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Exhibit 10.1
THIRD AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT
DATED AS OF JUNE 20, 2005
AMONG
LOVING CREEK FUNDING
CORPORATION,
OFFICEMAX INCORPORATED
ABN AMRO BANK N.V.,
WACHOVIA BANK, N.A., AS
THE RELATED BANK PURCHASERS
WINDMILL FUNDING CORPORATION, AS A CONDUIT PURCHASER,
and
BLUE RIDGE ASSET FUNDING
CORPORATION, AS
TABLE OF CONTENTS
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THIRD AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT
THIRD AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT, dated as of June 20, 2005, among Loving Creek Funding Corporation, a Delaware corporation (the “Seller” ), OfficeMax Incorporated (formerly known as Boise Cascade Corporation) (the “Initial Collection Agent” ), ABN AMRO Bank N.V., as agent for the Purchasers (the “Agent” ) and as the Windmill Purchaser Agent ( “Windmill Purchaser Agent” ), Wachovia Bank, N.A., as the Blue Ridge Purchaser Agent ( “Blue Ridge Purchaser Agent” ), the other Purchaser Agents from time to time party hereto (collectively with the Windmill Purchaser Agent and the Blue Ridge Purchaser Agent, the “Purchaser Agents” ), the Related Bank Purchasers from time to time party hereto (collectively, the “Related Bank Purchasers” ), Windmill Funding Corporation, as a Conduit Purchaser ( “Windmill” ) and Blue Ridge Funding Corporation, as a Conduit Purchaser ( “Blue Ridge” ). Certain capitalized terms used herein, and certain rules of construction, are defined in Schedule I. The Conduit Purchasers and the Related Bank Purchasers and their respective Commitments are listed on Schedule II.
Reference is made to that certain Second Amended and Restated Receivables Sale Agreement dated as of November 17, 2000, as amended, currently in effect among Loving Creek Funding Corporation (the “Seller” ), OfficeMax Incorporated (formerly known as Boise Cascade Corporation) (the “Initial Collection Agent” ), ABN AMRO Bank N.V., as agent for the Purchasers (the “Agent” ) and as the Windmill Purchaser Agent ( “Windmill Purchaser Agent” ), Wachovia Bank, N.A., as the Blue Ridge Purchaser Agent ( “Blue Ridge Purchaser Agent” ), the other Purchaser Agents from time to time party thereto (collectively, the “Purchaser Agents” ), the Related Bank Purchasers from time to time party thereto (collectively, the “Related Bank Purchasers” ), Windmill Funding Corporation, as a conduit purchaser ( “Windmill” ) and Blue Ridge Funding Corporation, as a conduit purchaser ( “Blue Ridge” ) (the “Original Receivables Sale Agreement” ). The Seller and the Initial Collection Agent hereby request that certain amendments be made to the Original Receivables Sale Agreement and, for the sake of clarity and convenience, that the Original Receivables Sale Agreement be restated in its entirety as so amended. This Third Amended and Restated Receivables Sale Agreement amends and replaces in its entirety the Original Receivables Sale Agreement, and from and after the date hereof, all references made to the Original Receivables Sale Agreement in any Transaction Document or in any other instrument or document shall, without more, be deemed to refer to this Third Amended and Restated Receivables Sale Agreement. In addition, unless otherwise amended, restated or modified in connection with the execution of this Third Amended and Restated Receivables Sale Agreement, all Transaction Documents executed in connection with the Original Receivables Sale Agreement shall be in full force and effect.
The parties hereto agree as follows:
ARTICLE I
Section 1.1 . Sales .
(a) The Sold Interest. Subject to the terms and conditions hereof, the Seller may, from time to time before the Termination Date, request that the Conduit Purchasers (or, only if a Conduit Purchaser denies such request or is unable to fund, ratably request that the Related Bank Purchasers for such Conduit Purchaser) make purchases of an undivided percentage ownership interest in its right, title and interest in the Receivables and all related Collections. Upon any such request, subject to the terms and conditions of this Agreement, the Conduit Purchasers may, in their sole discretion, purchase such interest, or, if any such Conduit Purchaser decides not to purchase such interest, the Related Bank Purchasers for such Conduit Purchaser shall purchase such interest. Such interest shall be transferred to the Agent, on behalf of each Purchaser Agent as representative of the applicable Conduit Purchaser or Related Bank Purchaser, as the case may be. Any such purchase (a “Purchase” ) shall be made by each relevant Purchaser remitting funds to the Seller, pursuant to Section 1.1(c) or by the Collection Agent remitting Collections to the Seller pursuant to Section 1.1(d). The aggregate percentage ownership interest so acquired by a Purchaser in the Receivables and related Collections (its “Purchase Interest” ) shall equal at any time the following quotient:
where:
I = the outstanding Investment of such Purchaser at such time;
ER = the Eligible Receivables Balance at such time; and
PRP = the Purchaser Reserve Percentage at such time.
Except during a Liquidation Period for a Purchaser, such Purchaser’s Purchase Interest will change whenever its Investment, its Purchaser Reserve Percentage or the Eligible Receivables Balance changes. During a Liquidation Period for a Purchaser its Purchase Interest shall remain constant, except for redeterminations to reflect Investment acquired from or transferred to a Purchaser under Article II or pursuant to a Transfer Agreement. The sum of all Purchasers’ Purchase Interests at any time is referred to herein as the “Sold Interest” , which at any time is the aggregate percentage ownership interest then held by the Purchasers in the Receivables and Collections.
(b) Conduit Purchaser Purchase Option and Related Bank Purchaser Commitments . Subject to Section 1.1(d) concerning Reinvestment Purchases, at no time will a Conduit Purchaser have any obligation to make a Purchase. Each Related Bank Purchaser severally
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hereby agrees, subject to Section 7.2 and the other terms and conditions hereof, to make Purchases before the Termination Date, based on the applicable Purchaser Group’s Ratable Share of each Purchase by (and, in the case of each Related Bank Purchaser, its Commitment Percentage of its Purchaser Group’s Ratable Share of such Purchase), to the extent its Investment would not thereby exceed its Commitment, the Aggregate Investment would not thereby exceed the Purchase Limit, and the Matured Aggregate Investment would not thereby exceed the Aggregate Commitments. Each Purchaser’s first Purchase and each additional Purchase by such Purchaser not made from Collections pursuant to Section 1.1(d) is referred to herein as an “Incremental Purchase.” Each Purchase made by a Purchaser with the proceeds of Collections in which it has a Purchase Interest, which does not increase the outstanding Investment of such Purchaser, is referred to herein as a “Reinvestment Purchase.” All Purchases hereunder shall be made ratably by such Purchaser Group in accordance with the Commitment of such Purchaser Group.
(c) Incremental Purchases . In order to request an Incremental Purchase from a Purchaser, the Seller must provide to the Agent and each Purchaser Agent an irrevocable written request (including by telecopier or other facsimile communication) substantially in the form of Exhibit A, by 10:00 a.m. (Chicago time) three Business Days before the requested date (the “Purchase Date” ) of such Purchase, specifying the requested Purchase Date (which must be a Business Day) and the requested amount (the “Purchase Amount” ) of such Purchase, which must be in a minimum amount of $1,000,000 and multiples thereof (or, if less, an amount equal to the Maximum Incremental Purchase Amount). All Incremental Purchases may only be requested ratably from the Conduit Purchasers in each Purchaser Group unless, a Conduit Purchaser, in its sole discretion, determines not to make its Ratable Share of such Incremental Purchase (which determination shall be made within one Business Day after the Seller’s request for an Incremental Purchase), in which case the Seller may request such Incremental Purchase from the Related Bank Purchasers for such Conduit Purchaser. Each Purchaser Agent shall promptly notify the related Purchasers from which a Purchase is requested of the contents of such request. If the Ratable Share of an Incremental Purchase requested from a Conduit Purchaser and such Conduit Purchaser determines, in its sole discretion, to make the requested Purchase, such Conduit Purchaser shall transfer to the Seller’s Account its Ratable Share amount of such Incremental Purchase by no later than 12:00 noon (Chicago time) on the Purchase Date. If a Conduit Purchaser refuses to make a requested Purchase and the Seller requests the Incremental Purchase from the Related Bank Purchasers for such Conduit Purchaser three Business Days before such requested Purchase, subject to Section 7.2 and the other terms and conditions hereof, each Related Bank Purchaser shall transfer its Commitment Percentage of its Purchaser Group’s Ratable Share of such Purchase into the Seller’s Account by no later than 12:00 noon (Chicago time) on the Purchase Date (which in no event will be earlier than three Business Days after such request is made to the Related Bank Purchasers).
(d) Reinvestment Purchases . Unless a Conduit Purchaser has provided to the Agent, each Purchaser Agent, the Seller, and the Collection Agent a notice still in effect that it no longer wishes to make Reinvestment Purchases (in which case such Conduit Purchaser’s Reinvestment Purchases, but not those of its Related Bank Purchasers, shall cease), at any time before the Termination Date when no Interim Liquidation is in effect, on each day that any Collections are received by the Collection Agent a Purchaser’s Purchase Interest in such Collections shall
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automatically be used to make a Reinvestment Purchase by such Purchaser, but only to the extent such Reinvestment Purchase would not cause the Purchaser’s Investment to increase above the amount of such Investment at the start of the day plus any Incremental Purchases made by the Purchaser on that day. A Conduit Purchaser may revoke any notice provided under the first sentence of this Section 1.1(d) by notifying the Agent, its Purchaser Agent, the Seller, and the Collection Agent that it will make Reinvestment Purchases.
(e) Security Interest . To secure all of the Seller’s obligations under the Transaction Documents and, to the extent of the Sold Interest, to secure the repayment of all Investment, the Seller hereby grants to the Agent (for the benefit of the Purchasers) a security interest in all of the Seller’s rights in the Receivables and the Collections.
Section 1.2 . Interim Liquidations . (a) Optional . The Seller may at any time direct that Reinvestment Purchases cease and that an Interim Liquidation commence for all Purchasers by giving the Agent, each Purchaser Agent and the Collection Agent at least three Business Days’ written (including telecopy or other facsimile communication) notice specifying the date on which the Interim Liquidation shall commence and, if desired, when such Interim Liquidation shall cease before the Termination Date (identified as a specific date or as when the Aggregate Investment is reduced to a specified amount). If the Seller does not so specify the date on which an Interim Liquidation shall cease, it may cause such Interim Liquidation to cease at any time before the Termination Date, subject to Section 1.2(b) below, by notifying the Agent, each Purchaser Agent and the Collection Agent in writing (including by telecopy or other facsimile communication) at least three Business Days before the date on which it desires such Interim Liquidation to cease.
(b) Mandatory . If at any time before the Termination Date any condition in Section 7.2 is not fulfilled, the Seller shall immediately notify the Agent, each Purchaser Agent and the Collection Agent, whereupon Reinvestment Purchases shall cease and an Interim Liquidation shall commence, which shall only cease upon the Seller confirming to the Agent that the conditions in Section 7.2 are fulfilled.
Section 1.3 . Selection of Discount Rates and Tranche Periods for each Purchaser Group .
(a) [Reserved] .
(b) Conduit Purchasers. The Seller shall pay Funding Charges with respect to each Conduit Purchaser’s Purchase Interest for each day that any Investment in respect of such Purchase Interest is outstanding. Each such Purchase Interest will accrue Funding Charges each day based on the Pooled Allocation. On each Settlement Date the Seller shall pay to the Windmill Purchaser Agent an aggregate amount equal to all accrued and unpaid Funding Charges in respect of such Purchase Interest for the immediately preceding Settlement Period. On each Settlement Date the Seller shall pay to the Blue Ridge Purchaser Agent an aggregate amount equal to all accrued and unpaid Funding Charges in respect of such Purchase Interest for the immediately preceding calendar month. Each Conduit Purchaser Agent shall allocate the Investment of its related Conduit Purchaser to Tranche Periods in its sole discretion. Any
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Investment purchased from such Conduit Purchaser pursuant to a Transfer Agreement shall accrue interest at the Prime Rate and have an initial Tranche Period of three Business Days.
(c) Related Bank Purchasers. All Investment of the Related Bank Purchasers shall be allocated to one or more Tranches reflecting the Discount Rates at which such Investment accrues Discount and the Tranche Periods for which such Discount Rates apply. In each request for an Incremental Purchase from a Related Bank Purchaser and three Business Days before the expiration of any Tranche Period applicable to any Related Bank Purchaser’s Investment, the Seller may request the Tranche Period(s) to be applicable to such Investment and the Discount Rate(s) applicable thereto. All Investment of the Related Bank Purchasers may accrue Discount at either the Eurodollar Rate or the Prime Rate, in all cases as established for each Tranche Period applicable to such Investment. Any Investment of the Related Bank Purchasers not allocated to a Tranche Period shall be a Prime Tranche. During the pendency of a Termination Event, the applicable Purchaser Agent, upon notice to all other Purchaser Agents, may reallocate any outstanding Investment of the Related Bank Purchasers to a Prime Tranche. All Discount accrued on the Investment of the Related Bank Purchasers during a Tranche Period shall be payable by the Seller on the last day of such Tranche Period or, for a Eurodollar Tranche with a Tranche Period of more than three months, 90 days after the commencement, and on the last day, of such Tranche Period.
(d) Each Conduit Purchaser Agent shall allocate the Investment of the related Conduit Purchaser to Tranche Periods in its sole discretion. If, by the time required in Section 1.3(c), the Seller fails to select a Discount Rate or Tranche Period for any Investment of the Related Bank Purchasers, such amount of Investment shall automatically accrue Discount at the Prime Rate for a three Business Day Tranche Period. Any Investment purchased from a Conduit Purchaser pursuant to the relevant Transfer Agreement shall accrue interest at the Prime Rate and have an initial Tranche Period of three Business Days.
(e) If any Related Bank Purchaser determines (i) that maintenance of any Eurodollar Tranche would violate any applicable law or regulation, (ii) that deposits of a type and maturity appropriate to match fund any of such Related Bank Purchaser’s Eurodollar Tranches are not available or (iii) that the maintenance of any Eurodollar Tranche will not adequately and fairly reflect the cost of such Purchaser of funding Eurodollar Tranches, then the applicable Purchaser Agent, upon the direction of such Related Bank Purchaser, shall suspend the availability of, and terminate any outstanding, Eurodollar Tranche so affected. All Investment allocated to any such terminated Eurodollar Tranche shall be reallocated to a Prime Tranche.
Section 1.4 . Fees and Other Costs and Expenses . (a) Each Purchaser Agent shall receive from the Seller for the ratable benefit of its Purchaser Group such amounts as agreed to with the Purchaser in the Fee Letter for such Purchaser Group.
(b) If with respect to any Investment of any Purchaser Group, the amount of such Purchaser Group’s Investment allocated to any CP or Eurodollar Tranche is reduced before the last day of its Tranche Period, or if a requested Incremental Purchase at the Eurodollar Rate does not take place on its scheduled Purchase Date, the Seller shall pay the Early Payment Fee to each
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Purchaser in the applicable Purchaser Group that had its Investment so reduced or scheduled Purchase not made.
(c) Investment shall be payable solely from the Sold Interest in Collections and from amounts payable under Sections 1.5 and 6.1 (to the extent amounts paid under Section 6.1 indemnify against reductions in or non-payment of Receivables), it being the intention of the parties that the Purchasers do not have recourse against the Seller for loss of Investment due solely to Obligor credit risk beyond the Sold Interest in the Receivables. The Seller shall pay, as a full recourse obligation, all other amounts payable hereunder, including, without limitation, all Discount, fees described in clauses (a) and (b) above and amounts payable under Article VI.
Section 1.5 . Maintenance of Sold Interest; Deemed Collection . (a) General . If at any time before the Termination Date the Eligible Receivables Balance is less than the sum of the Aggregate Investment (or, if a Termination Event exists, the Matured Aggregate Investment) plus the Aggregate Reserve, the Seller shall pay to the Agent an amount equal to such deficiency for application to reduce the Investments of the Purchasers ratably in accordance with the principal amount of their respective Investments, applied first to Prime Tranches and second to the other Tranches with the shortest remaining maturities unless otherwise specified by the Seller. Any amount so applied to reduce a Conduit Purchaser’s Investment shall be deposited into an account designated by the Purchaser Agent for the relevant Purchaser Group.
(b) Deemed Collections . If (1) on any day the outstanding balance of a Receivable is reduced or cancelled as a result of any defective or rejected goods or services, any cash discount or adjustment (including any adjustment resulting from the application of any special refund or other discounts or any reconciliation), any setoff or credit (whether such claim or credit arises out of the same, a related, or an unrelated transaction) or other similar reason not arising from the financial inability of the Obligor to pay undisputed indebtedness or (2) within thirty days of the date hereof, a Lock-Box Letter relating to the Lock Box and Lock Box Account with respect to a Receivable has not been executed by all appropriate parties and delivered to the Agent, the Seller shall be deemed to have received on such day a Collection on such Receivable in the amount, in the case of (1) above, of such reduction or cancellation and in the case of (2) above, the entire principal balance of such Receivable. If on any day any representation, warranty, covenant or other agreement of the Seller related to a Receivable is not true or is not satisfied, the Seller shall be deemed to have received on such day a Collection in the amount of the outstanding balance of such Receivable. All such Collections deemed received by the Seller under this Section 1.5(b) shall be remitted by the Seller to the Collection Agent in accordance with Section 5.1(i).
(c) Adjustment to Sold Interest . At any time before the Termination Date that the Seller is deemed to have received any Collection under Section 1.5(b) ( “Deemed Collections” ) that derive from a Receivable that is otherwise reported as an Eligible Receivable, so long as no Liquidation Period then exists, the Seller may satisfy its obligation to deliver such amount to the Collection Agent by instead notifying the Agent and the Purchaser Agents that the Sold Interest should be recalculated by decreasing the Eligible Receivables Balance by the amount of such Deemed Collections, so long as such adjustment does not cause the Sold Interest to exceed 100%.
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(d) Receivables Retransfers. If the Agent shall have received Deemed Collections or if an adjustment is made to the Sold Interest pursuant to Section 1.5(c) that in either case equals or exceeds the outstanding balance of any Receivable, all right, title and interest of Agent and Purchasers in and to such Receivables (including goods related to a Receivable) shall be deemed transferred to the Seller and by the Seller to the Originator. Each transfer made by the Agent under this Section shall be without recourse, representation or warranty, express or implied, of any type or kind on the part of the Agent and the Purchasers. The Seller shall bear all costs and expenses incurred by the Agent or any Purchaser in effecting any such transfer to the Seller.
(e) Payment Assumption . Unless an Obligor otherwise specifies or another application is required by contract or law, any payment received by the Seller from any Obligor shall be applied as a Collection of Receivables of such Obligor (starting with the oldest such Receivable) and remitted to the Collection Agent as such.
Section 1.6 . Reduction in Commitments . The Seller may, upon thirty days’ notice to the Agent and the Purchaser Agents, reduce the Aggregate Commitment in increments of $1,000,000, so long as the Aggregate Commitment at all times equals at least the outstanding Matured Aggregate Investment. Each such reduction in the Aggregate Commitment shall reduce the Commitment of each Related Bank Purchaser in accordance with its Ratable Share and shall ratably reduce the Purchase Limit so that the Aggregate Commitment remains at least 102% of the Purchase Limit.
Section 1.7 . Repurchases. At any time that the Aggregate Investment is less than 10% of the Aggregate Commitment in effect on the date hereof, the Seller may, upon thirty days’ notice to the Agent and the Purchaser Agents, repurchase the entire Sold Interest from the Purchasers at a price equal to the outstanding Matured Aggregate Investment and all other amounts then owed hereunder.
Section 1.8 . Assignment of Purchase Agreements. The Seller hereby assigns and otherwise transfers to the Agent (for the benefit of the Agent, each Purchaser Agent, each Purchaser and any other Person to whom any amount is owed hereunder), all of the Seller’s right, title and interest in, to and under each Purchase Agreement. The Seller shall execute, file and record all financing statements, continuation statements and other documents required to perfect or protect such assignment. This assignment includes (a) all monies due and to become due to the Seller from the Originator under or in connection with any Purchase Agreement (including fees, expenses, costs, indemnities and damages for the breach of any obligation or representation related to such agreement) and (b) all rights, remedies, powers, privileges and claims of the Seller against the Originator under or in connection with any Purchase Agreement. All provisions of each Purchase Agreement shall inure to the benefit of, and may be relied upon by, the Agent, each Purchaser Agent, each Purchaser and each such other Person. At any time that a Termination Event has occurred and is continuing, the Agent, on behalf of the Purchaser Agents and the Purchasers shall have the sole right to enforce the Seller’s rights and remedies under each Purchase Agreement to the same extent as the Seller could absent this assignment, but without any obligation on the part of the Agent, any Purchaser or any other such Person to perform any of the obligations of the Seller under each Purchase Agreement (or any of the promissory notes executed thereunder). All amounts distributed to the Seller under each Purchase Agreement from
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Receivables sold to the Seller thereunder shall constitute Collections hereunder and shall be applied in accordance herewith.
ARTICLE II
Section 2.1 . Purchases from a Conduit Purchaser. (a) Each Conduit Purchaser may, at any time, sell to the relevant Related Bank Purchasers pursuant to the relevant Transfer Agreement any percentage designated by such Conduit Purchaser of such Conduit Purchaser Investment and its related Conduit Purchaser Settlement (each, a “Put” ).
(b) Any portion of any Investment of a Conduit Purchaser and related Conduit Purchaser Settlement purchased by a Related Bank Purchaser shall be considered part of such Related Bank Purchaser’s Investment and related Conduit Purchaser Settlement from the date of the relevant Put. At the end of each applicable Tranche Period following any purchase by a Related Bank Purchaser of any portion of the relevant Conduit Purchaser Investment of the relevant Conduit Purchaser, the Seller shall pay to the relevant Purchaser Agent (for the ratable benefit of each such Purchaser) an amount equal to a portion of the sum of (i) the Assigned Conduit Purchaser Settlement and (ii) all unpaid Discount owed to such Conduit Purchaser (whether or not then due) to the end of each applicable Tranche Period to which any Investment being Put has been allocated, (iii) all accrued but unpaid fees (whether or not then due) payable to such Conduit Purchaser in connection herewith at the time of such purchase and (iv) all accrued and unpaid costs, expenses and indemnities due to such Conduit Purchaser from the Seller in connection herewith, which portion shall be calculated by dividing the amount of Investment allocated to the applicable Tranche Period by the total amount of Investment purchased.
(c) The proceeds from each Put received by a Conduit Purchaser (other than amounts described in clauses (iii) and (iv) of the preceding sentence) shall be used solely to pay that portion of the outstanding commercial paper of the relevant Conduit Purchaser issued to fund or maintain the Investment of such Conduit Purchaser so transferred. Until used to pay commercial paper, all proceeds of any Put pursuant to this Section shall be invested in Permitted Investments. All earnings on such Permitted Investments shall be promptly remitted to the Seller.
Section 2.2 . Purchases by a Conduit Purchaser. Each Conduit Purchaser may at any time deliver to its Purchaser Agent and each relevant Related Bank Purchaser a notification of assignment in substantially the form of Exhibit A to the relevant Transfer Agreement. If a Conduit Purchaser delivers such notice, each relevant Related Bank Purchaser shall sell to such Conduit Purchaser and such Conduit Purchaser shall purchase in full from each such Related Bank Purchaser, the Investment of the Related Bank Purchasers on the last day of the relevant Tranche Periods, at a purchase price equal to such Investment plus accrued and unpaid Discount thereon. Any sale from any Related Bank Purchaser to the relevant Conduit Purchaser pursuant to this Section 2.2 shall be without recourse, representation or warranty except for the representation and warranty that the Investment sold by such Related Bank Purchaser is free and
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clear of any Adverse Claim created or granted by such Related Bank Purchaser and that such Related Bank Purchaser has not suffered a Bankruptcy Event.
Section 2.3 . Allocations and Distributions .
(a) Non-Reinvestment Periods. Before the Termination Date unless an Interim Liquidation is in effect, on each day during a period that a Conduit Purchaser is not making Reinvestment Purchases (as established under Section 1.1(d)), the Collection Agent (i) shall set aside and hold solely for the benefit of the applicable Conduit Purchaser (or deliver to the applicable Purchaser Agent, if so instructed pursuant to Section 3.2(a)) such Conduit Purchaser’s Purchase Interest in all Collections received on such day and (ii) shall distribute on the last day of each CP Tranche Period to the applicable Purchaser Agent (for the benefit of such Conduit Purchaser) the amounts so set aside up to the amount of such Conduit Purchaser’s Purchase Amount and, to the extent not already paid in full, all Discount thereon and all other amounts then due from the Seller in connection with such Purchase Amount and Tranche Period. As provided in Section 1.4(c) all Discount and other amounts payable hereunder other than the Purchase Amount are payable by the Seller. If any part of the Sold Interest in any Collections is applied to pay any such amounts pursuant to this Section 2.3(a) and after giving effect to such application the Sold Interest is greater than 100%, the Seller shall pay to the Collection Agent the amount so applied to the extent necessary so that after giving effect to such payment the Sold Interest is no greater than 100%, for distribution as part of the Purchase Interest in Collections.
(b) Termination Date and Interim Liquidations. On each Wednesday during any Interim Liquidation and on each day and after the Termination Date, the Collection Agent shall set aside and hold solely for the account of each Purchaser Agent, for the benefit of each Purchaser Group to the extent provided below, (or deliver to each Purchaser Agent, if so instructed pursuant to Section 3.2(a)) and for the account of the Agent, the Sold Interest in all Collections of Receivables subject to such Interim Liquidation received on such day and such Collections shall be allocated as follows:
(i) first, ratably to each Purchaser Group until all Purchase Amounts of, and Discount due but not already paid to, each Purchaser Group under the Transaction Documents has been paid in full; and
(ii) second, ratably to each Purchaser Group until all amounts owed under the Transaction Documents to such Purchaser Group have been paid in full.
(iii) third, to the Agent until all amounts owed under the Transaction Documents to such Person have been paid in full;
(iv) fourth , to each Purchaser Agent until all amounts owed under the Transaction Documents to such Persons have been paid in full;
(v) fifth, to any other Person to whom any amounts are owed under the Transaction Documents until all such amounts have been paid in full; and
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(vi) sixth, to the Seller (or as otherwise required by applicable law).
Unless an Interim Liquidation has ended by such date (in which case Reinvestment Purchases shall resume to the extent provided in Section 1.1(d)), on the last day of each Tranche Period (unless otherwise instructed by a Purchaser Agent pursuant to Section 3.2(a)), the Collection Agent shall pay to the appropriate parties, from such set aside Collections, all amounts allocated to such Tranche Period and all Tranche Periods that ended before such date that are due in accordance with the priorities in clauses (i) and (ii) above. No distributions shall be made to pay amounts under clauses (iii), (iv), (v), and (vi) above until sufficient Collections have been set aside to pay all amounts described in clause (i) that may become payable for all outstanding Tranche Periods. As provided in Section 1.4(c) all interest and other amounts payable hereunder other than Investment are payable by the Seller. If any part of the Sold Interest in any Collections is applied to pay any such amounts pursuant to this Section 2.3(b) and after giving effect to such application the Sold Interest is greater than 100%, the Seller shall pay to the Collection Agent the amount so applied to the extent necessary so that after giving effect to such payment the Sold Interest is no greater than 100%, for distribution as part of the Sold Interest in Collections.
ARTICLE III
Section 3.1 . Appointment of Collection Agent . (a) The servicing, administering and collecting of the Receivables shall be conducted by a Person (the “Collection Agent” ) designated to so act on behalf of the Purchasers under this Article III. As the Initial Collection Agent, OfficeMax Incorporated is hereby designated as, and agrees to perform the duties and obligations of, the Collection Agent. OfficeMax Incorporated acknowledges that the Agent, each Purchaser Agent and each Purchaser have relied on OfficeMax Incorporated’s agreement to act as Collection Agent (and the agreement of any of the sub-collection agents to so act) in making the decision to execute and deliver this Agreement and agrees that it will not voluntarily resign as Collection Agent nor permit any sub-collection agent to voluntarily resign as a sub-collection agent. At any time after the occurrence of a Collection Agent Replacement Event the Agent may designate a new Collection Agent to succeed OfficeMax Incorporated (or any successor Collection Agent).
(b) OfficeMax Incorporated may, with the consent of the Agent (upon the direction of the Instructing Group), delegate its duties and obligations as Collection Agent to an Affiliate (acting as a sub-collection agent). OfficeMax Incorporated hereby appoints OfficeMax Contract, Inc. as its sub-collection agent with respect to Receivables generated by OfficeMax Contract, Inc.. Notwithstanding such delegation, OfficeMax Incorporated shall remain primarily liable for the performance of the duties and obligations so delegated, and the Agent, each Purchaser Agent and each Purchaser shall have the right to look solely to OfficeMax Incorporated for such performance. The Agent (with the consent of the Instructing Group) may at any time after the occurrence of a Collection Agent Replacement Event remove or replace any sub-collection agent.
(c) If replaced, the Collection Agent agrees it will terminate, and will cause each existing sub-collection agent to terminate, its collection activities in a manner requested by the
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Agent to facilitate the transition to a new Collection Agent. The Collection Agent shall cooperate with and assist any new Collection Agent (including providing access to, and transferring, all Records and allowing the new Collection Agent to use all licenses, hardware or software necessary or desirable to collect the Receivables). OfficeMax Incorporated irrevocably agrees to act (if requested to do so) as the data-processing agent for any new Collection Agent in substantially the same manner as OfficeMax Incorporated conducted such data-processing functions while it acted as the Collection Agent.
Section 3.2 . Duties of Collection Agent . (a) The Collection Agent shall take, or cause to be taken, all action necessary or advisable to collect each Receivable in accordance with this Agreement, the Credit and Collection Policy and all applicable laws, rules and regulations using the skill and attention the Collection Agent exercises in collecting other receivables or obligations owed solely to it. The Collection Agent may, prior to a Termination Event, commingle Collections with its other funds until such amounts are required to be paid pursuant to Section 2.3. If so instructed by the appropriate Purchaser Agent, the Collection Agent shall transfer to the appropriate Purchaser Agent the amount of Collections to which the appropriate Purchaser Group and the Purchasers are entitled by the Business Day following receipt. Each party hereto hereby appoints the Collection Agent to enforce such Person’s rights and interests in the Receivables, but (notwithstanding any other provision in any Transaction Document) the Agent (at the direction of the Instructing Group) shall at all times after the occurrence of a Termination Event have the sole right to direct the Collection Agent to commence or settle any legal action to enforce collection of any Receivable.
(b) If no Termination Event exists and the Collection Agent determines that such action is appropriate in order to maximize the Collections, the Collection Agent may, in accordance with the Credit and Collection Policy, extend the maturity of any Receivable (but no such extension shall be for a period more than thirty (30) days) or adjust the outstanding balance of any Receivable. Any such extension or adjustment shall not alter the status of a Receivable as a Delinquent Receivable, Defaulted Receivable or limit any rights of the Agent, any Purchaser Agent or the Purchasers hereunder. If a Termination Event exists, the Collection Agent may make such extensions or adjustments only with the prior consent of the Instructing Group.
(c) The Collection Agent shall turn over to the Seller (i) any percentage of Collections in excess of the Sold Interest, less all reasonable costs and expenses of the Collection Agent for servicing, collecting and administering the Receivables and (ii) subject to Section 1.5(e), the collections and records for any indebtedness owed to the Seller that is not a Receivable. The Collection Agent shall have no obligation to remit any such funds or records to the Seller until the Collection Agent receives evidence (satisfactory to the Agent) that the Seller is entitled to such items. The Collection Agent has no obligations concerning indebtedness that is not a Receivable other than to deliver the collections and records for such indebtedness to the Seller when required by this Section 3.2(c).
Section 3.3 . Reports . On or before each Reporting Date, the Collection Agent shall deliver to the Agent a Periodic Report reflecting information as of the close of business of the Collection Agent for the immediately preceding Reporting Period.
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Section 3.4 . Lock-Box Arrangements . The Agent is hereby authorized to give notice at any time after the occurrence of a Termination Event to any or all Lock-Box Banks that the Agent is exercising its rights under the Lock-Box Letters and to take all actions permitted under the Lock-Box Letters. The Seller agrees to take any action requested by the Agent to facilitate the foregoing. After the Agent takes any such action under the Lock-Box Letters, the Seller shall immediately deliver to the Agent any Collections received by the Seller. If the Agent takes control of any Lock-Box Account, the Agent shall distribute Collections it receives in accordance herewith and shall deliver to the Collection Agent, for distribution under Section 3.2, all other amounts it receives from such Lock-Box Account.
Section 3.5 . Enforcement Rights . (a) The Agent (at the direction of the Instructing Group) may, at any time after the occurrence of a Termination Event, direct the Obligors and the Lock-Box Banks to make all payments on the Receivables directly to the Agent or its designee. The Agent may, and the Seller shall at the Agent’s request, withhold the identity of the Purchasers from the Obligors and Lock-Box Banks. Upon the Agent’s request (at the direction of the Instructing Group) after the occurrence of a Termination Event, the Seller (at the Seller’s expense) shall (i) give notice to each Obligor of the Agent’s ownership of the Sold Interest and direct that payments on Receivables be made directly to the Agent or its designee, (ii) assemble for the Agent all Records and collateral security for the Receivables and transfer to the Agent (or its designee), or license to the Agent (or its designee) the use of, all software useful to collect the Receivables and (iii) segregate in a manner acceptable to the Agent all Collections the Seller receives and, promptly upon receipt, remit such Collections in the form received, duly endorsed or with duly executed instruments of transfer, to the Agent or its designee on behalf of the Purchaser Agents and the Purchasers.
(b) Upon the occurrence of a Termination Event, the Collection Agent shall segregate Collections from other funds of the Seller and hold such amounts for the Agent (for the benefit of the Purchaser Agents and the Purchasers). Upon the occurrence of a Termination Event, the Seller hereby irrevocably appoints the Agent as its attorney-in-fact coupled with an interest, with full power of substitution and with full authority in the place of the Seller, to take any and all steps deemed desirable by the Agent (at the direction of the Instructing Group), in the name and on behalf of the Seller to (i) collect any amounts due under any Receivable, including endorsing the name of the Seller on checks and other instruments representing Collections and enforcing such Receivables, and (ii) exercise any and all of the Seller’s rights and remedies under any Purchase Agreement. The Agent’s powers under this Section 3.5(b) shall not subject the Agent to any liability if any action taken by it proves to be inadequate or invalid, nor shall such powers confer any obligation whatsoever upon the Agent.
(c) None of the Agent, any Purchaser Agent or any Purchaser shall have any obligation to take or consent to any action to realize upon any Receivable or to enforce any rights or remedies related thereto.
Section 3.6 . Collection Agent Fee . On or before the twentieth day of each calendar month, the Seller shall pay to the Collection Agent a fee for the immediately preceding calendar month as compensation for its services (the “Collection Agent Fee” ) equal to (a) at all times OfficeMax Incorporated or an Affiliate of OfficeMax Incorporated is the Collection Agent, such
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consideration as is acceptable to it, the receipt and sufficiency of which is hereby acknowledged, and (b) at all times any other Person is the Collection Agent, a reasonable amount agreed upon by the Agent and the new Collection Agent on an arm’s-length basis reflecting rates and terms prevailing in the market at such time. The Collection Agent may only apply to payment of the Collection Agent Fee the portion of the Collections in excess of the Sold Interest or Collections that fund Reinvestment Purchases. The Agent may, with the consent of the Instructing Group, pay the Collection Agent Fee to the Collection Agent from the Sold Interest in Collections. The Seller shall be obligated to reimburse any such payment to the extent required by Section 1.5 or 2.3.
Section 3.7 . Responsibilities of the Seller . The Seller shall, or shall cause the Originator to, pay when due all Taxes payable in connection with the Receivables or their creation or satisfaction. The Seller shall, and shall cause the Originator to, perform all of its obligations under agreements related to the Receivables to the same extent as if interests in the Receivables had not been transferred hereunder or, in the case of the Originator, under each Purchase Agreement. The Agent’s, any Purchaser Agent’s or any Purchaser’s exercise of any rights hereunder shall not relieve the Seller or the Originator from such obligations. None of the Agent, any Purchaser Agent or any Purchaser shall have any obligation to perform any obligation of the Seller or of the Originator or any other obligation or liability in connection with the Receivables.
Section 3.8 . Actions by Seller . The Seller shall defend and indemnify the Agent, each Purchaser Agent and each Purchaser against all costs, expenses, claims and liabilities for any action taken by the Seller, the Originator or any other Affiliate of the Seller or of the Originator (whether acting as Collection Agent or otherwise) related to any Receivable, or arising out of any alleged failure of compliance of any Receivable with the provisions of any law or regulation. Subject to Section 1.5(d), if any goods related to a Receivable are repossessed, the Seller agrees to resell, or to have an Originator or another Affiliate resell, such goods in a commercially reasonable manner for the account of the Agent and remit, or have remitted, to the Agent the Purchasers’ share in the gross sale proceeds thereof net of any out-of-pocket expenses and any equity of redemption of the Obligor thereon. Any such moneys collected by the Seller or the Originator or other Affiliate of the Seller pursuant to this Section 3.8 shall be segregated and held in trust for the Agent and remitted to the Agent within one Business Day of receipt as part of the Sold Interest in Collections for application as provided herein.
Section 3.9 . Indemnities by the Collection Agent. Without limiting any other rights any Person may have hereunder or under applicable law, the Collection Agent hereby indemnifies and holds harmless the Agent, each Purchaser Agent and each Purchaser and their respective officers, directors, agents and employees (each an “Indemnified Party” ) from and against any and all damages, losses, claims, liabilities, penalties, Taxes, costs and expenses (including attorneys’ fees and court costs) (all of the foregoing collectively, the “Indemnified Losses” ) at any time imposed on or incurred by any Indemnified Party arising out of or otherwise relating to:
(i) any written representation or warranty made by the Collection Agent (or any employee or agent of the Collection Agent) in this Agreement, any other Transaction Document, any Periodic Report or any other information or report delivered by the
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Collection Agent pursuant hereto, which shall have been false or incorrect in any material respect when made;
(ii) the failure by the Collection Agent to comply with any applicable law, rule or regulation related to any Receivable, or the nonconformity of any Receivable with any such applicable law, rule or regulation;
(iii) any loss of a perfected security interest (or in the priority of such security interest) as a result of any commingling by the Collection Agent of funds to which the Agent or any Purchaser is entitled hereunder with any other funds; or
(iv) any failure of the Collection Agent, to perform its duties or obligations in accordance with the provisions of this Agreement or any other Transaction Document to which the Collection Agent is a party;
whether arising by reason of the acts to be performed by the Collection Agent hereunder or otherwise, excluding only Indemnified Losses to the extent (a) such Indemnified Losses resulted solely from negligence or willful misconduct of the Indemnified Party seeking indemnification, (b) solely due to the credit risk of the Obligor and for which reimbursement would constitute recourse to the Collection Agent for uncollectible Receivables, (c) such Indemnified Losses include Taxes on, or measured by, the overall net income of the Agent, any Purchaser Agent or any Purchaser computed in accordance with the Intended Tax Characterization, or (d) the Originator is the plaintiff and the Indemnified Party is the defendant unless such Indemnified Party prevails in such legal action; provided, however, that nothing contained in this sentence shall limit the liability of the Collection Agent or limit the recourse of the Agent, any Purchaser Agent and each Purchaser to the Collection Agent for any amounts otherwise specifically provided to be paid by the Collection Agent hereunder.
ARTICLE IV
Section 4.1 . Representations and Warranties . The Seller represents and warrants to the Agent, each Purchaser Agent and each Purchaser that:
(a) Corporate Existence and Power. Each of the Seller and the Originator is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation and has all corporate power and authority and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is now conducted, except where failure to obtain such license, authorization, consent or approval would not have an adverse effect on (i) its ability to perform its obligations under, or the enforceability of, any Transaction Document, (ii) its business or financial condition, (iii) the interests of the Agent, any Purchaser Agent or any Purchaser under any Transaction Document or (iv) the enforceability or collectibility of any Receivable.
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(b) Corporate Authorization and No Contravention. The execution, delivery and performance by each of the Seller and the Originator of each Transaction Document to which it is a party (i) are within its corporate powers, (ii) have been duly authorized by all necessary corporate action, (iii) do not contravene or constitute a default under (A) any applicable law, rule or regulation, (B) its or any Subsidiary’s charter or by-laws or (C) any agreement, order or other instrument to which it or any Subsidiary is a party or its property is subject and (iv) will not result in any Adverse Claim on any Receivable or Collection or give cause for the acceleration of any indebtedness of the Seller, the Originator or any Subsidiary.
(c) No Consent Required. No approval, authorization or other action by, or filings with, any Governmental Authority or other Person is required in connection with the execution, delivery and performance by the Seller or the Originator of any Transaction Document or any transaction contemplated thereby other than filings of Uniform Commercial Code financing statements as required herein and the filing by the Originator with the Securities and Exchange Commission of certain of the Transaction Documents.
(d) Binding Effect. Each Transaction Document to which the Seller or the Originator is a party constitutes the legal, valid and binding obligation of such Person enforceable against that Person in accordance with its terms, except as limited by bankruptcy, insolvency, or other similar laws of general application relating to or affecting the enforcement of creditors’ rights generally and subject to general principles of equity.
(e) Perfection of Ownership Interest . Immediately preceding its sale of Receivables to the Seller, the Originator was the owner of, and effectively sold, such Receivables to the Seller, free and clear of any Adverse Claim. The Seller owns the Receivables free of any Adverse Claim other than the interests of the Purchasers (through the Agent) therein that are created hereby, and each Purchaser shall at all times have a valid undivided percentage ownership interest, which shall be a first priority perfected security interest for purposes of Article 9 of the applicable Uniform Commercial Code, in the Receivables and Collections to the extent of its Purchase Interest then in effect.
(f) Accuracy of Information. All information furnished by the Seller, the Originator or any Affiliate of any such Person to the Agent, any Purchaser Agent or any Purchaser in connection with any Transaction Document, or any transaction contemplated thereby, is true and accurate in all material respects (and is not incomplete by omitting any information necessary to prevent such information from being materially misleading).
(g) No Actions, Suits. There are no actions, suits or other proceedings (including matters relating to environmental liability) pending or threatened against or affecting the Seller, the Originator or any Subsidiary, or any of their respective properties, that (i) if adversely determined (individually or in the aggregate), may have a material adverse effect on the financial condition of the Seller or the Originator and its Subsidiaries taken as a whole or on the collectibility of the Receivables or (ii) involve any Transaction Document or any transaction contemplated thereby. None of the Seller, the
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Originator or any Subsidiary is in default of any contractual obligation or in violation of any order, rule or regulation of any Governmental Authority, which default or violation may have a material adverse effect upon (i) the financial condition of the Seller or the Originator and the Subsidiaries taken as a whole or (ii) the collectibility of the Receivables.
(h) No Material Adverse Change. Since March 31, 2005, there has been no material adverse change in the collectibility of the Receivables or the (i) financial condition, business, operations or prospects of the Seller or the Originator and its Subsidiaries taken as a whole, or (ii) ability of the Seller or the Originator to perform its obligations under any Transaction Document.
(i) Accuracy of Exhibits; Lock-Box Arrangements. All information on Exhibits C and D (listing offices and names of the Seller and the Originator and where they maintain Records and Lock Boxes) is true and complete, subject to any changes permitted by, and notified to the Agent in accordance with, Article V. The Seller has delivered a copy of all Lock-Box Agreements to the Agent. The Seller has not granted any interest in any Lock-Box or Lock-Box Account to any Person other than the Agent and, upon delivery to a Lock-Box Bank of the related Lock-Box Letter, the Agent will have exclusive ownership and control of the Lock-Box Account at such Lock-Box Bank.
(j) Sales by the Originator . Each sale by the Originator to the Seller of an interest in Receivables and their Collections has been made in accordance with the terms of the Purchase Agreements, including the payment by the Seller to the Originator of the purchase price described in each Purchase Agreement. Each such sale has been made for “reasonably equivalent value” (as such term is used in Section 548 of the Bankruptcy Code) and not for or on account of “antecedent debt” (as such term is used in Section 547 of the Bankruptcy Code) owed by the Originator to the Seller.
ARTICLE V
Section 5.1 . Covenants of the Seller . The Seller hereby covenants and agrees to comply with the following covenants and agreements, unless the Agent (with the consent of the Instructing Group) shall otherwise consent:
(a) Financial Reporting . The Seller will, and will cause the Originator and each Subsidiary to, maintain a system of accounting established and administered in accordance with GAAP and will furnish to the Agent, each Purchaser Agent and each Purchaser:
(i) Annual Financial Statements. Within 90 days after each fiscal year of (A) OfficeMax Incorporated, copies of its annual audited financial statements (including a consolidated balance sheet, consolidated statement of income, consolidated statement of shareholders equity and consolidated statement of cash flows, with related footnotes) certified by independent public accountants satisfactory to the Agent and prepared on a
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consolidated basis in conformity with GAAP, and (B) the Seller, the balance sheet for the Seller and a profit and loss statement for the year then ended certified by a Designated Financial Officer thereof, in each case prepared on a consolidated basis in conformity with GAAP;
(ii) Quarterly Financial Statements. Within 45 days after each (except the last) fiscal quarter of each fiscal year of (A) OfficeMax Incorporated, copies of its unaudited financial statements (including at least a consolidated balance sheet as of the close of such quarter and consolidated statements of income and cash flows for the period from the beginning of the fiscal year to the close of such quarter) certified by a Designated Financial Officer and prepared in a manner consistent with the financial statements described in part (A) of clause (i) of this Section 5.l(a) and (B) the Seller, the quarterly balance sheet for the Seller and a profit and loss statement for the period from the beginning of such fiscal year to the close of such quarter, in each case certified by a Designated Financial Officer thereof and prepared in a manner consistent with clause (i) of Section 5.1(a);
(iii) Reports to Stockholders. Promptly upon the sending, making available or filing of the same, all debt registration statements, proxy statements, financial statements and reports as the Originator shall send or make available to its stockholders or to any holder of its public senior funded debt for borrowed money or filed with the Securities and Exchange Commission, excluding filings made with the SEC solely in respect of securities issued pursuant to employee benefit plans of the Originator and its Subsidiaries;
(iv) [Reserved]
(v) Other Information. With reasonable promptness, such other information (including non-financial information) as may be requested by the Agent, any Purchaser Agent or any Purchaser (with a copy of such request to the Agent).
(b) Notices . Immediately upon becoming aware of any of the following the Seller will notify the Agent and each Purchaser Agent and provide a description of:
(i) Potential Termination Events. The occurrence of any Potential Termination Event or any Potential Collection Agent Replacement Event;
(ii) Representations and Warranties. The failure of any representation or warranty herein to be true (when made or, with respect to the representations and warranties contained in Section 4.1(a)-(e), (g)(ii), (i) or (j), at any time thereafter) in any material respect;
(iii) Downgrading. The downgrading, withdrawal or suspension of any rating by any rating agency of any indebtedness of the Originator or the Seller;
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(iv) Litigation. The institution of any litigation, arbitration proceeding or governmental proceeding reasonably likely to be material to the Seller, or the Originator and its Subsidiaries taken as a whole or the collectibility or quality of the Receivables;
(v) Judgments. The entry of any judgment or decree against the Seller, the Originator or any Subsidiary if the aggregate amount of all judgments then outstanding against the Seller, the Originator and the Subsidiaries exceeds $10,000,000; or
(vi) Changes in Business. Any change in, or proposed change in, the character of the Seller’s or the Originator’s business that could impair the collectibility or quality of any Receivable.
If the Agent or any Purchaser Agent receives such a notice, the Agent or such Purchaser Agent shall promptly give notice thereof to each Purchaser Agent and each Purchaser and, until each Conduit Purchaser has no Investment after the Termination Date, to each CP Dealer and each Rating Agency.
(c) Conduct of Business. The Seller will perform, and will cause the Originator and Subsidiaries to perform, all actions necessary to remain duly incorporated, validly existing and in good standing in its jurisdiction of incorporation and to maintain all requisite authority to conduct its business in each jurisdiction in which it conducts business.
(d) Compliance with Laws. The Seller will comply, and will cause the Originator and Subsidiaries to comply, with all laws, regulations, judgments and other directions or orders imposed by any Governmental Authority to which such Person or any Receivable or Collection may be subject, except where non-compliance will not impair the collectibility of the Receivables or have a material adverse effect on the financial condition or operations of the Seller or of the Originator and its Subsidiaries taken as a whole.
(e) Furnishing Information and Inspection of Records. The Seller will furnish to the Agent, each Purchaser Agent and the Purchasers such information concerning the Receivables as the Agent, any Purchaser Agent or a Purchaser may request. The Seller will, and will cause the Originator to, permit, at any time during regular business hours, the Agent, any Purchaser Agent or any Purchaser (or any representatives thereof) (i) to examine and make copies of all Records, (ii) to visit the offices and properties of the Seller for the purpose of examining the Records and (iii) to discuss matters relating hereto with any of the Seller’s or the Originator’s officers, directors, employees or independent public accountants having knowledge of such matters. Once a year, the Agent (at the request of any Purchaser Agent) may (at the expense of the Seller) have an independent public accounting firm conduct an audit of the Records or make test verifications of the Receivables and Collections.
(f) Keeping Records. The Seller will, and will cause the Originator to, have and maintain (A) administrative and operating procedures (including an ability to recreate Records if originals are destroyed), (B) adequate facilities, personnel and equipment and (C) all Records and other information necessary or advisable for collecting the Receivables (including Records adequate to permit the immediate identification of each Obligor, each new Receivable and all
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Collections of, and adjustments to, each existing Receivable). The Seller will give the Agent and each Purchaser Agent prior notice of any material change in such administrative and operating procedures.
(g) Perfection. (i) The Seller will, and will cause the Originator to, at its expense, promptly execute and deliver all instruments and documents and take all action necessary or requested by the Agent (including the execution and filing of financing or continuation statements, amendments thereto or assignments thereof) to enable the Agent, on behalf of the Purchaser Agents and the Purchasers, to exercise and enforce all its rights hereunder and to vest and maintain vested in the Agent, on behalf of the Purchaser Agents and the Purchasers, a valid, first priority perfected security interest in the Receivables, each Purchase Agreement, and proceeds thereof free and clear of any Adverse Claim. The Agent will be permitted to sign and file any continuation statements, amendments thereto and assignments thereof without the Seller’s signature.
(ii) The Seller will, and will cause the Originator to, only change its name or identity or relocate its chief executive office or the Records following thirty (30) days advance notice to the Agent and the delivery to the Agent and each Purchaser Agent of all financing statements, instruments and other documents (including direction letters) requested by the Agent.
(iii) The Seller and the Originator will at all times maintain its chief executive offices within a jurisdiction in the USA (other than in the states of Florida, Maryland and Tennessee) in which Article 9 of the UCC is in effect. If the Seller or the Originator moves its chief executive office to a location that imposes Taxes, fees or other charges to perfect the Agent’s, the Purchaser Agents and the Purchasers’ interests hereunder or the Seller’s interests under each Purchase Agreement, the Seller will pay all such amounts and any other costs and expenses incurred in order to maintain the enforceability of the Transaction Documents, the Sold Interest and the interests of the Agent, the Purchaser Agents and the Purchasers in the Receivables and Collections.
(h) Performance of Duties. The Seller will perform, and will cause the Originator and Subsidiary and the Collection Agent (if an Affiliate) to perform, its respective duties or obligations in accordance with the provisions of each of the Transaction Documents. The Seller (at its expense) will, and will cause the Originator to, (i) fully and timely perform in all material respects all agreements required to be observed by it in connection with each Receivable, (ii) comply in all material respects with the Credit and Collection Policy, and (iii) refrain from any action that may impair the rights of the Agent, the Purchaser Agents or the Purchasers in the Receivables or Collections.
(i) Payments on Receivables, Accounts. The Seller will, and will cause the Originator to, at all times instruct all Obligors to deliver payments on the Receivables to a Lock-Box Account. If any such payments or other Collections are received by the Seller or the Originator, it shall hold such payments in trust for the benefit of the Agent and the Purchasers and promptly (but in any event within two Business Days after receipt) remit such funds into a Lock-Box Account. The Seller will cause each Lock-Box Bank to comply with the terms of each applicable Lock-Box Letter. The Seller will not permit the funds of any Affiliate to be deposited into any
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Lock-Box Account. If such funds are nevertheless deposited into any Lock-Box Account, the Seller will promptly identify such funds for segregation. After the occurrence of a Collection Agent Replacement Event, the Seller will not, and will not permit any Collection Agent or other Person to, commingle Collections or other funds to which the Agent or any Purchaser is entitled with any other funds. The Seller shall only add, and shall only permit an Originator to add, a Lock-Box Bank, Lock-Box, or Lock-Box Account to those listed on Exhibit D if the Agent has received notice of such addition, a copy of any new Lock-Box Agreement and an executed and acknowledged copy of a Lock-Box Letter substantially in the form of Exhibit E (with such changes as are acceptable to the Agent) from any new Lock-Box Bank. The Seller shall only terminate a Lock-Box Bank or Lock-Box, or close a Lock-Box Account, upon 30 days advance notice to the Agent.
(j) Sales and Adverse Claims Relating to Receivables. Except as otherwise provided herein, the Seller will not, and will not permit the Originator to (by operation of law or otherwise), create or suffer to exist any Adverse Claim upon any Receivable or any proceeds thereof except for a lien for personal property taxes not yet due and payable.
(k) Extension or Amendment of Receivables. Except as otherwise permitted in Section 3.2(b) and then subject to Section 1.5, the Seller will not, and will not permit the Originator to, extend, amend, rescind or cancel any Receivable.
(l) Change in Business or Credit and Collection Policy. The Seller will not make any material change in the character of its business or in its Credit and Collection Policy. The Seller will not permit the Originator to make any material change in its Credit and Collection Policy.
(m) Corporate Separateness. The Seller acknowledges that the Agent, the Purchasers and the Purchaser Agents are entering into the transactions contemplated by this Agreement in reliance upon the Seller’s identity as a legal entity that is separate from the Originator. Therefore, from and after the date of execution and delivery of the Agreement, the Seller shall take all reasonable steps, including all steps that the Agent or the Purchasers and the Purchaser Agents may from time to time reasonably request, to maintain the Seller’s identity as a separate legal entity and to make it manifest to third parties that the Seller is an entity with assets and liabilities distinct from those the Originator and any Affiliates thereof (other than the Seller) and not (for purposes other than income taxes) just a division of the Originator or any such Affiliate. Without limiting the generality of the foregoing and in addition to the other covenants set forth herein, Seller covenants as follows:
(i) The Seller shall at all times maintain at least one independent director who (x) is not currently and has not been during the five years preceding the date of the Agreement an officer, director or employee of an Affiliate of the Seller (except for such member), (y) is not a current or former officer or employee of the Seller and (z) is not a material stockholder of any Affiliates of the Seller.
(ii) The Seller shall not direct or participate in the management of any of the operations of an Affiliate of the Seller.
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(iii) The Seller shall maintain a separate principal office through which its business shall be conducted, which office may be located in identifiable space within the headquarters of one of the Affiliates of the Seller. The Seller shall have stationery and other business forms and a telephone listing separate from that of the Affiliates of the Seller.
(iv) The Seller shall at all times be adequately capitalized in light of its contemplated business.
(v) The Seller shall at all times provide for its own operating expenses and liabilities from its own funds.
(vi) The Seller shall maintain its assets and transactions separately from those of the Affiliates of the Seller and reflect such assets and transactions in financial statements separate and distinct from those of the Affiliates of the Seller and evidence such assets and transactions by appropriate entries in books and records separate and distinct from those of the Affiliates of the Seller. The Seller shall hold itself out to the public under the Seller’s own name as a legal entity separate and distinct from the Affiliates of the Seller. The Seller shall not hold itself out as having agreed to pay, or as being liable, primarily or secondarily, for, any obligations of the Affiliates of the Seller.
(vii) The Seller shall not become liable as a guarantor or otherwise with respect to any debt or contractual obligation of any Affiliates of the Seller.
(viii) Except as otherwise specifically provided herein, the Seller shall maintain the funds or other assets of the Seller separate from and not commingled with those of any Affiliates of the Seller and only maintain bank accounts or other depository accounts to which the Seller alone is the account party, into which the Seller alone makes deposits and from which the Seller alone (or the Agent hereunder) has the power to make withdrawals.
(ix) The Seller shall not make any payment or distribution of assets with respect to any obligation of any Affiliates of the Seller or grant an Adverse Claim on any of its assets to secure any obligation of any Affiliates of the Seller.
(x) The Seller shall not make loans, advances or otherwise extend credit to any of the Affiliates of the Seller.
(xi) The Seller shall hold regular duly noticed meetings of its members and make and retain minutes of such meetings.
(xii) The Seller shall have bills of sale (or similar instruments of assignment) and, if appropriate, UCC-1 financing statements, with respect to all assets purchased from any of the Affiliates of the Seller.
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(xiii) The Seller shall not engage in any transaction with any of the Affiliates of the Seller, except as permitted by the Agreement and as contemplated by the Purchase Agreement.
(xiv) The Seller shall comply with (and cause to be true and correct) each of the facts and assumptions contained in the opinion of Bell, Boyd & Lloyd LLC attached hereto as Exhibit H.
ARTICLE VI
Section 6.1 . Indemnities by the Seller . Without limiting any other rights any Person may have hereunder or under applicable law, the Seller hereby indemnifies and holds harmless, on an after-Tax basis, the Agent, each Purchaser Agent and each Purchaser and their respective officers, directors, agents and employees (each an “Indemnified Party” ) from and against any and all damages, losses, claims, liabilities, penalties, Taxes, costs and expenses (including attorneys’ fees and court costs) (all of the foregoing collectively, the “Indemnified Losses” ) at any time imposed on or incurred by any Indemnified Party relating to or resulting from:
(i) any representation or warranty made by the Seller or the Originator (or any employee or agent of the Seller or the Originator) under or in connection with this Agreement, any Periodic Report or any other information or report delivered by the Seller or the Originator pursuant hereto, which shall have been false or incorrect in any material respect when made or deemed made;
(ii) the failure by the Seller or the Originator to comply with any applicable law, rule or regulation related to any Receivable, or the nonconformity of any Receivable with any such applicable law, rule or regulation;
(iii) the failure of the Seller to vest and maintain vested in the Agent, for the benefit of the Purchaser Agents and the Purchasers, a perfected ownership or security interest in the Sold Interest and the property conveyed pursuant to Section 1.1(e) and Section 1.8, free and clear of any Adverse Claim;
(iv) any commingling of funds to which the Agent, any Purchaser Agent or any Purchaser is entitled hereunder with any other funds;
(v) any failure of a Lock-Box Bank to comply with the terms of the applicable Lock-Box Letter;
(vi) any dispute, claim, offset or defense of the Obligor to the payment of any Receivable other than one based on inability to pay or arising by virtue of the Obligor’s bankruptcy, or any other claim resulting from the sale or lease of goods or the rendering of services related to such Receivable or the furnishing or failure to furnish any such
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goods or services or other similar claim or defense not arising from the financial inability of any Obligor to pay undisputed indebtedness;
(vii) any failure of the Seller or the Originator, or any Affiliate of any thereof, to perform its duties or obligations in accordance with the provisions of this Agreement or any other Transaction Document to which such Person is a party (as a Collection Agent or otherwise);
(viii) any action taken by the Agent as attorney-in-fact for the Seller pursuant to Section 3.5(b);
(ix) any environmental liability claim, products liability claim or personal injury or property damage suit or other similar or related claim or action of whatever sort, arising out of or in connection with any Receivable or any other suit, claim or action of whatever sort relating to any of the Transaction Documents; or
(x) any Tax imposed upon the Agent or any Purchaser in connection with the transactions contemplated by the Transaction Documents;
excluding only Indemnified Losses to the extent (a) a final judgment of a court of competent jurisdiction holds such Indemnified Losses resulted solely from gross negligence or willful misconduct of the Indemnified Party seeking indemnification, (b) solely due to the credit risk of the Obligor and for which reimbursement would constitute recourse to the Seller or the Collection Agent for uncollectible Receivables or (c) such Indemnified Losses include Taxes on, or measured by, the overall net income of the Agent or any Purchaser.
Section 6.2 . Increased Cost and Reduced Return. If (i) the adoption of any applicable law, rule or regulation, or any change therein, or any change in the interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof, or compliance by any Funding Source, the Agent, any Purchaser Agent or any Purchaser (collectively, the “Funding Parties” ) with any request or directive of general applicability (whether or not having the force of law) of any such Governmental Authority or (ii) the adoption of or any change in any accounting principles, or any change in the interpretation thereof by any Accounting Authority applicable to a Funding Party that would require the consolidation of a Conduit Purchaser with such Funding Policy (a) subjects any Funding Party to any charge or withholding on or in connection with a Funding Agreement or this Agreement (collectively, the “Funding Documents” ) or any Receivable, (b) changes the basis of taxation of payments to any of the Funding Parties of any amounts payable under any of the Funding Documents (except for changes in the rate of Tax on the overall net income of such Funding | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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