CONFORMED EXECUTION COPY
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RECEIVABLES PURCHASE AGREEMENT
dated as of December 21, 2006
Among
PACTIV RSA LLC, as Seller,
PACTIV FACTORING LLC, as Servicer,
ATLANTIC ASSET SECURITIZATION LLC
and
CALYON NEW YORK BRANCH
as Agent
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TABLE OF CONTENTS
Page
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ARTICLE I
PURCHASE ARRANGEMENTS.............................................. 4
Section 1.1 Purchase Facility..................................... 4
Section 1.2 Increases............................................. 5
Section 1.3 Decreases............................................. 5
Section 1.4 Payment Requirements.................................. 5
ARTICLE II
PAYMENTS AND COLLECTIONS........................................... 6
Section 2.1 Payments.............................................. 6
Section 2.2 Collections Prior to Amortization..................... 6
Section 2.3 Collections Following Amortization.................... 7
Section 2.4 Application of Collections............................ 7
Section 2.5 Payment Rescission.................................... 7
Section 2.6 Maximum Purchaser Interests........................... 8
Section 2.7 Clean Up Call......................................... 8
ARTICLE III
COMPANY FUNDING.................................................... 8
Section 3.1 CP Costs.............................................. 8
Section 3.2 CP Costs Payments..................................... 8
Section 3.3 Calculation of CP Costs............................... 8
ARTICLE IV
FINANCIAL INSTITUTION FUNDING...................................... 8
Section 4.1 Financial Institution Funding......................... 8
Section 4.2 Yield Payments........................................ 9
Section 4.3 Selection and Continuation of Tranche Periods......... 9
Section 4.4 Suspension of the LIBO Rate........................... 9
ARTICLE V
REPRESENTATIONS AND WARRANTIES..................................... 10
Section 5.1 Representations and Warranties of the Seller Parties.. 10
Section 5.2 Financial Institution Representations and Warranties.. 14
ARTICLE VI
CONDITIONS OF PURCHASES............................................ 14
Section 6.1 Conditions Precedent to Initial Incremental Purchase.. 14
Section 6.2 Conditions Precedent to All Purchases and
Reinvestments...................................... 14
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ARTICLE VII
COVENANTS.......................................................... 15
Section 7.1 Affirmative Covenants of The Seller Parties........... 15
Section 7.2 Negative Covenants of the Seller Parties.............. 22
ARTICLE VIII
ADMINISTRATION AND COLLECTION...................................... 23
Section 8.1 Designation of Servicer............................... 23
Section 8.2 Duties of Servicer.................................... 24
Section 8.3 Collection Notices.................................... 25
Section 8.4 Responsibilities of Seller............................ 25
Section 8.5 Reports............................................... 26
Section 8.6 Servicing Fees........................................ 26
ARTICLE IX
AMORTIZATION EVENTS................................................ 26
Section 9.1 Amortization Events................................... 26
Section 9.2 Remedies.............................................. 28
ARTICLE X
INDEMNIFICATION.................................................... 29
Section 10.1 Indemnities by the Seller Parties..................... 29
Section 10.2 Increased Costs and Reduced Return.................... 31
Section 10.3 Other Costs and Expenses.............................. 32
ARTICLE XI
THE AGENT.......................................................... 33
Section 11.1 Authorization and Action.............................. 33
Section 11.2 Delegation of Duties.................................. 33
Section 11.3 Exculpatory Provisions................................ 33
Section 11.4 Reliance by Agent..................................... 34
Section 11.5 Non-Reliance on Agent and Other Purchasers............ 34
Section 11.6 Reimbursement and Indemnification..................... 34
Section 11.7 Agent in its Individual Capacity...................... 35
Section 11.8 Successor Agent....................................... 35
ARTICLE XII
ASSIGNMENTS; PARTICIPATIONS........................................ 35
Section 12.1 Assignments........................................... 35
ARTICLE XIII
MISCELLANEOUS...................................................... 36
Section 13.1 Waivers and Amendments................................ 36
Section 13.2 Notices............................................... 37
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Section 13.3 Ratable Payments...................................... 38
Section 13.4 Protection of Ownership Interests of the Purchasers... 38
Section 13.5 Confidentiality....................................... 38
Section 13.6 Bankruptcy Petition................................... 39
Section 13.7 Limitation of Liability............................... 39
Section 13.8 CHOICE OF LAW......................................... 39
Section 13.9 CONSENT TO JURISDICTION............................... 40
Section 13.10 WAIVER OF JURY TRIAL.................................. 40
Section 13.11 Integration; Binding Effect; Survival of Terms........ 40
Section 13.12 Counterparts; Severability; Section References........ 41
Section 13.13 Calyon Roles.......................................... 41
Section 13.14 Characterization...................................... 41
Exhibits and Schedules
Exhibit I Definitions
Exhibit II Form of Purchase Notice
Exhibit III Places of Business of the Seller Parties; Locations of
Records; Federal Employer Identification Number(s)
Exhibit IV Names of Collection Banks; Collection Accounts
Exhibit V Form of Compliance Certificate
Exhibit VI Form of Collection Account Agreement
Exhibit VII Credit and Collection Policy
Exhibit VIII Form of Monthly Report
Schedule A Commitments
Schedule B Closing Documents
Schedule C Equivalent Long-Term Ratings
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PACTIV RSA LLC
RECEIVABLES PURCHASE AGREEMENT
This Receivables Purchase Agreement, dated as of December 21, 2006, is
among PACTIV RSA LLC, a Delaware limited liability company ("Seller"), PACTIV
FACTORING LLC, a Delaware limited liability company ("Factoring"), as initial
Servicer (in such capacity, the "Servicer," and together with Seller, the
"Seller Parties" and each a "Seller Party"), the entities from time to time
listed on Schedule A to this Agreement (together with any of their respective
successors and assigns hereunder, the "Financial Institutions"), ATLANTIC ASSET
SECURITIZATION LLC ("Company") and CALYON NEW YORK BRANCH, as agent for the
Purchasers hereunder or any successor agent hereunder (together with its
successors and assigns hereunder, the "Agent"). Unless defined elsewhere herein,
capitalized terms used in this Agreement shall have the meanings assigned to
such terms in Exhibit I.
PRELIMINARY STATEMENTS
Seller desires to transfer and assign Purchaser Interests to the Purchasers
from time to time.
Company may, in its absolute and sole discretion, purchase Purchaser
Interests from Seller from time to time.
In the event that Company declines to make any purchase, the Financial
Institutions shall, at the request of Seller, purchase Purchaser Interests from
time to time. In addition, the Financial Institutions have agreed to provide a
liquidity facility to Company.
Calyon New York Branch has been requested and is willing to act as Agent on
behalf of Company and the Financial Institutions in accordance with the terms
hereof.
ARTICLE I
PURCHASE ARRANGEMENTS
Section 1.1 Purchase Facility.
(a) Upon the terms and subject to the conditions hereof, Seller may,
at its option, sell and assign Purchaser Interests to the Agent for the benefit
of one or more of the Purchasers. In accordance with the terms and conditions
set forth herein, Company may, at its option, instruct the Agent to purchase on
behalf of Company, or if Company shall decline to purchase, the Financial
Institutions hereby agree that the Agent shall purchase, on behalf of the
Financial Institutions, Purchaser Interests from time to time in an aggregate
amount not to exceed at such time the lesser of (i) the Purchase Limit and (ii)
the aggregate amount of the Commitments during the period from the date hereof
to but not including the Facility Termination Date.
(b) Seller may, upon at least 10 Business Days' notice to the Agent,
terminate
in whole or reduce in part, ratably among the Financial Institutions, 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 Increases. Seller shall provide the Agent with notice in a
form set forth as Exhibit II hereto of each Incremental Purchase (a "Purchase
Notice") no later than twelve noon (New York time) on the third (3rd) Business
Day prior to such Incremental Purchase. Each Purchase Notice shall be subject to
Section 6.2 hereof and, except as set forth below, shall be irrevocable and
shall specify the requested Purchase Price (which shall not be less than
$1,000,000) and Purchase Date (which, in the case of any Incremental Purchase
(after the initial Incremental Purchase hereunder), shall only be on a
Settlement Date) and, in the case of an Incremental Purchase to be funded by the
Financial Institutions, the requested Discount Rate and Tranche Period.
Following receipt of a Purchase Notice, the Agent will determine whether Company
agrees to make the purchase. If Company declines to make a proposed purchase,
Seller may cancel the Purchase Notice or, in the absence of such a cancellation,
the Incremental Purchase of the Purchaser Interest will be made by the Financial
Institutions. On the date of each Incremental Purchase, upon satisfaction of the
applicable conditions precedent set forth in Article VI, Company or the
Financial Institutions, as applicable, shall deposit to the Facility Account, in
immediately available funds, no later than 1:00 p.m. (New York time), an amount
equal to (i) in the case of Company, the aggregate Purchase Price of the
Purchaser Interests Company is then purchasing or (ii) in the case of a
Financial Institution, such Financial Institution's Pro Rata Share of the
aggregate Purchase Price of the Purchaser Interests the Financial Institution is
purchasing.
Section 1.3 Decreases. Seller shall provide the Agent with prior
written notice in conformity with the Required Notice Period (a "Reduction
Notice") of any proposed reduction of Aggregate Capital. Such Reduction Notice
shall designate (i) the date (the "Proposed Reduction Date") upon which any such
reduction of Aggregate Capital shall occur (which date shall give effect to the
applicable Required Notice Period), and (ii) the amount of Aggregate Capital to
be reduced which shall be applied ratably to the Purchaser Interests of Company
and the Financial Institutions in accordance with the amount of Capital (if any)
owing to Company, on the one hand, and the amount of Capital (if any) owing to
the Financial Institutions (ratably, based on their respective Pro Rata Shares),
on the other hand (the "Aggregate Reduction"). Only one (1) Reduction Notice
shall be outstanding at any time.
Section 1.4 Payment Requirements. All amounts to be paid or deposited
by any Seller Party pursuant to any provision of this Agreement shall be paid or
deposited in accordance with the terms hereof no later than twelve noon (New
York time) on the day when due in immediately available funds, and if not
received before twelve noon (New York time) shall be deemed to be received on
the next succeeding Business Day. If such amounts are payable to a Purchaser
they shall be paid to the Agent, for the account of such Purchaser, at the
office of Calyon New York Branch ABA 026008073; account number
01-25680-0001-00-001 "Pactiv/AAS" until otherwise notified by the Agent. All
computations of Yield, per annum fees calculated as part of any CP Costs, per
annum fees hereunder and per annum fees under the Fee Letter shall be made on
the basis of a year of 360 days for the actual number of days elapsed; provided,
however, that all computations of Yield calculated with respect to the Base Rate
shall be made on the basis of a year of 365 days for the actual number of days
elapsed. 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;
provided, however, that if any amount hereunder calculated
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with respect to the LIBO Rate shall be payable on a day which is not a Business
Day, such amount shall be payable on the immediately preceding Business Day.
ARTICLE II
PAYMENTS AND COLLECTIONS
Section 2.1 Payments. Notwithstanding any limitation on recourse
contained in this Agreement, Seller shall immediately pay to the Agent when due,
for the account of the relevant Purchaser or Purchasers on a full recourse
basis, (i) the fees set forth in the Fee Letter (which fees shall satisfy all
fees owing by the Seller to the Financial Institutions), (ii) all CP Costs
allocable to Capital funded by Commercial Paper, (iii) all accrued and unpaid
Yield (to the extent not included in CP Costs), (iv) all amounts payable as
Deemed Collections (which shall be immediately due and payable by Seller and
applied to reduce outstanding Aggregate Capital hereunder in accordance with
Sections 2.2 and 2.3 hereof), (v) all amounts payable to reduce the Purchaser
Interests, if required, pursuant to Section 2.6, (vi) all amounts payable
pursuant to Article X, if any, (vii) if Factoring or one of its Affiliates is
not the Servicer hereunder, all Servicer costs and expenses, including the
Servicing Fee, in connection with servicing, administering and collecting the
Receivables, (viii) all Broken Funding Costs and (ix) all Default Fees
(collectively, the "Obligations"). If any Person fails to pay any of the
Obligations when due, such Person agrees to pay, on demand, the Default Fee in
respect thereof until paid. Notwithstanding the foregoing, no provision of this
Agreement or the Fee Letter shall require the payment or permit the collection
of any amounts hereunder in excess of the maximum permitted by applicable law.
If at any time Seller receives any Collections or is deemed to receive any
Collections, Seller shall immediately pay such Collections or Deemed Collections
to the Servicer for application in accordance with the terms and conditions
hereof and, at all times prior to such payment, such Collections or Deemed
Collections shall be held in trust by Seller for the exclusive benefit of the
Purchasers and the Agent.
Section 2.2 Collections Prior to Amortization. Prior to the
Amortization Date, any Collections and/or Deemed Collections received by the
Servicer shall be set aside and held in trust by the Servicer for the payment of
any accrued and unpaid Aggregate Unpaids or for a Reinvestment as provided in
this Section 2.2. If at any time any Collections are received by the Servicer
prior to the Amortization Date, Seller hereby requests and the Purchasers hereby
agree to make, simultaneously with such receipt, a reinvestment (each a
"Reinvestment") with that portion of the balance of each and every Collection
received by the Servicer that is part of any Purchaser Interest, such that after
giving effect to such Reinvestment, the amount of Capital of such Purchaser
Interest immediately after such receipt and corresponding Reinvestment shall be
equal to the amount of Capital immediately prior to such receipt. On each
Settlement Date prior to the occurrence of the Amortization Date, the Servicer
shall remit to the Agent's account the amounts set aside during the preceding
Settlement Period that have not been subject to a Reinvestment and apply such
amounts (if not previously paid in accordance with Section 2.1), to reduce
unpaid Obligations. If such Capital and Obligations shall be reduced to zero,
any additional Collections received by the Servicer (i) if applicable, shall be
remitted to the Agent's account no later than twelve noon (New York time) to the
extent required to fund any Aggregate Reduction on such Settlement Date and (ii)
any balance remaining thereafter shall be remitted from the Servicer to Seller
on such Settlement Date.
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Section 2.3 Collections Following Amortization. On the Amortization
Date and on each day thereafter, the Servicer shall set aside and hold in trust,
for the holder of each Purchaser Interest, all Collections received on such day
and an additional amount for the payment of any accrued and unpaid Obligations
owed by Seller and not previously paid by Seller in accordance with Section 2.1.
On and after the Amortization Date, the Servicer shall, at any time upon the
request from time to time by (or pursuant to standing instructions from) the
Agent (i) remit to the Agent's account the amounts set aside pursuant to the
preceding sentence, and (ii) apply such amounts to reduce the Capital associated
with each such Purchaser Interest and any other Aggregate Unpaids.
Section 2.4 Application of Collections. If there shall be insufficient
funds on deposit for the Servicer to distribute funds in payment in full of the
aforementioned amounts pursuant to Section 2.2 or 2.3 (as applicable), the
Servicer shall distribute funds:
first, to the payment of the Servicer's reasonable out-of-pocket costs
and expenses in connection with servicing, administering and collecting the
Receivables, including the Servicing Fee, if Factoring or one of its
Affiliates is not then acting as the Servicer,
second, to the reimbursement of the Agent's costs of collection and
enforcement of this Agreement,
third, ratably to the payment of all accrued CP Costs, accrued and
unpaid Yield and fees payable pursuant to the Fee Letter,
fourth, (to the extent applicable) to the ratable reduction of the
Aggregate Capital,
fifth, for the ratable payment of all other unpaid Obligations,
sixth, to the payment of the accrued and unpaid Servicing Fee, if
Factoring or one of its Affiliates is acting as the Servicer, and
seventh, after the Aggregate Unpaids have been indefeasibly reduced to
zero, to Seller.
Collections applied to the payment of Aggregate Unpaids shall be
distributed in accordance with the aforementioned provisions, and, giving effect
to each of the priorities set forth in this Section 2.4, shall be shared ratably
(within each priority) among the Agent and the Purchasers in accordance with the
amount of such Aggregate Unpaids owing to each of them in respect of each such
priority.
Section 2.5 Payment Rescission. No payment of any of the Aggregate
Unpaids shall be considered paid or applied hereunder to the extent that, at any
time, all or any portion of such payment or application is rescinded by
application of law or judicial authority, or must otherwise be returned or
refunded for any reason. Seller shall remain obligated for the amount of any
payment or application so rescinded, returned or refunded, and shall promptly
pay to the Agent (for application to the Person or Persons who suffered such
rescission, return or refund) the full amount thereof, plus the Default Fee from
the date of any such rescission, return or refunding.
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Section 2.6 Maximum Purchaser Interests. Seller shall ensure that the
Purchaser Interests of the Purchasers shall at no time exceed in the aggregate
100%. If the aggregate of the Purchaser Interests of the Purchasers exceeds
100%, Seller shall immediately pay to the Agent an amount to be applied to
reduce the Aggregate Capital (as allocated by the Agent), such that after giving
effect to such payment the aggregate of the Purchaser Interests equals or is
less than 100%.
Section 2.7 Clean Up Call. In addition to Seller's rights pursuant to
Section 1.3, Seller shall have the right (after providing written notice to the
Agent in accordance with the Required Notice Period), at any time following the
reduction of the Aggregate Capital to a level that is less than 10.0% of the
original Purchase Limit, to repurchase from the Purchasers all, but not less
than all, of the then outstanding Purchaser Interests. The purchase price in
respect thereof shall be an amount equal to the Aggregate Unpaids through the
date of such repurchase, payable in immediately available funds. Such repurchase
shall be without representation, warranty or recourse of any kind by, on the
part of, or against any Purchaser or the Agent.
ARTICLE III
COMPANY FUNDING
Section 3.1 CP Costs. Seller shall pay CP Costs with respect to the
Capital associated with each Purchaser Interest of Company for each day that any
Capital in respect of such Purchaser Interest is outstanding. Each Purchaser
Interest funded substantially with Pooled Commercial Paper will accrue CP Costs
each day on a pro rata basis, based upon the percentage share the Capital in
respect of such Purchaser Interest represents in relation to all assets held by
Company and funded substantially with Pooled Commercial Paper.
Section 3.2 CP Costs Payments. On each Settlement Date, Seller shall
pay to the Agent (for the benefit of Company) an aggregate amount equal to all
accrued and unpaid CP Costs in respect of the Capital associated with all
Purchaser Interests of Company for the immediately preceding Accrual Period in
accordance with Article II.
Section 3.3 Calculation of CP Costs. On the third Business Day
immediately preceding each Settlement Date, Company shall calculate the
aggregate amount of CP Costs for the applicable Accrual Period and shall notify
Seller of such aggregate amount.
ARTICLE IV
FINANCIAL INSTITUTION FUNDING
Section 4.1 Financial Institution Funding. The Agent shall notify the
Seller if the Purchaser Interest will be funded by Financial Institutions. Each
Purchaser Interest of the Financial Institutions shall accrue Yield for each day
during its Tranche Period at either the LIBO Rate or the Base Rate in accordance
with the terms and conditions hereof. Until Seller gives notice to the Agent of
another Discount Rate in accordance with Section 4.4, the initial Discount Rate
for any Purchaser Interest transferred to the Financial Institutions pursuant to
the terms and conditions hereof shall be the Base Rate. If the Financial
Institutions acquire by assignment from Company any Purchaser Interest pursuant
to the Liquidity Agreement, each Purchaser Interest so
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assigned shall each be deemed to have a new Tranche Period commencing on the
date of any such assignment.
Section 4.2 Yield Payments. On the Settlement Date for each Purchaser
Interest of the Financial Institutions, Seller shall pay to the Agent (for the
benefit of the Financial Institutions) an aggregate amount equal to the accrued
and unpaid Yield for the entire Tranche Period of each such Purchaser Interest
in accordance with Article II.
Section 4.3 Selection and Continuation of Tranche Periods.
(a) With consultation from (and approval by) the Agent, Seller shall
from time to time request Tranche Periods for the Purchaser Interests of the
Financial Institutions, provided that, if at any time the Financial Institutions
shall have a Purchaser Interest, Seller shall always request Tranche Periods
such that at least one Tranche Period shall end on the date specified in clause
(A) of the definition of Settlement Date.
(b) Seller or the Agent, upon notice to and consent by the other
received at least three (3) Business Days prior to the end of a Tranche Period
(the "Terminating Tranche") for any Purchaser Interest, may, effective on the
last day of the Terminating Tranche: (i) divide any such Purchaser Interest into
multiple Purchaser Interests, (ii) combine any such Purchaser Interest with one
or more other Purchaser Interests that have a Terminating Tranche ending on the
same day as such Terminating Tranche or (iii) combine any such Purchaser
Interest with new Purchaser Interests to be purchased on the day such
Terminating Tranche ends, provided, that in no event may a Purchaser Interest of
Company be combined with a Purchaser Interest of the Financial Institutions.
(c) Financial Institution Discount Rates. Seller may select the LIBO
Rate or the Base Rate for each Purchaser Interest of the Financial Institutions.
Seller shall by twelve noon (New York time): (i) at least three (3) Business
Days prior to the expiration of any Terminating Tranche with respect to which
the LIBO Rate is being requested as a new Discount Rate and (ii) at least one
(1) Business Day prior to the expiration of any Terminating Tranche with respect
to which the Base Rate is being requested as a new Discount Rate, give the Agent
irrevocable notice of the new Discount Rate for the Purchaser Interest
associated with such Terminating Tranche. Until Seller gives notice to the Agent
of another Discount Rate, the initial Discount Rate for any Purchaser Interest
transferred to the Financial Institutions pursuant to the terms and conditions
hereof shall be the Base Rate.
Section 4.4 Suspension of the LIBO Rate.
(a) If any Financial Institution notifies the Agent that it has
determined that funding its Pro Rata Share of the Purchaser Interests of the
Financial Institutions at a LIBO Rate would violate any applicable law, rule,
regulation or directive of any governmental or regulatory authority, whether or
not having the force of law, or that (i) deposits of a type and maturity
appropriate to match fund its Purchaser Interests at such LIBO Rate are not
available or (ii) such LIBO Rate does not accurately reflect the cost of
acquiring or maintaining a Purchaser Interest at such LIBO Rate, then the Agent
shall suspend the availability of such LIBO Rate and require Seller to select
the Base Rate for any Purchaser Interest accruing Yield at such LIBO Rate.
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(b) If less than all of the Financial Institutions give a notice to
the Agent pursuant to Section 4.5(a), each Financial Institution which gave such
a notice shall be obliged, at the request of Seller, Company or the Agent, to
assign all of its rights and obligations hereunder to (i) another Financial
Institution or (ii) another funding entity nominated by Seller or the Agent that
is acceptable to Company and willing to participate in this Agreement through
the Liquidity Termination Date in the place of such notifying Financial
Institution; provided that (i) the notifying Financial Institution receives
payment in full, pursuant to an Assignment Agreement, of an amount equal to such
notifying Financial Institution's Pro Rata Share of the Capital and Yield owing
to all of the Financial Institutions and all accrued but unpaid fees and other
costs and expenses payable in respect of its Pro Rata Share of the Purchaser
Interests of the Financial Institutions, and (ii) the replacement Financial
Institution otherwise satisfies the requirements of Section 12.1(b).
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.1 Representations and Warranties of the Seller Parties. Each
Seller Party hereby represents and warrants to the Agent and the Purchasers, as
to itself, as of the date hereof and as of the date of each Incremental Purchase
and the date of each Reinvestment that:
(a) Existence and Power. Such Seller Party is a limited liability
company duly organized, validly existing and in good standing under the laws of
its state of formation. Such Seller Party is duly qualified to do business and
is in good standing as a foreign limited liability company, and has and holds
all power, corporate or otherwise, and all governmental licenses,
authorizations, consents and approvals required to carry on its business in each
jurisdiction in which its business is conducted except where the failure to so
qualify or so hold could not reasonably be expected to have a Material Adverse
Effect.
(b) Power and Authority; Due Authorization, Execution and Delivery.
The execution and delivery by such Seller Party of this Agreement and each other
Transaction Document to which it is a party, and the performance of its
obligations hereunder and thereunder and, in the case of Seller, Seller's use of
the proceeds of purchases made hereunder, are within its powers, corporate or
otherwise, and authority and have been duly authorized by all necessary action,
corporate or otherwise, on its part. This Agreement and each other Transaction
Document to which such Seller Party is a party has been duly executed and
delivered by such Seller Party.
(c) No Conflict. The execution and delivery by such Seller Party of
this Agreement and each other Transaction Document to which it is a party, and
the performance of its obligations hereunder and thereunder do not contravene or
violate (i) its certificate of formation or limited liability company operating
agreement, (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 such Seller Party or its Subsidiaries (except as created hereunder)
except, in any case, where such contravention or violation could not
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reasonably be expected to have a Material Adverse Effect; and no transaction
contemplated hereby requires compliance with any bulk sales act or similar law.
(d) 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 and delivery by such Seller Party of this
Agreement and each other Transaction Document to which it is a party and the
performance of its obligations hereunder and thereunder.
(e) Actions, Suits. There are no actions, suits or proceedings
pending, or to the best of such Seller Party's knowledge, threatened, against or
affecting such Seller Party, or any of its properties, in or before any court,
arbitrator or other body, that could reasonably be expected to have a Material
Adverse Effect. Such Seller Party is not in default with respect to any order of
any court, arbitrator or governmental body (which, in the case of the Servicer,
could reasonably be expected to have a Material Adverse Effect).
(f) Binding Effect. This Agreement and each other Transaction Document
to which such Seller Party is a party constitute the legal, valid and binding
obligations of such Seller Party enforceable against such Seller Party 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 and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(g) Accuracy of Information. All information heretofore furnished by
such Seller Party or any of its Affiliates 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 (including without limitation, all Monthly Reports) hereafter
furnished by such Seller Party or any of its Affiliates to the Agent or the
Purchasers will be, 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 therein not misleading.
(h) Use of Proceeds. No proceeds of any purchase hereunder will be
used for a purpose that 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.
(i) Good Title. Immediately prior to each purchase hereunder, 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. There have been duly filed all financing statements
or other similar instruments or documents necessary under the UCC (or any
comparable law) of all appropriate jurisdictions to perfect Seller's ownership
interest in each Receivable, its Collections and the Related Security.
(j) Perfection. This Agreement and the Collection Account Agreements,
together with the filing of the financing statements contemplated hereby, are
effective to, and shall, upon each purchase hereunder, transfer to the Agent for
the benefit of the relevant Purchaser or Purchasers (and the Agent for the
benefit of such Purchaser or Purchasers shall
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acquire from Seller) a valid and perfected first priority undivided percentage
ownership interest or security 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.
There have been duly filed all financing statements or other similar instruments
or documents necessary under the UCC (or any comparable law) of all appropriate
jurisdictions to perfect the Agent's (on behalf of the Purchasers) ownership or
security interest in the Receivables, the Related Security and the Collections.
(k) Places of Business and Locations of Records. The principal places
of business and chief executive office of such Seller Party and the offices
where it keeps all of its Records are located at the address(es) listed on
Exhibit III or such other locations of which the Agent has been notified in
accordance with Section 7.2(a) in jurisdictions where all action required by
Section 13.4(a) has been taken and completed. Seller's Federal Employer
Identification Number and organizational identification number, if any, are
correctly set forth on Exhibit III.
(l) Collections. The conditions and requirements set forth in Section
7.1(j) and Section 8.2 have at all times been satisfied and duly performed. The
names and addresses of all Collection Banks, together with the account numbers
of the Collection Accounts of Seller at each Collection Bank and the post office
box number of each Lock-Box, are listed on Exhibit IV. Seller has not granted
any Person, other than the Agent as contemplated by this Agreement, dominion and
control of any Lock-Box or Collection Account, or the right to take dominion and
control of any such Lock-Box or Collection Account at a future time or upon the
occurrence of a future event.
(m) Material Adverse Effect. (i) The initial Servicer represents and
warrants that since the date of this Agreement, no event has occurred that would
have a material adverse effect on the financial condition or operations of the
initial Servicer and its Subsidiaries or the ability of the initial Servicer or
its Subsidiaries to perform their respective obligations under this Agreement,
and (ii) Seller represents and warrants that since the date of this Agreement,
no event has occurred that would have a material adverse effect on (A) the
financial condition or operations of Seller, (B) the ability of Seller to
perform its obligations under the Transaction Documents, or (C) the
collectibility of the Receivables generally or any material portion of the
Receivables.
(n) Names. In the past five (5) years, Seller has not used any
corporate names, trade names or assumed names other than the name in which it
has executed this Agreement.
(o) Ownership of Seller. Factoring owns, directly or indirectly, 100%
of the membership interests of Seller, free and clear of any Adverse Claim. Such
membership interests are validly issued, fully paid and nonassessable, and there
are no options, warrants or other rights to acquire membership interests of
Seller.
(p) Not an Investment Company. Such Seller Party is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
or any successor statute.
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(q) Compliance with Law. Such Seller Party has complied in all
respects with all applicable laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it may be subject, except where the
failure to so comply could not reasonably be expected to have a Material Adverse
Effect. Each Receivable, together with the Contract related thereto, does not
contravene any laws, rules or regulations applicable thereto (including, without
limitation, laws, rules and regulations relating to truth in lending, fair
credit billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy), and no part of such Contract is in violation
of any such law, rule or regulation, except where such contravention or
violation could not reasonably be expected to have a Material Adverse Effect.
(r) Compliance with Credit and Collection Policy. Such Seller Party
has complied in all material respects with the Credit and Collection Policy with
regard to each Receivable and the related Contract, and has not made any change
to such Credit and Collection Policy, other than as permitted under Section
7.2(c), and in compliance with the notification requirements in Section
7.1(a)(vii).
(s) Payments to Factoring. With respect to each Receivable transferred
to Seller under the Receivables Sale Agreement, Seller has given reasonably
equivalent value to Factoring in consideration therefor and such transfer was
not made for or on account of an antecedent debt. No transfer by Factoring of
any Receivable under the Receivables Sale Agreement is or may be voidable under
any section of the Bankruptcy Reform Act of 1978 (11 U.S.C. Sections 101 et
seq.), as amended.
(t) Enforceability of Contracts. Each Contract with respect to each
Receivable is effective to create, and has created, a legal, valid and binding
obligation of the related Obligor to pay the Outstanding Balance of the
Receivable created thereunder and any accrued interest thereon, enforceable
against the Obligor 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 and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(u) Eligible Receivables. Each Receivable included in the Net
Receivables Balance as an Eligible Receivable on the date of purchase under the
Receivables Sale Agreement was an Eligible Receivable on such purchase date.
(v) Net Receivables Balance. Seller has determined that, immediately
after giving effect to each purchase hereunder, the Net Receivables Balance is
at least equal to the sum of the Aggregate Capital plus the Aggregate Reserves.
(w) Accounting. The manner in which such Seller Party accounts for the
transactions contemplated by this Agreement and the Receivables Sale Agreement
does not jeopardize the true sale analysis.
(x) Purpose. Seller has determined that, from a business viewpoint,
the purchase of the Receivables and related interests thereto from Factoring
under the Receivables Sale Agreement, and the sale of Purchaser Interests to the
Purchasers and the other transactions contemplated herein, are in the best
interests of Seller.
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(y) Other Representations and Warranties. This Agreement is effective
to transfer to the Agent and the Purchasers, as assignees of Seller, the full
benefit of and a direct claim against each of Factoring and each Original Seller
in respect of each representation or warranty made by Factoring and each
Original Seller under any Transaction Document.
Section 5.2 Financial Institution Representations and Warranties. Each
Financial Institution hereby represents and warrants to the Agent and Company
that:
(a) Existence and Power. Such Financial Institution 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 and delivery by such Financial
Institution of this Agreement and the performance of its obligations 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 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 Financial Institution.
(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 and delivery by such Financial
Institution of this Agreement and the performance of its obligations hereunder.
(d) Binding Effect. This Agreement constitutes the legal, valid and
binding obligation of such Financial Institution enforceable against such
Financial Institution 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 and by general
principles of equity (regardless of whether such enforcement is sought in a
proceeding in equity or at law).
ARTICLE VI
CONDITIONS OF PURCHASES
Section 6.1 Conditions Precedent to Initial Incremental Purchase. The
initial Incremental Purchase of a Purchaser 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 B and the
Agent shall have received all fees and expenses required to be paid on such date
pursuant to the terms of this Agreement and the Fee Letter.
Section 6.2 Conditions Precedent to All Purchases and Reinvestments.
Each purchase of a Purchaser Interest (other than pursuant to the Liquidity
Agreement) and each Reinvestment shall be subject to the further conditions
precedent that in the case of each such purchase or Reinvestment: (a) the
Servicer shall have delivered to the Agent on or prior to the date
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of such purchase, in form and substance satisfactory to the Agent, all Monthly
Reports as and when due under Section 8.5; (b) the Facility Termination Date
shall not have occurred; (c) the Agent shall have received such other approvals,
opinions or documents as it may reasonably request related to any change (or
knowledge thereof) in law or circumstances which gives rise to concern that a
Material Adverse Effect shall have occurred or which could be reasonably
expected to have a Material Adverse Effect; and (d) on the date of each such
Incremental Purchase or Reinvestment, the following statements shall be true
(and acceptance of the proceeds of such Incremental Purchase or Reinvestment
shall be deemed a representation and warranty by Seller that such statements are
then true):
(i) the representations and warranties set forth in Section 5.1 are
true and correct on and as of the date of such Incremental Purchase or
Reinvestment as though made on and as of such date;
(ii) no event has occurred and is continuing, or would result from
such Incremental Purchase or Reinvestment, that will constitute an
Amortization Event, and no event has occurred and is continuing, or would
result from such Incremental Purchase, that would constitute a Potential
Amortization Event;
(iii) the Aggregate Capital does not exceed the Purchase Limit and the
aggregate Purchaser Interests do not exceed 100%; and
(iv) no involuntary proceeding of the type described in Section
9.1(d)(ii) has been instituted, and remains undismissed or unstayed,
against any Seller Party.
It is expressly understood that each Reinvestment shall, unless otherwise
directed by the Agent or any Purchaser, occur automatically on each day that the
Servicer shall receive any Collections without the requirement that any further
action be taken on the part of any Person and notwithstanding the failure of
Seller to satisfy any of the foregoing conditions precedent in respect of such
Reinvestment. The failure of Seller to satisfy any of the foregoing conditions
precedent in respect of any Reinvestment shall give rise to a right of the
Agent, which right may be exercised at any time on demand of the Agent, to
rescind the related purchase and direct Seller to pay to the Agent for the
benefit of the Purchasers an amount equal to the Collections prior to the
Amortization Date that shall have been applied to the affected Reinvestment.
ARTICLE VII
COVENANTS
Section 7.1 Affirmative Covenants of The Seller Parties. Until the
date on which the Aggregate Unpaids have been indefeasibly paid in full and this
Agreement terminates in accordance with its terms, each Seller Party hereby
covenants, as to itself, as set forth below:
(a) Reporting. Such Seller Party will maintain, for itself and each of
its Subsidiaries, a system of accounting established and administered in
accordance with GAAP, and furnish or cause to be furnished to the Agent:
(i) Annual Reporting. Within ninety (90) days after the close of each
of its respective fiscal years, unaudited financial statements (which shall
include balance
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sheets, statements of income and retained earnings and a statement of cash
flows) for such Seller Party for such fiscal year certified by its
respective Authorized Officer.
(ii) Quarterly Reporting. Within forty-five (45) days after the close
of the first three (3) quarterly periods of each of its respective fiscal
years, balance sheets of each Seller Party as at the close of each such
period and statements of income and retained earnings and a statement of
cash flows for each Seller Party for the period from the beginning of such
fiscal year to the end of such quarter, all certified by its respective
Authorized Officer.
(iii) Compliance Certificate. Together with the financial statements
required hereunder, a compliance certificate in substantially the form of
Exhibit V signed by such Seller Party's Authorized Officer and dated the
date of such annual financial statement or such quarterly financial
statement, as the case may be.
(iv) Shareholders Statements and Reports. Promptly upon the furnishing
thereof to the shareholders of such Seller Party copies of all financial
statements, reports and proxy statements so furnished.
(v) S.E.C. Filings. Promptly upon the filing thereof, copies of all
registration statements and annual, quarterly, monthly or other regular
reports which Provider or any of its Subsidiaries files with the Securities
and Exchange Commission.
(vi) Copies of Notices. Promptly 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 Company, copies of the same.
(vii) Change in Credit and Collection Policy. At least thirty (30)
days prior to the effectiveness of any material change in or material
amendment to the Credit and Collection Policy, a copy of the Credit and
Collection Policy then in effect and a notice (A) indicating such change or
amendment, and (B) if such proposed change or amendment would be reasonably
likely to have a Material Adverse Effect on the collectibility of the
Receivables or decrease the credit quality of any newly created
Receivables, requesting the Agent's consent thereto.
(viii) Other Information. Promptly, from time to time, such other
information, documents, records or reports relating to the Receivables or
the condition or operations, financial or otherwise, of such Seller Party
as the Agent may from time to time reasonably request in order to protect
the interests of the Agent and the Purchasers under or as contemplated by
this Agreement.
(b) Notices. Such Seller Party will notify the Agent in writing of any
of the following promptly upon learning of the occurrence thereof, describing
the same and, if applicable, the steps being taken with respect thereto:
(i) Amortization Events or Potential Amortization Events. The
occurrence of each Amortization Event and each Potential Amortization
Event, by a statement of an Authorized Officer of such Seller Party.
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(ii) Judgment and Proceedings. (A) The entry of any judgment or decree
against the Provider or any of its Subsidiaries if the aggregate amount of
all judgments and decrees then outstanding against the Provider and its
Subsidiaries, taken as a whole, exceeds $50,000,000; (B) the institution of
any litigation, arbitration proceeding or governmental proceeding against
the Provider or the Servicer or any of their respective Subsidiaries which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect; and (C) the entry of any judgment or decree or the
institution of any litigation, arbitration proceeding or governmental
proceeding against Seller.
(iii) Material Adverse Effect. The occurrence of any event or
condition that has had, or could reasonably be expected to have, a Material
Adverse Effect.
(iv) Amortization Date. The occurrence of the "Amortization Date"
under the Receivables Sale Agreement or any Transfer Agreement.
(v) Defaults Under Other Agreements. The occurrence of a default or an
event of default under any other financing arrangement in excess of
$50,000,000 pursuant to which the Provider is a debtor or an obligor.
(vi) Downgrade of Provider. Any downgrade in the rating of any
Indebtedness of Provider by Standard & Poor's Ratings Group or by Moody's
Investors Service, Inc., setting forth the Indebtedness affected and the
nature of such change.
(c) Compliance with Laws and Preservation of Existence. Such Seller
Party will comply in all respects with all applicable laws, rules, regulations,
orders, writs, judgments, injunctions, decrees or awards to which it may be
subject, except where the failure to so comply could not reasonably be expected
to have a Material Adverse Effect. Such Seller Party will preserve and maintain
its existence, rights, franchises and privileges in the jurisdiction of its
formation, and qualify and remain qualified in good standing as a foreign
limited liability company in each jurisdiction where its business is conducted,
except where the failure to so preserve and maintain or qualify could not
reasonably be expected to have a Material Adverse Effect.
(d) Audits. Such Seller Party will furnish to the Agent from time to
time such information with respect to it and the Receivables as the Agent may
reasonably request. Such Seller Party will, from time to time during regular
business hours as requested by the Agent upon reasonable notice and at the sole
cost of such Seller Party, permit the Agent, or its agents or representatives
(and shall cause Factoring and each Original Seller 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 such Person relating to
the Receivables and the Related Security, including, without limitation, the
related Contracts, and (ii) to visit the offices and properties of such Person
for the purpose of examining such materials described in clause (i) above, and
to discuss matters relating to such Person's financial condition or the
Receivables and the Related Security or any Person's performance under any of
the Transaction Documents or any Person's performance under the Contracts and,
in each case, with any of the officers or employees of Seller or the Servicer
having knowledge of such matters. Notwithstanding the
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foregoing, no Seller Party shall be liable for the cost of more than one (1)
such audit during each calendar year, starting with the year 2007, unless an
Amortization Event has occurred.
(e) Keeping and Marking of Records and Books.
(i) The Servicer will (and will cause Factoring and each Original
Seller 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 Servicer will (and will cause
Factoring and each Original Seller to) give the Agent notice of any
material change in the administrative and operating procedures referred to
in the previous sentence.
(ii) Such Seller Party will (and will cause Factoring and each
Original Seller to) (A) on or prior to the date hereof, mark its master
data processing records relating to the Purchaser Interests with a legend,
acceptable to the Agent, describing the Purchaser Interests and (B) after
the occurrence of an Amortization Event, upon the request of the Agent (x)
mark each Contract and other books and records relating to the Purchaser
Interests with a legend describing the Purchaser Interests and (y) 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. Such
Seller Party will (and will cause Factoring and each Original Seller 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.
(g) Performance and Enforcement of Receivables Sale Agreement. Seller
will, and will require Factoring and each Original Seller to, perform each of
their respective obligations and undertakings under and pursuant to the
Receivables Sale Agreement, will purchase Receivables thereunder in strict
compliance with the terms thereof and will vigorously enforce the rights and
remedies accorded to Seller under the Receivables Sale Agreement. Seller will
take all actions to perfect and enforce its rights and interests (and the rights
and interests of the Agent and the Purchasers as assignees of Seller) under the
Receivables Sale 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 Receivables Sale Agreement.
(h) Ownership. Seller will (or will cause Factoring and each Original
Seller to) take all necessary action to (i) vest legal and equitable title to
the Receivables, the Related Security and the Collections purchased under the
Receivables Sale Agreement irrevocably in Seller, free and clear of any Adverse
Claims other than Adverse Claims in favor of the Agent and the Purchasers
(including, without limitation, the filing of all financing statements or other
18
similar instruments or documents necessary under the UCC (or any comparable law)
of all appropriate jurisdictions to perfect Seller's interest in such
Receivables, Related Security and Collections and such other action to perfect,
protect or more fully evidence the interest of Seller therein as the Agent may
reasonably request), and (ii) establish and maintain, in favor of the Agent, for
the benefit of the Purchasers, a valid and perfected first priority undivided
percentage ownership interest (and/or a valid and perfected first priority
security interest) in all Receivables, Related Security and Collections to the
full extent contemplated herein, free and clear of any Adverse Claims other than
Adverse Claims in favor of the Agent for the benefit of the Purchasers
(including, without limitation, the filing of all financing statements or other
similar instruments or documents necessary under the UCC (or any comparable law)
of all appropriate jurisdictions to perfect the Agent's (for the benefit of the
Purchasers) interest in such Receivables, Related Security and Collections and
such other action to perfect, protect or more fully evidence the interest of the
Agent for the benefit of the Purchasers as the Agent may reasonably request).
(i) Purchasers' Reliance. Seller acknowledges that the Purchasers are
entering into the transactions contemplated by this Agreement in reliance upon
Seller's identity as a legal entity that is separate from Provider or any
Affiliate thereof. Therefore, from and after the date of execution and delivery
of this Agreement, 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 Seller's identity as a separate legal entity and
to make it manifest to third parties that Seller is an entity with assets and
liabilities distinct from those of Provider and any Affiliate thereof and not
just a division of Provider or any such Affiliate. Without limiting the
generality of the foregoing and in addition to the other covenants set forth
herein, Seller will:
(i) conduct its own business in its own name and require that all
full-time employees of Seller, if any, identify themselves as such and not
as employees of Provider or any Affiliate thereof (including, without
limitation, by means of providing appropriate employees with business or
identification cards identifying such employees as Seller's employees);
(ii) compensate all employees, consultants and agents directly, from
Seller's own funds, for services provided to Seller by such employees,
consultants and agents and, to the extent any employee, consultant or agent
of Seller is also an employee, consultant or agent of Provider or any
Affiliate thereof, allocate the compensation of such employee, consultant
or agent between Seller and Provider or such Affiliate, as applicable, on a
basis that reflects the services rendered to Seller and Provider or such
Affiliate, as applicable;
(iii) clearly identify its offices (by signage or otherwise) as its
offices and, if such office is located in the offices of Provider or any
Affiliate thereof, Seller shall lease such office at a fair market rent;
(iv) have a separate telephone number, which will be answered only in
its name and separate stationery, invoices and checks in its own name;
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(v) conduct all transactions with Provider, all Affiliates thereof and
the Servicer (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 Seller and Provider or
any Affiliate thereof 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 a Board of Directors consisting of at least
three members, at least one member of which is an Independent Director;
(vii) observe all limited liability company formalities as a distinct
entity, and ensure that all actions relating to (A) the selection,
maintenance or replacement of the Independent Director, (B) the dissolution
or liquidation of Seller or (C) the initiation of, participation in,
acquiescence in or consent to any bankruptcy, insolvency, reorganization or
similar proceeding involving Seller, are duly authorized by unanimous vote
of its Board of Directors (including the Independent Director);
(viii) maintain Seller's books and records separate from those of
Provider and any Affiliate thereof and otherwise readily identifiable as
its own assets rather than assets of Provider and any Affiliate thereof;
(ix) prepare its financial statements separately from those of
Provider and any Affiliate thereof and insure that any consolidated
financial statements of Provider or any Affiliate thereof that include
Seller and that are filed with the Securities and Exchange Commission or
any other governmental agency have notes clearly stating that Seller is a
separate legal entity and that its assets will be available first and
foremost to satisfy the claims of the creditors of Seller;
(x) except as herein specifically otherwise provided, maintain the
funds or other assets of Seller separate from, and not commingled with,
those of Provider or any Affiliate thereof and only maintain bank accounts
or other depository accounts to which Seller alone is the account party,
into which Seller alone makes deposits and from which Seller alone (or the
Agent hereunder) has the power to make withdrawals;
(xi) pay all of Seller's operating expenses from Seller's own assets
(except for certain payments by Provider or other Persons pursuant to
allocation arrangements that comply with the requirements of this Section
7.1(i));
(xii) operate its business and activities such that: it does 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 Receivables Sale Agreement; and does
not create, incur, guarantee, assume or suffer to exist any indebtedness or
other liabilities, whether direct or contingent, other than (1) as a result
of the endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business, (2) the incurrence
of obligations under this Agreement, (3) the incurrence of obligations, as
expressly contemplated in the Receivables Sale Agreement,
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to make payment to Factoring thereunder for the purchase of Receivables
from Factoring under the Receivables Sale Agreement, and (4) the incurrence
of operating expenses in the ordinary course of business of the type
otherwise contemplated by this Agreement;
(xiii) maintain its limited liability company charter in conformity
with this Agreement, such that it does not amend, restate, supplement or
otherwise modify its Certificate of Formation or limited liability company
operating agreement in any respect that would impair its ability to comply
with the terms or provisions of any of the Transaction Documents,
including, without limitation, this Section 7.1(i);
(xiv) maintain the effectiveness of, and continue to perform under the
Receivables Sale Agreement and the Factoring Performance Undertaking, such
that it does not amend, restate, supplement, cancel, terminate or otherwise
modify the Receivables Sale Agreement or the Factoring Performance
Undertaking, or give any consent, waiver, directive or approval thereunder
or waive any default, action, omission or breach under the Receivables Sale
Agreement or the Factoring Performance Undertaking or otherwise grant any
indulgence thereunder, without (in each case) the prior written consent of
the Agent;
(xv) maintain its legal separateness such that it does 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 substantially all of its assets
(whether now owned or hereafter acquired) to, or acquire all or
substantially all of the assets of, any Person, nor at any time create,
have, acquire, maintain or hold any interest in any Subsidiary.
(xvi) maintain at all times the Required Capital Amount (as defined in
the Receivables Sale Agreement) and refrain from making any dividend,
distribution, redemption of membership interests or payment of any
subordinated indebtedness which would cause the Required Capital Amount to
cease to be so maintained; and
(xvii) take such other actions as are necessary on its part to ensure
that the facts and assumptions set forth in the opinion issued by Mayer,
Brown Rowe & Maw LLP, as counsel for Seller, in connection with the closing
or initial Incremental 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.
(j) Collections. Such Seller Party will cause (1) all proceeds from
all Lock-Boxes to be directly deposited by a Collection Bank into a Collection
Account and (2) each Lock-Box and Collection Account to be subject at all times
to a Collection Account Agreement that is in full force and effect. In the event
any payments relating to Receivables are remitted directly to Seller or any
Affiliate of Seller, Seller will remit (or will cause all such payments to be
remitted) directly to a Collection Bank and deposited into a Collection Account
within two (2) Business Days following receipt thereof, and, at all times prior
to such remittance, Seller will itself hold or, if applicable, will cause such
payments to be held in trust for the exclusive benefit of the Agent and the
Purchasers. Seller will maintain exclusive ownership, dominion and control
(subject to the terms of this Agreement) of each Lock-Box and Collection Account
and shall not grant the right to take dominion and control of any Lock-Box or
Collection Account at a future
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time or upon the occurrence of a future event to any Person, except to the Agent
as contemplated by this Agreement and the Collection Account Agreements.
(k) Taxes. Such Seller Party will file all tax returns and reports
required by law to be filed by it and will promptly pay all taxes and
governmental charges at any time owing Seller will pay when due any taxes
payable in connection with the Receivables, exclusive of taxes on or measured by
income or gross receipts of Company, the Agent or any Financial Institution.
(l) Insurance. Seller will maintain in effect, or cause to be
maintained in effect, at Seller's own expense, such casualty and liability
insurance as Seller shall deem appropriate in its good faith business judgment.
The foregoing requirements shall not be construed to negate, reduce or modify,
and are in addition to, Seller's obligations hereunder.
(m) Payment to Factoring and Original Sellers. With respect to any
Receivable purchased by Seller from Factoring such sale shall be effected under,
and in strict compliance with the terms of, the Receivables Sale Agreement,
including, without limitation, the terms relating to the amount and timing of
payments to be made to Factoring in respect of the purchase price for such
Receivable. With respect to any Receivable purchased by Factoring from an
Original Seller, such sale shall be effected under, and in strict compliance
with the terms of, the applicable Transfer Agreement, including, without
limitation, the terms relating to the amount and timing of payments to be made
to each Original Seller in respect of the purchase price for such Receivable.
Section 7.2 Negative Covenants of the Seller Parties. Until the date
on which the Aggregate Unpaids have been indefeasibly paid in full and this
Agreement terminates in accordance with its terms, each Seller Party hereby
covenants, as to itself, that:
(a) Change in Organization, Etc. Such Seller Party will not change its
jurisdiction of organization, the location of any office at which Records are
maintained or its name, identity or corporate structure or make any other change
such that any financing statement filed or other action taken to perfect the
Agent's interests hereunder would or could become seriously misleading or would
otherwise be rendered ineffective, unless such Seller Party shall have given the
Agent not less than 30 days' prior written notice of such change and shall have
cured such circumstances. Each Seller Party shall at all times maintain its
jurisdiction of organization, its chief executive office, the location of the
Records and the offices from which it primarily services the Receivables within
a jurisdiction in the United States in which Article Nine of the UCC (2001 or
later revision) is in effect. In the event that a Seller Party shall change the
jurisdiction in which it is organized or otherwise enter into any transaction
which would result in a "new debtor" (as defined in the UCC), such Seller Party
shall comply with the terms of Section 7.1(h) hereof.
(b) Change in Payment Instructions to Obligors. Except as may be
required by the Agent pursuant to Section 8.2(b), such Seller Party will not add
or terminate any bank as a Collection Bank, or make any change in the
instructions to Obligors regarding payments to be made to any Lock-Box or
Collection Account, unless the Agent shall have received, at least ten (10) days
before the proposed effective date therefor, (i) written notice of such
addition, termination or change and (ii) with respect to the addition of a
Collection Bank or a Collection
22
Account or Lock-Box, an executed Collection Account Agreement with respect to
the new Collection Account or Lock-Box; provided, however, that the Servicer may
make changes in instructions to Obligors regarding payments if such new
instructions require such Obligor to make payments to another existing
Collection Account.
(c) Modifications to Contracts and Credit and Collection Policy. Such
Seller Party will not, and will not permit Factoring or any Original Seller to,
make any change to the Credit and Collection Policy that could materially and
adversely affect the collectibility of the Receivables or decrease the credit
quality of any newly created Receivables. Except as provided in Section 8.2(c),
the Servicer will not, and will not permit Factoring or any Original Seller 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. Seller will 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,
Related Security or Collections, or upon or with respect to any Contract under
which any Receivable arises, or any Lock-Box or Collection Account, or assign
any right to receive income with respect thereto (other than, in each case, the
creation of the interests therein in favor of the Agent and the Purchasers
provided for herein), and Seller will 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 Seller, Factoring
or any Original Seller. Seller will not create or suffer to exist any mortgage,
pledge, security interest, encumbrance, lien, charge or other similar
arrangement on any of its inventory.
(e) Net Receivables Balance. At no time prior to the Amortization Date
shall Seller permit the Net Receivables Balance to be less than an amount equal
to the sum of the Aggregate Capital plus the Aggregate Reserves.
(f) Termination Date Determination. Seller will not designate the
Termination Date (as defined in the Receivables Sale Agreement), or send any
written notice to Factoring in respect thereof, without the prior written
consent of the Agent, except with respect to the occurrence of such Termination
Date arising pursuant to Section 5.1(d) of the Receivables Sale Agreement.
(g) Restricted Junior Payments. From and after the occurrence of any
Amortization Event, Seller will not make any Restricted Junior Payment if, after
giving effect thereto, Seller would fail to meet its obligations set forth in
Section 7.2(e).
ARTICLE VIII
ADMINISTRATION AND COLLECTION
Section 8.1 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 8.1. Factoring 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
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after an Amortization Event, designate as Servicer any Person to succeed
Factoring or any successor Servicer.
(b) Without the prior written consent of the Agent, Factoring shall
not be permitted to delegate any of its duties or responsibilities as Servicer
to any Person other than, with respect to certain Charged-Off Receivables,
outside collection agencies in accordance with its customary practices.
(c) Notwithstanding the foregoing subsection (b), (i) Factoring 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
Factoring in matters relating to the discharge by the Servicer of its duties and
responsibilities hereunder. The Agent and the Purchasers shall not be required
to give notice, demand or other communication to any Person other than Factoring
in order for communication to the Servicer and its sub-servicer or other
delegate with respect thereto to be accomplished. Factoring, at all times that
it is the Servicer, shall be responsible for providing any sub-servicer or other
delegate of the Servicer with any notice given to the Servicer under this
Agreement.
Section 8.2 Duties of Servicer. 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.
(a) The Servicer will instruct all Obligors to pay all Collections
directly to a Lock-Box or Collection Account. The Servicer shall effect a
Collection Account Agreement substantially in the form of Exhibit VI with each
bank party to a Collection Account at any time. In the case of any remittances
received in any Lock-Box or Collection Account that shall have been identified,
to the satisfaction of the Servicer, to not constitute Collections or other
proceeds of the Receivables or the Related Security, the Servicer shall promptly
remit such items to the Person identified to it as being the owner of such
remittances. From and after the date the Agent delivers to any Collection Bank a
Collection Notice pursuant to Section 8.3, the Agent may request that the
Servicer, and the Servicer thereupon promptly shall, instruct all Obligors with
respect to the Receivables to remit all payments thereon to a new depositary
account specified by the Agent and, at all times thereafter, Seller and the
Servicer shall not deposit or otherwise credit, and shall not permit any other
Person to deposit or otherwise credit to such new depositary account any cash or
payment item other than Collections.
(b) The Servicer shall administer the Collections in accordance with
the procedures described herein and in Article II. The Servicer shall set aside
and hold in trust for the account of Seller and the Purchasers their respective
shares of the Collections in accordance with Article II. The Servicer shall,
upon the request of the Agent after an Amortization Event, 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 Seller prior to the remittance thereof in accordance with Article
II. 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
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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 determines 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
Charged-Off Receivable or limit the rights of the Agent or the Purchasers under
this Agreement. Notwithstanding anything to the contrary contained herein, after
an Amortization Event, 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; provided,
that the Agent has given the Seller seven (7) days' prior notice and during such
notice period the Outstanding Balance of such Receivable has not been reduced to
zero.
(d) The Servicer shall hold in trust for Seller and the Purchasers all
Records that (i) evidence or relate to the Receivables, the related Contracts
and Related Security or (ii) are otherwise necessary or desirable to collect the
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 Seller 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 Article II.
(e) Any payment by an Obligor in respect of any indebtedness owed by
it to an Original Seller, Factoring or Seller 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 8.3 Collection Notices. The Agent is authorized at any time
after an Amortization Event to date and to deliver to the Collection Banks the
Collection Notices. Seller hereby transfers to the Agent for the benefit of the
Purchasers, effective when the Agent delivers such notice, the exclusive
ownership and control of each Lock-Box and the Collection Accounts. In case any
authorized signatory of Seller whose signature appears on a Collection Account
Agreement shall cease to have such authority before the delivery of such notice,
such Collection Notice shall nevertheless be valid as if such authority had
remained in force. Seller hereby authorizes the Agent, and agrees that the Agent
shall be entitled to (i) endorse 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
Seller.
Section 8.4 Responsibilities of Seller. Anything herein to the
contrary notwithstanding, the exercise by the Agent and the Purchasers of their
rights hereunder shall not release the Servicer, the applicable Original Seller,
Factoring or Seller from any of their duties or
25
obligations with respect to any Receivables or under the related Contracts. The
Purchasers shall have no obligation or liability with respect to any Receivables
or related Contracts, nor shall any of them be obligated to perform the
obligations of Seller.
Section 8.5 Reports. The Servicer shall prepare and forward to the
Agent (i) on each Monthly Reporting Date and at such times as the Agent shall
request, a Monthly Report and (ii) at such times as the Agent shall request, a
listing by Obligor of all Receivables together with an aging of such
Receivables.
Section 8.6 Servicing Fees. (a) In consideration of Factoring's
agreement to act as Servicer hereunder, so long as Factoring shall continue to
perform as Servicer hereunder, Seller shall pay to Factoring a fee (the
"Servicing Fee") on each Settlement Date, in arrears for the immediately
preceding calendar month, equal to 1.0% per annum of the average aggregate
Outstanding Balance of all Receivables during such period. The Servicing Fee
shall be the exclusive compensation to Factoring for its services as Servicer
and reimbursement for all of its costs and expenses as Servicer, and neither the
Seller nor any other party hereto shall have any obligation to reimburse
Factoring in respect of any costs or expenses suffered or incurred by Factoring
in such capacity, all of which are intended to be covered by the Servicing Fee.
Factoring acknowledges that its claim for payment of the Servicing Fee is a
limited recourse claim, payable only on the terms and conditions set forth in,
and to the extent of available funds under, Section 2.4 hereof.
(b) In the event that Factoring is replaced as Servicer pursuant to
Section 8.1(a), in consideration of such replacement Servicer's agreement to act
as Servicer hereunder, the Purchasers hereby agree that, so long as such
replacement Servicer shall continue to perform as Servicer hereunder, Seller
shall pay the Servicing Fee over to such replacement Servicer, which such fee
shall be paid at such times and in such reasonable amounts as agreed to by the
Agent and such replacement Servicer.
ARTICLE IX
AMORTIZATION EVENTS
Section 9.1 Amortization Events. The occurrence of any one or more of
the following events shall constitute an Amortization Event (each an
"Amortization Event"):
(a) Any Seller Party shall fail (i) to make any payment or deposit
required hereunder or (ii) to perform or observe any term, covenant or agreement
hereunder (other than as referred to in clause (i) of this paragraph (a) and
Section 9.1(d)) and such failure shall continue for five (5) consecutive
Business Days.
(b) Any representation, warranty, certification or statement made by
any Seller Party in this Agreement, any other Transaction Document or in any
other document delivered pursuant hereto or thereto shall prove to have been
incorrect when made or deemed made; provided, however, that (i) any breach of
the representations and warranties set forth in Sections 5.1(i), (t) or (u)
shall not constitute an Amortization Event unless such breach or breaches apply
in the aggregate to a material portion of the Receivables, and (ii) the
occurrence of an immaterial error in any Monthly Report shall not constitute an
Amortization Event.
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(c) Failure of Seller to pay any Indebtedness when due or the failure
of any other Seller Party or Provider to pay Indebtedness in excess of
$50,000,000 when due (in each case, after giving effect to any applicable grace
periods) unless waived in writing by the holder or holders of such Indebtedness;
or, the default by any Seller Party or Provider in the performance of any term,
provision or condition contained in any agreement under which any such
Indebtedness was created or is governed (in each case, after giving effect to
any applicable grace periods), 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, unless waived in writing by the holder or holders
of such Indebtedness; or any such Indebtedness of any Seller Party or Provider
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.
(d) Any Seller Party or Provider or any of their respective
Subsidiaries 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 (ii) any proceeding shall be
instituted by or against any Seller Party or Provider or any of their respective
Subsidiaries 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, and, in the case of any
such involuntary proceeding instituted against Provider, such proceeding remains
undismissed or unstayed for a period in excess of sixty (60) days; or (iii) any
Seller Party or Provider or any of their respective Subsidiaries shall take any
action to authorize any of the actions set forth in clauses (i) or (ii) above in
this subsection (d).
(e) Seller shall fail to comply with the terms of Section 2.6 hereof
(Maximum Purchaser Interests).
(f) As at the end of any calendar month,
(i) the average of the Delinquency Ratios as at the end of such month
and the two preceding months shall exceed 5.25%; or
(ii) the average of the Loss-to-Liquidation Ratios as at the end of
such month and the two preceding months shall exceed 2.25%; or
(iii) the average of the Dilution Ratios as at the end of such month
and the two preceding months shall exceed 8.75%.
(g) A Change of Control shall occur.
(h) (i) One or more final judgments for the payment of money shall be
entered against Seller or (ii) one or more final judgments for the payment of
money in an amount in excess of $50,000,000, individually or in the aggregate,
shall be entered against the Servicer, any Original Seller, Factoring or
Provider, taken as a whole, on claims not covered by insurance or as to which
the insurance carrier has denied its responsibility, and such judgment shall
continue unsatisfied and in effect for thirty (30) consecutive days without a
stay of execution.
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(i) (i) (A) The "Amortization Date" under and as defined in the
Receivables Sale Agreement shall occur, (B) Factoring shall for any reason cease
to transfer or cease to have the legal capacity to transfer, or otherwise be
incapable of transferring Receivables to Seller under the Receivables Sale
Agreement, or (C) Seller or Factoring shall cease to perform any of their
respective material obligations and undertaking under and pursuant to the
Receivables Sale Agreement or shall fail to enforce the rights and remedies
accorded under the Receivables Sale Agreement after the occurrence of such
failure; or (ii) (A) the "Amortization Date" under and as defined in any
Transfer Agreement shall occur, (B) any Original Seller shall for any reason
cease to transfer or cease to have the legal capacity to transfer, or otherwise
be incapable of transferring Receivables to Factoring under any Transfer
Agreement, or (C) Factoring or any Original Seller shall cease to perform any of
their respective material obligations and undertakings under and pursuant to any
Transfer Agreement or shall fail to enforce the rights and remedies accorded
under such Transfer Agreement after the occurrence of such failure.
(j) This Agreement shall terminate in whole or in part (except in
accordance with its terms), or shall cease to be effective or to be the legally
valid, binding and enforceable obligation of Seller, or any Obligor shall
directly or indirectly contest in any manner such effectiveness, validity,
binding nature or enforceability, or the Agent for the benefit of the Purchasers
shall cease to have a valid and perfected first priority security interest in
the Receivables, the Related Security and the Collections with respect thereto
and the Collection Accounts.
(k) Provider shall fail to perform or observe any term, covenant or
agreement required to be performed by it under either the Servicer Performance
Undertaking or the Factoring Performance Undertaking, or either the Servicer
Performance Undertaking or the Factoring Performance Undertaking shall cease to
be effective or to be the legally valid, binding and enforceable obligation of
Provider, or Provider shall directly or indirectly contest in any manner such
effectiveness, validity, binding nature or enforceability.
(l) Pactiv shall fail to comply with the financial covenants set forth
in Section 7.1 of the Pactiv Loan Agreement as is in effect on the date hereof
or as amended from time to time pursuant to any amendment which is consented to
in writing by the Agent (after giving effect to any applicable grace periods or
waivers which are consented to in writing by the Agent).
(m) An event has occurred that would have a material adverse effect on
the financial condition or operations of Pactiv that could affect the value or
collectability of the Receivables.
Section 9.2 Remedies. Upon the occurrence and during the continuation
of an Amortization Event, the Agent may, or upon the direction of the Required
Financial Institutions shall, take any of the following actions: (i) replace the
Person then acting as Servicer, (ii) declare the Amortization Date to have
occurred, whereupon the Amortization Date shall forthwith occur, without demand,
protest or further notice of any kind, all of which are hereby expressly waived
by each Seller Party; provided, however, that upon the occurrence of an
Amortization Event described in Section 9.1(d), or of an actual or deemed entry
of an order for relief with respect to any Seller Party under the Federal
Bankruptcy Code, the Amortization Date shall automatically occur, without
demand, protest or any notice of any kind, all of which are hereby expressly
28
waived by each Seller Party, (iii) to the fullest extent permitted by applicable
law, declare that the Default Fee shall accrue with respect to any of the
Aggregate Unpaids outstanding at such time, (iv) deliver the Collection Notices
to the Collection Banks, and (v) notify Obligors of the Purchasers' interest in
the Receivables. The aforementioned rights and remedies shall be without
limitation, and shall be in addition to all other rights and remedies of the
Agent and the Purchasers otherwise available under any other provision of this
Agreement, by operation of law, at equity or otherwise, all of which are hereby
expressly preserved, including, without limitation, all rights and remedies
provided under the UCC, all of which rights shall be cumulative.
ARTICLE X
INDEMNIFICATION
Section 10.1 Indemnities by the Seller Parties. Without limiting any
other rights that the Agent or any Purchaser or any Funding Source or any of
their respective assigns, officers, directors, agents and employees (each an
"Indemnified Party") may have hereunder or under applicable law, (A) Seller
hereby agrees to indemnify (and pay upon demand to) each 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, and (B) the
Servicer hereby agrees to indemnify (and pay upon demand to) each Indemnified
Party for Indemnified Amounts awarded against or incurred by any of them arising
out of the Servicer's activities as Servicer hereunder excluding, however, in
all of the foregoing instances under the preceding clauses (A) and (B):
(i) Indemnified Amounts to the extent a final judgment of a court of
competent jurisdiction holds that such Indemnified Amounts resulted from
gross negligence or willful misconduct on the part of the Indemnified Party
seeking indemnification;
(ii) Indemnified Amounts to the extent the same includes losses in
respect of Receivables that are uncollectible on account of the insolvency,
bankruptcy or lack of creditworthiness of the related Obligor; or
(iii) taxes on the net income (and taxes in lieu thereof) and
franchise taxes of the Indemnified Party, in each case to the extent
imposed by the jurisdiction of organization (or any subdivision thereof) of
such Indemnified Party or any jurisdiction (or subdivision thereof) where
the transactions contemplated herein are booked by such indemnified party
or where such transactions are otherwise effectively connected in respect
of such Indemnified Party;
provided, however, that nothing contained in this sentence shall limit the
liability of any Seller Party or limit the recourse of the Purchasers to any
Seller Party for amounts otherwise specifically provided to be paid by such
Seller Party under the terms of this Agreement.
Without limiting the generality of the foregoing indemnification, Seller and
Servicer, as applicable, shall indemnify the Agent and the Purchasers for
Indemnified Amounts (including,
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without limitation, losses in respect of uncollectible Receivables (other than
losses resulting solely from the circumstances described in clause (ii) above),
regardless of whether reimbursement therefor would constitute recourse to Seller
or the Servicer) relating to or resulting from:
(1) any representation or warranty made by any Seller Party, Factoring
or any Original Seller (or any officers of any such Person) under or in
connection with this Agreement, any other Transaction Document or any other
information or report delivered by any such Person pursuant hereto or
thereto, which shall have been false or incorrect when made or deemed made;
(2) the failure by any Seller Party, Factoring or any Original Seller
to comply with any applicable law, rule or regulation with respect to any
Receivable or Contract related thereto, or the nonconformity of any
Receivable or Contract included therein with any such applicable law, rule
or regulation or any failure of any Original Seller to keep or perform any
of its obligations, express or implied, with respect to any Contract;
(3) any failure of any Seller Party, Factoring or any Original Seller
to perform its duties, covenants or other obligations in accordance with
the provisions of this Agreement or any other Transaction Document;
(4) any products liability, personal injury or damage suit, or other
similar claim arising out of or in connection with merchandise, insurance
or services that are the subject of any Contract or any Receivable;
(5) 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;
(6) the commingling of Collections of Receivables at any time with
other funds;
(7) any investigation, litigation or proceeding related to or arising
from this Agreement or any other Transaction Document, the transactions
contemplated hereby, the use of the proceeds of an Incremental Purchase or
a Reinvestment, the ownership of the Purchaser Interests or any other
investigation, litigation or proceeding relating to any Seller Party,
Factoring or any Original Seller in which any Indemnified Party becomes
involved as a result of any of the transactions contemplated hereby;
(8) 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;
(9) any Amortization Event described in Section 9.1(d);
30
(10) any failure of Seller to acquire and maintain legal and equitable
title to, and ownership of any Receivable and the Related Security and
Collections with respect thereto from Factoring, free and clear of any
Adverse Claim (other than as created hereunder); or any failure of Seller
to give reasonably equivalent value to Factoring under the Receivables Sale
Agreement in consideration of the transfer by Factoring of any Receivable,
or any attempt by any Person to void such transfer under statutory
provisions or common law or equitable action;
(11) any failure of Factoring to acquire and maintain legal and
equitable title to, and ownership of any Receivable and the Related
Security and Collections with respect thereto from any Original Seller,
free and clear of any Adverse Claim (other than as created hereunder); or
any failure of Factoring to give reasonably equivalent value to any
Original Seller under the related Transfer Agreement in consideration of
the transfer by such Original Seller of any Receivable, or any attempt by
any Person to void such transfer under statutory provisions or common law
or equitable action;
(12) any failure to vest and maintain vested in the Agent for the
benefit of the Purchasers, or to transfer to the Agent for the benefit of
the Purchasers, legal and equitable title to, and ownership of, a first
priority perfected undivided percentage ownership interest (to the extent
of the Purchaser Interests contemplated hereunder) or security interest in
the Receivables, the Related Security and the Collections, free and clear
of any Adverse Claim (except as created by the Transaction Documents);
(13) the failure to have filed, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to any
Receivable, the Related Security and Collections with respect thereto, and
the proceeds of any thereof, whether at the time of any Incremental
Purchase or Reinvestment or at any subsequent time;
(14) any action or omission by any Seller Party which reduces or
impairs the rights of the Agent or the Purchasers with respect to any
Receivable or the value of any such Receivable;
(15) any attempt by any Person to void any Incremental Purchase or
Reinvestment hereunder under statutory provisions or common law or
equitable action;
(16) the failure of any Receivable included in the calculation of the
Net Receivables Balance as an Eligible Receivable to be an Eligible
Receivable at the time so included; and
(17) any claim by any Obligor under a Contract that the transfer, sale
or assignment of the rights and duties of an Original Seller or any of its
assignees under such Contract is not valid without the express consent of
such Obligor.
Section 10.2 Increased Costs and Reduced Return. (a) 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
31
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) that subjects any Funding Source to any charge or withholding on
or with respect to any Funding Agreement or this 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 taxes excluded by Section 10.1) or
(ii) that 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) that has the effect of reducing the rate of return on such
Funding Source's capital to a level below that which such Funding Source
could have achieved but for such adoption, change or compliance (taking
into consideration such Funding Source's policies concerning capital
adequacy) or
(iv) that imposes any other condition
and the result of any of the foregoing is (x) to impose a cost on, or increase
the cost to, any Funding Source of its commitment under any Funding Agreement or
of purchasing, maintaining or funding any interest acquired under any Funding
Agreement, (y) to reduce the amount of any sum received or receivable by, or to
reduce the rate of return of, any Funding Source under any Funding Agreement or
(z) to require any payment calculated by reference to the amount of interests
held or amounts received by it hereunder, then, upon demand by the Agent, Seller
shall pay to the Agent, for the benefit of the relevant Funding Source, such
amounts charged to such Funding Source or such amounts to otherwise compensate
such Funding Source for such increased cost or such reduction. Any demand by
Agent pursuant to the preceding sentence shall not cover a period of more than
ninety days preceding the date of such demand.
(b) Each Funding Source agrees that on the occurrence of any event
giving rise to the operation of this Section with respect to such Funding
Source, it will, if requested by the Seller, use reasonable efforts (subject to
overall policy considerations of such Funding Source) to designate another
office for any credit accommodation affected by such event, provided that such
designation is made on such terms that such Funding Source and its office suffer
no economic, legal or regulatory disadvantage, with the object of avoiding the
consequence of the event giving rise to the operation of such Section. In
calculating such amounts, such Funding Source shall use reasonable attribution
methods and such amounts shall not be unreasonable in relation to the amounts
charged to other parties, if any, the terms and circumstances of whose
relationship with such Funding Source are similar to those of Seller.
Section 10.3 Other Costs and Expenses. Seller shall pay to the Agent
and Company on demand all costs and out-of-pocket expenses in connection with
the preparation, execution, delivery and administration of this Agreement, the
transactions contemplated hereby
32
and the other documents to be delivered hereunder, including without limitation,
the cost of Company's auditors auditing the books, records and procedures of
Seller (subject to the limitations of Section 7.1(d)), reasonable fees and
out-of-pocket expenses of legal counsel for Company and the Agent (which such
counsel may be employees of Company or the Agent) with respect thereto and with
respect to advising Company and the Agent as to their respective rights and
remedies under this Agreement. 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 an Amortization Event.
ARTICLE XI
THE AGENT
Section 11.1 Authorization and Action. Each Purchaser hereby
designates and appoints Calyon 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 any Seller Party or any of such Seller Party's successors or assigns. The
Agent shall not be required to take any action that exposes the Agent to
personal liability or that 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 file the Uniform Commercial Code
financing statements and execute the Fee Letter and the Collection Account
Agreements on behalf of such Purchaser (the terms of which shall be binding on
such Purchaser).
Section 11.2 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 11.3 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 any Seller Party contained in this Agreement, any other
Transaction Document or any certificate, report, statement or other document
referred to or provided for in, or
33
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
any Seller Party to perform its obligations hereunder or thereunder, or for the
satisfaction of any condition specified in Article VI, or for the perfection,
priority, condition, value or sufficiency of 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 Parties. The Agent shall not be deemed to have knowledge of any
Amortization Event or Potential Amortization Event unless the Agent has received
notice from Seller or a Purchaser.
Section 11.4 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 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 Company or the Required Financial Institutions 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 Company or
the Required Financial Institutions 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 11.5 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 any Seller
Party, 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 Seller and
made its own decision to enter into this Agreement, the other Transaction
Documents and all other documents related hereto or thereto.
Section 11.6 Reimbursement and Indemnification. The Financial
Institutions 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 Parties (i) for
any amounts for which the Agent, acting in its capacity as Agent, is entitled to
reimbursement by the Seller Parties 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.
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Section 11.7 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 Seller or any Affiliate of Seller as though the Agent were
not the Agent hereunder. With respect to the acquisition of Purchaser Interests
pursuant to this Agreement, the Agent shall have the same rights and powers
under this Agreement in its individual capacity as any Purchaser and may
exercise the same as though it were not the Agent, and the terms "Financial
Institution," "Purchaser," "Financial Institutions" and "Purchasers" shall
include the Agent in its individual capacity.
Section 11.8 Successor Agent. The Agent may, upon five days' notice to
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 Financial Institutions 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 Financial
Institutions 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 Seller and the
Servicer (as applicable) 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 XI and Article X shall continue in effect for its
benefit with respect to any actions taken or omitted to be taken by it while it
was Agent under this Agreement and under the other Transaction Documents.
ARTICLE XII
ASSIGNMENTS; PARTICIPATIONS
Section 12.1 Assignments.
(a) Seller and each Financial Institution hereby agree and consent to
the complete or partial assignment by Company of all or any portion of its
rights under, interest in, title to and obligations under this Agreement to the
Financial Institutions pursuant to the Liquidity Agreement or to any other
Person, and upon such assignment, Company shall be released from its obligations
so assigned. Further, Seller and each Financial Institution hereby agree that
any assignee of Company of this Agreement or all or any of the Purchaser
Interests of Company shall have all of the rights and benefits under this
Agreement as if the term "Company" explicitly referred to such party, and no
such assignment shall in any way impair the rights and benefits of Company
hereunder. Neither Seller nor the Servicer shall have the right to assign its
rights or obligations under this Agreement.
(b) Any Financial Institution may at any time and from time to time
assign to one or more Persons ("Purchasing Financial Institutions") all or any
part of its rights and obligations under this Agreement pursuant to an
assignment agreement (the "Assignment Agreement") executed by such Purchasing
Financial Institution and such selling Financial Institution. The consent of
Company shall be required prior to the effectiveness of any such assignment.
Each assignee of a Financial Institution must (i) have a short-term debt rating
of A-1 or better by Standard & Poor's Ratings Group and P-1 by Moody's Investors
Service, Inc. and (ii)
35
agree to deliver to the Agent, promptly following any request therefor by the
Agent or Company, an enforceability opinion in form and substance satisfactory
to the Agent and Company. Upon delivery of the executed Assignment Agreement to
the Agent, such selling Financial Institution shall be released from its
obligations hereunder to the extent of such assignment. Thereafter the
Purchasing Financial Institution shall for all purposes be a Financial
Institution party to this Agreement and shall have all the rights and
obligations of a Financial Institution under this Agreement to the same extent
as if it were an original party hereto and no further consent or action by
Seller, the Purchasers or the Agent shall be required.
(c) Each of the Financial Institutions agrees that in the event that
it shall cease to have a short-term debt rating of A-1 or better by Standard &
Poor's Ratings Group and P-1 by Moody's Investors Service, Inc. (an "Affected
Financial Institution"), such Affected Financial Institution shall be obliged,
at the request of Company or the Agent, to assign all of its rights and
obligations hereunder to (x) another Financial Institution or (y) another
funding entity nominated by the Agent and acceptable to Company, and willing to
participate in this Agreement through the Liquidity Termination Date in the
place of such Affected Financial Institution; provided that the Affected
Financial Institution receives payment in full, pursuant to an Assignment
Agreement, of an amount equal to such Financial Institution's Pro Rata Share of
the Aggregate Capital and Yield owing to the Financial Institutions and all
accrued but unpaid fees and other costs and expenses payable in respect of its
Pro Rata Share of the Purchaser Interests of the Financial Institutions.
(d) Participations. Any Financial Institution 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 Purchaser
Interests of the Financial Institutions, or any other interest of such Financial
Institution hereunder. Notwithstanding any such sale by a Financial Institution
of a participating interest to a Participant, such Financial Institution's
rights and obligations under this Agreement shall remain unchanged, such
Financial Institution shall remain solely responsible for the performance of its
obligations hereunder, and Seller, Company and the Agent shall continue to deal
solely and directly with such Financial Institution in connection with such
Financial Institution's rights and obligations under this Agreement. Each
Financial Institution agrees that any agreement between such Financial
Institution and any such Participant in respect of such participating interest
shall not restrict such Financial Institution's right to agree to any amendment,
supplement, waiver or modification to this Agreement, except for any amendment,
supplement, waiver or modification described in Section 13.1(b)(i)(A-F).
ARTICLE XIII
MISCELLANEOUS
Section 13.1 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
36
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 13.1(b). Company, Seller and the Agent, at the direction (or with the
consent) of the Required Financial Institutions, 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 Seller or the Servicer, (B) reduce the rate or extend the
time of payment of Yield or any other CP Costs (or any component of Yield
or CP Costs), (C) reduce any fee payable to the Agent for the benefit of
the Purchasers, (D) except pursuant to Article XII hereof, change the
amount of the Capital of any Purchaser, any Financial Institution's Pro
Rata Share (except pursuant to the Liquidity Agreement) or any Financial
Institution's Commitment, (E) amend, modify or waive any provision of the
definition of Required Financial Institutions or this Section 13.1(b), (F)
consent to or permit the assignment or transfer by Seller of any of its
rights and obligations under this Agreement, (G) change the definition of
"Aggregate Reserves," "Concentration Limit," "Delinquency Ratio," "Dilution
Ratio," "Dilution Reserve," "Dilution Reserve Ratio," "Eligible
Receivable," "Loss Reserve," "Loss Reserve Ratio," "Loss-to-Liquidation
Ratio," "Net Receivables Balance," "Servicing Reserve," or "Yield Reserve,"
(H) release the Provider from its obligations under the Servicer
Performance Undertaking or the Factoring Performance Undertaking or (I)
amend or modify any defined term (or any defined term used directly or
indirectly in such defined term) used in clauses (A) through (H) above in a
manner that would circumvent the intention of the restrictions set forth in
such clauses; 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 Financial
Institutions, the Agent may amend this Agreement solely to add additional
Persons as Financial Institutions hereunder and (ii) the Agent, the Required
Financial Institutions and Company may enter into amendments to modify any of
the terms or provisions of Article XI or Section 13.13 without the consent of
Seller, provided that such amendment has no negative impact upon Seller. Any
modification or waiver made in accordance with this Section 13.1 shall apply to
each of the Purchasers equally and shall be binding upon Seller, the Purchasers
and the Agent.
Section 13.2 Notices. Except as provided in this Section 13.2, all
communications and notices provided for hereunder shall be in writing (including
bank wire, telecopy or electronic 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 or at such other address or
telecopy number as such Person may hereafter specify for the purpose of notice
to each of the other parties hereto. Each such notice or other communication
shall be effective if given by telecopy or other electronic transmission, upon
confirmation of the receipt thereof, if given by mail, three (3) Business Days
after the time such communication is deposited
37
in the mail with first class postage prepaid or if given by any other means,
when received at the address specified in this Section 13.2. 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 Seller. Seller agrees to deliver
promptly to the Agent a written confirmation of each telephonic notice signed by
an Authorized Officer of Seller; provided, 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 13.3 Ratable Payments. If any Purchaser, whether by setoff or
otherwise, has payment made to it with respect to any portion of the Aggregate
Unpaids owing to such Purchaser (other than payments received pursuant to
Section 10.2 or 10.3) 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 such Aggregate Unpaids held by the other Purchasers so
that after such purchase each Purchaser will hold its ratable proportion of such
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.
Section 13.4 Protection of Ownership Interests of the Purchasers.
(a) 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 Purchaser Interests, or to enable
the Agent or the Purchasers to exercise and enforce their rights and remedies
hereunder. At any time after an Amortization Event, the Agent may, or the Agent
may direct Seller or the Servicer to, notify the Obligors of Receivables, at
Seller's expense, of the ownership or security 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. Seller or the Servicer (as applicable) shall, at any Purchaser's
request, withhold the identity of such Purchaser in any such notification.
(b) If any Seller Party 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 obligations, and the Agent's or such
Purchaser's costs and expenses incurred in connection therewith shall be payable
by Seller as provided in Section 10.3. Each Seller Party 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 such Seller
Party 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. This appointment is coupled with
an interest and is irrevocable.
Section 13.5 Confidentiality.
(a) Each Seller Party and each Purchaser shall maintain and shall
cause each of its employees and officers to maintain the confidentiality of this
Agreement and the other confidential or proprietary information with respect to
the Agent and Company and their
38
respective businesses obtained by it or them in connection with the structuring,
negotiating and execution of the transactions contemplated herein, except that
such Seller Party and such Purchaser and its officers and employees may disclose
such information to such Seller Party's and such Purchaser's external
accountants and attorneys, the financial institutions party to the Pactiv Loan
Agreement, and as required by any applicable law or order of any judicial or
administrative proceeding.
(b) The Agent, the Company and each Financial Institution shall
maintain and shall cause each of its employees and officers to maintain the
confidentiality of the confidential or proprietary information with respect to
the Seller Parties and the Original Sellers and their respective businesses
obtained by it or them in connection with the structuring, negotiating and
execution of the transactions contemplated herein; provided, however, that each
Seller Party hereby consents to the disclosure of any nonpublic information with
respect to it (i) to the Agent, the Financial Institutions or Company by each
other, (ii) by the Agent or the Purchasers to any prospective or actual assignee
or participant of any of them and (iii) by the Agent to any rating agency,
Commercial Paper dealer or provider of a surety, guaranty or credit or liquidity
enhancement to Company or any entity organized for the purpose of purchasing, or
making loans secured by, financial assets for which Calyon acts as the
administrative agent and to any officers, directors, employees, outside
accountants and attorneys of any of the foregoing, provided each such Person is
informed of the confidential nature of such information, and (except in the case
of rating agencies) agrees to keep such information confidential. 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 13.6 Bankruptcy Petition. Each Seller Party, the Agent and
each Financial Institution hereby covenants and agrees that, prior to the date
that is one year and one day after the payment in full of all Commercial Paper
and other outstanding senior indebtedness of Company, it will not institute
against, or join any other Person in instituting against, Company or any such
entity 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 13.7 Limitation of Liability. Except with respect to any claim
arising out of the willful misconduct or gross negligence of Company, the Agent
or any Financial Institution, no claim may be made by any Seller Party or any
other Person against Company, the Agent or any Financial Institution 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 each Seller Party hereby waives,
releases, and agrees not to sue upon any claim for any such damages, whether or
not accrued and whether or not known or suspected to exist in its favor.
Section 13.8 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK AND THE MANDATORY
CHOICE OF LAW PROVISIONS SET FORTH IN ARTICLE 9 OF THE NEW YORK UCC (WITHOUT
GIVING EFFECT TO THE CONFLICT
39
OF LAWS PRINCIPLES THEREOF OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW, WHICH SHALL APPLY HERETO).
Section 13.9 CONSENT TO JURISDICTION. EACH SELLER PARTY HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED
BY SUCH PERSON PURSUANT TO THIS AGREEMENT AND EACH SELLER PARTY 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 ANY SELLER PARTY IN THE COURTS OF ANY OTHER JURISDICTION.
ANY JUDICIAL PROCEEDING BY ANY SELLER PARTY AGAINST THE AGENT OR ANY PURCHASER
OR ANY AFFILIATE OF THE AGENT OR ANY PURCHASER INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH SELLER PARTY PURSUANT TO THIS
AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK, NEW YORK.
Section 13.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO 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 ANY
SELLER PARTY PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER OR THEREUNDER.
Section 13.11 Integration; Binding Effect; Survival of Terms.
(a) This Agreement and each other Transaction Document 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) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns
(including any trustee in bankruptcy). This Agreement shall create and
constitute the continuing obligations of the parties hereto in accordance with
its terms and shall remain in full force and effect until terminated in
accordance with its terms; provided, however, that the rights and remedies with
respect to (i) any breach of any representation and warranty made by any Seller
Party pursuant to Article V, (ii) the indemnification and payment provisions of
Article X, and Sections 13.5, 13.6 and 13.15 shall be continuing and shall
survive any termination of this Agreement.
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Section 13.12 Counterparts; Severability; Section References. 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. Delivery of an executed counterpart of a signature page to
this Agreement by telecopier or other electronic means shall be effective as
delivery of a manually executed counterpart of this 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. Unless otherwise
expressly indicated, all references herein to "Article," "Section," "Schedule"
or "Exhibit" shall mean articles and sections of, and schedules and exhibits to,
this Agreement.
Section 13.13 Calyon Roles. Each of the Financial Institutions
acknowledges that Calyon acts, or may in the future act, (i) as administrative
agent for Company or any Financial Institution, (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 Company or any Financial Institution (collectively, the
"Calyon Roles"). Without limiting the generality of this Section 13.13, each
Financial Institution hereby acknowledges and consents to any and all Calyon
Roles and agrees that in connection with any Calyon Role, Calyon may take, or
refrain from taking, any action that it, in its discretion, deems appropriate,
including, without limitation, in its role as administrative agent for Company,
and the giving of notice to the Agent of a mandatory purchase pursuant to the
Liquidity Agreement.
Section 13.14 Characterization.
(a) It is the intention of the parties hereto that each purchase
hereunder shall constitute and be treated as an absolute and irrevocable sale,
which purchase shall provide the applicable Purchaser with the full benefits of
ownership of the applicable Purchaser Interest. Except as specifically provided
in this Agreement, each sale of a Purchaser Interest hereunder is made without
recourse to Seller; provided, however, that (i) Seller shall be liable to each
Purchaser and the Agent for all representations, warranties, covenants and
indemnities made by Seller pursuant to the terms of this Agreement, (ii) such
sale does not constitute and is not intended to result in an assumption by any
Purchaser or the Agent or any assignee thereof of any obligation of Seller,
Factoring, any Original Seller or any other person arising in connection with
the Receivables, the Related Security or the related Contracts, or any other
obligations of Seller, Factoring or any Original Seller, and (iii) such sale may
be considered debt for tax purposes.
(b) In addition to any ownership interest which the Agent may from
time to time acquire pursuant hereto, Seller hereby grants to the Agent for the
ratable benefit of the Purchasers a valid and perfected security interest in all
of Seller's right, title and interest in, to and under (but none of the Seller's
obligations under) the following assets now existing or hereafter arising: the
Receivables Sale Agreement (including the right of the Seller to compel
performance and otherwise exercise all remedies thereunder), all Receivables,
the Collections, each Lock-Box, each Collection Account, all Related Security,
all other rights and payments relating to such Receivables, and all proceeds of
any of the foregoing, and all other assets in which the Agent has acquired, may
hereafter acquire and/or purport to have acquired an interest
41
hereunder, prior to all other liens on and security interests therein to secure
the prompt and complete payment of the Aggregate Unpaids. The Agent and the
Purchasers shall have, in addition to the rights and remedies that they may have
under this Agreement, all other rights and remedies provided to a secured
creditor under the UCC and other applicable law, which rights and remedies shall
be cumulative.
Section 13.15 Excess Funds. The Company shall not be obligated to pay
any amount pursuant to this Agreement unless the Company has excess cash flow
from operations or has received funds with respect to such obligation which may
be used to make such payment and which funds or excess cash flow are not
required to repay when due the Commercial Paper of the Company. Any and all
claims against the Company under this Agreement shall be subordinate to the
claims of the holders of the Commercial Paper. Any amount which the Company does
not pay pursuant to the operation of the preceding sentence shall not constitute
a claim, as defined in Section 101(5) of the United States Bankruptcy Code,
against the Company for any such insufficiency unless and until the Company does
have excess cash flow or excess funds.
[SIGNATURE PAGES FOLLOW]
42
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.
PACTIV RSA LLC, as Seller
By: /s/ Gregory A. Hanson
------------------------------------
Name: Gregory A. Hanson
Title: President
PACTIV RSA LLC
1900 West Field Court
Lake Forest, Illinois 60045
Attn: General Counsel
Fax: (847) 482-4544 (Attn: Greg Hanson)
Fax: (847) 615-6621 (Attn: General
Counsel)
Email: ghanson@pactiv.com
dbrekke@pactiv.com
PACTIV FACTORING LLC, as Servicer
By: /s/ Gregory A. Hanson
------------------------------------
Name: Gregory A. Hanson
Title: President
PACTIV FACTORING LLC
1900 West Field Court
Lake Forest, Illinois 60045
Attn: General Counsel
Fax: (847) 482-4544 (Attn: Greg Hanson)
Fax: (847) 615-6621 (Attn: General
Counsel)
Email: ghanson@pactiv.com
dbrekke@pactiv.com
ATLANTIC ASSET SECURITIZATION LLC
By: /s/ Gary Miller
------------------------------------
Name: Gary Miller
Title: Managing Director
By: /s/ Michael Guarda
------------------------------------
Name: Michael Guarda
Title: Director
Atlantic Asset Securitization LLC
c/o Calyon New York Branch
1301 Avenue of the Americas
New York, NY 10019
Fax: (212) 459-3528
Email: conduitsec@calyon.com
CALYON NEW YORK BRANCH, as a Financial
Institution and as Agent
By: /s/ Gary Miller
------------------------------------
Name: Gary Miller
Title: Managing Director
By: /s/ Michael Guarda
------------------------------------
Name: Michael Guarda
Title: Director
Calyon New York Branch
Debt Capital Markets - Liquid Assets
Securitization
1301 Avenue of the Americas
New York, NY 10019
Fax: (212) 459-3528
Email: conduitsec@calyon.com
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 each 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
thereafter.
"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.
"Affected Financial Institution" has the meaning specified in Section
12.1(c).
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person or any Subsidiary of such 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" has the meaning set forth in the preamble to this Agreement.
"Aggregate Capital" means, on any date of determination, the aggregate
amount of Capital of all Purchaser Interests outstanding on such date.
"Aggregate Reduction" has the meaning specified in Section 1.3.
"Aggregate Reserves" means, on any date of determination, the sum of the
Loss Reserve, the Yield Reserve, the Servicing Reserve and the Dilution Reserve.
"Aggregate Unpaids" means, at any time, an amount equal to the sum of all
Aggregate Capital and all other unpaid Obligations (whether due or accrued) at
such time.
"Agreement" means this Receivables Purchase Agreement, as it may be amended
or modified and in effect from time to time.
"Amortization Date" means the earliest to occur of (i) the day on which any
of the conditions precedent set forth in Section 6.2 are not satisfied, (ii) the
Business Day immediately prior to the occurrence of an Amortization Event set
forth in Section 9.1(d), (iii) the Business Day specified in a written notice
from the Agent following the occurrence of any other Amortization Event, and
(iv) the date which is thirty (30) days after the Agent's receipt of written
notice from Seller that it wishes to terminate the facility evidenced by this
Agreement.
"Amortization Event" has the meaning specified in Article IX.
Exh. I-1
"Assignment Agreement" has the meaning set forth in Section 12.1(b).
"Authorized Officer" means, with respect to any Person, its president,
corporate controller, treasurer or chief financial officer.
"Base Rate" means a rate per annum equal to the higher of (i) the corporate
base rate, prime rate or base rate of interest, as applicable, announced by
Calyon New York Branch in New York, New York from time to time, changing when
and as such rate changes and (ii) the sum of the Federal Funds Rate and 2%.
"Broken Funding Costs" means for any Purchaser Interest which: (i) has its
Capital reduced without compliance by Seller with the notice requirements
hereunder or (ii) does not become subject to an Aggregate Reduction following
the delivery of any Reduction Notice or (iii) is assigned or terminated prior to
the date on which it was originally scheduled to end; an amount equal to the
excess, if any, of (A) the CP Costs or Yield (as applicable) that would have
accrued during the remainder of the Tranche Periods or the tranche periods for
Commercial Paper determined by the Agent to relate to such Purchaser Interest
(as applicable) subsequent to the date of such reduction, assignment or
termination (or in respect of clause (ii) above, the date such Aggregate
Reduction was designated to occur pursuant to the Reduction Notice) of the
Capital of such Purchaser Interest if such reduction, assignment or termination
had not occurred or such Reduction Notice had not been delivered, over (B) the
sum of (x) to the extent all or a portion of such Capital is allocated to
another Purchaser Interest, the amount of CP Costs or Yield actually accrued
during the remainder of such period on such Capital for the new Purchaser
Interest, and (y) to the extent such Capital is not allocated to another
Purchaser Interest, the income, if any, actually received during the remainder
of such period by the holder of such Purchaser Interest from investing the
portion of such Capital not so allocated. In the event that the amount referred
to in clause (B) exceeds the amount referred to in clause (A), the relevant
Purchaser or Purchasers agree to pay to Seller the amount of such excess. All
Broken Funding Costs shall be due and payable hereunder upon demand.
Notwithstanding any contrary provision herein, Broken Funding Costs shall be
calculated without giving effect to clause (ii) of the definition of LIBO Rate.
"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.
"Calyon" means Calyon New York Branch in its individual capacity and its
successors.
"Capital" of any Purchaser Interest means, at any time, (A) the Purchase
Price of such Purchaser Interest, minus (B) 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 in accordance with the terms and conditions of
this Agreement; provided that such Capital shall be restored (in accordance with
Section 2.5) in the amount of any Collections or other payments so
Exh. I-2
received and applied if at any time the distribution of such Collections or
payments are rescinded, returned or refunded for any reason.
"Change of Control" means (i) with respect to Provider, 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 20% or more of the outstanding
shares of voting stock of Provider, (ii) with respect to Factoring, the failure
of Provider to own directly, free and clear of all Adverse Claims, all of the
membership interests of Factoring, or (iii) with respect to Seller, the failure
of Factoring to own directly, free and clear of all Adverse Claims, all of the
membership interests of Seller.
"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 9.1(d) (as if references to Seller Party 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 Seller's books as uncollectible, (iv) which has been identified
by Seller as uncollectible or (v) as to which any payment, or part thereof,
remains unpaid for ninety-one (91) days or more from the original due date for
such payment.
"Collection Account" means each concentration account, depositary account,
lock-box account or similar account in which any Collections are collected or
deposited and which is listed on Exhibit IV.
"Collection Account Agreement" means an agreement substantially in the form
of Exhibit VI among Factoring, Seller, the Agent, an Original Seller and a
Collection Bank.
"Collection Bank" means, at any time, any of the banks holding one or more
Collection Accounts.
"Collection Notice" means a notice, in substantially the form of Annex A to
Exhibit VI, 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 yield, Finance Charges or other related amounts accruing in
respect thereof and all cash proceeds of Related Security with respect to such
Receivable.
"Commercial Paper" means promissory notes of Company issued by Company in
the commercial paper market.
"Commitment" means, for each Financial Institution, the commitment of such
Financial Institution to purchase Purchaser Interests from Seller and Company,
in an amount not to exceed (i) in the aggregate, the amount set forth opposite
such Financial Institution's name on Schedule A to this Agreement, as such
amount may be modified in accordance with the terms hereof and (ii) with respect
to any individual purchase hereunder, its Pro Rata Share of the Purchase Price
therefor.
Exh. I-3
"Commitment Termination Date" means December 10, 2012, as such date may be
extended by agreement of the parties hereto.
"Company" has the meaning set forth in the preamble to this Agreement.
"Concentration Limit" means, at any time, for any Obligor, 2.5% of the
aggregate Eligible Receivables Balance at such time, or such other amount (a
"Special Concentration Limit") for such Obligor designated by the Agent;
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; and provided, further, that the Agent may, upon not less than
three (3) Business Days' notice to Seller, cancel any Special Concentration
Limit. As of the date hereof, (i) a Special Concentration Limit is designated by
the Agent for Walmart/Sam's Club equal to 20.0% of the aggregate Eligible
Receivables Balance, (ii) a Special Concentration Limit is designated by the
Agent for Bunzl equal to 5.0% of the aggregate Eligible Receivables Balance and
(iii) Special Concentration Limits equal to specified percentages of the
Eligible Receivables Balance will be available for Obligors who have the
specified short-term ratings (or the equivalent long-term ratings as set forth
in Schedule C hereto) as set forth below:
Short-Term Rating of Obligor Special Concentration Limit
- ---------------------------- ---------------------------
At least A-1+ and P-1 10.0%
At least A-1 and P-1 10.0%
At least A-2 and P-2 8.0%
At least A-3 and P-3 4.0%
"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, 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
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, invoices or other writings pursuant to which such Receivable arises
or which evidences such Receivable.
"Contractual Dilutions" means, at any time, those Dilutions which are not
Floating Dilutions, as shown in the Monthly Report.
"CP Costs" means, for each day,
(a) with respect to Commercial Paper issued to finance the Company's
acquisition of Purchaser Interests hereunder which is not Pooled Commercial
Paper, the sum of (i) Yield accrued on such Commercial Paper on such day
plus (ii) any and all accrued commissions in respect of placement agents
and Commercial Paper dealers allocable to such Commercial Paper, and any
issuing and paying agent fees incurred, in respect of such Commercial Paper
for such day, minus (iii) any payment received on such
Exh. I-4
day net of expenses in respect of Broken Funding Costs related to the
prepayment of any Purchaser Interest of Company and
(b) with respect to Pooled Commercial Paper, the sum of (i) discount
or yield accrued on Pooled Commercial Paper on such day, plus (ii) any and
all accrued commissions in respect of placement agents and Commercial Paper
dealers, and issuing and paying agent fees incurred, in respect of such
Pooled Commercial Paper for such day, plus (iii) 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 (iv) any accrual of income net of expenses received on such day
from investment of collections received under all receivable purchase
facilities funded substantially with Pooled Commercial Paper, minus (v) any
payment received on such day net of expenses in respect of Broken Funding
Costs related to the prepayment of any Purchaser Interest of Company
pursuant to the terms of any receivable purchase facilities funded
substantially with Pooled Commercial Paper. In addition to the foregoing
costs, if Seller shall request any Incremental Purchase during any period
of time determined by the Agent in its sole discretion to result in
incrementally higher CP Costs applicable to such Incremental Purchase, the
Capital associated with any such Incremental Purchase shall, during such
period, be deemed to be funded by Company in a special pool (which may
include capital associated with other receivable purchase facilities) for
purposes of determining such additional CP Costs applicable only to such
special pool and charged each day during such period against such Capital.
"CP Rate" for any Accrual Period or portion thereof for any Purchaser
Interest means, to the extent Company funds such Purchaser Interest for such
Accrual Period or portion thereof by issuing Commercial Paper, the rate (or if
more than one rate, the weighted average of the rates) at which Commercial Paper
notes of Company having a term equal to such Accrual Period or portion thereof
or portion thereof and to be issued to fund such Purchaser Interest may be sold
by any placement agent or commercial paper dealer selected by the Agent on
behalf of Company, as agreed between each such agent or dealer and the Agent and
notice of which has been given by the Agent to the Servicer; provided if the
rate (or rates) as agreed between any such agent or dealer and the Agent for any
Accrual Period or portion thereof for any Purchaser Interest is a discount rate
(or rates), then such rate shall be the rate (or if more than one rate, the
weighted average of the rates) resulting from converting such discount rate (or
rates) to an interest-bearing equivalent rate per annum.
"Credit and Collection Policy" means Seller's credit and collection
policies and practices relating to Contracts and Receivables existing on the
date hereof and summarized in Exhibit VII hereto, as modified from time to time
in accordance with this Agreement.
"Days Sales Outstandings" means, on any date, the product of (a) the number
of days in the month most recently ended and (b) the amount obtained by dividing
(i) the Outstanding Balance of Receivables as of the last day of such month by
(ii) the aggregate dollar amount of Receivables created during such month.
Exh. I-5
"Deductions" means, at any time, the Outstanding Balance of all Receivables
that are related to short payments under investigation, as shown in the Monthly
Report.
"Deemed Collections" means the aggregate of all amounts Seller shall have
been deemed to have received as a Collection of a Receivable. Seller shall be
deemed to have received a Collection in respect of a Receivable (i) in the
amount by which the Outstanding Balance of any such Receivable is at any time
either (x) reduced as a result of any defective or rejected goods or services,
any discount or any adjustment or otherwise by Seller (other than cash
Collections on account of the Receivables) or (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
(ii) in the full amount of any such Receivable if any of the representations or
warranties in clauses (i), (j), (k), (l), (q), (r), (s), (t) or (u) of Section
5.1 are no longer true with respect to such Receivable.
"Default Fee" means with respect to any amount due and payable by Seller in
respect of any Aggregate Unpaids, an amount equal to the greater of (i) $1000
and (ii) interest on any such unpaid Aggregate Unpaids at a rate per annum equal
to 2% above the Base Rate.
"Default Proxy Ratio" means, for any calendar month, a fraction (calculated
as a percentage) equal to (i) the aggregate Outstanding Balance of all
Receivables (without duplication and excluding the Deductions) which, as of the
last day of such calendar month, remain unpaid for at least sixty-one (61) but
less than ninety-one (91) days from the original due date plus the aggregate
Outstanding Balance of all Receivables (without duplication) which, consistent
with the Credit and Collection Policy, were or should have been written off the
Seller's books as uncollectible during such calendar month, divided by (ii) the
aggregate Outstanding Balance of all Receivables generated during the calendar
month which ended on the date three (3) months prior to the last day of the
current calendar month.
"Delinquency Ratio" means, for any calendar month, a percentage equal to
(i) the aggregate Outstanding Balance of all Receivables that were Delinquent
Receivables as of the last day of such calendar month divided by (ii) the
aggregate Outstanding Balance of all Receivables (excluding the Deductions) as
of the last day of such calendar month.
"Delinquent Receivable" means a Receivable as to which any payment, or part
thereof, remains unpaid for sixty-one (61) days or more from the original due
date for such payment (but does not include any Receivables which are already
part of the Deductions).
"Designated Obligor" means an Obligor indicated by the Agent to Seller in
writing.
"Dilution Horizon Ratio" means, as of any date as set forth in the most
recent Monthly Report, a ratio computed by dividing (i) the aggregate of all
Receivables generated during the two (2) most recently ended calendar months by
(ii) the aggregate Net Receivables Balance plus Contractual Dilutions as of the
last day of the most recently ended calendar month.
"Dilution Ratio" means, for any calendar month, the ratio (expressed as a
percentage) computed as of the last day of such calendar month by dividing (i)
the aggregate amount of Floating Dilutions during such calendar month, by (ii)
the aggregate Outstanding Balance of all
Exh. I-6
Receivables generated during the calendar month which ended on the date two (2)
months prior to the last day of the current calendar month.
"Dilution Reserve" means, on any date, an amount equal to the product of
(i) the Dilution Reserve Ratio then in effect times (ii) the Aggregate Capital
as of the close of business on the immediately preceding Business Day; provided,
however, that as long as the long-term public senior debt rating of Pactiv is at
least BBB- by Standard & Poor's Ratings Group and at least Baa3 by Moody's
Investors Service, Inc., the Dilution Reserve shall be zero.
"Dilution Reserve Ratio" means, as of any date, an amount calculated as
follows:
Dilution Reserve Ratio = [(2.25 x ADR) + [(HDR - ADR) x (HDR/ADR)]] x DHR
where:
ADR = the average of the Dilution Ratios for the most recent twelve
calendar months;
HDR = the highest three month rolling average of the Dilution Ratios
during the most recent twelve calendar months; and
DHR = the Dilution Horizon Ratio.
The Dilution Reserve Ratio shall be calculated monthly in each Monthly Report
and such Dilution Reserve Ratio shall, absent manifest error, be effective from
the corresponding Settlement Date until the next succeeding Settlement Date.
"Dilutions" means, at any time, the aggregate amount of reductions or
cancellations described in clause (i) of the definition of "Deemed Collections."
"Discount Rate" means, the LIBO Rate or the Base Rate, as applicable, with
respect to each Purchaser Interest of the Financial Institutions.
"Eligible Receivable" means, at any time, a Receivable:
(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 Receivables as to
which any payment, or part thereof, remains unpaid for 61 days or more past
the original due date if the sum of such unpaid amounts equal more than 25%
of the aggregate Outstanding Balance of all Receivables due from such
Obligor or its Affiliates,
Exh. I-7
(iii) which is not a Charged-Off Receivable or a Delinquent
Receivable,
(iv) (1) which by its terms is due and payable within 30 days of the
original billing date therefor and has not had its payment terms extended,
or (2) which by its terms is due and payable at least 31 but less than 62
days after the original billing date therefor and has not had its payment
terms extended, provided, that the Outstanding Balance of such Receivable,
when added to the Outstanding Balance of all other Receivables which by
their terms are due and payable at least 31 but less than 62 days after the
original billing date therefor, shall not exceed 25% of the aggregate
Outstanding Balance of all Receivables,
(v) which is an "account" within the meaning of Section 9-102 (or any
successor section) of the UCC of all applicable jurisdictions,
(vi) which is denominated and payable only in United States dollars in
the United States,
(vii) 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,
(viii) which arises under a Contract which does not contain a
confidentiality provision that purports to restrict the ability of any
Purchaser to exercise its rights under this Agreement, including, without
limitation, its right to review the Contract,
(ix) 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 an Original Seller,
(x) 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,
(xi) which satisfies all applicable requirements of the Credit and
Collection Policy,
(xii) which was generated in the ordinary course of an Original
Seller's business,
(xiii) which arises solely from the sale of goods or the provision of
services to the related Obligor by an Original Seller, and not by any other
Person (in whole or in part),
Exh. I-8
(xiv) as to which the Agent has not notified Seller that the Agent has
determined that such Receivable or class of Receivables is not acceptable
as an Eligible Receivable.
(xv) which is not subject to any asserted right of rescission, set-off
or counterclaim or any other defense (including defenses arising out of
violations of usury laws) of the applicable Obligor against an Original
Seller or any other Adverse Claim, and the Obligor thereon holds no right
as against an Original Seller to cause such Original Seller to repurchase
the goods or merchandise the sale of which shall have given rise to such
Receivable (except with respect to sale discounts effected pursuant to the
Contract, or defective goods returned in accordance with the terms of the
Contract),
(xvi) as to which the applicable Original Seller 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,
(xvii) all right, title and interest to and in which has been validly
transferred by the applicable Original Seller to Factoring in accordance
with a Transfer Agreement and, thereafter, by Factoring directly to Seller
under and in accordance with the Receivables Sale Agreement, and Seller has
good and marketable title thereto free and clear of any Adverse Claim, and
(xviii) which is not a note receivable or for an amount related to
sales taxes.
"Eligible Receivables Balance" means, at any time, the Outstanding Balance
of all Eligible Receivables (excluding any Finance Charges) less the amounts
specified in the Monthly Report as the Contractual Dilutions and the Deductions.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Excluded Receivable" means any indebtedness or other obligations owed to
Pactiv, whether constituting an account, chattel paper, instrument or general
intangible (i) bearing on the face of the invoice with respect thereto the logo,
trade name or trademark "Molded Fibre" or (ii) arising from the operation of the
former Pactiv facilities located at 838 North Delsea Drive, Clayton, New Jersey
or 39 Pierce Industrial Park, Shelbyville, Kentucky, or (iii) for which the
Obligor is AlliedSignal, Inc.
"Facility Account" means Seller's Account No. 35097861 at Northern Trust
Bank.
"Facility Termination Date" means the earlier of (i) the Liquidity
Termination Date, (ii) the Amortization Date and (iii) the Commitment
Termination Date.
"Factoring Performance Undertaking" means that certain Factoring
Performance Undertaking, dated as of December 28, 2000, by Provider in favor of
the Seller, as the same may be amended, restated or otherwise modified from time
to time.
Exh. I-9
"Federal Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy," as amended and any successor statute thereto.
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate per annum for each day during such period equal to (a) the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the preceding
Business Day) by the Federal Reserve Bank of New York in the Composite Closing
Quotations for U.S. Government Securities; or (b) if such rate is not so
published for any day which is a Business Day, the average of the quotations at
approximately 11:30 a.m. (New York time) for such day on such transactions
received by the Agent from three federal funds brokers of recognized standing
selected by it.
"Fee Letter" means that certain letter agreement, dated as of the date
hereof, among Seller, the Company and the Agent, as it may be amended or
modified and in effect from time to time.
"Finance Charges" means, with respect to a Receivable, any finance,
interest, late payment charges or similar charges owing by an Obligor pursuant
to the related Contract.
"Financial Institutions" has the meaning set forth in the preamble in this
Agreement.
"Floating Dilutions" means, at any time, Dilutions which are not subject to
or limited by an arrangement or agreement with the related Obligor, existing at
the time the related Receivable is generated, in connection with early payment
or volume or other types of purchases.
"Funding Agreement" means this Agreement and any agreement or instrument
executed by any Funding Source with or for the benefit of Company.
"Funding Source" means (i) any Financial Institution or (ii) any insurance
company, bank or other funding entity providing liquidity, credit enhancement or
back-up purchase support or facilities to Company.
"GAAP" means generally accepted accounting principles in effect in the
United States of America from time to time.
"Incremental Purchase" means a purchase of one or more Purchaser Interests
which increases the total outstanding Aggregate 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, (vii)
Exh. I-10
Contingent Obligations and (viii) liabilities in respect of unfunded vested
benefits under plans covered by Title IV of ERISA.
"Independent Director" shall mean a member of the Board of Directors of
Seller who (i) is an individual with at least three (3) years' prior experience
in transactions involving the securitization of financial assets, and prior
experience as an independent director for an entity (other than Seller) whose
charter documents require the unanimous consent of all independent directors,
partners or members before such entity could file a bankruptcy proceeding or
consent to the institution of bankruptcy proceedings against it and (ii) is not
at such time, and has not been at any time during the preceding five (5) years,
(a) a director, member, officer, employee or affiliate of Seller, Factoring,
Provider or any of their respective Subsidiaries or Affiliates (other than any
such Subsidiary or Affiliate which is a special purpose entity engaged solely in
the purchase and sale of financial assets in connection with the securitization
of such assets), or (b) the beneficial owner (at the time of such individual's
appointment as an Independent Director or at any time thereafter while serving
as an Independent Director) of any of the outstanding common shares or
membership interest of Seller, Factoring, Provider, or any of their respective
Subsidiaries or Affiliates, having general voting rights.
"LIBO Rate" means the rate per annum equal to the sum of (i) (a) the
applicable British Bankers' Association Interest Settlement Rate for deposits in
U.S. dollars appearing on Reuters Screen FRBD as of 11:00 a.m. (London time) two
Business Days prior to the first day of the relevant Tranche Period, and having
a maturity equal to such Tranche Period, provided that, (1) if Reuters Screen
FRBD is not available to the Agent for any reason, the applicable LIBO Rate for
the relevant Tranche Period shall instead be the applicable British Bankers'
Association Interest Settlement Rate for deposits in U.S. dollars as reported by
any other generally recognized financial information service as of 11:00 a.m.
(London time) two Business Days prior to the first day of such Tranche Period,
and having a maturity equal to such Tranche Period, and (2) if no such British
Bankers' Association Interest Settlement Rate is available to the Agent, the
applicable LIBO Rate for the relevant Tranche Period shall instead be the rate
determined by the Agent to be the rate at which Calyon offers to place deposits
in U.S. dollars with 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 such Tranche Period, in the approximate amount to be funded at the LIBO Rate
and having a maturity equal to such Tranche Period, divided by (b) one minus the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal or other reserves) which is imposed against the Agent 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 (expressed as a
decimal), applicable to such Tranche Period plus (ii) .85% per annum. The LIBO
Rate shall be rounded, if necessary, to the next higher 1/100 of 1%.
"Liquidity Agreement" means the agreement entered into by Company with
certain Financial Institutions for the purpose of providing liquidity with
respect to the Capital funded by Company under this Agreement.
"Liquidity Termination Date" has the meaning set forth in the Liquidity
Agreement and shall initially be December 18, 2007.
Exh. I-11
"Lock-Box" means each locked postal box with respect to which a bank who
has executed a Collection Account Agreement has been granted exclusive access
for the purpose of retrieving and processing payments made on the Receivables
and which is listed on Exhibit IV.
"Loss Horizon Ratio" means, for any calendar month, a fraction (expressed
as a percentage) computed by dividing (i) the aggregate Outstanding Balance of
all Receivables generated during the three (3) most recently ended calendar
months by (ii) the aggregate Net Receivables Balance as at the last day of the
most recently ended calendar month.
"Loss Reserve" means, on any date, an amount equal to the product of (x)
the greater of (i) 12% and (ii) the Loss Reserve Ratio then in effect times (y)
the aggregate Net Receivables Balance as of the close of business on the
immediately preceding Business Day.
"Loss Reserve Ratio" means, as of any date, an amount calculated as
follows:
Loss Reserve Ratio = 2.25 x DPR x LHR, where
DPR = the highest three month rolling average of the
Default Proxy Ratio during the most recent twelve
calendar months; and
LHR = the Loss Horizon Ratio.
"Loss-to-Liquidation Ratio" means, for any calendar month, a fraction
(expressed as a percentage) equal to (i) the aggregate Outstanding Balance of
all Receivables (without duplication and excluding the Deductions) which, as of
the last day of such calendar month, remain unpaid for at least sixty-one (61)
but less than ninety-one (91) days from the original due date plus the aggregate
Outstanding Balance of all Receivables (without duplication) which, consistent
with the Credit and Collection Policy, were or should have been written off the
Seller's books as uncollectible and are less than sixty-one (61) days past due
date during such period, divided by (ii) the aggregate amount of Collections
during such calendar month.
"Material Adverse Effect" means a material adverse effect on (i) the
financial condition or operations of any Seller Party, Factoring, any Original
Seller or Provider and its Subsidiaries, (ii) the ability of any Seller Party,
Factoring, any Original Seller or Provider to perform such Person's obligations
under any Transaction Documents, (iii) the legality, validity or enforceability
of this Agreement or any other Transaction Document, (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.
"Monthly Report" means a report, in substantially the form of Exhibit VIII
hereto (appropriately completed), furnished by the Servicer to the Agent
pursuant to Section 8.5.
"Monthly Reporting Date" means the fifteenth (15th) day of each month, or,
if such day is not a Business Day, the next succeeding Business Day.
Exh. I-12
"Net Receivables Balance" means, at any time, the aggregate Eligible
Receivables Balance at such time reduced by the aggregate amount by which the
Eligible Receivables Balance of each Obligor and its Affiliates exceeds the
Concentration Limit for such Obligor.
"Obligations" shall have the meaning set forth in Section 2.1.
"Obligor" means a Person obligated to make payments pursuant to a Contract.
"Original Seller" means each of Pactiv and E-Z Por Corporation, a Delaware
corporation, or any other Subsidiary or Affiliate of Pactiv approved in writing
by the Agent from time to time.
"Outstanding Balance" of any Receivable at any time means the then
outstanding principal balance thereof.
"Pactiv" means Pactiv Corporation, a Delaware corporation.
"Pactiv Loan Agreement" means that certain Credit Agreement, dated as of
April 19, 2006, among Pactiv Corporation (formerly known as Tenneco Packaging
Inc.), Bank of America, N.A., as Administrative Agent, JPMorgan Chase Bank,
N.A., as Syndication Agent and Letter of Credit issuer, and the other financial
institutions party thereto.
"Participant" has the meaning set forth in Section 12.2.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"Pooled Commercial Paper" means Commercial Paper notes of Company subject
to any particular pooling arrangement by Company, but excluding Commercial Paper
issued by Company for a tenor and in an amount specifically requested by any
Person in connection with any agreement effected by Company.
"Potential Amortization Event" means an event which, with the passage of
time or the giving of notice, or both, would constitute an Amortization Event.
"Proposed Reduction Date" has the meaning set forth in Section 1.3.
"Pro Rata Share" means, for each Financial Institution, a percentage equal
to (i) the Commitment of such Financial Institution, divided by (ii) the
aggregate amount of all Commitments of all Financial Institutions hereunder,
adjusted as necessary to give effect to the application of the terms of the
Liquidity Agreement.
"Provider" means Pactiv in its capacity as "Provider" under either the
Servicer Performance Undertaking or the Factoring Performance Undertaking, as
applicable.
"Purchase Date" means each day on which the Seller sells Purchaser
Interests to the Company or to the Financial Institutions under this Agreement.
Exh. I-13
"Purchase Limit" means $130,000,000.
"Purchase Notice" has the meaning set forth in Section 1.2.
"Purchase Price" means, with respect to any Incremental Purchase of a
Purchaser Interest, the amount paid to Seller for such Purchaser Interest which
shall not exceed the least of (i) the amount requested by Seller in the
applicable Purchase Notice, (ii) the unused portion of the Purchase Limit on the
applicable Purchase Date and (iii) the excess, if any, of the Net Receivables
Balance (less the Aggregate Reserves) on the applicable Purchase Date over the
aggregate outstanding amount of Aggregate Capital determined as of the date of
the most recent Monthly Report.
"Purchasers" means Company and each Financial Institution.
"Purchaser Interest" means, at any time, an undivided percentage ownership
interest (computed as set forth below) associated with a designated amount of
Capital, selected pursuant to the terms and conditions hereof in (i) each
Receivable arising prior to the time of the most recent computation or
recomputation of such undivided interest, (ii) all Related Security with respect
to each such Receivable, and (iii) all Collections with respect to, and other
proceeds of, each such Receivable. Each such undivided percentage interest shall
equal:
C
--------
NRB - AR
where:
C = the Capital of such Purchaser Interest.
AR = the Aggregate Reserves.
NRB = the Net Receivables Balance.
Such undivided percentage ownership interest shall be initially computed on its
Purchase Date. Thereafter, until the Amortization Date, each Purchaser Interest
shall be automatically recomputed (or deemed to be recomputed) on each day prior
to the Amortization Date. The variable percentage represented by any Purchaser
Interest as computed (or deemed recomputed) as of the close of the business day
immediately preceding the Amortization Date shall remain constant at all times
thereafter.
"Purchasing Financial Institution" has the meaning set forth in Section
12.1(b).
"Receivable" means all indebtedness and other obligations owed to Seller,
Factoring, or an Original Seller other than an Excluded Receivable (at the time
it arises, and before giving effect to any transfer or conveyance under the
Transfer Agreements, the Receivables Sale Agreement or hereunder) or in which
Seller, Factoring or an Original Seller has a security interest or other
interest, including, without limitation, any indebtedness, obligation or
interest constituting an account, chattel paper, instrument or general
intangible, arising in connection with the sale of goods or the rendering of
services by an Original Seller, and further includes,
Exh. I-14
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; provided further, that any
indebtedness, rights or obligations referred to in the immediately preceding
sentence shall be a Receivable regardless of whether the account debtor or
Seller treats such indebtedness, rights or obligations as a separate payment
obligation.
Receivables Sale Agreement" means that certain Receivables Sale Agreement,
dated as of December 28, 2000, between Factoring and Seller, as the same may be
amended, restated or otherwise modified from time to time.
"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 Notice" has the meaning set forth in Section 1.3.
"Regulatory Change" has the meaning set forth in Section 10.2(a).
"Reinvestment" has the meaning set forth in Section 2.2.
"Related Security" means, with respect to any Receivable:
(i) all of Seller's interest in the inventory and goods (including
returned or repossessed inventory or goods), if any, the sale, financing or
lease of which by an Original Seller 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, 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 Receivable,
(v) all Records related to such Receivable,
Exh. I-15
(vi) all of Seller's right, title and interest in, to and under the
Receivables Sale Agreement and each Transfer Agreement in respect of such
Receivable and all of Seller's right, title and interest in, to and under
the Factoring Performance Undertaking, and
(vii) all proceeds of any of the foregoing.
"Required Financial Institutions" means, at any time, Financial
Institutions with Commitments in excess of 66-2/3% of the Purchase Limit.
"Required Notice Period" means the number of days required notice set forth
below applicable to the Aggregate Reduction indicated below:
Aggregate Reduction Required Notice Period
- ------------------- ----------------------
<=$100,000,000 three Business Days
>$100,000,000 five Business Days
"Restricted Junior Payment" means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of capital stock of
Seller now or hereafter outstanding, except a dividend payable solely in shares
of that class of stock or in any junior class of stock of Seller, (ii) any
redemption, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any class of capital
stock of Seller now or hereafter outstanding, (iii) any payment or prepayment of
principal of, premium, if any, or interest, fees or other charges on or with
respect to, and any redemption, purchase, retirement, defeasance, sinking fund
or similar payment and any claim for rescission with respect to the Subordinated
Loans (as defined in the Receivables Sale Agreement), (iv) any payment made to
redeem, purchase, repurchase or retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of any class of
capital stock of Seller now or hereafter outstanding, and (v) any payment of
management fees by Seller (except for reasonable management fees to the Provider
or its Affiliates in reimbursement of actual management services performed).
"Seller" has the meaning set forth in the preamble to this Agreement.
"Seller Parties" has the meaning set forth in the preamble to this
Agreement.
"Servicer" means at any time the Person (which may be the Agent) then
authorized pursuant to Article VIII to service, administer and collect
Receivables.
"Servicer Performance Undertaking" means that certain Servicer Performance
Undertaking, dated as of December 28, 2000, by Provider in favor of the Agent,
as the same may be amended, restated or otherwise modified from time to time.
"Servicing Fee" has the meaning set forth in Section 8.6.
Exh. I-16
"Servicing Reserve" means on any date, an amount equal to the sum of (a)
the accrued and unpaid Servicing Fee through the next Settlement Date plus (b)
an amount determined in accordance with the following formula: 2.25 multiplied
by the Servicing Fee percentage (1%), multiplied by Days Sales Outstanding,
divided by 360, multiplied by the Outstanding Balance of all Receivables on such
date.
"Settlement Date" means (A) the third (3rd) Business Day immediately
following each Monthly Reporting Date in respect of each Purchaser Interest of
Company, and (B) the last day of the relevant Tranche Period in respect of each
Purchaser Interest of the Financial Institutions.
"Settlement Period" means (A) in respect of each Purchaser Interest of
Company, the immediately preceding Accrual Period, and (B) in respect of each
Purchaser Interest of the Financial Institutions, the entire Tranche Period of
such Purchaser Interest.
"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, limited liability company, 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 Seller.
"Terminating Tranche" has the meaning set forth in Section 4.3(b).
"Tranche Period" means, with respect to any Purchaser Interest held by a
Financial Institution:
(a) if Yield for such Purchaser Interest is calculated on the
basis of the LIBO Rate, a period of one, two, three or six months, or such
other period as may be mutually agreeable to the Agent and Seller,
commencing on a Business Day selected by 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; or
(b) if Yield for such Purchaser Interest is calculated on the
basis of the Base Rate, a period commencing on a Business Day selected by
Seller and agreed to by the Agent, provided no such period shall exceed one
month.
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 Purchaser Interest which commences before the Amortization Date and would
otherwise end on a date occurring after the Amortization Date, such Tranche
Exh. I-17
Period shall end on the Amortization Date. The duration of each Tranche Period
which commences after the Amortization Date shall be of such duration as
selected by the Agent.
"Transaction Documents" means, collectively, this Agreement, each Purchase
Notice, the Receivables Sale Agreement, each Transfer Agreement, each Collection
Account Agreement, the Servicer Performance Undertaking, the Factoring
Performance Undertaking, the Fee Letter, the Subordinated Note (as defined in
the Receivables Sale Agreement) and all other instruments, documents and
agreements executed and delivered in connection herewith.
"Transfer Agreement" means each of (i) those certain Receivables Sale
Agreements, dated as of the date hereof, between each Original Seller and
Factoring, and (ii) each other Receivables Sale Agreement entered into from time
to time between an Original Seller, approved by the Agent, and Factoring, in
form and substance satisfactory to the Agent (as the same may be amended,
restated or otherwise modified from time to time).
"UCC" means the Uniform Commercial Code as from time to time in effect in
the specified jurisdiction.
"Yield" means (i) for each respective Tranche Period relating to Purchaser
Interests of the Financial Institutions, an amount equal to the product of the
applicable Discount Rate for each Purchaser Interest multiplied by the Capital
of such Purchaser Interest for each day elapsed during such Tranche Period,
annualized on either a 360 day basis (with respect to Purchaser Interests for
which the Discount Rate is the LIBO Rate) or a 365 day basis (with respect to
Purchaser Interests for which the Discount Rate is the Base Rate) and (ii) for
each respective Accrual Period relating to Purchaser Interests of the Company
which are not funded with Pooled Commercial Paper, an amount equal to the
product of the applicable CP Rate for each Purchaser Interest multiplied by the
Capital of such Purchaser Interest for each day elapsed during such Accrual
Period, annualized on a 360 day basis.
"Yield Reserve" means, on any date, an amount equal to (a) the sum of the
accrued and unpaid Yield through the next Settlement Date plus (b) an amount
determined in accordance with the following formula: the Base Rate on such date
multiplied by 2.25, multiplied by Days Sales Outstanding, divided by 360,
multiplied by the outstanding Capital on such date.
All accounting terms not specifically defined herein shall be construed in
accordance with GAAP. 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.
Exh. I-18
EXHIBIT II
FORM OF PURCHASE NOTICE
[Date]
Calyon New York Branch, as Agent
1301 Avenue of the Americas
New York, NY 10019
Attention: __________________
Re: PURCHASE NOTICE
Ladies and Gentlemen:
Reference is hereby made to the Receivables Purchase Agreement, dated as of
December 21, 2006, by and among Pactiv RSA LLC, a Delaware limited liability
company (the "Seller"), Pactiv Factoring LLC, as Servicer, the Financial
Institutions, Atlantic Asset Securitization LLC ("Company"), and Calyon New York
Branch, as Agent (the "Receivables Purchase Agreement"). Capitalized terms used
herein shall have the meanings assigned to such terms in the Receivables
Purchase Agreement.
The Agent is hereby notified of the following Incremental Purchase:
Purchase Price: $ __________________________________
Date of Purchase: __________________________________
Requested Discount Rate: [LIBO Rate] [Base Rate] [CP Rate]
Please credit the Purchase Price in immediately available funds to our
Facility Account [and then wire-transfer the Purchase Price in immediately
available funds on the above-specified date of purchase to:
[Account Name]
[Account No.]
Please advise [Name] at telephone no (__) _________________ if Company will
not be making this purchase.
In connection with the Incremental Purchase to be made on the above listed
"Date of Purchase" (the "Purchase Date"), the Seller hereby certifies that the
following statements are true
Exh. II-1
on the date hereof, and will be true on the Purchase Date (before and after
giving effect to the proposed Incremental Purchase):
(i) the representations and warranties of the Seller set forth in
Section 5.1 of the Receivables Purchase Agreement are true and correct on
and as of the Purchase Date as though made on and as of such date;
(ii) no event has occurred and is continuing, or would result from the
proposed Incremental Purchase, that will constitute an Amortization Event
or a Potential Amortization Event;
(iii) the Facility Termination Date has not occurred, the Aggregate
Capital does not exceed the Purchase Limit and the aggregate Purchaser
Interests do not exceed 100%; and
(iv) the amount of Aggregate Capital is $_________ after giving effect
to the Incremental Purchase to be made on the Purchase Date.
Very truly yours,
PACTIV RSA LLC
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Exh. II-2
EXHIBIT III
Principal Place of Business/Location of Books and Records
Pactiv RSA LLC
1900 West Field Court
Lake Forest, Illinois 66045
Federal Employer Identification Number
36-4402361
Organizational Identification Number
3289115
Pactiv Factoring LLC
1900 West Field Court
Lake Forest, Illinois 66045
Federal Employer Identification Number
36-4402363
Organizational Identification Number
32286671
Exh. III-1
EXHIBIT IV
Collection Account Banks and Addresses
Bank One, N.A.
1 Bank One Plaza
Chicago, IL 60670
Attn: Loretta McCarthy
Facsimile No. 312-928-0338
Banc One National Processing Corporation
1 Bank One Plaza
Chicago, IL 60670
Attn: Loretta McCarthy
Facsimile No. 312-928-0338
Collection Accounts Numbers
ZBA # 10-44536
ZBA # 10-60193
ZBA # 10-44502
ZBA # 11-32331
ZBA # 10-44452
ZBA # 10-44452
Lock-Box Account Numbers
905863
730109
730114
100954
100815
905960
Addresses of Lock-Boxes
P.O. Box 905863
Charlotte, NC 28217-5863
P.O. Box 730109
Dallas, TX 75229-0109
Exh. IV-1
EXHIBIT V
FORM OF COMPLIANCE CERTIFICATE
To: Calyon, NA (Main Office Chicago), as Agent
This Compliance Certificate is furnished pursuant to that certain
Receivables Purchase Agreement, dated as of December 21, 2006, among Pactiv RSA
LLC (the "Seller"), Pactiv Factoring LLC (the "Servicer"), the Purchasers party
thereto and Calyon New York Branch, as agent for such Purchasers (the
"Agreement").
THE UNDERSIGNED HEREBY CERTIFIES THAT:
(1) I am the duly elected ________________________________ of 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 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 an Amortization Event or Potential Amortization Event, 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 in paragraph 5 below.
(4) 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.
(5) 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 Seller has taken, is taking, or
proposes to take with respect to each such condition or event:
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
______________________
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 [____________],
[_____].
----------------------------------------
Name:
----------------------------------
Exh. V-1
SCHEDULE I TO COMPLIANCE CERTIFICATE
A. Schedule of Compliance as of __________, ____. 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: ___________________
Exh. V-2
EXHIBIT VI
FORM OF COLLECTION ACCOUNT AGREEMENT
[Date]
Name and Address
of Bank
Re: Pactiv Corporation/Pactiv Factoring LLC/Pactiv RSA LLC
Ladies and Gentlemen:
Reference is hereby made to each of the departmental post office boxes
listed on Schedule 1 hereto (each, a "Lock-Box") of which one or more of you has
exclusive control for the purpose of receiving mail and processing payments
therefrom pursuant to the Lock-Box Agreement dated [__________] originally by
and between Pactiv Corporation and you (the "Service 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 received in each of the Lock-Boxes, and credit such
payments to the accounts listed on Schedule 1 hereto (the "Lock-Box Accounts").
Any references to "you" or 'your' in this letter agreement shall mean JPMorgan
Chase Bank, N.A. as Lock-Box Bank.
Pactiv Corporation (the "Company") hereby informs you that, pursuant
to that certain Receivables Transfer Agreement, dated as of December 28, 2000,
as amended to date, between the Company and Pactiv Factoring LLC, the Company
has transferred all of its right, title and interest in and to, and exclusive
ownership and control of, the Lock-Box and the Lock-Box Accounts to Pactiv
Factoring LLC. Pactiv Factoring LLC hereby informs you that pursuant to that
certain Receivables Sale Agreement, dated as of December 28, 2000, as amended to
date, between Pactiv Factoring LLC and Pactiv RSA LLC (the "Seller"), Pactiv
Factoring LLC has transferred all of its right, title and interest in and to,
and exclusive ownership and control of, the Lock-Box and the Lock-Box Accounts
to the Seller. The Company, Pactiv Factoring LLC and the Seller have previously
requested that the name of the Lock-Box Accounts be changed to PACTIV RSA LLC.
Each of the Company, Pactiv Factoring LLC and the Seller hereby
irrevocably instructs you, and you hereby agree, that upon receiving notice from
Calyon New York Branch, as Agent, in the form attached hereto as Annex A: (i)
the name of the Lock-Box Accounts will be changed to the Agent (or any designee
of the Agent), and the Agent will have exclusive ownership of and access to the
Lock-Boxes and the Lock-Box Accounts, and none of the Company, the Seller, nor
any of their respective affiliates will have any control of the Lock-Boxes or
the Lock-Box Accounts or any access thereto, (ii) you will either continue to
send the funds from the Lock-Boxes to the Lock-Box Accounts, or will redirect
the funds as the Agent may otherwise request, (iii) you will transfer monies on
deposit in the Lock-Box Accounts, at any time, as directed by the Agent, (iv)
all services to be performed by you under the Service Agreement will be
performed on behalf of the Agent, and (v) all correspondence or other mail
Exh. VI-1
which you have agreed to send to the Company or the Seller will be sent to the
Agent at the following address:
Calyon New York Branch, as Agent
1301 Avenue of the Americas
New York, NY 10019-6022
Attention: Debt Capital Markets - Liquid Assets Securitization
Moreover, upon such notice, the Agent will have all rights and remedies given to
the Company (and the Seller, as the Company's assignee) under the Service
Agreement. The Company agrees, 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 Accounts
or any other account established with you by the Agent for the purpose of
receiving funds from the Lock-Boxes are subject to the liens of the Agent, and
will not be subject to deduction, set-off, banker's lien or any other right you
or any other party may have against the Company or the Seller except that you
may debit the Lock-Box Accounts for any items deposited therein that are
returned, charged-back any reversals, cancellations of payment orders and other
electronic transfers that are 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.
You will be liable only for direct damages in the event you fail to
exercise ordinary care. You shall be deemed to have exercised ordinary care if
your action or failure to act is in conformity with general banking usages or is
otherwise a commercially reasonable practice of the banking industry. You shall
not be liable for any special, indirect or consequential damages, even if you
have been advised of the possibility of these damages.
The Seller and the Agent acknowledge and agree that you have no
knowledge of (and are not required to know) the terms and provisions of the
separate agreements referred to in paragraph 2 above and other related
documentation or whether any actions by Agent (including without limitation the
sending of notice in the form attached hereto as Annex A) or Seller are
permitted or a breach thereunder or consistent or inconsistent therewith.
The parties acknowledge that you may assign or transfer your rights
and obligations hereunder to a wholly-owned subsidiary of[____________________].
The Seller agrees to indemnify you for, and hold you harmless from,
all claims, damages, losses, liabilities and expenses, including legal fees and
expenses, resulting from or with respect to this letter agreement and the
administration and maintenance of the Lock-Box Accounts and the services
provided hereunder, including, without limitation: (a) any action taken, or not
taken, by you in regard thereto in accordance with the terms of this letter
agreement, (b) the breach of any representation or warranty made by the Seller
pursuant to this letter agreement, (c) any item, including, without limitation,
any automated clearinghouse transaction, which is returned for any reason ( a
"Returned Item"), and (d) any failure of the Seller to pay any invoice or charge
to you for services in respect to this letter agreement and the Lock-Box
Accounts or any amount owing to you from the Seller with respect thereto or to
the
Exh. VI-2
service provided hereunder. The Agent agrees to indemnify you for and hold you
harmless from any Returned Item incurred in or after you receive a notice in the
form attached hereto as Annex A that the Agent will have exclusive ownership of
the Lock-Boxes and the Lock-Box Account or any interpleader proceeding related
thereto.
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 NEW YORK. The parties hereto acknowledge and agree that
this letter agreement is intended to be an agreement within the meaning of
Section 9-304(b)(1) of the Uniform Commercial Code in effect in the State of New
York and that the State of New York shall be deemed to be the jurisdiction of
the Lock-Box Bank for purposes of any matter in respect of the Lock-Box Account
relating to or arising under Section 9-304(b)(1) of the Uniform Commercial Code
as is in effect from time to time in the State of New York. 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.
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 to all parties so providing. You may terminate this letter agreement
upon the sending of at least thirty (30) days advance written notice to the
other parties and transfer of the Lock-Boxes to another bank selected by the
Agent and the Seller. In the event that any provision in this letter agreement
is in conflict with, or is inconsistent with, any provision of the Service
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.
Exh. VI-3
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.
Very truly yours,
PACTIV CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
PACTIV FACTORING LLC
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
PACTIV RSA LLC
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Acknowledged and agreed to as of [______________]
Name of Bank
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
CALYON NEW YORK BRANCH, as Agent
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Exh. VI-4
ANNEX A
FORM OF NOTICE
[On letterhead of the Agent]
[Date]
Name and Address
of Bank
Re: Pactiv Corporation/Pactiv Factoring LLC/Pactiv RSA LLC
Ladies and Gentlemen:
We hereby notify you that we are exercising our rights pursuant to
that certain collection account agreement, dated [___________] (the "Collection
Account Agreement") among Pactiv Corporation, Pactiv Factoring LLC and Pactiv
RSA LLC, you and us, to have the name of, and to have exclusive ownership and
control of, Accounts no. [____________] identified in the Collection Account
Agreement (the "Lock-Box Accounts") maintained with you, transferred to us. The
Lock-Box Accounts will henceforth be a zero-balance account, and funds deposited
in the Lock-Box Accounts should be sent at the end of each day to account no.
_______________ in the name of __________ at Calyon New York Branch in New York,
NY REFERENCE: PACTIV RSA LLC, OR AS OTHERWISE DIRECTED BY THE UNDERSIGNED. You
have further agreed to perform all other services you are performing under the
"Service Agreement" (as defined in the Letter Agreement) on our behalf.
We appreciate your cooperation in this matter.
Very truly yours,
CALYON NEW YORK BRANCH, as Agent
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
A-1
SCHEDULE 1
PACTIV CORPORATION
LOCKBOX ACCOUNTS LOCKBOX # LOCKBOX ADDRESS
- ---------------- --------- ---------------
S-1
EXHIBIT VII
Corporate Policy Manual (PACTIV LOGO)
Advanced Packaging Solutions
SUBJECT: Credit and Collections POLICY NO.: 1.1.3v1
Administration and Accounting
SCOPE: Pactiv Corporation Trade Accounts DATE ISSUED: January 6, 2003
Receivable
BODY:
1.0 PURPOSE:
The purpose of this policy is to document the Pactiv Corporation
requirements for credit and collections administration and accounting.
2.0 :REVISION HISTORY:
Revision Date Revision Number Change Reference Section(s)
- ------------- --------------- ----------------- --------------------
11/31/2002 NA Original Document Entire Document
3.0 PERSONS AFFECTED:
3.1 Inclusions: All Pactiv Corporation operating units, affiliates, and
subsidiaries.
3.2 Exclusions: None
4.0 POLICY:
4.1 The policy of Pactiv Corporation is to ensure that all reasonable
efforts are made to collect amounts owed the Corporation by trade
customers, and to properly record in the Corporation's accounting
records the accounts receivable and bad debts position of the Company
in each accounting period. In this regard, each customer of the
Corporation shall be dealt with equally and impartially, in compliance
with all applicable laws and regulations and in accordance with good
credit practice.
4.2 The Manager, Credit and Collections, working under the direction of
the VP, Finance and Controller, will administer the Corporation's
Credit and Collections Policy. All personnel of the Corporation
engaged in credit and collections activities, regardless of where they
are located and whether or not they report directly to the Manager,
Credit and Collections, are considered credit and collections
employees for the purposes of this Policy and are bound by its
requirements.
4.3 The Manager, Credit and Collections will develop, document, and have
properly approved credit procedures as required to implement the
Corporation's Credit and Collections Policy in North America. Pactiv
units and affiliates outside North America will also develop such
procedures which will be as aligned with North American procedures as
possible, taking into account local statutory and legal requirements
and information system capabilities. Approval of all such procedures
will include that of the VP, Finance and Controller and the Pactiv
Legal Department (or it's designated outside legal counsel).
4.4 Finance Directors of Pactiv units and affiliates located outside North
America will designate an individual employed in the finance function
to administer this policy and related procedures for their respective
business units. While these Finance Directors will retain ultimate
responsibility for compliance, they and their designated credit
administration personnel will solicit and receive guidance from the
Manager, Credit and Collections as required. Specifically, those
requirements of the Manager, Credit and Collections set forth in
sections 4.6 through 4.8 below will be carried out by the Finance
Directors and their designees outside of North America.
Exh. VII-1
4.5 The Manager, Credit and Collections, will periodically conduct credit
reviews of all Corporate business units and affiliates to ensure that
they are in compliance with this Policy and related procedures.
4.6 The Manager, Credit and Collections will determine for each customer,
according to established Procedures and properly approved Limits of
Authority, whether and in what amounts credit will be extended,
whether or not credit will be reduced or revoked, and what collection
practices will be employed. Marketing, Sales, or other operating
personnel do not have the authority to make such credit decisions
without the approval of the Manager, Credit and Collections. The
Manager, Credit and Collections will consult with appropriate
Marketing, Sales, or Operating Managers in the course of credit and
bad debt administration activities as required, including
determination of credit terms.
4.7 The Manager, Credit and Collections will determine when an accounts
receivable shall be deemed a bad debt and what collection practices
shall be employed to attempt collection, in accordance with
established Pactiv Procedures, including Limits of Authority.
4.8 The Manager, Credit and Collections will communicate the status of
trade receivables, including current bad debts and bad debts history,
on a monthly basis. Reports will be provided to the VP, Finance and
Controller, to the Director, Corporate Finance, and to the senior
financial manager of each Pactiv business unit (VP, Finance,
controller, or chief accountant, as appropriate), and to such business
unit managers as appropriate.
4.9 The Director, Corporate Finance will ensure that the status of the
Corporation's trade receivables and bad debts is properly accounted
for each month, in accordance with Generally Accepted Accounting
Principles and utilizing a process which has the concurrence of the
Corporation's external auditors.
5.0 :DEFINITIONS:
5.1 Bad Debt - an amount owed the Corporation but deemed uncollectable due
to insolvency, bankruptcy, disappearance of the customer, or for
similar reasons.
5.2 Accounts Receivable - amounts owed the Corporation resulting from the
sale of products or services to third parties. Sales to affiliated
parties are excluded from this definition.
6.0 RESPONSIBILITIES:
6.1 The VP, Finance and Controller (Controller) is responsible for
approving and ensuring Credit Management compliance with the Credit
and Collections Policy and related procedures.
6.2 The Manager, Credit and Collections is responsible for administering
all aspects of Pactiv Corporation's Credit and Collections Policy and
related procedures within North America, and for providing guidance
when necessary to Pactiv units and affiliates outside North America.
6.3 Finance Directors (FD's) and other direct reports of the Controller
are responsible for ensuring their staffs comply with the requirements
of this policy and related procedures.
6.4 Finance Directors of units located outside North America are
responsible for administering this Policy and related procedures in
their respective business units. They are also responsible for seeking
and implementing the advice of the Manager, Credit and Collections,
when questions arise concerning the application of this Policy or the
implementation of sound credit practices in their businesses.
6.5 The Director, Corporate Finance is responsible for ensuring that
Pactiv's accounts receivable and bad debts are properly accounted for
in each accounting period.
7.0 :PROCEDURE:
Not Applicable
Exh. VII-2
EXHIBIT VIII
FORM OF MONTHLY REPORT
[In addition to such other information as may be included on this
exhibit, each Monthly Report should set forth the following with respect to the
related Calculation Period (as defined in the Receivables Sale Agreement): (i)
the aggregate Outstanding Balance of Receivables created and conveyed by
Factoring to Seller in purchases pursuant to the Receivables Sale Agreement
during such Calculation Period, as well as the Net Receivables Balance included
therein, (ii) the aggregate purchase price payable to Factoring in respect of
such purchases, specifying the Discount Factor (as defined in the Receivables
Sale Agreement) in effect for such Calculation Period and the aggregate Purchase
Price Credits (as defined in the Receivables Sale Agreement) deducted in
calculating such aggregate purchase price, (iii) the aggregate amount of funds
received by the Servicer during such Calculation Period which are to be applied
as Reinvestments, (iv) the increase or decrease in the amount outstanding under
the Subordinated Note (as defined in the Receivables Sale Agreement) as of the
end of such Calculation Period after giving effect to the application of funds
toward the aggregate purchase price and the restrictions on Subordinated Loans
(as defined in the Receivables Sale Agreement) set forth in Section 1.2(a)(ii)
of the Receivables Sale Agreement, and (v) the amount of any capital
contribution made by Factoring to Seller as of the end of such Calculation
Period pursuant to Section 1.2(b) of the Receivables Sale Agreement.]
The above is a true and accurate accounting pursuant to the terms of
the Receivables Purchase Agreement, dated as of December 21, 2006 (the
"Agreement"), by and among Pactiv RSA LLC, Pactiv Factoring LLC, Atlantic Asset
Securitization LLC and Calyon New York Branch, as Agent, and I have no knowledge
of the existence of any conditions or events which constitute an Amortization
Event or Potential Amortization Event, as each such term is defined under the
Agreement, during or at the end of the accounting period covered by this monthly
report or as of the date of this certificate, except as set forth below.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Company Name:
--------------------------
Date:
----------------------------------
Exh. VIII-1
SCHEDULE A
COMMITMENTS OF FINANCIAL INSTITUTIONS
Financial Institution Commitment
- --------------------- ------------
Calyon New York Branch $130,000,000
Sch. A-1
SCHEDULE B
DOCUMENTS TO BE DELIVERED TO THE AGENT
ON OR PRIOR TO THE INITIAL PURCHASE
Sch. B-1
SCHEDULE C
EQUIVALENT LONG TERM RATINGS
Moody's Investors Service, Inc.
EQUIVALENT LONG-
SHORT-TERM RATING TERM RATING
- ----------------- ----------------
P-1 Aaa
P-1 Aa1
P-1 Aa2
P-1 Aa3
P-1 A1
P-2 A2
P-2 A3
P-2 Baa1
P-3 Baa2
P-3 Baa3
Not Prime < Baa3
Standard & Poors Ratings Group
EQUIVALENT LONG-
SHORT-TERM RATING TERM RATING
- ----------------- ----------------
A-1 AAA
A-1 AA+
A-1 AA
A-1 AA -
A-1 A+
A-2 A
A-2 A -
A-2 BBB+
A-3 BBB
A-3 BBB -
Unrated < BBB -
Sch. C-1