2003 - 4 PARTS AGREEMENT
[EXECUTION COPY]
PROGRAM FOR ACCOUNTS RECEIVABLE TRANSFER AGREEMENT
THIS PROGRAM FOR ACCOUNTS RECEIVABLE TRANSFER AGREEMENT is made this 22 day of
September, 2003 among BANK OF AMERICA, N.A. (together with any successor,
"BANA"), UNIVERSAL FOREST PRODUCTS RMS, LLC, a Michigan limited liability
company ("Client") and UNIVERSAL FOREST PRODUCTS, INC., a Michigan corporation
("Guarantor").
Recitals
Guarantor is the indirect owner of Client through Guarantor's wholly owned
subsidiary that owns the sole membership interest in Client. Client from time to
time will own accounts receivable resulting from the sale of products or
services by Client or one of its affiliates. Client wishes to sell certain
accounts receivable to BANA in accordance with the terms hereof. For purposes
hereof, terms defined in Annex I hereto shall have the respective meanings
assigned therein.
Therefore, for good and valuable consideration, the parties agree as follows:
1. Purchase of Receivables.
(a) In connection with the execution and delivery of this
Agreement, Client shall sell to BANA Receivables owned by Client, and
BANA shall purchase such Receivables from Client, on the terms set
forth herein and on the initial Schedule A hereto (such Schedule A and
each other Schedule A hereto being incorporated herein by reference).
After the date hereof, Client may from time to time (x) submit an
additional proposed Schedule A, in form and substance satisfactory to
BANA and executed by Client, to BANA, which additional proposed
Schedule A shall pertain to certain additional Receivables owned by
Client; and (y) seek the right to sell to BANA such additional
Receivables under the terms of this Agreement. Within 10 days after the
initial tender of Receivables in connection with any proposed Schedule
A, BANA shall notify Client if BANA wishes to accept the proposed
Schedule A and purchase any or all of such Receivables. The purchase of
any such Receivables by BANA shall be made pursuant to the terms
hereof.
All Purchased Receivables shall be evidenced by invoices (in
electronic or paper form), which invoices shall comport with the
following as specified on the relevant Schedule A: (i) the tenors of
the Minimum Invoice Tenor Period and Maximum Invoice Tenor Period, (ii)
the Minimum Invoice Amount, and (iii) no grace period related thereto
shall exceed the Past Due Grace Period. Without limiting the other
terms of this Agreement, BANA's purchase of Receivables of an Approved
Account Debtor (other than Replacement Receivables purchased pursuant
to Section 1(b)(4) below) shall be subject to the following conditions:
(A) Client shall submit an executed Schedule A relating to such
Receivables, which shall contain the relevant terms and conditions with
respect thereto, (B) BANA shall sign such Schedule A and return it to
Client, (C) the aggregate amount of such Receivables being purchased
shall, subject to Section 1(b)(4), be equal to the relevant Required
Amount, and (D) the relevant Schedule A shall contain the Effective
Date. All Receivables (including Replacement Receivables) purchased by
BANA shall be purchased on a non-recourse basis, provided that Client
shall have an obligation to repurchase certain Receivables upon the
limited circumstances provided herein. It is the express intention of
the parties to this Agreement that the purchase of Receivables
hereunder shall be, and shall be construed as, a true sale of such
Receivables by Client to BANA. Client acknowledges that the
representations and warranties made herein (including without
limitation in
1
Section 4) are a material inducement of BANA's purchase of the
Receivables to be purchased hereunder.
(b) The parties agree as follows with respect to Receivables
that BANA elects to purchase in connection with an executed Schedule A
submitted by Client to BANA:
(1) The purchase price (the "Purchase Price") for
such Receivables purchased shall be the percentage of the face
value thereof set forth on the relevant Schedule A as the
Purchase Price with respect to such Receivables.
(2) The parties shall consummate Client's sale of the
subject Receivables as promptly as practicable after BANA's
election to purchase such Receivables. The parties shall take
the following actions to effect each such purchase and sale:
(i) On each Effective Date, BANA shall pay
Client an amount equal to the aggregate Purchase
Price for the Receivables to be purchased on such
date, which shall be wired to the following account:
Bank: Xxxxxx Bank (Chicago, IL); ABA: 000000000;
Acct. No.: 000-000-0; For: Universal Forest Products
RMS, LLC.
(ii) With respect to all Remittances of cash
required to be paid over to BANA pursuant to Section
1(b)(4), Client shall make such payment in the form
of a wire transfer to the following account: Bank:
Bank of America, N.A., New York, NY; ABA: 026 009
593; Account No.: 6550-219386; For: Rate Derivative
Settlements - Attn: Xxxxx Xxxxxx.
(iii) Client shall execute and deliver to
BANA an assignment of or schedule of accounts with
respect to ( or both) each Receivable to be purchased
in such form as BANA may require. In addition, Client
shall deliver to BANA with respect to the Receivables
to be purchased: ( aa) if requested by BANA, a
purchase order signed by the applicable Account
Debtor or, alternatively, an unsigned purchase order
accompanied by an invoice and signed proof of
delivery; (bb) if requested by BANA, a valid invoice
in the form currently used by Client with regard to
the subject Receivables with evidence of shipment of
goods in accordance with any applicable purchase
order; (cc) if requested by BANA, a certificate duly
executed by or on behalf of the applicable Account
Debtor stating that all merchandise has been duly
delivered or services have been satisfactorily
completed in accordance with the purchase order; (dd)
any contracts, agreements, chattel paper, notes,
securities and instruments evidencing or relating to
the Receivable to the extent any of the preceding
exists and is requested by BANA; (ee) any credit
memoranda; (ff) such authorizing corporate
resolutions, corporate organizational documents and
legal opinions (covering, at a minimum, (x) due
authorization, execution and delivery, (y)
enforceability and perfection and (z) true sale) as
BANA may request; and (gg) such other documents and
certificates as BANA may request.
(iv) With respect to the initial purchase of
Purchased Receivables under Schedule A-1, such
purchase shall not occur or be effective until the
first date, on or after the date specified as the
"Earliest Effective Date" on any applicable Schedule
A, on which BANA shall have received: (aa) duly
executed counterparts of this Agreement, (bb) duly
executed counterparts of the Blocked Account
Agreement and (cc) to the extent applicable, evidence
satisfactory to BANA that all existing liens on the
Receivables to be purchased have been released and
appropriate arrangements made to amend or terminate
the UCC filings related thereto.
2
(3) From and after Client's sale and BANA's purchase
of any Receivable, BANA shall (i) have exclusive control and
shall be entitled to collect and receive all amounts payable
under the Purchased Receivable and (ii) have a first claim to
any rights under a policy of insurance relating to the
Purchased Receivable. BANA shall from and after such time be
vested with all of Client's rights in the Purchased Receivable
including without limitation: (i) Client's right of replevin
and reclamation with respect to the merchandise underlying the
Purchased Receivable; and (ii) subject only to the rights
assigned to Servicer under Section 6, Client's right to extend
the time for payment under, or make any compromise, adjustment
or modification with respect to, the Purchased Receivable;
provided, however, that BANA shall not undertake any of the
foregoing unless an Event of Default or the Stated Termination
Date has occurred and is continuing or Client shall have
failed to take appropriate action with respect to such
Purchased Receivable after BANA's reasonable request therefor.
Without limiting the foregoing, Client hereby assigns to BANA
all rights of Client under each contract underlying a
Purchased Receivable relating to the collectibility of
payments thereunder, security interests and other liens
created in connection therewith and the enforcement thereof,
but BANA does not and shall not thereby assume any obligations
of Client under any such contract. Notwithstanding the
foregoing, (i) Client shall perform all of its obligations (if
any) pursuant to any contract or agreement relating to any
Purchased Receivables to the same extent as if such Purchased
Receivables had not been transferred hereunder (and the
exercise by BANA of its rights hereunder shall not relieve
Client from such obligations), (ii) Client shall pay when due
any taxes payable by Client under applicable law, including
any sales taxes payable in connection with Purchased
Receivables and their creation and satisfaction, and (iii)
BANA shall not have any obligation or liability with respect
to any Purchased Receivable or any security or document or
agreement related thereto, nor shall BANA be obligated to
perform any of the obligations of Client or any Account Debtor
under any of the foregoing.
(4) All amounts received by Client with respect to
Purchased Receivables (other than any amounts in excess of the
Agreed Base Value of such Purchased Receivables) shall be
tracked (separately from amounts received by Client on
Receivables of the same Account Debtor that do not constitute
Purchased Receivables) and held in trust by Client for BANA,
and Client (or Servicer, if different from Client) will
deliver to BANA all amounts, checks, monies or other forms of
with respect to Purchased Receivables (collectively, payment
received "Remittances"), net of any amounts that have been
earned by Client (or Servicer, if different from Client) as an
Incentive Servicing Fee in accordance with Section 6(a);
provided, however, that, until the relevant Termination Date,
such Remittances may be used by Servicer, as agent for and on
account of BANA, to purchase from Client like Receivables of
the same Approved Account Debtor that meet all of the
requirements contained herein applicable to the original
Purchased Receivables of such Approved Account Debtor,
("Replacement Receivables"), which Replacement Receivables
shall (i) also be held for the exclusive benefit and account
of BANA to the same extent as the original Purchased
Receivables, and (ii) shall constitute "Purchased Receivables"
for all purposes of this Agreement. BANA assumes no
responsibility in the acceptance of checks or other forms of
exchange in payment of the Purchased Receivables. Irrespective
of whether or not a Termination Date has occurred, Client
and/or Servicer will (x) pursuant to Section 5(g), deposit
into the Blocked Account (for the benefit of BANA) all
Remittances received on, or on account of, Purchased
Receivables, net of any amounts that have been earned by
Client (or Servicer, if different from Client) as an Incentive
Servicing Fee in accordance with Section 6(a), and (y)
thereafter, promptly (but in no event later than the Stated
Termination Date with respect to Remittances received prior to
the Stated Termination Date) remit to BANA such Remittances
held in the Blocked Account (for the benefit of BANA) to the
extent such Remittances are not used to purchase Replacement
Receivables in accordance with the terms of the proviso set
forth in the first sentence of this Section 1(b)(4). For
purposes of maintaining the perfection of BANA's interest in
any
3
Purchased Receivables and the proceeds thereof, BANA hereby
appoints Client as its agent in respect of any Remittances
prior to such Remittances being used to purchase Replacement
Receivables; provided that Client's sole duty as such agent
shall be to hold such Remittances for the benefit of BANA or
purchase Replacement Receivables on behalf of BANA as
aforesaid.
(5) BANA shall not be obligated to purchase any
Receivable hereunder (other than Replacement Receivables
purchased pursuant to Section 1(b)(4)) unless and until: (i)
BANA accepts the Receivable for sale in accordance with the
terms hereof; and (ii) all other terms and conditions set
forth herein with respect to such purchase shall have been
satisfied. BANA's purchase of any Receivable or Receivables on
one occasion shall not obligate BANA to purchase any other
Receivable (other than Replacement Receivables purchased
pursuant to Section 1(b)(4)) on any future occasion.
(6) All invoices relating to the Receivables to be
purchased shall be in a form substantially similar to the form
of invoice with respect to such Receivables initially reviewed
and approved by BANA prior to the relevant Effective Date (or
in such other form as BANA may from time to time approve).
(7) If: (i) an Approved Account Debtor, after
receiving and accepting goods or services rendered (subject to
all representations and warranties herein), fails to pay a
Purchased Receivable when due and such nonpayment shall be the
result of or arise from the assertion of any claim or dispute
by an Account Debtor against Client or its affiliate for any
reason whatsoever, including without limitation, denial of or
disputes over the amount of a claim represented by a Purchased
Receivable, lack of adequate coverage, disputes concerning the
delivery, quantity, quality, or other attributes of the goods
or services rendered, or the exercise of any counterclaim or
offset (whether or not such claim, counterclaim or offset
relates to the specific Purchased Receivable); or (ii) if any
representation or warranty made by Client to BANA with respect
to a Purchased Receivable has been breached (each of the
circumstances (i) and (ii) referred to as a "Repurchase
Event") such Purchased Receivables shall be subject to
repurchase by Client as provided in Section 9(a). It is
understood and agreed that in the event that any Purchased
Receivable shall be more than 15 days past due other than as a
result of a Financial Inability to Pay, the applicable Account
Debtor shall be presumed to have asserted a claim or dispute
with respect thereto (thus giving rise to a Repurchase Event
with respect to such Receivable), unless Client shall rebut
such presumption to the satisfaction of BANA and, in
connection therewith, shall provide to BANA all of the
materials referenced in Section 6(b) with respect to such
Receivable.
(c) The sale or other transfer or conveyance of Purchased
Receivables do not create, nor are they intended to create, an
assumption by BANA of any of Client's obligations in connection with
such Receivables or any agreement or instrument relating thereto,
including, without limitation, any obligation to any Account Debtor.
Notwithstanding the foregoing, it is the further intention of the
parties to this Agreement that, if a court of competent jurisdiction
were to determine that such transfer of Purchased Receivables is not a
sale, such transfer shall be deemed a grant of a first priority
security interest in such Purchased Receivables, the Blocked Account
and all proceeds thereof to secure Client's obligations to BANA under
this Agreement, including (without limitation) Client's obligation to
repurchase certain Purchased Receivables as provided in Section 9(a).
2. Term.
(a) BANA may (i) at any time (whether before, during or after
an Event of Default), upon ten (10) days written notice to Client, or
(ii) immediately upon a downgrade in any Approved Account Debtor's
Credit Rating or the occurrence of an Event of Default, accelerate the
date on
4
and after which Client can no longer use Remittances to purchase
Replacement Receivables under a particular Schedule A as set forth in
the definition of "Termination Date".
(b) With respect to any Purchased Receivable, all Remittances
in respect thereof shall be paid to BANA in accordance with the terms
of Section 1(b)(4).
3. Fees. Servicer shall be entitled to a Servicing Fee from BANA as set
forth in Section 6.
4. Representations and Warranties.
(a) Each Client and Servicer represents and warrants to BANA
on the date hereof, on each applicable Effective Date (and, with
respect to each Replacement Receivable, on the date that BANA is deemed
to have purchased such Replacement Receivable) and at each time Client
submits to BANA a request that BANA purchase any Receivable that: (i)
it is duly organized and validly existing and in good standing under
the laws of the jurisdiction of its organization with the corporate
power and authority to carry on its activities as now conducted and as
contemplated under this Agreement, and to execute, deliver, perform and
secure its obligations under this Agreement in accordance with its
terms; (ii) the execution, delivery and performance by it of this
Agreement (aa) have been duly authorized by all necessary action, and
(bb) do not and will not conflict with, or result in a violation of,
any applicable provision of existing law, rule or regulation applicable
to it, any judgment, order or decree applicable to or binding on it,
its charter or bylaws or any indenture, contract, agreement, mortgage,
deed of trust or other instruments to which Client is a party or by
which it or its property is bound; (iii) this Agreement has been duly
authorized, executed and delivered by it, and is a legal, valid and
binding obligation of it enforceable against it in accordance with its
terms, except to the extent, if any, that the enforceability thereof
may be limited by (aa) the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium, debt adjustment or other
similar law or enactment now or hereafter enacted affecting the
enforcement of creditors' rights generally and (bb) general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law); (iv) all authorizations, permits,
consents, approvals, licenses or exemptions from, registrations or
filings with, or reports to, any governmental or regulatory unit or
other party or entity necessary for it to enter into this Agreement and
to perform its obligations hereunder have been obtained and remain in
full force and effect, and no other such authorizations, permits,
consents, approvals, licenses, exemptions, registrations, filings or
reports are necessary for the due execution, delivery and performance
by it of this Agreement; (v) no agreement exists between Client and any
Account Debtor that could interfere with such Account Debtor's payment
of and performance under the Purchased Receivables in accordance with
the relevant invoices; (vi) each contract underlying a Purchased
Receivable, by its terms, is freely transferable; (vii) each contract
underlying a Purchased Receivable is governed according to the laws of
a state of the United States of America; (viii) each contract
underlying a Purchased Receivable contains (Y) no material restrictions
or limitations on Client's (or its assignee's) ability to pursue
collection of such Receivables and enforcement of such contract and (Z)
no mandatory arbitration provisions; and (ix) it has complied (and will
continue to comply) with all applicable agreements and requirements
contained in this Agreement, including without limitation those set
forth in Section 5.
(b) Client acknowledges that as to each Receivable sold
hereunder that it expressly represents, warrants, agrees (and
furthermore acknowledges that BANA is expressly relying thereon) that
immediately prior to the purchase of such Receivable by BANA pursuant
to Section 1 hereof: (i) Client is the lawful owner of each such
Receivable; (ii) each such Receivable shall be sold and assigned to
BANA as absolute owner free and clear of all liens, claims and security
interests, and Client has complied with (and will continue to comply
with) the requirements of Section 5(e) with respect to each such
Receivable; (iii) each such Receivable is for a certain, definite,
undisputed and liquidated amount and represents an amount owed to
Client as a result of a bona fide sale in the ordinary course of
business of a product or service to an Approved Account Debtor who is
not affiliated with Client; (iv) complete deliveries have been made
under any agreement, representation or understanding between Client and
the applicable Account
5
Debtor with respect to each such Receivable, and, as required by
Section 1(b)(2)(iii)(dd), any contracts or agreements relating to each
such Receivable have been delivered to BANA; (v) no such Receivable is
past due (i.e., unpaid beyond the applicable Maximum Invoice Tenor
Period) or for a face value less than the applicable Minimum Invoice
Amount; (vi) the applicable Account Debtor is not, and will not be,
entitled to any offset, deduction, counterclaim, contra account and/or
other credit with respect to such Receivable or will be subject to any
dispute or claim (other than Credits that would not cause a breach of
the representation in clause (vii) below) by an Account Debtor
including, but not limited to, with respect to price, terms, quality,
quantity or delay in shipment; (vii) no such Receivable is or shall
otherwise be subject to, any offset, counterclaim, contra account or
any defense of any kind or character with respect to any such
Receivable (collectively, "Credits") that would cause the aggregate
amount of all Credits with respect to all Purchased Receivables
purchased by BANA under a particular Schedule A to exceed 7.5% (or such
other amount as Client and BANA may subsequently agree upon) of the
aggregate face value of all such Purchased Receivables; (viii) Client
does not have any knowledge of any fact that could reasonably be
expected to affect the validity or collectibility of any such
Receivable (other than Credits that would not cause a breach of the
representation in Section 4(b)(vii)); (ix) no such Receivable
represents a delivery of merchandise upon "consignment," "guaranteed
sale," "sale or return," "payment on reorder" or similar terms; (x) no
such Receivable represents a "pack, xxxx and hold" or similar
transaction; (xi) the names of the Account Debtors and the amounts
owing on the due dates of each such Receivable are correctly stated in
all instruments of assignment, schedules, invoices or other
documentation furnished by Client to BANA; (xii) no such Receivable has
a due date that is more than the Maximum Invoice Tenor Period unless
otherwise approved by BANA; (xiii) no other sale, assignment or grant
of a security interest or lien of any kind whatsoever presently exists
or will thereafter be created in favor of any person or entity with
respect to any such Receivable; (xiv) any and all information furnished
by Client to BANA in connection with the sale of each such Receivable
is and will be true and correct in all material respects at the time
that such information is furnished to BANA; (xv) Client has strictly
complied with all applicable laws and regulations in connection with
Client's sale of products or services giving rise to each such
Receivable; (xvi) all proceeds from the sale of such Receivables will
be used by Client in accordance with requirements of law, and will not
be used, directly or indirectly, to purchase or carry margin stock
(within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System) or to extend credit to others for the purpose
of purchasing or carrying margin stock or to refund indebtedness
originally incurred for such purpose; (xvii) each such Receivable is
and will be payable in United States dollars; and (xviii) each such
Receivable constitutes an "account" as defined in Section 9-102 of the
Uniform Commercial Code as in effect in the state of Client's formation
and in the state of Client's principal place of business. Client
acknowledges that the representations and warranties made herein are a
material inducement to BANA's purchase of the Receivables to be
purchased hereunder.
(c) Client authorizes BANA to represent and warrant to any
subsequent transferee or assignee of any Receivable that at the date of
purchase of the Receivable by BANA the Receivable represented a legally
valid indebtedness of the applicable Account Debtor for the amount of
such Receivable and that there were no known defaults or counterclaims
with respect to such Receivable. Client shall indemnify BANA from and
against any liability incurred by BANA, or any claims made against
BANA, as a result of any such representation or warranty by BANA.
5. Covenants of Client. Client and, to the extent applicable, Servicer
shall comply with each of the following covenants during the term of this
Agreement:
(a) Client shall deliver to BANA in form and detail
satisfactory to BANA (but only to the extent not delivered to BANA
under Client's syndicated bank credit facility or otherwise):
(i) as soon as available, but not later than 95 days
after the end of each fiscal year, a copy of the audited
consolidated balance sheet of Guarantor as at the end of such
year and the related consolidated statements of income or
operations, shareholders' equity and cash flows for such
fiscal year, setting forth in each case in
6
comparative form the figures for the previous fiscal year, and
accompanied by the opinion of a nationally-recognized
independent public accounting firm, which opinion shall state
that such consolidated financial statements present fairly, in
all material respects, the financial position for the periods
indicated in conformity with Generally Accepted Accounting
Principles applied on a basis consistent with prior years
(except for changes agreed upon by Guarantor and such auditors
which are disclosed and described in such statements). Such
opinion shall not be qualified or limited because of a
restricted or limited examination by such accountant of any
material portion of the records of Guarantor; and
(ii) as soon as available, but not later than 50 days
after the end of each of the first three fiscal quarters of
each fiscal year, a copy of the unaudited consolidated balance
sheet of Guarantor as of the end of such quarter and the
related consolidated statements of income and cash flows for
the period commencing on the first day and ending on the last
day of such quarter, and certified by any responsible
financial officer of Guarantor as being complete and correct
and fairly presenting in all material respects, in accordance
with Generally Accepted Accounting Principles, the financial
position and the results of the operations of Guarantor.
(b) Client and Servicer each shall do or cause to be done all
things necessary to preserve and keep in full force and effect its
existence, rights and privileges as a corporation or partnership, as
the case may be, under the laws of its state of organization.
(c) Neither Client nor Servicer will create, incur, assume or
suffer to exist any lien or other encumbrance (other than those arising
hereunder and except for such non-consensual encumbrances as may arise
in the ordinary course of Client's business) on: (i) the Purchased
Receivables (whether now existing or hereafter arising) or (ii) any
proceeds of the Purchased Receivables.
(d) Notwithstanding anything to the contrary, Client and
Servicer each shall apply all amounts, checks, monies or other forms of
payment received (i) from any Account Debtor who is an Approved Account
Debtor with respect to Purchased Receivables and with whom Client has
other Receivables and (ii) which do not clearly indicate the
Receivables which are being paid, first to Purchased Receivables on
such Account Debtor until all such Receivables have been paid in full
and, thereafter, to Receivables which are not Purchased Receivables.
(e) In connection with each Purchased Receivable and at its
own expense, Client and Servicer each shall (i) on the applicable date
of sale to BANA, indicate or cause to be indicated clearly and
unambiguously in its accounting records and xxxx or cause to be marked
on any paper invoice or the electronic ledger for any electronic
invoice that such Receivable has been sold to BANA pursuant to this
Agreement; (ii) ensure that its balance sheet indicates that the
Purchased Receivables have been sold to BANA; (iii) not mislead any
creditor with respect to BANA's ownership of the Purchased Receivables;
(iv) inform any person or entity that may inquire that the Purchased
Receivables have been sold to BANA without recourse; (v) not hold out
the Purchased Receivables as being able to satisfy any obligation owed
or that may be owed to any creditor or potential creditor of Client;
and (vi) promptly (and in any event within five (5) days) upon the
request of BANA, provide BANA with a list of, an accounts receivable
aging report for and any other similar financial or accounting document
relating to, all Purchased Receivables.
(f) Client and Servicer each shall notify BANA in the event
any of the following events occur as promptly as practical (but in any
event within five (5) days) after Client or Servicer, as applicable,
becomes aware, or has any reason to believe, such event has occurred or
will likely occur:
(i) a general meeting of unsecured creditors shall be
called by any Approved Account Debtor or on behalf of such
Account Debtor;
7
(ii) a voluntary or involuntary proceeding shall
have been instituted in a United States Bankruptcy Court to
adjudge an Approved Account Debtor bankrupt;
(iii) a petition shall have been filed in a United
States Bankruptcy Court for the corporate reorganization of an
Approved Account Debtor (Chapters 11 or 12, as may be amended
from time to time) or for the arrangement of the debts of an
Approved Account Debtor (Chapter 13, as may be amended from
time to time);
(iv) a receiver is appointed of the whole or any
part of the property of an Approved Account Debtor;
(v) an Approved Account Debtor, or a third party
on behalf of such Account Debtor, shall have made a general
offer of compromise, in writing, to his, her or its creditors
for less than his, her or its indebtedness;
(vi) possession shall have been taken of an Approved
Account Debtor's assets under an assignment or deed of trust
executed by such person for the benefit of his, her or its
creditors;
(vii) a creditors committee shall have been formed
for the sole purpose of liquidation of an Approved Account
Debtor;
(viii) possession shall have been taken of an
Approved Account Debtor's business assets under a chattel
mortgage given thereon;
(ix) a sale in bulk is made of an Approved Account
Debtor's property;
(x) an Approved Account Debtor's assets shall have
been sold under a writ of execution or attachment, or a writ
of execution shall have been returned unsatisfied;
(xi) an Approved Account Debtor shall have absconded;
(xii) an Approved Account Debtor's assets shall
have been sold under a distraint or levy by any taxing
authority, or by a landlord;
(xiii) an Approved Account Debtor's Credit Rating as
of the Effective Date (including as specified on the
applicable Schedule A) has been subsequently lowered or
withdrawn by S&P, Xxxxx'x or any other nationally recognized
rating agency;
(xiv) the assertion of any material dispute of, or
any claim of a Credit with respect to, any Purchased
Receivable by any Approved Account Debtor; or
(xv) a Servicer Default.
(g) Client, Servicer and Guarantor shall cause all Remittances
to be held in trust for the benefit of BANA and forward such
Remittances to the Blocked Account within one business day of receipt
thereof. For purposes of maintaining the perfection of BANA's interest
in any Remittances forwarded to, or otherwise received by, Client,
Servicer or Guarantor, BANA hereby appoints each of Client, Servicer
and Guarantor as its agent in respect of such funds and other property;
provided that, subject to Section 1(b)(4), Client's, Servicer's and
Guarantor's sole duty as such agent shall be to hold such funds or
other property in trust for the benefit of BANA and to transfer such
funds or other property to the Blocked Account as aforesaid. As a
matter of clarification, it is understood and agreed that all
Remittances in the possession of Client, Servicer or Guarantor, whether
held in the Blocked Account or otherwise, shall constitute the property
of
8
BANA to be held in trust for the benefit of BANA pursuant to the terms
of this Agreement (including the terms of Section 1(b)(4)).
(h) Client and Servicer each shall do or cause to be done
all things necessary or reasonably requested by BANA under any foreign
laws applicable to an Approved Account Debtor that is incorporated or
organized in a jurisdiction outside of the United States in order to
(i) ensure that BANA has and continues to have good title to the
Purchased Receivables, and (ii) ensure that BANA has and continues to
have the ability to enforce all rights purported to be transferred to
BANA hereunder with respect to the Purchased Receivables.
(i) Neither Client nor Servicer shall make any material
change in its credit and collections procedures that would adversely
affect the validity, enforceability or collectibility of the Purchased
Receivables or materially adversely affect the ability of Client or
Servicer to perform its obligations hereunder without the prior written
consent of BANA.
(j) Without the prior written consent of BANA, Client will
not amend, modify or waive any term or condition of any contract
underlying any Purchased Receivable, which amendment, modification or
waiver would adversely affect the validity, enforceability or
collectibility of such Receivable or adversely affect BANA's right to
collect any Purchased Receivable.
6. Servicing.
(a) Until BANA gives notice to Client of the designation of
a new Servicer as provided herein, Client is hereby designated as, and
hereby agrees to perform the duties and obligations of, the servicer
pursuant to the terms hereof (the "Servicer") with respect to the
Purchased Receivables; provided that, with respect to any group of
Purchased Receivables, Client (solely in its capacity as Servicer) may,
at any time, upon prior written notice to BANA, designate any affiliate
of Client as sub-servicer hereunder; provided, however, that such
affiliate shall not become Servicer and, notwithstanding any such
delegation, Client shall remain liable for the performance of the
duties and obligations of Servicer in accordance with the terms of this
Agreement without diminution of such liability by virtue of such
delegation and to the same extent and under the same terms and
conditions as if Client alone were performing such duties and
obligations. The parties agree that Guarantor shall serve as the
initial such sub-servicer hereunder. Client acknowledges that BANA has
relied on the agreement of Client to act as Servicer hereunder in
making its decision to execute and deliver this Agreement. Accordingly,
Client agrees that it shall not voluntarily resign as Servicer. In
consideration of the performance by Servicer of its obligations
hereunder with respect to Purchased Receivables under a particular
Schedule A, Servicer shall be entitled to receive, in advance on the
Effective Date for such Schedule A, the per annum Servicing Fee from
BANA. Furthermore, to the extent collected by Client, Client shall be
entitled to receive and retain an amount equal to Remittances collected
on Purchased Receivables in excess of the Agreed Base Value of such
Purchased Receivables as an "Incentive Servicing Fee." If an Event of
Default or Servicer Default occurs hereunder, (i) BANA may designate as
Servicer with respect to all or any portion of the Purchased
Receivables any person (including BANA or any of its affiliates) to
succeed Client or any successor Servicer, on the condition in each case
that any such person so designated shall agree to perform the duties
and obligations of Servicer pursuant to the terms hereof, and Client
agrees that it shall reimburse BANA for all increase in costs, expenses
or fees incurred by it as a result of, or in connection with, such
designation, and (ii) BANA shall have the right to setoff any Servicing
Fee owed to Client pursuant to this Section 6(a) against the amount of
any of Client's indemnity or other obligations hereunder.
(b) Servicer shall take or cause to be taken all such action
as may be necessary or advisable to administer, service and collect
each Purchased Receivable from time to time (including without
limitation minimizing the amount of any Credits and keeping a proper
accounting of any Credits that are asserted by an Account Debtor), all
at the Servicer's expense and in accordance with this Agreement and all
applicable laws, rules and regulations, with
9
reasonable care and diligence, and in accordance with any credit and
collection policy agreed to by Client and BANA with respect to a
Purchased Receivable; provided, however, that Servicer shall not extend
the maturity of any Purchased Receivable without BANA's prior consent,
which consent shall not be unreasonably withheld. In addition, Servicer
shall remit any and all Remittances received with respect to any
Purchased Receivables to BANA in accordance with the terms of Section
1(b)(4), and shall likewise forward all other payments and fees owed to
BANA pursuant to the terms hereof. Without BANA's consent, Client, in
its capacity as Servicer, shall not take any action (or omit to take
any action that it would customarily take in servicing Receivables)
where such action (or inaction) with respect to any Purchased
Receivable is reasonably likely to impair BANA's rights therein or the
enforceability, value or collectibility thereof. Without limiting the
foregoing, Client, in its capacity as Servicer, shall not take any
action (or omit to take any action that it would customarily take in
servicing Receivables) that results in preferential treatment for
Receivables of an Approved Account Debtor that do not constitute
Purchased Receivables. Servicer shall have the right to directly
communicate with any Account Debtor with respect to Purchased
Receivables (and, in the case of clause (ii), to commence collection
proceedings with BANA's consent on BANA's behalf): (i) to obtain
current information not already provided on such Account Debtor's
financial condition and creditworthiness, and (ii) to determine if any
portion of any Purchased Receivable is past due. Notwithstanding
anything to the contrary contained herein, upon the occurrence and
continuance of an Event of Default or to the extent any Purchased
Receivable is more than 15 days past due, BANA may direct Servicer, at
BANA's sole expense, to commence or settle any legal action to enforce
collection of any Purchased Receivable or to foreclose upon or
repossess any underlying security related thereto.
(c) If Client is not Servicer, then Client shall deliver to
Servicer and Servicer shall hold for the benefit of Client and BANA in
accordance with their respective interests, all records and documents
(including computer tapes or disks) with respect to each Purchased
Receivable. Servicer shall hold (and shall cause each sub-servicer to
hold) in trust (and, during the continuance of an Event of Default, at
the request of BANA, segregate) for BANA's benefit, any Remittances
received by Servicer (or any sub-servicer) with respect to the
Purchased Receivables, and distribute the same to BANA in accordance
with the terms of Section 1(b)(4) or otherwise upon BANA's direction.
Servicer agrees to make its records, files and books of account
available to BANA on request, and to allow BANA and its agents and
representatives to visit Servicer's premises upon reasonable notice and
during normal business hours to examine such records, files and books
of account, to make copies or extracts thereof, and to conduct such
examinations as BANA deems necessary. In addition, on the fifteenth
calendar day of each month, Servicer shall deliver to BANA a statement
of its account showing all accountings relating to all Purchased
Receivables as of the last day of such month. Such statements of
account shall be deemed correct and binding absent manifest error,
unless Servicer receives a written statement from BANA to the contrary
within five (5) days after same is received by BANA.
(d) For all Purchased Receivables which are past due for any
reason, but excluding those Purchased Receivables which are past due
solely as a result of a Repurchase Event, Servicer shall immediately
notify BANA and provide to BANA, promptly (and in any event within one
business day), each of the following: (i) a copy of the applicable
Account Debtor's purchase order and/or a signed confirmation thereof or
a signed confirmation of the delivery of goods thereunder; (ii) a copy
of each outstanding invoice (in electronic or paper form) and all
credit memoranda; (iii) a notarized statement of account; (iv) at
BANA's request, copy of all correspondence to and from the applicable
Account Debtor relating to such Purchased Receivables; (v) a copy of
Servicer's complete collection file on the applicable Account Debtor
relating to such Purchased Receivables; (vi) all guarantees, collateral
documents and security agreements relating to such Purchased
Receivables, (vii) proof of delivery of goods or rendering of services
relating to such Purchased Receivables, and (viii) such other documents
and information that BANA may reasonably request relating to such
Purchased Receivables. Further, with respect to any Purchased
Receivable that is more than 15 days past due (other than a Purchased
Receivable that is past due as solely a result of a Repurchase Event)
and that has not been repurchased by Client, Servicer shall provide to
BANA upon request (promptly, and in any
10
event within one business day) (x) a true and complete copy of any
contract relating to such Purchased Receivable, together with any
modifications or side letters related thereto, each written in English,
and (y) any other evidence of nonpayment of such Purchased Receivable
as may reasonably be requested by BANA.
(e) The occurrence of any one or more of the following events
shall constitute a "Servicer Default" hereunder:
(1) (a) Servicer shall fail to perform or observe any
term, covenant or agreement hereunder and such failure shall
remain unremedied for ten (10) days following BANA's written
notice thereof to Servicer, or (b) Servicer shall fail to make
any payment or deposit to be made by it hereunder when due; or
(2) any representation, warranty, certification or
statement made by the Servicer in this Agreement or in any
other document shall prove to have been incorrect in any
material respect when made or deemed made; or
(3) an Event of Default; or
(4) if any Purchased Receivable is not paid (or
repurchased) by the Stated Termination Date.
(f) Notwithstanding any other provision of this Agreement,
during the continuance of Servicer Default, BANA may, by written notice
to Client and/or Servicer (as applicable):
(1) direct the applicable Account Debtor(s) that
payment of all amounts payable under any Purchased Receivable
be made directly to BANA or its designee;
(2) instruct Client or Servicer (as applicable) to
give notice to the applicable Account Debtor(s), which notice
shall be given at Client's/Servicer's expense, directing that
payment of all amounts payable under any Purchased Receivable
be made directly to BANA or its designee; and/or
(3) terminate and replace Servicer.
(g) Client shall provide to Servicer on a timely basis all
information needed for the servicing, administration and collection
obligations of Servicer, including notice of the occurrence of any
Event of Default or any event specified in Section 5(f) hereof as
promptly as practicable (but in any event within five (5) days) after
Client becomes aware, or has any reason to believe, such event has
occurred or will likely occur.
7. Attorney-in-Fact. Client hereby grants and conveys to BANA an
irrevocable power of attorney (coupled with an interest) authorizing and
permitting BANA, at its option, with or without notice to Client, to do any one
of the following: (a) endorsing the name of Client upon any checks or other
instruments that may come into BANA's possession in payment of Purchased
Receivables; (b) endorsing the name of Client on any freight or express xxxx or
xxxx of lading relating to any Purchased Receivables; (c) taking all action as
BANA deems appropriate, including without limitation the execution and filing of
financing statements, in the name of and on behalf of Client to perfect any of
the security interests granted to BANA herein; provided, however, that BANA
shall not exercise any such power until the occurrence and during the
continuance of an Event of Default. Client agrees that neither BANA nor the
attorney-in-fact will be liable for any acts of commission or omission nor for
any error of judgment or mistake of fact or law except to the extent the same
constitutes gross negligence or willful misconduct.
8. Waiver. The waiver by BANA of any particular breach by Client of a
provision of this Agreement, or BANA's failure to exercise a right granted to it
herein, shall not constitute a waiver of any subsequent breach or any other
right.
11
9. Indemnity and Repurchase Obligations.
(a) BANA's purchase of a Receivable shall not relieve Client
from any liability that might arise out of Client's breach of any
representation, warranty, covenant or agreement hereunder, or out of
any unauthorized or fraudulent acts of Client, its officers, employees
or agents. In the event of (i) any breach of any representation and
warranty set forth in Section 4 with respect to a Purchased Receivable
or any such unauthorized or fraudulent act with respect to a Purchased
Receivable which remains uncured for ten (10) days after notice thereof
or (ii) an Account Debtor's failure to pay a Purchased Receivable
resulting from or arising out of a Repurchase Event, Client agrees upon
BANA's request, to repurchase such Receivable at a price equal to the
Agreed Base Value thereof.
(b) Client agrees to indemnify BANA from and against all
losses, damages, liabilities and costs, including attorneys fees and
expenses (whether incurred in connection with trial or appellate
proceedings or otherwise), incurred by BANA as a result of or in
connection with: (i) any claim or defense which any Account Debtor or
other person may have or assert against Client or BANA in connection
with Purchased Receivables or this Agreement; or (ii) any breach of any
of Client's representations, warranties, covenants or agreements
contained herein, in each of (i) and (ii) except to the extent
resulting from BANA's gross negligence or willful misconduct.
(c) BANA shall have the right to charge (by setoff or
otherwise) any of Client's accounts maintained with BANA, without
notice, for the amount of any of Client's indemnity or other
obligations hereunder.
(d) The remedies set forth in this Agreement or otherwise
available under applicable law shall be cumulative, and no election by
BANA to exercise any remedy shall preclude it from thereafter
exercising any other remedy.
10. Default and Remedies. An event of default ("Event of Default")
shall be deemed to have occurred hereunder upon the occurrence of one or more of
the following:
(a) Client shall fail to pay, (i) when and as required to be
paid herein, any amount on account of repurchasing any Purchased
Receivable, or (ii) within five (5) days after the same shall become
due, any other amount payable hereunder; or
(b) Servicer or Guarantor (i) shall fail to make any payment
in respect of any indebtedness having an aggregate principal amount of
$10,000,000 or more when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) and such failure
continues after the applicable grace or notice period, if any,
specified in the document relating thereto on the date of such failure;
or (ii) shall fail to perform or observe any other condition or
covenant, or any other event shall occur or condition exist, under any
agreement or instrument relating to any such indebtedness, and such
failure continues after the applicable grace or notice period, if any,
specified in the document relating thereto on the date of such failure,
if the effect of such failure, event or condition is to cause, or to
permit, the holder or holders of such indebtedness or beneficiary or
beneficiaries of such indebtedness (or a trustee or agent on behalf of
such holder or holders or beneficiary or beneficiaries) to cause such
indebtedness to be declared to be due and payable prior to its stated
maturity; or
(c) Servicer or Guarantor (i) shall generally fail to pay its
debts as they become due; (ii) commences any insolvency proceeding with
respect to itself; or (iii) takes any action to effectuate or authorize
any of the foregoing; or
(d) Any involuntary lien, garnishment, attachment or the like
shall be issued against or shall attach to the Purchased Receivables,
the Collateral or any portion thereof and the same is not released or
Client fails to repurchase such Purchased Receivables within ten (10)
days;
12
(e) (i) Any involuntary insolvency proceeding is commenced or
filed against Servicer or Guarantor; or any writ, judgment, warrant of
attachment, execution or similar process, is issued or levied against a
substantial part of Servicer's or Guarantor's properties, and any such
proceeding or petition shall not be dismissed, or such writ, judgment,
warrant of attachment, execution or similar process shall not be
released, vacated or fully bonded within 60 days after commencement,
filing or levy; (ii) Servicer or Guarantor admits the material
allegations of a petition against it in any insolvency proceeding, or
an order for relief (or similar order under non-U.S. law) is ordered in
any insolvency proceeding; or (iii) Servicer or Guarantor acquiesces in
the appointment of a receiver, trustee, custodian, conservator,
liquidator, mortgagee in possession (or agent therefor), or other
similar person for itself or a substantial portion of its property or
business; or
(f) One or more non-interlocutory judgments, orders or decrees
shall be entered against Servicer or Guarantor involving in the
aggregate a liability (not covered by independent third-party
insurance) as to any single or related series of transactions,
incidents or conditions, of $10,000,000 or more, and the same shall
remain unsatisfied, unvacated and unstayed pending appeal for a period
of 30 days after the entry thereof.
(g) Client, including in its role as Servicer hereunder, shall
breach any covenant or agreement set forth herein, or any warranty or
representation set forth herein shall be untrue when made, and the same
is not cured to BANA's reasonable satisfaction within ten (10) days
after such breach or occurrence;
(h) Any report, certificate, schedule, financial statement,
profit and loss statement or other statement furnished by Servicer, or
by any other person on behalf of Client, to BANA is not true and
correct in any material respect as of the date given.
(i) A material adverse change shall have occurred in
Servicer's financial conditions, business or operations in BANA's
opinion.
Upon the occurrence and during the continuance of any such Event of Default,
BANA (i) shall have no further obligation to take any action after Client's
tender of Receivables for purchase, (ii) may, by written notice to Client,
accelerate the date on and after which Client or Servicer can no longer use
Remittances to purchase Replacement Receivables and (iii) may immediately
exercise its rights and remedies hereunder or pursuant to applicable law with
respect to the Purchased Receivables, including giving notice to each Approved
Account Debtor to remit payment of all amounts payable under any Purchased
Receivable directly to BANA or to an account identified by BANA; provided,
however, that BANA will hold all collections that are not Remittances in trust
for Client and, subject to the provisions of Section 5(d) hereof, will deliver
such collections to Client promptly.
11. Cumulative Rights; Waivers. All rights, remedies and powers granted
to BANA in this Agreement, or in any other instrument or agreement between
Client and BANA are cumulative and may be exercised singularly or concurrently
with such other rights as BANA may have. These rights may be exercised from time
to time as to all or any part of the Purchased Receivables as BANA in its
reasonable discretion may determine. In the event BANA deems it necessary to
seek equitable relief, including, but not limited to, injunctive or receivership
remedies, as a result of Client's default, Client waives any requirement that
BANA post or otherwise obtain or procure any bond. Alternatively, in the event
BANA, in its sole and exclusive discretion, desires to procure and post a bond,
BANA may procure and file with the court a bond in an amount up to and not
greater than $10,000,000.00 notwithstanding any common or statutory law
requirement to the contrary. Upon BANA's posting of such bond it shall be
entitled to all benefits as if such bond was posted in compliance with state
law. Client also waives any right it may be entitled to, including an award of
attorney's fees or costs, in the event any equitable relief sought by and
awarded to BANA is thereafter, for whatever reason(s), vacated, dissolved or
reversed.
13
12. Termination. No termination or cancellation (regardless of cause or
procedure) of the transactions or relationship contemplated under this Agreement
shall in any way affect or impair the obligations, duties and liabilities of
Client or the rights of BANA relating to any transaction or event occurring
prior to such termination or cancellation. All undertakings, agreements,
indemnifications, covenants, warranties and representations contained herein
shall survive such termination or cancellation. Client acknowledges that it has
a duty to timely pay any tax obligation(s) and that if, for whatever reason, a
tax lien or levy were to issue, Client shall cause such lien or levy to be
satisfied or discharged within ten (10) days. Until such lien or levy is
satisfied and discharged, BANA shall be entitled to withhold any sum(s) that may
otherwise be due Client and may remit same to the appropriate governmental tax
authority. Moreover, Client agrees that until the tax lien or levy is satisfied
or discharged, BANA shall be entitled to collect all proceeds of Purchased
Receivables and apply such proceeds to Client's obligations hereunder. Nothing
contained herein shall suspend or xxxxx any obligation Client owes to BANA.
13. Expenses. Client agrees to pay all reasonable out-of-pocket due
diligence expenses incurred by BANA in connection with BANA's purchase of
Purchased Receivables hereunder. In addition to such due diligence expenses,
Client agrees to pay, and save BANA harmless against liability for the payment
of, all reasonable out-of-pocket expenses of BANA arising in connection with the
transactions contemplated herein (including any modifications relating hereto).
Such expenses include, without limitation, the following: (a) any and all state
documentary stamp taxes or other taxes (including interest and penalties, if
any) which may be determined to be payable with respect to the execution and
delivery of this Agreement or any assignment or other document executed in
connection with this Agreement or any such modification; (b) all search fees and
filing fees incurred in connection with the transactions contemplated herein;
(c) reasonable travel expenses; (d) reasonable legal fees and expenses in
connection with documenting and closing the transactions contemplated herein and
with collecting an account due to Client's failure to pay or perform its
obligations hereunder, as Servicer or otherwise; (e) credit reports; (f) wire
transfers, (g) reasonable expenses incurred for examining books, records,
accounts or procedures or policies of Client or Servicer, and (h) BANA's
customary expenses with regard to the establishment and maintenance of the
Blocked Account. Client agrees that BANA shall be entitled to indemnification
and recovery of any and all attorneys' fees or costs in respect of any
litigation based hereon, arising out of, or related hereto whether, under or in
connection with this and/or any agreement executed in conjunction herewith, or
any course of conduct, course of dealing, statements (whether verbal or written)
or actions of either party; provided, however, that BANA shall not be entitled
to indemnification and recovery of such legal costs where such legal costs
relate to litigation initiated by BANA that results in a judgment in favor of
Client.
14. Security Interest. It is the intention of the parties hereto that
Client's transfer of Receivables to BANA shall constitute a sale and assignment,
which sale and assignment shall be absolute, irrevocable and without recourse
(other than with respect to the limited repurchase obligations provided herein)
and shall provide BANA with the full benefits of ownership of the Purchased
Receivables. Notwithstanding the foregoing, to protect BANA in the event that
any transfer of Purchased Receivables is deemed by a court, contrary to the
express intent of the parties, to constitute a pledge rather than a sale and
assignment of such Purchased Receivables, Client and Guarantor do each hereby
grant to BANA a security interest in and lien upon all of such person's
respective right, title and interest in and to the Purchased Receivables, the
Blocked Account and all proceeds thereof (the "Collateral") to secure Client's
obligations to BANA under this Agreement, including (without limitation)
Client's obligation to repurchase certain Purchased Receivables as provided in
Section 9(a). Client and Guarantor do each agree to comply with all appropriate
laws in order to perfect BANA's security interest in and to the Collateral, to
execute any financing statements, continuations thereof, amendment thereto or
additional documents as BANA may require. Client and Guarantor do each hereby
authorize BANA to prepare and file such financing statements (including renewal
statements) or amendments thereof or supplements thereto or other instruments as
BANA may from time to time deem necessary or appropriate in order to perfect and
maintain the security interests granted hereunder in accordance with the UCC.
Neither Client nor Guarantor shall (a) alter its corporate existence or, in one
transaction or in a series of transactions, merge into or consolidate with any
other entity, or sell all or substantially all of its assets, (b) change its
state of incorporation or formation or (c) change its registered corporate name,
without, in each case, (i)
14
providing 30 days prior written notice to BANA, (ii) providing such information
as BANA may reasonably require in order to allow BANA to file appropriate
amendments to any previously filed financing statements and (iii) executing any
such additional documents as BANA may reasonably require in order to protect its
rights and remedies hereunder. The occurrence and continuation of any Event of
Default shall entitle BANA to all of the default rights and remedies (without
limiting the other rights and remedies exercisable by BANA either prior or
subsequent to an Event of Default) as available to a secured party under the
Uniform Commercial Code in effect in any applicable jurisdiction. Nothing in
this Section 14 shall be construed as a representation, on the part of the
Guarantor, that it has any right, title or interest in or to any of the
Purchased Receivables or the Blocked Account.
15. Agreement of Client. Client authorizes and empowers BANA, in its
sole discretion at any time during the continuance of an Event of Default, to:
(i) place a hold on Client's checking and other accounts now or hereafter
maintained at BANA ; and (ii) withdraw funds from any such account and remit the
same to BANA. Any division or department of BANA is authorized to comply with
each such direction made by any other division or department of BANA without any
duty to determine whether such direction, or any action pursuant thereto, is
authorized hereunder or otherwise complies with the terms hereof. BANA shall
have no liability to Client or any other entity as a result of its compliance
with any such direction, and Client shall indemnify BANA from and against all
such liability except to the extent that such liability arises as a result of
BANA's gross negligence or willful misconduct. BANA is authorized to apply all
funds received by it hereunder to Client's obligations hereunder in such order
as BANA may elect. The parties acknowledge that the amount held in each such
account may exceed the amount of Client's obligations as ultimately determined.
Client agrees that neither BANA nor any institution, nor any of their respective
affiliates, shall be liable for the dishonor of any item as the result of a hold
being placed on Client's accounts or as the result of any withdrawal of funds in
any such account in accordance with the terms hereof.
16. Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered by (a) personal delivery;
(b) courier; (c) telecopy, or (d) certified or registered mail, postage prepaid
to the address set forth below and shall be deemed given at the time of personal
delivery or, if by mail, as of the date of first attempted delivery:
If to BANA, at: Global Structured Products
NC1-007-06-07
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxxxxxx X. Xxxxxxx
Telephone: 000-000-0000
Telecopy: 000-000-0000
With a copy to: Bank of America, N.A.
0 X. 00xx Xxxxxx
XX0-000-00-00
Xxx Xxxx, XX 00000
Attn: Xxxxxxxxx Xxxxxxx
Telephone: 000-000-0000
Telecopy: 000-000-0000
If to Client, at: Universal Forest Products RMS, LLC
c/o Universal Forest Products, Inc.
0000 Xxxx Xxxxxxxx XX
Xxxxx Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxx, Chief Financial Officer
Telephone: 000-000-0000
Telecopy: 000-000-0000
15
If to Guarantor, at: Universal Forest Products, Inc.
0000 Xxxx Xxxxxxxx XX
Xxxxx Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxx, Chief Financial Officer
Telephone: 000-000-0000
Telecopy: 000-000-0000
17. Account Statements. Absent manifest error, BANA's books and records
shall be admissible in evidence without objection as prima facie evidence of the
status of the accounts between BANA and Client.
18. Confidential Information.
The parties agree that the negotiation, existence and terms of this
Agreement shall constitute confidential information and each party shall keep
the existence and terms of this Agreement confidential. Without limiting the
foregoing, Client understands and acknowledges that the form and terms of this
Agreement are proprietary trade products of BANA that BANA desires to keep
confidential and Client agrees that except for disclosure on a confidential
basis to Client's accountants, attorneys and other professional advisors
retained by in connection with this Agreement or as may be required by law, the
form and terms of this Agreement shall not be disclosed by Client in whole or in
part to any other person or entity without BANA's prior written consent.
The parties further agree that the information furnished by Client to
BofA regarding any Account Debtor, Client's relationship with such Account
Debtor and the goods and services furnished by Client to such Account Debtor
(including but not limited to any information delivered pursuant to Section
1(b)(iii)(dd) hereof) shall constitute confidential information. BofA agrees not
to disclose such information in whole or in part to any other person or entity
without Client's prior written consent, except for disclosure (i) on a
confidential basis to BofA's affiliates and employees who are involved in the
consummation of the transactions contemplated by this Agreement and to
accountants, attorneys and other professional advisors retained by BofA or its
affiliates in connection with this Agreement or in any way related to the
Purchased Receivables; (ii) as may be required by law; or (iii) of the name of
such Account Debtor, the amount of the related Purchased Receivable, the Minimum
and Maximum Invoice Tenor Period for such Purchased Receivable and the quantity
of goods purchased as specified in the Contract underlying such Purchased
Receivable (which disclosure may include delivery of the invoice underlying such
Purchased Receivable as required by the relevant hedge counterparty, in such
redacted form as approved by BofA and Client, such approvals not to be
unreasonably withheld) to the extent necessary to carry out any hedging activity
by BofA related to the Purchased Receivables or assignment by BofA of its rights
under this Agreement or in respect of the Purchased Receivables; provided that
any hedging counterparty or assignee agrees in writing, on terms approved in
advance by Client, to observe and preserve the confidentiality of any such
information so provided.
Notwithstanding anything herein to the contrary, the information
subject to this Section 18 shall not include, and the parties hereto (including
their employees, representatives or other agents) may disclose, (i) without
limitation of any kind any information with respect to the "tax treatment" and
"tax structure" (in each case, within the meaning of Treasury Regulation Section
1.6011-4) of the transactions contemplated hereby and all materials of any kind
(including opinions or other tax analyses) that are provided to BANA or Client
relating to such tax treatment and tax structure; provided that with respect to
any document or similar item that in either case contains information concerning
the tax treatment or tax structure of the transactions as well as other
information, this sentence shall only apply to such portions of the document or
similar item that relate to the tax treatment or tax structure of the
transactions contemplated hereby; and (ii) any information regarding the
transactions and matters pertaining thereto, but only to the extent that the
same is required to be reported on the financial statements and other
information included in the public filings or disclosures of or by Guarantor and
its affiliates made pursuant to applicable provisions of state or federal
securities laws including, without limitation, the Securities
16
Exchange Act of 1934, as amended; provided, however, the parties agree
that each Schedule A as well as all pricing information concerning this
transaction shall remain confidential.
19. Miscellaneous.
(a) This Agreement shall be governed and construed in
accordance with the laws of the State of New York without reference to
the conflict of laws provisions thereof.
(b) Client shall not assign this Agreement without the prior
written consent of BANA. This Agreement shall be deemed to be one of
financial accommodation and not assumable by any debtor, trustee or
debtor-in-possession in any bankruptcy proceeding without BANA's
express written consent and may be suspended in the event a petition in
bankruptcy is filed by or against Client.
(c) This Agreement shall be binding upon, and shall inure to
the benefit of, the parties hereto and their respective heirs, legal
representatives, successors and permitted assigns.
(d) This Agreement contains the entire agreement between the
parties hereto regarding the subject matter hereof, excepting only
assignments and schedules thereto that may be executed from time to
time. This Agreement shall not be modified except by written instrument
signed by all of the parties hereto.
(e) Client agrees to execute such further instruments as may
be required by BANA to evidence the transactions contemplated herein.
If any provision of this Agreement is found invalid, the remaining
provisions of this Agreement shall not be affected thereby.
(f) Nothing set forth herein or otherwise shall render the
parties partners of one another.
(g) Client acknowledges that there is no, and it will not seek
or attempt to establish any, fiduciary relationship between BANA and
Client on Client's behalf, and Client waives any right to assert, now
or in the future, the existence or creation of any such fiduciary
relationship between BANA and Client in any action or proceeding
(whether by way of claim, counterclaim, crossclaim or otherwise) for
damages.
(h) BANA agrees that notwithstanding anything to the contrary
set forth herein, unless and until such time as an Event of Default or
the Stated Termination Date shall have occurred and be continuing or
any Purchased Receivable shall be more than 15 days past due, BANA
shall not, and shall not cause Servicer to, contact any Account Debtor
directly for any reason with respect to any Purchased Receivable.
(i) This Agreement may be executed in a number of identical
counterparts, each of which shall be deemed an original for all
purposes and all of which constitute, collectively, one agreement.
20. Jury Trial Waiver; Jurisdiction. BANA AND CLIENT HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER MAY HAVE TO A TRIAL BY JURY
WITH RESPECT TO ANY LITIGATION BASED ON THIS AGREEMENT OR ANY TRANSACTIONS
CONTEMPLATED HEREIN, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY RELATED DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO, OR TO ANY
RELATED DOCUMENT. THE PARTIES CONSENT TO JURISDICTION AND VENUE IN THE STATE OR
FEDERAL COURTS IN ANY CITY, COUNTY AND STATE OF NEW YORK. CLIENT FURTHER AGREES
TO WAIVE ANY RIGHT IT MAY HAVE TO SEEK A CHANGE OF VENUE
17
BASED ON INCONVENIENCE OF THE FORUM OR OTHERWISE. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES ENTERING INTO THE SUBJECT TRANSACTION.
21. Guaranty. Guarantor is the indirect owner of Client through
Guarantor's wholly owned subsidiary that owns the sole membership interest in
Client. Guarantor hereby unconditionally and irrevocably guarantees to BANA the
due and punctual payment, performance and observance by Client and Servicer of
all of the terms, covenants, conditions, agreements and undertakings on the part
of Client and Servicer to be performed or observed under this Agreement,
including, without limitation, the punctual payment when due of all obligations
of Client and Servicer now or hereafter existing under this Agreement, whether
for indemnification payments, fees, expenses, repurchase obligations or
otherwise (all of the foregoing being collectively referred to as the
"Obligations"). In the event that Client or Servicer shall fail in any manner
whatsoever to perform or observe any of the Obligations when the same shall be
required to be performed or observed under this Agreement, then upon either
actual knowledge of an officer of Guarantor or demand of BANA, Guarantor shall
perform, cause to be performed or make payment to allow such Obligations to be
performed and shall fully indemnify and hold harmless BANA from and against any
and all damages, losses, claims, liabilities and costs and expenses, including
attorney's fees and disbursements awarded against or incurred by them or any of
them relating to such failure of Client or Servicer.
Guarantor further agrees that nothing contained herein shall prevent
BANA from foreclosing on its security interest in or lien on any asset, if any,
or from exercising any other rights available to it under this Agreement or any
other instrument of security, if any, and the exercise of any of the aforesaid
rights and the completion of any foreclosure proceedings shall not constitute a
discharge of any of Guarantor's obligations hereunder; it being the purpose and
intent of Guarantor that its obligations hereunder shall be absolute,
independent and unconditional under any and all circumstances. Neither
Guarantor's obligations hereunder nor any remedy for the enforcement thereof
shall be impaired, modified, changed, released or limited in any manner
whatsoever by an impairment, modification, change, release or limitation of the
liability of Client or Servicer or by reason of the bankruptcy or insolvency of
Client or Servicer. The Guarantor waives any and all notice of the creation,
renewal, extension or accrual of or increase in any of the Obligations and
notice of or proof of reliance by BANA upon this Section 21 or acceptance of
this Section 21. This Agreement shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon this Section 21. All dealings between Client, Servicer and
Guarantor, on the one hand, and BANA, on the other hand, likewise shall be
conclusively presumed to have been had or consummated in reliance upon this
Section 21.
Guarantor hereby waives any and all presentments, demands, notices, and
protests against Guarantor, and any requirement that BANA commence or exhaust
any remedies against Client or Servicer or any collateral securing the
Obligations. Guarantor's liability hereunder shall be unconditional irrespective
of (i) any lack of enforceability of the Obligations, (ii) any law, regulation
or order of any jurisdiction affecting any term of the Obligations or BANA's
rights with respect thereto, and (iii) any other circumstance which might
otherwise constitute a defense available to, or discharge of, Client, Servicer
or Guarantor. This guarantee is a guarantee of payment and performance and not
of collection and shall remain in full force and effect until payment in full of
the Obligations. The obligations of Guarantor under this Section 21 do rank and
will rank pari passu in priority of payment with all other unsecured and
unsubordinated obligations for borrowed money of Guarantor. Notwithstanding any
provision to the contrary contained herein, to the extent the obligations of
Guarantor shall be adjudicated to be invalid or unenforceable for any reason
(including, without limitation, because of any applicable state or federal law
relating to fraudulent conveyances or transfers) then the obligations of
Guarantor hereunder shall be limited to the maximum amount that is permissible
under applicable law (whether federal or state and including, without
limitation, the United States Bankruptcy Code).
18
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as of the date first above written.
Bank of America, N.A. Universal Forest Products RMS, LLC
By:__________________________ By:__________________________
Printed Name: Xxxxx Xxxxxxx Printed Name:
Title: Managing Director Title:
Universal Forest Products, Inc.
By:__________________________
Printed Name:
Title:
ANNEX I
TO
2003-4 PARTS AGREEMENT
DEFINITIONS
Account Debtor: Each person or entity obligated to pay any
Receivable.
Agreed Base Value: With respect to any Purchased Receivables,
an amount equal to 92.5% of the aggregate
face value of such Purchased Receivables.
Agreement: The Program for Accounts Receivable Transfer
Agreement to which this Annex I is attached
(together with any applicable Schedule A), as
amended, restated, extended, supplemented or
otherwise modified in writing from time to
time.
Approved Account Debtor: Any Account Debtor listed on a Schedule A
that has been executed by BANA.
BANA: As defined in the introductory paragraph of
the Agreement.
Blocked Account: The deposit account numbered 8666115507 at
BANA for the purpose of receiving
Remittances on the Purchased Receivables,
which account is subject to the Blocked
Account Agreement.
Blocked Account A letter agreement between Client and BANA
Agreement: detailing their agreement with regard to control
of, and access to, the Blocked Account.
Client: As defined in the introductory paragraph of the
Agreement.
Collateral: As defined in Section 14 of the Agreement.
Credit Rating: With respect to Client or any Account Debtor,
such person's issuer or counterparty credit
rating as assigned by S&P, Xxxxx'x or any other
nationally recognized ratings agency. To the
extent applicable, the respective Credit Ratings
of Client and the relevant Account Debtor as of
the Effective Date are set forth on the
applicable Schedule A.
Credits: As defined in Section 4(b) of the Agreement.
Effective Date: The date set forth after such term on the
applicable Schedule A, which represents the
effective date of BANA's initial purchase of the
subject Receivables.
Event of Default: As defined in Section 10 of the Agreement.
Financial Inability To Pay: An Account Debtor's failure to pay a Purchased
Receivable as a result of a deterioration in
such Account Debtor's credit quality as
evidenced by an event where such Account Debtor
(A) (i) is dissolved (other than pursuant to a
consolidation, amalgamation or merger); (ii)
becomes insolvent or is unable to pay its debts
or fails or admits in writing its inability
generally to pay its debts as they become due;
(iii) makes a general assignment, arrangement or
composition with or for the benefit of its
creditors; (iv) institutes or has instituted
against it a proceeding seeking judgment of
insolvency or bankruptcy or any other relief
under any bankruptcy or insolvency law or other
similar law affecting creditor's rights, or a
petition is presented for its winding-up or
liquidation, and, in the case of any such
proceeding or petition instituted
1
or presented against it, such proceeding or
petition (aa) results in a judgment of
insolvency or bankruptcy or the entry of an
order for relief or the making of an order for
its winding-up or liquidation or (bb) is not
dismissed, discharged, stayed or restrained in
each case within 30 days of the institution or
presentation thereof; (v) has a resolution
passed for its winding-up, official management
or liquidation; (vi) seeks or becomes subject to
the appointment of an administrator, provisional
liquidation, conservator, receiver, trustee,
custodian or other similar official for it or
for all or substantially all its assets; (vii)
has a secured party take possession of all or
substantially all its assets or has a distress,
execution, attachment, sequestration or other
legal process levied, enforced or sued on or
against all or substantially all its assets and
such secured party maintains possession, or any
such process is not dismissed, discharged,
stayed or restrained, in each case within 30
days thereafter; (viii) causes or is subject to
any event with respect to it which, under the
applicable laws of any jurisdiction, has an
analogous effect to any of the events specified
in clauses (i) to (vii) (inclusive); or (ix)
takes any action in furtherance of, or
indicating its consent to, approval of, or
acquiescence in, any of the foregoing acts; or
(B) fails, after giving effect to any applicable
grace period of the relevant obligation(s) of
such Account Debtor (other than such Purchased
Receivable), to make, when due, any payments
equal to or exceeding $10,000,000.00 under such
obligations.
Incentive Servicing Fee: As defined in Section 6(a) of the Agreement.
Maximum Invoice Tenor The time period set forth after such term on the
Period: applicable Schedule A, which represents, in
connection with Receivables that BANA has
approved for purchase with respect to a specific
Approved Account Debtor, the maximum payment
terms (i.e., the time period following the
invoice date within which the Account Debtor
must pay the relevant invoice) afforded such
Account Debtor in any invoice evidencing such
Receivables.
Minimum Invoice Amount: The amount set forth after such term on the
applicable Schedule A, which represents, in
connection with Receivables that BANA has
approved for purchase with respect to a specific
Approved Account Debtor, the minimum payment
amount specified in any invoice evidencing such
Receivables.
Minimum Invoice Tenor Period: The time period set forth after such term on the
applicable Schedule A, which represents, in
connection with Receivables that BANA has
approved for purchase with respect to a specific
Approved Account Debtor, the minimum payment
terms (i.e., the time period following the
invoice date within which the Account Debtor
must pay the relevant invoice) afforded such
Account Debtor in any invoice evidencing such
Receivables.
Moody's: Xxxxx'x Investors Service, Inc. or any
successor.
Guarantor: Universal Forest Products, Inc., a corporation
organized under the laws of the state of
Michigan.
Past Due Grace Period: The time period set forth after such term on the
applicable Schedule A, which represents, in
connection with Receivables that BANA has
approved for purchase with respect to a specific
Approved Account Debtor, the maximum past due
grace period (i.e., the time period following
the invoice due date within which Client will
accept payment on the relevant invoice without
affording Client the ability to charge the
Account Debtor a late fee, interest or other
penalties) afforded such Account Debtor in any
invoice evidencing such Receivables.
2
Purchase Price: As defined in Section 1(b)(1) of the Agreement.
Purchased Receivable: Any Receivable (including a Replacement
Receivable) purchased by BANA pursuant to the
Agreement.
Receivables: All receivables, instruments, accounts, chattel
paper, payment intangibles, notes, contract
rights and general intangibles resulting from
Client's sale of products or services before, on
or after the date hereof.
Remittances: As defined in Section 1(b)(4) of the Agreement.
Replacement Receivables: As defined in Section 1(b)(4) of the Agreement.
..
Required Amount: The amount set forth after such term on the
applicable Schedule A, which represents the
stated value of Receivables that BANA has
approved for purchase with respect to a specific
Approved Account Debtor.
S&P: Standard & Poor's Ratings Services, a division
of The XxXxxx-Xxxx Companies, Inc., or any
successor.
Schedule A: Any applicable Schedule A (which may be denoted
Schedule A-1, etc.), in substantially the form
of Annex II to the Agreement, attached and/or
executed in connection with the Agreement, as
such schedule is amended, restated, extended,
supplemented or otherwise modified in writing
from time to time.
Servicer: As defined in Section 6(a) of the Agreement.
Servicer Default: As defined in Section 6(e) of the Agreement.
Servicing Fee: With respect to Purchased Receivables under a
particular Schedule A, the amount determined by
multiplying (a) the Required Amount listed on
the applicable Schedule A times (b) a fraction,
the numerator of which shall be determined by
multiplying (x) the per annum percentage listed
as the Servicing Fee on the applicable Schedule
A times (y) the number of days in the period
from the relevant Effective Date to the relevant
Termination Date, and the denominator of which
shall be 360.
Stated Termination Date: The date set forth after such term on the
applicable Schedule A, which represents the date
on or prior to which each Purchased Receivable
must be paid by the relevant Account Debtor in
accordance with the payment terms for such
Receivable.
Termination Date: With respect to Purchased Receivables under a
particular Schedule A, the earlier of (a) the
applicable Stated Termination Date and (b) the
date specified in a writing from BANA to Client
(which date may be the date of such writing),
such earlier date being the date on and after
which Client can no longer use Remittances to
purchase Replacement Receivables.
3
FORM OF
SCHEDULE A-__
Subject to Program for Accounts Receivable Transfer Agreement dated September
22, 2003 executed by Client, Guarantor and Bank of America, N.A., the terms of
which are hereby incorporated by reference
Subject to credit approval and satisfactory documentation
Client signature below mandates Bank of America to initiate Due Diligence
Effective Date: [_________]
Stated Termination Date: [_________]
Client/Initial Servicer: Universal Forest Products RMS, LLC
Client's Credit Rating: [_________]
Guarantor: Universal Forest Products, Inc.
Guarantor's Credit Rating: [_________]
Account Debtor: [_________]
Account Debtor's Credit Rating: [_________]
Receivables:
Required Amount: [$_________]
Minimum Invoice Tenor Period: [___] days
Maximum Invoice Tenor Period: [___] days
Minimum Invoice Amount: $[__]
Past Due Grace Period: [__________] days
Purchase Price: [_________]%
Servicing Fee: [_________]% per annum, paid in advance
Due Diligence Expenses: For the account of Client/Initial Servicer
ACCEPTED AND AGREED:
Bank of America, N.A. Universal Forest Products Universal Forest Products, Inc.
RMS, LLC
By: By: By:
------------------------ ----------------------- -----------------------
Name: Name: Name:
---------------------- --------------------- ---------------------
Title: Title: Title:
--------------------- -------------------- --------------------
Prospective counterparties should conduct a thorough and independent review of
the legal, tax and accounting aspects of any proposed transaction to determine
its suitability in light of their particular circumstances. Although the
indicative information set forth above is reflective of the terms, as of the
specified date, under which Bank of America believes a contract might be
structured, no assurance can be given that such a contract will in fact be
executed. Purchase Price represents indicative pricing only; the actual Purchase
Price shall reflect market conditions at the time of closing.
