Exhibit 4(d)
AMENDED AND RESTATED
RECEIVABLES PURCHASE AGREEMENT
dated as of January 16, 2003
among
ROYAL APPLIANCE RECEIVABLES, INC.
ROYAL APPLIANCE MFG. CO.
and
FIFTH THIRD BANK
TABLE OF CONTENTS
Page
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. Purchase Facility .......................................... 2
Section 1.2. Making Purchases ........................................... 2
Section 1.3. Purchased Interest Computation ............................. 3
Section 1.4. Settlement Procedures ...................................... 3
Section 1.5. Fees ....................................................... 6
Section 1.6. Payments and Computations, Etc ............................. 7
Section 1.7. Increased Costs ............................................ 7
Section 1.8. Requirements of Law ........................................ 8
Section 1.9. Inability to Determine Euro-Rate ........................... 9
ARTICLE II
REPRESENTATIONS AND WARRANTIES; COVENANTS; TERMINATION EVENTS
Section 2.1. Representations and Warranties; Covenants .................. 10
Section 2.2. Termination Events ......................................... 10
ARTICLE III
INDEMNIFICATION
Section 3.1. Indemnities by the Seller .................................. 10
Section 3.2. Indemnities by the Servicer ................................ 12
ARTICLE IV
ADMINISTRATION AND COLLECTIONS
Section 4.1. Appointment of the Servicer ................................ 12
Section 4.2. Duties of the Servicer ..................................... 13
Section 4.3. Lock-Box Arrangements ...................................... 14
Section 4.4. Enforcement Rights ......................................... 14
Section 4.5. Responsibilities of the Seller ............................. 15
Section 4.6. Servicing Fee .............................................. 15
ARTICLE V
MISCELLANEOUS
Section 5.1. Amendments, Etc ............................................ 16
Section 5.2. Notices, Etc ............................................... 16
Section 5.3. Assignability .............................................. 16
Section 5.4. Costs, Expenses and Taxes .................................. 17
Section 5.5. No Proceedings; Limitation on Payments ..................... 17
Section 5.6. Confidentiality ............................................ 18
Section 5.7. GOVERNING LAW AND JURISDICTION ............................. 18
Section 5.8. Execution in Counterparts .................................. 19
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TABLE OF CONTENTS
(continued)
Page
Section 5.9. Survival of Termination .................................... 19
Section 5.10. WAIVER OF JURY TRIAL ....................................... 19
Section 5.11. Entire Agreement ........................................... 19
Section 5.12. Headings ................................................... 20
Section 5.13. Issuer's Liabilities ....................................... 20
Section 5.14. Merger Agreement ........................................... 20
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EXHIBIT I ...........................................................Definitions
EXHIBIT II ..............................................Conditions of Purchases
EXHIBIT III ......................................Representations and Warranties
EXHIBIT IV ............................................................Covenants
EXHIBIT V ....................................................Termination Events
EXHIBIT VI .............................Supplemental Perfection Representations,
Warranties and Covenants
SCHEDULE I .........................................Credit and Collection Policy
SCHEDULE II ................................Lock-Box Banks and Lock-Box Accounts
SCHEDULE III ........................................................Trade Names
SCHEDULE 2(f) ............................................Actions or Proceedings
ANNEX A .............................................Form of Information Package
ANNEX B .................................................Form of Purchase Notice
ANNEX C ..................................................Form of Paydown Notice
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This AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT (as amended,
restated, supplemented or otherwise modified from time to time, this
"Agreement") is entered into as of January 16, 2003, among ROYAL APPLIANCE
RECEIVABLES, INC., an Ohio corporation, as seller (the "Seller"), ROYAL
APPLIANCE MFG. CO., an Ohio corporation ("Royal"), as initial servicer (in such
capacity, together with its successors and permitted assigns in such capacity,
the "Servicer"), and FIFTH THIRD BANK ("Fifth Third"), an Ohio banking
corporation, as issuer (in such capacity, together with its successors and
permitted assigns, the "Issuer") and as administrator (in such capacity,
together with its successors and assigns, the "Administrator").
PRELIMINARY STATEMENTS.
1. The Seller, Royal, Market Street Funding Corporation ("MSFC") and PNC
Bank, National Association ("PNC") are parties to that certain Receivables
Purchase Agreement dated as of January 23, 2001 (as heretofore amended,
supplemented or otherwise modified from time to time, the "Original Agreement").
2. Pursuant to that certain Assignment and Assumption Agreement (the
"Assignment") dated as of the date hereof among the Seller, Royal, MSFC, PNC and
Fifth Third, (i) PNC resigned as Administrator under the Original Agreement and
Fifth Third agreed to assume the rights and responsibilities of the
Administrator thereunder and (ii) MSFC has agreed to assign to Fifth Third all
of its right, title and interest in and to the Receivables and the other Pool
Assets, along with all of its rights under the Original Agreement and the other
Transaction Documents, and Fifth Third has agreed to assume all of MSFC's
obligations and agreements thereunder.
3. As a conditio n precedent to Fifth Third's entering into the
Assignment and agreeing to become the Administrator, the parties hereto have
agreed to amend and restate the Original Agreement in its entirety, to be
effective concurrently with the effectiveness of the Assignment.
4. As of the effectiveness of the Assignment, this Agreement amends and
restates in its entirety the Original Agreement. Furthermore, upon the
effectiveness of this Agreement, the terms and provisions of the Original
Agreement shall, subject to this paragraph, be superseded hereby in their
entirety. Notwithstanding the amendment and restatement of the Original
Agreement by this Agreement, the Seller, the Originator and the Servicer shall
continue to be liable to the Administrator or any other Indemnified Party (as
such terms are defined in the Original Agreement) with respect to all unpaid
fees and expenses accrued to the date hereof and owing by them under the
Original Agreement and all agreements executed in connection with the Original
Agreement to indemnify such parties in connection with events or conditions
arising or existing prior to the Closing Date for which such parties have an
indemnification obligation pursuant to the terms of the Original Agreement. Upon
the effectiveness of this Agreement, each reference to the Original Agreement in
any other document, instrument or agreement shall mean and be a reference to
this Agreement.
5. The Seller desires to sell, transfer and assign an undivided variable
percentage interest in a pool of receivables, and the Issuer desires to acquire
such undivided variable percentage interest, as such percentage interest shall
be adjusted from time to time based upon, in part, reinvestment payments that
are made by the Issuer. The Issuer may from time to time sell participations in
such undivided variable percentage interest to one or more commercial paper
conduits.
6. Certain terms that are capitalized and used throughout this Agreement
are defined in EXHIBIT I. References in the Exhibits hereto to the "Agreement"
refer to this Agreement, as amended, restated, supplemented or otherwise
modified from time to time
7. In consideration of the mutual agreements, provisions and covenants
contained herein, the parties hereto agree as follows:
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. PURCHASE FACILITY. (a) On the terms and conditions hereinafter
set forth, the Issuer hereby agrees to purchase, and make reinvestments of,
undivided percentage ownership interests with regard to the Purchased Interest
from the Seller from time to time from the date hereof to the Facility
Termination Date (each such purchase or reinvestment, a "Purchase" or a
"Reinvestment", respectively). Under no circumstances shall the Issuer make any
such Purchase or Reinvestment if, after giving effect to such Purchase or
Reinvestment, the aggregate outstanding Capital of the Purchased Interest would
exceed the Purchase Limit. Under no circumstances shall the Issuer make more
than four Purchases during any one calendar month.
(b) The Seller may, upon at least 60 days' written notice to the
Administrator, terminate the purchase facility provided for in this Section in
whole or, upon at least 30 days' written notice to the Administrator, from time
to time, irrevocably reduce in part the unused portion of the Purchase Limit;
provided, that each partial reduction shall be in the amount of at least
$5,000,000, or an integral multiple of $1,000,000 in excess thereof, and that,
unless terminated in whole, the Purchase Limit shall in no event be reduced
below $20,000,000.
Section 1.2. MAKING PURCHASES. (a) Each Purchase (but not Reinvestment) of
undivided percentage ownership interests with regard to the Purchased Interest
hereunder shall be made upon the Seller's irrevocable written notice in the form
of Annex B (the "PURCHASE NOTICE") delivered to the Administrator in accordance
with SECTION 5.2 (which notice must be received by the Administrator before
11:00 a.m., Cincinnati, Ohio time) at least two Business Days before the
requested purchase date, which notice shall specify: (A) the amount requested to
be paid to the Seller (such amount, which shall not be less than $1,000,000 and
shall be in integral multiples of $100,000, being the Capital relating to the
undivided percentage ownership interest then being purchased), (B) the date of
such Purchase (which shall be a Business Day), and (C) the pro forma calculation
of the Purchased Interest after giving effect to the increase in Capital.
(b) On the date of each Purchase (but not Reinvestment) of undivided
percentage ownership interests with regard to the Purchased Interest hereunder,
the Issuer shall, upon
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satisfaction of the applicable conditions set forth in EXHIBIT II, make
available to the Seller in same day funds, at Fifth Third Bank, account number
00000000, ABA 000-000-000, an amount equal to the Capital relating to the
undivided percentage ownership interest then being purchased.
(c) Effective on the date of each Purchase pursuant to this SECTION 1.2
and each Reinvestment pursuant to SECTION 1.4, the Seller hereby sells and
assigns to the Issuer an undivided percentage ownership interest in: (i) each
Pool Receivable then existing, (ii) all Related Security with respect to such
Pool Receivables, and (iii) all Collections with respect to, and other proceeds
of, such Pool Receivables and Related Security.
(d) To secure all of the Seller's obligations (monetary or otherwise)
under this Agreement and the other Transaction Documents to which it is a party,
whether now or hereafter existing or arising, due or to become due, direct or
indirect, absolute or contingent, the Seller hereby grants to the Issuer a
security interest in all of the Seller's right, title and interest (including
any undivided interest of the Seller) in, to and under all of the following,
whether now or hereafter owned, existing or arising: (i) all Pool Receivables,
(ii) all Related Security with respect to such Pool Receivables, (iii) all
Collections with respect to, and other proceeds of, such Pool Receivables and
Related Security, (iv) the Lock-Box Accounts and all amounts on deposit therein,
and all certificates and instruments, if any, from time to time evidencing such
Lock-Box Accounts and such amounts on deposit therein, (v) all rights (but none
of the obligations) of the Seller under the Purchase and Sale Agreement, and
(vi) all proceeds of, and all amounts received or receivable under any or all
of, the foregoing (collectively, the "POOL ASSETS"). The Issuer shall have, with
respect to the Pool Assets, and in addition to all the other rights and remedies
available to the Issuer, all the rights and remedies of a secured party under
any applicable UCC. In connection with the transfer of the undivided interest
set forth in SECTION 1.2(c) or the grant of the security interest in the Pool
Assets set fo rth in this SECTION 1.2(d), by signing this Agreement in the space
provided, the Seller hereby authorizes the filing by Issuer of all applicable
UCC financing statements and amendments in all jurisdictions necessary to
perfect the security interest contemp lated hereby.
Section 1.3. Purchased Interest Computation. The Purchased Interest shall
be initially computed on the date of the initial Purchase hereunder. Thereafter,
until the Facility Termination Date, the Purchased Interest shall be
automatically recomputed (or deemed to be recomputed) on each Business Day other
than a Termination Day. From and after the occurrence of any Termination Day,
the Purchased Interest shall (until the event(s) giving rise to such Termination
Day are satisfied or are waived by the Administrator) be deemed to be 100%. The
Purchased Interest shall become zero when the Capital thereof and Discount
thereon shall have been paid in full, all the amounts owed by the Seller and the
Servicer hereunder to the Issuer, the Administrator and any othe r Indemnified
Party or Affected Person are paid in full, and the Servicer shall have received
the accrued Servicing Fee thereon.
Section 1.4. Settlement Procedures. (a) The collection of the Pool
Receivables shall be administered by the Servicer in accordance with this
Agreement. The Seller shall provide to the Servicer on a timely basis all
information needed for such administration, including notice of the occurrence
of any Termination Day and current computations of the Purchased Interest.
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(b) The Servicer shall, on each day on which Collections of Pool Receivables
are received (or deemed received) by the Seller or the Servicer:
(i) set aside and hold in trust (and shall, at the request of
the Administrator, segregate in a separate account approved by the
Administrator) for the Issuer, out of the Issuer's Share of such
Collections, first, an amount equal to the Discount accrued through such
day for each Portion of Capital and not previously set aside, second, an
amount equal to the fees set forth in the Fee Letter accrued and unpaid
through such day, and third, to the extent funds are available therefor, an
amount equal to the Issuer's Share of the Servicing Fee accrued through
such day and not previously set aside,
(ii) subject to SECTION 1.4(f), if such day is not a Termination
Day, remit to the Seller, on behalf of the Issuer, the remainder of the
Issuer's Share of such Collections. Such remainder shall be automatically
reinvested in Pool Receivables, and in the Related Security, Collections
and other proceeds with respect thereto; provided, however, that if the
Purchased Interest would exceed 100%, then the Servicer shall not reinvest,
but shall set aside and hold in trust for the Issuer (and shall, at the
request of the Administrator, segregate in a separate account approved by
the Administrator) a portion of such Collections that, together with the
other Collections set aside pursuant to this paragraph, shall equal the
amount necessary to reduce the Purchased Interest to 100%,
(iii) if such day is a Termination Day, set aside, segregate and
hold in trust (and shall, at the request of the Administrator, segregate in
a separate account approved by the Administrator) for the Issuer the entire
remainder of the Issuer's Share of the Collections; provided, that if
amounts are set aside and held in trust on any Termination Day of the type
described in clause (a) of the definition of "Termination Day" and,
thereafter, the conditions set forth in SECTION 2 of EXHIBIT II are
satisfied or waived by the Administrator, such previously set-aside amounts
shall be reinvested in accordance with clause (ii) on the day of such
subsequent satisfaction or waiver of conditions, and
(iv) release to the Seller (subject to SECTION 1.4(f) ) for its
own account any Collections in excess of: (x) amounts required to be
reinvested in accordance with CLAUSE (ii) or the proviso to CLAUSE (iii)
plus (y) the amounts that are required to be set aside pursuant to CLAUSE
(i), the proviso to CLAUSE (ii) and CLAUSE (iii) plus (z) the Seller's
Share of the Servicing Fee accrued and unpaid through such day and all
reasonable and appropriate out-of-pocket costs and expenses of the Servicer
for servicing, collecting and administering the Pool Receivables.
(c) The Servicer shall deposit into the Administration Account (or such
other account designated by the Administrator), on each Settlement Date,
Collections held for the Issuer pursuant to CLAUSE (b)(i) or (f) plus the amount
of Collections then held for the Issuer pursuant to CLAUSES (b)(ii) and (iii) of
Section 1.4; provided, that if Royal or an Affiliate thereof is the Servicer,
such day is not a Termination Day and the Administrator has not notified Royal
(or such Affiliate) that such right is revoked, Royal (or such Affiliate) may
retain the portion of the Collections set aside pursuant to CLAUSE (b)(i) that
represents the Issuer's Share of the Servicing Fee. On the last day of each
Settlement Period, the Administrator will notify the Servicer by
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facsimile of the amount of Discount accrued with respect to each Portion of
Capital during such Settlement Period or portion thereof.
(d) Upon receipt of funds deposited into the Administration Account
pursuant to CLAUSE (c), the Administrator shall cause such funds to be
distributed as follows:
(i) if such distribution occurs on a day that is not a Termination
Day and the Purchased Interest does not exceed 100%, first to the Issuer in
payment in full of all accrued Discount and fees (other than Servicing Fees)
with respect to each Portion of Capital, and second, if the Servicer has set
aside amounts in respect of the Servicing Fee pursuant to CLAUSE (b)(i) and has
not retained such amounts pursuant to CLAUSE (c), to the Servicer (payable in
arrears on each Settlement Date) in payment in full of the Issuer's Share of
accrued Servicing Fees so set aside, and
(ii) if such distribution occurs on a Termination Day or on a day when
the Purchased Interest exceeds 100%, first to the Issuer in payment in full of
all accrued Discount with respect to each Portion of Capital, second to the
Issuer in payment in full of Capital (or, if such day is not a Termination Day,
the amount necessary to reduce the Purchased Interest to 100%), third, to the
Servicer in payment in full of all accrued Servicing Fees, and fourth, if the
Capital and accrued Discount with respect to each Portion of Capital have been
reduced to zero, and all accrued Servicing Fees payable to the Servicer have
been paid in full, to the Issuer, the Administrator and any other Indemnified
Party or Affected Person in payment in full of any other amounts owed thereto by
the Seller hereunder.
After the Capital, Discount, fees payable pursuant to the Fee Letter and
Servicing Fees with respect to the Purchased Interest, and any other amounts
payable by the Seller and the Servicer to the Issuer, the Administrator or any
other Indemnified Party or Affected Person hereunder, have been paid in full,
all additional Collections with respect to the Purchased Interest shall be paid
to the Seller for its own account.
(e) For the purposes of this SECTION 1.4:
(i) if on any day the Outstanding Balance of any Pool Receivable is
reduced or adjusted as a result of any defective, rejected, returned,
repossessed or foreclosed goods or services, or any revision, cancellation,
allowance, rebate, discount or other adjustment made by the Seller or any
Affiliate of the Seller, or any setoff or dispute between the Seller or any
Affiliate of the Seller and an Obligor, the Seller shall be deemed to have
received on such day a Collection of such Pool Receivable in the amount of
such reduc tion or adjustment;
(ii) if on any day any of the representations or warranties in SECTION
1(g) or (n) of EXHIBIT III or SECTION 2, 3 or 4 of EXHIBIT VI is not true
with respect to any Pool Receivable, the Seller shall be deemed to have
received on such day a Collection of such Pool Receivable in full;
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(iii) except as provided in CLAUSE (i) or (ii), or as otherwise
required by applicable law or the relevant Contract, all Collections
received from an Obligor of any Receivable shall be applied to the
Receivables of such Obligor in the order of the age of such Receivables,
starting with the oldest such Receivable, unless such Obligor designates in
writing its payment for application to specific Receivables; and
(iv) if and to the extent the Administrator or the Issuer shall be
required for any reason to pay over to an Obligor (or any trustee,
receiver, custodian or similar official in any Insolvency Proceeding) any
amount received by it hereunder, such amount shall be deemed not to have
been so received by the Administrator or the Issuer but rather to have been
retained by the Seller and, accordingly, the Administrator or the Issuer,
as the case may be, shall have a claim against the Seller for such amount,
payable when and to the extent that any distribution from or on behalf of
such Obligor is made in respect thereof.
(f) If at any time the Seller shall wish to cause the reduction of Capital
(but not to commence the liquidation, or reduction to zero, of the entire
Capital of the Purchased Interest), the Seller may do so as follows:
(i) the Seller shall give the Administrator and the Servicer written
notice in the form of Annex C (A) at least two Business Days' prior to the
date of such reduction for any reduction of Capital less than or equal to
$10,000,000 and (B) at least ten Business Days' prior to the date of such
reduction for any reduction of Capital greater than $10,000,000 (in each
case such notice shall include the amount of such proposed reduction and
the proposed date on which such reduction will commence);
(ii) on the proposed date of the commencement of such reduction and on
each day thereafter, the Servicer shall cause Collections not to be
reinvested until the amount thereof not so reinvested shall equal the
desired amount of reduction; and
(iii) the Servicer shall hold such Collectio ns in trust for the
Issuer, for payment to the Administrator on (1) the next Settlement Date
immediately following the current Settlement Period or (2) such other date
approved by the Administrator with at least five Business Days prior
written notice to the Administrator of such payment, and Capital shall be
deemed reduced in the amount to be paid to the Administrator only when in
fact finally so paid;
PROVIDED, that (a) the amount of any such reduction shall be not less than
$1,000,000 and shall be an integral multiple of $100,000, and the entire Capital
of the Purchased Interest after giving effect to such reduction shall be not
less than $10,000,000 and shall be in an integral multiple of $100,000 (unless
the entire Capital shall have been reduced to zero) and (b) the Seller shall
choose a reduction amount, and the date of commencement thereof, so that to the
extent practicable such reduction shall commence and conclude in the same
Settlement Period.
Section 1.5. FEES. The Seller shall pay to the Administrator certain fees
in the amounts and on the dates set forth in a letter, dated the date hereof,
among Royal, the Seller and the Administrator (as such letter agreement may be
amended, supplemented or otherwise modified from time to time, the "Fee
Letter").
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Section 1.6. PAYMENTS AND COMPUTATIONS, ETC. (a) All amounts to be paid or
deposited by the Seller or the Servicer hereunder shall be made without
reduction for offset or counterclaim and shall be paid or deposited no later
than noon (Cincinnati, Ohio time) on the day when due in same day funds to the
Administration Account. All amounts received after noon (Cincinnati, Ohio time)
will be deemed to have been received on the next Business Day.
(b) The Seller or the Servicer, as the case may be, shall, to the extent
permitted by law, pay interest on any amount not paid or deposited by the Seller
or the Servicer, as the case may be, when due hereunder, at an interest rate
equal to 2.0% per annum above the Base Rate, payable on demand; PROVIDED,
HOWEVER, that such rate shall not at any time exceed the maximum rate permitted
by applicable law.
(c) All computations of interest under CLAUSE (b) and all computations of
Discount, fees and other amounts hereunder shall be made on the basis of a year
of 360 (or 365 or 366, as applicable, with respect to Discount or other amounts
calculated by reference to the Base Rate) days for the actual number of days
elapsed. Whenever any payment or deposit to be made hereunder shall be due on a
day other than a Business Day, such payment or deposit shall be made on the next
Business Day and such extension of time shall be included in the computation of
such payment or deposit.
Section 1.7. INCREASED COSTS. (a) If the Administrator, the Issuer, any
Purchaser, any other Program Support Provider or any of their respective
Affiliates (each an "Affected Person") reasonably determines that the existence
of or compliance with: (i) any law or regulation or any change therein or in the
interpretation or application thereof, in each case adopted, issued or occurring
after the date hereof, or (ii) any request, guideline or directive from any
central bank or other Governmental Authority (whether or not having the force of
law) issued or occurring after the date of this Agreement, affects or would
affect the amount of capital required or expected to be maintained by such
Affected Person, and such Affected Person determines that the amount of such
capital is increased by or based upon the existence of any commitment to make
Purchases of (or otherwise to maintain the investment in) Pool Receivables
related to this Agreement or any related liquidity facility, credit enhancement
facility and other commitments of the same type, then, upon demand by such
Affected Person (with a copy to the Administrator), the Seller shall promptly
pay to the Administrator, for the account of such Affected Person, from time to
time as specified by such Affected Person, additional amounts sufficient to
compensate such Affected Person in the light of such circumstances, to the
extent that such Affected Person reasonably determines such increase in capital
to be allocable to the existence of any of such commitments. A certificate as to
such amounts submitted to the Seller and the Administrator by such Affected
Person shall be conclusive and binding for all purposes, absent manifest error.
(b) If, due to either: (i) the introduction of or any change in or in the
interpretation of any law or regulation or (ii) compliance with any guideline or
request from any central bank or other Governmental Authority (whether or not
having the force of law), there shall be any increase in the cost to any
Affected Person of agreeing to purchase or purchasing, or maintaining the
ownership of, the Purchased Interest in respect of which Discount is computed by
reference to the Euro-Rate, then, upon demand by such Affected Person, the
Seller shall promptly pay to such Affected Person, from time to time as
specified by such Affected Person, additional
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amounts sufficient to compensate such Affected Person for such increased costs.
A certificate as to such amounts submitted to the Seller and the Administrator
by such Affected Person shall be conclusive and binding for all purposes, absent
manifest error.
(c) If such increased costs affect the related Affected Person's portfolio
of financing transactions, such Affected Person shall use reasonable averaging
and attribution methods to allocate such increased costs to the transactions
contemplated by this Agreement.
(d) Each Affected Person will notify Seller and the Administrator promptly
after it has received official notice of any event which will entitle such
Affected Person to such additional amounts as compensation pursuant to this
SECTION 1.7. Such additional amounts shall accrue from the date as to which such
Affected Person becomes subject to such additional costs as a result of such
event (or if such notice of such event is not given to Seller by such Affected
Person within 90 days after such Affected Person received such official notice
of such event, from the date which is 90 days prior to the date such notice is
given to Seller by such Affected Person).
Section 1.8. REQUIREMENTS OF LAW. If any Affected Person reasonably
determines that the existence of or compliance with: (a) any law or regulation
or any change therein or in the interpretation or application thereof, in each
case adopted, issued or occurring after the date hereof, or (b) any request,
guideline or directive from any central bank or other Governmental Authority
(whether or not having the force of law) issued or occurring after the date of
this Agreement:
(a) does or shall subject such Affected Person to any tax of any kind
whatsoever with respect to this Agreement, any increase in the Purchased
Interest or in the amount of Capital relating thereto, or does or shall change
the basis of taxation of payments to such Affected Person on account of
Collections, Discount or any other amounts payable hereunder (excluding taxes
imposed on the overall pre-tax net income of such Affected Person, and franchise
taxes imposed on such Affected Person, by the jurisdiction under the laws of
which such Affected Person is organized or a political subdivision thereof),
(b) does or shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by, or
deposits or other liabilities in or for the account of, purchases, advances or
loans by, or other credit extended by, or any other acquisition of funds by, any
office of such Affected Person that are not otherwise included in the
determination of the Euro-Rate or the Base Rate hereunder, or
(c) does or shall impose on such Affected Person any other condition, and
the result of any of the foregoing is: (A) to increase the cost to such Affected
Person of acting as Administrator, or of agreeing to purchase or purchasing or
maintaining the ownership of undivided percentage ownership interests with
regard to the Purchased Interest (or interests therein) or any Portion of
Capital, or (B) to reduce any amount receivable hereunder (whether directly or
indirectly), then, in any such case, upon demand by such Affected Person, the
Seller shall promptly pay to such Affected Person additional amounts necessary
to compensate such Affected Person for such additional cost or reduced amount
receivable. All such amounts shall
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be payable as incurred. A certificate from such Affected Person to the Seller
and the Administrator certifying, in reasonably specific detail, the basis for,
calculation of, and amount of such additional costs or reduced amount receivable
shall be conclusive and binding for all purposes, absent manifest error;
provided, however, that no Affected Person shall be required to disclose any
confidential or tax planning information in any such certificate.
Each Affected Person will notify Seller and the Administrator promptly
after it has received official notice of any event which will entitle such
Affected Person to such additional amounts as compensation pursuant to this
SECTION 1.8. Such additional amounts shall accrue from the date as to which such
Affected Person becomes subject to such additional costs as a result of such
event (or if such notice of such event is not given to Seller by such Affected
Person within 90 days after such Affected Person received such official notice
of such event, from the date which is 90 days prior to the date such notice is
given to Seller by such Affected Person).
Section 1.9. INABILITY TO DETERMINE EURO-RATE. (a) If the Administrator
determines before the first day of any Settlement Period (which determination
shall be final and conclusive) that, by reason of circumstances affecting the
interbank eurodollar market generally, deposits in dollars (in the relevant
amounts for such Settlement Period) are not being offered to banks in the
interbank eurodollar market for such Settlement Period, or adequate means do not
exist for ascertaining the Euro-Rate for such Settlement Period, then the
Administrator shall give notice thereof to the Seller. Thereafter, until the
Administrator notifies the Seller that the circumstances giving rise to such
suspension no longer exist, (i) no Portion of Capital shall be funded at the
Alternate Rate determined by reference to the Euro-Rate and (ii) the Discount
for any outstanding Portions of Capital then funded at the Alternate Rate
determined by reference to the Euro-Rate shall, on the last day of the then
current Settlement Period, be converted to the Alternate Rate determined by
reference to the Base Rate.
(b) If, on or before the first day of any Settlement Period, the
Administrator shall have been notified by any Purchaser that, such Purchaser has
determined (which determination shall be final and conclusive) that, any
enactment, promulgation or adoption of or any change in any applicable law, rule
or regulation, or any change in the interpretation or administration thereof by
a Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such Purchaser with
any guideline, request or directive (whether or not having the force of law) of
any such authority, central bank or comparable agency shall make it unlawful or
impossible for such Purchaser to fund or maintain any Portion of Capital at the
Alternate Rate and based upon the Euro-Rate, the Administrator shall notify the
Seller thereof. Upon receipt of such notice, until the Administrator notifies
the Seller that the circumstances giving rise to such determination no longer
apply, (i) no Portion of Capital shall be funded at the Alternate Rate
determined by reference to the Euro-Rate and (ii) the Discount for any
outstanding Portions of Capital then funded at the Alternate Rate determined by
reference to the Euro-Rate shall be converted to the Alternate Rate determined
by reference to the Base Rate either (A) on the last day of the then current
Settlement Period if such Purchaser may lawfully continue to maintain such
Portion of Capital at the Alternate Rate determined by reference to the
Euro-Rate to such day, or (B) immediately, if such Purchaser may
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not lawfully continue to maintain such Portion of Capital at the Alternate Rate
determined by reference to the Euro-Rate to such day.
ARTICLE II
REPRESENTATIONS AND WARRANTIES; COVENANTS;
TERMINATION EVENTS
Section 2.1. REPRESENTATIONS AND WARRANTIES; COVENANTS. Each of the Seller,
Royal and the Servicer hereby makes the representations and warranties, and
hereby agrees to perform and observe the covenants applicable to it set forth in
EXHIBITS III, IV, and VI.
Section 2.2. TERMINATION EVENTS. If any of the Termination Events set forth
in EXHIBIT V shall occur, the Administrator may, by notice to the Seller,
declare the Facility Termination Date to have occurred (in which case the
Facility Termination Date shall be deemed to have occurred); provided, that
automatically upon the occurrence of any event (without any requirement for the
passage of time or the giving of notice) described in paragraph (f) of EXHIBIT
V, the Facility Termination Date shall occur. Upon any such declaration,
occurrence or deemed occurrence of the Facility Termination Date, the Issuer and
the Administrator shall have, in addition to the rights and remedies that they
may have under this Agreement, all other rights and remedies provided after
default under the New York UCC and under other applicable law, which rights and
remedies shall be cumulative.
ARTICLE III
INDEMNIFICATION
Section 3.1. INDEMNITIES BY THE SELLER. Without limiting any other rights
that the Administrator, the Issuer, any Program Support Provider or any of their
respective Affiliates, employees, officers, directors, agents, counsel,
successors, transferees or assigns (each, an "Indemnified Party") may have
hereunder or under applicable law, the Seller hereby agrees to indemnify each
Indemnified Party from and against any and all claims, damages, expenses, costs,
losses and liabilities (including Attorney Costs) (all of the foregoing being
collectively referred to as "Indemnified Amounts") arising out of or resulting
from this Agreement (whether directly or indirectly), the use of proceeds of
Purchases or Reinvestments, the ownership of the Purchased Interest, or any
interest therein, or in respect of any Receivable, Related Security or Contract,
excluding, however: (a) Indemnified Amounts to the extent resulting from gross
negligence or willful misconduct on the part of such Indemnified Party or its
officers, directors, agents or counsel, (b) recourse (except as otherwise
specifically provided in this Agreement) for Receivables, or (c) any overall net
income taxes or franchise taxes imposed on such Indemnified Party by the
jurisdiction under the laws of which such Indemnified Party is organized or any
political subdivision thereof. Without limiting or being limited by the
foregoing, and subject to the exclusions set forth in the preceding sentence,
the Seller shall pay on demand (which demand shall be accompanied by
documentation of the Indemnified Amounts, in reasonable detail) 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:
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(i) the failure of any Receivable included in the calculation of the Net
Receivables Pool Balance as an Eligible Receivable to be an Eligible Receivable,
the failure of any information contained in an Information Package to be true
and correct, or the failure of any other information provided to the Issuer or
the Administrator with respect to Receivables or this Agreement to be true and
correct,
(ii) the failure of any representation, warranty or statement made or
deemed made by the Seller (or any of its officers) under or in connection with
this Agreement to have been true and correct as of the date made or deemed made
in all respects when made,
(iii) the failure by the Seller to comply with any applicable law, rule or
regulation with respect to any Pool Receivable or the related Contract, or the
failure of any Pool Receivable or the related Contract to conform to any such
applicable law, rule or regulation,
(iv) the failure to vest in the Issuer a valid and enforceable: (A)
perfected undivided percentage ownership interest, to the extent of the
Purchased Interest, in the Receivables in, or purporting to be in, the
Receivables Pool and the other Pool Assets, or (B) first priority perfected
security interest in the Pool Assets, in each case, free and clear of any
Adverse Claim,
(v) the failure to have filed, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to any Receivables
in, or purporting to be in, the Receivables Pool and the other Pool Assets,
whether at the time of any Purchase or Reinvestment or at any subsequent time,
(vi) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of the Obligor to the payment of any Receivable in,
or purporting to be in, the Receivables Pool (including a defense based on such
Receivable or the related Contract not being a legal, valid and binding
obligation of such Obligor enforceable against it in accordance with its terms),
or any other claim resulting from the sale of the goods or services related to
such Receivable or the furnishing or failure to furnish such goods or services
or relating to collection activities with respect to such Receivable,
(vii) any failure of the Seller, any Affiliate of the Seller or the
Servicer to perform its duties or obligations in accordance with the provisions
hereof or under the Contracts,
(viii) any products liability or other claim, investigation, litigation or
proceeding arising out of or in connection with merchandise, insurance or
services that are the subject of any Contract,
(ix) the commingling of Collections at any time with other funds,
(x) the use of proceeds of Purchases or Reinvestments, or
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(xi) any reduction in Capital as a result of the distribution of
Collections pursuant to SECTION 1.4(d), if all or a portion of such
distributions shall thereafter be rescinded or otherwise must be returned for
any reason.
Section 3.2. INDEMNITIES BY THE SERVICER. Without limiting any other rights
that the Administrator, the Issuer or any othe r Indemnified Party may have
hereunder or under applicable law, the Servicer hereby agrees to indemnify each
Indemnified Party from and against any and all Indemnified Amounts arising out
of or resulting from (whether directly or indirectly): (a) the failure of any
information contained in an Information Package to be true and correct, or the
failure of any other information provided to the Issuer or the Administrator by,
or on behalf of, the Servicer to be true and correct, (b) the failure of any
representation, warranty or statement made or deemed made by the Servicer (or
any of its officers) under or in connection with this Agreement to have been
true and correct as of the date made or deemed made in all respects when made,
(c) the failure by the Servicer to comply with any applicable law, rule or
regulation with respect to any Pool Receivable or the related Contract, (d) any
dispute, claim, offset or defense of the Obligor to the payment of any
Receivable in, or purporting to be in, the Receivables Pool resulting from or
related to the collection activities with respect to such Receivable, (e) any
failure of the Servicer to perform its duties or obligations in accordance with
the provisions hereof or any other Transaction Document to which it is a party,
(f) the failure to have filed, or any delay in filing, financing statements or
other similar instruments or documents under the UCC of any applicable
jurisdiction or other applicable laws with respect to any Receivables in, or
purporting to be in, the Receivables Pool and any other Pool Assets, whether at
the time of any Purchase or Reinvestment or at any subsequent time, or (g) any
commingling by the Servicer of Collections at any time with other funds.
ARTICLE IV
ADMINISTRATION AND COLLECTIONS
Section 4.1. APPOINTMENT OF THE SERVICER. (a) The servicing, administering
and collection of the Pool Receivables shall be conducted by the Person so
designated from time to time as the Servicer in accordance with this Section.
Until the Administrator gives notice to Royal (in accordance with this Section)
of the designation of a new Servicer, Royal is hereby designated as, and hereby
agrees to perform the duties and obligations of, the Servicer pursuant to the
terms hereof. Upon the occurrence of a Termination Event, the Administrator may
designate as Servicer any Person (including itself) to succeed Royal or any
successor Servicer, on the condition in each case that any such Person so
designated shall agree to perform the duties and obligations of the Servicer
pursuant to the terms hereof.
(b) Upon the designation of a successor Servicer as set forth in CLAUSE
(a), Royal agrees that it will terminate its activities as Servicer hereunder in
a manner that the Administrator determines will facilitate the transition of the
performance of such activities to the new Servicer, and Royal shall cooperate
with and assist such new Servicer. Such cooperation shall include access to and
transfer of related records and use by the new Servicer of all licenses,
hardware or software necessary or desirable to collect the Pool Receivables and
the Related Security.
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(c) Royal acknowledges that, in making their decision to execute and
deliver this Agreement, the Administrator and the Issuer have relied on Royal's
agreement to act as Servicer hereunder. Accordingly, Royal agrees that it will
not voluntarily resign as Servicer.
(d) The Servicer may delegate its duties and obligations hereunder to any
subservicer (each a "Sub-Servicer"); PROVIDED, that, in each such delegation:
(i) such Sub-Servicer shall agree in writing to perform the duties and
obligations of the Servicer pursuant to the terms hereof, (ii) the Servicer
shall remain primarily liable for the performance of the duties and obligations
so delegated, (iii) the Seller, the Administrator and the Issuer shall have the
right to look solely to the Servicer for performance, and (iv) the terms of any
agreement with any Sub-Servicer shall provide that the Administrator may
terminate such agreement upon the termination of the Servicer hereunder by
giving notice of its desire to terminate such agreement to the Servicer (and the
Servicer shall provide appropriate notice to each such Sub-Servicer); PROVIDED,
HOWEVER, that if any such delegation is to any Person other than the Originator,
the Administrator shall have consented in writing in advance to such delegation.
Section 4.2. DUTIES OF THE SERVICER. (a) The Servicer shall take or cause
to be taken all such action as may be necessary or advisable to administer and
collect each Pool Receivable from time to time, all in accordance with this
Agreement and all applicable laws, rules and regulations, with reasonable care
and diligence, and in accordance with the Credit and Collection Policies. The
Servicer shall set aside, for the accounts of the Seller and the Issuer, the
amount of the Collections to which each is entitled in accordance with ARTICLE
I. The Servicer may, in accordance with the applicable Credit and Collection
Policy, extend the maturity of any Pool Receivable and extend the maturity or
adjust the Outstanding Balance of any Defaulted Receivable as the Servicer may
determine to be appropriate to maximize Collections thereof; PROVIDED, HOWEVER,
that: for the purposes of this Agreement, (i) such extension shall not change
the number of days such Pool Receivable has remained unpaid from the date of the
original due date related to such Pool Receivable, (ii) such extension or
adjustment shall not alter the status of such Pool Receivable as a Delinquent
Receivable or a Defaulted Receivable or limit the rights of the Issuer or the
Administrator under this Agreement and (iii) if a Termination Event has occurred
and Royal or an Affiliate thereof is serving as the Servicer, Royal or such
Affiliate may make such extension or adjustment only upon the prior approval of
the Administrator. The Seller shall deliver to the Servicer and the Servicer
shall hold for the benefit of the Seller and the Administrator (individually and
for the benefit of the Issuer), in accordance with their respective interests,
all records and documents (including computer tapes or disks) with respect to
each Pool Receivable. Notwithstanding anything to the contrary contained herein,
the Administrator may direct the Servicer (whether the Servicer is Royal or any
other Person) to commence or settle any legal action to enforce collection of
any Pool Receivable or to foreclose upon or repossess any Related Security.
(b) The Servicer shall, as soon as practicable following actual receipt of
collected funds, turn over to the Seller the collections of any indebtedness
that is not a Pool Receivable, less, if Royal or an Affiliate thereof is not the
Servicer, all reasonable and appropriate out-of-pocket costs and expenses of
such Servicer of servicing, collecting and administering such collections. The
Servicer, if other than Royal or an Affiliate thereof, shall, as soon as
practicable upon demand, deliver to the Seller all records in its possession
that evidence or relate to any
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indebtedness that is not a Pool Receivable, and copies of records in its
possession that evidence or relate to any indebtedness that is a Pool
Receivable.
(c) The Servicer's obligations hereunder shall terminate on the later of:
(i) the Facility Termination Date and (ii) the date on which all amounts
required to be paid to the Issuer, the Administrator and any other Indemnified
Party or Affected Person hereunder shall have been paid in full.
After such termination, if Royal or an Affiliate thereof was not the
Servicer on the date of such termination, the Servicer shall promptly deliver to
the Seller all books, records and related materials that the Seller previously
provided to the Servicer, or that have been obtained by the Servicer, in
connection with this Agreement.
Section 4.3. LOCK-BOX ARRANGEMENTS. Prior to the initial Purchase
hereunder, the Seller shall enter into Lock-Box Agreements with all of the
Lock-Box Banks and deliver original counterparts thereof to the Administrator.
Upon the occurrence of a Termination Event, the Administrator may at any time
thereafter give notice to each Lock-Box Bank that the Administrator is
exercising its rights under the Lock-Box Agreements to do any or all of the
following: (a) to have the exclusive ownership and control of the Lock-Box
Accounts transferred to the Administrator and to exercise exclusive dominion and
control over the funds deposited therein, (b) to have the proceeds that are sent
to the respective Lock-Box Accounts redirected pursuant to the Administrator's
instructions rather than deposited in the applicable Lock-Box Account, and (c)
to take any or all other actions permitted under the applicable Lock-Box
Agreement. The Seller hereby agrees that if the Administrator at any time takes
any action set forth in the preceding sentence, the Administrator shall have
exclusive control of the proceeds (includ ing Collections) of all Pool
Receivables and the Seller hereby further agrees to take any other action that
the Administrator may reasonably request to transfer such control. Any proceeds
of Pool Receivables received by the Seller or the Servicer thereafter shall be
sent immediately to the Administrator. The parties hereto hereby acknowledge
that if at any time the Administrator takes control of any Lock-Box Account, the
Administrator shall not have any rights to the funds therein in excess of the
unpaid amounts due to the Administrator, the Issuer or any other Person
hereunder, and the Administrator shall distribute or cause to be distributed
such funds in accordance with SECTION 4.2(b) and ARTICLE I (in each case as if
such funds were held by the Servicer thereunder).
Section 4.4. ENFORCEMENT RIGHTS. (a) At any time following the occurrence
of a Termination Event:
(i) the Administrator may direct the Obligors that payment of all
amounts payable under any Pool Receivable is to be made directly to the
Administrator or its designee,
(ii) the Administrator may instruct the Seller or the Servicer to give
notice of the Issuer's interest in Pool Receivables to each Obligor, which
notice shall direct that payments be made directly to the Administrator or
its designee, and the Seller or the Servicer, as the case may be, shall
give such notice at the expense of the Seller or the
14
Servicer, as the case may be; PROVIDED, that if the Seller or the Servicer,
as the case may be, fails to so notify each Obligor, the Administrator (at
the Seller's or the Servicer's, as the case may be, expense) may so notify
the Obligors, and
(iii) the Administrator may request the Servicer to, and upon such
request the Servicer shall: (A) assemble all of the records necessary or
desirable to collect the Pool Receivables and the Related Security, and
transfer or license to a successor Servicer the use of all software
necessary or desirable to collect the Pool Receivables and the Related
Security, and make the same available to the Administrator or its designee
at a place selected by the Administrator, and (B) segregate all cash,
checks and other instruments received by it from time to time constituting
Collections in a manner acceptable to the Administrator and, promptly upon
receipt, remit all such cash, che cks and instruments, duly endorsed or
with duly executed instruments of transfer, to the Administrator or its
designee.
(b) The Seller hereby authorizes the Administrator, and irrevocably
appoints the Administrator as its attorney-in-fact with full power of
substitution and with full authority in the place and stead of the Seller, which
appointment is coupled with an interest, to take any and all steps in the name
of the Seller and on behalf of the Seller necessary or desirable, in the
determination of the Administrator, to collect any and all amounts or portions
thereof due under any and all Pool Assets, including endorsing the name of the
Seller on checks and other instruments representing Collections and enforcing
such Pool Assets. Notwithstanding anything to the contrary contained in this
subsection, none of the powers conferred upon such attorney- in-fact pursuant to
the preceding sentence shall subject such attorney- in- fact to any liability if
any action taken by it shall prove to be inadequate or invalid, nor shall they
confer any obligations upon such attorney- in-fact in any manner whatsoever.
Section 4.5. RESPONSIBILITIES OF THE SELLER. (a) Anything herein to the
contrary notwithstanding, the Seller shall: (i) perform all of its obligations,
if any, under the Contracts related to the Pool Receivables to the same extent
as if interests in such Pool Receivables had not been transferred hereunder, and
the exercise by the Administrator or the Issuer of their respective rights
hereunder shall not relieve the Seller from such obligations, and (ii) pay when
due any taxes, including any sales taxes payable in connection with the Pool
Receivables and their creation and satisfaction. The Administrator and the
Issuer shall not have any obligation or liability with respect to any Pool
Asset, nor shall either of them be obligated to perform any of the obligations
of the Seller, Royal or the Originator thereunder.
(b) Royal hereby irrevocably agrees that if at any time it shall cease to
be the Servicer hereunder, it shall act (if the then-current Servicer so
requests) as the data-processing agent of the Servicer and, in such capacity,
Royal shall conduct the data-processing functions of the administration of the
Receivables and the Collections thereon in substantially the same way that Royal
conducted such data-processing functions while it acted as the Servicer.
Section 4.6. SERVICING FEE. (a) Subject to CLAUSE (b), the Servicer shall
be paid a fee equal to .50% PER ANNUM (the "Servicing Fee Rate") of the daily
average aggregate Outstanding Balance of the Pool Receivables. The Issuer's
Share of such fee shall be paid through the
15
distributions contemplated by SECTION 1.4(d), and the Seller's Share of such fee
shall be paid by the Seller on each Settlement Date.
(b) If the Servicer ceases to be Royal or an Affiliate thereof, the
servicing fee shall be the greater of: (i) the amount calculated pursuant to
CLAUSE (a), and (ii) an alternative amount specified by the successor Servicer
not to exceed 110% of the aggregate reasonable costs and expenses incurred by
such successor Servicer in connection with the performance of its obligations as
Servicer.
ARTICLE V
MISCELLANEOUS
Section 5.1. AMENDMENTS, ETC. No amendment or waiver of any provision of
this Agreement or any other Transaction Document, or consent to any departure by
the Seller or the Servicer therefrom, shall be effective unless in a writing
signed by the Administrator, and, in the case of any amendment, by the other
parties thereto; and then such amendment, waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. No
failure on the part of the Issuer 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.
Section 5.2. NOTICES, ETC. All notices and other communications hereunder
shall, unless otherwise stated herein, be in writing (which shall include
facsimile communication) and be sent or delivered to each party hereto at its
address set forth under its name on the signature pages hereof or at such other
address as shall be designated by such party in a written notice to the other
parties hereto. Notices and communications by facsimile shall be effective when
sent (and shall be followed by hard copy sent by first class mail), and notices
and communications sent by other means shall be effective when received.
Section 5.3. ASSIGNABILITY. (a) This Agreement and the Issuer's rights and
obligations herein (including ownership of the Purchased Interest or an interest
therein) shall be assignable, in whole or in part, by the Issuer and its
successors and assigns with the prior written consent of the Seller; PROVIDED,
HOWEVER, that such consent shall not be unreasonably withheld; and PROVIDED
FURTHER, that no such consent shall be required if the assignment is made to
Fifth Third, any Affiliate of Fifth Third (other than a director or officer of
Fifth Third), any Purchaser or other Program Support Provider or any Person that
is: (i) in the business of issuing Notes and (ii) associated with or
administered by Fifth Third or any Affiliate of Fifth Third. Each assignor may,
in connection with the assignment, disclose to the applicable assignee (that
shall have agreed to be bound by SECTION 5.6) any information relating to the
Servicer, the Seller or the Pool Receivables furnished to such assignor by or on
behalf of the Servicer, the Seller, the Issuer or the Administrator. The
Administrator shall give prior written notice of any assignment of the Issuer's
rights and obligations (including ownership of the Purchased Interest to any
Person other than a Program Support Provider).
16
(b) The Issuer may at any time grant to one or more banks or other
institutions (each a "PURCHASER") party to the Liquidity Agreement, or to any
other Program Support Provider, participating interests in the Purchased
Interest. In the event of any such grant by the Issuer of a participating
interest to a Purchaser or other Program Support Provider, the Issuer shall
remain responsible for the performance of its obligations hereunder. The Seller
agrees that each Purchaser or other Program Support Provider shall be entitled
to the benefits of SECTIONS 1.7 and 1.8.
(c) This Agreement and the rights and obligations of the Administrator
hereunder shall be assignable, in whole or in part, by the Administrator and its
successors and assigns; PROVIDED, that unless: (i) such assignment is to an
Affiliate of Fifth Third, (ii) it becomes unlawful for Fifth Third to serve as
the Administrator or (iii) a Termination Event exists, the Seller has consented
to such assignment, which consent shall not be unreasonably withheld.
(d) Except as provided in SECTION 4.1(d), none of the Seller, Royal or the
Servicer may assign its rights or delegate its obligations hereunder or any
interest herein without the prior written consent of the Administrator.
(e) Without limiting any other rights that may be available under
applicable law, the rights of the Issuer may be enforced through it or by its
agents.
Section 5.4. COSTS, EXPENSES AND TAXES. (a) In addition to the rights of
indemnification granted under SECTION 3.1, the Seller agrees to pay on demand
(which demand shall be accompanied by documentation thereof in reasonable
detail) all reasonable costs and expenses in connection with the preparation,
execution, delivery and administration (including periodic internal audits by
the Administrator of Pool Receivables) of this Agreement, the other Transaction
Documents and the other documents and agreements to be delivered hereunder (and
all reasonable costs and expenses in connection with any amendment, waiver or
modification of any thereof), including: (i) Attorney Costs for the
Administrator, the Issuer and their respective Affiliates and agents with
respect thereto and with respect to advising the Administrator, the Issuer and
their respective Affiliates and agents as to their rights and remedies under
this Agreement and the other Transaction Documents, and (ii) all reasonable
costs and expenses (including Attorney Costs), if any, of the Administrator, the
Issuer and their respective Affiliates and agents in connection with the
enforcement of this Agreement and the other Transaction Documents.
(b) In addition, the Seller shall pay on demand any and all stamp and
other taxes and fees payable in connection with the execution, delivery, filing
and recording of this Agreement or the other documents or agreements to be
delivered hereunder, and agrees to save each Indemnified Party harmless from and
against any liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes and fees.
Section 5.5. NO PROCEEDINGS; LIMITATION ON PAYMENTS. (a) Each of the
Seller, Royal, the Servicer, the Administrator, each assignee of the Purchased
Interest or any interest therein, and each Person that enters into a commitment
to purchase the Purchased Interest or interests therein, hereby covenants and
agrees that it will not institute against, or join any other Person in
17
instituting against, the Issuer any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding, or other proceeding under any federal or
state bankruptcy or similar law, for one year and one day after the latest
maturing Note issued by the Issuer is paid in full. The provision of this
SECTION 5.5(a) shall survive any termination of this Agreement.
(b) Notwithstanding any provisions contained in this Agreement or any
other Transaction Documents to the contrary, the Issuer shall not, and shall not
be obligated to, pay any amount pursuant to this Agreement or any other
Transaction Document unless (i) the Issuer has received funds which may be used
to make such payment and which funds are not required to repay the Notes when
due and (ii) after giving effect to such payment, either (x) the Issuer could
issue Notes to refinance all outstanding Notes (assuming such outstanding Notes
matured at such time) in accordance with the program documents governing the
Issuer's securitization program or (y) all Notes are paid in full. Any amount
which the Issuer does not pay pursuant to the operation of the preceding
sentence shall not constitute a claim (as defined in ss.101 of the Bankruptcy
Code) against or corporate obligation of the Issuer for any such insufficiency
unless and until the Issuer satisfies the provisions of CLAUSES (i) and (ii)
above. The provisions of this SECTION 5.5(b) shall survive any termination of
this Agreement.
Section 5.6. CONFIDENTIALITY. Each of the Seller and the Servicer agrees to
maintain the confidentiality of this Agreement and the other Transaction
Documents (and all drafts thereof) in communications with third parties and
otherwise; PROVIDED, that this Agreement may be disclosed to: (a) third parties
to the extent such disclosure is made pursuant to a written agreement of
confidentiality in form and substance reasonably satisfactory to the
Administrator, and (b) the Seller's legal counsel and auditors if they agree to
hold it confidential. Unless otherwise required by applicable law, each of the
Administrator and the Issuer agrees to maintain the confidentiality of
non-public financial information regarding Royal and its Subsidiaries and
Affiliates; PROVIDED, that such information may be disclosed to: (i) third
parties to the extent such disclosure is made pursuant to a written agreement of
confidentiality in form and substance reasonably satisfactory to Royal, (ii)
legal counsel and auditors of the Issuer or the Administrator if they agree to
hold it confidentia l, (iii) the rating agencies rating the Notes, (iv) any
Program Support Provider or potential Program Support Provider (if they agree to
hold it confidential), (v) any placement agent placing the Notes and (vi) any
regulatory authorities having jurisdiction over Fifth Third, the Issuer, any
Program Support Provider or any Purchaser.
Section 5.7. GOVERNING LAW AND JURISDICTION. (a) THIS AGREEMENT SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK) EXCEPT TO THE EXTENT THAT THE
VALIDITY OR PERFECTION OF A SECURITY INTEREST OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEW YORK.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK; AND, BY
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EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO CONSENTS,
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF
THOSE COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE MAXIMUM
EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, THAT IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH OF THE PARTIES
HERETO WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH
SERVICE MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
Section 5.8. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which, when so executed, shall be deemed to
be an original, and all of which, when taken together, shall constitute one and
the same agreement.
Section 5.9. SURVIVAL OF TERMINATION. The provisions of SECTIONS 1.7, 1.8,
3.1, 3.2, 5.4, 5.5, 5.6, 5.7, 5.10 and 5.13 shall survive any termination of
this Agreement.
Section 5.10. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO WAIVES THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS AGREEMEN T OR THE TRANSACTIONS CONTEMPLATED
HEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY
OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE. EACH OF THE PARTIES HERETO AGREES
THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, EACH OF THE PARTIES HERETO FURTHER AGREES
THAT ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS
SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING THAT SEEKS, IN WHOLE
OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY
PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
Section 5.11. ENTIRE AGREEMENT. This Agreement and the other Transaction
Documents embody the entire agreement and understanding between the parties
hereto, and supersede all prior or contemporaneous agreements and understandings
of such Persons, verbal or written, relating to the subject matter hereof and
thereof, except for any prior arrangements made with respect to the payment by
the Issuer of (or any indemnification for) any fees, costs or expenses payable
to or incurred (or to be incurred) by or on behalf of the Seller, the Servicer
and the Administrator.
19
Section 5.12. HEADINGS. The captions and headings of this Agreement and any
Exhibit, Schedule or Annex hereto are for convenience of reference only and
shall not affect the interpretation hereof or thereof.
Section 5.13. ISSUER'S LIABILITIES. The obligations of the Issuer under the
Transaction Documents are solely the corporate obligations of the Issuer. No
recourse shall be had for any obligation or claim arising out of or based upon
any Transaction Document aga inst any stockholder, employee, officer, director
or incorporator of the Issuer; PROVIDED, HOWEVER, that this Section shall not
relieve any such Person of any liability it might otherwise have for its own
gross negligence or willful misconduct.
Section 5.14. MERGER AGREEMENT. Notwithstanding anything to the contrary
contained in this Agreement (including the Exhibits, Schedules and Annexes
hereto) or any other Transaction Document, Fifth Third acknowledges and agrees
that none of (i) the execution and delivery by Royal (or any affiliate of Royal)
of that certain Agreement and Plan of Merger dated December 16, 2002 among
Royal, Techtronic Industries, Co., Ltd., RAMC Holdings Inc. and TIC Acquisition
Corp. (the "MERGER AGREEMENT"), (ii) the terms and conditions of the Merger
Agreement or (iii) the consummation of the transactions contemplated thereby
constitute or will constitute a Termination Event or other breach or default
under this Agreement (including the Exhibits, Schedules and Annexes hereto) or
any other Transactio n Document, nor shall any of the foregoing CLAUSES (i),
(ii) and (iii) require a waiver from or the consent of Fifth Third.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
20
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
ROYAL APPLIANCE RECEIVABLES INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Secretary
Address:
Royal Appliance Receivables, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
ROYAL APPLIANCE MFG. CO.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: CFO
Address:
Royal Appliance Mfg. Co.
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
S-1
FIFTH THIRD BANK, as Issuer
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
Address:
Fifth Third Bank
00 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
FIFTH THIRD BANK, as Administrator
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
Address:
Fifth Third Bank
00 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
S-2
EXHIBIT I
DEFINITIONS
As used in the Agreement (including its Exhibits, Schedules and Annexes),
the following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms defined).
Unless otherwise indicated, all Section, Xxxx x, Exhibit and Schedule references
in this Exhibit are to Sections of and Annexes, Exhibits and Schedules to the
Agreement.
"Administration Account" means the account (account number 00000000, ABA
number 042-000-314) of the Administrator maintained at the office of Fifth Third
at 00 Xxxxxxxx Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxx 00000, or such other account as
may be so designated in writing by the Administrator to the Servicer.
"Administrator" has the meaning set forth in the preamble to the Agreement.
"Adverse Claim" means a lien, security interest or other charge or
encumbrance, or any other type of preferential arrangement; it being understood
that any thereof in favor of, or assigned to, the Issuer or the Administrator
(for the benefit of the Issuer) shall not constitute an Adverse Claim.
"Affected Person" has the meaning set forth in SECTION 1.7 of the
Agreement.
"Affiliate" means, as to any Person: (a) any Person that, directly or
indirectly, is in control of, is controlled by or is under common control with
such Person, or (b) who is a director or officer: (i) of such Person or (ii) of
any Person described in CLAUSE (a), except that, with respect to the Issuer,
Affiliate shall mean the holder(s) of its capital stock. For purposes of this
definition, control of a Person shall mean the power, direct or indirect: (x) to
vote 25% or more of the securities having ordinary voting power for the election
of directors or managers of such Person, or (y) to direct or cause the direction
of the management and policies of such Person, in either case whether by
ownership of securities, contract, proxy or otherwise.
"Agreement" has the meaning set forth in the preamble to the Agreement.
"Alternate Rate" for any Settlement Period for any Portion of Capital of
the Purchased Interest means an interest rate per annum equal to: (a) 1.50% per
annum above the Euro-Rate for such Settlement Period; PROVIDED, HOWEVER, that if
(x) it shall become unlawful for any Purchaser or Program Support Provider to
obtain funds in the London interbank eurodollar market in order to make, fund or
maintain any Purchased Interest, or if such funds shall not be reasonably
available to any Purchaser or Program Support Provider, or (y) there shall not
be at least two Business Days prior to the commencement of an applicable
Settlement Period to determine a Euro-Rate in accordance with its terms, then
the "Alternate Rate" shall be equal to the Base Rate in effect for each day
during the remainder of such Settlement Period or (b) if requested by the Seller
the Base Rate for such Settlement Period; PROVIDED, HOWEVER, that the "Alternate
Rate" for any day while a Termination Event exists shall be an interest rate
equal to 2.50% per annum above the Base Rate in effect on such day.
Ex.I-1
"Assignment" has the meaning set forth in Preliminary Statement No. 2 to
the Agreement.
"Attorney Costs" means and includes all reasonable fees and disbursements
of any law firm or other external counsel.
"Bankruptcy Code" means the United States Bankruptcy Reform Act of 1978 (11
U.S.C.ss.101, et seq.), as amended from time to time.
"Base Rate" has the meaning set forth in the Fee Letter.
"BBA" means the British Bankers' Association.
"Benefit Plan" means any employee benefit pension plan as defined in
Section 3(2) of ERISA in respect of which the Seller, the Originator, Royal or
any ERISA Affiliate is, or at any time during the immediately preceding six
years was, an "employer" as defined in Section 3(5) of ERISA.
"Business Day" means any day (other than a Saturday or Sunday) on which:
(a) banks are not authorized or required to close in New York City, New York or
Cincinnati, Ohio, and (b) if this definition of "Business Day" is utilized in
connection with the Euro-Rate, dealings are carried out in the London interbank
market.
"Capital" means the amount paid to the Seller in respect of the Purchased
Interest by the Issuer pursuant to the Agreement, or such amount divided or
combined in order to determine the Discount applicable to any Portion of
Capital, in each case reduced from time to time by Collections distributed and
applied on account of such Capital pursuant to SECTION 1.4(d) of the Agreement;
PROVIDED, that if such Capital shall have been reduced by any distribution, and
thereafter all or a portion of such distribution is rescinded or must otherwise
be returned for any reason, such Capital shall be increased by the amount of
such rescinded or returned distribution as though it had not been made.
"Change in Control" means that Royal ceases to own, directly or indirectly,
100% of the capital stock of the Seller free and clear of all Adverse Claims.
"Closing Date" means January 16, 2003.
"Collections" means, with respect to any Pool Receivable: (a) all funds
that are received by the Originator, Royal, the Seller or the Servicer in
payment of any amounts owed in respect of such Receivable (including purchase
price, finance charges, interest and all other charges), or applied to amounts
owed in respect of such Receivable (including insurance payments and net
proceeds of the sale or other disposition of repossessed goods or other
collateral or property of the related Obligor or any other Person directly or
indirectly liable for the payment of such Pool Receivable and available to be
applied thereon), (b) all amounts deemed to have been received pursuant to
SECTION 1.4(e) of the Agreement and (c) all other proceeds of such Pool
Receivable.
Ex. I-2
"Company Note" has the meaning set forth in SECTION 3.1 of the Purchase and
Sale Agreement.
"Concentration Percentage" means: (a) for any Group A Obligor, 70.00%, (b)
for any Group B Obligor, 24.00%, (c) for any Group C Obligor, 12.00% and (d) for
any Group D Obligor, 6.00%.
"Concentration Reserve" means, at any time: (a) the aggregate Capital at
such time multiplied by (b)(i) the Concentration Reserve Percentage, divided by
(ii) 100%, minus the Concentration Reserve Percentage.
"Concentration Reserve Percentage" means, at any time, the largest of: (a)
the sum of four largest Group D Obligor Percentages, (b) the sum of the two
largest Group C Obligor Percentages and (c) the largest Group B Obligor
Percentage.
"Contract" means, with respect to any Receivable, any and all contracts,
instruments, agreements, leases, invoices, notes or other writings pursuant to
which such Receivable arises or that evidence such Receivable or under which an
Obligor becomes or is obligated to make payment in respect of such Receivable.
"CP Rate" has the meaning set forth in the Fee Letter.
"Credit Agreement" means the Amended and Restated Credit Agreement, dated
as of April 1, 2002, amo ng Royal, the various lenders parties thereto and
National City Bank, a national banking association, as administrative agent.
"Credit and Collection Policy" means, as the context may require, those
receivables credit and collection policies and practices of the Originator in
effect on the date of the Agreement and described in Schedule I to the
Agreement, as modified in compliance with the Agreement.
"Cut-off Date" has the meaning set forth in the Purchase and Sale
Agreement.
"Days' Sales Outstanding" means, at any time, an amount computed as of the
last day of each calendar month equal to: (a) the average of the Outstanding
Balance of all Pool Receivables as of the last day of each of the three most
recent calendar months divided by (b)(i) the aggregate credit sales made by the
Originator during the three calendar months ended on or before the last day of
such calendar month divided by (ii) 90.
"Debt" means: (a) indebtedness for borrowed money, (b) obligations
evidenced by bonds, debentures, notes or other similar instruments, (c)
obligations to pay the deferred purchase price of property or services, (d)
obligations as lessee under leases that shall have been or should be, in
accordance with generally accepted accounting principles, recorded as capital
leases, and (e) obligations under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in CLAUSES (a) through (d).
Ex. I-3
"Defaulted Receivable" means a Receivable:
(a) as to which any payment, or part thereof, remains unpaid for more than
60 days from the original due date for such payment, or
(b) without duplication (i) as to which an Insolvency Proceeding shall
have occurred with respect to the Obligor thereof or any other Person obligated
thereon or owning any Related Security with respect thereto, or (ii) that has
been written off the Seller's books as uncollectible.
"Default Ratio" means the ratio (expressed as a percentage and rounded to
the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of the
last day of each calendar month by dividing: (a) the aggregate Outstanding
Balance of all Pool Receivables that became Defaulted Receivables during such
month, by (b) the aggregate credit sales made by the Originator during the month
that is three calendar months before such month.
"Delinquency Ratio" means the ratio (expressed as a percentage and rounded
to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of
the last day of each calendar month by dividing: (a) the aggregate Outstanding
Balance of all Pool Receivables that were Delinquent Receivables on such day by
(b) the aggregate Outstanding Balance of all Pool Receivables on such day.
"Delinquent Receivable" means a Receivable as to which any payment, or part
thereof, remains unpaid for more than 60 days from the original due date for
such payment.
"Dilution Horizon" means, for any calendar month, 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 calendar month of: (a) the
sum of (i) the aggregate credit sales made by the Originator during the most
recent calendar month PLUS (ii) .5 TIMES the aggregate credit sales made by the
Originator during the calendar month, which is one month prior to such calendar
month to (b) the aggregate Outstanding Balance of the Eligible Receivables at
the last day of the most recent calendar month.
"Dilution Ratio" means 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 each calendar month by dividing: (a) the aggregate amount of
payments, required to be made by the Seller pursuant to SECTION 1.4(e)(i) of the
Agreement during such calendar month (PROVIDED, HOWEVER, that any payments
relating to Receivables which are the subject of any stock rebalancing shall not
be included in the amount calculated pursuant to CLAUSE (a)) by (b) the
aggregate credit sales made by the Originator during the calendar month that is
immediately prior to such calendar month.
"Dilution Reserve" means, on any date, an amount equal to: (a) the Capital
at the close of business of the Servicer on such date MULTIPLIED BY (b) (i) the
Dilution Reserve Percentage on such date, DIVIDED BY (ii) 100% minus the
Dilution Reserve Percentage on such date.
Ex. I-4
"Dilution Reserve Percentage" means on any date, the greater of (a) 20.00%
and (b) the product of (i) the Dilution Horizon multiplied by (ii) the sum of
(x) 2 TIMES the average of the Dilution Ratios for the twelve most recent
calendar months and (y) the Spike Factor.
"Discount" means:
(a) for the Portion of Capital for any Settlement Period to the
extent the Issuer will be funding such Portion of Capital during such
Settlement Period through the issuance of Notes:
CPR x C x ED/360
(b) for the Portion of Capital for any Settlement Period to the
extent the Issuer will not be funding such Portion of Capital during such
Settlement Period through the issuance of Notes:
AR x C x ED/Year + TF
where:
AR = the Alternate Rate for the Portion of Capital for such
Settlement Period,
C = the Portion of Capital during such Settlement Period,
CPR = the CP Rate for the Portion of Capital for such Settlement
Period,
ED = the actual number of days during such Settlement Period,
Year = if such Portion of Capital is funded based upon: (i) the
Euro-Rate, 360 days, and (ii) the Base Rate, 365 or 366
days, as applicable, and
TF = the Termination Fee, if any, for the Portion of Capital
for such Settlement Period;
PROVIDED, that no provision of the Agreement shall require the payment or permit
the collection of Discount in excess of the maximum permitted by applicable law;
and PROVIDED FURTHER, that Discount for the Portion of Capital shall not be
considered paid by any distribution to the extent that at any time all or a
portion of such distribution is rescinded or must otherwise be returned for any
reason.
"Eligible Receivable" means, at any time, a Pool Receivable:
(a) the Obligor of which is (i) a United States resident, (ii) not a
government or a governmental subdivision, affiliate or agency, (iii) not
subject to any action of the type described in PARAGRAPH (f) of EXHIBIT V
to the Agreement and (iv) not an Affiliate of Royal,
Ex. I-5
(b) that is denominated and payable only in U.S. dollars in the
United States,
(c) that does not have a stated maturity which is more than (i) 30
days after the original invoice date of such Receivable if the Obligor of
such Receivable is Lowes Companies, Inc. or any Subsidiary thereof, (ii) 35
days after the original invoice date of such Receivable if the Obligor of
such Receivable is Wal-Mart Stores, Inc. or any Subsidiary thereof other
than McClanes, (iii) 60 days after the original invoice date of such
Receivable if the Obligor of such Receivable is Target Stores Division of
Xxxxxx-Xxxxxx Corporation, Radioshack Corporation or any Subsidiary
thereof, or Sears, Xxxxxxx and Co. or any Subsidiary thereof, (iv) 61 days
after the original invoice date of such Receivable if the Obligor of such
Receivable is The Home Depot, Inc. or any Subsidiary thereof, or (v) 65
days after the original invoice date of such Receivable if the Obligor of
suc h Receivable is Xxxx Club,
(d) that arises under a duly authorized Contract for the sale and
delivery of goods and services in the ordinary course of the Originator's
business,
(e) that arises under a duly authorized Contract that is in full
force and effect and that is a legal, valid and binding obligation of the
related Obligor, enforceable against such Obligor in accordance with its
terms,
(f) that conforms in all material respects with all applicable laws,
rulings and regulations in effect,
(g) that is not the subject of any asserted dispute, offset, hold
back defense, Adverse Claim or other claim other than any reduction of the
Outstanding Balance of such Pool Receivable the result of any Shortpayment
Amount,
(h) that satisfies all applicable requirements of the applicable
Credit and Collection Policy,
(i) that has not been modified, waived or restructured since its
creation, except as permitted pursuant to SECTION 4.2 of the Agreement,
(j) in which the Seller owns good and marketable title, free and
clear of any Adverse Claims, and that is freely assignable by the Seller
(including without any consent of the related Obligor),
(k) for which the Issuer shall have a valid and enforceable undivided
percentage ownership or security interest, to the extent of the Purchased
Interest, and a valid and enforceable first priority perfected security
interest therein and in the Related Security and Collections with respect
thereto, in each case free and clear of any Adverse Claim,
(l) that constitutes an account as defined in the UCC, and that is
not evidenced by instruments or chattel paper,
Ex. I-6
(m) that is neither a Defaulted Receivable nor a Delinquent
Receivable,
(n) for which neither the Originator thereof, the Seller nor the
Servicer has established any offset arrangements with the related Obligor,
(o) for which Defaulted Receivables of the related Obligor do not
exceed 25% of the Outstanding Balance of all such Obligor's Receivables,
(p) that represents amounts earned and payable by the Obligor that
are not subject to the performance of additional services by the Originator
thereof, and
(q) the Obligor of which has not been deemed unacceptable by the
Administrator based on the good faith judgment of the Administrator and
upon the prior written notice to the Seller.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute of similar import, together
with the regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA also refer to any successor sections.
"ERISA Affiliate" means: (a) any corporation that is a member of the same
controlled group of corporations (within the meaning of Section 414(b) of the
Internal Revenue Code) as the Seller, the Originator or Royal, (b) a trade or
business (whether or not incorporated) under common control (within the meaning
of Section 414(c) of the Internal Revenue Code) with the Seller, the Originator
or Royal, or (c) a member of the same affiliated service group (within the
meaning of Section 414(m) of the Internal Revenue Code) as the Seller, the
Originator, any corporation described in CLAUSE (a) or any trade or business
described in CLAUSE (b).
"Euro-Rate" means with respect to any Settlement Period the interest rate
per annum determined by the Administrator by dividing (the resulting quotient
rounded upwards, if necessary, to the nearest 1/100th of 1% per annum) (i) the
rate of interest determined by the Administrator in accordance with its usual
procedures (which determination shall be conclusive absent manifest error) to be
the ave rage of the London interbank market offered rates for U.S. dollars
quoted by the BBA as set forth on Dow Xxxxx Markets Service (formerly known as
Telerate) (or appropriate successor or, if the BBA or its successor ceases to
provide display page 3750 (or such other display page on the Dow Xxxxx Markets
Service system as may replace display page 3750) at or about 11:00 a.m. (London
time) on the Business Day which is two (2) Business Days prior to the first day
of such Settlement Period for an amount comparable to the Portion of Capital to
be funded at the Alternate Rate and based upon the Euro-Rate during such
Settlement Period by (ii) a number equal to 1.00 minus the Euro-Rate Reserve
Percentage. The Euro-Rate may also be expressed by the following formula:
Average of London interbank offered rates quoted by BBA
as shown on Dow Xxxxx Markets Service display page 3750
or appropriate successor
Euro-Rate = _______________________________________________________
Ex. I-7
1.00 - Euro-Rate Reserve Percentage
where "Euro-Rate Reserve Percentage" means, the maximum effective percentage in
effect on such day as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the reserve requirements
(including without limitation, supplemental, marginal, and emergency reserve
requirements) with respect to eurocurrency funding (currently referred to as
"Eurocurrency Liabilities"). The Euro-Rate shall be adjusted with respect to any
Portion of Capital funded at the Alternate Rate and based upon the Euro-Rate
that is outstanding on the effective date of any change in the Euro-Rate Reserve
Percentage as of such effective date. The Administrator shall give prompt notice
to the Seller of the Euro-Rate as determined or adjusted in accordance herewith
(which determination shall be conclusive absent manifest error).
"Excess Concentration" means the sum of the amounts by which the
Outstanding Balance of Eligible Receivables of each Obligor then in the
Receivables Pool exceeds an amount equal to: (a) the Concentration Percentage
for such Obligor multiplied by (b) the Outstanding Balance of all Eligible
Receivables then in the Receivables Pool.
"Facility Termination Date" means the earliest to occur of: (a) January 15,
2004, (b) the date determined pursuant to SECTION 2.2 of the Agreement, (c) the
date the Purchase Limit reduces to zero pursuant to SECTION 1.1(b) of the
Agreement, (d) the date that the commitments of the Purchasers terminate under
the Liquidity Agreement, and (e) the date the Issuer shall fail to cause the
amendment or modification of any Transaction Document or related opinion as
required by Moody's or Standard and Poor's, and such failure shall continue for
30 days after such amendment is initially requested.
"Federal Funds Rate" means, for any day, the per annum rate set forth in
the weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such
successor, "H.15(519)") for such day opposite the caption "Federal Funds
(Effective)." If on any relevant day such rate is not yet published in
H.15(519), the rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotatio ns for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m.
Quotations") for such day under the caption "Federal Funds Effective Rate." If
on any relevant day the appropriate rate is not yet published in either
H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day will be
the arithmetic mean as determined by the Administrator of the rates for the last
transaction in overnight Federal funds arranged before 9:00 a.m. (New York City
time) on that day by each of three leading brokers of Federal funds transactions
in New York City selected by the Administrator.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
System, or any entity succeeding to any of its principal functions.
"Fee Letter" has the meaning set forth in SECTION 1.5 of the Agreement.
"Fifth Third" has the meaning set forth in the preamble to the Agreement.
Ex. I-8
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any body or entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including any court, and any Person owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Group A Obligor" means any Obligor with a short-term rating of at least:
(a) "A-1" by Standard & Poor's, or if such Obligor does not have a short-term
rating from Standard & Poor's, a rating of "A+" or better by Standard & Poor's
on its long-term senior unsecured and uncredit-enhanced debt securities, AND (b)
"P-1" by Moody's, or if such Obligor does not have a short-term rating from
Moody's, "A1"or better by Moody's on its long-term senior unsecured and
uncredit-enhanced debt securities.
"Group A Obligor Percentage" means, at any time, for each Group A Obligor,
the percentage equivalent of: (a) the aggregate Outstanding Balance of the
Eligible Receivables of such Group A Obligor less any Excess Concentrations of
such Obligor, divided by (b) the aggregate Outstanding Balance of all Eligible
Receivables at such time.
"Group B Obligor" means an Obligor, not a Group A Obligor, with a
short-term rating of at least: (a) "A-2" by Standard & Poor's, or if such
Obligor does not have a short-term rating from Standard & Poor's, a rating of
"BBB+" to "A" by Standard & Poor's on its long-term senior unsecured and
uncredit-enhanced debt securities, AND (b) "P-2" by Moody's, or if such Obligor
does not have a short-term rating from Moody's, "Baa1" to "A2" by Moody's on its
long-term senior unsecured and uncredit-enhanced debt securities.
"Group B Obligor Percentage" means, at any time, for each Group B Obligor,
the percentage equivalent of: (a) the aggregate Outstanding Balance of the
Eligible Receivables of such Group B Obligor less any Excess Concentrations of
such Obligor, divided by (b) the aggregate Outstanding Balance of all Eligible
Receivables at such time.
"Group C Obligor" means an Obligor, not a Group A Obligor or a Group B
Obligor, with a short-term rating of at least: (a) "A-3" by Standard & Poor's,
or if such Obligor does not have a short-term rating from Standard & Poor's, a
rating of "BBB-" to "BBB" by Standard & Poor's on its long-term senior unsecured
and uncredit-enhanced debt securities, AND (b) "P-3" by Moody's, or if such
Obligor does not have a short-term rating from Moody's, "Baa3" to "Baa2" by
Moody's on its long-term senior unsecured and uncredit-enhanced debt securities.
"Group C Obligor Percentage" means, at any time, for each Group C Obligor,
the percentage equivalent of: (a) the aggregate Outstanding Balance of the
Eligible Receivables of such Group C Obligor less any Excess Concentrations of
such Obligor, divided by (b) the aggregate Outstanding Balance of all Eligible
Receivables at such time.
"Group D Obligor" means any Obligor that is not a Group A Obligor, Group B
Obligor or Group C Obligor.
"Group D Obligor Percentage" means, at any time, for each Group D Obligor:
(a) the aggregate Outstanding Balance of the Eligible Receivables of such Group
D Obligor less any
Ex. I-9
Excess Concentrations of such Obligor, divided by (b) the aggregate Outstanding
Balance of all Eligible Receivables at such time.
"Indemnified Amounts" has the meaning set forth in SECTION 3.1 of the
Agreement.
"Indemnified Party" has the meaning set forth in SECTION 3.1 of the
Agreement.
"Independent Director" has the meaning set forth in PARAGRAPH 3(c) of
EXHIBIT IV to the Agreement.
"Information Package" means a report, in substantially the form of Annex A
to the Agreement, furnished to the Administrator pursuant to the Agreement.
"Insolvency Proceeding" means: (a) any case, action or proceeding before
any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding- up
or relief of debtors, or (b) any general assignment for the benefit of creditors
of a Person, or composition, marshaling of assets for creditors of a Person, or
other, similar arrangement in respect of its creditors generally or any
substantial portion of its creditors, in each of cases (a) and (b) undertaken
under U.S. Federal, state or foreign law, including the Bankruptcy Code.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor statute of similar import, together with
the regulations thereunder, in each case as in effect from time to time.
References to sections of the Internal Revenue Code also refer to any successor
sections.
"Issuer" has the meaning set forth in the preamble to the Agreement.
"Issuer's Share" of any amount means such amount multiplied by the
Purchased Interest at the time of determination.
"Liquidity Agent" means PNC in its capacity as the Liquidity Agent pursuant
to the Liquidity Agreement.
"Liquidity Agreement" means any Liquidity Asset Purchase Agreement to be
entered into from time to time, among the Issuer, the purchasers from time to
time party thereto and Fifth Third, as Administrator and Liquidity Agent, as the
same may be further amended, supplemented or otherwise modified from time to
time.
"Lock-Box Account" means an account maintained at a bank or other financial
institution for the purpose of receiving Collections.
"Lock-Box Agreement" means an agreement, in form and substance satisfactory
to the Administrator, among the Seller, the Servicer, the Issuer and a Lock-Box
Bank.
"Lock-Box Bank" means any of the banks or other financial institutions
holding one or more Lock-Box Accounts.
Ex. I-10
"Loss Reserve" means, on any date, an amount equal to: (a) the Capital at
the close of business of the Servicer on such date multiplied by (b)(i) the Loss
Reserve Percentage on suc h date divided by (ii) 100% minus the Loss Reserve
Percentage on such date.
"Loss Reserve Percentage" means, on any date, the greater of: (a) 4.00% or
(b) the product of (i) 2 TIMES (ii) the highest average of the Default Ratios
for any three consecutive calendar months during the twelve most recent calendar
months TIMES (iii)(A) the aggregate credit sales made by the Originator during
the four most recent calendar months DIVIDED by (B) the aggregate Outstanding
Balance of Eligible Receivables as of such date.
"Material Adverse Effect" means, relative to any Person with respect to any
event or circumstance, a material adverse effect on:
(a) the assets, operations, business or financial condition of such
Person,
(b) the ability of any of such Person to perform its obligations
under the Agreement or any other Transaction Document to which it is a
party,
(c) the validity or enforceability of any other Transaction Document,
or the validity, enforceability or collectibility of a material portion of
the Pool Receivables, or
(d) the status, perfection, enforceability or priority of the
Issuer's or the Seller's interest in the Pool Assets.
"Merger Agreement" has the meaning set forth in SECTION 5.14 of the
Agreement.
"Moody's" means Xxxxx'x Investors Service, Inc.
"MSFC" has the meaning set forth in Preliminary Statement No. 1 to the
Agreement.
"Net Receivables Pool Balance" means, at any time: (a) the Outstanding
Balance of Eligible Receivables then in the Receivables Pool minus (b) the
Excess Concentration.
"Notes" means short-term promissory notes issued, or to be issued, by the
Issuer to fund its investments in accounts receivable or other financial assets.
"Obligor" means any of Lowes Companies, Inc. and any Subsidiary thereof,
Xxxx Club and any Subsidiary thereof other than McCla nes, Sears, Xxxxxxx and
Co. and any Subsidiary thereof, Target Stores Division of Xxxxxx-Xxxxxx
Corporation, Wal-Mart Stores, Inc. and any Subsidiary thereof other than
McClanes, Radioshack Corporation and any Subsidiary thereof or The Home Depot,
Inc. and any Subsidiary thereof.
"Obligor Percentage" means any of the Group A Obligor Percentage, the Group
B Obligor Percentage, the Group C Obligor Percentage or the Group D Obligor
Percentage.
"Original Agreement" has the meaning set forth in Preliminary Statement No.
1 to the Agreement.
Ex. I-11
"Originator" has the meaning set forth in the Purchase and Sale Agreement.
"Originator Assignment Certificate" means the assignment, in substantially
the form of EXHIBIT C to the Purchase and Sale Agreement, evidencing Seller's
ownership of the Receivables generated by the Originator, as the same may be
amended, supplemented, amended and restated, or otherwise modified from time to
time in accordance with the Purchase and Sale Agreement.
"Outstanding Balance" of any Receivable at any time means the then
outstanding principal balance thereof.
"Payment Date" has the meaning set forth in SECTION 2.1 of the Purchase and
Sale Agreement.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, limited liability company or other entity, or a government or any
political subdivision or agency thereof.
"PNC" has the meaning set forth in Preliminary Statement No. 1 to the
Agreement.
"Pool Assets" has the meaning set forth in SECTION 1.2(d) of the Agreement.
"Pool Receivable" means a Receivable in the Receivables Pool.
"Portion of Capital" means any separate portion of Capital being funded or
maintained by the Issuer (or its successors or permitted assigns) by reference
to a particular interest rate basis. In addition, at any time when the Capital
of the Purchased Interest is not divided into two or more such portions,
"Portion of Capital" means 100% of the Capital.
"Program Support Agreement" means and includes the Liquidity Agreement and
any other agreement entered into by any Program Support Provider providing for:
(a) the issuance of one or more letters of credit for the account of the Issuer,
(b) the issuance of one or more surety bonds for which the Issuer is obligated
to reimburse the applicable Program Support Provider for any drawings
thereunder, (c) the sale by the Issuer to any Program Support Provider of the
Purchased Interest (or portions thereof) and/or (d) the making of loans and/or
other extensions of credit to the Issuer in connection with the Issuer's
Receivables-securitization program contemplated in the Agreement, together with
any letter of credit, surety bond or other instrument issued thereunder (but
excluding any discretionary advance facility provided by the Administrator).
"Program Support Provider" means and includes any Purchaser and any other
Person (other than any customer of the Issuer) now or hereafter extending credit
or having a commitment to extend credit to or for the account of, or to make
purchases from, the Issuer pursuant to any Program Support Agreement.
"Purchase" has the meaning set forth in SECTION 1.1(a) of the Agreement.
Ex. I-12
"Purchase and Sale Agreement" means the Purchase and Purchase and Sale
Agreement, dated as of even date herewith, between the Seller and the Originator
as such agreement may be amended, amended and restated, supplemented or
otherwise modified from time to time.
"Purchase and Sale Indemnified Amounts" has the meaning set forth in
SECTION 9.1 of the Purchase and Sale Agreement.
"Purchase and Sale Indemnified Party" has the meaning set forth in SECTION
9.1 of the Purchase and Sale Agreement.
"Purchase and Sale Termination Date" has the meaning set forth in SECTION
1.4 of the Purchase and Sale Agreement.
"Purchase and Sale Termination Event" has the meaning set forth in SECTION
8.1 of the Purchase and Sale Agreement.
"Purchase Facility" has the meaning set forth in SECTION 1.1 of the
Purchase and Sale Agreement.
"Purchase Limit" means $35,000,000, as such amount may be reduced pursuant
to SECTION 1.1(B) of the Agreement. References to the unused portion of the
Purchase Limit shall mean, at any time, the Purchase Limit minus the then
outstanding Capital.
"Purchase Notice" has the meaning set forth in SECTION 1.2(A) of the
Agreement.
"Purchase Price" has the meaning set forth in SECTION 2.1 of the Purchase
and Sale Agreement.
"Purchase Report" has the meaning set forth in SECTION 2.1 of the Purchase
and Sale Agreement.
"Purchased Interest" means, at any time, the undivided percentage ownership
interest in: (a) each and every Pool Receivable now existing or hereafter
arising, (b) all Related Security with respect to such Pool Receivables and (c)
all Collections with respect to, and other proceeds of, such Pool Receivables
and Related Security. Such undivided percentage interest shall be computed as:
Capital + Total Reserves
----------------------------
Net Receivables Pool Balance
The Purchased Interest shall be determined from time to time pursuant to SECTION
1.3 of the Agreement.
"Purchaser" has the meaning set forth in SECTION 5.3(B) of the Agreement.
"Receivable" means any indebtedness and other obligations owed to the
Seller (as assignee of the Originator) or the Originator by, or any right of the
Seller or the Originator to
Ex. I-13
payment from or on behalf of, an Obligor, whether constituting an account,
chattel paper, instrument or general intangible, arising in connection with the
sale of goods or the rendering of services by the Originator, and includes the
obligation to pay any finance charges, fees and other charges with respect
thereto. Indebtedness and other obligations arising from any one transaction,
including indebtedness and other obligations represented by an individual
invoice or agreement, shall constitute a Receivable separate from a Receivable
consisting of the indebtedness and other obligations arising from any other
transaction.
"Receivables Pool" means, at any time, all of the then outstanding
Receivables arising or created prior to the Facility Termination Date.
"Reference Bank" means Fifth Third.
"Reinvestment" has the meaning set forth in SECTION 1.1(A) of the
Agreement.
"Related Rights" has the meaning set forth in SECTION 1.1 of the Purchase
and Sale Agreement.
"Related Security" means, with respect to any Receivable:
(a) all of the Seller's and the Originator's interest, if any, in the
goods sold that gave rise to such Receivable (including returned goods),
and documentation of title evidencing the shipment or storage of such
goods,
(b) all instruments and chattel paper that may evidence such
Receivable,
(c) all other security interests or liens and property subject
thereto from time to time purporting to secure payment of such Receivable,
whether pursuant to the Contract related to such Receivable or otherwise,
together with all UCC financing statements or similar filings relating
thereto, and
(d) all of the Seller's and the Originator's rights, interests and
claims under the Contracts and all guaranties, indemnities, insurance and
other agreements (including the related Contract) or arrangements of
whatever character from time to time supporting or securing payment of such
Receivable or otherwise relating to such Receivable, whether pursuant to
the Contract related to such Receivable or otherwise.
"Royal" has the meaning set forth in the preamble to the Agreement.
"SEC Reports" means the reports filed by Royal with the Securities and
Exchange Commission on Form 10-K, Form 10-Q and/or Form 8-K (or any successor
forms to any thereof).
"Seller" has the meaning set forth in the preamble to the Agreement.
"Seller's Share" of any amount means the greater of: (a) $0 and (b) such
amount minus the Issuer's Share.
Ex. I-14
"Servicer" has the meaning set forth in the preamble to the Agreement.
"Servicing Fee" shall mean the fee referred to in SECTION 4.6 of the
Agreement.
"Servicing Fee Rate" shall mean the rate referred to in SECTION 4.6 of the
Agreement.
"Settlement Date" means with respect to any Portion of Capital for any
Settlement Period, (i) prior to the Facility Termination Date, the 12th day of
each calendar month (or the next succeeding Business Day if such day is not a
Business Day), beginning February 12, 2003 and (ii) on and after the Facility
Termination Date, each day selected from time to time by the Administrator (it
being understood that the Administrator may select such Settlement Date to occur
as frequently as daily), or, in the absence of such selection, the date
specified in CLAUSE (I) above.
"Settlement Period" means: (a) before the Facility Termination Date: (i)
initially the period commencing on the date of the initial Purchase pursuant to
SECTION 1.2 of the Agreement (or in the case of any fees payable hereunder,
commencing on the Closing Date) and ending on (but not including) the next
Settlement Date, and (ii) the reafter, each period commencing on such Settlement
Date and ending on (but not including) the next Settlement Date, and (b) on and
after the Facility Termination Date: such period (including a period of one day)
as shall be selected from time to time by the Administrator or, in the absence
of any such selection, each period of 30 days from the last day of the preceding
Settlement Period.
"Shortpayment Amount" means with respect to any Shortpayment Receivable at
any time an amount equal to the difference between the original invoiced amount
for such Shortpayment Receivable and the amount actually received by the Seller
or the Servicer from or on behalf of the Obligor of such Shortpayment
Receivable.
"Shortpayment Receivable" means a Receivable as to which the Obligor has
paid to the Seller on account of such Receivable less than the original invoiced
amount for such Receivable because such Obligor believes it is entitled to a
promotional discount or allowance in the ordinary course of business of the
Seller with respect thereto.
"Solvent" means, with respect to any Person at any time, a condition under
which:
(i) the fair value and present fair saleable value of such Person's
total assets is, on the date of determination, greater than such Person's
total liabilities (including contingent and unliquidated liabilities) at
such time;
(ii) the fair value and present fair saleable value of such Person's
assets is greater than the amount that will be required to pay such
Person's probable liability on its existing debts as they become absolute
and matured ("DEBTS," for this purpose, includes all legal liabilities,
whether matured or unmatured, liquidated or unliquidated, absolute, fixed,
or contingent);
(iii) such Person is and shall continue to be able to pay all of its
liabilities as such liabilities mature; and
Ex. I-15
(iv) such Person does not have unreasonably small capital with which
to engage in its current and in its anticipated business.
For purposes of this definition:
(A) the amount of a Person's contingent or unliquidated liabilities
at any time shall be that amount which, in light of all the facts and
circumstances then existing, represents the amount which can reasonably be
expected to become an actual or matured liability;
(B) the "fair value" of an asset shall be the amount which may be
realized within a reasonable time either through collection or sale of such
asset at its regular market value;
(C) the "regular market value" of an asset shall be the amount which
a capable and diligent business person could obtain for such asset from an
interested buyer who is willing to Purchase such asset under ordinary
selling conditions; and
(D) the "present fair saleable value" of an asset means the amount
which can be obtained if such asset is sold with reasonable promptness in
an arm's- length transaction in an existing and not theoretical market.
"Spike Factor" means, for any calendar month, (a) the positive difference,
if any, between: (i) the highest Dilution Ratio for any calendar month during
the twelve most recent calendar months and (ii) the arithmetic average of the
Dilution Ratios for such twelve months TIMES (b) (i) the highest Dilution Ratio
for any calendar month during the twelve most recent calendar months DIVIDED by
(ii) the arithmetic average of the Dilution Ratios for such twelve months
"Standard & Poor's" means Standard & Poor's, a division of The XxXxxx-Xxxx
Companies, Inc.
"Subsidiary" means, as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock of each class or
other interests having ordinary voting power (other than stock or other
interests having such power only by reason of the happening of a contingency) to
elect a majority of the Board of Directors or other managers of such entity are
at the time owned, or management of which is otherwise controlled: (a) by such
Person, (b) by one or more Subsidiaries of such Person or (c) by such Person and
one or more Subsidiaries of such Person.
"Termination Day" means: (a) each day on which the conditions set forth in
SECTION 2 of EXHIBIT II to the Agreement are not satisfied or (b) each day that
occurs on or after the Facility Termination Date.
"Termination Event" has the meaning specified in EXHIBIT V to the
Agreement.
Ex. I-16
"Termination Fee" means, for any Settlement Period during which a
Terminatio n Day occurs, the amount, if any, by which: (a) the additional
Discount (calculated without taking into account any Termination Fee or any
shortened duration of such Settlement Period pursuant to the definition thereof)
that would have accrued during such Settlement Period on the reductions of
Capital relating to such Settlement Period had such reductions not been made,
exceeds (b) the income, if any, received by the Issuer from investing the
proceeds of such reductions of Capital, as determined by the Administrator,
which determination shall be binding and conclusive for all purposes, absent
manifest error.
"Total Reserves" means, at any time, the sum of: (a) the Yield Reserve,
plus (b) the greater of (i) the sum of (A) Loss Reserve plus (B) the Dilution
Reserve and (ii) the Concentration Reserve.
"Transaction Documents" means the Agreement, the Lock-Box Agreements, the
Fee Letter, the Purchase and Sale Agreement and all other certificates,
instruments, UCC financing statements, reports, notices, agreements and
documents executed or delivered under or in connection with the Agreement, in
each case as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the Agreement.
"UCC" means the Uniform Commercial Code as from time to time in effect in
the applicable jurisdiction.
"Unmatured Purchase and Sale Termination Event" means any event which, with
the giving of notice or lapse of time, or both, would become a Purchase and Sale
Termination Event.
"Unmatured Termination Eve nt" means an event that, with the giving of
notice or lapse of time, or both, would constitute a Termination Event.
"Yield Reserve" means, on any date, an amount equal to: (a) the Capital at
the close of business of the Servicer on such date multiplied by (b)(i) the
Yield Reserve Percentage on such date divided by (ii) 100% minus the Yield
Reserve Percentage on such date.
"Yield Reserve Percentage" means at any time:
(BR + SFR) x 1.5 x DSO
----------
360
where:
BR = the Base Rate as of the last day of the most recent Settlement
Period,
DSO = the Days' Sales Outstanding, and
SFR = the Servicing Fee Rate.
Ex. I-17
OTHER TERMS. All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting principles. All terms
used in Article 9 of the UCC in the State of New York, and not specifically
defined herein, are used herein as defined in such Article 9. Unless the context
otherwise requires, "or" means "and/or," and "including" (and with correlative
meaning "include" and "includes") means including without limiting the
generality of any description preceding such term.
Ex. I-18
EXHIBIT II
CONDITIONS OF PURCHASES
1. CONDITIONS PRECEDENT TO INITIAL PURCHASE. The initial Purchase under
this Agreement is subject to the following conditions precedent that the
Administrator shall have received on or before the date of such Purchase, each
in form and substance (including the date thereof) satisfactory to the
Administrator:
(a) A counterpart of the Agreement and the other Transaction Documents
executed by the parties thereto.
(b) Certified copies of: (i) the resolutions of the Board of Directors of
each of the Seller, the Originator and Royal authorizing the execution, delivery
and performance by the Seller, the Originator and Royal, as the case may be, of
the Agreement and the other Transaction Documents to which it is a party; (ii)
all documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to the Agreement and the other Transaction
Documents and (iii) the certificate of incorporation and by- laws of the Seller
and Royal.
(c) A certificate of the Secretary or Assistant Secretary of the Seller,
the Originator and Royal certifying the names and true signatures of its
officers who are authorized to sign the Agreement and the other Transaction
Documents. Until the Administrator receives a subsequent incumbency certificate
from the Seller, the Originator or Royal, as the case may be, the Administrator
shall be entitled to rely on the last such certificate delivered to it by the
Seller, the Originator or Royal, as the case may be.
(d) Proper financing statements, duly authorized and suitable for filing
under the UCC of all jurisdictions that the Administrator may deem necessary or
desirable in order to perfect the interests of the Seller, Royal and the Issuer
contemplated by the Agreement and the Purchase and Sale Agreement.
(e) Proper financing statements (Form UCC-3), duly authorized and suitable
for filing under the UCC of all jurisdictions that the Administrator may deem
necessary or desirable to release or assign all security interests and other
rights of any Person in the Receivables, Contracts or Related Security
previously granted by the Originator, Royal or the Seller.
(f) Completed UCC search reports, dated on or shortly before the date of
the initial Purchase hereunder, listing the financing statements filed in all
applicable jurisdictions referred to in SUBSECTION (E) above that name the
Originator or the Seller as debtor, together with copies of such other financing
statements, and similar search reports with respect to judgment liens, federal
tax liens and liens of the Pension Benefit Guaranty Corporation in such
jurisdictions, as the Administrator may request, showing no Adverse Claims on
any Pool Assets.
(g) Favorable opinions, in form and substance reasonably satisfactory to
the Administrator, of Xxxx Xxxxxxxx, a Legal Professional Association, counsel
for the Seller, the Originator and the Servicer.
(h) Satisfactory results of a review and audit (performed by
representatives of the Administrator) of the Servicer's collection, operating
and reporting systems, the Credit and
Ex. II-1
Collection Policy of the Originator, historical receivables data and accounts,
including satisfactory results of a review of the Servicer's operating
location(s) and satisfactory review and approval of the Eligible Receivables in
existence on the date of the initial Purchase under the Agreement.
(i) A pro forma Information Package representing the performance of the
Receivables Pool for the calendar month before closing.
(j) Evidence of payment by the Seller of all accrued and unpaid fees
(including those contemplated by the Fee Letter), costs and expenses to the
extent then due and payable on the date thereof, including any such costs, fees
and expenses arising under or referenced in Section 5.4 of the Agreement and the
Fee Letter.
(k) The Fee Letter duly executed by the Seller and the Servicer.
(l) Good standing certificates with respect to each of the Seller, the
Originator and the Servicer issued by the Secretary of State (or similar
official) of the state of each such Person's organization or formation and
principal place of business.
(m) The Liquidity Agreement and all other Transaction Documents duly
executed by the parties thereto.
(n) A computer file containing all information with respect to the
Receivables as the Administrator or the Issuer may reasonably request.
(o) Copies of executed Lock-Box Agreements with each Lock-Box Bank.
(p) Such other approvals, opinions or documents as the Administrator or
the Issuer may reasonably request.
2. CONDITIONS PRECEDENT TO ALL PURCHASES AND REINVESTMENTS. Each Purchase
(except as to CLAUSE (A), including the initial Purchase) and each Reinvestment
shall be subject to the further conditions precedent that:
(a) in the case of each Purchase, the Servicer shall have delivered to the
Administrator on or before such Purchase, in form and substance satisfactory to
the Administrator, a completed pro forma Information Package to reflect the
level of Capital and related reserves and the calculation of the Purchased
Interest after such subsequent Purchase and a completed Purchase Notice in the
form of Annex B; and
(b) on the date of such Purchase or Reinvestment the following statements
shall be true (and acceptance of the proceeds of such Purchase or Reinvestment
shall be deemed a representation and warranty by the Seller that such statements
are then true):
(i) the representations and warranties contained in EXHIBITS III
and VI to the Agreement are true and correct in all material respects on
and as of the date of such Purchase or Reinvestment as though made on and
as of such date (except to the extent
Ex. II-2
that such representations and warranties relate expressly to an earlier date,
and in which case such representations and warranties shall be true and correct
in all material respects as of such earlier date);
(ii) no event has occurred and is continuing, or would result from such
Purchase or Reinvestment, that constitutes a Termination Event or an Unmatured
Termination Event; and
(iii) the Capital does not exceed the Purchase Limit.
Ex. II-3
EXHIBIT III
REPRESENTATIONS AND WARRANTIES
1. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents and
warrants as follows:
(a) The Seller is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Ohio, its organizational number is
952378, and it is duly qualified to do business and is in good standing as a
foreign corporation in every jurisdiction where the nature of its business
requires it to be so qualified, except where the failure to be so qualified
would not have a Material Adverse Effect.
(b) The execution, delivery and performance by the Seller of the Agreement
and the other Transaction Documents to which it is a party, including its use of
the proceeds of Purchases and Reinvestments: (i) are within its corporate
powers; (ii) have been duly authorized by all necessary corporate action; (iii)
do not contravene or result in a default under or conflict with: (A) its charter
or by- laws, (B) any law, rule or regulation applicable to it except where such
contravention, default or conflict has not and will not have a Material Adverse
Effect, (C) any indenture, loan agreement, mortgage, deed of trust or other
material agreement or instrument to which it is a party or by which it is bound,
or (D) any order, writ, judgment, award, injunction or decree binding on or
affecting it or any of its property except where such contravention, default or
conflict has not and will not have a Material Adverse Effect; and (iv) do not
result in or require the creation of any Adverse Claim upon or with respect to
any of its properties. The Agreement and the other Transaction Documents to
which it is a party have been duly executed and delivered by the Seller.
(c) No authorization, approval or other action by, and no notice to or
filing with, any Governmental Authority or other Person is required for its due
execution, delivery and performance by the Seller of the Agreement or any other
Transaction Document to which it is a party, other than the Uniform Commercial
Code filings referred to in EXHIBIT II to the Agreement, all of which shall have
been filed on or before the date of the first Purchase hereunder.
(d) Each of the Agreement and the other Transaction Documents to which the
Seller is a party constitutes its legal, valid and binding obligation
enforceable against the Seller in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws from time to time in effect affecting the enforcement of creditors'
rights generally and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(e) There is no pending or, to Seller's best knowledge, threatened action
or proceeding affecting Seller or any of its properties before any Governmental
Authority or arbitrator.
Ex. III-1
(f) No proceeds of any Purchase or Reinvestment will be used to acquire any
equity security of a class that is registered pursuant to Section 12 of the
Securities Exchange Act of 1934.
(g) The Seller is the lega l and beneficial owner of the Pool Receivables
and Related Security, free and clear of any Adverse Claim (other than any
Adverse Claim arising solely as a result of any action taken by the Issuer or
the Administrator). Upon each Purchase or Reinvestment, the Issuer shall acquire
a valid and enforceable perfected undivided percentage ownership or security
interest, to the extent of the Purchased Interest, in each Pool Receivable then
existing or thereafter arising and in the Related Security, Collections and
other proceeds with respect thereto, free and clear of any Adverse Claim. The
Agreement creates a security interest in favor of the Issuer in the Pool Assets,
and the Issuer has a first priority perfected security interest in the Pool
Assets, free and clear of any Adverse Claims. No effective financing statement
or other instrument similar in effect covering any Pool Asset is on file in any
recording office, except (i) those filed in favor of the Seller pursuant to the
Purchase and Sale Agreement and the Issuer relating to the Agreement and (ii)
with respect to which proper financing statements (Form UCC-3) as described in
PARAGRAPH (1)(E) of EXHIBIT II to the Agreement have been executed and delivered
in accordance with PARAGRAPH (1)(E) of EXHIBIT II to the Agreement.
(h) Each Information Package (if prepared by the Seller or one of its
Affiliates, or to the extent that information contained therein is supplied by
the Seller or an Affiliate), information, exhibit, financial statement,
document, book, record or report furnished or to be furnished at any time by or
on behalf of the Seller to the Administrator in connection with the Agreement or
any other Transaction Document to which it is a party is or will be complete and
accurate in all material respects as of its date or (except as otherwise
disclosed to the Administrator at such time) as of the date so furnished,
(i) The Seller's principal place of business and chief executive office (as
such terms are used in the UCC) and the office where it keeps its records
concerning the Receivables are located at the address referred to in SECTIONS
1(B) and 2(B) of EXHIBIT IV to the Agreement.
(j) The names and addresses of all the Lock-Box Banks, together with the
account numbers of the Lock-Box Accounts at such Lock-Box Banks, are specified
in SCHEDULE II to the Agreement (or at such other Lock-Box Banks and/or with
such other Lock-Box Accounts as have been notified to the Administrator in
accordance with the Agreement) and all Lock-Box Accounts are subject to Lock-Box
Agreements. Seller has not granted to any Person, other than the Administrator
as contemplated by the Agreement, dominion and control of any Lock-Box Account,
or the right to take control of any such account at a future time or upon the
occurrence of a future event.
(k) The Seller is not in violation of any order of any court, arbitrator or
Governmental Authority binding on the Seller.
(l) Neither the Seller nor any of its Affiliates has any direct or indirect
ownership or other financial interest in the Issuer.
Ex. III-2
(m) No proceeds of any Purchase or Reinvestment will be used for any
purpose that violates any applicable law, rule or regulation, including
Regulations T, U or X of the Federal Reserve Board.
(n) Each Pool Receivable included as an Eligible Receivable in the
calculation of the Net Receivables Pool Balance is an Eligible Receivable.
(o) No event has occurred and is continuing, or would result from a
Purchase in respect of, or Reinvestment in respect of, the Purchased Interest or
from the application of the proceeds therefrom, that constitutes a Termination
Event or an Unmatured Termination Event.
(p) The Seller has accounted for and will continue to account for each sale
of undivided percentage ownership interests in Receivables in its books and
financial statements as sales, consistent with generally accepted accounting
principles.
(q) The Seller has complied in all material respects with the Credit and
Collection Policy of the Originator with regard to each Receivable originated by
the Originator.
(r) The Seller has complied in all material respects with all of the terms,
covenants and agreements contained in the Agreement and the other Transaction
Documents that are applicable to it.
(s) The Seller's complete corporate name is set forth in the preamble to
the Agreement, and it does not use and has not during the last six years used
any other corporate name, trade name, doing-business name or fictitious name,
except as set forth on SCHEDULE III to the Agreement and except for names first
used after the date of the Agreement and set forth in a notice delivered to the
Administrator pursuant to SECTION 1(L)(V) of EXHIBIT IV to the Agreement.
(t) The Seller is not an "investment company," or a company "controlled" by
an "investment company" within the meaning of the Investment Company Act of
1940, as amended. In addition, the Seller is not a "holding company," a
"subsidiary company" of a "holding company" or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company" within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
(u) With respect to each Receivable transferred to the Seller under the
Purchase and Sale Agreement, Seller has given reasonably equivalent value to the
Originator thereof in consideration therefor and such transfer was not made for
or on account of an antecedent debt. No transfer by any Originator of any
Receivable under the Purchase and Sale Agreement is or may be voidable under any
section of the Bankruptcy Code.
(v) Each Contract with respect to each Receivable is effective to create,
and has created, a legal, valid and binding obligation of the related Obligor to
pay the Outstanding Balance of the Receivable created thereunder and any accrued
interest thereon, enforceable against the Obligor in accordance with its terms,
except as such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws relating to or limiting
Ex. III-3
creditors' rights generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
(w) Since its most recent fiscal year end, there has been no change in the
business, operations, financial condition, properties or assets of the Seller
which would have a Material Adverse Effect on its ability to perform its
obligations under the Agreement or any other Transaction Document to which it is
a party or materially and adversely affect the transactions contemplated under
the Agreement or such other Transaction Documents.
(x) the Seller has no Debt or contingent obligations (whether matured or
inmatured) outstanding other than (i) the Company Note or (i) such Debt or
contingent obligations which will be paid and reduced to zero prior to the first
Purchase hereunder.
2. REPRESENTATIONS AND WARRANTIES OF ROYAL (INCLUDING IN ITS CAPACITY AS
THE SERVICER). Royal, individually and in its capacity as the Servicer,
represents and warrants as follows:
(a) Royal is a corporation duly formed, validly existing and in good
standing under the laws of the State of Ohio, its organizational number is
584762, and it is duly qualified to do business and is in good standing as a
foreign corporation in every jurisdiction where the nature of its business
requires it to be so qualified, except where the failure to be so qualified
would not have a Material Adverse Effect.
(b) The execution, delivery and performance by Royal of the Agreement and
the other Transaction Documents to which it is a party, including the Servicer's
use of the proceeds of Purchases and Reinvestments: (i) are within its corporate
powers; (ii) have been duly authorized by all necessary corporate action; (iii)
do not contravene or result in a default under or conflict with: (A) its charter
or bylaws, (B) any law, rule or regulation applicable to it except where such
contravention, default or conflict has not and will not have a Material Adverse
Effect, (C) any indenture, loan agreement, mortgage, deed of trust or other
material agreement or instrument to which it is a party or by which it is bound,
or (D) any order, writ, judgment, award, injunction or decree binding on or
affecting it or any of its property except where such contravention, default or
conflict has not and will not have a Material Adverse Effect; and (iv) do not
result in or require the creation of any Adverse Claim upon or with respect to
any of its properties. The Agreement and the other Transaction Documents to
which Royal is a party have been duly executed and delivered by Royal.
(c) No authorization, approval or other action by, and no notice to or
filing with any Governmental Authority or other Person, is required for the due
execution, delivery and performance by Royal of the Agreement or any other
Transaction Document to which it is a party other than the Uniform Commercial
Code filings referred to in Exhibit II to the Agreement, all of which shall have
been filed on or before the date of the first Purchase hereunder.
(d) Each of the Agreement and the other Transaction Documents to which
Royal is a party constitutes the legal, valid and binding obligation of Royal
enforceable against Royal in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization or other similar laws
from time to time in effect affecting the enforcement of
Ex. III-4
creditors' rights generally and by general principles of equity, rega rdless of
whether such enforceability is considered in a proceeding in equity or at law.
(e) The balance sheets of Royal and its consolidated Subsidiaries as at
December 31, 2001, and the related statements of income and retained earnings
for the fiscal year then ended, copies of which have been furnished to the
Administrator, fairly present the financial condition of Royal and its
consolidated Subsidiaries as of and at such date and the results of the
operations of Royal and its Subsidiaries for the period ended on such date, all
in accordance with generally accepted accounting principles consistently
applied, and since December 31, 2001 there has been no event or circumstances
which have had a Material Adverse Effect.
(f) Except as disclosed on SCHEDULE 2(F) hereto and as disclosed in the
most recent audited financial statements of Royal furnished to the
Administrator, there is no pending or, to its best knowledge, threatened action
or proceeding affecting it or any of its Subsidiaries before any Governmental
Authority or arbitrator that could have a Material Adverse Effect.
(g) No proceeds of any Purchase or Reinvestment will be used to acquire any
equity security of a class that is registered pursuant to Section 12 of the
Securities Exchange Act of 1934.
(h) Each Information Package (if prepared by Royal or one of its
Affiliates, or to the extent that information contained therein is supplied by
Royal or an Affiliate), information, exhibit, financial statement, document,
book, record or report furnished or to be furnished at any time by or on behalf
of the Servicer to the Administrator in connection with the Agreement is or will
be complete and accurate in all material respects as of its date or (except as
otherwise disclosed to the Administrator at such time) as of the date so
furnished.
(i) The principal place of business and chief executive office (as such
terms are used in the UCC) of Royal and the office where it keeps its records
concerning the Receivables are located at the address referred to in SECTION
2(B) of EXHIBIT IV to the Agreement.
(j) Royal is not in violation of any order of any court, arbitrator or
Governmental Authority, which could have a Material Adverse Effect.
(k) Neither Royal nor any of its Affiliates has any direct or indirect
ownership or other financial interest in the Issuer.
(l) The Servicer has complied in all material respects with the Credit and
Collection Policy of the Originator with regard to each Receivable originated by
the Originator.
(m) Royal has complied in all material respects with all of the terms,
covenants and agreements contained in the Agreement and the other Transaction
Documents that are applicable to it.
(n) Royal is not an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended. In addition, Royal is not a "holding company," a "subsidiary
company" of a "holding
Ex. III-5
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company" within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
(o) Since its most recent fiscal year end, there has been no change in the
business, operations, financial condition, properties or assets of the Servicer
which would have a Material Adverse Effect on its ability to perform its
obligations under the Agreement or any other Transaction Document to which it is
a party or materially and adversely affect the transactions contemplated under
the Agreement or such other Transaction Documents.
(p) No license or approval is required for the Administrator or any
successor Servicer to use any program used by the Servicer in the servicing of
the Receivables, other than such licenses and approvals that have been obtained
and are in full force and effect.
Ex. III-6
EXHIBIT IV
COVENANTS
1. COVENANTS OF THE SELLER. Until the latest of the Facility Termination
Date, the date on which no Capital of or Discount in respect of the Purchased
Interest shall be outstanding or the date all other amounts owed by the Seller
under the Agreement to the Issuer, the Administrator and any other Indemnified
Party or Affected Person shall be paid in full:
(a) COMPLIANCE WITH LAWS, ETC. The Seller shall comply in all material
respects with all applicable laws, rules, regulations and orders, and preserve
and maintain its corporate existence, rights, franchises, qualifications and
privileges, except to the extent that the failure so to comply with such laws,
rules and regulations or the failure so to preserve and maintain such rights,
franchises, qualifications and privileges would not have a Material Adverse
Effect.
(b) OFFICES, RECORDS AND BOOKS OF ACCOUNT, ETC. The Seller: (i) shall keep
its principal place of business and chief executive office (as such terms or
similar terms are used in the UCC) and the office where it keeps its records
concerning the Receivables at the address of the Seller set forth under its name
on the signature page to the Agreement and keep its state of incorporation at
the State set forth in SECTION 1(A) of Exhibit III or, pursuant to CLAUSE (L)(V)
below, at any other locations in jurisdictions where all actions reasonably
requested by the Administrator to protect and perfect the interest of the Issuer
in the Receivables and related items (including the Pool Assets) have been taken
and completed and (ii) shall provide the Administrator with at least 30 days'
written notice before making any change in the Seller's name or making any other
change in the Seller's identity or corporate structure (including a Change in
Control) that could render any UCC financing statement filed in connection with
this Agreement "seriously misleading" as such term (or similar term) is used in
the UCC; each notice to the Administrator pursuant to this sentence shall set
forth the applicable change and the effective date thereof. The Seller also will
maintain and implement (or cause the Servicer to maintain and implement)
administrative and operating procedures (including an ability to recreate
records evidencing Receivables and related Contracts in the event of the
destruction of the originals thereof), and keep and maintain (or cause the
Servicer to keep and maintain) all documents, books, records, computer tapes and
disks and other information reasonably necessary or advisable for the collection
of all Receivables (including records adequate to permit the daily
identification of each Receivable and all Collections of and adjustments to each
existing Receivable). Notwithstanding the above, in no event shall the Seller
have or maintain, or be a partner in any partnership that has or maintains, its
jurisdiction of organization, principal place of business or principal assets in
any of the states of Colorado, Kansas, New Mexico, Oklahoma, Utah or Wyoming.
(c) PERFORMANCE AND COMPLIANCE WITH CONTRACTS AND CREDIT AND COLLECTION
POLICY. The Seller shall (and shall cause the Servicer to), at its expense,
timely and fully perform and comply with all material provisions, covenants and
other promises required to be observed by it under the Contracts related to the
Receivables, and timely and fully comply in all material respects with the
applicable Credit and Collection Policies with regard to each Receivable and the
related Contract.
Ex. IV-1
(d) OWNERSHIP INTEREST, ETC. The Seller shall (and shall cause the Servicer
to), at its expense, take all action necessary or desirable to establish and
maintain a valid and enforceable undivided percentage ownership or security
interest, to the extent of the Purchased Interest, in the Pool Receivables, the
Related Security and Collections with respect thereto, and a first priority
perfected security interest in the Pool Assets, in each case free and clear of
any Adverse Claim, in favor of the Issuer, including taking such action to
perfect, protect or more fully evidence the interest of the Issuer as the
Issuer, through the Administrator, may reasonably request.
(e) SALES, LIENS, ETC. The Seller shall not sell, assign (by operation of
law or otherwise) or otherwise dispose of, or create or suffer to exist any
Adverse Claim upon or with respect to, any or all of its right, title or
interest in, to or under any Pool Assets (including the Seller's undivided
interest in any Receivable, Related Security or Collections, or upon or with
respect to any account to which any Collections of any Receivables are sent), or
assign any right to receive income in respect of any items contemplated by this
paragraph.
(f) EXTENSION OR AMENDMENT OF RECEIVABLES. Except as provided in the
Agreement, the Seller shall not, and shall not permit the Servicer to, extend
the maturity or adjust the Outstanding Balance or otherwise modify the terms of
any Pool Receivable in any material respect, or amend, modify or waive, in any
material respect, any term or condition of any related Contract (which term or
condition relates to payments under, or the enforcement of, such Contract).
(g) CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY. The Seller shall
not make (or permit the Originator to make) any material change in the character
of its business or in any Credit and Collection Policy, or any change in any
Credit and Collection Policy that would have a Material Adverse Effect with
respect to the Receivables. The Seller shall not make (or permit the Originator
to make) any other change in any Credit and Collection Policy without giving
prior written notice thereof to the Administrator.
(h) AUDITS. The Seller shall (and shall cause the Originator to), from time
to time during regular business hours as reasonably requested in advance (unless
a Termination Event or Unmatured Termination Event exists) by the Administrator,
permit the Administrator, or its agents or representatives: (i) to examine and
make copies of and abstracts from all books, records and documents (including
computer tapes and disks) in the possession or under the control of the Seller
(or the Originator) relating to Receivable s and the Related Security, including
the related Contracts; (ii) to visit the offices and properties of the Seller
and the Originator for the purpose of examining such materials described in
CLAUSE (I) above, and to discuss matters relating to Receivables and the Related
Security or the Seller's, Royal's or the Originator's performance under the
Transaction Documents or under the Contracts with any of the officers,
employees, agents or contractors of the Seller, Royal or the Originator having
knowledge of such matters; and (iii) without limiting the CLAUSES (I) and (II)
above, to engage certified public accountants or other auditors acceptable to
the Seller and the Administrator to conduct, at the Seller's expense, a review
of the Seller's books and records with respect to such Receivables.
Ex. IV-2
(i) CHANGE IN LOCK-BOX BANKS, LOCK-BOX ACCOUNTS AND PAYMENT INSTRUCTIONS TO
OBLIGORS. The Seller shall not, and shall not permit the Servicer or the
Originator to, add or terminate any bank as a Lock-Box Bank or any account as a
Lock-Box Account from those listed in SCHEDULE II to the Agreement, or make any
change in its instructions to Obligors regarding payments to be made to the
Seller, the Originator, the Servicer or any Lock-Box Account (or related post
office box), unless the Administrator shall have consented thereto in writing
and the Administrator shall have received copies of all agreements and documents
(including Lock-Box Agreements) that it may request in connection therewith.
(j) DEPOSITS TO LOCK-BOX ACCOUNTS. The Seller shall (or shall cause the
Servicer to): (i) instruct all Obligors to make payments of all Receivables to
one or more Lock-Box Accounts or to post office boxes to which only Lock-Box
Banks have access (and shall instruct the Lock-Box Banks to cause all items and
amounts relating to such Receivables received in such post office boxes to be
removed and deposited into a Lock-Box Account on a daily basis), and (ii)
deposit, or cause to be deposited, any Collections received by it, the Servicer
or the Originator into Lock-Box Accounts not later than one Business Day after
receipt thereof. Each Lock-Box Account shall at all times be subject to a
Lock-Box Agreement. The Seller will not (and will not permit the Servicer to)
deposit or otherwise credit, or cause or permit to be so deposited or credited,
to any Lock-Box Account cash or cash proceeds other than Collections.
(k) MARKING OF RECORDS. At its expense, the Seller shall: (i) xxxx (or
cause the Servicer to xxxx) its master data processing records relating to Pool
Receivables and related Contracts, including with a legend evidencing that the
undivided percentage ownership interests with regard to the Purchased Interest
related to such Receivables and related Contracts have been sold in accordance
with the Agreement, and (ii) cause the Originator so to xxxx its master data
processing records pursuant to the Purchase and Sale Agreement.
(l) REPORTING REQUIREMENTS. The Seller will provide to the Administrator
(in multiple copies, if requested by the Administrator) the following:
(i) as soon as available and in any event within 60 days after the end
of the first three quarters of each fiscal year of the Seller, balance
sheets of the Seller as of the end of such quarter and statements of
income, retained earnings and cash flow of the Seller for the period
commencing at the end of the previous fiscal year and ending with the end
of such quarter, certified by the chief financial officer of such Person;
(ii) as soon as available and in any event within 120 days after the
end of each fiscal year of the Seller, a copy of the annual report for such
year for the Seller, containing unaudited financial statements for such
year certified as to accuracy by the chief financial officer or treasurer
of the Seller;
(iii) as soon as possible and in any event within five days after the
occurrence of each Termination Event or Unmatured Termination Event, a
statement of the chief financial officer of the Seller setting forth
details of such Termination Event or Unmatured Termination Event and the
action that the Seller has taken and proposes to take with respect thereto;
Ex. IV-3
(iv) promptly after the filing or receiving thereof, copies of all
reports and notices that the Seller or any Affiliate files under ERISA with
the Internal Revenue Service, the Pension Benefit Guaranty Corporation or
the U.S. Department of Labor or that the Seller or any Affiliate receives
from any of the foregoing or from any multiemployer plan (within the
meaning of Section 4001(a)(3) of ERISA) to which the Seller or any of its
Affiliates is or was, within the preceding five years, a contributing
employer, in each case in respect of the assessment of withdrawal liability
or an event or condition that could, in the aggregate, result in the
imposition of liability on the Seller and/or any such Affiliate;
(v) at least thirty days before any change in the Seller's name or any
other change requiring the amendment of UCC financing statements, a notice
setting forth such changes and the effective date thereof;
(vi) promptly after the Seller obtains knowledge thereof, notice of
any: (A) material litigation, investigation or proceeding that may exist at
any time between the Seller and any Person or (B) material litigation or
proceeding relating to any Transaction Document;
(vii) promptly after the occurrence thereof, notice of a material
adverse change in the business, operations, property or financial or other
condition of the Seller, the Servicer or the Originator; and
(viii) such other information respecting the Receivables or the
condition or operations, financial or otherwise, o f the Seller or any of
its Affiliates as the Administrator may from time to time reasonably
request.
(m) CERTAIN AGREEMENTS. Without the prior written consent of the
Administrator, the Seller will not (and will not permit the Originator to)
amend, modify, waive, revoke or terminate any Transaction Document to which it
is a party or any provision of Seller's certificate of incorporation or by-laws.
(n) RESTRICTED PAYMENTS. (i) Except pursuant to CLAUSE (II) below, the
Seller will not: (A) purchase or redeem any shares of its capital stock, (B)
declare or pay any dividend or set aside any funds for any such purpose, (C)
prepay, purchase or redeem any Debt, (D) lend or advance any funds or (E) repay
any loans or advances to, for or from any of its Affiliates (the amounts
described in CLAUSES (A) through (E) being referred to as "Restricted
Payments").
(i) Subject to the limitations set forth in CLAUSE (III) below, the
Seller may make Restricted Payments so long as such Restricted Payments are
made only in one or more of the following ways: (A) the Seller may make
cash payments (including prepayments) on the Company Note in accordance
with its terms, and (B) if no amounts are then outstanding under the
Company Note, the Seller may declare and pay dividends.
(ii) The Seller may make Restricted Payments only out of the funds it
receives pursuant to SECTIONS 1.4(B)(II) and (IV) of the Agreement.
Furthermore, the Seller shall not pay, make or declare: (A) any dividend
if, after giving effect thereto, the Seller's
Ex. IV-4
tangible net worth would be less than $4,000,000, or (B) any Restricted
Payment (including any dividend) if, after giving effect thereto, any
Termination Event or Unmatured Termination Event shall have occurred and be
continuing.
(o) OTHER BUSINESS. The Seller will not: (i) engage in any business other
than the transactions contemplated by the Transaction Documents; (ii) create,
incur or permit to exist any Debt of any kind (or cause or permit to be issued
for its account any letters of credit or bankers' acceptances) other than
pursuant to this Agreement or the Company Note; or (iii) form any Subsidiary or
make any investments in any other Person; provided, however, that the Seller
shall be permitted to incur minimal obligations to the extent necessary for the
day-to-day operations of the Seller (such as expenses for stationery, audits,
maintenance of legal status, etc.).
(p) USE OF SELLER'S SHARE OF COLLECTIONS. The Seller shall apply the
Seller's Share of Collections to make payments in the following order of
priority: (i) the payment of its expenses (including all obligations payable to
the Issuer and the Administrator under the Agreement and under the Fee Letter);
(ii) the payment of accrued and unpaid interest on the Company Note; and (iii)
other legal and valid corporate purposes.
(q) TANGIBLE NET WORTH. The Seller will not permit its tangible net worth,
at any time, to be less than $4,000,000.
2. COVENANTS OF THE SERVICER AND ROYAL. Until the latest of the Facility
Termination Date, the date on which no Capital of or Discount in respect of the
Purchased Interest shall be outstanding or the date all other amounts owed by
the Seller under the Agreement to the Issuer, the Administrator and any other
Indemnified Party or Affected Person shall be paid in full:
(a) COMPLIANCE WITH LAWS, ETC. The Servicer and, to the extent that it
ceases to be the Servicer, Royal shall comply (and shall cause the Originator to
comply) in all material respects with all applicable laws, rules, regulations
and orders, and preserve and maintain its corporate existence, rights,
franchises, qualifications and privileges, except to the extent that the failure
so to comply with such laws, rules and regulations or the failure so to preserve
and maintain such existence, rights, franchises, qualifications and privileges
would not have a Material Adverse Effect.
(b) OFFICES, RECORDS AND BOOKS OF ACCOUNT, ETC. The Servicer and, to the
extent that it ceases to be the Servicer, Royal, shall keep (and shall cause the
Originator to keep) its principal place of business and chief executive office
(as such terms or similar terms are used in the applicable UCC) and the office
where it keeps its records concerning the Receivables at the address of the
Servicer set forth under its name on the signature page to the Agreement and
keep its state of incorporation at the State set forth in SECTION 2(A) of
Exhibit III or, upon at least 30 days' prior written notice of a proposed change
to the Administrator, at any other locations in jurisdictions where all actions
reasonably requested by the Administrator to protect and perfect the interest of
the Issuer in the Receivables and related items (including the Pool Assets) have
been taken and completed. The Servicer and, to the extent that it ceases to be
the Servicer, Royal, also will (and will cause the Originator to) maintain and
implement administrative and operating procedures (including an ability to
recreate records evidencing Receivables and related Contracts
Ex. IV-5
in the event of the destruction of the originals thereof), and keep and maintain
all documents, books, records, computer tapes and disks and other information
reasonably necessary or advisable for the collection of all Receivables
(including records adequate to permit the daily identification of each
Receivable and all Collections of and adjustments to each existing Receivable).
(c) PERFORMANCE AND COMPLIANCE WITH CONTRACTS AND CREDIT AND COLLECTION
POLICY. The Servicer and, to the extent that it ceases to be the Servicer,
Royal, shall (and shall cause the Originator to), at its expense, timely and
fully perform and comply with all material provisions, covenants and other
promises required to be observed by it under the Contracts related to the
Receivables, and timely and fully comply in all material respects with the
Credit and Collection Policy with regard to each Receivable and the related
Contract.
(d) EXTENSION OR AMENDMENT OF RECEIVABLES. Except as provided in the
Agreement, the Servicer and, to the extent that it ceases to be the Servicer,
Royal, shall not extend (and shall not permit the Originator to extend), the
maturity or adjust the Outstanding Balance or otherwise modify the terms of any
Pool Receivable in any material respect, or amend, modify or waive, in any
material respect, any term or condition of any related Contract (which term or
condition relates to payments under, or the enforcement of, such Contract).
(e) CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY. The Servicer and,
to the extent that it ceases to be the Servicer, Royal, shall not make any
material change in the character of its business or in any Credit and
Collection Policy, or any change in any Credit and Collection Policy that would
have a Material Adverse Effect. The Servicer and, to the extent that it ceases
to be the Servicer, Royal, shall not make any other change in any Credit and
Collection Policy without giving prior written notice thereof to the
Administrator.
(f) AUDITS. The Servicer and, to the extent that it ceases to be the
Servicer, Royal, shall (and shall cause the Originator to), from time to time
during regular business hours as reasonably requested in advance (unless a
Termination Event or Unmatured Termination Event exists) by the Administrator,
permit the Administrator, or its agents or representatives: (i) to examine and
make copies of and abstracts from all books, records and documents (including
computer tapes and disks) in its possession or under its control relating to
Receivables and the Related Security, including the related Contracts; (ii) to
visit its offices and properties for the purpose of examining such materials
described in CLAUSE (I) above, and to discuss matters relating to Receivables
and the Related Security or its performance hereunder or under the Contracts
with any of its officers, employees, agents or contractors having knowledge of
such matters; and (iii) without limiting the CLAUSES (I) and (II) above, to
engage certified public accountants or other auditors acceptable to the Servicer
and the Administrator to conduct, at the Servicer's expense, a review of the
Servicer's books and records with respect to such Receivables.
(g) CHANGE IN LOCK-BOX BANKS, LOCK-BOX ACCOUNTS AND PAYMENT INSTRUCTIONS TO
OBLIGORS. The Servicer and, to the extent that it ceases to be the Servicer,
Royal, shall not (and shall not permit the Originator to) add or terminate any
bank as a Lock-Box Bank or any account as a Lock-Box Account from those listed
in SCHEDULE II to the Agreement, or make any change
Ex. IV-6
in its instructions to Obligors regarding payments to be made to the Servicer or
any Lock-Box Account (or related post office box), unless the Administrator
shall have consented thereto in writing and the Administrator shall have
received copies of all agreements and documents (including Lock-Box Agreements)
that it may request in connection therewith.
(h) DEPOSITS TO LOCK-BOX ACCOUNTS. The Servicer shall: (i) instruct all
Obligors to make payments of all Receivables to one or more Lock-Box Accounts or
to post office boxes to which only Lock-Box Banks have access (and shall
instruct the Lock-Box Banks to cause all items and amounts relating to such
Receivables received in such post office boxes to be removed and deposited into
a Lock-Box Account on a daily basis); and (ii) deposit, or cause to be
deposited, any Collections received by it into Lock-Box Accounts not later than
one Business Day after receipt thereof. Each Lock-Box Account shall at all times
be subject to a Lock-Box Agreement.
(i) MARKING OF RECORDS. At its expense, the Servicer shall xxxx its master
data processing records relating to Pool Receivables and related Contracts,
including with a legend evidencing that the undivided percentage ownership
interests with regard to the Purchased Interest related to such Receivables and
related Contracts have been sold in accordance with the Agreement.
(j) REPORTING REQUIREMENTS. Royal shall provide to the Administrator (in
multiple copies, if requested by the Administrator) the following:
(i) as soon as available and in any event within 60 days after the end
of the first three quarters of each fiscal year of Royal, balance sheets of
Royal and its consolidated Subsidiaries as of the end of such quarter and
statements of income, retained earnings and cash flow of Royal and its
consolidated Subsidiaries for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, certified by
the chief financial officer of such Person (which information may be
contained in the SEC Reports);
(ii) as soon as available and in any event within 120 days after the
end of each fiscal year of such Person, a copy of the annual report for
such year for such Person and its consolidated Subsidiaries, containing
financial statements for such year audited by independent certified public
accountants of nationally recognized standing (which information may be
contained in the SEC Reports);
(iii) as to the Servicer only, as soon as available and in any event
not later than two Business Days prior to the Settlement Date, an
Information Package as of the most recently completed calendar month or, if
in the opinion of the Administrator reasonable grounds for insecurity exist
with respect to the collectibility of the Pool Receivables or with respect
to the Seller or Servicer's performance or ability to perform its
obligations under the Agreement, within six Business Days of a request by
the Administrator, an Information Package for such periods as is specified
by the Administrator (but in no event more frequently than weekly);
Ex. IV-7
(iv) as soon as possible and in any event within five days after
becoming aware of the occurrence of each Termination Event or Unmatured
Termination Event, a statement of the chief financial officer of Royal
setting forth details of such Termination Event or Unmatured Termination
Event and the action that such Person has taken and proposes to take with
respect thereto;
(v) promptly after the sending or filing thereof, copies of all
reports that Royal sends to any of its security holders, and copies of all
reports and registration statements that Royal or any Subsidiary files with
the Securities and Exchange Commission or any national securities exchange;
provided, that any filings with the Securities and Exchange Commission that
have been granted "confidential" treatment shall be provided promptly after
such filings have become publicly available;
(vi) promptly after the filing or receiving thereof, copies of all
reports and notices that Royal or any of its Affiliate files under ERISA
with the Internal Revenue Service, the Pension Benefit Guaranty Corporation
or the U.S. Department of Labor or that such Person or any of its
Affiliates receives from any of the foregoing or from any multiemployer
plan (within the meaning of Section 4001(a)(3) of ERISA) to which such
Person or any of its Affiliate is or was, within the preceding five years,
a contributing employer, in each case in respect of the assessment of
withdrawal liability or an event or condition that could, in the aggregate,
result in the imposition of liability on Royal and/or any such Affiliate;
(vii) at least thirty days before any change in Royal's or the
Originator's name or any other change requiring the amendment of UCC
financing statements, a notice setting forth such changes and the effective
date thereof;
(viii) promptly after Royal obtains knowledge thereof, notice of any:
(A) litigation, investigation or proceeding that may exist at any time
between Royal or any of its Subsidiaries and any Governmental Authority
that, if not cured or if adversely determined, as the case may be, would
have a Material Adverse Effect; (B) litigation or proceeding adversely
affecting such Person or any of its Subsidiaries in which the amount
involved is $2,000,000 or more and not covered by insurance or in which
injunctive or similar relief is sought; or (C) litigation or proceeding
relating to any Transaction Document;
(ix) promptly after the occurrence thereof, notice of a material
adverse change in the business, operations, property or financial or other
condition of Royal or any of its Subsidiaries; and
(x) such other information respecting the Receivables or the condition
or operations, financial or otherwise, of Royal or any of its Affiliates as
the Administrator may from time to time reasonably request.
3. SEPARATE EXISTENCE. Each of the Seller and Royal hereby acknowledges
that the Purchasers, the Issuer and the Administrator are entering into the
transactions contemplated by this Agreement and the other Transaction Documents
in reliance upon the Seller's identity as a
Ex. IV-8
legal entity separate from Royal and its Affiliates. Therefore, from and after
the date hereof, each of the Seller and Royal shall take all steps specifically
required by the Agreement or reasonably required by the Administrator to
continue the Seller's identity as a separate legal entity and to make it
apparent to third Persons that the Seller is an entity with assets and
liabilities distinct from those of Royal and any other Person, and is not a
division of Royal, its Affiliates or any other Person. Without limiting the
generality of the foregoing and in addition to and consistent with the other
covenants set forth herein, each of the Seller and Royal shall take such actions
as shall be required in order that:
(a) The Seller will be a limited purpose corporation whose primary
activities are restricted in its certificate of incorporation to: (i)
purchasing or otherwise acquiring from the Originator (or its Affiliates),
owning, holding, granting security interests or selling interests in Pool
Assets (or other receivables originated by the Originator or its
Affiliates, and certain related assets), (ii) entering into agreements for
the selling and servicing of the Receivables Pool (or other receivables
pools originated by the Originator or its Affiliates), and (iii) conducting
such other activities as it deems necessary or appropriate to carry out its
primary activities;
(b) The Seller shall not engage in any business or activity, or incur
any indebtedness or liability, other than as expressly permitted by the
Transaction Documents;
(c) Not less than one member of the Seller's Board of Directors (the
"Independent Director") shall be an individual who is not a direct,
indirect or beneficial stockholder, officer, director, employee, affiliate,
associate or supplier of Royal or any of its Affiliates. The certificate of
incorporation of the Seller shall provide that: (i) the Seller's Board of
Directors shall not approve, or take any other action to cause the filing
of, a voluntary bankruptcy petition with respect to the Seller unless the
Independent Director shall approve the taking of such action in writing
before the taking of such action, and (ii) such provision cannot be amended
without the prior written consent of the Independent Director;
(d) The Independent Director shall not at any time serve as a trustee
in bankruptcy for the Seller, Royal or any Affiliate thereof;
(e) Any employee, consultant or agent of the Seller will be
compensated from the Seller's funds for services provided to the Seller.
The Seller will not engage any agents other than its attorneys, auditors
and other professionals, and a servicer and any other agent contemplated by
the Transaction Documents for the Receivables Pool, which servicer will be
fully compensated for its services by payment of the Servicing Fee, and a
manager, which manager will be fully compensated from the Seller's funds;
(f) The Seller will contract with the Servicer to perform for the
Seller all operations required on a daily basis to service the Receivables
Pool. The Seller will pay the Servicer the Servicing Fee pursuant hereto.
The Seller will not incur any material indirect or overhead expenses for
items shared with Royal (or any other Affiliate thereof)
Ex. IV-9
that are not reflected in the Servicing Fee. To the extent, if any, that
the Seller (or any Affiliate thereof) shares items of expenses not
reflected in the Servicing Fee or the manager's fee, such as legal,
auditing and other professional services, such expenses will be allocated
to the extent practical on the basis of actual use or the value of services
rendered, and otherwise on a basis reasonably related to the actual use or
the value of services rendered; it being understood that Royal shall pay
all expenses relating to the preparation, negotiation, execution and
delivery of the Transaction Documents, including legal, agency and other
fees;
(g) The Seller's operating expenses will not be paid by Royal or any
other Affiliate thereof;
(h) All of the Seller's business correspondence and other
communications shall be conducted in the Seller's own name and on its own
separate stationery;
(i) The Seller's books and records will be maintained separately from
those of Royal and any other Affiliate thereof;
(j) All financial statements of Royal or any Affiliate thereof that
are consolidated to include Seller will contain detailed notes clearly
stating that: (i) a special purpose corporation exists as a Subsidiary of
Royal, and (ii) the Originator has sold receivables and other related
assets to such special purpose Subsidiary that, in turn, has sold undivided
interests therein to certain financial institutions and other entities;
(k) The Seller's assets will be maintained in a manner that
facilitates their identification and segrega tion from those of Royal or
any Affiliate thereof;
(l) The Seller will strictly observe corporate formalities in its
dealings with Royal or any Affiliate thereof, and funds or other assets of
the Seller will not be commingled with those of Royal or any Affiliate
thereof except as permitted by the Agreement in connection with servicing
the Pool Receivables. The Seller shall not maintain joint bank accounts or
other depository accounts to which Royal or any Affiliate thereof has
independent access. The Seller is not named, and has not entered into any
agreement to be named, directly or indirectly, as a direct or contingent
beneficiary or loss payee on any insurance policy with respect to any loss
relating to the property of Royal or any Subsidiary or other Affiliate of
Royal. The Seller will pay to the appropriate Affiliate the marginal
increase or, in the absence of such increase, the market amount of its
portion of the premium payable with respect to any insurance policy that
covers the Seller and such Affiliate;
(m) The Seller will maintain arm's- length relationships with Royal
(and any Affiliate thereof). Any Person that renders or otherwise furnishes
services to the Seller will be compensated by the Seller at market rates
for such services it renders or otherwise furnishes to the Seller. Neither
the Seller nor Royal will be or will hold itself out to be responsible for
the debts of the other or the decisions or actions respecting the daily
business and affairs of the other. The Seller and Royal will immediately
correct any known misrepresentation with respect to the foregoing, and they
will not operate or
Ex. IV-10
Purport to operate as an integrated single economic unit with respect to
each other or in their dealing with any other entity; and
(n) Royal shall not pay the salaries of Seller's employees, if any.
Ex.IV-11
EXHIBIT V
TERMINATION EVENTS
Each of the following shall be a "Termination Event":
(a) (i) the Seller, Royal, the Originator or the Servicer (if Royal or any
of its Affiliates) shall fail to perform or observe any term, covena nt or
agreement under the Agreement or any other Transaction Document and, except as
otherwise provided herein, such failure shall continue for five Business Days
after knowledge or notice thereof, (ii) the Seller or the Servicer shall fail to
make when due any payment or deposit to be made by it under the Agreement and
such failure shall continue unremedied for one Business Day or (iii) Royal shall
resign as Servicer, and no successor Servicer reasonably satisfactory to the
Administrator shall have been appointed;
(b) Royal (or any Affiliate thereof) shall fail to transfer to any
successor Servicer when required any rights pursuant to the Agreement that Royal
(or such Affiliate) then has as Servicer;
(c) any representation or warranty made or deemed made by the Seller, Royal
or Originator (or any of their respective officers) under or in connection with
the Agreement or any other Transaction Document, or any information or report
delivered by the Seller, Royal or Originator or the Servicer pursuant to the
Agreement or any other Transaction Document, shall prove to have been incorrect
or untrue in any material respect when made or deemed made or delivered, and
shall remain incorrect or untrue for 10 days after notice to the Seller or the
Servicer of such inaccuracy;
(d) the Seller or the Servicer shall fail to deliver the Information
Package pursuant to the Agreement, and such failure shall remain unremedied for
two Business Days;
(e) the Agreement or any Purchase or Reinvestment pursuant to the Agreement
shall for any reason: (i) cease to create, or the Purchased Interest shall for
any reason cease to be, a valid and enforceable perfected undivided percentage
ownership or security interest to the extent of the Purchased Interest in each
Pool Receivable, the Related Security and Collections with respect thereto, free
and clear of any Adverse Claim, or (ii) cease to create with respect to the Pool
Assets, or the interest of the Issuer with respect to such Pool Assets shall
cease to be, a valid and enforceable first priority perfected security interest,
free and clear of any Adverse Claim;
(f) the Seller, Royal or Originator shall generally not pay its debts as
such debts become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against the Seller, Royal or Originator
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief or
composition of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other similar
official for it or for any substantial part of its property and, in
Ex. V-1
the case of any such proceeding instituted against it (but not instituted by
it), either such proceeding shall remain undismissed or unstayed for a period of
60 days, or any of the actions sought in suc h proceeding (including the entry
of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of its
property) shall occur; or the Seller, Royal or Originator shall take any
corporate action to authorize any of the actions set forth above in this
paragraph;
(g) (i) the Default Ratio shall exceed 4.50%; (ii) the Delinquency Ratio
shall exceed 3.75%; (iii) the average for three consecutive calendar months of
(A) the Default Ratio shall exceed 2.75%; (B) the Delinquency Ratio shall exceed
2.75%; or (C) the Dilution Ratio shall exceed 20.00%; or (iv) Days' Sales
Outstanding shall exceed 55 days;
(h) a Change in Control shall occur;
(i) at any time (i) the sum of (A) the Capital plus (B) the Total Reserves,
exceeds (ii) the sum of (A) the Net Receivables Pool Balance at such time plus
(B) the Issuer's Share of the amount of Collections then on deposit in the
Lock-Box Accounts (other than amounts set aside therein representing Discount
and fees), and such circumstance shall not have been cured within two Business
Days;
(j) (i) Royal or any of its Subsidiaries shall fail to pay any principal of
or premium or interest on any of its Debt that is outstanding in a principal
amount of at least $250,000 in the aggregate when the same becomes due and
payable (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise), and such failure shall continue after the applicable grace
period, if any, specified in the agreement, mortgage, indenture or instrument
relating to such Debt (and shall have not been waived); or (ii) any other event
shall occur or condition shall exist under any agreement, mortgage, indenture or
instrument relating to any such Debt and shall continue after the applicable
grace period, if any, specified in such agreement, mortgage, indenture or
instrument (and shall have not been waived), if, in either case: (a) the effect
of such non-payment, event or condition is to give the applicable debtholders
the right (whether acted upon or not) to accelerate the maturity of such Debt,
or (b) any such Debt shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment), redeemed,
purchased or defeased, or an offer to repay, redeem, purchase or defease such
Debt shall be required to be made, in each case before the stated maturity
thereof;
(k) either: (i) a contribution failure shall occur with respect to any
Benefit Plan sufficient to give rise to a lien under Section 302(f) of ERISA,
(ii) the Internal Revenue Service shall file a notice of lien asserting a claim
or claims pursuant to the Internal Revenue Code with regard to any of the assets
of Seller, Originator, Royal or any ERISA Affiliate and such lien shall have
been filed and not released within 10 days, or (iii) the Pension Benefit
Guaranty Corporation shall, or shall indicate its intention in writing to the
Seller, Originator, Royal or any ERISA Affiliate to, either file a notice of
lien asserting a claim pursuant to ERISA with regard to any assets of the
Seller, Originator, Royal or any ERISA Affiliate or terminate any Benefit Plan
that has unfunded benefit liabilities, or any steps shall have been taken to
terminate any Benefit
Ex. V-2
Plan subject to Title IV of ERISA so as to result in any liability in excess of
$250,000 and such lien shall have been filed and not released within 10 days;
(l) Royal shall fail to perform and comply with each of the covenants set
forth in SECTIONS 9.6, 9.7, 9.8 and 9.9 of the Credit Agreement as in effect on
the date hereof, (but without giving effect to any other amendment, modification
or waiver to such financial covenants from time to time under the Credit
Agreement), each of which covenants and agreements, together with all related
definitions, exhibits and ancillary provisions, are hereby incorporated in this
Agreement by reference as though specifically set forth in this PARAGRAPH (L)
and shall survive the termination and/or expiration of the Credit Agreement;
(m) the occurrence of an event of default set forth in SECTION 10 of the Credit
Agreement as in effect on the date hereof, (regardless of whether such event of
default may be amended, modified or waived from time to time in accordance with
the Credit Agreement), each of which events of default and agreements, together
with all related definitions, exhibits and ancillary provisions, are hereby
incorporated in this Agreement by reference as though specifically set forth in
this PARAGRAPH (M) and shall survive the termination and/or expiration of the
Credit Agreement.
Ex. V-3
EXHIBIT VI
SUPPLEMENTAL PERFECTION REPRESENTATIONS, WARRANTIES AND COVENANTS
In addition to the representations, warranties and covenants contained in
Exhibit III hereof, the Seller hereby makes the following additional
representations, warranties and covenants:
1. RECEIVABLES; LOCK-BOX ACCOUNTS.
(a) The Pool Receivables constitute "accounts", "general intangibles" or
"tangible chattel paper", each within the meaning of the applicable UCC.
(b) Lock-Box Accounts. Each Lock-Box Account constitutes a "deposit
account" within the meaning of the applicable UCC.
2. CREATION OF SECURITY INTERESt. The Seller owns and has good and
marketable title to the Pool Receivables and Lock-Box Accounts (and the related
lock-boxes), free and clear of any Adverse Claim. The Agreement creates a valid
and continuing security interest (as defined in the applicable UCC) in the Pool
Receivables and the Lock-Box Accounts (and the related lock-boxes) in favor of
the Issuer, which security interest is prior to all other Adverse Claims and is
enforceable as such as against any creditors of and purchasers from the Seller.
3. PERFECTION.
(a) General. The Seller has or has caused, or will or will cause within ten
days after the date hereof, the filing of all appropriate financing statements
in the proper filing office in the appropriate jurisdictions under applicable
law in order to perfect the sale of the Pool Receivables from the Originator to
the Seller pursuant to the Purchase and Sale Agreement and the security interest
granted by the Seller to the Issuer in the Pool Receivables and Lock-Box
Accounts (and the related lock-boxes) hereunder.
(b) Tangible Chattel Paper. With respect to any Pool Receivable that
constitutes "tangible chattel paper", the Servicer is in possession of the
original copies of the tangible chattel paper that constitute or evidence such
Pool Receivables, and the Seller has filed or has caused the Originator to file,
or will file or will cause the Originator to file within ten days after the date
hereof, the financing statements described in paragraph (a) above, each of which
will contain a statement that: "A purchase of or a grant of a security interest
in any property described in this financing statement will violate the rights of
the Issuer." The Pool Receivables to the extent they are evidenced by "tangible
chattel paper" do not have any marks or notations indicating that they have been
pledged, assigned or otherwise conveyed to any Person other than the Seller or
the Issuer.
(c) Lock-Box Accounts. With respect to all Lock-Box Accounts (and all
related lock-boxes), the Seller has delivered to the Administrator, on behalf of
the Issuer, a fully executed Acknowledgment and Consent to Assignment of
Lock-Box Agreement pursuant to which the applicable Lock-Box Ba nk has agreed,
following the occurrence and continuation of a
Ex. VI-1
Termination Event, to comply with all instructions given by the Administrator
with respect to all funds on deposit in such Lock-Box Account (and all funds
sent to the respective lock-box), witho ut further consent by the Seller or the
Servicer.
4. PRIORITY.
(a) Other than the transfer of the Receivables by the Originator to the
Seller pursuant to the Purchase and Sale Agreement and the grant of security
interest by the Seller to the Issuer in the Pool Receivables and Lock-Box
Accounts (and the related lock-boxes) hereunder, neither the Seller nor the
Originator has pledged, assigned, sold, conveyed, or otherwise granted a
security interest in any of the Pool Receivables or Lock-Box Accounts (and the
related lock-boxes) to any other Person.
(b) Neither the Seller nor the Originator has authorized, or is aware of,
any filing of any financing statement against the Seller or the Originator that
includes a description of collateral covering the Pool Receivables or any other
Pool Assets, other than any financing statement filed pursuant to the Purchase
and Sale Agreement and this Agreement or financing statements that have been
validly terminated or assigned prior to or effective as of the date hereof.
(c) The Seller is not aware of any judgment, ERISA or tax lien filings
against either the Seller or the Originator.
(d) None of the Lock-Box Accounts (and the related lock-boxes) are in the
name of any Person other than the Seller or the Issuer. None of the Seller, the
Servicer or the Originator has consented to any Lock-Box Bank's complying with
instructions of any person other than the Administrator.
5. SURVIVAL OF SUPPLEMENTAL REPRESENTATIONS. Notwithstanding any other
provision of the Agreement or any other Transaction Document, the
representations contained in this Exhibit VI shall be continuing, and remain in
full force and effect until such time as all the Capital has finally been paid
in full and all other obligations of the Seller under the Agreement or any other
Transaction Documents have been fully performed.
6. NO WAIVER. The parties to the Agreement: (i) shall not, without
obtaining a confirmation of the then-current rating of the Notes, waive any of
the representations set forth in this EXHIBIT VI; (ii) shall provide the rating
agencies rating the Notes with prompt written notice of any breach of any
representations set forth in this EXHIBIT VI; and (iii) shall not, without
obtaining a confirmation of the then-current rating of the Notes (as determined
after any adjustment or withdrawal of the ratings following notice of such
breach), waive a breach of any of the representations set forth in this EXHIBIT
VI.
7. SELLER TO MAINTAIN PERFECTION AND PRIORITY. In order to evidence the
interests of the Issuer under this Agreement, the Seller shall, from time to
time take such action, or execute and deliver such instruments (other than
filing financing statements) as may be necessary or advisable (including,
without limitation, such actions as are requested by the Administrator on behalf
of the Issuer) to maintain and perfect, as a first-priority interest, the
Issuer's security
Ex. VI-2
interest in the Pool Receivables. The Seller shall, from time to time and within
the time limits established by law, prepare and present to the Administrator for
the Administrator's authorization and approval all financing statements,
amendments, continuations or initial financing statements in lieu of a
continuation statement, or other filings necessary to continue, maintain and
perfect the Issuer's security interest in the Pool Receivables as a
first-priority interest. The Administrator's approval of such filings shall
authorize the Seller to file such financing statements under the UCC without the
signature of the Seller, the Originator or the Issuer where allowed by
applicable law. Notwithstanding anything else in the Transaction Documents to
the contrary, neither the Seller, the Servicer, nor the Originator, shall have
any authority to file a termination, partial termination, release, partial
release or any amendment that deletes the name of a debtor or excludes
collateral of any such financing statements, without the prior written consent
of the Administrator, on behalf of the Issuer.
Ex. VI-3
SCHEDULE I
CREDIT AND COLLECTION POLICY
SCHED.I-1
SCHEDULE II
LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS
LOCK-BOX BANK ACCOUNT NAME ACCOUNT NUMBER
------------- ------------ --------------
PNC Bank, National Association Royal Appliance Receivables, Inc. 642996
X.X. Xxx 000000
Xxxxxxxxxx, XX 00000-0000
Sched. II-1
SCHEDULE III
TRADE NAMES
CORPORATE NAME TRADE NAMES/FICTITIOUS NAMES
-------------------------------- ----------------------------
Royal Appliance Receivables, Inc. None.
Sched. III-1
SCHEDULE 2(F)
ACTIONS OR PROCEEDINGS
1. Service Merchandise Company Inc. et al., Plaintiffs vs. Royal Appliance
Mfg. Co., Defendant, in the United States Bankruptcy Court, Middle District
of Tennessee, Nashville Division, Case No. 399-02649, filed March 12, 2001.
2. Royal Appliance Mfg. Co., Plaintiff vs. Bissell Homecare, Inc. et al.,
Defendants, in the United States District Court, Northern District of Ohio,
Eastern Division, Case No. 1:02CV0338, filed February 22, 2002.
3. Royal Appliance Mfg. Co., Plaintiff vs. White Consolidated, Ltd.,
Defendant, in the United States District Court, Northern District of Ohio,
Eastern Division, Case No. 1:02CV01127, filed June 14, 2002.
4. Bissell Homecare, Inc., Plaintiff vs. Royal Appliance Manufacturing, Co.,
Defendant, in the United States District Court, Northern District of Ohio,
Eastern Division, Case No. 1:02CV1358, filed July 15, 2002.
5. Royal Appliance Mfg. Co., Plaintiff vs. Euro-Pro Corporation et al.,
Defendants, in the United States District Court, Northern District of Ohio,
Eastern Division, Case No. 1:02CV02249, filed November 15, 2002.
6. Phone Zap, LLC, Plaintiff vs. Royal Appliance Manufacturing Co. and Privacy
Technologies, Inc., Defendants, in the United States District Court,
District of Columbia, Case No. 1:03cv00013, filed January 6, 2003.
Sched. 2(f)-1
ANNEX A
to Amended and Restated
Receivables Purchase Agreement
FORM OF INFORMATION PACKAGE
Annex A-1
ANNEX B
to Amended and Restated
Receivables Purchase Agreement
FORM OF PURCHASE NOTICE
Annex B-1
FORM OF PURCHASE NOTICE
________, [200_]
Fifth Third Bank
00 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Ladies and Gentlemen:
Reference is hereby made to the Amended and Restated Receivables Purchase
Agreement, dated as of January 16, 2003 (as heretofore amended, restated or
supplemented, the "RECEIVABLES PURCHASE AGREEMENT"), among Royal Appliance
Receivables, Inc. ("SELLER"), Royal Appliance Mfg. Co., as Servicer, and Fifth
Third Bank, as Issuer (in such capacity, the "Issuer") and as Administrator (in
such capacity, the "ADMINISTRATOR"). Capitalized terms used in this Purchase
Notice and not otherwise defined herein shall have the meanings assigned thereto
in the Receivables Purchase Agreement.
This letter constitutes a Purchase Notice pursuant to SECTION 1.2(A) of the
Receivables Purchase Agreement. Seller desires to sell an undivided percentage
variable interest in a pool of receivables on ___________, 20__, for a purchase
price of $____________. Subsequent to this Purchase, the aggregate outstanding
Capital will be $___________.
Seller hereby represents and warrants as of the date hereof, and as of the
date of Purchase, as follows:
(i) the representations and warranties contained in EXHIBIT III of the
Receivables Purchase Agreement are correct on and as of such dates as
though made on and as of such dates and shall be deemed to have been made
on such dates;
(ii) no Termination Event or Unmatured Termination Event has occurred
and is continuing, or would result from such Purchase;
(iii) after giving effect to the Purchase proposed hereby, the
aggregate outstanding Capital of the Purchased Interest will not exceed
100% and the Capital will not exceed the Purchase Limit; and
(iv) the Facility Termination Date shall not have occurred.
Annex B-2
IN WITNESS WHEREOF, the undersigned has caused this Purchase Notice to
be executed by its duly authorized officer as of the date first above
written.
ROYAL APPLIANCE RECEIVABLES, INC.
By:-------------------------------
Name Printed:------------------
Title:-------------------------
Annex B-3
ANNEX C
to Amended and Restated
Receivables Purchase Agreement
FORM OF PAYDOWN NOTICE
Annex C-1
FORM OF PAYDOWN NOTICE
--------------, -----
Fifth Third Bank
00 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Ladies and Gentlemen:
Reference is hereby made to the Amended and Restated Receivables Purchase
Agreement, dated as of January 16, 2003 (as amended, restated, supplemented or
otherwise modified, the "RECEIVABLES PURCHASE AGREEMENT"), among Royal Appliance
Receivables, Inc., as Seller, Royal Appliance Mfg. Co., as Servicer, and Fifth
Third Bank, as Issuer and as Administrator. Capitalized terms used in this
Paydown Notice and not otherwise defined herein shall have the meanings assigned
thereto in the Receivables Purchase Agreement.
This letter constitutes a Paydown Notice pursuant to SECTION 1.4(F)(I) of
the Receivables Purchase Agreement. The Seller desires to reduce the Capital on
____________, _____(1) by the application of $___________ in cash to pay Capital
and Discount to accrue (until such cash can be used to pay commercial paper
notes) with respect to such Capital, together with all costs related to such
reduction of Capital.
------------------
(1) Notice must be given at least ten Business Days' prior to the requested
paydown date, in the case of reductions in excess of $10,000,000, or at least
two Business Days' prior to the requested paydown date, in the case of
reductions of $10,000,000 or less.
Annex C-2
IN WITNESS WHEREOF, the undersigned has caused this Paydown Notice to be
executed by its duly authorized officer as of the date first above written.
ROYAL APPLIANCE RECEIVABLES, INC.
By:------------------------------
Name:-------------------------
Title:------------------------
Annex C-3
