EXHIBIT 10.4
EXECUTION COPY
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UNITED STATIONERS FINANCIAL SERVICES LLC,
USS RECEIVABLES COMPANY, LTD.,
and
UNITED STATIONERS FINANCIAL SERVICES LLC,
as Servicer
AMENDED AND RESTATED USFS RECEIVABLES SALE AGREEMENT
Dated as of March 28, 2003
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS................................................................................2
SECTION 1.1 CERTAIN DEFINED TERMS...............................................................2
SECTION 1.2 ACCOUNTING AND UCC TERMS............................................................7
SECTION 1.3 OTHER TERMS.........................................................................7
SECTION 1.4 COMPUTATION OF TIME PERIODS.........................................................7
ARTICLE II PURCHASE AND SALE OF RECEIVABLES..........................................................8
SECTION 2.1 PURCHASE AND SALE OF RECEIVABLES....................................................8
SECTION 2.2 PURCHASE PRICE......................................................................9
SECTION 2.3 PAYMENT OF PURCHASE PRICE...........................................................9
SECTION 2.4 NO REPURCHASE......................................................................11
SECTION 2.5 REBATES, ADJUSTMENTS, RETURNS AND REDUCTIONS; MODIFICATIONS........................11
SECTION 2.6 LIMITED REPURCHASE OBLIGATIONS.....................................................11
SECTION 2.7 OBLIGATIONS UNAFFECTED.............................................................12
SECTION 2.8 CERTAIN CHARGES....................................................................12
SECTION 2.9 INTENTIONALLY OMITTED..............................................................12
SECTION 2.10 FURTHER ASSURANCES.................................................................12
SECTION 2.11 ADDITIONAL REPURCHASE OBLIGATIONS..................................................12
ARTICLE III CONDITIONS TO PURCHASES.................................................................13
SECTION 3.1 CONDITIONS PRECEDENT TO THE COMPANY'S INITIAL PURCHASE.............................13
SECTION 3.2 CONDITIONS PRECEDENT TO THE ADDITION OF A SELLER...................................15
SECTION 3.3 CONDITIONS PRECEDENT TO EACH OF THE COMPANY'S PURCHASES OF RECEIVABLES.............17
SECTION 3.4 CONDITION PRECEDENT TO USFS'S OBLIGATIONS..........................................18
ARTICLE IV REPRESENTATIONS AND WARRANTIES...........................................................18
SECTION 4.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................................18
SECTION 4.2 REPRESENTATIONS AND WARRANTIES OF USFS.............................................19
ARTICLE V GENERAL COVENANTS.........................................................................27
SECTION 5.1 AFFIRMATIVE COVENANTS OF USFS......................................................27
SECTION 5.2 REPORTING REQUIREMENTS.............................................................35
SECTION 5.3 NEGATIVE COVENANTS.................................................................37
ARTICLE VI PURCHASE TERMINATION EVENTS..............................................................39
SECTION 6.1 PURCHASE TERMINATION EVENTS........................................................39
SECTION 6.2 ADDITIONAL REMEDIES................................................................42
ARTICLE VII INDEMNIFICATION.........................................................................42
SECTION 7.1 INDEMNITIES BY USFS................................................................42
SECTION 7.2 INDEMNITIES BY THE COMPANY.........................................................45
ARTICLE VIII SUBORDINATED NOTE......................................................................45
SECTION 8.1 SUBORDINATED NOTE..................................................................45
SECTION 8.2 RESTRICTIONS ON TRANSFER OF CONTRIBUTED NOTE AND SUBORDINATED NOTE.................46
ARTICLE IX MISCELLANEOUS............................................................................46
SECTION 9.1 AMENDMENT..........................................................................46
SECTION 9.2 NOTICES, ETC.......................................................................46
SECTION 9.3 NO WAIVER; REMEDIES................................................................47
SECTION 9.4 SUCCESSORS AND ASSIGNS.............................................................47
SECTION 9.5 COSTS, EXPENSES AND TAXES..........................................................47
SECTION 9.6 INTEGRATION........................................................................48
SECTION 9.7 CAPTIONS AND CROSS REFERENCES......................................................48
SECTION 9.8 RESERVED...........................................................................48
SECTION 9.9 RESERVED...........................................................................48
SECTION 9.10 EXECUTION IN COUNTERPARTS..........................................................48
SECTION 9.11 ACKNOWLEDGMENT OF ASSIGNMENTS......................................................48
SECTION 9.12 NO PETITION IN BANKRUPTCY..........................................................48
SECTION 9.13 ADDITION OF SELLERS................................................................49
SECTION 9.14 TREATMENT OF SELLERS OTHER THAN USSC; TERMINATION THEREOF..........................49
SECTION 9.15 TERMINATION........................................................................50
SECTION 9.16 WAIVER OF JURY TRIAL; SUBMISSION TO JURISDICTION; OTHER WAIVERS....................50
SECTION 9.17 GOVERNING LAW......................................................................51
SECTION 9.18 CONFIRMATION AND RATIFICATION OF TERMS.............................................51
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SCHEDULES
I AUTHORIZED OFFICERS
II USFS OFFICES
III [RESERVED]
IV POLICIES
V [RESERVED]
VI CORPORATE AND TRADE NAMES
VII DISCOUNTED PERCENTAGE
VIII ERISA
EXHIBITS
A FORM OF SUBORDINATED NOTE
B FORM OF UCC CERTIFICATE
ANNEX I
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AMENDED AND RESTATED
USFS RECEIVABLES SALE AGREEMENT
AMENDED AND RESTATED
USFS RECEIVABLES SALE AGREEMENT, dated as of
March 28, 2003 (as further amended, supplemented or otherwise modified and in
effect from time to time, this "AGREEMENT"), among UNITED STATIONERS FINANCIAL
SERVICES LLC, an Illinois limited liability company ("USFS"); USS RECEIVABLES
COMPANY, LTD., a Cayman Islands limited liability company (the "COMPANY"); and
USFS, in its capacity as servicer (the "SERVICER").
W I T N E S S E T H :
WHEREAS, USFS, the Company and the Servicer have entered into a
USFS
Receivables Sale Agreement dated as of May 1, 2001 (the "ORIGINAL AGREEMENT");
WHEREAS, the USFS, the Company and the Servicer desire to amend and
restate the Original Agreement in its entirety to read as set forth herein;
WHEREAS, the USFS intends to sell Receivables and Receivables Property
to the Company on the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, the Company desires to purchase Receivables and Receivables
Property from USFS on the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, USFS and the Company desire the sale of Receivables and
Receivables Property from USFS to the Company to be a true sale providing USFS
with the full benefits of ownership of the Receivables;
WHEREAS, contemporaneously with the execution and delivery of this
Agreement,
United Stationers Supply Co. (the "SELLER", and together with each
other Subsidiary of United Stationers Inc. from time to time added as a seller
thereunder pursuant to Section 9.13, the "SELLERS")), USFS, and USFS, as
Servicer, have entered into a Second Amended and Restated Receivables Sale
Agreement, dated as of the date hereof (as amended, supplemented or otherwise
modified and in effect from time to time, the "USSC RECEIVABLES SALE
AGREEMENT"), pursuant to which USSC will sell to USFS and USFS will purchase
from USSC Receivables and Receivables Property.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 CERTAIN DEFINED TERMS. (a) As used in this Agreement,
the following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms defined):
"ABR" means, for any day, rate per annum equal to the greater of (a)
the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. Any change in the ABR due to a change in the
Prime Rate or the Federal Funds Effective Rate shall be effective as of the
opening of business on the effective day of such change in the Prime Rate or the
Federal Funds Effective Rate.
"ADDITIONAL SELLER SUPPLEMENT" means an instrument substantially in
the form of Exhibit B hereto pursuant to which a Subsidiary of United Stationers
Inc. becomes a Seller party hereto.
"AUTHORIZED OFFICERS" means those officers of USFS designated in
Schedule I hereto (or in such other Schedule as may be delivered by USFS to the
other parties hereto from time to time) as duly authorized to execute and
deliver this Agreement and any instruments or documents in connection herewith
on behalf of USFS and to take, from time to time, all other actions on behalf of
USFS in connection herewith.
"CLOSING DATE" means March 28, 2003.
"CODE" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder or any successor statute and related regulations.
"COMPANY" has the meaning specified in the recitals hereto.
"CONTRACT" means a contract between any Seller and any Person pursuant
to or under which such Person shall be obligated to make payments to such
Seller.
"CONTRIBUTED NOTE" means that certain subordinated promissory note
executed by the Company dated April 3, 1998 in the original principal amount of
$47,227,059 in favor of USSC and contributed by USSC to USFS.
"DISCOUNTED PERCENTAGE" has the meaning specified in Schedule VII
hereto.
"DOCUMENTS" has the meaning specified in Section 5.1(r)(v)(B).
"EARLY TERMINATION" has the meaning specified in Section 6.1.
"EFFECTIVE DATE" means (i) with respect to each Seller as of the
Closing Date, the Closing Date and (ii) with respect to any Subsidiary of United
Stationers Inc.
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added as a Seller pursuant to Section 9.13 hereof subsequent to the date hereof,
any Seller Addition Date with respect to each such Subsidiary.
"ERISA AFFILIATE" means, with respect to any Person, any trade or
business (whether or not incorporated) that is a member of a group of which such
Person is a member and which is treated as a single employer under Section 414
of the Code.
"EXCLUDED RECEIVABLES PAYMENT" means any payment made by an Obligor
with respect to an Excluded Receivable.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, for any period, a
fluctuating interest rate per annum for each day during such period equal to (a)
the weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the preceding
Business Day) by the Federal Reserve Bank of
New York in the Composite Closing
Quotations for U.S. Government Securities; or (b) if such rate is not so
published for any day which is a Business Day, the average of the quotations at
approximately 10:30 a.m. (Chicago time) for such day on such transactions
received by Bank One, NA (Main Office Chicago) from three federal funds brokers
of recognized standing selected by it.
"FIRST TIER SALE RIGHTS" means, with respect to the USSC Receivables
Sale Agreement, (A) all property assigned thereunder and all rights of USFS to
receive monies due and to become due under or pursuant to such agreement,
whether payable as fees, expenses, costs or otherwise, (B) all rights of USFS to
receive proceeds of any insurance, indemnity, warranty or guaranty with respect
to such agreement, (C) claims of USFS for damages arising out of or for breach
of or default under such agreement, (D) the right of USFS to amend, waive or
terminate such agreement, to perform thereunder and to compel performance and
otherwise exercise all remedies thereunder, (E) all other rights, remedies,
powers, privileges and claims of USFS under or in connection with such agreement
(whether arising pursuant to such agreement or otherwise available to USFS at
law or in equity), including the rights of USFS to enforce such agreement and to
give or withhold any and all consents, requests, notices, directions, approvals,
extensions or waivers under or in connection therewith and (F) all monies due or
to become due and all amounts received with respect to the items listed in
clauses (A) through (F) and all proceeds (including, without limitation,
whatever is received upon the sale, exchange, collection or other disposition of
the foregoing and all "proceeds" as defined in Section 9-102 of the UCC as in
effect in the State of
New York) thereof, including all Recoveries relating
thereto.
"INDEMNIFIED AMOUNTS" has the meaning specified in Section 7.1.
"INITIAL SUBORDINATED NOTE AMOUNT" has the meaning specified in
Section 8.1(b).
"LIEN" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest
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of a vendor or a lessor under any conditional sale agreement, capital lease or
title retention agreement relating to such asset and (c) in the case of
securities, any purchase option, call or other similar right of a third party
with respect to such securities; provided, however, that if a lien is imposed
under Section 412(n) of the Code or Section 302(f) of ERISA for a failure to
make a required installment or other payment to a plan to which Section 412(n)
of the Code or Section 302(f) of ERISA applies, then such lien shall not be
treated as a "Lien" from and after the time any Person who is obligated to make
such payment pays to such plan the amount of such lien determined under Section
412(n)(3) of the Code or Section 302(f)(3) of ERISA, as the case may be, and
provides to the Trustee, any Agent and each Rating Agency written evidence
reasonably satisfactory to the Rating Agencies of the release of such lien, or
such lien expires pursuant to Section 412(n)(4)(B) of the Code or Section
302(f)(4)(B) of ERISA.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, which is covered by Title IV of ERISA and to which
United Stationers, Inc. or any member of the Controlled Group (as defined in the
Series 2003-1 Supplement) is obligated to make contributions.
"ORIGINAL AGREEMENT" has the meaning specified in the recitals hereto.
"OUTSTANDING SALE PRICE AMOUNT" means, at any time with respect to
USFS, the aggregate Purchase Price received by USFS with respect to the
aggregate outstanding Principal Amount at such time of the Purchased
Receivables.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"PAYMENT DATE" has the meaning specified in Section 2.3(a).
"PLAN" means an employee pension benefit plan, excluding any
Multiemployer Plan, which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code as to
which United Stationers, Inc. or any member of the Controlled Group (as defined
in the Series 2003-1 Supplement) may have any liability.
"POOLING AGREEMENT" means the Second Amended and Restated Pooling
Agreement, dated as of March 28, 2003, among the Company, the Servicer and Bank
One, NA (Main Office Chicago), as Trustee, as such agreement may be further
amended, supplemented, waived, or otherwise modified from time to time,
including, without limitation, the Series 2003-1 Supplement and the Series
2000-2 Supplement.
"POTENTIAL PURCHASE TERMINATION EVENT" means any condition or act
specified in Section 6.1 that, with the giving of notice or the lapse of time or
both, would become a Purchase Termination Event.
"PRIME RATE" means a rate per annum equal to the prime rate of
interest announced from time to time by Bank One, NA (Main Office Chicago) or
its parent
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(which is not necessarily the lowest rate charged to any customer), changing
when and as said prime rate changes.
"PURCHASE PRICE" has the meaning specified in Section 2.2.
"PURCHASE TERMINATION DATE" means the date on which the Company's
obligation to purchase Receivables from USFS shall terminate, which shall be the
date on which an Early Termination occurs with respect to USFS.
"PURCHASE TERMINATION EVENT" has the meaning specified in Section 6.1.
"PURCHASED RECEIVABLE" means, at any time, any Receivable sold to the
Company by USFS pursuant to, and in accordance with the terms of, this Agreement
and not theretofore resold to USFS pursuant to Section 2.1(b) or 2.6.
"PURCHASED RECEIVABLES PERCENTAGE" means, with respect to any Seller
as to which USSC has submitted a Seller Termination Request, the percentage
equivalent of a fraction, the numerator of which is an amount equal to the
aggregate outstanding Principal Amount of Purchased Receivables sold by such
Seller as of the applicable Seller Termination Request Date, and the denominator
of which is an amount equal to the aggregate outstanding Principal Amount of all
Purchased Receivables as of such date.
"RECEIVABLE" means the indebtedness and payment obligations of any
Person to a Seller (including, without limitation, obligations constituting an
account or general intangible or evidenced by a note, instrument, contract,
security agreement, chattel paper or other evidence of indebtedness or security)
arising from a sale of merchandise or the provision of services by such Seller,
including, without limitation, any right to payment for goods sold or for
services rendered, and including the right to payment of any interest, sales
taxes, finance charges, returned check or late charges and other obligations of
such Person with respect thereto; provided that, "Receivables" shall not include
Excluded Receivables.
"RECEIVABLES PROPERTY" has the meaning specified in Section 2.1(a).
"RELATED PROPERTY" means, with respect to each Receivable:
(a) all of USFS's interest in the inventory and goods
(including returned or repossessed inventory or goods), if any, relating to the
sale which gave rise to such Receivable;
(b) all other security interests or Liens, and USFS's interest
in the property subject thereto, from time to time purporting to secure payment
of such Receivable, together with all financing statements signed by an Obligor
describing any collateral securing such Receivable;
(c) all guarantees, insurance, letters of credit, supporting
obligations (within the meaning of the UCC) and other agreements or arrangements
of
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whatever character from time to time supporting or securing payment of such
Receivable; and
(d) all contracts and agreements associated with such
Receivable and all books, records and software related to such Receivable;
in the case of clauses (b) and (c), whether pursuant to the contract related to
such Receivable or otherwise or including without limitation, pursuant to any
obligations evidenced by a note, instrument, contract, security agreement,
chattel paper or other evidence of indebtedness or security; and
(e) the proceeds thereof.
"RELEVANT UCC STATE" means each jurisdiction in which the filing of a
UCC financing statement is necessary or desirable to perfect the Company's
interest in the Receivables.
"REPORTABLE EVENT" means any reportable event as defined in Section
4043(b) of ERISA or the regulations issued thereunder with respect to a Plan
(other than a Plan maintained by an ERISA Affiliate which is considered an ERISA
Affiliate only pursuant to subsection (m) or (o) of Section 414 of the Code).
"SEC" means the United States Securities and Exchange Commission.
"SELLER ADDITION DATE" has the meaning specified in Section 3.2.
"SELLER ADJUSTMENT PAYMENT" has the meaning specified in Section 2.5.
"SELLER REPURCHASE PAYMENT" has the meaning specified in Section 2.6.
"SELLER TERMINATION REQUEST" has the meaning specified in Section
9.14(a).
"SELLER TERMINATION REQUEST DATE" has the meaning specified in Section
9.14(a).
"SERIES 2000-2 SUPPLEMENT" means the Second Amended and Restated
Series 2000-2 Supplement, dated as of March 28, 2003 hereof, among the Company,
the Servicer, Bank One, NA (Main Office Chicago), as Trustee, Market Street
Funding Corporation, as Committed Purchaser, and PNC Bank, National Association,
as Administrator, to the Pooling Agreement, as each such agreement may be
further amended, supplemented or otherwise modified from time to time.
"SERIES 2003-1 SUPPLEMENT" means the Amended and Series 2003-1
Supplement, dated as of March 28, 2003 hereof, among the Company, the Servicer
and Bank One, NA (Main Office Chicago), as Funding Agent, Trustee and APA Bank,
and Falcon Asset Securitization Corporation, as Initial Purchaser, to the
Pooling Agreement,
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as each such agreement may be further amended, supplemented or otherwise
modified from time to time.
"SUBORDINATED NOTE" has the meaning specified in Section 8.1.
"UCC CERTIFICATE" means a certificate substantially in the form of
Exhibit C hereto.
"
USFS RECEIVABLES SALE AGREEMENT" has the meaning specified in the
recitals hereto.
"USFS SUBORDINATED NOTE" has the meaning specified in Section 8.1 of
the USSC Receivables Sale Agreement.
"USSC RECEIVABLES SALE AGREEMENT" has the meaning specified in the
recitals hereto.
"WITHDRAWAL LIABILITIES" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
(b) All capitalized terms used herein and not otherwise
defined have the meanings assigned to such terms in Section 1.1 of the Pooling
Agreement.
Section 1.2 ACCOUNTING AND UCC TERMS. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP; and all
terms used in Article 9 of the UCC that are used but not specifically defined
herein are used herein as defined therein.
Section 1.3 OTHER TERMS. The words "herein", "hereof", and
"hereunder" and words of similar import refer to this Agreement as a whole,
including the exhibits and schedules hereto, as the same may from time to time
be amended or supplemented, and not to any particular section, subsection or
clause contained in this Agreement, and all references to Sections, subsections,
Exhibits and Schedules shall mean, unless the context clearly indicates
otherwise, the Sections and subsections hereof and the Exhibits and Schedules
attached hereto, the terms of which Exhibits and Schedules are hereby
incorporated into this Agreement. Whenever appropriate, in the context, terms
used herein in the singular also include the plural, and vice versa.
Section 1.4 COMPUTATION OF TIME PERIODS. In this Agreement, in the
computation of a period of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".
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ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
Section 2.1 PURCHASE AND SALE OF RECEIVABLES. (a) USFS hereby
sells, assigns, transfers and conveys to the Company, without recourse (except
to the limited extent provided herein), all its respective right, title and
interest in, to and under (i) all Receivables now existing and hereafter arising
from time to time, (ii) all payment and enforcement rights (but none of the
obligations) with respect to such Receivables, (iii) all Related Property in
respect of such Receivables, (iv) all Collections with respect to the foregoing
clauses (i), (ii) and (iii) (including any such Collections in any Lockboxes or
Lockbox Accounts), (v) each Lockbox and Lockbox Account (vi) the USSC
Receivables Sale Agreement and First Tier Sale Rights and (vii) all "proceeds"
(as defined in Section 9-102 of the UCC) of the foregoing (the items described
in the foregoing clauses (ii) through (vi) are hereinafter collectively referred
to as the "RECEIVABLES PROPERTY").
(b) On each applicable Effective Date and on the date of
creation of each newly created Receivable (but only so long as no Early
Termination with respect to USFS shall have occurred and be continuing), all of
USFS's right, title and interest in, to and under (i) in the case of each such
Effective Date, all then existing Receivables and all Receivables Property in
respect of such Receivables and (ii) in the case of each such date of creation,
all such newly created Receivables and all Receivables Property in respect of
such Receivables shall be immediately and automatically sold, assigned,
transferred and conveyed to the Company pursuant to paragraph (a) above without
any further action by USFS or any other Person. If USFS shall not have received
payment from the Company of the Purchase Price for any newly created Receivable
and the related Receivables Property on the Payment Date therefor in accordance
with the terms of Section 2.3(b), such newly created Receivable and the
Receivables Property with respect thereto shall, upon receipt of notice from
USFS of such failure to receive payment, immediately and automatically be sold,
assigned, transferred and reconveyed by the Company to USFS without any further
action by the Company or any other Person.
(c) The parties to this Agreement intend that the transactions
contemplated by Sections 2.1(a) and (b) hereby shall be, and shall be treated
as, a purchase by the Company and a sale by USFS of the Purchased Receivables
and the Receivables Property in respect thereof and not a loan secured by such
Purchased Receivables and Receivables Property. All sales of Receivables and
Receivables Property by USFS hereunder shall be without recourse to, or
representation or warranty of any kind (express or implied) by, USFS, except as
otherwise specifically provided herein. The foregoing sale, assignment, transfer
and conveyance does not constitute and is not intended to result in a creation
or assumption by the Company of any obligation of USFS or any other Person in
connection with the Receivables, the Receivables Property or any agreement or
instrument relating thereto, including any obligation to any Obligor. If this
Agreement does not constitute a valid sale, assignment, transfer and conveyance
of all right, title and interest of USFS in, to and under the Purchased
Receivables and the
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Receivables Property in respect thereof despite the intent of the parties
hereto, the parties agree that this Agreement shall constitute a security
agreement under the UCC and applicable law. For this purpose and without being
in derogation of the parties' intent as expressed in this Section 2.1(c), USFS
hereby grants a "security interest" (as defined in the UCC) in the Purchased
Receivables, the Receivables Property in respect thereof and all proceeds
thereof to the Company to secure the prompt and complete payment of a loan
deemed to have been made in an amount equal to the aggregate Purchase Price of
the Purchased Receivables together with all other obligations of USFS hereunder.
The Company and its assigns shall have, in addition to the rights and remedies
which they may have under this Agreement, all other rights and remedies provided
to a secured creditor under the UCC and other applicable law, which rights and
remedies shall be cumulative.
(d) In connection with the foregoing conveyances, USFS agrees
to record and file, at its own expense, financing statements (and continuation
statements with respect to such financing statements when applicable) with
respect to the Receivables and Receivables Property now existing and hereafter
acquired by the Company from USFS meeting the requirements of applicable state
law in such manner and in such jurisdictions as are necessary to perfect the
Company's ownership or security interest in the Receivables and Receivables
Property and to deliver evidence of the execution and delivery of such financing
statements to the Company on or prior to the related Effective Date.
(e) In connection with the foregoing conveyances, USFS agrees
at its own expense, as agent of the Company, to indicate, or cause to be
indicated, on the computer files containing a master database of Receivables
that all Receivables included in such files and all Receivables Property, have
been sold to the Company in accordance with this Agreement.
Section 2.2 PURCHASE PRICE. The amount payable by the Company to
USFS (the "Purchase Price") for Receivables and Receivables Property on any
Payment Date under this Agreement shall be equal to the product of (a) the
aggregate outstanding Principal Amount of such Receivables as set forth in the
applicable Required Report and (b) the Discounted Percentage.
Section 2.3 PAYMENT OF PURCHASE PRICE. (a) Upon the fulfillment of
the conditions set forth in Article III, the Purchase Price for Receivables and
the Receivables Property shall be paid or provided for by the Company in the
manner provided below on each day for which a Required Report is delivered
pursuant to Section 4.1 of the Servicing Agreement (each such day, a "Payment
Date") in respect of a Reported Period (which Required Report shall specify the
Principal Amount of Receivables being sold on such Payment Date, the aggregate
Purchase Price for such Receivables and the components of payment as provided in
paragraph (b) below). USFS hereby appoints the Servicer as its agent to receive
payments of the Purchase Price of the Receivables and the Receivables Property
sold to the Company and hereby authorizes the Company to make all such payments
due to USFS directly to an account of, or as otherwise directed by, the
Servicer. The Servicer hereby accepts and agrees to such
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appointment. All payments under this Agreement shall be made not later than
11:00 a.m. (Chicago time) on the date specified therefor in Dollars in same day
funds or by check, as the Servicer shall elect, and to the bank account
designated in writing by the Servicer to the Company.
(b) The Purchase Price for Receivables and Receivables
Property shall be paid by the Company on each Payment Date as follows:
(i) by netting the amount of any Seller Adjustment
Payments or Seller Repurchase Payments pursuant to Section 2.5 or 2.6,
respectively, against such Purchase Price;
(ii) to the extent available for such purpose, in
cash from the net proceeds of transfers of interests in Purchased
Receivables by the Company to other Persons including, without
limitation, the Trustee pursuant to the Pooling Agreement;
(iii) at the option of the Company, by means of an
addition to the principal amount of the Subordinated Note in an
aggregate amount equal to the remaining portion of the Purchase Price;
provided, however, that with respect to any Seller, the outstanding
principal amount of such Seller's interest in the Subordinated Note
shall not at any time exceed 25% of the Outstanding Sale Price Amount
with respect to such Seller (giving effect to such addition); provided
further that the Company may pay the Purchase Price by means of
additions to the principal amount of the Subordinated Note only if, at
the time of such payment and after giving effect thereto, the fair
market value of the Company's assets, including, without limitation,
any beneficial interests held by the Company in the Trust and the
Trust Assets is greater than the amount of its liabilities including,
without limitation, its liabilities on the Subordinated Note and any
amount due and payable by the Company under the Pooling Agreement and
the other Transaction Documents. Any such addition to the principal
amount of the USFS Subordinated Note shall be allocated among the
Sellers (PRO RATA according to the Principal Amount of Receivables
sold by each Seller) by the Servicer in accordance with the provisions
of this Section 2.3(b)(iii) and Section 8.1. The Servicer may evidence
such additional principal amounts by recording the date and amount
thereof on the grid attached to such Subordinated Note, provided that
the failure to make any such recordation or any error in such grid
shall not adversely affect USFS's rights; and
(iv) in cash from the proceeds of capital
contributed by USFS to the Company, if any, in respect of its equity
interest in the Company.
(c) The Servicer shall be responsible, in its sole discretion
but in accordance with the preceding Section 2.3(b), for allocating among the
Sellers the
10
payment of the Purchase Price for Receivables and any amounts netted therefrom
pursuant to Section 2.3(b)(i), which allocation shall be, subject to the first
proviso contained in Section 2.3(b)(iii), either in the form of cash received
from the Company or as an addition to the principal amount of a Seller's
interest in the Subordinated Note.
(d) Whenever any payment to be made under this Agreement shall
be stated to be due on a day other than a Business Day, such payment shall be
made on the next succeeding Business Day. Amounts not paid when due in
accordance with the terms of this Agreement shall bear interest at a rate equal
at all times to the ABR PLUS 2%, payable on demand.
Section 2.4 NO REPURCHASE. Except to the extent expressly set forth
herein, USFS shall have no right or obligation under this Agreement, by
implication or otherwise, to repurchase from the Company any Purchased
Receivables or Receivables Property or to rescind or otherwise retroactively
affect any purchase of any Purchased Receivables or Receivables Property after
the Payment Date relating thereto.
Section 2.5 REBATES, ADJUSTMENTS, RETURNS AND REDUCTIONS;
MODIFICATIONS. From time to time, a Seller under the USSC Receivables Sale
Agreement may make Dilution Adjustments to Receivables in accordance with this
Section 2.5 and Section 5.3(c). USFS agrees to pay to the Company in cash, on
the first Business Day immediately succeeding the date of the grant of any
Dilution Adjustment (regardless of which Seller shall have granted such Dilution
Adjustment), the amount of any such Dilution Adjustment (a "SELLER ADJUSTMENT
PAYMENT"); PROVIDED that, prior to the occurrence of any Early Termination with
respect to all Sellers, any such Seller Adjustment Payment due to the Company on
any Payment Date shall, on such Payment Date, be netted against the Purchase
Price of newly created Receivables in accordance with Section 2.3(b)(i) to the
extent of such Purchase Price and the remaining amount of such Seller Adjustment
Payment due to the Company after such netting, if any, shall be paid to the
Company on such date in cash. The amount of any Dilution Adjustment made with
respect to any Reported Period shall be set forth on the Required Report
prepared with respect to such Reported Period.
Section 2.6 LIMITED REPURCHASE OBLIGATIONS. With respect to
Receivables conveyed to the Company on or after the date hereof, in the event
that (i) any representation or warranty contained in Section 4.2 in respect of
any Receivable transferred to the Company is not true and correct in any
material respect on the applicable Payment Date, or (ii) there is a breach of
any covenant contained in Section 5.1(d), (g) or (h) or Section 5.3 with respect
to any Receivable and such breach has a material adverse effect on the Company's
interest in such Receivable or (iii) the Company's interest in any such
Receivable is not a first priority perfected ownership or security interest at
any time as a result of any action taken by, or any failure to take action by,
USFS, then USFS agrees to pay to the Company in cash an amount equal to the
Purchase Price of such Receivable (whether the Company paid such Purchase Price
in cash or otherwise) less Collections received by the Company in respect of
such Receivable pursuant to the Pooling Agreement, such payment to occur no
later than the next occurring Payment Date; provided that, prior to any Early
Termination with respect
11
to all Sellers, any such payment due and owing to the Company on such Payment
Date shall be netted against the Purchase Price of newly created Receivables in
accordance with Section 2.3(b)(i) to the extent of such Purchase Price and the
remaining amount of such payment due to the Company after such netting, if any,
shall be paid to the Company in cash to the extent still unpaid on such Payment
Date. Any payment by any Seller pursuant to this Section 2.6 is referred to as a
"SELLER REPURCHASE PAYMENT." Simultaneously with any Seller Repurchase Payment
with respect to any Receivable, such Receivable and the Receivables Property
with respect thereto shall immediately and automatically be sold, assigned,
transferred and conveyed by the Company to USFS without any further action by
the Company or any other Person.
Section 2.7 OBLIGATIONS UNAFFECTED. The obligations of USFS to the
Company under this Agreement shall not be affected by reason of any invalidity,
illegality or irregularity of any Receivable or any sale of a Receivable.
Section 2.8 CERTAIN CHARGES. USFS and the Company agree that late
charge revenue, reversals of discounts, other fees and charges and other similar
items, whenever created, accrued in respect of Purchased Receivables shall be
the property of the Company notwithstanding the occurrence of an Early
Termination and all Collections with respect thereto shall continue to be
allocated and treated as Collections in respect of Purchased Receivables.
Section 2.9 INTENTIONALLY OMITTED.
Section 2.10 FURTHER ASSURANCES. From time to time at the request of
USFS, the Company shall deliver to USFS such documents, assignments, releases
and instruments of termination as USFS may reasonably request to evidence the
reconveyance by the Company to USFS of a Receivable pursuant to the terms of
Section 2.1(b) or Section 2.6, PROVIDED that the Company shall have been paid
all amounts due thereunder; and the Company and the Servicer shall take such
action as USFS may reasonably request, at the expense of USFS, to assure that
any such Receivable, the Related Property and Collections with respect thereto
do not remain commingled with other Collections hereunder.
Section 2.11 ADDITIONAL REPURCHASE OBLIGATIONS. With respect to
Receivables conveyed to the Company on or after the Closing Date, in the event
of any breach by USFS of any of the representations and warranties set forth in
Section 4.2(a), (b), (c), (e), (f) or (g), as of the date made, which breach has
a material adverse effect on the interests of the Company in such Receivables or
the related Receivables Property, then the Company, by notice then given in
writing to USFS, may direct USFS to purchase all Receivables and Receivables
Property sold by USFS to the Company and USFS shall be obligated to make such
purchase on the next Distribution Date occurring at least five Business Days
after receipt of such notice on the terms and conditions set forth in Section
2.11(b) below; PROVIDED, HOWEVER, that no such purchase shall be required to be
made if, by such Distribution Date, the representations and warranties contained
in Sections 4.2(a), (b), (c), (e), (f) or (g) shall be true and correct in all
material respects, and any material adverse effect on the Company caused thereby
has been cured.
12
(a) USFS shall, as the purchase price for the Receivables and
Receivables Property to be purchased pursuant to Section 2.11(a) above, pay to
the Company, on the Business Day preceding such Distribution Date, an amount
equal to the Purchase Price of the relevant Purchased Receivables, less
Collections received by the Company pursuant to the Pooling Agreement in respect
of such Purchased Receivables as of such Distribution Date. Upon payment of such
amount, in immediately available funds, to the Company, the Company's rights
with respect to such Purchased Receivables shall terminate and such interest
therein will be transferred to USFS and the Company shall have no further rights
with respect thereto. If the Company gives notice directing USFS to purchase the
Purchased Receivables as provided above, the obligation of USFS to purchase the
Purchased Receivables pursuant to this Section 2.11 shall upon satisfaction
thereof constitute the sole remedy with respect to an event of the type
specified in the first sentence of each of Section 2.11(a)(i) and 2.11(a)(ii)
available to the Company.
ARTICLE III
CONDITIONS TO PURCHASES
Section 3.1 CONDITIONS PRECEDENT TO THE COMPANY'S INITIAL PURCHASE.
The obligation of the Company to purchase Receivables and Receivables Property
hereunder on the Effective Date from USFS is subject to the conditions precedent
that the Company shall have received on or before the date of such purchase the
following, each (unless otherwise indicated) dated the Closing Date of such sale
and in form and substance reasonably satisfactory to the Company:
(a) RESOLUTIONS.Copies of the resolutions of the Board of
Directors of USFS approving this Agreement and the other Transaction Documents
to be delivered by USFS and the transactions contemplated thereby, certified by
the Secretary or Assistant Secretary of USFS;
(b) SECRETARY'S CERTIFICATE. A certificate of the Secretary or
Assistant Secretary of USFS certifying the names and true signatures of the
officers authorized on behalf of USFS to sign this Agreement and the other
Transaction Documents to be delivered by it (on which certificates the Company
may conclusively rely until such time as the Company shall receive from USFS a
revised certificate with respect to USFS meeting the requirements of this
subsection (b));
(c) CORPORATE DOCUMENTS. The certificate of incorporation of
USFS, duly certified by the Secretary of State of USFS's jurisdiction of
formation, as of a recent date acceptable to the Company, together with (i) a
certificate of good standing; as of a recent date, from such Secretary of State,
and (ii) a copy of the limited liability company agreement of USFS, duly
certified by the Secretary or an Assistant Secretary of USFS;
(d) UCC CERTIFICATE, UCC FINANCING STATEMENTS. (i) A UCC
Certificate duly executed by a Responsible Officer of USFS and dated the Closing
Date
13
and (ii) executed or authorized copies of such proper financing statements, in
form suitable for filing, naming USFS as the seller, the Company as the
purchaser and the Trustee on behalf of the Holders as assignee of the
Receivables, the Receivables Property, USFS's rights under the USSC Receivables
Sale Agreement and all proceeds thereof in each jurisdiction in which the
Company (or any of its assignees) deems it necessary or desirable to perfect the
Company's ownership and/or security interest in all Receivables and Receivables
Property, USFS's rights under the USSC Receivables Sale Agreement and all
proceeds thereof under the UCC or any comparable law of such jurisdiction;
(e) UCC SEARCHES. A written search report listing all
effective financing statements that name USFS as debtor or assignor and that are
filed in the jurisdictions in which filings were made pursuant to Section 3.1(d)
or the financing statements previously executed by USSC in favor of the Company
and in any other jurisdictions that the Company determines are necessary or
appropriate, together with copies of such financing statements (none of which,
except for those described in Section 3.1(d) or the financing statements
previously executed by USFS in favor of the Company shall cover any Receivables
or Receivables Property), and tax and judgment lien searches showing no such
liens that are not permitted by the Transaction Documents;
(f) TRANSACTION DOCUMENTS. Original copies, executed by each
of the parties thereto, of this Agreement and each of the other Transaction
Documents to be executed and delivered in connection herewith;
(g) GOOD STANDING CERTIFICATES. Copies of certificates of
compliance, of status or of good standing, dated as of a recent date, from the
Secretary of State or other appropriate authority of such jurisdiction, with
respect to USFS, in each State where the ownership, lease or operation of
property or the conduct of business requires it to qualify as a foreign entity,
except where the failure to so qualify would not reasonably be expected to have
a Material Adverse Effect;
(h) CONSENTS. Certificates dated the date hereof of a
Responsible Officer of USFS either (i) attaching copies of all material
consents, licenses and approvals required in connection with the execution,
delivery and performance of USFS of this Agreement and the other documents to be
delivered by it hereunder, and the validity and enforceability of thereof
against USFS, and such consents, licenses and approvals shall be in full force
and effect or (ii) stating that no such consents, licenses or approvals are so
required;
(i) LEGAL OPINIONS. One or more legal opinions from counsel to
USFS and counsel to the Company to the effect that:
(A) the sales of Receivables by USFS to the Company
pursuant to this Agreement are true sales and that such
Receivables would not be property of USFS's bankruptcy estate;
14
(B) a court should not order the substantive
consolidation of the assets and liabilities of the Company on
the one hand with those of any Seller or USFS, on the other
hand;
(C) to the effect that USFS and the Company, as
applicable, has all approvals, judicial, regulatory, legal or
otherwise, needed to execute, deliver and perform each
Transaction Document to which it is a party and that no
conflict or default will occur as a result of the execution,
delivery and performance thereof;
(D) to the effect that the Company has a valid and
perfected ownership or security interest in the Receivables and
Receivables Property; and
(E) addressing other customary matters. All of the
legal opinions referred to in this Section 3.1(i) shall be
addressed to the Trustee and any other Person reasonably
requested by the Company.
(j) RESERVED.
Section 3.2 CONDITIONS PRECEDENT TO THE ADDITION OF A SELLER. No
Subsidiary of United Stationers Inc. approved by the Company as an additional
Seller pursuant to Section 9.13 shall be added as a Seller hereunder unless the
conditions set forth below shall have been satisfied on or before the date
designated for the addition of such Seller (the "SELLER ADDITION DATE"):
(a) ADDITIONAL SELLER SUPPLEMENT, UCC CERTIFICATE. The Company
shall have received (with a copy for the Trustee) (i) an Additional Seller
Supplement duly executed and delivered by such Seller and (ii) a UCC Certificate
duly executed by a Responsible Officer of such Seller and dated the related
Seller Addition Date.
(b) RESOLUTIONS. The Company shall have received copies of
duly adopted resolutions of the Board of Directors of such Seller as in effect
on the related Seller Addition Date and in form and substance reasonably
satisfactory to the Company, authorizing this Agreement, the documents to be
delivered by such Seller hereunder and the transactions contemplated hereby,
certified by the Secretary or Assistant Secretary of such Seller.
(c) SECRETARY'S CERTIFICATE. The Company shall have received
duly executed certificates of the Secretary or an Assistant Secretary of such
Seller, dated the related Seller Addition Date, certifying the names and true
signatures of the officers authorized on behalf of such Seller to sign the
Additional Seller Supplement or any instruments or documents in connection with
this Agreement.
15
(d) CORPORATE DOCUMENTS. The Company shall have received the
certificate or articles of incorporation (or equivalent charter document) of
such Seller, duly certified by the Secretary of State of such Seller's
jurisdiction of formation, as of a recent date acceptable to the Company,
together with (i) a certificate of good standing, as of a recent date, from such
Secretary of State and (ii) a copy of the by-laws (or equivalent governance
document) of such Seller, duly certified by the Secretary or an Assistant
Secretary of such Seller.
(e) LOCKBOX AGREEMENT. A Lockbox Account with respect to
Receivables to be sold by such Seller shall have been established in the name of
the Company (or established in the name of such seller and assigned to the
Company which will then assign such Lockbox Account to the Company), and the
Servicer shall have delivered with respect to such Lockbox Account a Lockbox
Agreement in substantially the form of Exhibit A to the Pooling Agreement.
(f) UCC SEARCHES. The Company shall have received reports of
UCC and other searches listing such Seller as debtor or assignor reflecting the
absence of Liens on the Receivables and Receivables Property, and except for
Liens as to which USFS has received UCC termination statements in proper form
for filing.
(g) UCC FINANCING STATEMENTS. The Company shall have
authorized, filed and recorded, at its own expense, UCC-1 financing statements
naming the Company as purchaser and such Seller as seller with respect to the
Receivables and the Receivables Property (excluding returned merchandise) in
such manner and in such jurisdictions as are necessary or desirable to perfect
the Company 's ownership or security interest therein under the UCC and
delivered evidence of such filings to the Company; and all other action
necessary or desirable, in the opinion of the Company, to perfect the Company's
ownership or security interest in the Receivables and Receivables Property shall
have been duly taken.
(h) INTENTIONALLY OMITTED.
(i) OPINIONS. The Company shall have received (i) legal
opinions on behalf of such Seller as to general corporate matters of such Seller
(including, without limitation, an opinion as to the validity and perfection of
the Company 's interest in the Purchased Receivables) and (ii) confirmation (A)
as to the "true sale" nature of the sale of Receivables of such Seller hereunder
and (B) as to the absence of substantive consolidation issues between such
Seller, United Stationers Inc., USSC and USFS on the one hand and the Company on
the other hand, all in form and substance reasonably satisfactory to USFS. Such
legal opinions and confirmation shall be addressed to the Trustee and any other
Person reasonably requested by the Company.
(j) GOOD STANDING CERTIFICATES. The Company shall have
received copies of certificates of compliance, of status or of good standing,
dated as of a recent date, from the Secretary of State or other appropriate
authority of such jurisdiction, with respect to such Seller, in each State where
the ownership, lease or operation of property or the conduct of business
requires it to qualify as a foreign entity, except where
16
the failure to so qualify would not reasonably be expected to have a Material
Adverse Effect.
(k) CONSENTS. The Company shall have received, certificates
dated the date hereof of a Responsible Officer of such Seller either (i)
attaching copies of all material consents, licenses and approvals required in
connection with the execution, delivery and performance by such Seller of the
Additional Seller Supplement, this Agreement and each other document to be
delivered by it thereunder, and the validity and enforceability thereof against
such Seller, and such consents, licenses and approvals shall be in full force
and effect or (ii) stating that no such consents, licenses or approvals are so
required.
(l) GUARANTY. USFS shall have executed and delivered to the
Company an instrument in form and substance satisfactory to the Company, and the
Trustee, on behalf of the Holders, pursuant to which USFS shall guarantee the
obligations of such additional Seller under this Agreement.
Section 3.3 CONDITIONS PRECEDENT TO EACH OF THE COMPANY'S PURCHASES
OF RECEIVABLES. The obligation of the Company to pay for any Receivable and the
Receivables Property with respect thereto on each Payment Date (including the
Effective Date) shall be subject to the further conditions precedent that, on
and as of such Payment Date:
(a) the following statements shall be true (and the acceptance
by USFS of the Purchase Price for such Receivable on such Payment Date shall
constitute a representation and warranty by USFS that on such Payment Date such
statements are true):
(i) the representations and warranties of USFS
contained in Section 4.2 shall be true and correct in all material
respects on and as of such Payment Date as though made on and as of
such date except to the extent any such representation or warranty is
expressly made only as of another date (in which case it shall be true
and correct in all material respects on and as of such other date);
(ii) after giving effect to such purchase, no (A)
Early Termination or (B) Purchase Termination Event (after giving
effect to any applicable grace period) shall have occurred and be
continuing; and
(iii) there has been no material adverse change
since the date of this Agreement in the collectibility of the
Receivables taken as a whole;
(b) the Company and the Trustee shall be satisfied that USFS's
systems, procedures and record keeping relating to the Purchased Receivables
remain in all material respects sufficient and satisfactory in order to permit
the purchase and administration of the Purchased Receivables in accordance with
the terms and intent of this Agreement;
17
(c) the Company shall have received payment in full of all
amounts for which payment is due from USFS pursuant to Sections 2.5, 2.6 or 7.1;
(d) the Company shall have received such other approvals,
opinions or documents as the Company may reasonably request; and
(e) USFS shall have complied with all of its covenants in all
material respects and satisfied all of its obligations in all material respects
under this Agreement required to be complied with or satisfied as of such date;
PROVIDED, HOWEVER, that the failure of USFS to satisfy any of the foregoing
conditions shall not prevent USFS from subsequently selling Receivables upon
satisfaction of all such conditions or exercising its rights under Section
2.1(b); PROVIDED, FURTHER, that notwithstanding the foregoing conditions
precedent, upon payment of the Purchase Price for any Receivable (whether by
payment of cash, through an increase in the amounts outstanding under the
Subordinated Note, by offset of amounts owed to Buyer and/or by capital
contributions), title to such Receivable and the Receivables Property with
respect thereto shall vest in the Company, whether or not the conditions
precedent to the Company's obligation to pay for such Receivable were in fact
satisfied. The failure of USFS to satisfy any of the foregoing conditions
precedent, however, shall give rise to a right of USFS to rescind the related
purchase and direct USFS to pay to the Company an amount equal to the Purchase
Price that shall have been made with respect to any Receivables related thereto.
Section 3.4 CONDITION PRECEDENT TO USFS'S OBLIGATIONS. The
obligation of USFS on each Payment Date (including on the Effective Date) shall
be subject to the condition precedent that, on such date, the following
statement shall be true (and the payment by the Company of the Purchase Price
for such Receivable on such date shall constitute a representation and warranty
by the Company that on such Payment Date such statement is true): (i) no Early
Amortization Event or Potential Early Amortization Event of a type, with respect
to the Company, set forth in Section 7.1(a) of the Pooling Agreement shall have
occurred and be continuing and (ii) no Early Termination, as set forth in
Section 6 of the USSC Receivables Sale Agreement, shall have occurred.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants as to itself for the benefit of USFS as follows:
(a) It (i) is a limited liability company duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
formation, and is duly qualified as a foreign limited liability company and is
in good standing in each jurisdiction in which the ownership of its property or
its business as conducted and proposed to be conducted require such
qualification or in which the failure to so qualify would not reasonably be
expected to have a Material Adverse Effect, (ii) has the requisite
18
limited liability company power and authority to effect the transactions
contemplated hereby, and (iii) has all requisite limited liability company power
and authority and the legal right to own, pledge, mortgage and operate its
properties, and to conduct its business as now or currently proposed to be
conducted.
(b) The execution, delivery and performance by it of this
Agreement and all instruments and documents to be delivered hereunder by it, and
the transactions contemplated hereby and thereby, (i) are within its limited
liability company powers, have been duly authorized by all necessary limited
liability company action, and do not (A) contravene its certificate of
incorporation, memorandum of association or articles of association, (B) violate
any law or regulation or any order or decree of any court or governmental
instrumentality, (C) conflict with or result in the breach of, or constitute a
default under, any indenture, mortgage or deed of trust or any material lease,
agreement or other instrument binding on or affecting it or any of its
respective subsidiaries or any of its material properties or (D) result in or
require the creation or imposition of any Lien except as created or imposed
hereunder or under the Pooling Agreement, and no transaction contemplated hereby
requires compliance on its part with any bulk sales act or similar law, and (ii)
do not require the consent of, authorization by or approval of or notice to or
filing or registration with, any governmental body, agency, authority,
regulatory body or any other Person other than those which have been obtained or
made except for the filing of the financing statements referred to in Article
III hereof, which filings USFS hereby represents shall have been duly made prior
to or substantially contemporaneously with any purchases of Receivables and
Receivables Property and shall at all times be in full force and effect (except
as they may be terminated by the Company). This Agreement has been duly executed
and delivered by the Company and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms except (A) as
such enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors' rights in general,
and (B) as such enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity).
Section 4.2 REPRESENTATIONS AND WARRANTIES OF USFS. USFS hereby
represents and warrants for the benefit of the Company and its assigns on the
Closing Date and on each Payment Date, as follows:
(a) ORGANIZATION AND GOOD STANDING. USFS (i) is an Illinois
limited liability company duly organized or formed and validly existing as a
limited liability company in good standing under the laws of the state of its
formation, as the case may be, (ii) is duly qualified to do business as a
foreign entity and is in good standing in each jurisdiction in which the failure
to so qualify would reasonably be expected to have a Material Adverse Effect and
(iii) has full limited liability company power, authority and legal right to own
its properties and conduct its business as such properties are presently owned
and such business is presently conducted, and to execute, deliver and perform
its obligations under this Agreement.
19
(b) DUE QUALIFICATION. USFS has and holds all power, corporate
or otherwise, and has obtained all necessary licenses, authorizations, consents
and approvals in all jurisdictions in which the ownership or lease of property
or the conduct of its business requires such qualifications, authorizations,
consents, licenses or approvals, except where the failure to preserve and
maintain would not reasonably be expected to have a Material Adverse Effect.
(c) DUE AUTHORIZATION, EXECUTION AND DELIVERY. The execution
and delivery of this Agreement and the other Transaction Documents to which it
is a party and the consummation of the transactions provided for therein have
been duly authorized by USFS by all necessary limited liability company action
on its part. This Agreement and each other Transaction Document to which such
Seller is a party have been duly executed and delivered by such Seller.
(d) NO DEFAULT. USFS is not in default under or with respect
to any of its Contractual Obligations in any respect which would be reasonably
likely to have a Material Adverse Effect with respect to USFS. No (i) Early
Termination or (ii) Potential Purchase Termination Event with respect to a
Purchase Termination Event set forth in Section (g)(ii) of Section 6.01, in each
case with respect to USFS, has occurred and is continuing.
(e) VALID SALE; BINDING OBLIGATIONS.
(i) Each transfer of Receivables and Receivables
Property made pursuant to this Agreement shall constitute a valid
sale, transfer and assignment of (or a valid security interest in) the
Receivables and the Receivables Property to the Company (free and
clear of any Liens) which is perfected and of first priority under
applicable law, enforceable against creditors of, and purchasers from,
USFS;
(ii) This Agreement constitutes and each other
Transaction Document to be signed by USFS when duly executed and
delivered by such Seller will constitute a legal, valid and binding
obligation of USFS enforceable against it in accordance with its
terms, except (A) as such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws now or hereafter in effect affecting
the enforcement of creditors' rights in general, and (B) as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).
(f) NO VIOLATION. The execution, delivery and performance by
such Seller of, and the consummation of the transactions contemplated by, this
Agreement and the other Transaction Documents and the fulfillment of the terms
hereof and thereof will not (i) conflict with, result in any breach of any of
the terms and provisions of, or constitute (with or without notice or lapse of
time or both) a default (which, in the case of clauses (B) and (C) below would
reasonably be expected to cause a
20
Material Adverse Effect) under, (A) the articles of organization and limited
liability company agreement of USFS (or equivalent governance documents), of
organization and limited liability company agreement of USFS, or any shareholder
agreements, member agreements, voting trusts or similar arrangements applicable
to any of its authorized shares or equity interests, (B) any contract,
indenture, loan agreement, mortgage, deed of trust, or, (C) other material
agreement or instrument to which USFS is a party or by which USFS or any of its
material properties is bound, (ii) result in the creation or imposition of any
Lien upon any of its properties pursuant to the terms of any such contract,
indenture, loan agreement, mortgage, deed of trust, or other agreement or
instrument, other than this Agreement and the other Transaction Documents, or
(iii) violate any law or any order, rule, or regulation of any court or of any
federal, state, local or other regulatory body, administrative agency, or other
governmental instrumentality of the United States of America having jurisdiction
over USFS or any of its properties.
(g) NO PROCEEDINGS. There are no actions, suits, proceedings
or investigations at law or in equity (including, without limitation,
injunctions, writs or restraining orders) pending or, to the knowledge of USFS,
threatened against USFS before any court, regulatory body, administrative
agency, arbitrator or other tribunal or governmental instrumentality (i)
asserting the invalidity of this Agreement or any other Transaction Document,
(ii) seeking to prevent the consummation of any of the transactions contemplated
by this Agreement or any other Transaction Document, or (iii) seeking any
determination or ruling that, individually or in the aggregate, materially and
adversely affect (A) the performance by USFS of its obligations under this
Agreement or any other Transaction Document, (B) the validity or enforceability
of this Agreement or any other Transaction Document; (C) the collectibility of
USFS's Receivables taken as a whole or in any material portion thereof or (D)
the interests, rights or remedies of USFS (or its assigns) hereunder or such
Seller's Receivables taken as a whole or in any significant portion thereof.
(h) BULK SALES ACT. No transaction contemplated by this
Agreement or any other Transaction Document with respect to USFS requires
compliance with, or will be subject to avoidance under, any "bulk sales" act or
similar law.
(i) APPROVALS. No authorization or approval or other action
by, and no notice to or filing with or any other act by or in respect of, any
governmental authority or regulatory body in the United States of America or any
other Person is required for the due execution, delivery and performance by USFS
of this Agreement or any other Transaction Document to which it is a party
except for (i) those which have duly been obtained or made and are in full force
and effect on the Closing Date, (ii) those the failure of which to obtain or
make would not reasonably be expected to have a Material Adverse Effect and
(iii) the filing of the UCC financing statements referred to in Article III, all
of which, at the time required in Article III, shall have been duly made and
shall be in full force and effect.
(j) BONA FIDE RECEIVABLES.
21
(i) USFS has no knowledge of any fact which would
lead it to expect that such Receivable will not be paid in full when
due. Each Receivable sold by it hereunder and designated on a Required
Report to be an Eligible Receivable was or will be, as the case may
be, at its respective Payment Date, an Eligible Receivable. The
aggregate outstanding Principal Amount of Receivables so sold by it on
any Payment Date and so designated as Eligible Receivables was or will
be, as the case may be, correctly set forth on the Required Report
with respect to such Payment Date. Each Receivable classified as an
"Eligible Receivable" by USFS in any document or report delivered
hereunder satisfies the requirements of eligibility contained in the
definition of Eligible Receivable.
(ii) Each Receivable, together with any Contract
with respect thereto, is the legal, valid and binding obligation of
the related Obligor thereon, enforceable against such Obligor to pay
the full Principal Amount thereof (and any accrued interest thereon)
in accordance with its terms.
(iii) Each Receivable, together with any contract,
instrument and/or agreement related thereto, does not contravene any
applicable law, rule or regulation (including, without limitation,
laws, rules or regulations relating to truth in lending, fair credit
billing, fair credit reporting, equal credit opportunity, fair debt
collection practices or privacy), which in any way renders such
Receivable (or any contract, instrument and/or agreement related
thereto) unenforceable or would otherwise impair in any material
respect the collectibility of such Receivable.
(iv) USFS has complied in all material respects
with the applicable Policies with regard to each Receivable and the
related contracts, instruments and/or agreements, and has not made any
material change to the Policies, except in accordance with Section
5.3(d).
(k) OFFICE, LOCATION OF RECORDS. The principal place of
business and the chief executive office of USFS are as indicated on Schedule II
hereto. The offices where USFS keeps its records concerning the Receivables and
related Contracts and all purchase orders and other agreements related to the
Receivables are as indicated on Schedule II hereto (or at such other locations,
notified to the Company in accordance with Section 5.1(i), in jurisdictions
where all action required by Sections 5.1(f)(i) has been taken and completed).
Schedule II hereto accurately and correctly sets forth the following information
with respect to USFS (i) its jurisdiction of organization and organizational
structure, (ii) the place where it is "located" for the purposes of Section
9-307 of the UCC, (iii) its organizational identification number assigned to it
by its jurisdiction of organization, (iv) its Federal Employer Identification
Number, (v) its legal name and (vi) each filing office in which a filing by USFS
of a financing statement on Form UCC-l is required to be made in connection with
the transactions contemplated by
22
this Agreement and the other Transaction Documents. USFS has not, within the
period of twelve months prior to its Effective Date, (i) changed the location of
its principal place of business and chief executive office, its legal name or
its organizational structure, (ii) changed its "location" (within the meaning of
Section 9-307 of the UCC of all applicable jurisdictions) or (iii) become a "new
debtor" (as defined in Section 9-102(a)(56) of the UCC of all applicable
jurisdictions) with respect to a currently effective security agreement
previously entered into by any other Person. USFS and has not changed its
jurisdiction of organization or organizational structure.
(l) MARGIN REGULATIONS. No use of any funds obtained by USFS
under this Agreement or the other Transaction Documents will conflict with or
contravene any of Regulations T, U and X promulgated by the Board of Governors
of the Federal Reserve System from time to time.
(m) QUALITY OF TITLE. USFS is the legal and beneficial owner
of each Receivable and all Receivables Property which is to be transferred to
the Company by USFS, and such Receivables and Receivables Property shall be
transferred by USFS free and clear of any Lien (other than any Lien arising
under any other Transaction Document, arising solely as the result of any action
taken by the Company hereunder); prior to such transfer USFS shall have made all
filings under applicable law in each relevant jurisdiction in order to protect
and perfect the Company's ownership or security interest in all Receivables and
Receivables Property against all creditors of, and purchasers from, USFS; and
the Company shall have acquired and shall continue to have maintained a valid
and perfected first priority ownership or security interest in each Receivable
and the Receivables Property free and clear of any Lien (other than any Lien
arising solely as the result of any action taken by the Company hereunder or by
the Trustee); and no effective financing statement or other instrument similar
in effect covering any Receivable, any interest therein or any Receivables
Property with respect thereto is on file in any recording office except such as
may be filed in favor of (i) the applicable Seller in accordance with the
Contracts, (ii) USFS in accordance with the USSC Receivables Sale Agreement and
(iii) the Company pursuant to this Agreement and (iv) the Trustee pursuant to
the Pooling Agreement.
(n) ACCURACY OF INFORMATION. All factual written information
furnished on or after January 1, 2003 by USFS or its Affiliates (other than the
Company) to the Company for purposes of or in connection with any Transaction
Document or any transaction contemplated hereby or thereby is, and all other
such factual, written information hereafter furnished (if prepared by USFS or
any Affiliate or, if not prepared by USFS or any Affiliate, to the extent that
information contained therein was supplied by USFS or any Affiliate) by USFS or
any Affiliate (other than the Company) to the Company pursuant to or in
connection with any Transaction Document shall be, true and accurate in every
material respect on the date such information is stated or certified (unless
such information relates to another date), and such information does not and
will not contain any material misstatement of fact and is not, and shall not be
(as the case may be) incomplete by omitting to state a material fact or any fact
necessary to make the statements contained therein not misleading as of such
date.
23
(o) PROCEEDS BANKS, PAYMENT INSTRUCTIONS. The conditions and
requirements set forth in Section 5.1(c) of this Agreement and Section 2.3 of
the Servicing Agreement have at all times been satisfied and duly performed in
all material respects. The names and addresses of all Lockbox Processors,
together with the account numbers of all Lockbox Accounts at each Lockbox
Processor and the post office box number of each Lockbox are listed on Schedule
III to the USSC Receivables Sale Agreement. The Sellers under the USSC
Receivables Sale Agreement have transferred all of their right, title and
interest in each Lockbox Account to USFS, which will in turn transfer such
interest to the Company. No Seller has granted any Person, other than USFS as
contemplated by this Agreement, dominion and control or "control" (within the
meaning of Section 9-104 of the UCC of all applicable jurisdictions) of any
Lockbox or Lockbox Account, or the right to take dominion and control or
"control" (within the meaning of Section 9-104 of the UCC of all applicable
jurisdictions) of any such Lockbox or Lockbox Account at a future time or upon
the occurrence of a future event. Each Lockbox and each Lockbox Account is
subject to a Lockbox Agreement that is in full force and effect and each Lockbox
Account is free and clear of any Lien (other than any right of set-off expressly
provided for in the applicable Lockbox Agreement). Each Lockbox Processor has
executed and delivered to the Company a Lockbox Agreement. Each Seller, or the
Servicer on its behalf, has instructed all Obligors to make all payments in
respect of the Receivables and Related Property in accordance with Section
2.3(a) of the Servicing Agreement and Section 5.1(c) of this Agreement.
(p) VALID TRANSFERS. No transfer of any Receivables or any
Receivables Property to the Company by USFS constitutes a fraudulent transfer or
fraudulent conveyance or is otherwise void or voidable under similar laws or
principles, the doctrine of equitable subordination or for any other reason
(including, without limitation, under the Bankruptcy Code). The transfers of
Receivables and Receivables Property by USFS to the Company pursuant to this
Agreement, and all other transactions between USFS and the Company, have been
and will be made in good faith and without intent to hinder, delay or defraud
creditors of USFS, and USFS acknowledges that it has received and will receive
fair consideration and reasonably equivalent value for the purchases by the
Company of Receivables and Receivables Property hereunder and such transfer was
not made for or on account of an antecedent debt. The purchase of Receivables
and Receivables Property by the Company from USFS constitutes a true sale of
such Receivables and Receivables Property under applicable state law.
(q) TRADE NAMES. USFS uses no trade names, fictitious names,
assumed names or "doing business as" names in the furnishing of its products or
services which generate Receivables other than its actual corporate name and the
trade names set forth in Schedule VI and in the case of trade names, only in the
jurisdictions indicated on Schedule VI. During the five years preceding the date
hereof, except as set forth in Schedule VI and in the case of trade names, only
in the jurisdictions indicated on Schedule VI, USFS (i) has not been known by
any legal name or trade name other than its corporate name, and (ii) has not
been the subject of any merger or other corporate reorganization.
24
(r) COMPLIANCE WITH APPLICABLE LAWS. USFS is in material
compliance with the requirements of all applicable laws, rules, regulations, and
orders of all governmental authorities (federal, state, local or foreign, and
including, without limitation, environmental laws), a breach of any of which,
individually or in the aggregate, would be reasonably likely either (i) to have
a material adverse effect on (A) the business, operations, business prospects or
condition (financial or other) of USFS or (B) the ability of USFS to perform its
obligations under this Agreement and the other Transaction Documents, or (ii) to
impair the collectibility of any Receivables or any Receivables Property or the
enforceability or validity of any Contract.
(s) TAXES. USFS has filed all federal and all material state
and local tax returns required by law to be filed and has paid or made adequate
provision for the payment of all taxes, assessments and other governmental
charges due from USFS or is contesting any such tax, assessment or other
governmental charge in good faith through appropriate proceedings, except where
such failure would not reasonably be expected to cause a Material Adverse
Effect. No tax Lien has been filed, and, to the knowledge of USFS, no material
claim is being asserted, with respect to any such taxes. USFS knows of no basis
for any material additional tax assessment for any fiscal year for which
adequate reserves have not been established. For purposes of this paragraph,
"taxes" shall mean any present or future tax, levy, impost, duty, charge,
assessment or fee of any nature (including interest, penalties and additions
thereto) that is impose by any Governmental Authority.
(t) ACCOUNTING TREATMENT. USFS will not prepare any financial
statements that account for the transactions contemplated hereby in a manner
which is, nor will it in any other respect (except for tax purposes) account for
the transactions contemplated hereby in a manner which is, inconsistent with the
Company's ownership interest in the Receivables and Receivables Property.
(u) ERISA MATTERS.
(i) Except as specifically disclosed in Schedule
VIII hereto, USFS and each of its ERISA Affiliates are in compliance
in all material respects with the applicable provisions of ERISA and
the regulations and published interpretations thereunder with respect
to each Plan of USFS or any of its ERISA Affiliates, except for such
noncompliance which could not reasonably be expected to result in a
Material Adverse Effect with respect to USFS.
(ii) No Reportable Event has occurred as to which
USFS or any of its ERISA Affiliates was required to file a report with
the PBGC, other than reports for which the 30-day notice requirement
is waived, reports that have been filed and reports the failure of
which to file would not reasonably be expected to result in a Material
Adverse Effect with respect to USFS.
25
(iii) Except as specifically disclosed in Schedule
VIII hereto, as of the Effective Date, the present value of all
benefit liabilities under each Plan of USFS or any of its ERISA
Affiliates (on an ongoing basis and based on those assumptions used to
fund such Plan) did not, as of the last valuation report applicable
thereto, exceed the value of the assets of such Plan, except to the
extent that such excess would not have a Material Adverse Effect with
respect to USFS.
(iv) Neither USFS nor any of its ERISA Affiliates
has incurred any Withdrawal Liability that could reasonably be
expected to result in a Material Adverse Effect with respect to USFS.
(v) Neither USFS nor any of its ERISA Affiliates
has received any notification that any Multiemployer Plan is in
reorganization or has been terminated within the meaning of Title IV
of ERISA, or that a reorganization or termination has resulted or
could reasonably be expected to result, through increases in the
contributions required to be made to such Plan or otherwise, in a
Material Adverse Effect with respect to such USFS.
(v) CREDIT AND COLLECTION POLICIES. Schedule IV
accurately describes such USFS's Policies relating to Contracts and
Receivables in effect on the Closing Date.
(w) SOLVENCY. Both prior to and after giving effect to the
transactions contemplated by the Transaction Documents, (i) the assets of USFS,
at fair valuation, will exceed its debts and liabilities (including contingent
liabilities), (ii) the capital of USFS will not be unreasonably small to conduct
its business, (iii) USFS will not have incurred debts, and does not intend to
incur debts, beyond its ability to pay such debts as they mature, taking into
account the timing of and amounts of cash to be received by it and the timing of
and amounts of cash to be payable in respect of its Indebtedness and (iv) the
present fair salable value of the property of USFS will be greater than the
amount that will be required to pay the probable liabilities of USFS on its
debts and other liabilities, subordinated, contingent or otherwise, as such
debts and liabilities become absolute and matured. For all purposes of clauses
(i) through (iv) above, the amount of contingent liabilities at any time shall
be computed as the amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
(x) INVESTMENT COMPANY ACT. Neither USFS nor any of USFS's
Subsidiaries is (i) an "investment company" registered under, nor after giving
effect to the transactions contemplated hereby will be required to be registered
under, the 1940 Act, or (ii) a "holding company", or a "subsidiary company" of a
"holding company" within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
(y) OWNERSHIP. All of the issued and outstanding capital stock
of USFS is owned, directly or indirectly, by United Stationers Inc, free and
clear of any
26
Lien, other than any Lien in favor of the administrative agent under the Credit
Agreement.
(z) MATERIAL ADVERSE EFFECT. Since the date of September 30,
2002, no event has occurred that has had, or would reasonably be expected to
have a material adverse effect on (A) the financial condition or operations of
USFS and its Subsidiaries taken as a whole except as disclosed in USI's current
report on Form 8-K filed with the SEC on January 31, 2003 or otherwise disclosed
in writing to the Trustee prior to the Closing Date, (B) the ability of USFS, to
perform its obligations under this Agreement or the other Transaction Documents,
or (C) the collectibility of the Receivables generally or any material portion
of the Receivables.
(aa) ECEIVABLES DOCUMENTS. Upon the delivery, if any, by USFS
to the Company of licenses, rights, computer programs, related materials,
computer tapes, disks, cassettes and data relating to the administration of the
Purchased Receivables pursuant to Section 5.1(r), the Company shall have been
furnished with all materials and data reasonably necessary to permit timely
collection of the Purchased Receivables without the participation of USFS in
such collection.
The representations and warranties set forth in this Section 4.2 shall
survive the transfer and assignment of the respective Receivables to the Company
pursuant to this Agreement. USFS hereby represents and warrants to the Company,
as of the Effective Date and each Payment Date, that the representations and
warranties of USFS set forth in Section 4.2 are true and correct in all material
respects as of such date, except for any representation and warranty
specifically made as of an earlier date (including those made by the Sellers in
the USSC Receivables Sale Agreement), in which case such representation and
warranty shall be true and correct in all material respects as of such earlier
date. Upon discovery by a Responsible Officer of USFS or a Responsible Officer
of the Company, respectively, of any material breach of any of the foregoing
representations and warranties, the party discovering such breach shall give
prompt written notice to the other.
ARTICLE V
GENERAL COVENANTS
Section 5.1 AFFIRMATIVE COVENANTS OF USFS. USFS covenants that,
until the Purchase Termination Date shall have occurred and there are no amounts
outstanding with respect to the Purchased Receivables (other than Charged-off
Receivables):
(a) FINANCIAL STATEMENTS: Furnish to the Company (i) as soon
as available, but in any event within 60 days after the close of the first three
(3) quarterly periods of each of USFS's fiscal years, and within 125 days after
the close of the fourth quarterly period of each of USFS's fiscal years, balance
sheets of USFS and its
27
consolidated subsidiaries, each as at the close of each such period, and
statements of income and retained earnings and a statement of cash flows for
USFS and its consolidated Subsidiaries, each for such quarter, all certified by
an appropriate Responsible Officer as fairly presenting the financial position
and the results of operations of USFS and its consolidated Subsidiaries;
(b) PRESERVATION OF CORPORATE EXISTENCE AND NAME. USFS will
preserve and maintain in all respects its existence, rights, franchises and
privileges in the jurisdiction of its incorporation or formation, as the case
may be, and qualify and remain qualified in good standing as a foreign entity in
each jurisdiction where the failure to so qualify and be in good standing would
reasonably be expected to have a Material Adverse Effect.
(c) MAINTENANCE OF PROPERTY. USFS will keep all material
tangible property useful and necessary in its business in good working order and
condition (normal wear and tear excepted), except to the extent that the failure
to do any of the foregoing with respect to any such property would not,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect.
(d) COLLECTIONS. USFS will cause (1) all proceeds from all
Lockboxes to be directly deposited by a Lockbox Processor into a Lockbox Account
and (2) each Lockbox and Lockbox Account to be subject at all times to a Lockbox
Agreement that is in full force and effect. USFS will instruct, or cause the
Servicer to instruct, all Obligors to pay all Collections directly to a Lockbox
or Lockbox Account. In the event any payments relating to Receivables are
remitted directly to USFS or any Affiliate of USFS, USFS will remit all such
payments (or will cause all such payments to be remitted) directly to the
applicable Lockbox Processor and deposited into the applicable Lockbox Account
within one Business Day following receipt thereof, and, at all times prior to
such remittance, USFS or such Affiliate will itself hold or, if applicable, will
cause such payments to be held in trust for the exclusive benefit of the Company
and its assigns (including the Trustee and the Holders). USFS shall not grant or
purport to grant the right to take dominion and control or establish or purport
to establish "control" (within the meaning of Section 9-104 of the UCC of all
applicable jurisdictions) of any Lockbox or Lockbox Account at a future time or
upon the occurrence of a future event to any Person, except to the Trustee as
contemplated by this Agreement, the USSC Receivables Sale Agreement and the
Pooling Agreement. With respect to each Lockbox and Lockbox Account, USFS shall
take all steps necessary to ensure that the Trustee has "control" (within the
meaning of Section 9-104 of the UCC of all applicable jurisdictions) over each
such Lockbox and Lockbox Account.
(e) COMPLIANCE WITH LAWS, ETC. USFS shall comply in all
respects with all applicable laws, rules, regulations and orders applicable to
USFS and the Receivables and the Receivables Property, including, without
limitation, rules and regulations relating to truth in lending, fair credit
billing, fair credit reporting, equal credit opportunity, fair debt collection
practices and privacy, where failure to so comply would reasonably be expected
to have a Material Adverse Effect.
(f) VISITATION RIGHTS. At any reasonable time during normal
business hours and from time to time upon reasonable prior notice, USFS shall
permit (i)
28
the Company, or any of its assignees, agents or representatives, (A) to examine
and make copies of and abstracts from the records, books of account and
documents (including, without limitation, computer tapes and disks) of USFS
relating to Receivables and Receivables Property owned or to be purchased by the
Company hereunder, including, without limitation, the related Contracts and
purchase orders and other agreements and (B) following the termination of the
appointment of USFS as Servicer, to be present at the offices and properties of
USFS to administer and control the collection of amounts owing on the Purchased
Receivables and (ii) the Company, or any of its assignees, agents or
representatives, or the Trustee (upon the giving of appropriate notice to the
Company) to visit the properties of USFS for the purpose of examining such
records, books of account and documents, and to discuss the affairs, finances
and accounts of USFS relating to the Receivables or USFS's performance hereunder
or under any other Transaction Document with any of its officers, employees or
directors and with its independent certified public accountants; provided, that
the Company or its assignees, agents or representatives, as the case may be,
shall notify USFS prior to any contract with such accountants and shall give
USFS the opportunity to participate in such discussions.
(g) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. USFS will
maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing Receivables and
the Receivables Property in the event of the destruction of the originals
thereof), and keep and maintain proper books of records and account in which
full, true and correct entries in conformity in all material respects with GAAP
and all Requirements of Law shall be made of all dealings and transactions in
relation to its business and activities, including without limitation, all
documents, books, records and other information which, in each case, in the
reasonable discretion of the Company or its assignees, are necessary or
advisable for the collection of all Receivables and the Receivables Property
(including, without limitation, records adequate to permit the identification of
each new Receivable and all Collections of and adjustments to each existing
Receivable).
(h) PERFORMANCE AND COMPLIANCE WITH POLICIES, RECEIVABLES AND
CONTRACTS. USFS will (i) perform its obligations in accordance with and comply
in all material respects with the Policies, as amended from time to time in
accordance with the Transaction Documents and (ii) at its expense timely and
fully perform and comply with all material provisions, covenants and other
promises required to be observed by it under the Receivables and the Contracts
related to the Receivables and Receivables Property and all purchase orders and
other agreements related to such Receivables and Receivables Property.
(i) OBLIGATIONS. In addition to its obligations under Section
5.1(p), USFS shall pay, discharge or otherwise satisfy at or before maturity or
before they become delinquent, as the case may be, all taxes, assessments,
levies and other governmental charges at any time owing by it and all of its
other material obligations of whatever nature, except where (a) the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on its books, or (b) the failure to so pay, discharge or satisfy all
such obligations would not, individually or in the
29
aggregate, be reasonably likely to have a Material Adverse Effect and would not
subject any of its properties to any Lien prohibited by Section 5.3(b).
(j) LOCATION OF RECORDS. USFS will keep its principal place of
business and chief executive office, and the offices where it keeps its records
concerning the Receivables, all Receivables Property, all Contracts and purchase
orders and other agreements related to such Receivables (and all original
documents relating thereto), at the address referred to in Schedule II or, upon
30 days' prior written notice to the Company, at such other locations in
jurisdictions where all action required by Section 5.1(r) shall have been taken
and completed; provided, however, that the Rating Agency Condition shall have
been satisfied with respect to any changes in location of USFS's principal place
of business or chief executive office and such location is not in a state which
is within the Tenth Circuit unless it delivers an opinion of counsel reasonably
acceptable to the Rating Agencies to the effect that OCTAGON GAS SYSTEMS, INC.
▇. ▇▇▇▇▇▇, 995 F.2d 948 (10th Cir. 1993), is no longer controlling precedent in
the Tenth Circuit.
(k) FURNISHING COPIES, ETC. USFS shall furnish to the Company,
promptly after obtaining knowledge that a Receivable was, at the time of USFS's
purchase thereof, not an Eligible Receivable, notice thereof.
(l) OBLIGATION TO RECORD AND REPORT. USFS shall, to the
fullest extent permitted by GAAP and by applicable law, record each purchase of
the Purchased Receivables as a sale on its books and records, reflect each
purchase of Purchased Receivables in its financial statements and tax returns as
a sale and recognize gain or loss, as the case may be, on each purchase of
Purchased Receivables, except to the extent that such purchases are not
reportable for federal tax purposes due to the filing of tax forms of United
Stationers Inc. on a consolidated federal basis with those of the Sellers, USFS
and the Company.
(m) CONTINUING COMPLIANCE WITH THE UNIFORM COMMERCIAL CODE.
USFS shall, without limiting the requirements of Section 5.1(r), at its expense,
preserve, continue, and maintain or cause to be preserved, continued, and
maintained the Company's valid and properly perfected title to each Receivable
and the Receivables Property purchased hereunder, including, without limitation,
authorizing, filing or recording UCC financing statements in each relevant
jurisdiction.
(n) PROCEEDS OF RECEIVABLES. USFS shall use all reasonable
efforts to cause all payments made by Obligors in respect of Purchased
Receivables and Related Property to be made in accordance with Section 2.3(a) of
the Servicing Agreement.
(o) TAXES. USFS will file all federal and all material state
and local tax returns and reports required by law to be filed by it and will pay
all taxes and governmental charges thereby shown to be owing, except any such
taxes or charges which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
have been set aside on its books or
30
except where the failure to file such returns and reports and pay such taxes and
governmental charges would not reasonably be expected to cause a Material
Adverse Effect.
(p) SEPARATE CORPORATE EXISTENCE OF THE COMPANY. USFS hereby
acknowledges that the Trustee and the Holders are entering into the transactions
contemplated by the Transaction Documents in reliance upon the Company's
identity as a legal entity separate from the Sellers, USFS and all other
Affiliates thereof (such Seller, together with each such Affiliate, a "USS
Affiliate") and that the Trustee and the Holders would be prejudiced by any
substantive consolidation of the Company with any Seller or USFS. Therefore,
from and after the date hereof, USFS will take (or refrain from taking, as the
case may be) such actions, and will cause each other USS Affiliate it controls
to take (or refrain from taking, as the case may be) such actions, as shall be
required in order that:
(i) Except as specifically provided in Sections
7.1 and 9.5, no USS Affiliate will pay the Company's operating
expenses and liabilities, recognizing, however, that certain
organizational expenses of the Company and expenses relating to
creation and implementation of the securitization program contemplated
by the Transaction Documents have been or shall be paid by USFS or
USSC.
(ii) Each USS Affiliate will conduct its business
at offices segregated from the Company's offices. If office space is
leased from any USS Affiliate, a separate written lease on
arm's-length terms will be in effect at a market rental rate.
(iii) Each USS Affiliate will maintain corporate
records and books of account separate from those of the Company and
telephone numbers, mailing addresses, stationery and other business
forms that are separate and distinct from those of the Company.
(iv) Any financial statements of any USS Affiliate
that are consolidated to include the Company will contain a detailed
note substantially in the form, and to the effect, of the note set
forth on Annex 1.
(v) The Company's assets will be maintained in a
manner that facilitates their identification and segregation from
those of the Sellers, USFS and the other USS Affiliates.
(vi) Each USS Affiliate will strictly observe
corporate formalities in its dealings with the Company, and funds or
other assets of the Company will not be commingled or pooled with
those of any affiliated Person other than funds constituting (i)
Excluded Receivables Payments or (ii) Collections remitted to a
Collector pursuant to Section 2.3(a) of the Servicing Agreement;
provided that , in each case,
31
such funds shall not be commingled for more than one (1) Business Day.
No USS Affiliate will maintain joint bank accounts with the Company or
other depository accounts with the Company to which any USS Affiliate
has independent access.
(vii) Any transaction between the Company and any
USS Affiliate will be fair and equitable to the Company, will be the
type of transaction which would be entered into by a prudent Person in
the position of the Company with a USS Affiliate, and will be on terms
which are at least as favorable to the Company as may be obtained from
a Person which is not a USS Affiliate, it being understood and agreed
that the transactions contemplated in the Transaction Documents meet
the requirements of this clause (vii).
(viii) No USS Affiliate will hold itself out, or
permit itself to be held out, as having agreed to pay or be liable for
the debts of the Company.
(ix) Except for the authority delegated to the
Servicer pursuant to the Servicing Agreement, the duly elected Board
of Directors of the Company and the Company's duly appointed officers
shall at all times have sole authority to control decisions and
actions with respect to the daily business affairs of the Company.
(x) USFS shall comply with those procedures
described in the Specified Bankruptcy Opinion Provisions which are
applicable to USFS, except, in each case above, for such failure to
take actions or refrain from taking actions that are, in the
aggregate, not material.
(q) DEPOSITS IN PROGRAM ACCOUNTS. USFS shall not permit the
deposit of any funds other than Collections (except funds consisting of Excluded
Receivables Payments) which shall be transferred out of any such Lockbox Account
within 2 Business Days of deposit therein) in any of the Lockbox Accounts and
the Collection Account.
(r) OWNERSHIP; FURTHER ACTION EVIDENCING PURCHASES.
(i) USFS shall take all necessary action to
establish and maintain, irrevocably in the Company, (A) legal and
equitable title to the Receivables and the Collections and (B) all of
USFS's right, title and interest in the Receivables Property
associated with the Receivables, in each case, free and clear of any
Liens other than Liens in favor of the Company (and its assigns)
(including, without limitation, the filing of all financing statements
or other similar instruments or documents necessary under the UCC (or
any comparable law) of all appropriate jurisdictions to perfect USFS's
interest in such Receivables,
32
Receivables Property and Collections and such other action to perfect,
protect or more fully evidence the interest of USFS as USFS (or its
assigns) may reasonably request).
(ii) In furtherance of clause (i) above, USFS will
on or prior to the date hereof, indicate on its books and records
(including, without limitation, master data processing records) that
the Receivables, Receivables Property and Receivables Property have
been sold and assigned to the Company, and, in turn, the Company has
conveyed its interest therein to the Trustee for the benefit of the
Holders, and will provide to Company, upon request, copies of any such
records. USFS agrees that from time to time, at its expense, it will
promptly execute, authorize and deliver all further instruments and
documents, and take all further action, that may be necessary or
desirable or that the Company or its assignees may reasonably request,
to protect or more fully evidence the Company's ownership, right,
title and interest in the Receivables and Receivables Property sold by
USFS and its rights under the Contracts with respect thereto, or to
enable the Company or its assignees to exercise or enforce any of its
rights hereunder or under any other Transaction Document. Without
limiting the generality of the foregoing, USFS will upon the request
of the Company or its assignees (A) execute and/or authorize and file,
in accordance with the provisions of the UCC of the applicable
jurisdiction, continuation statements with respect to all financing
statements filed in connection with the transactions contemplated
hereby, as well as such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be
necessary or, in the reasonable opinion of the Company, desirable, (B)
contact customers to confirm and verify Receivables and (C) obtain the
agreement of any Person having a Lien on any Receivables owned by USFS
(other than any Lien created or imposed hereunder, under the Pooling
Agreement or under any other Transaction Document to release such Lien
upon the purchase of any such Receivables by the Company.
(iii) USFS hereby irrevocably authorizes the Company
and the Trustee to file one or more financing or continuation
statements, and amendments thereto, relative to all or any part of the
Receivables and Receivables Property sold or to be sold by USFS,
without the signature of USFS where permitted by law.
(iv) If USFS fails to perform any of its agreements
or obligations under this Agreement, the Company or its assignees may
(but shall not be required to) perform, or cause performance of, such
agreements or obligations, and the expenses of the Company incurred in
connection therewith shall be payable by USFS as provided in Section
9.5.
33
(v) USFS agrees that, whether or not a Purchase
Termination Event has occurred:
(1) the Company (and its assignees) shall have
the right at any time to notify, or require that USFS at its own
expense notify, the respective Obligors of the Company's ownership of
the Purchased Receivables and Receivables Property and may direct that
payment of all amounts due or to become due under the Purchased
Receivables be made directly to the Company or its designee;
(2) USFS shall, upon the Company's or the
Trustee's written request and at USFS's expense, (I) assemble all of
USFS's documents, instruments and other records (including credit
files and computer tapes or disks) that (A) evidence or will evidence
or record Receivables sold by USFS and (B) are otherwise necessary or
desirable to effect Collections of such Purchased Receivables
(collectively, the "DOCUMENTS") and (II) deliver the Documents to the
Company, the Trustee or any designee thereof at a place designated by
such Person. In recognition of USFS's need to have access to any
Documents which may be transferred to any applicable Person hereunder,
whether as a result of its continuing business relationship with any
Obligor for Receivables purchased hereunder, the Company hereby grants
to USFS an irrevocable license to access the Documents transferred by
USFS to the Company and to access any such transferred computer
software in connection with any activity arising in the ordinary
course of USFS's business; PROVIDED that USFS shall not disrupt or
otherwise interfere with the Company's or any applicable Person's use
of and access to the Documents and its computer software during such
license period;
(3) USFS hereby grants to the Company and the
Trustee (as the Company's assignee) an irrevocable power of attorney
(coupled with an interest) to take any and all steps in USFS's name
necessary or desirable, in the reasonable opinion of the Company or
Trustee, to collect all amounts due under the Purchased Receivables,
including, without limitation, endorsing USFS's name on checks and
other instruments representing Collections, enforcing the Purchased
Receivables and exercising all rights and remedies in respect thereof,
and
(4) upon written request of the Company or the
Trustee, will (i) deliver to the Company, the Trustee or a party
designated by the Company or the Trustee all licenses, rights,
computer programs, related material, computer tapes, disks, cassettes
and data necessary to the immediate collection of the Purchased
Receivables by the Company or the Trustee, with or without the
participation of USFS (excluding software licenses which by their
terms are not permitted to be so delivered, PROVIDED that USFS shall
use reasonable efforts to obtain consent of the relevant licensor to
such delivery) and (ii) make such
34
arrangements with respect to the collection of the Purchased
Receivables as may be reasonably required by the Company or the
Trustee.
(s) LEGEND REQUIREMENT FOR CHATTEL PAPER. USFS agrees (i) at
all times, with respect to chattel paper, to comply with the procedures set
forth in Schedule 3 to the Pooling Agreement and (ii) that any Receivable that
constitutes or is evidenced by "chattel paper" as defined in Article 9 of the
UCC as in effect in the Relevant UCC State shall bear a legend stating that such
Receivable has been sold to the Company and conveyed, in turn, to the Trust.
(t) COMPUTER FILES. USFS shall, at its own cost and expense,
retain the ledger used by USFS as a master record of the Obligors and retain
copies of all documents relating to each Obligor as custodian and agent for the
Company and other Persons with interests in the Purchased Receivables.
(u) LOCKBOXES. USFS shall ensure that each Lockbox Account
shall be free and clear of, and defend each Lockbox Account against, any Lien
(other than the Lien in favor of the Company and its assigns), writ, order,
stay, judgment, warrant of attachment or execution or similar process.
(v) INSURANCE. USFS will maintain in effect, or cause to be
maintained in effect, at its own expense, for itself and its Subsidiaries such
casualty and liability insurance as USFS shall deem appropriate in its good
faith business judgment. Copies of each policy shall be furnished to the Company
or its assigns in certificated form upon request. The foregoing requirements
shall not be construed to negate, reduce or modify, and are in addition to,
USFS's obligations hereunder.
(w) USFS shall defend the right, title and interest of the
Company and its assignees in, to and under the Receivables or Receivables
Property, whether now existing or hereafter created, against all claims of third
parties claiming through or under such Seller. Such Seller will duly fulfill all
material obligations on its part to be fulfilled under or in connection with
each Receivable or Receivables Property and will do nothing to impair the rights
of USFS or its assigns in such Receivable or Receivables Property. Such Seller
shall pay when due any taxes (including, without limitation, property, excise,
transfer or similar taxes) arising with respect to, or payable in connection
with, the Receivables or Receivables Property or on account of the transactions
contemplated by this Agreement or the other Transaction Documents.
Section 5.2 REPORTING REQUIREMENTS. USFS shall furnish to the
Company and its assigns from the date hereof until the Purchase Termination Date
shall have occurred with respect to USFS and until there are no amounts
outstanding with respect to Purchased Receivables previously sold by USFS to the
Company:
(a) COMPLIANCE CERTIFICATE. Concurrently with the delivery of
the financial statements required by Section 5.1(a), a certificate of a
Responsible Officer of USFS, (i) stating that to the best of such Responsible
Officer's knowledge, USFS during such period, has observed or performed in all
material respects all of its covenants
35
and other agreements, and satisfied in all material respects every condition,
contained in the Transaction Documents to which it is a party to be observed,
performed or satisfied by it, (ii) stating that such Responsible Officer has
obtained no knowledge of any Purchase Termination Event or Potential Purchase
Termination Event except as specified in such certificate and (iii) certifying,
as of the date of such certificate, (A) USFS 's jurisdiction of organization and
USFS 's "location" for the purposes of Section 9-307 of the UCC, and (B) that
USFS has not changed its jurisdiction of organization or its "location" for the
purposes of Section 9-307 of the UCC since the date of the hereof;
(b) ERISA. Promptly after the filing or receiving thereof,
copies of all reports and notices with respect to any Reportable Event which
USFS files under ERISA with the Internal Revenue Service, the PBGC or the U.S.
Department of Labor or which USFS receives from the PBGC if, in each case, such
report or notice relates to an event or condition that could reasonably be
expected to give rise to a Termination Notice, an Early Amortization Event or a
Material Adverse Effect;
(c) TERMINATION EVENTS; OTHER MATERIAL EVENTS. As soon as
possible and in any event within two Business Days after a Responsible Officer
of USFS obtains knowledge of each Purchase Termination Event, Potential Purchase
Termination Event, Servicer Default, Potential Servicer Default or any other
event that has a material likelihood of having a Material Adverse Effect, a
written statement of a Responsible Officer of USFS setting forth details of such
event and the action that USFS proposes to take with respect thereto;
(d) OTHER NOTICES. As soon as possible (and in any event
within five Business Days after a Responsible Officer of USFS obtains knowledge
of such event) written notice to the Company and its assigns of.
(i) any Lien on any Receivable or any Receivables
Property;
(ii) (A) The entry of any judgment or decree
against USFS or any of its Subsidiaries or the institution or
contingency of any litigation, arbitration proceeding, investigation
or governmental proceeding against USFS or any of its Subsidiaries
that, in either case, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect; and (B) any
material adverse development in any previously disclosed litigation,
investigations or proceedings;
(iii) the occurrence of a default or an event of
default under any other financing arrangement evidencing Indebtedness
pursuant to which USFS is a debtor or an obligor;
(iv) any downgrade in the rating of any
Indebtedness of USSC (if then rated) by S&P or by ▇▇▇▇▇'▇, setting
forth the Indebtedness affected and the nature of such change;
36
(v) the occurrence of any event or condition that
has had, or would reasonably be expected to have, a Material Adverse
Effect; and
(vi) the occurrence of any Purchase Termination
Event or Potential Purchase Termination Event or Early Termination
under this Agreement.
(e) SHAREHOLDERS OR MEMBERS STATEMENTS AND REPORTS. Promptly
upon the furnishing thereof to the shareholders or members of USFS copies of all
financial statements, reports and proxy statements so furnished.
(f) S.E.C. FILINGS. Promptly upon the filing thereof, copies
of all registration statements and annual, quarterly, monthly or other regular
reports which USFS or any of its Subsidiaries files with the Securities and
Exchange Commission.
(g) OTHER. Promptly, from time to time, such other
information, documents, records or reports respecting the Receivables or the
condition or operations, financial or otherwise, of USFS as the Company or any
of its assigns may from time to time reasonably request in order to protect its
respective interests under or as contemplated by this Agreement and the other
Transaction Documents.
Section 5.3 NEGATIVE COVENANTS. USFS covenants that, until the
Purchase Termination Date shall have occurred with respect to USFS and there are
no amounts outstanding with respect to Purchased Receivables previously sold by
USFS to the Company:
(a) RECEIVABLES TO BE ACCOUNTS, GENERAL INTANGIBLES OR CHATTEL
PAPER. USFS will take no action to cause any Receivable then outstanding to be
evidenced by any "instrument" other than, provided that the procedures set forth
in Schedule 3 to the Pooling Agreement are fully implemented with respect
thereto, an instrument which alone or together with a security agreement
constitutes "chattel paper" (each as defined in the UCC as in effect in the
Relevant UCC State). USFS will take no action to cause any Receivable then
outstanding to be anything other than an "account", "general intangible" or
"chattel paper" (each as defined in the UCC as in effect in the Relevant UCC
State).
(b) SECURITY INTERESTS. Except for the conveyances hereunder
and as provided below, USFS will not sell, pledge, assign or transfer to any
other Person, or grant, create, incur, assume or suffer to exist any other Lien
on any Receivable or Receivables Property, whether now existing or hereafter
created, or any interest therein; USFS will immediately notify the Company and
its assignees of the existence of any other Lien on any Receivable or
Receivables Property; and USFS shall defend the right, title and interest of the
Company and its assignees in, to and under the Receivables or Receivables
Property, whether now existing or hereafter created, against all claims of third
parties claiming through or under USFS.
37
(c) EXTENSION OR AMENDMENT OF RECEIVABLES; INELIGIBLE
RECEIVABLES. USFS will not, nor will it permit any Seller to, extend, rescind,
cancel, make any Dilution Adjustment to, amend or otherwise modify, or attempt
or purport to extend, rescind, cancel, make any Dilution Adjustment to, amend or
otherwise modify, the terms of any Purchased Receivables, or otherwise take any
action to cause, or which would permit, a Receivable that was designated as an
Eligible Receivable on the Payment Date relating to such Receivable to cease to
be an Eligible Receivable, except in any such case (a) in accordance with the
terms of the Policies, (b) as required by any Requirement of Law or (c) in the
case of Dilution Adjustments (whether or not permitted by any other clause of
this sentence), upon making a Seller Adjustment Payment pursuant to Section 2.5.
(d) CHANGE IN CREDIT AND COLLECTION POLICIES. USFS will not
make or permit to be made any change in its Policies other than any such change
which it is permitted to make (and proposes to make) pursuant to and in
accordance with Section 2.8(j) of the Pooling Agreement.
(e) PLACE OF BUSINESS, ETC. USFS will not change its principal
place of business or chief executive office from the location listed on Schedule
II or change the location of its records relating to the Receivables and
Receivables Property from those specified on Schedule II, unless in any such
event USFS shall have given the Company at least thirty (30) days' prior written
notice thereof fully in accordance with the terms and provisions of Section
5.1(i) and shall have taken all action necessary or reasonably requested by the
Company or the Trustee to amend its existing financing statements and
continuation statements so that they are not misleading and to file additional
financing statements in all applicable jurisdictions, if necessary, to continue
the first priority perfected ownership or security interests of the Company (and
its assigns) in all of the Receivables and Receivables Property.
(f) CHANGE IN NAME, JURISDICTION OF ORGANIZATION, STRUCTURE,
LOCATION ETC. USFS will not change its name, jurisdiction of organization,
identity or corporate or other organizational structure (within the meaning of
Sections 9-503 and/or 9-507 of the UCC of all applicable jurisdictions), become
a "new debtor" (as defined in Section 9-102(a)(56) of the UCC of all applicable
jurisdictions) with respect to a currently effective security agreement
previously entered into by any other Person, or change its "location" (within
the meaning of Section 9-307 of the UCC of all applicable jurisdictions) without
(i) giving 30 days' prior written notice to the Company, USFS, the Servicer and
the Trustee and (ii) taking all actions reasonably requested by the USFS (or its
assigns) (including but not limited to all filings and other acts necessary or
advisable under the UCC or similar statute of each relevant jurisdiction) in
order to continue USFS's (and its assigns') first priority perfected ownership
or security interest in all Receivables now owned or hereafter created and all
Receivables Property, including taking all action required by Section 5.1(a) or
5.1(r).
(g) CHANGE IN PAYMENT INSTRUCTIONS TO OBLIGORS. USFS shall not
instruct the Obligor on any Receivables to make payments with respect to such
Receivables and the Receivables Property with respect thereto other than to a
Lockbox
38
Account or Lockbox listed in Schedule III. Furthermore, USFS will not add or
terminate any depositary institution, processing company or bank as a Lockbox
Processor, or make any change in the instructions to Obligors regarding payments
to be made to any Lockbox or Lockbox Account unless USFS and the Trustee shall
have received, at least ten (10) days before the proposed effective date
therefor, (i) written notice of such addition, termination or change and (ii)
with respect to the addition of a Lockbox Processor or a Lockbox Account or
Lockbox, an executed Lockbox Agreement with respect to the new Lockbox Account
or Lockbox; PROVIDED, HOWEVER, that USFS may make changes in instructions to
Obligors regarding payments if such new instructions require such Obligor to
make payments to another existing Lockbox Account.
(h) ACCOUNTING CHANGES. USFS shall not make any material
change (i) in accounting treatment and reporting practices except as permitted
or required by GAAP, in any case, as disclosed in the notes to the financial
statements delivered pursuant to Section 5.1, (ii) in tax reporting treatment
except as permitted or required by law or otherwise, (iii) in the calculation or
presentation of financial and other information contained in other reports
delivered hereunder, or (iv) in any financial policy of USFS if such change
could have a material adverse effect on the Receivables taken as a whole or the
collection thereof.
(i) BUSINESS OF USFS. USFS shall not fail to maintain and
operate the business currently conducted by USFS and business activities
reasonably incidental or related thereto in substantially the manner in which it
is presently conducted and operated if such failure would change in any material
respect the character of its business and such change would be adverse to the
interest of the Company or its assignees (including the Trustee for the benefit
of the Holders), except (x) if such change is necessary under any Requirement of
Law, (y) if such change would not reasonably be expected to have a Material
Adverse Effect or (z) the Rating Agency Condition is satisfied with respect
thereto
(j) ACCOUNTING OF TRANSFERS. Prepare any financial statements
which shall account for the transactions contemplated hereby in any manner other
than as a sale of Receivables and Receivables Property by the USFS to the
Company or in any other respect account for or treat the transactions under this
Agreement (including for financial accounting purposes, except as required by
law, in any case, as disclosed in the notes to the financial statements
delivered pursuant to Section 5.1) in any manner other than as sale of
Receivables and Receivables Property by USFS to the Company; PROVIDED, HOWEVER,
that this subsection shall not apply for any tax or tax accounting purposes.
ARTICLE VI
PURCHASE TERMINATION EVENTS
Section 6.1 PURCHASE TERMINATION EVENTS. If, with respect to USFS,
any of the following events (each, a "PURCHASE TERMINATION EVENT" with respect
to USFS) shall have occurred and be continuing:
39
(a) USFS shall fail to make any payment or deposit to be made
by it hereunder when due and such failure shall remain unremedied for two
Business Days; or
(b) There shall have occurred (i) an Early Amortization Event
set forth in Section 7.1 of the Pooling Agreement or (ii) the Amortization
Period with respect to all outstanding Series shall have occurred and be
continuing; or
(c) Any representation or warranty made or deemed to be made
by USFS or any of its officers under or in connection with any Transaction
Document, Monthly Settlement Statement or other information, statement, record,
certificate, document or report delivered pursuant to a Transaction Document
shall (i) prove to have been false or incorrect in any material respect when
made or deemed made (including in each case by omission of information necessary
to make such representation, warranty, certificate or statement not materially
misleading) and (ii) continue to be materially false or incorrect until 10
Business Days after the earlier of (A) the date any Responsible Officer of USFS
obtains knowledge thereof and (B) the date USFS receives notice of the
incorrectness of such representation or warranty from the Company, the Servicer
or the Trustee; or
(d) USFS shall fail to perform or observe any of the covenants
or agreements set forth in Section 5.1 (other than in clauses (b), (c), (e),
(i), (k) (o), (t)(iii), (t)(iv) or (v)), 5.2 or 5.3; or
(e) USFS shall fail to perform or observe in any other term,
covenant or agreement contained in any Transaction Document on its part to be
performed or observed (other than as described in any other paragraph of this
Section 6.1) and any such failure shall remain unremedied for a period of 10
Business Days from the earlier of (A) the date any Responsible Officer of USFS
obtains knowledge of such failure and (B) the date USFS receives notice thereof
from the Company, the Servicer or the Trustee; or
(f) Any Transaction Document to which USFS is a party, or any
material provision thereof, shall cease, for any reason, to be in full force and
effect, or to be the legally valid, binding and enforceable obligation of, or
USSC, or USFS shall so assert in writing, or the Company shall fail to have a
valid and perfected first priority ownership or security interest in the
Receivables and the Receivables Property, subject to no other Liens or USFS or
any Affiliate shall so assert in writing; or
(g) (i) USFS shall commence any case, proceeding or other
action (A) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian or other similar official for it or for all or any
substantial part of its assets, or USFS shall make a general assignment for the
benefit
40
of its creditors; or (ii) there shall be commenced against USFS any case,
proceeding or other action of a nature referred to in clause (i) above which
remains undismissed, undischarged or unbonded for a period of 30 days or an
order for relief, decree, adjudication or appointment shall occur; (A) results
in the entry of an order for relief or any such adjudication or appointment or
(B) remains undismissed, undischarged or unbonded for a period of 30 days; or
(iii) there shall be commenced against USFS or any of its Subsidiaries any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part of
its assets which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded pending appeal
within 30 days from the entry thereof, or (iv) USFS or any of its respective
Subsidiaries shall take any action in furtherance of, or indicating its consent
to, approval of, or acquiescence in, any of the acts set forth in clause (i),
(ii), or (iii) above; or (v) USFS shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become due; or
(h) USFS has been terminated as Servicer following a Servicer
Default with respect to USFS under the Servicing Agreement;
(i) [Intentionally Omitted];
(j) default by USSC or USFS in the payment of an Indebtedness
equal to or in excess of $25,000,000 or the performance of any term, provision
or condition contained in any agreement under which any such Indebtedness was
created or is governed and the lender parties thereto shall have caused such
Indebtedness to come due prior to its stated maturity;
(k) any action, suit, investigation or proceeding at law or in
equity (including, without limitation, injunctions, writs or restraining orders)
shall be brought or commenced or filed by or before any arbitrator, court or
Governmental Authority against USSC or USFS or any of its properties, revenues
or rights which could reasonably be expected to have a Material Adverse Effect
with respect to such Person;
(l) one or more judgments for the payment of money (to the
extent not bonded or covered by insurance to the reasonable satisfaction of USFS
or its assigns) shall be rendered against USFS or any combination thereof (A) in
an aggregate amount greater than $25,000,000 or (B) that, individually or in the
aggregate, have resulted or could reasonably be expected to result in a Material
Adverse Effect and, in either case, the same shall remain undischarged for a
period of 30 consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to levy upon
assets or properties of USSC or USFS to enforce any such judgment; or
(m) (i) there shall have been filed against USSC or USFS a
notice of federal tax Lien or Liens with respect to any amounts in the aggregate
exceeding $5,000,000 from the Internal Revenue Service, and 40 days shall have
elapsed without such notice having been effectively withdrawn or such Lien
having been released or discharged; (ii) any formal step is taken to terminate
any Plan, other than a standard
41
termination under Section 4041(b) of ERISA, or a contribution failure has
occurred with respect to any Plan sufficient to give rise to a Lien under
Section 302(f) of ERISA or (iii) there shall have been filed against USSC or
such Seller a notice of any other Lien the existence of which could reasonably
be expected to have a Material Adverse Effect on the business, operations or
financial condition of such Person, and 40 days shall have elapsed without such
notice having been effectively withdrawn or such Lien having been released or
discharged;
(n) then, (x) in the case of any Purchase Termination Event
with respect to USFS described in paragraph (b)(i) or (g) above, the obligation
of the Company to purchase Receivables from USFS shall thereupon automatically
terminate without further notice of any kind, which is hereby waived by USFS,
(y) in the case of any Purchase Termination Event with respect to USFS described
in paragraph (b)(ii) above, the obligation of the Company to purchase
Receivables from USFS shall thereupon terminate without notice of any kind,
which is hereby waived by USFS, unless both the Company and USFS agree in
writing that such event shall not trigger an Early Termination hereunder and (z)
in the case of any other Purchase Termination Event with respect to USFS, so
long as such Purchase Termination Event shall be continuing, the Company may
terminate its obligation to purchase Receivables from USFS by written notice to
USFS (any termination with respect to USFS pursuant to clause (x), (y) or (z) of
this Section 6.1 is herein called an "EARLY TERMINATION" with respect to USFS);
PROVIDED, HOWEVER, that in the event of an involuntary petition or proceeding as
described in paragraphs (g)(ii) and (g)(iii) above, the Company shall not
purchase Receivables from USFS until such time, if any, as such involuntary
petition or proceeding has been dismissed.
Section 6.2 ADDITIONAL REMEDIES. Upon the occurrence of any
Purchase Termination Event, the Company shall have, in addition to all other
rights and remedies under this Agreement or otherwise, all other rights and
remedies provided under the UCC of each applicable jurisdiction and other
applicable laws, which rights shall be cumulative. Without limiting the
foregoing, the occurrence of a Purchase Termination Event shall not deny to the
Company any remedy (in addition to termination of the Company's obligation to
purchase Receivables from USFS) to which the Company may be otherwise
appropriately entitled, whether by statute or other applicable law, at law or in
equity.
ARTICLE VII
INDEMNIFICATION
Section 7.1 INDEMNITIES BY USFS. Without limiting any other rights
that USFS may have hereunder or under applicable law, USFS hereby agrees to
indemnify (and pay upon demand to) the Company and its assigns, officers,
directors, agents and employees (each an "INDEMNIFIED PARTY") from and against
any and all damages, losses, claims, taxes, liabilities, costs, expenses and for
all other amounts payable, including reasonable attorneys' fees (which attorneys
may be employees of the Company or any such assign, provided that such fees of
attorneys that are employees of
42
any Indemnified Party shall not be for services that are duplicative of the
services of any third-party attorneys retained by such Indemnified Party) and
disbursements (all of the foregoing being collectively referred to as
"INDEMNIFIED AMOUNTS") awarded against or incurred by any of them arising out of
or as a result of this Agreement or the acquisition, either directly or
indirectly, by the Company of an interest in the Receivables, excluding,
however:
(i) Indemnified Amounts to the extent a final
judgment of a court of competent jurisdiction holds that such
Indemnified Amounts resulted from gross negligence or willful
misconduct on the part of the Indemnified Party seeking
indemnification;
(ii) Indemnified Amounts to the extent the same
includes losses in respect of Receivables that are uncollectible on
account of the insolvency, bankruptcy or lack of creditworthiness of
the related Obligor; or
(iii) Excluded Taxes to the extent that the
computation of such taxes is consistent with the characterization for
income tax purposes of the acquisition by the Holders of the
Certificates under the Pooling Agreement as a loan or loans by the
Holders to the Company secured by, among other things, the Receivables
and the Receivables Property;
PROVIDED, HOWEVER, that nothing contained in this sentence shall limit the
liability of any Seller or limit the recourse of the Company to any Seller for
amounts otherwise specifically provided to be paid by USFS under the terms of
this Agreement. Without limiting the generality of the foregoing
indemnification, USFS shall indemnify the Company for Indemnified Amounts
(including, without limitation, losses in respect of uncollectible receivables,
regardless of whether reimbursement therefor would constitute recourse to USFS)
relating to or resulting from:
(iv) any representation or warranty made by USFS
(or any officers of USFS) under or in connection with this Agreement,
any other Transaction Document or any other information or report
delivered by USFS pursuant hereto or thereto that shall have been
false or incorrect when made or deemed made;
(v) the failure by USFS, to comply with any
applicable law, rule or regulation with respect to any Receivable or
Contract related thereto, or the nonconformity of any Receivable or
Contract included therein with any such applicable law, rule or
regulation or any failure of USFS to keep or perform any of its
obligations, express or implied, with respect to any Contract;
43
(vi) any failure of USFS to perform its duties,
covenants or other obligations in accordance with the provisions of
this Agreement or any other Transaction Document;
(vii) any products liability, personal injury or
damage, suit or other similar claim arising out of or in connection
with merchandise, insurance or services that are the subject of any
Contract or any Receivable;
(viii) any dispute, claim, offset or defense (other
than discharge in bankruptcy of the Obligor) of the Obligor to the
payment of any Receivable (including, without limitation, a defense
based on such Receivable or the related Contract not being a legal,
valid and binding obligation of such Obligor enforceable against it in
accordance with its terms), or any other claim resulting from the sale
of the merchandise or service related to such Receivable or the
furnishing or failure to furnish such merchandise or services;
(ix) the commingling of Collections of Receivables
at any time with other funds;
(x) any investigation, litigation or proceeding
related to or arising from this Agreement or any other Transaction
Document, the transactions contemplated hereby, the use of the
proceeds of any Purchase Price payment, the ownership of the
Receivables or any other investigation, litigation or proceeding
relating to USFS in which any Indemnified Party becomes involved as a
result of any of the transactions contemplated hereby;
(xi) any inability to litigate any claim against
any Obligor in respect of any Receivable as a result of such Obligor
being immune from civil and commercial law and suit on the grounds of
sovereignty or otherwise from any legal action, suit or proceeding;
(xii) any Purchase Termination Event described in
Section 6.1(g);
(xiii) any failure to vest and maintain vested in the
Company, or to transfer to the Company, legal and equitable title to,
and ownership of, the Receivables and the Collections, and all of USFS
's right, title and interest in the Receivables Property associated
with the Receivables, in each case, free and clear of any Lien;
(xiv) the failure to have filed, or any delay in
filing, financing statements or other similar instruments or documents
under the UCC of any applicable jurisdiction or other applicable laws
with respect to any Receivable, the Receivables Property and
Collections with respect thereto, and the proceeds of any thereof;
44
(xv) any action or omission by USFS which reduces
or impairs the rights of the Company with respect to any Receivable or
the value of any such Receivable;
(xvi) any attempt by any Person to void any sale
hereunder under statutory provisions or common law or equitable
action;
(xvii) the failure of any Receivable included in the
calculation of the Aggregate Receivables Amount as an Eligible
Receivable to be an Eligible Receivable at the time so included; and
(xviii) any failure of USFS to acquire and maintain
legal and equitable title to, and ownership of any Receivable and the
Receivables Property and Collections with respect thereto from the
applicable Seller under the USSC Receivables Sale Agreement, free and
clear of any Liens (other than as created hereunder); or any failure
of USFS to give reasonably equivalent value to any such Seller under
the USSC Receivables Sale Agreement Agreement in consideration of the
transfer by such Seller of any Receivable, or any attempt by any
Person to void such transfer under statutory provisions or common law
or equitable action.
Section 7.2 INDEMNITIES BY THE COMPANY. Without limiting any other
rights that USFS may have hereunder or under applicable law, the Company hereby
agrees to indemnify USFS from and against any and all claims, losses and
liabilities (including reasonable attorneys' fees) arising out of or resulting
from USFS's reliance on any representation or warranty made by the Company in
this Agreement or in any certificate delivered pursuant hereto that, in either
case, shall have been false or incorrect in any material respect when made or
deemed made.
ARTICLE VIII
SUBORDINATED NOTE
Section 8.1 SUBORDINATED NOTE. (a) On the initial Effective Date,
contemporaneously with the sale of Receivables and Receivables Property by USFS,
the Company shall issue to USFS a subordinated note substantially in the form of
Exhibit A hereto (as amended, supplemented or otherwise modified from time to
time, the "SUBORDINATED NOTE").
(b) The initial aggregate principal amount of the Subordinated
Note (the "INITIAL SUBORDINATED NOTE AMOUNT") shall be equal to $0.
(c) Following the initial Effective Date, the aggregate
principal amount of the Subordinated Note at any time shall be equal to the
difference between (i) the sum of the Initial Subordinated Note Amount and each
addition to the principal amount of the Subordinated Note with respect to USFS
pursuant to Section 2.3 as of such time and (ii) the aggregate amount of all
payments made in respect of the principal of the
45
Subordinated Note as of such time. All payments made in respect of the
Subordinated Note shall be allocated by the Servicer and shall be allocated to
pay accrued and unpaid interest thereon, and second, to pay the outstanding
principal amount thereof.
(d) Each Seller's interest in the USFS Subordinated Note shall
be equal to the aggregate of each addition to the USFS Subordinated Note
allocated to such Seller pursuant to Section 2.3(c), less the sum of each
repayment thereof allocated to such Seller by the Servicer in accordance with
Section 8.1(c). Interest on the outstanding principal amount of the Subordinated
Note shall accrue on the last day of each Settlement Period at a rate per annum
equal to the ABR plus 2% from and including the initial Effective Date to but
excluding the last day of each Settlement Period and shall be paid, subject to
the subordination provisions of the USFS Note, (x) on each Distribution Date
with respect to the principal amount of the Subordinated Note outstanding from
time to time during the Settlement Period immediately preceding such
Distribution Date and/or (y) on the maturity date thereof. Subject to the
subordination provisions of the Subordinated Note, principal thereunder not paid
or prepaid pursuant to the terms thereof shall be payable on the maturity date
of the Subordinated Note. Default in the payment of principal or interest under
the Subordinated Note shall not constitute a Purchase Termination Event under
this Agreement, a Servicer Default under any Servicing Agreement or an Early
Amortization Event under the Pooling Agreement or any Supplement thereto.
Section 8.2 RESTRICTIONS ON TRANSFER OF CONTRIBUTED NOTE AND
SUBORDINATED NOTE.
(a) [Intentionally Omitted].
(b) Subsequent to the date hereof, neither (i) the
Subordinated Note, or any right of USFS to receive payments thereunder, nor (ii)
the Contributed Note, or any right thereunder of USSC or its assignee, shall be
assigned, transferred, exchanged, pledged, hypothecated, participated or
otherwise conveyed (each, a "TRANSFER") to any Person (any Person, a
"SUBORDINATED NOTE TRANSFEREE") unless (X) notice of such Transfer has been
given to the Company, USSC, the Trustee, and each Agent, (Y) such Subordinated
Note Transferee has delivered an instrument, in form and substance reasonably
acceptable to the Company, the Trustee and each Agent, pursuant to which such
Subordinated Note Transferee agrees to abide by the terms of the Subordinated
Note and this Article VIII and (Z) each of the Company, the Trustee, and each
Agent have given their consent to such Transfer, which consent shall not be
unreasonably withheld.
ARTICLE IX
MISCELLANEOUS
Section 9.1 AMENDMENT. Neither this Agreement nor any of the terms
hereof may be amended, supplemented or modified except in a writing signed by
the Company and USFS and consented to by the Trustee. Any amendment, supplement
or
46
modification shall not be effective until the Rating Agency Condition, if
applicable, has been satisfied.
Section 9.2 NOTICES, ETC. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including facsimile communication) and shall be personally delivered or sent by
certified mail, postage-prepaid, by facsimile or by overnight courier, (a) in
the case of the Company, to it at the address or facsimile number set forth in
Section 10.4 of the Pooling Agreement and (b) in the case of all other parties,
to such party at the address or facsimile number of the Servicer set forth in
Section 10.4 of the Pooling Agreement or, in the case of the foregoing clause
(a) or (b), at such other address or facsimile number as shall be designated by
the relevant party in a written notice to the other parties hereto given in
accordance with this Section 9.2. All notices and communications provided for
hereunder shall be effective, (a) if personally delivered by express mail or
courier, when received, (b) if sent by certified mail, three Business Days after
having been deposited in the mail, postage prepaid and (c) if transmitted by
facsimile, when sent, receipt confirmed by telephone or electronic means.
Section 9.3 NO WAIVER; REMEDIES. No failure on the part of the
Company to exercise, and no delay in exercising, any right, power or remedy
under this Agreement 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. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 9.4 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of USFS and the Company and their respective
successors (whether by merger, consolidation or otherwise) and assigns. USFS
agrees that it will not assign or transfer all or any portion of its rights or
obligations hereunder without the prior written consent of the Company and the
Trustee. USFS acknowledges that the Company shall assign all of its rights
hereunder to the Trustee, for the benefit of the Holders, pursuant to the
Pooling Agreement. USFS consents to such assignment and agrees that the Trustee,
on behalf of the Holders, to the extent provided in the Pooling Agreement, shall
be entitled to enforce the terms of this Agreement and the rights (including,
without limitation, the right to grant or withhold any consent or waiver) of the
Company directly against USFS, whether or not a Purchase Termination Event or a
Potential Purchase Termination Event has occurred. USFS further agrees that, in
respect of its obligations hereunder, it will act at the direction of and in
accordance with all requests and instructions from the Trustee until all amounts
due to the Investor Certificateholders are paid in full. The Trustee, on behalf
of the Holders, shall have the rights of a third-party beneficiary under this
Agreement.
Section 9.5 COSTS, EXPENSES AND TAXES. In addition to the limited
rights of indemnification granted to the Company under Article VII hereof, USFS
agrees to reimburse USFS on demand all reasonable out-of-pocket costs and
expenses of the Company in connection with the negotiation, preparation,
execution and delivery of, and any amendment, supplement or other modification
to, this Agreement, the other
47
Transaction Documents and any other documents prepared in connection herewith
and therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, including, without limitation, the reasonable
fees and out-of-pocket expenses of counsel for the Company with respect thereto
and with respect to advising the Company as to its rights and remedies under
this Agreement, the other Transaction Documents and any such other documents,
and all costs and expenses (including, without limitation, reasonable counsel
fees and expenses), in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement, the other
Transaction Documents and any such other documents. In addition, USFS agrees to
pay any and all stamp and other taxes and governmental fees payable or
determined to be payable in connection with the execution, delivery, filing and
recording of this Agreement or the other Transaction Documents to be delivered
hereunder, and agrees to hold the Company harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or omitting to
pay such taxes and fees.
Section 9.6 INTEGRATION. This Agreement and the other Transaction
Documents contain a final and complete integration of all prior expressions by
the parties hereto with respect to the subject matter hereof and thereof and
shall together constitute the entire agreement among the parties hereto with
respect to the subject matter hereof and thereof, superseding all prior oral or
written understandings.
Section 9.7 CAPTIONS AND CROSS REFERENCES. The various captions
(including, without limitation, the table of contents) in this Agreement are
provided solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Agreement. Unless otherwise provided
herein, references in this Agreement to any "Section," "Exhibit," "Annex" or
"Schedule" are to such Section of or Exhibit or Annex or Schedule to this
Agreement, as the case may be.
Section 9.8 RESERVED.
Section 9.9 RESERVED.
Section 9.10 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 shall be deemed to be an
original and all of which when taken together shall constitute one and the same
agreement.
Section 9.11 ACKNOWLEDGMENT OF ASSIGNMENTS. USFS hereby acknowledges
and consents to the assignment by the Company of Receivables and Receivables
Property its rights under this Agreement pursuant to the Pooling and Servicing
Agreements. USFS acknowledges that the Company, pursuant to the Pooling
Agreement will grant a security interest in the Lockbox Accounts to the Trustee
for the benefit of the Holders. USFS agrees to take any action that the Company
or the Trustee may reasonably request in connection with such assignment or
security interest.
Section 9.12 NO PETITION IN BANKRUPTCY. USFS covenants and agrees
that prior to the date which is one year and one day after the date of
termination of this
48
Agreement pursuant to Section 9.13, it will not institute against or join any
other Person in instituting against the Company any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar proceeding
under the laws of the United States, any State of the United States or the
Cayman Islands.
Section 9.13 ADDITION OF SELLERS. Subject to the terms and
conditions hereof, from time to time one or more wholly-owned Subsidiaries of
United Stationers Inc. may become additional Sellers parties hereto, the
receivables originated by which may constitute Eligible Receivables of such
Seller. If any such Subsidiary wishes to become an additional Seller, it shall
submit a request to such effect in writing to USFS and forward a copy of such
request to the Company and the Trustee. USFS, at the direction of the Company,
may, subject to the terms and provisions of the Pooling and Servicing
Agreements, agree to (subject to the approval of the Trustee) or deny any such
request; PROVIDED that, if USFS shall have failed to respond to any such request
within 30 days after receipt thereof, such request shall be deemed to have been
denied. If USFS shall have agreed to any such request pursuant to this Section
9.13, then in the case of a wholly-owned Subsidiary of United Stationers Inc.,
such wholly-owned Subsidiary shall become an additional Seller party hereto on
the related Seller Addition Date upon satisfaction of the conditions set forth
in Section 3.2 and the conditions, if any, set forth in the Pooling and
Servicing Agreements.
Section 9.14 TREATMENT OF SELLERS OTHER THAN USSC; TERMINATION
THEREOF.
(a) USSC hereby covenants and agrees with USFS and USSC shall
not permit any Seller or USFS at any time to cease to be a wholly-owned
Subsidiary of United Stationers Inc., except as provided in the following
subsection (b).
(b) If United Stationers Inc. wishes to permit any Seller to
cease to be a wholly-owned Subsidiary of United Stationers Inc., then USSC shall
submit a request (a "SELLER TERMINATION REQUEST") to such effect in writing to
USFS, with a copy thereof to the Company and the Trustee, which request shall be
accompanied by a certificate prepared by a Responsible Officer of the Servicer
indicating the Purchased Receivables Percentage applicable to such Seller as of
the date of submission of such request (the "SELLER TERMINATION REQUEST DATE").
USFS, at the direction of the Company and subject to the terms and provisions of
the Pooling and Servicing Agreements, shall consent (subject to the approval of
the Trustee) to or deny any such Seller Termination Request, PROVIDED that, if
USFS shall have failed to respond to any such Seller Termination Request within
30 days after receipt thereof, such Seller Termination Request shall be deemed
to have been denied. If USFS shall have consented to any such Seller Termination
Request, and such consent shall not be in violation of any applicable provision
of the Pooling and Servicing Agreements, then the relevant Seller shall be
terminated as a Seller hereunder on the date of the consummation of the
transaction in connection with which such Seller ceases to be a wholly-owned
Subsidiary of United Stationers Inc. or, if USSC requests in writing that the
termination date be a date prior to the consummation of such transaction, such
earlier requested date (but in no event more than 30 days prior to the
consummation of such transaction); PROVIDED that if
49
an earlier date is so requested, USSC or any Subsidiary of United Stationers
Inc. shall have entered into a valid and legally, binding agreement to effect
such transaction on or before a date certain; PROVIDED FURTHER that, if the
Purchased Receivables Percentage applicable to such Seller as of the relevant
Seller Termination Request Date is less than 10%, then USFS shall consent to
such Seller Termination Request unless such consent would violate the terms and
provisions of the Pooling and Servicing Agreements. From and after the date any
such Seller is terminated as a Seller pursuant to this subsection, USFS shall
cease buying Receivables and Receivables Property from such Seller. Each such
Seller shall be released as a Seller party hereto for all other purposes and
shall cease to be a party hereto on such termination date.
(c) A terminated Seller shall have no further obligation under
any Transaction Document, other than to repurchase Receivables previously sold
by it to USFS or the Company, as applicable, pursuant to Section 2.6 and
indemnification obligations under Section 7.1.
Section 9.15 TERMINATION. This Agreement will terminate at such time
as (a) either (i) March 28, 2006 shall have occurred or (a) an Early Termination
shall have occurred hereunder and (b) all Receivables purchased hereunder have
been collected, and the proceeds thereof turned over to the Company and all
other amounts owing to the Company hereunder shall have been paid in full or, if
Receivables sold hereunder have not been collected, such Receivables have become
Defaulted Receivables and the Company shall have completed its collection
efforts with respect thereto; PROVIDED, HOWEVER, that the indemnities of USFS to
the Company set forth in this Agreement shall survive such termination and
PROVIDED, FURTHER, that the Company shall remain entitled to receive any
collections on Receivables sold hereunder which have become Defaulted
Receivables.
Section 9.16 WAIVER OF JURY TRIAL; SUBMISSION TO JURISDICTION; OTHER
WAIVERS.
EACH PARTY HERETO WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR RELATING TO THIS AGREEMENT,
ANY OTHER TRANSACTION DOCUMENT OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR THEREWITH OR ARISING FROM ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN), ACTIONS OF ANY OF THE PARTIES HERETO OR
ANY OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.
(a) Each of the Company and USFS hereby irrevocably and
unconditionally:
50
(i) submits itself and its property in any legal
action or proceeding relating to this Agreement and the other
Transaction Documents to which it is a party, or for recognition and
enforcement of any judgment in respect thereof, to the non-exclusive
jurisdiction of any United States Federal or Illinois State court
sitting in Chicago, Illinois;
(ii) consents that any such action or proceeding
may be brought in such courts and waives any objection that it may now
or hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(iii) agrees that service of process in any such
action or proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form of
mail), postage prepaid, to such Person at its address referred to in
Section 9.2 or at such other address of which USFS or the Company, as
the case may be, shall have been notified pursuant thereto;
(iv) agrees that nothing herein shall affect the
right to effect service of process in any other manner permitted by
law or shall limit the right to ▇▇▇ in any other jurisdiction; and
(v) waives, to the maximum extent not prohibited
by law, any right it may have to claim or recover in any legal action
or proceeding referred to in this Section 9.16(b) any special,
exemplary, punitive or consequential damages.
Section 9.17 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
Section 9.18 CONFIRMATION AND RATIFICATION OF TERMS. The effect of
this Agreement is to amend and restate the Original Agreement, and to the extent
that any rights, benefits or provisions in favor of any party to the Original
Agreement existed in the Original Agreement and continue to exist in this
Agreement (including without limitation and obligations to repurchase
Receivables) without any written waiver of any such rights, benefits or
provisions prior to the date hereof, then such rights, benefits or provisions
are acknowledged to be and to continue to be effective from and after the date
of the Original Agreement. This Agreement is not a novation. The parties hereto
agree and acknowledge that any and all rights, remedies and payment provisions
under the Original Agreement, which are continuing and survive any termination
of the Original Agreement including, without limitation, any and all rights,
remedies and payment provisions with respect to (A) any representation and
warranty made or deemed to be
51
made pursuant to the Original Agreement, or (B)
any indemnification provision, shall continue and survive the execution and
delivery of this Agreement.
52
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
THE SELLER
UNITED STATIONERS SUPPLY CO.
By:
--------------------------
Name:
Title:
THE SERVICER
UNITED STATIONERS FINANCIAL
SERVICES LLC
By:
--------------------------
Name:
Title:
UNITED STATIONERS FINANCIAL
SERVICES LLC
By:
--------------------------
Name:
Title:
Consented to by:
USS RECEIVABLES COMPANY, LTD.
By:
---------------------------
Name:
Title:
SCHEDULE I
AUTHORIZED OFFICERS
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ President
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Vice President and Treasurer
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Vice President and Assistant Secretary
SCHEDULE II
Principal place of business and Chief Executive Office of USFS:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇▇ County)
Offices where USFS keeps its records concerning Receivables and Related
Contracts, purchase orders and all other Agreements related to the Receivables:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇▇ County)
Jurisdiction of organization and organizational structure of USFS is: an
Illinois limited liability corporation.
For the purposes of Section 9-307 of the UCC, USFS is located in Illinois.
USFS 's organizational identification number assigned to it by its jurisdiction
of organization is: 00543071.
USFS 's Federal Employer Identification Number is: [__________].
USFS 's exact corporate and legal name, as such name appears in its articles of
incorporation, is: United Stationers Financial Services LLC
The Office of the Secretary of State of the State of Illinois is the only office
in which a filing by USFS of a financing statement on Form UCC-l is required to
be made in connection with the transactions contemplated by this Agreement and
the other Transaction Documents.
SCHEDULE III
[RESERVED]
SCHEDULE IV
Policies Concerning Contracts and Receivables:
ON FILE WITH USFS
SCHEDULE V
[RESERVED]
SCHEDULE VI
CORPORATE AND TRADE NAMES
United Stationers Financial Services LLC
JURISDICTIONS USED
Illinois
SCHEDULE VII
DISCOUNTED PERCENTAGE
The Discounted Percentage applicable to the Receivables purchased on any date
from USFS shall equal 98.3%; provided that the Discounted Percentage may be
revised with the mutual written consent of USFS and the Company, based the
evaluation report of a third party, provided that any change to the Discounted
Percentage shall apply only prospectively and shall not affect the Purchase
Price of any Receivables created prior to the date that USFS and the Company
agreed to make such change. The Discounted Percentage is (and to the extent
revised, shall be) reflective of a fair market value discount based on an
historical analysis of losses, dilutions, delinquencies and agings on the
Receivables, and which takes into account the anticipated funding and servicing
costs to the Company, as well as arm's-length return to the Company.
SCHEDULE VIII
ERISA
None
EXHIBIT A TO
AMENDED AND RESTATED
USFS RECEIVABLES SALE AGREEMENT
FORM OF SUBORDINATED NOTE
SUBORDINATED PROMISSORY NOTE
Des Plaines, Illinois March 28, 2003
FOR VALUE RECEIVED, the undersigned, USS RECEIVABLES COMPANY, LTD., a
Cayman Islands limited liability company ("USSR"), does hereby promise to pay to
the order of UNITED STATIONERS FINANCIAL SERVICES LLC, an Illinois limited
liability company ("USSC"), and its successors and permitted assigns, the
principal amount of this Subordinated Promissory Note (this "SUBORDINATED
NOTE"), determined as described below, together with interest thereon which
shall accrue on the last day of each Settlement Period at a rate per annum equal
to the ABR in effect from time to time plus two percent (2%) from and including
the initial Effective Date to but excluding the last day of each Settlement
Period and shall, subject to the terms and conditions hereof, be paid (x) on
each Distribution Date with respect to this Subordinated Note outstanding from
time to time during the Settlement Period immediately preceding such
Distribution Date and/or (y) on the Maturity Date (as hereinafter defined).
Capitalized terms used herein and not otherwise defined are used herein as
defined in the Amended and Restated
USFS Receivables Sale Agreement, dated as of
March 28, 2003, among the Sellers, USFS, and USFS, as Servicer (such agreement,
as it may from time to time be further amended, supplemented or otherwise
modified in accordance with its terms, the "
USFS RECEIVABLES SALE AGREEMENT")
and the Second Amended and Restated Pooling Agreement, dated as of March 28,
2003, among USSR, United Stationers Financial Services LLC, as Servicer, and
Bank One, NA (Main Office Chicago), as Trustee (such agreement, as it may from
time to time further be amended, supplemented or otherwise modified in
accordance with its terms, the "Pooling Agreement"). This Subordinated Note is
the Subordinated Note referred to in the
USFS Receivables Sale Agreement.
The Initial Subordinated Note Amount shall be equal to ____________
($___________). Following the Effective Date, the aggregate principal amount of
this USFS Subordinated Note at any time shall be equal to the difference between
(i) the sum of the Initial Subordinated Note Amount and each addition to the
principal amount of the Subordinated Note with respect to each Seller pursuant
to Section 2.03 of the
USFS Receivables Sale Agreement as of such time and (ii)
the aggregate amount of all payments made in respect of the principal of this
Subordinated Note as of such time. All payment made in respect of this
Subordinated Note shall be allocated among the Sellers by the Servicer in
accordance with the USFS Receivables Sale Agreement and shall be allocated
FIRST, to pay accrued and unpaid interest thereon, and SECOND, to pay the
outstanding principal amount thereof. Principal hereunder not paid or prepaid
pursuant to
the terms hereof shall be payable on the date (the "MATURITY DATE") on which all
of the Investor Certificateholders with respect to each Outstanding Series shall
have been paid in full all amounts owing to them under any Pooling Agreement or
Servicing Agreement. Payments of interest on and principal under this
Subordinated Note shall be paid by wire transfer of immediately available funds
to such account of each Seller as such Seller may designate in writing from time
to time. Notwithstanding the foregoing, no payment of interest or principal (any
of the foregoing, a "payment") may be made under this Subordinated Note at any
time unless (i) at the date such payment is to be made, USSR shall have made all
payments in respect of its repurchase obligations pursuant to the USFS
Receivables Sale Agreement at such date and (ii) such payment is effected in
accordance with all corporate and legal formalities applicable to USSR;
PROVIDED, HOWEVER, that (A) no payment shall be made on, and no Seller shall
make any claim for any payment on, any date if (x) a Potential Early
Amortization Event of a type referred to in clause (a)(ii) or (iii) of Section
7.1 of the Pooling Agreement or (y) an Early Amortization Event has occurred and
is continuing (or would occur as a result of such payment) on such date and (B)
all payments made on any date shall be payable by USSR solely from funds
available to USSR which are not otherwise needed or required on such date to be
applied to the payment of any amounts by USSR pursuant to the USFS Receivables
Sale Agreement and the Sellers shall make no claim for payment in contravention
of this clause (B). Default in the payment of interest on and principal under
this Subordinated Note shall not constitute a Purchase Termination Event under
the USFS Receivables Sale Agreement, a Servicer Default under the Servicing
Agreement, or an Early Amortization Event under the Pooling Agreement or any
Supplement thereto.
Each holder of this Subordinated Note agrees that it shall have no
right to be paid, and shall have no claim to payment, except in accordance with,
and subject to the terms and conditions of, this Subordinated Note.
Neither this Subordinated Note, nor any right of any Seller to receive
payments hereunder, shall be assigned, transferred, exchanged, pledged,
hypothecated, participated or otherwise conveyed, except as set forth in Section
8.2 of the USFS Receivables Sale Agreement.
USSR hereby waives diligence, presentment, demand, protest and notice
of any kind whatsoever. The failure of any holder to exercise any of its rights
hereunder in any particular instance shall not constitute a waiver thereof in
that or any subsequent instance.
If any payment or distribution of any kind be collected or received by
any Seller in respect of amounts owing to such Seller under this Subordinated
Note when pursuant hereto such payment should not have been made to or received
by such Seller, such Seller forthwith shall deliver the same to the Trustee for
the benefit of the Holders. Until so delivered, such payment or distribution
shall be held in trust by such Seller as the property of the Holders, segregated
from other funds and property held by such Seller.
Each Seller covenants and agrees that, prior to the date which is one
(1) year and one (1) day after the date of termination of the USFS Receivables
Sale
Agreement pursuant to Section 9.15 thereof, it will not institute against, or
join any other Person in instituting against, USSR any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any federal or state bankruptcy or similar law.
THIS SUBORDINATED NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
USS RECEIVABLES COMPANY, LTD.
By:
--------------------------
Name:
Title:
EXHIBIT B TO
SECOND AMENDED AND RESTATED
RECEIVABLES SALE AGREEMENT
FORM OF ADDITIONAL SELLER SUPPLEMENT
SUPPLEMENT, dated ___________, to the Second Amended and Restated
Receivables Sale Agreement dated as of March 28, 2003 (as may from time to time
further be amended, supplemented or otherwise modified, the "Agreement"), among
UNITED STATIONERS SUPPLY CO., an Illinois corporation ("USSC"), (the "Seller,"
and together with each other subsidiary of UNITED STATIONERS INC. from time to
time added as a seller pursuant to Section 9.13 of the Agreement, (the
"Sellers")), UNITED STATIONERS FINANCIAL SERVICES LLC, an Illinois limited
liability company ("USFS"), and USFS, in its capacity as servicer (terms used
but not defined herein have the meaning given them in the Agreement).
W I T N E S S E T H:
WHEREAS, the Agreement provides that any Subsidiary of USSC, although
not originally a Seller thereunder, may become a Seller under the Agreement,
with (i) the consent of USFS [and the Trustee] pursuant to Section 9.13 of the
Agreement and (ii) the satisfaction of each of the conditions precedent set
forth in Section 3.2 of the Agreement (including the requirement under Section
3.2(a) thereof that such additional Seller deliver to USFS a supplement in
substantially the form of this Supplement); and
WHEREAS, the undersigned is not an original Seller under the Agreement
but now desires to become a Seller thereunder.
NOW, THEREFORE, the undersigned hereby agrees as follows:
The undersigned agrees to be bound by all of the provisions of the
Agreement applicable to a Seller thereunder and agrees that it shall, on the
date this Supplement is accepted by USFS, become a Seller for all purposes of
the Agreement to the same extent as if originally a party thereto. In addition,
the undersigned hereby confirms and grants a "security interest" (as defined in
the UCC) in the all of its Purchased Receivables, the Receivables Property in
respect thereof and all proceeds thereof to USFS to secure the prompt and
complete payment of a loan deemed to have been made in an amount equal to the
aggregate Purchase Price of the Purchased Receivables together with all other
obligations of such Seller under the Agreement.
IN WITNESS THEREOF, the undersigned has caused this Supplement to be
executed and delivered by a duly authorized officer on the date first above
written.
[Insert name of Seller]
By:
--------------------------
Title:
--------------------
EXHIBIT C TO
USFS RECEIVABLES SALE
AGREEMENT
UCC CERTIFICATE
The undersigned, the Treasurer and Assistant Secretary of UNITED
STATIONERS FINANCIAL SERVICES LLC, an Illinois limited liability company
("USFS"), makes reference to the USFS Receivables Sale Agreement dated as of
March 28, 2003 (as may from time to time be amended, supplemented or otherwise
modified, the "AGREEMENT"), among USFS and USS RECEIVABLES COMPANY, LTD., a
Cayman Islands limited company, and USFS in its capacity as servicer (terms used
but not defined herein have the meaning given them in the Agreement), and in
connection therewith hereby certifies to the Company and the Trustee, on behalf
of USFS and not individually, as follows:
1. NAMES.
(a) The exact corporate and legal name of USFS, as such name
appears in its articles of incorporation, is as follows:
United Stationers Financial Services LLC
(b) Set forth below is each other corporate name USFS has had
since its organization, together with the date of the relevant change:
NONE
(c) USFS has not changed its identity or corporate structure
in way since within the past five years.
(d) No other names (including trade names or similar
appellations) have been used by USFS or any of its divisions or other business
units in connection with the conduct of its business or the ownership of its
properties at any time during the past five years.
2. Current Locations.
(a) The chief executive office and principal place of business
of USFS is located at the following address:
United Stationers Financial Services LLC
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(b) USFS does not maintain any books or records relating to
any Receivables and Receivables Property at any location other than as set forth
in Paragraph 2(a) above.
(c) For the purposes of Section 9-307 of the UCC, USFS is
located in Illinois.
3. JURISDICTION OF ORGANIZATION AND ORGANIZATIONAL STRUCTURE. USFS is an
Illinois corporation.
4. FEDERAL TAXPAYER IDENTIFICATION NUMBER. The following is USFS's Federal
Taxpayer Identification Number:
[____________]
5. ORGANIZATIONAL IDENTIFICATION NUMBER. The following is USFS 's
Organizational Identification Number assigned to it by its jurisdiction of
organization: 00543071
6. SCHEDULE OF FILINGS. The Office of the Secretary of State of the State of
Illinois is the only office in which a filing by USFS of a financing statement
on Form UCC-l is required to be made in connection with the transactions
contemplated by this Agreement and the other Transaction Documents.
IN WITNESS WHEREOF, I have hereunto set my hand this ___ day of March
2003.
---------------------------
[Name:]
[Title:]
ANNEX 1 TO THE USFS RECEIVABLES SALE AGREEMENT
USS Receivables Company, Ltd. is a separate bankruptcy remote
subsidiary of United Stationers Financial Services LLC established to purchase
accounts receivable from United Stationers Financial Services LLC and certain of
its other subsidiaries and affiliates.