Exhibit 10.2
RECEIVABLES PURCHASE AGREEMENT
DATED AS OF APRIL 28, 2005
AMONG
DEJ 98 FINANCE, LLC, AS SELLER,
WOLVERINE FINANCE, LLC, AS INITIAL SERVICER,
WOLVERINE TUBE, INC., AS PERFORMANCE GUARANTOR,
BLUE RIDGE ASSET FUNDING CORPORATION,
THE LIQUIDITY BANKS FROM TIME TO TIME PARTY HERETO,
AND
WACHOVIA BANK, NATIONAL ASSOCIATION, INDIVIDUALLY AND AS AGENT
TABLE OF CONTENTS
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ARTICLE I. PURCHASE ARRANGEMENTS.......................................... 2
SECTION 1.1 PURCHASE FACILITY....................................... 2
SECTION 1.2 INCREMENTAL PURCHASES................................... 2
SECTION 1.3 DECREASES............................................... 2
SECTION 1.4 DEEMED COLLECTIONS; PURCHASE LIMIT...................... 3
SECTION 1.5 PAYMENT REQUIREMENTS AND COMPUTATIONS................... 4
ARTICLE II. PAYMENTS AND COLLECTIONS..................................... 4
SECTION 2.1 PAYMENTS OF RECOURSE OBLIGATIONS........................ 4
SECTION 2.2 COLLECTIONS PRIOR TO THE FACILITY TERMINATION DATE...... 4
SECTION 2.3 COLLECTIONS ON AND AFTER THE FACILITY TERMINATION DATE.. 5
SECTION 2.4 PAYMENT RESCISSION...................................... 6
SECTION 2.5 CLEAN UP CALL........................................... 6
ARTICLE III. COMMERCIAL PAPER FUNDING.................................... 6
SECTION 3.1 CP COSTS................................................ 6
SECTION 3.2 CALCULATION OF CP COSTS................................. 7
SECTION 3.3 CP COSTS PAYMENTS....................................... 7
SECTION 3.4 DEFAULT RATE............................................ 7
ARTICLE IV. LIQUIDITY FUNDINGS........................................... 7
SECTION 4.1 LIQUIDITY FUNDINGS...................................... 7
SECTION 4.2 YIELD PAYMENTS.......................................... 7
SECTION 4.3 SELECTION AND CONTINUATION OF INTEREST PERIODS.......... 8
SECTION 4.4 LIQUIDITY FUNDING YIELD RATES........................... 8
SECTION 4.5 SUSPENSION OF THE LIBO RATE............................. 8
SECTION 4.6 DEFAULT RATE............................................ 9
ARTICLE V. REPRESENTATIONS AND WARRANTIES........... .................... 9
SECTION 5.1 REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES.... 9
ARTICLE VI. CONDITIONS OF PURCHASES...................................... 13
SECTION 6.1 CONDITIONS PRECEDENT TO INITIAL INCREMENTAL PURCHASE.... 13
SECTION 6.2 CONDITIONS PRECEDENT TO ALL PURCHASES AND REINVESTMENTS. 13
ARTICLE VII. COVENANTS................................................... 14
SECTION 7.1 AFFIRMATIVE COVENANTS OF THE SELLER PARTIES............. 14
SECTION 7.2 NEGATIVE COVENANTS OF THE SELLER PARTIES................ 21
ARTICLE VIII. ADMINISTRATION AND COLLECTION.............................. 23
SECTION 8.1 DESIGNATION OF SERVICER................................. 23
SECTION 8.2 DUTIES OF SERVICER...................................... 24
SECTION 8.3 CONTROL OF LOCK-BOX AND COLLECTION ACCOUNTS............. 25
SECTION 8.4 RESPONSIBILITIES OF SELLER.............................. 25
SECTION 8.5 SETTLEMENT REPORTS...................................... 25
SECTION 8.6 SERVICING FEE........................................... 25
ARTICLE IX. AMORTIZATION EVENTS.......................................... 26
SECTION 9.1 AMORTIZATION EVENTS..................................... 26
SECTION 9.2 REMEDIES................................................ 29
ARTICLE X. INDEMNIFICATION............................................... 29
SECTION 10.1 INDEMNITIES............................................. 29
SECTION 10.2 INCREASED COST AND REDUCED RETURN....................... 33
SECTION 10.3 OTHER COSTS AND EXPENSES................................ 33
SECTION 10.4 REPLACEMENT OF FUNDING SOURCE........................... 34
ARTICLE XI. THE AGENT.................................................... 34
SECTION 11.1 AUTHORIZATION AND ACTION................................ 34
SECTION 11.2 DELEGATION OF DUTIES.................................... 34
SECTION 11.3 EXCULPATORY PROVISIONS.................................. 34
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SECTION 11.4 RELIANCE BY AGENT...................................... 35
SECTION 11.5 NON-RELIANCE ON AGENT AND OTHER PURCHASERS............. 35
SECTION 11.6 REIMBURSEMENT AND INDEMNIFICATION...................... 35
SECTION 11.7 AGENT IN ITS INDIVIDUAL CAPACITY....................... 36
SECTION 11.8 SUCCESSOR AGENT........................................ 36
ARTICLE XII. ASSIGNMENTS AND PARTICIPATIONS.............................. 36
SECTION 12.1 PROHIBITION ON ASSIGNMENTS BY SELLER PARTIES........... 36
SECTION 12.2 ASSIGNMENTS BY PURCHASERS.............................. 36
SECTION 12.3 PARTICIPATIONS......................................... 37
ARTICLE XIII. MISCELLANEOUS.............................................. 38
SECTION 13.1 WAIVERS AND AMENDMENTS................................. 38
SECTION 13.2 NOTICES................................................ 38
SECTION 13.3 PROTECTION OF AGENT'S SECURITY INTEREST................ 39
SECTION 13.4 CONFIDENTIALITY........................................ 40
SECTION 13.5 BANKRUPTCY PETITION.................................... 40
SECTION 13.6 LIMITATION OF RECOURSE AND LIABILITY................... 41
SECTION 13.7 CHOICE OF LAW.......................................... 42
SECTION 13.8 CONSENT TO JURISDICTION................................ 42
SECTION 13.9 WAIVER OF JURY TRIAL................................... 42
SECTION 13.10 INTEGRATION; BINDING EFFECT; SURVIVAL OF TERMS......... 42
SECTION 13.11 COUNTERPARTS; SEVERABILITY; SECTION REFERENCES......... 43
SECTION 13.12 CHARACTERIZATION....................................... 43
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EXHIBITS AND SCHEDULES
Exhibit I Definitions
Exhibit II Form of Purchase Notice
Exhibit III Places of Business of the Seller Parties; Locations of Records;
Federal Employer and Organizational Identification Number(s)
Exhibit IV Names of Collection Banks; Collection Accounts
Exhibit V Form of Compliance Certificate
Exhibit VI Form of Collection Account Agreement
Exhibit VII Credit and Collection Policy
Exhibit VIII Form of Settlement Report
Exhibit IX Form of Performance Undertaking
Schedule A Commitments of Financial Institutions
Schedule B Closing Documents
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RECEIVABLES PURCHASE AGREEMENT
THIS RECEIVABLES PURCHASE AGREEMENT, dated as of April 28, 2005 is
entered into by and among:
(a) DEJ 98 Finance, LLC, a Delaware limited liability company
("SELLER"),
(b) Wolverine Finance, LLC, a Tennessee limited liability company
("WOLVERINE FINANCE"), as initial Servicer,
(c) Wolverine Tube, Inc., a Delaware corporation, as Performance
Guarantor,
(d) Blue Ridge Asset Funding Corporation, a Delaware corporation
("BLUE RIDGE"),
(e) Wachovia Bank, National Association, in its individual capacity,
and each of the other banks from time to time party hereto as liquidity
providers (each, a "LIQUIDITY BANK," and collectively, the "LIQUIDITY
BANKS"; and, together with Blue Ridge, the "PURCHASERS"), and
(e) Wachovia Bank, National Association, as agent for Blue Ridge and
the Liquidity Banks under the Transaction Documents and under the Liquidity
Agreement (together with its successors and assigns in such capacity, the
"AGENT").
UNLESS DEFINED ELSEWHERE HEREIN, CAPITALIZED TERMS USED IN THIS AGREEMENT SHALL
HAVE THE MEANINGS ASSIGNED TO SUCH TERMS IN EXHIBIT I HERETO (OR, IF NOT DEFINED
IN EXHIBIT I HERETO, THE MEANING ASSIGNED TO SUCH TERM IN EXHIBIT I TO THE
RECEIVABLES SALE AGREEMENT).
PRELIMINARY STATEMENTS
Seller desires to transfer and assign Receivable Interests to the
Agent, on behalf of one or more Purchasers. from time to time.
Blue Ridge may, in its absolute and sole discretion, purchase
Receivable Interests from Seller from time to time.
In the event that Blue Ridge declines to make any such purchase, the
Liquidity Banks shall, at the request of Seller, purchase Receivable
Interests from Seller from time to time.
Wachovia Bank, National Association has been requested and is willing
to act as Agent on behalf of Blue Ridge and the Liquidity Banks in
accordance with the terms hereof.
ARTICLE I.
PURCHASE ARRANGEMENTS
Section 1.1 Purchase Facility.
(a) Upon the terms and subject to the conditions of this Agreement
(including, without limitation, Article VI), from time to time prior to the
Facility Termination Date, Seller may sell and assign Receivable Interests to
the Agent, on behalf of one or more Purchasers; PROVIDED THAT Seller may not
sell or assign any Receivable Interest to the Agent if, after giving effect
thereto, the outstanding Aggregate Invested Amount would exceed the least of (i)
the Purchase Limit, (ii) the Net Pool Balance MINUS Required Reserves and (iii)
the product of 85% TIMES the aggregate Outstanding Balance of Eligible
Receivables. Blue Ridge may, at its option, instruct the Agent to purchase on
behalf of Blue Ridge, or if Blue Ridge shall decline to purchase, the Agent
shall purchase, on behalf of the Liquidity Banks, Receivable Interests from time
to time in accordance with the terms and subject to the conditions set forth
herein.
(b) Seller may, upon at least 10 Business Days' notice to the Agent,
terminate in whole or reduce in part the unused portion of the Purchase Limit
(and the Commitments shall correspondingly be terminated or reduced, ratably,
based on the Liquidity Banks' respective Pro Rata Shares); PROVIDED THAT each
partial reduction of the Purchase Limit shall be in an amount equal to
$5,000,000 (or a larger integral multiple of $1,000,000 if in excess thereof).
Section 1.2 Incremental Purchases. Seller shall provide the Agent with at
least two (2) Business Days' prior written notice in a form set forth as Exhibit
II hereto of each Incremental Purchase (each, a "PURCHASE NOTICE"). Each
Purchase Notice shall be subject to Section 6.2 hereof and, except as set forth
below, shall be irrevocable and shall specify the requested Purchase Price
(which shall not be less than $1,000,000 or a larger integral multiple of
$250,000) and the Purchase Date. Following receipt of a Purchase Notice, the
Agent will determine whether Blue Ridge agrees to make the proposed purchase. If
Blue Ridge declines to make the proposed purchase, Seller may cancel the
Purchase Notice or, in the absence of such a cancellation, the Incremental
Purchase will be made by the Liquidity Banks. On each Purchase Date, upon
satisfaction of the applicable conditions precedent set forth in Article VI,
Blue Ridge or the Liquidity Banks, as applicable, shall deposit to the Facility
Account, in immediately available funds, no later than 2:00 p.m. (New York
time), an amount equal to (i) in the case of Blue Ridge, the aggregate Purchase
Price of the Receivable Interests Blue Ridge is then purchasing or (ii) in the
case of a Liquidity Bank, such Liquidity Bank's Pro Rata Share of the aggregate
Purchase Price of the Receivable Interests the Liquidity Banks are purchasing.
Section 1.3 Decreases. Seller shall provide the Agent with prior written
irrevocable notice in conformity with the Required Notice Period (a "REDUCTION
NOTICE") of any proposed reduction of Aggregate Invested Amount, each of which
reductions shall be made only from Collections. Such Reduction Notice shall
designate (i) the date (the "PROPOSED REDUCTION DATE") upon which any such
reduction of Aggregate Invested Amount shall occur (which date shall give effect
to the applicable Required Notice Period), and (ii) the amount of Aggregate
Invested Amount to be reduced which shall be applied ratably to all Receivable
Interests of Blue Ridge and the Liquidity Banks in accordance with the amount of
Invested Amount (if any)
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owing to Blue Ridge, on the one hand, and the amount of Invested Amount (if any)
owing to the Liquidity Banks (ratably based on their respective Pro Rata
Shares), on the other hand (the "AGGREGATE REDUCTION"). Only one (1) Reduction
Notice shall be outstanding at any time.
Section 1.4 Deemed Collections; Purchase Limit.
(a) If on any day:
(i) the Outstanding Balance of any Receivable is reduced or
cancelled as a result of any defective or rejected goods or services, any cash
discount or any other adjustment by any Originator or any Affiliate thereof, or
as a result of any governmental or regulatory action, or
(ii) the Outstanding Balance of any Receivable is reduced or
canceled as a result of a setoff in respect of any claim by the Obligor thereof
(whether such claim arises out of the same or a related or an unrelated
transaction), or
(iii) the Outstanding Balance of any Receivable is reduced on
account of the obligation of any Originator or any Affiliate thereof to pay to
the related Obligor any rebate or refund, or
(iv) the Outstanding Balance of any Receivable is less than the
amount included with respect to such Receivable in calculating the Net Pool
Balance for purposes of any Settlement Report (for any reason other than receipt
of Collections or such Receivable becoming a Defaulted Receivable), or
(v) any of the representations or warranties of Seller set forth
in Section 5.1(g), (i), (j), (r), (s), (t) or (u) were not true when made with
respect to any Receivable,
then, on such day, Seller shall be deemed to have received a Collection of such
Receivable (A) in the case of clauses (i)-(iv) above, in the amount of such
reduction or cancellation or the difference between the actual Outstanding
Balance and the amount included with respect to such Receivable in calculating
such Net Pool Balance, as applicable; and (B) in the case of clause (v) above,
in the amount of the Outstanding Balance of such Receivable and, not later than
one (1) Business Day thereafter shall pay to the Agent's Account the amount of
any such Collection deemed to have been received in the same manner as actual
cash Collections are distributed under the terms of this Agreement.
(b) Seller shall ensure that the Aggregate Invested Amount at no time
exceeds the Purchase Limit. If at any time the Aggregate Invested Amount exceeds
the Purchase Limit, Seller shall pay to the Agent immediately an amount to be
applied to reduce the Aggregate Invested Amount (as allocated by the Agent),
such that after giving effect to such payment the Aggregate Invested Amount is
less than or equal to the Purchase Limit.
(c) Seller shall also ensure that the Receivable Interests shall at no
time exceed in the aggregate 100%. If the aggregate of the Receivable Interests
exceeds 100%, Seller shall pay to the Agent on or before the next succeeding
Settlement Date (or, if such excess is discovered on a Settlement Date, on such
Settlement Date) an amount to be applied to reduce the
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Aggregate Invested Amount (as allocated by the Agent), such that after giving
effect to such payment the aggregate of the Receivable Interests equals or is
less than 100%.
Section 1.5 Payment Requirements and Computations. All amounts to be paid
or deposited by any Seller Party pursuant to any provision of this Agreement
shall be paid or deposited in accordance with the terms hereof no later than
12:00 noon (New York time) on the day when due in immediately available funds,
and if not received before 12:00 noon (New York time) shall be deemed to be
received on the next succeeding Business Day. If such amounts are payable to the
Agent for the account of a Purchaser, they shall be paid to the Agent's Account,
for the account of such Purchaser until otherwise notified by the Agent. All
computations of CP Costs, Yield, per annum fees calculated as part of any CP
Costs, per annum fees hereunder and per annum fees under the Fee Letter shall be
made on the basis of a year of 360 days for the actual number of days elapsed.
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.
ARTICLE II.
PAYMENTS AND COLLECTIONS
Section 2.1 Payments of Recourse Obligations. Without limiting Seller's
other obligations under this Agreement, Seller hereby promises to pay the
following (collectively, the "RECOURSE OBLIGATIONS"):
(a) all amounts due and owing under Section 1.4 on the dates specified
therein;
(b) the fees set forth in the Fee Letter on the dates specified
therein;
(c) all accrued and unpaid Yield on the Receivable Interests accruing
Yield at the Alternate Base Rate or the Default Rate on the last day of each
Interest Period applicable thereto;
(d) all accrued and unpaid Yield on the Receivable Interests accruing
Yield at the LIBO Rate on the last day of each Interest Period applicable
thereto;
(e) all accrued and unpaid CP Costs on the Receivable Interests funded
with Commercial Paper on each CP Cost Payment Date; and
(f) all Broken Funding Costs, upon demand, and all Indemnified
Amounts, within ten (10) days of demand.
Section 2.2 Collections Prior to the Facility Termination Date.
(a) Prior to the Facility Termination Date, any Deemed Collections
received by Servicer and the Purchasers' Portion of any Collections received by
Servicer shall be set aside by Servicer for the payment of any accrued and
unpaid Aggregate Unpaids or for a Reinvestment as provided in this Section 2.2.
If at any time any Collections are received by Servicer prior to the Facility
Termination Date, except to the extent a Reduction Notice is pending, Seller
hereby
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requests that the applicable Purchaser(s) make, and either Blue Ridge or the
Liquidity Banks shall make, simultaneously with such receipt, a reinvestment
(each, a "REINVESTMENT") with the Purchasers' Portion of the balance of each and
every Collection received by such Servicer such that after giving effect to such
Reinvestment, the Invested Amount of such Receivable Interest immediately after
such receipt and corresponding Reinvestment shall be equal to the amount of
Invested Amount immediately prior to such receipt.
(b) On each Settlement Date, or with respect to the CP Costs, on each
CP Cost Payment Date, prior to the Facility Termination Date, the Agent shall
distribute the amounts set aside during the preceding Settlement Period that
have not been subject to a Reinvestment (if not previously paid in accordance
with Section 2.1) in the following order:
FIRST, to the Servicer (if the Servicer at such time is not Wolverine
Finance or one of its Affiliates), in payment of the accrued and unpaid
Servicing Fee for the preceding Settlement Period,
SECOND, to the Agent's Account, ratably for the payment of all accrued
and unpaid CP Costs, Yield and Broken Funding Costs (if any) that are then
due and owing,
THIRD, to the Agent's Account, ratably for the payment of all accrued
and unpaid fees under the Fee Letter (if any) that are then due and owing,
FOURTH, to the Agent's Account, if required under Section 1.3 or 1.4,
to the ratable reduction of Aggregate Invested Amount,
FIFTH, to the Agent's Account, for the ratable payment of all other
unpaid Recourse Obligations, if any, that are then due and owing,
SIXTH, to the Servicer (if the Servicer at such time is Wolverine
Finance or one of its Affiliates), the amount of the accrued and unpaid
Servicing Fee for the preceding Settlement Period, and
SEVENTH, the balance, if any, to Seller or otherwise in accordance
with Seller's instructions.
Section 2.3 Collections on and after the Facility Termination Date. On the
Facility Termination Date and on each day thereafter, the Agent shall set aside
for the Secured Parties all Collections received on each such day. On and after
the Facility Termination Date, the Servicer shall, on each Settlement Date and
on each other Business Day specified by the Agent distribute in the following
manner the amounts set aside pursuant to the preceding sentence:
FIRST, to the Servicer (if the Servicer at such time is not Wolverine
Finance or one of its Affiliates), in payment of the accrued and unpaid
Servicing Fee as of such date,
SECOND, to the Agent's Account, for the reimbursement of the Agent's
costs of collection and enforcement of this Agreement,
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THIRD, to the Agent's Account, ratably for the payment of all accrued
and unpaid CP Costs, Yield and Broken Funding Costs,
FOURTH, to the Agent's Account, ratably for the payment of all accrued
and unpaid fees under the Fee Letter,
FIFTH, to the Agent's Account, for the ratable reduction of Aggregate
Invested Amount,
SIXTH, to the Agent's Account, for the ratable payment of all other
Aggregate Unpaids,
SEVENTH, to the Servicer (if the Servicer at such time is Wolverine
Finance or one of its Affiliates), in payment of the accrued and unpaid
Servicing Fee as of such date, and
EIGHTH, after the Final Payout Date, to Seller the balance, if any.
Section 2.4 Payment Rescission. No payment of any of the Aggregate Unpaids
shall be considered paid or applied hereunder to the extent that, at any time,
all or any portion of such payment or application is rescinded by application of
law or judicial authority, or must otherwise be returned or refunded for any
reason. Seller shall remain obligated for the amount of any payment or
application so rescinded, returned or refunded, and shall promptly pay to the
Agent (for application to the Person or Persons who suffered such rescission,
return or refund) the full amount thereof, PLUS interest thereon at the Default
Rate from the date of any such rescission, return or refunding.
Section 2.5 Clean Up Call. In addition to Seller's rights pursuant to
Section 1.3, Servicer shall have the right (after providing written notice to
the Agent in accordance with the Required Notice Period), at any time following
the reduction of the Aggregate Invested Amount to a level that is less than
10.0% of the original Purchase Limit, to purchase 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 to the Agent's Account. Such
repurchase shall be without representation, warranty or recourse of any kind by,
on the part of, or against any Purchaser or the Agent.
ARTICLE III.
COMMERCIAL PAPER FUNDING
Section 3.1 CP Costs. Seller shall pay CP Costs with respect to the
Invested Amount of all Receivable Interests funded through the issuance of
Commercial Paper. Each Receivable Interest that is funded substantially with
Pooled Commercial Paper will accrue CP Costs each day on a pro rata basis, based
upon the percentage share that the Invested Amount in respect of such Receivable
Interest represents in relation to all assets held by Blue Ridge and funded
substantially with related Pooled Commercial Paper.
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Section 3.2 Calculation of CP Costs. Not later than the 3rd Business Day
immediately preceding each Monthly Reporting Date, Blue Ridge shall calculate
the aggregate amount of CP Costs applicable to its Receivable Interests for the
Calculation Period then most recently ended and shall notify Seller of such
aggregate amount.
Section 3.3 CP Costs Payments. On each Settlement Date, Seller shall pay to
the Agent (for the benefit of Blue Ridge) an aggregate amount equal to all
accrued and unpaid CP Costs in respect of the Invested Amount of all Receivable
Interests funded with Commercial Paper for the Calculation Period then most
recently ended in accordance with Article II.
Section 3.4 Default Rate. From and after the occurrence of an Amortization
Event, all Receivable Interests shall accrue yield at the Default Rate.
ARTICLE IV.
LIQUIDITY FUNDINGS
Section 4.1 Liquidity Fundings. Prior to the occurrence of an Amortization
Event, the outstanding Invested Amount of each Receivable Interest funded with a
Liquidity Funding shall accrue Yield for each day during its Interest Period at
either the LIBO Rate or the Alternate Base Rate in accordance with the terms and
conditions hereof. Until Seller gives the required notice to the Agent of
another Yield Rate in accordance with Section 4.4, the initial Yield Rate for
any Receivable Interest funded with a Liquidity Funding shall be the Alternate
Base Rate (unless the Default Rate is then applicable). If any undivided
interest in a Receivable Interest initially funded with Commercial Paper is sold
to the Liquidity Banks pursuant to the Liquidity Agreement, such undivided
interest in such Receivable Interest shall be deemed to have an Interest Period
commencing on the date of such sale.
Section 4.2 Yield Payments. On the Settlement Date for each Receivable
Interest that is funded with a Liquidity Funding, Seller shall pay to the Agent
(for the benefit of the Liquidity Banks) an aggregate amount equal to the
accrued and unpaid Yield thereon for the entire Interest Period of each such
Liquidity Funding in accordance with Article II.
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Section 4.3 Selection and Continuation of Interest Periods.
(a) With consultation from (and approval by) the Agent, Seller shall
from time to time request Interest Periods for the Receivable Interests funded
with Liquidity Fundings, PROVIDED THAT if at any time any Liquidity Funding is
outstanding, Seller shall always request Interest Periods such that at least one
Interest Period shall end on the date specified in clause (A) of the definition
of Settlement Date.
(b) Seller or the Agent, upon notice to and consent by the other
received at least three (3) Business Days prior to the end of an Interest Period
(the "TERMINATING TRANCHE") for any Liquidity Funding, may, effective on the
last day of the Terminating Tranche: (i) divide any such Liquidity Funding into
multiple Liquidity Fundings, (ii) combine any such Liquidity Funding with one or
more other Liquidity Fundings that have a Terminating Tranche ending on the same
day as such Terminating Tranche or (iii) combine any such Liquidity Funding with
a new Liquidity Funding to be made by the Liquidity Banks on the day such
Terminating Tranche ends.
Section 4.4 Liquidity Funding Yield Rates. Seller may select the LIBO Rate
(subject to Section 4.5 below) or the Alternate Base Rate for each Liquidity
Funding. Seller shall by 12:00 noon (New York time): (i) at least three (3)
Business Days prior to the expiration of any Terminating Tranche with respect to
which the LIBO Rate is being requested as a new Yield Rate and (ii) at least one
(1) Business Day prior to the expiration of any Terminating Tranche with respect
to which the Alternate Base Rate is being requested as a new Yield Rate, give
the Agent irrevocable notice of the new Yield Rate for the Liquidity Funding
associated with such Terminating Tranche. Until Seller gives notice to the Agent
of another Yield Rate, the initial Yield Rate for any Receivable Interest
assigned or participated to the Liquidity Banks pursuant to the Liquidity
Agreement shall be the Alternate Base Rate (unless the Default Rate is then
applicable).
Section 4.5 Suspension of the LIBO Rate.
(a) If any Liquidity Bank notifies the Agent that it has determined
that funding its ratable share of the Liquidity Fundings at a LIBO Rate would
violate any applicable law, rule, regulation, or directive of any governmental
or regulatory authority, whether or not having the force of law, or that (i)
deposits of a type and maturity appropriate to match fund its Liquidity Funding
at such LIBO Rate are not available or (ii) such LIBO Rate does not accurately
reflect the cost of acquiring or maintaining a Liquidity Funding at such LIBO
Rate, then the Agent shall suspend the availability of such LIBO Rate and
require Seller to select the Alternate Base Rate for any Liquidity Funding
accruing Yield at such LIBO Rate.
(b) If less than all of the Liquidity Banks give a notice to the Agent
pursuant to Section 4.5(a), each Liquidity Bank which gave such a notice shall
be obliged, at the request of Seller, Blue Ridge or the Agent, to assign all of
its rights and obligations hereunder to (i) another Liquidity Bank or (ii)
another funding entity nominated by Seller or the Agent that is an Eligible
Assignee willing to participate in the Liquidity Agreement through the Liquidity
Termination Date in the place of such notifying Liquidity Bank; PROVIDED THAT
(i) the notifying Liquidity Bank receives payment in full of all Aggregate
Unpaids owing to it (whether due or
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accrued), and (ii) the replacement Liquidity Bank otherwise satisfies the
requirements of the Liquidity Agreement.
Section 4.6 Default Rate. From and after the occurrence of an Amortization
Event, all Receivable Interests funded with a Liquidity Funding shall accrue
Yield at the Default Rate.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
Section 5.1 Representations and Warranties of the Seller Parties. Each
Seller Party hereby represents and warrants to the Agent and the Purchasers, as
to itself, as of the date hereof and as of the date of each Incremental Purchase
and the date of each Reinvestment that:
(a) Existence and Power. Such Seller Party's jurisdiction of
organization is correctly set forth in the preamble to this Agreement. Such
Seller Party is duly organized under the laws of that jurisdiction and no other
state or jurisdiction. Such Seller Party is validly existing and in good
standing under the laws of its state of organization. Such Seller Party is duly
qualified to do business and is in good standing as a foreign entity, and has
and holds all organizational power and all governmental licenses,
authorizations, consents and approvals required to carry on its business in each
jurisdiction in which its business is conducted except where the failure to so
qualify or so hold could not reasonably be expected to have a Material Adverse
Effect.
(b) Power and Authority; Due Authorization, Execution and Delivery.
The execution and delivery by such Seller Party of this Agreement and each other
Transaction Document to which it is a party, and the performance of its
obligations hereunder and thereunder and, in the case of Seller, Seller's use of
the proceeds of Purchases made hereunder, are within its corporate powers and
authority and have been duly authorized by all necessary corporate action on its
part. This Agreement and each other Transaction Document to which such Seller
Party is a party has been duly executed and delivered by such Seller Party.
(c) No Conflict. The execution and delivery by such Seller Party of
this Agreement and each other Transaction Document to which it is a party, and
the performance of its obligations hereunder and thereunder do not contravene or
violate (i) its certificate 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 such Seller Party or
its Subsidiaries (except as created hereunder) except, in any case, where such
contravention or violation could not reasonably be expected to have a Material
Adverse Effect; and no transaction contemplated hereby requires compliance with
any bulk sales act or similar law.
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(d) Governmental Authorization. Other than the filing of the financing
statements required hereunder, no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or regulatory body
is required for the due execution and delivery by such Seller Party of this
Agreement and each other Transaction Document to which it is a party and the
performance of its obligations hereunder and thereunder.
(e) Actions, Suits. There are no actions, suits or proceedings
pending, or to the best of such Seller Party's knowledge, threatened, against or
affecting such Seller Party, or any of its properties, in or before any court,
arbitrator or other body, that could reasonably be expected to have a Material
Adverse Effect. Such Seller Party is not in default with respect to any order of
any court, arbitrator or governmental body that could reasonably be expected to
have a Material Adverse Effect.
(f) Binding Effect. This Agreement and each other Transaction Document
to which such Seller Party is a party constitute the legal, valid and binding
obligations of such Seller Party enforceable against such Seller Party in
accordance with their respective terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(g) Accuracy of Information. All information heretofore furnished by
such Seller Party or any of its Affiliates to the Agent or any 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 such Seller Party or any of its Affiliates to
the Agent or any Purchaser will be, true and accurate in every material respect
on the date such information is stated or certified and not incomplete by
omitting to state any material fact necessary to make such information not
misleading at such time. There is no fact now known to any Authorized Officer of
any Seller Party which has, or would reasonably be expected to have, a Material
Adverse Effect which fact has not been set forth herein, in the financial
statements, or any certificate, opinion or other written statement made or
furnished by such Seller Party or any of its Affiliates to the Agent and the
Purchasers.
(h) Use of Proceeds. No proceeds of any Purchase hereunder will be
used (i) for a purpose that violates, or would be inconsistent with, (A) Section
7.2(e) of this Agreement or (B) Regulation T, U or X promulgated by the Board of
Governors of the Federal Reserve System from time to time or (ii) to acquire any
security in any transaction which is subject to Section 12, 13 or 14 of the
Securities Exchange Act of 1934, as amended.
(i) Good Title. Seller is the legal and beneficial owner of the
Receivables, Collections and Related Security with respect thereto, in each case
free and clear of any Adverse Claim, except as created by the Transaction
Documents. There have been duly filed all financing statements or other similar
instruments or documents necessary under the UCC (or any comparable law) of all
appropriate jurisdictions to perfect Seller's ownership interest in each
Receivable, its Collections and the Related Security.
(j) Perfection. Subject to Section 13.12, this Agreement is effective
to create a valid security interest in favor of the Agent for the benefit of the
Secured Parties in the
10
Purchased Assets to secure payment of the Aggregate Unpaids, free and clear of
any Adverse Claim except as created by the Transactions Documents. There have
been duly filed all financing statements or other similar instruments or
documents necessary under the UCC (or any comparable law) of all appropriate
jurisdictions to perfect the Agent's (on behalf of the Secured Parties) security
interest in the Purchased Assets.
(k) Places of Business and Locations of Records. The principal places
of business and chief executive office of such Seller Party and the offices
where it keeps all of its Records are located at the address(es) listed on
Exhibit III or such other locations of which the Agent has been notified in
accordance with Section 7.2(a) in jurisdictions where all action required by
Section 13.3(a) has been taken and completed. Seller's Federal Employer
Identification Number and Delaware Organization Identification Number are
correctly set forth on Exhibit III.
(l) Collections. The conditions and requirements set forth in Section
7.1(j) and Section 8.2 have at all times been satisfied and duly performed. The
names, addresses and jurisdictions of organization of all Collection Banks,
together with the account numbers of the Collection Accounts of Seller at each
Collection Bank and the post office box number of each Lock-Box, are listed on
Exhibit IV. Seller has not granted any Person, other than the Collateral Agent,
on behalf of the Agent and the Bank Agent, dominion and control of any Lock-Box
or Collection Account, or the right to take dominion and control of any such
Lock-Box or Collection Account at a future time or upon the occurrence of a
future event.
(m) Material Adverse Effect. (i) The initial Servicer represents and
warrants that since December 31, 2004, no event has occurred that would have a
material adverse effect on the financial condition or operations of the initial
Servicer or the ability of the initial Servicer to perform its obligations under
this Agreement, (ii) the Performance Guarantor represents and warrants that
since December 31, 2004, no event has occurred that would have a material
adverse effect on the financial condition or operations of the Performance
Guarantor and its Subsidiaries or the ability of the Performance Guarantor to
perform its obligations under this Agreement, and (iii) Seller represents and
warrants that since the date of this Agreement, no event has occurred that would
have a material adverse effect on (A) the financial condition or operations of
Seller, (B) the ability of Seller to perform its obligations under the
Transaction Documents, or (C) the collectibility of the Receivables generally or
any material portion of the Receivables.
(n) Names. The name in which Seller has executed this Agreement is
identical to the name of Seller as indicated on the public record of its state
of organization which shows Seller to have been organized. In the past five (5)
years, Seller has not used any legal names, trade names or assumed names other
than the name in which it has executed this Agreement.
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(o) Ownership of Seller. Performance Guarantor owns, directly or
indirectly, 100% of the issued and outstanding non-voting Equity Interests in
Seller and 49% of the issued and outstanding voting Equity Interests in Seller,
in each case free and clear of any Adverse Claim. Such Equity Interests are
validly issued, fully paid and nonassessable, and there are no options, warrants
or other rights to acquire securities of Seller.
(p) Not a Holding Company or an Investment Company. Such Seller Party
is not a "holding company" or a "subsidiary holding company" of a "holding
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended, or any successor statute. Such Seller Party is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
or any successor statute.
(q) Compliance with Law. Such Seller Party has complied in all
respects with all applicable laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it is subject, except where the failure
to so comply could not reasonably be expected to have a Material Adverse Effect.
Each Receivable, together with the Contract related thereto, does not contravene
any laws, rules or regulations applicable thereto (including, without
limitation, laws, rules and regulations relating to truth in lending, fair
credit billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy), and no part of such Contract is in violation
of any such law, rule or regulation, except where such contravention or
violation could not reasonably be expected to have a Material Adverse Effect.
(r) Compliance with Credit and Collection Policy. Such Seller Party
has complied in all material respects with the Credit and Collection Policy with
regard to each Receivable and the related Contract, and has not made any change
to such Credit and Collection Policy, except such material change as to which
the Agent has been notified in accordance with Section 7.1(a)(vii).
(s) Payments to Applicable Originator. With respect to each Receivable
transferred to Seller under the Receivables Sale Agreement, Seller has given
reasonably equivalent value to the applicable Originator in consideration
therefor and such transfer was not made for or on account of an antecedent debt.
No transfer by any Originator of any Receivable under the Receivables Sale
Agreement is or may be voidable under any section of the Bankruptcy Reform Act
of 1978 (11 U.S.C. Sections 101 et seq.), as amended.
(t) Enforceability of Contracts. Each Contract with respect to each
Receivable is effective to create, and has created, a legal, valid and binding
obligation of the related Obligor to pay the Outstanding Balance of the
Receivable created thereunder and any accrued interest thereon, enforceable
against the Obligor in accordance with its terms, except as such enforcement may
be limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(u) Eligible Receivables. Each Receivable included in the Net Pool
Balance as an Eligible Receivable on the date of any Settlement Report was an
Eligible Receivable on such date.
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(v) Purchase Limit and Maximum Receivable Interests. Immediately after
giving effect to each Incremental Purchase hereunder, the Aggregate Invested
Amount is less than or equal to the Purchase Limit and the aggregate of the
Receivable Interests does not exceed 100%.
(w) Accounting. The manner in which such Seller Party accounts for the
transactions contemplated by this Agreement and the Receivables Sale Agreement
does not jeopardize the true sale analysis.
(x) OFAC. None of the Seller Parties, any Subsidiary of any Seller
Party or to the best knowledge of any Seller Party, any Affiliate of any Seller
Party (a) is a Sanctioned Person, (b) does business in a Sanctioned Country in
violation of the economic sanctions of the United States administered by OFAC or
(c) does business in such country or with any such agency, organization or
person, in violation of the economic sanctions of the United States administered
by OFAC.
ARTICLE VI.
CONDITIONS OF PURCHASES
Section 6.1 Conditions Precedent to Initial Incremental Purchase. The
initial Incremental 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 B and (b)
the Agent shall have received all fees and expenses required to be paid on such
date pursuant to the terms of this Agreement and the Fee Letter.
Section 6.2 Conditions Precedent to All Purchases and Reinvestments. Each
Incremental Purchase and each Reinvestment shall be subject to the further
conditions precedent that (a) in the case of each such Purchase: (i) 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 Settlement
Reports as and when due under Section 8.5 and (ii) upon the Agent's request, the
Servicer shall have delivered to the Agent at least two (2) days prior to such
Purchase an interim Settlement Report showing the amount of Eligible
Receivables; (b) the Agent shall have received such other approvals, opinions or
documents as it may reasonably request and (c) on each Purchase Date, the
following statements shall be true (and acceptance of the proceeds of such
Incremental Purchase or Reinvestment shall be deemed a representation and
warranty by Seller that such statements are then true):
(i) the representations and warranties set forth in Section 5.1
are true and correct on and as of the date of such Incremental Purchase or
Reinvestment as though made on and as of such Purchase Date;
(ii) no event has occurred and is continuing, or would result
from such Incremental Purchase or Reinvestment, that will constitute an
Amortization Event, and no event has occurred and is continuing, or would result
from such Incremental Purchase or Reinvestment, that would constitute an
Unmatured Amortization Event; and
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(iii) the Aggregate Invested Amount does not exceed the Purchase
Limit and the aggregate Receivable Interests do not exceed 100%.
It is expressly understood that each Reinvestment shall, unless otherwise
directed by the Agent, occur automatically on each day that the Servicer shall
receive any Collections without the requirement that any further action be taken
on the part of any Person and notwithstanding the failure of Seller to satisfy
any of the foregoing conditions precedent in respect of such Reinvestment. The
failure of Seller to satisfy any of the foregoing conditions precedent in
respect of any Reinvestment shall give rise to a right of the Agent, which right
may be exercised at any time on demand of the Agent, to rescind the related
purchase and direct Seller to pay to the Agent's Account, for the benefit of the
applicable Purchaser(s), an amount equal to the Collections prior to the
Facility Termination Date that shall have been applied to the affected
Reinvestment.
ARTICLE VII.
COVENANTS
Section 7.1 Affirmative Covenants of the Seller Parties. Until the date on
which the Aggregate Unpaids have been indefeasibly paid in full and this
Agreement terminates in accordance with its terms, each Seller Party hereby
covenants, as to itself, as set forth below:
(a) Financial Reporting. Such Seller Party will maintain, for itself
and each of its Subsidiaries, a system of accounting established and
administered in accordance with GAAP, and furnish or cause to be furnished to
the Agent:
(i) Annual Reporting. Within 90 days after the close of each of
its respective fiscal years, (i) audited, unqualified consolidated financial
statements (which shall include balance sheets, statements of income and
retained earnings and a statement of cash flows) of Performance Guarantor and
its Subsidiaries for such fiscal year certified in a manner acceptable to the
Agent by independent public accountants reasonably acceptable to the Agent and
(ii) unaudited, financial statements (which shall include balance sheets,
statements of income and retained earnings and a statement of cash flows) of
Seller for such fiscal year, all certified by its chief financial officer.
(ii) Quarterly Reporting. Within 45 days after the close of the
first three (3) quarterly periods of each of its respective fiscal years, (i)
consolidated balance sheets of Performance Guarantor and its Subsidiaries as at
the close of each such period and consolidated statements of income and retained
earnings and a statement of cash flows of Performance Guarantor and its
Subsidiaries for the period from the beginning of such fiscal year to the end of
such quarter, all certified by Performance Guarantor's chief financial officer
and (ii) balance sheets of Seller as at the close of each such period and
consolidated statements of income and retained earnings and a statement of cash
flows of Seller for the period from the beginning of such fiscal year to the end
of such quarter, all certified by its chief financial officer.
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(iii) Compliance Certificate. Together with the financial
statements required hereunder, a compliance certificate in substantially the
form of Exhibit V signed by such Seller Party's Authorized Officer and dated the
date of such annual financial statement or such quarterly financial statement,
as the case may be.
(iv) Shareholders Statements and Reports. Promptly upon the
furnishing thereof to the shareholders of such Seller Party copies of all
financial statements, reports and proxy statements so furnished.
(v) S.E.C. Filings. Promptly upon the filing thereof, copies of
all registration statements and annual, quarterly, monthly or other regular
reports which any Seller Party or any of its Affiliates files with the
Securities and Exchange Commission.
(vi) Copies of Notices. Promptly upon its receipt of any notice,
request for consent, financial statements, certification, report or other
communication under or in connection with any Transaction Document from any
Person other than the Agent or the Purchasers, copies of the same.
(vii) Change in Credit and Collection Policy. At least thirty
(30) days prior to the effectiveness of any material change in or material
amendment to the Credit and Collection Policy, a copy of the Credit and
Collection Policy then in effect and a notice (A) indicating such proposed
change or amendment, and (B) if such proposed change or amendment would be
reasonably likely to adversely affect the collectibility of the Receivables or
decrease the credit quality of any newly created Receivables, requesting the
Agent's consent thereto.
(viii) Other Information. Promptly, from time to time, such other
information, documents, records or reports relating to the Receivables or the
condition or operations, financial or otherwise, of such Seller Party as the
Agent may from time to time reasonably request in order to protect the interests
of the Agent, for the benefit of the Purchasers, under or as contemplated by
this Agreement.
(b) Notices. Such Seller Party will notify the Agent in writing signed
by an Authorized Officer of such Seller Party of any of the following promptly
upon learning of the occurrence thereof, describing the same and, if applicable,
the steps being taken with respect thereto:
(i) Amortization Events or Unmatured Amortization Events. The
occurrence of each Amortization Event and each Unmatured Amortization Event.
(ii) Judgments and Proceedings. (A) (1) The entry of any judgment
or decree against the Performance Guarantor, the Servicer or any of the
Performance Guarantor's other Subsidiaries if the aggregate amount of all
judgments and decrees then outstanding against the Performance Guarantor, the
Servicer and the Performance Guarantor's other Subsidiaries exceeds $2,500,000
after deducting (a) the amount with respect to which the Performance Guarantor,
the Servicer or any such other Subsidiary of the Performance Guarantor, as the
case may be, is insured and with respect to which the insurer has not denied
coverage, and (b) the amount for which the Performance
15
Guarantor, the Servicer or any such other Subsidiary of the Performance
Guarantor is otherwise indemnified if the terms of such indemnification are
satisfactory to the Agent, and (2) the institution of any litigation,
arbitration proceeding or governmental proceeding against the Performance
Guarantor or the Servicer which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect; and (B) the entry of
any judgment or decree or the institution of any litigation, arbitration
proceeding or governmental proceeding against Seller.
(iii) Material Adverse Effect. The occurrence of any event or
condition that has had, or could reasonably be expected to have, a Material
Adverse Effect.
(iv) Termination Event. The occurrence of a "TERMINATION EVENT"
under and as defined in the Receivables Sale Agreement.
(v) Defaults Under Other Agreements. The occurrence of a default
or an event of default under any other financing arrangement pursuant to which
such Seller Party is a debtor or an obligor and such financing arrangement is in
excess of $2,500,000.
(vi) Notices under Receivables Sale Agreement. Copies of all
notices delivered under the Receivables Sale Agreement.
(vii) Downgrade of Performance Guarantor. Any downgrade in the
rating of any Indebtedness of the Performance Guarantor by S&P or Moody's,
setting forth the Indebtedness affected and the nature of such change.
(c) Compliance with Laws and Preservation of Corporate Existence. Such
Seller Party will comply in all respects with all applicable laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
it is subject, except where the failure to so comply could not reasonably be
expected to have a Material Adverse Effect. Such Seller Party will preserve and
maintain its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified in good
standing as a foreign corporation in each jurisdiction where its business is
conducted, except where the failure to so preserve and maintain or qualify could
not reasonably be expected to have a Material Adverse Effect.
(d) Audits. Such Seller Party will furnish to the Agent from time to
time such information with respect to it and the Receivables as the Agent may
reasonably request. Such Seller Party will, from time to time during regular
business hours as requested by the Agent upon reasonable notice and at the sole
cost of such Seller Party, permit the Agent, or its agents or representatives
(and shall cause each Originator to permit the Agent or its agents or
representatives): (i) to examine and make copies of and abstracts from all
Records in the possession or under the control of such Person relating to the
Purchased Assets, including, without limitation, the related Contracts, and (ii)
to visit the offices and properties of such Person for the purpose of examining
such materials described in clause (i) above, and to discuss matters relating to
such Person's financial condition or the Purchased Assets or any Person's
performance under any of the Transaction Documents or any Person's performance
under the Contracts and, in each case, with any of the officers or employees of
Seller or the Servicer
16
having knowledge of such matters (each of the foregoing examinations and visits,
a "REVIEW"); PROVIDED, HOWEVER, that, so long as no Amortization Event has
occurred and is continuing, the number of Reviews in any one calendar year shall
be limited to a maximum of four (4) and; PROVIDED, FURTHER, that, the Seller
Parties, collectively, shall not be responsible for the reasonable costs and
expenses of more than two (2) Reviews in any one calendar year unless (X) the
immediately preceding audit was unsatisfactory to the Agent with respect to
missing information, erroneous reporting, other non-compliance with the
provisions of the Transaction Documents or questions that have not been answered
to the Agent's satisfaction, or (Y) the Aggregate Invested Amount exceeds an
amount equal to 0.75 times the difference between the most recently computed Net
Pool Balance and the most recently computed Required Reserve.
(e) Keeping and Marking of Records and Books.
(i) The Servicer will (and will cause each Originator to)
maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing Receivables in the
event of the destruction of the originals thereof), and keep and maintain all
documents, books, records and other information reasonably necessary or
advisable for the collection of all Receivables (including, without limitation,
records adequate to permit the immediate identification of each new Receivable
and all Collections of and adjustments to each existing Receivable). The
Servicer will (and will cause each Originator to) give the Agent notice of any
material change in the administrative and operating procedures referred to in
the previous sentence.
(ii) Such Seller Party will (and will cause each Originator to):
(A) on or prior to the date hereof, mark its master data processing records and
other books and records relating to the Receivables with a legend, acceptable to
the Agent, describing the Agent's security interest in the Purchased Assets and
(B) upon the request of the Agent following the occurrence of an Amortization
Event: (x) mark each Contract with a legend describing the Agent's security
interest and (y) deliver to the Agent all Contracts (including, without
limitation, all multiple originals of any such Contract constituting an
instrument, a certificated security or chattel paper) relating to the
Receivables.
(f) Compliance with Contracts and Credit and Collection Policy. Such
Seller Party will (and will cause each Originator to) timely and fully (i)
perform and comply with all provisions, covenants and other promises required to
be observed by it under the Contracts related to the Receivables, and (ii)
comply in all respects with the Credit and Collection Policy in regard to each
Receivable and the related Contract.
17
(g) Performance and Enforcement of Receivables Sale Agreement. Seller
will, and will require each Originator to, perform each of their respective
obligations and undertakings under and pursuant to the Receivables Sale
Agreement, will purchase Receivables thereunder in strict compliance with the
terms thereof and will vigorously enforce the rights and remedies accorded to
Seller under the Receivables Sale Agreement. Seller will take all actions to
perfect and enforce its rights and interests (and the rights and interests of
the Agent, as Seller's assignee) under the Receivables Sale Agreement as the
Agent may from time to time reasonably request, including, without limitation,
making claims to which it may be entitled under any indemnity, reimbursement or
similar provision contained in the Receivables Sale Agreement.
(h) Ownership. Seller will (or will cause each Originator to) take all
necessary action to (i) vest legal and equitable title to the Purchased Assets
purchased under the Receivables Sale Agreement irrevocably in Seller, free and
clear of any Adverse Claims (other than Adverse Claims in favor of the Agent,
for the benefit of the Secured Parties) including, without limitation, the
filing of all financing statements or other similar instruments or documents
necessary under the UCC (or any comparable law) of all appropriate jurisdictions
to perfect Seller's interest in such Purchased Assets and such other action to
perfect, protect or more fully evidence the interest of Seller therein as the
Agent may reasonably request), and (ii) establish and maintain, in favor of the
Agent, for the benefit of the Secured Parties, a valid and perfected first
priority security interest in all Purchased Assets, free and clear of any
Adverse Claims, including, without limitation, the filing of all financing
statements or other similar instruments or documents necessary under the UCC (or
any comparable law) of all appropriate jurisdictions to perfect the Agent's (for
the benefit of the Secured Parties) security interest in the Purchased Assets
and such other action to perfect, protect or more fully evidence the interest of
the Agent for the benefit of the Secured Parties as the Agent may reasonably
request.
(i) Reliance. Seller acknowledges that the Agent and the Purchasers
are entering into the transactions contemplated by this Agreement in reliance
upon Seller's identity as a legal entity that is separate from each Originator.
Therefore, from and after the date of execution and delivery of this Agreement,
Seller shall take all reasonable steps, including, without limitation, all steps
that the Agent or any Purchaser may from time to time reasonably request, to
maintain Seller's identity as a separate legal entity and to make it manifest to
third parties that Seller is an entity with assets and liabilities distinct from
those of each Originator and any Affiliates thereof (other than Seller) and not
just a division of any Originator or any such Affiliate. Without limiting the
generality of the foregoing and in addition to the other covenants set forth
herein, Seller will:
(A) conduct its own business in its own name and require that all
full-time employees of Seller, if any, identify themselves as such and
not as employees of any Originator (including, without limitation, by
means of providing appropriate employees with business or
identification cards identifying such employees as Seller's
employees);
(B) compensate all employees, consultants and agents directly,
from Seller's own funds, for services provided to Seller by such
employees, consultants and agents and, to the extent any employee,
consultant or agent of Seller is also an employee, consultant or agent
of any Originator or any Affiliate
18
thereof, allocate the compensation of such employee, consultant or
agent between Seller and such Originator or such Affiliate, as
applicable, on a basis that reflects the services rendered to Seller
and such Originator or such Affiliate, as applicable;
(C) clearly identify its offices (by signage or otherwise) as its
offices and, if such office is located in the offices of any
Originator, Seller shall lease such office at a fair market rent;
(D) have a separate telephone number, which will be answered only
in its name and separate stationery and checks in its own name;
(E) conduct all transactions with each Originator and the
Servicer (including, without limitation, any delegation of its
obligations hereunder as Servicer) strictly on an arm's-length basis,
allocate all overhead expenses (including, without limitation,
telephone and other utility charges) for items shared between Seller
and such 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;
(F) at all times have a board of managers consisting of three
members, at least one member of which is an Independent Manager;
(G) observe all corporate formalities as a distinct entity, and
ensure that all limited liability company actions relating to (A) the
selection, maintenance or replacement of the Independent Manager, (B)
the dissolution or liquidation of Seller or (C) the initiation of,
participation in, acquiescence in or consent to any bankruptcy,
insolvency, reorganization or similar proceeding involving Seller, are
duly authorized by unanimous vote of its board of managers (including
the Independent Manager);
(H) maintain Seller's books and records separate from those of
each Originator and any Affiliate thereof and otherwise readily
identifiable as its own assets rather than assets of any Originator or
any Affiliate thereof;
(I) prepare its financial statements separately from those of
each Originator and insure that any consolidated financial statements
of any Originator or any Affiliate thereof that include Seller and
that are filed with the Securities and Exchange Commission or any
other governmental agency have notes clearly stating that Seller is a
separate legal entity and that its assets will be available first and
foremost to satisfy the claims of the creditors of Seller;
(J) except as herein specifically otherwise provided, maintain
the funds or other assets of Seller separate from, and not commingled
with, those of any Originator or any Affiliate thereof and only
maintain bank accounts or other depository accounts to which Seller
alone is the account party, into which Seller alone makes deposits and
from which Seller alone (or the Agent hereunder) has the power to make
withdrawals;
19
(K) pay all of Seller's operating expenses from Seller's own
assets (except for certain payments by any Originator or other Persons
pursuant to allocation arrangements that comply with the requirements
of this Section 7.1(i));
(L) operate its business and activities such that: it does not
engage in any business or activity of any kind, or enter into any
transaction or indenture, mortgage, instrument, agreement, contract,
lease or other undertaking, other than the transactions contemplated
and authorized by this Agreement and the Receivables Sale Agreement;
and does not create, incur, guarantee, assume or suffer to exist any
indebtedness or other liabilities, whether direct or contingent, other
than (1) as a result of the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course
of business, (2) the incurrence of obligations under this Agreement,
(3) the incurrence of obligations, as expressly contemplated in the
Receivables Sale Agreement, to make payment to the applicable
Originator thereunder for the purchase of Receivables from such
Originator under the Receivables Sale Agreement, and (4) the
incurrence of operating expenses in the ordinary course of business of
the type otherwise contemplated by this Agreement;
(M) maintain its Organizational Documents in conformity with this
Agreement, such that it does not amend, restate, supplement or
otherwise modify its Organizational Documents 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
7.1(i) of this Agreement;
(N) maintain the effectiveness of, and continue to perform under
the Receivables Sale Agreement and the Performance Undertaking, such
that it does not amend, restate, supplement, cancel, terminate or
otherwise modify the Receivables Sale Agreement or the Performance
Undertaking, or give any consent, waiver, directive or approval
thereunder or waive any default, action, omission or breach under the
Receivables Sale Agreement or the Performance Undertaking or otherwise
grant any indulgence thereunder, without (in each case) the prior
written consent of the Agent;
(O) maintain its limited liability company separateness such that
it does not merge or consolidate with or into, or convey, transfer,
lease or otherwise dispose of (whether in one transaction or in a
series of transactions, and except as otherwise contemplated herein)
all or substantially all of its assets (whether now owned or hereafter
acquired) to, or acquire all or substantially all of the assets of,
any Person, nor at any time create, have, acquire, maintain or hold
any interest in any Subsidiary.
(P) maintain at all times the Required Capital Amount (as defined
in the Receivables Sale Agreement) and refrain from making any
dividend, distribution, redemption of Equity Interests or payment of
any subordinated indebtedness which would cause the Required Capital
Amount to cease to be so maintained; and
20
(Q) take such other actions as are necessary on its part to
ensure that the facts and assumptions set forth in the opinion issued
by Dewey Ballantine LLP, as counsel for Seller, in connection with the
closing or initial Incremental Purchase under this Agreement and
relating to substantive consolidation issues, and in the certificates
accompanying such opinion, remain true and correct in all material
respects at all times.
(j) Collections. Such Seller Party will cause (1) all proceeds from
all Lock-Boxes to be directly deposited by a Collection Bank into a Collection
Account and (2) each Lock-Box and Collection Account to be subject at all times
to a Collection Account Agreement that is in full force and effect. In the event
any payments relating to the Purchased Assets are remitted directly to Seller or
any Affiliate of Seller, Seller will remit (or will cause all such payments to
be remitted) directly to a Collection Bank and deposited into a Collection
Account within two (2) Business Days following receipt thereof, and, at all
times prior to such remittance, Seller will itself hold or, if applicable, will
cause such payments to be held in trust for the exclusive benefit of the Agent
and the Purchasers. The ownership, dominion and control (subject to the terms of
this Agreement) of each Lock-Box and Collection Account shall be exclusively
maintained by the Collateral Agent and Seller shall not grant 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 to any Person, except to the Collateral
Agent as contemplated by this Agreement.
(k) Taxes. Such Seller Party will file all tax returns and reports
required by law to be filed by it and will promptly pay all taxes and
governmental charges at any time owing, except any such taxes which are not yet
delinquent or are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on its books. Seller will pay when due any taxes payable in
connection with the Receivables, exclusive of taxes on or measured by income or
gross receipts of the Agent or any Purchaser.
(l) Payment to Applicable Originator. With respect to any Receivable
purchased by Seller from any Originator, such sale shall be effected under, and
in strict compliance with the terms of, the Receivables Sale Agreement,
including, without limitation, the terms relating to the amount and timing of
payments to be made to such Originator in respect of the purchase price for such
Receivable.
Section 7.2 Negative Covenants of the Seller Parties. Until the date on
which the Aggregate Unpaids have been indefeasibly paid in full and this
Agreement terminates in accordance with its terms, each Seller Party hereby
covenants, as to itself, that:
(a) Name Change, Offices and Records. Such Seller Party will not
change its name, identity or structure (within the meaning of any applicable
enactment of the UCC), change its jurisdiction of organization, or change any
office where Records are kept unless it shall have: (i) given the Agent at least
ten (10) Business Days' prior written 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.
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(b) Change in Payment Instructions to Obligors. Except as may be
required by the Agent pursuant to Section 8.2(b), such Seller Party will not add
or terminate any bank as a Collection Bank, or make any change in the
instructions to Obligors regarding payments to be made to any Lock-Box or
Collection Account, unless the Agent shall have received, at least ten (10) days
before the proposed effective date therefor, (i) written notice of such
addition, termination or change and (ii) with respect to the addition of a
Collection Bank or a Collection Account or Lock-Box, an executed Collection
Account Agreement with respect to the new Collection Account or Lock-Box;
PROVIDED, HOWEVER, that the Servicer may make changes in instructions to
Obligors regarding payments if such new instructions require such Obligor to
make payments to another existing Collection Account.
(c) Modifications to Contracts and Credit and Collection Policy. Such
Seller Party will not, and will not permit any Originator to, make any change to
the Credit and Collection Policy that could adversely affect the collectibility
of the Receivables or decrease the credit quality of any newly created
Receivables. Except as provided in Section 8.2(d), the Servicer will not, and
will not permit any Originator to, extend, amend or otherwise modify the terms
of any Receivable or any Contract related thereto other than in accordance with
the Credit and Collection Policy.
(d) Sales, Liens. Except as otherwise expressly permitted by the
Transaction Documents, Seller will not sell, assign (by operation of law or
otherwise) or otherwise dispose of, or grant any option with respect to, or
create or suffer to exist any Adverse Claim upon (including, without limitation,
the filing of any financing statement) or with respect to, any of the Purchased
Assets, or assign any right to receive income with respect thereto (other than,
in each case, the creation of a security interest therein in favor of the Agent
as provided for herein), and Seller will defend the right, title and interest of
the Secured Parties in, to and under any of the foregoing property, against all
claims of third parties claiming through or under Seller or any Originator.
(e) Use of Proceeds. Seller will not use the proceeds of the Purchases
for any purpose other than (i) paying for Receivables and Related Security under
and in accordance with the Receivables Sale Agreement, including without
limitation, making payments on the Subordinated Notes to the extent permitted
thereunder and under the Receivables Sale Agreement, (ii) paying its ordinary
and necessary operating expenses when and as due, and (iii) making Restricted
Junior Payments to the extent permitted under this Agreement.
(f) Termination Date Determination. Seller will not designate the
Termination Date (as defined in the Receivables Sale Agreement), or send any
written notice to any Originator in respect thereof, without the prior written
consent of the Agent, except with respect to the occurrence of such Termination
Date arising pursuant to Section 5.1(d) of the Receivables Sale Agreement.
(g) Restricted Junior Payments. Seller will not make any Restricted
Junior Payment if after giving effect thereto, Seller's Net Worth (as defined in
the Receivables Sale Agreement) would be less than the Required Capital Amount
(as defined in the Receivables Sale Agreement).
22
(h) Seller Indebtedness. Seller will not incur or permit to exist any
Indebtedness or liability on account of deposits except: (i) the Aggregate
Unpaids, (ii) the Subordinated Loans, and (iii) other current accounts payable
arising in the ordinary course of business and not overdue.
(i) Prohibition on Additional Negative Pledges. No Seller Party will
enter into or assume any agreement (other than this Agreement and the other
Transaction Documents) prohibiting the creation or assumption of any Adverse
Claim upon the Purchased Assets except as contemplated by the Transaction
Documents, or otherwise prohibiting or restricting any transaction contemplated
hereby or by the other Transaction Documents, and no Seller Party will enter
into or assume any agreement creating any Adverse Claim upon the Subordinated
Notes.
ARTICLE VIII.
ADMINISTRATION AND COLLECTION
Section 8.1 Designation of Servicer.
(a) The servicing, administration and collection of the Receivables
shall be conducted by such Person (the "SERVICER") so designated from time to
time in accordance with this Section 8.1. Wolverine Finance 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 following the
occurrence of an Amortization Event designate as Servicer any Person to succeed
Wolverine Finance or any successor Servicer PROVIDED THAT the Rating Agency
Condition is satisfied.
(b) Wolverine Finance may delegate, and Wolverine Finance hereby
advises the Agent and the Purchasers that it has delegated, to the Originators,
as sub-servicers of the Servicer, certain of its duties and responsibilities as
Servicer hereunder in respect of the Receivables originated by such Originator.
Without the prior written consent of the Agent and the Required Liquidity Banks,
Wolverine Finance shall not be permitted to delegate any of its duties or
responsibilities as Servicer to any Person other than (i) Seller, (ii) the
Originators, and (iii) with respect to certain Defaulted Receivables, outside
collection agencies in accordance with its customary practices. Neither Seller
nor any Originator shall be permitted to further delegate to any other Person
any of the duties or responsibilities of the Servicer delegated to it by
Wolverine Finance. If at any time following an Amortization Event, the Agent
shall designate as Servicer any Person other than Wolverine Finance, all duties
and responsibilities theretofore delegated by Wolverine Finance to Seller or the
Originators may, at the discretion of the Agent, be terminated forthwith on
notice given by the Agent to Wolverine Finance and to Seller and the
Originators.
(c) Notwithstanding the foregoing subsection (b): (i) Wolverine
Finance 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 Wolverine Finance in matters relating to the discharge by
the Servicer of its duties and responsibilities hereunder. The Agent and the
Purchasers shall not be required to give notice, demand or other communication
to any Person
23
other than Wolverine Finance in order for communication to the Servicer and its
sub-servicer or other delegate with respect thereto to be accomplished.
Wolverine Finance, at all times that it is the Servicer, shall be responsible
for providing any sub-servicer or other delegate of the Servicer with any notice
given to the Servicer under this Agreement.
Section 8.2 Duties of Servicer.
(a) The Servicer shall take or cause to be taken all such actions as
may be necessary or advisable to collect each Receivable from time to time, all
in accordance with applicable laws, rules and regulations, with reasonable care
and diligence, and in accordance with the Credit and Collection Policy.
(b) The Servicer will instruct all Obligors to pay all Collections
directly to a Lock-Box or Collection Account. The Servicer shall effect a
Collection Account Agreement substantially in the form of Exhibit VI with each
bank party to a Collection Account at any time. In the case of any remittances
received in any Lock-Box or Collection Account that shall have been identified,
to the satisfaction of the Servicer, to not constitute Collections or other
proceeds of the Receivables or the Related Security, the Servicer shall promptly
remit such items to the Person identified to it as being the owner of such
remittances. The Agent may request that the Servicer, and the Servicer thereupon
promptly shall instruct all Obligors with respect to the Receivables, to remit
all payments thereon to a new depositary account specified by the Agent and, at
all times thereafter, Seller and the Servicer shall not deposit or otherwise
credit, and shall not permit any other Person to deposit or otherwise credit to
such new depositary account any cash or payment item other than Collections.
(c) The Servicer shall administer the Collections in accordance with
the procedures described herein and in Article II. The Servicer shall set aside
and hold in trust for the account of Seller and the Purchasers their respective
shares of the Collections in accordance with Article II. The Servicer shall,
upon the request of the Agent, segregate, in a manner acceptable to the Agent,
all cash, checks and other instruments received by it from time to time
constituting Collections from the general funds of the Servicer or Seller prior
to the remittance thereof in accordance with Article II. If the Servicer shall
be required to segregate Collections pursuant to the preceding sentence, the
Servicer shall segregate and deposit with a bank designated by the Agent such
allocable share of Collections of Receivables set aside 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.
(d) The Servicer may, in accordance with the Credit and Collection
Policy, extend the maturity of any Receivable or adjust the Outstanding Balance
of any Receivable as the Servicer determines to be appropriate to maximize
Collections thereof; PROVIDED, HOWEVER, that such extension or adjustment shall
not alter the status of such Receivable as a Delinquent Receivable or Defaulted
Receivable or limit the rights of the Agent or any Purchaser under this
Agreement. Notwithstanding anything to the contrary contained herein, the Agent
shall have the absolute and unlimited right upon the occurrence and during the
continuation of an Amortization Event 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.
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(e) The Servicer shall hold in trust for Seller and the Agent and the
Purchasers all Records that (i) evidence or relate to the Receivables, the
related Contracts and Related Security or (ii) are otherwise necessary or
desirable to collect the Receivables and shall, as soon as practicable upon
demand of the Agent, deliver or make available to the Agent all such Records, at
a place selected by the Agent. The Servicer shall, as soon as practicable
following receipt thereof turn over to Seller any cash collections or other cash
proceeds received with respect to Indebtedness not constituting Receivables. The
Servicer shall, from time to time at the request of the Agent or any Purchaser,
furnish to the Purchasers (promptly after any such request) a calculation of the
amounts set aside for the Purchasers pursuant to Article II.
(f) Any payment by an Obligor in respect of any indebtedness owed by
it to Originator or Seller shall, except as otherwise specified by such Obligor
or otherwise required by contract or law and unless otherwise instructed by the
Agent, be applied as a Collection of any Receivable of such Obligor (starting
with the oldest such Receivable) to the extent of any amounts then due and
payable thereunder before being applied to any other receivable or other
obligation of such Obligor.
Section 8.3 Control of Lock-Box and Collection Accounts. Seller hereby
transfers to the Collateral Agent, for the benefit of the Agent and the Bank
Agent, the exclusive control of each Lock-Box and the Collection Accounts.
Seller hereby authorizes the Collateral Agent and the Agent, and agrees that the
Collateral Agent and the Agent shall be entitled (i) to endorse Seller's name on
checks and other instruments representing Collections, (ii) to take such action
as shall be necessary or desirable to cause all cash, checks and other
instruments constituting Collections of Receivables to come into the possession
of the Collateral Agent or Agent rather than Seller and (iii) at any time after
the occurrence and during the continuation of an Amortization Event, to enforce
the Receivables, the related Contracts and the Related Security.
Section 8.4 Responsibilities of Seller. Anything herein to the contrary
notwithstanding, the exercise by the Agent, on behalf of the Purchasers, of the
Agent's rights hereunder shall not release the Servicer, any Originator or
Seller from any of their duties or obligations with respect to any Receivables
or under the related Contracts. The Agent and the Purchasers shall have no
obligation or liability with respect to any Receivables or related Contracts,
nor shall any of them be obligated to perform the obligations of Seller or any
Originator thereunder.
Section 8.5 Settlement Reports. The Servicer shall prepare and forward to
the Agent (i) on each Monthly Reporting Date, a Settlement Report and an
electronic file of the data contained therein and (ii) upon two (2) Business
Day's notice by Agent, a listing by Obligor of all Receivables together with an
aging of such Receivables in an electronic file format satisfactory to the
Agent; PROVIDED, HOWEVER, that the Agent may request that the Servicer deliver a
Settlement Report more frequently than monthly.
Section 8.6 Servicing Fee. As compensation for the Servicer's servicing
activities on their behalf, the Servicer shall be paid the Servicing Fee in
arrears on each Settlement Date out of Collections in accordance with Article
II.
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ARTICLE IX.
AMORTIZATION EVENTS
Section 9.1 Amortization Events. The occurrence of any one or more of the
following events shall constitute an Amortization Event:
(a) Any Seller Party shall fail to make any payment or deposit
required to be made by it under the Transaction Documents when due and, for any
such payment or deposit which is not in respect of the Aggregate Invested
Amount, such failure continues for three (3) consecutive Business Days.
(b) Any representation, warranty, certification or statement made by
any Seller Party in any Transaction Document to which it is a party or in any
other document delivered pursuant thereto shall prove to have been incorrect
when made or deemed made.
(c) Any Seller Party shall fail to perform or observe any covenant
contained in Section 7.2 or 8.5 when performance or observance is due.
(d) Any Seller Party shall fail to perform or observe any other
covenant or agreement under any Transaction Documents and such failure shall
continue for ten (10) consecutive Business Days.
(e) Failure of Seller to pay any Indebtedness (other than the
Aggregate Unpaids) when due or the default by Seller in the performance of any
term, provision or condition contained in any agreement under which any such
Indebtedness was created or is governed, the effect of which is to cause, or to
permit the holder or holders of such Indebtedness to cause, such Indebtedness to
become due prior to its stated maturity; or any such Indebtedness of Seller
shall be declared to be due and payable or required to be prepaid (other than by
a regularly scheduled payment) prior to the date of maturity thereof.
(f) Failure of Performance Guarantor or any of its Subsidiaries other
than Seller to pay Indebtedness in excess of $2,500,000 in aggregate principal
amount (hereinafter, "MATERIAL INDEBTEDNESS") when due; or the default by
Performance Guarantor or any of its Subsidiaries other than Seller in the
performance of any term, provision or condition contained in any agreement under
which any Material Indebtedness was created or is governed, the effect of which
is to cause, or to permit the holder or holders of such Material Indebtedness to
cause, such Material Indebtedness to become due prior to its stated maturity; or
any Material Indebtedness of the Performance Guarantor or any of its
Subsidiaries other than Seller shall be declared to be due and payable or
required to be prepaid (other than by a regularly scheduled payment) prior to
the date of maturity thereof.
(g) An Event of Bankruptcy shall occur with respect to the Performance
Guarantor or any of its Subsidiaries.
(h) As at the end of any Calculation Period:
26
(i) the three-month rolling average Delinquency Ratio shall
exceed 2.75%,
(ii) the three-month rolling average Default Ratio shall exceed
2.50%, or
(iii) the three-month rolling average Dilution Ratio shall exceed
5.0%.
(i) A Change of Control shall occur.
(j) (i) One or more final judgments for the payment of money in an
aggregate amount of $12,300 or more shall be entered against Seller or (ii) one
or more final judgments for the payment of money in an amount in excess of
$2,500,000, individually or in the aggregate, shall be entered against
Performance Guarantor or any of its Subsidiaries (other than Seller on claims
not covered by insurance or as to which the insurance carrier has denied its
responsibility, and such judgment shall continue unsatisfied and in effect for
thirty (30) consecutive days without a stay of execution.
(k) The "TERMINATION DATE" under and as defined in the Receivables
Sale Agreement shall occur under the Receivables Sale Agreement or any
Originator shall for any reason cease to transfer, or cease to have the legal
capacity to transfer, or otherwise be incapable of transferring Receivables to
Seller under the Receivables Sale Agreement (other than solely by reason of a
merger of such Originator with and into another Originator).
(l) This Agreement shall terminate in whole or in part (except in
accordance with its terms), or shall cease to be effective or to be the legally
valid, binding and enforceable obligation of Seller, or any Obligor shall
directly or indirectly contest in any manner such effectiveness, validity,
binding nature or enforceability, or the Agent for the benefit of the Purchasers
shall cease to have a valid and perfected first priority security interest in
the Purchased Assets.
(m) On any Settlement Date, after giving effect to the turnover of
Collections by the Servicer on such date and the application thereof to the
Aggregate Unpaids in accordance with this Agreement, the Aggregate Invested
Amount shall exceed the Purchase Limit.
(n) The Performance Undertaking shall cease to be effective or to be
the legally valid, binding and enforceable obligation of Performance Guarantor,
or Performance Guarantor shall directly or indirectly contest in any manner such
effectiveness, validity, binding nature or enforceability of its obligations
thereunder.
(o) The Internal Revenue Service shall file notice of a lien pursuant
to Section 6323 of the Tax Code with regard to any of the Purchased Assets and
such lien shall not have been released within seven (7) days, or the PBGC shall,
or shall indicate its intention to, file notice of a lien pursuant to Section
4068 of ERISA with regard to any of the Purchased Assets.
(p) Any Plan of Performance Guarantor or any of its ERISA Affiliates:
27
(i) shall fail to be funded in accordance with the minimum
funding standard required by applicable law, the terms of such Plan, Section 412
of the Tax Code or Section 302 of ERISA for any plan year or a waiver of such
standard is sought or granted with respect to such Plan under applicable law,
the terms of such Plan or Section 412 of the Tax Code or Section 303 of ERISA;
or
(ii) is being, or has been, terminated or the subject of
termination proceedings under applicable law or the terms of such Plan; or
(iii) shall require Performance Guarantor or any of its ERISA
Affiliates to provide security under applicable law, the terms of such Plan,
Section 401 or 412 of the Tax Code or Section 306 or 307 of ERISA; or
(iv) results in a liability to Performance Guarantor or any of
its ERISA Affiliates under applicable law, the terms of such Plan, or Title IV
ERISA,
and there shall result from any such failure, waiver, termination or other event
a liability to the PBGC or a Plan that would have a Material Adverse Effect.
(q) Any event shall occur which (i) materially and adversely impairs
the ability of the Originators to originate Receivables of a credit quality that
is at least equal to the credit quality of the Receivables sold or contributed
to Seller on the date of this Agreement or (ii) has, or could be reasonably
expected to have a Material Adverse Effect.
(r) The Net Pool Balance shall at any time be less than an amount
equal to the sum of (i) the Aggregate Invested Amount PLUS (ii) the Required
Reserve after giving effect to the turnover of Collectors by the Services or the
next Settlement Date and the application thereof to the Aggregate Unpaid in
accordance with this Agreement.
(s) Failure of the Consolidated Parties to maintain a Fixed Charge
Coverage Ratio during any period (i) beginning on the date on which the
Obligations outstanding under and as defined in the ABL Credit Agreement shall
equal or exceed $18,000,000 and continuing until the termination of ABL Credit
Agreement and the repayment in full of all such Obligations and (ii) after the
termination of ABL Credit Agreement, equal to or more than the following amounts
as of the last day of each month ended in the periods indicated below:
Period Ratio
------ -----------
1st Fiscal Quarter 2005 through 1st Fiscal Quarter 2006 1.00 to 1.0
2nd Fiscal Quarter 2006 through 3rd Fiscal Quarter 2006 1.05 to 1.0
4th Fiscal Quarter 2006 through 2nd Fiscal Quarter 2007 1.10 to 1.0
3rd Fiscal Quarter 2007 1.15 to 1.0
4th Fiscal Quarter and thereafter 1.20 to 1.0
(t) The Consolidated Parties shall make Capital Expenditures in excess
of $15,000,000 during any fiscal year.
28
(u) Commencing with the fiscal quarter of the Consolidated Parties
ending April 3, 2005,, Consolidated EBITDA for the Consolidated Parties shall be
less than the following amounts for the indicated fiscal quarter, calculated on
a rolling four quarter basis:
Minimum Consolidated
Fiscal Quarter EBITDA
-------------- --------------------
1st Fiscal Quarter 2005 $33,500,000
2nd Fiscal Quarter 2005 $27,500,000
3rd Fiscal Quarter 2005 $30,000,000
4th Fiscal Quarter 2005 $32,000,000
1st Fiscal Quarter 2006 $33,500,000
2nd Fiscal Quarter 2006 $34,500,000
3rd Fiscal Quarter 2006 $36,000,000
4th Fiscal Quarter 2006 $37,000,000
1st Fiscal Quarter 2007 $37,000,000
2nd Fiscal Quarter 2007 $38,500,000
3rd Fiscal Quarter 2007 $39,500,000
4th Fiscal Quarter 2007 $41,000,000
and thereafter
(v) Excess Availability under and as defined in the ABL Credit
Agreement shall be less than $5,000,000 at any time.
Section 9.2 Remedies. Upon the occurrence and during the continuation of an
Amortization Event, the Agent may, or upon the direction of the Required
Liquidity Banks shall, take any of the following actions: (i) replace the Person
then acting as Servicer, (ii) declare the Facility Termination Date to have
occurred, whereupon Reinvestments shall immediately terminate and the Facility
Termination Date shall forthwith occur, all without demand, protest or further
notice of any kind, all of which are hereby expressly waived by each Seller
Party; PROVIDED, HOWEVER, that upon the occurrence of an Event of Bankruptcy
with respect to any Seller Party, the Facility Termination Date shall
automatically occur, without demand, protest or any notice of any kind, all of
which are hereby expressly waived by each Seller Party, (iii) exercise all
rights and remedies of a secured party upon default under the UCC and other
applicable laws, and (iv) notify Obligors of the Agent's security interest in
the Receivables and other Purchased Assets. The aforementioned rights and
remedies shall be without limitation, and shall be in addition to all other
rights and remedies of the Agent and the Purchasers otherwise available under
any other provision of this Agreement, by operation of law, at equity or
otherwise, all of which are hereby expressly preserved, including, without
limitation, all rights and remedies provided under the UCC, all of which rights
shall be cumulative.
ARTICLE X.
INDEMNIFICATION
Section 10.1 Indemnities.
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10.1.1 Indemnities by Seller. Without limiting any other rights that
the Agent or the Purchasers, may have hereunder or under applicable law, Seller
hereby agrees to indemnify (and pay upon demand to) the Agent, each of the
Purchasers and each of the respective assigns, officers, directors, agents and
employees of the foregoing (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 another Indemnified Party) and disbursements (all
of the foregoing being collectively referred to as "INDEMNIFIED AMOUNTS")
awarded against or incurred by any of them arising out of or as a result of this
Agreement or the acquisition, either directly or indirectly, by any Purchaser of
an interest in the Receivables, EXCLUDING, HOWEVER:
(a) Indemnified Amounts to the extent a final judgment of a court of
competent jurisdiction holds that such Indemnified Amounts resulted from gross
negligence or willful misconduct on the part of the Indemnified Party seeking
indemnification;
(b) Indemnified Amounts to the extent the same includes losses in
respect of Receivables that are uncollectible on account of the insolvency,
bankruptcy or lack of creditworthiness of the related Obligor; or
(c) (i) taxes on or measured by the overall net income of such
Indemnified Party imposed by the United States, the jurisdiction under the laws
of which such Indemnified Party is incorporated or otherwise organized, in which
such Indemnified Party is a resident for income tax purposes, or in which such
Indemnified Party's principal executive office or lending office is located, in
each case, including any political subdivision thereof, (ii) branch profits
taxes, franchise taxes, or similar taxes imposed on the Indemnified Party, and
(iii) other taxes imposed by any jurisdiction in which such Indemnified Party is
subject to taxation for reasons other than the execution, delivery, performance,
filing, recording, and enforcement of, and the other activities contemplated in
this Agreement and the Indemnified Party's participation in the transactions
contemplated by this Agreement, to the extent that the computation of such taxes
is consistent with the characterization for income tax purposes of the
acquisition by any Purchaser, of Receivables as a loan or loans by any
Purchaser, to Seller secured by the Receivables, the Related Security, the
Collection Accounts and the Collections;
PROVIDED, HOWEVER, that nothing contained in this sentence shall limit the
liability of Seller or limit the recourse of any Purchaser, to Seller for
amounts otherwise specifically provided to be paid by Seller under the terms of
this Agreement. Without limiting the generality of the foregoing
indemnification, 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 Seller) relating to or resulting from:
(i) any representation or warranty made by Seller or (to the
extent Seller actually receives indemnity under the Receivables Sale Agreement)
the Originator (or any officers of any such Person) under or in connection with
this Agreement, any other Transaction Document or any other information or
report delivered by any such Person pursuant hereto or thereto, which shall have
been false or incorrect when made or deemed made;
30
(ii) the failure by Seller or (to the extent Seller actually
receives indemnity under the Receivables Sale Agreement) the Originator to
comply with any applicable law, rule or regulation with respect to any
Receivable or Contract related thereto, or the nonconformity of any Receivable
or Contract included therein with any such applicable law, rule or regulation or
(to the extent Seller actually receives indemnity under the Receivables Sale
Agreement) any failure of the Originator to keep or perform any of its
obligations, express or implied, with respect to any Contract;
(iii) any failure of Seller or (to the extent Seller actually
receives indemnity under the Receivables Sale Agreement) the Originator to
perform its duties, covenants or other obligations in accordance with the
provisions of this Agreement or any other Transaction Document;
(iv) any products liability, personal injury or damage suit, or
other similar claim arising out of or in connection with merchandise, insurance
or services that are the subject of any Contract or any Receivable;
(v) any dispute, claim, offset or defense (other than discharge
in bankruptcy of the Obligor) of the Obligor to the payment of any Receivable
(including, without limitation, a defense based on such Receivable or the
related Contract not being a legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms), or any other claim
resulting from the sale of the merchandise or service related to such Receivable
or the furnishing or failure to furnish such merchandise or services;
(vi) the commingling by Seller or (to the extent Seller actually
receives indemnity under the Receivables Sale Agreement) by the Originator 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, the use of the proceeds of any Purchase, the Purchased
Assets or any other investigation, litigation or proceeding relating to Seller
or (to the extent Seller actually receives indemnity under the Receivables Sale
Agreement) the Originator in which any Indemnified Party becomes involved as a
result of any of the transactions contemplated hereby;
(viii) any inability to litigate any claim against any Obligor in
respect of any Receivable as a result of such Obligor being immune from civil
and commercial law and suit on the grounds of sovereignty or otherwise from any
legal action, suit or proceeding;
(ix) any Amortization Event of the type described in Section
9.1(g) with respect to any Seller Party;
(x) any failure of Seller to acquire and maintain legal and
equitable title to, and ownership of any of the Purchased Assets from the
Originator, free and clear of any Adverse Claim (other than as created
hereunder); or any failure of Seller to give reasonably equivalent value to the
Originator under the Receivables Sale Agreement in consideration of the transfer
by the Originator of any Receivable, or any attempt by any Person to void such
transfer under statutory provisions or common law or equitable action;
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(xi) any failure to vest and maintain vested in the Agent for the
benefit of the Purchasers or to transfer to the Agent for the benefit of the
Purchasers, a valid first priority perfected security interests in the Purchased
Assets, free and clear of any Adverse Claim (except as created by the
Transaction Documents);
(xii) the failure to have filed, or any delay in filing,
financing statements or other similar instruments or documents under the UCC of
any applicable jurisdiction or other applicable laws with respect to any
Purchased Assets, and the proceeds thereof, whether at the time of any Purchase
or at any subsequent time;
(xiii) any action or omission by Seller which reduces or impairs
the rights of the Agent or any Purchaser with respect to any Purchased Assets or
the value of any Purchased Assets;
(xiv) any attempt by any Person to void any Purchase or the
Agent's security interest in the Purchased Assets under statutory provisions or
common law or equitable action;
(xv) the failure of any Receivable included in the calculation of
the Net Pool Balance as an Eligible Receivable to be an Eligible Receivable at
the time so included;
(xvi) any civil penalty or fine assessed by OFAC against, and all
reasonable costs and expenses (including counsel fees and disbursements)
incurred in connection with defense thereof by Agent or any Purchaser as a
result of the funding of the Commitments or the acceptance of payments due under
the Transaction Documents; and
(xvii) any payment required to be made by the Agent to the
Collateral Agent under the Intercreditor Agreement or by the Collateral Agent
under any Collection Account Agreement.
10.1.2 Indemnity by Servicer. Without limiting any other rights which
any such Person may have hereunder or under applicable law, Servicer agrees to
indemnify each Indemnified Party for any and all Indemnified Amounts incurred by
any of them arising out of or relating to: (i) any breach by Servicer of any of
its obligations or duties under the Transaction Documents, (ii) the inaccuracy
of any representation made by Servicer hereunder or in any certificate or
written statement delivered pursuant hereto or any other Transaction Document,
(iii) any commingling of any funds by Servicer or any of its Affiliates relating
to the Receivables with any of Servicer's funds or the funds of any other
Person, (iv) except for adjustments permitted under Section 8.2(d), any action
or omission by Servicer which reduces or impairs the rights of the Agent or the
Purchasers with respect to any Receivable or the value of any such Receivable,
(v) any investigation, litigation or proceeding relating to Servicer in which
any Indemnified Party becomes involved specifically as a result of its servicing
activities hereunder, (vi) any Amortization Event described in Section 9.1(g)
with respect to Servicer, (vii) Servicer's inclusion of any Receivable in the
calculation of the Net Pool Balance as an Eligible Receivable if Seller or
Originator had previously advised Servicer that such Receivable was not an
Eligible Receivable, (viii) any civil penalty or fine assessed by OFAC against,
and all reasonable costs and expenses (including counsel fees and disbursements)
incurred in connection with defense
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thereof by Agent or any Purchaser as a result of any servicing activities
hereunder; and (ix) any payment required to be made by the Agent to the
Collateral Agent under the Intercreditor Agreement or by the Collateral Agent
under any Collection Account Agreement. The foregoing indemnity by Servicer
shall exclude Indemnified Amounts of the type described in the exclusion clause
of Section 10.1.1 to the extent applicable.
Section 10.2 Increased Cost and Reduced Return. If after the date hereof,
any Regulatory Change shall occur: (i) that 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 taxes excluded by
Section 10.1) or (ii) that imposes, modifies or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement against
assets of, deposits with or for the account of a Funding Source, or credit
extended by a Funding Source pursuant to a Funding Agreement or (iii) that
imposes any other condition (other than with respect to taxes) 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, such Funding
Source shall notify the Agent and the Seller within 120 days after any
Regulatory Change (other than with respect to taxes) giving rise to any such
fee, expense, increased cost or reduced return and, upon written demand by the
Agent setting forth in reasonable detail the basis for and computation of the
amount of such claim, Seller shall pay to the Agent, for the benefit of the
relevant Funding Source, such amounts charged to such Funding Source or such
amounts to otherwise compensate such Funding Source for such increased cost or
such reduction. Failure of any Funding Source to give notice within the 120-day
period following a Regulatory Change (other than with respect to taxes) shall
limit the applicable Funding Source's right to reimbursement to any such fees,
expenses, increased costs or reduced returns that accrue or are incurred from
and after the date on which such notice is actually given.
Section 10.3 Other Costs and Expenses. Seller shall pay to the Agent and
the Purchasers, on demand all reasonable 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 Blue Ridge's
auditors auditing the books, records and procedures of Seller (subject to the
limitations in 7.1(d)), reasonable fees and out-of-pocket expenses of legal
counsel for Blue Ridge, and the Agent (which such counsel may be employees of
Blue Ridge, or the Agent) with respect thereto and with respect to advising Blue
Ridge, and the Agent as to their respective rights and remedies under this
Agreement. Seller shall pay to the Agent on demand any and all reasonable costs
and expenses of the Agent and the Purchasers, if any, including reasonable
counsel fees and expenses in connection with the enforcement of this Agreement
and the other documents delivered hereunder and in connection with any
restructuring or workout of this Agreement or such documents, or the
administration of this Agreement following an Amortization Event.
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Section 10.4 Replacement of Funding Source. If the Agent or a Funding
Source requests compensation under Section 10.2 herein then the Seller may, at
its sole expense and effort, upon notice to the Agent and such Funding Source,
require the Funding Source to assign and delegate, without recourse, all of its
interests, rights and obligations under this Agreement to an Eligible Assignee
willing to participate and assume the applicable obligations under this
Agreement through and including the Facility Termination Date; PROVIDED, THAT
the Seller shall have paid to Agent all fees associated with such assignment,
the Funding Source replaced pursuant to this Section 10.4 shall have received
all payments due to it under this Agreement and the other Funding Agreements
(whether due or accrued) and such assignment will result in a reduction in such
compensation or payments thereafter.
ARTICLE XI.
THE AGENT
Section 11.1 Authorization and Action. Each Purchaser hereby designates and
appoints Wachovia to act as its agent under the Liquidity Agreement and under
each 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 the Liquidity Agreement or the 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 in the Liquidity
Agreement or in the Transaction Documents, 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 the
Liquidity Agreement or any Transaction Document or otherwise exist for the
Agent. In performing its functions and duties under the Liquidity Agreement and
under the Transaction Documents, the Agent shall act solely as agent for the
Purchasers and does not assume nor shall be deemed to have assumed any
obligation or relationship of trust or agency with or for any Seller Party or
any of such Seller Party's successors or assigns. The Agent shall not be
required to take any action that exposes the Agent to personal liability or that
is contrary to the Liquidity Agreement, any 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.
Section 11.2 Delegation of Duties. The Agent may execute any of its duties
under the Liquidity Agreement and each Transaction Document by or through agents
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
Section 11.3 Exculpatory Provisions. Neither the Agent nor any of its
directors, officers, agents or employees shall be (i) liable for any action
lawfully taken or omitted to be taken by it or them under or in connection with
the Liquidity Agreement or any Transaction Document (except for its, their or
such Person's own gross negligence or willful misconduct), or (ii) responsible
in any manner to any of the Purchasers for any recitals, statements,
representations or warranties made by any Seller Party contained in the
Liquidity Agreement, any Transaction Document or any certificate, report,
statement or other document referred to or provided for in, or received under or
in connection with, the Liquidity Agreement or any
34
Transaction Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of the Liquidity Agreement or any Transaction
Document or any other document furnished in connection therewith, or for any
failure of any Seller Party to perform its obligations thereunder, or for the
satisfaction of any condition specified in Article VI, or for the perfection,
priority, condition, value or sufficiency of any collateral pledged in
connection herewith. The Agent shall not be under any obligation to any
Purchaser to ascertain or to inquire as to the observance or performance of any
of the agreements or covenants contained in, or conditions of, this Agreement or
any other Transaction Document, or to inspect the properties, books or records
of the Seller Parties. The Agent shall not be deemed to have knowledge of any
Amortization Event or Unmatured Amortization Event unless the Agent has received
notice from a Seller Party or a Purchaser.
Section 11.4 Reliance by Agent. The Agent shall in all cases be entitled to
rely, and shall be fully protected in relying, upon any document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to Seller), independent accountants and
other experts selected by the Agent. The Agent shall in all cases be fully
justified in failing or refusing to take any action under the Liquidity
Agreement or any Transaction Document unless it shall first receive such advice
or concurrence of Blue Ridge or the Required Liquidity Banks 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 Blue Ridge
or the Required Liquidity Banks or all of the Purchasers, as applicable, and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all the Purchasers.
Section 11.5 Non-Reliance on Agent and Other Purchasers. Each Purchaser
expressly acknowledges that neither the Agent, nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the Agent hereafter
taken, including, without limitation, any review of the affairs of any Seller
Party, shall be deemed to constitute any representation or warranty by the
Agent. Each Purchaser represents and warrants to the Agent that it has and will,
independently and without reliance upon the Agent or any other Purchaser and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations, property,
prospects, financial and other conditions and creditworthiness of Seller and
made its own decision to enter into this Agreement, the other Transaction
Documents and all other documents related hereto or thereto.
Section 11.6 Reimbursement and Indemnification. The Liquidity Banks agree
to reimburse and indemnify the Agent and its officers, directors, employees,
representatives and agents ratably according to their Pro Rata Shares, to the
extent not paid or reimbursed by the Seller Parties (i) for any amounts for
which the Agent, acting in its capacity as Agent, is entitled to reimbursement
by the Seller Parties hereunder and (ii) for any other expenses incurred by the
Agent, in its capacity as Agent and acting on behalf of the Purchasers, in
connection with the administration and enforcement of this Agreement and the
other Transaction Documents.
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Section 11.7 Agent in its Individual Capacity. The Agent and its Affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with Seller or any Affiliate of Seller as though the Agent were not the
Agent hereunder. With respect to the acquisition of Receivable Interests
pursuant to this Agreement, the Agent shall have the same rights and powers
under this Agreement in its individual capacity as any Purchaser and may
exercise the same as though it were not the Agent, and the terms "LIQUIDITY
BANK," "PURCHASER," "LIQUIDITY BANKS" and "PURCHASERS" shall include the Agent
in its individual capacity.
Section 11.8 Successor Agent. The Agent may, upon five days' notice to
Seller and the Purchasers, and the Agent will, upon the direction of all of the
Purchasers (other than the Agent, in its individual capacity) resign as Agent.
If the Agent shall resign, then the Required Liquidity Banks 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 Liquidity Banks
during such five-day period, then effective upon the termination of such five
day period, the Purchasers shall perform all of the duties of the Agent
hereunder and under the other Transaction Documents and Seller and the Servicer
(as applicable) shall make all payments in respect of the Aggregate Unpaids
directly to the applicable Purchasers and for all purposes shall deal directly
with the Purchasers. After the effectiveness of any retiring Agent's resignation
hereunder as Agent, the retiring Agent shall be discharged from its duties and
obligations hereunder and under the other Transaction Documents and the
provisions of this Article XI and Article X shall continue in effect for its
benefit with respect to any actions taken or omitted to be taken by it while it
was Agent under this Agreement and under the other Transaction Documents.
ARTICLE XII.
ASSIGNMENTS AND PARTICIPATIONS
Section 12.1 Prohibition on Assignments by Seller Parties. Except for
delegation of servicing duties in accordance with Section 8.1(b), no Seller
Party may assign any of its rights or obligations under this Agreement without
(a) the prior written consent of the Agent and Blue Ridge (which consent shall
not be unreasonably withheld), and (b) without satisfying the Rating Agency
Condition.
Section 12.2 Assignments by Purchasers.
(a) Seller and each Liquidity Bank hereby agree and consent to the
complete or partial assignment by Blue Ridge of all or any portion of its rights
under, interest in, title to and obligations under this Agreement to the
Liquidity Banks pursuant to the Liquidity Agreement or to any Eligible Conduit,
and upon such assignment, Blue Ridge shall be released from its obligations so
assigned. Further, Seller and each Liquidity Bank hereby agree that any assignee
of Blue Ridge of this Agreement or all or any of the Receivable Interests of
Blue Ridge shall have all of the rights and benefits under this Agreement as if
the term "BLUE RIDGE" explicitly referred to such party, and no such assignment
shall in any way impair the rights and benefits of Blue Ridge hereunder;
provided, however, that no such assignee shall be entitled to receive any
greater payment under Section 10.1.1 than Blue Ridge would have been entitled to
36
receive thereunder. Neither Seller nor Servicer shall have the right to assign
its rights or obligations under this Agreement.
(b) Any Liquidity Bank may at any time and from time to time assign to
one or more Persons ("PURCHASING LIQUIDITY BANKS") all or any part of its rights
and obligations under this Agreement pursuant to an assignment agreement in a
form reasonably acceptable to the Agent (an "ASSIGNMENT AGREEMENT") executed by
such Purchasing Liquidity Bank and such selling Liquidity Bank. The consent of
Blue Ridge and, prior to the occurrence of an Amortization Event, the Seller
(which consent shall not be unreasonably withheld or delayed) shall be required
prior to the effectiveness of any such assignment. Each assignee of a Liquidity
Bank must be an Eligible Assignee. Upon delivery of the executed Assignment
Agreement to the Agent, such selling Liquidity Bank shall be released from its
obligations hereunder to the extent of such assignment. Thereafter the
Purchasing Liquidity Bank shall for all purposes be a Liquidity Bank party to
this Agreement and shall have all the rights and obligations of a Liquidity Bank
under this Agreement to the same extent as if it were an original party hereto
and no further consent or action by Seller, the Purchasers or the Agent shall be
required; provided, however, that no Purchasing Liquidity Bank shall be entitled
to receive any greater payment under Section 10.1.1 than the selling Liquidity
Bank would have been entitled to receive thereunder.
(c) Each of the Liquidity Banks agrees that in the event that it shall
cease to have a short-term debt rating of A-1 or better by S&P and P-1 by
Moody's (an "AFFECTED LIQUIDITY BANK"), such Affected Liquidity Bank shall be
obliged, at the request of Blue Ridge or the Agent, to assign all of its rights
and obligations hereunder to (x) another Liquidity Bank or (y) another funding
entity nominated by the Agent and acceptable to Blue Ridge, and willing to
participate in this Agreement through the Liquidity Termination Date in the
place of such Affected Liquidity Bank; provided that the Affected Liquidity Bank
receives payment in full, pursuant to an Assignment Agreement, of an amount
equal to such Liquidity Bank's Pro Rata Share of the Aggregate Invested Amount
and Yield owing to the Liquidity Banks and all accrued but unpaid fees and other
costs and expenses payable in respect of its Pro Rata Share of the Receivable
Interests of the Liquidity Banks.
Section 12.3 Participations. Any Purchaser may, in the ordinary course of
its business at any time sell to one or more Persons (each such Person, a
"PARTICIPANT") participating interests in its interests in the Receivable
Interests or any other interest of such Purchaser hereunder. Notwithstanding any
such sale by a Purchaser of a participating interest to a Participant, such
Purchaser's rights and obligations under this Agreement shall remain unchanged,
such Purchaser shall remain solely responsible for the performance of its
obligations hereunder, and Seller, Blue Ridge and the Agent shall continue to
deal solely and directly with such Purchaser, as applicable, in connection with
such Purchaser's rights and obligations under this Agreement. Each Purchaser
agrees that any agreement between such Purchaser and any such Participant in
respect of such participating interest shall not restrict such Purchaser's right
to agree to any amendment, supplement, waiver or modification to this Agreement,
except for any amendment, supplement, waiver or modification described in
Section 13.1(b)(i). No Participant shall be entitled to receive any
indemnification rights, benefits or payments direct from Seller under Section
10.1.1.
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ARTICLE XIII.
MISCELLANEOUS
Section 13.1 Waivers and Amendments.
(a) No failure or delay on the part of the Agent or any Purchaser in
exercising any power, right or remedy under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or remedy preclude any other further exercise thereof or the exercise of
any other power, right or remedy. The rights and remedies herein provided shall
be cumulative and nonexclusive of any rights or remedies provided by law. Any
waiver of this Agreement shall be effective only in the specific instance and
for the specific purpose for which given.
(b) No provision of this Agreement may be amended, supplemented,
modified or waived except in writing in accordance with the provisions of this
Section 13.1(b). Blue Ridge, Seller and the Agent, at the direction of the
Required Liquidity Banks, 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 Blue Ridge and each affected Liquidity
Bank, (A) extend the Liquidity Termination Date or the date of any payment or
deposit of Collections by Seller or the Servicer, (B) reduce the rate or extend
the time of payment of Yield or any CP Costs (or any component of Yield or CP
Costs), (C) reduce any fee payable to the Agent for the benefit of any
Purchaser, (D) change the Invested Amount of any Receivable Interest, (E) amend,
modify or waive any provision of the definition of Required Liquidity Banks or
this Section 13.1(b), (F) consent to or permit the assignment or transfer by
Seller of any of its rights and obligations under this Agreement, (G) change the
definition of "ELIGIBLE RECEIVABLE," "LOSS RESERVE," "DILUTION RESERVE," "YIELD
RESERVE," "SERVICING RESERVE," "SERVICING FEE RATE," "REQUIRED RESERVE" or
"REQUIRED RESERVE FACTOR FLOOR" 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 that would circumvent the intention of the
restrictions set forth in such clauses; or
(ii) without the written consent of the then Agent, amend, modify
or waive any provision of this Agreement if the effect thereof is to affect the
rights or duties of such Agent,
AND ANY MATERIAL AMENDMENT, WAIVER OR OTHER MODIFICATION OF THIS AGREEMENT SHALL
REQUIRE SATISFACTION OF THE RATING AGENCY CONDITION.
Section 13.2 Notices. Except as provided in this Section 13.2, all
communications and notices provided for hereunder shall be in writing (including
bank wire, telecopy, e-mail or electronic facsimile transmission or similar
writing) and shall be given to the other parties hereto at their respective
addresses, e-mail addresses or telecopy numbers set forth on the signature
38
pages hereof or at such other address or telecopy number as such Person may
hereafter specify for the purpose of notice to each of the other parties hereto.
Each such notice or other communication shall be effective (i) if given by
telecopy, upon the receipt thereof, (ii) if given by mail, three (3) Business
Days after the time such communication is deposited in the mail with first class
postage prepaid, (iii) if given by e-mail, upon sender's receipt of an
acknowledgement from the intended recipient of a return e-mail, which may be
delivered through a "request a read receipt for this message" function, as
available, or other written acknowledgement, in each case acknowledging that
sender's e-mail has been read or (iv) if given by any other means, when received
at the address specified in this Section 13.2. Seller hereby authorizes the
Agent to effect Purchases and Interest Period and Yield Rate selections based on
telephonic notices made by any Person whom the Agent in good faith believes to
be acting on behalf of Seller. Seller agrees to deliver promptly to the Agent a
written confirmation of each telephonic notice signed by an authorized officer
of Seller; PROVIDED, HOWEVER, the absence of such confirmation shall not affect
the validity of such notice. If the written confirmation differs from the action
taken by the Agent, the records of the Agent shall govern absent manifest error.
Section 13.3 Protection of Agent's Security Interest.
(a) Seller agrees that from time to time, at its expense, it will
promptly execute and deliver all instruments and documents, and take all
actions, that may be necessary or desirable, or that the Agent may request, to
perfect, protect or more fully evidence the Agent's security interest in the
Purchased Assets, 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 Seller or the Servicer to, notify the Obligors of Receivables, at
Seller's expense, of the ownership or security interests of the Purchasers under
this Agreement and may also direct that payments of all amounts due or that
become due under any or all Receivables be made directly to the Agent or its
designee. Seller or the Servicer (as applicable) shall, at the Agent's request,
withhold the identities of the Agent and the Purchasers in any such
notification.
(b) If any Seller Party fails to perform any of its obligations
hereunder, the Agent or Blue Ridge may (but shall not be required to), after
delivery of notice to such Seller Party (which notice shall not be required
after the occurrence of an Amortization Event), perform, or cause performance
of, such obligations, and the Agent's or Blue Ridge's costs and expenses
incurred in connection therewith shall be payable by Seller as provided in
Section 10.3. Each Seller Party irrevocably authorizes the Agent at any time and
from time to time in the sole discretion of the Agent, and appoints the Agent as
its attorney-in-fact, to act on behalf of such Seller Party (i) to execute on
behalf of 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 Blue Ridge 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 Agent's security
interest in the Purchased Assets, for the benefit of the Secured Parties. This
appointment is coupled with an interest and is irrevocable. From and after July
1, 2005: (A) each of the Seller Parties hereby authorizes the Agent to file
financing statements and other filing or recording documents with respect to the
Receivables and Related Security (including any amendments thereto, or
continuation or termination statements thereof), without the signature or other
authorization of
39
such Seller Party, in such form and in such offices as the Agent reasonably
determines appropriate to perfect or maintain the perfection of the security
interest of the Agent hereunder, (B) each of the Seller Parties acknowledges and
agrees that it is not authorized to, and will not, file financing statements or
other filing or recording documents with respect to the Receivables or Related
Security (including any amendments thereto, or continuation or termination
statements thereof), without the express prior written approval by the Agent,
consenting to the form and substance of such filing or recording document, and
(C) each of the Seller Parties approves, authorizes and ratifies any filings or
recordings made by or on behalf of the Agent in connection with the perfection
of the security interests in favor of Seller or the Agent.
Section 13.4 Confidentiality.
(a) Each of the Seller Parties shall maintain and shall cause each of
its employees and officers to maintain the confidentiality of this Agreement and
the other confidential or proprietary information with respect to the Agent and
Blue Ridge and their respective businesses obtained by it or them in connection
with the structuring, negotiating and execution of the transactions contemplated
herein, except that such Seller Party and its officers and employees may
disclose such information to such Seller Party's external accountants and
attorneys and as required by any applicable law or order of any judicial or
administrative proceeding.
(b) Anything herein to the contrary notwithstanding, each Seller Party
hereby consents to the disclosure of any nonpublic information with respect to
it (i) to the Agent, the Liquidity Banks or Blue Ridge by each other, (ii) by
the Agent or Blue Ridge to any prospective or actual assignee or participant of
any of them and (iii) by the Agent to any rating agency, Commercial Paper dealer
or provider of a surety, guaranty or credit or liquidity enhancement to Blue
Ridge or any entity organized for the purpose of purchasing, or making loans
secured by, financial assets for which Wachovia acts as the administrative agent
and to any officers, directors, employees, outside accountants and attorneys of
any of the foregoing, PROVIDED THAT each such Person is informed of the
confidential nature of such information. In addition, Blue Ridge 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).
(c) Notwithstanding any other express or implied agreement to the
contrary, the parties hereto agree that each of them and each of their
employees, representatives, and other agents may disclose to any and all
Persons, without limitation of any kind, the tax treatment and tax structure of
the transaction and all materials of any kind (including opinions or other tax
analyses) that are provided to any of them relating to such tax treatment and
tax structure, except where confidentiality is reasonably necessary to comply
with U.S. federal or state securities laws. For purposes of this paragraph, the
terms "tax treatment" and "tax structure" have the meanings specified in
Treasury Regulation section 1.6011-4(c).
Section 13.5 Bankruptcy Petition. Seller, the Servicer, the Agent and each
Liquidity Bank hereby covenants and agrees that, prior to the date that is one
year and one day after the payment in full of all outstanding senior
indebtedness of Blue Ridge, it will not institute against, or join any other
Person in instituting against, Blue Ridge any bankruptcy, reorganization,
40
arrangement, insolvency or liquidation proceedings or other similar proceeding
under the laws of the United States or any state of the United States.
Section 13.6 Limitation of Recourse and Liability.
(a) Except with respect to any claim arising out of the willful
misconduct or gross negligence of Blue Ridge, the Agent or any Liquidity Bank,
no claim may be made by any Seller Party or any other Person against Blue Ridge,
the Agent or any Liquidity Bank or their respective Affiliates, directors,
officers, employees, attorneys or agents for any special, indirect,
consequential or punitive damages in respect of any claim for breach of contract
or any other theory of liability arising out of or related to the transactions
contemplated by this Agreement, or any act, omission or event occurring in
connection therewith; and each Seller Party hereby waives, releases, and agrees
not to sue upon any claim for any such damages, whether or not accrued and
whether or not known or suspected to exist in its favor.
(b) No recourse under or with respect to any obligation, covenant or
agreement (including, without limitation, the payment of any fees or any other
obligations) of any Purchaser as contained in this Agreement or any other
agreement, instrument or document entered into by it pursuant hereto or in
connection herewith shall be had against any administrator of such Purchaser or
any incorporator, affiliate, stockholder, officer, employee or director of such
Purchaser or of any such administrator, as such, by the enforcement of any
assessment or by any legal or equitable proceeding, by virtue of any statute or
otherwise; it being expressly agreed and understood that the agreements of such
Purchaser contained in this Agreement and all of the other agreements,
instruments and documents entered into by it pursuant hereto or in connection
herewith are, in each case, solely the corporate obligations of such Purchaser,
and that no personal liability whatsoever shall attach to or be incurred by any
administrator of such Purchaser or any incorporator, stockholder, affiliate,
officer, employee or director of such Purchaser or of any such administrator, as
such, or any other of them, under or by reason of any of the obligations,
covenants or agreements of such Purchaser contained in this Agreement or in any
other such instruments, documents or agreements, or that are implied therefrom,
and that any and all personal liability of every such administrator of such
Purchaser and each incorporator, stockholder, affiliate, officer, employee or
director of such Purchaser or of any such administrator, or any of them, for
breaches by such Purchaser of any such obligations, covenants or agreements,
which liability may arise either at common law or at equity, by statute or
constitution, or otherwise, is hereby expressly waived as a condition of and in
consideration for the execution of this Agreement. The provisions of this
Section 13.6 shall survive the termination of this Agreement.
(c) Notwithstanding anything in this Agreement to the contrary, Blue
Ridge shall not have any obligation to pay any amount required to be paid by it
hereunder in excess of any amount available to it after paying or making
provision for the payment of its Commercial Paper. All payment obligations of
Blue Ridge hereunder are contingent on the availability of funds in excess of
the amounts necessary to pay its Commercial Paper; and each of the other parties
hereto agrees that it will not have a claim under Section 101(5) of the
Bankruptcy Code if and to the extent that any such payment obligation owed to it
by Blue Ridge exceeds the amount available to Blue Ridge to pay such amount
after paying or making provision for the payment of its Commercial Paper.
41
Section 13.7 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, without regard to the
principles of conflicts of laws thereof OTHER THAN SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW (EXCEPT IN THE CASE OF THE OTHER TRANSACTION DOCUMENTS, TO THE
EXTENT OTHERWISE EXPRESSLY STATED THEREIN) AND EXCEPT TO THE EXTENT THAT THE
PERFECTION OF THE OWNERSHIP INTEREST OF SELLER OR THE SECURITY INTEREST OF THE
AGENT, FOR THE BENEFIT OF THE SECURED PARTIES, IN ANY OF THE COLLATERAL IS
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
Section 13.8 CONSENT TO JURISDICTION. EACH PARTY TO THIS AGREEMENT HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED
BY SUCH PERSON PURSUANT TO THIS AGREEMENT, AND EACH SUCH PARTY HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.
NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY PURCHASER TO BRING
PROCEEDINGS AGAINST ANY SELLER PARTY IN THE COURTS OF ANY OTHER JURISDICTION.
ANY JUDICIAL PROCEEDING BY ANY SELLER PARTY AGAINST THE AGENT OR ANY PURCHASER
OR ANY AFFILIATE OF THE AGENT OR ANY PURCHASER INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH SELLER PARTY PURSUANT TO THIS
AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK, NEW YORK.
Section 13.9 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES TRIAL BY
JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ANY
SELLER PARTY PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER OR THEREUNDER.
Section 13.10 Integration; Binding Effect; Survival of Terms.
(a) This Agreement and each other Transaction Document contain the
final and complete integration of all prior expressions by the parties hereto
with respect to the subject matter hereof and shall constitute the entire
agreement among the parties hereto with respect to the subject matter hereof
superseding all prior oral or written understandings.
42
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns
(including any trustee in bankruptcy). This Agreement shall create and
constitute the continuing obligations of the parties hereto in accordance with
its terms and shall remain in full force and effect until terminated in
accordance with its terms; PROVIDED, HOWEVER, that the rights and remedies with
respect to (i) any breach of any representation and warranty made by any Seller
Party pursuant to Article V, (ii) the indemnification and payment provisions of
Article X, and Sections 13.4 and 13.5 shall be continuing and shall survive any
termination of this Agreement.
(c) Each of the Seller Parties, Blue Ridge and the Agent hereby
acknowledges and agrees that the Liquidity Banks are hereby made express third
party beneficiaries of this Agreement and each of the other Transaction
Documents.
Section 13.11 Counterparts; Severability; Section References. This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one and
the same Agreement. Delivery of an executed counterpart of a signature page to
this Agreement by telecopier shall be effective as delivery of a manually
executed counterpart of a signature page to this Agreement. Any provisions of
this Agreement which are prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. Unless otherwise
expressly indicated, all references herein to "ARTICLE," "SECTION," "SCHEDULE"
or "EXHIBIT" shall mean articles and sections of, and schedules and exhibits to,
this Agreement.
Section 13.12 Characterization.
(a) It is the intention of the parties hereto that each Purchase
hereunder shall constitute and be treated as an absolute and irrevocable sale,
which Purchase shall provide the Purchasers 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 Seller; PROVIDED, HOWEVER, that (i) Seller shall be liable to the Purchasers
and the Agent for all representations, warranties, covenants and indemnities
made by 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 the Agent or any assignee thereof of any obligation of Seller or any
Originator or any other person arising in connection with the Receivables, the
Related Security, or the related Contracts, or any other obligations of Seller
or any Originator.
(b) In addition to any ownership interest which the Agent or the
Purchasers may from time to time acquire pursuant hereto, Seller hereby grants
to the Agent for the ratable benefit of Secured Parties a valid and perfected
security interest in all of Seller's right, title and interest in, to and under
all Receivables now existing or hereafter arising, the Collections, each
Lock-Box, each Collection Account, all Related Security, all other rights and
payments relating to such Receivables, and all proceeds of any of the foregoing
prior to all other liens on and security interests therein to secure the prompt
and complete payment of the Aggregate Unpaids. To the fullest extent permitted
by applicable law, Seller hereby authorizes the Agent and its
43
counsel to file the UCC financing statements (and any and all amendments thereto
and continuations thereof), which financing statements may include "all-assets"
descriptions of collateral, necessary or desirable in the opinion of the Agent
to perfect or maintain the perfection of the Agent's security interest granted
herein or any portion thereof, in each of the foregoing cases, without the
signature and without further authorization of Seller. The Agent, on behalf of
the Secured Parties, shall have, in addition to the rights and remedies that it
may have under this Agreement, all other rights and remedies provided to a
secured creditor under the UCC and other applicable law, which rights and
remedies shall be cumulative.
(signature pages follow)
44
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers or attorneys-in-fact as
of the date hereof.
DEJ 98 FINANCE, LLC
By: /s/ Thomas B. Sabol
------------------------------------
Name: Thomas B. Sabol
Title: Chief Manager and Secretary
Address:
DEJ 98 Finance, LLC
200 Clinton Avenue
Suite 1100
Huntsville, Alabama 35801
Attention: Thomas B. Sabol
Phone: (256) 580-3625
Fax: (256) 580-3996
E-mail: sabolt@wlv.com
WOLVERINE FINANCE, LLC
By: /s/ Thomas B. Sabol
------------------------------------
Name: Thomas B. Sabol
Title: Vice Manager & Treasurer
Address:
Wolverine Finance, LLC
200 Clinton Avenue
Suite 1000
Huntsville, Alabama 35801
Attention: Thomas B. Sabol
Phone: (256) 580-3625
Fax: (256) 580-3996
E-mail: sabolt@wlv.com
S-1
[Signature Page to Receivables Purchase Agreement]
WOLVERINE TUBE, INC.
By: /s/ Johann R. Manning, Jr.
----------------------------------------
Name: Johann R. Manning, Jr.
Title: President and Cheif Operating Officer
Address:
Wolverine Tube, Inc.
200 Clinton Avenue
Suite 1000
Huntsville, Alabama 35801
Attention: Thomas B. Sabol
Phone: (256) 580-3625
Fax: (256) 580-3996
E-mail: sabolt@wlv.com
S-2
[Signature Page to Receivables Purchase Agreement]
BLUE RIDGE ASSET FUNDING CORPORATION
BY: WACHOVIA CAPITAL MARKETS, LLC, ITS ATTORNEY-IN-FACT
By: /s/ DOUGLAS R. WILSON, SR.
------------------------------------
Name: DOUGLAS R. WILSON, SR.
Title: VICE PRESIDENT
Address:
Blue Ridge Asset Funding Corporation
c/o Wachovia Bank, National Association
301 S. College Street
FLR TRW 16 NC0171
Charlotte, NC 28288
Attention: Douglas R. Wilson, Sr.
Phone: (704) 374-2520
Fax: (704) 383-9579
E-mail: doug.wilson@wachovia.com
WITH A COPY TO:
Blue Ridge Asset Funding Corporation
c/o AMACAR Group, L.L.C.
6525 Morrison Blvd., Suite 318
Charlotte, North Carolina 28211
Attention: Douglas K. Johnson
Phone: (704) 365-0569
Fax: (704) 365-1362
E-mail: dkjohnson@AMACAR.com
S-3
[Signature Page to Receivables Purchase Agreement]
WACHOVIA BANK, NATIONAL ASSOCIATION, as a Liquidity Bank and as Agent
By: /s/ Elizabeth R. Wagner
------------------------------------
Name: Elizabeth R. Wagner
Title: Managing Director
Address:
Wachovia Bank, National Association
191 Peachtree Street, N.E.
22nd Floor, Mail Stop GA-8088
Atlanta, Georgia 30303
Attention: Elizabeth Wagner
Phone: (404) 332-1398
Fax: (404) 332-5152
E-mail: elizabeth.wagner@wachovia.com
S-4
[Signature Page to Receivables Purchase Agreement]
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):
"ABL CREDIT AGREEMENT" has the meaning set forth in the definition of
the term "Bank Agent".
"ADJUSTED DILUTION RATIO" means, at any time, the rolling average of
the Dilution Ratio for the 12 Calculation Periods then most recently ended.
"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, controlled by, or under direct or indirect
common control with, such Person or any Subsidiary of such Person. A Person
shall be deemed to control another Person if the controlling Person owns 10% or
more of any class of voting securities of the controlled Person or possesses,
directly or indirectly, the power to direct or cause the direction of the
management or policies of the controlled Person, whether through ownership of
stock, by contract or otherwise.
"AGENT" has the meaning set forth in the preamble to this Agreement.
"AGENT'S ACCOUNT" means account #8735-098787 at Wachovia Bank,
National Association, ABA #053100494.
"AGGREGATE INVESTED AMOUNT" means, on any date of determination, the
aggregate Invested Amount of all Receivable Interests outstanding on such date.
"AGGREGATE REDUCTION" has the meaning specified in Section 1.3.
"AGGREGATE UNPAIDS" means, at any time, an amount equal to the sum of
(i) the Aggregate Invested Amount, PLUS (ii) all Recourse Obligations (whether
due or accrued) at such time.
"AGREEMENT" means this Receivables Purchase Agreement, as it may be
amended or modified and in effect from time to time.
"ALTERNATE BASE RATE" means for any day, (i) the rate per annum equal
to the higher as of such day of (x) the Prime Rate, or (y) one-half of one
percent (0.50%) above the Federal Funds Rate PLUS (ii) the Applicable Base Rate
Percentage per annum then in effect. For purposes of determining the Alternate
Base Rate for any day, changes in the Prime Rate or the Federal Funds Rate shall
be effective on the date of each such change.
A-1
"AMORTIZATION DATE" means the earliest to occur of (i) the Business
Day immediately prior to the occurrence of an Event of Bankruptcy with respect
to any Seller Party, (ii) the Business Day specified in a written notice from
the Agent following the occurrence of any other Amortization Event, and (iii)
the date which is ten (10) Business Days after the Agent's receipt of written
notice from Seller that it wishes to terminate the facility evidenced by this
Agreement.
"AMORTIZATION EVENT" has the meaning specified in Article IX.
"APPLICABLE BASE RATE PERCENTAGE" has the meaning specified in the Fee
Letter.
"APPLICABLE LIBO RATE PERCENTAGE" has the meaning specified in the Fee
Letter.
"APPLICABLE PERCENTAGE" has the meaning specified in the Fee Letter.
"AUTHORIZED OFFICER" means, with respect to any Person, its president,
corporate controller, treasurer or chief financial officer.
"BANK AGENT" means Wachovia Bank, National Association, as
administrative agent for the financial institutions party to that certain
Amended and Restated Credit Agreement, dated as of April 28, 2005 (as the same
may be amended, restated or otherwise modified from time to time, the "ABL
CREDIT AGREEMENT"), and its successors and assigns.
"BEST POSSIBLE DSO" means, as of any date of determination, the
product of (i) a fraction, the numerator of which is the average, during the
three most recently ended fiscal months of the Originators, of the aggregate
Outstanding Balance of Current Receivables as of the last day of each such
fiscal month, and the denominator of which is the average, during such three
fiscal month period, of the aggregate sales generated by the Originators during
each such fiscal month, MULTIPLIED BY (ii) 30.
"BLUE RIDGE" has the meaning set forth in the preamble to this
Agreement.
"BROKEN FUNDING COSTS" means for any Receivable Interest which: (i)
has its Invested Amount reduced without compliance by Seller with the notice
requirements hereunder or (ii) does not become subject to an Aggregate Reduction
following the delivery of any Reduction Notice or (iii) is assigned by Blue
Ridge to the Liquidity Banks under the Liquidity Agreement or terminated prior
to the date on which it was originally scheduled to end; an amount equal to the
excess, if any, of (A) the CP Costs or Yield (as applicable) that would have
accrued during the remainder of the Interest Periods or the tranche periods for
Commercial Paper determined by the Agent to relate to such Receivable Interest
(as applicable) subsequent to the date of such reduction, assignment or
termination (or in respect of clause (ii) above, the date such Aggregate
Reduction was designated to occur pursuant to the Reduction Notice) of the
Invested Amount of such Receivable Interest if such reduction, assignment or
termination had not occurred or such Reduction Notice had not been delivered,
over (B) the sum of (x) to the extent all or a portion of such Invested Amount
is allocated to another Receivable Interest, the amount of CP Costs or Yield
actually accrued during the remainder of such period on such Invested Amount for
the new Receivable Interest, and (y) to the extent such Invested Amount is not
allocated to another Receivable Interest, the income, if any, actually received
during the
A-2
remainder of such period by the holder of such Receivable Interest from
investing the portion of such Invested Amount not so allocated. All Broken
Funding Costs shall be due and payable hereunder upon demand.
"BUSINESS DAY" means any day on which banks are not authorized or
required to close in New York, New York or Atlanta, Georgia, and The Depository
Trust Company of New York is open for business, and, if the applicable Business
Day relates to any computation or payment to be made with respect to the LIBO
Rate, any day on which dealings in dollar deposits are carried on in the London
interbank market.
"CALCULATION PERIOD" means each fiscal month of the Performance
Guarantor or portion thereof which elapses during the term of the Agreement. The
final Calculation Period shall terminate on the "Termination Date" under and as
defined in the Receivables Sale Agreement. As used in Section 3.2, Section 3.3,
and the definition of the term "Servicing Fee" and as used in the Fee Letter,
the first Calculation Period shall commence on the date hereof; otherwise
Calculation Period may cover a period before the date hereof, as the context
requires.
"CAPITAL EXPENDITURES" means any current expenditure by the
Consolidated Parties for fixed or capital assets as reflected on the financial
statements of the Consolidated Parties, as prepared in accordance with GAAP.
"CHANGE OF CONTROL" means (a) the acquisition by any Person, or two or
more Persons acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 20% or more of the outstanding shares of voting Equity
Interests in Wolverine Finance, or (b) the Performance Guarantor ceases to own,
directly or indirectly, 49% of outstanding voting Equity Interests in Seller.
"COLLATERAL AGENT" means Wachovia Bank, National Association, acting
as collateral agent under the Collection Account Agreement for the Agent and the
Bank Agent.
"COLLECTION ACCOUNT" means each concentration account, depositary
account, lock-box account or similar account in which any Collections are
collected or deposited and which is listed on Exhibit IV.
"COLLECTION ACCOUNT AGREEMENT" means an agreement substantially in the
form of Exhibit VI among an Seller, Wolverine Finance, the Collateral Agent and
a Collection Bank.
"COLLECTION BANK" means, at any time, any of the banks holding one or
more Collection Accounts.
"COLLECTIONS" means, with respect to any Receivable, all cash
collections and other cash proceeds in respect of such Receivable, including,
without limitation, all Finance Charges or other related amounts accruing in
respect thereof and all cash proceeds of Related Security with respect to such
Receivable.
"COMMERCIAL PAPER" means promissory notes of Blue Ridge issued by Blue
Ridge in the commercial paper market.
A-3
"COMMITMENT" means, for each Liquidity Bank, the commitment of such
Liquidity Bank to purchase Receivable Interests from Seller in an amount not to
exceed (i) in the aggregate, the amount set forth opposite such Liquidity Bank's
name on Schedule A to this Agreement, as such amount may be modified in
accordance with the terms hereof and (ii) with respect to any individual
purchase hereunder, its Pro Rata Share of the Purchase Price therefor.
"CONTINGENT OBLIGATION" of a Person means any agreement, undertaking
or arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement, take-or-pay contract or application for a letter of credit.
"CONSOLIDATED CASH INTEREST EXPENSE" means, for any applicable period
of computation, whether expensed or capitalized, all cash interest expense of
the Consolidated Parties for such period, net of interest income for such
period, all as determined in accordance with GAAP.
"CONSOLIDATED CASH TAXES" means, for any applicable period of
computation, the aggregate of all taxes of the Consolidated Parties determined
in accordance with applicable law and GAAP applied on a consistent basis, to the
extent the same are paid in cash during such period.
"CONSOLIDATED EBITDA" means, for any applicable period of computation,
without duplication, the sum of (i) Consolidated Net Income for such period, but
excluding therefrom all extraordinary items of income or loss, PLUS (ii) the
aggregate amount of depreciation and amortization charges made in calculating
Consolidated Net Income for such period, PLUS (iii) aggregate Consolidated
Interest Expense for such period, PLUS (iv) the aggregate amount of all income
taxes reflected on the consolidated statements of income of the Consolidated
Parties for such period. Except as otherwise provided herein, the applicable
period of computation shall be for the four (4) consecutive quarters ending as
of the date of determination.
"CONSOLIDATED FIXED CHARGES" means, for any applicable period of
computation, without duplication, the sum of (i) all Consolidated Cash Interest
Expense for the applicable period plus (ii) all Consolidated Scheduled Funded
Debt Payments for the applicable period.
"CONSOLIDATED FUNDED DEBT" means, as of the date of determination, all
Funded Debt of the Performance Guarantor and its consolidated Subsidiaries,
determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, for any applicable period of
computation, whether expensed or capitalized, all interest expense of the
Consolidated Parties for such period, net of interest income for such period,
all as determined in accordance with GAAP.
"CONSOLIDATED PARTIES" means the Performance Guarantor and all of its
consolidated Subsidiaries whether direct or indirect and whether now owned or
hereafter acquired.
A-4
"CONSOLIDATED NET INCOME" means, for any applicable period of
computation, the net income after taxes of the Consolidated Parties for such
period, as adjusted for (i) non-cash adjustments to Consolidated Net Income due
to the effect of changes in accounting methods required by GAAP and (ii) the tax
adjusted net value of (a) the non-cash adjustments to Consolidated Net Income on
account of gains or losses resulting from changes in the metal variance account
required by the mark to market of the Copper Hedge, as determined in accordance
with GAAP and (b) the non-cash adjustments to valuations of inventory that
consists of copper covered by the Copper Hedge resulting from the Performance
Guarantor's mark to market of inventory levels under the Copper Hedge at the
time of testing (the Performance Guarantor shall provide the Agent with copies
of reconciliation of these adjustments when and as provided to the Bank Agent
pursuant to and in accordance with the ABL Credit Agreement).
"CONSOLIDATED SCHEDULED FUNDED DEBT PAYMENTS" means, as of the end of
each fiscal quarter (or month, as applicable) of the Company and its
consolidated Subsidiaries on a consolidated basis, the sum of all scheduled
payments of principal on Consolidated Funded Debt (other than intercompany
Indebtedness) for the four (4) consecutive quarters (or 12 consecutive months,
as applicable) beginning on such date (including the principal component of
payments due on capital leases or under any synthetic lease, tax retention
operating lease, off-balance sheet loan or similar off-balance sheet financing
product during the applicable period beginning on such date).
"COPPER HEDGE" means the Trading Agreements between PB Financial, Inc.
and Wolverine Tube, Inc., Wolverine Tube (Canada) Inc. and Wolverine Joining
Technologies, LLC related to hedging copper and any other copper hedging
contract permitted under the ABL Credit Agreement.
"CONTRACT" means, with respect to any Receivable, any and all
instruments, agreements, invoices or other writings pursuant to which such
Receivable arises or which evidences such Receivable.
"CP COST PAYMENT DATE" means the 22nd day of each month after the date
of this Agreement (or if any such day is not a Business Day, the next succeeding
Business Day thereafter).
"CP COSTS" means, for each day, the sum of (i) discount or interest
accrued on Pooled Commercial Paper on such day, PLUS (ii) any and all accrued
commissions in respect of placement agents and Commercial Paper dealers, and
issuing and paying agent fees incurred, in respect of such Pooled Commercial
Paper for such day, PLUS (iii) other costs associated with funding small or
odd-lot amounts with respect to all receivable purchase or financing facilities
which are funded by Pooled Commercial Paper for such day, minus (iv) any accrual
of income net of expenses received on such day from investment of collections
received under all receivable purchase or financing facilities funded
substantially with Pooled Commercial Paper, minus (v) any payment received on
such day net of expenses in respect of Broken Funding Costs related to the
prepayment of any investment of Blue Ridge pursuant to the terms of any
receivable purchase or financing facilities funded substantially with Pooled
Commercial Paper. In addition to the foregoing costs, if Seller shall request
any Purchase during any period of time determined by the Agent in its sole
discretion to result in incrementally higher CP Costs applicable to such
Purchase, the principal associated with any such Purchase shall, during such
A-5
period, be deemed to be funded by Blue Ridge in a special pool (which may
include capital associated with other receivable purchase or financing
facilities) for purposes of determining such additional CP Costs applicable only
to such special pool and charged each day during such period against such
principal.
"CREDIT AND COLLECTION POLICY" means Seller's credit and collection
policies and practices relating to Contracts and Receivables existing on the
date hereof and summarized in Exhibit VII hereto, as modified from time to time
in accordance with this Agreement.
"CURRENT RECEIVABLE" means a Receivable that has not aged beyond its
originally stated due date.
"CUT-OFF DATE" means the last day of a Calculation Period.
"DAYS SALES OUTSTANDING" means, as of any day, an amount equal to the
product of (x) 91, multiplied by (y) the amount obtained by dividing (i) the
aggregate outstanding balance of Receivables as of the most recent Cut-Off Date,
by (ii) the aggregate sales generated by the Originators during the three (3)
Calculation Periods including and immediately preceding such Cut-Off Date.
"DEEMED COLLECTIONS" means Collections deemed received by Seller under
Section 1.4(a).
"DEFAULT HORIZON RATIO" means, as of any Cut-Off Date, the ratio
(expressed as a decimal) computed by dividing (i) the aggregate sales generated
by the Originators during the three Calculation Periods ending on such Cut-Off
Date, by (ii) the Net Pool Balance as of such Cut-off Date.
"DEFAULT RATE" means a rate per annum equal to the sum of (i) the
Alternate Base Rate PLUS (ii) the Applicable Base Rate Percentage then in effect
PLUS (iii) 2.00%, changing when and as the Alternate Base Rate changes.
"DEFAULT RATIO" means, as of any Cut-Off Date, the ratio (expressed as
a percentage) computed by dividing (x) the total amount of Receivables which
became Defaulted Receivables during the Calculation Period that includes such
Cut-Off Date, by (y) the aggregate sales generated by the Originators during the
Calculation Period occurring three months prior to the Calculation Period ending
on such Cut-Off Date.
"DEFAULTED RECEIVABLE" means a Receivable: (i) as to which the Obligor
thereof has suffered an Event of Bankruptcy; (ii) which, consistent with the
Credit and Collection Policy, would be written off Seller's books as
uncollectible; or (iii) as to which any payment, or part thereof, remains unpaid
for 61 days or more from the original due date for such payment.
"DELINQUENCY RATIO" means, at any time, a percentage equal to (i) the
aggregate Outstanding Balance of all Receivables that were Delinquent
Receivables at such time divided by (ii) the aggregate Outstanding Balance of
all Receivables at such time.
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"DELINQUENT RECEIVABLE" means a Receivable as to which any payment, or
part thereof, remains unpaid for 31-60 days from the original due date for such
payment.
"DESIGNATED OBLIGOR" means an Obligor indicated by the Agent to Seller
in writing.
"DILUTION" means the amount of any reduction or cancellation of the
Outstanding Balance of a Receivable as described in Section 1.4(a).
"DILUTION HORIZON RATIO" means, as of any Cut-off Date, a ratio
(expressed as a decimal), computed by dividing (i) the aggregate sales generated
by the Originators during the Calculation Period (or any other period as
established by the Agent by notice to Seller from time to time in Agent's
discretion based on Agent's analysis of results of Reviews conducted after the
date of the Agreement) ending on such Cut-Off Date, by (ii) the Net Pool Balance
as of such Cut-Off Date.
"DILUTION RATIO" means, as of any Cut-Off Date, a ratio (expressed as
a percentage), computed by dividing (i) the total amount of decreases in
Outstanding Balances due to Dilutions during the Calculation Period ending on
such Cut-Off Date, by (ii) the aggregate sales generated by the Originators
during the Calculation Period prior to the Calculation Period ending on such
Cut-Off Date.
"DILUTION RESERVE" means, for any Calculation Period, the product
(expressed as a percentage) of:
(a) the sum of (i) two (2) times the Adjusted Dilution Ratio as of the
immediately preceding Cut-Off Date, PLUS (ii) the Dilution Volatility Component
as of the immediately preceding Cut-Off Date, TIMES
(b) the Dilution Horizon Ratio as of the immediately preceding Cut-Off
Date.
"DILUTION VOLATILITY COMPONENT" means the product (expressed as a
percentage) of (i) the difference between (a) the highest three (3)-month
rolling average Dilution Ratio over the past 12 Calculation Periods and (b) the
Adjusted Dilution Ratio, and (ii) a fraction, the numerator of which is equal to
the ratio specified in (i)(a) of this definition and the denominator of which is
equal to the ratio specified in (i)(b) of this definition.
"DOWNGRADED LIQUIDITY BANK" means a Liquidity Bank which has been the
subject of a Downgrading Event.
"DOWNGRADING EVENT" with respect to any Person means the lowering of
the rating with regard to the short-term securities of such Person to below (i)
A-1 by S&P, or (ii) P-1 by Moody's.
"ELIGIBLE ASSIGNEE" means a commercial bank having a combined capital
and surplus of at least $250,000,000 with a rating of its (or its parent holding
company's) short-term securities equal to or higher than (i) A-1 by S&P and (ii)
P-1 by Moody's.
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"ELIGIBLE FOREIGN RECEIVABLE" means a Receivable, the Obligor of which
is United Technologies Corporation, American Standard Inc., Whirlpool
Corporation, General Electric Company, York International Corporation or any
wholly-owned subsidiary thereof.
"ELIGIBLE RECEIVABLE" means, at any time, a Receivable:
(i) the Obligor of which: (a) if a natural person, is a resident
of the United States or, if a corporation or other business organization, is
organized under the laws of the United States or any political subdivision
thereof and has its chief executive office in the United States, unless such
receivable is an Eligible Foreign Receivable; (b) is not an Affiliate of any of
the parties hereto; (c) is not a government or a governmental subdivision or
agency; and (d) is not a Designated Obligor,
(ii) which is not a Defaulted Receivable,
(iii) which is not owing from an Obligor as to which more than
50% of the aggregate Outstanding Balance of all Receivables owing from such
Obligor are Defaulted Receivables,
(iv) which by its terms is due and payable within 120 days of the
original billing date therefor and has not been outstanding for more than 90
days past such original billing date and has not had its payment terms extended
more than once; PROVIDED, HOWEVER, in the event that the Best Possible DSO
exceeds 40 days, the outstanding balance of Receivables payable within 120 days
of the original billing date therefor shall be deducted from the numerator set
forth in clause (i) of the definition of the term "Best Possible DSO" in an
amount necessary to cause the Best Possible DSO to be 40 days or less,
(v) which is an "account" or "chattel paper" within the meaning
of Section 9-106 and Section 9-105, respectively, of the UCC of all applicable
jurisdictions,
(vi) which is denominated and payable only in United States
dollars in the United States,
(vii) which arises under a Contract in a form which the Agent has
not deemed to be unacceptable in its reasonable discretion and which, together
with such Receivable, is in full force and effect and constitutes the legal,
valid and binding obligation of the related Obligor enforceable against such
Obligor in accordance with its terms subject to no offset, counterclaim or other
defense,
(viii) which arises under a Contract which (A) does not require
the Obligor under such Contract to consent to the transfer, sale, pledge or
assignment of the rights and duties of the applicable Originator or any of its
assignees under such Contract and (B) does not contain a confidentiality
provision that purports to restrict the ability of any Purchaser to exercise its
rights under this Agreement, including, without limitation, its right to review
the Contract,
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(ix) which arises under a Contract that contains an obligation to
pay a specified sum of money, contingent only upon the sale of goods or the
provision of services by the applicable Originator,
(x) which, together with the Contract related thereto, does not
contravene any law, rule or regulation applicable thereto (including, without
limitation, any law, rule and regulation relating to truth in lending, fair
credit billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy) and with respect to which no part of the
Contract related thereto is in violation of any such law, rule or regulation,
(xi) which satisfies all applicable requirements of the Credit
and Collection Policy,
(xii) which was generated in the ordinary course of the
applicable Originator's business,
(xiii) which arises solely from the sale of goods or the
provision of services to the related Obligor by the applicable Originator, and
not by any other Person (in whole or in part),
(xiv) as to which the Agent has not notified Seller that the
Agent has determined that such Receivable or class of Receivables is not
acceptable as an Eligible Receivable, including, without limitation, because
such Receivable arises under a Contract that is not acceptable to the Agent,
(xv) which is not subject to any dispute, counterclaim, right of
rescission, set-off, counterclaim or any other defense (including defenses
arising out of violations of usury laws) of the applicable Obligor against the
applicable Originator or any other Adverse Claim, and the Obligor thereon holds
no right as against such Originator to cause such Originator to repurchase the
goods or merchandise the sale of which shall have given rise to such Receivable
(except with respect to sale discounts effected pursuant to the Contract, or
defective goods returned in accordance with the terms of the Contract);
PROVIDED, HOWEVER, that if such dispute, offset, counterclaim or defense affects
only a portion of the Outstanding Balance of such Receivable, then such
Receivable may be deemed an Eligible Receivable to the extent of the portion of
such Outstanding Balance which is not so affected, and PROVIDED, FURTHER, that
Receivables of any Obligor which has any accounts payable by the applicable
Originator or by a wholly-owned Subsidiary of such Originator (thus giving rise
to a potential offset against such Receivables) may be treated as Eligible
Receivables to the extent that the Obligor of such Receivables has agreed
pursuant to a written agreement in form and substance satisfactory to the Agent,
that such Receivables shall not be subject to such offset,
(xvi) as to which the applicable Originator has satisfied and
fully performed all obligations on its part with respect to such Receivable
required to
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be fulfilled by it, and no further action is required to be performed by any
Person with respect thereto other than payment thereon by the applicable
Obligor,
(xvii) as to which each of the representations and warranties
contained in Sections 5.1(g), (i), (j), (r), (s), (t) and (u) is true and
correct,
(xviii) all right, title and interest to and in which has been
validly transferred by the applicable Originator directly to Seller under and in
accordance with the Receivables Sale Agreement, and Seller has good and
marketable title thereto free and clear of any Adverse Claim.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under common control with the Performance Guarantor within the
meaning of Section 414(b) or (c) of the Tax Code (and Sections 414(m) and (o) of
the Tax Code for purposes of provisions relating to Section 412 of the Tax
Code).
"EVENT OF BANKRUPTCY" shall be deemed to have occurred with respect to
a Person if either:
(a) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any court, seeking the liquidation,
reorganization, debt arrangement, dissolution, winding up, or composition or
readjustment of debts of such Person, the appointment of a trustee, receiver,
custodian, liquidator, assignee, sequestrator or the like for such Person or all
or substantially all of its assets, or any similar action with respect to such
Person under any law relating to bankruptcy, insolvency, reorganization, winding
up or composition or adjustment of debts, and such case or proceeding shall
continue undismissed, or unstayed and in effect, for a period of 60 consecutive
days; or an order for relief in respect of such Person shall be entered in an
involuntary case under the federal bankruptcy laws or other similar laws now or
hereafter in effect; or
(b) such Person shall commence a voluntary case or other proceeding
under any applicable bankruptcy, insolvency, reorganization, debt arrangement,
dissolution or other similar law now or hereafter in effect, or shall consent to
the appointment of or taking possession by a receiver, liquidator, assignee,
trustee (other than a trustee under a deed of trust, indenture or similar
instrument), custodian, sequestrator (or other similar official) for, such
Person or for any substantial part of its property, or shall make any general
assignment for the benefit of creditors, or shall be adjudicated insolvent, or
admit in writing its inability to pay its debts generally as they become due,
or, if a corporation or similar entity, its board of directors shall vote to
implement any of the foregoing.
"FACILITY ACCOUNT" means Seller's account no. 005-3313 at Mellon Bank,
N.A.
"FACILITY TERMINATION DATE" means the earlier of (i) the Liquidity
Termination Date and (ii) the Amortization Date.
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"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a fluctuating
interest rate per annum 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. Government 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 11:30 a.m. (New York time) for such day on such transactions
received by the Agent from three federal funds brokers of recognized standing
selected by it.
"FEE LETTER" means that certain letter agreement dated as of April 28,
2005 among Seller, the Agent, Parent and Blue Ridge, as it may be amended,
restated or otherwise modified and in effect from time to time.
"FINAL PAYOUT DATE" means the date on which all Aggregate Unpaids have
been paid in full and the Purchase Limit has been reduced to zero.
"FINANCE CHARGES" means, with respect to a Contract, any finance,
interest, late payment charges or similar charges owing by an Obligor pursuant
to such Contract.
"FOREIGN RECEIVABLE" means a Receivable the Obligor of which (a) if a
natural person, is a resident of a country other than the United States or (b)
if a corporation or other business organization, is organized under the laws of
a country other than the United State and has its chief executive office in a
country other than the United States.
"FIXED CHARGE COVERAGE RATIO" means, for any applicable period of
computation, the ratio of (i) Consolidated EBITDA LESS Unfinanced Capital
Expenditures LESS all Consolidated Cash Taxes paid during the applicable period
LESS cash dividends paid by the Performance Guarantor for the applicable period
to (ii) total Consolidated Fixed Charges. The applicable period of computation
shall be (a) for the purpose of determining the Applicable Percentage, the four
(4) consecutive quarters ending as of the date of determination, except with
respect to the Consolidated Scheduled Funded Debt Payments component of
Consolidated Fixed Charges, which shall be for the four (4) consecutive quarters
beginning as of the date of determination and (b) for the purpose of determining
compliance with Section 9.1(s) of the Agreement, the 12 consecutive month period
ending as of the date of determination, except with respect to the Consolidated
Scheduled Funded Debt Payments component of Consolidated Fixed Charges, which
shall be for the 12 consecutive month period beginning as of the date of
determination.
"FUNDED DEBT" means, without duplication, the sum of (a) all
Indebtedness (as such term is defined in the ABL Credit Agreement) of the
Consolidated Parties for borrowed money, (b) the principal portion of all
obligations of the Consolidated Parties under capital leases (including capital
leases incurred in accordance with the terms of Section 9.1 of the ABL Credit
Agreement), (c) all commercial letters of credit and the maximum or face amount
of all performance and standby letters of credit issued for the account of a
member of the Consolidated Parties, including, without duplication, all
unreimbursed draws thereunder, (d) all Guaranty Obligations (as such term is
defined in the ABL Credit Agreement) of the Consolidated Parties with respect to
Funded Debt of
A-11
another Person, (e) all Funded Debt of another entity secured by a lien on any
property of the Consolidated Parties, to the extent of the book value of the
property secured thereby, whether or not such Funded Debt has been assumed by a
member of the Consolidated Parties, (f) all Funded Debt of any partnership or
unincorporated joint venture to the extent a member of the Consolidated Parties
is legally obligated or has a reasonable expectation of being liable with
respect thereto, net of any assets of such partnership or joint venture and (g)
the principal balance outstanding under any synthetic lease, tax retention
operating lease, off-balance sheet loan or similar off-balance sheet financing
product of a member of the Consolidated Parties where such transaction is
considered borrowed money indebtedness for tax purposes but is classified as an
operating lease in accordance with GAAP.
"FUNDING AGREEMENT" means (i) this Agreement, (ii) the Liquidity
Agreement and (iii) any other agreement or instrument executed by any Funding
Source with or for the benefit of Blue Ridge.
"FUNDING SOURCE" means (i) any Liquidity Bank or (ii) any insurance
company, bank or other funding entity providing liquidity, credit enhancement or
back-up purchase support or facilities to Blue Ridge.
"GAAP" means generally accepted accounting principles in effect in the
United States of America as of the date of this Agreement.
"INCREMENTAL PURCHASE" means a purchase of one or more Receivable
Interests which increases the total outstanding Aggregate Invested Amount
hereunder.
"INDEBTEDNESS" of a Person means such Person's (i) obligations for
borrowed money, (ii) obligations representing the deferred purchase price of
property or services (other than accounts payable arising in the ordinary course
of such Person's business payable on terms customary in the trade), (iii)
obligations, whether or not assumed, secured by liens or payable out of the
proceeds or production from property now or hereafter owned or acquired by such
Person, (iv) obligations which are evidenced by notes, acceptances, or other
instruments, (v) capitalized lease obligations, (vi) net liabilities under
interest rate swap, exchange or cap agreements, (vii) Contingent Obligations and
(viii) liabilities in respect of unfunded vested benefits under plans covered by
Title IV of ERISA.
"INDEMNIFIED AMOUNTS" has the meaning specified in Section 10.1.
"INDEMNIFIED PARTY" has the meaning specified in Section 10.1.
"INDEPENDENT MANAGER" shall mean a member of the board of managers of
Seller who is not at such time, and has not been at any time during the
preceding five (5) years: (A) a director, officer, employee or affiliate of any
Originator or any of their respective Subsidiaries or Affiliates (other than
Seller), or (B) the beneficial owner (at the time of such individual's
appointment as an Independent Manager or at any time thereafter while serving as
an Independent Manager) of any of the outstanding common shares of Seller, any
Originator, or any of their respective Subsidiaries or Affiliates, having
general voting rights.
A-12
"INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement,
dated as of April 28, 2005, by and among the Bank Agent, the Agent, Wolverine
Finance, Seller and the Originators, as the same may be amended, restated or
otherwise modified from time to time.
"INTEREST PERIOD" means, with respect to any Receivable Interest
funded through a Liquidity Funding:
(a) if Yield for such Receivable Interest is calculated on the basis
of the LIBO Rate, a period of one month, or such other period as may be mutually
agreeable to the Agent and Seller, commencing on a Business Day selected by
Seller or the Agent pursuant to this Agreement. Such Interest Period shall end
on the day in the applicable succeeding calendar month which corresponds
numerically to the beginning day of such Interest Period, PROVIDED, HOWEVER,
that if there is no such numerically corresponding day in such succeeding month,
such Interest Period shall end on the last Business Day of such succeeding
month; or
(b) if Yield for such Receivable Interest is calculated on the basis
of the Alternate Base Rate, a period commencing on a Business Day selected by
Seller and agreed to by the Agent, PROVIDED THAT no such period shall exceed one
month.
If any Interest Period would end on a day which is not a Business Day, such
Interest Period shall end on the next succeeding Business Day, PROVIDED,
HOWEVER, that in the case of Interest Periods corresponding to the LIBO Rate, if
such next succeeding Business Day falls in a new month, such Interest Period
shall end on the immediately preceding Business Day. In the case of any Interest
Period which commences before the Facility Termination Date and would otherwise
end on a date occurring after the Facility Termination Date, such Interest
Period shall end on the Facility Termination Date. The duration of each Interest
Period which commences after the Facility Termination Date shall be of such
duration as selected by the Agent.
"INVESTED AMOUNT" of any Receivable Interest means, at any time, (A)
the Purchase Price of such Receivable Interest, minus (B) the sum of the
aggregate amount of Collections and other payments received by the Agent which
in each case are applied to reduce such Invested Amount in accordance with the
terms and conditions of this Agreement; PROVIDED THAT such Invested Amount shall
be restored (in accordance with Section 2.4) in the amount of any Collections or
other payments so received and applied if at any time the distribution of such
Collections or payments are rescinded, returned or refunded for any reason.
"LIBO RATE" means, for any Interest Period, (i) the rate per annum
determined on the basis of the offered rate for deposits in U.S. dollars of
amounts equal or comparable to the Invested Amount offered for a term comparable
to such Interest Period, which rates appear on a Bloomberg L.P. terminal,
displayed under the address "US0001M (Index) Q (Go)" effective as of 11:00 A.M.,
London time, two Business Days prior to the first day of such Interest Period,
PROVIDED that if no such offered rates appear on such page, the LIBO Rate for
such Interest Period will be the arithmetic average (rounded upwards, if
necessary, to the next higher 1/100th of 1%) of rates quoted by not less than
two major banks in New York, New York, selected by the Agent, at approximately
10:00 a.m.(New York time), two Business Days prior to the first day of such
Interest Period, for deposits in U.S. dollars offered by leading European banks
for a period
A-13
comparable to such Interest Period in an amount comparable to the Invested
Amount, divided by (b) one minus the maximum aggregate reserve requirement
(including all basic, supplemental, marginal or other reserves) which is imposed
against the Agent in respect of Eurocurrency liabilities, as defined in
Regulation D of the Board of Governors of the Federal Reserve System as in
effect from time to time (expressed as a decimal), applicable to such Interest
Period PLUS (ii) the Applicable LIBO Rate Percentage per annum then in effect.
The LIBO Rate shall be rounded, if necessary, to the next higher 1/16 of 1%.
"LIQUIDITY AGREEMENT" means that certain Liquidity Asset Purchase
Agreement dated as of April 28, 2005, by and among Blue Ridge, the Agent and the
Liquidity Banks, as the same may be amended, restated and/or otherwise modified
from time to time in accordance with the terms thereof.
"LIQUIDITY BANK" means each bank or financial institution from time to
time party hereto and to the Liquidity Agreement (other than Blue Ridge and
other than the Agent acting in its capacity as the Agent hereunder or
thereunder).
"LIQUIDITY COMMITMENT" means, as to each Liquidity Bank, its
commitment under the Liquidity Agreement. Each Liquidity Bank's Liquidity
Commitment shall equal 102% of the its Commitment hereunder.
"LIQUIDITY FUNDING" means (a) a purchase from Seller by any Liquidity
Bank of its Pro Rata Share of a Receivable Interest pursuant to its Commitment
under this Agreement, or (b) a purchase from Blue Ridge by any Liquidity Bank
pursuant to its Liquidity Commitment of all or any portion of, or any undivided
interest in, a Receivable Interest.
"LIQUIDITY TERMINATION DATE" means the earlier to occur of the
following:
(a) the earlier to occur of April 28, 2008 or date on which the
Liquidity Banks' Liquidity Commitments cease to be available to Blue Ridge or
otherwise cease to be in full force and effect; or
(b) the date on which a Downgrading Event with respect to a Liquidity
Bank shall have occurred and been continuing for not less than 30 days, and
either (i) the Downgraded Liquidity Bank shall not have been replaced by an
Eligible Assignee pursuant to the Liquidity Agreement, or (ii) the Liquidity
Commitment of such Downgraded Liquidity Bank shall not have been funded or
collateralized in such a manner that will avoid a reduction in or withdrawal of
the credit rating applied to the Commercial Paper to which such Liquidity
Agreement applies by any of the rating agencies then rating such Commercial
Paper.
"LOCK-BOX" means each locked postal box with respect to which a bank
who has executed a Collection Account Agreement has been granted exclusive
access for the purpose of retrieving and processing payments made on the
Receivables and which is listed on Exhibit IV.
"LOSS RESERVE" means, for any Calculation Period, the product
(expressed as a percentage) of (a) 2.0, times (b) the highest average of Default
Ratios for any consecutive three-
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month period occurring during the 12 Calculation Periods ending on the
immediately preceding Cut-Off Date, times (c) the Default Horizon Ratio as of
the immediately preceding Cut-Off Date.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
financial condition or operations of Performance Guarantor and its Subsidiaries,
taken as a whole, (ii) the ability of any Seller Party to perform its
obligations under this Agreement or the Performance Guarantor to perform its
obligations under the Performance Undertaking, (iii) the legality, validity or
enforceability of this Agreement or any other Transaction Document, (iv) the
Agent's security interest, for the benefit of the Secured Parties, 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 REPORTING DATE" means the 20th day of each month after the
date of this Agreement (or if any such day is not a Business Day, the next
succeeding Business Day thereafter) or such other days of any month as Agent may
request in connection with Section 8.5 hereof.
"MOODY'S" means Moody's Investors Service, Inc.
"NET POOL BALANCE" means, at any time, the aggregate Outstanding
Balance of all Eligible Receivables at such time reduced by the sum of (a) the
aggregate amount by which the Outstanding Balance of all Eligible Receivables of
each Obligor and its Affiliates exceeds the Obligor Concentration Limit for such
Obligor, (b) the amount by which the aggregate Outstanding Balance of all
Eligible Foreign Receivables exceeds the product of (X) the Eligible Foreign
Receivables Limit (as such term is defined in the Fee Letter) MULTIPLIED BY (Y)
the aggregate Outstanding Balance of all Eligible Receivables and (c) the amount
deducted from the numerator set forth in clause (i) of the definition of the
term "Best Possible DSO" pursuant to the proviso of clause (iv) of the
definition of the term "Eligible Receivable".
"OBLIGOR" means a Person obligated to make payments pursuant to a
Contract.
"OBLIGOR CONCENTRATION LIMIT" means, at any time, in relation to the
aggregate Outstanding Balance of Receivables owed by any single Obligor and its
Affiliates (if any), the applicable concentration limit shall be determined as
follows for Obligors who have short term unsecured debt ratings currently
assigned to them by S&P and Moody's (or in the absence thereof, the equivalent
long term unsecured senior debt ratings), the applicable concentration limit
shall be determined according to the following table:
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Allowable % of Eligible
S&P Rating Moody's Rating Receivables
---------- -------------- -----------------------
A-1+ P-1 10%
A-1 P-1 8%
A-2 P-2 8%
A-3 P-3 6%
Below A-3 or Not Rated by either Below P-3 or Not Rated by
S&P or Moody's either S&P or Moody's 3%
; PROVIDED, HOWEVER, that (a) if any Obligor has a split rating, the applicable
rating will be the lower of the two, (b) if any Obligor is not rated by either
S&P or Moody's, the applicable Obligor Concentration Limit shall be the one set
forth in the last line of the table above, and (c) subject to satisfaction of
the Rating Agency Condition and/or an increase in the percentage set forth in
clause (a)(i) of the definition of "REQUIRED RESERVE," upon Seller's request
from time to time, the Agent may agree to a higher percentage of Eligible
Receivables for a particular Obligor and its Affiliates (each such higher
percentage, a "SPECIAL CONCENTRATION LIMIT"), it being understood that any
Special Concentration Limit may be cancelled by the Agent upon not less than
five (5) Business Days' written notice to the Seller Parties.
"OFAC" means the U.S. Department of the Treasury's Office of Foreign
Assets Control.
"ORIGINATOR" means each of Wolverine Tube, Inc., a Delaware
corporation, Tube Forming, LP, a Delaware limited partnership and Small Tube
Manufacturing LLC, a Delaware limited liability company, each in its capacity as
a seller under the Receivables Sale Agreement.
"OUTSTANDING BALANCE" of any Receivable at any time means the then
outstanding principal balance thereof.
"PARTICIPANT" has the meaning set forth in Section 12.2.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"PENSION PLAN" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which Performance Guarantor sponsors or
maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a multiple employer plan (as described in
Section 4064(a) of ERISA) has made contributions at any time during the
immediately preceding five plan years.
"PERFORMANCE GUARANTOR" means Wolverine Tube, Inc., a Delaware
corporation.
"PERFORMANCE UNDERTAKING" means that certain Performance Undertaking,
dated as of April 28, 2005 by Performance Guarantor in favor of Seller,
substantially in the form of Exhibit IX, as the same may be amended, restated or
otherwise modified from time to time.
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"PERSON" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"PLAN" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which Performance Guarantor or any of its ERISA Affiliates sponsors or
maintains or to which Performance Guarantor or any of its ERISA Affiliates
makes, is making, or is obligated to make contributions and includes any Pension
Plan, other than a Plan maintained outside the United States primarily for the
benefit of Persons who are not U.S. residents.
"POOLED COMMERCIAL PAPER" means Commercial Paper notes of Blue Ridge
subject to any particular pooling arrangement by Blue Ridge, but excluding
Commercial Paper issued by Blue Ridge for a tenor and in an amount specifically
requested by any Person in connection with any agreement effected by Blue Ridge.
"PRIME RATE" means a rate per annum equal to the prime rate of
interest announced from time to time by Wachovia (which is not necessarily the
lowest rate charged to any customer), changing when and as said prime rate
changes.
"PRO RATA SHARE" means, for each Liquidity Bank on any date of
determination, a percentage equal to (i) the Commitment of such Liquidity Bank
at such time, DIVIDED BY (ii) the aggregate amount of all Commitments of all
Liquidity Banks at such time.
"PROPOSED REDUCTION DATE" has the meaning set forth in Section 1.3.
"PURCHASE" means an Incremental Purchase or a Reinvestment.
"PURCHASER" has the meaning set forth in the preamble to this
Agreement.
"PURCHASE DATE" means each Business Day on which a Purchase is made
hereunder.
"PURCHASE LIMIT" means $45,000,000.
"PURCHASE NOTICE" has the meaning set forth in Section 1.2.
"PURCHASE PRICE" means, with respect to any Incremental Purchase of a
Receivable Interest, the amount paid to Seller for such Receivable Interest
which shall not exceed the least of (i) the amount requested by Seller in the
applicable Purchase Notice, (ii) the unused portion of the Purchase Limit on the
applicable purchase date, (iii) the excess, if any, of the Net Pool Balance
(less the Required Reserve) on the applicable purchase date over the aggregate
outstanding amount of Aggregate Invested Amount determined as of the date of the
most recent Settlement Report, taking into account such proposed Incremental
Purchase and (iv) the excess, if any, of the product of 85% times the aggregate
Outstanding Balance of Eligible Receivables on the applicable purchase date over
the aggregate outstanding amount of Aggregate Invested Amount determined as of
the date of the most recent Settlement Report, taking into account such proposed
Incremental Purchase.
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"PURCHASED ASSETS" means all of Seller's right, title and interest,
whether now owned and existing or hereafter arising in and to all of the
Receivables, the Related Security, the Collections and all proceeds of the
foregoing.
"RATING AGENCY CONDITION" means that Blue Ridge has received written
notice from S&P and Moody's that an amendment, a change or a waiver will not
result in a withdrawal or downgrade of the then current ratings on Blue Ridge's
Commercial Paper.
"RECEIVABLE" means each "Receivable" under and as defined in the
Receivables Sale Agreement in which Seller acquires any interest.
"RECEIVABLE INTEREST" means, at any time, an undivided percentage
ownership interest (computed as set forth below) associated with a designated
amount of Invested Amount, selected pursuant to the terms and conditions hereof
in (i) each Receivable arising prior to the time of the most recent computation
or recomputation of such undivided interest, (ii) all Related Security with
respect to each such Receivable, and (iii) all Collections with respect to, and
other proceeds of, each such Receivable. Each such undivided percentage interest
shall equal:
IA + RR
-------
NPB
WHERE:
IA = the Invested Amount of such Receivable Interest.
NPB = the Net Pool Balance.
RR = the Required Reserve.
Such undivided percentage ownership interest shall be initially computed on its
date of purchase. Thereafter, until the Facility Termination Date, each
Receivable Interest shall be automatically recomputed (or deemed to be
recomputed) on each day prior to the Facility Termination Date. The variable
percentage represented by any Receivable Interest as computed (or deemed
recomputed) as of the close of the Business Day immediately preceding the
Facility Termination Date shall remain constant at all times thereafter.
"RECEIVABLES SALE AGREEMENT" means that certain Receivables Sale
Agreement, dated as of April 28, 2005, among the Originators and Seller, as the
same may be amended, restated or otherwise modified from time to time.
"RECORDS" means, with respect to any Receivable, all Contracts and
other documents, books, records and other information (including, without
limitation, computer programs, tapes, disks, punch cards, data processing
software and related property and rights) relating to such Receivable, any
Related Security therefor and the related Obligor.
"RECOURSE OBLIGATIONS" has the meaning set forth in Section 2.1.
"REDUCTION NOTICE" has the meaning set forth in Section 1.3.
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"REGULATORY CHANGE" means any change after the date of this Agreement
in United States (federal, state or municipal) or foreign laws, regulations
(including Regulation D) or accounting principles or the adoption or making
after such date of any interpretations, directives or requests applying to a
class of banks (including the Liquidity Banks) of or under any United States
(federal, state or municipal) or foreign laws, regulations (whether or not
having the force of law) or accounting principles by any court, governmental or
monetary authority, or accounting board or authority (whether or not part of
government) charged with the establishment, interpretation or administration
thereof. For the avoidance of doubt, any interpretation of Accounting Research
Bulletin No. 51 by the Financial Accounting Standards Board shall constitute a
Regulatory Change..
"REINVESTMENT" has the meaning set forth in Section 2.2.
"RELATED SECURITY" means, with respect to any Receivable:
(i) all of Seller's interest in the inventory and goods
(including returned or repossessed inventory or goods), if any, the sale,
financing or lease of which by an Originator gave rise to such Receivable, and
all insurance contracts with respect thereto,
(ii) all other security interests or liens and property subject
thereto from time to time, if any, purporting to secure payment of such
Receivable, whether pursuant to the Contract related to such Receivable or
otherwise, together with all financing statements and security agreements
describing any collateral securing such Receivable,
(iii) all guaranties, letters of credit, insurance and other
agreements or arrangements of whatever character from time to time supporting or
securing payment of such Receivable whether pursuant to the Contract related to
such Receivable or otherwise,
(iv) all service contracts and other contracts and agreements
associated with such Receivable,
(v) all Records related to such Receivable,
(vi) all of Seller's right, title and interest in, to and under
the Receivables Sale Agreement in respect of such Receivable and all of Seller's
right, title and interest in, to and under the Performance Undertaking, and
(vii) all proceeds of any of the foregoing.
"REQUIRED LIQUIDITY BANKS" means, at any time, Liquidity Banks with
Liquidity Commitments in excess of 50% of the aggregate amount of all Liquidity
Commitments.
"REQUIRED NOTICE PERIOD" means the number of days required notice set
forth below applicable to the Aggregate Reduction indicated below:
A-19
AGGREGATE REDUCTION REQUIRED NOTICE PERIOD
------------------- ----------------------
less than 25% of the Purchase
Limit 2 Business Days
greater than 25% but less
than 50% of the Purchase Limit 5 Business Days
greater than 50% of the
Purchase Limit 10 Business Days
"REQUIRED RESERVE" means, on any day during a Calculation Period, the
product of (a) the greater of (i) the Required Reserve Factor Floor and (ii) the
sum of the Loss Reserve, the Yield Reserve, the Dilution Reserve and the
Servicing Reserve, times (b) the Net Pool Balance as of the Cut-Off Date
immediately preceding such Calculation Period.
"REQUIRED RESERVE FACTOR FLOOR" means, for any Calculation Period, the
sum (expressed as a percentage) of (a) 13.5% PLUS (b) the product of the
Adjusted Dilution Ratio and the Dilution Horizon Ratio, in each case, as of the
immediately preceding Cut-Off Date.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any class of Equity Interests in
Seller now or hereafter outstanding, except a dividend payable solely in Equity
Interests of that class or in any junior class of Equity Interests in Seller,
(ii) any redemption, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any class of Equity
Interests in Seller now or hereafter outstanding, (iii) any payment or
prepayment of principal of, premium, if any, or interest, fees or other charges
on or with respect to, and any redemption, purchase, retirement, defeasance,
sinking fund or similar payment and any claim for rescission with respect to the
Subordinated Loans (as defined in the Receivables Sale Agreement), (iv) any
payment made to redeem, purchase, repurchase or retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire any
class of Equity Interests in Seller now or hereafter outstanding, and (v) any
payment of management fees by Seller (except for reasonable management fees to
any Originator or its Affiliates in reimbursement of actual management services
performed).
"SANCTIONED COUNTRY" means a country subject to a sanctions program
identified on the list maintained by OFAC and available at
http://www.treas.gov/offices/eotffc/ofac/ sanctions/index.html, or as otherwise
published from time to time.
"SANCTIONED PERSON" means (a) a person named on the list of Specially
Designated Nationals or Blocked Persons maintained by OFAC available at
http://www.treas.gov/offices/ eotffc/ofac/sdn/index.html, or as otherwise
published from time to time, or (b) (i) an agency of the government of a
Sanctioned Country, (ii) an organization
A-20
controlled by a Sanctioned Country, or (iii) a person resident in a Sanctioned
Country, to the extent subject to a sanctions program administered by OFAC.
"S&P" means Standard and Poor's Ratings Services, a division of The
McGraw Hill Companies, Inc.
"SECURED PARTIES" means the Indemnified Parties.
"SELLER" has the meaning set forth in the preamble to this Agreement.
"SELLER PARTIES" means, collectively, (a) Seller, (b) at any time
while it is acting as Servicer, Wolverine Finance, and (c) at any time while it
is acting as Performance Guarantor, Wolverine Tube, Inc.
"SERVICER" means at any time the Person (which may be the Agent) then
authorized pursuant to Article VIII to service, administer and collect
Receivables.
"SERVICING FEE" means, for each day in a Calculation Period:
(a) an amount equal to (i) the Servicing Fee Rate (or, at any time
while Wolverine Finance or one of its Affiliates is the Servicer, such lesser
percentage as may be agreed between Seller and the Servicer on an arms' length
basis based on then prevailing market terms for similar services), TIMES (ii)
the aggregate Outstanding Balance of all Receivables at the close of business on
the Cut-Off Date immediately preceding such Calculation Period, TIMES (iii)
1/360; or
(b) on and after the Servicer's reasonable request made at any time
when Wolverine Finance or one of its Affiliates is no longer acting as Servicer
hereunder, an alternative amount specified by the successor Servicer not
exceeding (i) 110% of such Servicer's reasonable costs and expenses of
performing its obligations under this Agreement during the preceding Calculation
Period, DIVIDED BY (ii) the number of days in the current Calculation Period.
"SERVICING FEE RATE" means 1.0% per annum.
"SERVICING RESERVE" means, for any Calculation Period, the product
(expressed as a percentage) of (a) the Servicing Fee Rate, TIMES (b) a fraction,
the numerator of which is the highest Days Sales Outstanding for the most recent
12 Calculation Periods and the denominator of which is 360.
"SETTLEMENT DATE" means (A) the 2nd Business Day after each Monthly
Reporting Date, and (B) the last day of the relevant Interest Period in respect
of each Receivable Interests funded through a Liquidity Funding.
"SETTLEMENT PERIOD" means (A) in respect of each Receivable Interest
funded through the issuance of Commercial Paper, the immediately preceding
Calculation Period, and (B) in respect of each Receivable Interest funded
through a Liquidity Funding, the entire Interest Period of such Liquidity
Funding.
A-21
"SETTLEMENT REPORT" means a report, in substantially the form of
Exhibit VIII hereto (appropriately completed), furnished by the Servicer to the
Agent pursuant to Section 8.5.
"SUBSIDIARY" of a Person means (i) any corporation more than 50% of
the outstanding securities having ordinary voting power of which shall at the
time be owned or controlled, directly or indirectly, by such Person or by one or
more of its Subsidiaries or by such Person and one or more of its Subsidiaries,
or (ii) any partnership, association, limited liability company, joint venture
or similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled; it
being understood that the Seller is not a Subsidiary of the Performance
Guarantor.
"TAX CODE" means the Internal Revenue Code of 1986, as the same may be
amended from time to time.
"TERMINATING TRANCHE" has the meaning set forth in Section 4.3(b).
"TRANSACTION DOCUMENTS" means, collectively, this Agreement, each
Purchase Notice, the Receivables Sale Agreement, each Collection Account
Agreement, the Performance Undertaking, the Fee Letter, each Subordinated Note
(as defined in the Receivables Sale Agreement) and all other instruments,
documents and agreements executed and delivered in connection herewith.
"UCC" means the Uniform Commercial Code as from time to time in effect
in the specified jurisdiction.
"UNFINANCED CAPITAL EXPENDITURES" means, for any period, all Capital
Expenditures not financed from proceeds of Consolidated Funded Debt (other than
Loans made under and as defined in the ABL Credit Agreement or from proceeds of
the Sale Price under and as defined in the Receivables Sale Agreement received
by the Originators).
"UNMATURED AMORTIZATION EVENT" means an event which, with the passage
of time or the giving of notice, or both, would constitute an Amortization
Event.
"WACHOVIA" means Wachovia Bank, National Association in its individual
capacity and its successors.
"YIELD" means for each Interest Period relating to a Receivable
Interest funded through a Liquidity Funding, an amount equal to the product of
the applicable Yield Rate for such Receivable Interest multiplied by the
Invested Amount of such Receivable Interest for each day elapsed during such
Interest Period, annualized on a 360 day basis.
"YIELD RATE" means, with respect to each Receivable Interest funded
through a Liquidity Funding, the LIBO Rate, the Alternate Base Rate or the
Default Rate, as applicable.
"YIELD RESERVE" means, for any Calculation Period, the product
(expressed as a percentage) of (i) 1.5 times (ii) the Alternate Base Rate as of
the immediately preceding Cut-Off Date times (iii) a fraction the numerator of
which is the highest Days Sales Outstanding for the most recent 12 Calculation
Periods and the denominator of which is 360.
A-22
ALL ACCOUNTING TERMS NOT SPECIFICALLY DEFINED HEREIN SHALL BE
CONSTRUED IN ACCORDANCE WITH GAAP. ALL TERMS USED IN ARTICLE 9 OF THE UCC IN THE
STATE OF NEW YORK, AND NOT SPECIFICALLY DEFINED HEREIN, ARE USED HEREIN AS
DEFINED IN SUCH ARTICLE 9.
A-23
EXHIBIT II
FORM OF PURCHASE NOTICE
----------
DEJ 98 FINANCE, LLC
PURCHASE NOTICE
DATED ______________, 20__
FOR PURCHASE ON ________________, 20__
Wachovia Bank, National Association, as Agent
191 Peachtree Street, N.E., GA-8088
Atlanta, Georgia 30303
Attention: Elizabeth R. Wagner, Fax No. (404) 332-5152
Ladies and Gentlemen:
Reference is made to the Receivables Purchase Agreement dated as of
_________, 2005 (as amended, supplemented or otherwise modified from time to
time, the "RECEIVABLES PURCHASE AGREEMENT") among DEJ 98 Finance, LLC, a
Delaware limited liability company (the "SELLER"), Wolverine Finance, LLC, a
Tennessee limited liability company, as initial Servicer, Wolverine Tube, Inc.,
a Delaware corporation, as Performance Guarantor, Blue Ridge Asset Funding
Corporation, Wachovia Bank, National Association, as a Purchaser and other
Purchasers party thereto, and Wachovia Bank National Association, as Agent.
Capitalized terms defined in the Receivables Purchase Agreement are used herein
with the same meanings.
1. The Servicer, on behalf of the Seller hereby certifies, represents
and warrants to the Agent and the Purchasers that on and as of the Purchase Date
(as hereinafter defined):
(a) all applicable conditions precedent set forth in Article VI of the
Receivables Purchase Agreement have been satisfied;
(b) each of its representations and warranties contained in Section
5.1 of the Receivables Purchase Agreement will be true and correct, in all
material respects, as if made on and as of the Purchase Date;
(c) no event will have occurred and is continuing, or would result
from the requested Purchase, that constitutes an Amortization Event or Unmatured
Amortization Event;
(d) the Facility Termination Date has not occurred; and
(e) after giving effect to the Purchase requested below, the Aggregate
Invested Amount will not exceed the Purchase Limit and the aggregate Receivable
Interests will not exceed 100%.
2. The Servicer, on behalf of the Seller hereby requests that the
Purchasers make a Purchase on ___________, 20__ (the "PURCHASE DATE") as
follows:
(a) Purchase Price: $_____________
(b) If the Purchase is funded with a Liquidity Funding, Servicer on
behalf of the Seller requests that the Invested Amount (which will initially
accrue Yield at the Alternate Base Rate) begin to accrued Yield at a LIBO Rate
for a Interest Period of _____ months on the third Business Day after the
Purchase Date).
3. Please disburse the proceeds of the Purchase as follows:
[Apply $________ to payment of Aggregate Unpaids due on the Purchase
Date]. [Wire transfer $________ to account no. ________ at ___________
Bank, in [city, state], ABA No. __________, Reference: ________].
IN WITNESS WHEREOF, the Servicer, on behalf of the Seller has caused
this Purchase Request to be executed and delivered as of this ____ day of
___________, _____.
[_______________________, as Servicer,
on behalf of:] ____________., as Seller
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT III
PLACES OF BUSINESS OF THE SELLER PARTIES; LOCATIONS OF RECORDS;
FEDERAL EMPLOYER AND ORGANIZATIONAL IDENTIFICATION NUMBER(S)
Name: DEJ 98 Finance, LLC
Places of Business: 200 Clinton Avenue, Suite 1100, Huntsville, AL 35801
Chief Executive Office: 200 Clinton Avenue, Suite 1100, Huntsville, AL 35801
Locations of Records: 200 Clinton Avenue, Suite 1100, Huntsville, AL 35801
Federal Employer Identification Number:
Organizational Identification Number:
EXHIBIT IV
NAMES OF COLLECTION BANKS; LOCK-BOXES & COLLECTION ACCOUNTS
Lock-boxes; Collection Accounts; Collection Banks
EXHIBIT V
FORM OF COMPLIANCE CERTIFICATE
To: Wachovia Bank, National Association, as Agent
This Compliance Certificate is furnished pursuant to that certain
Receivables Purchase Agreement dated as of __________, 2005 among DEJ 98
FINANCE, LLC, a Delaware limited liability company (the "SELLER"), Wolverine
Finance, LLC, a Tennessee limited liability company, (the "SERVICER"), Wolverine
Tube, Inc., a Delaware corporation, "PERFORMANCE GUARANTOR"), Blue Ridge Asset
Funding Corporation, Wachovia Bank, National Association, as a Purchaser and
other Purchasers party thereto, and Wachovia Bank National Association, as Agent
(the "AGREEMENT").
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected _________________ of
[Seller/Servicer/Performance Guarantor].
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of Seller and its Subsidiaries during the accounting period
covered by the attached financial statements.
3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or event which constitutes
an Amortization Event or Unmatured Amortization Event, as each such term is
defined under the Agreement, during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate[, except as set forth in paragraph 5 BELOW].
4. Schedule I attached hereto sets forth financial data and
computations evidencing the compliance with certain covenants of the Agreement,
all of which data and computations are true, complete and correct.
[5. Described below are the exceptions, if any, to paragraph 3 by
listing, in detail, the nature of the condition or event, the period during
which it has existed and the action which Seller has taken, is taking, or
proposes to take with respect to each such condition or event:
____________________]
28
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 as of ______________, 20__.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SCHEDULE I TO COMPLIANCE CERTIFICATE
A. Schedule of Compliance as of __________, ____ with Section ___ of
the Agreement. Unless otherwise defined herein, the terms used in this
Compliance Certificate have the meanings ascribed thereto in the Agreement.
This schedule relates to the month ended: _______________
30
EXHIBIT VI
FORM OF COLLECTION ACCOUNT AGREEMENT
31
EXHIBIT VII
CREDIT AND COLLECTION POLICY
EXHIBIT VIII
FORM OF SETTLEMENT REPORT
EXHIBIT IX
FORM OF PERFORMANCE UNDERTAKING
34
PERFORMANCE UNDERTAKING
THIS PERFORMANCE UNDERTAKING (this "UNDERTAKING"), dated as of April 28,
2005, is executed by Wolverine Tube, Inc., a Delaware corporation ("WTI" or the
"PERFORMANCE GUARANTOR") in favor of DEJ 98 Finance, LLC, a Delaware limited
liability company (together with its successors and assigns, "RECIPIENT").
RECITALS
1. Tube Forming, LP, a Delaware limited partnership and Small Tube
Manufacturing LLC, a Delaware limited liability company, (all of the foregoing,
collectively, the "SUBSIDIARY ORIGINATORS"), WTI, and Recipient have entered
into a Receivables Sale Agreement, dated as of April 28, 2005 (as amended,
restated or otherwise modified from time to time, the "SALE AGREEMENT"),
pursuant to which WTI and the Subsidiary Originators, subject to the terms and
conditions contained therein, are selling (and, in the case of WTI,
contributing) their respective right, title and interest in their accounts
receivable to Recipient.
2. Performance Guarantor owns, directly or indirectly, 100% of the Equity
Interests of each of the Subsidiary Originators and 100% of the non-voting
Equity Interests and 49% of the voting Equity Interests in Recipient, and each
of the Subsidiary Originators, and accordingly, Performance Guarantor, is
expected to receive substantial direct and indirect benefits from their sale of
receivables to Recipient pursuant to the Sale Agreement (which benefits are
hereby acknowledged).
3. As an inducement for Recipient to acquire Subsidiary Originators'
accounts receivable pursuant to the Sale Agreement, Performance Guarantor has
agreed to guaranty (a) the due and punctual performance by Subsidiary
Originators of their obligations respective under the Sale Agreement, as well as
(b) the Servicing Related Obligations (as hereinafter defined) of Wolverine
Finance, LLC, a Tennessee limited liability company ("WOLVERINE FINANCE").
4. Performance Guarantor wishes to guaranty the due and punctual
performance by Subsidiary Originators of their obligations to Recipient under or
in respect of the Sale Agreement and Wolverine Finance's Servicing Related
Obligations on the terms and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, Performance Guarantor hereby agrees as follows:
Section 1. Definitions. Capitalized terms used herein and not defined
herein shall the respective meanings assigned thereto in the Sale Agreement or
the Receivables Purchase Agreement (as hereinafter defined). In addition:
"AGREEMENTS" means, collectively, the Sale Agreement and the Receivables
Purchase Agreement.
"EQUITY INTERESTS" means, with respect to any Person, any and all
shares, interests, participations or other equivalents, including membership
interests (however designated, whether voting or non-voting), of capital of such
Person, including, if such Person is a partnership, partnership interests
(whether general or limited) and any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, such partnership, whether outstanding on the date
hereof or issued after the date of this Agreement.
"GUARANTEED OBLIGATIONS" means, collectively, (a) all covenants,
agreements, terms, conditions and indemnities to be performed and observed by
any Subsidiary Originator under and pursuant to the Sale Agreement and each
other document executed and delivered by any Subsidiary Originator pursuant to
the Sale Agreement, including, without limitation, the due and punctual payment
of all sums which are or may become due and owing by any Subsidiary Originator
under the Sale Agreement, whether for fees, expenses (including counsel fees),
indemnified amounts or otherwise, whether upon any termination or for any other
reason and (b) all Servicing Related Obligations, in each case, whether now
existing or hereafter arising.
"RECEIVABLE PURCHASE AGREEMENT" means the Receivables Purchase
Agreement, dated as of April 28, 2005 by and among Recipient, as Seller,
Wolverine Finance, as Servicer, the Performance Guarantor, Blue Ridge Asset
Funding Corporation, and Wachovia Bank, National Association, individually and
as Agent, as amended, restated or otherwise modified from time to time.
"SERVICING RELATED OBLIGATIONS" means all obligations of Wolverine
Finance (a) as Servicer under the Receivables Purchase Agreement or (b) which
arise pursuant to Sections 8.2 or 13.3 of the Receivables Purchase Agreement as
a result of its termination as Servicer.
Section 2. Guaranty of Performance of Guaranteed Obligations.
Performance Guarantor hereby guarantees to Recipient, the full and punctual
payment and performance by each Subsidiary Originator and Wolverine Finance of
its respective Guaranteed Obligations. This Undertaking is an absolute,
unconditional and continuing guaranty of the full and punctual performance of
all Guaranteed Obligations and is in no way conditioned upon any requirement
that Recipient first attempt to collect any amounts owing by any Subsidiary
Originator or Wolverine Finance, as applicable, to Recipient, the Agent,
Wachovia, Blue Ridge or any other Purchaser from any other Person or resort to
any collateral security, any balance of any deposit account or credit on the
books of Recipient, the Agent, Wachovia, Blue Ridge Blue Ridge or any other
Purchaser in favor of any Subsidiary Originator, Wolverine Finance or any other
Person or other means of obtaining payment. Should any Subsidiary Originator or
Wolverine Finance default in the payment or performance of any of its
Guaranteed Obligations, Recipient (or its assigns) may cause the immediate
performance by Performance Guarantor of such Guaranteed Obligations and cause
any payment Guaranteed Obligations to become forthwith due and payable to
Recipient (or its assigns), without demand or notice of any nature (other than
as expressly provided herein), all of which are hereby expressly waived by
Performance Guarantor. Notwithstanding the foregoing, this Undertaking is not a
guarantee of the collection of any of the Receivables and Performance Guarantor
shall not be responsible for any Guaranteed Obligations to the extent the
failure to perform such Guaranteed Obligations by any Subsidiary Originator or
Wolverine Finance results from Receivables being uncollectible on account of
the insolvency,
2
bankruptcy or lack of creditworthiness of the related Obligor; PROVIDED THAT
nothing herein shall relieve any Subsidiary Originator or Wolverine Finance
from performing in full its Guaranteed Obligations under the Agreements or
Performance Guarantor of its undertaking hereunder with respect to the full
performance of such duties.
Section 3. Performance Guarantor's Further Agreements to Pay. Performance
Guarantor further agrees, as the principal obligor and not as a guarantor only,
to pay to Recipient (and its assigns), forthwith upon demand in funds
immediately available to Recipient, all reasonable costs and expenses
(including court costs and reasonable legal expenses) incurred or expended by
Recipient in connection with the Guaranteed Obligations, this Undertaking and
the enforcement thereof, together with interest on amounts recoverable under
this Undertaking from the time when such amounts become due until payment at a
rate of interest (computed for the actual number of days elapsed based on a 360
day year) equal to the Alternate Base Rate PLUS the Applicable Base Rate
Percentage then in effect PLUS 2% per annum, such rate of interest changing
when and as the Prime Rate changes.
Section 4. Waivers by Performance Guarantor. Performance Guarantor waives
notice of acceptance of this Undertaking, notice of any action taken or omitted
by Recipient (or its assigns) in reliance on this Undertaking, and any
requirement that Recipient (or its assigns) be diligent or prompt in making
demands under this Undertaking, giving notice of any Termination Event,
Amortization Event, other default or omission by any Subsidiary Originator or
Wolverine Finance or asserting any other rights of Recipient under this
Undertaking. Performance Guarantor warrants that it has adequate means to
obtain from each Subsidiary Originator and Wolverine Finance, on a continuing
basis, information concerning the financial condition of such Subsidiary
Originator and Wolverine Finance, and that it is not relying on Recipient to
provide such information, now or in the future. Performance Guarantor also
irrevocably waives all defenses (i) that at any time may be available in
respect of the Guaranteed Obligations by virtue of any statute of limitations,
valuation, stay, moratorium law or other similar law now or hereafter in effect
or (ii) that arise under the law of suretyship, including impairment of
collateral. Recipient (and its assigns) shall be at liberty, without giving
notice to or obtaining the assent of Performance Guarantor and without
relieving Performance Guarantor of any liability under this Undertaking, to
deal with each Subsidiary Originator, Wolverine Finance and each other party
who now is or after the date hereof becomes liable in any manner for any of the
Guaranteed Obligations, in such manner as Recipient in its sole discretion
deems fit, and to this end Performance Guarantor agrees that the validity and
enforceability of this Undertaking, including without limitation, the
provisions of Section 7 hereof, shall not be impaired or affected by any of the
following: (a) any extension, modification or renewal of, or indulgence with
respect to, or substitutions for, the Guaranteed Obligations or any part
thereof or any agreement relating thereto at any time; (b) any failure or
omission to enforce any right, power or remedy with respect to the Guaranteed
Obligations or any part thereof or any agreement relating thereto, or any
collateral securing the Guaranteed Obligations or any part thereof; (c) any
waiver of any right, power or remedy or of any Termination Event, Amortization
Event, or default with respect to the Guaranteed Obligations or any part
thereof or any agreement relating thereto; (d) any release, surrender,
compromise, settlement, waiver, subordination or modification, with or without
consideration, of any other obligation of any person or entity with respect to
the Guaranteed Obligations or any part thereof; (e) the enforceability or
validity of the Guaranteed Obligations or any part thereof or the genuineness,
enforceability or validity of any agreement
3
relating thereto or with respect to the Guaranteed Obligations or any part
thereof; (f) the application of payments received from any source to the payment
of any payment obligations of any Subsidiary Originator or Wolverine Finance or
any part thereof or amounts which are not covered by this Undertaking even
though Recipient (or its assigns) might lawfully have elected to apply such
payments to any part or all of the payment obligations of such Subsidiary
Originator or to amounts which are not covered by this Undertaking; (g) the
existence of any claim, setoff or other rights which Performance Guarantor may
have at any time against any Subsidiary Originator in connection herewith or any
unrelated transaction; (h) any assignment or transfer of the Guaranteed
Obligations or any part thereof; or (i) any failure on the part of any
Subsidiary Originator to perform or comply with any term of the Agreements or
any other document executed in connection therewith or delivered thereunder, all
whether or not Performance Guarantor shall have had notice or knowledge of any
act or omission referred to in the foregoing clauses (a) through (i) of this
Section 4.
Section 5. Unenforceability of Guaranteed Obligations Against Subsidiary
Originators or Wolverine Finance. Notwithstanding (a) any change of ownership of
any Subsidiary Originator or the insolvency, bankruptcy or any other change in
the legal status of any Subsidiary Originator; (b) the change in or the
imposition of any law, decree, regulation or other governmental act which does
or might impair, delay or in any way affect the validity, enforceability or the
payment when due of the Guaranteed Obligations; (c) the failure of any
Subsidiary Originator or Performance Guarantor to maintain in full force,
validity or effect or to obtain or renew when required all governmental and
other approvals, licenses or consents required in connection with the Guaranteed
Obligations or this Undertaking, or to take any other action required in
connection with the performance of all obligations pursuant to the Guaranteed
Obligations or this Undertaking; or (d) if any of the moneys included in the
Guaranteed Obligations have become irrecoverable from any Subsidiary Originator
for any other reason other than final payment in full of the payment obligations
in accordance with their terms, this Undertaking shall nevertheless be binding
on Performance Guarantor. This Undertaking shall be in addition to any other
guaranty or other security for the Guaranteed Obligations, and it shall not be
rendered unenforceable by the invalidity of any such other guaranty or security.
In the event that acceleration of the time for payment of any of the Guaranteed
Obligations is stayed upon the insolvency, bankruptcy or reorganization of any
Subsidiary Originator or for any other reason with respect to any Subsidiary
Originator, all such amounts then due and owing with respect to the Guaranteed
Obligations under the terms of the Agreements, or any other agreement
evidencing, securing or otherwise executed in connection with the Guaranteed
Obligations, shall be immediately due and payable by Performance Guarantor.
Section 6. Representations and Warranties. Performance Guarantor hereby
represents and warrants to Recipient that:
(a) Authorization, Execution and Delivery; Binding Effect. The
execution and delivery by Performance Guarantor of this Undertaking, and the
performance of its obligations hereunder, are within its corporate powers and
authority and have been duly authorized by all necessary corporate action on
its part. This Undertaking has been duly executed and delivered by Performance
Guarantor. This Undertaking constitutes the legal, valid and binding obligation
of Performance Guarantor enforceable against Performance Guarantor in
accordance with their respective terms, except as such enforcement may be
limited by applicable
4
bankruptcy, insolvency, reorganization or other similar laws relating to or
limiting creditors' rights generally and by general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law).
(c) No Conflict; Government Consent. The execution and delivery by
Performance Guarantor of this Undertaking, and the performance of its
obligations hereunder 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 Performance Guarantor or its Subsidiaries
(except as created hereunder) except, in any case, where such contravention or
violation could not reasonably be expected to have a Material Adverse Effect.
Section 7. Subrogation; Subordination. Notwithstanding anything to the
contrary contained herein, until the Guaranteed Obligations are paid in full
Performance Guarantor: (a) will not enforce or otherwise exercise any right of
subrogation to any of the rights of Recipient, the Agent, Blue Ridge or any
other Purchaser against any Subsidiary Originator, (b) hereby waives all rights
of subrogation (whether contractual, under Section 509 of the United States
Bankruptcy Code, at law or in equity or otherwise) to the claims of Recipient,
the Agent and Blue Ridge against any Subsidiary Originator and all contractual,
statutory or legal or equitable rights of contribution, reimbursement,
indemnification and similar rights and "claims" (as that term is defined in the
United States Bankruptcy Code) which Performance Guarantor might now have or
hereafter acquire against any Subsidiary Originator that arise from the
existence or performance of Performance Guarantor's obligations hereunder, (c)
will not claim any setoff, recoupment or counterclaim against any Subsidiary
Originator in respect of any liability of Performance Guarantor to such
Subsidiary Originator and (d) waives any benefit of and any right to participate
in any collateral security which may be held by Secured Parties, the Agent or
Blue Ridge. The payment of any amounts due with respect to any indebtedness of
any Subsidiary Originator now or hereafter owed to Performance Guarantor is
hereby subordinated to the prior payment in full of all of the Guaranteed
Obligations. Performance Guarantor agrees that, after the occurrence of any
default in the payment or performance of any of the Guaranteed Obligations,
Performance Guarantor will not demand, sue for or otherwise attempt to collect
any such indebtedness of any Subsidiary Originator to Performance Guarantor
until all of the Guaranteed Obligations shall have been paid an performed in
full. If, notwithstanding the foregoing sentence, Performance Guarantor shall
collect, enforce or receive any amounts in respect of such indebtedness while
any obligations are still unperformed or outstanding, such amounts shall be
collected, enforced and received by Performance Guarantor as trustee for
Recipient (and its assigns) and be paid over to Recipient (or its assigns) on
account of the Guaranteed Obligations without affecting in any manner the
liability of Performance Guarantor under the other provisions of this
Undertaking. The provisions of this Section 7 shall be supplemental to and not
in derogation of any rights and remedies of Recipient under any separate
subordination agreement which Recipient may at any time and from time to time
enter into with Performance Guarantor.
Section 8. Termination of Performance Undertaking. Performance Guarantor's
obligations hereunder shall continue in full force and effect until all
Aggregate Unpaids are
5
finally paid and satisfied in full and the Receivables Purchase Agreement is
terminated, PROVIDED THAT this Undertaking shall continue to be effective or
shall be reinstated, as the case may be, if at any time payment or other
satisfaction of any of the Guaranteed Obligations is rescinded or must
otherwise be restored or returned upon the bankruptcy, insolvency, or
reorganization of any Subsidiary Originator or otherwise, as though such
payment had not been made or other satisfaction occurred, whether or not
Recipient (or its assigns) is in possession of this Undertaking. No invalidity,
irregularity or unenforceability by reason of the federal bankruptcy code or
any insolvency or other similar law, or any law or order of any government or
agency thereof purporting to reduce, amend or otherwise affect the Guaranteed
Obligations shall impair, affect, be a defense to or claim against the
obligations of Performance Guarantor under this Undertaking.
Section 9. Effect of Bankruptcy. This Performance Undertaking shall
survive the insolvency of any Subsidiary Originator and the commencement of any
case or proceeding by or against any Subsidiary Originator under the federal
bankruptcy code or other federal, state or other applicable bankruptcy,
insolvency or reorganization statutes. No automatic stay under the federal
bankruptcy code with respect to any Subsidiary Originator or other federal,
state or other applicable bankruptcy, insolvency or reorganization statutes to
which any Subsidiary Originator is subject shall postpone the obligations of
Performance Guarantor under this Undertaking.
Section 10. Setoff. Regardless of the other means of obtaining payment of
any of the Guaranteed Obligations, Recipient (and its assigns) is hereby
authorized at any time and from time to time, without notice to Performance
Guarantor (any such notice being expressly waived by Performance Guarantor) and
to the fullest extent permitted by law, to set off and apply any deposits and
other sums against the obligations of Performance Guarantor under this
Undertaking, whether or not Recipient (or any such assigns) shall have made any
demand under this Undertaking and although such obligations may be contingent
or unmatured.
Section 11. Taxes. All payments to be made by Performance Guarantor
hereunder shall be made free and clear of any deduction or withholding. If
Performance Guarantor is required by law to make any deduction or withholding
on account of tax or otherwise from any such payment, the sum due from it in
respect of such payment shall be increased to the extent necessary to ensure
that, after the making of such deduction or withholding, Recipient receive a
net sum equal to the sum which they would have received had no deduction or
withholding been made.
Section 12. Further Assurances. Performance Guarantor agrees that it
will from time to time, at the request of Recipient (or its assigns), provide
information relating to the business and affairs of Performance Guarantor as
Recipient may reasonably request. Performance Guarantor also agrees to do all
such things and execute all such documents as Recipient (or its assigns) may
reasonably consider necessary or desirable to give full effect to this
Undertaking and to perfect and preserve the rights and powers of Recipient
hereunder.
Section 13. Successors and Assigns. This Performance Undertaking shall
be binding upon Performance Guarantor, its successors and permitted assigns, and
shall inure to the benefit of and be enforceable by Recipient and its successors
and assigns. Performance Guarantor may not assign or transfer any of its
obligations hereunder without the prior written
6
consent of each of Recipient and the Agent. Without limiting the generality of
the foregoing sentence, Recipient may assign or otherwise transfer the
Agreements, any other documents executed in connection therewith or delivered
thereunder or any other agreement or note held by them evidencing, securing or
otherwise executed in connection with the Guaranteed Obligations, or sell
participations in any interest therein, to any other entity or other person,
and such other entity or other person shall thereupon become vested, to the
extent set forth in the agreement evidencing such assignment, transfer or
participation, with all the rights in respect thereof granted to the Secured
Parties herein.
Section 14. Amendments and Waivers. No amendment or waiver of any
provision of this Undertaking nor consent to any departure by Performance
Guarantor therefrom shall be effective unless the same shall be in writing and
signed by Recipient, the Agent and Performance Guarantor. No failure on the
part of Recipient to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right.
Section 15. Notices. All notices and other communications provided for
hereunder shall be made in writing and shall be addressed as follows: if to
Performance Guarantor, at the address set forth beneath its signature hereto,
and if to Recipient, at the addresses set forth beneath its signature hereto,
or at such other addresses as each of Performance Guarantor or any Recipient
may designate in writing to the other. Each such notice or other communication
shall be effective (1) if given by telecopy, upon the receipt thereof, (2) if
given by mail, three (3) Business Days after the time such communication is
deposited in the mail with first class postage prepaid or (3) if given by any
other means, when received at the address specified in this Section 15.
Section 16. GOVERNING LAW. THIS UNDERTAKING SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF OTHER THAN SECTIONS 5-1401
AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW WHICH SHALL APPLY HERETO).
Section 17. CONSENT TO JURISDICTION. EACH OF PERFORMANCE GUARANTOR AND
RECIPIENT HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY
UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN THE BOROUGH OF
MANHATTAN IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
UNDERTAKING, THE AGREEMENTS OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION
THEREWITH OR DELIVERED THEREUNDER AND EACH OF THE PERFORMANCE GUARANTOR AND
RECIPIENT 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.
7
Section 18. Bankruptcy Petition. Performance Guarantor hereby covenants and
agrees that, prior to the date that is one year and one day after the payment in
full of all outstanding senior Indebtedness of Blue Ridge, it will not institute
against, or join any other Person in instituting against, Blue Ridge 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 19. Miscellaneous. This Undertaking constitutes the entire
agreement of Performance Guarantor with respect to the matters set forth
herein. The rights and remedies herein provided are cumulative and not
exclusive of any remedies provided by law or any other agreement, and this
Undertaking shall be in addition to any other guaranty of or collateral
security for any of the Guaranteed Obligations. The provisions of this
Undertaking are severable, and in any action or proceeding involving any state
corporate law, or any state or federal bankruptcy, insolvency, reorganization
or other law affecting the rights of creditors generally, if the obligations of
Performance Guarantor hereunder would otherwise be held or determined to be
avoidable, invalid or unenforceable on account of the amount of Performance
Guarantor's liability under this Undertaking, then, notwithstanding any other
provision of this Undertaking to the contrary, the amount of such liability
shall, without any further action by Performance Guarantor or Recipient, be
automatically limited and reduced to the highest amount that is valid and
enforceable as determined in such action or proceeding. Any provisions of this
Undertaking which are prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction. Unless
otherwise specified, references herein to "SECTION" shall mean a reference to
sections of this Undertaking.
8
IN WITNESS WHEREOF, Performance Guarantor has caused this Undertaking to
be executed and delivered as of the date first above written.
WOLVERINE TUBE, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Address: 200 Clinton Avenue, Suite 1000
Huntsville, AL 35801
Attention: Thomas B. Sabol
Telephone: 256-580-3625
Facsimile: 256-580-3996
Email: sabolt@wlv.com
S-1
[Signature Page to Performance Undertaking]
SCHEDULE A
COMMITMENTS OF FINANCIAL INSTITUTIONS
LIQUIDITY BANK COMMITMENT
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Wachovia Bank, National Association $45,000,000.00