EXHIBIT 10.3
EXECUTION COPY
ANNEX X
TO
RECEIVABLES TRANSFER AGREEMENT
AND
RECEIVABLES PURCHASE AND SERVICING AGREEMENT
Dated as of
October 2, 1995
DEFINITIONS AND INTERPRETATION
SECTION 1. Definitions and Conventions. As used in the Transfer Agreement
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and the Purchase Agreement, the following terms shall have the following
meanings:
"Accession Agreement" means an Accession Agreement substantially in the
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form of Exhibit A to the Collateral Agent Agreement.
"Accountants' Letter" has the meaning specified in Section 4.02(a) of the
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Transfer Agreement.
"Accrued Monthly Yield" means for any day within a Settlement Period, the
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Daily Yield calculated for each day from and including the first day of the
Settlement Period through and including the day for which the calculation is
being made.
"Accrued Servicing Fee" means for any day within a Settlement Period, the
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Servicing Fee calculated for each day from and including the first day of the
Settlement Period through and including the day for which the calculation is
being made.
"Accrued Unused Commitment Fee" means for any day within a Settlement
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Period, the Unused Commitment Fee calculated for each day from and including the
first day of the Settlement Period through and including the day for which the
calculation is being made.
"Accumulated Funding Deficiency" has the meaning provided in Section 412 of
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the Internal Revenue Code and Section 302 of ERISA, whether or not waived.
"Additional Amounts" means any amounts payable to any Affected Party under
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Sections 2.10 and 2.11 of the Purchase Agreement.
"Additional Costs" has the meaning specified in Section 2.10(b) of the
----------------
Purchase Agreement.
"Adjusted Dilution Ratio" means, on any date of determination, the ratio
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(expressed as a percentage) computed by dividing:
(a) an amount equal to (i) the aggregate amount of Dilution Factors, minus
(ii) the sum of the overstocked returns, refused shipments and defective
returns, each of (i) and (ii) as reflected on the books of each Originator
during the Settlement Period preceding such day
by
--
(b) Adjusted Generated Receivables as of the third Settlement Period
preceding such day.
"Adjusted Generated Receivables" means the Outstanding Balance of all
------------------------------
Transferred Receivables generated during the Settlement Period minus the sum of
refused shipments and overstocked returns reflected on the books of the
Originator during such Settlement Period.
"Administration Fee" means a fee payable by the Seller to the Purchaser in
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respect of each Settlement Period as set out in the Fee Letter between the
Seller and the Purchaser.
"Adverse Claim" means any claim of ownership or any lien, security
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interest, title retention, trust or other charge or encumbrance, or other type
of preferential arrangement having the effect or purpose of creating a lien or
security interest, other than the ownership or security interest created under
the Purchase Agreement or under the Collateral Agent Agreement.
"Affected Party" means the Purchaser, any of the Liquidity Lenders, the
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Operating Agent, any of the Letter of Credit Providers, the Collateral Agent, or
any Affiliate of the foregoing persons.
"Affiliate" means, as to any Person, any other Person that, directly or
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indirectly, is in control of, is controlled by, or is under common control with,
such Person within the meaning of control under Section 15 of the Securities Act
of 1933, as amended.
"Agreement" means the Transfer Agreement or the Purchase Agreement, as the
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case may be.
"Assignment" has the meaning specified in Section 2.01(a) of the Transfer
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Agreement.
"Authorized Officer" means, with respect to any corporation, the Chairman
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or Vice-Chairman of the Board, the President, any Vice President, the Secretary,
the Treasurer, any Assistant Secretary, any Assistant Treasurer and each other
officer of such corporation specifically authorized in resolutions of the Board
of Directors of such corporation to sign agreements, instruments or other
documents in connection with the Transfer Agreement or the Purchase Agreement.
"Availability" means, as of any date, the lesser of:
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(a) an amount equal to:
(i) the Investment Base
times
-----
(ii) the Purchase Discount Rate
2
minus
-----
(iii) the Yield Discount Amount,
and
---
(b) the Maximum Purchase Limit then in effect.
"Billed Amount" means, with respect to any Receivable, the amount billed on
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the Billing Date to the related Obligor with respect thereto.
"Billing Date" means the date on which the invoice with respect to a
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Receivable was generated.
"Breakage Costs" has the meaning specified in Section 2.11 of the Purchase
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Agreement.
"Business Day" means any day of the year other than a Saturday, Sunday or
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any day on which banks generally are required, or authorized, to close in New
York, New York.
"Capital Investment" means, as of the date of any calculation, an amount
------------------
equal to (a) the aggregate deposits made in the Collection Account pursuant to
Section 2.04(b)(i) of the Purchase Agreement on or before such date minus (b)
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any amount disbursed to the Purchaser in reduction of Capital Investment
pursuant to Section 6.02, 6.03 or 6.05 of the Purchase Agreement on or before
such date.
"Capital Investment Available" means, as of the date of any calculation,
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the excess, if any of Availability over Capital Investment at the opening of
business on such date.
"Capital Investment Shortfall" means, for any day with respect to which the
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prior day the Deferred Purchase Price Adjustment for the prior day was greater
than zero and was not satisfied, the amount, if any, by which the Deferred
Purchase Price Adjustment calculated as of such prior day exceeded the amount of
Collections on deposit in the Capital Investment Sub-Account of the Collection
Account as of such prior day after disbursement of amounts set forth in Sections
6.03(c)(i) and (ii) of the Purchase Agreement.
"Capital Investment Sub-Account" means a sub-account of the Collection
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Account designated as such.
"Cash Purchase Price" means, as of any date of Purchase, the amount
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distributable to the Seller pursuant to Section 6.03(c)(vii) of the Purchase
Agreement.
"▇▇▇▇▇▇ Agreement" means the Amended and Restated Trade Receivables
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Purchase and Sale Agreement dated as of November 29, 1994 among
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Merisel Capital Funding, Inc., Corporate Receivables Corporation and Citicorp
North America, Inc. and the documents delivered in connection therewith.
"Collateral" means the Seller Collateral assigned and pledged by the Seller
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in Section 8.01 of the Purchase Agreement.
"Collateral Account" means the account maintained with the Depositary
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described in Section 6.01(d) of the Purchase Agreement.
"Collateral Agent" means GE Capital or such other party designated as agent
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for the secured parties under the Collateral Agent Agreement.
"Collateral Agent Agreement" means the Second Amended and Restated
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Collateral Agent and Security Agreement, dated as of June 29, 1995, among the
Redwood, the Collateral Agent, the Letter of Credit Agent, the Liquidity Agent
and the Depositary.
"Collection Account" means the account maintained with the Depositary
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described in Section 6.01(b) of the Purchase Agreement.
"Collections" means, with respect to any Receivable, all cash collections
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and other Proceeds of such Receivable (including late charges, fees and interest
arising thereon, and all recoveries with respect to Receivables that have been
written off as uncollectible).
"Commercial Paper" means promissory notes issued by the Purchaser.
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"Commonly Controlled Entity" means the Originators and any entity, whether
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or not incorporated, affiliated with the Originators pursuant to Section 414(b),
(c), (m) or (o) of the Internal Revenue Code.
"Concentration Discount Amount" means, with respect to any Obligor, on any
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date after giving effect to all Eligible Receivables to be purchased on such
date, the amount by which the Outstanding Balance of Eligible Receivables
payable by such Obligor exceeds the lesser of either (a) the dollar amount (if
any) set forth on Schedule 1 to the Purchase Agreement, or (b) the product of
(i) such Obligor's percentage set forth on Schedule 1 to the Purchase Agreement
and (ii) the Outstanding Balance of all Transferred Receivables that are
Eligible Receivables on such date. The Concentration Discount Amount may be
changed at any time at the sole discretion of the Operating Agent and upon
satisfaction of the Rating Agency Condition.
"Contract" means (i) an agreement (including an invoice) pursuant to, or
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under which, an Obligor shall be obligated to pay for Receivables of such
Obligor to any Originator from time to time or (ii) any floor plan repurchase
agreement, repurchase agreement, inventory financing agreement or other floor
plan agreement, guarantee, insurance or other agreement from time to time
financing or otherwise
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supporting or securing payment of a Receivable to any Originator, in the case of
clause (ii) substantially the form of one of the forms of written contract
delivered to the Operating Agent prior to the date hereof (or in substantially
the form of any other form of written contract delivered from time to time to
the Operating Agent by the Seller after the date hereof if such other form shall
have been approved by the Operating Agent in its reasonable discretion).
"Contributed Receivable" has the meaning specified in Section 2.01(b) of
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the Transfer Agreement.
"▇▇ ▇▇▇▇▇▇" means any Person holding record or beneficial ownership of
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Commercial Paper.
"CP Interest" has the meaning specified in Schedule 3.
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"Credit and Collection Policies" means the credit and collection policies
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of the Originator in effect on the Effective Date as such policies may hereafter
be amended, modified or supplemented from time to time with the written consent
of the Operating Agent.
"Daily Yield" has the meaning specified in Schedule 3 to the Purchase
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Agreement.
"Daily Yield Rate" has the meaning specified in Schedule 3 to the Purchase
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Agreement.
"Dealer" means any dealer under a Dealer Agreement.
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"Dealer Agreement" means any dealer agreement entered into by the Purchaser
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for the distribution of Commercial Paper.
"Debt" of any Person means indebtedness, obligations and liabilities of
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such Person (a) for borrowed money, (b) evidenced by bonds, debentures, notes or
other similar instruments (excluding accrued interest), (c) to pay the deferred
purchase price of property or services (it being understood that Debt shall not
include obligations both (i) classified as accounts payable, accrued liabilities
or income taxes payable under GAAP, (ii) incurred in the ordinary course of
business and (iii) not delinquent or otherwise past due), (d) principal
obligations as lessee under leases which have been or should be, in accordance
with GAAP, recorded as capital leases, (e) secured by any lien or other charge
upon property or assets owned by such Person, even though such Person has not
assumed or become liable for the payment of such obligations (but only to the
extent of the fair market value of such property or assets), (f) under any
interest rate, swap, "cap", "collar" or other hedging agreement, (g) under
reimbursement agreements or similar agreements with respect to the issuance of
letters of credit (other than obligations in respect of letters of credit opened
to provide for payment of goods and services purchased in the ordinary course of
business), (h) under direct or indirect guaranties in respect of, and
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obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (a) through (h) above,
and (i) liabilities in respect of unfunded vested benefits under plans covered
by ERISA, provided that no obligation, indebtedness or liability included in
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Debt shall be included in more than one of clauses (a) through (i). For the
purposes hereof, the term "guarantee" shall include any agreement, whether such
agreement is on a contingency or otherwise, to purchase, repurchase or otherwise
acquire Debt of any other Person, or to purchase, sell or lease, as lessee or
lessor, property or services, in any such case primarily for the purpose of
enabling another person to make payment of Debt, or to make any payment (whether
as an advance, capital contribution, purchase of an equity interest or
otherwise) to assure a minimum equity, asset base, working capital or other
balance sheet or financial condition, in connection with the Debt of another
Person, or to supply funds to or in any manner invest in another Person in
connection with Debt of such Person.
"Deemed Defaults" means for any Settlement Period, the sum of (i) the
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aggregate Outstanding Balance of Transferred Receivables which were from 61 to
90 days past Maturity Date as of the last day of such Settlement Period, plus
(ii) the aggregate Outstanding Balances of Transferred Receivables which were
(A) written off as uncollectible during such Settlement Period and (B) not more
than 60 days past Maturity Date of the time of such write-off.
"Default Ratio" means, as of any date, the ratio (expressed as a
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percentage) computed by dividing:
(a) the sum of (i) the Outstanding Balance of Transferred Receivables which
were more than 90 days past Maturity Date on the last day of each of the three
Settlement Periods preceding such date plus (ii) the Outstanding Balance of
Transferred Receivables written off as uncollectible during the three Settlement
Periods preceding such date
by
--
(b) the sum of the Outstanding Balance of all Transferred Receivables on
the last day of each of the three Settlement Periods preceding such day.
"Defaulted Receivable" means a Receivable (a) as to which any payment, or
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part thereof, remains unpaid for more than 90 days after the Maturity Date of
such Receivable, or (b) as to which the Obligor thereof has taken any action, or
suffered any event to occur, of the type described in Section 9.01(c) of the
Purchase Agreement in respect of the Obligor, or (c) which otherwise would be
determined to be uncollectible and written off in accordance with the Credit and
Collection Policies.
"Defective Goods Reserves" means, as of any date, an amount equal to the
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product of highest DRR for the twelve preceding Settlement Periods multiplied by
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the Outstanding Balance of Transferred Receivables transferred during the
preceding three Settlement Periods where "DRR" equals the fraction (expressed as
a percentage) where the numerator of which is the aggregate amount of defective
returns for the preceding Settlement Period shown on the books and records of
the Servicer and the denominator of which is the Outstanding Balance of
Transferred Receivables transferred during the preceding three Settlement
Periods.
"Deferred Purchase Price" means, as of any date of Purchase, an amount
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equal to the product of (a) the Outstanding Balance of Receivables to be sold
and (b) the Deferred Purchase Price Rate, in each case as of such date.
"Deferred Purchase Price Adjustment" means, as of the end of any date
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during the Revolving Period, an amount (positive or negative) equal to (a) the
product of (i)(A) the Deferred Purchase Price Rate calculated as of the end of
the previous date on which a Deferred Purchase Price Adjustment was calculated
minus (B) the Deferred Purchase Price Rate as of the end of such date; and (ii)
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(A) the aggregate Outstanding Balance of Transferred Receivables as of the end
of the previous date on which a Deferred Purchase Price Adjustment was
calculated, minus (B) Collections received since the end of the previous date on
which a Deferred Purchase Price Adjustment was calculated minus (C) Defaults and
other non-cash dilutions since the end of the previous date on which a Deferred
Purchase Price Adjustment was calculated, minus (b) the Deferred Purchase Price
Shortfall, if any, plus (c) the Capital Investment Shortfall, if any.
"Deferred Purchase Price Collections" means, as of the end of the previous
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date, an amount equal to the product of (a) Collections and (b) the Deferred
Purchase Price Rate, in each case as of such date.
"Deferred Purchase Price Outstanding" means, as of the end of any date, an
-----------------------------------
amount equal to the product of (a) the Outstanding Balance of Transferred
Receivables and (b) the Deferred Purchase Price Rate, in each case of such date.
"Deferred Purchase Price Shortfall" means, for any day with respect to
---------------------------------
which the prior day the Deferred Purchase Price Adjustment for the prior day was
less than zero and was not satisfied, the amount, if any, by which the Deferred
Purchase Price Adjustment calculated as of such prior day exceeded the amount of
Collections on deposit in the Deferred Purchase Price Sub-Account of the
Collection Account as of such prior day after disbursement of amounts set forth
in Sections 6.03(b)(i) and (ii) of the Purchase Agreement.
"Deferred Purchase Price Sub-Account" means a sub-account of the Collection
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Account designated as such.
"Deferred Purchase Price Rate" means:
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(a) as of the end of any date during the Revolving Period, a fraction
(expressed as a percentage) (i) the numerator of which equals the Outstanding
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Balance of Transferred Receivables minus Availability, in each case on such
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date, and (ii) the denominator of which is the Outstanding Balance of
Transferred Receivables on such date; and
(b) on any date after the Facility Termination Date, the Deferred Purchase
Price Rate calculated according to clause (a) immediately prior to the Facility
Termination Date.
"Delinquency Ratio" means, on any date of determination, the ratio
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(expressed as a percentage) computed by dividing:
(a) the Outstanding Balance of all Transferred Receivables that were
outstanding more than 30 days past their Maturity Date on the last day of each
of the last three Settlement Periods preceding such day
by
--
(b) the sum of the Outstanding Balance of all Transferred Receivables on
the last day of each of the three such Settlement Periods preceding such day.
"Delinquent Receivable" means any Receivable, other than a Defaulted
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Receivable, as to which any payment, or part thereof, remains unpaid for more
than 60 days past its Maturity Date.
"Depositary" means Bankers Trust Company, or any other Person designated as
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the successor Depositary from time to time in its capacity as issuing and paying
agent or trustee in connection with the issuance of Commercial Paper by Redwood.
"Dilution Factors" means, with respect to the Transferred Receivables, any
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net credits, rebates, freight charges, cash discounts, volume discounts,
cooperative advertising expenses, royalty payments, warranties, cost of parts
required to be maintained by agreement (whether express or implied), warehouse
and other allowances, disputes, chargebacks, defective returns, other returned
or repossessed goods, inventory transfers, allowances for early payments and
other similar allowances that are made or coordinated with an Originator's usual
practices, in each case after, in the case of any Receivable, such Receivable
first became a "Receivable" hereunder; provided that any allowances or
adjustments in accordance with the Credit and Collection Policies made on
account of an Obligor's insolvency or inability to pay shall not constitute a
Dilution Factor.
"Dilution Funded Amount" means, for any date, an amount equal to (a) (i)
----------------------
(A) the Outstanding Balance of previously Transferred Receivables which have
become Defaulted Receivables plus (B) other non-cash reductions of the
Outstanding Balance of Transferred Receivables since the preceding Business Day,
times (ii) 1 minus the Deferred Purchase Price Rate as of the end of the
-----
preceding Business Day,
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plus (b) the Dilution Funded Amount Shortfall, if any, outstanding at the end of
----
the preceding Business Day.
"Dilution Funded Amount Shortfall" means, for any date, an amount equal to
--------------------------------
the amount, if any, by which (a) the Dilution Funded Amount exceeds (b) (i) the
amount, if any, by which Deferred Purchase Price Collections exceed the sum of
the amounts set forth in Section 6.03(b)(i) of the Purchase Agreement.
"Dilution Reserve Ratio" means, on any date of determination, an amount
----------------------
(expressed as a percentage) calculated in accordance with the following formula:
HDR DILHOR
[(ADR x 2.00) + [(HDR - ADR) x ---]] x ------
ADR NRPB
where:
ADR = the ratio (expressed as a percentage) computed by dividing:
(a) an amount equal to (i) the aggregate amount of Dilution
Factors minus (ii) the sum of the overstocked returns,
refused shipments and defective returns, each of (i) and
(ii) as reflected on the books of the Originator during the
prior twelve Settlement Periods
by
--
(b) Adjusted Generated Receivables during the period commencing
on the first day of the fourteenth Settlement Period prior
to such day and ending on the last day of the third
Settlement Period prior to such day.
HDR = the highest Adjusted Dilution Ratio within the last twelve
Settlement Periods
DILHOR = Adjusted Generated Receivables recorded during the prior two
Settlement Periods
NRPB = the Outstanding Balance of Eligible Receivables on the last
day of the preceding Settlement Period.
The Dilution Reserve Ratio from the closing until the first month shall be
established by the Operating Agent at closing and the underlying calculations
for each of the twelve months preceding the first month after closing to be used
in future calculations of the Dilution Reserve Ratio shall be established by the
Operating Agent at closing in accordance with Schedule 1 attached to this Annex
X.
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"Effective Date" means the date of the Purchase Agreement.
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"Eligible Receivable" means, at any time, a Transferred Receivable:
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(a) which is not the liability of an Excluded Obligor;
(b) which is a liability of an Obligor organized under the laws of any
jurisdiction in the United States and having its principal office in the United
States;
(c) which is denominated and payable in United States dollars;
(d) which is not a Delinquent Receivable or a Defaulted Receivable;
(e) as to which the representations and warranties of Section 4.01(b) of
the Transfer Agreement are true and correct in all respects as of the related
Transfer Date; and
(f) which complies with such other criteria and requirements as the
Operating Agent may from time to time specify to the Seller following 30 days'
notice or, if so required by either Rating Agency, upon the number of days
notice specified by such Rating Agency.
"ERISA" means the Employee Retirement Income Security Act of 1974, as it
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may be amended from time to time, and the regulations promulgated thereunder.
"Event of Servicer Termination" has the meaning specified in Section 9.02
-----------------------------
of the Purchase Agreement.
"Excluded Obligor" means an Obligor which is (a) an Affiliate of any
----------------
Originator or the Seller, (b) a Governmental Authority, (c) an Obligor of which
more than 50% of its Receivables are Delinquent Receivables or Defaulted
Receivables, (d) a Floor Plan Obligor, provided that no Floor Plan Obligor
shall be an Excluded Obligor for 90 days from the Effective Date and thereafter,
from the date that the Seller has obtained an acknowledgement from such Floor
Plan Obligor, or (e) an Obligor listed on Schedule 2 to the Purchase Agreement
as revised from time to time pursuant to a letter in the form of Annex A
thereto.
"Facility Termination Date" means the earlier of (a) the date so designated
-------------------------
pursuant to Section 9.01 of the Purchase Agreement as a result of a Termination
Event, and (b) 90 days prior to the Final Purchase Date.
"Fee Letter" means the letter dated October 2, 1995 between the Seller and
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the Purchaser.
"Final Purchase Date" means October 2, 2000.
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"Floor Plan Obligor" means any Obligor referred to in clause (ii) of the
------------------
definition of "Obligor" contained in this Section 1.
"GAAP" means generally accepted accounting principles as in effect in the
----
United States, consistently applied, as of the date of such application.
"GE Capital" means General Electric Capital Corporation.
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"GE Persons" has the meaning specified in Section 5.01(b) of the Transfer
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Agreement.
"Governmental Authority" means the United States of America, any state,
----------------------
local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions thereof
or pertaining thereto.
"Gross Dilution Ratio" means on any date of determination, the ratio
--------------------
(expressed as a percentage) computed by dividing:
(a) an amount equal to the aggregate amount of Dilution Factors reflected
on the books of the Originator during the three Settlement Periods preceding
such day
by
--
(b) the Outstanding Balance of all Transferred Receivables generated during
the third, fourth and fifth Settlement Periods preceding such day.
"Incipient Event" means an event which, upon the giving of notice or the
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passage of time, or both, may become a Termination Event.
"Indemnified Amounts" has the meaning specified in Section 12.01(a) of the
-------------------
Purchase Agreement.
"Indemnified Party" has the meaning specified in Section 12.01(a) of the
-----------------
Purchase Agreement.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
---------------------
from time to time.
"Investment Base" means, for any date, as disclosed in the most recently
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submitted Investment Base Certificate, an amount equal to the Outstanding
Balance of Transferred Receivables that are Eligible Receivables minus the
Reserves in respect of such Eligible Receivables.
"Investment Base Certificate" means an Officer's Certificate in the form of
---------------------------
Exhibit B to the Purchase Agreement.
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"Investments" means, with respect to any Seller Account Collateral, the
-----------
certificates, instruments or other Permitted Investments in which amounts in
such account are invested from time to time.
"Letter of Credit" means the letter of credit, dated June 29, 1995,
----------------
provided by the Letter of Credit Providers pursuant to the Letter of Credit
Agreement.
"Letter of Credit Agent" means GE Capital, in its capacity as agent for the
----------------------
Letter of Credit Providers under the Letter of Credit Agreement, and its
successors and permitted assigns in such capacity.
"Letter of Credit Agreement" means the Second Amended and Restated Letter
--------------------------
of Credit Reimbursement Agreement, dated as of June 29, 1995, among the Redwood,
the Letter of Credit Agent and the Letter of Credit Providers.
"Letter of Credit Fee" has the meaning specified in the Fee Letter.
--------------------
"Letter of Credit Providers" means, initially, GE Capital, as provider of
--------------------------
the Letter of Credit under the Letter of Credit Agreement, and thereafter its
successors and any permitted assigns in such capacity.
"Liquidity Agent" means GE Capital and its successors and assigns as agent
---------------
for the Liquidity Lenders pursuant to the Liquidity Loan Agreement.
"Liquidity Lenders" means, collectively, GE Capital and any other provider
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of Liquidity Loans under the Liquidity Loan Agreement.
"Liquidity Loan Agreement" means the Second Amended and Restated Liquidity
------------------------
Loan Agreement, dated as of June 29, 1995 among Redwood, the Liquidity Lenders
and the Liquidity Agent in connection with the provision of liquidity support
for Redwood.
"Liquidity Loans" means borrowings by Redwood under the Liquidity Loan
---------------
Agreement.
"LOC Draw" means a draw under the Letter of Credit Agreement.
--------
"Lockbox" has the meaning specified in Section 6.01(a)(ii) of the Purchase
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Agreement.
"Lockbox Account" means one or more segregated deposit accounts described
---------------
in Section 6.01(a) of the Purchase Agreement in the name of the Operating Agent,
into which all Collections in respect of Transferred Receivables shall be
deposited.
"Lockbox Agreement" means one or more agreements among an Originator, the
-----------------
Seller, the Operating Agent, the Purchaser and a Lockbox Bank with
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respect to a Lockbox Account, (a) providing that all Collections therein shall
be remitted directly to the Collection Account within one Business Day of
receipt, (b) providing that such depositary institution waives its rights of
set-off with respect to such Lockbox Account, and (c) otherwise reasonably
satisfactory to the Operating Agent.
"Lockbox Bank" means any of the banks or other financial institutions
------------
holding one or more Lockbox Accounts.
"Loss Reserve Ratio" means, on any date of determination, an amount
------------------
(expressed as a percentage) calculated in accordance with the following formula:
DEFHOR
2.00 x ARR x ------
NRPB
where:
ARR = the highest Three Month Aged Receivables Ratio that occurred
during the last twelve Settlement Periods.
DEFHOR = Adjusted Generated Receivables recorded during the prior three
Settlement Periods.
NRPB = the Outstanding Balance of Eligible Receivables on the last day
of the preceding Settlement Period.
The underlying calculations for the Loss Reserve Ratio for each of the twelve
months preceding the first month after closing to be used in future calculations
of the Loss Reserve Ratio shall be established by the Operating Agent at closing
in accordance with Schedule 1 attached to this Annex X.
"Margin" means, for any period, the sum of the "Daily Margin Amounts" for
------
each day in such period, where the "Daily Margin Amount" equals the Daily Margin
(as specified in Schedule 3 to the Purchase Agreement) for each such day
multiplied by the Capital Investment on each such day.
"Maturity Date", for any Receivable, means the due date for payment
-------------
specified in the related Contract, or, if no date is specified, 60 days from the
Billing Date.
"Maximum Purchase Limit" means $300,000,000, as such amount may be subject
----------------------
to reduction in accordance with Section 2.02(a) of the Purchase Agreement.
"MCF" means Merisel Capital Funding, Inc. as a purchaser and transferee of
---
Transferred Receivables under the Transfer Agreement and the Seller under the
Purchase Agreement.
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"Monthly Report" means the Monthly Report in the form of Exhibit G to the
--------------
Purchase Agreement.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. or any successor thereto.
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"Multiemployer Plan" means a multiemployer plan (within the meaning of
------------------
Section 4001(a)(3) of ERISA) in respect of which a Commonly Controlled Entity
makes contributions or has liability.
"Net Dilution Ratio" means, on any date of determination, the ratio
------------------
(expressed as a percentage) computed by dividing:
(a) an amount equal to (i) the aggregate amount of Dilution Factors, minus
(ii) the sum of the overstocked returns and the refused shipments, each of (i)
and (ii) as reflected on the books of the Originator during the prior three
Settlement Periods
by
--
(b) the Adjusted Generated Receivables recorded during the third, fourth
and fifth Settlement Periods preceding such day.
"Net Proceeds Amount" means the face amount of Commercial Paper minus the
-------------------
discount on the price to the public and Dealer fees for such Commercial Paper.
"Obligor" means a Person (other than the Seller or the Originator) either
-------
(i) which is obligated to make payments pursuant to a Contract of the type
described in clause (i) of the definition of the term "Contract" contained in
this Section 1 or (ii) which has financed or is obligated to finance (by lending
to an Obligor referred to in clause (i) above, or by purchasing from the
Originator, if the consideration to be paid by such Person for such purchase is
in the form of indebtedness, or the Seller, if such consideration is in the form
of cash, or otherwise), or is a party to an agreement that contemplates that
such Person may so finance, a Receivable.
"Officer's Certificate" means, with respect to any Person, a certificate
---------------------
signed by and Authorized Officer.
"Operating Agent" means GE Capital, as Operating Agent under the Purchase
---------------
Agreement, together with its successors and assigns.
"Operating Agent Agreement" means the Operating Agent Agreement, dated as
-------------------------
of March 15, 1994, between Redwood and the Operating Agent.
"Orders" has the meaning specified in Section 4.01(a)(viii) of the Transfer
------
Agreement.
14
"Original Obligor" means any Obligor referred to in clause (i) of the
----------------
definition of "Obligor" contained in this Section 1.
"Originator" means individually or collectively, as the case may be (i)
----------
initially, Merisel Americas, Inc., a Delaware corporation, and (ii) if any other
Affiliate of the Parent becomes an Originator under Section 2.03 of the Transfer
Agreement, such other Affiliate.
"Other Purchase Agreements" means other agreements for the purchase or
-------------------------
funding of receivables entered into from time to time by the Purchaser in which
it is contemplated that such purchases or fundings will be financed in a similar
manner as contemplated hereunder.
"Outstanding Balance" of any Receivable at any time means an amount (not
-------------------
less than zero) equal to (a) its Billed Amount, minus (b) all payments received
from the Obligor with respect thereto, minus (c) all discounts to or any other
modifications that reduce the Billed Amount; provided, that if the Operating
--------
Agent or the Servicer reasonably makes a determination that all payments by the
Obligor with respect to such Billed Amount have been made, the Outstanding
Balance shall be zero.
"Parent" means Merisel, Inc., a Delaware corporation.
------
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
----
agency, corporation or instrumentality of the United States to which the duties
and powers of the Pension Benefit Guaranty Corporation are transferred.
"Permitted Investments" means one or more of the following:
---------------------
(a) obligations of, or guaranteed as to the full and timely payment of
principal and interest by, the United States or obligations of any agency or
instrumentality thereof, when such obligations are backed by the full faith and
credit of the United States;
(b) repurchase agreements on obligations specified in clause (a); provided,
that the short-term debt obligations of the party agreeing to repurchase are
rated at least A-1+ by S&P and P-1 by Moody's;
(c) federal funds, certificates of deposit, time deposits and bankers'
acceptances (which shall each have an original maturity of not more than 90 days
or, in the case of bankers' acceptances, shall in no event have an original
maturity of more than 365 days) of any United States depository institution or
trust company incorporated under the laws of the United States or any state;
provided, that the short-term obligations of such depository institution or
trust company are rated at least A-1+ by S&P and P-1 by Moody's;
15
(d) commercial paper (having original maturities of not more than 30 days)
of any corporation incorporated under the laws of the United States or any state
thereof which on the date of acquisition are rated at least A-1+ by S&P and P-1
by Moody's;
(e) securities of money market funds rated at least Aam by S&P and P-1 by
Moody's; and
(f) such other investments with respect to which each Rating Agency shall
have confirmed in writing to the Purchaser and Collateral Agent that such
investments shall not result in a withdrawal or reduction of the then current
rating by such Rating Agency of the Commercial Paper.
"Person" means an individual, partnership, corporation (including a
------
business trust), joint stock company, trust, association, joint venture,
Governmental Authority or any other entity of whatever nature.
"Plan" means any pension plan (other than a Multiemployer Plan) covered by
----
Title IV of ERISA, which is maintained by a Commonly Controlled Entity or in
respect of which a Commonly Controlled Entity has liability.
"Price Protection Reserve" means, for any day, the amount shown on the
------------------------
Servicer's books and records as the "Reserve for Price Protection" as of the
preceding Settlement Period.
"Proceeds" means, with respect to any Collateral, whatever is receivable or
--------
received when such Collateral is sold, collected, exchanged or otherwise
disposed of, whether such disposition is voluntary or involuntary, and includes
all rights to payment, including returned premiums, with respect to any
insurance relating to such Collateral.
"Program Documents" means the Letter of Credit Agreement, the Liquidity
-----------------
Loan Agreement, the Collateral Agent Agreement, the Depositary Agreement,
Commercial Paper Notes, the Operating Agent Agreement, each Accession Agreement
and the Dealer Agreements.
"Purchase" means a purchase of Receivables (or interests therein) by the
--------
Purchaser from the Seller pursuant to Section 2.01 of the Purchase Agreement.
"Purchase Agreement" means the Receivables Purchase and Servicing
------------------
Agreement, dated as of October 2, 1995 among the Seller, Redwood (as the
Purchaser), the Operating Agent, the Collateral Agent and the Originator, as
Servicer.
"Purchase Assignment" means the Assignment entered into by the Seller and
-------------------
the Purchaser in the form attached as Exhibit B to the Purchase Agreement.
"Purchase Date" means each day on which a Purchase is made.
-------------
16
"Purchase Discount Rate" means a rate, as of any date, equal to 100% minus
----------------------
the greater of (a) (i) the sum of the Loss Reserve Ratio and the Dilution
Reserve Ratio minus (ii) 15%, or (b) 25%.
"Purchase Excess" means, for any date, as disclosed in the most recently
---------------
submitted Investment Base Certificate, the extent to which the then Capital
Investment exceeds the Availability as of such date.
"Purchaser" means Redwood Receivables Corporation, a Delaware corporation.
---------
"Purchaser Secured Parties" means the CP Holders, the Depositary, the
-------------------------
Transaction Liquidity Agent, the Transaction Liquidity Lenders, the Letter of
Credit Agent and the Letter of Credit Providers.
"Rating Agency" means each of Moody's and S&P.
-------------
"Rating Agency Condition" means, with respect to any action, that each
-----------------------
Rating Agency has notified the Operating Agent and the Purchaser in writing that
such action will not result in a reduction or withdrawal of the rating of any
outstanding Commercial Paper.
"Receivable" means:
----------
(a) indebtedness of an Obligor (whether constituting an account, chattel
paper, instrument or general intangible) arising from the provision of
merchandise, goods or services by an Originator from the U.S. General
Distribution Division (as such may be renamed from time to time) and such other
divisions and businesses as may be added from time to time pursuant to the
Transfer Agreement to such Obligor, including the right to payment of any
interest or finance charges and other obligations of such Obligor with respect
thereto including, without limitation, (i) the indebtedness of any Original
Obligor under a Contract of the type described in clause (i) of the definition
of the term "Contract" arising from a sale of merchandise by the Seller to such
Original Obligor, including without limitation any such indebtedness which may
be financed by any Floor Plan Obligor, and (ii) the indebtedness of any Floor
Plan Obligor arising from the sale by the Originator of any indebtedness
referred to in clause (i) above to such Floor Plan Obligor under the agreement
or arrangement of the type described in clause (c) hereof relating to such
indebtedness;
(b) all security interests or liens and property subject thereto from time
to time securing or purporting to secure payment by the Obligor;
(c) all rights under any floor plan repurchase agreements, repurchase
agreements, inventory financing agreements, and other floor plan agreements, and
all guarantees, indemnities and warranties and proceeds thereof, proceeds of
insurance policies, financing statements and other agreements or arrangements of
whatever
17
character, in each case from time to time supporting or securing payment of such
Receivable whether pursuant to the Contract related to such Receivable or
otherwise;
(d) all Collections with respect to any of the foregoing;
(e) all Records with respect to any of the foregoing; and
(f) all Proceeds of any of the foregoing.
Unless otherwise stated, the term "Obligor" of any Receivable refers to both the
Original Obligor that owes such Receivable and, if applicable, the Floor Plan
Obligor that finances, or may finance, such Receivable.
"Receivable Collection Turnover" means, on any date of determination, a
------------------------------
number of days equal to:
(a) a fraction, the numerator of which is equal to the average of the
Outstanding Balance of Transferred Receivables on the first day of each
Settlement Period during the prior twelve Settlement Periods and the denominator
of which is equal to aggregate Collections received during such twelve
Settlement Periods with respect to all Receivables originated by the
Originators,
multiplied by
-------------
(b) the number of days in such prior twelve month period.
"Records" means all Contracts and other documents, books, records and other
-------
information (including, without limitation, computer programs, tapes, disks,
data processing software and related property and rights) prepared and
maintained by any Originator, the Servicer or the Seller with respect to
Receivables and the related Obligors.
"Redwood" means Redwood Receivables Corporation, a Delaware corporation.
-------
"Redwood Yield" for any period means the sum of the Daily Yield for each
-------------
day in such period, as more fully specified in Schedule 3 of the Purchase
Agreement.
"Refused Shipment Reserves" means, for any day, an amount equal to the
-------------------------
product of highest RSP for the preceding twelve Settlement Periods multiplied by
the Outstanding Balance of Transferred Receivables transferred during the
preceding Settlement Period, where "RSP" equals the fraction (expressed as a
percentage) where the numerator of which is the aggregate amount of refused
shipments for the preceding three Settlement Periods shown on the books and
records of the Servicer and the denominator of which is the Outstanding Balance
of Transferred Receivables transferred during the preceding three Settlement
Periods.
18
"Regulatory Change" means any change after the Effective Date in federal,
-----------------
state or foreign law or regulations (including, without limitation, Regulation D
of the Federal Reserve Board) or the adoption or making after such date of any
interpretation, directive or request applying to any Affected Party of or under
any federal, state or foreign law or regulations (whether or not having the
force of law) by any Governmental Authority charged with the interpretation or
administration thereof.
"Rejected Amount" means the amount of the capital contribution which the
---------------
Originator is required to make to the Seller (as determined by the Operating
Agent) as a result of breaches of representations and warranties with respect to
Receivables transferred to the Seller by the Originator pursuant to Section 4.04
of the Transfer Agreement.
"Related Documents" means each Lockbox Agreement, the Transfer Agreement,
-----------------
the Purchase Agreement, the Subordinated Note. the Assignment and all
agreements, instruments, certificates, financing statements or other documents
required to be delivered thereunder.
"Reportable Event" means any of the events set forth in Section 4043(c) of
----------------
ERISA or the regulations thereunder.
"Requested Amount" means the amount which an Originator wishes to receive
----------------
from the sale of Receivables on any Transfer Date.
"Request Notice" means, as more fully described in Section 2.01(b) of the
--------------
Transfer Agreement, a notice in the form of a computer print-out, tape or other
form of communication acceptable to the Operating Agent, which (a) enables
identification of the amount of Receivables sold and contributed on a Transfer
Date by an Originator to the Seller, (b) sets forth the amount of payments
received the Transferred Receivables since the prior Transfer Date, and (c) sets
forth the Requested Amount for the following Transfer Date.
"Reserves" means, for any day, the sum of the Concentration Discount
--------
Amount, the Defective Goods Reserve, the Refused Shipment Reserve and the Price
Protection Reserve.
"Retained Monthly Yield" means, for any day within a Settlement Period, the
----------------------
sum of all amounts transferred to or retained in the Retention Account with
respect to Daily Yield calculated as of the previous day in accordance with
Section 6.03(b)(i)(A) of the Purchase Agreement.
"Retained Servicing Fee" means, for any day within a Settlement Period, the
----------------------
sum of all amounts transferred to or retained in the Retention Account with
respect to the Servicing Fee calculated as of the previous day in accordance
with Section 6.03(b)(i)(C) of the Purchase Agreement.
19
"Retained Unused Commitment Fee" means, for any day within a Settlement
------------------------------
Period, the sum of all amounts transferred to or retained in the Retention
Account with respect to the Unused Commitment Fee calculated as of the previous
day in accordance with Section 6.03(b)(i)(E) of the Purchase Agreement.
"Retention Account" means the account maintained with the Depositary
-----------------
described in Section 6.01(c) of the Purchase Agreement.
"Retention Account Deficiency" means, for any Settlement Date, any
----------------------------
deficiency in the amounts on deposit in the Retention Account necessary to make
the payments required under Sections 6.04(a)(i), (ii), (iii) and (iv) of the
Purchase Agreement.
"Revolving Period" means the period commencing on the Effective Date and
----------------
ending on the day prior to the Facility Termination Date.
"S&P" means Standard & Poor's Ratings Services, a division of The McGraw-
---
Hill Companies, Inc. or any successor thereto.
"Sale" means a sale of Receivables by an Originator to the Seller under the
----
Transfer Agreement.
"Sale Price" means with respect to the Receivables to be sold by any
----------
Originator to the Seller on any Transfer Date, the price calculated by the
Seller and the Originator and approved from time to time by the Operating Agent,
equal to the product of:
(a) the Outstanding Balance of Receivables to be sold by such Originator to
the Seller on such date, times
-----
(b) a discount reflecting (i) the expected costs to be incurred by the
Seller of financing such purchase of such Sold Receivables until the Outstanding
Balance of such Sold Receivable is paid in full, (ii) the portion of such Sold
Receivables that are reasonably expected by such Originator to become Defaulted
Receivables, (iii) the portion of such Sold Receivables that are reasonably
expected by such Originator to be reduced by means other than receipt of
Collections on such Sold Receivables or pursuant to (ii) above, and (iv) a
profit margin agreed by the Seller and Originator reasonably calculated to
provide to the Seller at least an annual yield of no less than 10% and no more
than 15% on the equity of the Seller,
in each of (i), (ii) and (iii) determined based on historical experience of
such Originator. As of the Effective Date until the Settlement Date
occurring three months after the Effective Date, the Sale Price shall equal
96.4% and shall thereafter be recalculated on the Settlement Date occurring
after the end of each successive three month period. If the Seller and
Originator fail to agree on, or the Operating Agent fails to approve, a new
Sale Price, the previously calculated Sale Price shall be used until such
agreement is reached or approval
20
is given; provided that the Operating Agent shall be deemed to have
approved any calculation of the Sale Price if, on any date, the Sale Price
shall be an amount less than or equal to 100% less the dilution and default
experience on the Transferred Receivables, in each case as shown on the
books and records of the Servicer, for the three Settlement Periods prior
to such date.
"Seller" means Merisel Capital Funding, Inc., a wholly owned Subsidiary of
------
the Originator.
"Seller Account Collateral" has the meaning specified in Section 8.01(c) of
-------------------------
the Purchase Agreement.
"Seller Assigned Agreements" has the meaning specified in Section 8.01(b)
--------------------------
of the Purchase Agreement.
"Seller Collateral" has the meaning specified in Section 8.01 of the
-----------------
Purchase Agreement.
"Seller LOC Draws" means any payments made to the Purchaser in connection
----------------
with the Letter of Credit and allocated to the Seller.
"Seller Notice" means a notice in the form of Exhibit A, setting forth the
-------------
information required by Section 2.03(b) of the Purchase Agreement.
"Seller Secured Obligations" means all obligations of every nature of the
--------------------------
Seller (other than to the Originator or Servicer), now or hereafter existing,
under the Purchase Agreement and any promissory note or other document or
instrument delivered pursuant to such documents, and all amendments, extensions
or renewals thereof, whether for principal, interest, fees, expenses or
otherwise, whether now existing or hereafter arising, voluntary or involuntary,
whether or not jointly owed with others, direct or indirect, absolute or
contingent, liquidated or unliquidated, and whether or not from time to time
decreased or extinguished and later increased, created or incurred and all or
any portion of such obligations that are paid, to the extent all or any part of
such payment is avoided or recovered directly or indirectly from Redwood, the
Operating Agent or the Collateral Agent as a preference, fraudulent transfer or
otherwise.
"Seller's Share" means the ratio of the Maximum Purchase Limit under the
--------------
Purchase Agreement to the aggregate maximum purchase limits or commitments under
the Purchase Agreement and all Other Purchase Agreements.
"Servicer" means the Originator, or any Person designated as Successor
--------
Servicer, and its successors and assigns from time to time hereunder.
"Servicer Termination Notice" means notice by the Operating Agent to the
---------------------------
Servicer that an Event of Servicer Termination has occurred and that the
Servicer's appointment hereunder has been terminated.
21
"Services Agreement" means the Amended and Restated Ancillary Services
------------------
Agreement dated as of the date hereof between the Merisel, Inc. and MCF.
"Servicing Fee" means a fee payable by the Seller to the Servicer on each
-------------
Settlement Date equal to the product of (i) the Servicing Fee Rate, (ii) the
Outstanding Balance of all Transferred Receivables on such Settlement Date, and
(iii) the actual number of days in such period divided by 360.
"Servicing Fee Rate" means 1%.
------------------
"Servicing Fee Shortfall" means, for any day within a Settlement Period,
-----------------------
the amount, if any, by which the Accrued Servicing Fee calculated as of that day
exceeds the Retained Servicing Fee as of that same day.
"Servicing Officer" means any officer of the Servicer involved in, or
-----------------
responsible for, the administration and servicing of the Transferred Receivables
whose name appears on an Officer's Certificate listing servicing officers
furnished to the Operating Agent by the Servicer, as amended from time to time.
"Servicing Records" means all documents, books, records and other
-----------------
information (including, without limitation, computer programs, tapes, disks,
data processing software and related property and rights) prepared and
maintained by the Servicer with respect to the Transferred Receivables and the
related Obligors.
"Settlement Date" means the tenth Business Day following the end of each
---------------
Settlement Period.
"Settlement Period" means, in the case of the initial Settlement Period,
-----------------
the period beginning with the Effective Date to and including the last day of
the fiscal month in which such Effective Date occurs; with respect to the final
Settlement Period, the period ending on the Final Purchase Date and beginning
with the first day of the fiscal month in which the Final Purchase Date occurs;
and with respect to all other Settlement Periods, each fiscal month.
"Sold Receivable" has the meaning specified in Section 2.01(b) of the
---------------
Transfer Agreement.
"Sub-Servicer" means any Person with whom the Servicer enters into a Sub-
------------
Servicing Agreement.
"Sub-Servicing Agreement" means any written contract between the Servicer
-----------------------
and any Sub-Servicer, relating to servicing, administration or collection of
Transferred Receivables as provided in Section 7.01 of the Purchase Agreement.
"Subordinated Note" has the meaning specified in Section 2.01(c) of the
-----------------
Transfer Agreement.
22
"Subsidiary" means, as to any Person, any corporation or other entity (a)
----------
of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other Persons performing similar
functions are at the time directly or indirectly owned by such Person, or (b) is
directly or indirectly controlled by such Person within the meaning of control
under Section 15 of the Securities Act of 1933, as amended.
"Successor Servicer" has the meaning specified in Section 11.02 of the
------------------
Purchase Agreement.
"Successor Servicing Fees and Expenses" means the fees and expenses payable
-------------------------------------
by the Seller to the Purchaser, as agreed to by the Seller, the Purchaser, the
Operating Agent, the Liquidity Agent and the Letter of Credit Agent.
"Terminating Originator" has the meaning specified in Section 2.04(a)(i) of
----------------------
the Transfer Agreement.
"Termination Event" has the meaning specified in Section 9.01 of the
-----------------
Purchase Agreement.
"Three Month Aged Receivables Ratio" means, on any date of determination,
----------------------------------
the ratio (expressed as a percentage) equal to a fraction,
(a) the numerator of which equals the sum of the Deemed Defaults for the
three Settlement Periods preceding such day;
(b) the denominator of which equals sum of the Adjusted Generated
Receivables for the fourth, fifth and sixth Settlement Periods immediately
preceding such day.
The underlying calculations for the Three Month Aged Receivables Ratio for each
of the twelve Settlement Periods preceding the first Settlement Period after
closing to be used in future calculations of the Aged Receivables Ratio shall be
established by the Operating Agent at closing.
"Transaction Liquidity Loans" means the obligations of the Purchaser to pay
---------------------------
principal, interest, fees and other amounts in respect of any liquidity support
by whatever means given by a Transaction Liquidity Provider pursuant to a
Transaction Liquidity Agreement.
"Transaction Liquidity Agent" means the agent for the Transaction Liquidity
---------------------------
Providers appointed under the Transaction Liquidity Agreement.
"Transaction Liquidity Agreement" means the agreement executed by
-------------------------------
Transaction Liquidity Providers, the Operating Agent, the Transaction Liquidity
Agent and Redwood for the provision of Transaction Liquidity with respect to the
Purchase Agreement.
23
"Transaction Liquidity Provider" means any party that has executed an
------------------------------
Accession Agreement to the Collateral Agent Agreement as a transaction liquidity
provider with respect to the Transaction Liquidity Agreement.
"Transfer Agreement" means the Receivables Transfer Agreement, dated
------------------
October 2, 1995, between the Originator and the Seller.
"Transfer Date" has the meaning specified in Section 2.01(b) of the
-------------
Transfer Agreement.
"Transferred Receivable" means any Sold Receivable or Contributed
----------------------
Receivable provided that any Receivable repurchased by the Originator pursuant
to Section 4.04(i) of the Transfer Agreement shall not be deemed a Transferred
Receivable from and after the date of repurchase unless such Receivable has been
repurchased by or recontributed to the Seller.
"UCC" means, for any jurisdiction, the Uniform Commercial Code as from time
---
to time in effect in such jurisdiction.
"Underfunded Plan" means any Plan that has an Underfunding.
----------------
"Underfunding" means, with respect to any Plan, the excess, if any, of (a)
------------
the present value of all benefits under the Plan (based on the assumptions used
to fund the Plan pursuant to Section 412 of the Code) as of the most recent
valuation date over (b) the fair market value of the assets of such Plan as of
such valuation date.
"Unused Commitment Fee" has the meaning set forth in the Fee Letter.
---------------------
"Unused Commitment Fee Shortfall" means, for any day within a Settlement
-------------------------------
Period, the amount, if any, by which the Accrued Unused Commitment Fee
calculated as of that day exceeds the Retained Unused Commitment Fee as of that
same day.
"Yield Discount Amount" means the amount calculated by the Operating Agent,
---------------------
from time to time at its discretion, as set forth on Schedule 4 of the Purchase
Agreement.
"Yield Shortfall" means, for any day within a Settlement Period, the
---------------
amount, if any, by which the Accrued Monthly Yield calculated as of that day
exceeds the Retained Monthly Yield as of that same day.
SECTION 2. Other Terms. All accounting terms not specifically defined
-----------
herein shall be construed in accordance with GAAP. All terms used in Article 9
of the UCC of the State of New York, and not specifically defined herein, are
used herein as defined in such Article 9. All hourly references herein shall
refer to New York City
24
time. All references to "dollar" or "$" are to the lawful currency of the United
States of America.
SECTION 3. Interpretation. Unless the context otherwise requires:
--------------
(a) All references to agreements and acts refer to the same as from time to
time amended or supplemented or as the terms of such agreements are waived or
modified in accordance with their terms.
(b) The words "hereof", "herein" and "hereunder" and words of similar
import when used in the Transfer Agreement or the Purchase Agreement shall refer
to such Agreement as a whole and not to any particular provision of such
Agreement.
(c) References to any Section, Schedule or Exhibit are references to
Sections, Schedules and Exhibits in or to the Agreement in which the reference
is made.
(d) The term "including" means "including without limitation."
(e) Definitions of terms are applicable to the singular forms of such terms
as well as the plural forms and vice versa.
(f) References to a gender include references to each other gender.
25
