EXHIBIT 2.2
CONFIDENTIAL TREATMENT
The material marked by ({RADACTED}) on the attached pages has been omitted from
the filed copy of this agreement in connection with a confidential treatment
request filed with the Securities and Exchange Commission by Lesco, Inc.
Some of the schedules of Exhibit 2..2 are not filed pursuant Regulation S-K Item
601(b)(2) because the omitted schedules do not provide information which is
material to an investment decision in the Company's securities. The omitted
schedules in Exhibit 2.2 are Exhibit C (Operating Procedures) and Schedule 3.6
(Interest Rate Adjustment Illustration). The Company agrees to furnish
supplementally a copy of the omitted schedules to the Commission upon request.
PRIVATE LABEL BUSINESS CREDIT
PROGRAM AGREEMENT
BETWEEN
LESCO, INC.
LESCO SERVICES, INC.
AIM LAWN & GARDEN PRODUCTS, INC.
LESCO TECHNOLOGIES, LLC
AND
GE CAPITAL FINANCIAL INC.
DATED AS OF DECEMBER 16, 2003
TABLE OF CONTENTS
PAGE
ARTICLE 1 ESTABLISHMENT AND SCOPE OF THE PROGRAM................................................................ 1
Section 1.1 Establishment of the Program......................................................... 1
Section 1.2 Scope of the Program................................................................. 2
Section 1.3 Interim Transition Period............................................................ 2
Section 1.4 Recourse Accounts.................................................................... 3
ARTICLE 2 RESPONSIBILITIES UNDER THE PROGRAM.................................................................... 5
Section 2.1 Bank's Responsibilities.............................................................. 5
Section 2.2 LESCO's Responsibilities............................................................. 6
ARTICLE 3 SETTLEMENT AND PAYMENT TERMS.......................................................................... 7
Section 3.1 Settlement Procedures................................................................ 7
Section 3.2 Bank Payment Terms................................................................... 8
Section 3.3 LESCO Payment Terms.................................................................. 8
Section 3.4 Program Fees......................................................................... 8
Section 3.5 Program Fee Percentages.............................................................. 9
Section 3.6 Interest Rate Adjustor............................................................... 10
ARTICLE 4 OTHER PROGRAM ECONOMICS............................................................................... 11
Section 4.1 Allocation of Program Expenses....................................................... 11
Section 4.2 Solicitation of Accountholders for Other Products.................................... 11
ARTICLE 5 PROMOTION OF THE PROGRAM.............................................................................. 11
Section 5.1 Annual Marketing Plans............................................................... 11
Section 5.2 Responsibility of Bank to Promote the Program........................................ 12
Section 5.3 Responsibility of LESCO to Promote the Program....................................... 12
ARTICLE 6 OTHER AGREEMENTS...................................................................................... 13
Section 6.1 Ownership of Accounts................................................................ 13
Section 6.2 Ownership and Use of Accountholder Information....................................... 13
Section 6.3 Accountholder Terms.................................................................. 14
Section 6.4 Credit Criteria...................................................................... 14
Section 6.5 Operating Procedures................................................................. 14
Section 6.6 Credit Review Point; Program Credit Minimums......................................... 14
Section 6.7 LESCO Financial Reports; Financial Covenants......................................... 15
Section 6.8 Access............................................................................... 16
Section 6.9 Inserts and Billing Messages......................................................... 16
Section 6.10 Extended Warranties.................................................................. 17
Section 6.11 Third Party Participation............................................................ 17
Section 6.12 Sales Taxes and Related Record Retention............................................. 17
Section 6.13 Use of Names and Marks............................................................... 18
Section 6.14 Intellectual Property................................................................ 18
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Section 6.15 Securitization....................................................................... 18
Section 6.16 Grant of Security Interest/Precautionary Filing...................................... 18
Section 6.17 In-Store Payments.................................................................... 19
Section 6.18 Program Managers..................................................................... 20
Section 6.19 Periodic Program Reports............................................................. 20
ARTICLE 7 CHARGEBACKS........................................................................................... 20
Section 7.1 Chargeback Rights.................................................................... 20
Section 7.2 Fraud Losses on Accounts............................................................. 21
ARTICLE 8 - EXCLUSIVITY......................................................................................... 22
Section 8.1 Exclusivity.......................................................................... 22
Section 8.2 Right of First Refusal............................................................... 22
ARTICLE 9 TERM/TERMINATION...................................................................................... 22
Section 9.1 Program Term......................................................................... 22
Section 9.2 Termination of Agreement............................................................. 23
ARTICLE 10 POST TERM PROVISIONS................................................................................. 26
Section 10.1 Purchase of Accounts by LESCO upon Termination....................................... 26
Section 10.2 Bank's Rights If LESCO Does Not Purchase Accounts.................................... 27
Section 10.3 Survival Provisions.................................................................. 28
ARTICLE 11 - REPRESENTATIONS AND WARRANTIES..................................................................... 28
Section 11.1 Representations and Warranties....................................................... 28
Section 11.2 Presentment Warranties............................................................... 29
ARTICLE 12 INDEMNIFICATION...................................................................................... 30
Section 12.1 Indemnification by LESCO............................................................. 30
Section 12.2 Indemnification by Bank.............................................................. 30
Section 12.3 Indemnification Procedures........................................................... 31
ARTICLE 13 MISCELLANEOUS........................................................................................ 32
Section 13.1 Confidentiality...................................................................... 32
Section 13.2 Public Announcements................................................................. 32
Section 13.3 Binding Effect....................................................................... 33
Section 13.4 Assignment........................................................................... 33
Section 13.5 Governing Law........................................................................ 33
Section 13.6 Financial Accommodation.............................................................. 33
Section 13.7 No Third Party Beneficiaries......................................................... 33
Section 13.8 Amendments........................................................................... 33
Section 13.9 No Partnership....................................................................... 33
Section 13.10 Notices.............................................................................. 33
Section 13.11 Nonwaiver; Remedies Cumulative; Severability......................................... 34
Section 13.12 Damages Waiver....................................................................... 34
Section 13.13 Joint and Several Obligations........................................................ 34
Section 13.14 Entire Agreement..................................................................... 35
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Section 13.15 Further Assurances................................................................... 35
Section 13.16 Multiple Counterparts................................................................ 35
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PRIVATE LABEL BUSINESS CREDIT PROGRAM AGREEMENT
This PRIVATE LABEL BUSINESS CREDIT PROGRAM AGREEMENT is made as of
December 16, 2003 by and among LESCO, Inc., an Ohio corporation ("LESCO"), LESCO
Services, Inc., an Ohio corporation ("LSI"), AIM Lawn & Garden Products, Inc.,
an Ohio corporation ("AIM"), and LESCO Technologies, LLC, a Nevada limited
liability company ("LTLLC"), on the one hand, and GE Capital Financial Inc., a
Utah industrial loan corporation ("Bank"), on the other. Certain capitalized
terms used in this Agreement are defined in the attached Appendix A.
WHEREAS, LESCO is in the business of manufacturing and selling products
through Service Centers(R), Stores-On-Wheels(R), direct distribution, telephone,
e-commerce and by other means;
WHEREAS, prior to the date hereof, LESCO extended credit to its
commercial customers to allow such customers to finance purchases of LESCO's
products and LESCO administered and collected the resulting accounts receivable;
WHEREAS, among other things, Bank establishes programs to extend and
service customized credit programs to qualified commercial customers for the
purchase of products from various manufacturers and merchants;
WHEREAS, concurrently with the execution and delivery of this
Agreement, LESCO and Bank have executed the Purchase Agreement for the purpose
of transferring LESCO's interest in the Existing Accounts to Bank and
incorporating such Existing Accounts into the Program as set forth herein;
WHEREAS, the parties hereto desire to enter into this Agreement
pursuant to which Bank will, (i) extend credit with respect to and administer
the Existing Accounts and Indebtedness under either the Open Account Program or
the BRC Program, and (ii) make available the Open Account Program and the BRC
Program to qualified commercial customers of LESCO after the Program
Commencement Date;
In consideration of the following terms and conditions, and
for good and valuable consideration the receipt and sufficiency of which is
acknowledged, LESCO and Bank agree as follows:
ARTICLE 1 ESTABLISHMENT AND SCOPE OF THE PROGRAM
SECTION 1.1 ESTABLISHMENT OF THE PROGRAM.
(a) Bank and LESCO are entering into this Agreement to
establish a private-label business credit program, which will include both the
Open Account Program and the BRC Program and which will be made available to
qualified commercial customers of LESCO for the financing of purchases of
products and services from LESCO, all in accordance with the terms of this
Agreement (collectively, the "Program").
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(b) LESCO acknowledges and agrees that it shall be a
material condition precedent to Bank's obligations to perform hereunder that,
and the Program Commencement Date shall not be deemed to occur until, Bank and
LESCO shall have consummated the purchase and sale of the Existing Accounts
pursuant to the Purchase Agreement; provided, that the provisions of Appendix B
which by their terms are to commence on the Effective Date shall be effective as
of such date.
SECTION 1.2 SCOPE OF THE PROGRAM.
(a) During the Term, LESCO will accept Account
applications and forward such applications or the information contained therein
to Bank in accordance with the Operating Procedures and accept Credit Cards and
Accounts in accordance with the Operating Procedures and Bank will extend credit
directly to Accountholders under the Program pursuant to the Prox Terms, the Net
Invoice Terms, or the BRC Terms, as the case may be, with respect to purchases
of LESCO's products and services at all Store Locations, as well as in
connection with Telephone Purchases. LESCO acknowledges and agrees that (i)
Accountholders may only participate in either the Open Account Program (and,
within such program, on either the Prox Terms or the Net Invoice Terms, but not
both) or the BRC Program, but not both, and (ii) the terms and conditions set
forth herein pertaining to Net Invoice Accounts (including, without limitation,
Net Invoice Fees, Net Invoice Fee Percentages, and Net Invoice Terms) and any
obligation of Bank to extend credit in respect thereof shall not be effective
unless and until the parties agree in writing to effectuate such provisions and,
as part thereof, establish the pricing and Net Invoice Terms that will apply
thereto.
(b) Bank acknowledges that it is the intention of LESCO
to actively pursue the sales of its products through the Internet and the
parties agree to negotiate in good faith mutually acceptable terms and
conditions under which such functionality may be made available after the
Program Commencement Date to Accountholders under the Program.
(c) The Program is intended to be used by Accountholders
for purchases made primarily for commercial and business purposes and Bank does
not intend to extend credit under the Program for purchases made primarily for
personal, family or household use. LESCO acknowledges that Bank's obligation to
continue to extend credit under the Program is contingent on LESCO continuing to
sell the type of goods and services generally similar to those sold by LESCO as
of the Program Commencement Date.
SECTION 1.3 INTERIM TRANSITION PERIOD. The parties acknowledge and
agree that during the period from the Closing Date (as defined in the Purchase
Agreement) until the completion of Bank's transfer of the Purchased Accounts
onto Bank's systems (the "Interim Transition Period"), certain of the terms and
conditions of this Agreement shall be modified as and to the extent specifically
set forth below. Without limiting the generality of the foregoing and anything
in this Agreement to the contrary notwithstanding, during the Interim Transition
Period the following terms and conditions shall apply:
(a) Bank shall designate for each Existing Account and
for each Account originated during the Interim Transition Period whether such
Account shall be a Prox Account, a Net Invoice Account, or a BRC Account;
provided, that such designation notwithstanding, until
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the expiration of the Interim Transition Period, Bank shall extend commercial
credit with respect to all Accounts pursuant to the LESCO Terms, as the same
shall exist as of the Program Commencement Date.
(b) Bank shall not distribute standard Program materials
(including as contemplated by Section 2.1(c) and (d)) until the expiration of
the Interim Transition Period; provided, that Bank will distribute credit
applications reflecting the LESCO terms during the Interim Transition Period.
LESCO shall prepare and mail periodic billing statements on behalf of Bank
during the Interim Transition Period.
(c) Except to the extent otherwise directed by Bank,
LESCO shall process purchases and otherwise continue to conduct its
point-of-sale practices in respect of purchases from Store Locations and in
connection with Telephone Purchases in the ordinary course as such processing
and practices existed immediately prior to the Program Commencement Date.
(d) LESCO will transmit each day to Bank the aggregate
Charge Transaction Data for such day in accordance with instructions provided by
Bank. Without limiting the foregoing, the form of such submission shall be as
set forth in Exhibits A-1, A-2, and A-3. Except for the foregoing, the terms and
conditions of Sections 3.1(a) and (b) shall otherwise apply during the Interim
Transition Period.
(e) The terms and conditions set forth in Appendix B
shall apply during the Interim Transition Period.
(f) Unless otherwise modified above, the terms and
conditions of this Agreement shall apply as set forth herein.
SECTION 1.4 RECOURSE ACCOUNTS.
(a) It is the intention of the parties that the Program
be available to provide financing to those LESCO commercial customers qualifying
for the Program for the purchase of goods and services from LESCO. The foregoing
notwithstanding, LESCO acknowledges and agrees that Bank shall have sole
discretion over the establishment and application of the credit criteria used to
approve or decline prospective Accountholders and that such credit criteria will
be the primary basis upon which Bank will determine whether the credit
applications of prospective Accountholders will be approved or declined. In any
case in which Bank has declined an application for an Account, but the applicant
meets the following criteria:
(b) such applicant is a commercial entity in good
standing in the state of its organization (or if such applicant is an
individual, such person must be a minimum of 18 years of age at the time of
application),
(c) such applicant is applying for credit with respect to
operations located in (or, in the case of an individual, is a resident of) the
United States, and
(d) such applicant is applying for credit as a commercial
entity and is not seeking financing for personal, family or household purposes,
then LESCO may request that Bank approve such declined application and include
the resulting Account (each a "Recourse
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Account") in a portfolio of credit recourse Accounts (collectively the "Recourse
Portfolio") subject to the terms and conditions set forth herein. "Recourse
Accounts" shall also include Existing Accounts designated as "Recourse Accounts"
in accordance with the procedures therefore in the Purchase Agreement. Although
it is the intention of the parties that the provisions of this Section 1.4 shall
provide a mechanism though which a greater number of potential customers of
LESCO will be able to participate in the Program, the decision to include any
particular applicant presented by LESCO as a possible Recourse Account shall be
in Bank's sole discretion. LESCO acknowledges and agrees that (A) Bank may, in
its discretion, limit the Aggregate Outstanding Indebtedness attributable to the
Recourse Portfolio to the lesser of (x) ten percent (10%) of the Aggregate
Outstanding Indebtedness attributable to all Accounts, and (y) an amount of
Aggregate Outstanding Indebtedness with respect to all Recourse Accounts which,
based on Bank's projections, would not result in more than One Million Dollars
($1,000,000) in payments by LESCO to Bank in respect of its recourse obligations
under this Section 1.4 for the immediately succeeding twelve (12) months, and
(B) Recourse Accounts may only be Prox Accounts.
(e) LESCO acknowledges that the applications resulting in
Recourse Accounts do not meet Bank's standard credit criteria and but for
LESCO's promises and obligations under this Section 1.4, Bank would not have
agreed to approve such applicants for an Account. LESCO shall purchase any
Recourse Account after receipt of notice from Bank that such Recourse Account is
more than one hundred and fifty (150) days delinquent. The purchase price for
any such Recourse Account shall be equal to 100% of the outstanding balance at
the time of purchase. Bank may set-off against funds due LESCO hereunder amounts
due from LESCO in respect of such Recourse Account purchase; provided, that if
insufficient funds exist to complete any such set-off, LESCO shall pay Bank such
amount within ten (10) days of Bank's invoice. Additionally, if upon expiration
or termination of the Term LESCO elects to purchase the Accounts pursuant to
Section 10.1, the Recourse Accounts shall be purchased on the same terms and
conditions as all other Accounts; provided, however, if LESCO does not purchase
the Accounts pursuant to Section 10.1, LESCO shall nonetheless purchase all
Recourse Accounts for a purchase price equal to 100% of the then outstanding
Indebtedness attributable to such Accounts. Such purchase shall be without
recourse to or warranty from Bank and the parties shall complete such purchase
within sixty days after the expiration or earlier termination of the Term.
Beginning with the first full month after the expiration of the Interim
Transition Period, Bank shall provide LESCO at the end of each month a report
setting forth the delinquency status of all Recourse Accounts in the Recourse
Portfolio ("Delinquency Report"). The Delinquency Report shall include the
number and the outstanding balance of the Recourse Accounts in the Recourse
Portfolio that are current and at each delinquency level.
(f) Each Existing Account designated as a "Recourse
Account" pursuant to clause (ii) of the "Recourse Accounts" definition contained
in the Purchase Agreement shall only constitute a Recourse Account under this
Agreement until Bank receives payment in full of the Indebtedness owing under
such Account as of the Closing Date (as defined in the Purchase Agreement).
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ARTICLE 2 RESPONSIBILITIES UNDER THE PROGRAM
SECTION 2.1 BANK'S RESPONSIBILITIES. During the Term of this Agreement,
Bank's responsibilities in conducting the Program include the following:Extend
commercial credit to qualified customers of LESCO under the Prox Terms, the Net
Invoice Terms, or the BRC Terms in accordance with this Agreement and the
Accountholder Agreements; provided, that during the Interim Transition Period,
such terms shall be modified as otherwise set forth herein.
(a) Except as set forth in Section 1.3, establish (and
modify from time to time in its discretion) Accountholder finance charge rates
and other fees and Account terms.
(b) Except as set forth in Section 1.3, develop, produce
and deliver to LESCO at a central location, Bank's credit applications and
Accountholder Agreements and other standard Program materials.
(c) Produce and, as applicable, distribute Credit Cards
and Credit Card carriers in accordance with a design provided by LESCO that
meets Bank's specifications. In connection with the foregoing, LESCO
acknowledges and agrees that Bank will not distribute Credit Cards to the
holders of Existing Accounts unless such Accountholders so request; provided
however, that Bank shall, as part of its introductory materials sent to
Accountholders following the expiration of the Interim Transition Period (and
thereafter as part of its customer service scripts), make the Accountholder
aware that Bank can furnish a Credit Card (or Credit Cards, if applicable) to
such Accountholder upon request. All Accountholders opening Accounts after the
Program Commencement Date shall be provided a Credit Card. With respect to any
Accountholder for which no Credit Card was issued, the parties shall utilize the
alternative identification, verification, and authorization mechanism provided
for in the Operating Procedures in connection with all Charge Transaction Data.
(d) Establish (and modify from time to time in its
discretion) the credit criteria used to evaluate applications for Accountholder
Agreements.
(e) Assign (and modify from time to time in its
discretion) credit lines, authorize charges, and service Accounts (the foregoing
services shall be provided, at a minimum, during LESCO's ordinary course
operating hours as of the Program Commencement Date).
(f) Except as set forth in Section 1.3, prepare and mail
periodic billing statements to Accountholders with Active Accounts.
(g) Provide toll-free numbers for customer inquiries and
inquiries from Service Centers(R) and provide operators for such numbers, at a
minimum, during LESCO's ordinary course operating hours (as of the Program
Commencement Date such hours are 7:00 a.m. (est) through 8:00 p.m. (est) Monday
through Friday and 8:00 a.m. (est) through 3:00 p.m. (est) on Saturday;
provided, that Bank shall not unreasonably decline to provide operators for any
reasonable change in LESCO's ordinary course operating hours), and; at the
conclusion of the Interim Transition Period, provide automated voice response
capacity at all other times.
(h) Receive and post payments, collect Accounts, and take
all further actions Bank deems necessary or appropriate in connection with
Account administration.
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(i) Ensure that all Accountholder Agreements, billing
statements and solicitations conducted by Bank, and all of Bank's activities in
originating and administering Accounts, comply with all applicable laws;
provided, that Bank shall have no responsibility for the form of LESCO's billing
statements or the terms and conditions of credit advanced by LESCO to the extent
adopted by Bank during the Interim Transition Period.
(j) As of the expiration of the Interim Transition
Period, Bank will initiate the development of an Internet website for the
Program through which Account and Program information may be accessed by LESCO
and Accountholders; provided that LESCO acknowledges that Bank's ability to make
such site available is dependent upon the commercially reasonable assistance of
LESCO (including the provision information requested by Bank) and LESCO agrees
to provide such assistance upon request by Bank. Following the launch of such
Internet website, Bank will use its commercially reasonable efforts to ensure
that such website may be accessed and is available to LESCO and Accountholders
at any time.
SECTION 2.2 LESCO'S RESPONSIBILITIES. LESCO's responsibilities in
conducting the Program include the following:
(a) Within thirty (30) days after the Program
Commencement Date, in consultation with Bank, provide to Bank a design meeting
Bank's specifications for use in producing Credit Cards (as well as for other
LESCO-branded Program materials).
(b) Accept in accordance with the Operating Procedures
Credit Cards and Accounts for customer purchases from LESCO from Store
Locations. In the absence of a Credit Card (or in the case of Telephone
Purchases), follow the procedures for "card not present" purchase transactions
as provided for in the Operating Procedures.
(c) Promote the Program and the use of Accounts and
Credit Cards to its customers, including by producing customized store signage
and through other promotional methods.
(d) Train its personnel sufficiently so as to be able to
properly fulfill LESCO's responsibilities under the Program.
(e) Except for Account applications sent directly to Bank
by applicants, transmit all Account applications to Bank electronically and
otherwise process and retain such applications in accordance with procedures
reasonably determined by Bank.
(f) Only submit Charge Transaction Data in respect of
products or services reasonably related to the types of products or services
offered for sale by LESCO at Store Locations (or otherwise) as of the Program
Commencement Date.
(g) Comply with all Operating Procedures.
(h) Perform its responsibilities under this Agreement and
the Program, and conduct its activities as a seller of commercial products and
services, including its policies, products, services, business, point-of-sale
and sales practices, and advertising, in compliance with all applicable laws.
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(i) Only use documents and forms in connection with the
Program that were provided to LESCO, or approved in writing, by Bank (and only
the latest version of such documents), and; refrain from modifying any such
approved documents or forms without Bank's prior written consent.
(j) Cooperate in the resolution of any Accountholder
disputes; respond within twenty (20) days to any dispute forwarded to LESCO from
Bank, and; forward to Bank promptly after receipt by LESCO copies of any
communication relating to an Account received from any person.
(k) Maintain policies for the exchange or return of goods
and services which comply with industry standards and applicable laws; provide a
credit to the applicable Account upon the exchange or return of a good or
service financed on such Account (but do not credit an Account in any case where
the purchased good or service was not originally financed on an Account), and;
include the resulting credit in the next transmission of Charge Transaction Data
to Bank (but in no event more than three (3) days after the credit was issued).
(l) Retain copies of all invoices and receipts,
applications and Accountholder Agreements for at least twenty-five (25) months
(or such longer period as may be required by law); provide copies of any of the
foregoing to Bank within twenty (20) days of Bank's request, and; in
consultation with Bank, produce and use invoices and receipts which may be
captured and reproduced electronically via signature capture technology or other
methods.
(m) At LESCO's cost and expense, perform all necessary
programming in connection with establishing the interface between LESCO and Bank
for all point-of-sale data submission; provided, that during the Interim
Transition Period, such point-of-sale data transmission shall be conducted as
contemplated in Section 1.3(d).
ARTICLE 3 SETTLEMENT AND PAYMENT TERMS
SECTION 3.1 SETTLEMENT PROCEDURES.
(a) LESCO will transmit Charge Transaction Data to Bank
in accordance with the Operating Procedures. If Charge Transaction Data is
received by Bank's processing center before 8:00 a.m. (EST) on any Business Day,
Bank will process the Charge Transaction Data and initiate payment on the second
Business Day thereafter. If the Charge Transaction Data is received after 8:00
a.m. (EST) on any Business Day, or at any time on a day other than a Business
Day, Bank will process the Charge Transaction Data and initiate payment on the
third Business Day thereafter.
(b) Provided no circumstance exists that would entitle
Bank to give notice of termination of this Agreement, upon receipt, verification
and processing of Charge Transaction Data by Bank during the Term, Bank will
remit to LESCO in respect of such Charge Transaction Data an amount equal to the
sum of the total charges identified in such Charge Transaction Data less the sum
of (i) the total amount of any credits included in such Charge Transaction Data,
(ii) the applicable Program Fees, (iii) in-store payments (if any), and (iv) at
Bank's option, any other amounts then owed by LESCO to Bank (including, without
limitation, promotional discounts, early pay discounts (e.g. 1%-10 discounts)
and amounts charged back to LESCO
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pursuant to Article 7). Bank shall not be obligated to fund any Charge
Transaction Data submitted by LESCO more than sixty (60) days after the date of
the applicable purchase transaction.
SECTION 3.2 BANK PAYMENT TERMS.
(a) Bank will transfer funds payable to LESCO under this
Agreement via wire transfer to a single account maintained in the name of LESCO,
Inc. pursuant to written instructions delivered to Bank by LESCO.
(b) Notwithstanding any other provision of this
Agreement, Bank will have the right to net, setoff or recoup any amounts due to
it under this Agreement against any amounts owing to LESCO under this Agreement.
Nothing in this Section or any other provision of this Agreement is intended to
limit Bank's common law rights of setoff and recoupment.
SECTION 3.3 LESCO PAYMENT TERMS. Unless otherwise provided for
elsewhere in this Agreement, any amounts payable by LESCO to Bank under this
Agreement will be due when invoiced by the Bank and shall be paid in immediately
available funds within fifteen (15) days after the date of such invoice. LESCO
will transfer funds payable to Bank under this Section 3.3(a) via wire transfer
to a deposit account maintained in Bank's name pursuant to written instructions
delivered to LESCO by Bank.
SECTION 3.4 PROGRAM FEES. LESCO shall pay to Bank the Prox Fee in
connection with each submission to Bank of Charge Transaction Data pertaining to
purchases financed on Prox Accounts, the Net Invoice Fee in connection with each
submission to Bank of Charge Transaction Data pertaining to purchases financed
on Net Invoice Accounts, and the BRC Fee in connection with each submission to
Bank of Charge Transaction Data pertaining to purchases financed on BRC
Accounts. Such fees shall be calculated as follows:
(a) The Prox Fee shall be an amount equal to the product
of (x) the applicable Prox Fee Percentage, and (y) the aggregate amount of
charges on all Prox Accounts reflected in such Charge Transaction Data
(excluding any charges for which the parties have established a Promotional Fee
Percentage), less the aggregate amount of any credits on Prox Accounts reflected
in such Charge Transaction Data.
(b) The Net Invoice Fee for each purchase financed on a
Net Invoice Account shall be an amount equal to the product of (x) the
applicable Net Invoice Fee Percentage for such purchase, and (y) the amount of
charges reflected on the invoice relating to such Purchase, in each case, as
reflected in the Charge Transaction Data (excluding any charges for which the
parties have established a Promotional Fee Percentage), less the aggregate
amount of any credits on such Net Invoice Account reflected in such Charge
Transaction Data.
(c) The BRC Fee shall be an amount equal to the product
of (x) the applicable BRC Fee Percentage, and (y) the aggregate amount of
charges on all BRC Accounts reflected in such Charge Transaction Data (excluding
any charges for which the parties have established a Promotional Fee
Percentage), less the aggregate amount of any credits on BRC Accounts reflected
in such Charge Transaction Data.
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(d) The Prox Fee or BRC Fee applicable to any purchase
subject to a credit-based promotion shall be an amount equal to the product of
(x) the applicable Promotional Percentage (based upon the status of the Account
as either a Prox Account or a BRC Account, as the case may be, and the length of
the payment deferral period) for such purchase (which percentage shall be
obtained from Schedule 3.5(d)), and (y) the total amount of the charge
applicable to such purchase, as reflected in the Charge Transaction Data.
SECTION 3.5 PROGRAM FEE PERCENTAGES.
(a) The Prox Fee Percentages, Net Invoice Fee Percentages
and BRC Fee Percentages available under the Open Account Program and the BRC
Program (other than in respect of credit based promotions), respectively, as of
the Program Commencement Date are set forth on Schedule 3.5.
(b) Beginning on the first anniversary of the Program
Commencement Date and as of each Program Commencement Date anniversary
thereafter during the Term, the Prox Fee Percentage (other than the Prox
Recourse Fee Percentage) and/or the BRC Fee Percentage, as applicable, shall be
automatically adjusted in accordance with the charts set forth in Schedule 3.5
if the Average Active Account Balance for all Prox Accounts and/or all BRC
Accounts, as the case may be, during the immediately preceding Program Year is
greater than (i) in the case of Prox Accounts, (REDACTED) and (ii) in the case
of BRC Accounts, (REDACTED). Any adjustment to the Prox Fee Percentages and BRC
Fee Percentages required under the preceding sentence shall be effective on the
first day after the applicable Program Commencement Date anniversary.
(c) At any time following the first twenty-four (24)
months after the Program Commencement Date, Bank may, based upon differences in
the costs or other economic assumptions (including, without limitation, credit
losses, Account volume, and the like) which Bank relied upon in establishing the
Program Fee Percentages, adjust any or all of the Program Fee Percentages set
forth on Schedule 3.5 or Schedule 3.5(d) (as any of such percentages may
previously have been adjusted pursuant to Section 3.6) so long as (i) no single
adjustment will result in an increase in the Weighted Annual Program Cost of
more than (REDACTED) relative to the Program Fee Percentages in effect
immediately prior to such adjustment, and (ii) the aggregate of all such
adjustments will not result in an increase in the Weighted Annual Program Cost
of more than (REDACTED) relative to the Program Fee Percentages in effect as of
the Program Commencement Date. Each such adjustment is referred to herein as
"New Pricing". Prior to initiating any such New Pricing, Bank will (i) confer
with LESCO regarding the basis for such New Pricing, and (ii) give written
notice to LESCO not less than sixty (60) days prior to the end of any Program
Year. Such New Pricing will be implemented on the first day of the immediately
succeeding Program Year and will be used in calculating the Program Fees in
respect of all Charge Transaction Data submitted at any time after such
effective date. For the avoidance of doubt, adjustments to the Program Fee
Percentages contemplated by Section 3.6 shall not be taken into account when
calculating the effect on the Weighted Annual Program Cost resulting from any
New Pricing under this Section 3.5(b).
(d) As of the Program Commencement Date, the Promotional
Fee Percentages applicable to credit based promotions available under the
Program are set forth on Schedule
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3.5(d). If Bank and LESCO agree to offer any additional kind of credit-based
promotion with respect to either the Prox Terms, the Net Invoice Terms or the
BRC Terms, Bank will establish in writing, with acknowledgment by LESCO, the
Promotional Fee Percentage applicable to the calculation of the Program Fee
payable by LESCO for qualifying purchases, as well as such other terms and
conditions as the parties shall agree. BRC Accounts with respect to which a
credit based promotion is initiated during the Interim Transition Period shall
be subject to the Promotional Fee Percentages applicable to Prox Accounts.
SECTION 3.6 INTEREST RATE ADJUSTOR. In addition to Bank's right to
adjust the Program Fee Percentages as set forth in Section 3.5, on the first day
after the end of the first full calendar quarter following the Program
Commencement Date, the following pricing adjustment provisions shall apply:
(a) for every (REDACTED)increase in the LIBOR Rate above
1.00%, Bank shall increase each Prox Fee Percentage and each Net Invoice Fee
Percentage set forth on Schedule 3.5 (or any other Prox Fee Percentage or Net
Invoice Fee Percentage subsequently established by the parties) by (REDACTED).
Any change in the LIBOR Rate during any quarter or series of quarters not equal
to a multiple of (REDACTED)shall be held over and applied in the next calendar
quarter until at least a (REDACTED) multiple has been achieved. With respect to
each calendar quarter after such first quarter and continuing until the
expiration or earlier termination of the Operating Period, for every increase or
decrease in the LIBOR Rate relative to the rate in effect as of the last
Business Day of the immediately preceding calendar quarter (including any basis
point change held over from the prior quarter's calculation) equal to a multiple
of (REDACTED), Bank shall adjust up or down, as the case may be, each Prox Fee
Percentage and each Net Invoice Fee Percentage in the manner set forth above;
provided, however, Bank shall not make any adjustment to any Prox Fee Percentage
or any Net Invoice Fee Percentage based on a change in the LIBOR Rate below
1.00%. Bank shall implement any such change to the Prox Fee Percentages and the
Net Invoice Fee Percentages on the first day of each calendar quarter. By way of
illustration and not limitation, examples of such adjustments are attached
hereto as Schedule 3.6.
(b) for every (REDACTED)increase in the LIBOR Rate above
1.00%, Bank shall increase each Promotional Fee Percentage set forth on Schedule
3.5(d) (or any other Promotional Fee Percentage subsequently established by the
parties) by the number of basis points set forth in Schedule 3.5(d) (pursuant to
the "Interest Rate Adjustment" column). Any change in the LIBOR Rate during any
quarter or series of quarters not equal to a multiple of (REDACTED)shall be held
over and applied in the next calendar quarter until at least a
(REDACTED)multiple has been achieved. With respect to each calendar quarter
after such first quarter and continuing until the expiration or earlier
termination of the Operating Period, for every increase or decrease in the LIBOR
Rate relative to the rate in effect as of the last Business Day of the
immediately preceding calendar quarter (including any basis point change held
over from the prior quarter's calculation) equal to a multiple of (REDACTED),
Bank shall adjust up or down, as the case may be, each Promotional Fee
Percentage in the manner set forth above in this Section 3.5(d) and in
accordance with Schedule 3.5(d); provided, however, Bank shall not make any
adjustment to any Promotional Fee Percentage based on a change in the LIBOR Rate
below 1.00%. Bank shall implement any such change to the Promotional Fee
Percentages on the
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first day of each calendar quarter. By way of illustration and not limitation,
examples of such adjustments are attached hereto as Schedule 3.6.
ARTICLE 4 OTHER PROGRAM ECONOMICS
SECTION 4.1 ALLOCATION OF PROGRAM EXPENSES. Unless otherwise
specifically provided in this Agreement, each party will be responsible for all
costs and expenses incurred by it in connection with complying with its
responsibilities under this Agreement.
SECTION 4.2 SOLICITATION OF ACCOUNTHOLDERS FOR OTHER PRODUCTS.
(a) During the Term of this Agreement, Bank (or its
designees) may, with the prior written (except as provided below) consent of
LESCO (which consent shall not be unreasonably withheld after giving
consideration to any privacy or other opt-out obligations of LESCO), solicit
Accountholders for and offer to Accountholders (or arrange for a third party to
solicit and/or provide) products and services offered by Bank, its affiliates or
any third party, as well as Value-Added Programs, so long as such products or
services do not compete with LESCO's products. Not less than eight (8) weeks
prior to the proposed launch date of any such solicitation, Bank shall notify
LESCO of the proposed terms and conditions thereof. LESCO shall respond
promptly, but in any event not more than forty-five (45) days after such notice
date. If LESCO fails to respond within such 45 day period, LESCO's consent to
the proposed solicitation shall be deemed given. To the extent such marketing
involves the use of the LESCO Marks, Bank shall follow any guidelines provided
by LESCO in respect thereof. Following the termination of this Agreement
pursuant to Article 9, Bank may, without the consent of LESCO, solicit
Accountholders for and offer to Accountholders (or arrange for a third party to
solicit and/or provide) products and/or services offered by Bank, its affiliates
or any third party, so long as such products or services do not compete with
LESCO's products or services. The foregoing to the contrary notwithstanding,
nothing herein shall preclude Bank or any affiliate of Bank from undertaking any
general solicitation that happens to include Accountholders so long as the
inclusion of such Accountholders in such solicitation is not based upon the
status of any such entity as an Accountholder, the Accountholder Information was
not used in connection with such solicitation and the names of the solicited
Accountholders were obtained from a source other than the Accountholder
Information or the Program.
(b) Bank will be entitled to retain for its account any
proceeds generated from Bank's (including through third parties engaged by Bank)
provision of the goods and services referred to in Sections 4.2(a) and LESCO
will have no rights to such proceeds.
ARTICLE 5 PROMOTION OF THE PROGRAM
SECTION 5.1 ANNUAL MARKETING PLANS. Bank and LESCO will work together
in good faith to agree for each Program Year on a marketing plan to promote the
Program and each party agrees to implement such marketing plan. Bank and LESCO
may from time to time also mutually agree on additional specific marketing
activities for the Program (and will not unreasonably withhold consent to any
specific marketing plan proposed by the other party). Allocation of the costs
and expenses of all marketing promotions or other items set forth in each
marketing plan will be mutually established by the parties as part of such plan;
provided, that
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unless otherwise agreed to by Bank in writing, the costs of implementing each
marketing plan (or for implementing any marketing or promotional initiatives
developed by the parties outside of such plan) shall be paid for from the
Marketing Fund or by LESCO.
SECTION 5.2 RESPONSIBILITY OF BANK TO PROMOTE THE PROGRAM.
(a) Bank will establish (by creation of a record
maintained on the books of Bank) and administer a marketing fund ("Marketing
Fund") to fund Bank's portion of the costs and expenses of implementing the
agreed marketing plans for the Program.
(b) During the Term of this Agreement and prior to either
party issuing a notice of termination, Bank will allocate to the Marketing Fund
at the end of each Business Day during the Term an amount equal to (REDACTED) of
Net BRC Program Sales for such day. Unless a default by LESCO shall have
occurred and be continuing, Bank shall, to the extent provided for in the
applicable marketing plan, spend during the Program Year covered by such
marketing plan the amount allocated by Bank to the Marketing Fund during such
Program Year; provided, that Bank shall have no further obligation to expend any
funds remaining in the Marketing Fund as of the date of any notice of
termination given by either party.
(c) Bank will be the exclusive owner of the Marketing
Fund, and LESCO acknowledges and agrees that it will have no right, title or
interest in or to the Marketing Fund.
SECTION 5.3 RESPONSIBILITY OF LESCO TO PROMOTE THE PROGRAM.
(a) Without limiting LESCO's obligations under any
marketing plan, LESCO will actively support and promote the Program by, among
other things:
(b) encouraging the establishment and use of Accounts as
the preferred method of payment for LESCO's products and services (through, for
example, offering or providing loyalty programs, value propositions and other
customer incentives);
(c) providing and utilizing store signage, credit
advertisements, promotional inserts, statement messages and other marketing
materials promoting Program; and
(d) providing incentives and performance goals for LESCO
personnel with respect to the Program (which need not be monetary in nature).
(e) LESCO may establish an Accountholder loyalty program
connected to Credit Card and Account use and the Program (the "Cardholder
Loyalty Program"). If LESCO elects to establish such a program, (i) the terms
and conditions of the Cardholder Loyalty Program and any modifications thereto
shall be subject to Bank's reasonable consent, (ii) the Cardholder Loyalty
Program shall be in addition to and provide superior benefits in comparison with
any multi-tender or other loyalty program offered by LESCO, (iii) in addition to
any other amounts spent by LESCO under Section 5.1(a) or 5.3 to promote or
support the Program, LESCO shall expend such commercially reasonable amounts as
are deemed necessary or appropriate by the parties to support the Cardholder
Loyalty Program and to promote it to Accountholders and customers, (iv) to the
extent consistent with the marketing plan then in effect, LESCO may seek
reimbursement from the Marketing Fund for the costs associated with
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in-store promotion of the Cardholder Loyalty Program; provided however, that the
cost of customer rewards and incentives, merchandise discounts, mailing costs
and any third party servicing or transaction fees or costs relating to the
Cardholder Loyalty Program shall be paid by LESCO and shall not be subject to
reimbursement from the Marketing Fund.
(f) LESCO will not seek or obtain any special agreement
or condition from, nor discriminate in any way against, Accountholders or any
person with respect to the terms of any Account transaction. LESCO will not
charge any credit surcharge, application, processing or other Program related
fee to Accountholders.
ARTICLE 6 OTHER AGREEMENTS
SECTION 6.1 OWNERSHIP OF ACCOUNTS.
(a) Bank is and will be the sole and exclusive owner of
all Accounts and Account Documentation, and will be entitled to receive all
payments made by Accountholders on Accounts. Bank shall be identified as the
creditor and owner of the Accounts for all purposes, and LESCO shall not
represent or imply otherwise. LESCO acknowledges that it has no right, title or
interest in any Accounts or Account Documentation and will not, at any time,
have any right to any proceeds or payments made under the Accounts unless LESCO
subsequently purchases or otherwise acquires such Accounts from Bank. LESCO
further acknowledges that neither the Accountholder Information nor any of the
Account Documentation nor any of the information included in the Account
Documentation will be deemed to be Confidential Information of LESCO for
purposes of Section 13.1 hereof (provided, that the foregoing shall not limit or
derogate from the restrictions on use of the Accountholder List or the
information contained therein provided for in Section 13(b)(ii)). LESCO
authorizes and empowers Bank to sign and endorse LESCO's name upon any checks,
drafts, money orders or other forms of payment in respect of any Account that
may have been issued by the Accountholder in LESCO's name. This limited power of
attorney conferred in this Section 6.1 is deemed a power coupled with an
interest and will be irrevocable prior to the Final Liquidation Date.
(b) Except with respect to Recourse Accounts, Bank will
bear all credit losses on Accounts (other than as permitted by Bank's chargeback
rights in Article 7 and other than credit losses incurred after the Accounts are
purchased or otherwise acquired by LESCO or a third party pursuant to Section
10.1).
SECTION 6.2 OWNERSHIP AND USE OF ACCOUNTHOLDER INFORMATION. Bank is the
sole and exclusive owner of all lists of Accountholders and applicants generated
by the Program (including, without limitation, names, addresses, telephone
numbers, e-mail addresses, dates of birth, tax, organization, social security
and similar numbers, and account and similar access numbers), (the
"Accountholder Information"). Nothing herein shall limit LESCO's rights in or
use of any customer list of LESCO to the extent the information therein is
generated by LESCO independently of the Program. Further, Bank's ownership of
the Accountholder Information notwithstanding, LESCO may use the Accountholder
Information during the Term to promote the Program and to promote the products
and services sold by LESCO under the Program. Without limiting the solicitation
restrictions set forth in Section 4.2, during the Term, Bank may use the
Accountholder Information to exercise its rights and fulfill its obligations
under this
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Agreement and with respect to the administration and liquidation (including
sale) of Accounts after the expiration or earlier termination of the Term.
SECTION 6.3 ACCOUNTHOLDER TERMS. Bank may establish and modify the
ordinary finance charge rates (if applicable) to credit extended to
Accountholders. Bank may also establish (and modify from time to time) all other
terms upon which credit will be extended to Accountholders, including without
limitation, repayment terms, default finance charges, late fees, overlimit
charges, returned check charges, and other ordinary fees and charges. Subject to
the foregoing, the initial Prox Terms, Net Invoice Terms and BRC Terms to be
offered to Accountholders under the Open Account Program and the BRC Program,
respectively, are set forth in Schedule 6.3 hereto and are made a part hereof.
Unless a shorter notice period is required to avoid violation by Bank of
applicable law, rule, regulation or order, Bank shall notify and consult with
LESCO at least sixty (60) days prior to amending or modifying the finance charge
rates and fees set forth on Schedule 6.3.
SECTION 6.4 CREDIT CRITERIA. Bank shall establish in its discretion and
may modify from time to time any or all of the credit criteria used in
evaluating applicants under the Program (including, without limitation, the
creditworthiness of individual applicants, the range of credit limits to be made
available to individual Accountholders and whether to suspend or terminate the
credit privileges of any Accountholder). Bank will consult with LESCO regarding
any changes to the credit criteria used for the Program which, in Bank's
reasonable opinion, could reasonably be expected to have a material adverse
affect on the Program.
SECTION 6.5 OPERATING PROCEDURES. Except for changes (a) necessary to
the prevention or mitigation of fraud, (b) required by applicable law, or (c)
which Bank reasonably determines are necessary or appropriate to comply with (or
avoid violation of) applicable regulatory authority, Bank shall not materially
amend any "key terms" of the Operating Procedures without the prior written
consent of LESCO, which consent shall not be unreasonably withheld. As used in
the preceding sentence, "key terms" means those terms and conditions of the
Operating Procedures the amendment of which is reasonably likely to result in a
materially adverse alteration of the methods and procedures through which LESCO
participates in the Program, relative to the Operating Procedures attached
hereto as of the Program Commencement Date.
SECTION 6.6 CREDIT REVIEW POINT; PROGRAM CREDIT MINIMUMS.
(a) Bank will not be obligated to make any extension of
credit under the Program if, after such extension, the aggregate Indebtedness
for (i) all BRC Accounts, or (ii) for all Prox Accounts plus all Net Invoice
Accounts, would exceed, in the case of the BRC Accounts, the BRC Credit Review
Point or, in the case of Prox Accounts and Net Invoice Accounts, the Open
Account Credit Review Point. Bank shall also have no obligation to extend
further credit under the Program at any time after the occurrence of any event
that would allow Bank to give notice of termination hereunder.
(b) If at any time, the aggregate Indebtedness with
respect to (x) all BRC Accounts equals or exceeds eighty percent (80%) of the
BRC Credit Review Point then in effect, or (y) all Prox Accounts plus all Net
Invoice Accounts equals or exceeds eighty percent (80%) of
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the Open Account Credit Review Point then in effect, then within ninety (90)
days after either of the foregoing events, Bank will select one of the following
options and give LESCO written notice of its selection:
(c) Bank may increase the BRC Credit Review Point or the
Open Account Credit Review Point, as the case may be, to an amount that will
accommodate the then outstanding Indebtedness under the Open Account Program or
the BRC Program, and anticipated growth in either such pool of Indebtedness (as
applicable), based on Bank's good faith projections. If Bank selects this
option, then Bank's written notice to LESCO will include the amount of the
increased Credit Review Point.
(d) Bank may elect not to increase the BRC Credit Review
Point or the Open Account Credit Review Point, as the case may be, in which
case, LESCO will be entitled to terminate this Agreement in accordance with the
provisions of Section 9.2(i).
SECTION 6.7 LESCO FINANCIAL REPORTS; FINANCIAL COVENANTS.
(a) If at any time during the term of this Agreement
LESCO is not obligated to, or for any other reason does not, file periodic
financial reports with the Securities and Exchange Commission pursuant to the
reporting requirements of Section 13 or Section 15(d) of the Securities Exchange
Act of 1934, as amended, LESCO will:
(b) As soon as practicable but in any event not more than
one hundred and twenty (120) days after the end of each fiscal year, deliver to
Bank its audited annual financial statements, including its audited consolidated
balance sheet, income statement and statement of cash flows and financial
position, and including an unqualified opinion from a nationally recognized
accounting firm reasonably acceptable to Bank.
(c) As soon as practicable but in any event not more than
sixty (60) days after the end of each fiscal quarter of LESCO, deliver to Bank
its unaudited quarterly financial statements, including its unaudited
consolidated balance sheet, income statement and statement of cash flows and
financial position, accompanied by a certificate from LESCO's chief financial
officer that such financial statements were prepared in accordance with
generally accepted accounting principals applied on a consistent basis and
present fairly the consolidated financial position of LESCO as of the end of
such fiscal quarter and the results of its operations, subject to normal year
end audit adjustments.
(d) LESCO will deliver to Bank copies of all compliance
certificates delivered to its lenders under its credit facilities, if any.
(e) LESCO will satisfy the financial covenant set forth
on Schedule 6.7(c). Within fifteen (15) days after the end of each fiscal
quarter of LESCO, LESCO will deliver to Bank a written certification by the
chief financial officer of LESCO certifying that LESCO is in compliance with the
financial covenant set forth in Schedule 6.7(c) or, if not, providing a
reasonably detailed explanation as to the reasons for and the status of LESCO's
non-compliance. Each such certificate shall set forth in a manner reasonably
acceptable to Bank the calculation of such compliance.
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(f) Concurrently with the delivery of the certificate
referred to in Section 6.7(c), LESCO shall deliver a certificate signed by the
chief financial officer of LESCO, to the effect that, to the best of his or her
knowledge, LESCO is in compliance in all material respects with all applicable
environmental laws and OSHA. To the extent LESCO is not in material compliance
with the foregoing laws, the certificate shall set forth with specificity all
areas of such non-compliance and the proposed action LESCO will implement in
order to achieve material compliance. For purposes of this Section 6.7(d), LESCO
shall not be deemed to be out of compliance with applicable environmental laws
and OSHA if the aggregate liability to LESCO resulting from such non-compliance
for any fiscal quarter of LESCO (taking into account all violations incurred
during such quarter or remaining outstanding from prior quarters) is less than
or equal to One Hundred Thousand Dollars ($100,000).
SECTION 6.8 ACCESS. LESCO will permit Bank's representatives to visit
Store Locations during normal business hours with reasonable advance notice.
LESCO will also permit Bank to review and obtain copies of all of the books and
records of LESCO relating to the Program and authorizes Bank to monitor the
administration and promotion of the Program through mystery shopping and by
other reasonable means.
SECTION 6.9 INSERTS AND BILLING MESSAGES.
(a) Beginning as of the expiration of the Interim
Transition Period, for each billing statement sent to Accountholders during a
billing cycle during the Term, Bank will make available to LESCO a space for one
(1) customized message on the billing statement and Bank will include as many
LESCO inserts into each billing statement as possible (but in no event more than
eight (8) in the case of BRC Accounts and ten (10) in the case of Prox Accounts)
without causing the weight of the billing statement package to exceed one ounce;
provided that if Bank is required by law to send a notice in such month then
such notice shall take priority, and; provided further, that if LESCO wishes
Bank to include LESCO's inserts in any billing statements in which the inclusion
of such inserts will cause the postage on such billing statements to exceed one
ounce, then LESCO will provide at least five (5) days prior notice to Bank to
enable Bank to adjust its process and LESCO will pay the overweight postage
charges resulting therefrom. The foregoing notwithstanding, Bank is not required
to include any LESCO statement messages or billing inserts unless Bank receives
such statement messages or copies of the billing inserts at least fifteen (15)
days prior to the calendar month for the scheduled mailing date. LESCO will
provide copies of all billing inserts to Bank at its own cost.
(b) The form of customized messages and all billing
inserts will comply with Bank's specifications as provided to LESCO from time to
time, and Bank shall have the right to reject any message or billing statement
that Bank reasonably believes is detrimental to the image of the Bank or the
Program. In addition, any Bank billing inserts or statement messages that Bank
reasonably believes are required by law or to protect Bank's interest in the
Accounts will take priority over LESCO's billing inserts or statement messages.
For the avoidance of doubt, only billing inserts and statement messages
regarding the Program, or goods and services available for purchase from LESCO
under the Program, shall qualify for inclusion in Accountholder billing
statements.
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SECTION 6.10 EXTENDED WARRANTIES. LESCO will not be permitted to
finance on Accounts extended warranties or service contracts without the prior
written approval of Bank. With respect to either of the foregoing, if LESCO
seeks Bank's consent to finance such products under the Program, LESCO agrees to
review with Bank its offering of and procedures concerning the sale and
fulfillment of such products. LESCO understands that any third party insurer of
any extended warranty program proposed by LESCO shall be subject to financial
review by Bank and must otherwise be reasonably acceptable to Bank. Even where
approved by Bank, LESCO shall be responsible for ensuring that any extended
warranties or service contracts fully comply with all applicable laws. Nothing
in this Section 6.10 shall restrict LESCO from selling products subject to
normal manufacturer's warranties included in the standard purchase price as long
as no additional seller's warranties are provided.
SECTION 6.11 THIRD PARTY PARTICIPATION. As of the date of this
Agreement, LESCO represents and warrants that no affiliate of LESCO is engaged
in the business of selling goods or services to commercial customers other than
those affiliates signatory hereto, or those affiliates, if any, whose existence
and commercial sales activities have been disclosed to Bank prior to the date
hereof. LESCO shall not after the Program Commencement Date permit any affiliate
(other than those signatory hereto) to charge any purchase to an Account or to
submit any Charge Transaction Data to Bank without (i) the prior written consent
of Bank; (ii) such affiliate having entered into a written agreement with Bank
to be a sponsoring entity hereunder (on such modified terms and conditions as
Bank may require); and (iii) such affiliate having executed such additional
documents (including but not limited to UCC financing statements) as Bank may
require. LESCO has not and will not permit any licensee, subtenant or third
party operating in or from a Store Location to accept Credit Cards for purchases
by Accountholders without first obtaining Bank's prior written approval.
SECTION 6.12 SALES TAXES AND RELATED RECORD RETENTION.
(a) LESCO will pay when due any sales taxes relating to
the sale of goods or services financed on Accounts. LESCO agrees that Bank shall
be entitled to any and all recoveries of taxes of any type that were imposed on
the sale of goods or services attributable to any Account that Bank determines
to be non-collectable during the term of this Agreement through any and all
potential means, including, but not limited to, refunds, deductions, credits or
audit offsets. LESCO shall cooperate with Bank in the recovery of any and all
such taxes by any and all such means, including but not limited to executing any
and all forms or other documentation deemed necessary by Bank or required by any
taxing authority, and retaining and timely producing all supporting
documentation and data relative to such Accounts. Bank shall reimburse LESCO for
all reasonable expenses incurred by LESCO for copying, mailing or transmitting
such documentation or data at the direction of Bank as contemplated by this
Agreement.
(b) LESCO will retain a record of each purchase included
in any Charge Transaction Data submitted to Bank under the Program for at least
four (4) years from the date of each purchase, which record may be maintained in
electronic format, but must show the Account number, amount of sales, use or
excise tax included in each such purchase and the street address of the Store
Location where each such purchase was made (or a store number or other
- 17 -
information from which the street address of the location of the sale can be
readily ascertained). LESCO will provide such information to Bank within twenty
(20) days of Bank's request.
SECTION 6.13 USE OF NAMES AND MARKS. LESCO hereby grants Bank a
nonexclusive, royalty-free, worldwide license to use the LESCO Marks in
connection with the establishment, administration and operation of the Program
and the ownership and liquidation of the Accounts (including, without
limitation, the exercise by Bank of all of its rights under this Agreement and
under applicable law, and the fulfillment of all of Bank's obligations under
this Agreement and under applicable law). Without the prior written consent of
Bank, LESCO may not use Bank's (or any affiliate thereof) names or any related
marks, logos or similar proprietary designations; provided, that LESCO may use
Bank's business name, in the nominative sense, in connection with any credit
disclosure verbiage included in any advertising of the Program (or any credit
based promotion offered thereunder) by LESCO. The license granted hereby shall
expire as of the Final Liquidation Date. Bank shall not use the LESCO Marks for
any purpose other than in connection with the establishment, administration and
operation of the Program and the ownership and liquidation of the Accounts
(including, without limitation, the exercise by Bank of all of its rights under
this Agreement and under applicable law, and the fulfillment of all of Bank's
obligations under this Agreement and under applicable law), without the prior
written consent of LESCO.
SECTION 6.14 INTELLECTUAL PROPERTY. All technology, software, or other
material developed, invented, created or authored by either party in connection
with the Program shall belong solely and exclusively to the developing party,
including all intellectual property rights relating thereto.
SECTION 6.15 SECURITIZATION. Bank and its affiliates may securitize,
participate or otherwise convey or transfer an interest in, or pledge or create
a lien in respect of, any or all of the Accounts and/or Indebtedness at any time
during the term of this Agreement; provided, that no such action will adversely
effect any of the rights of LESCO to purchase the Accounts and Indebtedness in
accordance with the terms of this Agreement. LESCO agrees to cooperate with Bank
and its affiliates and use commercially reasonable efforts (without being
required to incur any material out-of-pocket costs) to assist Bank and its
affiliates in connection with any such matter.
SECTION 6.16 GRANT OF SECURITY INTEREST/PRECAUTIONARY FILING.
(a) Effective as of the Program Commencement Date, both
(x) as a precaution against the application of the Uniform Commercial Code (or
any other analogous personal property security law as in effect from time to
time) to this transaction or the recharacterization of this transaction, and (y)
to secure payment of and performance by LESCO of any and all indebtedness,
liabilities or obligations, now existing or hereafter arising pursuant to this
Agreement, including indebtedness, liabilities and obligations that may be
deemed to exist in the event of the applicability of Article 9 of the UCC to,
and any recharacterization of, any transactions contemplated hereby, LESCO
grants to Bank a security interest in all of LESCO's right, title and interest,
if any, now existing or hereafter arising in all (i) Accounts, Account
Documentation and Indebtedness, (ii) all deposits, credit balances and reserves
on Bank's books relating to any such Accounts, (iii) all goods financed on
Accounts and returned to LESCO by
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Accountholders for which LESCO has not repaid Bank, and (iv) all proceeds of any
of the foregoing.
(b) LESCO agrees to cooperate fully with Bank, as Bank
may reasonably request, in order to give effect to the security interests
granted by this Section 6.16. LESCO hereby authorizes Bank to file such UCC-l or
comparable statements as Bank deems necessary or appropriate to perfect such
security interests. LESCO represents and warrants that as of the date hereof the
following are the true and correct corporate names of each LESCO affiliate
signatory below: (i) LESCO, Inc., incorporated in the State of Ohio; LESCO
Services, Inc., incorporated in the State of Ohio; (iii) AIM Lawn & Garden
Products, Inc., incorporated in the State of Ohio; and (iv) LESCO Technologies,
LLC, organized under the laws of the State of Nevada. LESCO agrees to provide
Bank with thirty (30) days' prior written notice of any change in any of the
foregoing corporate names, or any states of incorporation or organization.
(c) Unless Bank shall have otherwise consented in
writing, LESCO shall not create, assume or suffer to exist any lien on any of
its right, title or interest under this Agreement or in the proceeds thereof.
SECTION 6.17 IN-STORE PAYMENTS.
(a) LESCO shall make available to Accountholders at all
Store Locations the address to be used for payment on Accounts to be made
directly to Bank; provided, that except as provided below, during the Term LESCO
may accept at any of its Store Locations payments on an Account by the
underlying Accountholder or any person acting on behalf of such Accountholder.
If any such in-store payment is made (or LESCO otherwise receives any payment on
an Account), LESCO shall give the Accountholder a receipt therefore and shall be
deemed to hold such payment as property of, and in trust for, Bank until (x)
such payment is delivered to Bank, or (y) Bank is informed of the amount of such
payment in accordance with Section 6.17(b). If at any time, based upon Bank's
good faith interpretation of any law, rule, regulation, guideline or order, Bank
determines that, as a result of such law, rule, regulation, guideline or order,
LESCO's acceptance of in-store payments is detrimental to the interests of Bank,
or if Bank determines that there has been a material deterioration in the
financial condition of LESCO, then, at Bank's request, LESCO shall cease
accepting in-store payments and shall direct Accountholders to make all payments
in respect of Accounts directly to Bank.
(b) It is the intention and expectation of Bank and LESCO
that notice of each in-store payment or credit slip with respect to any Account
shall be transmitted to Bank within 24 hours of each such transaction (which
notice shall include the amounts and Accounts as to which such transaction
relates); provided, that in no case shall any such data transmission occur later
than (i) in the case of purchases at Service Centers(R), three (3) days, and
(ii) in the case of purchases from Stores-On-Wheels(R) or from LESCO's other
outside sales force, five (5) days after the receipt of such payment or issuance
of such credit. An in-store payment will be credited to the relevant Account as
of the date Bank applies the amount of such payment to reduce amounts payable by
Bank to LESCO (or if no such application is made, as of the date Bank receives
such in-store payment from LESCO).
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SECTION 6.18 PROGRAM MANAGERS. Bank and LESCO shall each designate one
employee (with sufficient authority to facilitate decision-making on behalf of
Bank and LESCO, respectively, and with sufficient knowledge and experience to
effectively and efficiently manage the relationship contemplated hereby) who
shall be charged with day-to-day administrative responsibility for the Program
(each, a "Program Manager"), and who shall make available a sufficient amount of
his or her working time, attention, skill, and efforts necessary to furthering
the interests of the Program. Either party may replace its Program Manager at
any time upon not fewer than ten (10) days' notice to the other party, so long
as the replacement Program Manager meets the foregoing qualifications.
SECTION 6.19 PERIODIC PROGRAM REPORTS.
(a) Beginning at the expiration of the Interim Transition
Period, and following the end of each calendar month during the Term, Bank will
prepare and send to LESCO a report containing information about the Program
during such period. The specific form and content of such report shall be
determined by Bank and LESCO, subject to Bank's available internal customer
reporting capabilities as in effect on the Program Commencement Date (as the
same may be amended from time to time), but in any event shall include (i)
applicant and Accountholder demographics for such period, (ii) information about
the relative status (e.g., volume and aggregate outstanding balances) of the
Open Account Program and the BRC Program as of the end of such period, and (iii)
a summary of other pertinent statistical data pertaining to the Program for such
period. During the Interim Transition Period, Bank will produce such reports as
the parties may mutually agree, subject to the capabilities of the Account
Processing System.
(b) Following the expiration of the Interim Transition
Period, (i) Bank and LESCO shall work in good faith to develop mutually
agreeable customer service metrics for the Program, and (ii) upon the
establishment of such metrics, Bank shall include in the periodic reports
referred to in Section 6.19(a) (or on such other basis as the parties shall
agree) Bank's performance against such metrics for the applicable reporting
period.
ARTICLE 7 CHARGEBACKS
SECTION 7.1 CHARGEBACK RIGHTS. Bank will have the right to chargeback
to LESCO any Indebtedness, if with respect to the corresponding charge or credit
or the related Charge Transaction Data or the underlying transaction:
(a) The Accountholder disputes a charge and LESCO cannot
provide Bank with the applicable invoice or receipt that resolves the dispute
within twenty (20) days of Bank's request;
(b) The Accountholder or any person disputes the
existence of an Account and LESCO cannot provide Bank with an executed
application that resolves the dispute within twenty (20) days of Bank's request;
(c) The Accountholder disputes the amount of an Account
and/or refuses to pay alleging dissatisfaction with products or services
received, a breach of any warranty or representation by LESCO in connection with
the transaction, or an offset or counterclaim based
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on an act or omission of LESCO, provided that any such dispute(s) constitutes a
bona fide claim presented by an Accountholder in good faith in the reasonable
opinion of Bank;
(d) LESCO failed to comply with any Operating
Procedure(s) with respect to any charge, credit, or Account, or Bank determines
that any charge, credit or Account was subject to any acts of fraud performed by
or in collusion with LESCO's employees, contractors or agents;
(e) The Accountholder disputes the amount or existence
of, or otherwise refuses to pay, all or any portion of the Indebtedness
resulting from a Card-Not-Present Purchase; or
(f) Bank determines that any warranty made by LESCO
pursuant to Section 11.2 was false or inaccurate in any respect when made.
(g) In its reasonable discretion, Bank may compromise and
settle any claim made by any Accountholder (including claims made on behalf of
an authorized user) relating to such Accountholder's Account. No such compromise
or settlement will impair Bank's right to chargeback under this Section 7.1 any
portion of such Account not paid pursuant to any such settlement or compromise.
If the full amount or any portion of any Charge is charged back, upon receipt of
the funds due Bank in respect thereof, Bank will be deemed to have assigned,
without recourse, all rights to payment for the amount charged back to LESCO.
SECTION 7.2 FRAUD LOSSES ON ACCOUNTS. With respect to amounts payable
under Section 7.1 in connection with Uncontrollable Fraud (and without limiting
LESCO's obligation with respect to amounts payable for any other reason under
Section 7.1), LESCO agrees to pay to Bank promptly upon demand, an amount equal
to all losses, including accrued finance charges and fees, incurred by Bank in
any given Program Year resulting from Uncontrollable Fraud, once such losses
exceed the amount of the Fraud Cap established for such Program Year. Bank may
make demand for payment hereunder from time to time at any time during a Program
Year (or set off such amounts pursuant to Section 3.1(b)) after the losses,
including accrued finance charges and fees, incurred by Bank and resulting from
Uncontrollable Fraud exceed the Fraud Cap for such Year. In calculating fraud
losses, an incident of Uncontrollable Fraud will be attributed to the Program
Year in which the fraudulent act was perpetrated and not to the Year in which
such fraud is discovered (if different from the Year of perpetration). The
"Fraud Cap" for the first Program Year shall be (REDACTED). As used herein, the
following terms shall have the following meanings: (a) "Uncontrollable Fraud"
shall mean acts of fraud perpetrated by persons other than employees,
contractors or agents of LESCO, which acts of fraud occur despite LESCO's full
compliance with this Agreement and the Operating Procedures then in effect; and
(b) "Fraud Cap" means, for any Program Year after the first Program Year, an
amount equal to the product of (i) Net Program Sales for the immediately
preceding Program Year, and (ii(REDACTED); the percentage used in calculating
the Fraud Cap shall be subject to review and adjustment by Bank at the beginning
of each Program Year.
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ARTICLE 8 - EXCLUSIVITY
SECTION 8.1 EXCLUSIVITY. LESCO will not (and will cause its affiliates
not to) (a) directly or indirectly, accept for payment, promote, sponsor,
solicit, permit solicitation of, or make available to commercial customers of
LESCO or any of its affiliates or otherwise provide, any commercial credit or
charge program that bears, uses or refers to any trade names of LESCO or its
affiliates, or in any way competes with the Program, other than (i) any program
offered by Bank or an affiliate of Bank, (ii) a receivables financing program
operated by LESCO for the benefit of LESCO's customers operating or located
outside of the United States, (iii) credit provided or payment made by generally
accepted multi-purpose credit or charge cards or by generally accepted
multi-purpose debit or secured cards in each case, such as American Express,
MasterCard, Visa and Discover cards (provided that none of the cards referred to
in this clause (iii) may be "co-branded," "sponsored" or "co-sponsored" with
LESCO or bear the LESCO Marks), (iv) the closed-end commercial finance program
by and between LESCO and Dealer's Credit, Inc., nka, Sheffield Financial Corp.,
pursuant to that certain Exclusive Financing agreement dated July 31, 1997 (and
such amendments or restatements intended to extend the term thereof); provided,
that such program shall be limited to financing equipment purchases from LESCO,
or (v) a Second Source Program, or (b) promote any other charge or credit
payment vehicle not otherwise prohibited hereby (e.g. general purpose credit
cards) more favorably than Accounts and Credit Cards as a method for the payment
of LESCO's goods and services. As used herein, "Second Source Program" means any
commercial trade credit program that is available only to persons who submitted
properly completed applications to, and were rejected by, Bank (including after
re-submission for inclusion in the Recourse Portfolio) immediately preceding
such person's application to such other credit program.
SECTION 8.2 RIGHT OF FIRST REFUSAL. LESCO will not (and will cause its
affiliates not to) directly or indirectly accept for payment, promote, sponsor,
solicit, permit solicitation of, or make available to customers of LESCO any
commercial or consumer financing program or financial product or service or
enter into any agreement to outsource any such product or service to a third
party, without entering into good faith discussions for at least ninety (90)
days with Bank for Bank to provide such product or service. If after such
discussions, Bank and LESCO have not reached agreement, LESCO will have the
right, during the next ninety (90) day period, to enter into negotiations with
third parties regarding the provision of such product or service; provided,
however, that if such negotiations result in mutually acceptable terms between
LESCO and a specified third party ("proposed terms"), then prior to entering
into an agreement with such third party, LESCO must provide a written notice to
Bank describing in reasonable detail the proposed terms and offering Bank the
opportunity to accept such terms. Bank will then have thirty (30) days to (i)
reject the offer, in which case LESCO and such third party may finalize their
arrangements and enter into agreements on terms no more favorable to the third
party than the proposed terms, or (ii) accept the offer and work in good faith
with LESCO towards entering into an agreement on terms substantially similar to
the proposed terms.
ARTICLE 9 TERM/TERMINATION
SECTION 9.1 PROGRAM TERM. This Agreement shall continue until December
31, 2008 and shall automatically renew for additional three (3) year terms (each
such period, a "Term"),
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unless either party shall give written notice to the other party at least six
(6) months prior to the end of the scheduled expiration of such Term of its
intention to terminate the Program.
SECTION 9.2 TERMINATION OF AGREEMENT. Notwithstanding anything in
Section 9.1 to the contrary, this Agreement may be terminated prior to the end
of any Term as provided below (it being the intent of the parties hereto that
any exercise by LESCO of any termination rights hereunder shall be only be
exercisable by LI, acting on behalf of itself and LSI, AIM and LTLLC
collectively):
(a) If a party breaches any covenant or agreement
contained in this Agreement (i) which does not involve the payment of money to
the other party hereto and such breach continues for a period of thirty (30)
days after the non-breaching party has given written notice of the breach, or
(ii) which involves the payment of money to the other party hereto and such
breach continues for a period of five (5) days after the non-breaching party has
given written notice of the breach, then, in either case, the non-breaching
party shall have the right to terminate this Agreement. The foregoing clause
(ii) notwithstanding, the failure of a party to make a payment due hereunder
shall not give rise to a termination right in the other party if the amount
which such party has failed to pay is less than $25,000 and such party, acting
in good faith, has delivered a written notice to the other party contesting its
obligation to make such payment. In any case, to be effective, a termination
notice must be delivered within sixty (60) days of the expiration after the
applicable notice periods. This Agreement will terminate one hundred and twenty
(120) days after delivery of such notice of termination.
(b) If any representation or warranty made by a party
proves not to have been true and correct in all material respects as of the date
when made, then the other party shall have the right to terminate this
Agreement. In order to be effective, the notice of termination must be delivered
within sixty (60) days of the date such other party first becomes aware that
such representation or warranty is not true and correct. This Agreement will
terminate one hundred and twenty (120) days after delivery of such notice of
termination.
(c) If any of LESCO, LSI, AIM, or LTLLC, on the one hand,
or Bank on the other (A) is no longer Solvent (in the case of LESCO, LSI, AIM,
or LTLLC, Solvency is to be determined on a consolidated basis); (B) generally
does not pay its debts as such debts become due, or admits in writing its
inability to pay its debts generally; (C) makes a general assignment for the
benefit of its creditors, (D) has any proceeding instituted by or against it
seeking to adjudicate it bankrupt or insolvent or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief, or composition
of it or its debts under any law relating to bankruptcy, insolvency, or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee, custodian or other similar official
for it or for any substantial part of its property; or (E) takes any corporate
action to authorize any of the actions set forth above in (A) through (D) above,
then Bank, if the foregoing apply to any of LESCO, LSI, AIM, or LTLLC, if the
foregoing applies to Bank, shall have the right to terminate this Agreement. In
order to be effective, the notice of termination must be delivered within one
hundred and eighty (180) days of such other party becoming aware of the
occurrence of such event; provided, that in the case of an occurrence under
clause (D), this Agreement shall terminate automatically unless the parties
shall mutually agree in writing to continue the
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Program. In any case in which notice is required for termination, this Agreement
will terminate upon delivery of such notice.
(d) If, with respect to LESCO, LSI, AIM, or LTLLC, any of
the following events occur without the consent of Bank (which consent shall not
be unreasonably withheld), then Bank shall have the right to terminate this
Agreement: (A) any person or group of persons acquires, after the date of this
Agreement, beneficial ownership of fifty percent (50%) or more of the combined
voting power of the then outstanding voting securities of any of LESCO, LSI,
AIM, or LTLLC entitled to vote generally in the election of directors; (B) the
stockholders of any of LESCO, LSI, AIM, or LTLLC approve a reorganization,
merger or consolidation (each a "Reorganization"), in each case through which
the persons who were the respective beneficial owners of the voting securities
of any of LESCO, LSI, AIM, or LTLLC immediately prior to such Reorganization do
not beneficially own, following such Reorganization, directly or indirectly,
more than fifty percent (50%) of the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors of the corporation, as a result of such Reorganization; or (C) all or
substantially all of the assets or property of LESCO, LSI, AIM and LTLLC, on a
consolidated basis, are sold or otherwise disposed of in one transaction or
series of related transactions. In order to be effective, the notice of
termination must be delivered within one hundred and eighty (180) days of Bank
becoming aware of the occurrence of such event. This Agreement will terminate
one hundred and twenty (120) days after delivery of such notice of termination.
(e) If any of LESCO, LSI, AIM, or LTLLC, on the one hand,
or Bank on the other, is in default under any material loan agreement, indenture
or other instrument relating to any indebtedness for borrowed money and such
default gives any person, either with or without notice and without giving
effect to any extension of any grace period, the right to accelerate such
indebtedness, then the non-defaulting party (either Bank or LESCO, as the case
may be) shall have the right to terminate this Agreement. The foregoing
notwithstanding, so long as (i) the non-defaulting party (either Bank or LESCO,
as the case may be) receives notice of a pending default (of the type referred
to in the preceding sentence) from the defaulting party within seven (7) days
after the defaulting party first receives notice with respect thereto, (ii) the
defaulting party promptly provides (but in any event within the thirty (30) day
period referenced in clause (iii) below) to the non-defaulting party any and all
documentation or agreements which evidence a waiver of or forebearance or other
relief from such default, and (iii) within thirty (30) days after the date the
defaulting party first receives notice of any such default, the defaulting party
shall have entered into a valid, binding and enforceable written agreement which
(x) evidences the forebearance or waiver of such default by the third party
asserting such default, and (y) has been signed and delivered by the third party
asserting such default, then the non-defaulting party's termination rights under
this Section 9.2(e) shall be deemed waived, but only in respect of such
applicable default. In order to be effective, the notice of termination
otherwise provided for under this Section 9.2(e), must be delivered within
ninety (90) days after such non-defaulting party becoming aware of the
occurrence of such event. This Agreement will terminate thirty (30) days after
delivery of such termination notice by the non-defaulting party, unless the
underlying default is cured during such final thirty (30) day period.
(f) If a material adverse change has occurred in the
operations, financial condition, business or prospects of LESCO, LSI, AIM, and
LTLLC (on a consolidated basis), on
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the one hand, or Bank on the other, which the other party (either Bank, in the
case of a material adverse change to LESCO, LSI, AIM, and LTLLC, and LESCO, or
LESCO, in the case of a material adverse change to Bank, as the case may be) has
determined, in good faith, has had, or is reasonably likely to have, a material
adverse effect on the ongoing operation or continued viability of the Program,
then the other party shall have the right to terminate this Agreement. In order
to be effective, the notice of termination must be delivered within ninety (90)
days of the terminating party making such determination. This Agreement will
terminate sixty (60) days after delivery of such notice of termination.
(g) Bank shall have the right to terminate the Operating
Period upon written notice if (i) usury rates for the State of Utah (or any
other State in which the Bank may choose to locate) change, laws regulating
Bank's rate or fee structure change, or federal or state laws, regulations or
other authority preempt the exportation of Bank's rate or fee structure; (ii)
Bank determines, in good faith, that any of the foregoing has had, or is
reasonably likely to have, a material adverse effect on Bank's ability to
provide the Program or perform the transactions contemplated hereby or on
Program economics; (iii) Bank has sought to engage LESCO in a good-faith
renegotiation of the terms of this Agreement; (iv) the parties hereto have not
agreed to modifications to the terms of this Agreement that Bank reasonably
believes necessary to prevent a material adverse effect on the economics of the
Program or on Bank (or on its ability to perform the transactions contemplated
by this Agreement) resulting from the change in usury rates or other laws
regulating Bank's rate or fee structure or the exportation thereof; and (v)
either Bank is required to initiate changes to the Program to comply with
applicable law or more than one hundred and twenty (120) days have passed since
Bank first sought to engage LESCO in a good faith renegotiation of the terms of
this Agreement.
(h) If a final judgment or judgments for the payment of
money in excess of One Million Dollars ($1,000,000) is rendered against any of
LI, LSI, AIM, or LTLLC and the same is not either (i) covered by insurance where
the insurer has affirmatively and expressly accepted liability therefore or (ii)
vacated, stayed, bonded, paid, or discharged prior to expiration of the
applicable appeal period. In order to be effective, the notice of termination
must be delivered within one hundred and eighty (180) days of the date such
judgment was delivered. This Agreement will terminate one hundred and twenty
(120) days after delivery of such notice of termination.
(i) If Bank declines to increase the BRC Credit Review
Point then in effect or the Open Account Credit Review Point then in effect, as
the case may be, pursuant to Section 6.6(b)(ii), then LESCO may terminate this
Agreement. In order to be effective, the notice of termination must be delivered
within sixty (60) days after Bank notifies LESCO pursuant to Section 6.6(b)(ii).
This Agreement will terminate one hundred and twenty (120) days after LESCO's
delivery of such notice of termination.
(j) Either Bank or LESCO shall have the right to
terminate the Agreement upon written notice to the other party hereto, if the
performance by the other party of its obligations under this Agreement is
prevented or materially impeded, without ability to cure, for a period of not
less than 60 consecutive days by a Force Majeure Event.
- 25 -
(k) Either Bank or LESCO shall have the right to
terminate the Agreement upon written notice to the other party hereto, if the
other party fails to perform its post-closing obligations under the Purchase
Agreement, and such failure continues for a period of more than thirty (30) days
after notice from the non-breaching party.
ARTICLE 10 POST TERM PROVISIONS
SECTION 10.1 PURCHASE OF ACCOUNTS BY LESCO UPON TERMINATION.
(a) If Bank elects to terminate the Agreement under
Section 9.2 hereof, then, in addition to any other rights available to Bank
hereunder, Bank shall have the right to require LESCO to purchase, and in such
case LESCO must purchase or arrange for the purchase of not less than all of the
Accounts and related Indebtedness (other than Accounts that have been
written-off by Bank) for a purchase price payable in immediately available funds
equal to (i) the sum of: (x) (REDACTED)of the Aggregate Outstanding Indebtedness
attributable to BRC Accounts as of the date of purchase, plus (y) with respect
to Prox Accounts and Net Invoice Accounts (A) if the effective date of such
termination occurs on or before the first (1st) anniversary of the Program
Commencement Date, (REDACTED) of the Aggregate Outstanding Indebtedness
attributable to all such Accounts as of the date of purchase; (B) if the
effective date of such termination occurs after the first (1st) anniversary of
the Program Commencement Date, but prior to the second (2nd) anniversary,
(REDACTED)of such Indebtedness; (C) if the effective date of such termination
occurs after the second (2nd) anniversary of the Program Commencement Date, but
prior to the third (3rd) anniversary, (REDACTED)of such Indebtedness; (D) if the
effective date of such termination occurs after the third (3rd) anniversary of
the Program Commencement Date, but prior to the fourth (4th) anniversary,
(REDACTED)of such Indebtedness, and (E) if the effective date of such
termination occurs after the fourth (4th) anniversary, (REDACTED) of such
Indebtedness, less (ii) the amount of the Loan Loss Reserve. Bank must exercise
the right to require the purchase of the Accounts under this Section 10.1(a), if
at all, by notifying LESCO of such election in writing within thirty (30) days
after giving notice of termination under Section 9.2. If Bank elects not to
require LESCO to purchase the Accounts or otherwise fails to give such notice,
LESCO may nonetheless purchase the Accounts pursuant to the terms of this
Section 10.1(a) by giving notice to Bank of its election to purchase the
Accounts not more than forty-five (45) days after Bank's termination notice
under Section 9.2. In either case, LESCO (or its designee) must thereafter
purchase the Accounts and Indebtedness within one hundred twenty (120) days
after the effective date of such termination. Upon receipt of the purchase
price, Bank's obligation to deliver title to the Accounts and Indebtedness shall
be deemed satisfied by its execution and delivery of a bill of sale for such
Accounts and Indebtedness, and an authorization from Bank to file the requisite
financing statement(s) in respect thereof. LESCO will bear all expenses of
converting the Accounts and Indebtedness to LESCO (or its designee), as well as
Bank's Deconversion Costs.
(b) If LESCO exercises any of its termination rights
under Section 9.2 of the Agreement, or as of the expiration of any Term, LESCO
will have the option, exercisable as provided below, to purchase, or to arrange
for the purchase of, not less than all of the Accounts and related Indebtedness
(other than Accounts that have been written-off by Bank) upon the termination or
expiration of this Agreement for a purchase price payable in immediately
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available funds in an amount equal to (i) the sum of (x) (REDACTED) of the
Aggregate Outstanding Indebtedness attributable to BRC Accounts as of the date
of purchase, plus (y) (REDACTED)of the Aggregate Outstanding Indebtedness
attributable to all Prox Accounts and all Net Invoice Accounts, as of the date
of purchase, plus (z) Bank's Deconversion Costs, less (ii) the amount of the
Loan Loss Reserve. Notwithstanding the foregoing, the amount set forth in
Section 10.1(b)(iii) shall not be payable by LESCO in the event that LESCO
exercises its termination rights under Section 9.2 of this Agreement.
(c) LESCO's option to purchase, or arrange for the
purchase of, the Accounts and Indebtedness under Section 10.1(b) may be
exercised as follows:
(d) If the Agreement is expiring based on either party's
decision not to renew it under Section 9.1, LESCO may exercise its purchase
option by giving notice of such election within one hundred and eighty (180)
days prior to the expiration of the Agreement. LESCO must thereafter complete
such purchase on the first Business Day after the expiration of this Agreement.
(e) If the Agreement terminates pursuant to Section 9.2
following the delivery of a termination notice by LESCO, LESCO must exercise its
option by giving notice of such election with such termination notice. LESCO
must thereafter complete such purchase within one hundred twenty (120) days
after the effective date of such termination.
(f) If LESCO exercises its right to purchase, or arrange
for the purchase of, the Accounts and Indebtedness under Section 10.1(b):
(g) LESCO and Bank agree to work in good faith to prepare
the necessary purchase documents on terms and conditions that are reasonable and
customary for the industry.
(h) LESCO will bear all reasonable expenses of conversion
of the Accounts and Indebtedness to LESCO or its designee.
(i) Bank shall have no obligation to extend further
credit under the Program after the expiration or earlier termination of the
Agreement.
SECTION 10.2 BANK'S RIGHTS IF LESCO DOES NOT PURCHASE ACCOUNTS. If
LESCO does not exercise its option to purchase, or arrange for the purchase of,
the Accounts and Indebtedness under Section 10.1(b) upon the expiration or
earlier termination of the Agreement, Bank will have the right, in addition to
and without waiving any other rights it may have under the terms of this
Agreement or applicable law, to (i) liquidate any or all of the Accounts and
charge LESCO a monthly fee equal to the sum of (x) (REDACTED)on each Active
Account during such month which is a BRC Account, plus (y) (REDACTED)on each
Active Account during such month which is a Prox Account (and in the case of (x)
or (y), for as long as there remain Active Accounts); (ii) convert the Accounts
to another credit or charge program maintained by Bank or any of its affiliates,
or (iii) sell the Accounts, whether by securitization or otherwise to any third
party. LESCO will cooperate with Bank and take any action reasonably requested
by Bank, and Bank may use the LESCO Marks, if any, to communicate with
Accountholders and authorized users, in connection with any such liquidation,
substitution or
- 27 -
sale. Bank shall have no obligation to extend further credit under the Program
after the expiration or earlier termination of the Agreement.
SECTION 10.3 SURVIVAL PROVISIONS.
(a) Except as is expressly provided to the contrary in
this Agreement, all of the terms, conditions and covenants of this Agreement
(including the applicable provisions of Section 2.2 that relate to LESCO's sales
practices, Accountholder transactions, billing, customer servicing, settlement,
chargeback and dispute handling) will continue in effect following the
expiration or termination of the Term of this Agreement until the Final
Liquidation Date.
(b) In addition, all warranties, representations and
indemnities contained in this Agreement, and the parties' obligations under
Sections 6.1 (Ownership of Accounts), 6.2 (Ownership of Accountholder
Information), 6.12 (Record Retention), 6.13 (Use of Names and Marks), 6.14
(Intellectual Property), and Articles 10 and 13, will survive the termination of
this Agreement and the Final Liquidation Date.
ARTICLE 11 - REPRESENTATIONS AND WARRANTIES
SECTION 11.1 REPRESENTATIONS AND WARRANTIES. Each party signatory below
makes the following representations and warranties as of the date of this
Agreement, and LESCO makes such representations and warranties on and as of each
date on which Charge Transaction Data is transmitted to Bank:
(a) The complete legal name(s), correct organizational
type(s) and state(s) of incorporation or organization for such party is(are)
accurately set forth in the preamble paragraph hereto. Such party is duly
organized, validly existing, and in good standing under the laws of its state(s)
of incorporation or organization, as the case may be.
(b) Such party has the requisite organizational power and
authority to conduct its business as presently conducted and hereafter
contemplated to be conducted and to execute, deliver and perform this Agreement.
(c) This Agreement has been duly executed and delivered
by such party, and constitutes the legal, valid, and binding obligation of such
party, enforceable against such party in accordance with its terms.
(d) The execution and delivery of this Agreement by such
party and the consummation of the transactions contemplated hereby do not and
will not (i) conflict with the organizational documents of such party, (ii)
conflict with, or result in a breach of any provisions of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under any material agreement of such party; or (iii)
constitute a violation of any material order, judgment or decree to which such
party is bound. No consent, approval, permit, waiver, authorization, notice or
filing is required to be made or obtained in connection with the execution,
delivery and performance by such party of this Agreement.
(e) All information furnished by such party to the other
for purposes of or in connection with this Agreement is true and correct in all
material respects and no such
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information omits to state a material fact necessary to make the information so
furnished not misleading. Except as disclosed to the other party, there is no
fact known to such party (including, without limitation, threatened or pending
litigation) that could materially and adversely affect the financial condition,
business, property, or prospects of such party.
SECTION 11.2 PRESENTMENT WARRANTIES. With respect to each submission of
Charge Transaction Data to Bank, LESCO represents and warrants as follows with
respect to such Charge Transaction Data and each underlying transaction:
(a) All purchases included in the Charge Transaction Data
constitute bona fide, arms-length sales by LESCO of the goods or services
described therein in the ordinary course of LESCO's business; LESCO has
delivered all the products and fully performed all the services covered by the
Charge Transaction Data;
(b) The Charges included in the Charge Transaction Data
did not involve a cash advance or goods or services not listed in the applicable
invoice or receipt; only goods and services sold by LESCO are included in the
Charge Transaction Data; the Charges represent the entire purchase price of the
goods and services identified in the Charge Transaction Data other than a bona
fide down payment, deposit, or similar payment paid by cash or check, or
financed by any means other than the Credit Card;
(c) To the best of LESCO's knowledge, the goods and
services covered by the Charge Transaction Data were sold by LESCO to
Accountholders or authorized users for commercial or business purposes;
(d) No other credit provider has financed a portion of
any sales transaction included in the Charge Transaction Data other than a bona
fide down payment, deposit, or similar payment paid by cash or check;
(e) Except for Telephone Purchases, LESCO obtained a
signed invoice or receipt for each Charge included in the Charge Transaction
Data;
(f) The signature on each invoice or receipt on which a
signature is required is similar to the signature of the Accountholder or an
authorized user on the Credit Card, and; at the time of the purchase, LESCO
examined the Credit Card or, in the case of a Card-Not-Present-Purchase,
otherwise complied with the Operating Procedures;
(g) All purchases at Store Locations included in the
Charge Transaction Data occurred no earlier than (i) in the case of purchases at
Service Centers(R), three (3) days, and (ii) in the case of purchases from
Stores-On-Wheels(R) or from LESCO's other outside sales force, five (5) days
prior to the submission of such Charge Transaction Data, and; all transactions
included in the Charge Transaction Data were conducted in accordance with the
Operating Procedures, this Agreement and all applicable laws;
(h) Each invoice or receipt included in the Charge
Transaction Data (or, in the case of Telephone Purchases, the purchase
information in the Charge Transaction Data) is not invalid, illegible,
inaccurate or incomplete and has not been materially altered since being signed
or submitted by the Accountholder or an authorized user; the Account number and
name of the
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Accountholder or the authorized user has been accurately printed on each invoice
or receipt and has been included in each transmission of Charge Transaction
Data; LESCO has obtained a valid authorization from Bank for each purchase
(unless otherwise waived by Bank);
(i) Except in the case of a Telephone Purchase, each
transaction included in the Charge Transaction Data was consummated and
processed at a Store Location, and the Accountholder or an authorized user was
present.
ARTICLE 12 INDEMNIFICATION
SECTION 12.1 INDEMNIFICATION BY LESCO. LESCO agrees to indemnify and
hold harmless Bank, its affiliates, and their respective employees, officers,
directors and agents, from and against any and all Damages to the extent such
Damages arise out of, are connected with, or result from:
(a) Any breach by LESCO of any of the terms, covenants,
representations, warranties or other provisions contained in this Agreement;
(b) Any products or services sold by LESCO (including,
without limitation, any failure to provide the service as promised, any product
defects, or product liability or warranty claims relating thereto);
(c) Any act or omission, where there was a duty to act,
by LESCO or its employees, officers, directors or agents including without
limitation, the failure of LESCO to comply with any law, rule or regulation
applicable to LESCO;
(d) Any advertisements, solicitations or other promotions
of the Program or of goods or services eligible for purchase under the Program
conducted by or on behalf of LESCO (excluding those conducted by Bank).
(e) Bank's use of the LESCO Marks in accordance with the
terms of this Agreement; or
(f) Any activities, acts or omissions of any third party
to whom Accountholder Information is transferred or made available by or on
behalf of LESCO, including without limitation, information transferred or made
available to a third party by Bank at LESCO's request.
(g) The foregoing indemnity obligation of LESCO shall not
apply to any Damages of Bank to the extent caused by the gross negligence,
willful misconduct or illegal acts of Bank.
SECTION 12.2 INDEMNIFICATION BY BANK. Bank agrees to indemnify and hold
harmless LESCO, its affiliates, and their respective employees, officers,
directors and agents, from and against any and all Damages to the extent such
Damages arise out of, are connected with or result from:
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(a) Any breach by Bank of any of the terms, covenants,
representations, warranties or other provisions contained in this Agreement;
(b) any act or omission, where there was a duty to act,
by Bank or its employees, officers, directors, or agents, including without
limitation, the failure of Bank to comply with any law, rule or regulation
applicable to Bank;
(c) Any advertisements, solicitations or other promotions
by or on behalf of Bank (other than those conducted by LESCO) of the Program; or
(d) Any activities, acts or omissions of any third party
to whom Accountholder Information is transferred or made available by or on
behalf of Bank.
(e) The foregoing indemnity obligation of Bank shall not
apply to any Losses of LESCO to the extent caused by the gross negligence,
willful misconduct or illegal acts of LESCO.
SECTION 12.3 INDEMNIFICATION PROCEDURES.
(a) A party entitled to indemnification will give prompt
written notice to the indemnifying party of any claim, assertion, event,
condition or proceeding by any third party concerning any liability or damage as
to which it may request indemnification under this Article 12. The failure to
give such notice will not relieve the indemnifying party from liability
hereunder unless and solely to the extent the indemnifying party did not know of
such third party claim and such failure results in the forfeiture by the other
party of substantial rights and defenses.
(b) An indemnifying party will have the right, upon
written notice to the indemnified party, to conduct at its expense the defense
against such third party claim in its own name, or, if necessary, in the name of
the indemnified party. When the indemnifying party assumes the defense, the
indemnified party will have the right to approve the defense counsel and the
indemnified party will have no liability for any compromise or settlement of any
third party claim that is effected without its prior written consent (such
consent not to be unreasonably withheld), unless the sole relief provided is
monetary damages that are paid in full by the Indemnifying Party and such
compromise or settlement includes a release of each indemnified party from any
liabilities arising out of the third party claim. If the indemnifying party
delivers a notice electing to conduct the defense of the third party claim, the
indemnified party will, at the indemnifying party's expense, cooperate with and
make available to the indemnifying party such assistance, personnel, witnesses
and materials as the indemnifying party may reasonably request. If the
indemnifying party does not deliver a notice electing to conduct the defense of
the third party claim, the indemnified party will have the sole right to conduct
such defense and the indemnified party may pay, compromise or defend such third
party claim or proceeding at the indemnifying party's expense. Regardless of
which party defends the third party claim, the other party will have the right
at its sole expense to participate in the defense assisted by counsel of its own
choosing.
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ARTICLE 13 MISCELLANEOUS
SECTION 13.1 CONFIDENTIALITY.
(a) This Agreement, and all material and information
supplied by one party to another party under this Agreement, including, but not
limited to, information concerning a party's marketing plans, objectives or
financial results ("Confidential Information"), is confidential and proprietary.
All such information will be used by each party solely in the performance of its
obligations and exercise of its rights pursuant to this Agreement. Each party
will receive Confidential Information from the other party in confidence and
will not disclose such Confidential Information to any third party, except (a)
as contemplated under this Agreement; (b) as may be agreed upon in writing by
the party providing such Confidential Information; (c) in the case of Bank to an
affiliate of Bank; or (d) to the extent necessary, in exercising or enforcing
its rights or (e) as required by law. Each party will use its reasonable best
efforts to ensure that its respective officers, employees, and agents take such
action as will be necessary or advisable to preserve and protect the
confidentiality of Confidential Information. Upon written request after the
Final Liquidation Date, each party will destroy or return to the party providing
such Confidential Information all such Confidential Information in its
possession or control. Confidential Information will not include information in
the public domain and information lawfully obtained from a third party.
(b) Section 13.1(a) to the contrary notwithstanding,
(i) LESCO shall have the right to file a copy of
this Agreement with the applicable commission or governmental agency to the
extent necessary, in LESCO's good faith opinion, to comply with such disclosure
laws or regulations (including any reporting requirement of the Securities
Exchange Commission), or any listing requirement of any stock exchange,
including NASDAQ, applicable to LESCO; provided, that LESCO shall (i) notify
Bank in writing not less than thirty (30) days prior to any such filing of this
Agreement, (ii) redact such terms of this Agreement as Bank may reasonably
request prior to any such filing, and (iii) file a confidential treatment
request with respect to such redacted document as part of any such filing, and
(ii) Unless (w) required by any law, rule or
regulation applicable to Bank, (x) requested by any Accountholder (including as
necessary to assess whether a proposed Accountholder meets the credit criteria
necessary to participate in the Program), (y) required by any contract to which
Bank is a party, or (z) in connection with an Account which Bank has written off
(or as the parties may otherwise agree), Bank shall not, during the Term, sell,
assign or transfer any Accountholder Information to any third parties (except as
necessary or appropriate to allow Bank to exercise its rights and/or satisfy its
obligations hereunder (including in connection with the administration,
processing, collection and servicing of Accounts)), including any consumer or
commercial credit reporting agency or credit bureau.
SECTION 13.2 PUBLIC ANNOUNCEMENTS. Each of the parties shall consult
with each other before they or any of their respective affiliates or agents
issue any press releases or otherwise make, any public statements with respect
to this Agreement and the transactions contemplated hereby, and none of them nor
any affiliate of any of them shall issue any such
- 32 -
press release or make any public statement prior to receiving express written
approval of the other parties except, in each case, as may be required by
applicable law, regulation (including a reporting requirement of the Securities
Exchange Commission), or any listing requirement of any stock exchange, or
NASDAQ, applicable to Bank or LESCO. Without limiting the foregoing, the parties
agree to provide each other with any such obligatory press release or public
statement reasonably in advance of its release and they shall confer in good
faith with respect to the content thereof.
SECTION 13.3 BINDING EFFECT. This Agreement is binding upon and inures
to the benefit of the parties hereto and their respective successors and
permitted assigns.
SECTION 13.4 ASSIGNMENT. Neither Bank nor LESCO may assign its rights
or delegate its obligations under this Agreement without the prior written
consent of the other party, which consent will not be unreasonably withheld,
provided that Bank may, without such consent (i) assign all or part of its
rights and delegate some or all of its obligations under this Agreement to an
affiliate; (ii) engage third parties to perform some or all of Bank's
obligations under this Agreement, including, without limitation the servicing
and administration of Accounts; and (iii) assign all or some of its rights
hereunder to any person acquiring any or all Accounts after the termination or
expiration of this Agreement. Notwithstanding any assignment, Bank will remain
liable for all of its obligations under this Agreement.
SECTION 13.5 GOVERNING LAW. Except to the extent superceded by federal
law applicable to banks or savings associations, this Agreement and all rights
and obligations hereunder, including, but not limited to, matters of
construction, validity and performance, shall be governed by and construed in
accordance with the laws of the State of Utah. THE PARTIES HERETO WAIVE THEIR
RIGHT TO REQUEST A TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING IN ANY COURT
OF LAW, TRIBUNAL, OR OTHER LEGAL PROCEEDING ARISING OUT OF OR INVOLVING THIS
AGREEMENT, OR ANY DOCUMENT DELIVERED IN CONNECTION HEREWITH, OR RELATING TO ANY
OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SECTION 13.6 FINANCIAL ACCOMMODATION. LESCO acknowledges that this
Agreement is a "financial accommodation" contract (as such term is used in
Section 365(c)(2) of Title 11 of the United States Code) for the benefit of
LESCO.
SECTION 13.7 NO THIRD PARTY BENEFICIARIES. Except as otherwise
expressly set forth in this Agreement, this Agreement does not confer upon any
person, other than the parties, any rights or remedies under this Agreement.
SECTION 13.8 AMENDMENTS. This Agreement may not be amended except by
written instrument signed by LESCO and Bank.
SECTION 13.9 NO PARTNERSHIP. Nothing contained in this Agreement will
be construed to constitute LESCO and Bank as partners, joint venturers,
principal and agent, or employer and employee.
SECTION 13.10 NOTICES. All notices and communications given under this
Agreement must be in writing and must be sent by hand, by facsimile (with verbal
confirmation of receipt),
- 33 -
by certified mail, return receipt requested, or by nationally recognized
overnight courier service addressed to the party to whom such notice or other
communication is to be given or made as such party's address as set forth below
and will be deemed given one (1) Business Day after being sent, as follows:
if to LESCO: if to Bank:
LESCO, Inc.
15885 Sprague Road
Strongsville, Ohio 44136 GE Capital Financial Inc.
Attention:Chief 4246 South Riverboat Road
Financial Officer Suite #300
Salt Lake City, Utah 84123
Attn: President
with a copy to:
LESCO, Inc. with a copy to:
15885 Sprague Road
Strongsville, Ohio 44136 GE Capital Financial Inc.
Attention: Law Department 4246 South Riverboat Road, Suite #300
Salt Lake City, Utah 84123
Attn: Counsel
provided, however, that a party may notify the other party in
writing (in accordance with the notice provisions in this Section) from time to
time of an alternative address for notices under this Section and, in such case,
notices hereunder will be effective if sent to the last address so designated.
SECTION 13.11 NONWAIVER; REMEDIES CUMULATIVE; SEVERABILITY. All
remedies are cumulative and not exclusive, and no delay in exercising a right
will be deemed a waiver. If any provision of this Agreement is held to be
invalid, void or unenforceable, all other provisions will remain valid and be
enforced and construed as if such invalid provision were never a part of this
Agreement.
SECTION 13.12 DAMAGES WAIVER. Notwithstanding anything to the contrary
in this Agreement, Bank and LESCO shall not be liable to the other under or in
connection with this Agreement or the Program for any indirect or consequential
or other damages relating to prospective profits, income, anticipated sales or
investments, or goodwill, or for any punitive or exemplary damages; provided,
that the damages limitation set forth in this Section 13.12 shall not apply to
any Losses arising out of the failure of the parties under Section 13.1 or from
Losses which result from an obligation of Bank or LESCO to pay any third party
damages claims to the extent such third party claims otherwise fall under Bank's
or LESCO's respective indemnity obligations hereunder.
SECTION 13.13 JOINT AND SEVERAL OBLIGATIONS. Each obligation of LESCO
hereunder shall be a joint and several obligation of each of LESCO, LSI, AIM,
and LTLLC. For all purposes of this Agreement, notice given to or demand made
upon LESCO shall be deemed to be
- 34 -
notice given to or demand made upon each of LESCO, LSI, AIM, and LTLLC. LESCO
covenants for the benefit of Bank to enter into such agreements and to make such
other arrangements as may be necessary to ensure that each of LSI, AIM, and
LTLLC receives copies of all such notices or demands from LESCO. Whenever this
Agreement requires that payments be made to LESCO, Bank may make such payments
directly to LESCO, which shall receive such payment in trust for itself and LSI,
AIM, and LTLLC, to the extent any of such entities are entitled to all or any
portion thereof. Bank shall have no obligation to ensure and no liability for
the correct application of any payments made by it among LESCO, LSI, AIM, and
LTLLC.
SECTION 13.14 ENTIRE AGREEMENT. This Agreement (together with the
schedules, exhibits and appendices attached to this Agreement) is the entire
agreement of the parties with respect to the subject matter of this Agreement
and supersedes all other prior understandings, writings and agreements whether
written or oral.
SECTION 13.15 FURTHER ASSURANCES. LESCO and Bank agree to execute all
such further documents and instruments and to do all such further things as any
other party may reasonably request in order to give effect to and to consummate
the transactions contemplated by this Agreement.
SECTION 13.16 MULTIPLE COUNTERPARTS. This Agreement may be executed in
any number of multiple counterparts, all of which will constitute but one and
the same original.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, LESCO and Bank have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
BANK:
GE CAPITAL FINANCIAL INC.
By: _________________________________________
Name:
Title:
LESCO:
LESCO, INC.
By: _________________________________________
Name: Jeffrey Rutherford
Its: Senior Vice President and Chief Financial Officer
LESCO SERVICES, INC.
By: _________________________________________
Name: Jeffrey Rutherford
Its: Vice President and Chief Financial Officer
LESCO TECHNOLOGIES, LLC
By: _________________________________________
Name: Jeffrey Rutherford
Its: Vice President and Chief Financial Officer
AIM LAWN & GARDEN PRODUCTS, INC.
By: _________________________________________
Name: Jeffrey Rutherford
Its: Vice President and Chief Financial Officer
- 36 -
APPENDIX A
DEFINITIONS
A. CERTAIN DEFINED TERMS. As used in this Agreement, the following terms
will have the following meanings:
"Account" means all Prox Accounts, all Net Invoice Accounts
and all BRC Accounts. For the avoidance of doubt, (i) each Recourse Account (all
of which shall be Prox Accounts), and (ii) each Existing Account (which shall be
designated as either a Prox Account, a Net Invoice Account or a BRC Account)
shall, as of the Program Commencement Date, constitute Accounts hereunder and be
subject to all terms, conditions and provisions of this Agreement.
"Accountholder" means any commercial business entity which has
entered into an Accountholder Agreement with Bank or which is or may become
obligated under or with respect to an Account.
"Accountholder Agreement" means the credit agreement, in
either tangible or electronic form, between Bank and each Accountholder pursuant
to which such Accountholder and its authorized user(s), if any, may make
purchases on credit provided by Bank pursuant to the Prox Terms, the Net Invoice
Terms or the BRC Terms, as the case may be. Accountholder Agreement shall also
include any such agreements pertaining to the Existing Accounts.
"Account Documentation" means any and all Account information,
credit applications, Accountholder Agreements, Charge Transaction Data,
invoices, receipts, payments, credit information and documents or forms of any
type and in any media relating to the Program, excluding materials used for
advertising or solicitations. Account Documentation shall also include such
corresponding documentation pertaining to the Existing Accounts.
"Accountholder Information" has the meaning given to it in
Section 6.2.
"Account Processing System" shall have the meaning assigned to
it in Appendix B.
"Account Transition Services" shall have the meaning assigned
to it in Appendix B.
"Active Account" means, as of any given date, any Account
(other than an Account that has been written off in accordance with Bank's
write-off policies) that had a debit or credit balance at any time after the
beginning of the complete billing cycle immediately preceding such date.
"Aggregate Outstanding Indebtedness" means, as of any date of
determination, an amount equal to the aggregate amount of Indebtedness on all
Accounts as of such date.
"Agreement" means this Private Label Business Credit Program
Agreement, including all schedules and appendices, as it may be amended from
time to time.
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"Average Active Account Balance" means with respect to any
Program Year, (i) the quotient of (x) the sum of the Aggregate Outstanding
Indebtedness for the last day of each calendar month during such Program Year
divided by (y) twelve, divided by (ii) the Average Number of Active Accounts for
such Program Year.
"Average Number of Active Accounts" means with respect to any
Program Year, (i) the sum of the number of Active Accounts on the last day of
each calendar month during such Program Year divided by (ii) twelve.
"Bank" has the meaning given to it in the recitals.
"BRC Account" means the legal relationship established by and
between an Accountholder and Bank pursuant to an Accountholder Agreement and
with respect to which Bank agrees to extend revolving credit under the BRC
Program, on the BRC Terms, and the Accountholder agrees to repay such credit,
together with all Indebtedness owing thereunder from time to time and any
current or future guaranties, security or other credit support therefor.
"BRC Credit Review Point" means (REDACTED)or such other higher
amount as Bank, in its sole discretion, may from time to time specify to LESCO
in writing.
"BRC Fee" means a fee payable in connection with each
submission by LESCO to Bank of Charge Transaction Data pertaining to purchases
financed on BRC Accounts, calculated as set forth in Section 3.4(c).
"BRC Fee Percentages" means the percentages set by Bank for
use in calculating the BRC Fee. As of the Program Commencement Date, the BRC Fee
Percentages will be as set forth on Schedule 3.5. Pursuant to the provisions of
Section 3.5 and 3.6, Bank may reset the BRC Fee Percentages by written notice to
LESCO and such reset BRC Fee Percentages will be used in calculating the BRC Fee
in respect of all Charge Transaction Data submitted in respect of any BRC
Accounts at any time thereafter (until such BRC Fee Percentages are again reset
in accordance with the terms hereof.).
"BRC Program" means the customized revolving business credit
charge program established hereby and offered by Bank to qualified commercial
customers of LESCO.
"BRC Terms" means the terms and conditions applicable to
extensions of credit by Bank to Accountholders under the BRC Program. The
initial BRC Terms are set forth on Schedule 6.3.
"Business Day" means any day, except Saturday, Sunday, or a
day on which banks are required or permitted to be closed in Utah or Ohio.
"Card-Not-Present Purchases" means a purchase of LESCO's
products and/or services financed on an Account (i) where the person transacting
such purchase does not present a Credit Card relating to such Account, but
states that he or she is the owner or an employee of the Accountholder and an
authorized user, and LESCO does not do all of the following: (a) check such
person's identification, (b) confirm such person's identity and status as an
authorized buyer prior to such purchase in accordance with the Operating
Procedures, and
- 38 -
(c) obtain the authorized buyer signature on the invoice; or (ii) where such
purchase constitutes a Telephone Purchase.
"Charge Transaction Data" means Account and related
Accountholder and/or authorized user identification and transaction information
transmitted by LESCO to Bank with regard to a charge or a credit to an Account.
"Confidential Information" has the meaning given to it in
Section 13.1.
"Credit Card" means the plastic card issued by Bank under the
Program exclusively for use with the Program which evidences the right of an
Accountholder and, if the Accountholder has so designated, any authorized
user(s) to make purchases of goods and services from LESCO under the Program.
"Damages" means any and all losses, liabilities, costs, and
expenses (including, without limitation, reasonable attorneys' fees and
expenses, reasonable out-of-pocket costs, interest and penalties), settlements,
equitable relief, judgments, damages, claims (including, without limitation,
counter and cross-claims, and allegations whether or not proven) demands,
offsets, defenses, actions, or proceedings by whomsoever asserted.
"Deconversion Costs" means, the reasonable costs and expenses
actually incurred by Bank (as provided by Bank to LESCO in reasonable detail) in
respect of deconverting from Bank's systems the Prox Accounts and Net Invoice
Accounts purchased by LESCO pursuant to Section 10.1; provided, that (i) in the
case of an early termination (other than a termination by LESCO under Sections
9.2(a) or (b), all of such actual, reasonable costs and expenses of Bank shall
be paid by LESCO, or (ii) in the case of an early termination by LESCO under
Sections 9.2(a) or (b), or at the expiration of the Term (or any renewal
thereof), only the first five hundred thousand dollars ($500,000) of such
actual, reasonable costs and expenses of Bank shall be paid by LESCO.
"Effective Date" means the date this Agreement is executed and
delivered by each of Bank and LESCO.
"Existing Accounts" means the commercial accounts and related
indebtedness originated by LESCO which accounts and indebtedness were purchased
by Bank from LESCO pursuant to the Purchase Agreement.
"Existing Program Fees" means, as of any date, the sum of all
Prox Fees, all Net Invoice Fees and all BRC Fees (including fees based on the
application of any Promotional Fee Percentage) that were paid by LESCO under the
Program during the applicable period immediately preceding such date.
"Final Liquidation Date" will mean the first day after the
termination or expiration of this Agreement on which Bank no longer owns any
Active Accounts.
"Force Majeure Event" means any of the following: acts of God,
fire, earthquake, explosion, accident, terrorism, war, nuclear disaster, riot,
strike or labor dispute, material changes in applicable laws or regulations,
including, but not limited to, a change in state or
- 39 -
federal law, or other event beyond a party's reasonable control, rendering it
illegal, impossible or untenable for such party to perform as contemplated in,
or to offer the Program on the terms contemplated under, this Agreement.
"Indebtedness" means any and all amounts owing from time to
time with respect to an Account whether or not billed, including, without
limitation, any unpaid balance, finance charges (inclusive of finance charges
subject to possible reversals due to unexpired credit-based promotions), late
charges, and NSF fees.
"Interim Transition Period" has the meaning given in Section
1.3.
"LESCO" has the meaning given to it in the recitals.
"LESCO Marks" means the names and any related marks,
tradestyles, trademarks, service marks, logos or similar proprietary
designations as the same currently exist and as they may be amended or adopted
by LESCO from time to time hereafter.
"LESCO Terms" means the following terms of credit provided to
Accountholders during the Interim Transition Period: (1) "1% Ten Days; Net
Thirty (30) Days"; (2) Net Thirty (30) Days, and (3) such other non-standard
terms as are identified in the Closing File and the Closing File Supplement.
"LIBOR Rate" means, for any date, the highest three (3) month
"London Interbank Offered Rate" (LIBOR) as published in The Wall Street Journal
in its "Money Rates" section (or if The Wall Street Journal shall cease to be
published or to publish such rates, in such other publication as Bank may, from
time to time, specify) on such date, or if The Wall Street Journal is not
published on such date, on the last day before such date on which The Wall
Street Journal is published whether or not such rate is actually ever charged or
paid by any entity.
"Loan Loss Reserve" means the reserve against losses on
Accounts established and maintained by Bank in the ordinary course.
"Net BRC Program Sales" means, for any given period, the
aggregate amount of sales to Accountholders resulting in charges to the BRC
Accounts of such Accountholders during such period less aggregate credits to BRC
Accounts during such period, in each case as reflected in the Charge Transaction
Data.
"Net Invoice Account" means the legal relationship established
by and between an Accountholder and Bank pursuant to an Accountholder Agreement
and with respect to which Bank agrees to extend open-end credit on the Net
Invoice Terms, and the Accountholder agrees to repay such credit, together with
all Indebtedness owing thereunder from time to time and any current or future
guaranties, security or other credit support therefor.
"Net Invoice Fee" means a fee payable in connection with each
submission by LESCO to Bank of Charge Transaction Data pertaining to purchases
financed on Net Invoice Accounts, calculated as set forth in Section 3.4(b).
- 40 -
"Net Invoice Fee Percentage" means the percentages set by Bank
and used in calculating the Net Invoice Fee. Bank shall offer alternative Net
Invoice Percentages to Accountholders. The range of Net Invoice Fee Percentages
available as of the Program Commencement Date are set forth on Schedule 3.5.
Pursuant to the provisions of Section 3.5 and 3.6, Bank may reset one or more of
the Net Invoice Fee Percentages by written notice to LESCO and such reset Net
Invoice Fee Percentage(s) will be used in calculating the Net Invoice Fee in
respect of all Charge Transaction Data submitted in respect of any Net Invoice
Accounts at any time thereafter (until such Net Invoice Fee Percentage is again
reset in accordance with the terms hereof.).
"Net Invoice Terms" means the terms and conditions applicable
to extensions of credit by Bank to Accountholders electing to open a Net Invoice
Account. The initial Net Invoice Terms are set forth on Schedule 6.3.
"Net Program Sales" means, for any given period, the aggregate
amount of sales to Accountholders resulting in charges to the Accounts of such
Accountholders during such period less aggregate credits to Accounts during such
period, in each case as reflected in the Charge Transaction Data.
"New Pricing" has the meaning given in Section 3.5(c).
"New Program Fees" means, as of any date, the sum of all Prox
Fees, all Net Invoice Fees and all BRC Fees, that would have been paid by LESCO
under the Program during the applicable period immediately preceding such date,
assuming that all New Pricing proposed by Bank was effectuated at the beginning
of such period (including such fees that would have been paid based on the
application of the Promotional Fee Percentages).
"Open Account Program" means the open-end commercial credit
program established by Bank under this Agreement and made available to qualified
commercial customers of LESCO to finance purchases of LESCO's products and
services pursuant to the Prox Terms or the Net Invoice Terms, as the case may
be.
"Open Account Credit Review Point" means (REDACTED)or such
other higher amount as Bank, in its sole discretion, may from time to time
specify to LESCO in writing.
"Operating Procedures" means the operating procedures
attached to this Agreement as Appendix C, as may be amended from time to time by
Bank in Bank's reasonable discretion.
"Prime Rate" shall mean, as of any date of determination, the
highest bank prime or reference loan rate as published in the Wall Street
Journal in its "Money Rates" section (or if The Wall Street Journal shall cease
to be published or to publish such rates, in such other publication as Bank may,
from time to time, specify) on such date, or if The Wall Street Journal is not
published on such date, on the last day before such date on which The Wall
Street Journal is published, whether or not such rate is actually ever charged
or paid by any entity.
"Program" has the meaning given to it in Section 1.1.
- 41 -
"Program Commencement Date" means, subject to the provisions
of Section 1.1(b), December 29, 2003.
"Program Fee" means, collectively, all Prox Fees, all Net
Invoice Fees and all BRC Fees (which, for the avoidance of doubt, shall include
such fees based on the application of any Promotional Fee Percentage).
"Program Fee Percentages" means, collectively, all Prox Fee
Percentages, all Net Invoice Fee Percentages, all BRC Fee Percentages, and all
Promotional Fee Percentages.
"Promotional Fee Percentages" means, with respect to a Prox
Account, Net Invoice Account or BRC Account, as the case may be, the extended
payment period and corresponding Prox Fee Percentage, Net Invoice Fee Percentage
or BRC Fee Percentage applicable to any purchase financed under the Program and
which is subject to a credit-based promotion. The Promotional Fee Percentages in
effect as of the Program Commencement Date are as set forth in Schedule 3.5(d).
Such percentages may be amended from time to time by Bank as set forth in
Sections 3.5 and 3.6.
"Program Year" means a calendar year; provided, that the
first Program Year shall begin on the Program Commencement Date and end on
December 31, 2004.
"Prox Account" means the legal relationship established by and
between an Accountholder and Bank pursuant to an Accountholder Agreement and
with respect to which Bank agrees to extend open-end credit on the Prox Terms,
and the Accountholder agrees to repay such credit, together with all
Indebtedness owing thereunder from time to time and any current or future
guaranties, security or other credit support therefor.
"Prox Fee" means a fee payable in connection with each
submission by LESCO to Bank of Charge Transaction Data pertaining to purchases
financed on Prox Accounts, calculated as set forth in Section 3.4(a).
"Prox Fee Percentage" means the percentage set by Bank and
used in calculating the Prox Fee. As of the Program Commencement Date, the Prox
Fee Percentages are set forth on Schedule 3.5. Pursuant to the provisions of
Section 3.5 and 3.6, Bank may reset the Prox Fee Percentage by written notice to
LESCO and such reset Prox Fee Percentage will be used in calculating the Prox
Fee in respect of all Charge Transaction Data submitted in respect of any Prox
Accounts at any time thereafter (until such Prox Fee Percentage is again reset
in accordance with the terms hereof.). For the avoidance of doubt, the Prox
Recourse Fee Percentage shall also constitute a Prox Fee Percentage for all
purposes hereunder (except as specifically provided to the contrary herein).
"Prox Recourse Fee Percentage" means the percentage set by
Bank and used in calculating the Prox Fee applicable to Recourse Accounts. As of
the Program Commencement Date, the Prox Recourse Fee Percentage is set forth on
Schedule 3.5. Pursuant to the provisions of Section 3.5 and 3.6, Bank may reset
the Prox Fee Recourse Percentage by written notice to LESCO and such reset Prox
Recourse Fee Percentage will be used in calculating the Prox Fee in respect of
all Charge Transaction Data submitted in respect of any Recourse Accounts at any
- 42 -
time thereafter (until such Prox Recourse Fee Percentage is again reset in
accordance with the terms hereof.).
"Prox Terms" means the terms and conditions applicable to
extensions of credit by Bank to Accountholders electing to open a Prox Account.
The initial Prox Terms as set forth on Schedule 6.3.
"Purchase Agreement" means that certain Portfolio Purchase and
Sale Agreement, dated as of December 16, 2003, by and between LESCO and Bank.
"Recourse Accounts" means (i) those Existing Accounts
designated as Recourse Accounts (as defined in the Purchase Agreement) pursuant
to the terms and conditions of the Purchase Agreement, and (ii) all Accounts
designated as "Recourse Accounts" pursuant to the provisions of Section 1.4
hereto.
"Recourse Portfolio" has the meaning given in Section 1.4.
"Solvent" means, as to any person, (i) that the present fair
salable value of such person's assets exceeds the total amount of its
liabilities; (ii) that such person is generally able to pay its debts as they
come due; and (iii) that such person does not have unreasonably small capital to
carry on such person's business as theretofore operated and as thereafter
contemplated. The phrase "present fair salable value of such person's assets"
means that value that could be obtained if such person's assets were sold within
a reasonable time in one or more arm's-length transactions in an existing and
not theoretical market.
"Store Location" means those Service Centers(R) and
Stores-On-Wheels(R) owned or operated by LESCO within the United States. Also
included in the definition of "Store Location" shall be all individual sales
representatives comprising LESCO's outside sales force which are permitted to
process sales financed on Accounts, transmit Charge Transaction Data or
processes credits from a remote location not otherwise constituting a Service
Center(R) or one of LESCO's Stores-On-Wheels(R).
"Telephone Purchase" means a purchase of any of products or
services from LESCO charged to an Account where the Account information
necessary to effect the purchase is provided via the telephone.
"Term" has the meaning given to it in Section 9.1.
"Value-Added Program" means any products or services that
enhance the features of the Program or an Account.
"Weighted Annual Program Cost" means, for any period, the
percentage relationship, expressed in basis points, represented by the
following: (i) the difference between the New Program Fees and the Existing
Program Fees, divided by (ii) Existing Program Fees.
B. MISCELLANEOUS. As used in this Agreement, (i) all
references to the plural number shall include the singular number (and vice
versa); (ii) all references to the masculine gender shall include the feminine
gender (and vice versa) and (iii) all references to "herein,"
- 43 -
"hereof," "hereunder," "hereinbelow," "hereinabove" or like words shall refer to
this Agreement as a whole and not to any particular section, subsection or
clause contained in this Agreement. References herein to any document including,
without limitation, this Agreement shall be deemed a reference to such document
as it now exists, and as from time to time hereafter the same may be amended.
References herein to a "person" or "persons" shall be deemed to be references to
an individual, corporation, limited liability company, partnership, trust,
unincorporated association, joint venture, joint-stock company, or any other
form of entity. Captions of the sections of this Agreement are for convenience
of reference only and are not intended as a summary of such sections and do not
affect, limit, modify or construe the contents thereof.
- 44 -
APPENDIX B
TO
BUSINESS CREDIT PROGRAM AGREEMENT
INTERIM TRANSITION TERMS AND CONDITIONS
I. INTERIM TRANSITION PERIOD OBLIGATIONS.
(a) During the Interim Transition Period, LESCO shall
grant such rights, access and assistance with respect to LESCO's account
administration, software, systems and related intellectual property, including,
but not limited to the software, systems, data files, hardware, equipment and
related intellectual property pertaining to the Unity, Censys, AS400 and
Infinium account receivable processing systems (the "Account Processing
System"), including any and all modifications and upgrades thereto, that Bank
deems reasonably necessary or desirable to allow Bank to service and administer
the Accounts and related Indebtedness from a site designated by Bank. Such
rights, access and assistance shall pertain to equipment, software and/or
programs relating to data transmission, collection, storage and retrieval,
account processing (including billing), and customer service with respect to the
Accounts and related Indebtedness (collectively, the "Account Transition
Services").
(b) From Effective Date and during the Interim Transition
Period LESCO, or a third party designated by LESCO, shall provide (or continue
to provide, as the case may be) such personnel, training and technical
assistance with respect to the Account Processing System and functional use of
the data available on the Account Processing System (including, but not limited
to, VPN connections) as to allow Bank to understand and operate the Account
Processing System, including any and all modifications and upgrades thereto, and
to perform the Account Transition Services in a manner consistent with LESCO's
operating procedures in effect immediately prior to the Program Commencement
Date.
(c) Bank will pay all fees and expenses related to
training provided by any mutually agreeable third party(s). Except for third
party training or as otherwise may be mutually agreed to in writing by the
parties, all costs and expenses in connection with the training contemplated
under this Section, including travel expenses, shall be paid by the party
incurring such costs and expenses.
(d) LESCO shall (i) obtain, at no cost to Bank, such
third party consents, if any, as are necessary or appropriate to allow Bank to
operate the Account Processing System and to access such system from a site
designated by Bank, (ii) cooperate with Bank to obtain such third party
technical assistance as may be necessary or desirable to complete such move at
no cost to Bank, and (iii) otherwise provide such assistance as Bank shall
reasonably request to facilitate the performance of the Account Transition
Services as contemplated hereby.
(e) From Effective Date and during the Interim Transition
Period, LESCO shall:
(i) safeguard the Account Processing System to ensure that no
unauthorized person shall have access thereto and that no unauthorized
copy, publication, disclosure or
- 45 -
distribution in any form, in whole or in part, of the information
contained thereon shall be made.
(ii) maintain and update backup copies of all data and programs
used in conjunction with the Account Processing System at least daily
in order to prevent catastrophic loss.
(iii) in the event the Account Processing System is unable (due to
limitations on capacity or for any other reason) to perform processing
and otherwise support the use of the Account Processing System by both
LESCO and Bank in the ordinary course of LESCO's and Bank's business
operations, LESCO shall cease its use of the Account Processing System
until such time that the Account Processing System is able to perform
processing and otherwise support the use thereof by both LESCO and Bank
in the ordinary course of LESCO's and Bank's business operations.
(iv) minimize any disruption of Bank's access to the Account
Processing System or functional use thereof or of the data available on
the Account Processing System.
(v) repair or cause the repair of any malfunction with respect to
or failure of the Account Processing System reported by Bank or
discovered by LESCO.
(vi) facilitate the conversion of the Existing Accounts (and any
Accounts originated during the Interim Transition Period) from LESCO's
Account Processing System and onto Bank's account processing system,
including providing to Bank such standard master file test tapes (and
corresponding supplemental tapes) as Bank may reasonably request.
(j) LESCO shall use its commercially reasonable efforts
to facilitate the transfer and establishment of customer communication channels,
including, but not limited to, phone and facsimile communications.
II. REPRESENTATIONS AND WARRANTIES. LESCO makes the following
representations and warranties to Bank as of the Effective Date:
(a) There are no outstanding agreements or
understandings, written or oral, concerning the Account Processing System that
would preclude the parties hereto from effectuating the terms and conditions of
this Appendix B, including Bank's use of the Account Processing System as
contemplated hereby; LESCO's granting of the rights, access and assistance with
respect to the Account Processing System as set forth in this Appendix B does
not violate, infringe or otherwise conflict or interfere with any copyright,
trade secret, trademark, service mark, patent or any other intellectual property
or proprietary right of any third party, and will not give rise to any claim
against Bank or LESCO, including for infringement;
(b) Other than the liens of PNC Bank, National
Association, as agent, LESCO has not previously sold, licensed, encumbered or
pledged the Account Processing System or any portion thereof as security to any
third party; and
(c) LESCO has the full right, power and authority to
grant the rights, access and assistance with respect to the Account Processing
System contemplated hereby.
- 46 -
III. HOLD HARMLESS. LESCO hereby agrees to hold Bank harmless and waive any
and all claims or rights of action against Bank that may otherwise be available
to LESCO hereunder or at law or in equity with respect to any failure of Bank to
perform its obligations in respect of the Program or the provision of credit to
Accountholders or the administration of Accounts to the extent the same is
caused by any failure of the Account Processing System.
- 47 -
APPENDIX C
TO
BUSINESS CREDIT PROGRAM AGREEMENT
OPERATING PROCEDURES
OMITTED
- 48 -
SCHEDULE 3.5
TO
BUSINESS CREDIT PROGRAM AGREEMENT
INITIAL PROX PERCENTAGES AND BRC PERCENTAGE
AVAILABLE AS OF THE PROGRAM COMMENCEMENT DATE
(REDACTED)
- 49 -
SCHEDULE 3.5(d)
TO
BUSINESS CREDIT PROGRAM AGREEMENT
INITIAL PROMOTIONAL FEE PERCENTAGES
AVAILABLE AS OF THE PROGRAM COMMENCEMENT DATE
(REDACTED)
- 50 -
SCHEDULE 3.6
TO
BUSINESS CREDIT PROGRAM AGREEMENT
INTEREST RATE ADJUSTMENT ILLUSTRATION
OMITTED
- 51 -
SCHEDULE 6.3
TO
BUSINESS CREDIT PROGRAM AGREEMENT
INITIAL TERMS OFFERED TO ACCOUNTHOLDERS
A. PROX TERMS.
Payment Terms - Payment-In-Full due within 20 days of statement date, or such
other special terms and conditions as the parties shall mutually agree. Late
Fees - 2% of delinquent balance
B. BRC TERMS
APR -
Variable Rate at Prime Rate plus 15.00%
Minimum 21.00%
Minimum Payment - One-Twelfth of the highest balance since the previous zero
balance or $50.00, whichever is greater.
Late Payment Fee shall be as follows:
New Balance Late Payment Fee
----------- ----------------
Under $50.00 $15
$50-$99.99 $20
$100-$299.99 $25
$300 or above $29
C. NET INVOICE TERMS. Net Invoice Terms shall be determined by mutual written
agreement of the parties and shall be incorporated into this Schedule by
reference pursuant to such agreement.
- 52 -
SCHEDULE 6.7(c)
TO
BUSINESS CREDIT PROGRAM AGREEMENT
LESCO FINANCIAL COVENANTS
From the Program Commencement Date until the expiration or
earlier termination of the Term, LESCO shall satisfy and perform in the manner
set forth below each of the following financial covenant and report their
compliance therewith in the manner set forth in Section 6.7(c):
Fixed Charge Coverage Ratio. At the end of each fiscal quarter of LESCO, LESCO,
on a consolidated basis, shall maintain a Fixed Charge Coverage Ratio for the
immediately preceding four fiscal quarters, of not less than 1.05 to 1.00. With
respect to each of the following one time charges, such one time charge shall
not be taken into account in calculating the Fixed Charge Coverage Ratio for the
fiscal quarter in which such one time charge occurs (without duplication): (i)
fees and costs incurred by LESCO during such quarter in respect of terminating
or hedging any swap arrangement to which LESCO is a party, (ii) proceeds of the
sale of the Existing Accounts to LESCO, (iii) the costs and expenses of LESCO in
completing the sale of Existing Accounts to Bank and in amending and restating
its credit facility with PNC Bank, National Association, as agent, (iv) the
write-off of (x) amounts owing, but not paid in respect of Excluded Accounts (as
defined in the Purchase Agreement), and (y) deferred transaction costs,
financing fees and other costs incurred by LESCO during January 2002 arising out
of the restructuring of its balance sheet, and (v) the amount expended by LESCO
to purchase all of the Series B Preferred Stock of LESCO (which, as of the date
hereof, is estimated to be approximately One Million Seven Hundred Thousand
Dollars ($1,700,000)).
As used in this Schedule, the following terms shall have the following meanings:
"Earnings Before Interest and Taxes" shall mean for any period the sum of (i)
net income (or loss) of LESCO on a consolidated basis for such period (excluding
extraordinary gains and losses), plus (ii) all interest expense of LESCO on a
consolidated basis for such period, plus (iii) all charges against income of
LESCO on a consolidated basis for such period for federal, state and local tax.
"EBITDA" shall mean for any period the sum of (i) Earnings Before Interest and
Taxes for such period plus (ii) depreciation expenses for such period, plus
(iii) amortization expenses for such period.
"Fixed Charge Coverage Ratio" shall mean and include, with respect to any
period, the ratio of (a) EBITDA minus Non-Financed Capital Expenditures, minus
income taxes expensed on a consolidated basis, all the foregoing during such
period to (b) Fixed Charges during such period.
"Fixed Charges" shall mean, the sum of consolidated interest expense of LESCO,
current maturities of long-term debt, and payments under capitalized leases, the
foregoing all as
- 53 -
determined in conformity with GAAP. In determining the Fixed Charges as of the
end of any fiscal quarter, such calculation shall include the current maturities
in respect of long-term debt and payment under capitalized leases for the
immediately succeeding twelve months, plus the aggregate interest expense in
respect of Indebtedness for the immediately preceding twelve month period.
"GAAP" means Generally Accepted Accounting Principles in effect from time to
time in the United States, consistently applied.
"Indebtedness" of a person at a particular date shall mean all obligations of
such person which in accordance with GAAP would be classified upon a balance
sheet as liabilities (except capital stock and surplus earned or otherwise) and
in any event, without limitation by reason of enumeration, shall include all
indebtedness, debt and other similar monetary obligations of such person whether
direct or guaranteed, and all premiums, if any, due at the required prepayment
dates of such indebtedness, and all indebtedness secured by a lien on assets
owned by such person, whether or not such indebtedness actually shall have been
created, assumed or incurred by such person. Any indebtedness of such person
resulting from the acquisition by such person of any assets subject to any lien
shall be deemed, for the purposes hereof, to be the equivalent of the creation,
assumption and incurring of the indebtedness secured thereby, whether or not
actually so created, assumed or incurred.
"Non-Financed Capital Expenditures" shall mean capital expenditures of LESCO
which are not financed by any third party lender.
- 54 -
EXHIBIT A-1
(FORM OF)
DAILY ACTIVITY REPORT
CARDHOLDER ACTIVITY
OPENING BALANCE
$ xxx $ xxx $ xxx
BRC PROX** LESCO
------------------- -------------------- --------------------
TODAY MTD TODAY MTD TODAY MTD
SALES
SALES ADJUSTMENTS
CHARGE OFF SALES (A)
NET SALES
RETURNS
RETURNS ADJUSTMENTS
NET RETURNS
PAYMENTS
PAYMENTS ADJUSTMENTS
NET PAYMENTS
MISCELLANEOUS CHARGES
MISCELLANEOUS CHARGES ADJUSTMENTS
CHARGE OFF MISCELLANEOUS CHARGES
NET MISCELLANEOUS CHARGES
TRANSFERS IN
TRANSFERS OUT
REINSTATED (C)
NET TRANSFERS
NET CHANGE GOOD ACCOUNTS
CLOSING BALANCE $ xxx $ xxx $ xxx
**PROX RECOURSE ACCOUNTS SHALL BE SEPARATELY ACCOUNTED FOR USING THE SAME
ITEMIZED ATTRIBUTES.
- 55 -
$ xxx $ xxx $ xxx
BRC PROX** LESCO
------------------- --------------- --------------------
TODAY MTD TODAY MTD TODAY MTD
CARDHOLDER INCOME DETAIL
FINANCE CHARGES
FINANCE CHARGES-ADJUSTMENT
FINANCE CHARGES-CHARGEOFF
LATE CHARGES
LATE CHARGES-ADJUSTMENT
LATE CHARGES-CHARGEOFF
OVERLIMIT CHARGES
OVERLIMIT CHARGES-ADJUSTMENT
OVERLIMIT CHARGES-CHARGEOFF
NET CARDHOLDER INCOME (B)
UNPOSTED TRANSACTIONS
SALES
RETURNS
PAYMENTS
TOTAL UNPOSTED TRANSACTIONS
CHARGED-OFF ACCOUNTS
OPENING BALANCE
CHARGED OFF (A)
SALES
RETURNS
PAYMENTS
FINANCE CHARGE
LATE FEE
CREDIT LIFE
REINSTATED (C)
ENDING BALANCE
**PROX RECOURSE ACCOUNTS SHALL BE SEPARATELY ACCOUNTED FOR USING THE SAME
ITEMIZED ATTRIBUTES.
- 56 -
EXHIBIT A-2
(FORM OF)
DELINQUENCY REPORT
Current 30-59 60-89 90-119 120-149 150-179 180-209 210-239
(1 Cycle) (2 Cycles) (3 Cycles) (4 Cycles) (5 Cycles) (6 Cycles) (7 Cycles)
GE ACCOUNTS-BRC
OUTSTANDING BAL
Current 30-59 60-89 90-119 120-149 150-179 180-209 210-239
(1 Cycle) (2 Cycles) (3 Cycles) (4 Cycles) (5 Cycles) (6 Cycles) (7 Cycles)
GE ACCOUNTS-PROX
OUTSTANDING BAL
Current 30-59 60-89 90-119 120-149 150-179 180-209 210-239
(1 Cycle) (2 Cycles) (3 Cycles) (4 Cycles) (5 Cycles) (6 Cycles) (7 Cycles)
LESCO ACCOUNTS
OUTSTANDING BAL
240-269 270-299 Total
(8 Cycles) (9 Cycles) Bankrupt Outstanding
GE ACCOUNTS-BRC
OUTSTANDING BAL
240-269 270-299 Total
(8 Cycles) (9 Cycles) Bankrupt Outstanding
GE ACCOUNTS-PROX
OUTSTANDING BAL
240-269 270-299 Total
(8 Cycles) (9 Cycles) Bankrupt Outstanding
LESCO ACCOUNTS
OUTSTANDING BAL
- 1 -
EXHIBIT A-3
(FORM OF)
DAILY SETTLEMENT REPORT
DATE:___________________
BRC PROX PROX LESCO TOTAL
RECOURSE
----------------------------------------------------------------------
Cash Sales n/a
Credit Sales A n/a
less: Credit Slips (Returns B n/a
less: Chargebacks D n/a
plus: Chargeback Reversals E n/a
----------------------------------------------------------------------
EQUALS: NET CREDIT VOLUME F n/a
(A+E)-(B+D)
----------------------------------------------------------------------
less: In-Store Credit Payments G n/a
less: In-Store Cash Payments N
plus: Returned In-Store Payments H n/a
(NG Checks)
plus: Payments on LESCO accounts J
less: Returned LESCO Payments (NSF P
Checks)
less: Net Promotion Fees - Previous K n/a
Day
----------------------------------------------------------------------
EQUALS: SETTLEMENT AMOUNT M
(F+H+J)-(G+K+N+P)
----------------------------------------------------------------------
- 2 -