2004 EXTENSION AND FUNDING AGREEMENTExtension Agreement |
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CIT GROUP INC | Dell Financial Services L.P | Dell Credit Company L.L.C | DFS-SPV L.P | DFS-GP, Inc | Dell Inc | Dell Gen. P. Corp | Dell DFS Corporation | CIT Group Inc | CIT Financial USA, Inc | CIT DCC Inc | CIT DFS Inc | CIT Communications Finance Corporation | CIT Credit Group USA Inc | CIT Bank N.A. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
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Exhibit 10.1
EXECUTION COPY
2004 EXTENSION AND FUNDING AGREEMENT
This 2004 Extension and Funding Agreement (the "2004 Extension and
Funding Agreement" or "Agreement") is entered into as of the 8th day of
September, 2004, by and among: (1) Dell Financial Services L.P., a Delaware
limited partnership ("DFS"); (2) Dell Credit Company L.L.C., a Delaware limited
liability company ("General Partner"); (3) DFS-SPV L.P., a Delaware limited
partnership ("DFS-SPV"); (4) DFS-GP, Inc., a Delaware corporation ("DFS-GP");
(5) Dell Inc. , a Delaware corporation ("Dell"); (6) Dell Gen. P. Corp., a
Delaware corporation ("Dell Gen. P."); (7) Dell DFS Corporation, a Delaware
corporation ("Dell DFS"); (8) CIT Group Inc., a Delaware corporation ("CIT");
(9) CIT Financial USA, Inc., a Delaware corporation ("CIT Financial"); (10) CIT
DCC Inc., a Delaware corporation ("CIT DCC"); (11) CIT DFS Inc., a Delaware
corporation ("CIT DFS"); (12) CIT Communications Finance Corporation, a Delaware
corporation ("CIT Communications"); and (13) CIT Credit Group USA Inc., a
Delaware corporation ("CIT USA") (collectively referred to herein as the
"Parties").
RECITALS:
WHEREAS, the Parties wish to extend the term of the DFS Agreement (as
defined below) and amend the provisions thereof in certain respects; and
WHEREAS, the Parties desire to amend and modify certain other related
agreements as set forth herein.
NOW, THEREFORE, in consideration of the mutual promises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
<PAGE>
1. Definitions. Unless otherwise provided herein, capitalized terms
shall have the meanings set forth below or in the provisions and recitals of
this Agreement:
"Affiliate" has the meaning set forth in the DFS Agreement.
"Ancillary Agreements" has the meaning set forth in the DFS Agreement,
excluding this Agreement.
"Business Day" has the meaning set forth in the DFS Agreement.
"CIT Aggregate Interest" has the meaning set forth in the DFS Agreement.
"CIT Bank" means CIT Bank N.A., a Utah industrial loan corporation having
its principal location in Salt Lake City, Utah.
"CIT Funding Payment(s)" means the Quarterly CIT Funding Payments and the
Dell Initiated Lump Sum Funding Payment, as applicable, as such terms are
defined in Section 3 of this Agreement.
"CIT Termination Event" has the meaning set forth in the DFS Agreement.
"Dell Purchase Option" has the meaning set forth in the DFS Agreement.
"Dell's Public Segment" means that portion of the Dell business segment
(howsoever described or organized in the future) that offers Dell products to
federal, state and local governments.
"Financing" or "Financing Services" means the offering or providing of
financings of the sale or the provision of products to customers, including,
without limitation, by means of leases, installment sales contracts, and
conditional sales contracts and loans (whether secured or unsecured).
"Fiscal Year" has the meaning set forth in the DFS Agreement.
"Funding Mix" means the allocation of Gain-Generated Funding between
various customers, based upon (i) the Dell customer segment, and (ii) credit
profile.
"Funding Termination Factor" means a percentage to be agreed upon by the
Parties.
"Gain-Generated Funding" means any Transaction funded through an RPU (as
defined in the Reserve Administration Agreement).
"IDC" means International Data Corporation, or its successor entity.
"Limited Liability Company Agreement" means the Limited Liability Company
Agreement of Dell Credit Company L.L.C., dated April 12, 1997, by and between
Dell Gen P. Corp and CIT DCC Inc., as amended.
"PCs" means desktops, notebooks, ultra portables, and X86 servers.
"Omnibus Agreement" has the meaning set forth in the DFS Agreement.
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"Operating and Purchase Agreement" has the meaning set forth in the
Omnibus Agreement, as such Operating and Purchase Agreement has been amended
from time to time.
"Reserve Administration Agreement" means the Reserve Administration
Agreement, entered into as of the 8th day of September, 2004, by and between
Dell and CIT and the other parties thereto.
"Transactions" means leases and loans booked on the DFS system of record.
2. Amendment and Restatement of Agreement of Limited Partnership of
DFS. The Agreement of Limited Partnership of DFS, dated as of April 14, 1997, as
amended, shall be amended and restated in the form attached hereto as Exhibit A,
and such agreement, as amended and restated is referred to herein as the "DFS
Agreement."
3. Funding Arrangements.
(a) Funding Rights. Subject to the provisions below, CIT shall have the
right to purchase Gain-Generated Funding in each Fiscal Year in an
amount equal to the percentage of DFS total Gain-Generated Funding as
set forth on Schedule A (such right will be referred to herein as the
"CIT Minimum Funding Right"). In addition, subject to the provisions
below, Dell shall have the right to purchase Gain-Generated Funding in
each Fiscal Year to the extent not covered by the CIT Minimum Funding
Right (such right, expressed as a percentage of DFS total
Gain-Generated Funding will be referred to herein as the "Dell Funding
Right"; and the Dell Funding Right and the CIT Minimum Funding Right
are collectively referred to herein as the "Funding Rights" or
individually as a "Funding Right").
(b) Funding Term. The term of the CIT Minimum Funding Right and Dell
Funding Right shall commence at the beginning of Fiscal Year 2006 and
terminate at the end of Fiscal Year 2010 (the "Funding Term"). Upon the
purchase of the CIT Aggregate Interest by Dell, the CIT Minimum Funding
Right shall remain in effect through the expiration of the Funding Term
unless Dell exercises the Funding Termination Option (as defined in
Section 3(g) hereof). From the date Dell acquires the CIT Aggregate
Interest, pursuant to the DFS Agreement, through the end of the Funding
Term, Dell covenants as to itself and its Affiliates to (A) preserve
the DFS and DFS-SPV business structure, operate DFS and DFS-SPV,
respectively, as separate legal entities and not merge, sell assets
(outside the ordinary course of business), dissolve or otherwise alter
the legal structure of DFS and DFS-SPV (except that Dell may seek CIT's
consent to do any of the aforementioned actions and such consent shall
not be unreasonably withheld as long as such actions will not have a
negative effect, financial or otherwise, on CIT or any of its
Affiliates); and (B) cause the business of DFS and DFS-SPV to be
conducted in good faith and in the ordinary course consistent with past
practice in a manner such that Dell does not take any action designed
to enhance Dell's profitability at the financial detriment of CIT or
its Affiliates. Notwithstanding the provisions of any of the Ancillary
Agreements, none of the Ancillary Agreements shall automatically
terminate upon the purchase by Dell of the CIT Aggregate Interest
pursuant to the terms of the DFS Agreement, but instead such agreements
(including this Agreement) shall remain in
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effect to the extent necessary to enable CIT to exercise its CIT
Minimum Funding Right on the same terms and conditions as contemplated
in this Agreement.
(c) Dell Incremental Funding Right. If Dell (including any assignee of
Dell pursuant to Section 3(d) of this Agreement) does not exercise its
full Dell Funding Right in a given Fiscal Year, it shall be permitted
to purchase in the next Fiscal Year an incremental amount above its
Dell Funding Right for such Fiscal Year up to the amount (not to exceed
in dollar value 5% of DFS total Gain-Generated Funding in the previous
Fiscal Year) by which Dell did not achieve its full Dell Funding Right
in the previous Fiscal Year. Conversely, Dell (including any assignees
of Dell pursuant to Section 3(d) of this Agreement) may purchase an
amount of Gain-Generated Funding in excess of its full Dell Funding
Right in a given Fiscal Year (other than Fiscal Year 2010) (not to
exceed in dollar value 5% of DFS's total Gain-Generated Funding in such
Fiscal Year) (the "Incremental Funding Right"), and to the extent Dell
exercises its Incremental Funding Right, the CIT Minimum Funding Right
in such Fiscal Year shall be accordingly reduced; provided that the
Dell Funding Right for the subsequent Fiscal Year shall be reduced by a
like dollar amount, and CIT shall have the right, but not the
obligation, to purchase any portion of such amount of Gain-Generated
Fundings in such subsequent Fiscal Year in addition to the CIT Minimum
Funding Right in such subsequent Fiscal Year (the "CIT Funding Right
Adjustment") and the Dell Funding Right in such subsequent Fiscal Year
shall be accordingly reduced. By way of example, if Dell purchased 19%
of DFS total Gain-Generated Funding in Fiscal Year 2006, it would be
permitted to purchase in Fiscal Year 2007, 35% of DFS total
Gain-Generated Funding for Fiscal Year 2007 plus an additional amount
of DFS total Gain-Generated Funding for Fiscal Year 2007 equal to 5%
(and not 6%, as the Dell Incremental Funding is limited to 5%) of DFS
total Gain-Generated Funding for Fiscal Year 2006. Similarly, if Dell
purchased 29% of DFS total Gain-Generated Funding in Fiscal Year 2006,
it would be permitted to purchase in Fiscal Year 2007 up to 35% of DFS
total Gain-Generated Funding for Fiscal Year 2007 less an amount of DFS
total Gain-Generated Funding for Fiscal Year 2007 equal to 4% of total
Gain-Generated Funding for Fiscal Year 2006 (with such subtracted
dollar amount equaling the CIT Funding Right Adjustment for Fiscal Year
2007).
(d) Assignment of Funding Right.
(i) Dell, at its sole discretion, shall have the right to assign
some or all of its Dell Funding Right (including its right to make
incremental purchases pursuant to Section 3(c) of this Agreement) in
any given Fiscal Year to a third party; provided, however, that CIT
will have a right to match the terms offered to Dell by such third
party and substitute such third party as the assignee of the Dell
Funding Right.
(A) Prior to assigning its Dell Funding Right to a third party,
Dell shall provide to CIT, in writing, the terms and conditions
upon which such third party will provide funding,
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and any other information as CIT may reasonably request (the
"Dell Funding Notice"). CIT shall have seven (7) Business Days
(the "Evaluation Period") upon receipt of the Dell Funding Notice
to agree to provide such funding on the same terms and conditions
as described in the Dell Funding Notice; provided, however, that
if CIT accepts such terms and conditions within the Evaluation
Period, Dell shall be obligated to assign its Dell Funding Right
to CIT in connection with the transaction described in the Dell
Funding Notice and provided further that Dell shall not solicit
bids from third parties or accept unsolicited bids from third
parties in connection with such transaction. If CIT does not
agree in writing, prior to the expiration of the Evaluation
Period, to provide funding on the same terms and conditions as
set forth in the Dell Funding Notice, Dell may assign its Dell
Funding Right to such third party on the same terms and
conditions described in the Dell Funding Notice.
(B) If CIT elects to accept the funding described above, such
funding will be considered a Dell funding for the purpose of
calculating the Dell Funding Right and the CIT Minimum Funding
Right.
(ii) Except with respect to CIT's match right in connection with an
assignment by Dell of its Dell Funding Right (as described in clause
(i) above), Dell shall have the sole right to determine whether CIT
may purchase receivables in excess of its CIT Minimum Funding Right
and CIT Funding Right Adjustment (where applicable).
(e) Transaction Allocation and Funding Mix.
(i) During the Funding Term, each of the Dell Funding Mix and the
CIT Funding Mix shall be consistent with the total DFS Funding Mix,
unless otherwise agreed to by Dell and CIT.
(ii) Subject to the foregoing provisions, the allocation of
Transactions between Dell and CIT (the "Transaction Allocation")
shall be random. Neither party shall have preference as to the
Transactions to be allocated to it.
(A) On a monthly basis, DFS shall determine whether the
Transaction Allocation resulted in (a) a Funding Mix for each of
Dell and CIT that reflects the DFS Funding Mix and (b) funding by
Dell
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and CIT equal to the relevant Funding Right as exercised by Dell
and CIT respectively.
(B) Notwithstanding the first sentence of Section 3(e)(ii) of
this Agreement, if the Transaction Allocation after any given
month (on a cumulative basis) does not result in the correct
Funding Mix between Dell and CIT, then in the next month DFS
shall provide the party that experienced a Funding Mix shortfall
with an allocation of Transactions that is designed to
prospectively offset such shortfall (a "Funding Mix Correction").
The process by which such Funding Mix Corrections occur shall be
set forth in a policy (which shall be consistent with the terms
of this provision) to be adopted by the Parties and to be
administered by DFS.
(C) Notwithstanding the first sentence of Section 3(e)(ii) of
this Agreement, if the Transaction Allocation after any given
month (on a cumulative basis) does not match the relevant Funding
Right as exercised by Dell and CIT respectively, then in the next
month DFS shall provide the party that experienced a Funding
Right shortfall with an allocation of Transactions that is
designed to prospectively offset such shortfall (a "Funding Right
Correction"); provided, however, that if it is CIT that
experiences the shortfall and CIT does not have a CIT Funding
Right Adjustment in that Fiscal Year, and Dell has not exercised
its Incremental Funding Right in that Fiscal Year, no Funding
Right Correction shall be made, unless the shortfall exceeds 5%
of the DFS total Gain-Generated Funding at the end of the month
(on a cumulative basis) and then only to the extent of such
excess. Any such shortfall for CIT up to 5% of the DFS total
Gain-Generated Funding, where no Funding Right Correction is made
by DFS on behalf of CIT, pursuant to the previous sentence, shall
be deemed to be an exercise by Dell of its Dell Incremental
Funding Right. The process by which such Funding Right
Corrections occur shall be set forth in a policy (which shall be
consistent with the terms of this provision) to be adopted by the
Parties and to be administered by DFS.
(f) Dell's Right to Enter into Receivables Purchase Agreements. Dell or
any subsidiary thereof, shall have the right to enter into receivables
purchase agreements and related agreements with DFS, DFS-SPV and CIT
Bank under the same terms and conditions as the CIT Receivables
Purchase Agreement, as amended; the Commercial Loan CIT Receivables
Purchase Agreement, as amended; the DPA Receivables Purchase Agreement,
as amended; the DPA Servicing Agreement, as amended; and the DPA Sub
Servicing Agreement, as amended; and any other
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<PAGE>
agreements as are necessary to effectuate the terms and conditions of
this Agreement.
(g) Termination of CIT Minimum Funding Right. Upon the occurrence of a
CIT Termination Event pursuant to Section 8.1(a)(vi) (a CIT Change of
Control) of the DFS Agreement, and the exercise by Dell of its Dell
Purchase Option pursuant to the terms of the DFS Agreement, Dell shall
have the right through the duration of the Funding Term to terminate
the CIT Minimum Funding Right theretofore unexercised by CIT (the
"Funding Termination Option"); provided, however, that Dell shall
provide CIT six (6) months prior written notice of its intent to
exercise the Funding Termination Option and will pay CIT the CIT
Funding Payment(s) as defined below. The date on which Dell effectively
exercises its Funding Termination Option shall be referred to herein as
the "Funding Termination Date."
(A) CIT Funding Payment(s). If Dell exercises the Funding
Termination Option in accordance with this Agreement, then Dell
shall pay to CIT the Quarterly CIT Funding Payments (as defined
below); provided, however, that after February 1, 2008, Dell
shall pay to CIT the Dell Lump Sum Funding Payment (as defined
below) (the Quarterly CIT Funding Payments and the Dell Lump Sum
Funding Payment are referred to herein collectively as the "CIT
Funding Payment(s)").
(B) The "Quarterly CIT Funding Payments" shall be payments made
within 15 Business Days after the end of each Fiscal Quarter,
beginning from the end of the Fiscal Quarter in which the Funding
Termination Date occurs through the end of the Funding Term,
equal to the maximum amount of Gain-Generated Funding that CIT
could have purchased pursuant to the CIT Minimum Funding Right
for the relevant Fiscal Year if Dell had not exercised its
Funding Termination Option, and calculated on a quarterly basis,
multiplied by the Funding Termination Factor. The first Quarterly
CIT Funding Payment shall be calculated on a pro rata basis to
account for the time within the relevant Fiscal Quarter in which
the Funding Termination Date occurred.
(C) The "Dell Lump Sum Funding Payment" shall be an amount equal
to the present value of the total unexercised amounts of the CIT
Minimum Funding Right as of the later of either (i) the Funding
Termination Date, or (ii) the end of the last Fiscal Quarter for
which Dell made a Quarterly CIT Funding Payment, (the later of
either such date referred to herein as the "Lump Sum Payment
Date"), through the end of the Funding Term (based in good faith
upon the actual DFS business plan and the Dell volume forecast,
both as available at that time), multiplied by the Funding
Termination Factor, and then discounted to the Lump Sum Payment
Date at 8.5% per annum.
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<PAGE>
4. Exclusivity.
(a) Section 4 of the Master Agreement, as amended by Section 7(d) of
the Omnibus Agreement, is hereby deleted in its entirety and replaced
with the following:
"4. CIT's Exclusivity Covenants.
(a) Until the earlier of (i) February 1, 2008, or (ii) the
occurrence of a CIT Termination Event described in Section
8.1(a)(vi) (a CIT Change of Control) of the DFS Agreement and the
exercise by Dell of the Dell Purchase Option, CIT shall not, and
shall cause each of its Affiliates not to, directly or
indirectly, enter into any new agreements, arrangements or
understandings relating to the provision in the United States of
financings of the sale or the provision of products, including by
means of leases, installment sales contracts, conditional sales
contracts, loans (whether secured or unsecured) and related
financial services (including asset management, tracking and
recovery services, refurbishing, remarketing and rental programs)
(a "Competitive Business") (such financing referred to herein as
"Financing Services") to any Dell Competitor.
(b) For purposes hereof, "Dell Competitor" is defined as follows:






