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EXHIBIT 10(b)
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RECEIVABLES PURCHASE AGREEMENT
dated as of June 20, 2001
Among
CMC RECEIVABLES, INC.
as Seller
and
THREE RIVERS FUNDING CORPORATION,
as Buyer
and
COMMERCIAL METALS COMPANY,
as Servicer
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RECEIVABLES PURCHASE AGREEMENT
RECEIVABLES PURCHASE AGREEMENT dated as of June 20, 2001 among
CMC RECEIVABLES, INC., a Delaware corporation (the "Seller"), THREE RIVERS
FUNDING CORPORATION, a Delaware corporation (the "Buyer"), and COMMERCIAL METALS
COMPANY, a Delaware corporation(the "Company").
WITNESSETH THAT:
WHEREAS, the Company's Operating Divisions (as hereinafter
defined) and the Company's Affiliates (as hereinafter defined), Structural
Metals, Inc., SMI Steel Inc., ▇▇▇▇ Electric Steel Company of South Carolina
d/b/a SMI Steel South Carolina, CMC Steel Fabricators, Inc. d/b/a SMI Joist
Company, and ▇▇▇▇▇▇ Metal Company (collectively, the "Originators") in the
ordinary course of their business generate trade receivables resulting from the
sale of merchandise and the rendering of services to their customers; and
WHEREAS, the Originators may from time to time transfer to the
Seller certain of such receivables pursuant to the Sale Agreement dated as of
June 20, 2001 among the Originators and the Seller, as the same may from time to
time be amended, supplemented or otherwise modified (the "Sale Agreement");
WHEREAS, the Seller may from time to time create pools of such
receivables; and
WHEREAS, the Buyer may from time to time purchase from the
Seller undivided percentage ownership interests in such pools of receivables
pursuant to and in accordance with the terms hereof;
NOW, THEREFORE, the parties hereto, in consideration of their
mutual covenants hereinafter set forth and intending to be legally bound hereby,
agree as follows:
Article I
DEFINITIONS; CONSTRUCTION
1.01 Certain Definitions In addition to other words and terms
defined in the recitals hereof and elsewhere in this Agreement, as used herein,
the following words and terms shall have the following meanings respectively,
unless otherwise required by context:
"Account Balance" shall mean, in respect of each Receivable
which is included in the Receivables Pool, all amounts shown as owing by the
related Obligor on the accounting records
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of an Originator and the Seller, and all other amounts which are shown on the
most recent Settlement Statement and in respect of which the related Obligor is
obligated, excluding each Defaulted Receivable and reduced by the aggregate
amount of any taxes, transport charges or other amounts that are owed by the
Obligors with respect to Receivables but are collected by the Seller or the
Originators on behalf of any other Person at such time or in reimbursement of
amounts owed by the Seller or the Originators to any other Person at such time.
"Accounting Period" shall mean, with respect to any Settlement
Date, the period ending on the last calendar day (or if such last calendar day
is not a Business Day, the next succeeding Business Day) in the month
immediately preceding such Settlement Date, and the corresponding periods prior
to the Closing Date.
"Affected Party" shall mean each of the Buyer, any permitted
assignee of the Buyer, and each Person providing liquidity or credit support to
the Buyer pursuant to a Liquidity Agreement or a Program Support Agreement and
each of their respective Affiliates and assigns.
"Affiliate" shall mean, with respect to a Person, any other
Person which directly or indirectly controls, is controlled by or is under
common control with such Person. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement" shall mean this Receivables Purchase Agreement, as
the same may from time to time be amended, supplemented or otherwise modified.
"Business Day" shall mean any day other than a Saturday,
Sunday, public holiday under the Laws of the Commonwealth of Pennsylvania, the
State of Texas or the State of New York or other day on which banking
institutions are authorized or obligated to close in the Commonwealth of
Pennsylvania, the State of Texas or the State of New York.
"Buyer's Allocation" shall have the meaning ascribed to such
term in Section 3.01 hereof.
"Certificate of Participation" shall mean, with respect to the
Participation Interest, the written evidence of the Buyer's interest in the
Receivables Pool related to such Participation Interest, in substantially the
form attached as Exhibit A hereto.
"Chief Executive Office" shall mean, with respect to the
Seller or an Originator, the place where the Seller or the Originator, as the
case may be, is located, within the meaning of
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Section 9-103(c)(2) of the Uniform Commercial Code, as the same may from time to
time be amended, supplemented or otherwise modified, or any analogous provision
of any successor statute or any analogous provision of the Uniform Commercial
Code in effect in the jurisdiction whose Law governs the perfection of the
Seller's ownership interest in any Receivable or the Buyer's ownership interest
in any Purchased Receivable.
"Closing Date" shall mean the date on which the Participation
Interest is initially purchased by the Buyer in the Receivables Pool pursuant to
the terms of this Agreement.
"Collections" shall mean, for any Purchased Receivable as of
any date, (i) the sum of all amounts, whether in the form of cash, checks,
drafts, or other instruments (excluding promissory notes), received by an
Originator, the Seller or the Servicer or in a Permitted Lockbox in payment of,
or applied to, any amount owed by an Obligor on account of such Purchased
Receivable (including but not limited to all amounts received on account of any
Defaulted Receivable), including, without limitation, all amounts received on
account of such Purchased Receivable and other fees and charges, and (ii) all
amounts deemed to have been received by an Originator, the Seller or the
Servicer as a Collection pursuant to Sections 5.03(c) or 6.04 hereof.
"Company Fiscal Year" shall mean the fiscal year of the
Company, each of the other Originators and the Seller for accounting purposes.
"Company Entity" shall have the meaning assigned to such term
in Section 9.01(s) hereof.
"Complete Servicing Transfer" shall have the meaning ascribed
to such term in Section 6.07 hereof.
"Concentration Limit" shall mean, as of any date of
determination, with respect to all of the Receivables owing from a single
Obligor (except for an Obligor listed on Exhibit I), together with Receivables
owing from its Affiliates or subsidiaries, an amount equal to four percent (4%)
of the aggregate of the Account Balances of the Eligible Receivables in the
Receivables Pool outstanding as of the last day of the most recently completed
Accounting Period; provided that such percentage shall be increased for any
applicable Obligor to the highest level for which such Obligor qualifies, as
determined at the end of the Accounting Period most recently completed, in
accordance with the following: (i) six percent (6%) in the case of any Obligor
whose long-term debt obligations are rated BBB or higher by S&P or Baa2 or
higher by ▇▇▇▇▇'▇; (ii) eight percent (8%) in the case of any Obligor whose
long-term debt is rated A or higher by S&P or A2 or higher by ▇▇▇▇▇'▇; or (iii)
ten percent (10%) in the case of any Obligor whose long-term debt is rated AA or
higher by S&P or Aa2 or higher by ▇▇▇▇▇'▇.
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"Contract" shall mean a written or oral contract, which shall
be legally binding, between an Originator and an Obligor which gives rise to a
Receivable arising from the sale by the Originator of goods or services in the
ordinary course of the business of the Originator.
"Cost of Funds" shall mean, with respect to any Settlement
Period, an amount, as notified in writing by the Buyer to the Seller on or prior
to the related Settlement Date, equal to the interest or discount cost for funds
borrowed or obtained during such Settlement Period, either from the issuance of
commercial paper notes, the taking of loans or otherwise, by the Buyer for the
purpose of maintaining or acquiring the Participation Interest, including in the
computation of such cost any dealer's discount or fees and any and all other
fees which are attributable to such borrowing and are specified from time to
time in writing by the Buyer to the Seller.
"Credit and Collection Policy" shall mean the objective
receivable credit and collection practices utilized by the Originators, the
Seller and the Servicer as of the date hereof and approved by the Buyer, as the
same may be modified in strict compliance with this Agreement.
"Credit Enhancement Floor" shall mean, with respect to any
Settlement Date, the sum of (a) sixteen percent (16%), plus (b) the Expected
Dilution in the aggregate with respect to all types of Dilution Factors.
"Credit Enhancement Reserve" shall mean, with respect to any
Settlement Date, the product of (A) the greater of (1) the sum of (x) the
aggregate of the Dilution Reserves with respect to each type of Dilution Factor
as of such Settlement Date, plus (y) the Credit Loss Reserve as of such
Settlement Date and (2) the Credit Enhancement Floor as of such Settlement Date,
and (B) the positive result, if any, of (1) the aggregate outstanding balance of
Eligible Receivables in the Receivables Pool as of the last day of the full
Accounting Period immediately preceding such Settlement Date, minus (2) the sum
of (x) the Yield Reserve with respect to the related Settlement Period, plus (y)
the Servicer's Compensation Reserve as of such Settlement Date, minus (3) the
aggregate amount by which the Account Balance of Eligible Receivables of each
Obligor as of the last day of the full Accounting Period immediately preceding
such Settlement Date exceeds the Concentration Limit for such Obligor.
"Credit Loss Reserve" shall mean, with respect to any
Settlement Date, the product, expressed as a percentage, of (i) 2.0, (ii) the
Loss Ratio as of such Settlement Date and (iii) the Loss Horizon Ratio as of
such Settlement Date.
"Days Sales Outstanding" shall mean, as of any date of
calculation, the sum of (i) the product of (A) the quotient of (x) the aggregate
Account Balances of all Purchased Receivables
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outstanding as of the last day of the most recently ended Accounting Period less
the aggregate amount of net sales of the Originators during such Accounting
Period, divided by (y) the aggregate amount of net sales of the Originators
during the Accounting Period (the "Prior Period") immediately preceding the most
recently ended Accounting Period, and (B) the number of days in the Prior
Period, plus (ii) the number of days in the most recently ended Accounting
Period.
"Default Ratio" shall mean, with respect to any Settlement
Date, a fraction, expressed as a percentage, the numerator of which is the
aggregate outstanding balance of Eligible Receivables which were in the
Receivables Pool as of the first day of the full Accounting Period immediately
preceding such Settlement Date and which became Defaulted Receivables during
such Accounting Period and the denominator of which is the aggregate amount of
net sales of the Originators during the fourth full Accounting Period
immediately preceding such Settlement Date.
"Defaulted Receivable" shall mean a Purchased Receivable (a)
the Obligor of which is not entitled to purchase additional merchandise or
services from the applicable Originator, by reason of any default or
nonperformance by such Obligor, under the terms of the Credit and Collection
Policy, (b) which has become uncollectible or has been written off the books of
the applicable Originator or the Seller by reason of such Obligor's inability to
pay, as determined by the Buyer or the Servicer, in either case in accordance
with the Credit and Collection Policy, (c) in respect of which an Event of
Bankruptcy has occurred with respect to the related Obligor or (d) in respect of
which the Obligor is more than 60 days past due.
"Deferred Purchase Price" shall mean the amount calculated
pursuant to Section 5.06 hereof.
"Depositary" shall mean Bankers Trust Company.
"Dilution" shall mean a reduction of the Account Balance of an
Eligible Receivable given to an Obligor in accordance with the Credit and
Collection Policy as a result of a Dilution Factor.
"Dilution Factor" shall mean each type of factor set forth on
Exhibit H resulting in, or which may result in, a Dilution.
"Dilution Horizon" shall mean, with respect to any type of
Dilution Factor, the number indicated opposite such type of Dilution Factor on
Exhibit H; provided, that the Buyer may at any time, in its reasonable
discretion, change the Dilution Horizon for any type of Dilution Factor through
the delivery by the Buyer to the Seller of an amended Exhibit H.
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"Dilution Horizon Ratio" shall mean, as of any Settlement Date
with respect to any type of Dilution Factor, a fraction, expressed as a
percentage, the numerator of which is the aggregate amount of net sales of the
Originators during the number of full Accounting Periods immediately preceding
such Settlement Date equal to the Dilution Horizon with respect to such type of
Dilution Factor and the denominator of which is the aggregate outstanding
balance of Eligible Receivables in the Receivables Pool as of the last day of
the full Accounting Period immediately preceding such Settlement Date. The Buyer
and the Seller hereby agree that the Dilution Horizon Ratio with respect to a
Dilution Factor which has a Dilution Horizon equal to zero shall be zero.
"Dilution Ratio" shall mean, as of any Settlement Date with
respect to any type of Dilution Factor, a fraction, expressed as a percentage,
the numerator of which is the aggregate dollar amount of Dilutions attributable
to such type of Dilution Factor recognized by the Originators or the Seller
during the full Accounting Period immediately preceding such Settlement Date and
the denominator of which is the aggregate amount of net sales of the Originators
during the "N"th full Accounting Period immediately preceding such Settlement
Date, where "N" is equal to the Dilution Horizon with respect to such type of
Dilution Factor. The Buyer and the Seller hereby agree that the Dilution Ratio
with respect to a Dilution Factor which has a Dilution Horizon equal to zero
shall be zero.
"Dilution Reserve" shall mean, as of any Settlement Date with
respect to any type of Dilution Factor, the product of (a) the sum of (i) 2.0
times the Expected Dilution with respect to such type of Dilution Factor as of
such Settlement Date, plus (ii) the product of (x) the positive result, if any,
of the Dilution Spike Ratio with respect to such type of Dilution Factor as of
such Settlement Date, minus such Expected Dilution, and (y) a fraction, the
numerator of which is such Dilution Spike Ratio and the denominator of which is
such Expected Dilution, and (b) the Dilution Horizon Ratio with respect to such
type of Dilution Factor as of such Settlement Date.
"Dilution Spike Ratio" shall mean, as of any Settlement Date
with respect to any type of Dilution Factor, the highest Dilution Ratio with
respect to such type of Dilution Factor for any full Accounting Period during
the period of twelve (12) consecutive full Accounting Periods immediately
preceding such Settlement Date.
"Dispute" shall mean any dispute, deduction, claim, offset,
defense, counterclaim, set-off or obligation of any kind, contingent or
otherwise, relating to a Receivable, including, without limitation, any dispute
relating to goods or services already paid for.
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"Dollar", "Dollars" and the symbol "$" shall mean lawful money
of the United States of America.
"Eligible Receivable" shall mean any Receivable which:
(a) duly complies with all applicable Laws and other
legal requirements, whether Federal, state or local,
including, without limitation, usury laws, the
Federal Consumer Credit Protection Act, the Fair
Credit Billing Act and the Federal Truth in Lending
Act;
(b) constitutes an "account" or a "general intangible" as
defined in the Uniform Commercial Code as in effect
in the State of New York and the jurisdiction whose
Law governs the perfection of the Buyer's
Participation Interest in such Receivable;
(c) (i) was originated by an Originator in the ordinary
course of the Originator's business in a transaction
which complied with the Credit and Collection Policy,
or (ii) was originated by a business subsequently
acquired by or merged into the Originator in a
transaction which complied with the policies and
procedures of such business in effect at the time
such Receivable was originated, provided that the
eligibility of such Receivable under this clause (ii)
is approved in advance in writing by the Referral
Agent;
(d) arises from a Contract (the form of which has been
approved by the Referral Agent) and has been billed,
or will be billed to the related Obligor, or in
respect of which the related Obligor is otherwise
liable, in accordance with the terms of such
Contract;
(e) arises from a Contract that (i) does not require the
Obligor under such Contract to consent to the
transfer, sale or assignment of the rights of the
applicable Originator to receive payments under such
Contract and (ii) does not contain any provision that
restricts the ability of the Buyer to exercise its
rights under this Agreement, including, without
limitation, its right to review the Contract, except,
in each case, as consented to or waived in writing by
the Obligor under such Contract;
(f) constitutes a legal, valid, binding and irrevocable
payment obligation of the related Obligor,
enforceable in accordance with its terms
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(subject to contractual discounts, allowances,
quality and quantity adjustments);
(g) provides for payment in Dollars by the related
Obligor;
(h) is payable into a Permitted Lockbox or Lockbox
Account or directly to the Servicer or the Seller;
provided that Receivables originated by the Cometals
Operating Division need not be payable into a
Permitted Lockbox until such time as Cometals is
required to maintain a Permitted Lockbox pursuant to
Section 6.08;
(i) has not been repurchased by the Seller or deemed
collected pursuant to the provisions of this
Agreement;
(j) if it were a Purchased Receivable, would not be a
Defaulted Receivable;
(k) has an Obligor who is entitled to purchase additional
merchandise or receive additional services from an
Originator under the terms of the Credit and
Collection Policy; provided, that a Receivable which
has an Obligor who is not entitled to purchase
additional merchandise or receive additional services
from the Originator because such Obligor has reached
the credit limit established by the Originator shall
be deemed to satisfy this paragraph (k);
(l) was not originated in or subject to the Laws of a
jurisdiction whose Laws would make such Receivable,
the related Contract, the transfer of such Receivable
by the Originator to the Seller pursuant to the Sale
Agreement or the sale of the Participation Interest
in such Receivable to the Buyer hereunder unlawful,
invalid or unenforceable;
(m) is owned solely by the Seller free and clear of all
Liens, except for the Lien arising in connection with
this Agreement and any Program Support Agreement;
(n) no rejection or return of the goods or services which
give rise to such Receivable has occurred and all
goods and services in connection therewith have been
finally performed or delivered to and accepted by the
Obligor without Dispute;
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(o) is not an obligation of the United States, any state
or municipality or any agency or instrumentality or
political subdivision thereof, unless otherwise
agreed to in writing by the Buyer, the Seller and the
Affected Parties;
(p) is not subject to any contractual right of set-off;
(q) is an obligation representing part or all of the
sales price of merchandise or services;
(r) such Receivable must, by its terms, require full
payment in respect thereof not more than 60 days past
the specified due date thereof;
(s) has an Obligor who is located in the United States,
including the Commonwealth of Puerto Rico;
(t) has an Obligor who is not an Affiliate of an
Originator or the Seller;
(u) was acquired by the Seller from an Originator
pursuant to and in accordance with the terms of the
Sale Agreement; and
(v) the Obligor of which has not been deemed to be
ineligible by the Buyer, in its sole discretion, upon
ten (10) days prior written notice to the Seller.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or
not incorporated) that is a member of a group of which the Seller is a member
and which is treated as a single employer under Section 414 of the Code.
"Event of Bankruptcy" shall mean, for any Person:
(a) if such Person shall fail generally to, or admit in
writing its inability to, pay its debts as they
become due; or
(b) a proceeding shall have been instituted in a court
having jurisdiction in the premises seeking a decree
or order for relief in respect of such Person in an
involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in
effect, or for the appointment of a receiver,
liquidator, assignee, custodian, trustee,
sequestrator, conservator (under the Bank
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Conservation Act, as amended, or otherwise) or other
similar official of such Person or for any
substantial part of its property, or for the
winding-up or liquidation of its affairs; or
(c) the commencement by such Person of a voluntary case
under any applicable bankruptcy, insolvency or other
similar Law now or hereafter in effect, or such
Person's consent to the entry of an order for relief
in an involuntary case under any such Law, or consent
to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian,
sequestrator, conservator (under the Bank
Conservation Act, as amended, or otherwise) or other
similar official of such Person or for any
substantial part of its property, or any general
assignment for the benefit of creditors, or, if a
corporation or similar entity, any corporate action
in furtherance of any of the foregoing; or
(d) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the
appointment of a receiver, liquidator, assignee,
trustee, custodian, sequestrator, or conservator in
any insolvency, readjustment of debt, marshalling of
assets and liabilities, or similar proceedings, shall
have been entered against such Person.
"Expected Dilution" shall mean, as of any Settlement Date with
respect to any type of Dilution Factor, a fraction, expressed as a percentage,
the numerator of which is the sum of the Dilution Ratios with respect to such
type of Dilution Factor for each of the twelve full Accounting Periods
immediately preceding such Settlement Date and the denominator of which is 12.
"Expiration Date" means the earliest of (i) June 16, 2004,
which may be extended from time to time for an additional period or periods for
up to 360 days commencing on the then scheduled Expiration Date, by written
notice of request given by the Seller to the Buyer, specifying the duration of
the period of extension requested, at least 120 days before such scheduled
Expiration Date, and by written notice of acceptance (which notice may be given
or withheld by the Buyer in its sole discretion) by the Buyer to the Seller not
later than ninety (90) days prior to such scheduled Expiration Date, provided,
that the new scheduled Expiration Date shall in no event result in a remaining
term of this Agreement from any date of acceptance thereof that exceeds 360
days, (ii) the date that the Buyer shall give notice of the termination of the
Buyer's obligation to purchase the Participation Interest or make Reinvestments
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hereunder pursuant to Section 10.02, and (iii) the first date on which there
shall no longer be any Liquidity Agreement or Program Support Agreement in
effect (as to which the Buyer shall promptly notify the Seller after obtaining
notice of such termination, including any anticipated termination) supporting
commercial paper issued to fund the Participation Interest hereunder; provided,
further, that if any Expiration Date is not a Business Day it shall occur on the
next preceding Business Day.
"Facility Fee" shall mean the facility fee set forth in a
separate letter agreement, dated as of the Closing Date, between the Seller and
the Buyer, as the same may be amended from time to time.
"Fitch" shall mean Fitch Inc.
"GAAP" shall mean generally accepted accounting principles in
the United States of America, applied on a consistent basis except to the extent
necessary to comply with changes in such generally accepted accounting
principles.
"Income Taxes" shall mean any federal, state, local or foreign
taxes based upon, measured by, or imposed upon gross or net income, gross or net
receipts, capital or net worth, in each case, attributable solely to cash
received by the Affected Party that is not remitted or deemed remitted to the
Originators or the Seller (regardless of the name of the tax imposed), including
any penalties, interest or additions to tax imposed with respect thereto.
"Investment" shall mean, on each date of determination, the
sum of (i) the Net Investment and (ii) the Deferred Purchase Price, if any, as
determined on the first Closing Date or as set forth on the most recently
delivered Settlement Statement.
"Law" shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree or
award of any Official Body (including any law, rule, regulation or governmental
order relating to the protection of the environment or to public or employee
health or safety).
"Lien", in respect of the property of any Person, shall mean
any ownership interest of any other Person, any mortgage, deed of trust,
hypothecation, pledge, lien, security interest, grant of a power to confess
judgment, preference, right to priority payment, filing of any financing
statement, charge or other encumbrance or security arrangement of any nature
whatsoever, including, without limitation, any conditional sale or title
retention arrangement, any assignment, deposit arrangement, consignment or lease
intended as, or having the effect of, security, or the filing of a financing
statement in connection with any of the foregoing.
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"Liquidation Day" shall mean each day which occurs on or after
(i) the date designated in a notice given by the Buyer to the Seller stating
that the conditions contained in Section 4.03 hereof are not satisfied, (ii) the
Expiration Date, (iii) the date on which a Termination Event occurs and is
continuing, or (iv) the date on which the Seller gives written notice to the
Buyer that it no longer wishes to sell interests in the Receivables Pool to the
Buyer or permit Reinvestments to be made; provided, however, there shall be no
Liquidation Day after the Net Investment shall equal zero.
"Liquidation Period" shall mean one or more consecutive
Liquidation Days.
"Liquidity Agreement" shall mean the Funding Agreement dated
as of June 20, 2001 among the Buyer, Mellon Bank, as funding institution, and
the Referral Agent, as the same may from time to time be amended, supplemented,
modified, replaced or superseded.
"Lockbox Account" shall mean an account owned and maintained
by the Servicer or its subservicer, for the benefit of the Seller, with a
Permitted Lockbox Bank for the purpose of depositing payments made by Obligors.
"Lockbox Servicing Agreement" shall mean an agreement relating
to lockbox services in connection with a Permitted Lockbox which is in form and
substance satisfactory to the Buyer and which has been executed and delivered to
the Buyer by a Permitted Lockbox Bank.
"Loss Horizon Ratio" shall mean, with respect to any
Settlement Date, a fraction, expressed as a percentage, the numerator of which
is the aggregate amount of net sales of the Originators during the four full
Accounting Periods immediately preceding such Settlement Date and the
denominator of which is the aggregate outstanding balance of Eligible
Receivables in the Receivables Pool as of the last day of the full Accounting
Period immediately preceding such Settlement Date.
"Loss Ratio" shall mean, with respect to any Settlement Date,
the highest average Default Ratio for any three consecutive full Accounting
Periods during the period of twelve consecutive full Accounting Periods
immediately preceding such Settlement Date.
"Maximum Net Investment" shall mean $130,000,000 or such
greater amount as shall be established with the consent of the Buyer or such
lesser amount as shall be established in accordance with Section 2.03 hereof.
"Mellon Bank" shall mean Mellon Bank, N.A., a national banking
association.
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"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
"Multiemployer Plan" shall mean a multiemployer plan as
defined in Section 4001(a)(3) of ERISA to which the Seller or any ERISA
Affiliate (other than one considered an ERISA Affiliate only pursuant to
subsection (m) or (o) of Section 414 of the Code) is making or accruing an
obligation to make contributions, or has within any of the preceding five plan
years made or accrued an obligation to make contributions.
"Net Investment" shall mean (a) for the Closing Date, an
amount equal to the Purchase Price (not including the Deferred Purchase Price,
if any) paid for the Participation Interest on the Closing Date, and (b) for any
other day, an amount equal to the sum of (i) the Net Investment on the Closing
Date, plus (ii) amounts paid to the Seller pursuant to Section 5.01 hereof since
the Closing Date as an increase in the Net Investment, less (iii) all
Collections and other amounts paid to the Buyer and not reinvested (which shall
not include any amounts paid to the Buyer as Cost of Funds or fees) pursuant to
Sections 2.03(b), 5.03(b),(d)and (e) and 5.04 hereof since the Closing Date. In
the event that any amount received by the Buyer constituting any portion of
Collections is rescinded or must otherwise be returned or restored for any
reason to any Person, the Net Investment shall be increased by the amount of
Collections so rescinded, returned or restored.
"Net Sales" shall mean, with respect to an Originator during
any specified period of time, the aggregate sales by such Originator during such
period which generate Receivables.
"Obligor" shall mean, with respect to any Receivable, the
Person who purchased goods or services under a Contract giving rise to such
Receivable and who is obligated to make payments to an Originator or the Seller
on such Contract in respect of such Receivable.
"Office" shall mean, when used in connection with the Buyer,
its office located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, or when used in connection with the Company, an Originator or the Seller,
its respective office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or
at such other office or offices of the Buyer, the Company, the Originator or the
Seller or branch, subsidiary or Affiliate of any thereof as may be designated in
writing from time to time by any party hereto to the other parties hereto.
"Official Body" shall mean any government or political
subdivision or any agency, authority, bureau, central bank, commission,
department or instrumentality of either, or any court, tribunal, grand jury or
arbitrator, in each case whether foreign or domestic.
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"Operating Divisions" shall mean the following operating
divisions of the Company: Cometals, Commonwealth Metal, Dallas Trading Division
and Secondary Metals Processing Division.
"Originators" shall mean the Company (acting through its
Operating Divisions) and Structural Metals, Inc., SMI Steel Inc., ▇▇▇▇ Electric
Steel Company of South Carolina d/b/a SMI Steel South Carolina, CMC Steel
Fabricators, Inc. d/b/a SMI Joist Company, (acting through its facility in Hope,
Arkansas) and ▇▇▇▇▇▇ Metal Company.
"Participation Interest" shall mean, at any time, an undivided
percentage ownership interest equal to the Buyer's Allocation at such time in
all then outstanding Receivables included in the Receivables Pool, including,
without limitation, all Collections, and all collateral security, insurance
policies, letters of credit and surety bonds given on behalf of Obligors to
secure or support payment of such Receivables, and any proceeds of any of the
foregoing.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
referred to and defined in ERISA or any successor thereto.
"Permitted Lockbox" shall mean a post office box owned and
maintained by the Servicer or its subservicer for the benefit of the Seller for
the purpose of receiving payments made by Obligors.
"Permitted Lockbox Bank" shall mean any bank at which a
Lockbox Account is maintained, the short-term unsecured debt obligations of
which are rated at least A-1 by S&P, at least P-1 by Moody's and, if rated by
Fitch, at least F-1 by Fitch, appointed from time to time by the Seller and
approved by the Buyer.
"Person" shall mean an individual, corporation, partnership
(general or limited), trust, business trust, unincorporated association, joint
venture, joint-stock company, Official Body, or any other entity of whatever
nature.
"Plan" shall mean any pension plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
that is maintained for employees of the Seller or any ERISA Affiliate.
"Potential Servicer Event" shall mean any event or condition
which, with the giving of notice, the passage of time or both, would constitute
a Servicer Event.
"Potential Termination Event" shall mean any event or
condition which, with the giving of notice, the passage of time or both, would
constitute a Termination Event.
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"Program Fee" shall mean, for any Settlement Period, the rate
per annum set forth in the separate letter agreement, dated as of the Closing
Date, between the Seller and the Buyer, as the same may be amended from time to
time.
"Program Fee Amount" shall mean, for any Settlement Period or
part thereof, an amount equal to the product of (i) the Program Fee and (ii) the
average daily Net Investment during the days elapsed in such Settlement Period
and (iii) the quotient of the number of days elapsed during such Settlement
Period divided by 360.
"Program Support Agreement" means, collectively, all liquidity
agreements, funding agreements (other than the Liquidity Agreement), credit
agreements, letter of credit agreements, surety agreements, security agreements,
letters of credit and all other agreements which may be in effect from time to
time and which provide liquidity or credit support in respect of the commercial
paper issued by the Buyer, excluding, in the sole discretion of the Referral
Agent, any such agreement the absence of which would not reasonably be expected
to have a material adverse effect on the ability of the Buyer to issue its
commercial paper to fund the Net Investment hereunder.
"Purchase Availability Amount" shall mean, as of any date, an
amount equal to the excess, if any, of (i) the Maximum Net Investment as of such
date over (ii) the Net Investment as of such date.
"Purchase Documents" shall mean this Agreement, the
Certificate of Participation, the Sale Agreement and such other agreements,
documents and instruments entered into and delivered by the Seller or the
Originators in connection with the transactions contemplated by this Agreement.
"Purchase Notice" shall mean each notice delivered pursuant to
Section 4.02(e) hereof, in such form and with such detail as the Buyer may
require from time to time.
"Purchase Obligation" shall have the meaning ascribed to such
term in Section 2.01 hereof.
"Purchase Price" shall mean, with respect to the purchase of
the Participation Interest, the amount of cash consideration set forth on the
Purchase Notice or otherwise paid by the Buyer for such Participation Interest
on the Closing Date.
"Purchased Receivable" shall mean a Receivable included in the
Receivables Pool in which the Buyer is maintaining the Participation Interest
pursuant to the terms of this Agreement.
"Rate of Collections" shall mean, for any Accounting Period, a
fraction, expressed as a percentage, the numerator of which is equal to the
total Collections in respect of all
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Receivables (including deemed Collections to the extent actually received by the
Servicer pursuant to Section 5.07) during such Accounting Period and the
denominator of which is equal to the aggregate Account Balances of all
Receivables as of the close of business on the last day of the immediately
preceding Accounting Period.
"Receivable" shall mean, with respect to any Contract, all
receivables, contract rights, general intangibles, accounts, chattel paper,
instruments (including, without limitation, promissory notes), amounts due and
to become due to an Originator or the Seller arising under such Contract
(including but not limited to finance charges accrued with respect to such
amounts and fees), and all other rights, powers and privileges of the Originator
or the Seller arising thereunder or related thereto and in the merchandise
(including returned goods) and contracts relating thereto, assertable against
any Person whatsoever, all security interests, insurance policies, letters of
credit, surety bonds, guaranties and property securing or supporting payment of
such Receivable, all Records relating to such Receivable and all proceeds and
products of any of the foregoing; provided, that the term shall not include any
Receivable the Obligor of which is listed on Exhibit I hereto, as such exhibit
may be amended, supplemented or modified from time to time.
"Receivables Pool" shall mean, at any time, the group of
Purchased Receivables then outstanding which have, on the Closing Date, been
identified by the Seller as constituting a pool and each additional Receivable
thereafter added to such pool.
"Records" shall mean correspondence, memoranda, computer
programs, tapes, discs, papers, books or other documents or transcribed
information of any type whether expressed in ordinary or machine readable
language.
"Reference Rate" shall mean the rate of interest established
by the Referral Agent from time to time as its reference rate; any change in the
reference rate shall become effective as of the opening of business when such
change occurs. The "Reference Rate" is not intended to be the lowest rate of
interest charged by the Referral Agent in connection with extensions of credit
to debtors.
"Referral Agent" shall mean Mellon Bank, together with its
successors or assigns, in its capacity as referral agent for the Buyer.
"Reinvestment" shall mean the purchase by the Buyer and the
sale by the Seller of additional undivided percentage ownership interests in
each and every Purchased Receivable utilizing the proceeds of Collections that
were allocated to the Buyer for such purpose pursuant to Section 5.03(a).
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"Remainder" shall have the meaning assigned to such term in
Section 5.03(a) hereof.
"Reportable Event" shall mean any reportable event as defined
in Section 4043(c) of ERISA or the regulations issued thereunder with respect to
a Plan (other than a Plan maintained by an ERISA Affiliate that is considered an
ERISA Affiliate only pursuant to subsection (m) or (o) of Section 414 of the
Code).
"Responsible Officer" shall mean the chief executive officer,
chief financial officer, controller, secretary, treasurer or any vice president
of the Seller, the Company or any other Originator, respectively, as the case
may be.
"Sale Agreement" shall have the meaning assigned to such term
in the recitals hereto.
"Servicer" shall mean the Company, or any Person other than
the Company or its Affiliates which, upon the termination of the Company as
Servicer, succeeds to the functions performed by the Company as the servicer of
the Purchased Receivables pursuant to a Complete Servicing Transfer and a
Successor Servicing Agreement.
"Servicer Event" shall mean a Termination Event (other than
the Termination Event under Section 10.01(k) relating to the Buyer).
"Servicer's Compensation" shall have the meaning ascribed to
such term in Section 6.06(e) hereof.
"Servicer's Compensation Reserve" shall mean, as of any
Settlement Date, an amount equal to the product of (i) .50%, (ii) the aggregate
outstanding balance of Eligible Receivables in the Receivables Pool as of the
last day of the full Accounting Period immediately preceding such Settlement
Date, and (iii) a fraction, the numerator of which is the product of (a) the
Days Sales Outstanding at the close of business as of the last day of such
Accounting Period and (b) 1.5 and the denominator of which is 360.
"Settlement Date" shall mean, as to each Settlement Period,
the twenty-second (22nd) calendar day (or, if such twenty-second (22nd) calendar
day is not a Business Day, the next succeeding Business Day) after the last day
of the Accounting Period most recently completed.
"Settlement Period" shall mean (a) the period from and
including the Closing Date and ending on the day immediately preceding the first
Settlement Date, and (b) thereafter, the period from and including the
Settlement Date of the immediately preceding Settlement Period and ending on the
day immediately preceding the next Settlement Date.
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"Settlement Statement" shall mean a statement substantially in
the form of Exhibit B hereto, which, among other things, will identify in the
aggregate all Receivables included in the Receivables Pool as of the last day of
the Accounting Period most recently completed, duly completed and executed by a
Responsible Officer of the Company or, if the Company is no longer the Servicer,
of the Seller and delivered to the Buyer pursuant to Section 5.01 hereof.
"S&P" shall mean Standard & Poor's Ratings Services.
"Successor Servicing Agreement" shall mean any agreement
between the Buyer and any Person, other than the Company or its Affiliate, which
contains provisions concerning the servicing of the Purchased Receivables
substantially similar to the provisions contained herein, including Sections
5.03, 5.04, 5.06, 6.01, 6.02, 6.04, 6.06 and 6.07 hereof, pursuant to which such
Person performs servicing functions in respect of the Purchased Receivables, and
all agreements, instruments and documents attached thereto or delivered in
connection therewith, as any of the same may from time to time be amended,
supplemented or otherwise modified and in effect.
"Termination Event" shall have the meaning ascribed to such
term in Section 10.01 hereof.
"Transaction Costs" shall have the meaning ascribed to such
term in Section 11.01 hereof.
"UCC" shall have the meaning ascribed to such term in Section
1.02 hereof.
"Withdrawal Liability" shall mean 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 Subtitle E of Title IV of ERISA.
"Yield Reserve" shall mean, with respect to any Settlement
Period, an amount equal to the result of (X) the sum of (i) the Cost of Funds
for such Settlement Period and (ii) the product of (a) the Program Fee, (b) the
Net Investment at the close of business on the first day of such Settlement
Period, and (c) a fraction, the numerator of which is the actual number of days
in such Settlement Period and the denominator of which is 360, and (iii) the
product of (a) the Facility Fee, (b) the Maximum Net Investment as of the close
of business of the first day of such Settlement Period, and (c) a fraction, the
numerator of which is the actual number of days in such Settlement Period and
the denominator of which is 360, divided by (Y) the actual number of days in of
such Settlement Period, times (Z) the product of the Days Sales Outstanding as
of the last day of its most recently ended Accounting Period times 1.5.
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1.02 Interpretation and Construction. Unless the context of
this Agreement otherwise clearly requires, references to the plural include the
singular, the singular the plural and the part the whole. References in this
Agreement to "determination" by the Buyer shall be conclusive absent manifest
error and include good faith estimates by the Buyer (in the case of quantitative
determinations) and good faith beliefs by the Buyer (in the case of qualitative
determinations). The words "hereof", "herein", "hereunder" and similar terms in
this Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement. The section and other headings contained in this
Agreement are for reference purposes only and shall not control or affect the
construction of this Agreement or the interpretation hereof in any respect.
Section, subsection and appendix references are to this Agreement unless
otherwise specified. As used in this Agreement, the masculine, feminine or
neuter gender shall each be deemed to include the others whenever the context so
indicates. Terms not otherwise defined herein which are defined in the Uniform
Commercial Code as in effect in the State of New York (the "UCC") on the date
hereof shall have the respective meanings ascribed to such terms therein unless
the context otherwise clearly requires. This Agreement shall be construed as a
whole and in accordance with its fair meaning.
Article II
AGREEMENT TO PURCHASE AND SELL
2.01 Purchase Limits. Subject to the terms and conditions
hereof, the Seller may at its option sell to the Buyer, and the Buyer agrees to
purchase from the Seller (such agreement being referred to herein as the
"Purchase Obligation"), at any time and from time to time on and after the date
hereof and to but excluding the Expiration Date, undivided percentage ownership
interests in the Receivables Pool by purchasing the Participation Interest in
such Receivables Pool. Subject to the terms and conditions hereof, the Buyer
shall also (i) make Reinvestments by permitting the Servicer to cause
Collections allocated to the Buyer to be applied to the purchase of additional
undivided percentage ownership interests in the Receivables Pool, and (ii)
increase its Net Investment in the Participation Interest on any Settlement Date
at the request of the Seller (without regard to a minimum amount). The Buyer
shall not purchase the Participation Interest on the Closing Date, or permit a
Reinvestment to be made on any day, or increase its Net Investment on any
Settlement Date, to the extent that the amount of such purchase or Reinvestment
shall exceed the Purchase Availability Amount, or shall cause the Buyer's
Allocation (after giving effect to such purchase or Reinvestment) to exceed
100%. The Buyer shall not be obligated to increase the Maximum Net Investment.
The Buyer shall not purchase the Participation Interest if the Buyer cannot
issue its commercial paper notes or
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short-term promissory notes or otherwise borrow in order to fund the Purchase
Price of such Participation Interest, or to make any such purchase or any
Reinvestment or increase its Net Investment on any Settlement Date at or after
the earlier to occur of (i) the Expiration Date, and (ii) the reduction of the
Maximum Net Investment to zero pursuant to Section 2.03 hereof. So long as no
Termination Event or Potential Termination Event shall have occurred and be
continuing, the Buyer shall make timely annual requests for renewal of the
Liquidity Agreement during the term of this Agreement, provided, that no such
renewal shall be required to extend the term of the Liquidity Agreement beyond
the Expiration Date.
2.02 Amount of Purchases. The sale of the Participation
Interest on the Closing Date by the Seller to the Buyer shall be for a minimum
Purchase Price of $25,000,000.
2.03 Reduction of the Maximum Net Investment and Net
Investment; Termination of the Agreement.
(a) Reduction of Maximum Net Investment. The Maximum Net Investment
shall be reduced to zero (i) on the Expiration Date, or (ii) in accordance with
Section 10.02 hereof. In addition, upon written notice from the Seller to the
Buyer, the Seller may reduce in whole or in part the Maximum Net Investment,
effective as of the next Settlement Date on or after the thirtieth (30th) day
following the date on which such notice is given; provided, however, that (i)
any partial reduction must be in an amount equal to $5,000,000 or any greater
amount which is an integral multiple of $5,000,000, and (ii) if the Maximum Net
Investment at the time of such notice is less than or equal to $20,000,000, the
Seller may only elect to reduce the amount of the Maximum Net Investment to
zero. Notwithstanding any other provision of this Agreement, the Maximum Net
Investment may not at any time be reduced below the amount of the aggregate Net
Investment in effect at such time.
(b) Reduction of the Net Investment. If at any time the Seller shall
wish to cause the reduction of the Net Investment (but not to commence the
permanent liquidation of the Participation Interest), the Seller may do so upon
ten (10) days prior written notice thereof to the Buyer (such notice to include
the amount of such proposed reduction and the proposed date on which such
reduction will commence, which date shall be agreed to by the Buyer). On the
proposed date of commencement of such reduction and on each day thereafter, the
Servicer shall refrain from making Reinvestments of Collections until the amount
of such Collections not so reinvested shall equal the desired amount of
reduction. The Servicer shall pay to the Buyer all Collections received on each
day during the period in which Reinvestment of Collections has been suspended
pursuant to this Section 2.03(b) on the date which is the earlier of (i) two (2)
Business Days or (ii) the number of days specified in Section 9-306(4)(d) of the
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Uniform Commercial Code as in effect in the jurisdiction whose Laws govern the
rights of the Buyer in and to any such Collections after the day on which such
Collections are received by the Servicer. The Net Investment shall be deemed
reduced in the amount to be paid to the Buyer only when in fact so paid. The
Seller shall use reasonable efforts to attempt to choose a reduction amount, and
the date of the commencement thereof, so that such reduction shall commence and
conclude in the same Settlement Period. The Seller shall pay to the Buyer an
amount equal to any actual loss, cost or expense incurred by the Buyer as the
result of the repayment of the Net Investment prior to the maturity date of any
(x) loans made to the Buyer by third parties or (y) commercial paper notes or
short-term promissory notes issued by the Buyer, in each case for the purpose of
maintaining the Participation Interest. Buyer shall provide the Seller with
written notice as promptly as practicable of such actual loss, cost or expense,
which notice shall provide the calculations used in determining the amount of
such loss, cost or expense.
(c) Termination of the Agreement. This Agreement shall terminate at the
latest to occur of (i) the Expiration Date, (ii) the first day on which the Net
Investment equals zero, all other amounts accrued and owing to the Buyer under
this Agreement have been paid in full and the Maximum Net Investment has been
reduced to zero, or (iii) the first day on which all Eligible Receivables in the
Receivables Pool have been collected or written off by the Seller and the
Maximum Net Investment has been reduced to zero; provided, however, that the
covenants, representations, warranties and indemnities of the Company and the
Seller to the Buyer contained herein or made pursuant hereto shall survive such
termination. Upon such termination, the Buyer shall convey to the Seller,
without recourse, its Participation Interest in all Purchased Receivables and
shall deliver to the Seller all instruments and documents relating thereto. Upon
such reconveyance, the Deferred Purchase Price shall be deemed to have been paid
in full.
2.04 Fees Payable to the Buyer.
(a) Facility Fee. The Seller agrees to pay to the Buyer, in
consideration for the Purchase Obligation hereunder, from and including the date
of execution of this Agreement to but excluding the Expiration Date, the
Facility Fee. The accrued Facility Fee shall be due and payable in accordance
with Sections 5.03 and 5.04 hereof until the earlier of the Expiration Date or
the date on which the Maximum Net Investment is reduced to zero pursuant to
Section 2.03(a) hereof. To the extent the Facility Fee is not paid from
Collections in accordance with Section 5.03 or 5.04 hereof, the Facility Fee
shall be an absolute and unconditional obligation of the Seller.
(b) Fees Non-Refundable. The fees to be paid to the Buyer pursuant to
this Section 2.04 are non-refundable and shall
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not be refunded for any reason whatsoever, including, without limitation, the
later reduction or termination of the Maximum Net Investment in whole or in part
in accordance with the provisions of this Agreement.
Article III
BUYER'S ALLOCATION
3.01 Buyer's Allocation. The Buyer's Allocation on any day of
determination shall be a percentage, not in excess of 100%, equal to the
quotient of (i) the Investment, divided by (ii) the positive result of (a) the
aggregate Account Balances of all Eligible Receivables included in the
Receivables Pool on the date of determination before giving effect to
Collections on such date, less (b) the aggregate amount by which the Account
Balance of Eligible Receivables of each Obligor exceeds the Concentration Limit
for such Obligor.
3.02 Frequency of Computation of the Buyer's Allocation. The
Buyer's Allocation shall be initially computed as of the opening of business of
the Servicer on the Closing Date. Thereafter, until the Net Investment shall be
reduced to zero, the Buyer's Allocation shall be automatically recomputed as of
the close of business of the Servicer on each Business Day, and the Buyer's
Allocation shall constitute the percentage ownership interest of the Buyer in
the Receivables Pool on such date; provided, however, that on and after a
Liquidation Day and during the continuance of a Liquidation Period, the Buyer's
Allocation shall be equal to the Buyer's Allocation as computed on the first
Business Day preceding the occurrence of such Liquidation Day. The Buyer's
Allocation shall be reduced to zero at such time as the related Net Investment
shall be reduced to zero, the Buyer shall have received all amounts in respect
of accrued and unpaid Cost of Funds and Program Fee and all other amounts
payable to it pursuant to this Agreement, and the Servicer, provided the Company
is not the Servicer, shall have received the accrued Servicer's Compensation.
Article IV
ClOSING PROCEDURES
4.01 Purchase and Sale Procedures.
(a) General. The sale of the Participation Interest hereunder shall,
with respect to the Receivables Pool, transfer ownership to the Buyer of an
undivided percentage ownership interest in each Receivable in such Receivables
Pool, effective upon the creation of such Receivable.
(b) Indemnity for Failure to Close. If a sale of the Participation
Interest fails to occur on the Closing Date as
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specified in the Purchase Notice delivered pursuant to Section 4.02(e) hereof
and agreed to by the Buyer pursuant to Section 4.04 hereof for reasons other
than a breach by the Buyer, the Seller shall reimburse the Buyer on demand for
any loss, cost or expense (including loss of margin) incurred by the Buyer with
respect to this Agreement, its obligations hereunder or its funding of the
proposed Purchase Price (including, without limitation, any loss, cost or
expense in obtaining, liquidating or employing deposits as loans from third
parties or the loss, cost or expense of issuing its commercial paper notes or
short-term promissory notes in order to fund such Purchase Price) until the
earlier of (A) the Closing Date as specified in a subsequent Purchase Notice
delivered pursuant to Section 4.02(e) hereof and agreed to by the Buyer pursuant
to Section 4.04 hereof or (B) the date on which (i) the Buyer redeploys any
funds committed to fund such Purchase Price at a rate of return greater than or
equal to the Cost of Funds, or (ii) such commercial paper notes or short-term
promissory notes become due and payable, as the case may be. The Buyer shall
notify the Seller of the amount determined by the Buyer (which determination
shall be conclusive and binding absent manifest error) to be necessary to
compensate the Buyer for such loss, cost or expense. Such amount shall be due
and payable by the Seller to the Buyer ten (10) Business Days after such notice
is given.
4.02 Conditions Precedent to the First Purchase. The
obligation of the Buyer to purchase the Participation Interest from the Seller
on the Closing Date shall be subject to the satisfaction on or before June 30,
2001 of the conditions set forth in Section 4.03 hereof and the following
further conditions:
(a) Standing. The Buyer shall have received (i) from each of the Seller
and each Originator, a certificate, dated a recent date relative to the Closing
Date as determined by the Buyer, of the Secretary of State or other similar
official as to its good standing under the Laws of its jurisdiction of
organization, and (ii) from each Originator, a certificate, dated a recent date
relative to the Closing Date as determined by the Buyer, of the Secretary of
State or other similar official of the State where its chief executive offices
are located as to its good standing under the Laws of such jurisdiction.
(b) Opinions of Counsel. The Buyer shall have received favorable
written opinions of ▇▇▇▇▇ ▇. Sudbury, Esq., General Counsel of the Company, and
of ▇▇▇▇▇▇ and ▇▇▇▇▇, LLP, counsel for the Originators and the Seller, each dated
the Closing Date, each in form and substance acceptable to the Buyer.
(c) Financing Statements, etc. The Buyer shall have received evidence
satisfactory to it of the completion of all recordings, registrations and
filings as may be necessary in the opinion of the Buyer to evidence or perfect
the ownership
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interests to be acquired by the Buyer hereunder, including, without limitation:
(i) acknowledgment copies of proper financing
statements on Form UCC-1 filed on or prior to the Closing
Date, naming each Originator as debtor and/or assignor and the
Seller as secured party and/or assignee (in respect of the
transfer of Receivables contemplated by the Sale Agreement)
and naming the Seller as debtor and/or assignor and the Buyer
as secured party and/or assignee (in respect of the transfer
of the Participation Interest contemplated by this Agreement),
or such other similar instruments or documents as may be
necessary in the opinion of the Buyer under the Uniform
Commercial Code or any comparable law of all appropriate
jurisdictions to evidence or perfect the Buyer's Participation
Interest; and
(ii) evidence of searches satisfactory to the Buyer
listing all effective financing statements which name an
Originator (or any predecessor entity thereof) or the Seller
as debtor and/or assignor in the jurisdictions in which
filings are made pursuant to subsection (i) above, together
with copies of such financing statements, none of which (other
than the filings made pursuant to subsection (i) above) shall
cover any Receivables or the related Contracts, and of tax
lien searches satisfactory to the Buyer.
(d) Lockbox Agreements. The Buyer shall have received duly executed
copies of Lockbox Servicing Agreements with each of one or more Permitted
Lockbox Banks.
(e) Purchase Notice. The Buyer shall have received from the Seller, no
less than two (2) Business Days prior to the Closing Date, a notice (the
"Purchase Notice") in substantially the form of Exhibit F hereto, utilizing
information as of the last day of the most recently completed Accounting Period,
together with such written documentation of the procedures utilized and
calculations made in connection with the preparation of such Purchase Notice as
the Buyer may request.
(f) Responsible Officer Certificate. The Buyer shall have received a
certificate of a Responsible Officer, dated the Closing Date, from each of the
Seller and each Originator, in substantially the form attached hereto as Exhibit
C, and as to such other matters incident to the transactions contemplated by the
Purchase Documents as the Buyer may reasonably request, in form and substance
satisfactory to the Buyer. The Buyer may conclusively rely on any such
certificate unless and until a later certificate revising the prior certificate
is received by the Buyer.
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(g) Certificate of Participation. The Buyer shall have received on the
Closing Date, a Certificate of Participation executed on behalf of the Seller by
a Responsible Officer.
(h) Buyer's Review. The Buyer shall have completed to its satisfaction
a review of the Servicer's billing and collection operations and reporting
systems.
(i) Regulatory Approvals. Each Originator and the Seller shall have
received all necessary and desirable regulatory approvals, if any, of the
transactions under this Agreement and the Sale Agreement.
4.03 Conditions Precedent to Each Purchase and Reinvestment
The obligation of the Buyer to purchase the Participation Interest from the
Seller on the Closing Date, to make a Reinvestment on any date, or to increase
the Net Investment in the Receivables Pool on any Settlement Date, is subject to
the performance by each of the Originators and the Seller of its respective
obligations hereunder on or before the Closing Date, such date on which a
Reinvestment will be made or such Settlement Date, and to the satisfaction of
the following further conditions:
(a) Details, Proceedings and Documents. All legal details and
proceedings in connection with the transactions contemplated by the Purchase
Documents or the Receivables to be included in the Receivables Pool on the
Closing Date, such Settlement Date or such date of such Reinvestment shall be in
form and substance satisfactory to the Buyer, and the Buyer shall have received
all such originals or certified copies or other copies of such documents and
proceedings in connection with such transactions, in form and substance
satisfactory to the Buyer.
(b) Representations and Warranties. On and as of such date (i) the
representations and warranties of the Seller contained in Article VIII hereof
and of each of the Originators contained in the Sale Agreement shall be true and
correct with the same force and effect as though made on and as of the Closing
Date, such Settlement Date or such date of Reinvestment (except to the extent
that such representations and warranties relate solely to an earlier date), (ii)
the Originators and the Seller shall be in compliance with the respective
covenants contained in Article IX hereof and in the Sale Agreement, and (iii) no
Termination Event or Potential Termination Event shall occur as a result of the
Purchase and sale of the Participation Interest in the Receivables Pool on the
Closing Date, such Settlement Date or such date of Reinvestment, or shall have
occurred and be continuing or shall exist on the Closing Date, such Settlement
Date or such date of Reinvestment.
(c) Sale Agreement. The Sale Agreement shall be in full force and
effect.
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4.04 Purchase Price Subject to the terms and conditions
hereof, and relying upon the representations and warranties set forth herein, on
the Closing Date, the Buyer shall purchase the Participation Interest in the
Receivables Pool described in the Purchase Notice delivered by the Seller to the
Buyer and agreed upon by the Buyer. On the date of purchase of the Participation
Interest, the Buyer shall make available to the Seller at its Office, or such
other place as the Seller has notified the Buyer, the Purchase Price therefor.
4.05 Sale Without Recourse.
(a) The sale of the Participation Interest hereunder shall, except to
the extent specified in Section 5.06 hereof, be made without recourse to the
Seller with respect to any loss arising from Defaulted Receivables, provided,
that nothing contained herein shall limit the rights of the Buyer provided in
Section 2.04, Article V, Section 6.04 and Articles VII and XI hereof.
(b) This Agreement also constitutes a security agreement under the UCC.
The Buyer and the Seller intend that the transactions contemplated by this
Agreement shall be treated as sales and not as a financing. However, in the
event that it is ever determined that such transactions constitute a financing
arrangement, the Seller hereby grants to the Buyer on the date hereof and on the
terms and conditions of this Agreement a first priority security interest in and
against all of the Seller's right, title and interest in and to the Purchased
Receivables and the proceeds thereof for the purposes of securing the
obligations of the Seller and the rights of the Buyer under this Agreement.
4.06 Non-Assumption by the Buyer of Obligations No obligation
or liability of the Seller to any Obligor under any Purchased Receivable or
Contract shall be assumed by the Buyer hereunder or under the Certificate of
Participation, and any such assumption is hereby expressly disclaimed. The Buyer
shall be indemnified by the Seller in accordance with Section 11.04 hereof in
respect of any losses, claims, damages, liabilities, costs or expenses arising
out of or incurred in connection with any Obligor's assertion of such obligation
or liability against the Buyer.
4.07 Character of Receivables Added to Receivables Pools All
Receivables acquired by the Seller pursuant to the Sale Agreement shall be
included in the Receivables Pool immediately upon the Seller's acquisition
thereof. All such Receivables will comprise only one Receivables Pool.
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Article V
SETTLEMENTS; ADJUSTMENTS
5.01 Settlement Statements The Seller shall, or shall cause
the Servicer to, submit to the Buyer not less than two (2) Business Days prior
to each Settlement Date, a Settlement Statement signed by a Responsible Officer
dated as of such Settlement Date and including information in respect of the
Receivables Pool as of the last day of the Accounting Period most recently
completed. The execution and delivery of any Settlement Statement shall
constitute a representation and warranty by the Seller and the Servicer that the
information contained therein is true and correct as of the date thereof. Such
Settlement Statement shall be accompanied by such other information as the Buyer
may reasonably request. Subject to the terms and conditions of this Agreement,
if the Seller requests on a Settlement Statement that the Net Investment be
increased to an amount in excess of the Net Investment as of the immediately
preceding Settlement Date, the Buyer shall make available to the Seller at its
Office, or such other place as the Seller has notified to the Buyer, on the next
succeeding Settlement Date, the amount of such increase in the Net Investment;
provided, that such increase in the Net Investment shall not cause the Net
Investment to exceed the Maximum Net Investment then in effect. The Seller may
request a reduction in the Net Investment in accordance with Section 2.03(b).
5.02 Receivables Status Upon ten (10) Business Days' notice
from the Buyer, the Seller or the Servicer will furnish or cause to be furnished
to the Buyer a written report, signed by a Responsible Officer, containing such
information as the Buyer may reasonably request (in such form as the Buyer may
reasonably request), which shall include, without limitation, with respect to
the Participation Interest (a) the Account Balances of all Purchased
Receivables, together with all Collections, Dilutions, and other adjustments to
such Receivables since the date of the last written report furnished to the
Buyer, and an aging of all Purchased Receivables as of a date no later than the
date of such notice; and (b) an analysis and explanation of significant
variances, if any, between actual Collections of Purchased Receivables during
such Settlement Period and historical collections experience.
5.03 Non-Liquidation Settlements.
(a) Daily Settlements. On each day (other than a Liquidation Day) with
regard to each Settlement Period, the Buyer shall be allocated an amount of
Collections equal to the product of (i) the Buyer's Allocation, expressed as a
decimal, and (ii) Collections, if any, with respect to the Purchased Receivables
on such day. The Servicer shall hold in trust for the benefit of the Buyer out
of such amount in respect of such Buyer's
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Allocation an amount equal to the Cost of Funds and Program Fee Amount accrued
through such day and not previously so held (whether or not accrued during the
current Settlement Period), and (following such allocation) shall hold in trust
for its own account an amount, if available, equal to the Servicer's
Compensation accrued through such day for the Participation Interest and not
previously so held and (following such allocation) shall hold in trust for the
account of the Buyer an amount, if available, equal to the Facility Fee accrued
through such day and not previously so held. The remainder of such amount (the
"Remainder") in respect of the Buyer's Allocation shall, subject to the terms
and conditions of this Agreement, be utilized by the Servicer to make a
Reinvestment in the Receivables Pool in the amount of the Remainder, subject to
Sections 2.01 and 4.03 hereof, and after giving effect to any allocation of new
Receivables to the Receivables Pool. Any portion of the Remainder not applied to
a Reinvestment shall be held by the Servicer in accordance with subsection (d)
below. The Remainder, or any portion thereof, which is applied to a
Reinvestment, and any amount of Collections which were not allocated to the
Buyer pursuant to the first sentence of this Section 5.03(a), shall be remitted
by the Servicer to the Seller. Notwithstanding the foregoing, in the event that
at the end of any Settlement Period the amounts held in trust for the benefit of
the Buyer pursuant to the second sentence of this Section 5.03(a) and not
previously paid to the Buyer are less than the accrued and unpaid Cost of Funds
and Program Fee Amount for such Settlement Period, then any amount which had
been deemed to be a Remainder during such Settlement Period (up to the amount of
such deficit in the amount available to pay the Cost of Funds and Program Fee
Amount) shall be deemed to have been held in trust for the benefit of the Buyer
pursuant to the second sentence of this Section 5.03(a).
(b) Settlement Period. On each Settlement Date (other than a Settlement
Date with respect to a Settlement Period during which a Liquidation Day occurs),
the Servicer shall pay to the Buyer and the Servicer the amounts held in trust
for the benefit of the Buyer and the Servicer, respectively, pursuant to
subsection (a) above and not previously paid to the Buyer and the Servicer,
respectively.
(c) Deemed Collections. If on any day the Account Balance of a
Purchased Receivable is reduced as a result of a Dilution with respect to such
Purchased Receivable, the Servicer shall be deemed to have received on such day
a Collection of Purchased Receivables in the amount of such reduction. If on any
day any of the representations and warranties of the Seller set forth in Section
8.02(b) and (c) is no longer true or was not true when made with respect to such
Purchased Receivable, or if any of the representations and warranties of the
Seller set forth in Section 8.02(a) was not true when made, the Seller shall be
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deemed to have received on such day a Collection of such Purchased Receivable in
full.
(d) Unreinvested Collections. Any portion of the Remainder which may
not be immediately applied to Reinvestments in the Participation Interest in
accordance with Section 5.03(a) for any reason, shall be so reinvested as soon
as practicable without violating any provisions of this Agreement; provided,
however, that if any portion of the Remainder may not be applied to
Reinvestments in the Participation Interest for any reason on the date which is
the earlier of (i) two (2) Business Days or (ii) the number of days specified in
Section 9-306(4)(d) of the Uniform Commercial Code as in effect in the
jurisdiction whose Laws govern the rights of the Buyer in and to any such
portion of the Remainder after the Servicer receives such portion of the
Remainder, the Servicer shall pay such portion of the Remainder to the Buyer on
such earlier date. The Net Investment shall be deemed reduced in the amount to
be paid to the Buyer only when in fact so paid.
(e) Reduction of Buyer's Allocation. Notwithstanding anything to the
contrary contained herein, if, on any Settlement Date prior to the occurrence of
a Liquidation Day (after giving effect to all payments required to be made by
the Seller or the Servicer to or for the account of the Buyer pursuant to this
Section 5.03 and any increase in the Net Investment effected on such day), the
Buyer's Allocation shall exceed one hundred percent (100%), the Seller shall
make a payment of an amount in immediately available funds to the Referral Agent
for the account of the Buyer as a reduction of the Net Investment such that,
after giving effect to such payment, the Buyer's Allocation is equal to one
hundred percent (100%).
5.04 Liquidation Settlements.
(a) Notwithstanding the provisions of Sections 5.03(a) and (b) hereof,
on each Liquidation Day with regard to each Settlement Period, the Servicer
shall allocate to, and hold in trust for the benefit of, the Buyer for payment
in accordance with Section 5.04(b), an amount of Collections equal to the
product of (i) the Buyer's Allocation, and (ii) Collections in respect of the
Purchased Receivables for such Liquidation Day. The Collections allocated to the
Buyer pursuant to this section shall be allocated on a daily basis (i) first, to
the payment of any Cost of Funds and Program Fee accrued and owing to the Buyer,
(ii) second, subject to Section 6.06(e), to the payment of any Servicer's
Compensation accrued and owing to the Servicer, (iii) third, to make payment in
respect of any Facility Fee accrued and owing to the Buyer, (iv) fourth, to make
payment in respect of the Net Investment, and (v) fifth, to the payment of any
other amount accrued and owing to the Buyer under this Agreement. Any amount of
such Collections which were not allocated to the Buyer
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pursuant to the first sentence of this Section 5.04 on such Liquidation Day,
shall be remitted by the Servicer to the Seller.
(b) Collections held by the Servicer on behalf of the Buyer pursuant to
this Section 5.04 shall be remitted to the Buyer on the date which is the
earlier of (i) two (2) Business Days or (ii) the number of days specified in
Section 9-306(4)(d) of the Uniform Commercial Code as in effect in the
jurisdiction whose Laws govern the rights of the Buyer in and to any such
Collections after the Servicer receives such Collections.
5.05 Allocation of Collections.
(a) Except as required by Law or the underlying Contract, if any
Obligor is obligated under one or more Purchased Receivables and also under one
or more Contracts not constituting Purchased Receivables, then any payment
received from or on behalf of such Obligor shall be applied (i) to a specific
Contract if the Obligor designates such payment to be so applied, or (ii) to the
Purchased Receivables in the order in which payments are due thereunder if the
application of such payment is not so designated.
(b) Notwithstanding any other provision of this Agreement, the Buyer is
not entitled to receive any portion of Collections once the Net Investment is
reduced to zero and the Seller has no remaining payment obligations to the Buyer
under this Agreement.
5.06 Deferred Purchase Price. On the Closing Date, and,
thereafter, in each Settlement Statement, the Servicer shall calculate the
Deferred Purchase Price as of the last day of the full Accounting Period most
recently completed, which shall be an amount equal to the sum of (1) the Credit
Enhancement Reserve, plus (2) the Yield Reserve, plus (3) the Servicer's
Compensation Reserve; provided, that if a Liquidation Day occurs, the Deferred
Purchase Price will thereafter be the amount of the Deferred Purchase Price at
the close of business on the day immediately preceding such Liquidation Day.
5.07 Treatment of Collections and Deemed Collections. Any
Collections deemed to be received pursuant to this Agreement shall be paid by
the Seller to the Servicer in same day funds on the date of such deemed receipt.
The Servicer shall hold or distribute all Collections deemed received pursuant
to Sections 5.03 and 6.04 hereof to the same extent as if such Collections had
actually been received. So long as the Servicer shall hold any Collections or
deemed Collections required to be paid to the Buyer, it shall hold such
Collections in trust and separate and apart from its own funds and shall clearly
▇▇▇▇ its records to reflect such trust.
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Article VI
PROTECTION OF THE BUYER;
ADMINISTRATION AND COLLECTIONS
6.01 Maintenance of Information and Computer Records. The
Seller will, or will cause the Servicer to, hold in trust and keep safely for
the Buyer all evidence of the Buyer's right, title and interest in the
Receivables Pool. The Seller will, or will cause the Servicer and each
Originator to, on or prior to the Closing Date, and with respect to all
Receivables that are added to the Receivables Pool after the Closing Date, on
each respective date such Receivables are added, place an appropriate code or
notation in its Records to indicate those Receivables which are or which will be
included in the Receivables Pool.
6.02 Protection of the Interests of the Buyer.
(a) The Seller will, or will cause the Servicer to, from time to time
do and perform any and all acts and execute any and all documents (including,
without limitation, the execution, amendment or supplementation of any financing
statements, continuation statements, the Certificate of Participation and
notices of Certificate of Participation relating to the Participation Interest
for filing under the provisions of the Uniform Commercial Code of any applicable
jurisdiction, the execution, amendment or supplementation of any instrument of
transfer, and the making of notations on the Records of the Seller) as may be
requested by the Buyer in order to effect the purposes of this Agreement and the
sale of the Participation Interest hereunder and to perfect the Buyer's right,
title and interest in the Receivables Pool and all Collections with respect
thereto against all Persons whomsoever.
(b) To the fullest extent permitted by applicable Law, the Seller
hereby irrevocably grants to the Buyer and the Referral Agent an irrevocable
power of attorney, with full power of substitution, coupled with an interest, to
sign and file in the name of the Seller, or in its own name, financing
statements and continuation statements and amendments thereto with respect to
the Buyer's Participation Interest in the Purchased Receivables.
(c) At any reasonable time and from time to time at the Buyer's
reasonable request and (unless a Termination Event or Potential Termination
Event has occurred and is continuing) upon 3 Business Days notice to the Seller,
the applicable Originator or the Servicer, the Seller, such Originator or the
Servicer, as the case may be, shall permit such Person as the Buyer may
designate to conduct audits or visit and inspect any of the properties of the
Seller, such Originator or the Servicer, as the case may be, to examine the
Records, internal controls and procedures maintained by the Seller, such
Originator or the
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Servicer, as the case may be, and take copies and extracts therefrom, and to
discuss the Seller's, such Originator's or the Servicer's, as the case may be,
affairs with its officers, employees and independent accountants. Each of the
Seller, such Originator and the Servicer hereby authorizes such officers,
employees and its independent accountants (in the case of such accountants, in
the presence of a Responsible Officer of the Seller, such Originator or the
Servicer, as the case may be) to discuss with the Buyer the affairs of the
Seller, such Originator or the Servicer, as the case may be. The Seller shall
reimburse the Buyer for all reasonable fees, costs and expenses incurred by or
on behalf of the Buyer in connection with the foregoing actions promptly upon
receipt of a written invoice therefor.
(d) The Buyer shall have the right to do all such acts and things as it
may deem necessary to protect its interests, including, without limitation,
confirmation and verification of Purchased Receivables; provided, that the Buyer
will not contact any Obligor unless a Termination Event or Potential Termination
Event has occurred.
6.03 Maintenance of the Location of Writings and Records. The
Seller will at all times until completion of a Complete Servicing Transfer keep
or cause to be kept at its Chief Executive Office or at an office of the
Servicer designated in advance to the Buyer, each writing or Record which
evidences, and which is necessary or desirable to establish or protect,
including such books of account and other Records as will enable the Buyer or
its designee to determine at any time the status of, the Participation Interest
of the Buyer in each Purchased Receivable; provided, that any Records may be
stored at other locations to the extent temporary location elsewhere is
necessary in connection with litigation, repossession, other collection
activities or other usual business purposes. The Seller shall at its own expense
prepare and maintain machine-readable magnetic tapes or other media in such
format as the Buyer, in its reasonable discretion, may require pertaining to the
Purchased Receivables.
6.04 Information. The Seller will, or will cause the Servicer
to, furnish to the Buyer such additional information with respect to the
Purchased Receivables (including but not limited to the Credit and Collection
Policy) as the Buyer may reasonably request. The Seller will also furnish to the
Buyer all modifications, adjustments or supplements to the Credit and Collection
Policy as in effect on the date hereof; provided, however, that neither the
Seller nor any Originator shall, without the Buyer's prior written consent,
alter its credit, enforcement and other policies as in effect from time to time
if the effect of any alteration thereof would be to materially adversely affect
the collectibility of the Purchased Receivables. If any such alteration made
without the Buyer's consent is later determined by the Buyer to have had a
material adverse effect on
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the collectibility of Purchased Receivables, then the Seller or the Originator,
as the case may be, shall promptly revise such policies in order to prevent any
such material adverse effect from occurring thereafter, and the Purchased
Receivables that, in the sole judgment of the Buyer, became uncollectible due to
such change shall be deemed collected and shall be treated as deemed Collections
pursuant to Section 5.07 hereof. Promptly upon becoming aware of any Termination
Event or Potential Termination Event, the Servicer shall give the Buyer notice
thereof.
6.05 Performance of Undertakings Under the Purchased
Receivables; Indemnification. Each Originator will at all times observe and
perform, or cause to be observed and performed, all obligations and undertakings
to the Obligors arising in connection with each Purchased Receivable or related
Contract and neither the Originator nor the Seller will take any action or cause
any action to be taken to impair the rights of the Seller to the Receivables or
the rights of the Buyer to its Participation Interest in the Purchased
Receivables. In such connection, the Buyer shall be indemnified by the Seller in
accordance with Section 11.04 hereof and by each Originator in accordance with
the Sale Agreement in respect of any losses, claims, damages, liabilities, costs
or expenses incurred or arising out of any action taken or caused to be taken by
the Originator or the Seller which impairs the Seller's rights to the
Receivables or the Buyer's rights to its Participation Interest in the Purchased
Receivables.
6.06 Administration and Collections; Indemnification.
(a) General. Until a Complete Servicing Transfer shall have occurred,
the Company will be responsible for the administration, servicing and collection
of the Purchased Receivables; provided, however, that the Company may delegate
its duties to the Originator in accordance with Section 6.09 and, upon written
approval by the Buyer, such duties may also be delegated by the Company to any
of its Affiliates or a third party (without impairment, in either case, of the
Company's Obligations as Servicer). If and to the extent that the Company or any
of its Affiliates or any such third party is performing such functions, the
Company agrees to exercise or cause such Affiliate or third party to exercise
the same degree of skill and care and apply the same standards, policies,
procedures and diligence that it applies to the performance of the same
functions with respect to accounts owned by the Company.
(b) Administration. The Servicer shall, to the maximum extent permitted
by Law, have the power and authority, on behalf of the Buyer as part of the
Servicer's administrative and servicing obligations hereunder, to take such
action in respect of any such Purchased Receivable as the Servicer may deem
advisable, including the resale of any repossessed, returned or rejected goods;
provided, however, that the Servicer may not
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under any circumstances compromise, rescind, cancel, adjust or modify (including
by extension of time for payment or granting any discounts, allowances or
credits) the Account Balance of the related Contract for any Purchased
Receivable, except in accordance with the Credit and Collection Policy or
otherwise with the Buyer's prior written consent. The Servicer undertakes to
comply with each of the covenants of the Seller included herein in respect of
which the Seller undertakes to cause the Servicer to take or avoid taking
actions specified therein, and further agrees to perform the Servicer's
obligations under Article II of the Sale Agreement.
(c) Enforcement Proceedings. In the event of a default under any
Purchased Receivable before a Servicer Event, the Servicer shall, at the
Seller's expense, to the maximum extent permitted by Law, have the power and
authority, on behalf of the Buyer as part of the Servicer's administrative and
servicing obligations hereunder, to take any action in respect of any such
Purchased Receivable as the Servicer may deem advisable; provided, however, that
the Servicer or the Seller, as the case may be, shall take no enforcement action
(judicial or otherwise) with respect to such Purchased Receivable, except in
accordance with the Credit and Collection Policy or otherwise with the written
consent of the Buyer. The Servicer or the Seller, as the case may be, will apply
or will cause to be applied at all times before a Servicer Event the same
standards and follow the same procedures with respect to deciding to commence,
and in prosecuting, litigation on such Purchased Receivables as is applied and
followed with respect to like accounts not owned by the Buyer. In no event shall
the Servicer or the Seller, as the case may be, be entitled to make or authorize
any Person to make the Buyer a party to any litigation without the Buyer's
express prior written consent.
(d) Obligations of the Buyer. The Buyer may, but shall have no
obligation to, take any action or commence any proceeding to realize upon any
Purchased Receivable. At such time as the Servicer or the Seller, as the case
may be, has any obligation to pursue the collection of Purchased Receivables and
the Buyer possesses any documents necessary therefor, the Buyer agrees to
furnish such documents to the Servicer or the Seller, as the case may be, to the
extent and for the period necessary for the Servicer or the Seller, as the case
may be, to comply with its obligations hereunder.
(e) Servicer's Compensation. The Servicer's Compensation for performing
its responsibilities as the servicer with respect to any Purchased Receivables
on any day shall be equal to the quotient of (A) the product of (1) one-half of
one percent (0.50%), and (2) the Account Balances of Purchased Receivables on
such day, divided by (B) 360. Subject to Section 6.07(a), the Servicer's
Compensation shall be retained by the Servicer in accordance with Section 5.03
hereof or paid to
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the Servicer by the Buyer in the event Collections are applied in accordance
with Section 5.04 hereof; provided, however, that if the Company is the
Servicer, the Servicer's Compensation shall not be paid on or after any day on
which a Termination Event shall have occurred and be continuing.
(f) Indemnity. The Servicer shall indemnify the Buyer in respect of any
losses, claims, damages, liabilities, costs or expenses incurred or arising out
of any action taken or caused to be taken by the Servicer under this Section
6.06.
6.07 Complete Servicing Transfer.
(a) General. If at any time a Servicer Event shall have occurred and be
continuing, the Buyer may, by notice in writing to the Seller and the Company,
terminate the Company's capacity as Servicer in respect of the Purchased
Receivables (such termination referred to herein as a "Complete Servicing
Transfer"), notify Obligors of its interest in the Purchased Receivables, take
control of the Lockbox Accounts and exercise all other incidences of ownership
in the Purchased Receivables. After a Complete Servicing Transfer, the Buyer may
administer, service and collect the Purchased Receivables itself, and in such
event may retain the Servicer's Compensation for its own account, in any manner
it sees fit, including, without limitation, by compromise, extension or
settlement of such Purchased Receivables. Alternatively, the Buyer may engage
Mellon Bank to perform all or any part of the administration, servicing and
collection of the Purchased Receivables and pay to Mellon Bank all or a portion
of the Servicer's Compensation in consideration thereof.
(b) Transition. The Company, within ten (10) Business Days after
receiving a notice pursuant to Section 6.07(a) hereof, shall, at its own cost
and expense, deliver or cause to be delivered to the Buyer or its designated
agent (i) a schedule of the Purchased Receivables indicating as to each such
Purchased Receivable information as to the related Obligor, the Account Balance
as of such date of the related Contract and the location of the evidences of
such Purchased Receivable and related Contract, together with such other
information as the Buyer may reasonably request and (ii) all evidence of such
Purchased Receivables and related Contracts and such other Records related
thereto (including, without limitation, true copies of any computer tapes and
data in computer memories) as the Buyer may reasonably deem necessary to enable
it to protect and enforce its rights to, or its position as owner of, a
Participation Interest therein. After any such delivery, neither the Seller nor
any Originator will hold or retain any executed counterpart or any document
evidencing such Purchased Receivables or related Contracts without clearly
marking the same to indicate conspicuously that the same is not the original and
that transfer
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thereof does not transfer any rights against the related Obligor or any other
Person.
(c) Collections. From and after the occurrence of a Complete Servicing
Transfer, the Seller and the Servicer will cause to be transmitted and delivered
directly to the Buyer or its designated agent, for the Buyer's own account,
forthwith upon receipt and in the exact form received, all Collections (properly
endorsed, where required, so that such items may be collected by the Buyer) on
account of its Participation Interest in the Purchased Receivables. All such
Collections consisting of cash shall not be commingled with other items or
monies of the Seller or any Originator for a period longer than the lesser of
(i) two (2) Business Days or (ii) the number of days specified in Section
9-306(4)(d) of the Uniform Commercial Code as in effect in the jurisdiction
whose Laws govern the rights of the Buyer in and to any such Collections. If the
Buyer or its designated agent receives items or monies that are not payments on
account of its Participation Interest in the Purchased Receivables, such items
or monies shall be delivered promptly to the Seller after being so identified by
the Buyer or its designated agent. The Seller hereby irrevocably grants the
Buyer or its designated agent, if any, an irrevocable power of attorney, with
full power of substitution, coupled with an interest, to take, from and after
the occurrence of a Termination Event or Potential Termination Event, in the
name of the Seller all steps with respect to the Purchased Receivable which the
Buyer, in its reasonable discretion, may deem necessary or advisable to
negotiate or otherwise realize on any right of any kind held or owned by the
Seller or transmitted to or received by the Buyer or its designated agent
(whether or not from the Seller or any Obligor) in connection with its
Participation Interest in such Purchased Receivable; provided, however, that the
Buyer hereby agrees not to exercise, and not to permit its designated agents to
exercise, such power of attorney unless a Servicer Event shall have occurred and
be continuing. The Buyer will provide such periodic accountings and other
information related to disposition of funds so collected as the Seller may
reasonably request.
(d) Collection and Administration at Expense of Company. The Company
agrees that, in the event of a Complete Servicing Transfer, it will reimburse
the Buyer for all reasonable out-of-pocket expenses (including, without
limitation, reasonable attorneys' and accountants' and other third parties' fees
and expenses, expenses incurred by the Referral Agent's credit recovery group
(or any successor), expenses of litigation or preparation therefor, and expenses
of audits and visits to the offices of the Company) incurred by the Buyer or the
Referral Agent in connection with and following the transfer of functions
following a Complete Servicing Transfer (excluding, however, the fees of any
successor Servicer).
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(e) Payments by Obligors. At any time, and from time to time following
a Complete Servicing Transfer, or if a Servicer Event shall have occurred and be
continuing, the Seller, each Originator and the Servicer shall permit such
Persons as the Buyer may designate to open and inspect all mail received in the
Permitted Lockboxes, by the Seller at any of its offices or by an Originator or
the Servicer at any of their respective offices if (in the case of an Originator
or the Servicer) such mail on its face appears that it may be related to the
Purchased Receivables, and to remove therefrom any and all Collections or other
correspondence from Obligors or the Originator in respect of Purchased
Receivables. All Collections received by the Buyer shall be applied in
accordance with Section 5.05 hereof. The Buyer shall be entitled to notify the
Obligors of Purchased Receivables to make payments directly to the Buyer of
amounts due thereunder at any time and from time to time following the
occurrence of (i) a Servicer Event, (ii) a Complete Servicing Transfer, or (iii)
a violation by the Seller of the provisions of Section 6.08 hereof.
6.08 Lockboxes. The Seller and each Originator hereby agree
(i) to cause all Collections which may be sent by mail as payment on account of
Purchased Receivables to be mailed by Obligors to Permitted Lockboxes; (ii) to
make or cause the Servicer to make the necessary bookkeeping entries to reflect
such Collections on the Records pertaining to such Purchased Receivables; (iii)
to apply or cause the Servicer to apply all such Collections as provided in this
Agreement; (iv) not to amend or modify any term, with respect to the disposition
of such Collections or any other amounts received by the Seller, the Originators
or the Servicer or any Permitted Lockbox Bank, of this Agreement or any other
agreement (including instructions with respect thereto) without the prior
written consent of the Buyer to such amendment or modification; provided that
the Cometals Operating Division shall not be required to maintain a Permitted
Lockbox or to comply with clause (i) above until the tenth day following the
date on which the Seller or the Servicer receives notice from the Buyer that a
Potential Termination Event or other event which gives the Buyer reasonable
grounds for insecurity has occurred and the Buyer is requiring Cometals to
commence to maintain a Permitted Lockbox and to comply with clause (i) above.
6.09 Subservicing The Servicer may delegate its
responsibilities for the servicing and administration of the Receivables and
Collections of an Originator (other than the Company and its Operating
Divisions) to such Originator; provided, that (i) the Servicer shall remain
liable for the performance of the duties and obligations of the Servicer
pursuant to the terms hereof, and (ii) any applicable subservicing agreement
provides that such subservicer may be removed as subservicer if it fails to
perform its duties as subservicer or if any event occurs which materially and
adversely
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affects the ability of such subservicer to perform its duties and obligations as
subservicer. The Servicer will be responsible for any compensation paid to a
subservicer. The appointment of any subservicer in respect of any Receivables
shall not relieve the Servicer of its obligation to service and administer such
Receivables and the Servicer shall be liable for the acts of each subservicer.
Article VII
REPURCHASES BY SELLER
7.01 Repurchases. If on the last day of a Settlement Period
the Net Investment shall be equal to or less than five percent (5%) of the
Purchase Price paid for the Participation Interest on the Closing Date, the
Seller shall be entitled on such last day to repurchase the Participation
Interest from the Buyer upon at least ten (10) Business Days' prior written
notice to the Buyer.
7.02 Repurchase Price. In the case of a repurchase by the
Seller pursuant to Section 7.01 hereof, the Seller shall, on the date of such
repurchase, pay to the Buyer, as the repurchase price thereof, an amount equal
to the sum of (i) the Net Investment as of such date, plus (ii) the Cost of
Funds and Program Fee Amount accrued and owing as of such date, plus (iii) if
the Servicer is not the Company or an Affiliate, the accrued Servicer's
Compensation as of such date, plus (iv) all other amounts due to the Buyer
hereunder, plus (v) any actual loss, cost or expense incurred by the Buyer as
the result of the repayment of the Net Investment prior to the maturity date of
any (a) loans made to the Buyer by third parties or (b) commercial paper notes
or short-term promissory notes issued by the Buyer, in each case for the purpose
of maintaining the Participation Interest. The Buyer shall provide the Seller
with prompt written notice of such actual loss, cost or expense, which notice
shall provide the calculations used in determining the amount of such loss, cost
or expense.
7.03 Reassignment of Repurchased Receivables. Upon receipt of
the purchase price of the Participation Interest pursuant to Section 7.02
hereof, the Buyer shall reassign to the Seller the Buyer's Participation
Interest in the Purchased Receivables, without recourse, representation or
warranty (except for the warranty that upon the reassignment to the Seller of
the Buyer's Participation Interest in such Purchased Receivables, no Lien
created by the Buyer will affect the Purchased Receivables).
7.04 Obligations Not Affected. The obligations of the Seller
to the Buyer under this Article VII shall not be affected by any invalidity,
illegality or irregularity of any Purchased Receivable, the related Contract or
the sale thereof, except and to the extent that any such invalidity, illegality
or
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irregularity is caused solely by the gross negligence or willful misconduct of
the Buyer.
Article VIII
REPRESENTATIONS AND WARRANTIES
8.01 General Representations and Warranties of the Seller. The
Seller, in addition to its other representations and warranties contained herein
or made pursuant hereto, hereby represents and warrants to the Buyer, on and as
of the date hereof, the Closing Date, each Settlement Date on which the Net
Investment is increased, and each date on which a Reinvestment is made, that:
(a) Organization and Qualification. The Seller is a corporation duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of organization. The Seller is duly qualified to do business as a
foreign limited liability company in good standing in each jurisdiction in which
the ownership of its properties or the nature of its activities, or both,
requires it to be so qualified or, if not so qualified, the failure to so
qualify would not have a material adverse effect on its business, operations,
properties or financial condition. All of the Seller's issued and outstanding
stock is owned by the Company, free of any Liens, and has been fully paid and is
nonassessable.
(b) Authorization. The Seller has the power and authority to execute
and deliver the Purchase Documents, to convey the Participation Interest to the
Buyer, and to perform its obligations hereunder and thereunder.
(c) Execution and Binding Effect. Each of the Purchase Documents
(except the Certificate of Participation) has been duly and validly executed and
delivered by the Seller and constitutes a legal, valid and binding obligation of
the Seller enforceable in accordance with its terms except as enforceability may
be limited by bankruptcy, insolvency, reorganization or other similar laws in
effect from time to time affecting the enforcement of creditors' rights
generally and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law. When duly
executed and delivered by the Seller under the provisions hereof, the
Certificate of Participation will constitute a legal, valid and binding
assignment by the Seller enforceable in accordance with the terms thereof and
hereof, which will vest absolutely and unconditionally in the Buyer a valid
Participation Interest in the Purchased Receivables purported to be assigned
thereby, subject to no Liens whatsoever. Upon the filing of the financing
statements required under Section 4.02(c) hereof, the Buyer's Participation
Interest will be perfected under Article Nine of such Uniform Commercial Code,
prior to and enforceable against
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all creditors of and purchasers from the Seller and all other Persons
whatsoever.
(d) Authorizations and Filings. No authorization, consent, approval,
license, exemption or other action by, and no registration, qualification,
designation, declaration or filing with, any Official Body is or will be
necessary or, in the opinion of the Seller, advisable in connection with the
execution and delivery of the Purchase Documents, the consummation of the
transactions herein or therein contemplated or the performance of or the
compliance with the terms and conditions hereof or thereof, to ensure the
legality, validity or enforceability hereof or thereof, or to ensure that the
Buyer will have its Participation Interest in and to the Purchased Receivables
perfected and prior to all other Liens (including competing ownership
interests), other than the filing of financing statements under the Uniform
Commercial Code in the jurisdictions required under Section 4.02(c) hereof.
(e) Absence of Conflicts. Neither the execution and delivery of the
Purchase Documents, nor the consummation of the transactions herein or therein
contemplated, nor the performance of or the compliance with the terms and
conditions hereof or thereof, will (i) violate any Law applicable to it or (ii)
conflict with or result in a breach of or a default under (A) the operating
agreement or certificate of formation of the Seller or (B) any agreement or
instrument, including, without limitation, any and all indentures, debentures,
loans or other agreements to which the Seller is a party or by which it or any
of its properties (now owned or hereafter acquired) may be subject or bound.
(f) Location of Chief Executive Office, etc. As of the date hereof the
Seller's Chief Executive Office is located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇. The Seller has only the Affiliates identified in Exhibit D hereto, and
has not changed its name, merged or consolidated with any other corporation or
been the subject of any proceeding under ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code
(Bankruptcy) within the past ten (10) years.
(g) No Termination Event. No event has occurred and is continuing and
no condition exists which constitutes a Termination Event or a Potential
Termination Event.
(h) Accurate and Complete Disclosure. No information, whether written
or oral, furnished by the Seller to the Buyer pursuant to or in connection with
this Agreement, including such information in the Certificate of Participation,
Purchase Notice and any Settlement Statement, or any transaction contemplated
hereby is false or misleading in any material respect as of the date as of which
such information was furnished (including by omission of material information
necessary to make such information not misleading).
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(i) No Proceedings. There are no proceedings or investigations pending
or, to the Seller's best knowledge, threatened before any court, official body,
regulatory body, administrative agency, or other tribunal or governmental
instrumentality (A) asserting the invalidity of the Purchase Documents, (B)
seeking to prevent the consummation of any of the transactions contemplated by
the Purchase Documents, or (C) seeking any determination or ruling that could
materially and adversely affect (i) the performance by the Seller or the
Servicer of its obligations under this Agreement, or (ii) the validity or
enforceability of the Purchase Documents, the Contracts or any material amount
of the Receivables.
(j) Bulk Sales Act. No transaction contemplated hereby requires
compliance with any bulk sales act or similar law.
(k) Litigation. No injunction, decree or other decision has been issued
or made by any court, government or agency or instrumentality thereof with
respect to or affecting the Seller and no litigation, investigation or
proceeding of the type referred to in Section 9.01(j) exists.
(l) Margin Regulations. The use of all funds acquired by the Seller
under this Agreement will not conflict with or contravene any of Regulations T,
U and X of the Board of Governors of the Federal Reserve System, as the same may
from time to time be amended, supplemented or otherwise modified.
(m) Not an Investment Company. The Seller is not, and will not become
as a result of the transactions contemplated by the Purchase Documents, an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
8.02 Representations and Warranties of the Seller With Respect
to Each Sale of Receivables. By selling the Participation Interest in the
Receivables Pool to the Buyer (including by Reinvestment), the Seller represents
and warrants to the Buyer as of the date of such sale or Reinvestment and as of
each Settlement Date on which the Net Investment is increased (in addition to
its other representations and warranties contained herein or made pursuant
hereto) that:
(a) Account Balances; Purchase Notice. If such sale is on the Closing
Date, the Account Balances of the related Contracts for the Purchased
Receivables are the respective amounts therefor set forth in the Purchase
Notice, and all information set forth on such Purchase Notice is true and
correct as of such Closing Date.
(b) Assignment. The Certificate of Participation vests in the Buyer all
the right, title and interest of the
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Seller in and to the Purchased Receivables (to the extent of the Participation
Interest), and constitutes a valid sale thereof, enforceable against all
creditors of and purchasers from the Seller.
(c) No Liens. Each Purchased Receivable, together with the related
Contract and all purchase orders and other agreements related to such Purchased
Receivable, is owned by the Seller free and clear of any Lien, except as
provided herein, and when the Buyer purchases the Participation Interest in such
Purchased Receivables it shall have acquired and shall continue to have
maintained an undivided percentage ownership interest to the extent of its
Participation Interest in such Purchased Receivables and in the Collections with
respect thereto free and clear of any Lien, except as provided herein.
(d) Consideration. The Seller has either (i) purchased the receivables
in exchange for payment (made by the Seller in accordance with the provisions of
the Sale Agreement) in an amount which constitutes fair consideration and
approximate market value for the Receivables and in a sale the terms and
conditions of which (including, without limitation, the purchase price thereof)
reasonably approximate an arm's-length transaction between unaffiliated parties
or (ii) acquired the Receivables as a capital contribution in accordance with
the provisions of the Sale Agreement. No such sale, and no such contribution,
has been made for or on account of an antecedent debt owed to the Seller and no
such sale or contribution is or may be voidable or subject to avoidance under
any section of the U.S. Bankruptcy Code.
8.03 Representations and Warranties of the Servicer. The
Servicer represents and warrants (in the case of the initial Servicer, as of the
date hereof, and in the case of any Servicer appointed thereafter pursuant to
Article VI, as of the date of its acceptance of its appointment, and in each
case as of the date of each Settlement Statement) as follows:
(a) Organization and Qualification. The Servicer is a corporation duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of incorporation. The Servicer is duly qualified to do business as
a foreign corporation in good standing in each jurisdiction in which the
ownership of its properties or the nature of its activities or both, requires it
to be so qualified or, if not so qualified, the failure to so qualify would not
have a material adverse effect on its business, operations, properties or
financial condition.
(b) Authorization. The Servicer has the corporate power and authority
to execute and deliver this Agreement and to perform its obligations hereunder.
(c) Execution and Binding Effect. This Agreement has been duly and
validly executed and delivered by the Servicer and
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constitutes a legal, valid and binding obligation of the Servicer
enforceable in accordance with its terms except as enforceability may be limited
by bankruptcy, insolvency, reorganization or other similar laws in effect from
time to time affecting the enforcement of creditors' rights generally and by
general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
(d) Authorizations and Filings. No authorization, consent, approval,
license, exemption or other action by, and no registration, qualification,
designation, declaration or filing with, any Official Body is or will be
necessary or, in the opinion of the Servicer, advisable in connection with the
execution and delivery of this Agreement, the consummation of the transactions
herein contemplated or the performance of or the compliance with the terms and
conditions hereof by the Servicer, to ensure the legality, validity or
enforceability hereof.
(e) Absence of Conflicts. Neither the execution and delivery of this
Agreement and the Sale Agreement, nor the consummation of the transactions
herein and therein contemplated, nor the performance of or the compliance with
the terms and conditions hereof by the Servicer, will (i) violate any Law or
(ii) conflict with or result in a breach of or a default under (A) the articles
or certificate of incorporation or by-laws of the Servicer or (B) any agreement
or instrument in any material respect, including, without limitation, any and
all indentures, debentures, loans or other agreements to which the Servicer is a
party or by which it or any of its properties (now owned or hereafter acquired)
may be subject or bound.
(f) No Termination Event. No event has occurred and is continuing and
no condition exists which constitutes a Termination Event or a Potential
Termination Event.
(g) Accurate and Complete Disclosure. No information, whether written
or oral, furnished by the Servicer to the Buyer pursuant to or in connection
with this Agreement, including such information in any Settlement Statement, or
any transaction contemplated hereby, including without limitation information
regarding the Permitted Lockboxes and Permitted Lockbox Accounts, is false or
misleading in any material respect as of the date as of which such information
was furnished (including by omission of material information necessary to make
such information not misleading).
(h) No Proceedings. There are no proceedings or investigations pending
or threatened before any court, official body, regulatory body, administrative
agency, or other tribunal or governmental instrumentality (A) asserting the
invalidity of any of this Agreement (B) seeking to prevent the consummation of
any of the transactions contemplated by any of this Agreement, or (C) seeking
any determination or ruling that could materially and
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adversely affect (i) the performance by the Servicer of its obligations under
this Agreement or (ii) the validity or enforceability of the Contracts or any
material amount of the Receivables.
(i) Not an Investment Company. The Servicer is not, and will not become
as a result of the transactions contemplated by the Purchase Documents, an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
Article IX
COVENANTS
9.01 Affirmative Covenants of the Seller. In addition to its
other covenants contained herein or made pursuant hereto, the Seller covenants
to the Buyer as follows:
(a) Notice of Termination Event. Promptly upon becoming aware of any
Termination Event or Potential Termination Event, the Seller shall give the
Buyer notice thereof, together with a written statement of a Responsible Officer
setting forth the details thereof and any action with respect thereto taken or
contemplated to be taken by the Seller.
(b) Notice of Material Adverse Change. Promptly upon becoming aware
thereof, the Seller shall give the Buyer notice of any material adverse change
in the business, operations or financial condition of the Seller which could
affect adversely the collectibility of the Purchased Receivables or the ability
to service the Purchased Receivables. In order to verify compliance with this
Section 9.01(b), the Seller shall furnish the following to the Buyer:
(i) as soon as practicable and in any event within 45 days
following the close of each fiscal quarter, excluding the last fiscal
quarter, of each fiscal year of the Seller during the term of this
Agreement, an unaudited consolidated balance sheet of the Seller as at
the end of such quarter and unaudited consolidated statements of income
and cash flows of the Seller for such quarter and for the fiscal year
through such quarter, setting forth in comparative form the
corresponding figures for the corresponding quarter of the preceding
fiscal year, all in reasonable detail and certified by the principal
financial officer of the Seller, subject to adjustments of the type
which would occur as a result of a year-end audit, as having been
prepared in accordance with GAAP; and
(ii) as soon as practicable and in any event within 90 days
after the close of each fiscal year of the
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Seller during the term of this Agreement, a consolidated balance sheet
of the Seller as at the close of such fiscal year and consolidated
statements of income and cash flows of the Seller for such fiscal year,
setting forth in comparative form the corresponding figures for the
preceding fiscal year, all in reasonable detail and certified (with
respect to the consolidated financial statements) by the principal
financial officer of the Seller as having been prepared in accordance
with GAAP.
(c) Preservation of Existence. The Seller shall preserve and maintain
its existence, rights, franchises and privileges in the jurisdiction of its
organization, and qualify and remain qualified in good standing as a foreign
limited liability company in each jurisdiction where the failure to preserve and
maintain such existence, rights, franchises, privileges and qualification could
materially adversely affect (i) the interests of the Buyer hereunder or (ii) the
ability of the Seller to perform its obligations hereunder.
(d) Compliance with Laws. The Seller shall comply in all material
respects with all Laws applicable to the Seller, its business and properties,
and the Receivables.
(e) Enforceability of Obligations. The Seller shall ensure that, with
respect to each Purchased Receivable, the obligation of any related Obligor to
pay the unpaid balance of such Purchased Receivable in accordance with the terms
of the related Contract remains legal, valid, binding and enforceable against
such Obligor, except (i) as otherwise permitted by Section 6.06(b) hereof, (ii)
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws which may be applied in the
event of the bankruptcy or insolvency of such Obligor, and (iii) as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).
(f) Books and Records. The Seller shall maintain and implement
administrative and operating procedures (including, without limitation, the
ability to recreate Records evidencing the Purchased Receivables in the event of
the destruction of the originals thereof), and keep and maintain all documents,
books, Records and other information reasonably necessary or advisable for the
collection of all Purchased Receivables (including, without limitation, Records
adequate to permit the identification of all Collections and adjustments to each
existing Purchased Receivable) at its Chief Executive Office, except as provided
in Section 6.03 hereof.
(g) Fulfillment of Obligations. The Seller will duly observe and
perform, or cause to be observed or performed, all obligations and undertakings
on its part to be observed and
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performed under or in connection with the Purchased Receivables, and will do
nothing to impair the rights, title and interest of the Buyer in and to its
Participation Interest in the Purchased Receivables.
(h) Customer List. The Seller shall at all times maintain (or cause the
Servicer to maintain) a current list (which may be stored on magnetic tapes or
disks) of all Obligors under Contracts related to Purchased Receivables,
including the name, address, telephone number and account number of each such
Obligor. The Seller shall deliver or cause to be delivered a copy of such list
to the Buyer as soon as practicable following the Buyer's request.
(i) Copies of Reports, Filings, Opinions, etc.
(1) Together with each Settlement Statement required to be
delivered pursuant to Section 5.01, the Seller shall cause the Servicer
to prepare and forward to the Buyer (i) a report in substantially the
form of Exhibit E hereto, relating to the Receivables Pool, as of the
close of business on the last day of the Accounting Period most
recently completed, and (ii) a listing by Obligor of all Purchased
Receivables together with an aging of such Purchased Receivables as of
the last day of the most recently completed Accounting Period.
(2) The Seller shall, upon request by the Buyer, but not more
often than annually, furnish to the Buyer an opinion of counsel who
shall be satisfactory to the Buyer with respect to the perfection of
the Buyer's right, title and interest in the Receivables Pool and all
Collections with respect thereto against all Persons whomsoever.
(3) Simultaneously with the delivery of the Seller's annual
financial statements pursuant to Section 9.01(b)(ii) for each fiscal
year of the Seller commencing with the fiscal year ending in 2002, the
Seller shall, at the Seller's expense, cause a firm of nationally
recognized independent certified public accountants acceptable to the
Buyer (who may render other services to the Servicer or the Seller) to
furnish a report (which report shall cover the twelve months ending on
the last day of the Seller's fiscal year which is covered by such
financial statements) to the Buyer and the Referral Agent to the effect
that they have applied certain procedures agreed upon with the Servicer
and Buyer and examined certain documents and records relating to the
servicing of the Receivables under this Agreement and as to the
accounting firm's findings with regard to the
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procedures; provided that such examinations and reports may be combined
with the examinations and reports required by Section 9.03(i)(3).
(j) Litigation. As soon as possible, and in any event within five (5)
Business Days of the Seller's knowledge thereof, the Seller shall give the Buyer
notice of (i) any litigation, investigation or proceeding to which the Seller is
a party or which could have an adverse effect on the business, operations,
property or financial condition of the Seller or impair the ability of the
Seller to perform its obligations under this Agreement and (ii) any material
adverse development in previously disclosed litigation.
(k) Total Systems Failure. The Seller shall cause the Servicer to
promptly notify the Buyer of any total systems failure and to advise the Buyer
of the estimated time required to remedy such total systems failure and of the
estimated date on which a Settlement Statement can be delivered. Until a total
systems failure is remedied, the Seller shall cause the Servicer (i) to furnish
to the Buyer such periodic status reports and other information relating to such
total systems failure as the Buyer may reasonably request and (ii) to promptly
notify the Buyer if the Servicer believes that such total systems failure cannot
be remedied by the estimated date, which notice shall include a description of
the circumstances which gave rise to such delay, the action proposed to be taken
in response thereto, and a revised estimate of the date on which a Settlement
Statement can be delivered. The Seller shall cause the Servicer to promptly
notify the Buyer when a total systems failure has been remedied.
(l) Notice of Relocation. The Seller shall give the Buyer sixty (60)
days' prior written notice of any relocation of its Chief Executive Office if,
as a result of such relocation, the applicable provisions of the Uniform
Commercial Code of any applicable jurisdiction or other applicable Laws would
require the filing of any amendment of any previously filed financing statement
or continuation statement or of any new financing statement. The Seller will at
all times maintain its Chief Executive Office within a jurisdiction in the
United States in which Article Nine of the Uniform Commercial Code (1972 or
later revision) is in effect.
(m) Further Information. The Seller will furnish or cause to be
furnished to the Buyer such other information, as promptly as practicable, and
in such form and detail, as the Buyer may reasonably request.
(n) Treatment of Purchase. For accounting purposes, the Seller shall
treat the Purchase and each Reinvestment made hereunder as a sale of an
undivided participation interest in the Purchased Receivables. The Seller shall
also maintain its
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records and books of account in a manner which clearly reflects the sale of the
Participation Interest to the Buyer and the Buyer's Investment therein.
(o) Administrative and Operating Procedures. The Seller shall maintain
and implement administrative and operating procedures adequate to permit the
identification of the Receivables Pool and all collections and adjustments
attributable to each Receivables Pool.
(p) Certificates of Title.
(1) If any amount payable under or in connection with any
Purchased Receivable shall be or become evidenced by any promissory
note, chattel paper or other instrument, such note, chattel paper or
instrument shall be duly endorsed in a manner satisfactory to the Buyer
and delivered to the Buyer or its agent.
(2) The Seller shall deliver to the Buyer any certificate of
title or other evidence of ownership issued by the United States or any
state or any political subdivision thereof relating to any chattel held
as security for any amount payable under or in connection with any
Purchased Receivable, with evidence of perfection of the security
interest in such property noted thereon, if such notation is required
under the laws of the jurisdiction in which such property is located in
order to perfect a security interest in such property.
(3) If the Contract relating to any Purchased Receivable
requires the related Obligor to maintain insurance upon the chattel
security relating to such Contract, the Seller shall deliver to the
Buyer all documents or certificates relating to such insurance.
(4) The Seller shall deliver to the Buyer any other document
required by the terms of the related Contracts.
(q) Acknowledgment of Servicer. If there is a Servicer other than the
Seller, the Company or the Buyer, the Seller shall deliver to the Buyer a copy
of the Successor Servicing Agreement together with an acknowledgment from the
Servicer affirming that the Successor Servicing Agreement is in full force and
effect.
(r) Transfer of Receivables from the Company. Any Receivable
transferred by the Company to the Seller shall be transferred in accordance with
the terms and conditions of the Sale Agreement.
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(s) Separate Existence. The Seller hereby acknowledges that the Buyer
is entering into the transactions contemplated by this Agreement in reliance
upon the Seller's identity as a separate legal entity from the Originators or
any Company Entity (as defined below). Therefore, from and after the date of
execution and delivery of this Agreement, the Seller shall take all reasonable
steps including, without limitation, all steps that the Buyer may from time to
time reasonably request, to maintain the Seller's identity as a separate legal
entity and to make it manifest to third parties that the Seller is an entity
with assets and liabilities distinct from those of the Originators and any
Affiliates (other than the Seller) thereof (each of the Originators and its
Affiliates (other than the Seller) shall be referred to herein as a "Company
Entity"), and not just a division of any Company Entity. Without limiting the
generality of the foregoing and in addition to and consistent with the covenants
set forth above, the Seller shall:
(i) require that all full-time employees of the Seller
identify themselves as such and not as employees of any Company Entity
(including, without limitation, by means of providing appropriate
employees with business or identification cards identifying such
employees as the Seller's employees);
(ii) to the extent any employee, consultant or agent of the
Seller is also an employee, consultant or agent of any Company Entity,
allocate the compensation of such employee, consultant or agent between
the Seller and such Company Entity on a basis which reflects the
services rendered to the Seller and such Company Entity;
(iii) allocate all overhead expenses (including, without
limitation, telephone and other utility charges) for items shared
between the Seller and any Company Entity on a reasonable basis
consistent with GAAP;
(iv) at all times on and after the Closing Date have at least
one director on its board of directors who is not, (A) a director,
member, officer or employee of any Company Entity, (B) a person related
to any officer, member, or director of any Company Entity, (C) a holder
(directly or indirectly) of more than 5% of any voting securities of
any Company Entity, or (D) a person related to a holder (directly or
indirectly) of more than 5% of any voting securities of any Company
Entity (the "Independent Director");
(v) ensure that all of its actions are duly authorized by vote
of its board of directors (including
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the Independent Director) in accordance with its bylaws;
(vi) maintain the Seller's books and records separate from
those of any Company Entity and in a location which is clearly
identified (by signage or otherwise) as allocated solely to the Seller;
(vii) prepare its financial statements separately from those
of other Company Entities;
(viii) except as herein specifically otherwise provided, not
commingle funds or other assets of Seller with those of any other
Company Entity and not maintain bank accounts or other depository
accounts other than each Lockbox Account to which any Company Entity is
an account party, into which any Company Entity makes deposits or from
which any Company Entity has the power to make withdrawals;
(ix) be obligated to reimburse any Company Entity which pays
any of the Seller's operating expenses; and
(x) not permit the Seller to be named as an insured on the
insurance policy covering the property of any Company Entity, except
and only to the extent that such policy also covers property of the
Seller, or enter into an agreement with the holder of such policy
whereby in the event of a loss in connection with the property of any
Company Entity, proceeds are paid to the Seller.
(t) Enforcement of Sale Agreement. The Seller shall enforce the
obligations of the Originators and the Company under the Sale Agreement for the
benefit of the Buyer.
(u) Compliance with ERISA. (1) The Seller shall comply in all material
respects with the applicable provisions of ERISA and (2) furnish to the Buyer
(i) as soon as possible after, and in any event within thirty (30) days after
any Responsible Officer of the Seller or any ERISA Affiliate either knows or has
reason to know that, any Reportable Event has occurred and the aggregate
unfunded vested benefits of the Seller and all ERISA Affiliates of the Seller
exceed $50,000,000, (A) a copy of the notice of such event required to be given
to the PBGC or, if notice is not so required, a statement of an officer of the
Seller having responsibility over its employee benefits (a "Benefits Officer")
setting forth in reasonable detail the nature of such event and the action
proposed to be taken with respect thereto and (B) in the event that a notice is
required to be given to the PBGC, as soon as practicable after the reasonable
request of the Buyer following receipt a copy of such notice, a statement of a
Benefits Officer of the type described in (A)
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above, (ii) promptly after receipt thereof, a copy of any notice the Seller or
any ERISA Affiliate may receive from the PBGC relating to the intention of the
PBGC to terminate any Plan or Plans (other than a Plan maintained by an ERISA
Affiliate that is considered an ERISA Affiliate only pursuant to subsection (m)
or (o) of Section 414 of the Code) or to appoint a trustee to administer any
Plan or Plans, (iii) within ten (10) days after the due date for filing with the
PBGC pursuant to Section 412(n) of the Code of a notice of failure to make a
required installment or other payment with respect to a Plan, a copy of such
notice, and, as soon as practicable after the reasonable request of the Buyer, a
statement of a Benefits Officer setting forth in reasonable detail the nature of
such failure and the action proposed to be taken with respect thereto and (iv)
promptly and in any event within thirty (30) days after receipt thereof by the
Seller or any ERISA Affiliate from the sponsor of a Multiemployer Plan, a copy
of each notice received by the Seller or any ERISA Affiliate concerning (A) the
imposition of Withdrawal Liability in excess of $10,000,000 or (B) a
determination that a Multiemployer Plan is, or is expected to be, terminated or
in reorganization, in each case within the meaning of Title IV of ERISA.
9.02 Negative Covenants of the Seller. The Seller covenants
that it will not, without the prior written consent of the Buyer:
(a) Statementing for and Treatment of the Sales. Prepare any financial
statements for financial accounting or reporting purposes which shall account
for the transactions contemplated hereby in any manner other than as a sale of
the Participation Interest in the Purchased Receivables to the Buyer.
(b) No Rescissions or Modifications. Rescind or cancel any Purchased
Receivable or related Contract or modify any terms or provisions thereof, except
in accordance with the Credit and Collection Policy or otherwise with the prior
written consent of the Buyer.
(c) No Liens. Cause any of the Purchased Receivables to be sold,
pledged, assigned or transferred or to be subject to a Lien, other than the sale
and assignment of the Participation Interest therein to the Buyer and the Liens
created in connection with the transactions contemplated by this Agreement and
the Program Support Agreements.
(d) Mergers, Acquisitions. Be a party to any merger or consolidation,
or purchase or otherwise acquire all or substantially all of the assets or any
stock of any class of, or any partnership or joint venture interest in, any
other Person
(e) No Changes. Change its name, identity or organizational structure
in any manner which would, could or
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might make any financing statement or continuation statement filed in connection
with this Agreement or the transactions contemplated hereby seriously misleading
within the meaning of Section 9-402(7) of the Uniform Commercial Code of any
applicable jurisdiction or other applicable Laws unless it shall have given the
Buyer at least sixty (60) days' prior written notice thereof, or amend its
limited liability company agreement.
(f) Payment Instructions. Add any bank as a Permitted Lockbox Bank,
terminate any bank listed on Exhibit G hereto as a Permitted Lockbox Bank,
change any Lockbox Account listed on Exhibit G hereto, or make any change in its
instructions to Obligors regarding payments to be made to the Seller or payments
to be made to any Permitted Lockbox Bank, unless the Buyer shall have received
ten (10) Business Days' prior notice of such addition, termination or change
and, with respect to the addition of any Permitted Lockbox Bank, a Lockbox
Servicing Agreement executed by such Permitted Lockbox Bank shall have been
delivered to the Buyer.
(g) Sales, etc. Sell, transfer, convey, assign or lease all or any
substantial part of its assets, or sell or assign with or without recourse any
Receivables (other than pursuant hereto), or permit any subsidiary to do any of
the foregoing.
(h) Permitted Debt. Incur any debt or other liability except for (a)
debt of the Seller in favor of an Originator which is evidenced by a promissory
note of the Seller containing the following terms: (i) a fixed date for the
payment of principal and interest which date shall be no earlier than one year
and one day after the date specified in Section 8.2 of the Sale Agreement;
provided, that the note may be prepaid on any date no earlier than 91 days after
the date specified in Section 8.2 of the Sale Agreement so long as sufficient
funds remain in the Seller after such prepayment to provide for the payment of
all of the Seller's fees and expenses anticipated to accrue through the maturity
date; (ii) the obligations under such promissory note shall be subordinated to
all obligations of the Seller to the Buyer and no payments shall be made under
such promissory note until all obligations to the Buyer have been satisfied in
full, provided that payments (including prepayments) of principal and interest
may be made if, after giving effect to such payment, no Termination Event or
Potential Termination Event would occur or be continuing; and (iii) the
obligations of the Seller under such promissory note shall not constitute a
claim against the Seller in the event the Seller has insufficient funds to
satisfy the obligation unless all obligations of the Seller to the Buyer have
been paid in full and any period during which a trustee or receiver of the
Seller or the Seller's assets could recover any payments made to the Buyer
hereunder has expired, (b) obligations in connection with operating expenses
arising in the ordinary
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course of its business and (c) any liability arising under this Agreement.
(i) Other Agreements. Not enter into or be a party to any agreement or
instrument other than agreements with the Company covering the lease of its
offices, the allocation of its overhead and the provision for management
expenses, agreements covering insurance, this Agreement, the Sale Agreement, or
any other agreement referred to herein or contemplated hereby, amend, modify or
waive any provision in any thereof, or give any approval or consent or
permission provided for in any thereof without the prior written consent of the
Buyer (which consent will not be unreasonably withheld); provided, however, that
each such agreement shall contain an undertaking from each Person who enters
into any such agreement with the Seller that such Person will not institute, or
join with any other Person in instituting, against the Seller any proceeding of
the type referred to in Section 11.19.
(j) Other Business. Without the prior written consent of the Buyer, not
engage in any business or enterprise or enter into any transaction other than as
contemplated by this Agreement and the Sale Agreement.
9.03 Affirmative Covenants of the Servicer. In addition to its
other covenants contained herein or made pursuant hereto, the Servicer covenants
to the Buyer as follows:
(a) Notice of Termination Event. Promptly upon becoming aware of any
Termination Event or Potential Termination Event, the Servicer shall give the
Buyer notice thereof, together with a written statement of a Responsible Officer
setting forth the details thereof and any action with respect thereto taken or
contemplated to be taken by the Servicer.
(b) Notice of Material Adverse Change. Promptly upon becoming aware
thereof, the Servicer shall give the Buyer notice of any material adverse change
in the business, operations or financial condition of the Servicer which could
affect adversely the collectibility of the Purchased Receivables or the ability
to service the Purchased Receivables. In order to verify compliance with this
Section 9.01(b), the Servicer shall furnish the following to the Buyer:
(i) as soon as practicable and in any event within 45 days
following the close of each fiscal quarter, excluding the last fiscal
quarter, of each fiscal year of the Servicer during the term of this
Agreement, an unaudited consolidated balance sheet of the Servicer as
at the end of such quarter and unaudited consolidated statements of
income and cash flows of the Servicer for such quarter and for the
fiscal year through such quarter, setting forth in
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comparative form the corresponding figures for the corresponding
quarter of the preceding fiscal year, together with notes thereto as
are required to be included therein in accordance with GAAP, all in
reasonable detail and certified by the principal financial officer of
the Servicer, subject to adjustments of the type which would occur as a
result of a year-end audit, as having been prepared in accordance with
GAAP; and
(ii) as soon as practicable and in any event within 90 days
after the close of each fiscal year of the Servicer during the term of
this Agreement, a consolidated balance sheet of the Servicer as at the
close of such fiscal year and consolidated statements of income and
cash flows of the Servicer for such fiscal year, setting forth in
comparative form the corresponding figures for the preceding fiscal
year, all in reasonable detail and certified (with respect to the
consolidated financial statements) by independent certified public
accountants of recognized standing selected by the Servicer and
satisfactory to the Buyer, whose certificate or opinion accompanying
such financial statements shall not contain any qualification,
exception or scope limitation not satisfactory to the Buyer.
(c) Preservation of Corporate Existence. The Servicer shall preserve
and maintain its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified in good
standing as a foreign corporation in each jurisdiction where the failure to
preserve and maintain such existence, rights, franchises, privileges and
qualification could materially adversely affect (i) the interests of the Buyer
hereunder or (ii) the ability of the Servicer to perform its obligations
hereunder.
(d) Compliance with Laws. The Servicer shall comply in all material
respects with all Laws applicable to the Servicer, its business and properties,
and the Receivables.
(e) Enforceability of Obligations. The Servicer shall ensure that, with
respect to each Purchased Receivable, the obligation of any related Obligor to
pay the unpaid balance of such Purchased Receivable in accordance with the terms
of the related Contract remains legal, valid, binding and enforceable against
such Obligor, except (i) as otherwise permitted by Section 6.06(b) hereof, (ii)
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws which may be applied in the
event of the bankruptcy or insolvency of such Obligor, and (iii) as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).
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(f) Books and Records. The Servicer shall maintain and implement
administrative and operating procedures (including, without limitation, the
ability to recreate Records evidencing the Purchased Receivables in the event of
the destruction of the originals thereof), and keep and maintain all documents,
books, Records and other information reasonably necessary or advisable for the
collection of all Purchased Receivables (including, without limitation, Records
adequate to permit the identification of all Collections and adjustments to each
existing Purchased Receivable) at its Chief Executive Office, except as provided
in Section 6.03 hereof.
(g) Fulfillment of Obligations. The Servicer will duly observe and
perform, or cause to be observed or performed, all obligations and undertakings
on its part to be observed and performed under or in connection with the
Purchased Receivables, and will do nothing to impair the rights, title and
interest of the Buyer in and to its Participation Interest in the Purchased
Receivables.
(h) Customer List. The Servicer shall at all times maintain a current
list (which may be stored on magnetic tapes or disks) of all Obligors under
Contracts related to Purchased Receivables, including the name, address,
telephone number and account number of each such Obligor. The Servicer shall
deliver or cause to be delivered a copy of such list to the Buyer as soon as
practicable following the Buyer's request.
(i) Copies of Reports, Filings, Opinions, etc.
(1) Together with each Settlement Statement required to be
delivered pursuant to Section 5.01, the Servicer shall prepare and
forward to the Buyer (i) a report in substantially the form of Exhibit
E hereto, relating to the Receivables Pool, as of the close of business
on the last day of the Accounting Period most recently completed, and
(ii) a listing by Obligor of all Purchased Receivables together with an
aging of such Purchased Receivables as of the last day of the most
recently completed Accounting Period.
(2) The Servicer shall, upon request by the Buyer, but not
more often than annually, furnish to the Buyer an opinion of counsel
who shall be satisfactory to the Buyer with respect to the perfection
of the Buyer's right, title and interest in the Receivables Pool and
all Collections with respect thereto against all Persons whomsoever.
(3) Simultaneously with the delivery of the Servicer's annual
financial statements pursuant to Section 9.03(b)(ii) for each fiscal
year of the Servicer, commencing with the fiscal year ending in
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2002, the Servicer shall, at the Servicer's expense, cause a firm of
nationally recognized independent certified public accountants
acceptable to the Buyer (who may render other services to the Servicer
or the Seller) to furnish a report (which report shall cover the twelve
months ending on the last day of the Servicer's fiscal year which is
covered by such financial statements) to the Buyer and the Referral
Agent to the effect that they have applied certain procedures agreed
upon with the Servicer and Buyer and examined certain documents and
records relating to the servicing of the Receivables under this
Agreement and as to the accounting firm's findings with regard to the
procedures; provided that such examinations and reports may be combined
with the examinations and reports required by Section 9.01(i)(3).
(j) Litigation. As soon as possible, and in any event within five (5)
Business Days of the Servicer's knowledge thereof, the Servicer shall give the
Buyer notice of (i) any litigation, investigation or proceeding, whether or not
the Servicer is a party, which could have a material adverse effect on the
business, operations, property or financial condition of the Servicer or impair
the ability of the Servicer to perform its obligations under this Agreement and
(ii) any material adverse development in previously disclosed litigation.
(k) Total Systems Failure. The Servicer shall promptly notify the Buyer
of any total systems failure and to advise the Buyer of the estimated time
required to remedy such total systems failure and of the estimated date on which
a Settlement Statement can be delivered. Until a total systems failure is
remedied, the Servicer shall (i) furnish to the Buyer such periodic status
reports and other information relating to such total systems failure as the
Buyer may reasonably request and (ii) promptly notify the Buyer if the Servicer
believes that such total systems failure cannot be remedied by the estimated
date, which notice shall include a description of the circumstances which gave
rise to such delay, the action proposed to be taken in response thereto, and a
revised estimate of the date on which a Settlement Statement can be delivered.
The Servicer will promptly notify the Buyer when a total systems failure has
been remedied.
(l) Notice of Relocation. The Servicer shall give the Buyer sixty (60)
days' prior written notice of any relocation of its Chief Executive Office if,
as a result of such relocation, the applicable provisions of the Uniform
Commercial Code of any applicable jurisdiction or other applicable Laws would
require the filing of any amendment of any previously filed financing statement
or continuation statement or of any new financing statement. The Servicer will
at all times maintain its Chief Executive Office within a jurisdiction in the
United States in
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which Article Nine of the Uniform Commercial Code (1972 or later revision) is in
effect.
(m) Further Information. The Servicer will furnish or cause to be
furnished to the Buyer such other information, as promptly as practicable, and
in such form and detail, as the Buyer may reasonably request.
(n) Administrative and Operating Procedures. The Servicer shall
maintain and implement administrative and operating procedures adequate to
permit the identification of the Receivables Pool and all collections and
adjustments attributable to each Receivables Pool.
(o) Certificates of Title.
(1) If any amount payable under or in connection with any
Purchased Receivable shall be or become evidenced by any promissory
note, chattel paper or other instrument, such note, chattel paper or
instrument shall be duly endorsed in a manner satisfactory to the Buyer
and delivered to the Buyer or its agent.
(2) The Servicer shall deliver to the Buyer any certificate of
title or other evidence of ownership issued by the United States or any
state or any political subdivision thereof relating to any chattel held
as security for any amount payable under or in connection with any
Purchased Receivable, with evidence of perfection of the security
interest in such property noted thereon, if such notation is required
under the laws of the jurisdiction in which such property is located in
order to perfect a security interest in such property.
(3) If the Contract relating to any Purchased Receivable
requires the related Obligor to maintain insurance upon the chattel
security relating to such Contract, the Servicer shall deliver to the
Buyer all documents or certificates relating to such insurance.
(4) The Servicer shall deliver to the Buyer any other document
required by the terms of the related Contracts.
(p) Compliance with Sale Agreement. The Servicer shall, and shall cause
each other Originator to, comply with its obligations under the Sale Agreement
for the benefit of the Buyer.
(q) Notice of Ratings Changes. The Servicer shall give the Buyer prompt
notice of any change from time to time
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(including any credit watch or warning with respect thereto) in the ratings from
S&P or ▇▇▇▇▇'▇ of the Servicer's long term unsecured debt.
9.04 Negative Covenants of the Servicer. The Servicer
covenants that it will not, without the prior written consent of the Buyer:
(a) No Rescissions or Modifications. Rescind or cancel any Purchased
Receivable or related Contract or modify any terms or provisions thereof, except
in accordance with the Credit and Collection Policy or otherwise with the prior
written consent of the Buyer.
(b) No Liens. Cause any of the Purchased Receivables to be sold,
pledged, assigned or transferred or to be subject to a Lien, other than the sale
and assignment of the Participation Interest therein to the Buyer and the Liens
created in connection with the transactions contemplated by this Agreement.
(c) No Changes. Change its name, identity or corporate structure in any
manner which would, could or might make any financing statement or continuation
statement filed in connection with this Agreement or the Sale Agreement or the
transactions contemplated hereby or thereby seriously misleading within the
meaning of Section 9-402(7) of the Uniform Commercial Code of any applicable
jurisdiction or other applicable Laws unless it shall have given the Buyer at
least sixty (60) days' prior written notice thereof.
ARTICLE X
TERMINATION
10.01 Termination Events. A "Termination Event" shall mean the
occurrence and continuance of one or more of the following events or conditions:
(a) either the Seller or Servicer, as the case may be,
shall fail to remit or fail to cause to be remitted
to the Buyer on any Settlement Date any Collections
or other amounts required to be remitted to the
Buyer, on such Settlement Date; or
(b) the Seller or any Originator shall fail to deposit or
pay, or fail to cause to be deposited or paid, when
due any other amount due hereunder or under the Sale
Agreement; or
(c) any representation, warranty, certification or
statement made by the Seller or any Originator under
this Agreement or in any agreement, certificate,
report, appendix, schedule or
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document furnished by or on behalf of the Seller or
any Originator to the Buyer pursuant to or in
connection with this Agreement (including, without
limitation, the Sale Agreement) shall prove to have
been false or misleading in any respect material to
this Agreement or the transactions contemplated
hereby as of the time made or deemed made (including
by omission of material information necessary to make
such representation, warranty, certification or
statement not misleading) and, if remediable, shall
remain false or misleading in any material respect
for ten (10) Business Days after the earlier of (i)
notice to the Seller or the Servicer thereof and (ii)
discovery by the Seller or the Servicer thereof; or
(d) the Seller, any Originator or the Servicer shall fail
to obtain the prior consent of the Buyer to any
action or provision as to which such consent is
required by the terms of this Agreement or the Sale
Agreement; or
(e) the Seller, any Originator or the Servicer shall
default or fail in the performance or observance of
any other covenant, agreement or duty applicable to
it contained herein or in the Sale Agreement and such
default or failure shall continue for twenty (20)
days after either (i) any Responsible Officer of the
Seller or such Originator becomes aware thereof or
(ii) written notice thereof to the Seller by the
Buyer; or
(f) a default shall have occurred and be continuing
following the expiration of any applicable grace
period under any instrument or agreement evidencing,
securing or providing for the issuance of
indebtedness for borrowed money of, or guaranteed by,
the Seller, any Originator or any Affiliate thereof,
and in an amount equal to or in excess of $10,000,000
in the case of any Originator or any Affiliate
thereof other than the Seller, which default would
permit acceleration of the maturity of such
indebtedness; or
(g) a Permitted Lockbox Bank shall default or fail in the
performance or observance of any agreement or duty
applicable to it under the Lockbox Servicing
Agreement executed by it and such default or failure
shall continue for three (3) Business Days after
notice thereof to such Permitted Lockbox Bank and
within such period another Permitted Lockbox with
another Permitted Lockbox Bank is not
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established by the Seller, if so requested by the
Buyer; or
(h) litigation (including, without limitation, derivative
actions), arbitration, governmental proceedings or
actions pursuant to or brought to enforce any Law is
pending against the Seller, any Originator or any
Affiliate thereof which in the reasonable opinion of
the Buyer is likely to (i) impair the ability of the
Seller to perform its obligations under this
Agreement or the Sale Agreement, or (ii) materially
adversely affect the financial position or business
of the Originator or impair the ability of the
Originator to perform its obligations under this
Agreement, the Sale Agreement or the Company's
Consent; or
(i) there shall have occurred any event which materially
adversely affects the collectibility of a material
amount of the Purchased Receivables or there shall
have occurred any other event which materially
adversely affects the ability of the Servicer to
collect the Purchased Receivables or the ability of
the Servicer to perform hereunder; or
(j) an Event of Bankruptcy shall occur with respect to
(i) the Seller or any Originator, or (ii) one or more
Affiliates of the Seller or any Originator which
could have a material adverse effect on the business,
financial condition or operations of the Seller or
such Originator and, in the case of an involuntary
proceeding, such proceeding shall continue
undismissed for sixty (60) days or a final order or
decree shall be entered; or
(k) the Buyer or the Receivables Pool shall be deemed to
have become an "investment company" within the
meaning of the Investment Company Act of 1940, as
amended; or
(l) the average Rate of Collections for any three
consecutive Accounting Periods shall be less than
50%; or
(m) the Sale Agreement ceases to be in full force and
effect, or ceases to evidence the transfer by the
Originators to the Seller of all Receivables; or
(n) either (i) the Servicer is rated below B+ by S&P and
below B1 by ▇▇▇▇▇'▇ (the "Threshold Level" of S&P and
▇▇▇▇▇'▇, respectively), (ii) the Servicer is rated at
or above the Threshold Level by one of
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S&P or ▇▇▇▇▇'▇, but two or more rating categories
below the Threshold Level by the other thereof, (iii)
the Servicer is rated by only one of S&P or ▇▇▇▇▇'▇
and that one rating is below the Threshold Level or
(iv) the Servicer is not rated by either S&P or
▇▇▇▇▇'▇;
(o) the ability of the Seller to transfer undivided
interests in the Receivables hereunder or the ability
of the Company to transfer Receivables under the Sale
Agreement shall have been adversely affected by any
action of a regulatory authority having jurisdiction
over the Seller or any Originator, as the case may
be; or
(p) (1) this Agreement or the Certificate of
Participation shall for any reason cease to evidence
the transfer to the Buyer (or its assignees or
transferees) of legal and equitable right, title and
interest to, and ownership of, an undivided
percentage ownership interest in the Purchased
Receivables and Collections with respect thereto to
the extent of the Participation Interest, or (2) if
this Agreement or the Certificate of Participation
shall not evidence the transfer of an undivided
percentage ownership interest as described in clause
(1) above, this Agreement or such Certificate of
Participation shall for any reason not create a valid
and perfected first priority security interest (as
defined in the UCC) in favor of the Buyer in the
Purchased Receivables and Collections with respect
thereto;
(q) (i) any Person or two or more Persons acting in
concert shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 of the Securities
and Exchange Commission under the Securities Exchange
Act of 1934) of 50% or more of the outstanding shares
of the voting capital stock of the Company having the
power (without the occurrence of a contingency) to
elect the Board of Directors of the Company; or (ii)
as of any date, a majority of the Board of Directors
of the Company consists of individuals who were not
either (A) directors of the Company as of the
corresponding date of the previous year, (B) selected
or nominated to become directors by the Board of
Directors of the Company of which a majority
consisted of individuals described in clause (A), or
(C) selected or nominated to become directors by the
Board of Directors of the Company of which a majority
consisted of individuals
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described in clause (A) and individuals described in
clause (B);
(r) the average Default Ratio for any three consecutive
Accounting Periods is greater than 3%; or
(s) the average Dilution Ratio for any three consecutive
Accounting Periods is greater than 5%.
10.02 Consequences of a Termination Event.
(a) If a Termination Event specified in Section 10.01 hereof shall
occur and be continuing, the Buyer may, by notice to the Seller, terminate its
obligation to purchase the Participation Interest or make Reinvestments
hereunder; provided, that in the case of a Termination Event under Section
10.01(j), such obligation of the Buyer hereunder shall be automatically
terminated without any action on the part of the Buyer. Any such termination
shall reduce the Maximum Net Investment in effect from time to time thereafter
to the amount of the aggregate Net Investment at such time.
(b) Upon any termination of the Buyer's obligation to purchase the
Participation Interest and to make Reinvestments pursuant to this Section 10.02,
the Buyer shall have, in addition to all rights and remedies under this
Agreement or otherwise, all other rights and remedies provided under the Uniform
Commercial Code of the applicable jurisdiction and under other applicable Laws,
which rights shall be cumulative.
(c) The parties hereto acknowledge that this Agreement is, and is
intended to be, a contract to extend financial accommodations to the Seller
within the meaning of Section 365(e)(2)(B) of the Federal Bankruptcy Code (11
U.S.C. Section 365(e)(2)(B)) (or any amended or successor provision thereof or
any amended or successor code).
ARTICLE XI
MISCELLANEOUS
11.01 Expenses. The Company agrees, upon receipt of a written
invoice, to pay or cause to be paid, and to save the Buyer and the Referral
Agent harmless against liability for the payment of, all reasonable
out-of-pocket expenses (including, without limitation, reasonable attorneys',
accountant's and other third parties' fees and expenses, any filing fees, stamp
taxes, expenses of litigation or preparation therefor, audit expenses and
expenses incurred by officers or employees of the Buyer, but excluding salaries
and similar overhead costs of the Buyer and the Referral Agent which are
incurred notwithstanding the execution and performance of this Agreement)
incurred by or on
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behalf of the Buyer and the Referral Agent from time to time (a) arising in
connection with the development, audit, delivery, collection, preparation,
printing, execution, performance, administration and interpretation of the
Purchase Documents, or transactions undertaken, pursuant to or in connection
herewith or therewith (including, without limitation, the perfection or
protection of the Buyer's Participation Interest in the Purchased Receivables),
(b) relating to any amendments, waivers or consents to the Purchase Documents
requested by the Seller or the Company, (c) arising in connection with the
Buyer's or its agent's enforcement or preservation of rights under the Purchase
Documents, or (d) arising in connection with any litigation or preparation for
litigation involving the Purchase Documents, which, including all amounts
payable under Section 11.03, shall be referred to in this Agreement as
"Transaction Costs".
11.02 Payments. All payments to be made to the Buyer hereunder
shall be payable at 11:00 a.m., Pittsburgh time, on the day when due, at the
Buyer's Office in Dollars in immediately available funds. To the extent
permitted by Law, any amounts due from the Seller hereunder which are not paid
when due shall bear interest for each day from the day due until paid, payable
on demand, at a rate per annum equal to two percent (2.00%) above the Reference
Rate.
11.03 Indemnity for Taxes, Reserves and Expenses. If after the
date hereof, the adoption of any Law or guideline or any amendment or change in
the administration, interpretation or application of any existing or future Law
or guideline by any Official Body charged with the administration,
interpretation or application thereof, or the compliance with any request or
directive of any Official Body (whether or not having the force of Law):
(a) subjects an Affected Party to any tax or changes the basis
of taxation with respect to the Purchase Documents, the Participation
Interest, the Purchased Receivables or payments of amounts due
hereunder or under the Purchased Receivables (including, without
limitation, any sales, gross receipts, general corporate, personal
property, privilege or license taxes (unless such tax results solely
from the failure to file or keep current any certification or
documentation required to qualify for any exemption from or reduction
of any such tax to which such Affected Party would otherwise be
entitled), and including claims, losses and liabilities arising from
any failure to pay or delay in paying any such tax (unless such failure
or delay results solely from such Affected Party's gross negligence or
willful misconduct), but excluding Income Taxes incurred by such
Affected Party arising out of or as a result of this Agreement or the
ownership of the Participation Interest or in respect of any
Receivable), or
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(b) imposes, modifies or deems applicable any reserve
(including, without limitation, any reserve imposed by the Board of
Governors of the Federal Reserve System), special deposit or similar
requirement against assets held by, credit extended by, deposits with
or for the account of, or other acquisition of funds by, an Affected
Party, or
(c) shall change the amount of capital maintained or requested
or directed to be maintained by an Affected Party, or
(d) imposes upon an Affected Party any other condition or
expense (including, without limitation, (i) loss of margin and (ii)
reasonable attorneys' fees and expenses, expenses incurred by officers
or employees of the Referral Agent's credit recovery group (or any
successor thereto) and expenses of litigation or preparation therefor
in contesting any of the foregoing) with respect to the Purchase
Documents, the Participation Interest, the Purchased Receivables or the
purchase, maintenance or funding of the purchase of the Participation
Interest in any Receivables by an Affected Party,
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, reduce the rate of return on capital, or impose any
expense (including loss of margin) upon, an Affected Party with respect to this
Agreement, the obligations hereunder or the funding of purchases hereunder, the
Buyer may notify the Seller of the amount of such increase, reduction, or
imposition in writing within 180 days of the later of the event giving rise to
such increased costs or the Buyer's knowledge thereof, and shall provide the
Seller with a certificate which identifies the factual basis for such increase,
reduction or imposition, the amount or amounts that the Buyer has reasonably
determined will compensate it hereunder, and the manner in which such amount or
amounts have been calculated, and the Seller shall pay to the Buyer the amount
so notified to the Seller by the Buyer (which determination shall be conclusive)
necessary to compensate the Buyer for such increase, reduction or imposition;
provided, that the Seller and any other persons who from time to time sell
receivables or interests therein to the Buyer ("Other Sellers") each shall be
liable for such amount ratably in accordance with the usage under their
respective facilities; provided, further, that (i) if any portion of such amount
is attributable to the Seller and not attributable to any Other Seller, the
Seller shall be solely liable for such portion, and (ii) if any portion of such
amount is attributable to any Other Seller and not attributable to the Seller in
any way, the Seller shall not be liable for any of such portion. The Buyer's
determination with respect to the allocation of such amounts among the Seller
and Other Sellers shall be binding on the Seller. Such amounts shall be due and
payable by the Seller to
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such Affected Party ten (10) Business Days after such notice is given.
11.04 Indemnity.
(a) The Seller agrees to indemnify, defend and save harmless the Buyer,
the Referral Agent, their respective directors, officers, shareholders,
employees, agents and each legal entity, if any, who controls the Buyer or the
Referral Agent (each, an "Indemnified Party"), forthwith on demand, from and
against any and all losses, claims, damages, liabilities, costs and expenses
(including, without limitation, all reasonable attorneys' fees and expenses,
expenses incurred by their respective credit recovery groups (or any successors
thereto) and expenses of settlement, litigation or preparation therefor) which
the Buyer may incur or which may be asserted against the Buyer by any Person
(including, without limitation, any Originator or any Obligor or any other
Person whether on its own behalf or derivatively on behalf of the Seller) (all
of the foregoing being collectively referred to as "Losses"), INCLUDING ANY
LOSSES ARISING OR RESULTING FROM NEGLIGENCE ON THE PART OF AN INDEMNIFIED PARTY,
but excluding, (a) Losses to the extent resulting from the gross negligence or
willful misconduct on the part of such Indemnified Party, (b) recourse (except
as otherwise provided in this Agreement) for Defaulted Receivables, (c) any
Losses with respect to any tax, reserve, capital charge or expense related
thereto (indemnification with respect to such Losses being provided as and to
the extent provided in Section 11.03), or (d) Losses to the extent that such
Losses resulted from an act or omission of the Servicer, if the Servicer is not
the Company or an Affiliate of the Company arising from or incurred in
connection with (i) any breach of a representation, warranty or covenant by the
Seller or any Originator made or deemed made hereunder or in connection herewith
or the transactions contemplated herewith, or (ii) any suit, action, claim,
proceeding or governmental investigation, pending or threatened, whether based
on statute, regulation or order, on tort, on contract or otherwise, before any
local, state or federal court, arbitrator or administrative, governmental or
regulatory body, which arises out of or relates to the Purchase Documents, the
Participation Interest in the Purchased Receivables or related Contracts, or the
use of the proceeds of the sale of the Participation Interest in the Receivables
pursuant hereto or the transactions contemplated hereby (all Losses, after
giving effect to the limitations set forth in clauses (a) through (d) above,
being hereinafter referred to as "Indemnified Amounts").
(b) Without limitation of the generality of Section 11.04(a), the
Seller shall pay on demand to each Indemnified Party any and all amounts
necessary to indemnify such Indemnified Party from and against any and all
Indemnified Amounts relating to or resulting from any of the following:
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(i) the creation of the Participation Interest in any
Purchased Receivable which is not at the date of the creation of such
Participation Interest an Eligible Receivable;
(ii) reliance on any representation or warranty made or deemed
made by the Seller or any Originator (or any of its respective
Responsible Officers) or any statement made by any Responsible Officer
of the Seller or any Originator under or in connection with this
Agreement which shall have been incorrect in any material respect when
made;
(iii) the failure by the Seller or any Originator to comply
with any applicable law, rule or regulation;
(iv) the failure to vest in the Buyer an undivided percentage
interest, to the extent of the Participation Interest, in the Purchased
Receivables and Collections in respect thereof, free and clear of any
Lien; (v) the failure to have filed, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of
any applicable jurisdiction or under any other applicable law with
respect to the assignment of the Participation Interest;
(vi) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor) of the Obligor to the payment
of any Purchased Receivable (including, without limitation, a defense
based on such Purchased 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 Purchased Receivable
or the furnishing or failure to furnish such merchandise or services;
(vii) any failure of the Seller or any Originator to perform
its duties or obligations in accordance with the provisions of this
Agreement; or
(viii) any products liability claim arising out of or in
connection with merchandise, insurance or services which are the
subject of any Contract.
(c) Promptly upon receipt by any Indemnified Party hereunder of notice
of the commencement of any suit, action, claim, proceeding or governmental
investigation (an "Action"), such Indemnified Party shall, if a claim in respect
thereof is to be made against the Seller hereunder, notify the Seller in
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writing of the commencement thereof. The Seller may participate in the defense
of any such Action at its expense, and no settlement thereof shall be made
without the approval of the Seller and the Indemnified Party. The approval of
the Seller will not be unreasonably withheld or delayed. In case any Action
shall be brought against any Indemnified Party, the Seller shall be entitled to
participate in and, to the extent that it shall wish, to assume the defense
thereof, with counsel satisfactory to the Indemnified Party, and after notice
from the Seller to such Indemnified Party of its election so to assume the
defense thereof, the Seller shall not be liable to such Indemnified Party for
any legal or other expenses subsequently incurred by such Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation. In any such Action, any Indemnified Party shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party unless (i) the Seller and such Indemnified
Party shall have mutually agreed in writing to the retention of such counsel or
(ii) the named parties to any such Action (including any impleaded parties)
include both the Seller and such Indemnified Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Seller shall not, in
conjunction with any Action or related Actions in the same jurisdiction, be
liable for the fees and expenses of more than one separate firm in addition to
any local counsel for all such Indemnified Parties, unless (i) the Seller and
such Indemnified Parties shall have mutually agreed in writing to the retention
of separate counsel or (ii) the named parties to any such Action (including any
impleaded parties) include such Indemnified Parties and representation of such
Indemnified Parties by the same counsel would be inappropriate due to actual or
potential differing interests between them, and that all such fees and expenses
shall be reimbursed as they are incurred.
(d) The indemnity contained in this Section 11.04 shall survive the
termination of this Agreement.
11.05 Holidays. Except as may be provided in this Agreement to
the contrary, if any payment due hereunder shall be due on a day which is not a
Business Day, such payment shall instead be due the next following Business Day.
11.06 Records. All amounts calculated or due hereunder shall
be determined from the records of the Buyer, which determinations shall be
conclusive absent manifest error.
11.07 Amendments and Waivers. The Buyer, the Company and the
Seller may from time to time enter into agreements amending, modifying or
supplementing this Agreement, and the Buyer, in its sole discretion, may from
time to time grant waivers of the provisions of this Agreement or consents to
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a departure from the due performance of the obligations of the Seller or any
Originator under this Agreement. Any such agreement, waiver or consent must be
in writing and shall be effective only to the extent specifically set forth in
such writing. Any waiver of any provision hereof, and any consent to a departure
by the Seller from any of the terms of this Agreement, shall be effective only
in the specific instance and for the specific purpose for which given and if
such amendment, waiver or departure would have a material adverse effect on the
rights or obligations the Referral Agent or any Affected Party, such amendment,
departure or waiver shall not be effective until consented to by the affected
party.
11.08 No Implied Waiver; Cumulative Remedies. No course of
dealing and no delay or failure of the Buyer in exercising any right, power or
privilege under the Purchase Documents shall affect any other or future exercise
thereof or the exercise of any other right, power or privilege; nor shall any
single or partial exercise of any such right, power or privilege or any
abandonment or discontinuance of steps to enforce such a right, power or
privilege preclude any further exercise thereof or of any other right, power or
privilege. The rights and remedies of the Buyer under the Purchase Documents are
cumulative and not exclusive of any rights or remedies which the Buyer would
otherwise have.
11.09 No Discharge. The obligations of the Seller and the
Originators under the Purchase Documents shall be absolute and unconditional and
shall remain in full force and effect without regard to, and shall not be
released, discharged or in any way affected by (a) any exercise or nonexercise
of any right, remedy, power or privilege under or in respect of the Purchase
Documents or applicable Law, including, without limitation, any failure to
set-off or release in whole or in part by the Buyer of any balance of any
deposit account or credit on its books in favor of the Seller or an Originator
or any waiver, consent, extension, indulgence or other action or inaction in
respect of any thereof, or (b) any other act or thing or omission or delay to do
any other act or thing which would operate as a discharge of the Seller or an
Originator as a matter of Law.
11.10 Notices. All notices under Section 10.02 hereof shall be
given to the Seller by telephone (confirmed by first-class mail) or facsimile,
(which shall be effective when given by telephone or sent by facsimile) or by
first-class mail, express mail or courier (which shall be effective when
deposited in the mail or delivered to the courier), in all cases with charges
prepaid. All other notices, requests, demands, directions and other
communications (collectively "notices") under the provisions of this Agreement
shall be in writing (including telexed or facsimile communication) unless
otherwise expressly permitted hereunder and shall be sent by first-class mail,
express mail, or by facsimile, in all cases with charges
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prepaid, and any such properly given notice shall be effective when received.
All notices shall be sent to the applicable party at the address stated on the
signature page hereof or in accordance with the last unrevoked written direction
from such party to the other parties hereto.
11.11 Severability. The provisions of this Agreement are
intended to be severable. If any provision of this Agreement shall be held
invalid or unenforceable in whole or in part in any jurisdiction, such provision
shall, as to such jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without in any manner affecting the validity or
enforceability of such provision in any other jurisdiction or the remaining
provisions hereof in any jurisdiction.
11.12 Governing Law. THIS AGREEMENT AND THE CERTIFICATES OF
PARTICIPATION SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK INCLUDING ITS CONFLICT OF LAWS RULES. The Seller hereby
consents to the jurisdiction of the courts of the State of New York and the
courts of the United States located in the State of New York for the purpose of
adjudicating any claim or controversy arising in connection with this Agreement,
and for such purpose, to the extent it may lawfully do so, waives any objection
to such jurisdiction or to venue therein.
11.13 Prior Understandings. This Agreement sets forth the
entire understanding of the parties relating to the subject matter hereof, and
supersedes all prior understandings and agreements, whether written or oral.
11.14 Survival. All representations and warranties of the
Seller and the Originators contained herein or made in connection herewith or in
connection with the Certificate of Participation shall survive the making
thereof, and shall not be waived by the execution and delivery of this Agreement
or the Certificate of Participation, any investigation by the Buyer, the
purchase, repurchase or payment of the Participation Interest in any Purchased
Receivable, or any other event or condition whatsoever (other than a written
waiver complying with Section 11.07 hereof). All obligations of the Seller to
make payments to, or to indemnify, the Buyer or to repurchase the Participation
Interest in the Purchased Receivables from the Buyer shall survive the payment
of all Purchased Receivables, the termination of the Purchase Obligation and the
termination of all other obligations of the Seller hereunder and shall not be
affected by reason of an invalidity, illegality or irregularity of any Purchased
Receivable. The covenants and agreements contained in or given pursuant to this
Agreement (including, without limitation, those contained in Article IX) shall
continue in full force and effect until the termination of the Purchase
Obligation, liquidation of the Participation Interest in the
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Purchased Receivables and discharge of all other obligations of the Seller and
the Originators hereunder.
11.15 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument.
11.16 Set-Off. In case a Termination Event shall occur and be
continuing, the Buyer and, to the fullest extent permitted by Law, the holder of
any assignment of the Buyer's rights hereunder (including without limitation
each Affected Party), shall each have the right, in addition to all other rights
and remedies available to it, without notice to the Seller, to set-off against
and to appropriate and apply to any amount owing by the Seller hereunder which
has become due and payable, any debt owing to, and any other funds held in any
manner for the account of, the Seller by the Buyer or by any holder of any
assignment, including, without limitation, all funds in all deposit accounts
(whether time or demand, general or special, provisionally credited or finally
credited, or otherwise) now or hereafter maintained by the Seller with the Buyer
or any holder of any assignment. Such right shall exist whether or not such debt
owing to, or funds held for the account of, the Seller is or are matured other
than by operation of this Section 11.16 and regardless of the existence or
adequacy of any collateral, guaranty or any other security, right or remedy
available to the Buyer or any holder. Nothing in this Agreement shall be deemed
a waiver or prohibition or restriction of the Buyer's or any holder's rights of
set-off or other rights under applicable Law.
11.17 Time of Essence. Time is of the essence in this
Agreement.
11.18 Payments Set Aside. To the extent that the Seller, any
Originator or any Obligor makes a payment to the Buyer or the Buyer exercises
its rights of set-off and such payment or set-off or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by, or is required to be refunded, rescinded,
returned, repaid or otherwise restored to the Seller, such Originator, such
Obligor, a trustee, a receiver or any other Person under any Law, including,
without limitation, any bankruptcy law, any state or federal law, common law or
equitable cause, the obligation or part thereof originally intended to be
satisfied shall, to the extent of any such restoration, be reinstated, revived
and continued in full force and effect as if such payment had not been made or
such set-off had not occurred. The provisions of this Section 11.18 shall
survive the termination of this Agreement.
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11.19 No Petition. Each of the Seller and each Originator
agrees that it will not institute against, or join any other Person in
instituting against, the Buyer any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding or other similar proceeding under the laws
of the United States or any state of the United States. The provisions of this
Section 11.19 shall survive the termination of this Agreement.
11.20 No Recourse. The obligations of the Buyer under this
Agreement are solely the corporate obligations of the Buyer. No recourse shall
be had for the payment of any amount owing in respect to this Agreement or for
the payment of any fee hereunder or for any other obligation or claim arising
out of or based upon this Agreement against GSS, against any stockholder,
employee, officer, director or incorporator of the Buyer or against the Referral
Agent or any stockholder, employee, officer, director, incorporator or affiliate
thereof. For purposes of this paragraph, the term "GSS" shall mean and include
Global Securitization Services, LLC and all Affiliates thereof and any employee,
officer, director, incorporator, shareholder or beneficial owner of any of them;
provided, however, that the Buyer shall not be considered to be an affiliate of
GSS or the Referral Agent.
11.21 Tax Treatment. It is the intention of the parties hereto
that for the purposes of all taxes, the transactions contemplated hereby shall
be treated as a loan by the Buyer to the Seller secured by the Receivables (the
"Intended Characterization"). Each party hereby agrees that will report such
transactions for the purposes of all taxes, and otherwise will act for the
purposes of all taxes, in a manner consistent with the Intended
Characterization.
11.22 Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. No party may assign any of its rights or delegate any of its duties
hereunder without the prior written consent of the other parties hereto;
provided that the Buyer shall not be prohibited from making any assignment
contemplated in or permitted by a Liquidity Agreement or a Program Support
Agreement.
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IN WITNESS WHEREOF, the parties hereto, by their duly
authorized signatories, have executed and delivered this Agreement as of the
date first above written.
THREE RIVERS FUNDING CORPORATION
By:
---------------------------------------------
Title:
------------------------------------------
Address:
c/o Global Securitization Services, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy of all notices to:
Mellon Bank, N.A., as Referral Agent
One Mellon Bank Center - Room 0410
Pittsburgh, Pennsylvania 15258-0001
Attention: ▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
CMC RECEIVABLES, INC.
By:
---------------------------------------------
Title:
------------------------------------------
Address:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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COMMERCIAL METALS COMPANY, as Company,
Originator and Servicer
By:
---------------------------------------------
Title:
------------------------------------------
Address:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Acknowledged and Agreed to by:
STRUCTURAL METALS, INC.
By:
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Title:
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SMI STEEL, INC.
By:
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Title:
--------------------
▇▇▇▇ ELECTRIC STEEL COMPANY OF SOUTH CAROLINA
d/b/a SMI STEEL SOUTH CAROLINA
By:
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Title:
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CMC STEEL FABRICATORS, INC.
d/b/a SMI JOIST COMPANY
By:
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Title:
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▇▇▇▇▇▇ METAL COMPANY
By:
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Title:
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