EXHIBIT 10.21
RECEIVABLES PURCHASE AGREEMENT
Dated as of January 21, 1999
Among
METALS RECEIVABLES CORPORATION
as Seller
and
FALCON ASSET SECURITIZATION CORPORATION,
and
THE FINANCIAL INSTITUTIONS PARTY HERETO,
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Agent
METALS RECEIVABLES CORPORATION
RECEIVABLES PURCHASE AGREEMENT
TABLE OF CONTENTS
PAGE
ARTICLE I. AMOUNTS AND TERMS OF THE PURCHASES...........................Page 1
Section 1.1. PURCHASE FACILITY...................................Page 1
Section 1.2. MAKING PURCHASES....................................Page 2
Section 1.3. SELECTION OF TRANCHE PERIODS AND DISCOUNT RATES.....Page 2
Section 1.4. PERCENTAGE EVIDENCED BY RECEIVABLE INTERESTS........Page 3
Section 1.5. DIVIDING OR COMBINING RECEIVABLE INTERESTS..........Page 3
Section 1.6. REINVESTMENT PURCHASES..............................Page 3
Section 1.7. LIQUIDATION SETTLEMENT PROCEDURES...................Page 3
Section 1.8. DEEMED COLLECTIONS..................................Page 4
Section 1.9. DISCOUNT AND FUNDING CHARGES; PAYMENTS AND
COMPUTATIONS, ETC...................................Page 5
Section 1.10. SELLER INTEREST.....................................Page 5
ARTICLE II. LIQUIDITY FACILITY..........................................Page 6
Section 2.1. TRANSFER TO INVESTORS...............................Page 6
Section 2.2. TRANSFER PRICE REDUCTION DISCOUNT...................Page 6
Section 2.3. PAYMENTS TO FALCON..................................Page 6
Section 2.4. LIMITATION ON COMMITMENT TO PURCHASE FROM FALCON....Page 7
Section 2.5. DEFAULTING INVESTORS................................Page 7
ARTICLE III. REPRESENTATIONS AND WARRANTIES.............................Page 7
Section 3.1. SELLER REPRESENTATIONS AND WARRANTIES...............Page 7
Section 3.2. INVESTOR REPRESENTATIONS AND WARRANTIES.............Page 11
ARTICLE IV. CONDITIONS OF PURCHASES....................................Page 12
Section 4.1. CONDITIONS PRECEDENT TO INITIAL PURCHASE...........Page 12
Section 4.2. CONDITIONS PRECEDENT TO ALL PURCHASES AND
REINVESTMENTS......................................Page 12
ARTICLE V. COVENANTS...................................................Page 12
Section 5.1. AFFIRMATIVE COVENANTS OF SELLER....................Page 12
Section 5.2. NEGATIVE COVENANTS OF SELLER.......................Page 18
ARTICLE VI. ADMINISTRATION AND COLLECTION..............................Page 20
Section 6.1. DESIGNATION OF SERVICER............................Page 20
Section 6.2. DUTIES OF SERVICER.................................Page 21
Section 6.3. COLLECTION NOTICES.................................Page 22
Section 6.4. RESPONSIBILITIES OF THE SELLER.....................Page 22
Section 6.5. REPORTS............................................Page 22
Section 6.6. SERVICER FEE.......................................Page 22
ARTICLE VII. SERVICER DEFAULTS.........................................Page 23
Section 7.1. SERVICER DEFAULT...................................Page 23
Section 7.2. ORIGINATOR LIQUIDATION EVENTS......................Page 25
ARTICLE VIII. INDEMNIFICATION..........................................Page 26
Section 8.1. INDEMNITIES BY THE SELLER..........................Page 26
Section 8.2. INCREASED COST AND REDUCED RETURN..................Page 29
Section 8.3. OTHER COSTS AND EXPENSES...........................Page 29
Section 8.4. ALLOCATIONS........................................Page 30
ARTICLE IX. THE AGENT..................................................Page 30
Section 9.1. AUTHORIZATION AND ACTION...........................Page 30
Section 9.2. DELEGATION OF DUTIES...............................Page 31
Section 9.3. EXCULPATORY PROVISIONS.............................Page 31
Section 9.4. RELIANCE BY AGENT..................................Page 31
Section 9.5. NON-RELIANCE ON AGENT AND OTHER PURCHASERS.........Page 32
Section 9.6. REIMBURSEMENT AND INDEMNIFICATION..................Page 32
Section 9.7. AGENT IN ITS INDIVIDUAL CAPACITY...................Page 32
Section 9.8. SUCCESSOR AGENT....................................Page 32
ARTICLE X. ASSIGNMENTS; PARTICIPATIONS.................................Page 33
Section 10.1. ASSIGNMENTS.......................................Page 33
Section 10.2. PARTICIPATIONS....................................Page 34
ARTICLE XI. MISCELLANEOUS..............................................Page 34
Section 11.1. WAIVERS AND AMENDMENTS.............................Page 34
Section 11.2 NOTICES............................................Page 35
Section 11.3. RATABLE PAYMENTS..................................Page 35
Section 11.4. PROTECTION OF OWNERSHIP INTERESTS OF THE
PURCHASERS........................................Page 36
Section 11.5. CONFIDENTIALITY...................................Page 36
Section 11.6. BANKRUPTCY PETITION...............................Page 37
Section 11.7. LIMITATION OF LIABILITY...........................Page 37
SECTION 11.8. CHOICE OF LAW.....................................Page 37
SECTION 11.9. CONSENT TO JURISDICTION...........................Page 37
SECTION 11.10. WAIVER OF JURY TRIAL.............................Page 38
Section 11.11. INTEGRATION; SURVIVAL OF TERMS...................Page 38
Section 11.12. COUNTERPARTS; SEVERABILITY.......................Page 38
Section 11.13. FIRST CHICAGO ROLES..............................Page 38
Section 11.14. CHARACTERIZATION.................................Page 38
EXHIBITS AND SCHEDULES
EXHIBIT I DEFINITIONS
EXHIBIT II PRINCIPAL PLACE OF BUSINESS OF THE SELLER; LOCATION(S) OF
RECORDS; FEDERAL EMPLOYER IDENTIFICATION NUMBERS
EXHIBIT III LOCK-BOXES; CONCENTRATION ACCOUNTS; DEPOSITARY ACCOUNTS
EXHIBIT IV FORM OF COMPLIANCE CERTIFICATE
EXHIBIT V FORM OF COLLECTION ACCOUNT AGREEMENT
EXHIBIT VI CREDIT AND COLLECTION POLICY
EXHIBIT VII FORM OF MONTHLY REPORT
EXHIBIT VIII FORM OF PURCHASE NOTICE
EXHIBIT IX ORIGINATORS
SCHEDULE A LIST OF DOCUMENTS TO BE DELIVERED TO THE AGENT PRIOR TO THE
INITIAL PURCHASE
This Receivables Purchase Agreement dated as of January 21, 1999 is among
Metals Receivables Corporation, a Delaware corporation (the "Seller"), the
Investors, Falcon Asset Securitization Corporation ("Falcon") and The First
National Bank of Chicago, as Agent. Unless defined elsewhere herein, capitalized
terms used in this Agreement shall have the meanings assigned to such terms in
Exhibit I hereto.
PRELIMINARY STATEMENTS
The Seller desires to transfer and assign Receivable Interests to the
Purchasers from time to time.
Falcon may, in its absolute and sole discretion, purchase Receivable
Interests from the Seller from time to time.
The Investors shall, at the request of the Seller, purchase Receivable
Interests from time to time. In addition, the Investors have agreed to provide a
liquidity facility to Falcon.
The First National Bank of Chicago has been requested and is willing to
act as Agent on behalf of Falcon and the Investors in accordance with the terms
hereof.
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. PURCHASE FACILITY. (a) Upon the terms and subject to the
conditions hereof, the Seller may, at its option, sell and assign Receivable
Interests to the Agent for the benefit of the Purchasers. Falcon may, at its
option, instruct the Agent to purchase on behalf of Falcon, or if Falcon shall
decline to purchase, the Agent shall purchase on behalf of the Investors,
Receivable Interests from time to time during the period from the date hereof to
but not including the Termination Date. The Seller hereby assigns, transfers and
conveys to the Agent for the benefit of the relevant Purchaser or Purchasers,
and the Agent hereby acquires, all of the Seller's right, title and interest in
and to the Receivable Interests as more particularly described herein.
(b) The Seller may, upon at least ten days' prior notice to the Agent,
terminate in whole or reduce in part ratably among the Investors the unused
portion of the Purchase Limit; PROVIDED that each partial reduction of the
Purchase Limit shall be in an amount equal to $5,000,000 or an integral multiple
thereof.
Section 1.2. MAKING PURCHASES. (a) The Seller shall provide the Agent with
a purchase notice, in substantially the form of Exhibit VIII hereto (each a
"Purchase Notice"), at least (i) three
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Business Days prior to the date of an Incremental Purchase in the event the
applicable Discount Rate is requested to be the LIBO Rate, (ii) two Business
Days prior to the date of an Incremental Purchase in the event the applicable
Discount Rate is requested to be the CP Rate and (iii) one Business Day prior to
the date of an Incremental Purchase in the event the applicable Discount Rate is
requested to be the Base Rate. Each Purchase Notice shall, except as set forth
below, be irrevocable and shall specify the requested Purchase Price (which
shall not be less than, and shall be an integral multiple of, $1,000,000) and
date of purchase, together with the duration of the initial Tranche Period and
the initial Discount Rate related thereto. Following receipt of a Purchase
Notice, the Agent will determine whether Falcon agrees to make the purchase. If
Falcon declines to make a proposed purchase, the Seller may cancel the Purchase
Notice or the Incremental Purchase of the Receivable Interests will be made by
the Investors.
(b) On the date of each Incremental Purchase, upon satisfaction of
the applicable conditions precedent set forth in Article IV, Falcon or each
Investor, as applicable, shall deposit to the Facility Account, in immediately
available funds, no later than 12:00 noon (Chicago time), an amount equal to (i)
in the case of Falcon, the aggregate Purchase Price of each Receivable Interests
Falcon is then purchasing or (ii) in the case of an Investor, such Investor's
Pro Rata Share of the aggregate Purchase Price of each of the Receivable
Interests the Investors are purchasing.
Section 1.3. SELECTION OF TRANCHE PERIODS AND DISCOUNT RATES. (a) Each
Receivable Interest shall at all times have an associated amount of Capital, a
Discount Rate and Tranche Period applicable to it. Not less than $10,000,000 of
Capital may be allocated to any single Receivable Interest. The Seller shall
request Discount Rates and Tranche Periods for the Receivable Interests of the
Purchasers. The Seller may select the CP Rate (with the concurrence of the
Agent) or the Base Rate for the Receivable Interests of Falcon and the LIBO Rate
or the Base Rate for the Receivable Interests of the Investors. In the case of
any Tranche Period with respect to which either the LIBO Rate or the Base Rate
applies, the Seller shall by 9:00 a.m. (Chicago time), (i) at least three
Business Days prior to the expiration of any then existing Tranche Period with
respect to which the LIBO Rate is being requested as a new Discount Rate and
(ii) at least one Business Day prior to the expiration of any Tranche Period
with respect to which the Base Rate is being requested as a new Discount Rate,
give the Agent irrevocable notice of the new Tranche Period and Discount Rate
for the Receivable Interest associated with such expiring Tranche Period. In the
case of any Tranche Period with respect to which the CP Rate applies, unless the
Agent shall otherwise direct, or the Seller shall otherwise request (i) at least
three Business Days prior to the expiration of such Tranche Period with respect
to which the LIBO Rate is being requested as a new Discount Rate and (ii) at
least one Business Day prior to the expiration of such Tranche Period with
respect to which the Base Rate is being requested as a new Discount Rate, a new
Tranche Period with respect to which the CP Rate applies shall automatically
commence at the expiration of such existing Tranche Period. Until the Seller
gives notice to the Agent of another Discount Rate, the initial Discount Rate
for any Receivable Interest transferred to the Investors pursuant to Section 2.1
shall be the Base Rate.
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(b) If any Purchaser notifies the Agent that it has determined that
funding all or any portion of any Receivable Interest at a LIBO Rate would
violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, or that (i) deposits of a type and maturity appropriate
to match fund its Receivable Interests at such LIBO Rate are not available or
(ii) such LIBO Rate does not accurately reflect the cost of acquiring or
maintaining a Receivable Interest at such LIBO Rate, then the Agent shall
suspend the availability of such LIBO Rate and require the Seller to select a
new Discount Rate for any Receivable Interest accruing Discount at such LIBO
Rate.
Section 1.4. PERCENTAGE EVIDENCED BY RECEIVABLE INTERESTS. Each Receivable
Interest shall be initially computed on its date of purchase. Thereafter, until
its Liquidation Day, each Receivable Interest shall be automatically recomputed
(or deemed to be recomputed) on each day prior to its Liquidation Day. The
variable percentage represented by any Receivable Interest as computed (or
deemed recomputed) as of the close of business on the day immediately preceding
its Liquidation Day shall remain constant at all times after such Liquidation
Day.
Section 1.5. DIVIDING OR COMBINING RECEIVABLE INTERESTS. The Seller or the
Agent may, upon notice to and consent by the other received at least three
Business Days prior to the end of a Tranche Period for any Receivable Interest,
take any of the following actions with respect to such Receivable Interest: (i)
divide the Receivable Interest into two or more Receivable Interests having
aggregate Capital equal to the Capital of such divided Receivable Interest, (ii)
combine the Receivable Interest with another Receivable Interest with a Tranche
Period ending on the same day, creating a new Receivable Interest having Capital
equal to the Capital of the two Receivable Interests combined or (iii) combine
the Receivable Interest with a Receivable Interest to be purchased on such day
by such Purchaser, creating a new Receivable Interest having Capital equal to
the Capital of the two Receivable Interests combined, PROVIDED THAT, a
Receivable Interest of Falcon may not be combined with a Receivable Interest of
the Investors.
Section 1.6. REINVESTMENT PURCHASES. At any time that any Collection or
Collections are received by the Servicer after the initial purchase of a
Receivable Interest hereunder and on or prior to the Liquidation Day of such
Receivable Interest, the Seller hereby requests and the Purchasers hereby agree
to make, simultaneously with such receipt, a reinvestment (each a
"Reinvestment") with that portion of each and every Collection received by the
Servicer that is part of such Receivable Interest, such that after giving effect
to such Reinvestment, the amount of the Capital of such Receivable Interest
immediately after any such receipt and corresponding Reinvestment shall be equal
to the amount of the Capital immediately prior to such receipt.
Section 1.7. LIQUIDATION SETTLEMENT PROCEDURES. On the Liquidation Day of
a Receivable Interest and on each day thereafter, the Servicer shall set aside
and hold in trust for the holder of such Receivable Interest, the percentage
evidenced by such Receivable Interest of Collections received on such day. On
each Settlement Date after the occurrence of the Liquidation Day in respect of
such Receivable Interest, the Servicer shall remit to the Agent's account the
amounts set aside pursuant to the preceding sentence, together with any
remaining amounts set aside
Page 4
pursuant to Section 1.8 prior to such day, but not to exceed the sum of (i) the
accrued Discount or Funding Charges for, and Servicing Fee allocable to, such
Receivable Interest, (ii) the Capital of such Receivable Interest, and (iii) the
aggregate of all other amounts then owed hereunder by Seller to the Purchasers.
If there shall be insufficient funds on deposit for the Servicer to distribute
funds in payment in full of the aforementioned amounts, the Servicer shall
distribute funds FIRST, to reimbursement of the Agent's costs of collection and
enforcement of this Agreement, SECOND, if the Servicer is not the Seller or any
Affiliate of the Seller, to enable the applicable Purchasers to pay their
allocable portion of the accrued Servicing Fee, THIRD, in reduction of the
Capital of the Receivable Interests, FOURTH, in payment of all accrued Discount
and Funding Charges for the Receivable Interests, FIFTH, in payment of all other
amounts payable to the Purchasers, and SIXTH, if the Seller or any Affiliate of
the Seller is the Servicer, to enable the applicable Purchasers to pay their
allocable portion of the accrued Servicing Fee. Collections allocated to the
Receivable Interests of the Investors shall be shared ratably by the Investors
in accordance with their Pro Rata Shares. Collections applied to the payment of
fees, expenses, Discount, Funding Charges and all other amounts payable by the
Seller to the Agent and the Purchasers hereunder shall be allocated ratably
among the Agent and the Purchasers in accordance with such amounts owing to each
of them. Following the date on which the Aggregate Unpaids are reduced to zero,
the Servicer shall pay to Seller any remaining Collections set aside and held by
the Servicer pursuant to this Section 1.7.
Section 1.8. DEEMED COLLECTIONS. If on any day the Outstanding Balance of
a Receivable is either (x) reduced as a result of any defective or rejected
goods or services, any cash discount or any adjustment by the Seller, the
applicable Originator, the Transferor or the Servicer, (y) reduced or canceled
as a result of a setoff in respect of any claim by any Person (whether such
claim arises out of the same or a related transaction or an unrelated
transaction) or (z) canceled or amended and re-billed (not including corrections
to bills occurring on the same day of the original invoice), the Seller shall be
deemed to have received on such day a Collection of such Receivable in the
amount of such reduction or cancellation; PROVIDED that in the case of a
Receivable that is canceled or amended and re-billed, if the Seller's records
show the connection between the original invoice and the re-billed invoice such
that both invoices represent one and the same Receivable, the Seller shall be
deemed to have received on such day a Collection of such Receivable in the
amount equal to the difference between the amount due under such original
invoice and the amount due under re-billed invoice. If on any day any of the
representations or warranties in Article III are no longer true with respect to
a Receivable, the Seller shall be deemed to have received on such day a
Collection of such Receivable in full. If the Seller receives any Collections or
is deemed to receive Collections pursuant to this Section 1.8 or otherwise, the
Seller shall immediately pay such Collections or deemed Collections to the
Servicer and, at all times prior to such payment, such Collections shall be held
in trust by the Seller for the exclusive benefit of the Purchasers and the
Agent.
Section 1.9. DISCOUNT AND FUNDING CHARGES; PAYMENTS AND COMPUTATIONS, ETC.
(a) Funding Charges shall accrue for each Receivable Interest for which the CP
Rate applies for each day occurring during the Tranche Period for such
Receivable Interest. Each Receivable Interest
Page 5
for which the CP Rate applies shall be funded substantially with Pooled
Commercial Paper and will accrue Funding Charges each day based on the Pooled
Allocation; PROVIDED, however, that each Receivable Interest funded
substantially with Specially Pooled Paper (in accordance with Section 1.9(b)
hereof) will accrue Funding Charges each day based on the Specially Pooled
Allocation. Discount shall accrue for each Receivable Interest for which either
the LIBO Rate or Base Rate applies for each day occurring during the Tranche
Period for such Receivable Interest. On each Settlement Date, the Seller shall
pay to the Agent an amount equal to the accrued and unpaid Discount and Funding
Charges for the immediately preceding Accrual Period in respect of all
Receivable Interests at such time.
(b) If the Seller shall request any Incremental Purchase with respect to
which the applicable Discount Rate is the CP Rate during any Special Pooled
Period, the Capital associated with any such Incremental Purchase shall be
deemed to be funded by Falcon with Specially Pooled Paper, and shall be
aggregated by Falcon with any other Specially Pooled Paper outstanding at the
time of such Incremental Purchase for purposes of determining the Funding
Charges applicable to such Incremental Purchase. Each such Incremental Purchase
shall be deemed to be funded with Specially Pooled Paper until the end of the
Special Pooled Period during which any such Incremental Purchase occurred.
(c) Notwithstanding any limitation on recourse contained in this
Agreement, the Seller shall pay to the Agent, for the account of the relevant
Purchasers, such fees as set forth in the Fee Letter, all amounts payable as
Discount, all amounts payable as Funding Charges, all amounts payable pursuant
to Article VIII, if any, all Servicer costs, if any, payable pursuant to Section
6.2 and on demand therefor, any Early Collection Fee. If any Person fails to pay
any amount when due hereunder, such Person agrees to pay, on demand, the Default
Fee.
(d) All amounts to be paid or deposited by any Person hereunder shall be
paid or deposited in accordance with the terms hereof no later than 12:00 noon
(Chicago time) on the day when due in immediately available funds; if such
amounts are payable to a Purchaser they shall be paid to the Agent, for the
account of such Purchaser, at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
until otherwise notified by the Agent. Upon notice to the Seller, the Agent may
debit the Facility Account for all amounts due and payable hereunder. All
computations of Discount, Funding Charges and per annum fees hereunder and under
the Fee Letter shall be made on the basis of a year of 360 days for the actual
number of days elapsed (including the first but excluding the last day). All per
annum fees shall be payable monthly in arrears. If any amount hereunder shall be
payable on a day which is not a Business Day, such amount shall be payable on
the next succeeding Business Day.
Section 1.10. SELLER INTEREST. The Seller shall ensure that the Receivable
Interests of the Purchasers shall at no time exceed in the aggregate 100%. If on
the Liquidation Day of a Receivable Interest, the aggregate of the Receivable
Interests of the Purchasers exceeds 100%, the Seller shall immediately pay to
the Agent an amount to be applied to reduce the Capital of the Receivable
Interests, such that after giving effect to such payment the aggregate of the
Receivable
Page 6
Interest equals or is less than 100%. Such amount shall be applied to the
reduction of the Capital of the Receivable Interests ratably in accordance with
the percentages of the Receivable Interests. Any amounts received by the
Investors pursuant to the preceding sentence shall be applied ratably in
accordance with their Pro Rata Shares. The Seller hereby grants to the Agent for
the ratable benefit of the Purchasers a security interest in all of its interest
in the Receivables, Related Security, Collections and proceeds thereof to secure
payment of the Aggregate Unpaids, including its indemnity obligations under
Article VIII and all other obligations owed hereunder to the Purchasers.
ARTICLE II
LIQUIDITY FACILITY
Section 2.1. TRANSFER TO INVESTORS. Each Investor hereby agrees, subject
to Section 2.4, that immediately upon written notice from Falcon delivered on or
prior to the Liquidity Termination Date, it shall acquire by assignment from
Falcon, without recourse or warranty, its Pro Rata Share of one or more of the
Receivable Interests of Falcon as specified by Falcon. Each Investor shall
promptly pay to the Agent at an account designated by the Agent, for the benefit
of Falcon, its Acquisition Amount. Unless an Investor has notified the Agent
that it does not intend to pay its Acquisition Amount, the Agent may assume that
such payment has been made and may, but shall not be obligated to, make the
amount of such payment available to Falcon in reliance upon such assumption.
Falcon hereby sells and assigns to the Agent for the ratable benefit of the
Investors, and the Agent hereby purchases and assumes from Falcon, effective
upon the receipt by Falcon of the Falcon Transfer Price, the Receivable
Interests of Falcon which are the subject of any transfer pursuant to this
Article II.
Section 2.2. TRANSFER PRICE REDUCTION DISCOUNT. If the Adjusted Liquidity
Price is included in the calculation of the Falcon Transfer Price for any
Receivable Interest, each Investor agrees that the Agent shall pay to Falcon the
Reduction Percentage of any Discount or Funding Charges received by the Agent
with respect to such Receivable Interest.
Section 2.3. PAYMENTS TO FALCON. In consideration for the reduction of the
Falcon Transfer Prices by the Falcon Transfer Price Reductions, effective only
at such time as the aggregate amount of the Capital of the Receivable Interests
of the Investors equals the Falcon Residual, each Investor hereby agrees that
the Agent shall not distribute to the Investors and shall immediately remit to
Falcon any Discount, Funding Charges, Collections or other payments received by
it to be applied pursuant to the terms hereof or otherwise to reduce the Capital
of the Receivable Interests of the Investors.
Section 2.4. LIMITATION ON COMMITMENT TO PURCHASE FROM FALCON.
Notwithstanding anything to the contrary in this Agreement, no Investor shall
have any obligation to purchase any Receivable Interest from Falcon, pursuant to
Section 2.1 or otherwise, if:
Page 7
(i) Falcon shall have voluntarily commenced any proceeding or filed
any petition under any bankruptcy, insolvency or similar law seeking the
dissolution, liquidation or reorganization of Falcon or taken any corporate
action for the purpose of effectuating any of the foregoing; or
(ii) involuntary proceedings or an involuntary petition shall have
been commenced or filed against Falcon by any Person under any bankruptcy,
insolvency or similar law seeking the dissolution, liquidation or reorganization
of Falcon and such proceeding or petition shall have not been dismissed.
Section 2.5. DEFAULTING INVESTORS. If one or more Investors defaults in
its obligation to pay its Acquisition Amount pursuant to Section 2.1 (each such
Investor shall be called a "Defaulting Investor" and the aggregate amount of
such defaulted obligations being herein called the "Falcon Transfer Price
Deficit"), then upon notice from the Agent, each Investor other than the
Defaulting Investors (a "Non-Defaulting Investor") shall promptly pay to the
Agent, in immediately available funds, an amount equal to the lesser of (x) such
Non-Defaulting Investor's proportionate share (based upon the relative
Commitments of the Non-Defaulting Investors) of the Falcon Transfer Price
Deficit and (y) the unused portion of such Non-Defaulting Investor's Commitment.
A Defaulting Investor shall forthwith upon demand pay to the Agent for the
account of the Non-Defaulting Investors all amounts paid by each Non-Defaulting
Investor on behalf of such Defaulting Investor, together with interest thereon,
for each day from the date a payment was made by a Non-Defaulting Investor until
the date such Non-Defaulting Investor has been paid such amounts in full, at a
rate per annum equal to the Federal Funds Effective Rate plus 2%. In addition,
without prejudice to any other rights that Falcon may have under applicable law,
each Defaulting Investor shall pay to Falcon forthwith upon demand, the
difference between such Defaulting Investor's unpaid Acquisition Amount and the
amount paid with respect thereto by the non-Defaulting Investors, together with
interest thereon, for each day from the date of the Agent's request for such
Defaulting Investor's Acquisition Amount pursuant to Section 2.1 until the date
the requisite amount is paid to Falcon in full, at a rate per annum equal to the
Federal Funds Effective Rate plus 2%.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. SELLER REPRESENTATIONS AND WARRANTIES. The Seller,
individually and in its capacity as Servicer, hereby represents and warrants to
the Purchasers that:
(a) CORPORATE EXISTENCE AND POWER. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation, and has all corporate power and all governmental licenses,
authorizations, consents and approvals required to carry on its business in each
jurisdiction in which the nature of its business requires such authorization.
Page 8
(b) NO CONFLICT. The execution, delivery and performance by the Seller of
this Agreement and each other Transaction Document, and the Seller's use of the
proceeds of purchases made hereunder, are within its corporate powers, have been
duly authorized by all necessary corporate action, do not contravene or violate
(i) its certificate or articles of incorporation or by-laws, (ii) any law, rule
or regulation applicable to it, (iii) any restrictions under any agreement,
contract or instrument to which it is a party or by which it or any of its
property is bound, or (iv) any order, writ, judgment, award, injunction or
decree binding on or affecting it or its property, and do not result in the
creation or imposition of any Adverse Claim on assets of the Seller or its
Subsidiaries (except as created hereunder); and no transaction contemplated
hereby requires compliance with any bulk sales act or similar law. This
Agreement and each other Transaction Document has been duly authorized, executed
and delivered by the Seller.
(c) GOVERNMENTAL AUTHORIZATION. Other than the filing of the financing
statements required hereunder, no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or regulatory body
is required for the due execution, delivery and performance by the Seller of the
Transaction Documents.
(d) BINDING EFFECT. The Transaction Documents constitute the legal, valid
and binding obligations of the Seller enforceable against the Seller in
accordance with their respective terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally.
(e) ACCURACY OF INFORMATION. All information heretofore furnished by the
Seller, the Transferor, any Originator or the Servicer to the Agent or the
Purchasers for purposes of or in connection with this Agreement, any of the
other Transaction Documents or any transaction contemplated hereby or thereby
is, and all such information hereafter furnished by the Seller, the Transferor,
any Originator or the Servicer to the Agent or the Purchasers will be true and
accurate in every material respect, and with respect to any information
delivered pursuant to Section 5.1(a)(i) and (ii) will be, when taken as a whole,
true and accurate in every material respect, on the date such information is
stated or certified and does not and will not contain any material misstatement
of fact or omit to state a material fact or any fact necessary to make the
statements contained as of the date furnished therein not misleading, and with
respect to any information delivered pursuant to Section 5.1(a)(i) and (ii),
does not and will not contain any material misstatement of fact or omit to state
a material fact or any fact necessary to make the statements contained therein,
when taken as a whole, not misleading.
(f) USE OF PROCEEDS. No proceeds of any purchase hereunder will be used
(i) for a purpose which violates, or would be inconsistent with, Regulation T, U
or X promulgated by the Board of Governors of the Federal Reserve System from
time to time or (ii) to acquire any security in any transaction which is subject
to Section 13 or 14 of the Securities Exchange Act of 1934, as amended.
Page 9
(g) TITLE TO RECEIVABLES PURCHASED FROM THE ORIGINATORS. Each Receivable
transferred to the Seller has been (i) purchased by the Transferor from an
Originator in accordance with the terms of the Originator Transfer Agreement,
and the Transferor has thereby irrevocably obtained all legal and equitable
title to, and has the legal right to sell and encumber, such Receivable and the
Related Security and (ii) purchased by the Seller from the Transferor in
accordance with the terms of the Transfer Agreement, and the Seller has thereby
irrevocably obtained all legal and equitable title to, and has the legal right
to sell and encumber, such Receivable and the Related Security. Each such
Receivable has been transferred to the Transferor free and clear of any Adverse
Claim, and in turn, transferred to the Seller free and clear of any Adverse
Claim. Without limiting the foregoing, there has been duly filed all financing
statements or other similar instruments or documents necessary under the UCC of
all appropriate jurisdictions (or any comparable law) to perfect the Seller's
ownership interest in such Receivable.
(h) GOOD TITLE; PERFECTION. Immediately prior to each purchase hereunder,
the Seller shall be the legal and beneficial owner of the Receivables and
Related Security with respect thereto, free and clear of any Adverse Claim,
except as created by the Transaction Documents. This Agreement is effective to,
and shall, upon each purchase hereunder, transfer to the relevant Purchaser or
Purchasers (and such Purchaser or Purchasers shall acquire from the Seller) a
valid and perfected first priority undivided percentage ownership interest in
each Receivable existing or hereafter arising and in the Related Security and
Collections with respect thereto, free and clear of any Adverse Claim, except as
created by the Transactions Documents.
(i) PLACES OF BUSINESS. The principal places of business and chief
executive office of the Seller and the offices where the Seller keeps all its
Records are located at the address(es) listed on Exhibit II or such other
locations notified to the Agent in accordance with Section 5.2(a) in
jurisdictions where all action required by Section 5.2(a) has been taken and
completed. The Seller's Federal Employer Identification Number is correctly set
forth on Exhibit II.
(j) COLLECTION BANKS; ETC. Except as otherwise notified to the Agent in
accordance with Section 5.2(b), (i) the Seller has instructed, or
has caused each Originator and the Transferor to instruct, all
Obligors to pay all Collections directly to a lock-box or a
depository account listed on Exhibit III, (ii) all proceeds from
such lock-boxes are deposited directly by a Collection Bank into a
depository account listed on Exhibit III, (iii) the names and
addresses of all Collection Banks, together with the account numbers
of the Collection Accounts of the Seller at each Collection Bank,
are listed on Exhibit III, and (iv) each Collection Account to which
Collections are remitted is, or will be within 60 days of the date
hereof, subject to a Collection Account Agreement that is in full
force and effect. The Seller has not granted any Person, other than
the Agent as contemplated by this Agreement, dominion and control of
any Collection Account, or the right to take dominion and control of
any Collection Account at a future time or upon the occurrence of a
future event.
Page 10
(k) MATERIAL ADVERSE EFFECT. Since the date of the Seller's incorporation
no event has occurred which would have a Material Adverse Effect.
(l) NAMES. In the past five years, the Seller has not used any corporate
names, trade names or assumed names other than those listed on Exhibit II.
(m) ACTIONS, SUITS. There are no actions, suits or proceedings pending or
threatened against or affecting the Seller or any of its properties. There are
no actions, suits or proceedings pending or to the Seller's knowledge,
threatened, against or affecting, the Transferor or any Originator, or any of
the respective properties of the Transferor or any Originator, in or before any
court, arbitrator or other body, which are reasonably likely to (i) adversely
affect the collectibility of the Receivables, (ii) materially adversely affect
the financial condition of the Seller, the Transferor or any Originator or (iii)
materially adversely affect the ability of the Seller, the Transferor or any
Originator to perform its obligations under the Transaction Documents. The
Seller is not in default with respect to any order of any court, arbitrator or
governmental body. None of the Transferor or any Originator is in default with
respect to any order of any court, arbitrator or governmental body which default
would cause a Material Adverse Effect.
(n) CREDIT AND COLLECTION POLICIES. With respect to each Receivable, each
of the Seller, the Transferor, each Originator, and the Servicer has complied in
all material respects with the Credit and Collection Policy.
(o) PAYMENTS TO TRANSFEROR AND ORIGINATORS. With respect to each
Receivable transferred to the Seller, the Seller has given reasonably equivalent
value to the Transferor in consideration for such transfer of such Receivable
and the Related Security with respect thereto under the Transfer Agreement and
such transfer was not made for or on account of an antecedent debt. No transfer
by the Transferor to the Seller of any Receivable is or may be voidable under
any section of the Bankruptcy Code. With respect to each Receivable transferred
to the Transferor, the Transferor has given reasonably equivalent value to the
applicable Originator in consideration for such transfer of such Receivable and
the Related Security with respect thereto under the Originator Transfer
Agreement and such transfer was not made for or on account of an antecedent
debt. No transfer by any Originator to the Transferor of any Receivable is or
may be voidable under any section of the Bankruptcy Code.
(p) OWNERSHIP OF THE SELLER. The Transferor owns one hundred percent
(100%) of the issued and outstanding capital stock of the Seller. Such capital
stock is validly issued, fully paid and nonassessable and there are no options,
warrants or other rights to acquire securities of the Seller.
(q) NOT AN INVESTMENT COMPANY. The Seller is not an "investment company"
within the meaning of the Investment Company Act of 1940, as amended from time
to time, or any successor statute.
Page 11
(r) PURPOSE. The Seller has determined that, from a business viewpoint,
the purchase of the Receivables and related interests thereto from the
Transferor under the Transfer Agreement, and the sale of Receivable Interests to
the Purchasers and the other transactions contemplated herein, are in the best
interests of the Seller.
(s) OTHER REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of each Originator and the Transferor under each of the other
Transaction Documents is true and correct in all material respects on and as of
the date when made under such Transaction Document.
(t) YEAR 2000 ISSUES. The Seller has made a full and complete assessment
of the Year 2000 Issues and has a realistic and achievable program for
remediating the Year 2000 Issues on a timely basis. Based on such assessment and
program, the Seller does not reasonably anticipate that Year 2000 Issues will
have a Material Adverse Effect.
(u) MINIMUM RECEIVABLES BALANCE. The Net Receivables Balance is equal to
or greater than the Minimum Receivables Balance.
Section 3.2. INVESTOR REPRESENTATIONS AND WARRANTIES. Each Investor hereby
represents and warrants to the Agent and Falcon that:
(a) EXISTENCE AND POWER. Such Investor is a corporation or a banking
association duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, and has all corporate
power to perform its obligations hereunder.
(b) NO CONFLICT. The execution, delivery and performance by such Investor
of this Agreement are within its corporate powers, have been duly authorized by
all necessary corporate action, do not contravene or violate (i) its certificate
or articles of incorporation or association or by-laws, (ii) any law, rule or
regulation applicable to it, (iii) any restrictions under any agreement,
contract or instrument to which it is a party or any of its property is bound,
or (iv) any order, writ, judgment, award, injunction or decree binding on or
affecting it or its property, and do not result in the creation or imposition of
any Adverse Claim on its assets. This Agreement has been duly authorized,
executed and delivered by such Investor.
(c) GOVERNMENTAL AUTHORIZATION. No authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance by
such Investor of this Agreement.
(d) BINDING EFFECT. This Agreement constitutes the legal, valid and
binding obligation of such Investor enforceable against such Investor in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws relating
to or limiting creditors' rights generally.
Page 12
ARTICLE IV
CONDITIONS OF PURCHASES
Section 4.1. CONDITIONS PRECEDENT TO INITIAL PURCHASE. The initial
purchase of a Receivable Interest under this Agreement is subject to the
conditions precedent that the Agent shall have received on or before the date of
such purchase those documents listed on Schedule A hereto.
Section 4.2. CONDITIONS PRECEDENT TO ALL PURCHASES AND REINVESTMENTS. Each
purchase of a Receivable Interest (other than pursuant to Section 2.1) and each
Reinvestment shall be subject to the further conditions precedent that (a) in
the case of each such purchase, the Servicer shall have delivered to the Agent
on or prior to the date of such purchase, in form and substance satisfactory to
the Agent, all Monthly Reports as and when due under Section 6.5; (b) on the
date of each such purchase or Reinvestment, the following statements shall be
true (and acceptance of the proceeds of such purchase or Reinvestment shall be
deemed a representation and warranty by the Seller that such statements are then
true):
(i) the representations and warranties set forth in Article III are
correct in all material respects on and as of the date of such
purchase or Reinvestment as though made on and as of such date;
(ii) no event has occurred, or would result from such purchase or
Reinvestment, that will constitute a Servicer Default, and no event
has occurred and is continuing, or would result from such purchase
or Reinvestment, that would constitute a Potential Servicer Default;
and
(iii) the Liquidity Termination Date shall not have occurred, the
aggregate Capital of all Receivable Interests does not exceed the
Purchase Limit and the aggregate Receivable Interests do not exceed
xx%;
and (c) the Agent shall have received such other approvals, opinions or
documents as it may reasonably request.
ARTICLE V
COVENANTS
Section 5.1. AFFIRMATIVE COVENANTS OF SELLER. Until the date on which the
Aggregate Unpaids have been indefeasibly paid in full, the Seller, individually
and in its capacity as Servicer, hereby covenants that:
(a) FINANCIAL REPORTING. The Seller will maintain, for itself and each of
its Subsidiaries, a system of accounting established and administered in
accordance with generally accepted accounting principles, and furnish to the
Agent:
Page 13
(i) ANNUAL REPORTINg. Within 90 days after the close of each of its
fiscal years, financial statements for such fiscal year certified in a
manner acceptable to the Agent by the senior financial officer of the
Seller or such other Person as may be acceptable to the Agent.
(ii) COMPLIANCE CERTIFICATE; QUARTERLY REPORTING. Within 90 days
after the close of each of its fiscal years and within 45 days after the
close of each of the first three quarterly periods of each fiscal year, a
compliance certificate in substantially the form of Exhibit IV, together
with financial statements for such quarterly periods, signed by the senior
financial officer of the Seller or such other Person as may be acceptable
to the Agent.
(iii) NOTICES UNDER TRANSACTION DOCUMENTS. Forthwith upon its
receipt of any notice, request for consent, financial statements,
certification, report or other communication under or in connection with
any Transaction Document from any Person other than the Agent or any
Purchaser, copies of the same.
(iv) CHANGE IN CREDIT AND COLLECTION POLICY. At least 30 days prior
to the effectiveness of any material change in or amendment to the Credit
and Collection Policy, a copy of the Credit and Collection Policy then in
effect and a notice indicating such change or amendment.
(v) OTHER INFORMATION. Such other information (including
non-financial information) as the Agent or any Purchaser may from time to
time reasonably request.
(b) NOTICES. The Seller will notify the Agent in writing of any of the
following immediately upon learning of the occurrence thereof, describing the
same and, if applicable, the steps being taken with respect thereto:
(i) SERVICER DEFAULTS OR POTENTIAL SERVICER DEFAULTS. The occurrence
of each Servicer Default or each Potential Servicer Default, by a
statement of the treasurer, the corporate comptroller or senior financial
officer of the Seller.
(ii) JUDGMENT. The entry of any judgment or decree against the
Seller.
(iii) LITIGATION. The institution of any litigation, arbitration
proceeding or governmental proceeding against the Seller or which the
Seller becomes a party.
(c) COMPLIANCE WITH LAWS. The Seller will comply in all respects with all
applicable laws, rules, regulations, orders, writs, judgments, injunctions,
decrees or awards to which it may be subject for which a failure to comply would
have a Material Adverse Effect.
Page 14
(d) AUDITS. The Seller will furnish to the Agent from time to time such
information with respect to it and the Receivables as the Agent may reasonably
request. The Seller shall, from time to time during regular business hours as
requested by the Agent upon reasonable notice, permit the Agent, or its agents
or representatives (and shall cause the Transferor and each Originator to permit
the Agent or its agents or representatives), (i) to examine and make copies of
and abstracts from all Records in the possession or under the control of the
Seller, the Transferor, or any Originator relating to Receivables and the
Related Security, including, without limitation, the related Contracts, and (ii)
to visit the offices and properties of the Seller, the Transferor or any
Originator for the purpose of examining such materials described in clause (i)
above, and to discuss matters relating to the Seller's, the Transferor's or any
Originator's financial condition or the Receivables and the Related Security or
the Seller's performance hereunder, or the Transferor's or any Originator's
performance under any of the other Transaction Documents, or the Seller's, the
Transferor's or any Originator's performance under the Contracts with any of the
officers or employees of the Seller, the Transferor or any Originator having
knowledge of such matters.
(e) KEEPING AND MARKING OF RECORDS AND BOOKS.
(i) The Seller will, and will cause the Transferor and each
Originator to, maintain and implement administrative and operating
procedures (including, without limitation, an ability to recreate records
evidencing 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
Receivables (including, without limitation, records adequate to permit the
immediate identification of each new Receivable and all Collections of and
adjustments to each existing Receivable). The Seller will, and will cause
the Transferor and each Originator to, give the Agent notice of any
material change in the administrative and operating procedures referred to
in the previous sentence.
(ii) The Seller will, and will cause the Transferor and each
Originator to, (a) on or prior to the date hereof, if possible, or as soon
as practicable thereafter, ▇▇▇▇ its master data processing records
relating to the Receivable Interests with a legend, acceptable to the
Agent, describing the Receivable Interests, (b) upon the request of the
Agent take such other action reasonably requested by the Agent to make
evident the Purchasers' interests in the Receivables and (c) after the
occurrence of a Servicer Default, upon the request of the Agent, deliver
to the Agent all Contracts (including, without limitation, all multiple
originals of any such Contract) relating to the Receivables.
(f) COMPLIANCE WITH CONTRACTS AND CREDIT AND COLLECTION POLICY. The Seller
will, and will cause the Transferor and each Originator to, timely and fully (i)
perform and comply in all material respects with all provisions, covenants and
other promises required to be observed by it under the Contracts related to the
Receivables, and (ii) comply in all material respects with the Credit and
Collection Policy in regard to each Receivable and the related Contract. The
Seller
Page 15
will, and will cause the Transferor and each Originator to, pay when due any
taxes payable in connection with the Receivables.
(g) PURCHASE OF RECEIVABLES FROM THE TRANSFEROR. With respect to each
Receivable purchased under the Transfer Agreement, the Seller shall (or shall
cause the Transferor to) take all actions necessary to vest legal and equitable
title to such Receivable and the Related Security irrevocably in the Seller,
including, without limitation, the filing of all financing statements or other
similar instruments or documents necessary under the UCC of all appropriate
jurisdictions (or any comparable law) to perfect the Seller's interest in such
Receivable and such other actions to perfect, protect or more fully evidence the
interest of the Seller as the Agent may reasonable request.
(h) RECEIVABLE INTEREST. The Seller shall take all necessary actions to
establish and maintain a valid and perfected first priority undivided percentage
ownership interest in the Receivables and the Related Security and Collections
with respect thereto, to the full extent contemplated herein, in favor of the
Agent and the Purchasers, including, without limitation, taking such actions to
perfect, protect or more fully evidence the interest of the Agent and the
Purchasers hereunder as the Agent may reasonably request.
(i) PAYMENT TO THE TRANSFEROR AND ORIGINATORS. With respect to any
Receivable purchased by the Seller from the Transferor, such sale shall be
effected under, and in strict compliance with the terms of, the Transfer
Agreement, including, without limitation, the terms relating to the amount and
timing of payments to be made to the Transferor in respect of the purchase price
for such Receivable. With respect to any Receivable purchased by the Transferor
from any Originator, such sale shall be effected under, and in strict compliance
with the terms of, the Originator Transfer Agreement, including, without
limitation, the terms relating to the amount and timing of payments to be made
to the applicable Originator in respect of the purchase price for such
Receivable.
(j) PERFORMANCE AND ENFORCEMENT OF THE TRANSFER AGREEMENT. The Seller
shall timely perform the obligations required to be performed by the Seller, and
shall vigorously enforce the rights and remedies accorded to the Seller, under
the Transfer Agreement. The Seller shall take all actions to perfect and enforce
its rights and interests (and the rights and interests of the Purchasers and the
Agents, as assignees of the Seller) under the Transfer Agreement as the Agent
may from time to time reasonably request, including, without limitation, making
claims to which it may be entitled under any indemnity, reimbursement or similar
provision contained in the Transfer Agreement.
(k) PURCHASERS' RELIANCE. The Seller acknowledges that the Purchasers are
entering into the transactions contemplated by this Agreement in reliance upon
the Seller's identity as a separate legal entity from the Transferor. 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 Agent or any Purchaser may from time to time reasonably request to maintain
the Seller's
Page 16
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 Transferor and any Affiliates thereof and not just a division of the
Transferor. Without limiting the generality of the foregoing and in addition to
the other covenants set forth herein, the Seller shall:
(i) conduct its own business in its own name and require that all
full-time employees of the Seller identify themselves as such and not as
employees of the Transferor (including, without limitation, by means of
providing appropriate employees with business or identification cards
identifying such employees as the Seller's employees);
(ii) compensate all employees, consultants and agents directly, from
the Seller's bank accounts, for services provided to the Seller by such
employees, consultants and agents and, to the extent any employee,
consultant or agent of the Seller is also an employee, consultant or agent
of the Transferor, allocate the compensation of such employee, consultant
or agent between the Seller and the Transferor on a basis which reflects
the services rendered to the Seller and the Transferor;
(iii) clearly identify its offices (by signage or otherwise) as its
offices and, if such office is located in the offices of the Transferor,
the Seller shall lease such office at a fair market rent;
(iv) have a separate telephone number and separate stationary,
invoices and checks in its own name;
(v) conduct all transactions with the Transferor (including, without
limitation, any delegation of its obligations hereunder as Servicer)
strictly on an arm's-length basis, allocate all overhead expenses
(including, without limitation, telephone and other utility charges) for
items shared between the Seller and the Transferor on the basis of actual
use to the extent practicable and, to the extent such allocation is not
practicable, on a basis reasonably related to actual use;
(vi) at all times have at least one member of its Board of Directors
(an "Independent Director") who is not (A) a director, officer or employee
of the Transferor or an Affiliate thereof, (B) a Person related to any
officer or director of the Transferor, (C) a holder (directly or
indirectly) of any securities of the Transferor, or (D) a Person related
to a holder (directly or indirectly) of any voting securities of the
Transferor; and promptly reimburse the Transferor in respect of any losses
or expenses which are claimed by such Independent Director in his or her
capacity as Independent Director and which are paid by the Transferor;
(vii) observe all corporate formalities as a distinct entity, and
ensure that all corporate actions relating to (A) the selection,
maintenance or replacement of the Independent Director, (B) the
dissolution or liquidation of the Seller or (C) the initiation
Page 17
or participation in, acquiescence in or consent to any bankruptcy,
insolvency, reorganization or similar proceeding involving the Seller, are
duly authorized by unanimous vote of its Board of Directors (including the
Independent Director);
(viii) maintain the Seller's books and records separate from those
of the Transferor and otherwise readily identifiable as its own assets
rather than assets of the Transferor;
(ix) prepare its financial statements separately from those of the
Transferor and insure that any consolidated financial statements of the
Transferor or any Affiliate thereof that include Seller have detailed
notes clearly stating that the Seller is a separate corporate entity and
that its assets will be available first and foremost to satisfy the claims
of the creditors of the Seller;
(x) except as herein specifically otherwise provided, not commingle
funds or other assets of the Seller with those of the Transferor and not
maintain bank accounts or other depository accounts to which the
Transferor is an account party, into which the Transferor makes deposits
or from which the Transferor has the power to make withdrawals;
(xi) not permit the Transferor to pay any of the Seller's operating
expenses (except pursuant to allocation arrangements that comply with the
requirements of this Section 5.1(k));
(xii) not permit the Seller to be named as an insured on the
insurance policy covering the property of the Transferor or enter into an
agreement with the holder of such policy whereby in the event of a loss in
connection with such property, proceeds are paid to the Seller; and
(xiii) take such other actions as are necessary on its part to
ensure that the facts and assumptions set forth in the opinion issued by
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ as counsel for the Seller, in connection with the
closing or initial purchase under this Agreement and relating to
substantive consolidation issues, and in the certificates accompanying
such opinion, remain true and correct in all material respects at all
times.
(l) COLLECTIONS. The Seller or the Servicer shall instruct, or cause the
Transferor and each Originator to instruct, all Obligors to pay all Collections
directly to a lock-box or depository account listed on Exhibit III or maintained
in compliance with Section 5.2(b). In the case of payments remitted to any such
lock-box, the Seller or the Servicer shall cause all proceeds from such lock-box
to be deposited directly by a Collection Bank into a depositary account listed
on Exhibit III or maintained in compliance with Section 5.2(b). Within 60 days
of the date hereof, the Seller shall cause each lock-box and Collection Account
to be subject to a Collection Account Agreement that is in full force and
effect. The Seller shall, subject to the terms of a Collection Account Agreement
and the terms of this Agreement, maintain exclusive dominion and control to each
such lock-box, concentration account and depositary account; neither the
Transferor nor the
Page 18
applicable Originator shall have any interest in, or any dominion or control
over, any such lock-box, concentration account or depositary account. In the
case of any Collections received by the Seller, the Transferor or any
Originator, the Seller shall remit (or shall cause the Transferor or such
Originator to remit) such Collections to a Collection Account not later than the
Business Day immediately following the date of receipt of such Collections, and,
at all times prior to such remittance, the Seller shall itself hold (or, if
applicable, shall cause the Transferor or such Originator to hold) such
Collections in trust, for the exclusive benefit of the Purchasers and the Agent.
The Seller shall not (and shall cause the Transferor and each Originator to not)
deposit or otherwise credit to any Collection Account any check or payment item
other than Collections and payments on the Receivables and Related Security. The
Agent may at any time request that the Seller, and the Seller thereupon promptly
shall, direct all Obligors on Receivables to remit all payments thereon to a new
depository account specified by the Agent.
(m) The Seller shall at all times maintain net worth of not less than
three percent (3%) of the aggregate Capital at such time.
(n) The Seller will take all actions reasonably necessary to assure that
the Year 2000 Issues will not have a Material Adverse Effect. Upon the Agent's
request, the Seller will provide to the Agent a description of its Year 2000
program, including updates and progress reports. The Seller will advise the
Agent of any reasonably anticipated Material Adverse Effect as a result of Year
2000 Issues.
(o) The Seller shall notify the Agent within 35 days following any decline
in or withdrawal of the long-term debt rating of the Transferor.
Section 5.2. NEGATIVE COVENANTS OF SELLER. Until the date on which the
Aggregate Unpaids have been indefeasibly paid in full, the Seller, individually
and in its capacity as Servicer, hereby covenants that:
(a) NAME CHANGE, OFFICES, RECORDS AND BOOKS OF ACCOUNTS. The Seller will
not change its name, identity or corporate structure (within the meaning of
Section 9-402(7) of any applicable enactment of the UCC) or relocate its chief
executive office or any office where Records are kept unless it shall have: (i)
given the Agent at least 45 days prior notice thereof and (ii) delivered to the
Agent all financing statements, instruments and other documents requested by the
Agent in connection with such change or relocation.
(b) CHANGE IN PAYMENT INSTRUCTIONS TO OBLIGORS. The Seller will not add or
terminate any bank as a Collection Bank from those listed in Exhibit III, or
make any change in its instructions to Obligors regarding payments to be made to
the Seller or payments to be made to any Collection Account or Collection Bank,
unless the Agent shall have received, at least 10 days before the proposed
effective date therefor, (i) written notice of such addition, termination or
change, (ii) with respect to the addition of a Collection Account or a
Collection Bank, an executed account agreement and an executed Collection
Account Agreement from such Collection Bank relating
Page 19
thereto and (iii) with respect to any terminated Collection Bank, evidence of
such termination and evidence that such terminated Collection Bank has been
instructed to forward any payments received by it to an account which is
governed by an executed Collection Account Agreement; PROVIDED, HOWEVER, that
the Seller may make changes in instructions to Obligors regarding payments if
such new instructions require such Obligor to make payments to another existing
Collection Account that is subject to a Collection Account Agreement then in
effect.
(c) MODIFICATIONS TO CONTRACTS AND CREDIT AND COLLECTION POLICY The Seller
will not, and will not permit the Transferor or any Originator to, make any
change to the Credit and Collection Policy which would be reasonably likely to
adversely affect the collectibility of the Receivables or decrease the credit
quality of any newly created Receivables. Except as provided in Section 6.2(c),
the Seller will not (and will not permit the Servicer, the Transferor or any
Originator to) extend, amend or otherwise modify the terms of any Receivable or
any Contract related thereto other than in accordance with the Credit and
Collection Policy.
(d) SALES, LIENS, ETC. The Seller shall not sell, assign (by operation of
law or otherwise) or otherwise dispose of, or grant any option with respect to,
or create or suffer to exist any Adverse Claim upon (including, without
limitation, the filing of any financing statement) or with respect to, any
Receivable or Related Security or Collections in respect thereof, or upon or
with respect to any Contract under which any Receivable arises, or any
Collection Account or assign any right to receive income in respect thereof
(other than, in each case, the creation of the interests therein in favor of the
Agent and the Purchasers provided for herein), and the Seller shall defend the
right, title and interest of the Agent and the Purchasers in, to and under any
of the foregoing property, against all claims of third parties claiming through
or under the Seller.
(e) NATURE OF BUSINESS; OTHER AGREEMENTS; OTHER INDEBTEDNESS. The Seller
shall not engage in any business or activity of any kind or enter into any
transaction or indenture, mortgage, instrument, agreement, contract, lease or
other undertaking other than the transactions contemplated and authorized by
this Agreement and the Transfer Agreement. Without limiting the generality of
the foregoing, the Seller shall not create, incur, guarantee, assume or suffer
to exist any indebtedness or other liabilities, whether direct or contingent,
other than (i) as a result of the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
business, (ii) the incurrence of obligations under this Agreement, (iii) the
incurrence of obligations, as expressly contemplated in the Transfer Agreement,
to make payment to the Transferor thereunder for the purchase of Receivables
from the Transferor under such Transfer Agreement, and (iv) the incurrence of
operating expenses in the ordinary course of business of the type otherwise
contemplated in Section 5.1(k) of this Agreement. In the event the Seller shall
at any time borrow a "Revolving Loan" under the Transfer Agreement, the
obligations of the Seller in connection therewith shall be subordinated to the
obligations of the Seller to the Purchasers and the Agent under this Agreement,
on such terms as shall be satisfactory to the Agent.
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(f) AMENDMENTS TO THE TRANSFER AGREEMENT. The Seller shall not, without
the prior written consent of the Agent, (i) cancel or terminate the Transfer
Agreement, (ii) give any consent, waiver, directive or approval under the
Transfer Agreement, (iii) waive any default, action, omission or breach under
the Transfer Agreement, or otherwise grant any indulgence thereunder, (iv)
terminate any Sub-Servicer under the Transfer Agreement, or (v) amend,
supplement or otherwise modify any of the terms of the Transfer Agreement.
(g) AMENDMENTS TO CORPORATE DOCUMENTS. The Seller shall not amend its
Certificate of Incorporation or By-Laws in any respect that would impair its
ability to comply with the terms or provisions of any of the Transaction
Documents, including, without limitation, Section 5.1(k) of this Agreement.
(h) MERGER. The Seller shall not merge or consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in one transaction or
in a series of transactions, and except as otherwise contemplated herein) all or
any material part of its assets (whether now owned or hereafter acquired) to, or
acquire all or any material part of the assets of, any Person.
ARTICLE VI
ADMINISTRATION AND COLLECTION
Section 6.1. DESIGNATION OF SERVICER. (a) The servicing, administration
and collection of the Receivables shall be conducted by such Person (the
"Servicer") so designated from time to time in accordance with this Section 6.1.
The Seller is hereby designated as, and hereby agrees to perform the duties and
obligations of, the Servicer pursuant to the terms of this Agreement. The Agent
may at any time in its sole discretion terminate the Seller as Servicer on
notice given by the Agent to the Seller and may designate as Servicer any Person
to succeed the Seller or any successor Servicer.
(b) The Seller is permitted to delegate, and the Seller hereby advises the
Purchasers and the Agent that it has delegated, to the Transferor as subservicer
of the Servicer, certain of its duties and responsibilities as Servicer
hereunder. The Seller hereby further advises the Purchasers and the Agent that
the Transferor has delegated, to the Originators as subservicers of the
Transferor, its duties and responsibilities as subservicer. Notwithstanding the
foregoing, (i) the Seller shall be and remain primarily liable to the Agent and
the Purchasers for the full and prompt performance of all duties and
responsibilities of the Servicer hereunder and (ii) the Agent and the Purchasers
shall be entitled to deal exclusively with the Seller in matters relating to the
discharge by the Servicer of its duties and responsibilities hereunder, and the
Agent and the Purchasers shall not be required to give notice, demand or other
communication to any Person other than the Seller in order for communication to
the Servicer and its respective delegates and subservicers in respect thereof to
be accomplished. The Seller, at all times that it is the Servicer, shall be
responsible for providing its delegates and subservicers with any notice given
under this Agreement. The Agent may at any time in its sole discretion direct
the Seller to replace any of its delegates or
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subservicers on notice given by the Agent to the Seller and may designate as
subservicer any Person to succeed such subservicer or any successor subservicer.
(c) Without the prior written consent of the Required Investors, (i) the
Seller shall not be permitted to delegate any of its duties or responsibilities
as Servicer to any Person other than the Transferor, and then such delegation
shall be limited to the activities of Servicer hereunder, (ii) the Transferor
shall not be permitted to delegate any of its duties or responsibilities of the
Servicer delegated to it by the Seller to any Person other than the Originators
and (ii) the Originators shall not be permitted to further delegate to any other
Person any of its duties or responsibilities of the Servicer delegated to it by
the Transferor. If the Agent shall designate as Servicer any Person other than
the Seller in accordance with this Section 6.1, all duties and responsibilities
theretofore delegated by the Seller to the Transferor and by the Transferor to
any Originator may, at the discretion of the Agent, be terminated forthwith on
notice given by the Agent to the Seller.
Section 6.2. DUTIES OF SERVICER. (a) The Servicer shall take or cause to
be taken all such actions as may be necessary or advisable to collect each
Receivable from time to time, all in accordance with applicable laws, rules and
regulations, with reasonable care and diligence, and in accordance with the
Credit and Collection Policy.
(b) The Servicer shall administer the Collections in accordance with the
procedures described herein and in Article I. The Servicer shall set aside and
hold in trust for the account of the Seller and the Purchasers their respective
shares of the Collections of Receivables in accordance with Section 1.7. The
Servicer shall upon the request of the Agent after the occurrence of a
Liquidation Day, segregate, in a manner acceptable to the Agent, all cash,
checks and other instruments received by it from time to time constituting
Collections from the general funds of the Servicer or the Seller prior to the
remittance thereof in accordance with Section 1.7. If the Servicer shall be
required to segregate Collections pursuant to the preceding sentence, the
Servicer shall segregate and deposit with a bank designated by the Agent such
allocable share of Collections of Receivables set aside for the Purchasers on
the first Business Day following receipt by the Servicer of such Collections,
duly endorsed or with duly executed instruments of transfer.
(c) The Servicer, may, in accordance with the Credit and Collection
Policy, extend the maturity of any Receivable or adjust the Outstanding Balance
of any Receivable as the Servicer may determine to be appropriate to maximize
Collections thereof; PROVIDED, HOWEVER, that such extension or adjustment shall
not alter the status of such Receivable as a Delinquent Receivable or Defaulted
Receivable or limit the rights of the Agent or the Purchasers under this
Agreement. Notwithstanding anything to the contrary contained herein, the Agent
shall have the absolute and unlimited right to direct the Servicer to commence
or settle any legal action with respect to any Receivable or to foreclose upon
or repossess any Related Security.
(d) The Servicer shall hold in trust for the Seller and the Purchasers, in
accordance with their respective Receivable Interests, all Records that evidence
or relate to the Receivables, the related Contracts and Related Security or that
are otherwise necessary or desirable to collect the
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Receivables and shall, as soon as practicable upon demand of the Agent, deliver
or make available to the Agent all such Records, at a place selected by the
Agent. The Servicer shall, as soon as practicable following receipt thereof,
turn over to the Seller (i) that portion of Collections of Receivables
representing the Seller's undivided fractional ownership interest therein, less,
in the event the Seller is not the Servicer, all reasonable out-of-pocket costs
and expenses of the Servicer of servicing, administering and collecting the
Receivables not otherwise covered by the Servicing Fee, and (ii) any cash
collections or other cash proceeds received with respect to Indebtedness not
constituting Receivables. The Servicer shall, from time to time at the request
of any Purchaser, furnish to the Purchasers (promptly after any such request) a
calculation of the amounts set aside for the Purchasers pursuant to Section 1.7.
(e) Any payment by an Obligor in respect of any indebtedness owed by it to
the applicable Originator shall, except as otherwise specified by such Obligor
or otherwise required by contract or law and unless otherwise instructed by the
Agent, be applied as a Collection of any Receivable of such Obligor (starting
with the oldest such Receivable) to the extent of any amounts then due and
payable thereunder before being applied to any other receivable or other
obligation of such Obligor.
Section 6.3. COLLECTION NOTICES. The Agent is authorized at any time to
date and to deliver to the Collection Banks a Collection Notice under any
Collection Account Agreement. The Seller hereby transfers to the Agent for the
benefit of the Purchasers, effective when the Agent delivers any such Collection
Notice, the exclusive ownership and control of the Collection Accounts. In case
any authorized signatory of the Seller whose signature appears on a Collection
Account Agreement shall cease to have such authority before the delivery of such
notice, such Collection Account Agreement shall nevertheless be valid as if such
authority had remained in force. The Seller hereby authorizes the Agent, and
agrees that the Agent shall be entitled to (i) endorse the Seller's name on
checks and other instruments representing Collections, (ii) enforce the
Receivables, the related Contracts and the Related Security and (iii) take such
action as shall be necessary or desirable to cause all cash, checks and other
instruments constituting Collections of Receivables to come into the possession
of the Agent rather than the Seller.
Section 6.4. RESPONSIBILITIES OF THE SELLER. Anything herein to the
contrary notwithstanding, the exercise by the Agent and the Purchasers of their
rights hereunder shall not release the Servicer or the Seller from any of their
duties or obligations with respect to any Receivables or under the related
Contracts. Neither the Agent nor any of the Purchasers shall have any obligation
or liability with respect to any Receivables or related Contracts, nor shall any
of them be obligated to perform the obligations of the Seller.
Section 6.5. REPORTS. On the Reporting Date of each month and at such
other times as the Agent shall request, the Servicer shall prepare and forward
to the Agent a Monthly Report.
Section 6.6. SERVICER FEE. In consideration of the Servicer's agreement to
perform the duties and obligations of the Servicer hereunder, the parties hereto
severally agree to pay to the
Page 23
Servicer on each Settlement Date a fee (the "Servicing Fee") in an amount equal
to (i) 2.0% per annum MULTIPLIED by (ii) the average daily Outstanding Balance
of the Receivables during the calendar month then most recently ended. The
payment obligation in respect of the Servicing Fee shall be allocated among the
parties hereto ratably in accordance with their respective interests from time
to time in the Receivables. During the period that the Seller or any of its
Affiliates is the Servicer hereunder, unless a Servicer Default shall have
occurred and then be continuing, the Seller shall be permitted to retain an
amount from the Collections on each Settlement Date equal to the Servicing Fee
accrued and payable to such date.
ARTICLE VII
SERVICER DEFAULTS
Section 7.1. SERVICER DEFAULT. The occurrence of any one or more of the
following events shall constitute a Servicer Default:
(a) The Seller, the Transferor or the Servicer shall fail (i) to make any
payment or deposit required hereunder, (ii) to perform or observe any term,
covenant or agreement under SECTIONS 5.1 (A), (B)(II), (B)(III), (C), (E), (F)
or (N) and such failure shall remain unremedied for five Business Days, or (iii)
to perform or observe any term, covenant or agreement hereunder (other than as
referred to in clauses (i) or (ii) of this paragraph (a)) and such failure shall
remain unremedied for three Business Days.
(b) Any representation, warranty, certification or statement made by the
Seller in this Agreement, any other Transaction Document or in any other
document delivered pursuant hereto shall prove to have been incorrect when made
or deemed made.
(c) (i) Failure of the Seller to pay any Indebtedness when due; or the
default by the Seller in the performance of any term, provision or condition
contained in any agreement under which any Indebtedness was created or is
governed, the effect of which is to cause, or to permit the holder or holders of
such Indebtedness to cause, such Indebtedness to become due prior to its stated
maturity; or any Indebtedness of the Seller shall be declared to be due and
payable or required to be prepaid (other than by a regularly scheduled payment)
prior to the date of maturity thereof or (ii) failure of the Transferor, any
Originator or, if the Servicer is not the Seller, the Servicer to pay any
Indebtedness in excess of $10,000,000 when due; or the default by the
Transferor, any Originator or, if the Servicer is not the Seller, the Servicer
in the performance of any term, provision or condition contained in any
agreement under which such Indebtedness was created or is governed, the effect
of which is to cause, or to permit the holder or holders of such Indebtedness to
cause, such Indebtedness to become due prior to its stated maturity; or any such
Indebtedness of the Transferor, any Originator or, if the Servicer is not the
Seller, the Servicer shall be declared to be due and payable or required to be
prepaid (other than by a regularly scheduled payment) prior to the date of
maturity thereof.
Page 24
(d) (i) The Seller, the Transferor, any Originator or the Servicer shall
generally not pay its debts as such debts become due or shall admit in writing
its inability to pay its debts generally or shall make a general assignment for
the benefit of creditors; or any proceeding shall be instituted by or against
the Seller, the Transferor, any Originator or the Servicer seeking to adjudicate
it bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee or other similar official for it or any substantial part of
its property or (ii) the Seller, the Transferor, any Originator or the Servicer
shall take any corporate action to authorize any of the actions set forth in
clause (i) above in this subsection (d).
(e) As at the end of any calendar month,
(i) the average of the Delinquency Ratios of the three most recently
ended calendar months shall exceed x.x%;
(ii) the average of the Dilution Ratios of the three most recently
ended calendar months shall exceed x.x%; or
(iii) the average of the Default Ratios of the three most recently
ended calendar months shall exceed x.x%.
(f) The Transferor shall for any reason cease to transfer, or cease to
have the legal capacity or otherwise be incapable of transferring, Receivables
under the Transfer Agreement, or any "Potential Termination Event" with respect
to the covenant set forth in Section 4.1(c) of the Transfer Agreement or any
"Termination Event" shall occur under the Transfer Agreement.
(g) One or more Originators, the aggregate Outstanding Balance of whose
Receivables equals 17% or more of the Outstanding Balance of the Receivables
originated by all Originators, shall for any reason cease to transfer, or cease
to have the legal capacity or otherwise be incapable of transferring,
Receivables under the Originator Transfer Agreement, or any "Potential
Termination Event" with respect to the covenant set forth in Section 4.1(c) of
the Originator Transfer Agreement or any "Termination Event" shall occur under
the Originator Transfer Agreement with respect to such Originators.
(h) The aggregate Receivable Interests hereunder shall at any time exceed
xx% and such condition shall continue to exist for one Business Day.
(i) A Change of Control shall occur.
(j) Any Termination Event (as defined in the Transferor Credit Agreement
as of the date hereof) occurs which is reasonably likely to subject the Seller,
Transferor or any of the Transferor's Subsidiaries to liability individually or
in the aggregate in excess of $10,000,000.
Page 25
(k) The Transferor shall fail to observe any of the financial covenants
under Section 7.4 of the Transferor Credit Agreement as such financial covenants
are set forth in the Transferor Credit Agreement on the date hereof.
(l) The Seller shall fail to cause each lock-box and Collection Account to
be subject to a Collection Account Agreement that is in full force and effect
within 60 days of the date hereof.
then, and in any such event, the Agent shall at the request, or may with the
consent, of the Required Investors by notice to the Seller declare the
Termination Date to have occurred, whereupon the Termination Date shall
forthwith occur, without demand, protest or further notice of any kind, all of
which are hereby expressly waived by the Seller; PROVIDED, HOWEVER, that upon
the occurrence of a Servicer Default described in subsection (d) above or of an
actual or deemed entry of an order for relief with respect to the Seller, the
Transferor, any Originator or the Servicer, the Termination Date shall
automatically occur, without demand, protest or any notice of any kind, all of
which are hereby expressly waived by the Seller and the Servicer. Upon the
occurrence of the Termination Date for any reason whatsoever, the Agent and the
Purchasers shall have, in addition to all other rights and remedies under this
Agreement or otherwise, all other rights and remedies provided under the UCC of
all applicable jurisdictions and all other applicable laws, which rights shall
be cumulative. Promptly following the declaration of the Termination Date, the
Agent shall notify the Seller of such declaration in writing and shall confirm
therein that the Required Investors shall have requested or consented to such
declaration (it being understood that no such notice is required in the case of
a Servicer Default described in subsection (d) above or of an actual or deemed
entry of an order for relief with respect to the Seller, the Transferor, any
Originator or the Servicer). No action taken by the Agent or the Purchasers
under this ARTICLE VII shall limit, modify or otherwise affect the obligations
of any Investor to make any purchase requested by Falcon pursuant to SECTION 2.1
hereof.
Section 7.2. ORIGINATOR LIQUIDATION EVENTS. If any of the following events
shall occur:
(a) the Collection Account at Comerica Bank in the name of ▇▇▇▇▇ Metal
Servicenters, Inc. and the Collection Account at First Union National Bank in
the name of Interstate Steel Supply Company are not subject to effective
Collection Account Agreements within 14 days of the date hereof;
(b) a termination statement with respect to the UCC filing in the office
of ▇▇▇▇▇▇▇▇▇▇ County, Ohio naming ▇▇▇▇▇ Metal Servicenters, Inc. as the debtor
and Comerica Bank as the secured party is not filed within 7 days of the date
hereof;
(c) any Material Adverse Effect shall exist with respect to, or a material
adverse change shall occur in the financial condition of, any single Originator;
or
(d) any Originator shall for any reason cease to transfer, or cease to
have the legal capacity or otherwise be incapable of transferring, Receivables
under the Originator Transfer Agreement,
Page 26
or any "Potential Termination Event" with respect to the covenant set forth in
Section 4.1(c) of the Originator Transfer Agreement or any "Termination Event"
shall occur under the Originator Transfer Agreement.
then, in any such event, all of the Receivables that shall have been originated
by such affected Originator thereupon (or, in the case of Section 7.2 (c), upon
notice thereof from the Agent to the Seller) shall cease to be Eligible
Receivables and shall remain ineligible for so long as any of the conditions
described above shall continue to exist and, if the Seller is unable to satisfy
the conditions precedent set forth in Section 4.2 as a result of such event,
purchases and Reinvestments shall cease until such date as the conditions
precedent set forth in Section 4.2 are satisfied.
ARTICLE VIII
INDEMNIFICATION
Section 8.1. INDEMNITIES BY THE SELLER. Without limiting any other rights
which the Agent or any Purchaser may have hereunder or under applicable law, the
Seller hereby agrees to indemnify the Agent and each Purchaser and their
respective officers, directors, agents and employees (each an "Indemnified
Party") from and against any and all damages, losses, claims, taxes,
liabilities, costs, expenses and for all other amounts payable, including
reasonable attorneys' fees (which attorneys may be employees of the Agent or
such Purchaser) and disbursements (all of the foregoing being collectively
referred to as "Indemnified Amounts") awarded against or incurred by any of them
arising out of or as a result of this Agreement or the acquisition, either
directly or indirectly, by a Purchaser of an interest in the Receivables,
excluding, however:
(i) Indemnified Amounts to the extent final judgment of a court of
competent jurisdiction holds such Indemnified Amounts resulted from gross
negligence or willful misconduct on the part of the Indemnified Party
seeking indemnification;
(ii) Indemnified Amounts to the extent the same includes losses in
respect of Eligible Receivables which are uncollectible on account of the
insolvency, bankruptcy or lack of creditworthiness of the related Obligor;
or
(iii) taxes imposed by the jurisdiction in which such Indemnified
Party's principal executive office is located, on or measured by the
overall net income of such Indemnified Party to the extent that the
computation of such taxes is consistent with the Intended
Characterization;
PROVIDED, HOWEVER, that nothing contained in this sentence shall limit the
liability of the Seller or the Servicer or limit the recourse of the Purchasers
to the Seller or Servicer for amounts otherwise specifically provided to be paid
by the Seller or the Servicer under the terms of this Agreement. Without
limiting the generality of the foregoing indemnification, but subject to the
exclusions in clauses (i), (ii) and (iii) above, the Seller shall indemnify the
Agent and the Purchasers for
Page 27
Indemnified Amounts (including, without limitation, losses in respect of
uncollectible receivables, regardless of whether reimbursement therefor would
constitute recourse to the Seller or the Servicer) relating to or resulting
from:
(i) any representation or warranty made by the Seller, the Transferor,
any Originator or, if the Servicer is the Seller or an Affiliate of
the Seller, the Servicer (or any officers of the Seller, the
Transferor, any Originator or, if the Servicer is the Seller or an
Affiliate of the Seller, the Servicer) under or in connection with
this Agreement, any other Transaction Document, any Monthly Report
or any other information or report delivered by the Seller, the
Transferor, any Originator or, if the Servicer is the Seller or an
Affiliate of the Seller, the Servicer pursuant hereto, which shall
have been false or incorrect when made or deemed made;
(ii) the failure by the Seller, the Transferor, any Originator or, if the
Servicer is the Seller or an Affiliate of the Seller, the Servicer
to comply with any applicable law, rule or regulation with respect
to any Receivable or Contract related thereto, or the nonconformity
of any Receivable or Contract included therein with any such
applicable law, rule or regulation;
(iii) any failure of the Seller, the Transferor, any Originator or, if the
Servicer is the Seller or an Affiliate of the Seller, the Servicer
to perform its duties or obligations in accordance with the
provisions of this Agreement, any Contract relating to the
Receivables, or any other Transaction Document;
(iv) any products liability, personal injury or damage suit, or other
similar claim arising out of or in connection with merchandise,
insurance or services which are the subject of any Contract or any
Receivable;
(v) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of the Obligor to the payment of any
Receivable (including, without limitation, a defense based on such
Receivable or the related Contract not being a legal, valid and
binding obligation of such Obligor enforceable against it in
accordance with its terms), or any other claim resulting from the
sale of the merchandise or service related to such Receivable or the
furnishing or failure to furnish such merchandise or services;
(vi) the commingling of Collections of Receivables at any time with other
funds;
(vii) any investigation, litigation or proceeding related to or arising
from this Agreement or any other Transaction Document, the
transactions contemplated hereby or thereby, the use of the proceeds
of a purchase, the
Page 28
ownership of the Receivable Interests or any other
investigation, litigation or proceeding relating to the
Seller, the Transferor or any Originator in which any
Indemnified Party becomes involved as a result of any of the
transactions contemplated hereby or thereby;
(viii)any inability to litigate any claim against any Obligor in
respect of any Receivable as a result of such Obligor being
immune from civil and commercial law and suit on the grounds
of sovereignty or otherwise from any legal action, suit or
proceeding;
(ix) any Servicer Default described in Section 7.1(d);
(x) the failure to vest and maintain vested in the Agent and the
Purchasers, or to transfer to the Agent and the Purchasers,
legal and equitable title to, and ownership of, a first
priority perfected undivided percentage ownership (to the
extent of the Receivable Interests contemplated hereunder) in
the Receivables, the Related Security and the Collections,
free and clear of any Adverse Claim;
(xi) any failure to vest and maintain vested in the Seller (except
to the extent further transferred hereunder) legal and
equitable title to, and ownership of, the Receivables, the
Related Security and the Collections from the Transferor, free
and clear of any Adverse Claim; or any failure of the Seller
to give reasonably equivalent value to the Transferor under
the Transfer Agreement in consideration of the transfer by the
Transferor of any Receivable; or any attempt by any Person to
void any such transfer under statutory provisions or common
law or equitable action, including, without limitation, any
provision of the Bankruptcy Code;
(xii) any failure to vest and maintain vested in the Transferor
(except to the extent further transferred to the Seller under
the Transfer Agreement) legal and equitable title to, and
ownership of, the Receivables, the Related Security and the
Collections from each applicable Originator, free and clear of
any Adverse Claim; or any failure of the Transferor to give
reasonably equivalent value to each applicable Originator
under the Originator Transfer Agreement in consideration of
the transfer by such Originator of any Receivable; or any
attempt by any Person to void any such transfer under
statutory provisions or common law or equitable action,
including, without limitation, any provision of the Bankruptcy
Code;
(xiii)the Year 2000 Issue; or
Page 29
(xiv) the failure of any Receivable included in the calculation of
the Net Receivables Balance as an Eligible Receivable to be an
Eligible Receivable.
Section 8.2. INCREASED COST AND REDUCED RETURN. If after the date hereof,
any Funding Source shall be charged any fee, expense or increased cost on
account of the adoption of any applicable law, rule or regulation (including any
applicable law, rule or regulation regarding capital adequacy) or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency (a "Regulatory Change"): (i) which subjects
any Funding Source to any charge or withholding on or with respect to any
Funding Agreement or a Funding Source's obligations under a Funding Agreement,
or on or with respect to the Receivables, or changes the basis of taxation of
payments to any Funding Source of any amounts payable under any Funding
Agreement (except for changes in the rate of tax on the overall net income of a
Funding Source) or (ii) which imposes, modifies or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement against
assets of, deposits with or for the account of a Funding Source, or credit
extended by a Funding Source pursuant to a Funding Agreement or (iii) which
imposes any other condition the result of which is to increase the cost to a
Funding Source of performing its obligations under a Funding Agreement, or to
reduce the rate of return on a Funding Source's capital as a consequence of its
obligations under a Funding Agreement, or to reduce the amount of any sum
received or receivable by a Funding Source under a Funding Agreement or to
require any payment calculated by reference to the amount of interests or loans
held or interest received by it, then, upon demand by the Agent, the Seller
shall pay to the Agent, for the benefit of the relevant Funding Source, such
amounts charged to such Funding Source or compensate such Funding Source for
such reduction.
Section 8.3. OTHER COSTS AND EXPENSES. The Seller shall pay to the Agent
and Falcon on demand all costs and out-of-pocket expenses in connection with the
preparation, execution, delivery and administration of this Agreement and the
other Transaction Documents, the transactions contemplated hereby and the other
documents to be delivered hereunder, including without limitation, the cost of
Falcon's auditors auditing the books, records and procedures of the Seller,
reasonable fees and out-of-pocket expenses of legal counsel for Falcon and the
Agent (which such counsel may be employees of Falcon or the Agent) with respect
thereto and with respect to advising Falcon and the Agent as to their respective
rights and remedies under this Agreement. The Seller shall pay to the Agent on
demand any and all costs and expenses of the Agent and the Purchasers, if any,
including reasonable counsel fees and expenses in connection with the
enforcement of this Agreement and the other documents delivered hereunder and in
connection with any restructuring or workout of this Agreement or such
documents, or the administration of this Agreement following a Servicer Default.
The Seller shall reimburse Falcon on demand for all other costs and expenses
incurred by Falcon or any shareholder of Falcon ("Other Costs"), including,
without limitation, the cost of auditing Falcon's books by certified
Page 30
public accountants, the cost of rating the Commercial Paper by independent
financial rating agencies, any and all applicable issuing and paying agent fees
and commissions of placement agents and commercial paper dealers in respect of
such Commercial Paper, and the reasonable fees and out-of-pocket expenses of
counsel for Falcon or any counsel for any shareholder of Falcon with respect to
advising Falcon or such shareholder as to matters relating to Falcon's
operations.
Section 8.4. ALLOCATIONS. Falcon shall allocate the liability for Other
Costs among the Seller and other Persons with whom Falcon has entered into
agreements to purchase interests in receivables ("Other Sellers"). If any Other
Costs are attributable to the Seller and not attributable to any Other Seller,
the Seller shall be solely liable for such Other Costs. However, if Other Costs
are attributable to Other Sellers and not attributable to the Seller, such Other
Sellers shall be solely liable for such Other Costs. All allocations to be made
pursuant to the foregoing provisions of this Article VIII shall be made by
Falcon in its sole discretion and shall be binding on the Seller and the
Servicer.
ARTICLE IX
THE AGENT
Section 9.1. AUTHORIZATION AND ACTION. (a) Each Purchaser hereby
designates and appoints First Chicago to act as its agent hereunder and under
each other Transaction Document, and authorizes the Agent to take such actions
as agent on its behalf and to exercise such powers as are delegated to the Agent
by the terms of this Agreement and the other Transaction Documents together with
such powers as are reasonably incidental thereto. The Agent shall not have any
duties or responsibilities, except those expressly set forth herein or in any
other Transaction Document, or any fiduciary relationship with any Purchaser,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities on the part of the Agent shall be read into this Agreement or any
other Transaction Document or otherwise exist for the Agent. In performing its
functions and duties hereunder and under the other Transaction Documents, the
Agent shall act solely as agent for the Purchasers and does not assume nor shall
be deemed to have assumed any obligation or relationship of trust or agency with
or for the Seller or any of its successors or assigns. The Agent shall not be
required to take any action which exposes the Agent to personal liability or
which is contrary to this Agreement, any other Transaction Document or
applicable law. The appointment and authority of the Agent hereunder shall
terminate upon the indefeasible payment in full of all Aggregate Unpaids. Each
Purchaser hereby authorizes the Agent to execute each of the Uniform Commercial
Code financing statements, together with such other instruments or documents
determined by the Agent to be necessary or desirable in order to perfect,
evidence or more fully protect the interest of the Purchasers contemplated
hereunder, on behalf of such Purchaser (the terms of which shall be binding on
such Purchaser).
(b) Without limiting the generality of the foregoing, the Agent is
authorized (but not required) to act on behalf of the Purchasers in connection
with providing such instructions,
Page 31
approvals, waivers or consents as may from time to time be required hereunder or
under the Transfer Agreement to permit or authorize or direct the Seller to take
or refrain from taking any action under the Transfer Agreement; PROVIDED that
the Agent may at any time, in its sole discretion, elect to refrain from
providing any such instructions, approvals, waivers or consents until such time
as it shall have received the consent thereto of the Required Investors.
Section 9.2. DELEGATION OF DUTIES. The Agent may execute any of its duties
under this Agreement and each other Transaction Document by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
Section 9.3. EXCULPATORY PROVISIONS. Neither the Agent nor any of its
directors, officers, agents or employees shall be (i) liable for any action
lawfully taken or omitted to be taken by it or them under or in connection with
this Agreement or any other Transaction Document (except for its, their or such
Person's own gross negligence or willful misconduct), or (ii) responsible in any
manner to any of the Purchasers for any recitals, statements, representations or
warranties made by the Seller contained in this Agreement, any other Transaction
Document or any certificate, report, statement or other document referred to or
provided for in, or received under or in connection with, this Agreement, or any
other Transaction Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement, or any other
Transaction Document or any other document furnished in connection herewith or
therewith, or for any failure of the Seller to perform its obligations hereunder
or thereunder, or for the satisfaction of any condition specified in Article IV,
or for the perfection, priority, condition, value or sufficiency or any
collateral pledged in connection herewith. The Agent shall not be under any
obligation to any Purchaser to ascertain or to inquire as to the observance or
performance of any of the agreements or covenants contained in, or conditions
of, this Agreement or any other Transaction Document, or to inspect the
properties, books or records of the Seller. The Agent shall not be deemed to
have knowledge of any Servicer Default or Potential Servicer Default unless the
Agent has received notice from the Seller or a Purchaser.
Section 9.4. RELIANCE BY AGENT. The Agent shall in all cases be entitled
to rely, and shall be fully protected in relying, upon any document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Seller),
independent accountants and other experts selected by the Agent. The Agent shall
in all cases be fully justified in failing or refusing to take any action under
this Agreement or any other Transaction Document unless it shall first receive
such advice or concurrence of Falcon or the Required Investors or all of the
Purchasers, as applicable, as it deems appropriate and it shall first be
indemnified to its satisfaction by the Purchasers, PROVIDED that unless and
until the Agent shall have received such advice, the Agent may take or refrain
from taking any action, as the Agent shall deem advisable and in the best
interests of the Purchasers. The Agent shall in all cases be fully protected in
acting, or in refraining from acting, in accordance with a request of Falcon or
the Required
Page 32
Investors or all of the Purchasers, as applicable, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Purchasers.
Section 9.5. NON-RELIANCE ON AGENT AND OTHER PURCHASERS. Each Purchaser
expressly acknowledges that neither the Agent, nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the Agent hereafter
taken, including, without limitation, any review of the affairs of the Seller,
shall be deemed to constitute any representation or warranty by the Agent. Each
Purchaser represents and warrants to the Agent that it has and will,
independently and without reliance upon the Agent or any other Purchaser and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations, property,
prospects, financial and other conditions and creditworthiness of the Seller and
made its own decision to enter into this Agreement, the other Transaction
Documents and all other documents related hereto or thereto.
Section 9.6. REIMBURSEMENT AND INDEMNIFICATION. The Investors agree to
reimburse and indemnify the Agent and its officers, directors, employees,
representatives and agents ratably according to their Pro Rata Shares, to the
extent not paid or reimbursed by the Seller (i) for any amounts for which the
Agent, acting in its capacity as Agent, is entitled to reimbursement by the
Seller hereunder and (ii) for any other expenses incurred by the Agent, in its
capacity as Agent and acting on behalf of the Purchasers, in connection with the
administration and enforcement of this Agreement and the other Transaction
Documents.
Section 9.7. AGENT IN ITS INDIVIDUAL CAPACITY. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Seller or any Affiliate of the Seller as though the
Agent were not the Agent hereunder. With respect to the acquisition of
Receivable Interests pursuant to this Agreement, the Agent shall have the same
rights and powers under this Agreement as any Purchaser and may exercise the
same as though it were not the Agent, and the terms "Investor," "Purchaser,"
"Investors" and "Purchasers" shall include the Agent in its individual capacity.
Section 9.8. SUCCESSOR AGENT. The Agent may, upon five days' notice to the
Seller and the Purchasers, and the Agent will, upon the direction of all of the
Purchasers (other than the Agent, in its individual capacity) resign as Agent.
If the Agent shall resign, then the Required Investors during such five-day
period shall appoint from among the Purchasers a successor agent. If for any
reason no successor Agent is appointed by the Required Investors during such
five-day period, then effective upon the termination of such five day period,
the Purchasers shall perform all of the duties of the Agent hereunder and under
the other Transaction Documents and the Seller shall make all payments in
respect of the Aggregate Unpaids directly to the applicable Purchasers and for
all purposes shall deal directly with the Purchasers. After the effectiveness of
any retiring Agent's resignation hereunder as Agent, the retiring Agent shall be
discharged from its duties and obligations hereunder and under the other
Transaction Documents and the provisions of this Article IX and Article VIII
shall continue in effect for its benefit with respect to any actions taken
Page 33
or omitted to be taken by it while it was Agent under this Agreement and under
the other Transaction Documents.
ARTICLE X
ASSIGNMENTS; PARTICIPATIONS
Section 10.1. ASSIGNMENTS. (a) The Seller and each Investor hereby agree
and consent to the complete or partial assignment by Falcon of all of its rights
under, interest in, title to and obligations under this Agreement to the
Investors pursuant to Section 2.1 or to any other Person, and upon such
assignment, Falcon shall be released from its obligations so assigned. Further,
the Seller and each Investor hereby agree that any assignee of Falcon of this
Agreement or all or any of the Receivable Interests of Falcon shall have all of
the rights and benefits under this Agreement as if the term "Falcon" explicitly
referred to such party, and no such assignment shall in any way impair the
rights and benefits of Falcon hereunder. The Seller shall not have the right to
assign its rights or obligations under this Agreement.
(b) Any Investor may at any time and from time to time assign to one or
more Persons ("Purchasing Investors") all or any part of its rights and
obligations under this Agreement pursuant to an assignment agreement, in a form
and substance satisfactory to the Agent (the "Assignment Agreement",) executed
by such Purchasing Investor and such selling Investor. The consent of Falcon
shall be required prior to the effectiveness of any such assignment. Each
assignee of an Investor must have a short-term debt rating of A-1 or better by
S&P and P-1 by ▇▇▇▇▇'▇ and must agree to deliver to the Agent, promptly
following any request therefor by the Agent or Falcon, an enforceability opinion
in form and substance satisfactory to the Agent and Falcon. Upon delivery of the
executed Assignment Agreement to the Agent, such selling Investor shall be
released from its obligations hereunder to the extent of such assignment.
Thereafter the Purchasing Investor shall for all purposes be an Investor party
to this Agreement and shall have all the rights and obligations of an Investor
under this Agreement to the same extent as if it were an original party hereto
and no further consent or action by the Seller, the Purchasers or the Agent
shall be required.
(c) Each of the Investors agrees that in the event that it shall cease to
have a short-term debt rating of A-1 or better by S&P and P-1 by ▇▇▇▇▇'▇ (an
"Affected Investor"), such Affected Investor shall be obliged, at the request of
Falcon or the Agent, to assign all of its rights and obligations hereunder to
(x) another Investor or (y) another financial institution nominated by the Agent
and acceptable to Falcon, and willing to participate in this Agreement through
the Liquidity Termination Date in the place of such Affected Investor; provided
that the Affected Investor receives payment in full, pursuant to an Assignment
Agreement, of an amount equal to such Investor's Pro Rata Share of the Capital
and Discount owing to the Investors and all accruing but
Page 34
unpaid fees and other costs and expenses payable in respect of its Pro Rata
Share of the Receivable Interests.
Section 10.2. PARTICIPATIONS. Any Investor may, in the ordinary course of
its business at any time sell to one or more Persons (each a "Participant")
participating interests in its Pro Rata Share of the Receivable Interests of the
Investors, its obligation to pay Falcon its Acquisition Amounts or any other
interest of such Investor hereunder. Notwithstanding any such sale by an
Investor of a participating interest to a Participant, such Investor's rights
and obligations under this Agreement shall remain unchanged, such Investor shall
remain solely responsible for the performance of its obligations hereunder, and
the Seller, Falcon and the Agent shall continue to deal solely and directly with
such Investor in connection with such Investor's rights and obligations under
this Agreement. Each Investor agrees that any agreement between such Investor
and any such Participant in respect of such participating interest shall not
restrict such Investor's right to agree to any amendment, supplement, waiver or
modification to this Agreement, except for any amendment, supplement, waiver or
modification described in clause (i) of Section 11.1(b).
ARTICLE XI
MISCELLANEOUS
Section 11.1. WAIVERS AND AMENDMENTS. (a) No failure or delay on the part
of the Agent or any Purchaser in exercising any power, right or remedy under
this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or remedy preclude any other further
exercise thereof or the exercise of any other power, right or remedy. The rights
and remedies herein provided shall be cumulative and nonexclusive of any rights
or remedies provided by law. Any waiver of this Agreement shall be effective
only in the specific instance and for the specific purpose for which given.
(b) No provision of this Agreement may be amended, supplemented, modified
or waived except in writing in accordance with the provisions of this Section
11.1(b). Falcon, the Seller and the Agent, at the direction of the Required
Investors, may enter into written modifications or waivers of any provisions of
this Agreement, PROVIDED, HOWEVER, that no such modification or waiver shall:
(i) without the consent of each affected Purchaser, (A) extend the
Liquidity Termination Date or the date of any payment or deposit of
Collections by the Seller or the Servicer, (B) reduce the rate or extend
the time of payment of Discount or Funding Charges (or any component
thereof), (C) reduce any fee payable to the Agent for the benefit of the
Purchasers, (D) except pursuant to Article X hereof, change the amount of
the Capital of any Purchaser, an Investor's Pro Rata Share or an
Investor's Commitment, (E) amend, modify or waive any provision of the
definition of Required Investors or this Section 11.1(b), (F) consent to
or permit the assignment or transfer by the Seller of any of its rights
and obligations under this Agreement, or (G) amend or modify any defined
term (or any defined term used directly or indirectly in such defined
term) used in clauses
Page 35
(A) through (G) above in a manner which would circumvent the intention of
the restrictions set forth in such clauses; or
(ii) without the consent of the Investors with aggregate Commitments
equal to at least 85% of the Purchase Limit, change the definition of
"Dilution Reserve Percentage," "Discount/Servicing Reserve Percentage,"
"Eligible Receivable," or "Loss Reserve Percentage"; or
(ii) without the written consent of the then Agent, amend, modify or
waive any provision of this Agreement if the effect thereof is to affect
the rights or duties of such Agent.
Notwithstanding the foregoing, (i) without the consent of the Investors, the
Agent may, with the consent of the Seller, amend this Agreement solely to add
additional Persons as Investors hereunder and (ii) without the consent of the
Seller, the Agent, the Required Investors and Falcon may enter into amendments
to modify any of the terms or provisions of Article II, Article IX, Article X,
Section 11.13 or any other provision of this Agreement, provided that such
amendment has no negative impact upon the Seller. Any modification or waiver
made in accordance with this Section 11.1 shall apply to each of the Purchasers
equally and shall be binding upon the Seller, the Purchasers and the Agent.
Section 11.2 NOTICES. Except as provided below, all communications and
notices provided for hereunder shall be in writing (including bank wire,
telecopy or electronic facsimile transmission or similar writing) and shall be
given to the other parties hereto at their respective addresses or telecopy
numbers set forth on the signature pages hereof. The Seller hereby authorizes
the Agent to effect purchases and Tranche Period and Discount Rate selections
based on telephonic notices made by any Person whom the Agent in good faith
believes to be acting on behalf of the Seller. The Seller agrees to deliver
promptly to the Agent a written confirmation of each telephonic notice signed by
an authorized officer of the Seller. However, the absence of such confirmation
shall not affect the validity of such notice. If the written confirmation
differs from the action taken by the Agent, the records of the Agent shall
govern absent manifest error.
Section 11.3. RATABLE PAYMENTS. If any Purchaser, whether by setoff or
otherwise, has a payment made to it with respect to any portion of the Aggregate
Unpaids owing to such Purchaser (other than payments received pursuant to
Section 8.2 or 8.3) in a greater proportion than that received by any other
Purchaser entitled to receive a ratable share of such Aggregate Unpaids, such
Purchaser agrees, promptly upon demand, to purchase for cash without recourse or
warranty a portion of the Aggregate Unpaids held by the other Purchasers so that
after such purchase each Purchaser will hold its ratable proportion of the
Aggregate Unpaids; provided that if all or any portion of such excess amount is
thereafter recovered from such Purchaser, such purchase shall be rescinded and
the purchase price restored to the extent of such recovery, but without
interest.
Page 36
Section 11.4. PROTECTION OF OWNERSHIP INTERESTS OF THE PURCHASERS. (a) The
Seller agrees that from time to time, at its expense, it will promptly execute
and deliver all instruments and documents, and take all actions, that may be
necessary or desirable, or that the Agent may request, to perfect, protect or
more fully evidence the Receivable Interests, or to enable the Agent or the
Purchasers to exercise and enforce their rights and remedies hereunder. The
Agent may, or the Agent may direct the Seller to, notify the Obligors of
Receivables, at any time and at the Seller's expense, of the ownership interests
of the Purchasers under this Agreement and may also direct that payments of all
amounts due or that become due under any or all Receivables be made directly to
the Agent or its designee. The Seller shall, at any Purchaser's request,
withhold the identity of such Purchaser in any such notification.
(b) If the Seller or the Servicer fails to perform any of its obligations
hereunder, the Agent or any Purchaser may (but shall not be required to)
perform, or cause performance of, such obligation; and the Agent's or such
Purchaser's costs and expenses incurred in connection therewith shall be payable
by the Seller (if the Servicer that fails to so perform is the Seller or an
Affiliate thereof) as provided in Section 8.3, as applicable. The Seller and the
Servicer each irrevocably authorizes the Agent at any time and from time to time
in the sole discretion of the Agent, and appoints the Agent as its
attorney-in-fact, to act on behalf of the Seller and the Servicer (i) to execute
on behalf of the Seller as debtor and to file financing statements necessary or
desirable in the Agent's sole discretion to perfect and to maintain the
perfection and priority of the interest of the Purchasers in the Receivables and
(ii) to file a carbon, photographic or other reproduction of this Agreement or
any financing statement with respect to the Receivables as a financing statement
in such offices as the Agent in its sole discretion deems necessary or desirable
to perfect and to maintain the perfection and priority of the interests of the
Purchasers in the Receivables. This appointment is coupled with an interest and
is irrevocable.
Section 11.5. CONFIDENTIALITY. (a) The Seller shall maintain and shall
cause each of its employees and officers to maintain the confidentiality of this
Agreement and the other Transaction Documents and the other confidential
proprietary information with respect to the Agent and Falcon and their
respective businesses obtained by it or them in connection with the structuring,
negotiating and execution of the transactions contemplated herein and therein,
except that the Seller and its officers and employees may disclose such
information to the Seller's external accountants and attorneys and as required
by any applicable law or order of any judicial or administrative proceeding.
(b) Anything herein to the contrary notwithstanding, the Seller hereby
consents to the disclosure of any nonpublic information with respect to it (i)
to the Agent, the Investors or Falcon by each other, (ii) by the Agent or the
Purchasers to any prospective or actual assignee or participant of any of them
or (iii) by the Agent to any rating agency, Commercial Paper dealer or provider
of a surety, guaranty or credit or liquidity enhancement to Falcon or any entity
organized for the purpose of purchasing, or making loans secured by, financial
assets for which First Chicago acts as the administrative agent and to any
officers, directors, employees, outside
Page 37
accountants and attorneys of any of the foregoing. In addition, the Purchasers
and the Agent may disclose any such nonpublic information pursuant to any law,
rule, regulation, direction, request or order of any judicial, administrative or
regulatory authority or proceedings (whether or not having the force or effect
of law).
Section 11.6. BANKRUPTCY PETITION. The Seller, the Agent and each Investor
hereby covenants and agrees that, prior to the date which is one year and one
day after the payment in full of all outstanding senior Indebtedness of Falcon,
it will not institute against, or join any other Person in instituting against,
Falcon any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceeding under the laws of the United States or
any state of the United States.
Section 11.7. LIMITATION OF LIABILITY. Except with respect to any claim
arising out of the willful misconduct or gross negligence of Falcon, the Agent
or any Investor, no claim may be made by the Seller, the Servicer or any other
Person against Falcon, the Agent or any Investor or their respective Affiliates,
directors, officers, employees, attorneys or agents for any special, indirect,
consequential or punitive damages in respect of any claim for breach of contract
or any other theory of liability arising out of or related to the transactions
contemplated by this Agreement, or any act, omission or event occurring in
connection therewith; and the Seller hereby waives, releases, and agrees not to
▇▇▇ upon any claim for any such damages, whether or not accrued and whether or
not known or suspected to exist in its favor.
SECTION 11.8. CHOICE OF LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF
ILLINOIS.
SECTION 11.9. CONSENT TO JURISDICTION. THE SELLER HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY THE SELLER PURSUANT
TO THIS AGREEMENT AND THE SELLER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE
AGENT OR ANY PURCHASER TO BRING PROCEEDINGS AGAINST THE SELLER IN THE COURTS OF
ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE SELLER AGAINST THE AGENT
OR ANY PURCHASER OR ANY AFFILIATE OF THE AGENT OR A PURCHASER INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT
Page 38
EXECUTED BY THE SELLER PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A
COURT IN CHICAGO, ILLINOIS.
SECTION 11.10. WAIVER OF JURY TRIAL. THE AGENT, THE SELLER AND EACH
PURCHASER HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS
AGREEMENT, ANY DOCUMENT EXECUTED BY THE SELLER PURSUANT TO THIS AGREEMENT OR THE
RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.
Section 11.11. INTEGRATION; SURVIVAL OF TERMS. (a) This Agreement, the
Collection Account Agreements and the Fee Letter contain the final and complete
integration of all prior expressions by the parties hereto with respect to the
subject matter hereof and shall constitute the entire agreement among the
parties hereto with respect to the subject matter hereof superseding all prior
oral or written understandings.
(b) The provisions of Article VIII and Section 11.6 shall survive any
termination of this Agreement.
Section 11.12. COUNTERPARTS; SEVERABILITY. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
Agreement. Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Section 11.13. FIRST CHICAGO ROLES. Each of the Investors acknowledges
that First Chicago acts, or may in the future act, (i) as administrative agent
for Falcon, (ii) as issuing and paying agent for the Commercial Paper, (iii) to
provide credit or liquidity enhancement for the timely payment for the
Commercial Paper and (iv) to provide other services from time to time for Falcon
(collectively, the "First Chicago Roles"). Without limiting the generality of
this Section 11.13, each Investor hereby acknowledges and consents to any and
all First Chicago Roles and agrees that in connection with any First Chicago
Role, First Chicago may take, or refrain from taking, any action which it, in
its discretion, deems appropriate, including, without limitation, in its role as
administrative agent for Falcon, the giving of notice to the Agent of a
mandatory purchase pursuant to Section 2.1.
Section 11.14. CHARACTERIZATION. If the conveyance by the Seller to the
Purchasers of interests in Receivables hereunder shall be characterized as a
secured loan and not a sale, it is the intention of the parties hereto that this
Agreement shall constitute a security agreement under
Page 39
applicable law, and that the Seller shall be deemed to have granted to the Agent
for the ratable benefit of the Purchasers a duly perfected security interest in
all of the Seller's right, title and interest in, to and under the Receivables,
the Collections, each Collection Account, all Related Security, all payments on
or with respect to such Receivables, all other rights relating to and payments
made in respect of the Receivables, and all proceeds of any thereof prior to all
other liens on and security interests therein to secure the payment of the
Aggregate Unpaids, including the indemnity obligations of the Seller under
ARTICLE VIII, the payment and reimbursement by the Seller to the Purchasers of
all Capital hereunder, and the payment of all other obligations owed hereunder
to the Agent and the Purchasers. After a Servicer Default, the Agent and the
Purchasers shall have, in addition to the rights and remedies which they may
have under this Agreement, all other rights and remedies provided to a secured
creditor after default under the UCC and other applicable law, which rights and
remedies shall be cumulative.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date hereof.
METALS RECEIVABLES CORPORATION
By:/S/ ▇▇▇▇▇ ST. CLAIR
Name: ▇▇▇▇▇ ST. CLAIR
Title: TREASURER
Notices To:
Attn:▇▇▇▇▇ St. Clair
Address: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
FALCON ASSET SECURITIZATION
CORPORATION
By: /S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Authorized Signatory
c/o The First National Bank
of Chicago, as Agent
Suite 0596, 21st Floor
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Page 40
THE FIRST NATIONAL BANK OF CHICAGO, as Agent
By: /S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: FIRST VICE PRESIDENT
The First National Bank
Suite 0596, 21st Floor
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
INVESTORS:
COMMITMENT
$100,000,000 THE FIRST NATIONAL BANK OF CHICAGO, as an Investor
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: FIRST VICE PRESIDENT
The First National Bank of Chicago
Suite 0596, 21st Floor
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
$100,000,000 TOTAL COMMITMENT
Page 41
EXHIBIT I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
"ACCRUAL PERIOD" means the period from (and including) the first day of
each calendar month to (and including) the last day of such calendar month,
provided that the initial Accrual Period hereunder means the period from (and
including) the date of the initial purchase hereunder to (and including) the
last day of the calendar month during which the date of such initial purchase
occurs.
"ACQUISITION AMOUNT" means, on the date of any purchase from Falcon of
Receivable Interests pursuant to Section 2.1, (i) with respect to each Investor
other than First Chicago, the lesser of (a) such Investor's Pro Rata Share of
the Falcon Transfer Price and (b) such Investor's unused Commitment and (ii)
with respect to First Chicago, the difference between (a) the Falcon Transfer
Price and (b) the aggregate amount payable by all other Investors on such date
pursuant to clause (i) above.
"ADJUSTED LIQUIDITY PRICE" means, in determining the Falcon Transfer Price
for any Receivable Interest, an amount, as of any date of determination.
"ADVERSE CLAIM" means a lien, security interest, charge or encumbrance, or
other right or claim in, of or on any Person's assets or properties in favor of
any other Person.
"AFFILIATE" means any Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with, another Person
or any Subsidiary of such other Person. A Person shall be deemed to control
another Person if the controlling Person owns 10% or more of any class of voting
securities of the controlled Person or possesses, directly or indirectly, the
power to direct or cause the direction of the management or policies of the
controlled Person, whether through ownership of stock, by contract or otherwise.
"AGENT" means First Chicago in its capacity as agent for the Purchasers
pursuant to Article IX, and not in its individual capacity as an Investor, and
any successor Agent appointed pursuant to Article IX.
"AGGREGATE UNPAIDS" means, at any time, an amount equal to the sum of all
accrued and unpaid Discount, accrued and unpaid Funding Charges, accrued and
unpaid Servicing Fee, Capital and all other amounts owed (whether due or
accrued) hereunder or under the Fee Letter to the Agent and the Purchasers at
such time.
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"AGREEMENT" means this Receivables Purchase Agreement, as it may be
amended or modified and in effect from time to time.
"ALLOCATED COMMERCIAL PAPER" means Commercial Paper notes issued by Falcon
for a tenor and in an amount specially requested by any Person in connection
with a Receivable Purchase Facility then being made available by Falcon (or by
any agent on behalf of Falcon).
"BANKRUPTCY CODE" means the United States Bankruptcy Code, 11 U.S.C.
ss.ss.101 et seq., as amended.
"BASE RATE" means, (i) prior to the occurrence of a Servicer Default, a
rate per annum equal to the corporate base rate, prime rate or base rate of
interest, as applicable, announced by the Reference Bank from time to time,
changing when and as such rate changes, and (ii) at all times after the
occurrence of a Servicer Default, such rate plus 2% per annum.
"BUSINESS DAY" means any day on which banks are not authorized or required
to close in New York, New York or Chicago, Illinois and The Depository Trust
Company of New York is open for business, and, if the applicable Business Day
relates to any computation or payment to be made with respect to the LIBO Rate,
any day on which dealings in dollar deposits are carried on in the London
interbank market.
"CAPITAL" of any Receivable Interest means, at any time, the Purchase
Price of such Receivable Interest, minus the sum of the aggregate amount of
Collections and other payments received by the Agent which in each case are
applied to reduce such Capital; PROVIDED that such Capital shall be restored in
the amount of any Collections or payments so received and applied if at any time
the distribution of such Collections or payments are rescinded or must otherwise
be returned for any reason.
"CHANGE OF CONTROL" means (i) the acquisition by any Person, or two or
more Persons acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 30% or more of the outstanding shares of voting stock
of the Servicer or the Transferor; or (ii) the Transferor shall cease to own,
free and clear of all Adverse Claims, all of the outstanding shares of voting
stock of the Seller or any Originator on a fully diluted basis.
"CHARGED-OFF RECEIVABLE" means a Receivable: (i) as to which the Obligor
thereof has taken any action, or suffered any event to occur, of the type
described in Section 7.1(d) (as if references to the Seller therein refer to
such Obligor); (ii) as to which the Obligor thereof, if a natural person, is
deceased, (iii) which, consistent with the Credit and Collection Policy, would
be written off the Seller's books as uncollectible, or (iv) which has been
identified by the Seller as uncollectible.
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"COLLECTION ACCOUNT" means each concentration account, depositary account,
lock-box account or similar account in which any Collections are collected or
deposited.
"COLLECTION ACCOUNT AGREEMENT" means, in the case of any actual or
proposed Collection Account, an agreement in substantially the form of Exhibit V
hereto.
"COLLECTION BANK" means, at any time, any of the banks or other financial
institutions holding one or more Collection Accounts.
"COLLECTION NOTICE" means a notice, in substantially the form of the
Collection Notice contained in Annex A to Exhibit V hereto, from the Agent to a
Collection Bank.
"COLLECTIONS" means, with respect to any Receivable, all cash collections
and other cash proceeds in respect of such Receivable, including, without
limitation, all cash proceeds of Related Security with respect to such
Receivable and all amounts payable to the Purchasers by the Seller pursuant to
Section 1.8.
"COMMERCIAL PAPER" means promissory notes of Falcon issued by Falcon in
the commercial paper market.
"COMMITMENT" means, for each Investor, the commitment of such Investor to
purchase its Pro Rata Share of Receivable Interests from (i) the Seller and (ii)
Falcon, such Pro Rata Share not to exceed, in the aggregate, the amount set
forth opposite such Investor's name on the signature pages of this Agreement, as
such amount may be modified in accordance with the terms hereof.
"CONCENTRATION LIMIT" means, at any time, for any Obligor, the product of
.33 MULTIPLIED BY the Loss Reserve Percentage at such time, or such greater
amount for such Obligor designated by the Agent at any time on not less than
three Business Days' prior written notice to the Seller; PROVIDED, that in the
case of an Obligor and any Affiliate of such Obligor, the Concentration Limit
shall be calculated as if such Obligor and such Affiliate are one Obligor.
"CONTINGENT OBLIGATION" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person of
the types listed in clauses (i), (ii), (iii), (iv), (v) and (vi) of the
definition of Indebtedness, or agrees to maintain the net worth or working
capital or other financial condition of any other Person, or otherwise assures
any creditor of such other Person in respect of obligations of the types listed
in clauses (i), (ii), (iii), (iv), (v) and (vi) of the definition of
Indebtedness, against loss, including, without limitation, any comfort letter,
operating agreement, take-or-pay contract or application for a letter of credit.
"CONTRACT" means, with respect to any Receivable, any and all instruments,
agreements, leases, invoices or other writings pursuant to which such Receivable
arises or which evidences
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such Receivable, including, without limitation, the applicable quotation to
provide services, Obligor acknowledgments and acceptances and related purchase
orders.
"CP RATE" means, in respect of any Accrual Period, the rate per annum
which reflects all Funding Charges accruing during such Accrual Period.
"CREDIT AND COLLECTION POLICY" means the Seller's credit and collection
policies and practices relating to Contracts and Receivables existing on the
date hereof and summarized in Exhibit VI hereto, as modified from time to time
in accordance with this Agreement.
"DEEMED COLLECTIONS" means the aggregate of all amounts owing to Falcon
pursuant to Sections 1.8 and 8.1.
"DEFAULT FEE" means with respect to any amount due and payable by the
Seller hereunder or under the Fee Letter, an amount equal to interest on any
such amount at a rate per annum equal to 2% above the Base Rate, PROVIDED,
HOWEVER, that such interest rate will not at any time exceed the maximum rate
permitted by applicable law.
"DEFAULT RATIO" means, as of the last day of any month, a percentage equal
to (i) the aggregate Outstanding Balance of all Receivables that became
Defaulted Receivables during such month, PLUS the aggregate Outstanding Balance
of all Receivables (other than Defaulted Receivables) that became Charged-off
Receivables during such month, DIVIDED by (ii) the Originator Sales during the
month ending three months prior to such date.
"DEFAULTED RECEIVABLE" means a Receivable as to which any payment, or part
thereof, remains unpaid for more than 90 days from the original invoice date for
such payment.
"DELINQUENCY RATIO" means, at any time, a percentage equal to (i) the
aggregate Outstanding Balance of all Receivables that were Delinquent
Receivables at such time, DIVIDED by (ii) the aggregate Outstanding Balance of
all Receivables at such time.
"DELINQUENT RECEIVABLE" means a Receivable as to which any payment, or
part thereof, remains unpaid for more than 60 days from the original invoice
date.
"DESIGNATED OBLIGOR" means an Obligor indicated by the Agent to the Seller
in writing.
"DILUTION HORIZON RATIO" means, as of the last day of any month, a
percentage equal to (i) the Originator Sales during the two most recently ended
calendar months DIVIDED by (ii) the aggregate Outstanding Balance of all
Receivables that are not Defaulted Receivables as of such date.
"DILUTION RATIO" means, at any time, a percentage equal to (i) the
aggregate amount of Dilutions which occurred during the month then most recently
ended, DIVIDED by (ii) the Originator Sales during the month ending two months
prior to such date.
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"DILUTION RESERVE PERCENTAGE" means as of the last day of any month, a
percentage equal to the greater of (a) x.x% or (b) x.x%.
"DILUTIONS" means, at any time, the aggregate amount of reductions in the
Outstanding Balances of the Receivables as a result of any setoff, discount,
adjustment, amendment or cancellation and rebill (not including corrections to
bills occurring on the same day of the original invoice), or otherwise, other
than (i) cash Collections on account of the Receivables (excluding those amounts
payable pursuant to Section 1.8) and (ii) charge-offs; PROVIDED that in the case
of a Receivable that is amended or canceled and re-billed, if the Seller's
records show the connection between the original invoice and the re-billed
invoice such that both invoices represent one and the same Receivable, the
amount of "Dilution" with respect to such Receivable shall equal the difference
between the amount due under such original invoice and the amount due under the
re-billed invoice.
"DILUTION SPIKE RATIO" means, as of any date, the highest Dilution Ratio
in respect of any of the 12 immediately preceding months.
"DISCOUNT" means, for each Receivable Interest for any Tranche Period in
respect of which the LIBO Rate or the Base Rate applies: PROVIDED, that no
provision of this Agreement shall require the payment or permit the collection
of Discount in excess of the maximum permitted by applicable law; and PROVIDED,
FURTHER, that Discount for any Tranche Period shall not be considered paid by
any distribution to the extent that at any time all or a portion of such
distribution is rescinded or must otherwise be returned for any reason.
"DISCOUNT RATE" means the CP Rate, the LIBO Rate or the Base Rate, as
applicable.
"DISCOUNT/SERVICING RESERVE PERCENTAGE" means, on any date, an amount
equal to x.x%.
"EARLY COLLECTION FEE" means, for any Receivable Interest which has its
Capital reduced, or its Tranche Period terminated prior to the date on which it
was originally scheduled to end, the excess, if any, of (i) the Discount or
Funding Charges that would have accrued during the remainder of the Tranche
Period subsequent to the date of such reduction or termination on the Capital of
such Receivable Interest if such reduction or termination had not occurred, over
(ii) the sum of (a) to the extent all or a portion of such Capital is allocated
to another Receivable Interest, the Discount or Funding Charges actually accrued
during such period on such Capital for the new Receivable Interest, and (b) to
the extent such Capital is not allocated to another Receivable Interest, the
income, if any, actually received during such period by the holder of such
Receivable Interest from investing the portion of such Capital not so allocated.
In the event that the amount referred to in clause (ii) exceeds the amount
referred to in clause (i), the relevant Purchaser or Purchasers agree to pay to
the Seller the amount of such excess.
"ELIGIBLE RECEIVABLE" means, at any time, a Receivable:
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(i) the Obligor of which (a) if a natural person, is a resident of
the United States or, if a corporation or other business organization, is
organized under the laws of the United States or any political subdivision
thereof and has its chief executive office in the United States; (b) is
not an Affiliate of any of the parties hereto; (c) is not a Designated
Obligor; and (d) is not a government or a governmental subdivision or
agency,
(ii) the Obligor of which is not the Obligor of any Defaulted
Receivable or any Charged-Off Receivable which in the aggregate constitute
more than 20% of all Receivables of such Obligor,
(iii) which is not a Defaulted Receivable or a Charged-Off
Receivable,
(iv) which by its terms is due and payable (a) within 60 days of the
original billing date therefor and has not had its payment terms extended,
and the Outstanding Balance of which, when added to the Outstanding
Balance of all other Eligible Receivables which by their terms are due and
payable within 60 days of the original billing date therefor, does not
exceed 20% of the Net Receivables Balance or (b) within 30 days of the
original billing date therefor and has not had its payment terms extended,
(v) which is an account receivable representing all or part of the
sales price of merchandise, insurance and services within the meaning of
Section 3(c)(5) of the Investment Company Act of 1940, as amended,
(vi) which is an "account" within the meaning of Section 9-106 of
the UCC of all applicable jurisdictions,
(vii) which is denominated and payable only in United States dollars
in the United States,
(viii) which arises under a Contract which, together with such
Receivable, is in full force and effect and constitutes the legal, valid
and binding obligation of the related Obligor enforceable against such
Obligor in accordance with its terms subject to no offset, counterclaim or
other defense (except the potential discharge (as distinguished from
avoidance) in bankruptcy of such Obligor),
(ix) which arises under a Contract which (a) does not require the
Obligor under such Contract to consent to the transfer, sale or assignment
of the rights and duties of the applicable Originator or any of its
assignees under such Contract and (b) does not contain a confidentiality
provision that purports to restrict the ability of the Agent or any
Purchaser to exercise its rights under this Agreement, including, without
limitation, its right to review the Contract,
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(x) which arises under a Contract that contains an obligation to pay
a specified sum of money, contingent only upon the sale of goods or the
provision of services by the applicable Originator,
(xi) which is not subject to any right of rescission, set-off,
counterclaim, any other defense (including defenses arising out of
violations of usury laws) of the applicable Obligor or the applicable
Originator or any other Adverse Claim, and the Obligor thereon holds no
right as against the applicable Originator to cause such Originator to
repurchase the goods or merchandise the sale of which shall have given
rise to such Receivable,
(xii) as to which the applicable Originator has satisfied and fully
performed all obligations on its part with respect to such Receivable
required to be fulfilled by it, and no further action is required to be
performed by any Person with respect thereto other than payment thereon by
the applicable Obligor,
(xiii) all right, title and interest to and in which has been (i)
validly transferred by the applicable Originator directly to the
Transferor under and in accordance with the Originator Transfer Agreement,
and the Transferor has good and marketable title thereto free and clear of
any Adverse Claim and (ii) validly transferred by the Transferor directly
to the Seller under and in accordance with the Transfer Agreement, and the
Seller has good and marketable title thereto free and clear of any Adverse
Claim,
(xiv) which, together with the Contract related thereto, does not
contravene any law, rule or regulation applicable thereto (including,
without limitation, any law, rule and regulation relating to truth in
lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy) and with respect
to which no part of the Contract related thereto is in violation of any
such law, rule or regulation in any material respect,
(xv) which satisfies all applicable requirements of the Credit and
Collection Policy,
(xvi) which was generated in the ordinary course of the applicable
Originator's business,
(xvii) which arises solely from the sale or the provision of
services to the related Obligor by the applicable Originator, and not by
any other Person (in whole or in part),
(xviii) which, if canceled or amended and re-billed, (a) the
re-billed invoice for such Receivable is sufficiently connected to the
original invoice in the records and systems of the Seller such that the
original invoice and the re-billed invoice represent one and the same
Receivable and (b) such Receivable is not a Delinquent Receivable or a
Defaulted Receivable, as measured from the original invoice date prior to
giving effect to such cancellation or amendment, and
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(xix) as to which the Agent has not notified the Seller that the
Agent has, in the reasonable business judgment of the Agent, determined that
such Receivable or class of Receivables is not acceptable as an Eligible
Receivable, including, without limitation, because such Receivable arises under
a Contract that is not reasonably acceptable to the Agent.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"EXPECTED DILUTION RATIO" means, as of any date, the average of the
Dilution Ratios in respect of the 12 immediately preceding months.
"FACILITY ACCOUNT" means the Seller's Account No. 515-6602 at First
Chicago.
"FALCON RESIDUAL" means the sum of the Falcon Transfer Price Reductions.
"FALCON TRANSFER PRICE" means, with respect to the assignment by Falcon of
one or more Receivable Interests to the Agent for the benefit of the Investors
pursuant to Section 2.1, the sum of (i) the lesser of (a) the Capital of each
Receivable Interest and (b) the Adjusted Liquidity Price of each Receivable
Interest and (ii) all accrued and unpaid Discount and Funding Charges for such
Receivable Interests.
"FALCON TRANSFER PRICE REDUCTION" means in connection with the assignment
of a Receivable Interest by Falcon to the Agent for the benefit of the
Investors, the positive difference between (i) the Capital of such Receivable
Interest and (ii) the Adjusted Liquidity Price for such Receivable Interest.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a fluctuating
interest rate per annum equal for each day during such period equal to (a) the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the preceding
Business Day) by the Federal Reserve Bank of New York in the Composite Closing
Quotations for U.S. Governments Securities; or (b) if such rate is not so
published for any day which is a Business Day, the average of the quotations at
approximately 10:30 a.m. (Chicago time) for such day on such transactions
received by the Reference Bank from three federal funds brokers of recognized
standing selected by it.
"FEE LETTER" means that certain letter agreement dated as of the date
hereof between the Seller and the Agent, as it may be amended or modified and in
effect from time to time.
"FINANCE CHARGES" means, with respect to a Contract, any finance,
interest, late payment charges or similar charges owing by an Obligor pursuant
to such Contract.
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"FIRST CHICAGO" means The First National Bank of Chicago in its individual
capacity and its successors.
"FUNDING AGREEMENT" means this Agreement and any agreement or instrument
executed by any Funding Source with or for the benefit of Falcon.
"FUNDING CHARGES" means (i) in respect of each Receivable Interest funded
substantially with Pooled Commercial Paper, the Pooled Funding Charges, and (ii)
in respect of each Receivable Interest funded substantially with Specially
Pooled Paper, the Special Funding Charges.
"FUNDING SOURCE" means (i) any Investor or (ii) any insurance company,
bank or other financial institution providing liquidity, credit enhancement or
back-up purchase support or facilities to Falcon.
"INCREMENTAL PURCHASE" means a purchase of one or more Receivable
Interests which increases the total outstanding Capital hereunder.
"INDEBTEDNESS" of a Person means such Person's (i) obligations for
borrowed money, (ii) obligations representing the deferred purchase price of
property or services (other than accounts payable arising in the ordinary course
of such Person's business payable on terms customary in the trade), (iii)
obligations, whether or not assumed, secured by liens or payable out of the
proceeds or production from property now or hereafter owned or acquired by such
Person, (iv) obligations which are evidenced by notes, acceptances, or other
instruments, (v) capitalized lease obligations, (vi) net liabilities under
interest rate swap, exchange or cap agreements and (vii) Contingent Obligations.
"INTENDED CHARACTERIZATION" means, for income tax purposes, the
characterization of the acquisition by the Purchasers of Receivable Interests as
a loan or loans by the Purchasers to the Seller secured by the Receivables, the
Related Security and the Collections.
"INVESTOR FEE" means, for each Investor, a fee agreed to in writing by the
Agent or Falcon and such Investor.
"INVESTORS" means the financial institutions listed on the signature pages
of this Agreement under the heading "Investors" and their respective successors
and assigns.
"LIBO RATE" means the rate per annum equal to the sum of (i) (a) the rate
at which deposits in U.S. Dollars are offered by the Reference Bank to
first-class banks in the London interbank market at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of the relevant Tranche
Period, such deposits being in the approximate amount of the Capital of the
Receivable Interest to be funded or maintained, divided by (b) one minus the
Reserve
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Requirement (expressed as a decimal) applicable to such Tranche Period PLUS (ii)
1.75% per annum. The LIBO Rate shall be rounded, if necessary, to the next
higher 1/16 of 1%.
"LIQUIDATION DAY" means, for any Receivable Interest, the earliest to
occur of (i) the day on which the conditions precedent set forth in Section 4.2
are not satisfied, (ii) any Business Day so designated by the Seller or Falcon
after the occurrence of the Termination Date and (iii) the Business Day
immediately prior to the occurrence of a Servicer Default set forth in Section
7.1(d).
"LIQUIDITY TERMINATION DATE" means January 20, 2000.
"LOSS HORIZON RATIO" means a percentage, calculated as of the last day of
any month, equal to (i) the Originator Sales during the three-month period ended
on such date, DIVIDED by (ii) the aggregate Outstanding Balance of Receivables
as of such date that are not Defaulted Receivables.
"LOSS RATIO" means, as of any date, a percentage equal to the highest
three-month rolling average Default Ratio as of the last day of any of the
twelve months then most recently ended.
"LOSS RESERVE PERCENTAGE" means, at any time, the greater of (i) x TIMES
the Loss Ratio TIMES the Loss Horizon Ratio (in each case determined as of the
last day of the month then most recently ended) and (ii) x%.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
financial condition, business or operations of (A) the Seller or (B) the
Transferor and its Subsidiaries taken as a whole, (ii) the ability, financial or
otherwise, of the Seller, the Transferor or any Originator to perform its
obligations under any Transaction Document, (iii) the legality, validity or
enforceability of this Agreement, any Transaction Document or any Collection
Account Agreement or Collection Notice relating to a Collection Account into
which a material portion of Collections are deposited, (iv) any Purchaser's
interest in the Receivables generally or in any significant portion of the
Receivables, the Related Security or the Collections with respect thereto, or
(v) the collectibility of the Receivables generally or of any material portion
of the Receivables.
"MINIMUM RECEIVABLES BALANCE" means, at any time, an amount equal to the
aggregate Capital of the Receivable Interests DIVIDED BY (i) 1 MINUS (ii) the
sum, expressed as a decimal, of the Loss Reserve Percentage, the
Discount/Servicing Reserve Percentage and the Dilution Reserve Percentage.
"MONTHLY REPORT" means a report, in substantially the form of Exhibit VII
hereto (appropriately completed), furnished by the Servicer to the Agent
pursuant to Section 6.5.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc., and any successor
thereto.
"NET RECEIVABLES BALANCE" means, at any time, the aggregate Outstanding
Balance of the Eligible Receivables at such time reduced by the aggregate amount
by which the Outstanding
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Balance of all Eligible Receivables of each Obligor and its Affiliates exceeds
the Concentration Limit for such Obligor.
"OBLIGOR" means a Person obligated to make payments pursuant to a
Contract.
"ORIGINATORS" means each of the Subsidiaries of the Transferor listed on
Exhibit IX.
"ORIGINATOR SALES" means, in respect of any period, aggregate sales by the
Originators that shall have given rise to Receivables in accordance with
generally accepted accounting principles.
"ORIGINATOR TRANSFER AGREEMENT" means that certain Originator Transfer
Agreement of even date herewith among the Transferor, as buyer, and each
Originator, as sellers, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"OTHER COSTS" has the meaning assigned to that term in SECTION 8.3.
"OUTSTANDING BALANCE" of any Receivable at any time means the then
outstanding principal balance thereof.
"PERSON" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof.
"POOLED ALLOCATION" means, for each Receivable Interest funded
substantially with Pooled Commercial Paper, an amount each day equal to the
product of (i) the Pooled Percentage Share of such Receivable Interest on such
day multiplied by (ii) the aggregate amount of Pooled Funding Charges for such
day.
"POOLED COMMERCIAL PAPER" means Commercial Paper notes of Falcon except
(A) Allocated Commercial Paper, and (B) Specially Pooled Paper.
"POOLED FUNDING CHARGES" means, for each day, the sum of (i) discount
accrued on Pooled Commercial Paper on such day, plus (ii) any and all accrued
commissions in respect of placement agents and Commercial Paper dealers in
respect of such Pooled Commercial Paper for such day, plus (iii) issuing and
paying agent fees incurred on such Pooled Commercial Paper for such day, plus
(iv) other costs associated with funding small or odd-lot amounts with respect
to all Receivable Purchase Facilities which are funded by Pooled Commercial
Paper for such day, minus (v) any accrual of income net of expenses received on
such day from investment of collections received under all Receivable Purchase
Facilities funded with Pooled Commercial Paper, minus (vi) any payment received
on such day net of expenses in respect of broken funding costs related to the
prepayment of any Receivables Interest of Falcon pursuant to the terms of any
Receivable Purchase Facilities funded substantially with Pooled Commercial
Paper.
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"POOLED PERCENTAGE SHARE" means, for each Receivable Interest funded
substantially with Pooled Commercial Paper, a fraction (expressed as a
percentage) the numerator of which is equal to the Capital associated with such
Receivable Interest and the denominator of which is equal to the aggregate
amount of all outstanding capital associated with receivable interests (or
comparable terms used in any Receivable Purchase Facility) held by Falcon which
is funded substantially with Pooled Commercial Paper.
"POTENTIAL SERVICER DEFAULT" means an event which, with the passage of
time or the giving of notice, or both, would constitute a Servicer Default.
"PRO RATA SHARE" means, for each Investor, the Commitment of such Investor
divided by the Purchase Limit, adjusted as necessary to give affect to the
application of the terms of SECTION 2.5. "PURCHASE LIMIT" means the
aggregate of the Commitments of the Investors hereunder.
"PURCHASE NOTICE" has the meaning assigned to that term in SECTION 1.2.
"PURCHASE PRICE" means, with respect to any Incremental Purchase, the
amount specified by the Seller in the related Purchase Notice in respect of the
Receivable Interest then being proposed for sale to the Purchasers, which amount
shall not be greater than the amount which when added to the amount of the
aggregate Capital outstanding immediately prior to the consummation of such
Incremental Purchase would cause the aggregate Receivable Interests upon
consummation of such Incremental Purchase to equal 100%.
"PURCHASER" means Falcon or an Investor, as applicable.
"RECEIVABLE" means the indebtedness and other obligations owed (at the
time it arises, and before giving effect to any transfer or conveyance
contemplated under the Originator Transfer Agreement, the Transfer Agreement or
hereunder) to the applicable Originator, whether constituting an account,
chattel paper, instrument or general intangible, arising in connection with the
sale of goods or the rendering of services by such Originator, and includes,
without limitation, the obligation to pay any Finance Charges with respect
thereto. Indebtedness and other rights and obligations arising from any one
transaction, including, without limitation, indebtedness and other rights and
obligations represented by an individual invoice, shall constitute a Receivable
separate from a Receivable consisting of the indebtedness and other rights and
obligations arising from any other transaction.
"RECEIVABLE INTEREST" means, at any time, an undivided percentage
ownership interest associated with a designated amount of Capital, Discount Rate
and Tranche Period selected pursuant to Section 1.3 in (i) all Receivables
arising prior to the time of the most recent computation or recomputation of
such undivided interest pursuant to Section 1.4, (ii) all Related Security with
respect to such Receivables, and (iii) all Collections with respect to, and
other proceeds of, such Receivables.
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"RECEIVABLE PURCHASE FACILITY" means any receivables purchase agreement or
other similar contracted arrangement to which Falcon is a party relating to the
transfer, purchase or funding of receivables or other financial assets.
"RECORDS" means, with respect to any Receivable, all Contracts and other
documents, books, records and other information (including, without limitation,
computer programs, tapes, disks, punch cards, data processing software and
related property and rights) relating to such Receivable, any Related Security
therefor and the related Obligor.
"REDUCTION PERCENTAGE" means, for any Receivable Interest acquired by the
Investors from Falcon for less than the Capital of such Receivable Interest, a
percentage equal to a fraction the numerator of which is the Falcon Transfer
Price Reduction for such Receivable Interest and the denominator of which is the
Capital of such Receivable Interest.
"REFERENCE BANK" means First Chicago or such other bank as the Agent shall
designate with the consent of the Seller.
"REINVESTMENT" has the meaning assigned to that term in SECTION 1.6.
"RELATED SECURITY" means, with respect to any Receivable:
(i) all of the Seller's interest in the inventory and goods
(including returned or repossessed inventory or goods), if any, the
financing or lease of which by the applicable Originator gave rise to such
Receivable, and all insurance contracts with respect thereto,
(ii) all other security interests or liens and property subject
thereto from time to time, if any, purporting to secure payment of such
Receivable, whether pursuant to the Contract related to such Receivable or
otherwise, together with all financing statements and security agreements
describing any collateral securing such Receivable,
(iii) all guaranties, letters of credit, certificates of deposit,
insurance and other agreements or arrangements of whatever character from
time to time supporting or securing payment of such Receivable whether
pursuant to the Contract related to such Receivable or otherwise,
(iv) all service contracts and other contracts and agreements
associated with such Receivables,
(v) all Records related to such Receivables,
(vi) all of the Seller's right, title and interest in, to and under
the Transfer Agreement, the Originator Transfer Agreement and each
instrument, document
Page 54
or agreement executed in connection therewith in favor of or otherwise for
the benefit of the Seller; and
(vii) all proceeds of any of the foregoing.
"REPORTING DATE" means the 15th Business Day of each month.
"REQUIRED INVESTORS" means, at any time, Investors with Commitments in
excess of 66-2/3% of the Purchase Limit.
"RESERVE REQUIREMENT" means the maximum aggregate reserve requirement
(including all basic, supplemental, marginal and other reserves) which is
imposed against the Reference Bank in respect of Eurocurrency liabilities, as
defined in Regulation D of the Board of Governors of the Federal Reserve System
as in effect from time to time.
"S&P" means Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, or any successor thereto.
"SECTION" means a numbered section of this Agreement, unless another
document is specifically referenced.
"SELLER INTEREST" means, at any time, an undivided percentage ownership
interest of the Seller in the Receivables, Related Security and all Collections
with respect thereto equal to (i) one, minus (ii) the aggregate of the
Receivable Interests.
"SERVICER" means at any time the Person (which may be the Agent) then
authorized pursuant to Section 6.1 to service, administer and collect
Receivables.
"SERVICER DEFAULT" has the meaning specified in Article VII.
"SERVICING FEE" has the meaning specified in Section 6.6.
"SETTLEMENT DATE" means (i) the fifth Business Day in each calendar month
and (ii) from and after the Termination Date or the occurrence of any Servicer
Default, each additional day designated as such by the Agent.
"SPECIAL FUNDING CHARGES" means, for each day, the sum of (i) discount
accrued on Specially Pooled Paper on such day, plus (ii) any and all accrued
commissions in respect of placement agents and Commercial Paper dealers in
respect of such Specially Pooled Paper for such day, plus (iii) issuing and
paying agent fees incurred on such Specially Pooled Paper for such day, plus
(iv) other costs associated with funding small or odd-lot amounts with respect
to all Receivable Purchase Facilities which are funded by Specially Pooled Paper
for such day, minus (v) any accrual of income net of expenses received on such
day from investment of collections received under all Receivable
Page 55
Purchase Facilities funded with Specially Pooled Paper, minus (vi) any payment
received on such day net of expenses in respect of broken funding costs related
to the prepayment of any Receivable Interest of Falcon pursuant to the terms of
any Receivable Purchase Facility funded substantially with Specially Pooled
Paper.
"SPECIAL PERCENTAGE SHARE" means, for each Receivable Interest funded
substantially with Specially Pooled Paper, a fraction (expressed as a
percentage) the numerator of which is equal to the Capital associated with such
Receivable Interest and the denominator of which is equal to the aggregate
amount of all outstanding capital associated with receivable interests (or
comparable terms used in any Receivable Purchase Facility) held by Falcon which
is funded substantially with Specially Pooled Paper.
"SPECIAL POOLED PERIOD" means any period commencing on (i) each March 15th
and ending on the following April 5th, (ii) each June 15th and ending on the
following July 5th, (iii) each September 15th and ending on the following
October 5th, or (iv) each December 15th and ending on the following January 5th.
If the last day of any Special Pooled Period shall not be a Business Day, the
last day of such Special Pooled Period shall be the next succeeding Business
Day.
"SPECIALLY POOLED ALLOCATION" means, for each Receivable Interest funded
substantially with Specially Pooled Paper, an amount each day equal to the
product of (i) the Special Percentage Share of such Receivable Interest on such
day multiplied by the (ii) the aggregate amount of Special Funding Charges for
such day.
"SPECIALLY POOLED PAPER" means the aggregate of all Commercial Paper notes
of Falcon issued during any Special Pooled Period and allocated by the Agent to
Specially Pooled Paper in accordance with Section 1.9(b) hereof. Specially
Pooled Paper will not include Pooled Commercial Paper or Allocated Commercial
Paper at any time.
"SUBSIDIARY" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, association, joint venture or similar business
organization more than 50% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled. Unless otherwise
expressly provided, all references herein to a "Subsidiary" shall mean a
Subsidiary of the Seller.
"TERMINATION DATE" means, the earliest of (i) the Liquidity Termination
Date, (ii) the date of the declaration or automatic occurrence of the
Termination Date pursuant to Section 7.1 and (iii) the date designated by the
Seller or the Transferor upon 15 Business Days prior written notice to the
Agent; PROVIDED that, solely with respect to any Receivable Interest of Falcon,
"Termination Date" shall in addition be any date designated by Falcon as such in
a notice given to the Seller and the Agent.
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"TRANCHE PERIOD" means, with respect to any Receivable Interest:
(a) if the Discount Rate with respect to such Receivable Interest is
the CP Rate, the Accrual Period;
(b) if Discount for such Receivable Interest is calculated on the
basis of the LIBO Rate, a period of one, two or three months, or such
other period as may be mutually agreeable to the Agent and the Seller,
commencing on a Business Day selected by the Seller or the Agent pursuant
to this Agreement. Such Tranche Period shall end on the day in the
applicable succeeding calendar month which corresponds numerically to the
beginning day of such Tranche Period, provided, however, that if there is
no such numerically corresponding day in such succeeding month, such
Tranche Period shall end on the last Business Day of such succeeding
month; and
(c) if Discount for such Receivable Interest is calculated on the
basis of the Base Rate, a period of 30 days commencing on a Business Day
selected by the Seller.
If any Tranche Period would end on a day which is not a Business Day, such
Tranche Period shall end on the next succeeding Business Day, PROVIDED, however,
that in the case of Tranche Periods corresponding to the LIBO Rate, if such next
succeeding Business Day falls in a new month, such Tranche Period shall end on
the immediately preceding Business Day. In the case of any Tranche Period for
any Receivable Interest of which commences before the Termination Date and would
otherwise end on a date occurring after the Termination Date, such Tranche
Period shall end on the Termination Date. The duration of each Tranche Period
which commences after the Termination Date shall be of such duration as selected
by the Agent.
"TRANSACTION DOCUMENTS" means, collectively, this Agreement, the Transfer
Agreement, the Originator Transfer Agreement, the Fee Letter, each Collection
Account Agreement and all other instruments, documents and agreements executed
and delivered by the Seller, the Transferor or the Originator in connection
herewith.
"TRANSFER AGREEMENT" means that certain Receivable Purchase Agreement of
even date herewith between the Seller, as purchaser, and the Transferor, as
seller, as the same may be amended, restated, supplemented or otherwise modified
from time to time.
"TRANSFEROR" means Metals USA, Inc., a Delaware corporation.
"TRANSFEROR CREDIT AGREEMENT" means that certain Amended and Restated
Credit Agreement originally dated as of July 15, 1997 and amended and restated
as of February 11, 1998, among the Transferor, the institutions from time to
time parties thereto as Lenders and The First National Bank of Chicago, as
Agent, as the same has been amended prior to the date hereof and may be further
amended, restated, supplemented or otherwise modified from time to time.
Page 57
"UCC" means the Uniform Commercial Code as from time to time in effect in
the specified jurisdiction.
"YEAR 2000 ISSUES" means anticipated costs, problems and uncertainties
associated with the inability of certain computer applications to effectively
handle data including dates on and after January 1, 2000, as such inability
affects the business, operations, and financial condition of the Seller, the
Transferor, or any Originator and of the Seller's, the Transferor's or any
Originator's material customers, suppliers and vendors.
All accounting terms not specifically defined herein shall be construed in
accordance with generally accepted accounting principles. All terms used in
Article 9 of the UCC in the State of Illinois, and not specifically defined
herein, are used herein as defined in such Article 9.
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EXHIBIT II
PRINCIPAL PLACE OF BUSINESS OF THE SELLER; LOCATION(S) OF RECORDS;
FEDERAL EMPLOYER IDENTIFICATION NUMBERS
Page 59
EXHIBIT III
LOCK-BOXES;
CONCENTRATION ACCOUNTS; AND DEPOSITARY ACCOUNTS
Page 60
EXHIBIT IV
FORM OF COMPLIANCE CERTIFICATE
To: The First National Bank of Chicago, as Agent
This Compliance Certificate is furnished pursuant to that certain
Receivables Purchase Agreement dated as of January 21, 1999, among Metals
Receivables Corporation (the "Seller"), Falcon Asset Securitization Corporation,
the financial institutions party thereto and The First National Bank of Chicago,
as agent (the "Agreement").
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected of the Seller;
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of the Seller and its Subsidiaries during the accounting period
covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I have
no knowledge of, the existence of any condition or event which constitutes a
Servicer Default or Potential Servicer Default other than with respect to those
Servicer Defaults set forth in SECTION 7.1(E) of the Agreement, as each such
term is defined under the Agreement, during or at the end of the accounting
period covered by the attached financial statements or as of the date of this
Certificate, except as set forth below;
4. The examinations described in paragraph 2 did not disclose, and I have
no knowledge of, the existence of any condition or event which constitutes a
Servicer Default or Potential Servicer Default with respect to those Servicer
Defaults set forth in SECTION 7.1(E) of the Agreement, as each such term is
defined under the Agreement, as of the applicable date certified in each Monthly
Report issued by the Servicer during of the accounting period covered by the
attached financial statements, except as set forth below; and
5. Schedule I attached hereto sets forth financial data and computations
evidencing the compliance with certain covenants of the Agreement, all of which
data and computations are true, complete and correct.
Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Seller has taken, is taking, or proposes to
take with respect to each such condition or event:
Page 61
The foregoing certifications, together with the computations set forth in
Schedule I hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this ____ day of ______________,
19___.
SCHEDULE I TO COMPLIANCE REPORT
A. Schedule of Compliance as of __________, 19____ with Sections ___ of the
Agreement. Unless otherwise defined herein, the terms used in this
Compliance Certificate have the meanings ascribed thereto in the
Agreement.
This schedule relates to the month ended:
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EXHIBIT V
FORM OF COLLECTION ACCOUNT AGREEMENT
[On letterhead of Seller]
19
[Lock-Box Bank/Concentration Bank/Depositary Bank]
Re: [ORIGINATOR]
METALS USA, INC.
METALS RECEIVABLES CORPORATION
Ladies and Gentlemen:
You have exclusive control of P.O. Box #_____________ in [CITY, STATE, ZIP
CODE] (the "Lock-Box") for the purpose of receiving mail and processing payments
therefrom pursuant to that certain [name of lock-box agreement) between you and
[ORIGINATOR][Metals USA, Inc.] dated (the "Agreement"). You hereby confirm your
agreement to perform the services described therein. Among the services you have
agreed to perform therein, is to endorse all checks and other evidences of
payment, and credit such payments to our checking account no. __________
maintained with you in the name of [ORIGINATOR][Metals USA, Inc.] (the "Lock-Box
Account").
[ORIGINATOR][Metals USA, Inc.], hereby transfers and assigns all of its
right, title and interest in and to, and exclusive ownership and control over,
the Lock-Box and the Lock-Box Account to Metals Receivables Corporation (the
"Seller"). We hereby request that the name of the Lock-Box Account be changed to
Metals Receivables Corporation, as "Collection Agent" for the benefit of The
First National Bank of Chicago ("FNBC"), as agent under that certain Receivables
Purchase Agreement (the "Receivables Purchase Agreement") dated as of January
21, 1999 among the Seller, Falcon Asset Securitization Corporation, certain
financial institutions parties thereto and FNBC.
The Seller hereby irrevocably instructs you, and you hereby agree, that
upon receiving notice from FNBC in the form attached hereto as Annex A: (i) the
name of the Lock-Box Account will be changed to FNBC for itself and as agent (or
any designee of FNBC) and FNBC will have exclusive ownership of and access to
such Lock-Box Account, and neither the Seller nor any of our affiliates will
have any control of such Lock-Box Account or any access thereto, (ii) you will
either continue to send the funds from the Lock-Box to the Lock-Box Account, or
will redirect the funds as FNBC may otherwise request, (iii) you will transfer
monies on deposit in the Lock-Box
Page 63
Account, at any time, as directed by FNBC, (iv) all services to be performed by
you under the Agreement will be performed on behalf of FNBC, and (v) all
correspondence or other mail which you have agreed to send us will be sent to
FNBC at the following address:
The First National Bank of Chicago
Suite , 21st Floor
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Credit Manager, Asset Backed
Securities Division
Moreover, upon such notice, FNBC for itself and as agent will have all
rights and remedies given to us under the Agreement. We agree, however, to
continue to pay all fees and other assessments due thereunder at any time.
You hereby acknowledge that monies deposited in the Lock-Box Account or
any other account established with you by FNBC for the purpose of receiving
funds from the Lock-Box are subject to the liens of FNBC for itself and as agent
under the Receivables Purchase Agreement, and will not be subject to deduction,
set-off, banker's lien or any other right you or any other party may have
against us, except that you may debit the Lock-Box Account for any items
deposited therein that are returned or otherwise not collected and for all
charges, fees, commissions and expenses incurred by you in providing services
hereunder, all in accordance with your customary practices for the charge back
of returned items and expenses.
This letter agreement and the rights and obligations of the parties
hereunder will be governed by and construed and interpreted in accordance with
the laws of the State of Illinois. This letter agreement may be executed in any
number of counterparts and all of such counterparts taken together will be
deemed to constitute one and the same instrument. All references herein to "we"
or "us" refer to [ORIGINATOR][Metals USA, Inc.] and Metals Receivables
Corporation
This letter agreement contains the entire agreement between the parties,
and may not be altered, modified, terminated or amended in any respect, nor may
any right, power or privilege of any party hereunder be waived or released or
discharged, except upon execution by all parties hereto of a written instrument
so providing. In the event that any provision in this letter agreement is in
conflict with, or inconsistent with, any provision of the Agreement, this letter
agreement will exclusively govern and control. Each party agrees to take all
actions reasonably requested by any other party to carry out the purposes of
this letter agreement or to preserve and protect the rights of each party
hereunder.
Please indicate your agreement to the terms of this letter agreement by
signing in the space provided below. This letter agreement will become effective
immediately upon execution of a counterpart of this letter agreement by all
parties hereto.
Page 64
Very truly yours,
[ORIGINATOR][METALS USA, INC.]
By:
Name:______________________
Title
METALS RECEIVABLES CORPORATION
By:
Name:______________________
Title
Acknowledged and agreed to
this day of
[COLLECTION BANK]
By:
Name:______________________
Title:
Acknowledged and agreed to
this day of , 19
THE FIRST NATIONAL BANK OF
CHICAGO (for itself and
as agent)
By:
Name:___________________________
Title:
Page 65
ANNEX A
FORM OF COLLECTION NOTICE
[On letterhead of FNBC]
, 19
[Collection Bank/Depositary Bank/Concentration Bank]
Re: Metals Receivables Corporation
Ladies and Gentlemen:
We hereby notify you that we are exercising our rights pursuant to that
certain letter agreement among [ORIGINATOR][Metals USA, Inc.], Metals
Receivables Corporation, you and us, to have the name of, and to have exclusive
ownership and control of, account number (the "Lock-Box Account") maintained
with you, transferred to us. [Lock-Box Account will henceforth be a zero-balance
account, and funds deposited in the Lock-Box Account should be sent at the end
of each day to .] You have further agreed to perform all other services you are
performing under that certain agreement dated between you and Metals Receivables
Corporation on our behalf.
We appreciate your cooperation in this matter.
Very truly yours,
THE FIRST NATIONAL BANK OF CHICAGO
(for itself and as agent)
By:
Title:
Page 66
EXHIBIT VI
CREDIT AND COLLECTION POLICY
(Attached)
Page 67
EXHIBIT VII
FORM OF MONTHLY REPORT
(Attached)
EXHIBIT VIII
FORM OF PURCHASE NOTICE
[Date]
The First National Bank of Chicago as Agent for the Purchasers parties to the
Receivables Purchase Agreement referred to below
Suite _____
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Asset-Backed Markets
Gentlemen:
The undersigned, METALS RECEIVABLES CORPORATION, refers to the
Receivables Purchase Agreement, dated as of January 21, 1999 (the "Receivables
Purchase Agreement", the terms defined therein being used herein as therein
defined), among the undersigned, Falcon Asset Securitization Corporation
("Falcon"), certain Investors parties thereto and The First National Bank of
Chicago, as Agent for Falcon and such Investors (Falcon and Investors,
collectively, the "Purchasers"), and hereby gives you notice irrevocably,
pursuant to Section 1.2 of the Receivables Purchase Agreement, that the
undersigned hereby requests a purchase under the Receivables Purchase Agreement,
and in that connection sets forth below the information relating to such
purchase (the "Proposed Purchase") as required by Section 1.2 of the Receivables
Purchase Agreement:
(i) The Business Day of the Proposed Purchase is _________, 19__.
(ii) The requested Purchase Price in respect of the Proposed Purchase is
$_______.
Page 68
(iii) The requested Purchaser[s] in respect of the Proposed Purchase [is
Falcon] [are the Investors].
(iii) The duration of the initial Tranche Period for the Proposed Purchase
is _______ [days] [months][the Accrual Period].
(iv) The Discount Rate related to such initial Tranche Period is
requested to be the [CP][LIBO] [Base] Rate [and is requested to be
funded with Specially Pooled Paper in accordance with Section
1.9(b)].
The undersigned hereby certifies that the conditions precedent in
Section 4.2 of the Receivables Purchase Agreement are satisfied, including,
without limitation, that the following statements are true on the date hereof,
and will be true on the date of the Proposed Purchase (before and after giving
effect to the Proposed Purchase):
(A) the representations and warranties set forth in Article III of the
Receivables Purchase Agreement are correct in all material respects
on and as of such date, as though made on and as of such date;
(B) no event has occurred, or would result from the Proposed Purchase
that will constitute a Servicer Default, and no event has occurred
and is continuing, or would result from such Proposed Purchase, that
would constitute a Potential Servicer Default; and
(C) the Liquidity Termination Date shall not have occurred, the
aggregate Capital of all Receivable Interests shall not exceed the
Purchase Limit and the aggregate Receivable Interests shall not
exceed 100%.
Very truly yours,
METALS RECEIVABLES CORPORATION
By:_____________________________
Name:________________________
Title:_________________________
Page 69
EXHIBIT IX
ORIGINATORS
SCHEDULE A
DOCUMENTS AND RELATED ITEMS TO BE DELIVERED TO THE AGENT
ON OR PRIOR TO THE INITIAL PURCHASE
1. Copy of the Resolutions of the Board of Directors of the Seller certified
by its Secretary authorizing the Seller's execution, delivery and
performance of this Agreement and the other documents to be delivered by
it thereunder.
2. Articles or Certificate of Incorporation of the Seller certified by the
Secretary of State of the jurisdiction of incorporation of the Seller on
or within thirty (30) days prior to the initial Purchase.
3. Good Standing Certificate for the Seller issued by the Secretaries of
State of each jurisdiction where it has material operations.
4. A certificate of the Secretary of the Seller certifying (i) the names and
signatures of the officers authorized on its behalf to execute the
Agreement and any other documents to be delivered by it thereunder and
(ii) a copy of the Seller's By-Laws.
5. Time stamped receipt copies of proper financing statements, duly filed
under the UCC on or before the date of such initial Purchase in all
jurisdictions as may be necessary or, in the opinion of the Agent,
desirable, under the UCC of all appropriate jurisdictions or any
comparable law in order to perfect the ownership interests contemplated by
the Agreement.
6. Time stamped receipt copies of proper UCC termination statements, if any,
necessary to release all security interests and other rights of any Person
in the Receivables, Contracts or Related Security previously granted by
the Seller.
7. Executed copy of the Collection Account Agreements.
Page 70
8. A favorable opinion of legal counsel for the Seller reasonably acceptable
to the Agent which addresses general corporate matters enforceability,
perfection and such other matters as the Agent may reasonably request.
9. If requested by Falcon or the Agent, a favorable opinion of legal counsel
for each Investor, reasonably acceptable to the Agent which addresses the
following matters:
-- The Agreement has been duly authorized by all necessary corporate
action of the Investor.
-- The Agreement has been duly executed and delivered by the Investor
and, assuming due authorization, execution and delivery by each of
the other parties thereto, constitutes a legal, valid and binding
obligation of the Investor, enforceable against the Investor in
accordance with its terms.
10. A Compliance Certificate.
11. Written information from the Borrower, satisfactory to each Agent and each
Lender, indicating that the Borrower (a) has made a full and complete
assessment of the Year 2000 Issues; (b) has a realistic and achievable
program for remediating the Year 2000 Issues on a timely basis, and (c)
does not reasonably anticipate that Year 2000 Issues will have a Material
Adverse Effect.
12. The Fee Letter.
13. A direction letter executed by the Seller authorizing the Agent, and
directing warehousemen to allow the Agent, to inspect and make copies from
Seller's books and records maintained at off-site data processing or
storage facilities.
14. A Monthly Report as at , 19___.
15. Executed copies of (i) all consents from and authorizations by any Persons
and (ii) all waivers and amendments to existing credit facilities, that
are necessary in connection with the Agreement.
16. For each Purchaser that is not incorporated under the laws of the United
States of America, or a state thereof, two duly completed copies of United
States Internal Revenue Service Form 1001 or 4224, certifying in either
case that such Purchaser is entitled to receive payments under the
Agreement without deduction or withholding of any United States federal
income taxes.
Page 71