<Page>
Exhibit-10(q)
"*******" DENOTE MATERIAL THAT HAS BEEN
OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF
THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED.
RECEIVABLES PURCHASE AGREEMENT
Dated as of December 10, 2003
Among
HASBRO RECEIVABLES FUNDING, LLC
AS THE SELLER
and
CAFCO, LLC
and
STARBIRD FUNDING CORPORATION
AS THE INVESTORS
and
CITIBANK, N.A.
and
BNP PARIBAS, ACTING
THROUGH ITS NEW YORK BRANCH
AS BANKS
and
CITICORP NORTH AMERICA, INC.
AS THE PROGRAM AGENT
and
CITICORP NORTH AMERICA, INC.
and
BNP PARIBAS, ACTING
THROUGH ITS NEW YORK BRANCH
AS INVESTOR AGENTS
and
HASBRO, INC.
AS COLLECTION AGENT AND AN ORIGINATOR
<Page>
and
WIZARDS OF THE COAST, INC. and
ODDZON, INC.
AS ORIGINATORS
2
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TABLE OF CONTENTS
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Page
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ARTICLE I
DEFINITIONS.............................................................................................1
SECTION 1.01. Certain Defined
Terms......................................................................1
SECTION 1.02. Other
Terms...............................................................................25
ARTICLE II AMOUNTS AND TERMS OF THE
PURCHASES....................................................................25
SECTION 2.01. Purchase
Facility.........................................................................25
SECTION 2.02. Making
Purchases..........................................................................26
SECTION 2.03. Receivable Interest
Computation...........................................................27
SECTION 2.04. Settlement
Procedures.....................................................................28
SECTION 2.05.
Fees......................................................................................31
SECTION 2.06. Payments and Computations,
Etc............................................................32
SECTION 2.07. Dividing or Combining Receivable
Interests................................................32
SECTION 2.08. Increased
Costs...........................................................................32
SECTION 2.09. Additional Yield on Receivable Interests Bearing a
Eurodollar Rate........................34
SECTION
2.10.
Taxes.....................................................................................34
SECTION 2.11. Security
Interest.........................................................................36
SECTION 2.12. Sharing of
Payments.......................................................................36
SECTION 2.13. Right of
Setoff...........................................................................37
ARTICLE III CONDITIONS OF
PURCHASES..............................................................................37
SECTION 3.01. Conditions Precedent to Initial
Purchase..................................................37
SECTION 3.02. Conditions Precedent to All Purchases and
Reinvestments...................................39
ARTICLE IV REPRESENTATIONS AND
WARRANTIES........................................................................40
SECTION 4.01. Representations and Warranties of the
Seller..............................................40
SECTION 4.02. Representations and Warranties of the Collection
Agent....................................42
ARTICLE V
COVENANTS..............................................................................................44
SECTION 5.01.
Covenants of the
Seller...................................................................44
SECTION 5.02. Covenant of the Seller and the
Originators................................................50
ARTICLE VI ADMINISTRATION AND COLLECTION OF
POOL
RECEIVABLES.....................................................51
SECTION 6.01. Designation of Collection
Agent...........................................................51
SECTION 6.02. Duties of Collection
Agent................................................................51
SECTION 6.03. Certain Rights of the Program
Agent.......................................................53
SECTION 6.04. Rights and
Remedies.......................................................................54
SECTION 6.05. Further Actions Evidencing
Purchases......................................................54
SECTION 6.06. Covenants of the Collection Agent and each
Originator.....................................54
SECTION 6.07. Indemnities by the Collection
Agent.......................................................55
ARTICLE VII EVENTS OF
TERMINATION................................................................................56
SECTION 7.01. Events of
Termination.....................................................................56
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ARTICLE VIII THE PROGRAM
AGENT...................................................................................60
SECTION 8.01. Authorization and
Action..................................................................60
SECTION 8.02. Program Agent's Reliance,
Etc.............................................................60
SECTION 8.03. CNAI and
Affiliates.......................................................................61
SECTION 8.04. Indemnification of Program
Agent..........................................................61
SECTION 8.05. Delegation of
Duties......................................................................61
SECTION 8.06. Action or Inaction by Program
Agent.......................................................61
SECTION 8.07. Notice of Events of
Termination...........................................................61
SECTION 8.08. Non-Reliance on Program Agent and Other
Parties...........................................62
SECTION 8.09. Successor Program
Agent...................................................................62
SECTION 8.10. Reports and
Notices.......................................................................62
ARTICLE IX THE INVESTOR
AGENTS...................................................................................63
SECTION 9.01. Authorization and
Action..................................................................63
SECTION 9.02. Investor Agent's Reliance,
Etc............................................................63
SECTION 9.03. Investor Agent and
Affiliates.............................................................63
SECTION 9.04. Indemnification of Investor
Agents........................................................64
SECTION 9.05. Delegation of
Duties......................................................................64
SECTION 9.06. Action or Inaction by Investor
Agent......................................................64
SECTION 9.07. Notice of Events of
Termination...........................................................64
SECTION 9.08. Non-Reliance on Investor Agent and Other
Parties..........................................65
SECTION 9.09. Successor Investor
Agent..................................................................65
SECTION 9.10. Reliance on Investor
Agent................................................................65
ARTICLE X
INDEMNIFICATION........................................................................................66
SECTION 10.01. Indemnities by the
Seller................................................................66
ARTICLE XI
MISCELLANEOUS.........................................................................................68
SECTION 11.01. Amendments,
Etc..........................................................................68
SECTION 11.02. Notices,
Etc.............................................................................68
SECTION 11.03.
Assignability............................................................................68
SECTION 11.04. Costs and
Expenses.......................................................................71
SECTION 11.05. No Proceedings; Waiver of Consequential
Damages..........................................71
SECTION 11.06.
Confidentiality..........................................................................72
SECTION 11.07. GOVERNING
LAW............................................................................72
SECTION 11.08. Execution in
Counterparts................................................................73
SECTION 11.09. Survival of
Termination..................................................................73
SECTION 11.10. Consent to
Jurisdiction..................................................................73
SECTION 11.11. WAIVER OF JURY
TRIAL.....................................................................73
SECTION 11.12 Tax
Treatment.............................................................................73
</Table>
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SCHEDULES
SCHEDULE I - Lock-Box Banks
SCHEDULE II - Credit and Collection
Policy
SCHEDULE III - Fiscal Months
SCHEDULE IV - Locations of Records
Concerning Pool Receivables
ANNEXES
ANNEX A-1 - Form of Monthly Report
ANNEX A-2 - Form of Weekly Report
ANNEX A-3 - Form of Daily Report
ANNEX B -
Form of Lock-Box
Agreement
ANNEX C -
Forms of
Opinions of Counsel to the Seller
ANNEX D -
Assignment and
Acceptance
ANNEX E -
Form of Funds
Transfer Letter
ANNEX F -
Applicable
Margin
ANNEX G -
Parent
Undertaking
iii
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RECEIVABLES
PURCHASE AGREEMENT
Dated as of December 10, 2003
HASBRO RECEIVABLES FUNDING, LLC, a Delaware limited liability
company
(the "SELLER"), CAFCO, LLC, a Delaware
limited liability company, as an Investor
(as defined herein), STARBIRD FUNDING
CORPORATION, a Delaware corporation, as an
Investor, CITIBANK, N.A., as a Bank (as
defined herein), BNP PARIBAS, ACTING
THROUGH ITS NEW YORK BRANCH, as a Bank and
an Investor Agent (as defined
herein), CITICORP NORTH AMERICA, INC., a
Delaware corporation ("CNAI"), as
program agent (the "PROGRAM AGENT") for the
Investors and the Banks and as an
Investor Agent, HASBRO, INC., a Rhode
Island corporation, as Collection Agent
and an Originator, and WIZARDS OF THE
COAST, INC., a Washington corporation
("WOTC"), and ODDZON, INC., a Delaware
corporation ("ODDZON"), as Originators,
agree as follows:
PRELIMINARY STATEMENT. The Seller has acquired, and may continue
to
acquire, Receivables (as hereinafter
defined) from the Originators (as
hereinafter defined), by purchase (in the
case of Receivables acquired from
Originators other than the Parent) or
either by purchase or by contribution to
the capital of the Seller (in the case of
Receivables acquired from the Parent),
as determined from time to time by the
Seller and the Parent. The Seller is
prepared to sell undivided fractional
ownership interests (referred to herein as
"RECEIVABLE INTERESTS") in the Receivables.
The Investors may, in their
respective sole discretion, purchase such
Receivable Interests, and the Banks
are prepared to purchase such Receivable
Interests, in each case on the terms
set forth herein. Accordingly, the parties
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this Agreement,
the
following terms shall have the following
meanings (such meanings to be equally
applicable to both the singular and plural
forms of the terms defined):
"ADJUSTED EURODOLLAR RATE" means, for any Fixed Period, an
interest
rate per annum equal to the rate per annum
obtained by dividing (i) the
Eurodollar Rate for such Fixed Period by
(ii) a percentage equal to 100% minus
the Eurodollar Rate Reserve Percentage for
such Fixed Period.
"ADVERSE CLAIM" means a lien, security interest or other charge
or
encumbrance, or any other type of
preferential arrangement.
"AFFECTED PERSON" has the meaning specified in Section 2.08(a).
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"AFFILIATE" means, as to any Person, any other Person that,
directly
or indirectly, is in control of, is
controlled by or is under common control
with such Person or is a director or
officer of such Person.
"AFFILIATED OBLIGOR" means any Obligor that is an Affiliate of
another
Obligor.
"AGENT" means any of the Program Agent or any Investor Agent
and
"Agents" means, collectively, the Program
Agent and the Investor Agents.
"ALTERNATE BASE RATE" means (a) for each Bank or Investor in the
Group
which includes CAFCO, a fluctuating
interest rate per annum as shall be in
effect from time to time, which rate shall
be at all times equal to the higher
of:
(i)
the rate of interest announced publicly by Citibank in
New York, New York, from time to time as Citibank's base rate;
and
(ii) the
Federal Funds Rate; and
(b) for each Bank or
Investor in the Group which includes Starbird,
on any date, a fluctuating rate of interest
per annum equal to the higher of
(i)
the base commercial lending rate per annum announced from
time to time by BNP Paribas at its principal office in New York
in
effect on such day; and
(ii) the
Federal Funds Rate.
The Alternate Base Rate for BNP Paribas is
not necessarily intended to represent
the lowest rate of interest charged by BNP
Paribas for extensions of credit.
"APPLICABLE MARGIN" means, at any time, the percentage
determined
pursuant to Annex F based on the Parent's
Debt Rating at such time.
"ASSET PURCHASE AGREEMENT" means (a) in the case of any Bank
other
than Citibank and BNP Paribas, the asset
purchase agreement entered into by such
Bank concurrently with the Assignment and
Acceptance pursuant to which it became
party to this Agreement and (b) in the case
of Citibank and BNP Paribas, the
secondary market agreement, asset purchase
agreement or other similar liquidity
agreement entered into by such Bank for the
benefit of its respective Investor,
to the extent relating to the sale or
transfer of interests in Receivable
Interests, in each case as amended or
modified from time to time and expiring on
the Commitment Termination Date in effect
from time to time.
"ASSIGNEE RATE" for any Fixed Period for any Receivable Interest
means
an interest rate per annum equal to the
Eurodollar Rate for such Fixed Period
PLUS the Applicable Margin; PROVIDED,
HOWEVER, that in case of:
(i)
any Fixed Period on or prior to the first day of which an
Investor or Bank shall have notified the Program Agent and each
Investor Agent that the
2
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introduction of or any change in or in the interpretation of any
law
or regulation makes it unlawful, or any central bank or other
governmental authority asserts that it is unlawful, for such
Investor
or Bank to fund such Receivable Interest at the Assignee Rate
set
forth above (and such Investor or Bank shall not have
subsequently
notified the Program Agent and each Investor Agent that such
circumstances no longer exist),
(ii) any
Fixed Period of one to (and including) 29 days (it
being understood and agreed that this clause (ii) shall not be
applicable to a Fixed Period for which Yield is to be computed
by
reference to the Eurodollar Rate that is intended to have a
one-month
duration but due solely to LIBOR interest period convention the
duration thereof will be less than 30 days),
(iii) any Fixed
Period as to which the Program Agent and each
Investor Agent does not receive notice, by no later than 12:00
noon
(New York City time) on the second Business Day preceding the
first
day of such Fixed Period, that the related Receivable Interest
will
not be funded by CAFCO and Starbird through the issuance of
Promissory
Notes or commercial paper, as the case may be, or
(iv) any
Fixed Period for a Receivable Interest the Capital of
which allocated to the Investors or the Banks is less than
$500,000,
the "ASSIGNEE RATE" for such Fixed Period
shall be an interest rate per annum
equal to one percent per annum above the
Alternate Base Rate in effect from time
to time during such Fixed Period.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance
agreement entered into by a Bank, an
Eligible Assignee, such Bank's Investor
Agent and the Program Agent, pursuant to
which such Eligible Assignee may become
a party to this Agreement, in substantially
the form of Annex D hereto.
"BANK COMMITMENT" of any Bank means, (a) with respect to
Citibank,
$125,000,000 or such amount as reduced or
increased by any transfer under any
Assignment and Acceptance entered into
among Citibank, another Bank, the
Investor Agent for Citibank and the Program
Agent, (b) with respect to BNP
Paribas, $125,000,000 or such amount as
reduced or increased by any transfer
under any Assignment and Acceptance entered
into among BNP Paribas, another
Bank, the Investor Agent for BNP Paribas
and the Program Agent or (c) with
respect to a Bank (other than Citibank or
BNP Paribas) that has entered into an
Assignment and Acceptance, the amount set
forth therein as such Bank's Bank
Commitment, in each case as such amount may
be reduced or increased by an
Assignment and Acceptance entered into
among such Bank, an Eligible Assignee,
the Investor Agent for such Bank and the
Program Agent, and as may be further
reduced (or terminated) pursuant to the
next sentence. Any reduction (or
termination) of the Purchase Limit pursuant
to the terms of this Agreement shall
reduce ratably (or terminate) each Bank's
Bank Commitment; PROVIDED that if the
Investors and Banks in any Group (the
"DEPARTING GROUP") shall determine not to
extend the Commitment Termination Date or
shall approve an extension of the
Commitment Termination Date based on a
reduced Investor Purchase Limit for their
Group, then, if the Investors and the Banks
in the other Groups shall
3
<Page>
nonetheless determine to extend the
Commitment Termination Date, effective from
such Commitment Termination Date, the Bank
Commitment of each Bank in the
Departing Group shall be reduced (ratably,
or as otherwise mutually agreed by
such Banks) or terminated.
"BANKS" means Citibank, BNP Paribas and each Eligible Assignee
that
shall become a party to this Agreement
pursuant to Section 11.03.
"BNP PARIBAS" means BNP Paribas, a bank organized under the laws
of
France, acting through its New York
branch.
"BUSINESS DAY" means any day on which (i) banks are not authorized
or
required to close in New York City or Rhode
Island, and (ii) if this definition
of "Business Day" is utilized in connection
with the Eurodollar Rate, dealings
are carried out in the London interbank
market.
"CAFCO" means CAFCO, LLC and any successor or assign of CAFCO that
is
a receivables investment company which in
the ordinary course of its business
issues commercial paper or other securities
to fund its acquisition and
maintenance of receivables.
"CAPITAL" of any Receivable Interest means the original amount paid
to
the Seller for such Receivable Interest at
the time of its purchase by an
Investor or a Bank pursuant to this
Agreement, or such amount divided or
combined in accordance with Section 2.07,
in each case reduced from time to time
by Collections distributed on account of
such Capital pursuant to Section
2.04(e); PROVIDED that if such Capital
shall have been reduced by any
distribution and thereafter all or a
portion of such distribution is rescinded
or must otherwise be returned for any
reason, such Capital shall be increased by
the amount of such rescinded or returned
distribution, as though it had not been
made.
"CITIBANK" means Citibank, N.A., a national banking
association.
"CNAI" has the meaning specified in the introductory paragraph
hereof.
"COLLECTION AGENT" means at any time the Person then authorized
pursuant to Section 6.01 to administer and
collect Pool Receivables.
"COLLECTION AGENT FEE" has the meaning specified in Section
2.05(a).
"COLLECTIONS" means, with respect to any Receivable, all cash
collections and other cash proceeds of such
Receivable, including, without
limitation, all cash proceeds of Related
Security with respect to such
Receivable, and any Collection of such
Receivable deemed to have been received
pursuant to Section 2.04.
"COMMITMENT TERMINATION DATE" means the earliest of (a) December
8,
2004, UNLESS, prior to such date (or the
date so extended pursuant to this
clause), upon the Seller's request, made
not more than 45 days prior to the then
Commitment Termination Date, each Investor
and, with respect to each such
Investor, one or more of its Related Banks
which, immediately after giving
effect to such extension would have Bank
Commitments in an aggregate amount
equal to such Investor's Investor Facility
Amount to be in effect immediately
4
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after giving effect to such extension,
shall in their sole discretion consent,
which consent shall be given within 30 days
of such request and not more than 30
days prior to the then Commitment
Termination Date, to the extension of the
Commitment Termination Date to the date
occurring not more than 364 days after
the then Commitment Termination Date;
PROVIDED, however, that any failure of any
Investor or Bank to respond to the Seller's
request for such extension shall be
deemed a denial of such request by such
Bank, (b) the Facility Termination Date
(PROVIDED that if the Facility Termination
Date shall occur solely under clause
(d) of such defined term, the Commitment
Termination Date shall occur only with
respect to the Investor and Banks for which
such Facility Termination Date
occurred under clause (d)), (c) the date
determined pursuant to Section 7.01,
and (d) the date the Purchase Limit reduces
to zero pursuant to Section 2.01(b).
"CONCENTRATION LIMIT" for any Obligor means (i) at any time that
such
Obligor's Debt Rating is at least AA- by
S&P and Aa3 by Moody's, 23%, (ii) at
any time that such Obligor's Debt Rating is
at least BBB- by S&P and Baa3 by
Moody's, and clause (i) is not applicable,
11.5%, and (iii) at all other times,
5.75% ("NORMAL CONCENTRATION LIMIT"), or
such other higher percentage or dollar
amount ("SPECIAL CONCENTRATION LIMIT") for
such Obligor designated by the
Program Agent and each Investor Agent in a
writing delivered to the Seller;
PROVIDED that in the case of an Obligor
with any Affiliated Obligor, the
Concentration Limit shall be calculated as
if such Obligor and such Affiliated
Obligor are one Obligor; PROVIDED FURTHER,
that the Program Agent or any
Investor Agent may for bona fide credit
reasons reduce or cancel any Special
Concentration Limit for any Obligor upon
three Business Days' notice to the
Seller (with a copy of each of the other
Agents). The foregoing notwithstanding,
but subject to the two PROVISOS in the
previous sentence, the Special
Concentration Limit for **************
shall be the lower of (a) *********** of
the Outstanding Balance of all Pool
Receivables and (b) **************, and the
Special Concentration Limit for
*************** shall be the lower of (a)
*********** of the Outstanding Balance of
all Pool Receivables and (b)
**************, PROVIDED, that if the Debt
Rating for **************shall be
below AA- by S&P or below Aa3 by
Moody's, or the Debt Rating for **************
shall be below A- by S&P or below A3 by
Moody's, then the Concentration Limit
for **************or **************, as the
case may be, shall be the applicable
Concentration Limit determined pursuant to
clauses (ii) and (iii) of the first
sentence of this definition.
"CONTRACT" means an agreement between any Originator and an Obligor
or
an invoice between any Originator and an
Obligor pursuant to or under which such
Obligor shall be obligated to pay for
merchandise from time to time.
"CP FIXED PERIOD DATE" means, for any Receivable Interest, the date
of
purchase of such Receivable Interest and
thereafter the last day of each Fiscal
Month or any other day as shall have been
agreed to in writing by the Program
Agent, the Investor Agents and the Seller
prior to the first day of the
preceding Fixed Period for such Receivable
Interest or, if there is no preceding
Fixed Period, prior to the first day of
such Fixed Period.
"CREDIT AND COLLECTION POLICY" means those receivables credit
and
collection policies and practices of the
Seller and the Originators in effect on
the date of this Agreement and described in
Schedule II hereto, as modified in
compliance with this Agreement.
5
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"DAILY REPORT" means a report in substantially the form of Annex
A-3
hereto and containing such additional
information as any Agent may reasonably
request from time to time, furnished by the
Collection Agent pursuant to Section
6.02(g)(iii) or 6.02(g)(iv).
"DEBT" means (i) indebtedness for borrowed money, (ii)
obligations
evidenced by bonds, debentures, notes or
other similar instruments, (iii)
obligations to pay the deferred purchase
price of property or services, (iv)
obligations as lessee under leases which
shall have been or should be, in
accordance with generally accepted
accounting principles, recorded as capital
leases, and (v) obligations under direct or
indirect guaranties in respect of,
and 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 (i) through (iv)
above.
"DEBT RATING" for any Person, means the rating by S&P, Moody's
or
Fitch of such Person's long-term public
senior unsecured non-credit enhanced
debt.
"DEFAULT RATIO" means the ratio (expressed as a percentage)
computed
as of the last day of each Fiscal Month by
dividing (i) the aggregate
Outstanding Balance of all Originator
Receivables that were Defaulted
Receivables on such day or that would have
been Defaulted Receivables on such
day had they not been written off the books
of the applicable Originator or the
Seller during such Fiscal Month by (ii) the
aggregate Outstanding Balance of all
Originator Receivables on such day.
"DEFAULTED RECEIVABLE" means an Originator Receivable:
(i)
as to which any payment, or part thereof, remains unpaid
for 91 or more days from the original due date for such
payment;
(ii) as to
which the Obligor thereof has taken any action, or
suffered any event to occur, of the type described in Section
7.01(g);
or
(iii) which,
consistent with the Credit and Collection Policy,
would be written off the applicable Originator's or the Seller's
books
as uncollectible.
"DEFERRED PURCHASE PRICE" has the meaning specified in the
Originator
Purchase Agreement.
"DELINQUENCY RATIO" means the ratio (expressed as a percentage)
computed as of the last day of each Fiscal
Month by dividing (i) the aggregate
Outstanding Balance of all Originator
Receivables that were Delinquent
Receivables on such day by (ii) the
aggregate Outstanding Balance of all
Originator Receivables on such day.
"DELINQUENT RECEIVABLE" means an Originator Receivable that is not
a
Defaulted Receivable and:
(i)
as to which any payment, or part thereof, remains unpaid
for 61 or more days, but less than 91 days, from the original due
date
for such payment; or
6
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(ii)
which, consistent with the Credit and Collection Policy,
would be classified as delinquent by the applicable Originator or
the
Seller.
"DEPARTING GROUP" has the meaning specified within the definition
of
"Bank Commitment" in this Section 1.01.
"DILUTED RECEIVABLE" means that portion (and only that portion) of
any
Originator Receivable which is either (a)
reduced or canceled as a result of (i)
any defective, rejected or returned
merchandise or services or any failure by an
Originator to deliver any merchandise or
provide any services or otherwise to
perform under the underlying Contract, (ii)
any change in the terms of or
cancellation of, a Contract or any cash
discount, discount for quick payment or
other adjustment by an Originator which
reduces the amount payable by the
Obligor on the related Originator
Receivable (except any such change or
cancellation resulting from or relating to
the financial inability to pay or
insolvency of the Obligor of such
Originator Receivable), (iii) any set-off by
an Obligor in respect of any claim by such
Obligor as to amounts owed by it on
the related Originator Receivable (whether
such claim arises out of the same or
a related transaction or an unrelated
transaction) or (iv) any allowance given
in connection with the applicable
Originator's sales incentives and product
return programs which are accounted for as
"credits" to the relevant Outstanding
Balance or (b) subject to any specific
dispute, offset, counterclaim or defense
whatsoever (except the discharge in
bankruptcy of the Obligor thereof); PROVIDED
that Diluted Receivables are calculated
assuming that all charge backs are
resolved in the Obligor's favor.
"DILUTION HORIZON FACTOR" means, as of any date, a ratio computed
by
dividing (i) the aggregate original
Outstanding Balance of all Originator
Receivables created by the Originators
during the number of Fiscal Months
determined pursuant to the definition of
Liquidation Period by (ii) the
Outstanding Balance of Originator
Receivables (other than Defaulted
Receivables), less Collections on hand but
not yet applied to reduce the
Outstanding Balance of Originator
Receivables, in each case as at the last day
of the most recently ended Fiscal
Month.
"DILUTION PERCENTAGE" means, as of any date, the product of (a)
the
sum of (i) the product of (x) two,
multiplied by (y) the average of the Dilution
Ratios for each of the twelve most recently
ended Fiscal Months, plus (ii) the
Dilution Volatility Ratio as at the last
day of the most recently ended Fiscal
Month, multiplied by (b) the Dilution
Horizon Factor as of such date.
"DILUTION RATIO" means, as of any date, the ratio (expressed as
a
percentage) computed for the most recently
ended Fiscal Month by dividing (i)
the aggregate amount of Diluted Receivables
during such Fiscal Month by (ii) the
aggregate Outstanding Balance (in each
case, at the time of creation) of all
Originator Receivables created during the
sixth Fiscal Month immediately
preceding such Fiscal Month.
"DILUTION RESERVE" means, for any Receivable Interest on any date,
an
amount equal to the greater of:
(a)
DP X (C + YFR)
where:
7
<Page>
DP =
the
Dilution Percentage on such date.
C =
the
Capital of such Receivable Interest on such
date.
YFR
= the Yield and Fee Reserve for such
Receivable
Interest on such date.
or (b) PD X
2.0
where:
PD =
the
Projected Dilution for the most recent Fiscal
Month.
"DILUTION VOLATILITY RATIO" means, as of any date, a ratio
(expressed
as a percentage) equal to the product of
(a) the highest of the average of the
Dilution Ratios for the most recently ended
Fiscal Month and the two immediately
preceding Fiscal Months calculated for each
of the twelve most recently ended
Fiscal Months minus the average of the
Dilution Ratios for each of the twelve
most recently ended Fiscal Months, and (b)
a ratio calculated by dividing the
highest of the average of the Dilution
Ratios for the most recently ended Fiscal
Month and the two immediately preceding
Fiscal Months calculated for each of the
twelve most recently ended Fiscal Months by
the average of the Dilution Ratios
for each of the twelve most recently ended
Fiscal Months.
"E-MAIL SELLER REPORT" has the meaning specified in Section
6.02(g).
"ELIGIBLE ASSIGNEE" means (a) with respect to the Group which
includes
CAFCO, (i) CNAI or any of its Affiliates,
(ii) any Person managed or sponsored
by Citibank, CNAI or any of their
Affiliates or (iii) any financial or other
institution acceptable to the Investor
Agent for such Group and approved by the
Seller (which approval by the Seller shall
not be unreasonably withheld or
delayed and shall not be required if an
Event of Termination or an Incipient
Event of Termination has occurred and is
continuing) and (b) with respect to the
Group which includes Starbird, (i) BNP
Paribas or any of its Affiliates, (ii)
any Person managed or sponsored by BNP
Paribas or any of its Affiliates or (iii)
any financial or other institution
acceptable to the Investor Agent for such
Group and approved by the Seller (which
approval by the Seller shall not be
unreasonably withheld or delayed and shall
not be required if an Event of
Termination or an Incipient Event of
Termination has occurred and is
continuing).
"ELIGIBLE RECEIVABLE" means, at any time, a Receivable:
(i)
the Obligor of which is not an Affiliate of any
Originator or the Seller and is either (a) a resident of the
United
States or Canada or (b) ******** or ********, PROVIDED, that no
Receivables of ******** or ******** which otherwise meet the
requirements of this definition shall be Eligible Receivables
until
such time as the Program Agent has received an opinion of
********
counsel or other evidence satisfactory to it confirming that
the
Program Agent (on behalf of the Investors and the Banks) has
acquired
a valid and perfected first priority ownership or security interest
in
and other enforceable rights with respect to such Receivables,
which
interest and rights are substantially as protected and
8
<Page>
favorable as the Program Agent's rights under the UCC with respect
to
Receivables of United States Obligors;
(ii) which
is not a Defaulted Receivable and the Obligor of
which is not the Obligor of any Defaulted Receivables which in
the
aggregate constitute 10% or more of the aggregate Outstanding
Balance
of all Receivables of such Obligor;
(iii) which,
according to the Contract related thereto, is
required
to be paid in full within ************ of the original
billing date therefor;
(iv) which
is an obligation representing all or part of the
sales price of merchandise, insurance or services within the
meaning
of Section 3(c)(5) of the Investment Company Act of 1940, as
amended;
(v)
which is an "account" within the meaning of Article 9 of
the UCC of the applicable jurisdictions governing the perfection
of
the interest created by a Receivable Interest;
(vi) which
is denominated and payable only in United States
dollars in the United States;
(vii) which
arises under a Contract which, together with such
Receivable, is in full force and effect and constitutes the
legal,
valid and binding obligation of the Obligor of such Receivable and
is
not subject to any Adverse Claim or any dispute, offset,
counterclaim
or defense whatsoever (except (A) the potential discharge in
bankruptcy of such Obligor and (B) allowances given in connection
with
the applicable Originator's sales incentives and product return
programs which are accounted for as "credits" to the relevant
Outstanding Balance);
(viii) which, together
with the Contract related thereto, does
not contravene in any material respect any laws, rules or
regulations
applicable thereto (including, without limitation, laws, rules
and
regulations relating to usury, consumer protection, truth in
lending,
fair credit billing, fair credit reporting, equal credit
opportunity,
fair debt collection practices and privacy) and with respect to
which
none of the Seller, any Originator, the Collection Agent or the
Obligor is in violation of any such law, rule or regulation in
any
material respect;
(ix) which
arises under a Contract which (A) does not require
the Obligor thereunder to consent to the transfer, sale or
assignment
of the rights and duties of the Seller or the applicable
Originator
thereunder and (B) does not contain a confidentiality provision
that
purports to restrict the ability of any Agent, the Investors or
the
Banks to exercise their rights under this Agreement, including,
without limitation, their right to review the Contract;
9
<Page>
(x)
which was generated in the ordinary course of the
applicable Originator's business;
(xi) which
has not been extended, rewritten or otherwise
modified from the original terms thereof (except as permitted
by
Section 6.02(c)) due to the Obligor's financial inability to
pay;
(xii) the
transfer, sale or assignment of which does not
contravene any applicable law, rule or regulation;
(xiii) which satisfies
in all material respects all applicable
requirements of the Credit and Collection Policy;
(xiv) as to
which, at or prior to the later of the date of this
Agreement and the date such Receivable is created, an Investor
Agent
has not notified the Seller that such Receivable (or the Obligor
of
such Receivable) is, based on bona fide credit reasons, no
longer
acceptable for purchase hereunder by the Investor or any Bank
for
which such Investor Agent is acting as Investor Agent;
(xv) which
arises under a Contract which is not an executory
contract;
(xvi) as to
which the relevant Originator has satisfied and
fully performed all obligations required to be fulfilled by it
(other
than customary warranty obligations and errors not of a
material
nature arising in the ordinary course of business), and no
further
action is required to be performed by any Person with respect
thereto
other than payment thereon by the applicable Obligor; and
(xvii) which does not
arise from the sale of consigned goods,
unless the Investor Agents shall have otherwise consented
thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as
amended from time to time, and the
regulations promulgated and rulings issued
thereunder.
"ERISA AFFILIATE" means any Person which is treated as a single
employer with the Parent under Section 414
of the Internal Revenue Code of 1986,
as amended.
"ERISA REPORTABLE EVENT" means a reportable event with respect to
a
Guaranteed Pension Plan within the meaning
of Section 4043 of ERISA and the
regulations promulgated thereunder.
"EUROCURRENCY LIABILITIES" has the meaning assigned to that term
in
Regulation D of the Board of Governors of
the Federal Reserve System, as in
effect from time to time.
"EURODOLLAR RATE" means, for any Fixed Period for each Bank or
Investor in any Group, an interest rate per
annum equal to the rate per annum at
which deposits in U.S. dollars are offered
by the principal office of Citibank
(if the Investor Agent for such Group is
CNAI) or BNP Paribas (if the Investor
Agent for such Group is BNP Paribas) in
each case in London,
10
<Page>
England to prime banks in the London
interbank market at 11:00 A.M. (London
Time) two Business Days before the first
day of such Fixed Period in an amount
substantially equal to the Capital
associated with such Fixed Period on such
first day and for a period equal to such
Fixed Period.
"EURODOLLAR RATE RESERVE PERCENTAGE" of any Investor or Bank for
any
Fixed Period in respect of which Yield is
computed by reference to the
Eurodollar Rate means the reserve
percentage (expressed as a decimal and rounded
upward to the nearest 1/100th of 1%)
applicable two Business Days before the
first day of such Fixed Period under
regulations issued from time to time by the
Board of Governors of the Federal Reserve
System (or any successor) (or if more
than one such percentage shall be
applicable, the daily average of such
percentages for those days in such Fixed
Period during which any such percentage
shall be so applicable) for determining the
maximum reserve requirement
(including, without limitation, any basic
emergency, supplemental, marginal and
other reserves and taking into account any
transitional adjustments or other
scheduled changes in reserve requirements)
for such Investor or Bank with
respect to liabilities or assets consisting
of or including Eurocurrency
Liabilities (or with respect to any other
category of liabilities that includes
deposits by reference to which the interest
rate on Eurocurrency Liabilities is
determined) having a term equal to such
Fixed Period.
"EVENT OF TERMINATION" has the meaning specified in Section
7.01.
"FACILITY TERMINATION DATE" means the earliest of (a) December 6,
2006
or (b) the date determined pursuant to
Section 7.01 or (c) the date the Purchase
Limit reduces to zero pursuant to Section
2.01(b) or (d) the date the Asset
Purchase Agreement of any Bank expires
without being renewed (it being
understood and agreed that the initial
expiration date of the Asset Purchase
Agreement of each Bank shall be the
Commitment Termination Date and concurrently
with any subsequent extension by such Bank
of the Commitment Termination Date,
the Asset Purchase Agreement of such Bank
will be extended for an identical time
period) (PROVIDED that, under this clause
(d), the Facility Termination Date
shall occur solely with respect to the
Investors and Banks in such Bank's
Group).
"FEDERAL FUNDS RATE" means, for any period, a fluctuating
interest
rate per annum equal for each day during
such period to the weighted average of
the rates on overnight Federal funds
transactions with members of the Federal
Reserve System arranged by Federal funds
brokers, as published for such day (or,
if such day is not a Business Day, for the
next preceding Business Day) by the
Federal Reserve Bank of New York, or, if
such rate is not so published for any
day which is a Business Day, the average of
the quotations for such day on such
transactions received by the Program Agent
from three Federal funds brokers of
recognized standing selected by it.
"FEE AGREEMENTS" has the meaning specified in Section 2.05(b).
"FEES" has the meaning specified in Section 2.05(b).
"FISCAL MONTH" means a fiscal month of the Originators as set forth
on
Schedule III hereto, as such schedule shall
be updated from time to time in
accordance with the terms hereof.
11
<Page>
"FITCH" means Fitch, Inc.
"FIXED PERIOD" means, with respect to any Receivable Interest:
(a)
in the case of any Fixed Period in respect of which Yield
is computed by reference to the Investor Rate, each successive
period
commencing on each CP Fixed Period Date for such Receivable
Interest
and ending on the next succeeding CP Fixed Period Date for such
Receivable Interest; and
(b)
in the case of any Fixed Period in respect of which Yield
is computed by reference to the Assignee Rate, each successive
period
of from one to and including 29 days, or a period of one month, as
the
Seller shall select and the Investor Agent for the relevant
Investor
or Bank may approve on notice by the Seller received by such
Investor
Agent (including notice by telephone, confirmed in writing) not
later
than 11:00 A.M. (New York City time) on (A) the day which occurs
two
Business Days before the first day of such Fixed Period (in the
case
of Fixed Periods in respect of which Yield in computed by reference
to
the Eurodollar Rate) or (B) the first day of such Fixed Period (in
the
case of Fixed Periods in respect of which Yield is computed by
reference to the Alternate Base Rate), each such Fixed Period for
such
Receivable Interest to commence on the last day of the
immediately
preceding Fixed Period for such Receivable Interest (or, if there
is
no such Fixed Period, on the date of purchase of such
Receivable
Interest), EXCEPT that if such Investor Agent shall not have
received
such notice, or such Investor Agent and the Seller shall not have
so
mutually agreed, before 11:00 A.M. (New York City time) on such
day,
such Fixed Period shall be one day;
PROVIDED, HOWEVER, that:
(i)
any Fixed Period (other than of one day) which would
otherwise end on a day which is not a Business Day shall be
extended
to the next succeeding Business Day (PROVIDED, HOWEVER, if Yield
in
respect of such Fixed Period is computed by reference to the
Eurodollar Rate, and such Fixed Period would otherwise end on a
day
which is not a Business Day, and there is no subsequent Business
Day
in the same calendar month as such day, such Fixed Period shall end
on
the next preceding Business Day);
(ii) in
the case of any Fixed Period of one day, (A) if such
Fixed Period is the initial Fixed Period for a Receivable
Interest,
such Fixed Period shall be the day of the purchase of such
Receivable
Interest; (B) any subsequently occurring Fixed Period which is one
day
shall, if the
immediately preceding Fixed Period is more than one day,
be the last day of such immediately preceding Fixed Period and, if
the
immediately preceding Fixed Period is one day, be the day next
following such immediately preceding Fixed Period; and (C) if
such
Fixed Period occurs on a day immediately preceding a day which is
not
a Business Day, such Fixed Period shall be extended to the next
succeeding Business Day; and
12
<Page>
(iii) in the
case of any Fixed Period for any Receivable
Interest which commences before the Termination Date for such
Receivable Interest and would otherwise end on a date occurring
after
such Termination Date, such Fixed Period shall end on such
Termination
Date and the duration of each Fixed Period which commences on or
after
the Termination Date for such Receivable Interest shall be of
such
duration (including, without limitation, one day) as shall be
selected
by the Program Agent with the consent of the Investor Agents (or,
if
such Termination Date occurs solely as a result of the occurrence
of a
Facility Termination Date under clause (d) of the defined term
Facility Termination Date for less than all the Groups, as shall
be
selected by the Investor Agent for the Investor and Banks for
which
such Facility Termination Date under clause (d) is applicable) or,
in
the absence of any such selection, each period of thirty days from
the
last day of the immediately preceding Fixed Period.
"FUNDS TRANSFER LETTER" means a letter in substantially the form
of
Annex E hereto executed and delivered by
the Seller to the Program Agent and the
Investor Agents, as the same may be amended
or restated in accordance with the
terms thereof.
"GROUP" means (a) with respect to CAFCO, its Investor Agent,
its
Related Banks and CAFCO, and (b) with
respect to Starbird, its Investor Agent,
its Related Banks and Starbird.
"GUARANTEED PENSION PLAN" means any employee pension benefit
plan
within the meaning of Section 3(2) of ERISA
maintained or contributed to by the
Parent or any ERISA Affiliate, the benefits
of which are guaranteed on
termination in full or in part by the PBGC
pursuant to Title IV of ERISA, other
than a Multiemployer Plan.
**********************************************************************
****************************************************
"INCIPIENT BANKRUPTCY EVENT OF TERMINATION" means an event
under
Section 7.01(g) that but for notice or
lapse of time or both would constitute an
Event of Termination.
"INCIPIENT EVENT OF TERMINATION" means an event that but for notice
or
lapse of time or both would constitute an
Event of Termination.
"INDEMNIFIED PARTY" has the meaning specified in Section 10.01.
"INVESTOR" means CAFCO, Starbird and all other owners by assignment
or
otherwise of a Receivable Interest
originally purchased by CAFCO or Starbird
and, to the extent of the undivided
interests so purchased, shall include any
participants.
"INVESTOR AGENT" means (a) with respect to CAFCO and its
Related
Banks, CNAI or any successor investor agent
designated by such parties, and (b)
with respect to Starbird and its Related
Banks, BNP Paribas or any successor
investor agent designated by such
parties.
"INVESTOR AGENT'S ACCOUNT" means (a) with respect to CAFCO and
its
Related Banks, the special account (account
number ********) of their Investor
Agent maintained at the office of Citibank
at 399 Park Avenue, New York, New
York, or such other account as such
13
<Page>
Investor Agent shall designate in writing
to the Seller, the Collection Agent
and the Program Agent, and (b) with respect
to Starbird and its Related Banks,
the special account (account number
******** of their Investor Agent maintained
at the office of BNP Paribas in New York,
New York, or such other account as
such Investor Agent shall designate in
writing to the Seller, the Collection
Agent and the Program Agent.
"INVESTOR PURCHASE LIMIT" means (a) with respect to the Group
consisting of CAFCO and its Related Banks,
$125,000,000, and (b) with respect to
the Group consisting of Starbird and its
Related Banks, $125,000,000. Any
reduction (or termination) of the Purchase
Limit pursuant to the terms of this
Agreement shall reduce ratably (or
terminate) each Group's Investor Purchase
Limit; PROVIDED, that if any Departing
Group shall determine not to extend the
Commitment Termination Date or shall
approve an extension of the Commitment
Termination Date based on a reduced
Investor Purchase Limit for their Group,
then, if the Investors and Banks in the
other Groups shall nonetheless determine
to extend the Commitment Termination Date,
effective from such Commitment
Termination Date, the Investor Purchase
Limit of the Departing Group shall be so
reduced or terminated.
"INVESTOR RATE" means for any Fixed Period for any Receivable
Interest:
(a)
with respect to CAFCO, the per annum rate equivalent to
the weighted average of the per annum rates paid or payable by
such
Investor from time to time as interest on or otherwise (by means
of
interest rate hedges or otherwise) in respect of those
Promissory
Notes issued by such Investor that are allocated, in whole or in
part,
by such Investor's Investor Agent (on behalf of such Investor) to
fund
the purchase or maintenance of such Receivable Interest during
such
Fixed Period as determined by such Investor Agent (on behalf of
such
Investor) and reported to the Seller, the Program Agent and, if
the
Collection Agent is not the Seller, the Collection Agent, which
rates
shall reflect and give effect to the commissions of placement
agents
and dealers in respect of such Promissory Notes, to the extent
such
commissions are allocated, in whole or in part, to such
Promissory
Notes by such Investor Agent (on behalf of such Investor);
PROVIDED,
HOWEVER, that (a) if any component of such rate is a discount rate,
in
calculating the "INVESTOR RATE" for such Fixed Period such
Investor
Agent shall for such component use the rate resulting from
converting
such discount rate to an interest bearing equivalent rate per
annum;
(b) the Investor Rate with respect to Receivable Interests funded
by
CAFCO's Participants shall be the same rate as in effect from time
to
time on Receivable Interests or portions thereof that are not
funded
by one of its Participants; and (c) if all of the Receivable
Interests
maintained by CAFCO are funded by its Participants, then the
Investor
Rate shall be CAFCO's pool funding rate in effect from time to
time
for its largest size pool of transactions which settles
monthly.
(b)
with respect to Starbird, an interest rate per annum
equal to the sum of (i) the rate or, if more than one rate, the
weighted average of the rates, determined by converting to an
interest-bearing equivalent rate per annum the discount rate
(or
rates) at which commercial paper notes of Starbird on each day
during
such Fixed Period have been sold by any placement agent or
commercial
14
<Page>
paper dealer selected by Starbird, plus (ii) to the extent not
reflected in the rate described in clause (i) above, applicable
commissions and charges charged by such placement agent or
commercial
paper dealer with respect to such commercial paper notes, expressed
as
a percentage of such face amount and converted to an
interest-bearing
equivalent rate per annum, plus (iii) certain documentation and
transaction costs directly associated with the issuance of such
commercial paper notes, as are customarily charged by Starbird to
its
customers in similar transactions, plus (iv) costs of other
related
borrowings by Starbird, including borrowings to fund small or
odd
dollar amounts that are not easily accommodated in the
commercial
paper market, expressed as a percentage of the face amount of
such
commercial paper notes and converted to an interest-bearing
equivalent
rate per annum; PROVIDED, HOWEVER that if any component of such
rate
is a discount rate, in calculating the "Investor Rate", Starbird
shall
for such component use the rate resulting from converting such
discount rate to an interest bearing equivalent rate per annum.
**********************************************************************
****************************************************
"LIQUIDATION DAY" means, for any Receivable Interest, (i) each
day
during a Fixed Period for such Receivable
Interest on which the conditions set
forth in Section 3.02 are not satisfied and
(ii) each day which occurs on or
after the Termination Date for such
Receivable Interest.
"LIQUIDATION FEE" means, for (i) any Fixed Period for which Yield
is
computed by reference to the Investor Rate
and a reduction of Capital is made
for any reason on any day with less than
two Business Days' prior notice or (ii)
any Fixed Period for which Yield is
computed by reference to the Eurodollar Rate
and a reduction of Capital is made for any
reason on any day other than the last
day of such Fixed Period, the amount, if
any, by which (A) the additional Yield
(calculated without taking into account any
Liquidation Fee or any shortened
duration of such Fixed Period pursuant to
clause (iii) of the definition
thereof) which would have accrued from the
date of such repayment to the last
day of such Fixed Period (or, in the case
of clause (i) above, the maturity of
the underlying commercial paper tranches)
on the reductions of Capital of the
Receivable Interest relating to such Fixed
Period had such reductions remained
as Capital, exceeds (B) the income, if any,
received by the Investors or the
Banks which hold such Receivable Interest
from the investment of the proceeds of
such reductions of Capital.
"LIQUIDATION PERIOD" means, at any time, the number of Fiscal
Months
(rounded to the next highest whole Fiscal
Month) arrived at by dividing (a) the
sum of the then Maximum Available Capital
plus Yield and Fee Reserve in respect
of such Maximum Available Capital by (b)
Net Collections for the most recent
Fiscal Month.
"LOCK-BOX ACCOUNT" means a post office box administered by a
Lock-Box
Bank or an account maintained at a Lock-Box
Bank, in each case for the purpose
of receiving Collections.
"LOCK-BOX AGREEMENT" means an agreement, in substantially the form
of
Annex B.
15
<Page>
"LOCK-BOX BANK" means any of the banks holding one or more
Lock-Box
Accounts.
"LOSS HORIZON FACTOR" means, as of any date, a ratio computed
by
dividing (i) the aggregate Outstanding
Balance (in each case, at the time of
creation) of all Originator Receivables
created by the Originators during the
four most recently ended Fiscal Months by
(ii) the Outstanding Balance of
Originator Receivables (other than
Defaulted Receivables), less Collections on
hand but not yet applied to reduce the
Outstanding Balance of Originator
Receivables, in each case as at the last
day of the most recently ended Fiscal
Month.
"LOSS PERCENTAGE" means, as of any date, the greatest of (a)
the
product of (i) two multiplied by (ii) the
Loss Horizon Factor as of the last day
of the most recently ended Fiscal Month
multiplied by (iii) the highest of the
Loss Ratios for the twelve most recently
ended Fiscal Months, (b) four times the
Normal Concentration Limit referred to in
clause (iii) of the definition of
Concentration Limit and (c) 10%.
"LOSS RATIO" means, as of any date, the average of the ratios
(each
expressed as a percentage) for each of the
three most recently ended Fiscal
Months computed for each such month by
dividing (a) the sum of the aggregate
Outstanding Balance of Originator
Receivables which were 91-120 days past due
(or otherwise would have been classified
during such Fiscal Month as Defaulted
Receivables in accordance with clauses (ii)
or (iii) of the definition of
"Defaulted Receivables") as at the last day
of such Fiscal Month plus (without
duplication) write-offs during such Fiscal
Month of Originator Receivables not
yet 91 days past due, by (b) the aggregate
Outstanding Balance (in each case, at
the time of creation) of Originator
Receivables created during the fourth
preceding Fiscal Month.
"LOSS RESERVE" means, for any Receivable Interest on any date,
an
amount equal to:
LP X (C+ YFR)
where:
LP =
the Loss
Percentage on such date.
C =
the
Capital of such Receivable Interest on such
date.
YFR
= the
Yield and Fee Reserve for such Receivable
Interest on such date.
"LOSS-TO-LIQUIDATION RATIO" means the ratio (expressed as a
percentage) computed as of the last day of
each Fiscal Month by dividing (i) the
aggregate Outstanding Balance of all
Originator Receivables written off by the
Originators or the Seller, or which should
have been written off by the
Originators or the Seller in accordance
with the Credit and Collection Policy,
during the most recently ended 12 Fiscal
Months by (ii) the aggregate amount of
Collections of Originator Receivables
actually received during such period.
16
<Page>
"MAXIMUM AVAILABLE CAPITAL" means, at any time, the maximum amount
of
Capital (not in excess of the Purchase
Limit) which would be available at the
time of computation without violating the
provisions of Section 7.01(i).
"MAXIMUM RECEIVABLE INTEREST" means (i) at any time when only
Monthly
Reports are required to be furnished
hereunder, 95%, (ii) at any time when
Weekly Reports are required to be furnished
hereunder during the period referred
to in clause (a) of the definition of
Weekly Reporting Period, 95% and at all
other times when Weekly Reports are
required to be furnished hereunder, 98.75%,
and (iii) at any time when Daily Reports
are required to be furnished hereunder
during the period referred to in clause (a)
of the definition of Weekly
Reporting Period, 99% and at all other
times when Daily Reports are required to
be furnished hereunder, 99.75%.
**********************************************************************
****************************************************
"MONTHLY REPORT" means a report in substantially the form of Annex
A-1
hereto and containing such additional
information as any Agent may reasonably
request from time to time, furnished by the
Collection Agent pursuant to Section
6.02(g)(i).
"MOODY'S" means Moody's Investors Service, Inc.
"MULTIEMPLOYER PLAN" means any multiemployer plan within the
meaning
of Section 3(37) of ERISA maintained or
contributed to by the Parent or any
ERISA Affiliate.
"NET COLLECTIONS" means, for any Fiscal Month, an amount equal
to
MC X (ER-EOC)
-------
ER
where:
MC =
Collections received during such Fiscal Month.
EOC =
the amount determined pursuant to clause (i) of
the definition of Net Receivables Pool Balance
(without giving effect to excess concentrations of
********or ********), when Net Receivables Pool
Balance is calculated as of the last day of such
Fiscal Month.
ER =
the Outstanding Balance of Eligible Receivables in
the Receivables Pool at the end of such Fiscal
Month.
"NET RECEIVABLES POOL BALANCE" means at any time the
Outstanding
Balance of Eligible Receivables then in the
Receivables Pool reduced by the sum
of (without duplication) (i) the aggregate
amount by which the Outstanding
Balance of Eligible Receivables of each
Obligor then in the Receivables Pool
exceeds the product of (A) the
Concentration Limit for such Obligor multiplied
by (B) the aggregate outstanding Capital of
all Receivable Interests (PROVIDED,
that if such Concentration Limit is
calculated as a dollar amount, then such
dollar
17
<Page>
amount shall be used in lieu of the product
of clauses (A) and (B)), (ii)
the aggregate amount of Collections on hand
at such time but not yet applied to
reduce the Outstanding Balance of a Pool
Receivable, (iii) to the extent credit
memos have not already been excluded from
the Receivables Pool, the aggregate
Outstanding Balance of all Eligible
Receivables in respect of which any credit
memo issued by an Originator or the Seller
is outstanding at such time to the
extent not yet applied to reduce the
Outstanding Balance of a Pool Receivable,
(iv) the amount, if any, by which (A) the
aggregate Outstanding Balance of all
Eligible Receivables then in the
Receivables Pool having original due dates more
than 120 days after the original billing
date therefor exceeds (B) 35% of the
aggregate Outstanding Balance of all
Receivables then in the Receivables Pool,
(v) the amount by which the aggregate
Outstanding Balance of Receivables for
which the Obligor is a U.S. or state
government or a U.S. or state governmental
subdivision or agency exceeds 2% of the
aggregate Outstanding Balance of all
Receivables then in the Receivables Pool,
(vi) the amount by which the aggregate
Outstanding Balance of Receivables for
which the Obligor is a Canadian resident,
******** or ******** exceeds 5% of the
aggregate Outstanding Balance of all
Receivables then in the Receivables Pool,
(vii) the amount by which the
aggregate Outstanding Balance of
Receivables for which the Obligor is a Quebec
resident exceeds ********, and (viii) from
and after the date on which the
proviso in clause (i) of the definition of
"Eligible Receivable" is satisfied,
the amount by which the aggregate
Outstanding Balance of Receivables for which
the Obligor is ******** exceeds 1% of the
aggregate Outstanding Balance of all
Receivables then in the Receivables
Pool.
"OBLIGOR" means a Person obligated to make payments to any
Originator
pursuant to a Contract.
"ORIGINATOR" means each of Wizards of the Coast, Inc., a
Washington
corporation, OddzOn, Inc., a Delaware
corporation and the Parent.
"ORIGINATOR PURCHASE AGREEMENT" means the Purchase and
Contribution
Agreement dated as of the date of this
Agreement between the Originators, as
sellers, and the Seller, as purchaser, as
the same may be amended, modified or
restated from time to time.
"ORIGINATOR RECEIVABLE" means the indebtedness of any Obligor
resulting from the provision or sale of
merchandise by any Originator under a
Contract (whether constituting an account,
instrument, chattel paper or general
intangible), and includes the right to
payment of any interest or finance
charges and other obligations of such
Obligor with respect thereto, but shall
not include receivables bearing general
ledger account codes ********
(non-trade), ******** (direct to retail),
********or ******** (intercompany) or
Wizards of the Coast Company Code
************* (retail stores dba Wizards and
Gamekeeper).
"OTHER COMPANIES" means the Originators and all of their
Subsidiaries
except the Seller.
"OTHER TAXES" has the meaning specified in Section 2.10(b).
"OUTSTANDING BALANCE" of any Receivable at any time means the
then
outstanding principal balance thereof.
Sales or use tax and any other taxes
which may be billed in connection with a
Receivable are not included in the
Outstanding Balance.
18
<Page>
"PARENT" means Hasbro, Inc., a Rhode Island corporation.
"PARENT UNDERTAKING" means the Undertaking Agreement made in favor
of
the Seller and relating to obligations of
the Originators other than the Parent
substantially in the form of Annex G
hereto, as the same may be amended,
modified or restated from time to time.
"PARTICIPANT" shall have the meaning assigned to such term in
Section
11.03(h).
"PBGC" means the Pension Benefit Guaranty Corporation created
by
Section 4002 of ERISA and any successor
entity or entities having similar
responsibilities.
"PERCENTAGE" of any Bank means, (a) with respect to Citibank,
the
percentage set forth on the signature page
to this Agreement, or such amount as
reduced or increased by any Assignment and
Acceptance entered into with an
Eligible Assignee, (b) with respect to BNP
Paribas, the percentage set forth on
the signature page to this Agreement, or
such amount as reduced by any
Assignment and Acceptance entered into with
an Eligible Assignee, or (c) with
respect to a Bank that has entered into an
Assignment and Acceptance, the amount
set forth therein as such Bank's
Percentage, or such amount as reduced or
increased by an Assignment and Acceptance
entered into between such Bank and an
Eligible Assignee.
"PERSON" means an individual, partnership, corporation (including
a
business trust), limited liability company,
joint stock company, trust,
unincorporated association, joint venture
or other entity, or a government or
any political subdivision or agency
thereof.
"POOL NON-COMPLIANCE DATE" means any day on which the sum of
the
Receivable Interests as shown in the most
recent Monthly Report, Weekly Report
(if required by Section 6.02(g)(ii)) or
Daily Report (if required by Section
6.02(g)(iii)) is greater than the Maximum
Receivable Interest.
"POOL RECEIVABLE" means a Receivable in the Receivables Pool.
"PROGRAM AGENT" has the meaning specified in the introductory
paragraph hereof.
"PROGRAM AGENT ACCOUNT" means the bank account (account number
********) under the control of the Program
Agent maintained at the Program Agent
Account Bank, or such other account as the
Program Agent shall designate in
writing to the Seller, the Collection Agent
and the Investor Agents from time to
time, PROVIDED that such account shall be
subject to a Program Agent Account
Control Agreement.
"PROGRAM AGENT ACCOUNT BANK" means Bank of America, N.A., or
such
other bank, satisfactory to each of the
Agents, as the Program Agent shall
designate in writing to each of the Seller,
the Collection Agent and the
Investor Agents from time to time.
"PROGRAM AGENT ACCOUNT CONTROL AGREEMENT" means an agreement among
the
Seller, the Collection Agent, the Program
Agent and the Program Agent Account
Bank, in form and substance satisfactory to
each of the Agents.
19
<Page>
"PROJECTED DILUTION" means, for any Fiscal Month (the "RELEVANT
FISCAL
MONTH") an amount equal to the aggregate
amount of Diluted Receivables which
occurred during the period of "X" Fiscal
Months beginning 11 Fiscal Months prior
to the relevant Fiscal Month, where "X" is
the highest Liquidation Period during
the 12-month period ending with the
relevant Fiscal Month.
"PROMISSORY NOTES" means, collectively, (i) promissory notes issued
by
CAFCO and (ii) participations sold by CAFCO
pursuant to Section 10.03(h);
PROVIDED that the term "Promissory Notes"
shall not include the interests sold
by CAFCO to a Bank or its designee under an
Asset Purchase Agreement.
"PURCHASE LIMIT" means $250,000,000, as such amount may be
reduced
pursuant to the immediately succeeding
sentence or Section 2.01(b). In the event
that the Facility Termination Date shall
occur solely under clause (d) of such
defined term, then on such Facility
Termination Date the Purchase Limit shall be
reduced by the aggregate Bank Commitments
of the Banks in the Group for which
such Facility Termination Date has occurred
(as such Bank Commitments were in
effect immediately prior to such Facility
Termination Date). References to the
unused portion of the Purchase Limit shall
mean, at any time, the Purchase
Limit, as then reduced pursuant to Section
2.01(b), minus the then outstanding
Capital of Receivable Interests under this
Agreement.
**********************************************************************
********************************************************************************
****
"RECEIVABLE" means any Originator Receivable which has been
acquired
by the Seller by purchase or by capital
contribution pursuant to the Originator
Purchase Agreement.
"RECEIVABLE INTEREST" means, at any time, an undivided
percentage
ownership interest in (i) all then
outstanding Pool Receivables arising prior to
the time of the most recent computation or
recomputation of such undivided
percentage interest pursuant to Section
2.03, (ii) all Related Security with
respect to such Pool Receivables, and (iii)
all Collections with respect to, and
other proceeds of, such Pool Receivables.
Such undivided percentage interest
shall be computed as
C + YFR + LR+DR
---------------
NRPB
where:
C =
the
Capital of such Receivable Interest at the
time of computation.
YFR = the
Yield and Fee Reserve of such Receivable
Interest at the time of computation.
LR =
the Loss Reserve of such Receivable Interest at
the
time of computation.
20
<Page>
DR =
the Dilution Reserve of such Receivable Interest
at the time of computation.
NRPB = the
Net Receivables Pool Balance at the time of
computation.
Each Receivable Interest shall be
determined from time to time pursuant to the
provisions of Section 2.03; PROVIDED,
HOWEVER, that solely for the purpose of
determining the sum of the Receivable
Interests in the second sentence of
Section 2.04(d), the first sentence of
Section 4.02(g) and Section 7.01, Capital
shall be reduced by the aggregate amount of
funds (if any) then held in the
Program Agent Account for distribution on
account of Capital (which funds have
not yet been applied to reduce Capital),
and the Reserves shall be computed on
such reduced Capital.
"RECEIVABLES POOL" means at any time the aggregation of each
then
outstanding Receivable.
"REGISTER" has the meaning specified in Section 11.03(c).
"RELATED BANK" means (a) with respect to CAFCO, Citibank, each
Bank
which has entered into an Assignment and
Acceptance with Citibank, and each
assignee (directly or indirectly) of any
such Bank, which assignee has entered
into an Assignment and Acceptance, and (b)
with respect to Starbird, BNP
Paribas, each Bank which has entered into
an Assignment and Acceptance with BNP
Paribas, and each assignee (directly or
indirectly) of any such Bank, which
assignee has entered into an Assignment and
Acceptance.
"RELATED SECURITY" means with respect to any Receivable
(i)
all of the Seller's interest in any merchandise
(including returned merchandise) relating to any sale giving rise
to
such Receivable;
(ii) all
security interests or liens and property subject
thereto from time to time purporting to secure payment of such
Receivable, whether pursuant to the Contract relating to such
Receivable or otherwise, together with all financing statements
filed
against an Obligor describing any collateral securing such
Receivable;
(iii) all
guaranties, insurance and other agreements or
arrangements of whatever character (but excluding the ********and
any
letter of credit supporting payment under the ********) from time
to
time supporting or securing payment of such Receivable whether
pursuant to the Contract relating to such Receivable or otherwise;
and
(iv) the
Contract and all other books, records and other
information (including, without limitation, computer programs,
tapes,
discs, punch cards, data processing software and related property
and
rights) relating to such Receivable and the related Obligor.
21
<Page>
"RESERVES" means, with respect to any Receivable Interest as of
any
day, the sum of the Yield and Fee Reserve,
the Loss Reserve and the Dilution
Reserve for such Receivable Interest as of
such day.
"S&P" means Standard and Poor's, a division of The
McGraw-Hill
Companies, Inc.
"SEC" means the Securities and Exchange Commission.
"SELLER REPORT" means a Monthly Report, a Weekly Report or a
Daily
Report.
"SETTLEMENT DATE" for any Receivable Interest means the last day
of
each Fixed Period for such Receivable
Interest ; PROVIDED, HOWEVER, that if
Yield with respect to such Receivable
Interest is computed with reference to the
Investor Rate and no Liquidation Day exists
on the last day of a Fixed Period
for such Receivable Interest, the
Settlement Date for such Receivable Interest
for such Fixed Period shall be the second
Business Day after the due date of the
Monthly Report for such Fixed Period.
"STARBIRD" means Starbird Funding Corporation and any successor
or
assign of Starbird that is a receivables
investment company which in the
ordinary course of its business issues
commercial paper or other securities to
fund its acquisition and maintenance of
receivables.
"SUBSIDIARY" means any corporation or other entity of which
securities
having ordinary voting power to elect a
majority of the board of directors or
other persons performing similar functions
are at the time directly or
indirectly owned by the Seller or an
Originator, as the case may be, or one or
more Subsidiaries, or by the Seller or an
Originator, as the case may be, and
one or more Subsidiaries.
"TANGIBLE NET WORTH" means at any time the excess of (i) the sum
of
(a) the product of (x) 100% minus the
Discount (as such term is defined in the
Originator Purchase Agreement) multiplied
by (y) the Outstanding Balance of all
Receivables other than Defaulted
Receivables plus (b) cash and cash equivalents
of the Seller, minus (ii) the sum of (a)
Capital plus (b) the Deferred Purchase
Price.
**********************************************************************
****************************************************
"TAXES" has the meaning specified in Section 2.10(a).
"TERMINATION DATE" for any Receivable Interest means (i) in the
case
of a Receivable Interest owned by an
Investor, the earlier of (a) the Business
Day which the Seller or the Investor Agent
for such Investor so designates by
notice to the other (with a copy to the
Program Agent and the other Investor
Agents) at least one Business Day in
advance for such Receivable Interest and
(b) the Facility Termination Date and (ii)
in the case of a Receivable Interest
owned by a Bank, the earlier of (a) the
Business Day which the Seller so
designates by notice to the Program Agent
and the Investor Agents at least one
Business Day in advance for such Receivable
Interest and (b) the Commitment
Termination Date.
22
<Page>
"TRANSACTION DOCUMENT" means any of this Agreement, the
Originator
Purchase Agreement, the Parent Undertaking,
the Lock-Box Agreements, the Program
Agent Account Control Agreement, the Fee
Agreements and all other agreements and
documents delivered and/or related hereto
or thereto.
"UCC" means the Uniform Commercial Code as from time to time in
effect
in the specified jurisdiction.
**********************************************************************
*************************************************
"WEEK" means each calendar week beginning on Saturday and ending
on
(and including) the close of business on
the following Friday.
"WEEKLY REPORT" means a report in substantially the form of Annex
A-2
hereto and containing such additional
information as any Agent may reasonably
request from time to time, furnished by the
Collection Agent pursuant to Section
6.02(g)(ii).
"WEEKLY REPORTING PERIOD" means (a) the period beginning on
December 1
of each year and ending on the last day of
February of the next year and (b) any
period during which the Parent's Debt
Rating is less than BB by S&P or less than
Ba3 by Moody's (but no Event of Termination
pursuant to Section 7.01(n) then
exists).
"WEEKLY SETTLEMENT DATE" means the second Business Day of each
Week
occurring during any Weekly Reporting
Period.
"WEIGHTED AVERAGE DELINQUENCY" means, as of any date, an amount
calculated by multiplying (a) the number of
days equivalent to the mid-point in
each of columns two through seven in part
VII (Historical Data) of the part of
the Monthly Report under "Portfolio
Performance Tests and Compliance" (except
that for the column entitled "Current", the
mid-point number of days shall be
zero and for the column entitled "121 +
dpd", the mid-point shall be 130) times
(b) the aggregate Outstanding Balance of
all Receivables in each such column and
dividing the result by (c) the aggregate
Outstanding Balance of all Receivables
in all columns, in each case as calculated
by the Collection Agent in the then
most recent Monthly Report; PROVIDED, that
if the Program Agent should disagree
with any such calculation, the Program
Agent may calculate such Weighted Average
Delinquency.
"WEIGHTED AVERAGE MATURITY" means, for any Fiscal Month, an
amount
calculated by multiplying (a) the average
maturity shown in each column in part
V (Payment Term Detail) of the part of the
Monthly Report for which "Portfolio
Aging" is Part I times (b) the aggregate
Outstanding Balance of all Receivables
in each such column and dividing the result
by (c) the total Outstanding Balance
of all Receivables in all payment term
categories, in each case as calculated by
the Collection Agent in the most recent
Monthly Report; PROVIDED, that if the
Program Agent should disagree with any such
calculation, the Program Agent may
calculate such Weighted Average
Maturity.
"YIELD" means for each Receivable Interest for each Fixed
Period:
23
<Page>
(i)
for each day during each Fixed Period to the extent an
Investor will be funding its portion of such Receivable
Interest
through the issuance of Promissory Notes, commercial paper or
other
promissory notes, as the case may be, and no Event of Termination
has
occurred and is continuing,
IR x C X ED + LF
---
360
(ii) for
each day during such Fixed Period to the extent (x)
an Investor will not be funding its portion of such Receivable
Interest through the issuance of Promissory Notes, commercial paper
or
other promissory notes, as the case may be, or (y) a Bank will
be
funding its portion of such Receivable Interest, or (z) an Event
of
Termination has occurred and is continuing,
AR x C x ED + LF
---
360
where:
AR =
the
Assignee Rate for such portion of such
Receivable
Interest for such Fixed Period;
C =
the
Capital of such portion of such Receivable
Interest during such Fixed Period;
IR =
the
Investor Rate for such portion of such
Receivable Interest for such Fixed Period;
ED =
the actual
number of days elapsed during such
portion of such Fixed Period;
LF =
the
Liquidation Fee, if any, for such portion of
such Receivable Interest for such Fixed Period;
PROVIDED that no provision of this
Agreement shall require the payment or permit
the collection of Yield in excess of the
maximum permitted by applicable law;
and PROVIDED FURTHER that Yield for any
Receivable Interest shall not be
considered paid by any distribution to the
extent that at any time all or a
portion of such distribution is rescinded
or must otherwise be returned for any
reason.
"YIELD AND FEE
RESERVE" means, on any date, an amount equal to
(C X YFRP) + AUYF
where:
C =
the
Capital of such Receivable Interest at the
close of business of the Collection Agent on such
date.
24
<Page>
YFRP = the Yield
and Fee Reserve Percentage on such date.
AUYF = accrued
and unpaid Yield, Collection Agent Fee and
Fees on such date, in each case for such Receivable
Interest.
"YIELD AND FEE RESERVE PERCENTAGE" means, on any date, a
percentage
equal to
[(AER X 1.5) + AM+ CAF] X [WAD + WAM]
-------------------------------------
360
where:
AER =
the
one-month Adjusted Eurodollar Rate in effect
on such date.
AM =
the
Applicable Margin used in the calculation of
the Assignee Rate in effect on such date.
CAF =
the
percentage per annum used in the calculation
of the Collection Agent Fee in effect on such date.
WAD =
the
maximum Weighted Average Delinquency for the
immediately preceding 12 Fiscal Months.
WAM =
the
Weighted Average Maturity for the most recent
Fiscal Month.
SECTION 1.02. OTHER TERMS . All accounting terms not
specifically
defined herein shall be construed in
accordance with generally accepted
accounting principles. All terms used in
Article 9 of the UCC in the State of
New York, and not specifically defined
herein, are used herein as defined in
such Article 9.
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 2.01. PURCHASE FACILITY . (a) On the terms and
conditions
hereinafter set forth, each of CAFCO and
Starbird may, in its sole discretion,
ratably in accordance with the Investor
Purchase Limit of its Group, and, if and
to the extent CAFCO or Starbird does not
make a purchase, the Related Banks for
such Investor shall, ratably in accordance
with their respective Bank
Commitments, purchase Receivable Interests
from the Seller from time to time
during the period from the date hereof to
the Facility Termination Date (in the
case of the Investors) and to the
Commitment Termination Date (in the case of
the Banks). Under no circumstances shall
the Investors make any such purchase,
or the Banks be obligated to make any such
purchase, if after giving effect to
such purchase, the aggregate outstanding
Capital of Receivable Interests would
exceed the Purchase Limit.
25
<Page>
(b) The Seller may at
any time, upon at least five Business Days'
notice to the Program Agent and the
Investor Agents, terminate the facility
provided for in this Agreement in whole or,
from time to time, reduce in part
the unused portion of the Purchase Limit;
PROVIDED that each partial reduction
shall be in the amount of at least
$1,000,000 or an integral multiple thereof.
(c) Until the Program
Agent (or any Investor Agent with respect to
its Investor) gives the Seller the notice
provided in Section 3.02(c)(iii), the
Program Agent, on behalf of the Investors
which own Receivable Interests, may
have the Collections attributable to such
Receivable Interests automatically
reinvested pursuant to Section 2.04 in
additional undivided percentage interests
in the Pool Receivables by making an
appropriate readjustment of such Receivable
Interests. The Program Agent, on behalf of
the Banks which own Receivable
Interests, shall have the Collections
attributable to such Receivable Interests
automatically reinvested pursuant to
Section 2.04 in additional undivided
percentage interests in the Pool
Receivables by making an appropriate
readjustment of such Receivable
Interests.
SECTION 2.02. MAKING PURCHASES . (a) Each purchase by any of
the
Investors or the Banks shall be made on
notice given no later than 3:00 P.M.
(New York City time) at least two Business
Days' in advance from the Seller to
the Program Agent and each Investor Agent,
PROVIDED that no more than one
purchase shall be made in any Week. Each
such notice of a purchase shall specify
(i) the amount requested to be paid to the
Seller (such amount, which shall not
be less than $3,000,000, being referred to
herein as the initial "Capital" of
the Receivable Interest then being
purchased), (ii) the allocation of such
amount among each of the Groups (which
shall be proportional to the Investor
Purchase Limit of each Group) and (iii) the
date of such purchase (which shall
be a Business Day). Each Investor shall
promptly notify the Program Agent
whether such Investor has determined to
make the requested purchase on the terms
specified by the Seller. The Program Agent
shall promptly thereafter notify the
Seller whether the Investors have
determined to make the requested purchase and,
if so, whether all of the terms specified
by the Seller are acceptable to the
Investors.
If any Investor has determined not to make the entire amount of
a
proposed purchase requested to be made by
it, the Investor Agent for such
Investor shall promptly send notice of the
proposed purchase to all of the
Related Banks for such Investor
concurrently by telecopier, telex or cable
specifying the date of such purchase, the
aggregate amount of Capital of the
Receivable Interest being purchased by such
Related Banks (which amount shall be
equal to the portion of the initial Capital
requested to be funded by such
Investor, which such Investor determined
not to fund), each such Related Bank's
portion thereof (determined ratably in
accordance with its respective Bank
Commitment), whether the Yield for the
Fixed Period for such Receivable Interest
is calculated based on the Eurodollar Rate
(which may be selected only if such
notice is given at least two Business Days
prior to the purchase date) or the
Alternate Base Rate, and the duration of
the Fixed Period for such Receivable
Interest (which shall be one day if the
Seller has not selected another period).
(b) On the date of
each such purchase of a Receivable Interest, the
applicable Investors and/or Banks, as the
case may be, shall, upon satisfaction
of the applicable conditions set forth in
this Article II and Article III, make
available to the Seller in same day funds,
at the account set forth in the Funds
Transfer Letter, an aggregate amount equal
to the initial Capital of
26
<Page>
such Receivable Interest; PROVIDED,
HOWEVER, if such purchase is being made by
the applicable Banks following the
designation by the Investor Agent for an
Investor of a Termination Date for a
Receivable Interest owned by such Investor
pursuant to clause (i)(a) of the definition
of Termination Date and any Capital
of such Receivable Interest is outstanding
on such date of purchase, the Seller
hereby directs the applicable Banks to pay
the proceeds of such purchase (to the
extent of the outstanding Capital and
accrued Yield on such Receivable Interest
of such Investor) to the relevant Investor
Agent's Account, for application to
the reduction of the outstanding Capital
and accrued Yield on such Receivable
Interest of such Investor.
(c) Effective on the
date of each purchase pursuant to this Section
2.02 and each reinvestment pursuant to
Section 2.04, the Seller hereby sells and
assigns to the Program Agent, for the
benefit of the parties making such
purchase, an undivided percentage ownership
interest, to the extent of the
Receivable Interest then being purchased,
in each Pool Receivable then existing
and in the Related Security and Collections
with respect thereto.
(d) Notwithstanding
the foregoing, (i) neither CAFCO nor Starbird
shall make purchases under this Section
2.02 at any time in an amount which
would exceed the Investor Purchase Limit of
such Investor's Group and (ii) a
Bank shall not be obligated to make
purchases under this Section 2.02 at any
time in an amount which would exceed such
Bank's Bank Commitment less the sum of
(A) the aggregate outstanding and unpaid
amount of any purchases made by such
Bank under such Bank's Asset Purchase
Agreement plus (B) such Bank's ratable
share of the aggregate outstanding portion
of Capital held by the Investor in
such Bank's Group (whether or not any
portion thereof has been assigned under an
Asset Purchase Agreement), after giving
effect to reductions of the Capital held
by the Investor in such Bank's Group to be
made on the date of such purchase
(whether from the distribution of
Collections or from the proceeds of purchases
by such Bank). Each Bank's obligation shall
be several, such that the failure of
any Bank to make available to the Seller
any funds in connection with any
purchase shall not relieve any other Bank
of its obligation, if any, hereunder
to make funds available on the date of such
purchase, but no Bank shall be
responsible for the failure of any other
Bank to make funds available in
connection with any purchase.
SECTION 2.03. RECEIVABLE INTEREST COMPUTATION . Each Receivable
Interest shall be initially computed on its
date of purchase. Thereafter until
the Termination Date for such Receivable
Interest, such Receivable Interest
shall be automatically recomputed (or
deemed to be recomputed) on each day other
than a Liquidation Day. Any Receivable
Interest, as computed (or deemed
recomputed) as of the day immediately
preceding the Termination Date for such
Receivable Interest, shall thereafter
remain constant; PROVIDED, HOWEVER, that
from and after the date on which the
Termination Date shall have occurred for
all Receivable Interests and until each
Receivable Interest becomes zero in
accordance with the next sentence, each
Receivable Interest shall be calculated
as the percentage equivalent of a fraction
the numerator of which is the
percentage representing such Receivable
Interest immediately prior to such date
and the denominator of which is the sum of
the percentages representing all
Receivable Interests which were outstanding
immediately prior to such date. Each
Receivable Interest shall become zero when
Capital thereof and Yield thereon
shall have been paid in full, and all Fees
and other amounts owed by the Seller
hereunder to the Investors, the Banks, the
Investor Agents or the Program Agent
are paid and the Collection Agent shall
have received the accrued Collection
Agent Fee thereon.
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SECTION 2.04. SETTLEMENT PROCEDURES . (a) Collection of the
Pool
Receivables shall be administered by a
Collection Agent, in accordance with the
terms of Article VI of this Agreement. The
Seller shall provide to the
Collection Agent (if other than the Seller)
on a timely basis all information
needed for such administration, including
notice of the occurrence of any
Liquidation Day, a Pool Non-Compliance Date
and current computations of each
Receivable Interest.
(b) So long as the
Parent's Debt Ratings are equal to or higher than
BB by S&P and equal to or higher than
Ba3 by Moody's, the Collection Agent
shall, on each day on which Collections of
Pool Receivables are received by it:
(i)
with respect to each Receivable Interest, set aside and
hold in trust (and, at the request of the Program Agent following
an
Event of Termination, segregate) for the Investors or the Banks
that
hold such Receivable Interest and for the Investor Agents, out of
the
percentage of such Collections represented by such Receivable
Interest, an amount equal to the Yield, Fees and Collection Agent
Fee
accrued through such day for such Receivable Interest and not
previously set aside;
(ii) with
respect to each Receivable Interest, if such day is
not a Liquidation Day for such Receivable Interest, reinvest with
the
Seller on behalf of the Investors or the Banks that hold such
Receivable Interest the percentage of such Collections represented
by
such Receivable Interest, to the extent representing a return
of
Capital, by recomputation of such Receivable Interest pursuant
to
Section 2.03;
(iii) if such
day is a Liquidation Day for any one or more
Receivable Interests, set aside and hold in trust (and, at the
request
of the Program Agent following an Event of Termination, segregate)
for
the Investors and/or the Banks that hold such Receivable Interests
and
for the Investor Agents (x) if such day is a Liquidation Day for
less
then all of the Receivable Interests, the percentage of such
Collections represented by such Receivable Interests and (y) if
such
day is a Liquidation Day for all of the Receivable Interests, all
of
the remaining
Collections (but not in excess of the aggregate Capital
of such Receivable Interests and any other amounts payable by
the
Seller hereunder); PROVIDED that if amounts are set aside and held
in
trust on any Liquidation Day occurring prior to the Termination
Date,
and thereafter prior to the Settlement Date for such Fixed Period
the
conditions set forth in Section 3.02 are satisfied or waived by
the
Program Agent and the Investor Agents, such previously set
aside
amounts shall, to the extent representing a return of Capital,
be
reinvested in accordance with the preceding subsection (ii) on the
day
of such subsequent satisfaction or waiver of conditions;
PROVIDED,
FURTHER, if such day is a Liquidation Day for one or more
Receivable
Interests solely by reason of the designation by the Investor
Agent
for an Investor of a Termination Date for a Receivable Interest
pursuant to clause (i)(a) of the definition of Termination Date
(and
no other event or condition qualifying as a Liquidation Day has
occurred), then the Collection Agent shall periodically notify
such
Investor Agent of the amounts set aside and
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held in trust pursuant to this clause (iii) on account of such
Receivable Interests (which notice shall be given at such times as
the
Collection Agent and such Investor Agent may agree, but no less
frequently than weekly), the Banks in such Investor Agent's
Group
shall make periodic purchases of the Receivable Interests from
the
Seller having initial Capital equal to the amounts so set aside
and
held in trust, the Seller hereby directs such Banks to pay the
proceeds of such purchases to the applicable Investor Agent's
Account,
for application to the reduction of the outstanding Capital on
such
Receivable Interests of such Investor, and the amounts so set
aside
and held in trust shall be paid by the Collection Agent to the
Seller
on account of the purchase price of the Receivable Interests so
purchased by such Banks; and
(iv)
release to the Seller for its own account any Collections
in excess of the amounts that are required to be set aside pursuant
to
subsection (i) above.
(c) At any time when
the Parent's Debt Rating is downgraded to less
than BB by S&P or less than Ba3 by
Moody's, the Program Agent shall direct each
Lock-Box Bank to remit all Collections
deposited in the Lock-Box Accounts to the
Program Agent Account at least once each
Business Day, and thereafter the
Collection Agent shall not be permitted to
withdraw any funds from the Program
Agent Account on any day unless (i) the
Collection Agent shall have provided the
Agents with each Seller Report then due,
(ii) the most recent Seller Report
shall show that no Pool Non-Compliance Date
exists or shall show that after
taking into account the withdrawal of a
portion (but not all) of the funds in
the Program Agent Account, no Pool
Non-Compliance Date will exist (in which
case, only such portion of funds may be
withdrawn) and (iii) no other Event of
Termination shall exist. If the Collection
Agent is permitted to withdraw funds
from the Program Agent Account pursuant to
the preceding sentence, such funds
shall be applied as provided in Section
2.04(b). If the Collection Agent is not
permitted to withdraw all of the funds from
the Program Agent Account pursuant
to the first sentence of this Section
2.04(c), then on any subsequent Business
Day on which funds are on deposit in the
Program Agent Account, the Collection
Agent may, following delivery of a Seller
Report to each Agent, withdraw from
the Program Agent Account all or a portion
of the funds in the Program Agent
Account and apply such funds as provided in
Section 2.04(b); PROVIDED, that such
Seller Report shall state that, after
taking account of the proposed withdrawal,
a Pool Non-Compliance Date does not exist,
such Seller Report shall set forth
the calculation supporting such statement
and no other Event of Termination
shall exist. On any Business Day which is a
Settlement Date or a Weekly
Settlement Date, the Program Agent shall,
and on any Business Day on which an
Event of Termination exists, the Program
Agent may, direct the Program Agent
Account Bank to remit all funds then in the
Program Agent Account to the
Investor Agent's Account of each Investor
Agent (ratably according to the
aggregate Capital of Receivable Interests
held by the Investors and Banks in
such Investor Agent's Group).
(d) The Collection
Agent shall deposit into the Investor Agent's
Account of each Investor Agent, on the
Settlement Date for each Receivable
Interest, Collections held for such
Investor Agent and/or the Investors or the
Banks in its Group that relate to such
Receivable Interest pursuant to Section
2.04(b). In addition, on the day of
delivery of any Monthly Report or Weekly
Report which sets forth a Pool
Non-Compliance Date as of the close of business
on the last Business Day of the preceding
Fiscal Month or Week, and on each
Business Day
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thereafter until a Pool Non-Compliance Date
no longer exists, the Collection
Agent shall deposit into the Investor
Agent's Account of each Investor Agent
(ratably according to the aggregate Capital
of Receivable Interests held by the
Investors and Banks in such Investor
Agent's Group) Collections set aside
pursuant to clause (iii) of Section
2.04(b); PROVIDED that the aggregate amount
deposited pursuant to this sentence with
respect to any Monthly Report or Weekly
Report shall not exceed an amount such
that, after giving effect to the
application of such amount to the reduction
of Capital, the sum of the
Receivable Interests is equal to the
Maximum Receivable Interest.
(e) Upon receipt of
funds deposited into the Investor Agent's
Account, the relevant Investor Agent shall
distribute them as follows:
(i)
if such distribution occurs on a day that is not a
Liquidation Day (and does not consist of funds remitted directly
from
the Program Agent Account pursuant to the last sentence of
Section
2.04(c)), first to the Collection Agent in payment in full of
all
accrued Collection Agent Fee payable by the Investors and Banks in
its
Group and then to the Investors or the Banks in its Group that
hold
the relevant Receivable Interest and to such Investor Agent in
payment
in full of all accrued Yield and Fees.
(ii) if
such distribution consists of (x) funds remitted
directly from the Program Agent Account pursuant to the last
sentence
of Section 2.04(c) or (y) funds deposited pursuant to the
second
sentence of Section 2.04(d), and, in either case, no Event of
Termination then exists, to the Investors or the Banks in its
Group
that hold the Receivable Interests in reduction of the Capital of
such
Receivable Interests.
(iii) if such
distribution occurs on a Liquidation Day, first
to the Collection Agent in payment in full of all accrued
Collection
Agent Fee payable by the Investors and Banks in its Group, second
to
the Investors or the Banks in its Group that hold the relevant
Receivable Interest and to such Investor Agent in payment in full
of
all accrued Yield and Fees, third to such Investors and/or Banks
in
reduction to zero of all Capital and fourth to such Investors,
Banks
or such Investor Agent in payment of any other amounts owed by
the
Seller hereunder.
After the Capital, Yield, Fees and Collection Agent Fee with
respect
to a Receivable Interest, and any other
amounts payable by the Seller to the
Investors, the Banks, the Investor Agents
or the Program Agent hereunder have
been paid in full, all additional
Collections with respect to such Receivable
Interest shall be paid to the Seller for
its own account.
(f) For the purposes
of this Section 2.04:
(i)
if on any day any Pool Receivable becomes (in whole or in
part) a Diluted Receivable, the Seller shall be deemed to have
received on such day a Collection of such Pool Receivable in
the
amount of such Diluted Receivable
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which shall be payable by the Seller on the earlier of (x) the
first
day thereafter on which a Seller Report is due and (y) the
occurrence
of an Event of Termination;
(ii) if on
any day any of the representations or warranties
contained in Section 4.01(h) is no longer true with respect to
any
Pool Receivable, the Seller shall be deemed to have received on
such
day a Collection of such Pool Receivable in full;
(iii) except as provided in
subsection (i) or (ii) of this
Section 2.04(f), or as otherwise required by applicable law or
the
relevant Contract, all Collections received from an Obligor of
any
Receivables shall be applied to the Receivables of such Obligor in
the
order of the age of such Receivables, starting with the oldest
such
Receivable, unless such Obligor designates its payment for
application
to specific Receivables; and
(iv) if
and to the extent the Program Agent or any of the
Investor Agents, the Investors or the Banks shall be required for
any
reason to pay over to an Obligor any amount received on its
behalf
hereunder, such amount shall be deemed not to have been so
received
but rather to have been retained by the Seller and, accordingly,
the
Program Agent or such Investor Agent, the Investors or the Banks,
as
the case may be, shall have a claim against the Seller for such
amount, payable when and to the extent that any distribution from
or
on behalf of such Obligor is made in respect thereof.
(g) On the fifth
Business Day after the end of each calendar month in
respect of which Yield is computed by
reference to the Investor Rate, each
Investor Agent shall furnish the Seller
with an invoice setting forth the amount
of the accrued and unpaid Yield and Fees
for such Fixed Period with respect to
the Receivable Interests held by the
Investors and the Banks in such Investor
Agent's Group.
SECTION 2.05. FEES . (a) Each Investor and Bank shall pay to
the
Collection Agent a fee (the "COLLECTION
AGENT FEE") of 2.7% per annum on the
average daily unpaid Capital of each
Receivable Interest owned by such Investor
or Bank, from the date of purchase of such
Receivab
