debt; or any other default under any agreement or instrument
relating to any such Debt or any other event, shall occur and shall continue
after the applicable grace period, if any, specified in such agreement or
instrument if the effect of such default or event is to accelerate, or to
permit the acceleration of, the maturity of such Debt; or any such Debt shall
be declared to be due and payable or required to be prepaid (other than by a
regularly scheduled required prepayment) prior to the stated maturity thereof;
of
(g) there shall be pending any litigation, investigation
or proceeding, or any material adverse development in any such litigation shall
have occurred, which the Servicer is required to disclose pursuant to Section
6.03(h) hereof, which would materially adversely affect the financial position
or results of operations of the Servicer and its Consolidated Subsidiaries
taken as a whole or materially impair the ability of the Servicer to perform
its obligations under this Agreement; or
(h) an Event of Bankruptcy shall occur with respect to
the Servicer.
4.09. Complete Servicing Transfer.
(a) General. If at any time a Servicer Default shall
have occurred and be continuing, the Administrative Agent may by
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written notice to the Seller and the Servicer, terminate the Servicer's
capacity as Servicer under this Agreement (such termination referred to herein
as a "Complete Servicing Transfer"). After a Complete Servicing Transfer and
unless or until a Successor Servicer is appointed as provided in this Section
4.09, the Administrative Agent (or its designee approved by the Majority
Investors) may contact any Obligor and will administer, service and collect the
Receivables itself, and in such event, will retain the Servicer's Compensation
for its own account, in any manner it sees fit, including, without limitation,
by compromise, extension or settlement of such Receivables. Alternatively, the
Majority Investors may appoint an Eligible Servicer to serve as Successor
Servicer and require the Seller to pay to such Successor Servicer all or a
portion of the Servicer's Compensation in consideration thereof. The
Administrative Agent shall give S&P and Moody's prompt notice of the occurrence
of a Complete Servicing Transfer; provided, however, that failure to give such
notice shall not affect the effectiveness of the notice delivered with respect
to, or the rights of the Investors resulting from, such Complete Servicing
Transfer. No appointment of a Successor Servicer shall be effective until the
Successor Servicer shall have accepted its appointment by a written assumption
and agreement to perform all of the duties, obligations and liabilities of the
Servicer hereunder. 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 the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof, and all references in this Agreement to the Servicer shall be deemed to
refer to the Successor Servicer except for the references in Sections 5.03(f),
(j) and (k) which shall continue to refer to Western Digital.
(b) Transition. The Servicer, within ten Business Days
after receiving a notice pursuant to Section 4.09(a) hereof, shall, at the
Seller's sole expense, (x) deliver to the Administrative Agent or its
designated agent (i) a schedule of the Receivables in which the Investors have
a Purchased Interest indicating as to each such Receivable information as to
the related Obligor, the Outstanding Balance as of such date of the related
Contract and the location of the evidences of such Receivable and related
Contract, together with such other information as the Administrative Agent may
reasonably request and (ii) all evidence in the Servicer's possession or
control of such Receivables and related Contracts and such other Records in the
Servicer's possession or control related thereto (including, without
limitation, true copies of any computer tapes and data in computer memories),
and (y) permit the Administrative Agent access during normal business hours to
the Servicer's premises, equipment and files and other Records, in each case as
the Administrative Agent may reasonably deem necessary to enable it to protect
and enforce its rights and the rights of the Investors to the Purchased
Interest therein. After any such delivery, the
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Servicer will not hold or retain any executed counterpart or any document
evidencing such Receivables or related Contracts without clearly marking the
same to indicate conspicuously that the same is not the original and that
transfer thereof does not transfer any rights against the related Obligor or
any other Person.
(c) Collections. If at any time there shall be a
Complete Servicing Transfer, the terminated Servicer will cause to be
transmitted and delivered directly to the Administrative Agent or the Successor
Servicer, for the account of the Investors, forthwith upon receipt and in the
exact form received, all Collections (properly endorsed, where required, so
that such items may be collected by the Administrative Agent or the Successor
Servicer, as the case may be, on behalf of the Investors) on account of their
Purchased Interest in any Receivables. All such Collections consisting of cash
shall not be commingled with other items or monies of the Servicer for a period
longer than two Business Days. If the Administrative Agent or the Successor
Servicer receives items or monies that are not payments on account of the
Investors' interest in any Receivables, such items or monies shall be delivered
promptly to the Seller after being so identified by the Administrative Agent or
the Successor Servicer, as the case may be. Each of the Seller and the
terminated Servicer hereby irrevocably grants the Administrative Agent or the
Successor Servicer, as the case may be, if any, an irrevocable power of
attorney, with full power of substitution, coupled with an interest, to take in
the name of the Seller or terminated Servicer, as the case may be, all steps
with respect to any Receivable which the Administrative Agent, in its sole
discretion, may deem necessary or advisable to negotiate or otherwise realize
on any right of any kind held or owned by the Seller or terminated Servicer, as
the case may be, or transmitted to or received by the Administrative Agent or
terminated Servicer, as the case may be (whether or not from the Seller or any
Obligor) in connection with the Investors' Purchased Interest in any
Receivable. The Administrative Agent will provide such periodic accounting and
other information related to the disposition of funds so collected as the
Seller may reasonably request.
(d) Collection and Administration at Expense of the
Seller. The Seller agrees that in the event of a Complete Servicing Transfer,
it will reimburse the Administrative Agent for all reasonable out-of-pocket
expenses (including, without limitation, attorneys' and accountants' and other
third parties' fees and expenses, expenses incurred by the Administrative
Agent, expenses of litigation or preparation therefor, and expenses of audits
and visits to the offices of the Seller) incurred by the Administrative Agent
in connection with and following the transfer of functions following a Complete
Servicing Transfer.
(e) Payments by Obligors. At any time, and from time to
time following a Complete Servicing Transfer, the terminated Servicer shall
permit such Persons as the Administrative Agent
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may designate to open and inspect, at such Servicer's offices and in the
presence of a representative of such Servicer all mail received by such
Servicer at any of its offices, and to remove therefrom any and all Collections
or other correspondence from Obligors in respect of Receivables. All
Collections received by the Administrative Agent shall be applied in accordance
with Section 2.13(b) hereof. The Administrative Agent shall be entitled to
notify the Obligors of Receivables to make payments directly to the
Administrative Agent or Successor Servicer of amounts due thereunder at any
time and from time to time following the occurrence of (i) a Servicer Default,
(ii) a Complete Servicing Transfer or (iii) a violation by the Servicer of the
provisions of Section 4.10 hereof.
4.10. Lockboxes. The Servicer hereby agrees (i) to
instruct all Obligors to cause all Collections on account of Receivables to be
mailed directly to a Permitted Lockbox; (ii) to use its best effort not to
suffer or permit any funds other than such Collections to be mailed to
Permitted Lockboxes or deposited into related Lockbox Accounts; (iii) to make
the necessary bookkeeping entries to reflect such Collections on the Records
pertaining to such Receivables; (iv) to apply all such Collections as provided
in this Agreement; (v) not to amend or modify any term of any Lockbox Servicing
Instructions without the prior written consent of the Administrative Agent to
such amendment or modification; and (vi) not to amend or modify any term, with
respect to the disposition of such Collections or any other amounts received by
the Servicer or any Permitted Lockbox Bank, of this Agreement or any other
agreement (other than Lockbox Servicing Instructions) without the prior written
consent of the Administrative Agent to such amendment or modification. The
Servicer further represents and warrants and covenants and agrees as follows:
each Lockbox Account shall be maintained with a Permitted Lockbox Bank; each
Lockbox Account shall be a segregated account and the funds deposited in such
Lockbox Account from time to time shall not be commingled with any other funds
of the Servicer or the Seller; each Lockbox Account shall be in the name of the
Administrative Agent; the location of each Permitted Lockbox and each related
Lockbox Account shall not be changed without the consent of the Administrative
Agent; funds deposited in each Lockbox Account shall be transferred to the
Servicing Account not later than the next Business Day after such funds are
deposited in each such Lockbox Account; each Lockbox Account shall be insured
by the Federal Deposit Insurance Corporation to the full extent permitted by
law; the Administrative Agent or the Collateral Agent shall have the right to
obtain control over each Permitted Lockbox and each related Lockbox Account,
and, in either case, direct the Permitted Lockbox Bank not to transfer funds in
such Lockbox Account to the Seller or the Servicer, and direct the Permitted
Lockbox Bank to transfer the funds in such Lockbox Account to an account
designated by the Administrative Agent, the Successor Servicer, if any, or the
Collateral Agent, as the case may be, if either (a) a Servicer Default occurs
which would allow a Complete
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Servicing Transfer under this Agreement (whether or not the Administrative
Agent exercises its right to terminate the Servicer) or (b) a Termination Event
occurs, by dating and delivering the Lockbox Transfer Letter with respect to
such Permitted Lockbox, and the Seller and Servicer hereby irrevocably
authorize the Administrative Agent to date and deliver a Lockbox Transfer
Letter to each Permitted Lockbox Bank at any time after the occurrence and
during the continuation of a Servicer Default or Termination Event; neither the
Seller nor the Servicer has given or shall give any instructions to any
Permitted Lockbox Bank inconsistent with the Lockbox Transfer Letter; and the
Seller and Servicer shall cooperate fully with the Administrative Agent in
effecting any such transfer of control. The Servicer shall not enter into any
Lockbox Servicing Instructions or other lockbox servicing agreement which does
not contain the foregoing provisions and terms, unless such deviation is
consented to by the Affected Parties.
4.11. Servicer Indemnification of Affected Parties. The
Servicer shall indemnify and hold harmless the Affected Parties and their
assigns (and their respective directors, officers, employees and agents), from
and against any loss, liability, expense, damage or injury suffered or
sustained by reason of any breach by the Servicer of any of its
representations, warranties or covenants contained in this Agreement, including
any judgment, award, settlement, reasonable attorneys fees and other costs or
expenses incurred in connection with the defense of any actual action,
proceeding or claim; provided, however, that the Servicer shall not indemnify
the Affected Parties and their assigns if such acts or omissions were
attributable to fraud, gross negligence, breach of fiduciary duty or willful
misconduct by any such Party. Any indemnification pursuant to this Section
shall be had only 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
termination of this Agreement.
4.12. 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, regulation or order and (ii) there is no
reasonable action which the Servicer could take to make the performance of its
duties hereunder permissible under applicable law, regulation or order. 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
reasonably acceptable and delivered to the Administrative Agent. No such
resignation shall become effective until the Administrative Agent or a
Successor Servicer shall have assumed the responsibilities and obligations of
the Servicer in accordance with Section 4.09 hereof; provided, that if, within
one hundred and twenty days of the date that the Servicer notifies the
Administrative Agent of its resignation in
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accordance with this Section 4.12, the Administrative Agent does not receive
any bids from Eligible Servicers in accordance with Section 4.09 to act as
Successor Servicer, then the Administrative Agent shall automatically be
appointed Successor Servicer in accordance with Section 4.09. The
Administrative Agent shall promptly notify S&P and Moody's of receipt of the
Servicer's notice of resignation and of the appointment of a Successor
Servicer.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01. General Representations and Warranties of the
Seller. The Seller, in addition to its other representations and warranties
contained herein or made pursuant hereto, hereby represents and warrants to
each Investor and the Administrative Agent on and as of the date hereof and on
and as of the date of each Incremental Purchase and each reinvestment Purchase
that:
(a) Organization and Qualification. The Seller is a
corporation duly organized, validly existing and in good standing under the
Laws of its jurisdiction of incorporation. The Seller is duly qualified to do
business as a foreign corporation in good standing in each jurisdiction in
which the ownership of its properties or the nature of its activities
(including transactions giving rise to Receivables), or both, requires it to be
so qualified or, if not so qualified, the failure to so qualify would not have
a material adverse effect on its financial condition or results of operations.
(b) Authorization. The Seller has the corporate power
and authority to execute and deliver the Purchase Documents and the Receivables
Sale and Contribution Agreement, to make the sales provided for herein and to
perform its obligations hereunder and thereunder.
(c) Execution and Binding Effect. Each of the Purchase
Documents and the Receivables Sale and Contribution Agreement has been duly and
validly executed and delivered by the Seller and (assuming the due and valid
execution and delivery thereof by the other parties thereto), constitutes a
valid and binding obligation of the Seller enforceable in accordance with its
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or other similar Laws of general application
relating to or affecting the enforcement of creditors' rights or by general
principles of equity. The Program Documents will vest absolutely and
unconditionally in the Administrative Agent, for the benefit of the applicable
Investors, a valid undivided ownership or security interest in the Receivables
to the extent provided herein, subject to no Liens whatsoever (except for Liens
created by any Investor). Upon the filing of the necessary financing
statements under the
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UCC as in effect in the jurisdiction whose Law governs the perfection of
Administrative Agent's and Investors' ownership interests in the Receivables,
the Administrative Agent's and the Investors' ownership interests in the
Receivables will be perfected under Article Nine of such UCC, prior to and
enforceable against all creditors of and purchasers from the Seller and all
other Persons whatsoever (other than the Administrative Agent, Investors and
their successors and assigns).
(d) Authorizations and Filings. No authorization,
consent, approval, license, exemption or other action by, and no registration,
qualification, designation, declaration or filing with, any Official Body is or
will be necessary or, in the opinion of the Seller, advisable in connection
with the execution and delivery by the Seller of the Purchase Documents and the
Receivables Contribution and Sale Agreement, the consummation by the Seller of
the transactions herein or therein contemplated or the performance by the
Seller of or the compliance by the Seller with the terms and conditions hereof
or thereof, to ensure the legality, validity or enforceability hereof or
thereof, or to ensure that the Administrative Agent, for the benefit of the
Investors, will have an undivided ownership interest in and to the Receivables
which is perfected and prior to all other Liens (including competing ownership
interests), other than the filing of financing statements under the UCC in the
jurisdiction of the Seller's and Western Digital's Chief Executive Offices and
in the State of Delaware.
(e) Absence of Conflicts. Neither the execution and
delivery by the Seller of the Purchase Documents or the Receivables
Contribution and Sale Agreement, nor the consummation by the Seller of the
transactions herein or therein contemplated, nor the performance by the Seller
of or the compliance by the Seller with the terms and conditions hereof or
thereof, will (i) violate any Law or (ii) conflict with or result in a breach
of or a default under (A) the Certificate of Incorporation or By-laws of the
Seller or (B) any agreement or instrument, including, without limitation, any
material indentures, debentures, loans or other agreements to which the Seller
is a party or by which it or any of its properties (now owned or hereafter
acquired) may be subject or bound, which would have a material adverse effect
on its financial position or results of operations or result in rendering any
Debt evidenced thereby due and payable prior to its maturity or result in the
creation or imposition of any material Lien pursuant to the terms of any such
instrument or agreement upon any property (now owned or hereafter acquired) of
the Seller. The Seller has not entered into any agreement with any Obligor
prohibiting, restricting or conditioning the assignment of any portion of the
Receivables.
(f) Location of Chief Executive Office, Etc. As of the
date hereof: (i) the Seller's Chief Executive Office is located at the address
for notices set forth on the signature
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page hereof; and (ii) the offices where the Seller keeps all of its Records
relating to the Receivables are listed on Exhibit K hereto.
(g) No Termination Event. No event has occurred and is
continuing and no condition exists which constitutes a Termination Event or a
Potential Termination Event with respect to either Investor Group.
(h) Accurate and Complete Disclosure. The information
furnished in writing by the Seller to any Investor, any APA Purchaser or the
Administrative Agent pursuant to or in connection with this Agreement or any
transaction contemplated hereby, taken as a whole, is not false or misleading
in any material respect as of the date as of which such information was
furnished (including by omission of material information necessary to make such
information not misleading).
(i) No Proceedings. There are no proceedings or
investigations pending, or to the knowledge of any Responsible Officer of the
Seller, threatened, before any Official Body (A) asserting the invalidity of
the Purchase Documents or the Receivables Contribution and Sale Agreement, (B)
seeking to prevent the consummation of any of the transactions contemplated by
the Purchase Documents or the Receivables Contribution and Sale Agreement, or
(C) seeking any determination or ruling that could reasonably be expected to
materially and adversely affect (i) the performance by the Seller or the
Servicer of their respective obligations under the Purchase Documents or the
Receivables Contribution and Sale Agreement or (ii) the validity or
enforceability of the Purchase Documents or the Receivables Contribution and
Sale Agreement, the Contracts or any material amount of the Receivables.
(j) Bulk Sales Act. No transaction contemplated hereby
requires compliance with any bulk sales act or similar law.
(k) Financial Condition. The Seller is not insolvent
and the transfer of the Receivables on such day will not be made in
contemplation of the occurrence thereof.
(l) Litigation. No injunction, decree or other decision
has been issued or made by any Official Body that prevents, and to the
knowledge of any Responsible Officer of the Seller, no threat by any Person has
been made to attempt to obtain any such decision that would have a material
adverse impact on the financial condition or results of operations of the
Seller, the conduct by the Seller of any substantial portion of its business
operations affecting the Receivables, and no litigation, investigation or
proceeding of the type referred to in Section 6.01(g) hereof exists except as
set forth on Exhibit M.
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(m) Margin Regulations. The use of all funds acquired
by the Seller under this Agreement will not conflict with or contravene any of
Regulations G, T, U and X of the Board of Governors of the Federal Reserve
System, as the same may from time to time be amended, supplemented or otherwise
modified.
(n) ERISA. No event or condition is occurring or exists
with respect to any Plan or Multiemployer Plan concerning which the Seller
would be under an obligation to furnish a report to the Administrative Agent in
accordance with Section 6.01(l) hereof.
(o) Taxes. The Seller has filed all income tax returns
(federal, state and local) and all other material tax returns which are
required to be filed by them and has paid all taxes due pursuant to such
returns or pursuant to any assessment received by it except for any such tax
assessment, charge or levy the payment of which is being contested in good
faith and by proper proceedings.
(p) Books and Records. The Seller has indicated on its
books and records (including any computer files), that the Purchased Interest
in the Receivables is the property of the Investors.
5.02. Representations and Warranties of the Seller With
Respect to Each Sale of Receivables. By selling undivided ownership interests
in Receivables to any Investor either by Incremental Purchase or reinvestment
Purchase, the Seller represents and warrants to each Investor and the
Administrative Agent as of the date of such sale of an Incremental Purchase or
reinvestment Purchase and only as to Receivables in which an interest is first
sold by the Seller to the Investors hereunder on such date (in addition to its
other representations and warranties contained herein or made pursuant hereto)
that:
(a) Purchase Notice. If such sale is a sale of an
Incremental Purchase, all information set forth on the related Purchase Notice
is true and correct as of the date of such Incremental Purchase.
(b) Assignment. This Agreement vests in the
Administrative Agent, for the benefit of each Investor, all the right, title
and interest of the Seller in and to the percentage of the Purchased Interest
owned by such Investor in the Receivables, and the Related Security and
Collections with respect thereto, and constitutes a valid sale of the Purchased
Interest, enforceable against, and creating an interest prior in right to, all
creditors of and purchasers from such Seller, subject to all applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and general principles of equity, regardless of whether enforcement is sought
in a proceeding in equity or at law.
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(c) No Liens. Each Receivable, together with the
related Contract and all purchase orders and other agreements related to such
Receivable, is owned by the Seller free and clear of any Lien, except as
provided herein (except for Liens created by any Investor), and when the
Administrative Agent, on behalf of an Investor, makes a purchase of a Purchased
Interest in such Receivable it shall have acquired an undivided percentage
ownership interest to the extent of its percentage of the Purchased Interest in
such Receivable and in the Related Security and the Collections with respect
thereto free and clear of any Lien, except as provided herein. The Seller has
not sold, pledged, assigned, transferred or subjected to a Lien any of the
Receivables, other than the assignment of Purchased Interests therein to the
Administrative Agent, for the benefit of the Investors, in accordance with the
terms of this Agreement.
(d) Filings. On or prior to each Purchase and each
recomputation of the Purchased Interest, all financing statements and other
documents required to be recorded or filed in order to perfect and protect the
Purchased Interest against all creditors of and purchasers from the Seller and
all other Persons whatsoever will have been duly filed in each filing office
necessary for such purpose and all filing fees and taxes, if any, payable in
connection with such filings shall have been paid in full.
(e) Credit and Collection Policy. The Seller has
complied in all material respects with the Credit and Collection Policy in
regard to each Receivable and related Contract.
(f) Permitted Lockbox Banks and Lockbox Accounts. The
names and addresses of all Permitted Lockbox Banks, together with the numbers
of all Lockbox Accounts at such Permitted Lockbox Banks and the addresses of
all related Permitted Lockboxes, are specified in Exhibit N (or such other
Permitted Lockbox Banks, Lockbox Accounts and/or Permitted Lockboxes as have
been notified by the Seller to the Administrative Agent and have been consented
to by the Administrative Agent or the Majority Investors in accordance with
Section 6.04(e)).
(g) Bona Fide Receivables. Each Receivable is an
obligation of a customer of Western Digital arising out of the past, current or
future performance by Western Digital in accordance with the terms of the
Contract giving rise to such Receivables. The Seller has no knowledge of any
fact that 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 Dilution Factor. Each Receivable
classified as an "Eligible Receivable" by the Seller in any document or report
delivered hereunder satisfies the requirements of eligibility contained in the
definition of Eligible Receivable.
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(h) Nature of Receivables. Each Receivable is, or will
be, an "eligible asset" within the meaning of Rule 3a-7 promulgated under the
Investment Company Act of 1940, as amended from time to time, and a purchase of
each Receivable with the proceeds of Commercial Paper would constitute a
"current transaction" within the meaning of Section 3(a)(3) of the Securities
Act of 1933, as amended from time to time.
5.03. Representations and Warranties of the Servicer.
Western Digital, as initial Servicer, and any Successor Servicer by its
appointment hereunder, hereby makes the following representations and
warranties to each Investor and the Administrative Agent, in the case of the
initial Servicer, on and as of the date hereof, and in the case of any
Successor Servicer, on and as of the date of its appointment, and on and as of
the date of each Incremental Purchase and each reinvestment Purchase after such
date:
(a) Organization and Qualification. The Servicer is a
corporation duly organized, validly existing and in good standing under the
Laws of its jurisdiction of incorporation. The Servicer is duly qualified to
do business as a foreign corporation in good standing in each jurisdiction in
which the ownership of its properties or the nature of its activities, or both,
requires it to be so qualified or, if not so qualified, the failure to so
qualify would not have a material adverse effect on its obligations under this
Agreement.
(b) Authorization. The Servicer has the corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder and thereunder.
(c) Execution and Binding Effect. This Agreement has
been duly and validly executed and delivered by the Servicer and (assuming the
due and valid execution and delivery thereof by each Investor and the Seller),
constitutes a valid and binding obligation of the Servicer enforceable in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization or other similar Laws of general
application relating to or affecting the enforcement of creditors' rights or by
general principles of equity.
(d) Authorizations and Filings. No authorization,
consent, approval, license, exemption or other action by, and no registration,
qualification, designation, declaration or filing with, any Official Body is or
will be necessary or, in the opinion of the Servicer, advisable in connection
with the execution and delivery by the Servicer of this Agreement, the
consummation by the Servicer of the transactions herein or therein contemplated
or the performance by the Servicer of or the compliance by the Servicer with
the terms and conditions hereof, to ensure the legality, validity or
enforceability hereof.
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(e) Absence of Conflicts. Neither the execution and
delivery by the Servicer of this Agreement, nor the consummation by the
Servicer of the transactions herein contemplated, nor the performance by the
Servicer of or the compliance by the Servicer with the terms and conditions
hereof, will (i) violate any Law or (ii) conflict with or result in a breach of
or a default under (A) the Certificate of Incorporation or By-laws of the
Servicer or (B) any material agreement or instrument, including, without
limitation, any indentures, debentures, loans or other agreements to which the
Servicer is a party or by which it or any of its properties (now owned or
hereafter acquired) may be subject or bound, which would have a material
adverse effect on the ability of the Servicer to perform its obligations under
this Agreement.
(f) No Termination Event. No event has occurred and is
continuing and no condition exists which constitutes a Termination Event or a
Potential Termination Event with respect to either Investor Group.
(g) Accurate and Complete Disclosure. The information
furnished in writing by the Servicer to an Investor or Investors or the
Administrative Agent pursuant to or in connection with this Agreement or any
transaction contemplated hereby, taken as a whole, is not false or misleading
in any material respect as of the date as of which such information was
furnished (including by omission of material information necessary to make such
information not misleading).
(h) No Proceedings. There are no proceedings or
investigations pending, or to the knowledge of any Responsible Officer of the
Servicer, threatened, before any Official Body (A) asserting the invalidity of
this Agreement, (B) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement, or (C) seeking any determination
or ruling that might materially and adversely affect (i) the performance by the
Servicer of its obligations under this Agreement or (ii) the validity or
enforceability of this Agreement.
(i) ERISA. No event or condition is occurring or exists
with respect to any Plan or Multiemployer Plan concerning which the Servicer
would be under an obligation to furnish a report to the Administrative Agent in
accordance with Section 6.01(q).
(j) No Change in Ability to Service. With respect to
the initial Servicer only, since the date hereof, there has been no material
adverse change in the ability of the Servicer to service and collect the
Receivables and the Related Security and Collections.
(k) No Servicer Default. No Servicer Default has
occurred and is continuing.
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5.04. Representation and Warranty of Western Digital.
Western Digital hereby represents and warrants to each Investor and the
Administrative Agent, on the date hereof, and on and as of the date of each
Incremental Purchase and each reinvestment Purchase after such date that (A)
The consolidated balance sheet of Western Digital and its Consolidated
Subsidiaries as at June 30, 1993 and the related statements of income and cash
flows of Western Digital and its Consolidated Subsidiaries for Western
Digital's fiscal year then ended, certified by independent accountants, copies
of which have been furnished to the Administrative Agent, fairly present the
consolidated financial position of Western Digital and its Consolidated
Subsidiaries as at such date and the consolidated results of the operations of
and cash flows of Western Digital and its Consolidated Subsidiaries for the
period ended on such date, all in accordance with GAAP, (y) the unaudited
consolidated balance sheet of Western Digital and its Consolidated Subsidiaries
as at September 25, 1993 and the related unaudited statements of income and
cash flows of Western Digital and its Consolidated Subsidiaries for the periods
then ended, copies of which have been furnished to the Administrative Agent,
fairly present the consolidated financial position of Western Digital and its
Consolidated Subsidiaries as at such date and the consolidated results of the
operations of and cash flows of Western Digital and its Consolidated
Subsidiaries for the periods ended on such date, all in accordance with GAAP
and (B) since June 30, 1993 there has been no material adverse change in any
such financial condition or results of operations or in the Seller's or
Servicer's ability to perform its respective obligations under the Purchase
Documents, except as set forth on Exhibit L.
ARTICLE VI
COVENANTS
6.01. Affirmative Covenants of the Seller. In addition
to its other covenants contained herein or made pursuant hereto, the Seller
covenants to each Investor and the Administrative Agent as follows:
(a) Notice of Termination Event. Promptly upon any
Responsible Officer of the Seller becoming aware of any Termination Event,
Potential Termination Event or Servicer Default, the Seller shall give the
Administrative Agent, S&P and Moody's notice thereof, together with a written
statement of a Responsible Officer setting forth the details thereof and any
action with respect thereto taken or contemplated to be taken by the Seller.
(b) Notice of Material Adverse Change. Promptly upon
any Responsible Officer of the Seller becoming aware thereof, the Seller shall
give the Administrative Agent, S&P and Moody's notice of any material adverse
change in the business, operations
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or financial condition of the Seller or the Servicer taken as a whole which the
Seller believes could reasonably be expected to affect adversely the
collectibility of the Receivables or the ability of the Servicer to service
such Receivables. When Western Digital is the Servicer hereunder, in order to
verify compliance with this Section 6.01(b) and otherwise verify compliance
with this Agreement, the Seller shall, unless the Majority Investors shall
otherwise consent in writing, furnish or cause to be furnished the following to
the Administrative Agent:
(i) as soon as practicable and in any event within 50
days following the close of each fiscal quarter, excluding the last
fiscal quarter, of Western Digital's Fiscal Year during the term of
this Agreement, an unaudited consolidated balance sheet of Western
Digital as at the end of such quarter and unaudited consolidated
statements of income and cash flows of Western Digital for such
quarter and for the fiscal year through such quarter, setting forth
in comparative form the corresponding figures for the corresponding
quarter of the preceding fiscal year, together with notes thereto as
are required to be included therein in accordance with GAAP or
applicable Securities and Exchange Commission requirements, all in
reasonable detail and certified by a Responsible Officer of Western
Digital, subject to adjustments of the type which would occur as a
result of a year-end audit, as having been prepared in accordance
with GAAP;
(ii) as soon as practicable and in any event within 95
days after the close of the Western Digital's Fiscal Year during the
term of this Agreement, a consolidated balance sheet of Western
Digital as at the close of such fiscal year and consolidated
statements of income and cash flows of Western Digital for such
fiscal year, setting forth in comparative form the corresponding
figures for the preceding fiscal year, all in reasonable detail and
certified (with respect to the consolidated financial statements) by
independent certified public accountants of nationally recognized
standing selected by Western Digital and reasonably acceptable to the
Majority Investors, whose certificate or opinion accompanying such
financial statements shall not contain any qualification, exception
or scope limitation not reasonably acceptable to the Majority
Investors, and accompanied by any management letter prepared by such
accountants; and
(iii) together with the financial statements required in
clauses (i) and (ii) above, a certificate of a Responsible Officer of
Western Digital stating that no Termination Event, Potential
Termination Event or Servicer Default exists, or if any Termination
Event, Potential Termination Event or Servicer Default exists,
stating the nature and status thereof.
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(c) Preservation of Corporate Existence. The Seller
shall preserve and maintain its corporate existence, rights, franchises and
privileges in the jurisdiction of its incorporation, and qualify and remain
qualified in good standing as a foreign corporation in each jurisdiction where
the failure to preserve and maintain such existence, rights, franchises,
privileges and qualification would materially adversely affect (i) the
interests of the Administrative Agent or any Investor hereunder or (ii) the
ability of the Seller or the Servicer to perform its obligations under the
Purchase Documents or Receivables Contribution and Sale Agreement.
(d) Compliance with Laws. The Seller shall comply (i)
in all material aspects with all Laws applicable to the Seller, its business
and properties, and (ii) with all Laws applicable to all Receivables.
(e) Enforceability of Obligations. The Seller shall
take such actions as it believes are reasonable and within its power to ensure
that, with respect to each Receivable, the obligation of any related Obligor to
pay the unpaid balance of such Receivable in accordance with the terms of the
related Contract remains legal, valid, binding and enforceable against such
Obligor.
(f) Fulfillment of Obligations. The Seller will duly
observe and perform, or cause to be observed or performed, all material
obligations and undertakings on its part to be observed and performed under or
in connection with the Receivables, will duly observe and perform all material
provisions, covenants and other promises required to be observed by it under
the Contracts related to the Receivables, will do nothing to impair the rights,
title and interest of the Administrative Agent or any Investor in and to the
Purchased Interest and will pay when due any taxes, including without
limitation any sales tax, excise tax or other similar tax or charge, payable in
connection with such Receivables and their creation and satisfaction.
(g) Litigation. As soon as possible, and in any event
within ten Business Days of the knowledge of any Responsible Officer, the
Seller shall give the Administrative Agent notice of (i) any litigation,
investigation or proceeding against the Seller which may exist at any time
which, in the reasonable judgment of the Seller, could reasonably be expected
to have a material adverse effect on the financial condition or results of
operations of the Seller or impair the ability of the Seller or the Servicer to
perform their respective obligations under this Agreement and (ii) any material
adverse development in any such previously disclosed litigation.
(h) Notice of Relocation. The Seller shall give the
Administrative Agent, S&P and Moody's 45 days' prior written notice of any
relocation of its Chief Executive Office if, as a result of such relocation,
the applicable provisions of the UCC
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of any applicable jurisdiction or other applicable Laws would require the
filing of any amendment of any previously filed financing statement or
continuation statement or of any new financing statement. The Seller will at
all times maintain its Chief Executive Office within a jurisdiction in the
United States in which Article Nine of the UCC (1972 or later revision) is in
effect as of the date hereof or the date of any such relocation.
(i) Further Information. The Seller shall use its best
efforts to furnish or cause to be furnished to the Administrative Agent such
other information as promptly as practicable, and in such form and detail, as
the Administrative Agent may reasonably request.
(j) Treatment of Purchase. For accounting and tax
purposes, the Seller shall treat each Incremental Purchase and each
reinvestment Purchase made hereunder as a sale of a Purchased Interest in the
underlying Receivables originated by the Seller. The Seller shall also
maintain its records and books of account in a manner which clearly reflects
each such sale of a Purchased Interest to the Administrative Agent, for the
benefit of the Investors, and the Investors' Investment therein.
(k) Fees, Taxes and Expenses. The Seller shall pay all
filing fees, stamp taxes, other taxes (other than taxes imposed directly on the
overall net income of the Investors) and expenses, including the fees and
expenses set forth in Section 9.01 hereof, if any, which may be incurred on
account of or arise out of this Agreement and the documents and transactions
entered into pursuant to this Agreement.
(l) ERISA Events.
(i) Promptly upon becoming aware of the occurrence of
any Event of Termination which together with all other Events of
Termination occurring within the prior 12 months involve a payment of
money by or a potential aggregate liability of the Seller or any
ERISA Affiliate or any combination of such entities in excess of
$5,000,000, the Seller shall give the Administrative Agent, S&P and
Moody's a written notice specifying the nature thereof, what action
the Seller or any ERISA Affiliate has taken and, when known, any
action taken or threatened by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto.
(ii) Promptly upon receipt thereof, the Seller shall
furnish to the Administrative Agent copies of (i) all notices
received by the Seller or any ERISA Affiliate of the PBGC's intent to
terminate any Plan or to have a trustee appointed to administer any
Plan; (ii) all notices received by the Seller or any ERISA Affiliate
from the sponsor of a Multiemployer Plan pursuant to Section 4202 of
ERISA involving a withdrawal liability in excess of $5,000,000;
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and (iii) all funding waiver requests filed by the Seller or any
ERISA Affiliate with the Internal Revenue Service with respect to any
Plan, the accrued benefits of which exceed the present value of the
plan assets as of the date the waiver request is filed by more than
$5,000,000, and all communications received by the Seller or any
ERISA Affiliate from the Internal Revenue Service with respect to any
such funding waiver request.
(m) Collections. The Seller shall instruct all Obligors
to cause all Collections to be mailed to or otherwise deposited in a Permitted
Lockbox.
(n) No Other Business. The Seller shall engage in no
business other than the business contemplated hereunder and under the
Receivables Contribution and Sale Agreement.
(o) Enforcement. The Seller shall take all action
necessary and appropriate to enforce its rights and claims under the
Receivables Contribution and Sale Agreement.
(p) Separate Corporate Existence. The Seller shall:
(i) Maintain its own deposit account or accounts,
separate from those of any Affiliate, with commercial banking
institutions. The funds of the Seller will not be diverted to any
other Person or for other than corporate uses of the Seller, nor will
such funds (other than Collections on Receivables deposited in a
Lockbox Account) be commingled with the funds of Western Digital or
any other Affiliate of Western Digital.
(ii) To the extent that it shares the same officers or
other employees as any of its stockholders or Affiliates, the
salaries of and the expenses related to providing benefits to such
officers and other employees shall be fairly allocated among such
entities, and each such entity shall bear its fair share of the
salary and benefit costs associated with all such common officers and
employees.
(iii) To the extent that it jointly contracts with any
of its stockholders or Affiliates to do business with vendors or
service providers or to share overhead expenses, the costs incurred
in so doing shall be allocated fairly among such entities, and each
such entity shall bear its fair share of such costs. To the extent
that the Seller contracts or does business with vendors or service
providers where the goods and services provided are partially for the
benefit of any other Person, the costs incurred in so doing shall be
fairly allocated to or among such entities for whose benefits the
goods and services are provided, and each such entity shall bear its
fair share of such costs. All material transactions between the
Seller and any of its Affiliates shall be only on an arm's length
basis.
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(iv) Maintain a principal executive and administrative
office through which its business is conducted separate from those of
Western Digital. To the extent that the Seller and any of its
stockholders or Affiliates have offices in the same location, there
shall be a fair and appropriate allocation of overhead costs among
them, and each such entity shall bear its fair share of such
expenses.
(v) Conduct its affairs strictly in accordance with its
Certificate of Incorporation and observe all necessary, appropriate
and customary corporate formalities, including, but not limited to,
holding all regular and special stockholders' and directors' meetings
appropriate to authorize all corporate action, keeping separate and
accurate minutes of its meetings, passing all resolutions or consents
necessary to authorize actions taken or to be taken, and maintaining
accurate and separate books, records and accounts, including, but not
limited to, payroll and intercompany transaction accounts.
6.02. Negative Covenants of the Seller. The Seller
covenants that it will not, without the prior written consent of the Majority
Investors:
(a) No Rescissions or Modifications. Reduce, rescind or
cancel any Receivable or related Contract or modify any terms or provisions
thereof or grant any Dilution Factors to an Obligor, except in accordance with
the Credit and Collection Policy or otherwise with the prior written consent of
the Majority Investors.
(b) No Liens. Cause any of the Receivables or related
Contracts, or any inventory or goods the sale of which may give rise to such
Receivable (unless the secured party having a security interest in any such
inventory or goods disclaims any Lien in Receivables as proceeds of such
inventory or goods), or any Permitted Lockbox or Lockbox Account or any right
to receive any payments received therein or deposited thereto, to be sold,
pledged, assigned or transferred or to be subject to a Lien, other than the
sale and assignment of the Purchased Interest therein to the Administrative
Agent and the Investors and the Liens granted in connection with the
transactions contemplated by this Agreement.
(c) Consolidations Mergers and Sales of Assets. (i)
Consolidate or merge with or into any other Person or (ii) sell, lease or
otherwise transfer all or substantially all of its assets to any other Person;
provided that the Seller may merge with another Person if (A) the Seller is the
corporation surviving such merger, (B) immediately after and giving effect to
such merger, no Termination Event or Potential Termination Event shall have
occurred and be continuing and (C) S&P and Moody's shall have been given prior
written notice of such merger.
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(d) No Changes. Make any change in the character of its
business or in the Credit and Collection Policy, which change would, in either
case, impair the collectibility of any material amount of the Receivables or
make any material change in the Credit and Collection Policy or in its current
payment terms with respect to Receivables without prior written notification to
the Administrative Agent and prior written consent of the Majority Investors,
or change its name, identity or corporate structure in any manner which would
make any financing statement or continuation statement filed in connection with
this Agreement or the transactions contemplated hereby seriously misleading
within the meaning of Section 9-402(7) of the UCC of any applicable
jurisdiction or other applicable Laws unless it shall have given the
Administrative Agent at least 45 days' prior written notice thereof and unless
prior thereto it shall have caused such financing statement or continuation
statement to be amended or a new financing statement to be filed such that such
financing statement or continuation statement would not be seriously
misleading.
(e) ERISA Matters. Permit any event or condition which
is described in any of clauses (i) through (vi), clause (viii) or clause (x) of
the definition of Event of Termination to occur or exist with respect to any
Plan or Multiemployer Plan if such event or condition, together with all other
events or conditions described in the definition of Event of Termination
occurring within the prior 12 months involve the payment of money by or an
incurrence of liability of the Seller or any ERISA Affiliate in an amount in
excess of $10,000,000.
(f) Separate Business. Permit its assets to be
commingled with those of Western Digital or any Affiliate of Western Digital.
The Seller shall maintain separate corporate records and books of account from
those of Western Digital and its Affiliates, and the Seller shall conduct its
business from an office separate from that of Western Digital. The Seller will
conduct its business solely in its own name and will cause Western Digital and
its Affiliates to conduct their business solely in their own names so as not to
mislead others as to the identity of the entity with which those others are
concerned. The Seller will provide for its own operating expenses and
liabilities from its own funds, except that the organizational expenses of the
Seller may be paid by Western Digital. The Seller will not hold itself out, or
permit itself to be held out, as having agreed to pay, or as being liable for,
the debts of Western Digital or any of its Affiliates, and the Seller shall
cause Western Digital and its Affiliate not to hold themselves out, or permit
themselves to be held out, as having agreed to pay, or as being liable for, the
debts of the Seller. The Seller will maintain an arm's length relationship
with Western Digital and its Affiliates with respect to any transactions
between the Seller, on the one hand, and Western Digital or its Affiliates on
the other.
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(g) Capital Stock. Issue any capital stock except to
Western Digital or create any Subsidiary. The Seller shall not pay any
dividends to Western Digital if such payment would be prohibited under the
General Corporation Law of the State of Delaware.
(h) Statement for and Treatment of Sales. Prepare any
financial statements for financial accounting or reporting purposes which shall
account for the transactions contemplated herein in any manner other than as a
sale of the Purchased Interest to the Administrative Agent, for the benefit of
the Investors.
6.03. Covenants of the Servicer. The Servicer covenants
to each Investor and the Administrative Agent as follows:
(a) Notice of Termination Event. Promptly upon any
Responsible Officer of the Servicer becoming aware of any Termination Event or
Potential Termination Event, the Servicer shall give the Administrative Agent,
S&P and Moody's notice thereof, together with a written statement of a
Responsible Officer setting forth the details thereof and any action with
respect thereto taken or contemplated to be taken by the Servicer.
(b) Notice of Material Adverse Change. Promptly upon
any Responsible Officer of the Servicer becoming aware thereof, the Servicer
shall give the Administrative Agent, S&P and Moody's notice of any material
adverse change in the business, operations or financial condition of the
Servicer which the Servicer believes reasonably could reasonably be expected to
affect adversely the collectibility of the Receivables or the ability of the
Servicer to service such Receivables. When Western Digital is the Servicer
hereunder, in order to verify compliance with this Section 6.03(b) and
otherwise verify compliance with this Agreement, the Servicer shall, unless the
Majority Investors shall otherwise consent in writing, furnish or cause to be
furnished to the Administrative Agent the documents described in 6.01(b)
hereof.
(c) Preservation of Corporate Existence. The Servicer
shall preserve and maintain its corporate existence, rights, franchises and
privileges in the jurisdiction of its incorporation, and qualify and remain
qualified in good standing as a foreign corporation in each jurisdiction where
the failure to preserve and maintain such existence, rights, franchises,
privileges and qualification would materially adversely affect (i) the
interests of the Administrative Agent or any Investor hereunder or (ii) the
ability of the Servicer to perform its obligations under this Agreement.
(d) Compliance with Laws. The Servicer shall comply in
all material respects with all Laws applicable to the
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Servicer, its business and properties where the failure to so comply would
materially adversely affect (i) the interests of the Administrative Agent or
any Investor hereunder or (ii) the ability of the Servicer to perform its
obligations under this Agreement.
(e) Books and Records. The Servicer shall, or shall
cause the Seller to, to the extent practicable, 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, Records and other information reasonably necessary or advisable for the
collection of all Receivables (including, without limitation, Records adequate
to permit the identification of all Related Security and Collections and
adjustments to each existing Receivable).
(f) Fulfillment of Obligations. The Servicer will duly
observe and perform all material obligations and undertakings on its part to be
observed and performed under or in connection with this Agreement and will do
nothing to impair the rights, title and interest of the Administrative Agent or
any Investor in and to the Purchased Interest.
(g) Copies of Reports, Filings, Etc. The Servicer shall
furnish to the Administrative Agent, as soon as practicable after the issuance,
sending or filing thereof, copies of all proxy statements, financial
statements, reports and other communications which the Servicer sends to its
security holders generally, and copies of all regular, periodic and special
reports which the Servicer files with the Securities and Exchange Commission or
with any securities exchange on Forms 10-K, 10-Q, 8-K or any successor forms
thereto.
(h) Litigation. As soon as possible, and in any event
within ten Business Days of the knowledge of any Responsible Officer thereof,
the Servicer shall give the Administrative Agent notice of (i) any litigation,
investigation or proceeding against the Servicer which may exist at any time
which, in the reasonable judgment of the Servicer, could reasonably be expected
to have a material adverse effect on the financial condition or results of
operations of the Servicer or could impair the ability of the Servicer to
perform its obligations under this Agreement and (ii) any material adverse
development in any such previously disclosed litigation.
(i) Total Systems Failure. The Servicer shall promptly
notify the Administrative Agent, S&P and Moody's of any total systems failure
and shall advise the Administrative Agent, S&P and Moody's of the estimated
time required to remedy such total systems failure and of the estimated date on
which a Monthly Report can be delivered. Until a total systems failure is
remedied, the Servicer (i) will furnish to the Administrative
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Agent such periodic status reports and other information relating to such total
systems failure as the Administrative Agent may reasonably request and (ii)
will promptly notify the Administrative Agent if the Servicer believes that
such total systems failure cannot be remedied by the estimated date, which
notice shall include a description of the circumstances which gave rise to such
delay, the action proposed to be taken in response thereto, and a revised
estimate of the date on which a Monthly Report can be delivered. The Servicer
shall promptly notify the Administrative Agent, S&P and Moody's when a total
systems failure has been remedied.
(j) Further Information. The Servicer shall use its
best efforts to furnish to the Administrative Agent such other information with
respect to the Receivables as promptly as practicable, and in such form and
detail, as the Administrative Agent may reasonably request.
(k) Administrative and Operating Procedures. The
Servicer shall maintain and implement administrative and operating procedures
adequate to permit the identification of the Receivables and all collections
and adjustments attributable thereto and shall comply in all material respects
with the Credit and Collection Policy in regard to each Receivables and related
Contract.
(l) Customer List. The Servicer shall at all times
maintain a current list (which may be stored on magnetic tapes or disks) of all
Obligors under Contracts related to Receivables, including the name, address,
telephone number and account number of each such Obligor. The Servicer shall
deliver or cause to be delivered a copy of such list to the Administrative
Agent as soon as practicable following the Administrative Agent's request.
(m) Notice of Relocation. The Servicer shall give the
Administrative Agent, S&P and Moody's 45 days' prior written notice of any
relocation of its Chief Executive Office if, as a result of such relocation,
the applicable provisions of the UCC of any applicable jurisdiction or other
applicable Laws would require the filing of any amendment of any previously
filed financing statement or continuation statement or of any new financing
statement. The Servicer will at all times maintain its Chief Executive Office
within a jurisdiction in the United States in which Article Nine of the UCC
(1972 or later revision) is in effect as of the date hereof or the date of any
such relocation.
(n) Fees, Taxes and Expenses. The Servicer shall pay
all filing fees, stamp taxes, other taxes (other than taxes imposed directly on
the overall net income of the Investors) and expenses, including the fees and
expenses set forth in Section 9.01 hereof, if any, which may be incurred on
account of or arise out of this Agreement and the documents and transactions
entered into pursuant to this Agreement.
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(o) Collections. The Servicer shall instruct all
Obligors to cause all Collections to be mailed to or otherwise deposited in a
Permitted Lockbox.
(p) Insurance. The Servicer shall keep insured by
financially sound and reputable insurers all property of a character usually
insured by corporations engaged in the same or similar business similarly
situated against loss or damage of the kinds and in the amounts customarily
insured against by such corporations and carry such other insurance as is
usually carried by such corporations.
(q) 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 perform 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 Administrative Agent.
(r) Performance and Compliance with Contracts. The
Servicer shall, or if Western Digital is no longer the Servicer, Western
Digital shall, timely and fully perform and comply with all material
provisions, covenants and other promises required to be observed by it under
the Contracts related to the Receivables.
(s) No Other Business. The Servicer shall engage in no
business other than business substantially similar to its current business.
6.04. Negative Covenants of the Servicer. The Servicer
covenants that it will not, without the prior written consent of the Majority
Investors:
(a) No Rescissions or Modifications. Reduce, rescind or
cancel any Receivable or related Contract or modify any terms or provisions
thereof or grant any Dilution Factors to an Obligor, except in accordance with
the Credit and Collection Policy or otherwise with the prior written consent of
the Majority Investors.
(b) No Liens. Cause any of the Receivables or related
Contracts, or any inventory or goods the sale of which may give rise to such
Receivable (unless the secured party having a security interest in any such
inventory or goods disclaims any Lien in Receivables as proceeds of such
inventory or goods), or any Permitted Lockbox or Lockbox Account or any right
to receive any payments received therein or deposited thereto, to be sold,
pledged, assigned or transferred or to be subject to a Lien, other than the
sale and assignment of the Purchased Interest therein to the Administrative
Agent and the Investors and the Liens crested in connection with the
transactions contemplated by this Agreement.
DC1-1121.9 78
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(c) Consolidations Mergers and Sales of Assets. (i)
Consolidate or merge with or into any other Person or (ii) sell, lease or
otherwise transfer all or substantially all of its assets to any other Person;
provided that the Servicer may merge with another Person if (A) the Servicer is
the corporation surviving such merger and (B) immediately after and giving
effect to such merger, no Termination Event, Potential Termination Event or
Servicer Default shall have occurred and be continuing and (C) S&P and Moody's
shall have given prior written notice of such merger.
(d) No Changes. Make any change in the character of its
business or in the Credit and Collection Policy, which change would, in either
case, impair the collectibility of any material amount of the Receivables or
make any material change in the Credit and Collection Policy without prior
written notification to the Administrative Agent and prior written consent of
the Majority Investors, or change its name, identity or corporate structure in
any manner which would make any financing statement or continuation statement
filed in connection with this Agreement or the transactions contemplated hereby
seriously misleading within the meaning of Section 9-402(7) of the UCC of any
applicable jurisdiction or other applicable Laws unless it shall have given the
Administrative Agent at least 45 days' prior written notice thereof and unless
prior thereto it shall have caused such financing statement or continuation
statement to be amended or a new financing statement to be filed such that such
financing statement or continuation statement would not be seriously
misleading.
(e) Change in Payments or Deposits of Payments. Except
with the prior written consent of the Administrative Agent, add or terminate
any Person as a Permitted Lockbox Bank from those Persons listed in Exhibit N
hereto, make or permit any change in the location of any Permitted Lockbox or
the location or account number of any Lockbox Account, or make any change in
the instructions to its Obligors regarding payments to be made to the Seller or
Servicer or payments to be made to any Permitted Lockbox.
6.05. Negative Covenants of Western Digital. Western
Digital, both as Servicer and in its individual capacity, covenants that it
will not, without the prior written consent of the Majority Investors:
(a) Minimum Consolidated Tangible Net Worth. Permit
Consolidated Tangible Net Worth to be less than the following amounts at the
following dates: (i) at December 25, 1993, $90 million plus the Net Cash
Equity Proceeds of any sale of equity of Western Digital received after the
Closing Date but prior to or on December 25, 1993; (ii) at March 26, 1994, $95
million plus the Net Cash Equity Proceeds of any sale of equity of Western
Digital received during the fiscal quarter ended on such date plus the
principal amount of any debt security of Western Digital
DC1-1121.9 79
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converted into capital stock of Western Digital during such quarter; and (iii)
at the end of any subsequent fiscal quarter, the sum of (A) the Consolidated
Tangible Net Worth required to be maintained as of the end of the immediately
preceding fiscal quarter, plus (B) 80% of Western Digital's net income (after
taxes) (but not net losses) for such fiscal quarter, plus (C) the Net Cash
Equity Proceeds of any sale of equity of Western Digital received during such
fiscal quarter, plus (D) the principal amount (or, in the case of a debt
security issued at a discount, the then accreted value of such debt security)
of any debt security of Western Digital converted into capital stock of Western
Digital during such quarter. "Net Cash Equity Proceeds" means, with respect to
any sale of equity by Western Digital, the aggregate cash proceeds of such
issuance or sale received by Western Digital, net of (i) attorneys' fees,
accountants' fees, underwriters' fees, placement agents' fees, discounts or
commissions and brokerage, consultant, filing and other fees actually incurred
in connection with such sale, and (ii) taxes paid or payable as a result
thereof (other than capital gains taxes).
(b) Profitability. Permit more than two (2) consecutive
fiscal quarters of net losses.
(c) Leverage Ratio. Permit the ratio of Western
Digital's Debt to Consolidated Tangible Net Worth to exceed the following
amounts at the following dates: (i) at March 26, 1994, 1.60:1; (ii) at June
30, 1994 and September 24, 1994, 1.40:1; (iii) at December 24, 1994 and March
25, 1995, 1.20:1; and (iv) at June 30, 1995 and at the last day of each fiscal
quarter thereafter, 1.00:1.
(d) No Liens. Cause any of the Receivables or related
Contracts, or any inventory or goods (including software and other intellectual
property) the sale of which may give rise to a Receivable, whether or not such
sale gives rise to a Receivable (unless the secured party having a security
interest in such inventory or goods disclaims any interest in the Receivables,
as proceeds of such inventory or goods), or any Permitted Lockbox or Lockbox
Account or any right to receive any payments received therein or deposited
thereto, to be sold, pledged, assigned or transferred or to be subject to a
Lien, other than the sale and assignment of the Receivables by Western Digital
to the Seller pursuant to the Receivables Contribution and Sale Agreement, and
of the Purchased Interest in the Receivables to the Administrative Agent, for
the benefit of the Investors, and the Liens created in connection with the
transactions contemplated by the Receivables Contribution and Sale Agreement
and by this Agreement.
(e) Credit and Collection Policy. Alter its Credit and
Collection Policy in effect from time to time, except with the prior written
consent of the Administrative Agent.
DC1-1121.9 80
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(f) Pledge of Stock. Pledge or sell the stock of the
Seller.
(g) Statement for and Treatment of the Sales. Prepare
any financial statements for financial accounting or reporting purposes which
shall account for the transactions contemplated by the Receivables Contribution
and Sale Agreement in any manner other than as a sale of the Transferred
Property by Western Digital to the Seller.
In order to verify compliance with the covenants in
Section 6.05(a), (b) and (c) hereof, a Responsible Officer of Western Digital
shall deliver a certificate in substantially the form of Exhibit Q hereto to
the Administrative Agent (who will deliver such certificate to any Investor
upon request of such Investor) within 15 days of the end of each fiscal quarter
of Western Digital.
ARTICLE VII
TERMINATION
7.01. Termination Events. A "Termination Event" shall
mean the occurrence and continuance of one or more of the following events or
conditions (provided that the occurrence and continuance of the Termination
Event set forth in Section 7.01(m) hereof shall not be a "Termination Event"
with respect to the Bank Purchasers:
(a) the Seller shall fail to remit or fail to cause to
be remitted to the Servicer, the Administrative Agent or any Investor on any
day any Collections or other amounts required to be remitted to the Servicer,
the Administrative Agent or such Investor on such day; or
(b) the Seller shall fail to deposit, or pay or fail to
cause to be deposited or paid when due any other amount due hereunder; or
(c) any representation, warranty, certification or
statement made by the Seller under this Agreement (other than under Section
5.02 hereof) or in any agreement, certificate, report, appendix, schedule or
document furnished by the Seller or the Servicer, as the case may be, to any
Investor or the Administrative Agent pursuant to or in connection with this
Agreement shall prove to have been false or misleading in any respect material
to this Agreement or the transactions contemplated hereby as of the time made
or deemed made (including by omission of material information necessary to make
such representation, warranty, certification or statement not misleading); or
(d) the Seller shall fail to obtain the prior consent of
each of the Investors, the Majority Investors, the Majority
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Bank Purchasers, the Majority DFC Purchasers, the Majority Purchasers (as
defined in the Asset Purchase Agreement) or the Administrative Agent, as
required, to any action or provision as to which such consent is required by
the terms of this Agreement; or
(e) the Seller shall default or fail in the performance
or observance of any other covenant, agreement or duty applicable to it
contained herein and such default or failure shall continue for seven Business
Days after either (i) any Responsible Officer of the Seller or the Servicer, as
the case may be, becomes aware thereof or (ii) notice thereof to such Person by
the Administrative Agent or the Majority Investors; or
(f) the Default Ratio, computed for the immediately
preceding month, shall exceed 5%; or the sum of the Charge-Off Ratios, computed
for each of the three immediately preceding months, shall exceed 1.75%; or the
sum of the Dilution Ratios, computed for each of the three immediately
preceding months shall exceed 35%; or
(g) Western Digital shall default or fail in the
performance or observance of covenant, agreement or duty applicable to it
contained herein and such default or failure shall continue for seven Business
Days after either (i) any Responsible Officer of the Seller, the Servicer or
Western Digital, as the case may be, becomes aware thereof or (ii) notice
thereof to such Person by the Administrative Agent or the Majority Investors;
or
(h) there shall be pending any litigation, investigation
or proceeding, or any material adverse development in any such litigation shall
have occurred, which a Seller is required to disclose pursuant to Section
6.01(g) or Section 6.03(h) hereof, which would materially adversely affect the
financial position or results of operations of the Seller or Western Digital
and its Consolidated Subsidiaries taken as a whole or materially impair the
ability of the Seller or the Servicer to perform their respective obligations
under this Agreement; or
(i) there shall have occurred any event which materially
adversely affects the collectibility of a material amount of the Receivables or
there shall have occurred any other event which materially adversely affects
the ability of the Servicer to collect Receivables or the ability of the
Servicer to perform hereunder or the warranty in Section 5.04(a)(B) hereof
shall not be true at any time; or
(j) an Event of Bankruptcy shall occur with respect to
the Seller or Western Digital; or
(k) the Investors' Aggregate Percentage Interest shall
at any time exceed 100% (but for the limitation set forth in the
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first sentence of the second paragraph of the definition of such term) and
shall continue to exceed 100% for five (5) days after Servicer's calculation
(after recalculation, if appropriate) of such Percentage; or
(l) the occurrence of a Servicer Default if such
Servicer Default shall have occurred and be continuing for at least seven (7)
days and if a Complete Servicing Transfer would not cure such Default or result
in the Investors' suffering no material adverse effect; or
(m) 60 days following the date on which (i) the
Securities and Exchange Commission, any banking regulatory authority or any
other Official Body having jurisdiction over J.P. Morgan & Co. Incorporated
("JPM") or any of its subsidiaries, shall require the consolidation of the
assets and liabilities of DFC on the balance sheet of JPM or any of its
subsidiaries (including, without limitation, J.P. Morgan Delaware or Morgan
Guaranty Trust Company of New York) or shall require that capital be maintained
with respect thereto under any capital requirements as if such assets were
owned by JPM or any of its subsidiaries, (ii) the independent auditors for JPM
shall have advised JPM or any of its subsidiaries in writing that in their
opinion such consolidation is required by GAAP or applicable Law, rule or
regulations, (iii) any Affected Party shall determine that any arrangement or
transaction contemplated by this Agreement, the Security Agreement, the APA
Credit Agreement, the Asset Purchase Agreement or the Program Letter of Credit
Reimbursement Agreement will impose a material adverse regulatory impact on
such Affected Party, including without limitation, any Transaction Cost
described in Section 9.02 hereof; or (iv) DFC shall determine that DFC may be
required to register as an investment company under the Investment Company Act
of 1940, as amended.
7.02. Consequences of a Termination Event.
(a) If a Termination Event with respect to an Investor
Group specified in Section 7.01 hereof shall occur and be continuing, the
Administrative Agent shall, at the request, or may with the consent of the
Majority Bank Purchasers or the Majority DFC Purchasers, as the case may be, by
notice to the Seller and the Servicer (a "Notice of Termination"), terminate
the obligation of such Investor Group to purchase any interest in any
Receivables (including by reinvestment) hereunder and declare all outstanding
Tranche Periods related to such Investor Group to be ended; provided, however,
that neither the Administrative Agent nor the Bank Purchasers shall have a
right to terminate the obligation of the Bank Purchasers to purchase
Receivables hereunder solely upon the occurrence of a Termination Event under
Section 7.01(m) hereof; and provided further that, in the case of a Termination
Event under Section 7.01(f), (i), (j) and (k) hereof, such obligation of all of
the Investors hereunder shall be automatically terminated without any action on
the part of the
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Administrative Agent and all outstanding Tranche Periods shall be ended. Any
such termination shall reduce the Maximum Net Investment of the Investor Group
in effect from time to time thereafter to the amount of the Bank Net Investment
or the DFC Net Investment, as the case may be, at such time and the
Administrative Agent, after consultation with each of the Investors in such
Investor Group may, pursuant to Section 2.06 hereof and in any case other than
a termination due to a Termination Event described in Section 7.01(m) hereof,
declare the Tranche Rates applicable to the Bank Net Investment or the DFC Net
Investment, as the case may be, to be the Base Rate plus 1% per annum. The
Administrative Agent shall give S&P, Moody's and each Investor in an Investor
Group prompt notice of the Administrative Agent's delivery of a Notice of
Termination with respect to such Investor Group to the Seller and the Servicer
and shall also give S&P and Moody's prompt notice of the determination not to
deliver a Notice of Termination after the occurrence of a Termination Event;
provided, however, that failure to give such notice shall not affect the
effectiveness of, or the rights of the Administrative Agent or the applicable
Investors resulting from the delivery of, such Notice of Termination.
(b) Upon any termination of the Investors' obligations
pursuant to this Section 7.02, such Investors and the Administrative Agent
shall have, in addition to all rights and remedies under this Agreement or
otherwise, all other rights and remedies provided under the UCC of the
applicable jurisdiction and under other applicable Laws, which rights shall be
cumulative.
(c) The parties hereto acknowledge that this Agreement
is, and is intended to be, a contract to extend financial accommodations to the
Seller within the meaning of Section 365(e)(2)(B) of the Federal Bankruptcy
Code (11 U.S.C. Section 365(e)(2)(B)) (or any amended or successor provision
thereof or any amended or successor code).
ARTICLE VIII
THE ADMINISTRATIVE AGENT
8.01. Authorization and Action. Each Investor hereby
accepts the appointment of and authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms hereof, together with such powers as are
reasonably incidental thereto. When requested to do so by the Majority Bank
Investors, the Majority DFC Investors or the Majority Investors, as the case
may be, the Administrative Agent shall take such action or refrain from taking
such action as the Majority Bank Investors, the Majority DFC Investors or the
Majority Investors, as the case may be, direct under or in connection with or
on any
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matter relating to the Seller, the Servicer, this Agreement and all other
Purchase Documents. In the event of a conflict between a determination or
calculation made by the Administrative Agent and a determination or calculation
made by the Majority Bank Investors, the Majority DFC Investors or the Majority
Investors, as the case may be, the determination or calculation of the Majority
Bank Investors, the Majority DFC Investors or the Majority Investors as the
case may be, shall control. Except for actions which the Administrative Agent
is expressly required to take pursuant to this Agreement or the Asset Purchase
Agreement, the Administrative Agent shall not be required to take any action
which exposes the Administrative Agent to personal liability or which is
contrary to applicable law unless the Administrative Agent shall receive
further assurances to its satisfaction from the Investors of the
indemnification obligations under Section 8.05 hereof against any and all
liability and expense which may be incurred in taking or continuing to take
such action. The Administrative Agent agrees to give to each Investor prompt
notice of each notice and determination given to it by the Seller, Western
Digital or the Servicer or by it to the Seller, Western Digital or the
Servicer, pursuant to the terms of this Agreement. Subject to Section 8.06
hereof, the appointment and authority of the Administrative Agent hereunder
shall terminate at the later to occur of (i) the payment to (a) each Investor
of all amounts owing to such Investor hereunder and (b) the Administrative
Agent of all amounts due hereunder and (ii) the later of the Bank Expiration
Date and the DFC Expiration Date.
8.02. UCC Filings. The Investors, the Seller and the
Servicer expressly recognize and agree that the Administrative Agent may be
listed as the assignee or secured party of record on, and the Investors
expressly authorize the Administrative Agent to execute on their behalf as
their agent, the various UCC filings required to be made hereunder in order to
perfect the sale of the Purchased Interest from the Seller to the Investors,
that such listing and/or execution shall be for administrative convenience only
in creating a record or nominee owner to take certain actions hereunder on
behalf of the Investors or to execute UCC filings on behalf of the Investors
and that such listing and/or execution will not affect in any way the status of
the Investors as the beneficial owners of the Purchased Interest. In addition,
such listing or execution shall impose no duties on the Administrative Agent
other than those expressly and specifically undertaken in accordance with this
Article VIII. In furtherance of the foregoing, each Investor shall be entitled
to enforce its respective rights created under this Agreement without the need
to conduct such enforcement through the Administrative Agent except as provided
herein.
8.03. Administrative Agent's Reliance, Etc. Neither the
Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them as
Administrative Agent under or in connection with this Agreement (including,
without
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limitation, the Administrative Agent's servicing, administering or collecting
Receivables as Servicer pursuant to Section 4.02 hereof), except for its or
their own gross negligence or willful misconduct. Without limiting the
foregoing, the Administrative Agent: (i) may consult with legal counsel,
independent public accountants and other experts selected by it 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; (ii) makes
no warranty or representation to any Investor and shall not be responsible to
any Investor for any statements, warranties or representations made by the
Seller or the Servicer in connection with this Agreement; (iii) shall not have
any duty to ascertain or to inquire as to the performance or observance of any
of the terms, covenants or conditions of this Agreement on the part of the
Seller or the Servicer or to inspect the property (including the books and
records) of the Seller or the Servicer; (iv) shall not be responsible to any
Investor for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other instrument or
document furnished pursuant hereto; and (v) shall incur no liability under or
in respect of this Agreement by acting upon any notice (including notice by
telephone), consent, certificate or other instrument or writing (which may be
by telex) believed by it in good faith to be genuine and signed or sent by the
proper party or parties.
8.04. Administrative Agent and Affiliates. J.P. Morgan
Delaware and its Affiliates may generally engage in any kind of business with
the Seller, Western Digital, the Servicer or any Obligor, any of their
respective Affiliates and any Person who may do business with or own securities
of the Seller, the Servicer or any Obligor or any of their respective
Affiliates, all as if J.P. Morgan Delaware were not the Administrative Agent
and without any duty to account therefor to the Investors.
8.05. Indemnification. Each Investor severally agrees
to indemnify the Administrative Agent (to the extent not reimbursed by the
Seller or Servicer), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against the Administrative Agent in any way relating
to or arising out of this Agreement or any action taken or omitted by the
Administrative Agent under this Agreement; provided, that (i) an Investor shall
not be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting or arising from the Administrative Agent's gross negligence or
willful misconduct and (ii) an Investor shall not be liable for any amount in
respect of any compromise or settlement or any of the foregoing unless such
compromise or settlement is approved by the Majority Investors. Without
limitation of the generality of the foregoing, each Investor agrees to
reimburse the Administrative Agent, promptly
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upon demand, for any reasonable out-of-pocket expenses (including reasonable
counsel fees) incurred by the Administrative Agent in connection with the
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, provided, that an Investor
shall not be responsible for the costs and expenses of the Administrative Agent
in defending itself against any claim alleging the gross negligence or willful
misconduct of the Administrative Agent to the extent such gross negligence or
willful misconduct is determined by a court of competent jurisdiction in a
final and non-appealable decision. Notwithstanding the foregoing, no Investor
shall be liable to the Administrative Agent for any liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed upon,
incurred by or asserted against the Administrative Agent which arose in
connection with actions taken or omitted to be taken by the Administrative
Agent after the Investor Net Investment of such Investor has been irrevocably
reduced to zero and all Aggregate Unpaids of such Investor have been paid, and
DFC's liability to the Administrative Agent under this Section 8.05 shall be
limited by the provisions of Section 9.23 hereof.
8.06. Successor Administrative Agent. The
Administrative Agent may resign at any time by giving sixty days' written
notice thereof to the Investors, the Seller and the Servicer, S&P and Moody's.
Upon any such resignation, the Majority Investors shall have the right to
appoint a successor Administrative Agent approved by the Seller (which approval
will not be unreasonably withheld or delayed). If no successor Administrative
Agent shall have been so appointed by the Majority Investors, and shall have
accepted such appointment, within sixty days after the retiring Administrative
Agent's giving of notice or resignation, then the retiring Administrative Agent
shall not retire until a successor Administrative Agent shall have been
appointed and may, on behalf of the Investors, appoint a successor
Administrative Agent approved by the Seller (which approval will not be
unreasonably withheld or delayed), which successor Administrative Agent shall
be (a) either (i) a commercial bank having a combined capital and surplus of at
least $250,000,000, (ii) an Affiliate of such bank, or (iii) an Affiliate of
JPM, (b) such a commercial bank or Affiliate having a short-term debt rating of
at least "A-3" by S&P and at least "P-3" by Moody's and (c) experienced in the
types of transactions contemplated by this Agreement. Upon the acceptance of
any appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and
become vested with all of the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent, the provisions of this Article VIII
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shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under this Agreement. The retiring
Administrative Agent shall give prompt written notice to S&P and Moody's of the
appointment of a successor Administrative Agent.
ARTICLE IX
MISCELLANEOUS
9.01. Expenses. The Seller agrees, upon receipt of a
written invoice, to pay or cause to be paid, and to save DFC, the
Administrative Agent, the Referral Agent and the Co-Agents (and in the case of
clause (ii)(y) below, every other Investor) harmless against liability for the
payment of, all reasonable out-of-pocket expenses (including, without
limitation, attorneys', accountant's and other third parties' fees and
expenses, any filing fees and expenses incurred by officers or employees of DFC
(and in the case of clause (ii)(y) below, every other Investor), the Servicer,
the Administrative Agent, the Referral Agent and the Co-Agents, but excluding
salaries and similar overhead costs of DFC (and in the case of clause (ii)(y)
below, every other Investor), the Servicer, the Administrative Agent, the
Referral Agent and the Co-Agents which are incurred regardless of the execution
and performance of this Agreement) incurred by or on behalf of DFC (and in the
case of clause (ii) below, every other Investor), the Servicer, the
Administrative Agent, the Referral Agent and the Co-Agents (i) in connection
with the negotiation, execution, delivery and preparation of the Purchase
Documents, the Receivables Contribution and Sale Agreement and the transactions
contemplated by or undertaken pursuant to or in connection herewith or
therewith (including, without limitation, the perfection or protection of the
Purchased Interest in the Receivables) and (ii) from time to time (x) relating
to any requested amendments, waivers or consents under the Purchase Documents
or the Receivables Contribution and Sale Agreement, (y) arising in connection
with the Investors', the Administrative Agent's or the Co-Agents' enforcement
or preservation of their respective rights (including, without limitation, the
perfection and protection of the Purchased Interest in the Receivables) under
the Purchase Documents or the Receivables Contribution and Sale Agreement, or
(z) arising in connection with any audit, dispute, disagreement, litigation or
preparation for litigation involving the Purchase Documents or the Receivables
Contribution and Sale Agreement, which, including all amounts payable under
Section 9.02 hereof, shall be referred to in this Agreement as "Transaction
Costs".
9.02. Indemnity for Taxes Reserves and Expenses.
(a) If after the date hereof, the adoption of any Law or
bank regulatory guideline or any amendment or change in the interpretation of
any existing or future Law or bank regulatory
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guideline by any Official Body charged with the administration, interpretation
or application thereof, or the compliance with any directive of any Official
Body (in the case of any bank regulatory guideline, whether or not having the
force of Law):
(i) subject to such Affected Party's compliance with
Section 9.21, if applicable, shall subject any Affected Party and any
permitted assigns (collectively, the "Indemnified Parties") to any
tax, duty or other charge with respect to the Purchase Documents, the
Receivables Contribution and Sale Agreement, the Purchased Interest,
the Receivables or payments of amounts due thereunder, or shall
change the basis of taxation of payments to any Indemnified Party of
amounts payable in respect of the Purchase Documents, the Receivables
Contribution and Sale Agreement, the Purchased Interest, the
Receivables or payments of amounts due thereunder or its obligation
to advance funds in respect of the Purchase Documents, the
Receivables Contribution and Sale Agreement, the Purchased Interest
or the Receivables (except for changes in the rate of general
corporate, franchise, net income or other income tax imposed on such
Indemnified Party by the jurisdiction in which such Indemnified
Party's principal executive office is located); 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 of Governors of
the Federal Reserve System) against assets of, deposits with or for
the account of, or credit extended by, any Indemnified Party or shall
impose on any Indemnified Party or on the United States market for
certificates of deposit or the London interbank market any other
condition affecting the Purchase Documents, the Receivables
Contribution and Sale Agreement, the Purchased Interest, the
Receivables or payments of amounts due thereunder or its obligation
to advance funds in respect of the Purchase Documents, the
Receivables Contribution and Sale Agreement, the Purchased Interest
or the Receivables; or
(iii) imposes upon any Indemnified Party any other
expense (including, without limitation, reasonable attorneys' fees
and expenses, and expenses of litigation preparation therefor in
contesting any of the foregoing) with respect to the Purchase
Documents, the Receivables Contribution and Sale Agreement, the
Purchased Interest, the Receivables or payments of amounts due
thereunder or its obligation to advance funds in respect of the
Purchase Documents, the Receivables Contribution and Sale Agreement,
the Purchased Interest or the Receivables;
and the result of any of the foregoing is to increase the cost to such
Indemnified Party with respect to the Purchase Documents,
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the Receivables Contribution and Sale Agreement, the Purchased Interest, the
Receivables, the obligations thereunder, the funding or refunding of any
purchases thereunder, under the Asset Purchase Agreement, the APA Credit
Agreement or under the Program Letter of Credit Reimbursement Agreement, by an
amount deemed by such Indemnified Party to be material, then, within 10 days
after demand by any Investor or the Administrative Agent, the Seller agrees to
pay or cause to be paid to such Investor or the Administrative Agent such
additional amount or amounts as will compensate such Indemnified Party for such
increased cost. Except as expressly otherwise required by this Section 9.02(a)
or any other provision of this Agreement, neither the Seller nor the Servicer
shall have an obligation to pay to or reimburse the Administrative Agent or any
Investor for any amount on account of income, franchise, withholding or other
taxes and, except to the extent the Administrative Agent or any such Investor
is entitled to deliver and delivers forms pursuant to Section 9.21 showing that
no withholding or other deduction is required to be made, the Seller and the
Servicer shall be entitled to make such withholdings and other deductions from
amounts payable hereunder as may be required to be made under applicable law.
(b) If any Indemnified Party shall have determined that,
after the date hereof, the adoption of any applicable Law or bank regulatory
guideline regarding capital adequacy, or any change therein, or any change in
the interpretation thereof by any Official Body, or any directive regarding
capital adequacy (in the case of any bank regulatory guideline, 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 Indemnified Party (or
its parent) as a consequence of such Indemnified Party's obligations hereunder
or with respect hereto to a level below that which such Indemnified Party (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 Indemnified Party to be material, then
from time to time, within 10 days after demand by any Investor or the
Administrative Agent, the Seller agrees to pay or cause to be paid to such
Indemnified Party such additional amount or amounts as will compensate such
Indemnified Party (or its parent) for such reduction.
(c) Each Investor and the Administrative Agent will
promptly notify the Seller of any event of which it has knowledge, occurring
after the date hereof, which notice shall include a certificate signed by an
officer of such Investor in reasonably sufficient detail to permit the Seller
to determine the amount of such compensation claimed, which will entitle an
Indemnified Party to compensation pursuant to this Section 9.02. A notice by
any Investor, or the Administrative Agent on behalf of an Investor, claiming
compensation under this Section and setting forth the additional amount or
amounts to be paid to it hereunder shall be rebuttably presumptive. In
determining such
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amount, any Investor may use any reasonable averaging and attributing methods.
9.03. Indemnity.
(a) The Seller agrees to indemnify, defend and save
harmless each Investor, the Administrative Agent, their directors, officers,
shareholders, employees, agents and each legal entity, if any, who controls any
Investor or the Administrative Agent, other than for the indemnitee's own gross
negligence or willful misconduct, forthwith on demand, from and against any and
all losses, claims, damages, liabilities, out-of-pocket costs and expenses
(including, without limitation, all reasonable attorneys' fees and expenses,
out-of-pocket expenses incurred by their respective credit recovery groups (or
any successors thereto) and expenses of settlement, litigation or preparation
therefor) which any Investor or the Administrative Agent may incur or which may
be asserted against any Investor or the Administrative Agent by any Person
(including, without limitation, any Obligor or any other Person whether on its
own behalf or derivatively on behalf of the Seller) arising from or incurred in
connection with (i) any breach of a representation, warranty or covenant by the
Seller made or deemed made hereunder or in connection herewith or the
transactions contemplated hereby or any statement made by any Responsible
Officer of the Seller in connection herewith or the transactions contemplated
hereby which shall have been incorrect in any material respect when made, (ii)
any action taken or, if the Seller is otherwise obligated to take action,
failed to be taken, by the Seller, with respect to the Purchased Interest or
any of its obligations hereunder, including, without limitation, the Seller's
failure to comply with an applicable law or regulation, (iii) any failure to
vest and maintain vested in the Investors an undivided ownership interest in
the Receivables included in the Purchased Interest, free and clear of any Lien
or other adverse claim (except for Liens created by any Investor), whether
existing at the time of Purchase of such Receivables or at any time thereafter,
(iv) any failure to pay when due any taxes, including without limitation any
sales tax, excise tax or other similar tax or charge payable in connection with
the Receivables and their creation or satisfaction, (v) any products liability
claim arising out of or which relates to the Purchased Interest in the
Receivables or related Contracts or (vi) any dispute, suit, action, claim,
proceeding or governmental investigation, pending or threatened, whether based
on statute, regulation or order, on tort, on contract or otherwise, before any
Official Body which arises out of or relates to the Purchase Documents, the
Purchased Interest in the Receivables or related Contracts, or the use of the
proceeds of the sale of the Purchased Interest in the Receivables pursuant
hereto.
(b) Promptly upon receipt by any indemnified party under
this Section 9.03 of notice of the commencement of any suit, action, claim,
proceeding or governmental investigation
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against such indemnified party, such indemnified party shall, if a claim in
respect thereof is to be made against the Sellers hereunder, notify the Seller
in writing of the commencement thereof. The Seller may participate in and
assume the defense of any such suit, action, claim, proceeding or investigation
at its expense, and no settlement thereof shall be made without the approval of
the Seller and the indemnified party. The approval of the Seller will not be
unreasonably withheld or delayed. After notice from the Seller to the
indemnified party of its intention to assume the defense thereof with counsel
reasonably satisfactory to the Administrative Agent and the Majority Investors,
and so long as the Seller so assumes the defense thereof in a manner reasonably
satisfactory to the Administrative Agent and the Majority Investors, the Seller
shall not be liable for any legal expenses of counsel unless there shall be a
conflict between the interests of the Seller and the indemnified party.
9.04. Holidays. Except as may be provided in this
Agreement to the contrary, if any payment due hereunder shall be due on a day
which is not a Business Day, such payment shall instead be due the next
succeeding Business Day.
9.05. Records. All amounts calculated or due hereunder
shall be determined from the records of the Administrative Agent, which
determinations shall be conclusive absent manifest error.
9.06. Amendments and Waivers. The Majority Bank
Purchasers, DFC, the Administrative Agent, the Servicer and the Seller may from
time to time, with the consent, if required pursuant to this Agreement or the
Asset Purchase Agreement, of the APA Purchasers or Majority Purchasers (as
defined in, or as required by, the Asset Purchase Agreement), enter into
agreements amending, modifying or supplementing this Agreement, and the
Majority Bank Purchasers and DFC, with the consent, if required pursuant to
this Agreement or the Asset Purchase Agreement, of the APA Purchasers or
Majority Purchasers (as defined in, or as required by, the Asset Purchase
Agreement), in their sole discretion, may from time to time grant waivers of
the provisions of this Agreement or consents to a departure from the due
performance of the obligations of the Seller or the Servicer under this
Agreement; provided that if any such amendment, modification, supplement or
waiver relates solely to the rights or obligations of one Investor Group, only
the Investors related to such Investor Group shall be required to consent to
such amendment, modification, supplement or waiver; provided further, that no
such amendment, modification, supplement or waiver shall, unless signed by each
affected Investor, (i) increase the Maximum Net Investment of the DFC
Purchasers or increase the Purchase Commitment of any Bank Purchaser, (ii)
reduce the amount of the Aggregate Net Investment of any Tranche or reduce the
Discount applicable to any Tranche, (iii) extend the DFC Expiration Date
(except as provided in Section 2.15 hereof) or the Bank
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Expiration Date, (iv) change the percentage of the (1) Bank Percentage Interest
in the Purchased Interest, (2) DFC Percentage Interest in the Purchased
Interest or (3) Purchased Interest, as the case may be, which shall be required
for the Investors or any of them to take any action under this Section or any
other provision of this Agreement or (v) consent to or permit the assignment or
transfer of any rights in the Purchase Documents or in the security interest or
ownership interest in the Receivables (together with Related Security,
Collections and other Proceeds with respect thereto) granted to the
Administrative Agent for the benefit of the Investors in any manner other than
in accordance with the Purchase Documents. Any such agreement, waiver or
consent must be in writing and shall be effective only to the extent
specifically set forth in such writing. Any waiver of any provision hereof,
and any consent to a departure by the Seller or the Servicer from any of the
terms of this Agreement, shall be effective only in the specific instance and
for the specific purpose for which given and if such amendment, waiver or
departure would have a material adverse effect on the rights or obligations of
the APA Agent, the Collateral Agent or the Program LOC Bank, such amendment,
departure or waiver shall not be effective until consented to by the Affected
Party, provided, that,if any such amendment would have a material effect on the
rights or obligations of the parties hereto, such amendment shall not be
effective without prior written confirmation from S&P and Moody's that such
amendment would not result in the reduction or withdrawal of its then current
rating of the Commercial Paper. The Administrative Agent shall give S&P and
Moody's prompt notice of any such waiver.
9.07. Term of Agreement. This Agreement shall terminate
following the later of (x) the Bank Expiration Date and (y) the DFC Expiration
Date and the reduction of the Aggregate Net Investment to zero and the
indefeasible payment in full of all Discount and all other Aggregate Unpaids;
provided, however, that (i) the rights and remedies of the Investors and the
Administrative Agent with respect to any representation and warranty made or
deemed to be made by or on behalf of a Seller or the Servicer pursuant to this
Agreement, (ii) the indemnification and payment provisions set forth in
Sections 9.01, 9.02 and 9.03 hereof and (iii) the agreement set forth in
Section 9.20 hereof shall be continuing and shall survive any termination of
this Agreement.
9.08. No Implied Waiver: Cumulative Remedies. No
course of dealing and no delay or failure of any Investor or the Administrative
Agent in exercising any right, power or privilege under the Purchase Documents
shall affect any other or future exercise thereof or the exercise of any other
right, power or privilege; nor shall any single or partial exercise of any such
right, power or privilege or any abandonment or discontinuance of steps to
enforce such a right, power or privilege preclude any further exercise thereof
or of any other right, power or privilege. The rights and remedies of the
Investors under
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Purchase Documents are cumulative and not exclusive of any or remedies which
any Investor would otherwise have.
9.09. No Discharge. The obligations of the Seller and
the Servicer under the Purchase Documents shall be absolute and unconditional
and shall remain in full force and effect without regard to, and shall not be
released, discharged or in any way affected by (a) any exercise or nonexercise
of any right, remedy, power or privilege under or in respect of the Purchase
Documents or applicable Law, including, without limitation, any failure to
set-off or release in whole or in part by any Investor of any balance of any
deposit account or credit on its books in favor of the Seller or the Servicer
or any waiver, consent, extension, indulgence or other action or inaction in
respect of any thereof, or (b) any other act or thing or omission or delay to
do any other act or thing which would operate as a discharge of the Seller or
the Servicer as a matter of Law.
9.10. Notices. All notices under Section 7.02 hereof
shall be given to the Seller or the Servicer by telephone or facsimile,
confirmed by first-class mail, first-class express mail or courier, in all
cases with charges prepaid. All other notices, requests, demands, directions
and other communications (collectively "notices") under the provisions of this
Agreement shall be in writing (including telexed or facsimile communication)
unless otherwise expressly permitted hereunder and shall be sent by first-class
mail, first-class express mail, or by telex or facsimile with confirmation in
writing mailed first-class mail, in all cases with charges prepaid. Any such
properly given notice shall be effective when received. All notices shall be
sent to the applicable party at the Office stated on the signature page hereof
or in accordance with the last unrevoked written direction from such party to
the other parties hereto.
9.11. Severability. The provisions of this Agreement
are intended to be severable. If any provision of this Agreement shall be held
invalid or unenforceable in whole or in part in any jurisdiction, such
provision shall, as to such jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without in any manner affecting the validity or
enforceability of such provision in any other jurisdiction or the remaining
provisions hereof in any jurisdiction.
9.12. Governing Law: Submission to Jurisdiction. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. The Seller and the Servicer hereby submit to the
nonexclusive jurisdiction of the courts of the State of New York and the courts
of the United States located in the State of New York for the purpose of
adjudicating any claim or controversy arising in connection with any of the
Purchase Documents or any of the transactions contemplated thereby, and for
such purpose, to the extent it may lawfully do so, waives any objection which
it may now or
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hereafter have to such jurisdiction or to venue therein and any claim of
inconvenient forum with respect thereto. Nothing in this Section 9.12 shall
affect the right of any Investor or the Administrative Agent to bring any
action or proceeding against the Seller or the Servicer or their respective
property in the courts of other jurisdictions.
9.13. Prior Understandings. This Agreement sets forth
the entire understanding of the parties relating to the subject matter hereof,
and supersedes all prior understandings and agreements, whether written or
oral.
9.14. Survival. All representations and warranties of
the Seller and the Servicer contained herein or made in any document delivered
in connection herewith shall not be waived by the execution and delivery of
this Agreement, any investigation by an Investor or Investors or the
Administrative Agent, the purchase, repurchase or payment of any Purchased
Interest in any Receivable, or any other event or condition whatsoever (other
than a written waiver complying with Section 9.06 hereof). The covenants and
agreements contained in or given pursuant to this Agreement (including, without
limitation, those contained in Articles IV and VI hereof) shall continue in
full force and effect until the termination of the obligation of all Investors
to make Purchases hereunder, the reduction of the Aggregate Net Investment to
zero and the payment in full of all Discount and all other Aggregate Unpaids.
9.15. Counterparts. This Agreement may be executed in
any number of counterparts and by the different parties hereto on separate
counterparts each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument.
9.16. Set-Off; Sharing of Payments.
(a) In case a Termination Event with respect to either
Investor Group shall occur and be continuing, each Investor and, to the fullest
extent permitted by Law, the holder of any assignment of any DFC Purchaser's
rights hereunder pursuant to the Security Agreement, shall each have the right,
in addition to all other rights and remedies available to it, without notice to
the Seller or the Servicer, to set-off against and to appropriate and apply to
any amount owing by the Seller or the Servicer hereunder which has become due
and payable, any debt owing to, and any other funds held in any manner for the
account of, the Seller or the Servicer by an Investor or by any holder of any
assignment, including, without limitation, all funds in all deposit accounts
(whether time or demand, general or special, provisionally credited or finally
credited, or otherwise) now or hereafter maintained by the Seller or the
Servicer with an Investor or the Collateral Agent under the Security Agreement.
Such right shall exist whether or not such debt owing to, or funds held for the
account of, the Seller or the Servicer is or
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are matured other than by operation of this Section 9.16 and regardless of the
existence or adequacy of any collateral, guaranty or any other security, right
or remedy available to any Investor or any holder. Nothing in this Agreement
shall be deemed a waiver or prohibition or restriction of any Investors or any
holder's rights of set-off or other rights under applicable Law.
(b) Each Investor agrees that if it shall, by exercising
any right of set-off or counterclaim or otherwise, receive payment of a
proportion of any amounts owing by the Seller or the Servicer hereunder which
is greater than the proportion received by any other Investor in respect of the
aggregate amount due to it pursuant to this Agreement, the Investor receiving
such proportionately greater payment shall purchase such participations in the
Investor Percentage Interest in the Purchased Interest held by the other
Investors, and such other adjustments shall be made, as may be required so that
all such payments by the Seller or the Servicer hereunder, shall be shared by
all of the Investors pro rata; provided that nothing in this Section shall
impair the right of any Investor to exercise any right of set-off or
counterclaim it may have and to apply the amount subject to such exercise to
the payment of indebtedness of the Sellers other than its indebtedness under
this Agreement. The Seller and the Servicer agree, to the fullest extent they
may effectively do so under Law, that any holder of a participation in an
Investor's Percentage Interest in the Purchased Interest, whether or not
acquired pursuant to the foregoing arrangements, may exercise rights of set-off
and counterclaim and other rights with respect to such participation as fully
as if such holder of a participation were a direct creditor of the Seller or
the Servicer in the amount of such participation.
9.17. Successors and Assigns.
(a) This Agreement shall be binding on the parties
hereto and their respective successors and assigns; provided, however, that the
Seller may not assign any of its rights or delegate any of its duties hereunder
without the prior written consent of the Majority Investors. No provision of
this Agreement shall in any manner restrict the ability of any Investor to
assign, participate, grant security interests in, or otherwise transfer all or
any portion of the Purchased Interest owned by such Investor, provided that,
except as otherwise specified herein, no assignment of an Investor's Purchased
Interest shall be effective without the consent of the Seller. The Seller and
the Servicer hereby agree and consent to the complete assignment by the DFC
Purchasers of all of their respective rights under, interest in, title to and
obligations under the Purchase Documents to the Collateral Agent. The
Administrative Agent shall give prompt notice to S&P and Moody's of any such
assignment.
DC1-1121.9 96
<PAGE> 102
(b) Any Investor may, in the ordinary course of its
business and in accordance with applicable law, at any time sell to one or more
Persons (each a "Participant"), with the consent of the Seller, which consent
shall not be unreasonably withheld, participating interests in its Investor
Percentage Interest, its obligation to purchase undivided percentage ownership
interests in the Receivables or any other interest of such Investor hereunder;
provided, however, that the assignment by DFC to any of the APA Purchasers in
accordance with the provisions of the Asset Purchase Agreement shall not be
considered a sale of DFC's Investor Percentage Interest under this subsection
9.17(b). Notwithstanding any such sale by an Investor of a participating
interest to a Participant, such Investor's rights and obligations under this
Agreement shall remain unchanged, such Investor shall remain solely responsible
for the performance of its obligations hereunder, and the Seller, the Servicer
(to the extent provided herein) and the Administrative Agent shall continue to
deal solely and directly with such Investor in connection with such Investor's
rights and obligations under this Agreement. Each Investor agrees that any
agreement between such Investor and any such Participant in respect of such
participating interest shall not restrict such Investor's right to agree to any
amendment, supplement, waiver or modification to this Agreement, except for any
amendment, supplement, waiver or modification described in clauses (i), (ii),
(iii), (iv) and (v) of Section 9.06 hereof.
9.18. Confidentiality. Each Investor, the
Administrative Agent, the Seller and the Servicer each shall hold all
non-public information obtained pursuant to this Agreement and the transactions
contemplated hereby or effected in connection herewith in accordance with
customary procedures for handling confidential information of this nature and
in any event may make disclosure (a) reasonably required by a bona fide
transferee, including without limitation any APA Lending Bank or any successor
Investor, in connection with the participation in this Agreement by such APA
Lending Bank, or such successor Investor (b) necessary in order to obtain any
consents, approvals, waivers or other arrangements required to permit the
execution, delivery and performance by the Sellers of this Agreement or (c) as
required or requested by any Official Body or pursuant to legal process.
9.19. Payments Set Aside. To the extent that the
Seller, the Servicer or any Obligor makes a payment to the Administrative Agent
for distribution to the Investors or to an Investor or an Investor exercises
its rights of set-off and such payment or set-off or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by, or is required to be refunded, rescinded,
returned, repaid or otherwise restored to the Seller, the Servicer, such
Obligor, a trustee, a receiver or any other Person under any Law, including,
without limitation, any bankruptcy law, any state or federal law, common law or
equitable cause, the obligation or part thereof originally
DC1-1121.9 97
<PAGE> 103
intended to be satisfied shall, to the extent of any such restoration, be
reinstated, revived and continued in full force and effect as if such payment
had not been made or such set-off had not occurred. The provisions of this
Section 9.19 shall survive the termination of this Agreement.
9.20. No Petition. (a) The Seller and the Servicer
each agrees that, prior to the date which is one year and one day after the
date upon which all obligations of the Seller to DFC and the DFC Purchasers
hereunder are paid in full and all outstanding Commercial Paper and other
indebtedness of DFC are paid in full, it will not institute against, or join
any other Person in instituting against DFC any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding or other similar proceeding
under the laws of the United States or any state of the United States.
(b) The Administrative Agent, the Investors and the
Servicer each agrees that, prior to the date which is one year and one day
after the date all obligations of the Seller to DFC and the DFC Purchasers
under this Agreement are paid in full, it will not institute against, or join
any other Person in instituting against the Seller any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding or other
similar proceeding under the laws of the United States or any state of the
United States.
9.21. Tax Forms. Each Investor (other than Investors
organized under the laws of the United States or any state thereof) agrees to
promptly provide the Seller, the Servicer and the Administrative Agent with (A)
appropriate executed copies of Internal Revenue Service Form 4224 (or
alternatively, Internal Revenue Service Form 1001, but only if the applicable
treaty described in such Form provides for a complete exemption from federal
income tax withholdings), or any successor forms, (i) on or promptly after the
date hereof (or, if later, the date on which it becomes an Investor hereunder
pursuant to Section 9.17 hereof), and (ii) upon the occurrence of any event
that would require the amendment or resubmission of any such Form previously
provided hereunder and (B) such other forms or information in connection
therewith reasonably requested by the Seller, the Servicer or the
Administrative Agent.
9.22. No Recourse. The obligations of DFC under this
Agreement are solely the corporate obligations of DFC. No recourse shall be
had for the payment of any amount owing in respect of this Agreement or for the
payment of any fee hereunder or for any other obligation or claim arising out
of or based upon this Agreement against Merrill, Goldman, any Affected Party,
the Referral Agent or the Administrative Agent, any Affiliate of any of the
foregoing, or any stockholder, employee, officer, director, incorporator or
beneficial owner of any of the foregoing. For purposes of this paragraph, the
term "Merrill" shall mean and include Merrill and all Affiliates thereof and
any
DC1-1121.9 98
<PAGE> 104
stockholder, employee, officer, director, incorporator or beneficial owner of
any of them, and the term "Goldman" shall mean and include Goldman and all
Affiliates thereof and any stockholder, employee, officer, director,
incorporator or beneficial owner of any of them; provided, however, that DFC
shall be considered to be an Affiliate of Merrill, Goldman, the Referral Agent,
any Affected Party or the Administrative Agent for the purposes of this
Section.
9.23. Limited Recourse. The payment obligations of DFC
under this Agreement are subject to the availability of excess cash flow and
the payment priorities set forth in the Security Agreement. To the extent that
such excess cash flow is insufficient or unavailable for such obligation, it
shall not constitute a claim against DFC.
DC1-1121.9 99
<PAGE> 105
IN WITNESS WHEREOF, the parties hereto, by their duly
authorized signatories, have executed and delivered this Agreement as of the
date first above written.
DELAWARE FUNDING CORPORATION
by: J.P. Morgan Delaware, as
attorney-in-fact for
Delaware Funding
Corporation
by:
----------------------
Authorized Signatory
Vice President
----------------------
Title
Address for Notices: Delaware Funding Corporation
c/o J H Holdings Corporation
Ropes & Gray
One International Place
Boston,
Massachusetts 02110-2464
Attention: David Donaldson
Tel. No.: (617) 951-7000
Fax No.: (617) 951-7050
With a copy to
the Referral Agent: J.P. Morgan Delaware
902 Market Street
Wilmington, Delaware 19801
Attention: Asset Finance
Group
Tel. No.: (302) 651-3788
Fax No.: (302) 652-7416
Address for Funds Transfer: Morgan Guaranty Trust
Company
ABA No. 021 11 00 238
for credit to: J.P. Morgan
Delaware
Account No. 001 39 068
for further credit to:
Delaware Funding
Corporation
Commercial Paper Account
DC1-1121.9 100
<PAGE> 106
Purchase J.P. MORGAN DELAWARE, as
Commitment: $25,000,000 a Bank Purchaser
By:
--------------------------
Authorized Signatory
Vice President
-------------------------
Title
Address for Notices: 902 Market Street
Wilmington, Delaware 19801
Attention: Asset Finance Group
Tel. No.: (302) 651-3788
Fax No.: (302) 652-7416
Address for Funds Transfer: Morgan Guaranty Trust Company
of New York
New York, New York
Account Name: J.P. Morgan
Delaware
ABA No. 021-000-238
Account No. 001-39-968
Attention: Loan Operations
Reference: Western Digital
Funding Corporation
DC1-1121.9 101
<PAGE> 107
Purchase THE FIRST NATIONAL BANK OF BOSTON
Commitment: $25,000,000
By:
-------------------------------
Authorized Signatory
Managing Director
------------------------------
Title
Address for Notices: The First National Bank of Boston
435 Tasso Street, Suite 250
Palo Alto, California 94301
Attention: High Technology
Division/PALOALT
and
The First National Bank of Boston
100 Federal Street
Boston, Massachusetts 02110
Attention: High Technology
Division/01-08-04
Address for Funds Transfer: The First National Bank of Boston
ABA No. 011-00-390
100 Federal Street
Boston, Massachusetts 02110
Attention: Comm Loan Svc, Adm 50
High Tech
Ref: Western Digital Corporation
DC1-1121.9 102
<PAGE> 108
J.P. Morgan DELAWARE, as
Administrative Agent
by:
-------------------------------
Authorized Signatory
Vice President
------------------------------
Title
Address for Notices: J.P. Morgan Delaware
902 Market Street
Wilmington, Delaware 19801
Attention: Asset Finance
Group
Tel. No.: (302) 651-3788
Fax No.: (302) 652-7416
Address for Funds Transfer: Morgan Guaranty Trust Company
ABA No. 021 11 00 238
for credit to: J.P. Morgan Delaware
Account No. 001 39 068
for further credit to:
Delaware Funding Corporation
Commercial Paper Account
WESTERN DIGITAL CAPITAL CORPORATION,
as Seller
by:
-------------------------------
Authorized Signatory
Chief Financial Officer
------------------------------
Title
Address for Notices: 8105 Irvine Center Drive, 4th Floor
Irvine California 92718
Attention: Chief Financial Officer
Tel. No.: (714) 753-1083
Address for Funds Transfer: Morgan Guaranty Trust Company of
New York
ABA No. 021-11-00-238
for credit to Western Digital
Capital Corporation
Account No. 001-61-8921
WESTERN DIGITAL CORPORATION, as
Servicer
by:
------------------------------
Authorized Signatory
Vice President and Treasurer
------------------------------
Title
DC1-1121.9 103
<PAGE> 109
Address for Notices: 8105 Irvine Center Drive
Irvine California 92718
Attention: Treasury Department
Tel. No.: (714) 932-5000
Fax No.: (714) 932-5899
Address for Funds Transfer: Morgan Guaranty Trust Company of
New York
ABA No. 021-111-00-238
for credit to Western Digital
Corporation
Account No. 066-58-865
WESTERN DIGITAL CORPORATION
by:
------------------------------
Authorized Signatory
Vice President and Treasurer
------------------------------
Title
DC1-1121.9 104
<PAGE> 110
Exhibit A
WESTERN DIGITAL
CORPORATION
<TABLE>
<S> <C> <C> <C>
SUBJECT EFFECTIVE DATE LAST REVISION DATE FIN. NUMBER
Credit Management 04/01/90 12/20/93 3550
</TABLE>
PURPOSE:
To establish guidelines for evaluating and granting credit limits to customers,
monitoring payment trends and ensuring maximized cash flow and revenue while
minimizing risk.
POLICY:
In establishing credit guidelines, the Company's goal is to satisfy the
customer's needs to purchase products at their convenience and to pay for those
purchases within a specified time frame, while minimizing potential losses.
Credit shall be granted to customers within the following stated guidelines and
limitations established by the Credit Department.
Sales shall only be made on open account to customers who have an approved,
available credit limit. The Credit Department must evaluate and grant credit
limits to potential customers, monitor payment trends and make collections
efforts as necessary. Sales to customers under letter of credit arrangements
are not covered by this policy.
PROCEDURE:
I. Establishment of Credit
A. The establishment of a credit limit is of utmost importance in terms of
serving the customer's needs and maintaining customer relations. Care
must be taken, however, to minimize the Company's exposure to potential
losses due to a financially unstable customer.
<PAGE> 111
Policy No. 3550
Page 2 of 4
B. Sufficient information must be obtained from the customer to permit an
adequate appraisal of the credit risk involved in establishing and
servicing the account.
1. All customers requesting credit should submit the following to the
Credit Department for evaluation:
a. A completed Credit Application (Exhibit A)
b. Customer Financial Statements
c. Bank References
d. Trade References
2. The following information may be used as additional sources for
evaluating the customer's credit worthiness
a. Dun & Bradstreet Report
b. Personal Interview
c. Sales Department input and knowledge
d. Trade Credit Associations (e.g. Reimer Assoc.)
C. Upon receipt of the potential customer's credit information, a customer
file will be created. This information, along with the following
tangible and subjective aspects, is then reviewed:
1. Character: The integrity and honesty of the customer, i.e. the
customer must be willing to pay within the established terms.
2. Capacity: The profitability of the customer's business, i.e. the
customer must not only be willing to pay, but must also be able to
meet its obligations.
3. Capital: The tangible aspects of the customer's credit worthiness
that can be measured with some exactness, i.e. the customer's
financial strength.
4. Conditions: Other items to consider in order to evaluate the
customer's credit worthiness such as, does the customer utilize
its profits to help expand its business, does the customer
generate sufficient levels of cash to cover its obligations such
as accounts payable and bank loans, does the customer have a
previous history of non-payment, etc.
<PAGE> 112
Policy No. 3550
Page 3 of 4
D. A credit limit will be established by the responsible Credit Manager
based on the evaluation of the customer's financial history and
determination of the customer's credit worthiness. The following
criteria should be taken into consideration when determining the amount
of the credit limit:
1. Status of the customer and the length of time in business, i.e.
the financial strength of the customer (both on a historical and a
go-forward basis)
2. Total credit exposure to the customer, i.e. the credit limit
should be established at a level whereby the customer can meet all
of its financial obligations within their stated terms
3. Potential of the customer, i.e. the customer's ability to purchase
product regularly from the Company, as well as the customer's
growth potential
4. Size of the customer's order, i.e. the amount of the credit limit
should be sufficient to cover the average order for the customer
E. All credit limits shall be approved by the Senior Credit Managers and
may be subject to review and approval by the Treasurer.
F. Once a customer is approved for credit, only the Credit Department can
update the Customer Master File with the customer's approved payment
terms and credit limit. This information is used for Invoice
Authorization and billing purposes. Orders that exceed a customer's
credit limit must be manually approved by the responsible Credit
Manager.
G. Reviews of credit limits are an on-going process. Factors taken into
consideration are profit and payment trends, business opportunities,
and strategic partnerships.
<PAGE> 113
Policy No. 3550
Page 4 of 4
II. Collections
A. Domestically the standard payment terms granted to each customer is Net
30 days from date of invoices. International terms may vary
geographically.
B. Communication regarding payment is a continuous process. Collection
efforts will occur according to established terms and current payment
trends. These efforts should be documented by entries into the call
sheet log (Exhibit B) or by copies of faxed correspondences kept in the
customer file.
C. In certain cases, it may be necessary to handle collections through the
responsible Sales Manager or Sales Representative who has a close
working relationship with the customer.
MAINTENANCE
This policy shall be reviewed annually by the Treasurer and Senior Credit
Managers to ensure that the policy meets the needs of both the Company and its
customers.
<PAGE> 114
EXHIBIT B
Description of Qualifying Receivable
Accounts receivables generated from the sale of computer-related merchandise
(other than software) by Western Digital Corporation.
B-1
<PAGE> 115
ASSET PURCHASE AGREEMENT
Dated as of January 7, 1994
Exhibit O
(to Receivables Purchase
Agreement)
J.P. MORGAN DELAWARE, as administrative agent (the "Agent"), and each
of the parties (each a "Purchaser") who has executed a signature page to this
Asset Purchase Agreement or an Assignment of Purchase Commitment in the form of
Exhibit A hereto agree as follows:
RECITALS
WHEREAS WESTERN DIGITAL CAPITAL CORPORATION (the "Seller"), DELAWARE
FUNDING CORPORATION ("DFC"), the Agent, WESTERN DIGITAL CORPORATION, in its
individual capacity and as servicer ("Western Digital" and the "Servicer",
respectively) and certain banks listed therein have entered into a Receivables
Purchase Agreement dated as of January 7, 1994 (the "Receivables Purchase
Agreement");
WHEREAS DFC has purchased, and may from time to time in the future
purchase, from the Seller undivided percentage ownership interests in
Receivables (including any additional Receivables arising after the initial
purchase of interests in Receivables), together with the Related Security and
Collections with respect thereto (collectively, the "Purchased Interest");
WHEREAS DFC may in the future determine from time to time sell
undivided interests in the Purchased Interest ("Percentage Interests") to the
Purchasers or to assign to the Purchasers its obligations to purchase from the
Seller undivided percentage ownership interests in Receivables (including any
additional Receivables arising after the initial purchase of interests in
Receivables), together with the Related Security and Collections with respect
thereto (collectively, a "Purchase Assignment"); and
WHEREAS each Purchaser has agreed to purchase Percentage Interests that
from time to time may be offered for sale by DFC during the term of its
Purchase Commitment (as defined below) under this Asset Purchase Agreement or
to accept Purchase Assignments.
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions. Unless otherwise defined herein, the terms defined
in the Receivables Purchase Agreement are used herein as therein defined.
2. Purchase of Percentage Interests and Purchase Assignments. (a) A
Purchaser shall become a party hereto (i) by executing and delivering to the
Agent a counterpart of the signature page to this Asset Purchase Agreement or
(ii) in accordance with the procedures set forth in Section 9 hereof.
Thereupon, upon acceptance and recording by the Agent in the Register (defined
below) and subject to any necessary approval of such Purchaser by the Seller,
such Purchaser shall become a party to this Asset Purchase Agreement from and
after the effective date set forth on such signature page. Purchasers may
become parties hereto at different times and from time to time in accordance
with the foregoing procedure. The signature page shall set forth the undivided
percentage (the "Percentage") interest in the Purchased Interest that a
Purchaser has agreed to purchase hereunder, the maximum amount of the Investor
Net Investment (which shall not exceed the DFC Net Investment) that a Purchaser
is obligated to purchase hereunder plus accrued and unpaid Discount at the
applicable Tranche Rate (the "Maximum Purchase"), the effective date of the
purchase commitment and the
<PAGE> 116
expiration date of the purchase commitment (the "Purchase Termination Date").
If DFC desires to extend the Purchase Termination Date of a Purchaser, then DFC
shall notify the Agent at least 60 days but not more than 90 days prior to such
Purchaser's Purchase Termination Date of its desire to extend such Purchaser's
Purchase Termination Date for a period of an additional eleven months,
whereupon the Agent shall notify such Purchaser of DFC's desire to extend such
Purchaser's Purchase Termination Date. Each Purchaser shall promptly notify
the Agent whether it agrees to such extension at least 25 days but not more
than 30 days prior to such Purchaser's Purchase Termination Date. The Agent
shall notify DFC in writing of the decision of each Purchaser within one
Business Day after receipt of notice from such Purchaser, which notice shall
separately set forth the name and the Maximum Purchase of each Purchaser which
decides not to extend its Purchase Termination Date. If a Purchaser agrees to
an extension, the new Purchase Termination Date for such Purchaser shall be 360
days from the 30th day before the previous Purchase Termination Date. No
Downgraded Purchaser (as defined below) shall be permitted to extend its
Purchase Termination Date. In the event that any Purchaser desires to extend
its Purchase Termination Date for a Maximum Purchase amount that is less than
the amount of its Maximum Purchase prior to DFC's request for an extension of
the Purchase Termination Date, DFC, in its sole and absolute discretion, may
accept such extension; provided, however, that such Purchaser shall be deemed
to be a Reducing Purchaser (as defined below) for purposes of Section 13(f) to
the extent of such Purchaser's Reduced Amount (as defined below).
For the purposes of this Asset Purchase Agreement, "Downgraded
Purchaser" means any Purchaser that has its commercial paper or short-term
deposit rating lowered below (a) P-1 by Moody's or (b) A-1+ by S&P and
"Non-Extending Purchaser" shall mean a Purchaser that has not consented to the
extension of its Purchase Termination Date pursuant to this Section 2(a).
(b) (i) From time to time upon notice from the Agent to each
Purchaser, each of the Purchasers shall purchase, on the terms and
conditions herein set forth, in accordance with their respective
Percentages, Percentage Interests that the Agent, as agent for DFC, offers
for sale, up to such Purchaser's Maximum Purchase. In addition, the Agent
shall notify each Purchaser of the occurrence of a "DFC Sale Event"
(hereinafter defined) and of an obligation to purchase, and on the Business
Day after receipt of such notice, the Purchasers shall purchase, severally
and not jointly, Percentage Interests, on the terms and conditions herein
set forth, in accordance with their respective Percentages, up to such
Purchaser's Maximum Purchase. A "DFC Sale Event" shall occur if any of the
following events occurs: (i) a Termination Event as set forth in Section
7.01(f), (i), (j) or (k) of the Receivables Purchase Agreement, or (ii)
Western Digital shall have breached any covenant set forth in Section
6.05(a), (b) or (c) of the Receivables Purchase Agreement, or (iii) the
Servicer shall have breached any covenant set forth in Section 6.03(b) of
the Receivables Purchase Agreement.
(ii) Each notice of purchase given pursuant to clause (i) of this
Section 2(b) shall be given no later than 11:00 a.m. (New York City time)
on the Business Day of such purchase, shall be sent by telecopier, telex or
cable to all Purchasers concurrently, and shall specify the date of such
purchase and the Tranche in which interests are to be purchased (identified
by Tranche Period and the amount of DFC Net Investment). The Agent shall
request a Tranche Rate for each Tranche or portion thereof to be purchased
by a Purchaser, which Tranche Rate shall be calculated based on the
Eurodollar Rate or Base Rate (collectively, the "Rate") for such Purchaser.
If the Agent has requested a Tranche Rate for any Tranche to be calculated
based on the Eurodollar Rate, the Tranche Period for such Tranche shall
commence three Eurodollar Business Days after notice of such requested
Tranche Rate. Each Purchaser will calculate the Tranche Rate based on the
Rate requested by the Agent; provided, however, that if the Agent has
requested a Tranche Rate based on the Eurodollar Rate, and either (a)
deposits in dollars (in the applicable amounts) are not available to the
Purchasers generally in the London interbank market for such Tranche
Period, or (b) the Majority Purchasers advise the Agent that the Adjusted
LIBOR Rate (as defined in the DFC Rate Supplement) will not adequately and
fairly reflect the cost to such Purchasers of maintaining or funding
Tranches based on the Eurodollar Rate, the Agent shall so notify the
<PAGE> 117
Administrative Agent, whereupon until the Administrative Agent notifies the
Agent that such circumstances no longer exist, the obligation of the
Purchasers to allocate any portion of the Maximum Purchase amount to any
Tranche based on the Eurodollar Rate shall be suspended. Each Purchaser
will notify the Agent by 12:00 noon (New York City time) if the Tranche
Rate is not going to be based on the requested Rate. Each Purchaser will
establish the Tranche Rate based on the Eurodollar Dollar Rate at the
Eurodollar Rate (as such term is defined in the DFC Rate Supplement) and
will establish the Rate based on the Base Rate at the Base Rate (as such
term is defined in the Receivables Purchase Agreement.) Prior to 2:00 p.m.
(New York City time) on the date of each purchase, each Purchaser shall pay
the Agent for the account of DFC in immediately available funds in United
States dollars, by depositing to an account designated by the Agent in New
York City, an amount (such Purchaser's "Purchase Price") equal to such
Purchaser's Percentage of the lesser of (a) the then unpaid Investor Net
Investment related to the Purchased Interest (which Investor Net Investment
and Purchased Interest shall be calculated giving effect to the
corresponding Purchase by DFC under the Receivables Purchase Agreement)
plus accrued and unpaid Discount, if any, for such Purchased Interest or
(b) the following amount computed for the Purchased Interest:
DPI x ARB
---------
LRA
Where:
DPI = The DFC Percentage Interest.
ARB = The sum of (i) Net Receivables Balance, (ii) all Collections
deemed to have been received by the Seller or the Servicer
pursuant to Section 2.08(c)-(g) of the Receivables Purchase
Agreement, and (iii) the Outstanding Balance of all
Receivables that are no longer Eligible Receivables for any
reason other than that set forth in clause (i) of the
definition of "Eligible Receivable" in Section 1.01 of the
Receivables Purchase Agreement.
LRA = A loss reserve adjustment, computed by adding to the number 1
an amount (expressed as a fraction) equal to 50% of the fixed
percentage that is used in determining Loss Percentage.
For purposes of the foregoing computations, DPI shall be calculated after
giving effect to the corresponding Purchase by DFC under the Receivables
Purchase Agreement and DPI, ARB and LRA shall be calculated on the date the
Purchased Interest was last computed or deemed computed.
(c) From time to time upon notice from the Agent to each Purchaser,
each Purchaser shall accept Purchase Assignments. From and after the date of a
Purchase Assignment and prior to the date, if any, of any reassignment pursuant
to Section 10(b) hereof, each Purchaser shall assume all of the obligations of
DFC under the Receivables Purchase Agreement (and agrees to be bound by the
Receivables Purchase Agreement) to the extent of such Purchaser's Percentage of
the percentage of Maximum Net Investment with respect to the DFC Purchasers
assigned by DFC to all Purchasers (the "Purchaser's Purchased Percentage").
Upon any such Purchase Assignment, each Purchaser shall succeed to the rights
and be obligated to perform the obligations of DFC under the Receivables
Purchase Agreement to the extent of the Purchaser's Purchased Percentage
(including without limitation, the obligation to make Incremental Purchases
pursuant to Sections 2.01, 2.02 and 2.03 of the Receivables Purchase
Agreement).
(d) Notwithstanding Sections 2(b) and 2(c), a Purchaser shall not be
obligated to make purchases under such Sections at any time in an amount which
would exceed such Purchaser's Maximum Purchase. Each Purchaser's obligation
shall be several, such that the failure of any Purchaser to make payment to the
Agent in connection with any purchase hereunder shall not relieve any other
Purchaser of its obligation hereunder to make payment for the purchase by such
other Purchaser up to such Purchaser's Maximum Purchase. If the
<PAGE> 118
Agent shall have been notified by any Purchaser that such Purchaser will not
make available the amount which would represent such Purchaser's Percentage of
any purchase (other than a Non-Pro Rata Purchase Percentage (as defined below))
requested by DFC or the Seller, as the case may be, each Purchaser agrees,
subject to the first sentence of this Section 2(d), to make available to the
Agent a ratable share of such amount (calculated on the basis of the
Percentages of the Purchasers that the Agent has determined will make such
purchase). The defaulting Purchaser agrees to purchase from each Purchaser
that shall have purchased a portion of such defaulting Purchaser's Percentage,
forthwith upon demand, the amount so purchased, together with Discount at the
applicable Tranche Rate for each day that a Purchaser is required to fund a
portion of the defaulting Purchaser's Percentage.
(e) Each Purchaser shall be obligated to purchase Percentage Interests
or accept Purchase Assignments under this Asset Purchase Agreement (its
"Purchase Commitment") until the earliest of (i) the Purchase Termination Date
of such Purchaser's Purchase Commitment, (ii) the date on which the Agent
notifies the Purchaser that the Receivables Purchase Agreement has been
terminated and the DFC Net Investment and Aggregate Unpaids due the DFC
Purchasers for the Purchased Interest have been paid in full and (iii) (A) the
date DFC voluntarily commences any proceeding or files any petition under any
bankruptcy, insolvency or similar law seeking the dissolution, liquidation or
reorganization or DFC or (B), if involuntary proceedings or any involuntary
petition shall have been commenced or filed against DFC by any Person under any
bankruptcy, insolvency of similar law seeking the dissolution, liquidation or
reorganization of DFC, the date 60 days following the commencement or filing of
such proceeding or petition, if such proceeding or petition has not been
dismissed on or before such date; provided that if a Purchaser's Purchase
Commitment has not previously terminated pursuant to this Section 2 (e), such
Purchaser's obligation to accept Purchase Assignments shall terminate on the
DFC Expiration Date.
(f) Within 10 Business Days of each purchase pursuant to Section 2(b)
hereof, or assignment pursuant to Section 2(c), the Agent will deliver to each
Purchaser a certificate in the form of Exhibit B attached hereto reflecting
each Purchaser's ownership of the Percentage Interest so purchased or the
Purchaser's Purchase Percentage so assigned and will arrange for any filings
necessary to implement such purchase.
(g) Notwithstanding that Purchasers may have purchased Percentage
Interests hereunder and may have received payments from Collections of
Receivables (which have not been reinvested pursuant to Section 4(a) hereof)
sufficient to repay such Percentage Interests in whole or in part, each
Purchaser may be called upon to purchase additional Percentage Interests or
accept additional Purchase Assignments (not to exceed the Maximum Purchase for
each such Purchaser) until the expiration of such Purchaser's Purchase
Commitment pursuant to Section 2(e) hereof.
(h) In the event DFC assigns any portion of the Purchased Interest to
another Person (which is managed by the Agent and which in the ordinary course
of its business issues commercial paper or other securities to fund its
acquisition and maintenance of receivables or interests therein), sales of the
Purchased Interest or Purchase Assignments by such other Person may be made
under this Asset Purchase Agreement on the same terms and conditions as sales
or assignments by DFC.
3. Register. The Agent shall maintain at its address, 902 Market
Street, Wilmington, Delaware 19801, Attention: Asset Finance Group, a copy of
this Asset Purchase Agreement and each signature page hereto and each
Assignment of Purchase Commitment delivered to and accepted by it and a
register for the recordation of the names and addresses of the Purchasers,
their Percentage Interests, Purchase Assignments, effective dates and Purchase
Termination Dates, aggregate outstanding DFC Net Investment relating to the
portion of the Purchased Interest owned by each Purchaser from time to time and
the Purchase Price relating thereto (the "Register"). The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error, and the Seller, the Agent and the Purchasers may treat each person whose
name is recorded in the Register as a Purchaser hereunder for all purposes of
this Asset Purchase Agreement. The
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Register shall be available for inspection by the Seller or any Purchaser at
any reasonable time and from time to time upon reasonable prior notice.
4. Distribution of Payments.
(a) Prior to the earlier of the DFC Expiration Date or the Purchase
Termination Date for a Purchaser, whenever any amount of Collections is paid in
respect of the Purchased Interest and such Purchaser has purchased a Percentage
Interest or has purchased an undivided ownership interest in Receivables
pursuant to a Purchase Assignment and such Purchased Interest or Purchase
Assignment, as applicable, has not been repurchased by DFC pursuant to Section
10 hereof (each such purchased interest, a "Purchaser Interest"), the Servicer
will, on behalf of such Purchaser, reinvest such Collections, pursuant to
Section 2.05 of the Receivables Purchase Agreement, in additional undivided
interests in Receivables. The Percentage of a Purchaser in additional
receivables included in such Purchaser's Purchaser Interest shall at all times
be equal to the Percentage in each other Receivable included or to be included
in such Purchaser's Purchaser Interest. Notwithstanding the foregoing, a
Purchaser shall not be obligated to make a purchase under this Section 4(a) at
any time in an amount which would exceed, if added to all prior purchases
hereunder, such Purchaser's Maximum Purchase. Prior to the earlier of the DFC
Expiration Date or the Purchase Termination Date for a Purchaser, whenever any
amount of Discount is paid in respect of such Purchaser's Purchaser Interest,
the Agent will promptly pay, or cause to be paid, out of funds received by it,
to such Purchaser, in United States dollars, its Percentage of such amount
(adjusted for differences in the Tranche Rates to which such Purchaser and DFC
are entitled and further adjusted to reflect the fact that such Purchaser is
only entitled to the applicable Tranche Rate on its Purchase Price) accrued
from and after the last date on which interest was paid in respect of such
Purchaser Interest prior to the acquisition of such Purchaser Interest by the
Purchaser.
(b) Following the earlier of the DFC Expiration Date or the Purchase
Termination Date for a Purchaser, whenever any amount of DFC Net Investment or
Discount is paid in respect of the Purchaser Interest and such Purchaser has
purchased a Purchaser Interest that has not been repurchased pursuant to
Section 10 hereof, the Agent will promptly pay, or cause to be paid, out of
such funds received by it, to each Purchaser, in United States dollars, its
Percentage of such amount (adjusted for differences in the Tranche Rates to
which such Purchaser and DFC are entitled and further adjusted to reflect the
fact that such Purchaser is only entitled to the applicable Tranche Rate on its
Purchase Price) accrued from and after the last date on which interest was paid
in respect of such Purchaser Interest prior to the acquisition of such
Purchaser Interest by the Purchaser.
(c) If, after the Agent has paid a Purchaser its Percentage of any
amount received by a Purchaser pursuant to paragraphs (a) or (b) above, such
amount must be returned for any reason (including bankruptcy), such Purchaser
will repay to the Agent promptly the amount the Agent paid to such Purchaser.
After a Purchaser has been paid (excluding any repayment referred to in the
immediately preceding sentence) its Investor Net Investment and its Percentage
of accrued Discount on the Purchased Interest (based on the Tranche Rate to
which such Purchaser is entitled and further adjusted to reflect the fact that
the Purchaser is only entitled to the applicable Tranche Rate on its Purchase
Price), such Purchaser acknowledges that any remaining amounts of Investor Net
Investment or Discount paid in connection with the Purchased Interest to which
such Purchaser would otherwise be entitled by reason of its Purchaser Interest
shall be paid to DFC for its own account.
(d) Each Purchaser's rights as a purchaser of Purchaser Interests
shall be as set forth in the Receivables Purchase Agreement, but shall not
extend to any of the fees set forth or referred to in Section 2.10 of the
Receivables Purchase Agreement except as agreed in the separate letters between
the Agent and each Purchaser dated the effective date of such Purchaser's
signature page.
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5. Representations and Warranties. (a) Neither the Agent nor DFC
makes any representation or warranty or assumes any responsibility with respect
to (i) any statements, warranties or representations made in or in connection
with the Receivables Purchase Agreement, the Receivables Contribution and Sale
Agreement, any related guarantee or other agreement or the execution, legality,
validity, enforceability, genuineness or sufficiency of the Receivables
Purchase Agreement, the Receivables Contribution and Sale Agreement, any
related guarantee or other agreement or any instrument or document furnished
pursuant thereto or in connection therewith, (ii) the value or collectibility
of any Receivable or the Purchased Interest or (iii) the financial condition of
the Seller or Servicer or any Affiliate thereof or the performance or
observance by the Seller or Servicer or any Affiliate thereof of any of their
respective obligations under the Receivables Purchase Agreement, the
Receivables Contribution and Sale Agreement, any related guarantee or other
agreement or any instrument or document furnished pursuant thereto or in
connection therewith. The Agent does represent to each Purchaser, however,
that the portion of the Purchased Interest which is sold to each Purchaser
hereunder pursuant to Section 2(b) is, at the time of sale, free and clear of
any adverse claims created by or arising as a result of claims against the
Agent or DFC.
(b) Each Purchaser represents that this Asset Purchase Agreement has
been duly authorized, executed and delivered by such Purchaser pursuant to its
corporate powers and constitutes the legal, valid and binding obligation of
such Purchaser.
(c) Each Purchaser confirms that such Purchaser has received such
documents and information as such Purchaser has deemed appropriate to make its
own credit analysis and decision, independently and without reliance on the
Agent or DFC to enter into this Asset Purchase Agreement and will,
independently and without reliance on the Agent or DFC and based on such
documents and information as such Purchaser shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
hereunder. The Agent will furnish to each Purchaser copies of any financial or
other documents that the Agent receives from time to time under the Receivables
Purchase Agreement, but the Agent assumes no responsibility for the
authenticity, validity, accuracy or completeness thereof.
6. Liability of the Agent, etc. None of the Agent, DFC or the
Referral Agent shall be liable to any Purchaser in connection with (i) the
administration of the Receivables Purchase Agreement or (ii) this Asset
Purchase Agreement or any purchases hereunder (except pursuant to the Agent's
representation in Section 5(a) hereof), in either case except for its own gross
negligence or willful misconduct. Without limiting the foregoing, the Agent,
DFC and the Referral Agent (i) may consult with legal counsel (including
counsel for the Seller), independent public accountants or other experts and
shall not be liable for any action taken or omitted to be taken in good faith
in accordance with the advice of such counsel, accountants or other experts,
(ii) shall not be responsible for the performance or observance by the Seller,
the Servicer or any Affiliate of any of the terms, covenants or conditions of
the Receivables Purchase Agreement, the Receivables Contribution and Sale
Agreement, any related guarantee or other agreement or any instrument or
document furnished pursuant thereto or in connection therewith, (iii) shall
incur no liability by acting upon any notice, consent, certificate or other
instrument or writing believed to be genuine and signed or sent by the proper
party and (iv) shall not be deemed to be acting as any Purchaser's trustee or
otherwise in a fiduciary capacity hereunder or under or in connection with the
Receivables Purchase Agreement or the Purchased Interest.
7. Rights of the Agent. The Agent reserves the right, in its sole
discretion (subject to the next sentence), to exercise any rights and remedies
available to the Purchasers under the Receivables Purchase Agreement, any
related guarantee or other agreement or pursuant to applicable law, and also to
agree to any amendment, modification or waiver of the Receivables Purchase
Agreement, any related guarantee or other agreement or any instrument or
document delivered pursuant thereto or in connection therewith.
Notwithstanding the foregoing, the Agent agrees that it shall not
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(a) without the prior written consent of each Purchaser (or, in the
case of clause (iii), each affected Purchaser),
(i) amend the definitions of "Eligible Receivable," "Defaulted
Receivable" or "Concentration Factor" contained in the Receivables Purchase
Agreement or
(ii) amend, modify or waive any provision of the Receivables
Purchase Agreement in any way which would
(A) increase the Maximum Net Investment of the DFC Purchasers, or
(B) reduce the amount of Aggregate Net Investment or Discount
that is payable on any Tranche on account of the Purchased Interest or
delay any scheduled date for payment thereof, or
(C) impair any rights expressly granted to an assignee or
participant under the Receivables Purchase Agreement, or
(D) reduce fees payable by the Seller to the Agent or DFC
which relate to payments to Purchasers or delay the dates on which such
fees are payable, or
(E) modify any provisions relating to recourse for deemed
Collections or recourse for Discount, or
(iii) agree to a different Rate than set forth for such Purchaser
on the applicable signature page hereof, or
(iv) amend or waive the Termination Event relating to the
bankruptcy of the Seller, or
(v) amend or waive any Servicer Default relating to the financial
condition, or bankruptcy of the Servicer, or
(vi) amend or waive any Termination Event relating to the breach
of financial covenants by Western Digital, or
(b) without the prior written consent of the "Majority Purchasers"
(defined below),
(i) amend the definitions of "Default Ratio," "Charge-Off Ratio,"
"Dilution Ratio," "Average Collection Period," "DFC Percentage Interest,"
"Investor Percentage Interest," "Investors' Aggregate Percentage Interest",
"Net Receivables Balance", "Loss Percentage", "Dilution Percentage" or "Net
Overconcentration Percentage", or
(ii) amend the Termination Events to increase the maximum
permitted Default Ratio, Charge-Off Ratio, Dilution Ratio or Average
Collection Period or increase the maximum Investors' Aggregate Percentage
Interest.
"Majority Purchasers" shall mean at any time Persons owing undivided interests
in the Purchased Interest that aggregate more than 50% of the total outstanding
DFC Net Investment in the Purchased Interest; provided that solely for purposes
of such computation, (1) Purchasers shall be deemed (whether or not they shall
have made purchases or accepted assignments hereunder) to own undivided
interests equal to their respective Percentages of DFC Net Investment and (2)
the DFC Net Investment in the portion of the Purchased Interest owned by DFC
shall be deemed to be reduced by the amounts set forth in clause (1) and also
by the amount of any undivided
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interests in the Purchased Interest owned by Persons other than Purchasers.
Notwithstanding anything to the contrary contained in this Section 7,
nothing herein shall effect any obligation, if any, DFC may have pursuant to
the Receivables Purchase Agreement to give notice to, or seek the consent of
Moody's and S&P to any amendment or waiver of any provision of the Receivables
Purchase Agreement.
8. Obligations of the Purchaser, Including Confidentiality. Each
Purchaser agrees to abide by any obligations set forth in the Receivables
Purchase Agreement on the part of an owner of a portion of the Purchased
Interest, including without limitation any obligations to maintain
confidentiality and not to institute bankruptcy proceedings. Furthermore, each
Purchaser understands that the Receivables Purchase Agreement itself is a
confidential document and no Purchaser will disclose it to any other Person
except with the Agent's prior written consent or to Purchaser's legal counsel
if such counsel agrees to hold it confidential, or as required by law.
Notwithstanding the foregoing, any Purchaser may, in connection with any
assignment or participation or proposed assignment or participation pursuant to
Section 9 or 10 hereof, disclose to the assignee or participant or proposed
assignee or participant any information relating to the Seller, the Servicer
furnished to such Purchaser by or on behalf of the Seller, the Servicer or by
the Agent; provided that, prior to any such disclosure, the assignee or
participant or proposed assignee or participant agrees to preserve the
confidentiality of any confidential information relating to the Seller or the
Servicer received by it from any of the foregoing entities.
9. Assignability. (a) Each Purchaser may assign to any Eligible
Assignee (defined below) or to any other Purchaser all or a portion of its
rights and obligations under this Asset Purchase Agreement (including, without
limitation, all or a portion of its Purchase Commitment and any Percentage
Interests owned by it); provided, however, that
(i) each such assignment shall be of a constant, and not a
varying, percentage of all rights and obligations under this Asset Purchase
Agreement,
(ii) the amount being assigned pursuant to each assignment shall
in no event be less than the lesser of $10,000,000 and the assigning
Purchaser's Maximum Purchase and
(iii) the parties to each such assignment shall execute and
deliver to the Agent, for its acceptance and recording in the Register, an
Assignment of Purchase Commitment in the form of Exhibit A attached hereto,
together with a processing and recordation fee of $2,500.
Upon such execution, delivery, acceptance and recording, from and after
the effective date specified in the Assignment of Purchase Commitment, (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 this Asset Purchase
Agreement, have the rights and obligations of a Purchaser hereunder and (y) the
assignor thereunder shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to this Asset Purchase Agreement, relinquish
its rights and be released from its obligations under this Asset Purchase
Agreement (and, in the case of an assignment covering all or the remaining
portion of an assigning Purchaser's rights and obligations under this Asset
Purchase Agreement, such Purchaser shall cease to be a party hereto).
Notwithstanding the foregoing, no assignment hereunder shall be effective
unless (i) the documents evidencing such assignment are satisfactory to Moody's
and S&P and (ii) the assignee has delivered to Moody's and S&P an opinion of
counsel to the assignee satisfactory to each of Moody's and S&P stating that
the obligations of the assignee under this Asset Purchase Agreement are the
legal, valid and binding obligations of the assignee, enforceable against the
assignee in accordance with their terms.
(b) For purposes of this Asset Purchase Agreement, (i) the term
"Purchaser" shall mean a party
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executing a counterpart of a signature page hereto and each Eligible Assignee
that shall become a party to this Asset Purchase Agreement pursuant to this
Section 9, and (ii) the term "Eligible Assignee" shall mean any Person which
(A) is acceptable to the Agent, (B) is approved by the Seller which approval
shall not be unreasonably withheld and (C) either (x) has short-term debt rated
at least "P-1" by Moody's and "A-1+" by S&P or (y) is acceptable to Moody's and
S&P, provided that the assignment to such Person does not result in a reduction
or withdrawal of the rating of the Commercial Paper issued or to be issued by
DFC by either Moody's or S&P, or both.
(c) Upon its receipt of an Assignment of Purchase Commitment executed
by an assigning Purchaser and by an assignee who is an Eligible Assignee or who
is an existing Purchaser, the Agent shall (i) accept such Assignment of
Purchase Commitment, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Seller.
10. Repurchase by DFC. (a) Provided no Termination Event has
occurred and is continuing, DFC may, upon one Business Day prior written notice
to the Agent (which shall notify the Purchasers on the day it receives such
notice), repurchase Percentage Interests and any purchases made pursuant to a
Purchase Assignment (collectively "Repurchased Interests") from a Purchaser at
a repurchase price equal to such Purchaser's unpaid Investor Net Investment
related to such Repurchased Interest plus accrued and unpaid interest, if any,
at the applicable Tranche Rate for such Repurchased Interest (the "Repurchase
Amount"); provided that the repurchase of any Repurchased Interest shall only
occur at the end of the Tranche Period related to such Repurchased Interest.
Prior to 2:00 p.m. (New York City time) on the date of such repurchase, DFC
shall pay the Agent for the account of each applicable Purchaser in immediately
available funds in United States dollars, by depositing to an account
designated by the Agent in New York City, the Repurchase Amount for each
Repurchased Interest.
(b) Provided that no Termination Event has occurred and is continuing,
DFC may, at any time, upon written notice to the Agent, require a Purchaser to
reassign all or any portion of such Purchaser's Purchase Assignments. From and
after the date of reassignment of a Purchase Assignment the applicable
Purchaser shall have no obligations under the Receivables Purchase Agreement
with respect to such Purchase Assignment.
(c) Within 10 Business Days of each repurchase pursuant to Section
10(a) hereof, or reassignment pursuant to Section 10(b) hereof, the Agent will
deliver to DFC a certificate in the form of Exhibit B hereto reflecting DFC's
ownership of the Repurchased Interest repurchased or the Purchased Interest so
reassigned and will arrange for any filings necessary to implement such
repurchase.
11. Participations. Subject to Section 9.17 of the Receivables
Purchase Agreement, each Purchaser may sell participations to one or more banks
or other entities in or to all or a portion of its rights and obligations under
this Asset Purchase Agreement (including, without limitation, all or a portion
of its Purchase Commitment and the Percentage Interests owned by it); provided,
however, that (i) such Purchaser's obligations under this Asset Purchase
Agreement (including, without limitation, its Purchase Commitment hereunder)
shall remain unchanged and (ii) such Purchaser shall remain solely responsible
to the other parties hereto for the performance of such obligations. The
Seller, the Agent and the other Purchasers shall continue to deal solely and
directly with such Purchaser in connection with such Purchaser's rights and
obligations under this Asset Purchase Agreement.
12. Change in Maximum Net Investment. (a) If, pursuant to Section
7(a)(ii) hereof, the Receivables Purchase Agreement shall be amended to
increase the Maximum Net Investment with respect to the DFC Purchasers, then
(i) the Agent shall promptly notify each Purchaser of such amendment and (ii)
on the effective date of such amendment, each Purchaser's Percentage shall be
proportionately reduced and each Purchaser's Maximum Purchase amount shall
remain the same; provided, however, that if the Agent has not notified the
Purchasers in the notification provided pursuant to clause (i) above that an
additional
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purchaser has agreed to sign this Asset Purchase Agreement with a Maximum
Purchase equal to such increase in the Maximum Net Investment with respect to
the DFC Purchasers, each Purchaser may elect to maintain its Percentage under
its Purchaser Commitment by executing and delivering, within ten days after
receipt of notice of such amendment, a new signature page to this Asset
Purchase Agreement reaffirming its Percentage and indicating its new Maximum
Purchase amount; provided, however, that in no event shall either DFC or the
Agent agree to amend the Receivables Purchase Agreement to increase the Maximum
Net Investment with respect to the DFC Purchasers to an amount that is greater
than the aggregate of each Purchaser's Maximum Purchase amount.
(b) If, pursuant to Section 2.11 of the Receivables Purchase
Agreement, the Maximum Net Investment with respect to the DFC Purchasers shall
be reduced, each Purchaser's Percentage under its Purchase Commitment shall
remain the same and each Purchaser's Maximum Purchase amount shall be
proportionately reduced; provided, however, that the Agent shall not consent to
a reduction of the Maximum Net Investment with respect to the DFC Purchasers to
an amount which is less than the aggregate of the Percentage Interests of the
Purchasers unless the Seller agrees to repurchase a portion of the Percentage
Interests equal to the difference between the Percentage Interest and the
reduced Maximum Net Investment with respect to the DFC Purchasers.
13. Miscellaneous. (a) Each Purchaser will on demand reimburse the
Agent its Percentage share of any and all reasonable costs and expenses
(including, without limitation, reasonable fees and disbursements of counsel),
which may be incurred in connection with collecting any portion of the
Purchased Interest in which a Purchaser purchases Purchaser Interests
hereunder, for which the Agent is not promptly reimbursed by the Seller.
(b) The Agent and its Affiliates may accept deposits from, lend money
or otherwise extend credit to, act as trustee under indentures of, and
generally engage in any kind of business with, the Seller, the Servicer and any
of their Affiliates and any Person who may do business with or own securities
of the Seller, the Servicer or any Affiliate, all as though this Asset Purchase
Agreement had not been entered into and without any duty to account therefor to
any Purchaser.
(c) Any taxes due and payable on any payments to be made to any
Purchaser hereunder shall be such Purchaser's sole responsibility. Each
Purchaser warrants that it is not subject to any taxes, charges, levies or
withholdings with respect to payments under the Asset Purchase Agreement that
are imposed by means of withholding by any applicable taxing authority
("Withholding Tax"). Each Purchaser agrees to provide the Agent, form time to
time upon the Agent's request, completed and signed copies of any documents
that may be required by an applicable taxing authority to certify such
Purchaser's exemption from Withholding Tax with respect to payments to be made
to such Purchaser under this Asset Purchase Agreement; and each Purchaser
agrees to hold the Agent harmless from any Withholding Tax imposed due to such
Purchaser's failure to establish that it is not subject to Withholding Tax.
(d) The Agent shall furnish to each Purchaser, until the later of (i)
such Purchaser's Purchase Termination Date and (ii) the date on which such
Purchaser's portion of the DFC Net Investment and all other amounts payable to
such Purchaser hereunder have been paid in full, a copy of the annual audited
financial statements of DFC, promptly upon the same becoming available.
(e) Each Purchaser shall promptly notify the Agent of any downgrading
in the short-term unsecured debt securities of such Purchaser by Moody's or
S&P, and following receipt of such notice, the Agent shall promptly notify DFC
of such Purchaser's identity and down-grade. The Agent shall have the right,
in its sole discretion, to terminate the right and obligation of any Purchaser
to purchase a portion of the Purchased Interest and accept Purchase Assignments
hereunder in the event that the unsecured short-term debt securities of such
Purchaser shall cease to be rated at least A-1+/P-1 (or the equivalent thereof)
by S&P and Moody's;
<PAGE> 125
provided that the Agent shall not terminate the rights and obligations of any
Purchaser hereunder unless either (i) one or more Eligible Assignees or other
Purchasers have agreed to accept, in the aggregate, effective as of the date of
termination, such terminated Purchaser's Maximum Purchase, (ii) the Maximum Net
Investment with respect to the DFC Purchasers has been reduced by an amount
equal to the terminated Purchaser's Maximum Purchase and each non-terminated
Purchaser has agreed, notwithstanding Section 12(b) hereof, to increase its
Purchaser's Percentage and maintain its Maximum Purchase at the same amount as
was in effect immediately prior to the reduction in the Maximum Net Investment
with respect to the DFC Purchasers or (iii) DFC obtains liquidity support
satisfactory to Moody's and S&P in an amount not less than such terminated
Purchaser's Maximum Purchase. Such termination shall be effective upon written
notice to such effect delivered by the Agent to such Purchaser, whereupon the
Purchase Termination Date of such Purchaser shall be deemed to have occurred.
Upon such termination, the Purchaser shall cease to have any rights or
obligations with respect to future purchases of receivable interest under this
Agreement but shall continue to have the rights and obligations of a Purchaser
with respect to the portion of the Purchased Interest purchased by it pursuant
to the terms of this Agreement prior to such termination.
(f) On the fifth Business Day prior to any Non-Extending Purchaser's
Expiry Date, such Non-Extending Purchaser shall, upon the request of the Agent,
and subject to the limitations imposed by Section 2(c) hereof, make a Non-Pro
Rata Purchase in an amount up to such Purchaser's Maximum Purchase or, if such
Non-Extending Purchaser has extended its Purchase Termination Date for a
Purchase Commitment that is less than the amount of its Maximum Purchase (a
"Reducing Purchaser") prior to such extension, such Non- Pro Rata Purchase
shall be in an amount equal to the difference between such Purchaser's Maximum
Purchase prior to such extension and such Purchaser's Purchase Commitment
amount as extended (such amount is hereinafter referred to as the "Reduced
Amount"). The amount of such Non-Pro Rata Purchase to be made by a
Non-Extending Purchaser or Reducing Purchaser shall be an amount equal to the
product of (i) the difference between (A) the Maximum Net Investment with
respect to the DFC Purchasers minus the aggregate outstanding Purchaser
Interests (excluding such Non-Pro Rata Purchase) and (B) an amount equal to the
difference between (x) the aggregate of the Maximum Purchase of the Purchasers
whose obligations to purchase Purchased Interests and accept Purchase
Assignments hereunder do not expire on such Expiry Date (including the reduced
Maximum Purchase of the Reducing Purchaser) and (y) the aggregate outstanding
Purchaser Interests of all Purchasers whose obligations to purchase Purchased
Interests and accept Purchase Assignments hereunder do not expire on such
Expiry Date (including the Purchased Interests and Purchase Assignments of a
Reducing Purchaser that do not constitute the Reduced Amount for such
Purchaser) and (ii) a fraction the numerator of which is such Non-Extending
Purchaser's Maximum Purchase, or Reduced Amount, as the case may be, and the
denominator of which is the aggregate of the Maximum Purchases or Reduced
Amounts of all of the Non-Extending Purchasers whose obligations to purchase
Purchased Interests and accept Purchase Assignments hereunder expire on such
Expiry Date; provided, however, that if DFC shall have requested at least 15
Business Days prior to such Expiry Date from each of Moody's and S&P written
confirmation that the failure to request such a purchase or assignment will not
result in the reduction or withdrawal of its then current rating, if any, of
the Commercial Paper, and if such written confirmation is received by DFC prior
to the fifth Business Day immediately preceding such Expiry Date, DFC shall not
request and such Non-Extending Purchaser or Reducing Purchaser shall not make,
such purchase or accept such assignment.
(g) On the 30th day (or if such day is not a Business Day, the next
succeeding Business Day) after any Purchaser becomes a Downgraded Purchaser,
unless DFC shall have replaced such Downgraded Purchaser pursuant to Section
13(e) hereof, DFC shall request such Downgraded Purchaser to make, and if such
request is made such Downgraded Purchaser shall make in accordance with the
provisions hereof, subject to the limitations imposed by Section 2(c) hereof, a
Non-Pro Rata Purchase in an amount equal to the Maximum Purchase minus the
outstanding Purchaser Interests of such Purchaser; provided, however, that if
DFC shall have requested at least 15 Business Days prior to such 30th day from
each of Moody's and S&P written confirmation that the failure to request such a
purchase or assignment will not result in the reduction or withdrawal of its
then current rating, if any, of the Commercial Paper, and if such written
confirmation is
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received by DFC prior to such 30th day, DFC shall not request and such
Downgraded Purchaser shall not make, such purchase or accept such assignment.
(h) The Agent will promptly give each Non-Extending Purchaser
telephonic notice (confirmed in writing promptly thereafter) of the aggregate
amount of the Non-Pro Rata Purchases required pursuant to Section 13(f) or
Section 13(g) hereof or this Section 13(h). If such telephonic notice is
received by a Purchaser prior to 12:00 noon (New York City time) on any such
Business Day, the requested Non-Pro Rata Purchase shall be made by the
Non-Extending Purchaser by 2:00 p.m. (New York City time) on such Business Day.
If such telephonic notice is not received prior to 12:00 noon (New York City
time) on such Business Day, the requested Non-Pro Rata Purchase shall be made
by the Non-Extending Purchaser by 2:00 p.m. (New York City time) on the
Business Day next succeeding the Business Day on which such telephonic notice
is given.
For purposes of this Asset Purchase Agreement, "Expiry Date" shall mean
the later of (i) January 10, 1995, or, if said day is not a Business Day, the
Business Day next succeeding said day, and (ii) the last day of any extension
of such date pursuant to Section 2(a) hereof, or, if said day is not a Business
Day, the Business Day next succeeding said day and "Non-Pro Rata Purchase"
shall mean a purchase of Percentage Interests or acceptance of a Purchase
Assignment pursuant to Section 13(f), 13(g) or this Section 13(h).
(i) THIS ASSET PURCHASE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(j) This Asset Purchase Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Asset Purchase Agreement.
(k) The Purchaser and DFC may, from time to time, enter into
agreements amending, modifying or supplementing this Asset Purchase Agreement.
Any such agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing; provided that DFC shall not amend any
provision of this Asset Purchase Agreement without having given prior notice
thereof to Moody's and S&P and without the prior written confirmation from each
of Moody's and S&P that such amendment would not result in the reduction or
withdrawal of the then current rating, if any, of the Commercial Paper.
14. Bankruptcy Petition Against DFC. (a) Each Purchaser and the
Agent hereby covenants and agrees that, prior to the date which is one year and
one day after the later of (i) the payment in full of all outstanding
Commercial Paper and (ii) the payment in full of all outstanding Commercial
Paper of any subsidiary of DFC, it will not institute against, or join any
other Person in instituting against DFC any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding or other similar proceeding
under the laws of the United States or any state of the United States.
(b) Each Purchaser and the Agent hereby covenants and agrees that,
prior to the date which is one year and one day after the date upon which all
obligations of the Seller to the DFC Purchasers are paid in full, it will not
institute against, or join any other Person in instituting against the Seller
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding or other similar proceeding under the laws of the United States or
any state of the United States.
15. Limited Recourse to DFC. Notwithstanding anything to the contrary
contained herein, all obligations of DFC shall be payable by DFC only to the
extent of assets available therefor and, to the extent assets are not available
or sufficient for the payment thereof, shall not constitute a claim against
DFC.
<PAGE> 127
Signature Page
with respect to
Western Digital Capital Corporation
Asset Purchase Agreement
Dated as of January 7, 1994
Section 1.
Percentage: 100%
Section 2.
Maximum Purchase: $25,000,000
Section 3.
Effective Date of Purchase Commitment: (1) January 10, 1994
Purchase Termination Date: (2) January 5, 1995
J.P. MORGAN DELAWARE
By: ________________________
Title: Vice President
902 Market Street
Wilmington, Delaware 19801-3783
J.P. MORGAN DELAWARE,
as Agent
By: ________________________
Authorized Signature
Vice President
________________________
Title
__________________________________
1 This date should be no earlier than the date of
acceptance by the Agent.
2 This date is 360 days after the Effective Date.
<PAGE> 128
The undersigned hereby consents to the sale from time to time by J.P. Morgan
Delaware, as Agent for the undersigned, of undivided interests in the Purchased
Interest owned by the undersigned, pursuant to the Asset Purchase Agreement to
which this is attached.
DELAWARE FUNDING CORPORATION
By: J.P. Morgan Delaware,
as attorney-in-fact for
Delaware Funding Corporation
By: ________________________
Authorized Signatory
Vice President
_______________________
Title
<PAGE> 129
Exhibit A
Assignment of Purchase Commitment
with respect to
Western Digital Capital Corporation
Asset Purchase Agreement
Dated as of January 7, 1994
Section 1.
<TABLE>
<S> <C>
Purchase Commitment Percentage Assigned: ________%
Assignor's remaining Purchase Commitment
Percentage: ________%
DFC Net Investment with respect to Percentage
Interests Assigned: $_________
DFC Net Investment with respect to Assignor's
remaining Percentage Interests: $__________
Section 2.
- - ---------
Assignee's Maximum Purchase: $__________
Assignor's remaining Maximum Purchase: $__________
Section 3.
- - ---------
Effective Date of this Assignment: __________, 19__
Purchase Termination Date of assigned
Purchase Commitment: __________, 19__
</TABLE>
[NAME OF ASSIGNOR]
By: ________________________
Title:
[NAME OF ASSIGNEE]
By: ________________________
Title:
[Address]
Accepted this ____ day of
__________, 199__
J.P. MORGAN DELAWARE,
as Agent
By: ________________________
Authorized Signatory
________________________
Title
<PAGE> 130
Exhibit B
PURCHASE CONTRACT
________________, 19___
[Date of Purchase]
[Name and Address of Purchaser] (3)
[Delaware Funding Corporation
c/o Ropes & Gray
1 International Place
Boston, Massachusetts 02110] (4)
Re: Western Digital Capital Corporation (the "Seller")
Gentlemen:
This certificate confirms that on the date set forth above
(the "Purchase Date") you have [purchased]1/ [repurchased]2/ for your account
and risk, upon the terms and conditions of the Asset Purchase Agreement dated
as of January 10, 1994, among you, the undersigned and certain other parties,
an undivided interest (your "Percentage Interest") to the extent of ____% in
and to the Purchased Interest more fully identified in Annex 1 hereto and owned
by [DFC]1/ [Name of Purchaser from whom interest is being repurchased]2/
pursuant to the Receivables Purchase Agreement dated as of January 10, 1994,
among the Seller, DFC, Western Digital Corporation, certain bank purchasers
listed therein and the undersigned, as agent].2/
We acknowledge receipt from you of the sum of $__________ in
payment of the Purchase Price for your Percentage Interest in the Purchased
Interest.
Very truly yours,
J.P. MORGAN DELAWARE,
as Agent
By: ________________________
Authorized Signatory
________________________
Title
__________________________________
3 To be inserted if certificate is being delivered in
connection with a purchase by a Purchaser.
4 To be inserted if certificate is being delivered in
connection with a repurchase by DFC.
<PAGE> 131
Annex 1 to Purchase Certificate
List of Tranche in which a
Percentage Interest is Purchased
(Calculated as of the Purchase Date)
<TABLE>
<CAPTION>
Outstanding DFC
Net Investment
Start of Current Original DFC With respect to
Tranche Period Net Investment Percentage End of Current
relating to with respect to Interest as of Tranche Period
Percentage Percentage Date of for Percentage
Interest Interest Purchase Interest
_______________ _______________ _______________ _______________
<S> <C> <C> <C>
1.
2.
3.
4.
</TABLE>
<PAGE> 1
Exhibit 10.32
EXECUTION COPY
FIRST AMENDMENT
TO
RECEIVABLES PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO RECEIVABLES PURCHASE AGREEMENT
dated March 23, 1994 (this "Amendment") is by and between Western
Digital Capital Corporation (the "Seller"), Western Digital
Corporation ("Western Digital"), Delaware Funding Corporation
("DFC"), J.P. Morgan Delaware, as Administrative Agent and a Bank
Purchaser and The First National Bank of Boston, as a Bank
Purchaser, and is consented to by J.P. Morgan Delaware, as sole
APA Purchaser, and amends and supplements the Receivables Purchase-Agreement
dated as of January 7, 1994 (the "Agreement"), by and between the Seller,
Western Digital, DFC, J.P. Morgan Delaware, as Administrative Agent and a Bank
Purchaser and The First National Bank of Boston, as a Bank Purchaser.
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned to such terms in the Agreement.
RECITALS
WHEREAS, the parties to the Agreement have agreed to
(i) amend the Agreement to increase the Maximum Net Investment
with respect to the DFC Purchasers, and (ii) to waive and amend
the provision of Section 3.02(c) of the Agreement requiring
delivery of an amended Certificate of Incorporation of the
Seller; and
WHEREAS, J.P. Morgan Delaware, as the current sole APA Purchaser,
is willing to consent to this Amendment on the terms hereof.
NOW THEREFORE, in consideration of the premises and the agreements
contained herein, the parties agree as follows:
SECTION 1. Amendments to Section 1.01.
(a) The definition of "DFC Expiration Date" is amended by
deleting the dollar amount $25,000,000 in clause (ii)(C) thereof and replacing
such dollar amount with $35,000,000.
(b) The definition of "Maximum Net Investment" is amended by read
as follows:
"Maximum Net Investment" shall mean, for the DFC Purchasers, $35,000,000, and
for the Bank Purchasers, $50,000,000 unless otherwise increased with the
consent of the DFC Purchasers or the Bank Purchasers, as applicable, or reduced
as provided in Section 2.11(a) hereof; provided, however, that at all times on
1
<PAGE> 2
and after the Bank Expiration Date or the DFC Expiration Date, as applicable,
the "Maximum Net Investment" shall mean the Bank Net Investment or the DFC Net
Investment, as the case may be. The aggregate of the Maximum Net Investments
for the Investor Groups on the date hereof is $85,000,000.
SECTION 2. Amendment to Section 2.12(c). The dollar amount at
the end of Section 2.12(c) is changed from $25,000,000 to $35,000,000.
SECTION 3. Amendment to Section 2.15(b). Clause (ii) in
Section 2.15(b) is amended by changing the dollar amount therein from
$25,000,000 to $35,000,000.
SECTION 4. Waiver of, and Amendment to, Section 3.02(c). The
requirement of delivery by the Seller, within 30 days of the Closing Date, of
an amended Certificate of Incorporation providing for two (2) "Outside
Directors" (as defined therein) is hereby waived, and such 30 days is amended
to 90 days.
SECTION 5. Agreement in Full Force and Effect as Amended.
Except as specifically amended hereby, all of the terms and conditions of the
Agreement shall remain in full force and effect. All references to the
Agreement in any other document or instrument shall be deemed to mean such
Agreement as amended by this Amendment. This Amendment shall not constitute a
novation of the Agreement, but shall constitute an amendment thereof. The
parties hereto agree to be bound by the terms and obligations of the Agreement,
as amended by this Amendment, as though the terms and obligations of the
Agreement were set forth herein.
SECTION 6. Counterparts. This Amendment may be executed in any
number of counterparts and by separate parties hereto on separate counterparts,
each of which when executed shall be deemed an original, but all such
counterparts taken together shall constitute one and the same instrument.
SECTION 7. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized officers as of the day and year
first above written.
WESTERN DIGITAL CAPITAL CORPORATION, as
Seller
By:____________________________________
Authorized Signatory
Title: Chief Financial Officer
WESTERN DIGITAL CORPORATION,
as Servicer
By:____________________________________
Authorized Signatory
Title: Vice President and Treasurer
DELAWARE FUNDING CORPORATION
by: J.P. Morgan Delaware, as
attorney-in-fact for Delaware
Funding Corporation
by:_______________________________
Authorized Signatory
Title: Vice President
J.P. MORGAN DELAWARE, as
Administrative Agent
By:____________________________________
Authorized Signatory
Title: Vice President
J.P. MORGAN DELAWARE, as a Bank
Purchaser
By:____________________________________
Authorized Signatory
Title: Vice President
3
<PAGE> 4
THE FIRST NATIONAL BANK OF BOSTON, as
Bank Purchaser
By:___________________________________
Authorized Signatory
Acknowledged and Consented to
J.P. MORGAN DELAWARE, as
APA Purchaser
By:________________________________
Authorized Signatory
Title: Vice President
4
<PAGE> 1
Exhibit 10.32.1
EXECUTION COPY
ASSIGNMENT AGREEMENT
DATED AS OF MARCH 23, 1994
BETWEEN
J.P. MORGAN DELAWARE, AS
BANK PURCHASER,
ASSIGNOR
AND
THE BANK OF CALIFORNIA, N.A.
AND
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., LOS ANGELES AGENCY,
ASSIGNEES
<PAGE> 2
WHEREAS, pursuant to Section 9.17 of that certain Receivables
Purchase Agreement dated as of January 7, 1994, and amended as of March 23,
1994 (as amended, the "Agreement"), by and between Western Digital Capital
Corporation (the "Seller"), Western Digital Corporation, Delaware Funding
Corporation, J.P. Morgan Delaware, as Administrative Agent and a Bank
Purchaser, and The First National Bank of Boston, as a Bank Purchaser, the
right of each Investor to assign its interests under the Agreement is
specifically provided; and
WHEREAS, J.P. Morgan Delaware is a Bank Purchaser-Investor under
the Agreement with a current Purchase Commitment of $25,000,000 and a Purchased
Interest equal to 50% of the Bank Percentage Interest; and
WHEREAS, J.P. Morgan Delaware, as a Bank Purchaser (herein, the
"Assignor"), desires to assign certain portions of its rights and interests in,
and obligations under, the Agreement, evidenced by its Purchase Commitment and
its Purchased Interest from time to time, to The Bank of California, N.A., and
The Long-Term Credit Bank of Japan, Ltd., Los Angeles Agency, respectively; and
WHEREAS, The Bank of California, N.A., and The Long-Term Credit
Bank of Japan, Ltd., Los Angeles Agency, are desirous of accepting the
assignment of the specified portions of the Assignor's rights and interests in,
and obligations under, the Agreement, including the specified portions of the
Purchase Commitment and Purchased Interest:
NOW, THEREFORE, the Assignor, and The Bank of California, N.A.,
and The Long-Term Credit Bank of Japan, Ltd., Los Angeles Agency, as assignees
(together, the "Assignees"), in consideration of the agreements contained
herein, enter into the following assignment agreement (this "Assignment
Agreement"):
1. Assignment. Assignor hereby assigns, transfers and conveys to
the Assignees, with no representation or warranty, except as set forth in
paragraph 3(a) herein, a portion of its rights and interests in, and
obligations under, the Agreement and the Bank Rate Supplement, evidenced by the
Assignor's Purchase Commitment and Purchased Interest, in the respective
amounts and percentages set forth opposite the names of the Assignees below:
<TABLE>
<S> <C> <C>
The Bank of California, Purchase Commitment - $5,000,000
N.A.: Purchased Interest - 20% of the
Assignor's
Purchased Interest
(10% of the Bank
Purchased Interest)
</TABLE>
2
<PAGE> 3
<TABLE>
<S> <C> <C>
The Long-Term Credit Purchase Commitment - $12,500,000
Bank of Japan, Ltd., Purchased Interest - 50% of the Assignor's
Los Angeles Agency: Purchased Interest
(25% of the Bank
Purchased Interest)
</TABLE>
2. Acceptance of Assignment. Each of The Bank of California,
N.A. and The Long-Term Credit Bank of Japan, Ltd., Los Angeles Agency, hereby
accepts the assignment of Assignor's rights, interests and obligations
specified above.
3. Representations and Warranties. (a) The Assignor represents
and warrants that as of the date hereof, (i) the Bank Net Investment is $0;
and (ii) it is the legal and beneficial owner of the interest being assigned by
it hereunder and such interest is free and clear of any adverse claim.
(b) Each of the Assignees hereby represents and warrants to the
Assignor that it has the right, power, legal capacity and authority to execute
and deliver this Assignment Agreement and to consummate the transactions
contemplated hereby. This Assignment Agreement has been duly and validly
executed and delivered by each Assignee and constitutes the valid, legal and
binding agreement of such Assignee. No approval of any person, entity or
governmental authority which has not been obtained is required for the due and
valid execution of this Assignment Agreement by either Assignee or the
consummation of any of the transactions contemplated hereby.
4. Effective Date. The effective date for this Assignment
Agreement shall be March 23, 1994 (the "Effective Date"). Following the
execution of this Assignment Agreement, it will be delivered to the
Administrative Agent and constitute notice of this Assignment by the Assignor.
5. Assignee as Party to the Agreement. Upon receipt by the
Administrative Agent, as of the Effective Date, (i) each Assignee shall be
deemed a party to the Agreement and, to the extent provided in this Assignment
Agreement, have the rights and obligations of a Bank Purchaser thereunder,
including the right to receive payments under the Agreement and the Bank Rate
Supplement (including, without limitation, its Pro Rata Share of Discount, Bank
Net Investment, Aggregate Unpaids and fees), (ii) the Assignor shall, to the
extent provided in this Assignment Agreement, relinquish a portion of its
rights and interests and be released from a portion of its obligations under
the Agreement, and (iii) the Assignor shall pay each Assignee its pro rata
share of the Assignor's Participation Fee.
3
<PAGE> 4
6. Governing Law. This Assignment Agreement shall be governed by the
laws of the State of New York.
7. Definitions. Capitalized terms used in this Assignment Agreement
and not otherwise defined herein shall have the meanings given in the
Agreement.
8. Counterparts. This Assignment Agreement may be executed in any
number of counterparts and by separate parties hereto on separate counterparts,
each of which when executed shall be deemed an original, but all such
counterparts taken together shall constitute one and the same instrument.
J.P MORGAN DELAWARE, as
Assignor
By:_______________________________
Authorized Signatory
Title: Vice President
THE BANK OF CALIFORNIA, N.A., as
Assignee
By:_______________________________
Authorized Signatory
Title: Vice President and
Unit Manager
Address for Notices:
Address for Funds Transfer:
4
<PAGE> 5
6. Governing Law. This Assignment Agreement shall be governed by the
laws of the State of New York.
7. Definitions. Capitalized terms used in this Assignment Agreement
and not otherwise defined herein shall have the meanings given in the
Agreement.
8. Counterparts. This Assignment Agreement may be executed in any
number of counterparts and by separate parties hereto on separate counterparts,
each of which when executed shall be deemed an original, but all such
counterparts taken together shall constitute one and the same instrument.
J.P MORGAN DELAWARE, as
Assignor
By:___________________________________
Authorized Signatory
Title: Vice President
THE BANK OF CALIFORNIA, N.A., as
Assignee
By:___________________________________
Authorized Signatory
Title: Vice President and
Unit Manager
Address for Notices:
550 South Hope Street, 5th Floor
Los Angeles, California 90071
Address for Funds Transfer:
The Bank of California
ABA# 121000015
Credit A/C # 001-060-235
Attn: Hisako Sakamoto
Re: Western Digital
5
<PAGE> 6
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., LOS ANGELES AGENCY,
as Assignee
By:____________________________________
Authorized Signatory
Title: Deputy General Manager
Address for Notices:
444 S. Flower Street
Los Angeles, CA 9007l
Address for Funds Transfer:
The First Interstate Bank of California
707 Wilshire Boulevard
Los Angeles, CA 90017
ABA # 122000218
Account # 220234834
Account Name: The Long-Term Credit Bank of Japan, Ltd., Los Angeles
Agency
CONSENT:
WESTERN DIGITAL CAPITAL
CORPORATION, as Seller
By:_________________________________
Authorized Signatory
Title: Chief Financial Officer
6
<PAGE> 1
EXHIBIT 11
WESTERN DIGITAL CORPORATION
COMPUTATION OF PER SHARE EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
---------------------- ----------------------
MARCH 26, MARCH 27, MARCH 26, MARCH 27,
1994 1993 1994 1993
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
PRIMARY
Net income............................... $28,448 $ 1,633 $35,837 $12,713
======= ======= ======= =======
Weighted average number of common
shares outstanding during the period..... 41,575 32,350 37,525 30,298
Incremental common shares attributable
to exercise of outstanding options and
warrants.................................. 2,905 2,952 1,982 2,248
------- ------- ------- -------
Total shares...................... 44,480 35,302 39,507 32,546
======= ======= ======= =======
Net income per share...................... $ .64 $ .05 $ .91 $ .39
======= ======= ======= =======
FULLY DILUTED
Net income................................ $28,448 $ 1,633 $35,837 $12,713
Add back: interest expense, net of
income tax effect, applicable to
convertible subordinated debentures....... 1,168 1,236 3,504 3,710
------- ------- ------- -------
$29,616 $ 2,869 $39,341 $16,423
======= ======= ======= =======
Weighted average number of common
shares outstanding during the period...... 41,575 32,350 37,525 30,298
Incremental common shares attributable
to exercise of outstanding options and
warrants.................................. 3,214 2,956 3,318 2,383
Incremental common shares attributable
to conversion of convertible subordinated
debentures................................ 4,074 4,083 4,074 4,083
------- ------- ------- -------
Total shares...................... 48,863 39,389 44,917 36,764
======= ======= ======= =======
Net income per share...................... $ .61 $ .07 $ .88 $ .45
======= ======= ======= =======
</TABLE>
