EXHIBIT 10.23
PURCHASE AND SALE AGREEMENT
between
CITGO PETROLEUM CORPORATION,
as Seller
and
CITGO FUNDING COMPANY, L.L.C.,
as Purchaser
Dated as of February 28, 2003
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS............................................................................... 1
Section 1.1 Defined Terms.................................................................... 1
Section 1.2 Other Terms...................................................................... 8
ARTICLE II AMOUNTS AND TERMS OF THE PURCHASES........................................................ 9
Section 2.1 Agreement to Purchase............................................................ 9
Section 2.2 Payment for the Purchases........................................................ 10
Section 2.3 Purchase Price Credit Adjustments................................................ 10
Section 2.4 Payments and Computations, Etc................................................... 11
Section 2.5 Transfer of Records.............................................................. 11
Section 2.6 Characterization................................................................. 12
Section 2.7 Servicing of Receivables......................................................... 12
ARTICLE III CONDITIONS OF PURCHASES................................................................... 13
Section 3.1 Conditions Precedent to Initial Purchase......................................... 13
Section 3.2 Conditions Precedent to All Purchases............................................ 13
ARTICLE IV REPRESENTATIONS AND WARRANTIES............................................................ 13
Section 4.1 Representations and Warranties................................................... 13
ARTICLE V COVENANTS................................................................................. 17
Section 5.1 Covenants of the Seller.......................................................... 17
ARTICLE VI TERMINATION EVENTS........................................................................ 21
Section 6.1 Termination Events............................................................... 21
Section 6.2 Remedies......................................................................... 22
ARTICLE VII INDEMNIFICATION........................................................................... 22
Section 7.1 Indemnities by the Seller........................................................ 22
ARTICLE VIII MISCELLANEOUS............................................................................. 24
Section 8.1 Amendments, Etc.................................................................. 24
Section 8.2 Notices, Etc..................................................................... 25
Section 8.3 Assignability; Subordination..................................................... 25
Section 8.4 Costs, Expenses and Taxes........................................................ 26
Section 8.5 No Proceedings; Limitation on Payments........................................... 26
Section 8.6 GOVERNING LAW AND JURISDICTION................................................... 26
-i-
TABLE OF CONTENTS
(continued)
PAGE
Section 8.7 Execution in Counterparts........................................................ 27
Section 8.8 Survival of Termination.......................................................... 27
Section 8.9 WAIVER OF JURY TRIAL............................................................. 27
Section 8.10 Entire Agreement................................................................. 27
Section 8.11 Headings......................................................................... 27
-ii-
SCHEDULES AND ANNEXES
SCHEDULE I CREDIT AND COLLECTION POLICY
SCHEDULE II LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS
SCHEDULE III TRADE NAMES OF THE SELLER
SCHEDULE IV DESCRIPTION OF RECEIVABLES
ANNEXES
ANNEX A FORM OF LOCK-BOX AGREEMENT
ANNEX B FORM OF SUBORDINATED REVOLVING NOTE
-iii-
PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT (this "Agreement") is entered
into as of February 28, 2003 between CITGO PETROLEUM CORPORATION, a Delaware
corporation, as seller (the "Seller") and CITGO FUNDING COMPANY, L.L.C., a
Delaware limited liability company, as purchaser (together with its successors
and permitted assigns, the "Purchaser").
PRELIMINARY STATEMENTS
The Seller has agreed to sell, transfer and assign and the
Purchaser has agreed to purchase "Receivables" (as hereinafter defined) from
time to time arising or created by the Seller, in accordance with the terms of
this Agreement.
Each of the Seller and the Purchaser intends the transactions
contemplated hereby to be true sales of the Receivables from the Seller to the
Purchaser, providing the Purchaser with the full benefits of ownership of the
Receivables originated by the Seller, and none of the Seller or the Purchaser
intends these transactions to be, or for any purpose to be characterized as,
loans from the Purchaser to the Seller.
Reference is made to (i) that certain Receivables Purchase
Agreement (as the same may from time to time be amended, restated, supplemented
or otherwise modified, the "Receivables Purchase Agreement") of even date
herewith among the Purchaser, the Seller, as initial servicer thereunder (the
"Servicer"), Asset One Securitization, LLC (the "Issuer") and Societe Generale
(the "Agent"). Pursuant to the Receivables Purchase Agreement, the Purchaser has
agreed to sell, transfer and assign to the Issuer undivided variable percentage
interests in a pool of Receivables acquired from the Seller and owned by the
Purchaser from time to time on the terms and subject to the conditions set forth
therein.
In consideration of the mutual agreements, provisions and
covenants contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined). Unless
otherwise indicated, all Section, Annex, Exhibit and Schedule references in this
Agreement are to Sections of and Annexes, Exhibits and Schedules to this
Agreement.
"Adverse Claim" means a lien, security interest or other
charge or encumbrance, or any other type of preferential arrangement, it being
understood that a lien, security interest or other charge or encumbrance, or any
other type of preferential arrangement, in favor of the Purchaser or the Issuer
shall not constitute an Adverse Claim.
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by or is under common
control with such Person or is a director or officer of such Person.
"Agent" has the meaning set forth in the preamble to this
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. Section 101, et seq.), as amended from time to time.
"Business Day" means any day that is not a Saturday, Sunday or
other day on which commercial banks in Chicago, New York City, San Francisco, or
Tulsa, Oklahoma are authorized or required by law to remain closed.
"CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (42 U.S.C. Section 9601, et seq.).
"CITGO" means CITGO Petroleum Corporation, a Delaware
corporation.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collection Date" means the date as of which (i) all
Receivables purchased by the Purchaser hereunder shall have been collected in
full or shall have been written off in accordance with the Credit and Collection
Policy and (ii) all indemnities, adjustments and other amounts due hereunder by
the Seller to the Purchaser shall have been paid in full.
"Collection Period" means a calendar month.
"Collections" means, with respect to any Receivable, (a) all
funds which are received by the Seller or the Servicer in payment of any amounts
owed in respect of such Receivable (including, without limitation, purchase
price, finance charges, interest and all other charges), or applied to amounts
owed in respect of such Receivable (including, without limitation, 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 Receivable and available
to be applied thereon), (b) all deemed Collections and (c) all other proceeds of
such Receivable.
"Contract" means, with respect to any Receivable, the portions
of each Distributor Franchise Agreement or similar agreement which relate to the
payment terms and other arrangements that give rise to or evidence such
Receivable and the Seller's rights under each Distributor Franchise Agreement or
similar agreement with respect to the collection and enforcement of such
Receivable.
"Credit and Collection Policy" means those receivables credit
and collection policies and practices of the Seller, which have been adopted by
the Purchaser, in effect on the
2
date of this Agreement and previously furnished to the Issuer and the Agent and
described in Schedule I hereto, as modified in compliance with this Agreement.
"Dilution Factors" means (i) the failure by the Seller to
deliver any merchandise or provide any services or otherwise to perform under
the underlying Contract or xxxx of lading, (ii) any change in the terms of, or
cancellation of, a Contract or invoice or any other adjustment by the Servicer
which reduces the amount payable by the Obligor on the related Receivable, (iii)
any setoff by an Obligor in respect of any claim by such Obligor as to the
amounts owed by it on the related Receivable, and (iv) any specific dispute
(with respect to which a credit is issued) counterclaim or defense asserted by
the Obligor of the related Receivable (except the discharge in bankruptcy of
such Obligor).
"Distributor Franchise Agreement" means an agreement between
the Seller and a distributor of petroleum which provides for the sale and
purchase of CITGO branded petroleum products.
"EFT Receivable" means any Receivable which is to be paid or
is otherwise paid by the Obligor thereof through an electronic funds transfer or
ACH transfer to a Lock-Box Account.
"Eligible Receivable" means, at any time, a Receivable:
(i) the Obligor of which (A) is a United States resident
or a resident of such other jurisdiction as has been approved in
writing by the Agent, (B) except for certain Obligors as indicated on
Schedule V of the Receivables Purchase Agreement, operates under the
"CITGO" trade name (unless otherwise agreed in writing by the Agent),
(C) is not an Affiliate of the Seller or the Purchaser, (D) is not a
government or a governmental subdivision or agency, (E) is not subject
to any action of the type described in paragraph (g) of Exhibit V of
the Receivables Purchase Agreement, and (F) is not an Excluded Obligor;
(ii) which is denominated and payable only in U.S. dollars
in the United States;
(iii) which has a stated maturity and which stated maturity
is not more than 45 days after the date on which such Receivable was
generated;
(iv) which arises in the ordinary course of the Seller's
business and constitutes an EFT Receivable;
(v) which arises under a Contract which is in full force
and effect and which is a legal, valid and binding obligation of the
related Obligor, enforceable against such Obligor in accordance with
its terms;
(vi) which conforms with all applicable laws, rulings and
regulations in effect;
3
(vii) which is not the subject of any asserted dispute,
offset, hold back defense, Adverse Claim or other claim (other than a
Permitted Offset Claim) and which does not arise from the sale of
inventory which is subject to any Adverse Claim;
(viii) which complies with the requirements of the Credit
and Collection Policy and the payment and other terms of the Contract
related to the Receivable are consistent with customary terms for the
Seller's industry and type of Receivables;
(ix) which arises from the completion of the sale and
delivery of goods, and must not represent an invoice in advance of such
completion;
(x) which is not subject to any contingent performance
requirements of the Seller unless such requirements are guaranteed or
insured by third parties acceptable to the Agent;
(xi) which has not been modified or restructured since its
creation, except as permitted pursuant to Section 4.2(a) of the
Receivables Purchase Agreement;
(xii) in which the Seller owns good and marketable title
and which is freely transferable and assignable by the Seller without
the consent of the Obligor;
(xiii) for which the Purchaser shall have a valid and
enforceable 100% ownership 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;
(xiv) which constitutes an account or general intangible as
defined in the UCC, and which is not evidenced by an instrument or
chattel paper;
(xv) which is not aged more than 60 days past the due
date;
(xvi) the Obligor of which is not the Obligor of
Receivables aged more than 60 days past the applicable due dates having
an aggregate Outstanding Balance which exceeds 10% of all such
Obligor's Receivables;
(xvii) a purchase of which with the proceeds of the Notes
issued by the Issuer would constitute a "current transaction" within
the meaning of Section 3 (a) (3) of the Securities Act of 1933, as
amended;
(xviii) which is an account receivable representing all or
part of the sales price of merchandise, insurance or services within
the meaning of Section 3 (c)(5)(A) of the Investment Company Act of
1940, as amended;
(xix) which meets the eligibility requirements appropriate
to the specific type of Receivables which the Agent has based on aging,
turnover, delinquency, loss, dilution, type or other factor that the
Agent deems appropriate;
4
(xx) which is not written off as uncollectible and should
not have been written off in accordance with the Credit and Collection
Policy; and
(xxi) as to which, at or prior to the time of the initial
creation of an interest therein under the Receivables Purchase
Agreement, the Agent has not notified the Purchaser that the Agent has
determined in its sole discretion and reasonable business judgment
based upon the Agent's reasonable and good faith estimate of the credit
quality of such Receivables (or class of Receivables), that such
Receivable (or class of Receivables) is not acceptable for purchase
under the Receivables Purchase Agreement.
"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.
"Excluded Obligor" means an Obligor, so designated in writing
as such by the Agent to the Purchaser, from time to time, following the
occurrence of an Unmatured Termination Event and upon the Issuer's and the
Liquidity Banks' reasonable determination that the creditworthiness of such
Obligor warrants such designation, it being understood that from time to time
the Agent may revoke its designation of one or more Obligors as Excluded
Obligors by written notice to the Purchaser.
"Facility Termination Date" has the meaning set forth in
Exhibit I to the Receivables Purchase Agreement.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System, or any entity succeeding to any of its principal
functions.
"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 without limitation any court, and any Person
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"Hazardous Materials" means materials defined as "hazardous
substances," "hazardous waste" or "hazardous constituents" or any similar term
in (a) CERCLA, (B) RCRA, or (c) any other Federal, State or local environmental
law or regulation.
"Indemnified Amounts" has the meaning set forth in Section
7.1.
"Indemnified Party" has the meaning set forth in Section 7.1.
"Insolvency Proceeding" means (a) any case, action or
proceeding before any court or other Governmental Authority relating to
bankruptcy, reorganization, insolvency, liquidations, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for the benefit
of creditors, composition, marshalling of assets for creditors, or other,
similar arrangement in respect of its creditors generally or any substantial
portion of its creditors;
5
in each case (a) and (b) undertaken under U.S. Federal, state or foreign law,
including the Bankruptcy Code.
"Issuer" has the meaning set forth in the preamble to this
Agreement.
"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 substantially the
form of Annex A, among the Seller, the Purchaser, the Agent and each Lock-Box
Bank.
"Lock-Box Bank" means any of the banks or other financial
institutions holding one or more Lock-Box Accounts.
"Material Adverse Effect" means, with respect to any Person,
relative to any occurrence of whatever nature (including any adverse
determination in any litigation, arbitration or governmental investigation or
proceeding) and after taking into account insurance coverage and effective
indemnification with respect to such occurrence, a materially adverse effect on:
(a) the consolidated business, operations, property or
financial or other condition of such Person and its
subsidiaries; or
(b) the ability of such Person to perform any of its
payment or other material obligations under any of the
Transaction Documents.
"Multiemployer Plan" means any "multiemployer plan" (as that
term is defined under section 3(37) of ERISA) under which the Seller or any
Related Person has contributed or with respect to which the Seller or such
Related Person may have any liability.
"Obligor" means, with respect to any Receivable, the Person
obligated to make payments pursuant to the Contract relating to such Receivable.
"Outstanding Balance" of any Receivable at any time means the
then outstanding principal balance thereof.
"PBGC" means the Pension Benefit Guaranty Corporation created
by section 4002(a) of ERISA and any successor thereto.
"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.
"Plan" means any plan described in section 4021(a) of ERISA
and not excluded pursuant to section 4021(b) thereof, under which the Seller or
any Related Person to the Seller has contributed or with respect to which the
Seller or such Related Person is liable.
"Purchase" means a purchase by the Purchaser of the
Receivables and Related Rights from the Seller in accordance with Section 2.1.
6
"Purchase Price Credit" has the meaning set forth in Section
2.3.
"Purchaser" has the meaning set forth in the preamble to this
Agreement.
"RCRA" means the Resource Conservation and Recovery Act of
1976 (42 U.S.C. Section 6901 et seq.).
"Receivable" means any indebtedness and other obligations
(whether or not earned by performance) owed to the Seller or any right of the
Seller to payment from or on behalf of an Obligor whether constituting an
account, chattel paper or general intangible, arising in connection with
property or goods that have been or are to be sold or otherwise disposed of, or
services rendered or to be rendered by the Seller, as more particularly
described on Schedule IV hereto, and includes, without limitation, the
obligation to pay any finance charges, fees and other charges with respect
thereto. Indebtedness and other obligations arising from any one transaction,
including, without limitation, 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 Purchase Agreement" has the meaning set forth in
the preamble to this Agreement.
"Records" has the meaning set forth in Section 2.5.
"Related Assets" has the meaning set forth in Section 2.1.
"Related Person" means, with respect to any Person, any other
Person which, together with such Person, is under common control as described in
section 414 of the Code.
"Related Security" means with respect to any Receivable:
(i) all of the Seller's interest in any goods (including
returned goods), and documentation or title evidencing the shipment or
storage of any goods (including returned goods), relating to any sale
giving rise to such Receivable;
(ii) 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 signed by an Obligor relating thereto; and
(iii) 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.
Notwithstanding the foregoing, any proceeds from Related
Security shall be applied to receivables which are secured or supported
by such Related Security, whether or not such receivables are Excluded
Receivables, in the order of the age of such receivables, starting with
the oldest such receivable.
7
"Reportable Event" means a "reportable event" described in
section 4043(b) of ERISA.
"Revolving Loan" has the meaning set forth in Section 2.2.
"Revolving Note" has the meaning set forth in Section 2.2.
"Seller" has the meaning set forth in the preamble to this
Agreement.
"Servicer" has the meaning set forth in the preamble to this
Agreement.
"SG" means Societe Generale, a banking corporation organized
under the laws of France.
"Termination Date" means the earliest to occur of (a) February
27, 2004, (b) the Business Day which the Seller or the Purchaser so designates
by notice to the other and, if the Receivables Purchase Agreement shall then be
in effect, the Agent at least 5 days in advance, (c) the date as determined
pursuant to Section 6.2 and (d) the Facility Termination Date.
"Termination Event" has the meaning specified in Section 6.1.
"Transaction Documents" means this Agreement, the Revolving
Note, the Receivables Purchase Agreement, the Lock-Box Agreements and all other
certificates, instruments, UCC financing statements, reports, notices,
agreements and documents executed or delivered under or in connection with this
Agreement, in each case as the same may be amended, supplemented or otherwise
modified from time to time in accordance with this Agreement.
"UCC" means the Uniform Commercial Code as from time to time
in effect in the applicable jurisdiction.
"Unfunded Vested Liability" means, relative to any Plan,
including any Multiemployer Plan, at any time, the excess (if any) of (a) the
present value of all vested nonforfeitable benefits under such Plan or such
Multiemployer Plan, as the case may be, over (b) the fair market value of all
Plan assets or Multiemployer Plan assets, as the case may be, allocable to such
benefits, all determined as of the then most recent valuation date for such Plan
or such Multiemployer Plan, as the case may be, but only to the extent that such
excess represents a potential liability of any Loan Party to the PBGC, such Plan
or such Multiemployer Plan under Title IV of ERISA.
"Unmatured Termination Event" means an event which but for the
lapse of time or the giving of notice, or both, would constitute a Termination
Event.
"Welfare Plan" means a "welfare plan," as such term is defined
in section 3(1) of ERISA.
Section 1.2 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
8
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.
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES
Section 2.1 Agreement to Purchase. (a) Upon the terms and
subject to the conditions hereof, the Purchaser hereby agrees to buy, and the
Seller hereby agrees to sell, on each Business Day from the date hereof until
the occurrence of the Termination Date, and the Seller does hereby sell, assign,
transfer and convey to the Purchaser, all of the Seller's right, title and
interest in and to (i) each Receivable now owned or hereafter arising at any
time through the Termination Date, (ii) all Related Security with respect to
such Receivable (it being understood that nothing contained in this Agreement
shall constitute a delegation of the Seller's duties under the Contracts related
to the Receivables), (iii) all Records, (iv) all of the Seller's right, title
and interest in each post office box and related post office box address and
Lock-Box Account to which Collections are sent, all amounts on deposit therein,
all certificates and instruments, if any, from time to time evidencing such
Lock-Box Accounts and amounts on deposit therein, and all related agreements
between the Seller and the Lock-Box Banks, (v) all Collections with respect to
the foregoing, and (vi) all proceeds of the foregoing. The items listed in
clauses (ii), (iii), (iv) (v) and (vi) of the proceeding sentence in relation to
any Receivables are herein collectively called the "Related Assets" or with
respect to any such Receivable, the "Related Asset." On each day when the
Receivables are purchased by the Purchaser from the Seller the Purchaser shall
acquire, upon payment of the Purchase Price therefor in accordance with Section
2.2 below, all of the Seller's right, title and interest in and to all
Receivables which were not previously purchased by the Purchaser hereunder,
together with all Related Security relating thereto and all Collections thereof.
Prior to making any Purchase hereunder, the Purchaser may request of the Seller,
and the Seller shall deliver, such approvals, opinions, information, reports or
documents as the Purchaser may reasonably request.
(b) It is the intention of the parties hereto that each
Purchase of Receivables made hereunder shall constitute a "sale of accounts", as
such term is used in Article 9 of the UCC, which sales are absolute and
irrevocable and provide the Purchaser with the full benefits of ownership of the
Receivables. Except for the Purchase Price Credits owed pursuant to Section. 2.3
hereof, each sale of Receivables hereunder is made without recourse to the
Seller; provided, however, that (i) the Seller shall be liable to the Purchaser
for all representations, warranties and covenants made by the Seller pursuant to
the terms of this Agreement, and (ii) such sale does not constitute and is not
intended to result in an assumption by the Purchaser or any assignee thereof of
any obligation of the Seller or any other person arising in connection with the
Receivables, the Related Security, the related Contracts and the Lock-Box
Accounts, or any other obligations of the Seller. In view of the intention of
the parties hereto that the purchases of Receivables made hereunder shall
constitute sales of such Receivables rather than a loan secured by such
Receivables, the Seller agrees on or prior to the date hereof to xxxx the master
data processing records relating to the Receivables with a legend, acceptable to
the Purchaser and the Agent, evidencing that the Purchaser has purchased such
Receivables as provided in this Agreement and to note in its financial
statements that the Receivables have been sold to the Purchaser. Upon the
9
request of the Purchaser or the Agent, the Seller will execute and file such
financing or continuation statements, or amendments thereto or assignments
thereof, and such other instruments or notices, as may be necessary or
appropriate or as the Purchaser or the Agent may reasonably request to evidence
the sale of Receivables to the Purchaser hereunder. In addition, the Seller
will, upon request, make available to the Purchaser or to the Servicer the
original copy of each Contract under which a Receivable has arisen.
Section 2.2 Payment for the Purchases. (a) The "Purchase
Price" with respect to any purchase on any date shall be an amount equal to (i)
the aggregate Outstanding Balance of the subject Receivables as of such date,
minus (ii) an amount equal to 1% of the aggregate Outstanding Balance of the
subject Receivables as of such date or, if less, an amount agreed upon by the
Seller and the Purchaser, which amount shall allow the Purchaser a reasonable
return with respect to such purchase, minus (iii) any Purchase Price Credits to
be credited against the purchase price. The Purchase Price for each purchase
shall be payable in full by the Purchaser to the Seller or its designee on the
date of such purchase (except that the Purchaser may, with respect to any such
purchase, offset against such Purchase Price any amounts owed by the Seller to
the Purchaser hereunder and which have become due but remain unpaid) and shall
be paid to the Seller in the manner provided in the following paragraph of this
Section.
(b) With respect to any Purchase hereunder, the Purchaser
shall pay the Purchase Price by making a cash payment to the Seller in
immediately available funds to the extent that the Purchaser has cash available
to make such payment (including cash which may be available to the Purchaser
under the Receivables Purchase Agreement). To the extent that cash is not
available to pay the Purchase Price, the Purchaser may pay all or a part of the
applicable Purchase Price by borrowing from the Seller a subordinated revolving
loan (each a "Revolving Loan"), and the Seller, subject to the remaining
provisions of this paragraph, irrevocably agrees to advance such Revolving Loan
in the amount so specified by the Purchaser. Notwithstanding the foregoing, the
Seller shall not make any Revolving Loan if, as a result of making such loan,
the Purchaser's net worth would be equal to an amount that is less than three
percent (3.00%) of the aggregate outstanding balance of all Receivables at such
time. The Revolving Loans shall be evidenced by, and shall be payable in
accordance with the terms and provisions of, a subordinated promissory note in
the form of Annex B hereto (the "Revolving Note") and shall be payable solely
from funds which the Purchaser is not required under the Receivables Purchase
Agreement to set aside for the benefit of, or otherwise pay over to, the Agent,
the Liquidity Banks, the Issuer, the "Affected Persons" (as defined therein) and
the "Indemnified Parties" (as defined therein).
(c) In the case of any Purchase, if the Purchaser is
unable to pay in full the applicable Purchase Price with a payment in cash
and/or a borrowing of a Revolving Loan, then the Seller shall be deemed to have
contributed to the capital of the Purchaser Receivables having an aggregate
Outstanding Balance equal to such unpaid portion of the total Purchase Price,
provided, however, that no such deemed capital contribution shall be made from
and after the date on which the Seller notifies the Purchaser in writing that it
has designated a date as the Termination Date.
Section 2.3 Purchase Price Credit Adjustments. If on any day
(i) the Outstanding Balance of any Receivable is reduced or adjusted as a result
of any Dilution Factors,
10
or (ii) any of the representations or warranties in paragraphs (h) or (o) of
Section 4.1 is not true with respect to any Receivable, then, in such event, the
Purchaser shall be entitled to a credit (a "Purchase Price Credit") against the
Purchase Price otherwise payable hereunder equal to the full amount of such
reduction or adjustment (in the case of clause (i) above) or equal to the
Outstanding Balance of the applicable Receivable (in the case of clause (ii)
above). If such Purchase Price Credit exceeds the Purchase Price in respect of
the Receivables to be sold hereunder on any date, then the Seller shall pay the
remaining amount of such Purchase Price Credit in cash on the next succeeding
Business Day; provided that, if the Termination Date has not occurred, the
Seller shall be allowed to deduct the remaining amount of such Purchase Price
Credit from any indebtedness to it owed under the Revolving Note; provided,
further, that at any time (y) during which Receivables are not sold hereunder or
(z) on or after the Termination Date, the amount of any such Purchase Price
Credit shall be paid by the Seller to the Purchaser by deposit in immediately
available funds into the relevant Lock-Box Account for application by the
Servicer to the same extent as if Collections of the applicable Receivable in
such amount had actually been received on such date.
Section 2.4 Payments and Computations, Etc. All amounts to be
paid or deposited by the Purchaser hereunder shall be paid or deposited in
accordance with the terms hereof by no later than noon (Tulsa, Oklahoma time) on
the day when due in immediately available funds to the account of the Seller
designated from time to time by the Seller or as otherwise directed by the
Seller. All amounts to be paid or deposited by the Seller hereunder shall be
paid or deposited in accordance with the terms hereof by no later than noon
(Tulsa, Oklahoma time) on the day when due in immediately available funds to the
account of the Purchaser designated from time to time by the Seller or as
otherwise directed by the Purchaser. In the event that any payment owed by any
Person hereunder becomes due on a day which is not a Business Day, then such
payment shall be made on the next succeeding Business Day and such extension of
time shall be included in the computation of such payment. The Seller shall, to
the extent permitted by law, pay interest on any amount not paid or deposited by
the Seller when due hereunder, at an interest rate equal to 2.0% per annum above
the "Base Rate" (as defined in the Receivables Purchase Agreement), payable on
demand. All computations of interest payable hereunder shall be made on the
basis of a year of 360 days for the actual number of days (including the first
but excluding the last day) elapsed.
Section 2.5 Transfer of Records. (a) In connection with the
Purchases of Receivables hereunder, the Seller hereby sells, transfers, assigns
and otherwise conveys to the Purchaser all of the Seller's right and title to
and interest in all Contracts and other documents, books, records and other
information (including, without limitation, computer programs, tapes, disks,
punch cards, data processing software and related property and rights) relating
to the Receivables, any Related Security therefor and the related Obligors
(collectively, the "Records"), without the need for any further documentation in
connection with any purchase hereunder. In connection with such transfer, the
Seller hereby grants to each of the Purchaser and the Servicer an irrevocable,
non-exclusive license to use, without royalty or payment of any kind, all
software used by the Seller to account for the Receivables, to the extent
necessary to administer the Receivables, whether such software is owned by the
Seller or is owned by others and used by the Seller under license agreements
with respect thereto, provided, that should the consent of any licensor of the
Seller to such grant of the license described herein be required, the Seller
hereby agrees upon the request of the Purchaser or any assignee of the Purchaser
to obtain the consent of
11
such third-party licensor. The license granted hereby shall be irrevocable, and
shall terminate on the Collection Date.
(b) The Seller shall take such action requested by the
Purchaser and/or any of the Purchaser's assignees, from time to time hereafter,
that may be necessary or appropriate to ensure that the Purchaser and its
assigns have an enforceable ownership interest in the Records relating to the
Receivables purchased from the Seller hereunder and an enforceable right
(whether by license or sublicense or otherwise) to use all of the computer
software used to account for the Receivables and/or to recreate such Records.
Section 2.6 Characterization. If, notwithstanding the
intention of the parties expressed in Section 2.1(b), the conveyance by the
Seller to the Purchaser of Receivables hereunder shall be characterized as a
secured loan and not a sale, this Agreement shall nonetheless constitute a
security agreement under applicable law. For this purpose, the Seller hereby
grants to the Purchaser a duly perfected security interest in all of the
Seller's right, title and interest in, to and under all (i) Receivables, (ii)
all Related Security with respect to such Receivables, (it being understood that
nothing contained in this Agreement shall constitute a delegation of the
Seller's duties under the Contracts related to the Receivables), (iii) all
Records, (iv) all of the Seller's right, title and interest in each post office
box and related post office box address and Lock-Box Account to which
Collections are sent, all amounts on deposit therein, all certificates and
instruments, if any, from time to time evidencing such Lock-Box Accounts and
amounts on deposit therein, and all related agreements between the Seller and
the Lock-Box Banks, (v) all Collections with respect to the foregoing, (vi) all
payments on or with respect to such Receivables, all other rights relating to
and payments made in respect of the Receivables, and (vii) all proceeds of any
of the foregoing. After any Termination Event, the Purchaser and its assignees
shall have, in addition to the rights and remedies which they may have under
this Agreement, all other rights and remedies provided to a secured creditor
after default under the UCC and other applicable law, which rights and remedies
shall be cumulative. In that regard, the Purchaser is hereby granted a license
or other right to use, without charge, the Seller's copyrights, rights of use of
any name, trade names, trademarks, service marks and advertising matter, or any
property of a similar nature, as it may pertain to Related Security comprising
repossessed or returned inventory the sale or lease of which shall have given
rise to a Receivable and in order to facilitate the disposition by the Purchaser
of such inventory. In connection with the grant of the transfer of ownership or
security interest in the Receivables, by signing this Agreement in the space
provided, the Seller hereby authorizes the filing of all applicable UCC
financing statements in all necessary jurisdictions.
Section 2.7 Servicing of Receivables. Pursuant to the
Receivables Purchase Agreement, the Seller has been appointed as the initial
Servicer thereunder, and the Seller has accepted such appointment. As the
Servicer, the Seller shall be responsible for collecting the Receivables,
tracking, holding and remitting the Collections and fulfilling all other duties
expressly assigned to it in the Receivables Purchase Agreement. The Seller shall
exercise reasonable care in the performance of its duties as the Servicer under
the Receivables Purchase Agreement and shall use the same degree of care and
skill which it applies to its own property. The appointment of the Seller as the
Servicer may be revoked as provided in the Receivables Purchase Agreement.
12
ARTICLE III
CONDITIONS OF PURCHASES
Section 3.1 Conditions Precedent to Initial Purchase. The
initial purchase under this Agreement is subject to the condition precedent that
on or before the date of such purchase the conditions precedent set forth in
Section 1 of Exhibit II of the Receivables Purchase Agreement are satisfied.
Section 3.2 Conditions Precedent to All Purchases. Each
purchase (including the initial purchase) shall be subject to the further
condition precedent that the conditions precedent set forth in Section 2 of
Exhibit II of the Receivables Purchase Agreement are satisfied.
Notwithstanding any failure or inability of the Seller to
satisfy any of the foregoing conditions precedent on any date in respect of any
purchase, unless on or prior to such date the Purchaser shall specifically
instruct the Seller to the contrary, all right, title and interest of the Seller
in and to each Receivable (and the Related Asset) that is available for sale on
such date shall transfer to and vest in the Purchaser without any action
required on the part of the Purchaser and the Purchaser, as owner of such
Receivables, shall have a claim against the Seller arising in connection with
the representations and warranties made by the Seller in connection with such
transfer.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties. 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 Delaware,
and 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. The Seller's organizational number is 2005114.
(b) The execution, delivery and performance by the Seller
of this Agreement and the other Transaction Documents to which it is a party,
including the Seller's use of the proceeds of purchases, (i) are within the
Seller's 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 (1) the Seller's charter or by-laws, (2) any law, rule or
regulation applicable to the Seller, (3) any contractual restriction binding on
or affecting the Seller or its property or (4) any order, writ, judgment, award,
injunction or decree binding on or affecting the Seller or its property, and
(iv) do not result in or require the creation of any Adverse Claim upon or with
respect to any of its properties. This Agreement and the other Transaction
Documents to which it is a party have been duly executed and delivered by the
Seller.
(c) No authorization or 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
13
performance by the Seller of this Agreement or any other Transaction Document to
which it is a party, or for the perfection of the Purchaser's interests under
the Transaction Documents except for the filing of the UCC Financing Statements
referred to in Exhibit II of the Receivables Purchase Agreement.
(d) Each of this Agreement and the other Transaction
Documents to which it is a party constitutes the legal, valid and binding
obligation of the Seller enforceable against the Seller in accordance with its
terms.
(e) The balance sheets of the Seller and its subsidiaries
as at December 31, 2002, and the related statements of income and retained
earnings of the Seller and its subsidiaries for the fiscal year then ended,
copies of which have been furnished to the Purchaser, fairly present the
financial condition of the Seller and its subsidiaries as at such date and the
results of the operations of the Seller and its subsidiaries for the period
ended on such date, all in accordance with generally accepted accounting
principles consistently applied and since December 31, 2002 there has been no
material adverse change in the business, operations, property or financial or
other condition or operations of the Seller or any of its subsidiaries, the
ability of the Seller to perform its obligations under this Agreement or the
other Transaction Documents to which it is a party or the collectibility of the
Receivables, or which affects the legality, validity or enforceability of this
Agreement or the other Transaction Documents to which it is a party.
(f) There is no pending or threatened action or
proceeding affecting the Seller or any of its subsidiaries before any
Governmental Authority or arbitrator which, if adversely determined, would
reasonably be expected to have a Material Adverse Effect or would materially
adversely affect the collectibility of the Receivables, or which affects or
purports to affect the legality, validity or enforceability of the Agreement or
the other Transaction Documents to which it is a party.
(g) No proceeds of any purchase will be used to acquire
any equity security of a class which is registered pursuant to Section 12 of the
Securities Exchange Act of 1934.
(h) The Seller is the legal and beneficial owner of the
Receivables and the Related Assets free and clear of any Adverse Claim; upon
each Purchase hereunder, the Purchaser shall acquire a valid and enforceable
perfected 100% ownership interest in all of the Seller's right, title and
interest in and to the Receivables and the Related Assets and other proceeds
with respect thereto existing on the date of this Agreement, free and clear of
any Adverse Claim. This Agreement creates a security interest in favor of the
Purchaser in the items described in Section 2.6, and the Purchaser has a first
priority perfected security interest in such items, free and clear of any
Adverse Claim. No effective financing statement or other instrument similar in
effect covering any Contract or any Receivable or the Related Assets is on file
in any recording office, except those filed in favor of the Purchaser relating
to this Agreement or in favor of assignees of the Purchaser.
(i) Any 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 Purchaser in connection with this Agreement is or
will be accurate in all material respects as of its date or
14
(except as otherwise disclosed to the Purchaser at such time) as of the date so
furnished, and no such item contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary in order
to make the statements contained therein, in the light of the circumstances
under which they were made, not misleading.
(j) The principal place of business and chief executive
office (as such terms are used in the UCC) of the Seller and the office where
the Seller keeps its records concerning the Receivables are located at the
address referred to in paragraph (b) of Section 5.1.
(k) The names and addresses of all the Lock-Box Banks,
together with the account numbers of the Lock-Box Accounts (and all related post
office boxes) of the Seller at such Lock-Box Banks, are specified in Schedule II
to this Agreement (or at such other Lock-Box Banks and/or with such other
Lock-Box Accounts (and such related post office boxes) as have been notified to
the Purchaser and the Agent in accordance with this Agreement) and all Lock-Box
Accounts (and all related post office boxes) are subject to Lock-Box Agreements.
All right, title and interest of the Seller in and to, and exclusive dominion
and control in respect of, each Lock-Box Account (and all related post office
boxes) has been transferred by the Seller to the Purchaser, free and clear of
any Adverse Claim.
(l) The Seller is not in violation of any order of any
court, arbitrator or Governmental Authority.
(m) Neither the Seller nor any Affiliate of the Seller
has any direct or indirect ownership or other financial interest in the Issuer.
(n) No proceeds of any purchase will be used for any
purpose that violates any applicable law, rule or regulation, including, without
limitation, Regulations T, U or X of the Federal Reserve Board.
(o) Except for Receivables sold on the Closing Date the
balance of which are not included in the Net Receivables Balance for such date,
each Receivable purchased by or otherwise transferred to the Purchaser hereunder
is, on the date of such purchase or transfer, an Eligible Receivable.
(p) No event has occurred and is continuing, or would
result from any purchase hereunder or from the application of the proceeds
therefrom, which constitutes a Termination Event.
(q) The Seller has accounted for each transfer of
Receivables hereunder in its books and financial statements as a sale,
consistent with generally accepted accounting principles.
(r) The Seller has complied in all material respects with
the Credit and Collection Policy with regard to each Receivable.
(s) The Seller has complied with all of the terms,
covenants and agreements contained in this Agreement and the other Transaction
Documents to which it is a party and that are applicable to it.
15
(t) The Seller's complete corporate name is set forth in
the preamble to this Agreement, and the Seller 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 and except for
names first used after the date of this Agreement and set forth in a notice
delivered to the Purchaser and the Agent pursuant to Section 5.1(b)(ii) .
(u) Each Plan and, to the best of the Seller's knowledge,
each Multiemployer Plan, complies in all material respects with applicable law
and,
(i) no Reportable Event for which the PBGC has not waived
the 30-day notice requirement has occurred with respect to any Plan or
to the best of the Seller's knowledge, any Multiemployer Plan which
could result in the Seller incurring any liability or obligation in
excess of $10,000,000;
(ii) no steps have been taken to terminate any Plan which
could result in the Seller's making a contribution, or incurring a
liability or obligation, to such Plan in excess of $10,000,000; no
steps have been taken to appoint a receiver to administer any such
Plan; to the best of the Seller's knowledge, no steps have been taken
to terminate or appoint a receiver to administer any Multiemployer Plan
which could result in the Seller's making a contribution, or incurring
a liability or obligation, to such Multiemployer Plan in excess of
$10,000,000; and neither the Seller nor any Related Person has
withdrawn from any such Multiemployer Plan or initiated steps to do so;
(iii) there is no Unfunded Vested Liability with respect to
any Plan or, to the best of the Seller's knowledge, any Multiemployer
Plan, that would reasonably be expected to have, in the event of
termination of such Plan or withdrawal from such Multiemployer Plan, a
Material Adverse Effect;
(iv) no contribution failure has occurred with respect to
any Plan sufficient to give rise to a lien under Section 302(f) of
ERISA; no condition exists or event or transaction has occurred with
respect to any Plan which would reasonably be expected to have a
Material Adverse Effect; and neither the Seller nor any of its
subsidiaries has any contingent liability with respect to any
post-retirement benefit under a Welfare Plan, other than liability for
continuation coverage described in Part 6 of Title I of ERISA, that
would reasonably be expected to have a Material Adverse Effect; and
(v) no failure to make any contribution or payment to any
Plan or Multiemployer Plan has occurred and no amendment to any Plan
has been made, which (A) could result in the imposition of an Adverse
Claim with respect to the Receivables or (B) is reasonably likely to
result in the imposition of an Adverse Claim with respect to any other
assets of the Seller or the posting of a bond or other security under
ERISA or the Code.
(v) The Seller and its subsidiaries are each in
compliance in all material respects with all Federal, state and local laws and
regulations (i) now applicable to the Seller or any subsidiary, or (ii) which,
to the best knowledge of the Seller will be applicable (or, if not in compliance
with such laws and regulations referred to in this clause (ii), the Seller or
such
16
subsidiary is taking appropriate action diligently pursued to be in compliance
therewith on a timely basis or to be exempt from compliance), relating to
pollution control and environmental contamination, including all laws and
regulations governing the generation, use, collection, treatment, storage,
transportation, recovery, removal, discharge or disposal of Hazardous Materials,
except to the extent that the failure to comply or take such action would not
reasonably be expected to have a Material Adverse Effect.
(w) The perfection representations and warranties set
forth in Exhibit VII of the Receivables Purchase Agreement shall be a part of
this Agreement for all purposes and the Seller hereunder makes such
representations and warranties.
ARTICLE V
COVENANTS
Section 5.1 Covenants of the Seller. Until the latest of the
Termination Date, the Collection Date and the date all amounts owed by the
Seller under this Agreement to the Purchaser and any other Indemnified Party
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 existence, rights, franchises, qualifications, and privileges
would not materially adversely affect the collectibility of the Receivables or
the enforceability of any related Contract or the ability of the Seller to
perform its obligations under any related Contract or under this Agreement.
(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 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 this Agreement and keep its State of organization at
the State set forth in Section 4.1(a) or, upon at least 30 days' prior written
notice of a proposed change to the Purchaser (and, if the Receivables Purchase
Agreement shall then be in effect, the Agent), at any other locations in
jurisdictions where all actions reasonably requested by the Purchaser or the
Agent to protect and perfect the interest of the Purchaser and its assignees in
the Receivables and related items (including without limitation the items
described in Section 2.6) have been taken and completed and (ii) shall provide
the Purchaser (and, if the Receivables Purchase Agreement shall then be in
effect, the Agent) with at least 30 days' written notice prior to making any
change in the Seller's name or making any other change in the Seller's identity
or corporate structure (including a merger) which could render any UCC financing
statement filed in connection with this Agreement "seriously misleading" as such
term is used in the UCC; each notice pursuant to this sentence shall set forth
the applicable change and the effective date thereof. The Seller also will
maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing Receivables and
related Contracts 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
17
or advisable for the collection of all Receivables (including, without
limitation, 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 Seller shall, 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) Ownership Interest Etc. The Seller shall, at its
expense, take all action necessary or desirable to establish and maintain, in
favor of the Purchaser and its assignees, a valid and enforceable 100% ownership
interest in the Receivables and the Related Assets with respect thereto, and a
first priority perfected security interest in the items described in Section
2.6, in each case free and clear of any Adverse Claim including, without
limitation, taking such action to perfect, protect or more fully evidence the
interest of the Purchaser under this Agreement as the Purchaser or any of its
assignees may 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 item described in Section 2.6 (including
without limitation the Seller's interest in any Receivable, Related Assets, 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 (e).
(f) Extension or Amendment of Receivables. Except as
provided in the Receivables Purchase Agreement, the Seller, as Servicer
thereunder, shall not extend the maturity or adjust the Outstanding Balance or
otherwise modify the terms of any Receivable, or amend, modify or waive any term
or condition of any related Contract.
(g) Change in Business or Credit and Collection Policy.
The Seller shall not make any material change in the character of its business
or in the Credit and Collection Policy, or any change in the Credit and
Collection Policy that would adversely affect the enforceability of any related
Contract or the ability of the Seller to perform its obligations under any
related Contract or under this Agreement; provided that the Seller may make any
of the changes described above to the extent such change is required in order to
comply with applicable laws. Notwithstanding any of the foregoing, the Seller
shall not make any material change in the Credit and Collection Policy that
would adversely affect the collectibility of any Receivable.
(h) Audits. (i) The Seller shall, from time to time
during regular business hours as reasonably requested by the Purchaser (or, if
the Receivables Purchase Agreement shall then be in effect, the Agent), permit
the Purchaser and the Agent, or their respective agents or representatives, (A)
to examine and make copies of and abstracts from all books, records and
documents (including, without limitation, computer tapes and disks) in the
possession or under the control of the Seller relating to Receivables and the
Related Security, including, without limitation, the related Contracts, and (B)
to visit the offices and properties of the Seller for the purpose of examining
such materials described in clause (i)(A) above, and to discuss matters
18
relating to Receivables and the Related Security or the Seller's performance
hereunder or under the Contracts with any of the officers, employees, agents or
contractors of the Seller having knowledge of such matters; and (ii) without
limiting the provisions of clause (i) next above, from time to time during
regular business hours as reasonably requested by the Agent, permit certified
public accountants or other auditors acceptable to the Agent to conduct (at
Seller's expense once each year or if a Termination Event has occurred) a review
of its books and records with respect to the Receivables. The Agent, or its
agents and representatives, may (and the Agent (or such other Person who may be
designated from time to time by Issuer) shall, upon the request of Issuer)
conduct a review of the type described hereinabove whenever Issuer or the Agent,
as the case may be, in its and their reasonable judgment, deem such review
appropriate.
(i) Change in Lock-Box Banks, Lock-Box Accounts and
Payment Instructions to Obligors. The Seller shall not add or terminate any bank
as a Lock-Box Bank or any account as a Lock-Box Account (or the related post
office box) from those listed in Schedule II to this Agreement, or make any
change in its instructions to Obligors regarding payments to be made to the
Seller or payments to be made to any Lock-Box Account (or related post office
box), unless the Purchaser and the Agent shall have consented prior thereto in
writing (such consent not to be unreasonably withheld or delayed) and the
Purchaser and the Agent shall have received copies of all agreements and
documents (including without limitation Lock-Box Agreements) that either may
request in connection therewith.
(j) Deposits to Lock-Box Accounts. The Seller shall (i)
instruct all Obligors to make payments of all Receivables to one or more
Lock-Box Accounts (as defined in the Receivables Purchase Agreement) directly 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 of Receivables 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.
(k) Marking of Records. At its expense, the Seller shall
xxxx the master data processing records relating to Receivables and related
Contracts, including with a legend, as mutually agreed upon, evidencing that
such Receivables and related Contracts have been sold in accordance with this
Agreement and directing all inquiries to the Seller's Treasurer or Manager of
General Credit for further details. The Seller's Treasurer and Manager of
General Credit shall at all times keep in their possession copies of the
Transaction Documents.
(l) Merger, Sale of Assets. The Seller shall not:
(i) be a party to any merger or consolidation,
except that, so long as no Termination Event
has occurred or would occur immediately
after giving effect thereto or would result
therefrom, the Seller may merge with any
other Person, provided that the Seller is
the survivor of such merger; or
(ii) sell, transfer, assign or convey all or
substantially all of its assets.
19
(m) Reporting Requirements. The Seller will provide to
the Purchaser and the Agent (in multiple copies, if requested by the Agent) the
following:
(i) as soon as available and in any event within 60 days
after the end of each of the first three quarters of each fiscal year
of the Seller, balance sheets of the Seller and its subsidiaries as of
the end of such quarter and statements of income and retained earnings
of the Seller and its subsidiaries for the period commencing at the end
of the previous fiscal year and ending with the end of such quarter,
certified by the treasurer of the Seller; provided, that, to the extent
CITGO is the Servicer and CITGO or any Affiliate thereof has delivered
such balance sheets or statements to the Agent, the Servicer shall have
no obligation under this clause (i) to provide such balance sheets or
statements, as the case may be, to the Agent;
(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 and its subsidiaries, containing
financial statements for such year audited by Deloitte & Touche LLP or
other independent certified public accountants reasonably acceptable to
the Purchaser and the Agent; provided, that to the extent CITGO is the
Servicer and CITGO or any Affiliate thereof has delivered such annual
report to the Agent, the Servicer shall have no obligation under this
clause (ii) to provide such annual report to the Agent;
(iii) as soon as possible and in any event within five days
after the occurrence of each Termination Event or an Unmatured
Termination Event, a statement of the treasurer 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;
(iv) at least 30 days prior to 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;
(v) promptly after the sending or filing thereof, copies
of all reports that the Seller sends to any of its security holders,
and copies of all other reports and registration statements that the
Seller or any subsidiary files with the Securities and Exchange
Commission or any national securities exchange;
(vi) promptly upon learning thereof, written notice
describing the institution of any steps by the Seller or any other
Person to terminate any Plan or any Multiemployer Plan, or the
appointment of a receiver to administer any Plan or any Multiemployer
Plan, or the withdrawal by the Company or any Related Person from any
Multiemployer Plan, or the failure to make a required contribution to
any Plan if such failure is sufficient to give rise to a lien under
section 302(f) of ERISA, or the taking of any action with respect to a
Plan which could result in the requirement that the originator furnish
a bond or other security to the PBGC or such Plan, or the occurrence of
any event with respect to any Plan which could reasonably be expected
to result in the incurrence by the Seller of any material liability,
fine or penalty, or any material increase in the contingent liability
of the Seller with respect to any post-retirement Welfare Plan benefit;
20
(vii) such other information respecting the Receivables or
the condition or operations, financial or otherwise, of the Seller or
any of its Affiliates as the Purchaser or the Agent may from time to
time reasonably request;
(viii) promptly after the Seller obtains knowledge thereof,
notice of any (a) litigation, investigation or proceeding which may
exist at any time between the Seller and any Governmental Authority
which, if not cured or if adversely determined, as the case may be, is
reasonably likely to have a Material Adverse Effect; or (b) litigation
or proceeding which is reasonably likely to have a Material Adverse
Effect or (c) litigation or proceeding relating to any Transaction
Document; and
(ix) promptly after the occurrence thereof, notice of any
event which is reasonably likely to have a Material Adverse Effect.
(n) Purchasers' Reliance. The Seller acknowledges that
the Issuer, the Liquidity Banks and the Agent (together with the "Purchasers",
as defined in the Receivables Purchase Agreement) are entering into the
transactions contemplated by the Receivables Purchase Agreement in reliance upon
the Purchaser's identity as a separate legal entity from the Seller. Therefore,
from and after the date of execution and delivery of this Agreement, the Seller
shall take all reasonable steps including, without limitation, all steps that
the Issuer, the Liquidity Banks or Agent may from time to time reasonably
request, to maintain the Purchaser's identity as a separate legal entity and to
make it manifest to third parties that the Purchaser is an entity with assets
and liabilities distinct from those of the Seller and any Affiliates thereof and
not just a division of the Seller. Without limiting the generality of the
foregoing and in addition to the other covenants set forth herein, the Seller
(i) shall not hold itself out to third parties as liable for the debts of the
Purchaser nor purport to own the Receivables and other assets acquired by the
Purchaser hereunder or otherwise, (ii) shall take all other actions necessary on
its part to ensure that the Purchaser is at all times in compliance with the
covenants set forth in paragraph (l) of Exhibit IV of the Receivables Purchase
Agreement and (iii) shall cause all tax liabilities arising in connection with
the transactions contemplated herein or otherwise to be allocated between the
Seller and the Purchaser on an arm's-length basis.
(o) Perfection Covenants. The perfection covenants set
forth in Exhibit VII to the Receivables Purchase Agreement shall be a part of
this Agreement for all purposes and the Seller hereunder makes such covenants.
ARTICLE VI
TERMINATION EVENTS
Section 6.1 Termination Events. Each of the following events
shall be a "Termination Event":
(a) The Seller shall fail to make any payment required
under this Agreement.
(b) Any representation or warranty made or deemed made by
the Seller (or any of its respective officers) under or in connection with this
Agreement or any information or
21
report delivered by the Seller pursuant to this Agreement shall prove to have
been incorrect or untrue in any material respect when made or deemed made or
delivered; or
(c) The Seller shall fail to perform or observe any other
material term, covenant or agreement contained in this Agreement on its part to
be performed or observed and any such failure shall remain unremedied for 10
days after receiving notice or becoming aware of such failure; or
(d) This Agreement or any purchase pursuant to this
Agreement shall for any reason (other than pursuant to the terms hereof) (i)
cease to create, or the Purchaser and its assignees shall for any reason cease
to have, a valid and enforceable perfected 100% ownership interest in each
Receivable and the Related Assets and other proceeds with respect thereto, free
and clear of any Adverse Claim or (ii) cease to create with respect to the items
described in Section 2.6, or the interest of the Purchaser and its assignees
with respect to such items shall cease to be, a valid and enforceable first
priority perfected security interest, free and clear of any Adverse Claim; or
(e) Any "Termination Event" shall occur under and as
defined in the Receivables Purchase Agreement and the "Termination Date" shall
have been declared thereunder as a result thereof.
Section 6.2 Remedies. If any of the Termination Events set
forth in Section 6.1 hereto shall occur, the Purchaser may, by notice to the
Seller, declare the Termination Date to have occurred (in which case the
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 subsection (d) of Section 6.1, the
Termination Date shall occur. Upon any such declaration, occurrence or deemed
occurrence of the Termination Date, the Purchaser shall have, in addition to the
rights and remedies which it may have under this Agreement, all other rights and
remedies provided after default under the UCC and under other applicable law,
which rights and remedies shall be cumulative.
ARTICLE VII
INDEMNIFICATION
Section 7.1 Indemnities by the Seller. Without limiting any
other rights that the Purchaser or any of its employees, agents, 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, 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) or the use of proceeds of purchases
or the ownership of any Receivable or any related Contract, excluding, however,
(a) Indemnified Amounts to the extent resulting from gross negligence, willful
misconduct or unlawful conduct on the part of such Indemnified Party, (b)
recourse (except as otherwise specifically provided in this Agreement) for
uncollectible 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
22
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 to each Indemnified Party any and all amounts
necessary to indemnify such Indemnified Party from and against any and all
Indemnified Amounts relating to or resulting from any of the following:
(i) the failure of (A) any Receivable included by the
Seller or the Servicer (so long as the Servicer is an Affiliate of the
Seller) in the calculation of the Net Receivables Balance as an
Eligible Receivable to be an Eligible Receivable as of the date of such
calculation (unless such ineligibility occurs as a result of the
Agent's exercise of its rights to exclude Receivables and/or Obligors
pursuant to the definition of "Eligible Receivable") or (B) any other
information provided to the Purchaser or any of its assignees with
respect to the Receivables or this Agreement to be true and correct;
(ii) the failure of any representation or warranty or
statement (i) made in writing, (ii) verbally communicated during the
due diligence process prior to the date of closing by the Seller (or
any of its officers) under or in connection with this Agreement or any
Transaction Document to have been true and correct in all respects when
made;
(iii) the failure by the Seller to comply with any covenant
set forth in Article V;
(iv) the failure by the Seller to comply with any
applicable law, rule or regulation with respect to any Receivable or
the related Contract; or the failure of any Receivable or the related
Contract to conform to any such applicable law, rule or regulation;
(v) the failure to vest in the Purchaser a valid and
enforceable (A) perfected 100% ownership interest in the Receivables
and the Related Assets with respect thereto and (B) first priority
perfected security interest in the items described in Section 2.6, in
each case, free and clear of any Adverse Claim;
(vi) 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 and the Related Assets in respect thereof,
whether at the time of any purchase or at any subsequent time;
(vii) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor) of the Obligor to the payment
of any Receivable (including, without limitation, a defense based on
such Receivable or the related Contract not being a legal, valid and
binding obligation of such Obligor enforceable against it in accordance
with its terms), or any other claim resulting from the sale of the
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 (if such collection
activities were performed by the Seller or any of its Affiliates acting
as Servicer or by any agent or independent contractor retained by the
Seller or any of its Affiliates);
(viii) any failure of the Seller to perform its duties or
obligations in accordance with the provisions hereof or to perform its
duties or obligations under the Contracts;
23
(ix) any products liability or other claim, investigation,
litigation or proceeding arising out of or in connection with
merchandise, insurance or services which are the subject of any
Contract;
(x) the commingling of Collections of Receivables at any
time with other funds of the Seller;
(xi) any investigation, litigation or proceeding related
to this Agreement or the use of proceeds of purchases or the ownership
of any Receivable or Related Assets;
(xii) any distribution of Collections all or a portion of
which shall thereafter be rescinded or otherwise must be returned for
any reason;
(xiii) the Seller's failure to pay when due any taxes
(including sales, excise or personal property taxes) payable in
connection with the Receivables;
(xiv) any attempt by any Person to void any such transfer
of Receivables hereunder under statutory provisions or common law or
equitable action, including, without limitation, any provision of the
Bankruptcy Code; or
(xv) any information provided by the Seller in any
Transaction Document furnished to the Purchaser, the Issuer, the
Liquidity Banks or the Agent in connection with this Agreement which
shall have been incorrect in any respect or which shall have omitted
any material fact necessary to make such information not misleading; or
(xvi) any setoff of any Lock-Box Bank of amounts owed by
the Seller or any Affiliate thereof to such Lock-Box Bank.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Amendments, Etc. No amendment or waiver of any
provision of this Agreement or consent to any departure by the Seller therefrom
shall be effective unless in a writing signed by the Purchaser (and, if the
Receivables Purchase Agreement shall then be in effect, the Agent), and, in the
case of any amendment, by the Seller 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 Purchaser or any of its assignees
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. It is expressly understood and acknowledged that during the period the
Receivables Purchase Agreement shall be in effect, the prior consent of the
Agent and the Issuer, to the extent the Receivables Purchase Agreement is in
effect, shall be required in accordance with the terms thereof in order for the
Purchaser to grant any material consent, authorization or approval requested of
the Purchaser hereunder, or for the Purchaser to agree to any amendment, waiver
or other modification to the terms or conditions of this Agreement.
24
Section 8.2 Notices, Etc. All notices and other communications
hereunder shall, unless otherwise stated herein, be in writing (which shall
include facsimile communication) and 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 received (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 8.3 Assignability; Subordination. (a) This Agreement
shall be binding upon and inure to the benefit of the Seller, the Purchaser and
their respective successors and permitted assigns (including any trustee in
bankruptcy). The Seller may not assign any of its rights or delegate any of its
obligations hereunder or transfer any interest herein without the prior written
consent of the Purchaser. The Purchaser may assign at any time its rights and
obligations hereunder and interests herein to any other Person without the
consent of the Seller. Without limiting the foregoing, the Seller acknowledges
that the Purchaser, pursuant to the Receivables Purchase Agreement, shall assign
to the Agent, for the benefit of the Liquidity Banks, the Issuer and the
"Purchasers" (as defined in the Receivables Purchase Agreement), all of its
rights, remedies, powers and privileges hereunder and that the Agent may further
assign such rights, remedies, powers and privileges to the extent permitted in
the Receivables Purchase Agreement. The Seller agrees that the Agent, as the
assignee of the Purchaser, shall, subject to the terms of the Receivables
Purchase Agreement, have the right to enforce this Agreement and to exercise
directly all of the Purchaser's rights and remedies under this Agreement
(including, without limitation, the right to give or withhold any consents or
approvals of the Purchaser to be given or withheld hereunder) and the Seller
agrees to cooperate fully with the Agent, the Issuer and the Liquidity Banks in
the exercise of such rights and remedies. The Seller further agrees to give to
the Agent copies of all notices it is required to give to the Purchaser
hereunder. This Agreement shall create and constitute the continuing obligations
of the parties hereto in accordance with its terms, and shall remain in full
force and effect until the later to occur of the Termination Date and the
Collection Date; provided, however, that the rights and remedies with respect to
any breach of any representation and warranty made by the Seller hereunder and
the indemnification and payment provisions hereof shall be continuing and shall
survive any termination of this Agreement.
(b) The Seller agrees that any indebtedness, obligation
or claim, it may from time to time hold or otherwise have against the Purchaser
or any assets or properties of the Purchaser, including, without limitation any
obligation or claim under the Revolving Note or otherwise in respect of the
Revolving Loan, whether arising hereunder or otherwise existing, shall be
subordinate in right of payment to the prior payment in full of any indebtedness
or obligation of the Purchaser owing to the Agent, the Liquidity Banks, the
Issuer, the "Affected Persons" (as defined in the Receivables Purchase
Agreement), the "Indemnified Parties" (as defined in the Receivables Purchase
Agreement) under or in connection with the Receivables Purchase Agreement. The
subordination provision contained herein is for the direct benefit of, and may
be enforced by, the Agent, the Liquidity Banks, the Issuer, the "Affected
Persons" (as defined in the Receivables Purchase Agreement), the "Indemnified
Parties" (as defined in the Receivables Purchase Agreement) and their respective
assignees.
25
(c) Each assignor may, in connection with any assignment,
but subject to Section 8.6, disclose to the applicable assignee any information
relating to the Seller or the Receivables furnished to such assignor by or on
behalf of the Seller or the Purchaser.
Section 8.4 Costs, Expenses and Taxes. (a) In addition to the
rights of indemnification granted under Section 7.1 hereof, the Seller agrees to
pay on demand all costs and expenses in connection with the preparation,
execution, delivery and administration (including periodic auditing of
Receivables) of this Agreement, and the other documents and agreements to be
delivered hereunder, including, without limitation, Attorney Costs for the
Purchaser with respect to advising the Purchaser as to its rights and remedies
under this Agreement and the other Transaction Documents, and all costs and
expenses, if any (including Attorney Costs), of the Purchaser 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 8.5 No Proceedings; Limitation on Payments. The Seller
covenants and agrees that it will not institute against, or join any other
Person in instituting against, either the Purchaser or 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 commercial paper note issued by
the Issuer is paid in full.
Section 8.6 GOVERNING LAW AND JURISDICTION. (a) THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAWS,
BUT OTHERWISE WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF).
(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 EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH OF THE PURCHASER AND THE SELLER CONSENTS, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH
OF THE PURCHASER AND THE SELLER 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, WHICH 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. THE PURCHASER AND THE SELLER
EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR
26
OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
Section 8.7 Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed shall be
an original and all of which when taken together shall constitute one and the
same agreement.
Section 8.8 Survival of Termination. The provisions of Section
7.1, 8.4, 8.5, 8.6 and 8.9 shall survive any termination of this Agreement.
Section 8.9 WAIVER OF JURY TRIAL. THE PURCHASER AND THE SELLER
EACH WAIVE 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 AGREEMENT 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. THE
PURCHASER AND THE SELLER EACH AGREE 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 WHICH 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 8.10 Entire Agreement. This Agreement and the other
Transaction Documents required to be delivered hereunder embody the entire
agreement and understanding between the Purchaser and the Seller, and supersede
all prior or contemporaneous agreements and understandings of such Persons,
verbal or written, relating to the subject matter hereof and thereof.
Section 8.11 Headings. The captions and headings of this
Agreement are for convenience of reference only and shall not affect the
interpretation hereof or thereof.
27
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.
CITGO PETROLEUM CORPORATION,
as Seller
By:
-------------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
0000 Xxxxx Xxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
CITGO FUNDING COMPANY, L.L.C.,
as Purchaser
By:
-------------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
X.X. Xxx 00000 Xxxxx,
Xxxxxxxx 00000-0000
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
with a copy to the Agent, where applicable, at:
Societe Generale
000 Xxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Asset Securitization
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
S-1 SG/CITGO Purchase and Sale Agreement
SCHEDULE I
CREDIT AND COLLECTION POLICY
SCHEDULE II
LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS
SCHEDULE III
TRADE NAMES OF THE SELLER
None.
SCHEDULE IV
DESCRIPTION OF RECEIVABLES
As used in the Agreement, Receivables shall include all receivables originated
by the following "Customer Groups" of the Seller:
A. Using the "CITGO" tradename
CODE CUSTOMER GROUPS
---- ---------------
CLOS-BR CITGO Light Oil Sales - Branded Marketer
B. Not using the "CITGO" tradename
CODE CUSTOMER GROUPS
---- ---------------
CLOS-UB CITGO Light Oil Sales - Unbranded
CLOS-UM CITGO Light Oil Sales - Unbranded Marketer
CLOC-AV CITGO Light Oil Commercial - Aviation
CLOC-CM CITGO Light Oil Commercial - Commercial
CLOC-CR CITGO Light Oil Commercial - Commercial Resale
CLOC-RF CITGO Light Oil Commercial - Racing Fuel
CSAD-AV CITGO Supply & Dist. - Aviation
CSAD-CR CITGO Supply & Dist. - Commercial Resale
CSAD-DM CITGO Supply & Dist. - Domestic
CSAD-EX CITGO Supply & Dist. - Exchange Sales
CSAD-MI CITGO Supply & Dist. - Misc. Sales
ANNEX A
FORM OF LOCK-BOX AGREEMENT
(Attached)
FORM OF LOCK-BOX AGREEMENT
[DATE]
[LOCKBOX BANK NAME AND
ADDRESS]
Re: Lockbox Agreement (this "Agreement")
for Lockbox Number(s) [_________] and [_________]
Lockbox Account Number(s) [_________] and [_________]
Ladies and Gentlemen:
CITGO PETROLEUM CORPORATION, a Delaware corporation ("Originator"),
hereby notifies you that in connection with certain transactions involving the
trade receivables of Originator, Originator hereby transfers exclusive ownership
and control of its lockbox number(s) [_________] and [_________] (the "Lockbox")
and the corresponding lockbox account number(s) [_________] and [_________]
maintained with you (the "Lockbox Account") to CITGO Funding Company, L.L.C.
("SPV") (or its assigns or designees), and SPV hereby notifies you that in
connection with such transactions SPV hereby transfers exclusive dominion and
control of the Lockbox and the Lockbox Account to Societe Generale, in its
capacity as agent for and on behalf of certain other parties (the "Agent").
Originator has agreed to act as initial servicer of such receivables for SPV and
the Agent (Originator, or any successor servicer, the "Servicer"). Originator
shall have no ownership of, or rights in, the Lockbox or Lockbox Account or any
funds therein.
In connection with the foregoing, SPV and the Agent hereby jointly
instruct you, beginning on the date hereof until you are otherwise notified by
the Agent in writing, (i) to change the name on the Lockbox and the Lockbox
Account to "CITGO Funding Company, L.L.C. and Societe Generale, as Agent for and
on behalf of certain parties"; (ii) to follow your usual operating procedures
for the handling of any checks, except as modified by this Agreement; (iii) to
follow your usual procedures in the event the Lockbox, the Lockbox Account or
any check should be or become the subject of any writ, levy, order or other
similar judicial or regulatory order or process, except as modified by this
Agreement; (iv) to collect the monies, checks, instruments and other items of
payment mailed to the Lockbox; (v) to maintain the Lockbox Account as a "Deposit
Account" (as defined in Section 9-102 of the Uniform Commercial Code as in
effect in the State of New York (the "Applicable UCC")); (vi) to deposit in the
Lockbox Account all such monies, checks, instruments and other items of payment
(unless otherwise instructed by the Agent); and (vii) to transfer all collected
and available funds in the Lockbox Account in accordance with the instructions
of the Servicer; provided, however, that, at all times from and after the date
of your receipt of notice from the Agent of termination of the Servicer's access
to the Lockbox and Lockbox Account, which notice may be in the form
Annex A-2
attached hereto as Annex A or in any other form that gives you reasonable notice
of such termination (the "Agent's Notice"), such funds shall be transferred by
you directly to the Agent, at its address set forth below its signature hereto
or as the Agent otherwise notifies you, or otherwise in accordance with the
instructions of the Agent. You are hereby further instructed to permit the
Servicer and the Agent to obtain upon request any information relating to the
Lockbox and the Lockbox Account, including, without limitation, any information
regarding the balance or activity of the Lockbox Account.
Originator and SPV also hereby jointly notify you that notwithstanding
anything herein or elsewhere to the contrary, the Agent, or any party designated
in writing by the Agent, shall be irrevocably entitled to exercise any and all
rights in respect of or in connection with the Lockbox and the Lockbox Account,
including, without limitation, the right to specify when payments are to be made
out of or in connection with the Lockbox and the Lockbox Account. At all times
from and after the date of your receipt of the Agent's Notice, neither
Originator (including, in its capacity as Servicer), SPV nor any of our
respective affiliates shall be given any access to the Lockbox or Lockbox
Account.
The Agent's Notice may be personally served or sent by facsimile or
U.S. mail, certified return receipt requested, to the address or facsimile
number set forth under your signature to this letter agreement (or to such other
address or facsimile number as to which you shall notify the Agent in writing).
If the Agent's Notice is given by facsimile or electronic mail, it will be
deemed to have been received when the Agent's Notice is sent and receipt is
confirmed by telephone or other electronic means. All other notices will be
deemed to have been received when actually received or, in the case of personal
delivery, delivered.
The monies, checks, instruments and other items of payment mailed to
the Lockbox and the funds deposited into the Lockbox Account will not be subject
to deduction, set-off, banker's lien, or any other right in favor of any person
other than the Agent (except that you may set off the face amount of any items
(including, without limitation, checks and automated clearinghouse transactions)
returned unpaid because of uncollected or insufficient funds in accordance with
your customary practices). To the extent that funds in the Lockbox Account are
insufficient, Originator shall pay you for such returned items. All service
charges and fees with respect to the Lockbox and Lockbox Account shall continue
to be payable by Originator under the arrangements currently in effect.
Originator hereby authorizes you, without prior notice, from time to time to
debit any other account Originator may have with you for the amount or amounts
due you under the two preceding sentences.
By executing this Agreement, you (a) irrevocably waive and agree not to
assert, claim or endeavor to exercise, (b) irrevocably bar and estop yourself
from asserting, claiming or exercising and (c) acknowledge that you have not
heretofore received a notice, writ, order or any form of legal process from any
other party asserting, claiming or exercising, any right of set-off, banker's
lien, security interest or other purported form of claim with respect to the
Lockbox or Lockbox Account or any funds from time to time therein (except for
security interests which have been terminated on or prior to the date hereof).
You agree to give the Agent and SPV prompt notice if the Lockbox or the Lockbox
Account becomes subject to any writ, judgment, warrant of attachment, execution
or similar process. Except for your right to payment of your service charges and
fees from Originator and to make deductions for returned items, you shall
Annex A-3
have no rights in the Lockbox or Lockbox Account or funds therein. To the extent
you may ever have such rights, you hereby expressly subordinate all such rights
to all rights of the Agent.
In addition, as collateral security for SPV's obligations to the Agent
and certain other persons in connection with the transactions referenced in the
first paragraph of this Agreement, SPV hereby grants to the Agent a present and
continuing security interest in (a) the Lockbox and the Lockbox Account, (b) all
general intangibles and privileges in respect of the Lockbox or the Lockbox
Account, and (c) all cash, checks, money orders and other items of value of SPV
now or hereafter paid, deposited, credited, held (whether for collection,
provisionally or otherwise) or otherwise, in the possession or under the control
of, or in transit to you or any agent, bailee or custodian thereof in respect of
the Lockbox or the Lockbox Account, and all proceeds of the foregoing
(collectively, "Receipts"). You acknowledge and agree that (i) the Agent has
"Control" (as defined in Section 9-104 of the Applicable UCC) of the Lockbox
Account and you are required to comply with the instructions of the Agent
directing disposition of the funds in the Lockbox Account without further
consent by the Originator, Servicer, SPV or any affiliate thereof and (ii) you
shall at all times maintain the Lockbox Account as a "Deposit Account" (as
defined in Section 9-102 of the Applicable UCC). The Agent hereby appoints you
as the Agent's bailee for the Lockbox, Lockbox Account and all Receipts for the
purpose of perfecting the Agent's security interest in such collateral, and you
hereby accept such appointment and agree to be bound by the terms of this
Agreement. SPV hereby agrees to such appointment and further agrees that you, on
behalf of the Agent, shall be entitled to exercise, as directed in accordance
with the terms of this Agreement, any and all rights which the Agent may have in
connection with the transactions referenced in the first paragraph of this
Agreement or under applicable law with respect to the Lockbox, Lockbox Account,
all Receipts and all other collateral described in this paragraph.
You will not be liable to Originator, SPV or the Agent for any expense,
claim, loss, damage or cost ("Damages") arising out of or relating to your
performance under this Agreement other than those Damages which result directly
from your acts or omissions constituting gross negligence. In no event will you
be liable for any special, indirect, exemplary or consequential Damages,
including but not limited to lost profits.
Originator shall indemnify you against, and hold you harmless from, any
and all liabilities, claims, costs, expenses and damages of any nature
(including but not limited to allocated costs of staff counsel, other reasonable
attorneys' fees and any fees and expenses incurred in enforcing this Agreement)
in any way arising out of or relating to disputes or legal actions concerning
this Agreement, the Lockbox or the Lockbox Account. Originator agrees to pay to
you, upon receipt of your invoice, all costs, expenses and attorneys' fees
(including allocated costs for in-house legal services) incurred by you in
connection with the preparation and administration (including any amendments)
and enforcement of this Agreement. This paragraph does not apply to any cost or
damage attributable to your negligence or intentional misconduct. Originator's
obligations under this paragraph shall survive termination of this Agreement.
Notwithstanding any of the other provisions in this Agreement, in the
event of the commencement of a case pursuant to Xxxxx 00, Xxxxxx Xxxxxx Code,
filed by or against SPV, or in the event of the commencement of any similar case
under then applicable federal or state law
Annex A-4
providing for the relief of debtors or the protection of creditors by or against
SPV, you may act as you deem necessary to comply with all applicable provisions
of governing statutes and shall be held harmless from any claim of any of the
parties for so doing, provided that you shall not release any funds other than
in accordance with (i) this Agreement or (ii) an order of a court of competent
jurisdiction.
You hereby agree not to institute or join any other person or entity in
instituting, any suit pursuant to Xxxxx 00, Xxxxxx Xxxxxx Code, or any similar
suit or proceeding under then applicable state or federal law providing for the
relief of debtors or the protection of creditors, against SPV prior to the date
which is one year and one day after payment of all obligations of SPV to the
Agent (and the parties for which it is acting as agent) are paid in full. This
section shall survive any termination of this Agreement.
You may terminate this Agreement upon 30 days' prior written notice to
SPV and the Agent. The Agent may terminate this Agreement upon 30 days' prior
written notice to SPV and you. Neither SPV nor the Servicer may terminate this
Agreement, except with the written consent of the Agent and upon 30 days' prior
written notice to you and the Agent. Originator may not terminate this
Agreement. Incoming mail addressed to the Lockbox or Lockbox Account (including,
without limitation, any direct funds transfer to the Lockbox Account) received
after any such termination shall be forwarded in accordance with the Agent's
instructions.
You shall not assign or transfer your rights or obligations hereunder
(other than to the Agent) without the prior written consent (which consent shall
not be unreasonably withheld) of the Agent and SPV. Originator (except to the
extent of its limited capacity as Servicer) shall not assign or transfer its
rights and obligations hereunder without your consent and the consent of the
Agent. Neither SPV nor Servicer shall not assign or transfer its rights or
obligations hereunder without the consent of the Agent. The Agent may at any
time assign its rights and obligations hereunder upon notice to the other
parties hereto. Subject to the preceding sentences, this Agreement shall be
binding upon each of the parties hereto and their respective successors and
assigns, and shall inure to the benefit of, and be enforceable by, the Agent,
each of the parties hereto and their respective successors and assigns.
This Agreement contains the entire agreement between the parties with
respect to the subject matter hereof, and may not be altered, modified or
amended in any respect, nor except as set forth in the preceding paragraph may
any right, power or privilege of any party hereunder be waived or released or
discharged, except upon execution by you, SPV and the Agent of a written
instrument so providing. The terms and conditions of any agreement between
Originator and/or SPV and you (a "Lockbox Service Agreement") (whether now
existing or executed hereafter) with respect to the lockbox arrangements, to the
extent not inconsistent with this Agreement, are made part of this Agreement
with respect to matters not explicitly covered in this Agreement. In the event
that any provision in this Agreement is in conflict with, or inconsistent with,
any provision of any such Lockbox Service Agreement, this Agreement will
exclusively govern and control. Each party agrees to take all actions reasonably
requested by any other party to carry out the purposes of this Agreement or to
preserve and protect the rights of each party hereunder.
Annex A-5
Except as otherwise expressly provided herein, notice, demand or other
communication required or permitted to be given hereunder shall be in writing
and may be (a) personally served, (b) sent by courier service, (c) sent by
facsimile or electronic mail or (d) sent by United States mail and shall be
deemed to have been given when (a) delivered in person, (b) delivered by courier
service, (c) upon confirmation by telephone or other electronic means of receipt
of the telex, facsimile or electronic mail or (d) five business days after
deposit in the United States mail (registered or certified, with postage prepaid
and properly addressed); provided, however, that notices to the Agent hereunder
shall not be effective until actually received by the Agent. For the purposes
hereof, the addresses of the parties hereto shall be as set forth below each
party's name below, or, as to each party, at such other address as may be
designated by such party in a written notice to the other parties.
This Agreement and the rights and obligations of the parties hereunder
will be governed by and construed and interpreted in accordance with the
internal laws of the State of New York. The SPV, the Agent and you agree that
New York is your "jurisdiction" for purposes of Section 9-304 of the Applicable
UCC. This Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each of which counterparts,
when so executed shall be deemed to be an original and all of which
counterparts, taken together, shall constitute one and the same agreement.
Delivery of an executed counterpart of the signature pages of this Agreement by
telecopier or other electronic means shall be equally effective as delivery of a
manually executed counterpart.
Annex A-6
Please evidence your agreement to the terms of, and acknowledge receipt
of, this Agreement by signing in the space provided below.
Very truly yours,
CITGO PETROLEUM CORPORATION,
as Originator and Servicer
By:_______________________________________
Name:_____________________________________
Title:____________________________________
0000 Xxxxx Xxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
CITGO FUNDING COMPANY, L.L.C.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
X.X. Xxx 00000
Xxxxx, Xxxxxxxx 00000-0000
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
SOCIETE GENERALE, as Agent
By:_______________________________________
Name:_____________________________________
Title:____________________________________
000 Xxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Asset Securitization Group
Annex A-7
ACKNOWLEDGED AND AGREED:
[NAME OF LOCKBOX BANK]
By:_____________________________________
Name:___________________________________
Title:__________________________________
Date:___________________________________
[ADDRESS]
Attention: [___________]
Telephone: [__________]
Telecopy: [___________]
Annex A-8
ANNEX A TO
LOCKBOX AGREEMENT
[NAME AND ADDRESS OF LOCKBOX BANK]
Re: Lockbox Agreement for
Lockbox Numbers [___________] and [___________]
and Lockbox Account Numbers [___________] and [___________]
Ladies and Gentlemen:
Reference is made to the Lockbox Agreement, dated [___________], 2003
(the "Lockbox Agreement"), among CITGO PETROLEUM CORPORATION, CITGO FUNDING
COMPANY, L.L.C., the undersigned, as Agent, and you concerning the
above-described lockboxes and lockbox accounts. We hereby give you notice of the
termination of the Servicer's access to the Lockbox and Lockbox Accounts as
provided in the Lockbox Agreement.
We hereby instruct you not to permit any other party to have access to
the above-described lockboxes and lockbox accounts and to make all payments to
be made by you out of or in connection thereunder directly to the undersigned
upon our instructions, at our address set forth above.
Very truly yours,
SOCIETE GENERALE, as Agent
By:__
Name:_________________________________
Title:________________________________
By:__
Name:_________________________________
Title:________________________________
Annex A-9
ANNEX B
FORM OF SUBORDINATED REVOLVING NOTE
(Attached)
SUBORDINATED REVOLVING NOTE
February 28, 2003
FOR VALUE RECEIVED, the undersigned, CITGO FUNDING COMPANY,
L.L.C., a Delaware limited liability company ("Company"), promises to pay to
CITGO PETROLEUM, a Delaware corporation (the "Originator"), on the terms and
subject to the conditions set forth herein and in the Purchase and Sale
Agreement referred to below, the aggregate unpaid Purchase Price of all
Receivables purchased by the Company from the Originator pursuant to such
Purchase and Sale Agreement, as such unpaid Purchase Price is shown in the
records of the Servicer.
1. Purchase and Sale Agreement. This Revolving Note is one of the
Revolving Notes described in, and is subject to the terms and conditions set
forth in, that certain Purchase and Sale Agreement of even date herewith (as the
same may be amended, supplemented, amended and restated or otherwise modified in
accordance with its terms, the "Purchase and Sale Agreement"), between the
Company and the Originator. Reference is hereby made to the Purchase and Sale
Agreement for a statement of certain other rights and obligations of the Company
and the Originator.
2. Definitions. Capitalized terms used (but not defined) herein
have the meanings assigned thereto in Exhibit I to the Receivables Purchase
Agreement (as defined in the Purchase and Sale Agreement). In addition, as used
herein, the following terms have the following meanings:
"Bankruptcy Proceedings" has the meaning set forth in clause
(b) of paragraph 9 hereof.
"Final Maturity Date" means the Payment Date immediately
following the date that falls one hundred twenty one (121) days after the
Termination Date.
"Interest Period" means the period from and including a
Settlement Date (or, in the case of the first Interest Period, the date hereof)
to but excluding the next Settlement Date.
"Prime Rate" means a per annum rate equal to the "Prime Rate"
as published in the "Money Rates" section of The Wall Street Journal or if such
information ceases to be published in The Wall Street Journal, such other
publication as determined by the Agent in its reasonable discretion.
"Receivables Purchase Agreement" means the Receivables
Purchase Agreement, dated as of February 28, 2003, entered into among CITGO
Funding Company, L.L.C., CITGO Petroleum, Asset One Securitization, LLC and
Societe Generale.
"Senior Interests" means, collectively, (i) all accrued and
unpaid Discount, (ii) all fees payable by the Company to the Senior Interest
Holders pursuant to the Receivables Purchase Agreement, (iii) all amounts
payable pursuant to Section 1.8 and 1.9 of the Receivables Purchase Agreement,
(iv) the Capital and (v) all other obligations owed by the Company to the Senior
Interest Holders under the Receivables Purchase Agreement and other Transaction
Documents
Annex B-1 Revolving Note
that are due and payable, together with any and all interest and Discount
accruing on any such amount after the commencement of any Bankruptcy
Proceedings, notwithstanding any provision or rule of law that might restrict
the rights of any Senior Interest Holder, as against the Company or anyone else,
to collect such interest.
"Senior Interest Holders" means, collectively, the Issuer, the
Agent, Affected Persons and the Indemnified Parties.
"Subordination Provisions" means, collectively, clauses (a)
through (l) of paragraph 9 hereof.
"Telerate Screen Rate" means, for any Interest Period, the
rate for thirty day commercial paper denominated in dollars which appears on
Page 1250 of the Dow Xxxxx Telerate Service (or such other page as may replace
that page on that service for the purpose of displaying dollar commercial paper
rates) at approximately 9:00 a.m., New York City time, on the first day of such
Interest Period.
3. Interest. Subject to the Subordination Provisions set forth
below, the Company promises to pay interest on this Revolving Note as follows:
(a) Prior to the Final Maturity Date, the aggregate
unpaid Purchase Price from time to time outstanding during any Interest Period
shall bear interest at a rate per annum equal to the Telerate Screen Rate for
such Interest Period as determined by the Servicer; and
(b) From (and including) the Final Maturity Date to (but
excluding) the date on which the entire aggregate unpaid Purchase Price payable
to the Originator is fully paid, such aggregate unpaid Purchase Price from time
to time outstanding shall bear interest at a rate per annum equal to the Prime
Rate.
4. Interest Payment Dates. Subject to the Subordination
Provisions set forth below, the Company shall pay accrued interest on this
Revolving Note on each Settlement Date, and shall pay accrued interest on the
amount of each principal payment made in cash on a date other than a Settlement
Date at the time of such principal payment.
5. Basis of Computation. Interest accrued hereunder that is
computed by reference to the Telerate Screen Rate shall be computed for the
actual number of days elapsed on the basis of a 360-day year, and interest
accrued hereunder that is computed by reference to the rate described in
paragraph 3(b) of this Revolving Note shall be computed for the actual number of
days elapsed on the basis of a 365- or 366-day year.
6. Principal Payment Dates. Subject to the Subordination
Provisions set forth below, payments of the principal amount of this Revolving
Note shall be made as follows:
(a) The principal amount of this Revolving Note shall be
reduced by an amount equal to each payment deemed made pursuant to Section 2.3
of the Purchase and Sale Agreement; and
Annex B-2
(b) The entire remaining unpaid Purchase Price of all
Receivables purchased by the Company from the Originator pursuant to the
Purchase and Sale Agreement shall be due and payable on the Final Maturity Date.
Subject to the Subordination Provisions set forth below, the
principal amount of and accrued interest on this Revolving Note may be prepaid
on any Business Day without premium or penalty.
7. Payment Mechanics. All payments of principal and interest
hereunder are to be made in lawful money of the United States of America.
8. Enforcement Expenses. In addition to and not in limitation of
the foregoing, but subject to the Subordination Provisions set forth below and
to any limitation imposed by applicable law, the Company agrees to pay all
expenses, including reasonable attorneys' fees and legal expenses, incurred by
the Originator in seeking to collect any amounts payable hereunder which are not
paid when due.
9. Subordination Provisions. The Originator and any other holder
of this Revolving Note (collectively, the Originator and any such other holder
are called the "Holder"), by its acceptance of this Revolving Note, covenants
and agrees on behalf of itself and any holder of this Revolving Note, that the
payment of the principal amount of and interest on this Revolving Note is hereby
expressly subordinated in right of payment to the payment and performance of the
Senior Interests to the extent and in the manner set forth in the following
clauses of this paragraph 9:
(a) No payment or other distribution of the Company's
assets of any kind or character, whether in cash, securities, or other rights or
property, shall be made on account of this Revolving Note except to the extent
such payment or other distribution is (i) permitted under the covenants of the
Company set forth in paragraph 1(s) of Exhibit IV of the Receivables Purchase
Agreement or (ii) made pursuant to clauses (a) and (b) of paragraph 6 of this
Revolving Note;
(b) In the event of any dissolution, winding up,
liquidation, readjustment, reorganization or other similar event relating to the
Company, whether voluntary or involuntary, partial or complete, and whether in
bankruptcy, insolvency or receivership proceedings, or upon an assignment for
the benefit of creditors, or any other marshalling of the assets and liabilities
of the Company or any sale of all or substantially all of the assets of the
Company other than as permitted by the Purchase and Sale Agreement (such
proceedings being herein collectively called "Bankruptcy Proceedings"), the
Senior Interests shall first be paid and performed in full and in cash before
the Originator shall be entitled to receive and to retain any payment or
distribution in respect of this Revolving Note. In order to implement the
foregoing during any Bankruptcy Proceeding: (i) all payments and distributions
of any kind or character in respect of this Revolving Note to which Holder would
be entitled except for this clause (b) shall be made directly to the Agent (for
the benefit of the Senior Interest Holders); (ii) Holder shall promptly file a
claim or claims, in the form required in any Bankruptcy Proceedings, for the
full outstanding amount of this Revolving Note, and shall use commercially
reasonable efforts to cause said claim or claims to be approved and all payments
and other distributions in respect thereof to be made directly to the Agent (for
the benefit of the Senior Interest Holders) until the
Annex B-3
Senior Interests shall have been paid and performed in full and in cash; and
(iii) Holder hereby irrevocably agrees that the Issuer (or the Agent acting on
the Issuer's behalf), in the name of Holder or otherwise, may demand, xxx for,
collect, receive and receipt for any and all such payments or distributions, and
file, prove and vote or consent in any such Bankruptcy Proceedings with respect
to any and all claims of Holder relating to this Revolving Note, in each case
until the Senior Interests shall have been paid and performed in full and in
cash;
(c) In the event that Holder receives any payment or
other distribution of any kind or character from the Company or from any other
source whatsoever, in respect of this Revolving Note, other than as expressly
permitted by the terms of this Revolving Note, such payment or other
distribution shall be received in trust for the Senior Interest Holders and
shall be turned over by Holder to the Agent (for the benefit of the Senior
Interest Holders) forthwith. Holder will xxxx its books and records so as
clearly to indicate that this Revolving Note is subordinated in accordance with
the terms hereof. All payments and distributions received by the Agent in
respect of this Revolving Note, to the extent received in or converted into
cash, may be applied by the Agent (for the benefit of the Senior Interest
Holders) first to the payment of any and all expenses (including reasonable
attorneys' fees and legal expenses) paid or incurred by the Senior Interest
Holders in enforcing these Subordination Provisions, or in endeavoring to
collect or realize upon this Revolving Note, and any balance thereof shall,
solely as between the Originator and the Senior Interest Holders, be applied by
the Agent (in the order of application set forth in Section 1.4(d)(ii) of the
Receivables Purchase Agreement) toward the payment of the Senior Interests; but
as between the Company and its creditors, no such payments or distributions of
any kind or character shall be deemed to be payments or distributions in respect
of the Senior Interests;
(d) Notwithstanding any payments or distributions
received by the Senior Interest Holders in respect of this Revolving Note, while
any Bankruptcy Proceedings are pending Holder shall not be subrogated to the
then existing rights of the Senior Interest Holders in respect of the Senior
Interests until the Senior Interests have been paid and performed in full and in
cash. If no Bankruptcy Proceedings are pending, Holder shall only be entitled to
exercise any subrogation rights that it may acquire (by reason of a payment or
distribution to the Senior Interest Holders in respect of this Revolving Note)
to the extent that any payment arising out of the exercise of such rights would
be permitted under the covenants of the Company set forth in paragraph 1(s) of
Exhibit IV of the Receivables Purchase Agreement;
(e) These Subordination Provisions are intended solely
for the purpose of defining the relative rights of Holder, on the one hand, and
the Senior Interest Holders on the other hand. Nothing contained in these
Subordination Provisions or elsewhere in this Revolving Note is intended to or
shall impair, as between the Company, its creditors (other than the Senior
Interest Holders) and Holder, the Company's obligation, which is unconditional
and absolute, to pay Holder the principal of and interest on this Revolving Note
as and when the same shall become due and payable in accordance with the terms
hereof or to affect the relative rights of Holder and creditors of the Company
(other than the Senior Interest Holders);
(f) Holder shall not, until the Senior Interests have
been paid and performed in full and in cash, (i) cancel, waive, forgive,
transfer or assign, or commence legal proceedings to enforce or collect, or
subordinate to any obligation of the Company, howsoever created,
Annex B-4
arising or evidenced, whether direct or indirect, absolute or contingent, or now
or hereafter existing, or due or to become due, other than the Senior Interests,
this Revolving Note or any rights in respect hereof or (ii) convert this
Revolving Note into an equity interest in the Company, unless Holder shall have
received the prior written consent of the Agent and the Issuer in each case;
(g) Holder shall not, without the advance written consent
of the Agent and the Issuer, commence, or join with any other Person in
commencing, any Bankruptcy Proceedings with respect to the Company until at
least one year and one day shall have passed since the Senior Interests shall
have been paid and performed in full and in cash;
(h) If, at any time, any payment (in whole or in part) of
any Senior Interest is rescinded or must be restored or returned by a Senior
Interest Holder (whether in connection with Bankruptcy Proceedings or
otherwise), these Subordination Provisions shall continue to be effective or
shall be reinstated, as the case may be, as though such payment had not been
made;
(i) Each of the Senior Interest Holders may, from time to
time, at its sole discretion, without notice to Holder, and without waiving any
of its rights under these Subordination Provisions, take any or all of the
following actions: (i) retain or obtain an interest in any property to secure
any of the Senior Interests; (ii) retain or obtain the primary or secondary
obligations of any other obligor or obligors with respect to any of the Senior
Interests; (iii) extend or renew for one or more periods (whether or not longer
than the original period), alter or exchange any of the Senior Interests, or
release or compromise any obligation of any nature with respect to any of the
Senior Interests; (iv) amend, supplement, amend and restate, or otherwise modify
any Transaction Document; and (v) release its security interest in, or
surrender, release or permit any substitution or exchange for all or any part of
any rights or property securing any of the Senior Interests, or extend or renew
for one or more periods (whether or not longer than the original period), or
release, compromise, alter or exchange any obligations of any nature of any
obligor with respect to any such rights or property;
(j) Holder hereby waives: (i) notice of acceptance of
these Subordination Provisions by any of the Senior Interest Holders; (ii)
notice of the existence, creation, non-payment or non-performance of all or any
of the Senior Interests; and (iii) all diligence in enforcement, collection or
protection of, or realization upon, the Senior Interests, or any thereof, or any
security therefor;
(k) Each of the Senior Interest Holders may, from time to
time, on the terms and subject to the conditions set forth in the Transaction
Documents to which such Persons are party, but without notice to Holder, assign
or transfer any or all of the Senior Interests, or any interest therein; and,
notwithstanding any such assignment or transfer or any subsequent assignment or
transfer thereof, such Senior Interests shall be and remain Senior Interests for
the purposes of these Subordination Provisions, and every immediate and
successive assignee or transferee of any of the Senior Interests or of any
interest of such assignee or transferee in the Senior Interests shall be
entitled to the benefits of these Subordination Provisions to the same extent as
if such assignee or transferee were the assignor or transferor; and
Annex B-5
(l) These Subordination Provisions constitute a
continuing offer from the holder of this Revolving Note to all Persons who
become the holders of, or who continue to hold, Senior Interests; and these
Subordination Provisions are made for the benefit of the Senior Interest
Holders, and the Agent may proceed to enforce such provisions on behalf of each
of such Persons.
10. General. No failure or delay on the part of the Originator in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such power or right preclude any
other or further exercise thereof or the exercise of any other power or right.
No amendment, modification or waiver of, or consent with respect to, any
provision of this Revolving Note shall in any event be effective unless (i) the
same shall be in writing and signed and delivered by the Company and Holder and
(ii) all consents required for such actions under the Transaction Documents
shall have been received by the appropriate Persons.
11. Maximum Interest. Notwithstanding anything in this Revolving
Note to the contrary, the Company shall never be required to pay unearned
interest on any amount outstanding hereunder and shall never be required to pay
interest on the principal amount outstanding hereunder at a rate in excess of
the maximum interest rate that may be contracted for, charged or received under
applicable federal or state law (such maximum rate being herein called the
"Highest Lawful Rate"). If the effective rate of interest which would otherwise
by payable under this Revolving Note would exceed the Highest Lawful Rate, or if
the holder of this Revolving Note shall receive any unearned interest or shall
receive monies that are deemed to constitute interest which would increase the
effective rate of interest payable by the Company under this Revolving Note to a
rate in excess of the Highest Lawful Rate, then (i) the amount of interest which
would otherwise by payable by the Company under this Revolving Note shall be
reduced to the amount allowed by applicable law, and (ii) any unearned interest
paid by the Company or any interest paid by the Company in excess of the Highest
Lawful Rate shall be refunded to the Company. Without limitation of the
foregoing, all calculations of the rate of interest contracted for, charged or
received by the Originator under this Revolving Note that are made for the
purpose of determining whether such rate exceeds the Highest Lawful Rate
applicable to the Originator (such Highest Lawful Rate being herein called the
"Originator's Maximum Permissible Rate") shall be made, to the extent permitted
by usury laws applicable to the Originator (now or hereafter enacted), by
amortizing, prorating and spreading in equal parts during the actual period
during which any amount has been outstanding hereunder all interest at any time
contracted for, charged or received by the Originator in connection herewith. If
at any time and from time to time (i) the amount of interest payable to the
Originator on any date shall be computed at the Originator's Maximum Permissible
Rate pursuant to the provisions of the foregoing sentence and (ii) in respect of
any subsequent interest computation period the amount of interest otherwise
payable to the Originator would be less than the amount of interest payable to
the Originator computed at the Originator's Maximum Permissible Rate, then the
amount of interest payable to the Originator in respect of such subsequent
interest computation period shall continue to be computed at the Originator's
Maximum Permissible Rate until the total amount of interest payable to the
Originator shall equal the total amount of interest which would have been
payable to the Originator if the total amount of interest had been computed
without giving effect to the provisions of the foregoing sentence.
Annex B-6
12. No Negotiation. This Revolving Note is not negotiable except
that is may be assigned to any Affiliate of the Originator.
13. GOVERNING LAW. THIS COMPANY NOTE HAS BEEN DELIVERED IN THE
STATE OF NEW YORK, AND SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
14. Captions. Paragraph captions used in this Revolving Note are
for convenience only and shall not affect the meaning or interpretation of any
provision of this Revolving Note.
Annex B-7
CITGO FUNDING COMPANY, L.L.C.
By:____________________________________
Name: _________________________________
Title: ______________________________
Annex B-8
