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EXECUTION COPY
EXHIBIT 4(b)
RECEIVABLES PURCHASE AND
SERVICING AGREEMENT
RECEIVABLES PURCHASE AND SERVICING AGREEMENT, dated as of September
29, 1997 (this "Agreement"), by and among Royal Appliance Receivables, Inc., an
Ohio corporation as Seller (the "Seller"), LLAMA RETAIL FUNDING, L.P., a
Delaware limited partnership, as Purchaser (as such, together with its
successors and assigns, the ("Purchaser"), ROYAL APPLIANCE MFG. CO., an Ohio
corporation as originator of the Receivables (the "Parent") and as servicer (as
such, together with its successors and assigns, the "Servicer") and CAPITAL USA,
L.L.C., a Delaware limited liability company in its capacity as administrator
hereunder (as such, together with its successors and assigns, the
"Administrative Agent").
W I T N E S S E T H:
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WHEREAS, the Seller is a wholly-owned, bankruptcy-remote subsidiary of
the Parent;
WHEREAS, the Seller has been formed for the sole purpose of purchasing
and selling certain trade receivables originated by the Parent in the ordinary
course of its business and sold or contributed to the Seller from time to time
pursuant to the Receivables Sale Agreement by and between the Parent and the
Seller;
WHEREAS, the Administrative Agent has been requested and is willing to
provide certain administrative services on behalf of the Purchaser in connection
with the making and financing of such purchases;
WHEREAS, the Purchaser desires that a Servicer be appointed to service
receivables purchased by the Purchaser under this Agreement and the Parent has
been requested and is willing to act as the Servicer;
NOW, THEREFORE, the parties agree as follows:
This Agreement hereby expressly incorporates by reference herein the
Standard Terms and Conditions attached hereto as Annex A.
1. (a) CERTAIN DEFINED TERMS. As used in this agreement, the following
additional terms shall have the following meanings:
APPLICABLE MARGIN: means, with respect to all Tier I Receivables,
0.60% and, with respect to all Tier II Receivables, 0.90% per annum.
BALANCE SHEET DATE: means June 30, 1997.
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BUSINESS DAY: means any day of the year other than a Saturday,
Sunday or any day on which banks generally are required, or
authorized, to close in New York, New York, Fayetteville, Arkansas, or
Cleveland, Ohio.
COLLECTION ACCOUNT: means the Eligible Bank Account titled "Llama
Retail Funding, L.P. -- Collection Account Royal Appliance"
established pursuant to Section 2.03(b).
ESCROW PERIOD: means, with respect to any Escrowed Amount, the
period expiring on the 91st day (or such longer period as may be
required by Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Bankruptcy Code to the
extent the Seller or the Parent was an "insider" within the meaning of
Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Bankruptcy Code at the time of such
transfer) following the deposit or allocation of such Escrowed Amount
into the Escrowed Amount Subaccount.
FINAL PURCHASE DATE: means March 17, 1998, or such later date as
the Administrative Agent may agree, with the approval of the Purchaser
in a written notice to the Seller.
MINIMUM INVESTMENT AMOUNT: means $100,000.
PARENT JUDGMENT AMOUNT: means $5 million.
PROGRAM FEE RATE: means 0.20%, as adjusted from time to time by
written notice from the Administrative Agent to the Seller.
PURCHASE DATE: means the Effective Date and, thereafter, each
successive Business Day.
PURCHASE LIMIT: means from the Effective Date through January 31,
1998, $40,000,000, and thereafter $25,000,000.
SERVICING FEE RATE: means 1.00%.
(b) All capitalized terms used and not defined herein, shall have the
meaning specified in Annex A to this Agreement.
(c) The words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole. All references to Articles
and Sections shall be deemed to refer to Articles and Sections of this Agreement
as the context requires.
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2. ADDITIONS AND MODIFICATIONS TO THIS AGREEMENT.
(a) The following defined terms are amended as follows:
(i) Clause (d) of the definition of "Eligible
Receivable" is hereby amended by adding the following
after the word "adjusted" "(other than as
contemplated in (c) above)."
(ii) Clause (o) of the definition of "Eligible
Receivable" is hereby amended by deleting the words
"30 days'" and inserting the words "60 days'."
(iii) The definition of "Minimum Dilution Reserve
Amount" is deleted in full.
(iv) The definition of "Related Documents" is hereby
amended by adding the following after the words
"Receivables Purchase Agreement:"
, the Management Agreement, dated as of September
29, 1997, between the Parent and the Seller
(b) The following new definition is hereby added:
CP DISRUPTION EVENT: The inability of a Purchaser, at
any time, whether as a result of a prohibition, a
contractual restriction or any other event or
circumstances whatsoever, to raise funds through the
issuance of its commercial paper notes (whether or
not constituting commercial paper notes issued to
fund Purchases hereunder) in the United States
commercial paper market.
(c) Section 2.1(a) is hereby amended by adding the
following at the end
thereof:
In the event the Purchaser is not able to make a
Purchase that it otherwise has agreed to make solely
as a result of a CP Disruption Event, the Purchaser
will, to the extent it is permitted, request an
advance under the Liquidity Agreement and shall make
such Purchase in an amount equal to the amount of
such advance.
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(d) Section 6.3(b) and (d) are each hereby amended by
adding at the end of each such section the following:
in any way that could materially affect the
Servicer's ability to perform is obligations under
this Agreement or any Related Document
(e) Section 6.3 (d) is hereby amended by adding at
the end of such section the following:
with respect to the Receivables or the obligations
of the Servicer under this Agreement
(f) Section 7.1((b) is hereby amended by inserting the
following after the words "Debt of the Parent:"
in excess of $5 million, individually or in the
aggregate
(g) Section 7.1(c) is hereby deleted and replace in its
entirety as follows:
the Parent or the Seller shall generally not pay any
of its respective 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 Parent (and,
in the case of any such proceeding instituted
against the Parent, but not instituted by it, any
such proceeding shall remain undismissed or unstayed
for a period of 60 days) or the Seller seeking to
adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief or
composition of it or any of its Debts under any law
relating to bankruptcy, insolvency, reorganization
or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver,
trustee, custodian or other similar official for it
or for any substantial part of its property, or any
of the actions sought in such proceeding (including,
without limitation, 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 Parent or the Seller shall take any corporate
action to authorize any of the actions set forth in
this subsection; or
(h) Section 7.1(l) is hereby amended by deleting the
phrase "or for any other reason whatsoever."
(i) Section 10.4 is amended by inserting "lenders," in
the second parenthetical phrase thereof, before the word "directors."
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(j) Annex B(l) is hereby deleted and replaced in its
entirety as follows:
(l) (i) Consolidated balance sheets and statements of
income and changes in financial position of the
Parent, the Servicer and their respective
Subsidiaries for each of the years in the three year
period ended the Balance Sheet Date, audited by an
independent nationally recognized accounting firm;
(ii) Unaudited balance sheets of the
Seller as of the Effective Date and consolidated
balance sheets and statements of income and changes
in financial position of the Parent, the Servicer and
their respective Subsidiaries for each fiscal quarter
following the Balance Sheet Date ended more than 45
days prior to the Effective Date;
(iii) The Seller's balance sheet, dated
as of the Effective Date and certified by the chief
executive or accounting officer of the Parent;
(k) Annex D (b) is hereby amended by deleting the phrase
"in a manner acceptable to the Administrative Agent."
(l) Annex D (f) is hereby deleted and replaced in its
entirety as follows:
(f) promptly upon the request of the
Administrative Agent, copies of any ERISA reports
filed by the Seller or the Parent; and
(m) Annex D (g) is hereby deleted and replaced in its
entirety as follows:
(g) promptly, from time to time, such other
information, documents, records or reports respecting
the Purchased Receivables, the Contracts, the
condition or operations, financial or otherwise, of
the Seller or the transactions contemplated by this
Agreement and the Related Documents as the Purchaser
or the Administrative Agent may, from time to time,
reasonably request from the Seller, the Servicer or
the Parent.
(m) Exhibit A is hereby amended by deleting the text of
paragraph A and replacing it in its entirety as
follows:
THE DILUTION RESERVE.
DILUTION RESERVE: For any Receivables Interest, on
any day, an amount equal to the product of (a) 10%
and (b) the Net Receivables Pool Balance at the time
of such calculation.
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(n) Section 2.18 is hereby added as follows:
Section 2.18 PAYMENTS IN RESPECT OF DILUTIONS. On any
day on which one or more Dilutions arise as a result
of any action by any Designated Obligor or otherwise,
the Seller shall pay to the Administrative Agent
within ten days, for application hereunder in
reduction of Capital Investment, in immediately
available funds, by wire transfer or otherwise, an
amount equal to the aggregate dollar amount of such
Dilutions.
3. COUNTERPARTS. This Agreement may be executed in counterparts each
of which shall be an original, but all of which together shall constitute one
and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Receivables
Purchase and Servicing Agreement to be executed by their respective officers
thereunto duly authorized as of the date first written above.
ROYAL APPLIANCE RECEIVABLES, INC.,
as Seller
By:_____________________________________
Name:
Title:
ROYAL APPLIANCE MFG. CO., as Parent and
Servicer
By:_____________________________________
Name:
Title:
LLAMA RETAIL FUNDING, L.P.,
as Purchaser,
By Llama Retail Funding Corp.,
its general partner
By:_____________________________________
Name:
Title: President
CAPITAL USA, L.L.C.,
as Administrative Agent
By:_____________________________________
Name: Xxxxx X. Xxxxxx
Title: Vice President
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