1
EXHIBIT 10.6
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$150,000,000
RECEIVABLES PURCHASE AGREEMENT
DATED AS OF AUGUST 2, 1996
AMONG
YELLOW RECEIVABLES CORPORATION,
AS SELLER
AND
FALCON ASSET SECURITIZATION CORPORATION
AND
THE FINANCIAL INSTITUTIONS PARTY HERETO,
AS INVESTORS
AND
THE FIRST NATIONAL BANK OF CHICAGO,
AS AGENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2
TABLE OF CONTENTS
_________________
PAGE
____
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES.................... 1
Section 1.1. Purchase Facility........................................ 1
Section 1.2. Making Incremental Purchases............................. 2
Section 1.3. Selection of Tranche Periods and Discount Rates.......... 2
Section 1.4. Percentage Evidenced by Receivable Interests............. 3
Section 1.5. Dividing or Combining Receivable Interests............... 3
Section 1.6. Reinvestment Purchases and Pre-Liquidation Settlements... 4
Section 1.7. Liquidation Settlement Procedures........................ 5
Section 1.8. Deemed Collection of Dilutions and Certain Other Recourse
Obligations.............................................. 6
Section 1.9. Discount; Payments and Computations, Etc................. 6
Section 1.10. Maximum Aggregate of Receivable Interests; Grant of
Security Interest........................................ 7
Section 1.11. Seller's Extinguishment.................................. 7
Section 1.12. Servicer Fee............................................. 8
ARTICLE II
LIQUIDITY FACILITY........................... 8
Section 2.1. Transfer to Investors.................................... 8
Section 2.2. Transfer Price Reduction Discount........................ 8
Section 2.3. Payments to FALCON....................................... 8
Section 2.4. Limitation on Commitment to Purchase from FALCON......... 9
Section 2.5. Defaulting Investors..................................... 9
i
3
PAGE
----
ARTICLE III
REPRESENTATIONS AND WARRANTIES.................... 9
Section 3.1. Seller Representations and Warranties................... 10
(a) Corporate Existence and Power................................ 10
(b) No Conflict.................................................. 10
(c) Governmental Authorization................................... 10
(d) Binding Effect............................................... 10
(e) Accuracy of Information...................................... 10
(f) Use of Proceeds.............................................. 11
(g) Title to Receivables......................................... 11
(h) Good Title; Perfection....................................... 11
(i) Places of Business........................................... 11
(j) Collection Banks; etc........................................ 11
(k) Material Adverse Effect...................................... 12
(l) Names........................................................ 12
(m) Actions, Suits............................................... 12
(n) Credit and Collection Policies............................... 12
(o) Payments to Originator....................................... 12
(p) Ownership of the Seller...................................... 13
(q) Not an Investment Company.................................... 13
(r) Purpose...................................................... 13
(s) Net Receivables Balance...................................... 13
(t) Contracts Governing Excluded Receivables..................... 13
Section 3.2. Investor Representations and Warranties................. 13
(a) Existence and Power.......................................... 13
(b) No Conflict.................................................. 13
(c) Governmental Authorization................................... 14
(d) Binding Effect............................................... 14
ARTICLE IV
CONDITIONS OF PURCHASES....................... 14
Section 4.1. Conditions Precedent to Initial Purchase................ 14
Section 4.2. Conditions Precedent to All Purchases and Reinvestments. 14
ii
4
PAGE
----
ARTICLE V
COVENANTS............................... 15
Section 5.1. Affirmative Covenants of Seller......................... 15
(a) Financial Reporting.......................................... 15
(i) Annual Reporting....................................... 15
(ii) Quarterly Reporting.................................... 15
(iii) Compliance Certificate................................. 15
(iv) Copies of Notices, Etc. under Sale Agreement and
Other Transaction Documents............................ 15
(v) Change in Credit and Collection Policy................. 15
(vi) Replacement of Contracts Applicable to Excluded
Receivables............................................ 16
(vii) Other Information...................................... 16
(b) Notices...................................................... 16
(i) Servicer Defaults or Potential Servicer Defaults....... 16
(ii) Judgment............................................... 16
(iii) Litigation............................................. 16
(iv) Termination Date under Sale Agreement.................. 16
(v) Downgrade.............................................. 16
(vi) Labor Strike, Walkout, Lockout or Slowdown............. 16
(c) Compliance with Laws......................................... 16
(d) Audits....................................................... 17
(e) Keeping and Marking of Records and Books..................... 17
(f) Compliance with Invoices and Credit and Collection Policy.... 17
(g) Purchase of Receivables from the Originator.................. 18
(h) Ownership Interest........................................... 18
(i) Payment to the Originator.................................... 18
(j) Performance and Enforcement of Sale Agreement................ 18
(k) Purchasers' Reliance......................................... 18
(l) Collections.................................................. 20
(m) Minimum Net Worth............................................ 21
(n) Accounting for Collections of Excluded Receivables........... 21
Section 5.2. Negative Covenants of Seller............................ 21
(a) Name Change, Offices, Records and Books of Accounts.......... 21
(b) Change in Payment Instructions to Obligors................... 22
(c) Modifications to Invoices and Credit and Collection Policy... 22
(d) Sales, Liens, Etc............................................ 22
(e) Nature of Business; Other Agreements; Other Indebtedness..... 22
(f) Amendments to Sale Agreement................................. 23
(g) Amendments to Corporate Documents............................ 23
(h) Merger....................................................... 23
iii
5
PAGE
----
(i) Restricted Junior Payments................................... 24
ARTICLE VI
ADMINISTRATION AND COLLECTION.................. 24
Section 6.1. Designation of Servicer................................. 24
Section 6.2. Duties of Servicer...................................... 24
Section 6.3. Collection Notices...................................... 26
Section 6.4. Responsibilities of the Seller.......................... 26
Section 6.5. Reports................................................. 26
ARTICLE VII
SERVICER DEFAULTS........................... 27
Section 7.1. Servicer Defaults....................................... 27
ARTICLE VIII
INDEMNIFICATION............................ 28
Section 8.1. Indemnities by the Seller............................... 28
Section 8.2. Increased Cost and Reduced Return....................... 30
Section 8.3. Costs and Expenses Relating to this Agreement........... 31
ARTICLE IX
THE AGENT............................... 31
Section 9.1. Authorization and Action................................ 31
Section 9.2. Delegation of Duties.................................... 32
Section 9.3. Exculpatory Provisions.................................. 32
Section 9.4. Reliance by Agent....................................... 32
Section 9.5. Non-Reliance on Agent and Other Purchasers.............. 33
Section 9.6. Reimbursement and Indemnification....................... 33
Section 9.7. Agent in its Individual Capacity........................ 33
Section 9.8. Successor Agent......................................... 33
ARTICLE X
iv
6
PAGE
----
ASSIGNMENTS; PARTICIPATIONS..................... 34
Section 10.1. Assignments............................................. 34
Section 10.2. Participations.......................................... 35
ARTICLE XI
MISCELLANEOUS............................. 35
Section 11.1. Waivers and Amendments.................................. 35
Section 11.2. Notices................................................. 36
Section 11.3. Ratable Payments........................................ 37
Section 11.4. Protection of Ownership Interests of the Purchasers..... 37
Section 11.5. Confidentiality......................................... 38
Section 11.6. Bankruptcy Petition..................................... 38
Section 11.7. Limitation of Liability................................. 38
Section 11.8. CHOICE OF LAW........................................... 39
Section 11.9. CONSENT TO JURISDICTION................................. 39
Section 11.10. WAIVER OF JURY TRIAL.................................... 39
Section 11.11. Integration; Survival of Terms.......................... 39
Section 11.12. Counterparts; Severability.............................. 39
Section 11.13. First Chicago Roles..................................... 40
Section 11.14. Characterization........................................ 40
EXHIBITS AND SCHEDULES
EXHIBIT I DEFINITIONS............................................. 44
EXHIBIT II CHIEF EXECUTIVE OFFICE OF THE SELLER;
LOCATIONS OF RECORDS; FEDERAL
EMPLOYER IDENTIFICATION NUMBER.......................... 63
EXHIBIT III LOCKBOXES; COLLECTION ACCOUNTS;
CONCENTRATION ACCOUNTS; AND
DEPOSITARY ACCOUNTS..................................... 64
EXHIBIT IV FORM OF COMPLIANCE CERTIFICATE.......................... 65
EXHIBIT V FORM OF COLLECTION ACCOUNT AGREEMENT.................... 67
EXHIBIT VI CREDIT AND COLLECTION POLICY............................ 71
EXHIBIT VII FORM OF INVOICE(S)...................................... 72
EXHIBIT VIII FORM OF MONTHLY REPORT.................................. 73
EXHIBIT IX FORM OF PURCHASE NOTICE................................. 74
v
7
PAGE
----
EXHIBIT X CONTRACTS APPLICABLE TO EXCLUDED CONTRACTS..............76
SCHEDULE A DOCUMENTS AND RELATED ITEMS
TO BE DELIVERED TO THE AGENT ON
OR PRIOR TO THE INITIAL PURCHASE....................... 77
vi
8
THIS RECEIVABLES PURCHASE AGREEMENT, dated as of August 2, 1996, is by and
among Yellow Receivables Corporation, a Delaware corporation (the "SELLER"),
the Investors (hereinafter defined), Falcon Asset Securitization Corporation
("FALCON") and The First National Bank of Chicago, as Agent. Unless defined
elsewhere herein, capitalized terms used in this Agreement shall have the
meanings assigned to such terms in EXHIBIT I hereto.
PRELIMINARY STATEMENTS
The Seller desires to transfer and assign Receivable Interests
to the Purchasers from time to time.
FALCON may, in its absolute and sole discretion, purchase
Receivable Interests from the Seller from time to time.
The Investors shall, at the request of the Seller, purchase
Receivable Interests from time to time. In addition, the Investors
have agreed to provide a liquidity facility to FALCON.
The First National Bank of Chicago has been requested and is
willing to act as Agent on behalf of FALCON and the Investors in
accordance with the terms hereof.
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. Purchase Facility.
(a) Upon the terms and subject to the conditions hereof, the Seller may,
at its option, sell and assign Receivable Interests to the Agent for the
benefit of the Purchasers. FALCON may, at its option, instruct the Agent to
purchase on behalf of FALCON, or if FALCON shall decline to purchase, unless
the Seller cancels such purchase in accordance with SECTION 1.2, the Agent
shall purchase on behalf of the Investors, Receivable Interests from time to
time during the period from the date hereof to but not including the Facility
Termination Date. The Seller hereby assigns, transfers and conveys to the
Agent for the benefit of the relevant Purchaser(s), and the Agent hereby
acquires, all of the Seller's now owned and existing and hereafter arising or
acquired right, title and interest in and to the Receivable Interests.
(b) The Seller may, upon at least 30 Business Days' notice to the Agent,
terminate in whole or reduce in part, ratably among the Investors, the unused
portion of the
9
Purchase Limit; PROVIDED THAT each partial reduction of the Purchase Limit
shall be in an amount equal to $5,000,000 or an integral multiple thereof.
Section 1.2. Making Incremental Purchases. The Seller shall provide the
Agent with a purchase notice, in substantially the form of EXHIBIT IX hereto
(each, a "PURCHASE NOTICE"), at least one (1) Business Day prior to the initial
purchase of Receivable Interests hereunder and at least three (3) Business Days
prior to each subsequent Incremental Purchase. Each Purchase Notice shall,
except as set forth below, be irrevocable and shall specify the requested
Purchase Price (which shall not be less than $3,000,000) and date of such
Incremental Purchase, together with the duration of the initial Tranche Period
and the initial Discount Rate related thereto. Following receipt of a Purchase
Notice, the Agent will determine whether FALCON agrees to make the purchase.
If FALCON declines to make a proposed purchase, the Agent shall promptly advise
the Seller and the Servicer of such fact, and (i) the Seller may thereupon
cancel the Purchase Notice or (ii) in the absence of such a cancellation, the
Incremental Purchase of the Receivable Interests will be made by the Investors.
On the date of each Incremental Purchase, upon satisfaction of the applicable
conditions precedent set forth in ARTICLE IV, FALCON or each Investor, as
applicable, shall deposit to the Facility Account, in immediately available
funds, no later than 12:00 noon (Chicago time), an amount equal to (i) in the
case of FALCON, the aggregate Purchase Price of each Receivable Interest FALCON
is then purchasing or (ii) in the case of an Investor, such Investor's Pro Rata
Share of the aggregate Purchase Price of each of the Receivable Interests the
Investors are purchasing.
Section 1.3. Selection of Tranche Periods and Discount Rates.
(a) Each Receivable Interest shall at all times have an associated amount
of Capital, a Discount Rate and Tranche Period applicable to it. Not less than
$3,000,000 of Capital may be allocated to any single Receivable Interest. The
Seller shall request Discount Rates and Tranche Periods for the Receivable
Interests of the Purchasers. For the Receivable Interests of FALCON, the
Seller may select the CP Rate, with the concurrence of the Agent, or the Base
Rate; for the Receivable Interests of the Investors, the Seller may select the
LIBOR Rate or the Base Rate. The Seller shall by 9:00 a.m. (Chicago time):
(i) at least three (3) Business Days prior to the expiration of
any then existing Tranche Period with respect to which the LIBOR
Rate is being requested as a new Discount Rate,
(ii) at least one (1) Business Day prior to the expiration of
any then existing Tranche Period with respect to which the CP Rate
is being requested as a new Discount Rate, and
2
10
(iii) at least one (1) Business Day prior to the expiration of
any Tranche Period with respect to which the Base Rate is being
requested as a new Discount Rate,
give the Agent irrevocable notice of the new Tranche Period and Discount Rate
for the Receivable Interest associated with such expiring Tranche Period. The
Agent shall, promptly following its knowledge thereof, advise the Seller in any
instance if the Tranche Period selected by the Seller at any time is not
acceptable to FALCON or the Investors, as applicable. If the Seller fails to
request timely a Discount Rate and/or a Tranche Period for any Receivable
Interest pursuant to the terms of this SECTION 1.3, or the Seller and the Agent
fail to agree on an acceptable duration for any Tranche Period, the Discount
Rate shall be the CP Rate (if FALCON is the applicable Purchaser) or the Base
Rate, in the Agent's sole discretion, and the applicable Tranche Period shall
be a period of one Business Day commencing on the day requested in the Purchase
Notice or the last day of the then expiring Tranche Period for such Receivable
Interest, as applicable. Until the Seller gives notice to the Agent of another
Discount Rate, the initial Discount Rate for any Receivable Interest
transferred to the Investors pursuant to SECTION 2.1 shall be the Base Rate.
(b) If any Investor notifies the Agent that it has determined that funding
its Pro Rata Share of the Receivable Interests of the Investors at a LIBOR 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
Receivable Interests at such LIBOR Rate are not available or (ii) such LIBOR
Rate does not accurately reflect the cost of acquiring or maintaining a
Receivable Interest at such LIBOR Rate, then the Agent shall suspend the
availability of such LIBOR Rate and require the Seller to select a new Discount
Rate for any Receivable Interest accruing Discount at such LIBOR Rate.
Section 1.4. Percentage Evidenced by Receivable Interests. Each
Receivable Interest shall be initially computed on its date of purchase.
Thereafter, until its Liquidation Day, each Receivable Interest shall be
automatically recomputed (or deemed to be recomputed) on each day prior to its
Liquidation Day. The variable percentage represented by any Receivable
Interest as computed (or deemed recomputed) as of the close of business on the
day immediately preceding its Liquidation Day shall remain constant at all
times after such Liquidation Day.
Section 1.5. Dividing or Combining Receivable Interests. The Seller or
the Agent may, upon notice to and consent by the other received not later than
the applicable time required under SECTION 1.3(A) prior to the end of a Tranche
Period for any Receivable Interest, take any of the following actions with
respect to such Receivable Interest: (i) divide the Receivable Interest into
two or more Receivable Interests having aggregate Capital equal to the Capital
of such divided Receivable Interest, (ii) combine the Receivable Interest with
another Receivable Interest with a Tranche Period ending on the same day,
creating a new Receivable Interest having Capital equal to the Capital of the
two
3
11
Receivable Interests combined or (iii) combine the Receivable Interest with
a Receivable Interest to be purchased on such day by such Purchaser, creating a
new Receivable Interest having Capital equal to the Capital of the two
Receivable Interests combined, PROVIDED THAT a Receivable Interest of FALCON
may not be combined with a Receivable Interest of the Investors.
Section 1.6. Reinvestment Purchases and Pre-Liquidation Settlements. At
any time that any Collection is received by the Servicer after the initial
purchase, or any other Incremental Purchase, of a Receivable Interest hereunder
and on or prior to the Liquidation Day of such Receivable Interest:
(a) the Servicer (at any time the Servicer is not the Seller,
the Originator or an Affiliate thereof) may retain a portion of such
Collection in payment of any Servicer Fee then due and owing;
(b) thereafter, the Servicer is hereby directed to pay a
portion of the remainder, if any, of such Collection to the Agent in
payment of any accrued and unpaid (i) Discount and (ii) fees under
the Fee Letter, in each case that are due and owing on such day; and
(c) thereafter, except to the extent the Seller wishes to
reduce the outstanding amount of Capital of a Receivable Interest
(in which case the provisions of SECTION 1.7 shall be applicable to
the portion of such Receivable Interest represented by such
reduction in Capital), the Seller hereby requests and the Purchasers
hereby agree to make, simultaneously with such receipt, a
reinvestment (each, a "REINVESTMENT") with that portion of the
remainder of such Collection that is part of such Receivable
Interest such that after giving effect to such Reinvestment, the
amount of the Capital of such Receivable Interest immediately after
any such receipt and corresponding Reinvestment shall be equal to
the amount of the Capital immediately prior to such receipt;
(d) thereafter, the Servicer (if the Servicer is the Seller,
the Originator or an Affiliate thereof) may retain a portion of the
remainder, if any, of such Collection to payment of the Servicer
Fee;
(e) thereafter, if requested by the Seller, any remaining
portion of such Collection may be applied to making an additional
Incremental Purchase in accordance with the terms of this Agreement;
and
(f) finally, any remaining portion of such Collection shall be
paid to the Seller, as the Seller may direct; PROVIDED, HOWEVER,
that in the event that such remaining portion follows an election by
the Seller not to reinvest Collections pursuant to SECTION 1.6(C),
the Servicer shall continue to hold, in trust in the Facility
Account, the Seller's undivided percentage interest of such
Collection which is not reinvested until the earlier to occur of (i)
establishment
4
12
by the Seller or the Servicer or subservicer of a
software modification which enables the identification of
Collections related to Excluded Receivables separate and apart from
the Receivables and demonstration by the Seller that it is entitled
to receive such remaining portion as a Collection in respect of an
Excluded Receivable, or (ii) a subsequent Incremental Purchase in at
least the amount of such un-reinvested funds.
Section 1.7. Liquidation Settlement Procedures. On the Liquidation Day
of a Receivable Interest and on each day thereafter, the Servicer shall set
aside and hold in trust for (a) the holder of such Receivable Interest, the
percentage evidenced by such Receivable Interest of Collections received on
such day, and (b) for the Seller, all remaining Collections. On the last day
of each Tranche Period of a Receivable Interest after the occurrence of its
Liquidation Day:
(i) until the Seller or the Servicer is able to identify which
Collections relate to Excluded Receivables, the Servicer shall
continue to hold, in trust in the Facility Account, the Seller's
undivided percentage interest of all Collections in respect of such
Receivable Interest which are received on and after the Liquidation
Day of a Receivable Interest,
(ii) once the Seller or the Servicer is able to identify which
Collections relate to Excluded Receivables, the Servicer shall remit
to the Seller the Seller's undivided percentage interest of all
Collections in respect of such Receivable Interest which are
received on and after the Liquidation Day of a Receivable Interest
and all Collections in respect of Excluded Receivables, and
(iii) the Servicer shall remit to the Agent's account the
amounts set aside pursuant to the preceding clause (a), together
with any remaining amounts set aside pursuant to SECTION 1.8 prior
to such day, but not to exceed the sum of (A) the accrued Discount
for such Receivable Interest, (B) the Capital of such Receivable
Interest, (C) the aggregate of all fees and other amounts then owed
hereunder or under the Fee Letter by Seller to the Agent or any of
the Purchasers, and (D) the accrued Servicer Fee for such Receivable
Interest.
If there shall be insufficient funds on deposit for the Servicer to distribute
funds to the Agent in payment in full of the amounts described in the foregoing
clause (iii), the Servicer shall distribute such funds:
first, to reimbursement of the Agent's costs of collection and
enforcement of this Agreement,
5
13
second, to the Servicer (if the Servicer is not the Seller, the
Originator or an Affiliate thereof) in payment of all accrued
Servicer Fee in respect of such Receivable Interest,
third, in payment of all accrued Discount for such Receivable
Interest,
fourth, in reduction of the Capital of the Receivable
Interests,
fifth, in payment of all fees under the Fee Letter and other
amounts, if any, then due and owing hereunder to the Agent or the
Purchasers, and
sixth, to the Servicer (if the Seller, the Originator or an
Affiliate thereof is the Servicer) in payment of all accrued
Servicer Fee in respect of such Receivable Interest.
Collections allocated to the Receivable Interests of the Investors shall be
shared ratably by the Investors in accordance with their Pro Rata Shares.
Collections applied to the payment of fees, expenses, Discount and all other
amounts payable by the Seller to or for the account of the Agent and the
Purchasers hereunder shall be allocated ratably among the Agent and the
Purchasers in accordance with such amounts owing to each of them. To the
extent Collections are available for such purpose in accordance with the
foregoing, the accrued Servicer Fee in respect of each Receivable Interest
shall be remitted to the Servicer. Following the date on which the Aggregate
Unpaids are reduced to zero, the Servicer shall pay to Seller any remaining
Collections set aside and held by the Servicer pursuant to this SECTION 1.7.
Section 1.8. Deemed Collection of Dilutions and Certain Other Recourse
Obligations. If on any day the Outstanding Balance of, or Finance Charges in
respect of, a Receivable is either (a) reduced as a result of any defective or
rejected services, any cash discount or any adjustment by the Seller or the
Originator or (b) 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), the Seller shall be deemed to have
received on such day a Collection of such Receivable in the amount of such
reduction or cancellation. If on any day any of the representations or
warranties in SECTION 3.1 (other than SECTION 3.1(K)) are no longer true with
respect to a Receivable, the Seller shall be deemed to have received on such
day a Collection of such Receivable in full. If the Seller receives any
Collections or is deemed to receive Collections pursuant to this SECTION 1.8 or
otherwise, the Seller shall immediately pay such Collections or deemed
Collections to the Servicer and, at all times prior to such payment, such
Collections shall be held in trust by the Seller for the exclusive benefit of
the Purchasers and the Agent.
Section 1.9. Discount; Payments and Computations, Etc.
(a) Discount shall accrue for each Receivable Interest for each day
occurring during the Tranche Period for such Receivable Interest. On the last
day of each
6
14
Tranche Period, the Seller shall pay to the Agent an amount equal
to the accrued and unpaid Discount for such Tranche Period.
(b) Notwithstanding any limitation on recourse contained in this
Agreement, the Seller shall pay to the Agent, for the account of the relevant
Purchasers, the fees set forth in the Fee Letter, all amounts payable as
Discount, all amounts payable pursuant to ARTICLE VIII, if any, all Servicer
costs, if any, payable pursuant to SECTION 6.2 and on demand therefor, any
Early Collection Fee. If any Person fails to pay any amount when due
hereunder, such Person agrees to pay, on demand, the Default Fee.
(c) All amounts to be paid or deposited by any Person hereunder shall be
paid or deposited in accordance with the terms hereof no later than 12:00 noon
(Chicago time) on the day when due in immediately available funds; if such
amounts are payable to a Purchaser they shall be paid to the Agent, for the
account of such Purchaser, at the account specified in SECTION 1.9(D) until
otherwise notified by the Agent. The Agent shall, in accordance with its
customary practice, provide invoices from time to time to the Seller in respect
of Discount and other fees and expenses payable by the Seller hereunder. In
the event the Seller shall at any time fail to pay any amount when due
hereunder, the Agent may, on notice to the Seller, debit the Facility Account
for such amount. All computations of Discount and per annum fees hereunder and
under the Fee Letter shall be made on the basis of a year of 360 days for the
actual number of days elapsed (including the first but excluding the last day).
All per annum fees shall be payable monthly in arrears. If any amount
hereunder shall be payable on a day which is not a Business Day, such amount
shall be payable on the next succeeding Business Day.
(d) All amounts payable to the Agent or any Purchaser under this Agreement
or the Fee Letter shall be made in immediately available funds to FMSD Clearing
Account no. 7321-7683 at The First National Bank of Chicago, in Chicago,
Illinois, ABA No. 071000013, Reference: Yellow Receivables Corporation, until
otherwise notified by the Agent.
Section 1.10. Maximum Aggregate of Receivable Interests; Grant of
Security Interest. The Seller shall ensure that the aggregate Receivable
Interests of the Purchasers shall at no time exceed 100%. If, on any day, the
aggregate Receivable Interests of the Purchasers exceeds 100%, the Seller shall
immediately pay to the Agent an amount to be applied to reduce the Capital of
the Receivable Interests, such that after giving effect to such payment the
aggregate of the Receivable Interest equals or is less than 100%. Such amount
shall be applied to the reduction of the Capital of the Receivable Interests
ratably in accordance with the percentages of the Receivable Interests. Any
amounts received by the Investors pursuant to the preceding sentence shall be
applied ratably in accordance with their Pro Rata Shares. The Seller hereby
grants to the Agent for the ratable benefit of the Purchasers a security
interest in all of its interest in the Receivables, Related Security,
Collections and proceeds thereof to secure payment of the Aggregate Unpaids,
including its indemnity obligations under ARTICLE VIII and all other
obligations owed hereunder to the Purchasers.
7
15
Section 1.11. Seller's Extinguishment. The Seller shall have the right,
on not less than thirty (30) Business Days' written notice to the Agent, at any
time following the reduction of the Capital to a level that is less than 5.0%
of the original Purchase Limit, to repurchase from the Purchasers all, but not
less than all, of the then outstanding Receivable 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.
Section 1.12. Servicer Fee. To the extent of available Collections in
accordance with the priorities set forth in SECTIONS 1.6 and 1.7, on the first
Business Day of each month while any Aggregate Unpaids are outstanding, the
Servicer shall be paid a servicing and collection fee (the "SERVICER FEE")
equal to 2.0% per annum on the average daily amount of Capital during the
calendar month (or portion thereof) then most recently ended. The Servicer Fee
shall be computed for actual days elapsed on the basis of a year consisting of
365 days.
ARTICLE II
LIQUIDITY FACILITY
Section 2.1. Transfer to Investors. Each Investor hereby agrees, subject
to SECTION 2.4, that immediately upon written notice from FALCON delivered on
or prior to the Liquidity Termination Date, it shall acquire by assignment from
FALCON, without recourse or warranty, its Pro Rata Share of one or more of the
Receivable Interests of FALCON as specified by FALCON. Each Investor shall
promptly pay to the Agent at an account designated by the Agent, for the
benefit of FALCON, its Acquisition Amount. Unless an Investor has notified the
Agent that it does not intend to pay its Acquisition Amount, the Agent may
assume that such payment has been made and may, but shall not be obligated to,
make the amount of such payment available to FALCON in reliance upon such
assumption. FALCON hereby sells and assigns to the Agent for the ratable
benefit of the Investors, and the Agent hereby purchases and assumes from
FALCON, effective upon the receipt by FALCON of the FALCON Transfer Price, the
Receivable Interests of FALCON which are the subject of any transfer pursuant
to this ARTICLE II.
Section 2.2. Transfer Price Reduction Discount. If the Adjusted
Liquidity Price is included in the calculation of the FALCON Transfer Price for
any Receivable Interest, each Investor agrees that the Agent shall pay to
FALCON the Reduction Percentage of any Discount received by the Agent with
respect to such Receivable Interest.
Section 2.3. Payments to FALCON. In consideration for the reduction of
the FALCON Transfer Prices by the FALCON Transfer Price Reductions, effective
only at such time as the aggregate amount of the Capital of the Receivable
Interests of the Investors equals the FALCON Residual, each Investor hereby
agrees that the Agent shall not
8
16
distribute to the Investors and shall immediately remit to FALCON any
Discount, Collections or other payments received by it to be applied pursuant
to the terms hereof or otherwise to reduce the Capital of the Receivable
Interests of the Investors.
Section 2.4. Limitation on Commitment to Purchase from FALCON.
Notwithstanding anything to the contrary in this Agreement, no Investor shall
have any obligation to purchase any Receivable Interest from FALCON, pursuant
to SECTION 2.1 or otherwise, if: (i) FALCON shall have voluntarily commenced
any proceeding or filed any petition under any bankruptcy, insolvency or
similar law seeking the dissolution, liquidation or reorganization of FALCON or
taken any corporate action for the purpose of effectuating any of the
foregoing; or (ii) involuntary proceedings or an involuntary petition shall
have been commenced or filed against FALCON by any Person under any bankruptcy,
insolvency or similar law seeking the dissolution, liquidation or
reorganization of FALCON and such proceeding or petition shall have not been
dismissed.
Section 2.5. Defaulting Investors. If one or more Investors defaults in
its obligation to pay its Acquisition Amount pursuant to SECTION 2.1 (each such
Investor shall be called a "DEFAULTING INVESTOR" and the aggregate amount of
such defaulted obligations being herein called the "FALCON TRANSFER PRICE
DEFICIT"), then upon notice from the Agent, each Investor other than the
Defaulting Investors (a "NON-DEFAULTING INVESTOR") shall promptly pay to the
Agent, in immediately available funds, an amount equal to the lesser of (x)
such Non-Defaulting Investor's proportionate share (based upon the relative
Commitments of the Non-Defaulting Investors) of the FALCON Transfer Price
Deficit and (y) the unused portion of such Non-Defaulting Investor's
Commitment. A Defaulting Investor shall forthwith upon demand pay to the Agent
for the account of the Non-Defaulting Investors all amounts paid by each
Non-Defaulting Investor on behalf of such Defaulting Investor, together with
interest thereon, for each day from the date a payment was made by a
Non-Defaulting Investor until the date such Non-Defaulting Investor has been
paid such amounts in full, at a rate per annum equal to the Federal Funds
Effective Rate plus 0.5% for the two Business Days and 2.0% per annum
thereafter. In addition, without prejudice to any other rights that FALCON may
have under applicable law, each Defaulting Investor shall pay to FALCON
forthwith upon demand, the difference between such Defaulting Investor's unpaid
Acquisition Amount and the amount paid with respect thereto by the
non-Defaulting Investors, together with interest thereon, for each day from the
date of the Agent's request for such Defaulting Investor's Acquisition Amount
pursuant to SECTION 2.1 until the date the requisite amount is paid to FALCON
in full, at a rate per annum equal to the Federal Funds Effective Rate plus
2.0%.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Seller Representations and Warranties. The Seller hereby
represents and warrants to the Purchasers that:
9
17
(a) Corporate Existence and Power. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation, and has all corporate power and all governmental licenses,
authorizations, consents and approvals required to carry on its business in
each jurisdiction in which its business is conducted.
(b) No Conflict. The execution, delivery and performance by the Seller of
this Agreement and each other Transaction Document, and the Seller's use of the
proceeds of purchases made hereunder, are within its corporate powers, have
been duly authorized by all necessary corporate action, do not contravene or
violate (i) its certificate or articles of incorporation or by-laws, (ii) any
law, rule or regulation applicable to it, (iii) any restrictions under any
agreement, contract or instrument to which it is a party or by which it or any
of its property is bound, or (iv) any order, writ, judgment, award, injunction
or decree binding on or affecting it or its property, and do not result in the
creation or imposition of any Adverse Claim on assets of the Seller or its
Subsidiaries (except created hereunder); and no transaction contemplated hereby
requires compliance with any bulk sales act or similar law. This Agreement and
each other Transaction Document has been duly authorized, executed and
delivered by the Seller.
(c) Governmental Authorization. Other than the filing of the financing
statements required hereunder, no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or regulatory body
is required for the due execution, delivery and performance by the Seller of
the Transaction Documents.
(d) Binding Effect. The Transaction Documents constitute the legal, valid
and binding obligations of the Seller enforceable against the Seller in
accordance with their respective terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally.
(e) Accuracy of Information. All information heretofore furnished by the
Seller 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
hereafter furnished by the Seller or any of its Affiliates to 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.
(f) Use of Proceeds. No proceeds of any purchase hereunder will be used
(i) for a purpose which violates, or would be inconsistent with, Regulation G,
T, U or X promulgated by the Board of Governors of the Federal Reserve System
from time to time or (ii) to acquire any security in any transaction which is
subject to Section 13 or 14 of the Securities Exchange Act of 1934, as amended.
10
18
(g) Title to Receivables. Each Receivable has been purchased by the
Seller from the Originator in accordance with the terms of the Sale Agreement,
and the Seller has thereby irrevocably obtained all legal and equitable title
to, and has the legal right to sell and encumber, such Receivable, its
Collections and the Related Security. Each such Receivable has been
transferred to the Seller free and clear of any Adverse Claim. Without
limiting the foregoing, there has been duly filed all financing statements or
other similar instruments or documents necessary under the UCC of all
appropriate jurisdictions (or any comparable law) to perfect the Seller's
ownership interest in such Receivable.
(h) Good Title; Perfection. Immediately prior to each purchase hereunder,
the Seller shall be the legal and beneficial owner of the Receivables and
Related Security with respect thereto, free and clear of any Adverse Claim,
except as created by the Transaction Documents. This Agreement is effective
to, and shall, upon each purchase hereunder, transfer to the relevant Purchaser
or Purchasers (and such Purchaser or Purchasers shall acquire from the Seller)
a valid and perfected first priority undivided percentage ownership interest in
each Receivable existing or hereafter arising and in the Related Security and
Collections with respect thereto, free and clear of any Adverse Claim, except
as created by the Transactions Documents.
(i) Places of Business. The principal places of business and chief
executive office of the Seller and the offices where the Seller keeps all its
Records are located at the address(es) listed on EXHIBIT II or such other
locations notified to the Agent in accordance with SECTION 5.2(A) in
jurisdictions where all action required by SECTION 5.2(A) has been taken and
completed. The Seller's Federal Employer Identification Number is correctly
set forth on EXHIBIT II.
(j) Collection Banks; etc. Except as otherwise notified to the Agent in
accordance with SECTION 5.2(B):
(i) the Seller has instructed, or has caused the Originator to
instruct, all Obligors to pay all Collections directly to a
segregated lock-box identified on EXHIBIT III hereto,
(ii) in the case of all proceeds remitted to any such lock-box
which is now or hereafter established, such proceeds will be
deposited directly by the applicable Collection Bank into a
concentration account or a depository account listed on EXHIBIT III,
(iii) the names and addresses of all Collection Banks, together
with the account numbers of the Collection Accounts of the Seller at
each Collection Bank, are listed on EXHIBIT III, and
(iv) each lock-box and Collection Account to which Collections
are remitted shall be subject to a Collection Account Agreement that
is then in full force and effect.
11
19
In the case of lock-boxes and Collection Accounts identified on EXHIBIT III
which were established by the Originator or by any Person other than the
Seller, exclusive dominion and control thereof has been transferred to the
Seller. The 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 lock-box
or Collection Account at a future time or upon the occurrence of a future
event.
(k) Material Adverse Effect. Since April 30, 1996, no event has occurred
which would have a Material Adverse Effect.
(l) Names. In the past five years, the Seller has not used any corporate
names, trade names or assumed names other than the name in which it has
executed this Agreement.
(m) Actions, Suits. There are no actions, suits or proceedings pending,
or to the best of the Seller's knowledge, threatened, against or affecting the
Seller or the Originator, or any of the respective properties of the Seller or
the Originator, in or before any court, arbitrator or other body, which are
reasonably likely to (i) adversely affect the collectibility of a material
portion of the Receivables, (ii) materially adversely affect the financial
condition of the Seller or the Originator or (iii) materially adversely affect
the ability of the Seller or the Originator to perform its obligations under
the Transaction Documents. Neither the Seller nor the Originator is in default
with respect to any order of any court, arbitrator or governmental body.
(n) Credit and Collection Policies. With respect to each Receivable, each
of the Originator, the Seller and the Servicer has complied in all material
respects with the Credit and Collection Policy.
(o) Payments to Originator. With respect to each Receivable transferred
to the Seller, the Seller has given reasonably equivalent value to the
Originator in consideration for such transfer of such Receivable and the
Related Security with respect thereto under the Sale Agreement and such
transfer was not made for or on account of an antecedent debt. No transfer by
the Originator of any Receivable is or may be voidable under any Section of the
Bankruptcy Reform Act of 1978 (11 U.S.C. Section Section 101 et seq.), as
amended.
(p) Ownership of the Seller. The Originator owns, directly or indirectly,
100% of the issued and outstanding capital stock of the Seller. Such capital
stock is validly issued, fully paid and nonassessable and there are no options,
warrants or other rights to acquire securities of the Seller.
(q) Not an Investment Company. The Seller is not an "investment company"
within the meaning of the Investment Company Act of 1940, as amended from time
to time, or any successor statute.
12
20
(r) Purpose. The Seller has determined that, from a business viewpoint,
the purchase of Receivables and related interests from the Originator under the
Sale Agreement, and the sale of Receivable Interests to the Purchasers and the
other transactions contemplated herein, are in the best interest of the Seller.
(s) Net Receivables Balance. Both before and after giving effect to each
Incremental Purchase and Reinvestment, the Net Receivables Balance equals or
exceeds the product of (i) 100% + the Aggregate Reserve Percentage, multiplied
by (ii) the aggregate Capital outstanding.
(t) Contracts Governing Excluded Receivables. Aside from contracts
applicable to Approved Offset Receivables, the only contracts listed on EXHIBIT
X hereto are contracts of the Originator that (i) by virtue of their
confidentiality provisions would preclude the Originator from disclosing to any
Person information that is included on an Invoice, and/or (ii) by their terms
preclude the assignment to any Person of any of the Originator's rights to
payment thereunder (notwithstanding the provisions of Section 9-318 of the
UCC).
Section 3.2. Investor Representations and Warranties. Each Investor
hereby represents and warrants to the Agent and FALCON that:
(a) Existence and Power. Such Investor is a corporation or a banking
association duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization, and has all
corporate power to perform its obligations hereunder.
(b) No Conflict. The execution, delivery and performance by such Investor
of this Agreement are within its corporate powers, have been duly authorized by
all necessary corporate action, do not contravene or violate (i) its
certificate or articles of incorporation or association or by-laws, (ii) any
law, rule or regulation applicable to it, (iii) any restrictions under any
agreement, contract or instrument to which it is a party or any of its property
is bound, or (iv) any order, writ, judgment, award, injunction or decree
binding on or affecting it or its property, and do not result in the creation
or imposition of any Adverse Claim on its assets. This Agreement has been duly
authorized, executed and delivered by such Investor.
(c) Governmental Authorization. No authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance by
such Investor of this Agreement.
(d) Binding Effect. This Agreement constitutes the legal, valid and
binding obligation of such Investor enforceable against such Investor in
accordance with its terms,
13
21
except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws relating to or limiting
creditors' rights generally.
ARTICLE IV
CONDITIONS OF PURCHASES
Section 4.1. Conditions Precedent to Initial Purchase. The initial
purchase of a Receivable Interest under this Agreement is subject to the
conditions precedent that (a) the Agent shall have received on or before the
date of such purchase those documents listed on SCHEDULE A hereto, and (b) the
Agent shall have been paid all fees required to be paid on such date pursuant
to the terms of the Fee Letter.
Section 4.2. Conditions Precedent to All Purchases and Reinvestments.
Each purchase of a Receivable Interest (other than pursuant to SECTION 2.1) and
each Reinvestment shall be subject to the further conditions precedent that:
(a) in the case of each such purchase, the Servicer shall have delivered
to the Agent on or prior to the date of such purchase, in form and substance
satisfactory to the Agent, all Monthly Reports as and when due under SECTION
6.5;
(b) on the date of each such purchase or Reinvestment, the following
statements shall be true both before and after giving effect to such purchase
or Reinvestment (and acceptance of the proceeds of such purchase or
Reinvestment shall be deemed a representation and warranty by the Seller that
such statements are then true):
(i) the representations and warranties set forth in SECTION 3.1
are correct on and as of the date of such purchase or Reinvestment
as though made on and as of such date; PROVIDED, HOWEVER, that the
representation and warranty set forth in SECTION 3.1(K) need only be
true and correct as of the date of the initial purchase of
Receivable Interests hereunder;
(ii) no event has occurred, or would result from such purchase
or Reinvestment, that will constitute a Servicer Default, and no
event has occurred and is continuing, or would result from such
purchase or Reinvestment, that would constitute a Potential Servicer
Default; and
(iii) the Liquidity Termination Date shall not have occurred,
the aggregate Capital of all Receivable Interests shall not exceed
the Purchase Limit and the aggregate Receivable Interests shall not
exceed 100%; and
(c) the Agent shall have received such other approvals, opinions or
documents as it may reasonably request.
14
22
ARTICLE V
COVENANTS
Section 5.1. Affirmative Covenants of Seller. Until the date on which
the Aggregate Unpaids have been indefeasibly paid in full, the Seller hereby
covenants, individually and in its capacity as Servicer, that:
(a) Financial Reporting. The Seller will maintain a system of accounting
established and administered in accordance with generally accepted accounting
principles, and furnish to the Agent:
(i) Annual Reporting. Within 90 days after the close of each of its
fiscal years, financial statements for such fiscal year certified in a
manner acceptable to the Agent by the Chief Financial Officer of the
Seller.
(ii) Quarterly Reporting. Within 45 days after the close of the
first three quarterly periods of each of its fiscal years, balance sheets
as at the close of each such period and statements of income and retained
earnings and a statement of cash flows for the period from the beginning
of such fiscal year to the end of such quarter, all certified by its Chief
Financial Officer.
(iii) Compliance Certificate. Together with the financial statements
required hereunder, a compliance certificate in substantially the form of
EXHIBIT IV signed by the Seller's Chief Financial Officer and dated the
date of such annual financial statement or such quarterly financial
statement, as the case may be.
(iv) Copies of Notices, Etc. under Sale Agreement and Other
Transaction Documents. Forthwith upon its receipt of any notice, request
for consent, financial statements of the Originator, certification, report
or other communication under or in connection with any Transaction
Document from any Person other than the Agent or FALCON, copies of the
same.
(v) Change in Credit and Collection Policy. At least 30 days prior
to the effectiveness of any material change in or amendment to the Credit
and Collection Policy, a copy of the Credit and Collection Policy then in
effect and a notice indicating such change or amendment.
(vi) Replacement of Contracts Applicable to Excluded Receivables.
Not less than once every 3 months while any Excluded Receivables exist (or
more frequently if the Seller desires), an updated version of EXHIBIT X
hereto.
(vii) Other Information. Such other information (including
non-financial information) as the Agent or any Purchaser may from time to
time reasonably request.
15
23
(b) Notices. The Seller will notify the Agent in writing of any of the
following immediately upon learning of the occurrence thereof, describing the
same and, if applicable, the steps being taken with respect thereto:
(i) Servicer Defaults or Potential Servicer Defaults. The
occurrence of each Servicer Default or each Potential Servicer
Default, by a statement of the Chief Financial Officer of the
Seller;
(ii) Judgment. The entry of any judgment or decree against the
Seller;
(iii) Litigation. The institution of any litigation,
arbitration proceeding or governmental proceeding against the Seller
or to which the Seller becomes party;
(iv) Termination Date under Sale Agreement. The declaration by
the Originator of the "TERMINATION DATE" under the Sale Agreement;
(v) Downgrade. Any downgrade in the rating of any Indebtedness
of the Seller, the Originator or Yellow Corporation by Standard &
Poor's Ratings Group or by Moody's Investors Service, Inc., setting
forth the Indebtedness affected and the nature of such change;
and/or
(vi) Labor Strike, Walkout, Lockout or Slowdown. The
commencement or threat of any labor strike, walkout, lockout or
concerted labor slowdown which prevents, or could reasonably be
likely to prevent, pick-ups, shipments and/or deliveries by the
Originator (collectively, "LABOR ACTIONS").
(c) Compliance with Laws. The Seller will comply in all material respects
with all applicable laws, rules, regulations, orders writs, judgments,
injunctions, decrees or awards to which it may be subject.
(d) Audits. The Seller will furnish to the Agent from time to time such
information with respect to it and the Receivables as the Agent may reasonably
request. The Seller shall, from time to time during regular business hours as
requested by the Agent upon reasonable notice, permit the Agent, or its agents
or representatives (and shall cause the Originator to permit the Agent or its
agents or representatives) (i) to examine and make copies of and abstracts from
all Records in the possession or under the control of the Seller or the
Originator relating to Receivables and the Related Security, including, without
limitation, the related Invoices, and (ii) to visit the offices and properties
of the Seller or the Originator for the purpose of examining such materials
described in clause (i) above, and to discuss matters relating to the Seller's
or the Originator's financial condition or the Receivables and the Related
Security or the Seller's performance hereunder, or the
16
24
Originator's performance under any of the other Transaction Documents, or the
Seller's or the Originator's performance under the Invoices with any of the
officers or employees of the Seller or the Originator having knowledge of such
matters.
(e) Keeping and Marking of Records and Books.
(i) The Seller will, and will cause the Originator to, maintain and
implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing Receivables in the
event of the destruction of the originals thereof), and keep and maintain
all documents, books, records and other information reasonably necessary
or advisable for the collection of all Receivables (including, without
limitation, records adequate to permit the immediate identification of
each new Receivable and all Collections of and adjustments to each
existing Receivable). The Seller will, and will cause the Originator to,
give the Agent notice of any material change in the administrative and
operating procedures referred to in the previous sentence.
(ii) The Seller will, and will cause the Originator to, (a) on or
prior to the date hereof, mark its master data processing records and
other books and records relating to the Receivable Interests with a
legend, acceptable to the Agent, describing the Receivable Interests and
(b) upon the request of the Agent: (A) mark each Invoice with a legend
describing the Receivable Interests and (B) deliver to the Agent all
Invoices (including, without limitation, all multiple originals of any
such Invoice) relating to the Receivables.
(f) Compliance with Invoices and Credit and Collection Policy. The Seller
will, and will cause the Originator to, timely and fully (i) perform and comply
with all provisions, covenants and other promises required to be observed by it
under the Invoices (other than bills of lading) related to the Receivables, and
(ii) comply in all material respects with any bills of lading included in the
Invoices and with the Credit and Collection Policy. The Seller will, and will
cause the Originator to, pay when due any taxes payable in connection with the
Receivables.
(g) Purchase of Receivables from the Originator. With respect to each
Receivable purchased under the Sale Agreement, the Seller shall (or shall cause
the Originator to) take all actions necessary to vest legal and equitable title
to such Receivable and the Related Security irrevocably in the Seller,
including, without limitation, the filing of all financing statements or other
similar instruments or documents necessary under the UCC of all appropriate
jurisdictions (or any comparable law) to perfect the Seller's interest in such
Receivable and such other action to perfect, protect or more fully evidence the
interest of the Seller as the Agent may reasonably request.
(h) Ownership Interest. The Seller shall take all necessary action to
establish and maintain a valid and perfected first priority undivided
percentage ownership interest in the Receivables and the Related Security and
Collections with respect thereto, to
17
25
the full extent contemplated herein, in favor of the Agent and the Purchasers,
including, without limitation, taking such action to perfect, protect or more
fully evidence the interest of the Agent and the Purchasers hereunder as the
Agent may reasonably request.
(i) Payment to the Originator. With respect to any Receivable purchased
by the Seller from the Originator, such sale shall be effected under, and in
strict compliance with the terms of, the Sale Agreement, including, without
limitation, the terms relating to the amount and timing of payments to be made
to the Originator in respect of the purchase price for such Receivable.
(j) Performance and Enforcement of Sale Agreement. The Seller shall
timely perform the obligations required to be performed by the Seller, and
shall vigorously enforce the rights and remedies accorded to the Seller, under
the Sale Agreement. The Seller shall take all actions to perfect and enforce
its rights and interests (and the rights and interests of the Purchasers and
the Agents, as assignees of the Seller) under the 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 Sale Agreement.
(k) Purchasers' Reliance. The Seller acknowledges that the Purchasers are
entering into the transactions contemplated by this Agreement in reliance upon
the Seller's identity as a legal entity that is separate from the Originator.
Therefore, from and after the date of execution and delivery of this Agreement,
the Seller shall take all reasonable steps including, without limitation, all
steps that the Agent or any Purchaser may from time to time reasonably request
to maintain the Seller's identity as a separate legal entity and to make it
manifest to third parties that the Seller is an entity with assets and
liabilities distinct from those of the Originator and any Affiliates thereof
and not just a division of the Originator. Without limiting the generality of
the foregoing and in addition to the other covenants set forth herein, the
Seller shall:
(i) conduct its own business in its own name and require that all
full-time employees of the Seller, if any, identify themselves as such and
not as employees of the Originator (including, without limitation, by
means of providing appropriate employees with business or identification
cards identifying such employees as the Seller's employees);
(ii) compensate all employees, consultants and agents directly, from
the Seller's bank accounts, for services provided to the Seller by such
employees, consultants and agents and, to the extent any employee,
consultant or agent of the Seller is also an employee, consultant or agent
of the Originator, allocate the compensation of such employee, consultant
or agent between the Seller and the Originator on a basis which reflects
the services rendered to the Seller and the Originator;
18
26
(iii) clearly identify its offices (by signage or otherwise) as its
offices and, if such office is located in the offices of the Originator,
the 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;
(v) conduct all transactions with the Originator (including, without
limitation, any delegation of its obligations hereunder as Servicer)
strictly on an arm's-length basis, allocate all overhead expenses
(including, without limitation, telephone and other utility charges) for
items shared between the Seller and the Originator on the basis of actual
use to the extent practicable and, to the extent such allocation is not
practicable, on a basis reasonably related to actual use;
(vi) at all times have at least two members of its Board of Directors
(each, an "INDEPENDENT DIRECTOR") who are not at such time, and have not
have been at any time during the preceding five years (A) a director,
officer, employee or affiliate of Yellow Corporation or any of its
subsidiaries or affiliates, 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 five percent (5%)
of the outstanding common shares of Yellow Corporation having general
voting rights; provided, however, that a director who otherwise meets the
description of Independent Director as set forth herein shall not be
disqualified from serving as an Independent Director of the Seller if he
or she is also a director of another corporation that is an Affiliate of
Yellow Corporation with a certificate of incorporation substantially
similar to the certificate of incorporation of the Seller;
(vii) observe all corporate formalities as a distinct entity, and
ensure that all corporate actions relating to (A) the selection,
maintenance or replacement of the Independent Directors, (B) the
dissolution or liquidation of the Seller or (C) the initiation of
participation in, acquiescence in or consent to any bankruptcy,
insolvency, reorganization or similar proceeding involving the Seller, are
duly authorized by unanimous vote of its Board of Directors (including the
Independent Directors);
(viii) maintain the Seller's books and records separate from those of
the Originator and otherwise readily identifiable as its own assets rather
than assets of the Originator;
(ix) prepare its financial statements separately from those of the
Originator and insure that any consolidated financial statements of the
Originator or any Affiliate thereof that include the Seller and which are
filed with the Securities and Exchange Commission or any other
governmental agency have notes clearly stating that the Seller is a
separate corporate entity and that its assets will be available first and
foremost to satisfy the claims of the creditors of the Seller;
19
27
(x) except as herein specifically otherwise provided, not commingle
funds or other assets of the Seller with those of the Originator and not
maintain bank accounts or other depository accounts to which the
Originator is an account party, into which the Originator makes deposits
or from which the Originator has the power to make withdrawals;
(xi) not permit the Originator to pay any of the Seller's operating
expenses (except pursuant to allocation arrangements that comply with the
requirements of this SECTION 5.1(K));
(xii) not permit the Seller to be named as an insured on the
insurance policy covering the property of the Originator or enter into an
agreement with the holder of such policy whereby in the event of a loss in
connection with such property, proceeds are paid to the Seller; and
(xiii) take such other actions as are necessary on its part to ensure
that the facts and assumptions set forth in the opinion issued by Skadden,
Arps, Slate, Meagher & Flom, as counsel for the Seller, in connection with
the closing or initial purchase under this Agreement and relating to
substantive consolidation issues, and in the certificates accompanying
such opinion, remain true and correct in all material respects at all
times.
(l) Collections. The Seller shall instruct all Obligors, or cause the
Originator to instruct, all Obligors to pay all Collections directly to a
segregated lock-box or other Collection Account listed on EXHIBIT III, each of
which is subject to a Collection Account Agreement. In the case of payments
remitted to any such lock-box, the Seller shall cause all proceeds from such
lock-box to be deposited directly by a Collection Bank into a Collection
Account listed on EXHIBIT III, which is subject to a Collection Account
Agreement. The Seller shall maintain exclusive dominion and control (subject
to the terms of this Agreement) to each such Collection Account. In the case
of any Collections received by the Seller or the Originator, the Seller shall
remit (or shall cause the Originator to remit) such Collections to a Collection
Account not later than the Business Day immediately following the date of
receipt of such Collections, and, at all times prior to such remittance, the
Seller shall itself hold (or, if applicable, shall cause the Originator to
hold) such Collections in trust, for the exclusive benefit of the Purchasers
and the Agent. In the case of any remittances received by the Seller in any
such 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 Seller 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 of the Collection Banks a
Collection Notice pursuant to SECTION 6.3, the Agent may request that the
Seller, and the Seller thereupon promptly shall and shall direct the Originator
to, direct all Obligors on Receivables to remit all payments thereon to a new
depositary account (the "NEW CONCENTRATION ACCOUNT") specified by the Agent
and, at all times thereafter the Seller shall not deposit or otherwise credit,
and shall
20
28
not permit the Originator or any other Person to deposit or otherwise
credit to the New Concentration Account any cash or payment item other than
Collections. Alternatively, the Agent may request that the Seller, and the
Seller thereupon promptly shall, direct all Persons then making remittances to
any Collection Account listed on EXHIBIT III which remittances are not payments
on Receivables to deliver such remittances to a location other than an account
listed on EXHIBIT III.
(m) Minimum Net Worth. The Seller shall at all times maintain total
assets which exceed its total liabilities by not less than 3% of the
Outstanding Balance of the Receivables at such time.
(n) Accounting for Collections of Excluded Receivables. As soon as
practicable and in any event not later than October 31, 1996, the Seller shall
(or shall require the Originator to) implement a modification to its accounting
systems which enables the Seller (and/or the Originator as subservicer) to
identify and track Collections in respect of the Excluded Receivables
separately from the Collections in respect of the Receivables.
Section 5.2. Negative Covenants of Seller. Until the date on which the
Aggregate Unpaids have been indefeasibly paid in full, the Seller hereby
covenants, individually and in its capacity as Servicer, that:
(a) Name Change, Offices, Records and Books of Accounts. The Seller will
not change its name, identity or corporate structure (within the meaning of
Section 9-402(7) of any applicable enactment of the UCC) or relocate its chief
executive office or any office where Records are kept unless it shall have:
(i) given the Agent at least 45 days prior notice thereof and (ii) delivered to
the Agent all financing statements, instruments and other documents requested
by the Agent in connection with such change or relocation.
(b) Change in Payment Instructions to Obligors. The Seller will not add or
terminate any bank as a Collection Bank from those listed in EXHIBIT III, or
make any change in its instructions to Obligors regarding payments to be made
to the Seller or payments to be made to any lock-box, Collection Account or
Collection Bank, unless the Agent shall have received, at least fifteen (15)
Business 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 lock-box, Collection
Account or Collection Bank, an executed account agreement and an
executed Collection Account Agreement from such Collection Bank
relating thereto;
PROVIDED, HOWEVER, that the Seller may make changes in instructions to Obligors
regarding payments if such new instructions require such Obligor to make
payments to another existing lock-box or Collection Account that is subject to
a Collection Account Agreement then in effect.
21
29
(c) Modifications to Invoices and Credit and Collection Policy. The
Seller will not make any change to the Credit and Collection Policy which would
be reasonably likely to adversely affect the collectibility of any material
portion of the Receivables or decrease the credit quality of any newly created
Receivables. Except as provided in SECTION 6.2(C), the Seller, acting as
Servicer or otherwise, will not extend, amend or otherwise modify the terms of
any Receivable or any Invoice related thereto other than in accordance with the
Credit and Collection Policy.
(d) Sales, Liens, Etc. The Seller shall not sell, assign (by operation of
law or otherwise) or otherwise dispose of, or grant any option with respect to,
or create or suffer to exist any Adverse Claim upon (including, without
limitation, the filing of any financing statement) or with respect to, any
Excluded Receivable or any Receivable, Related Security or Collections, or upon
or with respect to any Invoice under which any Receivable arises, or any
lock-box or Collection Account or assign any right to receive income in respect
thereof (other than, in each case, the creation of the interests therein in
favor of the Agent and the Purchasers provided for herein), and the Seller
shall defend the right, title and interest of the Agent and the Purchasers in,
to and under any of the foregoing property, against all claims of third parties
claiming through or under the Seller or the Originator.
(e) Nature of Business; Other Agreements; Other Indebtedness. The Seller
shall not engage in any business or activity of any kind or enter into any
transaction or indenture, mortgage, instrument, agreement, contract, lease or
other undertaking other than the transactions contemplated and authorized by
this Agreement and the Sale Agreement. Without limiting the generality of the
foregoing, the Seller shall not create, incur, guarantee, assume or suffer to
exist any indebtedness or other liabilities, whether direct or contingent,
other than:
(i) as a result of the endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary
course of business,
(ii) the incurrence of obligations under this Agreement,
(iii) the incurrence of obligations, as expressly contemplated
in the Sale Agreement, to make payment to the Originator thereunder
for the purchase of Receivables from the Originator under the Sale
Agreement, and
(iv) the incurrence of operating expenses in the ordinary
course of business of the type otherwise contemplated in SECTION
5.1(K) of this Agreement.
In the event the Seller shall at any time borrow a "REVOLVING LOAN" under the
Sale Agreement, the obligations of the Seller in connection therewith shall be
subordinated to the obligations of the Seller to the Purchasers and the Agent
under this Agreement, on such terms as shall be satisfactory to the Agent.
22
30
(f) Amendments to Sale Agreement. The Seller shall not, without the prior
written consent of the Agent:
(i) cancel or terminate the Sale Agreement,
(ii) give any consent, waiver, directive or approval under the
Sale Agreement,
(iii) waive any default, action, omission or breach under the
Sale Agreement, or otherwise grant any indulgence thereunder, or
(iv) amend, supplement or otherwise modify any of the terms of
the Sale Agreement.
(g) Amendments to Corporate Documents. The Seller shall not amend its
Certificate of Incorporation or By-Laws in any respect that would impair its
ability to comply with the terms or provisions of any of the Transaction
Documents, including, without limitation, SECTION 5.1(K) of this Agreement.
(h) Merger. The Seller shall not merge or consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in one transaction or
in a series of transactions, and except as otherwise contemplated herein) all
or substantially all of its assets (whether now owned or hereafter acquired)
to, or acquire all or substantially all of the assets of, any Person.
(i) Restricted Junior Payments. The Seller shall not make any Restricted
Junior Payment if a Servicer Default or Potential Servicer Default exists or
would result therefrom.
ARTICLE VI
ADMINISTRATION AND COLLECTION
Section 6.1. Designation of Servicer.
(a) The servicing, administration and collection of the Receivables shall
be conducted by such Person (the "SERVICER") so designated from time to time in
accordance with this SECTION 6.1. The Seller is hereby designated as, and
hereby agrees to perform the duties and obligations of, the Servicer pursuant
to the terms of this Agreement. The Agent may at any time designate as
Servicer any Person to succeed the Seller or any successor Servicer.
(b) The Seller is permitted to delegate, and the Seller hereby advises the
Purchasers and the Agent that it has delegated, to the Originator, as
subservicer of the
23
31
Servicer, certain of its duties and responsibilities as Servicer hereunder in
respect of the Receivables transferred by the Originator to the Seller.
Notwithstanding the foregoing, (i) the Seller shall be and remain primarily
liable to the Agent and the Purchasers for the full and prompt performance of
all duties and responsibilities of the Servicer hereunder and (ii) the Agent
and the Purchasers shall be entitled to deal exclusively with the Seller in
matters relating to the discharge by the Servicer of its duties and
responsibilities hereunder, and the Agent and the Purchasers shall not be
required to give notice, demand or other communication to any Person other than
the Seller in order for communication to the Servicer and its subservicer or
other delegate in respect thereof to be accomplished. The Seller, at all times
that it is the Servicer, shall be responsible for providing its subservicer or
other delegate with any notice given under this Agreement.
(c) Without the prior written consent of the Required Investors, (i) the
Seller shall not be permitted to delegate any of its duties or responsibilities
as Servicer to any Person other than the Originator, and then such delegation
shall be limited to the activities of Servicer hereunder as the same may relate
to the Receivables originated by the Originator, and (ii) no Originator shall
be permitted to further delegate to any other Person any of the duties or
responsibilities of the Servicer delegated to it by the Seller. If at any time
the Agent shall designate as Servicer any Person other than the Seller, all
duties and responsibilities theretofore delegated by the Seller to the
Originator may, at the discretion of the Agent, be terminated forthwith on
notice given by the Agent to the Seller.
Section 6.2. Duties of Servicer.
(a) The Servicer shall take or cause to be taken all such actions as may
be necessary or advisable to collect each Receivable from time to time, all in
accordance with applicable laws, rules and regulations, with reasonable care
and diligence, and in accordance with the applicable Invoices and the Credit
and Collection Policy.
(b) The Servicer shall administer the Collections in accordance with the
procedures described herein and in ARTICLE I. The Servicer shall set aside and
hold in trust for the account of the Seller and the Purchasers their respective
shares of the Collections of Receivables in accordance with SECTIONS 1.6 and
1.7. The Servicer shall upon the request of the Agent after the occurrence of
a Liquidation Day, segregate, in a manner acceptable to the Agent, all cash,
checks and other instruments received by it from time to time constituting
Collections from the general funds of the Servicer or the Seller prior to the
remittance thereof in accordance with SECTION 1.7. If the Servicer shall be
required to segregate Collections pursuant to the preceding sentence, the
Servicer shall segregate and deposit with a bank designated by the Agent such
allocable share of Collections of Receivables set aside for the Purchasers on
the first Business Day following receipt by the Servicer of such Collections,
duly endorsed or with duly executed instruments of transfer.
(c) The Servicer, may, in accordance with the Credit and Collection
Policy, extend the maturity of any Receivable or adjust the Outstanding Balance
of any Receivable as the Servicer may determine to be appropriate to maximize
Collections thereof;
24
32
PROVIDED, HOWEVER, that such extension or adjustment shall not alter the status
of such Receivable as a Delinquent Receivable or Defaulted Receivable or limit
the rights of the Agent or the Purchasers under this Agreement.
Notwithstanding anything to the contrary contained herein, from and after the
occurrence of a Servicer Default, the Agent shall have the absolute and
unlimited right to direct the Servicer to commence or settle any legal action
with respect to any Receivable or to foreclose upon or repossess any Related
Security.
(d) The Servicer shall hold in trust for the Seller and the Purchasers, in
accordance with their respective interests in the Receivables, all Records that
evidence or relate to the Receivables, the related Invoices and Related
Security or that 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, (x) if such demand is made at
any time prior to the replacement of the Seller as Servicer hereunder, at the
chief executive office of the Originator and (y) if such demand is made at any
time after the replacement of the Seller as Servicer hereunder, to such
location as the Agent may designate in writing. The Servicer shall, as soon as
practicable following receipt thereof, turn over to the Seller (i) that portion
of Collections of Receivables representing the Seller's undivided fractional
ownership interest therein, less, in the event the Seller is not the Servicer,
all reasonable out-of-pocket costs and expenses of the Servicer of servicing,
administering and collecting the Receivables, and (ii) any cash collections or
other cash proceeds received with respect to indebtedness not constituting
Receivables. The Servicer shall, from time to time at the request of any
Purchaser, furnish to the Purchasers (promptly after any such request) a
calculation of the amounts set aside for the Purchasers pursuant to SECTION
1.7.
(e) Any payment by an Obligor in respect of any indebtedness owed by it to
the 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 6.3. Collection Notices. The Agent is authorized at any time to
date and to deliver to the Collection Banks a Collection Notice under any
Collection Account Agreement. The Seller hereby transfers to the Agent for the
benefit of the Purchasers, effective when the Agent delivers such notice, the
exclusive ownership and control of the Collection Accounts. In case any
authorized signatory of the Seller whose signature appears on a Collection
Account Agreement shall cease to have such authority before the delivery of
such notice, such Collection Notice shall nevertheless be valid as if such
authority had remained in force. The Seller hereby authorizes the Agent, and
agrees that the Agent shall be entitled to (i) endorse the Seller's name on
checks and other instruments representing Collections, (ii) enforce the
Receivables, the related Invoices and the Related Security and (iii) take such
action as shall be necessary or desirable to cause all cash,
25
33
checks and other instruments constituting Collections of Receivables to come
into the possession of the Agent rather than the Seller.
Section 6.4. Responsibilities of the Seller. Anything herein to the
contrary notwithstanding, the exercise by the Agent and the Purchasers of their
rights hereunder shall not release the Servicer or the Seller from any of their
duties or obligations with respect to any Receivables or under the related
Invoices. The Purchasers shall have no obligation or liability with respect to
any Receivables or related Invoices, nor shall any of them be obligated to
perform the obligations of the Seller.
Section 6.5. Reports. On the 15th day of each month (or, if such date is
not a Business Day, the next following Business Day), and at such other times
as the Agent shall request, the Servicer shall prepare and forward to the Agent
a Monthly Report. Promptly following any request therefor by the Agent, the
Seller shall prepare and provide to the Agent a listing by Obligor of all
Receivables together with an aging of such Receivables. If at any time an
Approved Offset Receivable or a Supplemental Approved Offset Receivable ceases
to be an Eligible Receivable because the Originator commences purchasing, on
credit, goods or services from the Obligor thereon, the Servicer shall, not
later than 5 Business Days thereafter, deliver to the Agent a restated Monthly
Report for the month preceding such occurrence deducting the Outstanding
Balance of such Approved Offset Receivable or Supplemental Approved Offset
Receivable, as the case may be, from the aggregate Outstanding Balance of
Eligible Receivables previously reflected thereon.
ARTICLE VII
SERVICER DEFAULTS
Section 7.1. Servicer Defaults. The occurrence of any one or more of the
following events shall constitute a Servicer Default:
(a) The Servicer or the Seller shall fail (i) to make when due 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 such failure shall remain unremedied for five (5) Business
Days following written notice thereof to the Servicer or the Seller, as
applicable.
(b) Any representation, warranty, certification or statement made by the
Seller, the Servicer or the Originator in this Agreement, any other Transaction
Document or in any other document delivered pursuant hereto shall prove to have
been incorrect in any material respect when made or deemed made.
(c) (i) The Seller or the Servicer shall generally not pay its debts as
such debts become due or shall admit in writing its inability to pay its debts
generally or shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against the Seller or the Servicer
seeking to adjudicate it bankrupt or insolvent, or
26
34
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee or
other similar official for it or any substantial part of its property, or (ii)
the Seller or any Servicer shall take any corporate action to authorize any of
the actions set forth in clause (i) above in this subsection (c).
(d) As at the end of any calendar month:
(i) the average of the Delinquency Ratios for each of the three
consecutive calendar months then most recently ended shall exceed
4.00%;
(ii) the Dilution Ratio for any calendar month shall exceed
3.25%; or
(iii) the average of the Default Ratios for each of the three
consecutive calendar months then most recently ended shall exceed
4.00%.
(e) The Originator (i) shall fail to perform or observe any term, covenant
or agreement contained in any other Transaction Document, or (ii) shall for any
reason cease to transfer, or cease to have the legal capacity or otherwise be
incapable of transferring, Receivables to the Seller, as purchaser under the
Sale Agreement, or any "EVENT OF DEFAULT" or "POTENTIAL EVENT OF DEFAULT" shall
occur under the Sale Agreement.
(f) The aggregate Receivable Interests hereunder shall at any time exceed
100%.
(g) A Change of Control shall occur.
ARTICLE VIII
INDEMNIFICATION
Section 8.1. Indemnities by the Seller. Without limiting any other
rights which the Agent or any Purchaser may have hereunder or under applicable
law, the Seller hereby agrees to indemnify the Agent and each Purchaser and
their respective officers, directors, agents and employees (each, an
"INDEMNIFIED PARTY") from and against any and all damages, losses, claims,
taxes, liabilities, costs, expenses and for all other amounts payable,
including reasonable attorneys' fees (which attorneys may be employees of the
Agent or such Purchaser) and disbursements (all of the foregoing being
collectively referred to as "INDEMNIFIED AMOUNTS") awarded against or incurred
by any of them arising out of or as a result of this Agreement or the
acquisition, either directly or indirectly, by a Purchaser of an interest in
the Receivables, EXCLUDING, HOWEVER:
27
35
(a) Indemnified Amounts to the extent final judgment of a court of
competent jurisdiction holds such Indemnified Amounts resulted from gross
negligence or willful misconduct on the part of the Indemnified Party
seeking indemnification;
(b) Indemnified Amounts to the extent the same includes losses in
respect of Receivables which are uncollectible on account of the
insolvency, bankruptcy or lack of creditworthiness of the related Obligor;
or
(c) taxes imposed by the jurisdiction in which such Indemnified
Party's principal executive office is located, on or measured by the
overall net income of such Indemnified Party to the extent that the
computation of such taxes is consistent with the Intended
Characterization;
PROVIDED, HOWEVER, that nothing contained in this sentence shall limit the
liability of the Seller or the Servicer or limit the recourse of the Purchasers
to the Seller or Servicer for amounts otherwise specifically provided to be
paid by the Seller or the Servicer under the terms of this Agreement. Without
limiting the generality of the foregoing indemnification, the Seller shall
indemnify the Agent and the Purchasers for Indemnified Amounts (including,
without limitation, losses in respect of uncollectible receivables, regardless
of whether reimbursement therefor would constitute recourse to the Seller or
the Servicer) relating to or resulting from:
(i) any representation or warranty made by the Seller, the
Originator or the Servicer (or any officers of the Seller, the
Originator or the Servicer) under or in connection with this
Agreement, any other Transaction Document, any Monthly Report or any
other information or report delivered by the Seller, the Originator
or the Servicer pursuant hereto or thereto, which shall have been
false or incorrect when made or deemed made;
(ii) the failure by the Seller, the Originator or the Servicer
to comply with any applicable law, rule or regulation with respect
to any Receivable or Invoice related thereto, or the nonconformity
of any Receivable or Invoice included therein with any such
applicable law, rule or regulation;
(iii) any failure of the Seller, the Originator or the Servicer
to perform its duties or obligations in accordance with the
provisions of this Agreement or any other Transaction Document;
(iv) any products liability or similar claim arising out of or
in connection with merchandise, insurance or services which are the
subject of any Invoice;
(v) any dispute, claim, offset or defense (other than discharge
in bankruptcy of the Obligor) of any Obligor to the payment of any
Receivable (including, without limitation, a defense based on such
Receivable or the
28
36
related Invoice not being a legal, valid and binding obligation of
such Obligor enforceable against it in accordance with its terms), or any
other claim resulting from the sale of the merchandise or service related
to such Receivable or the furnishing or failure to furnish such
merchandise or services;
(vi) the commingling of Collections of Receivables at any time
with other funds;
(vii) any investigation, litigation or proceeding related to or
arising from this Agreement or any other Transaction Document, the
transactions contemplated hereby or thereby, the use of the proceeds
of a purchase, the ownership of the Receivable Interests or any
other investigation, litigation or proceeding relating to the Seller
or the Originator in which any Indemnified Party becomes involved as
a result of any of the transactions contemplated hereby or thereby;
(viii) any inability to litigate any claim against any Obligor
in respect of any Receivable as a result of such Obligor being
immune from civil and commercial law and suit on the grounds of
sovereignty or otherwise from any legal action, suit or proceeding;
(ix) a Servicer Default described in SECTION 7.1(C);
(x) the failure to vest and maintain vested in the Agent and
the Purchasers, or to transfer to the Agent and the Purchasers,
legal and equitable title to, and ownership of, a first priority
perfected undivided percentage ownership (to the extent of the
Receivable Interests contemplated hereunder) in the Receivables, the
Related Security and the Collections, free and clear of any Adverse
Claim; or
(xi) any failure of the Seller to give reasonably equivalent
value to the Originator under the Sale Agreement in consideration of
the transfer by the Originator of any Receivable, or any attempt by
any Person to void any such transfer under statutory provisions or
common law or equitable action, including, without limitation, any
provision of the Bankruptcy Code.
Section 8.2. Increased Cost 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 charged with the interpretation or administration thereof, or
compliance with any request or directive (whether or not having
29
37
the force of law) of any such authority, central bank or comparable agency (a
"REGULATORY CHANGE"): (i) which subjects any Funding Source to any charge or
withholding on or with respect to any Funding Agreement or a Funding
Source's obligations under a Funding Agreement, or on or with respect to the
Receivables, or changes the basis of taxation of payments to any Funding Source
of any amounts payable under any Funding Agreement (except for changes in the
rate of tax on the overall net income of a Funding Source) or (ii) which
imposes, modifies or deems applicable any reserve, assessment, insurance
charge, special deposit or similar requirement against assets of, deposits with
or for the account of a Funding Source, or credit extended by a Funding Source
pursuant to a Funding Agreement or (iii) which imposes any other condition the
result of which is to increase the cost to a Funding Source of performing its
obligations under a Funding Agreement, or to reduce the rate of return on a
Funding Source's capital as a consequence of its obligations under a Funding
Agreement, or to reduce the amount of any sum received or receivable by a
Funding Source under a Funding Agreement or to require any payment calculated
by reference to the amount of interests or loans held or interest received by
it, then, upon demand by the Agent, the Seller shall pay to the Agent, for the
benefit of the relevant Funding Source, such amounts charged to such Funding
Source or compensate such Funding Source for such reduction.
(b) Payment of any sum pursuant to SECTION 8.2(A) shall be made by the
Seller to the Agent, for the benefit of the relevant Funding Source, not later
than ten (10) days after any such demand is made. A certificate of any Funding
Source, signed by an authorized officer claiming compensation under this
SECTION 8.2 and setting forth the additional amount to be paid for its benefit
and explaining the manner in which such amount was determined shall be
conclusive evidence of the amount to be paid, absent manifest error.
Section 8.3. Costs and Expenses Relating to this Agreement. The Seller
shall pay to the Agent and FALCON on demand all costs and out-of-pocket
expenses in connection with the preparation, execution, delivery and
administration of this Agreement, the transactions contemplated hereby and the
other documents to be delivered hereunder, including without limitation, the
cost of FALCON's auditors auditing the books, records and procedures of the
Seller, reasonable fees and out-of-pocket expenses of legal counsel for FALCON
and the Agent (which such counsel may be employees of FALCON or the Agent) with
respect thereto and with respect to advising FALCON and the Agent as to their
respective rights and remedies under this Agreement. The Seller shall pay to
the Agent on demand any and all costs and expenses of the Agent and the
Purchasers, if any, including reasonable counsel fees and expenses in
connection with the enforcement of this Agreement and the other documents
delivered hereunder and in connection with any restructuring or workout of this
Agreement or such documents, or the administration of this Agreement following
a Servicer Default.
30
38
ARTICLE IX
THE AGENT
Section 9.1. Authorization and Action. Each Purchaser hereby designates
and appoints First Chicago to act as its agent hereunder and under each other
Transaction Document, and authorizes the Agent to take such actions as agent on
its behalf and to exercise such powers as are delegated to the Agent by the
terms of this Agreement and the other Transaction Documents together with such
powers as are reasonably incidental thereto. The Agent shall not have any
duties or responsibilities, except those expressly set forth herein or in any
other Transaction Document, or any fiduciary relationship with any Purchaser,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities on the part of the Agent shall be read into this Agreement or any
other Transaction Document or otherwise exist for the Agent. In performing its
functions and duties hereunder and under the other Transaction Documents, the
Agent shall act solely as agent for the Purchasers and does not assume nor
shall be deemed to have assumed any obligation or relationship of trust or
agency with or for the Seller or any of its successors or assigns. The Agent
shall not be required to take any action which exposes the Agent to personal
liability or which is contrary to this Agreement, any other Transaction
Document or applicable law. The appointment and authority of the Agent
hereunder shall terminate upon the indefeasible payment in full of all
Aggregate Unpaids. Each Purchaser hereby authorizes the Agent to execute on
behalf of such Purchaser (the terms of which shall be binding on such
Purchaser) each of the Uniform Commercial Code financing statements, together
with such other instruments or documents determined by the Agent to be
necessary or desirable in order to perfect, evidence or more fully protect the
interest of the Purchasers contemplated hereunder.
Section 9.2. Delegation of Duties. The Agent may execute any of its
duties under this Agreement and each other Transaction Document by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
Section 9.3. Exculpatory Provisions. Neither the Agent nor any of its
directors, officers, agents or employees shall be (i) liable for any action
lawfully taken or omitted to be taken by it or them under or in connection with
this Agreement or any other Transaction Document (except for its, their or such
Person's own gross negligence or willful misconduct), or (ii) responsible in
any manner to any of the Purchasers for any recitals, statements,
representations or warranties made by the Seller contained in this Agreement,
any other Transaction Document or any certificate, report, statement or other
document referred to or provided for in, or received under or in connection
with, this Agreement, or any other Transaction Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement, or any other Transaction Document or any other document furnished in
connection herewith or therewith, or for any failure of the Seller to perform
its obligations hereunder or thereunder, or for the satisfaction of any
condition
31
39
specified in ARTICLE IV, or for the perfection, priority, condition,
value or sufficiency or any collateral pledged in connection herewith. The
Agent shall not be under any obligation to any Purchaser to ascertain or to
inquire as to the observance or performance of any of the agreements or
covenants contained in, or conditions of, this Agreement or any other
Transaction Document, or to inspect the properties, books or records of the
Seller. The Agent shall not be deemed to have knowledge of a Servicer Default
or Potential Servicer Default unless the Agent has received notice from the
Seller or a Purchaser.
Section 9.4. Reliance by Agent. The Agent shall in all cases be entitled
to rely, and shall be fully protected in relying, upon any document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Seller),
independent accountants and other experts selected by the Agent. The Agent
shall in all cases be fully justified in failing or refusing to take any action
under this Agreement or any other Transaction Document unless it shall first
receive such advice or concurrence of FALCON or the Required Investors or all
of the Purchasers, as applicable, as it deems appropriate and it shall first be
indemnified to its satisfaction by the Purchasers, PROVIDED THAT unless and
until the Agent shall have received such advice, the Agent may take or refrain
from taking any action, as the Agent shall deem advisable and in the best
interests of the Purchasers. The Agent shall in all cases be fully protected
in acting, or in refraining from acting, in accordance with a request of FALCON
or the Required Investors or all of the Purchasers, as applicable, and such
request and any action taken or failure to act pursuant thereto shall be
binding upon all the Purchasers.
Section 9.5. Non-Reliance on Agent and Other Purchasers. Each Purchaser
expressly acknowledges that neither the Agent, nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the Agent hereafter
taken, including, without limitation, any review of the affairs of the Seller,
shall be deemed to constitute any representation or warranty by the Agent.
Each Purchaser represents and warrants to the Agent that it has and will,
independently and without reliance upon the Agent or any other Purchaser and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations, property,
prospects, financial and other conditions and creditworthiness of the Seller
and made its own decision to enter into this Agreement, the other Transaction
Documents and all other documents related hereto or thereto.
Section 9.6. Reimbursement and Indemnification. The Investors agree to
reimburse and indemnify the Agent and its officers, directors, employees,
representatives and agents ratably according to their Pro Rata Shares, to the
extent not paid or reimbursed by the Seller (i) for any amounts for which the
Agent, acting in its capacity as Agent, is entitled to reimbursement by the
Seller hereunder and (ii) for any other expenses incurred by the Agent, in its
capacity as Agent and acting on behalf of the Purchasers, in connection with
the administration and enforcement of this Agreement and the other Transaction
Documents.
32
40
Section 9.7. Agent in its Individual Capacity. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Seller or any Affiliate of the Seller as though the
Agent were not the Agent hereunder. With respect to the acquisition of
Receivable Interests pursuant to this Agreement, the Agent shall have the same
rights and powers under this Agreement as any Purchaser and may exercise the
same as though it were not the Agent, and the terms "Investor," "Purchaser,"
"Investors" and "Purchasers" shall include the Agent in its individual
capacity.
Section 9.8. Successor Agent. The Agent may, upon five days' notice to
the Seller and the Purchasers, and the Agent will, upon the direction of all of
the Purchasers (other than the Agent, in its individual capacity) resign as
Agent. If the Agent shall resign, then the Required Investors during such
five-day period shall appoint from among the Purchasers a successor agent. If
for any reason no successor Agent is appointed by the Required Investors during
such five-day period, then effective upon the termination of such five day
period, the Purchasers shall perform all of the duties of the Agent hereunder
and under the other Transaction Documents and the Seller shall make all
payments in respect of the Aggregate Unpaids directly to the applicable
Purchasers and for all purposes shall deal directly with the Purchasers. After
the effectiveness of any retiring Agent's resignation hereunder as Agent, the
retiring Agent shall be discharged from its duties and obligations hereunder
and under the other Transaction Documents and the provisions of this ARTICLE IX
and ARTICLE VIII shall continue in effect for its benefit with respect to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement and under the other Transaction Documents.
ARTICLE X
ASSIGNMENTS; PARTICIPATIONS
Section 10.1. Assignments.
(a) The Seller and each Investor hereby agree and consent to the complete
or partial assignment by FALCON of all of its rights under, interest in, title
to and obligations under this Agreement to the Investors pursuant to SECTION
2.1 or to any other Person, and upon such assignment, FALCON shall be released
from its obligations so assigned. Further, the Seller and each Investor hereby
agree that any assignee of FALCON of this Agreement or all or any of the
Receivable Interests of FALCON shall have all of the rights and benefits under
this Agreement as if the term "FALCON" explicitly referred to such party, and
no such assignment shall in any way impair the rights and benefits of FALCON
hereunder. The Seller shall not have the right to assign its rights or
obligations under this Agreement.
(b) Any Investor may at any time and from time to time assign to one or
more Persons ("PURCHASING INVESTORS") all or any part of its rights and
obligations under this Agreement pursuant to an assignment agreement, in a form
and substance satisfactory to the Agent (the "ASSIGNMENT AGREEMENT"), executed
by such Purchasing Investor and such selling Investor. The consent of FALCON
shall be required prior to the effectiveness
33
41
of any such assignment. Each assignee of an Investor must 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 must agree to deliver to the Agent,
promptly following any request therefor by the Agent or FALCON, an
enforceability opinion in form and substance satisfactory to the Agent and
FALCON. Upon delivery of the executed Assignment Agreement to the Agent, such
selling Investor shall be released from its obligations hereunder to the extent
of such assignment. Thereafter the Purchasing Investor shall for all purposes
be an Investor party to this Agreement and shall have all the rights and
obligations of an Investor under this Agreement to the same extent as if it
were an original party hereto and no further consent or action by the Seller,
the Purchasers or the Agent shall be required.
(c) Each of the Investors agrees that in the event that it shall cease to
have a short-term debt rating of A-1 or better by Standard & Poor's Corporation
and P-1 by Moody's Investors Service, Inc. (an "AFFECTED INVESTOR"), such
Affected Investor shall be obliged, at the request of FALCON or the Agent, to
assign all of its rights and obligations hereunder to (x) another Investor or
(y) another financial institution nominated by the Agent and acceptable to
FALCON, and willing to participate in this Agreement through the Liquidity
Termination Date in the place of such Affected Investor; provided that the
Affected Investor receives payment in full, pursuant to an Assignment
Agreement, of an amount equal to such Investor's Pro Rata Share of the Capital
and Discount owing to the Investors and all accruing but unpaid fees and other
costs and expenses payable in respect of its Pro Rata Share of the Receivable
Interests.
Section 10.2. Participations. Any Investor may, in the ordinary course
of its business at any time sell to one or more Persons (each, a "PARTICIPANT")
participating interests in its Pro Rata Share of the Receivable Interests of
the Investors, its obligation to pay FALCON its Acquisition Amounts or any
other interest of such Investor hereunder. Notwithstanding any such sale by an
Investor of a participating interest to a Participant, such Investor's rights
and obligations under this Agreement shall remain unchanged, such Investor
shall remain solely responsible for the performance of its obligations
hereunder, and the Seller, FALCON and the Agent shall continue to deal solely
and directly with such Investor in connection with such Investor's rights and
obligations under this Agreement. Each Investor agrees that any agreement
between such Investor and any such Participant in respect of such participating
interest shall not restrict such Investor's right to agree to any amendment,
supplement, waiver or modification to this Agreement, except for any amendment,
supplement, waiver or modification described in clause (i) of SECTION 11.1(B).
34
42
ARTICLE XI
MISCELLANEOUS
Section 11.1. Waivers and Amendments. (a) No failure or delay on the part
of any party hereto in exercising any power, right or remedy under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or remedy preclude any other further exercise
thereof or the exercise of any other power, right or remedy. The rights and
remedies herein provided shall be cumulative and nonexclusive of any rights or
remedies provided by law. Any waiver of this Agreement shall be effective only
in the specific instance and for the specific purpose for which given.
(b) No provision of this Agreement may be amended, supplemented, modified
or waived except in writing in accordance with the provisions of this SECTION
11.1(B). FALCON, the Seller and the Agent, at the direction of the Required
Investors, may enter into written modifications or waivers of any provisions of
this Agreement, PROVIDED, HOWEVER, that no such modification or waiver shall:
(i) without the consent of each affected Purchaser, (A) extend the
Liquidity Termination Date or the date of any payment or deposit of
Collections by the Seller or the Servicer, (B) reduce the rate or extend
the time of payment of Discount (or any component thereof), (C) reduce any
fee payable to the Agent for the benefit of the Purchasers, (D) except
pursuant to ARTICLE X hereof, change the amount of the Capital of any
Purchaser, an Investor's Pro Rata Share or an Investor's Commitment, (E)
amend, modify or waive any provision of the definition of Required
Investors or this SECTION 11.1(B), (F) consent to or permit the assignment
or transfer by the Seller of any of its rights and obligations under this
Agreement, (G) change the definition of "ELIGIBLE RECEIVABLE," "DILUTION
RESERVE", "DISCOUNT RESERVE," "LOSS RESERVE PERCENTAGE," "AGGREGATE
RESERVE PERCENTAGE" or "DEFAULT RATIO," or (H) amend or modify any defined
term (or any defined term used directly or indirectly in such defined
term) used in clauses (A) through (G) above in a manner which 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 Investors, the
Agent may, with the consent of the Seller, amend this Agreement solely to add
additional Persons as Investors hereunder and (ii) without the consent of the
Seller, the Agent, the Required Investors and FALCON may enter into amendments
to modify any of the terms or provisions of ARTICLE II, ARTICLE IX, ARTICLE X
or SECTION 11.13 provided that such amendment has no negative impact upon the
Seller. Any modification or waiver made in accordance with this SECTION 11.1
shall apply to each of the Purchasers equally and shall be binding upon the
Seller, the Purchasers and the Agent.
35
43
Section 11.2. Notices.
(a) Except as provided in subsection (b) below, all communications and
notices provided for hereunder shall be in writing (including bank wire,
telecopy or electronic facsimile transmission or similar writing) and shall be
given to the other parties hereto at their respective addresses or telecopy
numbers set forth on the signature pages hereof. All such communications and
notices shall, when mailed, telecopied, telegraphed, telexed or cabled, be
effective when received through the mails, transmitted by telecopy, delivered
to the telegraph company, confirmed by telex answerback or delivered to the
cable company, respectively, except that communications and notices to the
Agent or any Purchaser pursuant to ARTICLE I or II shall not be effective until
received by the intended recipient.
(b) The Seller hereby authorizes the Agent to effect purchases and
Tranche Period and Discount Rate selections based on telephonic notices made by
any Person whom the Agent in good faith believes to be acting on behalf of the
Seller. The Seller agrees to deliver promptly to the Agent a written
confirmation of each telephonic notice signed by an authorized officer of the
Seller. However, the absence of such confirmation shall not affect the
validity of such notice. If the written confirmation differs from the action
taken by the Agent, the records of the Agent shall govern absent manifest
error.
Section 11.3. Ratable Payments. If any Purchaser, whether by setoff or
otherwise, has payment made to it with respect to any portion of the Aggregate
Unpaids owing to such Purchaser (other than payments received pursuant to
SECTION 8.2 or 8.3) in a greater proportion than that received by any other
Purchaser entitled to receive a ratable share of such Aggregate Unpaids, such
Purchaser agrees, promptly upon demand, to purchase for cash without recourse
or warranty a portion of the Aggregate Unpaids held by the other Purchasers so
that after such purchase each Purchaser will hold its ratable proportion of the
Aggregate Unpaids; provided that if all or any portion of such excess amount is
thereafter recovered from such Purchaser, such purchase shall be rescinded and
the purchase price restored to the extent of such recovery, but without
interest.
Section 11.4. Protection of Ownership Interests of the Purchasers.
(a) The Seller agrees that from time to time, at its expense, it will
promptly execute and deliver all instruments and documents, and take all
actions, that may be necessary or desirable, or that the Agent may request, to
perfect, protect or more fully evidence the Receivable Interests, or to enable
the Agent or the Purchasers to exercise and enforce their rights and remedies
hereunder. The Agent may, or the Agent may direct the Seller to, notify the
Obligors of Receivables, at any time following the replacement of the Seller as
Servicer and at the Seller's expense, of the ownership interests of the
Purchasers under this Agreement and may also direct that payments of all amounts
due or that become due under any or all Receivables be made directly to the
Agent or its designee. The Seller shall, at any Purchaser's written request,
withhold the identity of such Purchaser in any such notification.
36
44
(b) If the Seller or the Servicer fails to perform any of its obligations
hereunder, the Agent or any Purchaser may (but shall not be required to)
perform, or cause performance of, such obligation; and the Agent's or such
Purchaser's costs and expenses incurred in connection therewith shall be
payable by the Seller (if the Servicer that fails to so perform is the Seller
or an Affiliate thereof) as provided in SECTION 8.3, as applicable. The Seller
and the Servicer each irrevocably authorizes the Agent at any time and from
time to time in the sole discretion of the Agent, and appoints the Agent as its
attorney-in-fact, to act on behalf of the Seller and the Servicer (i) to
execute on behalf of the Seller as debtor and to file financing statements
necessary or desirable in the Agent's sole discretion to perfect and to
maintain the perfection and priority of the interest of the Purchasers in the
Receivables and (ii) to file a carbon, photographic or other reproduction of
this Agreement or any financing statement with respect to the Receivables as a
financing statement in such offices as the Agent in its sole discretion deems
necessary or desirable to perfect and to maintain the perfection and priority
of the interests of the Purchasers in the Receivables. This appointment is
coupled with an interest and is irrevocable.
Section 11.5. Confidentiality.
(a) The Seller shall maintain and shall cause each of its employees and
officers to maintain the confidentiality of this Agreement and the other
confidential proprietary information with respect to the Agent and FALCON and
their respective businesses obtained by it or them in connection with the
structuring, negotiating and execution of the transactions contemplated herein,
except that the Seller and its officers and employees may disclose such
information to the Seller's external accountants and attorneys and as required
by any applicable law or order of any judicial or administrative proceeding.
In addition, the Seller 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).
(b) Anything herein to the contrary notwithstanding, the Seller hereby
consents to the disclosure of any nonpublic information with respect to it (i)
to the Agent, the Investors or FALCON by each other, (ii) by the Agent or the
Purchasers to any prospective or actual assignee or participant of any of them
or (iii) by the Agent to any rating agency, Commercial Paper dealer or provider
of a surety, guaranty or credit or liquidity enhancement to FALCON or any
entity organized for the purpose of purchasing, or making loans secured by,
financial assets for which First Chicago acts as the administrative agent and
to any officers, directors, employees, outside accountants and attorneys of any
of the foregoing, provided each such Person is informed of the confidential
nature of such information in a manner consistent with the practice of the
Agent for the making of such disclosures generally to Persons of such type. 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).
37
45
Section 11.6. Bankruptcy Petition. The Seller, the Agent and each
Investor hereby covenants and agrees that, prior to the date which is one year
and one day after the payment in full of all outstanding senior indebtedness of
FALCON, it will not institute against, or join any other Person in instituting
against, FALCON any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceeding under the laws of the
United States or any state of the United States.
Section 11.7. Limitation of Liability. Except with respect to any claim
arising out of the willful misconduct or gross negligence of FALCON, the Agent
or any Investor, no claim may be made by the Seller, the Servicer or any other
Person against FALCON, the Agent or any Investor or their respective
Affiliates, directors, officers, employees, attorneys or agents for any
special, indirect, consequential or punitive damages in respect of any claim
for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by this Agreement, or any act,
omission or event occurring in connection therewith; and the Seller hereby
waives, releases, and agrees not to 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 11.8. CHOICE OF LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE
OF ILLINOIS.
Section 11.9. CONSENT TO JURISDICTION. THE SELLER HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY THE SELLER
PURSUANT TO THIS AGREEMENT AND THE SELLER HEREBY IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER
HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A
COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT
THE RIGHT OF THE AGENT OR ANY PURCHASER TO BRING PROCEEDINGS AGAINST THE SELLER
IN THE COURTS OF ANY OTHER JURISDICTION WHEREIN ANY ASSETS OF THE SELLER OR THE
ORIGINATOR MAY BE LOCATED. ANY JUDICIAL PROCEEDING BY THE SELLER AGAINST THE
AGENT OR ANY PURCHASER OR ANY AFFILIATE OF THE AGENT OR A PURCHASER INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY THE SELLER PURSUANT
TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
Section 11.10. WAIVER OF JURY TRIAL. THE AGENT, THE SELLER AND EACH
PURCHASER HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL
38
46
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY THE SELLER PURSUANT TO
THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.
Section 11.11. Integration; Survival of Terms. This Agreement, the
Collection Account Agreements, and the Fee Letter contain the final and
complete integration of all prior expressions by the parties hereto with
respect to the subject matter hereof and shall constitute the entire agreement
among the parties hereto with respect to the subject matter hereof superseding
all prior oral or written understandings. The provisions of ARTICLE VIII and
SECTION 11.6 shall survive any termination of this Agreement.
Section 11.12. Counterparts; Severability. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
Agreement. Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 11.13. First Chicago Roles. Each of the Investors acknowledges
that First Chicago and certain of its Affiliates including (First Chicago
Capital Markets, Inc.) act, or may in the future act, (i) as administrative
agent for FALCON, (ii) as issuing and paying agent for the Commercial Paper,
(iii) to provide credit or liquidity enhancement for the timely payment for the
Commercial Paper and (iv) to provide other services from time to time for
FALCON (collectively, the "FIRST CHICAGO ROLES"). Without limiting the
generality of this SECTION 11.13, each Investor hereby acknowledges and
consents to any and all First Chicago Roles and agrees that in connection with
any First Chicago Role, First Chicago may take, or refrain from taking, any
action which it, in its discretion, deems appropriate, including, without
limitation, in its role as administrative agent for FALCON, the giving of
notice to the Agent of a mandatory purchase pursuant to SECTION 2.1.
Section 11.14. Characterization.
(a) It is the intention of the parties hereto that each purchase hereunder
shall constitute an absolute and irrevocable sale, which purchase shall provide
the applicable Purchaser with the full benefits of ownership of the applicable
Receivable Interest. Except as specifically provided in this Agreement, each
sale of a Receivable Interest hereunder is made without recourse to the Seller;
PROVIDED, HOWEVER, that (i) the Seller shall be liable to each Purchaser and
the Agent for all representations, warranties and covenants made by the Seller
pursuant to the terms of this Agreement, and (ii) such sale does not constitute
and is not intended to result in an assumption by any Purchaser or
39
47
the Agent or any assignee thereof of any obligation of the Seller or the
Originator or any other person arising in connection with the Receivables, the
Related Security, or the related Invoices, or any other obligations of
the Seller or the Originator.
(b) If the conveyance by the Seller to the Purchasers of interests in
Receivables hereunder shall be characterized as a secured loan and not a sale,
it is the intention of the parties hereto that this Agreement shall constitute
a security agreement under applicable law, and that the Seller shall be deemed
to have granted to the Agent for the ratable benefit of the Purchasers a duly
perfected security interest in all of the Seller's right, title and interest
in, to and under the Receivables, the Collections, each Collection Account, all
Related Security, all payments on or with respect to such Receivables, all
other rights relating to and payments made in respect of the Receivables, and
all proceeds of any thereof prior to all other liens on and security interests
therein. After a Servicer Default, the Agent and the Purchasers shall have, in
addition to the rights and remedies which they may have under this Agreement,
all other rights and remedies provided to a secured creditor after default
under the UCC and other applicable law, which rights and remedies shall be
cumulative.
40
48
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.
YELLOW RECEIVABLES CORPORATION
By:_______________________________
Name:
Title:
Address for Notices:
Yellow Receivables Corporation
10990 Roe Avenue
P.O. Box 7489
Overland Park, KS 66211
Attention: Chet Lamkey
Phone: (913) 344-3325
Fax: (913) 344-4849
FALCON ASSET SECURITIZATION CORPORATION
By:_______________________________
Authorized Signatory
c/o The First National Bank
of Chicago
Asset-Backed Finance
One First National Plaza
Chicago, Illinois 60670-0079
Attention: Alison Dolin
Fax: (312) 732-4487
41
49
INVESTORS:
Commitment
$150,000,000 THE FIRST NATIONAL BANK OF
CHICAGO, as an Investor and as Agent
By:________________________________
Authorized Agent
The First National Bank of Chicago
Suite 0079, 1-21
One First National Plaza
Chicago, Illinois 60670
Attention: Alison Dolin
Fax: (312) 732-4487
- ------------
$150,000,000 PURCHASE LIMIT
42
50
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):
"ACQUISITION AMOUNT" means, on the date of any purchase from FALCON of
Receivable Interests pursuant to SECTION 2.1, (i) with respect to each Investor
other than First Chicago, the lesser of (a) such Investor's Pro Rata Share of
the FALCON Transfer Price and (b) such Investor's unused Commitment and (ii)
with respect to First Chicago, the difference between (a) the FALCON Transfer
Price and (b) the aggregate amount payable by all other Investors on such date
pursuant to clause (i) above.
"ADJUSTED LIQUIDITY PRICE" means, in determining the FALCON Transfer Price
for any Receivable Interest, an amount equal to:
(i) DC + (ii) RI x [ NDR ]
-----------------------
1 + [.50 x (LRP + DRP)]
where:
RI = the undivided percentage interest evidenced by such Receivable
Interest.
DC = the Deemed Collections.
NDR = the Outstanding Balance of all non-Defaulted Receivables.
LRP = the Loss Reserve Percentage.
DRP = the Dilution Reserve Percentage.
Each of the foregoing shall be determined from the most recent Monthly Report
received from the Servicer.
"ADVERSE CLAIM" means a lien, security interest, charge or encumbrance, or
other right or claim in, of or on any Person's assets or properties in favor of
any other Person.
"AFFILIATE" means, with respect to any Person, any other Person directly
or indirectly controlling (including but not limited to all directors and
officers of such Person), controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control another Person
if such Person possesses, directly or indirectly, the power to direct or cause
the direction of the management or policies of the other Person,
43
51
whether through ownership of voting securities, by contract or otherwise. In
addition, for purposes of the definitions of "CONCENTRATION LIMIT,"
"ELIGIBLE RECEIVABLE" and "NET RECEIVABLES BALANCE," a Person shall be deemed
to control another Person if such Person owns more than 50% of any class of
voting securities (or corresponding interest in the case of non-corporate
entities) of the other Person.
"AGENT" means First Chicago in its capacity as agent for the Purchasers
pursuant to ARTICLE IX, and not in its individual capacity as an Investor, and
any successor Agent appointed pursuant to ARTICLE IX.
"AGGREGATE RESERVE PERCENTAGE" means, on any date of determination, the
greater of (a) the sum of the Loss Reserve Percentage, the Dilution Reserve
Percentage, the Discount Reserve Percentage and the Servicer Fee Percentage,
each as then in effect, and (b) 20%.
"AGGREGATE UNPAIDS" means, at any time, an amount equal to the sum of all
accrued and unpaid Discount, Capital and all other amounts owed (whether due or
accrued) hereunder or under the Fee Letter to the Agent and the Purchasers at
such time, plus all accrued and unpaid Servicer Fees owed hereunder to the
Servicer.
"AGREEMENT" means this Receivables Purchase Agreement, as it may be
amended or modified and in effect from time to time.
"APPROVED OFFSET RECEIVABLE" means any Receivable arising under contract
numbers 39, 45, 56, 111, 146 and 152 on EXHIBIT X hereto for so long as the
Originator does not purchase goods or services on credit from the Obligor
thereon.
"BASE RATE" means a rate per annum equal to the corporate base rate, prime
rate or base rate of interest, as applicable, announced by the Reference Bank
from time to time, changing when and as such rate changes; PROVIDED, HOWEVER,
that from and after the occurrence of a Servicer Default, and during the
continuation thereof, the "BASE RATE" shall mean a rate per annum equal to the
sum of 2% per annum PLUS the corporate base rate, prime rate or base rate of
interest, as applicable, announced by the Reference Bank from time to time,
changing when and as such rate changes.
"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 LIBOR
Rate, any day on which dealings in dollar deposits are carried on in the London
interbank market.
"CAPITAL" of any Receivable Interest means, at any time, the Purchase
Price of such Receivable Interest (and after giving effect to any adjustments
contemplated in SECTION 1.5), minus the sum of the aggregate amount of
Collections and other payments received by the Agent which in each case are
applied to reduce such Capital; PROVIDED
44
52
THAT such Capital shall be restored in the amount of any Collections or
payments so received and applied if at any time the distribution of such
Collections or payments are rescinded or must otherwise be returned for any
reason.
"CHANGE OF CONTROL" means (i) any Person or Persons acting in concert
shall acquire 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 Yellow Corporation;
or (ii) during any period of twelve (12) consecutive months, commencing before
or after the date hereof, individuals who at the beginning of such twelve-month
period were directors of the Originator shall cease for any reason to
constitute a majority of the board of directors of the Originator; or (iii) the
Originator shall cease to own, free and clear of all Adverse Claims, all of the
outstanding shares of voting stock of the Seller on a fully diluted basis; or
(iv) Yellow Corporation shall cease to own, free and clear of all Adverse
Claims, all of the outstanding shares of voting stock of the Originator on a
fully diluted basis.
"COLLECTION ACCOUNT" means each concentration account, depositary account,
lock-box account or similar account in which any Collections are collected or
deposited.
"COLLECTION ACCOUNT AGREEMENT" means, in the case of any actual or
proposed Collection Account, an agreement in substantially the form of EXHIBIT
V hereto.
"COLLECTION BANK" means, at any time, any of the banks or other financial
institutions holding one or more Collection Accounts.
"COLLECTION NOTICE" means a notice, in substantially the form of the
Collection Notice contained in EXHIBIT V hereto, from the Agent to a Collection
Bank.
"COLLECTIONS" means, with respect to any Receivable, all cash collections
and other cash proceeds in respect of such Receivable, including, without
limitation, all cash proceeds of Related Security with respect to such
Receivable and all amounts payable to the Purchasers by the Seller pursuant to
SECTION 1.8.
"COMMERCIAL PAPER" means promissory notes of FALCON issued by FALCON in
the commercial paper market.
"COMMITMENT" means, for each Investor, the commitment of such Investor to
purchase its Pro Rata Share of Receivable Interests from (i) the Seller and
(ii) FALCON, such Pro Rata Share not to exceed, in the aggregate, the amount
set forth opposite such Investor's name on the signature pages of this
Agreement, as such amount may be modified in accordance with the terms hereof.
"CONCENTRATION LIMIT" means:
45
53
(a) for any Obligor and its Affiliates considered as if they
were one and the same Obligor, an amount equal to (i) 3.00%,
multiplied by (ii) the aggregate Outstanding Balance of all Eligible
Receivables at such time;
(b) at any time, for all Government Receivables, 5% of the
aggregate Outstanding Balance of all Eligible Receivables at such
time; and
(c) at any time, for that portion of the Receivables
representing Deferred Revenue, 10% of the aggregate Outstanding
Balance of all Eligible Receivables at such time;
PROVIDED, HOWEVER, that:
(i) the Concentration Limit set forth in the preceding clause
(c) will automatically become zero (A) at all times while any Labor
Action remains is pending, and (B) immediately following the threat
of any Labor Action and for so long as the Agent, FALCON or the
Required Investors reasonably believe(s) such threat is likely to be
carried out, and
(ii) the Agent may from time to time designate other amounts
(each, a "SPECIAL CONCENTRATION LIMIT") for any Obligor or class of
Receivables, it being understood and agreed that the Agent, FALCON
or the Required Investors may, upon not less than three Business
Days' notice to the Seller, cancel any Special Concentration Limit.
"CP RATE" means (a) if applicable, unless and until the Agent advises the
Seller to the contrary, the CP Composite Rate or (b) the rate, requested by the
Seller and agreed to by FALCON, equivalent to the rate (or if more than one
rate, the weighted average of the rates) at which Commercial Paper having a
term equal to the relevant Tranche Period may be sold by any placement agent or
commercial paper dealer reasonably selected by FALCON, as agreed between each
such dealer or agent and FALCON plus any and all applicable issuing and paying
agent fees and commissions of placement agents and commercial paper dealers in
respect of such Commercial Paper; PROVIDED, HOWEVER, that if the rate (or
rates) as agreed between any such agent or dealer and FALCON is a discount rate
(or rates), the "CP Rate" for such Tranche Period shall be the rate (or if
more than one rate, the weighted average of the rates) resulting from FALCON's
converting such discount rate (or rates) to an interest-bearing equivalent rate
per annum.
"CREDIT AND COLLECTION POLICY" means the Seller's credit and collection
policies and practices relating to Invoices and Receivables existing on the
date hereof and summarized in EXHIBIT VI hereto, as modified from time to time
in accordance with this Agreement. It is understood that the Credit and
Collection Policy of the Seller in respect of any Receivable shall be the
credit and collection policies of the Originator thereof. To the extent the
Originator shall not have comprehensively reduced to writing its credit and
46
54
collection policies, the Credit and Collection Policy in respect of Receivables
originated by the Originator shall be those credit and collection policies of
the Originator in effect on the date hereof and disclosed to the Agent on or
prior to the date hereof.
"DAYS OUTSTANDING" means, at any time: (a) one-half of the sum of the
beginning and ending Outstanding Balances of all Receivables during the month
most recently ended, multiplied by (b) the number of days in the month most
recently ended divided by the aggregate amount payable pursuant to Invoices
generated during that month.
"DEEMED COLLECTIONS" means the aggregate of all amounts owing to FALCON
pursuant to SECTIONS 1.8 and 8.1.
"DEFAULT FEE" means with respect to any amount due and payable by the
Seller hereunder or under the Fee Letter, an amount equal to interest on any
such amount at a rate per annum equal to 2% above the Base Rate; PROVIDED,
HOWEVER, that such interest rate will not at any time exceed the maximum rate
permitted by applicable law.
"DEFAULT RATIO" means, at any time, a fraction (expressed as a percentage)
having (a) a numerator equal to the sum of (i) the Outstanding Balance of all
Receivables that remained outstanding 151 to 180 days after their respective
initial invoice dates, plus (ii) the aggregate Outstanding Balance of
Receivables that were written off as uncollectible during the month most
recently ended that, if not so written off, would have been outstanding not
more than 150 days after their respective invoice dates, and (b) a denominator
equal to the aggregate amount payable pursuant to Invoices generated five (5)
months prior to the month most recently ended.
"DEFAULTED RECEIVABLE" means a Receivable: (i) as to which any payment,
or part thereof, remains unpaid for 150 days or more from the original invoice
date for such payment; (ii) as to which the Obligor thereof has taken any
action, or suffered any event to occur, of the type described in SECTION 7.1(C)
(as if references to the Seller therein refer to such Obligor); (iii) as to
which the Obligor thereof, if a natural person, is deceased; or (iv) which has
been identified by the Seller as uncollectible.
"DEFERRED REVENUE" means any Receivable which has been booked as an asset
on the Originator's balance sheet (prior to giving effect to any sale or
contribution of such Receivable by the Originator to the Seller) but as to
which delivery of the underlying goods has not yet been completed in accordance
with the Invoice or underlying purchase order.
"DELINQUENCY RATIO" means, as of the last day of any calendar month, a
percentage equal to (i) the aggregate Outstanding Balance of all Receivables
that are then Delinquent Receivables, divided by (ii) the aggregate Outstanding
Balance of all Receivables as of such date.
47
55
"DELINQUENT RECEIVABLE" means a Receivable (other than a Defaulted
Receivable) as to which any payment, or part thereof, remains unpaid for 120
days but less than 150 days from the original invoice date for such payment.
"DILUTION HORIZON RATIO" means, on any date of determination: (i) the
aggregate amount of Receivables generated during the 4-month period then most
recently ended, divided by (ii) the Net Receivables Balance on such date.
"DILUTION RESERVE PERCENTAGE" means, on any date of determination, the
percentage determined pursuant to the following formula:
{(2.25 x ED) + [(DS - ED) x (DS/ED)]} x DHR
where:
ED = the Expected Dilution on such date;
DS = the Dilution Spike as of such date; and
DHR = the Dilution Horizon Ratio on such date.
"DILUTION RATIO" means, as of the last day of any calendar month, a
percentage equal to (i) the aggregate amount of Dilutions which occurred during
such month, divided by (ii) the aggregate amount of Receivables generated by
the Originator 4 months prior to such month.
"DILUTION RESERVE" means, on any date, an amount equal to (i) the Dilution
Reserve Percentage, multiplied by (ii) the Net Receivables Balance as of the
opening of business of the Servicer on such date.
"DILUTION SPIKE" means, on any date of determination, the highest Dilution
Ratio for any month during the 12 months then most recently ended.
"DILUTIONS" means, at any time, the aggregate amount of reductions in the
Outstanding Balances of the Receivables as a result of any setoff, discount,
adjustment or otherwise, other than cash Collections on account of the
Receivables.
"DISCOUNT" means, for each Receivable Interest for any Tranche Period:
AD
DR x C x -----
360
where:
48
56
DR = the Discount Rate for such Receivable Interest for such Tranche
Period;
C = the Capital of such Receivable Interest during such Tranche Period;
and
AD = the actual number of days elapsed during such Tranche Period;
PROVIDED, THAT no provision of this Agreement shall require the payment or
permit the collection of Discount in excess of the maximum permitted by
applicable law; and PROVIDED FURTHER, that Discount for any Tranche Period
shall not be considered paid by any distribution to the extent that at any time
all or a portion of such distribution is rescinded or must otherwise be
returned for any reason.
"DISCOUNT RATE" means the LIBOR Rate, the CP Rate or the Base Rate, as
applicable; PROVIDED THAT from and after the occurrence of a Servicer Default,
the Discount Rate in respect of each Receivable Interest and Tranche Period
shall be the Base Rate.
"DISCOUNT RESERVE" means, on any date of determination, the amount
determined pursuant to the following formula:
{ (D + F) + [ (C x 1.5 x DR) x 2 x DSO ] }
-------
360
where:
D = the accrued and unpaid Discount for all Receivable Interests as of
the date of determination;
F = the aggregate amount of accrued and unpaid Servicer Fees and other
fees owing pursuant to the Fee Letter as of the date of
determination;
C = the aggregate Capital outstanding as of the date of determination;
DR = the highest Discount Rate applicable on the date of determination; and
DSO = the Days Outstanding.
"DISCOUNT RESERVE PERCENTAGE" means, on any date of determination, a
percentage equal to (i) the Discount Reserve divided by (ii) the Net
Receivables Balance.
49
57
"EARLY COLLECTION FEE" means, for any Receivable Interest which has its
Capital reduced, or its Tranche Period terminated prior to the date on which it
was originally scheduled to end, the excess, if any, of (i) the Discount that
would have accrued during the remainder of the Tranche Period subsequent to the
date of such reduction or termination on the Capital of such Receivable
Interest if such reduction or termination had not occurred, over (ii) the sum
of (a) to the extent all or a portion of such Capital is allocated to another
Receivable Interest, the Discount actually accrued during such period on such
Capital for the new Receivable Interest, and (b) to the extent such Capital is
not allocated to another Receivable Interest, the income, if any, actually
received during such period by the holder of such Receivable Interest from
investing the portion of such Capital not so allocated. In the event that the
amount referred to in clause (ii) exceeds the amount referred to in clause (i),
the relevant Purchaser or Purchasers agree to pay to the Seller the amount of
such excess.
"ELIGIBLE RECEIVABLE" means, at any time:
(i) a Receivable 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, and (b) is not an Affiliate of any of the parties hereto,
(ii) a Receivable as to which no payment, or part thereof, remains
unpaid for 120 days or more from the original invoice date, and such
Receivable is not a Defaulted Receivable,
(iii) a Receivable which arises under an Invoice that requires
payment within 60 days after the original invoice date therefor and has
not had its payment terms extended,
(iv) a Receivable which is an account receivable representing all or
part of the sales price of merchandise, insurance and services within the
meaning of Section 3(c)(5) of the Investment Company Act of 1940, as
amended,
(v) a Receivable which is an "account" within the meaning of Section
9-106 of the UCC of all applicable jurisdictions,
(vi) a Receivable which is denominated and payable only in United
States dollars in the United States,
(vii) a Receivable which arises under an Invoice in substantially the
form of one of the form invoices set forth on EXHIBIT VII hereto or
otherwise approved by the Agent in writing, which, together with such
Receivable, is in full force and effect and constitutes the legal, valid
and binding obligation of the related Obligor enforceable by the Seller
and its assignees against such Obligor in accordance with its terms,
50
58
(viii) a Receivable which arises under an Invoice which (a) does not
require the Obligor under such Invoice to consent to the transfer, sale or
assignment of the rights and duties of the Originator or any of its
assignees under such Invoice and (b) is not subject to a confidentiality
provision that would have the effect of restricting the ability of the
Agent or any Purchaser to exercise its rights under this Agreement,
including, without limitation, its right to review the Invoice,
(ix) a Receivable which arises under an Invoice that contains an
obligation to pay a specified sum of money,
(x) a Receivable (A) which is not subject to any right of rescission,
counterclaim, any other defense (including defenses arising out of
violations of usury laws) of the applicable Obligor or the Originator or
any other Adverse Claim, and (B) which, unless such Receivable is an
Approved Offset Receivable or a Supplemental Approved Offset Receivable,
is not subject to any right of set-off in respect of all or any portion of
the Outstanding Balance thereof then being proposed for inclusion in Net
Receivables Balance as of any date,
(xi) a Receivable as to which (A) at any time while any Labor Action
is pending or threatened, the Originator has satisfied and fully performed
all obligations on its part with respect to such Receivable required to be
fulfilled by it, and no further action is required to be performed by any
Person with respect thereto other than payment thereon by the applicable
Obligor, and (B) at any time while no such Labor Action is pending or
threatened, a Receivable as to which the Originator has commenced shipment
of the underlying goods in accordance with the applicable Invoice or
purchase order and no further action is required to be performed by any
Person with respect thereto other than the completion of shipment by the
Originator and payment thereon by the applicable Obligor,
(xii) a Receivable all right, title and interest to and in which has
been validly transferred by the Originator directly to the Seller under
and in accordance with the Sale Agreement, and the Seller has good and
marketable title thereto free and clear of any Adverse Claim,
(xiii) a Receivable which, together with the Invoice related thereto,
was created in compliance with each, and 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
Invoice related thereto is in violation of any such law, rule or
regulation,
(xiv) a Receivable which satisfies all applicable requirements of the
Credit and Collection Policy,
51
59
(xv) a Receivable which was generated in the ordinary course of the
Originator's business in connection with the provision of shipping
services for the applicable Obligor by the Originator,
(xvi) that portion of a Receivable which arises solely from the sale
of freight shipping and ancillary services to the related Obligor by the
Originator (and not that portion which arises from the provision of
services by an interline carrier), and the Originator shall have
transferred such Receivable to the Seller,
(xvii) a Receivable as to which the Agent has not notified the Seller
that the Agent has determined that such Receivable or class of Receivables
is not acceptable as an Eligible Receivable, including, without
limitation, because such Receivable arises under an Invoice that is not
acceptable to the Agent, and
(xviii) a Receivable the Obligor of which is not the Obligor
(or the Affiliate of an Obligor) in respect of Receivables of which
more than 50% of the aggregate Outstanding Balance is more than 120
days past their respective invoice dates.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"EXCLUDED RECEIVABLE" means any Receivable (other than an Approved Offset
Receivable) which arises under a contract listed on EXHIBIT X hereto unless and
until such contract is replaced, restated, amended or otherwise modified to
eliminate (i) any confidentiality provision, if applicable, that purport to
preclude the Originator from disclosing information that would be included on
an Invoice, and (ii) any provision that puports to preclude the assignment of
any of the Originator's rights to payment thereunder.
"EXPECTED DILUTION" means, on any date of determination, the average of
the Dilution Ratios for the 12 months then most recently ended.
"FACILITY ACCOUNT" means the Seller's Account No. 55-66681 at First
Chicago.
"FACILITY TERMINATION DATE" means the earliest of (i) the Liquidity
Termination Date, (ii) the date the Seller shall exercise its right to
repurchase the outstanding Receivable Interests pursuant to SECTION 1.11, (iii)
any date selected by the Seller on not less than fifteen (15) Business Days'
prior written notice to the Agent; PROVIDED THAT if any Person then acting as
Agent hereunder shall have elected or been required to resign as Agent pursuant
to SECTION 9.8, the Seller may elect, by written notice to the Agent given
promptly following notice to the Seller of such resignation, to have the
Facility Termination Date occur on the effective date of such resignation; (iv)
the date of the occurrence of a Servicer Default involving the Seller and of
the type described in SECTION
52
60
7.1(C), (v) any date following the occurrence, and during the continuance, of a
Servicer Default which the Required Investors declare to be the Facility
Termination Date, and (vi) the date on which the Originator ceases selling
and/or contributing Receivables to the Seller pursuant to the Sale Agreement
and/or the Subscription Agreement referred to therein.
"FALCON RESIDUAL" means the sum of the FALCON Transfer Price Reductions.
"FALCON TRANSFER PRICE" means, with respect to the assignment by FALCON of
one or more Receivable Interests to the Agent for the benefit of the Investors
pursuant to SECTION 2.1, the sum of (i) the lesser of (a) the Capital of each
Receivable Interest and (b) the Adjusted Liquidity Price of each Receivable
Interest and (ii) all accrued and unpaid Discount for such Receivable
Interests.
"FALCON TRANSFER PRICE REDUCTION" means in connection with the assignment
of a Receivable Interest by FALCON to the Agent for the benefit of the
Investors, the positive difference between (i) the Capital of such Receivable
Interest and (ii) the Adjusted Liquidity Price for such Receivable Interest.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a fluctuating
interest rate per annum equal for each day during such period equal to (i) the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the
preceding Business Day) by the Federal Reserve Bank of New York in the
Composite Closing Quotations for U.S. Governments Securities; or (ii) if such
rate is not so published for any day which is a Business Day, the average of
the quotations at approximately 10:30 a.m. (Chicago time) for such day on such
transactions received by the Reference Bank from three federal funds brokers of
recognized standing selected by it.
"FEE LETTER" means that certain letter agreement dated as of the date
hereof between the Seller and the Agent, as it may be amended or modified and
in effect from time to time.
"FINANCE CHARGES" means, with respect to an Invoice, any finance,
interest, late payment charges or similar charges owing by an Obligor pursuant
to such Invoice.
"FIRST CHICAGO" means The First National Bank of Chicago in its individual
capacity and its successors.
"FUNDING AGREEMENT" means this Agreement and any agreement or instrument
executed by any Funding Source with or for the benefit of FALCON.
53
61
"FUNDING SOURCE" means (i) any Investor or (ii) any insurance company,
bank or other financial institution providing liquidity, credit enhancement or
back-up purchase support or facilities to FALCON.
"GOVERNMENT RECEIVABLE" means a Receivable as to which the Obligor is the
United States federal government, any political subdivision thereof, or any
agency of the foregoing.
"INCREMENTAL PURCHASE" means a purchase of one or more Receivable
Interests which increases the total outstanding Capital hereunder.
"INTENDED CHARACTERIZATION" means, for income tax purposes, the
characterization of the acquisition by the Purchasers of Receivable Interests
as a loan or loans by the Purchasers to the Seller secured by the Receivables,
the Related Security, the Collection Accounts and the Collections.
"INVESTORS" means the financial institutions listed on the signature pages
of this Agreement under the heading "INVESTORS" and their respective successors
and assigns.
"INVOICE" means, collectively, with respect to any Receivable, any and all
instruments, bills of lading, invoices or other writings which evidence such
Receivable or the goods underlying such Receivable.
"LABOR ACTIONS" has the meaning set forth in SECTION 5.1(B)(VI).
"LIBOR RATE" means the rate per annum equal to the sum of (i) (a) the rate
at which deposits in U.S. Dollars are offered by the Reference Bank to
first-class banks in the London interbank market at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of the relevant Tranche
Period, such deposits being in the approximate amount of the Capital of the
Receivable Interest to be funded or maintained, divided by (b) one minus the
Reserve Requirement (expressed as a decimal) applicable to such Tranche Period
plus (ii) 0.75%. The LIBOR Rate shall be rounded, if necessary, to the next
higher 1/16 of 1%.
"LIQUIDATION DAY" means, for any Receivable Interest, the earliest to
occur of (i) any Business Day so designated by the Agent on or at any time
following any day on which the conditions precedent set forth in SECTION 4.2
are not satisfied, (ii) any Business Day so designated by the Seller or FALCON
after the occurrence of the Termination Date, (iii) the Business Day
immediately prior to the occurrence of a Servicer Default set forth in SECTION
7.1(C), and (iv) the Business Day, if any, on which the aggregate outstanding
amount of Capital of all Receivable Interests is decreased after giving effect
to any Reinvestments on such day.
54
62
"LIQUIDITY TERMINATION DATE" means August 1, 1999 (or if such date is not
a Business Day, the next preceding Business Day.
"LOSS RESERVE PERCENTAGE" means, on any date of determination, (a) 2.25,
multiplied by (b) the highest of the past 12 rolling 3-month average Default
Ratio, multiplied by (c) a fraction having a numerator equal to the aggregate
amount of Receivables generated during the preceding 4 months and denominator
equal to the Net Receivables Balance on the date of determination.
"LOSS-TO-LIQUIDATION RATIO" means, for any month, a percentage equal to:
(i) the amount of Receivables which were written-off as uncollectible any time
during such month in accordance with the Credit and Collection Policy, divided
by (ii) the aggregate amount of Collections during each such month.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
financial condition, business or operations of the Seller or the Originator,
(ii) the ability of the Seller or the Originator to perform its obligations
under any Transaction Document, (iii) the legality, validity or enforceability
of this Agreement, any Transaction Document or any Collection Account Agreement
or Collection Notice relating to a Collection Account into which a material
portion of Collections are deposited, (iv) the Seller's or 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 6.5.
"NET RECEIVABLES BALANCE" means, at any time, the aggregate Outstanding
Balance of all Eligible Receivables at such time, reduced by the aggregate
amount by which the Outstanding Balance of all Eligible Receivables of each
Obligor and its Affiliates exceeds the Concentration Limit for such Obligor.
"NEW CONCENTRATION ACCOUNT" has the meaning set forth in SECTION 5.1(I).
"OBLIGOR" means a Person obligated to make payments pursuant to an
Invoice.
"ORIGINATOR" means Yellow Freight System, Inc., an Indiana corporation.
"OUTSTANDING BALANCE" of any Receivable at any time means the then
outstanding principal balance thereof, and shall exclude any interest or
finance charges thereon, without regard to whether any of the same shall have
been capitalized.
55
63
"PERSON" means an individual, partnership, corporation, association,
trust, or any other entity, or organization, including a government or
political subdivision or agent or instrumentality thereof.
"POTENTIAL SERVICER DEFAULT" means an event which, with the passage of
time or the giving of notice, or both, would constitute a Servicer Default.
"PRO RATA SHARE" means, for each Investor, the Commitment of such Investor
divided by the Purchase Limit, adjusted as necessary to give affect to the
application of the terms of SECTION 2.5.
"PURCHASE LIMIT" means the aggregate of the Commitments of the Investors
hereunder (which aggregate amount is $150,000,000 as of the date of this
Agreement).
"PURCHASE PRICE" means, with respect to any Incremental Purchase, the
least of:
(a) the amount of Capital requested by the Seller,
(b) the remaining unused portion of the Purchase Limit, and
(c) the maximum amount by which the aggregate outstanding
Capital could be increased such that after giving effect to such
increase in Capital, the Net Receivables Balance will equal or
exceed the product of (i) the sum of 100% plus the Aggregate Reserve
Percentage, times (ii) the aggregate outstanding Capital after
giving effect to such Incremental Purchase.
"PURCHASER" means FALCON or an Investor, as applicable.
"RECEIVABLE" means the indebtedness and other obligations owed (at the
time it arises, and before giving effect to any transfer or conveyance
contemplated under the Sale Agreement or hereunder) to the Originator, whether
constituting an account, chattel paper, instrument or general intangible,
arising in connection with the provision of freight shipping and ancillary
services by the Originator and includes, without limitation, the obligation to
pay any Finance Charges with respect thereto; PROVIDED, HOWEVER, that the term
"RECEIVABLE" shall not include any Excluded Receivable. Indebtedness and other
rights and obligations arising from any one transaction, including, without
limitation, indebtedness and other rights and obligations represented by an
individual Invoice, shall constitute a Receivable separate from a Receivable
consisting of the indebtedness and other rights and obligations arising from
any other transaction.
"RECEIVABLE INTEREST" means, at any time, an undivided percentage
ownership interest associated with a designated amount of Capital, Discount
Rate and Tranche Period selected pursuant to SECTION 1.3 in (i) all Receivables
transferred to or otherwise acquired or held by the Seller and arising prior to
the time of the most recent
56
64
computation or recomputation of such undivided interest pursuant to SECTION
1.4, (ii) all Related Security with respect to such Receivables, and (iii) all
Collections with respect to, and other proceeds of, such Receivables. Such
undivided percentage interest shall equal:
C
-----------------
NRB - (ARP x NRB)
where:
C = the Capital of such Receivable Interest.
ARP = the Aggregate Reserve Percentage.
NRB = the Net Receivables Balance.
"RECORDS" means, with respect to any Receivable, all Invoices and other
documents, books, records and other information (including, without limitation,
computer programs, tapes, disks, punch cards, data processing software and
related property and rights) relating to such Receivable, any Related Security
therefor and the related Obligor.
"REDUCTION PERCENTAGE" means, for any Receivable Interest acquired by the
Investors from FALCON for less than the Capital of such Receivable Interest, a
percentage equal to a fraction the numerator of which is the FALCON Transfer
Price Reduction for such Receivable Interest and the denominator of which is
the Capital of such Receivable Interest.
"REFERENCE BANK" means First Chicago or such other bank as the Agent shall
designate with the consent of the Seller.
"REQUIRED INVESTORS" means, at any time, Investors with Commitments in
excess of 66-2/3% of the Purchase Limit.
"RELATED SECURITY" means, with respect to any Receivable:
(i) all of the Seller's interest in the goods, the shipment of which
gave rise to such Receivable, and any 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 Invoice related to such Receivable or
otherwise, together with all financing statements and security agreements
describing any collateral securing such Receivable,
57
65
(iii) all guaranties, insurance and other agreements or arrangements
of whatever character from time to time supporting or securing payment of
such Receivable whether pursuant to the Invoice related to such Receivable
or otherwise,
(iv) all Records related to such Receivables,
(v) all of the Seller's right, title and interest in, to and under
the Sale Agreement and each bill of lading, instrument, document or
agreement executed in connection therewith in favor of or otherwise for
the benefit of the Seller; and
(vi) all proceeds of any of the foregoing.
"RESERVE REQUIREMENT" means the maximum aggregate reserve requirement
(including all basic, supplemental, marginal and other reserves) which is
imposed against the Reference Bank in respect of Eurocurrency liabilities, as
defined in Regulation D of the Board of Governors of the Federal Reserve System
as in effect from time to time.
"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
the Seller now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock or in any junior class of stock to the
Originator, (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 the 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 Indebtedness evidenced by the Subordinated Note
(as defined in the 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 the
Seller now or hereafter outstanding, and (v) any payment of management fees by
the Seller.
"SALE AGREEMENT" means that certain Receivables Sale Agreement of even
date herewith between the Seller, as purchaser, and the Originator, as seller,
as the same may be amended, restated, supplemented or otherwise modified from
time to time.
"SECTION" means a numbered section of this Agreement, unless another
document is specifically referenced.
"SERVICER" means at any time the Person (which may be the Agent) then
authorized pursuant to ARTICLE VI to service, administer and collect
Receivables.
"SERVICER DEFAULT" has the meaning specified in ARTICLE VII.
58
66
"SERVICER FEE" has the meaning specified in SECTION 1.12.
"SERVICER FEE RESERVE" means, on any date, an amount determined pursuant
to the following formula:
SFP x NRB x 2 x DSO
-------
360
where:
SFP = the Servicer Fee Percentage as of the date of determination;
NRB = the Net Receivables Balance as of the opening of business of the
Servicer on such date; and
DSO = the Days Outstanding on such date of determination.
"SERVICER FEE PERCENTAGE" means 2% or such other percentage as may be
agreed upon between the Agent and the Servicer as an arms-length rate for the
Servicer Fee.
"SUBSIDIARY" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or
more of its Subsidiaries or by such Person and one or more of its Subsidiaries,
or (ii) any partnership, association, joint venture or similar business
organization more than 50% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled. Unless otherwise
expressly provided, all references herein to a "SUBSIDIARY" shall mean a
Subsidiary of the Seller.
"SUPPLEMENTAL APPROVED OFFSET RECEIVABLE" means any Receivable arising
under contract numbers 1, 9, 22, 67, 107, 110, 116 or 187 on EXHIBIT X hereto
from and after the time such Receivable is no longer an Excluded Receivable but
only for so long as the Originator does not purchase goods or services on
credit from the applicable Obligor.
"TERMINATION DATE" means, for any Receivable Interest, the Facility
Termination Date, and, solely with respect to a Receivable Interest of FALCON,
that Business Day so designated by the Seller or FALCON by notice to the other.
"TRANCHE PERIOD" means, with respect to any Receivable Interest:
59
67
(i) if Discount for such Receivable Interest is calculated with
respect to the CP Rate, a period of days not to exceed 270 days commencing
on a Business Day requested by the Seller and agreed to by FALCON;
(ii) if Discount for such Receivable Interest is calculated on the
basis of the LIBOR Rate, a period of one, two or three months, or such
other period as may be mutually agreeable to the Agent and the Seller,
commencing on a Business Day selected by the Seller or the Agent pursuant
to this Agreement. Such Tranche Period shall end on the day in the
applicable succeeding calendar month which corresponds numerically to the
beginning day of such Tranche Period, provided, however, that if there is
no such numerically corresponding day in such succeeding month, such
Tranche Period shall end on the last Business Day of such succeeding
month; and
(iii) if Discount for such Receivable Interest is calculated on the
basis of the Base Rate, a period of one Business Day.
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 LIBOR Rate,
if such next succeeding Business Day falls in a new month, such Tranche Period
shall end on the immediately preceding Business Day. In the case of any
Tranche Period for any Receivable Interest of which commences before the
Termination Date and would otherwise end on a date occurring after the
Termination Date, such Tranche Period shall end on the Termination Date. The
duration of each Tranche Period which commences after the Termination Date
shall be of such duration as selected by the Agent.
"TRANSACTION DOCUMENTS" means, collectively, this Agreement, the Sale
Agreement, the Fee Letter, each Collections Notice and all other instruments,
documents and agreements executed and delivered by the Seller or the Originator
in connection herewith.
"UCC" means the Uniform Commercial Code as from time to time in effect in
the specified jurisdiction.
ALL ACCOUNTING TERMS NOT SPECIFICALLY DEFINED HEREIN SHALL BE CONSTRUED IN
ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. ALL TERMS USED IN
ARTICLE 9 OF THE UCC IN THE STATE OF ILLINOIS, AND NOT SPECIFICALLY DEFINED
HEREIN, ARE USED HEREIN AS DEFINED IN SUCH ARTICLE 9.
60
68
EXHIBIT II
CHIEF EXECUTIVE OFFICE OF THE SELLER; LOCATIONS OF RECORDS;
FEDERAL EMPLOYER IDENTIFICATION NUMBER
Chief Executive Office:
10990 Roe Avenue
Overland Park, KS 66211
Location of Records:
10990 Roe Avenue
Overland Park, KS 66211
Federal Employer Identification Number:
Yellow Receivables Corporation 52-1985649
Trade Names and Assumed Names: None (other than its corporate name,
Yellow Receivables Corporation)
61
69
EXHIBIT III
LOCKBOXES; COLLECTION ACCOUNTS;
CONCENTRATION ACCOUNTS; AND DEPOSITARY ACCOUNTS
YELLOW FREIGHT SYSTEM, INC.
TYPE OF ACCT. ACCOUNT # BANK NAME CITY, STATE
- ------------- --------- --------- -----------
Concentration 010100006289 Boatmen's First National Bank Kansas City,
Missouri
YELLOW RECEIVABLES CORPORATION
------------------------------
Collection 010161073442 Boatmen's First National Bank Kansas City,
Missouri
Collection 010161035591* Boatmen's First National Bank Kansas City,
Missouri
Depository 55-66681 The First National Bank of Chicago, Chicago,
Illinois
Concentration 55-03450* The First National Bank ofChicago, Chicago
Illinois
Collection 03268-43* National Bank of Detroit Detroit,
Michigan
62
70
* Assigned to Yellow Receivables Corporation by Yellow Freight System, Inc.
63
71
EXHIBIT IV
FORM OF COMPLIANCE CERTIFICATE
To: The First National Bank of Chicago, as Agent
This Compliance Certificate is furnished pursuant to that certain
Receivables Purchase Agreement dated as of August 2, 1996, among Yellow
Receivables Corporation (the "SELLER"), the Purchasers party thereto, and The
First National Bank of Chicago, as agent for such Purchasers (the "AGREEMENT").
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected _________ of the Seller;
2. I have reviewed the terms of the Agreement and I have made,
or have caused to be made under my supervision, a detailed review of the
transactions and conditions of the Seller and its Subsidiaries during the
accounting period covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose,
and I have no knowledge of, the existence of any condition or event which
constitutes a Servicer Default or Potential Servicer Default, as each such term
is defined under the Agreement, during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate[, except as set forth below.
Described below are the exceptions, if any, to paragraph 3 by
listing, in detail, the nature of the condition or event, the period during
which it has existed and the action which the Seller has taken, is taking,
or proposes to take with respect to each such condition or event:]
The foregoing certifications, together with the computations set forth
in Schedule I hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this __ day of
_________, 19__.
____________
64
72
SCHEDULE I TO COMPLIANCE REPORT
A. Schedule of Compliance with SECTION 7.1(d) of the Agreement. Unless
otherwise defined herein, the terms used in this Compliance Certificate
have the meanings ascribed thereto in the Purchase Agreement.
This schedule relates to the month ended: _______
65
73
EXHIBIT V
FORM OF COLLECTION ACCOUNT AGREEMENT
[On letterhead of Seller]
_______ 19__
[Lock-Box Bank/Concentration Bank/Depositary Bank]
Re: Yellow Receivables Corporation
Yellow Freight System, Inc.
Ladies and Gentlemen:
You have exclusive control of P.O. Box #______________in **[city, state,
zip code]** (the "LOCK-BOX") for the purpose of receiving mail and processing
payments therefrom pursuant to that certain **[name of lock-box agreement]**
between you and Yellow Freight System, Inc. dated __________ (the "AGREEMENT").
You hereby confirm your agreement to perform the services described therein.
Among the services you have agreed to perform therein, is to endorse all checks
and other evidences of payment, and credit such payments to checking account
no. ________ maintained with you in the name of Yellow Freight System, Inc.
(the "LOCK-BOX ACCOUNT").
Yellow Freight System, Inc. ("YFSI") hereby transfers and assigns all of
its right, title and interest in and to, and exclusive ownership and control
over, the Lock-Box and the Lock-Box Account to Yellow Receivables Corporation
("YELLOW-SPC"). YFSI and Yellow-SPC hereby request that the name of the
Lock-Box Account be changed to the Yellow Receivables Corporation, as
"COLLECTION AGENT" for the benefit of The First National Bank of Chicago
("FNBC"), as agent under that certain Receivables Purchase Agreement (the
"RECEIVABLES PURCHASE AGREEMENT") dated as of August 2, 1996 among Yellow-SPC,
Falcon Asset Securitization Corporation, certain financial institutions parties
thereto and FNBC.
Yellow-SPC hereby irrevocably instructs you, and you hereby agree, that
upon receiving notice from FNBC in the form attached hereto as Annex A: (i) the
name of the Lock-Box Account will be changed to FNBC for itself and as agent
(or any designee of FNBC) and FNBC will have exclusive ownership of and access
to such Lock-Box Account, and neither YFSI, Yellow-SPC nor any of their
respective affiliates will have any control of such Lock-Box Account or any
access thereto, (ii) you will either continue to send the funds from the
Lock-Box to the Lock-Box Account, or will redirect the funds as FNBC may
otherwise request, (iii) you will transfer monies on deposit in the Lock-Box
Account, at any
66
74
time, as directed by FNBC, (iv) all services to be performed by
you under the Agreement will be performed on behalf of FNBC, and (v) all
correspondence or other mail which you have agreed to send to either YFSI or
Yellow-SPC will be sent to FNBC at the following address:
The First National Bank of Chicago
Suite 0079, 21st Floor
One First National Plaza
Chicago, Illinois 60670
Attention: Credit Manager, Asset-Backed Finance
Moreover, upon such notice, FNBC for itself and as agent will have all
rights and remedies given to YFSI or Yellow-SPC under the Agreement. Each of
YFSI and Yellow-SPC 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 Account or
any other account established with you by FNBC for the purpose of receiving
funds from the Lock-Box are subject to the liens of FNBC for itself and as
agent under the Receivables Purchase Agreement, and will not be subject to
deduction, set-off, banker's lien or any other right you or any other party may
have against YFSI or Yellow-SPC, except that you may debit the Lock-Box Account
for any items deposited therein that are returned or otherwise not collected
and for all charges, fees, commissions and expenses incurred by you in
providing services hereunder, all in accordance with your customary practices
for the charge back of returned items and expenses.
This letter agreement and the rights and obligations of the parties
hereunder will be governed by and construed and interpreted in accordance with
the laws of the State of Illinois. This letter agreement may be executed in
any number of counterparts and all of such counterparts taken together will be
deemed to constitute one and the same instrument.
This letter agreement contains the entire agreement between the parties,
and may not be altered, modified, terminated or amended in any respect, nor may
any right, power or privilege of any party hereunder be waived or released or
discharged, except upon execution by all parties hereto of a written instrument
so providing. In the event that any provision in this letter agreement is in
conflict with, or inconsistent with, any provision of the Agreement, this
letter agreement will exclusively govern and control. Each party agrees to
take all actions reasonably requested by any other party to carry out the
purposes of this letter agreement or to preserve and protect the rights of each
party hereunder.
67
75
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,
YELLOW FREIGHT SYSTEM, INC.
By ______________________________
Title ___________________________
YELLOW RECEIVABLES CORPORATION
By ______________________________
Title ___________________________
Acknowledged and agreed to
this __ day of ____________, 1996:
[COLLECTION BANK]
By:________________________________
Title:_____________________________
Acknowledged and agreed to
this __day of ___________, 1996:
THE FIRST NATIONAL BANK OF CHICAGO (for itself and
as Agent)
By________________________
Authorized Agent
68
76
ANNEX A
FORM OF COLLECTION NOTICE
[On letterhead of FNBC]
_______ , 19__
[Collection Bank/Depositary Bank/Concentration Bank]
Re: Yellow Receivables Corporation
Ladies and Gentlemen:
We hereby notify you that we are exercising our rights pursuant to that
certain letter agreement among Yellow Freight System, Inc., Yellow Receivables
Corporation, you and us, to have the name of, and to have exclusive ownership
and control of, account number_____________ (the "LOCK-BOX ACCOUNT") maintained
with you, transferred to us. Lock-Box Account will henceforth be a
zero-balance account, and funds deposited in the Lock-Box Account should be
sent at the end of each day to _________________. You have further agreed to
perform all other services you are performing under that certain agreement
dated ____________ between you and Yellow Freight System, Inc. on our behalf.
We appreciate your cooperation in this matter.
Very truly yours,
THE FIRST NATIONAL BANK OF CHICAGO
(for itself and as agent)
By:___________________________
Authorized Agent
69
77
EXHIBIT VI
CREDIT AND COLLECTION POLICY
[to be provided by the Seller]
70
78
EXHIBIT VII
FORM OF INVOICE(S)
[to be provided by the Seller]
71
79
EXHIBIT VIII
FORM OF MONTHLY REPORT
[to be provided by First Chicago]
72
80
EXHIBIT IX
FORM OF PURCHASE NOTICE
[Date]
The First National Bank of Chicago,
as Agent for the Purchasers parties
to the Receivables Purchase Agreement
referred to below
Suite 0079, 1-21
One First National Plaza
Chicago, Illinois 60670
Attention: Asset-Backed Finance
Gentlemen:
The undersigned, Yellow Receivables Corporation, refers to the Receivables
Purchase Agreement, dated as of August 2, 1996 (the "RECEIVABLES PURCHASE
AGREEMENT", the terms defined therein being used herein as therein defined),
among the undersigned, Falcon Asset Securitization Corporation ("FALCON"),
certain Investors parties thereto and The First National Bank of Chicago, as
Agent for FALCON and such Investors, and hereby gives you notice, irrevocably,
pursuant to SECTION 1.2 of the Receivables Purchase Agreement that the
undersigned hereby requests a Purchase under the Receivables Purchase
Agreement, and in that connection sets forth below the information relating to
such Purchase (the "PROPOSED PURCHASE") as required by SECTION 1.2 of the
Receivables Purchase Agreement:
(i) The Business Day of the Proposed Purchase is ______, 19__.
(ii) The requested Purchase Price in respect of the Proposed Purchase
is $_______.
(iii) The requested Purchaser[s] in respect of the
Proposed Purchase [is FALCON] [are the Investors].
(iv) The duration of the initial Tranche Period for
the Proposed Purchase is ____________ [days] [months].
73
81
(v) The Discount Rate related to such initial Tranche
Period is requested to be the [CP] [LIBOR] [Base] Rate.
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the Proposed Purchase (before
and after giving effect to the Proposed Purchase):
(A) the representations and warranties set forth in SECTION
3.1 [(other than SECTION 3.1(K)](1) of the Receivables Purchase
Agreement are correct on and as of such date, as though made on
and as of such date;
(B) no event has occurred, or would result from the
Proposed Purchase that will constitute a Servicer Default, and no
event has occurred and is continuing, or would result from such
Proposed Purchase, that would constitute a Potential Servicer
Default; and
(C) the Liquidity Termination Date shall not have occurred,
the aggregate Capital of all Receivable Interests shall not
exceed the Purchase Limit and the aggregate Receivable Interests
shall not exceed 100%.
Very truly yours,
YELLOW RECEIVABLES CORPORATION
By:_______________________________
Title:
__________________
(1) Bracketed language should only be included after the initial purchase
of Receivable Interests hereunder.
74
82
EXHIBIT X
CONTRACTS APPLICABLE TO EXCLUDED CONTRACTS
[to be provided by Seller]
75
83
SCHEDULE A
DOCUMENTS AND RELATED ITEMS TO BE DELIVERED TO THE AGENT
ON OR PRIOR TO THE INITIAL PURCHASE
I. Receivables Sale Agreement
A. Receivables Sale Agreement dated as of August 2, 1996 (the "SALE
AGREEMENT") by and between Yellow Freight System, Inc., an Indiana corporation
(the "ORIGINATOR"), and Yellow Receivables Corporation, a Delaware corporation
("YELLOW-SPC"), with the following exhibits:
Exhibit I - Definitions
Exhibit II - Places of Business of Originator; Locations of Records;
Trade Names; Prior Names; Federal Employer I.D. Number
Exhibit III - Lockboxes; Collection Accounts; Concentration Accounts; and
Depositary Accounts
Exhibit IV - Compliance Certificate
Exhibit V - Collection Account Agreement
Exhibit VI - Credit and Collection Policy
Exhibit VII - Form(s) of Invoice(s)
Exhibit VIII - Monthly Report
Exhibit IX - Stockholder and Subscription Agreement
Exhibit X - Subordinated Revolving Note
Exhibit XI - Contracts Applicable to Excluded Receivables
B. Subordinated Revolving Note dated August 2, 1996 executed by Yellow-SPC
in favor of the Originator.
C. Stockholder and Subscription Agreement dated as of August 2, 1996 by
and between the Originator and Yellow-SPC.
D. Certificate of the Originator's [Assistant] Secretary certifying:
1. An attached copy of the Originator's Articles of Incorporation
(certified within 60 days prior to closing by the Indiana Secretary
of State)
2. An attached copy of the Originator's By-Laws
76
84
3. An attached copy of resolutions of the Originator's Board of
Directors authorizing the Originator's execution, delivery and
performance of the Sale Agreement and related documents
4. The names, titles and specimen signatures of the Originator's
officers authorized to execute and deliver the Sale Agreement and
related documents
E. Good standing certificates for the Originator from the following states
certified within 60 days prior to closing:
1. Indiana
2. Kansas
F. Pre-filing state and federal tax lien, judgment lien and UCC lien
searches against the Originator from the following jurisdictions:
1. Kansas
2. As applicable for tax and judgment liens, ________ County, Kansas.
G. UCC Financing Statements naming the Originator, as debtor, Yellow-SPC,
as secured party, and The First National Bank of Chicago, as Agent, as assignee
of secured party, for filing in the following jurisdictions:
1. Secretary of State of Kansas.
H. Post-filing UCC lien searches against the Originator from the following
jurisdictions:
1. Secretary of State of Kansas.
I. Collection Account Agreements
1. Boatmen's
2. First Chicago
3. _____________?
J. Opinions:
1. Corporate/UCC opinions
2. True Sale/Non-consolidation opinion
K. CFO's Certificate re no Event of Default or Potential Event of Default
and absence of Material Adverse Effect since April 30, 1996.
77
85
M. UCC-3 Termination Statements from the following:]
II. Receivables Purchase Agreement
A. Receivables Purchase Agreement dated as of August 2, 1996 (the
"INVESTOR AGREEMENT") by and among Yellow-SPC, Falcon Asset Securitization
Corporation ("FALCON"), various Investors, and The First National Bank of
Chicago, as Agent (in such capacity, the "AGENT") with the following exhibits:
Exhibit I - Definitions
Exhibit II - Places of Business of Yellow-SPC; Locations of Records;
Trade Names; Federal Employer I.D. Number
Exhibit III - Lockboxes; Collection Accounts; Concentration Accounts; and
Depositary Accounts
Exhibit IV - Compliance Certificate
Exhibit V - Collection Account Agreement
Exhibit VI - Credit and Collection Policy
Exhibit VII - Form(s) of Invoice(s)
Exhibit VIII - Monthly Report
Exhibit IX - Form of Purchase Notice
Exhibit X - Contracts Applicable to Excluded Receivables
B. Fee Letter dated of August 2, 1996 by and between Yellow-SPC and the
Agent.
C. Certificate of Yellow-SPC's [Assistant] Secretary certifying:
1. An attached copy of Yellow-SPC's Certificate of Incorporation
(certified within 30 days prior to closing by the Delaware
Secretary of State)
2. An attached copy of Yellow-SPC's By-Laws
3. An attached copy of resolutions of Yellow-SPC's Board of Directors
authorizing Yellow-SPC's execution, delivery and performance of
the Investor Agreement and related documents
78
86
4. The names, titles and specimen signatures of Yellow-SPC's
officers authorized to execute and deliver the Investor Agreement
and related documents
D. Good standing certificates for Yellow-SPC from the following states
certified within 30 days prior to closing:
1. Delaware
2. Kansas
E. UCC Financing Statements naming Yellow-SPC, as debtor, and the Agent,
as secured party, for filing in the following jurisdictions:
1. Secretary of State of Kansas
F. Post-filing UCC lien searches against Yellow-SPC from the following
jurisdictions:
1. Secretary of State of Kansas
G. Collection Account Agreements
1. Boatmen's
2. First Chicago
3. _____________?
H. Purchase Notice executed by Yellow-SPC.
I. Opinion of Yellow-SPC's re corporate/UCC issues
J. CFO's Certificate re no Servicer Default or Potential Servicer Default
and absence of Material Adverse Effect since April 30, 1996.
79