EXHIBIT 10.15
RECEIVABLES PURCHASE AND SERVICING AGREEMENT
Dated as of April 29, 1996
by and among
PAMECO SECURITIZATION CORPORATION,
as Seller,
REDWOOD RECEIVABLES CORPORATION,
as Purchaser,
PAMECO CORPORATION,
as Servicer,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Operating Agent and Collateral Agent
TABLE OF CONTENTS
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ARTICLE I.
DEFINITIONS AND INTERPRETATION
Section 1.01. Definitions.................................................... 2
Section 1.02. Other Terms and Interpretation................................. 2
ARTICLE II.
AMOUNTS AND TERMS OF THE PURCHASES
Section 2.01. Purchases...................................................... 2
Section 2.02. Optional Changes in Purchase Limit............................. 2
Section 2.03. Notices Relating to Purchases.................................. 3
Section 2.04. Conveyance of Receivables...................................... 3
Section 2.05. Facility Termination Date...................................... 4
Section 2.06. Repayment of Capital Investment................................ 4
Section 2.07. Daily Yield.................................................... 4
Section 2.08. Fees........................................................... 4
Section 2.09. Time and Method of Payments.................................... 5
Section 2.10. Further Action Evidencing Purchases............................ 5
Section 2.11. Additional Costs; Capital Requirements......................... 6
Section 2.12. Breakage Costs................................................. 7
Section 2.13. Purchase Excess................................................ 8
ARTICLE III.
CONDITIONS TO PURCHASE
Section 3.01. Conditions Precedent to Effectiveness of Agreement............. 8
Section 3.02. Conditions Precedent to All Purchases..........................11
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of the Seller...................12
Section 4.02. Representations and Warranties of the Servicer.................17
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ARTICLE V.
GENERAL COVENANTS OF THE SELLER
Section 5.01. Affirmative Covenants of the Seller............................19
Section 5.02. Reporting Requirements of the Seller...........................21
Section 5.03. Negative Covenants of the Seller...............................22
ARTICLE VI.
COLLECTIONS AND DISBURSEMENTS
Section 6.01. Establishment of Accounts......................................24
Section 6.02. Funding of Collection Account..................................26
Section 6.03. Daily Disbursements From the Collection Account -
Revolving Period...............................................27
Section 6.04. Disbursements From the Retention Account - Settlement
Date Procedures - Revolving Period.............................29
Section 6.05. Liquidation Settlement Procedures..............................30
Section 6.06. Investment of Accounts.........................................33
Section 6.07. Termination Procedure..........................................33
ARTICLE VII.
APPOINTMENT OF THE SERVICER
Section 7.01. Appointment of the Servicer....................................34
Section 7.02. Duties and Responsibilities of the Servicer....................34
Section 7.03. Collections on Receivables.....................................34
Section 7.04. Authorization of the Servicer..................................35
Section 7.05. Servicing Fees.................................................35
Section 7.06. Covenants of the Servicer......................................36
Section 7.07. Reporting......................................................37
Section 7.08. Annual Statement as to Compliance..............................37
Section 7.09. Annual Independent Public Accountants' Servicing and
Compliance Report..............................................38
ARTICLE VIII.
GRANT OF SECURITY INTERESTS
Section 8.01. Seller's Grant of Security Interest............................38
Section 8.02. Seller's Certification.........................................40
Section 8.03. Consent to Assignment..........................................40
Section 8.04. Delivery of Collateral.........................................40
Section 8.05. Seller Remains Liable..........................................41
Section 8.06. Covenants of the Seller and Servicer Regarding the Collateral..41
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ARTICLE IX.
TERMINATION EVENTS
Section 9.01. Termination Events.............................................44
Section 9.02. Events of Servicer Termination.................................47
ARTICLE X.
REMEDIES
Section 10.01. Actions Upon Termination Event.................................49
Section 10.02. Exercise of Remedies...........................................50
Section 10.03. Severability of Remedies.......................................50
Section 10.04. Power of Attorney..............................................50
Section 10.05. Continuing Security Interest...................................51
ARTICLE XI.
SUCCESSOR SERVICER
Section 11.01. Servicer Not to Resign.........................................51
Section 11.02. Appointment of the Successor Servicer..........................51
Section 11.03. Duties of the Servicer.........................................52
Section 11.04. Effect of Termination or Resignation...........................52
ARTICLE XII.
INDEMNIFICATION
Section 12.01. Indemnities by the Seller......................................52
Section 12.02. Indemnities by the Servicer....................................53
ARTICLE XIII.
OPERATING AGENT
Section 13.01. Authorization and Action.......................................54
Section 13.02. Reliance, etc..................................................54
Section 13.03. GE Capital and Affiliates......................................55
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ARTICLE XIV.
MISCELLANEOUS
Section 14.01. Notices, Etc...................................................55
Section 14.02. Binding Effect; Assignability..................................55
Section 14.03. Costs, Expenses and Taxes......................................56
Section 14.04. Confidentiality................................................57
Section 14.05. No Proceedings.................................................57
Section 14.06. Amendments; Waivers; Consents..................................58
Section 14.07. GOVERNING LAW; CONSENT TO JURISDICTION;
WAIVER OF JURY TRIAL...........................................58
Section 14.08. Execution in Counterparts; Severability........................59
Section 14.09. Descriptive Headings...........................................59
Section 14.10. Limited Recourse...............................................59
Schedule 1 - Concentration Limits
Schedule 2 - Excluded Obligors
Annex A to
Schedule 2 - Form of Amending Letter
Schedule 3 - Determination of "Daily Yield"
Schedule 4 - Yield Discount Amount
Schedule 5 - Addresses of the Seller
Schedule 6 - List of Lockboxes and Lockbox Accounts
Schedule 7 - List of Seller Agreements
Schedule 8 - List of Originator/Servicer Trade, Fictitious, Assumed and
"Doing Business as" Names
Schedule 9 - States for Which Good Standing Certificates are Required
Exhibit A-1 - Form of Notice (Request for Purchase)
Exhibit A-2 - Form of Notice (Reduction of Commitment)
Exhibit A-3 - Form of Notice (Termination of Commitment)
Exhibit A-4 - Form of Notice (Repayment of Capital Investment)
Exhibit B - Form of Purchase Assignment
Exhibit C - Form of Investment Base Certificate
Exhibit D - Form of Officer's Certificate as to Solvency
Exhibit E - Form of Officer's Certificate of Seller
(Bringdown Certificate)
Exhibit F - Form of Officer's Certificate of Servicer
Exhibit G - Form of Monthly Report
Exhibit H - Financial Covenants - Servicer
Exhibit I - Financial Covenants - Seller
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RECEIVABLES PURCHASE AND SERVICING AGREEMENT, dated as of April 29,
1996 (the "AGREEMENT") by and among PAMECO SECURITIZATION CORPORATION, a
Delaware corporation (the "SELLER"), REDWOOD RECEIVABLES CORPORATION, a Delaware
corporation, as Purchaser (as such, together with its successors and assigns,
the "PURCHASER"), GENERAL ELECTRIC CAPITAL CORPORATION, in its capacity as
operating agent hereunder (as such, together with its successors and assigns,
the "OPERATING AGENT") and in its capacity as Collateral Agent for the Purchaser
Secured Parties (as such, together with its successors and assigns, the
"COLLATERAL AGENT"), and PAMECO CORPORATION, a Delaware corporation, as servicer
hereunder (as such, together with its successors and permitted assigns, the
"SERVICER").
RECITALS
A. The Seller is a wholly-owned bankruptcy remote Subsidiary of the
Originator.
B. The Seller has been formed for the sole purpose of purchasing or
otherwise acquiring certain Receivables originated by the Originator.
C. The Seller intends that such Receivables shall be purchased by or
contributed to the Seller pursuant to the Transfer Agreement.
D. The Seller and the Purchaser intend that the Purchaser purchase
the Receivables.
E. The Operating Agent has been requested and is willing to act as
operating agent on behalf of the Purchaser in connection with the making and
financing of such advances.
F. In order to effectuate the purposes of this Agreement, the
Purchaser and the Operating Agent desire that a servicer be appointed to perform
certain servicing, administrative and collection functions in respect of the
receivables acquired by the Purchaser under this Agreement.
G. The Originator has been requested and is willing to act as the
Servicer.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I.
DEFINITIONS AND INTERPRETATION
Section 1.01. Definitions. Except as otherwise expressly provided herein
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or unless the context otherwise requires, capitalized terms not otherwise
defined herein shall have meanings assigned to such terms in Annex X hereto,
which is incorporated by reference herein. All other capitalized terms used
herein shall have the meanings specified herein.
Section 1.02. Other Terms and Interpretation. All other terms and the
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interpretation of this Agreement shall be as set out in Annex X hereto.
ARTICLE II.
AMOUNTS AND TERMS OF THE PURCHASES
Section 2.01. Purchases. On the terms and conditions hereinafter set
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forth, the Purchaser shall purchase Transferred Receivables (each, a "PURCHASE")
from the Seller from time to time during the Revolving Period. Under no
circumstances shall the Purchaser make any Purchase if, after giving effect to
such Purchase, the aggregate outstanding Capital Investment would exceed the
Availability. The aggregate price for each such Purchase shall consist of the
Cash Purchase Price and the Deferred Purchase Price.
Section 2.02. Optional Changes in Purchase Limit.
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(a) The Seller may, not more than twice during each calendar year,
reduce the Maximum Purchase Limit permanently; provided that (i) the Seller
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shall give notice of such reduction to the Purchaser in the form of Exhibit A-2,
(ii) any partial reduction of the Maximum Purchase Limit shall be in an amount
equal to Five Million Dollars ($5,000,000) or an integral multiple thereof, and
(iii) no such reduction shall reduce the Maximum Purchase Limit below Capital
Investment.
(b) The Seller shall be entitled at its option to terminate the
Maximum Purchase Limit, provided that the Purchaser shall be given no less than
90 days' prior notice by the Seller of such termination in the form of Exhibit
A-3. Any such termination shall be permanent and irrevocable.
(c) Each written notice required to be delivered pursuant to clauses
(a) and (b) above shall be irrevocable and shall be effective only if received
by the Purchaser and the Operating Agent not later than 5:00 p.m., New York City
time on the
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Business Day prior to the date of the related termination or reduction. Each
such notice of termination or reduction shall specify the amount thereof.
Section 2.03. Notices Relating to Purchases.
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(a) On the third Business Day of each week, the Seller shall file
with the Operating Agent an Investment Base Certificate and, upon request,
copies of all applicable Request Notices under the Transfer Agreement delivered
since the date of the most recent Investment Base Certificate filed with the
Operating Agent. Availability will be calculated based on the most recent
Investment Base Certificate delivered to the Purchaser and the Operating Agent.
(b) The Seller shall give the Purchaser and the Operating Agent
written notice of each Purchase resulting in an increase in Capital Investment
(in each case, a "SELLER NOTICE"). Each such written notice shall be
substantially in the form of Exhibit A-1, shall be irrevocable and shall be
effective only if received by the Purchaser and the Operating Agent not later
than 12:00 p.m., New York City time on the Business Day prior to the date of the
related Purchase. Each such notice requesting a Purchase shall specify the
amount by which the Seller wishes the Capital Investment of the Purchaser to be
increased and the Purchase Date (which shall be a Business Day).
Section 2.04. Conveyance of Receivables.
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(a) On the Effective Date, the Seller will complete, execute and
deliver a Purchase Assignment in the form of Exhibit B to the Purchaser.
(b) (i) Following receipt of a Seller Notice, subject to the
satisfaction of the conditions set forth in Section 3.02, the Purchaser shall
make available to or on behalf of the Seller, in same day funds, in accordance
with the Seller's instructions (after taking into account amounts on deposit in
the Collection Account which may be applied to any Capital Investment pursuant
to Section 6.03(a)(iii)) the lesser of the amount specified in such Seller
Notice and Capital Investment Available.
(ii) On each Business Day during the Revolving Period, subject to
the terms of Section 6.03, the Purchaser shall make available to or on behalf of
the Seller, in same day funds, amounts on deposit in the Collection Account
which may be disbursed to the Seller as payment for the Transferred Receivables.
(c) Effective on the date of each Purchase, the ownership of all
Transferred Receivables (including Transferred Receivables transferred prior to
the Purchase Date) will be vested in the Purchaser. The Seller shall not take
any action inconsistent with such ownership and shall not claim any ownership
interest in any such Transferred Receivable. The Seller shall indicate in its
Records that ownership of
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the Transferred Receivable is held by the Purchaser. In addition, the Seller
shall respond to any inquiries with respect to ownership of a Transferred
Receivable by stating that it is no longer the owner of such Transferred
Receivable and that ownership of such Transferred Receivable is held by the
Purchaser. Documents relating to the Transferred Receivables shall be held in
trust by the Seller and the Servicer, for the benefit of the Purchaser as the
owner thereof, and possession of any incident relating to the Transferred
Receivables so retained is for the sole purpose of facilitating the servicing of
the Transferred Receivables. Such retention and possession is at the will of
the Purchaser and in a custodial capacity for the benefit of the Purchaser only.
(d) If the Originator is required to repurchase Transferred
Receivables from the Seller pursuant to Section 4.04 of the Transfer Agreement,
the Purchaser shall sell such Transferred Receivables to the Seller (i) for cash
or (ii) in exchange for a new Eligible Receivable or new Eligible Receivables,
in either case in an amount equal to the Outstanding Balance of such Transferred
Receivables.
Section 2.05. Facility Termination Date. Notwithstanding anything to the
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contrary herein, on and after the Facility Termination Date, the Purchaser shall
have no obligation to purchase any additional Receivables.
Section 2.06. Repayment of Capital Investment. The Capital Investment may
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be repaid at any time and from time to time, in whole or in part, upon prior
written notice to the Purchaser and Operating Agent substantially in the form of
Exhibit A-4 provided, however, that all repayments of Capital Investment or any
portion thereof shall be made together with payment of (i) all Daily Yield
accrued on the amount repaid to (but excluding) the date of such repayment, and
(ii) any and all Breakage Costs payable under Section 2.12.
Section 2.07. Daily Yield.
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(a) The Seller shall pay to the Purchaser, as set forth in Sections
6.03, 6.04 and 6.05, Daily Yield on the Capital Investment of the Purchaser.
(b) Notwithstanding the foregoing, the Seller shall pay interest on
unpaid Daily Yield and on any other amount payable by the Seller hereunder (to
the extent permitted by law) that shall not be paid in full when due (whether at
stated maturity, by acceleration or otherwise) for the period commencing on the
due date thereof to (but excluding) the date the same is paid in full at the
applicable Daily Yield Rate.
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Section 2.08. Fees.
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(a) The Seller shall pay to the Purchaser the fees set forth in the
Fee Letter.
(b) On each Settlement Date, the Seller shall pay to the Servicer,
the Servicing Fee, or to the Successor Servicer, the Successor Servicing Fees
and Expenses.
Section 2.09. Time and Method of Payments. Subject to the provisions of
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Sections 6.02, 6.03, 6.04 and 6.05, all payments of Capital Investment, yield,
fees and other amounts payable by the Seller hereunder shall be made in dollars,
in immediately available funds, to the Purchaser not later than 2:00 p.m., New
York City time, on the date on which such payment shall become due. Any such
payment made on such date but after such time shall be deemed to have been made
on, and Daily Yield shall continue to accrue and be payable thereon until, the
next succeeding Business Day. If any payment becomes due on a day other than a
Business Day, such payment may be made on the next succeeding Business Day and
such extension shall be included in computing Daily Yield in connection with
such payment. All payments hereunder shall be made without setoff or
counterclaim and in such amounts as may be necessary in order that all such
payments shall not be less than the amounts otherwise specified to be paid under
this Agreement. If any payment hereunder to any Affected Party is subject to
withholding for or on account of any present or future taxes, levies, imposts,
duties or other similar charges of whatever nature imposed upon an Affected
Party by any Governmental Authority (other than any tax on or measured by the
net income of the Affected Party to which any such payment is due pursuant to
applicable foreign, federal, state and local income tax laws), such payment
shall be grossed up by an amount such that the Affected Party receives the same
amount that would have been received had such payment not been subject to
withholding.
Section 2.10. Further Action Evidencing Purchases.
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(a) The Seller agrees that, from time to time, at its expense, it
will promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary or appropriate, in the opinion of
the Purchaser, or that the Purchaser or the Operating Agent may request, in
order to perfect, protect or more fully evidence the transfer of ownership of
Transferred Receivables or to enable the Purchaser to exercise or enforce any of
its rights hereunder or under any Purchase Assignment. Without limiting the
generality of the foregoing, the Seller will, upon the request of the Purchaser,
(i) execute and file such financing or continuation statements, or amendments
thereto or assignments thereof, and such other instruments or notices, as may be
necessary or appropriate, or as the Purchaser may request, (ii) after the
occurrence of an Incipient Event, ▇▇▇▇, or cause the Servicer to ▇▇▇▇,
conspicuously each invoice evidencing each Transferred Receivable with a legend,
acceptable to the
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Purchaser, evidencing that the Purchaser has purchased all right and title
thereto and interest therein as provided in the Transfer Agreement, (iii) after
the occurrence of an Incipient Event, send notification to Obligors as to the
transfer of Transferred Receivables, and (iv) ▇▇▇▇, or cause the Servicer to
▇▇▇▇, its master data processing records evidencing such Transferred Receivables
with such legend.
(b) The Seller hereby authorizes the Purchaser to file one or more
financing or continuation statements, and amendments thereto and assignments
thereof, relating to all or any of the Transferred Receivables and Collections
with respect thereto without the signature of the Seller where permitted by law.
A carbon, photographic or other reproduction of this Agreement or any notice or
financing statement covering the Transferred Receivables or any part thereof
shall be sufficient as a notice or financing statement where permitted by law.
The Purchaser will promptly send to the Seller after receipt of any
acknowledgment copies from the appropriate governmental agency any financing or
continuation statements thereto which it files without the signature of the
Seller except, in the case of filings of copies of this Agreement as financing
statements, the Purchaser will promptly send the Seller after receipt from the
appropriate governmental agency the filing or recordation information with
respect thereto.
Section 2.11. Additional Costs; Capital Requirements.
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(a) In the event that any existing or future law, regulation or
guideline, or interpretation thereof, by any court or administrative or
governmental authority charged with the administration thereof, or compliance by
any Affected Party with any request or directive (whether or not having the
force of law) of any such authority shall impose, modify or deem applicable or
result in the application of, any capital maintenance, capital ratio or similar
requirement against commitments made by any Affected Party under this Agreement
or a Program Document, and the result of any event referred to above is to
impose upon any Affected Party or increase any capital requirement applicable as
a result of the making or maintenance of, such Affected Party's commitment
(which imposition of capital requirements may be determined by each Affected
Party's allocation of the aggregate of such capital increases or impositions),
then, upon demand made by the Operating Agent on behalf of such Affected Party
as promptly as practicable after it obtains knowledge that such law, regulation,
guideline, interpretation, request or directive exists and determines to make
such demand, the Seller shall immediately pay to the Collateral Agent on behalf
of such Affected Party from time to time as specified by the Operating Agent,
additional amounts which shall be sufficient to compensate such Affected Party
for the Seller's Share of such imposition of or increase in capital requirements
together with interest on each such amount from the date demanded until payment
in full thereof at the Daily Yield Rate. A certificate setting forth in
reasonable detail the amount necessary to compensate such Affected Party as a
result of an imposition of or increase in capital
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requirements submitted by the Operating Agent to the Seller shall be conclusive,
absent manifest error, as to the amount thereof.
(b) In the event that any Regulatory Change shall: (i) change the
basis of taxation of any amounts payable to any Affected Party in respect of any
Purchases, Capital Investment, LOC Draws, Liquidity Loans or Transaction
Liquidity Loans (other than taxes imposed on the overall net income of such
Affected Party for any such Purchases, Capital Investment, LOC Draws or
Liquidity Loans by the United States of America or the jurisdiction in which
such Affected Party has its principal office); (ii) impose or modify any
reserve, Federal Deposit Insurance Corporation premium or assessment, special
deposit or similar requirements relating to any extensions of credit or other
assets of, or any deposits with or other liabilities of, such Affected Party; or
(iii) impose any other conditions affecting this Agreement in respect of
Purchases, Capital Investment, LOC Draws, Liquidity Loans, and Transaction
Liquidity Loans (or any of such extensions of credit, assets, deposits or
liabilities); and the result of any event referred to in clause (i), (ii) or
(iii) above shall be to increase such Affected Party's costs of making or
maintaining any Purchases, Capital Investment, LOC Draws, Liquidity Loans, and
Transaction Liquidity Loans or its commitment under a Program Document, or to
reduce any amount receivable by such Affected Party hereunder in respect of any
of its Purchases, Capital Investment, LOC Draws and Liquidity Loans or its
commitment (such increases in costs and reductions in amounts receivable are
hereinafter referred to as "ADDITIONAL COSTS") then, upon demand made by the
Operating Agent on behalf of such Affected Party, as promptly as practicable
after it obtains knowledge that such a Regulatory Change exists and determines
to make such demand, the Seller shall pay to the Collateral Agent on behalf of
such Affected Party, from time to time as specified by the Operating Agent,
additional commitment fees or other amounts which shall be sufficient to
compensate such Affected Party for the Seller's Share of such increased cost or
reduction in amounts receivable by such Affected Party from the date of such
change, together with interest on each such amount from the date demanded until
payment in full thereof at the Daily Yield Rate.
(c) Determinations by any Affected Party for purposes of this Section
2.11 of the effect of any Regulatory Change on its costs of making or
maintaining Purchases, Capital Investment, LOC Draws or Liquidity Loans or on
amounts receivable by it in respect of Purchases, Capital Investment, LOC Draws,
Liquidity Loans or Transaction Liquidity Loans and of the additional amounts
required to compensate such Affected Party in respect of any Additional Costs,
shall be set forth in a written notice to the Seller in reasonable detail and
shall be conclusive, absent manifest error.
Section 2.12. Breakage Costs. The Seller shall pay to the Collateral
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Agent for the account of the Purchaser, upon the request of the Purchaser, such
amount or amounts as shall compensate the Purchaser for any loss (including loss
of profit), cost
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or expense incurred by the Purchaser (as determined by the Purchaser) as a
result of any repayment of a Purchase (and interest thereon) other than on the
maturity date of the Commercial Paper funding such Purchase, such compensation
to include, without limitation, an amount equal to any loss or expense suffered
by the Purchaser during the period from the date of receipt of such repayment to
(but excluding) the maturity date of such Commercial Paper, if the rate of
interest obtainable by the Purchaser upon the redeployment of an amount of funds
equal to the amount of such repayment is less than the rate of interest
applicable to such Commercial Paper (such expense to be referred to as "BREAKAGE
COSTS"). The determination by the Purchaser of the amount of any such loss or
expense shall be set forth in a written notice to the Seller in reasonable
detail and shall be conclusive, absent manifest error.
Section 2.13. Purchase Excess. After completion of the disbursements
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specified in Subsections 6.03(a), (b) and (c), the Operating Agent shall notify
the Seller of any remaining Purchase Excess and the Seller shall deposit the
amount of any Purchase Excess in the Collection Account by 11:00 a.m. on the
Business Day following the date of such Purchase Excess.
ARTICLE III.
CONDITIONS TO PURCHASE
Section 3.01. Conditions Precedent to Effectiveness of Agreement. The
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effectiveness of this Agreement is subject to the condition precedent that the
Purchaser, the Operating Agent and the Collateral Agent shall each have received
on or before the Effective Date the following, in form and substance
satisfactory to the Operating Agent:
(a) An executed copy of the Transfer Agreement.
(b) A certificate from an officer of the Originator in the form of
Exhibit D (Solvency Certificate as to Seller).
(c) With respect to the Seller:
(i) the certificate or articles of incorporation of the Seller
certified, as of a date no more than ten (10) days prior to the Effective
Date, by the Secretary of State of its state of incorporation;
(ii) a good standing certificate, dated no more than ten (10)
days prior to the Effective Date, from the respective Secretary of State of
its state of incorporation and each state in which the Seller is required
to qualify, or represents that it is qualified, to do business;
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(iii) a certificate of the Secretary or Assistant Secretary of
the Seller certifying as of the Effective Date: (A) the names and true
signatures of the officers authorized on its behalf to sign this Agreement,
(B) a copy of the Seller's by-laws, and (C) a copy of the resolutions of
the board of directors of the Seller approving this Agreement, the Related
Documents to which it is a party and the transactions contemplated hereby
and thereby; and
(iv) an Officer's Certificate in the form of Exhibit E
(Bringdown Certificate).
(d) With respect to the Servicer:
(i) the certificate or articles of incorporation of the
Servicer certified, as of a date no more than ten (10) days prior to the
Effective Date, by the Secretary of State of its state of incorporation;
(ii) a good standing certificate, dated no more than ten (10)
days prior to the Effective Date, from the respective Secretary of State of
its state of incorporation and each state listed on Schedule 9 hereto;
(iii) a certificate of the Secretary or Assistant Secretary of
the Servicer certifying as of the Effective Date: (A) the names and true
signatures of the officers authorized on its behalf to sign this Agreement,
(B) a copy of the Servicer's by-laws, and (C) a copy of the resolutions of
the board of directors of the Servicer approving this Agreement, the
Related Documents to which it is a party and the transactions contemplated
thereby and hereby; and
(iv) an Officer's Certificate in the form of Exhibit F
(Servicer's Certificate).
(e) Certified copies of requests for information or copies on form
UCC-11 (or a similar search report certified by a party acceptable to the
Operating Agent), dated a date no more than fourteen (14) days prior to the
Effective Date listing all effective financing statements and other similar
instruments and documents which name the Originator and the Seller (under their
present names and any previous names) as debtor, together with copies of such
financing statements none of which shall cover any Transferred Receivables
unless termination statements or statements of release are provided with respect
thereto pursuant to subsection (f) below.
(f) Executed termination statements (form UCC-3), if any, necessary
to release all security interests and other rights of any Person in Transferred
Receivables previously granted by the Originator including, without limitation,
all such releases specified by the Originator prior to the date hereof.
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(g) Any necessary third party consents to the closing of the
transactions contemplated hereby.
(h) Executed financing statements (form UCC-1), in respect of
Transferred Receivables, (i) pursuant to the Transfer Agreement, naming each
Originator as the assignor and the Seller as the assignee, and (ii) pursuant to
Article VIII, naming the Seller as the debtor/seller, the Purchaser as secured
party/purchaser and the Collateral Agent as the assignee, or other, similar
instruments or documents, as may be necessary or, in the opinion of the
Operating Agent, desirable under the UCC of all appropriate jurisdictions or any
other applicable law (including the Assignment of Claims Act) to perfect the
Purchaser's and the Collateral Agent's interests in all Transferred Receivables
in which an interest may be assigned hereunder.
(i) Fully executed copies of each Lockbox Agreement.
(j) The favorable opinion of counsel to the Seller and the Originator
as to (i) corporate and security interest/perfection matters, (ii) the true sale
of the Transferred Receivables from the Originator to the Seller, (iii) the
nonconsolidation of the Seller's assets into the bankruptcy estate of the
Originator, and (iv) such other matters as the Operating Agent may require.
(k) Payment of all fees due hereunder or under the Fee Letter.
(l) Payment or satisfactory provisions for payment of the legal and
documentation costs of the Purchaser and Operating Agent.
(m) (i) Consolidated balance sheets, statements of income and
statements of cash flow of the Parent and its Subsidiaries for each of the
years in the three year period ended February 28, 1995, audited by a
nationally recognized accounting firm (accompanied by consolidating
financial information reviewed by such accounting firm and a satisfactory
management letter, together with management's response thereto); and
(ii) Unaudited consolidated and consolidating balance sheets
and statements of income and statements of cash flow of the Parent and its
Subsidiaries for the 13 month period ended March 31, 1996.
(n) Confirmation of the ratings of the Commercial Paper as A-1+ by
S&P and P-1 by ▇▇▇▇▇'▇.
(o) A copy of the Servicer's Credit and Collection Policies.
(p) An Investment Base Certificate as of the Effective Date.
10
(q) All taxes (other than income taxes) including without limitation,
any stamp duty, imposed on any party hereto as a result of this transaction,
shall have been paid by the Originator.
(r) Such other approvals, consents, opinions, documents and
instruments, as the Operating Agent may request.
Section 3.02. Conditions Precedent to All Purchases. Each Purchase
-------------------------------------
(including the initial Purchase) shall be subject to the further conditions
precedent as follows:
(a) On the related Purchase Date, the Seller shall have certified in
the related Investment Base Certificate that, except as specifically disclosed
in writing to the Purchaser, and specifically consented to by the Purchaser in
its sole discretion:
(i) the representations and warranties of the Seller, the
Originator and the Servicer set forth in Sections 4.01 and 4.02 are true
and correct on and as of such date, before and after giving effect to such
Purchase and to the application of the proceeds therefrom, as though made
on and as of such date;
(ii) no event has occurred, or would result from such Purchase
or from the application of the proceeds therefrom, which is continuing and
constitutes a Termination Event or would constitute a Termination Event but
for the requirement that notice be given or time elapse or both;
(iii) the Seller is in compliance with each of its covenants set
forth herein; and
(iv) no event has occurred which constitutes an Event of
Servicer Termination or would constitute an Event of Servicer Termination
but for the requirement that notice be given or time elapse or both.
(b) The Facility Termination Date has not occurred.
(c) Before and after giving effect to such purchase and to the
application of proceeds therefrom, there exists no Purchase Excess.
(d) The Originator and Seller shall have taken such other action,
including delivery of approvals, consents, opinions, documents and instruments
to the Purchaser and the Operating Agent, as the Operating Agent may request.
11
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of the Seller. The Seller
--------------------------------------------
represents and warrants to the Purchaser, the Operating Agent and the Collateral
Agent as of the date hereof, as of the Effective Date and on each subsequent
Purchase Date as follows:
(a) The Seller is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation and is duly
qualified to do business, and is in good standing, in each jurisdiction in which
the nature of its business requires it to be so qualified.
(b) The Seller has the power and authority to own, pledge, mortgage,
operate and convey all of its properties, to conduct its business as now or
proposed to be conducted and to execute and deliver this Agreement and the
Related Documents and to perform the transactions contemplated hereby and
thereby.
(c) The Seller is and has been a wholly-owned subsidiary of Pameco
Corporation, a Delaware corporation.
(d) The Seller is operated is such a manner that the separate
corporate existence of the Seller and the Originator would not be disregarded in
the event of a bankruptcy or insolvency of the Originator and in such regard:
(i) the Seller is and has been a limited purpose corporation
whose activities are restricted in its certificate or articles of
incorporation;
(ii) no Originator nor any Affiliate of the Originator is nor
has been involved in the day-to-day management of the Seller;
(iii) other than the purchase and contribution of Receivables,
the payment of dividends and the return of capital to the Originator, any
lease or sub-lease of office space or equipment and the payment of
Servicing Fees to the Servicer under this Agreement, the Seller engages or
has engaged in no intercorporate transactions with the Originator or any
Affiliate of the Originator;
(iv) the Seller maintains separate corporate records and books
of account from each Originator, holds regular corporate meetings and
otherwise observes corporate formalities and has a separate business office
from each Originator;
12
(v) the financial statements and books and records of the
Seller and each Originator prepared after the Effective Date reflect the
separate corporate existence of the Seller;
(vi) the Seller maintains its assets separately from the assets
of each Originator and any other Affiliate of each Originator (including
through the maintenance of separate bank accounts and except for any
Records to the extent necessary for the servicing of the Transferred
Receivables), the Seller's funds and assets, and records relating thereto,
have not been and are not commingled with those of the Originator or any
other Affiliate of the Originator and the separate creditors of the Seller
will be entitled to be satisfied out of the Seller's assets prior to any
value in the Seller becoming available to the Seller's equityholders;
(vii) except as permitted under this Agreement and the Related
Documents and those associated with the creation and organization of the
Seller, neither the Originator nor any Affiliate of the Originator (A) pays
the Seller's expenses; (B) guarantees the Seller's obligations, or (C)
advances funds to the Seller for the payment of expenses or otherwise;
(viii) all business correspondence of the Seller and other
communications are conducted in the Seller's own name, on its own
stationery and through a separately-listed telephone number;
(ix) the Seller does not act as agent for the Originator or any
Affiliates of the Originator, but instead presents itself to the public as
a corporation separate from each Originator, independently engaged in the
business of purchasing and financing Receivables;
(x) the Seller maintains at least two independent directors
each of whom, at all times after the Effective Date, shall not be a
shareholder, director, officer, employee or associate, or any relative of
any of the foregoing, of the Originator or any Affiliate of the Originator
(other than the Seller) as provided in its certificate or articles of
incorporation; and
(xi) the bylaws or Certificate of Incorporation of the Seller
require it to maintain (A) correct and complete books and records of
account, and (B) minutes of the meetings and other proceedings of its
shareholders and board of directors.
(e) The Seller has not engaged, and does not presently engage, in any
activity other than the activities undertaken pursuant to this Agreement and the
Related Documents, nor has the Seller entered into any agreement other than this
13
Agreement and the Related Documents, and any agreement necessary to undertake
any activity pursuant to this Agreement or the Related Documents.
(f) The execution, delivery and performance by the Seller of this
Agreement, the Related Documents and the transactions contemplated hereby and
thereby (i) have been duly authorized by all necessary corporate or other action
on the part of the Seller, (ii) do not contravene or cause the Seller to be in
default under (A) the Seller's certificate or articles of incorporation or
by-laws, (B) any contractual restriction contained in any indenture, loan or
credit agreement, lease, mortgage, security agreement, bond, note, or other
agreement or instrument binding on or affecting the Seller or its property or
the Originator or its property, or (C) any law, rule, regulation, order, license
requirement, writ, judgment, award, injunction, or decree applicable to, binding
on or affecting the Seller or its property or the Originator or its property,
and (iii) do not result in or require the creation of any Adverse Claim upon or
with respect to any of the property of the Seller or the Originator (other than
in favor of the Purchaser and the Collateral Agent as contemplated hereunder).
(g) This Agreement and the Related Documents have each been duly
executed and delivered by the Seller.
(h) No consent of, notice to, filing with or permits, qualifications
or other action by any Governmental Authority or any other party is required (i)
for the due execution, delivery and performance by the Seller of this Agreement
or any of the Related Documents, (ii) for the perfection of or the exercise by
each of the Purchaser, the Operating Agent or the Collateral Agent of any of its
rights or remedies hereunder or thereunder, (iii) for the grant by the Seller of
the security interests granted under Section 8.01 of this Agreement, (iv) for
the perfection of or the exercise by each of the Purchaser or the Collateral
Agent of its rights and remedies provided for in this Agreement, or (v) to
ensure the legality, validity, enforceability or admissibility into evidence of
this Agreement in any jurisdiction in which any of the Collateral is located, in
each case other than consents, notices, filings and other actions which have
been obtained or made and complete copies of which have been provided to the
Purchaser, the Operating Agent or the Collateral Agent and continuation
statements in respect of any such filings.
(i) No transaction contemplated by this Agreement requires compliance
with any bulk sales act or similar law.
(j) This Agreement and each Related Document is the legal, valid and
binding obligation of the Seller enforceable against the Seller in accordance
with its respective terms. Each of the Seller Assigned Agreements to which the
Originator or the Seller is a party constitutes the legal, valid and binding
obligation of such Person, enforceable against such Person in accordance with
its terms, subject to any applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or
14
hereafter in effect relating to or affecting the enforceability of creditors'
rights generally and general equitable principles, whether applied in a
proceeding at law or in equity.
(k) There is no pending or threatened, nor any reasonable basis for
any, action, suit or proceeding against or affecting the Seller, its officers or
directors, or the property of the Seller, in any court or tribunal, before any
arbitrator of any kind or before or by any Governmental Authority.
(l) No injunction, writ, restraining order or other order of any
nature adverse to the Seller or the conduct of its business or which is
inconsistent with the due consummation of the transactions contemplated by this
Agreement or the Related Documents has been issued by a Governmental Authority
nor been sought by any Person.
(m) The principal place of business and chief executive office of the
Seller, and the offices where the Seller keeps its Records and the original
copies of the Seller Assigned Agreements are located at the address of the
Seller for notices under Section 14.01 and as set forth on Schedule 5 and there
are currently no, and during the past four months (or such shorter time as the
Seller has been in existence) there have not been, any other locations where the
Seller is located (as that term is used in the UCC of the jurisdiction where
such principal place of business is located) or keeps Records.
(n) The Seller does not have and has never conducted business using
tradenames, fictitious names, assumed names or "doing business as" names and has
not changed its name during the last five years.
(o) The Seller does not have any Subsidiaries.
(p) The Seller is solvent and will not become insolvent after giving
effect to the transactions contemplated by this Agreement and the Related
Documents. The Seller has no Debts to any Person other than pursuant to this
Agreement and the Related Documents. The Seller, after giving effect to the
transactions contemplated by this Agreement and the Related Documents, will have
an adequate amount of capital to conduct its business in the foreseeable future.
(q) For federal income tax, reporting and accounting purposes (except
in any consolidated financial statements and consolidated tax returns), the
Seller will treat the purchase or assignment of each Transferred Receivable
pursuant to the Transfer Agreement as a purchase or absolute assignment of each
Originator's full right, title and ownership interest in such Transferred
Receivable to the Seller (and Contributed Receivables shall be accounted for as
an increase in the stated capital of the Seller) and the Seller has not in any
other manner accounted for or treated the transactions in Transferred
Receivables.
15
(r) The Seller has complied and will comply in all respects with all
applicable laws, rules, regulations, judgments, agreements, decrees and orders
with respect to its business and properties and all Collateral.
(s) The Seller has filed on a timely basis all tax returns (federal,
state and local) required to be filed, is not liable for taxes payable by any
other Person (except for the payment of such amounts as a result of the filing
of a consolidated tax return) and has paid or made adequate provisions for the
payment of all taxes, assessments and other governmental charges due from the
Seller. No tax lien or similar Adverse Claim has been filed, and no claim is
being asserted, with respect to any such tax, assessment or other governmental
charge. Any taxes, fees and other governmental charges payable by the
Originator in connection with the execution and delivery of this Agreement and
the Related Documents and the transactions contemplated hereby or thereby have
been paid or shall have been paid if and when due at or prior to such Transfer
Date.
(t) Each Investment Base Certificate and Request Notice is accurate
in all material respects and the Investment Base as of the Effective Date is not
materially different than the Investment Base as reported in the Investment Base
Certificate delivered pursuant to 3.01(p).
(u) Each Transferred Receivable is owned by the Seller free and clear
of any Adverse Claim and the Seller has the full right, corporate power and
lawful authority to assign, transfer and pledge the same and interests therein
and all substitutions therefor and additions thereto pursuant to Section 8.01,
and upon making each Purchase, the Purchaser will have acquired a perfected,
first priority and valid security interest in such Transferred Receivables, free
and clear of any Adverse Claim or restriction on transferability. No effective
financing statement or other instrument similar in effect covering all or any
part of the Seller Collateral is on file in any recording office, except such as
may have been filed in favor of the Purchaser as "Secured Party/Purchaser" and
the Collateral Agent as "Assignee" pursuant to Article VIII of this Agreement
or, with respect to the Transferred Receivables, in favor of the Seller pursuant
to the Transfer Agreement unless termination statements or statements of release
are provided thereto with respect to Section 3.01(f).
(v) Each Transferred Receivable was purchased by or contributed to
the Seller on the relevant Transfer Date pursuant to the Transfer Agreement.
(w) Each purchase of Receivables under the Transfer Agreement will
constitute (i) a "current transaction" within the meaning of Section 3(a)(3) of
the Securities Act of 1933, as amended, and (ii) a purchase or other acquisition
of notes, drafts, acceptances, open accounts receivable or other obligations
representing part or all of the sales price of merchandise, insurance or
services within the meaning of Section 3(c)(5) of the Investment Company Act of
1940, as amended.
16
(x) All information heretofore or hereafter furnished by or on behalf
of the Seller to the Collateral Agent, the Operating Agent or the Purchaser in
connection with this Agreement or any transaction contemplated hereby is and
will be true and complete in all material respects and does not and will not
omit to state a material fact necessary to make the statements contained therein
not misleading.
(y) The Seller is in compliance with ERISA and has not incurred and
does not expect to incur any liabilities (except for premium payments arising in
the ordinary course of business) payable to the PBGC (or any successor thereto)
under ERISA.
(z) (i) The Seller is not a party to any indenture, loan or credit
agreement or any lease or other agreement or instrument or subject to any
charter or corporation restriction that could have, and no provision of
applicable law or governmental regulation is reasonably likely to have, a
material adverse effect on the condition (financial or otherwise), business,
operations or properties of the Seller, or could have such an effect on the
ability of the Seller to carry out its obligations under this Agreement and the
other Related Documents to which the Seller is a party, (ii) the Seller is not
in default under or with respect to any contract, agreement, lease or other
instrument to which the Seller is a party and which is material to the Seller's
condition (financial or otherwise), business, operations or properties, and the
Seller has not delivered or received any notice of default thereunder, and (iii)
each contract, agreement, lease or other instrument to which the Seller is a
party is listed on Schedule 7.
(aa) The Seller is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended. The making of the Purchases by the Purchaser, the application of the
proceeds and repayment thereof by the Seller and the consummation of the
transactions contemplated by this Agreement and the other Related Documents to
which the Seller is a party will not violate any provision of such Act or any
rule, regulation or order issued by the Securities and Exchange Commission
thereunder.
(bb) There is not now, nor will there be at any time in the future,
any agreement or understanding between the Originator or any other Affiliate of
the Originator and the Seller (other than as expressly set forth herein)
providing for the allocation or sharing of obligations to make payments or
otherwise in respect of any taxes, fees, assessments or other governmental
charges (except for the payment of such amounts as a result of the filing of a
consolidated tax return).
(cc) Each of the representations and warranties of the Seller
contained in the Related Documents (other than this Agreement) is true and
correct in all material respects and the Seller hereby makes each such
representation and warranty to, and
17
for the benefit of, the Collateral Agent, the Operating Agent and the Purchaser
as if the same were set forth in full herein.
Section 4.02. Representations and Warranties of the Servicer. The
----------------------------------------------
Servicer represents and warrants to the Purchaser, the Operating Agent and the
Collateral Agent as follows as of the date hereof:
(a) The Servicer is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation and is
duly qualified to do business, and is in good standing, in every jurisdiction in
which the nature of its business requires it to be so qualified.
(b) The Servicer has the power and authority to execute and deliver
this Agreement and to perform the transactions contemplated hereby.
(c) The execution, delivery and performance by the Servicer of this
Agreement, each other Related Document to which it is a party and all other
agreements, instruments and documents which may be delivered by it pursuant
hereto and thereto and the transactions contemplated hereby and thereby (i) have
been duly authorized by all necessary corporate or other action on the part of
the Servicer, (ii) do not contravene or cause the Servicer to be in default
under (A) its charter or by-laws, (B) any contractual restriction with respect
to any Debt of the Servicer or contained in any indenture, loan or credit
agreement, lease, mortgage, security agreement, bond, note or other agreement or
instrument binding on or affecting it or its property, or (C) any law, rule,
regulation, order, writ, judgment, award, injunction or decree binding on or
affecting it or its property, and (iii) do not result in or require the creation
of any Adverse Claim upon or with respect to any of its properties (other than
in favor of the Seller, Redwood and the Collateral Agent).
(d) This Agreement and each other Related Document to which it is a
party has been duly executed and delivered by the Servicer.
(e) No consent of, notice to, filing with or permits, qualifications
or other action by any Governmental Authority or any other party is required for
the due execution, delivery and performance by the Servicer of this Agreement,
any Related Document to which it is a party or any other agreement, document or
instrument to be delivered hereunder other than any consents, notices, permits,
qualifications, filings or other actions which have been obtained or made and
complete copies of which have been provided to the Purchaser, the Operating
Agent and the Collateral Agent.
(f) This Agreement and each other Related Document to which it is a
party is the legal, valid and binding obligation of the Servicer enforceable
against the Servicer in accordance with its terms subject to any applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or
18
affecting the enforceability of creditors' rights generally and general
equitable principles, whether applied in a proceeding at law or in equity.
(g) There is no pending or threatened, nor any reasonable basis for
any, action, suit, investigation or proceeding of a material nature against or
affecting the Servicer, its officers or directors, or the property of the
Servicer, in any court or tribunal, before any arbitrator of any kind or before
or by any Governmental Authority (i) asserting the invalidity of this Agreement,
any other Related Document or any document to be delivered by the Servicer
hereunder or thereunder, or (ii) seeking any determination or ruling that might
materially and adversely affect (A) the performance by the Servicer of its
obligations under this Agreement or other Related Document, or (B) the validity
or enforceability of this Agreement or any Related Document or any document to
be delivered by the Servicer hereunder or thereunder.
(h) No injunction, writ, restraining order or other order of any
material nature adverse to the Servicer or the conduct of its business or which
is inconsistent with the due consummation of the transactions contemplated by
this Agreement and the Related Documents has been issued by a Governmental
Authority or, to the knowledge of the Servicer, has been sought by any other
Person.
(i) The Servicer has filed all tax returns (federal, state and local)
required to be filed by it and has paid or has made adequate provision for the
payment of all taxes, fees, assessments and other governmental charges due from
the Servicer, no tax lien or other similar Adverse Claim has been filed, and no
claim has been filed, and no claim is being asserted, with respect to any such
tax, fee, assessment or other governmental charge. Any taxes, fees and other
governmental charges payable by the Servicer in connection with the transactions
contemplated by this Agreement and the Related Documents and the execution and
delivery of this Agreement and the Related Documents have been paid or shall
have been paid at or prior to the Effective Date.
(j) The Servicer is not required to be registered as an "investment
company" under the Investment Company Act of 1940.
(k) Each of the representations and warranties of the Servicer
contained in this Agreement and the Related Documents is true and correct in all
material respects and the Servicer hereby makes each such representation and
warranty contained in the Related Documents to, and for the benefit of, the
Purchaser, the Operating Agent and the Collateral Agent.
19
ARTICLE V.
GENERAL COVENANTS OF THE SELLER
Section 5.01. Affirmative Covenants of the Seller. The Seller shall,
-----------------------------------
unless the Operating Agent shall otherwise consent in writing:
(a) perform each of its obligations under this Agreement and the
Related Documents and comply in all respects with all of its obligations under
this Agreement and the Related Documents and comply with all applicable law,
rules, regulations and orders with respect to this Agreement, the Related
Documents, to its business and properties and all Transferred Receivables,
related Contracts and Collections with respect thereto;
(b) preserve and maintain its corporate existence, rights, franchises
and privileges in the jurisdiction of its incorporation and shall conduct its
business in accordance with the terms of its certificate of incorporation and
bylaws;
(c) continue to operate its business in the manner set forth in
Sections 4.01(d) and (e);
(d) deposit all Collections it may receive in respect of Transferred
Receivables into the Lockbox Account within one Business Day of receipt;
(e) use the proceeds of the Purchases made hereunder solely for (i)
the purchase of Receivables from the Originator, (ii) payment of dividends to
its shareholder or (iii) payment of administrative fees or Servicing Fees or
expenses to the Originator or routine administrative expenses pursuant to this
Agreement or the Related Documents;
(f) permit the Purchaser, the Operating Agent and the Collateral
Agent to make or cause to be made (and, after the occurrence of and during the
continuance of a Termination Event, at the Seller's expense) inspections and
audits of any books, records and papers of the Seller and the Servicer and to
make extracts therefrom and copies thereof, or to make inspections and
examinations of any properties and facilities of the Seller and the Servicer, on
reasonable notice, at all such reasonable times and as often as required in
order to assure that the Seller is and will be in compliance with its
obligations under this Agreement and the Related Documents;
(g) pay, perform and discharge all of its obligations and
liabilities, including, without limitation, all taxes, assessments and
governmental charges upon its income and properties when due, unless and to the
extent only that such obligations, liabilities, taxes, assessments and
governmental charges shall be contested in good faith and by appropriate
proceedings and that, to the extent required by GAAP, proper
20
and adequate book reserves relating thereto are established by the Seller and
then only to the extent that a bond is filed in cases where the filing of a bond
is necessary to avoid the creation of an Adverse Claim against any of its
properties;
(h) upon request of the Purchaser, the Collateral Agent or the
Operating Agent, ▇▇▇▇ its Records to show the interests of the Purchaser and
Collateral Agent; and
(i) pursuant to Section 14.03, pay the Purchaser's attorney's fees
and disbursements and rating agency fees.
Section 5.02. Reporting Requirements of the Seller. The Seller shall
------------------------------------
furnish, or cause to be furnished, to the Purchaser, the Operating Agent, the
Collateral Agent and (in the case of Section 5.02(f) only) the Rating Agencies:
(a) no less frequently than the third Business Day of each week, an
Investment Base Certificate in the form of Exhibit C;
(b) monthly, as soon as available, and in any event, within fifteen
days after the end of each fiscal month, a Monthly Report in the form of Exhibit
G;
(c) as soon as available and in any event within 90 days after the
end of each fiscal year, a copy of the audited consolidated financial statements
for such year for the Parent and its consolidated Subsidiaries, certified, in a
manner acceptable to the Operating Agent and the Collateral Agent, by Ernst &
Young or other nationally recognized independent public accountants acceptable
to the Operating Agent and the Collateral Agent with such financial statements
being prepared in accordance with GAAP applied consistently throughout the
period involved (except as approved by such accountants and disclosed therein);
(d) as soon as available and in any event within (i) 30 days after
the end of each fiscal month of each fiscal year of the Parent (other than any
month which constitutes the end of any fiscal quarter) or (ii) 45 days after the
end of each of the first three quarters of each fiscal year of the Parent, in
each case, an unaudited consolidated balance sheet of the Parent and its
consolidated Subsidiaries as of the end of such month or quarter and including
the prior comparable period, and the unaudited consolidated statements of income
and retained earnings, and of cash flow, of the Parent and its consolidated
Subsidiaries for such month or quarter and for the period commencing at the end
of the previous fiscal year and ending with the end of such month or quarter,
certified by the chief financial officer, chief accounting officer or treasurer
of the Parent identifying such documents as being the documents described in
this paragraph (d) and stating that the information set forth therein fairly
presents the financial condition of the Parent and its consolidated Subsidiaries
as of and for the periods then ended, subject to year-end adjustments consisting
only of normal,
21
recurring accruals and confirming that the Servicer is in compliance with all
financial covenants in this Agreement;
(e) as soon as possible and in any event within five days after the
occurrence of a Termination Event or an Incipient Event, the statement of the
chief executive officer of the Seller setting forth complete details of such
Termination Event or Incipient Event and the action which the Seller has taken,
is taking and proposes to take with respect thereto;
(f) as soon as available and in any event within 90 days after the
end of each fiscal year, a report from Ernst & Young or other nationally
recognized independent public accountants (upon which report, the Operating
Agent and the Collateral Agent may rely) to the Collateral Agent and the
Operating Agent to the effect that such firm has applied the agreed upon
procedures agreed to by the Seller and the Operating Agent with respect to (a)
the Seller's compliance with the Seller's financial covenants in this Agreement
and (b) the substantial compliance with this Agreement in the preparation of the
Monthly Reports (including the Investment Base Certificates attached thereto)
delivered during the previous fiscal year, and that, on the basis of such
procedures, such firm has reported that there are no exceptions, except as set
forth in such statement;
(g) promptly, from time to time, such other information, documents,
records or reports respecting the Transferred Receivables or the Contracts or
the condition or operations, financial or otherwise, of the Seller, or the
Originator or any of its Subsidiaries, as the Purchaser, the Operating Agent or
the Collateral Agent may request from time to time;
(h) upon any request from the Operating Agent and in any event, on or
before 90 days after the end of each fiscal year, (i) an Officer's Certificate
of the Seller, dated the date of such delivery, bringing down to such date the
matters set forth in the Officer's Certificate in the form of Exhibit E, and
(ii) an Officer's Certificate of the Servicer, dated the date of such delivery,
bringing down to such date the matters set forth in the Officer's Certificate in
the form of Exhibit F; and
(i) promptly, notification in writing of any litigation, legal
proceeding or dispute, whether or not in the ordinary course of business,
affecting the Seller, whether or not fully covered by insurance, and regardless
of the subject matter thereof.
Section 5.03. Negative Covenants of the Seller. The Seller shall not,
--------------------------------
without the written consent of the Purchaser, the Operating Agent and the
Collateral Agent:
(a) 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, or assign any right to receive income in respect of, (i) any Transferred
Receivable or related Contract
22
with respect thereto, or upon or with respect to any Lockbox Account, any
Lockbox, the Collection Account, the Retention Account or other account in
which any Collections of any Transferred Receivable are deposited, or (ii) any
of the Seller's property;
(b) extend, amend, forgive, discharge, compromise, waive, cancel or
otherwise modify the terms of the Transfer Agreement, any Related Document, the
Credit and Collection Policies or of any Transferred Receivable, or amend,
modify or waive any term or condition of any Contract related thereto provided
that the foregoing shall not prohibit the Seller from authorizing the Servicer
to take such actions to the extent permitted hereunder, under the Transfer
Agreement or by the Credit and Collection Policy;
(c) make any change in its instructions to Obligors regarding
payments to be made to the Seller or payments to be deposited to the Lockbox
Account or any Lockbox;
(d) amend its articles or certificate of incorporation, its by-laws
or any Related Document or the Transfer Agreement;
(e) merge with or into, consolidate with or into, convey, transfer,
lease or otherwise dispose of all or substantially all of its assets (whether
now owned or hereafter acquired) to, or acquire all or substantially all of the
assets of, or any capital stock or other ownership interest of, any Person
(whether in one transaction or in a series of transactions), or own any
Subsidiary;
(f) prepare any financial statements which shall account for the
transactions contemplated by the Transfer Agreement in any manner other than as
a true sale or absolute assignment of the Transferred Receivables to the Seller
from the Originator, or in any other respect account for or treat the
transactions contemplated hereby (including but not limited to, for accounting,
tax and reporting purposes) in any manner other than as a true sale or absolute
assignment of the Transferred Receivables to the Seller from the Originator;
(g) at any time (i) advance credit to any Person, or (ii) declare any
dividends, repurchase any stock, return any capital, or otherwise make any
distribution of cash or any other property, if after giving effect to such
distribution, there would be a Purchase Excess;
(h) create, incur, permit to exist or have outstanding any Debt,
except:
(i) Debt of the Seller to the Purchaser, any Affected Party,
any Indemnified Party, the Servicer, the Originator or any other Person
under the Transfer Agreement and this Agreement;
23
(ii) taxes, assessments and governmental charges; and
(iii) the endorsement of negotiable instruments for deposit or
collection in the ordinary course of business;
(i) issue any additional shares or any right or option to acquire any
shares, or any security convertible into any shares, of the capital stock of the
Seller to any Person other than the Parent;
(j) enter into, or be a party to, any transaction with any Person,
other than pursuant to this Agreement or the Transfer Agreement;
(k) make or suffer to exist any purchases of assets or investments in
any Person, including, without limitation, any shareholder, director, officer or
employee of the Seller or any of the Parent's other Subsidiaries, except
Transferred Receivables; or
(l) deposit or permit the deposit of any Collections on Unapproved
Receivables into any Lockbox Account.
ARTICLE VI.
COLLECTIONS AND DISBURSEMENTS
Section 6.01. Establishment of Accounts.
-------------------------
(a) The Lockbox Account.
-------------------
(i) The Seller has established with a Lockbox Bank each
Lockbox Account, into which the Servicer shall deposit from time to time
all monies, instruments and other property received by it as Proceeds of
the Transferred Receivables. The Seller agrees that prior to a Termination
Event the Operating Agent, and upon the occurrence and during the
continuation of a Termination Event the Collateral Agent, shall have
exclusive dominion and control of each Lockbox Account and all monies,
instruments and other property from time to time in each Lockbox Account.
The Seller will not make or cause to be made, or have any ability to make
or cause to be made any withdrawals from any Lockbox Account, except as
provided in Section 6.01(b)(ii).
(ii) The Seller and the Servicer have instructed all existing
Obligors of Transferred Receivables, and will instruct all future Obligors,
to make payments in respect of Transferred Receivables only (A) by check or
money order mailed to one or more lockboxes or post office boxes under the
control of
24
the Operating Agent (each such box being a "LOCKBOX"), or (B) by wire
transfer or moneygram directly to a Lockbox Account, or (C) by direct debit
from such Obligor's account to the Lockbox Account. The Lockboxes and
Lockbox Accounts to which mail payments are made as of the date hereof are
listed on the attached Schedule 6. The Seller and the Servicer shall
endorse, to the extent necessary, all checks or other instruments received
in any Lockbox so that the same can be deposited in the Lockbox Account, in
the form so received (with all necessary endorsements), on the next
Business Day after the Business Day on which such check or other
instruments are received. In addition, the Seller and Servicer shall
deposit or cause to be deposited in the Lockbox Account all cash, checks,
money orders or other Proceeds of Collateral received other than in a
Lockbox or by wire payments, in the form so received (with all necessary
endorsements), not later than the close of business on the Business Day
following the date of such receipt, and until so deposited all such items
or other Proceeds shall be held in trust for the Collateral Agent. Neither
the Seller nor the Servicer shall deposit any moneys not required or
permitted under this Agreement or the Related Documents into the Lockboxes
or Lockbox Accounts.
(iii) If a Lockbox Agreement terminates for any reason or any
Lockbox Bank fails to comply with its obligations under the related Lockbox
Agreement for any reason, then the Seller shall promptly notify all
Obligors to make all future wire payments to a new Lockbox Account with
another Lockbox Bank. The Seller shall not close the Lockbox Account
unless it shall have (1) received the prior written consent of the
Operating Agent and the Collateral Agent, (2) established a new account
with the same Lockbox Bank or with a new depositary institution
satisfactory to the Operating Agent and the Collateral Agent, (3) entered
into an agreement covering such new account with the Lockbox Bank or with
such new depositary institution substantially in the form of the Lockbox
Agreement or which is otherwise satisfactory in all respects to the
Operating Agent and the Collateral Agent (whereupon, for all purposes of
this Agreement and the Related Documents, such new account shall become the
Lockbox Account, such new agreement shall become the Lockbox Agreement and
any new depositary institution shall become the Lockbox Bank), and (4)
taken all such action as the Collateral Agent shall require to grant and
perfect a first priority security interest in such new Lockbox Account to
the Collateral Agent under Section 8.01 of this Agreement. Other than
pursuant to this Section 6.01(a), the Seller or Servicer shall not open any
new Lockbox or Lockbox Account without the consent of the Operating Agent,
the Collateral Agent and the Purchaser.
(iv) Notwithstanding anything contained herein to the contrary,
payments made by any Obligor to a branch of the Servicer located in any
location described in Schedule 3 to the Transfer Agreement (as such
Schedule is modified from time to time) shall be deposited in a Blocked
Account.
25
(b) Collection Account.
------------------
(i) The Purchaser has established and shall maintain a
segregated deposit account with the Depositary titled "Redwood Receivables
Corporation- Collection Account (Pameco Securitization Corporation) (the
"COLLECTION ACCOUNT"). The Seller agrees that the Operating Agent shall
have exclusive dominion and control of the Collection Account and all
monies, instruments and other property from time to time in the Collection
Account.
(ii) Pursuant to Section 6.02, the Seller shall instruct the
Lockbox Bank to transfer, and the Seller hereby grants each of the
Operating Agent and the Collateral Agent the authority to instruct each
Lockbox Bank to transfer, on each Business Day in same day funds, all
available funds deposited in the Lockbox Account before such Business Day
to the Collection Account. The Purchaser, the Operating Agent and the
Collateral Agent may deposit into the Collection Account from time to time
all monies, instruments and other property received by any of them as
Proceeds of the Transferred Receivables. On each Business Day before the
Facility Termination Date, so long as no Termination Event shall have
occurred and be continuing, the Operating Agent shall instruct and cause
the Depositary (which instruction may be in writing or by telephone
confirmed promptly thereafter in writing) to release funds on deposit in
the Collection Account in the order of priority set forth in Section 6.03.
On each Business Day on and after the Facility Termination Date and on each
Business Day during any period while a Termination Event has occurred and
is continuing, the Collateral Agent may and the Operating Agent shall apply
all amounts when received in the Collection Account in the order of
priority set forth in Section 6.05.
(iii) If the Depositary wishes to resign as depositary of the
Collection Account for any reason or fails to carry out the instructions of
the Operating Agent or the Collateral Agent for any reason, then the
Purchaser or the Operating Agent shall promptly notify the Purchaser
Secured Parties. The Purchaser shall not close the Collection Account
unless it shall have (1) received the prior written consent of the
Operating Agent and the Collateral Agent, (2) established a new account
with the Depositary or with a new depositary institution satisfactory to
the Operating Agent and the Collateral Agent, (3) entered into an agreement
covering such new account with such new depositary institution satisfactory
in all respects to the Operating Agent and the Collateral Agent (whereupon
such new account shall become the Collection Account for all purposes of
this Agreement and the Related Documents), and (4) taken all such action as
the Collateral Agent shall require to grant and perfect a first priority
security interest in such new Collection Account to the Collateral Agent
under this Agreement.
26
(c) Retention Account. The Purchaser has established and shall
-----------------
maintain a segregated deposit account with the Depositary and controlled by the
Operating Agent titled "Redwood Receivables Corporation - Retention Account
(Pameco Securitization Corporation)" (the "RETENTION ACCOUNT").
(d) Collateral Account. The Purchaser has established and shall
------------------
maintain a segregated deposit account with the Depositary and controlled by the
Operating Agent titled "Redwood Receivables Corporation - Collateral Account"
(the "COLLATERAL ACCOUNT").
Section 6.02. Funding of Collection Account.
-----------------------------
(a) As soon as practicable and in any event, no later than 10:00
a.m., on each Business Day:
(i) the Operating Agent shall transfer all Collections
deposited in any Lockbox Account prior to such Business Day to the
Collection Account;
(ii) the Purchaser shall, or shall cause the Collateral Agent
to, deposit in the Collection Account the amount required, pursuant to
Section 2.04(b)(i);
(iii) the Purchaser shall, or shall cause the Collateral Agent
to, deposit any Seller LOC Draws made on such Business Day to the
Collection Account;
(iv) if, pursuant to a Seller Notice, the Seller has requested
to reduce the Capital Investment of the Purchaser, the Seller shall deposit
cash into the Collection Account in an amount equal to the amount specified
in such Seller Notice,
(v) if, on the prior Business Day, the Operating Agent has
notified the Seller of any Purchase Excess, the Seller shall deposit cash
in the amount of such Purchase Excess in the Collection Account;
(vi) if on such Business Day the Seller is required to make
other payments under this Agreement not previously retained out of
Collections (including Indemnified Amounts not previously paid), the Seller
shall deposit an amount equal to such payments in the Collection Account;
(vii) if, on the prior Business Day, the Originator made a
capital contribution of a Rejected Amount or repurchased a Transferred
Receivable, pursuant to the Transfer Agreement, the Seller shall deposit
cash in the amount
27
received from the Originator for such contribution or repurchase in the
Collection Account; and
(viii) the Servicer shall deposit into the Collection Account
the Outstanding Balance of any Transferred Receivable it elects to pay
pursuant to Section 7.04.
(b) If, two Business Days prior to any Settlement Date, the Operating
Agent notifies the Seller of any Retention Account Deficiency pursuant to
Section 6.04(b), the Seller shall deposit cash in the amount of such deficiency
into the Collection Account no later than 10:00 a.m. on such Settlement Date.
(c) On and after the Facility Termination Date, the Operating Agent
shall transfer all amounts held in the Retention Account as of that date to the
Collection Account.
Section 6.03. Daily Disbursements From the Collection Account - Revolving
-----------------------------------------------------------
Period. On each Business Day, as soon as practicable and in any event no later
------
than 12:00 p.m., during the Revolving Period, following the transfers made in
accordance with Section 6.02, the Operating Agent shall disburse all amounts in
the Collection Account in the following priority:
(a) transfer all amounts in the Collection Account in the following
priority:
(i) to the Retention Account for the account of the Purchaser,
the amount of any Retention Account Deficiency deposited pursuant to
Section 6.02(b);
(ii) to the Deferred Purchase Price Sub-Account, all Deferred
Purchase Price Collections;
(iii) to the Capital Investment Sub-Account, the balance;
(b) transfer all amounts in the Deferred Purchase Price Sub-Account,
in the following priority:
(i) to the Retention Account for the account of the Purchaser,
an amount equal to the sum of
(A) Daily Yield;
(B) the Yield Shortfall for the prior Business Day;
28
(C) the Servicing Fee;
(D) the Servicing Fee Shortfall for the prior Business
Day;
(E) the Unused Commitment Fee; and
(F) the Unused Commitment Fee Shortfall for the prior
Business Day;
(ii) to the Capital Investment Sub-Account, an amount equal to
the Dilution Funded Amount;
(iii) if the Deferred Purchase Price Adjustment is less than
zero, to the Capital Investment Sub-Account an amount equal to the absolute
value of the Deferred Purchase Price Adjustment; and
(iv) to an account previously designated by the Seller, in
partial payment of the Deferred Purchase Price, the balance, if any; and
(c) transfer all amounts in the Capital Investment Sub-Account, in
the following priority:
(i) to the Retention Account for the account of the Purchaser,
the Yield Shortfall, the Servicing Fee Shortfall and the Unused Commitment
Fee Shortfall, if any, following the transfer made pursuant to Section
6.03(b)(i);
(ii) to the Collateral Account for the account of the Purchaser
(or in the case of Indemnified Amounts, for the account of the Indemnified
Party), amounts deposited into the Collection Account pursuant to Section
6.02(a)(vi);
(iii) to the Collateral Account for the account of the
Purchaser, in reduction of its Capital Investment if, as disclosed in the
most recently submitted Investment Base Certificate, there is a Purchase
Excess, by transfer of such Purchase Excess;
(iv) if, pursuant to a Seller Notice, the Seller has requested
to reduce the Capital Investment of the Purchaser, to the Collateral
Account for the account of the Seller, the lesser of (A) the amount of such
request, in reduction of Capital Investment and the (B) the balance;
(v) if the Deferred Purchase Price Adjustment is greater than
zero, to the Seller an amount equal to the Deferred Purchase Price
Adjustment, as partial payment of the Deferred Purchase Price;
29
(vi) the balance, to an account previously designated by the
Seller, as payment of the Cash Purchase Price for Purchases made on such
day.
Section 6.04. Disbursements From the Retention Account - Settlement Date
----------------------------------------------------------
Procedures - Revolving Period.
-----------------------------
(a) As soon as practicable and in any event no later than 1:00 p.m.
on each Settlement Date during the Revolving Period, the amounts held in the
Retention Account shall be disbursed or retained by the Operating Agent in the
following priority:
(i) to the Collateral Account for the account of the Purchaser
(or, if applicable, any Indemnified Party), in an amount equal to:
(A) an amount equal to the accrued and unpaid Daily Yield
to the end of the preceding Settlement Period;
(B) all Additional Amounts incurred and payable to any
Affected Party through the end of the preceding Settlement Period;
(C) all other amounts accrued and payable under this
Agreement (including Indemnified Amounts incurred and payable to any
Indemnified Party) through the end of the preceding Settlement Period
to the extent not already transferred pursuant to Section
6.03(c)(iii); and
(D) if there is a Purchase Excess, an amount equal to
such excess, in reduction of Capital Investment;
(ii) to the Servicer on behalf of the Seller, in an amount
equal to its accrued and unpaid Servicing Fee to the end of the preceding
Settlement Period;
(iii) retained in the Retention Account, the Accrued Monthly
Yield, Accrued Unused Commitment Fee and Accrued Servicing Fee as of that
date; and
(iv) to the extent that the balance in the Retention Account
exceeds the amount to be retained or disbursed under Sections 6.04(a)(i)
through (iii), the excess to an account previously designated by the
Seller.
(b) No later than two Business Days prior to each Settlement Date,
the Operating Agent shall determine and notify the Seller of any Retention
Account Deficiency for the preceding Settlement Period, and the Seller shall
deposit funds in the
30
amount of such Retention Account Deficiency to the Collection Account pursuant
to Section 6.02(b).
Section 6.05. Liquidation Settlement Procedures. On each Business Day on
---------------------------------
and after the Facility Termination Date, the Collateral Agent shall:
(a) transfer all amounts in the Collection Account in the following
priority:
(i) to the Deferred Purchase Price Sub-Account, all Deferred
Purchase Price Collections; and
(ii) to the Capital Investment Sub-Account, the balance;
(b) transfer all amounts in the Deferred Purchase Price Sub-Account,
in the following priority:
(i) if an Event of Servicer Termination has occurred and a
Successor Servicer has been appointed, to the Successor Servicer in an
amount equal to its accrued and unpaid Successor Servicing Fees and
Expenses;
(ii) to the Collateral Account for the account of the
Purchaser, in an amount equal to, on any such Business Day on which Capital
Investment is being maintained through the issuance of Commercial Paper (to
the extent such Capital Investment exceeds Transaction Liquidity Loans then
outstanding), accrued and unpaid CP Interest through and including the date
of maturity of the Commercial Paper maintaining such Capital Investment;
(iii) if there are Transaction Liquidity Loans then outstanding,
to the Transaction Liquidity Agent on behalf of the Transaction Liquidity
Providers, in an amount equal to accrued and unpaid interest on the
Transaction Liquidity Loans;
(iv) to the Capital Investment Sub-Account:
(A) an amount equal to the Dilution Funded Amount; and
(B) if there are Transaction Liquidity Loans then
outstanding or Capital Investment exceeds the Transaction Liquidity Loans
then outstanding, all amounts remaining in the Deferred Purchase Price Sub-
Account, if any;
31
(v) to the Letter of Credit Agent, if there are any
outstanding LOC Draws in respect of the Seller, in an amount equal to
accrued and unpaid interest on such outstanding LOC Draws;
(vi) to the Collateral Account, an amount equal to (A) accrued
and unpaid Daily Yield minus (B) the sum of (i) amounts paid pursuant to
Sec tion 6.05(b)(ii), (ii) amounts paid pursuant to Section 6.05(b)(iii),
and (iii) amounts paid under Section 6.05(b)(v);
(vii) if an Event of Servicer Termination has not occurred, to
the Servicer in an amount equal to its accrued and unpaid Servicing Fee;
(viii) upon payment in full of all amounts set forth in clauses
(c)(i)-(c)(v) below, to an account previously designated by the Seller, in
partial payment of the Deferred Purchase Price, the balance, if any; and
(c) transfer all amounts in the Capital Investment Sub-Account, in
the following priority:
(i) to the Collateral Account for the account of the
Purchaser, in an amount equal to,
(A) on any such Business Day on which Capital Investment
is being maintained through the issuance of Commercial Paper (to the
extent such Capital Investment exceeds Transaction Liquidity Loans
then outstanding), accrued and unpaid CP Interest through and
including such date, to the extent not paid pursuant to Sections
6.05(b)(ii) and 6.05(b)(vi); and
(B) on any such Business Day on which Capital Investment
is being maintained through the issuance of Commercial Paper (to the
extent such Capital Investment exceeds Transaction Liquidity Loans
then outstanding), the principal of all Capital Investment in excess
of such Transaction Liquidity Loans;
(ii) if there are Transaction Liquidity Loans outstanding, to
the Transaction Liquidity Agent on behalf of the Transaction Liquidity
Providers, in an amount equal to:
(A) accrued and unpaid interest on the Transaction
Liquidity Loans to the extent not paid pursuant to Section
6.05(b)(iii);
(B) the principal of outstanding Transaction Liquidity
Loans; and
32
(C) any other amounts, including any fees, owing to the
Transaction Liquidity Agent or Transaction Liquidity Providers in
connection with the Transaction Liquidity Loans;
(iii) to the Collateral Account for the account of the
Purchaser, in an amount equal to:
(A) all Additional Amounts incurred and payable to any
Affected Party; and
(B) all Indemnified Amounts incurred and payable to any
Indemnified Party;
(iv) to the Letter of Credit Agent, if there are any
outstanding LOC Draws in respect of the Seller, in an amount equal to:
(A) accrued and unpaid interest on such outstanding LOC
Draws;
(B) the principal of such outstanding LOC Draws; and
(C) any other amounts, including fees, owing to the Letter
of Credit Agent in connection with such outstanding LOC Draws; and
(v) to the Collateral Account, an amount equal to (A) accrued
and unpaid Daily Yield minus (B) the sum of (i) amounts paid pursuant to
Section 6.05(c)(i)(A), (ii) amounts paid pursuant to Section
6.05(c)(ii)(A), and (iii) amounts paid under Section 6.05(c)(iv)(A);
(vi) if an Event of Servicer Termination has not occurred, to
the Servicer in an amount equal to its accrued and unpaid Servicing Fee;
and
(vii) upon payment in full of all amounts set forth in clauses
(c)(i)-(c)(vi) above, to an account previously designated by the Seller,
the balance, if any.
(d) after the Facility Termination Date, on each day by no later than
11:00 a.m. the Operating Agent shall transfer all amounts then on deposit in the
Retention Account to the Collateral Account;
Section 6.06. Investment of Accounts. During the Revolving Period, to the
----------------------
extent there are uninvested amounts deposited in the Collateral Account or the
Retention Account, the Operating Agent shall invest all such amounts in
Permitted Investments selected by the Operating Agent that mature no later than
the immediately
33
succeeding Business Day, in the case of the Collateral Account, and the
immediately succeeding Settlement Date, in the case of the Retention Account.
On or after the Facility Termination Date, any investment of such amounts shall
be solely at the discretion of the Operating Agent, subject to the restrictions
described above.
Section 6.07. Termination Procedure.
---------------------
(a) On the earlier of (i) the first Business Day after the Facility
Termination Date on which the Capital Investment has been reduced to zero or
(ii) the Final Purchase Date, if the payments required to be made pursuant to
Sections 6.05(a), (b), (c) and (d) have not been made in full, the Seller shall
immediately deposit into the Collection Account an amount sufficient to make
such payments in full.
(b) On the first Business Day after the Facility Termination Date on
which the payments required pursuant to Subsections 6.05(a), (b), (c) and (d)
have been made in full, all amounts held in the Collection Account and the
Retention Account, if any, shall be disbursed in immediately available funds to
the Seller and all security interests of the Purchaser and the Collateral Agent
in all Transferred Receivables owned by the Seller or other Seller Collateral
shall be released by the Purchaser and the Collateral Agent. Such disbursement
shall constitute the final payment to which the Seller is entitled pursuant to
the terms of this Agreement.
ARTICLE VII.
APPOINTMENT OF THE SERVICER
Section 7.01. Appointment of the Servicer. The Purchaser hereby appoints
---------------------------
the Servicer as its agent to service the Transferred Receivables and enforce its
rights and interests in and under each Transferred Receivable and each related
Contract and to serve in such capacity until the termination of its
responsibilities pursuant to Sections 9.02 or 11.01. The Servicer hereby agrees
to perform the duties and obligations with respect thereto set forth herein.
The Servicer may, with the prior consent of the Purchaser, the Operating Agent,
and the Collateral Agent subcontract with a Sub-Servicer for collection,
servicing or administration of the Transferred Receivables, provided, that (a)
--------
the Servicer shall remain liable for the performance of the duties and
obligations of the Sub-Servicer pursuant to the terms hereof, and (b) any Sub-
Servicing Agreement that may be entered into and any other transactions or
services relating to the Transferred Receivables involving a Sub-Servicer shall
be deemed to be between the Sub-Servicer and the Servicer alone and the
Purchaser, Operating Agent and the Collateral Agent shall not be deemed parties
thereto and shall have no obligations, duties or liabilities with respect to the
Sub-Servicer.
34
Section 7.02. Duties and Responsibilities of the Servicer.
-------------------------------------------
(a) The Servicer shall conduct the servicing, administration and
collection of the Transferred Receivables and shall take, or cause to be taken,
all such actions (i) as may be necessary or advisable to service, administer and
collect each Transferred Receivable from time to time; (ii) as the Servicer
would take if the Transferred Receivables were owned and serviced by the
Servicer, and (iii) as are consistent with industry practice for the servicing
of such Transferred Receivables.
(b) The Purchaser, the Operating Agent and the Collateral Agent shall
not have any obligation or liability with respect to any Transferred Receivables
or related Contracts, nor shall any of them be obligated to perform any of the
obligations of the Servicer hereunder.
Section 7.03. Collections on Receivables. (a) In the event that the
--------------------------
Servicer is unable to determine the specific Receivables on which Collections
have been received from an Obligor, for the purposes of this Agreement only, the
parties agree that such Collections shall be deemed to have been received on the
Receivables in the order in which they were originated with respect to such
Obligor. In the event that the Servicer is unable to determine the specific
Receivables on which discounts, offsets or other non-cash reductions have been
granted or made with respect to an Obligor, the parties agree that such
reductions shall be deemed to have been granted or made (i) prior to a
Termination Event, in the discretion of the Servicer, and (ii) after a
Termination Event, in the reverse order in which they were originated with
respect to such Obligor.
(b) If the Servicer determines that amounts unrelated to Purchased
Receivables (the "Unrelated Amounts") have been deposited in the Collection
Account, the Servicer shall provide evidence of same to the Operating Agent, the
Collateral Agent and Redwood, no later than the opening of business on the
Business Day following the day on which the Servicer became aware that such
Unrelated Amounts were deposited in the Collection Account which evidence may
take the form of written notice if requested by any of the foregoing and shall
be satisfactory to each of the foregoing. Upon receipt of proper notice, the
Operating Agent shall segregate the Unrelated Amounts and such Unrelated Amounts
shall not be deemed to be part of Collections and shall not be subject to the
provisions of Article VI hereof.
Section 7.04. Authorization of the Servicer. Each of the Seller and the
-----------------------------
Purchaser hereby authorizes the Servicer (including any successor thereto) to
take any and all steps in its name and on its behalf necessary or desirable and
not inconsistent with the ownership of the Transferred Receivables by the
Purchaser and the pledge to the Collateral Agent, in the determination of the
Servicer, to collect all amounts due under any and all such Transferred
Receivables, including, without limitation, endorsing any of their names on
checks and other instruments representing Collections, executing and delivering
any and all instruments of satisfaction or
35
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to such Transferred Receivables and, after
the delinquency of any such Transferred Receivable and to the extent permitted
under and in compliance with applicable law and regulations, to commence
proceedings with respect to enforcing payment of such Transferred Receivables
and the related Contracts, and adjusting, settling or compromising the account
or payment thereof, to the same extent as the Originator could have done if it
had continued to own such Receivable. Each Originator, the Seller and the
Purchaser shall furnish the Servicer (and any successors thereto) with any
powers of attorney and other documents necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties hereunder, and
shall cooperate with the Servicer to the fullest extent in order to ensure the
collectibility of the Transferred Receivables. Notwithstanding anything to the
contrary contained herein, the Purchaser, the Collateral Agent and the Operating
Agent shall have the absolute and unlimited right to direct the Servicer
(whether the Servicer is the Originator or otherwise) to commence or settle any
legal action to enforce collection of any such Transferred Receivable or to
foreclose upon, repossess or take any other action which the Collateral Agent or
the Operating Agent deems necessary or advisable with respect thereto; provided,
that the Servicer may, rather than commencing such action or taking other
enforcement action, at its option elect to pay the Purchaser the Outstanding
Balance of such Transferred Receivable. In no event shall the Servicer be
entitled to make the Purchaser, the Collateral Agent or the Operating Agent a
party to any litigation without such party's express prior written consent, or
to make the Seller a party to any litigation without the Operating Agent's
consent.
Section 7.05. Servicing Fees. As compensation for its servicing
--------------
activities and as reimbursement for its expenses in connection therewith, the
Servicer shall be entitled to receive the Servicing Fees in the manner set forth
in Sections 6.04 and 6.05, payable monthly in arrears on each Settlement Date
with respect to the preceding Settlement Period. The Servicer shall be required
to pay for all expenses incurred by the Servicer in connection with its
activities hereunder (including any payments to accountants, counsel or any
other Person) and shall not be entitled to any payment therefor other than the
Servicing Fees.
Section 7.06. Covenants of the Servicer. The Servicer shall (unless
-------------------------
having previously received the prior written consent of the Operating Agent and
the Collateral Agent):
(a) 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 (and any such purported disposition shall be null and void), any Transferred
Receivable or related Contract with respect thereto, or upon or with respect to
the Lockbox Account, the Lockboxes, the Collection Account, the Retention
Account or any other account to
36
which any Collections of any Transferred Receivable are deposited, or assign any
right to receive income in respect thereof;
(b) not extend, amend or otherwise modify the terms of any
Transferred Receivable (other than adjusting, settling or compromising the
account or payment of a Transferred Receivable pursuant to Section 7.04 and
except for deferments in the ordinary course of business which are consistent
with the Credit and Collection Policies), or amend, modify or waive any term or
condition of any Contract related thereto;
(c) not, and shall not permit any of its Subsidiaries to, engage in
any business other than the distribution of refrigeration, air conditioning and
heating equipment and its duties and obligations as Servicer set forth herein;
(d) not make any change in its instructions to Obligors to make
payments to the Lockboxes or Lockbox Accounts, provided that no Collections on
Unapproved Receivables shall be deposited into the Lockbox Accounts;
(e) not merge with or into (unless the Servicer is the surviving
corporation), consolidate with or into, or convey, transfer, lease or otherwise
dispose of all or substantially all of its assets (whether now owned or
hereafter acquired) (whether in one transaction or in a series of transactions);
(f) not make any change to its corporate name or use any tradenames,
fictitious names, assumed names or "doing business as" names except those
disclosed on Schedule 1 to the Transfer Agreement and after at least thirty
days' prior written notice to the Operating Agent, Collateral Agent and Redwood;
(g) identify the Transferred Receivables clearly and unambiguously in
its Servicing Records to reflect that such Transferred Receivables are owned by
the Seller;
(h) comply in all respects with the Credit and Collection Policies in
regard to each Transferred Receivable and the related Contracts; and
(i) comply in all material respects with all applicable laws, rules,
regulations and orders with respect to it, its business and properties and all
Transferred Receivables, related Contracts and Collections with respect thereto.
Section 7.07. Reporting. During the term of this Agreement, solely with
---------
respect to clauses (a) and (b) below, if Pameco Corporation is not the Servicer,
the Servicer shall furnish to the Collateral Agent, the Operating Agent and the
Purchaser:
37
(a) as soon as available and in any event within 90 days after the
end of each fiscal year of the Servicer, a copy of the audited consolidated
financial statement of the Servicer and its consolidated Subsidiaries as of the
end of such year and the related consolidated statements of income and retained
earnings, and of cash flow, of the Servicer and its consolidated Subsidiaries
for such year, in each case reported on by Ernst & Young or other firm of
nationally recognized independent public accountants acceptable to the Operating
Agent (accompanied by consolidating financial information received by such
accounting firm and a satisfactory management letter) and each other report or
statement sent to shareholders or publicly filed by the Servicer;
(b) on or before the 45th day after each quarter, an Officer's
Certificate stating, as to each signer thereof, that (i) a review of the
activities of the Servicer during the preceding calendar quarter and of its
performance under this Agreement has been made under such officer's supervision,
(ii) to the best of such officer's knowledge, based on such review, the Servicer
has fulfilled all its obligations under this Agreement throughout such quarter,
or, if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof, (iii) the Servicer has complied with the covenants set forth in Section
7.06 and Exhibit H, and (iv) the representations and warranties of the Servicer
in Section 4.02 are true and correct as if made on the date of such Officer's
Certificate;
(c) written notification of the occurrence of a Termination Event
(including, without limitation, a material adverse change in the financial
condition of the Originator) or an Incipient Event;
(d) written notification of any action, suit, proceeding, dispute,
offset deduction, defense or counterclaim that is or may be asserted by an
Obligor with respect to any Transferred Receivable; and
(e) such other periodic, special or other reports or information as
the Purchaser, the Operating Agent or the Collateral Agent may reasonably
require.
Section 7.08. Annual Statement as to Compliance. The Servicer shall
---------------------------------
deliver to the Collateral Agent, the Operating Agent and the Purchaser on or
before 90 days after the end of each fiscal year, an Officer's Certificate
stating, as to each signer thereof, that (a) a review of the activities of the
Servicer during the preceding calendar year and of its performance under this
Agreement has been made under such officer's supervision, (b) to the best of
such officer's knowledge, based on such review, the Servicer has fulfilled all
its obligations under this Agreement throughout such year or, if there has been
a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof, (c) the
Servicer has complied with the covenants set forth in Section 7.06 and Exhibit
H, and (d) the
38
representations and warranties of the Servicer in Section 4.02 are true and
correct as if made on the date of such Officer's Certificate.
Section 7.09. Annual Independent Public Accountants' Servicing and
----------------------------------------------------
Compliance Report. Without duplication of Section 5.02(f), as soon as
-----------------
available, and in any event within 90 days after the end of each fiscal year,
the Servicer at its expense shall cause a firm of nationally recognized
independent public accountants to furnish a statement (on which the Purchaser,
the Operating Agent and the Collateral Agent may rely) to the Collateral Agent
and the Operating Agent to the effect that such firm has applied the agreed upon
procedures referred to in Section 5.02(f) with respect to (a) the Servicer's
compliance with the Servicer's financial covenants in this Agreement and (b) the
Servicer's substantial compliance with this Agreement (including the Credit and
Collection Policies), and that, on the basis of such procedures, such firm has
reported that there are no exceptions, except as set forth in such statement.
ARTICLE VIII.
GRANT OF SECURITY INTERESTS
Section 8.01. Seller's Grant of Security Interest. It is the intention of
-----------------------------------
the parties hereto that each payment by the Purchaser to the Seller with respect
to Transferred Receivables to be made hereunder shall constitute a purchase and
sale of such Transferred Receivables and not a loan. If, however, a court of
competent jurisdiction holds that the transaction evidenced hereby constitutes a
loan and not a purchase and sale, it is the intention of the parties hereto that
this Agreement shall constitute a security agreement under applicable law. In
such regard and, in any event, as security for the prompt payment or performance
in full when due, whether at stated maturity, by acceleration or otherwise, of
all Seller Secured Obligations, the Seller hereby assigns and pledges to the
Purchaser, and grants to the Purchaser a security interest in and lien upon, all
of the Seller's right, title and interest in and to the following, in each case
whether now or hereafter existing or in which Seller now has or hereafter
acquires an interest and wherever the same may be located (collectively, the
"SELLER COLLATERAL"):
(a) all Transferred Receivables, Contracts and Collections;
(b) the Transfer Agreement, all Lockbox Agreements and all other
Related Documents now or hereafter in effect relating to the purchase, servicing
or processing of such Transferred Receivables (the "SELLER ASSIGNED
AGREEMENTS"), including (i) all rights of the Seller to receive moneys due and
to become due under or pursuant to the Seller Assigned Agreements, (ii) all
rights of the Seller to receive proceeds of any insurance, indemnity, warranty
or guaranty with respect to the Seller Assigned Agreements, (iii) claims of the
Seller for damages arising out of or for breach of or default under the Seller
Assigned Agreements, and (iv) the right of the Seller to
39
amend, waive or terminate the Seller Assigned Agreements, to perform under the
Seller Assigned Agreements and to compel performance and otherwise exercise all
remedies under the Seller Assigned Agreements;
(c) all of the following (the "SELLER ACCOUNT COLLATERAL"):
(i) the Lockbox Account, the Lockboxes, the Blocked Accounts
and all funds held in the Lockbox Account, the Blocked Accounts and the
Lockboxes and all certificates and instruments, if any, from time to time
representing or evidencing the Lockbox Account, the Blocked Accounts, the
Lockboxes, or such funds,
(ii) the Collection Account and the Retention Account, all
funds held in the Collection Account and the Retention Account, and all
certificates and instruments, if any, from time to time representing or
evidencing the Collection Account, the Retention Account or such funds,
(iii) all Investments from time to time of amounts in the
Collection Account and the Retention Account, and all certificates and
instruments, if any, from time to time representing or evidencing such
Investments,
(iv) all notes, certificates of deposit and other instruments
related to the Receivables or the Related Documents from time to time
delivered to or otherwise possessed by the Purchaser or any assignee or
agent on behalf of the Purchaser in substitution for or in addition to any
of the then existing Seller Account Collateral, and
(v) all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any and all of the then existing Seller
Account Collateral;
(d) all additional property related to the Receivables and the
Related Documents that may from time to time hereafter be granted and pledged by
the Seller or by anyone on its behalf under this Agreement, including the
deposit with the Purchaser, the Operating Agent or the Collateral Agent of
additional moneys by the Seller; and
(e) all Proceeds, accessions, substitutions, rents and profits of any
and all of the foregoing Seller Collateral (including Proceeds that constitute
property of the types described in Sections 8.01(a) through (d) above) and, to
the extent not otherwise included, all payments under insurance (whether or not
the Purchaser or any assignee or agent on behalf of the Purchaser is the loss
payee thereof) or any
40
indemnity, warranty or guaranty payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Seller Collateral.
Section 8.02. Seller's Certification. The Seller hereby certifies that
----------------------
(a) the benefits of the representations and warranties of each Originator made
under the Transfer Agreement have been assigned to the Purchaser and the
Collateral Agent; (b) the rights of the Seller under the Transfer Agreement to
require a capital contribution or payment of a Rejected Amount from an
Originator may be enforced by the Purchaser and the Collateral Agent; and (c)
the Transfer Agreement provides that the representations, warranties and
covenants described in Sections 4.01 and 4.02 shall survive the sale of the
Transferred Receivables and the termination of the Transfer Agreement and this
Agreement.
Section 8.03. Consent to Assignment. Each of the Seller, each Originator
---------------------
and the Servicer acknowledges and consents to the security interest over the
Seller Collateral created pursuant to the Collateral Agent Agreement and
acknowledges the rights of the Collateral Agent and the covenants given by the
Purchaser in favor of the Collateral Agent set forth in the Collateral Agent
Agreement, and further acknowledges and consents that the Collateral Agent shall
be entitled to enforce the provisions of the Seller Assigned Agreements to which
the Seller, the Originator or the Servicer is a party and shall be entitled to
all the rights and remedies of the Purchaser thereunder. In addition, each of
the Seller, each Originator and the Servicer hereby authorizes the Collateral
Agent to rely on the representations and warranties of the Seller, each
Originator or the Servicer, respectively, contained in the Seller Assigned
Agreements to which the Seller, the Originator or the Servicer is a party and in
any other certificates and documents furnished by the Seller, the Originator or
the Servicer to any party in connection therewith.
Section 8.04. Delivery of Collateral. All certificates or instruments
----------------------
representing or evidencing Collateral shall be delivered to and held by or on
behalf of the Collateral Agent pursuant to the Collateral Agent Agreement and
shall be in suitable form for transfer by delivery or shall be accompanied by
duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Collateral Agent, and to the extent not
constituting an assignment shall be irrevocable powers of attorney coupled with
an interest. The Collateral Agent shall have the right, at any time in its
discretion following the occurrence of and during the continuation of a
Termination Event and without prior notice to the Seller or the Purchaser, to
transfer to or to register in the name of the Collateral Agent or any of its
nominees any or all of the Collateral. In addition, the Collateral Agent shall
have the right at any time to exchange certificates or instruments representing
or evidencing Collateral for certificates or instruments of smaller or larger
denominations.
Section 8.05. Seller Remains Liable. Notwithstanding anything in this
---------------------
Agreement, (a) each of the Seller and the Originator shall remain liable under
the
41
Transferred Receivables, Contracts, Seller Assigned Agreements and other
agreements included in the Collateral to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by the Purchaser or the Collateral Agent of any of
its rights under this Agreement or the Collateral Agent Agreement shall not
release the Seller or the Servicer from any of their respective duties or
obligations under the Transferred Receivables, Contracts, Seller Assigned
Agreements or other agreements included in the Collateral, (c) the Purchaser,
the Collateral Agent and the Purchaser Secured Parties shall not have any
obligation or liability under the Transferred Receivables, Contracts, Seller
Assigned Agreements or other agreements included in the Collateral by reason of
this Agreement or the Collateral Agent Agreement, and (d) neither the Collateral
Agent nor any of the other Secured Parties shall be obligated to perform any of
the obligations or duties of the Seller or the Servicer under the Transferred
Receivables, Contracts, Seller Assigned Agreements or other agreements included
in the Collateral or to take any action to collect or enforce any claim for
payment assigned under this Agreement or the Collateral Agent Agreement.
Section 8.06. Covenants of the Seller and Servicer Regarding the
--------------------------------------------------
Collateral.
----------
(a) Offices and Records. The Seller shall keep its chief place of
-------------------
business and chief executive offices and the office where it keeps its Records
at the respective locations specified in Schedule 5 or, upon at least 30 days
prior written notice to the Collateral Agent, at such other location in a
jurisdiction where all action required by Section 8.06(f) shall have been taken
with respect to the Collateral. The Seller and the Servicer shall, for not less
than three years or for such longer period as may be required by law, from the
date on which any Transferred Receivable arose, maintain the Records with
respect to each Transferred Receivable, including records of all payments
received, credits granted and merchandise returned. The Seller and the Servicer
will permit representatives of the Operating Agent and the Collateral Agent at
any time and from time to time during normal business hours, and at such times
outside of normal business hours as the Operating Agent and the Collateral Agent
shall request, (i) to inspect and make copies of and abstracts from such
records, and (ii) to visit the properties of the Seller or the Servicer utilized
in connection with the collection, processing or servicing of the Transferred
Receivables for the purpose of examining such Records, and to discuss matters
relating to the Receivables or the Seller's or Servicer's performance under this
Agreement with any officer or employee of the Seller or Servicer having
knowledge of such matters. In connection therewith, the Operating Agent or the
Collateral Agent may institute procedures to permit it to confirm the Obligor
balances in respect of any Transferred Receivables. Each of the Seller and the
Servicer agrees to render to the Operating Agent and the Collateral Agent such
clerical and other assistance as may be requested with regard to the foregoing.
If a Termination Event shall have occurred and be continuing, promptly upon
request therefor, the Seller or the Servicer shall deliver to the Collateral
Agent records
42
reflecting activity through the close of business on the immediately preceding
Business Day.
(b) Collection of Transferred Receivables. Except as otherwise
-------------------------------------
provided in this Section 8.06(b), the Seller shall continue to collect or cause
to be collected, at its own expense, all amounts due or to become due to the
Seller under the Transferred Receivables, the Seller Assigned Agreements and any
other Seller Collateral. In connection with such collections, the Seller may
take (and at the Collateral Agent's direction after a Termination Event has
occurred and is continuing, shall take) such action as the Seller or the
Collateral Agent may deem necessary or advisable to enforce collection of the
Transferred Receivables and the Seller Assigned Agreements; provided, however,
that the Collateral Agent may, at any time that a Termination Event has occurred
and is continuing, notify any Obligor with respect to any Transferred
Receivables or obligors under the Seller Assigned Agreements of the assignment
of such Transferred Receivables or Seller Assigned Agreements, as the case may
be, to the Collateral Agent and direct that payments of all amounts due or to
become due to the Seller thereunder be made directly to the Collateral Agent or
any servicer, collection agent or lockbox or other account designated by the
Collateral Agent and, upon such notification and at the expense of the Seller,
the Collateral Agent may enforce collection of any such Transferred Receivables
or the Seller Assigned Agreements and adjust, settle or compromise the amount or
payment thereof, provided that the Seller may, rather than commencing such
action or taking other enforcement action, at its option, elect to pay the
Purchaser the Outstanding Balance of such Transferred Receivable.
(c) Maintain Records of Transferred Receivables. The Seller and the
-------------------------------------------
Servicer shall, at their own cost and expense, maintain satisfactory and
complete records of the Collateral, including a record of all payments received
and all credits granted with respect to the Collateral and all other dealings
with the Collateral. Each of the Seller and the Servicer will ▇▇▇▇
conspicuously with a legend, in form and substance satisfactory to the
Collateral Agent, its records, computer tapes, computer disks and credit files
pertaining to the Collateral and the Related Contracts, and its file cabinets or
other storage facilities where it maintains information pertaining to the
Collateral, to evidence this Agreement and the assignment and security interest
granted by this Article VIII. Upon the occurrence and during the continuation
of a Termination Event, the Seller and Servicer shall (i) deliver and turn over
to the Collateral Agent or to its representatives, or at the option of the
Collateral Agent shall provide the Collateral Agent or its representatives with
access to, after the occurrence of a Termination Event, at any time, and during
all other times, during ordinary business hours, on demand of the Collateral
Agent, all of the Seller's and Servicer's facilities, personnel, books and
records pertaining to the Collateral, including all Records, and (ii) allow the
Collateral Agent to occupy the premises of the Seller and the Servicer where
such books, records and Records are maintained, and utilize such premises, the
equipment thereon and any personnel of the Seller or the Servicer that
43
the Collateral Agent may wish to employ to administer, service and collect the
Transferred Receivables.
(d) Performance of Seller Assigned Agreements. The Seller or the
-----------------------------------------
Servicer, as applicable, shall (i) perform and observe all the terms and
provisions of the Seller Assigned Agreements to be performed or observed by it,
maintain the Seller Assigned Agreements in full force and effect, enforce the
Seller Assigned Agreements in accordance with their terms and take all such
action to such end as may be from time to time requested by the Collateral
Agent, and (ii) upon request of the Operating Agent or the Collateral Agent,
make to any other party to the Seller Assigned Agreements such demands and
requests for information and reports or for action as the Seller is entitled to
make under the Seller Assigned Agreements.
(e) Notice of Adverse Claim. Each of the Seller and the Servicer
-----------------------
shall advise the Purchaser, the Operating Agent and the Collateral Agent
promptly, in reasonable detail, (i) of any Adverse Claim known to it made or
asserted against any of the Seller Collateral, (ii) of the occurrence of any
event which would have a material adverse effect on the aggregate value of the
Seller Collateral or on the assignments and security interests granted by the
Seller in this Agreement and (iii) of the occurrence of any event described in
Section 4.02(h)(iii), (iv) or (v) of the Transfer Agreement with respect to any
Obligor with an Outstanding Balance of Transferred Receivables of $100,000 or
more at any one time.
(f) Further Assurances; Financing Statements.
----------------------------------------
(i) Each of the Seller and the Servicer severally agrees that
at any time and from time to time, at its expense, it shall promptly
execute and deliver all further instruments and documents, and take all
further action, that may be necessary or desirable or that the Purchaser,
the Operating Agent or the Collateral Agent may request to perfect and
protect the assignments and security interests granted or purported to be
granted by this Article VIII or to enable the Purchaser, the Operating
Agent or the Collateral Agent to exercise and enforce its rights and
remedies under this Agreement and the Collateral Agent Agreement with
respect to any Collateral. Without limiting the generality of the
foregoing, the Seller shall execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices as
may be necessary, desirable or that the Purchaser, the Operating Agent or
the Collateral Agent may request to protect and preserve the assignments
and security interests granted by this Agreement and the Collateral Agent
Agreement.
(ii) The Seller and the Purchaser hereby severally authorize
the Collateral Agent to file one or more financing or continuation
statements, and amendments thereto, relating to all or any part of the
Collateral without the
44
signature of the Seller or the Purchaser where permitted by law. A carbon,
photographic or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient
as a financing statement where permitted by law. The Collateral Agent will
promptly send to the Seller any financing or continuation statements
thereto which it files without the signature of the Seller and will
promptly send to the Purchaser any financing or continuation statements
thereto which it files without the signature of the Purchaser except, in
the case of filings of copies of this Agreement as financing statements,
the Collateral Agent will promptly send the Seller or the Purchaser, as the
case may be, the filing or recordation information with respect thereto.
(iii) Each of the Seller and the Servicer shall furnish to the
Collateral Agent from time to time such statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as the Collateral Agent may request, all in
reasonable detail.
ARTICLE IX.
TERMINATION EVENTS
Section 9.01. Termination Events. If any of the following events
------------------
(each, a "TERMINATION EVENT") shall occur and be continuing:
(a) (i) the Seller shall default in the payment of any amount owed by
it hereunder and such failure shall remain unremedied for one Business Day, or
(ii) the Seller shall fail to perform or observe any other term, covenant or
agreement contained in this Agreement or the Related Documents and such failure
shall remain unremedied for five Business Days after written notice of any such
failure described in this clause (ii) shall have been given by the Operating
Agent or the Collateral Agent to the Seller; or
(b) a default has occurred (and any applicable grace period has
elapsed) and be continuing under any instrument or agreement evidencing,
securing or providing for the issuance of Debt of the Parent, the Originator or
the Seller and such default has not been waived by the non-defaulting party; or
(c) the Originator or the Seller shall generally not pay any of its
respective 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 the Seller seeking to adjudicate it bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or any of its Debts under any law
relating to bankruptcy, insolvency, reorganization or relief of debtors, or
45
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, 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 the Seller
shall take any corporate action to authorize any of the actions set forth in
this subsection; or
(d) judgments or orders for the payment of money (other than such
judgments or orders in respect of which adequate insurance is maintained for the
payment thereof) in excess of $250,000 in the aggregate against the Originator
or any Affiliate of the Originator shall remain unpaid, unstayed on appeal,
undischarged, unbonded or undismissed for a period of 30 days or more; or
(e) a judgment or order for the payment of money is rendered against
the Seller; or
(f) there is a material breach of any of the representations and
warranties of the Seller set forth in Section 4.01; or
(g) any Governmental Authority (including the Internal Revenue
Service or the PBGC) shall file notice of a lien with regard to any assets of
the Originator (other than lien (i) limited by its terms to assets other than
Receivables and (ii) not materially adversely affecting the financial condition
of the Servicer or the Servicer's ability to perform as Servicer hereunder); or
(h) any Governmental Authority (including the Internal Revenue
Service or the PBGC) shall file notice of a lien with regard to any of the
assets of the Seller; or
(i) the Operating Agent or the Collateral Agent has determined that
any event or condition which materially adversely affects the collectibility of
the Receivables has occurred, or that any other event or condition which
materially adversely affects the financial condition of the Seller or the Seller
and its Subsidiaries as a whole, the ability of the Originator or the Seller to
collect Receivables or the ability of the Seller to perform hereunder has
occurred; or
(j) there shall occur a failure of the Originator to make any
payment, repurchase any Transferred Receivables or substitute any Transferred
Receivables with Eligible Receivables as required under Section 4.04 of the
Transfer Agreement, or if the Transfer Agreement shall for any reason cease to
evidence the transfer to the Seller (or its assignees or transferees) of the
legal and equitable title to, and ownership of, the Transferred Receivables; or
46
(k) any Lockbox Agreement or the Transfer Agreement have been amended
or terminated without the written consent of the Purchaser, the Operating Agent
and the Collateral Agent; or
(l) an Event of Servicer Termination has occurred; or
(m) the Operating Agent has determined that the funding of
Receivables hereunder is impracticable due to (i) a drop in or withdrawal of any
of the ratings assigned to the Purchaser's Commercial Paper, (ii) the imposition
of Additional Amounts, (iii) restrictions on the amount of Transferred
Receivables it may finance, (iv) the inability of the Purchaser to issue
Commercial Paper or (v) for any other reason whatsoever; or
(n) the Purchaser and the Collateral Agent cease to hold a first
priority, perfected ownership interest in the Transferred Receivables; or
(o) a Seller LOC Draw has occurred; or
(p) the obligations of the Transaction Liquidity Providers to make
Transaction Liquidity Loans, the proceeds of which may be used by the Purchaser
to make Purchases to the Seller, have terminated; or
(q) a breach of the covenants in Exhibit I has occurred; or
(r) a breach of a provision contained in Section 4.04 of the Transfer
Agreement has occurred that is not remedied within 1 Business Day of the
occurrence thereof, or a breach of any other provision of the Transfer Agreement
has occurred that is not remedied within 5 Business Days after notice thereof
shall have been given by the Operating Agent or the Collateral Agent to the
Seller;
(s) an Event of Default under the Collateral Agent Agreement has
occurred; or
(t) the short term debt rating of a Transaction Liquidity Provider
has been downgraded by a Rating Agency and such Transaction Liquidity Provider
has not been replaced in accordance with the Transaction Liquidity Agreement
within 30 days; or
(u) the Purchase Discount Rate shall be less than 50% for two
consecutive Settlement Periods;
then and in any such event, the Operating Agent shall, at the request, or may
with the consent, of the Purchaser or the Collateral Agent, by notice to the
Seller declare the Facility Termination Date to have occurred, whereupon the
Facility Termination Date
47
shall forthwith occur, without demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Seller; provided, that in the
--------
event that any of the Termination Events described in subsections (b), (c), (o),
(p), (s) or (t) have occurred, or the Termination Event described in subsection
(a)(i) has occurred and remained unremedied for four days, the Facility
Termination Date shall automatically occur, without demand, protest or any
notice of any kind, all of which are hereby expressly waived by the Seller.
Section 9.02. Events of Servicer Termination. If any of the following
------------------------------
events (each, an "EVENT OF SERVICER TERMINATION") shall occur and be continuing:
(a) the Servicer shall fail to perform or observe any term, covenant
or agreement contained in this Agreement and such failure shall remain
unremedied for five Business Days after written notice thereof shall have been
given by the Purchaser, the Collateral Agent or the Operating Agent to the
Servicer; or
(b) (i) a default has occurred and is continuing under any instrument
or agreement to which GE Capital or any of its Affiliates is a party,
evidencing, securing or providing for the issuance of Debt of the Servicer, or
(ii) a default has occurred and is continuing entitling a party to accelerate
any payment of Debt under any instrument or agreement evidencing, securing or
providing for the issuance of Debt of the Servicer in an amount exceeding
$250,000; or
(c) the Servicer shall generally not pay any of 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 Servicer seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief or composition of it
or any of its Debts under any law relating to bankruptcy, insolvency,
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, 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 Servicer shall take any corporate action to authorize any of the
actions set forth in this subsection; or
(d) judgments or orders for the payment of money (other than such
judgments or orders in respect of which adequate insurance is maintained for the
payment thereof) in excess of $250,000 in the aggregate against the Servicer or
any of its Affiliates shall remain unpaid, unstayed on appeal, undischarged,
unbonded or undismissed for a period of 30 days or more; or
48
(e) there is a breach of any of the representations and warranties of
the Servicer set forth in Section 4.02; or
(f) a breach of the covenants in Exhibit H has occurred; or
(g) the Operating Agent or the Collateral Agent shall have determined
that any event or condition which materially adversely affects the ability of
the Servicer to collect Receivables or to otherwise perform hereunder has
occurred; or
(h) a Termination Event shall have occurred or this Agreement shall
have been terminated; or
(i) a deterioration has taken place in the quality of servicing of
Transferred Receivables or other Receivables serviced by the Servicer which
either the Operating Agent or the Collateral Agent, each in its sole discretion,
determines to be material, and such material deterioration has not been
eliminated within thirty (30) days of Purchaser's written notice to Servicer of
such deterioration; or
(j) the Servicer shall assign or purport to assign any of its
obligations hereunder or under the Transfer Agreement without the prior written
consent of the Operating Agent and the Collateral Agent; or
(k) the Seller's board of directors has determined that it is in the
best interests of the Seller to terminate the Servicer and shall have given the
Servicer, the Operating Agent, the Purchaser and the Collateral Agent at least
30 days written notice thereof,
then, and in any such event, the Operating Agent shall (on behalf of the
Seller), at the request, or may with the consent, of the Purchaser or the
Collateral Agent, by delivery of a Servicer Termination Notice to the Seller and
the Servicer, terminate the servicing responsibilities of the Servicer
hereunder, without demand, protest or further notice of any kind, all of which
are hereby waived by the Servicer. Upon any such declaration, all authority and
power of the Servicer under this Agreement and the Transfer Agreement shall pass
to and be vested in the Successor Servicer appointed pursuant to Section 11.02;
provided, that notwithstanding anything to the contrary herein, the Seller
--------
agrees that it will continue to follow the procedures set forth in Section
7.02(a) with respect to Collections on Transferred Receivables.
49
ARTICLE X.
REMEDIES
Section 10.01. Actions Upon Termination Event. If any Termination Event
------------------------------
shall have occurred and be continuing and the Operating Agent shall have
declared the Facility Termination Date to have occurred or the Facility
Termination Date shall have been deemed to have occurred pursuant to Section
9.01, then the Collateral Agent may exercise in respect of the Seller
Collateral, in addition to any and all other rights and remedies otherwise
available to it, all of the rights and remedies of a secured party upon default
under the UCC (such rights and remedies to be cumulative and nonexclusive), and,
in addition, may take the following remedial actions:
(a) The Collateral Agent may, without notice to the Seller except as
required by law and at any time or from time to time, charge, set-off and
otherwise apply all or any part of the Seller Secured Obligations against
amounts payable to the Seller from the Collection Account, the Lockbox Account,
the Retention Account or any part of such accounts in accordance with the
priorities required by Sections 6.05 and 6.07.
(b) The Collateral Agent may, without notice except as specified
below, solicit and accept bids for and sell the Seller Collateral or any part of
the Seller Collateral in one or more parcels at public or private sale, at any
exchange, broker's board or at any of the Purchaser's, Operating Agent's or
Collateral Agent's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Collateral Agent may deem
commercially reasonable. The Seller agrees that, to the extent notice of sale
shall be required by law, at least ten Business Days' notice to the Seller of
the time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. The Collateral Agent
shall not be obligated to make any sale of Seller Collateral regardless of
notice of sale having been given. The Collateral Agent may adjourn any public
or private sale from time to time by announcement at the time and place fixed
for such sale, and such sale may, without further notice, be made at the time
and place to which it was so adjourned. Every such sale shall operate to divest
all right, title, interest, claim and demand whatsoever of the Seller in and to
the Seller Collateral so sold, and shall be a perpetual bar, both at law and in
equity, against the Seller, the Originator, any Person claiming the Seller
Collateral sold through the Seller, the Originator and their respective
successors or assigns.
(c) Upon the completion of any sale under Section 10.01(b), the
Seller or the Servicer will deliver or cause to be delivered all of the Seller
Collateral sold to the purchaser or purchasers at such sale on the date of sale,
or within a reasonable time thereafter if it shall be impractical to make
immediate delivery, but in any event full title and right of possession to such
property shall pass to such purchaser or
50
purchasers forthwith upon the completion of such sale. Nevertheless, if so
requested by the Collateral Agent or by any purchaser, the Seller shall confirm
any such sale or transfer by executing and delivering to such purchaser all
proper instruments of conveyance and transfer and releases as may be designated
in any such request.
(d) At any sale under Section 10.01(b), the Purchaser, the Collateral
Agent or any Purchaser Secured Party may bid for and purchase the property
offered for sale and, upon compliance with the terms of sale, may hold, retain
and dispose of such property without further accountability therefor.
(e) The Collateral Agent may exercise at the Seller's expense any and
all rights and remedies of the Seller under or in connection with the Seller
Assigned Agreements or the other Seller Collateral, including any and all rights
of the Seller to demand or otherwise require payment of any amount under, or
performance of any provisions of, the Seller Assigned Agreements.
Section 10.02. Exercise of Remedies. No failure or delay on the part of
--------------------
the Collateral Agent to exercise any right, power or privilege under this
Agreement and no course of dealing between the Seller, the Servicer, the
Originator or the Operating Agent, on the one hand, and the Collateral Agent, on
the other hand, shall operate as a waiver of such right, power or privilege, nor
shall any single or partial exercise of any right, power or privilege under this
Agreement preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. The rights
and remedies expressly provided in this Agreement are cumulative and not
exclusive of any rights or remedies which the Collateral Agent or the Secured
Parties would otherwise have pursuant to law or equity. No notice to or demand
on any party in any case shall entitle such party to any other or further notice
or demand in similar or other circumstances, or constitute a waiver of the right
of the other party to any other or further action in any circumstances without
notice or demand.
Section 10.03. Severability of Remedies. The invalidity of any remedy in
------------------------
any jurisdiction shall not invalidate such remedy in any other jurisdiction.
The invalidity or unenforceability of the remedies herein provided in any
jurisdiction shall not in any way affect the right of the enforcement in such
jurisdiction or elsewhere of any of the other remedies herein provided.
Section 10.04. Power of Attorney. Each of the Seller and the Servicer
-----------------
hereby irrevocably appoints the Collateral Agent its true and lawful attorney
(with full power of substitution) in its name, place and stead and at its
expense, in connection with the enforcement of the rights and remedies provided
for in this Article X, including with the following powers: (a) to give any
necessary receipts or acquittance for amounts collected or received hereunder,
(b) to make all necessary transfers of the Seller Collateral in connection with
any sale or other disposition made pursuant hereto, (c) to execute and deliver
for value all necessary or appropriate bills of sale, assignments
51
and other instruments in connection with any such sale or other disposition, the
Seller and the Servicer hereby ratifying and confirming all that such attorney
(or any substitute) shall lawfully do hereunder and pursuant hereto, and (d) to
sign any agreements, orders or other documents in connection with or pursuant to
this Agreement and any Related Document. Nevertheless, if so requested by the
Collateral Agent or a purchaser of Seller Collateral, the Seller shall ratify
and confirm any such sale or other disposition by executing and delivering to
the Collateral Agent or such purchaser all proper bills of sale, assignments,
releases and other instruments as may be designated in any such request.
Section 10.05. Continuing Security Interest. This Agreement shall create
----------------------------
a continuing security interest in the Collateral until the satisfaction of
Section 6.07(b).
ARTICLE XI.
SUCCESSOR SERVICER
Section 11.01. Servicer Not to Resign. The Servicer shall not resign from
----------------------
the obligations and duties hereby imposed on it except upon determination that
(a) the performance of its duties hereunder has become impermissible under
applicable law or regulation, and (b) there is no reasonable action which the
Servicer could take to make the performance of its duties hereunder become
permissible under applicable law. Any such determination permitting the
resignation of the Servicer shall be evidenced as to clause (a) above by an
opinion of counsel to such effect delivered to the Purchaser, the Collateral
Agent and the Operating Agent. No such resignation shall become effective until
a successor servicer shall have assumed the responsibilities and obligations of
the Servicer in accordance with Section 11.02.
Section 11.02. Appointment of the Successor Servicer. In connection with
-------------------------------------
the termination of the Servicer's responsibilities under this Agreement pursuant
to Section 9.02 or 11.01, the Operating Agent shall (a) succeed to and assume
all of the Servicer's responsibilities, rights, duties and obligations as
Servicer (but not in any other capacity, including specifically not its
obligations under Section 12.02) under this Agreement (and except that the
Operating Agent makes no representations and warranties pursuant to Section
4.02), or (b) appoint a successor servicer to the Servicer which shall be
acceptable to the Collateral Agent and shall succeed to all rights and assume
all of the responsibilities, duties and liabilities of the Servicer under this
Agreement (the Operating Agent, in such capacity, or such successor servicer
being referred to as the "SUCCESSOR SERVICER"); provided, that the Successor
Servicer shall have no responsibility for any actions of the Servicer prior to
the date of its appointment as Successor Servicer. In selecting a Successor
Servicer, the Operating Agent may obtain bids from any potential Successor
Servicer and may agree to any bid it deems appropriate. The Successor Servicer
shall accept its appointment by executing,
52
acknowledging and delivering to the Operating Agent and the Collateral Agent an
instrument in form and substance acceptable to the Operating Agent and the
Collateral Agent.
Section 11.03. Duties of the Servicer. At any time following the
----------------------
appointment of a Successor Servicer:
(a) The Servicer agrees that it will terminate its activities as
Servicer hereunder in a manner acceptable to the Collateral Agent so as to
facilitate the transfer of servicing to the Successor Servicer including,
without limitation, timely delivery (i) to the Collateral Agent of any funds
that were required to be remitted to the Collateral Agent for deposit in the
Collection Account, and (ii) to the Successor Servicer, at a place selected by
the Successor Servicer, of all Servicing Records and other information with
respect to the Transferred Receivables. The Servicer shall account for all funds
and shall execute and deliver such instruments and do such other things as may
be required to more fully and definitely vest and confirm in the Successor
Servicer all rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer.
(b) The Servicer shall terminate each Sub-Servicing Agreement that
may have been entered into and the Successor Servicer shall not be deemed to
have assumed any of the Servicer's interest therein or to have replaced the
Servicer as a party to any such Sub-Servicing Agreement.
Section 11.04. Effect of Termination or Resignation. Any termination or
------------------------------------
resignation of the Servicer under this Agreement shall not affect any claims
that the Originator, the Collateral Agent, the Purchaser or the Operating Agent
may have against the Servicer for events or actions taken or not taken by the
Servicer arising prior to any such termination or resignation.
ARTICLE XII.
INDEMNIFICATION
Section 12.01. Indemnities by the Seller.
-------------------------
(a) Without limiting any other rights that the Collateral Agent, the
Purchaser, the Operating Agent, the Transaction Liquidity Agent, any Transaction
Liquidity Provider, the Letter of Credit Agent or any Letter of Credit Provider
or any director, officer, employee, agent or incorporator of such party (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, losses, liabilities, obligations, damages, penalties, actions,
judgments, suits, and costs and expenses of any nature whatsoever related
thereto, including attorneys' fees and
53
disbursements (all of the foregoing being collectively referred to as
"INDEMNIFIED AMOUNTS"), which may be imposed on, incurred by or asserted against
an Indemnified Party in any way arising out of or relating to (i) any breach of
the Seller's obligations under this Agreement or any Related Document, (ii) the
sale or the pledge of the Transferred Receivables, or (iii) any Receivable or
any Contract, excluding, however Indemnified Amounts to the extent resulting
solely from gross negligence or willful misconduct on the part of such
Indemnified Party. Without limiting or being limited by the foregoing, 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:
(A) reliance on any representation or warranty made or deemed made by
the Seller (or any of its officers) under or in connection with this
Agreement, any Related Document or any report or other information
delivered by the Seller pursuant hereto which shall have been incorrect in
any material respect when made or deemed made or delivered;
(B) the failure by the Seller to comply with any term, provision or
covenant contained in this Agreement, any Related Document or any agreement
executed by it in connection with this Agreement or with any applicable
law, rule or regulation with respect to any Transferred Receivable or its
related Contract, or the nonconformity of any Transferred Receivable or its
related Contract with any such applicable law, rule or regulation; or
(C) the failure to vest and maintain vested in the Purchaser legal
and equitable title to and ownership of the Receivables which are, or are
purported to be, Transferred Receivables, together with all Collections in
respect thereof, free and clear of any Adverse Claim (except as permitted
hereunder) whether existing at the time of the purchase of such Receivable
or at any time thereafter, and to maintain or transfer to the Collateral
Agent a first priority, perfected security interest therein.
(b) Any Indemnified Amounts subject to the indemnification provisions
of this Section 12.01 not paid in accordance with Article VI, to the extent that
funds are available therefor in accordance with the provisions of Article VI,
shall be paid to the Indemnified Party within five Business Days following
demand therefor.
Section 12.02. Indemnities by the Servicer.
---------------------------
(a) Without limiting any other rights that an Indemnified Party may
have hereunder or under applicable law, the Servicer hereby agrees to indemnify
each Indemnified Party from and against any and all Indemnified Amounts which
may be imposed on, incurred by or asserted against an Indemnified Party in any
way arising out of or relating to any breach of the Servicer's obligations under
this Agreement,
54
excluding, however, (A) Indemnified Amounts to the extent resulting from gross
negligence or willful misconduct on the part of such Indemnified Party and (B)
recourse solely for uncollectible and uncollected Transferred Receivables.
Without limiting or being limited by the foregoing, the Servicer 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:
(i) reliance on any representation or warranty made or deemed
made by the Servicer (or any of its officers) under or in connection with
this Agreement, any Related Document or any report or other information
delivered by the Servicer pursuant hereto which shall have been incorrect
in any material respect when made or deemed made or delivered; or
(ii) the failure by the Servicer to comply with any term,
provision or covenant contained in this Agreement, any Related Document or
any agreement executed by it in connection with this Agreement or with any
applicable law, rule or regulation with respect to any Transferred
Receivable or its related Contract, or the imposition of any Adverse Claim
(except as permitted hereunder) with respect to a Transferred Receivable as
a result of the Servicer's actions hereunder.
(b) Any Indemnified Amounts subject to the indemnification provisions
of this Section 12.02 shall be paid to the Indemnified Party within five
Business Days following demand therefor.
ARTICLE XIII.
OPERATING AGENT
Section 13.01. Authorization and Action. The Operating Agent may take
------------------------
such action and carry out such functions under this Agreement as are delegated
to it by the terms hereof, pursuant to the Operating Agent Agreement or
otherwise contemplated hereby or thereby or are reasonably incidental thereto;
provided, that the duties of the Operating Agent shall be determined solely by
--------
the express provisions of this Agreement and other than the duties set forth in
Section 13.02 any permissive right of the Operating Agent hereunder shall not be
construed as a duty.
Section 13.02. Reliance, etc. None of the Operating Agent, any Affiliate
-------------
thereof nor any of their respective directors, officers, agents or employees
will be liable for any action taken or omitted to be taken by any of them under
or in connection with this Agreement, the Program Documents or the Related
Documents, except when caused solely by their own gross negligence or willful
misconduct. Without limiting the generality of the foregoing, and
notwithstanding any term or provision hereof to the
55
contrary, the Seller, the Servicer and the Purchaser hereby acknowledge and
agree that the Operating Agent (a) acts as agent hereunder for the Purchaser and
has no duties or obligations to, will incur no liabilities or obligations to,
and does not act as an agent in any capacity for, the Seller or the Originator,
(b) may consult with legal counsel, independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts, (c) makes no warranty or representation hereunder and
shall not be responsible for any statements, warranties or representations made
in or in connection with this Agreement, the Program Documents or the Related
Documents, (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement, the Program Documents or Related Documents on the part of the Seller,
the Servicer or the Purchaser or to inspect the property (including the books
and records) of the Seller, the Servicer or the Purchaser, (e) shall not be
responsible to the Seller, the Servicer or the Purchaser for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or any other instrument or document furnished pursuant hereto
(including the Related Documents), (f) shall incur no liability under or in
respect of this Agreement, the Program Documents or the Related Documents by
acting upon any notice or communication (including a communication by
telephone), consent, certificate or other instrument or writing believed by it
to be genuine and signed, sent or communicated by the proper party or parties
and (g) shall not be bound to make any investigation into the facts or matters
stated in any notice or other communication hereunder and may rely on the
accuracy of such facts or matters.
Section 13.03. GE Capital and Affiliates. GE Capital and its Affiliates
-------------------------
may generally engage in any kind of business with the Seller, the Originator,
the Servicer, the Purchaser or any Obligor, any of their respective Affiliates
and any Person who may do business with or own securities of such parties or any
of their respective Affiliates, all as if GE Capital were not the Operating
Agent, and without the duty to account therefor to the Seller, the Originator,
the Servicer, the Purchaser or any other Person.
ARTICLE XIV.
MISCELLANEOUS
Section 14.01. Notices, Etc.. All notices and other communications
-------------
provided for hereunder, unless otherwise stated herein, shall be in writing and
mailed or telecommunicated, or delivered as to each party hereto, at its address
set forth below or at such other address as shall be designated by such party in
a written notice to the other parties hereto. All such notices and
communications shall not be effective until received by the party to whom such
notice or communication is addressed.
56
Section 14.02. Binding Effect; Assignability. This Agreement shall be
-----------------------------
binding upon and inure to the benefit of the Seller, the Servicer, the
Purchaser, the Operating Agent and their respective permitted successors and
assigns. Neither the Seller nor the Servicer may assign any of their rights and
obligations hereunder or any interest herein without the prior written consent
of the Purchaser, the Collateral Agent and the Operating Agent and unless the
Rating Agency Condition has been fulfilled. The Purchaser, the Collateral Agent
and the Operating Agent may, at any time, without the consent of the Seller, the
Originator or the Servicer, assign any of their respective rights and
obligations hereunder or interest herein to any Affiliate of GE Capital or any
party to any Program Document. Any such assignee may further assign at any time
its rights and obligations hereunder or interests herein to any other Affiliate
of GE Capital or any party to any Program Document without the consent of the
Seller, any Originator or the Servicer. Otherwise, the Purchaser, the
Collateral Agent and the Operating Agent may not assign any of their rights
hereunder or their interests herein without the prior written consent of the
Seller. This Agreement shall create and constitute the continuing obligations
of the parties hereto in accordance with its terms, and shall remain in full
force and effect until its termination; provided, that the rights and remedies
--------
with respect to any breach of any representation and warranty made by the Seller
or the Servicer pursuant to Article IV and the indemnification and payment
provisions of Article XII shall be continuing and shall survive any termination
of this Agreement.
Section 14.03. Costs, Expenses and Taxes.
-------------------------
(a) In addition to the rights of indemnification under Article XII
hereof, the Seller agrees to pay upon demand all costs and expenses and taxes
(excluding income taxes) incurred by the Purchaser, the Operating Agent or the
Collateral Agent in connection with the administration (including periodic
auditing, Rating Agency requirements, modification and amendment) of this
Agreement, the Related Documents and the other documents to be delivered
hereunder. The Seller further agrees to pay on demand fees and out-of-pocket
expenses of counsel for the Purchaser, the Operating Agent and the Collateral
Agent whether incurred before or after the Effective Date with respect thereto
and with respect to advising the Purchaser, the Operating Agent or the
Collateral Agent as to its rights and remedies under this Agreement, the Related
Documents and the other agreements executed pursuant hereto. The Seller further
agrees to pay on demand all costs, counsel fees and expenses in connection with
the enforcement (whether through negotiation, legal proceedings or otherwise) of
this Agreement, the Related Documents and the other agreements and documents to
be delivered hereunder, including, without limitation, counsel fees and expenses
in connection with the enforcement of rights under this Section 14.03 in
accordance with the provisions of Article VI to the extent that funds are
available therefor in accordance therewith.
57
(b) In addition, the Seller shall pay on demand any and all stamp,
sales, excise and other taxes (other than income taxes) and fees payable or
determined to be payable in connection with the execution, delivery, filing or
recording of this Agreement, the Related Documents or the other agreements and
documents to be delivered hereunder, and agrees to indemnify and save each
Indemnified Party from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes and fees.
(c) In the event that the Operating Agent determines that any of the
costs referred to in paragraphs (a) or (b) above were in any part incurred on
behalf of, or are attributable to the actions of, borrowers or sellers under
Other Purchase Agreements, the Seller shall have no liability hereunder in
excess of the Seller's Share of such costs.
(d) If the Seller or the Servicer fails to perform any agreement or
obligation contained herein, the Purchaser, the Collateral Agent or the
Operating Agent may (but shall not be required to) itself perform, or cause
performance of, such agreement or obligation, and the expenses of such party
incurred in connection therewith shall be payable by the party which has failed
to so perform upon such party's demand therefor.
Section 14.04. Confidentiality.
---------------
(a) Except to the extent otherwise required by applicable law or
unless the Operating Agent shall otherwise consent in writing, the Seller and
the Servicer agree to maintain the confidentiality of this Agreement (and all
drafts hereof and documents ancillary thereto) in its communications with third
parties and otherwise and not to disclose, deliver or otherwise make available
to any third party (other than its directors, officers, employees, accountants
or counsel) the original or any copy of all or any part of this Agreement (or
any draft hereof and documents ancillary thereto).
(b) The Seller and the Servicer each agrees that it shall not issue
any news release or make any public announcement pertaining to the transactions
contemplated by this Agreement and the Related Documents without the prior
written consent of the Purchaser (which consent shall not be unreasonably
withheld) unless such news release or public announcement is required by law, in
which case the Seller shall consult with the Operating Agent prior to the
issuance of such news release or public announcement. The Seller may, however,
disclose the general terms of this Agreement and the Related Documents to trade
creditors, suppliers and other similarly situated Persons so long as such
disclosure is not in the form of a news release or public announcement.
Section 14.05. No Proceedings. The Seller and the Servicer each hereby
--------------
agrees that it will not, directly or indirectly, institute, or cause to be
instituted, against
58
the Purchaser any proceeding of the type referred to in Section 9.01(c) so long
as there shall not have elapsed one year plus one day since the latest maturing
Commercial Paper has been paid in full in cash.
Section 14.06. Amendments; Waivers; Consents. No modification, amendment
-----------------------------
or waiver of or with respect to any provision of this Agreement, the Related
Documents or any other agreements, instruments and documents delivered pursuant
hereto or thereto, nor consent to any departure by the Seller or the Servicer
from any of the terms or conditions hereof or thereof, shall be effective unless
it shall be in writing and signed by each of the parties hereto and with respect
to any material modification, amendment or waiver, satisfies the Rating Agency
Condition. Any waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No consent to or demand on the
Seller, the Originator or the Servicer in any case shall, in itself, entitle it
to any other consent or further notice or demand in similar or other
circumstances. This Agreement, the Related Documents and the documents referred
to therein embody the entire agreement among the Seller, the Purchaser, the
Operating Agent, the Collateral Agent and the Servicer and supersede all prior
agreements and understandings relating to the subject hereof.
Section 14.07. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
------------------------------------------------------
TRIAL.
-----
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAW
PROVISIONS THEREOF).
(b) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY SUBMITS TO THE NON-
EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED
STATES DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND
EACH WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT
ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESSES
SET FORTH BELOW, AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS
AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY WAIVES ANY OBJECTION BASED ON FORUM
-----
NON CONVENIENS AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER,
--------------
AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION 14.07(b) SHALL AFFECT THE
RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW.
59
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY WAIVES ANY RIGHT TO
HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR IN CONNECTION
WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN
A BENCH TRIAL WITHOUT A JURY.
Section 14.08. Execution in Counterparts; Severability. This Agreement
---------------------------------------
may be executed by the parties hereto in 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. In case any provision in
or obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation shall not in any
way be affected or impaired thereby in such jurisdiction and the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation shall not be impaired thereby in any other
jurisdiction.
Section 14.09. Descriptive Headings. The descriptive headings of the
--------------------
various sections of this Agreement are inserted for convenience of reference
only and shall not be deemed to affect the meaning or construction of any of the
provisions hereof.
Section 14.10. Limited Recourse. The obligations of the Purchaser under
----------------
this Agreement and all Related Documents are solely the corporate obligations of
the Purchaser. No recourse shall be had for the payment of any amount owing in
respect of Purchases or for the payment of any fee hereunder or any other
obligation or claim arising out of or based upon this Agreement or any other
Related Document against any shareholder, employee, officer, director, agent or
incorporator of the Purchaser. Any accrued obligations owing by the Purchaser
under this Agreement shall be payable by the Purchaser solely to the extent that
funds are available therefor from time to time in accordance with the provisions
of Article VI of the Collateral Agent Agreement and Article VI of this Agreement
(and such accrued obligations shall not be extinguished until paid in full).
60
IN WITNESS WHEREOF, the parties have caused this Receivables Purchase and
Servicing Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
PAMECO CORPORATION, as Servicer
By_______________________________
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Phone number: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier number:(▇▇▇) ▇▇▇-▇▇▇▇
REDWOOD RECEIVABLES CORPORATION, as Purchaser
By_______________________________
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Assistant Secretary
Address: c/o General Electric Capital
Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Redwood Administrator
Phone number: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier number: (▇▇▇) ▇▇▇-▇▇▇▇
or (▇▇▇) ▇▇▇-▇▇▇▇
PAMECO SECURITIZATION CORPORATION,
as Seller
By______________________________
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Phone number: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier number:(▇▇▇) ▇▇▇-▇▇▇▇
GENERAL ELECTRIC CAPITAL CORPORATION,
as Operating Agent and Collateral Agent
By______________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Duly Authorized Signatory
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President, Portfolio/Pameco
Phone number: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier number:(▇▇▇) ▇▇▇-▇▇▇▇
Schedule 1
----------
CONCENTRATION LIMITS
--------------------
Concentration Limit
Percentage
----------
All other Obligors 4%
All Canadian Obligors in the aggregate 10%
All Terms over 90 days in the aggregate 2%
S-1
Schedule 2
----------
EXCLUDED OBLIGORS
-----------------
NONE
S-2
Annex A
-------
to
--
Schedule 2
----------
FORM OF AMENDING LETTER
-----------------------
[Insert Date]
Pameco Securitization Corporation
___________________
___________________
Attention: ________
Redwood Receivables Corporation
c/o General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Redwood Administrator
Pameco Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Re: Receivables Purchase and Servicing Agreement,
dated as of April 29, 1996
Ladies and Gentlemen:
This notice is given pursuant to the Receivables Purchase and
Servicing Agreement, dated as of April 29, 1996 (the "Purchase Agreement"),
between Redwood Receivables Corporation, General Electric Capital Corporation as
agent for the Company (in such capacity, the "Operating Agent") and as
collateral agent for the Purchaser Secured Parties, Pameco Securitization
Corporation and Pameco Corporation. Capitalized terms used but not defined in
this notice have the meanings ascribed to such terms in the Purchase Agreement.
The Operating Agent hereby amends Schedule 2 to the Purchase Agreement
as follows:
S-2-A-1
[The following Obligors are added to Schedule 2 as "Excluded
Obligors":]
[The following Obligors are removed from Schedule 2:]
The effective date of this amendment to Schedule 2 is ____________,
199__.
Very truly yours,
GENERAL ELECTRIC CAPITAL
CORPORATION
By:________________________________________
Name:
Title:
S-2-A-2
Schedule 3
----------
DETERMINATION OF "DAILY YIELD"
------------------------------
MONTHLY INTEREST SUM OF DAILY YIELD FOR THE SETTLEMENT
EXPENSE PERIOD
#1) DAILY YIELD = CP Interest Amount + Liquidity Interest + LOC Interest + Margin
Amount Amount Amount
#2) DAILY YIELD RATE = (Daily Yield/Capital Investment Outstanding) x 360
#3) CP INTEREST AMOUNT = PSC x Daily Weighted x Redwood Funding
CP Net Amount Average CP Rate Factor
#3a) PSC = Capital Investment - PSC Liquidity Loans Outstanding + PSC
CP NET AMOUNT Liquidity Deposits -PSC LOC Draws Outstanding + PSC LOC
Deposits
#3b) WEIGHTED AVERAGE = Average of the rate of interest for all tranches of CP
CP RATE Outstanding issued by the Purchaser, weighted by CP
Outstanding in each tranche
#3c) DAILY WEIGHTED = Weighted Average CP Rate / 360
AVERAGE CP RATE
#3d) REDWOOD FUNDING = Net Proceeds Amount / Aggregate CP Net Amount
FACTOR
#4) LIQUIDITY INTEREST = PSC Outstanding x (Liquidity Interest
AMOUNT Liquidity Loans Rate/360)
#5) LOC INTEREST = PSC LOC Draws Outstanding x PSC Daily LOC Rate
AMOUNT
#5a) PSC DAILY LOC RATE = ((CP Interest Amount + Liquidity Interest Amount) /PSC
Senior Debt)
#6) MARGIN AMOUNT = Prior to the Facility Termination Date:
Capital Investment x Daily Margin
Facility Termination Date:
Capital Investment x Daily Default Margin
S-3-1
Definitions
-----------
Where otherwise not defined below, capitalized terms shall have the meaning
assigned to those terms in Annex X.
"Aggregate CP Net Amount" means the sum of the CP Net Amounts for all
-----------------------
Borrowers and Sellers.
"Borrower" has the meaning specified in the Pameco Liquidity Agreement.
--------
"CP Net Amount" means, for any Borrower or Seller, an amount equal to (i)
-------------
Advances Outstanding or Capital Investment, as the case may be, minus (ii)
Liquidity Loans Outstanding , plus (iii) Liquidity Deposits, minus (iv) LOC
Draws Outstanding, plus (v) LOC Deposits, each of (ii), (iii), (iv) and (v) with
respect to such Borrower or Seller.
"Daily Margin" and "Daily Default Margin" mean the following percentages
------------ --------------------
divided by 360:
Daily Margin Daily Default Margin Financial Covenants
------------ -------------------- -------------------
1.50 3.50 Adjusted Interest Coverage Ratio
less than 2.75 to 1.0
1.25 3.25 Adjusted Interest Coverage Ratio
equal to or greater than
2.75 to 1.0
provided that, for the purposes of calculating the Daily Margin and Daily
Default Margin, the Adjusted Interest Coverage Ratio for any period shall be
deemed to be the highest of (a) the Adjusted Interest Coverage for such period
and (b) the highest Adjusted Interest Coverage Ratio among all previous periods.
"Liquidity Interest Rate" has the meaning specified in the Pameco Liquidity
-----------------------
Agreement.
"Net Proceeds Amount" has the meaning specified in the Pameco Liquidity
-------------------
Agreement.
"Pameco Liquidity Agreement" means the Liquidity Loan Agreement dated as of
--------------------------
April 29, 1996 between Redwood and GE Capital executed in connection with this
Agreement.
S-3-2
"PSC CP Net Amount" means, an amount equal to (i) Capital Investment, minus
-----------------
(ii) Liquidity Loans Outstanding, plus (iii) Liquidity Deposits, minus (iv) LOC
Draws Outstanding, plus (v) LOC Deposits.
"PSC Liquidity Deposits" has the meaning specified in the Pameco Liquidity
----------------------
Agreement.
"PSC Liquidity Loans Outstanding" has the meaning specified in the Pameco
-------------------------------
Liquidity Agreement.
"PSC LOC Deposits" has the meaning specified in the Pameco Liquidity
----------------
Agreement.
"PSC LOC Draws Outstanding" has the meaning specified in the Pameco
-------------------------
Liquidity Agreement.
"PSC Senior Debt" means the sum of PSC CP Net Amount and PSC Liquidity
---------------
Loans Outstanding.
"Seller" has the meaning specified in the Pameco Liquidity Agreement.
------
S-3-3
Schedule 4
----------
YIELD DISCOUNT AMOUNT
---------------------
Yield Discount Amount = Purchase Rate Discount Amount
+ Yield Volatility Discount Amount
+ Unused Commitment Fee Discount Amount
+ Servicing Fee Discount Amount
#1 Purchase Rate = Capital Investment
Discount Amount x Daily Yield Rate (see Schedule 3)
x Liquidation Term Factor
x 360
#2 Yield Volatility = Capital Investment
Discount Amount x Yield Volatility Percentage
x Liquidation Term Factor
#3 Unused Commitment Fee = Capital Investment Available
Discount Amount x Unused Commitment Fee Rate
x Liquidation Term Factor
#4 Servicing Fee = Outstanding Balances of Transferred
Discount Amount Receivables
x Servicing Fee Rate
x Liquidation Term Factor
#5 Liquidation Term = Expected Liquidation Period/360
Factor
#6 Unused Purchase = Maximum Purchase Limit
Amount - Capital Investment Outstanding
"Expected Liquidation Period" means the weighted average number of
---------------------------
days from the date of the Investment Base Certificate to the invoice due date
for the Outstanding Balance of Transferred Receivables.
"Yield Volatility Percentage" means the maximum increase in interest
---------------------------
rates anticipated over the Expected Liquidation Period, as determined from time
to time by the Collateral Agent.
S-4
Schedule 5
----------
ADDRESSES OF THE SELLER
-----------------------
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
S-5
Schedule 6
----------
LOCKBOXES AND LOCKBOX ACCOUNTS
------------------------------
Lockbox Lockbox
------- -------
Bank ABA Number Number Address Street Address
---- ---------- ------- ------- --------------
NBD Bank ▇▇▇-▇▇▇-▇▇▇ 77102 07423-13 ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇
▇▇▇▇▇
S-6
Schedule 7
----------
LIST OF SELLER AGREEMENTS
-------------------------
Sublease between Seller as lessee and Pameco Corporation
as lessor, dated as of April 29, 1996
S-7
Schedule 8
----------
LIST OF ORIGINATOR/SERVICER TRADE,
FICTITIOUS, ASSUMED AND "DOING BUSINESS
AS" NAMES
-----------------------------------------
Trade Names
-----------
Pameco Corp. Knoxville Refrigeration
National Temperature Control Centers R &R Supply
NTCC Thermal Company
Melchoir, Armstrong, Dessau Thermal Supply
Melco ▇▇▇▇▇▇▇▇▇ Distribution
▇▇▇▇▇▇ Refrigeration Pameco-Aire
▇▇▇▇▇▇ Brothers Gulf Coast Air Conditioning
J & P Supply Rick's Supply
S-8
Schedule 9
----------
LIST OF STATES FOR WHICH GOOD STANDING
CERTIFICATES ARE REQUIRED
-------------------------
1. California
2. Colorado
3. Florida
4. Georgia
5. Louisiana
6. Minnesota
7. New Jersey
8. New York
9. Tennessee
10. Texas
11. North Carolina
12. Utah
S-9
Exhibit A-1
to
Purchase Agreement
FORM OF NOTICE - Request for Purchase
-------------------------------------
[Insert Date]
Redwood Receivables Corporation
C/o General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Redwood Administrator
General Electric Capital Corporation,
as Operating Agent
C/o General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Vice President - Portfolio/Pameco
Re: Receivables Purchase and Servicing Agreement,
dated as of April 29,1996
Ladies and Gentlemen:
This notice is given pursuant to Section 2.03(b) of the Receivables
Purchase and Servicing Agreement, dated as of April 29, 1996 (the "Purchase
Agreement"), between Redwood Receivables Corporation (the "Purchaser"), General
Electric Capital Corporation, as agent for the Company (in such capacity, the
"Operating Agent") and as collateral agent for the Purchaser Secured Parties,
Pameco Securitization Corporation (the "Seller") and Pameco Corporation.
Capitalized terms used but not defined in this notice have the meanings ascribed
to such terms in the Purchase Agreement.
The Seller hereby requests that the Purchaser make a Purchase from the
Seller on ___________, 19__ pursuant to Section 2.01 of the Purchase Agreement
in the amount of $____________ to be disbursed to the Seller in accordance with
A-1-1
Section 2.04 of the Purchase Agreement. The Company hereby confirms that the
conditions set forth in Section 3.02 of the Purchase Agreement for the making of
such Purchase have been met.
Very truly yours,
PAMECO SECURITIZATION CORPORATION
By:____________________________
Name:
Title:
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
to
Purchase Agreement
FORM OF NOTICE - Reduction of Commitment
----------------------------------------
[Insert Date]
Redwood Receivables Corporation
C/o General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Redwood Administrator
General Electric Capital Corporation,
as Operating Agent
C/o General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Vice President - Portfolio/Pameco
Re: Receivables Purchase and Servicing Agreement,
dated as of April 29, 1996
Ladies and Gentlemen:
This notice is given pursuant to Section 2.02(a) of the Receivables
Purchase and Servicing Agreement, dated as of April 29, 1996 (the "Purchase
Agreement"), between Redwood Receivables Corporation (the "Purchaser"), General
Electric Capital Corporation, as agent for the Company (in such capacity, the
"Operating Agent") and as collateral agent for the Purchaser Secured Parties,
Pameco Securitization Corporation (the "Seller") and Pameco Corporation.
Capitalized terms used but not defined in this notice have the meanings ascribed
to such terms in the Purchase Agreement.
The Seller hereby irrevocably notifies the Purchaser and the Operating
Agent pursuant to Section 2.02(a) of the Purchase Agreement that on
____________, 19__ (which is a Business Day) the Maximum Purchase Limit shall be
reduced to $_________ This reduction is the [first] [second] reduction permitted
by Section 2.02(a)
A-2-1
of the Purchase Agreement. After such reduction, the Maximum Purchase Limit
will not be less than the Capital Investment [after giving effect to, and
conditioned upon, the repayment of Purchases set forth in the attached notice].
Very truly yours,
PAMECO SECURITIZATION CORPORATION
By:____________________________
Name:
Title:
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
to
Purchase Agreement
FORM OF NOTICE - Termination of Commitment
------------------------------------------
[Insert Date]
Redwood Receivables Corporation
C/o General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Redwood Administrator
General Electric Capital Corporation,
as Operating Agent
C/o General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Vice President - Portfolio/Pameco
Re: Receivables Purchase and Servicing Agreement,
dated as of April 29, 1996
Ladies and Gentlemen:
This notice is given pursuant to Section 2.02(b) of the Receivables
Purchase and Servicing Agreement, dated as of April 29, 1996 (the "Purchase
Agreement"), between Redwood Receivables Corporation (the "Purchaser"), General
Electric Capital Corporation, as agent for the Company (in such capacity, the
"Operating Agent") and as collateral agent for the Purchaser Secured Parties,
Pameco Securitization Corporation (the "Seller") and Pameco Corporation.
Capitalized terms used but not defined in this notice have the meanings ascribed
to such terms in the Purchase Agreement.
A-3-1
The Seller hereby irrevocably notifies the Purchaser and the Operating
Agent pursuant to Section 2.02(b) of the Purchase Agreement that on
____________, 19__ (which is a Business Day at least 90 days after the date this
notice is given) the Maximum Purchase Limit shall be terminated.
Very truly yours,
PAMECO SECURITIZATION CORPORATION
By:____________________________
Name:
Title:
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
to
Purchase Agreement
FORM OF NOTICE - Repayment of Capital Investment
------------------------------------------------
[Insert Date]
Redwood Receivables Corporation
C/o General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Redwood Administrator
General Electric Capital Corporation,
as Operating Agent
C/o General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Vice President - Portfolio/Pameco
Re: Receivables Purchase and Servicing Agreement,
dated as of April 29, 1996
Ladies and Gentlemen:
This notice is given pursuant to Section 2.06 of the Receivables
Purchase and Servicing Agreement, dated as of April 29, 1996 (the "Purchase
Agreement"), between Redwood Receivables Corporation (the "Purchaser"), General
Electric Capital Corporation, as agent for the Company (in such capacity, the
"Operating Agent") and as collateral agent for the Purchaser Secured Parties,
Pameco Securitization Corporation (the "Seller") and Pameco Corporation.
Capitalized terms used but not defined in this notice have the meanings ascribed
to such terms in the Purchase Agreement.
The Seller hereby notifies the Purchaser and the Operating Agent that
on ___________, 19__ (which is a Business Day) the Seller intends to repay from
[Collections] [borrowings under the Credit Agreement] [other sources - specify]
$__________ of Purchases currently outstanding to the Seller pursuant to Section
2.06
A-4-1
of the Purchase Agreement, including (i) all Daily Yield accrued on the
principal amount of Purchases being repaid to (but excluding) the date of
repayment, and (ii) any and all Breakage Costs payable under Section 2.12 of the
Purchase Agreement.
Very truly yours,
PAMECO SECURITIZATION CORPORATION
By:____________________________
Name:
Title:
A-4-2
Exhibit B
to
Purchase Agreement
FORM OF PURCHASE ASSIGNMENT
---------------------------
ASSIGNMENT, dated as of April 29, 1996 between Pameco Securitization
Corporation (the "Seller") and REDWOOD RECEIVABLES CORPORATION (the
"Purchaser").
1. We refer to the Receivables Purchase and Servicing Agreement (the
"PURCHASE AGREEMENT") dated as of April 29, 1996 among the Seller, the
Purchaser, Pameco Corporation and General Electric Capital Corporation. All
provisions of such Purchase Agreement are incorporated herein by reference. All
capitalized terms shall have the meanings set forth in the Purchase Agreement.
2. The Seller does hereby sell to the Purchaser all right, title and
interest of the Seller in and to all Transferred Receivables transferred to the
Seller from time to time pursuant to the Receivables Transfer Agreement dated as
of April 29, 1996 between Pameco Corporation and the Seller.
3. THIS CERTIFICATE OF ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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.
PAMECO SECURITIZATION REDWOOD RECEIVABLES
CORPORATION CORPORATION
By: ________________________ By: _________________________
Name: Name:
Title: Title:
B-1
Exhibit C
to
Purchase Agreement
FORM OF INVESTMENT BASE CERTIFICATE
-----------------------------------
C-1
Exhibit D
to
Purchase Agreement
FORM OF OFFICER'S CERTIFICATE AS TO SOLVENCY
--------------------------------------------
Pameco Corporation
Officer's Certificate
I, [Name of Officer], the duly elected [Insert Title] of Pameco
Corporation (the "Originator"), hereby certify in connection with the
Receivables Purchase and Servicing Agreement, dated as of April 29, 1996 (the
"Purchase Agreement"; capitalized terms used but not defined in this Officer's
Certificate having the meaning set forth in the Purchase Agreement), between
Pameco Securitization Corporation (the "Seller"), the Originator, Redwood
Receivables Corporation (the "Purchaser") and General Electric Capital
Corporation, as agent for the Purchaser (in such capacity, the "Operating
Agent") and as collateral agent for the Purchaser Secured Parties (in such
capacity, the "Collateral Agent"), and for the benefit of the Purchaser, the
Operating Agent and the Collateral Agent, as follows:
(1) the performance of the Transfer Agreement, dated as of April 29,
1996, between the Originator, as seller, and the Seller, as buyer, will not
render the Seller insolvent; and
(2) the Seller will be able to remain economically viable without
further investments by the Originator for the foreseeable future.
IN WITNESS WHEREOF, I have signed and delivered this Officer's
Certificate this _____ day of ___________, 1996;
Pameco Corporation
By:____________________________
Name:
Title:
D-1
Exhibit E
to
Purchase Agreement
FORM OF OFFICER'S CERTIFICATE OF SELLER
---------------------------------------
Pameco Securitization Corporation
Officer's Certificate
I, [Name of Officer], the duly elected [Insert Title] of Pameco
Securitization Corporation (the "Seller"), hereby certify pursuant to Section
3.01(c)(iv) of the Receivables Purchase and Servicing Agreement, dated as
of April 29, 1996 (the "Purchase Agreement"; capitalized terms used but not
defined in this Officer's Certificate having the meaning set forth in the
Purchase Agreement), between the Seller, Pameco Corporation, Redwood Receivables
Corporation (the "Purchaser") and General Electric Capital Corporation, as agent
for the Purchaser (in such capacity, the "Operating Agent") and as collateral
agent (in such capacity, the "Collateral Agent") for the Purchaser Secured
Parties (as defined in the Purchase Agreement), and for the benefit of the
Purchaser, the Operating Agent and the Collateral Agent, as follows:
(1) after giving effect to the effectiveness of the Purchase
Agreement, no Termination Event or Incipient Event will have occurred and
be continuing; and
(2) the representations and warranties of the Seller contained in
Section 4.01 of the Purchase Agreement, in the Transfer Agreement and in
any other document, certificate or financial or other statement delivered
by the Seller in connection with the Purchase Agreement or the Transfer
Agreement are true and correct in all material respects and with the same
force and effect as though such representations and warranties had been
made as of such date, except to the extent any such representations and
warranties relate solely to an earlier date.
IN WITNESS WHEREOF, I have signed and delivered this Officer's
Certificate this _____ day of ___________, 1996.
PAMECO SECURITIZATION CORPORATION
By:____________________________
Name:
Title:
E-1
Exhibit F
to
Purchase Agreement
FORM OF OFFICER'S CERTIFICATE OF SERVICER
-----------------------------------------
Pameco Corporation
Officer's Certificate
I, [Name of Officer], the duly elected [Insert Title] of Pameco
Corporation (the "Servicer"), hereby certify pursuant to Section 3.01(d)(iv) of
the Receivables Purchase and Servicing Agreement, dated as of April 29, 1996
(the "Purchase Agreement"; capitalized terms used but not defined in this
Officer's Certificate having the meaning set forth in the Purchase Agreement),
between Pameco Securitization Corporation (the "Seller"), the Servicer, Redwood
Receivables Corporation (the "Purchaser") and General Electric Capital
Corporation, as agent for the Purchaser (in such capacity, the "Operating
Agent") and as collateral agent (in such capacity, the "Collateral Agent") for
the Purchaser Secured Parties (as defined in the Purchase Agreement), and for
the benefit of the Purchaser, the Operating Agent and the Collateral Agent, as
follows:
(1) after giving effect to the effectiveness of the Purchase
Agreement, no Event of Servicer Termination or event which, with the giving
of notice or lapse of time, or both, will have occurred and be continuing;
and
(2) the representations and warranties of the Servicer contained in
Section 4.02 of the Purchase Agreement and in any other document,
certificate or financial or other statement delivered by the Servicer in
connection with the Purchase Agreement are true and correct in all material
respects and with the same force and effect as though such representations
and warranties had been made as of such date, except to the extent any such
representations and warranties relate solely to an earlier date.
IN WITNESS WHEREOF, I have signed and delivered this Officer's
Certificate this _____ day of _____________, 1996.
PAMECO CORPORATION
By:____________________________
Name:
Title:
F-1
Exhibit G
to
Purchase Agreement
FORM OF MONTHLY REPORT
----------------------
PAMECO SECURITIZATION CORPORATION
G-1
Exhibit H
to
Purchase Agreement
FINANCIAL COVENANTS
-------------------
1. The Servicer shall not breach or fail to comply with any of the
following financial covenants, each of which shall be calculated in accordance
with GAAP, consistently applied:
(a) Servicer EBITDA. As of any date of determination, the Servicer
---------------
EBITDA for the preceding twelve consecutive fiscal months shall not be less than
$7,800,000.
(b) Interest Coverage Ratio. As of any date of determination, the
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Interest Coverage Ratio for the preceding twelve consecutive fiscal months shall
not be less than 1.7 to 1.0.
(c) Fixed Charge Coverage Ratio. As of any date of determination,
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the ratio of (i) Servicer EBITDA to (ii) Servicer Fixed Charges for the
preceding twelve consecutive fiscal months shall not be less than 1.05 to 1.0.
(d) Maintenance of Net Worth. The sum of (x) Servicer Net Worth on
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the last day of each fiscal quarter ending on the last day of any fiscal year
set forth below and (y) the aggregate amount of Permitted Dividends made prior
to or on such date shall not be less than the amount set forth opposite such
fiscal year:
Fiscal Year Ending Amount
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February 28, 1997 $21,000,000
February 28, 1998 $22,500,000
February 28, 1999 and thereafter $24,500,000
(e) Operating Leases. The Servicer shall not, and shall not permit
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any of its Subsidiaries to, enter into, incur or assume (whether directly or
contingently) any Operating Lease if the minimum rental commitment under all
non-cancelable Operating Leases of the Servicer and its Subsidiaries (as noted
in the notes to the Parent's financial statements) for any period of four
consecutive fiscal quarters of the Servicer would exceed $16,000,000.
2. Capitalized terms used in this Exhibit H and not defined in Annex
X shall have the meaning ascribed to such terms in the Credit Agreement;
provided that all
H-1
references to (i) the "Company" shall mean the Servicer, (ii) "this Agreement"
shall mean the Credit Agreement and (iii) "Holdings" shall mean the Parent.
H-2
Exhibit I
to
Purchase Agreement
The Seller shall not breach or fail to comply with any of the
following financial covenants as of any Settlement Date:
(i) Default Ratio less than 7.5% for all Settlement Dates other
than Settlement Dates occurring during November, December or
January of any year for which the Default Ratio shall be 8.0%;
(ii) Delinquency Ratio less than 11.0% for all Settlement Dates
other than Settlement Dates occurring during November, December
or January of any year for which the Delinquency Ratio shall be
12.0%;
(iii) Dilution Ratio less than 7.5%;
(iv) Receivable Collection Turnover less than 58 days;
(v) Seller Net Worth Percentage less than 5%.
I-1