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 required) July 29, 1994
ILLINOIS CENTRAL RAILROAD COMPANY
(Exact name of registrant as specified
in its charter)
Delaware 1-7092 36-2728842
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
455 North Cityfront Plaza Drive, Chicago, Illinois 60611-5504
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 755-7500
Item 7. Financial Statements and Exhibits
(a) Exhibits:
4.1 Form of Toronto Dominion Credit Agreement
4.2 Form of Receivables Purchase Agreement
dated as of March 29, 1994, between
Illinois Central Railroad Company and
Golden Gate Funding Corporation.
10.1* Form of the Illinois Central Railroad
Company Executive Performance Compensation
Program.
10.2* Form of the Illinois Central Railroad
Company Supplemental Executive Retirement
Plan.
10.3* Form of the Illinois Central Railroad
Company Executive Deferred Compensation
Plan.
10.4* Form of the Illinois Central Railroad
Company Performance Compensation Program
ILLINOIS CENTRAL RAILROAD COMPANY
SIGNATURE
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 hereto duly authorized.
ILLINOIS CENTRAL RAILROAD COMPANY
/S/ JOHN V. MULVANEY
John V. Mulvaney
Controller
Date: July 29, 1994
ILLINOIS CENTRAL RAILROAD COMPANY
AND SUBSIDIARIES
EXHIBIT INDEX
Exhibit Sequential
No. Descriptions Page No.
4.1 Form of Toronto Dominion
Credit Agreement A
4.2 Form of Receivables Purchase
Agreement dated as of March 29,
1994, between Illinois Central
Railroad Company and Golden
Gate Funding Corporation. A
10.1* Form of the Illinois Central
Railroad Company Executive
Performance Compensation Program. A
10.2* Form of the Illinois Central
Railroad Company Supplemental
Executive Retirement Plan. A
10.3* Form of the Illinois Central
Railroad Company Executive
Deferred Compensation Plan. A
10.4* Form of the Illinois Central
Railroad Company Performance
Compensation Program A
* Items so marked identify management
contracts or compensatory plans
arrangements.
A Filed but not included in printed version.
EXHIBIT 4.1
November 18, 1993
Illinois Central Railroad Company
455 North City Front Plaza
Chicago, IL 60611-5504
Attn: Douglas A. Koman
Treasurer
Dear Mr. Koman:
This Facility Agreement Letter (the
"Agreement") sets forth certain underlying
arrangements for loans which The Toronto-Dominion
Bank (the "Bank") may from time to time make to
Illinois Central Railroad Company (the "Borrower")
under a Short-Term Loan Facility (the "Facility").
These arrangements detail the operation of the
Facility and serve to augment the properly signed
and delivered Grid Promissory Note (the "Note")
evidencing the debt for all borrowings under this
Facility. The Bank and the Borrower hereby agree
as follows:
1. Borrowing Resolutions. Prior to the
making of any loans the Borrower will have
delivered to the Bank resolutions of The Executive
Committee of the Borrower's Board of Directors, in
a form satisfactory to the Bank, authorizing
certain persons ("Authorized Persons") to take on
behalf of the Borrower all actions contemplated by
this Agreement and the Note.
2. Agreements to Make Loans. From time to
time, by telephone, the Borrower may ask to borrow
money from the Bank, or the Bank may offer to make
loans ("Loans") to the Borrower, hereunder. The
Borrower and the Bank may from time to time make
oral agreements ("Oral Agreements") that the Bank
will make Loans to the Borrower hereunder. Each
Oral Agreement will specify the following terms
(the "Terms") of the Loan relating thereto: (i)
the date on which such Loan is to be made, (ii) the
principal amount of such Loan, (iii) the date on
which such Loan shall mature (the "Maturity Date"),
(iv) the annual rate of interest on such Loan
(which shall be a fixed rate), and (v) the date or
dates on which any interest payable prior to
maturity is to be paid. The Borrower acknowledges
and confirms that all claims of the Bank in respect
of outstanding Loans under this Agreement will at
all times rank pari passu with all other senior
unsecured indebtedness of the Borrower.
3. Confirmations; Crediting of Funds;
Reliance by the Bank.
Each time the Bank and the Borrower shall enter
into an Oral Agreement with respect to a Loan,
(a) the Bank shall endeavor to send the
Borrower written, telecopied or telexed
confirmation of the Terms of such Loan;
and
(b) the Bank shall make such Loan by wire
transfer of the Loan amount in
immediately available funds, to the
Borrower's account at a bank specified in
written, telecopied or telexed form by
the Borrower.
(c) The Bank shall make such entries on the
Note as reflects the Loan and the Oral
Agreement. The Bank shall be entitled to
rely upon and act hereunder pursuant to
any Oral Agreement which it reasonably
believes to have been made with the
Borrower through an Authorized Person.
If the Bank shall credit or transfer any
amount to an account of the Borrower
pursuant to this Agreement, then the Bank
shall be deemed to have made a Loan
pursuant hereto, and the Borrower shall
be indebted to the Bank for such amount.
If the Borrower believes that the
confirmation relating to any Loan
contains any error or discrepancy from
the applicable Oral Agreement, the
Borrower will promptly notify the Bank
thereof. If any disagreement arises
between the Borrower and the Bank as to
the terms of any Oral Agreement, both
shall attempt to resolve such
disagreement in good faith, otherwise,
the applicable Loan shall be payable on
demand by the Bank, together with
interest to the date of payment at the
Effective Federal Funds Rate. The
"Effective Federal Funds Rate" shall mean
a per annum floating rate of interest
equal, for any day, to the average per
annum rate of interest at which member
banks of the Federal Reserve System make
overnight loans to each other on such day
(or, if such day is not a Business Day,
then on the next preceding Business Day),
as reported by the Federal Reserve Bank
of New York. "Business Day" shall mean
any day other than a day on which banks
are authorized to be closed in New York
City. Principal and interest on each
Loan shall be repaid in accordance with
the terms of the Oral Agreements and the
Note by wire transfer of immediately
available funds to the Bank, as it shall
direct from time to time.
4. Uncommitted Facility. The Borrower
acknowledges that the Facility is not a committed
facility and that the Bank shall have no obligation
to make any Loans under this Agreement.
5. Benefit of Agreement. This Agreement and
the Note shall be binding upon, for the benefit of,
and enforceable by the respective successors and
assigns of the parties hereto; provided that
neither party to this Agreement or the Note may
assign any of its rights hereunder or thereunder
without the prior written consent of the other
party. The Bank may sell participations and
subparticipations in all or any part of the Loans
made hereunder; provided that in such event the
participant shall not have any direct rights
against the Borrower under this Agreement or the
Note. The Bank may furnish any information
concerning the Borrower received with respect to
this Agreement from time to time to assignees and
participants (including prospective assignees and
participants).
6. Notices. All notices hereunder and all
written or telexed confirmations of Oral Agreements
made hereunder shall be sent, to the Borrower, as
indicated from time to time on Exhibit B and if to
the Bank, as indicated on Exhibit C.
7. Information to be Furnished by the
Borrower. The Borrower agrees that so long as any
Loan is outstanding, the Borrower will deliver to
the Bank:
(a) as soon as available and in any event
within 120 days after the end of each fiscal year
of the Borrower, a copy of the Borrower's annual
report to shareholders or such other applicable
audited financial report showing the Borrower's
(and subsidiaries) Consolidated Balance Sheet,
Statements of Income and Statements of Cash Flow;
(b) as soon as available and in any event
within 45 days after the end of each fiscal quarter
of the Borrower, a Consolidated Balance Sheet of
the Borrower (and subsidiaries) as at the end of
such quarter and the related Consolidated
Statements of Income, and Statements of Cash Flow
for such fiscal quarter and for the portion of the
Borrower's fiscal year ended at the end of such
quarter; and
(c) prompt notice of the occurrence of any
event or condition which constitutes, or is likely
to result in, a material adverse change in the
Borrower which would materially adversely affect
the ability of the Borrower to promptly repay
principal and interest on all outstanding Loans.
8. Expenses. The Borrower agrees to pay on
demand all reasonable out-of-pocket costs and
expenses (including reasonable attorneys' fees and
expenses) incurred by the Bank in connection with
the enforcement of, or any waiver or amendment of
any term of this Agreement, any Loan, or the Note.
9. Remedies. No failure or delay on the
part of the Bank in exercising any right or remedy
hereunder or under the Note, nor any partial
exercise of any right or remedy shall preclude any
further exercise thereof or the exercise of any
other right or remedy hereunder or under the Note.
Such rights and remedies expressly provided are
cumulative and not exclusive of any rights or
remedies which the Bank would otherwise have.
10. Modifications. No provision of this
Agreement or the Note may be waived, modified or
discharged except in writing by the Bank.
11.Governing Law. This Agreement shall be
governed by and construed in accordance with the
laws of the State of New York.
If this letter correctly reflects your
agreement with us, please execute both copies
hereof and return one to us, whereupon this
Agreement shall be binding upon you and the Bank.
Yours sincerely,
The Toronto-Dominion Bank
By:
Joseph J. Houston
Manager, Indirect Risk/
Credit Administration
Agreed and accepted this 16th day of December,
1993.
Illinois Central Railroad
Company
By:
Title:
GRID PROMISSORY NOTE
Dated December 16, 1993
FOR VALUE RECEIVED, the undersigned (the
"Borrower"), promises to pay to the order of The
Toronto-Dominion Bank (the "Bank") at the Bank's
office located at 31 West 52nd Street, New York, NY
10019, in lawful money of the United States of
America, in immediately available funds, on the
maturity date of each Loan evidenced hereby, the
principal amount of such Loan.
This Note evidences Loans made pursuant to,
and is entitled to the benefits of, the Facility
Agreement Letter (the "Agreement") dated November
18, 1993 between the Borrower and the Bank.
The Borrower agrees to pay interest (computed
on a basis of a year of 360 days and actual days
elapsed) on the unpaid principal amount of each
advance at such office in like money and funds for
each day from the date of such advance until
payment in full at a rate per annum agreed upon at
the time of the advance, payable on the maturity
date of such advance unless specified payable on a
date or dates prior to maturity. No advance may be
prepaid.
The Bank is authorized to endorse the
particulars of each advance evidenced hereby on the
attached Payment Schedule (Exhibit A) and to attach
additional Payment Schedules as necessary.
The obligations evidenced by this Note may be
declared immediately due and payable (i) upon the
failure of the Borrower to pay any principal or
interest under this Note, when due, (ii) upon the
failure of the Borrower or any consolidated
subsidiary of the Borrower to make any payment in
respect of any indebtedness for money borrowed in
excess of Twenty-five Million Dollars
($25,000,000.00) when due whether by acceleration,
at maturity or otherwise or within any applicable
grace period, excluding any such failure to pay any
such indebtedness to the Bank which failure arises
from the acceleration of such indebtedness as the
result of the Borrower's failure to comply with any
restriction relating to Margin Stock, or (iii) as
contemplated by Section 3(c) of the Agreement.
The Borrower waives all claims to presentment,
demand, protest and notice of dishonor. The
Borrower agrees to pay all cost of collection,
including reasonable attorney's fees in connection
with the enforcement of this Note.
This Note shall be governed by the internal
substantive law of the State of New York.
Illinois Central Railroad
Company
By:
Title:
EXHIBIT 4.2
RECEIVABLES PURCHASE AGREEMENT
among
ILLINOIS CENTRAL RAILROAD COMPANY,
as Seller and Servicer,
GOLDEN GATE FUNDING CORPORATION,
as Issuer
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION,
as Administrator
Dated as of March 29, 1994
RECEIVABLES PURCHASE AGREEMENT
This RECEIVABLES PURCHASE AGREEMENT (this
"Agreement") is entered into as
of March 29, 1994 among ILLINOIS CENTRAL RAILROAD
COMPANY, a Delaware corporation, as seller (the "Seller") and
servicer (the "Servicer"), GOLDEN GATE FUNDING CORPORATION, a
Delaware corporation (the "Issuer"), and BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a
national banking association, as administrator (the
"Administrator").
PRELIMINARY STATEMENTS. Certain terms that
are capitalized and used throughout this Agreement
are defined in Exhibit I to this Agreement.
References in the Exhibits to "the Agreement" refer
to this Agreement, as amended, modified or
supplemented from time to time.
The Seller desires to sell, transfer and
assign an undivided variable percentage interest in
a pool of receivables, and the Issuer desires to
acquire such undivided variable percentage
interest, as such percentage interest shall
be adjusted from time to time based upon, in part,
reinvestment payments which are made by the Issuer
and additional incremental payments made to the
Seller.
In consideration of the mutual agreements,
provisions and covenants contained herein, the
parties hereto agree as follows:
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 1.1. Purchase Facility. (a)
On the terms and conditions hereinafter set
forth, the Issuer shall purchase and make
reinvestments of undivided percentage ownership
interests with regard to the Purchased Interest
from the Seller from time to time during the period
from the date hereof to the Facility Termination
Date. Under no circumstances shall the Issuer make
any such purchase or reinvestment if after giving
effect to such purchase or reinvestment the
aggregate outstanding Capital of the Purchased
Interest would exceed the Purchase Limit.
(b) The Seller may, upon at least five
Business Days' notice to the Administrator,
terminate the purchase facility provided in this
Section 1.1 in whole or, from time to time,
irrevocably reduce in part the unused portion of
the Purchase Limit; provided that each partial
reduction shall be in the amount of at least
$1,000,000 or an integral multiple thereof.
SECTION 1.2. Making Purchases. (a)
Each purchase (not including reinvestments) of
undivided ownership interests with regard to the
Purchased Interest hereunder shall be made upon the
Seller's irrevocable written notice delivered to
the Administrator in accordance with Section 5.2
(which notice must be received by the Administrator
prior to 9:00 a.m. San Francisco time) (i) four
Business Days prior to the requested purchase date,
in the case of a purchase to be funded at the
Alternate Rate and based on the Eurodollar Rate,
(ii) two Business Days prior to the requested
purchase date, in the case of a purchase to be
funded at the Alternate Rate and based on the
Base Rate and (iii) two Business Days prior to the
requested purchase date, in the case of a purchase
to be funded at the CP Rate, which notice shall
specify (A) the amount requested to be paid to the
Seller (such amount, which shall not be less than
$5,000,000, being the "Capital" relating to the
undivided ownership interest then being purchased),
(B) the date of such purchase (which shall be a
Business Day) and (C) the desired funding basis for
such purchase (which shall be either the Alternate
Rate or the CP Rate) and the duration of the
initial Fixed Period(s) for such purchase. If such
terms relate to the CP Rate, the Administrator
shall promptly thereafter notify the Seller whether
such terms are acceptable to the Issuer. If the
Administrator notifies the Seller that such terms
relating to the CP Rate are unacceptable to the
Issuer, then the notice provided by the Seller
pursuant to the first sentence of this clause (a)
shall be deemed not to have been given.
(b) On the date of each purchase (not
including reinvestments) of undivided ownership
interests with regard to the Purchased Interest
hereunder, the Issuer shall, upon satisfaction of
the applicable conditions set forth in Exhibit II
hereto, make available to the Seller in same day
funds, at Continental Bank N.A., account #7418736,
ABA #071000039, an amount equal to the Capital
relating to the undivided ownership interest then
being purchased.
(c) Effective on the date of each purchase
pursuant to this Section 1.2 and each reinvestment
pursuant to Section 1.4, the Seller hereby sells
and assigns to the Issuer an undivided percentage
ownership interest in (i) each Pool Receivable then
existing, (ii) all Related Security with respect to
such Pool Receivables, and (iii) Collections with
respect to, and other proceeds of, such Pool
Receivables and Related Security.
(d) To secure all of the Seller's
obligations (monetary or otherwise) under this
Agreement and the other Transaction Documents to
which it is a party, whether now or hereafter
existing or arising, due or to become due,
direct or indirect, absolute or contingent, the
Seller hereby grants to the Issuer a security
interest in all of the Seller's right, title and
interest (including without limitation any
undivided interest of the Seller) in, to and
under all of the following, whether now or
hereafter owned, existing or arising: (A) all Pool
Receivables, (B) all Related Security with respect
to each such Pool Receivable, (C) all Collections
with respect to each such Receivable, (D) the
Lock-Box Accounts and all amounts on deposit
therein and all certificates and instruments, if
any, from time to time evidencing such Lock-Box
Accounts and amounts on deposit therein, and (E)
all proceeds of, and all amounts received or
receivable under any or all of, the foregoing. The
Issuer shall have, with respect to the property
described in this Section 1.2(d), and in addition
to all the other rights and remedies available to
the Issuer, all the rights and remedies of a
secured party under any applicable UCC.
SECTION 1.3. Purchased Interest
Computation. The Purchased Interest
shall be initially computed on the date of the
initial purchase hereunder. Thereafter until the
Termination Date, the Purchased Interest shall be
automatically recomputed (or deemed to be
recomputed) on each Business Day other than a
Termination Day. The Purchased Interest, as
computed (or deemed recomputed) as of the day
immediately preceding the Termination Date, shall
thereafter remain constant. The Purchased Interest
shall become zero when the Capital thereof and
Discount thereon shall have been paid in full, all
the amounts owed by the Seller hereunder to the
Issuer or the Administrator, or any other
Indemnified Party or Affected Person, are paid in
full and the Servicer shall have received the
accrued Servicing Fee thereon.
SECTION 1.4. Settlement Procedures. (a)
Collection of the Pool Receivables shall be
administered by the Servicer in accordance with the
terms of this Agreement. The Seller shall provide
to the Servicer (if other than the Seller) on a
timely basis all information needed for such
administration, including notice of the occurrence
of any Termination Day and current computations of
the Purchased Interest.
(b) The Servicer shall, on each day on
which Collections or Pool Receivables are received
by the Seller or the Servicer or deemed to be
received by the Seller pursuant to the terms of
this Agreement:
(i) set aside and hold in trust (and,
at the request of the Administrator, segregate) for
the Issuer, out of the percentage of such
Collections represented by the Purchased Interest,
an amount equal to the Discount and Servicing Fee
accrued through such day for the Purchased Interest
and not previously set aside;
(ii) subject to Section 1.4(f), if
such day is not a Termination Day, remit to the
Seller, on behalf of the Issuer, the remainder of
the percentage of such Collections, represented by
the Purchased Interest, to the extent representing
a return of Capital; such Collections shall be
automatically reinvested in Pool Receivables, and
in the Related Security and Collections with
respect thereto, and the Purchased Interest shall
be automatically recomputed pursuant to Section
1.3;
(iii) if such day is a Termination
Day, set aside, segregate and hold in trust for the
Issuer the entire remainder of the percentage of
the Collections represented by the Purchased
Interest; provided that if amounts are set aside
and held in trust on any Termination Day and
thereafter the conditions set forth in Section 2 of
Exhibit II are satisfied or are waived by the
Administrator, such previously set aside amounts
shall, to the extent representing a return of
Capital, be reinvested in accordance with the
preceding paragraph (ii) on the day of such
subsequent satisfaction or waiver of conditions;
and (iv) during such times as amounts are
required to be reinvested in accordance with the
foregoing paragraph (ii) or the proviso to
paragraph (iii), release to the Seller (subject to
Section 1.4(f)) for its own account any Collections
in excess of (x) such amounts, (y) the amounts that
are required to be set aside pursuant to paragraph
(i) above and (z) in the event the Seller is not
the Servicer, all reasonable and appropriate
out-of-pocket costs and expenses of such Servicer
of servicing, collecting and administering the Pool
Receivables.
(c) The Servicer shall deposit into the
Administration Account (except for amounts in
respect of Discount and Capital, which shall be
deposited into the Commercial Paper Account), on
the last day of each Settlement Period relating to
a Portion of Capital, Collections held for the
Issuer pursuant to Section 1.4(b) or Section 1.4(f)
with respect to such Portion of Capital.
(d) Upon receipt of funds deposited into
the Administration Account and Commercial Paper
Account pursuant to Section 1.4(c), the
Administrator shall cause such funds to be
distributed as follows:
(i) if such distribution occurs on a
day that is not a Termination Day, first to the
Issuer in payment in full of all accrued Discount
and then to the Servicer (payable in arrears on the
last day of each calendar month) in payment in full
of all accrued Servicing Fees; and
(ii) if such distribution occurs on a
Termination Day, first to the Issuer in payment in
full of all accrued Discount, second to the Issuer
in payment in full of all Capital, third to the
Issuer, Administrator and any other Indemnified
Party or Affected Person in payment in full of any
other amounts owed thereto by the Seller hereunder,
and fourth to the Servicer in payment in full of
all accrued Servicing Fees; provided, that if the
Servicer is a Person other than the Seller the
Administrator shall cause such funds to be
distributed to the Servicer in payment in full of
all accrued Servicing Fees prior to distributing
funds to the Issuer, Administrator and any other
Indemnified Party or Affected Person as set forth
in clause "third" above.
After the Capital and Discount and Servicing Fees
with respect to the Purchased Interest, and any
other amounts payable by the Seller to the Issuer,
the Administrator or any other Indemnified Party or
Affected Person hereunder, have been paid in full,
all additional Collections with respect to the
Purchased Interest shall be paid to the Seller for
its own account.
(e) For the purposes of this Section 1.4:
(i) if on any day the Outstanding
Balance of any Pool Receivable is reduced or
adjusted as a result of any defective, rejected,
returned, repossessed or foreclosed goods or
services, or any correction or adjustment made with
respect to the estimated amount of any Car Hire
Receivable, Freight Receivable or Switching
Receivable, or any discount or other adjustment
made by the Seller, or any setoff (except to the
extent Interline Payables exist with respect to
Receivables) or dispute between the Seller and an
Obligor, the Seller shall be deemed to have
received on such day a Collection of such Pool
Receivable in the amount of such reduction or
adjustment;
(ii) if on any day any of the
representations or warranties in paragraphs (h) or
(o) of Exhibit III is not true with respect to any
Pool Receivable, the Seller shall be deemed to have
received on such day a Collection of such Pool
Receivable in full;
(iii) except as provided in paragraph
(i) or (ii) of this Section 1.4(e), or as otherwise
required by applicable law or the relevant
Contract, all Collections received from an Obligor
of any Receivables shall be applied to the
Receivables of such Obligor in the order of the age
of such Receivables, starting with the oldest such
Receivable, unless such Obligor designates in
writing its payment for application to specific
Receivables; and
(iv) if and to the extent the
Administrator or the Issuer shall be required for
any reason to pay over to an Obligor (or any
trustee, receiver, custodian or similar official in
any Insolvency Proceeding) any amount received by
it hereunder, such amount shall be deemed not to
have been so received but rather to have been
retained by the Seller and, accordingly, the
Administrator or the Issuer, as the case may be,
shall have a claim against the Seller for such
amount, payable when and to the extent that any
distribution from or on behalf of such Obligor is
made in respect thereof.
(f) If at any time Seller shall wish to cause
the reduction of a Portion of Capital (but not to
commence the liquidation, or reduction to zero, of
the entire Capital of the Purchased Interest), the
Seller may do so as follows:
(i) the Seller shall give the
Administrator at least five Business Days' prior
written notice thereof (including the amount of
such proposed reduction and the proposed date on
which such reduction will commence),
(ii) on the proposed date of
commencement of such reduction and on each day
thereafter, the Servicer shall cause Collections
with respect to such Portion of Capital not to be
reinvested until the amount thereof not so
reinvested shall equal the desired amount of
reduction, and
(iii) the Servicer shall hold such
Collections in trust for the Issuer, for payment to
the Administrator on the last day of the current
Settlement Period relating to such Portion of
Capital, and the applicable Portion of Capital
shall be deemed reduced in the amount to be paid to
the Administrator only when in fact finally so paid;
provided that,
(A) the amount of any such reduction
shall be not less than $5,000,000 and shall be an
integral multiple of $1,000,000, and the entire
Capital of the Purchased Interest after giving
effect to such reduction shall be not less than
$5,000,000 and shall be in an integral multiple of
$1,000,000,
(B) the Seller shall choose a
reduction amount, and the date of commencement
thereof, so that to the extent practicable such
reduction shall commence and conclude in the same
Fixed Period, and
(C) if two or more Portions of Capital
shall be outstanding at the time of any proposed
reduction, such proposed reduction shall be
applied, unless the Seller shall otherwise specify
in the notice given pursuant to Section 1.4(f)(i),
to the Portion of Capital with the shortest
remaining Fixed Period.
SECTION 1.5. Fees. The Seller shall pay
to the Administrator certain fees in the amounts
and on the dates set forth in a letter agreement
between the Seller and the Administrator delivered
pursuant to Section 1 of Exhibit II, as such letter
agreement may be amended, supplemented or otherwise
modified from time to time.
SECTION 1.6. Payments and Computations,
Etc. (a) All amounts to be paid or deposited by
the Seller or the Servicer hereunder shall be paid
or deposited no later than 12:00 noon (New York
City time) on the day when due in same day funds
(x) in the case of amounts in respect of Discount
and Capital, to the Commercial Paper Account, and
(y) in the case of all other amounts, to the
Administration Account. All amounts received after
12:00 noon (New York City time) will be deemed to
have been received on the immediately succeeding
Business Day.
(b) The Seller shall, to the extent
permitted by law, pay interest on any amount not
paid or deposited by the Seller (whether as
Servicer or otherwise) when due hereunder, at an
interest rate per annum equal to 2.0% per annum
above the Base Rate, payable on demand.
(c) All computations of interest under
subsection (b) above and all computations of
Discount, fees, and other amounts hereunder shall
be computed on the following basis: (i) when such
computation is based on the Base Rate, and the Base
Rate is determined by BofA's "reference rate", such
computations shall be made on the basis of a year
of 365 or 366 days, as the case may be, and actual
days elapsed, and (ii) all other such computations
shall be made on the basis of a 360-day year and
actual days elapsed. Whenever any payment or
deposit to be made hereunder shall be due on a day
other than a Business Day, such payment or deposit
shall be made on the next succeeding Business Day
and such extension of time shall be included in the
computation of such payment or deposit.
SECTION 1.7. Dividing or Combining
Portions of the Capital of the Purchased Interest.
The Seller may, on the last day of any Fixed
Period, either (i) divide the Capital of the
Purchased Interest into two or more portions (each,
a "Portion of Capital") equal, in aggregate, to the
Capital of the Purchased Interest, provided that
after giving effect to such division the amount of
each such Portion of Capital shall not be less than
$1,000,000, or (ii) combine any two or more
Portions of Capital outstanding on such last day
and having Fixed Periods ending on such last day
into a single Portion of Capital equal to the
aggregate of such Portions.
SECTION 1.8. Increased Costs. If the
Administrator, the Issuer, the Credit Bank, any
Purchaser or any of their respective Affiliates
(each an "Affected Person") determines that the
existence of or compliance with (i) any law or
regulation or any change therein or in the
interpretation or application thereof, in each case
adopted, issued or occurring after the date hereof
or (ii) any request, guideline or directive from
any central bank or other Governmental Authority
(whether or not having the force of law) issued or
occurring after the date of this Agreement affects
or would affect the amount of capital required or
expected to be maintained by such Affected Person
and such Affected Person determines that the amount
of such capital is increased by or based upon the
existence of any commitment to make purchases of or
otherwise to maintain the investment in Pool
Receivables related to this Agreement or any
related liquidity facility or credit enhancement
facility and other commitments of the same type
related to this Agreement, then, upon demand by
such Affected Person (with a copy to the
Administrator), the Seller shall within 15 days pay
to the Administrator, for the account of such
Affected Person, from time to time as specified by
such Affected Person, additional amounts sufficient
to compensate such Affected Person in the light of
such circumstances, to the extent that such
Affected Person reasonably determines such increase
in capital to be allocable to the existence of any
of such commitments. A certificate as to such
amounts submitted to the Seller and the
Administrator by such Affected Person setting forth
in reasonable detail the calculation of such
amounts shall be conclusive and binding for all
purposes, absent manifest error; provided,
however, that no Affected Person shall be required
to disclose any confidential or tax planning
information in any such certificate. If any demand
is made by an Affected Person pursuant to this
Section 1.8 later than 90 days after the date on
which such Affected Person became aware of an
increase in cost giving rise to such demand, then
such Affected Person shall be entitled to
compensation for such increased costs only from the
date which is 90 days prior to the date on which
such demand is made; provided that the limit on
compensation set forth in this sentence shall not
apply to the extent that the applicable law,
regulation, guideline or request (as so introduced,
changed, interpreted, or issued) has a retroactive
effect so long as such demand is made within 90
days after the date on which such Affected Party
became aware of such increase in costs.
SECTION 1.9. Requirements of Law. In
the event that any Affected Person determines that
the existence of or compliance with (i) any law or
regulation or any change therein or in the
interpretation or application thereof, in each case
adopted, issued or occurring after the date hereof
or (ii) any request, guideline or directive from
any central bank or other Governmental Authority
(whether or not having the force of law) issued or
occurring after the date of this Agreement:
(i) does or shall subject such
Affected Person to any tax of any kind whatsoever
with respect to this Agreement, any increase in the
Purchased Interest or in the amount of Capital
relating thereto, or does or shall change the basis
of taxation of payments to such Affected Person on
account of Collections, Discount or any other
amounts payable hereunder (excluding taxes imposed
on the income of such Affected Person, and
franchise taxes imposed on such Affected Person, by
the jurisdiction under the laws of which such
Affected Person is organized or a political
subdivision thereof);
(ii) does or shall impose, modify or
hold applicable any reserve, special deposit,
compulsory loan or similar requirement against
assets held by, or deposits or other liabilities in
or for the account of, purchases, advances or loans
by, or other credit extended by, or any other
acquisition of funds by, any office of such
Affected Person which are not otherwise included in
the determination of the Eurodollar Rate hereunder;
or
(iii) does or shall impose on such
Affected Person any other condition;
and the result of any of the foregoing is (x) to
increase the cost to such Affected Person of acting
as Administrator, or of agreeing to purchase or
purchasing or maintaining the ownership of
undivided ownership interests with regard to the
Purchased Interest (or interests therein) or any
Portion of Capital in respect of which Discount is
computed by reference to the Eurodollar Rate or (y)
to reduce any amount receivable hereunder (whether
directly or indirectly) funded or maintained by
reference to the Eurodollar Rate, then, in any such
case, upon demand by such Affected Person the
Seller shall within 15 days pay such Affected
Person any additional amounts necessary to
compensate such Affected Person for such additional
cost or reduced amount receivable. All such
amounts shall be payable as incurred. A
certificate from such Affected Person to the Seller
certifying, in reasonably specific detail, the
basis for, calculation of, and amount of such
additional costs or reduced amount receivable shall
be conclusive in the absence of manifest error;
provided, however, that no Affected Person shall be
required to disclose any confidential or tax
planning information in any such certificate. If
any demand is made by an Affected Person pursuant
to this Section 1.9 later than 90 days after the
date on which such Affected Person became aware of
such additional cost or reduced amount receivable
giving rise to such demand, then such Affected
Person shall be entitled to compensation for such
additional cost or reduced amount receivable only
from the date which is 90 days prior to the
date on which such demand is made; provided that
the limit on compensation set forth in this
sentence shall not apply to the extent that the
applicable law (as so changed, interpreted,
applied, or issued) has a retroactive effect so
long as such demand is made within 90 days after
the date on which such Affected Party became aware
of such additional cost or reduced amount
receivable.
SECTION 1.10. Inability to Determine
Eurodollar Rate. In the event that the
Administrator shall have determined prior to the
first day of any Fixed Period (which determination
shall be conclusive and binding upon the parties
hereto) by reason of circumstances affecting the
interbank Eurodollar market, either (a) dollar
deposits in the relevant amounts and for the
relevant Fixed Period are not available, (b)
adequate and reasonable means do not exist
for ascertaining the Eurodollar Rate for such Fixed
Period or (c) the Eurodollar Rate determined
pursuant hereto does not accurately reflect the
cost to the Issuer (as conclusively determined by
the Administrator) of maintaining any Portion of
Capital of the Purchased Interest during such Fixed
Period, the Administrator shall promptly give
telephonic notice of such determination, confirmed
in writing, to the Seller prior to the first day of
such Fixed Period. Upon delivery of such notice
(a) no Portion of Capital shall be funded
thereafter at the Alternate Rate determined by
reference to the Eurodollar Rate, unless and until
the Administrator shall have given notice to the
Seller that the circumstances giving rise to such
determination no longer exist, and (b) with respect
to any outstanding Portions of Capital then funded
at the Alternate Rate determined by reference to
the Eurodollar Rate, such Alternate Rate shall
automatically be converted to the Alternate Rate
determined by reference to the Base Rate at the
respective last days of the then current Fixed
Periods relating to such Portions of Capital.
ARTICLE II
REPRESENTATIONS AND WARRANTIES; COVENANTS;
TERMINATION EVENTS
SECTION 2.1. Representations and
Warranties; Covenants. The Seller hereby makes the
representations and warranties, and hereby agrees
to perform and observe the covenants, set forth in
Exhibits III and IV, respectively hereto.
SECTION 2.2. Termination Events. If any
of the Termination Events set forth in Exhibit V
hereto shall occur, the Administrator may, by
notice to the Seller, declare the Facility
Termination Date to have occurred (in which
case the Facility Termination Date shall be deemed
to have occurred); provided that, automatically
upon the occurrence of any event (without any
requirement for the passage of time or the giving
of notice) described in subsections (g) or (k) of
Exhibit V or subsection (i) (after expiration of
the grace period contained in such subsection (i))
of Exhibit V, the Facility Termination Date
shall occur; provided, further, that, in the case
of a Termination Event described in subsection (j)
of Exhibit V, the Facility Termination Date shall
be deemed to have occurred on the sixth Business
Day following the date of such notice unless such
Termination Event is cured during the intervening
period. Upon any such declaration, occurrence or
deemed occurrence of the Facility Termination Date,
the Issuer and the Administrator shall have, in
addition to the rights and remedies which they may
have under this Agreement, all other rights and
remedies provided after default under the UCC and
under other applicable law, which rights and
remedies shall be cumulative. Notwithstanding
anything to the contrary in this Agreement
(including without limitation any Exhibit hereto),
this Section 2.2 shall not be limited or otherwise
affected by satisfaction of the conditions to
reinvestments or purchases set forth in Section 2
of Exhibit II.
ARTICLE III
INDEMNIFICATION
SECTION 3.1. Indemnities by the Seller.
Without limiting any other rights that the
Administrator or the Issuer or any of their
respective Affiliates, employees or agents (each,
an "Indemnified Party") may have hereunder or
under applicable law, the Seller hereby agrees to
indemnify each Indemnified Party from and against
any and all claims, damages, expenses, losses and
liabilities (including Attorney Costs) (all of the
foregoing being collectively referred to as
"Indemnified Amounts") arising out of or resulting
from this Agreement (whether directly or
indirectly) or the use of proceeds of purchases or
reinvestments or the ownership of the Purchased
Interest, or any interest therein, or in respect of
any Receivable or any Contract, excluding, however,
(a) Indemnified Amounts to the extent resulting
from gross negligence or willful misconduct on the
part of such Indemnified Party, (b) recourse
(except as otherwise specifically provided in this
Agreement) for uncollectible Receivables or (c) any
income taxes or franchise taxes imposed on such
Indemnified Party by the jurisdiction under the
laws of which such Indemnified Party is organized
or any political subdivision thereof. Without
limiting or being limited by the foregoing, and
subject to the exclusions set forth in the
preceding sentence, the Seller shall pay on demand
to each Indemnified Party any and all amounts
necessary to indemnify such Indemnified Party from
and against any and all Indemnified Amounts
relating to or resulting from any of
the following:
(i) the failure of any Receivable
included in the calculation of the Net Receivables
Pool Balance as an Eligible Receivable to be an
Eligible Receivable, the failure of any information
contained in a Seller Report to be true and
correct, or the failure of any other information
provided to the Issuer or the Administrator with
respect to Receivables or this Agreement to be true
and correct;
(ii) reliance on any representation or
warranty or statement made or deemed made by the
Seller (or any of its officers), as Servicer or
otherwise, under or in connection with this
Agreement which shall have been incorrect in any
material respect when made;
(iii) the failure by the Seller, as
Servicer or otherwise, to comply with any
applicable law, rule or regulation with respect to
any Pool Receivable or the related Contract; or the
failure of any Pool Receivable or the related
Contract to conform to any such applicable law,
rule or regulation;
(iv) the failure to vest in the Issuer
a valid and enforceable (A) undivided percentage
ownership interest, to the extent of the Purchased
Interest, in each Pool Receivable at any time
existing and the Related Security and Collections
with respect thereto and (B) a first priority
perfected security interest in the items described
in Section 1.2(d), in each case free and clear of
any Adverse Claim;
(v) the failure to have filed, or any
delay in filing, financing statements or other
similar instruments or documents under the UCC of
any applicable jurisdiction or other applicable
laws with respect to any Receivables in, or
purporting to be in, the Receivables Pool and the
Related Security and Collections in respect
thereof, whether at the time of any purchase or
reinvestment or at any subsequent time;
(vi) any dispute, claim, offset or
defense (other than (A) discharge in bankruptcy of
the Obligor and (B) to the extent Interline
Payables exist with respect to Receivables) of the
Obligor to the payment of any Receivable in, or
purporting to be in, the Receivables Pool
(including, without limitation, a defense based on
such Receivable or the related Contract not being a
legal, valid and binding obligation of such
Obligor enforceable against it in accordance with
its terms), or any other claim resulting from the
sale of the goods or services related to such
Receivable or the furnishing or failure to furnish
such goods or services or relating to collection
activities with respect to such Receivable (if such
collection activities were performed by the Seller,
or any of its Affiliates, acting as Servicer or by
any agent or independent contractor retained by the
Seller or any of its Affiliates);
(vii) any failure of the Seller, as
Servicer or otherwise, to perform its duties or
obligations in accordance with the provisions
hereof or to perform its duties or obligations
under the Contracts;
(viii) any products liability or other
claim, investigation, litigation or proceeding
arising out of or in connection with merchandise,
insurance or services which are the subject of any
Contract;
(ix) the commingling of Collections of
Pool Receivables at any time with other funds
(including funds representing Interline Payables);
(x) any investigation, litigation or
proceeding related to this Agreement or the use of
proceeds of purchases or reinvestments or the
ownership of the Purchased Interest or in respect
of any Receivable, Related Security or Contract;
(xi) any reductions in the amount of a
Pool Receivable the Obligor of which is a
Government Obligor, and the Related Security and
Collections with respect thereto, as the result of
an appropriation (or failure to make an
appropriation) by such Obligor or the inability to
collect any amount from such Obligor;
(xii) any inability to enforce in Canada
any judgment rendered in the United States against
a Canadian Obligor in respect of any Pool
Receivable without reexamination or relitigation of
the matters adjudicated upon, or any inability to
obtain any judgment in or utilize the court or
other adjudication system of Canada;
(xiii) the handling by the Indemnified
Party of any Interline Payables, or the application
and delivery thereof in the manner contemplated in
this Agreement, including, without limitation, any
assertion by any Person that the Indemnified Party
should have delivered Interline Payables or should
have caused Interline Payables to be delivered
directly to a Person other than the Seller, or, if
the Indemnified Party shall in fact have delivered
such Interline Payables or caused Interline
Payables to be delivered to such other Person
(although not required by this Agreement), that the
Person to whom such delivery shall have been made
was not authorized to receive such remittance, or
any assertion by any Person that the Indemnified
Party owed any duty to such Person to monitor or
advise such Person as to the financial condition or
operations of the Seller at any time; or
(xiv) any reduction in Capital as a
result of the distribution of Collections pursuant
to Section 1.4(d), in the event that all or a
portion of such distributions shall thereafter be
rescinded or otherwise must be returned for any
reason.
ARTICLE IV
ADMINISTRATION AND COLLECTIONS
SECTION 4.1. Appointment of Servicer.
(a) The servicing, administering and collection of
the Pool Receivables shall be conducted by the
Person so designated from time to time as Servicer
in accordance with this Section 4.1. Until the
Administrator gives notice to the Seller (in
accordance with this Section 4.1) of the
designation of a new Servicer, the Seller is
hereby designated as, and hereby agrees to perform
the duties and obligations of, the Servicer
pursuant to the terms hereof. Upon the occurrence
of a Termination Event, the Administrator may
designate as Servicer any Person (including itself)
to succeed the Seller or any successor Servicer, on
the condition in each case that any such Person so
designated shall agree to perform the duties and
obligations of the Servicer pursuant to the terms
hereof.
(b) Upon the designation of a successor
Servicer as set forth in subsection 4.1(a) hereof,
the Seller agrees that it will terminate its
activities as Servicer hereunder in a manner which
the Administrator determines will facilitate the
transition of the performance of such activities to
the new Servicer, and the Seller shall cooperate
with and assist such new Servicer. Such
cooperation shall include (without limitation)
access to and transfer of records and use by the
new Servicer of all licenses, hardware or software
necessary or desirable to collect the Pool
Receivables and the Related Security.
(c) The Seller acknowledges that the
Administrator and the Issuer have relied on the
Seller's agreement to act as Servicer hereunder in
making their decision to execute and deliver this
Agreement. Accordingly, the Seller agrees that it
will not voluntarily resign as Servicer.
(d) The Servicer may delegate its duties
and obligations hereunder to any subservicer (each,
a "Sub-Servicer"); provided that, in each such
delegation, (i) such Sub-Servicer shall agree in
writing to perform the duties and obligations of
the Servicer pursuant to the terms hereof, (ii) the
Servicer shall remain primarily liable to the
Issuer for the performance of the duties
and obligations so delegated, (iii) the Seller, the
Administrator and the Issuer shall have the right
to look solely to the Servicer for performance and
(iv) the terms of any agreement with any
Sub-Servicer shall provide that the Administrator
may terminate such agreement upon the termination
of the Servicer hereunder by giving notice of its
desire to terminate such agreement to the Servicer
(and the Servicer shall provide appropriate notice
to such Sub-Servicer).
SECTION 4.2. Duties of Servicer. (a)
The Servicer shall take or cause to be taken all
such action as may be necessary or advisable to
collect each Pool Receivable from time to time, all
in accordance with this Agreement and all
applicable laws, rules and regulations, with
reasonable care and diligence, and in accordance
with the Credit and Collection Policy. Without
the prior written approval of the Administrator,
the Servicer may not extend the maturity of any
Pool Receivable or extend the maturity or adjust
the Outstanding Balance of any Defaulted Receivable
other than to maximize the amount of the
Collections therefrom; provided, however, that any
such extension or adjustment shall not alter the
status of such Pool Receivable as a Delinquent
Receivable or a Defaulted Receivable or limit the
rights of the Issuer or the Administrator under
this Agreement. The Seller shall deliver to
the Servicer and the Servicer shall hold for the
benefit of the Seller and the Administrator (for
the benefit of the Issuer and individually) in
accordance with their respective interests, all
records and documents (including without
limitation computer tapes or disks) with respect to
each Pool Receivable. Notwithstanding anything to
the contrary contained herein, the Administrator
may direct the Servicer (whether the Servicer is
the Seller or any other Person) to commence or
settle any legal action to enforce collection of
any Pool Receivable or to foreclose upon or
repossess any Related Security; provided, however,
that no such direction may be given unless either
(i) a Termination Event has occurred or (ii) the
Administrator believes in good faith that failure
to commence, settle, or effect such legal action,
foreclosure or repossession could adversely affect
Receivables constituting a material portion of the
Pool Receivables.
(b) The Servicer shall as soon as
practicable following actual receipt of collected
funds turn over to the Seller the collections of
any indebtedness that is not a Pool Receivable
(which shall include all Interline Payables);
provided, however, if the Seller is not the
Servicer, the Servicer shall not be under any
obligation to remit any such funds to the Seller
unless and until the Servicer has received from the
Seller evidence satisfactory to the Administrator
and the Servicer that the Seller is entitled to
such funds hereunder and under applicable law. The
Servicer, if other than the Seller, shall as soon
as practicable upon demand, deliver to the Seller
all records in its possession which evidence or
relate to any indebtedness that is not a Pool
Receivable, and copies of records in its possession
which evidence or relate to any indebtedness that
is a Pool Receivable.
(c) Notwithstanding anything to the
contrary contained in this Article IV, the
Servicer, if not the Seller, shall have no
obligation to collect, enforce or take any other
action described in this Article IV with respect to
any indebtedness that is not a Pool Receivable
(including with respect to Interline Payables)
other than to deliver to the Seller the collections
and documents with respect to any such indebtedness
as described in Section 4.2(b). It is expressly
understood and agreed by the parties that such
Servicer's duties in respect of any indebtedness
that is not a Pool Receivable (including with
respect to Interline Payables) are set forth in
this Section 4.2 in their entirety. Upon delivery
by such Servicer of funds or records relating to
any indebtedness that is not a Pool Receivable
(including with respect to Interline Payables) to
the Seller, such Servicer shall have discharged in
full all of its responsibilities to make any such
delivery. Such Servicer shall not have any
obligation to deliver any Interline Payables to any
Person other than the Seller.
(d) The Servicer's obligations hereunder
shall terminate on the later of (i) the Facility
Termination Date and (ii) the date on which all
amounts required to be paid to the Issuer, the
Administrator and any other Indemnified Party or
Affected Person hereunder shall have been paid in
full.
SECTION 4.3. Lock-Box Arrangements. The
Seller shall enter into Lock-Box Agreements with
all of the Lock-Box Banks, and deliver original
counterparts thereof to the Administrator, not
later than April 29, 1994. Upon the occurrence of
a Termination Event, the Administrator may at any
time thereafter give notice to each Lock-Box Bank
that the Administrator is exercising its rights
under the Lock-Box Agreements to do any or all of
the following: (i) to have the exclusive ownership
and control of the Lock-Box Accounts transferred to
the Administrator and to exercise exclusive
dominion and control over the funds deposited
therein, (ii) to have the proceeds that are sent to
the respective Lock-Box Accounts be redirected
pursuant to its instructions rather than deposited
in the applicable Lock-Box Account, and (iii) to
take any or all other actions permitted under the
applicable Lock-Box Agreement. The Seller hereby
agrees that if the Administrator, at any time,
takes any action set forth in the preceding
sentence, the Administrator shall have exclusive
control of the proceeds (including Collections) of
all Pool Receivables and the Seller hereby further
agrees to take any other action that the
Administrator may reasonably request to transfer
such control. Any proceeds of Pool Receivables
received by the Seller, as Servicer or otherwise,
thereafter shall be sent immediately to the
Administrator. The parties hereto hereby
acknowledge that if at any time the Administrator
takes control of any Lock-Box Account, the
Administrator shall not have any rights to the
funds therein in excess of the unpaid amounts due
to the Administrator, the Issuer or any other
Person hereunder and the Administrator shall
distribute or cause to be distributed such funds in
accordance with Section 4.2(b) hereof (including
the proviso thereto) and Article I hereof (in each
case as if such funds were held by the Servicer
thereunder).
SECTION 4.4. Enforcement Rights. (a) At
any time following the designation of a Servicer
(other than the Seller) pursuant to Section 4.1
hereof:
(i) the Administrator may direct the
Obligors that payment of all amounts payable under
any Pool Receivable be made directly to the
Administrator or its designee;
(ii) the Administrator may instruct the
Seller to give notice of the Issuer's interest in
Pool Receivables to each Obligor, which notice
shall direct that payments be made directly to the
Administrator or its designee, and upon such
instruction from the Administrator the Seller
shall give such notice at the expense of the
Seller; provided, that if the Seller fails to so
notify each Obligor, the Administrator may so
notify the Obligors; and
(iii) the Administrator may request the
Seller to, and upon such request the Seller shall,
(A) assemble all of the records necessary or
desirable to collect the Pool Receivables and the
Related Security, and transfer or license the use
of, to the new Servicer, all software necessary or
desirable to collect the Pool Receivables and the
Related Security, and make the same available to
the Administrator or its designee at a place
selected by the Administrator, and (B) segregate
all cash, checks and other instruments received by
it from time to time constituting Collections with
respect to the Pool Receivables in a manner
acceptable to the Administrator and, promptly upon
receipt, remit all such cash, checks and
instruments, duly endorsed or with duly executed
instruments of transfer, to the Administrator or
its designee.
(b) The Seller hereby authorizes the
Administrator, and irrevocably appoints the
Administrator as its attorney-in-fact with full
power of substitution and with full authority in
the place and stead of the Seller, which
appointment is coupled with an interest, to take
any and all steps in the name of the Seller and on
behalf of the Seller necessary or desirable, in the
determination of the Administrator, to collect any
and all amounts or portions thereof due under any
and all Pool Receivables or Related Security,
including, without limitation, endorsing the name
of the Seller on checks and other instruments
representing Collections and enforcing such Pool
Receivables, Related Security and the related
Contracts. Notwithstanding anything to the
contrary contained in this subsection (b), none of
the powers conferred upon such attorney-in-fact
pursuant to the immediately preceding sentence
shall subject such attorney-in-fact to any
liability if any action taken by it shall
prove to be inadequate or invalid, nor shall they
confer any obligations upon such attorney-in-fact
in any manner whatsoever.
SECTION 4.5. Responsibilities of the
Seller. (a) Anything herein to the contrary
notwithstanding, the Seller shall (i) perform all
of its obligations under the Contracts related to
the Pool Receivables to the same extent as if
interests in such Pool Receivables had not been
transferred hereunder and the exercise by the
Administrator or the Issuer of its rights
hereunder shall not relieve the Seller from such
obligations, and (ii) pay when due any taxes,
including, without limitation, any sales taxes
payable in connection with the Pool Receivables and
their creation and satisfaction. The Administrator
and the Issuer shall not have any obligation or
liability with respect to any Pool Receivable, any
Related Security or any related Contract,
nor shall any of them be obligated to perform any
of the obligations of the Seller under any of the
foregoing.
(b) The Seller hereby irrevocably agrees
that if at any time it shall cease to be the
Servicer hereunder, it shall act (if the then
current Servicer so requests) as the
data-processing agent of the Servicer and, in such
capacity, the Seller shall conduct the
data-processing functions of the administration of
the Receivables and the Collections thereon in
substantially the same way that the Seller
conducted such data-processing functions while it
acted as the Servicer.
SECTION 4.6. Servicing Fee. The
Servicer shall be paid a fee, through distributions
contemplated by Section 1.4(d), equal to 1% per
annum of the outstanding Capital.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Amendments, Etc. No
amendment or waiver of any provision of this
Agreement or consent to any departure by the Seller
or Servicer therefrom shall be effective unless in
a writing signed by the Administrator, and, in the
case of any amendment, by the Seller and the
Servicer, and a written statement is obtained from
each of the Relevant Rating Agencies that the
rating of the Notes will not be downgraded or
withdrawn solely as a result of such amendment or
waiver and then such amendment, waiver or consent
shall be effective only in the specific instance
and for the specific purpose for which given. No
failure on the part of the Issuer or Administrator
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.
SECTION 5.2. Notices, Etc. All notices
and other communications hereunder shall, unless
otherwise stated herein, be in writing (which shall
include facsimile communication) and sent or
delivered, to each party hereto, at its address set
forth under its name on the signature pages hereof
or at such other address as shall be designated by
such party in a written notice to the other parties
hereto. Notices and communications by facsimile
shall be effective when sent (and shall be followed
by hard copy sent by first class mail), and notices
and communications sent by other means shall be
effective when received.
SECTION 5.3. Assignability. (a) This
Agreement and the Issuer's rights and obligations
herein (including ownership of the Purchased
Interest) shall be assignable, in whole or in part,
by the Issuer and its successors and assigns;
provided, however, that no such assignment shall be
made to any Person other than BofA, any Affiliate
of BofA (other than a director or officer of
BofA) or any Person which is (i) in the business of
issuing commercial paper and (ii) associated with
or administered by BofA or any Affiliate of BofA.
The Administrator shall notify the Seller and each
Relevant Rating Agency of any such assignment.
Each assignor permitted by this Section 5.3 may, in
connection with the assignment, disclose to the
assignee any information relating to the Seller or
the Pool Receivables furnished to such assignor by
or on behalf of the Seller, the Issuer or the
Administrator.
(b) The Issuer may at any time grant to one
or more banks or other institutions (each a
"Purchaser"), including the "Purchasers" under the
Liquidity Asset Purchase Agreement, participating
interests in the Purchased Interest with the prior
written consent of the Seller; provided, however,
that such consent shall not be unreasonably
withheld; and provided, further, however, that no
such consent shall be required if the proposed
purchaser is BofA or an Affiliate of BofA. In the
event of any such grant by the Issuer of a
participating interest to a Purchaser, the Issuer
shall remain responsible for the performance of its
obligations hereunder.
Subject to the next sentence, any agreement
pursuant to which the Issuer may grant such a
participating interest shall provide that the
Issuer or the Administrator shall retain the sole
right and responsibility to enforce the
obligations of the Seller hereunder including,
without limitation, the right to approve any
amendment, modification or waiver of any provision
of this Agreement. Any participation agreement
referred to in the preceding sentence
may provide that
(x) without the consent of all of the
Purchasers, the Issuer or the Administrator shall
not agree to any modification, amendment or
waiver of this Agreement which would (i) reduce the
amount of Capital or Discount that is payable on
account of the Purchased Interest or delay
any scheduled date for payment thereof, (ii)
increase the Purchase Limit, (iii) modify the
reserve requirements for uncollectible Receivables,
Discount or the Servicing Fee, or (iv) modify any
yield protection or indemnity provision which
expressly inures to the benefit of assignees or
participants of the Issuer, and (y) subject to
restrictions described in clause (x), the
Administrator or the Issuer shall, at the request
of, and may, with the consent of, Purchasers having
interests with respect to the Purchased Interest
aggregating more than 50%, exercise any and all
rights and remedies available under this Agreement
or pursuant to applicable law, and agree to any
amendment, modification or waiver of this Agreement
or any instrument or document delivered pursuant
hereto.
The Seller agrees that each Purchaser shall,
to the extent provided in its participation
agreement, be entitled to the benefits of Sections
1.8 and 1.9 with respect to its participating
interest not in excess of what would be paid absent
such participation unless paid pursuant to the
Liquidity Asset Purchase Agreement.
(c) This Agreement and the rights and
obligations of the Administrator hereunder shall be
assignable, in whole or in part, by the
Administrator and its successors and assigns.
(d) Except as provided in Section 4.1(d),
neither the Seller nor the Servicer may assign its
rights or delegate its obligations hereunder or any
interest herein without the prior written consent
of the Administrator.
(e) Without limiting any other rights that
may be available under applicable law, the rights
of the Issuer may be enforced through it or by its
agents.
SECTION 5.4. Costs, Expenses and Taxes.
(a) In addition to the rights of indemnification
granted under Section 3.1 hereof, the Seller agrees
to pay on demand all costs and expenses in
connection with the preparation, execution,
delivery and administration (including periodic
auditing of Pool Receivables; provided that not
more than two such audits each calendar year
shall be covered by this Section 5.4(a); provided,
further, that the foregoing proviso shall not apply
after the occurrence of a Termination Event) of
this Agreement, the Liquidity Asset Purchase
Agreement and the other Transaction Documents, and
any amendment, modification or waiver of any of the
foregoing, including, without limitation, Attorney
Costs for the Administrator, the Issuer and their
respective Affiliates and agents with respect
thereto and with respect to advising the
Administrator, the Issuer and their respective
Affiliates and agents as to their rights and
remedies under this Agreement and the other
documents and agreements referred to above, and all
costs and expenses, if any (including Attorney
Costs), of the Administrator, the Issuer
and their respective Affiliates and agents, in
connection with the enforcement of this Agreement
and the other documents and agreements referred to
above.
(b) In addition, the Seller shall pay on
demand (i) any and all commissions of placement
agents and commercial paper dealers in respect of
commercial paper notes issued by the Issuer to fund
the purchase or maintenance of undivided interests
in respect of the Purchased Interest (and on or
prior to each date on which such commercial paper
notes are so issued the Administrator shall use
reasonable efforts to notify the Seller as to the
amount of such commissions, provided that failure
to so notify the Seller shall not limit or
otherwise affect the obligations of the Seller or
the rights of the Administrator or the Issuer) and
(ii) any and all stamp and other taxes and fees
payable in connection with the execution, delivery,
filing and recording of this Agreement or the other
documents or agreements to be delivered hereunder,
and agrees to save each Indemnified Party harmless
from and against any liabilities with respect to or
resulting from any delay in paying or omission to
pay such taxes and fees.
SECTION 5.5. No Proceedings; Limitation
on Payments.
(a) Each of the Seller, the Servicer, the
Administrator, each assignee of the Purchased
Interest or any interest therein and each Person
which enters into a commitment to purchase the
Purchased Interest or interests therein hereby
agrees that it will not institute against, or join
any other Person in instituting against, the Issuer
any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding, or other
proceeding under any federal or state bankruptcy or
similar law, for one year and one day after the
latest maturing Note is paid in full.
(b) Notwithstanding any provisions
contained in this Agreement to the contrary, the
Issuer shall not, and shall not be obligated to,
pay any amount pursuant to this Agreement unless
(i) the Issuer has excess cash flow from
operations or has received funds with respect to
such obligation which may be used to make such
payment and which funds or excess cash flow are not
required to repay the Notes when due and (ii) each
"Purchased Interest" owned by the Issuer pursuant
to any receivables purchase agreement (including
this Agreement) is less than or equal to 100%. Any
amount which the Issuer does not pay pursuant to
the operation of the preceding sentence shall not
constitute a claim against the Issuer for any such
insufficiency unless and until the conditions
described in clauses (i) and (ii) of the preceding
sentence are satisfied.
SECTION 5.6. Confidentiality. The
Seller, Servicer, Issuer and Administrator each
agrees to take normal and reasonable precautions
and exercise due care to maintain the
confidentiality of this Agreement and the other
Transaction Documents (and all drafts thereof), and
all information identified as "confidential" or
"secret" by the Seller and provided to the other
parties by the Seller under this Agreement or any
other Transaction Document, and no such Person nor
any of their respective Affiliates shall use
any such information other than in connection with
or in enforcement of this Agreement and the other
Transaction Documents, except to the extent such
information (i) was or becomes generally available
to the public other than as a result of disclosure
by such Person, or (ii) was or becomes available on
a non-confidential basis from a source other than
such Person, provided that such source is not bound
by a confidentiality agreement with respect
thereto; provided, however, that any Person may
disclose such information (A) at the request or
pursuant to any requirement of any Governmental
Authority to which such Person is subject or in
connection with an examination of such Person by
any such authority; (B) pursuant to subpoena or
other court process; (C) when required to do so in
accordance with the provisions of any applicable
requirement of law; (D) to the extent reasonably
required in connection with any litigation or
proceeding to which such Person or its Affiliates
may be party; (E) to the extent reasonably required
in connection with the exercise of any remedy
hereunder or under any other Transaction Document;
(F) to such Person's independent auditors and other
professional advisors; (G) to the Rating Agencies;
(H) to any assignee, Purchaser, or assignee or
participant of a Purchaser, actual or potential,
provided that such Person agrees in writing
to keep such information confidential to the same
extent required hereunder; and (I) as expressly
permitted under the terms of any other document or
agreement regarding confidentiality to which such
Person and any of the other parties hereto is
party.
SECTION 5.7. GOVERNING LAW AND
JURISDICTION.
(a) THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF), EXCEPT TO THE
EXTENT THAT THE PERFECTION (OR THE EFFECT OF
PERFECTION OR NON-PERFECTION) OF THE INTERESTS OF
THE ISSUER IN THE POOL RECEIVABLES AND THE OTHER
ITEMS DESCRIBED IN SECTION 1.2(d) IS GOVERNED BY
THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK.
(b) ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR OF THE UNITED
STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH
OF THE ISSUER, THE SELLER, THE SERVICER AND THE
ADMINISTRATOR CONSENTS, FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION
OF THOSE COURTS. EACH OF THE ISSUER, THE SELLER,
THE SERVICER AND THE ADMINISTRATOR IRREVOCABLY
WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW,
ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE
TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY
DOCUMENT RELATED HERETO. THE ISSUER, THE SELLER,
THE SERVICER AND THE ADMINISTRATOR EACH WAIVE
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY NEW YORK LAW.
SECTION 5.8. Execution in Counterparts.
This Agreement may be executed in any number of
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 5.9. Survival of Termination.
The provisions of Sections 1.8, 1.9, 3.1, 5.4, 5.5,
5.6, 5.7 and 5.10 shall survive any termination of
this Agreement.
SECTION 5.10. WAIVER OF JURY TRIAL. THE
ISSUER, THE SELLER, THE SERVICER AND THE
ADMINISTRATOR EACH WAIVE THEIR RESPECTIVE RIGHTS TO
A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY,
IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF
ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY
OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE
ISSUER, THE SELLER, THE SERVICER AND THE
ADMINISTRATOR EACH AGREE THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL
WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING,
EACH OF THE PARTIES HERETO FURTHER AGREES THAT ITS
RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION
HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT.
SECTION 5.11. Entire Agreement. This
Agreement embodies the entire agreement and
understanding between the Issuer, the Seller, the
Servicer and the Administrator, and supersedes all
prior or contemporaneous agreements and
understandings of such Persons, verbal or written,
relating to the subject matter hereof and thereof,
except for any prior arrangements made with respect
to the payment by the Issuer of (or any
indemnification for) any fees, costs or expenses
payable to or incurred (or to be incurred) by or on
behalf of the Seller, the Servicer and the
Administrator.
SECTION 5.12. Headings. The captions and
headings of this Agreement and in any Exhibit
hereto are for convenience of reference only and
shall not affect the interpretation hereof or
thereof.
IN WITNESS WHEREOF, the parties have caused
this Agreement to be executed by their respective
officers thereunto duly authorized, as of the date
first above written.
ILLINOIS CENTRAL RAILROAD COMPANY,
as Seller and as Servicer
By:
Name:
Title:
455 North Cityfront Plaza Drive
Chicago, Illinois 60611-5504
Attention: Mr. Douglas A. Koman
Tel. No. (312) 755-7935
Facsimile No. (312) 755-7917
GOLDEN GATE FUNDING CORPORATION
By: Bank of America National Trust and
Savings Association, as attorney-in-fact
By:
Name:
Title:
c/o Bank of America National Trust and Savings
Association Structured Finance #5419
555 California Street
San Francisco, California 94104
Attention: Mr. Omar Bolli
Tel. No. (415) 622-2482
Facsimile No. (415) 953-1515
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Administrator
By:
Name:
Title:
Structured Finance #5419
555 California Street
San Francisco, California 94104
Attention: Mr. Omar Bolli
Tel. No. (415) 622-2482
Facsimile No. (415) 953-1515
EXHIBIT I
DEFINITIONS
As used in the Agreement (including its
Exhibits), the following terms shall have the
following meanings (such meanings to be equally
applicable to both the singular and plural forms of
the terms defined). Unless otherwise indicated,
all Section, Annex and Exhibit references in this
Exhibit are to Sections of and Annexes and Exhibits
to the Agreement.
"AAR" means the Association of American
Railroads, or any entity succeeding to any of its
principal functions.
"Abstract" means the ledger maintained by
the Seller for recording Car Hire Receivables,
Freight Receivables and Switching Receivables owed
by railroad carrier Obligors, which is issued to
such Obligors at the end of each calendar month.
"Administration Account" means the special
account (account #1233918372, ABA #121000358) of
the Issuer maintained at the office of BofA at San
Francisco, California, or such other account as may
be so designated in writing by the Administrator to
the Seller and the Servicer.
"Administrator" has the meaning set forth in
the preamble to the Agreement and shall include
successors and assigns pursuant to Section 5.3.
"Adverse Claim" means a lien, security
interest or other charge or encumbrance, or any
other type of preferential arrangement, except to
the extent Interline Payables exist with respect to
Receivables, it being understood that a lien,
security interest or other charge or encumbrance,
or any other type of preferential arrangement, in
favor of the Issuer shall not constitute an Adverse
Claim.
"Affected Person" has the meaning set forth
in Section 1.8.
"Affiliate" means, as to any Person, any
other Person that, directly or indirectly, is in
control of, is controlled by or is under common
control with such Person or is a director or
officer of such Person.
"Alternate Rate" for any Fixed Period for
any Portion of Capital of the Purchased Interest
means an interest rate per annum equal to (a) 0.50%
per annum above the Eurodollar Rate for such Fixed
Period, or (b) the Base Rate for such Fixed Period;
provided, however, that in the case of
(i) any Fixed Period existing on or
after the first day on which (x) the Administrator
shall have given a notice to the Seller pursuant to
Section 1.10 (which notice shall not have
been revoked by the Administrator) or (y) the
Administrator shall have been notified by the
Issuer or a Purchaser that the introduction of or
any change in or in the interpretation of any law
or regulation makes it unlawful, or any central
bank or other Governmental Authority asserts that
it is unlawful, for the Issuer or such Purchaser to
fund any Portion of Capital of the Purchased
Interest at the Alternate Rate set forth above (and
the Issuer or such Purchaser shall not have
subsequently notified the Administrator that such
circumstances no longer exist),
(ii) any Fixed Period of one to (and
including) 13 days,
(iii) any Fixed Period if the Seller has
failed to notify the Administrator by 12:00 noon
(New York City time) on (x) the second Business Day
preceding the first day of such Fixed Period that
the Seller desires that related Portion of Capital
be funded at the CP Rate or (y) the fourth Business
Day preceding the first day of such Fixed Period
that the Seller desires that the related Portion of
Capital be funded at the Alternate Rate and based
on the Eurodollar Rate, or
(iv) any Fixed Period relating to a
Portion of Capital which is less than $1,000,000,
the "Alternate Rate" for each such Fixed Period
shall be an interest rate per annum equal to the
Base Rate in effect on the each day of such Fixed
Period. The "Alternate Rate" for any Termination
Day shall be an interest rate equal to 2% per annum
above the Base Rate in effect on such day.
"Attorney Costs" means and includes all fees
and disbursements of any law firm or other external
counsel, the allocated cost of internal legal
services and all disbursements of internal counsel.
"Average Maturity" means at any time that
period of days equal to the average maturity of the
Pool Receivables calculated by the Servicer in the
then most recent Seller Report; provided that if
the Administrator shall disagree with any such
calculation, the Administrator may recalculate such
Average Maturity, and any such recalculation shall
be conclusive and binding for all purposes absent
manifest error.
"Bankruptcy Code" means the United States
Bankruptcy Reform Act of 1978 (11 U.S.C. 101, et
seq.), as amended from time to time.
"Base Rate" means, for any day, the
fluctuating interest rate per annum as shall be in
effect from time to time, which rate shall be at
all times equal to the higher of:
(a) the rate of interest in effect
for such day as publicly announced from time to
time by BofA in San Francisco, California, as its
"reference rate." It is a rate set by BofA based
upon various factors including BofA's costs and
desired return, general economic conditions and
other factors, and is used as a reference point for
pricing some loans, which may be priced at, above,
or below such announced rate; and
(b) 0.50% per annum above the latest
Federal Funds Rate.
"BofA" means Bank of America National Trust
and Savings Association, a national banking
association.
"Bills for Collection Receivables" means any
Pool Receivables other than Car Hire Receivables,
Customer Receivables, Freight Receivables or
Switching Receivables.
"Business Day" means any day on which (i)
banks are not authorized or required to close in
New York City or San Francisco and (ii) if this
definition of "Business Day" is utilized in
connection with the Eurodollar Rate, dealings
are carried out in the London interbank market.
"Canadian Obligor" means an Obligor that is a
resident or domiciliary of Canada.
"Capital" means the amount paid to the Seller
in respect of the Purchased Interest by the Issuer
pursuant to the Agreement, or such amount divided
or combined in accordance with Section 1.7, in each
case reduced from time to time by Collections
distributed on account of such Capital pursuant to
Section 1.4(d) and increased from time to time by
reinvestments pursuant to Section 1.4(b)(ii);
provided that if such Capital shall have been
reduced by any distribution and thereafter all or a
portion of such distribution is rescinded or must
otherwise be returned for any reason, such Capital
shall be increased by the amount of such rescinded
or returned distribution, as though it had not
been made.
"Car Hire Receivables" means any Pool
Receivables representing amounts due from railroad
carrier Obligors for interline car hire services
rendered by the Seller.
"Collection Delay Factor" means 1.5, or such
other factor (not exceeding 2.0) as the
Administrator may from time to time select upon
three Business Days' notice to the Seller.
"Collections" means, with respect to any Pool
Receivable, (a) all funds which are received by the
Seller or the Servicer in payment of any amounts
owed in respect of such Receivable (including,
without limitation, purchase price, finance
charges, interest and all other charges), or
applied to amounts owed in respect of such
Receivable (including, without limitation,
insurance payments and net proceeds of the sale or
other disposition of repossessed goods or other
collateral or property of the related Obligor or
any other Person directly or indirectly liable for
the payment of such Pool Receivable and available
to be applied thereon), (b) all Collections deemed
to have been received pursuant to Section 1.4(e)
and (c) all other proceeds of such Receivable.
"Commercial Paper Account" means the account
(account #077165100, ABA #026005885) of the Issuer
maintained at the office of BankAmerica National
Trust Company at New York, New York, or such other
account as may be designated in a notice by the
Administrator to the Seller and Servicer.
"Contract" means, with respect to any
Receivable, any and all contracts, understandings,
instruments, agreements, leases, invoices, notes,
or other writings pursuant to which such Receivable
arises or which evidences such Receivable or under
which a Person becomes or is obligated to make
payment in respect of such Receivable.
"Coverage Ratio" means the ratio (expressed
as a percentage) computed as of any day by dividing
the Net Receivables Pool Balance by the sum of (a)
the aggregate outstanding Capital of the Purchased
Interest and (b) accrued and unpaid Discount in
respect thereof.
"CP Rate" for any Fixed Period for any
Portion of Capital of the Purchased Interest means,
to the extent the Issuer funds such Portion of
Capital for such Fixed Period by issuing commercial
paper, the rate (or if more than one rate, the
weighted average of the rates) at which commercial
paper notes of the Issuer having a term equal to
such Fixed Period and to be issued to fund such
Portion of Capital may be sold by any placement
agent or commercial paper dealer selected by the
Administrator on behalf of the Issuer, as agreed
between each such agent or dealer and the
Administrator and notified by the Administrator to
the Servicer (and if the Seller is not the
Servicer, to the Seller as well); provided that if
the rate (or rates) as agreed between any such
agent or dealer and the Administrator with regard
to any Fixed Period for such Portion of Capital is
a discount rate (or rates), then such rate shall be
the rate (or if more than one rate, the weighted
average of the rates) resulting from converting
such discount rate (or rates) to an
interest-bearing equivalent rate per annum.
"Credit and Collection Policy" means those
receivables credit and collection policies and
practices of the Seller in effect on the date of
the Agreement and described in Schedule I to the
Agreement, as modified in compliance with the
Agreement.
"Credit Bank" means the Credit Bank under
(and as defined in) the Reimbursement and Credit
Agreement dated as of September 1, 1993 between the
Issuer and Bank of America National Trust and
Savings Association, as amended from time to time.
"Customer Receivables" means any Pool
Receivables representing amounts due from
non-railroad carrier Obligors for non-interline
freight transportation and related incidental
services rendered by the Seller.
"Debt" means (i) indebtedness for borrowed
money, (ii) obligations evidenced by bonds,
debentures, notes or other similar instruments,
(iii) obligations to pay the deferred purchase
price of property or services, (iv) obligations as
lessee under leases which shall have been or should
be, in accordance with generally accepted
accounting principles, recorded as capital leases,
and (v) obligations under direct or indirect
guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise
acquire, or otherwise to assure a creditor against
loss in respect of, indebtedness or obligations of
others of kinds referred to in clauses (i) through
(iv) above.
"Default Ratio" means the ratio (expressed as
a percentage and rounded upwards to the nearest
1/100 of 1%) computed as of the last day of each
calendar month by dividing (i) the aggregate
Outstanding Balance of all Pool Receivables that
were Defaulted Receivables on such day or that
would have been Defaulted Receivables on such day
had they not been written off the books of
the Seller during such month by (ii) the aggregate
Outstanding Balance of all Pool Receivables on such
day.
"Defaulted Receivable" means a Receivable:
(i) as to which any payment, or part
thereof, for the type of Receivable set forth
below, remains unpaid for at least the number of
days from the original customer billing date for
such payment or, as applicable, from the date the
Abstract is sent to the applicable railroad
carrier Obligor, set forth below for the type of
Receivable:
Type of Receivable Number of Days
Bills for Collection 121
Receivables
Car Hire Receivables 91
Customer Receivables 91
Freight Receivables 61
Switching Receivables 61;
(ii) as to which the Obligor thereof or
any other Person obligated thereon or owning any
Related Security in respect thereof has taken any
action, or suffered any event to occur, of the type
described in paragraph (g) of Exhibit V (as if such
paragraph (g) referred to such Obligor or other
Person); or
(iii) which, consistent with the Credit
and Collection Policy, would be written off the
Seller's books as uncollectible.
"Default-to-Revenue Amount of Bills for
Collection Receivables" means an amount calculated
as of each Month End Date equal to the product of
(a) the highest Three Month Average Default-to-Revenue
Ratio for Bills for Collection Receivables during the
twelve month period ending on such Month End Date,
provided, however, that the earliest month included in
calculations pursuant to this clause (a) shall be
December 1993, (b) two and (c) the amount of Bills for
Collection Receivables booked by the Seller during the
four months ending on such Month End Date.
"Default-to-Revenue Amount of Car Hire
Receivables" means an amount calculated as of each
Month End Date equal to the product of (a) the
highest Three Month Average Default-to-Revenue
Ratio for Car Hire Receivables during the twelve
month period ending on such Month End Date,
provided, however, that the earliest month included
in calculations pursuant to this clause (a) shall
be December 1993, (b) two and (c) the amount of Car
Hire Receivables booked by the Seller during the
three months ending on such Month End Date.
"Default-to-Revenue Amount of Customer
Receivables" means an amount calculated as of each
Month End Date equal to the product of (a) the
highest Three Month Average Default-to-Revenue
Ratio for Customer Receivables during the twelve
month period ending on such Month End Date,
provided, however, that the earliest month included
in calculations pursuant to this clause (a) shall
be December 1993, (b) two and (c) the amount of
Customer Receivables booked by the Seller during
the three months ending on such Month End Date.
"Default-to-Revenue Amount of Freight
Receivables" means an amount calculated as of each
Month End Date equal to the product of (a) the
highest Three Month Average Default-to-Revenue
Ratio for Freight Receivables during the
twelve month period ending on such Month End Date,
provided, however, that the earliest month included
in calculations pursuant to this clause (a) shall
be December 1993, (b) two and (c) the amount of
Freight Receivables booked by the Seller during the
month ending on such Month End Date.
"Default-to-Revenue Amount of Switching
Receivables" means an amount calculated as of each
Month End Date equal to the product of (a) the
highest Three Month Average Default-to-Revenue
Ratio for Switching Receivables during the twelve
month period ending on such Month End Date,
provided, however, that the earliest month included
in calculations pursuant to this clause (a) shall
be December 1993, (b) two and (c) the amount of
Switching Receivables booked by the Seller during
the month ending on such Month End Date.
"Default-to-Revenue Percentage" means the
ratio (expressed as a percentage and rounded upward
to the nearest 1/100th of 1%) calculated as of
each Month End Date by dividing (a) the sum, as of
such Month End Date, of the Default-to-Revenue
Amount of Bills for Collection Receivables, the
Default-to-Revenue Amount of Car Hire Receivables,
the Default-to-Revenue Amount of Customer
Receivables, the Default-to-Revenue Amount of
Freight Receivables, and the Default-to-Revenue
Amount of Switching Receivables by (b) the
Outstanding Balance of the Pool Receivables as of
such Month End Date.
"Default-to-Revenue Ratio for Bills for
Collection Receivables" means the ratio (expressed
as a percentage and rounded upward to the nearest
1/100th of 1%) computed as of each Month End Date
by dividing (i) the sum of (a) the amount of Bills
for Collection Receivables which became Defaulted
Receivables during the month ending on such Month
End Date and (b) the amount of Bills for
Collection Receivables written off during the month
ending on such Month End Date which at the time of
writeoff had not yet become Defaulted Receivables
by (ii) the amount of Bills for Collection
Receivables booked by the Seller during the month
which occurred five months prior to the month
ending on such Month End Date.
"Default-to-Revenue Ratio for Car Hire
Receivables" means the ratio (expressed as a
percentage and rounded upward to the nearest
1/100th of 1%) computed as of each Month End Date
by dividing (i) the sum of (a) the amount of
Car Hire Receivables which became Defaulted
Receivables during the month ending on such Month
End Date and (b) the amount of Car Hire Receivables
written off during the month ending on such Month
End Date which at the time of writeoff had not yet
become Defaulted Receivables by (ii) the amount of
Car Hire Receivables booked by the Seller during
the month which occurred four months prior to the
month ending on such Month End Date.
"Default-to-Revenue Ratio for Customer
Receivables" means the ratio (expressed as a
percentage and rounded upward to the nearest
1/100th of 1%) computed as of each Month End Date
by dividing (i) the sum of (a) the amount of
Customer Receivables which became Defaulted
Receivables during the month ending on such Month
End Date and (b) the amount of Customer Receivables
written off during the month ending on such Month
End Date which at the time of writeoff had not yet
become Defaulted Receivables by (ii) the amount of
Customer Receivables booked by the Seller during
the month which occurred four months prior to the
month ending on such Month End Date.
"Default-to-Revenue Ratio for Freight
Receivables" means the ratio (expressed as a
percentage and rounded upward to the nearest
1/100th of 1%) computed as of each Month End Date
by dividing (i) the sum of (a) the amount of
Freight Receivables which became Defaulted
Receivables during the month ending on such Month
End Date and (b) the amount of Freight Receivables
written off during the month ending on such Month
End Date which at the time of writeoff had not yet
become Defaulted Receivables by (ii) the amount of
Freight Receivables booked by the Seller during the
month which occurred two months prior to the month
ending on such Month End Date.
"Default-to-Revenue Ratio for Switching
Receivables" means the ratio (expressed as a
percentage and rounded upward to the nearest
1/100th of 1%) computed as of each Month End Date
by dividing (i) the sum of (a) the amount of
Switching Receivables which became Defaulted
Receivables during the month ending on such Month
End Date and (b) the amount of Switching
Receivables written off during the month ending on
such Month End Date which at the time of writeoff
had not yet become Defaulted Receivables by (ii)
the amount of Switching Receivables booked by the
Seller during the month which occurred two months
prior to the month ending on such Month End Date.
"Delinquency Ratio" means the ratio
(expressed as a percentage and rounded upwards to
the nearest 1/100 of l%) computed as of the last
day of each calendar month by dividing (i) the
aggregate Outstanding Balance of all Pool
Receivables that were Delinquent Receivables on
such day by (ii) the aggregate Outstanding Balance
of all Pool Receivables on such day.
"Delinquent Receivable" means a Receivable
which is not a Defaulted Receivable (unless such
Receivable is a Freight Receivable or a Switching
Receivable) and:
(i) as to which any payment, or part
thereof, for the type of Receivable set forth
below, remains unpaid for at least the number of
days from the original customer billing date for
such payment or, as applicable, from the date the
Abstract is sent to the applicable railroad
carrier Obligor, set forth below for the type of
Receivable:
Type of Receivable Number of Days
Bills for Collection 61
Receivables
Car Hire Receivables 61
Customer Receivables 31
Freight Receivables 31
Switching Receivables 31; or
(ii) which, consistent with the Credit
and Collection Policy, would be classified as
delinquent by the Seller.
"Designated Obligor" means an Obligor, so
designated in writing as such by the Administrator
to the Seller, from time to time, it being
understood that from time to time the Administrator
may revoke its designation of one or more Obligors
as Designated Obligors by written notice to the
Seller.
"Discount" means:
(i) for the Portion of Capital of the
Purchased Interest for any Fixed Period to the
extent the Issuer will be funding such Portion of
Capital on the first day of such Fixed Period
through the issuance of commercial paper,
ED
CPR x C x + TF; and
360
(ii) for the Portion of Capital of the
Purchased Interest for any Fixed Period to the
extent the Issuer will not be funding such Portion
of Capital on the first day of such Fixed Period
through the issuance of commercial paper,
ED
AR x C x + TF
DAYS
where:
AR = the Alternate Rate for the Portion
of Capital of the Purchased
Interest for such Fixed Period
C = the Portion of Capital of the
Purchased Interest during such
Fixed Period
CPR = the CP Rate for the Portion of
Capital of the Purchased Interest
for such Fixed Period
ED = the actual number of days
during such Fixed Period
TF = the Termination Fee, if any, for
the Portion of Capital of the
Purchased Interest for such Fixed
Period
DAYS = 365 or 366 (depending
on the number of days in the applicable
year), if the Alternate Rate is based on the Base
Rate and the Base Rate is determined by reference
to BofA's "reference rate"; or 360, if the
Alternate Rate is based on the Eurodollar Rate or
is based on the Base Rate and the Base Rate is
determined by reference to the Federal Funds Rate;
provided that no provision of the Agreement shall
require the payment or permit the collection of
Discount in excess of the maximum permitted by
applicable law; provided, further, that, without
limiting the generality of any provision of the
Agreement, the Seller shall not request that a
Portion of Capital be funded through the issuance
of commercial paper unless it is fully able to
comply with its obligations pursuant to Section
5.4(b) in connection therewith; and provided,
further, however, that Discount for the Portion of
Capital of the Purchased Interest shall not be
considered paid by any distribution to the
extent that at any time all or a portion of such
distribution is rescinded or must otherwise be
returned for any reason.
"Discount Reserve" for the Purchased Interest
at any time means the sum of (i) the Termination
Discount at such time for the Purchased Interest,
and (ii) the then accrued and unpaid Discount for
the Purchased Interest.
"Domestic Obligor" means an Obligor that is a
resident or domiciliary of the United States.
"Eligible Receivables" means, at any time,
Receivables:
(i) the Obligor of which is (a) with
respect to Freight Receivables, a Designated
Obligor, and with respect to any other
Receivables, a Domestic Obligor, Canadian Obligor
or Government Obligor (subject in all cases to the
concentration percentages for such Obligors
set forth herein), (b) not an Affiliate of the
Seller, and (c) not subject to any action of the
type described in paragraph (g) of Exhibit V;
(ii) which are denominated and payable
only in U.S. dollars in the United States;
(iii) which have a stated maturity and
which stated maturity is not more than 120 days
after the date on which such Receivable was
generated;
(iv) which arise in the ordinary course
of the Seller's business;
(v) which arise under a Contract which
is in full force and effect and which is a legal,
valid and binding obligation of the related
Obligor, enforceable against such Obligor in
accordance with its terms;
(vi) which conform with all applicable
laws, rulings and regulations;
(vii) (A) which are not the subject of
any asserted dispute, offset, hold-back defense,
Adverse Claim or other claim or counterclaim
(it being understood that if a dispute, offset,
hold-back defense, Adverse Claim or other claim or
counterclaim affects less than all of the
Outstanding Balance of a Receivable which is in all
other respects an Eligible Receivable, then only
the affected portion shall not be counted as an
Eligible Receivable) except to the extent that
Interline Payables exist with respect to
Receivables, and (B) which do not arise from the
sale of inventory which is subject to any Adverse
Claim;
(viii) which comply with the requirements
of the Credit and Collection Policy and the payment
and other terms of the Contract related to the
Receivable are consistent with customary terms for
the Seller's industry and type of Receivables;
(ix) which arise from the completion of
the sale and delivery of goods or services
performed, and must not represent an invoice in
advance of such completion and, if a Car Hire
Receivable, Freight Receivable or Switching
Receivable, the Seller has sent all appropriate
documentation to the applicable railroad carrier
Obligor;
(x) which are not subject to any
contingent performance requirements of the Seller
unless such requirements are guaranteed or insured
by third parties acceptable to the Administrator;
(xi) which do not require the consent
of the related Obligor to be sold or assigned;
(xii) which have not been modified or
restructured since their creation, except as
permitted pursuant to Section 4.2 of the Agreement;
(xiii) which the Seller has good and
marketable title and which are freely assignable by
the Seller;
(xiv) for which the Issuer shall have a
valid and enforceable undivided percentage
ownership interest, to the extent of the Purchased
Interest, and a valid and enforceable first
priority perfected security interest therein and in
the Related Security and Collections with respect
thereto, in each case free and clear of any Adverse
Claim;
(xv) which constitute accounts as
defined in the UCC, and which are not evidenced by
instruments or chattel paper;
(xvi) which are not Defaulted
Receivables and, in the case of Freight Receivables
or Switching Receivables, are not Delinquent
Receivables;
(xvii) for which the Seller has
established no offset arrangements with the related
Obligor, except to the extent that Interline
Payables exist with respect to Receivables;
(xviii) for which the Outstanding Balance
of Defaulted Receivables of the related Obligor do
not exceed 50% the Outstanding Balance of all such
Obligor's Receivables;
(xix) a purchase of which with the
proceeds of the Notes would constitute a "current
transaction" within the meaning of Section 3(a)(3)
of the Securities Act of 1933, as amended;
(xx) which is an account receivable
representing all or part of the sales price of
merchandise, insurance or services within the
meaning of Section 3(c)(5)(A) of the Investment
Company Act of 1940, as amended;
(xxi) the Obligor of which has not, as a
result of such Obligor's financial condition or
creditworthiness, been required by the Seller at
any time during the immediately preceding 12 months
to pay for services rendered by the Seller on a
cash basis;
(xxii) the Obligor of which has not had
Receivables having Outstanding Balances exceeding
50% of the aggregate Outstanding Balance of all
Pool Receivables of such Obligor referred to the
Seller's collection department, transferred to the
Seller's "account 706-800", "account 745-0050", or
an equivalent account of the Seller, characterized
as doubtful by the Seller, or which have been
reserved against by the Seller, all in accordance
with the Credit Collection and Policy; and
(xxiii) as to which the Administrator has
notified the Seller (and has not rescinded such
notification) that such Receivable shall not (or
that all Receivables of which the applicable
Obligor is the Obligor shall not) be considered
Eligible Receivables due to the applicable
Obligor's financial condition or prospects or the
internal credit limitations of the Purchasers with
respect to such Obligor.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended from time to time,
and any successor statute of similar import,
together with the regulations thereunder, in each
case as in effect from time to time. References to
sections of ERISA also refer to any successor
sections.
"Eurodollar Rate" means, for any Fixed
Period, an interest rate per annum (rounded upward
to the nearest 1/16th of l%) determined pursuant to
the following formula:
Eurodollar Rate = LIBOR
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means,
for any Fixed Period, the maximum reserve
percentage (expressed as a decimal, rounded upward
to the nearest 1/100th of 1%) determined under
regulations issued from time to time by the Federal
Reserve Board for determining the maximum reserve
requirement (including any emergency, supplemental
or other marginal reserve requirement) with respect
to Eurocurrency funding (currently referred to as
"Eurocurrency liabilities") having a term
comparable to such Fixed Period; and
"LIBOR" means the rate of interest per
annum determined by the Liquidity Agent to be the
arithmetic mean (rounded upward to the nearest
1/16th of 1%) of the rates of interest per annum
notified to the Liquidity Agent by the Reference
Bank as the rates of interest at which dollar
deposits in the approximate amount of the Capital
associated with such Fixed Period would be offered
to major banks in the London interbank market at
their request at or about 11:00 a.m. (London time)
on the second Business Day prior to the
commencement of such Fixed Period.
"Facility Termination Date" means the
earliest to occur of (a) March 29, 1997, (b) the
Purchase Termination Date, as defined in the
Liquidity Asset Purchase Agreement, which on the
date of the Agreement is March 28, 1995, or such
later date designated as the Purchase Termination
Date from time to time pursuant to the Liquidity
Asset Purchase Agreement (it being understood that
the Administrator shall notify the Seller of the
designation of such later date, provided that
failure to provide such notice shall not limit or
otherwise affect the obligations of the Seller or
the rights of the Administrator, the Issuer, or any
other party to the Liquidity Asset Purchase
Agreement), (c) the date determined pursuant to
Section 2.2, and (d) the date the Purchase Limit
reduces to zero pursuant to Section 1.1(b).
"Federal Funds Rate" means, for any period,
the per annum rate set forth in the weekly
statistical release designated as H.15(5l9), 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
publication, published by the Federal
Reserve Bank of New York (including any such
successor, the "Composite 3:30 p.m. Quotation") 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 Administrator
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 the Administrator.
"Federal Reserve Board" means the Board of
Governors of the Federal Reserve System, or any
entity succeeding to any of its principal
functions.
"Fixed Period" means with respect to each
Portion of Capital:
(a) initially the period commencing on the
date of a purchase pursuant to Section 1.2 and
ending such number of days as the Seller shall
select, subject to the approval of the
Administrator pursuant to Section 1.2 in the
case of a purchase to be funded at the CP Rate; and
(b) thereafter each period commencing on
the last day of the immediately preceding Fixed
Period for any Portion of Capital of the Purchased
Interest and ending such number of days as the
Seller shall select, subject to the approval of the
Administrator, on notice by the Seller received by
the Administrator (including notice by telephone,
confirmed in writing) not later than 11:00 a.m.
(New York City time) on such last day, except that
if the Administrator shall not have received such
notice or approved such period on or before 11:00
a.m. (New York City time) on such last day, such
period shall be one day; provided that
(i) any Fixed Period in respect of
which Discount is computed by reference to the
Alternate Rate shall be a period from one to and
including 13 days, or a period of one, two or three
months, as the Seller may select as provided above;
(ii) any Fixed Period (other than of
one day) 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 Discount in respect of such Fixed Period is
computed by reference to the Eurodollar Rate, 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;
(iii) in the case of any Fixed Period of
one day, (A) if such Fixed Period is the initial
Fixed Period for a purchase pursuant to Section
1.2, such Fixed Period shall be the day of purchase
of the Purchased Interest; (B) any subsequently
occurring Fixed Period which is one day shall, if
the immediately preceding Fixed Period is more than
one day, be the last day of such immediately
preceding Fixed Period, and, if the immediately
preceding Fixed Period is one day, be the day next
following such immediately preceding Fixed Period;
and (C) if such Fixed Period occurs on a day
immediately preceding a day which is not a Business
Day, such Fixed Period shall be extended to the
next succeeding Business Day; and
(iv) in the case of any Fixed Period
for any Portion of Capital of the Purchased
Interest which commences before the Termination
Date and would otherwise end on a date occurring
after the Termination Date, such Fixed Period shall
end on such Termination Date and the duration of
each Fixed Period which commences on or after the
Termination Date shall be of such duration as shall
be selected by the Administrator; and
(c) notwithstanding anything to the contrary
herein, no Fixed Period in respect of which
Discount is computed at the CP Rate shall be a
period of more than 90 days.
"Freight Receivables" means any Pool
Receivables which have been booked by the Seller
and which represent estimates of amounts due from
Designated Obligors for interline freight
transportation services rendered by the Seller.
"Government Obligor" means an Obligor that is
a State or an agency, department, instrumentality
or municipality thereof.
"Governmental Authority" means any nation or
government, any state or other political
subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any body
or entity exercising executive, legislative,
judicial, regulatory or administrative functions of
or pertaining to government, including without
limitation the ICC or any court, and any Person
owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.
"ICC" means the Interstate Commerce
Commission, or any Person succeeding to any of its
principal functions.
"including" (and with correlative meaning
"include" and "includes") means including without
limiting the generality of any description
preceding such term.
"Indemnified Amounts" has the meaning set
forth in Section 3.1.
"Insolvency Proceeding" means (a) any case,
action or proceeding before any court or other
Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidations,
receivership, dissolution, winding-up or relief of
debtors, or (b) any general assignment for the
benefit of creditors, composition, marshalling of
assets for creditors, or other, similar arrangement
in respect of its creditors generally or any
substantial portion of its creditors; in each case
(a) and (b) undertaken under U.S. Federal, state or
foreign law, including the Bankruptcy Code.
"Interline Payables" means, as to each
interline carriage of freight for a shipper or
consignee or agent therefor by the Seller and
another railroad carrier or other service performed
for a shipper or consignee or agent therefor by the
Seller and/or another railroad carrier in relation
to such interline carriage of freight (which
includes, without limitation, refrigeration,
loading, unloading, diversion, transit, switching,
demurrage and weighing charges), any payment
received and held by the Seller in respect of that
part or division of any gross amount payable by
such shipper or consignee or agent therefor to the
Seller to which such other railroad carrier is or
will be entitled, pursuant to applicable tariffs
(including without limitation tariffs for joint
rates and routes and the applicable railroad
carriers' respective divisions), contracts
(including without limitation transportation
service agreements between railroad carriers and
shippers and divisions agreements between railroad
carriers), rules and regulations of the ICC, rules
of the AAR and the Credit and Collection Policy, as
consideration for that part of the interline
carriage of freight or other service performed by
such other railroad carrier, which part or division
the Seller is required to collect and turn over
to such other railroad carrier in accordance with
the rules and regulations of the ICC, rules of the
AAR and the Credit and Collection Policy.
"Investment Grade" means, with respect to any
Person's long-term public senior debt securities, a
rating of at least BBB- by Standard & Poor's
Corporation or Baa3 by Moody's Investors Service,
Inc.; provided, that if such Person's long-term
public senior debt securities are rated by more
than one of the foregoing rating agencies, then
each such rating agency which rates such
securities shall have given them a rating at least
equal to the categories specified above; and
provided further, that if such Person does not have
rated long-term public senior debt securities
outstanding, the Administrator has determined, in
its sole discretion, that if such Person did have
such securities, that they would receive at least
such a rating.
"Issuer" has the meaning set forth in the
preamble to the Agreement and shall include any
successor or assign permitted by the Agreement.
"Liquidity Agent" means BofA in its capacity
as Liquidity Agent pursuant to the Liquidity Asset
Purchase Agreement.
"Liquidity Asset Purchase Agreement" means
that certain Liquidity Asset Purchase Agreement
dated as of March 29, 1994 among Bank of America
National Trust and Savings Association and the
other Purchasers from time to time party thereto,
the Liquidity Agent, the Issuer and Bank of America
National Trust and Savings Association, as
Administrator, as amended from time to time.
"Lock-Box Account" means an account which is
maintained at a bank or other financial institution
for the purpose of receiving Collections.
"Lock-Box Agreement" means an agreement, in
substantially the form of Annex A, between the
Seller and each Lock-Box Bank.
"Lock-Box Bank" means any of the banks or
other financial institutions holding one or more
Lock-Box Accounts.
"Loss Percentage" means, on any date, the
greatest of (i) the Default-to-Revenue Percentage
on the Month End Date immediately preceding such
date, (ii) three times the average
Loss-to-Liquidation Ratio for the 12 month
period ending on the Month End Date immediately
preceding such date, (iii) three times the highest
Normal Concentration Percentage and (iv) 12%.
"Loss Reserve" means, for the Purchased
Interest, on any date, an amount equal to
LP x (C + DR)
where:
LP = the Loss Percentage for the
Purchased Interest on such date.
C = the Capital of the Purchased
Interest at the close of business of the Servicer
on such date.
DR = the Discount Reserve for the
Purchased Interest on such date.
"Loss-to-Liquidation Ratio" means the ratio
(expressed as a percentage and rounded upward to
the nearest 1/100th of 1%) computed as of the last
day of each calendar month by dividing (i) the
aggregate Outstanding Balance of all Pool
Receivables written off by the Seller, or which
should have been written off by the Seller in
accordance with the Credit and Collection Policy,
during the calendar month period ending on such
last day by (ii) the aggregate amount of
Collections of Pool Receivables actually received
during such period.
"Month End Date" means the last day of a
calendar month.
"Net Receivables Pool Balance" means at any
time the Outstanding Balance of Eligible
Receivables then in the Receivables Pool reduced by
the sum of (i) the Outstanding Balance of such
Eligible Receivables that have become Defaulted
Receivables, (ii) the amount of Interline Payables
at such time (which, in the case of Freight
Receivables, are determined on a net basis with
respect to each individual Obligor thereof instead
of with respect to the aggregate Outstanding
Balance of Eligible Receivables), (iii) the
aggregate amount by which the Outstanding Balance
of Eligible Receivables (other than Defaulted
Receivables) of each Obligor then in the
Receivables Pool exceeds the product of (A) the
Normal Concentration Percentage for such Obligor
(or Special Concentration Percentage if such
Obligor is a Special Obligor) multiplied by (B) the
Outstanding Balance of the Eligible Receivables
then in the Receivables Pool, (iv) the excess, if
any, of (A) the Outstanding Balance of Freight
Receivables over (B) $5,000,000, and (v) the
aggregate amount by which the Outstanding
Balance of Eligible Receivables (other than
Defaulted Receivables) of the following classes of
Obligors then in the Receivables Pool exceeds the
product of (A) the applicable concentration
percentage for such class of Obligors set
forth below multiplied by (B) the Outstanding
Balance of the Eligible Receivables then in the
Receivables Pool:
Class of Obligor Concentration Percentage
All Canadian Obligors 3%
All Canadian and Government Obligors 6%.
"Normal Concentration Percentage" means (a)
3% for any Obligor rated Investment Grade and (b)
1.5% for any Obligor not rated Investment Grade.
"Notes" has the meaning set forth in the
Liquidity Asset Purchase Agreement.
"Obligor" means, with respect to any
Receivable, the Person obligated to make payments
pursuant to the Contract relating to such
Receivable.
"Outstanding Balance" of any Receivable at
any time means the then outstanding principal
balance thereof.
"PBGC" means the Pension Benefit Guaranty
Corporation and any entity succeeding to any or all
of its functions under ERISA.
"Pension Plan" means a "pension plan", as
such term is defined in section 3(2) of ERISA,
which is subject to title IV of ERISA (other than a
multiemployer plan as defined in section 4001(a)(3)
of ERISA), and to which the Seller or any
corporation, trade or business that is, along with
the Seller, a member of a controlled group of
corporations or a controlled group of trades or
businesses, as described in sections 414(b) and
414(c), respectively, of the Internal Revenue Code
of 1986, as amended or section 4001 of ERISA may
have any liability, including any liability by
reason of having been a substantial employer within
the meaning of section 4063 of ERISA at any time
during the preceding five years, or by reason of
being deemed to be a contributing sponsor under
section 4069 of ERISA.
"Person" means an individual, partnership,
corporation (including a business trust), joint
stock company, trust, unincorporated association,
joint venture or other entity, or a government or
any political subdivision or agency thereof.
"Pool Receivable" means a Receivable in the
Receivables Pool.
"Portion of Capital" has the meaning set
forth in Section 1.7. In addition, at any time
when the Capital of the Purchased Interest is not
divided into two or more portions, "Portion of
Capital" means 100% of the Capital of the Purchased
Interest.
"Purchase Limit" means the lesser of (i)
$50,000,000, as such amount may be reduced pursuant
to Section 1.1(b), and (ii) the aggregate of the
Maximum Liquidity Purchase of the Purchasers under
the Liquidity Asset Purchase Agreement. References
to the unused portion of the Purchase Limit shall
mean, at any time, the Purchase Limit minus (i) the
then outstanding Capital of the Purchased Interest
under the Agreement and (ii) the aggregate of the
Discount payable during the existing Fixed Periods
(for the entirety of such Fixed Periods) in respect
of the related Portions of Capital.
"Purchased Interest" means, at any time, the
undivided percentage ownership interest in (i) each
and every Pool Receivable now existing or hereafter
arising, other than any Pool Receivable that arises
on or after the Facility Termination Date, (ii) all
Related Security with respect to such Pool
Receivables, and (iii) all Collections with respect
to, and other proceeds of, such Pool Receivables
and Related Security. Such undivided percentage
interest shall be computed as
C + DR + LR + SFR
NRB
where:
C = the Capital of the Purchased
Interest at the time of computation.
DR = the Discount Reserve of the
Purchased Interest at the time of
computation.
LR = the Loss Reserve of the Purchased
Interest at the time of computation.
SFR = the Servicing Fee Reserve of the
Purchased Interest at the time of
computation.
NRB = the Net Receivables Pool Balance
at the time of computation.
The Purchased Interest shall be determined from
time to time pursuant to the provisions of Section
1.3.
"Purchaser" has the meaning set forth in
Section 5.3(b).
"Rate Variance Factor" means 1.1 (which
factor reflects the potential variance in selected
interest rates over a period of time designated by
the Administrator, as computed by the Servicer each
month and set forth in the Seller Report in
accordance with the provisions thereof); provided
that the factors used in computing the "Rate
Variance Factor" may be changed from time to time
upon at least five days' prior notice to the
Servicer.
"Rating Agency" means, collectively, Duff &
Phelps Credit Rating Co., Fitch Investors Service,
Inc., Moody's Investors Service, Inc. and Standard
& Poor's Ratings Group, a division of McGraw-Hill,
Inc., and their respective successors in interest.
"Receivable" means, as to each carriage of
freight by the Seller or other service performed
for a shipper or consignee or agent thereof by the
Seller in relation to such carriage of freight
(which includes, without limitation, refrigeration,
loading, unloading, diversion, transit, switching,
demurrage and weighing charges), the right of the
Seller to receive that part or division of any
gross amount payable by a shipper or consignee or
agent thereof, whether constituting an account,
chattel paper, instrument or general intangible,
and whether payable to the Seller or to another
railroad carrier as trustee or otherwise for the
benefit of the Seller, to which the Seller is or
will be entitled pursuant to applicable tariffs
(including without limitation tariffs for joint
rates and routes and the applicable railroad
carriers' respective divisions), contracts
(including without limitation transportation
service agreements for shippers and divisions
agreements between railroad carriers), rules and
regulations of the ICC, rules of the AAR or the
Credit and Collection Policy, all as in effect from
time to time (without taking into account any
offset for Interline Payables) in respect of such
carriage or other service, a Receivable being
deemed to arise hereunder concurrently with the
initiation by the Seller of its carriage or other
service and without regard to the issuance
or absence thereof of any statement, invoice or
waybill by the Seller or any other railroad carrier
in respect thereof, together with the right to
payment of any interest or finance charges and
other obligations with respect thereto. Amounts
payable and other obligations arising from any one
carriage of freight or other services performed,
including, without limitation, amounts payable and
other obligations represented by an individual
invoice or agreement, shall constitute a Receivable
separate from a Receivable consisting of the
amounts payable and other obligations arising from
any other carriage of freight or other services
performed.
"Receivables Pool" means at any time all of
the then outstanding Receivables.
"Reference Bank" means BofA.
"Related Security" means with respect to any
Receivable:
(i) all of the Seller's interest, if
any, in any goods or other property the carriage or
hire or other services in respect of which gave
rise to such Receivable;
(ii) all other security interests or
liens and property subject thereto from time to
time purporting to secure payment of such
Receivable, whether pursuant to the Contract
related to such Receivable or otherwise, together
with all UCC financing statements signed by an
Obligor relating thereto; and
(iii) all guaranties, indemnities,
insurance and other agreements (including the
related Contract) or arrangements of whatever
character from time to time supporting or securing
payment of such Receivable or otherwise relating to
such Receivable whether pursuant to the Contract
related to such Receivable or otherwise.
"Relevant Rating Agencies" means,
collectively, each of the Rating Agencies then
rating the Notes at the request of the Issuer.
"Seller" shall have the meaning set forth in
the preamble to the Agreement and shall include any
successors permitted by Section 5.3(d).
"Seller Report" means a report, in
substantially the form of Annex B, furnished by the
Servicer to the Administrator pursuant to the
Agreement and the Exhibits and Annexes thereto.
"Servicer" has the meaning set forth in the
preamble to the Agreement and, upon designation of
any successor Servicer in accordance with Section
4.1, shall mean such successor Servicer.
"Servicing Fee" shall mean the fee referred
to in Section 4.6.
"Servicing Fee Reserve" for the Purchased
Interest at any time means the sum of (i) the
unpaid Servicing Fee relating to the Purchased
Interest accrued to such time, plus (ii) an amount
equal to (a) the Capital of the Purchased Interest
at the time of computation multiplied by (b) the
product of (x) the percentage per annum at which
the Servicing Fee is accruing on such date and
(y) a fraction having the product of the Average
Maturity and the Collection Delay Factor (each as
in effect at such date) as its numerator and 360 as
its denominator.
"Settlement Period" for the Purchased
Interest means each period commencing on the first
day and ending on the last day of each Fixed Period
for the Purchased Interest and, on and after the
Termination Date for the Purchased Interest, such
period (including, without limitation, a period of
one day) as shall be selected from time to time by
the Administrator or, in the absence of any such
selection, each period of 30 days from the last day
of the immediately preceding Settlement Period.
"Solvent" means, as to any Person at any
time, that (a) the fair value of the property of
such Person is greater than the amount of such
Person's liabilities (including disputed,
contingent and unliquidated liabilities) as
such value is established and liabilities evaluated
for purposes of Section 101(31) of the Bankruptcy
Code and, in the alternative, for purposes of the
Illinois Uniform Fraudulent Transfer Act; (b) the
present fair saleable value of the property of such
Person is not less than the amount that will be
required to pay the probable liability of such
Person on its debts as they become absolute and
matured; (c) such Person is able to realize upon
its property and pay its debts and other
liabilities (including disputed, contingent and
unliquidated liabilities) as they mature in the
normal course of business; (d) such Person does not
intend to, and does not believe that it will, incur
debts or liabilities beyond such Person's ability
to pay as such debts and liabilities mature; and
(e) such Person is not engaged in business or
a transaction, and is not about to engage in
business or a transaction, for which such Person's
property would constitute unreasonably small
capital.
"Special Concentration Percentage" means a
concentration percentage, so designated in writing
as such by the Administrator to the Seller, from
time to time, with respect to an Obligor, it being
understood that the Administrator may change any
such designation from time to time (with the prior
approval of the Relevant Rating Agencies) by
written notice to the Seller.
"Special Obligor" means an Obligor, so
designated in writing as such by the Administrator
to the Seller (with the prior approval of the
Relevant Rating Agencies), from time to time, and
with respect to which the Administrator has
designated a Special Concentration Percentage, it
being understood that the Administrator may change
any such designation from time to time (with the
prior approval of the Relevant Rating Agencies) by
written notice to the Seller.
"Switching Receivables" means any Pool
Receivables representing amounts due from railroad
carrier Obligors for interline switching services
rendered by the Seller.
"Termination Date" for the Purchased Interest
means the earlier of (i) the Business Day which the
Seller so designates by notice to the Administrator
at least one Business Day in advance and (ii) the
Facility Termination Date.
"Termination Day" means, for the Purchased
Interest, (i) each day during a Settlement Period
for the Purchased Interest on which the
conditions set forth in Section 2 of Exhibit II are
not satisfied, and (ii) each day which occurs on or
after the Termination Date.
"Termination Discount" means, for the
Purchased Interest on any date, an amount equal to
the Rate Variance Factor on such date multiplied by
the product of (i) the Capital of the Purchased
Interest on such date and (ii) the product of (a)
the Eurodollar Rate plus 0.50% per annum for the
Purchased Interest for a 30-day Fixed Period deemed
to commence on such date and (b) a fraction having
as its numerator the product of the Average
Maturity and the Collection Delay Factor (each as
in effect at such date) and 360 as its denominator.
"Termination Event" has the meaning specified
in Exhibit V.
"Termination Fee" means, for any Fixed Period
during which a Termination Day occurs, the amount,
if any, by which (i) the additional Discount
(calculated without taking into account any
Termination Fee or any shortened duration of such
Fixed Period pursuant to clause (b)(iv) of the
definition thereof) which would have accrued during
such Fixed Period on the reductions of Capital of
the Purchased Interest relating to such Fixed
Period had such reductions remained as Capital,
exceeds (ii) the income, if any, received by
the Issuer from the Issuer investing the proceeds
of such reductions of Capital, as determined by the
Administrator, which determination shall be
binding and conclusive for all purposes, absent
manifest error.
"Three Month Average Default-to-Revenue Ratio
for Bills for Collection Receivables" means the
arithmetic average of the Default-to-Revenue Ratios
for Bills for Collection Receivables for the three
most recent calendar months.
"Three Month Average Default-to-Revenue Ratio
for Car Hire Receivables" means the arithmetic
average of the Default-to-Revenue Ratios for Car
Hire Receivables for the three most recent calendar
months.
"Three Month Average Default-to-Revenue Ratio
for Customer Receivables" means the arithmetic
average of the Default-to-Revenue Ratios for
Customer Receivables for the three most recent
calendar months.
"Three Month Average Default-to-Revenue Ratio
for Freight Receivables" means the arithmetic
average of the Default-to-Revenue Ratios for
Freight Receivables for the three most recent
calendar months.
"Three Month Average Default-to-Revenue Ratio
for Switching Receivables" means the arithmetic
average of the Default-to-Revenue Ratios for
Switching Receivables for the three most recent
calendar months.
"Transaction Documents" means the Agreement,
the Lock-Box Agreements, the Liquidity Asset
Purchase Agreement and all other certificates,
instruments, UCC financing statements, agreements
(excluding other agreements pursuant to which
the Issuer's commercial paper program was
established or is credit-enhanced) and documents to
be executed and/or delivered under or in connection
with the Agreement, in each case as the same may be
amended, supplemented or otherwise modified from
time to time in accordance with the Agreement.
"UCC" means the Uniform Commercial Code as
from time to time in effect in the applicable
jurisdiction.
"Welfare Plan" means a "welfare plan", as
such term is defined in section 3(1) of ERISA.
Other Terms. All accounting terms not
specifically defined herein shall be construed in
accordance with generally accepted accounting
principles. All terms used in Article 9 of the UCC
in the State of New York, and not specifically
defined herein, are used herein as defined in such
Article 9.
Applicable Law, Rule or Regulation. All
references in the Agreement, or any Exhibit or
Annex thereto, to "applicable law, rule or
regulation", or other words of similar import,
shall include, without limitation, the laws, rules,
regulations and tariffs of the ICC and the AAR.
EXHIBIT II
CONDITIONS OF PURCHASES
1. Conditions Precedent to Initial
Purchase. The initial purchase under the Agreement
is subject to the conditions precedent that the
Administrator shall have received on or before the
date of such purchase the following, each in form
and substance (including the date thereof)
satisfactory to the Administrator:
(a) Certified copies of (i) the resolutions
of the Board of Directors of the Seller authorizing
the execution, delivery and performance by the
Seller of the Agreement and the other Transaction
Documents, (ii) all documents evidencing other
necessary corporate action and governmental
approvals, if any, with respect to the Agreement
and the other Transaction Documents and (iii) the
certificate of incorporation and by-laws of the
Seller.
(b) A certificate of the Secretary or
Assistant Secretary of the Seller certifying the
names and true signatures of the officers of the
Seller authorized to sign the Agreement and the
other Transaction Documents.
(c) Acknowledgment copies, or time stamped
receipt copies of proper financing statements, duly
filed on or before the date of such initial
purchase under the UCC of all jurisdictions that
the Administrator may deem necessary or desirable
in order to perfect the interests of the Issuer
contemplated by the Agreement.
(d) Acknowledgment copies, or time stamped
receipt copies of proper financing statements, if
any, necessary to release all security interests
and other rights of any Person in the Receivables,
Contracts or Related Security previously granted by
the Seller.
(e) Completed UCC requests for information,
dated on or before the date of such initial
purchase, listing the financing statements referred
to in subsection (c) above and all other effective
financing statements filed in the jurisdictions
referred to in subsection (c) above and in such
other jurisdictions as the Administrator may
request, that name the Seller as debtor,
together with copies of such other financing
statements (none of which shall cover any
Receivables, Contracts or Related Security), and
similar search reports with respect to federal tax
liens and liens of the Pension Benefit Guaranty
Corporation in such jurisdictions as the
Administrator may request, showing no such liens on
any of the Receivables, Contracts or related
Security.
(f) A favorable opinion of Davis Polk &
Wardwell, counsel for the Seller, in form and
substance satisfactory to the Administrator.
(g) Satisfactory results of a review and
audit of the Seller's collection, operating and
reporting systems, Credit and Collection Policy,
historical receivables data and accounts, including
satisfactory results of a review of the Seller's
operating location(s), and satisfactory review and
approval of the Eligible Receivables in existence
on the date of the initial purchase under the
Agreement.
(h) Credit Bank and Purchaser credit
approvals.
(i) Payment of the Issuer's, the Credit
Bank's and the Purchaser's arrangement fees, if
any.
(j) Evidence of payment by the Seller of
all accrued and unpaid fees (including those
contemplated by the letter agreement referred to in
Section 1.5), costs and expenses to the extent then
due and payable on the date thereof, together with
Attorney Costs of the Administrator to the extent
invoiced prior to or on such date, plus such
additional amounts of Attorney Costs as shall
constitute the Administrator's reasonable estimate
of Attorney Costs incurred or to be incurred by it
through the closing proceedings (provided that such
estimate shall not thereafter preclude final
settling of accounts between the Seller and the
Administrator); including any such costs,
fees and expenses arising under or referenced in
Section 5.4.
(k) A letter agreement between the Seller
and the Administrator contemplated by Section 1.5.
(l) Such other approvals, opinions or
documents as the Administrator, Credit Bank or
Purchasers may reasonably request, including good
standing certificates with respect to the Seller
issued by the Secretaries of the States of Illinois
and Delaware.
2. Conditions Precedent to All Purchases
and Reinvestments. Each purchase (including the
initial purchase) and each reinvestment shall be
subject to the further conditions precedent that:
(a) in the case of each purchase, the
Servicer shall have delivered to the Administrator
on or prior to such purchase, in form and substance
satisfactory to the Administrator, a completed
Seller Report with respect to the immediately
preceding calendar month, together with a listing
by Obligor of all Receivables, Interline Payables
and such additional information as may reasonably
be requested by the Administrator;
(b) on the date of such purchase or
reinvestment the following statements shall be true
(and acceptance of the proceeds of such purchase or
reinvestment shall be deemed a representation and
warranty by the Seller that such statements are
then true):
(i) the representations and warranties
contained in Exhibit III are true and correct on
and as of the date of such purchase or reinvestment
as though made on and as of such date; provided,
however, that
(A) the representation and
warranty set forth in clause (v) of Exhibit III
shall be made only on the date of the initial
purchase hereunder;
(B) for purposes of this
Section 2(b)(i) only the representation and
warranty set forth in clause (p) of Exhibit
III shall be deemed not to refer to: (I) an
Unmatured Termination Event (defined below) under
clauses (d) or (i) of Exhibit V; (II) a Termination
Event specified in clauses (a), (b), (c), (f), (h),
(j) or (k) of Exhibit V unless such Termination
Event shall exist for 5 consecutive Business Days;
or (III) a Termination Event specified in clause
(e) of Exhibit V unless such Termination Event
shall exist for 5 consecutive Business Days after
the Seller becomes aware thereof; and
(C) for purposes of this
Section 2(b)(i) only, the failure of any
representation and warranty set forth in clause
(e), (f) or (w) of Exhibit III to be true and
correct shall not prevent reinvestments unless such
representation and warranty shall fail to be true
and correct for 5 consecutive Business Days;
(ii) no event has occurred and is
continuing, or would result from such purchase or
reinvestment, that (x) constitutes a Termination
Event or (y) would constitute a Termination Event
but for the requirement that notice be given or
time elapse or both (an event contemplated by this
clause (y) being referred to as an "Unmatured
Termination Event"); provided, however, that
(A) for purposes of this Section
2(b)(ii) only, the existence of an Unmatured
Termination Event under clauses (d) or (i) of
Exhibit V shall not prevent reinvestments;
(B) for purposes of this Section
2(b)(ii) only, the existence of a Termination Event
specified in clauses (a), (b), (c), (f), (h), (j)
or (k) of Exhibit V shall not prevent reinvestments
unless such Termination Event shall exist for 5
consecutive Business Days; and
(C) for purposes of this Section
2(b)(ii) only, the existence of a Termination Event
specified in clause (e) of Exhibit V shall not
prevent reinvestments unless such Termination Event
shall exist for 5 consecutive Business Days after
the Seller becomes aware thereof;
(iii) the Termination Date has not
occurred; and
(iv) all of the Seller's long-term
public senior debt securities are rated at least as
high as Investment Grade;
(c) on the date of such purchase or
reinvestment, and after giving effect thereto, the
aggregate outstanding Capital of the Purchased
Interest shall not exceed the Purchase Limit; and
(d) the Administrator shall have received
such other approvals, opinions or documents as it
may reasonably request.
EXHIBIT III
REPRESENTATIONS AND WARRANTIES
The Seller represents and warrants as follows:
(a) The Seller is a corporation duly
incorporated, validly existing and in good standing
under the laws of the State of Delaware, and is
duly qualified to do business, and is in good
standing, in every jurisdiction where the nature of
its business requires it to be so qualified.
(b) The execution, delivery and performance by
the Seller of the Agreement and the other Transaction
Documents to which it is a party, including the
Seller's use of the proceeds of purchases and
reinvestments and the performance by the Seller of
its obligations under Section 5.4, (i) are within the
Seller's corporate powers, (ii) have been duly
authorized by all necessary corporate action, (iii) do
not contravene or result in a default under or conflict
with (1) the Seller's certificate of incorporation or
by-laws, (2) any law, rule or regulation applicable to
the Seller, (3) any contractual restriction binding on
or affecting the Seller or its property or (4) any
order, writ, judgment, award, injunction or decree
binding on or affecting the Seller or its property,
and (iv) do not result in or require the creation
of any lien, security interest or other charge or
encumbrance upon or with respect to any of its
properties. The Agreement and the other
Transaction Documents to which it is a party have
been duly executed and delivered by the Seller.
(c) No authorization or approval or
other action by, and no notice to or filing with,
any Governmental Authority or any other Person is
required for the due execution, delivery and
performance by the Seller of the Agreement or any
other Transaction Document to which it is a party,
including performance by the Seller of its
obligations under Section 5.4.
(d) Each of the Agreement and the
other Transaction Documents to which it is a party,
including each provision of Section 5.4,
constitutes the legal, valid and binding obligation
of the Seller enforceable against the Seller in
accordance with its terms.
(e) The balance sheets of the Seller
and its subsidiaries as at September 30, 1993, and
the related statements of income and retained
earnings of the Seller and its subsidiaries for the
fiscal year then ended, copies of which have been
furnished to the Administrator, fairly present the
financial condition of the Seller and its
subsidiaries as at such date and the results of
the operations of the Seller and its subsidiaries
for the period ended on such date, all in
accordance with generally accepted accounting
principles consistently applied, and since
September 30, 1993 there has been no material
adverse change in the business, operations,
property or financial or other condition or
operations of the Seller or any of its
subsidiaries, the ability of the Seller to perform
its obligations under the Agreement or the other
Transaction Documents or the collectibility of the
Receivables, or which affects the legality,
validity or enforceability of the Agreements or the
other Transaction Documents.
(f) There is no pending or threatened
action or proceeding affecting the Seller or any of
its subsidiaries before any Governmental Authority
or arbitrator which could materially adversely
affect the business, operations, property,
financial or other condition or operations of the
Seller or any of its subsidiaries, the ability of
the Seller to perform its obligations under the
Agreement or the other Transaction Documents or the
collectibility of the Receivables, or which affects
or purports to affect the legality, validity or
enforceability of the Agreement or the other
Transaction Documents.
(g) No proceeds of any purchase or
reinvestment will be used to acquire any equity
security of a class which is registered pursuant to
Section 12 of the Securities Exchange Act of 1934.
(h) The Seller is the legal and
beneficial owner of the Pool Receivables and
Related Security free and clear of any Adverse
Claim; upon each purchase or reinvestment, the
Issuer shall acquire a valid and enforceable
undivided percentage ownership interest, to the
extent of the Purchased Interest, in each Pool
Receivable then existing or thereafter arising and
in the Related Security and Collections with
respect thereto, free and clear of any Adverse
Claim; the Agreement creates a security interest in
favor of the Issuer in the items described in
Section 1.2(d), and the Issuer has a first priority
perfected security interest in such items, free and
clear of any Adverse Claims. No effective
financing statement or other instrument similar
in effect covering any Contract or any Pool
Receivable or the Related Security or Collections
with respect thereto or any Lock-Box Account is on
file in any recording office, except those filed in
favor of the Administrator relating to the
Agreement.
(i) Each Seller Report (if prepared
by the Seller or one of its Affiliates, or to the
extent that information contained therein is
supplied by the Seller or an Affiliate),
information, exhibit, financial statement,
document, book, record or report furnished or to be
furnished at any time by or on behalf of the Seller
to the Administrator in connection with the
Agreement is or will be accurate in all material
respects as of its date or (except as otherwise
disclosed to the Administrator at such time) as of
the date so furnished, and no such document
contains or will contain any untrue statement
of a material fact or omits or will omit to state a
material fact necessary in order to make the
statements contained therein, in the light of the
circumstances under which they were made, not
misleading.
(j) The principal place of business
and chief executive office (as such terms are used
in the UCC) of the Seller and the office where the
Seller keeps its records concerning the Receivables
are located at the address referred to in paragraph
(b) of Exhibit IV (or at such other addresses
designated in accordance with such paragraph (b)),
and during the six years prior to the initial
purchase under the Agreement such principal place
of business, chief executive office and office were
located in Illinois.
(k) The names and addresses of all
the Lock-Box Banks, together with the account
numbers of the Lock-Box Accounts of the Seller at
such Lock-Box Banks, are specified in Schedule II
to the Agreement (or at such other Lock-Box Banks
and/or with such other Lock-Box Accounts as may be
added in accordance with Exhibit IV) and on and
after April 29, 1994 all Lock-Box Accounts are
subject to Lock-Box Agreements.
(l) The Seller is not in violation of
any order of any arbitrator or Governmental
Authority.
(m) Neither the Seller nor any
Affiliate of the Seller has any direct or indirect
ownership or other financial interest in the
Issuer.
(n) No proceeds of any purchase or
reinvestment will be used for any purpose that
violates any applicable law, rule or regulation,
including, without limitation, Regulations G or U
of the Federal Reserve Board.
(o) Each Pool Receivable included as
an Eligible Receivable in the calculation of the
Net Receivables Pool Balance is an Eligible
Receivable.
(p) No event has occurred and is
continuing, or would result from a purchase in
respect of, or reinvestment in respect of the
Purchased Interest or from the application of the
proceeds therefrom, which constitutes a Termination
Event.
(q) The Seller will account for each
sale of undivided percentage ownership interests in
Receivables in its books and financial statements
as sales, consistent with generally accepted
accounting principles.
(r) The Seller has complied in all
material respects with the Credit and Collection
Policy with regard to each Receivable.
(s) The Seller is Solvent; and at the
time of (and immediately after) each purchase of,
and reinvestment in, a Purchased Interest, the
Seller shall have been Solvent.
(t) The Seller, as Servicer or
otherwise, has complied with all of the terms,
covenants and agreements contained in the Agreement
and the other Transaction Documents and applicable
to it.
(u) The Seller's complete corporate
name is set forth in the preamble to the Agreement,
and the Seller does not use and has not during the
last six years used any other corporate name, trade
name, doing business name or fictitious name,
except for names first used after the date of the
Agreement and set forth in a notice delivered to
the Administrator pursuant to paragraph (l)(vii) of
Exhibit IV.
(v) There are no strikes, lockouts or
other labor disputes against the Seller or any of
its subsidiaries, or, to the best of the Seller's
knowledge, threatened against or affecting the
Seller or any of its subsidiaries, and no
significant unfair labor practice complaint is
pending against the Seller or any of its
subsidiaries or, to the best knowledge of the
Seller, threatened against any of them by or before
any Governmental Authority.
(w) During the preceding twelve months, no steps
have been taken to terminate any Pension Plan, and no
contribution failure has occurred with respect to any
Pension Plan sufficient to give rise to a lien under
section 302(f) of ERISA. No condition exists or event
or transaction has occurred with respect to any
Pension Plan which could result in the incurrence
by the Seller of any material liability, fine or
penalty. The Seller has no contingent liability
with respect to any post-retirement benefit under a
Welfare Plan, other than liability for continuation
coverage described in Part 6 of title I of ERISA.
EXHIBIT IV
COVENANTS
Covenants of the Seller. Until the
latest of the Facility Termination Date, the date
on which no Capital of or Discount in respect of
the Purchased Interest shall be outstanding or the
date all other amounts then owed by the Seller
under the Agreement to the Issuer, the
Administrator and any other Indemnified Party or
Affected Person shall be paid in full:
(a) Compliance with Laws, Etc. The
Seller shall comply in all material respects with
all applicable laws, rules, regulations and orders,
and preserve and maintain its corporate existence,
rights, franchises, qualifications, and privileges
except to the extent that the failure so to comply
with such laws, rules and regulations or the
failure so to preserve and maintain such existence,
rights, franchises, qualifications, and privileges
would not materially adversely affect the
collectibility of the Receivables or the
enforceability of any related Contract or the
ability of the Seller to perform its obligations
under any related Contract or under the Agreement.
(b) Offices, Records and Books of
Account. The Seller shall keep its principal place
of business and chief executive office (as such
terms are used in the UCC) and the office where it
keeps its records concerning the Receivables at the
address of the Seller set forth under its name on
the signature page to the Agreement or, upon 30
days' prior written notice to the Administrator, at
any other locations in jurisdictions where all
actions reasonably requested by the Administrator
to protect and perfect the interest of the Issuer
in the Receivables and related items (including
without limitation the items described in Section
1.2(d)) have been taken and completed. The Seller
also will maintain and implement administrative and
operating procedures (including, without
limitation, an ability to recreate records
evidencing Receivables and related Contracts in the
event of the destruction of the originals thereof),
and keep and maintain all documents, books,
records, computer tapes and disks and other
information reasonably necessary or advisable for
the collection of all Receivables (including,
without limitation, records adequate to permit the
daily identification of each Receivable and all
Collections of and adjustments to each existing
Receivable).
(c) Performance and Compliance with
Contracts and Credit and Collection Policy. The
Seller shall, at its expense, timely and fully
perform and comply with all material provisions,
covenants and other promises required to be
observed by it under the Contracts related to the
Receivables, and timely and fully comply in all
material respects with the Credit and Collection
Policy with regard to each Receivable and the
related Contract.
(d) Ownership Interest, Etc. The
Seller shall, at its expense, take all action
necessary or desirable to establish and maintain a
valid and enforceable undivided ownership interest,
to the extent of the Purchased Interest, in the
Pool Receivables and the Related Security and
Collections with respect thereto, and a first
priority perfected security interest in the items
described in Section 1.2(d), in each case free and
clear of any Adverse Claim, in favor of the Issuer,
including, without limitation, taking such action
to perfect, protect or more fully evidence the
interest of the Issuer under the Agreement as the
Issuer, through the Administrator, may request.
(e) Sales, Liens, Etc. The Seller
shall not sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create or
suffer to exist any Adverse Claim upon or with
respect to, any or all of its right, title
or interest in, to or under, (i) any item described
in Section 1.2(d) (including without limitation the
Seller's undivided interest in any Receivable,
Related Security, or Collections) or (ii) any post
office box to which any payments in respect of any
Receivable are sent, including without limitation
any assignment of any right to receive income in
respect of items contemplated by clause (i) or
clause (ii) of this paragraph (e).
(f) Extension or Amendment of
Receivables. Except as provided in the Agreement,
the Seller shall not extend the maturity or adjust
the Outstanding Balance or otherwise modify the
terms of any Pool Receivable, or amend, modify or
waive any term or condition of any related
Contract.
(g) Change in Business or Credit and
Collection Policy. The Seller shall not make any
material change in the character of its business or
in the Credit and Collection Policy, or any change
in the Credit and Collection Policy (i) that
relates to the accounting for Interline Payables
(unless required to be made pursuant to any
applicable law, rule or regulation), (ii)
that would alter the accounting procedures
governing the accounts designated as
"account 706-800" and "account 745-0050" on the
Seller's books, or (iii) that would adversely
affect the collectibility of the Receivables Pool
or the enforceability of any related Contract or
the ability of the Seller to perform its
obligations under any related Contract or under the
Agreement. The Seller shall not withdraw from or
cease to be a member of the AAR. The Seller shall
not make any other change in the Credit and
Collection Policy without the prior written consent
of the Administrator.
(h) Audits. The Seller shall, from
time to time during regular business hours as
requested by the Administrator, permit the
Administrator, or its agents or representatives,
(i) to examine and make copies of and abstracts
from all books, records and documents (including,
without limitation, computer tapes and disks) in
the possession or under the control of the Seller
relating to Receivables and the Related Security,
including, without limitation, the related
Contracts, and (ii) to visit the offices and
properties of the Seller for the purpose of
examining such materials described in clause (i)
above, and to discuss matters relating to
Receivables and the Related Security or the
Seller's performance hereunder or under the
Contracts with any of the officers, employees,
agents or contractors of the Seller having
knowledge of such matters.
(i) Change in Lock-Box Banks,
Lock-Box Accounts and Payment Instructions to
Obligors. The Seller shall not add or terminate
any bank as a Lock-Box Bank or any account as a
Lock-Box Account from those listed in Schedule II
to the Agreement, or make any change in its
instructions to Obligors regarding payments to be
made to the Seller or payments to be made to
any Lock-Box Account (or related post office box),
unless the Administrator shall have consented
thereto in writing and the Administrator shall have
received copies of all agreements and documents
(including without limitation Lock-Box Agreements)
that it may request in connection therewith.
(j) Deposits to Lock-Box Accounts.
The Seller shall (i) instruct all Obligors to make
payments of all Receivables (other than Freight
Receivables) to one or more Lock-Box Accounts or to
post office boxes to which only Lock-Box Banks have
access (and shall instruct the Lock-Box Banks to
cause all items and amounts relating to such
Receivables received in such post office
boxes to be removed and deposited into a Lock-Box
Account on a daily basis), (ii) instruct all
Obligors of Freight Receivables to make payments to
the Seller or to a Lock-Box Account and (iii)
deposit, or cause to be deposited, any Collections
of Pool Receivables (other than Freight
Receivables) received by it into Lock-Box Accounts
not later than one Business Day after receipt
thereof. On and after April 29, 1994 all Lock-Box
Accounts shall at all times be subject to Lock-Box
Agreements. Following (i) 60 days' prior written
notice from the Administrator to the Seller or (ii)
the occurrence of a Termination Event, the Seller
(x) will not deposit or otherwise credit, or cause
or permit to be deposited or credited, to any
Lock-Box Account cash or cash proceeds other than
Collections of Pool Receivables and (y) will
deposit or cause to be deposited not later than two
Business Days after receipt thereof all Collections
of Freight Receivables into one or more Lock-Box
Accounts.
(k) Marking of Records. At its expense, the
Seller shall mark its master data processing records
relating to Pool Receivables and related Contracts,
including with a legend evidencing that the undivided
percentage ownership interests with regard to the
Purchased Interest related to such Receivables and
related Contracts have been sold in accordance with
the Agreement.
(l) ERISA Matters. The Seller shall
notify the Administrator as soon as is practicable
and in any event not later than two Business Days
after (i) the institution of any steps by the
Seller or any other Person to terminate any Pension
Plan, (ii) the failure to make a required
contribution to any Pension Plan if such failure is
sufficient to give rise to a lien under section
302(f) of ERISA, (iii) the taking of any action
with respect to a Pension Plan which could result
in the requirement that the Seller furnish a bond
or other security to the PBGC or such Pension Plan,
or (iv) the occurrence of any event with respect to
any Pension Plan which could result in the
incurrence by the Seller of any material liability,
fine or penalty, or any material increase in the
contingent liability of the Seller with respect to
any post-retirement Welfare Plan benefit.
(m) Reporting Requirements. The
Seller will provide to the Administrator (in
multiple copies, if requested by the Administrator)
the following:
(i) as soon as available and in any event
within 45 days after the end of the first three
quarters of each fiscal year of the Seller,
balance sheets of the Seller and its subsidiaries
as of the end of such quarter and statements of
income and retained earnings of the Seller and its
subsidiaries for the period commencing at the end
of the previous fiscal year and ending with the end
of such quarter, certified by the chief financial
officer of the Seller;
(ii) as soon as available and in any event
within 90 days after the end of each fiscal year
of the Seller, a copy of the annual report for such
year for the Seller and its subsidiaries, containing
financial statements for such year audited by Arthur
Andersen & Co. or other independent public accountants
acceptable to the Administrator;
(iii) as soon as available and in any event within
10 Business Days after the end of each calendar month,
a Seller Report as of the last day of the immediately
preceding month;
(iv) as soon as possible and in any event within
five days after the occurrence of each Termination
Event or event which, with the giving of notice or
lapse of time, or both, would constitute a Termination
Event, a statement of the chief financial officer of
the Seller setting forth details of such Termination
Event or event and the action that the Seller has
taken and proposes to take with respect thereto;
(v) promptly after the sending or filing
thereof, copies of all reports that the Seller
sends to any of its public security holders,
and copies of all reports and registration
statements that the Seller or any subsidiary
files with the Securities and Exchange
Commission or any national securities exchange;
(vi) at least sixty days prior to any
change in the Seller's name or any other change
requiring the amendment of UCC financing statements,
a notice setting forth such changes and the
effective date thereof;
(vii) such other information respecting the
Receivables or the condition or operations,
financial or otherwise, of the Seller or any of
its Affiliates as the Administrator may from
time to time reasonably request, including without
limitation a listing by Obligor of all Receivables
together with an aging of such Receivables and
information concerning actual and historical
collections experience with respect thereto;
(viii) promptly after the Seller obtains
knowledge thereof, notice of any (a) litigation,
investigation or proceeding which may exist at
any time between the Seller and any Governmental
Authority which, in either case, if not cured or
if adversely determined, as the case may be,
would have a material adverse effect on the
business, operations, property or financial
or other condition of the Seller; or (b)
litigation or proceeding adversely affecting
the Seller or any of its subsidiaries in which
the amount involved is $5,000,000 or more and
not covered by insurance or in which injunctive
or similar relief is sought or (c) litigation or
proceeding relating to any Transaction Document; and
(ix) promptly after the occurrence thereof,
notice of a material adverse change in the business,
operations, property or financial or other condition
of the Seller or any of its subsidiaries.
EXHIBIT V
TERMINATION EVENTS
Each of the following shall be a "Termination
Event":
(a) (i) The Servicer (if the Seller or any
of its Affiliates) shall fail to perform or observe
any term, covenant or agreement under the Agreement
or (ii) any Person which is the Servicer shall fail
to make when due any payment or deposit to be made
by it under the Agreement; or
(b) The Seller shall fail (i) to transfer
to any successor Servicer when requested any
rights, pursuant to the Agreement, which the Seller
then has as Servicer, or (ii) to make any payment
required under the Agreement; or
(c) Any representation or warranty made or
deemed made by the Seller or the Servicer (or any
of their respective officers) under or in
connection with the Agreement or any information or
report delivered by the Seller or the Servicer
pursuant to the Agreement shall prove to have been
incorrect or untrue in any material respect when
made or deemed made or delivered, provided that no
Termination Event shall result from a breach of the
representations and warranties set forth in
paragraphs (h) or (o) of Exhibit III if on each day
on which such representations and warranties are
not true the deemed Collections relating thereto
shall have been handled in accordance with Section
1.4(b); or
(d) The Seller shall fail to perform or
observe any other term, covenant or agreement
contained in the Agreement on its part to be
performed or observed and any such failure shall
remain unremedied for 10 days (or, with respect
to a failure to deliver the Seller Report
pursuant to the Agreement, such failure shall
remain unremedied for five days); or
(e) The Seller or any of its subsidiaries
shall fail to pay any principal of or premium or
interest on any of its Debt, which is outstanding
in a principal amount of at least $10,000,000 in
the aggregate, when the same becomes due and
payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and
such failure shall continue after the applicable
grace period, if any, specified in the agreement,
mortgage, indenture or instrument relating to such
Debt; or any other event shall occur or condition
shall exist under any agreement, mortgage,
indenture or instrument relating to any such Debt
and shall continue after the applicable grace
period, if any, specified in such agreement,
mortgage, indenture or instrument, if the
effect of such event or condition is to accelerate,
or to permit the acceleration of, the maturity of
such Debt; or any such Debt shall be declared
to be due and payable, or required to be prepaid
(other than by a regularly scheduled required
prepayment), redeemed, purchased or defeased, or an
offer to repay, redeem, purchase or defease such
Debt shall be required to be made, in each case
prior to the stated maturity thereof; or
(f) The Agreement or any purchase or any
reinvestment pursuant to the Agreement shall for
any reason (other than pursuant to the terms
hereof) (i) cease to create, or the Purchased
Interest shall for any reason cease to be, a
valid and enforceable undivided percentage
ownership interest to the extent of the Purchased
Interest in each Pool Receivable and the Related
Security and Collections with respect thereto, free
and clear of any Adverse Claim or (ii) cease to
create with respect to the items described in
Section 1.2(d), or the interest of the Issuer with
respect to such items shall cease to be, a valid
and enforceable first priority perfected security
interest, free and clear of any Adverse Claim,
provided, however, that it shall not be a
Termination Event hereunder if the security
interest referred to in clause (ii) in respect of
any item is not perfected if such item is of a type
as to which perfection may not be achieved through
filing under the UCC, provided, further, however,
that it shall be a Termination Event hereunder if
any such item is subject to any Adverse Claim; or
(g) The Seller or any of its subsidiaries
shall generally not pay its debts as such debts
become due, or shall admit in writing its inability
to pay its debts generally, or shall make a general
assignment for the benefit of creditors, or shall
apply for or make any change contemplated by 49
U.S.C. 11361-11367 (as such sections may be amended
from time to time); or any proceeding shall be
instituted by or against the Seller or any of its
subsidiaries seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment,
protection, relief, or composition of it or its
debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors,
or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or
other similar official for it or for any
substantial part of its property and, in the
case of any such proceeding instituted against it
(but not instituted by it), either such proceeding
shall remain undismissed or unstayed for a period
of 30 days, or any of the actions sought in such
proceeding (including, without limitation, the
entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or
other similar official for, it or for any
substantial part of its property) shall occur; or
the Seller or any of its subsidiaries shall take
any corporate action to authorize any of the
actions set forth above in this paragraph (g); or
(h) As of the last day of any calendar
month, either the Default Ratio shall exceed 10% or
the Delinquency Ratio shall exceed 15%, or as of
the last day of any three consecutive calendar
months, the Loss-to-Liquidation Ratio shall exceed
1.0%; or
(i) The Coverage Ratio shall, for five
consecutive Business Days, be less than the greater
of (x) 117.5% and (y) the sum of (I) 117.5% and
(II) the product of (A) one-half and (B) the Loss
Percentage minus 15%; or
(j) The Purchased Interest shall exceed
100%; or
(k) Any of the Seller's long-term public
senior debt securities shall cease to be rated
Investment Grade.
SCHEDULE I
CREDIT AND COLLECTION POLICY
SCHEDULE II
LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS
Lock-Box Bank
Lock-Box Account
Boatmen's National
10-0101-093628
Bank of St. Louis
One Boatmen's Plaza
St. Louis, MO 63101
Deposit Guaranty National Bank
500-2962968
P.O. Box 1200
Jackson, MS 39215
Continental Bank
74-18736
231 S. LaSalle Street
Chicago, IL 60697
ANNEX A
FORM OF LOCK-BOX AGREEMENT
Letterhead of Illinois Central Railroad Company
LOCK-BOX AGREEMENT
, 199
Name and Address of Lock-Box Bank]
Gentlemen:
Reference is made to our [lock-box][
Delete in the case of direct wire transfer
accounts.] account[s] no[s]. maintained with you
(the "Account[s]"). Pursuant to a Receivables
Purchase Agreement dated as of March 29, 1994 among
us, as Seller, Golden Gate Funding Corporation
("GGFC"), and Bank of America National Trust
and Savings Association, as administrator (the
"Administrator"), we have assigned and/or may
hereafter assign to GGFC one or more undivided
percentage interests in accounts, chattel paper,
instruments or general intangibles (collectively,
"Receivables") with respect to which payments are
or may hereafter be made to the Account[s], and
have granted to GGFC a security interest in such
Receivables, the Account[s], amounts on deposit
therein and related property. Your execution of
this letter agreement is a condition precedent to
our continued maintenance of the Account[s] with
you.
We hereby transfer exclusive ownership and
control of the Account[s] to the Administrator on
behalf of GGFC, subject only to the condition
subsequent that the Administrator shall have given
you notice of its election to assume such ownership
and control, which notice may be in the form
attached hereto as Exhibit A or in any other form
that gives you reasonable notice of such
election.
We hereby irrevocably instruct you, at all
times from and after the date of your receipt of
notice from the Administrator as described above,
to make all payments to be made by you out of or in
connection with the Account[s] directly to the
Administrator, at its address set forth below its
signature hereto or as the Administrator otherwise
notifies you, for the account of the GGFC (account
#1233918372, ABA #121000358), or otherwise in
accordance with the instructions of the
Administrator.
We also hereby notify you that, at all times
from and after the date of your receipt of notice
from the Administrator as described above, the
Administrator shall be irrevocably entitled to
exercise in our place and stead any and all rights
in respect of or in connection with the Account[s],
including, without limitation, (a) the right to
specify when payments are to be made out of or in
connection with the Account[s] and (b) the right to
require preparation of duplicate monthly bank
statements on the Account[s] for the
Administrator's audit purposes and mailing of such
statements directly to an address specified by the
Administrator.
Notice from the Administrator may be
personally served or sent by Telex, facsimile or
U.S. mail, certified return receipt requested, to
the address, Telex or facsimile number set forth
under your signature to this letter agreement (or
to such other address, Telex or facsimile number as
to which you shall notify the Administrator in
writing). If notice is given by Telex or
facsimile, it will be deemed to have been received
when the notice is sent and the answerback is
received (in the case of Telex) or receipt is
confirmed by telephone or other electronic means
(in the case of facsimile). All other notices will
be deemed to have been received when actually
received or, in the case of personal delivery,
delivered.
By executing this letter agreement, you
acknowledge and consent to the existence of the
Administrator's right to ownership and control of
the Account[s] and GGFC's security interest in the
Account[s] and amounts from time to time on deposit
therein and agree that from the date hereof the
Account[s] shall be maintained by you for the
benefit of, and amounts from time to time therein
held by you as agent for, the Administrator on the
terms provided herein. The Account[s] [is/are] to
be titled "Illinois Central Railroad Company and
Bank of America National Trust and Savings
Association as the Administrator for Golden Gate
Funding Corporation, as their interests may
appear". Except as otherwise provided in this
letter agreement, payments to the Account[s] are to
be processed in accordance with the standard
procedures currently in effect. All service
charges and fees with respect to the Account[s]
shall continue to be payable by us as under the
arrangements currently in effect.
By executing this letter agreement, you
irrevocably waive and agree not to assert, claim or
endeavor to exercise, irrevocably bar and estop
yourself from asserting, claiming or exercising,
and acknowledge that you have not heretofore
received a notice, writ, order or any form of legal
process from any other party asserting, claiming or
exercising, any right of set-off, banker's lien or
other purported form of claim with respect to [any
of] the Account[s] or any funds from time to time
therein. Except for your right to payment of your
service charges and fees and to make deductions for
returned items, you shall have no rights in the
Account[s] or funds therein. To the extent you may
ever have such rights, you hereby expressly
subordinate all such rights to all rights of the
Administrator.
You may terminate this letter agreement by
cancelling the Account[s] maintained with you,
which cancellation and termination shall become
effective only upon thirty days' prior written
notice thereof from you to the Administrator.
Incoming [mail addressed to] [wire transfers to]
the Account[s] received after such cancellation
shall be forwarded in accordance with the
Administrator's instructions. This letter
agreement may also be terminated upon written
notice to you by the Administrator stating that the
Receivables Purchase Agreement pursuant to which
this letter agreement was obtained is no longer in
effect. Except as otherwise provided in this
paragraph, this letter agreement may not be
terminated or amended without the prior written
consent of the Administrator. This letter
agreement may be executed in any number of
counterparts, and by the parties hereto on 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.
Please acknowledge your agreement to the terms
set forth in this letter agreement by signing the
two copies of this letter agreement enclosed
herewith in the space provided below, sending one
such signed copy to the Administrator at its
address provided above and returning the other
signed copy to us.
Very truly yours,
ILLINOIS CENTRAL RAILROAD COMPANY
By:
Name:
Title:
Acknowledged and agreed to as of
the date first written above:
GOLDEN GATE FUNDING CORPORATION
By: Bank of America National Trust
and Savings Association, as
attorney in fact
By:
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Administrator
By:
Name:
Title:
Address for notice:
Structured Finance #5419
555 California Street
San Francisco, California 94104
Attention: Mr. Omar Bolli
Tel. No. (415) 622-2482
Facsimile No. (415) 953-1515
[NAME OF LOCK-BOX BANK]
By:
Name:_____________________________
Title:
Address for notice:
Attention:
Telex No.:
(Answerback: )
Tel. No.:
Facsimile No.:
[Letterhead of Bank of America National
Trust and Savings Association]
[Name and Address
of Lock-Box Bank]
Re: Illinois Central Railroad Company
[Lock-Box][Delete in the case of direct
wire transfer accounts.] Account No[s].
[and ]
Gentlemen:
Reference is made to the letter agreement
dated , 199__ (the "Letter Agreement") among
Illinois Central Railroad Company, Golden Gate
Funding Corporation ("GGFC"), the undersigned, as
Administrator and you concerning the above
described [lock-box]* account[s] (the
"Account[s]"). We hereby give you notice of our
assumption of ownership and control of the
Account[s] as provided in the Letter Agreement.
We hereby instruct you to make all payments to
be made by you out of or in connection with the
Account[s] [directly to the undersigned, at [our
address set forth above], for the account of GGFC
(account no. )].
[other instructions]
Very truly yours,
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as
Administrator
By:
Name:
Title:
ANNEX B
FORM OF SELLER REPORT
TABLE OF CONTENTS
PAGE
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES...... 1
SECTION 1.1.
Purchase Facility....................... 1
SECTION 1.2.
Making Purchases........................ 2
SECTION 1.3.
Purchased Interest Computation.......... 3
SECTION 1.4.
Settlement Procedures................... 3
SECTION 1.5.
Fees.................................... 7
SECTION 1.6.
Payments and Computations, Etc.......... 7
SECTION 1.7.
Dividing or Combining Portions of the
Capital of the Purchased Interest...... 7
SECTION 1.8.
Increased Costs......................... 8
SECTION 1.9.
Requirements of Law..................... 8
SECTION 1.10.
Inability to Determine Eurodollar Rate.. 10
ARTICLE II
REPRESENTATIONS AND WARRANTIES; COVENANTS;
TERMINATION EVENTS.................... 10
SECTION 2.1.
Representations and Warranties;
Covenants............................. 10
SECTION 2.2.
Termination Events...................... 10
ARTICLE III
INDEMNIFICATION......................... 11
SECTION 3.1.
Indemnities by the Seller............... 11
ARTICLE IV
ADMINISTRATION AND COLLECTIONS.......... 14
SECTION 4.1.
Appointment of Servicer................. 14
SECTION 4.2.
Duties of Servicer...................... 15
SECTION 4.3.
Lock-Box Arrangements................... 16
SECTION 4.4.
Enforcement Rights...................... 17
SECTION 4.5.
Responsibilities of the Seller.......... 18
SECTION 4.6.
Servicing Fee........................... 18
ARTICLE V
MISCELLANEOUS........................... 19
SECTION 5.1.
Amendments, Etc......................... 19
SECTION 5.2.
Notices, Etc............................ 19
SECTION 5.3.
Assignability........................... 19
SECTION 5.4.
Costs, Expenses and Taxes............... 21
SECTION 5.5.
No Proceedings; Limitation on Payments.. 22
SECTION 5.6.
Confidentiality......................... 22
SECTION 5.7.
GOVERNING LAW AND JURISDICTION.......... 23
SECTION 5.8.
Execution in Counterparts............... 23
SECTION 5.9.
Survival of Termination................. 23
SECTION 5.10.
WAIVER OF JURY TRIAL.................... 24
SECTION 5.11.
Entire Agreement........................ 24
SECTION 5.12.
Headings................................ 24
EXHIBIT I
DEFINITIONS............................. I-1
EXHIBIT II
CONDITIONS OF PURCHASES................. II-1
EXHIBIT III
REPRESENTATIONS AND WARRANTIES.......... III-1
EXHIBIT IV
COVENANTS............................... IV-1
EXHIBIT V
TERMINATION EVENTS...................... V-1
SCHEDULE I
CREDIT AND COLLECTION POLICY............ I-1
SCHEDULE II
LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS.... II-1
ANNEX A
FORM OF LOCK-BOX AGREEMENT.............. A-1
ANNEX B
FORM OF SELLER REPORT................... B-1
ILLINOIS CENTRAL RAILROAD COMPANY
EXECUTIVE PERFORMANCE COMPENSATION PROGRAM
CERTIFICATE
I, , Secretary of
Illinois Central Railroad Company, hereby certify
that the attached document is a correct copy of
Illinois Central Railroad Company Executive
Performance Compensation Program as adopted
effective as of January 1, 1994.
Dated this day of , 1994.
As Secretary as Aforesaid
(Seal)
ILLINOIS CENTRAL RAILROAD COMPANY
EXECUTIVE PERFORMANCE COMPENSATION PROGRAM
The Illinois Central Railroad Company Executive
Performance Compensation Program was adopted
November 23, 1993, for the Covered Employees of
Illinois Central Railroad Company and its
Affiliated Companies. The purpose of the Program
is to enhance the overall effectiveness of the
Illinois Central Railroad Company executive
compensation program and to attract, retain and
motivate Covered Employees.
ARTICLE I
DEFINITIONS
Wherever used herein the following terms shall
have the meanings hereinafter set forth:
1.1. "Affiliated Company" means a business
entity, or predecessor of such entity, if any,
which is a member of a controlled group of
corporations which includes the Company.
1.2. "Base Salary" means a Covered Employee's
annual base salary rate for the Year, as specified
by the Company or an Affiliated Company prior to
each Year.
1.3. "Board" means the Board of Directors of
the Company.
1.4. "Committee" means the Compensation
Committee of the Board that is responsible for
setting performance goals, certifying that such
goals have been met under the Program, and
administration of the Program.
1.5. "Company" means Illinois Central Railroad
Company, a Delaware corporation, or any successor
corporation or other entity resulting from a merger
or consolidation into or with the Company or a
transfer or sale of substantially all of the assets
of the Company.
1.6. "Covered Employee" means any individual
who, on the last day of the Year, is: (i) the chief
executive officer of the Company, or acting in such
capacity; or (ii) among the four highest
compensated officers of the Company or an
Affiliated Company, other than the chief executive
officer (or such other group of employees as is
later specified in final regulations issued under
Section 162(m) of the Internal Revenue Code).
1.7. "Maximum Award" means, for purposes of
Performance Awards, the percentage of each Covered
Employee's Target Award that would be payable to
the Covered Employee if the Company achieved its
maximum performance levels, as specified in Exhibit
A.
1.8. "Measurement Areas" means the areas of
Company performance that are measured for purposes
of the Program, as follows:
(a) For purposes of Stock Option Awards, the
Measurement Areas shall be: (i) total shareholder
return (price appreciation and dividends) ("TRS");
(ii) annual return on average total capital,
calculated on an after award after-tax basis
("ROTC"); and (iii) revenue growth.
(b) For purposes of Performance Awards, the
Measurement Areas shall be: (i) ROTC; and (ii)
revenue growth.
1.9. "Performance Award" means the additional
cash remuneration payable to a Covered Employee
pursuant to the Program based solely on Company
performance.
1.10. "Performance Period" means, for purposes
of Stock Option Awards, the three Year period
ending in the Year of the Stock Option Award,
during which the Company's performance is compared
to the performance of similar corporations, as
described in Section 3.2 and Exhibit C (e.g., Stock
Option Awards granted for the 1996 Year, if any,
shall be based on the Company's performance in
1994, 1995 and 1996). Notwithstanding the
foregoing, the Performance Period for the 1994 Year
shall be only the 1994 Year, and the Performance
Period for the 1995 Year shall be the 1994 and 1995
Years.
1.11. "Program" means the Illinois Central
Railroad Company Executive Performance Compensation
Program, as set forth herein and as hereinafter
amended from time to time.
1.12. "Stock Option Award" means the options to
purchase common stock of the Company under the
Stock Plan which are awarded to a Covered Employee
pursuant to the Program each year, based solely on
Company performance for that year.
1.13. "Stock Plan" means the Illinois Central
Corporation 1990 Long Term Incentive Plan which is
incorporated herein by reference.
1.14. "Target Award" means, for purposes of
Performance Awards, a percentage of each Covered
Employee's Base Salary, as listed in Exhibit A, as
the same may be amended from time to time, that is
the basis for a Performance Award.
1.15. "Year" means the calendar year. The
Program operates on the fiscal year of the Company,
which is the calendar year.
1.16. Words in the masculine gender shall
include the feminine and the singular shall include
the plural, and vice versa, unless qualified by the
context. Any headings used herein are included for
ease of reference only and are not to be construed
so as to alter the terms hereof.
ARTICLE II
ANNUAL PERFORMANCE AWARDS AND PERFORMANCE GOALS
2.1. Company Performance Goals. Each Covered
Employee shall be eligible to receive a Performance
Award under the Program. Prior to the commencement
of each Year, the Committee shall establish Company
performance goals based on the Measurement Areas
for Performance Awards. The Committee shall
establish three levels of performance goals for
each Measurement Area: (i) a threshold level; (ii)
a target level; and (iii) a maximum level. If
Company performance fails to attain the threshold
level of ROTC for any Year, the percentage of the
Target Awards that is payable to Covered Employees
shall be 0%.
2.2. Calculating Performance Awards. The
actual Performance Awards for Covered Employees
will be determined by the extent to which the
Company attains the objective performance goals
established by the Committee prior to the beginning
of the Year, calculated as follows (and according
to the charts in Exhibits A and B):
(a) The Company's performance in the
Measurement Areas applicable to Performance Awards
shall be determined for the Year.
(b) Company performance in both Measurement
Areas shall be compared to the performance
objectives established by the Committee prior to
the Year, and placed on a chart (Exhibit B) that
contains the threshold, target and maximum levels
for both Measurement Areas, and a specified
percentage figure for each level.
(c) The Target Award for each Covered
Employee shall be multiplied by the applicable
percentage figure from the chart (Exhibit B), and
the product shall be multiplied by each Covered
Employee's Base Salary to determine the Performance
Award for that Covered Employee.
If the Company were to attain the maximum level of
performance with respect to both Measurement Areas
in a Year, each Covered Employee's Target Award
percentage would be multiplied by the Covered
Employee's Maximum Award percentage, both as listed
in Exhibit A, with the product then multiplied by
the Covered Employee's Base Salary for that Year to
determine the Covered Employee's actual Performance
Award. The Performance Award payout will range
from 0% to 150% of Covered Employees' Target Award
levels. No portion of a Covered Employee's
Performance Award shall be based on individual
performance. If at least the pre-established
threshold performance goals are not attained, no
Performance Awards shall be paid under the Program.
2.3. Reduction in Performance Award. The
Committee may, in its sole discretion, reduce (but
may not increase) the Company performance
percentage, calculated in section 2.2(b) above, by
an amount of up to 20%; such reduced performance
percentage then will be used in section 2.2(c)
above.
2.4. Committee Certification. The Committee
shall certify in writing, prior to payment of any
Performance Award hereunder to a Covered Employee,
that the performance goals and any other material
terms of the Program were satisfied for the
applicable Year.
ARTICLE III
STOCK OPTION AWARDS
3.1. Stock Option Awards. Each Covered
Employee shall be eligible to receive a Stock
Option Award under the Program. The number of
stock options, if any, that are granted to any
Covered Employee each Year under the Stock Plan as
a Stock Option Award shall be determined in
accordance with Section 3.2 below. All Stock
Option Awards shall be made at fair market value on
the date of grant, and shall be exercisable in
accordance with the terms of the Stock Plan for a
period of ten years from the date of grant. The
maximum number of shares of Company stock with
respect to which Stock Option Awards may be granted
to any Covered Employee pursuant to this Program is
100,000 per year.
3.2. Procedure for Calculating Stock Option
Awards Based on Company Performance. The number of
Stock Option Awards granted for any Year shall be
calculated as follows (and in accordance with the
charts in Exhibit C):
(a) The Company's performance in each
Measurement Area shall be determined for the
Performance Period ending in the Year.
(b) In each Measurement Area, Company
performance for the Performance Period shall be
compared to the performance of corporations in a
specified "Reference Group." The Reference Group
for the ROTC and revenue growth Measurement Areas
is Class I Railroads. The Reference Group for the
TRS Measurement Area is the Standard and Poor's
Midcap 400 index.
(c) The percentile ranking of the Company's
performance within the applicable Reference Group
then shall be multiplied by a weighting factor, as
follows: (i) 50% for the TRS Measurement Area; and
(ii) 25% for the ROTC and revenue growth
Measurement Areas. The product shall be a
"Weighted Performance Ranking" for each Measurement
Area.
(d) The Weighted Performance Ranking figures
for the three Measurement Areas then shall be added
together and divided by three, to yield a single
"Weighted Average Performance Ranking."
(e) The Weighted Average Performance Ranking
figure then shall be placed on a chart that
contains a threshold, target and maximum level for
the Company's Weighted Average Performance Ranking,
and a specified Stock Option Award grant for each
salary grade for each level of Weighted Average
Performance Ranking.
No portion of a Covered Employee's Stock Option
Award shall be based on individual performance.
3.3. Implementation Transition Period. For
1994, Company performance will be compared to the
Reference Group performance for 1994 only. In
1995, the comparison period will be the average of
the Reference Group performance for 1994 and 1995.
Beginning in 1996 and thereafter, the Performance
Period will be a three year average.
3.4. Vesting of Stock Option Awards. The
Stock Option Awards granted to a Covered Employee
for any Year shall vest ratably over a period of
four years, e.g., at a rate of 25 percent for each
Year, beginning with the Year after the Year to
which the Stock Option Award is attributable.
ARTICLE IV
ADMINISTRATION OF THE PROGRAM
4.1. Administration by the Committee. The
Committee shall be responsible for the general
operation and administration of the Program.
4.2. Powers and Duties of Committee. The
Committee shall administer the Program in
accordance with its terms and shall have all powers
necessary to carry out the provisions of the
Program. The Committee shall determine all
questions arising in the administration,
interpretation, and application of the Program,
including but not limited to, questions of
eligibility and the status and rights of Covered
Employees. Any such determination by the Committee
shall presumptively be conclusive and binding on
all persons.
ARTICLE V
AMENDMENT OR TERMINATION
5.1. Amendment or Termination.
(a) The Committee reserves the right to amend
or terminate the Program at any time. Any such
amendment or termination shall be made pursuant to
a resolution of the Board.
(b) Notwithstanding the provisions of Section
5.1(a) above: (i) no amendment shall be made to any
material term of the Program that was disclosed to
and approved by the stockholders of Illinois Central
Corporation in accordance with Code Section 162(m)
and the proposed regulations thereunder; and (ii) any
amendment of the Program may not take effect before
the first day the Year coincident with or next
following the date of the resolution by the Board.
5.2. Stockholder Approval. The Committee can
propose, and the Board approve, an amendment
outlined in Section 5.1(b) above, subject to
requesting and obtaining the approval of the
stockholders of Illinois Central Corporation.
EXHIBIT A
PERFORMANCE AWARDS
Target Awards
Salary
Grade Target Award
(As a % of Base Salary)
A 75%
B-C 65%
D-E 60%
Maximum Awards
Salary
Grade Maximum Award
(As a % of Target Award)
A 150%
B-C 150%
D-E 150%
EXHIBIT B
PERFORMANCE AWARDS: COMPANY PERFORMANCE GOALS
The following chart illustrates the methodology for
calculating a Covered Employee's Performance Award.
Payouts for performance between discrete threshold,
target and maximum levels are to be interpolated.
<TABLE>
<CAPTION>
RETURN ON TOTAL CAPITAL (2)
<S> <C> <C> <C> <C> <C>
Below (1) Threshold Target Maximum
Threshold
Maximum 0% 50% 117% 150%
ANNUAL
REVENUE Target 0% 50% 100% 133%
GROWTH
Threshold 0% 50% 83% 116%
Below
Threshold 0% 50% 67% 100%
</TABLE>
(1) An ROTC "governor" prevents the payout for
revenue growth (as a % of target) from
exceeding the payout for ROTC until the
company achieves its ROTC target.
(2) ROTC measure calculated after accrual for
Performance Awards.
EXHIBIT C
STOCK OPTION AWARDS
Basis For Assessing Company's 3-Year Performance(1)
<TABLE>
<CAPTION>
<S> <C> <C>
Weighting of Company's
Percentile Ranking
Measurement Area Reference Group (Prior 3-Year Period)(1)
Total Shareholder Return(2) S&P Midcap 400 50%
(Price Apprec. & Dividends)
ROTC (3) Class I Railroads 25%
Revenue Growth (4) Class I Railroads 25%
Total 100%
</TABLE>
(1) Basis for 1994 will be 1994 results of
Reference Group. Basis for 1995 will be average of
1994 and 1995; basis for 1996 and thereafter will
be three year average.
(2) Calculated by rank ordering the 3-year
annualized CAGR of the companies within the Midcap
400.
(3) Calculated by rank ordering the 3-year average
ROTC.
(4) Calculated by rank ordering the 3-year average
growth rate.
Performance-Based Stock Option Award
Grants by Individual by Grade
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Company's Weighted Company's Weighted Company's Weighted Average
Average Performance Average Performance Average Performance
Ranking: Ranking: Ranking:
Threshold Performance Target Performance Maximum Performance
Salary
Grade
< = 25%ile 50%ile > = 75%ile
A 21,500 43,000 64,500
B 10,550 21,100 31,650
C 7,375 14,750 22,125
D 4,850 9,700 14,550
</TABLE>
Straight-line interpolation between Threshold,
Target and Maximum performance levels.
EXHIBIT 10.2
ILLINOIS CENTRAL RAILROAD COMPANY
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
CERTIFICATE
I, , Secretary of Illinois
Central Railroad Company, hereby certify that the
attached document is a correct copy of Illinois
Central Railroad Company Supplemental Executive
Retirement Plan as adopted effective as of
January 1, 1994.
Dated this day of _________,
1994.
As Secretary as Aforesaid
(Seal)
ILLINOIS CENTRAL RAILROAD COMPANY
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Illinois Central Railroad Company
Supplemental Executive Retirement Plan is adopted
effective as of January 1, 1994, for the Executive
Employees of Illinois Central Railroad Company.
The purpose of the Plan is to ensure that the
retirement benefits provided to Executive Employees
enhance the overall effectiveness of the Illinois
Central Railroad Company executive compensation
program and attract, retain and motivate such
individuals.
Accordingly, Illinois Central Railroad Company
hereby adopts the Plan pursuant to the terms and
provisions set forth below:
ARTICLE I
DEFINITIONS
Wherever used herein the following terms shall
have the meanings hereinafter set forth:
1.1. "Affiliated Company" means a business
entity, or predecessor of such entity, if any,
which is a member of a controlled group of
corporations of which the Company is also a member.
1.2. "Board" means the Board of Directors of
the Company.
1.3. "Code" means the Internal Revenue Code
of 1986, as amended from time to time, and any
regulations relating thereto.
1.4. "Committee" means the Illinois Central
Benefit Administration Committee that is
responsible for the administration of the Plan.
1.5. "Company" means Illinois Central
Railroad Company, a Delaware corporation, or, to
the extent provided in Section 5.10 below, any
successor corporation or other entity resulting
from a merger or consolidation into or with the
Company or a transfer or sale of substantially all
of the assets of the Company. An Affiliated
Company may adopt the Plan on behalf of its
Executive Employees, by resolution of its Board of
Directors, approved in writing by the Committee.
1.6. "Disabled" means a Participant is: (i)
entitled to benefits under the Company's group
long-term disability plan; or (ii) permanently and
totally disabled as determined in the sole
discretion of the Committee.
1.7. "Early Retirement Date" means the first
day of the calendar month coincident with or next
following the date on which a Participant has both
attained age 55 years and completed at least 10
Years of Credited Service.
1.8. "Executive Employee" means each
executive employee of the Company in Salary Grades
A through G, as such Salary Grades are described in
the salary component of the performance
compensation program approved by the Board in 1993.
The Board from time to time shall have the
discretion to designate individuals occupying other
executive or management positions with the Company
as Executive Employees for purposes of the Plan.
1.9. "Final Average Earnings" means one-
third of a Participant's total cash compensation
from the Company, including bonuses, plus amounts
the Participant elects to defer under the Qualified
Retirement Plan and any other qualified or non-
qualified plans maintained by the Company, during
the 36 consecutive months within the last 60 months
preceding the earlier of the Participant's
Retirement Date or other termination of employment
with the Company during which the Participant's
compensation was highest.
1.10. "Normal Retirement Date" means the
first day of the calendar month coincident with or
next following the date a Participant attains age
65 years.
1.11. "Participant" means an Executive
Employee of the Company who is eligible for
participation pursuant to Section 1.8 and who has
completed the enrollment forms provided by the
Committee.
1.12. "Plan" means the Illinois Central
Railroad Company Supplemental Executive Retirement
Plan, as set forth herein and as hereinafter
amended from time to time.
1.13. "Qualified Retirement Plan" means the
Illinois Central Corporation Supplemental
Retirement and Savings Plan established effective
January 1, 1989, as amended from time to time, and
each successor or replacement plan. Except as
otherwise provided in this Article I, all defined
terms used in the Plan that are defined in the
Qualified Retirement Plan shall have the same
meaning in the Plan as is set forth in the
definition in the Qualified Retirement Plan.
1.14. "Retirement Date" means a
Participant's actual date of retirement from
employment with the Company after the Participant's
Normal Retirement Date or Early Retirement Date.
1.15. "Spouse" or "Surviving Spouse" means a
person who is legally married to a Participant
throughout the one year period ending on the
earlier of the date the Participant's Supplemental
Retirement Benefit commences or the date of the
Participant's death.
1.16. "Supplemental Retirement Benefit"
means the benefit payable to a Participant pursuant
to Section 2.2 by reason of the Participant's
termination of employment with the Company for any
reason other than death and after completing at
least five Years of Credited Service.
1.17. "Supplemental Surviving Spouse
Benefit" means the benefit payable to a Surviving
Spouse pursuant to Section 2.3 of the Plan.
1.18. "Years of Credited Service" means the
number of consecutive 12-month periods of the
Participant's employment with the Company beginning
with the later of January 1, 1994 or the date of
the Participant's employment or reemployment with
the Company. No more than 10 Years of Credited
Service will be counted by the Plan. A
Participant's employment with the Company prior to
January 1, 1994, shall not be counted for purposes
of determining Years of Credited Service. A
Participant who becomes Disabled while an active
Participant in the Plan shall continue to earn
Years of Credited Service until his Retirement
Date. No credit shall be given for partial years
of employment or periods of employment preceding a
termination of employment and return to work.
1.19. Words in the masculine gender shall
include the feminine and the singular shall include
the plural, and vice versa, unless qualified by the
context. Any headings used herein are included for
ease of reference only and are not to be construed
so as to alter the terms hereof.
ARTICLE II
SUPPLEMENTAL RETIREMENT BENEFIT AND
SUPPLEMENTAL SURVIVING SPOUSE BENEFIT
2.1. Form of Supplemental Retirement
Benefit. If the Participant does not have a Spouse
at the time payment of his Supplemental Retirement
Benefits is to commence, such Benefit will be paid
in the form of an annuity for the life of the
Participant only. A Participant's Supplemental
Retirement Benefit will be paid in the form of a
joint and 50% survivor annuity if the Participant
has a Spouse at the time payment of his
Supplemental Retirement Benefits is to commence.
Notwithstanding the foregoing, the 50% survivor
annuity portion of a Supplemental Retirement
Benefit shall not commence to a Spouse or Surviving
Spouse until the first day of the month following
the later of: (i) the date on which the Spouse or
Surviving Spouse attains age 55 years; or (ii) the
date of the Participant's death.
2.2. Amount of Supplemental Retirement
Benefit. The annual amount of a Participant's
Supplemental Retirement Benefit, commencing on the
Participant's Normal Retirement Date, shall be
equal to the difference between (a) and (b) below:
(a) The product of: (i) three and one-half
percent (3.5%); (ii) the Participant's Final
Average Earnings; and (iii) the Participant's
number of Years of Credited Service.
LESS
(b) The annual annuitized value of a fifteen
year annuity that could be provided with the sum
of: (i) the portion of the Participant's account in
the Qualified Retirement Plan which is attributable
solely to Company contributions and the earnings
thereon; (ii) the Participant's account in the
Company's Excess Plan; and (iii) the Participant's
account balance in the Company's Account Balance
Plan.
In no event shall the amount calculated under
subsection (a) above exceed 35% of a Participant's
Final Average Earnings.
For purposes of determining the offset portion
attributable to the portion of the Participant's
account in the Qualified Retirement Plan which is
attributable solely to Company contributions and
the earnings thereon in subsection (b) above, the
amount in subsection (b) will be increased, in the
sole discretion of the Committee, to the amount
that would have been in that Participant's account
if not for some or all of the following
circumstances: (i) the Participant made Pre-Tax
Contributions at less than the level necessary to
receive the maximum Company matching contribution
available under the Qualified Retirement Plan
(except that, this clause (i) shall not apply to
the extent that the Participant's level of Pre-Tax
Contributions was reduced or limited in any year to
comply with Code limitations on Pre-Tax
Contributions); or (ii) the Participant's account
was reduced by a loan, withdrawal or qualified
domestic relations order as to the Participant. For
purposes of determining the offset portion, the
average annual rate of interest earned by the
Participant's account in the Qualified Retirement
Plan shall be assumed to be six percent (6%);
provided, however, that if the average annual
interest rate earned by a Participant's account
exceeds 6%, the amount of earnings attributable to
such excess shall not be applied as a reduction in
subsection (b) above.
The amounts described in (a) and (b) shall be
computed as of the date of termination of
employment of the Participant with the Company in
the form of an annuity commencing on the
Participant's Normal Retirement Date, using
reasonable actuarial assumptions selected by the
Committee for this purpose.
2.3. Supplemental Surviving Spouse Benefit.
If a Participant dies after becoming Disabled or
completing at least five Years of Credited Service,
but prior to commencement of the Participant's
Supplemental Retirement Benefit under this Plan, a
Surviving Spouse Benefit shall be payable to the
Participant's Surviving Spouse. The monthly amount
of the Supplemental Surviving Spouse Benefit
payable to a Surviving Spouse shall be equal to 50%
of the monthly amount that the Participant would
have been entitled to receive in accordance with
Section 2.2, based on the Participant's Years of
Credited Service and Final Average Earnings as of
his date of Death. The Supplemental Surviving
Spouse Benefit shall be payable over the lifetime
of the Surviving Spouse only in monthly
installments commencing on the first day of the
month following the later of: (i) the date on which
the Surviving Spouse attains age 55 years; or (ii)
the date of the Participant's death. The
Supplemental Surviving Spouse Benefit shall
terminate with the payment for the month in which
occurs the date of the Surviving Spouse's death.
2.4. Commencement of Supplemental Retirement
Benefit. Payment of the Supplemental Retirement
Benefit to a Participant shall commence on the
first day of the month coincident with or next
following the Participant's Normal Retirement Date.
A Participant who retires on an Early Retirement
Date may elect, by written election filed with the
Committee, to have his Supplemental Retirement
Benefit commence prior to his Normal Retirement
Date on the first day of any month coincident with
or next following his Early Retirement Date. The
Supplemental Retirement Benefit of a Disabled
Participant shall commence at or after the date
that would have been the Participant's Early or
Normal Retirement Date.
2.5. Actuarial Equivalent. A Supplemental
Retirement Benefit that commences at any time prior
to the Participant's Normal Retirement Date, shall
be the actuarial equivalent of the Supplemental
Retirement Benefit determined pursuant to Section
2.2 above payable at the Participant's Normal
Retirement Date, based upon actuarial adjustments
and assumptions adopted by the Committee for this
purpose.
2.6. Limitation on Distribution.
Notwithstanding the foregoing provisions of the
Plan relating to distribution of Participant's
Supplemental Retirement Benefit, if distribution of
such Benefit in any calendar year would not be
deductible by the Company because of the
limitations of Code Section 162(m), such
distribution shall be postponed in whole or in
part, until the first calendar year in which such
distribution would not be limited as to
deductibility by Code Section 162(m).
2.7. Unscheduled Withdrawal Right. A
participant may request an unscheduled withdrawal
after his Retirement Date of the then present
value of his Supplemental Retirement Benefit under
the Plan; provided that the present value amount
distributable to such Participant shall be reduced
by 10 percent. In the event of the termination
of the Plan or a Change in Control of the Company,
a Participant may request an unscheduled withdrawal
of all or any portion of the present value of his
Supplemental Retirement Benefit by written notice
to the Committee; provided that, the present value
amount distributable to such Participant will be
reduced by six percent (rather than 10 percent, as
provided above). For purposes of this
Section 2.7, the term "Company" shall include
Illinois Central Corporation, and a "Change in
Control" of the Company shall be deemed to have
occurred if:
(a) any "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange
Act") is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act,
except that a person shall be deemed to be the
"beneficial owner" of all shares that any such
person has the right to acquire pursuant to any
agreement or arrangement or upon exercise of
conversion rights, warrants, options or otherwise,
without regard to the sixty day period referred to
in such Rule), directly or indirectly, of
securities representing 25% or more of the combined
voting power of the Company's then outstanding
securities; provided, however, that the following
acquisitions shall not constitute a Change in
Control: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company or
(iii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the
Company; or
(b) at any time during any period of two
consecutive years (not including any period prior
to January 1, 1994) individuals who at the
beginning of such period constituted the Board (the
"Incumbent Board") cease for any reason to
constitute at least a majority of the Board;
provided, however, that any individual becoming a
director subsequent to such date whose election, or
nomination for election by the Company's
shareholders, was approved by a vote of at least a
majority of the directors then comprising the
Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board,
but excluding, for this purpose, any such
individual whose initial assumption of office
occurs as a result of either an actual or
threatened election contest (as such terms are used
in Rule 14a-11 or Regulation 14A promulgated under
the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf
of a person other than the Board.
ARTICLE III
ADMINISTRATION OF THE PLAN
3.1. Administration by the Committee. The
Committee shall be responsible for the general
operation and administration of the Plan and for
carrying out the provisions thereof.
3.2. Powers and Duties of Committee. The
Committee shall administer the Plan in accordance
with its terms and shall have all powers necessary
to carry out the provisions of the Plan. The
Committee shall interpret the Plan and shall
determine all questions arising in the
administration, interpretation, and application of
the Plan, including but not limited to, questions
of eligibility and the status and rights of
Participants, Spouses and other persons. Any such
determination by the Committee shall presumptively
be conclusive and binding on all persons. The
regularly kept records of the Company shall be
conclusive and binding upon all persons with
respect to a Participant's date and length of
employment, Years of Credited Service, time and
amount of compensation and the manner of payment
thereof, type and length of any absence from work
and all other matters contained therein relating to
Participants. All rules and determinations of the
Committee shall be uniformly and consistently
applied to all persons in similar circumstances.
To the extent not inconsistent with this Plan, all
provisions set forth in the Qualified Retirement
Plan with respect to the administrative powers and
duties of the Committee, expenses of
administration, and procedures for filing claims,
also shall be applicable with respect to this Plan.
ARTICLE IV
AMENDMENT OR TERMINATION
4.1. Amendment or Termination. The Company
intends the Plan to be permanent but reserves the
right to amend or terminate the Plan. Any such
amendment or termination shall be made pursuant to
a resolution of the Board and shall be effective as
of the date of such resolution.
4.2 Effect of Amendment or Termination. No
amendment or termination of the Plan shall directly
or indirectly deprive any current or former
Participant or Surviving Spouse of all or any
portion of any Supplemental Retirement Benefit or
Supplemental Surviving Spouse Benefit, the payment
of which has commenced prior to the effective date
of such amendment or termination, or which would be
payable if the Participant terminated employment
for any reason, including death, on such effective
date. Upon termination of the Plan, distribution
of Supplemental Retirement Benefits and
Supplemental Surviving Spouse Benefits shall be
made to Participants, their Surviving Spouses or
beneficiaries in the manner and at the time
described in Section 2 of the Plan. No additional
Supplemental Retirement Benefits or Supplemental
Surviving Spouse Benefits shall be earned after
termination of the Plan.
ARTICLE V
GENERAL PROVISIONS
5.1. Participants' Rights Unsecured. Except
as set forth in Section 5.2, the Plan at all times
shall be entirely unfunded and no provision shall
at any time be made with respect to segregating any
assets of the Company for payment of any benefits
hereunder. The right of a Participant or the
Participant's Surviving Spouse to receive a benefit
hereunder shall be an unsecured claim against the
general assets of the Company, and neither the
Participant nor a Surviving Spouse or beneficiary
shall have any rights in or against any specific
assets of the Company.
5.2. Trust Agreement. Notwithstanding the
provisions of Section 5.1, the Company shall enter
into a trust agreement ("Trust Agreement") whereby
the Company shall agree to contribute to a trust
("Trust") for the purpose of accumulating assets to
assist the Company in fulfilling its obligations to
Participants and Surviving Spouses hereunder. Such
Trust Agreement shall be substantially in the form
of the model trust agreement set forth in Internal
Revenue Service Revenue Procedure 92-64, or any
subsequent Internal Revenue Service Revenue
Procedure, and shall include provisions required in
such model trust agreement that all assets of the
Trust shall be subject to the creditors of the
Company in the event of insolvency.
5.3. General Conditions. Any amount or
benefit payable under the Qualified Retirement Plan
shall be paid solely in accordance with the terms
and conditions of the Qualified Retirement Plan,
and nothing in this Plan shall operate or be
construed in any way to modify, amend or affect the
terms and provisions of the Qualified Retirement
Plan.
5.4. No Guaranty of Benefits. Nothing
contained in the Plan shall constitute a guaranty
by the Company or any other person or entity that
the assets of the Company will be sufficient to pay
any benefit hereunder. No Participant, Surviving
Spouse or other person shall have any right to
receive a benefit or a distribution of
contributions under the Plan except in accordance
with the terms of the Plan.
5.5. No Enlargement of Employee Rights.
Establishment of the Plan shall not be construed to
give any Participant the right to be retained in
the service of the Company.
5.6. Spendthrift Provision. No interest of
any person or entity in, or right to receive a
distribution under, the Plan shall be subject in
any manner to sale, transfer, assignment, pledge,
attachment, garnishment, or other alienation or
encumbrance of any kind; nor may such interest or
right to receive a distribution be taken, either
voluntarily or involuntarily for the satisfaction
of the debts of, or other obligations or claims
against, such person or entity, including claims
for alimony, support, separate maintenance and
claims in bankruptcy proceedings.
5.7. Applicable Law. The Plan shall be
construed and administered under the laws of the
State of Illinois except to the extent preempted by
federal law.
5.8. Small Benefits. If the actuarial value
of any Supplemental Retirement Benefit or
Supplemental Surviving Spouse Benefit is less than
$3,500, the Company may pay the actuarial value of
such Benefit to the Participant or Surviving Spouse
in a single lump sum in lieu of any further Benefit
payments hereunder.
5.9. Incapacity of Recipient. Subject to
applicable state law, if any person entitled to a
payment under the Plan is deemed by the Company to
be incapable of personally receiving and giving a
valid receipt for such payment, then, unless and
until claim therefor shall have been made by a duly
appointed guardian or other legal representative of
such person, the Company may provide for such
payment or any part thereof to be made to any other
person or institution then contributing toward or
providing for the care and maintenance of such
person. Any such payment shall be a payment for
the account of such person and a complete discharge
of any liability of the Company and the Plan
therefor.
5.10. Corporate Successors. The Plan shall
not be automatically terminated by a transfer or
sale of assets of the Company, or by the merger or
consolidation of the Company into or with any other
corporation or other entity, but the Plan shall be
continued after such sale, merger or consolidation
only if and to the extent that the transferee,
purchaser or successor entity agrees to continue
the Plan. In the event that the Plan is not
continued by the transferee, purchaser or successor
entity, the Plan shall terminate subject to the
provisions of Section 4.2.
5.11. Unclaimed Benefit. Each Participant,
Surviving Spouse or beneficiary shall keep the
Company informed of his or her current address.
The Company shall not be obligated to search for
the whereabouts of any person. If the location of
a Participant is not made known to the Company
within three years after the date on which payment
of the Participant's benefits under the Plan, may
first be made, payment may be made as though the
Participant had died at the end of the three-year
period. If, within one additional year after such
three-year period has elapsed, or, within three
years after the actual death of a Participant, the
Company is unable to locate any Surviving Spouse or
beneficiary of the Participant, then the Company
shall have no further obligation to pay any benefit
hereunder to such Participant, Surviving Spouse or
beneficiary or any other person and such benefit
shall be irrevocably forfeited.
5.12. Limitations on Liability.
Notwithstanding any of the preceding provisions of
the Plan, none of the Company, any member of the
Committee, nor any individual acting as an employee
or agent of the Company or the Committee, shall be
liable to any Participant, former Participant,
Surviving Spouse or any other beneficiary or other
person for any claim, loss, liability or expense
incurred in connection with the Plan.
5.13. Claims Procedure. In the event that a
Participant's claim for benefits under the Plan is
denied in whole or in part by the Committee, the
Committee will notify the Participant (or Spouse or
other beneficiary) of the denial. Such
notification will be made in writing, within 90
days of the date the claim is received by the
Committee. The notification will include: (i) the
specific reasons for the denial; (ii) specific
reference to the Plan provisions upon which the
denial is based; (iii) a description of any
additional information necessary for the claimant
to perfect the claim and an explanation of why such
material or information is necessary; and (iv) an
explanation of the applicable review procedures.
The Participant (or Spouse or other
beneficiary) has 60 days from the date he receive
notice of a claim denial to file a written request
for review of the denial with the Committee. The
Committee will review the claim denial and inform
the Participant in writing of its decision within
60 days of the date the claim review request is
received by the Committee. This decision will be
final.
5.14 Insurance Policy Provisions. The
Participant will cooperate with the Company by
furnishing any and all information requested by
the Company, in order to facilitate the payment
of benefits hereunder, taking such physical
examinations as the Company may deem necessary
and taking such other relevant action as may be
requested by the Company. If the Participant
refuses to so cooperate, the Company shall have
no obligation to the Participant or his
designated beneficiary under this Plan.
EXHIBIT 10.3
ILLINOIS CENTRAL RAILROAD COMPANY
EXECUTIVE DEFERRED COMPENSATION PLAN
CERTIFICATE
I, , Secretary of Illinois
Central Railroad Company, hereby certify that the
attached document is a correct copy of Illinois
Central Railroad Company Executive Deferred
Compensation Plan as adopted effective as of
January 1, 1994.
Dated this day of _________, 1994.
As Secretary as Aforesaid
(Seal)
ILLINOIS CENTRAL RAILROAD COMPANY
EXECUTIVE DEFERRED COMPENSATION PLAN
The Illinois Central Railroad Company Executive
Deferred Compensation Plan is adopted effective as
of January 1, 1994, for the Executive Employees of
Illinois Central Railroad Company. The purpose of
the Plan is to permit Executive Employees to
contribute a portion of their Compensation on a
pre-tax basis toward retirement benefits, enhance
the overall effectiveness of the Illinois Central
Railroad Company executive compensation program and
to attract, retain and motivate such individuals.
Accordingly, Illinois Central Railroad Company
hereby adopts the Plan pursuant to the terms and
provisions set forth below:
ARTICLE I
DEFINITIONS
Wherever used herein the following terms shall
have the meanings hereinafter set forth:
1.1. "Account" or "Accounts" means the account
or accounts maintained under the Plan by the
Committee in the Participant's name to which
Compensation deferrals and interest earnings are
credited in accordance with the Plan. A separate
Account shall be maintained for each Deferral Unit.
A Participant shall be fully vested in the amount
in his Accounts at all times.
1.2. "Affiliated Company" means a business
entity, or predecessor of such entity, if any,
which is a member of a controlled group of
corporations which includes the Company.
1.3. "Board" means the Board of Directors of
the Company.
1.4. "Bonus" means the additional cash
remuneration payable to a Participant pursuant to
the Company's performance compensation program or
any other plan, program or arrangement under which
the Company pays an amount of cash remuneration to
a Participant above such Participant's Base Salary.
1.5. "Code" means the Internal Revenue Code of
1986, as amended from time to time, and any
regulations relating thereto.
1.6. "Committee" means the Illinois Central
Benefit Administration Committee that is
responsible for the administration of the Plan.
1.7. "Company" means Illinois Central Railroad
Company, a Delaware corporation, or, to the extent
provided in Section 6.10 below, any successor
corporation or other entity resulting from a merger
or consolidation into or with the Company or a
transfer or sale of substantially all of the assets
of the Company. An Affiliated Company may adopt
the Plan on behalf of its Executive Employees, by
resolution of its Board of Directors, approved in
writing by the Committee.
1.8. "Compensation" means a Participant's
Salary and Bonus payable in any calendar year.
Compensation deferrals elected under this Plan
shall not affect the determination of compensation
or earnings for purposes of any other plan, policy
or program (including, but not limited to, the
Qualified Retirement Plan and the Supplemental
Executive Retirement Plan) maintained by the
Company.
1.9. "Declared Rate" means a rate of interest
established for each Plan Year, equal to 100
percent of the 120-month rolling average of the 10-
Year Treasury Note rate, determined as of December
15 of the preceding Plan Year.
1.10. "Deferral Unit" means the commitment to
make Compensation deferral contributions in the
same amount for a period of five consecutive Plan
Years, which is created by each Compensation
deferral election under Section 2.1.
1.11. "Disabled" means a Participant is (i)
entitled to benefits under the Company's group
long-term disability plan; or (ii) permanently and
totally disabled as determined in the sole
discretion of the Committee.
1.12. "Early Retirement Date" means the first
day of the calendar month coincident with or next
following the date on which a Participant has: (i)
attained age 55 years; (ii) completed at least 10
Years of Credited Service; and (iii) completed all
Deferral Units.
1.13. "Executive Employee" means each executive
employee of the Company in salary grades A through
G, as such salary grades are described in the
salary component of the performance compensation
program approved by the Board in 1993. The Board
from time to time shall have the discretion to
designate individuals occupying other executive or
management positions with the Company as Executive
Employees for purposes of the Plan.
1.14. "Normal Retirement Date" means the first
day of the calendar month coincident with or next
following the date on which the Participant has
both attained age 65 years and completed all
Deferral Units.
1.15. "Participant" means an Executive Employee
of the Company who is eligible for participation
pursuant to Section 1.13 and who has completed the
election and enrollment forms provided by the
Committee. A Participant who is demoted out of a
covered salary grade will continue as a Participant
as to his existing Accounts and Deferral Units, but
shall not be eligible to make further Compensation
deferral elections.
1.16. "Plan" means the Illinois Central
Railroad Company Executive Deferred Compensation
Plan, as set forth herein and as hereinafter
amended from time to time.
1.17. "Plan Year" means the Company's W-2 year.
1.18. "Qualified Retirement Plan" means the
Illinois Central Corporation Supplemental
Retirement and Savings Plan established effective
January 1, 1989, as amended from time to time, and
each successor or replacement plan.
1.19. "Retirement Date" means a Participant's
actual date of retirement from employment with the
Company after the Participant's Normal Retirement
Date or Early Retirement Date.
1.20. "Retirement Rate" means a rate of
interest established for each Plan Year equal to
120 percent of the 120-month rolling average of the
10-Year Treasury Note rate, determined as of
December 15 of the preceding Plan Year.
1.21. "Salary" means a Participant's annual
base salary rate for the Plan Year, as specified by
the Company prior to each Plan Year.
1.22. "Years of Credited Service" means the
number of consecutive 12-month periods of the
Participant's employment with the Company beginning
with the later of January 1, 1994 or the date of
the Participant's employment or reemployment with
the Company. A Participant who becomes Disabled
while an active Participant in the Plan shall
continue to earn Years of Credited Service until
his Retirement Date. No credit shall be given for
partial years of employment or periods of
employment preceding a termination of employment
and return to work.
1.23. Words in the masculine gender shall
include the feminine and the singular shall include
the plural, and vice versa, unless qualified by the
context. Any headings used herein are included for
ease of reference only and are not to be construed
so as to alter the terms hereof.
ARTICLE II
COMPENSATION DEFERRAL CONTRIBUTIONS
2.1. Compensation Deferral Elections. Any
Executive Employee may elect to become a
Participant under the Plan by completing the
election form provided by the Committee. A
Participant may elect to defer annually the receipt
of a portion of the Compensation otherwise payable
to him by the Company in any Plan Year. The amount
of Compensation deferred by a Participant shall be
a fixed amount or percentage of such Compensation,
but shall not exceed: (i) fifty percent (50%) of
such Participant's Base Salary; and (ii) one
hundred percent (100%) of such Participant's Annual
Bonus. Each Compensation deferral election
executed by a Participant shall create a Deferral
Unit. A Deferral Unit must be for at least $25,000
of Compensation; that is, it must cause a total of
at least $25,000 to be deferred over the five year
Deferral Unit period.
The election by which a Participant elects to
defer compensation as provided in this Plan shall
be in writing, signed by the Participant, and
delivered to the Committee prior to January 1 of
the Plan Year in which the Compensation to be
deferred is otherwise payable to the Participant;
except that, in the year in which a Participant
first becomes eligible to participate in the Plan,
such Participant may make an election to defer
Compensation for services to be performed within 30
days after the date he becomes eligible.
Any deferral election made by the Participant shall
be irrevocable with respect to the Compensation
covered by such election.
2.2. Investment of Deferred Amounts. All
Compensation deferral amounts shall be credited to
a Participant's Accounts and credited with interest
from the date the Compensation amount would have
been paid to the Participant, if not deferred,
until the Participant's Retirement Date, or date of
earlier termination of employment.
(a) If the Participant's employment terminates
after the Participant has attained his Retirement
Date or on account of Disability or death, the
Participant's Accounts shall be credited with
interest at the Retirement Rate.
(b) If the Participant's employment terminates
prior to the Participant's Retirement Date, the
Participant's Accounts shall be credited with
interest at the Declared Rate.
(c) If the Participant's employment terminates
prior to the Participant's Retirement Date and the
Participant is receiving installment payments in
accordance with Section 3.2, the Participant's
Accounts shall be credited with interest at a rate
equal to the lesser of: (i) the prime rate, as
published in The Wall Street Journal on the first
day of the month preceding termination and
recalculated annually; or (ii) the Declared Rate.
(d) If the Participant receives a
distribution pursuant to Sections 3.5(b), 3.7 or
3.8, prior to employment terminations, the
Participant's Accounts shall be credited with
interest at the Declared Rate.
Notwithstanding the foregoing and the provisions of
Section 1.20, the Accounts of a deceased
Participant shall be credited with interest at the
Retirement Rate, except that such Rate shall be
determined as of January 1 of each Plan Year.
Interest at the rate described above shall be
credited monthly, compounded annually. The
Committee shall provide each Participant with a
written statement of his Accounts at least
annually.
2.3. Acceleration or Cessation of Compensation
Deferrals. With respect to any Deferral Unit, a
Participant may elect to:
(a) halt Compensation deferrals to be made in
accordance with such Deferral Unit; or
(b) accelerate the Compensation deferral to be
made in any future Plan Year within the Deferral
Unit into an earlier Plan Year, subject to the
limits of Section 2.1.
Any such change to a Deferral Unit must be elected
in writing filed with the Committee prior to
beginning of the Plan Year for which the election
is to be effective.
ARTICLE III
DISTRIBUTION OF COMPENSATION DEFERRALS
3.1. Cessation of Deferrals. All Compensation
deferrals shall cease upon a Participant's
termination of employment with the Company, except
as follows:
(a) if a Participant is Disabled, Compensation
deferrals that are part of a Deferral Unit shall
continue as long as the Participant continues to
receive Salary or Bonus; and
(b) if a Participant's employment terminates
on account of the Participant's death, the Company
shall contribute to the Plan the amount that would
have been contributed as a Compensation deferral by
the Participant under any Deferral Unit that is
incomplete as of the Participant's death.
3.2. Termination of Employment Prior to Death,
Disability or Retirement. Upon termination of a
Participant's employment with the Company prior to
a Retirement Date and for any reason other than
death or Disability, the Participant's Accounts
shall be distributed, notwithstanding the
Participant's elections made pursuant to Sections
3.4 and 3.5, as follows:
(a) If the Participant terminated employment
prior to completing 10 Years of Credited Service,
the Participant's Accounts shall be distributed in
a single lump sum distribution.
(b) If the Participant terminated employment
after completing at least 10 Years of Credited
Service, the Participant's Accounts shall be
distributed in: (i) a single lump sum distribution;
or (ii) in substantially equal monthly installments
over a period of 5 years, if the Participant had
elected the installment method of distribution
pursuant to Section 3.4 below.
Notwithstanding the foregoing, if a lump sum
otherwise would be payable in accordance with this
Section 3.2, but the amount in a Participant's
Accounts exceeds $50,000, the Committee, in its
sole discretion, may cause distribution of the
Participant's Accounts in substantially equal
annual payments over a period of three years.
Distribution shall be made or commence within 60
days of the Participant's employment termination
date and will be based on the balance in the
Participant's Accounts at the end of the month of
the Participant's employment termination.
3.3. Distribution Due to Death. If a
Participant dies before complete distribution of
his Accounts, any remaining amount in the
Participant's Accounts shall be distributed to the
beneficiary designated by the Participant's in the
form and period elected by the Participant; except
that, if the amount in the Participant's Accounts
as of the date of the Participant's death is
$50,000 or less, such amount shall be paid to the
designated beneficiary in a single lump sum
payment. If a Participant has not designated a
beneficiary under the Plan, or if no designated
beneficiary is living on the date of distribution
hereunder, amounts distributable pursuant to this
Section shall be distributed to those persons or
entities entitled to receive distributions of the
Participant's accounts under the Qualified
Retirement Plan. Interest shall be credited to a
deceased Participant's Accounts, until such
Accounts are fully distributed, at the Retirement
Rate.
3.4. Form of Distribution After Retirement
Date. Each Participant shall elect the form and
timing of the distribution of his Accounts upon his
Normal Retirement Date, at the time the Participant
elects Compensation deferrals under Section 2.1
above. The Participant may elect to have his
Accounts distributed after his Retirement Date as
follows:
(a) in a lump sum distribution; or
(b) in substantially equal monthly
installment payments over a fixed period of 5, 10
or 15 years.
If the Participant fails to elect a form or period
of distribution, the Participant's Accounts will be
paid in monthly installments over a period of 15
years.
3.5. Commencement of Distribution. Each
Participant shall elect, at the time of his
Compensation deferral election, the commencement
date for distribution of his Accounts; provided
that such election shall only be effective if the
Participant's employment termination is after a
Retirement Date or on account of death or
Disability.
(a) If distribution of a Participant's
Accounts is made on account of the Participant's
Retirement Date, distribution may commence as of
one of the following dates, as elected by the
Participant, at the time of his Compensation
deferral election: (i) within 60 days after the
Participant's Retirement Date; (ii) on the January
1 next following the Participant's Retirement Date;
or (iii) on a date that is a specified number of
years after the Participant's Retirement Date, but
not later than the earlier of (A) ten years after
the Participant's Retirement Date, or (B) the date
the Participant attains age 70 years. If the
Participant elects distribution of his Accounts in
the form of a lump sum but elects a deferred
commencement date, interest will be credited to his
Accounts in accordance with Section 2.2 through the
end of the month preceding the month of
distribution of his Accounts.
(b) A Participant may elect the form and
commencement of the distribution of his Accounts
which is expected to begin during his active
employment with the Company. The Participant may
elect, at the time of his Compensation deferral
election, to have a portion of his Accounts
distributed during his active employment as
follows: (i) in a lump sum distribution; or (ii)
in four substantially equal annual installment
payments. Election of an in-service distribution
period must specify a commencement date that is at
least seven years from the commencement date of the
Deferral Unit as to which the election applies. If
the distribution elected pursuant to this
subsection (b) causes the amount in a Participant's
Accounts to fall below $5,000, the entire amount of
the Participant's Accounts shall be distributed.
3.6. Change in Distribution Election. The
Committee may permit a Participant to change his
election as to the form, period or commencement of
distribution of his Accounts. A Participant may
request such change by writing filed with the
Committee. In the event a Participant changes his
election as to form, period or commencement of
distribution within 12 months prior to his
Retirement Date or other termination of employment
for a reason other than death or Disability, the
amount distributable from such Participant's
Accounts will be reduced by 10 percent. This
reduction is intended to discourage Participants
from changing their elections as to distribution
and prevent Participants from being deemed in
constructive receipt of their Accounts upon their
Retirement Date.
3.7. Unscheduled Withdrawal Right. A
Participant may request an unscheduled withdrawal
of all or any portion of his Accounts during or
after his active employment with the Company by
written notice to the Committee; provided that, the
amount distributable from such Participant's
Accounts will be reduced by 10 percent. If a
Participant elects an unscheduled withdrawal under
this Section while employed by the Company, the
Participant would not be permitted to elect a new
Deferral Unit for a period of twelve months
following the date of such withdrawal. This
reduction and ineligibility period is intended to
discourage Participants from requesting withdrawals
(other than on account of an unforeseeable
emergency) and prevent Participants from being
deemed in constructive receipt of their Accounts.
Notwithstanding the foregoing, if a Participant
requests an unscheduled withdrawal following a
Change in Control of the Company, the amount
distributable from such Participant's Accounts will
be reduced by six percent (rather than 10 percent,
as provided above). For purposes of this Section
3.7, the term "Company" shall include Illinois
Central Corporation, and a "Change in Control" of
the Company shall be deemed to have occurred if:
(a) any "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange
Act") is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act,
except that a person shall be deemed to be the
"beneficial owner" of all shares that any such
person has the right to acquire pursuant to any
agreement or arrangement or upon exercise of
conversion rights, warrants, options or otherwise,
without regard to the sixty day period referred to
in such Rule), directly or indirectly, of
securities representing 25% or more of the combined
voting power of the Company's then outstanding
securities; provided, however, that the following
acquisitions shall not constitute a Change in
Control: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company or
(iii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the
Company; or
(b) at any time during any period of two
consecutive years (not including any period prior
to January 1, 1994) individuals who at the
beginning of such period constituted the Board (the
"Incumbent Board") cease for any reason to
constitute at least a majority of the Board;
provided, however, that any individual becoming a
director subsequent to such date whose election, or
nomination for election by the Company's
shareholders, was approved by a vote of at least a
majority of the directors then comprising the
Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board,
but excluding, for this purpose, any such
individual whose initial assumption of office
occurs as a result of either an actual or
threatened election contest (as such terms are used
in Rule 14a-11 or Regulation 14A promulgated under
the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf
of a person other than the Board.
3.8. Hardship Distribution. A Participant may
request, by writing filed with the Committee, that
a distribution be made to him of all or part of the
amount then credited to his Accounts on account of
a severe financial hardship. The Committee will
approve such a distribution to the Participant only
in the event of an unforeseeable emergency. An
"unforeseeable emergency" is an unanticipated
emergency that is caused by an event beyond the
control of the Participant and that would result in
severe financial hardship to such Participant if
early withdrawal were not permitted. An
unforeseeable emergency that results in severe
financial hardship is an unexpected illness or
accident of the Participant or a dependent, loss of
a Participant's property due to casualty, or other
similar, extraordinary, unforeseeable circumstances
beyond the control of the Participant. The severe
financial hardship may not be relieved by an early
distribution under this Plan to the extent it might
otherwise be relieved through reimbursement or
compensation by insurance or otherwise, by
liquidation of a Participant's assets, or by
cessation of Compensation deferrals under the Plan.
Any hardship distribution under this Section will
be limited to the amount necessary to meet the
emergency.
3.9. Limitation on Distribution.
Notwithstanding the foregoing provisions of the
Plan relating to distribution of Participant's
Accounts, if distribution of a Participant's
Accounts in any calendar year would not be
deductible by the Company because of the
limitations of Code Section 162(m), such
distribution shall be postponed in whole or in
part, until the first calendar year in which such
distribution would not be limited as to
deductibility by Code Section 162(m).
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.1. Administration by the Committee. The
Committee shall be responsible for the general
operation and administration of the Plan and for
carrying out the provisions thereof.
4.2. Powers and Duties of Committee. The
Committee shall administer the Plan in accordance
with its terms and shall have all powers necessary
to carry out the provisions of the Plan. The
Committee shall interpret the Plan and shall
determine all questions arising in the
administration, interpretation, and application of
the Plan, including but not limited to, questions
of eligibility and the status and rights of
employees, Participants and other persons. Any
such determination by the Committee shall
presumptively be conclusive and binding on all
persons. The regularly kept records of the Company
shall be conclusive and binding upon all persons
with respect to a Participant's date and length of
employment, Years of Credited Service, time and
amount of Compensation and the manner of payment
thereof, type and length of any absence from work
and all other matters contained therein relating to
Participants. All rules and determinations of the
Committee shall be uniformly and consistently
applied to all persons in similar circumstances.
To the extent not inconsistent with this Plan, all
provisions set forth in the Qualified Retirement
Plan with respect to the administrative powers and
duties of the Committee, expenses of
administration, and procedures for filing claims,
also shall be applicable with respect to this Plan.
ARTICLE V
AMENDMENT OR TERMINATION
5.1. Amendment or Termination. The Company
intends the Plan to be permanent but reserves the
right to amend or terminate the Plan. Any such
amendment or termination shall be made pursuant to
a resolution of the Board and shall be effective as
of the date of such resolution. The Company
specifically reserves the right to amend the
credited rates of interest provided for in Section
2.2; provided that, any such change will not reduce
the amount of interest credited to a Participant's
Accounts prior to, or otherwise reduce the amount
in Participant's Accounts as of, the effective date
of the amendment.
5.2. Effect of Amendment or Termination. No
amendment or termination of the Plan shall divest
any Participant or beneficiary of the amount in the
Participant's Accounts, or of any rights to which
the Participant would have been entitled if the
Plan had been terminated immediately prior to the
effective date of such amendment. Upon termination
of the Plan, distribution of Participants' Accounts
shall be made to Participants or their
beneficiaries in the manner elected by such
Participants, unless the Company determines to
distribute all Accounts in lump sums. No
Compensation deferrals shall be permitted after
termination of the Plan.
ARTICLE VI
GENERAL PROVISIONS
6.1. Participants' Rights Unsecured. Except
as set forth in Section 6.2, the Plan at all times
shall be entirely unfunded and no provision shall
at any time be made with respect to segregating any
assets of the Company for payment of any benefits
hereunder. The right of a Participant or the
Participant's beneficiary to receive a distribution
of the Participant's Accounts hereunder shall be an
unsecured claim against the general assets of the
Company, and neither the Participant nor a
beneficiary shall have any rights in or against any
specific assets of the Company.
6.2. Trust Agreement. Notwithstanding the
provisions of Section 6.1, the Company shall enter
into a trust agreement ("Trust Agreement") whereby
the Company shall agree to contribute to a trust
("Trust") for the purpose of accumulating assets to
assist the Company in fulfilling its obligations to
Participants hereunder. Such Trust Agreement shall
be substantially in the form of the model trust
agreement set forth in Internal Revenue Service
Revenue Procedure 92-64, or any subsequent Internal
Revenue Service Revenue Procedure, and shall
include provisions required in such model trust
agreement that all assets of the Trust shall be
subject to the creditors of the Company in the
event of insolvency.
6.3. General Conditions. Any Qualified
Retirement Benefit or any other benefit payable
under the Qualified Retirement Plan shall be paid
solely in accordance with the terms and conditions
of the Qualified Retirement Plan, and nothing in
this Plan shall operate or be construed in any way
to modify, amend or affect the terms and provisions
of the Qualified Retirement Plan.
6.4. No Guaranty of Benefits. Nothing
contained in the Plan shall constitute a guaranty
by the Company or any other person or entity that
the assets of the Company will be sufficient to pay
any benefit hereunder. No Participant or other
person shall have any right to receive a benefit or
a distribution of Accounts under the Plan except in
accordance with the terms of the Plan.
6.5 No Enlargement of Employee Rights.
Establishment of the Plan shall not be construed to
give any Participant the right to be retained in
the service of the Company.
6.6. Spendthrift Provision. No interest of
any person or entity in, or right to receive a
distribution under, the Plan shall be subject in
any manner to sale, transfer, assignment, pledge,
attachment, garnishment, or other alienation or
encumbrance of any kind; nor may such interest or
right to receive a distribution be taken, either
voluntarily or involuntarily for the satisfaction
of the debts of, or other obligations or claims
against, such person or entity, including claims
for alimony, support, separate maintenance and
claims in bankruptcy proceedings.
6.7 Applicable Law. The Plan shall be
construed and administered under the laws of the
State of Illinois except to the extent preempted by
federal law.
6.8. Small Benefits. If the amount in a
Participant's Accounts at any time after the
Participant's termination of employment for any
reason, is less than $5,000, the Committee shall
cause the amount in such Accounts to be distributed
to the Participant or his beneficiary in a single
lump sum as soon as practicable.
6.9. Incapacity of Recipient. Subject to
applicable state law, if any person entitled to a
payment under the Plan is deemed by the Committee
to be incapable of personally receiving and giving
a valid receipt for such payment, then, unless and
until claim therefor shall have been made by a duly
appointed guardian or other legal representative of
such person, the Committee may provide for such
payment or any part thereof to be made to any other
person or institution then contributing toward or
providing for the care and maintenance of such
person. Any such payment shall be a payment for
the account of such person and a complete discharge
of any liability of the Company and the Plan
therefor.
6.10. Corporate Successors. The Plan shall
not be automatically terminated by a transfer or
sale of assets of the Company, or by the merger or
consolidation of the Company into or with any other
corporation or other entity, but the Plan shall be
continued after such sale, merger or consolidation
only if and to the extent that the transferee,
purchaser or successor entity agrees to continue
the Plan. In the event that the Plan is not
continued by the transferee, purchaser or successor
entity, the Plan shall terminate subject to the
provisions of Section 5.2.
6.11. Unclaimed Benefit. Each Participant or
beneficiary shall keep the Company informed of his
or her current address. The Company shall not be
obligated to search for the whereabouts of any
person. If the location of a Participant is not
made known to the Company within three years after
the date on which payment of the Participant's
benefits under the Plan, may first be made, payment
may be made as though the Participant had died at
the end of the three-year period. If, within one
additional year after such three-year period has
elapsed, or, within three years after the actual
death of a Participant, the Company is unable to
locate any beneficiary of the Participant, then the
Company shall have no further obligation to pay any
benefit hereunder to such Participant or
beneficiary or any other person and such benefit
shall be irrevocably forfeited.
6.12. Limitations on Liability.
Notwithstanding any of the preceding provisions of
the Plan, none of the Company, any member of the
Committee, nor any individual acting as an employee
or agent of the Company or the Committee, shall be
liable to any Participant, former Participant or
any beneficiary or other person for any claim,
loss, liability or expense incurred in connection
with the Plan.
6.13. Claims Procedure. In the event that a
Participant's claim for benefits under the Plan is
denied in whole or in part by the Committee, the
Committee will notify the Participant (or
beneficiary) of the denial. Such notification will
be made in writing, within 90 days of the date the
claim is received by the Committee. The
notification will include: (i) the specific reasons
for the denial; (ii) specific reference to the Plan
provisions upon which the denial is based; (iii) a
description of any additional information necessary
for the claimant to perfect the claim and an
explanation of why such material or information is
necessary; and (iv) an explanation of the
applicable review procedures.
The Participant (or beneficiary) has 60 days
from the date he receive notice of a claim denial
to file a written request for review of the denial
with the Committee. The Committee will review the
claim denial and inform the Participant (or
beneficiary) in writing of its decision within 60
days of the date the claim review request is
received by the Committee. This decision will be
final.
6.14. Insurance Policy Provisions. The
Participant will cooperate with the Company by
furnishing any and all information requested by
the Company, in order to facilitate the payment
of benefits hereunder, taking such physical
examinations as the Company may deem necessary
and taking such other relevant action as may be
requested by the Company. If the Participant
refuses to so cooperate, the Company shall have
no obligation to the Participant or his designated
beneficiary under this Plan.
If the Participant makes any material mis-
statement of information or nondisclosure of
medical history, then no benefits will be
payable by reason of this Plan to the
Participant or his Beneficiary, or in the
Company's sole discretion, benefits may be
payable in a reduced amount.
If the Participant commits suicide during
the two-year period beginning on the date that a
Policy is issued, or if the Participant makes
any material misstatement of information or
nondisclosure of medical history, then survivor
benefits under the Plan will be limited to the
amount in the Particiant's Account, plus interest
credited at the prime rate, paid in a lump sum.
EXHIBIT 10.4
ILLINOIS CENTRAL RAILROAD COMPANY
PERFORMANCE COMPENSATION PROGRAM
CERTIFICATE
I, , Secretary of Illinois
Central Railroad Company, hereby certify that the
attached document is a correct copy of Illinois
Central Railroad Company Performance Compensation
Program as adopted effective as of January 1, 1994.
Dated this day of , 1994.
As Secretary as Aforesaid
(Seal)
ILLINOIS CENTRAL RAILROAD COMPANY
PERFORMANCE COMPENSATION PROGRAM
The Illinois Central Railroad Company
Performance Compensation Program was adopted
November 23, 1993, effective as of January 1, 1994,
for the management employees of Illinois Central
Railroad Company and its Affiliated Companies. The
purpose of the Program is to enhance the overall
effectiveness of the Illinois Central Railroad
Company executive compensation program and to
attract, retain and motivate management employees.
ARTICLE I
DEFINITIONS
Wherever used herein the following terms shall
have the meanings hereinafter set forth:
1.1. "Affiliated Company" means a business
entity, or predecessor of such entity, if any,
which is a member of a controlled group of
corporations which includes the Company.
1.2. "Base Salary" means a Participant's
annual base salary rate for the Year, as specified
by the Company or an Affiliated Company prior to
each Year.
1.3. "Board" means the Board of Directors of
the Company.
1.4. "Committee" means the Compensation
Committee of the Board that is responsible for
setting performance goals, certifying that such
goals have been met under the Program, and
administration of the Program.
1.5. "Company" means Illinois Central Railroad
Company, a Delaware corporation, or, to the extent
provided in Section 5.4 below, any successor
corporation or other entity resulting from a merger
or consolidation into or with the Company or a
transfer or sale of substantially all of the assets
of the Company.
1.6. "Covered Employee" means any individual
who, on the last day of the Year, is: (i) the chief
executive officer of the Company, or acting in such
capacity; or (ii) among the four highest
compensated officers of the Company or an
Affiliated Company, other than the chief executive
officer (or such other group of employees as is
later specified in final regulations issued under
Section 162(m) of the Internal Revenue Code).
1.7. "Maximum Award" means, for purposes of
Performance Awards, the percentage of each
Participant's Target Award that would be payable to
the Participant if the Company achieved its maximum
performance levels, as specified in Exhibit A.
1.8. "Measurement Areas" means the areas of
Company performance that are measured for purposes
of the Program, as follows: (i) annual return on
average total capital, calculated on an after
award, after-tax basis ("ROTC"); and (ii) revenue
growth.
1.9. "Performance Award" or "Award" means the
additional cash remuneration payable to a
Participant pursuant to the Program.
1.10. "Participant" means each management
employee of the Company and its Affiliated
Companies in alphabetical salary grades A through G
and numerical salary grades 1 through 10, as such
salary grades are described in the salary component
of the performance compensation program approved by
the Board in 1993, and as such salary grades may be
amended from time to time. The Board shall have
the discretion to designate individuals occupying
other positions with the Company or an Affiliated
Company as Participants for purposes of the
Program. Individuals who are Covered Employees are
not Participants in this Program.
1.11. "Program" means the Illinois Central
Railroad Company Performance Compensation Program,
as set forth herein and as hereinafter amended from
time to time.
1.12. "Target Award" means the percentage of
each Participant's Base Salary that is established
by the Committee, as listed in Exhibit A, as the
same may be amended from time to time. Target
Award levels range from 10% to 65% of Participants'
annual Base Salary.
1.13. "Year" means the calendar year. The
Program operates on the fiscal year of the Company,
which is the calendar year.
1.14. Words in the masculine gender shall
include the feminine and the singular shall include
the plural, and vice versa, unless qualified by the
context. Any headings used herein are included for
ease of reference only and are not to be construed
so as to alter the terms hereof.
ARTICLE II
ANNUAL PERFORMANCE AWARDS AND PERFORMANCE GOALS
2.1. Awards. The actual Performance Awards
for Participants will be the sum of: (i) the
Performance Award based on
Company performance determined by the extent to
which the Company attains the objective performance
goals established by the Committee prior to the
beginning of the Year, calculated according to
Sections 2.2 and 2.3 below and the chart in Exhibit
B; and (ii) the Performance Award based on the
Participant's individual performance, determined in
accordance with Section 2.4 below and the chart in
Exhibit C. A Participant must receive a
satisfactory or better performance rating in his or
her annual performance review for the applicable
Year to be eligible to receive a Performance Award.
2.2. Company Performance Goals. Each
Participant shall be eligible to receive a
Performance Award under the Program. Prior to the
commencement of each Year, the Committee shall
establish Company performance goals based on the
Measurement Areas for Performance Awards. The
Committee shall establish three levels of
performance goals for each Measurement Area: (i) a
threshold level; (ii) a target level; and (iii) a
maximum level. If Company performance fails to
attain the threshold level of ROTC for any Year,
the Company portion of the Target Award percentage
that is payable to Participants shall be 0%.
2.3. Calculating Performance Awards. The
actual Performance Awards for Participants will be
determined by the extent to which the Company
attains the objective performance goals established
by the Committee prior to the beginning of the
Year, calculated as follows (and according to the
charts in Exhibits A and B):
(a) The Company's performance in the
Measurement Areas applicable to Performance Awards
shall be determined for the Year.
(b) Company performance in both Measurement
Areas shall be compared to the performance
objectives established by the Committee prior to
the Year, and placed on a chart (Exhibit B) that
contains the threshold, target and maximum levels
for both Measurement Areas, and a specified
percentage figure for each level.
(c) The Target Award for each Participant
shall be multiplied by the applicable percentage
figure from the chart (Exhibit B), and the product
shall be multiplied by each Participant's Base
Salary to determine the Performance Award for that
Participant.
If the Company were to attain the maximum level of
performance with respect to both Measurement Areas
in a Year, each Participant's Target Award
percentage would be multiplied by the Participant's
Maximum Award percentage, both as listed in Exhibit
A, with the product then multiplied by the
Participant's Base Salary for that Year to
determine the Participant's actual Performance
Award. The Performance Award payout will range
from 0% to 150% of Participants' Target Award
levels. If at least the pre-established threshold
performance goals are not attained, no Company portion
of the Performance Awards shall be paid under the Program.
2.4. Additional Award Based on Participant
Performance. (a) If the Company achieves performance
at threshold or above, each Participant shall be eligible
to receive an additional Award based solely on the
Participant's individual performance during the
Year (in addition to any Award attributable to
Company performance). The amount of any additional
Target Award, (ii) based on the Participant's performance
rating; and (iii) within the guidelines specified in the
table in Exhibit C. (b) If company performance is less than
threshold and if Participant were to receive the
highest possible performance rating in all
categories, such Participant would receive an
individual Award calculated by multiplying the
Participant's Target Award amount by 25% to 50%.
2.5. Reduction or Increase in Award. The
Committee may, in its sole discretion, increase or
decrease the Company performance percentage
calculated in Section 2.3 above by an amount of up
to 20% of such Participant's Target Award. It is
intended that such discretion shall be exercised
after examining other business measures (e.g.,
safety, operating ratio, EPS, or other measures).
2.6. Committee Certification. The Committee
shall certify in writing, prior to payment of any
Performance Award hereunder to a Participant, that
the performance goals and any other material terms
of the Program were satisfied for the applicable
Year.
2.7 Maximum Total Award. When the Award
percentages calculated in Sections 2.2 through 2.5
above are accumulated, the award payable to any
Participant shall be limited to 200% of the
Participant's Target Award, as outlined in Exhibit
A.
ARTICLE III
ADMINISTRATION OF THE PROGRAM
3.1. Administration by the Committee. The
Committee shall be responsible for the general
operation and administration of the Program.
3.2. Powers and Duties of Committee. The
Committee shall administer the Program in
accordance with its terms and shall have all powers
necessary to carry out the provisions of the
Program. The Committee shall determine all
questions arising in the administration,
interpretation, and application of the Program,
including but not limited to, questions of
eligibility and the status and rights of employees,
Participants and other persons. Any such
determination by the Committee shall presumptively
be conclusive and binding on all persons.
ARTICLE IV
AMENDMENT OR TERMINATION
4.1. Amendment or Termination. The Committee
reserves the right to amend or terminate the
Program at any time; provided that any amendment of
the Program affecting Participants may not take
effect before the first day the Year coincident
with or next following the date of the amendment.
Any such amendment or termination shall be made
pursuant to a resolution of the Board and shall be
effective as of the date of such resolution.
ARTICLE V
GENERAL PROVISIONS
5.1. No Enlargement of Employee Rights. No
Participant or other person shall have any right to
receive an Award under the Program except in
accordance with the terms of the Program.
Establishment of the Program shall not be construed
to give any Participant the right to be retained in
the service of the Company or any Affiliated
Company.
5.2. Spendthrift Provision. No interest of
any person or entity in, or putative right to
receive an Award under, the Program shall be
subject in any manner to sale, transfer,
assignment, pledge, attachment, garnishment, or
other alienation or encumbrance of any kind; nor
may such interest or right to receive an Award be
taken, either voluntarily or involuntarily for the
satisfaction of the debts of, or other obligations
or claims against, such person or entity, including
claims for alimony, support, separate maintenance
and claims in bankruptcy proceedings.
5.3. Applicable Law. The Program shall be
construed and administered under the laws of the
State of Illinois except to the extent preempted by
federal law.
5.4. Corporate Successors. The Program shall
not be automatically terminated by a transfer or
sale of assets of the Company, or by the merger or
consolidation of the Company into or with any other
corporation or other entity, but the Program shall
be continued after such sale, merger or
consolidation only if and to the extent that the
transferee, purchaser or successor entity agrees to
continue the Program.
EXHIBIT A
Target Awards
Salary
Grade Target Award
(As a % of Base Salary)
B-C 65%
D-E 60%
F-G 40%
1-3 30%
4-6 15%
7-10 10%
Maximum Awards (Company Portion)
Salary
Grade Maximum Award
(Company Portion)
(As a % of Base Salary)
B-C 97.5%
D-E 90.0%
F-G 60.0%
1-3 45.0%
4-6 22.5%
7-10 15.0%
EXHIBIT B
PERFORMANCE AWARDS: COMPANY PERFORMANCE GOALS
The following chart illustrates the methodology for
calculating a Participant's Performance Award.
Payouts for performance between discrete threshold,
target and maximum levels are to be interpolated.
<TABLE>
<CAPTION>
RETURN ON TOTAL CAPITAL (2)
<S> <C> <C> <C> <C> <C>
Below(1) Threshold Target Maximum
Threshold
Maximum 0% 50% 117% 150%
ANNUAL
REVENUE Target 0% 50% 100% 133%
GROWTH
Threshold 0% 50% 83% 116%
Below
Threshold 0% 50% 67% 100%
</TABLE>
(1) An ROTC "governor" prevents the payout for
revenue growth (as a % of target) from exceeding
the payout for ROTC until the company achieves its
ROTC target.
(2) ROTC measure calculated after accrual for
Performance Awards.
EXHIBIT C
INDIVIDUAL PORTION
ANNUAL AWARD PERFORMANCE ASSESSMENT
TO BE ADDED ON TO COMPANY PORTION
PERFORMANCE AWARD AS A
RATING % OF TARGET
5 25% - 50%
4 10% - 25%
3 0% - 10%
Participants receiving a performance rating of 1 or
2 are not eligible to receive an Award under the
Program. Their actual Award is 0%.
