<PAGE>
Exhibit 10.2
RECEIVABLES PURCHASE AGREEMENT
DATED AS OF APRIL 28, 2005
AMONG
DEJ 98 FINANCE, LLC, AS SELLER,
WOLVERINE FINANCE, LLC, AS INITIAL SERVICER,
WOLVERINE TUBE, INC., AS PERFORMANCE GUARANTOR,
BLUE RIDGE ASSET FUNDING CORPORATION,
THE LIQUIDITY BANKS FROM TIME TO TIME PARTY HERETO,
AND
WACHOVIA BANK, NATIONAL ASSOCIATION, INDIVIDUALLY AND AS AGENT
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S>
<C>
ARTICLE I. PURCHASE
ARRANGEMENTS.......................................... 2
SECTION 1.1 PURCHASE
FACILITY....................................... 2
SECTION 1.2 INCREMENTAL
PURCHASES................................... 2
SECTION 1.3
DECREASES...............................................
2
SECTION 1.4 DEEMED COLLECTIONS;
PURCHASE LIMIT...................... 3
SECTION 1.5 PAYMENT REQUIREMENTS
AND COMPUTATIONS................... 4
ARTICLE II. PAYMENTS AND
COLLECTIONS..................................... 4
SECTION 2.1 PAYMENTS OF RECOURSE
OBLIGATIONS........................ 4
SECTION 2.2 COLLECTIONS PRIOR TO
THE FACILITY TERMINATION DATE...... 4
SECTION 2.3 COLLECTIONS ON AND
AFTER THE FACILITY TERMINATION DATE.. 5
SECTION 2.4 PAYMENT
RESCISSION...................................... 6
SECTION 2.5 CLEAN UP
CALL........................................... 6
ARTICLE III. COMMERCIAL PAPER
FUNDING.................................... 6
SECTION 3.1 CP
COSTS................................................ 6
SECTION 3.2 CALCULATION OF CP
COSTS................................. 7
SECTION 3.3 CP COSTS
PAYMENTS....................................... 7
SECTION 3.4 DEFAULT
RATE............................................ 7
ARTICLE IV. LIQUIDITY
FUNDINGS........................................... 7
SECTION 4.1 LIQUIDITY
FUNDINGS...................................... 7
SECTION 4.2 YIELD
PAYMENTS.......................................... 7
SECTION 4.3 SELECTION AND
CONTINUATION OF INTEREST PERIODS.......... 8
SECTION 4.4 LIQUIDITY FUNDING
YIELD RATES........................... 8
SECTION 4.5 SUSPENSION OF THE LIBO
RATE............................. 8
SECTION 4.6 DEFAULT
RATE............................................ 9
ARTICLE V. REPRESENTATIONS AND
WARRANTIES........... .................... 9
SECTION 5.1 REPRESENTATIONS AND
WARRANTIES OF THE SELLER PARTIES.... 9
ARTICLE VI. CONDITIONS OF
PURCHASES...................................... 13
SECTION 6.1 CONDITIONS PRECEDENT
TO INITIAL INCREMENTAL PURCHASE.... 13
SECTION 6.2 CONDITIONS PRECEDENT
TO ALL PURCHASES AND REINVESTMENTS. 13
ARTICLE VII.
COVENANTS...................................................
14
SECTION 7.1 AFFIRMATIVE COVENANTS
OF THE SELLER PARTIES............. 14
SECTION 7.2 NEGATIVE COVENANTS OF
THE SELLER PARTIES................ 21
ARTICLE VIII. ADMINISTRATION AND
COLLECTION.............................. 23
SECTION 8.1 DESIGNATION OF
SERVICER................................. 23
SECTION 8.2 DUTIES OF
SERVICER...................................... 24
SECTION 8.3 CONTROL OF LOCK-BOX
AND COLLECTION ACCOUNTS............. 25
SECTION 8.4 RESPONSIBILITIES OF
SELLER.............................. 25
SECTION 8.5 SETTLEMENT
REPORTS...................................... 25
SECTION 8.6 SERVICING
FEE........................................... 25
ARTICLE IX. AMORTIZATION
EVENTS.......................................... 26
SECTION 9.1 AMORTIZATION
EVENTS..................................... 26
SECTION 9.2
REMEDIES................................................
29
ARTICLE X.
INDEMNIFICATION...............................................
29
SECTION 10.1
INDEMNITIES.............................................
29
SECTION 10.2 INCREASED COST AND REDUCED
RETURN....................... 33
SECTION 10.3 OTHER COSTS AND
EXPENSES................................ 33
SECTION 10.4 REPLACEMENT OF FUNDING
SOURCE........................... 34
ARTICLE XI. THE
AGENT....................................................
34
SECTION 11.1 AUTHORIZATION AND
ACTION................................ 34
SECTION 11.2 DELEGATION OF
DUTIES.................................... 34
SECTION 11.3 EXCULPATORY
PROVISIONS.................................. 34
</TABLE>
i
<PAGE>
<TABLE>
<S>
<C>
SECTION 11.4 RELIANCE BY
AGENT...................................... 35
SECTION 11.5 NON-RELIANCE ON AGENT
AND OTHER PURCHASERS............. 35
SECTION 11.6 REIMBURSEMENT AND
INDEMNIFICATION...................... 35
SECTION 11.7 AGENT IN ITS
INDIVIDUAL CAPACITY....................... 36
SECTION 11.8 SUCCESSOR
AGENT........................................ 36
ARTICLE XII. ASSIGNMENTS AND
PARTICIPATIONS.............................. 36
SECTION 12.1 PROHIBITION ON
ASSIGNMENTS BY SELLER PARTIES........... 36
SECTION 12.2 ASSIGNMENTS BY
PURCHASERS.............................. 36
SECTION 12.3
PARTICIPATIONS.........................................
37
ARTICLE XIII.
MISCELLANEOUS..............................................
38
SECTION 13.1 WAIVERS AND
AMENDMENTS................................. 38
SECTION 13.2
NOTICES................................................
38
SECTION 13.3 PROTECTION OF AGENT'S
SECURITY INTEREST................ 39
SECTION 13.4
CONFIDENTIALITY........................................
40
SECTION 13.5 BANKRUPTCY
PETITION.................................... 40
SECTION 13.6 LIMITATION OF RECOURSE
AND LIABILITY................... 41
SECTION 13.7 CHOICE OF
LAW.......................................... 42
SECTION 13.8 CONSENT TO
JURISDICTION................................ 42
SECTION 13.9 WAIVER OF JURY
TRIAL................................... 42
SECTION 13.10 INTEGRATION; BINDING EFFECT;
SURVIVAL OF TERMS......... 42
SECTION 13.11 COUNTERPARTS; SEVERABILITY;
SECTION REFERENCES......... 43
SECTION 13.12
CHARACTERIZATION.......................................
43
</TABLE>
ii
<PAGE>
EXHIBITS AND SCHEDULES
<TABLE>
<S>
<C>
Exhibit I
Definitions
Exhibit II Form of Purchase
Notice
Exhibit III Places of Business of
the Seller Parties; Locations of Records;
Federal Employer and Organizational Identification Number(s)
Exhibit IV Names of
Collection Banks; Collection Accounts
Exhibit V Form of
Compliance Certificate
Exhibit VI Form of
Collection Account Agreement
Exhibit VII Credit and Collection
Policy
Exhibit VIII Form of Settlement
Report
Exhibit IX Form of Performance
Undertaking
Schedule A Commitments of
Financial Institutions
Schedule B Closing
Documents
</TABLE>
iii
<PAGE>
RECEIVABLES PURCHASE AGREEMENT
THIS RECEIVABLES PURCHASE AGREEMENT, dated as of April 28, 2005
is
entered into by and among:
(a) DEJ 98 Finance, LLC, a Delaware limited liability company
("SELLER"),
(b) Wolverine Finance, LLC, a Tennessee limited liability
company
("WOLVERINE FINANCE"), as
initial Servicer,
(c) Wolverine Tube, Inc., a Delaware corporation, as
Performance
Guarantor,
(d) Blue Ridge Asset Funding Corporation, a Delaware
corporation
("BLUE
RIDGE"),
(e) Wachovia Bank, National Association, in its individual
capacity,
and each of the
other banks from time to time party hereto as liquidity
providers (each,
a "LIQUIDITY BANK," and collectively, the "LIQUIDITY
BANKS"; and,
together with Blue Ridge, the "PURCHASERS"), and
(e) Wachovia Bank, National Association, as agent for Blue Ridge
and
the Liquidity
Banks under the Transaction Documents and under the Liquidity
Agreement
(together with its successors and assigns in such capacity, the
"AGENT").
UNLESS DEFINED ELSEWHERE HEREIN,
CAPITALIZED TERMS USED IN THIS AGREEMENT SHALL
HAVE THE MEANINGS ASSIGNED TO SUCH TERMS IN
EXHIBIT I HERETO (OR, IF NOT DEFINED
IN EXHIBIT I HERETO, THE MEANING ASSIGNED
TO SUCH TERM IN EXHIBIT I TO THE
RECEIVABLES SALE AGREEMENT).
PRELIMINARY STATEMENTS
Seller desires to transfer and assign Receivable Interests to
the
Agent, on behalf
of one or more Purchasers. from time to time.
Blue Ridge may, in its absolute and sole discretion, purchase
Receivable
Interests from Seller from time to time.
In the event that Blue Ridge declines to make any such purchase,
the
Liquidity Banks
shall, at the request of Seller, purchase Receivable
Interests from
Seller from time to time.
Wachovia Bank, National Association has been requested and is
willing
to act as Agent
on behalf of Blue Ridge and the Liquidity Banks in
accordance with
the terms hereof.
<PAGE>
ARTICLE I.
PURCHASE ARRANGEMENTS
Section 1.1
Purchase Facility.
(a) Upon the terms and subject to the conditions of this
Agreement
(including, without limitation, Article
VI), from time to time prior to the
Facility Termination Date, Seller may sell
and assign Receivable Interests to
the Agent, on behalf of one or more
Purchasers; PROVIDED THAT Seller may not
sell or assign any Receivable Interest to
the Agent if, after giving effect
thereto, the outstanding Aggregate Invested
Amount would exceed the least of (i)
the Purchase Limit, (ii) the Net Pool
Balance MINUS Required Reserves and (iii)
the product of 85% TIMES the aggregate
Outstanding Balance of Eligible
Receivables. Blue Ridge may, at its option,
instruct the Agent to purchase on
behalf of Blue Ridge, or if Blue Ridge
shall decline to purchase, the Agent
shall purchase, on behalf of the Liquidity
Banks, Receivable Interests from time
to time in accordance with the terms and
subject to the conditions set forth
herein.
(b) Seller may, upon at least 10 Business Days' notice to the
Agent,
terminate in whole or reduce in part the
unused portion of the Purchase Limit
(and the Commitments shall correspondingly
be terminated or reduced, ratably,
based on the Liquidity Banks' respective
Pro Rata Shares); PROVIDED THAT each
partial reduction of the Purchase Limit
shall be in an amount equal to
$5,000,000 (or a larger integral multiple
of $1,000,000 if in excess thereof).
Section 1.2
Incremental Purchases. Seller shall provide the Agent with at
least two (2) Business Days' prior written
notice in a form set forth as Exhibit
II hereto of each Incremental Purchase
(each, a "PURCHASE NOTICE"). Each
Purchase Notice shall be subject to Section
6.2 hereof and, except as set forth
below, shall be irrevocable and shall
specify the requested Purchase Price
(which shall not be less than $1,000,000 or
a larger integral multiple of
$250,000) and the Purchase Date. Following
receipt of a Purchase Notice, the
Agent will determine whether Blue Ridge
agrees to make the proposed purchase. If
Blue Ridge declines to make the proposed
purchase, Seller may cancel the
Purchase Notice or, in the absence of such
a cancellation, the Incremental
Purchase will be made by the Liquidity
Banks. On each Purchase Date, upon
satisfaction of the applicable conditions
precedent set forth in Article VI,
Blue Ridge or the Liquidity Banks, as
applicable, shall deposit to the Facility
Account, in immediately available funds, no
later than 2:00 p.m. (New York
time), an amount equal to (i) in the case
of Blue Ridge, the aggregate Purchase
Price of the Receivable Interests Blue
Ridge is then purchasing or (ii) in the
case of a Liquidity Bank, such Liquidity
Bank's Pro Rata Share of the aggregate
Purchase Price of the Receivable Interests
the Liquidity Banks are purchasing.
Section 1.3
Decreases. Seller shall provide the Agent with prior written
irrevocable notice in conformity with the
Required Notice Period (a "REDUCTION
NOTICE") of any proposed reduction of
Aggregate Invested Amount, each of which
reductions shall be made only from
Collections. Such Reduction Notice shall
designate (i) the date (the "PROPOSED
REDUCTION DATE") upon which any such
reduction of Aggregate Invested Amount
shall occur (which date shall give effect
to the applicable Required Notice Period),
and (ii) the amount of Aggregate
Invested Amount to be reduced which shall
be applied ratably to all Receivable
Interests of Blue Ridge and the Liquidity
Banks in accordance with the amount of
Invested Amount (if any)
2
<PAGE>
owing to Blue Ridge, on the one hand, and
the amount of Invested Amount (if any)
owing to the Liquidity Banks (ratably based
on their respective Pro Rata
Shares), on the other hand (the "AGGREGATE
REDUCTION"). Only one (1) Reduction
Notice shall be outstanding at any
time.
Section 1.4
Deemed Collections; Purchase Limit.
(a) If on any day:
(i) the Outstanding Balance of any Receivable is reduced or
cancelled as a result of any defective or
rejected goods or services, any cash
discount or any other adjustment by any
Originator or any Affiliate thereof, or
as a result of any governmental or
regulatory action, or
(ii) the Outstanding Balance of any Receivable is reduced or
canceled as a result of a setoff in respect
of any claim by the Obligor thereof
(whether such claim arises out of the same
or a related or an unrelated
transaction), or
(iii) the
Outstanding Balance of any Receivable is reduced on
account of the obligation of any Originator
or any Affiliate thereof to pay to
the related Obligor any rebate or refund,
or
(iv) the Outstanding Balance of any Receivable is less than the
amount included with respect to such
Receivable in calculating the Net Pool
Balance for purposes of any Settlement
Report (for any reason other than receipt
of Collections or such Receivable becoming
a Defaulted Receivable), or
(v) any of the
representations or warranties of Seller set forth
in Section 5.1(g), (i), (j), (r), (s), (t)
or (u) were not true when made with
respect to any Receivable,
then, on such day, Seller shall be deemed
to have received a Collection of such
Receivable (A) in the case of clauses
(i)-(iv) above, in the amount of such
reduction or cancellation or the difference
between the actual Outstanding
Balance and the amount included with
respect to such Receivable in calculating
such Net Pool Balance, as applicable; and
(B) in the case of clause (v) above,
in the amount of the Outstanding Balance of
such Receivable and, not later than
one (1) Business Day thereafter shall pay
to the Agent's Account the amount of
any such Collection deemed to have been
received in the same manner as actual
cash Collections are distributed under the
terms of this Agreement.
(b) Seller shall ensure that the Aggregate Invested Amount at no
time
exceeds the Purchase Limit. If at any time
the Aggregate Invested Amount exceeds
the Purchase Limit, Seller shall pay to the
Agent immediately an amount to be
applied to reduce the Aggregate Invested
Amount (as allocated by the Agent),
such that after giving effect to such
payment the Aggregate Invested Amount is
less than or equal to the Purchase
Limit.
(c) Seller shall also ensure that the Receivable Interests shall at
no
time exceed in the aggregate 100%. If the
aggregate of the Receivable Interests
exceeds 100%, Seller shall pay to the Agent
on or before the next succeeding
Settlement Date (or, if such excess is
discovered on a Settlement Date, on such
Settlement Date) an amount to be applied to
reduce the
3
<PAGE>
Aggregate Invested Amount (as allocated by
the Agent), such that after giving
effect to such payment the aggregate of the
Receivable Interests equals or is
less than 100%.
Section 1.5
Payment Requirements and Computations. All amounts to be paid
or deposited by any Seller Party pursuant
to any provision of this Agreement
shall be paid or deposited in accordance
with the terms hereof no later than
12:00 noon (New York time) on the day when
due in immediately available funds,
and if not received before 12:00 noon (New
York time) shall be deemed to be
received on the next succeeding Business
Day. If such amounts are payable to the
Agent for the account of a Purchaser, they
shall be paid to the Agent's Account,
for the account of such Purchaser until
otherwise notified by the Agent. All
computations of CP Costs, Yield, per annum
fees calculated as part of any CP
Costs, per annum fees hereunder and per
annum fees under the Fee Letter shall be
made on the basis of a year of 360 days for
the actual number of days elapsed.
If any amount hereunder shall be payable on
a day which is not a Business Day,
such amount shall be payable on the next
succeeding Business Day.
ARTICLE II.
PAYMENTS AND COLLECTIONS
Section 2.1
Payments of Recourse Obligations. Without limiting Seller's
other obligations under this Agreement,
Seller hereby promises to pay the
following (collectively, the "RECOURSE
OBLIGATIONS"):
(a) all amounts due and owing under Section 1.4 on the dates
specified
therein;
(b) the fees set forth in the Fee Letter on the dates specified
therein;
(c) all accrued and unpaid Yield on the Receivable Interests
accruing
Yield at the Alternate Base Rate or the
Default Rate on the last day of each
Interest Period applicable thereto;
(d) all accrued and unpaid Yield on the Receivable Interests
accruing
Yield at the LIBO Rate on the last day of
each Interest Period applicable
thereto;
(e) all accrued and unpaid CP Costs on the Receivable Interests
funded
with Commercial Paper on each CP Cost
Payment Date; and
(f) all Broken Funding Costs, upon demand, and all Indemnified
Amounts, within ten (10) days of
demand.
Section 2.2
Collections Prior to the Facility Termination Date.
(a) Prior to the Facility Termination Date, any Deemed
Collections
received by Servicer and the Purchasers'
Portion of any Collections received by
Servicer shall be set aside by Servicer for
the payment of any accrued and
unpaid Aggregate Unpaids or for a
Reinvestment as provided in this Section 2.2.
If at any time any Collections are received
by Servicer prior to the Facility
Termination Date, except to the extent a
Reduction Notice is pending, Seller
hereby
4
<PAGE>
requests that the applicable Purchaser(s)
make, and either Blue Ridge or the
Liquidity Banks shall make, simultaneously
with such receipt, a reinvestment
(each, a "REINVESTMENT") with the
Purchasers' Portion of the balance of each and
every Collection received by such Servicer
such that after giving effect to such
Reinvestment, the Invested Amount of such
Receivable Interest immediately after
such receipt and corresponding Reinvestment
shall be equal to the amount of
Invested Amount immediately prior to such
receipt.
(b) On each Settlement Date, or with respect to the CP Costs, on
each
CP Cost Payment Date, prior to the Facility
Termination Date, the Agent shall
distribute the amounts set aside during the
preceding Settlement Period that
have not been subject to a Reinvestment (if
not previously paid in accordance
with Section 2.1) in the following
order:
FIRST, to the Servicer (if the Servicer at such time is not
Wolverine
Finance or one
of its Affiliates), in payment of the accrued and unpaid
Servicing Fee
for the preceding Settlement Period,
SECOND, to the Agent's Account, ratably for the payment of all
accrued
and unpaid CP
Costs, Yield and Broken Funding Costs (if any) that are then
due and
owing,
THIRD, to the Agent's Account, ratably for the payment of all
accrued
and unpaid fees
under the Fee Letter (if any) that are then due and owing,
FOURTH, to the Agent's Account, if required under Section 1.3 or
1.4,
to the ratable
reduction of Aggregate Invested Amount,
FIFTH, to the Agent's Account, for the ratable payment of all
other
unpaid Recourse
Obligations, if any, that are then due and owing,
SIXTH, to the Servicer (if the Servicer at such time is
Wolverine
Finance or one
of its Affiliates), the amount of the accrued and unpaid
Servicing Fee
for the preceding Settlement Period, and
SEVENTH, the balance, if any, to Seller or otherwise in
accordance
with Seller's
instructions.
Section 2.3 Collections on and
after the Facility Termination Date. On the
Facility Termination Date and on each day
thereafter, the Agent shall set aside
for the Secured Parties all Collections
received on each such day. On and after
the Facility Termination Date, the Servicer
shall, on each Settlement Date and
on each other Business Day specified by the
Agent distribute in the following
manner the amounts set aside pursuant to
the preceding sentence:
FIRST, to the Servicer (if the Servicer at such time is not
Wolverine
Finance or one
of its Affiliates), in payment of the accrued and unpaid
Servicing Fee as
of such date,
SECOND, to the Agent's Account, for the reimbursement of the
Agent's
costs of
collection and enforcement of this Agreement,
5
<PAGE>
THIRD, to the Agent's Account, ratably for the payment of all
accrued
and unpaid CP
Costs, Yield and Broken Funding Costs,
FOURTH, to the Agent's Account, ratably for the payment of all
accrued
and unpaid fees
under the Fee Letter,
FIFTH, to the Agent's Account, for the ratable reduction of
Aggregate
Invested
Amount,
SIXTH, to the Agent's Account, for the ratable payment of all
other
Aggregate
Unpaids,
SEVENTH, to the Servicer (if the Servicer at such time is
Wolverine
Finance or one
of its Affiliates), in payment of the accrued and unpaid
Servicing Fee as
of such date, and
EIGHTH, after the Final Payout Date, to Seller the balance, if
any.
Section 2.4
Payment Rescission. No payment of any of the Aggregate Unpaids
shall be considered paid or applied
hereunder to the extent that, at any time,
all or any portion of such payment or
application is rescinded by application of
law or judicial authority, or must
otherwise be returned or refunded for any
reason. Seller shall remain obligated for
the amount of any payment or
application so rescinded, returned or
refunded, and shall promptly pay to the
Agent (for application to the Person or
Persons who suffered such rescission,
return or refund) the full amount thereof,
PLUS interest thereon at the Default
Rate from the date of any such rescission,
return or refunding.
Section 2.5
Clean Up Call. In addition to Seller's rights pursuant to
Section 1.3, Servicer shall have the right
(after providing written notice to
the Agent in accordance with the Required
Notice Period), at any time following
the reduction of the Aggregate Invested
Amount to a level that is less than
10.0% of the original Purchase Limit, to
purchase all, but not less than all, of
the then outstanding Receivable Interests.
The purchase price in respect thereof
shall be an amount equal to the Aggregate
Unpaids through the date of such
repurchase, payable in immediately
available funds to the Agent's Account. Such
repurchase shall be without representation,
warranty or recourse of any kind by,
on the part of, or against any Purchaser or
the Agent.
ARTICLE III.
COMMERCIAL PAPER FUNDING
Section 3.1 CP
Costs. Seller shall pay CP Costs with respect to the
Invested Amount of all Receivable Interests
funded through the issuance of
Commercial Paper. Each Receivable Interest
that is funded substantially with
Pooled Commercial Paper will accrue CP
Costs each day on a pro rata basis, based
upon the percentage share that the Invested
Amount in respect of such Receivable
Interest represents in relation to all
assets held by Blue Ridge and funded
substantially with related Pooled
Commercial Paper.
6
<PAGE>
Section 3.2
Calculation of CP Costs. Not later than the 3rd Business Day
immediately preceding each Monthly
Reporting Date, Blue Ridge shall calculate
the aggregate amount of CP Costs applicable
to its Receivable Interests for the
Calculation Period then most recently ended
and shall notify Seller of such
aggregate amount.
Section 3.3 CP
Costs Payments. On each Settlement Date, Seller shall pay to
the Agent (for the benefit of Blue Ridge)
an aggregate amount equal to all
accrued and unpaid CP Costs in respect of
the Invested Amount of all Receivable
Interests funded with Commercial Paper for
the Calculation Period then most
recently ended in accordance with Article
II.
Section 3.4
Default Rate. From and after the occurrence of an Amortization
Event, all Receivable Interests shall
accrue yield at the Default Rate.
ARTICLE IV.
LIQUIDITY FUNDINGS
Section 4.1
Liquidity Fundings. Prior to the occurrence of an Amortization
Event, the outstanding Invested Amount of
each Receivable Interest funded with a
Liquidity Funding shall accrue Yield for
each day during its Interest Period at
either the LIBO Rate or the Alternate Base
Rate in accordance with the terms and
conditions hereof. Until Seller gives the
required notice to the Agent of
another Yield Rate in accordance with
Section 4.4, the initial Yield Rate for
any Receivable Interest funded with a
Liquidity Funding shall be the Alternate
Base Rate (unless the Default Rate is then
applicable). If any undivided
interest in a Receivable Interest initially
funded with Commercial Paper is sold
to the Liquidity Banks pursuant to the
Liquidity Agreement, such undivided
interest in such Receivable Interest shall
be deemed to have an Interest Period
commencing on the date of such sale.
Section 4.2
Yield Payments. On the Settlement Date for each Receivable
Interest that is funded with a Liquidity
Funding, Seller shall pay to the Agent
(for the benefit of the Liquidity Banks) an
aggregate amount equal to the
accrued and unpaid Yield thereon for the
entire Interest Period of each such
Liquidity Funding in accordance with
Article II.
7
<PAGE>
Section 4.3
Selection and Continuation of Interest Periods.
(a) With consultation from (and approval by) the Agent, Seller
shall
from time to time request Interest Periods
for the Receivable Interests funded
with Liquidity Fundings, PROVIDED THAT if
at any time any Liquidity Funding is
outstanding, Seller shall always request
Interest Periods such that at least one
Interest Period shall end on the date
specified in clause (A) of the definition
of Settlement Date.
(b) Seller or the Agent, upon notice to and consent by the
other
received at least three (3) Business Days
prior to the end of an Interest Period
(the "TERMINATING TRANCHE") for any
Liquidity Funding, may, effective on the
last day of the Terminating Tranche: (i)
divide any such Liquidity Funding into
multiple Liquidity Fundings, (ii) combine
any such Liquidity Funding with one or
more other Liquidity Fundings that have a
Terminating Tranche ending on the same
day as such Terminating Tranche or (iii)
combine any such Liquidity Funding with
a new Liquidity Funding to be made by the
Liquidity Banks on the day such
Terminating Tranche ends.
Section 4.4
Liquidity Funding Yield Rates. Seller may select the LIBO Rate
(subject to Section 4.5 below) or the
Alternate Base Rate for each Liquidity
Funding. Seller shall by 12:00 noon (New
York time): (i) at least three (3)
Business Days prior to the expiration of
any Terminating Tranche with respect to
which the LIBO Rate is being requested as a
new Yield Rate and (ii) at least one
(1) Business Day prior to the expiration of
any Terminating Tranche with respect
to which the Alternate Base Rate is being
requested as a new Yield Rate, give
the Agent irrevocable notice of the new
Yield Rate for the Liquidity Funding
associated with such Terminating Tranche.
Until Seller gives notice to the Agent
of another Yield Rate, the initial Yield
Rate for any Receivable Interest
assigned or participated to the Liquidity
Banks pursuant to the Liquidity
Agreement shall be the Alternate Base Rate
(unless the Default Rate is then
applicable).
Section 4.5
Suspension of the LIBO Rate.
(a) If any Liquidity Bank notifies the Agent that it has
determined
that funding its ratable share of the
Liquidity Fundings at a LIBO Rate would
violate any applicable law, rule,
regulation, or directive of any governmental
or regulatory authority, whether or not
having the force of law, or that (i)
deposits of a type and maturity appropriate
to match fund its Liquidity Funding
at such LIBO Rate are not available or (ii)
such LIBO Rate does not accurately
reflect the cost of acquiring or
maintaining a Liquidity Funding at such LIBO
Rate, then the Agent shall suspend the
availability of such LIBO Rate and
require Seller to select the Alternate Base
Rate for any Liquidity Funding
accruing Yield at such LIBO Rate.
(b) If less than all of the Liquidity Banks give a notice to the
Agent
pursuant to Section 4.5(a), each Liquidity
Bank which gave such a notice shall
be obliged, at the request of Seller, Blue
Ridge or the Agent, to assign all of
its rights and obligations hereunder to (i)
another Liquidity Bank or (ii)
another funding entity nominated by Seller
or the Agent that is an Eligible
Assignee willing to participate in the
Liquidity Agreement through the Liquidity
Termination Date in the place of such
notifying Liquidity Bank; PROVIDED THAT
(i) the notifying Liquidity Bank receives
payment in full of all Aggregate
Unpaids owing to it (whether due or
8
<PAGE>
accrued), and (ii) the replacement
Liquidity Bank otherwise satisfies the
requirements of the Liquidity
Agreement.
Section 4.6
Default Rate. From and after the occurrence of an Amortization
Event, all Receivable Interests funded with
a Liquidity Funding shall accrue
Yield at the Default Rate.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
Section 5.1
Representations and Warranties of the Seller Parties. Each
Seller Party hereby represents and warrants
to the Agent and the Purchasers, as
to itself, as of the date hereof and as of
the date of each Incremental Purchase
and the date of each Reinvestment that:
(a) Existence and Power. Such Seller Party's jurisdiction of
organization is correctly set forth in the
preamble to this Agreement. Such
Seller Party is duly organized under the
laws of that jurisdiction and no other
state or jurisdiction. Such Seller Party is
validly existing and in good
standing under the laws of its state of
organization. Such Seller Party is duly
qualified to do business and is in good
standing as a foreign entity, and has
and holds all organizational power and all
governmental licenses,
authorizations, consents and approvals
required to carry on its business in each
jurisdiction in which its business is
conducted except where the failure to so
qualify or so hold could not reasonably be
expected to have a Material Adverse
Effect.
(b) Power and Authority; Due Authorization, Execution and
Delivery.
The execution and delivery by such Seller
Party of this Agreement and each other
Transaction Document to which it is a
party, and the performance of its
obligations hereunder and thereunder and,
in the case of Seller, Seller's use of
the proceeds of Purchases made hereunder,
are within its corporate powers and
authority and have been duly authorized by
all necessary corporate action on its
part. This Agreement and each other
Transaction Document to which such Seller
Party is a party has been duly executed and
delivered by such Seller Party.
(c) No Conflict. The execution and delivery by such Seller Party
of
this Agreement and each other Transaction
Document to which it is a party, and
the performance of its obligations
hereunder and thereunder do not contravene or
violate (i) its certificate or articles of
incorporation or by-laws, (ii) any
law, rule or regulation applicable to it,
(iii) any restrictions under any
agreement, contract or instrument to which
it is a party or by which it or any
of its property is bound, or (iv) any
order, writ, judgment, award, injunction
or decree binding on or affecting it or its
property, and do not result in the
creation or imposition of any Adverse Claim
on assets of such Seller Party or
its Subsidiaries (except as created
hereunder) except, in any case, where such
contravention or violation could not
reasonably be expected to have a Material
Adverse Effect; and no transaction
contemplated hereby requires compliance with
any bulk sales act or similar law.
9
<PAGE>
(d) Governmental Authorization. Other than the filing of the
financing
statements required hereunder, no
authorization or approval or other action by,
and no notice to or filing with, any
governmental authority or regulatory body
is required for the due execution and
delivery by such Seller Party of this
Agreement and each other Transaction
Document to which it is a party and the
performance of its obligations hereunder
and thereunder.
(e) Actions, Suits. There are no actions, suits or proceedings
pending, or to the best of such Seller
Party's knowledge, threatened, against or
affecting such Seller Party, or any of its
properties, in or before any court,
arbitrator or other body, that could
reasonably be expected to have a Material
Adverse Effect. Such Seller Party is not in
default with respect to any order of
any court, arbitrator or governmental body
that could reasonably be expected to
have a Material Adverse Effect.
(f) Binding Effect. This Agreement and each other Transaction
Document
to which such Seller Party is a party
constitute the legal, valid and binding
obligations of such Seller Party
enforceable against such Seller Party in
accordance with their respective terms,
except as such enforcement may be
limited by applicable bankruptcy,
insolvency, reorganization or other similar
laws relating to or limiting creditors'
rights generally and by general
principles of equity (regardless of whether
enforcement is sought in a
proceeding in equity or at law).
(g) Accuracy of Information. All information heretofore furnished
by
such Seller Party or any of its Affiliates
to the Agent or any Purchasers for
purposes of or in connection with this
Agreement, any of the other Transaction
Documents or any transaction contemplated
hereby or thereby is, and all such
information hereafter furnished by such
Seller Party or any of its Affiliates to
the Agent or any Purchaser will be, true
and accurate in every material respect
on the date such information is stated or
certified and not incomplete by
omitting to state any material fact
necessary to make such information not
misleading at such time. There is no fact
now known to any Authorized Officer of
any Seller Party which has, or would
reasonably be expected to have, a Material
Adverse Effect which fact has not been set
forth herein, in the financial
statements, or any certificate, opinion or
other written statement made or
furnished by such Seller Party or any of
its Affiliates to the Agent and the
Purchasers.
(h) Use of Proceeds. No proceeds of any Purchase hereunder will
be
used (i) for a purpose that violates, or
would be inconsistent with, (A) Section
7.2(e) of this Agreement or (B) Regulation
T, U or X promulgated by the Board of
Governors of the Federal Reserve System
from time to time or (ii) to acquire any
security in any transaction which is
subject to Section 12, 13 or 14 of the
Securities Exchange Act of 1934, as
amended.
(i) Good Title. Seller is the legal and beneficial owner of the
Receivables, Collections and Related
Security with respect thereto, in each case
free and clear of any Adverse Claim, except
as created by the Transaction
Documents. There have been duly filed all
financing statements or other similar
instruments or documents necessary under
the UCC (or any comparable law) of all
appropriate jurisdictions to perfect
Seller's ownership interest in each
Receivable, its Collections and the Related
Security.
(j) Perfection. Subject to Section 13.12, this Agreement is
effective
to create a valid security interest in
favor of the Agent for the benefit of the
Secured Parties in the
10
<PAGE>
Purchased Assets to secure payment of the
Aggregate Unpaids, free and clear of
any Adverse Claim except as created by the
Transactions Documents. There have
been duly filed all financing statements or
other similar instruments or
documents necessary under the UCC (or any
comparable law) of all appropriate
jurisdictions to perfect the Agent's (on
behalf of the Secured Parties) security
interest in the Purchased Assets.
(k) Places of Business and Locations of Records. The principal
places
of business and chief executive office of
such Seller Party and the offices
where it keeps all of its Records are
located at the address(es) listed on
Exhibit III or such other locations of
which the Agent has been notified in
accordance with Section 7.2(a) in
jurisdictions where all action required by
Section 13.3(a) has been taken and
completed. Seller's Federal Employer
Identification Number and Delaware
Organization Identification Number are
correctly set forth on Exhibit III.
(l) Collections. The conditions and requirements set forth in
Section
7.1(j) and Section 8.2 have at all times
been satisfied and duly performed. The
names, addresses and jurisdictions of
organization of all Collection Banks,
together with the account numbers of the
Collection Accounts of Seller at each
Collection Bank and the post office box
number of each Lock-Box, are listed on
Exhibit IV. Seller has not granted any
Person, other than the Collateral Agent,
on behalf of the Agent and the Bank Agent,
dominion and control of any Lock-Box
or Collection Account, or the right to take
dominion and control of any such
Lock-Box or Collection Account at a future
time or upon the occurrence of a
future event.
(m) Material Adverse Effect. (i) The initial Servicer represents
and
warrants that since December 31, 2004, no
event has occurred that would have a
material adverse effect on the financial
condition or operations of the initial
Servicer or the ability of the initial
Servicer to perform its obligations under
this Agreement, (ii) the Performance
Guarantor represents and warrants that
since December 31, 2004, no event has
occurred that would have a material
adverse effect on the financial condition
or operations of the Performance
Guarantor and its Subsidiaries or the
ability of the Performance Guarantor to
perform its obligations under this
Agreement, and (iii) Seller represents and
warrants that since the date of this
Agreement, no event has occurred that would
have a material adverse effect on (A) the
financial condition or operations of
Seller, (B) the ability of Seller to
perform its obligations under the
Transaction Documents, or (C) the
collectibility of the Receivables generally or
any material portion of the
Receivables.
(n) Names. The name in which Seller has executed this Agreement
is
identical to the name of Seller as
indicated on the public record of its state
of organization which shows Seller to have
been organized. In the past five (5)
years, Seller has not used any legal names,
trade names or assumed names other
than the name in which it has executed this
Agreement.
11
<PAGE>
(o) Ownership of Seller. Performance Guarantor owns, directly
or
indirectly, 100% of the issued and
outstanding non-voting Equity Interests in
Seller and 49% of the issued and
outstanding voting Equity Interests in Seller,
in each case free and clear of any Adverse
Claim. Such Equity Interests are
validly issued, fully paid and
nonassessable, and there are no options, warrants
or other rights to acquire securities of
Seller.
(p) Not a Holding Company or an Investment Company. Such Seller
Party
is not a "holding company" or a "subsidiary
holding company" of a "holding
company" within the meaning of the Public
Utility Holding Company Act of 1935,
as amended, or any successor statute. Such
Seller Party is not an "investment
company" within the meaning of the
Investment Company Act of 1940, as amended,
or any successor statute.
(q) Compliance with Law. Such Seller Party has complied in all
respects with all applicable laws, rules,
regulations, orders, writs, judgments,
injunctions, decrees or awards to which it
is subject, except where the failure
to so comply could not reasonably be
expected to have a Material Adverse Effect.
Each Receivable, together with the Contract
related thereto, does not contravene
any laws, rules or regulations applicable
thereto (including, without
limitation, laws, rules and regulations
relating to truth in lending, fair
credit billing, fair credit reporting,
equal credit opportunity, fair debt
collection practices and privacy), and no
part of such Contract is in violation
of any such law, rule or regulation, except
where such contravention or
violation could not reasonably be expected
to have a Material Adverse Effect.
(r) Compliance with Credit and Collection Policy. Such Seller
Party
has complied in all material respects with
the Credit and Collection Policy with
regard to each Receivable and the related
Contract, and has not made any change
to such Credit and Collection Policy,
except such material change as to which
the Agent has been notified in accordance
with Section 7.1(a)(vii).
(s) Payments to Applicable Originator. With respect to each
Receivable
transferred to Seller under the Receivables
Sale Agreement, Seller has given
reasonably equivalent value to the
applicable Originator in consideration
therefor and such transfer was not made for
or on account of an antecedent debt.
No transfer by any Originator of any
Receivable under the Receivables Sale
Agreement is or may be voidable under any
section of the Bankruptcy Reform Act
of 1978 (11 U.S.C. Sections 101 et seq.),
as amended.
(t) Enforceability of Contracts. Each Contract with respect to
each
Receivable is effective to create, and has
created, a legal, valid and binding
obligation of the related Obligor to pay
the Outstanding Balance of the
Receivable created thereunder and any
accrued interest thereon, enforceable
against the Obligor in accordance with its
terms, except as such enforcement may
be limited by applicable bankruptcy,
insolvency, reorganization or other similar
laws relating to or limiting creditors'
rights generally and by general
principles of equity (regardless of whether
enforcement is sought in a
proceeding in equity or at law).
(u) Eligible Receivables. Each Receivable included in the Net
Pool
Balance as an Eligible Receivable on the
date of any Settlement Report was an
Eligible Receivable on such date.
12
<PAGE>
(v) Purchase Limit and Maximum Receivable Interests. Immediately
after
giving effect to each Incremental Purchase
hereunder, the Aggregate Invested
Amount is less than or equal to the
Purchase Limit and the aggregate of the
Receivable Interests does not exceed
100%.
(w) Accounting. The manner in which such Seller Party accounts for
the
transactions contemplated by this Agreement
and the Receivables Sale Agreement
does not jeopardize the true sale
analysis.
(x) OFAC. None of the Seller Parties, any Subsidiary of any
Seller
Party or to the best knowledge of any
Seller Party, any Affiliate of any Seller
Party (a) is a Sanctioned Person, (b) does
business in a Sanctioned Country in
violation of the economic sanctions of the
United States administered by OFAC or
(c) does business in such country or with
any such agency, organization or
person, in violation of the economic
sanctions of the United States administered
by OFAC.
ARTICLE
VI.
CONDITIONS OF PURCHASES
Section 6.1
Conditions Precedent to Initial Incremental Purchase. The
initial Incremental Purchase of a
Receivable Interest under this Agreement is
subject to the conditions precedent that
(a) the Agent shall have received on or
before the date of such Purchase those
documents listed on Schedule B and (b)
the Agent shall have received all fees and
expenses required to be paid on such
date pursuant to the terms of this
Agreement and the Fee Letter.
Section 6.2
Conditions Precedent to All Purchases and Reinvestments. Each
Incremental Purchase and each Reinvestment
shall be subject to the further
conditions precedent that (a) in the case
of each such Purchase: (i) the
Servicer shall have delivered to the Agent
on or prior to the date of such
Purchase, in form and substance
satisfactory to the Agent, all Settlement
Reports as and when due under Section 8.5
and (ii) upon the Agent's request, the
Servicer shall have delivered to the Agent
at least two (2) days prior to such
Purchase an interim Settlement Report
showing the amount of Eligible
Receivables; (b) the Agent shall have
received such other approvals, opinions or
documents as it may reasonably request and
(c) on each Purchase Date, the
following statements shall be true (and
acceptance of the proceeds of such
Incremental Purchase or Reinvestment shall
be deemed a representation and
warranty by Seller that such statements are
then true):
(i) the representations and warranties set forth in Section 5.1
are true and correct on and as of the date
of such Incremental Purchase or
Reinvestment as though made on and as of
such Purchase Date;
(ii) no event has occurred and is continuing, or would result
from such Incremental Purchase or
Reinvestment, that will constitute an
Amortization Event, and no event has
occurred and is continuing, or would result
from such Incremental Purchase or
Reinvestment, that would constitute an
Unmatured Amortization Event; and
13
<PAGE>
(iii) the Aggregate Invested Amount does not exceed the
Purchase
Limit and the aggregate Receivable
Interests do not exceed 100%.
It is expressly understood that each
Reinvestment shall, unless otherwise
directed by the Agent, occur automatically
on each day that the Servicer shall
receive any Collections without the
requirement that any further action be taken
on the part of any Person and
notwithstanding the failure of Seller to satisfy
any of the foregoing conditions precedent
in respect of such Reinvestment. The
failure of Seller to satisfy any of the
foregoing conditions precedent in
respect of any Reinvestment shall give rise
to a right of the Agent, which right
may be exercised at any time on demand of
the Agent, to rescind the related
purchase and direct Seller to pay to the
Agent's Account, for the benefit of the
applicable Purchaser(s), an amount equal to
the Collections prior to the
Facility Termination Date that shall have
been applied to the affected
Reinvestment.
ARTICLE VII.
COVENANTS
Section 7.1
Affirmative Covenants of the Seller Parties. Until the date on
which the Aggregate Unpaids have been
indefeasibly paid in full and this
Agreement terminates in accordance with its
terms, each Seller Party hereby
covenants, as to itself, as set forth
below:
(a) Financial Reporting. Such Seller Party will maintain, for
itself
and each of its Subsidiaries, a system of
accounting established and
administered in accordance with GAAP, and
furnish or cause to be furnished to
the Agent:
(i) Annual Reporting. Within 90 days after the close of each of
its respective fiscal years, (i) audited,
unqualified consolidated financial
statements (which shall include balance
sheets, statements of income and
retained earnings and a statement of cash
flows) of Performance Guarantor and
its Subsidiaries for such fiscal year
certified in a manner acceptable to the
Agent by independent public accountants
reasonably acceptable to the Agent and
(ii) unaudited, financial statements (which
shall include balance sheets,
statements of income and retained earnings
and a statement of cash flows) of
Seller for such fiscal year, all certified
by its chief financial officer.
(ii) Quarterly Reporting. Within 45 days after the close of the
first three (3) quarterly periods of each
of its respective fiscal years, (i)
consolidated balance sheets of Performance
Guarantor and its Subsidiaries as at
the close of each such period and
consolidated statements of income and retained
earnings and a statement of cash flows of
Performance Guarantor and its
Subsidiaries for the period from the
beginning of such fiscal year to the end of
such quarter, all certified by Performance
Guarantor's chief financial officer
and (ii) balance sheets of Seller as at the
close of each such period and
consolidated statements of income and
retained earnings and a statement of cash
flows of Seller for the period from the
beginning of such fiscal year to the end
of such quarter, all certified by its chief
financial officer.
14
<PAGE>
(iii) Compliance Certificate. Together with the financial
statements required hereunder, a compliance
certificate in substantially the
form of Exhibit V signed by such Seller
Party's Authorized Officer and dated the
date of such annual financial statement or
such quarterly financial statement,
as the case may be.
(iv) Shareholders Statements and Reports. Promptly upon the
furnishing thereof to the shareholders of
such Seller Party copies of all
financial statements, reports and proxy
statements so furnished.
(v) S.E.C. Filings. Promptly upon the filing thereof, copies of
all registration statements and annual,
quarterly, monthly or other regular
reports which any Seller Party or any of
its Affiliates files with the
Securities and Exchange Commission.
(vi) Copies of Notices. Promptly upon its receipt of any
notice,
request for consent, financial statements,
certification, report or other
communication under or in connection with
any Transaction Document from any
Person other than the Agent or the
Purchasers, copies of the same.
(vii) Change in Credit and Collection Policy. At least thirty
(30) days prior to the effectiveness of any
material change in or material
amendment to the Credit and Collection
Policy, a copy of the Credit and
Collection Policy then in effect and a
notice (A) indicating such proposed
change or amendment, and (B) if such
proposed change or amendment would be
reasonably likely to adversely affect the
collectibility of the Receivables or
decrease the credit quality of any newly
created Receivables, requesting the
Agent's consent thereto.
(viii) Other Information. Promptly, from time to time, such
other
information, documents, records or reports
relating to the Receivables or the
condition or operations, financial or
otherwise, of such Seller Party as the
Agent may from time to time reasonably
request in order to protect the interests
of the Agent, for the benefit of the
Purchasers, under or as contemplated by
this Agreement.
(b) Notices. Such Seller Party will notify the Agent in writing
signed
by an Authorized Officer of such Seller
Party of any of the following promptly
upon learning of the occurrence thereof,
describing the same and, if applicable,
the steps being taken with respect
thereto:
(i) Amortization Events or Unmatured Amortization Events. The
occurrence of each Amortization Event and
each Unmatured Amortization Event.
(ii) Judgments and Proceedings. (A) (1) The entry of any
judgment
or decree against the Performance
Guarantor, the Servicer or any of the
Performance Guarantor's other Subsidiaries
if the aggregate amount of all
judgments and decrees then outstanding
against the Performance Guarantor, the
Servicer and the Performance Guarantor's
other Subsidiaries exceeds $2,500,000
after deducting (a) the amount with respect
to which the Performance Guarantor,
the Servicer or any such other Subsidiary
of the Performance Guarantor, as the
case may be, is insured and with respect to
which the insurer has not denied
coverage, and (b) the amount for which the
Performance
15
<PAGE>
Guarantor, the Servicer or any such other
Subsidiary of the Performance
Guarantor is otherwise indemnified if the
terms of such indemnification are
satisfactory to the Agent, and (2) the
institution of any litigation,
arbitration proceeding or governmental
proceeding against the Performance
Guarantor or the Servicer which,
individually or in the aggregate, could
reasonably be expected to have a Material
Adverse Effect; and (B) the entry of
any judgment or decree or the institution
of any litigation, arbitration
proceeding or governmental proceeding
against Seller.
(iii) Material Adverse Effect. The occurrence of any event or
condition that has had, or could reasonably
be expected to have, a Material
Adverse Effect.
(iv) Termination Event. The occurrence of a "TERMINATION EVENT"
under and as defined in the Receivables
Sale Agreement.
(v) Defaults Under Other Agreements. The occurrence of a
default
or an event of default under any other
financing arrangement pursuant to which
such Seller Party is a debtor or an obligor
and such financing arrangement is in
excess of $2,500,000.
(vi) Notices under Receivables Sale Agreement. Copies of all
notices delivered under the Receivables
Sale Agreement.
(vii) Downgrade of Performance Guarantor. Any downgrade in the
rating of any Indebtedness of the
Performance Guarantor by S&P or Moody's,
setting forth the Indebtedness affected and
the nature of such change.
(c) Compliance with Laws and Preservation of Corporate Existence.
Such
Seller Party will comply in all respects
with all applicable laws, rules,
regulations, orders, writs, judgments,
injunctions, decrees or awards to which
it is subject, except where the failure to
so comply could not reasonably be
expected to have a Material Adverse Effect.
Such Seller Party will preserve and
maintain its corporate existence, rights,
franchises and privileges in the
jurisdiction of its incorporation, and
qualify and remain qualified in good
standing as a foreign corporation in each
jurisdiction where its business is
conducted, except where the failure to so
preserve and maintain or qualify could
not reasonably be expected to have a
Material Adverse Effect.
(d) Audits. Such Seller Party will furnish to the Agent from time
to
time such information with respect to it
and the Receivables as the Agent may
reasonably request. Such Seller Party will,
from time to time during regular
business hours as requested by the Agent
upon reasonable notice and at the sole
cost of such Seller Party, permit the
Agent, or its agents or representatives
(and shall cause each Originator to permit
the Agent or its agents or
representatives): (i) to examine and make
copies of and abstracts from all
Records in the possession or under the
control of such Person relating to the
Purchased Assets, including, without
limitation, the related Contracts, and (ii)
to visit the offices and properties of such
Person for the purpose of examining
such materials described in clause (i)
above, and to discuss matters relating to
such Person's financial condition or the
Purchased Assets or any Person's
performance under any of the Transaction
Documents or any Person's performance
under the Contracts and, in each case, with
any of the officers or employees of
Seller or the Servicer
16
<PAGE>
having knowledge of such matters (each of
the foregoing examinations and visits,
a "REVIEW"); PROVIDED, HOWEVER, that, so
long as no Amortization Event has
occurred and is continuing, the number of
Reviews in any one calendar year shall
be limited to a maximum of four (4) and;
PROVIDED, FURTHER, that, the Seller
Parties, collectively, shall not be
responsible for the reasonable costs and
expenses of more than two (2) Reviews in
any one calendar year unless (X) the
immediately preceding audit was
unsatisfactory to the Agent with respect to
missing information, erroneous reporting,
other non-compliance with the
provisions of the Transaction Documents or
questions that have not been answered
to the Agent's satisfaction, or (Y) the
Aggregate Invested Amount exceeds an
amount equal to 0.75 times the difference
between the most recently computed Net
Pool Balance and the most recently computed
Required Reserve.
(e) Keeping and Marking of Records and Books.
(i) The Servicer will (and will cause each Originator to)
maintain and implement administrative and
operating procedures (including,
without limitation, an ability to recreate
records evidencing Receivables in the
event of the destruction of the originals
thereof), and keep and maintain all
documents, books, records and other
information reasonably necessary or
advisable for the collection of all
Receivables (including, without limitation,
records adequate to permit the immediate
identification of each new Receivable
and all Collections of and adjustments to
each existing Receivable). The
Servicer will (and will cause each
Originator to) give the Agent notice of any
material change in the administrative and
operating procedures referred to in
the previous sentence.
(ii) Such Seller Party will (and will cause each Originator
to):
(A) on or prior to the date hereof, mark
its master data processing records and
other books and records relating to the
Receivables with a legend, acceptable to
the Agent, describing the Agent's security
interest in the Purchased Assets and
(B) upon the request of the Agent following
the occurrence of an Amortization
Event: (x) mark each Contract with a legend
describing the Agent's security
interest and (y) deliver to the Agent all
Contracts (including, without
limitation, all multiple originals of any
such Contract constituting an
instrument, a certificated security or
chattel paper) relating to the
Receivables.
(f) Compliance with Contracts and Credit and Collection Policy.
Such
Seller Party will (and will cause each
Originator to) timely and fully (i)
perform and comply with all provisions,
covenants and other promises required to
be observed by it under the Contracts
related to the Receivables, and (ii)
comply in all respects with the Credit and
Collection Policy in regard to each
Receivable and the related Contract.
17
<PAGE>
(g) Performance and Enforcement of Receivables Sale Agreement.
Seller
will, and will require each Originator to,
perform each of their respective
obligations and undertakings under and
pursuant to the Receivables Sale
Agreement, will purchase Receivables
thereunder in strict compliance with the
terms thereof and will vigorously enforce
the rights and remedies accorded to
Seller under the Receivables Sale
Agreement. Seller will take all actions to
perfect and enforce its rights and
interests (and the rights and interests of
the Agent, as Seller's assignee) under the
Receivables Sale Agreement as the
Agent may from time to time reasonably
request, including, without limitation,
making claims to which it may be entitled
under any indemnity, reimbursement or
similar provision contained in the
Receivables Sale Agreement.
(h) Ownership. Seller will (or will cause each Originator to) take
all
necessary action to (i) vest legal and
equitable title to the Purchased Assets
purchased under the Receivables Sale
Agreement irrevocably in Seller, free and
clear of any Adverse Claims (other than
Adverse Claims in favor of the Agent,
for the benefit of the Secured Parties)
including, without limitation, the
filing of all financing statements or other
similar instruments or documents
necessary under the UCC (or any comparable
law) of all appropriate jurisdictions
to perfect Seller's interest in such
Purchased Assets and such other action to
perfect, protect or more fully evidence the
interest of Seller therein as the
Agent may reasonably request), and (ii)
establish and maintain, in favor of the
Agent, for the benefit of the Secured
Parties, a valid and perfected first
priority security interest in all Purchased
Assets, free and clear of any
Adverse Claims, including, without
limitation, the filing of all financing
statements or other similar instruments or
documents necessary under the UCC (or
any comparable law) of all appropriate
jurisdictions to perfect the Agent's (for
the benefit of the Secured Parties)
security interest in the Purchased Assets
and such other action to perfect, protect
or more fully evidence the interest of
the Agent for the benefit of the Secured
Parties as the Agent may reasonably
request.
(i) Reliance. Seller acknowledges that the Agent and the
Purchasers
are entering into the transactions
contemplated by this Agreement in reliance
upon Seller's identity as a legal entity
that is separate from each Originator.
Therefore, from and after the date of
execution and delivery of this Agreement,
Seller shall take all reasonable steps,
including, without limitation, all steps
that the Agent or any Purchaser may from
time to time reasonably request, to
maintain Seller's identity as a separate
legal entity and to make it manifest to
third parties that Seller is an entity with
assets and liabilities distinct from
those of each Originator and any Affiliates
thereof (other than Seller) and not
just a division of any Originator or any
such Affiliate. Without limiting the
generality of the foregoing and in addition
to the other covenants set forth
herein, Seller will:
(A) conduct its own business in its own name and require that
all
full-time employees of Seller, if any, identify themselves as such
and
not as employees of any Originator (including, without limitation,
by
means of providing appropriate employees with business or
identification cards identifying such employees as Seller's
employees);
(B) compensate all employees, consultants and agents directly,
from Seller's own funds, for services provided to Seller by
such
employees, consultants and agents and, to the extent any
employee,
consultant or agent of Seller is also an employee, consultant or
agent
of any Originator or any Affiliate
18
<PAGE>
thereof, allocate the compensation of such employee, consultant
or
agent between Seller and such Originator or such Affiliate, as
applicable, on a basis that reflects the services rendered to
Seller
and such Originator or such Affiliate, as applicable;
(C) clearly identify its offices (by signage or otherwise) as
its
offices and, if such office is located in the offices of any
Originator, Seller shall lease such office at a fair market
rent;
(D) have a separate telephone number, which will be answered
only
in its name and separate stationery and checks in its own name;
(E) conduct all transactions with each Originator and the
Servicer (including, without limitation, any delegation of its
obligations hereunder as Servicer) strictly on an arm's-length
basis,
allocate all overhead expenses (including, without limitation,
telephone and other utility charges) for items shared between
Seller
and such Originator on the basis of actual use to the extent
practicable and, to the extent such allocation is not practicable,
on
a basis reasonably related to actual use;
(F) at all times have a board of managers consisting of three
members, at least one member of which is an Independent
Manager;
(G) observe all corporate formalities as a distinct entity, and
ensure that all limited liability company actions relating to (A)
the
selection, maintenance or replacement of the Independent Manager,
(B)
the dissolution or liquidation of Seller or (C) the initiation
of,
participation in, acquiescence in or consent to any bankruptcy,
insolvency, reorganization or similar proceeding involving Seller,
are
duly authorized by unanimous vote of its board of managers
(including
the Independent Manager);
(H) maintain Seller's books and records separate from those of
each Originator and any Affiliate thereof and otherwise readily
identifiable as its own assets rather than assets of any Originator
or
any Affiliate thereof;
(I) prepare its financial statements separately from those of
each Originator and insure that any consolidated financial
statements
of any Originator or any Affiliate thereof that include Seller
and
that are filed with the Securities and Exchange Commission or
any
other governmental agency have notes clearly stating that Seller is
a
separate legal entity and that its assets will be available first
and
foremost to satisfy the claims of the creditors of Seller;
(J) except as herein specifically otherwise provided, maintain
the funds or other assets of Seller separate from, and not
commingled
with, those of any Originator or any Affiliate thereof and only
maintain bank accounts or other depository accounts to which
Seller
alone is the account party, into which Seller alone makes deposits
and
from which Seller alone (or the Agent hereunder) has the power to
make
withdrawals;
19
<PAGE>
(K) pay all of Seller's operating expenses from Seller's own
assets (except for certain payments by any Originator or other
Persons
pursuant to allocation arrangements that comply with the
requirements
of this Section 7.1(i));
(L) operate its business and activities such that: it does not
engage in any business or activity of any kind, or enter into
any
transaction or indenture, mortgage, instrument, agreement,
contract,
lease or other undertaking, other than the transactions
contemplated
and authorized by this Agreement and the Receivables Sale
Agreement;
and does not create, incur, guarantee, assume or suffer to exist
any
indebtedness or other liabilities, whether direct or contingent,
other
than (1) as a result of the endorsement of negotiable instruments
for
deposit or collection or similar transactions in the ordinary
course
of business, (2) the incurrence of obligations under this
Agreement,
(3) the incurrence of obligations, as expressly contemplated in
the
Receivables Sale Agreement, to make payment to the applicable
Originator thereunder for the purchase of Receivables from such
Originator under the Receivables Sale Agreement, and (4) the
incurrence of operating expenses in the ordinary course of business
of
the type otherwise contemplated by this Agreement;
(M) maintain its Organizational Documents in conformity with
this
Agreement, such that it does not amend, restate, supplement or
otherwise modify its Organizational Documents in any respect
that
would impair its ability to comply with the terms or provisions of
any
of the Transaction Documents, including, without limitation,
Section
7.1(i) of this Agreement;
(N) maintain the effectiveness of, and continue to perform
under
the Receivables Sale Agreement and the Performance Undertaking,
such
that it does not amend, restate, supplement, cancel, terminate
or
otherwise modify the Receivables Sale Agreement or the
Performance
Undertaking, or give any consent, waiver, directive or approval
thereunder or waive any default, action, omission or breach under
the
Receivables Sale Agreement or the Performance Undertaking or
otherwise
grant any indulgence thereunder, without (in each case) the
prior
written consent of the Agent;
(O) maintain its limited liability company separateness such
that
it does not merge or consolidate with or into, or convey,
transfer,
lease or otherwise dispose of (whether in one transaction or in
a
series of transactions, and except as otherwise contemplated
herein)
all or substantially all of its assets (whether now owned or
hereafter
acquired) to, or acquire all or substantially all of the assets
of,
any Person, nor at any time create, have, acquire, maintain or
hold
any interest in any Subsidiary.
(P) maintain at all times the Required Capital Amount (as
defined
in the Receivables Sale Agreement) and refrain from making any
dividend, distribution, redemption of Equity Interests or payment
of
any subordinated indebtedness which would cause the Required
Capital
Amount to cease to be so maintained; and
20
<PAGE>
(Q) take such other actions as are necessary on its part to
ensure that the facts and assumptions set forth in the opinion
issued
by Dewey Ballantine LLP, as counsel for Seller, in connection with
the
closing or initial Incremental Purchase under this Agreement
and
relating to substantive consolidation issues, and in the
certificates
accompanying such opinion, remain true and correct in all
material
respects at all times.
(j) Collections. Such Seller Party will cause (1) all proceeds
from
all Lock-Boxes to be directly deposited by
a Collection Bank into a Collection
Account and (2) each Lock-Box and
Collection Account to be subject at all times
to a Collection Account Agreement that is
in full force and effect. In the event
any payments relating to the Purchased
Assets are remitted directly to Seller or
any Affiliate of Seller, Seller will remit
(or will cause all such payments to
be remitted) directly to a Collection Bank
and deposited into a Collection
Account within two (2) Business Days
following receipt thereof, and, at all
times prior to such remittance, Seller will
itself hold or, if applicable, will
cause such payments to be held in trust for
the exclusive benefit of the Agent
and the Purchasers. The ownership, dominion
and control (subject to the terms of
this Agreement) of each Lock-Box and
Collection Account shall be exclusively
maintained by the Collateral Agent and
Seller shall not grant the right to take
dominion and control of any Lock-Box or
Collection Account at a future time or
upon the occurrence of a future event to
any Person, except to the Collateral
Agent as contemplated by this
Agreement.
(k) Taxes. Such Seller Party will file all tax returns and
reports
required by law to be filed by it and will
promptly pay all taxes and
governmental charges at any time owing,
except any such taxes which are not yet
delinquent or are being diligently
contested in good faith by appropriate
proceedings and for which adequate reserves
in accordance with GAAP shall have
been set aside on its books. Seller will
pay when due any taxes payable in
connection with the Receivables, exclusive
of taxes on or measured by income or
gross receipts of the Agent or any
Purchaser.
(l) Payment to Applicable Originator. With respect to any
Receivable
purchased by Seller from any Originator,
such sale shall be effected under, and
in strict compliance with the terms of, the
Receivables Sale Agreement,
including, without limitation, the terms
relating to the amount and timing of
payments to be made to such Originator in
respect of the purchase price for such
Receivable.
Section 7.2
Negative Covenants of the Seller Parties. Until the date on
which the Aggregate Unpaids have been
indefeasibly paid in full and this
Agreement terminates in accordance with its
terms, each Seller Party hereby
covenants, as to itself, that:
(a) Name Change, Offices and Records. Such Seller Party will
not
change its name, identity or structure
(within the meaning of any applicable
enactment of the UCC), change its
jurisdiction of organization, or change any
office where Records are kept unless it
shall have: (i) given the Agent at least
ten (10) Business Days' prior written
notice thereof and (ii) delivered to the
Agent all financing statements, instruments
and other documents requested by the
Agent in connection with such change or
relocation.
21
<PAGE>
(b) Change in Payment Instructions to Obligors. Except as may
be
required by the Agent pursuant to Section
8.2(b), such Seller Party will not add
or terminate any bank as a Collection Bank,
or make any change in the
instructions to Obligors regarding payments
to be made to any Lock-Box or
Collection Account, unless the Agent shall
have received, at least ten (10) days
before the proposed effective date
therefor, (i) written notice of such
addition, termination or change and (ii)
with respect to the addition of a
Collection Bank or a Collection Account or
Lock-Box, an executed Collection
Account Agreement with respect to the new
Collection Account or Lock-Box;
PROVIDED, HOWEVER, that the Servicer may
make changes in instructions to
Obligors regarding payments if such new
instructions require such Obligor to
make payments to another existing
Collection Account.
(c) Modifications to Contracts and Credit and Collection Policy.
Such
Seller Party will not, and will not permit
any Originator to, make any change to
the Credit and Collection Policy that could
adversely affect the collectibility
of the Receivables or decrease the credit
quality of any newly created
Receivables. Except as provided in Section
8.2(d), the Servicer will not, and
will not permit any Originator to, extend,
amend or otherwise modify the terms
of any Receivable or any Contract related
thereto other than in accordance with
the Credit and Collection Policy.
(d) Sales, Liens. Except as otherwise expressly permitted by
the
Transaction Documents, Seller will not
sell, assign (by operation of law or
otherwise) or otherwise dispose of, or
grant any option with respect to, or
create or suffer to exist any Adverse Claim
upon (including, without limitation,
the filing of any financing statement) or
with respect to, any of the Purchased
Assets, or assign any right to receive
income with respect thereto (other than,
in each case, the creation of a security
interest therein in favor of the Agent
as provided for herein), and Seller will
defend the right, title and interest of
the Secured Parties in, to and under any of
the foregoing property, against all
claims of third parties claiming through or
under Seller or any Originator.
(e) Use of Proceeds. Seller will not use the proceeds of the
Purchases
for any purpose other than (i) paying for
Receivables and Related Security under
and in accordance with the Receivables Sale
Agreement, including without
limitation, making payments on the
Subordinated Notes to the extent permitted
thereunder and under the Receivables Sale
Agreement, (ii) paying its ordinary
and necessary operating expenses when and
as due, and (iii) making Restricted
Junior Payments to the extent permitted
under this Agreement.
(f) Termination Date Determination. Seller will not designate
the
Termination Date (as defined in the
Receivables Sale Agreement), or send any
written notice to any Originator in respect
thereof, without the prior written
consent of the Agent, except with respect
to the occurrence of such Termination
Date arising pursuant to Section 5.1(d) of
the Receivables Sale Agreement.
(g) Restricted Junior Payments. Seller will not make any
Restricted
Junior Payment if after giving effect
thereto, Seller's Net Worth (as defined in
the Receivables Sale Agreement) would be
less than the Required Capital Amount
(as defined in the Receivables Sale
Agreement).
22
<PAGE>
(h) Seller Indebtedness. Seller will not incur or permit to exist
any
Indebtedness or liability on account of
deposits except: (i) the Aggregate
Unpaids, (ii) the Subordinated Loans, and
(iii) other current accounts payable
arising in the ordinary course of business
and not overdue.
(i) Prohibition on Additional Negative Pledges. No Seller Party
will
enter into or assume any agreement (other
than this Agreement and the other
Transaction Documents) prohibiting the
creation or assumption of any Adverse
Claim upon the Purchased Assets except as
contemplated by the Transaction
Documents, or otherwise prohibiting or
restricting any transaction contemplated
hereby or by the other Transaction
Documents, and no Seller Party will enter
into or assume any agreement creating any
Adverse Claim upon the Subordinated
Notes.
ARTICLE VIII.
ADMINISTRATION AND COLLECTION
Section 8.1
Designation of Servicer.
(a) The servicing, administration and collection of the
Receivables
shall be conducted by such Person (the
"SERVICER") so designated from time to
time in accordance with this Section 8.1.
Wolverine Finance is hereby designated
as, and hereby agrees to perform the duties
and obligations of, the Servicer
pursuant to the terms of this Agreement.
The Agent may at any time following the
occurrence of an Amortization Event
designate as Servicer any Person to succeed
Wolverine Finance or any successor Servicer
PROVIDED THAT the Rating Agency
Condition is satisfied.
(b) Wolverine Finance may delegate, and Wolverine Finance
hereby
advises the Agent and the Purchasers that
it has delegated, to the Originators,
as sub-servicers of the Servicer, certain
of its duties and responsibilities as
Servicer hereunder in respect of the
Receivables originated by such Originator.
Without the prior written consent of the
Agent and the Required Liquidity Banks,
Wolverine Finance shall not be permitted to
delegate any of its duties or
responsibilities as Servicer to any Person
other than (i) Seller, (ii) the
Originators, and (iii) with respect to
certain Defaulted Receivables, outside
collection agencies in accordance with its
customary practices. Neither Seller
nor any Originator shall be permitted to
further delegate to any other Person
any of the duties or responsibilities of
the Servicer delegated to it by
Wolverine Finance. If at any time following
an Amortization Event, the Agent
shall designate as Servicer any Person
other than Wolverine Finance, all duties
and responsibilities theretofore delegated
by Wolverine Finance to Seller or the
Originators may, at the discretion of the
Agent, be terminated forthwith on
notice given by the Agent to Wolverine
Finance and to Seller and the
Originators.
(c) Notwithstanding the foregoing subsection (b): (i) Wolverine
Finance shall be and remain primarily
liable to the Agent and the Purchasers for
the full and prompt performance of all
duties and responsibilities of the
Servicer hereunder and (ii) the Agent and
the Purchasers shall be entitled to
deal exclusively with Wolverine Finance in
matters relating to the discharge by
the Servicer of its duties and
responsibilities hereunder. The Agent and the
Purchasers shall not be required to give
notice, demand or other communication
to any Person
23
<PAGE>
other than Wolverine Finance in order for
communication to the Servicer and its
sub-servicer or other delegate with respect
thereto to be accomplished.
Wolverine Finance, at all times that it is
the Servicer, shall be responsible
for providing any sub-servicer or other
delegate of the Servicer with any notice
given to the Servicer under this
Agreement.
Section 8.2
Duties of Servicer.
(a) The Servicer shall take or cause to be taken all such actions
as
may be necessary or advisable to collect
each Receivable from time to time, all
in accordance with applicable laws, rules
and regulations, with reasonable care
and diligence, and in accordance with the
Credit and Collection Policy.
(b) The Servicer will instruct all Obligors to pay all
Collections
directly to a Lock-Box or Collection
Account. The Servicer shall effect a
Collection Account Agreement substantially
in the form of Exhibit VI with each
bank party to a Collection Account at any
time. In the case of any remittances
received in any Lock-Box or Collection
Account that shall have been identified,
to the satisfaction of the Servicer, to not
constitute Collections or other
proceeds of the Receivables or the Related
Security, the Servicer shall promptly
remit such items to the Person identified
to it as being the owner of such
remittances. The Agent may request that the
Servicer, and the Servicer thereupon
promptly shall instruct all Obligors with
respect to the Receivables, to remit
all payments thereon to a new depositary
account specified by the Agent and, at
all times thereafter, Seller and the
Servicer shall not deposit or otherwise
credit, and shall not permit any other
Person to deposit or otherwise credit to
such new depositary account any cash or
payment item other than Collections.
(c) The Servicer shall administer the Collections in accordance
with
the procedures described herein and in
Article II. The Servicer shall set aside
and hold in trust for the account of Seller
and the Purchasers their respective
shares of the Collections in accordance
with Article II. The Servicer shall,
upon the request of the Agent, segregate,
in a manner acceptable to the Agent,
all cash, checks and other instruments
received by it from time to time
constituting Collections from the general
funds of the Servicer or Seller prior
to the remittance thereof in accordance
with Article II. If the Servicer shall
be required to segregate Collections
pursuant to the preceding sentence, the
Servicer shall segregate and deposit with a
bank designated by the Agent such
allocable share of Collections of
Receivables set aside for the Purchasers on
the first Business Day following receipt by
the Servicer of such Collections,
duly endorsed or with duly executed
instruments of transfer.
(d) The Servicer may, in accordance with the Credit and
Collection
Policy, extend the maturity of any
Receivable or adjust the Outstanding Balance
of any Receivable as the Servicer
determines to be appropriate to maximize
Collections thereof; PROVIDED, HOWEVER,
that such extension or adjustment shall
not alter the status of such Receivable as
a Delinquent Receivable or Defaulted
Receivable or limit the rights of the Agent
or any Purchaser under this
Agreement. Notwithstanding anything to the
contrary contained herein, the Agent
shall have the absolute and unlimited right
upon the occurrence and during the
continuation of an Amortization Event to
direct the Servicer to commence or
settle any legal action with respect to any
Receivable or to foreclose upon or
repossess any Related Security.
24
<PAGE>
(e) The Servicer shall hold in trust for Seller and the Agent and
the
Purchasers all Records that (i) evidence or
relate to the Receivables, the
related Contracts and Related Security or
(ii) are otherwise necessary or
desirable to collect the Receivables and
shall, as soon as practicable upon
demand of the Agent, deliver or make
available to the Agent all such Records, at
a place selected by the Agent. The Servicer
shall, as soon as practicable
following receipt thereof turn over to
Seller any cash collections or other cash
proceeds received with respect to
Indebtedness not constituting Receivables. The
Servicer shall, from time to time at the
request of the Agent or any Purchaser,
furnish to the Purchasers (promptly after
any such request) a calculation of the
amounts set aside for the Purchasers
pursuant to Article II.
(f) Any payment by an Obligor in respect of any indebtedness owed
by
it to Originator or Seller shall, except as
otherwise specified by such Obligor
or otherwise required by contract or law
and unless otherwise instructed by the
Agent, be applied as a Collection of any
Receivable of such Obligor (starting
with the oldest such Receivable) to the
extent of any amounts then due and
payable thereunder before being applied to
any other receivable or other
obligation of such Obligor.
Section 8.3
Control of Lock-Box and Collection Accounts. Seller hereby
transfers to the Collateral Agent, for the
benefit of the Agent and the Bank
Agent, the exclusive control of each
Lock-Box and the Collection Accounts.
Seller hereby authorizes the Collateral
Agent and the Agent, and agrees that the
Collateral Agent and the Agent shall be
entitled (i) to endorse Seller's name on
checks and other instruments representing
Collections, (ii) to take such action
as shall be necessary or desirable to cause
all cash, checks and other
instruments constituting Collections of
Receivables to come into the possession
of the Collateral Agent or Agent rather
than Seller and (iii) at any time after
the occurrence and during the continuation
of an Amortization Event, to enforce
the Receivables, the related Contracts and
the Related Security.
Section 8.4
Responsibilities of Seller. Anything herein to the contrary
notwithstanding, the exercise by the Agent,
on behalf of the Purchasers, of the
Agent's rights hereunder shall not release
the Servicer, any Originator or
Seller from any of their duties or
obligations with respect to any Receivables
or under the related Contracts. The Agent
and the Purchasers shall have no
obligation or liability with respect to any
Receivables or related Contracts,
nor shall any of them be obligated to
perform the obligations of Seller or any
Originator thereunder.
Section 8.5
Settlement Reports. The Servicer shall prepare and forward to
the Agent (i) on each Monthly Reporting
Date, a Settlement Report and an
electronic file of the data contained
therein and (ii) upon two (2) Business
Day's notice by Agent, a listing by Obligor
of all Receivables together with an
aging of such Receivables in an electronic
file format satisfactory to the
Agent; PROVIDED, HOWEVER, that the Agent
may request that the Servicer deliver a
Settlement Report more frequently than
monthly.
Section 8.6
Servicing Fee. As compensation for the Servicer's servicing
activities on their behalf, the Servicer
shall be paid the Servicing Fee in
arrears on each Settlement Date out of
Collections in accordance with Article
II.
25
<PAGE>
ARTICLE IX.
AMORTIZATION EVENTS
Section 9.1
Amortization Events. The occurrence of any one or more of the
following events shall constitute an
Amortization Event:
(a) Any Seller Party
shall fail to make any payment or deposit
required to be made by it under the
Transaction Documents when due and, for any
such payment or deposit which is not in
respect of the Aggregate Invested
Amount, such failure continues for three
(3) consecutive Business Days.
(b) Any representation, warranty, certification or statement made
by
any Seller Party in any Transaction
Document to which it is a party or in any
other document delivered pursuant thereto
shall prove to have been incorrect
when made or deemed made.
(c) Any Seller Party shall fail to perform or observe any
covenant
contained in Section 7.2 or 8.5 when
performance or observance is due.
(d) Any Seller Party shall fail to perform or observe any other
covenant or agreement under any Transaction
Documents and such failure shall
continue for ten (10) consecutive Business
Days.
(e) Failure of Seller to pay any Indebtedness (other than the
Aggregate Unpaids) when due or the default
by Seller in the performance of any
term, provision or condition contained in
any agreement under which any such
Indebtedness was created or is governed,
the effect of which is to cause, or to
permit the holder or holders of such
Indebtedness to cause, such Indebtedness to
become due prior to its stated maturity; or
any such Indebtedness of Seller
shall be declared to be due and payable or
required to be prepaid (other than by
a regularly scheduled payment) prior to the
date of maturity thereof.
(f) Failure of Performance Guarantor or any of its Subsidiaries
other
than Seller to pay Indebtedness in excess
of $2,500,000 in aggregate principal
amount (hereinafter, "MATERIAL
INDEBTEDNESS") when due; or the default by
Performance Guarantor or any of its
Subsidiaries other than Seller in the
performance of any term, provision or
condition contained in any agreement under
which any Material Indebtedness was created
or is governed, the effect of which
is to cause, or to permit the holder or
holders of such Material Indebtedness to
cause, such Material Indebtedness to become
due prior to its stated maturity; or
any Material Indebtedness of the
Performance Guarantor or any of its
Subsidiaries other than Seller shall be
declared to be due and payable or
required to be prepaid (other than by a
regularly scheduled payment) prior to
the date of maturity thereof.
(g) An Event of Bankruptcy shall occur with respect to the
Performance
Guarantor or any of its Subsidiaries.
(h) As at the end of any Calculation Period:
26
<PAGE>
(i) the three-month rolling average Delinquency Ratio shall
exceed 2.75%,
(ii) the three-month rolling average Default Ratio shall exceed
2.50%, or
(iii) the three-month rolling average Dilution Ratio shall
exceed
5.0%.
(i) A Change of Control shall occur.
(j) (i) One or more final judgments for the payment of money in
an
aggregate amount of $12,300 or more shall
be entered against Seller or (ii) one
or more final judgments for the payment of
money in an amount in excess of
$2,500,000, individually or in the
aggregate, shall be entered against
Performance Guarantor or any of its
Subsidiaries (other than Seller on claims
not covered by insurance or as to which the
insurance carrier has denied its
responsibility, and such judgment shall
continue unsatisfied and in effect for
thirty (30) consecutive days without a stay
of execution.
(k) The "TERMINATION DATE" under and as defined in the
Receivables
Sale Agreement shall occur under the
Receivables Sale Agreement or any
Originator shall for any reason cease to
transfer, or cease to have the legal
capacity to transfer, or otherwise be
incapable of transferring Receivables to
Seller under the Receivables Sale Agreement
(other than solely by reason of a
merger of such Originator with and into
another Originator).
(l) This Agreement shall terminate in whole or in part (except
in
accordance with its terms), or shall cease
to be effective or to be the legally
valid, binding and enforceable obligation
of Seller, or any Obligor shall
directly or indirectly contest in any
manner such effectiveness, validity,
binding nature or enforceability, or the
Agent for the benefit of the Purchasers
shall cease to have a valid and perfected
first priority security interest in
the Purchased Assets.
(m) On any Settlement Date, after giving effect to the turnover
of
Collections by the Servicer on such date
and the application thereof to the
Aggregate Unpaids in accordance with this
Agreement, the Aggregate Invested
Amount shall exceed the Purchase Limit.
(n) The Performance Undertaking shall cease to be effective or to
be
the legally valid, binding and enforceable
obligation of Performance Guarantor,
or Performance Guarantor shall directly or
indirectly contest in any manner such
effectiveness, validity, binding nature or
enforceability of its obligations
thereunder.
(o) The Internal Revenue Service shall file notice of a lien
pursuant
to Section 6323 of the Tax Code with regard
to any of the Purchased Assets and
such lien shall not have been released
within seven (7) days, or the PBGC shall,
or shall indicate its intention to, file
notice of a lien pursuant to Section
4068 of ERISA with regard to any of the
Purchased Assets.
(p) Any Plan of Performance Guarantor or any of its ERISA
Affiliates:
27
<PAGE>
(i) shall fail to be funded in accordance with the minimum
funding standard required by applicable
law, the terms of such Plan, Section 412
of the Tax Code or Section 302 of ERISA for
any plan year or a waiver of such
standard is sought or granted with respect
to such Plan under applicable law,
the terms of such Plan or Section 412 of
the Tax Code or Section 303 of ERISA;
or
(ii) is being, or has been, terminated or the subject of
termination proceedings under applicable
law or the terms of such Plan; or
(iii) shall require Performance Guarantor or any of its ERISA
Affiliates to provide security under
applicable law, the terms of such Plan,
Section 401 or 412 of the Tax Code or
Section 306 or 307 of ERISA; or
(iv) results in a liability to Performance Guarantor or any of
its ERISA Affiliates under applicable law,
the terms of such Plan, or Title IV
ERISA,
and there shall result from any such
failure, waiver, termination or other event
a liability to the PBGC or a Plan that
would have a Material Adverse Effect.
(q) Any event shall occur which (i) materially and adversely
impairs
the ability of the Originators to originate
Receivables of a credit quality that
is at least equal to the credit quality of
the Receivables sold or contributed
to Seller on the date of this Agreement or
(ii) has, or could be reasonably
expected to have a Material Adverse
Effect.
(r) The Net Pool Balance shall at any time be less than an
amount
equal to the sum of (i) the Aggregate
Invested Amount PLUS (ii) the Required
Reserve after giving effect to the turnover
of Collectors by the Services or the
next Settlement Date and the application
thereof to the Aggregate Unpaid in
accordance with this Agreement.
(s) Failure of the Consolidated Parties to maintain a Fixed
Charge
Coverage Ratio during any period (i)
beginning on the date on which the
Obligations outstanding under and as
defined in the ABL Credit Agreement shall
equal or exceed $18,000,000 and continuing
until the termination of ABL Credit
Agreement and the repayment in full of all
such Obligations and (ii) after the
termination of ABL Credit Agreement, equal
to or more than the following amounts
as of the last day of each month ended in
the periods indicated below:
<TABLE>
<CAPTION>
Period
Ratio
------
-----------
<S>
<C>
1st Fiscal Quarter 2005 through 1st Fiscal
Quarter 2006
1.00 to 1.0
2nd Fiscal Quarter 2006 through 3rd Fiscal
Quarter 2006
1.05 to 1.0
4th Fiscal Quarter 2006 through 2nd Fiscal
Quarter 2007
1.10 to 1.0
3rd Fiscal Quarter 2007
1.15 to 1.0
4th Fiscal Quarter and thereafter
1.20 to 1.0
</TABLE>
(t) The Consolidated Parties shall make Capital Expenditures in
excess
of $15,000,000 during any fiscal year.
28
<PAGE>
(u) Commencing with the fiscal quarter of the Consolidated
Parties
ending April 3, 2005,, Consolidated EBITDA
for the Consolidated Parties shall be
less than the following amounts for the
indicated fiscal quarter, calculated on
a rolling four quarter basis:
<TABLE>
<CAPTION>
Minimum Consolidated
Fiscal Quarter
EBITDA
--------------
--------------------
<S>
<C>
1st Fiscal Quarter 2005
$33,500,000
2nd Fiscal Quarter 2005
$27,500,000
3rd Fiscal Quarter 2005
$30,000,000
4th Fiscal Quarter 2005
$32,000,000
1st Fiscal Quarter 2006
$33,500,000
2nd Fiscal Quarter 2006
$34,500,000
3rd Fiscal Quarter 2006
$36,000,000
4th Fiscal Quarter 2006
$37,000,000
1st Fiscal Quarter 2007
$37,000,000
2nd Fiscal Quarter 2007
$38,500,000
3rd Fiscal Quarter 2007
$39,500,000
4th Fiscal Quarter 2007
$41,000,000
and thereafter
</TABLE>
(v) Excess Availability under and as defined in the ABL Credit
Agreement shall be less than $5,000,000 at
any time.
Section 9.2
Remedies. Upon the occurrence and during the continuation of an
Amortization Event, the Agent may, or upon
the direction of the Required
Liquidity Banks shall, take any of the
following actions: (i) replace the Person
then acting as Servicer, (ii) declare the
Facility Termination Date to have
occurred, whereupon Reinvestments shall
immediately terminate and the Facility
Termination Date shall forthwith occur, all
without demand, protest or further
notice of any kind, all of which are hereby
expressly waived by each Seller
Party; PROVIDED, HOWEVER, that upon the
occurrence of an Event of Bankruptcy
with respect to any Seller Party, the
Facility Termination Date shall
automatically occur, without demand,
protest or any notice of any kind, all of
which are hereby expressly waived by each
Seller Party, (iii) exercise all
rights and remedies of a secured party upon
default under the UCC and other
applicable laws, and (iv) notify Obligors
of the Agent's security interest in
the Receivables and other Purchased Assets.
The aforementioned rights and
remedies shall be without limitation, and
shall be in addition to all other
rights and remedies of the Agent and the
Purchasers otherwise available under
any other provision of this Agreement, by
operation of law, at equity or
otherwise, all of which are hereby
expressly preserved, including, without
limitation, all rights and remedies
provided under the UCC, all of which rights
shall be cumulative.
ARTICLE X.
INDEMNIFICATION
Section 10.1
Indemnities.
29
<PAGE>
10.1.1 Indemnities by Seller. Without limiting any other rights
that
the Agent or the Purchasers, may have
hereunder or under applicable law, Seller
hereby agrees to indemnify (and pay upon
demand to) the Agent, each of the
Purchasers and each of the respective
assigns, officers, directors, agents and
employees of the foregoing (each, an
"INDEMNIFIED PARTY") from and against any
and all damages, losses, claims, taxes,
liabilities, costs, expenses and for all
other amounts payable, including reasonable
attorneys' fees (which attorneys may
be employees of the Agent or another
Indemnified Party) and disbursements (all
of the foregoing being collectively
referred to as "INDEMNIFIED AMOUNTS")
awarded against or incurred by any of them
arising out of or as a result of this
Agreement or the acquisition, either
directly or indirectly, by any Purchaser of
an interest in the Receivables, EXCLUDING,
HOWEVER:
(a) Indemnified Amounts to the extent a final judgment of a court
of
competent jurisdiction holds that such
Indemnified Amounts resulted from gross
negligence or willful misconduct on the
part of the Indemnified Party seeking
indemnification;
(b) Indemnified Amounts to the extent the same includes losses
in
respect of Receivables that are
uncollectible on account of the insolvency,
bankruptcy or lack of creditworthiness of
the related Obligor; or
(c) (i) taxes on or measured by the overall net income of such
Indemnified Party imposed by the United
States, the jurisdiction under the laws
of which such Indemnified Party is
incorporated or otherwise organized, in which
such Indemnified Party is a resident for
income tax purposes, or in which such
Indemnified Party's principal executive
office or lending office is located, in
each case, including any political
subdivision thereof, (ii) branch profits
taxes, franchise taxes, or similar taxes
imposed on the Indemnified Party, and
(iii) other taxes imposed by any
jurisdiction in which such Indemnified Party is
subject to taxation for reasons other than
the execution, delivery, performance,
filing, recording, and enforcement of, and
the other activities contemplated in
this Agreement and the Indemnified Party's
participation in the transactions
contemplated by this Agreement, to the
extent that the computation of such taxes
is consistent with the characterization for
income tax purposes of the
acquisition by any Purchaser, of
Receivables as a loan or loans by any
Purchaser, to Seller secured by the
Receivables, the Related Security, the
Collection Accounts and the
Collections;
PROVIDED, HOWEVER, that nothing contained
in this sentence shall limit the
liability of Seller or limit the recourse
of any Purchaser, to Seller for
amounts otherwise specifically provided to
be paid by Seller under the terms of
this Agreement. Without limiting the
generality of the foregoing
indemnification, Seller shall indemnify the
Agent and the Purchasers, for
Indemnified Amounts (including, without
limitation, losses in respect of
uncollectible receivables, regardless of
whether reimbursement therefor would
constitute recourse to Seller) relating to
or resulting from:
(i) any representation or warranty made by Seller or (to the
extent Seller actually receives indemnity
under the Receivables Sale Agreement)
the Originator (or any officers of any such
Person) under or in connection with
this Agreement, any other Transaction
Document or any other information or
report delivered by any such Person
pursuant hereto or thereto, which shall have
been false or incorrect when made or deemed
made;
30
<PAGE>
(ii) the failure by Seller or (to the extent Seller actually
receives indemnity under the Receivables
Sale Agreement) the Originator to
comply with any applicable law, rule or
regulation with respect to any
Receivable or Contract related thereto, or
the nonconformity of any Receivable
or Contract included therein with any such
applicable law, rule or regulation or
(to the extent Seller actually receives
indemnity under the Receivables Sale
Agreement) any failure of the Originator to
keep or perform any of its
obligations, express or
