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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
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TABLE OF CONTENTS
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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
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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
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EXHIBITS AND SCHEDULES
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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
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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.
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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)
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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
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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
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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,
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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.
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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.
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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
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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.
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(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
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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.
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(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.
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(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
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(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.
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(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
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<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
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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.
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(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
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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;
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(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
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(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.
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(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).
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(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
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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.
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(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.
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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:
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(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
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