EXHIBIT 10.01
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AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT
dated as of June 3, 2008
Among
VOLT FUNDING CORP.,
as Seller
and
THE VARIOUS BUYERS AND BUYER AGENTS FROM TIME TO TIME PARTY HERETO,
and
VOLT INFORMATION SCIENCES, INC.,
as Servicer
and
PNC BANK, NATIONAL ASSOCIATION,
as Administrator
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TABLE OF CONTENTS
Page
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AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT
ARTICLE I
DEFINITIONS; CONSTRUCTION
1.01 Certain Definitions...............................................................................3
1.02 Interpretation and Construction..................................................................28
ARTICLE II
AGREEMENT TO PURCHASE AND SELL
2.01 Purchase Limits..................................................................................29
2.02 Amount of Purchases..............................................................................30
2.03 Reduction of the Aggregate Maximum Net Investment and
Net Investment; Termination of the Agreement.....................................................30
2.04 Fees Payable to the Buyer........................................................................32
2.05 Extension of the Liquidity Termination Date......................................................32
2.06 Additional Buyers................................................................................33
ARTICLE III
BUYER'S ALLOCATION
3.01 Buyer's Allocation...............................................................................34
3.02 Frequency of Computation of the Buyer's Allocation...............................................34
ARTICLE IV
CLOSING PROCEDURES
4.01 Purchase and Sale Procedures.....................................................................35
4.02 Conditions Precedent to the First Purchase.......................................................36
4.03 Conditions Precedent to Each Purchase, Reinvestment and Aggregate Net Investment.................39
(i)
4.04 Purchase Price...................................................................................40
4.05 Security Interest................................................................................41
4.06 Non Assumption by the Buyer of Obligations.......................................................43
4.07 Character of Receivables Added to Receivables Pools..............................................43
4.08. Fifth Third Liquidity Agreement..................................................................43
ARTICLE V
SETTLEMENTS; ADJUSTMENTS
5.01 Settlement Statements............................................................................43
5.02 Receivables Status...............................................................................44
5.03 Non-Liquidation Settlements......................................................................44
5.04 Liquidation Settlements..........................................................................46
5.05 Allocation of Collections........................................................................47
5.06 Deferred Purchase Price..........................................................................47
5.07 Treatment of Collections and Deemed Collections..................................................48
ARTICLE VI
PROTECTION OF THE BUYER;
ADMINISTRATION AND COLLECTIONS
6.01 Maintenance of Information and Computer Records..................................................48
6.02 Protection of the Interests of the Buyers........................................................48
6.03 Maintenance of the Location of Writings and Records..............................................49
6.04 Information......................................................................................50
6.05 Performance of Undertakings Under the Purchased
Receivables; Indemnification.....................................................................51
6.06 Administration and Collections; Indemnification..................................................51
6.07 Complete Servicing Transfer......................................................................53
6.08 Lockboxes........................................................................................56
(ii)
ARTICLE VII
REPURCHASES BY SELLER
7.01 Repurchases......................................................................................56
7.02 Repurchase Price.................................................................................56
7.03 Reassignment of Repurchased Receivables..........................................................57
7.04. Obligations Not Affected.........................................................................57
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
8.01 General Representations and Warranties of the Seller.............................................57
8.02 Representations and Warranties of the Seller with Respect to Each Sale of Receivables............60
8.03 Representations and Warranties of the Servicer...................................................62
ARTICLE IX
COVENANTS
9.01 Affirmative Covenants of the Seller..............................................................64
9.02 Negative Covenants of the Seller.................................................................72
9.03 Affirmative Covenants of the Servicer............................................................75
9.04 Negative Covenants of the Servicer...............................................................82
ARTICLE X
TERMINATION
10.01 Termination Events...............................................................................82
10.02 Consequences of a Termination Event..............................................................82
ARTICLE XI
MISCELLANEOUS
11.01 Expenses.........................................................................................87
11.02 Payments.........................................................................................87
(iii)
11.03 Indemnity for Taxes, Reserves and Expenses.......................................................88
11.04 Indemnity........................................................................................89
11.05 Holidays.........................................................................................92
11.06 Records..........................................................................................93
11.07 Amendments and Waivers...........................................................................93
11.08 No Implied Waiver; Cumulative Remedies...........................................................94
11.09 No Discharge.....................................................................................94
11.10 Notices..........................................................................................94
11.11 Severability.....................................................................................95
11.12 Governing Law....................................................................................95
11.13 Prior Understandings.............................................................................95
11.14 Survival.........................................................................................96
11.15 Counterparts.....................................................................................96
11.16 Set-Off..........................................................................................96
11.17 Time of Essence..................................................................................97
11.18 Payments Set Aside...............................................................................97
11.19 No Petition......................................................................................98
11.20 No Recourse......................................................................................98
11.21 Tax Treatment....................................................................................99
11.22 Assignment.......................................................................................99
11.23 Limitation on Signing Authority..................................................................99
ARTICLE XII
THE AGENTS
12.01 Appointment and Authorization...................................................................100
12.02 Delegation of Duties............................................................................101
12.03 Exculpatory Provisions..........................................................................101
12.04 Reliance by Agents..............................................................................102
(iv)
12.05 Notice of Termination Events and Servicer Events................................................103
12.06 Non-Reliance on Administrator, Buyer Agents and Other
Buyers..........................................................................................103
12.07 Administrators and Affiliates...................................................................104
12.08 Indemnification.................................................................................104
12.09 Successor Administrator.........................................................................105
EXHIBITS
A Form of Certificate of Participation
B Form of Settlement Statement
C Form of Certificate of Responsible Officer
D Information Regarding Affiliates
E Accounting Period Report
F-1 Form of Purchase Notice
F-2 Form of Seller Assignment Confirmation Certificate
G List of Permitted Lockbox Banks
H Excluded Obligors
I Banking Institution Closure Dates
J Form of Paydown Notice
(v)
AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT
AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT dated as
of June 3, 2008 among VOLT FUNDING CORP., a Delaware corporation (the "Seller"),
THE VARIOUS BUYERS AND BUYER AGENTS FROM TIME TO TIME PARTY HERETO, VOLT
INFORMATION SCIENCES, INC., a New York corporation (the "Company"), and PNC
BANK, NATIONAL ASSOCIATION, as Administrator for each Buyer Group (in such
capacity, the "Administrator").
WITNESSETH THAT:
WHEREAS, the Seller, Three Rivers Funding Corporation, a
Delaware corporation ("TRFCO"), and the Company, as Servicer, are parties to
that certain Receivables Purchase Agreement, dated as of April 12, 2002, as
heretofore amended, supplemented or otherwise modified from time to time (the
"Existing Agreement"); and
WHEREAS, the Company is engaged in part, and the Company's
Affiliates (as hereinafter defined), Volt Management Corp., a Delaware
corporation ("Volt Management"), P/S Partner Solutions, Ltd., a Delaware
corporation ("P/S") formerly known as PS Payrolling, Ltd., and Volt Technical
Resources, LLC, a Delaware limited liability company ("Volt Technical") formerly
a Delaware corporation known as Volt Human Resources, Inc. (collectively, the
"Subsidiary Originators", and, collectively with the Company, the
"Originators"), are engaged in full, in the business of providing staffing
solutions to their customers (the "Staffing Solutions Business"); and
WHEREAS, the Originators, in the ordinary course of the
Staffing Solutions Business, generate trade receivables resulting from their
sale of merchandise and the rendering of services to their customers with regard
to such business (the "Staffing Solutions Receivables"); and
WHEREAS, the Subsidiary Originators heretofore have
transferred, and hereafter may from time to time transfer, their respective
Staffing Solutions Receivables to the Company pursuant to: (i) in the case of
Volt Management, that certain Receivables Purchase and Sale Agreement dated as
of April 12, 2002 between Volt Management and the Company, as heretofore
amended, supplemented or otherwise modified, as amended by the Omnibus Amendment
Agreement dated as of the date hereof among the Seller, the Company, Volt
Management, Volt Technical, P/S, Market Street, Relationship Funding, PNC Bank,
National Association ("PNC") and Fifth Third Bank ("Fifth Third") (the "Omnibus
Amendment Agreement"), and as hereafter further amended, supplemented or
otherwise modified from time to time (the "Volt Management Sale Agreement");
(ii) in the case of Volt Technical, that certain Receivables Purchase and Sale
Agreement dated as of April 12, 2002 between Volt Technical and the Company, as
heretofore amended, supplemented or otherwise modified, as amended by the
Omnibus Amendment Agreement, and as hereafter further amended, supplemented or
otherwise modified from time to time (the "Volt Technical Sale Agreement"); and
(iii) in the case of P/S, that certain Receivables Purchase and Sale Agreement
dated as of May 23, 2006 between P/S and the Company, as heretofore amended,
supplemented or otherwise modified, as amended by the Omnibus Amendment
Agreement, and as hereafter further amended, supplemented or otherwise modified
from time to time (the "P/S Sale Agreement"; and, together with the Volt
Management Sale Agreement and the Volt Technical Sale Agreement, the "Subsidiary
Sale Agreements"); and
WHEREAS, the Company heretofore has transferred, and hereafter
may from time to time transfer, to the Seller the Staffing Solutions Receivables
generated by the Subsidiary Originators (and acquired by the Company pursuant to
the Subsidiary Sale Agreements), as well as Staffing Solutions Receivables
generated by the Company, pursuant to that certain Receivables Sale and
Contribution Agreement dated as of April 12, 2002 between the Company and the
Seller, as heretofore amended, supplemented or otherwise modified, as amended by
the Omnibus Amendment Agreement, and hereafter further amended, supplemented or
otherwise modified from time to time (the "Sale Agreement"); and
WHEREAS, the Seller heretofore has created, and hereafter may
continue, a pool of such Staffing Solutions Receivables; and
WHEREAS, TRFCO heretofore from time to time purchased from the
Seller undivided percentage ownership interests in the pool of receivables
pursuant to and in accordance with the terms of the Existing Agreement; and
WHEREAS, in connection with the execution of this Agreement
TRFCO assigned all of its right title, interest and obligations in the
Participation Interest, the Existing Agreement and all other Purchase Documents
(as defined under the Existing Agreement) to Market Street Funding LLC, a
Delaware limited liability company ("Market Street"), and Relationship Funding
Company, LLC, a Delaware limited liability company ("Relationship Funding"), the
sole Buyers as of the Closing Date, in the amounts set forth on the Omnibus
Assignment and Assumption Agreement, dated as of the date hereof, among the
Seller, Market Street, Relationship Funding, Fifth Third, PNC Bank, the
Administrator, TRFCO, Mellon Bank, N.A., the Originators and the Servicer (the
"Omnibus Assignment Agreement"); and
WHEREAS, the Buyers from time to time hereafter may purchase
from the Seller undivided percentage ownership interests in the pool of
receivables pursuant to and in accordance with the terms hereof; and
WHEREAS, the parties hereto wish to amend and restate the
Existing Agreement on the terms hereof;
NOW, THEREFORE, the parties hereto, in consideration of their
mutual covenants hereinafter set forth and intending to be legally bound, hereby
agree as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
-------------------------
1.01. Certain Definitions. In addition to other words and
terms defined in the recitals hereof and elsewhere in this Agreement, as used
herein, the following words and terms shall have the following meanings
respectively, unless otherwise required by context:
"Account Balance" shall mean, in respect of a Receivable which
is included in the Receivables Pool, all amounts shown as owing by the related
Obligor on the accounting records of the Company and the Seller, and all other
amounts which are shown on the most recent Settlement Statement and in respect
of which the related Obligor is obligated, excluding each Defaulted Receivable.
"Accounting Period" shall mean, with respect to any Settlement
Date, the period beginning on the first Monday and ending on the last Sunday of
the Fiscal Month of the Company or the Seller most recently ended prior to such
Settlement Date.
3
"Administrator" shall have the meaning assigned to such term
in the recitals hereof.
"Affected Party" shall mean each of the Buyers, the Buyer
Agents, and the Administrator, any permitted assignee of a Buyer, a Buyer Agent,
and the Administrator, and each Person providing liquidity or credit support to
a Buyer pursuant to a Liquidity Agreement or a Program Support Agreement and
each of their respective Affiliates and assigns.
"Affiliate" shall mean, with respect to a Person, any other
Person which directly or indirectly controls, is controlled by or is under
common control with such Person. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement" shall mean this Amended and Restated Receivables
Purchase Agreement, as the same may from time to time be amended, supplemented
or otherwise modified.
"Aggregate Buyers' Allocation" shall mean the sum of the
Buyer's Allocations for each Buyer.
"Aggregate Cost of Funds" at any time, shall mean the sum of
the aggregate for each Buyer of the accrued and unpaid Cost of Funds with
respect to each such Buyer's Purchase Price.
"Aggregate Maximum Net Investment" shall mean, at any time of
determination, the sum of the Maximum Net Investments of each Buyer.
"Aggregate Net Investment" shall mean, for any given day, the
sum of the Net Investments of each Buyer, as calculated on such day.
"Average Dilution Ratio" means, as of any date of calculation,
the average of the Dilution Ratios for the twelve most recent Accounting
Periods.
"Business Day" shall mean any day other than a Saturday,
Sunday, or other day on which (a) banking institutions are authorized or
obligated to close in the State of New York (which days are set forth on Exhibit
I hereto as such Exhibit I may be amended from time to time by the parties
hereto), (b) banking institutions are authorized or obligated to close in the
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Commonwealth of Pennsylvania (which days are set forth on Exhibit I hereto) (c)
there is a public holiday under the Laws of the Commonwealth of Pennsylvania or
the State of New York (which days are set forth Exhibit I hereto as such Exhibit
I may be amended from time to time by the parties hereto) or (d) SIFMA
recommends as a closed day for the United States bond market.
"Buyer" means each Person listed as such as set forth on the
signature pages of this Agreement or in any assignment agreement by which a
person becomes a Buyer.
"Buyer Agent" means each Person acting as an agent on behalf
of a Buyer Group and designated as a Buyer Agent for such Buyer Group on the
signature pages to this Agreement or any other Person who becomes a party to
this Agreement as a Buyer Agent pursuant to an assignment agreement.
"Buyer's Allocation" shall have the meaning ascribed to such
term in Section 3.01 hereof.
"Buyer Group" means, for each Buyer (and/or any assignee of a
Buyer), such Buyer and its related Buyer Agent.
"Certificate of Participation" shall mean, for a Buyer, with
respect to such Buyer's Participation Interest, the written evidence of such
Buyer's interest in the Receivables Pool related to such Participation Interest,
in substantially the form attached as Exhibit A hereto.
"Chief Executive Office" shall mean, with respect to any
referenced Person, the place where such Person would be deemed to be located
(within the meaning of Section 9-307(b) of Revised UCC Article 9 as in effect in
New York) if not a registered organization (as defined in Revised UCC Article 9
as in effect in New York).
"Closing Date" shall mean the date on which the Participation
Interest is initially purchased by Market Street and Relationship Funding (as
the initial Buyers hereunder) in the Receivables Pool pursuant to the terms of
this Agreement and the Omnibus Assignment Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
5
"Collections" shall mean, for any Purchased Receivable as of
any date, (i) the sum of all amounts, whether in the form of cash, checks,
drafts, or other instruments (excluding promissory notes), received by any
Originator, the Seller or the Servicer or in a Permitted Lockbox or in a Lockbox
Account in payment of, or applied to, any amount owed by an Obligor on account
of such Purchased Receivable (including but not limited to all amounts received
on account of any Defaulted Receivable), including, without limitation, all
amounts received on account of such Purchased Receivable and other fees and
charges, and (ii) all amounts deemed to have been received by the Company, the
Seller or the Servicer as a Collection pursuant to Sections 5.03(c) or 6.04
hereof.
"Company" shall have the meaning assigned to such term in the
recitals hereof.
"Company Entity" shall have the meaning assigned to such term
in Section 9.01(s) hereof.
"Complete Servicing Transfer" shall have the meaning ascribed
to such term in Section 6.07 hereof.
"Concentration Limit" shall mean, as of any date of
determination, with respect to all of the Eligible Receivables owing from a
single Obligor (except for an Obligor listed on Exhibit H), together with
Receivables owing from its subsidiaries and other Affiliates, an amount equal to
three and one-half percent (3.5%) of the aggregate of the Account Balances of
the Eligible Receivables in the Receivables Pool outstanding as of the last day
of the most recently completed Accounting Period; provided that such percentage
shall be increased for any applicable Obligor to the highest level for which
such Obligor qualifies, as determined at the end of the Accounting Period most
recently completed, in accordance with the following table:
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- ------------------------------------------- ---------------------- ----------------------------------------------------
CONCENTRATION LIMIT OF PARTICULAR
OBLIGOR (AND SUBSIDIARIES AND SHORT-TERM RATING LONG-TERM SENIOR UNSECURED DEBT RATING
OTHER AFFILIATES) FROM S&P/MOODY'S FROM S&P/MOODY'S
- ------------------------------------------- ---------------------- ----------------------------------------------------
16% Not Applicable at least AA/
at least Aa2
- ------------------------------------------- ---------------------- ----------------------------------------------------
14% A-1/P-1 at least A+ but less than AA/
at least A1 but less than Aa2
- ------------------------------------------- ---------------------- ----------------------------------------------------
8% A-2/P-2 at least BBB+, but less than A+/
at least Baa1, but less than A1
- ------------------------------------------- ---------------------- ----------------------------------------------------
6% A-3/P-3 at least BBB-, but less than BBB+/
at least Baa3, but less than Baa1
- ------------------------------------------- ---------------------- ----------------------------------------------------
3.5% Not Applicable Not Applicable
- ------------------------------------------- ---------------------- ----------------------------------------------------
If the Obligor's short-term debt obligations are rated by both S&P and Moody's,
the applicable concentration level is the highest level in respect of which the
short-term debt obligation rating in respect of the Obligor by each agency is at
least equal to the rating set forth in the second column; provided, however, if
rated by only one such agency, the concentration level is one level lower than
the level satisfied for that agency (but not below 3.5%). If the Obligor's
short-term debt obligations are unrated by either agency but its long-term debt
obligations are rated by one or both agencies, then the applicable concentration
level is the highest level in respect of which the long-term debt obligation
rating in respect of the Obligor by each agency is at least equal to the rating
set forth in the third column; provided, however, if rated by only one such
agency, the concentration level is one level lower than the level satisfied for
that agency (but not below 3.5%); provided further, that such proviso should not
apply if the Obligor is rated by only one such agency and such rating is at
least AA or Aa2. Notwithstanding the foregoing, (x) the applicable percentage
shall be an amount equal to sixteen percent (16%) for all the Eligible
Receivables owing from Microsoft Corporation (together with Receivables owing
from its subsidiaries and other Affiliates) whether or not said Obligor has
rated debt; and (y) the applicable Concentration Limit of any particular Obligor
may be (a) increased in respect of such particular Obligor with the prior
written consent of the Buyer Agents or (b) in the sole discretion of the
Administrator upon five (5) Business Days prior notice to the Seller decreased
in respect of such particular Obligor.
"Contract" shall mean a written or oral contract, which shall
be legally binding, between one or more Originators and an Obligor which gives
rise to a Receivable arising from the sale by the Originators of goods or
services in the ordinary course of the Staffing Solutions Business.
7
"Cost of Funds" shall mean, with respect to any Settlement
Period and a Buyer, an amount, as notified in writing by the applicable Buyer
Agent to the Seller in respect of the related Settlement Date, equal to the
interest or discount cost for funds borrowed or obtained during such Settlement
Period, either from the issuance of commercial paper notes, the taking of loans
or otherwise, by the applicable Buyer for the purpose of maintaining or
acquiring its Participation Interest, including in the computation of such cost
any dealer's discount or fees and any and all other fees which are attributable
to such borrowing and are specified from time to time in writing by the
applicable Buyer Agent to the Seller. The "Cost of Funds" for any day while a
Termination Event or a Potential Termination Event exists shall be an interest
rate equal to 2.0% per annum above the Reference Rate as in effect on such day.
"Credit and Collection Policy" shall mean the objective
receivable credit and collection practices utilized in connection with the
Staffing Solutions Business and Staffing Solutions Receivables by the
Originators, the Seller and the Servicer as of the date hereof and approved by
the Administrator and the Buyer Agents, as the same may be modified in strict
compliance with this Agreement.
"Credit Dilution Reserve" means, on any date, the product,
expressed as a percentage, of (a) the Dilution Horizon multiplied by (b) the sum
of (i) 2 times the Average Dilution Ratio and (ii) the Dilution Spike Factor.
"Credit Dynamic Reserve" shall mean, with respect to any
Settlement Date, expressed as a percentage, the sum of (i) Credit Loss Reserve
and (ii) Credit Dilution Reserve.
"Credit Enhancement Floor" shall mean, with respect to any
Settlement Date, fourteen percent (14%).
"Credit Enhancement Reserve" shall mean, with respect to any
Settlement Date, an amount equal to, the product of (A) the greater of (1) the
Credit Dynamic Reserve as of such Settlement Date and (2) the Credit Enhancement
Floor as of such Settlement Date, and (B) the positive result, if any, of (1)
the aggregate outstanding Account Balance of Eligible Receivables in the
Receivables Pool as of the last day of the Accounting Period immediately
preceding such Settlement Date, minus (2) the Yield Reserve with respect to the
related Settlement Period, minus (3) the aggregate amount by which the Account
Balance of Eligible Receivables of each Obligor as of the last day of the
Accounting Period immediately preceding such Settlement Date exceeds the
Concentration Limit for such Obligor.
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"Credit Loss Reserve" shall mean, with respect to any
Settlement Date, the product, expressed as a percentage, of (i) 2.0, (ii) the
Loss Ratio as of such Settlement Date and (iii) the Loss Horizon Ratio as of
such Settlement Date.
"Days Sales Outstanding" shall mean, as of any date of
calculation, the product of (A) the quotient of (x) the aggregate Account
Balances of all Purchased Receivables outstanding as of the last day of the most
recently ended Accounting Period divided by (y) the aggregate amount of sales of
the Originators, attributable to the Staffing Solutions Business, during that
Accounting Period and the two Accounting Periods immediately preceding it
(collectively, the "Three Accounting Periods"); and (B) the number of days in
the Three Accounting Periods.
"Default Ratio" shall mean, with respect to any Settlement
Date, a fraction, expressed as a percentage, the numerator of which is the
aggregate outstanding balance of Eligible Receivables which were in the
Receivables Pool as of the first day of the Accounting Period immediately
preceding such Settlement Date and which became Defaulted Receivables during
such Accounting Period and the denominator of which is the aggregate amount of
sales of the Originators, attributable to the Staffing Solutions Business,
during the fifth Accounting Period immediately preceding such Settlement Date.
"Defaulted Receivable" shall mean a Purchased Receivable (a)
the Obligor of which is not entitled to purchase additional merchandise or
services from the Company, by reason of any default or nonperformance by such
Obligor, under the terms of the Credit and Collection Policy, (b) which has
become uncollectible or has been written off the books of the Company or the
Seller by reason of such Obligor's inability to pay, as determined by the Buyer
or the Servicer, in either case in accordance with the Credit and Collection
Policy, (c) in respect of which an Event of Bankruptcy has occurred with respect
to the related Obligor or (d) in respect of which the Obligor is more than 90
days past due.
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"Deferred Purchase Price" shall mean the amount calculated
pursuant to Section 5.06 hereof.
"Dilution" shall mean a reduction of the Account Balance of an
Eligible Receivable given to an Obligor as a result of credits, cancellations,
cash discounts, warranties, allowances, disputes, rebates, charge backs, billing
errors, returned or repossessed goods, or other allowances, adjustments and
deductions (including, without limitation, any special or other discounts or any
reconciliations) that are given to an Obligor.
"Dilution Horizon" shall mean, with respect to any Settlement
Date, a fraction, expressed as a percentage, the numerator of which is the
aggregate amount of sales of the Originators, attributable to the Staffing
Solutions Business during the Accounting Period to which such Settlement Date
relates and the denominator of which is the aggregate outstanding balance of
Eligible Receivables in the Receivables Pool as of the last day of the
Accounting Period for such Settlement Date.
"Dilution Ratio" means, for any referenced Accounting Period,
the ratio (expressed as a percentage and rounded to the nearest 1/100th of 1%,
with 5/1000th of 1% rounded upward), computed as of the last day of such
referenced Accounting Period of: (a) Dilution during the referenced Accounting
Period; by (b) the aggregate credit sales made by all the Originators during the
immediately preceding Accounting Period.
"Dilution Spike Factor" means, for any referenced Accounting
Period, the product of: (a) the positive difference, if any, between (i) the
highest Dilution Ratio for any Accounting Period during the twelve most recent
Accounting Periods (including the referenced Accounting Period) and (ii) the
Average Dilution Ratio during those twelve most recent Accounting Periods
(including the referenced Accounting Period); and (b) (i) the highest Dilution
Ratio for any Accounting Period during the twelve most recent Accounting Periods
(including the referenced Accounting Period), divided by (ii) the Average
Dilution Ratio during those twelve most recent Accounting Periods (including the
referenced Accounting Period).
"Dispute" shall mean any dispute, deduction, claim, offset,
defense, counterclaim, set-off or obligation of any kind, contingent or
otherwise, relating to a Receivable, including, without limitation, any dispute
relating to goods or services already paid for.
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"Dollar," "Dollars" and the symbol "$" shall mean lawful money
of the United States of America.
"Eligible Receivable" shall mean any Receivable which:
(a) duly complies with all applicable Laws and other legal
requirements, whether Federal, state or local,
including, without limitation, usury laws, the Federal
Consumer Credit Protection Act, the Fair Credit Billing
Act and the Federal Truth in Lending Act;
(b) constitutes an "account" or a "general intangible" as
defined in Revised UCC Article 9 as in effect in the
State of New York and, if different, the jurisdiction
whose Law governs the perfection of the Buyers'
Participation Interests in such Receivable;
(c) (i) was originated by one or more of the Originators in
the ordinary course of the Staffing Solutions Business
in a transaction which complied with the Credit and
Collection Policy, or (ii) was originated by a business
subsequently acquired by or merged into one of the
Originators in a transaction which complied with the
policies and procedures of such business in effect at
the time such Receivable was originated, provided that
the eligibility of such Receivable under this clause
(ii) is approved in advance in writing by the
Administrator;
(d) arises from a Contract (the form of which, if not
entered into in the ordinary course of the Staffing
Solutions Business, has been approved by the
Administrator) and has been billed, or will be billed
to the related Obligor, or in respect of which the
related Obligor is otherwise liable, in accordance with
the terms of such Contract;
(e) constitutes a legal, valid, binding and irrevocable
payment obligation of the related Obligor, enforceable
in accordance with its terms (subject to contractual
discounts, allowances, quality and quantity
adjustments);
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(f) provides for payment in Dollars by the related Obligor;
(g) is payable by the Obligor (or by a Paying Agent) into a
Permitted Lockbox or Lockbox Account;
(h) has not been repurchased by the Seller or deemed
collected pursuant to the provisions of this Agreement;
(i) if it were a Purchased Receivable, would not be a
Defaulted Receivable;
(j) has an Obligor who is entitled to purchase additional
merchandise or receive additional services from the
Originators under the terms of the Credit and
Collection Policy; provided, that a Receivable which
has an Obligor who is not entitled to purchase
additional merchandise or receive additional services
from the Originators because such Obligor has reached
the individual or aggregate credit limit established by
the Originators shall be deemed to satisfy this
paragraph (j);
(k) was not originated in or subject to the Laws of a
jurisdiction whose Laws would make such Receivable, the
related Contract, the transfer of such Receivable by a
Subsidiary Originator to the Company pursuant to a
Subsidiary Sale Agreement, the transfer of such
Receivable by the Company to the Seller pursuant to the
Sale Agreement or the sale of the Participation
Interests in such Receivable to the Buyers hereunder
unlawful, invalid or unenforceable;
(l) is owned solely by the Seller free and clear of all
Liens, except for the Lien arising in connection with
this Agreement and any Program Support Agreement and
other Permitted Liens;
12
(m) other than with respect to warranty claims being
handled in accordance with the Credit and Collection
Policy, no rejection or return of the goods or services
which give rise to such Receivable has occurred and all
goods and services in connection therewith have been
finally performed or delivered to and accepted by the
Obligor without Dispute;
(n) is not an obligation of the United States, any state or
municipality or any agency or instrumentality or
political subdivision thereof, unless otherwise agreed
to in writing by the Buyer Agents, the Seller and the
Affected Parties;
(o) is not subject to any contractual right of setoff;
(p) is an obligation representing part or all of the sales
price of merchandise or services;
(q) such Receivable must, by its terms, require full
payment in respect thereof to be paid no later than 60
days after the date the original invoice with respect
thereto was sent to the related Obligor;
(r) has an Obligor who is located in the United States,
including Puerto Rico, or in Canada;
(s) has an Obligor who is not an Affiliate of the Company
or the Seller;
(t) was acquired by the Seller from the Company pursuant to
and in accordance with the terms of the Sale Agreement;
and
(u) the Obligor of which has not been deemed to be
ineligible by the Administrator, in its reasonable
discretion, upon ten (10) Business Days' prior written
notice to the Seller.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
13
"ERISA Affiliate" shall mean any trade or business (whether or
not incorporated) that is a member of a group of which the Seller is a member
and which is treated as a single employer under Section 414 of the Code.
"Event of Bankruptcy" shall mean, for any Person:
(a) if such Person shall fail generally to, or admit in
writing its inability to, pay its debts as they become
due; or
(b) a proceeding shall have been instituted in a court
having jurisdiction in the premises seeking a decree or
order for relief in respect of such Person in an
involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in
effect, or for the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator,
conservator (under the Bank Conservation Act, as
amended, or otherwise) or other similar official of
such Person or for any substantial part of its
property, or for the winding up or liquidation of its
affairs; or
(c) the commencement by such Person of a voluntary case
under any applicable bankruptcy, insolvency or other
similar Law now or hereafter in effect, or such
Person's consent to the entry of an order for relief in
an involuntary case under any such Law, or consent to
the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator,
conservator (under the Bank Conservation Act, as
amended, or otherwise) or other similar official of
such Person or for any substantial part of its
property, or any general assignment for the benefit of
creditors, or, if a corporation or similar entity, any
corporate action in furtherance of any of the
foregoing; or
(d) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the
appointment of a receiver, liquidator, assignee,
trustee, custodian, sequestrator, or conservator in any
insolvency, readjustment of debt, marshalling of assets
and liabilities, or similar proceedings, shall have
been entered against such Person.
14
"Existing Agreement" shall have the meaning set forth in the
recitals hereof.
"Exiting Buyer" shall have the meaning set forth in Section
2.05 hereof.
"Expiration Date" means the earliest of (i) June 3, 2013, (ii)
the date that the Administrator shall give notice of the termination of all the
Buyers' obligations to purchase the Participation Interests or make
Reinvestments hereunder pursuant to Section 10.02, (iii) with respect to a
Buyer, the first date on which there shall no longer be any Liquidity Agreement
or, solely with respect to Market Street any Program Support Agreement, in
effect or the Liquidity Termination Date under a Liquidity Agreement shall have
occurred in respect of such Buyer and its related Buyer Agent, which date may be
extended from time to time for an additional period or periods in accordance
with Section 2.05, and (iv) Seller shall fail to cause the amendment or
modification of any Purchase Document as reasonably requested by Moody's or S&P,
and such failure shall continue for 30 days after such amendment or modification
is initially requested; provided, further, that if any Expiration Date is not a
Business Day it shall occur on the next preceding Business Day.
"Facility Fee" shall mean, for a Buyer and for any Settlement
Period the facility fee set forth in separate letter agreement, dated as of the
Closing Date, between the Seller and the applicable Buyer Agent and/or Buyer, as
the same may be amended from time to time.
"Facility Fee Amount" shall mean, for any Settlement Period or
part thereof with respect to a Buyer, an amount equal to the product of (i) the
Facility Fee of such Buyer; (ii) 102% of the average daily Maximum Net
Investment of such Buyer during the days elapsed in such Settlement Period and
(iii) the quotient of (a) the number of days elapsed during such Settlement
Period, divided by (b) 360.
"Fifth Third" shall have the meaning set forth in the recitals
hereof.
"Financial Officer" of a referenced Person means the chief
financial officer, principal accounting officer, treasurer or controller of such
Person, or such other officer of such Person as the Buyer may permit in its
reasonable discretion.
15
"Fiscal Month" shall mean, with respect to the Company or any
of its subsidiaries, including the Seller, each of the twelve (12) monthly
accounting periods, each of which accounting periods contains either four (4) or
five (5) weeks, into which the particular Fiscal Year of the Company or such
subsidiary is divided.
"Fiscal Year" shall mean, with respect to the Company or any
of its subsidiaries, including the Seller, the 52-week or 53-week period ending
on the Sunday nearest to October 31st of such year.
"GAAP" shall mean generally accepted accounting principles in
the United States of America, applied on a consistent basis and applied to both
classification of items and amounts, and shall include, without limitation, the
official interpretations thereof by the Financial Accounting Standards Board,
its predecessors and successors.
"Income Taxes" shall mean any federal, state, local or foreign
taxes based upon, measured by, or imposed upon gross or net income, gross or net
receipts, capital or net worth, in each case, attributable solely to cash
received by the Affected Party that is not remitted or deemed remitted to the
Company or the Seller (regardless of the name of the tax imposed), including any
penalties, interest or additions to tax imposed with respect thereto.
"Initial Closing Date" shall mean April 15, 2002.
"Investment" shall mean, on each date of determination, the
sum of (i) the Aggregate Net Investment and (ii) the Deferred Purchase Price, if
any, as determined on the Closing Date or as set forth on the most recently
delivered Settlement Statement.
"Law" shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree or
award of any Official Body (including any law, rule, regulation or governmental
order relating to the protection of the environment or to public or employee
health or safety).
16
"Lien", in respect of the property of any Person, shall mean
any ownership interest of any other Person, any mortgage, deed of trust,
hypothecation, pledge, lien, security interest, grant of a power to confess
judgment, preference, right to priority payment, filing of any financing
statement, charge or other encumbrance or security arrangement of any nature
whatsoever, including, without limitation, any conditional sale or title
retention arrangement, any assignment, deposit arrangement, consignment or lease
intended as, or having the effect of, security, or the filing of a financing
statement in connection with any of the foregoing.
"Liquidation Day" shall mean each day which occurs on or after
(i) the date designated in a notice given by the Administrator to the Seller
stating that the conditions contained in Section 4.03 hereof are not satisfied,
(ii) the Expiration Date, (iii) the date on which a Termination Event occurs and
is continuing and the Buyers have, pursuant to Section 10.02 hereof, by notice
to the Seller, terminated their obligation to purchase the Participation
Interests or make Reinvestments hereunder or such obligation was automatically
terminated pursuant to clause (i) of Section 10.01(j), or (iv) the date on which
the Seller gives written notice to the Administrator, the Buyers and the Buyer
Agents that it no longer wishes to sell interests in the Receivables Pool to the
Buyers or permit Reinvestments to be made; provided, however, there shall be no
Liquidation Day after the Aggregate Net Investment shall equal zero.
"Liquidation Period" shall mean one or more consecutive
Liquidation Days.
"Liquidity Agreement" shall mean (i) with respect to Market
Street, the Liquidity Asset Purchase Agreement dated as of June 3, 2008 among
Market Street, PNC as Liquidity Agent and the Purchasers from time to time party
thereto and (ii) with respect to Relationship Funding, the Liquidity Agreement
dated as of June 3, 2008 among Relationship Funding, Fifth Third as liquidity
agent and the liquidity providers from time to time party thereto, as each may
from time to time be amended, supplemented, modified, replaced or superseded.
"Liquidity Termination Date" shall mean for each Liquidity
Agreement or Program Support Agreement, the date on which such Liquidity
Agreement or Program Support Agreement expires, and which date may be extended
by the parties thereto in accordance with the terms thereof.
17
"Lockbox Account" shall mean an account owned and maintained
by the Seller with a Permitted Lockbox Bank for the purpose of depositing
payments made by Obligors.
"Lockbox Servicing Agreement" shall mean an agreement relating
to lockbox services in connection with a Permitted Lockbox which is in form and
substance satisfactory to the Administrator and which has been executed and
delivered to the Administrator by a Permitted Lockbox Bank.
"Loss Horizon Ratio" shall mean, with respect to any
Settlement Date, a fraction, expressed as a percentage, the numerator of which
is the aggregate amount of sales of the Originators, attributable to the
Staffing Solutions Business, during the four Accounting Periods immediately
preceding such Settlement Date and the denominator of which is the aggregate
outstanding balance of Eligible Receivables in the Receivables Pool as of the
last day of the Accounting Period immediately preceding such Settlement Date.
"Loss Ratio" shall mean, with respect to any Settlement Date,
the highest average Default Ratio for any three consecutive Accounting Periods
during the period of twelve consecutive Accounting Periods immediately preceding
such Settlement Date.
"Majority Buyers" shall mean, at any time, the Buyers whose
Maximum Net Investments aggregate more than 50% of the Aggregate Maximum Net
Investment; provided, however, that so long as the Maximum Net Investment of one
Buyer is greater than 50% of the Aggregate Net Investment and there is more than
one Buyer, then "Majority Buyers" shall mean a minimum of two Buyers.
"Market Street" shall have the meaning set forth in the
recitals hereof.
"Maximum Net Investment" shall mean, with respect to a Buyer,
the maximum amount which such Buyer is obligated to pay hereunder on account of
any Purchase Obligation, as set forth below its signature to this Agreement or
in any assignment agreement pursuant to which it became a Buyer, as such amount
may be (a) modified in connection with any subsequent assignment, (b) increased
with the consent of such Buyer or (c) decreased pursuant to Section 2.03 hereof.
"Moody's" shall mean Moody's Investors Service, Inc.
18
"Multiemployer Plan" shall mean a multiemployer plan as
defined in Section 4001(a)(3) of ERISA to which the Seller or any ERISA
Affiliate (other than one considered an ERISA Affiliate only pursuant to
subsection (m) or (o) of Section 414 of the Code) is making or accruing an
obligation to make contributions, or has within any of the preceding five plan
years made or accrued an obligation to make contributions.
"Net Investment" shall mean with respect to a Buyer (a) for
the Closing Date, an amount equal to the Purchase Price (not including the
Deferred Purchase Price, if any) paid by the applicable Buyer for its
Participation Interest on the Closing Date, and (b) for any other day, an amount
equal to the sum of (i) the Net Investment for such Buyer on the Closing Date,
plus (ii) amounts paid to the Seller pursuant to Section 5.01 hereof since the
Closing Date as an increase in such Buyer's Net Investment, less (iii) all
Collections and other amounts paid to such Buyer and not reinvested (which shall
not include any amounts paid to such Buyer as Cost of Funds or fees) pursuant to
Sections 2.03 (b), 5.03 (b), (d) and (e) and 5.04 hereof since the Closing Date.
In the event that any amount received by such Buyer constituting any portion of
Collections is rescinded or must otherwise be returned or restored for any
reason to any Person, the Net Investment for such Buyer shall be increased by
the amount of Collections so rescinded, returned or restored.
"Obligor" shall mean, with respect to any Receivable, the
Person who purchased goods or services under a Contract giving rise to such
Receivable and who is obligated to make payments (either directly or through a
Paying Agent) to an Originator or the Seller on such Contract in respect of such
Receivable.
"Office" shall mean, when used in connection with the
Administrator, a Buyer or a Buyer Agent, its respective office located at the
address set forth below its signature page hereto, or when used in connection
with the Company or the Seller, its respective office located at 560 Lexington
Avenue, New York, New York 10022, or at such other office or offices of the
Administrator, the Buyers, the Buyer Agents, the Company or the Seller or
branch, subsidiary or Affiliate of any thereof as may be designated in writing
from time to time by any party hereto to the other parties hereto.
"Official Body" shall mean any government or political
subdivision or any agency, authority, bureau, central bank, commission,
department or instrumentality of either, or any court, tribunal, grand jury or
arbitrator, in each case whether foreign or domestic.
19
"Omnibus Amendment Agreement" shall have the meaning assigned
to such term in the recitals hereto.
"Omnibus Assignment Agreement" shall have the meaning assigned
to such term in the recitals hereof.
"Originators" shall have the meaning assigned to such term in
the recitals hereto.
"Participation Interest" shall mean, with respect to a Buyer,
at any time, an undivided percentage ownership interest equal to such Buyer's
Allocation at such time in (a) all then outstanding Purchased Receivables
included in the Receivables Pool, including, without limitation, (i) all
Collections, and (ii) all collateral security, supporting obligations, insurance
policies, letters of credit and surety bonds given on behalf of Obligors to
secure or support payment of such Receivables, (b) all the Seller's right, title
and interest in the Purchase Documents, and (c) any proceeds of any of the
foregoing.
"Paydown Notice" shall have the meaning set forth in Section
2.03(b) hereof.
"Paying Agent" shall mean any subsidiary of the Company whose
principal business is acting as a paying agent intermediary between an Obligor
and an Originator. (As of the Closing Date, ProcureStaff, Ltd., and Information
Management Associates, Inc., both of which are Delaware corporations, are the
only Paying Agents.)
"PBGC" shall mean the Pension Benefit Guaranty Corporation
referred to and defined in ERISA or any successor thereto.
"Permitted Lien" means any of the following:
(a) liens, charges or other encumbrances for taxes and
assessments which are not yet due and payable;
(b) liens of or resulting from any judgment or award, the
time for the appeal or petition for rehearing of which
shall not have expired, or in respect of which the
20
Seller and/or the Originator shall at any time in good
faith be prosecuting an appeal or proceeding for a
review and in respect of which a stay of execution
pending such appeal or proceeding for review shall have
been secured, provided, that the interest sold
hereunder or any portion thereof sold or intended to be
sold hereunder is not, in the opinion of the Buyer,
jeopardized thereby;
(c) liens, charges or other encumbrances or priority claims
incidental to the conduct of business or the ownership
of properties and assets (including warehousemen's and
attorneys' liens and statutory landlords' liens) and
deposits, pledges or liens to secure statutory
obligations, surety or appeal bonds or other liens of
like general nature incurred in the ordinary course of
business and not in connection with the borrowing of
money, provided in each case, the obligation secured is
not overdue or, if overdue, is being contested in good
faith by appropriate actions or proceedings, and
provided, further, that the interest sold hereunder or
any portion thereof sold or intended to be sold
hereunder is not, in the opinion of the Administrator
or any Buyer Agent, jeopardized thereby; and
(d) liens, charges or encumbrances created pursuant to this
Agreement or a Program Support Agreement.
"Permitted Lockbox" shall mean a post office box owned and
maintained by the Seller for the purpose of receiving payments made by Obligors.
"Permitted Lockbox Bank" shall mean any bank at which a
Lockbox Account is maintained, the short-term unsecured debt obligations of
which are rated at least A-1 by S&P, and at least P-1 by Moody's, appointed from
time to time by the Seller and approved by the Administrator.
"Person" shall mean an individual, corporation, partnership
(general or limited), trust, business trust, unincorporated association, joint
venture, joint-stock company, Official Body, or any other entity of whatever
nature.
21
"Plan" shall mean any pension plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
that is maintained for employees of the Seller or any ERISA Affiliate.
"PNC" shall have the meaning assigned to such term in the
recitals hereto.
"Potential Servicer Event" shall mean any event or condition
which, with the giving of notice, the passage of time or both, would constitute
a Servicer Event.
"Potential Termination Event" shall mean any event or
condition which, with the giving of notice, the passage of time or both, would
constitute a Termination Event.
"Program Fee" shall mean, for a Buyer and for any Settlement
Period, the rate per annum set forth in a separate letter agreement, dated as of
the Closing Date, between the Seller and the applicable Buyer Agent and/or
Buyer, as the same may be amended from time to time.
"Program Fee Amount" shall mean, for any Settlement Period or
part thereof with respect to a Buyer, an amount equal to the product of (i) the
Program Fee of such Buyer and (ii) the average daily Net Investment of such
Buyer during the days elapsed in such Settlement Period and (iii) the quotient
of the number of days elapsed during such Settlement Period divided by 360.
"Program Support Agreement" means, collectively, all liquidity
agreements, funding agreements (other than the Liquidity Agreement), credit
agreements, letter of credit agreements, surety agreements, security agreements,
letters of credit and all other agreements which may be in effect from time to
time and which provide liquidity or credit support in respect of the commercial
paper issued by the Buyer, and includes, without limitation, the Bridge Loan
Agreement, dated June 3, 2008, between Relationship Funding and Fifth Third.
"Pro Rata Portion" shall mean, with respect to a Buyer and its
related Buyer Agent, a fraction (expressed as a percentage), the numerator of
which is the Maximum Net Investment of such Buyer, and the denominator of which
is the Aggregate Maximum Net Investment.
22
"P/S" shall have the meaning assigned to such term in the
recitals hereto.
"P/S Sale Agreement" shall have the meaning assigned to such
term in the recitals hereto.
"Purchase Availability Amount" shall mean, with respect to a
Buyer, as of any date, an amount equal to the excess, if any, of (i) the Maximum
Net Investment of such Buyer as of such date over (ii) the Net Investment of
such Buyer as of such date.
"Purchase Documents" shall mean this Agreement, each
Certificate of Participation, the Sale Agreement, each Subsidiary Sale
Agreement, the Omnibus Assignment Agreement, the Omnibus Amendment Agreement and
such other agreements, documents and instruments entered into and delivered by
the Seller or the Company in connection with the transactions contemplated by
this Agreement.
"Purchase Notice" shall mean each (i) notice delivered
pursuant to Section 4.02(e) of the Existing Agreement in the form attached
thereto as Exhibit F and Section 4.02(e) hereof substantially in the form
attached hereto as Exhibit F-1, and (ii) on the Closing Date, the Seller
Assignment Confirmation Certificate substantially in the form attached hereto as
Exhibit F-2, in such form and with such detail as the Buyer Agents may require
from time to time.
"Purchase Obligation" shall have the meaning ascribed to such
term in Section 2.01 hereof.
"Purchase Price" shall mean, with respect to the purchase of a
Participation Interest by a Buyer, (a) with respect to Market Street and
Relationship Funding, the amount of cash consideration set forth on the Omnibus
Assignment Agreement as the cash amount to be paid by the applicable Buyer to
TRFCO for such Participation Interest on the Closing Date and (b) with respect
to any other Buyer, the amount of cash consideration set forth on the Purchase
Notice or assignment agreement as the cash amount to be paid by the applicable
Buyer to Seller or Buyer for such Participation Interest on the applicable date
set forth on such Purchase Notice or assignment agreement.
"Purchased Receivable" shall mean a Receivable included in the
Receivables Pool in which the Buyers are maintaining their Participation
Interests pursuant to the terms of this Agreement.
23
"Rate of Collections" shall mean, for any Accounting Period, a
fraction, expressed as a percentage, the numerator of which is equal to the
total Collections in respect of all Purchased Receivables in the Receivables
Pool (including deemed Collections to the extent actually received by the
Servicer pursuant to Section 5.07) during such Accounting Period and the
denominator of which is equal to the aggregate Account Balances of all Purchased
Receivables in the Receivables Pool as of the close of business on the last day
of the immediately preceding Accounting Period.
"Rating Agency Condition" means, when applicable, with respect
to any material event or occurrence, receipt by the Administrator (or the
applicable Buyer Agent) of written confirmation from each of S&P's and Moody's
(and/or each other rating agency then rating the short term promissory notes
issued or to be issued by any applicable Buyer) that such event or occurrence
shall not cause the rating on the then outstanding short term promissory notes
issued or to be issued by any applicable Buyer to be downgraded or withdrawn.
"Receivable" shall mean, with respect to any Contract, all
receivables, contract rights, general intangibles, payment intangibles,
accounts, chattel paper, documents, instruments (including, without limitation,
promissory notes), amounts due and to become due to one or more of the
Originators or the Seller arising under such Contract (including but not limited
to finance charges accrued with respect to such amounts and fees), and all other
rights, powers and privileges of the Originators or the Seller arising
thereunder or related thereto and in the merchandise (including returned goods)
and contracts relating thereto, assertable against any Person whatsoever, all
supporting obligations, security interests, insurance policies, letters of
credit, letter-of-credit rights, surety bonds, guaranties, investment property
and property securing or supporting payment of such Receivable, all Records
relating to such Receivable and all proceeds and products of any of the
foregoing; provided, that the term shall not include any Receivable the Obligor
of which is listed on Exhibit H hereto, as such exhibit may be amended,
supplemented or modified from time to time.
"Receivables Pool" shall mean, at any time, the group of
Purchased Receivables then outstanding which have, on the Initial Closing Date,
been identified by the Seller as constituting a pool and each additional
Receivable thereafter added to such pool.
24
"Records" shall mean correspondence, memoranda, computer
programs, tapes, discs, papers, books or other documents or transcribed
information of any type whether expressed in ordinary or machine readable
language.
"Reference Rate" shall mean, in respect of a Buyer, the rate
of interest established by the applicable Buyer Agent from time to time as such
Buyer Agent's reference rate (if any); any change in the reference rate shall
become effective as of the opening of business when such change occurs. The
"Reference Rate" is not intended to be the lowest rate of interest charged by
such Buyer Agent in connection with extensions of credit to debtors.
"Reinvestment" shall mean the purchase by each Buyer and the
sale by the Seller of additional undivided percentage ownership interests in
each and every Purchased Receivable utilizing the proceeds of Collections that
were allocated to such Buyer for such purpose pursuant to Section 5.03(a).
"Relationship Funding" has the meaning set forth in the
recitals hereto.
"Remainder" shall have the meaning assigned to such term in
Section 5.03(a) hereof.
"Reportable Event" shall mean any reportable event as defined
in Section 4043(b) of ERISA or the regulations issued thereunder with respect to
a Plan (other than a Plan maintained by an ERISA Affiliate that is considered an
ERISA Affiliate only pursuant to subsection (m) or (o) of Section 414 of the
Code).
"Responsible Officer" shall mean, as to any referenced Person,
the chief executive officer, chief financial officer, chief accounting officer,
controller, or treasurer of such Person.
"Revised UCC Article 9" shall mean Uniform Commercial Code,
Article 9, 1999 Official Text, and the corresponding provisions as revised and
in effect in connection therewith as amended, supplemented or otherwise modified
from time to time.
"Sale Agreement" shall have the meaning assigned to such term
in the recitals hereto.
25
"Seller" shall have the meaning assigned to such term in the
recitals hereto.
"Seller Assignment Confirmation Certificate" has the meaning
set forth in the definition of Purchase Notice.
"Servicer" shall mean the Company, or any Person other than
the Company or its Affiliates which, upon the termination of the Company as
Servicer, succeeds to the functions performed by the Company as the servicer of
the Purchased Receivables pursuant to a Complete Servicing Transfer and a
Successor Servicing Agreement.
"Servicer Event" shall mean a Termination Event (other than
the Termination Event under Section 10.01(k) relating to the Buyer).
"Servicer's Compensation" shall have the meaning ascribed to
such term in Section 6.06(e) hereof.
"Servicer's Compensation Rate" shall mean, as of any
Settlement Date, 0.50% per annum.
"Settlement Date" shall mean: (a) in the case of any
Settlement Period ended prior to the Closing Date, the "Settlement Date" as
determined under (and defined in) the Existing Agreement; (b) in the case of the
first Settlement Period ending after the Closing Date, June 18, 2008; and (c) in
the case of any subsequent Settlement Period, the eighteenth (18th) calendar day
(or, if not a Business Day, the next succeeding Business Day) of the calendar
month immediately following the calendar month in which the immediately
preceding Settlement Date occurred.
"Settlement Period" shall mean (a) the period from and
including the Closing Date and ending on the day immediately preceding the first
Settlement Date, and (b) thereafter, the period from and including the
Settlement Date relating to the immediately preceding Settlement Period and
ending on the day immediately preceding the next Settlement Date. References in
this Agreement to the Settlement Date relating to a referenced Settlement Period
shall mean the Settlement Date occurring one day after the close of such
Settlement Period.
"Settlement Statement" shall mean a statement substantially in
the form of Exhibit B hereto, which, among other things, will identify any and
26
all Purchased Receivables included in the Receivables Pool as of the last day of
the Accounting Period most recently completed, duly completed and executed by a
Responsible Officer of the Company or, if the Company is no longer the Servicer,
of the Seller and delivered to the Buyer pursuant to Section 5.01 hereof.
"Shaw Family" shall mean William Shaw and Jerome Shaw, and
their respective spouses and descendants and trusts established principally for
the benefit of one or more of the foregoing, whether or not constituting a
"group" within the meaning of the Securities Exchange Act of 1934, as amended,
and the rules promulgated thereunder.
"S&P" shall mean Standard & Poor's Ratings Services.
"Subsidiary Originators" shall have the meaning assigned to
such term in the recitals hereto.
"Subsidiary Sale Agreement" shall have the meaning assigned to
such term in the recitals hereto.
"Successor Servicing Agreement" shall mean any agreement
between the Buyers, the Buyer Agents, the Administrator and any Person, other
than the Company or its Affiliate, which contains provisions concerning the
servicing of the Purchased Receivables substantially similar to the provisions
contained herein, including Sections 5.03, 5.04, 5.06, 6.01, 6.02, 6.04, 6.06
and 6.07 hereof, pursuant to which such Person performs servicing functions in
respect of the Purchased Receivables, and all agreements, instruments and
documents attached thereto or delivered in connection therewith, as any of the
same may from time to time be amended, supplemented or otherwise modified and in
effect.
"Termination Event" shall have the meaning assigned to such
term in Section 10.01 hereof.
"Transaction Costs" shall have the meaning assigned to such
term in Section 11.01 hereof.
"TRFCO" shall have the meaning assigned to such term in the
recitals hereto.
"Volt Management" shall have the meaning assigned to such term
in the recitals hereto.
27
"Volt Management Sale Agreement" shall have the meaning
assigned to such term in the recitals hereto.
"Volt Technical" shall have the meaning assigned to such term
in the recitals hereto.
"Volt Technical Sale Agreement" shall have the meaning
assigned to such term in the recitals hereto.
"Withdrawal Liability" shall mean liability to a Multiemployer
Plan as a result of a complete or partial withdrawal from such Multiemployer
Plan, as such terms are defined in Part I Subtitle E of Title IV of ERISA.
"Yield Reserve" shall mean, with respect to any Settlement
Period, an amount equal to the following amount:
{(RR + SFR) x 1.5(DSO) x Eligible Receivables}
--------
360
where:
RR = the Reference Rate in effect at such time,
DSO = the Days' Sales Outstanding, and
SFR = Servicer's Compensation Rate.
1.02. Interpretation and Construction. Unless the context of
this Agreement otherwise clearly requires, references to the plural include the
singular, the singular the plural and the part the whole. References in this
Agreement to "determination" by the Administrator, a Buyer or a Buyer Agent
shall be conclusive absent manifest error and include good faith estimates by
the Administrator, a Buyer or a Buyer Agent (in the case of quantitative
determinations) and good faith beliefs by the Administrator, a Buyer or a Buyer
Agent (in the case of qualitative determinations). The words "hereof", "herein",
"hereunder" and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. The section and
other headings, and table of contents, contained in this Agreement are for
reference purposes only and shall not control or affect the construction of this
Agreement or the interpretation hereof in any respect. Section, subsection and
appendix references are to this Agreement unless otherwise specified. As used in
this Agreement, the masculine, feminine or neuter gender shall each be deemed to
include the others whenever the context so indicates. Terms not otherwise
defined herein which are defined in Revised UCC Article 9 as in effect in New
York on the date hereof shall have the respective meanings ascribed to such
terms therein unless the context otherwise clearly requires. This Agreement
shall be construed as a whole and in accordance with its fair meaning.
28
ARTICLE II
AGREEMENT TO PURCHASE AND SELL
------------------------------
2.01. Purchase Limits. Subject to the terms and conditions
hereof, the Seller may at its option sell to the Buyers, and the Buyers agree to
purchase from the Seller (such agreement being referred to herein as the
"Purchase Obligation"), at any time and from time to time on and after the date
hereof and to but excluding the Expiration Date, undivided percentage ownership
interests in the Receivables Pool by the Seller selling and such Buyer
purchasing the Participation Interest in such Receivables Pool. Subject to the
terms and conditions hereof, such Buyer shall also (i) make Reinvestments by
permitting the Servicer to cause Collections allocated to such Buyer to be
applied to the purchase of additional undivided percentage ownership interests
in the Receivables Pool, and (ii) increase its Net Investment in its
Participation Interest on any Settlement Date at the request of the Seller
(without regard to a minimum amount). No Buyer shall purchase a Participation
Interest on the Closing Date, or permit a Reinvestment to be made on any day, or
increase its Net Investment on any Settlement Date, to the extent that the
amount of such purchase, Reinvestment or increase shall cause (i) the Aggregate
Net Investment (after giving effect to such purchase, Reinvestment or increase)
to exceed the Aggregate Maximum Net Investment then in effect, (ii) the Net
Investment of a Buyer (after giving effect to such purchase, Reinvestment or
increase) to exceed the Maximum Net Investment of such Buyer then in effect or
(iii) the Aggregate Buyers' Allocation (after giving effect to such purchase,
Reinvestment or increase) to exceed 100%. No Buyer shall be obligated to
increase its Maximum Net Investment. No Buyer shall purchase a Participation
Interest if the Buyer can neither issue its commercial paper notes or short-term
promissory notes nor otherwise borrow in order to fund the Purchase Price of
such Participation Interest, or to make any such purchase or any Reinvestment or
increase its Net Investment on any Settlement Date at or after the earlier to
occur of (i) the Expiration Date, and (ii) the reduction of the Maximum Net
Investment to zero pursuant to Section 2.03 hereof. For the avoidance of doubt,
each increase in a Buyer's Net Investment under this Agreement shall be deemed
to be a purchase by such Buyer under this Agreement.
29
2.02. Amount of Purchases. Market Street, as a Buyer and
Relationship Funding, as a Buyer shall pay to TRFCO on the Closing Date in
immediately available funds, an amount equal to such Buyer's Pro Rata Portion of
TRFCO's aggregate Net Investment under (and as defined in) the Existing
Agreement at such time, whereupon, TRFCO shall be deemed to have sold,
transferred and assigned to such Buyers without recourse, representation or
warranty (except that TRFCO represents and warrants that, it is sole owner and
it has good and marketable title to such interest and upon the effectiveness of
such transfer, the undivided interest in the Net Investment of TRFCO sold to
Market Street and Relationship Funding pursuant to the Omnibus Assignment
Agreement will be free and clear of any Lien), and Market Street and
Relationship Funding shall be deemed to have thereby irrevocably taken, received
and assumed from TRFCO, an undivided interest in all of such Net Investment of
TRFCO outstanding under the Existing Agreement, so that immediately upon giving
effect to such payments, each of Market Street and Relationship Funding will
have a Participation Interest hereunder based upon its Pro Rata Portion of the
Aggregate Net Investment.
2.03. Reduction of the Aggregate Maximum Net Investment and
Net Investment; Termination of the Agreement.
(a) Reduction of Aggregate Maximum Net Investment. The Aggregate Maximum
Net Investment shall be reduced to zero (i) on the Expiration Date, or (ii) in
accordance with Section 10.02 hereof. In addition, upon written notice from the
Seller to Administrator and the Buyer Agents, the Seller may reduce in whole or
in part the Aggregate Maximum Net Investment, such reduction to be applied as a
reduction of the Maximum Net Investment of each Buyer on a pro rata basis based
on its respective Pro Rata Portion, effective as of the next Settlement Date on
or after the thirtieth (30th) day following the date on which such notice is
given; provided, however, that (i) any partial reduction must be in an amount
equal to $5,000,000 or any greater amount which is an integral multiple of
$5,000,000, and (ii) if the Aggregate Maximum Net Investment at the time of such
notice is less than or equal to $20,000,000, the Seller may only elect to reduce
the amount of the Aggregate Maximum Net Investment to zero. Notwithstanding any
other provision of
30
this Agreement, the Aggregate Maximum Net Investment may not at any time be
reduced below the amount of the Aggregate Net Investment in effect at such time.
(b) Reduction of the Aggregate Net Investment. If at any time the Seller
shall wish to cause the reduction of the Aggregate Net Investment on any date
other than a Settlement Date (but not to commence the permanent liquidation of
the Participation Interest), the Seller may do so upon ten (10) days prior
written notice thereof (the "Paydown Notice") in substantially the form of
Exhibit J hereto to the Administrator and the Buyer Agents (such notice to
include the amount of such proposed reduction which shall be allocated to the
Net Investment of each Buyer in accordance with the Buyers applicable Pro Rata
Portions and the proposed date on which such reduction will commence, which date
shall be agreed to by the Administrator and the Buyer Agents). On the proposed
date of commencement of such reduction and on each day thereafter, the Servicer
shall refrain from making Reinvestments of Collections until the amount of such
Collections not so reinvested shall equal the desired amount of such aggregate
reduction. The Servicer shall pay to the Buyers Collections in respect of the
Buyer's Allocation received on each day during the period in which Reinvestment
of Collections has been suspended pursuant to this Section 2.03(b) on the date
which is two (2) Business Days after the day on which such Collections are
received by the Servicer. The Aggregate Net Investment shall be deemed reduced
in the amount to be paid to the Buyers only when in fact so paid. The Seller
shall use reasonable efforts to attempt to choose a reduction amount, and the
date of the commencement thereof, so that such reduction shall commence and
conclude in the same Settlement Period. The Seller shall pay to the Buyers an
amount equal to any actual loss, cost or expense incurred by the Buyers as the
result of the repayment of the Aggregate Net Investment prior to the maturity
date of any (x) loans made to the Buyers by third parties or (y) commercial
paper notes or short-term promissory notes issued by the Buyers, in each case
for the purpose of maintaining the Participation Interests. Each Buyer agrees to
give the Seller prompt written notice (in reasonable detail consistent with its
customary practices) of any such loss, cost or expense.
(c) Termination of the Agreement. This Agreement shall terminate at the
latest to occur of (i) the Expiration Date, (ii) the first day on which the
Aggregate Net Investment equals zero, all other amounts accrued and owing to the
31
Administrator, the Buyers and the Buyer Agents under this Agreement have been
paid in full and the Aggregate Maximum Net Investment has been reduced to zero,
or (iii) the first day on which all Eligible Receivables in the Receivables Pool
have been collected or written off by the Seller and the Aggregate Maximum Net
Investment has been reduced to zero; provided, however, that the covenants,
representations, warranties and indemnities of the Company, the Servicer and the
Seller, as the case may be, to the Administrator, the Buyers and the Buyer
Agents contained herein or made pursuant hereto shall survive such termination
in accordance with Section 11.14. Upon such termination, the Buyers shall convey
to the Seller, without recourse, their Participation Interests in all Purchased
Receivables and shall deliver to the Seller all instruments and documents
relating thereto. Upon such reconveyance, the Deferred Purchase Price shall be
deemed to have been paid in full.
2.04. Fees Payable to the Buyer.
(a) Facility Fee and Program Fee. The Seller agrees to pay to applicable
Buyer Agent, for the account of the applicable Buyer, as applicable, in
consideration for the Purchase Obligation hereunder, from and including the
Closing Date to but excluding the Expiration Date, the Facility Fee Amount and
the Program Fee Amount. The accrued Facility Fee Amount and the Program Fee
Amount shall be due and payable to each Buyer in accordance with Sections 5.03
and 5.04 hereof until the date on which the Net Investment of such Buyer shall
have the been finally paid in full and this Agreement is terminated. To the
extent the Facility Fee Amount and the Program Fee Amount is not paid from
Collections in accordance with Section 5.03 or 5.04 hereof, the Facility Fee
Amount and the Program Fee Amount shall be absolute and unconditional
obligations of the Seller.
(b) Fees Non-Refundable. The fees to be paid to the Buyers pursuant to
this Section 2.04 are non-refundable and shall not be refunded for any reason
whatsoever, including, without limitation, the later reduction or termination
of the Aggregate Maximum Net Investment in whole or in part in accordance with
the provisions of this Agreement.
Section 2.05. Extension of the Liquidity Termination Date.
Provided that no Termination Event or Potential Termination exists and is
continuing, Seller may request that Administrator seek from each Buyer Agent an
extension of each Liquidity Termination Date under each applicable Liquidity
32
Agreement by submitting a request for an extension (each, an "Extension
Request") to the Administrator and Buyer Agents no more than 210 days prior to
the applicable Liquidity Termination Date then in effect. Each Extension Request
must specify the new Liquidity Termination Date requested by Seller and the date
(which must be at least 30 days after the Extension Request is delivered to the
Administrator and Buyer Agents) as of which the Buyer Agents must respond to the
Extension Request (the "Response Date"). The requested new Liquidity Termination
Dates shall be no more than 364 days after the Response Date, including the
Response Date as one of the days in the calculation of the days elapsed.
Promptly upon receipt of an Extension Request, the Administrator shall notify
the Buyer Agents of the contents thereof and shall request each Buyer Agent to
approve the Extension Request. Each Buyer Agent approving or denying the
Extension Request shall deliver its written approval or denial to the
Administrator no later than the Response Date (it being understood that (i) the
Buyer Agents may accept or decline such Extension Request in their sole
discretion and on such terms as they may elect and (ii) any Buyer Agent that
does not respond to any Extension Request on or before the Response Date shall
be deemed to have declined), whereupon the Administrator shall notify Seller
within two (2) Business Days thereafter as to which Buyer Agents have approved
and which Buyer Agents have declined the Extension Request. With respect to any
Buyer Agents that approve such Extension Request, the Buyer Agents shall enter
into such documents as the Buyer Agents may deem necessary or appropriate to
reflect such extension, all reasonable costs and expenses incurred by the
Buyers, the Buyer Agents and the Administrator in connection therewith
(including reasonable attorneys' fees) shall be paid by the Seller and the
Administrator shall promptly notify the Seller, the Buyers and their respective
Buyer Agents of the new Liquidity Termination Date; provided, however, that the
failure of the Administrator to so notify the Seller of any Buyer Agent's
determination to decline any Extension Request shall not affect the
understanding and agreement that such Buyer and its respective Buyer Agent
(collectively, an "Exiting Buyer") shall be deemed to have declined to grant
such Extension Request. Upon the occurrence of the current scheduled Liquidity
Termination Date of an Exiting Buyer, the Aggregate Maximum Net Investment shall
be reduced by an amount equal to the Maximum Net Investment of such Exiting
Buyer.
Section 2.06. Additional Buyers. The Seller may, with the
written consent of the Administrator and each Buyer Agent, add additional
Persons as Buyers. Each new Buyer shall become a party hereto, by executing and
delivering to the Administrator and the Seller, an assignment agreement in the
form and substance reasonably acceptable to the Administrator.
33
ARTICLE III
BUYER'S ALLOCATION
------------------
3.01. Buyer's Allocation. The "Buyer's Allocation" for a Buyer
on any day of determination shall be a percentage, not in excess of 100%, equal
to the quotient of (i) such Buyer's Pro Rata Portion of the Investment, divided
by (ii) the positive result of (a) the aggregate Account Balances of all
Eligible Receivables included in the Receivables Pool on the date of
determination before giving effect to Collections on such date, less (b) the sum
(without duplication) of (i) the aggregate amount by which the Account Balance
of Eligible Receivables of each Obligor exceeds the Concentration Limit for such
Obligor, and (ii) the amount by which the aggregate Account Balances of Eligible
Receivables payable to a Paying Agent exceeds 5% of the aggregate Account
Balances of all Eligible Receivables.
3.02. Frequency of Computation of the Buyer's Allocation. The
Buyer's Allocation for a Buyer shall be initially computed as of the opening of
business of the Servicer on the Closing Date. Thereafter, until the Aggregate
Net Investment shall be reduced to zero, the Buyer's Allocation for a Buyer
shall be automatically recomputed as of the close of business of the Servicer on
each Business Day, and the Buyer's Allocation for such Buyer shall constitute
the percentage ownership interest for such Buyer in the Receivables Pool on such
date; provided, however, that on and after a Liquidation Day and during the
continuance of a Liquidation Period, the Buyer's Allocation shall be equal to
such Buyer's Allocation as computed on the Business Day immediately preceding
the commencement of such Liquidation Period. The Buyer's Allocation for a Buyer
shall be reduced to zero at such time as the related Net Investment of such
Buyer shall be reduced to zero and the Maximum Net Investment of such Buyer has
been reduced to zero, such Buyer shall have received all amounts in respect of
accrued and unpaid Cost of Funds of such Buyer, the Program Fee, the Facility
Fee and all other amounts payable to such Buyer, its related Buyer Agent and the
Administrator pursuant to this Agreement, and the Servicer, provided the Company
is not the Servicer, shall have received the accrued Servicer's Compensation.
34
ARTICLE IV
CLOSING PROCEDURES
------------------
4.01. Purchase and Sale Procedures.
(a) General. The sale of the Participation Interests hereunder shall,
with respect to the Receivables Pool, transfer ownership to the Buyers of an
undivided percentage ownership interest in each Receivable in such Receivables
Pool, effective: (i) upon the Closing Date, in the case of Receivables included
in the Receivables Pool on such date; and (ii) upon the creation of such
Receivable and the simultaneous acquisition thereof by the Seller, in the case
of each Receivable subsequently created.
(b) Indemnity for Failure to Close. If a sale of the Participation
Interests fails to occur on the Closing Date as agreed to by the Administrator,
the Buyers and the Buyer Agents pursuant to Section 4.04 hereof (other than by
virtue of any breach by the Administrator, a Buyer or a Buyer Agent), the Seller
shall reimburse the Administrator, the Buyers and the Buyer Agents on demand for
any loss, cost or expense (including loss of margin) incurred by such parties
with respect to this Agreement, its obligations hereunder or its funding of the
proposed Purchase Price (including, without limitation, any loss, cost or
expense in obtaining, liquidating or employing deposits as loans from third
parties or the loss, cost or expense of issuing its commercial paper notes or
short-term promissory notes in order to fund such Purchase Price) until the
earlier of (A) the Closing Date as specified in a subsequent Purchase Notice or
as agreed to by the Administrator, the Buyers and the Buyer Agents pursuant to
Section 4.04 hereof or (B) the date on which (i) such Buyer redeploys any funds
committed to fund such Purchase Price at a rate of return greater than or equal
to the Cost of Funds of such Buyer, or (ii) such commercial paper notes or
short-term promissory notes become due and payable, as the case may be. Each
Buyer or its Buyer Agent shall notify the Seller (in reasonable detail
consistent with its customary practices) of the amount determined by such Buyer
or Buyer Agent to be necessary to compensate such Buyer for such loss, cost or
expense. Such amount shall be due and payable by the Seller to the applicable
Buyer ten (10) Business Days after such notice is given.
35
4.02. Conditions Precedent to the First Purchase. The
obligation of each Buyer to purchase a Participation Interest from TRFCO on the
Closing Date shall be subject to the satisfaction on or before June 3, 2008 of
the conditions set forth in Section 4.03 hereof and the following further
conditions:
(a) Standing. The Administrator, each Buyer and each Buyer Agent
shall have received (i) from each of the Seller and the Company, a certificate,
dated a recent date relative to the Closing Date as determined by the
Administrator, of the Secretary of State or other similar official as to its
good standing under the Laws of its jurisdiction of organization, and (ii) from
the Company, certificates, dated a recent date relative to the Closing Date as
determined by the Administrator, of the Secretary of State or other similar
official of each other state, if any, in which the Company maintains its Chief
Executive Office or principal accounting office.
(b) Opinions of Counsel. The Administrator, each Buyer and each
Buyer Agent shall have received favorable written opinions of Howard Weinreich,
Esq., General Counsel of the Company, and of Troutman Sanders, LLP, counsel
for the Subsidiary Originators, the Company and the Seller, each dated the
Closing Date, each in form and substance acceptable to the Administrator, the
Buyers and the Buyer Agents. For the avoidance of doubt, the
Administrator, the Buyers and the Buyer Agents shall have received
favorable written opinions regarding certain corporate matters,
enforceability and perfection issues and the true sale and nonconsolidation
nature of the transactions each in form and substance acceptable to the
Administrator and the Buyer Agents.
(c) Financing Statements, etc. The Administrator, each Buyer and each
Buyer Agent shall have received evidence satisfactory to it of the completion of
all recordings, registrations and filings as may be necessary or, in the opinion
of the Administrator and the Buyer Agents, desirable, to evidence or perfect the
ownership interests to be acquired by the Buyers hereunder, including, without
limitation:
(i) acknowledgment copies of proper financing statements on
Form UCC-1 and/or Form UCC-3 filed on or prior to the Closing Date, (A)
36
naming the Subsidiary Originators as debtor and/or seller, the Company
as buyer and/or assignor and the Administrator as secured party/total
assignee (in respect of the transfer of Receivables contemplated by the
Subsidiary Sale Agreements), (B) naming the Company as debtor and/or
assignor, the Seller as buyer and/or assignor and the Administrator as
secured party/total assignee (in respect of the transfer of Receivables
contemplated by the Sale Agreement) and (C) naming the Seller as debtor
and/or seller and Administrator as secured party and/or buyer (in
respect of the transfer of the Participation Interests contemplated by
this Agreement) or such other similar instruments or documents as may be
necessary or, in the opinion of the Administrator or the Buyer Agents,
advisable, under Revised UCC Article 9 or any comparable law of all
appropriate jurisdictions to evidence or perfect the Buyers'
Participation Interests; and
(ii) evidence of searches satisfactory to the Administrator
and the Buyer Agents listing all effective financing statements which
name the Subsidiary Originator (or any predecessor entity of such
Subsidiary Originator), the Company (or any predecessor entity of the
Company) or the Seller as debtor and/or assignor in the jurisdictions in
which filings are made pursuant to subsection (i) above (or any other
jurisdiction that would have been a necessary or an advisable filing
jurisdiction prior to the adoption of Revised UCC Article 9 as in effect
in New York), together with copies of such financing statements, none of
which (other than the filings made pursuant to subsection (i) above)
shall cover any Receivables or the related Contracts, and of tax lien
searches satisfactory to the Administrator and the Buyer Agents.
(d) Lockbox Agreements. The Administrator, each Buyer and each Buyer
Agent shall have received duly executed copies of Lockbox Servicing Agreements
with each of one or more Permitted Lockbox Banks and an assignment of TRFCO's
rights under such Lockbox Servicing Agreements executed by the applicable
Permitted Lockbox Bank.
(e) Seller Assignment Confirmation Certificate. The Administrator, the
Buyer and the Buyer Agents shall have received from the Seller, no less than two
37
(2) Business Days prior to the Closing Date, a certificate (the "Seller
Assignment Confirmation Certificate") in substantially the form of Exhibit F-2
hereto, utilizing information as of the last day of the most recently completed
Accounting Period for such Closing Date, together with such written
documentation of the procedures utilized and calculations made in connection
with the preparation of such Seller Assignment Confirmation Certificate as the
Administrator, Buyer or Buyer Agents requested. The Administrator, the Buyer and
the Buyer Agents shall have received a copy of such Seller Assignment
Confirmation Certificate no later than 12:00 P.M. (New York time) one Business
Day prior to the Closing Date.
(f) Responsible Officer Certificate. The Administrator, each Buyer and
each Buyer Agent shall have received a certificate of a Responsible Officer,
dated the Closing Date, from each of the Seller, the Company and each
Originator, in substantially the form attached hereto as Exhibit C, and as to
such other matters incident to the transactions contemplated by the Purchase
Documents as the Administrator, the Buyers and the Buyer Agents may reasonably
request, in form and substance satisfactory to the Administrator, the Buyers and
the Buyer Agents. The Administrator, the Buyers and the Buyer Agents may
conclusively rely on any such certificate unless and until a later certificate
revising the prior certificate is received by the Administrator, the Buyers and
the Buyer Agents.
(g) Certificate of Participation. Each Buyer shall have received on the
Closing Date, a Certificate of Participation executed on behalf of the Seller
by a Responsible Officer.
(h) Buyer's Review. The Administrator, each Buyer and each Buyer Agent
shall have completed to its satisfaction a review of the Servicer's billing and
collection operations and reporting systems.
(i) Regulatory Approvals. The Company, the Originators and the Seller
shall have received all necessary and desirable regulatory approvals, if any, of
the transactions under this Agreement, the Sale Agreement and the Subsidiary
Sale Agreements.
(j) Creditors' Consent. The Administrator, each Buyer and each Buyer
Agent shall have received evidence that the required lenders under any existing
credit agreement to which the Company or any Subsidiary Originator is party, and
38
any other creditors whose consent is required, have granted their consent to the
execution and delivery of the Purchase Documents and the consummation of the
transactions contemplated hereby and thereby in form and substance satisfactory
to the Administrator, the Buyers and the Buyer Agents.
(k) The Administrator, each Buyer and each Buyer Agent shall have
received an executed Omnibus Assignment Agreement. (l) Each Liquidity Agreement
shall have been duly executed by, and delivered to, the parties thereto.
4.03. Conditions Precedent to Each Purchase, Reinvestment and
Increase of Aggregate Net Investment. The obligation of each Buyer to purchase
its Participation Interest from TRFCO on the Closing Date, to make a
Reinvestment on any date, or to increase the Aggregate Net Investment in the
Receivables Pool on any Settlement Date, is subject to the performance by each
of the Company, the Servicer and the Seller of its respective obligations
hereunder on or before the Closing Date, such date on which a Reinvestment will
be made or such Settlement Date, and to the satisfaction of the following
further conditions:
(a) Details, Proceedings and Documents. All legal details and
proceedings in connection with the transactions contemplated by the Purchase
Documents or the Receivables to be included in the Receivables Pool on the
Closing Date, such Settlement Date or such date of such Reinvestment shall be in
form and substance satisfactory to the Administrator and each Buyer Agent, and
the Administrator and each Buyer Agent shall have received all such originals or
certified copies or other copies of such documents and proceedings in connection
with such transactions, in form and substance satisfactory to the Administrator
and each Buyer Agent.
(b) Representations and Warranties. On and as of such date (i) the
representations and warranties of the Seller contained in Article VIII hereof,
of the Company contained in the Sale Agreement and of the Subsidiary Originators
contained in the Subsidiary Sale Agreements shall be true and correct in all
material respects with the same force and effect as though made on and as of the
Closing Date, such Settlement Date or such date of Reinvestment (except to the
extent that such representations and warranties relate solely to an earlier
date), (ii) the Servicer and the Seller shall be in compliance with the
39
respective covenants contained in Article IX hereof, the Company shall be in
compliance with its respective covenants contained in the Sale Agreement and the
Subsidiary Originators shall be in compliance with their respective covenants
contained in the Subsidiary Sale Agreements, and (iii) no Termination Event or
Potential Termination Event shall occur as a result of the purchase and sale of
the Participation Interests in the Receivables Pool on the Closing Date, such
Settlement Date or such date of Reinvestment, or shall have occurred and be
continuing or shall exist on the Closing Date, such Settlement Date or such date
of Reinvestment.
(c) Sale Agreement. The Sale Agreement shall be in full force and
effect.
(d) Subsidiary Sale Agreements. The Subsidiary Sale Agreements shall be
in full force and effect.
(e) Liquidity Agreements. Each Liquidity Agreement shall be in full
force and effect and Relationship Funding shall have sufficient unused liquidity
support (after giving effect to the purchase to occur on such date) pursuant to
such Liquidity Agreement.
(f) Purchase Notice. Each Buyer and its respective Buyer Agent shall
have received from the Seller or the Administrator a Purchase Notice in
accordance with Section 4.02(e) of this Agreement notwithstanding any reference
in Section 4.02(e) to the Closing Date.
(g) Receipt of Funds. Relationship Funding shall have received from
sources available to it funds for such purpose in an amount sufficient to make
such purchase.
(h) Buyers Allocation. After giving affect to such purchase,
Reinvestment or increase, each Buyer's Allocation shall not exceed 100% and the
Aggregate Buyers' Allocation shall not exceed 100%.
4.04. Purchase Price. Subject to the terms and conditions
hereof, and relying upon the representations and warranties set forth herein, on
the Closing Date, each Buyer shall purchase its Participation Interest in the
Receivables Pool from TRFCO in accordance with the Omnibus Assignment Agreement.
40
4.05. Security Interest. (a) The sale of the Participation
Interests hereunder shall, except to the extent specified in Section 5.06
hereof, be made without recourse to the Seller with respect to any loss arising
from Defaulted Receivables, provided, that nothing contained herein shall limit
the rights of the Administrator, the Buyers and the Buyer Agents provided in
Section 2.04, this Section, Article V, Section 6.04 and Articles VII and XI
hereof.
(b) Notwithstanding that the other provisions of this Agreement purport
to characterize the conveyance by the Seller to the Buyers as effecting the sale
by the Seller, to the Buyers, of undivided percentage ownership interests in and
to the Receivables Pool, Seller and the Buyers acknowledge and agree that, under
applicable law, said conveyance may constitute a conveyance intended as
security. Accordingly, to secure all of the Seller's obligations (monetary or
otherwise) owing to the Buyers or the Administrator under this Agreement and the
Purchase Documents to which Seller is a party, whether now or hereafter arising,
due or to become due, direct or indirect, absolute or contingent, the parties
hereto intend that the financing arrangements from the Buyers in favor of the
Seller be secured by a Lien in favor of the Administrator (on behalf of the
Buyers) against all Purchased Receivables and the other collateral described
below (including proceeds). To that end, this Agreement is intended to
constitute a security agreement under Revised UCC Article 9, as in effect in New
York, for purposes of the attachment of such Lien. In furtherance thereof, the
Seller granted to TRFCO pursuant to the Existing Agreement (and does hereby
ratify and confirm its grant to TRFCO pursuant to the Existing Agreement of) a
first priority security interest in and against all of the Seller's right, title
and interest in and to the Purchased Receivables (including the proceeds
thereof) and hereby grants to the Administrator, on behalf and for the benefit
of the Buyers, on the terms and conditions of this Agreement a first priority
security interest in and against all of the Seller's right, title and interest
in and to the following:(A) Purchased Receivables (including the proceeds
thereof): (B) all Collections with respect to such Purchased Receivables (C) the
Permitted Lockboxes and Lockbox Accounts (including but not limited to the
Lockbox Account referenced on Exhibit G hereto), whether constituting deposit
accounts or otherwise, and all amounts on deposit therein, and all certificates
and instruments, if any, from time to time evidencing such Lockbox Accounts
(collectively, the "Lockbox and Lockbox Account Collateral"); (D) the Purchase
Documents (but none of the obligations), including any and all supporting
41
obligations, and any and all security interest or other liens in and to any and
all personal property securing any right to payment or performance under any
Purchase Document; (E) to the extent not otherwise included in the foregoing,
all accounts, general intangibles (including but not limited to payment
intangibles) and instruments (as such terms are defined in Revised UCC Article
9, as in effect in New York); and (F) all proceeds of, and all amounts received
or receivable under any or all of the foregoing for the purposes of securing
such obligations of the Seller and the rights of the Administrator, the Buyers
and the Buyer Agents under this Agreement.
(c) For avoidance of doubt, the following shall apply for purposes of
subsection (b), above: (i) the Purchased Receivables, Lockbox and Lockbox
Account Collateral, accounts, general intangibles and instruments, and other
personal property, included as collateral covered under this Agreement include
all such personal property in existence as of the Initial Closing Date, and the
Closing Date as well as all such personal property thereafter arising, created
or acquired, and that, insofar as this Agreement is held to secure indebtedness,
the collateral also secures future advances; (ii) Seller acknowledges and
consents to the assignment by TRFCO to the Administrator, on behalf and for the
benefit of the Buyers, of all of TRFCO's right, title and interest in the
security interest granted by the Seller to TRFCO pursuant to the Existing
Agreement; (iii) references in this Agreement to "Purchased Receivables", and
like references, are to be construed, mutatis mutandis, to reflect a conveyance
intended as security rather than an outright conveyance; and (iv) in the event
that the conveyance of the undivided percentage ownership interest in and to the
Purchased Receivables in fact were held to be a true sale thereof from Seller to
Buyers, then, notwithstanding such treatment, the security interest grant under
subsection (b) nevertheless would remain valid and enforceable in and to the
Lockbox and Lockbox Account Collateral, to secure Seller's obligations as
aforesaid.
(d) The Seller hereby authorizes the Administrator, the Buyers and the
Buyer Agents to file appropriate initial financing statements, and amendments
thereto, to the extent provided in Section 9-509(b) of Revised UCC Article 9, as
in effect in New York, in connection with the transactions referenced in
subsections (b) and (c) above.
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4.06. Non Assumption by the Buyers of Obligations. No
obligation or liability of the Seller to any Obligor under any Purchased
Receivable or Contract shall be assumed by the Administrator, any Buyer or any
Buyer Agent hereunder or under any Certificate of Participation, and any such
assumption is hereby expressly disclaimed. The Administrator, each Buyer and
each Buyer Agent shall be indemnified by the Seller in accordance with Section
11.04 hereof in respect of any losses, claims, damages, liabilities, costs or
expenses arising out of or incurred in connection with any Obligor's assertion
of such obligation or liability against the Administrator, any Buyer or any
Buyer Agent.
4.07. Character of Receivables Added to Receivables Pools. All
Receivables acquired by the Seller pursuant to the Sale Agreement shall be
included in the Receivables Pool immediately upon the Seller's acquisition
thereof. All such Receivables will comprise only one Receivables Pool.
4.08. Fifth Third Liquidity Agreement. Notwithstanding
Sections 4.03(e) and (g) above at all times prior to the Liquidity Termination
Date under the Fifth Third Liquidity Agreement, Fifth Third shall provide to
Relationship Funding (a) sufficient unused liquidity support (after giving
effect to the purchase to occur hereunder) pursuant to such Liquidity Agreement
and (b) funds in an amount sufficient for Relationship Funding to make a
purchase hereunder.
ARTICLE V
SETTLEMENTS; ADJUSTMENTS
------------------------
5.01. Settlement Statements. The Seller shall, or shall cause
the Servicer to, submit to the Administrator and each Buyer Agent not less than
two (2) Business Days prior to each Settlement Date, a Settlement Statement
signed by a Responsible Officer dated as of such Settlement Date and including
information in respect of the Receivables Pool as of the last day of the
Accounting Period most recently completed. The execution and delivery of any
Settlement Statement shall constitute a representation and warranty by the
Seller and the Servicer that the information contained therein is true and
correct as of the date thereof. Such Settlement Statement shall be accompanied
by such other information as the Administrator or the Buyer Agents may
reasonably request. Subject to the terms and conditions of this Agreement, if
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the Seller requests on a Settlement Statement relating to a Settlement Period
then ending that the Aggregate Net Investment be increased to an amount in
excess of the Aggregate Net Investment as of the Settlement Date relating to the
immediately preceding Settlement Period, each Buyer shall initiate a wire
transfer to Seller not later than 3:00 P.M. (New York time) on the Settlement
Date relating to the Settlement Period then ending its Pro Rata Portion of the
amount of such increase in the Aggregate Net Investment; provided, that such
increase in the Aggregate Net Investment shall not cause (i) the Aggregate Net
Investment to exceed the Aggregate Maximum Net Investment then in effect or (ii)
the Net Investment of a Buyer to exceed the Maximum Net Investment of such Buyer
then in effect. The Seller may request a reduction in the Net Investment in
accordance with Section 2.03(b).
5.02. Receivables Status. Upon ten (10) Business Days' notice
from the Administrator or a Buyer Agent, the Seller or the Servicer will furnish
or cause to be furnished to the Administrator, the Buyers and the Buyer Agents a
written report, signed by a Responsible Officer, containing such information as
the Administrator or a Buyer Agent may reasonably request (in such form as the
Administrator or a Buyer Agent may reasonably request), which shall include,
without limitation, with respect to the Participation Interests (a) the Account
Balances of all Purchased Receivables, together with all Collections, Dilutions,
and other adjustments to such Receivables since the date of the last written
report furnished to such parties, and an aging of all Purchased Receivables as
of a date no later than the date of such notice; and (b) an analysis and
explanation of significant variances, if any, between actual Collections of
Purchased Receivables during such Settlement Period and historical collections
experience.
5.03. Non-Liquidation Settlements.
(a) Daily Settlements. On each day (other than a Liquidation Day) with
regard to each Settlement Period, each Buyer shall be allocated an amount of
Collections equal to the product of (i) the Buyer's Allocation of such Buyer,
expressed as a decimal, and (ii) Collections, if any, with respect to the
Purchased Receivables on such day. The Servicer shall hold in trust for the
benefit of such Buyer out of such amount in respect of such Buyer's Allocation
an amount equal to the Cost of Funds of such Buyer and Program Fee Amount of
such Buyer accrued through such day and not previously so held (whether or not
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accrued during the current Settlement Period), and (following such allocation)
shall hold in trust for its own account an amount, if available, equal to the
Servicer's Compensation accrued through such day for the Participation Interests
and not previously so held and (following such allocation) shall hold in trust
for the account of such Buyer an amount, if available, equal to the Facility Fee
Amount of such Buyer accrued through such day and not previously so held. The
remainder of such amount in respect of the Buyer's Allocation of such Buyer (the
"Remainder") shall, subject to the terms and conditions of this Agreement, be
utilized by the Servicer to make a Reinvestment in the Receivables Pool in the
amount of the Remainder, subject to Sections 2.01 and 4.03 hereof, and after
giving effect to any allocation of new Receivables to the Receivables Pool. Any
portion of the Remainder not applied to a Reinvestment shall be held by the
Servicer in accordance with subsection (d) below. The Remainder, or any portion
thereof, which is applied to a Reinvestment, and any amount of Collections which
were not allocated to the Buyers pursuant to the first sentence of this Section
5.03(a), shall be remitted by the Servicer to the Seller. Notwithstanding the
foregoing, in the event that at the end of any Settlement Period the amounts
held in trust for the benefit of the Buyers pursuant to the second sentence of
this Section 5.03(a) and not previously paid to the Buyer are less than the
accrued and unpaid Aggregate Cost of Funds and Program Fee Amount for such
Settlement Period, then any amount which had been deemed to be a Remainder
during such Settlement Period (up to the amount of such deficit in the amount
available to pay the Cost of Funds and Program Fee Amount of all Buyers) shall
be deemed to have been held in trust for the benefit of the Buyers pursuant to
the second sentence of this Section 5.03(a).
(b) Settlement Period. On each Settlement Date (other than a Settlement
Date relating to a Settlement Period during which a Liquidation Day occurs), the
Servicer shall pay to the Buyers and the Servicer the amounts held in trust for
the benefit of the Buyers and the Servicer, respectively, pursuant to subsection
(a) above and not previously paid to the Buyers and the Servicer, respectively.
(c) Deemed Collections. If on any day the Account Balance of a Purchased
Receivable is reduced as a result of a Dilution with respect to such Purchased
Receivable, the Servicer shall be deemed to have received on such day a
Collection of Purchased Receivables in the amount of such reduction. If on any
day any of the representations and warranties of the Seller set forth in Section
8.02(b) and (c) is no longer true or was not true when made with respect to such
Purchased Receivable, or if any of the representations and warranties of the
Seller set forth in Section 8.02(a) was not true when made, the Seller shall be
deemed to have received on such day a Collection of such Purchased Receivable in
full.
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(d) Unreinvested Collections. Any portion of the Remainder which may not be
immediately applied to Reinvestments in the Participation Interests in
accordance with Section 5.03(a) for any reason, shall be so reinvested as soon
as practicable without violating any provisions of this Agreement; provided,
however, that if any portion of the Remainder has not been applied to
Reinvestments in the Participation Interest for any reason on or before the date
which is two (2) Business Days after the Servicer receives such portion of the
Remainder, the Servicer shall pay such portion of the Remainder to the Buyers on
such second Business Day. The Net Investment of each Buyer shall be deemed
reduced in the amount to be paid to such Buyer only when in fact so paid.
(e) Notwithstanding anything to the contrary contained herein, if, on
any Settlement Date which is not a Liquidation Day (after giving effect to all
payments required to be made by the Seller or the Servicer to or for the account
of the Buyers pursuant to this Section 5.03 and any increase in the Net
Investment of the Buyers effected on such day), the Aggregate Buyers' Allocation
shall exceed one hundred percent (100%), the Seller shall make a payment of an
amount in immediately available funds to the Buyer Agents for the account of the
applicable Buyers as a reduction of the Net Investment of the Buyers such that,
after giving effect to such payment, the Aggregate Buyers' Allocation is equal
to one hundred percent (100%).
5.04. Liquidation Settlements.
(a) Notwithstanding the provisions of Sections 5.03(a) and (b) hereof,
on each Liquidation Day with regard to each Settlement Period, the Servicer
shall allocate to the Administrator (on behalf of each Buyer), and hold in trust
for the benefit of the Administrator (on behalf of each Buyer) for payment in
accordance with Section 5.04(b), an amount of Collections equal to the product
of (i) such Buyer's Allocation, and (ii) Collections in respect of the Purchased
Receivables for such Liquidation Day. The Collections allocated to the
Administrator on behalf of each Buyer pursuant to this section shall be
46
allocated on a daily basis (i) first, to the payment of any Cost of Funds and
Program Fee accrued and owing to each Buyer, (ii) second, subject to Section
6.06(e), to the payment of any Servicer's Compensation accrued and owing to the
Servicer, (iii) third, to make payment in respect of any Facility Fee accrued
and owing to each Buyer, (iv) fourth, to make payment in respect of the
Aggregate Net Investment, and (v) fifth, to the payment of any other amount
accrued and owing to the Administrator, the Buyers and the Buyer Agents under
this Agreement. Any amount of such Collections which were not allocated to the
Administrator (on behalf of each Buyer) pursuant to the first sentence of this
Section 5.04 on such Liquidation Day shall be remitted by the Servicer to the
Seller.
(b) Collections held by the Servicer (on behalf of the Administrator)
on behalf of each Buyer pursuant to this Section 5.04 shall be remitted to the
Administrator on or before the date which is two (2) Business Days after the
Servicer receives such Collections.
5.05. Allocation of Collections.
(a) Except as required by Law or the underlying Contract, if any
Obligor is obligated under one or more Purchased Receivables and also under one
or more Contracts not constituting Purchased Receivables, then any payment
received from or on behalf of such Obligor shall be applied (i) to a specific
Contract if the Obligor designates such payment to be so applied, or (ii) to the
Purchased Receivables in the order in which payments are due thereunder if the
application of such payment is not so designated.
(b) Notwithstanding any other provision of this Agreement, no Buyer is
entitled to receive any portion of Collections once the Net Investment of such
Buyer is reduced to zero and the Seller has no remaining payment obligations to
such Buyer or its related Buyer Agent under this Agreement.
5.06. Deferred Purchase Price. On the Closing Date, and,
thereafter, in each Settlement Statement, the Servicer shall calculate, as of
the last day of the Accounting Period most recently completed, the amount (the
"Deferred Purchase Price") equal to the Credit Enhancement Reserve, provided,
that on and after a Liquidation Day and during the continuance of a Liquidation
Period, the Deferred Purchase Price shall be equal to the Deferred Purchase
Price as computed on the Business Day immediately preceding the commencement of
such Liquidation Period.
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5.07. Treatment of Collections and Deemed Collections. Any
Collections deemed to be received pursuant to this Agreement shall be paid by
the Seller to the Servicer in same day funds on the date of such deemed receipt.
The Servicer shall hold or distribute all Collections deemed received pursuant
to Sections 5.03 and 5.04 hereof to the same extent as if such Collections had
actually been received. So long as the Servicer shall hold any Collections or
deemed Collections required to be paid to the Administrator, the Buyers or the
Buyer Agents, it shall hold such Collections in trust and separate and apart
from its own funds and shall clearly mark its records to reflect such trust.
ARTICLE VI
PROTECTION OF THE BUYER;
ADMINISTRATION AND COLLECTIONS
------------------------------
6.01. Maintenance of Information and Computer Records. The
Seller will, or will cause the Servicer to, hold in trust and keep safely for
the Buyers all evidence of each Buyer's right, title and interest in the
Receivables Pool. The Seller will, or will cause the Servicer to, on or prior to
the Closing Date, and with respect to all Receivables that are added to the
Receivables Pool after the Closing Date, on each respective date such
Receivables are added, place an appropriate code or notation in its Records to
indicate those Receivables which are or which will be included in the
Receivables Pool.
6.02. Protection of the Interests of the Buyers.
(a) The Seller will, or will cause the Servicer to, from time to time
do and perform any and all acts and execute any and all documents (including,
without limitation, the execution, amendment or supplementation of any financing
statements, continuation statements, each Certificate of Participation and
notices of each Certificate of Participation relating to the Participation
Interests for filing under the provisions of Revised UCC Article 9 of any
applicable jurisdiction, the execution, amendment or supplementation of any
instrument of transfer, and the making of notations on the Records of the
Seller) as may be reasonably requested by the Administrator in order to effect
the purposes of this Agreement and the sale of the Participation Interests
hereunder and to perfect each Buyer's right, title and interest in the
Receivables Pool and all Collections with respect thereto against all Persons
whomsoever.
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(b) To the fullest extent permitted by applicable Law, the Seller
hereby irrevocably grants to the Administrator, each Buyer and each Buyer Agent
an irrevocable power of attorney, with full power of substitution, coupled with
an interest, to sign and file in the name of the Seller, or in its own name,
financing statements and continuation statements and amendments thereto with
respect to such Buyer's Participation Interest in the Purchased Receivables and,
to the extent that Section 4.05(c) hereof is applicable, with respect to such
Buyer's security interest in the Purchased Receivables.
(c) At any reasonable time and from time to time at a Buyer Agent's
reasonable request upon notice to the Seller, the Company or the Servicer, the
Seller, the Company or the Servicer, as the case may be, shall permit such
Person as such Buyer Agent may designate to conduct audits or visit and inspect
any of the properties of the Seller, the Company or the Servicer, as the case
may be, to examine the Records, internal controls and procedures maintained by
the Seller, the Company or the Servicer, as the case may be, and take copies and
extracts therefrom, and to discuss the Seller's, the Company's or the
Servicer's, as the case may be, affairs with its officers, employees and
independent accountants. Each of the Seller, the Company and the Servicer hereby
authorizes such officers, employees and independent accountants to discuss with
such Buyer Agent the affairs of the Seller, the Company or the Servicer, as the
case may be. The Seller shall reimburse such Buyer Agent for all reasonable
fees, costs and expenses incurred by or on behalf of such Buyer Agent in
connection with the foregoing actions, subject to the limitations contained in
Section 11.01, promptly upon receipt of a written invoice therefor.
(d) Each Buyer shall have the right to do all such acts and things as it
reasonably may deem necessary to protect its interests under this Agreement,
including, without limitation, confirmation and verification of Purchased
Receivables; provided, however, that each Buyer, each Buyer Agent and the
Administrator hereby agree not to contact any Obligor unless permitted by
Section 6.07(e).
6.03. Maintenance of the Location of Writings and Records. The
Seller will at all times until completion of a Complete Servicing Transfer keep
49
or cause to be kept at its Chief Executive Office, or at such other office of
the Seller or an office of the Servicer designated in advance to the
Administrator, the Buyers and the Buyer Agents, separate and apart from all
other Records of the Servicer or the Company, each writing or Record which
evidences, and which is necessary or desirable to establish or protect,
including such books of account and other Records as will enable the
Administrator, the Buyers and the Buyer Agents or their designee to determine at
any time the status of, the Participation Interests of the Buyers in each
Purchased Receivable; provided, that any Records may be stored at other
locations to the extent temporary location elsewhere is necessary in connection
with litigation, repossession, other collection activities or other usual
business purposes. The Seller shall, if requested by the Administrator, at its
own expense prepare and maintain machine-readable magnetic tapes in such format
as the Administrator, in its sole discretion, may require pertaining to the
Purchased Receivables.
6.04. Information. The Seller will, or will cause the Servicer
to, furnish to the Administrator, the Buyers and the Buyer Agents such
additional information with respect to the Purchased Receivables (including but
not limited to the Credit and Collection Policy) as the Administrator, the
Buyers and the Buyer Agents may reasonably request. The Seller will also furnish
to each such party all modifications, adjustments or supplements to the Credit
and Collection Policy as in effect on the date hereof; provided, however, that
neither the Seller nor the Company shall (nor shall the Company permit any
Subsidiary Originator to), without the Administrator's and each Buyer Agent's
prior written consent, alter its credit, enforcement and other policies
(pertaining to the Staffing Solutions Business) as in effect from time to time
if the effect of any alteration thereof would be to materially adversely affect
the collectibility of the Purchased Receivables. If any such alteration made
without the Administrator's and the Buyer Agents' consent is later determined by
the Administrator and Buyer Agents to have had a material adverse effect on the
collectibility of Purchased Receivables, then the Seller or the Company, as the
case may be, shall promptly revise (or, in the case of a Subsidiary Originator,
the Company shall promptly cause that Subsidiary Originator to revise) such
policies in order to prevent any such material adverse effect from occurring
thereafter, and the Purchased Receivables that, in the sole judgment of the
Administrator and Buyer Agents, became uncollectible due to such change shall be
deemed collected and shall be treated as deemed Collections pursuant to Section
5.07 hereof. Promptly upon becoming aware of any Termination Event or Potential
Termination Event, the Servicer shall give the Administrator, the Buyers and the
Buyer Agents notice thereof.
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6.05. Performance of Undertakings Under the Purchased
Receivables; Indemnification. The Company will at all times observe and perform,
or cause to be observed and performed, all obligations and undertakings to the
Obligors arising in connection with each Purchased Receivable or related
Contract and neither the Company nor the Seller will take any action or cause
any action to be taken to impair the rights of the Seller to the Receivables or
the rights of each Buyer to its Participation Interest in the Purchased
Receivables, in each case except as otherwise provided in this Agreement. In
such connection, each Buyer shall be indemnified by the Seller in accordance
with Section 11.04 hereof, by the Company in accordance with the Sale Agreement
and by the Subsidiary Originators in accordance with the Subsidiary Sale
Agreements in respect of any losses, claims, damages, liabilities, costs or
reasonable expenses incurred or arising out of any action taken or caused to be
taken by the Originators, Company or the Seller which impairs the Seller's
rights to the Receivables or each Buyer's rights to its Participation Interest
in the Purchased Receivables.
6.06. Administration and Collections; Indemnification.
(a) General. Until a Complete Servicing Transfer shall have occurred,
the Company hereby is appointed as the initial Servicer hereunder and, in such
capacity, will be responsible for the administration, servicing and collection
of the Purchased Receivables; provided, however, that upon written approval by
the Administrator such duties may be delegated by the Company to any of its
Affiliates or a third party (without impairment of the Company's obligations as
Servicer). If and to the extent that the Company or any of its Affiliates or any
such third party is performing such functions, the Company agrees to exercise or
cause such Affiliate or third party to exercise the same degree of skill and
care and apply the same standards, policies, procedures and diligence that it
applies to the performance of the same functions with respect to accounts owned
by the Company.
(b) Administration. The Servicer shall, to the maximum extent permitted
by Law, have the power and authority, on behalf of the Administrator, the Buyers
and the Buyer Agents as part of the Servicer's administrative and servicing
obligations hereunder, to take such action in respect of any such Purchased
51
Receivable as the Servicer may deem advisable, including the resale of any
repossessed, returned or rejected goods; provided, however, that the Servicer
may not under any circumstances compromise, rescind, cancel, adjust or modify
(including by extension of time for payment or granting any discounts,
allowances or credits) the Account Balance of the related Contract for any
Purchased Receivable, except in accordance with the Credit and Collection Policy
or otherwise with the Administrator's and each Buyer Agent's prior written
consent. The Servicer undertakes to comply with each of the covenants of the
Seller included herein in respect of which the Seller undertakes to cause the
Servicer to take or avoid taking actions specified therein, and further agrees
to perform the Servicer's obligations under Article II of the Sale Agreement.
(c) Enforcement Proceedings. In the event of a default under any
Purchased Receivable before a Servicer Event, the Servicer shall, at the
Seller's expense, to the maximum extent permitted by Law, have the power and
authority, on behalf of the Administrator, the Buyers and the Buyer Agents as
part of the Servicer's administrative and servicing obligations hereunder, to
take any action in respect of any such Purchased Receivable as the Servicer may
deem advisable; provided, however, that the Servicer or the Seller, as the case
may be, shall take no enforcement action (judicial or otherwise) with respect to
such Purchased Receivable, except in accordance with the Credit and Collection
Policy or otherwise with the written consent of the Administrator. The Servicer
or the Seller, as the case may be, will apply or will cause to be applied at all
times before a Servicer Event the same standards and follow the same procedures
with respect to deciding to commence, and in prosecuting, litigation on such
Purchased Receivables as is applied and followed with respect to like accounts
not owned by a Buyer. In no event shall the Servicer or the Seller, as the case
may be, be entitled to make or authorize any Person to make the Administrator,
any Buyer or any Buyer Agent a party to any litigation without such party's
express prior written consent.
(d) Obligations of the Administrator, the Buyers and the Buyer Agents.
The Administrator, the Buyers and the Buyer Agents may (consistent with this
Agreement), but shall have no obligation to, take any action or commence any
proceeding to realize upon any Purchased Receivable. At such time as the
Servicer or the Seller, as the case may be, has any obligation to pursue the
collection of Purchased Receivables and the Administrator, a Buyer or a Buyer
52
Agent possesses any documents necessary therefor, such party agrees to furnish
such documents to the Servicer or the Seller, as the case may be, to the extent
and for the period necessary for the Servicer or the Seller, as the case may be,
to comply with its obligations hereunder.
(e) Servicer's Compensation. The "Servicer's Compensation" for
performing its responsibilities as the servicer with respect to any Purchased
Receivables on any day shall be equal to the quotient of (A) the product of (1)
one-half of one percent (0.50%), and (2) the Account Balances of Purchased
Receivables on such day, divided by (B) 360. Subject to Section 6.07(a), the
Servicer's Compensation shall be retained by the Servicer in accordance with
Section 5.03 hereof or paid to the Servicer by each Buyer in the event
Collections are applied in accordance with Section 5.04 hereof; provided,
however, that if the Company is the Servicer, the Servicer's Compensation shall
not be paid on or after any day on which a Termination Event shall have occurred
and be continuing.
(f) Indemnity. The Servicer shall indemnify the Administrator, the
Buyers and the Buyer Agents in respect of any losses, claims, damages,
liabilities, costs or reasonable expenses incurred or arising out of any action
taken or caused to be taken by the Servicer under this Section 6.06.
6.07. Complete Servicing Transfer.
(a) General. If at any time a Servicer Event shall have occurred and be
continuing, the Administrator may, or shall, upon the written consent of the
Majority Buyers, by notice in writing to the Seller and the Company, terminate
the Company's capacity as Servicer in respect of the Purchased Receivables (such
termination referred to herein as a "Complete Servicing Transfer"), notify
Obligors of its interest in the Purchased Receivables, take control of the
Permitted Lockboxes and the Lockbox Accounts and exercise all other incidences
of ownership in the Purchased Receivables. After a Complete Servicing Transfer,
the Administrator may administer, service and collect the Purchased Receivables
itself, and in such event may retain the Servicer's Compensation for its own
account, in any manner it sees fit consistent with applicable law, including,
without limitation, by compromise, extension or settlement of such Purchased
Receivables.
53
(b) Transition. The Company, within ten (10) Business Days after
receiving a notice pursuant to Section 6.07(a) hereof, shall, at its own cost
and expense, deliver or cause to be delivered to the Administrator and each
Buyer Agent (i) a schedule of the Purchased Receivables indicating as to each
such Purchased Receivable information as to the related Obligor, the Account
Balance as of such date of the related Contract and the location of the
evidences of such Purchased Receivable and related Contract, together with such
other information as the Administrator or any Buyer Agent may reasonably request
and (ii) all evidence of such Purchased Receivables and related Contracts and
such other Records related thereto (including, without limitation, true copies
of any computer tapes and data in computer memories) as the Administrator or any
Buyer Agent may reasonably deem necessary to enable it to protect and enforce
the Buyers' rights to, or its position as owner of, a Participation Interest
therein. After any such delivery, neither the Seller nor the Company will hold
or retain any executed counterpart or any document evidencing such Purchased
Receivables or related Contracts without clearly marking the same to indicate
conspicuously that the same is not the original and that transfer thereof does
not transfer any rights against the related Obligor or any other Person.
(c) Collections. From and after the occurrence of a Complete Servicing
Transfer, the Seller and the Servicer will cause to be transmitted and delivered
directly to the Administrator on behalf of the Buyers, forthwith upon receipt
and in the exact form received, all Collections (properly endorsed, where
required, so that such items may be collected by the Administrator) on account
of the Buyers' Participation Interests in the Purchased Receivables. Such
Collections shall remain subject to the provisions herein pertaining to
allocation and application of Collections, including without limitation Sections
5.03 and 5.04 hereof. All such Collections consisting of cash shall not be
commingled with other items or monies of the Seller, the Company, or any
Originator for a period longer than two (2) Business Days. If the Administrator
receives items or monies that are not payments on account of the Buyers'
Participation Interests in the Purchased Receivables, such items or monies shall
be delivered promptly to the Seller after being so identified by the
Administrator. The Seller hereby irrevocably grants the Administrator an
irrevocable power of attorney, with full power of substitution, coupled with an
interest, to take in the name of the Seller all steps with respect to the
Purchased Receivable consistent with applicable law and which the Administrator,
54
in its reasonable discretion, may deem necessary or advisable to negotiate or
otherwise realize on any right of any kind held or owned by the Seller or
transmitted to or received by the Administrator, a Buyer or a Buyer Agent
(whether or not from the Seller or any Obligor) in connection with the Buyers'
Participation Interests in such Purchased Receivable; provided, however, that
the Administrator hereby agrees not to exercise such power of attorney unless a
Servicer Event shall have occurred and be continuing. The Administrator, the
Buyers and the Buyer Agents will provide such periodic accountings and other
information related to disposition of funds so collected as the Seller may
reasonably request.
(d) Collection and Administration at Expense of Company. The Company
agrees that, in the event of a Complete Servicing Transfer, it will reimburse
the Administrator, the Buyers and the Buyer Agents for all reasonable
out-of-pocket expenses (including, without limitation, attorneys' and
accountants' and other third parties' fees and expenses, expenses incurred by
each such party's credit recovery group (or any successor), expenses of
litigation or preparation therefor, and expenses of audits and visits to the
offices of the Seller, the Company or any Originator) incurred by the
Administrator, the Buyers and the Buyer Agents in connection with and following
the transfer of functions following a Complete Servicing Transfer (excluding,
however, the fees of any successor Servicer), except insofar as arising out of
or relating to their gross negligence or willful misconduct.
(e) Payments by Obligors. At any time, and from time to time following
a Complete Servicing Transfer, or if a Servicer Event or a Termination Event or
a Potential Termination Event pursuant to Section 10.01(j) shall have occurred
and be continuing, the Seller, the Company and the Servicer shall permit such
Persons as the Administrator may designate to open and inspect all mail
(pertaining to the Staffing Solutions Business) received by the Seller, the
Company or the Servicer, or by any Paying Agent that is an Affiliate of the
Company or the Seller, at any of its offices, and to remove therefrom any and
all Collections or other correspondence from Obligors, the Seller, the
Originators or the Company in respect of Purchased Receivables. All Collections
received by the Administrator, the Buyers and the Buyer Agents shall be applied
in accordance with Section 5.05 hereof. The Administrator shall be entitled to
notify the Obligors of Purchased Receivables to make payments directly to the
Administrator or the Buyer Agents of amounts due thereunder at any time and from
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time to time following the occurrence of (i) a Servicer Event, (ii) a Complete
Servicing Transfer, or (iii) a violation by the Seller of the provisions of
Section 6.08 hereof.
6.08. Lockboxes. The Seller and the Company hereby agree (i)
to direct all Obligors (or their Paying Agent) to submit all Collections on
account of Purchased Receivables either (A) to the Permitted Lockbox maintained
at the Permitted Lockbox Bank for deposit in the Lockbox Account or (B) directly
to the Lockbox Accounts; (ii) to cause the Servicer to make the necessary
bookkeeping entries to reflect such Collections on the Records pertaining to
such Purchased Receivables; (iii) to cause the Servicer to apply all such
Collections as provided in this Agreement; and (iv) not to amend or modify any
term, with respect to the disposition of such Collections or any other amounts
received by the Seller, the Originators, the Company, the Servicer, the Paying
Agents or any Permitted Lockbox Bank, of this Agreement, the Lockbox Servicing
Agreement or any other related agreement (including instructions with respect
thereto) without the prior written consent of the Administrator and Buyer Agents
to such amendment or modification.
ARTICLE VII
REPURCHASES BY SELLER
---------------------
7.01. Repurchases. If on the last day of a Settlement Period
the Aggregate Net Investment shall be equal to or less than ten percent (10%) of
the Aggregate Maximum Net Investment as of the Closing Date, the Seller shall be
entitled on such last day to repurchase the Participation Interests from the
Buyers upon at least ten (10) Business Days' prior written notice to the
Administrator, the Buyers and the Buyer Agents.
7.02. Repurchase Price. In the case of a repurchase by the
Seller pursuant to Section 7.01 hereof, the Seller shall, on the date of such
repurchase, pay to each Buyer, as the repurchase price thereof, an amount equal
to the sum of (i) the Net Investment of such Buyer as of such date, plus (ii)
the Cost of Funds of such Buyer and Program Fee Amount of such Buyer accrued and
owing as of such date, plus (iii) if the Servicer is not the Company or an
Affiliate, the accrued Servicer's Compensation as of such date, plus (iv) all
other amounts due to such Administrator, the Buyers and the Buyer Agents
56
hereunder (including, without limitation, the Facility Fee Amount of each
Buyer), plus (v) any loss, cost or expense incurred by the Administrator, the
Buyers and the Buyer Agents as the result of the repayment of the Net Investment
of the Buyers prior to the maturity date of any (a) loans made to the Buyers by
third parties or (b) commercial paper notes or short-term promissory notes
issued by the Buyers, in each case for the purpose of maintaining the
Participation Interests.
7.03. Reassignment of Repurchased Receivables. Upon receipt of
the purchase price of the Participation Interests pursuant to Section 7.02
hereof, the Buyers shall reassign to the Seller such Buyer's Participation
Interest in the Purchased Receivables, without recourse, representation or
warranty (except for the warranty that upon the reassignment to the Seller of
such Buyer's Participation Interest in such Purchased Receivables, no Lien
created by such Buyer will affect the Purchased Receivables).
7.04 Obligations Not Affected. The obligations of the Seller
to the Administrator, the Buyers and the Buyer Agents under this Article VII
shall not be affected by any invalidity, illegality or irregularity of any
Purchased Receivable, the related Contract or the sale thereof, except and to
the extent that any such invalidity, illegality or irregularity is caused by the
gross negligence or willful misconduct of the Administrator, such Buyer or such
Buyer Agent.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
------------------------------
8.01. General Representations and Warranties of the Seller.
The Seller, in addition to its other representations and warranties contained
herein or made pursuant hereto, hereby represents and warrants to the
Administrator, the Buyers and the Buyer Agents, on and as of the date hereof,
the Closing Date, each Settlement Date on which the Net Investment of a Buyer is
increased, and each date on which a Reinvestment is made, that:
(a) Organization and Qualification. The Seller is a corporation duly
incorporated, validly existing and in good standing under the Laws of its
jurisdiction of incorporation. The Seller is duly qualified to do business as a
foreign corporation in good standing in each jurisdiction in which the ownership
57
of its properties or the nature of its activities, or both, requires it to be so
qualified or, if not so qualified, the failure to so qualify would not have a
material adverse effect on its business, operations, properties or financial
condition. All of the Seller's issued and outstanding stock is owned by the
Company, free of any Liens, and has been fully paid and is nonassessable.
(b) Authorization. The Seller has the corporate power and authority to
execute and deliver the Purchase Documents, to convey the Participation
Interests to the Buyers, and to perform its obligations hereunder and
thereunder.
(c) Execution and Binding Effect. Each of the Purchase Documents
executed by the Seller (except each Certificate of Participation) has been duly
and validly executed and delivered by the Seller and constitutes a legal, valid
and binding obligation of the Seller that is enforceable against the Seller in
accordance with its terms except (i) as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws which may be applied in the event of the bankruptcy or insolvency of such
Obligor, and (ii) as such enforceability may be limited by general principles of
equity (whether considered in a suit at law or in equity). When duly executed
and delivered by the Seller under the provisions hereof, each Certificate of
Participation will constitute a legal, valid and binding assignment by the
Seller that is enforceable against the Seller in accordance with the terms
thereof and hereof except (i) as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws which may be applied in the event of the bankruptcy or insolvency of such
Obligor, and (ii) as such enforceability may be limited by general principles of
equity (whether considered in a suit at law or in equity), which will vest
absolutely and unconditionally in each Buyer a valid Participation Interest in
accordance with the terms of this Agreement, in the Purchased Receivables
purported to be assigned thereby, subject to no Liens whatsoever except as may
arise under this Agreement and the Program Support Agreements and other
Permitted Liens. Upon the filing of the financing statements required under
Section 4.02(c) hereof, each Buyer's Participation Interest will be perfected
under Revised UCC Article 9 as in effect in New York, prior to and enforceable
against all creditors of and purchasers from the Seller and all other Persons
whatsoever except (i) as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws which
may be applied in the event of the bankruptcy or insolvency of such Obligor, and
(ii) as such enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity).
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(d) Authorizations and Filings. No authorization, consent, approval,
license, exemption or other action by, and no registration, qualification,
designation, declaration or filing with, any Official Body is or will be
necessary or, in the opinion of the Seller, advisable in connection with the
Seller's execution and delivery of the Purchase Documents, its consummation of
the transactions herein or therein contemplated or its performance of or its
compliance with the terms and conditions hereof or thereof, to ensure the
legality, validity or enforceability hereof or thereof as against the Seller, or
to ensure that each Buyer will have its Participation Interest in and to the
Purchased Receivables perfected and prior to all other Liens (including
competing ownership interests), other than the filing of financing statements
under Revised UCC Article 9 in the jurisdictions required under Section 4.02(c)
hereof.
(e) Absence of Conflicts. Neither the Seller's execution and delivery
of the Purchase Documents, nor its consummation of the transactions herein or
therein contemplated, nor its performance of or the compliance with the terms
and conditions hereof or thereof, will (i) violate any Law applicable to it or
(ii) conflict with or result in a breach of or a default under (A) the articles
or certificate of incorporation or by-laws of the Seller or (B) any agreement or
instrument, including, without limitation, any and all indentures, debentures,
loans or other agreements, to which the Seller is a party or by which it or any
of its properties (now owned or hereafter acquired) may be subject or bound.
(f) Location of Chief Executive Office, Etc. As of the Initial Closing
Date (i) the Seller's Chief Executive Office is located at 560 Lexington Avenue,
New York, New York 10022, (ii) the Seller has only the Affiliates identified in
Exhibit D hereto, and (iii) the Seller has not changed its name, merged or
consolidated with any other corporation or been the subject of any proceeding
under Title 11, United States Code (Bankruptcy) within the past ten (10) years.
(g) No Termination Event. No event has occurred and is continuing and
no condition exists which constitutes a Termination Event or a Potential
Termination Event.
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(h) Accurate and Complete Disclosure. No information, whether written
or oral, furnished by the Seller to the Administrator, the Buyers and the Buyer
Agents pursuant to or in connection with this Agreement or any transaction
contemplated hereby is false or misleading in any material respect as of the
date as of which such information was furnished (including by omission of
material information necessary to make such information not misleading).
(i) No Proceedings. There are no proceedings or investigations pending
(or, to the Seller's knowledge, threatened) before any court, official body,
regulatory body, administrative agency, or other tribunal or governmental
instrumentality (A) asserting the invalidity of the Purchase Documents, (B)
seeking to prevent the consummation of any of the transactions contemplated by
the Purchase Documents, or (C) seeking any determination or ruling that could
materially and adversely affect (i) the performance by the Seller or the
Servicer of its obligations under this Agreement, or (ii) the validity or
enforceability of the Purchase Documents, the Contracts or any material amount
of the Receivables.
(j) Bulk Sales Act. No transaction contemplated hereby requires
compliance with any bulk sales act or similar law.
(k) Litigation. No injunction, decree or other decision has been issued
or made by any court, government or agency or instrumentality thereof with
respect to or affecting the Seller and no litigation, investigation or
proceeding of the type referred to in Section 9.01(j) exists.
(l) Margin Regulations. The use of all funds acquired by the Seller
under this Agreement will not conflict with or contravene any of Regulations T,
U and X of the Board of Governors of the Federal Reserve System, as the same may
from time to time be amended, supplemented or otherwise modified.
(m) Not an Investment Company. The Seller is not and will not become as
a result of the transactions contemplated by the Purchase Documents, an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
8.02. Representations and Warranties of the Seller with
Respect to Each Sale of Receivables. By selling the Participation Interest in
the Receivables Pool to the Buyers (including by Reinvestment), the Seller
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represents and warrants to the Administrator, the Buyers and the Buyer Agents as
of the date of such sale or Reinvestment and as of each Settlement Date on which
the Net Investment of a Buyer is increased (in addition to its other
representations and warranties contained herein or made pursuant hereto) that:
(a) Account Balances; Purchase Notice. If such sale is on the Closing
Date, the Account Balances of the related Contracts for the Purchased
Receivables are the respective amounts therefor set forth in the Purchase
Notice, and all information set forth on such Purchase Notice is true and
correct as of such Closing Date.
(b) Assignment. Each Certificate of Participation vests in the
applicable Buyer all the right, title and interest of the Seller in and to the
Purchased Receivables (to the extent of such Participation Interest), and
constitutes a valid sale thereof, in each case in accordance with the terms of
this Agreement, enforceable against all creditors of and purchasers from the
Seller except (i) as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws which
may be applied in the event of the bankruptcy or insolvency of the Seller, and
(ii) as such enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity).
(c) No Liens. Each Purchased Receivable, together with the related
Contract and all purchase orders and other agreements related to such Purchased
Receivable, is owned by the Seller free and clear of any Lien, except as
provided herein, and when a Buyer purchases its Participation Interest in such
Purchased Receivables it shall have acquired and shall continue to have
maintained an undivided percentage ownership interest to the extent of its
Participation Interest in such Purchased Receivables and in the Collections with
respect thereto, in accordance with the terms of this Agreement, except (i) as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws which may be applied in the
event of the bankruptcy or insolvency of the Seller, and (ii) as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity) free and clear of any Lien, except as
provided herein.
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(d) Eligible Receivable. At the time of purchase of the undivided
ownership interest in a Receivable which is identified as an Eligible Receivable
for purposes of the calculations hereunder, such Receivable is an Eligible
Receivable.
8.03. Representations and Warranties of the Servicer. The
Servicer represents and warrants (in the case of the initial Servicer, as of the
date hereof, and in the case of any Servicer appointed thereafter pursuant to
Article VI, as of the date of its acceptance of its appointment, and in each
case as of the date of each Settlement Statement during such service) as
follows:
(a) Organization and Qualification. The Servicer is a corporation duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of incorporation. The Servicer is duly qualified to do business as
a foreign corporation in good standing in each jurisdiction in which the
ownership of its properties or the nature of its activities or both, requires it
to be so qualified or, if not so qualified, the failure to so qualify would not
have a material adverse effect on its business, operations, properties or
financial condition.
(b) Authorization. The Servicer has the corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder.
(c) Execution and Binding Effect. This Agreement has been duly and
validly executed and delivered by the Servicer and constitutes a legal, valid
and binding obligation of the Servicer that is enforceable against the Servicer
in accordance with its terms except (i) as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws which may be applied in the event of the bankruptcy or insolvency of such
Obligor, and (ii) as such enforceability may be limited by general principles of
equity (whether considered in a suit at law or in equity).
(d) Authorizations and Filings. No authorization, consent, approval,
license, exemption or other action by, and no registration, qualification,
designation, declaration or filing with, any Official Body is or will be
necessary or, in the opinion of the Servicer, advisable in connection with the
Servicer's execution and delivery of this Agreement, its consummation of the
transactions herein contemplated or its performance of or its compliance with
the terms and conditions hereof, to ensure the legality, validity or
enforceability hereof.
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(e) Absence of Conflicts. Neither the Servicer's execution and delivery
of this Agreement and the Sale Agreement, nor its consummation of the
transactions herein and therein contemplated, nor its performance of or the
compliance with the terms and conditions hereof, will (i) violate any Law
applicable to it or (ii) conflict with or result in a breach of or a default
under (A) the articles or certificate of incorporation or by-laws of the
Servicer or (B) any agreement or instrument, including, without limitation, any
and all indentures, debentures, loans or other agreements to which the Servicer
is a party or by which it or any of its properties (now owned or hereafter
acquired) may be subject or bound.
(f) No Termination Event. No event has occurred and is continuing and no
condition exists which constitutes a Termination Event or a Potential
Termination Event.
(g) Accurate and Complete Disclosure. No information, whether written or
oral, furnished by the Servicer to the Administrator, the Buyers and the Buyer
Agents pursuant to or in connection with this Agreement or any transaction
contemplated hereby, including without limitation information regarding the
Permitted Lockboxes and Lockbox Accounts, is false or misleading in any material
respect as of the date as of which such information was furnished (including by
omission of material information necessary to make such information not
misleading).
(h) No Proceedings. There are no proceedings or investigations pending
(or, to the Servicer's knowledge, threatened) before any court, official body,
regulatory body, administrative agency, or other tribunal or governmental
instrumentality (A) asserting the invalidity of any of this Agreement (B)
seeking to prevent the consummation of any of the transactions contemplated by
any of this Agreement, or (C) seeking any determination or ruling that could
materially and adversely affect (i) the performance by the Servicer of its
obligations under this Agreement or (ii) the validity or enforceability of the
Contracts or any material amount of the Receivables.
(i) Not an Investment Company. The Servicer is not and will not become
as a result of the transactions contemplated by the Purchase Documents, an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
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ARTICLE IX
COVENANTS
---------
9.01. Affirmative Covenants of the Seller. In addition to its
other covenants contained herein or made pursuant hereto, the Seller covenants
to the Administrator, each Buyer and each Buyer Agent as follows:
(a) Notice of Termination Event. Promptly upon becoming aware of any
Termination Event or Potential Termination Event, the Seller shall (or direct
the Servicer to) give the Administrator and each Buyer Agent notice thereof,
together with a written statement of a Responsible Officer setting forth the
details thereof and any action with respect thereto taken or contemplated to be
taken by the Seller.
(b) Notice of Material Adverse Change. Promptly upon becoming aware
thereof, the Seller shall (or direct the Servicer to) give the Administrator and
each Buyer Agent notice of any material adverse change in the business,
operations or financial condition of the Seller which could affect adversely the
collectibility of the Purchased Receivables or the ability to service the
Purchased Receivables. In order to verify compliance with this Section 9.01(b),
the Seller shall furnish the following to the Administrator and each Buyer
Agent:
(i) as soon as practicable and in any event within 60 days
following the close of each fiscal quarter, excluding the last fiscal
quarter, of each fiscal year of the Seller during the term of this
Agreement, an unaudited consolidated balance sheet of the Seller as at
the end of such quarter and unaudited consolidated statements of income
and cash flows of the Seller for such quarter and for the fiscal year
through such quarter, setting forth in comparative form the
corresponding figures for the corresponding quarter of the preceding
fiscal year, all in reasonable detail and certified by a Financial
Officer of the Seller, subject to (A) adjustments of the type which
would occur as a result of a year-end audit and (B) the absence of
notes, as having been prepared in accordance with GAAP; and
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(ii) as soon as practicable and in any event within 100 days
after the close of each fiscal year of the Seller during the term of
this Agreement, an unaudited consolidated balance sheet of the Seller
as at the close of such fiscal year and unaudited consolidated
statements of income and cash flows of the Seller for such fiscal year,
setting forth in comparative form the corresponding figures for the
preceding fiscal year, together with appropriate explanatory notes
thereto, all in reasonable detail and certified (with respect to the
consolidated financial statements) by a Financial Officer of the Seller
as having been prepared in accordance with GAAP.
(c) Preservation of Existence. The Seller shall preserve and maintain
its corporate existence, rights, franchises and privileges in the jurisdiction
of incorporation, and qualify and remain qualified in good standing as a foreign
corporation in each jurisdiction where the failure to preserve and maintain such
existence, rights, franchises, privileges and qualification could materially
adversely affect (i) the interests of the Administrator, any Buyer or any Buyer
Agent hereunder or (ii) the ability of the Seller to perform its obligations
hereunder.
(d) Compliance with Laws. The Seller shall comply in all material
respects with all Laws applicable to the Seller, its business and properties,
and the Purchased Receivables.
(e) Enforceability of Obligations. The Seller shall ensure that, with
respect to each Purchased Receivable, the obligation of any related Obligor to
pay the unpaid balance of such Purchased Receivable in accordance with the terms
of the related Contract remains legal, valid, binding and enforceable against
such Obligor, except (i) as permitted by Section 6.06 hereof, (ii) as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws which may be applied in the
event of the bankruptcy or insolvency of such Obligor, and (iii) as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).
(f) Books and Records. The Seller shall maintain and implement
administrative and operating procedures (including, without limitation, the
ability to recreate Records evidencing the Purchased Receivables in the event of
the destruction of the originals thereof), and keep and maintain all documents,
books, Records and other information reasonably necessary or advisable for the
65
collection of all Purchased Receivables (including, without limitation, Records
adequate to permit the identification of all Collections and adjustments to each
existing Purchased Receivable) at its Chief Executive Office, except as provided
in Section 6.03 hereof.
(g) Fulfillment of Obligations. The Seller will duly observe and
perform, or cause to be observed or performed, all obligations and undertakings
on its part to be observed and performed under or in connection with the
Purchased Receivables, and, subject to Section 6.06, will do nothing to impair
the rights, title and interest of any Buyer in and to its Participation Interest
in the Purchased Receivables.
(h) Customer List. The Seller shall at all times maintain (or cause the
Servicer to maintain) a current list (which may be stored on magnetic tapes or
disks) of all Obligors under Contracts related to Purchased Receivables,
including the name, address, telephone number and account number of each such
Obligor. The Seller shall deliver or cause to be delivered a copy of such list
to the Administrator and each Buyer Agent as soon as practicable following the
such party's request.
(i) Copies of Reports, Filings, Opinions, etc.
(1) Together with each Settlement Statement required to be
delivered pursuant to Section 5.01, the Seller shall cause the Servicer
to prepare and forward to the Administrator and each Buyer Agent (i) a
report in substantially the form of Exhibit E hereto, relating to the
Receivables Pool, as of the close of business on the last day of the
Accounting Period most recently completed, and (ii) a listing by
Obligor of all Purchased Receivables together with an aging of such
Purchased Receivables, in such detail as such party may reasonably
request, as of the last day of the most recently completed Accounting
Period.
(2) Upon the request of the Administrator not more often
than annually, the Seller shall furnish to the Administrator, each
Buyer and each Buyer Agent an opinion of counsel who shall be
satisfactory to the Administrator with respect to the perfection of
each Buyer's right, title and interest in the Receivables Pool and all
Collections with respect thereto against all Persons whomsoever.
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(3) Simultaneously with the delivery of the Seller's annual
financial statements pursuant to Section 9.01(b)(ii) for each fiscal
year of the Seller, the Seller shall, at the Seller's expense, cause a
firm of nationally recognized independent certified public accountants
(who may render other services to the Servicer or the Seller) to
furnish a report to the Administrator, each Buyer and each Buyer Agent
to the effect that they have applied certain procedures agreed upon
with the Servicer and Administrator, each Buyer and each Buyer Agent
and examined certain documents and records relating to the servicing of
the Receivables under this Agreement and that, based upon such
agreed-upon procedures, nothing has come to the attention of such
accountants that caused them to believe that the servicing (including,
without limitation, the allocation of the Collections) has not been
conducted in compliance with the terms and conditions of Article V and
Section 6.08 of this Agreement and such predecessor agreement, except
for such exceptions as they believe to be immaterial and such other
exceptions as shall be set forth in such statement; and in addition,
each report shall set forth the agreed upon procedures performed;
provided that such examinations and reports may be combined with the
examinations and reports required by Section 9.03(i)(3).
(j) Litigation. As soon as possible, and in any event within three (3)
Business Days of the Seller's knowledge thereof, the Seller shall (or shall
direct the Servicer to) give the Administrator and each Buyer Agent notice of
(i) any litigation, investigation or proceeding to which the Seller is a party
which could have an adverse effect on the business, operations, property or
financial condition of the Seller or impair the ability of the Seller to
perform its obligations under this Agreement and (ii) any material adverse
development in previously disclosed litigation.
(k) Total Systems Failure. The Seller shall cause the Servicer to
promptly notify the Administrator and each Buyer Agent of any total systems
failure and to advise the Administrator and each Buyer Agent of the estimated
time required to remedy such total systems failure and of the estimated date on
which a Settlement Statement can be delivered. Until a total systems failure is
remedied, the Seller shall cause the Servicer (i) to furnish to the
Administrator and each Buyer Agent such periodic status reports and other
information relating to such total systems failure as the Administrator and each
Buyer Agent may reasonably request and (ii) to promptly notify the Administrator
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and each Buyer Agent if the Servicer believes that such total systems failure
cannot be remedied by the estimated date, which notice shall include a
description of the circumstances which gave rise to such delay, the action
proposed to be taken in response thereto, and a revised estimate of the date on
which a Settlement Statement can be delivered. The Seller shall cause the
Servicer to promptly notify the Administrator and each Buyer Agent when a total
systems failure has been remedied.
(l) Notice of Change. The Seller shall give the Administrator, each
Buyer and each Buyer Agent sixty (60) days' prior written notice of any change
in its jurisdiction of incorporation, name, identity or corporate structure if,
as a result of such change, the applicable provisions of the Revised UCC
Article 9 of any applicable jurisdiction or other applicable Laws would require
the filing of any amendment of any previously filed financing statement or
continuation statement or of any new financing statement. The Seller will at all
times maintain its Chief Executive Office within a jurisdiction in the United
States in which Revised UCC Article 9 is in effect.
(m) Further Information. The Seller will furnish or cause to be
furnished to the Administrator and each Buyer Agent such other information, as
promptly as practicable, and in such form and detail, as the Administrator and
each Buyer Agent may reasonably request.
(n) Treatment of Purchase. For accounting purposes, the Seller shall
treat the Purchase and each Reinvestment made hereunder as a sale of an
undivided participation interest in the Purchased Receivables. The Seller shall
also maintain its records and books of account in a manner which clearly
reflects the sale of the Participation Interests to the Buyers and the Buyers'
Investment therein.
(o) Administrative and Operating Procedures. The Seller shall maintain
and implement administrative and operating procedures adequate to permit the
identification of the Receivables Pool and all collections and adjustments
attributable to such Receivables Pool.
(p) Certificates of Title.
(1) If any amount payable under or in connection with any
Purchased Receivable shall be or become evidenced by any promissory note,
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chattel paper or other instrument, such note, chattel paper or instrument shall
be duly endorsed in a manner satisfactory to the Administrator and delivered to
the Administrator or its agent.
(2) The Seller shall deliver to the Administrator any
certificate of title or other evidence of ownership issued by the United States
or any state or any political subdivision thereof relating to any chattel held
as security for any amount payable under or in connection with any Purchased
Receivable, with evidence of perfection of the security interest in such
property noted thereon, if such notation is required under the laws of the
jurisdiction in which such property is located in order to perfect a security
interest in such property.
(3) If the Contract relating to any Purchased Receivable
requires the related Obligor to maintain insurance upon the chattel security
relating to such Contract, the Seller shall deliver to the Administrator all
documents or certificates relating to such insurance.
(4) The Seller shall deliver to the Administrator any other
document required by the terms of the related Contracts as a condition to the
enforcement thereof.
(q) Acknowledgment of Servicer. If there is a Servicer other than the
Seller or the Company, the Seller shall deliver to the Administrator and each
Buyer Agent a copy of the Successor Servicing Agreement together with an
acknowledgment from the Servicer affirming that the Successor Servicing
Agreement is in full force and effect.
(r) Transfer of Receivables from the Company. Any Receivable transferred
by the Company to the Seller shall be transferred in accordance with the terms
and conditions of the Sale Agreement.
(s) Separate Existence. The Seller hereby acknowledges that the
Administrator, each Buyer and each Buyer Agent are entering into the
transactions contemplated by this Agreement in reliance upon the Seller's
identity as a separate legal entity from the Company or any Company Entity (as
defined below). Therefore, from and after the date of execution and delivery of
this Agreement, the Seller shall take all reasonable steps including, without
limitation, all steps that the Administrator, any Buyer or any Buyer Agent may
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from time to time reasonably request, to maintain the Seller's identity as a
separate legal entity and to make it manifest to third parties that the Seller
is an entity with assets and liabilities distinct from those of the Company and
any Affiliates (other than the Seller) thereof (each of the Company and its
Affiliates (other than the Seller) shall be referred to herein as a "Company
Entity"), and not just a division of any Company Entity. Without limiting the
generality of the foregoing and in addition to and consistent with the covenants
set forth above, the Seller shall:
(i) require that any and all full-time employees of the Seller
identify themselves as such and not as employees of any Company Entity
(including, without limitation, by means of providing appropriate
employees with business or identification cards identifying such
employees as the Seller's employees);
(ii) to the extent any employee, consultant or agent of the
Seller is also an employee, consultant or agent of any Company Entity,
allocate the compensation of such employee, consultant or agent between
the Seller and such Company Entity on a basis which reflects the
services rendered to the Seller and such Company Entity;
(iii) allocate all overhead expenses (including, without
limitation, telephone and other utility charges) for items shared
between the Seller and any Company Entity on a reasonable basis
consistent with GAAP;
(iv) at all times on and after the Closing Date have at least
one director on its board of directors who is not, (A) a director,
member, officer or employee of any Company Entity, (B) a person related
to any officer, member, or director of any Company Entity, (C) a holder
(directly or indirectly) of more than 5% of any voting securities of
any Company Entity, or (D) a person related to a holder (directly or
indirectly) of more than 5% of any voting securities of any Company
Entity (the "Independent Director");
(v) ensure that all of its actions are duly authorized by vote
of its board of directors (including the Independent Director in the
case of the filing of a voluntary bankruptcy petition) in accordance
with its bylaws;
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(vi) maintain the Seller's books and records separate from
those of any Company Entity and in a location which is clearly
identified (by signage or otherwise) as allocated solely to the Seller;
(vii) prepare its financial statements separately from those
of the Company Entities and insure that any consolidated financial
statements of the Company that include the Seller have a footnote
clearly stating that the Seller is a separate entity and that its
assets will be available first to satisfy the claims of its creditors;
(viii) except as herein specifically otherwise provided, not
commingle funds or other assets of Seller with those of any Company
Entity and not maintain bank accounts or other depository accounts to
which any Company Entity is an account party, into which any Company
Entity makes deposits or from which any Company Entity has the power to
make withdrawals;
(ix) be obligated to reimburse any Company Entity which pays
any of the Seller's operating expenses; and
(x) not permit the Seller to be named as an insured on the
insurance policy covering the property of any Company Entity, except
and only to the extent that such policy also covers property of the
Seller, or enter into an agreement with the holder of such policy
whereby in the event of a loss in connection with the property of any
Company Entity, proceeds are paid to the Seller.
(t) Enforcement of Sale Agreement and Subsidiary Sale Agreements. The
Seller shall enforce the obligations of the Company under the Sale Agreement for
the benefit of the Administrator, each Buyer and each Buyer Agent. The Seller
shall cause the Company to enforce the obligations of the Subsidiary Originators
under the Subsidiary Sale Agreements for the benefit of the Administrator, each
Buyer and each Buyer Agent.
(u) Compliance with ERISA. (1) The Seller shall comply in all material
respects with the applicable provisions of ERISA and (2) furnish to the
Administrator and each Buyer Agent (i) as soon as possible after, and in any
event within thirty (30) days after any Responsible Officer of the Seller or any
ERISA Affiliate either knows or has reason to know that, any Reportable Event
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has occurred that alone or together with any other Reportable Event could
reasonably be expected to result in liability of the Seller to the PBGC in an
aggregate amount exceeding $10,000, or of all ERISA Affiliates of the Seller to
the PBGC in an aggregate amount exceeding $200,000,000, (A) a copy of the notice
of such event required to be given to the PBGC or, if notice is not so required,
a statement of an officer of the Seller having responsibility over its employee
benefits (a "Benefits Officer") setting forth in reasonable detail the nature of
such event and the action proposed to be taken with respect thereto and (B) in
the event that a notice is required to be given to the PBGC, as soon as
practicable after the reasonable request of the Administrator, any Buyer or any
Buyer Agent following receipt a copy of such notice, a statement of a Benefits
Officer of the type described in (A) above, (ii) promptly after receipt thereof,
a copy of any notice the Seller or any ERISA Affiliate may receive from the PBGC
relating to the intention of the PBGC to terminate any Plan or Plans (other than
a Plan maintained by an ERISA Affiliate that is considered an ERISA Affiliate
only pursuant to subsection (m) or (o) of Section 414 of the Code) or to appoint
a trustee to administer any Plan or Plans, (iii) within ten (10) days after the
due date for filing with the PBGC pursuant to Section 412(n) of the Code of a
notice of failure to make a required installment or other payment with respect
to a Plan, a copy of such notice, and, as soon as practicable after the
reasonable request of the Administrator, any Buyer or any Buyer Agent, a
statement of a Benefits Officer setting forth in reasonable detail the nature of
such failure and the action proposed to be taken with respect thereto and (iv)
promptly and in any event within thirty (30) days after receipt thereof by the
Seller or any ERISA Affiliate from the sponsor of a Multiemployer Plan, a copy
of each notice received by the Seller or any ERISA Affiliate concerning (A) the
imposition of Withdrawal Liability or (B) a determination that a Multiemployer
Plan is, or is expected to be, terminated or in reorganization, in each case
within the meaning of Title IV of ERISA.
(v) Collections. The Seller shall cause all Collections received
directly by the Seller from Obligors to be deposited in the Permitted Lockboxes
within two (2) Business Days from the date of receipt of such Collections by the
Seller.
9.02 Negative Covenants of the Seller. The Seller covenants
that it will not, without the prior written consent of the Administrator and
each Buyer Agent:
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(a) Statementing for and Treatment of the Sales. Prepare any financial
statements for financial accounting or reporting purposes which shall account
for the transactions contemplated hereby in any manner other than as a sale of
the Participation Interest in the Purchased Receivables to the Buyers.
(b) No Rescissions or Modifications. Rescind or cancel any Purchased
Receivable or related Contract or modify any terms or provisions thereof, except
in accordance with the Credit and Collection Policy or otherwise with the prior
written consent of the Administrator and the Buyer Agents.
(c) No Liens. Cause any of the Purchased Receivables to be sold,
pledged, assigned or transferred or to be subject to a Lien, other than the sale
and assignment of the Participation Interests therein to the Buyers and the
Liens created in connection with the transactions contemplated by this Agreement
and the Program Support Agreements and other Permitted Liens.
(d) Mergers, Acquisitions. Be a party to any merger or consolidation, or
purchase or otherwise acquire all or substantially all of the assets or any
stock of any class of, or any partnership or joint venture interest in, any
other Person.
(e) No Changes. (i) Change its name, identity or corporate structure in
any manner which would, could or might make any financing statement or
continuation statement filed in connection with this Agreement or the
transactions contemplated hereby seriously misleading within the meaning of
Revised UCC Article 9 or other applicable Laws or (ii) change its jurisdiction o
f organization within the meaning of Revised UCC Article 9 or (iii) change its
principal place of business or chief executive office to the State of California
unless in the case of (i),(ii) or (iii) above it shall have given the
Administrator and each Buyer Agent at least sixty (60) days' prior written
notice thereof, or (iv) amend its articles or certificate of incorporation or
its by-laws without the prior written consent of the Administrator and each
Buyer Agent.
(f) Payment Instructions. Add any bank as a Permitted Lockbox Bank,
terminate any bank listed on Exhibit G hereto as a Permitted Lockbox Bank,
change any Lockbox Account listed on Exhibit G hereto, or make any change in its
instructions to Obligors regarding payments to be made to the Seller or payments
to be made to any Permitted Lockbox Bank, unless the Administrator and each
Buyer Agent shall have received ten (10) Business Days' prior notice of such
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addition, termination or change and, with respect to the addition of any
Permitted Lockbox Bank, a Lockbox Servicing Agreement executed by such Permitted
Lockbox Bank shall have been delivered to the Administrator and each Buyer
Agent.
(g) Sales, Etc. Sell, transfer, convey, assign or lease all or any
substantial part of its assets, or sell or assign with or without recourse any
Receivables (other than pursuant hereto), or permit any subsidiary to do any of
the foregoing.
(h) Permitted Debt. Incur any debt or other liability except for (a)
debt of the Seller in favor of the Company which is evidenced by the promissory
note of the Seller delivered pursuant to the Sale Agreement containing the
following terms: (i) a fixed date for the payment of principal and interest
which date shall be no earlier than one year and one day after the last day on
which the Aggregate Net Investment is greater than zero; (ii) the obligations
under such promissory note shall be subordinated to all obligations of the
Seller to the Administrator, each Buyer and each Buyer Agent and no payments
shall be permitted to be made under such promissory note until the
Administrator, each Buyer and each Buyer Agent have no remaining enforceable
claims against the Seller (other than inchoate indemnity obligations and, if the
Aggregate Net Investment is not zero, claims to a Buyer's Allocation of
Collections in the event that any written-off Receivables ultimately are
collected), provided that payments (including prepayments) of principal and
interest may be made if, after giving effect to such payment, no Termination
Event or Potential Termination Event would occur or be continuing; and (iii) the
obligations of the Seller under such promissory note shall not constitute a
claim against the Seller in the event the Seller has insufficient funds to
satisfy the obligation unless all obligations of the Seller to the
Administrator, each Buyer and each Buyer Agent have been paid in full and any
period during which a trustee or receiver of the Seller or the Seller's assets
could recover any payments made to the Administrator, any Buyer or any Buyer
Agent hereunder has expired, (b) obligations in connection with operating
expenses arising in the ordinary course of its business as well as statutorily
imposed joint and several liability, including, but not limited to such
statutorily imposed joint and several liability relating to income taxes and
ERISA obligations and (c) any liability arising under this Agreement or any of
the agreements permitted under clause (i) below.
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(i) Other Agreements. Not enter into or be a party to any agreement or
instrument other than agreements with the Company covering the lease of its
offices, the allocation of its overhead and the provision for management
expenses, agreements covering insurance, this Agreement, the Sale Agreement, or
any other agreement referred to herein or contemplated hereby, amend, modify or
waive any provision in any thereof (except as permitted by this Agreement), or
give any approval or consent or permission provided for in any thereof without
the prior written consent of the Administrator (which consent will not be
unreasonably withheld); provided, however, that each such agreement shall
contain an undertaking from each Person who enters into any such agreement with
the Seller that such Person will not institute, or join with any other Person in
instituting, against the Seller any proceeding of the type referred to in
Section 11.19.
(j) Other Business. Without the prior written consent of the
Administrator, not engage in any business or enterprise or enter into any
transaction other than as contemplated by this Agreement and the Sale Agreement.
9.03. Affirmative Covenants of the Servicer. In addition to
its other covenants contained herein or made pursuant hereto, the Servicer
covenants to the Administrator, each Buyer and each Buyer Agent as follows:
(a) Notice of Termination Event. Promptly upon becoming aware of any
Termination Event or Potential Termination Event, the Servicer shall give the
Administrator and each Buyer Agent notice thereof, together with a written
statement of a Responsible Officer setting forth the details thereof and any
action with respect thereto taken or contemplated to be taken by the Servicer.
(b) Notice of Material Adverse Change. Promptly upon becoming aware
thereof, the Servicer shall give the Administrator and each Buyer Agent notice
of any material adverse change in the business, operations or financial
condition of the Servicer which could affect adversely the collectibility of the
Purchased Receivables or the ability to service the Purchased Receivables. In
order to verify compliance with this Section 9.03(b), the Servicer shall furnish
the following to the Administrator and each Buyer Agent:
(i) as soon as practicable and in any event within 60 days
following the close of each fiscal quarter, excluding the last fiscal
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quarter, of each fiscal year of the Servicer during the term of this
Agreement, an unaudited consolidated balance sheet of the Servicer as
at the end of such quarter and unaudited consolidated statements of
income and cash flows of the Servicer for such quarter and for the
fiscal year through such quarter, setting forth in comparative form the
corresponding figures for the corresponding quarter of the preceding
fiscal year, all in reasonable detail and certified by a Financial
Officer of the Servicer, subject to (A) adjustments of the type which
would occur as a result of a year-end audit and (B) the absence of
notes, as having been prepared in accordance with GAAP; and
(ii) as soon as practicable and in any event within 100 days
after the close of each fiscal year of the Servicer during the term of
this Agreement, a consolidated balance sheet of the Servicer as at the
close of such fiscal year and consolidated statements of income and
cash flows of the Servicer for such fiscal year, setting forth in
comparative form the corresponding figures for the preceding fiscal
year, all in reasonable detail and certified (with respect to the
consolidated financial statements) by independent certified public
accountants of recognized standing selected by the Servicer and
satisfactory to the Administrator, whose certificate or opinion
accompanying such financial statements shall not contain any
qualification, exception or scope limitation not satisfactory to the
Administrator.
(c) Preservation of Corporate Existence. The Servicer shall preserve and
maintain its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified in good
standing as a foreign corporation in each jurisdiction where the failure to
preserve and maintain such existence, rights, franchises, privileges and
qualification could materially adversely affect (i) the interests of the
Administrator, any Buyer or any Buyer Agent hereunder or (ii) the ability of the
Servicer to perform its obligations hereunder.
(d) Compliance with Laws. The Servicer shall comply in all material
respects with all Laws applicable to the Servicer, its business and properties,
and the Purchased Receivables.
(e) Enforceability of Obligations. The Servicer shall ensure that,
with respect to each Purchased Receivable, the obligation of any related Obligor
to pay the unpaid balance of such Purchased Receivable in accordance with the
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terms of the related Contract remains legal, valid, binding and enforceable
against such Obligor, except (i) as otherwise permitted by Section 6.06 hereof,
(ii) as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws which may be applied in the
event of the bankruptcy or insolvency of such Obligor, and (iii) as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).
(f) Books and Records. The Servicer shall maintain and implement
administrative and operating procedures (including, without limitation, the
ability to recreate Records evidencing the Purchased Receivables in the event of
the destruction of the originals thereof), and keep and maintain all documents,
books, Records and other information reasonably necessary or advisable for the
collection of all Purchased Receivables (including, without limitation, Records
adequate to permit the identification of all Collections and adjustments to each
existing Purchased Receivable) at its Chief Executive Office, except as provided
in Section 6.03 hereof.
(g) Fulfillment of Obligations. The Servicer will duly observe and
perform, or cause to be observed or performed, all obligations and undertakings
on its part to be observed and performed under or in connection with the
Purchased Receivables, and, subject to Section 6.06, will do nothing to impair
the rights, title and interest of any Buyer in and to its Participation Interest
in the Purchased Receivables.
(h) Customer List. The Servicer shall at all times maintain a current
list (which may be stored on magnetic tapes or disks) of all Obligors under
Contracts related to Purchased Receivables, including the name, address,
telephone number and account number of each such Obligor. The Servicer shall
deliver or cause to be delivered a copy of such list to the Administrator and
each Buyer Agent as soon as practicable following the such party's request.
(i) Copies of Reports, Filings, Opinions, Etc.
(1) Together with each Settlement Statement required to be
delivered pursuant to Section 5.01, the Servicer shall prepare and forward to
the Administrator and each Buyer Agent (i) a report in substantially the form of
Exhibit E hereto, relating to the Receivables Pool, as of the close of business
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on the last day of the Accounting Period most recently completed, and (ii) a
listing by Obligor of all Purchased Receivables together with an aging of such
Purchased Receivables, in such detail as such party may reasonably request, as
of the last day of the most recently completed Accounting Period.
(2) Upon the request of the Administrator not more often than
annually, the Servicer shall furnish to the Administrator, each Buyer and each
Buyer Agent an opinion of counsel who shall be satisfactory to the Administrator
with respect to the perfection of each Buyer's right, title and interest in the
Receivables Pool and all Collections with respect thereto against all Persons
whomsoever.
(3) Simultaneously with the delivery of the Servicer's annual
financial statements pursuant to Section 9.03(b)(ii) for each fiscal year of the
Servicer, the Servicer shall, at the Servicer's expense, cause a firm of
nationally recognized independent certified public accountants (who may render
other services to the Servicer or the Seller) to furnish a report to the
Administrator and each Buyer Agent to the effect that they have applied certain
procedures agreed upon with the Servicer and the Administrator and each Buyer
Agent and examined certain documents and records relating to the servicing of
the Receivables under this Agreement and that, based upon such agreed-upon
procedures, nothing has come to the attention of such accountants that caused
them to believe that the servicing (including, without limitation, the
allocation of the Collections) has not been conducted in compliance with the
terms and conditions of Article V and Section 6.08 of this Agreement and such
predecessor agreement, except for such exceptions as they believe to be
immaterial and such other exceptions as shall be set forth in such statement;
and in addition, each report shall set forth the agreed-upon procedures
performed; provided that such examinations and reports may be combined with the
examinations and reports required by Section 9.01(i)(3).
(j) Litigation. As soon as possible, and in any event within three (3)
Business Days of the Servicer's knowledge thereof, the Servicer shall give the
Administrator and each Buyer Agent notice of (i) any litigation, investigation
or proceeding to which the Servicer is a party which could have a material
adverse effect on the business, operations, property or financial condition of
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the Servicer or impair the ability of the Servicer to perform its obligations
under this Agreement and (ii) any material adverse development in previously
disclosed litigation.
(k) Total Systems Failure. The Servicer shall promptly notify the
Administrator and each Buyer Agent of any total systems failure and to advise
the Administrator and each Buyer Agent of the estimated time required to remedy
such total systems failure and of the estimated date on which a Settlement
Statement can be delivered. Until a total systems failure is remedied, the
Servicer shall (i) furnish to the Administrator and each Buyer Agent such
periodic status reports and other information relating to such total systems
failure as the Administrator and each Buyer Agent may reasonably request and
(ii) promptly notify the Administrator and each Buyer Agent if the Servicer
believes that such total systems failure cannot be remedied by the estimated
date, which notice shall include a description of the circumstances which gave
rise to such delay, the action proposed to be taken in response thereto, and a
revised estimate of the date on which a Settlement Statement can be delivered.
The Servicer will promptly notify the Administrator and each Buyer Agent when a
total systems failure has been remedied.
(l) Notice of Change. The Servicer shall give the Administrator and each
Buyer Agent sixty (60) days' prior written notice of any change in its
jurisdiction of incorporation, name, identity or corporate structure if, as a
result of such change, the applicable provisions of the Revised UCC Article 9 of
any applicable jurisdiction or other applicable Laws would require the filing of
any amendment of any previously filed financing statement or continuation
statement or of any new financing statement. The Servicer will at all times
maintain its Chief Executive Office within a jurisdiction in the United States
in which Revised UCC Article 9 is in effect.
(m) Further Information. The Servicer will furnish or cause to be
furnished to the Administrator and each Buyer Agent such other information, as
promptly as practicable, and in such form and detail, as the Administrator and
each Buyer Agent may reasonably request.
(n) Administrative and Operating Procedures. The Servicer shall maintain
and implement administrative and operating procedures adequate to permit the
identification of the Receivables Pool and all collections and adjustments
attributable to such Receivables Pool.
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(o) Certificates of Title.
(1) If any amount payable under or in connection with any Purchased
Receivable shall be or become evidenced by any promissory note, chattel paper or
other instrument, such note, chattel paper or instrument shall be duly endorsed
in a manner satisfactory to the Administrator and delivered to the Administrator
or its agent.
(2) The Servicer shall deliver to the Administrator any certificate
of title or other evidence of ownership issued by the United States or any state
or any political subdivision thereof relating to any chattel held as security
for any amount payable under or in connection with any Purchased Receivable,
with evidence of perfection of the security interest in such property noted
thereon, if such notation is required under the laws of the jurisdiction in
which such property is located in order to perfect a security interest in such
property.
(3) If the Contract relating to any Purchased Receivable requires
the related Obligor to maintain insurance upon the chattel security relating to
such Contract, the Servicer shall deliver to the Administrator all documents or
certificates relating to such insurance.
(4) The Servicer shall deliver to the Administrator any other
document required by the terms of the related Contracts as a condition to the
enforcement thereof.
(p) Compliance with Sale Agreement. The Company shall comply with its
obligations under the Sale Agreement and each Subsidiary Sale Agreement for the
benefit of the Administrator, each Buyer and each Buyer Agent.
(q) Paying Agent. The Servicer shall cause all Collections received by a
Paying Agent from Obligors to be deposited in the Permitted Lockboxes within two
(2) Business Days from the date of receipt of such Collections by the Paying
Agent unless it is impossible, due solely to the acts or omissions of an Obligor
or Obligors, financial institutions or other third parties, to allocate the
monies received by the Paying Agent between Collections and other amounts within
such period, in which case the Servicer shall cause such Collections to be
deposited in the Permitted Lockboxes as promptly as possible.
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9.04. Negative Covenants of the Servicer. The Servicer
covenants that it will not, without the prior written consent of the
Administrator and each Buyer Agent:
(a) No Rescissions or Modifications. Rescind or cancel any Purchased
Receivable or related Contract or modify any terms or provisions thereof, except
in accordance with the Credit and Collection Policy or otherwise with the prior
written consent of the Administrator.
(b) No Liens. Cause any of the Purchased Receivables to be sold,
pledged, assigned or transferred or to be subject to a Lien, other than the sale
and assignment of the Participation Interests therein to the Buyers and the
Liens created in connection with the transactions contemplated by this Agreement
and the Program Support Agreements and other Permitted Liens, nor will it permit
any of the accounts into which any Paying Agent may deposit Collections to be
subject to any Lien, other than Permitted Liens.
(c) No Changes. (i) Change its name, identity or corporate structure in
any manner which would, could or might make any financing statement or
continuation statement filed in connection with this Agreement, the Sale
Agreement, the Subsidiary Sale Agreements or the transactions contemplated
hereby or thereby seriously misleading within the meaning of Revised UCC Article
9 or other applicable Laws or (ii) change its jurisdiction of organization
within the meaning of Revised UCC Article 9 unless in the case of (i) or (ii)
above it shall have given the Administrator and each Buyer Agent at least sixty
(60) days' prior written notice thereof.
ARTICLE X
TERMINATION
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10.01. Termination Events. A "Termination Event" shall mean
the occurrence and continuance of one or more of the following events or
conditions:
(a) either the Seller, the Paying Agent or Servicer, as the case may be,
shall fail to remit or fail to cause to be remitted to the Administrator, a
Buyer or a Buyer Agent on any Settlement Date any Collections or other amounts
required to be remitted to the Administrator, a Buyer or a Buyer Agent, on such
Settlement Date; or
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(b) the Seller, the Company or an Originator shall fail to deposit or
pay, or fail to cause to be deposited or paid, when due any other amount due
hereunder or under the Sale Agreement or the Subsidiary Sale Agreements; or
(c) any representation, warranty, certification or statement made by the
Seller, the Company or any Originator under this Agreement or in any agreement,
certificate, report, appendix, schedule or document furnished by or on behalf of
the Seller, the Company or any Originator to the Administrator, a Buyer or a
Buyer Agent pursuant to or in connection with this Agreement (including, without
limitation, the Sale Agreement and the Subsidiary Sale Agreements) shall prove
to have been false or misleading in any respect material to this Agreement or
the transactions contemplated hereby as of the time made or deemed made
(including by omission of material information necessary to make such
representation, warranty, certification or statement not misleading); provided,
however, that the events described in this Section 10.01(c) shall not constitute
a Termination Event if cured within 20 days of discovery of the false or
misleading nature, but only if (i) the event described in this Section 10.01(c)
is capable of being cured and (ii) the cure period will not have any material
adverse effect on the Administrator, the Buyers and the Buyer Agents; or
(d) the Seller, the Company, any Originator or the Servicer shall fail
to obtain the prior consent of the Administrator, the Buyers and the Buyer
Agents to any action or provision as to which such consent is required by the
terms of this Agreement, the Sale Agreement or the Subsidiary Sale Agreements;
or
(e) the Seller, the Company, any Originator or the Servicer shall
default or fail in the performance or observance of any other covenant,
agreement or duty applicable to it contained herein or in the Sale Agreement or
in a Subsidiary Sale Agreement and such default or failure shall continue for
twenty (20) days after either (i) any Responsible Officer of the Seller, the
Company or any Originator becomes aware thereof or (ii) written notice thereof
to the Seller by the Administrator or a Buyer Agent; or
(f) a default shall have occurred and be continuing under any instrument
or agreement evidencing, securing or providing for the issuance of indebtedness
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for borrowed money of, or guaranteed by, the Seller, the Company or any
Affiliate thereof, and in an amount equal to or in excess of $5,000,000 in the
case of the Company or any Affiliate thereof other than the Seller, which
default permits acceleration of the maturity of such indebtedness; or
(g) a Permitted Lockbox Bank shall default or fail in the performance or
observance of any agreement or duty applicable to it under the Lockbox Servicing
Agreement executed by it and such default or failure shall continue for two (2)
Business Days after notice thereof to such Permitted Lockbox Bank and within
such period another Permitted Lockbox with another Permitted Lockbox Bank is not
established by the Seller, if so requested by the Administrator; or
(h) litigation (including, without limitation, derivative actions),
arbitration, governmental proceedings or actions pursuant to or brought to
enforce any Law is pending against the Seller, the Company or any Affiliate
thereof which in the reasonable opinion of the Administrator or a Buyer Agent is
likely to (i) adversely affect the financial position or business of the Seller
or impair the ability of the Seller to perform its obligations under this
Agreement or the Sale Agreement, (ii) materially adversely affect the financial
position or business of the Company or impair the ability of the Company to
perform its obligations under this Agreement, the Sale Agreement or the
Subsidiary Sale Agreements or (iii) materially adversely affect the financial
position or business of the Subsidiary Originators or impair the ability of the
Subsidiary Originators to perform their obligations under the Subsidiary Sale
Agreements; or
(i) there shall have occurred any event which materially adversely
affects the collectibility of a material amount of the Purchased Receivables or
there shall have occurred any other event which materially adversely affects the
ability of the Servicer to collect the Purchased Receivables or the ability of
the Servicer to perform hereunder; or
(j) an Event of Bankruptcy shall occur with respect to (i) the Seller,
the Company, any Subsidiary Originator or any Paying Agent, or (ii) one or more
Affiliates of the Seller or the Company which could have a material adverse
effect on the business, financial condition or operations of the Seller, the
Company or any Originator; provided that, in the case of an involuntary
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proceeding against any Company Entity, the same shall remain undismissed for
sixty (60) days thereafter; provided, further that the immediately proceeding
proviso shall not apply if the actions sought in such Event of Bankruptcy shall
occur; or
(k) a Buyer or the Receivables Pool shall be deemed to have become an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended; or
(l) the average Rate of Collections for any three consecutive Accounting
Periods shall be less than 40%; or
(m) (i) the Sale Agreement ceases to be in full force and effect, or
ceases to evidence the transfer by the Company to the Seller of all Purchased
Receivables; or (ii) a Subsidiary Sale Agreement ceases to be in full force and
effect, or ceases to evidence the transfer by the applicable Subsidiary
Originator to the Company of all of that Subsidiary Originator's Staffing
Solutions Receivables; or
(n) the ability of the Seller to transfer undivided interests in the
Purchased Receivables hereunder, the ability of the Company to transfer
Purchased Receivables under the Sale Agreement or the ability of a Subsidiary
Originator to transfer Staffing Solution Receivables under a Subsidiary Sale
Agreement shall have been adversely affected by any action of a regulatory
authority having jurisdiction over the Seller, the Company or any Subsidiary
Originator, as the case may be; or
(o) this Agreement or each Certificate of Participation, or a combination
thereof, shall for any reason neither (1) evidence the transfer to each Buyer
(or its assignees or transferees) of legal and equitable right, title and
interest to, and ownership of, an undivided percentage ownership interest in the
Purchased Receivables and Collections with respect thereto to the extent of the
Participation Interest of such Buyer, nor (2) create a valid and perfected first
priority security interest (as defined in Revised UCC Article 9) in favor of the
Administrator in the Purchased Receivables and Collections with respect thereto;
or
(p) (i) any Person or two or more Persons acting in concert, other than
the Shaw Family, shall have acquired beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 30% or more of the outstanding shares of the voting
capital stock of the Company having the power (without the occurrence of a
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contingency) to elect the Board of Directors of the Company ("Volt Voting
Stock"), unless the Shaw Family also beneficially owns, in the aggregate, 30% or
more of the outstanding shares of Volt Voting Stock; or (ii) as of any date, a
majority of the Board of Directors of the Company consists of individuals who
were not either (A) directors of the Company as of the corresponding date of the
previous year, (B) selected or nominated to become directors by the Board of
Directors of the Company of which a majority consisted of individuals described
in clause (A), or (C) selected or nominated to become directors by the Board of
Directors of the Company of which a majority consisted of individuals described
in clause (A) and individuals described in clause (B); or
(q) the average Default Ratio for any three consecutive Accounting
Periods is greater than 4%.
10.02. Consequences of a Termination Event.
(a) If a Termination Event specified in Section 10.01 hereof shall
occur and be continuing, the Administrator may (with the consent of the Majority
Buyers) or shall (at the direction of a Buyer), by notice to the Seller,
terminate each Buyer's obligation to purchase the Participation Interest or make
Reinvestments hereunder; provided, that in the case of a Termination Event under
clause (i) of Section 10.01(j), such obligation of the Buyers hereunder shall be
automatically terminated without any action on the part of the Administrator.
Any such termination shall reduce the Aggregate Maximum Net Investment in effect
from time to time thereafter to the amount of the Aggregate Net Investment at
such time and as a result shall reduce the amount of each Buyer's Maximum Net
Investment in effect from time to time thereafter to the amount of such Buyer's
Net Investment, at such time.
(b) Upon any termination of the Buyers' obligation to purchase the
Participation Interests and to make Reinvestments pursuant to this Section
10.02, the Administrator, the Buyers and the Buyer Agents shall have, in
addition to all rights and remedies under this Agreement or otherwise, all other
rights and remedies provided under the Uniform Commercial Code of the applicable
jurisdiction and under other applicable Laws, which rights shall be cumulative.
(c) The parties hereto acknowledge that this Agreement is, and is
intended to be, a contract to extend financial accommodations to the Seller
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within the meaning of Section 365(e)(2)(B) of the Federal Bankruptcy Code (11
U.S.C. ss.365(e)(2)(B)) (or any amended or successor provision thereof or any
amended or successor code).
ARTICLE XI
MISCELLANEOUS
-------------
11.01. Expenses. The Seller agrees, upon receipt of a written
invoice, to pay or cause to be paid, and to save the Administrator, each Buyer
and each Buyer Agent harmless against liability for the payment of, all
reasonable out-of-pocket expenses (including, without limitation, attorneys',
accountant's and other third parties' fees and expenses, any filing fees, stamp
taxes, expenses of litigation or preparation therefor, audit expenses and
expenses incurred by officers or employees of the Administrator, each Buyer and
each Buyer Agent, in each case to the extent reasonable, but excluding salaries
and similar overhead costs of the Administrator, each Buyer and each Buyer Agent
which are incurred notwithstanding the execution and performance of this
Agreement) incurred by or on behalf of the Administrator, each Buyer and each
Buyer Agent from time to time (a) arising in connection with the development,
audit, delivery, collection, preparation, printing, execution, performance,
administration and interpretation of the Purchase Documents, or transactions
undertaken, pursuant to or in connection herewith or therewith (including,
without limitation, the perfection or protection of a Buyer's Participation
Interest in the Purchased Receivables), (b) relating to any amendments, waivers
or consents to the Purchase Documents requested by the Seller, the Company or an
Originator, (c) arising in connection with the Administrator's, a Buyer's or a
Buyer's Agent or their agent's enforcement or preservation of rights under the
Purchase Documents, or (d) arising in connection with any litigation or
preparation for litigation involving the Purchase Documents, which, including
all amounts payable under Section 11.03, shall be referred to in this Agreement
as "Transaction Costs".
11.02. Payments. All payments to the Administrator, the Buyers
or the Buyer Agents hereunder shall be received by 11:00 a.m., Pittsburgh time,
on the day when due, by the party to which such amount is due in Dollars in
immediately available funds. All amounts received after 11:00 A.M. (Pittsburgh
time) will be deemed to have been received on the next Business Day. To the
extent permitted by Law, any amounts due from the Seller or Servicer hereunder
which are not received by 11:00 A.M. (Pittsburgh time) shall bear interest
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(including interest on interest) for each day from the day due until received on
a Business Day by 11:00 A.M. (Pittsburgh time), payable on demand, at a rate per
annum equal to two percent (2.00%) above the Reference Rate.
11.03. Indemnity for Taxes, Reserves and Expenses. If after
the date hereof, the adoption of any Law or guideline or any amendment or change
in the administration, interpretation or application of any existing or future
Law or guideline by any Official Body charged with the administration,
interpretation or application thereof, or the compliance with any request or
directive of any Official Body (whether or not having the force of Law):
(a) subjects an Affected Party to any tax or changes the basis of
taxation with respect to the Purchase Documents, the Participation Interests,
the Purchased Receivables or payments of amounts due hereunder or under the
Purchased Receivables (including, without limitation, any sales, gross receipts,
general corporate, personal property, privilege or license taxes (unless such
tax results solely from the failure to file or keep current any certification or
documentation required to qualify for any exemption from or reduction of any
such tax to which such Affected Party would otherwise be entitled), and
including claims, losses and liabilities arising from any failure to pay or
delay in paying any such tax (unless such failure or delay results solely from
such Affected Party's gross negligence or willful misconduct), but excluding
Income Taxes incurred by such Affected Party arising out of or as a result of
this Agreement or the ownership of the Participation Interests or in respect of
any Receivable), or
(b) imposes, modifies or deems applicable any reserve (including,
without limitation, any reserve imposed by the Board of Governors of the Federal
Reserve System), special deposit or similar requirement against assets held by,
credit extended by, deposits with or for the account of, or other acquisition of
funds by, an Affected Party, or
(c) shall change the amount of capital maintained or requested or
directed to be maintained by an Affected Party, or
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(d) imposes upon an Affected Party any other condition or expense
(including, without limitation, (i) loss of margin and (ii) attorneys' fees and
expenses, expenses incurred by officers or employees of the Administrator's or a
Buyer Agent's credit recovery group (or any successor thereto) and expenses of
litigation or preparation therefor in contesting any of the foregoing), in each
case only to the extent such expenses are reasonable, with respect to the
Purchase Documents, the Participation Interests, the Purchased Receivables or
the purchase, maintenance or funding of the purchase of the Participation
Interests in any Receivables by an Affected Party,
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, reduce the rate of return on capital, or impose any
expense (including loss of margin) upon, an Affected Party with respect to this
Agreement, the obligations hereunder or the funding of purchases hereunder, such
Affected Party may notify the Seller of the amount of such increase, reduction,
or imposition, and the Seller shall pay to such Affected Party the amount so
notified to the Seller by the such Affected Party (which determination shall be
conclusive) necessary to compensate such Affected Party for such increase,
reduction or imposition; provided, that the Seller and any other persons who
from time to time sell receivables or interests therein to the Buyers ("Other
Sellers") each shall be liable for such amount ratably in accordance with the
usage under their respective facilities; provided, further, that (i) if any
portion of such amount is attributable to the Seller and not attributable to any
Other Seller, the Seller shall be solely liable for such portion, and (ii) if
any portion of such amount is attributable to any Other Seller and not
attributable to the Seller in any way, the Seller shall not be liable for any of
such portion. Such Affected Party's determination with respect to the allocation
of such amounts among the Seller and Other Sellers shall be binding on the
Seller. Such amounts shall be due and payable by the Seller to such Affected
Party ten (10) Business Days after such notice is given.
11.04. Indemnity.
(a) The Seller agrees to indemnify, defend and save harmless the
Administrator, each Buyer, each Buyer Agent, their respective directors,
officers, shareholders, members, employees, agents and each legal entity, if
any, who controls the Administrator, such Buyer or such Buyer Agent (each, an
"Indemnified Party"), forthwith on demand, from and against any and all losses,
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claims, damages, liabilities, costs and expenses (including, without limitation,
all attorneys' fees and expenses, expenses incurred by their respective credit
recovery groups (or any successors thereto) and expenses of settlement,
litigation or preparation therefor) which the Administrator, such Buyer or such
Buyer Agent may incur or which may be asserted against the Administrator, such
Buyer or such Buyer Agent by any Person (including, without limitation, the
Company or any Obligor or any other Person whether on its own behalf or
derivatively on behalf of the Seller) (all of the foregoing being collectively
referred to as "Losses"), excluding, however, (a) Losses to the extent resulting
from the gross negligence or willful misconduct on the part of such Indemnified
Party, (b) recourse (except as otherwise provided in this Agreement) for
Defaulted Receivables, (c) any Losses with respect to any tax, reserve, capital
charge or expense related thereto (indemnification with respect to such Losses
being provided as and to the extent provided in Section 11.03), or (d) Losses to
the extent that such Losses resulted from an act or omission of the Servicer, if
the Servicer is not the Company or an Affiliate of the Company arising from or
incurred in connection with (i) any breach of a representation, warranty or
covenant by the Seller or the Company made or deemed made hereunder or in
connection herewith or the transactions contemplated herewith, or (ii) any suit,
action, claim, proceeding or governmental investigation, pending or threatened,
whether based on statute, regulation or order, on tort, on contract or
otherwise, before any local, state or federal court, arbitrator or
administrative, governmental or regulatory body, which arises out of or relates
to the Purchase Documents, the Participation Interests in the Purchased
Receivables or related Contracts, or the use of the proceeds of the sale of the
Participation Interests in the Receivables pursuant hereto or the transactions
contemplated hereby (all Losses, after giving effect to the limitations set
forth in clauses (a) through (d) above, being hereinafter referred to as
"Indemnified Amounts").
(b) Without limitation of the generality of Section 11.04(a), the Seller
shall pay on demand to each Indemnified Party any and all amounts necessary to
indemnify such Indemnified Party from and against any and all Indemnified
Amounts relating to or resulting from any of the following:
(i) the creation of a Participation Interest in any Purchased
Receivable which is not at the date of the creation of such
Participation Interest an Eligible Receivable;
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(ii) reliance on any representation or warranty made or deemed
made by the Seller, the Company or any Originator (or any of its
respective Responsible Officers) or any statement made by any
Responsible Officer of the Seller, the Company or any Originator under
or in connection with this Agreement which shall have been incorrect in
any material respect when made;
(iii) the failure by the Seller, the Company or any Originator
to comply with any applicable law, rule or regulation;
(iv) the failure to vest in a Buyer, in accordance with the
terms of this Agreement, an undivided percentage interest, to the
extent of its Participation Interest, in the Purchased Receivables and
Collections in respect thereof free and clear of any Lien except as
provided in this Agreement;
(v) the failure to have filed, or any delay in filing,
financing statements or other similar instruments or documents under
Revised UCC Article 9 of any applicable jurisdiction or under any other
applicable law with respect to the assignment of the Participation
Interests;
(vi) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor) of the Obligor to the payment
of any Purchased Receivable (including, without limitation, a defense
based on such Purchased Receivable or the related Contract not being a
legal, valid and binding obligation of such Obligor enforceable against
it in accordance with its terms), or any other claim resulting from the
sale of the merchandise or service related to such Purchased Receivable
or the furnishing or failure to furnish such merchandise or services;
(vii) any failure of the Seller, the Company or any Originator
to perform its duties or obligations in accordance with the provisions
of this Agreement; or
(viii) any products liability claim arising out of or in
connection with merchandise, insurance or services which are the
subject of any Contract.
(c) Promptly upon receipt by any Indemnified Party hereunder of notice
of the commencement of any suit, action, claim, proceeding or governmental
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investigation (an "Action"), such Indemnified Party shall, if a claim in respect
thereof is to be made against the Seller hereunder, notify the Seller in writing
of the commencement thereof. The Seller may participate in the defense of any
such Action at its expense, and no settlement thereof shall be made without the
approval of the Seller and the Indemnified Party. The approval of the Seller
will not be unreasonably withheld or delayed. In case any Action shall be
brought against any Indemnified Party, the Seller shall be entitled to
participate in and, to the extent that it shall wish, to assume the defense
thereof, with counsel satisfactory to the Indemnified Party, and after notice
from the Seller to such Indemnified Party of its election so to assume the
defense thereof, the Seller shall not be liable to such Indemnified Party for
any legal or other expenses subsequently incurred by such Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation. In any such Action, any Indemnified Party shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party unless (i) the Seller and such Indemnified
Party shall have mutually agreed in writing to the retention of such counsel or
(ii) the named parties to any such Action (including any impleaded parties)
include both the Seller and such Indemnified Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Seller shall not, in
conjunction with any Action or related Actions in the same jurisdiction, be
liable for the fees and reasonable expenses of more than one separate firm in
addition to any local counsel for all such Indemnified Parties, unless (i) the
Seller and such Indemnified Parties shall have mutually agreed in writing to the
retention of separate counsel or (ii) the named parties to any such Action
(including any impleaded parties) include such Indemnified Parties and
representation of such Indemnified Parties by the same counsel would be
inappropriate due to actual or potential differing interests between them, and
that all such fees and reasonable expenses shall be reimbursed as they are
incurred.
(d) The indemnity contained in this Section 11.04 shall survive the
termination of this Agreement.
11.05. Holidays. Except as may be provided in this Agreement
to the contrary, if any payment due hereunder shall be due on a day which is not
a Business Day, such payment shall instead be due the next following Business
Day.
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11.06. Records. All amounts calculated or due from hereunder
shall be determined from the records of the Administrator, the Buyers and the
Buyer Agents, which determinations shall be conclusive absent manifest error.
11.07. Amendments and Waivers. The Administrator, the Majority
Buyers, the applicable Buyer Agents, if applicable Fifth Third in its individual
capacity, the Company and the Seller may from time to time enter into agreements
amending, modifying or supplementing this Agreement, and the Administrator and
the Majority Buyers, in their sole discretion, may from time to time grant
waivers of the provisions of this Agreement or consents to a departure from the
due performance of the obligations of the Seller or the Company under this
Agreement. Any such agreement, waiver or consent must be in writing and shall be
effective only to the extent specifically set forth in such writing. Any waiver
of any provision hereof, and any consent to a departure by the Seller from any
of the terms of this Agreement, shall be effective only in the specific instance
and for the specific purpose for which given; provided, however, that, to the
extent required by the securitization program of any Buyer, no such amendment
shall be effective until the Rating Agency Condition shall have been satisfied
with respect thereto (the Administrator hereby agrees to provide executed copies
of any material amendment to or waiver of any provision of this Agreement to the
Rating Agencies); provided, further that no such amendment or waiver shall,
without the consent of each Buyer and any Affected Party (other than such
Affected Party's Affiliates), (A) extend the date of any payment or deposit of
Collections by the Seller or the Servicer, (B) reduce the rate or extend the
time of payment of Cost of Funds, (C) reduce any fees payable to the
Administrator, any Buyer Agent or any Buyer pursuant to the applicable related
fee letter agreement, (D) change the amount of Net Investment of any Buyer, any
Buyer's Participation Interest or any Buyer's Maximum Net Investment, (E) amend,
modify or waive any provision of the definition of "Majority Buyers," this
Section 11.07, Section 4.03(e), Section 4.03(f), Section 4.03(g), Section 5.01,
Section 9.01(l), Section 9.02(e), Section 11.19, Section 11.20 or Section 11.22,
(F) consent to or permit the assignment or transfer by the Seller of any of its
rights and obligations under this Agreement, (G) change the definition of
"Eligible Receivable," "Loss Ratio," "Loss Horizon Ratio," "Dilution Horizon,"
"Deferred Purchaser Price," "Dilution Ratio," "Dilution Spike Factor" or
"Termination Event," (H) amend or modify any defined term (or any defined term
used directly or indirectly in such defined term) used in clauses (A) through
(G) above in a manner that would circumvent the intention of the restrictions
93
set forth in such clauses including, without limitation, the definitions of
"Liquidity Agreement" and "Liquidity Termination Date," or (I) would otherwise
have a material adverse effect on the rights and obligations of the
Administrator, any Buyer, any Buyer Agent or any Affected Party. No failure on
the part of the Buyers, the Buyer Agents or the Administrator to exercise, and
no delay in exercising any right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other right.
11.08. No Implied Waiver; Cumulative Remedies. No course of
dealing and no delay or failure of the Administrator, any Buyer or any Buyer
Agent in exercising any right, power or privilege under the Purchase Documents
shall affect any other or future exercise thereof or the exercise of any other
right, power or privilege; nor shall any single or partial exercise of any such
right, power or privilege or any abandonment or discontinuance of steps to
enforce such a right, power or privilege preclude any further exercise thereof
or of any other right, power or privilege. The rights and remedies of the
Administrator, the Buyers and the Buyer Agents under the Purchase Documents are
cumulative and not exclusive of any rights or remedies which such parties would
otherwise have.
11.09. No Discharge. The obligations of the Seller and the
Company under the Purchase Documents shall be absolute and unconditional and
shall remain in full force and effect without regard to, and shall not be
released, discharged or in any way affected by (a) any exercise or nonexercise
of any right, remedy, power or privilege under or in respect of the Purchase
Documents or applicable Law, including, without limitation, any failure to
set-off or release in whole or in part by the Administrator, any Buyer or any
Buyer Agent of any balance of any deposit account or credit on its respective
books in favor of the Seller or the Company or any waiver, consent, extension,
indulgence or other action or inaction in respect of any thereof, or (b) any
other act or thing or omission or delay to do any other act or thing which would
operate as a discharge of the Seller or the Company as a matter of Law.
11.10. Notices. All notices under Section 10.02 hereof shall
be given to the Seller: (i) by telephone (confirmed by first-class mail) or
facsimile (and which shall be effective when given by telephone or sent by
facsimile, if given or sent on a Business Day; otherwise, on the next Business
94
Day); or (ii) by first-class mail (which shall be effective three Business Days
after being deposited in the mail, if deposited on a Business Day; otherwise,
four Business Days thereafter); or (iii) by overnight express mail or overnight
courier (which shall be effective one Business Day after being delivered to the
courier, if delivered on a Business Day; otherwise, two Business Days); and in
all cases with charges prepaid. All other notices, requests, demands, directions
and other communications (collectively "notices") under the provisions of this
Agreement shall be in writing (including telexed or facsimile communication)
unless otherwise expressly permitted hereunder and shall be sent by first-class
mail, express mail, or by facsimile, in all cases with charges prepaid, and any
such properly given notice shall be effective when received. All notices shall
be sent to the applicable party at the address stated on the signature page
hereof or in accordance with the last unrevoked written direction from such
party to the other parties hereto.
11.11. Severability. The provisions of this Agreement are
intended to be severable. If any provision of this Agreement shall be held
invalid or unenforceable in whole or in part in any jurisdiction, such provision
shall, as to such jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without in any manner affecting the validity or
enforceability of such provision in any other jurisdiction or the remaining
provisions hereof in any jurisdiction.
11.12. Governing Law. THIS AGREEMENT AND THE CERTIFICATES OF
PARTICIPATION SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK WITHOUT REGARD TO ITS CONFLICTS OF LAWS RULES (OTHER THAN
SECTION 5-1401 OF NEW YORK'S GENERAL OBLIGATIONS LAW). Each of the Seller and
the Company hereby consents to the jurisdiction of the courts of the State of
New York and the courts of the United States located in the State of New York
for the purpose of adjudicating any claim or controversy arising in connection
with this Agreement, and for such purpose, to the extent it may lawfully do so,
waives any objection to such jurisdiction or to venue therein.
11.13. Prior Understandings. This Agreement sets forth the
entire understanding of the parties relating to the subject matter hereof, and
supersedes all prior understandings and agreements, whether written or oral,
except as specifically referred to herein. This Agreement amends and restates
the Existing Agreement in its entirety, effective as of the Closing Date, and is
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not intended to constitute a novation of the obligations thereunder. Nothing
contained herein shall terminate any security interests, guaranties or
subordinations previously granted in favor of TRFCO in connection with the
Existing Agreement and the transactions contemplated thereby; such security
interests, guaranties and subordinations are being assigned by TRFCO to the
Administrator, on behalf of the Buyers and Buyer Agents; and such security
interests, guaranties and subordinations shall continue in full force and effect
in favor of the Buyers (or the Buyer Agents or Administrator, on behalf of the
Buyers) from and after the Closing Date.
11.14. Survival. All representations and warranties of the
Seller and the Company contained herein or made in connection herewith or in
connection with a Certificate of Participation shall survive the making thereof,
and shall not be waived by the execution and delivery of this Agreement or a
Certificate of Participation, any investigation by the Administrator, any Buyer
or any Buyer Agent, the purchase, repurchase or payment of a Participation
Interest in any Purchased Receivable, or any other event or condition whatsoever
(other than a written waiver complying with Section 11.07 hereof). All
obligations of the Seller to make payments to, or to indemnify, the
Administrator, any Buyer or any Buyer Agent or to repurchase a Participation
Interest in the Purchased Receivables from the Administrator, any Buyer or any
Buyer Agent shall survive the payment of all Purchased Receivables, the
termination of the Purchase Obligation and the termination of all other
obligations of the Seller hereunder and shall not be affected by reason of an
invalidity, illegality or irregularity of any Purchased Receivable. The
covenants and agreements contained in or given pursuant to this Agreement
(including, without limitation, those contained in Article IX) shall continue in
full force and effect until the termination of the Purchase Obligation,
liquidation of all Participation Interests in the Purchased Receivables and
discharge of all other obligations of the Seller and the Company hereunder.
11.15. Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument.
11.16. Set-Off. In case a Termination Event shall occur and be
continuing, the Administrator, each Buyer and its related Buyer Agent and, to
the fullest extent permitted by Law, the holder of any assignment of a Buyer's
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rights hereunder (including without limitation each Affected Party), shall each
have the right, in addition to all other rights and remedies available to it,
without notice to the Seller, to set-off against and to appropriate and apply to
any amount owing by the Seller hereunder which has become due and payable, any
debt owing to, and any other funds held in any manner for the account of, the
Seller by, the Administrator, a Buyer, its related Buyer Agent or by any holder
of any assignment, including, without limitation, all funds in all deposit
accounts (whether time or demand, general or special, provisionally credited or
finally credited, or otherwise) now or hereafter maintained by the Seller with
the Administrator, a Buyer or any holder of any assignment. Such right shall
exist whether or not such debt owing to, or funds held for the account of, the
Seller is or are matured other than by operation of this Section 11.16 and
regardless of the existence or adequacy of any collateral, guaranty or any other
security, right or remedy available to the Administrator, a Buyer, its related
Buyer Agent or any holder. Nothing in this Agreement shall be deemed a waiver or
prohibition or restriction of the Administrator's, a Buyer's, its related Buyer
Agent's or any holder's rights of set-off or other rights under applicable Law.
11.17. Time of Essence. Time is of the essence in this
Agreement.
11.18. Payments Set Aside. To the extent that the Seller, the
Company or any Obligor makes a payment to the Administrator, a Buyer or a Buyer
Agent or the Administrator, a Buyer or a Buyer Agent exercises its rights of
set-off and such payment or set-off or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by, or is required to be refunded, rescinded, returned, repaid
or otherwise restored to the Seller, the Company, any Originator, such Obligor,
a trustee, a receiver or any other Person under any Law, including, without
limitation, any bankruptcy law, any state or federal law, common law or
equitable cause, the obligation or part thereof originally intended to be
satisfied shall, to the extent of any such restoration, be reinstated, revived
and continued in full force and effect as if such payment had not been made or
such set-off had not occurred. The provisions of this Section 11.18 shall
survive the termination of this Agreement.
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11.19. No Petition. Each party hereto hereby covenants and
agrees that prior to the date which is one year and one day after the payment in
full of all outstanding commercial paper notes or other indebtedness of each
Buyer, it will not institute against or join any other Person in instituting
against such Buyer any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceeding under the laws of the United
States or any state of the United States. The agreements set forth in this
Section 11.19 and the parties' respective obligations under this Section 11.19
shall survive the termination of this Agreement.
11.20. No Recourse. (a) The obligations of the Administrator,
the Buyers and the Buyer Agents under this Agreement are solely the corporate
obligations of such party. No recourse shall be had for the payment of any
amount owing in respect to this Agreement or for the payment of any fee
hereunder or for any other obligation or claim arising out of or based upon this
Agreement against AMACAR, against any stockholder, employee, officer, director
or incorporator of the Administrator, the Buyers and the Buyer Agents or any
stockholder, employee, officer, director, incorporator or affiliate thereof. For
purposes of this paragraph, the term "AMACAR" shall mean and include AMACAR
Group, L.L.C. and all Affiliates thereof and any employee, officer, director,
incorporator, shareholder or beneficial owner of any of them; provided, however,
that Market Street shall not be considered to be an affiliate of AMACAR. (b)
Relationship Funding shall not have any obligation to pay any amounts owing
hereunder unless and until Relationship Funding has received such amounts
pursuant to the Participation Interest and such amounts are not necessary to pay
outstanding commercial paper notes or other outstanding indebtedness of
Relationship Funding. In addition, each party hereto hereby agrees that no
liability or obligation of Relationship Funding hereunder for fees, expenses or
indemnities shall constitute a claim (as defined in Section 101 of Title 11 of
the United States Bankruptcy Code) against Relationship Funding unless
Relationship Funding has received cash from the Participation Interest
sufficient to pay such amounts, and such amounts are not necessary to pay
outstanding commercial paper notes or other indebtedness of Relationship
Funding. The agreements set forth in this Section 11.20(b) and the parties'
respective obligations under this Section 11.20(b) shall survive the termination
of this Agreement. (c) Market Street shall not have any obligation to pay any
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amounts owing hereunder unless and until Market Street has received such amounts
pursuant to the Participation Interest and such amounts are not necessary to pay
outstanding commercial paper notes or other outstanding indebtedness of Market
Street. In addition, each party hereto hereby agrees that no liability or
obligation of Market Street hereunder for fees, expenses or indemnities shall
constitute a claim (as defined in Section 101 of Title 11 of the United States
Bankruptcy Code) against Market Street unless Market Street has received cash
from the Participation Interest sufficient to pay such amounts, and such amounts
are not necessary to pay outstanding commercial paper notes or other
indebtedness of Market Street. The agreements set forth in this Section 11.20(c)
and the parties' respective obligations under this Section 11.20(c) shall
survive the termination of this Agreement. For the avoidance of doubt, Section
11.20(b) and (c) are not intended to address and do not address the obligations
of the Buyers to purchase a Participation Interest from TRFCO on the Closing
Date, to make a Reinvestment on any date, or to increase the Aggregate Net
Investment in the Receivables Pool on any Settlement Date. Such obligations are
subject to the other provisions of this Agreement, including but not limited,
Sections 4.02 and 4.03.
11.21. Tax Treatment. It is the intention of the parties
hereto that for the purposes of all taxes, the transactions contemplated hereby
shall be treated as a loan by the Buyers to the Seller secured by the
Receivables (the "Intended Characterization"). Each party hereby agrees that it
will report such transactions for the purposes of all taxes, and otherwise will
act for the purposes of all taxes, in a manner consistent with the Intended
Characterization.
11.22. Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. No party may assign any of its rights or delegate any of its duties
hereunder without the prior written consent of the other parties hereto;
provided that no Buyer shall be prohibited from or require consent for making
any assignment (including a grant of a security interest and permitting
foreclosure thereon) contemplated in or permitted by a Liquidity Agreement or a
Program Support Agreement; provided further, neither Market Street nor
Relationship Funding shall need consent to assign any of its rights or delegate
any of its duties hereunder to an Affiliate.
11.23. Limitation on Signing Authority. Notwithstanding anything to the
contrary contained herein, no party (other than Relationship Funding) shall have
the power or authority to sign any document in the name of Relationship Funding.
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ARTICLE XII
THE AGENTS
----------
12.01. Appointment and Authorization. Each Buyer and Buyer
Agent hereby irrevocably designates and appoints PNC Bank, National Association,
as the "Administrator" hereunder and authorizes the Administrator to take such
actions and to exercise such powers as are delegated to the Administrator hereby
and to exercise such other powers as are reasonably incidental thereto. The
Administrator shall not have any duties other than those expressly set forth
herein or any fiduciary relationship with any Buyer or Buyer Agent, and no
implied obligations or liabilities shall be read into this Agreement, or
otherwise exist, against the Administrator. The Administrator does not assume,
nor shall it be deemed to have assumed, any obligation to, or relationship of
trust or agency with, the Seller, the Company or Servicer. Notwithstanding any
provision of this Agreement or any other Purchase Documents to the contrary, in
no event shall the Administrator ever be required to take any action which
exposes the Administrator to personal liability or which is contrary to the
provision of any Purchase Document or applicable law.
(a) Each Buyer hereby irrevocably designates and appoints the respective
institution identified as the Buyer Agent for such Buyer's on the signature
pages hereto or in an assignment agreement pursuant to which such Buyer becomes
a party hereto, and each authorizes such Buyer Agent to take such action on its
behalf under the provisions of this Agreement and to exercise such powers and
perform such duties as are expressly delegated to such Buyer Agent by the terms
of this Agreement, if any, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement, no Buyer Agent shall have any duties or responsibilities, except
those expressly set forth herein, or any fiduciary relationship with any Buyer
or other Buyer Agent or the Administrator, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities on the part of such Buyer
Agent shall be read into this Agreement or otherwise exist against such Buyer
Agent.
(b) Except as otherwise specifically provided in this Agreement, the
provisions of this Article XII are solely for the benefit of the Buyer Agents,
the Administrator and the Buyers, and none of the Seller, the Company or
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Servicer shall have any rights as a third-party beneficiary or otherwise under
any of the provisions of this Article XII, except that this Article XII shall
not affect any obligations or liability which any Buyer Agent, Fifth Third (in
its individual capacity), the Administrator or any Buyer may have to the Seller,
the Company or the Servicer under the other provisions of this Agreement.
Furthermore, no Buyer shall have any rights as a third-party beneficiary or
otherwise under any of the provisions hereof in respect of a Buyer Agent which
is not the Buyer Agent for such Buyer.
(c) In performing its functions and duties hereunder, the Administrator
shall act solely as the agent of the Buyers and the Buyer Agents and does not
assume nor shall be deemed to have assumed any obligation or relationship of
trust or agency with or for the Seller, the Company, any Originator or Servicer
or any of their successors and assigns. In performing its functions and duties
hereunder, each Buyer Agent shall act solely as the agent of its respective
Buyer and does not assume nor shall be deemed to have assumed any obligation or
relationship of trust or agency with or for the Seller, the Company, any
Originator, the Servicer, any other Buyer, any other Buyer Agent or the
Administrator, or any of their respective successors and assigns.
12.02. Delegation of Duties. The Administrator may execute any
of its duties through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. The
Administrator shall not be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected by it with reasonable care.
12.03. Exculpatory Provisions. None of the Buyer Agents, the
Administrator or any of their respective directors, officers, agents or
employees shall be liable for any action taken or omitted (i) with the consent
or at the direction of the Majority Buyers or (ii) in the absence of such
Person's gross negligence or willful misconduct. The Administrator shall not be
responsible to any Buyer, Buyer Agent or other Person for (i) any recitals,
representations, warranties or other statements made by the Seller, the Company,
the Servicer, any Originator or any of their Affiliates, (ii) the value,
validity, effectiveness, genuineness, enforceability or sufficiency of any
Purchase Document, (iii) any failure of the Seller, the Company, the Servicer,
any Originator or any of their Affiliates to perform any obligation hereunder or
101
under the other Purchase Documents to which it is a party (or under any
Contract), or (iv) the satisfaction of any condition specified in Sections 4.02
or 4.03. The Administrator shall not have any obligation to any Buyer or Buyer
Agent to ascertain or inquire about the observance or performance of any
agreement contained in any Purchase Document or to inspect the properties, books
or records of the Seller, the Company, the Servicer, any Originator or any of
their respective Affiliates.
12.04. Reliance by Agents. Each Buyer Agent and the
Administrator shall in all cases be entitled to rely, and shall be fully
protected in relying, upon any document or other writing or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person and upon advice and statements of legal counsel (including
counsel to the Seller), independent accountants and other experts selected by
the Administrator. Each Buyer Agent and the Administrator shall in all cases be
fully justified in failing or refusing to take any action under any Purchase
Document unless it shall first receive such advice or concurrence of the
Majority Buyers, and assurance of its indemnification, as it deems appropriate.
(a) The Administrator shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement in accordance with a request
of the Majority Buyers or the Buyer Agents, and such request and any action
taken or failure to act pursuant thereto shall be binding upon all Buyers, the
Administrator and Buyer Agents.
(b) A Buyer shall be entitled to request or direct the related Buyer
Agent to take action, or refrain from taking action, under this Agreement on
behalf of such Buyer. Such Buyer Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement in accordance with a
request of such Buyer, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of such Buyer Agent's Buyer.
(c) Unless otherwise advised in writing by a Buyer Agent or by any Buyer
on whose behalf such Buyer Agent is purportedly acting, each party to this
Agreement may assume that (i) such Buyer Agent is acting for the benefit of each
of the Buyer in respect of which such Buyer Agent is identified as being the
"Buyer Agent" in the definition of "Buyer Agent" hereto, as well as for the
102
benefit of each assignee or other transferee from any such Person, and (ii) each
action taken by such Buyer Agent has been duly authorized and approved by all
necessary action on the part of the Buyer on whose behalf it is purportedly
acting. Each Buyer Agent and its Buyer shall agree amongst themselves as to the
circumstances and procedures for removal, resignation and replacement of such
Buyer Agent.
12.05. Notice of Termination Events and Servicer Events.
Neither any Buyer Agent nor the Administrator shall be deemed to have knowledge
or notice of the occurrence of any Termination Event, Potential Termination
Event, Servicer Event or Potential Servicer Event, unless the Administrator has
received notice from any Buyer, Buyer Agent, the Servicer or the Seller stating
that a Termination Event, Potential Termination Event, a Servicer Event or
Potential Servicer Event has occurred hereunder and describing such Termination
Event, Potential Termination Event, Servicer Event or Potential Servicer Event.
In the event that the Administrator receives such a notice, it shall promptly
give notice thereof to each Buyer Agent whereupon each such Buyer Agent shall
promptly give notice thereof to its related Buyer. In the event that a Buyer
Agent receives such a notice (other than from the Administrator), it shall
promptly give notice thereof to the Administrator. The Administrator shall take
such action concerning a Termination Event, a Potential Termination Event, a
Servicer Event or a Potential Servicer Event as may be directed by the Majority
Buyers (unless such action otherwise requires the consent of all Buyers), but
until the Administrator receives such directions, the Administrator may (but
shall not be obligated to) take such action, or refrain from taking such action,
as the Administrator deems advisable and in the best interests of the Buyers and
the Buyer Agents.
12.06. Non-Reliance on Administrator, Buyer Agents and Other
Buyers. Each Buyer expressly acknowledges that none of the Administrator, the
Buyer Agents nor any of their respective officers, directors, employees, agents,
attorneys-in-fact or Affiliates has made any representations or warranties to it
and that no act by the Administrator, or any Buyer Agent hereafter taken,
including any review of the affairs of the Seller, the Company, the Servicer or
any Originator, shall be deemed to constitute any representation or warranty by
the Administrator or such Buyer Agent, as applicable. Each Buyer represents and
warrants to the Administrator and the Buyer Agents that, independently and
without reliance upon the Administrator, Buyer Agents or any other Buyer and
based on such documents and information as it has deemed appropriate, it has
made and will continue to make its own appraisal of and investigation into the
103
business, operations, property, prospects, financial and other conditions and
creditworthiness of the Seller, the Company, the Servicer and the Originators,
and the Receivables and its own decision to enter into this Agreement and to
take, or omit, action under any Purchase Document. Except for items specifically
required to be delivered hereunder, the Administrator shall not have any duty or
responsibility to provide any Buyer Agent with any information concerning the
Seller, the Company, the Servicer or the Originators or any of their Affiliates
that comes into the possession of the Administrator or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
12.07. Administrators and Affiliates. Each of the Buyers, the
Buyer Agents and the Administrator and any of their respective Affiliates may
extend credit to, accept deposits from and generally engage in any kind of
banking, trust, debt, entity or other business with the Seller, the Company, the
Servicer or any Originator or any of their Affiliates. With respect to the
acquisition of the Purchased Receivables pursuant to this Agreement, each of the
Buyer Agents and the Administrator shall have the same rights and powers under
this Agreement as any Buyer and may exercise the same as though it were not such
an agent, and the terms "Buyer" and "Buyers" shall include, to the extent
applicable, each of the Buyer Agents and the Administrator in their individual
capacities.
12.08. Indemnification. Each Buyer (other than Relationship
Funding), and Fifth Third as Relationship Funding's Buyer Agent, shall indemnify
and hold harmless the Administrator (but solely in its capacity as
Administrator) and its officers, directors, employees, representatives and
agents (to the extent not reimbursed by the Seller, the Company, the Servicer or
any Originator and without limiting the obligation of the Seller, the Company,
the Servicer, or any Originator to do so), ratably (based on its Maximum Net
Investment) from and against any and all liabilities, obligations, losses,
damages, penalties, judgments, settlements, costs, expenses and disbursements of
any kind whatsoever (including in connection with any investigative or
threatened proceeding, whether or not the Administrator or such Person shall be
designated a party thereto) that may at any time be imposed on, incurred by or
asserted against the Administrator or such Person as a result of, or related to,
any of the transactions contemplated by the Purchase Documents or the execution,
delivery or performance of the Purchase Documents or any other document
104
furnished in connection therewith (but excluding any such liabilities,
obligations, losses, damages, penalties, judgments, settlements, costs, expenses
or disbursements resulting solely from the gross negligence or willful
misconduct of the Administrator or such Person as finally determined by a court
of competent jurisdiction).
12.09. Successor Administrator. The Administrator may, upon at
least five (5) days' notice to the Seller, each Buyer and Buyer Agent, resign as
Administrator. Such resignation shall not become effective until a successor
Administrator is appointed by the Majority Buyers and has accepted such
appointment. Upon such acceptance of its appointment as Administrator hereunder
by a successor Administrator, such successor Administrator shall succeed to and
become vested with all the rights and duties of the retiring Administrator, and
the retiring Administrator shall be discharged from its duties and obligations
under the Purchase Documents. After any retiring Administrator's resignation
hereunder, the provisions of Sections 11.01 11.03 and 11.04 and this Article XII
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was the Administrator.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto, by their duly authorized
signatories, have executed and delivered this Agreement as of the date first
above written.
MARKET STREET FUNDING LLC,
as a Buyer
By: _________________________________________
Name: _______________________________________
Title:_______________________________________
Address:
c/o AMACAR Group, LLC
6525 Morrison Blvd., Suite 318
Charlotte, NC 28211
Attention: Douglas K. Johnson
Telephone: (704) 365-0569
Facsimile: (704) 365-1362
Maximum Net Investment:
$125,000,000
Buyer Agent:
PNC Bank, National Association
S-1 (Amended and Restated
Receivables Purchase Agreement)
PNC BANK, NATIONAL ASSOCIATION, as
Administrator and a Buyer Agent
By: _________________________________________
Name:________________________________________
Title:_______________________________________
Address:
PNC Bank, National Association
One PNC Plaza
249 Fifth Avenue
Pittsburgh, Pennsylvania 15222-2702
Attention: William Falcon
Telephone: (412) 762-5442
Facsimile: (412) 762-9184
S-2 (Amended and Restated
Receivables Purchase Agreement)
RELATIONSHIP FUNDING COMPANY, LLC,
as a Buyer
By: _________________________________________
Name:________________________________________
Title:_______________________________________
Address:
Relationship Funding Company, LLC
227 West Monroe Street, Suite 4900
Chicago, Illinois 60606
Attention: Operations
Telephone: (312) 977-4560
Facsimile: (312) 977-1967
Maximum Net Investment:
$75,000,000
Buyer Agent:
Fifth Third Bank
S-3 (Amended and Restated
Receivables Purchase Agreement)
FIFTH THIRD BANK,
as a Buyer Agent (and as to
Section 4.08 in its individual
capacity)
By:__________________________________________
Name:________________________________________
Title:_______________________________________
Address:
Fifth Third Bank - Asset
Securitization Group
38 Fountain Square Plaza
MD 109046
Cincinnati, Ohio 45202
Attention: Andrew D. Jones
Telephone: (513) 534-0836
Facsimile: (513) 534-0319
S-4 (Amended and Restated
Receivables Purchase Agreement)
VOLT FUNDING CORP.
By:__________________________________________
Name:________________________________________
Title:_______________________________________
Address:
Volt Funding Corp.
560 Lexington Avenue, 15th Floor
New York, New York 10022
Attention: Chief Financial Officer
Telephone: (212) 704-2450
Facsimile: (212) 704-2470
S-5 (Amended and Restated
Receivables Purchase Agreement)
VOLT INFORMATION SCIENCES, INC.
By:__________________________________________
Name:________________________________________
Title:_______________________________________
Address:
Volt Information Sciences, Inc.
560 Lexington Avenue, 15th Floor
New York, New York 10022
Attention: Chief Financial Officer
Telephone: (212) 704-2400
Facsimile: (212) 704-2417
S-6 (Amended and Restated
Receivables Purchase Agreement)