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RECEIVABLES PURCHASE AGREEMENT
Dated as of September 22, 1995
Among
THE STANDARD PRODUCTS FUNDING CORPORATION
as Seller
---------
and
THE STANDARD PRODUCTS COMPANY
as initial Master Servicer
--------------------------
and
CLIPPER RECEIVABLES CORPORATION
as Purchaser
------------
and
STATE STREET BOSTON CAPITAL CORPORATION
as Administrator
----------------
and
NATIONAL CITY BANK
as Relationship Bank
--------------------
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TABLE OF CONTENTS
Page
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ARTICLE I PURCHASES AND REINVESTMENTS 2
SECTION 1.01. Commitments to Purchase; Limits on Purchaser's
Obligations 2
SECTION 1.02. Purchase Procedures; Assignment of Purchaser's
Interests 2
SECTION 1.03. Collections during Revolving Period 3
SECTION 1.04. Collections During Liquidation Period 6
SECTION 1.05 [RESERVED] . 10
SECTION 1.06. Purchased Interest 10
ARTICLE II COMPUTATIONAL RULES 11
SECTION 2.01. Selection of Asset Tranches 11
SECTION 2.02. Computation of Purchaser's Total Investment
and Purchaser's Tranche Investment 12
SECTION 2.03. Computation of Concentration Limits and Unpaid
Balance 13
SECTION 2.04. Computation of Earned Discount 13
SECTION 2.05. Estimates of Earned Discount Rate, Fees, Etc. 13
ARTICLE III SETTLEMENTS 14
SECTION 3.01. Settlement Procedures 14
SECTION 3.02. Deemed Collections; Reduction of Purchaser's
Total Investment, Etc. 18
SECTION 3.03. Payments and Computations, Etc. 20
SECTION 3.04. Treatment of Collections and Deemed
Collections 20
ARTICLE IV FEES AND YIELD PROTECTION 21
SECTION 4.01. Fees 21
SECTION 4.02. Yield Protection 21
SECTION 4.03. Funding Losses 23
ARTICLE V CONDITIONS OF PURCHASES 24
SECTION 5.01. Conditions Precedent to Initial Purchase 24
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SECTION 5.02. Conditions Precedent to All Purchases and
Reinvestments 26
ARTICLE VI REPRESENTATIONS AND WARRANTIES 27
SECTION 6.01. Representations and Warranties of Seller
Parties 27
ARTICLE VII GENERAL COVENANTS OF SELLER PARTIES 32
SECTION 7.01. Affirmative Covenants of Seller Parties 32
SECTION 7.02. Reporting Requirements of Seller Parties 34
SECTION 7.03. Negative Covenants of Seller Parties 36
SECTION 7.04. Separate Corporate Existence of Seller 39
SECTION 7.05. Financial Covenants 42
ARTICLE VIII ADMINISTRATION AND COLLECTION 42
SECTION 8.01. Designation of Master Servicer 42
SECTION 8.02. Duties of Master Servicer 43
SECTION 8.03. Rights of the Administrator 45
SECTION 8.04. Responsibilities of Seller Parties 46
SECTION 8.05. Further Action Evidencing Purchases and
Reinvestments 47
SECTION 8.06. Application of Collections 48
ARTICLE IX SECURITY INTEREST 49
SECTION 9.01. Grant of Security Interest 49
SECTION 9.02. Further Assurances 49
SECTION 9.03. Remedies 49
ARTICLE X LIQUIDATION EVENTS 49
SECTION 10.01. Liquidation Events 49
SECTION 10.02. Remedies 53
ARTICLE XI THE ADMINISTRATOR; RELATIONSHIP BANK 53
SECTION 11.01. Authorization and Action 53
SECTION 11.02. Administrator's and Relationship Bank's
Reliance, Etc. 53
SECTION 11.03. State Street Capital and NCB and Affiliates 54
ARTICLE XII ASSIGNMENT OF PURCHASER'S INTEREST 54
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SECTION 12.01. Restrictions on Assignments 54
SECTION 12.02. Rights of Assignee 56
SECTION 12.03. Terms and Evidence of Assignment 56
SECTION 12.04. Rights of Collateral Agent 56
ARTICLE XIII INDEMNIFICATION 56
SECTION 13.01. Indemnities by Seller 56
SECTION 13.02. Indemnities by Master Servicer 59
ARTICLE XIV MISCELLANEOUS 60
SECTION 14.01. Amendments, Etc. 60
SECTION 14.02. Notices, Etc. 61
SECTION 14.03. No Waiver; Remedies 61
SECTION 14.04. Binding Effect; Survival 61
SECTION 14.05. Costs, Expenses and Taxes 62
SECTION 14.06. No Proceedings 63
SECTION 14.07. Confidentiality of Seller Information 63
SECTION 14.08. Confidentiality of Program Information 65
SECTION 14.09. Captions and Cross References 67
SECTION 14.10. Integration 68
SECTION 14.11. Governing Law 68
SECTION 14.12. Waiver Of Jury Trial 68
SECTION 14.13. Consent To Jurisdiction; Waiver Of Immunities 68
SECTION 14.14. Execution in Counterparts 69
SECTION 14.15. No Recourse Against Other Parties 69
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APPENDICES
APPENDIX A Definitions
SCHEDULES
SCHEDULE 6.01(i) Description of Material Adverse Changes
SCHEDULE 6.01(j) Description of Litigation
SCHEDULE 6.01(n) List of Offices of Master Servicer and Seller where
Records Are Kept
SCHEDULE 6.01(o) List of Lock-Box Banks
SCHEDULE 6.01(p) Description of Credit and Collection Policy
EXHIBITS
EXHIBIT 1.02(a) Form of Notice of Purchase
EXHIBIT 3.01(a) Form of Information Package
EXHIBIT 5.01(a) Form of Sale Agreement
EXHIBIT 5.01(f) Form of UCC Financing Statement
EXHIBIT 5.01(h) Form of Lock-Box Agreement
EXHIBIT 5.01(i) Form of Opinion of Special Counsel for Seller Parties
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RECEIVABLES PURCHASE AGREEMENT
Dated as of September 22, 1995
THIS IS A RECEIVABLES PURCHASE AGREEMENT (this "AGREEMENT"), among:
(1) THE STANDARD PRODUCTS FUNDING CORPORATION, a Delaware corporation
(together with its successors and permitted assigns, "SELLER"),
(2) THE STANDARD PRODUCTS COMPANY, an Ohio corporation (together with
its successors, "STANDARD" as initial servicer hereunder (in such capacity,
together with any successor servicer appointed pursuant to SECTION 8.01,
"MASTER SERVICER"; Standard, in its capacity as Master Servicer, together with
Seller, each a "SELLER PARTY" and collectively the "SELLER PARTIES"),
(3) CLIPPER RECEIVABLES, a Delaware corporation ("PURCHASER"),
(4) STATE STREET BOSTON CAPITAL CORPORATION, a Massachusetts
corporation ("STATE STREET CAPITAL"), as administrator for Purchaser under the
Program Administration Agreement (in such capacity, together with any
successors thereto in such capacity, the "ADMINISTRATOR"), and
(5) NATIONAL CITY BANK a national bank ("NCB"), as a referral agent
for Purchaser under the Relationship Bank Agreement (in such capacity, together
with any successors thereto in such capacity, the "RELATIONSHIP BANK").
Unless otherwise indicated, capitalized terms used in this Agreement are
defined in APPENDIX A.
BACKGROUND
1. Seller is a wholly-owned direct subsidiary of Standard.
2. Standard is engaged in the business of the manufacture of
parts for the automotive, marine and appliance industries.
3. Concurrently herewith, Standard together with the other
Originators and Seller are entering into the Sale Agreement pursuant to which
each Originator will transfer to Seller all of its right, title and interest in
and to the Pool Receivables and certain related property.
4. Seller has requested Purchaser, and Purchaser agreed, subject
to the terms and conditions contained in this Agreement, to purchase from
Seller from time to time an undivided percentage interest, referred to herein
as the Purchased Interest, in Pool Receivables and related property.
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5. Seller and Purchaser also desire that, subject to the terms
and conditions of this Agreement, certain of the daily Collections in respect
of the Purchased Interest be reinvested in Pool Receivables, which reinvestment
shall constitute part of the Purchased Interest.
6. State Street Capital has been requested, and is willing, to
act as the Administrator under this Agreement.
7. NCB has been requested, and is willing, to act as the
Relationship Bank under this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto hereby agree as follows:
ARTICLE I
PURCHASES AND REINVESTMENTS
SECTION 1.01. COMMITMENTS TO PURCHASE; LIMITS ON PURCHASER'S
OBLIGATIONS. Upon the terms and subject to the conditions of this Agreement
(including, without limitation, ARTICLE V), from time to time prior to the
Termination Date, Seller may request that Purchaser purchase from Seller
ownership interests in Pool Receivables and Related Assets, and Purchaser shall
make such purchase (each being a "PURCHASE"); PROVIDED that no Purchase shall
be made by Purchaser if, after giving effect thereto, either (a) the then
Purchaser's Total Investment would exceed the lesser of (1) $50,000,000 and (2)
84% TIMES the Net Pool Balance (the "PURCHASE LIMIT"), or (b) the Purchased
Interest, expressed as a percentage of Net Pool Balance (as of the Cut-Off Date
for the Settlement Date on which such Purchase is made), would exceed 100% (the
"ALLOCATION LIMIT"); and PROVIDED, FURTHER that each Purchase made pursuant to
this Section 1.01 shall have a purchase price equal to at least $1,000,000 and
shall be an integral multiple of $1,000,000.
SECTION 1.02. PURCHASE PROCEDURES; ASSIGNMENT OF PURCHASER'S
INTERESTS.
(a) NOTICE OF PURCHASE. Each Purchase from Seller by
Purchaser shall be made on notice from Seller to the Administrator
received by the Administrator not later than 11:00 a.m. (New York City
time) on the Business Day next preceding the date of such proposed
Purchase. Each such notice of a proposed Purchase shall be
substantially in the form of EXHIBIT 1.02(a) and shall specify the
desired amount and date of such Purchase.
(b) FUNDING OF PURCHASE. On the date of each Purchase,
Purchaser shall, upon satisfaction of the applicable conditions set
forth in ARTICLE V, make available to the Administrator at the
Administrator's Office the amount of its Purchase in same day funds,
and after receipt by the Administrator of such funds, the
Administrator will make such funds immediately available to Seller at
such office.
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(c) ASSIGNMENT OF PURCHASED INTERESTS. Seller hereby
sells, assigns and transfers to Purchaser, effective on and as of the
date of each Purchase by the Purchaser hereunder, the undivided
ownership interest in the Pool Receivables and Related Assets
represented by the net increase in the Purchased Interest resulting
from such Purchase.
SECTION 1.03. COLLECTIONS DURING REVOLVING PERIOD.
(a) On the close of business on each Business Day during
the period from the date of the first Purchase to the Termination
Date, Master Servicer will, out of all Collections received on such
day from Pool Receivables:
(i) if any Ford Concentration Draw or Chrysler
Concentration Draw is outstanding, determine the amount of Ford
Collections, in the case of a Ford Concentration Draw, or Chrysler
Collections, in the case of a Chrysler Concentration Draw,
received on such day and pay such amount to the Administrator
for application to and up to the outstanding amount of any Ford
Concentration Draw or Chrysler Concentration Draw, as the case
may be, in each case, together with accrued interest therein;
(ii) determine the Purchaser's Share and the Seller's Share of
the Collections remaining after the application of the immediately
preceding clause (i);
(iii) out of the Purchaser's Share of Collections allocated
pursuant to CLAUSE (ii), set aside and hold in trust for
Purchaser an amount equal to the sum of the estimated amount of
Earned Discount accrued in respect of each Asset Tranche (based
on rate information provided by the Administrator pursuant to
Section 2.05), all other amounts due from Seller to Purchaser,
the Administrator or the Relationship Bank hereunder and the
Master Servicer's Fee (in each case, accrued through such day)
and not so previously set aside;
(iv) apply the Purchaser's Share of the Collections as
determined pursuant to CLAUSE (ii) and not required to be set
aside pursuant to CLAUSE (iii) to the purchase from Seller of
ownership interests in Pool Receivables and Related Assets (each
such purchase being a "REINVESTMENT"); PROVIDED that:
(A) if (I) the then Purchased Interest would exceed the
Allocation Limit or (II) the then Purchaser's Total
Investment would exceed the Purchase Limit, then Master
Servicer shall not reinvest, but shall set aside and hold
for the benefit of Purchaser, a portion of such Collections
which, together with other Collections previously set aside
pursuant to this CLAUSE (iv), shall equal the amount
necessary to reduce the Purchaser's Total Investment to the
Purchase Limit and the Purchased Interest to the Allocation
Limit;
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(B) if any of the conditions precedent to
Reinvestment in CLAUSES (a), (b) and (d) of SECTION 5.02 are not
satisfied, then Master Servicer shall not reinvest any of such
remaining Collections, but shall set them aside and hold them in
trust for the benefit of Purchaser; and
(v) pay to Seller (A) the portion of Collections not
allocated to the Purchaser's Share pursuant to CLAUSE (ii) and (B) the
Collections applied to Reinvestment pursuant to CLAUSE (iv).
(b) UNREINVESTED COLLECTIONS. Master Servicer shall set
aside and hold in trust for the benefit of Purchaser all Collections which,
pursuant to CLAUSE (iv) of SECTION 1.03(a), may not be reinvested in the
Pool Receivables and Related Assets. If the Administrator or the
Relationship Bank shall so request in writing, then, within one Business
Day after receipt of each request, Master Servicer shall apply such funds
to reduce the Purchaser's Total Investment in accordance with SECTION
1.03(c)(iii). If, prior to the date when such Collections are required
to be paid to the Administrator for the benefit of Purchaser pursuant to
SECTION 1.03(c)(iii), the amount of Collections so set aside exceeds the
amount, if any, necessary to reduce the Purchaser's Total Investment to
the Purchase Limit and the Purchased Interest to the Allocation Limit,
and the conditions precedent to Reinvestment set forth in clauses (a),
(b) and (d) of SECTION 5.02 are satisfied, then the Master Servicer shall
apply such Collections (or, if less, a portion of such Collections equal
to the amount of such excess) to the making of a Reinvestment. No delay
in the Administrator or Relationship Bank making such request shall
release the Master Servicer from its obligations to make such payment
whether or not such funds were set aside and held in trust as refined
by this clause (b).
(c) PAYMENT OF AMOUNTS SET ASIDE.
(i) Master Servicer shall pay all amounts set aside
pursuant to SECTION 1.03(a)(iii) in respect of Earned Discount on
an Asset Tranche funded by a Liquidity Loan, a Credit Draw or a
Concentration Draw to the Administrator on the last day of the
then current Yield Period for such Asset Tranche.
(ii) Master Servicer shall pay all amounts of
Collections set aside pursuant to SECTION 1.03(a)(iii) to the
Administrator on each Settlement Date, as provided in SECTION
3.01, in an amount not exceeding the sum of all accrued and
unpaid Earned Discount in respect of each Asset Tranche, Master
Servicer's Fee and all other amounts (other than the Purchaser's
Total Investment) then due from Seller to Purchaser, the
Administrator or the Relationship Bank, or on such earlier date
or dates as the Administrator shall require on at least one
Business Day's written notice to Master Servicer.
(iii) Master Servicer shall pay all amounts set aside
pursuant to SECTION 1.03(b) and not previously applied pursuant
to SECTION 1.03(b) to the
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Administrator for the account of Purchaser (A) on the last day of the
then current Yield Period for any Asset Tranche funded by a Liquidity
Loan, a Credit Draw or a Concentration Draw, in an amount not
exceeding the Purchaser's Tranche Investment of such Asset Tranche,
and (B) on the Settlement Date for each Settlement Period, as provided
in SECTION 3.01, in an amount not exceeding the Purchaser's Total
Investment, or on such earlier date or dates as the Administrator
shall require on at least one Business Day's prior written notice to
Master Servicer; PROVIDED, HOWEVER,
(1) no such payment shall be made with respect to an
Asset Tranche funded by a Concentration Draw unless the
Purchaser's Tranche Investments of all Asset Tranches, if
any, funded by Commercial Paper Notes, Liquidity Loans or
Credit Draws shall have been reduced to zero;
(2) no such payment shall be made with respect to
an Asset Tranche funded by a Credit Draw unless the
Purchaser's Tranche Investments of all Asset Tranches, if
any, funded by Commercial Paper Notes or Liquidity Loans
shall have been reduced to zero;
(3) no payment shall be made with respect to an Asset
Tranche funded by Commercial Paper Notes unless the
Purchaser's Tranche Investments of all Asset Tranches, if
any, funded by Liquidity Loans shall have been reduced to
zero; and
(4) all Ford Collections and Chrysler Collections
received prior to the Termination Date shall be applied
first to the Ford Concentration Draws and the Chrysler
Concentration Draws, respectively, until such Concentration
Draws have been reduced to zero.
SECTION 1.04. COLLECTIONS DURING LIQUIDATION PERIOD.
(a) On the close of business on each Business Day during
the Liquidation Period, Master Servicer will, out of all Collections
received on such day from Pool Receivables:
(i) determine the amount of Ford Collections and Chrysler
Collections received on such day,
(ii) divide (A) the Ford Collections into Ford Normal
Collections and Ford Excess Collections based upon the applicable
Ford Allocation Percentage, and (B) the Chrysler Collections into
Chrysler Normal Collections and Chrysler Excess Collections based
upon the applicable Chrysler Allocation Percentage,
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(iii) deposit (A) the Ford Excess Collections into the Ford
Excess Collateral Account and (B) the Chrysler Excess Collections into
the Chrysler Excess Collateral Account,
(iv) divide the remaining Collections (other than Ford Excess
Collections and Chrysler Excess Collections) into the Purchaser's
Share and Seller's Share of such Collections,
(v) out of Purchaser's Share of Collections allocated pursuant
to CLAUSE (iv), set aside and hold in trust an amount to be paid to
the Administrator as provided in SECTION 3.01 equal to the sum of
(A) the estimated amount of Earned Discount accrued
through such day in respect of each Asset Tranche (based upon the
rate information provided by the Administrator pursuant to
SECTION 2.05) and not previously set aside,
(B) all other amounts due from Seller to the Purchaser
(other than in respect of Purchaser's Total Investment), the
Administrator or the Relationship Bank hereunder and the Master
Servicer's Fee (in each case accrued through such day) and not
previously set aside,
(C) an amount equal to the lesser of the remaining amount
of such Purchaser's Share of Collections and the Purchaser's
Total Investment, and
(vi) pay to the Seller the portion, if any, of Seller's Share
of Collections not deposited pursuant to the preceding CLAUSE (iii)
and of Purchaser's Share not required to be set aside pursuant to the
preceding CLAUSE (v); PROVIDED that, if, on or prior to such day,
either
(A) any Ford Receivable or Chrysler Receivable has become
a Defaulted Receivable, or
(B) the Excess Concentration Limit for either Ford or
Chrysler shall be equal to zero due to a downgrade or withdrawal
of the applicable credit ratings of Ford or Chrysler, as the case
may be,
the Master Servicer shall ratably divide the Seller's Share of such
Collections determined pursuant to CLAUSE (iv) into two amounts which
shall be treated as and deemed to be Ford Collections and Chrysler
Collections, respectively, based upon the proportion that
(y) the amount of the Unpaid Balance of Ford Receivables
included in the Net Pool Balance bears to
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(z) the amount of the Unpaid Balance of Chrysler
Receivables included in the Net Pool Balance,
as each such amount is reflected in the Information Package most
recently delivered prior to the commencement of the Liquidation
Period, and further divide such deemed Ford Collections into Ford
Normal Collections and Ford Excess Collections and such deemed
Chrysler Collections into Chrysler Normal Collections and Chrysler
Excess Collections, as provided by the preceding CLAUSE (ii), and
deposit the deemed Ford Excess Collections and deemed Chrysler Excess
Collections as so further divided into the Ford Excess Collateral
Account, in the case of such Ford Excess Collections and the Chrysler
Excess Collateral Account, in the case of such deemed Chrysler Excess
Collections and deposit the deemed Ford Normal Collections and
Chrysler Normal Collections in the Cash Collateral Account.
(b) At the end of each Yield Period and each Settlement
Period, Master Servicer shall withdraw from the Cash Collateral Account
(i) first, an amount equal to the aggregate amount of the
Unpaid Balance of all Receivables that became Defaulted Receivables
during such Yield Period or Settlement Period and pay the amount so
withdrawn to the Administrator to be applied in reduction of the
Purchaser's Total Investment as provided in SECTION 3.01(d)(iv) until
the Purchaser's Tranche Investment for all Asset Tranches funded by
Liquidity Loans, Commercial Paper Notes or Credit Draws have been
reduced to zero;
(ii) second, after the Asset Tranches set forth in the previous
CLAUSE (i) have been reduced to zero, from any remaining amounts on
deposit in the Cash Collateral Account, an amount up to the amount of
all Recourse Obligations otherwise unsatisfied at such time and pay
the amount so withdrawn to the Administrator to be applied ratably to
such Recourse Obligations; and
(iii) third, after all Recourse Obligation have been satisfied
in full, from any remaining amounts on deposit in the Cash Collateral
Account, an amount up to the outstanding amount of Ford Concentration
Draws and Chrysler Concentration Draws at such time, in each case,
together with accrued interest thereon and pay the amount so withdrawn
to the Administrator to be applied ratably to such Ford Concentration
Draws and Chrysler Concentration Draws and accrued interest thereon.
(c) If, on any day a Ford Concentration Draw or a
Chrysler Concentration Draw is outstanding, the Master Servicer shall
withdraw from the Ford Excess Collateral Account, in the case of a Ford
Concentration Draw, or the Chrysler Excess Collateral Account, in the
case of a Chrysler Concentration Draw, an amount equal to the lesser of
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(i) all amounts owing in respect of such Concentration Draw,
and
(ii) the balance in the Ford Excess Collateral Account or the
Chrysler Excess Collateral Account, as the case may be,
and in either case, pay the amount so withdrawn to the Administrator for
application to the Ford Concentration Draws or the Chrysler Concentration
Draws, as the case may be, in accordance with SECTION 3.01(d);
PROVIDED, that, if on such day, the Unpaid Balance of Ford Receivables or
Chrysler Receivables, as the case may be, is zero, the Master Servicer
shall
(y) withdraw from the Chrysler Excess Collateral Account
amounts owing in respect of any Ford Concentration Draw, if, on such
day, the Unpaid Balance of Chrysler Receivables is zero, and
(z) withdraw from the Ford Excess Collateral Account
amounts owing in respect of any Chrysler Concentration Draw, if, on
such day, the Unpaid Balance of Ford Receivables is zero;
and in either case, pay the amount so withdrawn to the
Administrator for application to the Ford Concentration Draws or the
Chrysler Concentration Draws, as the case may be, in accordance with
SECTION 3.01(d);
PROVIDED, FURTHER that, if on such day, the Unpaid Balance of Ford
Receivables and Chrysler Receivables is zero, the Master Servicer shall
withdraw all amounts then on deposit in the Ford Excess Collateral
Account and the Chrysler Excess Collateral Account and deposit such
amounts in the Cash Collateral Account to be applied in accordance with
the previous CLAUSE (b).
(d) If, on any day the sum of
(i) the Purchaser's Share of the aggregate amount of
Collections then on deposit in the Collateral Accounts, PLUS
(ii) the amount the set aside pursuant to the preceding CLAUSE
(a)(v),
is equal to or greater than the amount which, if paid by the Seller in
respect of Purchaser's Total Investment and all other amounts payable by
Seller under the Transaction Documents, would cause the Final Payout Date
to occur, then the Master Servicer shall (y) pay to the Administrator
such amount from withdrawals from the Collateral Accounts and amounts set
aside pursuant to the preceding CLAUSE (a)(v), for application in
accordance with SECTION 3.01(d), and (z) pay all
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remaining amounts on deposit in the Collateral Accounts and amounts so
set aside to the Seller.
(e) If, on any day when no Ford Concentration Draw or Chrysler
Concentration Draw is outstanding, there is no Pool Receivable that is less
than 150 days past due from the original due date for such Receivable, then the
Master Servicer shall withdraw all amounts from the Collateral Accounts and pay
such amounts, together with all amounts set aside pursuant to the preceding
CLAUSE (a)(v), to the Administrator for application in accordance with SECTION
3.01(d).
(f) Notwithstanding the application of any amounts pursuant to
CLAUSES (b), (c) or (e) of the foregoing provisions of this SECTION 1.04, any
Collections received prior to the Final Payout Date shall be applied as
provided in CLAUSE (a) of this SECTION 1.04.
SECTION 1.05. [RESERVED]
SECTION 1.06. PURCHASED INTEREST.
(a) COMPONENTS OF PURCHASED INTEREST. On any date the Purchased
Interest will represent Purchaser's undivided percentage ownership interest in
all then outstanding Pool Receivables and all Related Assets with respect to
such Pool Receivables as at such date.
(b) COMPUTATION OF PURCHASED INTEREST. On any date, the Purchased
Interest will be equal to a percentage, expressed as the following fraction:
PTI + ACR + LCR + LR + DR
-------------------------
NPB
where:
PTI = the then Purchaser's Total Investment;
ACR = the then Accrued Cost Reserve;
LCR = the then Liquidation Cost Reserve;
LR = the then Loss Reserve;
DR = the then Dilution Reserve; and
NPB = the then Net Pool Balance;
PROVIDED, HOWEVER, that the Purchased Interest, as computed as of the day
immediately preceding the Termination Date, will remain constant at all times
on and after the Termination Date until the Final Payout Date, unless at any
time the Administrator requests a recalculation of the Purchased Interest,
in which case the Purchased Interest
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shall remain constant following such recalculation until the Final
Payout Date, or, if earlier, until the date of the next such
recalculation.
(c) FREQUENCY OF COMPUTATION. The Purchased Interest
shall be computed (i) as provided in SECTION 3.01, as of the Cut-Off
Date for each Settlement Period, and (ii) on the Settlement Date
following such Reporting Date, after giving effect to the payments
made pursuant to SECTION 3.01. In addition, at any time during the
Liquidation Period or when a Liquidation Event or Unmatured
Liquidation Event shall have occurred and be continuing, the
Administrator may require Master Servicer to provide an Information
Package, based on the information then available to Master Servicer,
for purposes of computing the Purchased Interest or the Purchase Limit
as of any other date, and Master Servicer agrees to do so within one
Business Day of its receipt of the Administrator's request.
ARTICLE II
COMPUTATIONAL RULES
SECTION 2.01. SELECTION OF ASSET TRANCHES. The Administrator
shall, from time to time for purposes of computing Earned Discount, divide the
Purchased Interest into Asset Tranches, and the applicable Earned Discount Rate
may be different for each Asset Tranche. Purchaser's Total Investment shall be
allocated to each Asset Tranche by the Administrator to reflect the funding
sources for the Purchased Interest, so that:
(a) there will be one or more Asset Tranches, selected by
the Administrator, reflecting the portion of the Purchased Interest
funded by outstanding Liquidity Loans, if any;
(b) there will be one or more Asset Tranches, selected by
the Administrator, reflecting the portion of the Purchased Interest
funded by Credit Draws, if any;
(c) there will be one or more Asset Tranches, selected by
the Administrator, reflecting the portion of the Purchased Interest
funded by Concentration Draws, if any; and
(d) there will be an Asset Tranche equal to the excess of
Purchaser's Total Investment over the aggregate amounts allocated at
such time pursuant to CLAUSES (a), (b) and (c) above, which Asset
Tranche shall reflect the portion of the Purchased Interest funded by
Commercial Paper Notes.
The Purchaser confirms that it is its intention to allocate all or
substantially all of the Purchased Interest to the Asset Tranche funded by
Commercial Paper Notes; provided that the
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Purchaser or the Administrator may determine, from time to time, in its sole
discretion, that funding such Purchased Interest by Commercial Paper Notes is
not desirable for any reason.
SECTION 2.02. COMPUTATION OF PURCHASER'S TOTAL INVESTMENT AND
PURCHASER'S TRANCHE INVESTMENT. In making any determination of Purchaser's
Total Investment and any Purchaser's Tranche Investment, the following rules
shall apply:
(a) Purchaser's Total Investment shall not be considered
reduced by any allocation, setting aside or distribution of any
portion of Collections unless such Collections shall have been
actually delivered to the Administrator pursuant hereto;
(b) Purchaser's Total Investment shall not be considered
reduced by any distribution of any portion of Collections if at any
time such distribution is rescinded or must otherwise be returned for
any reason; and
(c) if there is any reduction in Purchaser's Total
Investment, there shall be a corresponding reduction in a Purchaser's
Tranche Investment with respect to one or more Asset Tranches selected
by the Administrator in its discretion.
SECTION 2.03. COMPUTATION OF CONCENTRATION LIMITS AND UNPAID
BALANCE. The Obligor Concentration Limits and the aggregate Unpaid Balance of
Pool Receivables of any Obligor and its Affiliated Obligors (if any) shall be
calculated as if such Obligor and its Affiliated Obligors were one Obligor.
SECTION 2.04. COMPUTATION OF EARNED DISCOUNT. In making any
determination of Earned Discount, the following rules shall apply:
(a) the Administrator shall determine the Earned Discount
accruing with respect to each Asset Tranche and each Settlement Period
therefor (or, in the case of an Asset Tranche funded by Liquidity
Loans, Credit Draws or Concentration Draws, each Yield Period), in
accordance with the definition of Earned Discount;
(b) no provision of this Agreement shall require the
payment or permit the collection of Earned Discount in excess of the
maximum permitted by applicable law; and
(c) Earned Discount for any Asset Tranche shall not be
considered paid by any distribution if at any time such distribution
is rescinded or must otherwise be returned for any reason.
SECTION 2.05. ESTIMATES OF EARNED DISCOUNT RATE, FEES, ETC. For
purposes of determining the amounts required to be set aside by Master Servicer
pursuant to SECTION 1.03, the Administrator shall notify Master Servicer from
time to time of the Purchaser's Tranche Investment of each Asset Tranche, the
Earned Discount Rate applicable to each Asset Tranche and the rates at which
fees and other amounts are accruing hereunder. It is understood and
17
agreed that (i) the Earned Discount Rate for any Asset Tranche may change from
one applicable Yield Period or Settlement Period to the next, and the Alternate
Base Rate or CP Rate used to calculate the Earned Discount Rate may change from
time to time during an applicable Yield Period or Settlement Period, (ii)
certain rate information provided by the Administrator to Master Servicer shall
be based upon the Administrator's good faith estimate, (iii) the amount of
Earned Discount actually accrued with respect to an Asset Tranche during any
Settlement Period (or, in the case of an Asset Tranche funded by Liquidity
Loans, Credit Draws or Concentration Draws, any Yield Period) may exceed, or be
less than, the amount set aside with respect thereto by Master Servicer, and
(iv) the amount of fees or other payables accrued hereunder with respect to any
Settlement Period may exceed, or be less than, the amount set aside with
respect thereto by Master Servicer. Failure to set aside any amount so accrued
shall not relieve Master Servicer of its obligation to remit Collections to the
Administrator with respect to such accrued amount, as and to the extent
provided in SECTION 3.01.
ARTICLE III
SETTLEMENTS
SECTION 3.01. SETTLEMENT PROCEDURES. The parties hereto will take
the following actions with respect to each Settlement Period:
(a) INFORMATION PACKAGE. On the Reporting Date for each
Settlement Period, Master Servicer shall deliver to the Relationship
Bank and the Administrator a diskette containing the information
described in EXHIBIT 3.01(a) (an "INFORMATION PACKAGE").
(b) EARNED DISCOUNT; OTHER AMOUNTS DUE. On the day before
each Reporting Date, the Administrator shall notify Master Servicer of
(i) the amount of Earned Discount accrued in respect of the
Purchaser's Total Investment during the prior Settlement Period, and
(ii) all fees and other amounts accrued and payable by Seller under
this Agreement (other than amounts described in CLAUSE (c) below).
Master Servicer shall pay to the Administrator the amount of such
Earned Discount, fees and other amounts on the Settlement Date for
such month. Such payment shall be made (A) out of amounts set aside
pursuant to SECTION 1.03 or SECTION 1.04 for such payment, (B) in the
case of amounts other than Earned Discount, to the extent that amounts
were not set aside pursuant to SECTION 1.03 or SECTION 1.04 for such
payment, out of Collections paid by Master Servicer to Seller (which
amounts Seller hereby agrees to pay to Master Servicer) up to the
aggregate amount of Collections paid to Seller during such Settlement
Period, and (C) in the case of Earned Discount, to the extent that
funds were not set aside pursuant to SECTION 1.03 or SECTION 1.04 for
such payment (because the actual Earned Discount for such Settlement
Period was greater than the estimated Earned Discount used in
calculating the Purchased Interest during such Settlement Period), out
of Collections paid by Master Servicer to Seller (which amounts Seller
hereby agrees to pay to Master Servicer), up to the aggregate amount
of Collections paid to Seller during such Settlement Period.
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(c) PAYMENTS OF PURCHASER'S TOTAL INVESTMENT; PAYMENTS DURING
LIQUIDATION PERIOD.
(i) On the Reporting Date for each Settlement Period, the
Administrator shall compute and notify the Master Servicer of, as of
the related Cut-Off Date and based upon the assumptions in the next
sentence, (A) the Purchased Interest, (B) the amount of the reduction
or increase (if any) in the Purchased Interest since the next
preceding Cut-Off Date, (C) the excess (if any) of the Purchased
Interest over the Allocation Limit, (D) the excess (if any) of the
Purchaser's Total Investment over the Purchase Limit, (E) the
outstanding Concentration Draws, and (F) all accrued and unpaid Earned
Discount in respect of each Asset Tranche, Master Servicer's Fee and
all other amounts then due to Purchaser, the Administrator or
Relationship Bank. Such calculation shall be based upon the
assumptions that (x) the information in the Information Package is
correct, and (y) Collections set aside pursuant to SECTION 1.03 or
SECTION 1.04 will be paid to the Administrator on the Settlement Date
for such Settlement Period.
(ii) If, according to the computations made pursuant to CLAUSE
(i) above, on any Reporting Date, the Purchased Interest exceeds the
Allocation Limit or the Purchaser's Total Investment exceeds the
Purchase Limit, then on the Settlement Date for such Settlement
Period, Master Servicer shall pay to the Administrator (to the extent
of Collections during the related Settlement Period attributable to
all Asset Tranches and not previously paid to the Administrator) the
amount necessary to reduce the Purchaser's Total Investment to the
Purchase Limit and the Purchased Interest to the Allocation Limit,
SUBJECT, HOWEVER, to the PROVISO to SECTION 1.03(c)(iii). Such
payment shall be made out of amounts set aside pursuant to SECTION
1.03 for such purpose and, to the extent Collections which should have
been set aside pursuant to SECTION 1.03 were instead reinvested, the
Seller hereby agrees to pay such amounts to the Master Servicer (for
remittance to the Administrator).
(iii) In addition to the payments described in CLAUSE (ii)
above, during the Liquidation Period, Master Servicer shall pay to the
Administrator out of the amounts set aside pursuant to SECTION
1.04(a)(v) or deposited in the Cash Collateral Account pursuant to
SECTION 1.04 (A) on the last day of the current Yield Period, an
amount not exceeding the Purchaser's Tranche Investment of the Asset
Tranches funded by Liquidity Loans, if any, (B) after reduction to
zero of the Purchaser's Tranche Investments of the Asset Tranches, if
any, funded by Liquidity Loans, on the Settlement Date for each
Settlement Period, an amount not exceeding the Purchaser's Tranche
Investment of the Asset Tranche funded by Commercial Paper Notes, and
(C) after reduction to zero of the Purchaser's Tranche Investment of
all Asset Tranches funded by Liquidity Loans or Commercial Paper
Notes, on the last day of the current Yield Period for any Asset
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Tranche funded by Credit Draws, an amount not exceeding the
Purchaser's Total Investment funded by Credit Draws; provided that,
notwithstanding the foregoing, all amounts on deposit in the Ford
Excess Collateral Account and the Chrysler Excess Collateral Account
shall be applied to any Ford Concentration Draw or Chrysler
Concentration Draw, as applicable, as provided in SECTION 3.01(d)
until each such Concentration Draw is reduced to zero.
(d) ORDER OF APPLICATION. Upon receipt by the Administrator of
funds distributed on or prior to a Settlement Date or on the last day of
any Yield Period pursuant to SECTION 1.03, SECTION 1.04 or this SECTION
3.01, the Administrator shall apply such funds on such Settlement Date or
on the last day of such Yield Period, as applicable, to the items specified
in the subclauses below, in the order of priority of such subclauses:
(i) to Earned Discount accrued during such Settlement Period
with respect first, to Liquidity Loans, next to Commercial Paper Notes
and last to Credit Draws, and then to any previously accrued Earned
Discount not paid on a prior Settlement Date with respect first, to
Liquidity Loans, next to Commercial Paper Notes, and last to Credit
Draws;
(ii) to accrued and unpaid Master Servicer's Fee (if Master
Servicer is not Seller or its Affiliate);
(iii) to the Program Fee, the Liquidity Fee and the
Concentration Fee accrued during such Settlement Period in that order
and then to any previously accrued Program Fee, Liquidity Fee and
Concentration Fee not paid on a prior Settlement Date, in that order;
(iv) to the reduction of Purchaser's Total Investment, to the
extent such reduction is required under SECTION 3.01(c)(iii);
(v) to other accrued and unpaid amounts owing to Purchaser
hereunder (except Earned Discount on any Asset Tranche funded by a
Liquidity Loan or a Concentration Draw which has accrued but is not
yet overdue under SECTION 1.03(c));
(vi) to accrued and unpaid amounts owing to the Relationship
Bank;
(vii) to accrued and unpaid Master Servicer's Fee (if Master
Servicer is Seller or its Affiliate); and
(viii) to outstanding Ford Concentration Draws and Chrysler
Concentration Draws ratably according to outstanding principal
amounts, together with accrued interest thereon.
Notwithstanding anything to the contrary in this CLAUSE (d):
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(i) on each Business Day prior to the Termination Date, all
Ford Collections and Chrysler Collections received on such day shall
be applied by the Administrator to any outstanding Ford Concentration
Draw and accrued interest thereon or Chrysler Concentration Draw and
accrued interest thereon, as applicable, until each such Concentration
Draw and the amount of accrued interest thereon is reduced to zero,
and
(ii) on each Business Day on and after the Termination Date,
all amounts withdrawn from the Ford Excess Collateral Account or the
Chrysler Excess Collateral Account and paid to the Administrator
pursuant to SECTION 1.04(c) shall be applied by the Administrator to
any outstanding Ford Concentration Draw and accrued interest thereon
or Chrysler Concentration Draw and accrued interest thereon, as
applicable, until each such Concentration Draw and the amount of
accrued interest thereon is reduced to zero.
(e) NON-DISTRIBUTION OF MASTER SERVICER'S FEE. If the
Administrator consents (which consent may be revoked at any time), the
amounts (if any) set aside pursuant to SECTION 1.03 in respect of Master
Servicer's Fee may be retained by Master Servicer, in which case no
distribution shall be made in respect of Master Servicer's Fee pursuant to
CLAUSE (d) above.
(f) DELAYED PAYMENT. If on any day described in this SECTION 3.01
or in SECTION 1.03(c), because Collections during the relevant Settlement
Period or Yield Period were less than the aggregate amounts payable, Master
Servicer shall not make any payment otherwise required, the next available
Collections in respect of the Purchased Interest shall be applied to such
payment, and no Reinvestment shall be permitted hereunder until such amount
payable has been paid in full.
SECTION 3.02. Deemed Collections; Reduction of Purchaser's Total
Investment, Etc.
(a) DEEMED COLLECTIONS. If on any day
(i) the Unpaid Balance of any Pool Receivable is
(A) reduced as a result of any defective, rejected or
returned merchandise or services, any cash discount, or any
adjustment by any Seller Party or any Affiliate of any thereof,
(B) reduced or cancelled as a result of a setoff in
respect of any claim by the Obligor thereof against any Seller
Party or any Affiliate of any thereof (whether such claim arises
out of the same or a related or an unrelated transaction),
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(C) reduced on account of the obligation of any Seller
Party to pay to the related Obligor any rebate or refund, or
(D) less than the amount included in calculating the Net
Pool Balance for purposes of any Information Package (for any
reason other than such Receivable becoming a Defaulted
Receivable), or
(ii) any of the representations or warranties of Seller set
forth in SECTION 6.01(l) or (p) were not true when made with respect
to any Pool Receivable, or any of the representations or warranties of
Seller set forth in SECTION 6.01(l) are no longer true with respect to
any Pool Receivable, or any Pool Receivable is repurchased by an
Originator pursuant to the Sale Agreement,
then, on such day, Seller shall be deemed to have received a Collection of
such Pool Receivable
(I) in the case of CLAUSE (i) above, in the amount of such
reduction or cancellation or the difference between the actual Unpaid
Balance and the amount included in calculating such Net Pool Balance,
as applicable; and
(II) in the case of CLAUSE (ii) above, in the amount of the
Unpaid Balance of such Pool Receivable
and, in the case of a deemed collection under CLAUSE (i) or (ii), Purchaser
shall have full recourse to Seller for the amount of such Pool Receivable
deemed to be a Collection. Collections deemed received by Seller under this
SECTION 3.02(a) are herein referred to as "DEEMED COLLECTIONS".
(b) OPTIONAL LIMITATION ON REINVESTMENT. In addition to
and not in limitation of the provisions of SECTION 1.03(c)(iii), Seller may at
any time elect to reduce the Purchaser's Total Investment as follows:
(i) Seller shall give the Administrator at least 5 Business
Days' prior written notice of such reduction (including the amount of
such proposed reduction and the proposed date on which such reduction
will commence),
(ii) on the proposed date of commencement of such reduction
and on each day thereafter, Master Servicer shall refrain from
reinvesting Collections pursuant to SECTION 1.03(a)(iv) until the
amount thereof not so reinvested shall equal the desired amount of
reduction, and
(iii) Master Servicer shall hold such Collections in trust for
Purchaser, pending payment to the Administrator on the next Settlement
Date;
provided that:
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(A) the amount of any such reduction shall be not less
than $5,000,000 and shall be an integral multiple of $1,000,000,
and the Purchaser's Total Investment after giving effect to such
reduction shall be not less than $10,000,000 (unless Purchaser's
Total Investment shall thereby be reduced to zero), and
(B) Seller shall use reasonable efforts to attempt to
choose a reduction amount, and the date of commencement thereof,
so that such reduction shall commence and conclude in the same
Settlement Period.
SECTION 3.03. PAYMENTS AND COMPUTATIONS, ETC.
(a) Payments. All amounts to be paid or deposited by Seller
or Master Servicer to the Administrator or any other Person hereunder
(other than amounts payable under SECTION 4.02) shall be paid or
deposited in accordance with the terms hereof no later than 10:00 a.m.
(New York City time) on the day when due in lawful money of the United
States of America in immediately available funds (i) in the case of
amounts to be paid or deposited in respect of accrued and unpaid
Earned Discount or in reduction of Purchaser's Total Investment, to
the Collateral Agent at The First National Bank of Chicago, Chicago,
Illinois (account no. 21-201949-1), (ii) in the case of Concentration
Draws and other amounts to be paid to any Concentration Bank, to NCB,
account no. 151804 for distribution to the applicable Concentration
Bank and (iii) in the case of all fees, expenses and other amounts
(other than amounts payable under SECTION 4.02), to the Administrator
in care of State Street Bank & Trust Company, Boston, Massachusetts
(account no. 00000000), or, in the case of CLAUSE (i) or (ii) above,
to such other account at the bank named therein or at such other bank
as the Collateral Agent, the Administrator or any Concentration Bank,
as applicable, may designate by written notice to the Person making
such payment.
(b) LATE PAYMENTS. Seller or Master Servicer, as
applicable, shall, to the extent permitted by law, pay to Purchaser
interest on all amounts not paid or deposited when due hereunder at 2%
PER ANNUM above the Alternate Base Rate, payable on demand, PROVIDED,
HOWEVER, that such interest rate shall not at any time exceed the
maximum rate permitted by applicable law.
(c) METHOD OF COMPUTATION. All computations of interest,
Earned Discount, Liquidation Discount, any fees payable under SECTION
4.01 and any other fees payable by Seller to Purchaser, the
Administrator, any Concentration Bank or the Relationship Bank in
connection with Purchases hereunder shall be made on the basis of a
year of 360 days for the actual number of days (including the first
day but excluding the last day) elapsed.
SECTION 3.04. TREATMENT OF COLLECTIONS AND DEEMED COLLECTIONS.
Seller shall forthwith deliver to Master Servicer all Deemed Collections, and
Master Servicer shall hold or distribute such Deemed Collections as Earned
Discount, accrued Master Servicer's Fee,
23
repayment of Purchaser's Total Investment, and to other accrued amounts owing
hereunder to the same extent as if such Deemed Collections had actually been
received on the date of such delivery to Master Servicer. If Collections are
then being paid to the Administrator or its designee, or lock boxes or accounts
directly or indirectly owned or controlled by the Administrator, Master
Servicer shall forthwith cause such Deemed Collections to be paid to the
Administrator or its designee or to such lock boxes or accounts, as applicable,
or as the Administrator shall request. So long as Seller shall hold any
Collections (including Deemed Collections) required to be paid to Master
Servicer, the Administrator or Collateral Agent, it shall hold such Collections
in trust and shall clearly xxxx its records to reflect such trust; provided
that unless the Administrator or the Relationship Bank shall have requested it
in writing to do so, Seller shall not be required to should such Collections in
a separate deposit account containing only such Collections.
ARTICLE IV
FEES AND YIELD PROTECTION
SECTION 4.01. FEES. Seller shall pay to Purchaser and the
Administrator certain fees from time to time in amounts and payable on such
dates as are set forth in a separate letter dated on or about the date hereof
(as amended from time to time, the "FEE LETTER") among Seller, Purchaser, the
Relationship Bank and the Administrator.
SECTION 4.02. YIELD PROTECTION.
(a) If (i) any Regulatory Change occurring after the date hereof or
(ii) Regulation D
(A) shall subject an Affected Party to any tax, duty or other
charge with respect to any Purchased Interest owned by or funded by
it, or any obligations or right to make Purchases or Reinvestments
or to provide funding therefor, or shall change the basis of
taxation of payments to the Affected Party of any Purchaser's Total
Investments or Earned Discount owned by, owed to or funded in whole
or in part by it or any other amounts due under this Agreement in
respect of the Purchased Interest owned by or funded by it or its
obligations or rights, if any, to make Purchases or Reinvestments
or to provide funding therefor (except with respect to any tax on
or determined by reference to the overall net income of such
Affected Party imposed by the United States of America, by the
jurisdiction in which such Affected Party's principal executive
office is located and, if such Affected Party's principal executive
office is not in the United States of America, by the jurisdiction
where such Affected Party's principal office in the United States
is located); or
(B) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Federal
Reserve Board, but
24
excluding any reserve included in the determination of Earned
Discount), special deposit or similar requirement against assets of
any Affected Party, deposits or obligations with or for the account
of any Affected Party or with or for the account of any affiliate
(or entity deemed by the Federal Reserve Board to be an affiliate)
of any Affected Party, or credit extended by any Affected Party; or
(C) shall change the amount of capital maintained or
required or requested or directed to be maintained by any Affected
Party (excluding any such change in the amount of capital resulting
from the application of (as opposed to a change in) any law, rule,
regulation, interpretation, directive or requirement existing on
the date hereof); or
(D) shall impose any other condition affecting any Purchased
Interest owned or funded in whole or in part by any Affected Party,
or its obligations or rights, if any, to make Purchases or
Reinvestments or to provide funding therefor; or
(E) shall change the rate for, or the manner in which the
Federal Deposit Insurance Corporation (or a successor thereto)
assesses, deposit insurance premiums or similar charges;
and the result of any of the foregoing is or would be
(x) to increase the cost to (or in the case of Regulation D
referred to above, to impose a cost on) (I) an Affected Party
funding or making or maintaining any Purchases or Reinvestments,
any purchases, reinvestments, or loans or other extensions of
credit under the Liquidity Agreement, or any Credit Draw or any
commitment of such Affected Party with respect to any of the
foregoing, or (II) the Administrator for continuing its or Seller's
relationship with Purchaser,
(y) to reduce the amount of any sum received or receivable
by an Affected Party under this Agreement, or under the Liquidity
Agreement or the Credit Agreement with respect thereto, or
(z) in the sole determination of such Affected Party, to
reduce the rate of return on the capital of an Affected Party as a
consequence of its obligations hereunder or arising in connection
herewith to a level below that which such Affected Party could
otherwise have achieved,
then, within forty-five days after demand by such Affected Party (which
demand shall be accompanied by a statement setting forth the basis of such
demand and a calculation of the amounts claimed by the Affected Party),
Seller shall pay directly to such Affected Party such additional amount or
amounts as will compensate such Affected Party for such additional or
increased cost or such reduction.
25
(b) Each Affected Party represents that, as of the date of
this Agreement, it has no knowledge of any event or condition that
would entitle it to compensation pursuant to this SECTION 4.02 and
each Affected Party will promptly notify Seller and the Administrator
of any event of which it has knowledge (including any future event
that, in the judgment of such Affected Party, is reasonably certain to
occur) which will entitle such Affected Party to compensation pursuant
to this SECTION 4.02; PROVIDED, HOWEVER, no failure to give or delay
in giving such notification shall adversely affect the rights of any
Affected Party to such compensation.
(c) In determining any amount provided for or referred to
in this SECTION 4.02, an Affected Party may use any reasonable
averaging and attribution methods (consistent with its ordinary
business practices) that it (in its sole discretion) shall deem
applicable. Any Affected Party when making a claim under this SECTION
4.02 shall submit to Seller a statement as to such increased cost or
reduced return (including calculation thereof in reasonable detail),
which statement shall, in the absence of demonstrable error, be
conclusive and binding upon Seller.
SECTION 4.03. FUNDING LOSSES. In the event that any Liquidity Bank
shall incur any loss or expense (including any loss or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired
by such Liquidity Bank to make any Liquidity Loan or Concentration Draw or
maintain any Liquidity Loan or Concentration Draw) as a result of (i) any
settlement with respect to Purchaser's Tranche Investment of any Asset Tranche
funded by a Liquidity Loan or a Concentration Draw being made on any day other
than the scheduled last day of an applicable Yield Period with respect thereto,
or (ii) any Purchase not being made in accordance with a request therefor under
SECTION 1.02, then, upon written notice from the Administrator to Seller and
Master Servicer, Seller shall pay to Master Servicer, and Master Servicer shall
pay to the Administrator for the account of such Liquidity Bank, the amount of
such loss or expense. Such written notice (which shall include calculations in
reasonable detail) shall, in the absence of manifest error, be conclusive and
binding upon the Seller and Master Servicer.
ARTICLE V
CONDITIONS OF PURCHASES
SECTION 5.01. CONDITIONS PRECEDENT TO INITIAL PURCHASE. The
initial Purchase hereunder is subject to the condition precedent that the
Administrator shall have received, on or before the date of such Purchase, the
following each (unless otherwise indicated) dated such date in the form and
substance satisfactory to the Administrator:
(a) The Sale Agreement, duly executed by the Master
Servicer, each Originator and Seller, substantially in the form of
EXHIBIT 5.01(a), together with (i) the closing documents required to
be delivered thereunder;
26
(b) A copy of the resolutions of the Board of Directors of
each Seller Party approving this Agreement and the other Transaction
Documents to be delivered by it hereunder and the transactions
contemplated hereby, certified by its Secretary or Assistant Secretary;
(c) A certificate of the Secretary or Assistant Secretary
of each Seller Party certifying the names and true signatures of the
officers authorized on its behalf to sign this Agreement and the other
Transaction Documents to be delivered by it hereunder (on which
certificate the Administrator and Purchaser may conclusively rely until
such time as the Administrator shall receive from such Seller Party a
revised certificate meeting the requirements of this SUBSECTION (c));
(d) The Articles or Certificate of Incorporation of each
Seller Party, duly certified by the Secretary of State of the state of
incorporation of such Seller Party, as of a recent date acceptable to
Administrator, in each case together with a copy of the by-laws of such
Seller Party, duly certified by the Secretary or an Assistant Secretary
of such Seller Party;
(e) Copies of good standing certificates for each Seller
Party, issued by the Secretaries of State of the state of incorporation
of such Seller Party and the state where such Seller Party's principal
place of business is located;
(f) Acknowledgment copies (or other evidence of filing
reasonably acceptable to the Administrator) of (i) proper financing
statements (Form UCC-1), in such form as the Administrator may
reasonably request, naming each Originator as the seller of the
Receivables and Related Assets, Seller as the purchaser thereof and
Purchaser as assignee, and (ii) financing statements (Form UCC-1), in
such other form as the Administrator may reasonably request, naming
Seller as the debtor and seller of an undivided percentage interest in
the Pool Receivables and Related Assets and Purchaser as the secured
party and purchaser thereof, or other, similar instruments or
documents, as may be necessary or, in the opinion of the Administrator,
desirable under the UCC or any comparable law of all appropriate
jurisdictions to perfect the sale by each Originator to Seller of, and
Purchaser's undivided percentage interest in, the Pool Receivables and
Related Assets;
(g) Search reports provided in writing to the
Administrator, (i) listing all effective financing statements that name
any Seller Party as debtor and that are filed in the jurisdictions in
which filings were made pursuant to SUBSECTION (f) above and in such
other jurisdictions that the Administrator shall reasonably request,
together with copies of such financing statements (none of which
(except for any of the financing statements described in SUBSECTION (f)
above) shall cover any Receivables or Related Assets), and (ii) listing
all tax liens and judgment liens (if any) filed against any debtor
referred to in CLAUSE (i) above in the jurisdictions described therein
and showing no such Adverse Claims;
27
(h) Duly executed copies of Lock-Box Agreements with each
of the Lock-Box Banks;
(i) A favorable opinion of Xxxxx & Xxxxxxxxx, special
counsel to the Seller Parties, in substantially the form of EXHIBIT
5.01(i).
(j) A favorable opinion of Xxxxx & Xxxxxxxxx, special counsel
to the Seller Parties, as to
(i) the existence of a "true sale" of the Receivables from
each Originator to Seller under the Sale Agreement; and
(ii) the inapplicability of the doctrine of substantive
consolidation to Seller and any of the Originators in connection
with any bankruptcy proceeding involving any Seller Party;
(k) A PRO FORMA Information Package, prepared as of the
Cut-Off Date on or about August 31, 1995;
(l) A report in form and substance satisfactory to the
Administrator from the Relationship Bank as to a pre-closing due
diligence audit by the Relationship Bank;
(m) The Liquidity Agreement, in form and substance
satisfactory to the Administrator, duly executed by Purchaser, the
Liquidity Agent and each Liquidity Bank;
(n) Written approval by the Credit Bank of this Agreement
and the transactions contemplated hereby;
(o) Letters from the rating agencies then rating the
Commercial Paper Notes, confirming in effect that the existing ratings
of the Commercial Paper Notes will remain in effect after giving
effect to the transactions contemplated hereby; and
(p) Such other agreements, instruments, certificates,
opinions and other documents as the Administrator or the Relationship
Bank may reasonably request.
SECTION 5.02. CONDITIONS PRECEDENT TO ALL PURCHASES AND
REINVESTMENTS. Each Purchase (including the first Purchase) and each
Reinvestment shall be subject to the further conditions precedent that on the
date of such Purchase, Reinvestment or increase the following statements shall
be true (and Seller, by accepting the amount of such Purchase or increase or by
receiving the proceeds of such Reinvestment, and each other Seller Party, upon
such acceptance or receipt by Seller, shall be deemed to have certified that):
28
(a) the representations and warranties contained in
SECTION 6.01 are correct in all material respects on and as of such
day as though made on and as of such day and shall be deemed to have
been made on such day,
(b) no event has occurred and is continuing, or would
result from such Purchase, Reinvestment and increase, that constitutes
a Liquidation Event or Unmatured Liquidation Event,
(c) after giving effect to each proposed Purchase or
Reinvestment, Purchaser's Total Investment will not exceed the
Purchase Limit and the Purchased Interest will not exceed the
Allocation Limit,
(d) the Termination Date shall not have occurred, and
(e) in the case of a Purchase, the Administrator shall
have timely received an appropriate notice of the proposed Purchase in
accordance with SECTION 1.02(a);
PROVIDED, HOWEVER, the absence of the occurrence and continuance of an
Unmatured Liquidation Event shall not be a condition precedent to any
Reinvestment or any Purchase on any day which does not cause the Purchaser's
Total Investment, after giving effect to such Reinvestment or Purchase, to
exceed the Purchaser's Total Investment as of the opening of business on such
day.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01. REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES. Each
Seller Party jointly and severally represents and warrants as follows:
(a) ORGANIZATION AND GOOD STANDING; OWNERSHIP. Each
Seller Party has been duly organized and is validly existing as a
corporation in good standing under the laws of the state in which it
was incorporated, with corporate power and authority to own its
properties and to conduct its business as such properties are
presently owned and such business is presently conducted. Seller had
at all relevant times, and now has, all necessary corporate power,
authority, and legal right to acquire and own the Pool Receivables.
Standard owns directly all the issued and outstanding capital stock of
Seller, in each case, free and clear of all Adverse Claims.
(b) DUE QUALIFICATION. Each Seller Party is duly
qualified to do business as a foreign corporation in good standing,
and has obtained all necessary licenses and approvals, in all
jurisdictions in which the ownership or lease of property or the
conduct of its business requires such qualification, licenses or
approvals, and the failure to obtain such qualification, licenses or
approvals could reasonably be expected to have a Material Adverse
Effect.
29
(c) POWER AND AUTHORITY; DUE AUTHORIZATION. Each Seller
Party (i) has all necessary corporate power, authority and legal right
(A) to execute and deliver this Agreement and the other Transaction
Documents to which it is a party, (B) to carry out the terms of the
Transaction Documents to which it is a party, (C) in the case of
Master Servicer, to service the Receivables and the Related Assets in
accordance with this Agreement and the Sale Agreement, and (D) in the
case of Seller, sell and assign the Purchased Interest on the terms
and conditions herein provided, and (ii) has duly authorized by all
necessary corporate action the execution, delivery and performance of
this Agreement and the other Transaction Documents and, in the case of
Seller, the sales and assignments described in CLAUSE (i)(D) above.
(d) VALID SALE; BINDING OBLIGATIONS. (i) This Agreement
constitutes a valid sale, transfer, and assignment of the Purchased
Interest to Purchaser, enforceable against creditors of, and
purchasers from, Seller, and (ii) this Agreement constitutes, and each
other Transaction Document to be signed by any Seller Party when duly
executed and delivered will constitute, a legal, valid and binding
obligation of such Seller Party, enforceable in accordance with its
terms; except as enforceability of any of the foregoing may be limited
by bankruptcy, insolvency, reorganization, or other similar laws from
time to time in effect affecting the enforcement of creditors' rights
generally and by general principles of equity, regardless of whether
such enforceability is considered in a proceeding in equity or at law.
(e) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the other Transaction Documents and
the fulfillment of the terms hereof will not (i) conflict with, result
in any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time or both) a default under, the
articles or certificate of incorporation or by-laws of any Seller
Party, or any indenture, loan agreement, receivables purchase
agreement, mortgage, deed of trust, or other agreement or instrument
to which any Seller Party is a party or by which it or any of its
properties is bound, (ii) result in the creation or imposition of any
Adverse Claim upon any of Seller Party's properties pursuant to the
terms of any such indenture, loan agreement, receivables purchase
agreement, mortgage, deed of trust, or other agreement or instrument,
other than this Agreement and the other Transaction Documents, or
(iii) violate any law or any order, rule, or regulation applicable to
any Seller Party of any court or of any federal or state regulatory
body, administrative agency, or other governmental instrumentality
having jurisdiction over such Seller Party or any of its properties,
except where such conflict or violation could not reasonably be
expected to have a Material Adverse Effect.
(f) NO PROCEEDINGS. There are no proceedings or
investigations pending, or, to any Seller Party's knowledge,
threatened, before any court, regulatory body, administrative agency,
or other tribunal or governmental instrumentality (i) asserting the
invalidity of this Agreement or any other Transaction Document, (ii)
seeking to prevent the sale and assignment of the Receivables under
the Sale Agreement or of the Purchased
30
Interest under this Agreement or the consummation of any of the other
transactions contemplated by this Agreement or any other Transaction
Document, (iii) seeking any determination or ruling that might have a
Material Adverse Effect or (iv) seeking to adversely affect the
federal income tax characterization as sales of the Purchases or
Reinvestments hereunder.
(g) BULK SALES ACT. No transaction contemplated hereby
requires compliance with any bulk sales act or similar law.
(h) GOVERNMENT APPROVALS. No authorization or approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due execution,
delivery and performance by each Seller Party of this Agreement and
each other Transaction Document to which it is a party, EXCEPT for (i)
the filing of the UCC financing statements referred to in ARTICLE V,
(ii) the filing of any UCC continuation statements and amendments from
time to time required in relation to any UCC financing statements
filed in connection with this Agreement, as provided in SECTION 8.05,
all of which, at the time required in ARTICLE V or SECTION 8.05, as
applicable, shall have been duly made and shall be in full force and
effect, and (iii) authorizations, approvals, notices and filings, the
failure of which to obtain, notify or file could not reasonably be
expected to have a Material Adverse Effect.
(i) FINANCIAL CONDITION. (w) The consolidated balance
sheets of Standard and its consolidated subsidiaries as at December
31, 1994, and the related statements of income and shareholders'
equity of Standard and its consolidated subsidiaries for the fiscal
year then ended, certified by Xxxxxx Xxxxxxxx, LLP, independent
certified public accountants, copies of which have been furnished to
the Administrator and the Relationship Bank, fairly present in all
material respects the consolidated financial condition of Standard and
its consolidated subsidiaries as at such date and the consolidated
results of the operations of Standard and its consolidated
subsidiaries for the period ended on such date, all in accordance with
GAAP consistently applied, (x) since December 31, 1994 there has been
no material adverse change in any such condition, except as described
in SCHEDULE 6.01(i), (y) the balance sheets of Seller as at the date
hereof, certified by an authorized officer of the Seller, copies of
which have been furnished to the Administrator and the Relationship
Bank, fairly present in all material respects the financial condition,
assets and liabilities of Seller as at such date, all in accordance
with GAAP consistently applied, and (z) since the date of Seller's
formation, there has been no material adverse change in Seller's
financial condition, business, business prospects or operations.
(j) LITIGATION. No injunction, decree or other decision
has been issued or made by any court, governmental agency or
instrumentality thereof that prevents, and to the knowledge of any
Seller Party, no threat by any person has been made to attempt to
obtain any such decision that would prevent, any Seller Party from
conducting a material part of its business operations and would have a
Material Adverse Effect, except as described in SCHEDULE 6.01(j).
31
(k) MARGIN REGULATIONS. The use of all funds obtained by
any Seller Party under this Agreement or any other Transaction
Document will not conflict with or contravene any of Regulations G, T,
U and X promulgated by the Board of Governors of the Federal Reserve
System from time to time.
(l) QUALITY OF TITLE. (i) Each Pool Receivable, together
with the Related Assets, is owned by Seller free and clear of any
Adverse Claim (other than any Adverse Claim arising solely as the
result of any action taken by Purchaser (or any assignee thereof) or
by the Administrator); (ii) when Purchaser makes a Purchase or
Reinvestment, it shall have acquired and shall at all times thereafter
continuously maintain a valid and perfected first priority undivided
percentage ownership interest to the extent of the Purchased Interest
in each Pool Receivable, each Related Asset and Collections with
respect thereto, free and clear of any Adverse Claim (other than any
Adverse Claim arising as the result of any action taken by Purchaser
(or any assignee thereof) or by the Administrator; and (iii) no
financing statement or other instrument similar in effect covering any
Pool Receivable, any interest therein, the Related Assets or
Collections with respect thereto is on file in any recording office
except such as may be filed (1) in favor of an Originator in
accordance with the Contracts, (2) in favor of Seller in connection
with the Sale Agreement, (3) in favor of Purchaser or the
Administrator in accordance with this Agreement or in connection with
any Adverse Claim arising solely as the result of any action taken by
Purchaser (or any assignee thereof) or by the Administrator, or (4) in
favor of the Collateral Agent.
(m) ACCURATE REPORTS. No Information Package (if prepared
by any Seller Party or its Affiliate, or to the extent information
therein was supplied by any Seller Party or its Affiliate) or other
information, exhibit, financial statement, document, book, record or
report (excluding projections and forecasts) furnished or to be
furnished, in each case in writing, by or on behalf of any Seller
Party or its Affiliates to the Administrator, Purchaser or the
Relationship Bank in connection with this Agreement was inaccurate in
any material respect as of the date it was dated or as of the date so
furnished, or contained any material misstatement of fact or omitted
to state a material fact or any fact necessary to make the statements
contained therein not materially misleading. All projections or
forecasts furnished by any Seller Party or its Affiliate to the
Administrator, Purchaser or the Relationship Bank in connection with
this Agreement were prepared in good faith and based on reasonable
assumptions.
(n) OFFICES. The principal places of business and chief
executive offices of Master Servicer and Seller are located at the
respective addresses set forth under its name on the signature pages
hereof, and the offices where Master Servicer and Seller keep all
their books, records and documents evidencing Pool Receivables, the
related Contracts and all purchase orders and other agreements related
to such Pool Receivables are located at the addresses specified in
SCHEDULE 6.01(n) (or at such other locations, notified to the
Administrator in accordance with SECTION 7.01(f), in jurisdictions
where all action required by SECTION 8.05 has been taken and
completed).
32
(o) LOCK-BOX ACCOUNTS. The names and addresses of all the
Lock-Box Banks, together with the account numbers of the lock-box
accounts of each Originator or Seller at such Lock-Box Banks, are
specified in SCHEDULE 6.01(o) (or have been notified to and approved
by the Administrator and the Relationship Bank in accordance with
SECTION 7.03(d)).
(p) ELIGIBLE RECEIVABLES. Each Receivable included in the
Net Pool Balance as an Eligible Receivable on the date of any Purchase
or Reinvestment shall be an Eligible Receivable on such date.
(q) NATURE OF RECEIVABLES. Each Receivable constitutes an
"account" as such term is defined in the UCC.
ARTICLE VII
GENERAL COVENANTS OF SELLER PARTIES
SECTION 7.01. AFFIRMATIVE COVENANTS OF SELLER PARTIES. From the date
hereof until the Final Payout Date, each Seller Party will, unless the
Administrator and the Relationship Bank shall otherwise consent in writing:
(a) COMPLIANCE WITH LAWS, ETC. Comply in all material
respects with all applicable laws, rules, regulations and orders,
including those with respect to the Pool Receivables and related
Contracts, except where the failure to so comply had not and will not
have individually or in the aggregate a Material Adverse Effect.
(b) PRESERVATION OF CORPORATE EXISTENCE. Preserve and
maintain its corporate existence, rights, franchises and privileges in
the jurisdiction of its incorporation, and qualify and remain
qualified in good standing as a foreign corporation in each
jurisdiction where the failure to preserve and maintain such
existence, rights, franchises, privileges and qualification would have
a Material Adverse Effect.
(c) AUDITS. (i) At any time and from time to time upon
reasonable written notice during regular business hours, permit the
Administrator, the Relationship Bank or any of their 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
such Seller Party relating to Pool Receivables, including, without
limitation, the related Contracts and purchase orders and other
agreements, and (B) to visit the offices and properties of any Seller
Party for the purpose of examining such materials described in CLAUSE
(i)(A) next above, and to discuss matters relating to Pool Receivables
or any Seller Party's performance hereunder with any Responsible
Manager of any Seller Party having knowledge of such matters; (ii) at
any time and from time to time upon reasonable written notice during
regular business hours,
33
permit the Administrator, the Relationship Bank or any of their agents
or representatives, to meet with the independent auditors of the
Seller Parties, to the extent permitted by such auditors, to review
such auditors' work papers (including, without limitation, work papers
relating to any audit report or audit opinion described in SECTION
7.02(h)) and otherwise to review with such auditors the books and
records of the Seller Parties with respect to the Pool Receivables and
Related Assets; and (iii) without limiting the provisions of CLAUSE
(i) next above, from time to time (A) upon reasonable written notice
during regular business hours, not more than once in any calendar
quarter or (B) on request of the Administrator or the Relationship
Bank at any time when a Liquidation Event or Unmatured Liquidation
Event shall have occurred and be continuing, at the expense of such
Seller Party, permit certified public accountants or other auditors
acceptable to the Administrator to conduct a review of any Seller
Party's books and records with respect to the Pool Receivables and
Related Assets, at such Seller Party's expense.
(d) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. In the case
of Master Servicer, maintain and implement administrative and
operating procedures (including, without limitation, an ability to
recreate records evidencing Pool Receivables in the event of the
destruction of the originals thereof), and keep and maintain, all
documents, books, records and other information reasonably necessary
or advisable for the collection of all Pool Receivables (including,
without limitation, records adequate to permit the daily
identification of outstanding Unpaid Balances by Obligor and related
debit and credit details of the Pool Receivables).
(e) PERFORMANCE AND COMPLIANCE WITH RECEIVABLES AND
CONTRACTS. At its expense, timely and fully perform and comply with
all material provisions, covenants and other promises, if any,
required to be observed by it under the Contracts related to the Pool
Receivables and all purchase orders and other agreements related to
such Pool Receivables.
(f) LOCATION OF RECORDS. Keep its chief place of business
and chief executive office, and the offices where it keeps its records
concerning the Pool Receivables, all related Contracts and all
purchase orders and other agreements related to such Pool Receivables
(and all original documents relating thereto), at the address of
Master Servicer and Seller referred to in SECTION 6.01(n) or, upon at
least 30 days' prior written notice to the Administrator, at such
other locations in jurisdictions where all action required by SECTION
8.05 shall have been taken and completed.
(g) CREDIT AND COLLECTION POLICIES. Comply in all
material respects with the Credit and Collection Policy in regard to
each Pool Receivable and the related Contract.
(h) COLLECTIONS. In the case of Master Servicer, instruct
all Obligors to cause all Collections of Pool Receivables to be
deposited directly with a Lock-Box Bank, and in the case of the other
Seller Party, not give any contrary or conflicting instructions, and,
upon the request of Master Servicer or the Administrator, confirm such
instructions by
34
Master Servicer or take such other action as may be reasonably
required to give effect to such instructions.
(i) SALE AGREEMENT. Perform and comply in all material
respects with all of its covenants and agreements set forth in the
Sale Agreement.
SECTION 7.02. REPORTING REQUIREMENTS OF SELLER PARTIES. From the
date hereof until the Final Payout Date unless the Administrator and the
Relationship Bank shall otherwise consent in writing, Seller Parties will, and
Parent will cause each other Seller Party to, furnish to the Administrator and
the Relationship Bank:
(a) QUARTERLY FINANCIAL STATEMENTS. As soon as available
and in any event within 45 days after the end of each of the first
three quarters of each fiscal year of Standard, copies of the
financial statements of Standard and its Subsidiaries prepared on a
consolidated basis, consisting of at least a balance sheet as at the
close of such quarter and statements of earnings and changes in cash
flows for such quarter and for the period from the beginning of the
fiscal year to the close of such quarter, in each case in conformity
with GAAP, duly certified by the chief financial officer of Standard,
together with a certificate from such officer containing a computation
of, and showing compliance with, the financial restrictions contained
in SECTION 10.01(p);
(b) ANNUAL FINANCIAL STATEMENTS. As soon as available and
in any event within 90 days after the end of each fiscal year of
Standard, copies of the financial statements of Standard and its
Subsidiaries prepared on a consolidated basis, consisting of at least
a balance sheet of Standard and its Subsidiaries for such year and
consolidated statements of earnings, cash flows and shareholders'
equity, in each case in conformity with GAAP, consistently applied,
setting forth in each case in comparative form corresponding figures
form the preceding fiscal year, with all such consolidated statements
duly certified by Xxxxxx Xxxxxxxx, LLP or other independent certified
public accountants of nationally recognized standing selected by
Standard and approved by the Administrator, which approval will not be
unreasonably withheld, together with a certificate from such
accountants containing a computation of, and showing compliance with,
the financial restrictions contained in SECTION 10.01(p);
(c) REPORTS TO HOLDERS AND EXCHANGES. In addition to the
reports required by SUBSECTIONS (a) and (b) next above, promptly upon
the Administrator's or Relationship Bank's reasonable request, copies
of any reports specified in such request which any Seller Party sends
to any of its securityholders, and any reports or registration
statements that any Seller Party files with the Securities and
Exchange Commission or any national securities exchange other than
registration statements relating to employee benefit plans and to
registrations of securities for selling securities;
(d) ERISA. Promptly after the filing or receiving
thereof, copies of all reports and notices with respect to any
Reportable Event defined in Article IV of ERISA which any Seller Party
files under ERISA with the Internal Revenue Service, the Pension
35
Benefit Guaranty Corporation or the U.S. Department of Labor or which
such Seller Party receives from the Pension Benefit Guaranty
Corporation;
(e) LIQUIDATION EVENTS, ETC. As soon as possible and in
any event within five days of a Responsible Manager obtaining
knowledge of the occurrence of each Liquidation Event and each
Unmatured Liquidation Event or any "Purchase Termination Event" or
"Unmatured Purchase Termination Event" under the Sale Agreement, a
written statement of the chief financial officer or chief accounting
officer of a Seller Party setting forth details of such event and the
action that such Seller Party take with respect thereto;
(f) LITIGATION. As soon as possible and in any event
within ten Business Days of a Responsible Manager of any Seller Party
obtaining knowledge thereof, written notice of (i) any litigation,
investigation or proceeding which may exist at any time which could
reasonably be expected to have a Material Adverse Effect and (ii) any
development in previously disclosed litigation which development could
reasonably be expected to have a Material Adverse Effect;
(g) AUDIT OF POOL RECEIVABLES. As soon as available and
in any event within 90 days after the end of each fiscal year of
Seller, an audit report, prepared by Xxxxxx Xxxxxxxx, LLP or other
nationally recognized independent certified public accountants
selected by Seller and reasonably acceptable to the Administrator and
the Relationship Bank, as of the end of such fiscal year,
substantially in the form of the report delivered pursuant to SECTION
5.01(l) and covering such other matters as the Administrator or the
Relationship Bank may reasonably request;
(h) CHANGE IN CREDIT AND COLLECTION POLICY. Prior to its
effective date, written notice of (i) any material change in the
character of any Seller Party's business, and (ii) any material change
in the Credit and Collection Policy; and
(i) OTHER. Promptly, from time to time, such other
information, documents, records or reports respecting the Receivables
or the condition or operations, financial or otherwise, of any Seller
Party as the Administrator or the Relationship Bank may from time to
time reasonably request in order to protect the interests of the
Administrator or Purchaser under or as contemplated by this Agreement.
SECTION 7.03. NEGATIVE COVENANTS OF SELLER PARTIES. From the date
hereof until the Final Payout Date, no Seller Party will, without the prior
written consent of the Administrator and the Relationship Bank:
(a) SALES, ADVERSE CLAIMS, ETC. (i) Except as otherwise
provided herein and in the other Transaction Documents, 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 Pool
Receivable or any Related Asset, or any interest therein, or any
lock-box account to which any Collections of any Pool Receivable are
sent, or any right to receive
36
income or proceeds from or in respect of any of the foregoing, and
(ii) in the case of Master Servicer, not assert any interest in the
Receivables, except as Master Servicer.
(b) EXTENSION OR AMENDMENT OF RECEIVABLES. Except as
otherwise permitted in SECTION 8.02(c), extend, amend or otherwise
modify the terms of any Pool Receivable, or amend, modify or waive any
material term or condition of any Contract related thereto; provided
that this CLAUSE (b) shall not apply to any Receivable reconveyed to
the applicable Originator pursuant to SECTION 3.5 of the Sale
Agreement.
(c) CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY.
Make or permit to be made any material change in the character of its
business or, except as required by GAAP, in the Credit and Collection
Policy, which change would, in either case, impair the collectibility
of any Pool Receivable or otherwise adversely affect the interests or
remedies of Purchaser under this Agreement or any other Transaction
Document.
(d) CHANGE IN PAYMENT INSTRUCTIONS TO OBLIGORS. Add or
terminate any bank as a Lock-Box Bank from those listed in SCHEDULE
6.01(o) or make any change in its instructions to Obligors regarding
payments to be made to Seller or Master Servicer or payments to be
made to any Lock-Box Bank (except for a change in instructions solely
for the purpose of directing Obligors to make such payments to another
existing Lock-Box Bank), unless (i) the Administrator and the
Relationship Bank shall have approved such addition, termination or
change and (ii) the Administrator shall have received duly executed
copies of Lock-Box Agreements with each new Lock-Box Bank.
(e) DEPOSITS TO LOCK-BOX ACCOUNTS. Deposit or otherwise
credit, or cause or permit to be so deposited or credited, to any
lock-box account or other account covered by any Lock-Box Agreement,
or any other account maintained by Seller or Master Servicer for the
purpose of receiving Collections on Pool Receivables, any cash or cash
proceeds other than Collections of Pool Receivables.
(f) CHANGES TO OTHER DOCUMENTS. Enter into any amendment
or modification of or supplement to the Sale Agreement or the Seller's
Certificate of Incorporation.
(g) FUNDAMENTAL CHANGES. (i) Except as expressly
contemplated by the Transaction Documents, wind up, liquidate or
dissolve its affairs, or sell, lease, transfer or otherwise dispose of
all or any part of its properties and assets, except that Standard
(but not Seller) may sell or otherwise dispose of any assets (A) if
such sale or disposition is in the ordinary course of business or (B)
other than in the ordinary course of business, unless (x) the
aggregate book value of all sales or dispositions (on a consolidated
basis) during the most recent 12-month accounting period would exceed
15% of its Total Assets as computed at the end of the most recent
quarter preceding such sale or since December 31, 1993 would exceed
25% of its Total Assets as computed at the end of the most recent
fiscal year preceding such sale or (y) such assets in the aggregate
contributed more than 10% of the Net Income of Standard and its
consolidated subsidiaries on a consolidated
37
basis in the most recent 12-month accounting period or 25% of Net
Income since December 31, 1993.
(ii) It will not consolidate with or merge into any other
corporation, or permit another corporation to merge into it, unless
(and only in the case of a consolidation or merger involving Standard
and not the Seller), at the time of such transaction and immediately
after giving effect thereto, (A) no Liquidation Event or Unmatured
Liquidation Event shall have occurred and be continuing, and (B) if
the successor formed by or resulting from such consolidation or merger
of Standard is other than Standard, such successor
(x) shall be a corporation duly organized and existing
under the laws of the United States of America or any state
thereof, and
(y) shall, by written instrument satisfactory to the
Purchaser, Administrator and Relationship Bank, expressly assume
the due and punctual performance and observance of all the
obligations, terms, covenants, agreements and conditions of this
Agreement and the other Transaction Documents to be performed or
observed by Standard and, if Standard is the Master Servicer at
such time, the Master Servicer hereunder.
(h) RESTRICTED PAYMENTS BY SELLER. In the case of Seller,
purchase or redeem any shares of the capital stock of Seller, (A)
declare or pay any dividends thereon (other than stock dividends),
make any distribution to stockholders or set aside any funds for any
such purpose, or (B) pay any principal amount of any Initial Purchaser
Note (as defined in the Sale Agreement), EXCEPT that Seller may pay
all or a portion of such principal amount on any day if after giving
effect to such payment the Purchaser's Total Investment does not
exceed the Purchase Limit and the Purchased Interest does not exceed
the Allocation Limit and Seller's Tangible Net Worth (computed for
purposes of this CLAUSE (h) by including any Initial Purchaser Notes
as Indebtedness of the Seller) is not less than $7,500,000 and Seller
has paid all of its current operating expenses.
(i) SELLER INDEBTEDNESS. In the case of Seller, incur or
permit to exist any indebtedness or liability on account of deposits
or advances or for borrowed money or for the deferred purchase price
of any property or services, except (A) indebtedness of Seller to
Standard incurred in accordance with the Sale Agreement, (B) current
accounts payable arising under the Transaction Documents and not
overdue and (C) other current accounts payable arising in the ordinary
course of business and not overdue, in an aggregate amount at any time
outstanding not to exceed $150,000.
(j) NEGATIVE PLEDGES. Enter into or assume any agreement
(other than this Agreement and the other Transaction Documents)
prohibiting the creation or assumption of any Adverse Claim upon any
Receivables or Related Assets, whether now owned or hereafter
acquired, except as contemplated by the Transaction Documents, or
otherwise
38
prohibiting or restricting any transaction contemplated hereby or by
the other Transaction Documents.
SECTION 7.04. SEPARATE CORPORATE EXISTENCE OF SELLER. Each Seller
Party hereby acknowledges that Purchaser, the Administrator and the
Relationship Bank are entering into the transactions contemplated hereby in
reliance upon Seller's identity as a legal entity separate from Master Servicer
and its other Affiliates. Therefore, each Seller Party shall take all steps
specifically required by this Agreement or reasonably required by the
Administrator or the Relationship Bank to continue Seller's identity as a
separate legal entity and to make it apparent to third Persons that Seller is
an entity with assets and liabilities distinct from those of its Affiliates,
and is not a division of Standard or any other Person. Without limiting the
foregoing, each Seller Party will take such actions as shall be required in
order that:
(a) Seller will be a limited purpose corporation whose primary
activities are restricted in its Certificate of Incorporation to
purchasing or otherwise acquiring from the Originators, owning,
holding, granting security interests, or selling interests, in Pool
Receivables and Related Assets, entering into agreements for the
selling and servicing of the Receivables Pool, and conducting such
other activities as it deems necessary or appropriate to carry out its
primary activities;
(b) Not less than one member of Seller's Board of Directors
(the "INDEPENDENT DIRECTOR") shall be an individual, who is not, and
never has been, a direct, indirect or beneficial stockholder, officer,
director, employee, affiliate, associate, material supplier or
material customer of Standard or any of its Affiliates (provided that
indirect stock ownership of Standard or of any of its Affiliates by
any Person through a mutual fund or similar diversified investment
pool shall not disqualify such person from being an Independent
Director unless such person maintains direct or indirect control of
the investment decisions of such mutual fund or similar diversified
investment pool). The certificate of incorporation of Seller shall
provide that (i) Seller's Board of Directors shall not approve, or
take any other action to cause the filing of, a voluntary bankruptcy
petition with respect to Seller unless the Independent Director shall
approve the taking of such action in writing prior to the taking of
such action and (ii) such provisions cannot be amended without the
prior written consent of such Independent Director;
(c) No Independent Director shall at any time serve as a
trustee in bankruptcy for Seller or any Affiliate thereof;
(d) Any employee, consultant or agent of Seller will be
compensated from Seller's funds for services provided to Seller.
Seller will not engage any agents other than its attorneys, auditors
and other professionals, Standard or an Affiliate thereof in a manner
consistent with this SECTION 7.04 and a servicer and any other agent
contemplated by the Transaction Documents for the Receivables Pool,
which servicer will be fully compensated for its services by payment
of the Master Servicer's Fee;
39
(e) Seller will contract with Master Servicer to perform for
Seller all operations required on a daily basis to service the
Receivables Pool. Seller will pay Master Servicer the Master
Servicer's Fee pursuant hereto. Seller will not incur any material
indirect or overhead expenses for items shared with Standard (or any
other Affiliate thereof) which are not reflected in the Master
Servicer's Fee (except as permitted by CLAUSE (o) below). To the
extent, if any, that Seller (or any other Affiliate thereof) share
items of expenses not reflected in the Master Servicer's Fee, for
legal, auditing and other professional services and directors' fees
and other reasonable charges, such expenses will be allocated to the
extent practical on the basis of actual use or the value of services
rendered, and otherwise on a basis reasonably related to the actual
use or the value of services rendered, it being understood that
Standard shall pay all expenses relating to the preparation,
negotiation, execution and delivery of the Transaction Documents,
including, without limitation, legal, agency and other fees;
(f) Seller's operating expenses will not be paid by any other
Seller Party or other Affiliate of Seller unless that Seller Party or
Affiliate is acting as agent in a manner consistent with CLAUSES (a)
through (e);
(g) Seller will have its own stationery;
(h) The books and records of Seller will be maintained
separately from those of Master Servicer and any other Affiliate of
Seller;
(i) Any financial statements of any Seller Party or Affiliate
thereof which are consolidated to include Seller will contain detailed
notes clearly stating that (A) all of Seller's assets are owned by
Seller, and (B) Seller is a separate corporate entity with its own
separate creditors that will be entitled to be satisfied out of
Seller's assets prior to any value in Seller becoming available to
Seller's equity holders;
(j) Seller's assets will be maintained in a manner that
facilitates their identification and segregation from those of Master
Servicer and the other Affiliates;
(k) Each Affiliate of Seller will strictly observe corporate
formalities in its dealings with Seller, and funds or other assets of
Seller will not be commingled with those of any of its Affiliates;
(l) No Affiliate of Seller will maintain joint bank accounts
with Seller or other depository accounts with Seller to which any such
Affiliate (other than in its capacity as the Master Servicer or
Servicer hereunder or under the Sale Agreement) has independent
access;
(m) No Affiliate of Seller shall, directly or indirectly, name
Seller or enter into any agreement to name Seller as a direct or
contingent beneficiary or loss payee on any insurance policy covering
the property of any Affiliate of Seller;
40
(n) No Affiliate of Seller will at any time pool any of its
funds with any funds of Seller;
(o) Each Affiliate of Seller will maintain arm's-length
relationships with Seller, and each Affiliate of Seller that renders
or otherwise furnishes services or merchandise to Seller will be
compensated by Seller at commercially reasonable rates for such
services or merchandise, except that any supplies will be provided at
cost; and
(p) No Affiliate of Seller will be, nor will it hold itself
out to be, responsible for the debts of Seller or the decisions or
actions in respect of the daily business and affairs of Seller.
Standard and Seller will immediately correct or cause to be corrected
any known misrepresentation with respect to the foregoing and they
will not operate or purport to operate as an integrated single
economic unit with respect to each other or in their dealing with any
other entity.
SECTION 7.05. FINANCIAL COVENANTS. From the date hereof until the
Final Payout Date, Standard will:
(a) TANGIBLE NET WORTH. Maintain at all times a Tangible Net
Worth of not less than the then "Required Minimum" in effect at the
time in question. On the date of this Agreement, the "Required
Minimum" shall be $120,000,000. On (i) the first day of each fiscal
quarter of Standard thereafter (other than the first day of the
Standard's fiscal year), the Required Minimum shall be increased by an
amount equal to fifty percent (50%) of the Net Income of Standard and
its consolidated subsidiaries, determined on a consolidated basis, if
any, (but not less than zero), for the immediately preceding fiscal
quarter; and (ii) the first day of each fiscal year of Standard
thereafter, the Required Minimum shall be adjusted to equal the
Required Minimum at the beginning of the immediately preceding fiscal
year increased by an amount equal to fifty percent (50%) of the Net
Income of Standard and its consolidated subsidiaries, determined on a
consolidated basis, if any (but not less than zero), for such
immediately preceding fiscal year.
(b) TOTAL DEBT TO CAPITALIZATION RATIO. Not permit the Total
Debt to Capitalization Ratio to exceed 0.60 to 1.0 at any time.
(c) CURRENT RATIO. not permit the Current Ratio to be less
than 1.20 to 1.00 at any time.
(d) LEVERAGE. At any time when Leverage is equal to or greater
than 45% measured as of the end of the most recently ended fiscal
quarter of Standard, not permit the EBIT Ratio of Standard and its
consolidated subsidiaries for the period consisting of the immediately
preceding four fiscal quarters to be less than 1.75 to 1.0.
ARTICLE VIII
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ADMINISTRATION AND COLLECTION
SECTION 8.01. DESIGNATION OF MASTER SERVICER.
(a) STANDARD AS INITIAL MASTER SERVICER. The servicing,
administering and collection of the Pool Receivables shall be conducted by the
Person designated as Master Servicer hereunder from time to time in accordance
with this SECTION 8.01. Until the Administrator or the Relationship Bank gives
to Standard a Successor Notice (as defined in SECTION 8.01(b)), Standard is
hereby designated as, and hereby agrees to perform the duties and obligations
of, Master Servicer pursuant to the terms hereof.
(b) SUCCESSOR NOTICE; MASTER SERVICER TRANSFER EVENTS.
Upon Standard's receipt of a notice from the Administrator or Relationship Bank
of the Administrator's or Relationship Bank's designation of a new Master
Servicer (a "SUCCESSOR NOTICE"), Standard agrees that it will terminate its
activities as MASTER SERVICER hereunder in a manner that the Administrator
believes will facilitate the transition of the performance of such activities
to the new Master Servicer, and the Administrator (or its designee) shall
assume each and all of Standard's obligations to service and administer such
Receivables, on the terms and subject to the conditions herein set forth, and
Standard shall use its best efforts to assist the Administrator (or its
designee) in assuming such obligations. The Administrator and Relationship
Bank agree not to give Standard a Successor Notice until after the occurrence
of any Liquidation Event (any such Liquidation Event or other event being
herein called a "MASTER SERVICER TRANSFER EVENT"), in which case such Successor
Notice may be given at any time in the Administrator's or the Relationship
Bank's discretion. If Standard disputes the occurrence of a Master Servicer
Transfer Event, Standard may take appropriate action to resolve such dispute;
PROVIDED that Standard must terminate its activities hereunder as Master
Servicer and allow the newly designated Master Servicer to perform such
activities on the date provided by the Administrator or Relationship Bank as
described above, notwithstanding the commencement or continuation of any
proceeding to resolve the aforementioned dispute.
(c) SUBCONTRACTS. Master Servicer may, with the prior
consent of the Administrator, subcontract with any other Person for servicing,
administering or collecting the Pool Receivables; PROVIDED that Master Servicer
shall remain liable for the performance of the duties and obligations of Master
Servicer pursuant to the terms hereof and such subservicing arrangement may be
terminated at the Administrator's request at anytime after a Successor Notice
has been given.
SECTION 8.02. DUTIES OF MASTER SERVICER.
(a) APPOINTMENT; DUTIES IN GENERAL. Each of Seller,
Purchaser and the Administrator hereby appoints as its agent Master Servicer,
as from time to time designated pursuant to SECTION 8.01, to enforce its rights
and interests in and under the Pool Receivables, the Related Security and the
related Contracts. Master Servicer shall
42
take or cause to be taken all such actions as may be necessary or advisable to
collect each Pool Receivable from time to time, all in accordance with
applicable laws, rules and regulations, with reasonable care and
diligence, and in accordance with the Credit and Collection Policy.
(b) ALLOCATION OF COLLECTIONS; SEGREGATION. Master
Servicer shall set aside for the account of Seller and Purchaser their
respective allocable shares of the Collections of Pool Receivables in
accordance with SECTION 1.03 but shall not be required (unless otherwise
requested by the Administrator or the Relationship Bank) to segregate the funds
constituting such portions of such Collections (other than funds that are
reinvested pursuant to SECTION 1.03(iv)) prior to the remittance thereof in
accordance with said SECTIONS. If, in the reasonable discretion of the
Administrator or the Relationship Bank, the Master Servicer is so instructed,
within five (5) (or three (3), if a Liquidation Event has occurred and is
continuing) Business Days of receipt by Master Servicer of such instruction,
Master Servicer shall segregate and deposit with a bank designated by the
Relationship Bank, with the approval of the Administrator, Purchaser's share of
Collections of Pool Receivables, on the first Business Day following receipt by
Master Servicer of such Collections in immediately available funds.
(c) MODIFICATION OF RECEIVABLES. So long as no
Liquidation Event and no Unmatured Liquidation Event shall have occurred and be
continuing or would result from any of the following, Standard, while it is
Master Servicer, may, in accordance with the Credit and Collection Policy, (i)
extend the maturity or adjust the Unpaid Balance of any Defaulted Receivable as
Standard may reasonably determine to be appropriate to maximize Collections
thereof, PROVIDED that no Receivable may be extended for more than 90 days or
more than once and the Unpaid Balance of any Receivable may be adjusted only
once, and (ii) adjust the Unpaid Balance of any Receivable to reflect the
reductions or cancellations described in the first sentence of SECTION 3.02(a).
(d) DOCUMENTS AND RECORDS. Each Seller Party shall
deliver to Master Servicer, and Master Servicer shall hold in trust for Seller
and Purchaser in accordance with their respective interests, all documents,
instruments and records (including, without limitation, computer tapes or
disks) that evidence or relate to Pool Receivables.
(e) CERTAIN DUTIES TO SELLER. Master Servicer shall, as
soon as practicable following receipt, turn over to Seller the Collections of
any Receivable which is not a Pool Receivable and any other amounts held by
Master Servicer other than in respect of Collections on a Pool Receivable.
Master Servicer, if other than Standard or any other Seller Party or Affiliate
thereof, shall, as soon as practicable upon demand, deliver to Seller all
documents, instruments and records in its possession that evidence or relate to
Receivables of Seller other than Pool Receivables, and copies of documents,
instruments and records in its possession that evidence or relate to Pool
Receivables.
(f) TERMINATION. Master Servicer's authorization under
this Agreement shall terminate upon the Final Payout Date.
43
(g) POWER OF ATTORNEY. Seller hereby grants to Master
Servicer an irrevocable power of attorney, with full power of substitution,
coupled with an interest, to take in the name of Seller all steps which are
necessary or advisable to endorse, negotiate or otherwise realize on any
writing or other right of any kind held or transmitted by Seller or transmitted
or received by Purchaser (whether or not from Seller) in connection with any
Receivable.
SECTION 8.03. RIGHTS OF THE ADMINISTRATOR.
(a) NOTICE TO OBLIGORS. At any time when a Liquidation
Event has occurred and is continuing, the Administrator may notify the Obligors
of Pool Receivables, or any of them, of the ownership of the Purchased Interest
by Purchaser.
(b) NOTICE TO LOCK-BOX BANKS. At any time following the
earliest to occur of (i) the occurrence of a Liquidation Event, (ii) the
commencement of the Liquidation Period, and (iii) the warranty in SECTION
6.01(i)(x) no longer being true, the Administrator is hereby authorized to give
notice to the Lock-Box Banks, as provided in the Lock-Box Agreements, of the
transfer to the Administrator of dominion and control over the lock-boxes and
related accounts to which the Obligors of Pool Receivables make payments.
Seller and Master Servicer hereby transfer to the Administrator, effective when
the Administrator shall give notice to the Lock-Box Banks as provided in the
Lock-Box Agreements, the exclusive dominion and control over such lock-boxes
and accounts, and shall take any further action that the Administrator may
reasonably request to effect such transfer.
(c) RIGHTS ON MASTER SERVICER TRANSFER EVENT. At any
time following the designation of a Master Servicer other than Standard
pursuant to SECTION 8.01:
(i) The Administrator may direct the Obligors of Pool
Receivables, or any of them, to pay all amounts payable under any Pool
Receivable directly to the Administrator or its designee.
(ii) Any Seller Party shall, at the Administrator's or
Relationship Bank's request and at such Seller Party's expense, give
notice of Purchaser's ownership and security interests in the Pool
Receivables to each such Obligor and direct that payments be made
directly to the Administrator or its designee.
(iii) Each Seller Party shall, at the Administrator's or
Relationship Bank's request, (A) assemble all of the documents,
instruments and other records (including, without limitation, computer
programs, tapes and disks) which evidence the Pool Receivables, and
the related Contracts and Related Security, or which are otherwise
necessary or desirable to collect such Pool Receivables, and make the
same available to the successor Master Servicer at a place selected by
the Administrator or the Relationship Bank, and (B) segregate all
cash, checks and
44
other instruments received by it from time to time constituting
Collections of Pool Receivables in a manner acceptable to the
Administrator and promptly upon receipt, remit all such cash,
checks and instruments, duly endorsed or with duly executed
instruments of transfer, to the successor Master Servicer.
(iv) Each Seller Party and Purchaser hereby authorizes the
Administrator, and grants to the Administrator an irrevocable
power of attorney (which shall terminate on the Final Payout
Date), to take any and all steps in such Seller Party's name and
on behalf of Seller Parties and Purchaser which are necessary or
desirable, in the determination of the Administrator, to collect
all amounts due under any and all Pool Receivables, including,
without limitation, endorsing any Seller Party's name on checks
and other instruments representing Collections and enforcing such
Pool Receivables and the related Contracts.
SECTION 8.04. RESPONSIBILITIES OF SELLER PARTIES. Anything
herein to the contrary notwithstanding:
(a) CONTRACTS. Each Seller Party shall perform all of its
obligations (if any) under the Contracts related to the Pool
Receivables and under the related purchase orders and other agreements
to the same extent as if the Purchased Interest had not been sold
hereunder, and the exercise by the Administrator or its designee of
its rights hereunder shall not relieve any Seller Party from such
obligations.
(b) LIMITATION OF LIABILITY. The Administrator, the
Relationship Bank and Purchaser shall not have any obligation or
liability with respect to any Pool Receivables, Contracts related
thereto or any other related purchase orders or other agreements, nor
shall any of them be obligated to perform any of the obligations of
any Seller Party or any Originator thereunder.
SECTION 8.05. FURTHER ACTION EVIDENCING PURCHASES AND REINVESTMENTS.
(a) FURTHER ASSURANCES. Each Seller Party agrees that
from time to time, at its expense, it will promptly execute and
deliver all further instruments and documents, and take all further
action that the Administrator or its designee may reasonably request
in order to perfect, protect or more fully evidence the Purchases
hereunder and the resulting Purchased Interest, or to enable Purchaser
or the Administrator or its designee to exercise or enforce any of
their respective rights hereunder or under any Transaction Document in
respect thereof. Without limiting the generality of the foregoing,
each Seller Party will:
(i) upon the reasonable request of the Administrator, 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;
(ii) upon the reasonable request of the Administrator, xxxx
conspicuously each Contract evidencing each Pool Receivable with
a legend, acceptable to the
45
Administrator, evidencing that the Purchased Interest has been
sold in accordance with this Agreement; and
(iii) xxxx its master data processing records evidencing such
Pool Receivables and related Contracts with a legend, reasonably
acceptable to the Administrator, evidencing that the Purchased
Interest has been sold in accordance with this Agreement.
(b) ADDITIONAL FINANCING STATEMENTS; PERFORMANCE BY
ADMINISTRATOR. Each Seller Party hereby authorizes the Administrator
or its designee to file one or more financing or continuation
statements, and amendments thereto and assignments thereof, relative
to all or any of the Pool Receivables and the Related Assets now
existing or hereafter arising in the name of any Seller Party. If any
Seller Party fails to perform any of its agreements or obligations
under this Agreement, the Administrator or its designee may (but shall
not be required to) itself perform, or cause performance of, such
agreement or obligation, and the reasonable expenses of the
Administrator or its designee incurred in connection therewith shall
be payable by the Seller Parties as provided in SECTION 14.05.
(c) CONTINUATION STATEMENTS; OPINION. Without limiting
the generality of SUBSECTION (a), Seller will, not earlier than six
(6) months and not later than three (3) months prior to the fifth
anniversary of the date of filing of the financing statements referred
to in SECTION 5.01(f) or any other financing statement filed pursuant
to this Agreement or in connection with any Purchase hereunder, if the
Final Payout Date shall not have occurred:
(i) execute and deliver and file or cause to be filed an
appropriate continuation statement with respect to such financing
statement; and
(ii) deliver or cause to be delivered to the Administrator an
opinion of the counsel for Seller Parties, in form and substance
reasonably satisfactory to the Administrator, confirming and
updating the opinion delivered pursuant to SECTION 5.01(i)(i) to
the effect that the Purchased Interest hereunder continues to be
a valid and perfected ownership or security interest, subject to
no other Adverse Claims of record except as provided herein or
otherwise permitted hereunder.
SECTION 8.06. APPLICATION OF COLLECTIONS. Any payment by an Obligor
in respect of any indebtedness owed by it to any Originator or Seller shall,
except as otherwise specified by such Obligor or required by the underlying
Contract or law,
(a) at any time before the commencement of the Liquidation
Period, be recorded as a credit in a contra-account established for
Collection of the Receivables of such Obligor; and
(b) upon and after the commencement of the Liquidation Period,
be applied FIRST, as a Collection of Pool Receivables of such Obligor
in the order of the age of such Pool
46
Receivables starting with the oldest of such Pool Receivables and,
second, to any other indebtedness of such Obligor.
ARTICLE IX
SECURITY INTEREST
SECTION 9.01. GRANT OF SECURITY INTEREST. To secure all Recourse
Obligations of Seller arising in connection with this Agreement and each other
Transaction Document, whether now or hereafter existing, due or to become due,
direct or indirect, or absolute or contingent, including, without limitation,
all Indemnified Amounts, payments on account of Collections received or deemed
to be received and fees, in each case pro rata according to the respective
amounts thereof, Seller hereby assigns and pledges to Purchaser, for the
benefit of the Secured Parties, and hereby grants to Purchaser, for the benefit
of the Secured Parties, a first priority perfected security interest in, all of
Seller's right, title and interest now or hereafter existing in, to and under
(a) all of the Pool Receivables and Related Assets to the extent of the
Purchased Interest of the Purchaser therein, (b) all Collections and other
proceeds of such Receivables and Related Assets to the extent of the
Purchaser's Interest (c) all rights of the Seller under the Sale Agreement and
(d) the Cash Collateral Account and the Collateral Accounts and all amounts on
deposit and all certificates or instruments held therein.
SECTION 9.02. FURTHER ASSURANCES. The provisions of SECTION 8.05
shall apply to the security interest granted under SECTION 9.01 as well as to
the Purchases, Reinvestments and all the Purchased Interests hereunder.
SECTION 9.03. REMEDIES. Upon the occurrence and during the
continuance of a Liquidation Event, Purchaser shall have, with respect to the
collateral granted pursuant to SECTION 9.01, and in addition to all other
rights and remedies available to Purchaser or the Administrator under this
Agreement and the other Transaction Documents or other applicable law, all the
rights and remedies of a secured party upon default under the UCC.
ARTICLE X
LIQUIDATION EVENTS
SECTION 10.01. LIQUIDATION EVENTS. The following events shall be
"LIQUIDATION EVENTS" hereunder:
(a) Master Servicer (if any Seller Party or Affiliate
thereof is Master Servicer) or Seller (in the case of CLAUSE (ii)
below)
(i) shall fail to perform or observe any term, covenant or
agreement that is an obligation of Master Servicer hereunder
(other than as referred to in CLAUSE (ii) below) including,
without limitation, failure to deliver any Information Package,
report, statement or other written information required to be
delivered by Master
47
Servicer hereunder if, in the case of a failure to deliver any
Information Package, such failure shall remain unremedied for
three (3) Business Days and, in the case of any other failure,
such failure shall remain unremedied for five (5) Business Days,
or
(ii) shall fail to make any payment or deposit to be made by it
hereunder when due; or
(b) Any representation or warranty made or deemed to be
made by any Seller Party (or any of its officers) under or in
connection with this Agreement or any Information Package or other
information or report delivered pursuant hereto shall prove to have
been false or incorrect in any material respect when made and which
continues to be incorrect in any material respect for a period of
fifteen days after the date on which notice of such inaccuracy,
requiring the same to be remedied, shall have been given to any Seller
Party by the Administrator, or after the date any Responsible Manager
of a Seller Party has actual knowledge thereof; or
(c) Any Seller Party shall fail to perform or observe any term,
covenant or agreement contained in this Agreement or any of the other
Transaction Documents on its part to be performed or observed and
(except as provided in CLAUSE (o) below), any such failure shall
remain unremedied for fifteen (15) Business Days after (A) written
notice thereof shall have been given by the Administrator or the
Relationship Bank to any Seller Party or (B) any Responsible Manager
of a Seller Party has actual knowledge thereof; or
(d) (i) A default shall have occurred and be continuing
under any instrument or agreement evidencing, securing or providing
for the issuance of indebtedness for borrowed money which, when taken
together with the amount of receivables subject to any agreement or
instrument also in default under CLAUSE (iii) below, is in excess of
$2,500,000, which indebtedness is of, or guaranteed by, any Seller
Party or any Affiliate thereof, which default if unremedied, uncured,
or unwaived (with or without the passage of time or the giving of
notice or both) would permit acceleration of the maturity of such
indebtedness and such default shall have continued unremedied, uncured
or unwaived for a period long enough to permit such acceleration; (ii)
a "Purchase Termination Event" shall have occurred and be continuing
under the Sale Agreement; or (iii) any default under any other
agreement or instrument relating to the purchase of receivables of any
Seller Party or any Affiliate thereof in an aggregate amount which,
when taken together with the amount of indebtedness subject to any
agreement or instrument also in default under CLAUSE (i) above, is in
excess of $2,500,000, or any other event, shall occur and shall
continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such default is to
terminate, or permit the termination of, the commitment of any party
to such agreement or instrument to purchase receivables or the right
of such Seller Party or such Affiliate to reinvest in receivables the
principal amount paid by any party to such agreement or instrument for
its interest in receivables; or
48
(e) An Event of Bankruptcy shall have occurred and remain
continuing with respect to Master Servicer, any Seller Party or any
Originator; or
(f) the Seller shall be required to register as an "investment
company", or be a company controlled by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended;
or
(g) The Dilution Ratio at any Cut-Off Date exceeds 5.0%
as of such Cut-Off Date or the average of the Dilution Ratios for any
three consecutive Cut-Off Dates exceeds 3.50%; or
(h) The Default Ratio at any Cut-Off Date exceeds 2.0% or
the average of the Default Ratios for any three consecutive Cut-Off
Dates exceeds 1.75%; or
(i) Master Servicer (if any Seller Party or Affiliate
thereof is Master Servicer) shall make any material change in the
policies as to origination of Receivables or in the Credit and
Collection Policy and more than five Business Days have elapsed
without the Master Servicer having obtained the prior written consent
of the Administrator and the Relationship Bank, which consent shall
not be unreasonably withheld; or
(j) On any Settlement Date, after giving effect to the
payments made under SECTION 3.01(c), (i) the Purchased Interest
exceeds the Allocation Limit or (ii) the Purchaser's Total Investment
exceeds the Purchase Limit and, if such excess in CLAUSE (i) or (ii)
exists solely as a result of a decrease in the Excess Concentration
Limit, the Purchased Interest or the Purchaser's Total Investment
shall exceed the respective Allocation Limit or Purchase Limit for
more than fifteen days after the Settlement Date for the Settlement
Period during which such decrease occurred; or
(k) The Delinquency Ratio at any Cut-Off Date exceeds 8.0%
or the average of the Delinquency Ratios for any three consecutive
Cut-Off Dates exceeds 6.0%; or
(l) A Concentration Draw shall have been requested by the
Purchaser and funded by a Concentration Bank pursuant to the Liquidity
Agreement; or
(m) Any Seller Party is subject to a Change-in-Control; or
(n) The Internal Revenue Service shall file notice of a
lien pursuant to SECTION 6323 of the Internal Revenue Code with regard
to any of the Receivables or Related Assets and such lien shall not
have been released within 5 days, or the Pension Benefit Guaranty
Corporation shall, or shall indicate its intention to, file notice of
a lien pursuant to SECTION 4068 of the Employee Retirement Income
Security Act of 1974 with regard to any of the Receivables or Related
Assets; or
(o) Standard shall (i) fail to observe any of the
financial covenants set forth in SECTION 7.05 or (ii) permit the
Tangible Net Worth of the Seller (computed for purposes
49
of this CLAUSE (o) by including any Initial Purchaser Notes as
Indebtedness of the Seller) to be less than $7,500,000 for a period of
more than 30 days; or
(p) One or more judgments in an aggregate amount exceeding
$1,000,000 (not including any portion thereof for which an insurance
company shall have acknowledged responsibility in writing or which
shall have been paid or bonded or stayed pending appeal) shall have
been entered against any Seller Party and remain undischarged for a
period of thirty (30) days during which execution shall not be
effectively stayed, which, in the opinion of the Relationship Bank or
the Administrator, have caused, or have a reasonable likelihood of
causing, a Material Adverse Effect; or
(q) This Agreement shall for any reason (other than
pursuant to the terms hereof) cease to create in favor of the
Purchaser a valid and enforceable first priority perfected ownership
interest or security interest in each Purchased Interest hereunder,
free and clear of any lien.
SECTION 10.02. REMEDIES.
(a) OPTIONAL LIQUIDATION. Upon the occurrence of a and
during the continuance of a Liquidation Event (other than a
Liquidation Event described in SUBSECTION (e) of SECTION 10.01), the
Administrator shall, at the request, or may with the consent, of
Purchaser, by notice to Seller declare the Purchase Termination Date
to have occurred and the Liquidation Period to have commenced.
(b) AUTOMATIC LIQUIDATION. Upon the occurrence of a
Liquidation Event described in SUBSECTION (e) of SECTION 10.01, the
Purchase Termination Date shall occur and the Liquidation Period shall
commence automatically.
(c) ADDITIONAL REMEDIES. Upon any Purchase Termination
Date pursuant to this SECTION 10.02, no Purchases or Reinvestments
thereafter will be made, and the Administrator, Purchaser and the
Relationship Bank shall have, in addition to all other rights and
remedies under this Agreement or otherwise, all other rights and
remedies provided under the UCC of each applicable jurisdiction and
other applicable laws, which rights shall be cumulative.
ARTICLE XI
THE ADMINISTRATOR; RELATIONSHIP BANK
SECTION 11.01. AUTHORIZATION AND ACTION. Pursuant to agreements
entered into with the Administrator and the Relationship Bank, Purchaser has
appointed and authorized the Administrator and the Relationship Bank (or their
respective designees) to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the
50
Administrator or the Relationship Bank by the terms hereof, together with such
powers as are reasonably incidental thereto.
SECTION 11.02. ADMINISTRATOR'S AND RELATIONSHIP BANK'S RELIANCE, ETC.
The Administrator, the Relationship Bank and their directors, officers, agents
or employees shall not be liable for any action taken or omitted to be taken by
it or them under or in connection with the Transaction Documents (including,
without limitation, the servicing, administering or collecting Pool Receivables
as Master Servicer pursuant to SECTION 8.01), except for its or their own
breach of the terms of the applicable terms of the Transaction Documents or its
or their own gross negligence or willful misconduct. Without limiting the
generality of the foregoing, each of the Administrator and the Relationship
Bank: (a) may consult with legal counsel (including counsel for Seller),
independent certified public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith
by it in accordance with the advice of such counsel, accountants or experts;
(b) makes no warranty or representation to Purchaser or any other holder of any
interest in Pool Receivables and shall not be responsible to Purchaser or any
such other holder for any statements, warranties or representations made by any
Seller Party in or in connection with any Transaction Document; (c) shall not
have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of any Transaction Document on the
part of any Seller Party or to inspect the property (including the books and
records) of any Seller Party; (d) shall not be responsible to Purchaser or any
other holder of any interest in Pool Receivables for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of any
Transaction Document (except by and against the Administrator and the
Relationship Bank); and (e) shall incur no liability under or in respect of
this Agreement by acting upon any notice (including notice by telephone where
permitted herein), consent, certificate or other instrument or writing (which
may be by facsimile or telex) in good faith believed by it to be genuine and
signed or sent by the proper party or parties.
XXXXXXX 00.00. XXXXX XXXXXX XXXXXXX XXX XXX AND AFFILIATES. State
Street Capital and NCB and any of their respective Affiliates may generally
engage in any kind of business with any Seller Party or any Obligor, any of
their respective Affiliates and any Person who may do business with or own
securities of any Seller Party or any Obligor or any of their respective
Affiliates, all as if State Street Capital and NCB were not the Administrator
and the Relationship Bank, respectively, and without any duty to account
therefor to Purchaser or any other holder of an interest in Pool Receivables.
ARTICLE XII
ASSIGNMENT OF PURCHASER'S INTEREST
SECTION 12.01. RESTRICTIONS ON ASSIGNMENTS.
(a) Neither any Seller Party nor NCB, in any capacity
(except, in the case of NCB in any capacity, as otherwise agreed among
Purchaser, the Administrator and
51
NCB), may assign its rights, or delegate its duties hereunder or any
interest herein without the prior written consent of the
Administrator. Purchaser may not assign its rights hereunder (although
it may delegate its duties hereunder as expressly indicated herein) or
the Purchased Interest (or any portion thereof) to any Person without
the prior written consent of Seller, which consent shall not be
unreasonably withheld; provided, however, that
(i) Purchaser may assign all of its rights and interests in
the Transaction Documents, together with all its interest in the
Purchased Interest, to State Street Capital or NCB, or both, or
any Affiliate of either of them, or to any "bankruptcy remote"
special purpose entity, the business of which is administered by
State Street Capital or any Affiliate of State Street Capital
(which assignee shall then be subject to this Article XII);
provided, however, that such assignee has a short-term rating of
at least A-1 by Standard and Poor's Ratings Group and P-1 by
Xxxxx'x Investors Service, Inc. and that in the event of any such
proposed assignment permitted pursuant to clause (i), each such
assignee shall, promptly upon the purported effective date of
such assignment, execute and deliver to Seller a written
acknowledgement, in form and substance reasonably satisfactory to
Seller, evidencing such assignee's assumption of Purchaser's
obligations under this Agreement and under any other agreement
executed in connection herewith, and such purported assignment
shall be deemed to be of no force and effect if such
acknowledgement has not been delivered to Seller, in form and
substance reasonably satisfactory to Seller, within ten days of
the purported effective date of assignment; and
(ii) Purchaser may assign and grant a security interest in all
of its rights in the Transaction Documents, together with all of
its rights and interest in the Purchased Interest, to the
Collateral Agent, to secure Purchaser's obligations under or in
connection with the Commercial Paper Notes, the Liquidity
Agreement, the Credit Agreement and any letter of credit issued
thereunder, and certain other obligations of Purchaser incurred
in connection with the funding of the Purchases and Reinvestments
hereunder, which assignment and grant of a security interest (and
any subsequent assignment by the Collateral Agent) shall not be
considered an "assignment" for purposes of SECTION 12.01(b) or,
prior to the enforcement of such security interest, for purposes
of any other provision of this Agreement (other than SECTION
12.03).
(b) Seller agrees to advise the Administrator within five
Business Days after notice to Seller of any proposed assignment by
Purchaser of the Purchased Interest (or any portion thereof), not
otherwise permitted under subsection (a), of Seller's consent or
non-consent to such assignment, and if it does not consent, the
reasons therefor. If Seller does not consent to such assignment,
Purchaser may immediately or at any time thereafter assign such
Purchased Interest (or portion thereof) to any Person or Persons
permitted under clause (i) of SECTION 12.01(a).
52
SECTION 12.02. RIGHTS OF ASSIGNEE. Upon the assignment by Purchaser
in accordance with this Article XII, the assignee receiving such assignment
shall have all of the rights of Purchaser with respect to the Transaction
Documents and the Purchased Interest (or such portion thereof as has been
assigned).
SECTION 12.03. TERMS AND EVIDENCE OF ASSIGNMENT. Any assignment of
the Purchased Interest (or any portion thereof) to any Person which is
otherwise permitted under this Article XII shall be upon such terms and
conditions as Purchaser and the assignee may mutually agree, and may be
evidenced by such instrument(s) or document(s) as may be satisfactory to
Purchaser, the Administrator and the assignee.
SECTION 12.04. RIGHTS OF COLLATERAL AGENT. Seller hereby agrees
that, upon prior written notice to Seller, the Collateral Agent may exercise
all the rights of the Administrator hereunder, with respect to the Purchased
Interest (or any portions thereof), and Collections with respect thereto, which
are owned by Purchaser, and all other rights and interests of Purchaser in, to
or under this Agreement or any other Transaction Document. Without limiting
the foregoing, upon such notice or at any time thereafter (but subject to any
conditions applicable to the exercise of such rights by the Administrator), the
Collateral Agent may request Master Servicer to segregate Purchaser's allocable
shares of Collections from Seller's allocable share, may give a Successor
Notice pursuant to and in accordance with Section 8.01(b), may give or require
the Administrator or Relationship Bank to give notice to the Lock-Box Banks as
referred to in Section 8.03(b) and may direct the Obligors of Pool Receivables
to make payments in respect thereof directly to an account designated by them,
in each case, to the same extent as the Administrator might have done.
ARTICLE XIII
INDEMNIFICATION
SECTION 13.01. INDEMNITIES BY SELLER.
(a) GENERAL INDEMNITY. Without limiting any other rights
which any such Person may have hereunder or under applicable law,
Seller hereby agrees to indemnify each of the Administrator,
Purchaser, the Liquidity Banks, the Credit Bank, the Relationship
Bank, the Liquidity Agent, each of their respective Affiliates, and
all successors, transferees, participants and assigns and all
officers, directors, shareholders, controlling persons, employees and
agents of any of the foregoing (each an "Indemnified Party"),
forthwith on demand, from and against any and all damages, losses,
claims, liabilities and related costs and expenses, including
attorneys' fees and disbursements (all of the foregoing being
collectively referred to as "Indemnified Amounts") awarded against or
incurred by any of them arising out of or relating to the Transaction
Documents or the ownership or funding of the Purchased Interest or in
respect of any Receivable or any Contract, excluding, however, (a)
Indemnified Amounts to the extent determined by a court of competent
jurisdiction to have resulted from gross negligence or willful
53
misconduct on the part of such Indemnified Party or (b) recourse
(except as otherwise specifically provided in this Agreement) for
Defaulted Receivables. Without limiting the foregoing, Seller shall
indemnify each Indemnified Party for Indemnified Amounts arising out
of or relating to:
(i) the transfer by any Seller Party of any interest in any
Receivable other than the transfer of Receivables and related
property by the Originator to Seller pursuant to the Sale
Agreement, the transfer of any Purchased Interest to Purchaser
pursuant to this Agreement and the grant of a security interest
to Purchaser pursuant to SECTION 9.01;
(ii) any representation or warranty made by any Seller Party
(or any of its officers or Affiliates) under or in connection
with any Transaction Document, any Information Package or any
other information or report delivered by or on behalf of any
Seller Party pursuant hereto, which shall have been false,
incorrect or misleading in any material respect when made or
deemed made or delivered, as the case may be;
(iii) the failure by any Seller Party to comply with any
applicable law, rule or regulation with respect to any Pool
Receivable or the related Contract, or the nonconformity of any
Pool Receivable or the related Contract with any such applicable
law, rule or regulation;
(iv) the failure to vest and maintain vested in Purchaser an
undivided percentage ownership interest, to the extent of the
Purchased Interest, in the Receivables in, or purporting to be
in, the Receivables Pool, free and clear of any Adverse Claim,
other than a Adverse Claim arising solely as a result of an act
of Purchaser, the Administrator or the Relationship Bank, whether
existing at the time of any Purchase or Reinvestment of such
Purchased Interest or at any time thereafter;
(v) the failure to file, or any delay in filing, financing
statements or other similar instruments or documents under the
UCC of any applicable jurisdiction or other applicable laws with
respect to any Receivables in, or purporting to be in, the
Receivables Pool, whether at the time of any Purchase or
Reinvestment or at any time thereafter;
(vi) any dispute, claim, offset or defense (other than
discharge in bankruptcy) of the Obligor to the payment of any
Receivable in, or purporting to be in, the Receivables Pool
(including, without limitation, a defense based on such
Receivables or the related Contract not being a legal, valid and
binding obligation of such Obligor enforceable against it in
accordance with its terms), or any other claim resulting from the
sale of the merchandise or services related to such Receivable or
the furnishing or failure to furnish such merchandise or
services;
54
(vii) any matter described in CLAUSE (i) or (ii) of SECTION
3.02(a);
(viii) any failure of any Seller Party, as Master Servicer or
otherwise, to perform its duties or obligations in accordance
with the provisions of ARTICLE III or ARTICLE VIII;
(ix) any products liability claim arising out of or in
connection with merchandise or services that are the subject of
any Pool Receivable;
(x) any claim of breach by any Seller Party of any related
Contract with respect to any Pool Receivable; or
(xi) any tax or governmental fee or charge (but not including
taxes upon or measured by net income), all interest and penalties
thereon or with respect thereto, and all out-of-pocket costs and
expenses, including the reasonable fees and expenses of counsel
in defending against the same, which may arise by reason of the
purchase or ownership of any Purchased Interest, or any other
interest in the Pool Receivables or in any goods which secure any
such Pool Receivables.
For purposes of determining the Seller's liability under this Section
13.01 for any breach of representation, warranty or covenant, any limitation in
such representation, warranty or covenant based on the existence of a Material
Adverse Effect or other materiality concept shall be disregarded.
(b) CONTEST OF TAX CLAIM; AFTER-TAX BASIS. If any
Indemnified Party shall have notice of any attempt to impose or
collect any tax or governmental fee or charge for which
indemnification will be sought from any Seller Party under SECTION
13.01(a)(xi), such Indemnified Party shall give prompt and timely
notice of such attempt to Seller and Seller shall have the right, at
its expense, to participate in any proceedings resisting or objecting
to the imposition or collection of any such tax, governmental fee or
charge. Indemnification hereunder shall be in an amount necessary to
make the Indemnified Party whole after taking into account any tax
consequences to the Indemnified Party of the payment of any of the
aforesaid taxes and the receipt of the indemnity provided hereunder or
of any refund of any such tax previously indemnified hereunder,
including the effect of such tax or refund on the amount of tax
measured by net income or profits which is or was payable by the
Indemnified Party.
(c) CONTRIBUTION. If for any reason the indemnification
provided above in this Section 13.01 (and subject to the exceptions
set forth therein) is unavailable to an Indemnified Party or is
insufficient to hold an Indemnified Party harmless, then Seller shall
contribute to the amount paid or payable by such Indemnified Party as
a result of such loss, claim, damage or liability in such proportion
as is appropriate to reflect not only the relative benefits received
by such Indemnified Party on the one hand and Seller on the other hand
but also the relative fault of such Indemnified Party as well as any
other relevant equitable considerations.
55
SECTION 13.02. INDEMNITIES BY MASTER SERVICER. Without limiting any
other rights which any Indemnified Party may have hereunder or under applicable
law, the Master Servicer hereby agrees to indemnify each of the Indemnified
Parties forthwith on demand, from and against any and all Indemnified Amounts
awarded against or incurred by any of them arising out of or relating to the
Master Servicer's performance of, or failure to perform, any of its obligations
under or in connection with any Transaction Document, or any representation or
warranty made by Master Servicer (or any of its officers) under or in
connection with any Transaction Document, any Information Package or any other
information or report delivered by or on behalf of Master Servicer, which shall
have been false, incorrect or misleading in any material respect when made or
deemed made or delivered, as the case may be. For purposes of determining the
Master Servicer's liability under this Section 13.02 for any breach of
representation, warranty or covenant, any limitation in such representation,
warranty or covenant based on the existence of a Material Adverse Effect or
other materiality concept shall be disregarded. Notwithstanding the foregoing,
in no event shall any Indemnified Party be awarded any Indemnified Amounts (a)
to the extent determined by a court of competent jurisdiction to have resulted
from gross negligence or willful misconduct on the part of such Indemnified
Party or (b) constituting recourse for Defaulted Receivables.
If for any reason the indemnification provided above in this SECTION
13.02 (and subject to the exceptions set forth therein) is unavailable to an
Indemnified Party or is insufficient to hold an Indemnified Party harmless,
then the Master Servicer shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, claim, damage or liability in such
proportion as is appropriate to reflect not only the relative benefits received
by such Indemnified Party on the one hand and the Master Servicer on the other
hand but also the relative fault of such Indemnified Party as well as any other
relevant equitable considerations.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.01. AMENDMENTS, ETC. No amendment or waiver of any
provision of this Agreement nor consent to any departure by any Seller Party
therefrom shall in any event be effective unless the same shall be in writing
and signed by (a) each Seller Party, the Administrator and Purchaser (with
respect to an amendment), PROVIDED that no amendment to this SECTION 14.01
shall become effective without the consent of all the parties hereto, or (b)
the Administrator, the Relationship Bank and Purchaser (with respect to a
waiver or consent by them) or any Seller Party (with respect to a waiver or
consent by it), as the case may be, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. The parties acknowledge that, before entering into such an amendment or
granting such a waiver or consent, Purchaser may also be required to obtain the
approval of some or all of the Liquidity Banks or the Credit Bank and, with
respect to any material amendment, waiver or consent, will be required to
obtain confirmation from certain rating agencies that such
56
amendment, waiver or consent will not result in a withdrawal or reduction of
the ratings of the Commercial Paper Notes.
SECTION 14.02. Notices, Etc. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including facsimile communication) and shall be personally delivered or sent
by express mail or courier or by certified mail, postage prepaid, or by
facsimile, to the intended party at the address or facsimile number of such
party set forth under its name on the signature pages hereof or at such other
address or facsimile number as shall be designated by such party in a written
notice to the other parties hereto. All such notices and communications shall
be effective, (a) if personally delivered or sent by express mail or courier or
if sent by certified mail, when received, and (b) if transmitted by facsimile,
when sent, receipt confirmed by telephone or electronic means.
SECTION 14.03. NO WAIVER; REMEDIES. No failure on the part of the
Administrator, the Relationship Bank, any Affected Party, any Indemnified
Party, Purchaser or any other holder of the Purchased Interest (or any portion
thereof) 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. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law. Without limiting the foregoing,
each of State Street Capital, individually and as Administrator, NCB,
individually and as Relationship Bank, the Collateral Agent, the Credit Bank
and each Liquidity Bank and each Concentration Bank is hereby authorized by
Seller at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by State Street Capital, the Collateral Agent and such Liquidity
Bank to or for the credit or the account of Seller, now or hereafter existing
under this Agreement, to the Administrator, any Concentration Bank, any
Affected Party, any Indemnified Party or Purchaser, or their respective
successors and assigns.
SECTION 14.04. BINDING EFFECT; SURVIVAL. This Agreement shall be
binding upon and inure to the benefit of each Seller Party, the Administrator,
the Relationship Bank, each Concentration Bank, Purchaser and their respective
successors and assigns, and the provisions of SECTION 4.02 and ARTICLE XIII
shall inure to the benefit of the Affected Parties and the Indemnified Parties,
respectively, and their respective successors and assigns; PROVIDED, HOWEVER,
nothing in the foregoing shall be deemed to authorize any assignment not
permitted by SECTION 12.01. 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 Final Payout Date. The rights
and remedies with respect to any breach of any representation and warranty made
by Seller pursuant to ARTICLE VI and the indemnification and payment provisions
of ARTICLE XIII and SECTIONS 4.02, 14.05, 14.06, 14.07, 14.08 and 14.15 shall
be continuing and shall survive any termination of this Agreement.
SECTION 14.05. COSTS, EXPENSES AND TAXES. In addition to its
obligations under Article XIII, Seller Parties jointly and severally agree to
pay on demand:
57
(a) all reasonable costs and expenses incurred by the
Administrator, the Relationship Bank, any Concentration Bank, the
Credit Bank, the Collateral Agent, any Liquidity Bank and the
Purchaser and their respective Affiliates in connection with
(i) the negotiation, preparation, execution and delivery of
this Agreement, the other Transaction Documents or the Liquidity
Agreement, any amendment of or consent or waiver under any of the
Transaction Documents which is requested or proposed by any
Seller Party (whether or not consummated), or the enforcement of,
or any actual or claimed breach of, this Agreement or any of the
other Transaction Documents, including, without limitation, the
reasonable fees and expenses of counsel to any of such Persons
incurred in connection with any of the foregoing or in advising
such Persons as to their respective rights and remedies under any
of the Transaction Documents in connection with any of the
foregoing, and
(ii) the administration (including periodic auditing as
provided for herein) of this Agreement and the other Transaction
Documents, including, without limitation, all reasonable
out-of-pocket expenses (including reasonable fees and expenses of
independent accountants), incurred in connection with any review
of any Seller Party's books and records either prior to the
execution and delivery hereof or pursuant to SECTION 7.02(h) or
7.01(c)(iii); and
(b) all stamp and other taxes and fees payable or
determined to be payable in connection with the execution, delivery,
filing and recording of this Agreement or the other Transaction
Documents (and Seller Parties jointly and severally agree to indemnify
each Indemnified Party against any liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes and
fees).
SECTION 14.06. NO PROCEEDINGS. Master Servicer hereby agrees that it
will not institute against Seller, or join any Person in instituting against
Seller, and each Seller Party, Master Servicer, State Street Capital
(individually and as Administrator) and NCB (individually and in its various
other capacities under the Transaction Documents) and each Concentration Bank
each hereby agrees that it will not institute against Purchaser, or join any
other Person in instituting against Purchaser, any insolvency proceeding
(namely, any proceeding of the type referred to in the definition of Event of
Bankruptcy) so long as any Commercial Paper Notes issued by Purchaser shall be
outstanding or there shall not have elapsed one year plus one day since the
last day on which any such Commercial Paper Notes shall have been outstanding.
SECTION 14.07. Confidentiality of Seller Information.
(a) CONFIDENTIAL SELLER INFORMATION. Each party hereto
(other than Seller Parties) acknowledges that certain of the
information provided to such party by or on behalf of Seller Parties
in connection with this Agreement and the transactions contemplated
hereby is or may be confidential, and each such party severally agrees
that, unless Standard shall otherwise agree in writing, and except as
provided in SUBSECTION (b), such party will not disclose to any other
person or entity:
58
(i) any information regarding, or copies of, any non-public
financial statements, reports, schedules and other information
furnished by any Seller Party to Purchaser, the Administrator or
the Relationship Bank (A) prior to the date hereof in connection
with such party's due diligence relating to the Seller Parties
and the transactions contemplated hereby, or (B) pursuant to
SECTION 3.01, 5.01, 6.01(i), 6.01(j), 7.01(c) or 7.02, or
(ii) any other information regarding any Seller Party which is
designated by any Seller Party to such party in writing as
confidential
(the information referred to in CLAUSES (i) and (ii) above, whether
furnished by any Seller Party or any attorney for or other
representative or an Affiliate thereof (each a "SELLER INFORMATION
PROVIDER"), is collectively referred to as the "SELLER INFORMATION");
provided, HOWEVER, "SELLER INFORMATION" shall not include any
information which is or becomes generally available to the general
public other than from a breach of this Agreement or to such party on
a nonconfidential basis from a source other than any Seller
Information Provider, or which was known to such party on a
nonconfidential basis prior to its disclosure by any Seller
Information Provider.
(b) DISCLOSURE. Notwithstanding SUBSECTION (a), each party
may disclose any Seller Information:
(i) to any of such party's independent attorneys, consultants
and auditors, and to each Liquidity Bank, the Credit Bank, any
dealer or placement agent for Purchaser's commercial paper, and
any actual or potential assignees of, or participants in, any of
the rights or obligations of Purchaser, any Liquidity Bank, any
Concentration Bank, the Credit Bank, the Administrator or the
Relationship Bank under or in connection with this Agreement, who
(A) in the good faith belief of such party, have a need to know
such Seller Information, (B) are informed by such party of the
confidential nature of the Seller Information and the terms of
this SECTION 14.07, and (C) are subject to confidentiality
restrictions generally consistent with this SECTION 14.07,
(ii) to any rating agency that maintains a rating for
Purchaser's commercial paper or is considering the issuance of
such a rating, for the purposes of reviewing the credit of
Purchaser in connection with such rating,
(iii) to any other party to this Agreement (and any
independent attorneys, consultants and auditors of such party),
for the purposes contemplated hereby,
(iv) as may be required by any municipal, state, federal or
other regulatory body having or claiming to have jurisdiction
over such party, in order to comply with any law, order,
regulation, regulatory request or ruling applicable to such
party,
59
(v) subject to SUBSECTION (c), in the event such party is
legally compelled (by interrogatories, requests for information
or copies, subpoena, civil investigative demand or similar
process) to disclose such Seller Information, or
(vi) in connection with the enforcement of this Agreement or
any other Transaction Document.
In addition, Purchaser and the Administrator may disclose on a "no
name" basis to any actual or potential investor in Purchaser's
Commercial Paper Notes information regarding the nature of this
Agreement, the basic terms hereof (including without limitation the
amount and nature of Purchaser's commitment and Purchaser's Total
Investment with respect to the Purchased Interest and any other
credit enhancement provided by any Seller Party hereunder), the
nature, amount and status of the Pool Receivables, and the current
and/or historical ratios of losses to liquidations and/or outstandings
with respect to the Receivables Pool.
(c) LEGAL COMPULSION. In the event that any party hereto
(other than any Seller Party) or any of its representatives is
requested or becomes legally compelled (by interrogatories, requests
for information or documents, subpoena, civil investigative demand or
similar process) to disclose any of the Seller Information, such party
will (or will cause its representative to)
(i) provide Standard with prompt written notice so that (A)
Standard may seek a protective order or other appropriate remedy,
or (B) Standard may, if it so chooses, agree that such party (or
its representatives) may disclose such Seller Information
pursuant to such request or legal compulsion; and
(ii) unless Standard agrees that such Seller Information may
be disclosed, make a timely objection to the request or
compulsion to provide such Seller Information on the basis that
such Seller Information is confidential and subject to the
agreements contained in this SECTION 14.07.
In the event such protective order or remedy is not obtained, or
Standard agrees that such Seller Information may be disclosed, such
party will furnish only that portion of the Seller Information which
(in such party's good faith judgment) is legally required to be
furnished and will exercise reasonable efforts to obtain reliable
assurance that confidential treatment will be afforded the Seller
Information.
(d) This SECTION 14.07 shall survive termination of this
Agreement.
SECTION 14.08. CONFIDENTIALITY OF PROGRAM INFORMATION.
60
(a) CONFIDENTIAL INFORMATION. Each party hereto acknowledges
that State Street Capital regards the structure of the transactions
contemplated by this Agreement to be proprietary, and each such party
agrees that:
(i) it will not disclose without the prior consent of State
Street Capital (other than to the directors, employees, auditors,
counsel or affiliates (collectively, "REPRESENTATIVES") of such
party, each of whom shall be informed by such party of the
confidential nature of the Program Information (as defined below)
and of the terms of this SECTION 14.08), (A) any information
regarding the pricing in, or copies of, this Agreement any other
Transaction Document or any transaction contemplated hereby or
thereby, (B) any information regarding the organization, business
or operations of Purchaser generally or the services performed by
the Administrator or the Relationship Bank for Purchaser, or (C)
any information which is furnished by State Street Capital to
such party and which is designated by State Street Capital to
such party in writing or otherwise as confidential or not
otherwise available to the general public (the information
referred to in clauses (A), (B) and (C) is collectively referred
to as the "PROGRAM INFORMATION"); PROVIDED, HOWEVER, that such
party may disclose any such Program Information (I) to any other
party to this Agreement (and any independent attorneys,
consultants and auditors of any such party) for the purposes
contemplated hereby, (II) as may be required by any municipal,
state, federal or other regulatory body having or claiming to
have jurisdiction over such party, (III) in order to comply with
any law, order, regulation, regulatory request or ruling,
including the Exchange Act, applicable to such party, or (IV)
subject to SUBSECTION (c), in the event such party is legally
compelled (by interrogatories, requests for information or
copies, subpoena, civil investigative demand or similar process)
to disclose any such Program Information; and
(ii) it will use the Program Information solely for the
purposes of evaluating, administering and enforcing the
transactions contemplated by this Agreement and making any
necessary business judgments and legal determinations with
respect thereto.
(b) AVAILABILITY OF CONFIDENTIAL INFORMATION. This SECTION
14.08 shall be inoperative as to such portions of the Program
Information which are or become generally available to the public or
such party on a nonconfidential basis from a source other than State
Street Capital or were known to such party on a nonconfidential basis
prior to its disclosure by State Street Capital.
(c) LEGAL COMPULSION TO DISCLOSE. In the event that any party
or anyone to whom such party or its representatives transmits the
Program Information is requested or becomes legally compelled (by
interrogatories, requests for information or documents, subpoena,
civil investigative demand or similar process) to disclose any of the
Program Information, such party will
61
(i) provide State Street Capital with prompt written notice so
that State Street Capital may seek a protective order or other
appropriate remedy and/or, if it so chooses, agree that such
party may disclose such Program Information pursuant to such
request or legal compulsion; and
(ii) unless State Street Capital agrees that such Program
Information may be disclosed, make a timely objection to the
request or confirmation to provide such Program Information on
the basis that such Program Information is confidential and
subject to the agreements contained in this SECTION 14.08.
In the event that such protective order or other remedy is not
obtained, or State Street Capital agrees that such Program Information
may be disclosed, such party will furnish only that portion of the
Program Information which (in such party's good faith judgment) is
legally required to be furnished and will exercise reasonable
efforts to obtain reliable assurance that confidential treatment
will be accorded the Program Information. In the event any Seller
Party is required to file a copy of this Agreement with the Securities
and Exchange Commission or any other governmental authority, it will
(A) provide State Street Capital with prompt written notice of such
requirement and (B) exercise reasonable efforts to obtain reliable
assurance that such governmental authority will give confidential
treatment to this Agreement.
(d) SURVIVAL. This SECTION 14.08 shall survive termination of
this Agreement.
SECTION 14.09. CAPTIONS AND CROSS REFERENCES. The various captions
(including, without limitation, the table of contents) in this Agreement are
provided solely for convenience of reference and shall not affect the meaning
or interpretation of any provision of this Agreement. Unless otherwise
indicated, references in this Agreement to any Section, Appendix, Schedule or
Exhibit are to such Section of or Appendix, Schedule or Exhibit to this
Agreement, as the case may be, and references in any Section, subsection, or
clause to any subsection, clause or subclause are to such subsection, clause or
subclause of such Section, subsection or clause.
SECTION 14.10. INTEGRATION. This Agreement, together with the
letter referenced in SECTION 4.01, contains a final and complete integration of
all prior expressions by the parties hereto with respect to the subject matter
hereof and shall constitute the entire understanding among the parties hereto
with respect to the subject matter hereof, superseding all prior oral or
written understandings.
SECTION 14.11. GOVERNING LAW. THIS AGREEMENT, INCLUDING THE RIGHTS
AND DUTIES OF THE PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE
TO PRINCIPLES OF CONFLICTS OF LAW, EXCEPT TO THE EXTENT THAT THE PERFECTION OF
THE INTERESTS OF PURCHASER IN THE RECEIVABLES OR RELATED PROPERTY IS GOVERNED
BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
62
SECTION 14.12. WAIVER OF JURY TRIAL. EACH SELLER PARTY HEREBY
EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY OTHER TRANSACTION
DOCUMENT OR UNDER ANY AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR WHICH MAY
IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING
OR OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL NOT BE
TRIED BEFORE A JURY.
SECTION 14.13. CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES. EACH
SELLER PARTY HEREBY ACKNOWLEDGES AND AGREES THAT:
(a) IT IRREVOCABLY (i) SUBMITS TO THE JURISDICTION, FIRST,
OF ANY UNITED STATES FEDERAL COURT, AND SECOND, IF FEDERAL
JURISDICTION IS NOT AVAILABLE, OF ANY NEW YORK STATE COURT, IN EITHER
CASE SITTING IN NEW YORK COUNTY, NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, (ii) AGREES THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED ONLY IN SUCH NEW YORK STATE OR FEDERAL COURT AND NOT IN ANY
OTHER COURT, AND (iii) WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING.
(b) TO THE EXTENT THAT IT HAS OR HEREAFTER MAY ACQUIRE ANY
IMMUNITY FROM THE JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID TO EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT
TO ITSELF OR ITS PROPERTY, IT HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY
IN RESPECT OF ITS OBLIGATIONS UNDER OR IN CONNECTION WITH THIS
AGREEMENT.
SECTION 14.14. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by the different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
Agreement.
SECTION 14.15. NO RECOURSE AGAINST OTHER PARTIES. No recourse under
any obligation, covenant or agreement of Purchaser contained in this Agreement
shall be had against any stockholder, employee, officer, director, or
incorporator of Purchaser, PROVIDED, HOWEVER, that
63
nothing in this SECTION 14.15 shall relieve any of the foregoing Persons from
any liability which such Person may otherwise have for his/her or its gross
negligence or willful misconduct.
64
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.
THE STANDARD PRODUCTS FUNDING
CORPORATION, as Seller
By_______________________________
Title__________________________
0000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: _____________________
THE STANDARD PRODUCTS COMPANY, as
initial Master Servicer
By_______________________________
Title____________________________
0000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: _____________________
CLIPPER RECEIVABLES CORPORATION,
as Purchaser
By_______________________________
Vice President
X.X. Xxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: _____________________
00
XXXXX XXXXXX XXXXXX XXXXXXX
CORPORATION, as Administrator
By_______________________________
Vice President
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Clipper Funds
NATIONAL CITY BANK,
as Relationship Bank
By_______________________________
Vice President
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Facsimile No.: (000) 000-0000
Attention: _____________________
