EXHIBIT 10(v)
CONFIDENTIAL TREATMENT - Asterisked material has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
EXECUTION COPY
MASTER AGREEMENT
This MASTER AGREEMENT (as the same may from time to time be amended,
restated or otherwise modified, this "Agreement") is executed as of the 5th day
of August, 2003, among BASTOGNE, INC., a Nevada corporation ("SPV"), CHECKFREE
SERVICES CORPORATION, a Delaware corporation ("Servicer"), and SUNTRUST BANK, a
Georgia state-chartered commercial bank ("Bank").
WHEREAS, SPV has requested that Bank provide the Services described
herein, and Bank is willing to provide such Services subject to the terms and
conditions of this Agreement.
NOW, THEREFORE, for good and valuable consideration, Servicer, SPV and
Bank agree as follows:
ARTICLE I. DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
"ACH" shall mean the Federal Reserve Bank Automated Clearinghouse
Network.
"ACH Fees" shall have the meaning set forth in Section 4.2(b).
"ACH Monitoring Agreement" shall mean that certain Agreement for Fed
ACH File Tracking and Reporting Service between the Federal Reserve Bank and
Bank, as may be amended, modified, supplemented or replaced from time to time.
"ACH Services" shall mean the provision by Bank to SPV, or Servicer on
behalf of SPV, through use of the Transit Numbers, of access, pursuant to the
terms of this Agreement, to the ACH processing, clearing, and settlement
capability offered by the Federal Reserve Bank to Bank through Bank's account at
the Federal Reserve Bank.
"ACH Transaction" shall mean any entry initiated by SPV or Servicer, on
behalf of SPV, or for which SPV is responsible under the provisions of this
Agreement, using the Transit Numbers, to be cleared and settled through ACH to
debit and credit Deposit Accounts of Subscribers and Merchants.
"ACH Transmissions" shall have the meaning set forth in Section 4.3.
"Accounts" shall mean collectively the DDA, the Overnight Accounts, the
Custody Accounts and any other Securities Account in which Bank has permitted
SPV to maintain Investments.
"Affiliate" shall mean as to any Person, any other Person, directly or
indirectly, Controlling, Controlled by or under common Control with such Person.
"Agreement Date" shall mean the date this Agreement is duly executed by
the parties hereto.
"Assets" shall mean, as to any Person on any date, the aggregate amount
of all assets of such Person, which would be classified as assets on a balance
sheet of such Person as of such date, prepared in accordance with GAAP.
"Attributable Indebtedness" shall mean on any date, for any Person (a)
in respect of any Synthetic Lease, the capitalized amount of the remaining lease
payments under such Synthetic Lease that would appear on a balance sheet of such
Person prepared in accordance with GAAP if such Synthetic Lease were accounted
for as a capital lease, and (b) in respect of any Securitization Transaction of
such Person, the outstanding principal amount of such financing.
"Average Minimum Required Balance" means the sum of collected and
available funds in the DDA at the end of each Business Day for each calendar
month divided by the number of days in such calendar month.
"Bankruptcy Event" means with respect to Parent, Servicer or SPV, such
entity shall (a) die or discontinue business, (b) generally not pay its debts as
such debts become due, (c) make a general assignment for the benefit of
creditors, (d) apply for, consent to or fail to contest in a timely and
appropriate manner the appointment of a receiver, a custodian, a trustee, an
administrator, an interim trustee or liquidator of all or a substantial part of
its assets, (e) be adjudicated a debtor or have entered against it an order for
relief under Title 11 of the United States Code, as the same may be amended from
time to time, (f) file a voluntary petition in bankruptcy or file a petition or
an answer seeking reorganization or an arrangement with creditors or seeking to
take advantage of any other law (whether federal or state) relating to relief of
debtors, or admit (by answer, by default or otherwise) the material allegations
of a petition filed against it in any bankruptcy, reorganization, insolvency or
other proceeding (whether federal or state) relating to relief of debtors, (g)
an involuntary proceeding shall be commenced or involuntary petition shall be
filed seeking liquidation, reorganization or other relief under any federal,
state or foreign bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a receiver, custodian, administrator,
trustee, interim trustee or liquidator of all or a substantial part of its
assets, and in any such case, such proceeding or petition shall remain
undismissed for a period of 60 days or any judgment, decree or order by a court
of competent jurisdiction approving such proceeding or petition shall be
entered, or (h) take, or omit to take, any action in order thereby to effect any
of the foregoing.
"Base Percentage Rate" shall mean the percentage rate used by the
Federal Reserve Bank in calculating the charge to Bank for any daylight
overdrafts in the Bank's account maintained with the Federal Reserve Bank. As of
the date of this Agreement the Base Percentage Rate is equal to .36% per annum.
Each change by the Federal Reserve Bank in the Base Percentage Rate shall
immediately be effective at the time of such change.
"BIN Number" shall have the meaning set forth in Section 5.2(a).
"Business" shall mean Servicer's ▇▇▇▇ payment service for Subscribers
and the collection and disbursement services provided by SPV in connection
therewith.
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"Business Assets" means all cash, cash equivalents, securities,
financial assets and other assets in the DDA, any Custody Account, the Overnight
Accounts, the Returns Account, any other Investments and any Unsettled ACH
Debits that correspond to actual Business Liabilities on the date of
calculation, other than Uncollected ACH Debits.
"Business Day" shall mean (a) a day other than a Saturday or Sunday
that both (i) Bank is providing banking services to the public from its offices
in Atlanta, Georgia and (ii) the Federal Reserve Bank is providing ACH and wire
transfer services for banks and other financial institutions, and (b) in
connection with any ACH Transaction shall mean a Fed ACH Business Day, in
connection with any RPPS Transaction shall mean an RPPS Business Day, and in
connection with an E-Pay Transaction shall mean an E-Pay Business Day.
"Business Liabilities" means the sum of Overdraft Advances, Unsettled
ACH Credits, Unsettled RPPS Credits, Unsettled E-Pay Credits, Issued but Not
Cleared Checks, Unsettled ACH Returns and Other Payment Obligations.
"Business Sweep Services Agreement" shall mean that certain Business
Sweep Services Agreement, dated May 1, 2003, between Bank and SPV, as may be
amended, modified, supplemented or replaced from time to time.
"Capital Lease Obligations" shall mean, for any Person, all obligations
of such Person to pay rent or other amounts under any lease (or other
arrangement conveying the right to use) of real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Capitalized Software" shall mean, for any Person at the time any
determination thereof is made, any lease or cost of software capitalized on the
balance sheet of such Person in accordance with GAAP.
"Capitalized Software Obligations" shall mean, for any Person at the
time any determination thereof is made, the amount of the obligations of such
Person in respect of Capitalized Software on the balance sheet of such Person in
accordance with GAAP.
"Code" shall mean the Internal Revenue Code of 1986, as amended,
together with the rules and regulations promulgated thereunder.
"Company" shall mean Servicer or SPV.
"Companies" shall mean Servicer and SPV.
"Consolidated EBITDA" shall mean, for Parent and its Subsidiaries for
any period (determined on a consolidated basis in accordance with GAAP), an
amount equal to the sum of (a) Consolidated Net Income for such period, plus (b)
to the extent deducted in determining Consolidated Net Income for such period,
(i) Consolidated Interest Expense, (ii) income tax expense, (iii) depreciation
and amortization and (iv) all other non-cash charges, including without
limitation, non-cash charges incurred in connection with the issuance by Parent
of warrants and non-cash charges incurred in connection with any write-off by
Parent or any
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Subsidiary of Parent of research and development costs provided that such
charges were the result of a non-cash transaction. For the purpose of
determining the Covenants set forth in Sections 7.9(d), (e), and (g) for any
period, Consolidated EBITDA shall be calculated for such period after giving pro
forma effect to any merger with or acquisition of all or substantially all of
the assets of capital stock of any Person permitted under Section 7.7 (a
"Permitted Acquisition") consummated during such period and any Indebtedness
incurred, assumed or refinanced in connection therewith, as if such Permitted
Acquisition occurred and such Indebtedness had been incurred, assumed or
refinanced on the first day of such period.
"Consolidated EBITDAR" shall mean, for Parent and its Subsidiaries for
any period (determined on a consolidated basis in accordance with GAAP), an
amount equal to the sum of (a) Consolidated EBITDA for such period, plus (b)
Consolidated Rent for such period.
"Consolidated Intangible Assets" shall mean, as to Parent and its
Subsidiaries as of any date, the aggregate amount of all assets that would be
classified as intangible assets on a consolidated balance sheet of Parent
prepared in accordance with GAAP.
"Consolidated Interest Expense" shall mean, for Parent and its
Subsidiaries for any period (determined on a consolidated basis in accordance
with GAAP), the sum of (a) all interest in respect of Indebtedness of Parent and
its Subsidiaries (including without limitation the interest component of any
payments in respect of (i) Capital Lease Obligations and (ii) Capitalized
Software Obligations) capitalized or accrued during such period (whether or not
actually paid during such period)), plus (b) the net amount payable (or minus
the net amount receivable) under Swap Contracts during such period (whether or
not actually paid or received during such period).
"Consolidated Net Debt" shall mean as of any date of determination, all
Indebtedness of Parent and it Subsidiaries on a consolidated basis, less all
cash, cash equivalents and marketable securities of Parent and its Subsidiaries
(excluding all Subscriber Funds and all such assets owned by SPV).
"Consolidated Net Income" shall mean, for any period, the net income
(or loss) of Parent and its Subsidiaries for such period (determined on a
consolidated basis in accordance with GAAP), but excluding therefrom (to the
extent otherwise included therein) (i) any extraordinary gains or losses, (ii)
any gains attributable to write-ups of assets and (iii) any equity interest of
Parent or any Subsidiary of Parent in the unremitted earnings of any Person that
is not a Subsidiary and (iv) any income (or loss) of any Person accrued prior to
the date it becomes a Subsidiary or is merged into or consolidated with Parent
or any Subsidiary of Parent or the date that such Person's assets are acquired
by Parent or any Subsidiary of Parent.
"Consolidated Rent" shall mean, for Parent and its Subsidiaries for any
period (determined on a consolidated basis in accordance with GAAP), the
aggregate amount of all fixed and contingent payments with respect to all leases
of real and personal property (excluding payments on Capital Lease Obligations).
"Consolidated Tangible Net Worth" shall mean, for Parent and its
Subsidiaries as of any date, the excess if any, of Assets over Liabilities, as
the same would be reflected in the consolidated financial statements of Parent
as of such date prepared in accordance with GAAP, less the book value of all
Consolidated Intangible Assets.
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"Control" shall mean the power, directly or indirectly, either to (i)
vote 5% or more of securities having ordinary voting power for the election of
directors (or persons performing similar functions) of a Person or (ii) direct
or cause the direction of the management and policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. The
terms "Controlling", "Controlled by", and "under common Control with" have
meanings correlative thereto.
"Control Agreement" shall mean any control agreement executed by SPV or
Servicer, as the case requires, Bank and (a) any Securities Intermediary
maintaining a Securities Account in the name of, or for the benefit of, SPV or
Servicer, as applicable, in form and substance satisfactory to Bank, pursuant to
which such Securities Intermediary has been instructed and agrees to follow all
orders or instructions of Bank with respect to the Securities Account and any
security, security entitlement, financial assets or other assets maintained in
such Securities Account, or (b) any financial institution at which SPV or
Servicer maintains a Deposit Account, in form and substance satisfactory to
Bank, pursuant to which such financial institution has been instructed and
agrees to follow all orders or instructions of Bank with respect to such Deposit
Account or any funds on deposit therein, as such control agreement may be
amended, modified, supplemented or replaced from time to time.
"Covenants" shall mean the covenants set forth in Article VII.
"CRC" shall have the meaning set forth in Section 7.18.
"Crime Insurance Policy" shall have the meaning set forth in Section
7.1.
"Custodian" shall have the meaning set forth in Section 2.2(a).
"Custody Account" shall have the meaning set forth in Section 2.2(a).
"Custody Agreement" shall have the meaning set forth in Section 2.2(a).
"Daily Contact Person" means each person Bank has designated to serve
as SPV's Client Manager, Group Portfolio Manager, Treasury Management Services
Manager, Operations Manager and Risk Administrator, or their replacements in
such capacity.
"DDA" shall have the meaning set forth in Section 2.1 (a).
"Debt" shall mean, collectively, (a) all Indebtedness and other
liabilities and obligations incurred by Servicer or SPV to Bank under this
Agreement or any other Transaction Document; (b) each extension, renewal or
refinancing thereof in whole or in part; (c) any Fees payable to Bank or an
Affiliate of Bank by SPV or Servicer hereunder or under any other Transaction
Document or in connection with any Service; (d) every other liability and
obligation, now or hereafter owing to Bank or any Affiliate of Bank by Servicer
or SPV, and includes, without limitation, every liability and obligation,
whether owing by only Servicer or SPV or by Servicer or SPV with one or more
others in a several, joint, or joint and several capacity, whether owing
absolutely or contingently, whether created by note, overdraft, guaranty of
payment or other contract or by quasi-contract, tort, statute or other operation
of law, whether incurred directly to Bank (or any Affiliate thereof) or acquired
by Bank (or any Affiliate thereof) by purchase,
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pledge or otherwise and whether participated to or from Bank (or any Affiliate
thereof) in whole or in part; and (e) all Related Expenses.
"Default" shall mean any event or condition, which with the passage of
time or giving of notice or both would constitute an Event of Default.
"Default Rate" shall mean a rate per annum equal to two percent (2.00%)
in excess of the Prime Rate.
"Deposit Account" shall mean (a) any demand, time, savings, passbook,
or like account maintained with a bank, savings and loan association, credit
union, or like organization and (b) any "deposit account" as defined in Article
9 of the UCC.
"Electronic Commerce Services Division" shall mean any division of
Servicer's businesses which provides or supports services related to any
electronic commerce transactions or services, including, without limitation, the
Business and servicer's ▇▇▇▇ presentment business.
"E-Pay" shall mean the VISA electronic processing, clearing and
settlement system.
"E-Pay Business Day" shall mean the hours during a twenty-four hour
period occurring on one or more Business Days during which VISA accepts and
processes E-Pay Transmissions; and except as otherwise provided in this
Agreement events occurring after such time shall be deemed to occur on the next
E-Pay Business Day.
"E-Pay Fees" shall have the meaning set forth in Section 5.2(b).
"E-Pay Rules" shall have the meaning set forth in Section 5.3(b).
"E-Pay Service Agreements" shall have the meaning set forth in Section
5.7.
"E-Pay Services" shall mean the provision by Bank to SPV or Servicer,
on behalf of SPV, through use of the BIN Number, of access, pursuant to the
terms of this Agreement, to the E-Pay processing, clearing, and settlement
capability offered by VISA. "E-Pay Services" shall also include any other
services defined as "E-Pay Services" in any schedule to this Agreement signed by
the parties and expressly referencing this Agreement and the inclusion of such
services as part of the E-Pay Services.
"E-Pay Transaction" shall mean any transaction initiated by SPV, or
Servicer on behalf of SPV, or for which SPV is responsible under the provisions
of this Agreement, using Bank's BIN number to be cleared and settled through
E-Pay to credit Deposit Accounts of Merchants or the reversal of such prior
credit "E-Pay Transactions" on behalf of SPV or Servicer.
"E-Pay Transmission" shall have the meaning set forth in Section 5.3(b)
"Event of Default" shall mean an event or condition that constitutes an
Event of Default as described in Article IX hereof.
"Fed ACH Business Day" shall mean a day on which the Federal Reserve
Bank is providing ACH and wire transfer services and (i) for Monday through
Thursday, the hours of 3:00 a.m. (Eastern time) on any Business Day until 2:59
a.m. (Eastern time) on the following
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Business Day; for Friday the hours of 3:00 a.m. (Eastern time) until 11:00 p.m.
(Eastern time) and (iii) for Sunday the hours of 5:30 p.m. (Eastern time) until
2:59 a.m. (Eastern time) on the following Business Day, and except as otherwise
provided in this Agreement events occurring after such times shall be deemed to
occur on the next Fed ACH Business Day.
"Federal Reserve Bank" shall mean the Federal Reserve Bank of Atlanta.
"Financial Officer" shall mean, with respect to any Person, any of the
following officers: chief executive officer, president, chief financial officer
or treasurer.
"GAAP" shall mean generally accepted accounting principles as then in
effect, which shall include the official interpretations thereof by the
Financial Accounting Standards Board, applied on a basis consistent with the
past accounting practices and procedures of Parent, Servicer and SPV.
"Guarantee" of or by any Person (the "guarantor") shall mean any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly and including any obligation, direct or indirect, of the guarantor
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued in support of
such Indebtedness or obligation; provided, that the term "Guarantee" shall not
include endorsements for collection or deposits in the ordinary course of
business. The amount of any Guarantee shall be deemed to be an amount equal to
the stated or determinable amount of the primary obligation in respect of which
Guarantee is made or, if not so stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is required to
perform thereunder) as determined by such Person in good faith. The term
"Guarantee" used as a verb has a corresponding meaning.
"ICA Number" shall have the meaning set forth in Section 5.2(a).
"Immediate Fair Market Value" shall mean an amount equal to the sum of
cash and cash equivalents maintained in the Accounts and the price that would be
received based upon the immediate sale or liquidation of securities and other
assets in the Accounts as determined by Bank using recognized quotation
services.
"Indebtedness" shall mean, for any Person, without duplication (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person upon which interest is customarily paid, (iv) all
obligations of such Person in respect of the deferred purchase price of property
or services (other than trade payables incurred in the ordinary course of
business), (v) all obligations of such Person under any conditional sale or
other title retention agreement(s) relating to property acquired by such Person,
(vi) all Capital Lease Obligations of such Person, (vii) all obligations,
contingent or otherwise, of such Person in respect of letters of credit,
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bankers' acceptances or similar extensions of credit, (viii) all Guarantees by
such Person of Indebtedness of a third party, (ix) all Indebtedness of a third
party secured by any Lien on property owned by such Person, whether or not such
Indebtedness has been assumed by such Person, (x) all obligations of such
Person, contingent or otherwise, to purchase, redeem, retire or otherwise
acquire for value any common stock of such Person, (xi) the Attributable
Indebtedness of Synthetic Leases and Securitization Transactions of such Person
and (xii) the Swap Termination Value under any Swap Contract of such Person. The
Indebtedness of any Person shall include the Indebtedness of any partnership or
joint venture in which such Person is a general partner or a joint venturer,
except to the extent that the terms of such Indebtedness provide that such
Person is not liable therefor. For avoidance of doubt, "Indebtedness" shall not
include obligations to make payments of Subscriber Funds to Merchants.
"Initial Term" shall have the meaning set forth in Section 11.4(h).
"Instruction Letter" shall mean any instruction letter executed by SPV
and an Investment Advisor, substantially in the form of Exhibit H attached
hereto, pursuant to which an Investment Advisor has been instructed and agrees
to follow all orders or instructions given by Bank with respect to any
Investments or SPV Investments without consent of SPV.
"Investments" shall have the meaning set forth in Section 2.2(a).
"Investment Advisor" shall have the meaning set forth in Section
2.2(a).
"Investment Policy" shall have the meaning set forth in Section 7.9(c).
"Investment Services Division" shall mean the division of Servicer's
business which provides or supports a range of investment portfolio management
services to financial institutions, including broker dealers, money managers and
investment advisors.
"Issued but Not Cleared Checks" means checks drawn on SPV's controlled
disbursement Deposit Accounts listed on Schedule 8.5 for payment to Merchants
that have not yet settled through such Deposit Accounts and upon the settlement
of which, funds will be paid from the DDA.
"KeyBank" shall mean KeyBank National Association, a national banking
association.
"Liabilities" shall mean, as to any Person at any time, the aggregate
amount of all liabilities of every kind and nature which would be classified as
liabilities on a balance sheet of such Person as of such date, prepared in
accordance with GAAP, including without limitation deferred income taxes and
Capital Lease Obligations, if any.
"Lien" shall mean any mortgage, security interest, lien, charge,
encumbrance on, hypothecation, pledge or deposit of, or conditional sale or
other title retention agreement with respect to any property (real or personal)
or asset.
"Litigation" shall mean any arbitration, lawsuit or criminal
prosecution filed in a court of law, or other appropriate forum pursuant to the
rules of an applicable arbitration association.
"MasterCard" shall mean MasterCard International Incorporated, a
Delaware corporation.
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"MasterCard RPPS Service Agreements" shall mean collectively, that
certain RPPS Sponsorship Agreement between Bank and MasterCard, that certain
Remote Payment and Presentment Service Agreement between MasterCard and Bank,
that certain Sponsee Agreement between Bank, MasterCard and SPV, and any other
documents executed by Bank or SPV in connection therewith.
"Master Repurchase Agreement" shall mean that certain Master Repurchase
Agreement dated as of May 1, 2003, between Bank or an Affiliate of Bank and SPV,
as may be amended, modified, supplemented or replaced from time to time.
"Material Adverse Change" shall mean any change, effect, or
circumstance that is materially adverse to the business, assets, liabilities,
properties, prospects, condition (financial or otherwise) or results of
operations of (i) SPV, (ii) if applicable to Servicer, of Servicer and SPV,
taken as a whole, or (iii) if applicable to Parent, of Parent and its
Subsidiaries, taken as a whole.
"Material Adverse Effect" shall mean a material adverse effect has
occurred or is threatened in the business, assets, liabilities, properties,
prospects, condition (financial or otherwise) or results of operations of (i)
SPV, (ii) if applicable to Servicer, of Servicer and SPV, taken as a whole, or
(iii) if applicable to Parent, of Parent and its Subsidiaries, taken as a whole.
"Merchants" shall mean individual and business merchants that SPV is
authorized and directed to pay by any Subscriber, and any financial institutions
to which Subscriber Funds are transferred in order to effect payments to such
individual and business merchants.
"Minimum Required Balance" shall have the meaning set forth in Section
2.1 (b).
"Monthly Contact Person" means each person Bank has designated to serve
as SPV's Client Manager, Group Portfolio Manager, Treasury Management Services
Manager and Operations Manager, or their replacements in such capacity.
"Monthly Reporting Person" means ▇▇▇▇▇ ▇▇▇▇▇▇ or his replacement in his
capacity as Treasurer of SPV.
"NACHA Rules" shall have the meaning set forth in Section 4.3.
"Obligation" shall mean any Debt or other obligation due to Bank or any
Affiliate of Bank from Servicer or SPV.
"Obligor" shall mean a Person whose credit or any of whose property is
pledged to the payment of a Debt.
"Other Payment Obligations" means all other obligations of SPV related
to any Subscriber Funds other than those that are accounted for as Unsettled ACH
Credits, Unsettled RPPS Credits, Unsettled E-Pay Credits, Issued but Not Cleared
Checks or Unsettled ACH Returns.
"Overdraft Advance" shall have the meaning set forth in Section 3.1.
"Overdraft Commitment" shall have the meaning set forth in Section 3.7.
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"Overdraft Default" shall have the meaning set forth in Section 9.1(a).
"Overdraft Facility" shall have the meaning set forth in Section 3.1.
"Overnight Accounts" shall have the meaning set forth in Section 2.2
(a).
"Overnight Overdraft" shall have the meaning set forth in Section
3.3(b).
"Overnight Repurchases" shall have the meaning set forth in Section 2.2
(a).
"Parent" shall mean CheckFree Corporation, a Delaware corporation.
"Permitted Investment" shall mean (i) any purchase of any stocks,
bonds, notes, debentures or other securities or investments in accordance with
Servicer's investment policy as provided to Bank and in effect on the date
hereof, (ii) any capital contribution by Servicer in SPV, (iii) any purchase by
Servicer of the capital stock of any Person permitted under Section 7.7 and (iv)
any advances, loans, extension of credits, or capital contributions by Servicer
to or investments by Servicer in any Person or the purchases of any stocks,
bonds, notes, debentures, or other securities of any Person other than as
permitted under clauses (i), (ii) and (iii), which individually or in the
aggregate do not exceed $25,000,000, so long as at the time of any such advance,
loan, extension of credit, capital contribution, investment or purchase, and
immediately after giving effect thereto, no Default or Event of Default shall
have occurred and be continuing.
"Permitted Lien" shall mean:
(i) Liens imposed by law for taxes not yet due or which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves are being maintained in accordance with GAAP;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law created in
the ordinary course of business for amounts not yet due or which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves are being maintained in accordance with GAAP;
(iii) pledges and deposits made in the ordinary course of business
in compliance with workers' compensation, unemployment insurance and other
social security laws or regulations; and
(iv) as to Servicer only, other Liens on any assets which are used
solely in connection with and are a part of Servicer's Investment Services or
Software Divisions.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, unincorporated organization, corporation, limited liability
company, institution, trust, estate, government or other agency or political
subdivision thereof or any other entity.
"Prime Rate" shall mean the interest rate established from time to time
by Bank as Bank's prime rate, whether or not such rate is publicly announced;
the Prime Rate may not be the lowest interest rate charged by Bank for
commercial or other extensions of credit. Each change in the Prime Rate shall be
effective immediately from and after such change.
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"Purchase Money Debt" shall mean (i) Indebtedness of Servicer
(including without limitation a Capital Lease) that is incurred to finance part
or all of (but not more than) the purchase price of equipment, goods or fixtures
purchased by Servicer in the ordinary course of business, within 30 days of such
purchase, and (ii) any Indebtedness that constitutes a renewal, extension or
refunding of, but not an increase in the principal amount of Purchase Money Debt
that is so under clause (i).
"Related Expenses" shall mean any and all costs, liabilities, and
expenses (including, without limitation, losses, damages, penalties, claims,
actions, reasonable attorneys' fees, legal expenses, judgments, suits, and
disbursements) (a) incurred by, imposed upon, or asserted against, Bank in any
attempt by Bank to (i) obtain, preserve, perfect, or enforce any security
interest evidenced by this Agreement or any other Transaction Document; (ii)
obtain payment, performance, and observance of any and all of the Obligations;
or (iii) maintain, insure, audit, collect, preserve, repossess, and dispose of
any of the collateral securing the Obligations or any thereof, including,
without limitation, costs and expenses for appraisals, assessments, and audits
of Servicer and SPV or any such collateral; or (b) incidental or related to (a)
above, including, without limitation, interest thereupon from the date incurred,
imposed, or asserted until paid at the Default Rate, (c) incurred by Bank in
connection with any audit of SPV or Servicer by Bank following the occurrence of
any Level Two, Level Three or Level Four Event of Default, or (d) otherwise
incurred by Bank in the negotiation, preparation, execution and administration
of (i) this Agreement and the other Transaction Documents (other than the
routine day-to-day administration conducted by the Bank in connection with the
Services), (ii) any amendments hereto or thereto and (iii) any waivers hereof or
thereof (whether or not the transactions contemplated in this Agreement or any
other Loan Document shall be consummated); provided, however, that the Related
Expenses associated with the negotiation, preparation and execution of this
Agreement and the Transaction Documents shall not exceed $110,000.00.
"Returns Account" shall mean an account receivable arising from SPV
corporate funds being loaned by Bastogne to the DDA for purposes of covering
Uncollected ACH Debits.
"Returns Period" shall have the meaning set forth in Section 11.5(b).
"RPPS" shall mean MasterCard's remote payment processing, clearing and
settlement system.
"RPPS Business Day" shall mean the hours during any twenty-four hour
period occurring on one or more Business Days during which RPPS accepts and
processes RPPS Transmissions, and except as otherwise provided in this Agreement
events occurring after such time shall be deemed to occur on the next RPPS
Business Day.
"RPPS Fees" shall have the meaning set forth in Section 5.2(b).
"RPPS Rules" shall have the meaning set forth in Section 5.3(a).
"RPPS Services" shall mean the provision by Bank to SPV, or Servicer on
behalf of SPV, through the use of the ICA Number, of access, pursuant to the
terms of this Agreement, to the RPPS processing, clearing, and settlement
capability offered by MasterCard. "RPPS Services" shall also include any other
services defined as "RPPS Services" in any schedule to this
11
Agreement signed by the parties and expressly referencing this Agreement and the
inclusion of such services as part of the RPPS Services.
"RPPS Transaction" shall mean any transaction initiated by SPV, or
Servicer on behalf of SPV, or for which SPV is responsible under the provisions
of this Agreement, using Bank's ICA number to be cleared and settled through
RPPS to credit Deposit Accounts of certain Merchants or the reversal of such
prior credit "RPPS Transactions" on behalf of SPV or Servicer.
"RPPS Transmission" shall have the meaning set forth in Section 5.3(a).
"SAS70" shall have the meaning set forth in Section 7.3(d).
"Securities Account" shall mean an account to which a financial asset
is or may be credited in accordance with an agreement under which the Person
maintaining the account undertakes to treat the Person for whom the account is
maintained as entitled to exercise the rights that comprise the financial asset,
including without limitation, the Overnight Accounts and the Custody Accounts.
"Securities Intermediary" shall have the meaning given such term in the
Uniform Commercial Code ("UCC"), as adopted in the State of Georgia and as in
effect on the date of this Agreement or following the date of this Agreement,
including without limitation, each Securities Intermediary with which an
Overnight Account or a Custody Account is maintained.
"Securitization Transaction" shall mean with respect to any Person any
financing transaction or series of financing transactions (including factoring
arrangements) pursuant to which such Person or any Subsidiary of such Person may
sell, convey or otherwise transfer, or grant a security interest in, accounts,
payments, receivables, rights to future lease payments or residuals or similar
rights to payment to a special purpose subsidiary or affiliate of such Person
which shall issue notes, trust certificates or other instruments or securities
or evidence of indebtedness to be repaid from collections with respect to such
accounts, payments, receivables and rights.
"Security Agreement" shall mean that certain Security Agreement
executed on or about the date hereof by SPV in favor of Bank, substantially in
the form of Exhibit I attached hereto, as it may be amended, restated or
otherwise modified from time to time.
"Security Procedures" shall mean the security procedures required under
Section 7.11 or any other security procedures required by Bank in connection
with an audit under Section 7.3(f).
"Servicer Guaranty" shall mean that certain Servicer Guaranty Agreement
executed on or about the date hereof by Servicer in favor of Bank, substantially
in the form of Exhibit J attached hereto, as it may be amended, restated or
otherwise modified from time to time.
"Servicer Pledge Agreement" shall mean that certain Servicer Pledge
Agreement executed on or about the date hereof by Servicer in favor of Bank,
substantially in the form of Exhibit K, attached hereto, as it may be amended,
restated or otherwise modified from time to time.
12
"Servicer Security Agreement" shall mean that certain Servicer Security
Agreement executed on or about the date hereof by Servicer in favor of Bank,
substantially in the form of Exhibit L attached hereto, as it may be amended,
restated or otherwise modified from time to time.
"Services" shall mean (i) the ACH Services, (ii) the RPPS Services,
(iii) the E-Pay Services, (iv) the Overdraft Facility, (v) balance reporting,
wire transfer and other treasury management services provided by Bank to SPV in
connection with the DDA, pursuant to the applicable cash management or treasury
management service agreements between Bank and SPV, (vi) any custody or
investment services related to Subscriber Funds, Overnight Repurchases and
Investments provided by Bank or an Affiliate of Bank pursuant to the applicable
Custody Agreement, Business Sweep Services Agreement, Master Repurchase
Agreement or investment services agreement between SPV and Bank or such
Affiliate of Bank, and (vii) any other services defined as "Services" in any
schedule to this Agreement signed by the parties and expressly referencing this
Agreement and the inclusion of such services as part of the Services.
"Servicing Agreement" shall mean that certain Servicing Agreement dated
as of August 5, 2003 between SPV and Servicer pursuant to which Servicer acts as
the SPV Servicer.
"Software Division" shall mean the division of Servicer's business
which provides software, and the maintenance, support and professional services
related thereto, to large financial service providers and other companies,
excluding any software or services related to or used in connection with the
Business or the Electronic Commerce Services Division.
"SPV Custody Account" shall have the meaning set forth in Section 2.3.
"SPV Deposit Account" shall have the meaning set forth in Section 2.3.
"SPV Funds" shall have the meaning set forth in Section 2.3.
"SPV Investments" shall have the meaning set forth in Section 2.3.
"SPV Net Worth" shall mean, with respect to SPV, as of any date, the
excess if any, of Assets over Liabilities, as the same would be reflected in the
financial statements of SPV as of such date prepared in accordance with GAAP.
"SPV Servicer" means the entity that conducts, pursuant to the
Servicing Agreement, the services for SPV necessary for SPV to fulfill its
primary purpose of offering collection and disbursement services for Subscriber
Funds and other services in connection with the Business.
"Subscriber Funds" shall have the meaning set forth in Section 2.1(a).
"Subscribers" shall mean the individual consumers and businesses who
have contracted with Servicer, or a financial institution, Merchant or other
service provider which has contracted with Servicer, for the ▇▇▇▇ payment
services of Servicer.
"Subsidiary" shall mean, with respect to any Person (the "parent"), any
corporation, partnership, joint venture, limited liability company, association
or other entity the accounts of
13
which would be consolidated with those of the parent in the parent's
consolidated financial statements if such financial statements were prepared in
accordance with GAAP as of such date, as well as any other corporation,
partnership, joint venture, limited liability company, association or other
entity (i) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power, or in the
case of a partnership, general partnership interests are, as of such date,
owned, Controlled or held, or (ii) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent.
"SunTrust Funds Transfer Agreement" shall have the meaning set forth in
the definition of Transaction Documents in this Article I.
"Swap Contract" (a) any and all interest rate swap transactions, basis
swaps, credit derivative transactions, forward rate transactions, commodity
swaps, commodity options, forward commodity contracts, equity or equity index
swaps or options, bond or bond price or bond index swaps or options or forward
bond or forward bond price or forward bond index transactions, interest rate
options, forward foreign exchange transactions, cap transactions, floor
transactions, collar transactions, currency swap transactions, cross-currency
rate swap transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a "Master Agreement"), including
any such obligations or liabilities under any Master Agreement.
"Swap Termination Value" shall mean, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the
▇▇▇▇-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts.
"Synthetic Leases" shall mean any synthetic lease, tax retention
operating lease, off-balance sheet loan or similar off-balance sheet financing
arrangement whereby the arrangement is considered borrowed money indebtedness
for tax purposes but is classified as an operating lease or does not otherwise
appear on the balance sheet under GAAP.
"Transaction Documents" shall mean this Agreement, the Security
Agreement, the Servicer Guaranty, the Servicer Security Agreement, the Servicer
Pledge Agreement, each Control Agreement executed by SPV in connection with the
Overnight Accounts, any Custody Account and any other Investments, each
Instruction Letter, the ACH Monitoring Agreement, each Custody Agreement, the
Business Sweep Services Agreement and the Master Repurchase Agreement related to
the DDA, any other security agreement, pledge agreement or financing statement
delivered in connection with the Agreement, any of Bank's other cash management
or treasury management service agreements entered into between Bank and SPV or
Servicer in
14
connection with the Accounts, including without limitation the SunTrust Funds
Transfer Agreement between SunTrust and SPV (the "SunTrust Funds Transfer
Agreement"), Online Treasury Manager Access Agreement, and Bank's Rules and
Regulations for Commercial Deposit Accounts, any investment services agreement
of Bank or any Affiliate of the Bank related to the Investments or Subscriber
Funds, or any other agreement or document executed in connection with any of the
foregoing, as any of the foregoing may from time to time be amended, restated or
otherwise modified or replaced.
"Transition" shall have the meaning given such term in Section 11.5(a).
"Transition Completion Date" shall have the meaning set forth in
Section 11.5(a).
"Transit Numbers" shall have the meaning set forth in Section 4.2(a).
"Uncollected ACH Debit" means an ACH debit entry which is returned or
otherwise fails to settle by the earlier of (a) the date on which the second
attempt of such ACH debit with the receiver of such ACH debit is returned or
otherwise fails to settle or (b) the third (3rd) Business Day from the initial
transmission of such ACH debit entry.
"Unsettled ACH Credits" means any credit entries that (i) have been
sent by SPV, or Servicer on behalf of SPV, or for which SPV is responsible under
the provisions of this Agreement, to the Federal Reserve Bank using the Transit
Numbers, (ii) have not yet been settled by the Federal Reserve Bank, and (iii)
will result in the payment of funds to the Federal Reserve Bank from the DDA
upon settlement.
"Unsettled ACH Debits" means any debit entries originated by SPV, or
Servicer on behalf of SPV, using the Transit Numbers for the purpose of
collecting funds from Subscribers that (i) either (A) have been sent and have
not yet been settled by the Federal Reserve Bank, or (B) are scheduled to be
sent within four (4) Business Days and correspond to Issued but Not Cleared
Checks, and (ii) will result in funds being received from the Federal Reserve
Bank for deposit to the DDA upon settlement.
"Unsettled ACH Returns" means any ACH return, reversing or adjustment
entries originated by a receiver of a prior ACH debit entry debited against such
receiver's Deposit Account and credited to the DDA which will has not settled in
the DDA and will result in the payment of funds from the DDA.
"Unsettled E-Pay Credits" means any credit entries (i) that have been
sent by SPV or Servicer, on behalf of SPV, or for which SPV is responsible under
the provisions of this Agreement, to VISA using the BIN number, (ii) have not
yet been settled by VISA, and (iii) will result in the payment of funds to VISA
from the DDA upon settlement.
"Unsettled RPPS Credits" means credit files that (i) have been sent by
SPV or SPV Servicer, on behalf of SPV, or for which SPV is responsible under the
provisions of this Agreement, to MasterCard using the ICA Number, (ii) have not
yet been settled by MasterCard, and (iii) will result in the payment of funds to
MasterCard from the DDA upon settlement.
"VISA" shall mean Visa U.S.A. Inc., the owner and manager of the E-Pay
payment and settlement system utilized by Servicer and SPV for the crediting of
funds to certain Merchants.
15
* Portions have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.
Each term defined in the singular in this Agreement shall have the same meaning
when used in the plural and each term defined in the plural in this Agreement
shall have the same meaning when used in the singular. Except as otherwise
defined in this Agreement, or unless the context otherwise requires, each
accounting term that is used in this Agreement and that is defined by GAAP
shall, for purposes of this Agreement and the other Transaction Documents, be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared, in
accordance with GAAP as in effect from time to time, applied on a basis
consistent (except for such changes approved by the such Company's independent
public accountants) with past practice; provided, that if SPV notifies the Bank
that such Company wishes to amend any covenant in Section 7.9 to eliminate the
effect of any change in GAAP on the operation of such covenant (or if the Bank
notifies SPV that Bank wishes to amend Section 7.9 for such purpose), then
compliance with such covenant shall be determined on the basis of GAAP in effect
immediately before the relevant change in GAAP became effective, until either
such notice is withdrawn or such covenant is amended in a manner satisfactory to
SPV and the Bank.
ARTICLE II. DEPOSIT ACCOUNT; INVESTMENTS
SECTION 2.1 SUBSCRIBER FUNDS DEPOSIT ACCOUNT.
(a) SPV shall maintain at Bank, and subject to the terms of this
Agreement, Bank shall provide SPV a demand Deposit Account, and one or more zero
balance deposit accounts tied to and used in connection with such demand Deposit
Account which Bank may provide from time to time, solely for use in connection
with the Business to collect funds from Subscribers and to disburse funds to
Merchants and make other payments permitted herein (collectively, the "DDA").
Except for the funds deposited into the account set forth in Section 2.4 below,
all funds collected from Subscribers ("Subscriber Funds") shall be deposited
into the DDA or such other Deposit Account set forth on Schedule 8.5 and which
is subject to a standing transfer order transferring all Subscriber Funds to the
DDA on a daily basis. SPV agrees that only Subscriber Funds or proceeds from the
sale of Investments purchased with Subscriber Funds will be deposited into the
DDA.
(b) SPV shall maintain at the close of each Business Day a minimum
balance of collected and available funds in the DDA equal to [*] (the "Minimum
Required Balance").
(c) Transfers from the DDA may only be made (i) to Merchant
Deposit Accounts pursuant to ACH Transmissions, RPPS Transmissions and E-Pay
Transmissions, (ii) by repetitive wire transfer to one of the Deposit Accounts
listed on Schedule 2.1 hereto in accordance with the terms of the SunTrust Funds
Transfer Agreement, (iii) to a Custody Account, (iv) to transfer earnings on
Investments to an SPV Deposit Account, or (v) by non-repetitive wire transfer in
amounts less than or equal to $10,000 in accordance with the SunTrust Funds
Transfer Agreement. Any non-repetitive wire transfers in excess of $10,000 (each
an "Exception Wire"), must be approved by Bank. Upon submission to an authorized
representative designated by Bank, at the facsimile number designated for such
authorized representative, of a request and transfer instructions for an
Exception Wire by SPV, together with a description of the reason for such
Exception Wire and the documentation required by Bank for Bank to make a
decision to approve such request (the reason, the transfer instructions, and the
required
16
documentation shall hereinafter be the "Exception Wire Documentation"), Bank
shall use reasonable efforts to make a determination of whether to approve or
reject an Exception Wire, and if approved, to initiate such Exception Wire
within 2 hours of receipt of the Exception Wire Documentation, such initiation
of an Exception Wire subject to the terms of the SunTrust Funds Transfer
Agreement. If Bank fails to notify SPV of the rejection of an Exception Wire
within 2 hours of its receipt of the Exception Wire Documentation, then such
Exception Wire shall be deemed approved by the Bank and shall thereafter be
promptly initiated, subject to the terms of the SunTrust Funds Transfer
Agreement, unless Bank otherwise notifies SPV of a delay in approving an
Exception Wire. Nothing contained herein shall result in the Bank having any
responsibility or liability with respect to any request for an Exception Wire
that Bank determines in good faith to reject. Bank may reject any wire transfer
request from the DDA not permitted hereunder and shall have no liability for
failing to do so. Bank agrees, at its expense to retain and maintain, during the
term of this Agreement, personnel for whom one of their primary responsibilities
is to administer the process for approving Exception Wires.
SECTION 2.2 INVESTMENTS.
(a) Pursuant to the terms of the Business Sweep Services Agreement
and the Master Repurchase Agreement, the Minimum Required Balance, plus any
additional funds in the DDA determined by SPV, less a target balance of
$1,000,000 of collected and available funds in the DDA after such investment
(the "Target Balance"), will be invested by Bank on an overnight basis in
repurchase obligations ("Overnight Repurchases"). Prior to the time Subscriber
Funds are actually needed to make payments to Merchants, SPV may purchase
investments with the funds in the DDA in excess of the Minimum Required Balance
as permitted under the Investment Policy (the "Investments") (i) on an overnight
basis in certain investment funds or such other overnight investment vehicles
permitted under the Investment Policy maintained in a Securities Account with
Federated Shareholder Services Company, ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. or such other
Securities Intermediary satisfactory to Bank, (the "Overnight Accounts"), or
(ii) in longer term Investments permitted under the Investment Policy through
various investment advisors satisfactory to Bank (each an "Investment Advisor").
All Investments, other than Investments maintained in the Overnight Accounts,
will be maintained in one or more custody accounts established with Bank or an
Affiliate of Bank (each a "Custody Account") under a custody agreement in form
and substance satisfactory to Bank (each a "Custody Agreement"), between SPV and
Bank or such Affiliate (each a "Custodian"). Pursuant to the contractual
relationship between each Investment Advisor and SPV, the Investment Advisors
will only be permitted to invest Subscriber Funds in repurchase obligations,
government securities and other Investments permitted under the Investment
Policy. Prior to maintaining or trading any Investments with any Securities
Intermediary or Investment Advisor, SPV shall cause such Securities Intermediary
to execute a Control Agreement and such Investment Advisor to execute an
Instruction Letter, each in form and substance satisfactory to Bank, granting
Bank control over the Investments, and pursuant to which such Securities
Intermediary or Investment Advisor agrees to follow all instructions given by
Bank with respect to any Investments without SPV's consent upon certification by
Bank to such Securities Intermediary or Investment Advisor that a Level Two,
Level Three or Level Four Event of Default has occurred. The Investments may be
liquidated by Bank to fund any Overdraft Advances outstanding at the end of a
Business Day in accordance with the terms of this Agreement. All proceeds from
the liquidation of any Investment must be deposited directly into the DDA unless
otherwise directed by Bank. SPV
17
shall be permitted to withdraw the income and earnings on the Investments, which
shall be placed in one or more SPV Deposit Accounts or SPV Custody Accounts.
(b) All of the Subscriber Funds received by SPV, whether held in
the DDA, Overnight Repurchases, the Overnight Accounts, a Custody Account or in
any other Investments, have been received and are being maintained by SPV for
the purpose of satisfying the obligations to make payments to Merchants as
directed by the Subscribers. SPV will not use any Subscriber Funds for any
purpose other than to make payments to Merchants as directed, to purchase
Investments permitted hereunder, or to pay Bank for either an Overdraft Advance
or fund any transfers from the DDA permitted hereunder, other than any interest,
fees, or service charges imposed by Bank in connection with the Services.
SECTION 2.3 SPV ACCOUNTS AND INVESTMENTS. SPV shall maintain all funds
of SPV not consisting of Subscriber Funds ("SPV Funds") and all investments of
SPV Funds ("SPV Investments") in Deposit Accounts with Bank (each a "SPV Deposit
Account") or in a custody account with Bank or an affiliate of Bank under a
custody agreement, in form and substance satisfactory to Bank (each a "SPV
Custody Account"). Prior to maintaining or trading any income or earnings on the
Investments or other SPV Funds with any Securities Intermediary or Investment
Advisor, SPV shall cause such Securities Intermediary to execute a Control
Agreement and such Investment Advisor to execute an Instruction Letter, each in
form and substance satisfactory to Bank, granting Bank control over the SPV
Investments, and pursuant to which such Securities Intermediary or Investment
Advisor agrees to follow all instructions given by Bank with respect to such
without SPV's consent upon certification by Bank to the Securities Intermediary
that a Level Two, Level Three or Level Four Event of Default has occurred.
SECTION 2.4 RETURNS ACCOUNT. SPV may maintain, subject to the
requirements in this Section 2.4, a demand Deposit Account at KeyBank for the
sole purpose of depositing, on a daily basis, those checks received from
Merchants in the process of effecting a return of Subscriber Funds to a
Subscriber. Such Deposit Account shall be subject to and governed by a Control
Agreement and all available funds in such Deposit Account will be swept on a
daily basis into the DDA or such other account as directed by Bank pursuant to a
daily standing transfer order.
ARTICLE III. OVERDRAFT FACILITY
SECTION 3.1 ADVANCEMENT OF FUNDS. Subject to the terms and conditions
of this Agreement, Bank shall from time to time make advances to SPV to fund
daylight overdrafts which may occur in the DDA in an aggregate principal amount
at any time outstanding not to exceed the Overdraft Commitment (the "Overdraft
Facility"). Each debit to the DDA which creates an overdraft in the DDA and is
funded by Bank, shall be deemed an "Overdraft Advance" hereunder. The obligation
of SPV to repay any Overdraft Advances funded under this Agreement shall be
evidenced by Bank's records, and such records shall be prima facie evidence of
the existence and amount of such Obligations.
SECTION 3.2 OBLIGATIONS OF SPV. Without derogating or detracting in any
respect from the obligations of SPV and Servicer to Bank arising hereunder or
under any other agreement, SPV, shall:
18
* Portions have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.
(a) Repay all Overdraft Advances by the end of each Business Day;
and
(b) Ensure that at all times (i) all of the Business Assets of
SPV, including but not limited to the sum of [*] shall equal or exceed (ii) all
of the Business Liabilities of SPV, including but not limited to the sum of [*].
SECTION 3.3 RIGHTS OF BANK. In addition to, and not in lieu of any
other rights or powers it may have under state or federal law, under the
agreements it has established with respect to the Accounts or any Investments or
otherwise, Bank shall have the right to take the following actions:
(a) At any time Bank may monitor the position of the various
Accounts to assure itself that there are sufficient funds available, either in
the form of uninvested cash or Investments in the Accounts that may be readily
liquidated, to cover any Overdraft Advances and satisfy all other Business
Liabilities.
(b) If SPV has failed to deposit a sufficient amount of collected
and available funds, so that the balance of collateral and available funds in
the DDA is positive by 12:00 p.m. (Eastern time) on the Business Day immediately
following any Business Day on which an Overdraft Advance is outstanding at
Bank's close of business (each an "Overnight Overdraft"), in addition to any
other rights Bank may have, Bank may, without any prior notice to SPV or
Servicer, (i) take possession and control of any or all of the Accounts or any
other Investments, (ii) instruct any Securities Intermediary with which an
Account is maintained or any Investment Advisor trading in any Account to
transfer financial assets to Bank in satisfaction of or as collateral with
respect to any Overdraft Advances and any Unsettled ACH Credits, Unsettled RPPS
Credits, Unsettled E-Pay Credits or other debit against or transfer from the
DDA, (iii) instruct any Securities Intermediary with which an Account is
maintained or any Investment Advisor trading in any Account to sell or liquidate
such financial assets in such manner as Bank deems appropriate and transfer
funds to the DDA to satisfy any deficit in the DDA and in the amount of any
Unsettled ACH Credits, Unsettled RPPS Credits, Unsettled E-Pay Credits or any
other debit against or transfer from the DDA, or (iv) otherwise take such
actions with respect to the Accounts or any cash or financial assets therein or
any other Investments as it deems necessary and appropriate to cover any deficit
in the DDA and any Unsettled ACH Credits, Unsettled RPPS Credits, Unsettled
E-Pay Credits or any other debit against or transfer from the DDA. Bank agrees
that if it decides to sell or liquidate financial assets it will sell those
financial assets with shorter terms and settlement periods first and those
financial assets with the longest terms and settlement periods last.
(c) If by 4:30 p.m. (Eastern time) on any Business Day the balance
of collected and available funds posted to the DDA is not equal to the Minimum
Required Balance, or if any transfer from the DDA would reduce the balance of
collected and available funds posted to the DDA below the Minimum Required
Balance, the Bank may refuse to honor any transfer from the DDA during the
remainder of such Business Day, other than a transfer to effect Overnight
Repurchases.
19
* Portions have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.
SECTION 3.4 INTEREST. Interest shall accrue on the amount of each
Overdraft Advance from the time such Overdraft Advance is made until repaid at a
rate equal to the product of (i) the Base Percentage Rate in effect from time to
time multiplied by (ii) the amount of the Overdraft Advance, multiplied by (iii)
the quotient of the (a) the number of days an Overdraft Advance is outstanding
(including any day an Overdraft Advance is outstanding on such day), divided by
(b) 360, multiplied by (iv) the quotient of (a) the number of hours the
Overdraft Advance is outstanding on any day, divided by (b) 24. The SPV shall
pay all accrued and unpaid interest monthly on the first Business Day of each
calendar month immediately succeeding the month in which such interest accrues.
All accrued interest must be paid in actual U.S. dollars and SPV may not use
compensating balances in the DDA to offset such amounts.
SECTION 3.5 POWER OF ATTORNEY. SPV hereby grants unto Bank, its
officers, employees and agents, the right and power, in the name and stead of
SPV, to take the actions described in Section 3.3 above and any other actions
Bank is permitted to take under this Agreement or the other Transaction
Documents, to the full extent as if SPV itself were taking such actions. With
respect to any Securities Account in which Investments are maintained, the
rights granted herein shall constitute rights to give entitlement orders or
other instructions to a Securities Intermediary as an entitlement holder under
Section 8-506 of the UCC and are intended to constitute control under Section
8-106 of the UCC.
SECTION 3.6 SATISFACTION OF OBLIGATIONS. Nothing contained in this
Agreement shall allow Bank to use the assets of the Accounts to satisfy any
obligation of SPV or Servicer to Bank other than the Obligations owed under this
Agreement and the other Transaction Documents.
SECTION 3.7 MAXIMUM ADVANCE Notwithstanding anything to the contrary
contained herein or in any other document, Bank shall have no obligation to
advance any funds to SPV in an amount greater than the lesser of (i) [*] or (ii)
the sum of the aggregate Immediate Fair Market Value of cash and Investments in
the Accounts (the "Overdraft Commitment"). If Bank, in its sole discretion,
funds any Overdraft Advance which exceeds the Overdraft Commitment, such
Overdraft Advance shall be part of the Obligations under this Agreement and
shall be secured by any collateral now or hereafter pledged to secure the
Obligations. The funding of any Overdraft Advance at any time in excess of the
Overdraft Commitment shall be in Bank's sole discretion, and shall not
constitute or be construed as an agreement by Bank to fund any Overdraft Advance
in excess of the Overdraft Commitment at any time in the future.
ARTICLE IV. ACH FACILITY
SECTION 4.1 ACH TRANSACTIONS. Subject to the terms and conditions of
this Agreement and the ACH Monitoring Agreement, Bank shall facilitate the use
by SPV of ACH Transactions as contemplated herein.
SECTION 4.2 SERVICES, FEES AND CHARGES.
(a) Bank will maintain for the sole use of SPV and Servicer, on
behalf of SPV, and shall permit SPV and Servicer to use, the four Federal
Reserve Bank transit routing numbers of
20
* Portions have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.
Bank (the "Transit Numbers") listed on Exhibit B attached hereto, to clear and
settle ACH credit and debit entries to Subscriber and Merchant Deposit Accounts
originated and transmitted directly to the Federal Reserve Bank. The Transit
Numbers will be used by SPV only to originate ACH Transmissions to Subscriber
and Merchant Deposit Accounts in accordance with the terms of this Agreement.
Subject to the terms of this Agreement and the ACH Monitoring Agreement, the
Bank shall notify the Federal Reserve Bank to accept the ACH Transmissions
submitted directly by SPV using the Transit Numbers.
(b) SPV shall pay to Bank for the ACH Services such fees ("ACH
Fees") as are specified in Exhibit A, attached hereto. SPV shall also pay to
Bank any other fees, charges, expenses or penalties assessed by the Federal
Reserve Bank from time to time for or in connection with the ACH Services and
any ACH Transmission. Bank may increase the ACH Fees from time to time effective
upon 180 days' prior written notice, or in the event of any increase in the
fees, charges, expenses or penalties imposed or assessed by the Federal Reserve
Bank, upon the effective date of such increase by the Federal Reserve Bank;
provided, however, Bank may not increase the ACH Fees during the Initial Term of
this Agreement, except as a result of any increase in the fees, charges,
expenses or penalties charged by the Federal Reserve Bank, during the Initial
Term of this Agreement. If the Bank increases the ACH Fees, other than as a
result of an increase in the fees, charges, expenses or penalties imposed or
assessed by the Federal Reserve Bank for or in connection with ACH Services,
Servicer and SPV may terminate the ACH Service without penalty upon 90 days'
prior written notice. SPV shall be liable for all charges or penalties assessed
by NACHA for any violation of the NACHA Rules arising from SPV's acts or
omissions or misconduct, including any breach of any representation in Section
8.19.
SECTION 4.3 ACH TRANSMISSION. [*]
SECTION 4.4 FILE LIMITS. SPV and Servicer acknowledge and agree that
neither SPV nor Servicer, on behalf of SPV, shall originate any ACH Transmission
which would cause (a) the aggregate total dollar amount of all ACH Transmissions
of ACH credit entries originated on any Business Day to exceed the lesser of (i)
as calculated by Bank, the product of (A) the average of the largest dollar
amount of ACH credit entries originated on any Business
21
* Portions have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.
Day in a month for each of the prior three months then ended (including ACH
credit entries originated using the KeyBank routing and transit numbers to
disburse Subscriber Funds to Merchants for purposes of calculating such average
for the first five months ending after the Agreement Date), multiplied by (B)
1.3, effective thirty days after Bank receives from SPV such information for
each of the prior three months, it being understood that this calculation shall
be on a rolling three month basis, or (ii) as calculated by Bank, the sum of (A)
the Immediate Fair Market Value of all cash and Investments in the Accounts at
the time of such ACH Transmission, plus (B) the aggregate total dollar amount of
all Unsettled ACH Debits (other than Uncollected ACH Debits) at the time of such
ACH Transmission as reported by the Federal Reserve Bank, less (C) the aggregate
total dollar amount of all Overdraft Advances outstanding at the time of such
ACH Transmission, less (D) the aggregate total dollar amount of all RPPS and
E-Pay Transmissions which have been originated on such Business Day at the time
of such ACH Transmission, less (E) the amount of all Issued but Not Cleared
Checks (the "Credit Cap"), or (b) the aggregate total dollar amount of all ACH
Transmissions of ACH debit entries originated on any Business Day to exceed, as
calculated by Bank, the product of (i) the average of the largest dollar amount
of ACH debit entries originated on any Business Day in a month for each of the
prior three months then ended (including ACH debit entries originated using the
KeyBank routing and transit numbers to collect Subscriber Funds for purposes of
calculating such average for the first five months ending after the Agreement
Date), multiplied by (ii) 1.3, effective thirty days after Bank receives from
SPV such information for each of the prior three months, it being understood
that this calculation shall be on a rolling three month basis (the "Debit Cap").
For purposes of calculating compliance with the Credit Cap and the Debit Cap,
any ACH Transmission originated after the close of any Fed ACH Business Day on a
Friday but before the start of the Fed ACH Business Day on the following Monday
shall be included in the aggregate amount of credit entries and debit entries
originated on the prior Fed ACH Business Day. Bank shall have no obligation to
fund the payment of any ACH Transmission that causes the aggregate total dollar
amount of ACH credit entries originated on any Banking Day to exceed the Credit
Cap or the aggregate total dollar amount of ACH debit entries originated on any
Banking Day to exceed the Debit Cap, and Bank may order the Federal Reserve Bank
to reject any such ACH Transmission and shall have no liability for failing to
do so.
SECTION 4.5 USER ID AND SENDING POINT ID; FED CIRCUIT. [*]
22
* Portions have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.
SECTION 4.6 REJECTION OF ENTRIES; CANCELLATIONS AND AMENDMENTS;
REVERSAL ENTRIES.
(a) [*]
(b) [*]
23
* Portions have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.
(c) [*]
(d) SPV and Servicer acknowledge that once SPV or Servicer has
transmitted an ACH Transmission to the Federal Reserve Bank, that (i) neither
SPV nor Servicer shall have any right or ability to, but may request that Bank
request for the Federal Reserve Bank to, cancel or amend such ACH Transmission,
(ii) the Bank shall have no ability to cancel or amend such ACH Transmission,
and (iii) neither Bank nor the Federal Reserve Bank shall have any obligation to
cancel or amend or take any actions to cancel or amend such ACH Transmission.
SECTION 4.7 COMPLIANCE. Bank, Servicer and SPV understand, acknowledge,
and agree that this Agreement is subject to the ongoing approval of the Office
of the Comptroller of the Currency, the Federal Reserve Bank, the Federal
Reserve Board, the Georgia Department of Banking and Finance or any other
applicable government agency, including but not limited to the ability of Bank
to retain multiple routing and transit numbers and to permit the SPV or Servicer
to use the Bank's routing and transit number to originate ACH Transmissions
directly with the Federal Reserve Bank. Should the Federal Reserve Bank or any
other regulatory agency or state or federal court direct Bank to cease and
desist such operations, refuse to continue to permit Bank to provide the ACH
Services to SPV or Servicer, or change the method of operations involving the
ACH Services, or should Bank's provision of the ACH Services or any part thereof
be or become in violation of any court order, law, regulation, circular, or
official interpretation or letter of a regulatory agency, then Bank will not be
required to continue providing the affected ACH Services but will promptly
notify SPV and Servicer that the services contemplated herein will be
terminated. However, Bank will use good faith efforts to attempt to assist SPV
and Servicer in determining if any alternative processing scenarios are
available, and Bank reserves the right to negotiate the price and other terms
with respect to any such alternative servicing arrangements that Bank may elect
to provide. SPV and Servicer agree that they will fully comply with all
applicable state and federal laws, regulations, and Federal Reserve Bank
operating circulars, including but not limited to Federal Reserve Board
Regulation E, Operating Circular No. 4 or other successor operating circular,
and with the NACHA Rules, as such laws, regulations, operating letters, and
NACHA Rules are amended from time to time, and SPV and Servicer acknowledge that
such amendments may necessitate a change in Bank's pricing. Insofar as Bank's
cooperation is necessary to enable SPV and Servicer to comply with the
foregoing, Bank will reasonably cooperate with SPV and Servicer. In addition,
Bank, SPV and Servicer agree that if the Federal Reserve Bank or NACHA Rules
require any change in operations involving the processing of ACH Transmissions,
SPV and Servicer will cooperate to comply with same.
SECTION 4.8 OTHER ACH TERMS. Bank, Servicer or SPV may terminate its
obligation to engage in all future ACH Transactions upon written notice to the
other parties in the event any party is required to discontinue its
participation in the Services based upon (i) a
24
change in the rules, regulations, circulars or letters of any regulatory body,
including the Federal Reserve Board, Federal Reserve Bank or other Reserve Bank,
the NACHA Rules, or any laws governing or applicable to the Services that makes
any party unable to continue to make ACH Transmissions or render any Services
hereunder, or (ii) an order of a state or federal court or regulatory body
having jurisdiction to require Bank, Servicer or SPV to terminate ACH
Transmissions or any Services hereunder. Bank may declare a Level Two Event of
Default if (i) the Federal Reserve Bank terminates the ACH Monitoring Agreement
or (ii) a material default by the Federal Reserve Bank under the ACH Monitoring
Agreement has occurred, and if Bank is unable to arrange, to its satisfaction,
services for monitoring, tracking and reporting and suspending or rejecting ACH
Transmissions within thirty days of the declaration of a Level Two Event of
Default, Bank may terminate the ACH Services upon 150 days' prior written notice
to SPV.
SECTION 4.9 AUTHORIZED TRANSACTIONS; SECURITY PROCEDURES. SPV and
Servicer acknowledge and agree that all ACH Transmissions originated using the
Transit Numbers will be transmitted directly from SPV or Servicer to the Federal
Reserve Bank, and Bank will not have any ability to, or responsibility for,
verifying the authenticity or accuracy of any ACH Transmission. SPV and Servicer
shall be solely responsible for limiting access to, and maintaining the security
and confidentiality of, the system used to originate ACH Transmissions. Except
for ACH entries originated solely as a result of the actions of any employees of
Bank or an Affiliate of Bank, excluding any actions taken in good faith in
accordance with instructions provided by any person Bank believes in good faith
is an employee or representative of SPV or Servicer, SPV and Servicer agree to
be bound by any ACH Transmission, whether or not unauthorized, originated using
the Transit Numbers, and all ACH entries included in any ACH Transmission shall
be deemed to be an authorized transaction of SPV. SPV shall be liable to Bank
for the dollar amount of any ACH credit entry or any ACH debit entry which is
later returned, included in any such ACH Transmission. Bank will not grant any
other customer the right to use the Transit Numbers.
SECTION 4.10 FRAUDULENT AND ERRONOUS ENTRIES. If Bank believes that any
ACH Transmission contains a fraudulent, erroneous or otherwise unauthorized
entry, upon notice by Bank, SPV and Servicer agree to take all actions
reasonably necessary to determine whether such entry in such ACH Transmission
was fraudulent, erroneous or otherwise unauthorized.
SECTION 4.11 PAYMENT OF ENTRIES. SPV shall pay the Bank the amount of
each ACH credit entry in any ACH Transmission on the date such ACH credit entry
settles at the Bank's account with the Federal Reserve Bank. The Bank may
immediately debit the DDA on such date for the amount of such ACH credit entries
without any prior notice to SPV at such time as Bank may determine. Bank shall
pay SPV the amount of each ACH debit entry in any ACH Transmission on the date
such ACH debit entry settles at the Bank's account with the Federal Reserve
Bank, at such time as is typical for the Bank under the circumstances in its
ordinary course of business.
SECTION 4.12 LIMITATION OF LIABILITY. Bank shall not be deemed an agent
of and shall not be responsible for or have any liability for the acts of
omissions of any third party, including without limitation the Federal Reserve
Bank, other than an Affiliate of Bank. Bank shall have no liability for the
Federal Reserve Bank's error in processing any ACH
25
* Portions have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.
Transmission or any failure to process or delay in processing any ACH
Transmission, unless the Federal Reserve Bank was acting in accordance with
instructions given by Bank and such failure or delay did not result from the
negligence or misconduct of the Federal Reserve Bank. SPV shall be solely
responsible for the actions of any third party authorized to perform on its
behalf under this Agreement.
ARTICLE V. RPPS AND E-PAY FACILITIES
SECTION 5.1 RPPS AND E-PAY TRANSACTIONS. Subject to the terms and
conditions of this Agreement and the MasterCard RPPS Service Agreements or VISA
E-Pay Service Agreements, as the case requires, Bank shall facilitate the use by
SPV and Servicer, on behalf of SPV, of RPPS and E-Pay Services as contemplated
herein.
SECTION 5.2 SERVICES, FEES, CHARGES AND VOLUME.
(a) [*]
(b) SPV shall pay to Bank for the RPPS Services such fees ("RPPS
Fees") as are specified in Exhibit C attached hereto, and immediately upon
demand pay Bank or MasterCard for all other amounts of any kind owed to
MasterCard in connection with SPV's or Servicer's use of RPPS, including without
limitation, the amount of any RPPS Transmission, any charges, fees, expenses or
penalties assessed against SPV or Bank by MasterCard for or in connection with
any RPPS Transactions and any amounts owed under any other agreement between SPV
and MasterCard. Similarly, SPV shall pay to Bank for the E-Pay Services such
fees ("E-Pay Fees") as are specified in Exhibit G attached hereto, and
immediately upon demand pay Bank or VISA for all other amounts of any kind owed
to VISA for or in connection with the SPV's or Servicer's use of E-Pay,
including without limitation, the amount of any E-Pay Transmission, any charges,
fees, expenses or penalties assessed against SPV or Bank by VISA for or in
connection with any E-Pay Transactions and any amounts owed under any other
agreement between SPV and VISA. Bank may increase the RPPS Fees and/or the E-Pay
Fees from time to time effective upon 180 day's prior written notice, or in the
event of an increase in the fees, charges, expenses or penalties imposed or
assessed by MasterCard or VISA, upon the effective date of such increase by
26
* Portions have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.
MasterCard or VISA; provided, however, Bank may not increase the RPPS Fees or
E-Pay Fees during the Initial Term of this Agreement, except as a result of an
increase in the fees, charges, expenses or penalties charged by MasterCard or
VISA. If the Bank increases the RPPS Fees and/or the E-Pay Fees, other than as a
result of an increase in the fees, charges, expenses or penalties imposed or
assessed by MasterCard or Visa for or in connection with any RPPS Services or
E-Pay Services, Servicer and SPV may terminate the RPPS Services or E-Pay
Services, as the case requires, without penalty upon 90 day's prior written
notice.
(c) SPV and Servicer will not initiate any RPPS Transmission which
would cause the aggregate total dollar amount of all RPPS Transmissions
originated on any Business Day to exceed lesser of (i) [*], or (ii) as
calculated by Bank, the sum of (a) the Immediate Fair Market Value of all
Investments at the time of such RPPS Transmission, plus (b) the aggregate total
dollar amount of all Unsettled ACH Debits (other than Uncollected ACH Debits) at
the time of such RPPS Transmission as reported by the Federal Reserve Bank, less
(c) the aggregate total dollar amount of all Overdraft Advances outstanding at
the time of such RPPS Transmission, less (d) the aggregate total dollar amount
of all ACH credit entries and E-Pay Transmissions which have been originated on
such Business Day at the time of such RPPS Transmission, less (e) the amount of
all Issued but Not Cleared Checks (the "RPPS Transmission Limit"). Bank shall
have no obligation to fund the payment of any RPPS Transmission that causes the
aggregate total dollar amount of RPPS Transmissions originated on any Business
Day to exceed the RPPS Transmission Limit, or if SPV or Servicer owes any
additional amounts to MasterCard, other than normal service charges, fees and
expenses, including penalties not in excess of $25,000, and may order MasterCard
to reject such RPPS Transmission, but shall have no liability for failing to do
so.
(d) SPV and Servicer will not initiate any E-Pay Transmissions
which would cause the aggregate total dollar amount of all E-Pay Transmissions
originated on any Business Day to exceed the lesser of (i) [*], or (ii)
as calculated by Bank, the sum of (a) the Immediate Fair Market Value of all
Investments at the time of such E-Pay Transmission, plus (b) the aggregate total
dollar amount of all Unsettled ACH Debits (other than Uncollected ACH Debits) at
the time of such E-Pay Transmission as reported by the Federal Reserve Bank,
less (c) the aggregate total dollar amount of all Overdraft Advances outstanding
at the time of such E-Pay Transmission, less (d) the aggregate total dollar
amount of all ACH credit entries and RPPS Transmissions which have been
originated on such Business Day at the time of such E-Pay Transmission, less (e)
the amount of all Issued but Not Cleared Checks (the "E-Pay Transmission
Limit"). Bank shall have no obligation to fund the payment of any E-Pay
Transmission that causes the aggregate total dollar amount of E-Pay
Transmissions to exceed the E-Pay Transmission Limit, or if SPV or Servicer owes
any additional amounts, other than normal service charges, fees and expenses,
including penalties not in excess of $25,000, and may order VISA to reject any
such E-Pay Transmission, but shall have no liability for failing to do so.
SECTION 5.3 TRANSMISSION.
(a) [*]
27
* Portions have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.
(b) [*]
SECTION 5.4 REJECTION OF ENTRIES. SPV and Servicer agree that all RPPS
Transmissions and E-Pay Transmissions are subject to and must comply with the
RPPS Rules and E-PAY Rules, as the case requires, the risk limits, including the
RPPS Transmission Limit or E-Pay Transmission Limit, as the case requires, the
Security Procedures or other processing requirements or security procedures
MasterCard or E-Pay, as the case requires, may require SPV or Servicer to
implement from time to time. Bank may, but shall have no liability for failing
to do so, refuse to honor any wire draw down or other request by MasterCard or
VISA to fund any RPPS or E-Pay Transmission, or may instruct MasterCard or VISA
to reject any RPPS or E-Pay Transmission, and Bank shall have no liability for
refusing to honor or the rejection of such RPPS or E-pay Transmission, if (i)
the Bank reasonably believes such Transmission does not comply with such
applicable Rules, the RPPS Transmission Limit or E-Pay Transmissions Limit or
other risk limits, the Security Procedures or any other processing requirements
or security procedures MasterCard or E-Pay may require SPV or Servicer to
implement from time to time, (ii) a Level Four Event of Default has occurred,
(iii) the Bank reasonably believes that any RPPS or E-Pay Transmission contains
a fraudulent entry or any Security Procedures have been breached, or (iv) the
ownership of the Subscriber Funds or the authority of SPV or Servicer to
transmit any entry in an RPPS Transmission or E-Pay Transmission is challenged
in connection with any Litigation brought by any Person, which shall, in the
reasonable determination of the Bank after consultation with Servicer, be deemed
meritorious, unless SPV has provided Bank with additional cash collateral equal
to the amount of Subscriber Funds in dispute to satisfy SPV's obligations to
fund any RPPS or E-Pay
28
Transmission originated in the amount of such disputed funds. SPV and Servicer
acknowledge that once SPV or Servicer has originated a RPPS Transmission or
E-Pay Transmission, (a) the SPV and Servicer will not have the right or be able
to (but may request that MasterCard or Visa, as appropriate) cancel or amend
such RPPS or E-Pay Transmission, (b) Bank shall have no ability to cancel or
amend such RPPS or E-Pay Transmissions, and (c) Bank shall not have any
obligation to cancel or amend such RPPS or E-Pay Transmission.
SECTION 5.5 COMPLIANCE. Bank, Servicer, and SPV understand,
acknowledge, and agree that this Agreement is subject to the ongoing approval of
the Office of the Comptroller of the Currency, the Federal Reserve Bank, the
Federal Reserve Board, the Georgia Department of Banking and Finance or any
other applicable governmental agency, and MasterCard and VISA, including but not
limited to the ability of Bank to retain the ICA and BIN Numbers and to permit
the SPV or Servicer to use the Bank's ICA or BIN Numbers, as the case requires.
Should the Federal Reserve Bank or any other state or federal regulatory agency
or court or MasterCard or VISA direct Bank to cease and desist providing RPPS or
E-PAY Services, refuse to continue to permit Bank to provide the RPPS or E-Pay
Services to SPV or Servicer, or change the method of operations involving the
RPPS or E-Pay Services, or should Bank's provision of the RPPS or E-Pay Services
or any part thereof be or become in violation of any court order, law,
regulation, circular, or official interpretation or letter of a regulatory
agency, then Bank will not be required to continue providing the affected RPPS
or E-Pay Service, but will promptly notify SPV and Servicer that the services
contemplated herein will be terminated. However, Bank will use good faith
efforts to attempt to assist SPV and Servicer in determining if any alternative
processing scenarios are available, and Bank reserves the right to negotiate the
price and other terms with respect to any such alternative servicing
arrangements that Bank may elect to provide. SPV and Servicer agree that they
will fully comply with all applicable state and federal laws, regulations, and
Federal Reserve Bank operating circulars, and with the RPPS and E-Pay Rules, as
such laws, regulations, operating letters, and RPPS and E-Pay Rules are amended
from time to time, and SPV and Servicer acknowledge that such amendments may
necessitate a change in Bank's pricing. Insofar as Bank's cooperation is
necessary to enable SPV and Servicer to comply with the foregoing, Bank will
reasonably cooperate with SPV and Servicer. In addition, Bank, Servicer, and SPV
agree that if MasterCard or VISA require any change in operations involving the
processing of RPPS or E-Pay Transmissions, SPV and Servicer will cooperate to
comply with same.
SECTION 5.6 OTHER TERMS. Bank, Servicer or SPV may terminate its
obligation to engage in all future RPPS or E-Pay Transactions upon written
notice to the other parties in the event any party is required to discontinue
its participation in the Services based upon (i) a change in the rules,
regulations, or letters of any regulatory body, including the Federal Reserve
Bank or other Reserve Bank, the RPPS or E-Pay Rules, or any laws governing or
applicable to the Services that makes any party unable to continue to make RPPS
or E-Pay Transmissions or render any Services hereunder, or (ii) an order of a
state or federal court or regulatory body having jurisdiction to require Bank,
Servicer or SPV to terminate RPPS or E-Pay Transmissions or any Services
hereunder. Bank may terminate its obligations under this Agreement to provide,
RPPS Services or E-Pay Services at any time upon written notice to SPV after
receipt by Bank of notice from MasterCard or VISA that MasterCard or VISA has
terminated access to RPPS or E-Pay, as the case requires.
29
SECTION 5.7 AUTHORIZED TRANSACTIONS; SECURITY PROCEDURES. SPV and
Servicer acknowledge and agree that all RPPS and E-Pay Transmissions will be
transmitted directly from SPV or Servicer to MasterCard or VISA, as the case
requires, and Bank will not have an ability to or responsibility for verifying
the authenticity or accuracy of any RPPS or E-Pay Transmission. SPV and Servicer
shall be solely responsible for limiting access to, and maintaining the security
and confidentiality of, the system used to originate RPPS or E-Pay Transmissions
through the ICA and BIN Numbers. Except for any entries originated solely as a
result of the actions of any employee of Bank or any Affiliate of Bank,
excluding any actions taken in good faith in accordance with instructions
provided by any person Bank believes in good faith is an employee or
representatives of SPV or Servicer. SPV and Servicer agree to be bound by any
RPPS or E-Pay Transmission, whether or not authorized, issued through the ICA or
BIN Number, and all entries included in any RPPS or E-Pay Transmission shall be
deemed an authorized transaction of SPV, and SPV shall be liable to Bank for the
dollar amount of any entry included in any RPPS or E-Pay Transmission. Bank will
not grant any other customer the right to use the ICA Number or BIN Number.
SECTION 5.8 E-PAY SERVICES. Bank's obligation to provide E-PAY Services
in accordance with the terms of this Agreement shall be conditioned on Bank's
review and satisfaction with any service agreements required by VISA for use of
E-Pay (collectively, the "E-Pay Service Agreements").
SECTION 5.9 LIMITATION OF LIABILITY. Bank shall not be deemed an agent
of and shall not be responsible for or have any liability for the acts of
omissions of any third party, other than an Affiliate of Bank, including without
limitation MasterCard or VISA. Bank shall have no liability for MasterCard's or
VISA's error in processing any RPPS or E-Pay Transmission or any failure to
process or delay in processing any RPPS or E-Pay Transmission, unless MasterCard
or VISA was acting in accordance with instructions given by Bank and such
failure or delay did not result from the negligence or willful misconduct of
MasterCard or VISA. SPV shall be solely responsible for the actions of any third
party authorized to perform on its behalf under this Agreement.
ARTICLE VI. CONDITIONS AND CONDITIONS PRECEDENT
SECTION 6.1 CONDITIONS PRECEDENT. The obligation of Bank to provide any
Services hereunder, including without limitation, to make any Overdraft Advance
or engage in any ACH, RPPS or E-Pay Transaction, shall not become effective
until satisfaction of each of the following conditions:
(a) OFFICER'S CERTIFICATE, RESOLUTIONS, ORGANIZATIONAL DOCUMENTS.
Servicer and SPV shall have delivered to Bank an officer's certificate, in form
and substance satisfactory to Bank, certifying the names of the officers of
Servicer and SPV authorized to sign the Transaction Documents to which such
Company is a party, together with the true signatures of such officers and
certified copies of (i) the resolutions of the board of directors of Servicer
and SPV evidencing approval of the execution and delivery of such Transaction
Documents, (ii) the Articles (or Certificates) of Incorporation and all
amendments thereto of Servicer and SPV, in each case having been certified, not
more than thirty (30) days prior to the Agreement Date, by the Secretary of
State of the jurisdiction under which Servicer or
30
SPV shall have been organized, and (iii) the By-Laws and all amendments thereto
of Servicer and SPV.
(b) LEGAL OPINIONS. Servicer and SPV shall have delivered to Bank
(i) a substantive non-consolidation opinion from their counsel, which shall be a
reasoned opinion in form and substance satisfactory to Bank, (ii) an opinion
from their counsel on the corporate separateness of SPV and separateness of the
assets of SPV from claims of creditors of Servicer or Parent in the event of the
bankruptcy of either, which shall be a reasoned opinion in form and substance
satisfactory to Bank, and (iii) an opinion from their counsel typical for
secured lending transactions, including opinions as to the due authorization and
execution of, and the legal, valid and binding effect of, the Transaction
Documents and the perfection of security interests granted thereunder, in form
and substance satisfactory to Bank.
(c) GOOD STANDING CERTIFICATES. SPV shall have delivered to Bank a
good standing certificate or full force and effect certificate for SPV, issued
on or about the Agreement Date by the Secretary of State of Nevada, and Servicer
shall have delivered to Bank a good standing certificate or full force and
effect certificate for Servicer, issued on or about the Agreement Date by the
Secretary of State of Delaware.
(d) CLOSING FEE/LEGAL FEES. Servicer and SPV shall have paid to
Bank on the Agreement Date all reasonable legal fees and expenses of Bank in
connection with the preparation and negotiation of this Agreement and all
Transaction Documents, such fees and expenses not to exceed $110,000.00.
(e) INSURANCE CERTIFICATE. Servicer and SPV shall have delivered
to Bank evidence of insurance on ▇▇▇▇▇ form, and otherwise satisfactory to Bank,
of adequate personal property, business interruption, errors and omissions and
liability insurance, and all other coverages required hereunder of Parent and
each Company, including the Crime Insurance Policy, together with appropriate
evidence of (i) additional insured clauses or endorsements in favor of and
satisfactory to Bank on all general liability and umbrella coverages, and (ii)
loss payee clauses or endorsements in favor of and satisfactory to Bank on the
Crime Insurance Policy and property and business interruption coverages.
(f) NO MATERIAL ADVERSE CHANGE. No Material Adverse Change, in the
opinion of Bank, as to either Parent or any Company shall have occurred since
December 31, 2002.
(g) SERVICING AGREEMENT. A duly executed copy of the Servicing
Agreement dated as of August 5, 2003, between Servicer and SPV, substantially in
the form of Exhibit M attached hereto, shall be delivered to Bank.
(h) ACH MONITORING AGREEMENT. The ACH Monitoring Agreement,
substantially in the form of Exhibit N attached hereto, and otherwise mutually
acceptable to Servicer and Bank, duly executed by the Federal Reserve Bank,
shall have been delivered to Bank.
(i) FEDERAL RESERVE BANK CIRCUIT AND PROGRAMMING. A dedicated
circuit has been established by the Federal Reserve Bank in the name of Bank for
use by SPV in connection with the ACH Service, and the Federal Reserve Bank
shall have confirmed to Bank
31
in a manner satisfactory to Bank that the Federal Reserve Bank, SPV and Servicer
have completed all programming and testing necessary for the Federal Reserve
Bank to monitor ACH Transmissions originated using the Transit Numbers in
accordance with the ACH Monitoring Agreement.
(j) SPV DIRECTORS. SPV shall provide the Bank with a certified
list of its directors with its independent director identified.
(k) SECURITY AGREEMENT. The Security Agreement, granting a
security interest in all property of the SPV, shall have been delivered to Bank,
together with evidence satisfactory to Bank that Bank has a valid and perfected
security interest in all property of SPV prior to all other Liens.
(l) SERVICER GUARANTY. The Servicer Guaranty Agreement executed by
Servicer, pursuant to which Servicer unconditionally and absolutely guarantees
all obligations of SPV to Bank, shall have been delivered to Bank.
(m) SERVICER SECURITY AGREEMENT. The Servicer Security Agreement
executed by Servicer in favor of Bank, granting a security interest in the
assets of Servicer's Electronic Commerce Services Division, shall have been
delivered to Bank, together with evidence satisfactory to Bank that Bank has a
valid and perfected security interests in such assets of Servicer prior to all
other Liens.
(n) SERVICER PLEDGE AGREEMENT. The Servicer Pledge Agreement,
granting a security interest in all issued and outstanding shares of stock of
SPV, shall have been delivered to Bank, together with all certificates
evidencing such pledged shares and other documents Bank deems necessary for Bank
to have a the valid and perfected security interest such pledged shares.
(o) CONTROL AGREEMENTS. Control Agreements (i) duly executed by
SPV and each Securities Intermediary with which SPV has established a Securities
Account in which Investments or SPV Investments are maintained, (ii) duly
executed by SPV and each financial institution with which SPV maintains a
Deposit Account (iii) duly executed by Servicer and each Securities Intermediary
with which Servicer has established a Securities Account in which any
securities, securities entitlements, financial assets or other investments
pledged to Bank pursuant to the Servicer Security Agreement are maintained and
pursuant to which such Securities Intermediary agrees to follow all instructions
given by Bank with respect to such assets without Servicer's consent upon
certification by Bank to such Securities Intermediary that (a) an Event of
Default under, and as such term is defined in, the Servicer Security Agreement
has occurred, or (b) Bank has made a demand upon Servicer for payment under the
Servicer Guaranty, and (iv) duly executed by Servicer and each financial
institution where Servicer has a Deposit Account into which payments on any
accounts receivable or proceeds of any other collateral pledged to Bank pursuant
to the Servicer Security Agreement are maintained and pursuant to which such
financial institution agrees to follow all instructions given by Bank with
respect to such assets without Servicer's consent upon certification by Bank to
such financial institution that an (a) Event of Default under, and as such terms
is defined in, the Servicer Security Agreement has occurred, or (b) Bank has
made a demand upon Servicer for payment under the Servicer Guaranty, each in
form and substance satisfactory to Bank, shall have been delivered to Bank.
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* Portions have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.
(p) INSTRUCTION LETTERS. Instruction Letters duly executed by SPV
and each Investment Advisor with which SPV has contracted to trade in any
Investments or SPV Investments, shall have been delivered to Bank.
(q) BUSINESS SWEEP SERVICES AGREEMENT AND MASTER REPURCHASE
AGREEMENT. The Business Sweep Services Agreement and Master Repurchase
Agreement, each duly executed by SPV, shall have been delivered to Bank.
(r) CUSTODY AGREEMENT. SPV shall have delivered to Bank the
Custody Agreement duly executed by SPV, substantially in the form of Exhibit O
attached hereto.
(s) MASTERCARD AND E-PAY AGREEMENTS. The MasterCard RPPS Service
Agreements and VISA E-Pay Service Agreements, each in form and substance
satisfactory to Bank, duly executed by MasterCard or VISA, as the case requires,
SPV and Servicer, shall have been delivered to Bank.
(t) ASSIGNMENT DOCUMENTS. SPV shall deliver evidence satisfactory
to Bank of the conveyance by Servicer, Parent or any Affiliate of Servicer to
SPV of all rights in and to Subscriber Funds, accounts receivable, any
investments of Subscriber Funds, and all interest and earnings on such
investments.
(u) CLOSING CERTIFICATES. Each of Servicer and SPV shall have
delivered to Bank a closing certificate, executed by the president, chief
executive officer or chief financial officer of such Company, substantially in
the form of Exhibit P attached hereto.
(v) CAPITALIZATION. SPV shall deliver evidence satisfactory to
Bank that SPV had been capitalized with $25,000,000 as of the date of this
Agreement.
(w) MINIMUM REQUIRED BALANCE. SPV shall have deposited in the DDA
[*] in collected and available funds.
(x) INVESTMENTS. SPV shall deliver evidence satisfactory to Bank
that all Investments, other than the Investments in Overnight Accounts, shall be
transferred to and maintained in a Custody Account, and all SPV Investments
shall be transferred to and maintained in a SPV Custody Account.
(y) DUE DILIGENCE. Completion by Bank of the business and legal
due diligence on SPV and its Affiliates as set forth on Schedule 6.1(y), with
the results satisfactory to Bank in its sole discretion.
(z) TERMINATION OF KEYBANK AGREEMENT. Evidence satisfactory to
Bank that the Amended and Restated Loan and Security Agreement by and among
KeyBank, Parent, CheckFree Investment Corporation dated as of December 30, 1999,
and all amendments thereto, shall be terminated, all loans thereunder repaid,
and all Liens granted to KeyBank thereunder have been terminated and/or
cancelled.
(aa) SERVICER INTELLECTUAL PROPERTY SECURITY AGREEMENT. Completion
by Servicer of an Intellectual Property Security Agreement evidencing Bank's
security interest in all of Servicer's intellectual property, and otherwise
related to or used in the
33
Business or the Electronic Commerce Services Division, as reflected on the FAS
142 Schedule and the supporting documents thereunder as required by Section
7.3(c)(iv) herein including, but not limited to, Servicer's rights in and to the
Intellectual Property License that shall be entered into by and between Servicer
and Parent with regard to all of Parent's intellectual property utilized by
Servicer in the Business or the Electronic Commerce Services Division and such
Intellectual Property License shall be, in form and substance, satisfactory to
the Bank.
(bb) OTHER SERVICES AGREEMENTS AND DOCUMENTS. All other service
agreements or documents reasonably requested by Bank in connection with any of
the Services, each in form and substance satisfactory to Bank, duly executed by
the appropriate Person and delivered to Bank.
SECTION 6.2 REPRESENTATIONS. The initiation of any ACH, RPPS or E-PAY
Transmission or the occurrence of each Overdraft Advance shall be deemed to
constitute, as of the date of such ACH, RPPS or E-Pay Transmission or Overdraft
Advance, (i) a representation and warranty by SPV and Servicer that the
conditions in Section 6.1 have been satisfied and (ii) a representation and
warranty by SPV and Servicer that the representations and warranties set forth
in this Agreement and each of the other Transaction Documents are true and
correct on and as of the date of and after giving effect to such ACH, RPPS or
E-PAY Transmission or Overdraft Advance.
ARTICLE VII. COVENANTS
Servicer and SPV each agrees that so long as this Agreement remains in effect
and thereafter until all obligations of Servicer and SPV to Bank shall have been
paid in full, Servicer and SPV shall perform and observe, and cause Parent to
perform and observe where required, each of the following provisions:
SECTION 7.1 INSURANCE. The Parent shall at all times maintain, for the
benefit of Servicer and SPV, policies of insurance, each in such form, written
by such companies, in such amounts, for such period, and against such risks as
may be acceptable to Bank, including, but not limited to, $100,000,000 in crime
insurance, including Employee Dishonesty and Computer Fraud coverages for theft
of money or securities SPV holds or for which SPV or Service is legally liable
(the "Crime Insurance Policy"), and the other minimum insurance coverage
requirements set forth on Schedule 7.1 attached hereto. Within ten (10) days of
Bank's written request, Servicer and SPV shall furnish to Bank such information
about any Company's insurance as Bank may from time to time reasonably request,
which information shall be prepared in form and detail satisfactory to Bank and
certified by an officer of such Company. Bank shall be named as loss payee, and
shall have priority in payment, on the Crime Insurance Policy and property
coverages, and except where not permitted by law, Bank shall be listed as an
additional insured on all general liability and umbrella coverages, and SPV will
cause Parent to provide, upon request, a Certificate of Insurance as evidence
thereof. Such Certificate of Insurance shall provide for thirty (30) days
cancellation notice to Bank from the insurance carrier.
SECTION 7.2 MONEY OBLIGATIONS. Each of Parent, SPV and Servicer shall
pay in full (a) prior in each case to the date when penalties would attach, all
taxes,
34
assessments and governmental charges and levies (except only those so long as
and to the extent that the same shall be contested in good faith by appropriate
and timely proceedings and for which adequate reserves have been established in
accordance with GAAP) for which it may be or become liable or to which any or
all of its properties may be or become subject; (b) all of its wage obligations
to its employees in compliance with the Fair Labor Standards Act (29 U.S.C.
206-207) or any comparable provisions; and (c) all of its other obligations
calling for the payment of money (except only those so long as and to the extent
that the same shall be contested in good faith and for which adequate reserves
have been established in accordance with GAAP) before such payment becomes
overdue, except where the failure to make such payment could not reasonably be
expected to have a Material Adverse Effect.
SECTION 7.3 FINANCIAL STATEMENTS AND REPORTS.
(a) SPV shall deliver to Bank:
(i) As soon as available, and in any event within forty-five
(45) days after the close of each of the first three fiscal quarters in
each fiscal year of SPV, the quarterly unaudited balance sheets of SPV
as of the end of such periods and the related unaudited statements of
operations and cash flows for such periods, setting forth, in each
case, comparative figures for the related periods in the prior fiscal
year and, all of which shall be certified by the chief financial
officer or chief executive officer of SPV as fairly presenting in all
material respects, the financial position of SPV as of the end of such
period and the results of its operations for the period then ended in
accordance with GAAP, subject to changes resulting from normal year-end
audit adjustments; and
(ii) On the fifteenth (15th) day of each month or if not a
Business Day the first Business Day immediately following the fifteenth
(15th) day of such month, SPV or Servicer shall deliver to Bank (a) a
report which contains detailed calculations of and statements of
compliance with the covenant set forth in 3.2(b), (b) a report
containing the detailed calculation of the Immediate Fair Market Value
of all Investments in any Overnight Account or Custody Account, (c) a
report containing a detailed calculation of the amount of Issued but
Not Cleared Checks and (d) a report which contains the required
calculations and statements concerning compliance with the Covenants
for which compliance is to be measured on the last Business Day of the
immediately preceding month. SPV or Servicer shall accomplish the
delivery of such reports by means of a facsimile or an electronic mail
message sent to each Monthly Contact Person at the facsimile number or
electronic mail address Bank may provide for such Monthly Contact
Person from time to time. On request of Bank, the substance of such
reports shall be confirmed by the Monthly Reporting Person in form
satisfactory to Bank. The form of the report setting forth the detailed
calculations required in clauses (a), (b) and (c) above is attached
hereto as Schedule 7.3(a)(ii).
(iii) Concurrently with the delivery of the financial
statements referred to in Sections 7.3(a), 7.3(b) and 7.3(c) SPV shall
deliver a certificate of a Financial Officer of SPV (i) certifying as
to whether there exists any Default or Event of Default on the date of
such certificate, and if a Default or an Event of Default than exists,
specifying the details thereof and the action which the Company or
Parent, as applicable, has taken or
35
proposes to take with respect thereto, and (ii) setting forth in
reasonable detail calculations demonstrating compliance with the
financial covenants set forth in Sections 7.9(a), 7.9(d), 7.9(e),
7.9(f), 7.9(g). Attached as Schedule 7.3(a)(iii) is a detailed
description of the method of calculation of each of the financial
covenants set forth in Sections 7.9(a), 7.9(d), 7.9(e), 7.9(f) and
7.9(g) for the fiscal quarter of SPV and Parent ending March 31, 2003,
together with an example of such calculation, and SPV shall use such
method of calculation to calculate compliance with each of such
financial covenants at all times required hereunder.
(b) Servicer shall deliver to Bank:
As soon as available, and in any event within forty-five (45)
days after the close of each of the first three fiscal quarters in each
fiscal year of Servicer, the consolidated quarterly unaudited balance
sheets of Servicer and its Subsidiaries as of the end of such periods
and the related consolidated and consolidating unaudited statements of
operations and cash flows for such periods, setting forth, in each
case, comparative figures for the related periods in the prior fiscal
year and, all of which shall be certified by the chief financial
officer or chief executive officer of Servicer as fairly presenting in
all material respects, the financial position of Servicer as of the end
of such period and the results of its operations for the period then
ended in accordance with GAAP, subject to changes resulting from normal
year-end audit adjustments; and
(c) Servicer shall also deliver to Bank:
(i) As soon as available, and in any event within forty-five
(45) days after the close of each of the first three fiscal quarters in
each fiscal year of Parent, the consolidated quarterly unaudited
balance sheets of Parent and its Subsidiaries as of the end of such
periods and the related consolidated and consolidating unaudited
statements of income and cash flows for such periods, setting forth, in
each case, comparative figures for the related periods in the prior
fiscal year and, all of which shall be certified by the chief financial
officer or chief executive officer of Parent as fairly presenting in
all material respects, the financial position of Parent as of the end
of such period and the results of its operations for the period then
ended in accordance with GAAP, subject to changes resulting from normal
year-end audit adjustments; and
(ii) As soon as available, and in any event within one hundred
twenty (120) days after the close of each fiscal year of Parent, (A)
the audited consolidated balance sheet of Parent and its Subsidiaries
as at the end of such fiscal year and the related audited consolidated
statements of operations, stockholders equity and cash flows for such
fiscal year, setting forth, in each case, comparative figures for the
preceding fiscal year, certified by Deloitte & Touche or other
independent certified public accountants of recognized national
standing, whose report shall be without limitation as to the scope of
the audit, unqualified and otherwise reasonably satisfactory in
substance to Bank, and (B) a supplemental consolidating balance sheet
of Parent and its Subsidiaries as of the end of such fiscal year and a
supplemental consolidating statement of operations for such fiscal
year. Such supplemental consolidating schedules shall reflect
separately the accounts of SPV and its subsidiaries and collectively
all other members of the consolidated group, and shall be subjected to
the auditing procedures applied to the basic consolidated
36
financial statements of Parent and its Subsidiaries by Deloitte &
Touche or other independent certified public accountants of recognized
national standing, and the independent accountants shall certify
whether the supplemental consolidating schedules are fairly stated in
all material respects when considered in relation to the basic
consolidated financial statements taken as a whole.
(iii) As soon as available, and in any event within ten (10)
days of the end of each calendar month, a report, in form and substance
satisfactory to Bank, as to all accounts receivable of Servicer as of
the last day of such month, which shall designate whether each account
receivable was generated in connection with or is related to the
Business or Electronic Commerce Services Division, the Investment
Services Division or the Software Division and shall be accompanied by
such supporting detail and documentation reasonably requested by Bank,
including without limitation copies of customer statements, and such
report shall be certified by the chief financial officer, chief
executive officer or treasurer of Servicer as being true and correct in
all material respects.
(iv) As soon as available, and in any event within 120 days of
the end of each fiscal year, Servicer shall prepare a list, together
with any supporting detail and documentation reasonably requested by
Bank, classifying each asset of Services as either an asset of the
Electronic Commerce Services Division, the Investment Services
Division, the Software Division or as otherwise unallocated. Such list
shall be prepared by Servicer's management in accordance with Financial
Accounting Statement 142 and prior practice ("FAS 142 Schedule"), shall
otherwise be in form and substance satisfactory to Bank, shall be
certified by the chief financial officer, chief executive officer or
treasurer as being true and correct in all material respect, and shall
be incorporated into the Parent's audited financial statements as
prepared by Deloitte & Touche or other independent certified public
accountants of recognized national standing.
(v) As soon as available, and in any event within ten (10)
days of the end of each calendar quarter, a report, in form and
substance satisfactory to Bank, as to all personal tangible property
and fixtures of Servicer as of the last day of such calendar quarter,
which shall designate whether such personal tangible property and
fixtures are used in connection with or is related to the Business or
Electronic Commerce Services Division, the Investment Services Division
or the Software Division and shall be accompanied by such supporting
detail and documentation reasonably requested by Bank, and such report
shall be certified by the chief financial officer, chief executive
officer or treasurer of Servicer as being true and correct in all
material respects.
(d) The Business operations of Servicer and SPV will be subject to
a Statement of Accounting Standards 70 Level II ("SAS70") review by Deloitte &
Touche or other independent certified public accountants of recognized national
standing, whose report shall be no less frequent than once per fiscal year with
no greater than fourteen (14) months between delivery of one SAS70 to the
following SAS70, with a satisfactory opinion by such accountants, and otherwise
reasonably satisfactory in substance to Bank. All SAS70 reports shall be
delivered to Bank no more than five (5) Business Days following the delivery of
such SAS70 to Servicer or SPV by such independent certified public accountant.
37
(e) SPV shall provide immediate notice to Bank no later than 10:00
a.m. on such Business Day that if the Unsettled ACH Credits, Unsettled RPPS
Credits, Unsettled E-Pay Credits, Issued but Not Cleared Checks, Unsettled ACH
Returns, wire transfer drawdown requests and such other debits presented against
the DDA do not reconcile with a corresponding Unsettled ACH Debit, wire
transfer, or other credit presented for credit to the DDA as calculated by the
Company on a nightly basis. SPV shall accomplish the delivery of this
Certificate by means of a facsimile or electronic mail message sent to each
Daily Contact Person at the facsimile number or email address Bank has provided
for such Daily Contact Person.
(f) Notwithstanding anything to the contrary contained in this
Agreement, in addition to all other reporting requirements of Bank, Servicer and
SPV shall be subject to Bank risk management audits, credit and fraud audits,
write-off audits, or any other audits Bank deems necessary as it may relate to
the obligations of Servicer or SPV to Bank or the compliance by SPV and Servicer
with the warranties, representations, covenants and obligations contained
herein, each in the sole discretion and at the expense of Bank. Any such audit
shall be conducted during reasonable times and with reasonably notice, not to
exceed one Business Day's prior written notice, or upon an Event of Default
immediately so as not to unreasonably interfere with the business and operations
of SPV and Servicer. If Bank, as a result of such audit, reasonably concludes
that it is exposed to undue financial risk or exposure based on the internal
controls and security procedures of Servicer or SPV, Bank shall notify Servicer
and SPV in writing of such finding, and Bank, Servicer and SPV shall negotiate
in good faith upon the appropriate remedy for such condition and the time frame
required to implement such remedy, or, if the parties cannot agree within
fifteen (15) days of the date of Bank's notice of such finding, Bank may declare
a Level Two Event of Default if Servicer and SPV cannot remedy the matter to the
reasonable satisfaction of Bank within thirty (30) days' of notice by Bank of
the steps it has determined are required to remedy such condition.
SECTION 7.4 FINANCIAL RECORDS. Each of SPV, Servicer and Parent shall
at all times maintain true and complete records and books of account, including,
without limiting the generality of the foregoing, appropriate reserves for
possible losses and liabilities, all in accordance with GAAP, and at all
reasonable times (during normal business hours and upon notice to such Company)
shall permit Bank to examine that Company's books and records and to make
excerpts therefrom and transcripts thereof.
SECTION 7.5 FRANCHISES. Each of SPV, Servicer and Parent shall preserve
and maintain at all times its existence, shall maintain its rights to conduct
its business as currently conducted, and shall be and remain in good standing
and qualified to do business in each jurisdiction except where failure to remain
in good standing or so qualified does not have a Material Adverse Effect on its
business or operations.
SECTION 7.6 NOTICE. Servicer and SPV shall cause a Financial Officer of
Servicer or SPV to promptly notify the Daily and Monthly Contact Persons by
electronic mail whenever SPV or Servicer (i) is in breach of any warranty or
representation made by them herein; (ii) is in breach of any covenant or
obligation imposed on them herein; or (iii) there exists any other Default or
Event of Default.
SECTION 7.7 MERGER; ACQUISITION; SALE OF ASSETS. SPV shall not merge or
consolidate with, acquire all or substantially all of the assets or capital
stock of, or
38
* Portions have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.
otherwise combine with any Person. Neither Parent nor Servicer shall merge or
consolidate with, acquire all or substantially all of the assets or capital
stock of, or otherwise combine with any Person; provided that Parent or Servicer
may merge or consolidate with or acquire all or substantially all of the assets
of any other Person, if at the time of any such merger, consolidation or
acquisition and immediately after giving effect thereto, no Default or Event of
Default shall have occurred and be continuing and immediately after giving
effect thereto Parent or Servicer, as the case requires, shall be the surviving
entity, Servicer shall be a wholly owned subsidiary of Parent and Parent and
Servicer shall continue to hold all or substantially all of their respective
businesses and assets held prior to such merger, acquisition or consolidation.
Neither SPV nor Servicer shall sell, lease or transfer or otherwise dispose of
all or a substantial part of its assets to any Person; provided that Servicer
may sell any or all of its assets related to or used in connection with the
Investment Services or Software Divisions, and not otherwise related to or used
in connection with the Business or any other business division of Servicer, for
the fair value of such assets.
SECTION 7.8 AFFILIATE TRANSACTIONS. SPV shall not, directly or
indirectly, enter into or permit to exist any transaction (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with any Affiliate of SPV or Servicer on terms or
conditions that are less favorable to SPV than those that might be obtained at
the time in a transaction with a non-Affiliate. Servicer shall not, directly or
indirectly, enter into or permit to exist any material transaction (including,
without limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with any Affiliate of SPV or Servicer on terms or
conditions that are less favorable to Servicer than those that might be obtained
at the time in a transaction with a non-Affiliate.
SECTION 7.9 FINANCIAL COVENANTS.
(a) SPV shall maintain at all times SPV Net Worth (excluding
Business Assets and Business Liabilities from the calculation) equal to or
greater than (i) $25,000,000 during the first calendar year of the Initial Term
of this Agreement, (ii) $30,000,000 during the second calendar year of the
Initial Term this Agreement and (iii) $35,000,000 during the third calendar year
of the Initial Term of this Agreement and (iv) such amount required by Bank
during any Renewal Period.
(b) SPV shall maintain at all times an Average Minimum Required
Balance of [*].
(c) All Investments shall comply with the Investment Policy for
Subscriber Funds, as adopted on January 31, 2002, a copy of which is attached
hereto as Exhibit E (the "Investment Policy").
(d) Parent will maintain, as of the last day of each fiscal
quarter, Consolidated EBITDA for the cumulative four fiscal quarters then ended
of not less than $50,000,000.
(e) Parent will maintain a ratio of Consolidated Net Debt to
Consolidated EBITDA (calculated for the cumulative four fiscal quarters then
ended) of not more than 1.75 to 1.00, calculated at the end of each fiscal
quarter.
39
(f) Parent will maintain at all times Consolidated Tangible Net
Worth equal to the sum of (a) 60% of actual Consolidated Tangible Net Worth as
of June 30, 2003, plus (b) 50% of Consolidated Net Income for each fiscal
quarter beginning with the fiscal quarter ending September 30, 2003 (without
duplication for losses).
(g) Parent will maintain a ratio of Consolidated EBITDAR to the
sum of Consolidated Interest Expense plus Consolidated Rent (calculated for the
cumulative four fiscal quarters then ended) of not less than 2.5 to 1.0,
calculated at the end of each fiscal quarter.
SECTION 7.10 CHANGES TO CONTACT PERSON. Any changes to the identity of
those individuals on the list of individuals designated to serve as the Daily
Contact Person or Monthly Contact Person shall be communicated by means of an
electronic mail message sent by Bank to SPV and Servicer. Any change to the
Monthly Reporting Person shall be communicated by means of an electronic mail
message by SPV or Servicer to the Monthly Contact Person.
SECTION 7.11 SECURITY PROCEDURES. SPV and Servicer shall maintain at
all times the security procedures and controls for the prevention and detection
of loss, internal fraud or fraudulent or erroneous transactions described in
Servicer's Risk Management Policies attached hereto as Schedule 7.13, as in
effect on the date hereof, or as may be amended from time to time to increase or
improve such security procedures.
SECTION 7.12 SPV SERVICER. Servicer shall at all times be the SPV
Servicer.
SECTION 7.13 CRIMINAL BACKGROUND CHECKS. Servicer and SPV shall, within
thirty (30) days of the effective date of this Agreement, complete a criminal
background check to the extent described on Schedule 7.13 on all employees of
Servicer and SPV or any Affiliates thereof holding the positions set forth on
Schedule 7.13 attached hereto. Servicer, Parent and SPV shall not knowingly
employ any person in any of the positions set forth on Schedule 7.13 who has
been convicted of any criminal offense involving dishonesty, breach of trust or
money laundering or has agreed to enter into a pretrial diversion or similar
program in connection with a prosecution for such offense.
SECTION 7.14 FURTHER ASSURANCES.
(a) To evidence the rights of Bank with respect to the Accounts
and all other assets of SPV, SPV hereby authorizes, and Bank may file, a UCC-1
Financing Statement, evidencing a security interest in all of SPV's right,
title, and interest in and to each of the Accounts and such other assets and the
proceeds thereof, whether existing now or arising in the future. Further, SPV
shall execute, and cause each financial institution with which SPV maintains a
Deposit Account and each Securities Intermediary to execute a Control Agreement
and each Investment Advisors to execute any Instruction Letter, and Bank may
take any other action it deems appropriate to perfect its security interest in
the Accounts and all other assets. SPV shall execute such other agreements and
documents and do such further acts as may be necessary in the reasonable opinion
of Bank to carry out the purposes of this Agreement.
(b) To evidence the rights of Bank with respect to the assets of
or related to the Business or the Electronic Commerce Services Division and in
which Servicer has granted a security interest to Bank pursuant to the Servicer
Security Agreement, Servicer hereby
40
authorizes, and Bank may file, a UCC-1 Financing Statement, evidencing a
security interest in all of Servicer's right, title, and interest in and to such
assets and the proceeds thereof, whether existing now or arising in the future.
Further, Servicer shall execute, and cause each financial institution with which
Servicer maintains a Deposit Account and each Securities Intermediary with which
Servicer maintains such a Securities Account in which payments on accounts
receivable or proceeds of any other assets pledged to Bank pursuant to the
Servicer Security Agreement are received or any investments or proceeds thereof
are maintained, to execute a Control Agreement pursuant to which such financial
institution or Securities Intermediary agrees to follow all instructions given
by Bank with respect to such assets without Servicer's consent upon
certification by Bank to such financial institution or Securities Intermediary
that (i) an Event of Default under, and as such term is defined in, the Servicer
Security Agreement has occurred, or (ii) Bank has made a demand for payment
under the Servicer Guaranty, and Bank may take any other action it deems
appropriate to perfect its security interest in such Deposit Accounts,
Securities Accounts and other assets. Servicer shall execute such other
agreements and documents and do such further acts as may be necessary in the
reasonable opinion of Bank to carry out the purposes of this Agreement.
SECTION 7.15 LITIGATION. SPV and Servicer shall promptly notify Bank of
any lawsuits, actions, investigations, or other proceedings pending or, to the
knowledge of Servicer or SPV, threatened against Parent or any Company, or in
respect of which any Company may have any liability, in any court or before any
governmental authority, arbitration board, or other tribunal, and (b) any
orders, writs, injunctions, judgments, or decrees of any court or government
agency or instrumentality to which Parent or any Company is a party or by which
the property or assets of such Person are bound, that, in either (a) or (b), as
to which if adversely determined or enforced against Parent or the Company,
would have a Material Adverse Effect on Parent or such Company.
SECTION 7.16 LIENS. SPV will not create, incur, assume or suffer to
exist any Lien on any of its assets or property now owned or hereafter acquired,
except (a) Liens now or hereafter created in favor of the Bank, and (b) Liens
described in clauses (i) and (iii) of the definition of Permitted Liens in
Article I. Servicer will not create, incur, assume or suffer to exist any Lien
on any of its assets or property now owned or hereafter acquired, except (a)
Liens now or hereafter created in favor of the Bank, (b) Permitted Liens (c)
Liens in existence on the date hereof and listed on Schedule 7.16 and (d) Liens
created after the date hereof in connection with any Purchase Money Debt;
provided that such Liens attach only to the assets subject to such Purchase
Money Debt.
SECTION 7.17 INDEBTEDNESS. SPV will not create, incur, assume or suffer
to exist any Indebtedness, except the Obligations.
SECTION 7.18 INVESTMENTS. SPV will not make or permit to remain
outstanding any advance, loan, extension of credit, or capital contribution by
it to or investment by it in any Person, or purchase or own any stock, bonds,
notes, debentures, or other securities of any Person, or be or become a joint
venturer with or partner of any Person, except (i) SPV may purchase the
Investments, and (ii) SPV may hold all of the outstanding stock of CKFR
Receivables Corporation, a Nevada corporation ("CRC"); provided, however, that
CRC shall not engage in any activities, undertake any business, or incur any
indebtedness or liabilities other than maintaining its corporate existence
without the prior written consent of Bank. Servicer will
41
not make or permit to remain outstanding any advance, loan, extension of credit,
or capital contributions by it to or investment by it in any Person, or purchase
or own any stock, bonds, notes, debentures, or other securities of any Person,
or be or become a joint venturer with or partner of any Person, except Servicer
may make any Permitted Investment.
SECTION 7.19 COMMUNICATION WITH ACCOUNTANTS. SPV and Servicer authorize
Bank to communicate directly with its, and its Subsidiaries', independent
certified public accountants, including Deloitte & Touche, and authorizes and
shall instruct those accountants and advisors to disclose and make available to
Bank any and all financial statements and other supporting financial documents,
schedules and information relating to any such Person (including copies of any
issued management letters) with respect to the business, financial condition and
other affairs of any such Company.
ARTICLE VIII. REPRESENTATIONS AND WARRANTIES
Servicer and SPV, each separately and not jointly, represent and
warrant that the statements set forth in this Article VIII are true, correct and
complete with regard to Servicer and SPV, respectively.
SECTION 8.1 EXISTENCE; SUBSIDIARIES; FOREIGN QUALIFICATION. Each
Company is a corporation, duly formed, validly existing, and in good standing
under the laws of its state of formation and is duly qualified and authorized to
do business and is in good standing as a foreign entity in the jurisdictions set
forth opposite its name on Schedule 8.1 hereto, which are all of the states or
jurisdictions where the character of its property or its business activities
makes such qualification necessary, except where the failure to so qualify will
not cause or result in a Material Adverse Effect. Schedule 8.1 hereto sets forth
each Company, its name as set forth in its articles or certificate of
incorporation, or certificate of formation, its state of formation, its
organizational identification number, its relationship to Servicer, Parent and
SPV, including the percentage of each class of stock owned by a Company, and its
principal place of business. Except as set forth in Schedule 8.1 hereto, no
Company has, at any time during the period of five (5) consecutive years ending
on the date of this Agreement, used or done business under, or been known among
creditors by, any name other than the name of such Company set forth in such
Company's articles or certificate of incorporation or certificate of formation.
SECTION 8.2 AUTHORITY. Servicer and SPV each have the right and power
and is duly authorized and empowered to enter into, execute and deliver the
Transaction Documents to which it is a party and to perform and observe the
provisions of the Transaction Documents to which it is a party. The Transaction
Documents to which Servicer and SPV are a party have been duly authorized and
approved by Servicer's and SPV's respective Board of Directors and are the valid
and binding obligations of Servicer and SPV, respectively, enforceable against
Servicer and SPV in accordance with their respective terms. The execution,
delivery and performance of the Transaction Documents will not conflict with nor
result in any breach in any of the provisions of, or constitute a default under,
the provisions of Servicer's or SPV's Articles (or Certificate) of Incorporation
or Bylaws or any material agreements to which such Person is a party or by which
its assets are bound, or violates any laws, regulations, ordinances, writs,
judgment or decrees applicable to such Person.
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SECTION 8.3 COMPLIANCE WITH LAWS. Each Company:
(a) holds permits, certificates, licenses, orders, registrations,
franchises, authorizations, and other approvals from federal, state, local, and
foreign governmental and regulatory bodies necessary for the conduct of its
business and is in compliance with all applicable laws relating thereto, except
to the extent failure to do so would not have a Material Adverse Effect;
(b) is in compliance with all federal, state, local, or foreign
applicable statutes, rules, regulations, and orders including, without
limitation, those relating to environmental protection, occupational safety and
health, and equal employment practices, except to the extent failure to do so
would not have a Material Adverse Effect; and
(c) is not in violation of or in default under any agreement to
which it is a party or by which its assets are subject or bound, except to the
extent failure to do so would not have a Material Adverse Effect.
SECTION 8.4 LITIGATION AND ADMINISTRATIVE PROCEEDINGS. Schedule 8.4
hereto has been provided by SPV and Servicer and as to each of SPV and Servicer
separately sets forth, as to the provider of such information, (a) any lawsuits,
claims, actions, investigations or other proceedings which challenges it's right
or power to enter in or perform any obligation under the Transaction Documents
to which it is a party, (b) any lawsuits, actions, investigations, or other
proceedings pending or threatened against it, or in respect of which it may have
any liability, in any court or before any governmental authority, arbitration
board, or other tribunal, and (c) any orders, writs, injunctions, judgments, or
decrees of any court or government agency or instrumentality to which it is a
party or by which the property or assets of it are bound, that, in either (b) or
(c), if adversely determined or enforced against the Servicer or SPV, as
applicable, would reasonably be expected to have a Material Adverse Effect.
SECTION 8.5 ACCOUNTS. Schedule 8.5 hereof sets forth, as of the date
hereof, (i) for SPV, the name of each Person by which there is maintained, or
with which there is maintained, any Deposit Account or Securities Account in
which any of Subscriber Funds, Investments or the proceeds thereof, or any SPV
Funds, SPV Investments or the proceeds thereof are maintained, together with the
title and account number of each such Deposit Account or Securities Account and
(ii) for Servicer, the name of each Person by which there is maintained, or with
which there is maintained, any Deposit Account in which any funds related to or
proceeds of accounts receivable or other assets arising from or related to the
Business or Electronic Commerce Services Division and in which Servicer has
granted Bank a security interest under the Servicer Security Agreement are
received, together with the title and account number of each such Deposit
Account or Securities Account. Except for the Amended and Restated Loan and
Security Agreement by and among KeyBank, Parent, and CheckFree Investment
Corporation dated as of December 30, 1999, which shall be terminated prior to
the commencement of the Services set forth in this Agreement, neither SPV nor
Servicer has entered into any agreement with any other Person granting,
conveying or transferring to such Person any rights in or control of any Deposit
Account or Securities Account set forth on Schedule 8.5 or cash or financial
assets maintained therein. SPV shall not have any other accounts other than the
DDA, the Deposit Accounts and the Securities Accounts described on Schedule 8.5
as of the Agreement Date. Servicer shall not have any other accounts in which
any funds related to or
43
proceeds of Subscriber Funds or any accounts receivable or other assets arising
from or related to the Business or the Electronic Commerce Services Division and
in which Servicer has granted a security interest to Bank pursuant to the
Servicer Security Agreement are deposited, other than the Deposit Accounts and
Securities Accounts described on Schedule 8.5 as of the Agreement Date;
provided, however that Parent or Servicer may maintain a deposit, investment or
overnight investment account (collectively, the "Sweep Account") not otherwise
listed in Schedule 8.5 into which all monies derived from the accounts
receivable of the Electronic Commerce Services Division may be swept, prior to
notice by Bank under the Control Agreements, and in which Bank shall not be
granted a security interest pursuant to the Servicer Security Agreement.
Moreover, any security interest that Bank may have in the funds in the Deposit
Accounts listed in Schedule 8.5 shall be terminated once such funds are
transferred to the Sweep Account as permitted hereunder. All cash, checks,
drafts or similar items of payment relating to or constituting payments made in
respect of accounts receivable arising from or related to the Business or the
Electronic Commerce Services Division or other assets in which Servicer has
granted a security interest to Bank pursuant to the Servicer Security Agreement,
will be deposited only in one of the Servicer's accounts described on Schedule
8.5.
SECTION 8.6 TAX RETURNS. All federal, state and local tax returns and
other reports required by law to be filed in respect of the income, business,
properties and employees of each Company have been filed and all taxes,
assessments, fees and other governmental charges that are due and payable have
been either paid or are otherwise being disputed in good faith with adequate
reserves established in accordance with GAAP, except as otherwise permitted
herein or where the failure to do so does not and will not cause or result in a
Material Adverse Effect. The provision for taxes on the books of each Company is
adequate for all years not closed by applicable statutes and for the current
fiscal year.
SECTION 8.7 CONTINUED BUSINESS. There exists no actual, pending, or, to
Servicer's or SPV's knowledge, any threatened termination, cancellation or
limitation of, or any modification or change in the business relationship of any
Company and any customer or supplier, or any group of customers or suppliers,
where such termination, cancellation, limitation or modification would have a
Material Adverse Effect. To the knowledge of SPV and Servicer, there exists no
present condition or state of facts or circumstances that would reasonably be
expected to have a Material Adverse Effect on any Company in any respect or
prevent a Company from conducting such business or the transactions contemplated
by this Agreement in substantially the same manner in which it was previously
conducted.
SECTION 8.8 CONSENTS OR APPROVALS. No consent, approval or
authorization of, or filing, registration or qualification with, any
governmental authority or any other Person is required to be obtained or
completed by Servicer, Parent or SPV in connection with the execution, delivery
or performance of any of the Transaction Documents, that has not already been
obtained or completed.
SECTION 8.9 SOLVENCY. Servicer and SPV have received consideration from
Bank that is the reasonable equivalent value of the obligations and liabilities
that Servicer and SPV have incurred to Bank. SPV, Parent and Servicer are not
insolvent as defined in any applicable state or federal statute, nor will
Servicer, Parent or SPV be rendered insolvent by the execution and delivery of
the Transaction Documents to Bank or performance thereunder. Servicer, Parent
and SPV are not engaged or about to engage in any business or transaction for
44
which the assets retained by it will be an unreasonably small amount of capital,
taking into consideration the obligations to Bank incurred hereunder. Servicer,
Parent and SPV do not intend to, nor do they believe that they will, incur debts
beyond their ability to pay such debts as they mature.
SECTION 8.10 MATERIAL AGREEMENTS. The securities filings of Parent set
forth all material contracts to which either Parent, Servicer or SPV are a party
as required by Item 601(b)(10) of the Securities and Exchange Commission's
Regulation S-K.
SECTION 8.11 INTELLECTUAL PROPERTY. Each Company owns, possesses, or
has the right to use all of the patents, patent applications, trademarks,
service marks, copyrights, licenses, and rights with respect to the foregoing
necessary for the conduct of its business without any conflict with the rights
of others, except where the lack of such ownership, possession or right would
not have a Material Adverse Effect.
SECTION 8.12 INSURANCE. Each Company maintains with financially sound
and reputable insurers insurance with coverage and limits as required by law and
as is customary with persons engaged in the same businesses as the Companies.
Schedule 8.12 hereto sets forth all insurance carried by the Companies, setting
forth in detail the amount and type of such insurance.
SECTION 8.13 ACCURATE AND COMPLETE STATEMENTS. Neither the Transaction
Documents nor any written statement made by any Company in connection with any
of the Transaction Documents contains any untrue statement of a material fact or
omits a material fact necessary to make the statements contained therein or in
the Transaction Documents not misleading.
SECTION 8.14 DEFAULTS. No Default or Event of Default exists hereunder,
nor will any begin to exist immediately after the execution and delivery hereof.
SECTION 8.15 RIGHTS IN ACCOUNTS. SPV represents that it has the right,
power and authority to grant the rights in and to the Accounts to Bank as
provided herein and in the other Transaction Documents.
SECTION 8.16 PRIVACY. SPV, Parent and Servicer are and shall continue
to be in compliance with all obligations with respect to privacy and information
reporting required by applicable law and regulations, except where the failure
to comply with such requirements does not have a Material Adverse Effect.
SECTION 8.17 MARKET TERRITORY. SPV and Servicer are engaged and shall
continue to be engaged in the ▇▇▇▇ payment business and all business
transactions and all electronic fund transfers shall be made with accounts that
are located at any state or federally-insured depository institutions or
registered broker-dealers, and such depository institutions or registered
broker-dealers shall be located in the United States of America. SPV and
Servicer also warrant that payments to Merchants that are made by paper check
shall be sent only with sufficient postage to allow delivery to addresses that
are located in the United States of America.
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SECTION 8.18 SUBSIDIARIES. SPV has and shall continue to have no
Subsidiaries, no interest in any joint venture or partnership with any Person,
nor any other investment of any kind in any Person, except as permitted in
Section 7.18.
SECTION 8.19 ACH TRANSACTIONS. Each delivery of an ACH Transmission by
SPV, or Servicer on behalf of SPV, shall constitute a warranty, separately and
not jointly, by Servicer and SPV to Bank:
(a) that the Transmission and all ACH entries therein in all
material respects (i) are in the correct form and contain correction
information, (ii) are timely under the terms and provisions of Operating
Circular No. 4 and this Agreement, (iii) with respect to ACH debit entries, are
for sums due and owing from Deposit Accounts debited and have been properly
authorized, (iv) with respect to ACH credit entries, are for sums appropriately
due to Deposit Accounts credited and have been properly authorized, and (v) are
in compliance with all other provisions of the NACHA Rules;
(b) that the creation and processing of each ACH entry and error
correction, and the action of Bank or the Federal Reserve Bank in accordance
with any instruction from Servicer or SPV, is fully authorized by Servicer and
SPV, the party to whom such ACH entry relates, and any other party whose
authorization is required.
SECTION 8.20 RPPS TRANSACTIONS. Each delivery of a RPPS Transmission,
and each communication of instructions to MasterCard in connection with the RPPS
Services or performance of this Agreement by SPV, or Servicer on behalf of SPV,
shall constitute a warranty by Servicer and SPV, as applicable, to Bank:
(a) that the RPPS Transmission and all RPPS entries therein in all
material respects (i) are in correct form and contain correct information, (ii)
are timely under the terms and provisions of this Agreement and RPPS Rules,
(iii) with respect to RPPS reversal entries, are for sums due and owing from
such Deposit Accounts, and (iv) with respect to RPPS credit entries, are for
sums appropriately due to Deposit Accounts credited;
(b) that the creation and processing of each RPPS entry and error
correction, and the action of Bank or MasterCard in accordance with any
instruction from Servicer or SPV, is fully authorized by Servicer and SPV, the
party to whom such RPPS entry relates, and any other party whose authorization
is required, except for inadvertent errors, none of which is material;
(c) that neither SPV nor Servicer owes any Indebtedness,
obligations or other liabilities of any kind to MasterCard in connection with or
in any way related to RPPS, and no events, facts or circumstances exists which
would give rise to any such Indebtedness, obligations or liabilities, except for
the amounts owed for each RPPS Transmission and the standard fees, charges and
expenses (including penalties not to exceed $25,000) assessed by MasterCard in
accordance with the terms of the MasterCard RPPS Service Agreements; and
(d) that neither SPV nor Servicer is a party to any agreement with
MasterCard in connection with or in any way related to RPPS, except that certain
Sponsee Agreement among MasterCard, Bank and SPV.
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SECTION 8.21 E-PAY TRANSACTIONS. Each delivery of an E-Pay
Transmission, and each communication of instructions to VISA in connection with
the E-Pay Services or performance of this Agreement by SPV, or Servicer on
behalf of SPV shall constitute a warranty by Servicer and SPV, as applicable, to
Bank:
(a) that the E-Pay Transmission and all E-Pay entries therein in
all material respects (i) are in correct form and contain correct information,
(ii) are timely under the terms and provisions of this Agreement and E-Pay
Rules, (iii) with respect to E-Pay reversal entries, are for sums due and owing
from such Deposit Accounts, and (iv) with respect to E-Pay credit entries, are
for sums appropriately due to Deposit Accounts credited;
(b) that the creation and processing of each E-Pay entry and error
correction, and the action of Bank or VISA in accordance with any instruction
from Servicer or SPV, is fully authorized by Servicer and SPV, the party to whom
such E-Pay entry relates, and any other party whose authorization is required;
and
(c) that neither SPV nor Servicer owes any Indebtedness,
obligations or other liabilities of any kind to VISA in connection with or in
any way related to E-Pay, and no events, facts or circumstances exist which
would give rise to any such Indebtedness, obligations or liabilities, except for
the amounts of each E-Pay Transmission and for the standard fees, charges and
expenses (including penalties not to exceed $25,000) assessed by VISA in
accordance with the terms of the E-Pay Service Agreement.
SECTION 8.22 SPV OPERATIONS. The SPV shall conduct its business in all
material respects in accordance with its Articles of Incorporation and By-Laws,
including maintaining an Independent Director. The SPV shall not amend its
Articles of Incorporation or By-Laws in any respect where the affirmative vote
of the Independent Director is required to approve such amendment, without prior
notice of such amendment to the Bank and the Bank's consent, which consent shall
not be unreasonably withheld. So long as the Servicer is an Affiliate of the
SPV, any fees for services by the Servicer shall be junior and subordinate to
claims of the Bank hereunder, but may be paid when due unless an uncured Event
of Default has occurred and is continuing.
SECTION 8.23 SPV INFORMATION. The information provided with respect to
SPV pursuant to Sections 6.1(a) and 6.1(j) is accurate and complete in all
material respects.
SECTION 8.24 OWNERSHIP OF PROPERTY; LIENS. Each Company has good and
marketable title to, or valid leasehold interest in, all of its real and
personal property, free and clear of all Liens except Liens permitted under
Section 7.16.
ARTICLE IX. EVENTS OF DEFAULT
Each of the following shall constitute an Event of Default hereunder:
SECTION 9.1 FAILURE TO COMPLY WITH SECTION 3.2(a).
(a) If SPV fails to comply with Section 3.2(a), which failure
arises other than as a result of Bank failing to make a payment to the DDA in
accordance with proper instructions
47
from SPV, Bank's standard procedures and the terms of any Transaction Document,
it shall be a Level One Event of Default. If SPV fails (i) to restore a positive
balance of collected and available funds in the DDA by 12:00 p.m. (Eastern time)
on the first Business Day following the occurrence of an Overnight Overdraft (an
"Overnight Default"), or (ii) to pay any required fee in connection with any
Overnight Overdraft within five (5) Business Days of the date on which such
Overnight Overdraft occurs, it shall be deemed a Level Two Event of Default.
(b) If, within any period of twenty-five (25) consecutive Business
Days, SPV fails to comply with Section 3.2(a) on more than one Business Day, any
such failure arising other than as a result of Bank failing to make a payment to
the DDA in accordance with proper instructions from SPV, Bank's standard
procedures and the terms of the Transaction Documents, a Level Two Event of
Default shall occur. If SPV fails to comply with Section 3.2(a) more than two
(2) times within any period of twenty-five (25) consecutive Business Days, Bank
may, in its sole discretion, increase the amount of the Minimum Required Balance
and Average Minimum Required Balance by an amount up to $50,000,000 each, upon
each such failure by SPV to comply with Section 3.2(a) in such time period.
SECTION 9.2 FAILURE TO COMPLY WITH FINANCIAL COVENANTS.
(a) If SPV fails to comply with any provision of Section 7.9
(other than Sections 7.9(a) and (b)), it shall be a Level Two Event of Default.
(b) If SPV fails to comply with Section 7.9(a), it shall be a
Level Three Event of Default.
(c) If SPV fails to comply with Section 2.1(b) on any Business
Day, it shall be a Level One Event of Default. If SPV fails to restore
compliance with Section 2.1(b) by 4:30 p.m. (Eastern time) on the Business Day
following the day for which the failure to comply with Section 2.1(b) occurred,
it shall be a Level Two Event of Default. If SPV fails to comply with Section
2.1(b) more than two (2) times within any period of twenty-five (25) consecutive
Business Days, Bank may, in its sole discretion, increase the amount of the
Minimum Required Balance and Average Minimum Required Balance by an amount up to
$50,000,000 each, upon each such failure by SPV to comply with Section 2.1(b) in
such time period.
(d) If SPV fails to be in compliance with Section 7.9(b) it shall
be a Level One Event of Default. If SPV fails to restore its compliance with
Section 7.9(b) within fourteen (14) days of the date of such failure, calculated
for the 30 days then ended at the time tested, it shall be a Level Two Event of
Default.
(e) If SPV fails to comply with Section 3.2(b), it shall be a
Level Four Event of Default.
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SECTION 9.3 FAILURE TO MAKE REQUIRED PAYMENTS TO BANK. If SPV or
Servicer fails to make any payment, other than any payment otherwise
specifically addressed in this Article IX, required pursuant to the Transaction
Documents, on the date it is due it shall be a Level One Event of Default;
provided, however, if SPV or Servicer fails to make any such payment to Bank
within five (5) Business Days of the date when such payment is due it shall be a
Level Two Event of Default.
SECTION 9.4 BREACH OF CERTAIN WARRANTIES AND REPRESENTATIONS. If any
warranty or representation made or deemed made by or on behalf of SPV or
Servicer in or in connection with this Agreement, any other Transaction Document
or any certificate, report, financial statement or document submitted to Bank in
connection with the Transaction Documents, shall be untrue or incorrect in any
respect on or as of any date such representations are made or deemed to be made
or submitted, such breach shall be a Level Three Event of Default.
SECTION 9.5 BREACH OF CERTAIN COVENANTS.
(a) If SPV or Servicer fails to comply with any covenant or
obligation contained herein, unless otherwise specifically addressed in this
Article IX, and such breach continues for a period of thirty (30) days without
such breach being cured or corrected, such breach shall be a Level Three Event
of Default.
(b) If SPV or Servicer become indebted to MasterCard or VISA for
any amounts other than the amounts of any RPPS or E-PAY Transmissions or
standard fees (including penalties assessed in an amount less than $25,000)
charged in accordance with the MasterCard or E-Pay Service Agreements, as
applicable, it shall constitute a Level Three Event of Default.
(c) If Parent becomes subject to a Bankruptcy Event, such event
shall be a Level Two Event of Default.
(d) If Servicer becomes subject to a Bankruptcy Event, such event
shall be a Level Four Event of Default unless SPV makes arrangements
satisfactory to Bank within [_] number of days of the occurrence of a
Bankruptcy Event to either perform or have a third party satisfactory to Bank
perform the services and obligations of Servicer under the Servicing Agreement,
such event shall be a Level Two Event of Default.
(e) If SPV becomes subject to a Bankruptcy Event, such event shall
be a Level Four Event of Default.
(f) if any trustee, administrator, custodian, receiver, creditor,
party in interest, interim trustee or liquidator in any bankruptcy,
reorganization, insolvency, liquidation or other proceeding filed by or against
Parent, Servicer or SPV under any federal, state or foreign bankruptcy,
reorganization, insolvency or similar law, now or hereafter in effect, (i) shall
take any action to challenge the conveyance of any assets or rights by Servicer
or Parent to SPV under the Contribution Agreement or otherwise, or to assert
that any assets or rights conveyed by Servicer or Parent to SPV under the
Contribution Agreement or otherwise, including without limitation the Subscriber
Funds, any investments purchased with Subscriber Funds or any rights in
connection therewith, constitute property of the estate of Parent or Servicer,
or (ii) shall take
49
any action to substantively consolidate the assets and/or liabilities of SPV
with the assets and/or liabilities of either Parent or Servicer, such event
shall constitute a Level Four Event of Default.
(g) If SPV or Servicer fails to comply with Section 4.5, such
event shall be a Level Two Event of Default.
SECTION 9.6 CHANGE IN CONTROL. If Parent shall cease to own one hundred
percent (100%) of Servicer, or if Servicer shall cease to own one hundred
percent (100%) of SPV, it shall be a Level Three Event of Default.
SECTION 9.7 OTHER INDEBTEDNESS.
(a) Unless otherwise specifically addressed in this Article IX, if
a breach or default occurs under any loan agreement between Bank and Parent or
an Affiliate of Parent, other than this Agreement, and is not cured within any
applicable cure period, it shall be a Level Two Event of Default.
(b) If a default or breach shall occur under any other agreement,
document or instrument to which Servicer is a party which is not cured within
any applicable grace period, and such default or breach (i) involves the failure
to make any payment when due in respect of any Indebtedness (other than the
Obligations) of Servicer in the aggregate, during any twelve month period, in
excess of $1,000,000, or (ii) causes, or permits any holder of such Indebtedness
to cause such Indebtedness or a portion thereof in excess of $1,000,000 in the
aggregate during any twelve month period, to become due prior to its stated
maturity, it shall be a Level Three Event of Default.
(c) If a default or breach shall occur under any other agreement,
document or instrument to which Parent is a party which is not cured within any
applicable grace period, and such default or breach (i) involves the failure to
make any payment when due in respect of any Indebtedness of Parent in excess of
$1,000,000 in the aggregate during any twelve month period, or (ii) causes, or
permits any holder of such Indebtedness to cause such Indebtedness or a portion
thereof in excess of $1,000,000 in the aggregate during any twelve month period,
to become due prior to its stated maturity, it shall be a Level Two Event of
Default.
SECTION 9.8 FRAUD. If any fraudulent transfer or transfers are made
from the DDA or any Investments which (i) arise from actions other than
fraudulent actions of the Bank or its Affiliates, (ii) individually or in the
aggregate during any twelve month period exceed $1,000,000, and (iii) are the
financial responsibility of, or result in the liability of, Servicer or SPV with
respect thereto, it shall be a Level Three Event of Default.
SECTION 9.9 VALIDITY OF TRANSACTION DOCUMENTS.
(a) A Level Two Event of Default shall occur and be existing if
any material provision, in the sole opinion of Bank, of any Transaction Document
shall at any time for any reason cease to be valid, binding and enforceable
against Servicer or SPV.
(b) A Level Three Event of Default shall occur and be existing if
the validity, binding effect or enforceability of any material provision, in the
sole opinion of Bank, of any Transaction Document against Servicer or SPV shall
be contested by any Company or any other Obligor.
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(c) A Level Four Event of Default shall occur and be existing if
Servicer or SPV shall deny that it has any or further liability or obligation
thereunder while this Agreement otherwise remains in effect.
SECTION 9.10 JUDGMENTS. If one or more judgments, orders or awards for
the payment of money in an aggregate amount in excess of $1,000,000 in the case
of SPV and $10,000,000 in the case of Servicer (exclusive of any judgment, order
or award amount to the extent covered by insurance, bond, surety or similar
instrument where the insurer or holder of such bond, surety or instrument, as
the case requires, has not contested liability in respect of such judgment,
order or award so long as SPV or Servicer is seeking to recover under such
insurance, bond, surety or similar instrument) shall be rendered against the SPV
or Servicer, respectively, and either (i) enforcement proceedings shall have
been commenced by any creditor upon such judgment, order or award or (ii) there
shall be a period of 30 consecutive days during which such judgment, order or
award remains unsatisfied and a stay of enforcement of such judgment, order or
award shall not be in effect, it shall be a Level Three Event of Default.
SECTION 9.11 MATERIAL ADVERSE CHANGE.
(a) A Level Two Event of Default shall occur and be existing if
Bank determines, in the exercise of its reasonable judgment that a Material
Adverse Change has occurred with respect to Parent.
(b) A Level Three Event of Default shall occur and be existing if
Bank determines, in the exercise of its reasonable judgment, that a Material
Adverse Change has occurred with respect to Servicer or SPV.
SECTION 9.12 TRANSACTION DOCUMENTS. Unless otherwise specifically
addressed in this Article IX or in the applicable Transaction Document, a Level
Three Event of Default shall occur and be existing if an event of default (as
such term is defined in the applicable Transaction Document) shall occur under
any of the other Transaction Documents and such event of default is not covered
within any applicable cure period.
ARTICLE X. REMEDIES UPON DEFAULT
Notwithstanding any contrary provision or inference herein or
elsewhere,
SECTION 10.1 LEVEL ONE DEFAULTS. If a Level One Event of Default shall
occur and be continuing, Bank shall be entitled to payment of all outstanding
funds owed to it, with interest thereon at the Default Rate, until such time as
the amounts are paid.
SECTION 10.2 LEVEL TWO DEFAULTS. If a Level Two Event of Default shall
occur and be continuing, Bank shall be entitled to (i) take such steps as it may
determine to (a) assure that the Business Assets have an Immediate Fair Market
Value equal to the Business Liabilities, (b) assure that at the close of each
Business Day the balance of collected and available funds posted to the DDA is
equal to the Minimum Required Balance, and (c) assure that at no time does an
overdraft in the DDA exist, including among other things, (x) requiring SPV to
maintain sufficient collected and available funds in the DDA to fund (l) each
ACH credit entry contained in any ACH Transmission, each RPPS credit entry
contained in any RPPS
51
Transmission, and each E-Pay credit entry contained in any E-Pay Transmission,
from the time each such ACH, RPPS or E-Pay Transmission is originated until the
entries in each such ACH, RPPS or E-Pay Transmission settle, and (2) any other
debit against or transfer from the DDA; or (y) taking possession and control of
any or all of the Overnight Accounts, Custody Accounts or Investments and
liquidating or instructing any Securities Intermediary, Custodian or Investment
Advisor to liquidate Investments in an amount sufficient to cover the amount of
any Overdraft Advances, all ACH Transmissions, RPPS Transmissions or E-Pay
Transmissions, from the time any such ACH, RPPS or E-Pay Transmission is
originated until is has settled, or any other debits against the DDA and to
satisfy the Minimum Balance Requirement, and (z) in the case of an Overdraft
Default, taking any actions permitted under Section 3.3(b), and (ii) exercise
any and all rights under any Transaction Documents or applicable law in any
collateral pledged by SPV to Bank under the Transaction Documents to satisfy any
outstanding Obligations; provided that Bank will not use any Subscriber Funds or
proceeds from Investments except as permitted in Section 2.2(b).
SECTION 10.3 LEVEL THREE DEFAULTS. If a Level Three Event of Default
shall occur and be continuing, Bank shall be entitled, in addition to taking the
steps outlined in Section 10.2 above, to terminate this Agreement or any Service
hereunder effective upon 180 days prior written notice to SPV and to reduce the
amounts of the Overdraft Commitment upon thirty (30) days' prior written notice
to SPV.
SECTION 10.4 LEVEL FOUR DEFAULTS. If a Level Four Event of Default
shall occur and be continuing, Bank shall be entitled, in addition to or in lieu
of taking the steps outlined in Sections 10.2 and 10.3 above, to (i) immediately
terminate this Agreement pursuant to the process set forth in Section 11.4(c)
herein, and (ii) to immediately terminate the obligation of Bank to fund any
Overdraft Advance or permit Servicer or SPV to utilize Bank's access to the ACH
system, RPPS system or E-Pay system, if not previously terminated, and,
immediately upon such election, the obligation of Bank to fund any Overdraft
Advance or permit Servicer or SPV to utilize Bank's access to the ACH system,
RPPS system or E-Pay system, immediately shall be terminated, and/or accelerate
the maturity of all of the Obligations (if the Obligations are not already due
and payable), whereupon all of the Obligations shall become and thereafter be
immediately due and payable in full without any presentment or demand and
without any further or other notice of any kind, all of which are hereby waived
by Servicer and SPV.
SECTION 10.5 OFFSETS. If there shall occur or exist any Level Four
Event of Default, Bank shall also have the right at any time to set off against,
and to appropriate and apply toward the payment of, any and all Obligations then
owing by Servicer and SPV to Bank, whether or not the same shall then have
matured, any and all deposit balances and all other indebtedness then held or
owing by Bank to or for the credit or account of Servicer and SPV, all without
notice to or demand upon Servicer, SPV or any other Person, all such notices and
demands being hereby expressly waived by Servicer and SPV.
ARTICLE XI. MISCELLANEOUS
SECTION 11.1 COSTS AND FEES. SPV shall pay all the ACH, RPPS and E-Pay
fees and other fees and charges imposed by Bank in connection with the other
Services monthly on such day as may be determined by Bank. Notwithstanding
anything to the contrary contained
52
herein or in any other document, Bank may charge to SPV all costs, expenses, and
charges incurred as a result of fulfilling any of the terms or conditions of
this Agreement including but not limited to (i) costs and fees of external
counsel to the extent provided in Section 6.1(d) above, (ii) any costs and fees
imposed by the Federal Reserve Bank in relation to the ACH Services, (iii) any
costs and fees imposed by MasterCard in relation to SPV activity through the
RPPS Services, and (iv) any costs and fees imposed by VISA in relation to SPV
activity through the E-Pay Services.
SECTION 11.2 LIMITATION ON DAMAGES. In any action by one of the parties
against the others arising from performance, or the failure of performance, of
the provisions of this Agreement, damages will be limited to general money
damages in an amount not to exceed the actual damages of the party, and
reasonable attorneys' fees and other expenses of litigation. In no case will a
party be responsible for special, incidental, consequential, or exemplary
damages, except for willful breach of this Agreement.
SECTION 11.3 SOFTWARE OWNERSHIP. Bank, SPV and Servicer shall each have
sufficient rights in and to all specifications, tapes, and programs utilized or
developed by any of them to allow them to perform and carry out the ACH
Services, RPPS Services and E-Pay Services, or otherwise in connection with the
performance of this Agreement.
SECTION 11.4 TERM AND TERMINATION.
(a) This Agreement shall be effective as of the Agreement Date,
and shall continue and remain in effect until terminated as provided herein.
(b) This Agreement or any Service may be terminated by mutual
consent of Bank, SPV and Servicer.
(c) This Agreement may be terminated by Bank immediately upon
written notice to SPV if the conditions to Bank's obligations to provide any of
the Services in Section 6 have not been satisfied within sixty (60) days of the
Agreement Date.
(d) This Agreement or any Service provided hereunder may be
terminated by Bank in the event of a Level Four Event of Default. In order to
exercise its rights of termination under this Section 11.4(c), Bank shall give
notice to SPV of its intent to terminate this Agreement or any Service, with the
termination to be effective immediately upon notice. Once termination is
effective, SPV shall at all times maintain net funds in the DDA such that at no
time is there an aggregate deficit in the DDA.
(e) This Agreement or any Service provided hereunder may be
terminated by Bank in the event of a Level Three Event of Default in accordance
with the terms of Section 10.3.
(f) Bank may terminate the ACH Services in accordance with the
terms of Section 4.8 and Bank may terminate the RPPS Services and E-Pay Services
in accordance with the terms of Section 5.6.
(g) SPV and Servicer may terminate this Agreement if Bank fails to
abide by its covenants and obligations set forth in this Agreement, which
failure continues for a period of thirty (30) days following notice thereof
given by SPV or Servicer. In the event SPV and
53
Servicer elect to exercise their right of termination under this Section
11.4(d), SPV and Servicer must give Bank at least thirty (30) days notice of
termination (or such longer period as it desires, not to exceed 180 days or any
shorter period provided hereunder upon the occurrence of an Event of Default),
during which time (i) Bank shall continue to perform the Services as required by
this Agreement, and (ii) shall cooperate with SPV and Servicer in obtaining a
substitute for the Services provided hereunder by Bank.
(h) This Agreement shall terminate three (3) years from the date
of this Agreement (the "Initial Term") unless otherwise terminated in accordance
with the terms of this Agreement; provided however, this Agreement shall be
automatically extended for up to three additional one year periods (each a
"Renewal Period") unless either Bank or SPV notifies the other not less than 120
days prior to the end of the Initial Term or any such Renewal Period that the
Agreement will terminate at the end of the Initial Term or such Renewal Period.
(i) Bank may immediately terminate Servicer's access to ACH, RPPS
or E-Pay if at any time Servicer ceases to be the SPV Servicer.
(j) Bank, Servicer, Parent or SPV may terminate this Agreement,
upon giving the other parties hereto ninety (90) days prior written notice of
its intention to terminate, on or after acquisition, directly or indirectly,
whether through ownership of stock or through any other means whatsoever, of
effective or working control of a party hereof, or its operations or policies,
by any corporation, trust association or similar corporation if following such
acquisition, failure to terminate this Agreement would, in the opinion of
counsel acceptable to the other parties, give rise to a violation of one or more
provisions of the ▇▇▇▇▇▇▇ Act (15 U.S.C. Section 1 et seq.) or the ▇▇▇▇▇▇▇ Act
(15 U.S.C. Section 18 et seq.).
(k) If this Agreement has been terminated other than as a result
of the occurrence of an Event of Default, Bank agrees to cooperate with SPV and
Servicer to effect a transfer of the Federal Reserve Bank Circuit referred to in
Section 6.1(i) to another financial institution designated by Servicer, to the
extent such transfer is feasible. Servicer shall pay all reasonable expenses
incurred by Bank in connection therewith.
(l) After the termination of this Agreement or the ACH Services,
SPV shall maintain a minimum balance of $5,000,000 in the DDA or other Deposit
Account established with Bank for a period of 75 days from the effective date of
such termination to fund any returns or adjustments related to any ACH
Transmission, RPPS Transmission, E-Pay Transmission or any other amounts
credited to the DDA, or any fees and charges or other outstanding Obligations
owed to Bank in connection with the Services.
SECTION 11.5 TRANSITION RULES.
(a) Notwithstanding any other provision of this Agreement, until
the earlier of 120 days from the date the conditions precedent in Article VI are
satisfied or actual completion of the Transition by SPV and Servicer (the
"Transition Completion Date"), the following provisions shall apply:
(i) No later than the Transition Completion Date, SPV
and Servicer shall: (A) transfer all Subscriber Funds deposited in any
Deposit Account maintained with
54
* Portions have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.
KeyBank to the DDA and close all such Deposit Accounts with KeyBank;
except as provided in Section 11.5(b), (B) cease to use any ACH or RPPS
origination or other funds transfer services provided by KeyBank in
connection with Subscriber Funds or the Business, (C) transfer all
investments of Subscriber Funds to an Overnight Account or the Custody
Account and close all other Securities Accounts, (D) transfer all SPV
Funds to an SPV Deposit Account maintained with Bank and all SPV
Investments to an SPV Custody Account, and (E) terminate all other
services provided by KeyBank related to the Subscriber Funds or the
Business (the "Transition"). Until the Transition Completion Date, SPV
may deposit Subscriber Funds into the DDA or the Deposit Account
currently used at KeyBank for the collection and disbursement of
Subscriber Funds in connection with the Business. A minimum of
$100,000,000 in the form of cash or Investments must be maintained in
the Custody Account at all times from the Agreement Date until the
Transition Completion Date.
(ii) Until the Transition Completion Date Bank shall be
entitled to (A) take such steps as it may determine to ensure that SPV
maintains cash and Investments in the Accounts with an Immediate Fair
Market Value equal to or greater than the amount necessary to fund (1)
each ACH credit entry contained in any ACH Transmission, each RPPS
Transmission, and each E-Pay Transmissions, from the time each such
ACH, RPPS or E-Pay Transmission is originated until the entries in each
such ACH, RPPS or E-Pay Transmission have settled, and (2) any other
debit against or transfer from the DDA; and (B) take possession and
control of any or all of the Overnight Accounts, Custody Accounts or
Investments and liquidate or instruct any Securities Intermediary with
which SPV maintains any Investment, Custodian or Investment Advisor to
liquidate Investments in an amount sufficient to fund the amount of all
ACH, RPPS or E-Pay Transmissions, at the time any such ACH, RPPS or
E-Pay Transmission is originated, or any other debit or transfer drawn
on the DDA.
(iii) Until the Transition Completion Date, (A) the Credit
Cap will be the lesser of (1) [*], and (2), as calculated by
Bank, the sum of (x) Immediate Fair Market Value of cash and
Investments in the Accounts, less (y) any RPPS or E-Pay Transmissions
originated on such Business Day at the time of such ACH Transmission,
less (z) any other debits against or transfer from the DDA, and (B) the
Debit Cap will be the lesser of (1) [*], and (2) the amount
calculated for the Debit Cap under Section 4.4.
(iv) Until the Transition Completion Date, the RPPS
Transmission Limit will be the lesser of (A) [*] and (B) the
sum of (1) the Immediate Fair Market Value of cash and Investments in
the Accounts, less (2) any ACH or E-Pay Transmissions originated on
such Business Day at the time of such RPPS Transmission, less (3) any
other debits against or transfers from the DDA. Until the Transition
Completion Date, the E-Pay Transmission Limit will be the lesser of (A)
[*] and (B) the sum of (1) the Immediate Fair Market Value of
cash and Investments in the Accounts, less (2) any ACH or RPPS
Transmissions originated on such Business Day at the time of such E-Pay
Transmission, less (3) any other debits against or transfers from the
DDA.
55
(v) Prior to the end of the Returns Period, SPV and
Servicer, on behalf of SPV, may use the old Sending Point ID to
originate ACH credit and debit entry transmissions over Federal Reserve
Bank Circuit leased by SunTrust using the KeyBank routing and transit
numbers currently used. Bank shall have no obligation to, monitor or
liability for, any ACH credit or debit transmissions originated using
the KeyBank routing and transit numbers.
(b) SPV may maintain a Deposit Account with KeyBank with a balance
of up to $5,000,000 for a period of seventy-five (75) days after the Transition
Completion Date (the "Returns Period") to fund any returns or adjustments for
errors related to any ACH debit entries or other amounts credited to a Deposit
Account with KeyBank in connection with the Business. At the end of the Returns
Period, all funds in such Deposit Account with KeyBank will be transferred to
the DDA and such Deposit Account will be closed.
SECTION 11.6 NOTICE. Except as required in Section 5.3, 7.3, and 7.6,
any notice, request or other communication required or permitted to be given
under this Agreement shall be in writing and deemed to have been properly given
when delivered in person, or when sent by telecopy or other electronic means and
electronic confirmation of error free receipt is received (provided that if
delivered or received on a day other than a Business Day, notice shall be given
as of the following Business Day) or on the first Business Day after being sent
by a recognized overnight courier service when sent for next day delivery,
addressed to the party at the address set forth below.
If to Bank: With a copy to:
SunTrust Bank SunTrust Bank
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇, Client Manager Attn: ▇▇▇▇▇ ▇▇▇▇▇▇, Group Portfolio
Facsimile Number: ▇▇▇-▇▇▇-▇▇▇▇ Manager
Facsimile Number: ▇▇▇-▇▇▇-▇▇▇▇
If to Servicer, Parent and the SPV: With a copy to:
CheckFree Services Corporation CheckFree Services Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇
Attention: Treasurer Attention: General Counsel
Facsimile Number: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile Number: ▇▇▇-▇▇▇-▇▇▇▇
If to Daily Notice Contact or Monthly Notice Contact, see the contact
information on Exhibit H.
Any party may change its address for notices in the manner set forth above.
SECTION 11.7 CAPITAL ADEQUACY. If Bank shall have determined, after the
Agreement Date, that the adoption of any applicable law, rule, regulation or
guideline regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the
56
interpretation or administration thereof, or compliance by Bank (or its lending
office) with any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, which adoption or change must, in all instances, be of generally
applicability to all banks and not specifically directed to Bank as a result of
a condition, practice or activity of Bank, has or would have the effect of
reducing the rate of return on Bank's capital (or the capital of its holding
company) as a consequence of its obligations hereunder to a level below that
which Bank (or its holding company) could have achieved but for such adoption,
change or compliance (taking into consideration Bank's policies or the policies
of its holding company with respect to capital adequacy) by an amount deemed by
Bank to be material, then from time to time, within fifteen (15) days after
demand by Bank, Servicer and SPV shall pay to Bank such additional amount or
amounts as will compensate Bank (or its holding company) for such reduction.
Notwithstanding the foregoing, if the change in charges to SPV and Servicer is
material, SPV and Servicer may terminate this Agreement on 180 days prior
written notice to Bank. Bank shall designate a different lending office if such
designation will avoid the need for, or reduce the amount of, such compensation
and will not, in the judgment of Bank, be otherwise disadvantageous to Bank and
will not, in the judgment of SPV and Servicer, materially adversely affect SPV
or Servicer in connection with the Services. A certificate of Bank claiming
compensation under this Section 11.6 and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, Bank may use any reasonable
averaging and attribution methods. Failure on the part of Bank to demand
compensation for any reduction in return on capital with respect to any period
shall not constitute a waiver of Bank's rights to demand compensation for any
reduction in return on capital in such period or in any other period. The
protection of this Section 11.6 shall be available to Bank regardless of any
possible contention of the invalidity or inapplicability of the law, regulation
or other condition that shall have been imposed.
SECTION 11.8 REGULATION AND EXAMINATION. Bank, Servicer and SPV
understand and agree that the performance of obligations under this Agreement is
subject, without notice, to the regulation and examination of the Comptroller of
the Currency, Federal Reserve Board, the Georgia Department of Banking and
Finance, or such other governmental agency as shall have jurisdiction over the
subject matter hereof.
SECTION 11.9 CONFIDENTIALITY.
(a) Bank will safeguard, and hold confidential from disclosure to
unauthorized persons, all data of Servicer and SPV to which Bank or one of its
Affiliates obtains access pursuant to this Agreement to the same extent that
Bank safeguards data relating to its own business, unless such data are
otherwise available to the public or are already in Bank's possession and were
rightfully obtained by it from others, or unless such disclosure is required by
law or regulation. In such case, Bank will bear no responsibility for
disclosures thereof or with respect thereto, whether inadvertent or otherwise.
Bank's obligations herein shall be perpetual and shall survive and continue
after termination.
(b) Servicer and SPV will safeguard, and hold confidential from
disclosure to unauthorized persons, all data owned or licensed by Bank or one of
its Affiliates to which Servicer or SPV obtains access pursuant to this
Agreement to the same extent that Servicer or SPV safeguards data relating to
its own business, unless such data are otherwise available to the
57
public or are already in Servicer or SPV's possession and were rightfully
obtained by it from others, or unless required by law or regulation. In such
case, neither SPV of Servicer will bear any responsibility for disclosures
thereof or with respect thereto, whether inadvertent or otherwise. Servicer's
and SPV's obligations herein shall be perpetual and shall survive and continue
after termination.
(c) To the extent that in connection with the Services, Bank
obtains access to or possession of non-public personal financial information of
Subscribers, Bank shall implement appropriate administrative, technical, and
physical safeguards to protect the security, confidentiality and integrity of
such information in accordance with all applicable Laws. It shall not use any
such information except to the extent necessary to carry out the Services or as
otherwise specifically permitted by applicable law.
(d) No party to this Agreement has made any statement or
representation to the other regarding the federal tax consequences or federal
tax structure of the transactions contemplated by this Agreement or has imposed
(and this Agreement does not impose) any conditions of confidentiality on the
disclosure thereof. The intent and purpose of this Section 11.9(d) is to assure
that the transactions contemplated by this Agreement are not treated as offered
under "conditions of confidentiality" within the meaning of the Code and Section
1.6011-4 of the regulations promulgated thereunder, and thus this Section shall
be construed and interpreted consistently with such intent.
SECTION 11.10 DUE CARE.
(a) Bank, Servicer, and SPV will exercise due care in performing
their respective obligations hereunder and each party will, in the event of an
error or omission attributable to the malfunction of equipment which it owns or
leases or to the acts, negligence, or the failure of operators, programmers, or
other personnel or programs employed by them, which error or omission impedes
the performance of such party's obligations hereunder, use reasonable efforts to
correct such error or omission, and provide prompt notice of the error or
omission to the other party.
(b) No party shall be liable to the other for any nonperformance
if it is prevented from performing any task hereunder in whole or in part as a
result of an act of God, war, civil disturbance, labor dispute, or other cause
beyond its reasonable control, provided, that it has taken reasonable steps and
precautions to minimize the delay caused by such event and it commences
performance as soon as reasonably possible after the occurrence.
SECTION 11.11 NO WAIVER; CUMULATIVE REMEDIES; RELATIONSHIP OF PARTIES.
No omission or course of dealing on the part of Bank in exercising any right,
power or remedy hereunder or under any of the Transaction Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder or under any of the
Transaction Documents. The remedies herein provided are cumulative and in
addition to any other rights, powers or privileges held or available under any
of the Transaction Documents or by operation of law, by contract or otherwise
and any rights, powers or privileges held or available under any Transaction
Documents are in addition to any remedies hereunder. Nothing contained in this
Agreement and no action taken by Bank pursuant hereto shall be
58
deemed to constitute Servicer, SPV and Bank a partnership, association, joint
venture or other entity. The relationship among Servicer, SPV and Bank with
respect to the Transaction Documents is and shall be solely that of obligor and
service provider, respectively, and Bank shall have no fiduciary obligation
toward Servicer and SPV, with respect to any such documents or the transactions
contemplated thereby.
SECTION 11.12 AMENDMENTS, CONSENTS. No amendment, modification,
termination, or waiver of any provision of any Transaction Document nor consent
to any variance therefrom, shall be effective unless the same shall be in
writing and signed by the Parties hereto (provided, however, that a waiver or
consent may be signed by the party granting such waiver or consent without the
need for the signature of the other party or parties hereto). Any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
SECTION 11.13 COSTS, EXPENSES AND TAXES. Servicer and SPV agree to pay
on demand all costs and expenses of Bank, and all Related Expenses, including
but not limited to, administration, travel and out-of-pocket expenses (including
but not limited to attorneys' fees and expenses) of Bank in connection with the
restructuring or enforcement of the Obligations, this Agreement or any other
Transaction Document. In addition, Servicer and SPV shall pay any and all stamp
and other taxes, other than income, franchise or similar taxes imposed on the
Bank, and fees payable or determined to be payable in connection with the
execution and delivery of any Transaction Document, and the other instruments
and documents to be delivered hereunder, and agrees to hold Bank harmless from
and against any and all liabilities with respect to or resulting from any delay
in paying or omission to pay such taxes or fees.
SECTION 11.14 INDEMNIFICATION. Each of Servicer and SPV, severally and
not jointly, agree to defend, indemnify and hold harmless Bank (and its
Affiliates, officers, directors, attorneys, agents and employees) from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including attorneys' fees), or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by or asserted against Bank in connection with, relating to or arising out of
the Transaction Documents, whether or not the conditions to Bank's obligations
to provide any of the Services have been satisfied or any transactions
contemplated by any of the Transaction Documents have been consummated, any
actual or proposed use of proceeds of any Overdraft Advance, the purchase of any
Investments or any of the Obligations, or any activities of any Company or any
Obligor or any of their respective Affiliates; provided that Bank shall not have
the right to be indemnified under this Section 11.14 for its own gross
negligence or willful, reckless or intentional misconduct. All obligations
provided for in this Section 11.14 shall survive any termination of this
Agreement.
SECTION 11.15 BINDING EFFECT; ASSIGNMENT. This Agreement shall become
effective when it shall have been executed by Servicer, SPV and Bank and
thereafter shall be binding upon and inure to the benefit of Servicer, SPV and
Bank and their respective successors and assigns, except that Servicer and SPV
shall not have the right to assign their rights hereunder or any interest herein
without the prior written consent of Bank such consent shall not be unreasonably
withheld.
59
SECTION 11.16 GOVERNING LAW; SUBMISSION TO JURISDICTION. This
Agreement, and the other Transaction Documents shall be governed by and
construed in accordance with the laws of the State of Georgia and the respective
rights and obligations of Servicer, SPV and Bank shall be governed by Georgia
law, without regard to principles of conflict of laws. Servicer and SPV hereby
irrevocably submit to the non-exclusive jurisdiction of any Georgia state or
federal court sitting in Atlanta, Georgia, over any action or proceeding arising
out of or relating to this Agreement or any other Transaction Document, and
Servicer and SPV hereby irrevocably agree that all claims in respect of such
action or proceeding may be heard and determined in such Georgia state or
federal court. Servicer and SPV, on behalf of themselves and their Subsidiaries,
hereby irrevocably waive, to the fullest extent permitted by law, any objection
they may now or hereafter have to the laying of venue in any action or
proceeding in any such court as well as any right they may now or hereafter have
to remove such action or proceeding, once commenced, to another court on the
grounds of FORUM NON CONVENIENS or otherwise. Servicer and SPV agree that a
final, nonappealable judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
SECTION 11.17 SEVERABILITY OF PROVISIONS; CAPTIONS; ATTACHMENTS. Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction. The several captions to sections herein are inserted
for convenience only and shall be ignored in interpreting the provisions of this
Agreement. Each schedule or exhibit attached to this Agreement shall be
incorporated herein and shall be deemed to be a part hereof.
SECTION 11.18 ENTIRE AGREEMENT. This Agreement and all other
Transaction Documents or other agreements, documents or instruments attached
hereto or executed on or as of the Agreement Date integrate all the terms and
conditions mentioned herein or incidental hereto and supersede all oral
representations and negotiations and prior writings with respect to the subject
matter hereof.
SECTION 11.19 RULE OF CONSTRUCTION. The Transaction Documents were
negotiated by the parties with the benefit of legal representation and any rule
of construction or interpretation otherwise requiring this Agreement or any
other Transaction Document to be construed or interpreted against any party
shall not apply to any construction or interpretation hereof or thereof.
SECTION 11.20 EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same agreement.
SECTION 11.21 JURY TRIAL WAIVER. SERVICER, SPV AND BANK WAIVE ANY RIGHT
TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG SERVICER, SPV, PARENT AND BANK, ARISING OUT
OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN
60
CONNECTION WITH THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED
THERETO. THIS WAIVER SHALL NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY
BANK'S ABILITY TO PURSUE REMEDIES PURSUANT TO ANY PROVISION CONTAINED IN ANY
NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT AMONG SERVICER, SPV, PARENT AND
BANK.
[remainder of this page intentionally left blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of this 5th day of August, 2003.
CHECKFREE SERVICES CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Title: Executive Vice President
and Chief Financial Officer
BASTOGNE, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Title: Treasurer
SUNTRUST BANK
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Title: Director, Corporate &
Investment Banking
[Signature Page for the Master Agreement]