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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report:
(Date of earliest event reported)
September 11, 2007
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CONN'S, INC.
(Exact name of registrant as specified in charter)
Delaware
(State or other Jurisdiction of Incorporation or Organization)
000-50421 06-1672840
(Commission File Number) (IRS Employer
Identification No.)
3295 College Street
Beaumont, Texas 77701
(Address of Principal Executive
Offices and zip code)
(409) 832-1696
(Registrant's telephone
number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Securities Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) 12 under the
Securities Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) 12 under the
Securities Act (17 CFR 240.13e-2(c))
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Item 1.01 Entry into a Material Definitive Agreement.
On September 11, 2007, the Company issued a press release announcing its
entering into an Amended and Restated Series 2002-A Supplement to Base Indenture
and an Amended and Restated Note Purchase Agreement. A copy of the press release
is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
Amended and Restated Series 2002-A Supplement to Base Indenture; Amended
and Restated Note Purchase Agreement: On September 10, 2007, the Company,
through Conn Funding II, L.P. (CFII), a special purpose affiliate of the
Company, entered an "Amended and Restated Series 2002-A Supplement to Base
Indenture dated September 1, 2002" with Wells Fargo Bank, National Association,
as Trustee, amending its "Base Indenture" dated September 1, 2002 (as amended,
supplemented and otherwise modified through the date of the Second Supplemental
Indenture); and an "Amended and Restated Note Purchase Agreement" with Conn
Funding II, L.P., as Issuer, Conn Appliances, Inc., a wholly owned subsidiary of
the Company as Seller, Three Pillars Funding LLC, as a Conduit Purchaser, Park
Avenue Receivables Company, LLC (PARCO), as a Conduit Purchaser, JPMorgan Chase
Bank, N.A., as Funding Agent and as Committed Purchaser, and SunTrust Robinson
Humphrey, Inc., as the Administrator, amending its Note Purchase Agreement dated
September 1, 2002.
These Amendments provide for an increase in the Variable Funding Note
issued under the Indenture from $300,000,000 to $450,000,000, and extends the
term of $200 million of the Variable Funding Note for one year to September
2012. The $150 million increase is renewable annually with an initial maturity
date in July 2008, which will be accelerated when a long-term, fixed-rate bond
issuance is completed. During the time period that the increased commitment is
outstanding, CFII is subject to an Additional Cash Reserve Amount if the Net
Portfolio Yield, which was 9.0% at July 31, 2007, falls below 5%. Debt service
coverage ratio, total adjusted leverage ratio and minimum net worth covenants
relative to the performance of Conn's, Inc. were also added. Additionally, PARCO
joined as an additional purchaser and is providing one-third of the commitment,
while Three Pillars Funding LLC, originally the sole purchaser, provides
two-thirds of the commitment.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
We are not directly liable to the lenders under the asset-backed
securitization facility described under Item 1.01. If the QSPE is unable to
repay the notes due to the QSPE's inability to collect the transferred customer
accounts, the QSPE could not pay the subordinated notes it has issued to us in
partial payment for transferred customer accounts.
Item 9.01 Exhibits.
Exhibit 99.1 Press Release, dated September 11, 2007
Exhibit 99.2 Amended and Restated Series 2002-A Supplement
to Base Indenture
Exhibit 99.3 Amended and Restated Note Purchase Agreement
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONN'S, INC.
Date: September 11, 2007 By: /s/ David L. Rogers
---------------------------------------
David L. Rogers
Chief Financial Officer
Exhibit 99.1
Conn's, Inc. Reports Increase in Securitization Funding Capacity
and Addition of a New Co-Purchaser
BEAUMONT, Texas--(BUSINESS WIRE)--Sept. 11, 2007--Conn's, Inc.
(NASDAQ/NM:CONN), a specialty retailer of home appliances, consumer
electronics, computers, mattresses, furniture and lawn and garden
products, today announced that its qualified special purpose entity
(QSPE) has executed an expansion of its existing 2002 Series A
variable funding note to provide additional liquidity and support the
continued growth of the credit portfolio.
The expansion increases the QSPE's borrowing capacity under the
variable funding note to $450 million, an increase of $150 million.
Further, the QSPE diversified the funding sources supporting the
variable funding note with one of the world's largest global financial
services firms joining as a co-purchaser and providing one-third of
the total commitment. The existing co-purchaser of the variable
funding note supports the remaining two-thirds of the total
commitment. There was $192.5 million outstanding under the variable
funding note at July 31, 2007. Including the Company's invested cash
balance and borrowing capacity at July 31, 2007, this increase brings
the total unused capital available for growth and repayment of debt to
approximately $365 million. The $150 million capacity increase is
renewable annually with an initial maturity date in July 2008, which
will be accelerated when a long-term, fixed-rate bond issuance is
completed. More information about the transaction and its participants
can be found in the Current Report on Form 8-K filed today.
"We believe this expanded borrowing capacity and addition of a new
co-purchaser is recognition by the banking community, and our
long-time valued business partners, of the strength, performance, and
growth opportunities of our Company," said Thomas J. Frank, Conn's
Chairman and Chief Executive Officer. "This additional capacity
provides liquidity to support our growth plans, while the QSPE works
on completing the process of obtaining long-term financing for its
continued growth."
About Conn's, Inc.
The Company is a specialty retailer currently operating 63 retail
locations in Texas and Louisiana: 21 stores in the Houston area, 14 in
the Dallas/Fort Worth Metroplex, 10 in San Antonio, five in Austin,
four in Southeast Texas, one in Corpus Christi, two in South Texas and
six stores in Louisiana. It sells major home appliances, including
refrigerators, freezers, washers, dryers and ranges, and a variety of
consumer electronics, including micro-display projection, plasma and
LCD flat-panel televisions, camcorders, digital cameras, computers and
computer peripherals, DVD players (both standard and high definition),
portable audio and home theater products. The Company also sells lawn
and garden products, furniture and mattresses, and continues to
introduce additional product categories for the home to help respond
to its customers' product needs and to increase same store sales.
Unlike many of its competitors, the Company provides flexible
in-house credit options for its customers. In the last three years,
the Company has financed, on average, approximately 58% of retail
sales. Customer receivables are financed substantially through an
asset-backed securitization facility, from which the Company derives
servicing fee income and interest income. The Company transfers
receivables, consisting of retail installment contracts and revolving
accounts for credit extended to its customers, to a QSPE in exchange
for cash and subordinated securities. The QSPE funds its purchases of
the receivables through the issuance of asset-backed and variable
funding notes issued to third parties and subordinated securities to
the Company.
This press release contains forward-looking statements that
involve risks and uncertainties. Such forward-looking statements
generally can be identified by the use of forward-looking terminology
such as "may," "will," "expect," "intend," "could," "estimate,"
"should," "anticipate," or "believe," or the negative thereof or
variations thereon or similar terminology. Although the Company
believes that the expectations reflected in such forward-looking
statements will prove to be correct, the Company can give no assurance
that such expectations will prove to be correct and there can be no
assurance that the QSPE will be able to issue additional fixed rate
bonds, or if it does, it will be prior to the maturity of the increase
of the capacity under the 2002 Series A variable funding note. The
actual future performance of the Company and the QSPE could differ
materially from such statements. Factors that could cause or
contribute to such differences include, but are not limited to:
interest rates; volatility in the bond markets; delinquency and loss
trends in the receivables portfolio; borrowings from its revolving
line of credit and proceeds from securitizations to fund operations,
debt repayment and expansion; the Company's growth strategy and plans
regarding opening new stores and entering new markets; the Company's
intention to update or expand existing stores; the Company's estimated
capital expenditures and costs related to the opening of new stores or
the update or expansion of existing stores; the Company's ability to
introduce additional product categories; the Company's cash flow from
operations; growth trends and projected sales in the home appliance
and consumer electronics industry and the Company's ability to
capitalize on such growth; relationships with the Company's key
suppliers; the results of the Company's litigation; weather conditions
in the Company's markets; changes in the Company's stock price; and
the actual number of shares of common stock outstanding. Further
information on these risk factors is included in the Company's filings
with the Securities and Exchange Commission, including the Company's
annual report on Form 10-K filed on March 29, 2007. You are cautioned
not to place undue reliance on these forward-looking statements, which
speak only as of the date of this press release. Except as required by
law, the Company is not obligated to publicly release any revisions to
these forward-looking statements to reflect the events or
circumstances after the date of this press release or to reflect the
occurrence of unanticipated events.
CONTACT: Conn's, Inc., Beaumont
Chairman and CEO
Thomas J. Frank, 409-832-1696 Ext. 3218
Exhibit 99.2
CONN FUNDING II, L.P.,
as Issuer
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
AMENDED AND RESTATED SERIES 2002-A SUPPLEMENT
Dated as of September 10, 2007
to
BASE INDENTURE
Dated as of September 1, 2002
CONN FUNDING II, L.P.
SERIES 2002-A
Variable Funding Asset Backed Floating Rate Notes
2
TABLE OF CONTENTS
Page
PRELIMINARY STATEMENT..................................................1
DESIGNATION............................................................1
SECTION 1. Definitions................................................1
SECTION 2. Article 3 of the Base Indenture...........................11
SECTION 3.1 Initial Issuance; Procedure for Increasing the Investor
Interest .................................................11
SECTION 3.2 Procedure for Decreasing the Investor Interest..................12
SECTION 3. Servicing Compensation..........................................13
SECTION 4. Cleanup Call..............................................13
SECTION 5. Delivery and Payment for the Notes........................14
SECTION 6 Form of Delivery of the Notes; Depository; Denominations;
Transfer Provisions...14
SECTION 7. Article 5 of Base Indenture...............................17
SECTION 5.11 Allocations..............................................17
SECTION 5.12 Determination of Monthly Interest.........................18
SECTION 5.13 Determination of Monthly Principal........................19
SECTION 5.14 Coverage of Required Amount...............................19
SECTION 5.15 Monthly Payments..........................................19
SECTION 5.16 Investor Charge-Offs......................................23
SECTION 5.17 Allocation of Excess Amounts..............................23
SECTION 5.18 Servicer's Failure to Make a Deposit or Payment...........24
SECTION 5.19 Shared Principal Collections..............................24
SECTION 5.20 [Reserved]................................................24
SECTION 5.21 Excess Funding Account....................................24
SECTION 5.22 Payment of Fees...........................................26
SECTION 8. Article 6 of the Base Indenture...........................26
SECTION 6.1 Distributions...................................................26
SECTION 6.2 Monthly Noteholders' Statement..................................26
SECTION 9. Series 2002-A Pay Out Events..............................28
3
SECTION 10. Article 7 of the Base Indenture...........................31
SECTION 7.1 Representations and Warranties of the Issuer....................31
SECTION 7.2 Reaffirmation of Representations and Warranties by the Issuer...35
SECTION 11. Redemption Provision......................................35
SECTION 12. Amendments and Waiver.....................................35
SECTION 13. Counterparts..............................................36
SECTION 14. Governing Law.............................................36
SECTION 15. Waiver of Trial by Jury...................................36
SECTION 16. No Petition...............................................36
SECTION 17. Rights of the Trustee.....................................36
SECTION 18. Issuer Additional Issuance Requirements...................36
4
EXHIBIT A Form of Third Amended and Restated Series 2002-A Note
EXHIBIT B Form of Monthly Noteholders' Statement
EXHIBIT C Form of Transfer Certificate
EXHIBIT D Form of Notice of Voluntary Decrease
SCHEDULE 1 List of Proceedings
SCHEDULE 2 List of Trade Names
This AMENDED AND RESTATED SERIES 2002-A SUPPLEMENT, dated as of
September 10, 2007 (as amended, modified, restated or supplemented from time to
time in accordance with the terms hereof, this "Series Supplement"), by and
among CONN FUNDING II, L.P., a special purpose limited partnership established
under the laws of Texas, as issuer ("Issuer"), and WELLS FARGO BANK, NATIONAL
ASSOCIATION (as successor to Wells Fargo Bank Minnesota, National Association),
a banking association organized and existing under the laws of the United States
of America, as trustee (together with its successors in trust under the Base
Indenture referred to below, the "Trustee") is a Series Supplement to the Base
Indenture, dated as of September 1, 2002, between the Issuer and the Trustee (as
amended, modified, restated or supplemented from time to time, exclusive of
Series Supplements, the "Base Indenture").
PRELIMINARY STATEMENT
---------------------
WHEREAS, Section 2.2 of the Base Indenture provides, among other
things, that Issuer and the Trustee may at any time and from time to time enter
into a series supplement to the Base Indenture for the purpose of authorizing
the issuance of one or more Series of Notes.
WHEREAS, the Issuer and the Trustee have entered into that certain
Series 2002-A Supplement, dated as of September 1, 2002 (as amended prior to the
date hereof, the "Original Series Supplement").
NOW, THEREFORE, the parties hereto hereby agree to amend and restate
the Original Series Supplement in its entirety as follows:
DESIGNATION
-----------
(a) There is hereby amended and restated a Series of notes to be
issued pursuant to the Base Indenture and this Series Supplement and such Series
of notes shall be substantially in the form of Exhibit A hereto, executed by or
on behalf of the Issuer and authenticated by the Trustee and designated
generally Variable Funding Asset Backed Floating Rate Notes, Series 2002-A (the
"Notes"). The Notes shall be issued in minimum denominations of $500,000 (and in
integral multiples of $100,000 in excess thereof).
(b) Series 2002-A (as defined below) shall not be subordinated to
any other Series.
SECTION 1. Definitions. In the event that any term or provision
contained herein shall conflict with or be inconsistent with any
provision contained in the Base Indenture, the terms and provisions of
this Series Supplement shall govern. All Article, Section or subsection
references herein mean Articles, Sections or subsections of this Series
Supplement, except as otherwise provided herein. All capitalized terms
not otherwise defined herein are defined in the Base Indenture. Each
capitalized term defined herein shall relate only to the Notes and no
other Series of Notes issued by the Issuer.
1
"Additional Amounts" means all amounts owed by the Issuer pursuant
to Section 2.11 and Article VIII of the Note Purchase Agreement and Breakage
Amounts (as defined in the Note Purchase Agreement).
"Additional Cash Reserve Amount" means, on any date, if the Net
Portfolio Yield averaged over the three preceding Monthly Periods (i) exceeds
5.0%, $0, (ii) exceeds 4.0% but does not exceed 5.0%, 2.0% of the outstanding
principal amount of the Notes on such date, (iii) exceeds 3.0% but does not
exceed 4.0%, 3.0% of the outstanding principal amount of the Notes on such date,
(iv) is 3.0% or less, 4.0% of the outstanding principal amount of the Notes on
such date.
"Additional Interest" has the meaning specified in Section 5.12.
"Administrator" has the meaning specified in the Note Purchase
Agreement.
"Aggregate Investor Default Amount" means, with respect to any
Monthly Period, an amount equal to the product of (a) the aggregate Outstanding
Principal Balance of all Receivables that became Defaulted Receivables during
such Monthly Period (each respective Outstanding Principal Balance being
measured as of the date the relevant Receivable became a Defaulted Receivable)
minus any Deemed Collections deposited into the Collection Account during such
Monthly Period in respect of Receivables that have become Defaulted Receivables
before or during such Monthly Period and (b) the Floating Investor Percentage
with respect to such Monthly Period.
"Aggregate Net Investor Charge-Offs" means, on any date of
determination, the sum of the "Net Investor Charge-Offs" or similar amount for
each Series.
"Available Funds" means, with respect to any Monthly Period, an
amount equal to the Investor Percentage of Collections of Finance Charges,
Recoveries and Investment Earnings deposited in the Finance Charge Account for
such Monthly Period (or to be deposited in the Finance Charge Account on the
related Series Transfer Date with respect to the preceding Monthly Period
pursuant to the third paragraph of subsection 5.4(a) of the Base Indenture).
"Available Investor Principal Collections" means (A) with respect to
the Notes and any Monthly Period, an amount equal to (i) the Investor Principal
Collections for such Monthly Period, plus (ii) the amount of Shared Principal
Collections that are allocated to Series 2002-A in accordance with Section 5.19,
and (B) when used with respect to any other Series, has the meaning specified in
the applicable Series Supplement.
"Available Issuer Interest" has the meaning specified in the
definition of Coverage Test.
"Bank" has the meaning specified in paragraph 6(c)(i).
"Cash Option" means a provision in any Contract which provides for
the application of interest payments theretofore made by the related Obligor
against the Outstanding Principal Balance of the related Receivable if such
Obligor shall pay the Outstanding Principal Balance (less the interest to be so
credited) on or prior to the end of the related Cash Option Period.
2
"Cash Option Amount" means, as of any Determination Date, with
respect to the outstanding Cash Option Receivables, the product of (i) the
highest Portfolio Yield during the past twelve months divided by twelve, times
(ii) the aggregate Outstanding Principal Balance of such Cash Option
Receivables, times (iii) the weighted average Cash Option Period for such Cash
Option Receivables (expressed in months).
"Cash Option Period" means, with respect to any Cash Option
Receivable, the period, not to exceed forty-eight months, from and including the
Initiation Date for such Cash Option Receivable and ending on the last day, as
set forth in the related Contract, that the related Obligor may exercise the
Cash Option.
"Cash Option Receivable" means any Purchased Receivable which
includes a Cash Option.
"Change in Control" shall mean any of the following:
(a) the acquisition of ownership by any Person or group (other than
one or more shareholders of Conn (determined as of the Closing Date)) of shares
representing more than 50% of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of Conn's Inc., a Delaware corporation
("Conn's Inc."); or
(b) the failure of Conn's Inc. to own 100% of the equity interest of
Conn; or
(c) the failure of Conn to directly or indirectly through its
Subsidiaries own 100% of the equity interest of Issuer.
"Closing Date" means September 13, 2002.
"Commitment Termination Date" means the Final Purchase Expiration
Date (as such term is defined in, and may be amended pursuant to, the Note
Purchase Agreement).
"Committed Purchaser" has the meaning specified in the Note Purchase
Agreement.
"Conduit Purchasers" has the meaning specified in the Note Purchase
Agreement.
"Contingent Liability" means any agreement, undertaking or
arrangement by which any Person guarantees, endorses or otherwise becomes or is
contingently liable upon (by direct or indirect agreement, contingent or
otherwise, to provide funds for payment, to supply funds to, or otherwise to
invest in, a debtor, or otherwise to assure a creditor against loss) the
indebtedness, obligation or any other liability of any other Person (other than
by endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person.
The amount of any Person's obligation under any Contingent Liability shall
(subject to any limitation set forth therein) be deemed to be the outstanding
principal amount (or maximum outstanding principal amount, if larger) of the
debt, obligation or other liability guaranteed thereby.
3
"Coverage Test" means, on any date of determination, that (i) the
Issuer Interest as of such date exceeds the largest required "Minimum Issuer
Interest" of any outstanding Series (such excess being herein called the
"Available Issuer Interest") as of such date (determined by the Servicer taking
into account any increases, decreases and status changes of the Receivables and
any increases or decreases in the outstanding notes including those scheduled to
occur on such date) and (ii) the Aggregate Net Investor Charge-Offs is zero as
of such date.
"Cumulative Series Principal Shortfall" means the sum of the Series
Principal Shortfalls (as such term is defined in each of the related Series
Supplements) for each Series.
"Decrease" means a Mandatory Decrease or a Voluntary Decrease, as
applicable.
"Default Rate" has the meaning specified in the Note Purchase
Agreement.
"Deficiency Amount" has the meaning specified in Section 5.12.
"Dilution Adjuster" means, with respect to any Monthly Period, (i)
the highest six-month rolling average Dilution Rate during the twelve preceding
Monthly Periods times (ii) (a) if Net Portfolio Yield averaged over the last
three consecutive monthly periods is less than 4.00%, 4.00 or (b) otherwise,
3.25.
"Dilution Rate" means, with respect to any Monthly Period, the ratio
(expressed as a percentage) computed as of the last day of such Monthly Period
equal to the result of (i) an amount equal to the total returns for such Monthly
Period, divided by (ii) an amount equal to total sales by the Sellers for such
Monthly Period times, (iii) the aggregate original principal balance (other than
that portion of the principal balance attributable to insurance premium in
respect of any Merchandise) of Receivables originated during such Monthly
Period, divided by (iv) the quotient of (A) the sum of (I) the aggregate
Outstanding Principal Balance of all Receivables as of the last day of the
previous Monthly Period, plus (II) the aggregate Outstanding Principal Balance
of all Receivables as of such last day of such Monthly Period, divided by (B)
two, times (v) twelve.
"Excess Funding Account" has the meaning specified in subsection
5.21(a).
"Excess Spread" means, with respect to any Series Transfer Date, the
amounts with respect to such Series Transfer Date, if any, specified pursuant to
paragraph 5.15(a)(vii).
"Fees" means all of the amounts payable in connection with the Fee
Letters (as such term is defined in the Note Purchase Agreement).
"Final Purchase Expiration Date" has the meaning specified in the
Note Purchase Agreement.
"Finance Charge Collections" means (i) all Collections allocable to
Finance Charges and (ii) all Recoveries allocable to Finance Charges.
4
"Fixed Investor Percentage" means, with respect to any Monthly
Period, the percentage equivalent of a fraction, the numerator of which is the
Investor Interest as of the close of business on the last day of the Revolving
Period and the denominator of which is the sum of the numerators used to
calculate the respective investor percentages used for allocations with respect
to Principal Receivables for all outstanding Series on such date of
determination.
"Floating Investor Percentage" means, with respect to any Monthly
Period, the percentage equivalent of a fraction, the numerator of which is the
Modified Investor Interest for such Monthly Period and the denominator of which
is the sum of the numerators used to calculate the respective investor
percentages used for allocations with respect to Finance Charges, Recoveries,
Investment Earnings, Aggregate Investor Default Amounts, Principal Receivables,
Available Issuer Interest, Servicing Fee or Trustee and Back-up Servicer Fees
and Expenses, as applicable, for all outstanding Series on such date of
determination.
"Funding Agent" has the meaning specified in the Note Purchase
Agreement.
"Gross Loss Adjuster" means, with respect to any Monthly Period, (i)
the highest six-month rolling average Gross Loss Rate during the twelve
immediately preceding Monthly Periods times (ii) (a) if Net Portfolio Yield
averaged over the last three consecutive monthly periods is less than 4.00%,
4.00 or (b) otherwise, 3.25.
"Gross Loss Rate" means, with respect to any Monthly Period, the
ratio (expressed as a percentage) computed as of the last day of such Monthly
Period, by dividing (i) the Outstanding Principal Balance of Defaulted
Receivables which were deemed to be Defaulted Receivables during such Monthly
Period by (ii) (A) the aggregate Outstanding Principal Balance of all
Receivables as of the last day of the previous Monthly Period plus (B) the
aggregate Outstanding Principal Balance of all Receivables as of such last day
of such Monthly Period divided by (C) two and multiplying the result by (iii)
twelve.
"Increase" has the meaning specified in subsection 3.1(a).
"Initial Note Principal" means $28,080,192.
"Initiation Date" means, with respect to any Receivable, the date of
the transaction that gave rise to the original Outstanding Principal Balance of
such Receivable.
"Interest Period" means, with respect to any Payment Date, the
preceding Monthly Period (or, in the case of the first Payment Date, from and
including the Closing Date to and including October 21, 2002).
"Investor Charge-Offs" has the meaning specified in subsection
5.16(a).
"Investor Interest" means, on any date of determination, an amount
equal to (a) the Initial Note Principal, plus (b) the aggregate amount of all
Increases made prior to such date, minus (c) the aggregate amount of principal
payments (including, without limitation, any Decreases) made to Noteholders
prior to such date, minus (d) the aggregate amount of Investor Charge-Offs
pursuant to subsection 5.16(a), plus (e) the aggregate amount of Excess Spread
and funds on deposit in the Excess Funding Account applied on all prior Series
Transfer Dates pursuant to subsection 5.17(b) for the purpose of reimbursing
amounts deducted pursuant to the foregoing clause (d), plus (f) the Required
Reserve Amount. Once all principal and interest on the Notes and any other
amounts payable to the Noteholders, if any, pursuant to the Transaction
Documents have been paid in full, the Investor Interest shall be zero.
5
"Investor Percentage" means, for any Monthly Period, (a) with
respect to Finance Charges, Recoveries, Investment Earnings, Aggregate Investor
Default Amounts, Available Issuer Interest, Servicing Fee and Trustee and
Back-Up Servicer Fees and Expenses at any time and Principal Receivables during
the Revolving Period, the Floating Investor Percentage and (b) with respect to
Principal Receivables during the Rapid Amortization Period, the Fixed Investor
Percentage.
"Investor Principal Collections" means, with respect to any Monthly
Period, the sum of (a) the Investor Percentage of the aggregate amount deposited
into the Principal Account (less any Issuer Distributions) for such Monthly
Period pursuant to paragraph 5.11(a)(i), (b) the aggregate amount to be treated
as Investor Principal Collections for such Monthly Period pursuant to paragraph
5.15(a)(iii) and Section 5.17, and (c) in connection with the purchase or
redemption of Notes, the aggregate amount deposited in the Payment Account
pursuant to Section 4 hereof.
"Issuer" is defined in the preamble of this Series Supplement.
"Legal Final Payment Date" means July 30, 2016.
"Mandatory Decrease" has the meaning specified in subsection 3.2(a).
"Maximum Principal Amount" means:
(a) commencing on the Restatement Date and ending on the Tranche C
Purchase Expiration Date, the sum of (i) the Tranche A Principal Amount, plus
(ii) the Tranche B Principal Amount, plus (iii) Tranche C Principal Amount;
(b) commencing on the day following the Tranche C Purchase
Expiration Date and ending on the Tranche A Purchase Expiration Date, the sum of
(i) the Tranche A Principal Amount, plus (ii) the Tranche B Principal Amount;
and
(c) commencing on the day following the Tranche A Purchase
Expiration Date, and ending on the Tranche B Purchase Expiration Date, the
Tranche B Principal Amount.
"Minimum Issuer Interest" means for any date of determination an
amount equal to (a) the Cash Option Amount as of such date plus (b) the
Outstanding Principal Balance of all Receivables that are not Eligible
Receivables as of such date.
"Modified Investor Interest" means for any Monthly Period, the
average daily Investor Interest for such Monthly Period (or, in the case of the
first Monthly Period, from and including the Closing Date to, and including the
last day of such first Monthly Period).
"Monthly Interest" has the meaning specified in subsection 5.12.
6
"Monthly Period" has the meaning specified in the Base Indenture,
except that the first Monthly Period with respect to the Notes shall begin on
and include the Closing Date and shall end on and include September 30, 2002.
"Monthly Principal" has the meaning specified in subsection 5.13.
"Net Investor Charge-Offs" means, on any date of determination, the
excess of (a) the amount described in clause (d) of the definition of Investor
Interest on such date over (b) the amount described in clause (e) of such
definition on such date.
"Net Portfolio Yield" for any Monthly Period (as determined as of
the last day of each Monthly Period) shall mean the annualized percentage
equivalent of a fraction, (a) the numerator of which is equal to the Net Yield
Amount for such Monthly Period and (b) the denominator of which is equal to the
aggregate Outstanding Principal Balance of all Receivables on such day. For
purposes of this definition, "Net Yield Amount" means for any Monthly Period an
amount equal to the excess of the sum of Collections of Finance Charges plus
Recoveries allocable to Finance Charges over the sum of (a) interest and fees
accrued for the current Monthly Period and overdue interest and fees with
respect to the Notes and "Enhancement" of all Series (together with, if
applicable, interest on such overdue interest and fees at the rate specified in
the accompanying series supplements), (b) accrued and unpaid Servicing Fees and
Trustee and Back-Up Servicer Fees and Expenses for such Monthly Period, (c) the
aggregate Outstanding Principal Balance of all Receivables that became Defaulted
Receivables during such Monthly Period (each respective Outstanding Principal
Balance being measured as of the date the relevant Receivable became a Defaulted
Receivable), and (d) any other costs, expenses, or liability of the Issuer of
any nature whatsoever incurred during such Monthly Period (except for the
obligations of the Issuer to pay any principal on the Notes outstanding at such
time or any Business Taxes and except for fee and indemnity expenses for which
cash other than such Monthly Period's Collections are available to the Issuer).
"Note Principal" means on any date of determination the then
outstanding principal amount of the Notes.
"Note Purchase Agreement" means any agreement by and among the
Conduit Purchasers party thereto, the Administrator, the Funding Agent, the
Committed Purchaser, the Issuer and the Seller, pursuant to which the Conduit
Purchasers agree to purchase an interest in Notes from the Issuer, subject to
the terms and conditions set forth therein, or any successor agreement to such
effect among the Issuer and such Conduit Purchasers or its successors, as
amended, supplemented or otherwise modified from time to time.
"Note Rate" has the meaning specified in the Note Purchase
Agreement.
"Noteholder" means with respect to any Note, the holder of record of
such Note.
"Notes" has the meaning specified in paragraph (a) of the
Designation.
"Notice Persons" means the Administrator and the Funding Agent.
"Parent" shall mean Conn Appliances, Inc.
7
"Payment Account" means the account established as such for the
benefit of the Secured Parties of this Series 2002-A pursuant to subsection
5.3(c) of the Base Indenture.
"Payment Date" means October 21, 2002 and the twentieth day of each
calendar month thereafter, or if such twentieth day is not a Business Day, the
next succeeding Business Day.
"Payment Rate" shall mean, with respect to any Monthly Period, the
ratio (expressed as a percentage) computed as of the last day of such Monthly
Period by dividing (i) an amount equal to all Collections received with respect
to the Principal Receivables and Finance Charges during such Monthly Period by
(ii) (A) the aggregate Outstanding Principal Balance of all Receivables as of
the last day of the previous Monthly Period plus (B) the aggregate Outstanding
Principal Balance of all Receivables as of such last day of such Monthly Period
divided by (C) two.
"Payoff Date" means the date on which all principal and interest on
the Notes and any other amounts directly related to Series 2002-A payable to any
Noteholder, the Administrator or the Funding Agent under the Transaction
Documents have been indefeasibly paid in full.
"Permissible Uses" means the amount of funds to be used by the
Issuer to pay (i) the Servicer Letter of Credit Bank any amounts payable thereto
by the Issuer under the reimbursement agreement for the Servicer Letter of
Credit, (ii) the Seller for Subsequently Purchased Receivables (directly or
through repayment of any subordinated notes issued to the Seller), (iii) its
equity owners, as a dividend distribution (so long as the Issuer has a net worth
(in accordance with GAAP) of at least 1% of the outstanding principal amount of
the Notes after giving effect thereto) and (iv) other expenses of the Issuer not
prohibited by the Transaction Documents.
"Portfolio Yield" means, with respect to Eligible Receivables for
any Monthly Period, the ratio (expressed as a percentage) computed as of the
last day of such Monthly Period by dividing (i) the amount of all Finance Charge
Collections (other than amounts described in clause (iii) of the definition
thereof) received during such Monthly Period, by (ii) (A) the aggregate
Outstanding Principal Balance of all Receivables as of the last day of the
previous Monthly Period plus (B) the aggregate Outstanding Principal Balance of
all Receivables as of such last day of such Monthly Period divided by (C) two
and multiplying the result by (iii) twelve.
"Portfolio Yield Adjuster" means, with respect to any Monthly
Period, (i) if Net Portfolio Yield averaged over the last three consecutive
Monthly Periods is less than 4.00%, the greater of (a) the difference (which may
be a negative number) of (I) 18.0%, minus (II) the lowest six-month rolling
average Portfolio Yield during the twelve preceding Monthly Periods and (b)
- -3.00% or (ii) otherwise, 0%.
"Potential Series 2002-A Pay Out Event" shall mean an event which
upon the lapse of time or the giving of notice, or both, would constitute a
Series 2002-A Pay Out Event.
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"Principal Reallocation Amount" means the Investor Percentage
(determined with regard to only (and only to the extent of) those Series with
respect to which principal is being reallocated pursuant to a corresponding
provision at such time) of the Available Issuer Interest (after giving effect to
any reduction pursuant to Section 5.16 or the definition of Required Reserve
Amount on such day or pursuant to any comparable provisions of any other Series
Supplement of any other Series on such day) at such time.
"QIB" has the meaning specified in paragraph 6(c)(i).
"Rapid Amortization Period" means the Amortization Period commencing
on the Rapid Pay Out Commencement Date and ending on the Series 2002-A
Termination Date.
"Rapid Pay Out Commencement Date" means the earliest of (i) the
Commitment Termination Date, (ii) the date on which an Issuer Pay Out Event is
deemed to occur pursuant to Section 9.1 of the Base Indenture or (iii) the date
on which a Series 2002-A Pay Out Event is deemed to occur pursuant to Section 9
of this Series Supplement.
"Rating Agency" means Moody's and Standard & Poor's and any other
nationally recognized statistical rating organization from which a rating for
the commercial paper issued by a Conduit Purchaser (at the request thereof) is
currently in effect.
"Redemption Date" means the date on which the Notes are redeemed in
full pursuant to Section 4 or 11 hereof.
"Required Amount" has the meaning specified in subsection 5.14(a).
"Required Persons" means Holders of Notes representing at least 100%
of the aggregate Note Principal of all Notes.
"Required Reserve Amount" shall mean, at any time, the sum of (I)
the greater of (a) $7,500,000 and (b) an amount equal to (i) the Note Principal
at such time, multiplied by (ii)(A) the Required Reserve Percentage at such
time, divided by (B) 100% minus the Required Reserve Percentage at such time,
plus (II)(A) commencing on the Restatement Date and ending on the Tranche C
Purchase Expiration Date, the Additional Cash Reserve Amount, and (B)
thereafter, zero; provided, however, that the Required Reserve Amount shall be
fixed during the Rapid Amortization Period as of the Rapid Pay Out Commencement
Date; provided, further, that the Required Reserve Amount may only increase from
time to time to the extent of the Investor Percentage (determined with regard to
only (and only to the extent of) those Series with respect to which the
"Required Reserve Amount" is increasing at such time) of the Available Issuer
Interest (after giving effect to any reductions pursuant to Section 5.16 but
prior to any reductions with respect to Principal Reallocation Amounts on such
day, or pursuant to any comparable provisions of any other Series Supplement for
any Series on such day) at such time.
"Required Reserve Percentage" means the ratio (expressed as a
percentage) equal to the sum of (a) the Gross Loss Adjuster, (b) the Dilution
Adjuster, and (c) the Portfolio Yield Adjuster; provided that the Required
Reserve Percentage shall not be less than 15.0%.
"Restatement Date" means September 10, 2007.
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"Revolving Period" means the period from and including the Closing
Date to, but not including, the Rapid Pay Out Commencement Date.
"Rule 144A" has the meaning specified in paragraph 6(c)(i).
"Series 2002-A" means the Series of the Variable Funding Asset
Backed Floating Rate Notes represented by the Notes.
"Series 2002-A Pay Out Event" has the meaning specified in Section
9.
"Series 2002-A Termination Date" means the earliest to occur of (a)
the Payment Date on which the Notes, plus all other amounts due and owing to the
Noteholders, if any, are paid in full, (b) the Legal Final Payment Date and (c)
the Indenture Termination Date.
"Series Principal Shortfall" means with respect to the Notes and any
Series Transfer Date, the excess, if any, of (a) (i) with respect to any Series
Transfer Date related to a Mandatory Decrease, the amount of such Mandatory
Decrease, (ii) with respect to any Series Transfer Date during the Rapid
Amortization Period, the Investor Interest (but not less than the Note
Principal) or (iii) with respect to any other Series Transfer Date, zero, over
(b) the Investor Principal Collections for such Series Transfer Date.
"Shared Principal Collections" means, with respect to any Series
Transfer Date, either (a) the amount allocated to the Notes which may be applied
to the "Series Principal Shortfall" with respect to other outstanding Series or
(b) the amounts allocated to the notes of other Series which the applicable
Series Supplements for such Series specify are to be treated as "Shared
Principal Collections" and which may be applied to cover the Series Principal
Shortfall with respect to the Notes.
"Solvent" means with respect to any Person that as of the date of
determination both (A)(i) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including Contingent
Liabilities) of such Person and (z) not less than the amount that will be
required to pay the probable liabilities on such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (B) such Person is
"solvent" within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
"Tranche A Principal Amount" means $100,000,000.
"Tranche B Principal Amount" means $200,000,000.
"Tranche C Principal Amount" means $150,000,000.
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"Tranche A Purchase Expiration Date" has the meaning specified in
the Note Purchase Agreement.
"Tranche B Purchase Expiration Date" has the meaning specified in
the Note Purchase Agreement.
"Tranche C Purchase Expiration Date" has the meaning specified in
the Note Purchase Agreement.
"Voluntary Decrease" has the meaning specified in subsection 3.2(b).
SECTION 2. Article 3 of the Base Indenture. Article 3 shall be read
in its entirety as follows and shall be applicable only to the Notes:
ARTICLE 3
INITIAL ISSUANCE AND INCREASES AND DECREASES
OF INVESTOR INTEREST AND NOTES
SECTION 3.1 Initial Issuance; Procedure for Increasing the
Investor Interest.
(a) (i) On the Closing Date, the Issuer issued Notes in accordance
with Section 2.2 of the Base Indenture and Section 6 of the Original Series
Supplement and subject to satisfaction of the conditions precedent set forth in
subsection (b) of this Section 3.1 (other than clause (b)(i)), on the
Restatement Date the Issuer will replace such Notes, as amended, with Notes in
the aggregate initial principal amount equal to the Maximum Principal Amount and
(ii) on any Business Day during the Revolving Period, the Issuer may increase
the Investor Interest (each such increase referred to as an "Increase"), upon
one Business Day's prior written notice (delivered by 12:00 noon New York time)
to the Trustee, Administrator and the Funding Agent, by reducing the Issuer
Interest and increasing the Note Principal, pro rata for all Notes, by an amount
equal to such Increase; provided that the Issuer shall not request more than two
Increases during any Monthly Period.
(b) The Investor Interest may be increased on any Business Day
during the Revolving Period pursuant to subsection (a) above, only upon
satisfaction of each of the following conditions with respect to such initial
issuance and each proposed Increase:
(i) The aggregate amount of each issuance or Increase shall be
equal to or greater than $1,000,000 (and in integral multiples of
$100,000 in excess thereof);
(ii) After giving effect to such issuance or Increase, the
Note Principal shall not exceed the Maximum Principal Amount;
(iii) The Coverage Test is satisfied and, if SunTrust Bank (or
any Affiliate thereof) is the Servicer Letter of Credit Bank, there
are no outstanding draws on the Servicer Letter of Credit;
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(iv) After giving effect to any Increase, the Net Investor
Charge-Offs is zero;
(v) Such issuance or Increase and the application of the
proceeds thereof shall not result in the occurrence of (1) a Pay Out
Event for any Series, Servicer Default or an Event of Default, or
(2) an event or occurrence, which, with the passing of time or the
giving of notice thereof, or both, would become a Pay Out Event for
any Series, Servicer Default or an Event of Default; and
(vi) All required consents have been obtained and all other
conditions precedent to the purchase of the Notes and the making of
advances under the Note Purchase Agreement shall have been
satisfied.
(c) Upon receipt of the proceeds of such issuance or Increase by or
on behalf of the Issuer, the Trustee shall, or shall cause the Transfer Agent
and Registrar to, indicate in the Note Register the amount thereof.
(d) The Issuer shall not issue additional Notes of this Series. For
this purpose, neither an Increase pursuant to subsection 3.1(b) nor an amendment
to this Series Supplement to increase the Maximum Principal Amount shall
constitute the issuance of additional Notes.
(e) Notwithstanding anything to the contrary in this Section 3.1 or
in Section 3.2, the Issuer may allocate "Increases" and "Decreases" among the
VFN Series (but not among individual Notes of this Series) on a non-pro rata
basis, provided that (i) the Issuer shall not (unless necessary in order to
comply with paragraph (ii) of this subsection (e)) disproportionately allocate
"Increases" or "Decreases" to the same Series for two or more consecutive
"Increases" or "Decreases" (as the case may be) and (ii) the Issuer shall use
its reasonable best efforts to allocate "Increases" and "Decreases" among the
VFN Series such that the aggregate "Note Principal" of the VFN Series is at all
times ratably allocated among the VFN Series according to their respective
"Maximum Principal Amounts".
SECTION 3.2 Procedure for Decreasing the Investor Interest.
(a) Mandatory Decrease. Without limiting Section 9 hereof, if on any
date of determination (i) the Issuer Interest as of the end of the prior Monthly
Period is less than the largest required Minimum Issuer Interest of any Series
outstanding as of such date (unless, on or before the succeeding Series Transfer
Date, a Seller transfers Subsequently Purchased Receivables to the Issuer and/or
the Issuer reduces the outstanding principal balance of any other Series of
notes and, in either case, increases the Issuer Interest so that it is greater
than or equal to such Minimum Issuer Interest) or (ii) the Note Principal
exceeds the Maximum Principal Amount, on or before the following Payment Date,
the Issuer shall deposit or cause to be deposited into the Payment Account from
Available Investor Principal Collections, amounts otherwise payable to the
Issuer (to the extent not required to be paid pursuant to Section 5.22) or other
amounts so designated to be applied in accordance with subsection 5.15(g), a
principal payment to decrease (x) the Investor Interest by the amount necessary,
so that after giving effect to all Decreases of the Investor Interest on the
related Payment Date, the Issuer Interest shall be greater than or equal to the
largest required Minimum Issuer Interest of any Series outstanding and (y) the
Note Principal to an amount equal to the Maximum Principal Amount (each such
decrease pursuant to this subsection 3.2(a), a "Mandatory Decrease"). Each such
Mandatory Decrease shall be on a pro rata basis for all Notes, and "Mandatory
Decreases" of all VFN Series shall occur on a pro rata basis subject to
subsection 3.1(e). Upon such Mandatory Decrease, the Servicer, on behalf of the
Issuer, shall reflect such Decrease in the Monthly Noteholder Statement.
12
(b) Voluntary Decrease. On any Business Day, the Issuer may upon two
Business Days' prior written notice (or seven Business Days' prior written
notice if the Decrease is $10,000,000 or more) (in substantially the form of
Exhibit D hereto) to the Trustee and to the Noteholders (in accordance with the
terms of the Note Purchase Agreement) decrease the Investor Interest (each such
reduction of the Investor Interest pursuant to this subsection 3.2(b), a
"Voluntary Decrease") by depositing or causing to be deposited into the Payment
Account from Available Investor Principal Collections, amounts otherwise payable
to the Issuer (to the extent not required to be paid pursuant to Section 5.22)
or other amounts so designated and distributing to the Noteholders in respect of
principal on the Notes, an amount equal to the amount of such Decrease in
accordance with subsection 5.15(g). Each such Voluntary Decrease shall be on a
pro rata basis for all Notes, the Voluntary Decrease shall be in a minimum
principal amount of $1,000,000 (and in integral multiples of $100,000 in excess
thereof) and shall occur on a pro rata basis subject to subsection 3.1(e). Upon
such Voluntary Decrease, the Servicer, on behalf of the Issuer shall reflect
such Decrease in the Monthly Noteholder Statement.
(c) Principal Amortization. During the Rapid Amortization Period,
principal will be allocated to the Investor Interest (pursuant to Section 5.13)
and paid to the Noteholders on a pro rata basis.
(d) Upon each Decrease and each decrease due to the commencement of
the Rapid Amortization Period, the Trustee shall, or shall cause the Transfer
Agent and Registrar to, indicate in the Note Register the amount thereof.
SECTION 3. Servicing Compensation. The share of the Servicing Fee
allocable to Series 2002-A with respect to any Series Transfer Date shall be
equal to the Investor Percentage of the Servicing Fee for the relevant Monthly
Period. The Servicing Fee shall be paid by the cash flows from the Trust Estate
allocated to the Noteholders or the noteholders of other Series (as provided in
the related series supplements) and in no event shall the Issuer, the Trustee or
the Noteholders be liable therefor. The Servicing Fee allocable to Series 2002-A
shall be payable to the Servicer solely to the extent amounts are available for
distribution in respect thereof pursuant to paragraph 5.15(a)(ii) and subsection
5.17(a).
SECTION 4. Cleanup Call.
(a) The Notes shall be subject to purchase by the initial Servicer,
at its option, in accordance with the terms specified in subsection 12.4(a) of
the Base Indenture, on any Payment Date on or after the Payment Date on which
the Investor Interest is reduced to an amount less than or equal to 10% of the
Maximum Principal Amount as of the Restatement Date.
13
(b) The deposit to the Payment Account required in connection with
any such purchase will be equal to the sum of (i) the Note Principal, plus (ii)
accrued and unpaid interest on the Notes through the day preceding the Payment
Date on which the purchase occurs, plus (iii) any other amounts (including,
without limitation, accrued and unpaid Additional Amounts) payable to the
Noteholders pursuant to the Note Purchase Agreement, minus (iv) the amounts, if
any, on deposit at such Payment Date in the Payment Account for the payment of
the foregoing amounts.
SECTION 5.Delivery and Payment for the Notes. The Trustee shall
execute, authenticate and deliver the Notes in accordance with Section 2.4 of
the Base Indenture and Section 6 below.
SECTION 6. Form of Delivery of the Notes; Depository;
Denominations; Transfer Provisions.
(a) The Notes shall be delivered as Registered Notes in definitive
form as provided in Sections 2.1 and 2.18 of the Base Indenture. The Notes shall
initially be registered in the name of the Administrator for Three Pillars
Funding LLC and the Funding Agent for Park Avenue Receivables Company, LLC, as
applicable, and shall not be transferred, sold or pledged, in whole or in part,
other than pursuant to Section 2.6 of the Base Indenture and this Section 6.
(b) The Notes will be issuable in minimum denominations of $500,000
(and in integral multiples of $100,000 in excess thereof).
(c) When Notes are presented to the Transfer Agent and Registrar or
a co-registrar with a request to register a transfer or to exchange them for an
equal principal amount of Notes of other authorized denominations, the Transfer
Agent and Registrar shall register the transfer or make the exchange if its
requirements for such transaction are met; provided, however, that the Notes
surrendered for transfer or exchange (a) shall be duly endorsed or accompanied
by a written instrument of transfer in form satisfactory to the Issuer and the
Transfer Agent and Registrar, duly executed by the holder thereof or its
attorney, duly authorized in writing and (b) shall be transferred or exchanged
in compliance with the following provisions:
(i) (A) if such Note is being transferred to a qualified
institutional buyer (a "QIB") as defined in, and in accordance with,
Rule 144A under the Securities Act ("Rule 144A"), the transferor
shall, unless the transferee is a party to the Note Purchase
Agreement or is a QIB within the meaning of Rule 144A(a)(1)(vi) (a
"Bank"), provide the Issuer and the Transfer Agent and Registrar
with a certification to that effect (in substantially the form of
Exhibit C hereto); or (B) if such Note is being transferred in
reliance on another exemption from the registration requirements of
the Securities Act, the transferor shall provide the Issuer and the
Transfer Agent and Registrar with a certification to that effect (in
substantially the form of Exhibit C hereto) and, if requested by the
Transfer Agent and Registrar or the Issuer, an opinion of counsel in
form and substance acceptable to the Issuer and to the Transfer
Agent and Registrar to the effect that such transfer is in
compliance with the Securities Act.
14
(ii) each such transferee of such Note shall be deemed to have
made the acknowledgements, representations and agreements set forth
below:
(1) unless it has been advised that the transferor is
relying on an exemption from the registration requirements of
the Securities Act, it is purchasing the Note for its own
account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a
QIB and is aware that the sale to it is being made in reliance
on Rule 144A;
(2) it understands that the Notes have not been and will
not be registered or qualified under the Securities Act or any
applicable state securities laws or the securities laws of any
other jurisdiction and are being offered only in a transaction
not involving any public offering within the meaning of the
Securities Act, that the Issuer is not required to register or
qualify the Notes, and that the Notes may be resold, pledged
or transferred only in compliance with provisions of this
subsection 6(c) and only (A) to the Issuer, (B) to a person
the transferor reasonably believes is a QIB in a transaction
meeting the requirements of Rule 144A or (C) in a transaction
otherwise exempt from the registration requirements of the
Securities Act and, in each case, in accordance with any
applicable securities laws of any state of the United States
or any other jurisdiction and in accordance with the
restrictions set forth herein;
(3) if it desires to offer, sell or otherwise transfer,
pledge or hypothecate the Notes as described in clause (B) or
(C) of the preceding paragraph, it may, pursuant to clause (i)
above, be required to deliver a certificate and, in the case
of clause (C), may be required to deliver an opinion of
counsel if the Issuer and the Transfer Agent and Registrar so
request, in each case, reasonably satisfactory in form and
substance to the Issuer and the Servicer, that an exemption
from the registration requirements of the Securities Act
applies to such offer, sale, transfer or hypothecation; and it
understands that the Registrar and Transfer Agent will not be
required to accept for registration of transfer the Notes
acquired by it, except upon presentation of, if applicable,
the certificate and, if applicable, the opinion described
above;
(4) it agrees that it will, and each subsequent holder
is required to, notify any purchaser of Notes from it of the
resale restrictions referred to in clauses (2) and (3) above,
if then applicable and understands that such notification
requirement will be satisfied, in the case only of transfers
by physical delivery of Definitive Notes, by virtue of the
fact that the following legend will be placed on the Notes
unless otherwise agreed to by the Issuer:
15
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
THE SECURITIES LAWS OF ANY OTHER JURISDICTION. THIS NOTE MAY
BE RESOLD, PLEDGED OR TRANSFERRED ONLY (1) TO A PERSON THE
TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT ("RULE
144A")) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A
OR (2) IN A TRANSACTION OTHERWISE EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES AND ANY OTHER
JURISDICTION AND BASED ON AN OPINION OF COUNSEL IF THE ISSUER
OR TRANSFER AGENT AND REGISTRAR SO REQUEST, IN EACH SUCH CASE,
IN COMPLIANCE WITH THE INDENTURE AND ALL APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
JURISDICTION. THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY TRANSFEREE FROM IT OF THE RESALE
RESTRICTIONS SET FORTH ABOVE.
BY ACQUIRING THIS NOTE, EACH PURCHASER WILL BE DEEMED TO HAVE
REPRESENTED, WARRANTED AND COVENANTED EITHER THAT (A) IT IS
NOT AN "EMPLOYEE BENEFIT PLAN" SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"),
A "PLAN" DESCRIBED IN SECTION 4975(e)(1) OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED, AN ENTITY DEEMED TO HOLD
"PLAN ASSETS" OF ANY OF THE FOREGOING BY REASON OF INVESTMENT
BY AN "EMPLOYEE BENEFIT PLAN" OR "PLAN" IN SUCH ENTITY, OR A
GOVERNMENTAL PLAN SUBJECT TO APPLICABLE LAW THAT IS
SUBSTANTIALLY SIMILAR TO THE FIDUCIARY RESPONSIBILITY
PROVISIONS OF ERISA OR SECTION 4975 OF THE CODE OR (B) ITS
PURCHASE AND HOLDING OF THIS NOTE WILL NOT RESULT IN A
NON-EXEMPT PROHIBITED TRANSACTION UNDER ERISA OR SECTION 4975
OF THE CODE (OR, IN THE CASE OF A GOVERNMENTAL PLAN, ANY
SUBSTANTIALLY SIMILAR APPLICABLE LAW).
(5) it acknowledges that the foregoing restrictions
apply to holders of beneficial interests in the Notes as well
as to Holders of the Notes; and
16
(6) it acknowledges that the Trustee, the Issuer and
their Affiliates and others will rely upon the truth and
accuracy of the foregoing acknowledgments, representations and
agreements and agrees that if any of the acknowledgments,
representations or agreements deemed to have been made by its
purchase of such Notes is no longer accurate, it will promptly
notify the Issuer; and it is acquiring any Notes for the
account of one or more QIBs, it represents that it has sole
investment discretion with respect to each such account and
that it has full power to make the foregoing acknowledgments,
representations and agreements on behalf of each such account;
and
(7) it acknowledges that either (i) no part of the
assets used by it to acquire the Notes constitutes assets of
any employee benefit plan subject to ERISA, Section 4975 of
the Code or any entity deemed to hold plan assets of any of
the foregoing by reason of investment by an employee benefit
plan or plan in the entity or (ii) its purchase and holding of
the Notes will not, throughout the term of holding, constitute
a non-exempt "prohibited transaction" under Section 406 of
ERISA or Section 4975 of the Code by reason of the application
of one or more statutory or administrative exemptions from
such prohibited transaction rules or otherwise.
In addition, such transferee, unless it is a party to the Note
Purchase Agreement or a Bank, shall be responsible for providing additional
information or certification, as shall be reasonably requested by the Trustee or
Issuer, to support the truth and accuracy of the foregoing acknowledgements,
representations and agreements, it being understood that such additional
information is not intended to create additional restrictions on the transfer of
the Notes.
SECTION 7. Article 5 of Base Indenture. Sections 5.1, 5.2, 5.3,
5.4, 5.5, 5.6, 5.7, 5.8, 5.9 and 5.10 of the Base Indenture shall be read in
their entirety as provided in the Base Indenture. The following provisions,
however, shall constitute part of Article 5 of the Indenture solely for purposes
of Series 2002-A and shall be applicable only to the Notes (except as otherwise
provided in the following provisions or in another Series Supplement):
ARTICLE 6
ALLOCATION AND APPLICATION OF COLLECTIONS
SECTION 5.11 Allocations.
(a) Allocations of Collections. On each day any Collections are
deposited in the Collection Account, the Servicer shall, prior to the close of
business on such day, make the following deposits from the Collection Account:
(i) Deposit into the Principal Account all Collections
received in respect of Principal Receivables on such date (such
deposit to be applied in accordance with the Indenture and
subsection 5.15(b)); and
17
(ii) Deposit into the Finance Charge Account all Collections
received in respect of Finance Charges, Recoveries, Investment
Earnings or otherwise (but not in respect of Principal Receivables)
on such date (such deposit to be applied in accordance with the
Indenture and subsection 5.15(a)).
(b) Excess Funding Collections. Any Collections deposited into the
Excess Funding Account pursuant to Section 5.15 shall be held in the Excess
Funding Account and, prior to the commencement of the Rapid Amortization Period,
shall be first applied in accordance with Section 5.17 and then paid, first, to
the Servicer Letter of Credit Bank to the extent of any amounts payable thereto
by the Issuer under the reimbursement agreement for the Servicer Letter of
Credit and, second, to the Issuer, in each case on any date (so long as the
Coverage Test remains satisfied (or will be satisfied on such date through the
use of such Collections to pay for Subsequently Purchased Receivables from the
Seller) and such payment and the application thereof shall not result in the
occurrence of (1) a Pay Out Event for any Series, a Servicer Default or an Event
of Default, or (2) in the case of Permissible Uses of the type described in
clauses (ii) and (iii) of the definition thereof, an event or occurrence, which,
with the passing of time or the giving of notice thereof, or both, would become
a Pay Out Event for any Series, Servicer Default or an Event of Default) to the
extent of (and to be used solely for) Permissible Uses on such date as
determined by the Servicer; provided, however, that if an Accumulation Period or
an Amortization Period commences with respect to any Series, any funds on
deposit in the Excess Funding Account shall be first applied in accordance with
Section 5.17 and then released from the Excess Funding Account, deposited in the
Principal Account and treated as Shared Principal Collections to the extent
needed to cover principal payments due to such Series; provided, however, that
$10,000 shall remain on deposit in the Excess Funding Account for use to pay
expenses of the Issuer not prohibited by the Transaction Documents, as
determined by the Servicer.
SECTION 5.12 Determination of Monthly Interest. The amount of
monthly interest payable on the Notes shall be determined as of each
Determination Date and shall be an amount equal to the product of (i)(A) a
fraction, the numerator of which is the actual number of days in the related
Interest Period and the denominator of which is 360, times (B) the weighted
average Note Rate in effect with respect to the related Interest Period, and
(ii) the average daily outstanding principal balance of the Notes during such
Interest Period (the "Monthly Interest"); provided, however, that in addition to
Monthly Interest, an amount equal to the sum of (i) the amount of any unpaid
Deficiency Amount, as defined below and (ii) an amount equal to the product
(such product being herein called the "Additional Interest") of (A) a fraction,
the numerator of which is the actual number of days in the related Interest
Period and the denominator of which is 360, times (B) a rate equal to the
Default Rate in effect with respect to the related Interest Period, times (C)
any Deficiency Amount, as defined below (or the portion thereof which has not
theretofore been paid to Noteholders) and (iii) the amount of any unpaid
Additional Amounts for the related Interest Period as determined pursuant to the
Note Purchase Agreement shall also be payable to the Noteholders. The
"Deficiency Amount" for any Determination Date shall be equal to the excess, if
any, of (x) the sum of the Monthly Interest, the Additional Interest, the
Additional Amounts and the Deficiency Amount as determined pursuant to the
preceding sentence for the Interest Period ended immediately prior to the
preceding Payment Date, over (y) the amount actually paid in respect thereof on
the preceding Payment Date; provided, that the Deficiency Amount on the Initial
Determination Date shall be zero.
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SECTION 5.13 Determination of Monthly Principal. The amount on
deposit in the Principal Account allocable to the repayment of principal of the
Notes shall be determined as of each Series Transfer Date ("Monthly Principal"),
beginning with the first Series Transfer Date occurring after the Rapid
Amortization Period begins, and shall be equal to the lesser of (i) the
Available Investor Principal Collections on deposit in the Principal Account on
such Series Transfer Date and (ii) the Investor Interest (after taking into
account any adjustments to be made on such Series Transfer Date pursuant to
Section 5.16) on such Series Transfer Date.
SECTION 5.14 Coverage of Required Amount.
(a) On or before each Series Transfer Date, the Servicer shall
determine the amount (the "Required Amount"), if any, by which an amount equal
to the sum of (i) the Monthly Interest for such Series Transfer Date, plus (ii)
the Deficiency Amount, if any, for such Series Transfer Date, plus (iii) the
Additional Interest, if any, for such Series Transfer Date, plus (iv) the
Additional Amounts, and the Investor Percentage of the Trustee and Back-Up
Servicer Fees and Expenses for such Series Transfer Date, plus (v) the Investor
Percentage of the Servicing Fee for the prior Monthly Period, plus (vi) any
amounts described in clauses (iv) and (v) above that were due but not paid on
any prior Series Transfer Date, plus (vii) the Aggregate Investor Default
Amount, if any, for the prior Monthly Period.
(b) In the event that the Required Amount for such Series Transfer
Date is greater than zero, (i) the Servicer shall give written notice to the
Trustee of such positive Required Amount on or before such Series Transfer Date,
and (ii) to the extent available in each case, the Required Amount shall be paid
first from the Finance Charge Account and second from the Excess Funding Account
on such Series Transfer Date pursuant to subsection 5.17(a).
SECTION 5.15 Monthly Payments. On or before each Series Transfer
Date, the Servicer shall instruct the Trustee in writing (which writing shall be
substantially in the form of the Monthly Servicer Report attached as Exhibit A
to the Servicing Agreement) to withdraw, and the Trustee, acting in accordance
with such instructions, shall withdraw on such Series Transfer Date or the
related Payment Date, as applicable, to the extent of the funds credited to the
relevant accounts, the amounts in respect of the Notes required to be withdrawn
from the Finance Charge Account, the Principal Account, the Excess Funding
Account and the Payment Account as follows:
(a) An amount equal to the Available Funds deposited into the
Finance Charge Account for the related Monthly Period shall be distributed on
each Series Transfer Date in the following priority:
(i) first, an amount equal to the Investor Percentage of the
Trustee and Back-Up Servicer Fees and Expenses for such Series
Transfer Date (plus the Investor Percentage of any Trustee and
Back-Up Servicer Fees and Expenses due but not paid to the Trustee
on any prior Series Transfer Date) shall be paid by the Servicer or
the Trustee to the Trustee, second, an amount equal to Monthly
Interest for such Series Transfer Date, plus the amount of any
Deficiency Amount (other than with respect to any Additional
Amounts) for such Series Transfer Date, plus the amount of any
Additional Interest (other than with respect to any Additional
Amounts) for such Series Transfer Date shall be deposited by the
Servicer or the Trustee into the Payment Account for distribution to
the Noteholders on the related Payment Date and, third, an amount
equal to any Additional Amounts for such Series Transfer Date, plus
the amount of any Deficiency Amount (with respect to any Additional
Amounts) for such Series Transfer Date, plus the amount of any
Additional Interest (with respect to any Additional Amounts) for
such Series Transfer Date shall be distributed by the Servicer or
the Trustee to the Person entitled thereto;
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(ii) an amount equal to the Investor Percentage of the
Servicing Fee for such Series Transfer Date (plus the Investor
Percentage of any Servicing Fee due but not paid to the Servicer on
any prior Series Transfer Date) shall be paid to the Servicer;
(iii) an amount equal to the Aggregate Investor Default
Amount, if any, for the preceding Monthly Period shall be treated as
a portion of Investor Principal Collections and deposited into the
Principal Account on such Series Transfer Date;
(iv) [reserved];
(v) to the extent the Available Issuer Interest is greater
than zero (after giving effect to all other reductions thereof on
such date and the payment pursuant to this clause (v) and the
corresponding provision of each other Series Supplement), an amount
equal to the Investor Percentage of any amounts payable to the
Servicer Letter of Credit Bank by the Issuer under the reimbursement
agreement for the Servicer Letter of Credit shall be paid to the
Servicer Letter of Credit Bank;
(vi) to the extent the Available Issuer Interest is greater
than zero (after giving effect to all other reductions thereof on
such date and the payment pursuant to this clause (vi) and the
corresponding provision of each other Series Supplement), an amount
equal to the Investor Percentage of any unreimbursed expenses of the
Trustee shall be paid to the Trustee; and
(vii) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed as set forth in Section 5.17.
(b) During the Revolving Period (unless the next Business Day after
such Series Transfer Date is the Commitment Termination Date), an amount equal
to the Available Investor Principal Collections deposited into the Principal
Account for the related Monthly Period, after giving effect to any payment
required under clause (g) below on the related Payment Date, shall be
distributed on each Series Transfer Date in the following priority:
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(i) an amount, not in excess of the Principal Reallocation
Amount, to pay or deposit any amounts described in clauses(a)(i),
(ii), (iv), (v) and (vi) above (in such order) that remain unpaid or
undeposited after giving effect to the application of funds,
pursuant to clause (a) above;
(ii) an amount equal to the lesser of (A) the product of (1) a
fraction, the numerator of which is equal to the Available Investor
Principal Collections remaining after the application specified in
paragraph 5.15(b)(i) above and the denominator of which is equal to
the sum of the portion of the "Available Investor Principal
Collections" for each Series that are available for sharing as
specified in the related Series Supplement and (2) the Cumulative
Series Principal Shortfall, if any, and (B) Available Investor
Principal Collections remaining after the application specified in
paragraph 5.15(b)(i) above, shall remain in the Principal Account to
be treated as Shared Principal Collections and applied to Series
other than this Series 2002-A; and
(iii) the balance, if any, shall be deposited into the Excess
Funding Account.
(c) During the Rapid Amortization Period (or if the next Business
Day after such Series Transfer Date is the Commitment Termination Date), an
amount equal to the Available Investor Principal Collections deposited into the
Principal Account for the related Monthly Period shall be distributed on each
Series Transfer Date in the following priority:
(i) an amount equal to the Monthly Principal for such Series
Transfer Date shall be deposited into the Payment Account;
(ii) an amount, not in excess of the Principal Reallocation
Amount, to pay or deposit any amounts described in clauses(a)(i),
(ii), (iv) and (v) above (in such order) that remain unpaid or
undeposited after giving effect to the application of funds,
pursuant to clause (a) above;
(iii) an amount equal to the lesser of (A) the product of (1)
a fraction, the numerator of which is equal to the Available
Investor Principal Collections remaining after the application
specified in paragraphs 5.15(c)(i) and (ii) above and the
denominator of which is equal to the sum of the "Available Investor
Principal Collections" for each Series that are available for
sharing as specified in the related Series Supplement and (2) the
Cumulative Series Principal Shortfall, if any, and (B) the Available
Investor Principal Collections remaining after the application
specified in paragraphs 5.15(c)(i) and (ii) above, shall remain in
the Principal Account to be treated as Shared Principal Collections
and applied to Series other than this Series 2002-A; and
(iv) the balance, if any, shall be deposited into the Excess
Funding Account.
(d) On each Payment Date, the Trustee, acting in accordance with
instructions from the Servicer, shall pay to the Noteholders, on a pro rata
basis, the amount deposited into the Payment Account pursuant to paragraph
5.15(a)(i) (including, without limitation, indirectly pursuant to paragraphs
5.15(b)(i) and (c)(ii) above) on the immediately preceding Series Transfer Date.
21
(e) On the first Payment Date occurring after the Rapid Amortization
Period begins, and on each Payment Date thereafter, the Trustee, acting in
accordance with instructions from the Servicer, shall pay the amount deposited
into the Payment Account pursuant to subsection 5.15(c) on the immediately
preceding Series Transfer Date to the following Persons or accounts (as the case
may be) in the following priority:
(i) to the Noteholders, pro rata, an amount equal to the least
of (A) the Monthly Principal and (B) the Note Principal;
(ii) first, to the Noteholders, pro rata, any other amounts
(including, without limitation, accrued and unpaid interest) payable
thereto pursuant to any Transaction Document (other than Additional
Amounts) and, second, to the Persons entitled thereto, any
Additional Amounts payable thereto;
(iii) [reserved];
(iv) to the extent the Available Issuer Interest is greater
than zero (after giving effect to all other reductions thereof on
such date and the payment pursuant to this clause (iv) and the
corresponding provision of each other Series Supplement), to the
Trustee to pay unreimbursed expenses of the Trustee; and
(v) the balance, if any, shall be deposited into the Excess
Funding Account.
(f) On any Redemption Date, the amounts required to be on deposit in
the Payment Account pursuant to Section 4 or Section 11, shall be paid to the
following Persons:
(i) to the Noteholders, pro rata, the Note Principal; and
(ii) first, to the Noteholders, pro rata, any other amounts
(including, without limitation, accrued and unpaid interest) payable
thereto pursuant to the Note Purchase Agreement and, second, to the
Persons entitled thereto, any Additional Amounts payable thereto.
(g) On any Payment Date in connection with a Decrease pursuant to
Section 3.2, the amount of such Decrease shall be paid to the Noteholders, pro
rata, from (i) Available Investor Principal Collections, (ii) the proceeds of a
partial refinancing of any outstanding Series of Notes or (iii) amounts
otherwise available to the Issuer, all to the extent that such amounts have been
deposited in the Payment Account.
SECTION 5.16 Investor Charge-Offs.
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(a) On or before each Series Transfer Date, the Servicer shall
calculate the Aggregate Investor Default Amount. If, on any Series Transfer
Date, the Aggregate Investor Default Amount exceeds the aggregate amount to be
distributed with respect thereto for the relevant Monthly Period pursuant to
paragraph 5.15(a)(iii) and subsection 5.17(a), the Investor Interest shall be
reduced by the amount of such excess, but only to the extent such excess exceeds
the Investor Percentage (determined with regard to only (and only to the extent
of) those Series with respect to which the "Investor Interest" is being so
reduced with respect to Defaulted Receivables during such Monthly Period) of the
Available Issuer Interest (such reduction, an "Investor Charge-Off"). The
Investor Interest shall thereafter be reimbursed on any Series Transfer Date by
the amount of Excess Spread and funds on deposit in the Excess Funding Account
allocated and available for such purpose pursuant to subsection 5.17(b).
(b) Except as otherwise expressly provided herein, if losses and
investment expenses attributable to the investment of amounts on deposit in any
Trust Account or any Series Account exceed interest and investment earnings in
respect of such amounts during any Monthly Period, the net losses and expenses
shall be allocated first to the Issuer Interest and second between the "Investor
Interests" of all outstanding Series, in the same proportion that losses in
respect of Principal Receivables are so allocated for such Monthly Period.
SECTION 5.17 Allocation of Excess Amounts. On or before each Series
Transfer Date, the Trustee, acting pursuant to the Servicer's instructions,
shall apply Excess Spread in the Finance Charge Account and to the extent
necessary (to cover amounts described in clauses (a) and (b) below) transfer
funds from the Excess Funding Account (after giving effect to the deposits to be
made therein on such date) to the Finance Charge Account in order to make the
following distributions on each Series Transfer Date (in the following order of
priority) for the related Monthly Period:
(a) an amount equal to the Required Amount, if any, with respect to
such Series Transfer Date will be used to fund such Required Amount and be
applied in accordance with, and in the priority set forth in, subsection
5.15(a);
(b) an amount equal to the aggregate amount by which the Investor
Interest has been reduced on previous Series Transfer Dates (but has not been
reimbursed) for reasons other than a reduction of the Required Reserve Amount,
Decreases and/or the payment of principal to the Noteholders will be treated as
a portion of Investor Principal Collections and deposited into the Principal
Account on such Series Transfer Date; and
(c) any remaining Excess Spread shall be treated as a portion of
Investor Principal Collections and deposited into the Principal Account on such
Series Transfer Date.
To the extent that there are insufficient funds in the Excess
Funding Account to make all payments required under subsections 5.17(a) and (b)
above and under the corresponding provisions for each other Series, the amount
on deposit in the Excess Funding Account shall be allocated to each Series on a
pro rata basis (based on the "Investor Interest" of each such Series).
23
SECTION 5.18 Servicer's Failure to Make a Deposit or Payment. If
the Servicer fails to make, or give instructions to make, any payment, deposit
or withdrawal (other than as required by subsection 12.4(a) and Section 12.1)
required to be made or given by the Servicer at the time specified in the Base
Indenture or this Series Supplement (including applicable grace periods), the
Trustee shall make such payment, deposit or withdrawal from the applicable
account without instruction from the Servicer. The Trustee shall be required to
make any such payment, deposit or withdrawal hereunder only to the extent that
the Trustee has sufficient information to allow it to determine the amount
thereof. The Servicer shall, upon request of the Trustee, promptly provide the
Trustee with all information necessary to allow the Trustee to make such
payment, deposit or withdrawal. Such funds or the proceeds of such withdrawal
shall be applied by the Trustee in the manner in which such payment or deposit
should have been made by the Servicer.
SECTION 5.19 Shared Principal Collections.
(a) The portion of Shared Principal Collections allocable to Series
2002-A on deposit in the Principal Account on any Series Transfer Date shall be
treated and applied as an Available Investor Principal Collection pursuant to
Section 5.15.
(b) "Shared Principal Collections allocable to Series 2002-A" on any
Series Transfer Date means an amount equal to the Series Principal Shortfall, if
any, with respect to Series 2002-A on such Series Transfer Date; provided,
however, that if the aggregate amount of Shared Principal Collections for all
Series for such Series Transfer Date is less than the Cumulative Series
Principal Shortfall for such Series Transfer Date, then "Shared Principal
Collections allocable to Series 2002-A" on such Series Transfer Date shall equal
the product of (i) Shared Principal Collections for all Series for such Series
Transfer Date and (ii) a fraction, the numerator of which is the Series
Principal Shortfall with respect to Series 2002-A and the denominator of which
shall be the aggregate amount of "Cumulative Series Principal Shortfall" for all
Series for such Series Transfer Date.
(c) Solely for the purpose of determining the amount of Available
Investor Principal Collections to be treated as Shared Principal Collections on
any Series Transfer Date allocable to other Series, on each Determination Date,
the Servicer shall determine the Required Amount and Excess Spread as of such
Determination Date for the following Series Transfer Date.
SECTION 5.20 [Reserved].
SECTION 5.21 Excess Funding Account.
(a) The Servicer has established and maintained and shall continue
to maintain, with a Qualified Institution, in the name of the Trustee, on behalf
of the Issuer, for the benefit of the Secured Parties, a segregated trust
account (the "Excess Funding Account"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of such Secured
Parties. The Trustee shall possess all right, title and interest in all funds on
deposit from time to time in the Excess Funding Account and in all proceeds
thereof. The Excess Funding Account shall be under the sole dominion and control
of the Trustee for the benefit of the Secured Parties, and the Trustee shall be
the entitlement holder of the Excess Funding Account. If at any time the
institution holding the Excess Funding Account ceases to be a Qualified
Institution, the Trustee shall notify each Rating Agency and within ten (10)
Business Days establish a new Excess Funding Account meeting the conditions
specified above with a Qualified Institution, and shall transfer any cash or any
investments to such new Excess Funding Account. The Trustee, at the direction of
the Servicer, shall (i) make withdrawals from the Excess Funding Account from
time to time for the purposes set forth in subsection 5.11(b) and any comparable
provision of any other Series Supplement and (ii) make deposits into the Excess
Funding Account as specified in subsection 5.11(b) and any comparable provision
of any other Series Supplement.
24
(b) Funds on deposit in the Excess Funding Account shall be invested
by the Trustee (at the Servicer's written discretion) in Permitted Investments.
Funds on deposit in the Excess Funding Account on any Series Transfer Date,
after giving effect to any withdrawals that day, shall be invested in Permitted
Investments that will mature so that such funds will be available for withdrawal
on or before the next Series Transfer Date. The Trustee shall:
(i) hold each Permitted Investment (other than such as are
described in clause (c) of the definition thereof) that constitutes
investment property through a securities intermediary, which
securities intermediary shall (I) agree that such investment
property shall at all times be credited to a securities account of
which the Trustee is the entitlement holder, (II) comply with
entitlement orders originated by the Trustee without the further
consent of any other person or entity, (III) agree that all property
credited to such securities account shall be treated as a financial
asset, (IV) waive any lien on, security interest in, or right of
set-off with respect to any property credited to such securities
account, and (V) agree that its jurisdiction for purposes of
Sections 8-110 and Section 9-305(a)(3) of the UCC shall be New York,
and that such agreement shall be governed by the laws of the State
of New York; and
(ii) maintain for the benefit of the Secured Parties,
possession or control of each other Permitted Investment (including
any negotiable instruments, if any, evidencing such Permitted
Investments) not described in clause (i) above (other than such as
are described in clause (c) of the definition thereof); provided
that no Permitted Investment shall be disposed of prior to its
maturity date if such disposition would result in a loss. Terms used
in clause (i) above that are defined in the New York UCC and not
otherwise defined herein shall have the meaning set forth in the New
York UCC.
(c) All interest and earnings (net of losses and investment
expenses) accrued on funds on deposit in the Excess Funding Account to the
extent allocable to this Series shall be treated as Collections, deposited into
the Finance Charge Account and applied in accordance with the Indenture.
25
SECTION 5.22 Payment of Fees. If on any Payment Date (a) the Notes
are not allocated any Collections because the Investor Interest is zero and (b)
any Noteholders are owed Additional Amounts on the amount of Notes that the
Conduit Purchasers (or the Committed Purchaser, as the case may be) have
committed to purchase but has not been purchased, then such Additional Amounts
shall be paid from amounts otherwise payable to the Issuer.
SECTION 8. Article 6 of the Base Indenture. Article 6 of the Base
Indenture shall read in its entirety as follows and shall be applicable only to
the Noteholders.
ARTICLE 6
DISTRIBUTIONS AND REPORTS
SECTION 6.1 Distributions.
(a) On each Payment Date, the Trustee shall distribute (in
accordance with the Monthly Servicer Report delivered by the Servicer on or
before the related Series Transfer Date pursuant to subsection 2.09(a) of the
Servicing Agreement) to each Noteholder of record on the immediately preceding
Record Date (other than as provided in Section 12.5 respecting a final
distribution), such Noteholder's pro rata share (based on the aggregate Investor
Interests represented by the Notes held by such Noteholder) of the amounts on
deposit in the Payment Account that are payable to the Noteholders pursuant to
Section 5.15 by wire transfer to an account designated by such Noteholders,
except that, with respect to Notes registered in the name of the nominee of a
Clearing Agency, such distribution shall be made in immediately available funds.
(b) Notwithstanding anything to the contrary contained in the Base
Indenture or this Series Supplement, if the amount distributable in respect of
principal on the Notes on any Payment Date is less than one dollar, then no such
distribution of principal need be made on such Payment Date.
SECTION 6.2 Monthly Noteholders' Statement.
(a) On or before each Payment Date, the Trustee shall forward to
each Noteholder, with respect to each Noteholder's interest and to each Rating
Agency and Notice Person a statement substantially in the form of Exhibit B
hereto prepared by the Servicer and delivered to the Trustee on the preceding
Determination Date and setting forth, among other things, the following
information:
(i) the total amount distributed to the Noteholders;
(ii) the amount of such distribution allocable to Monthly
Principal;
(iii) the amount of such distribution allocable to Trustee and
Back-Up Servicer Fees and Expenses, Monthly Interest, Deficiency
Amounts, Additional Interest and Additional Amounts, respectively;
(iv) the amount of Collections of Principal Receivables
received during the related Monthly Period and allocated in respect
of the Notes;
26
(v) the amount of Recoveries, premium refunds and Collections
of Finance Charges received during the related Monthly Period and
allocated in respect of the Notes;
(vi) the aggregate Outstanding Principal Balance of the
Receivables, the Issuer Interest, the Investor Interest, the
Floating Investor Percentage and the Fixed Investor Percentage as of
the end of the preceding Monthly Period;
(vii) the aggregate Outstanding Principal Balance of
Receivables, including earned and unearned Finance Charges, but
excluding bankrupt accounts and accounts in repossession, which were
1-30 days, 31-60 days, 61-90 days, 91-120 days, 121-180 days and
more than 180 days delinquent, respectively as of the end of the
preceding Monthly Period;
(viii) the Net Portfolio Yield, Portfolio Yield, Portfolio
Yield Adjuster, Payment Rate, Gross Loss Rate, Gross Loss Adjuster,
Dilution Adjuster, Dilution Rate and the Aggregate Investor Default
Amount as of the end of the preceding Monthly Period;
(ix) the aggregate amount of Investor Charge-Offs and other
reductions in the absence of principal distributions on the Investor
Interests for such Series Transfer Date;
(x) the aggregate amount of Investor Charge-Offs and other
reductions in the absence of principal distributions on the Investor
Interests deemed to have been reimbursed on such Series Transfer
Date;
(xi) the Note Principal as of the end of the day on the
Payment Date;
(xii) Increases and Decreases in the Notes during the related
Interest Period, and the average daily balance of the Notes for the
related Interest Period;
(xiii) the amount of the Servicing Fee and the Investor
Percentage of the Servicing Fee for such Series Transfer Date;
(xiv) the Note Rate for the Interest Period ending on the day
before such Payment Date;
(xv) the amount of Available Funds on deposit in the Finance
Charge Account on the related Series Transfer Date;
(xvi) the date on which the Rapid Amortization Period
commenced, if applicable;
(xvii) the Cash Option Amount, if any;
27
(xviii) the Minimum Issuer Interest, Available Issuer Interest
and Aggregate Net Investor Charge-Offs, if any, as of the end of the
preceding Monthly Period;
(xix) the aggregate Outstanding Principal Balance of all
Receivables the final maturity date of which has been extended by up
to six months, more than six months to twelve months and more than
twelve months, respectively, as of the end of the preceding Monthly
Period;
(xx) the aggregate amount of reductions of the Outstanding
Principal Balance of the Receivables as a result of cancellations of
service maintenance contracts and credit insurance during the
related Monthly Period; and
(xxi) the aggregate Outstanding Principal Balance of all
Receivables any Obligor of which is an Opportunity Customer as of
the end of the preceding Monthly Period.
(b) Annual Noteholders' Tax Statement. To the extent required by the
Code, on or before January 31 of each calendar year, beginning with the calendar
year 2003, the Trustee shall distribute to each Person who at any time during
the preceding calendar year was a Noteholder, a statement prepared by the
Trustee containing the information required to be contained in the regular
monthly report to Noteholders, as set forth in subclauses (i), (ii) and (iii)
above, aggregated for such calendar year or the applicable portion thereof
during which such Person was a Noteholder, together with such other customary
information (consistent with the treatment of the Notes as debt) (the "Section
6.2(b) Tax Statement"). Such obligations of the Trustee shall be deemed to have
been satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code as from time to
time in effect. The Issuer shall provide the Funding Agent with a copy of the
Section 6.2(b) Tax Statement that the Trustee distributed on or prior to January
31, 2007, if any, for the calendar year 2007, on or before the Restatement Date.
SECTION 9. Series 2002-A Pay Out Events. If any one of the following
events (a "Series 2002-A Pay Out Event") shall occur with respect to the Notes:
(a) failure on the part of the Issuer (i) to pay any amount
described in clauses (i)-(vi) of the definition of Required Amount or to make
any payment or deposit required by the terms of this Series Supplement, the Note
Purchase Agreement or any other Transaction Document, on or before the date two
(2) Business Days after the date on which such payment or deposit is required to
be made herein or therein (or, in the case of a deposit to be made with respect
to any Monthly Period, by the related Payment Date), or (ii) duly to observe or
perform in any respect any other covenants or agreements of the Issuer set forth
in this Series Supplement, the Note Purchase Agreement or any other Transaction
Document which failure, solely in the case of this clause (ii), continues
unremedied for a period of thirty (30) Business Days after the Issuer has
knowledge thereof, or after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Issuer by the
Administrator, the Funding Agent, Servicer or any Noteholder (it being
understood and agreed that the failure to duly to observe or perform in any
respect any covenant set forth in Section 7.6 of the Note Purchase Agreement
shall have no grace period); provided, however, that a Series 2002-A Pay Out
Event pursuant to this subsection 9(a) shall not be deemed to have occurred
hereunder if such Series 2002-A Pay Out Event is the result of a breach of a
representation, warranty, statement or certificate with respect to any
Receivable, and the Servicer has received a Deemed Collection in connection
therewith, in an amount equal to the Outstanding Principal Balance of such
Receivable and all accrued and unpaid interest thereon for application in
accordance with Article 5 of the Base Indenture as modified by this Series
Supplement;
28
(b) any representation or warranty made by the Issuer in this Series
Supplement, the Note Purchase Agreement or any other Transaction Document or any
information delivered by the Issuer pursuant thereto shall prove to have been
incorrect in any respect when made or when delivered which, solely to the extent
such incorrect representation or warranty may be cured without any actual or
potential detriment to any Secured Party, continues unremedied for a period of
thirty (30) Business Days after the date on which the Issuer has knowledge
thereof or on which written notice thereof, requiring the same to be remedied,
shall have been given to the Issuer by the Administrator, the Funding Agent,
Servicer or any Noteholder; provided, however, that a Series 2002-A Pay Out
Event pursuant to this subsection 9(b) shall not be deemed to have occurred
hereunder if such Series 2002-A Pay Out Event is the result of a breach of a
representation, warranty, statement or certificate with respect to any
Receivable, and the Servicer has received a Deemed Collection in connection
therewith, in an amount equal to the Outstanding Principal Balance of such
Receivable and all accrued and unpaid interest thereon for application in
accordance with Article 5 of the Base Indenture as modified by this Series
Supplement;
(c) the Issuer or the Seller shall become the subject of any Event
of Bankruptcy or voluntarily suspend payment of its obligations; or the Issuer
shall become unable for any reason (other than by reason of a determination by
the Seller not to sell receivables to the Issuer pursuant to the Purchase
Agreement) to pledge Receivables to the Trustee in accordance with the
provisions of this Series Supplement;
(d) the Issuer or the Seller shall become an "investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(e) any Servicer Default (other than a Servicer Default specified in
clause (e), (h), (i) or (j) of Section 2.04 of the Servicing Agreement) shall
occur, or a Servicer Default specified in clause (e), (h), (i) or (j) of Section
2.04 of the Servicing Agreement shall occur and not be cured within ten (10)
days after the earlier of discovery by the Servicer or the date on which written
notice of such Servicer Default, requiring the same to be remedied, shall have
been given to the Servicer by the Issuer or any Noteholder;
(f) on the close of the Issuer's business on the last day of any
Monthly Period, the Net Portfolio Yield averaged over any three consecutive
Monthly Periods is less than 2.00%;
(g) an Event of Default;
29
(h) on any date of determination the Gross Loss Rate shall be equal
to or exceed 10.0% on a rolling three-month average basis;
(i) a Pay Out Event occurs under any other Series;
(j) at any time Parent is the Servicer, any event of default (not
cured or waived within ten (10) Business Days) under (A) the Retailer Credit
Agreement, (B) any inventory financing agreement between any lender and the
Servicer, the Parent or the Seller, or (C) any indenture, credit or loan
agreement or other agreement or instrument of any kind pursuant to which
Indebtedness of the Servicer, the Parent or the Seller in an aggregate principal
amount in excess of $1,000,000 is outstanding or by which the same is evidenced,
shall have occurred and be continuing;
(k) the Trustee shall, for any reason, fail or cease to have a valid
and perfected first priority security interest in the Receivables and Related
Security, and any other Issuer assets in the Trust Estate free and clear of any
Adverse Claims (and, solely with respect to the Collections and proceeds with
respect to the foregoing or other proceeds of any item of collateral described
above, to the extent provided in Section 9-315 of the UCC);
(l) the Coverage Test is not satisfied or the Required Reserve
Amount cannot increase as a result of the limitation in the second proviso in
the definition thereof and in either case such condition continues unremedied
for three (3) Business Days;
(m) the imposition of (i) non de-minimis tax liens against the
Issuer, (ii) tax liens against the Seller unless such lien would not have a
Material Adverse Effect and has been released within thirty (30) days of the
earlier of (a) the date the Seller has knowledge of the imposition of such tax
lien or (b) the date on which the Seller receives notice of the imposition of
such tax lien, and (iii) ERISA liens against the Issuer or the Seller;
(n) there shall have occurred a Change in Control;
(o) the Servicer shall become unable for any reason to transfer the
Collections on, or other proceeds of, Receivables to the Issuer in accordance
with the provisions of this Series Supplement;
(p) the occurrence and continuation of a Purchase Termination Event
under and as defined in the Purchase Agreement;
(q) the failure of the Issuer to pay when due any amount due with
respect to any Indebtedness to which it is a party (other than Issuer
Obligations);
(r) the Payment Rate shall be less than or equal to 3.0% for any
Monthly Period;
(s) [reserved]; or
30
(t) if SunTrust Bank (or any Affiliate thereof) is the Servicer
Letter of Credit Bank, the Available Issuer Interest is less than the principal
of, and interest on, any unreimbursed draws under the Servicer Letter of Credit;
then, (i) in the case of any event described in subparagraph (a), (b), (e), (h),
(j), (k), (l), (m), (n), (p), (q), (r), (s) or (t) after the applicable grace
period, if any, set forth in such subparagraphs, the Administrator or the
Funding Agent by notice then given in writing to the Issuer and the Servicer may
declare that the Rapid Pay Out Commencement Date has occurred as of the date of
such notice and (ii) in the case of an event described in subparagraphs (c),
(d), (f), (g), (i) or (o) or, three (3) Business Days following the occurrence
and continuation of an event described in subparagraph (l), the Rapid Pay Out
Commencement Date shall occur without any notice or other action on the part of
any party hereto immediately upon the occurrence of such event.
Notwithstanding anything to the contrary in the Base Indenture, no
Series 2002-A Pay Out Event may be amended, waived or deleted, and no new Series
2002-A Series Pay Out Event may be added, without the prior consent of the
Required Persons for Series 2002-A.
SECTION 10. Article 7 of the Base Indenture. Article 7 of the Base
Indenture shall read in its entirety as follows:
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
SECTION 7.1 Representations and Warranties of the Issuer. The Issuer
hereby represents and warrants to the Trustee and each of the Secured Parties
that:
(a) Organization and Good Standing, etc. The Issuer has been duly
organized and is validly existing and in good standing under the laws of its
state of Texas, with power and authority to own its properties and to conduct
its respective businesses as such properties are presently owned and such
business is presently conducted. The Issuer is not organized under the laws of
any other jurisdiction or governmental authority. The Issuer is duly licensed or
qualified to do business as a foreign entity in good standing in the
jurisdiction where its principal place of business and chief executive office is
located and in each other jurisdiction in which the failure to be so licensed or
qualified would be reasonably likely to have a Material Adverse Effect.
(b) Power and Authority; Due Authorization. The Issuer has (a) all
necessary power, authority and legal right to (i) execute, deliver and perform
its obligations under this Indenture and each of the other Transaction Documents
to which it is a party and (b) duly authorized, by all necessary action, the
execution, delivery and performance of this Indenture and the other Transaction
Documents to which it is a party and the borrowing, and the granting of security
therefor, on the terms and conditions provided herein.
(c) No Violation. The consummation of the transactions contemplated
by this Indenture and the other Transaction Documents and the fulfillment of the
terms hereof will not (a) 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, (i) the organizational documents of the Issuer or (ii)
any indenture, loan agreement, pooling and servicing agreement, receivables
purchase agreement, mortgage, deed of trust, or other agreement or instrument to
which the Issuer is a party or by which it or its properties is bound, (b)
result in or require the creation or imposition of any Adverse Claim upon its
properties pursuant to the terms of any such indenture, loan agreement, pooling
and servicing agreement, receivables purchase agreement, mortgage, deed of
trust, or other agreement or instrument, other than pursuant to the terms of the
Transaction Documents, or (c) violate any law or any order, rule, or regulation
applicable to the Issuer or of any court or of any federal, state or foreign
regulatory body, administrative agency, or other governmental instrumentality
having jurisdiction over the Issuer or any of its respective properties.
31
(d) Validity and Binding Nature. This Indenture is, and the other
Transaction Documents to which it is a party when duly executed and delivered by
the Issuer and the other parties thereto will be, the legal, valid and binding
obligation of the Issuer enforceable in accordance with their respective terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights generally
and by general principles of equity.
(e) Government Approvals. No authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body required for the due execution, delivery or performance by the
Issuer of any Transaction Document to which it is a party remains unobtained or
unfiled, except for the filing of the UCC financing statements referred to in
Section 15.4.
(f) [Reserved].
(g) Margin Regulations. The Issuer is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock, and no
proceeds with respect to the sale of the Notes or any Increases thereto,
directly or indirectly, will be used for a purpose that violates, or would be
inconsistent with, Regulations T, U and X promulgated by the Federal Reserve
Board from time to time.
(h) Perfection. (1) Immediately preceding the Closing Date and the
date of each recomputation of the Investor Interest, the Issuer shall be the
owner of all of the Receivables and Related Security and Collections and
proceeds with respect thereto, free and clear of all Adverse Claims. On or prior
to the Initial Closing Date and the date of each recomputation of the Investor
Interest, all financing statements and other documents required to be recorded
or filed in order to perfect and protect the assets of the Trust Estate against
all creditors (other than Secured Parties) of, and purchasers (other than
Secured Parties) from, the Issuer and the Seller will have been (or will be
within ten (10) days of the Initial Closing Date) duly filed in each filing
office necessary for such purpose, and all filing fees and taxes, if any,
payable in connection with such filings shall have been (or will be within ten
(10) days of the Initial Closing Date) paid in full;
32
(ii) the Indenture constitutes a valid grant of a security
interest to the Trustee for the benefit of the Purchasers and the
other Secured Parties in all right, title and interest of the Issuer
in the Receivables, the Related Security and Collections and
proceeds with respect thereto and all other assets of the Trust
Estate, now existing or hereafter created or acquired. Accordingly,
to the extent the UCC applies with respect to the perfection of such
security interest, upon the filing of any financing statements
described in Article 8 of the Indenture, and, solely with respect to
the Related Security, to the extent required for perfection under
the relevant UCC, the delivery of possession of all instruments, if
any, included in such Related Security to the Servicer), the Trustee
shall have a first priority perfected security interest in such
property and the proceeds thereof (to the extent provided in Section
9-315), subject to Permitted Encumbrances and, to the extent the UCC
does not apply to the perfection of such security interest, all
notices, filings and other actions required by all applicable law
have been taken to perfect and protect such security interest or
lien against and prior to all Adverse Claims with respect to the
relevant Receivables, Related Security and Collections and proceeds
with respect thereto and all other assets of the Trust Estate.
Except as otherwise specifically provided in the Transaction
Documents, neither the Issuer nor any Person claiming through or
under the Issuer has any claim to or interest in the Collection
Account; and
(iii) immediately prior to, and after giving effect to, the
initial purchase of the Notes, the Issuer will be Solvent.
(i) Offices. The principal place of business and chief executive
office of the Issuer is located at the address referred to in Section 15.4 (or
at such other locations, notified to the Trustee in jurisdictions where all
action required thereby has been taken and completed).
(j) Tax Status. The Issuer has filed all tax returns (Federal, State
and local) required to be filed by it and has paid or made adequate provision
for the payment of all taxes, assessments and other governmental charges then
due and payable (including for such purposes, the setting aside of appropriate
reserves for taxes, assessments and other governmental charges being contested
in good faith).
(k) Use of Proceeds. No proceeds of any Notes will be used by the
Issuer to acquire any security in any transaction which is subject to Section 13
or 14 of the Securities Exchange Act of 1934, as amended.
(l) Compliance with Applicable Laws; Licenses, etc.
(i) The Issuer is in compliance with the requirements of all
applicable laws, rules, regulations, and orders of all governmental
authorities, a breach of any of which, individually or in the
aggregate, would be reasonably likely to have a Material Adverse
Effect.
(ii) The Issuer has not failed to obtain any licenses,
permits, franchises or other governmental authorizations necessary
to the ownership of its properties or to the conduct of its
business, which violation or failure to obtain would be reasonably
likely to have a Material Adverse Effect.
(m) No Proceedings. Except as described in Schedule 1,
33
(i) there is no order, judgment, decree, injunction,
stipulation or consent order of or with any court or other
government authority to which the Issuer is subject, and there is no
action, suit, arbitration, regulatory proceeding or investigation
pending, or, to the knowledge of the Issuer, threatened, before or
by any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality, against the Issuer that,
individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect; and
(ii) there is no action, suit, proceeding, arbitration,
regulatory or governmental investigation, pending or, to the
knowledge of the Issuer, threatened, before or by any court,
regulatory body, administrative agency, or other tribunal or
governmental instrumentality (A) asserting the invalidity of this
Indenture, the Notes or any other Transaction Document, (B) seeking
to prevent the issuance of the Notes pursuant hereto or the
consummation of any of the other transactions contemplated by this
Indenture or any other Transaction Document or (C) seeking to
adversely affect the federal income tax attributes of the Issuer.
(n) Investment Company Act. The Issuer is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
(o) Eligible Receivables. Each Receivable included as an Eligible
Receivable in any Monthly Servicer Report shall be an Eligible Receivable as of
the date so included. Each Receivable, including Subsequently Purchased
Receivables, purchased by the Issuer on any Purchase Date shall be an Eligible
Receivable as of such Purchase Date unless otherwise specified to the Trustee in
writing prior to such Purchase Date.
(p) Receivables Schedule. The Receivable File is a true and correct
schedule of the Receivables included in the Trust Estate.
(q) ERISA. (i) Each of the Issuer and its ERISA Affiliates is in
compliance in all material respects with ERISA unless any failure to so comply
could not reasonably be expected to have a Material Adverse Effect and (ii) no
Lien exists in favor of the Pension Benefit Guaranty Corporation on any of the
Receivables. No ERISA Event has occurred with respect to Title IV Plans of the
Issuer. No ERISA Event has occurred with respect to Title IV plans of the
Issuer's ERISA Affiliates that have an aggregate Unfunded Pension Liability
equal to or greater than $1,000,000. No ERISA Event has occurred with respect to
a Multiemployer Plan of the Issuer or its ERISA Affiliates.
(r) Accuracy of Information. All information heretofore furnished
by, or on behalf of, the Issuer to the Trustee or any of the Noteholders in
connection with any Transaction Document, or any transaction contemplated
thereby, is true and accurate in every material respect (without omission of any
information necessary to prevent such information from being materially
misleading).
(s) No Material Adverse Change. Since January 31, 2002, there has
been no material adverse change in the collectibility of the Receivables or the
Issuer's (i) financial condition, business, operations or prospects or (ii)
ability to perform its obligations under any Transaction Document.
34
(t) Trade Names and Subsidiaries. Set forth on Schedule 2 hereto is
a complete list of trade names of the Issuer for the six year period preceding
the Closing Date. The Issuer has no Subsidiaries and does not own or hold,
directly or indirectly, any equity interest in any Person.
(u) Notes. The Notes have been duly and validly authorized, and,
when executed and authenticated in accordance with the terms of the Indenture,
and delivered to and paid for in accordance with each of the Note Purchase
Agreements, will be duly and validly issued and outstanding and will be entitled
to the benefits of the Indenture.
(v) Sales by Seller. (a) Each sale of Receivables by the Seller (and
its predecessors) to the Issuer shall have been effected under, and in
accordance with the terms of, the Purchase Agreement, including the payment by
the Issuer to the Seller (or its predecessors) of an amount equal to the
purchase price therefor as described in the Purchase Agreement, and each such
sale shall have been made for "reasonably equivalent value" (as such term is
used under Section 548 of the Federal Bankruptcy Code) and not for or on account
of "antecedent debt" (as such term is used under Section 547 of the Federal
Bankruptcy Code) owed by the Issuer to the Seller.
SECTION 7.2 Reaffirmation of Representations and Warranties by the
Issuer. On the Closing Date, the Restatement Date and on each Business Day, the
Issuer shall be deemed to have certified that all representations and warranties
described in Section 7.1 hereof are true and correct on and as of such day as
though made on and as of such day (except to the extent they relate to an
earlier date or later time, and then as of such earlier date or later time).
SECTION 11. Redemption Provision.
(a) The Issuer shall (if able) redeem the Notes in full on the
Commitment Termination Date through a refinancing. The Issuer shall give notice
of its election to pay such Notes in accordance with the terms of the Base
Indenture and the Note Purchase Agreement prior to such redemption.
(b) The amount required to be deposited into the Payment Account in
connection with any redemption in full shall be equal to the sum of (i) the Note
Principal, plus (ii) accrued and unpaid the interest on the Notes through the
Payment Date on which the redemption occurs, plus (iii) any other amounts
(including, without limitation, accrued and unpaid Additional Amounts) payable
to the Noteholders pursuant to the Note Purchase Agreement, less (iv) the
amounts, if any, on deposit at such Payment Date in the Payment Account for the
payment of the foregoing amounts. Such deposit shall be made not later than 1:00
p.m. New York City time on the Redemption Date.
SECTION 12. Amendments and Waiver. Any amendment, waiver or other
modification to the Base Indenture, this Series Supplement or the Series
Supplement for any other VFN Series shall be subject to the restrictions
thereon, if applicable, in the Note Purchase Agreement.
35
SECTION 13. Counterparts. This Series Supplement may be executed in
any number of counterparts, and by different parties in separate counterparts,
each of which so executed shall be deemed to be an original, but all of such
counterparts shall together constitute but one and the same instrument.
SECTION 14. Governing Law. THIS SERIES SUPPLEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICTS OF LAW PROVISIONS (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW
YORK GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. EACH OF THE
PARTIES TO THIS SERIES SUPPLEMENT AND EACH NOTEHOLDER HEREBY AGREES TO THE
NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND ANY APPELLATE COURT HAVING JURISDICTION TO REVIEW THE
JUDGMENTS THEREOF. EACH OF THE PARTIES HERETO AND EACH NOTEHOLDER HEREBY WAIVES
ANY OBJECTION BASED ON FORUM NON CONVENIENS AND ANY OBJECTION TO VENUE OF ANY
ACTION INSTITUTED HEREUNDER IN ANY OF THE AFOREMENTIONED COURTS AND CONSENTS TO
THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT.
SECTION 15. Waiver of Trial by Jury. To the extent permitted by
applicable law, each of the parties hereto and each of the Noteholders
irrevocably waives all right of trial by jury in any action, proceeding or
counterclaim arising out of or in connection with this Series Supplement or the
Transaction Documents or any matter arising hereunder or thereunder.
SECTION 16. No Petition. The Trustee, by entering into this Series
Supplement and each Noteholder, by accepting a Note hereby covenant and agree
that they will not prior to the date which is one year and one day after payment
in full of the last maturing Note of any Series and termination of the Indenture
institute against the Issuer, or join in any institution against the Issuer of,
any bankruptcy proceedings under any United States Federal or state bankruptcy
or similar law in connection with any obligations relating to the Noteholders,
the Servicing Agreement, the Base Indenture or this Series Supplement.
SECTION 17. Rights of the Trustee. The rights, privileges and
immunities afforded to the Trustee under the Base Indenture shall apply
hereunder as if fully set forth herein.
SECTION 18. Issuer Additional Issuance Requirements.
(a) The Issuer (or the Servicer on its behalf and in the best
interest of the Issuer and the "Noteholders" of each Series) shall, within 12
months prior to the Commitment Termination Date, initiate marketing to renew or
replace the commitment under this Series Supplement. Such commitment shall
continue to be provided by a commercial paper conduit, on a floating rate basis,
for a period of three to five years, subject to market conditions.
36
(b) If, as of any month end, the Note Principal exceeds the sum of
(i) 50% of the Maximum Principal Amount, plus (ii) $35,000,000, then the Issuer
(or the Servicer on its behalf and in the best interest of the Issuer and the
"Noteholders" of each Series) shall, within three months thereafter, initiate
marketing of a new Series of term fixed rate notes in an amount equal to the
difference (the "New Issuance Amount") of (i) the Note Principal, minus (ii)
$35,000,000 (rounded down to the nearest $25,000,000 increment), with a three to
five year weighted average life and a Class structure similar to the Issuer's
Series 2002-B Notes, subject to market conditions. Under no circumstances will
the New Issuance Amount be less than $150,000,000. Additionally, the new Series
of term notes will not be issued if the interest rate on such notes would cause
the Net Portfolio Yield to fall to or continue at a level that would require an
increase in the then existing "Additional Cash Reserve Amounts" for any Series.
If the Issuer (or the Servicer on its behalf and in the best interest of the
Issuer and the "Noteholders" of each Series) is not able to close a new term
Series within six months of the initiation of the marketing thereof, the Issuer
(or the Servicer on its behalf and in the best interest of the Issuer and the
"Noteholders" of each Series) shall seek a temporary increase of the Maximum
Principal Amount in an amount equal to the New Issuance Amount and then
re-initiate its marketing of a new term Series within six months. At the time
the new term Series issuance is completed, the net proceeds thereof will be used
to pay down Note Principal and the Maximum Principal Amount will be reduced by
the amount of the temporary increase, if any.
(c) If the Maximum Principal Amount (which term for the purposes of
this clause (c) shall exclude any temporary increases pursuant to clause (b)
above) is less than 45% (or, if the Maximum Principal Amount at such date of
determination equals or exceeds $300,000,000, 33%) of the sum of the Maximum
Principal Amount plus the aggregate "Note Principal" of each outstanding term
Series plus the principal amount of any term Series for which marketing has been
initiated pursuant to clause (b) above, then the Issuer (or the Servicer on its
behalf and in the best interest of the Issuer and the "Noteholders" of each
Series) shall, within three months thereafter, initiate marketing to increase
the Maximum Principal Amount to 45% (or, if the Maximum Principal Amount equals
or exceeds $300,000,000, 40%) of the sum of the Maximum Principal Amount plus
the aggregate "Note Principal" of each outstanding term Series plus the
principal amount of any term Series for which marketing has been initiated
pursuant to clause (b) above (such total rounded up to the nearest $25,000,000
increment), in each case on substantially the same terms as this Series
Supplement and with the Commitment Termination Date extended to match the
original term, subject to market conditions.
[signature page follows]
37
IN WITNESS WHEREOF, the parties hereto have caused this Series
Supplement to be duly executed by their respective officers as of the day and
year first above written.
CONN FUNDING II, L.P., as Issuer
By: Conn Funding II GP, L.L.C.,
its general partner
By:_______________________________________
Name:
Title:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
not in its individual capacity, but
solely as Trustee
By:_______________________________________
Name:
Title:
38
EXHIBIT A
---------
FORM OF
-------
THIRD AMENDED AND RESTATED SERIES 2002-A NOTE
---------------------------------------------
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY OTHER
JURISDICTION. THIS NOTE MAY BE RESOLD, PLEDGED OR TRANSFERRED ONLY (1) TO A
PERSON THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT ("RULE 144A")) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A OR (2) IN A TRANSACTION OTHERWISE EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND ANY OTHER JURISDICTION AND
BASED ON AN OPINION OF COUNSEL IF THE ISSUER OR TRANSFER AGENT AND REGISTRAR SO
REQUEST, IN EACH SUCH CASE, IN COMPLIANCE WITH THE INDENTURE AND ALL APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION. THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY TRANSFEREE
FROM IT OF THE RESALE RESTRICTIONS SET FORTH ABOVE.
BY ACQUIRING THIS NOTE, EACH PURCHASER WILL BE DEEMED TO HAVE REPRESENTED,
WARRANTED AND COVENANTED EITHER THAT (A) IT IS NOT AN "EMPLOYEE BENEFIT PLAN"
SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA"), A "PLAN" DESCRIBED IN SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED, AN ENTITY DEEMED TO HOLD "PLAN ASSETS" OF ANY OF THE
FOREGOING BY REASON OF INVESTMENT BY AN "EMPLOYEE BENEFIT PLAN" OR "PLAN" IN
SUCH ENTITY, OR A GOVERNMENTAL PLAN SUBJECT TO APPLICABLE LAW THAT IS
SUBSTANTIALLY SIMILAR TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF ERISA OR
SECTION 4975 OF THE CODE OR (B) ITS PURCHASE AND HOLDING OF THIS NOTE WILL NOT
RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER ERISA OR SECTION 4975 OF THE
CODE (OR, IN THE CASE OF A GOVERNMENTAL PLAN, ANY SUBSTANTIALLY SIMILAR
APPLICABLE LAW).
THE INDENTURE (AS DEFINED BELOW) CONTAINS FURTHER RESTRICTIONS ON THE TRANSFER
AND RESALE OF THIS NOTE. EACH TRANSFEREE OF THIS NOTE, BY ACCEPTANCE HEREOF, IS
DEEMED TO HAVE ACCEPTED THIS NOTE, SUBJECT TO THE FOREGOING RESTRICTIONS ON
TRANSFERABILITY. IN ADDITION, EACH TRANSFEREE OF THIS NOTE, BY ACCEPTANCE
HEREOF, IS DEEMED TO HAVE MADE THE REPRESENTATIONS AND AGREEMENTS SET FORTH IN
THE INDENTURE.
BY ACCEPTANCE HEREOF, THE HOLDER OF THIS NOTE AGREES TO THE TERMS AND CONDITIONS
SET FORTH IN THE INDENTURE AND HEREIN.
Exhibit A-1
REGISTERED
No. 1 $[450,000,000]
SEE REVERSE FOR CERTAIN DEFINITIONS
THE PRINCIPAL OF THIS NOTE MAY BE INCREASED AND DECREASED AS
SPECIFIED IN THE SERIES 2002-A SUPPLEMENT AND IS PAYABLE IN INSTALLMENTS AS SET
FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
CONN FUNDING II, L.P.
VARIABLE FUNDING ASSET BACKED FLOATING RATE NOTES, SERIES 2002-A
Conn Funding II, L.P., a limited partnership organized and existing
under the laws of the State of Texas (herein referred to as the "Issuer"), for
value received, hereby promises to pay [_____________________], as the
[Administrator/Funding Agent] for [Three Pillars Funding LLC/Park Avenue
Receivables Company, LLC], or registered assigns, the principal sum set forth
above or such other principal sum set forth on Schedule A attached hereto (which
sum shall not exceed $[450,000,000]), payable on each Payment Date after the end
of the Revolving Period (as defined in the Series 2002-A Supplement) in an
amount equal to the Monthly Principal, as defined in Section 5.13 of the Amended
and Restated Series 2002-A Supplement, dated as of September 10, 2007 (as
amended, supplemented or otherwise modified from time to time, the "Series
2002-A Supplement"), between the Issuer and the Trustee to the Base Indenture
(described below); provided, however, that the entire unpaid principal amount of
this Note shall be due and payable on July 30, 2016 (the "Legal Final Payment
Date"). The Issuer will pay interest on this Note at the Note Rate (as defined
in the Series 2002-A Supplement) on each Payment Date until the principal of
this Note is paid or made available for payment, on the average daily
outstanding principal balance of this Note during the related Interest Period
(as defined in the Series 2002-A Supplement). Interest will be computed on the
basis set forth in the Indenture. Such principal of and interest on this Note
shall be paid in the manner specified on the reverse hereof.
[This Note is issued in substitution and replacement for the Note
issued in favor of Holder by Issuer, dated as of August 1, 2006 in the amount of
$300,000,000 and is not intended to be, nor shall it be deemed to be, a
repayment of such original Note.]
The Notes are subject to optional redemption in accordance with the
Indenture on or after any Payment Date on which the Investor Interest is reduced
to an amount less than or equal to 10% of the Maximum Principal Amount as of the
Restatement Date.
The principal of and interest on this Note are payable in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
Exhibit A-2
Issuer hereby irrevocably authorizes the [Administrator/Funding
Agent] to enter on the reverse hereof or on an attachment hereto the date and
amount of each borrowing and principal payment under and in accordance with the
Indenture. Issuer agrees that this Note, upon each such entry being duly made,
shall evidence the indebtedness of Issuer with the same force and effect as if
set forth in a separate Note executed by Issuer; provided that such entry is
recorded by the Transfer Agent and Registrar in the Note Register.
Reference is made to the further provisions of this Note set forth
on the reverse hereof and to the Indenture, which shall have the same effect as
though fully set forth on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
Exhibit A-3
IN WITNESS WHEREOF, the Issuer, has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer as of the date set
forth below.
CONN FUNDING II, L.P.
By: Conn Funding II GP, L.L.C.,
its general partner
By:____________________________________
Authorized Officer
Attested to:
By:
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within mentioned Series
2002-A Supplement.
WELLS FARGO BANK,
NATIONAL ASSOCIATION, not in
its individual capacity, but solely as
Trustee
By:______________________________________
Authorized Officer
Dated: ______________, 2007
Exhibit A-4
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Variable Funding Asset Backed Floating Rate Notes, Series
2002-A (herein called the "Notes"), all issued under the Amended and Restated
Series 2002-A Supplement to the Base Indenture dated as of September 10, 2007
(such Base Indenture, as supplemented by the Series 2002-A Supplement and
supplements relating to other series of notes, as supplemented or amended, is
herein called the "Indenture"), between the Issuer and WELLS FARGO BANK,
NATIONAL ASSOCIATION, as trustee (the "Trustee," which term includes any
successor Trustee under the Indenture), to which Indenture reference is hereby
made for a statement of the respective rights and obligations thereunder of the
Issuer, the Trustee and the Noteholders. The Notes are subject to all terms of
the Indenture. All terms used in this Note that are defined in the Indenture
shall have the meanings assigned to them in or pursuant to the Indenture.
Principal of the Notes will be payable on each Payment Date after
the end of the Revolving Period as described on the face hereof and may be
prepaid as set forth in the Indenture. "Payment Date" means the twentieth day of
each calendar month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing on September 20, 2007.
All principal payments on the Notes shall be made pro rata to the
Noteholders entitled thereto.
Subject to certain limitations set forth in the Indenture, payments
of interest on this Note due and payable on each Payment Date, together with the
installment of principal, if any, to the extent not in full payment of this
Note, shall be made by wire transfer in immediately available funds to the
Person whose name appears as the Noteholder on the Note Register as of the close
of business on each Record Date without requiring that this Note be submitted
for notation of payment. Any reduction in the principal amount of this Note
effected by any payments made on any Payment Date or date of prepayment shall be
binding upon all future Noteholders and of any Note issued upon the registration
of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted
on Schedule A attached hereto. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Payment Date, then the Trustee, in the name
of and on behalf of the Issuer, will notify the Person who was the Holder hereof
as of the Record Date preceding such Payment Date by notice mailed prior to such
Payment Date and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the Trustee's principal Corporate
Trust Office or at the office of the Trustee's agent appointed for such purposes
located in the City of New York.
On any redemption, purchase, exchange or cancellation of any of the
beneficial interests represented by this Note, details of such redemption,
purchase, exchange or cancellation shall be entered by the Paying Agent in
Schedule A hereto recording any such redemption, purchase, exchange or
cancellation. Upon any such redemption, purchase, exchange or cancellation, the
principal amount of this Note and the beneficial interests represented by the
Note shall be reduced or increased, as appropriate, by the principal amount so
redeemed, purchased, exchanged or cancelled.
Exhibit A-5
Each Noteholder, by acceptance of a Note, covenants and agrees that
by accepting the benefits of the Indenture that such Noteholder will not prior
to the date which is one year and one day after the payment in full of the last
maturing note of any Series and the termination of the Indenture institute
against the Issuer or join in any institution against the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings, under any United States Federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the Transaction Documents.
Each Noteholder, by acceptance of a Note, covenants and agrees that
by accepting the benefits of the Indenture that such Noteholder will treat such
Note as indebtedness for all Federal, state and local income and franchise tax
purposes.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Note (as of the day of determination or as
of such other date as may be specified in the Indenture) is registered as the
owner hereof for all purposes, whether or not this Note be overdue, and neither
the Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
As provided in the Indenture, no recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer under the Indenture,
including this Note, against any Seller, the Initial Seller, the Servicer, the
Trustee or any partner, owner, incorporator, beneficiary, beneficial owner,
agent, officer, director, employee, shareholder or agent of the Issuer, any
Seller, the Initial Seller, the Servicer or the Trustee except as any such
Person may have expressly agreed.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Trustee and
the Noteholders under the Indenture.
The Notes are issuable only in registered form as provided in the
Indenture in denominations as provided in the Indenture, subject to certain
limitations therein set forth.
This Note and the Indenture shall be construed in accordance with
the laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note.
Exhibit A-6
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _____________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints ____________, attorney, to transfer said Note on the books kept for
registration thereof, with full power of substitution in the premises.
Dated: ________________ _________________(1)
Signature Guaranteed:
-----------------------
- ----------
(1) NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
Exhibit A-7
SCHEDULE A
The following are borrowings, renewals and payments made under this Note of
the Issuer Dated ________________, 2007:
Loan Renewal Amount Due Date Amount Paid
Date Date Borrowed/ --- Prin. Paid Principal Interest
---- ---- Renewed ---------- ------------------
-------
Schedule A-1
EXHIBIT B
---------
FORM OF MONTHLY NOTEHOLDERS' STATEMENT
--------------------------------------
Exhibit B-1
EXHIBIT C
---------
FORM OF TRANSFER CERTIFICATE
----------------------------
To: Wells Fargo Bank, National Association,
as Trustee and Registration and Transfer Agent
MAC N9311-161
6th and Marquette
Minneapolis, Minnesota 55479-0700
Attention: Corporate Trust Services/Asset-Backed Administration
Re: Conn Funding II, L.P.- Variable Funding Asset Backed
Floating Rate Notes, Series 2002-A
This Certificate relates to $450,000,000 principal amount
of Notes held in
0 book-entry or
0 definitive form
by _____________ (the "Transferor") issued pursuant to the Base Indenture, dated
as of September 1, 2002, between Conn Funding II, L.P., as Issuer, and Wells
Fargo Bank, National Association (as successor to Wells Fargo Bank Minnesota,
National Association), as Trustee (as amended, supplemented or otherwise
modified from time to time, the "Base Indenture") and the Amended and Restated
Series 2002-A Supplement thereto, dated as of September 10, 2007 (as amended,
supplemented or otherwise modified from time to time, the "Series Supplement"
and, together with the Base Indenture, the "Indenture"). Capitalized terms used
herein and not otherwise defined, shall have the meanings given thereto in the
Indenture.
The Transferor has requested the Trustee by written order to
exchange or register the transfer of a Note or Notes.
In connection with such request and in respect of each such
Note, the Transferor does hereby certify as follows:
0 Such Note is being acquired for its own account.
0 Such Note is being transferred pursuant to and in
accordance with Rule 144A under the Securities Act, and, accordingly, the
Transferor further certifies that the Series 2002-A Notes are being transferred
to a Person that the Transferor reasonably believes is purchasing the Series
2002-A Notes for its own account, or for an account with respect to which such
Person exercises sole investment discretion, and such Person and such account is
a "qualified institutional buyer" within the meaning of Rule 144A in a
transaction meeting the requirements of Rule 144A.
Exhibit C-1
0 Such Note is being transferred in reliance on and in
compliance with an exemption from the registration requirements of the
Securities Act, other than Rule 144A under the Securities Act, and in compliance
with other applicable state and federal securities laws and, if requested by the
Trustee, an opinion of counsel is being furnished simultaneously with the
delivery of this Certificate as required under Section 6 of the Series
Supplement. This Certificate and the statements contained therein are made for
your benefit and the benefit of the Issuer.
[INSERT NAME OF TRANSFEROR]
By:
Name:
Title:
Date:
Exhibit C-2
EXHIBIT D
---------
FORM OF NOTICE OF VOLUNTARY DECREASE
------------------------------------
1. Proposed Voluntary Decrease Date: ___________
2. Total amount of requested Voluntary Decrease: $__________
a. Pro rata amount to Three Pillars Funding LLC: $__________
b. Pro rata amount to Park Avenue Receivables $__________
Company, LLC and the Committed Purchaser:
3. Remaining Note Principal (after giving effect to the
requested Decrease): $__________
4. Certifications:
(a) The representations and warranties of Conn Funding II, L.P.
(the "Issuer"), Conn Appliances, Inc., as seller, in the
Base Indenture dated as of September 1, 2002 (as amended)
between the Issuer and Wells Fargo Bank, National
Association (f/k/a Wells Fargo Bank Minnesota, National
Association), as trustee (the "Trustee"); the Amended and
Restated Series 2002-A Supplement, dated as of September 10,
2007, between the Issuer and the Trustee (the "Series
Supplement"); and the Amended and Restated Note Purchase
Agreement dated as of September 10, 2007 (the "Note Purchase
Agreement"), among the Issuer, the Seller, the Conduit
Purchasers party thereto, JPMorgan Chase Bank, N.A. and
SunTrust Robinson Humphrey, Inc., are true and correct in
all material respects on the date hereof (except to the
extent they expressly relate to an earlier or later time and
then as of such earlier or later time).
(b) The conditions to the Voluntary Decrease specified in Sections
3.2 and 5.15 of the Series Supplement have been satisfied and
will be satisfied as of the applicable Decrease Date.
Capitalized terms used herein and not otherwise defined, shall have the
meanings given thereto in the Series Supplement.
CONN FUNDING II, L.P., as the Issuer
By: Conn Funding II GP, L.L.C.,
Its general partner
By:_______________________________________
Name:
Title:
Date of Notice: __________
Exhibit D-1
SCHEDULE 1
----------
LIST OF PROCEEDINGS
-------------------
None.
Schedule 1-1
SCHEDULE 2
----------
LIST OF TRADE NAMES
-------------------
None.
Schedule 2-1
Exhibit 99.3
AMENDED AND RESTATED NOTE PURCHASE AGREEMENT
among
CONN FUNDING II, L.P.,
as Issuer,
CONN APPLIANCES, INC.,
as Seller,
THREE PILLARS FUNDING LLC,
as a Conduit Purchaser,
PARK AVENUE RECEIVABLES COMPANY, LLC,
as a Conduit Purchaser,
JPMORGAN CHASE BANK, N.A.,
as Funding Agent and as Committed Purchaser, and
SUNTRUST ROBINSON HUMPHREY, INC.
as the Administrator.
dated as of September 10, 2007
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS...................................................1
SECTION 1.1 Certain Defined Terms...................................1
SECTION 1.2 Other Definitional Provisions...........................9
ARTICLE II. PURCHASE AND SALE............................................10
SECTION 2.1 Purchase and Sale of the Notes.........................10
SECTION 2.2 Initial Purchase Price.................................10
SECTION 2.3 Increases..............................................10
SECTION 2.4 Extension of Purchase Expiration Dates.................12
SECTION 2.5 Reduction of Maximum Principal Amount..................12
SECTION 2.6 Calculation of Monthly Interest........................12
SECTION 2.7 Benefits of Indenture..................................13
SECTION 2.8 Broken Funding.........................................13
SECTION 2.9 Illegality.............................................14
SECTION 2.10 Inability to Determine Eurodollar Rate (Reserve
Adjusted)..............................................14
SECTION 2.11 Fees...................................................15
ARTICLE III. CLOSING......................................................15
SECTION 3.1 Closing................................................15
SECTION 3.2 Transactions to be Effected at the Closing.............15
ARTICLE IV. CONDITIONS PRECEDENT.........................................15
SECTION 4.1 Conditions Precedent to Initial Purchase of the
Notes..................................................15
SECTION 4.2 Conditions Precedent to each Increase..................18
SECTION 4.3 Conditions Precedent to the Restatement................18
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF THE ISSUER AND THE
SELLER.......................................................20
SECTION 5.1 Representations, Warranties and Covenants of the
Seller and the Issuer..................................20
SECTION 5.2 Reaffirmation of Representations and Warranties by
the Issuer.............................................25
ARTICLE VI. REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE
ADMINISTRATOR, THE FUNDING AGENT AND THE CONDUIT
PURCHASERS...................................................25
SECTION 6.1 Securities Laws; Transfer Restrictions.................25
-i-
TABLE OF CONTENTS
(continued)
Page
ARTICLE VII. COVENANTS....................................................26
SECTION 7.1 Monthly Noteholders' Statement; Notice of Adverse
Effect.................................................26
SECTION 7.2 Further Assurances.....................................27
SECTION 7.3 Modifications to Transaction Documents.................27
SECTION 7.4 Expenses...............................................27
SECTION 7.5 Reorganizations and Transfers..........................27
SECTION 7.6 Financial Covenants....................................27
ARTICLE VIII. INDEMNIFICATION..............................................28
SECTION 8.1 Indemnification........................................28
SECTION 8.2 Increased Costs........................................29
SECTION 8.3 Indemnity for Taxes....................................30
SECTION 8.4 Other Costs, Expenses and Related Matters..............32
ARTICLE IX. THE ADMINISTRATOR AND THE FUNDING AGENT......................32
SECTION 9.1 Authorization and Action...............................33
SECTION 9.2 Administrator's and Funding Agent's Reliance, Etc......33
SECTION 9.3 Administrator, Funding Agent and their Respective
Affiliates.............................................34
SECTION 9.4 Purchase Decision......................................34
SECTION 9.5 Successor Administrator and Funding Agent..............34
ARTICLE X. MISCELLANEOUS................................................35
SECTION 10.1 Amendments.............................................35
SECTION 10.2 Notices................................................35
SECTION 10.3 No Waiver; Remedies....................................36
SECTION 10.4 Binding Effect; Assignability..........................37
SECTION 10.5 Confidentiality........................................38
SECTION 10.6 GOVERNING LAW; JURISDICTION............................38
SECTION 10.7 Wavier of Trial by Jury................................38
SECTION 10.8 No Proceedings.........................................38
SECTION 10.9 Execution in Counterparts..............................38
SECTION 10.10 No Recourse............................................38
SECTION 10.11 Survival...............................................39
-ii-
TABLE OF CONTENTS
(continued)
Page
SECTION 10.12 Recourse...............................................39
SECTION 10.13 No Fiduciary Duty......................................39
SCHEDULES AND EXHIBITS
EXHIBIT A Form Notice of Increase
Schedule I List of Proceedings
Schedule II List of Trade Names
-iii-
This AMENDED AND RESTATED NOTE PURCHASE AGREEMENT (this "Note
Purchase Agreement") is among CONN FUNDING II, L.P., as issuer (the "Issuer"),
CONN APPLIANCES, INC., as seller (the "Seller"), THREE PILLARS FUNDING LLC
(f/k/a Three Pillars Funding Corporation) ("Three Pillars"), as a conduit
purchaser (a "Conduit Purchaser"), PARK AVENUE RECEIVABLES COMPANY, LLC
("PARCO"), as a conduit purchaser (a "Conduit Purchaser", and together with
Three Pillars Funding LLC, the "Conduit Purchasers"), JPMORGAN CHASE BANK, N.A.
("JPMorgan"), as funding agent for PARCO (in such capacity, the "Funding Agent")
and as Committed Purchaser, and SUNTRUST ROBINSON HUMPHREY, INC. (f/k/a SunTrust
Capital Markets, Inc.), as administrator (the "Administrator").
RECITALS
WHEREAS, the Issuer has issued and may continue to issue the
variable funding notes pursuant to a Base Indenture, dated as of September 1,
2002 (as amended, supplemented or otherwise modified from time to time, the
"Base Indenture"), between the Issuer and Wells Fargo Bank, National Association
(f/k/a Wells Fargo Bank Minnesota, National Association), as trustee (in such
capacity, together with its successors and assigns in such capacity, the
"Trustee"), as supplemented by the Amended and Restated Series Supplement
2002-A, dated as of September 10, 2007, between the Issuer and the Trustee (as
amended, supplemented or otherwise modified from time to time, the "Series
Supplement", and together with the Base Indenture, the "Indenture"); and
WHEREAS, the Issuer, the Seller (for itself and as successor by
merger to CAI, L.P.), Three Pillars Funding LLC and the Administrator are
parties to that certain Note Purchase Agreement, dated as of the Closing Date
(as amended prior to the date hereof, the "Original Note Purchase Agreement")
and such parties and the parties hereto desire to amend and restate the Original
Note Purchase Agreement.
WHEREAS, the Conduit Purchasers desire to acquire such variable
funding notes and to make advances from time to time hereunder and the Committed
Purchaser is committed to acquire certain variable funding notes and to make
advances from time to time hereunder.
NOW, THEREFORE, for full and fair consideration, the parties hereto
agree that the Original Note Purchase Agreement is hereby amended and restated
in its entirety as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1 Certain Defined Terms. Capitalized terms used herein
without definition shall have the meanings set forth in the Indenture.
Additionally, the following terms shall have the following meanings:
"Act" means the Securities Act of 1933, as amended.
"Administrator" has the meaning set forth in the Preamble.
"Affected Party" means each of the Conduit Purchasers, the Committed
Purchaser, any Liquidity Bank, any permitted assignee of any Conduit Purchaser
or any Liquidity Bank, any Support Provider and any holder of a participation
interest in the rights and obligations of any Liquidity Bank and any Credit Bank
under any Liquidity Agreement and/or any Credit Agreement, the Administrator,
the Funding Agent and any holding company of either Bank.
"Aggregate Purchaser Funded Amount" means, on any date of
determination an amount equal to (a) the Initial Purchase Price, plus (b) the
aggregate amount of all Increases made prior to such date of determination,
minus (c) the aggregate amount of principal payments (including, without
limitation, any Decreases) in respect of the Notes made to and received by or on
behalf of the Conduit Purchasers and the Committed Purchaser prior to such date.
"Alternate Reference Rate" means, on any date, a fluctuating rate of
interest per annum equal to the higher of:
(a) the rate of interest most recently announced by Bank at
its principal office in Atlanta, Georgia or New York, New York, as
applicable, as its prime rate (it being understood that at any one time
there shall exist only one such prime rate so announced), which rate is
not necessarily intended to be the lowest rate of interest determined by
such Bank in connection with extensions of credit; or
(b) the Federal Funds Rate (as defined below) most recently
determined by Bank plus 0.50% per annum.
"Applicable Margin" has the meaning set forth in the Fee Letters, as
applicable.
"Bank" means SunTrust Bank, a Georgia banking corporation or
JPMorgan, as applicable.
"Bank Rate" means, for any Interest Period, an interest rate per
annum equal to either (a) the sum of (i) 3.00% per annum, and (ii) the
Eurodollar Rate (Reserve Adjusted) for such Interest Period; provided, however,
that if (x) it shall become unlawful for any Liquidity Bank or any Credit Bank
to obtain funds in the London interbank eurodollar market in order to make, fund
or maintain any Funding Tranche hereunder, or if such funds shall not be
reasonably available to any Liquidity Bank or any Credit Bank, or (y) there
shall not be time prior to the commencement of an applicable Interest Period to
determine a Eurodollar Rate (Reserve Adjusted) in accordance with its terms or
the "Bank Rate" shall apply other than at the first day of the Interest Period,
then the "Bank Rate" shall be equal to the weighted average of the Alternate
Reference Rates in effect for each day during the remainder of such Interest
Period or (b) if requested by the Issuer, the weighted average of the Alternate
Reference Rates in effect during such Interest Period, plus 3.00%.
"Block Event" means an event or circumstance that, after the giving
of notice or lapse of time or both, would give rise to an Event of Default, Pay
Out Event or Servicer Default.
"Breakage Amounts" has the meaning specified in Section 2.8.
2
"Closing" has the meaning specified in Section 3.1.
"Closing Date" has the meaning specified in Section 3.1.
"Commercial Paper Notes" means short-term promissory notes issued by
any Conduit Purchaser.
"Commercial Paper Rate" means, for any Interest Period for the
related Funding Tranche, a rate per annum equal to:
(a) in the case of a Conduit Purchaser using match funding, the sum
of (i) the rate or, if more than one rate, the weighted average of the rates,
determined by converting to an interest-bearing equivalent rate per annum the
discount rate (or rates) at which the applicable Commercial Paper Notes
outstanding during such Interest Period have been or may be sold by any
placement agent or commercial paper dealer selected by Administrator or the
Funding Agent, as applicable, plus (ii) the commissions and charges charged by
such placement agent or commercial paper dealer with respect to such Commercial
Paper Notes expressed as a percentage of the face amount thereof and converted
to an interest-bearing equivalent rate per annum (the "Match Funding Rate"); or
(b) in the case of a Conduit Purchaser using pool funding, the sum
of (i) the rate equivalent to the weighted average cost (as determined by the
agent under the applicable securitization facility and which shall include
incremental carrying costs incurred with respect to Commercial Paper Notes
maturing on dates other than those on which corresponding funds are received by
such Conduit Purchaser, other borrowings by such Conduit Purchaser (other than
under any Credit Agreement)), plus (ii) the commissions and charges charged by
such placement agent or commercial paper dealer with respect to such Commercial
Paper Notes expressed as a percentage of the face amount thereof and converted
to an interest-bearing equivalent rate per annum, plus (iii) any other costs
associated with the issuance of Commercial Paper Notes) of or related to the
issuance of Commercial Paper Notes that are allocated, in whole or in part, by
such Conduit Purchaser or the agent under the applicable securitization facility
to fund or maintain such portion of the aggregate principal amount of such
Conduit Purchaser's Note (and which may be also allocated in part to the funding
of other assets of such Conduit Purchaser); provided, however, that if the rate
(or rates) is a discount rate, then the rate (or if more than one rate, the
weighted average of the rates) shall be the rate resulting from converting such
discount rate (or rates) to an interest bearing equivalent rate per annum (the
"Pool Funding Rate").
"Commitment" means, (i) with respect to Three Pillars, as a Conduit
Purchaser, (a) commencing on the Restatement Date and ending on the Tranche C
Purchase Expiration Date, $300,000,000, (b) commencing on the day following the
Tranche C Purchase Expiration Date, and ending on the Tranche A Purchase
Expiration Date, $200,000,000 and (c) thereafter, $133,333,333.33 and (ii) with
respect to each of PARCO, as a Conduit Purchaser, and the Committed Purchaser,
(a) commencing on the Restatement Date and ending on the Tranche C Purchase
Expiration Date, $150,000,000, (b) commencing on the day following the Tranche C
Purchase Expiration Date, and ending on the Tranche A Purchase Expiration Date,
$100,000,000 and (c) thereafter, $66,666,666.67.
3
"Committed Purchaser" means, JPMorgan Chase Bank, N.A. and each
of its successors and assigns.
"Conduit Purchasers" is defined in the Preamble.
"Covered Taxes" has the meaning specified in Section 8.3.
"Credit Advance" means a drawing under a letter of credit issued
pursuant to a Credit Agreement for the account of any Conduit Purchaser, a loan
to any Conduit Purchaser under a Credit Agreement or any other advance or
disbursement of funds to any Conduit Purchaser or for such Conduit Purchaser's
account pursuant to a Credit Agreement or any such letter of credit, in each
case to the extent such drawing, loan, advance or disbursement has not been
repaid or reimbursed to the applicable Credit Bank in accordance with the
related Credit Agreement.
"Credit Agreement" means and includes any program-wide agreement
entered into by any Credit Bank providing for the issuance of one or more
letters of credit for the account of any Conduit Purchaser, the issuance of one
or more surety bonds for which any Conduit Purchaser is obligated to reimburse
the applicable Credit Bank for any drawings thereunder, the sale by any Conduit
Purchaser to any Credit Bank of receivables or other financial assets purchased
by such Conduit Purchaser (or portions thereof) and/or the making of loans
and/or other extensions of credit to any Conduit Purchaser in connection with
its commercial paper program, together with any cash collateral agreement,
letter of credit, surety bond or other agreement or instrument executed and
delivered in connection therewith (but excluding the Liquidity Agreement of such
Conduit Purchaser, or similar agreement, or any voluntary advance agreement).
"Credit Bank" means and includes each Bank and any other or
additional bank or other Person (other than any customer of any Conduit
Purchaser or any liquidity provider as such) now or hereafter extending credit
or a purchase commitment to or for the account of a Conduit Purchaser or issuing
a letter of credit, surety bond or other instrument, in each case to support any
obligations arising under or in connection with such Conduit Purchaser's
commercial paper program.
"Decrease" has the meaning specified in the Series Supplement.
"Default Rate" has the meaning specified in the definition of Note
Rate.
"Dollar" or "$" means lawful currency of the United States of
America.
"Eurodollar Rate (Reserve Adjusted)" means, with respect to any
Funding Tranche, the rate per annum equal to the quotient of (i) the offered
rate for deposits in Dollars for a one-month period in an amount equal (as
nearly as possible) to the principal amount of the Funding Tranche which rate
appears on the pages 3750 or 3740, as applicable, of the Dow Jones Market
Service as of 11:00 A.M. (London, England) time on the Rate Setting Day;
provided, that if at least two rates appear on pages 3750 or 3740, as
applicable, of the Dow Jones Market Service on such Rate Setting Day, the rate
for such Interest Period shall be the arithmetic mean of such rates; provided
further, that if no such offered rates appear on such page, the rate used for
such Interest Period will be the arithmetic average (rounded upward, if
necessary, to the next higher 1/16th of 1%) of rates offered to Administrator by
not less than two major banks in London, England at approximately 10:00 A.M.
(Atlanta, Georgia time), two (2) Business Days prior to the first day of such
Interest Period for deposits in U.S. dollars in the London interbank market for
a one-month period in an amount comparable to the principal amount of the
Funding Tranche, divided by (ii) a number equal to 1.00 minus the Reserve
Percentage. The rate so determined in accordance herewith shall be rounded
upwards to the multiple of 1/100th of 1%
4
"Federal Bankruptcy Code" means the bankruptcy code of the United
States of America codified in Title 11 of the United States Code.
"Federal Funds Rate" means, for any period, the per annum rate set
forth in the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Board (including any
such successor, "H.15(519)") for such day opposite the caption "Federal Funds
(Effective)." If on any relevant day such rate is not yet published in
H.15(519), the rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publications, published by the Federal
Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m.
Quotations") for such day under the caption "Federal Funds Effective Rate." If
on any relevant day the appropriate rate for such previous day is not yet
published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate
for such day will be the arithmetic mean as determined by the related Bank of
the rates for the last transaction in overnight Federal funds arranged prior to
9:00 a.m. (New York time) on that day by each of three leading brokers of
Federal funds transactions in New York City selected by such Bank.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System, or any entity succeeding to any of its principal functions.
"Fee Letters" means each of the following letter agreements: (i)
that certain second amended and restated letter agreement, dated as of the date
hereof, between the Issuer and the Administrator setting forth certain fees
payable by the Issuer in connection with the purchase of Notes by the
Administrator for the benefit of Three Pillars and (ii) that certain letter
agreement, dated as of the date hereof, between the Issuer and the Funding Agent
setting forth certain fees payable by the Issuer in connection with the purchase
of Notes by the Funding Agent for the benefit of PARCO.
"Fees" has the meaning set forth in Section 2.11.
"Final Purchase Expiration Date" means the latest to occur of (i)
the Tranche A Purchase Expiration Date, (ii) Tranche B Purchase Expiration Date
and (iii) the Tranche C Purchase Expiration Date (as such dates may be extended
from time to time pursuant to Section 2.4).
"Fixed Period" means, with respect to a Funding Tranche, a period
selected by the Administrator with respect to Three Pillars and the Funding
Agent with respect to PARCO, in each case in its sole discretion; provided, that
5
(i) any Fixed Period with respect to any Funding Tranche
not funded by the issuance of Commercial Paper Notes which
would otherwise end on a day which is not a Business Day shall
be extended to the next succeeding Business Day; provided,
however, if interest in respect of such Fixed Period is
computed by reference to the Eurodollar Rate (Reserve
Adjusted), and such Fixed Period would otherwise end on a day
which is not a Business Day, and there is no subsequent
Business Day in the same calendar month as such day, such
Fixed Period shall end on the next preceding Business Day;
(ii) any Fixed Period with respect to any Funding
Tranche not funded by the issuance of Commercial Paper Notes
will not be for a term of more than 40 days; and
(iii) any Fixed Period in respect of which interest is
computed by reference to the Commercial Paper Rate may be
terminated at the election of, and upon notice thereof to the
Issuer by, the Administrator or the Funding Agent, as
applicable, any time, in which case the Funding Tranche
allocated to such terminated Fixed Period shall be allocated
to a new Fixed Period and shall accrue interest at the
Alternate Reference Rate.
"Funding Agent" is defined in the Preamble.
"Funding Tranche" means one or more portions of the Aggregate
Purchaser Funded Amount used to fund or maintain the Notes that accrue interest
by reference to different interest rates.
"Governmental Actions" means any and all consents, approvals,
permits, orders, authorizations, waivers, exceptions, variances, exemptions or
licenses of, or registrations, declarations or filings with, any Governmental
Authority required under any Governmental Rules.
"Governmental Authority" means the United States of America, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and having jurisdiction over the applicable Person.
"Governmental Rules" means any and all laws, statutes, codes, rules,
regulations, ordinances, orders, writs, decrees and injunctions, of any
Governmental Authority and any and all legally binding conditions, standards,
prohibitions, requirements and judgments of any Governmental Authority.
"Increase" has the meaning specified in the Series Supplement.
"Increase Amount" means the amount requested by the Issuer to be
funded by the Conduit Purchasers or the Committed Purchaser (on a pro rata basis
based on the Commitment) on an Increase Date.
6
"Increase Date" means the date on which each Increase occurs.
"Indemnified Party" has the meaning specified in Section 8.1.
"Initial Note Principal" means $28,080,192.
"Initial Purchase Price" has the meaning specified in Section 2.2.
"Issuer" is defined in the Preamble.
"Issuer Indemnified Amounts" has the meaning specified in subsection
8.1(a).
"JPMorgan" is defined in the Preamble.
"Liquidity Agreement" means and includes (a) the Liquidity Asset
Purchase Agreement (regarding Conn Funding II, L.P.), dated as of September 13,
2002, among Three Pillars, as borrower, SunTrust Bank, as liquidity agent for
the Liquidity Banks from time to time party thereto, and SunTrust Robinson
Humphrey, Inc. (f/k/a SunTrust Equitable Securities Corporation), as
administrator for Three Pillars, and the Liquidity Banks from time to time party
thereto, (b) the Asset Purchase Agreement (regarding Conn Funding II, L.P.),
dated as of the date hereof among PARCO, JPMorgan, as funding agent for the
Liquidity Banks from time to time party thereto and the Liquidity Banks from
time to time party thereto, and (c) any other agreement hereafter entered into
by any Conduit Purchaser providing for the sale by such Conduit Purchaser of an
interest in the Notes (or portions thereof), or the making of loans or other
extensions of credit to such Conduit Purchaser secured by security interests in
the Notes (or portions thereof), to support all or part of such Conduit
Purchaser's payment obligations under its Commercial Paper Notes or to provide
an alternate means of funding such Conduit Purchaser's investments in accounts
receivable or other financial assets, in each case as amended, supplemented or
otherwise modified from time to time.
"Liquidity Bank" means and includes the applicable Bank and the
various financial institutions as are, or may become, parties to a Liquidity
Agreement, as purchasers thereunder.
"Match Funding Rate" has the meaning specified in clause (a) of the
definition of "Commercial Paper Rate" herein.
"Monthly Noteholders' Statement" has the meaning specified in
paragraph 2.3(b)(i).
"Note Rate" means, with respect to any Interest Period, the weighted
average of the rates applicable to all Funding Tranches outstanding during all
or part of such Interest Period (determined as of each day in such Interest
Period), each such rate being (a) to the extent any Conduit Purchaser is funding
such Funding Tranche during such period through the issuance of its Commercial
Paper Notes, the Commercial Paper Rate plus the Applicable Margin, and (b) to
the extent any Conduit Purchaser is funding such Funding Tranche during such
period pursuant to a Liquidity Agreement or, in the case of Three Pillars, the
Voluntary Advance Agreement, a rate per annum equal to the Bank Rate plus the
Applicable Margin, provided that on any day after the occurrence and continuance
of any Servicer Default, Pay Out Event or any other Event of Default, the rate
applicable to each such Funding Tranche (the "Default Rate") shall be 3% per
annum above the applicable Alternate Reference Rate in effect on such day plus
the Applicable Margin; provided, however, that interest for any Funding Tranche
shall not be considered paid by any distribution to the extent that all or a
portion of such distribution is rescinded or must otherwise be returned for any
reason.
7
"Notes" means the Variable Funding Asset Backed Notes Series 2002-A
in the maximum aggregate principal amount of $450,000,000 to be issued by the
Issuer pursuant to the Indenture.
"Notice of Increase" means a written notice of an Increase in the
form of Exhibit A hereto.
"Offering Memorandum 2002" means that certain offering memorandum,
dated as of September 10, 2002, prepared by the Issuer and the Seller in
connection with the issuance of the Series 2002-B Fixed Rate Notes.
"Original Note Purchase Agreement" is defined in the Recitals.
"PARCO" is defined in the Preamble.
"Participant" has the meaning specified in subsection 1.4(b).
"Pool Funding Rate" has the meaning specified in clause (b) of the
definition of "Commercial Paper Rate" herein.
"Program Documents" means, with respect to each Conduit Purchaser,
the related Liquidity Agreement, any related Credit Agreement, solely with
respect to Three Pillars, the Voluntary Advance Agreement, the documents under
which Administrator or the Funding Agent, as applicable, performs its
obligations and the other documents to be executed and delivered in connection
therewith, in each case as amended, supplemented or otherwise modified from time
to time.
"Purchase Expiration Date" means any of (i) the Tranche A Purchase
Expiration Date, (ii) Tranche B Purchase Expiration Date and (iii) the Tranche C
Purchase Expiration Date, as the context requires.
"Rate Setting Day" means, for any Interest Period, two (2) Business
Days prior to the commencement of such Interest Period. In the event such day is
not a Business Day, then the Rate Setting Day shall be the immediately preceding
Business Day.
"Reduction" has the meaning specified in Section 2.5.
"Restatement" has the meaning specified in Section 3.1.
"Restatement Date" has the meaning specified in Section 3.1.
8
"Seller" is defined in the Preamble (it being understood that any
reference to the Seller with respect to the Closing Date shall be deemed a
reference to the Seller and its predecessors).
"Support Provider" means and includes any entity now or hereafter
extending credit or liquidity support or having a commitment to extend credit or
liquidity support to or for the account of, or to make loans to or purchases
from, any Conduit Purchaser or issuing a letter of credit, surety bond or other
instrument to support any obligations arising under or in connection with the
commercial paper program of such Conduit Purchaser.
"Three Pillars" is defined in the Preamble.
"Tranche A Purchase Expiration Date" means July 29, 2008 (as such
date may be extended from time to time pursuant to Section 2.4).
"Tranche B Purchase Expiration Date" means September 10, 2012 (as
such date may be extended from time to time pursuant to Section 2.4).
"Tranche C Purchase Expiration Date" means the earlier to occur of
(i) July 29, 2008 and (ii) the closing date of a term securitization transaction
where the Issuer is the issuer (as such date may be extended from time to time
pursuant to Section 2.4).
"Transaction Documents" means (i) the Base Indenture, (ii) the
Series Supplement, (iii) this Note Purchase Agreement, (iv) the Fee Letters, (v)
the Liquidity Agreements, (vi) the Servicing Agreement and (vii) the Notes, in
each case in effect on the date hereof or as modified in accordance with the
terms of the Transaction Documents.
"Trust Assets" means all of the Issuer's right, title and interest
in and to all Receivables, Related Security, Contracts, Collections and all
proceeds relating to the foregoing and all of the other collateral which is part
of the Trust Estate or otherwise pledged to the Trustee for the benefit of the
Secured Parties pursuant to the Indenture.
"Voluntary Advance Agreement" means the Voluntary Advance Agreement,
dated as of March 11, 1999, among SunTrust Robinson Humphrey, Inc. (f/k/a
SunTrust Equitable Securities Corporation), the Administrator and SunTrust Bank,
as it may be amended, supplemented or otherwise modified from time to time.
SECTION 1.2 Other Definitional Provisions. (1) All terms defined in
this Note Purchase Agreement shall have the meanings defined herein when used in
any certificate or other document made or delivered pursuant hereto unless
otherwise defined therein.
(b) As used herein and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined
in Section 1.1, and accounting terms partially defined in Section 1.1 to
the extent not defined, shall have the respective meanings given to them
under GAAP. To the extent that the definitions of accounting terms herein
are inconsistent with the meanings of such terms under generally accepted
accounting principles, the definitions contained herein shall control.
9
(c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Note Purchase Agreement shall refer to
this Note Purchase Agreement as a whole and not to any particular
provision of this Note Purchase Agreement; and Section, subsection,
Schedule and Exhibit references contained in this Note Purchase Agreement
are references to Sections, subsections, the Schedules and Exhibits in or
to this Note Purchase Agreement unless otherwise specified.
ARTICLE II.
PURCHASE AND SALE
SECTION 2.1 Purchase and Sale of the Notes. On the terms and subject
to the conditions set forth in the Original Note Purchase Agreement, and in
reliance on the covenants, representations, warranties and agreements therein
set forth, the Issuer sold at the Closing to the Administrator, on behalf of
Three Pillars (as a Conduit Purchaser) the Notes then outstanding in an
aggregate initial outstanding principal amount equal to the Initial Note
Principal for the Initial Purchase Price. On the Restatement Date, the
Administrator, on behalf of Three Pillars, assigned a portion of the Notes to
the Funding Agent, on behalf of PARCO (as a Conduit Purchaser), and the
Committed Purchaser.
SECTION 2.2 Initial Purchase Price. The Notes were purchased at
Closing at a price (the "Initial Purchase Price") equal to 100% of the Initial
Note Principal.
SECTION 2.3 Increases.
(a) Subject to the terms and conditions of this Note Purchase
Agreement and the Series Supplement, from time to time prior to the Final
Purchase Expiration Date but not more frequently than twice per month
(unless the Administrator and the Funding Agent otherwise consent in their
sole discretion) upon receipt by the Administrator and the Funding Agent
of a Notice of Increase, the Administrator, on behalf of Three Pillars (as
a Conduit Purchaser), and the Funding Agent, on behalf of PARCO (as a
Conduit Purchaser) or the Committed Purchaser, as the case may be, shall
make Increases as provided in Section 2.3(c); provided, however, that no
Conduit Purchaser (or the Committed Purchaser, as the case may be) shall
be required to fund any Increase if, after giving effect thereto, its Note
Principal would exceed the Maximum Principal Amount; and provided,
further, that no Conduit Purchaser (or the Committed Purchaser, as the
case may be) shall be required to fund any Increase if, after giving
effect thereto, its Note Principal would exceed its Commitment.
(b) Each Increase hereunder shall be subject to the further
conditions precedent that:
(i) The Administrator and the Funding Agent will have
received copies of each of the monthly noteholders' statement,
the form of which is attached as Exhibit B to the Series
Supplement (the "Monthly Noteholders' Statement"), in each
case, most recently required to have been delivered under the
Indenture;
10
(ii) Each of the representations and warranties of each
of the Seller, the Servicer and the Issuer made in the
Transaction Documents to which it is a party shall be true and
correct in all material respects as of the applicable Increase
Date (except to the extent they expressly relate to an earlier
or later time);
(iii) The Issuer, the Servicer and the Seller shall be
in compliance in all material respects with all of its
respective covenants contained in the Transaction Documents;
(iv) No Pay Out Event, Potential Pay Out Event, Default,
Event of Default, Servicer Default or Block Event shall have
occurred and be continuing;
(v) The Final Purchase Expiration Date shall not have
occurred; and
(vi) The Administrator and the Funding Agent shall have
received a completed Notice of Increase with respect to such
proposed Increase, not later than 12:00 p.m. (New York time)
one (1) Business Day prior to the proposed date of such
Increase.
(c) Three Pillars (as a Conduit Purchaser) shall make its
related pro rata portion of the proceeds of such requested Increase
available to the Administrator at its office in Atlanta, Georgia and PARCO
(as a Conduit Purchaser) may make its related pro rata portion of the
proceeds of such requested Increase available to the Funding Agent at its
office in New York, New York, in same day funds on the Increase Date, and
if PARCO (as a Conduit Purchaser) does not make available its full pro
rata portion of such Increase Amount, the Committed Purchaser shall make
any portion constituting a shortfall so available to the Funding Agent.
Upon receipt by Administrator and the Funding Agent of such funds, the
Administrator and the Funding Agent will make such funds available to
Issuer not later than 3:00 p.m. New York City time on the Increase Date by
wire transfer of immediately available funds to such account as may from
time to time be specified by the Issuer in a notice to the Administrator
and the Funding Agent.
(d) All conditions set forth in Section 3.1 of the Series
Supplement, to the extent applicable, shall have been satisfied at such
time. Each "Increase" with respect to all VFN Series shall be allocated to
each respective VFN Series as instructed by the Issuer; provided, that (i)
the Issuer shall not (unless necessary in order to comply with the
requirements of clause (ii) of this paragraph) disproportionately allocate
Increases to the same VFN Series for two or more consecutive Increases and
(ii) shall at all times use its reasonable best efforts to allocate
Increases to the respective VFN Series so that the aggregate of the
"Aggregate Purchaser Funded Amounts" under (and as defined in) each VFN
Series is at all times ratably allocated among each such VFN Series
according to their respective "Maximum Principal Amount" (as defined in
each such VFN Series).
11
SECTION 2.4 Extension of Purchase Expiration Dates. The Issuer may
advise the Administrator and the Funding Agent in writing of its desire to
extend any of the Tranche A Expiration Date, Tranche B Expiration Date or the
Tranche C Expiration Date; provided such request is made not more than 90 days
prior to, and not less than 60 days prior to, the then current related Purchase
Expiration Date. The Administrator and the Funding Agent shall notify the Issuer
in writing, within 45 days after its receipt of such request by the Issuer,
whether the Conduit Purchasers and the Committed Purchaser are agreeable to such
extension (it being understood that each Conduit Purchaser may accept or decline
such a request in its sole discretion and on such terms as it may elect) and, to
the extent the Conduit Purchasers and the Committed Purchaser are agreeable, the
Issuer, the Administrator, the Funding Agent, the Committed Purchaser and the
Conduit Purchasers shall enter into such documents as the Conduit Purchasers and
the Committed Purchaser may deem necessary or appropriate to reflect such
extension, and all reasonable costs and expenses incurred by the Conduit
Purchasers, the Administrator, the Funding Agent and the Committed Purchaser in
connection therewith (including reasonable attorneys' costs) shall be paid by
the Issuer; it being understood, that the failure of the Administrator and the
Funding Agent to so notify the Issuer as set forth above shall not be deemed to
be a consent to such request for extension by any Conduit Purchaser or the
Committed Purchaser.
SECTION 2.5 Reduction of Maximum Principal Amount.
(a) On any Payment Date prior to the Rapid Pay Out
Commencement Date, upon the written request of the Issuer, the "Maximum
Principal Amount" (as defined in each VFN Series) may be permanently
reduced (a "Reduction"), on a ratable basis with respect to each VFN
Series and with respect to the Notes, by the Issuer; provided that the
Issuer shall have given each applicable "Administrator" and the Funding
Agent hereunder irrevocable written notice (effective upon receipt) of the
amount of such Reduction prior to 10:00 a.m., New York time on a Business
Day that is at least thirty (30) days prior to such Reduction; provided,
further, that any such Reduction shall be in an amount equal to
$25,000,000 in the aggregate for all VFN Series or integral multiples of
$10,000,000 in excess thereof; and provided, further, that no Reduction
may cause the aggregate of the "Maximum Principal Amounts" under all VFN
Series to be lower than $150,000,000. Each Reduction effected pursuant to
this Section 2.5 shall automatically and permanently, without any further
action on the part of any party, reduce the Commitment of each of (i)
Three Pillars, as a Conduit Purchaser, and (ii) PARCO, as a Conduit
Purchaser, and the Committed Purchaser on a pro rata basis, in the amount
of such Reduction.
(b) The Issuer shall pay to (i) the Administrator on behalf of
Three Pillars and (ii) the Funding Agent on behalf of PARCO or the
Committed Purchaser any accrued and unpaid fees and expenses with respect
to the reduction amount on the date of any such Reduction.
SECTION 2.6 Calculation of Monthly Interest.
12
(a) On the Business Day prior to each Series Transfer Date,
the Administrator (with respect to Three Pillars) and the Funding Agent
(with respect to PARCO and the Committed Purchaser), as applicable, shall
calculate, for the applicable Interest Period, the aggregate Monthly
Interest for each Funding Tranche (such Monthly Interest to be calculated
using the Note Rate, if necessary, for the remaining days in such Interest
Period). Each of the Administrator and the Funding Agent may, in its sole
discretion, determine the Commercial Paper Rate for its related Conduit
Purchaser with respect to each Series Transfer Date using the Match
Funding Rate or the Pool Funding Rate; provided, however, that to the
extent that the related Conduit Purchaser may choose between the Match
Funding Rate or the Pool Funding Rate, the Issuer may request the
Administrator or the Funding Agent, as applicable, to use either the Match
Funding Rate or the Pool Funding Rate in determining the Commercial Paper
Rate for its related Conduit Purchaser with respect to such Series
Transfer Date (it being understood and agreed that the Administrator or
the Funding Agent, as applicable, shall have no obligation to follow any
such request by the Issuer).
(b) The Issuer agrees to pay, and the Issuer agrees to
instruct the Servicer and the Trustee to pay, all amounts payable by it
with respect to the Notes, this Note Purchase Agreement and the Series
Supplement to the accounts designated by the Administrator and the Funding
Agent. All such amounts shall be paid no later than noon, New York City
time, on the day when due as determined in accordance with this Note
Purchase Agreement, the Indenture and the other Transaction Documents, in
lawful money of the United States in immediately available funds. Amounts
received after that time shall be deemed to have been received on the next
Business Day and shall bear interest at the Default Rate, which interest
shall be payable on demand.
SECTION 2.7 Benefits of Indenture. The Issuer hereby acknowledges
and confirms that each representation, warranty, covenant and agreement made
pursuant to the Indenture by the Issuer to the Trustee is (unless such
representation, warranty, covenant or agreement specifically states otherwise),
also made herein, all for the benefit and security of each Conduit Purchaser,
the Committed Purchaser, the Funding Agent and the Administrator.
SECTION 2.8 Broken Funding. In the event of (i) the payment of any
principal of any Funding Tranche (other than a Funding Tranche on which the
interest is computed by reference to the Alternate Reference Rate) other than on
the last day of the Fixed Period applicable thereto (including as a result of
the occurrence of the Rapid Pay Out Commencement Date or an optional prepayment
of a Funding Tranche), or (ii) any failure to borrow or prepay any Funding
Tranche (other than a Funding Tranche on which the interest is computed by
reference to the Alternate Reference Rate) on the date specified in any notice
delivered pursuant hereto, then, in any such event, the Issuer shall compensate
the Affected Party for the loss, cost and expense attributable to such event.
Such loss, cost or expense to any such Affected Party shall be deemed to include
an amount (the "Breakage Amount") determined by such Affected Party (or the
Administrator with respect to Three Pillars or the Funding Agent with respect to
PARCO or the Committed Purchaser, as applicable) to be the excess, if any, of
(i) the amount of interest which would have accrued on the portion of the
principal amount of such Funding Tranche prepaid or to be borrowed or prepaid
had such event not occurred, at the interest rate that would have been
applicable to such Funding Tranche, for the period from the date of such event
to the last day of the Fixed Period (or, in the case of a failure to borrow for
the period that would have been the related Fixed Period), over (ii) the amount
of interest which would be obtainable upon redeployment or reinvestment of an
amount of funds equal to such portion of such Funding Tranche for such period. A
certificate of any Affected Party incurring any loss, cost or expense as a
result of any of the events specified in this Section 2.8 and setting forth any
amount or amounts that the Affected Party is entitled to receive pursuant to
this Section 2.8 and the reason(s) therefor shall be delivered to the Issuer by
the Administrator or the Funding Agent and shall include reasonably detailed
calculations and shall be conclusive absent manifest error. The Issuer shall pay
to the Administrator or the Funding Agent, as applicable, on behalf of such
Affected Party the amount shown as due on any such certificate on the first
Payment Date which is not less than three Business Days after receipt thereof.
13
SECTION 2.9 Illegality. Notwithstanding anything in this Note
Purchase Agreement or any other Transaction Document to the contrary, if, after
the Closing Date, the adoption of any Law or bank regulatory guideline or any
amendment or change in the interpretation of any existing or future Law or bank
regulatory guideline by any Official Body charged with the administration,
interpretation or application thereof, or the compliance with any directive of
any Official Body (in the case of any bank regulatory guideline, whether or not
having the force of Law), shall make it unlawful for any Affected Party to
acquire or maintain a Funding Tranche by reference to the Eurodollar Rate
(Reserve Adjusted) as contemplated by this Note Purchase Agreement or any
Program Document, (i) the Administrator or the Funding Agent, as applicable, on
behalf of such Affected Party shall, within forty-five (45) days after receiving
actual knowledge thereof, deliver a certificate to the Issuer (with a copy to
the Administrator or the Funding Agent, as applicable) setting forth the basis
for such illegality, which certificate shall be conclusive absent manifest
error, and (ii) such Affected Party's portion of any Funding Tranche maintained
by reference to the Eurodollar Rate (Reserve Adjusted) then outstanding shall be
converted automatically to a Funding Tranche maintained by reference to the
Alternate Reference Rate.
SECTION 2.10 Inability to Determine Eurodollar Rate (Reserve
Adjusted). If, prior to the first day of any Interest Period relating to any
Funding Tranche maintained by reference to the Eurodollar Rate (Reserve
Adjusted):
(1) the Administrator or the Funding Agent shall have
determined (which determination in the absence of manifest
error shall be conclusive and binding upon the Issuer)
that, by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate (Reserve Adjusted) for
such Interest Period; or
(2) the Administrator or the Funding Agent shall have
received notice from an Affected Party that the Eurodollar
Rate (Reserve Adjusted) determined or to be determined for
such Interest Period will not adequately and fairly reflect
the cost to such Affected Party (as conclusively certified
by such Person) of purchasing or maintaining their affected
portions of such Funding Tranches during such Interest
Period;
14
then, in either such event, the Administrator or the Funding Agent
shall give telecopy or telephonic notice thereof (confirmed in writing) to the
Issuer and the Administrator or Funding Agent, as applicable as soon as
practicable (but, in any event, within thirty (30) days after such determination
or notice, as applicable) thereafter. Until such notice has been withdrawn by
the Administrator or the Funding Agent, as applicable, no further Funding
Tranches by the related Conduit Purchaser shall be funded or maintained at the
Eurodollar Rate (Reserve Adjusted). The Administrator and the Funding Agent, as
applicable, agrees to withdraw any such notice as soon as reasonably practicable
after such Person is notified of a change in circumstances which makes such
notice inapplicable.
SECTION 2.11 Fees. The Issuer shall pay to the Administrator or the
Funding Agent, as applicable, for the benefit of the applicable Affected Party
as and when due and in accordance with the provisions for payment set forth in
Article 5 of the Series Supplement, each of the applicable fees set forth in the
Fee Letters (the "Fees").
ARTICLE III.
CLOSING
SECTION 3.1 Closing. The closing (the "Closing") of the purchase and
sale of the Notes in connection with the Original Note Purchase Agreement was
held at 9:00 a.m., Chicago, Illinois time, on or about September 13, 2002, at
the offices of Mayer, Brown, Rowe & Maw LLP, 190 South LaSalle Street, Chicago,
Illinois 60603 (the date of the Closing being referred to herein as the "Closing
Date"). The closing of the transactions contemplated by this Note Purchase
Agreement (the "Restatement") will be held at 9:00 a.m., Chicago, Illinois time,
on or about September 10, 2007, at the offices of Mayer Brown LLP, 71 South
Wacker Drive, Chicago, Illinois 60606 (such date being referred to herein as the
"Restatement Date").
SECTION 3.2 Transactions to be Effected at the Closing. At the
Closing (a) the Administrator delivered to the Issuer funds in an amount equal
to the sum of the Initial Purchase Price; and (b) the Issuer delivered one Note
to the Administrator in satisfaction of the Issuer's obligation to the
Administrator hereunder. On the Restatement Date the Issuer shall deliver the
then outstanding Notes to the Trustee for cancellation and shall deliver newly
issued Notes to the Administrator and the Funding Agent in the form attached to
the Series Supplement.
ARTICLE IV.
CONDITIONS PRECEDENT
SECTION 4.1 Conditions Precedent to Initial Purchase of the Notes.
In addition to the conditions set forth in Section 3.1 of the Series Supplement,
the purchase by the Administrator on behalf of the Conduit Purchaser of the
Notes was subject to the satisfaction at the time of the Closing of the
following conditions, each of which was satisfied or waived on or prior to the
Closing:
(a) The Administrator shall have received on the Closing Date
from each of the Seller and the Issuer, a certificate, dated the Closing
Date and signed by an executive officer of the Seller and an executive
officer of the Issuer, as the case may be, to the effect that, and the
Administrator shall be satisfied that, (i) the representations and
warranties of the Seller and the Issuer in this Note Purchase Agreement,
the Indenture and the other Transaction Documents are true and correct on
and as of the Closing Date as if made on and as of such date, (ii) the
Issuer and the Seller have complied with all the agreements and satisfied
all the conditions on their part to be performed or satisfied in this Note
Purchase Agreement, the Indenture and the other Transaction Documents, as
applicable, at or prior to the Closing Date, and (iii) there has not
occurred any change or any development that is likely to result in a
change in the condition, financial or otherwise, or in the earnings,
business, operations or prospects of the Issuer or the Seller, and their
respective Affiliates, taken as a whole, from that set forth in the
Offering Memorandum 2002 that has had or could reasonably be expected to
have a Material Adverse Effect.
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(b) The Administrator shall have received a certificate, dated
the Closing Date, signed by an executive officer of Trustee to the effect
that each of the Trust Accounts have been established.
(c) The Administrator shall have received, on the Closing
Date, opinions delivered to the Administrator and the Conduit Purchaser
(and the other addressees reasonably requested by the Initial Purchaser),
in each case, dated the Closing Date, covering such matters as the
Administrator shall reasonably request.
(d) The Issuer, the Trustee, the Seller and the other parties
to the Transaction Documents shall have executed and delivered the
Transaction Documents to which they are parties in the same form and
substance as previously presented to and approved by the Administrator.
(e) Prior to the Closing Date, the Issuer and the Seller shall
have furnished to the Administrator such further information, certificates
and documents as the Administrator may reasonably request.
(f) Prior to the Closing Date, the Administrator shall have
received certified copies of resolutions of the Board of Directors of the
Issuer, the Servicer and the Seller (or, in each case, of its general
partner or sole member, if applicable) authorizing or ratifying the
execution, delivery and performance, respectively, of the Transaction
Documents to which it is a party, together with a certified copy of its
articles or certificate of incorporation or certificate of limited
partnership, as applicable, and a copy of its limited partnership
agreement or by-laws, as applicable.
(g) Prior to the Closing Date, the Administrator shall have
received certified copies of all documents evidencing any necessary
corporate action, consents and governmental approvals (if any) with
respect to the Transaction Documents.
(h) Prior to the Closing Date, the Administrator shall have
received a certificate of the secretary or an assistant secretary of each
of the Issuer, the Servicer Letter of Credit Bank and the Seller (or, in
each case, of its general partner, if applicable) certifying the names of
its officer or officers authorized to sign the Transaction Documents to
which it is a party.
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(i) Prior to the Closing Date, the Administrator shall have
received good standing certificates for the Issuer, the Servicer and the
Seller issued as of a recent date acceptable to Administrator by (a) the
Secretary of State of the jurisdiction of such Person's incorporation or
organization, and (b) the Secretary of State of the jurisdiction where
such Person's chief executive office and principal place of business are
located.
(j) Prior to the Closing Date, the Administrator shall have
received (i) acknowledgment copies of proper financing statements (Form
UCC-1), filed on or prior to the Closing Date, naming Issuer as debtor and
Trustee (for the benefit of the Secured Parties) as the secured party as
may be necessary or, in the opinion of Administrator, desirable under the
UCC to perfect Trustee's (for the benefit of the Secured Parties) security
interest in the Trust Estate, (ii) acknowledgment copies of proper
financing statements, filed on or prior to the Closing Date, naming the
Seller (and its predecessors) as seller/debtor, the Issuer as
purchaser/secured party and the Trustee as assignee as may be necessary
or, in the opinion of Administrator, desirable under the UCC to perfect
Trustee's ownership interest in the Receivables and the proceeds thereof,
and (iii) executed copies of proper UCC-3 financing statements necessary
to release all liens and other Adverse Claims of any Person in the Trust
Estate, the Receivables or the Purchased Receivables, as applicable,
granted by the Issuer or the Seller or its predecessors.
(k) Prior to the Closing Date, the Administrator shall have
received a written search report by a search service acceptable to
Administrator listing all effective financing statements that name the
Issuer or the Seller and its predecessors as a debtor or assignor and that
are filed in the jurisdictions in which filings were made pursuant to
subsection 4.1(j) above and in such other jurisdictions that Administrator
shall have reasonably requested, together with copies of such financing
statements (none of which shall cover any of the Trust Estate), and tax
and judgment lien search reports from a Person satisfactory to
Administrator showing no evidence of such lien filed against the Issuer or
the Seller and its predecessors.
(l) Prior to the Closing Date, the Administrator shall have
received all outstanding Fees payable pursuant to the Fee Letter,
including all accrued attorneys' fees and expenses.
(m) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
Governmental Authority that would, as of the Closing Date, prevent the
issuance or sale of the Notes; and no injunction or order of any Federal,
state or foreign court shall have been issued that would, as of the
Closing Date, prevent the issuance or sale of the Notes.
(n) All Governmental Actions of all Governmental Authorities
required with respect to the transactions contemplated by the Transaction
Documents and the other documents related thereto shall have been obtained
or made.
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(o) To the extent required by Three Pillars' commercial paper
program, a letter from each rating agency rating Three Pillars' Commercial
Paper Notes confirming its rating of such Commercial Paper Notes or that
such rating will not be withdrawn or downgraded after giving effect to the
Original Note Purchase Agreement and the transactions contemplated
thereby.
(p) No Pay Out Event, Potential Pay Out Event, Event of
Default, Servicer Default or Block Event has occurred and is continuing.
(q) The representations and warranties of the Issuer, the
Servicer and the Seller set forth in the Original Note Purchase Agreement
and the other Transaction Documents are true and correct as of the Closing
Date.
SECTION 4.2 Conditions Precedent to each Increase. In addition to
the conditions set forth in Section 3.1 of the Series Supplement, the obligation
of the Conduit Purchasers and the Committed Purchaser to fund any Increase on
the related Increase Date is subject to the condition that there exist no Pay
Out Event, Potential Pay Out Event, Event of Default, Servicer Default or Block
Event which has occurred and is continuing.
SECTION 4.3 Conditions Precedent to the Restatement. In addition to
the conditions set forth in Section 3.1 of the Series Supplement, the purchase
by the Administrator and the Funding Agent on behalf of the respective Conduit
Purchasers of the Notes on the Restatement Date is subject to the satisfaction
at the time of the Restatement of the following conditions:
(a) The Administrator and the Funding Agent shall have
received on the Restatement Date from each of the Seller and the Issuer, a
certificate signed by an executive officer of such Person, dated the
Restatement Date, to the effect that (i) the representations and
warranties of the Seller and the Issuer in this Note Purchase Agreement,
the Indenture and the other Transaction Documents are true and correct on
and as of the Restatement Date as if made on and as of such date, (ii) the
Issuer and the Seller have complied with all the agreements and satisfied
all the conditions on their part to be performed or satisfied in this Note
Purchase Agreement, the Indenture and the other Transaction Documents, as
applicable, at or prior to the Restatement Date, and (iii) there has not
occurred any change or any development that is likely to result in a
change in the condition, financial or otherwise, or in the earnings,
business, operations or prospects of the Issuer or the Seller, and their
respective Affiliates, taken as a whole, from that set forth in the
Seller's most recent form 10-K filed with the Securities and Exchange
Commission that has had or could reasonably be expected to have a Material
Adverse Effect and the Administrator and the Funding Agent shall be
satisfied that such conditions are true.
(b) The Funding Agent shall have received, on the Restatement
Date, reliance letters with respect to such opinions delivered to the
Administrator and Three Pillars prior to the Restatement Date as may be
requested by the Funding Agent.
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(c) The Administrator and the Funding Agent shall have
received on the Restatement Date opinion letters and/or bring-down letters
of opinions delivered to the Administrator and Three Pillars prior to the
Restatement Date from counsel to the Issuer, the Seller and the Trustee,
in each case in form and substance satisfactory to the Administrator and
the Funding Agent.
(d) (i) The Issuer, the Trustee, the Seller and the other
parties to the Transaction Documents shall have executed and delivered to
the Administrator and the Funding Agent this Note Purchase Agreement and
each other Transaction Document to be executed as of the Restatement Date
and (ii) the Issuer shall have delivered to the Funding Agent all
previously executed Transaction Documents and documents related to the
Transaction Documents, including all amendments thereto, to which they are
parties in the same form and substance as previously delivered to the
Administrator.
(e) Prior to the Restatement Date, the Issuer and the Seller
shall have furnished to the Administrator and the Funding Agent such
further information, certificates and documents as the Administrator or
the Funding Agent may reasonably request.
(f) Prior to the Restatement Date, the Administrator and the
Funding Agent shall have received certified copies of all documents
evidencing any necessary corporate action, consents and governmental
approvals (if any) with respect to the Transaction Documents.
(g) Prior to the Restatement Date, the Administrator and the
Funding Agent shall have received good standing certificates for the
Issuer, the Servicer and the Seller issued as of a recent date acceptable
to Administrator and the Funding Agent by (a) the Secretary of State of
the jurisdiction of such Person's incorporation or organization, and (b)
the Secretary of State of the jurisdiction where such Person's chief
executive office and principal place of business are located.
(h) Prior to the Restatement Date, the Funding Agent shall
have received, in form and substance to its reasonable satisfaction (i)
acknowledgment copies of properly filed financing statements (Form UCC-1),
filed on or prior to September 13, 2002, naming Issuer as debtor and
Trustee (for the benefit of the Secured Parties) as the secured party
perfecting Trustee's (for the benefit of the Secured Parties) security
interest in the Trust Estate, (ii) acknowledgment copies of properly filed
financing statements, filed on or prior to September 13, 2002, naming the
Seller (and its predecessors) as seller/debtor, the Issuer as
purchaser/secured party and the Trustee as assignee perfecting Trustee's
ownership interest in the Receivables and the proceeds thereof, (iii)
acknowledgment copies of properly filed UCC-3 financing statements
reflecting releases of all liens and other Adverse Claims of any Person in
the Trust Estate, the Receivables or the Purchased Receivables, as
applicable, granted by the Issuer or the Seller or its predecessors and
(iv) acknowledgment copies of properly filed UCC-3 financing statements
reflecting the continuation of the financing statements referenced in
clauses (i) and (ii) above.
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(i) Prior to the Restatement Date, each of the Administrator
and the Funding Agent shall have received all outstanding Fees due and
payable to it pursuant to its related Fee Letter, including all accrued
attorneys' fees and expenses.
(j) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
Governmental Authority that would, as of the Restatement Date, prevent the
issuance or sale of the Notes; and no injunction or order of any Federal,
state or foreign court shall have been issued that would, as of the
Restatement Date, prevent the issuance or sale of the Notes.
(k) No Pay Out Event, Potential Pay Out Event, Event of
Default, Servicer Default or Block Event has occurred and is continuing.
(l) The representations and warranties of the Issuer, the
Servicer and the Seller set forth in this Note Purchase Agreement and the
other Transaction Documents are true and correct as of the Restatement
Date (except to the extent they relate to an earlier date or later time,
and then as of such earlier date or later time).
(m) All fees due and payable to each Conduit Purchaser, the
Administrator, the Funding Agent and the Committed Purchaser on or prior
to the Restatement Date shall have been paid in full.
(n) To the extent required by any Conduit Purchaser's
commercial paper program, a letter from each rating agency rating such
Conduit Purchaser's Commercial Paper Notes confirming its rating of such
Commercial Paper Notes or that such rating will not be withdrawn or
downgraded after giving effect to this Note Purchase Agreement and the
transactions contemplated hereby.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE ISSUER AND THE SELLER
SECTION 5.1 Representations, Warranties and Covenants of the Seller
and the Issuer. The Issuer severally represents and warrants and the Seller,
jointly and severally with the Issuer, represent and warrant to the Conduit
Purchasers, the Funding Agent, the Committed Purchaser and the Administrator,
that:
(a) Organization and Good Standing. Each of the Seller and the
Issuer has been duly organized and is validly existing and in good
standing under the laws of the state of organization, with full power and
authority to own its properties and conduct its business as presently
conducted. Each of the Issuer and the Seller is duly qualified to do
business and is in good standing as a foreign entity (or is exempt from
such requirements), and has obtained all necessary licenses and approvals,
in each jurisdiction in which failure to so qualify or to obtain such
licenses and approvals would be reasonably likely to have a Material
Adverse Effect.
(b) Power and Authority; Due Authorization. Each of the Seller
and the Issuer has (a) all necessary power, authority and legal right to
(i) execute, deliver and perform its obligations under this Note Purchase
Agreement and each of the other Transaction Documents to which it is a
party and (b) duly authorized, by all necessary action, the execution,
delivery and performance of this Note Purchase Agreement and the other
Transaction Documents to which it is a party, the transactions
contemplated herein and the borrowing, and the granting of security
therefor, on the terms and conditions provided in the Indenture.
20
(c) No Violation. The consummation of the transactions
contemplated by this Note Purchase 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, (A) the organizational documents of the Issuer or the Seller or (B)
any indenture, loan agreement, pooling and servicing agreement,
receivables purchase agreement, mortgage, deed of trust, or other
agreement or instrument to which the Issuer or the Seller is a party or by
which the Issuer or the Seller or any of the Issuer's or the Seller's
properties is bound, (ii) result in or require the creation or imposition
of any Adverse Claim upon its properties pursuant to the terms of any such
indenture, loan agreement, pooling and servicing agreement, receivables
purchase agreement, mortgage, deed of trust, or other agreement or
instrument, other than pursuant to the terms of the Transaction Documents,
or (iii) violate any law or any order, rule, or regulation applicable to
the Issuer or the Seller or of any court or of any federal, state or
foreign regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over, the Issuer or the Seller or any
of its respective properties.
(d) Validity and Binding Nature. This Note Purchase Agreement
is, and the other Transaction Documents to which the Issuer or the Seller
is a party when duly executed and delivered by the Issuer or the Seller
and the other parties thereto will be, the legal, valid and binding
obligation of the Issuer or the Seller, as applicable, enforceable in
accordance with their respective terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar law affecting creditors' rights generally and by general
principles of equity.
(e) Government Approvals. No authorization or approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body required for the due execution, delivery or
performance by the Issuer or the Seller of any Transaction Document to
which it is a party remains unobtained or unfiled, except for the filing
of the UCC financing statements referred to in Section 15.4 of the Base
Indenture.
(f) Bulk Sales. No transaction contemplated hereby or by the
other Transaction Documents requires compliance with any "bulk sales" act
or similar law.
(g) Margin Regulations. Neither the Seller nor the Issuer is
engaged in the business of extending credit for the purpose of purchasing
or carrying margin stock, and no proceeds from the transactions
contemplated hereby, directly or indirectly, will be used for a purpose
that violates, or would be inconsistent with, Regulations T, U and X
promulgated by the Federal Reserve Board from time to time.
21
(h) Perfection. (a) On the Closing Date and the date of each
Increase, the Issuer shall be the owner of all of the Receivables and
Related Security and Collections and proceeds with respect thereto, free
and clear of all Adverse Claims. On or prior to the Closing Date and the
date of each Increase and each recomputation of the Investor Interest, all
financing statements and other documents required to be recorded or filed
in order to perfect and protect the Trust Estate against all creditors
(other than Secured Parties) of, and purchasers (other than Secured
Parties) from, the Issuer and each Seller will have been (or will have
been within ten (10) days of the Closing Date) duly filed in each filing
office necessary for such purpose, and all filing fees and taxes, if any,
payable in connection with such filings shall have been (or will have been
within ten (10) days of the Closing Date) paid in full;
(ii) the Indenture constitutes a valid grant of a
security interest to the Trustee for the benefit of the
Conduit Purchasers and the other Secured Parties in all right,
title and interest of the Issuer in the Receivables, the
Related Security and Collections and proceeds with respect
thereto and all other assets of the Trust Estate, now existing
or hereafter created or acquired. Accordingly, to the extent
the UCC applies with respect to the perfection of such
security interest, upon the filing of any financing statements
described in Article 8 of the Indenture, and, solely with
respect to the Related Security, to the extent required for
perfection under the relevant UCC, the delivery of possession
of all instruments, if any, included in such Related Security
to the Servicer), the Trustee shall have a first priority
perfected security interest in such property and the proceeds
thereof (to the extent provided in Section 9-315), subject to
Permitted Encumbrances and, to the extent the UCC does not
apply to the perfection of such security interest, all notices
filings and other actions required by all applicable law have
been taken to perfect and protect such security interest or
lien against and prior to all Adverse Claims with respect to
the relevant Receivables, Related Security and Collections and
proceeds with respect thereto and all other assets of the
Trust Estate. Except as otherwise specifically provided in the
Transaction Documents, neither the Issuer nor any Person
claiming through or under the Issuer has any claim to or
interest in the Collection Account; and
(iii) immediately prior to, and after giving effect to,
the initial purchase of the Notes and each Increase hereunder,
the Issuer will be Solvent.
(i) Offices. The principal place of business and chief
executive office of the Issuer is located at the address referred to in
Section 15.4 of the Base Indenture (or at such other locations, notified
to the Trustee in jurisdictions where all action required thereby has been
taken and completed).
(j) Tax Status. Each of the Issuer and the Seller has filed
all tax returns (Federal, State and local) required to be filed by it and
has paid or made adequate provision for the payment of all taxes,
assessments and other governmental charges then due and payable (including
for such purposes, the setting aside of appropriate reserves for taxes,
assessments and other governmental charges being contested in good faith).
22
(k) Compliance with Applicable Laws; Licenses, etc.
(i) Each of the Issuer and the Seller is in compliance
with the requirements of all applicable laws, rules,
regulations, and orders of all governmental authorities, a
breach of any of which, individually or in the aggregate,
would be reasonably likely to have a Material Adverse Effect.
(ii) Neither of the Issuer nor the Seller has failed to
obtain any licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its properties or
to the conduct of its business, which violation or failure to
obtain would be reasonably likely to have a Material Adverse
Effect.
(l) No Proceedings. Except as described in Schedule I,
(i) there is no order, judgment, decree, injunction,
stipulation or consent order of or with any court or other
government authority to which the Issuer or the Seller is
subject, and there is no action, suit, arbitration, regulatory
proceeding or investigation pending, or, to the knowledge of
the Issuer or the Seller, threatened, before or by any court,
regulatory body, administrative agency or other tribunal or
governmental instrumentality, against the Issuer that,
individually or in the aggregate, is reasonably likely to have
a Material Adverse Effect; and
(ii) there is no action, suit, proceeding, arbitration,
regulatory or governmental investigation, pending or, to the
knowledge of the Issuer or the Seller, threatened, before or
by any court, regulatory body, administrative agency, or other
tribunal or governmental instrumentality (A) asserting the
invalidity of this Note Purchase Agreement, the Indenture, the
Notes or any other Transaction Document, (B) seeking to
prevent the issuance of the Notes pursuant to the Indenture or
the consummation of any of the other transactions contemplated
by this Indenture or any other Transaction Document or (C)
seeking to adversely affect the federal income tax attributes
of the Issuer.
(m) Investment Company Act, Etc. None of the Seller or the
Issuer is, or after applying the proceeds of this offering will be, an
"investment company" within the meaning of the Investment Company Act of
1940, as amended.
(n) Eligible Receivables. Each Receivable included in the
Trust Estate on the date of any Monthly Servicer Report shall be an
Eligible Receivable on such date. Each Receivable, including Subsequently
Purchased Receivables, purchased by the Issuer on any Purchase Date shall
be an Eligible Receivable as of such Purchase Date.
23
(o) Receivables Schedule. The Receivable File is a true and
correct schedule of the Receivables included in the Trust Estate.
(p) ERISA. (i) Each of the Seller, the Issuer and its
respective ERISA Affiliates is in compliance in all material respects with
ERISA unless any failure to so comply could not reasonably be expected to
have a Material Adverse Effect and (ii) no Lien exists in favor of the
Pension Benefit Guaranty Corporation on any of the Receivables. No ERISA
Event has occurred with respect to Title IV Plans of the Issuer. No ERISA
Event has occurred with respect to Title IV plans of the Seller's or the
Issuer's ERISA Affiliates that have an aggregate Unfunded Pension
Liability equal to or greater than $1,000,000. No ERISA Event has occurred
with respect to a Multiemployer Plan (as defined in the Base Indenture) of
the Issuer or its ERISA Affiliates.
(q) Accuracy of Information. All information heretofore
furnished by, or on behalf of, the Seller or the Issuer to the Trustee or
any of the Noteholders in connection with any Transaction Document, or any
transaction contemplated thereby, is true and accurate in every material
respect (without omission of any information necessary to prevent such
information from being materially misleading).
(r) No Material Adverse Change. Since the date of the Seller's
most recent form 10-K filed with the Securities and Exchange Commission,
there has been no material adverse change in the collectibility of the
Receivables or the Issuer's (i) financial condition, business, operations
or prospects or (ii) ability to perform its obligations under any
Transaction Document.
(s) Trade Names and Subsidiaries. Set forth on Schedule II
hereto is a complete list of trade names of the Seller for the six year
period preceding the Closing Date. The Issuer has no Subsidiaries and does
not own or hold, directly or indirectly, any equity interest in any
Person.
(t) Notes. The Notes have been duly and validly authorized,
and, when executed and authenticated in accordance with the terms of the
Indenture, and delivered to and paid for in accordance with this Note
Purchase Agreement, will be duly and validly issued and outstanding and
will be entitled to the benefits of the Indenture.
(u) Sales by Seller. (a) Each sale of Receivables by the
Seller to the Issuer shall have been effected under, and in accordance
with the terms of, the Purchase Agreement, including the payment by the
Issuer to the Seller of an amount equal to the purchase price therefor as
described in the Purchase Agreement, and each such sale shall have been
made for "reasonably equivalent value" (as such term is used under Section
548 of the Federal Bankruptcy Code) and not for or on account of
"antecedent debt" (as such term is used under Section 547 of the Federal
Bankruptcy Code) owed by the Issuer to the Seller.
(v) Use of Proceeds. No proceeds of any Notes will be used by
the Issuer to acquire any security in any transaction which is subject to
Section 13 or 14 of the Securities Exchange Act of 1934, as amended.
24
(w) Reaffirmation of Representations and Warranties by the
Issuer. On the Closing Date and on each Business Day, the Issuer shall be
deemed to have certified that all representations and warranties described
in Section 7.1 of the Indenture are true and correct on and as of such day
as though made on and as of such day (except to the extent they relate to
an earlier date or later time, and then as of such earlier date or later
time).
SECTION 5.2 Reaffirmation of Representations and Warranties by the
Issuer. On the Closing Date, the Restatement Date, on each Business Day and on
each day that an Increase is made hereunder, the Issuer, by accepting the
proceeds thereof, shall be deemed to have certified that all representations and
warranties described in Section 5.1 hereof and Section 7.1 of the Indenture are
true and correct on and as of such day as though made on and as of such day
(except to the extent they relate to an earlier date or later time, and then as
of such earlier date or later time).
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
WITH RESPECT TO THE ADMINISTRATOR,
THE FUNDING AGENT AND THE CONDUIT PURCHASERS
SECTION 6.1 Securities Laws; Transfer Restrictions. Each of the
Administrator, the Funding Agent and each Conduit Purchaser represents and
warrants to the Issuer, for itself, as of the date hereof (or as of a subsequent
date on which a successor or assign of any Purchaser shall become a party
hereto), and agrees that:
(a) it has (i) reviewed the Indenture (including the schedule
and exhibits thereto) and all other documents which have been provided by
the Issuer to it with respect to the transactions contemplated by the
Indenture, (ii) participated in due diligence sessions with the Servicer
and (iii) had an opportunity to discuss the Issuer's and the Seller's
businesses, management and financial affairs, and the terms and conditions
of the proposed purchase with the Issuer and the Servicer and their
respective representatives;
(b) it is an "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act and
has sufficient knowledge and experience in financial and business matters
to be capable of evaluating the merits and risks of investing in, and it
is able and prepared to bear the economic risk of investing in, the Notes;
(c) it is purchasing the Notes for its own account, or for the
account of one or more "accredited investors" within the meaning of Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act that
meet the criteria described in subsection (b) and for which it is acting
with complete investment discretion, for investment purposes only and not
with a view to distribution;
25
(d) it understands that (i) the Notes have not been and will
not be registered or qualified under the Securities Act or any applicable
state securities laws or the securities laws of any other jurisdiction and
is being offered only in a transaction not involving any public offering
within the meaning of the Securities Act, (ii) the Issuer is not required
to so register or qualify the Notes, and (iii) the Notes may be resold,
pledged or otherwise transferred only (A) to the Issuer, (B) to a
"qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in a transaction meeting the requirements of Rule 144A
under the Securities Act, or (C) in a transaction otherwise exempt from
the registration requirements of the Securities Act, in each case in
accordance with the provisions of the Indenture and any applicable
securities laws of any state of the United States or any other
jurisdiction;
(e) it understands that upon original issuance thereof, and
until such time as the same may no longer be required under the applicable
requirements of the Securities Act, the certificate evidencing the Notes
(and all securities issued in exchange therefor or substitution thereof)
shall bear a legend substantially in the form set forth in the form of
Notes included as an exhibit to the Series Supplement;
(f) it understands that the Registrar and Transfer Agent for
the Notes will not be required to accept for registration of transfer the
Notes acquired by it, except upon presentation of, if applicable, the
certificate and, if applicable, the opinion described in the Series
Supplement; and
(g) it will obtain from any transferee of the Notes (or any
interest therein) substantially the same representations, warranties and
agreements contained in this Section 6.1.
ARTICLE VII.
COVENANTS
SECTION 7.1 Monthly Noteholders' Statement; Notice of Adverse
Effect. (3) The Issuer will cause each Monthly Noteholders' Statement pertaining
to the Series Supplement to be delivered to each Conduit Purchaser and the
Committed Purchaser, contemporaneously with the delivery thereof to the Trustee.
(b) As soon as possible, and in any event within one (1) day
after the occurrence thereof, the Issuer shall (or shall cause the
Servicer to) give each Conduit Purchaser and the Committed Purchaser
written notice of each Pay Out Event, Potential Pay Out Event, Event of
Default, Servicer Default or Block Event.
SECTION 7.2 Further Assurances. The Issuer agrees to take any and
all acts and to create any and all further instruments necessary or reasonably
requested by the Administrator and the Funding Agent to fully effect the
purposes of this Note Purchase Agreement.
SECTION 7.3 Modifications to Transaction Documents. (4)
Notwithstanding anything in the Indenture to the contrary, no provision of this
Note Purchase Agreement, the Indenture, the Servicing Agreement or the Purchase
Agreement may be amended, waived or otherwise modified without (i) the prior
written consent of the Issuer and the Required Persons and (ii) if such
amendment is material, without satisfying the Rating Agency Condition; provided
that the consent of all of the Noteholders shall be required for (i) any
amendment, waiver, modification or supplement of any such document described
above relating to (i) the definitions of "Eligible Receivables," "Purchase
Expiration Date," "Final Purchase Expiration Date," "Tranche A Expiration Date,"
"Tranche B Expiration Date," "Tranche C Expiration Date," "Required Persons,"
"Required Reserve Amount," "Coverage Test" and "Maximum Principal Amount" and
any defined terms incorporated therein, (ii) the reduction or postponement of
the time for payment of any fee or other amount payable to or on behalf of such
Noteholders or (iii) this Section 7.3.
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(b) The Issuer shall (or shall cause the Servicer to) give the
Administrator, the Funding Agent, the Committed Purchaser and the Conduit
Purchasers written notice of any proposed amendment, modification or
waiver of any provision of the Transaction Documents.
SECTION 7.4 Expenses. Whether or not the Closing takes place, except
as otherwise expressly provided herein or in the Fee Letter, all reasonable
costs and expenses incurred in connection with this Note Purchase Agreement and
the transactions contemplated hereby shall be paid by the Issuer.
SECTION 7.5 Reorganizations and Transfers. The Issuer shall not
enter into any transaction described in subsection 8.3(c) of the Indenture
unless the Trustee and the Required Persons shall have given their prior written
consent thereto.
SECTION 7.6 Financial Covenants. (5) The Seller will not permit the
ratio of (i) Consolidated EBITDA plus Consolidated Rent Expense minus
Consolidated Capital Expenditures divided by (ii) Consolidated Cash Interest
Expense (exclusive of any fees paid in respect of the undrawn face amounts of
the Collection Account Letters of Credit) plus Consolidated Rent Expense, as
determined as of the last day of each fiscal quarter for the twelve-month period
ending on such day, to be less than 2.00 to 1.00.
(b) The Seller will not permit the ratio of (i) the sum of (x)
Consolidated Total Debt (exclusive of the undrawn face amounts of the
Collection Account Letters of Credit, the undrawn face amounts of the Bank
of America Letters of Credit and the undrawn face amounts of the Letters
of Credit issued under this Agreement) plus (y) eight times Consolidated
Rent Expense divided by (ii) Consolidated EBITDA plus Consolidated Rent
Expense, as determined as of the last day of each fiscal quarter for the
twelve-month period ending on such day, to be greater than 3.00 to 1.00.
(c) Notwithstanding anything set forth in Section 2.04(e) of
the Servicing Agreement, the Seller will not permit, at any time,
Consolidated Net Worth to be less than the sum of (i) $109,541,000 plus
(ii) 75% of positive Net Income generated after January 31, 2005 plus
(iii) 100% of any capital stock or other ownership or profit interest or
any securities convertible into or exchangeable for capital stock or other
ownership or profit interest or any warrants, rights or options to acquire
the same, issued after January 31, 2005. Any gains attributable to the
effects of Statements of Financial Accounting Standards Nos. 125/140
and/or 133, or their successors, and any losses attributable thereto,
shall be excluded in determining Consolidated Net Worth for purposes of
this Section.
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All capitalized terms used in this Section 7.6 (other than "Seller" and
"Servicing Agreement") and all defined terms incorporated therein by reference
or usage shall have the meanings set forth in that certain Credit Agreement,
dated as of October 31, 2005, among the Seller, the lenders party thereto,
JPMorgan Chase Bank, National Association, as administrative agent, Bank of
America, N.A., as syndication agent and SunTrust Bank, as documentation agent
(the "Credit Facility"), solely as such Credit Facility has been amended through
the date hereof and without giving effect to any further amendment, restatement,
amendment and restatement, modification or supplement thereto (it being
understood and agreed that all such terms shall still apply in full force as
used in this Note Purchase Agreement notwithstanding any termination,
restructuring or other modification of the Credit Facility). For the avoidance
of doubt, the parties hereto hereby agree that each covenant set forth in this
Section 7.6 shall be tested by the Seller quarterly.
ARTICLE VIII.
INDEMNIFICATION
SECTION 8.1 Indemnification. The Seller and the Issuer, jointly and
severally, agree to indemnify and hold harmless the Administrator, the Funding
Agent, the Committed Purchaser, each Conduit Purchaser, each Liquidity Bank,
each Credit Bank, each Bank, each of such Banks' Affiliates and each of their
respective successors, transferees, participants and assigns and all officers,
directors, shareholders, controlling persons, employees and agents of any of the
foregoing (each of the foregoing Persons being individually called an
"Indemnified Party"), forthwith on demand, from and against any and all damages,
losses, claims, liabilities and related costs and expenses, including reasonable
attorneys' fees and disbursements (all of the foregoing being collectively
called "Indemnified Amounts") awarded against or incurred by any of them arising
out of or relating to any Transaction Document or the transactions contemplated
thereby, any commingling of funds (whether or not permitted hereunder), or the
use of proceeds therefrom by the Issuer, including (without limitation) in
respect of the Initial Purchase Price or any Increases or in respect of any
Receivable; excluding, however, (a) Indemnified Amounts to the extent determined
by a court of competent jurisdiction to have resulted from gross negligence or
willful misconduct on the part of any Indemnified Party or its agent or
subcontractor (BUT EXPRESSLY EXCLUDING FROM THIS CLAUSE (a), AND EXPRESSLY
INCLUDING IN THE INDEMNITY SET FORTH IN THIS SECTION 8.1, INDEMNIFIED AMOUNTS
ATTRIBUTABLE TO THE ORDINARY, SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH
INDEMNIFIED PARTY, IT BEING THE INTENT OF THE PARTIES THAT, TO THE EXTENT
PROVIDED IN THIS SECTION 8.1, INDEMNIFIED PARTIES SHALL BE INDEMNIFIED FOR THEIR
OWN ORDINARY, SOLE OR CONTRIBUTORY NEGLIGENCE NOT CONSTITUTING GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT), and (b) any tax upon or measured by net income (except
those described in Section 8.1) on any Indemnified Party.
SECTION 8.2 Increased Costs.
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(a) If after the date hereof, the adoption of any law or bank
regulatory guideline or any amendment or change in the interpretation of
any existing or future law or bank regulatory guideline by any Official
Body charged with the administration, interpretation or application
thereof, or the compliance with any directive of any Official Body (in the
case of any bank regulatory guideline, whether or not having the force of
law), other than laws, interpretations, guidelines or directives relating
to Taxes:
(i) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without
limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System) against assets of,
deposits with or for the account of, or credit extended by, an
Affected Party or shall impose on any Affected Party or on the
United States market for certificates of deposit or the London
interbank market any other condition affecting this Note
Purchase Agreement, the other Transaction Documents, the
ownership, maintenance or financing of the Notes, the
Receivables, any other assets of the Trust Estate or payments
of amounts due hereunder or its obligation to advance funds
hereunder or under the other Transaction Documents; or
(ii) imposes upon any Affected Party any other expense
deemed by such Affected Party to be material (including,
without limitation, reasonable attorneys' fees and expenses,
and expenses of litigation or preparation therefor in
contesting any of the foregoing) with respect to this Note
Purchase Agreement, the other Transaction Documents, the
ownership, maintenance or financing of the Notes, the
Receivables, any other assets of the Trust Estate, or payments
of amounts due hereunder or its obligation to advance funds
hereunder or otherwise in respect of this Note Purchase
Agreement or the other Transaction Documents,
and the result of any of the foregoing is to increase the cost to such Affected
Party with respect to this Note Purchase Agreement, the other Transaction
Documents, the ownership, maintenance or financing of the Notes, the
Receivables, any other assets of the Trust Estate, the obligations hereunder,
the funding of any Increases hereunder or under the other Transaction Documents,
by an amount reasonably deemed by such Affected Party to be material, then, on
the first Payment Date which is not less than three Business Days after demand
by such Affected Party through the Administrator or the Funding Agent, as
applicable, the Issuer shall pay to such Affected Party such additional amount
or amounts as will compensate such Affected Party for such increased cost or
reduction. In making demand hereunder, the applicable Affected Party shall
submit to the Issuer a certificate as to such increased costs incurred which
shall provide in detail the basis for such claim which certificate shall be
conclusive and binding for all purposes absent manifest error; provided,
however, that no such Affected Party shall be required to disclose any
confidential or tax planning information in any such certificate.
(b) If any Affected Party shall have determined that after the
Closing Date, the adoption of any applicable law or bank regulatory
guideline regarding capital adequacy, or any change therein, or any change
in the interpretation thereof by any Official Body, or any directive
regarding capital adequacy (in the case of any bank regulatory guideline,
whether or not having the force of law) of any such Official Body, has or
would have, due to an increase in the amount of capital required to be
maintained by such Affected Party, the effect of reducing the rate of
return on capital of such Affected Party as a consequence of such Affected
Party's obligations hereunder or with respect hereto to a level below that
which such Affected Party could have achieved but for such adoption,
change, request or directive (taking into consideration its policies with
respect to capital adequacy) by an amount reasonably deemed by such
Affected Party to be material, then from time to time, on the first
Payment Date which is not less than ten (10) Business Days after demand by
such Affected Party through the Administrator or the Funding Agent, as
applicable, the Issuer shall pay to such Affected Party such additional
amount or amounts as will compensate such Affected Party for such
reduction. In making demand hereunder, the applicable Affected Party shall
submit to the Issuer a certificate as to such increased costs incurred
which shall provide in detail the basis for such claim which certificate
shall be conclusive and binding for all purposes absent manifest error;
provided, however, that no such Affected Party shall be required to
disclose any confidential or tax planning information in any such
certificate.
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SECTION 8.3 Indemnity for Taxes. All payments made by the Issuer to
the Administrator or the Funding Agent for the benefit of any related Conduit
Purchaser or the Committed Purchaser under this Note Purchase Agreement or any
other Transaction Document shall be made free and clear of, and without
deduction or withholding for or on account of, any present or future stamp or
similar taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Official Body, excluding (i) taxes that would not have been imposed if
the Affected Party had timely complied with the requirements of subsection
8.3(b) hereof, and (ii) taxes imposed on the net income of the Administrator,
the Funding Agent or any other Affected Party, in each case imposed by any
jurisdiction under the laws of which the Administrator, the Funding Agent or
such Affected Party is organized or any political subdivision or taxing
authority thereof or therein (all such nonexcluded taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, collectively or individually,
"Taxes"). If any such Taxes are required to be withheld from any amounts payable
to the Administrator, the Funding Agent or any Affected Party hereunder, the
amounts so payable to the Administrator, the Funding Agent or such Affected
Party shall be increased to the extent necessary to yield to the Administrator,
the Funding Agent or such Affected Party (after payment of all Taxes) all
amounts payable hereunder at the rates or in the amounts specified in this Note
Purchase Agreement and the other Transaction Documents. The Issuer shall
indemnify the Administrator, the Funding Agent and any such Affected Party for
the full amount of any such Taxes on the first Payment Date which is not less
than ten (10) days after the date of written demand therefor by the
Administrator or the Funding Agent, as applicable.
(a) Each Affected Party that is a Non-United States Person
shall:
(i) deliver to the Issuer and the Administrator or the
Funding Agent, as applicable, two duly completed copies of IRS
Form W-8 BEN or Form W-8 ECI, or successor applicable form, as
the case may be;
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(ii) deliver to the Issuer and the Administrator or the
Funding Agent, as applicable, two (2) further copies of any
such form or certification on or before the date that any such
form or certification expires or becomes obsolete and after
the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Issuer; and
(iii) obtain such extensions of time for filing and
complete such forms or certifications as may reasonably be
requested by the Issuer, the Administrator or the Funding
Agent;
unless, in any such case, an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which, regardless of the identity of the
Affected Party, renders all such forms inapplicable or which, regardless of the
identity of the Affected Party, would prevent such Affected Party from duly
completing and delivering any such form with respect to it, and such Affected
Party so advises the Issuer and the Administrator or the Funding Agent, as
applicable. Each such Affected Party so organized shall certify in the case of
an IRS Form W-8 BEN or IRS Form W-8 ECI (or successor applicable form), that it
is entitled to receive payments under this Note Purchase Agreement and the other
Transaction Documents without deduction or withholding of any United States
federal income taxes. Each Affected Party which is a Non-United States Person
represents and warrants to the Issuer and the Administrator or the Funding
Agent, as applicable, that, as of the date of this Note Purchase Agreement (or
the date such Person otherwise becomes an Affected Party, as the case may be),
(i) it is entitled to receive all payments hereunder without deduction or
withholding for or on account of any United States federal Taxes and (ii) it is
permitted to take the actions described in the preceding sentence under the laws
and any applicable double taxation treaties of the jurisdiction of its head
office or any booking office used in connection with this Note Purchase
Agreement. Each Affected Party which is a Non-United States Person further
agrees that, to the extent any form claiming complete or partial exemption from
withholding and deduction of United States federal Taxes delivered under this
clause (b) is found to be incomplete or incorrect in any material respect, such
Affected Party shall (to the extent it is permitted to do so under the laws and
any double taxation treaties of the United States, the jurisdiction of its
organization and the jurisdictions in which its relevant booking offices are
located) execute and deliver to each of the Administrator or the Funding Agent,
as applicable, and the Issuer a complete and correct replacement form.
(b) Limitations. Each Affected Party agrees to use reasonable
efforts to mitigate the imposition of any Taxes referred to in this
Section 8.3, including changing the office of such Affected Party from
which any Funding Tranche (or portion thereof) funded or maintained by
such Affected Party or this Note Purchase Agreement is booked; provided
that such reasonable efforts would not be disadvantageous to such Affected
Party or result in the imposition of any additional Taxes upon such
Affected Party or cause such Affected Party, in its good faith judgment,
to violate one or more of its policies in order to avoid such imposition
of Taxes.
SECTION 8.4 Other Costs, Expenses and Related Matters.
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(a) The Issuer agrees, upon receipt of a written invoice, to
pay or cause to be paid, and to save the Affected Parties harmless against
liability for the payment of, all reasonable out-of-pocket expenses
(including, without limitation, reasonable attorneys', accountants' and
other third parties' fees and expenses, any filing fees and expenses
incurred by officers or employees of any of the Affected Parties) or
intangible, documentary or recording taxes incurred by or on behalf of the
Affected Parties (i) in connection with the negotiation, execution,
delivery and preparation of this Note Purchase Agreement, the other
Transaction Documents and any documents or instruments delivered pursuant
hereto and thereto and the transactions contemplated hereby or thereby
(including, without limitation, the perfection or protection of the
Affected Parties' interest in the Trust Estate) and (ii) (A) relating to
any amendments, waivers or consents under this Note Purchase Agreement,
any Program Documents and the other Transaction Documents, (B) arising in
connection with any of the Affected Parties' enforcement or preservation
of rights (including, without limitation, the perfection and protection of
the Affected Parties' interest in the Trust Estate), or (C) arising in
connection with any audit, dispute, disagreement, litigation or
preparation for litigation involving this Note Purchase Agreement or any
of the other Transaction Documents.
(b) The Administrator or the Funding Agent will notify the
Issuer and the Servicer in writing of any event occurring after the date
hereof which will entitle an Indemnified Party or Affected Party to
compensation pursuant to this Article VIII. Any notice by the
Administrator or the Funding Agent claiming compensation under this
Article VIII and setting forth the additional amount or amounts to be paid
to it hereunder shall be conclusive in the absence of manifest error. In
determining such amount, the Administrator or the Funding Agent, as
applicable, or any applicable Indemnified Party or Affected Party may use
any reasonable averaging and attributing methods.
(c) If the Issuer is required to pay any additional amount to
any Conduit Purchaser pursuant to Section 8.2 or 8.3, then such Conduit
Purchaser shall use reasonable efforts (which shall not require such
Conduit Purchaser to incur an unreimbursed loss or unreimbursed cost or
expense or otherwise take any action inconsistent with its internal
policies or legal or regulatory restrictions or suffer any disadvantage or
burden reasonably deemed by it to be significant) to assign its rights and
delegate and transfer its obligations hereunder to another of its offices,
branches or Affiliates, if such filing or assignment would reduce amounts
payable pursuant to Section 8.2 or 8.3, as the case may be, in the future.
ARTICLE IX.
THE ADMINISTRATOR AND THE FUNDING AGENT
32
SECTION 9.1 Authorization and Action. Three Pillars, as a Conduit
Purchaser, hereby appoints SunTrust Robinson Humphrey, Inc. as its Administrator
for purposes of the Transaction Documents and authorizes the Administrator to
take such action as agent on its behalf and to exercise such powers as are
delegated to the Administrator, by the terms hereof, together with such powers
as are reasonably incidental thereto. PARCO, as a Conduit Purchaser, and the
Committed Purchaser, hereby appoint JPMorgan Chase Bank, N.A. as its Funding
Agent for purposes of the Transaction Documents and authorizes the Funding Agent
to take such action as agent on their behalf and to exercise such powers as are
delegated to the Funding Agent, by the terms hereof, together with such powers
as are reasonably incidental thereto. Three Pillars, as a Conduit Purchaser,
hereby authorizes the Administrator, in its sole discretion, to take any actions
and exercise any rights or remedies under this Note Purchase Agreement and any
permitted related agreements and documents. PARCO, as a Conduit Purchaser, and
the Committed Purchaser hereby authorize the Funding Agent, in its sole
discretion, to take any actions and exercise any rights or remedies under this
Note Purchase Agreement and any permitted related agreements and documents.
Except for actions which the Administrator or the Funding Agent is expressly
required to take pursuant to this Note Purchase Agreement or the applicable
Program Documents, neither the Administrator nor the Funding Agent shall be
required to take any action which exposes the Administrator or the Funding Agent
to personal liability or which is contrary to applicable law unless the
Administrator or the Funding Agent, as applicable, shall receive further
assurances to its satisfaction from the related Conduit Purchaser, of the
indemnification obligations under Section 9.4 hereof against any and all
liability and expense which may be incurred in taking or continuing to take such
action. The Administrator agrees to give to Three Pillars prompt notice of each
notice and determination given to it by the Issuer, the Servicer or the Trustee,
pursuant to the terms of this Note Purchase Agreement or the Indenture. The
Funding Agent agrees to give to PARCO and the Committed Purchaser prompt notice
of each notice and determination given to it by the Issuer, the Servicer or the
Trustee, pursuant to the terms of this Note Purchase Agreement or the Indenture.
Subject to Section 9.5 hereof, the appointment and authority of each of the
Administrator and the Funding Agent hereunder shall terminate upon the later of
(i) the payment to (a) each Conduit Purchaser and the Committed Purchaser of all
amounts owing to such Person hereunder and (b) the Administrator and the Funding
Agent of all amounts due hereunder and (ii) the Series 2002-A Termination Date.
SECTION 9.2 Administrator's and Funding Agent's Reliance, Etc.
Neither the Administrator, the Funding Agent nor any of its respective
directors, officers, agents who are natural persons or employees shall be liable
for any action taken or omitted to be taken by it or them as Administrator or
Funding Agent under or in connection with this Note Purchase Agreement or any
related agreement or document, except for its or their own gross negligence or
willful misconduct. Without limiting the foregoing, the Administrator and the
Funding Agent: (i) may consult with legal counsel, independent 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; (ii) makes no warranty or
representation to the Conduit Purchasers, the Funding Agent or the Committed
Purchaser and shall not be responsible to the Conduit Purchasers, the Funding
Agent or the Committed Purchaser for any statements, warranties or
representations made by any other Person in connection with any Transaction
Document; (iii) 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 Person or to inspect the property
(including the books and records) of any Person; (iv) shall not be responsible
to the Conduit Purchasers, the Funding Agent or the Committed Purchaser for the
due execution, legality, validity, enforceability, genuineness, sufficiency or
value of any Transaction Document or any other instrument or document furnished
pursuant hereto or thereto; and (v) shall incur no liability under or in respect
of any Transaction Document by acting upon any notice (including notice by
telephone), consent, certificate or other instrument or writing (which may be by
telex) believed by it in good faith to be genuine and signed or sent by the
proper party or parties.
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SECTION 9.3 Administrator, Funding Agent and their Respective
Affiliates. Each of the Administrator, the Funding Agent and any of their
respective Affiliates may generally engage in any kind of business with the
Issuer, the Seller, any Bank, Servicer, any Obligor, any insurer, any of their
respective Affiliates and any Person who may do business with or own securities
of the Issuer, the Seller, any Bank, Servicer, any Obligor or any of their
respective Affiliates, all as if such entities were not the Administrator or the
Funding Agent, as applicable, and without any duty to account therefor to the
Conduit Purchasers, the Funding Agent and the Committed Purchaser, as
applicable.
SECTION 9.4 Purchase Decision. Each of the Conduit Purchasers and
the Committed Purchaser acknowledges that it has, independently and without
reliance upon the Administrator or the Funding Agent, and based on such
documents and information as it has deemed appropriate, made its own evaluation
and decision to enter into this Note Purchase Agreement and to purchase an
interest in the Notes. Each of the Conduit Purchasers and the Committed
Purchaser also acknowledges that it will, independently and without reliance
upon the Administrator or the Funding Agent or any of their respective
Affiliates, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own decisions in taking or not
taking action under this Note Purchase Agreement or any related agreement,
instrument or other document.
SECTION 9.5 Successor Administrator and Funding Agent.
(a) The Administrator may resign at any time by giving five days'
written notice thereof to each of the parties hereto and the Trustee. Upon
any such resignation of the Administrator, Three Pillars, as a Conduit
Purchaser, shall have the right to appoint a successor Administrator. If
no successor Administrator shall have been so appointed and shall have
accepted such appointment, within five days after the retiring
Administrator's giving of notice of resignation, then the retiring
Administrator may, on behalf of Three Pillars, as a Conduit Purchaser,
appoint a successor Administrator. Upon the acceptance of any appointment
as Administrator hereunder by a successor Administrator, such successor
Administrator shall thereupon succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring Administrator, and
the retiring Administrator shall be discharged from its duties and
obligations under this Note Purchase Agreement and the other Transaction
Documents (other than obligations arising or to have been performed prior
to such retirement). After any retiring Administrator's resignation
hereunder as Administrator, the provisions of this Article IX shall inure
to its benefit as to any actions taken or omitted to be taken by it while
it was an Administrator under this Note Purchase Agreement and the other
Transaction Documents.
(b) The Funding Agent may resign at any time by giving five days'
written notice thereof to each of the parties hereto and the Trustee. Upon
any such resignation of the Funding Agent, PARCO, as a Conduit Purchaser,
and the Committed Purchaser shall have the right to appoint a successor
Funding Agent. If no successor Funding Agent shall have been so appointed
and shall have accepted such appointment, within five days after the
retiring Funding Agent's giving of notice of resignation, then the
retiring Funding Agent may, on behalf of the PARCO, as a Conduit
Purchaser, and the Committed Purchaser, appoint a successor Funding Agent.
Upon the acceptance of any appointment as Funding Agent hereunder by a
successor Funding Agent, such successor Funding Agent shall thereupon
succeed to and become vested with all of the rights, powers, privileges
and duties of the retiring Funding Agent, and the retiring Funding Agent
shall be discharged from its duties and obligations under this Note
Purchase Agreement and the other Transaction Documents (other than
obligations arising or to have been performed prior to such retirement).
After any retiring Funding Agent's resignation hereunder as Funding Agent,
the provisions of this Article IX shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was an Funding Agent
under this Note Purchase Agreement and the other Transaction Documents.
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ARTICLE X.
MISCELLANEOUS
SECTION 10.1 Amendments. No amendment or waiver of any provision of
this Note Purchase Agreement shall in any event be effective unless the same
shall be made in accordance with the requirements set forth in Section 7.3, and
then such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 10.2 Notices. All communications hereunder, except as herein
otherwise specifically provided, shall be in writing and, if to the Conduit
Purchasers, shall be mailed, delivered or telegraphed and confirmed to such
Persons at the following addresses:
Three Pillars Funding LLC
c/o AMACAR Group, L.L.C.
6525 Morrison Boulevard,
Suite 318
Charlotte, NC 28211
Attention: Doris Hearn
Facsimile: (704) 365-1362
and
Park Avenue Receivables Company, LLC
10 South Dearborn Street
Chicago, IL 60670
Attention: Maureen Marcon
Facsimile: (312) 732-3600
if to the Administrator, shall be mailed, delivered or
telegraphed and confirmed to the Administrator at the following address:
35
SunTrust Robinson Humphrey, Inc.
303 Peachtree Street
Atlanta, Georgia 30308
Attention: Kecia Howson
Facsimile: (404) 813-0000
if to the Funding Agent or the Committed Purchaser, shall be mailed,
delivered or telegraphed and confirmed to such Person at the following address:
JPMorgan Chase Bank, N.A.
10 South Dearborn Street
Chicago, IL 60670
Attention: Maureen Marcon
Facsimile: (312) 732-3600
if to the Seller, shall be mailed, delivered or telegraphed and
confirmed to the Seller at the following address:
Conn Appliances, Inc.
3295 College Street
Beaumont, Texas 77701
Attention: David Atnip
Telephone: 409-832-1696 ext. 3270
Facsimile: 409-839-4609
if to the Issuer, shall be mailed, delivered or telegraphed and
confirmed to the Issuer at the following address:
Conn Funding II, L.P.
3295 College Street
Beaumont, Texas 77701
Attention: David Atnip
Telephone: 409-832-1696 ext. 3270
Facsimile: 409-839-4609
SECTION 10.3 No Waiver; Remedies. No failure on the part of any
party hereto 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.
SECTION 10.4 Binding Effect; Assignability. (6) This Note Purchase
Agreement shall be binding on the parties hereto and their respective successors
and assigns; provided, however, that the Issuer may not assign any of its rights
or delegate any of its duties hereunder or under any of the other Transaction
Documents to which it is a party without the prior written consent of the
Administrator and the Funding Agent. No provision of this Note Purchase
Agreement or any other Transaction Document shall in any manner restrict the
ability of any Affected Party to assign, participate, grant security interests
in, or otherwise transfer any portion of its interest in the Notes (and its
rights to receive any payments in respect thereof, including in connection with
any collateral securing payment with respect to such Notes); provided, that any
such transfer, participation or assignment shall only be made in compliance with
the transfer restrictions set forth in the Indenture; provided, further, that
unless otherwise consented to by the Issuer, such transferee, participant or
assignee shall have executed and delivered to the Issuer, the Trustee, the
Funding Agent and the Administrator, a transfer certificate, the form of which
is attached as Exhibit C to the Series Supplement, with such changes as shall be
reasonably acceptable to the Issuer. Without limiting the foregoing, any Conduit
Purchaser may, in one or a series of transactions, transfer all or any portion
of its interest in the Trust Estate and the Notes, and its rights and
obligations under the Transaction Documents to any Bank, any Liquidity Bank (or
any successor of any thereof by merger, consolidation or otherwise), any
Affiliate of any Bank or any Liquidity Bank in connection with a draw under a
Liquidity Agreement or a Credit Advance (which may then assign all or any
portion thereof so assigned or any interest therein to such party or parties as
it may choose).
36
(b) Any Conduit Purchaser or any assignee permitted pursuant
to subsection (a) above may, in the ordinary course of its business and in
accordance with applicable law, at any time sell to one or more Persons
(each, a "Participant") participating interests in all or a portion of its
rights and obligations under this Note Purchase Agreements; provided, that
any such transfer, participation or assignment shall only be made in
compliance with the transfer restrictions set forth in the Indenture;
provided, further, that the Administrator shall have consented to any such
participation by Three Pillars, as a Conduit Purchaser and the Funding
Agent shall have consented to any such participation by PARCO, as a
Conduit Purchaser, or the Committed Purchaser. Notwithstanding any such
sale by such Conduit Purchaser or assignee of participating interests to a
Participant, such Conduit Purchaser or assignee rights and obligations
under this Note Purchase Agreement shall remain unchanged, such Conduit
Purchaser or assignee shall remain solely responsible for the performance
thereof, and the other parties hereto shall continue to deal solely and
directly with such Conduit Purchaser or assignee in connection with such
Conduit Purchaser or assignee's rights and obligations under this Note
Purchase Agreement. Each Conduit Purchaser or assignee shall be entitled
to the benefits of Article IX hereof; provided, however, that all amounts
payable to any such Participant shall be limited to the amounts which
would have been payable to such Conduit Purchaser or assignee selling such
participating interest had such interest not been sold.
(c) This Note Purchase Agreement shall create and constitute
the continuing obligation of the parties hereto in accordance with its
terms, and shall remain in full force and effect until such time as all
amounts payable with respect to the Notes shall have been paid in full.
SECTION 10.5 Confidentiality. Unless otherwise consented to by the
Administrator and the Funding Agent, each of the Issuer and the Seller hereby
agrees that it will not disclose the contents of any Transaction Document, or
any other confidential or proprietary information furnished by the
Administrator, the Funding Agent, the Committed Purchaser or any Conduit
Purchaser to any Person other than its Affiliates (which Affiliates shall have
executed an agreement satisfactory in form and in substance to the Administrator
and the Funding Agent to be bound by this Section 10.5) auditors and attorneys
or as required by applicable law.
37
SECTION 10.6 GOVERNING LAW; JURISDICTION. THIS NOTE PURCHASE
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS
(OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
EACH OF THE PARTIES TO THIS NOTE PURCHASE AGREEMENT HEREBY AGREES TO THE
NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND ANY APPELLATE COURT HAVING JURISDICTION TO REVIEW THE
JUDGMENTS THEREOF. EACH OF THE PARTIES HEREBY WAIVES ANY OBJECTION BASED ON
FORUM NON CONVENIENS AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED
HEREUNDER IN ANY OF THE AFOREMENTIONED COURTS AND CONSENTS TO THE GRANTING OF
SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.
SECTION 10.7 Wavier of Trial by Jury. To the extent permitted by
applicable law, each of the parties hereto irrevocably waives all right of trial
by jury in any action, proceeding or counterclaim arising out of or in
connection with this Note Purchase Agreement or any matter arising hereunder.
SECTION 10.8 No Proceedings. The Issuer agrees that so long as any
indebtedness of any Conduit Purchaser shall be outstanding or there shall not
have elapsed one year plus one day since the last day on which any indebtedness
of such Conduit Purchaser shall have been outstanding, it shall not file, or
join in the filing of, a petition against such Conduit Purchaser under the
Federal Bankruptcy Code, or join in the commencement of any bankruptcy,
reorganization, arrangement, insolvency, liquidation or other similar proceeding
against such Conduit Purchaser.
SECTION 10.9 Execution in Counterparts. This Note Purchase Agreement
may be executed in any number of counterparts and by 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 10.10 No Recourse. Notwithstanding anything to the contrary
contained herein, the obligations of the Conduit Purchasers under this Note
Purchase Agreement are solely the corporate obligations of such Conduit
Purchaser and, in the case of obligations of any Conduit Purchaser other than
its respective Commercial Paper Notes, shall be payable at such time as funds
are actually received by, or are available to, such Conduit Purchaser in excess
of funds necessary to pay in full all of its respective outstanding Commercial
Paper Notes and, to the extent funds are not available to pay such obligations,
the claims relating thereto shall not constitute a claim against such Conduit
Purchaser but shall continue to accrue. Each party hereto agrees that the
payment of any claim (as defined in Section 101 of the Bankruptcy Code) of any
such party shall be subordinated to the payment in full of all Commercial Paper
Notes.
38
No recourse under any obligation, covenant or agreement of any
Conduit Purchaser contained in this Note Purchase Agreement shall be had against
any incorporator, stockholder, officer, director, member, manager, employee or
agent of such Conduit Purchaser (solely by virtue of such capacity) by the
enforcement of any assessment or by any legal or equitable proceeding, by virtue
of any statute or otherwise; it being expressly agreed and understood that this
Note Purchase Agreement is solely a corporate obligation of each Conduit
Purchaser, and that no personal liability whatever shall attach to or be
incurred by any incorporator, stockholder, officer, director, member, manager,
employee or agent of any Conduit Purchaser (solely by virtue of such capacity)
or any of them under or by reason of any of the obligations, covenants or
agreements of such Conduit Purchaser contained in this Note Purchase Agreement,
or implied therefrom, and that any and all personal liability for breaches by
such Conduit Purchaser of any of such obligations, covenants or agreements,
either at common law or at equity, or by statute, rule or regulation, of every
such incorporator, stockholder, officer, director, member, manager, employee or
agent is hereby expressly waived as a condition of and in consideration for the
execution of this Note Purchase Agreement; provided that the foregoing shall not
relieve any such Person from any liability it might otherwise have as a result
of fraudulent actions taken or fraudulent omissions made by them.
SECTION 10.11 Survival. All representations, warranties, covenants,
guaranties and indemnifications contained in this Note Purchase Agreement
(including, without limitation, in Sections 10.8 and 10.10), and in any
document, certificate or statement delivered pursuant hereto or in connection
herewith shall survive the sale, transfer or repayment of the Notes.
SECTION 10.12 Recourse. The obligations of the Issuer under this
Note Purchase Agreement and the Notes are full-recourse obligations of the
Issuer.
SECTION 10.13 No Fiduciary Duty. Each of the Issuer and the Seller
acknowledges that each of the Administrator and the Funding Agent is acting
solely in the capacity of arm's-length contractual counterparties to the Issuer
and the Seller with respect to the offering of Notes contemplated hereby
(including in connection with determining the terms of the offering) and not as
a financial advisor or a fiduciary to, or an agent of the Issuer, the Seller or
any other Person. Additionally, neither the Administrator nor the Funding Agent
is advising the Issuer, the Seller or any other Person as to any legal, tax,
investment, accounting or regulatory matters in any jurisdiction. The Issuer and
the Seller shall consult with their own advisors concerning such matters and
shall be responsible for making their own independent investigation and
appraisal of the transactions contemplated hereby, and neither the Administrator
nor the Funding Agent shall have any responsibility or liability to the Issuer
or the Seller with respect thereto. Any review by the Administrator or the
Funding Agent of the Issuer, the Seller, the transactions contemplated hereby or
other matters relating to such transactions will be performed solely for the
benefit of the Administrator or the Funding Agent, as applicable, and shall not
be on behalf of the Issuer, the Seller or any other party.
[Remainder of page intentionally left blank -- signature pages follow.]
39
IN WITNESS WHEREOF, the parties have caused this Note Purchase
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
CONN FUNDING II, L.P., as Issuer
By: Conn Funding II GP, L.L.C.,
its general partner
By:_______________________________________
Name
Title
CONN APPLIANCES, INC., as Seller
By:_______________________________________
Name
Title
THREE PILLARS FUNDING LLC,
as a Conduit Purchaser
By:_______________________________________
Name
Title
PARK AVENUE RECEIVABLES COMPANY LLC, as a
Conduit Purchaser
By: JPMorgan Chase Bank, N.A.,
its attorney-in-fact
By:_______________________________________
Name
Title
S-1
JPMORGAN CHASE BANK, N.A., as Funding
Agent
By:_______________________________________
Name
Title
JPMORGAN CHASE BANK, N.A. as Committed
Purchaser
By:_______________________________________
Name
Title
SUNTRUST ROBINSON HUMPHREY, INC.,
as Administrator
By:_______________________________________
Name
Title
S-2
EXHIBIT A
Form of Notice of Increase
1. Proposed Increase Date: ___________
2. Amount of requested Increase (lesser of $__________
minimum amount of $__________ or the then
unfunded portion of Three Pillars Funding
LLC's Commitment) (with respect to Three
Pillars Funding LLC)
3. Purchase Price (Three Pillars Funding LLC) $__________
4. Amount of requested Increase (lesser of $__________
minimum amount of $__________ or the then
unfunded portion of the Commitment of Park
Avenue Receivables Company, LLC and JPMorgan
Chase Bank, N.A., as Committed Purchaser)
(with respect to Park Avenue Receivables
Company, LLC and JPMorgan Chase Bank, N.A., as
Committed Purchaser)
5. Purchase Price (Park Avenue Receivables $__________
Company, LLC)
6. Remaining Maximum Principal Amount (after $__________ giving effect to
the aggregate requested
Increase)
7. Certifications:
(a) The representations and warranties of Conn Funding II, L.P. (the
"Issuer"), Conn Appliances, Inc., as seller, in the Base Indenture
dated as of September 1, 2002 (as amended) between the Issuer and
Wells Fargo Bank, National Association (f/k/a Wells Fargo Bank
Minnesota, National Association), as trustee (the "Trustee"); the
Amended and Restated Series 2002-A Supplement, dated as of
September 10, 2007, between the Issuer and the Trustee; and the
Amended and Restated Note Purchase Agreement dated as of September
10, 2007 (the "Note Purchase Agreement"), among the Issuer, the
Seller, the Conduit Purchasers party thereto, JPMorgan Chase Bank,
N.A. and SunTrust Robinson Humphrey, Inc., are true and correct in
all material respects on the date hereof (except to the extent
they expressly relate to an earlier or later time and then as of
such earlier or later time).
(b) The conditions to the Increase specified in Section 2.3 of the
Note Purchase Agreement have been satisfied and will be satisfied
as of the applicable Increase Date.
Exhibit A-1
The Issuer understands and agrees that no Conduit Purchaser (or the
Committed Purchaser, as the case may be) shall be required to fund any Increase
if, after giving effect thereto, its Note Principal would exceed its Commitment.
Capitalized terms used herein shall have the meanings set forth in the
Note Purchase Agreement.
CONN FUNDING II, L.P., as the Issuer
By: Conn Funding II GP, L.L.C.,
Its general partner
By:_______________________________________
Name
Title
Date of Notice: __________
Exhibit A-2
SCHEDULE I
LIST OF PROCEEDINGS
None.
Schedule I-1
SCHEDULE II
LIST OF TRADE NAMES
Conn Appliances, Inc.:
"Appliance Parts & Service"
"Conn"
"Conn Appliances"
"Conn Rental"
"Conn Service"
"Conns"
"Conn's"
"Conn's Rental"
"Conn's Service"
Conn Funding II, L.P.:
None.
Schedule II-1