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:
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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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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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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
