Exhibit 10.2
RECEIVABLES PURCHASE AGREEMENT
among
S.D. ▇▇▇▇▇▇ FINANCE CO.,
as Seller,
S.D. ▇▇▇▇▇▇ COMPANY,
as Servicer,
BANK OF MONTREAL,
as Purchaser,
and
▇▇▇▇▇▇▇ ▇▇▇▇▇ SECURITIES INC.,
as Agent.
TABLE OF CONTENTS
PAGE
ARTICLE I. AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. Purchase Facility . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Making Purchases. . . . . . . . . . . . . . . . . . . . . 2
Section 1.3. Participation Computation . . . . . . . . . . . . . . . . 3
Section 1.4. Settlement Procedures . . . . . . . . . . . . . . . . . . 3
Section 1.5. Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 1.6. Payments and Computations, Etc. . . . . . . . . . . . . . 8
Section 1.7. Dividing or Combining Portions of the
Investment of the Participation . . . . . . . . . . . . 8
Section 1.8. Increased Costs . . . . . . . . . . . . . . . . . . . . . 8
Section 1.9. Additional Discount on Portions of
Participation Bearing a Eurodollar Rate . . . . . . . . 9
Section 1.10. Requirements of Law. . . . . . . . . . . . . . . . . . . 10
Section 1.11. Inability to Determine Eurodollar Rate . . . . . . . . . 11
ARTICLE II. REPRESENTATIONS AND WARRANTIES; COVENANTS;
TERMINATION EVENTS
Section 2.1. Representations and Warranties;
Covenants . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.2. Termination Events. . . . . . . . . . . . . . . . . . . . 12
ARTICLE III. INDEMNIFICATION
Section 3.1. Indemnities by the Seller . . . . . . . . . . . . . . . . 12
ARTICLE IV. ADMINISTRATION AND COLLECTIONS
Section 4.1. Appointment of Servicer . . . . . . . . . . . . . . . . . 14
Section 4.2. Duties of Servicer. . . . . . . . . . . . . . . . . . . . 15
Section 4.3. Establishment and Use of Certain
Accounts. . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.4. Enforcement Rights. . . . . . . . . . . . . . . . . . . . 17
Section 4.5. Responsibilities of the Seller. . . . . . . . . . . . . . 18
Section 4.6. Servicing Fee . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE V. MISCELLANEOUS
Section 5.1. Amendments, Etc.. . . . . . . . . . . . . . . . . . . . . 19
Section 5.2. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.3. Assignability . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.4. Costs, Expenses and Taxes . . . . . . . . . . . . . . . . 21
Section 5.5. No Proceedings; Limitation on Payments. . . . . . . . . . 21
Section 5.6. Confidentiality . . . . . . . . . . . . . . . . . . . . . 21
Section 5.7. GOVERNING LAW AND JURISDICTION. . . . . . . . . . . . . . 22
Section 5.8. Execution in Counterparts . . . . . . . . . . . . . . . . 22
Section 5.9. Survival of Termination . . . . . . . . . . . . . . . . . 22
Section 5.10. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . 22
Section 5.11. Entire Agreement . . . . . . . . . . . . . . . . . . . . 23
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 5.12. Headings . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.13. Purchaser's Liabilities. . . . . . . . . . . . . . . . . 23
EXHIBIT I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . I-1
EXHIBIT II CONDITIONS OF PURCHASES . . . . . . . . . . . . . . . . . . .II-1
EXHIBIT III REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . III-1
EXHIBIT IV COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . .IV-1
EXHIBIT V TERMINATION EVENTS. . . . . . . . . . . . . . . . . . . . . . V-1
EXHIBIT VI COLLECTION ACCOUNT AGREEMENT. . . . . . . . . . . . . . . . .VI-1
EXHIBIT VII LIQUIDATION ACCOUNT AGREEMENT . . . . . . . . . . . . . . . VII-1
EXHIBIT VIII SPECIAL OBLIGOR CONCENTRATION LIMITS. . . . . . . . . . . .VIII-1
EXHIBIT IX PORTFOLIO CERTIFICATE . . . . . . . . . . . . . . . . . . . . .IX
SCHEDULE I CREDIT AND COLLECTION POLICY. . . . . . . . . . . . . . . . . I-1
SCHEDULE II LOCKBOX BANKS AND LOCKBOX ACCOUNTS. . . . . . . . . . . . . .II-1
SCHEDULE III TRADE NAMES . . . . . . . . . . . . . . . . . . . . . . . . III-1
SCHEDULE IV FISCAL MONTHS . . . . . . . . . . . . . . . . . . . . . . . .IV-1
ANNEX A FORM OF LOCKBOX AGREEMENT
ANNEX B FORM OF NOTICE OF PURCHASE
ANNEX C FORM OF CORPORATE OPINION
ANNEX D FORM OF BANKRUPTCY OPINION
ANNEX E FORM OF SERVICER REPORT
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RECEIVABLES PURCHASE AGREEMENT
This RECEIVABLES PURCHASE AGREEMENT (this "AGREEMENT") is entered into as
of April 23, 1996 among S.D. ▇▇▇▇▇▇ FINANCE CO., a Delaware corporation, as
seller (the "SELLER"), S.D. ▇▇▇▇▇▇ COMPANY, a Pennsylvania corporation ("SDW"),
as initial servicer (in such capacity, together with its successors and
permitted assigns in such capacity, the "SERVICER"), BANK OF MONTREAL, a
Canadian chartered bank, acting through its Chicago Branch (together with its
successors and permitted assigns, the "PURCHASER"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇ SECURITIES
INC., a Delaware corporation ("▇▇▇▇▇▇▇ ▇▇▇▇▇") as agent for the Purchaser (in
such capacity, together with its successors and assigns in such capacity, the
"AGENT").
PRELIMINARY STATEMENTS. Certain terms that are capitalized and used
throughout this Agreement are defined in EXHIBIT I to this Agreement.
References in the Exhibits hereto to "the Agreement" refer to this Agreement, as
amended, modified or supplemented from time to time.
The Seller desires to sell, transfer and assign an undivided variable
percentage interest in a pool of receivables, and the Purchaser desires to
acquire such undivided variable percentage interest, as such percentage interest
shall be adjusted from time to time based upon, in part, reinvestment payments
which are made by the Purchaser and additional incremental payments made to the
Seller.
In consideration of the mutual agreements, provisions and covenants
contained herein, the parties hereto agree as follows:
ARTICLE I.
AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. PURCHASE FACILITY. (a) On the terms and conditions
hereinafter set forth, the Purchaser hereby agrees to purchase and make
reinvestments of undivided percentage ownership interests with regard to the
Participation from the Seller from time to time during the period from the date
hereof to the Facility Termination Date. Under no circumstances shall the
Purchaser make any such purchase or reinvestment if, after giving effect to such
purchase or reinvestment, the aggregate outstanding Investment of the
Participation would exceed the Purchase Limit.
(b) The Seller may, upon at least 30 Business Days' notice to the Agent,
terminate the purchase facility provided in this SECTION 1 in whole or, from
time to time, irrevocably reduce in part the unused portion of the Purchase
Limit; PROVIDED that each partial reduction shall be in the amount of at least
$1,000,000, or an integral multiple of $500,000 in excess thereof.
Section 1.2. MAKING PURCHASES. (a) Each purchase (but not reinvestments)
of undivided ownership interests with regard to the Participation hereunder
shall be made upon the Seller's irrevocable written notice in the form of Annex
B delivered to the Agent in accordance with SECTION 5.2 (which notice must be
received by the Agent prior to 11:00 a.m., Chicago time) on the second Business
Day next preceding the date of such proposed purchase. Each such notice of any
such proposed purchase shall specify the desired amount and date of such
purchase and the desired duration of the initial Yield Period for the resulting
Participation. The Agent shall select the duration of such initial Yield
Period, and each subsequent Yield Period in its discretion; PROVIDED that it
shall use reasonable efforts, taking into account market conditions, to
accommodate Seller's preferences.
(b) On the date of each purchase (but not reinvestment) of undivided
ownership interests with regard to the Participation hereunder, the Purchaser
shall, upon satisfaction of the applicable conditions set forth in EXHIBIT II
hereto, make available to the Agent at its office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, the amount of such purchase in same day funds, and
after the Agent's receipt of such funds, the Agent shall make such funds
immediately available to the Seller at such office.
(c) Effective on the date of each purchase pursuant to this SECTION 1.2
and each reinvestment pursuant to SECTION 1.4, the Seller hereby sells and
assigns to the Purchaser an undivided percentage ownership interest in (i) each
Pool Receivable then existing, (ii) all Related Security with respect to such
Pool Receivables, and (iii) Collections with respect to, and other proceeds of,
such Pool Receivables and Related Security.
(d) To secure all of the Seller's obligations (monetary or otherwise)
under this Agreement and the other Transaction Documents to which it is a party,
whether now or hereafter existing or arising, due or to become due, direct or
indirect, absolute or contingent, the Seller hereby grants to the Purchaser a
security interest in all of the Seller's right, title and interest (including
without limitation any undivided interest of the Seller) in, to and under all of
the following, whether now or hereafter owned, existing or arising: (A) all
Pool Receivables, (B) all Related Security with respect to each such Pool
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Receivable, (C) all Collections with respect to each such Pool Receivable, (D)
the Lock Box Accounts, Collection Account and Liquidation Account and all
amounts on deposit therein and all certificates and instruments, if any, from
time to time evidencing such Lock Box Accounts, Collection Account and
Liquidation Account and amounts on deposit therein, (E) all rights of the Seller
under the Purchase and Contribution Agreement, and (F) all proceeds of, and all
amounts received or receivable under any or all of, the foregoing. The
Purchaser shall have, with respect to the property described in this
SECTION 1.2(d), and in addition to all the other rights and remedies available
to the Purchaser, all the rights and remedies of a secured party under any
applicable UCC.
Section 1.3. PARTICIPATION COMPUTATION. The Participation shall be
initially computed on the date of the initial purchase hereunder. Thereafter
until the Termination Date, the Participation shall be automatically recomputed
(or deemed to be recomputed) on each Business Day other than a Termination Day.
The Participation, as computed (or deemed recomputed) as of the day immediately
preceding the Termination Date, shall thereafter remain constant. The
Participation shall become zero when the Investment thereof and Discount thereon
shall have been paid in full, all the amounts owed by the Seller hereunder to
the Purchaser, the Agent, and any other Indemnified Party or Affected Person are
paid in full and the Servicer shall have received the accrued Servicing Fee
thereon.
Section 1.4. SETTLEMENT PROCEDURES. (a) Collection of the Pool Receivables
shall be administered by the Servicer in accordance with the terms of this
Agreement. The Seller shall provide to the Servicer (if other than the Seller)
on a timely basis all information needed for such administration, including
notice of the occurrence of any Termination Day and current computations of the
Participation.
(b) The Servicer shall, on each day on which Collections of Pool
Receivables are received (or deemed received) by the Seller or Servicer,
transfer such Collections from the Lock-Box Accounts and deposit such
Collections into the Collection Account. With respect to such Collections on
such day, the Servicer shall:
(i) transfer from the Collection Account to the Liquidation Account,
set aside for the benefit of the Purchaser, out of the percentage of such
Collections represented by the Participation, FIRST an amount equal to the
Discount accrued through such day for each Portion of Investment and not
previously set aside and SECOND, to the extent funds are available
therefor, an amount equal to the Servicing Fee (if the Originator or any
Affiliate thereof is not the Servicer), the Commitment Fee and the Program
Fee
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accrued through such day for the Participation and not previously set
aside; and
(ii) subject to SECTION 1.4(f), if such day is not a Termination Day,
remit to the Seller, on behalf of the Purchaser, the remainder of the
percentage of such Collections, represented by the Participation, to the
extent representing a return on the Investment; such Collections shall be
automatically reinvested in Pool Receivables, and in the Related Security
and Collections and other proceeds with respect thereto, and the
Participation shall be automatically recomputed pursuant to SECTION 1.3; IT
BEING UNDERSTOOD, that prior to remitting to the Seller the remainder of
such Collections by way of reinvestment in Pool Receivables, the Servicer
shall have calculated the Participation on such day, and if such
Participation shall exceed 100% of the Net Receivables Pool Balance on such
day, such Collections shall not be remitted to the Seller but shall be
transferred to the Liquidation Account for the benefit of the Purchaser in
accordance with PARAGRAPH (iii) below;
(iii) if such day is a Termination Day, (A) transfer to the
Liquidation Account for the Purchaser the entire remainder of the
percentage of the Collections represented by the Participation; PROVIDED
that so long as the Facility Termination Date has not occurred if any
amounts are so transferred to the Liquidation Account on any Termination
Day and thereafter, the conditions set forth in SECTION 2 of EXHIBIT II are
satisfied or are waived by the Agent, such previously set aside amounts
shall, to the extent representing a return on the Investment, be reinvested
in accordance with the preceding PARAGRAPH (ii) on the day of such
subsequent satisfaction or waiver of conditions, and (B) transfer to the
Liquidation Account for the Purchaser the entire remainder of the
Collections in the Collection Account represented by the Seller's share of
the Collections, if any; PROVIDED that so long as the Facility Termination
Date has not occurred if any amounts are so transferred to the Liquidation
Account on any Termination Day and thereafter, the conditions set forth in
SECTION 2 of EXHIBIT II are satisfied or are waived by the Agent, such
previously set aside amounts shall be distributed to the Seller on the day
of such subsequent satisfaction or waiver of conditions; and
(iv) during such times as amounts are required to be reinvested in
accordance with the foregoing PARAGRAPH (ii) or the proviso to PARAGRAPH
(iii), release to the Seller (subject to SECTION 1.4(f)) for its own
account any Collections in excess of (x) such amounts, (y) the amounts
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that are required to be transferred to the Liquidation Account pursuant
to PARAGRAPH (I) above and (z) in the event the Seller is not the
Servicer, all reasonable and appropriate out-of-pocket costs and
expenses of such Servicer of servicing, collecting and administering the
Pool Receivables.
(c) The Servicer shall deposit into the Purchaser's Account (or such other
account designated by the Agent), on the last day of each Settlement Period
relating to a Portion of Investment:
(i) Collections held on deposit in the Liquidation Account for the
benefit of the Purchaser pursuant to SECTION 1.4(b)(i) in respect of
accrued Discount and the Program Fees and Commitment Fees with respect to
such Portion of Investment;
(ii) Collections held on deposit in the Liquidation Account for the
benefit of the Purchaser pursuant to SECTION 1.4(f) with respect to such
Portion of Investment; and
(iii) the lesser of (x) the amount of Collections then held on deposit
in the Liquidation Account for the benefit of the Purchaser pursuant to
SECTION 1.4(b)(iii) and (y) such Portion of Investment.
The Servicer shall deposit to its own account from Collections held on deposit
in the Liquidation Account pursuant to SECTION 1.4(b)(i) in respect of the
accrued Servicing Fee, an amount equal to such accrued Servicing Fee.
(d) Upon receipt of funds deposited into the Purchaser's Account pursuant
to SECTION 1.4(c) with respect to any Portion of Investment, the Agent shall
cause such funds to be distributed as follows:
(i) if such distribution occurs on a day that is not a Termination
Day, FIRST to the Purchaser in payment in full of all accrued Discount with
respect to such Portion of Investment, SECOND, to the Purchaser in payment
of accrued and unpaid Program Fees and Commitment Fees, and THIRD, if the
Servicer has set aside amounts in respect of the Servicing Fee pursuant to
SECTION 1.4(b)(i), to the Servicer (payable in arrears on the last day of
each calendar month) in payment in full of accrued Servicing Fees so set
aside with respect to such Portion of Investment; and
(ii) if such distribution occurs on a Termination Day, FIRST to the
Purchaser in payment in full of all accrued Discount with respect to such
Portion of Investment, SECOND to the Purchaser in payment of accrued and
unpaid Program
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Fees and Commitment Fees, THIRD, to the Purchaser in payment in full of
such Portion of Investment, FOURTH, if SDW or any of its Affiliates is
not the Servicer, to the Servicer in payment in full of all accrued
Servicing Fees with respect to such Portion of Investment, and FIFTH, if
the Investment and accrued Discount with respect to each Portion of
Investment have been reduced to zero, and all accrued Servicing Fees
payable to the Servicer (if other than the Seller) have been paid in
full, to the Purchaser, the Agent and any other Indemnified Party or
Affected Person in payment in full of any other amounts owed thereto by
the Seller hereunder and then to the Servicer (if the Servicer is the
Seller) in payment in full of all accrued Servicing Fees.
After the Investment, Program Fees, Discount and Servicing Fees with respect to
the Participation, and any other amounts payable by the Seller to the Purchaser,
the Agent or any other Indemnified Party or Affected Person hereunder, have been
paid in full, all additional Collections with respect to the Participation shall
be paid to the Seller for its own account.
(e) For the purposes of this SECTION 1.4:
(i) if on any day the Outstanding Balance of any Pool Receivable is
reduced or adjusted as a result of any defective, rejected, returned,
repossessed or foreclosed goods or services, or any discount, rebate or
other adjustment made by the Originator, Seller or Servicer, or any setoff
or dispute between the Seller, Originator or the Servicer and an Obligor,
the Seller shall be deemed to have received on such day a Collection of
such Pool Receivable in the amount of such reduction or adjustment;
(ii) if on any day any of the representations or warranties in
PARAGRAPHS (h) or (o) of EXHIBIT III is not true with respect to any Pool
Receivable, the Seller shall be deemed to have received on such day a
Collection of such Pool Receivable in full;
(iii) except as provided in PARAGRAPH (i) or (ii) of this
SECTION 1.4(e), or as otherwise required by applicable law or the relevant
Contract, all Collections received from an Obligor of any Receivable shall
be applied to the Receivables of such Obligor in the order of the age of
such Receivables, starting with the oldest such Receivable, unless such
Obligor designates in writing its payment for application to specific
Receivables; and
(iv) if and to the extent the Agent or the Purchaser shall be required
for any reason to pay over to an Obligor
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(or any trustee, receiver, custodian or similar official in any
Insolvency Proceeding) any amount received by it hereunder, such amount
shall be deemed not to have been so received but rather to have been
retained by the Seller and, accordingly, the Agent or the Purchaser, as
the case may be, shall have a claim against the Seller for such amount,
payable when and to the extent that any distribution from or on behalf
of such Obligor is made in respect thereof.
(f) If at any time the Seller shall wish to cause the reduction of a
Portion of Investment (but not to commence the liquidation, or reduction to
zero, of the entire Investment of the Participation), the Seller may do so as
follows:
(i) the Seller shall give the Agent at least five Business Days'
prior written notice thereof (including the amount of such proposed
reduction and the proposed date on which such reduction will commence),
(ii) on the proposed date of commencement of such reduction and on
each day thereafter, the Servicer shall cause Collections with respect to
such Portion of Investment not to be reinvested until the amount thereof
not so reinvested shall equal the desired amount of reduction, and
(iii) the Servicer shall hold such Collections in the Liquidation
Account for the benefit of the Purchaser, for payment to the Agent on the
last day of the current Settlement Period relating to such Portion of
Investment, and the applicable Portion of Investment shall be deemed
reduced in the amount to be paid to the Agent only when in fact finally so
paid;
provided that,
A. the amount of any such reduction shall be not less than
$1,000,000 and shall be an integral multiple of $500,000, and the entire
Investment of the Participation after giving effect to such reduction shall
be not less than $1,000,000,
B. the Seller shall choose a reduction amount, and the date of
commencement thereof, so that to the extent practicable such reduction
shall commence and conclude in the same Yield Period, and
C. if two or more Portions of Investment shall be outstanding at the
time of any proposed reduction, such proposed reduction shall be applied,
unless the Seller shall otherwise specify in the notice given pursuant to
SECTION
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1.4(f)(i), to the Portion of Investment with the shortest remaining
Yield Period.
Section 1.5. FEES. The Seller shall pay to the Agent certain fees in the
amounts and on the dates set forth in a letter dated April 26, 1996 between the
Seller and the Agent (as the same may be amended, amended and restated,
supplemented or modified, the "FEE LETTER") delivered pursuant to SECTION 1 of
EXHIBIT II, as such letter agreement may be amended, supplemented or otherwise
modified from time to time.
Section 1.6. PAYMENTS AND COMPUTATIONS, ETC. (a) All amounts to be paid or
deposited by the Seller or the Servicer hereunder shall be paid or deposited no
later than noon (Chicago time) on the day when due in same day funds to
the Purchaser's Account. All amounts received after noon (Chicago time) will be
deemed to have been received on the immediately succeeding Business Day.
(b) The Seller shall, to the extent permitted by law, pay interest on any
amount not paid or deposited by the Seller or Servicer when due hereunder, at an
interest rate equal to 2.0% PER ANNUM above the Base Rate, payable on demand.
(c) All computations of interest under SUBSECTION (b) above and all
computations of Discount, fees, and other amounts hereunder shall be made on the
basis of a year of 360 days for the actual number of days elapsed. Whenever any
payment or deposit to be made hereunder shall be due on a day other than a
Business Day, such payment or deposit shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
such payment or deposit.
Section 1.7. DIVIDING OR COMBINING PORTIONS OF THE INVESTMENT OF THE
PARTICIPATION. The Seller may, on the last day of any Yield Period, either (i)
divide the Investment of the Participation into two or more portions (each, a
"PORTION OF INVESTMENT") equal, in aggregate, to the Investment of the
Participation, PROVIDED that after giving effect to such division the amount of
each such Portion of Investment shall be not less than $10,000,000, or (ii)
combine any two or more Portions of Investment outstanding on such last day and
having Yield Periods ending on such last day into a single Portion of Investment
equal to the aggregate of the Investment of such Portions of Investment.
Section 1.8. INCREASED COSTS. (a) If the Agent, the Purchaser, any
Liquidity Bank, any other Program Support Provider or any of their respective
Affiliates (each an "AFFECTED PERSON") determines that the existence of or
compliance with (i) any law or regulation or any change therein or in the
interpretation or
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application thereof, in each case adopted, issued or occurring after the date
hereof or (ii) any request, guideline or directive from any central bank or
other Governmental Authority (whether or not having the force of law) issued
or occurring after the date of this Agreement affects or would affect the
amount of capital required or expected to be maintained by such Affected
Person and such Affected Person determines that the amount of such capital is
increased by or based upon the existence of any commitment to make purchases
of or otherwise to maintain the investment in Pool Receivables related to
this Agreement or any related liquidity facility or credit enhancement
facility and other commitments of the same type, then, upon demand by such
Affected Person (with a copy to the Agent), the Seller shall immediately pay
to the Agent, for the account of such Affected Person, from time to time as
specified by such Affected Person, additional amounts sufficient to
compensate such Affected Person in the light of such circumstances, to the
extent that such Affected Person reasonably determines such increase in
capital to be allocable to the existence of any of such commitments. A
certificate as to such amounts submitted to the Seller and the Agent by such
Affected Person shall be conclusive and binding for all purposes, absent
manifest error.
(b) If, due to either (i) the introduction of or any change (other than
any change by way of imposition or increase of reserve requirements referred to
in SECTION 1.9) in or in the interpretation of any law or regulation or (ii)
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there shall be
any increase in the cost to any Affected Person of agreeing to purchase or
purchasing, or maintaining the ownership of the Participation in respect of
which Discount is computed by reference to the Eurodollar Rate, then, upon
demand by such Affected Person, the Seller shall immediately pay to such
Affected Person, from time to time as specified, additional amounts sufficient
to compensate such Affected Person for such increased costs. A certificate as to
such amounts submitted to the Seller by such Affected Person shall be conclusive
and binding for all purposes, absent manifest error.
Section 1.9. ADDITIONAL DISCOUNT ON PORTIONS OF PARTICIPATION BEARING A
EURODOLLAR RATE. The Seller shall pay to any Affected Person, so long as such
Affected Person shall be required under regulations of the Board of Governors of
the Federal Reserve System to maintain reserves with respect to liabilities or
assets consisting of or including "Eurocurrency Liabilities", additional
Discount on the unpaid Investment of the applicable Portion of Investment during
each Yield Period in respect of which Discount is computed by reference to the
Eurodollar Rate, for such Yield Period, at a rate per annum equal at all times
during such Yield Period to the remainder obtained
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by subtracting (i) the Eurodollar Rate for such Yield Period from (ii) the
rate obtained by dividing such Eurodollar Rate referred to in clause (i)
above by that percentage equal to 100% minus the Eurodollar Rate Reserve
Percentage for such Yield Period, payable on each date on which Discount is
payable on the applicable Portion of Investment. Such additional Discount
shall be determined by the Affected Person and notified to the Seller through
the Agent within 30 days after any Discount payment is made with respect to
which such additional Discount is requested. A certificate as to such
additional Discount submitted to the Seller by the Affected Person shall be
conclusive and binding for all purposes, absent manifest error.
Section 1.10. REQUIREMENTS OF LAW. In the event that any Affected Person
determines that the existence of or compliance with (i) any law or regulation or
any change therein or in the interpretation or application thereof, in each case
adopted, issued or occurring after the date hereof or (ii) any request,
guideline or directive from any central bank or other Governmental Authority
(whether or not having the force of law) issued or occurring after the date of
this Agreement:
(i) does or shall subject such Affected Person to any tax of any kind
whatsoever with respect to this Agreement, any increase in the
Participation or in the amount of Investment relating thereto, or does or
shall change the basis of taxation of payments to such Affected Person on
account of Collections, Discount or any other amounts payable hereunder
(excluding taxes imposed on the overall net income of such Affected Person,
and franchise taxes imposed on such Affected Person, by the jurisdiction
under the laws of which such Affected Person is organized or a political
subdivision thereof);
(ii) does or shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held
by, or deposits or other liabilities in or for the account of, purchases,
advances or loans by, or other credit extended by, or any other acquisition
of funds by, any office of such Affected Person which are not otherwise
included in the determination of the Eurodollar Rate or the Base Rate
hereunder; or
(iii) does or shall impose on such Affected Person any other
condition;
and the result of any of the foregoing is (x) to increase the cost to such
Affected Person of acting as Agent, or of agreeing to purchase or purchasing or
maintaining the ownership of undivided ownership interests with regard to the
Participation (or interests therein) or any Portion of Investment in respect of
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which Discount is computed by reference to the Eurodollar Rate or the Base Rate
or (y) to reduce any amount receivable hereunder (whether directly or
indirectly) funded or maintained by reference to the Eurodollar Rate or the Base
Rate, then, in any such case, upon demand by such Affected Person the Seller
shall pay such Affected Person any additional amounts necessary to compensate
such Affected Person for such additional cost or reduced amount receivable. All
such amounts shall be payable as incurred. A certificate from such Affected
Person to the Seller certifying, in reasonably specific detail, the basis for,
calculation of, and amount of such additional costs or reduced amount receivable
shall be conclusive in the absence of manifest error; PROVIDED, however, that no
Affected Person shall be required to disclose any confidential or tax planning
information in any such certificate.
Section 1.11. INABILITY TO DETERMINE EURODOLLAR RATE. In the event that
the Agent shall have determined prior to the first day of any Yield Period
(which determination shall be conclusive and binding upon the parties hereto) by
reason of circumstances affecting the interbank Eurodollar market, either (a)
dollar deposits in the relevant amounts and for the relevant Yield Period are
not available, (b) adequate and reasonable means do not exist for ascertaining
the Eurodollar Rate for such Yield Period or (c) the Eurodollar Rate determined
pursuant hereto does not accurately reflect the cost to the Purchaser (as
conclusively determined by the Agent) of maintaining any Portion of Investment
during such Yield Period, the Agent shall promptly give telephonic notice of
such determination, confirmed in writing, to the Seller prior to the first day
of such Yield Period. Upon delivery of such notice (a) no Portion of Investment
shall be funded thereafter at the Bank Rate determined by reference to the
Eurodollar Rate, unless and until the Agent shall have given notice to the
Seller that the circumstances giving rise to such determination no longer exist,
and (b) with respect to any outstanding Portions of Investment then funded at
the Bank Rate determined by reference to the Eurodollar Rate, such Bank Rate
shall automatically be converted to the Bank Rate determined by reference to the
Base Rate at the respective last days of the then-current Yield Periods relating
to such Portions of Investment.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES; COVENANTS;
TERMINATION EVENTS
Section 2.1. REPRESENTATIONS AND WARRANTIES; COVENANTS. The Seller hereby
makes the representations and warranties, and
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hereby agrees to perform and observe the covenants, set forth in EXHIBITS
III and IV, respectively hereto.
Section 2.2. TERMINATION EVENTS. If any of the Termination Events set
forth in EXHIBIT V hereto shall occur, the Agent may, by notice to the Seller,
declare the Facility Termination Date to have occurred (in which case the
Facility Termination Date shall be deemed to have occurred); PROVIDED that,
automatically upon the occurrence of any event (without any requirement for the
passage of time or the giving of notice) described in SUBSECTION (g), (i) or (k)
of EXHIBIT V, the Facility Termination Date shall occur. Upon any such
declaration, occurrence or deemed occurrence of the Facility Termination Date,
the Purchaser and the Agent shall have, in addition to the rights and remedies
which they may have under this Agreement, all other rights and remedies provided
after default under the UCC and under other applicable law, which rights and
remedies shall be cumulative.
ARTICLE III.
INDEMNIFICATION
Section 3.1. INDEMNITIES BY THE SELLER. Without limiting any other rights
that the Agent or the Purchaser or any of their respective Affiliates,
employees, agents, successors, transferees or assigns (each, an "INDEMNIFIED
PARTY") may have hereunder or under applicable law, the Seller hereby agrees to
indemnify each Indemnified Party from and against any and all claims, damages,
expenses, losses and liabilities (including Attorney Costs) (all of the
foregoing being collectively referred to as "INDEMNIFIED AMOUNTS") arising out
of or resulting from this Agreement or other Transaction Documents (whether
directly or indirectly) or the use of proceeds of purchases or reinvestments or
the ownership of the Participation, or any interest therein, or in respect of
any Receivable or any Contract, excluding, however, (a) Indemnified Amounts to
the extent resulting from gross negligence or willful misconduct on the part of
such Indemnified Party, (b) recourse (except as otherwise specifically provided
in this Agreement) for uncollectible Receivables to be written off consistent
with the Credit and Collection Policy, or (c) any overall net income taxes or
franchise taxes imposed on such Indemnified Party by the jurisdiction under the
laws of which such Indemnified Party is organized or any political subdivision
thereof. Without limiting or being limited by the foregoing, and subject to the
exclusions set forth in the preceding sentence, the Seller shall pay on demand
to each Indemnified Party any and all amounts necessary to indemnify such
Indemnified Party from and against any and all Indemnified Amounts relating to
or resulting from any of the following:
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(i) the failure of any Receivable included in the calculation of the
Net Receivables Pool Balance as an Eligible Receivable to be an Eligible
Receivable, the failure of any information contained in a Servicer Report
to be true and correct, or the failure of any other information provided to
the Purchaser or the Agent with respect to Receivables or this Agreement to
be true and correct;
(ii) the failure of any representation or warranty or statement made
or deemed made by the Seller (or any of its officers) under or in
connection with this Agreement to have been true and correct in all
respects when made;
(iii) the failure by the Seller to comply with any applicable law,
rule or regulation with respect to any Pool Receivable or the related
Contract; or the failure of any Pool Receivable or the related Contract to
conform to any such applicable law, rule or regulation;
(iv) the failure to vest in the Purchaser a valid and enforceable (A)
perfected undivided percentage ownership interest, to the extent of the
Participation, in the Receivables in, or purporting to be in, the
Receivables Pool and the Related Security and Collections with respect
thereto and (B) first priority perfected security interest in the items
described in SECTION 1.2(d), in each case, free and clear of any Adverse
Claim;
(v) the failure to have filed, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to any
Receivables in, or purporting to be in, the Receivables Pool and the
Related Security and Collections in respect thereof, whether at the time of
any purchase or reinvestment or at any subsequent time;
(vi) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of the Obligor to the payment of any Receivable
in, or purporting to be in, the Receivables Pool (including, without
limitation, a defense based on such Receivable or the related Contract not
being a legal, valid and binding obligation of such Obligor enforceable
against it in accordance with its terms), or any other claim resulting from
the sale of the goods or services related to such Receivable or the
furnishing or failure to furnish such goods or services or relating to
collection activities with respect to such Receivable (if such collection
activities were performed by the Seller or any of its Affiliates acting as
Servicer or by any agent or
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independent contractor retained by the Seller or any of its
Affiliates);
(vii) any failure of the Seller to perform its duties or obligations
in accordance with the provisions hereof or to perform its duties or
obligations under the Contracts;
(viii) any products liability or other claim, investigation,
litigation or proceeding arising out of or in connection with merchandise,
insurance or services which are the subject of any Contract;
(ix) the commingling of Collections of Pool Receivables at any time
with other funds;
(x) any investigation, litigation or proceeding related to this
Agreement or the use of proceeds of purchases or reinvestments or the
ownership of the Participation or in respect of any Receivable, Related
Security or Contract;
(xi) any reduction in Investment as a result of the distribution of
Collections pursuant to SECTION 1.4(d), in the event that all or a portion
of such distributions shall thereafter be rescinded or otherwise must be
returned for any reason; or
(xii) any tax or governmental fee or charge (other than any tax upon
or measured by net income or gross receipts), all interest and penalties
thereon or with respect thereto, and all reasonable out-of-pocket costs and
expenses, including the reasonable fees and expenses of counsel in
defending against the same, which may arise by reason of the purchase or
ownership of the Participation, or other interests in the Receivables Pool
or in any Related Security or Contract.
ARTICLE IV.
ADMINISTRATION AND COLLECTIONS
Section 4.1. APPOINTMENT OF SERVICER. (a) The servicing, administering and
collection of the Pool Receivables shall be conducted by the Person so
designated from time to time as Servicer in accordance with this SECTION 4.1.
Until the Agent gives notice to the Seller and the Servicer (in accordance with
this SECTION 4.1) of the designation of a new Servicer, SDW is hereby designated
as, and hereby agrees to perform the duties and obligations of, the Servicer
pursuant to the terms hereof. Upon the occurrence of a Termination Event, the
Agent may designate as
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Servicer any Person (including itself) to succeed the Servicer or any
successor Servicer, on the condition in each case that any such Person so
designated shall agree to perform the duties and obligations of the Servicer
pursuant to the terms hereof.
(b) Upon the designation of a successor Servicer as set forth in SECTION
4.1(a) hereof, the Servicer agrees that it will terminate its activities as
Servicer hereunder in a manner which the Agent determines will facilitate the
transition of the performance of such activities to the new Servicer, and the
Servicer shall cooperate with and assist such new Servicer. Such cooperation
shall include (without limitation) access to and transfer of records and use by
the new Servicer of all licenses, hardware or software necessary or desirable to
collect the Pool Receivables and the Related Security.
(c) The Servicer acknowledges that, in making their decision to execute
and deliver this Agreement, the Agent and the Purchaser have relied on the
Servicer's agreement to act as Servicer hereunder. Accordingly, the Servicer
agrees that it will not voluntarily resign as Servicer.
(d) The Servicer may delegate its duties and obligations hereunder to any
subservicer (each, a "SUB-SERVICER"); provided that, in each such delegation,
(i) such Sub-Servicer shall agree in writing to perform the duties and
obligations of the Servicer pursuant to the terms hereof, (ii) the Servicer
shall remain primarily liable to the Purchaser and the Agent for the performance
of the duties and obligations so delegated, (iii) the Seller, the Agent and the
Purchaser shall have the right to look solely to the Servicer for performance
and (iv) the terms of any agreement with any Sub-Servicer shall provide that the
Agent may terminate such agreement upon the termination of the Servicer
hereunder by giving notice of its desire to terminate such agreement to the
Servicer (and the Servicer shall provide appropriate notice to such Sub-
Servicer).
SECTION 4.2. DUTIES OF SERVICER. (a) The Servicer shall take or cause to
be taken all such action as may be necessary or advisable to collect each Pool
Receivable from time to time, all in accordance with this Agreement and all
applicable laws, rules and regulations, with reasonable care and diligence, and
in accordance with the Credit and Collection Policy. The Servicer shall set
aside for the accounts of the Seller and the Purchaser the amount of the
Collections to which each is entitled in accordance with ARTICLE II hereto. The
Servicer may, in accordance with the Credit and Collection Policy, extend the
maturity of any Pool Receivable (but not beyond thirty (30) days) and extend the
maturity or adjust the Outstanding Balance of any Defaulted Receivable as the
Servicer may determine to be appropriate to maximize Collections thereof;
PROVIDED, HOWEVER,
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that (i) such extension or adjustment shall not alter the status of such Pool
Receivable as a Delinquent Receivable or a Defaulted Receivable or limit the
rights of the Purchaser or the Agent under this Agreement and (ii) if a
Termination Event has occurred and SDW or any of its Affiliates is still
serving as Servicer, the Seller may make such extension or adjustment only
upon the prior written approval of the Agent. The Seller shall deliver to
the Servicer and the Servicer shall hold for the benefit of the Seller and
the Agent (for the benefit of the Purchaser and individually) in accordance
with their respective interests, all records and documents (including without
limitation computer tapes or disks) with respect to each Pool Receivable.
Notwithstanding anything to the contrary contained herein, the Agent may
direct the Servicer to commence or settle any legal action to enforce
collection of any Pool Receivable or to foreclose upon or repossess any
Related Security; PROVIDED, HOWEVER, that no such direction may be given
unless a Termination Event has occurred.
(b) The Servicer's obligations hereunder shall terminate on the Final
Payout Date.
After such termination, the Servicer shall promptly deliver to the Seller
all books, records and related materials that the Seller previously provided to
the Servicer in connection with this Agreement.
Section 4.3. ESTABLISHMENT AND USE OF CERTAIN ACCOUNTS.
(a) LOCK-BOX ACCOUNTS. Prior to the initial purchase hereunder, the
Seller shall enter into Lock-Box Agreements establishing the Lock-Box Accounts
listed on SCHEDULE II with all of the Lock-Box Banks, and deliver original
counterparts thereof to the Agent.
(b) COLLECTION ACCOUNT. The Servicer agrees to establish the Collection
Account on or before the date of the first purchase hereunder. The Collection
Account shall be used to accept the transfer of Collections of Pool Receivables
from the Lock-Box Accounts pursuant to SECTION 1.4(b) and for such other
purposes described in the Transaction Documents.
(c) LIQUIDATION ACCOUNT. The Servicer agrees to establish the Liquidation
Account on or before the date of the first purchase hereunder. The Liquidation
Account shall be used to receive transfers of certain amounts of the Purchaser's
share of Collections of Pool Receivables prior to the Settlement Dates and for
such other purposes described in the Transaction Documents. No funds other than
those transferred in accordance with SECTION 1.4 shall be intentionally
transferred into the Liquidation Account.
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(d) PERMITTED INVESTMENTS. Any amounts in the Liquidation Account or the
Collection Account, as the case may be, may be invested by the Liquidation
Account Bank or Collection Account Bank, respectively, at Servicer's direction,
in Permitted Investments, so long as Purchaser's interest in such Permitted
Investments is perfected and such Permitted Investments are subject to no
Adverse Claims other than those of the Purchaser provided hereunder.
(e) CONTROL OF LOCK-BOX ACCOUNTS. The Agent may at any time give notice
to each Lock-Box Bank, the Collection Account Bank and the Liquidation Account
Bank that the Agent is exercising its rights under the Lock-Box Agreements, the
Collection Account Agreement and the Liquidation Account Agreement to do any or
all of the following: (i) to have the exclusive ownership and control of the
Lock-Box Accounts, the Collection Account and the Liquidation Account
transferred to the Agent and to exercise exclusive dominion and control over the
funds deposited therein, (ii) to have the proceeds that are sent to the
respective Lock-Box Accounts be redirected pursuant to its instructions rather
than deposited in the applicable Lock-Box Account, and (iii) to take any or all
other actions permitted under the applicable Lock-Box Agreement, the Collection
Account Agreement and the Liquidation Account Agreement. The Seller hereby
agrees that if the Agent at any time takes any action set forth in the preceding
sentence, the Agent shall have exclusive control of the proceeds (including
Collections) of all Pool Receivables and the Seller hereby further agrees to
take any other action that the Agent may reasonably request to transfer such
control. Any proceeds of Pool Receivables received by the Seller, as Servicer
or otherwise, thereafter shall be sent immediately to the Agent. The parties
hereto hereby acknowledge that if at any time the Agent takes control of any
Lock-Box Account, the Collection Account and the Liquidation Account, the Agent
shall not have any rights to the funds therein in excess of the unpaid amounts
due to the Agent, the Purchaser or any other Person hereunder.
Section 4.4. ENFORCEMENT RIGHTS. (a) At any time following the occurrence
of a Termination Event:
(i) the Agent may direct the Obligors that payment of all amounts
payable under any Pool Receivable be made directly to the Agent or its
designee;
(ii) the Agent may instruct the Seller or the Servicer to give notice
of the Purchaser's interest in Pool Receivables to each Obligor, which
notice shall direct that payments be made directly to the Agent or its
designee, and upon such instruction from the Agent the Seller or the
Servicer, as applicable, shall give such notice at the
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expense of the Seller; provided, that if the Seller or the Servicer
fails to so notify each Obligor, the Agent may so notify the Obligors;
and
(iii) the Agent may request the Seller or the Servicer to, and upon
such request the Seller or the Servicer, as applicable, shall, (A) assemble
all of the records necessary or desirable to collect the Pool Receivables
and the Related Security, and transfer or license to any new Servicer the
use of all software necessary or desirable to collect the Pool Receivables
and the Related Security, and make the same available to the Agent or its
designee at a place selected by the Agent, and (B) segregate all cash,
checks and other instruments received by it from time to time constituting
Collections with respect to the Pool Receivables in a manner acceptable to
the Agent and, promptly upon receipt, remit all such cash, checks and
instruments, duly endorsed or with duly executed instruments of transfer,
to the Agent or its designee.
(b) The Seller hereby authorizes the Agent, and irrevocably appoints the
Agent as its attorney-in-fact with full power of substitution and with full
authority in the place and stead of the Seller, which appointment is coupled
with an interest, to take any and all steps in the name of the Seller and on
behalf of the Seller necessary or desirable, in the determination of the Agent,
to collect any and all amounts or portions thereof due under any and all Pool
Receivables or Related Security, including, without limitation, endorsing the
name of the Seller on checks and other instruments representing Collections and
enforcing such Pool Receivables, Related Security and the related Contracts.
Notwithstanding anything to the contrary contained in this SUBSECTION (b), none
of the powers conferred upon such attorney-in-fact pursuant to the immediately
preceding sentence shall subject such attorney-in-fact to any liability if any
action taken by it shall prove to be inadequate or invalid, nor shall they
confer any obligations upon such attorney-in-fact in any manner whatsoever.
Section 4.5. RESPONSIBILITIES OF THE SELLER. Anything herein to the
contrary notwithstanding, the Seller shall (i) perform all of its obligations,
if any, under the Contracts related to the Pool Receivables to the same extent
as if interests in such Pool Receivables had not been transferred hereunder, and
the exercise by the Agent or the Purchaser of its rights hereunder shall not
relieve the Seller from such obligations and (ii) pay when due any taxes,
including, without limitation, any sales taxes payable in connection with the
Pool Receivables and their creation and satisfaction. The Agent and the
Purchaser shall not have any obligation or liability with respect to any Pool
Receivable, any Related Security or any
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related Contract, nor shall any of them be obligated to perform any of the
obligations of the Seller under any of the foregoing.
Section 4.6. SERVICING FEE. The Servicer shall be paid a fee, through
distributions contemplated by SECTION 1.4(d), equal to 0.50% PER ANNUM of the
average outstanding Investment.
ARTICLE V.
MISCELLANEOUS
SECTION 5.1. AMENDMENTS, ETC. No amendment or waiver of any provision of
this Agreement or consent to any departure by the Seller or Servicer therefrom
shall be effective unless in a writing signed by the Agent, and, in the case of
any amendment, by the Seller and the Servicer and then such amendment, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. No failure on the part of the Purchaser or Agent to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right.
Section 5.2. NOTICES, ETC. All notices and other communications hereunder
shall, unless otherwise stated herein, be in writing (which shall include
facsimile communication) and sent or delivered, to each party hereto, at its
address set forth under its name on the signature pages hereof or at such other
address as shall be designated by such party in a written notice to the other
parties hereto. Notices and communications by facsimile shall be effective when
sent (and shall be followed by hard copy sent by first class mail), and notices
and communications sent by other means shall be effective when received.
Section 5.3. ASSIGNABILITY. (a) This Agreement and the Purchaser's rights
and obligations herein (including ownership of the Participation) shall be
assignable, in whole or in part, by the Purchaser and its successors and assigns
with the prior written consent of the Seller; PROVIDED, HOWEVER, that such
consent shall not be unreasonably withheld; and PROVIDED, FURTHER, that no such
consent shall be required if the assignment is made to any Affiliate of the
Purchaser, any Liquidity Bank or other Program Support Provider or any Person
which is (i) in the business of issuing Notes (including, without limitation,
PAR) and (ii) associated with or administered by the Agent or any Affiliate of
the Purchaser (each such Person, a "NOTE ISSUER"). Each assignor may, in
connection with the assignment, disclose to the applicable assignee any
information relating to the Seller or
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the Pool Receivables furnished to such assignor by or on behalf of the
Seller, the Purchaser or the Agent.
The parties hereto anticipate that Bank of Montreal may assign all of its
rights and obligations under this Agreement and the other Transaction Documents
to Pooled Accounts Receivable Capital Corporation, a Delaware corporation
("PAR"). The Seller to the extent required hereunder hereby consents to such
assignment, and agrees that upon receipt by the Seller and the Servicer of
notice of such assignment by Bank of Montreal, (i) all references herein and in
the other Transaction Documents to the "Purchaser" shall be deemed to refer to
PAR and (ii) all references herein and in the other Transaction Documents to the
"Agent" shall refer to ▇▇▇▇▇▇▇ ▇▇▇▇▇, as agent for PAR. The Seller, the
Servicer and the Purchaser hereby agree to execute and deliver such documents
and instruments, including UCC financing statements, as the Agent may reasonably
request to evidence such assignment.
Upon the assignment by the Purchaser in accordance with this SECTION 5.3,
the assignee receiving such assignment shall have all of the rights of the
Purchaser with respect to the Transaction Documents and the Investment (or such
portion thereof as has been assigned).
(b) The Purchaser may at any time grant to one or more banks or other
institutions (each a "LIQUIDITY BANK") party to the Liquidity Agreement or to
any other Program Support Provider participating interests or security interests
in the Participation. In the event of any such grant by the Purchaser of a
participating interest to a Liquidity Bank or other Program Support Provider,
the Purchaser shall remain responsible for the performance of its obligations
hereunder. The Seller agrees that each Liquidity Bank or other Program Support
Provider shall be entitled to the benefits of SECTIONS 1.8, 1.9 and 1.10.
(c) This Agreement and the rights and obligations of the Agent hereunder
shall be assignable, in whole or in part, by the Agent and its successors and
assigns; PROVIDED, HOWEVER, that if such assignment is to any Person who is not
an Affiliate of the Agent, the Agent must receive the prior written consent of
the Seller (which consent shall not be unreasonably withheld).
(d) Except as provided in SECTION 4.1(d), neither the Seller nor the
Servicer may assign its rights or delegate its obligations hereunder or any
interest herein without the prior written consent of the Agent.
(e) Without limiting any other rights that may be available under
applicable law, the rights of the Purchaser may be enforced through it or by its
agents.
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Section 5.4. COSTS, EXPENSES AND TAXES. (a) In addition to the rights of
indemnification granted under SECTION 3.1 hereof, the Seller agrees to pay on
demand all reasonable costs and expenses in connection with the preparation,
execution, delivery and administration (including periodic auditing of Pool
Receivables) of this Agreement, the Liquidity Agreement, and the other documents
and agreements to be delivered hereunder, including all reasonable costs and
expenses relating to the amending, amending and restating, modifying or
supplementing of this Agreement, the Liquidity Agreement and the other documents
and agreements to be delivered hereunder and the waiving of any provisions
thereof, and including in all cases, without limitation, Attorney Costs for the
Agent, the Purchaser and their respective Affiliates and agents with respect
thereto and with respect to advising the Agent, the Purchaser and their
respective Affiliates and agents as to their rights and remedies under this
Agreement and the other Transaction Documents, and all reasonable costs and
expenses, if any (including Attorney Costs), of the Agent, the Purchaser and
their respective Affiliates and agents, in connection with the enforcement of
this Agreement and the other Transaction Documents.
(b) In addition, the Seller shall pay on demand any and all stamp and
other taxes and fees payable in connection with the execution, delivery, filing
and recording of this Agreement or the other documents or agreements to be
delivered hereunder, and agrees to save each Indemnified Party harmless from and
against any liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes and fees.
SECTION 5.5. NO PROCEEDINGS; LIMITATION ON PAYMENTS. Each of the Seller,
the Servicer, the Agent, each assignee of the Participation or any interest
therein, and each Person which enters into a commitment to purchase the
Participation or interests therein, hereby covenants and agrees that it will not
institute against, or join any other Person in instituting against, any Note
Issuer, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding, or other proceeding under any federal or state bankruptcy or similar
law, for one year and one day after the latest maturing Note issued by any such
Note Issuer is paid in full.
Section 5.6. CONFIDENTIALITY. Unless otherwise required by applicable
law, the Seller agrees to maintain the confidentiality of this Agreement and the
other Transaction Documents (and all drafts thereof) in communications with
third parties and otherwise; PROVIDED that this Agreement may be disclosed to
(a) third parties to the extent such disclosure is made pursuant to a written
agreement of confidentiality in form and substance reasonably satisfactory to
the Agent, (b) the Seller's legal counsel and auditors if they agree to hold it
confidential and
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(c) to the parties to the Credit and Guarantee Agreement; PROVIDED that only
the terms and conditions of this agreement may be revealed to such parties
and not the details of any fees, pricing or interest rates.
Section 5.7. GOVERNING LAW AND JURISDICTION. (a) THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE COMMONWEALTH OF
MASSACHUSETTS (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES
THEREOF), EXCEPT TO THE EXTENT THAT THE PERFECTION (OR THE EFFECT OF PERFECTION
OR NON-PERFECTION) OF THE INTERESTS OF THE PURCHASER IN THE POOL RECEIVABLES
AND THE OTHER ITEMS DESCRIBED IN SECTION 1.2(d) IS GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE COMMONWEALTH OF MASSACHUSETTS.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE
BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR OF THE UNITED
STATES FOR THE FEDERAL DISTRICT OF MASSACHUSETTS, AND BY EXECUTION AND DELIVERY
OF THIS AGREEMENT, EACH OF THE PURCHASER, THE SELLER, THE SERVICER AND THE AGENT
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE PURCHASER, THE SELLER, THE SERVICER
AND THE AGENT IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE PURCHASER, THE SELLER, THE
SERVICER AND THE AGENT EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY MASSACHUSETTS
LAW.
Section 5.8. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which when so executed shall be deemed to be
an original and all of which when taken together shall constitute one and the
same agreement.
Section 5.9. SURVIVAL OF TERMINATION. The provisions of SECTIONS 1.8,
1.9, 1.10, 3.1, 5.4, 5.5, 5.6, 5.7 and 5.10 shall survive any termination of
this Agreement.
Section 5.10. WAIVER OF JURY TRIAL. THE PURCHASER, THE SELLER, THE
SERVICER AND THE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER
PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR
OTHERWISE. THE PURCHASER, THE SELLER, THE SERVICER AND THE AGENT EACH AGREE
THAT ANY SUCH CLAIM
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OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, EACH OF THE PARTIES HERETO FURTHER AGREES THAT ITS
RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS
TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY
PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
Section 5.11. ENTIRE AGREEMENT. This Agreement embodies the entire
agreement and understanding between the Purchaser, the Seller, the Servicer and
the Agent, and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof, except for any prior arrangements made with respect
to the payment by the Purchaser of (or any indemnification for) any fees, costs
or expenses payable to or incurred (or to be incurred) by or on behalf of the
Seller, the Servicer and the Agent.
Section 5.12. HEADINGS. The captions and headings of this Agreement and
in any Exhibit hereto are for convenience of reference only and shall not affect
the interpretation hereof or thereof.
Section 5.13. PURCHASER'S LIABILITIES. The obligations of the Purchaser
under this Agreement are solely the corporate obligations of the Purchaser. No
recourse shall be had for any obligation or claim arising out of or based upon
this Agreement against any stockholder, employee, officer, director or
incorporator of the Purchaser; and PROVIDED, HOWEVER, that this SECTION 5.13
shall not relieve any such Person of any liability it might otherwise have for
its own gross negligence or willful misconduct. The agreements provided in this
SECTION 5.13 shall survive termination of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
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S.D. ▇▇▇▇▇▇ FINANCE CO., as Seller
By:_____________________________________
Name:
Title:
S.D. ▇▇▇▇▇▇ FINANCE CO.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: _______________________
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S.D. ▇▇▇▇▇▇ COMPANY, as Servicer
By:_____________________________________
Name:
Title:
S.D. ▇▇▇▇▇▇ COMPANY
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: _______________________
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ SECURITIES INC., as Agent
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
▇▇▇▇▇▇▇ ▇▇▇▇▇ SECURITIES INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
BANK OF MONTREAL, as Purchaser
By:_____________________________________
Name:
Title:
Bank of Montreal
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT I
DEFINITIONS
As used in the Agreement (including its Exhibits), the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined). Unless otherwise
indicated, all Section, Annex, Exhibit and Schedule references in this Exhibit
are to Sections of and Annexes, Exhibits and Schedules to the Agreement.
"ADVERSE CLAIM" means a lien, security interest or other charge or
encumbrance, or any other type of preferential arrangement, it being understood
that a lien, security interest or other charge or encumbrance, or any other type
of preferential arrangement, in favor of the Purchaser shall not constitute an
Adverse Claim.
"AFFECTED PERSON" has the meaning set forth in Section 1.8.
"AFFILIATE" means, as to any Person, any other Person that, directly
or indirectly, is in control of, is controlled by or is under common control
with such Person or is a director or officer of such Person, except that with
respect to the Purchaser, Affiliate shall mean the holder(s) of its capital
stock.
"AGENT" has the meaning set forth in the preamble to the Agreement.
"APPLICABLE MARGIN" has the meaning set forth in the Fee Letter.
"ATTORNEY COSTS" means and includes all fees and disbursements of any
law firm or other external counsel, the allocated cost of internal legal
services and all disbursements of internal counsel, to be paid as set forth in
the Fee Letter.
"AVERAGE MATURITY" means at any time that period of days equal to the
average days sales outstanding of the Pool Receivables calculated by the
Servicer in the then most recent Servicer Report; PROVIDED, that if the Agent
shall disagree with any such calculation, the Agent may recalculate such Average
Maturity, and any such recalculation shall be prima facie evidence of such
Average Maturity.
"BANK OF MONTREAL" means Bank of Montreal, a Canadian chartered bank.
I-1
"BANK RATE" for any Yield Period for any Portion of Investment of the
Participation means an interest rate PER ANNUM equal to the Applicable Margin
above the Eurodollar Rate for such Yield Period; provided, further, that in the
case of
(i) any Yield Period on or prior to the first day of which the
Agent shall have been notified by a Liquidity Bank or the Purchaser
that the introduction of or any change in or in the interpretation of
any law or regulation makes it unlawful, or any central bank or other
Governmental Authority asserts that it is unlawful, for such Liquidity
Bank or the Purchaser to fund any Portion of Investment (based on the
Eurodollar Rate) set forth above (and such Liquidity Bank or the
Purchaser, as applicable, shall not have subsequently notified the
Agent that such circumstances no longer exist),
(ii) any Yield Period of one to (and including) 13 days,
(iii) any Yield Period as to which the Agent does not receive
notice, by no later than 12:00 noon (Chicago time) on (w) the second
Business Day preceding the first day of such Yield Period that the
Seller desires that the related Portion of Investment be funded at the
CP Rate, (x) the third Business Day preceding the first day of such
Yield Period that the Seller desires that the related Portion of
Investment be funded at the Bank Rate, or (y) the Seller has given the
notice contemplated by clause (w) of this CLAUSE (III) and the Agent
shall have notified the Seller that funding the related Portion of
Investment at the CP Rate is unacceptable to the Purchaser, or
(iv) any Yield Period relating to a Portion of Investment which
is less than $5,000,000,
the "BANK RATE" for each such Yield Period shall be an interest rate per annum
equal to the Base Rate in effect on each day of such Yield Period.
Notwithstanding the foregoing, the "BANK RATE" for each day in a Yield Period
occurring during the continuance of a Termination Event shall be an interest
rate equal to 2% PER ANNUM above the Base Rate in effect on such day.
"BANKRUPTCY CODE" means the United States Bankruptcy Reform Act of
1978 (11 U.S.C. Section 101, ET SEQ.), as amended from time to time.
"BASE RATE" means for any day, a fluctuating interest rate per annum
as shall be in effect from time to time, which
I-2
rate shall be at all times equal to the rate of interest most recently
announced by Bank of Montreal at its branch in Chicago, Illinois as its prime
commercial rate for United States loans made in the United States.
"BUSINESS DAY" means any day on which (i) both (A) the Agent at its
branch office in Chicago, Illinois is open for business and (B) commercial banks
in New York City are not authorized or required to be closed for business, and
(ii) if this definition of "Business Day" is utilized in connection with the
Eurodollar Rate, dealings are carried out in the London interbank market.
"CHANGE IN CONTROL" means
(a) the failure of Sappi Limited and its wholly owned subsidiaries to
beneficially own at least 51% (or 40% after an initial public offering or
subsequent public offering of common stock) of the capital stock of S.D.
▇▇▇▇▇▇ Holdings or to have the right to appoint a majority of the Board of
Directors; or
(b) the failure of S.D. ▇▇▇▇▇▇ Holdings to own all of the capital
stock of S.D. ▇▇▇▇▇▇ Company (other than the senior preferred stock); or
(c) the failure of S.D. ▇▇▇▇▇▇ Company to own at least 100% of the
outstanding shares of voting stock of the Seller, subject to the pledge to
Chemical Bank, as agent, under the Credit and Guarantee Agreement.
"COLLECTION ACCOUNT" means that certain bank account numbered ▇▇▇-▇▇▇-▇
maintained at ▇▇▇▇▇▇ Trust and Savings Bank in Chicago, Illinois which is (i)
identified as the "S.D. ▇▇▇▇▇▇ FINANCE CO. COLLECTION ACCOUNT," (ii) in the
Seller's name, (iii) pledged, on a first-priority basis, to the Purchaser
pursuant to SECTION 1.2(D), and (iv) is governed by the Collection Account
Agreement.
"COLLECTION ACCOUNT AGREEMENT" means a letter agreement, in the form
of EXHIBIT VI to the Agreement, among the Seller, the Agent and the Collection
Account Bank, as the same may be amended, supplemented, amended and restated, or
otherwise modified from time to time in accordance with the Agreement.
I-3
"COLLECTION ACCOUNT BANK" means the bank holding the Collection
Account.
"COLLECTION DELAY PERIOD" means 0.5 times the Average Maturity or such
other number of days as the Agent may from time to time select upon three
Business Days' notice to the Seller.
"COLLECTIONS" means, with respect to any Pool Receivable, (a) all
funds which are received by the Seller, an Originator or the Servicer in payment
of any amounts owed in respect of such Receivable (including, without
limitation, purchase price, finance charges, interest and all other charges), or
applied to amounts owed in respect of such Receivable (including, without
limitation, insurance payments and net proceeds of the sale or other disposition
of repossessed goods or other collateral or property of the related Obligor or
any other Person directly or indirectly liable for the payment of such Pool
Receivable and available to be applied thereon), (b) all Collections deemed to
have been received pursuant to SECTION 1.4(e) and (c) all other proceeds of such
Receivable.
"COMMITMENT FEE" has the meaning set forth in the Fee Letter.
"COMPANY NOTE" has the meaning set forth in Section 3.2 of the
Purchase and Contribution Agreement.
"CONCENTRATION PERCENTAGE" means, for any Obligor, the percentage
equal to (a) the aggregate Outstanding Balances of all Eligible Receivables of
such Obligor DIVIDED BY (b) the aggregate Outstanding Balances of all Eligible
Receivables then in the Receivables Pool.
"CONTRACT" means, with respect to any Receivable, any and all
contracts, understandings, instruments, agreements, invoices, notes, or other
writings pursuant to which such Receivable arises or which evidences such
Receivable or under which an Obligor becomes or is obligated to make payment in
respect of such Receivable.
"CP RATE" for any Yield Period for any Portion of Investment of the
Participation means, to the extent the Purchaser funds such Portion of
Investment for such Yield Period by issuing Notes, a rate PER ANNUM equal to the
sum of (i) the rate (or if more than one rate, the weighted average of the
rates) at which Notes of the Purchaser having a term equal to such Yield Period
and to be issued to fund such Portion of Investment may be sold by any placement
agent or commercial paper dealer selected by the Agent on behalf of the
Purchaser, as agreed between each such agent or dealer and the Agent and
notified by the Agent to the Servicer; PROVIDED, that if the rate (or rates) as
agreed between any such agent or dealer and the Agent with regard to any Yield
Period for such Portion of Investment is a discount rate (or rates), then such
rate shall be
I-4
the rate (or if more than one rate, the weighted average of the rates)
resulting from converting such discount rate (or rates) to an
interest-bearing equivalent rate per annum, PLUS (ii) the commissions and
charges charged by such placement agent or commercial paper dealer with
respect to such Notes, expressed as a percentage of such face amount and
converted to an interest-bearing equivalent rate PER ANNUM.
"CREDIT AND COLLECTION POLICY" means those receivables credit and
collection policies and practices of the Servicer in effect on the date of the
Agreement and described in SCHEDULE I hereto, as modified in compliance with the
Agreement.
"CREDIT AND GUARANTEE AGREEMENT" means that certain Amended and
Restated Credit and Guarantee Agreement, dated as of April 26, 1996, among SDW
Holdings Corporation, S.D. ▇▇▇▇▇▇ Company, Chemical Bank, as agent, and the
other parties thereto.
"DEBT" means (i) indebtedness for borrowed money, (ii) obligations
evidenced by bonds, debentures, notes or other similar instruments, (iii)
obligations to pay the deferred purchase price of property or services, (iv)
obligations as lessee under leases which shall have been or should be, in
accordance with generally accepted accounting principles, recorded as capital
leases, (v) obligations under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of kinds referred to in CLAUSES (I) through (iv) above,
and (vi) liabilities in respect of unfunded vested benefits under plans covered
by Title IV of ERISA.
"DEFAULT RATIO" means the ratio (expressed as a percentage and rounded
upward to the nearest 1/100 of 1%) computed as of the last day of each Fiscal
Month by dividing (i) the aggregate Outstanding Balance of all Pool Receivables
(net of all miscellaneous credits) that were Defaulted Receivables on such day
or that would have been Defaulted Receivables on such day had they not been
written off the books of the Seller during such month by (ii) the aggregate
Outstanding Balance of all Pool Receivables on such day.
"DEFAULTED RECEIVABLE" means a Receivable:
(i) as to which any payment, or part thereof, remains unpaid for
at least 61 days from the original due date for such payment;
(ii) as to which the Obligor thereof or any other Person
obligated thereon or owning any Related Security in respect thereof
has taken any action, or suffered
I-5
any event to occur, of the type described in PARAGRAPH (G) of
EXHIBIT V hereto; or
(iii) which, consistent with the Credit and Collection Policy,
would be written off the Seller's books as uncollectible.
"DELINQUENCY RATIO" means the ratio (expressed as a percentage and
rounded upward to the nearest 1/100 of 1%) computed as of the last day of each
Fiscal Month by dividing (i) the aggregate Outstanding Balance of all Pool
Receivables (net of all miscellaneous credits) that were Delinquent Receivables
on such day by (ii) the aggregate Outstanding Balance of all Pool Receivables on
such day.
"DELINQUENT RECEIVABLE" means a Receivable which is not a Defaulted
Receivable and:
(i) as to which any payment, or part thereof, remains unpaid for
at least 31 days from the original due date for such payment; or
(ii) which, consistent with the Credit and Collection Policy,
would be classified as delinquent by the Seller.
"DESIGNATED OBLIGOR" means, at any time, all Obligors of the
Originators except any Obligor as to which the Agent in good faith has given
notice to Seller that such Obligor shall not be considered a Designated Obligor,
such notice to become effective on the last day of the Fiscal Month in which
such notice is given.
"DILUTION PERCENTAGE" means the greater of (a) 3.5% or (b) two (2)
times the highest Dilution Ratio as of the last day of each of the twelve (12)
months ended immediately preceding such date for so long as the Purchaser is not
PAR, or one and one-half (1.5) times the highest Dilution Ratio as of the last
day of each of the twelve (12) months ended immediately preceding such date for
so long as the Purchaser is PAR.
"DILUTION RATIO" means, for any Fiscal Month, the ratio (expressed as
a percentage and rounded upwards to the nearest 1/100th of 1%) of (a) the
aggregate Outstanding Balance of all Pool Receivables during such period that
have been reduced or adjusted as a result of any defective, rejected, returned,
repossessed or foreclosed goods or services, or any discount or adjustment made
by the Originator, Seller or Servicer or any setoff or dispute between the
Seller, Originator or the Servicer and an Obligor, to (b) the aggregate amount
of Collections of Pool Receivables actually received during such period.
I-6
"DILUTION RESERVE" for the Participation at any time means the product
of (i) the Dilution Percentage as of the end of the immediately preceding Fiscal
Month and (ii) the Investment of the Participation at the time of computation.
"DISCOUNT" means:
(i) for the Portion of Investment of the Participation for any
Yield Period to the extent the Purchaser will be funding such Portion
of Investment on the first day of such Yield Period through the
issuance of Notes,
CPR x I x ED + TF
--
360
(ii) for the Portion of Investment of the Participation for any
Yield Period to the extent the Purchaser will not be funding such
Portion of Investment on the first day of such Yield Period through
the issuance of Notes,
ED
--
BR x I x 360 + TF
where:
BR = the Bank Rate for the Portion of Investment of the
Participation for such Yield Period
I = the Portion of Investment of the Participation during such
Yield Period
CPR = the CP Rate for the Portion of Investment of the
Participation for such Yield Period
ED = the actual number of days during such Yield Period
TF = the Termination Fee, if any, for the Portion of Investment
of the Participation for such Yield Period
; PROVIDED, that no provision of the Agreement shall require the payment or
permit the collection of Discount in excess of the maximum permitted by
applicable law; and PROVIDED, FURTHER, that Discount for the Portion of
Investment of the Participation shall not be considered paid by any distribution
to the extent that at any time all or a portion of such distribution is
rescinded or must otherwise be returned for any reason.
I-7
"DISCOUNT RESERVE" for the Participation at any time means the sum of
(i) the Termination Discount at such time for the Participation, and (ii) the
then accrued and unpaid Discount for the Participation.
"DIVIDENDS" means any dividend or distribution (in cash or
obligations) on any shares of any class of Seller's capital stock or any
warrants, options or other rights with respect to shares of any class of
Seller's capital stock.
"ELIGIBLE RECEIVABLES" means, at any time, Receivables:
(i) the Obligor of which is a United States resident or Canadian
resident or a resident of such other jurisdiction as has been approved
in writing by the Agent, is not an Affiliate of the Seller (unless
(x) supported by a letter of credit in a face amount at least equal to
the Outstanding Balance of such Receivables issued for the benefit of
the Liquidity Banks and/or the Purchaser and in a form acceptable to
the Agent and Liquidity Agent and issued by a financial institution
with a short-term unsecured credit rating of at least A-1/P-1 by the
Rating Agencies which is acceptable to the Agent and the Liquidity
Agent or (y) approved by the Purchaser, the Liquidity Agent and the
Rating Agencies), is not subject to any action of the type described
in PARAGRAPH (G) of EXHIBIT V, and is not an Excluded Obligor;
PROVIDED, HOWEVER, that if the Obligor of such Receivable is a
government or governmental subdivision or agency, the Outstanding
Balance of such Receivable when added to the Outstanding Balance of
all other Eligible Receivables, the Obligors of which are governments
or governmental subdivisions or agencies, does not exceed 5% of the
Outstanding Balance of all Eligible Receivables then in the
Receivables Pool and if the Obligor of such Receivable is a Canadian
resident, the Outstanding Balance of such Receivable when added to the
Outstanding Balance of all other Eligible Receivables, the Obligors of
which are Canadian residents, does not exceed 5% of the Outstanding
Balance of all Eligible Receivables then in the Receivables Pool;
PROVIDED FURTHER, HOWEVER, that Receivables the Obligors of which are
Canadian residents shall not constitute Eligible Receivables if the
claims paying rating of Canada is downgraded below "A" by S&P;
(ii) which are denominated and payable only in U.S. dollars in
the United States or Canada;
I-8
(iii) which have a stated maturity and which stated maturity is
not more than 30 days after the date on which such Receivable was
generated;
(iv) which arise under a Contract which is in full force and
effect and which is a legal, valid and binding obligation of the
related Obligor, enforceable against such Obligor in accordance with
its terms;
(v) which conform with all applicable laws, rulings and
regulations in effect;
(vi) which are not the subject of any asserted dispute, offset,
hold back defense, Adverse Claim or other claim and which does not
arise from the sale of inventory which is subject to any Adverse
Claim;
(vii) which comply with the requirements of the Credit and
Collection Policy and the payment and other terms of the Contract
related to the Receivable are consistent with customary terms for an
Originator's industry and type of Receivables;
(viii) which arise from the sale and delivery of goods or
services in the ordinary course of an Originator's business;
(ix) which are not subject to any "exchange agreement" with the
Seller or Originator thereof or any contingent performance
requirements of an Originator;
(x) which do not require the consent of the related Obligor to
be sold or assigned;
(xi) which have not been modified or restructured since their
creation, except as permitted pursuant to SECTION 4.2 of the
Agreement;
(xii) in which the Seller owns good and marketable title and
which are freely assignable by the Seller;
(xiii) for which the Purchaser shall have a valid and
enforceable undivided percentage ownership interest, to the extent of
the Participation, and a valid and enforceable first priority
perfected security interest therein and in the Related Security and
Collections with respect thereto, in each case free and clear of any
Adverse Claim;
I-9
(xiv) which constitute accounts as defined in the UCC, and which
are not evidenced by instruments or chattel paper;
(xv) which are not Defaulted Receivables or Delinquent
Receivables;
(xvi) for which the Seller has established no offset
arrangements with the related Obligor;
(xvii) the Obligor of which is not the Obligor of Defaulted
Receivables in an aggregate amount in excess of 10% of the aggregate
Outstanding Balance of all Receivables of such Obligor and the Obligor
of which is not the Obligor (excluding any Obligor which is an
Affiliate of the Seller) of Delinquent Receivables in an aggregate
amount in excess of 50% of the aggregate Outstanding Balance of all
Receivables of such Obligor;
(xviii) the Obligor of which is a Designated Obligor; and
(xix) which do not constitute "▇▇▇▇ and hold" receivables;
PROVIDED, HOWEVER, that miscellaneous credits accrued and payable to an Obligor
with respect to volume and sales discounts shall be deducted from the Eligible
Receivables of each Obligor when calculating the aggregate Outstanding Balance
of Eligible Receivables.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute of similar import, together
with the regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA also refer to any successor sections.
"ERISA AFFILIATE" shall mean with respect to any Person, at any time,
each trade or business (whether or not incorporated) that would, at the time, be
treated together with such Person as a single employer under Section 4001 of
ERISA or Sections 414(b), (c), (m) or (o) of the Code.
"EURODOLLAR RATE" means, for any Yield Period, an interest rate per
annum (rounded upward to the nearest 1/16th of 1%) determined pursuant to the
following formula:
Eurodollar Rate = LIBOR
____________________________________
1.00 - Eurodollar Reserve Percentage
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Where,
"EURODOLLAR RESERVE PERCENTAGE" means, for any Yield Period, the
maximum reserve percentage (expressed as a decimal, rounded upward to the
nearest 1/100th of 1%) in effect on the date LIBOR for such Yield Period is
determined under regulations issued from time to time by the Federal
Reserve Board for determining the maximum reserve requirement (including
any emergency, supplemental or other marginal reserve requirement) with
respect to "Eurocurrency" funding (currently referred to as "Eurocurrency
liabilities") having a term comparable to such Yield Period; and
"LIBOR" means the rate of interest per annum determined by the
Liquidity Agent to be the arithmetic mean (rounded upward to the nearest
1/16th of 1%) of the rates of interest per annum notified to the Liquidity
Agent as the rate of interest at which dollar deposits in the approximate
amount of the Investment associated with such Yield Period would be offered
to major banks in the London interbank market at their request at or about
11:00 a.m. (London time) on the second Business Day prior to the
commencement of such Yield Period.
"EXCLUDED OBLIGOR" means an Obligor, so designated in writing as such
by the Agent in its sole discretion to the Seller, from time to time, it being
understood that from time to time the Agent may revoke its designation of one or
more Obligors as Excluded Obligors by written notice to the Seller.
"FACILITY TERMINATION DATE" means October 23, 1996; PROVIDED, HOWEVER,
that the "Facility Termination Date" shall mean April 23, 2001 if PAR shall
become Purchaser hereunder.
"FEDERAL FUNDS RATE" means, for any period, the PER ANNUM rate set
forth in the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Board (including any
such successor, "H.15(519)") for such day opposite the caption "Federal Funds
(Effective)". If on any relevant day such rate is not yet published in
H.15(519), the rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m.
Quotation") for such day under the caption "Federal Funds Effective Rate." If
on any relevant day the appropriate rate for such previous day is not yet
published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate
for such day will be the arithmetic mean as determined by the Agent of the rates
for the
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last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New
York time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Agent.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System, or any entity succeeding to any of its principal functions.
"FEE LETTER" has the meaning set forth in SECTION 1.5.
"FINAL PAYOUT DATE" means the date following the Facility Termination
Date on which no Investment or Discount in respect of the Participation under
the Agreement shall be outstanding and all other amounts payable by the
Originator, the Seller or the Servicer to the Purchaser, the Agent or any other
Affected Person under the Transaction Documents shall have been paid in full.
"FISCAL MONTH" means each fiscal month listed on SCHEDULE IV hereto,
as updated with respect to additional fiscal months by notice from the Servicer
to the Agent.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any body or entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including without limitation any court, and any Person owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"INDEMNIFIED AMOUNTS" has the meaning set forth in Section 3.1.
"INDEMNIFIED PARTY" has the meaning set forth in Section 3.1.
"INSOLVENCY PROCEEDING" means (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidations, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; in each case (a) and (b) undertaken under U.S. Federal, state or
foreign law, including the Bankruptcy Code.
"INVESTMENT" means the amount paid to the Seller in respect of the
Participation by the Purchaser pursuant to the
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Agreement, or such amount divided or combined in accordance with SECTION 1.7,
in each case reduced from time to time by Collections distributed and applied
on account of such Investment pursuant to SECTION 1.4(D) and increased from
time to time by reinvestments pursuant to SECTION 1.4(B)(II); PROVIDED, that
if such Investment shall have been reduced by any distribution and thereafter
all or a portion of such distribution is rescinded or must otherwise be
returned for any reason, such Investment shall be increased by the amount of
such rescinded or returned distribution, as though it had not been made.
"INVESTMENT GRADE" means, with respect to any Person's long term
public senior debt securities, a rating of at least BBB- by Standard & Poor's
Ratings Services or Baa3 by ▇▇▇▇▇'▇ Investors Service, Inc.; PROVIDED, that if
such Person's long- term public senior debt securities are rated by more than
one of the foregoing rating agencies, then each such rating agency which rates
such securities shall have given them a rating at least equal to the categories
specified above.
"LIQUIDATION ACCOUNT" means that certain bank account numbered
▇▇▇-▇▇▇-▇ maintained at ▇▇▇▇▇▇ Trust and Savings Bank in Chicago, Illinois
which is (i) identified as the "S.D. ▇▇▇▇▇▇ FINANCE CO. LIQUIDATION ACCOUNT,"
(ii) in the Seller's name, (iii) pledged, on a first-priority basis, to the
Purchaser pursuant to SECTION 1.2(D), and (iv) is governed by the Liquidation
Account Agreement.
"LIQUIDATION ACCOUNT AGREEMENT" means a letter agreement, in the form
of EXHIBIT VII to the Agreement, among the Seller, the Agent and the Liquidation
Account Bank, as the same may be amended, supplemented, amended and restated, or
otherwise modified from time to time in accordance with the Agreement.
"LIQUIDATION ACCOUNT BANK" means the bank holding the Liquidation
Account.
"LIQUIDITY AGENT" means Bank of Montreal in its capacity as Liquidity
Agent pursuant to the Liquidity Agreement.
"LIQUIDITY AGREEMENT" means that certain Liquidity Asset Purchase
Agreement in form and substance satisfactory to the Rating Agencies and the
Agent and entered into among Bank of Montreal, such other financial institutions
as may be parties thereto, Bank of Montreal, as Liquidity Agent, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
as servicing agent, and PAR, as amended, amended and restated, supplemented or
otherwise modified from time to time.
"LIQUIDITY BANK" has the meaning set forth in SECTION 5.3(B).
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"LOCK-BOX ACCOUNT" means an account maintained at a bank or other
financial institution for the purpose of receiving Collections established
pursuant to SECTION 4.3 and as listed on SCHEDULE II.
"LOCK-BOX AGREEMENT" means an agreement, in substantially the form of
ANNEX A, between the Seller and each Lock-Box Bank.
"LOCK-BOX BANK" means any of the banks or other financial institutions
holding one or more Lock-Box Accounts.
"LOSS PERCENTAGE" means, on any date, the greater of (i) 3 times the
highest Default Ratio as of the last day of each of the twelve (12) Fiscal
Months ended immediately preceding such date and (ii) 10%; PROVIDED, HOWEVER,
that if PAR shall become the Purchaser hereunder, CLAUSE (II) shall equal 7.5%.
"LOSS RESERVE" means, for the Participation, on any date, an amount
equal to
LP x NRPB
where:
LP = the Loss Percentage for the Participation on such date.
NRPB = Net Receivables Pool Balance.
"LOSS-TO-lIQUIDATION RATIO" means the ratio (expressed as a percentage
and rounded upward to the nearest 1/100th of 1%) computed as of the last day of
each Fiscal Month by dividing (i) the aggregate Outstanding Balance of all Pool
Receivables written off by the Seller, or which should have been written off by
the Seller in accordance with the Credit and Collection Policy, during such
Fiscal Month by (ii) the aggregate amount of Collections of Pool Receivables
actually received during such period.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Services, Inc.
"NET RECEIVABLES POOL BALANCE" means at any time an amount equal to
the sum of (a) the aggregate Outstanding Balances of Eligible Receivables then
in the Receivables Pool MINUS (b) the aggregate amount by which the Outstanding
Balance of the Eligible Receivables of each Obligor then in the Receivables Pool
exceeds the product of (A) the Normal Concentration Percentage for such Obligor
multiplied by (B) the Outstanding Balance of the Eligible Receivables then in
the Receivables Pool.
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"NORMAL CONCENTRATION PERCENTAGE" for any Obligor means at any time
3.0% if such Obligor is not a Special Obligor, or if such Obligor is a Special
Obligor, the percentage set forth opposite its name on EXHIBIT VIII; PROVIDED,
HOWEVER, that if PAR shall become the Purchaser hereunder, then the "Normal
Concentration Percentage" shall equal 2.5% if such Obligor is not a Special
Obligor.
"NOTE ISSUER" has the meaning set forth in SECTION 5.3(A).
"NOTES" means short-term promissory notes issued or to be issued by
any Note Issuer (including, without limitation, PAR) to fund its investments in
accounts receivable or other financial assets.
"OBLIGOR" means, with respect to any Receivable, the Person obligated
to make payments pursuant to the Contract relating to such Receivable.
"ORIGINATOR" has the meaning set forth in the Purchase and
Contribution Agreement.
"OUTSTANDING BALANCE" of any Receivable at any time means the then
outstanding principal balance thereof.
"PAR" has the meaning set forth in SECTION 5.3(A).
"PARTICIPATION" means, at any time, the undivided percentage ownership
interest in (i) each and every Pool Receivable now existing or hereafter
arising, other than any Pool Receivable that arises on or after the Facility
Termination Date, (ii) all Related Security with respect to such Pool
Receivables, and (iii) all Collections with respect to, and other proceeds of,
such Pool Receivables and Related Security. Such undivided percentage interest
shall be computed as
I + DR + LR + DIR + SFR
_______________________
NRB
where:
I = the Investment of the Participation at the time of
computation.
DR = the Discount Reserve of the Participation at the time of
computation.
LR = the Loss Reserve of the Participation at the time of
computation.
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DIR = the Dilution Reserve of the Participation at the time of the
computation.
SFR = the Servicing Fee Reserve of the Participation at the time
of computation.
NRB = the Net Receivables Pool Balance at the time of computation.
The Participation shall be determined from time to time pursuant to the
provisions of SECTION 1.3.
"PERMITTED INVESTMENTS" means certificates of deposit that are not
represented by instruments, have a maturity of one week or less and are issued
by the Collection Account Bank, Liquidation Account Bank (with respect to the
investment of funds in the Collection Account or Liquidation Account,
respectively) or Bank of Montreal; PROVIDED, HOWEVER, that the Agent (on behalf
of Purchaser) may, from time to time, upon three Business Days' prior written
notice to Servicer, remove from the scope of "Permitted Investments"
certificates of deposit of any such Bank(s) and specify to be within such scope,
certificates of deposit of any other bank.
"PERSON" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, limited liability company or other entity, or a government or any
political subdivision or agency thereof.
"POOL RECEIVABLE" means a Receivable in the Receivables Pool.
"PORTFOLIO CERTIFICATE" means a certificate substantially in the form
of EXHIBIT IX to the Agreement.
"PORTION OF INVESTMENT" has the meaning set forth in SECTION 1.7. In
addition, at any time when the Investment of the Participation is not divided
into two or more portions, "Portion of Investment" means 100% of the Investment
of the Participation.
"PROGRAM FEE" has the meaning set forth in the Fee Letter.
"PROGRAM SUPPORT PROVIDER" means and includes any Liquidity Bank and
any other or additional Person (other than any customer of the Purchaser) now or
hereafter extending credit or having a commitment to extend credit to or for the
account of, or to make purchases from, the Purchaser or issuing a letter of
credit, surety bond or other instrument to support any
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obligations arising under or in connection with PAR's securitization program.
"PROGRAM SUPPORT AGREEMENT" means and includes the Liquidity Agreement
and any other agreement entered into by any Program Support Provider providing
for the issuance of one or more letters of credit for the account of the
Purchaser, the issuance of one or more surety bonds for which the Purchaser is
obligated to reimburse the applicable Program Support Provider for any drawings
thereunder, the sale by the Purchaser to any Program Support Provider of the
Participation (or portions thereof) and/or the making of loans and/or other
extensions of credit to the Purchaser in connection with the Purchaser's
securitization program, together with any letter of credit, surety bond or other
instrument issued thereunder.
"PURCHASE AND CONTRIBUTION AGREEMENT" means the Purchase and
Contribution Agreement, dated as of April 23, 1996, among the Originator and the
Seller, as the same may be modified, supplemented, amended and amended and
restated from time to time in accordance with the Transaction Documents.
"PURCHASE LIMIT" means $110,000,000, as such amount may be reduced
pursuant to SECTION 1.1(B); PROVIDED, HOWEVER, that following the written
request of the Seller, the Purchaser may, in its sole and absolute discretion,
increase the Purchase Limit to $130,000,000. References to the unused portion
of the Purchase Limit shall mean, at any time, the Purchase Limit minus the then
outstanding Investment of the Participation under the Agreement.
"PURCHASER" has the meaning set forth in the preamble to the
Agreement.
"PURCHASER'S ACCOUNT" means the special account (account number
▇▇▇▇▇▇▇) of the Purchaser maintained at the office of ▇▇▇▇▇▇ Trust and Savings
Bank in Chicago, Illinois (ABA #071-000-288), or such other account as may be so
designated in writing by the Agent to the Seller and the Servicer.
"RATE VARIANCE FACTOR" means 1.50; PROVIDED, that the "Rate Variance
Factor" may be changed from time to time upon at least five days' prior notice
to the Servicer.
"RATING AGENCIES" means Moody's and S&P.
"RECEIVABLE" means any indebtedness and other obligations owed to the
Originator or Seller or any right of the Seller or Originator to payment from or
on behalf of an Obligor, whether constituting an account, chattel paper,
instrument or general intangible, arising in connection with the sale of goods
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or the rendering of services by the Originator or Seller, and includes, without
limitation, the obligation to pay any finance charges, fees and other charges
with respect thereto. Indebtedness and other obligations arising from any one
transaction, including, without limitation, indebtedness and other obligations
represented by an individual invoice or agreement, shall constitute a Receivable
separate from a Receivable consisting of the indebtedness and other obligations
arising from any other transaction.
"RECEIVABLES POOL" means at any time all of the then outstanding
Receivables.
"RELATED SECURITY" means, with respect to any Receivable:
(i) all of the Seller's interest in any goods (including
returned goods), and documentation or title evidencing the shipment or
storage of any goods (including returned goods), relating to any sale
giving rise to such Receivable;
(ii) all other security interests or liens and property subject
thereto from time to time purporting to secure payment of such
Receivable, whether pursuant to the Contract related to such
Receivable or otherwise, together with all UCC financing statements or
similar filings signed by an Obligor relating thereto; and
(iii) all guaranties, indemnities, insurance and other agreements
(including the related Contract) or arrangements of whatever character
from time to time supporting or securing payment of such Receivable or
otherwise relating to such Receivable whether pursuant to the Contract
related to such Receivable or otherwise.
"RESTRICTED PAYMENTS" has the meaning set forth in clause (o) of
EXHIBIT IV of the Agreement.
"S&P" means Standard and Poor's Ratings Services.
"SDW" has the meaning set forth in the Preamble to this Agreement.
"SELLER" has the meaning set forth in the preamble to the Agreement.
"SERVICER" has the meaning set forth in the preamble to the Agreement.
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"SERVICER REPORT" means a report, in substantially the form of ANNEX E
hereto, furnished by the Servicer to the Agent pursuant to the Agreement.
"SERVICER REPORT DATE" means the 15th day of each month, or if such
day is not a Business Day, the next Business Day.
"SERVICING FEE" shall mean the fee referred to in Section 4.6.
"SERVICING FEE RESERVE" for the Participation at any time means the
sum of (i) the unpaid Servicing Fee relating to the Participation accrued to
such time, plus (ii) an amount equal to (a) the Net Receivables Pool Balance at
the time of computation multiplied by (b) the product of (x) the percentage per
annum at which the Servicing Fee is accruing on such date and (y) a fraction
having the sum of the Average Maturity plus the Collection Delay Period (each as
in effect at such date) as its numerator and 360 as its denominator.
"SETTLEMENT PERIOD" for each Portion of Investment means each period
commencing on the first day and ending on the last day of each Yield Period for
such Portion of Investment and, on and after the Termination Date, such period
(including, without limitation, a period of one day) as shall be selected from
time to time by the Agent.
"SPECIAL OBLIGOR" means an Obligor, so designated in writing by the
Agent, having a long-term public senior debt rating of at least Investment Grade
or which has been approved by the Agent; PROVIDED, HOWEVER, if PAR is the
Purchaser, each of the Rating Agencies shall have provided a notice in writing
to the Agent to the effect that the inclusion of such Obligor as a Special
Obligor will not result in the downgrading or withdrawal of such Rating
Agencies' current rating of the Notes.
"TERMINATION DATE" means the earlier of (i) the Business Day which the
Seller so designates by notice to the Agent at least 30 Business Days in advance
and (ii) the Facility Termination Date.
"TERMINATION DAY" means (i) each day on which the conditions set forth
in SECTION 2 of EXHIBIT II are not satisfied and (ii) each day which occurs on
or after the Termination Date.
"TERMINATION DISCOUNT" means, for the Participation on any date, an
amount equal to the Rate Variance Factor on such date multiplied by the product
of (i) the Investment of the Participation on such date and (ii) the product of
(a) the Base Rate for the Participation plus 2% per annum for a 30-day Yield
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Period deemed to commence on such date and (b) a fraction having as its
numerator the sum of the Average Maturity plus the Collection Delay Period (each
as in effect at such date) and 360 as its denominator.
"TERMINATION EVENT" has the meaning specified in EXHIBIT V.
"TERMINATION FEE" means, for any Yield Period during which a
Termination Day occurs, the amount, if any, by which (i) the additional Discount
(calculated without taking into account any Termination Fee or any shortened
duration of such Yield Period pursuant to CLAUSE (IV) of the definition thereof)
which would have accrued during such Yield Period on the reductions of
Investment of the Participation relating to such Yield Period had such
reductions remained as Investment, exceeds (ii) the income, if any, received by
the Purchaser from the Purchaser investing the proceeds of such reductions of
Investment, as determined by the Agent, which determination shall be binding and
conclusive for all purposes, absent manifest error.
"TRANSACTION DOCUMENTS" means the Agreement, the Lock- Box Agreements,
the Collection Account Agreement, the Liquidation Account Agreement, the
Purchase and Contribution Agreement and all other certificates, instruments, UCC
financing statements, reports, notices, agreements and documents executed or
delivered under or in connection with the Agreement, in each case as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with the Agreement.
"UCC" means the Uniform Commercial Code as from time to time in effect
in the applicable jurisdiction.
"UNMATURED TERMINATION EVENT" means an event which, with the giving of
notice or lapse of time, or both, would constitute a Termination Event; it being
understood that an event or condition described in PARAGRAPH (E)(II) of EXHIBIT
V shall constitute an "Unmatured Termination Event" during the 60 day waiver
period described therein.
"YIELD PERIOD" means, with respect to each Portion of Investment:
(a) initially the period commencing on the date of a purchase
pursuant to SECTION 1.2 and ending such number of days as the Seller shall
select, subject to the approval of the Agent pursuant to SECTION 1.2, up to
60 days after such date; and
(b) thereafter each period commencing on the last day of the
immediately preceding Yield Period for any Portion of
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Investment of the Participation and ending such number of days (not to
exceed 60 days) as the Seller shall select, subject to the approval of the
Agent pursuant to SECTION 1.2, on notice by the Seller received by the
Agent (including notice by telephone, confirmed in writing) not later than
11:00 a.m. (Chicago time) on such last day, EXCEPT that if the Agent shall
not have received such notice or approved such period on or before 11:00
a.m. (Chicago time) on such last day, such period shall be one day;
PROVIDED, that
(i) any Yield Period in respect of which Discount is computed by
reference to the Bank Rate shall be a period from one to and including
60 days;
(ii) any Yield Period (other than of one day) which would
otherwise end on a day which is not a Business Day shall be extended
to the next succeeding Business Day; PROVIDED, HOWEVER, if Discount in
respect of such Yield Period is computed by reference to the
Eurodollar Rate, and such Yield Period would otherwise end on a day
which is not a Business Day, and there is no subsequent Business Day
in the same calendar month as such day, such Yield Period shall end on
the next preceding Business Day;
(iii) in the case of any Yield Period of one day, (A) if such
Yield Period is the initial Yield Period for a purchase pursuant to
SECTION 1.2, such Yield Period shall be the day of purchase of the
Participation; (B) any subsequently occurring Yield Period which is
one day shall, if the immediately preceding Yield Period is more than
one day, be the last day of such immediately preceding Yield Period,
and, if the immediately preceding Yield Period is one day, be the day
next following such immediately preceding Yield Period; and (C) if
such Yield Period occurs on a day immediately preceding a day which is
not a Business Day, such Yield Period shall be extended to the next
succeeding Business Day; and
(iv) in the case of any Yield Period for any Portion of
Investment of the Participation which commences before the Termination
Date and would otherwise end on a date occurring after the Termination
Date, such Yield Period shall end on such Termination Date and the
duration of each Yield Period which commences on or after the
Termination Date shall be of such duration as shall be selected by the
Agent.
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OTHER TERMS. All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting principles. All
terms used in Article 9 of the UCC in the State of New York, and not
specifically defined herein, are used herein as defined in such Article 9.
Unless the context otherwise requires, "or" means "and/or," and "including" (and
with correlative meaning "include" and "includes") means including without
limiting the generality of any description preceding such term.
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EXHIBIT II
CONDITIONS OF PURCHASES
1. CONDITIONS PRECEDENT TO INITIAL PURCHASE. The initial purchase
under the Agreement is subject to the conditions precedent that the Agent shall
have received on or before the date of such purchase the following, each in form
and substance (including the date thereof) satisfactory to the Agent:
(a) A counterpart of this Agreement and the other Transaction
Documents duly executed by the parties thereto.
(b) Certified copies of (i) the resolutions of the Board of Directors
of each of the Seller, the Servicer, and any Originator authorizing the
execution, delivery, and performance by the Seller, the Servicer and any
Originator of the Agreement and the other Transaction Documents, (ii) all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to the Agreement and the other Transaction
Documents and (iii) the certificate of incorporation and by-laws of the Seller,
the Servicer, and any Originator.
(c) A certificate of the Secretary or Assistant Secretary of the
Seller, the Servicer, and any Originator certifying the names and true
signatures of the officers of the Seller, the Servicer, and any Originator
authorized to sign the Agreement and the other Transaction Documents. Until the
Agent receives a subsequent incumbency certificate from the Seller, the
Servicer, and any other Originator in form and substance satisfactory to the
Agent, the Agent shall be entitled to rely on the last such certificate
delivered to it by the Seller, the Servicer, and any Originator.
(d) Acknowledgment copies, or time-stamped receipt copies of proper
financing statements, duly filed on or before the date of such initial purchase
under the UCC of all jurisdictions that the Agent may deem necessary or
desirable in order to perfect the interests of the Purchaser contemplated by the
Agreement and other Transaction Documents.
(e) Acknowledgment copies, or time-stamped receipt copies of proper
financing statements, if any, necessary to release all security interests and
other rights of any Person in the Receivables, Contracts or Related Security
previously granted by the Seller.
(f) Completed UCC requests for information, dated on or before the
date of such initial purchase, listing the
II-1
financing statements referred to in SUBSECTION (e) above and all other
effective financing statements filed in the jurisdictions referred to in
SUBSECTION (e) above that name the Seller or any Originator as debtor, together
with copies of such other financing statements (none of which shall cover any
Receivables, Contracts or Related Security), and similar search reports with
respect to federal tax liens and liens of the Pension Benefit Guaranty
Corporation in such jurisdictions as the Agent may request, showing no such
liens on any of the Receivables, Contracts or Related Security.
(g) Copies of executed (i) Lock-Box Agreements with the Lock-Box
Banks, (ii) the Collection Account Agreement with the Collection Account Bank,
and (iii) the Liquidation Account Agreement with the Liquidation Account Bank.
(h) Favorable opinions of Ropes & ▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, counsel
for the Seller, substantially in the form of Annex C hereto and as to corporate
and such other matters as the Agent may reasonably request.
(i) Favorable opinions of Ropes & ▇▇▇▇, counsel for the Seller,
substantially in the form of Annex D and as to bankruptcy matters.
(j) Servicer Report representing the performance of the portfolio
purchased through the Purchase and Contribution Agreement and the Agreement for
the month prior to closing.
(k) Evidence (i) of the execution and delivery by each of the parties
thereto of the Purchase and Contribution Agreement and all documents, agreements
and instruments contemplated thereby (which evidence shall include copies,
either original or facsimile, of each of such documents, instruments and
agreements), (ii) that each of the conditions precedent to the execution and
delivery of the Purchase and Contribution Agreement has been satisfied to the
Administrator's satisfaction, and (iii) that the initial purchases under the
Purchase and Contribution Agreement have been consummated.
(l) Evidence of payment by the Seller of all accrued and unpaid fees
(including those contemplated by the Fee Letter), costs and expenses to the
extent then due and payable on the date thereof, together with Attorney Costs of
the Agent to the extent invoiced prior to or on such date, plus such additional
amounts of Attorney Costs as shall constitute the Agent's reasonable estimate of
Attorney Costs incurred or to be incurred by it through the closing proceedings;
including any such costs, fees and expenses arising under or referenced in
SECTION 5.4.
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(m) The Fee Letter between the Seller and the Agent contemplated by
SECTION 1.5.
(n) Good standing certificates with respect to the Seller, the
Servicer and any Originator issued by the Secretaries of the States of
Massachusetts, Pennsylvania, Michigan, Maine and Alabama.
(o) Such other approvals, opinions or documents as the Agent may
reasonably request.
2. CONDITIONS PRECEDENT TO ALL PURCHASES AND REINVESTMENTS. Each
purchase (including the initial purchase) and each reinvestment shall be subject
to the further conditions precedent that:
(a) in the case of each purchase, the Servicer shall have delivered
to the Agent on or prior to such purchase, in form and substance satisfactory to
the Agent, a completed Servicer Report with respect to the immediately preceding
Fiscal Month, dated within 30 days prior to the date of such purchase together
with a listing by Obligor of all Receivables and such additional information as
may reasonably be requested by the Agent;
(b) on the date of such purchase or reinvestment the following
statements shall be true (and acceptance of the proceeds of such purchase or
reinvestment shall be deemed a representation and warranty by the Seller that
such statements are then true):
(i) the representations and warranties contained in EXHIBIT III
are true and correct on and as of the date of such purchase or reinvestment
as though made on and as of such date; and
(ii) no event has occurred and is continuing, or would result
from such purchase or reinvestment, that constitutes a Termination Event or
an Unmatured Termination Event; and
(iii) in the case of purchases only, no event of the type
described in CLAUSE(e)(i) or (ii) of EXHIBIT V has occurred and is
continuing;
PROVIDED, HOWEVER, that an Unmatured Termination Event of the type described in
PARAGRAPH (e)(ii) of EXHIBIT V shall not be a condition precedent to
reinvestment; and
(c) the Agent shall have received such other approvals, opinions or
documents as it may reasonably request.
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EXHIBIT III
REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents
and warrants as follows:
(a) The Seller is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, and is duly
qualified to do business, and is in good standing, as a foreign corporation in
every jurisdiction where the nature of its business requires it to be so
qualified.
(b) The execution, delivery and performance by the Seller of the
Agreement and the other Transaction Documents to which each is a party,
including the Seller's use of the proceeds of purchases and reinvestments, (i)
are within the Seller's corporate powers, (ii) have been duly authorized by all
necessary corporate action, (iii) do not contravene or result in a default under
or conflict with (1) the Seller's charter or by-laws, (2) any law, rule or
regulation applicable to the Seller, (3) any contractual restriction binding on
or affecting the Seller or its property or (4) any order, writ, judgment, award,
injunction or decree binding on or affecting the Seller or its property, and
(iv) do not result in or require the creation of any Adverse Claim upon or with
respect to any of its properties. The Agreement and the other Transaction
Documents to which it is a party have been duly executed and delivered by the
Seller.
(c) No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority or other Person is required for the
due execution, delivery and performance by the Seller of the Agreement or any
other Transaction Document to which it is a party other than those previously
obtained or UCC filings.
(d) Each of the Agreement and the other Transaction Documents to
which it is a party constitutes the legal, valid and binding obligation of the
Seller enforceable against the Seller in accordance with its terms.
(e) Since its date of formation, there has been no material adverse
change in the business, operations, property or financial or other condition or
operations of the Seller, the ability of the Seller to perform its obligations
under the Agreement or the other Transaction Documents to which it is a party or
the collectibility of the Receivables, or which affects the legality, validity
or enforceability of the Agreement or the other Transaction Documents.
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(f) There is no pending or threatened action or proceeding affecting
the Seller before any Governmental Authority or arbitrator which could
materially adversely affect the business, operations, property, financial or
other condition or operations of the Seller, the ability of the Seller to
perform its obligations under the Agreement or the other Transaction Documents
or the collectibility of the Receivables, or which affects or purports to affect
the legality, validity or enforceability of the Agreement or the other
Transaction Documents.
(g) No proceeds of any purchase or reinvestment will be used to
acquire any equity security of a class which is registered pursuant to
Section 12 of the Securities Exchange Act of 1934.
(h) The Seller is the legal and beneficial owner of the Pool
Receivables and Related Security, free and clear of any Adverse Claim; upon each
purchase or reinvestment, the Purchaser shall acquire a valid and enforceable
perfected undivided percentage ownership interest, to the extent of the
Participation, in each Pool Receivable then existing or thereafter arising and
in the Related Security and Collections and other proceeds, with respect
thereto, free and clear of any Adverse Claim; the Agreement creates a security
interest in favor of the Purchaser in the items described in SECTION 1.2(d), and
the Purchaser has a first priority perfected security interest in such items,
free and clear of any Adverse Claims. No effective financing statement or other
instrument similar in effect covering any Contract or any Pool Receivable or the
Related Security or Collections with respect thereto or any Lock-Box Account is
on file in any recording office, except those filed in favor of the Purchaser
relating to the Agreement.
(i) Each Servicer Report, information, exhibit, financial statement,
document, book, record or report furnished or to be furnished at any time by or
on behalf of the Seller to the Agent in connection with the Agreement is or will
be accurate in all material respects as of its date or (except as otherwise
disclosed to the Agent at such time) as of the date so furnished, and no such
item contains or will contain any untrue statement of a material fact or omits
or will omit to state a material fact necessary in order to make the statements
contained therein, in the light of the circumstances under which they were made,
not misleading.
(j) The principal place of business and chief executive office (as
such terms are used in the UCC) of the Seller and the office where the Seller
keeps its records concerning the Receivables are located at the address referred
to in PARAGRAPH (b) of EXHIBIT IV.
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(k) The names and addresses of all the Lock-Box Banks, together with
the account numbers of the Lock-Box Accounts of the Seller at such Lock-Box
Banks, are specified in SCHEDULE II to the Agreement (or at such other Lock-Box
Banks and/or with such other Lock-Box Accounts as have been notified to the
Agent in accordance with the Agreement) and all Lock-Box Accounts are subject to
Lock-Box Agreements. All Obligors have been directed to make all payment with
respect to each Contract to a Lock-Box Account.
(l) The Seller is not in violation of any order of any court,
arbitrator or Governmental Authority.
(m) Neither the Seller nor any Affiliate of the Seller has any direct
or indirect ownership or other financial interest in the Purchaser.
(n) No proceeds of any purchase or reinvestment will be used for any
purpose that violates any applicable law, rule or regulation, including, without
limitation, Regulations G or U of the Federal Reserve Board.
(o) Each Pool Receivable included as an Eligible Receivable in the
calculation of the Net Receivables Pool Balance is an Eligible Receivable as of
the date of such calculation.
(p) No event has occurred and is continuing, or would result from a
purchase in respect of, or reinvestment in respect of, the Participation or from
the application of the proceeds therefrom, which constitutes a Termination
Event.
(q) The Seller (and the Servicer) have complied in all material
respects with the Credit and Collection Policy with regard to each Receivable.
(r) The Seller has complied with all of the terms, covenants and
agreements contained in the Agreement and the other Transaction Documents and
applicable to it.
(s) The Seller's complete corporate name is set forth in the preamble
to the Agreement, and the Seller does not use and has not during the last six
years used any other corporate name, trade name, doing-business name or
fictitious name, except as set forth on SCHEDULE III and except for names first
used after the date of the Agreement and set forth in a notice delivered to the
Agent pursuant to PARAGRAPH (l)(vii) of EXHIBIT IV.
(t) The authorized capital stock of Seller consists of one thousand
(1000) shares of common stock, without par value, one hundred (100) shares of
which are currently issued and outstanding. All of such outstanding shares are
validly issued,
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fully paid and nonassessable and are owned (beneficially and of record) by SDW,
subject to a pledge to Chemical Bank, as agent, under the Credit and Guarantee
Agreement.
(u) Seller has filed all federal and other tax returns and reports
required by law to have been filed by it and has paid all taxes and governmental
charges thereby shown to be owing.
(v) The Seller is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
B. REPRESENTATIONS AND WARRANTIES OF THE SERVICER. The Servicer
represents and warrants as follows:
(a) The Servicer is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Pennsylvania, and is duly
qualified to do business, and is in good standing, as a foreign corporation in
every jurisdiction where the nature of its business requires it to be so
qualified.
(b) The execution, delivery and performance by the Servicer of the
Agreement and the other Transaction Documents to which it is a party, (i) are
within the Servicer's corporate powers, (ii) have been duly authorized by all
necessary corporate action, (iii) do not contravene or result in a default under
or conflict with (1) the Servicer's charter or by-laws, (2) any law, rule or
regulation applicable to the Servicer, (3) any contractual restriction binding
on or affecting the Servicer or its property or (4) any order, writ, judgment,
award, injunction or decree binding on or affecting the Servicer or its
property, and (iv) do not result in or require the creation of any Adverse Claim
upon or with respect to any of its properties. The Agreement and the other
Transaction Documents to which it is a party have been duly executed and
delivered by the Servicer.
(c) No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority or other Person is required for the
due execution, delivery and performance by the Servicer of the Agreement or any
other Transaction Document to which it is a party.
(d) Each of the Agreement and the other Transaction Documents to
which it is a party constitutes the legal, valid and binding obligation of the
Servicer enforceable against the Servicer in accordance with its terms.
(e) The balance sheet of the Servicer as at September 30, 1995, a
copy of which has been furnished to the Agent, fairly presents the financial
condition of the Servicer, as at such date, and since September 30, 1995 there
has been no material adverse change in the ability of the Servicer to perform
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its obligations under the Agreement or the other Transaction Documents to which
it is a party or the collectibility of the Receivables, or which affects the
legality, validity or enforceability of the Agreement or the other Transaction
Documents.
(f) There is no pending or threatened action or proceeding affecting
the Servicer before any Governmental Authority or arbitrator which could
materially adversely affect the business, operations, property, financial or
other condition or operations of the Servicer, the ability of the Servicer to
perform its obligations under the Agreement or the other Transaction Documents
or the collectibility of the Receivables, or which affects or purports to affect
the legality, validity or enforceability of the Agreement or the other
Transaction Documents.
(g) The Servicer has complied in all material respects with the
Credit and Collection Policy with regard to each Receivable.
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EXHIBIT IV
COVENANTS
COVENANTS OF THE SELLER AND THE SERVICER. Until the latest of the Facility
Termination Date, the date on which no Investment of or Discount in respect of
the Participation shall be outstanding or the date all other amounts owed by the
Seller under the Agreement to the Purchaser, the Agent and any other Indemnified
Party or Affected Person shall be paid in full:
(a) COMPLIANCE WITH LAWS, ETC. Each of the Seller and the Servicer
shall comply in all material respects with all applicable laws, rules,
regulations and orders, and preserve and maintain its corporate existence,
rights, franchises, qualifications, and privileges except to the extent that the
failure so to comply with such laws, rules and regulations or the failure so to
preserve and maintain such existence, rights, franchises, qualifications, and
privileges would not materially adversely affect the collectibility of the
Receivables or the enforceability of any related Contract or the ability of the
Seller or the Servicer to perform its obligations under any related Contract or
under the Agreement.
(b) OFFICES, RECORDS AND BOOKS OF ACCOUNT, ETC. The Seller (i) shall
keep its principal place of business and chief executive office (as such terms
are used in the UCC) and the office where it keeps its records concerning the
Receivables at the address of the Seller set forth under its name on the
signature page to the Agreement or, upon at least 60 days' prior written notice
of a proposed change to the Agent, at any other locations in jurisdictions where
all actions reasonably requested by the Agent to protect and perfect the
interest of the Purchaser in the Receivables and related items (including
without limitation the items described in SECTION 1.2(d)) have been taken and
completed and (ii) shall provide the Agent with at least 60 days' written notice
prior to making any change in the Seller's name or making any other change in
the Seller's identity or corporate structure (including a merger) which could
render any UCC financing statement filed in connection with this Agreement
"seriously misleading" as such term is used in the UCC; each notice to the Agent
pursuant to this sentence shall set forth the applicable change and the
effective date thereof. The Seller also will maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing Receivables and related Contracts in the
event of the destruction of the originals thereof), and keep and maintain all
documents, books, records, computer tapes and disks and other information
reasonably necessary or advisable for the
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collection of all Receivables (including, without limitation, records adequate
to permit the daily identification of each Receivable and all Collections of
and adjustments to each existing Receivable).
(c) PERFORMANCE AND COMPLIANCE WITH CONTRACTS AND CREDIT AND
COLLECTION POLICY. The Seller shall, at its expense, timely and fully perform
and comply with all material provisions, covenants and other promises required
to be observed by it under the Contracts related to the Receivables, and timely
and fully comply in all material respects with the Credit and Collection Policy
with regard to each Receivable and the related Contract.
(d) OWNERSHIP INTEREST, ETC. The Seller shall, at its expense, take
all action necessary or desirable to establish and maintain a valid and
enforceable undivided ownership interest, to the extent of the Participation, in
the Pool Receivables and the Related Security and Collections and other proceeds
with respect thereto, and a first priority perfected security interest in the
items described in SECTION 1.2(d), in each case free and clear of any Adverse
Claim, in favor of the Purchaser, including, without limitation, taking such
action to perfect, protect or more fully evidence the interest of the Purchaser
under the Agreement as the Purchaser, through the Agent, may request.
(e) SALES, LIENS, ETC. Except as provided in paragraphs (i) and (j)
of the EXHIBIT IV, the Seller shall not sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create or suffer to exist any Adverse
Claim upon or with respect to, any or all of its right, title or interest in, to
or under, any item described in SECTION 1.2(d) (including without limitation the
Seller's undivided interest in any Receivable, Related Security, or Collections,
or upon or with respect to any account to which any Collections of any
Receivables are sent), or assign any right to receive income in respect of any
items contemplated by this PARAGRAPH (e).
(f) EXTENSION OR AMENDMENT OF RECEIVABLES. Except as provided in the
Agreement, neither the Seller nor the Servicer shall extend the maturity or
adjust the Outstanding Balance or otherwise modify the terms of any Pool
Receivable, or amend, modify or waive any term or condition of any related
Contract.
(g) CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY. Neither the
Seller nor the Servicer shall make any material change in the character of its
business or in the Credit and Collection Policy, or any change in the Credit and
Collection Policy that would adversely affect the collectibility of the
Receivables Pool or the enforceability of any related Contract or the ability of
the Seller or Servicer to perform its obligations under any related Contract or
under the Agreement. Neither
IV-2
the Seller nor the Servicer shall make any other change in the Credit and
Collection Policy without the prior written consent of the Agent.
(h) AUDITS. Each of the Seller and the Servicer shall, from time to
time during regular business hours as requested by the Agent, permit the Agent,
or its agents or representatives, (i) to examine and make copies of and
abstracts from all books, records and documents (including, without limitation,
computer tapes and disks) in the possession or under the control of the Seller
or the Servicer relating to Receivables and the Related Security, including,
without limitation, the related Contracts, and (ii) to visit the offices and
properties of the Seller and the Servicer for the purpose of examining such
materials described in clause (i) above, and to discuss matters relating to
Receivables and the Related Security or the Seller's or Servicer's performance
hereunder or under the Contracts with any of the officers, employees, agents or
contractors of the Seller having knowledge of such matters.
(i) CHANGE IN LOCK-BOX BANKS, LOCK-BOX ACCOUNTS AND PAYMENT
INSTRUCTIONS TO OBLIGORS. Neither the Seller nor the Servicer shall add or
terminate any bank as a Lock-Box Bank or any account as a Lock-Box Account from
those listed in Schedule II to the Agreement, or make any change in its
instructions to Obligors regarding payments to be made to the Seller or the
Servicer or payments to be made to any Lock-Box Account (or related post office
box), unless the Agent shall have consented thereto in writing and the Agent
shall have received copies of all agreements and documents (including without
limitation Lock-Box Agreements) that it may request in connection therewith.
(j) DEPOSITS TO LOCK-BOX ACCOUNTS. The Seller shall, or shall cause
the Servicer to, (i) instruct all Obligors to make payments of all Receivables
to one or more Lock-Box Accounts or to post office boxes to which only Lock-Box
Banks have access (and shall instruct the Lock-Box Banks to cause all items and
amounts relating to such Receivables received in such post office boxes to be
removed and deposited into a Lock-Box Account on a daily basis), and (ii)
deposit, or cause to be deposited, any Collections of Pool Receivables received
by it or the Servicer into Lock-Box Accounts not later than one Business Day
after receipt thereof. Each Lock-Box Account, the Collection Account and the
Liquidation Account shall at all times be subject to a Lock-Box Agreement,
Collection Account Agreement or Liquidation Account Agreement, respectively.
Neither the Seller nor the Servicer will deposit or otherwise credit, or cause
or permit to be so deposited or credited, to any Lock-Box Account cash or cash
proceeds other than Collections of Pool Receivables.
IV-3
(k) MARKING OF RECORDS. At its expense, the Seller (or the Servicer
on its behalf) shall ▇▇▇▇ its master data processing records relating to Pool
Receivables and related Contracts, including with a legend evidencing that the
undivided percentage ownership interests with regard to the Participation
related to such Receivables and related Contracts have been sold in accordance
with the Agreement.
(l) REPORTING REQUIREMENTS. The Seller will provide to the Agent (in
multiple copies, if requested by the Agent) the following:
(i) as soon as available and in any event within 45 days after
the end of the first three quarters of each fiscal year of the Seller,
balance sheets of the Seller and its subsidiaries as of the end of such
quarter and statements of income and retained earnings of the Seller and
its subsidiaries for the period commencing at the end of the previous
fiscal year and ending with the end of such quarter, certified by the chief
financial officer of the Seller;
(ii) as soon as available and in any event within 90 days after
the end of each fiscal year of the Seller, a copy of the annual report for
such year for the Seller and its subsidiaries, containing financial
statements for such year audited by Deloitte & Touche LPP or other
independent certified public accountants acceptable to the Agent;
(iii) as soon as available and in any event no later than the
last Business Day of each week, a weekly Portfolio Certificate;
(iv) as soon as available and in any event not later than the
Servicer Report Date, a Servicer Report as of the Fiscal Month ended
immediately prior to such Servicer Report Date;
(v) as soon as possible and in any event within three days after
the occurrence of each Termination Event or event which, with the giving of
notice or lapse of time, or both, would constitute a Termination Event, a
statement of the chief financial officer of the Seller setting forth
details of such Termination Event or event and the action that the Seller
has taken and proposes to take with respect thereto;
(vi) promptly after the filing or receiving thereof, copies of
all reports and notices that the Seller or any Affiliate files under ERISA
with the Internal Revenue Service or the Pension Benefit Guaranty
Corporation or the
IV-4
U.S. Department of Labor or that the Seller or any Affiliate receives from
any of the foregoing or from any multiemployer plan (within the meaning of
Section 4001(a)(3) of ERISA) to which the Seller or any Affiliate is or
was, within the preceding five years, a contributing employer, in each case
in respect of the assessment of withdrawal liability or an event or
condition which could, in the aggregate, result in the imposition of
liability on the Seller and/or any such Affiliate in excess of $100,000;
(vii) at least thirty days prior to any change in the Seller's
name or any other change requiring the amendment of UCC financing
statements, a notice setting forth such changes and the effective date
thereof;
(viii) such other information respecting the Receivables
(including a Seller's Report on a more frequent basis than provided in
CLAUSE (iii) above) or the condition or operations, financial or otherwise,
of the Seller or any of its Affiliates as the Agent may from time to time
reasonably request;
(ix) promptly after the Seller obtains knowledge thereof, notice
of any (a) litigation, investigation or proceeding which may exist at any
time between the Seller, the Servicer or any Originator, on the one hand,
and any Governmental Authority which, if not cured or if adversely
determined, as the case may be, would have a material adverse effect on the
business, operations, property or financial or other condition of the
Seller, the Servicer or any Originator, as the case may be, or (b)
litigation or proceeding adversely affecting the Seller or any of its
subsidiaries, the Servicer or any Originator, as the case may be, in which
the amount involved is $100,000 or more and not covered by insurance or in
which injunctive or similar relief is sought or (c) litigation or
proceeding relating to any Transaction Document; and
(x) promptly after the occurrence thereof, notice of a material
adverse change in the business, operations, property or financial or other
condition of the Seller.
(m) SEPARATE CORPORATE EXISTENCE. Each of the Seller and the Servicer
hereby acknowledges that Purchaser and the Agent are entering into the
transactions contemplated by the Agreement and the Transaction Documents in
reliance upon the Seller's identity as a legal entity separate from the Servicer
and the Originator. Therefore, from and after the date hereof, the Seller and
the Servicer shall take all reasonable steps to continue the Seller's identity
as a separate legal entity and to make it apparent to third Persons that the
Seller is an entity
IV-5
with assets and liabilities distinct from those of the Servicer, the Originator
and any other Person, and is not a division of the Servicer or the Originator
or any other Person. Without limiting the generality of the foregoing and in
addition to and consistent with the covenant set forth in PARAGRAPH (a) of this
EXHIBIT IV, the Seller and the Servicer shall take such actions as shall be
required in order that:
(i) The Seller will be a limited purpose corporation whose
primary activities are restricted in its certificate of incorporation to
purchasing Receivables from the Originator, entering into agreements for
the servicing of such Receivables, selling undivided interests in such
Receivables and conducting such other activities as it deems necessary or
appropriate to carry out its primary activities;
(ii) Not less than one member of Seller's Board of Directors (the
"INDEPENDENT DIRECTORS") shall be individuals who are not direct, indirect
or beneficial stockholders, officers, directors, employees, affiliates,
associates, customers or suppliers of the Originator or any of its
Affiliates. The Seller's Board of Directors shall not approve, or take any
other action to cause the commencement of a voluntary case or other
proceeding with respect to the Seller under any applicable bankruptcy,
insolvency, reorganization, debt arrangement, dissolution or other similar
law, or the appointment of or taking possession by, a receiver, liquidator,
assignee, trustee, custodian, or other similar official for the Seller
unless in each case the Independent Directors shall approve the taking of
such action in writing prior to the taking of such action. The Independent
Directors' fiduciary duty shall be to the Seller (and creditors) and not to
the Seller's shareholders in respect of any decision of the type described
in the preceding sentence. In the event an Independent Director resigns or
otherwise ceases to be a director of the Seller, there shall be selected a
replacement Independent Director who shall not be an individual within the
proscriptions of the first sentence of this CLAUSE (ii) or any individual
who has any other type of professional relationship with the Originator or
any of its Affiliates or any management personnel of any such Person or
Affiliate and who shall be (x) a tenured professor at a business or law
school, (y) a retired judge or (z) an established independent member of the
business community, having a sound reputation and experience relative to
the duties to be performed by such individual as an Independent Director;
IV-6
(iii) No Independent Director shall at any time serve as a
trustee in bankruptcy for Originator or any Affiliate thereof;
(iv) Any employee, consultant or agent of the Seller will be
compensated from the Seller's own bank accounts for services provided to
the Seller except as provided herein in respect of the Servicer's Fee. The
Seller will engage no agents other than a Servicer for the Receivables,
which Servicer will be fully compensated for its services to the Seller by
payment of the Servicer's Fee;
(v) The Seller will contract with the Servicer to perform for the
Seller all operations required on a daily basis to service its Receivables.
The Seller will pay the Servicer a monthly fee based on the level of
Receivables being managed by the Servicer. The Seller will not incur any
material indirect or overhead expenses for items shared between the Seller
and the Originator or any Affiliate thereof which are not reflected in the
Servicer's Fee. To the extent, if any, that the Seller and the Originator
or any Affiliate thereof share items of expenses not reflected in the
Servicer's Fee, such as legal, auditing and other professional services,
such expenses will be allocated to the extent practical on the basis of
actual use or the value of services rendered, and otherwise on a basis
reasonably related to the actual use or the value of services rendered, it
being understood that Originator shall pay all expenses relating to the
preparation, negotiation, execution and delivery of the Transaction
Documents, including, without limitation, legal and other fees;
(vi) The Seller's operating expenses will not be paid by
Originator or any Affiliate thereof unless the Seller shall have agreed in
writing with such Person to reimburse such Person for any such payments;
(vii) The Seller will have its own separate mailing address and
stationery;
(viii) The Seller's books and records will be maintained
separately from those of the Originator or any Affiliate thereof;
(ix) Any financial statements of the Originator or any Affiliate
thereof which are consolidated to include the Seller will contain detailed
notes clearly stating that the Seller is a separate corporate entity and
has sold ownership interests in the Seller's accounts receivable;
IV-7
(x) The Seller's assets will be maintained in a manner that
facilitates their identification and segregation from those of the
Originator and any Affiliate thereof;
(xi) The Seller will strictly observe corporate formalities in
its dealings with the Originator and any Affiliate thereof, and funds or
other assets of the Seller will not be commingled with those of the
Originator or any Affiliate thereof. The Seller shall not maintain joint
bank accounts or other depository accounts to which the Originator or any
Affiliate thereof (other than SDW in its capacity as Servicer) has
independent access. None of the Seller's funds will at any time be pooled
with any funds of the Originator or any Affiliate thereof;
(xii) The Seller shall pay to the Originator the marginal
increase (or, in the absence of such increase, the market amount of its
portion) of the premium payable with respect to any insurance policy that
covers the Seller and any Affiliate thereof, but the Seller shall not,
directly or indirectly, be named or enter into an agreement to be named, as
a direct or contingent beneficiary or loss payee, under any such insurance
policy, with respect to any amounts payable due to occurrences or events
related to the Originator or any Affiliate thereof; and
(xiii) The Seller will maintain arm's length relationships with
the Originator and any Affiliate thereof. The Originator or any Affiliate
thereof that renders or otherwise furnishes services to the Seller will be
compensated by the Seller at market rates for such services. Neither the
Seller nor any Originator or any Affiliate thereof will be or will hold
itself out to be responsible for the debts of the other or the decisions or
actions respecting the daily business and affairs of the other.
(n) MERGERS, ACQUISITIONS, SALES, ETC.
(i) The Seller shall not
(A) be a party to any merger or consolidation, or directly or
indirectly purchase or otherwise acquire, whether in one or a series
of transactions, all or substantially all of the assets or any stock
of any class of, or any partnership or joint venture interest in, any
other Person, or sell, transfer, assign, convey or lease any of its
property and assets (including, without limitation, any Pool
Receivable or any interest therein) other than pursuant to this
Agreement;
IV-8
(B) make, incur or suffer to exist an investment in, equity
contribution to, loan, credit or advance to, or payment obligation in
respect of the deferred purchase price of property from, any other
Person, except for obligations incurred pursuant to the Transaction
Documents; or
(C) create any direct or indirect Subsidiary or otherwise
acquire direct or indirect ownership of any equity interests in any
other Person.
(o) RESTRICTED PAYMENTS.
(i) GENERAL RESTRICTION. Except in accordance with this
SUBPARAGRAPH (i), the Seller shall not (A) purchase or redeem any shares of
its capital stock, (B) declare or pay any Dividend or set aside any funds
for any such purpose, (C) prepay, purchase or redeem any subordinated
indebtedness of the Seller, (D) lend or advance any funds or (E) repay any
loans or advances to, for or from the Originator. Actions of the type
described in this CLAUSE (i) are herein collectively called "RESTRICTED
PAYMENTS".
(ii) TYPES OF PERMITTED PAYMENTS. Subject to the limitations set
forth in CLAUSE (iii) below, the Seller may make Restricted Payments so
long as such Restricted Payments are made only to the Originator and only
in one or more of the following ways:
(A) Seller may make cash payments (including prepayments) on the
Company Note in accordance with its terms; and
(B) if no amounts are then outstanding under the Company Note,
the Seller may declare and pay Dividends.
(iii) SPECIFIC RESTRICTIONS. The Seller may make Restricted
Payments only out of Collections paid or released to the Seller pursuant to
SECTIONS 1.4(b). Furthermore, the Seller shall not pay, make or declare
(A) any Dividend if, after giving effect thereto, Seller's
Tangible Net Worth would be less than Three Million Dollars
($3,000,000); or
(B) any Restricted Payment (including any Dividend) if, after
giving effect thereto, any Termination Event or Unmatured Termination
Event shall have occurred and be continuing.
IV-9
(p) USE OF SELLER'S SHARE OF COLLECTIONS. The Seller shall apply its
share of Collections to make payments in the following order of priority:
FIRST, the payment of its expenses (including, without limitation, the
obligations payable to Purchaser, the Affected Persons and the Agent under the
Transaction Documents), SECOND, the payment of accrued and unpaid interest on
the Company Note, THIRD, the payment of the outstanding principal amount of the
Company Note, and FOURTH, other legal and valid corporate purposes.
(q) AMENDMENTS TO CERTAIN DOCUMENTS.
(i) The Seller shall not amend, supplement, amend and restate, or
otherwise modify the Purchase and Contribution Agreement, the Company Note,
any other document executed under the Purchase and Contribution Agreement,
the Collection Account Agreement, the Lock-Box Agreements, the Liquidation
Account Agreement or the Seller's certificate of incorporation or by-laws,
except (A) in accordance with the terms of such document, instrument or
agreement and (B) with the advance written consent of the Agent.
(ii) The Originator shall not enter into or otherwise become
bound by, any agreement, instrument, document or other arrangement that
restricts its right to amend, supplement, amend and restate or otherwise
modify, or to extend or renew, or to waive any right under, this Agreement
or any other Transaction Document.
(r) INCURRENCE OF INDEBTEDNESS. The Seller shall not (i) create,
incur or permit to exist, any Debt or liability or (ii) cause or permit to be
issued for its account any letters of credit or bankers' acceptances, except for
Debt incurred pursuant to the Company Note and liabilities incurred pursuant to
or in connection with the Transaction Documents or otherwise permitted therein.
(s) AMENDMENTS TO PLEDGE AGREEMENT. The Servicer covenants that it
will not amend Section 21 of the Borrower Stock Pledge Agreement (as defined in
the Credit and Guarantee Agreement) without the consent of the Agent.
IV-10
EXHIBIT V
TERMINATION EVENTS
Each of the following shall be a "Termination Event":
(a) (i) The Servicer (if SDW or any of its Affiliates) shall fail to
perform or observe any term, covenant or agreement under the Agreement in any
material respect or (ii) any Person which is the Servicer shall fail to make
when due (or within two Business Days after notice thereof) any payment or
deposit to be made by it under the Agreement; or
(b) The Seller shall fail (i) to transfer to any successor Servicer
when required any rights, pursuant to the Agreement, which the Seller then has
as Servicer, or (ii) to make any payment required under the Agreement, and in
either case such failure shall remain unremedied for two Business Days after
notice; or
(c) Any representation or warranty made or deemed made by the Seller
or the Servicer (or any of their respective officers) under or in connection
with the Agreement or any information or report delivered by the Seller or the
Servicer pursuant to the Agreement shall prove to have been incorrect or untrue
in any material respect when made or deemed made or delivered; or
(d) The Seller or the Servicer shall fail to perform or observe any
other term, covenant or agreement contained in the Agreement on its part to be
performed or observed and any such failure shall remain unremedied for 30 days
(or, with respect to a failure to deliver the Servicer Report or the Portfolio
Certificate pursuant to the Agreement, such failure shall remain unremedied for
five days); or
(e)(i) Any event shall occur or condition shall exist under the
Credit and Guarantee Agreement and shall continue after the applicable grace
period, if any, specified in the Credit and Guarantee Agreement, if the effect
of such event or condition is to permit the acceleration of the maturity of the
Debt under the Credit and Guarantee Agreement and the requisite Lenders (as
defined in the Credit and Guarantee Agreement) shall not have waived such event
or condition within 60 days of the occurrence thereof; or (ii) any Debt under
the Credit and Guarantee Agreement shall be declared to be due and payable, or
required to be prepaid (other than by a regularly scheduled required
prepayment), redeemed, purchased or defeased, or an offer to repay, redeem,
purchase or defease such Debt shall be
V-1
required to be made, in each case prior to the stated maturity thereof; or
(f) The Agreement or any purchase or any reinvestment pursuant to the
Agreement shall for any reason (other than pursuant to the terms hereof) (i)
cease to create, or the Participation shall for any reason cease to be, a valid
and enforceable perfected undivided percentage ownership interest to the extent
of the Participation in each Pool Receivable and the Related Security and
Collections and other proceeds with respect thereto, free and clear of any
Adverse Claim or (ii) cease to create with respect to the items described in
SECTION 1.2(d), or the interest of the Purchaser with respect to such items
shall cease to be, a valid and enforceable first priority perfected security
interest, free and clear of any Adverse Claim; or
(g) The Originator or Seller shall generally not pay its debts as
such debts become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against the Originator or Seller
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other similar
official for it or for any substantial part of its property and, in the case of
any such proceeding instituted against it (but not instituted by it), either
such proceeding shall remain undismissed or unstayed for a period of 30 days, or
any of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of its
property) shall occur; or the Originator or Seller shall take any corporate
action to authorize any of the actions set forth above in this PARAGRAPH (g); or
(h) As of the last day of any Fiscal Month, the arithmetic average of
the Default Ratios for the most recent three Fiscal Months shall exceed 2.0% or
the arithmetic average of the Delinquency Ratio for the most recent three Fiscal
Months shall exceed 2.0% or the arithmetic average of the Loss-to-Liquidation
Ratios for the most recent twelve Fiscal Months shall exceed 0.5% or the average
of the Dilution Ratios for the most recent three Fiscal Months shall exceed 7%;
or
(i) The Participation shall exceed 100% and such condition shall
continue unremedied for 5 days; or
(j) A Change in Control shall occur; or
V-2
(k) The Internal Revenue Service shall file notice of a lien pursuant
to Section 6323 of the Internal Revenue Code with regard to any assets of Seller
and such lien shall not have been released within ten Business Days, or the
Pension Benefit Guaranty Corporation shall, or shall indicate its intention to,
file notice of a lien pursuant to Section 4068 of ERISA with regard to any of
the assets of Seller or any Originator; or
(l) The aggregate Outstanding Balances of all Eligible Receivables
shall be less than 115% of the Investment and such failure shall continue
unremedied for 5 days.
V-3
EXHIBIT VI
COLLECTION ACCOUNT AGREEMENT
VI-1
EXHIBIT VII
LIQUIDATION ACCOUNT AGREEMENT
VII-1
EXHIBIT VIII
SPECIAL OBLIGOR CONCENTRATION LIMITS
NORMAL
SENIOR UNSECURED CONCENTRATION
OBLIGOR DEBT RATING PERCENTAGE
------- ----------- ----------
International Paper A(1) 30%
Central National ▇▇▇▇▇▇▇▇▇ ▇▇ 15%(2)
Alco Standard A(1) 20%
▇▇▇▇ A(1) 10%
Affiliates of Sappi NR (L/C from 15%
International (Interco) Standard Bk of
South Africa)
(1) If a Special Obligor is downgraded to BBB/Baa2 or below, the Normal
Concentration Percentage for such Obligor will be reduced to 7.5%. If a
Special Obligor is reduced below BBB-/Baa3, the Normal Concentration
Percentage will revert to 3.0% (or 2.5% if PAR is the Purchaser hereunder).
(2) The Normal Concentration Percentage for Central National ▇▇▇▇▇▇▇▇▇ shall
only equal 15% so long as the Pool Receivables of which Central National
▇▇▇▇▇▇▇▇▇ is the Obligor are (x) supported by a letter of credit in a face
amount at least equal to the Outstanding Balance of such Receivables issued
for the benefit of the Liquidity Banks and/or the Purchasers and in a form
acceptable to the Agent and the Liquidity Agent and issued by a financial
institution with a short-term unsecured credit rating of at least A-1/P-1
by the Rating Agencies or (y) supported by a credit facility or arrangement
otherwise acceptable the Agent, the Liquidity Agent and the Rating
Agencies, else the Normal Concentration Percentage shall equal 3.0% (or
2.5% if PAR is the Purchaser hereunder). If the Average Maturity of the
Pool Receivables of which Central National ▇▇▇▇▇▇▇▇▇ is the Obligor exceeds
45 days, the Normal Concentration Percentage for Central National ▇▇▇▇▇▇▇▇▇
will revert to 3.0% (or 2.5% if PAR is the Purchaser hereunder).
VIII-1
EXHIBIT IX
PORTFOLIO CERTIFICATE
IX-1
SCHEDULE I
CREDIT AND COLLECTION POLICY
Schedule I-1
SCHEDULE II
LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS
LOCK-BOX BANK LOCK-BOX ACCOUNT
------------- ----------------
1. The First National Bank of Chicago 55-34062
First Chicago National
Processing Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Cash Management Product
Implementation Unit
2. Mellon Bank, N.A. 093-5383
Three Mellon Bank Center
Room 3119
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Document Control Manager
Schedule II-1
SCHEDULE III
TRADE NAMES
None
Schedule III-1
SCHEDULE IV
FISCAL MONTHS
--------------------------------------------------------------
--------------------------------------------------------------
FISCAL MONTH QUARTER CLOSING MONTH-END NUMBER DAYS
DAY CLOSING DATE OF
WEEKS
--------------------------------------------------------------
January 1996 Qtr 2 Wed 31 Jan. 1996 4 28
--------------------------------------------------------------
February 1996 Wed 28 Feb. 1996 4 28
--------------------------------------------------------------
March 1996 Wed 3 April 1996 5 35
--------------------------------------------------------------
April 1996 Qtr 3 Wed 1 May 1996 4 28
--------------------------------------------------------------
May 1996 Wed 29 May 1996 4 28
--------------------------------------------------------------
June 1996 Wed 3 July 1996 5 35
--------------------------------------------------------------
July 1996 Qtr 4 Wed 31 July 1996 4 28
--------------------------------------------------------------
August 1996 Wed 28 August 1996 4 28
--------------------------------------------------------------
September 1996 Wed 2 October 1996 5 35
--------------------------------------------------------------
--------------------------------------------------------------
Schedule IV-1
ANNEX A
FORM OF LOCK-BOX AGREEMENT
[Letterhead of Seller]
LOCK-BOX AGREEMENT
___________, 199__
[Name and Address of
Lock-Box Bank]
Gentlemen:
Reference is made to our [lock-box](1) account[s] no[s]. maintained with
you (the "Account[s]"). Pursuant to a Receivables Purchase Agreement dated as
of ______________, 199_ among us, as Seller, S.D. ▇▇▇▇▇▇ Company, as Servicer,
Bank of Montreal, as purchaser (Bank of Montreal, or any successors and assigns
in such capacity, the "Purchaser"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Securities Inc., as agent
(the "Agent"), we have assigned and/or may hereafter assign to the Purchaser
one or more undivided percentage ownership interests in accounts, chattel
papers, instruments or general intangibles (collectively, "Receivables") with
respect to which payments are or may hereafter be made to the Account[s], and
have granted to the Purchaser a security interest in such Receivables, the
Account[s], amounts on deposit therein and related property. Your execution of
this letter agreement is a condition precedent to our continued maintenance of
the Account[s] with you.
We hereby transfer exclusive ownership and control of the Account[s] to the
Agent on behalf of the Purchaser, subject only to the condition subsequent that
the Agent shall have given you notice of its election to assume such ownership
and control, which notice may be in the form attached hereto as Exhibit A or in
any other form that gives you reasonable notice of such election.
_______________________
(1) Delete in the case of direct wire transfer accounts.
Annex A-1
We hereby irrevocably instruct you, at all times from and after the date of
your receipt of notice from the Agent as described above, to make all payments
to be made by you out of or in connection with the Account[s] directly to the
Agent, at its address set forth below its signature hereto or as the Agent
otherwise notifies you, for the account of the Purchaser (account #__________,
ABA #_________), or otherwise in accordance with the instructions of the Agent.
We also hereby notify you that, at all times from and after the date of
your receipt of notice from the Agent as described above, the Agent shall be
irrevocably entitled to exercise in our place and stead any and all rights in
respect of or in connection with the Account[s], including, without limitation,
(a) the right to specify when payments are to be made out of or in connection
with the Account[s] and (b) the right to require preparation of duplicate
monthly bank statements on the Account[s] for the Agent's audit purposes and
mailing of such statements directly to an address specified by the Agent.
Notice from the Agent may be personally served or sent by Telex, facsimile
or U.S. mail, certified return receipt requested, to the address, [Telex] or
facsimile number set forth under your signature to this letter agreement (or to
such other address, [Telex] or facsimile number as to which you shall notify the
Agent in writing). If notice is given by [Telex] or facsimile, it will be
deemed to have been received when the notice is sent [and the answerback is
received (in the case of Telex)] or receipt is confirmed by telephone or other
electronic means (in the case of facsimile). All other notices will be deemed
to have been received when actually received or, in the case of personal
delivery, delivered.
By executing this letter agreement, you acknowledge and consent to the
existence of the Agent's right to ownership and control of the Account[s] and
the Purchaser's security interest in the Account[s] and amounts from time to
time on deposit therein and agree that from the date hereof the Account[s] shall
be maintained by you for the benefit of, and amounts from time to time therein
held by you as agent for, the Agent on the terms provided herein. The
Account[s] [is/are] to be titled "[Name of Seller] and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Securities
Inc. as the Agent for the Purchaser, its successors and assigns, as their
interests may appear." Except as otherwise provided in this letter agreement,
payments to the Account[s] are to be processed in accordance with the standard
procedures currently in effect. All service charges and fees with respect to
the Account[s] shall continue to be payable by us as under the arrangements
currently in effect.
By executing this letter agreement, you irrevocably waive and agree not to
assert, claim or endeavor to exercise,
Annex A-2
irrevocably bar and estop yourself from asserting, claiming or exercising, and
acknowledge that you have not heretofore received a notice, writ, order or any
form of legal process from any other person or entity asserting, claiming or
exercising, any right of set-off, banker's lien or other purported form of
claim with respect to [any of] the Account[s] or any funds from time to time
therein. Except for your right to payment of your service charges and fees and
to make deductions for returned items, you shall have no rights in the
Account[s] or funds therein. To the extent you may ever have such rights, you
hereby expressly subordinate all such rights to all rights of the Agent.
You may terminate this letter agreement by cancelling the Account[s]
maintained with you, which cancellation and termination shall become effective
only upon thirty days' prior written notice thereof from you to the Agent.
Incoming [mail addressed to] [wire transfers to] the Account[s] received after
such cancellation shall be forwarded in accordance with the Agent's
instructions. This letter agreement may also be terminated upon written notice
to you by the Agent stating that the Receivables Purchase Agreement pursuant to
which this letter agreement was obtained is no longer in effect. Except as
otherwise provided in this paragraph, this letter agreement may not be
terminated or amended without the prior written consent of the Agent. This
letter agreement may be executed in any number of counterparts, and by the
parties hereto on separate counterparts, each of which when so executed shall be
deemed to be an original and all of which when taken together shall constitute
one and the same agreement.
Please acknowledge your agreement to the terms set forth in this letter
agreement by signing the two copies of this letter agreement enclosed herewith
in the space provided below, sending one such signed copy to the Agent at its
address provided above and returning the other signed copy to us.
Very truly yours,
[NAME OF SELLER]
By:________________________________
Name:______________________________
Title:_____________________________
Annex A-3
Acknowledged and agreed to as of the date first
written above:
▇▇▇▇▇▇▇ ▇▇▇▇▇ SECURITIES INC.,
as Agent
By:________________________________
Name:______________________________
Title:_____________________________
Address for notice:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Director
Telephone:
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
[NAME OF LOCK-BOX BANK]
By:________________________________
Name:______________________________
Title:_____________________________
Address for notice:
Attention:
Telex No.:
(Answerback:)
Telephone:
Facsimile:
Annex A-4
EXHIBIT A to
Lock-Box Agreement
[▇▇▇▇▇▇▇ ▇▇▇▇▇ Securities Inc.]
[Name and Address
of Lock-Box Bank]
Re: [Name of Seller]
[Lock-Box]* Account No[s]. [and ]
--------------------------------------------
Gentlemen:
Reference is made to the letter agreement dated , 199__ (the
"Letter Agreement") among [Name of Seller], S.D. ▇▇▇▇▇▇ Company, as Servicer,
Bank of Montreal (Bank of Montreal, or any successors and assigns thereof, the
"Purchaser"), the undersigned, as Agent and you concerning the above described
[lock-box]* account[s] (the "Account[s]"). We hereby give you notice of our
assumption of ownership and control of the Account[s] as provided in the Letter
Agreement.
We hereby instruct you to make all payments to be made by you out of or in
connection with the Account[s] [directly to the undersigned, at [our address set
forth above], for the account of the Purchaser (account no. )].
[other instructions]
Very truly yours,
▇▇▇▇▇▇▇ ▇▇▇▇▇ SECURITIES INC.,
as Agent
By:________________________________
Name:______________________________
Title:_____________________________
_____________________
* Delete in the case of direct wire transfer accounts.
Annex A-5
ANNEX C
FORM OF CORPORATE OPINIONS
ANNEX D
FORM OF BANKRUPTCY OPINION
ANNEX E
FORM OF SERVICER REPORT
FIRST AMENDMENT TO RECEIVABLES PURCHASE
AGREEMENT
This FIRST AMENDMENT TO RECEIVABLES PURCHASE AGREEMENT, dated as of June
14, 1996 (this "AMENDMENT"), is entered into among S.D. ▇▇▇▇▇▇ FINANCE CO., a
Delaware corporation ("SELLER"), S.D. ▇▇▇▇▇▇ COMPANY, a Pennsylvania
corporation ("S.D. ▇▇▇▇▇▇"), as Servicer, POOLED ACCOUNTS RECEIVABLE CAPITAL
CORPORATION, a Delaware corporation (the "PURCHASER"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇
SECURITIES, INC., a Delaware corporation, as Agent for Purchaser (in such
capacity, the "AGENT").
RECITALS
1. The Seller, S.D. ▇▇▇▇▇▇, the Purchaser and the Agent are parties to
that certain Receivables Purchase Agreement dated as of April 23, 1996 (the
"AGREEMENT"); and
2. The parties hereto desire to amend the Agreement as hereinafter set
forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. CERTAIN DEFINED TERMS. Capitalized terms that are used herein
without definition and that are defined in the Agreement shall have the same
meanings herein as in the Agreement.
2. AMENDMENT TO AGREEMENT. The Agreement is hereby amended as follows:
2.1 Exhibit VIII to the Agreement is deleted in its entirety and
replaced by the Exhibit VIII attached hereto.
3. REPRESENTATIONS AND WARRANTIES. Each of the Seller and S.D. ▇▇▇▇▇▇
hereby represents and warrants to Purchaser and the Agent as to itself as
follows:
a. REPRESENTATIONS AND WARRANTIES. Its representations and
warranties contained in Exhibit III to the Agreement are true and
correct as of the date hereof (unless stated to relate solely to an
earlier date, in which case such representations and warranties are true
and correct as of such earlier date).
b. ENFORCEABILITY. The execution and delivery by it of this Amendment,
and the performance of its obligations under this Amendment and the
Agreement, as amended hereby, are within
its corporate powers and have been duly authorized by all necessary
corporate action on its part. This Amendment and the Agreement, as
amended hereby, are its valid and legally binding obligations,
enforceable in accordance with their terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and by
general principles of equity, regardless of whether such enforceability
is considered in a proceeding in equity or at law.
c. NO DEFAULT. No Termination Event or Unmatured Termination Event
has occurred and is continuing.
4. EFFECT OF AMENDMENT. Except as expressly amended and modified by
this Amendment, all provisions of the Agreement shall remain in full force
and effect. After this Amendment becomes effective, all references in the
Agreement (or in any other Transaction Document) to "this Agreement",
"hereof", "herein" or words of similar effect referring to the Agreement
shall be deemed to be references to the Agreement as amended by this
Amendment. This Amendment shall not be deemed to expressly or impliedly
waive, amend or supplement any provision of the Agreement other than as set
forth herein.
5. EFFECTIVENESS. This Amendment shall become effective as of the date
hereof upon receipt by the Agent of the following:
a. counterparts of this Amendment (whether by facsimile or
otherwise) executed by each of the other parties hereto; and
b. a written statement from each of ▇▇▇▇▇'▇ and S&P that this
Amendment will not result in a downgrade or withdrawal of the rating of
the commercial paper notes of the Purchaser.
6. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties on separate counterparts, and each
counterpart shall be deemed to be an original, and all such counterparts
shall together constitute but one and the same instrument.
7. GOVERNING LAW. This Amendment shall be governed by, and construed in
accordance with, the internal laws of the Commonwealth of Massachusetts
without regard to any otherwise applicable principles of conflicts of law.
8. SECTION HEADINGS. The various headings of this Amendment are
inserted for convenience only and shall not affect the meaning or
interpretation of this amendment or the Agreement or any provision hereof or
thereof.
-2-
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first written above.
S.D. ▇▇▇▇▇▇ FINANCE CO., as Seller
By:________________________________
Name:___________________________
Title:__________________________
S.D. ▇▇▇▇▇▇ COMPANY, as Servicer
By:________________________________
Name:___________________________
Title:__________________________
POOLED ACCOUNTS RECEIVABLE
CAPITAL CORPORATION, as Purchaser
By:________________________________
Name:___________________________
Title:__________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇ SECURITIES, INC.,
as Agent
By:________________________________
Name:___________________________
Title:__________________________
By:________________________________
Name:___________________________
Title:__________________________
-3-
EXHIBIT VIII
SPECIAL OBLIGOR CONCENTRATION LIMITS
NORMAL
SENIOR UNSECURED CONCENTRATION
OBLIGOR DEBT RATING PERCENTAGE
------- ---------------- -------------
International Paper A(1) 30%
Central National ▇▇▇▇▇▇▇▇▇ ▇▇ 15%(2)
Alco Standard A(1) 20%
▇▇▇▇ A(1) 10%
Affiliates of Sappi NR (L/C from 20%
International (Interco) Standard Bk of
South Africa)
(1) If a Special Obligor is downgraded to BBB/Baa2 or below, the Normal
Concentration Percentage for such Obligor will be reduced to 7.5%. If a
Special Obligor is reduced below BBB-/Baa3, the Normal Concentration
Percentage will revert to 2.5%.
(2) The Normal Concentration Percentage for Central National ▇▇▇▇▇▇▇▇▇ shall
equal 15% only so long as the Pool Receivables of which Central National
▇▇▇▇▇▇▇▇▇ is the Obligor are (x) fully supported by a letter of credit
in a face amount at least equal to the Outstanding Balance of such
Receivables issued for the benefit of the Liquidity Banks and/or the
Purchaser and in a form acceptable to the Agent and the Liquidity Agent
and issued by a financial institution with a short-term unsecured credit
rating of at least A-1/P-1 by the Rating Agencies or (y) fully supported
by the Liquidity Agreement or another credit facility or arrangement
otherwise acceptable the Agent, the Liquidity Agent and the Rating
Agencies, otherwise the Normal Concentration Percentage for Central
National ▇▇▇▇▇▇▇▇▇ shall equal 2.5%. If the Average Maturity of the Pool
Receivables of which Central National ▇▇▇▇▇▇▇▇▇ is the Obligor exceeds
45 days, the Normal Concentration Percentage for Central National
▇▇▇▇▇▇▇▇▇ will revert to 2.5%.
VIII-1