<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to _______________________
Commission file number 0-12255
YELLOW CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 48-0948788
- ------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10990 Roe Avenue, P.O. Box 7563, Overland Park, Kansas 66207
- ------------------------------------------------------ ---------
(Address of principal executive offices) (Zip Code)
(913) 696-6100
----------------------------------------------------
(Registrant's telephone number, including area code)
No Changes
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at October 29, 1999
----- -------------------------------
Common Stock, $1 Par Value 24,879,149 shares
<PAGE> 2
YELLOW CORPORATION
INDEX
<TABLE>
<CAPTION>
Item Page
- ---- ----
PART I
<S> <C>
1. Financial Statements
Consolidated Balance Sheets -
September 30, 1999 and December 31, 1998 3
Statements of Consolidated Operations -
Quarter and Nine Months Ended September 30, 1999 and 1998 4
Statements of Consolidated Cash Flows -
Nine Months Ended September 30, 1999 and 1998 5
Notes to Consolidated Financial Statements 6
2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
3. Quantitative and Qualitative Disclosures About Market Risk 13
PART II
6. Exhibits and Reports on Form 8-K 19
Signatures 20
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
Yellow Corporation and Subsidiaries
(Amounts in thousands except share data)
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 22,440 $ 25,522
Accounts receivable, net 261,312 272,436
Prepaid expenses and other 33,532 76,657
----------- -----------
Total current assets 317,284 374,615
----------- -----------
PROPERTY AND EQUIPMENT:
Cost 2,094,912 1,897,029
Less - Accumulated depreciation 1,227,225 1,194,227
----------- -----------
Net property and equipment 867,687 702,802
----------- -----------
GOODWILL AND OTHER ASSETS 107,871 28,268
----------- -----------
$ 1,292,842 $ 1,105,685
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and checks outstanding $ 115,637 $ 147,644
Wages and employees' benefits 168,818 119,347
Other current liabilities 168,140 149,127
Current maturities of long-term debt 1,791 77
----------- -----------
Total current liabilities 454,386 416,195
----------- -----------
OTHER LIABILITIES:
Long-term debt 274,973 156,988
Deferred income taxes 38,695 18,433
Claims, insurance and other 133,299 142,817
----------- -----------
Total other liabilities 446,967 318,238
----------- -----------
SHAREHOLDERS' EQUITY:
Common stock, $1 par value 29,405 29,356
Capital surplus 15,621 14,948
Retained earnings 436,906 403,262
Accumulated other comprehensive income (2,468) (3,163)
Treasury stock (87,975) (73,151)
----------- -----------
Total shareholders' equity 391,489 371,252
----------- -----------
$ 1,292,842 $ 1,105,685
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 4
STATEMENTS OF CONSOLIDATED OPERATIONS
Yellow Corporation and Subsidiaries
For the Quarter and Nine Months Ended September 30, 1999 and 1998
(Amounts in thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Third Quarter Nine Months
------------------------- -------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATING REVENUE $ 860,983 $ 744,873 $ 2,344,537 $ 2,164,752
----------- ----------- ----------- -----------
OPERATING EXPENSES:
Salaries, wages and benefits 541,427 468,103 1,500,088 1,385,356
Operating expenses and supplies 126,456 111,574 354,394 332,930
Operating taxes and licenses 26,375 23,346 72,901 70,986
Claims and insurance 19,111 22,622 52,606 54,680
Depreciation and amortization 29,683 25,767 79,241 79,018
Purchased transportation 84,039 67,021 215,384 181,249
----------- ----------- ----------- -----------
Total operating expenses 827,091 718,433 2,274,614 2,104,219
----------- ----------- ----------- -----------
INCOME FROM OPERATIONS 33,892 26,440 69,923 60,533
----------- ----------- ----------- -----------
NONOPERATING (INCOME) EXPENSES:
Interest expense 4,544 2,714 10,295 8,844
Other, net 1,662 276 1,629 677
----------- ----------- ----------- -----------
Nonoperating expenses, net 6,206 2,990 11,924 9,521
----------- ----------- ----------- -----------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 27,686 23,450 57,999 51,012
INCOME TAX PROVISION 11,775 9,905 24,355 21,425
----------- ----------- ----------- -----------
INCOME FROM CONTINUING OPERATIONS 15,911 13,545 33,644 29,587
Loss from discontinued operations -- -- -- (66,746)
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 15,911 $ 13,545 $ 33,644 $ (37,159)
=========== =========== =========== ===========
AVERAGE SHARES OUTSTANDING-BASIC 24,866 26,041 25,042 27,050
=========== =========== =========== ===========
AVERAGE SHARES OUTSTANDING-DILUTED 25,009 26,151 25,211 27,290
=========== =========== =========== ===========
BASIC EARNINGS (LOSS) PER SHARE:
Income from continuing operations $ .64 $ .52 $ 1.34 $ 1.09
Loss from discontinued operations -- -- -- (2.46)
----------- ----------- ----------- -----------
Net income (loss) $ .64 $ .52 $ 1.34 $ (1.37)
=========== =========== =========== ===========
DILUTED EARNINGS (LOSS) PER SHARE:
Income from continuing operations $ .64 $ .52 $ 1.33 $ 1.08
Loss from discontinued operations -- -- -- (2.44)
----------- ----------- ----------- -----------
Net income (loss) $ .64 $ .52 $ 1.33 $ (1.36)
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
STATEMENTS OF CONSOLIDATED CASH FLOWS
Yellow Corporation and Subsidiaries
For the Nine Months Ended September 30, 1999 and 1998
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Net cash from operating activities $ 219,006 $ 120,917
--------- ---------
INVESTING ACTIVITIES:
Acquisition of property and equipment (123,182) (84,306)
Acquisition of Jevic, net of cash acquired (164,507) --
Proceeds from disposal of property and equipment 4,975 18,470
Net capital expenditures of discontinued operations -- 2,203
--------- ---------
Net cash used in investing activities (282,714) (63,633)
--------- ---------
FINANCING ACTIVITIES:
Treasury stock purchases (14,824) (42,115)
Proceeds from stock options and other, net 632 620
Increase (decrease) in long-term debt 74,818 (3,132)
--------- ---------
Net cash provided by (used in) financing activities 60,626 (44,627)
--------- ---------
NET INCREASE (DECREASE) IN CASH (3,082) 12,657
CASH, BEGINNING OF PERIOD 25,522 17,703
--------- ---------
CASH, END OF PERIOD $ 22,440 $ 30,360
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid (received) $ 8,922 $ (3,636)
========= =========
Interest paid $ 6,620 $ 5,384
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Yellow Corporation and Subsidiaries
1. The accompanying consolidated financial statements include the accounts
of Yellow Corporation and its wholly owned subsidiaries (the company)
and have been prepared by the company, without audit by independent
public accountants, pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of management, all
normal recurring adjustments necessary for a fair statement of the
results of operations for the interim periods included herein have been
made. Certain information and note disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted from these
statements pursuant to such rules and regulations. Accordingly, the
accompanying consolidated financial statements should be read in
conjunction with the consolidated financial statements included in the
company's 1998 Annual Report to Shareholders.
2. The company provides freight transportation services primarily to the
less-than-truckload (LTL) market in North America through its
subsidiaries, Yellow Freight System, Inc. (Yellow Freight), Saia Motor
Freight Line, Inc. (Saia), WestEx, Inc. (WestEx) and Action Express,
Inc. (Action). The company acquired Jevic Transportation, Inc. (Jevic)
on July 9, 1999. Jevic is a hybrid LTL and TL carrier operating
principally in the Northeast. The company provides global transportation
solutions through YCS International, Inc. (YCS) through fully integrated
ocean, land and air transportation services. Yellow Services, Inc.
(Yellow Services) is a subsidiary that provides information technology
and other services to the company and its subsidiaries. For the quarter
ended September 30, 1999 Yellow Freight comprised approximately 78
percent of total revenue while Saia comprised approximately 10 percent
and Jevic approximately 7 percent of total revenue.
3. The company reports financial and descriptive information about its
reportable operating segments, on a basis consistent with that used
internally for evaluating segment performance and allocating resources
to segments.
In connection with the Jevic acquisition, the company now has three
reportable segments that are strategic business units that offer
different products and services. The National segment is comprised of
the operations of Yellow Freight, a carrier that provides comprehensive
national LTL service as well as international service throughout North
America. The Southeast regional segment consists of the operations of
Saia, a regional LTL carrier that provides overnight and second-day
service in twelve southeastern states and Puerto Rico.
6
<PAGE> 7
The Northeast segment consists of the operations of Jevic, a hybrid
regional heavy LTL and TL carrier that provides service primarily in the
Northeastern states. The segments are managed separately because each
requires different operating, technology and marketing strategies and
processes. The company evaluates performance primarily on operating
income and return on capital.
The accounting policies of the segments are the same as those described
in the summary of significant accounting policies in the company's 1998
Annual Report to Shareholders. The company also charges a trade name fee
to Yellow Freight (1% of revenue) for use of the company's trademark.
Interest and intersegment transactions are recorded at current market
rates. Income taxes are allocated in accordance with a tax sharing
agreement in proportion to each segment's contribution to the parent's
consolidated tax status. The following table summarizes the company's
continuing operations by business segment (in thousands):
<TABLE>
<CAPTION>
SE NE Corporate
National Regional Regional and Other Consolidated
-------- -------- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
Y-T-D September 30, 1999
Operating revenue $1,927,015 $ 260,487 $ 63,380 $ 93,655 $2,344,537
Income from operations 58,110 12,512 4,467 (5,166) 69,923
Identifiable assets 781,689 227,645 259,730 23,778 1,292,842
Y-T-D September 30, 1998
Operating revenue $1,862,242 $ 254,703 NA $ 47,807 $2,164,752
Income from operations 47,639 17,998 NA (5,104) 60,533
Identifiable assets 780,944 207,261 NA 64,425 1,052,630
</TABLE>
4. On July 9, 1999 the company completed a cash tender offer for all of the
common stock of Jevic Transportation, Inc. at $14 share. The transaction
was accounted for as a purchase. The aggregate purchase price of the
stock, including vested stock options and transaction costs was
approximately $160.8 million, net of an anticipated $4.3 million tax
benefit relating to the cost of the stock options. Transaction costs
relate primarily to legal and professional fees (in millions).
<TABLE>
<S> <C>
Purchase Price:
Common Stock tendered $149.9
Stock options, net of tax benefit 7.0
Transaction fees 3.9
------
$160.8
------
</TABLE>
The total transaction was approximately $200 million, including
assumption of debt. The transaction was accounted for under purchase
accounting and the excess of purchase price over fair value of assets
acquired was allocated to goodwill and is being amortized over 40 years.
Accordingly, the results of Jevic's operations have been included in the
company's condensed financial statements for the period from July 10,
1999 through September 30, 1999. The acquisition was financed using
Yellow Corporation's existing credit facilities.
7
<PAGE> 8
The following pro forma financial information for the company gives
effect to the Jevic acquisition as if it had occurred on January 1, 1998.
These pro forma results have been prepared for comparative purposes only
and do not purport to be indicative of the results of operations which
actually would have resulted had the acquisitions occurred on the date
indicated, or which may result in the future. (Pro forma financial
information is in thousands except per share data.)
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30
-------------------------
1999 1998
----------- -----------
<S> <C> <C>
Revenue $ 2,483,784 $ 2,331,269
Income from continuing operations 34,972 31,044
Net income (loss) 34,972 (35,702)
Diluted Per Share Data:
Income from continuing operations $ 1.39 $ 1.14
Net income (loss) $ 1.39 $ (1.31)
</TABLE>
5. On June 1, 1998, the company reached agreement in principle to sell
Preston Trucking Company, Inc. (Preston Trucking) one of its regional
LTL segments to a management group of three senior officers of Preston
Trucking. The sale resulted in a noncash charge of $63.6 million net of
anticipated tax benefits of approximately $28.0 million in 1998. The
equity consideration received by the company for Preston's net assets
was $100 and Preston retained approximately $4.0 million of industrial
revenue bond debt. The disposition did not materially impact operating
results and liquidity of the company. The results of Preston Trucking
have been classified as discontinued operations in the consolidated
financial statements. No interest charges have been allocated to
discontinued operations and the company does not anticipate any material
change in the loss recorded on disposal of the discontinued operations.
In July 1999, Preston Trucking ceased operations and has commenced a
liquidation of its assets under federal bankruptcy regulations.
6. The difference between average common shares outstanding used in the
computation of basic earnings per share and fully diluted earnings per
share is attributable to outstanding common stock options.
7. The company's comprehensive income includes net income and foreign
currency translation adjustments. Comprehensive income for the third
quarter ended September 30, 1999 and 1998 was $16.0 million and $13.1
million, respectively. Comprehensive income (loss) for the nine months
ended September 30, 1999 and 1998 was $34.3 million and $(37.8) million,
respectively.
8
<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
FINANCIAL CONDITION
September 30, 1999 Compared to December 31, 1998
Working capital is reduced through Yellow Freight's asset backed securitization
agreement (ABS). Accounts receivable at September 30, 1999 and December 31, 1998
are net of $152 million and $43 million of receivables sold under the ABS
agreement, resulting in a $109 million reduction in working capital during the
period. Including the effects of the ABS transactions, working capital decreased
$95.5 million during the first nine months of 1999, resulting in a working
capital deficit of $137.1 million at September 30, 1999 compared to a $41.6
million working capital deficit at December 31, 1998. Increases in accounts
receivable excluding the effects of ABS transactions were largely offset by
increases in accrued salaries wages and benefits, decreases in prepaid expenses
and increases in accounts payable and checks outstanding. The company can
operate with a deficit working capital position because of rapid turnover of
accounts receivable, effective cash management and ready access to funding.
On July 9, 1999 the company completed a cash tender offer for all of the common
stock of Jevic Transportation, Inc. The aggregate purchase price of the stock,
including transaction costs, was approximately $164.5 million, net of cash
acquired. Including assumption of debt, the total transaction was approximately
$200 million. The acquisition was financed under the company's existing $300
million credit facility and the company's ABS agreement. These facilities
provide adequate capacity to fund working capital and capital expenditures
requirements. As a result, total debt during the first nine months of 1999
increased by $119.7 million from December 31, 1998 due to the acquisition of
Jevic. The remainder of the purchase price was funded through the company's ABS
facility. Net capital expenditures (other than the Jevic acquisition) for the
first nine months of 1999 were $118.2 million. Subject to ongoing review, total
net capital spending for 1999 is expected to total approximately $159 million,
exclusive of the Jevic transaction.
During the nine months ended September 30, 1999 the company purchased 855,500
additional treasury shares. The company suspended its treasury repurchase
program effective in April 1999 as a result of the Jevic transaction and more
attractive internal investment opportunities.
9
<PAGE> 10
RESULTS OF OPERATIONS
Comparison of Three Months Ended September 30, 1999 and 1998
Net income for the quarter ended September 30, 1999 was $15.9 million or $.64
per share (diluted), a 23 percent improvement over earnings per share in the
1998 third quarter. Net income for the quarter ended September 30, 1998 was
$13.5 million or $.52 per share (diluted). Operating revenue for the 1999 third
quarter was $861.0 million, an increase of 15.6 percent over operating revenue
of $744.9 million for the 1998 third quarter.
Yellow Freight System, the company's national LTL segment had operating income
of $26.6 million for the third quarter of 1999 an increase of 29.6% over
operating income of $20.5 million in the third quarter of 1998. Yellow Freight's
third quarter 1999 operating revenue was $675.4 million, a 5.6 percent increase
over operating revenue of $639.6 million in the third quarter of 1998. Yellow
Freight's operating ratio was 96.1 in the third quarter of 1999 versus 96.8 in
the third quarter of 1998.
LTL tonnage increased 3.2 percent in the third quarter compared to the 1998
quarter, and the number of shipments increased 3.1 percent compared to the 1998
third quarter. A general rate increase averaging 5.5 percent went into effect on
September 1 on approximately half of the revenue base not covered by term
contracts and contributed to the quarter-to-quarter improvement. Yellow Freight
also reactivated a fuel surcharge program that has offset rising diesel fuel
prices.
The four carriers comprising Yellow Corporation regional group during 1999 third
quarter - Saia Motor Freight, Jevic Transportation, WestEx and Action Express -
reported combined operating income of $9.6 million on revenue of $180.3 million,
producing a combined operating ratio of 94.7. In the 1998 third quarter the
regional group excludes the Jevic and Action Express acquisitions and reported
combined operating income of $7.1 million on revenue of $105.2 million producing
an operating ratio of 93.3.
Saia, the company's southeast regional LTL segment had operating income of $4.7
million in the third quarter of 1999 compared to operating income of $6.7
million in the third quarter of 1998. Saia's operating revenue for the quarter
ended September 30, 1999 was $89.1 million, a 1.5 percent increase from
operating revenue of $87.9 million in the third quarter of 1998. Saia's
performance remains below 1998 levels due to softer revenue in the Texas and
Gulf Coast regions with economies tied to the petroleum industry and increased
wage and benefit expense. Saia's operating ratio was 94.7 for the third quarter
of 1999 versus 92.3 in the 1998 third quarter.
Jevic, which became part of the Yellow companies beginning July 10, reported
third quarter revenue of $63.4 million and operating income of $4.5 million for
an operating ratio of 93.0 for this partial quarter. As a stand-alone company in
the third quarter of 1998, Jevic reported revenue of $57.0 million and operating
income of $4.2 million for an operating ratio of 92.6.
10
<PAGE> 11
WestEx, the company's regional carrier serving California and the Southwest,
reported operating revenue of $18.5 million for the third quarter of 1999
compared to $17.4 million for the 1998 third quarter. Action, the company's
regional carrier serving the Pacific Northwest and Rocky Mountain States had
third quarter revenues of $9.3 million. Action was acquired in December 1998.
WestEx had an operating ratio of 99.6 for the third quarter of 1999 compared to
an operating ratio of 97.9 for the third quarter of 1998. Action Express
reported an operating ratio of 96.1 for the third quarter of 1999.
Corporate and other business development expenses were $2.3 million in the 1999
third quarter, up from $0.9 million in the 1998 third quarter. The company
continues to evaluate a variety of strategic initiatives to increase shareholder
value.
Nonoperating expenses in the 1999 third quarter were $6.2 million, up from $3.0
million in the 1998 third quarter, due to increased financing expense resulting
primarily from the Jevic acquisition. The effective tax rate was 42.5 percent in
the 1999 third quarter and 42.2 percent in the third quarter of 1998.
The 1999 third quarter earnings per share results also reflect the impact of
stock buyback programs which have reduced average shares outstanding by
approximately 4.4 percent compared to last year's third quarter.
Comparison of Nine Months Ended September 30, 1999 and 1998
Continuing Operations:
Net income for the nine months ended September 30, 1999 was $33.6 million or
$1.33 per share (diluted). Income from continuing operations for the nine months
ended September 30, 1998 was $29.6 million or $1.08 per share (diluted).
Operating revenue for the nine months ended September 30, 1999 was $2,344.5
million an increase of 8.3 percent over operating revenue of $2,164.8 million
for the nine months ended September 30, 1998.
Yellow Freight System had operating income of $58.1 million for the nine months
ended September 30, 1999 an increase of 22.0% over operating income of $47.6
million in the comparable 1998 period. Yellow Freight's 1999 year to date
operating revenue was $1,927.0 million, up 3.5 percent from operating revenue of
$1,862.2 million for the nine months ended September 30, 1998. Yellow Freight's
operating ratio was 97.0 for the first nine months of 1999 versus 97.4 in the
first nine months of 1998.
11
<PAGE> 12
Yellow Freight System is benefiting from a continued strong pricing environment
that has produced LTL yield improvements in excess of 3 percent for the first
nine months of 1999 compared to 1998. Year to date LTL tonnage increased 1.1
percent and year to date LTL shipments are up 4.5 percent compared to 1998. In
addition, the first nine months of 1998 were adversely affected by the freight
diversion problem that resulted from customer concerns over labor contract
negotiations and a possible strike.
Saia had operating income of $12.5 million for the nine months ended September
30, 1999 compared to $18.0 million for the nine months ended September 30, 1998.
Saia's 1999 year to date operating revenue was $260.5 million up 2.3 percent
from $254.7 million for the first nine months of 1998. Saia's business weakness
was mostly concentrated in Texas and other Gulf Coast states with economies tied
to the petroleum industry. Saia's operating ratio was 95.2 for the nine months
ended September 30, 1999 compared to 92.9 for the nine months ended September
30, 1998.
Year to date results of operations for the company include Jevic from the
acquisition date of July 9, 1999. For the period from July 10, 1999 through
September 30, 1999, Jevic reported year to date revenue of $63.4 million and
year to date operating income of $4.5 million for an operating ratio of 93.0.
WestEx reported operating revenue of $52.3 million for the first nine months of
1999, up 9.5 percent from $47.8 million for the nine months ended September 30,
1998. Action had revenues of $26.9 million for the first nine months of 1999.
Action was acquired in December 1998. Both WestEx and Action reported small
operating profits for the first nine months of 1999 as both companies absorbed
one-time expenses related to network realignments and other corporate
development programs. Saia has substantially absorbed Action operations in
Texas. Action has taken over part of WestEx's operations in Colorado and Utah
while WestEx has absorbed part of Action's California operations.
During the first half of 1999, market fuel prices fell below the company's fuel
hedge contract prices, depriving the company of fuel cost savings. However
during the last three months, this trend has reversed. As a result, of fuel
price increases in the third quarter of 1999, current market prices are above
the company's current hedge contracts. The company remains substantially hedged
for the balance of 1999 and a portion of 2000.
Nonoperating expense increased between years, primarily a result of increased
financing costs associated with the Jevic acquisition. The effective tax rate
for the first nine months of 1999 was 42.0 percent, the same as the effective
tax rate for the first nine months of 1998.
Earnings per share results through September 30, 1999 also reflect the impact of
stock buyback programs, which have reduced average shares outstanding by 13
percent compared to the average shares outstanding for the first nine months of
1998.
12
<PAGE> 13
Year 2000:
The company's Year 2000 project is intended to minimize the business impact of
potential Year 2000 failures. Work efforts both to remediate and replace
mainframe and client/server business applications have been completed on
schedule. Business contingency plans have also been developed. The remainder of
the year will be used to refine and communicate the business contingency plans,
complete the planned rollout of equipment, and continue to retest systems for
Year 2000 readiness.
The company's Year 2000 strategy included mainframe, mid-range, and client
server applications, PCs, workstations, end-user computing, vendor software,
equipment, environmental operations in terminals and offices, suppliers and
customers. Inventory and assessment of all areas have been completed.
Non-compliant vendor software and equipment determined to be critical to the
business has been remediated. PC hardware and software is being replaced as
needed through a systematic schedule of upgrades.
The company's strategy also included developing relationships with vendors who
are working toward compliance. The company has material vendor relationships
with financial institutions, utilities and telecommunication companies. These
vendors indicate that they expect to achieve compliance and do not anticipate
business interruptions as the century changes. The company has developed and is
refining contingency plans to address potential Year 2000 scenarios that may
arise with key vendors, customers and other external parties. However, these
external risks are beyond the company's total control, thus there can be no
assurance that all year 2000 risks can be contained by company contingency
plans.
The company began its Year 2000 project in 1995 and has estimated total project
costs to be approximately $16 million. Through September 30, 1999 the company
has incurred approximately $15.2 million which represents approximately 6% of
its information technology budget over the project period. The company expensed
$0.5 million of modification costs in the third quarter of 1999 and $1.4 million
for the nine months ended September 30, 1999 compared to $1.4 million in the
third quarter of 1998 and $4.9 million for the nine months ended September 30,
1998.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The company is exposed to a variety of market risks, including the effects of
interest rates, fuel prices and foreign currency exchange rates. To ensure
adequate funding through seasonal business cycles and minimize overall borrowing
costs, the company utilizes a variety of both fixed rate and variable rate
financial instruments with varying maturities. At September 30, 1999
approximately 66 percent of the company's long-term financing including ABS is
at variable rates with the balance at fixed rates. The company uses interest
rate swaps to hedge a portion of its exposure to variable interest rates.
13
<PAGE> 14
The company uses swaps as hedges in order to manage a portion of its exposure to
variable diesel prices. These agreements provide protection from rising fuel
prices, but limit the ability to benefit from price decreases below the purchase
price of the agreement. The swap transactions are generally based on the price
of heating oil. Based on historical information, the company believes the
correlation between the market prices of diesel fuel and heating oil is highly
effective.
The company's revenues and operating expenses, assets and liabilities of its
Canadian and Mexican subsidiaries are denominated in foreign currencies, thereby
creating exposures to changes in exchange rates, however the risks related to
foreign currency exchange rates are not material to the company's consolidated
financial position or results of operations.
The table below provides information about the company's debt instruments
(including off balance sheet asset backed securitzation (ABS)) and interest rate
swaps as of September 30, 1999. For debt obligations the table presents
principal cash flows (in millions) and related weighted average interest rates
by contractual maturity dates. For interest rate swaps the table presents
notional amounts (in millions) and weighted average interest rates by
contractual maturity. Weighted average variable rates are based on the 30-day
LIBOR rate at September 30, 1999.
EXPECTED MATURITY DATE
<TABLE>
<CAPTION>
THERE- FAIR
1999 2000 2001 2002 2003 AFTER TOTAL VALUE
-------- ------- ------- ------ ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DEBT OBLIGATIONS
FIXED RATE DEBT $ 0.1 $ 29.0 $ 7.2 $ 22.2 $ 19.5 $ 69.5 $ 147.5 $ 148.2
AVE. INT. RATE 7.06% 6.75% 8.28% 7.35% 6.29% 6.89%
VAR. RATE DEBT $ 0.3 $ 1.5 $ 101.5 $ 5.8 $ 5.1 $ 15.1 $ 129.3 $ 129.3
AVE. INT. RATE 5.98% 5.98% 6.14% 5.89% 4.32% 5.90%
OFF BAL. SHEET -
ABS $ 152.0 $ 152.0 $ 152.0
AVE. INT. RATE 5.41%
INTEREST RATE
DERIVATIVES:
VARIABLE TO FIXED:
NOTIONAL AMOUNT $ 0.4 $ 1.5 $ 1.5 $ 5.8 $ 0.1 $ 4.8 $ 14.1 $ 14.1
AVERAGE PAY
RATE (FIXED) 5.80% 5.81% 5.81% 5.70% 7.65% 7.65%
AVERAGE RECEIVE
RATE (VARIABLE) 5.98% 5.98% 5.99% 5.89% 7.55% 7.55%
</TABLE>
The following table provides information about the company's diesel fuel hedging
instruments that are sensitive to changes in commodity prices. The table
presents notional amounts in gallons and the weighted average contract price by
contractual maturity date as of September 30, 1999. The company maintained fuel
inventories for use in normal operations at
14
<PAGE> 15
September 30, 1999, which were not material to the company's financial position
and represented no significant market exposure.
Expected Maturity Date
<TABLE>
<CAPTION>
1999 2000 Total
---- ---- -----
<S> <C> <C> <C>
Heating Oil Swaps:
Gallons (in millions) 26.5 38.6 65.1
Weighted Average Price per Gallon $ .4563 $ .4578 $ .4572
Fair Value (in millions) $ 8.3
</TABLE>
Statements contained herein that are not purely historical are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995, including statements regarding the company's expectations, hopes, beliefs
and intentions on strategies regarding the future. It is important to note that
the company's actual future results could differ materially from those projected
in such forward-looking statements because of a number of factors, including but
not limited to inflation, labor relations, inclement weather, competitor pricing
activity, year 2000 issues, expense volatility and a downturn in general
economic activity.
15
<PAGE> 16
Yellow Freight System, Inc.
Financial Information
For the Quarter Ended September 30
(Amounts in thousands)
<TABLE>
<CAPTION>
Third Quarter Nine Months
------------------ ---------------------
1999 1998 % 1999 1998 %
------- ------- --- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Operating revenue 675,412 639,627 5.6 1,927,015 1,862,242 3.5
Operating income 26,590 20,514 58,110 47,639
Operating ratio 96.1 96.8 97.0 97.4
Total assets at September 30 781,689 780,944
</TABLE>
<TABLE>
<CAPTION>
Third Quarter
Third Quarter Amount/Workday
----------------------- -------------------
1999 1998 % 1999 1998 %
-------- -------- --- -------- ------- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Workdays (64) (64)
Financial statement LTL 624,900 585,450 6.7 9,764.1 9,147.7 6.7
revenue TL 54,334 54,310 0.0 849.0 848.6 0.0
Other (3,822) (133) NM (59.7) (2.1) NM
Total 675,412 639,627 5.6 10,553.4 9,994.2 5.6
Revenue excluding LTL 624,900 585,450 6.7 9,764.1 9,147.7 6.7
revenue recognition TL 54,334 54,310 0.0 849.0 848.6 0.0
adjustment Other 3 529 NM 0.0 8.3 NM
Total 679,237 640,289 6.1 10,613.1 10,004.6 6.1
Tonnage LTL 1,819 1,763 3.2 28.43 27.55 3.2
TL 361 379 (4.7) 5.64 5.91 (4.7)
Total 2,180 2,142 1.8 34.07 33.46 1.8
Shipments LTL 3,685 3,575 3.1 57.58 55.86 3.1
TL 49 51 (4.0) .77 .80 (4.0)
Total 3,734 3,626 3.0 58.35 56.66 3.0
Revenue/cwt. LTL 17.17 16.60 3.4
TL 7.53 7.17 4.9
Total 15.58 14.94 4.3
Revenue/shipment LTL 169.59 163.75 3.6
TL 1,102.77 1,058.20 4.2
Total 181.90 176.41 3.1
</TABLE>
16
<PAGE> 17
Saia Motor Freight Line, Inc.
Financial Information
For the Quarter Ended September 30
(Amounts in thousands)
<TABLE>
<CAPTION>
Third Quarter Nine Months
----------------- -----------------
1999 1998 % 1999 1998 %
------- ------- --- ------- ------- ---
<S> <C> <C> <C> <C> <C> <C>
Operating revenue 89,137 87,852 1.5 260,487 254,703 2.3
Operating income 4,698 6,730 12,512 17,998
Operating ratio 94.7 92.3 95.2 92.9
Total assets at September 30 227,645 207,261
</TABLE>
<TABLE>
<CAPTION>
Third Quarter
Third Quarter Amount/Workday
---------------------- ------------------------
1999 1998 % 1999 1998 %
------- ------- ---- ------- --------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Workdays (64) (64)
Financial statement LTL 80,281 79,041 1.6 1,254.4 1,235.0 1.6
revenue TL 8,856 8,811 .5 138.4 137.7 .5
Total 89,137 87,852 1.5 1,392.8 1,372.7 1.5
Revenue excluding LTL 80,379 79,054 1.7 1,255.9 1,235.2 1.7
revenue recognition TL 8,867 8,812 .6 138.5 137.7 .6
adjustment Total 89,246 87,866 1.6 1,394.4 1,372.9 1.6
Tonnage LTL 450 442 1.9 7.03 6.90 1.9
TL 148 145 2.4 2.32 2.26 2.4
Total 598 587 2.0 9.35 9.16 2.0
Shipments LTL 824 822 .2 12.87 12.84 .2
TL 15 15 (1.7) .23 .24 (1.7)
Total 839 837 .2 13.10 13.08 .2
Revenue/cwt. LTL 8.93 8.95 (.2)
TL 2.99 3.04 (1.7)
Total 7.46 7.49 (.4)
Revenue/shipment LTL 97.59 96.21 1.4
TL 595.30 581.46 2.4
Total 106.43 105.00 1.4
</TABLE>
17
<PAGE> 18
Jevic Transportation, Inc.
Financial Information
For the Quarter Ended September 30
(Amounts in thousands)
<TABLE>
<CAPTION>
7/10-9/30 7/1-9/30
--------- ------------------------------
1999 1999 1998 %
--------- ------- -------- ----
<S> <C> <C> <C> <C>
Operating revenue 63,380 69,743 57,037 22.3
Operating income 4,467 4,949 4,242
Operating ratio 93.0 92.9 92.6
Total assets at September 30 259,730 259,730 135,425
</TABLE>
For comparative purposes, all information presented below is based on
information covering the period July 1 through September 30. The period from
July 1 through July 9 is not included in Yellow Corporation consolidated
financial filings. Current quarter results include purchase accounting
adjustments that decreased operating income by $0.4 million.
<TABLE>
<CAPTION>
Third Quarter
Third Quarter Amount/Workday
-------------------- -------------------
1999 1998 % 1999 1998 %
-------- -------- ----- -------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Workdays (64) (64)
Financial statement LTL 43,661 35,467 23.1 682.2 554.2 23.1
revenue TL 26,082 21,570 20.9 407.5 337.0 20.9
Total 69,743 57,037 22.3 1,089.7 891.2 22.3
Revenue excluding LTL 43,870 35,689 22.9 685.5 557.6 22.9
revenue recognition TL 26,213 21,709 20.7 409.6 339.2 20.7
adjustment Total 70,083 57,398 22.1 1,095.1 896.8 22.1
Tonnage LTL 241 204 18.2 3.76 3.18 18.2
TL 359 296 21.6 5.62 4.62 21.6
Total 600 500 20.2 9.38 7.80 20.2
Shipments LTL 203 170 19.0 3.16 2.66 19.0
TL 36 30 20.8 0.57 0.47 20.8
Total 239 200 19.5 3.73 3.13 19.5
Revenue/cwt. LTL 9.12 8.77 4.0
TL 3.65 3.67 (0.7)
Total 5.84 5.75 1.7
Revenue/shipment LTL 216.51 209.86 3.2
TL 722.72 727.64 (0.7)
Total 293.37 287.14 2.2
</TABLE>
18
<PAGE> 19
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(10) - Amendment and Restatement Dated July 30, 1999 of the Receivables
Purchase Agreement Dated as of August 2, 1996
(27) - Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
- Yellow Corporation announced November 9, 1999 the resignation of
A. Maurice Myers as chairman, president and chief executive
officer and the immediate appointment of William D. Zollars as
chairman, president and chief executive officer.
19
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
YELLOW CORPORATION
---------------------------------------
Registrant
Date: November 12, 1999 /s/ William D. Zollars
--------------------------- ---------------------------------------
William D. Zollars
Chairman of the Board of
Directors, President & Chief
Executive Officer
Date: November 12, 1999 /s/ H. A. Trucksess, III
--------------------------- ---------------------------------------
H. A. Trucksess, III
Senior Vice President - Finance/
Chief Financial Officer & Treasurer
20
<PAGE> 1
EXHIBIT 10
[AMENDED AND RESTATED PURCHASE AGREEMENT]
AMENDMENT AND RESTATEMENT
DATED AS OF JULY 30, 1999
OF THE
RECEIVABLES PURCHASE AGREEMENT
DATED AS OF AUGUST 2, 1996
AMONG
YELLOW RECEIVABLES CORPORATION,
AS SELLER
AND
FALCON ASSET SECURITIZATION CORPORATION
AND
THE FINANCIAL INSTITUTIONS PARTY HERETO,
AS INVESTORS
AND
THE FIRST NATIONAL BANK OF CHICAGO,
AS AGENT
<PAGE> 2
TABLE OF CONTENTS
PAGE
ARTICLE I AMOUNTS AND TERMS OF THE PURCHASES...................................1
Section 1.1. Purchase Facility.............................................1
Section 1.2. Increases.....................................................1
Section 1.3. Decreases.....................................................2
Section 1.4. Payment Requirements..........................................2
Section 1.5. Payments and Collections......................................2
Section 1.5.1. Payments.................................................2
Section 1.5.2. Collections Prior to Amortization........................3
Section 1.5.3. Collections Following Amortization.......................3
Section 1.5.4. Application of Collections...............................3
Section 1.5.5. Payment Recission........................................4
Section 1.5.6. Maximum of Purchasers'Receivable Interests...............4
Section 1.5.7. Clean Up Call............................................4
Section 1.6. FALCON Funding................................................5
Section 1.6.1. CP Costs.................................................5
Section 1.6.2. CP Costs Payments........................................5
Section 1.6.3. Calculation of CP Costs..................................5
Section 1.7. Investor Funding..............................................5
Section 1.7.1. Investor Funding.........................................5
Section 1.7.2. Discount Payments........................................5
Section 1.7.3. Selection and Continuation of Tranche Periods............5
Section 1.7.4. Investor Discount Rates..................................6
Section 1.7.5. Suspension of the LIBOR Rate.............................6
Section 1.7.6. Calculation of Discount..................................6
Section 1.8. Grant of Security Interest....................................6
Section 1.9. Servicer Fee..................................................6
ARTICLE II LIQUIDITY FACILITY..................................................6
Section 2.1. Transfer to Investors.........................................7
Section 2.2. Transfer Price Reduction Discount.............................7
Section 2.3. Payments to FALCON............................................7
Section 2.4. Limitation on Commitment to Purchase from FALCON..............7
Section 2.5. Defaulting Investors..........................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES.....................................8
Section 3.1. Seller Representations and Warranties.........................8
(a) Corporate Existence and Power........................................8
(b) No Conflict..........................................................8
i
<PAGE> 3
(c) Governmental Authorization...........................................8
(d) Binding Effect.......................................................8
(e) Accuracy of Information..............................................9
(f) Use of Proceeds......................................................9
(g) Title to Receivables.................................................9
(h) Good Title; Perfection...............................................9
(i) Places of Business...................................................9
(j) Collection Banks; etc................................................9
(k) Material Adverse Effect.............................................10
(l) Names...............................................................10
(m) Actions, Suits......................................................10
(n) Credit and Collection Policies......................................10
(o) Payments to Originator..............................................10
(p) Ownership of the Seller.............................................10
(q) Not an Investment Company...........................................10
(r) Purpose.............................................................11
(s) Net Receivables Balance.............................................11
(t) Contracts Governing Excluded Receivables............................11
(u) Year 2000...........................................................11
Section 3.2. Investor Representations and Warranties......................11
(a) Existence and Power.................................................11
(b) No Conflict.........................................................11
(c) Governmental Authorization..........................................11
(d) Binding Effect......................................................11
ARTICLE IV CONDITIONS OF PURCHASES............................................12
Section 4.1. Conditions Precedent to Initial Purchase.....................12
Section 4.2. Conditions Precedent to All Purchases and Reinvestments......12
ARTICLE V COVENANTS...........................................................13
Section 5.1. Affirmative Covenants of Seller..............................13
(a) Financial Reporting.................................................13
(i) Annual Reporting.................................................13
(ii) Quarterly Reporting.............................................13
(iii) Compliance Certificate.........................................13
(iv) Copies of Notices, Etc. under Sale Agreement and Other
Transaction Documents...........................................13
(v) Change in Credit and Collection Policy...........................13
(vi) Replacement of Contracts Applicable to Excluded Receivables.....13
(vii) Other Information..............................................13
(b) Notices.............................................................14
(i) Servicer Defaults or Potential Servicer Defaults.................14
(ii) Judgment........................................................14
(iii) Litigation.....................................................14
(iv) Termination Date under Sale Agreement...........................14
(v) Downgrade........................................................14
(vi) Labor Strike, Walkout, Lockout or Slowdown......................14
(c) Compliance with Laws................................................14
(d) Audits..............................................................14
(e) Keeping and Marking of Records and Books............................14
(f) Compliance with Invoices and Credit and Collection Policy...........15
(g) Purchase of Receivables from the Originator.........................15
ii
<PAGE> 4
(h) Ownership Interest..................................................15
(i) Payment to the Originator...........................................15
(j) Performance and Enforcement of Sale Agreement.......................15
(k) Purchasers'Reliance.................................................16
(l) Collections.........................................................17
(m) Minimum Net Worth...................................................18
Section 5.2. Negative Covenants of Seller.................................18
(a) Name Change, Offices, Records and Books of Accounts.................18
(b) Change in Payment Instructions to Obligors..........................18
(c) Modifications to Invoices and Credit and Collection Policy..........19
(d) Sales, Liens, Etc...................................................19
(e) Nature of Business; Other Agreements; Other Indebtedness............19
(f) Amendments to Sale Agreement........................................19
(g) Amendments to Corporate Documents...................................20
(h) Merger..............................................................20
(i) Restricted Junior Payments..........................................20
ARTICLE VI ADMINISTRATION AND COLLECTION......................................20
Section 6.1. Designation of Servicer......................................20
Section 6.2. Duties of Servicer...........................................21
Section 6.3. Collection Notices...........................................22
Section 6.4. Responsibilities of the Seller...............................22
Section 6.5. Reports......................................................22
ARTICLE VII SERVICER DEFAULTS.................................................22
Section 7.1. Servicer Defaults............................................22
ARTICLE VIII INDEMNIFICATION..................................................23
Section 8.1. Indemnities by the Seller....................................23
Section 8.2. Increased Cost and Reduced Return............................25
Section 8.3. Costs and Expenses Relating to this Agreement................26
ARTICLE IX THE AGENT..........................................................26
Section 9.1. Authorization and Action.....................................26
Section 9.2. Delegation of Duties.........................................27
Section 9.3. Exculpatory Provisions.......................................27
Section 9.4. Reliance by Agent............................................27
Section 9.5. Non-Reliance on Agent and Other Purchasers...................27
Section 9.6. Reimbursement and Indemnification............................28
Section 9.7. Agent in its Individual Capacity.............................28
Section 9.8. Successor Agent..............................................28
ARTICLE X ASSIGNMENTS; PARTICIPATIONS.........................................29
iii
<PAGE> 5
Section 10.1. Assignments.................................................29
Section 10.2. Participations..............................................29
ARTICLE XI MISCELLANEOUS......................................................30
Section 11.1. Waivers and Amendments......................................30
Section 11.2. Notices.....................................................31
Section 11.3. Ratable Payments............................................31
Section 11.4. Protection of Ownership Interests of the Purchasers.........31
Section 11.5. Confidentiality.............................................32
Section 11.6. Bankruptcy Petition.........................................32
Section 11.7. Limitation of Liability.....................................32
Section 11.8. CHOICE OF LAW...............................................33
Section 11.9. CONSENT TO JURISDICTION.....................................33
Section 11.10. WAIVER OF JURY TRIAL.......................................33
Section 11.11. Integration; Survival of Terms.............................33
Section 11.12. Counterparts; Severability.................................33
Section 11.13. First Chicago Roles........................................34
Section 11.14. Characterization...........................................34
EXHIBIT I DEFINITIONS........................................................37
EXHIBIT II CHIEF EXECUTIVE OFFICE OF THE SELLER; LOCATIONS OF RECORDS;
FEDERAL EMPLOYER IDENTIFICATION NUMBER........................................52
EXHIBIT III LOCKBOXES; COLLECTION ACCOUNTS; CONCENTRATION ACCOUNTS;
AND DEPOSITARY ACCOUNTS.......................................................53
EXHIBIT IV FORM OF COMPLIANCE CERTIFICATE.....................................54
EXHIBIT V FORM OF COLLECTION ACCOUNT AGREEMENT................................56
EXHIBIT VI CREDIT AND COLLECTION POLICY.......................................60
EXHIBIT VII FORM OF INVOICE(S)................................................61
EXHIBIT VIII FORM OF MONTHLY REPORT...........................................62
EXHIBIT IX FORM OF PURCHASE NOTICE............................................63
EXHIBIT X CONTRACTS APPLICABLE TO EXCLUDED CONTRACTS..........................65
iv
<PAGE> 6
SCHEDULE A DOCUMENTS AND RELATED ITEMS TO BE DELIVERED TO THE AGENT
ON OR PRIOR TO THE EFFECTIVENESS OF THE AMENDED AND
RESTATED RECEIVABLES PURCHASE AGREEMENT.......................................66
v
<PAGE> 7
THIS AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT,
dated as of July 30, 1999, is by and among Yellow Receivables Corporation, a
Delaware corporation (the "SELLER"), the Investors (hereinafter defined), Falcon
Asset Securitization Corporation ("FALCON") and The First National Bank of
Chicago, as Agent, and amends and restates in its entirety that certain
Receivables Purchase Agreement dated as of August 2, 1996, by and among such
parties (as heretofore amended, the "EXISTING AGREEMENT"). Unless defined
elsewhere herein, capitalized terms used in this Agreement shall have the
meanings assigned to such terms in Exhibit I hereto.
PRELIMINARY STATEMENTS
The Seller desires to transfer and assign Receivable Interests
to the Purchasers from time to time.
FALCON may, in its absolute and sole discretion, purchase
Receivable Interests from the Seller from time to time.
The Investors shall, at the request of the Seller, purchase
Receivable Interests from time to time. In addition, the Investors have
agreed to provide a liquidity facility to FALCON.
The First National Bank of Chicago has been requested and is
willing to act as Agent on behalf of FALCON and the Investors in
accordance with the terms hereof.
The parties desire to amend and restate in its entirety the
Existing Agreement on the terms and subject to the conditions
hereinafter set forth.
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. Purchase Facility. Upon the terms and subject to
the conditions hereof, Seller may, at its option, sell and assign Receivable
Interests to the Agent for the benefit of one or more of the Purchasers. In
accordance with the terms and conditions set forth herein, FALCON may, at its
option, instruct the Agent to purchase on behalf of FALCON, or if FALCON shall
decline to purchase, unless the Seller cancels such purchase in accordance with
Section 1.2, the Agent shall purchase, on behalf of the Investors, Receivable
Interests from time to time in an aggregate amount not to exceed the Purchase
Limit during the period from the date hereof to but not including the Liquidity
Termination Date. The Seller may, upon at least 30 Business Days' notice to the
Agent, terminate in whole or reduce in part, ratably among the Investors, the
unused portion of the Purchase Limit; provided that each partial reduction of
the Purchase Limit shall be in an amount equal to $5,000,000 or an integral
multiple thereof.
Section 1.2. Increases. The Seller shall provide the Agent
with at least three Business Days' prior notice in a form set forth as Exhibit
IX hereto of each Incremental Purchase (a "PURCHASE NOTICE"). Each Purchase
Notice shall be subject to Section 4.2 hereof and, except as set forth below,
shall be irrevocable and shall specify the requested Purchase Price (which shall
not be less than $3,000,000) and date of purchase and, in the case of an
Incremental Purchase to be funded by the Investors, the requested Discount Rate
and Tranche Period. Following receipt of a Purchase Notice, the Agent will
determine whether FALCON agrees to make the purchase. If FALCON declines to make
a proposed purchase, the Agent shall promptly advise the Seller and the Servicer
of such fact, and the Seller may thereupon cancel
1
<PAGE> 8
the Purchase Notice or, in the absence of such a cancellation, the Incremental
Purchase of the Receivable Interest will be made by the Investors. On the date
of each Incremental Purchase, upon satisfaction of the applicable conditions
precedent set forth in Article IV, FALCON or the Investors, as applicable, shall
deposit to the Facility Account, in immediately available funds, no later than
12:00 noon (Chicago time), an amount equal to (i) in the case of FALCON, the
aggregate Purchase Price of the Receivable Interests FALCON is then purchasing
or (ii) in the case of an Investor, such Investor's Pro Rata Share of the
aggregate Purchase Price of the Receivable Interests the Investors are
purchasing.
Section 1.3. Decreases. The Seller shall provide the Agent
with prior written notice in conformity with the Required Notice Period of any
reduction from Collections requested by the Seller of the aggregate Capital
outstanding (a "REDUCTION NOTICE"). Such Reduction Notice shall designate (i)
the date (the "PROPOSED REDUCTION DATE") upon which any such reduction of
Capital shall occur (which date shall give effect to the applicable Required
Notice Period), and (ii) the aggregate amount of Capital to be reduced which
shall be applied ratably to the Receivable Interests of FALCON and the Investors
in accordance with the amount of Capital (if any) owing to FALCON, on the one
hand, and the amount of Capital (if any) owing to the Investors (ratably, based
on their respective Pro Rata Shares), on the other hand (the "AGGREGATE
REDUCTION"). Only one (1) Reduction Notice shall be outstanding at any time.
Notwithstanding the foregoing, the Aggregate Reduction will not be made if the
Amortization Date shall have occurred for any reason on or prior to the Proposed
Reduction Date.
Section 1.4. Payment Requirements. All amounts to be paid or
deposited by the Seller or the Servicer pursuant to any provision of this
Agreement shall be paid or deposited in accordance with the terms hereof no
later than 12:00 noon (Chicago time) on the day when due in immediately
available funds, and if not received before 12:00 noon (Chicago time) shall be
deemed to be received on the next succeeding Business Day. If such amounts are
payable to a Purchaser they shall be paid to the Agent, for the account of such
Purchaser, at One First National Plaza, Chicago, Illinois 60670 until otherwise
notified by the Agent. In the event the Seller shall fail to pay any amount when
due hereunder, upon notice to the Seller, the Agent may debit the Facility
Account for all such amounts due and payable hereunder. All computations of
Discount, per annum fees calculated as part of any CP Costs, per annum fees
hereunder and under the Fee Letter shall be made on the basis of a year of 360
days for the actual number of days elapsed. If any amount hereunder shall be
payable on a day which is not a Business Day, such amount shall be payable on
the next succeeding Business Day.
Section 1.5. Payments and Collections.
Section 1.5.1. Payments. Notwithstanding any limitation on
recourse contained in this Agreement, the Seller shall immediately pay to the
Agent when due, for the account of the relevant Purchaser or Purchasers on a
full recourse basis, (i) such fees as set forth in the Fee Letter (which fees
shall be sufficient to pay all fees owing to the Investors), (ii) all CP Costs,
(iii) all amounts payable as Discount, (iv) all amounts payable as Deemed
Collections (which shall be applied to reduce outstanding Capital hereunder in
accordance with Sections 1.5.2 and 1.5.3 hereof), (v) all amounts payable to
reduce the aggregate Capital of the Purchasers' Receivables Interests, if
required, pursuant to Section 1.5.6, (vi) all amounts payable pursuant to
Article VIII, if any, (vii) all Servicer costs and expenses in connection with
servicing, administering and collecting the Receivables, and (viii) all Broken
Funding Costs (collectively, the "OBLIGATIONS"). Notwithstanding the foregoing,
no provision of this Agreement or the Fee Letter shall require the payment or
permit the collection of any amounts hereunder in excess of the maximum
permitted by applicable law. If at any time the Seller receives any Collections
or is deemed to receive any Collections, the Seller shall promptly pay such
Collections or Deemed Collections to the Servicer and, at all
2
<PAGE> 9
times prior to such payment, such Collections shall be held in trust by the
Seller for the exclusive benefit of the Purchasers and the Agent.
Section 1.5.2 Collections Prior to Amortization. Prior to the
Amortization Date, any Collections and/or Deemed Collections received by the
Servicer (after the initial purchase of a Receivable Interest hereunder) shall
be set aside and held in trust by the Servicer for the payment of any accrued
and unpaid Aggregate Unpaids or for a Reinvestment as provided in this Section
1.5.2. If at any time any Collections are received by the Servicer prior to the
Amortization Date, the Seller hereby requests and the Purchasers hereby agree to
make, simultaneously with such receipt, a reinvestment (each, a "REINVESTMENT")
with that portion of each and every Collection received by the Servicer that is
part of any Receivable Interest, such that after giving effect to such
Reinvestment, the amount of Capital of such Receivable Interest immediately
after such receipt and corresponding Reinvestment shall be equal to the amount
of Capital immediately prior to such receipt. On each Settlement Date prior to
the occurrence of the Amortization Date, the Servicer shall remit to the Agent's
account the amounts set aside during the preceding Settlement Period that were
not the subject of a Reinvestment and apply such amounts (if not previously paid
in accordance with Section 1.5.1) to reduce unpaid CP Costs, Discount and other
Obligations. If such CP Costs, Discount and other Obligations shall be reduced
to zero, any additional Collections received by the Servicer shall (i) if
applicable, be remitted to the Agent's account no later than 12:00 noon (Chicago
time) to the extent required to fund any Aggregate Reduction on such Settlement
Date and (ii) thereafter be remitted from the Servicer to the Seller on such
Settlement Date.
Section 1.5.3 Collections Following Amortization. On the
Amortization Date and on each day thereafter, the Servicer shall set aside and
hold in trust, for the holder of each Receivable Interest, the percentage
evidenced by such Receivable Interest of all Collections received on such day
and an additional amount of Collections for the payment of any accrued and
unpaid Obligations owed by the Seller and not previously paid by the Seller in
accordance with Section 1.5.1. On and after the Amortization Date, the Servicer
shall, at any time upon the request from time to time by (or pursuant to
standing instructions from) the Agent (i) remit to the Agent's account the
amounts set aside pursuant to the preceding sentence, and (ii) apply such
amounts to reduce the Capital associated with each such Receivable Interest and
any other Aggregate Unpaids.
Section 1.5.4. Application of Collections. If there shall be
insufficient funds on deposit for the Servicer to distribute funds in payment in
full of the aforementioned amounts pursuant to Section 1.5.2 or 1.5.3 (as
applicable), the Servicer shall distribute funds:
first, to the payment of the Servicer's reasonable
out-of-pocket costs and expenses in connection with servicing, administering and
collecting the Receivables if the Seller or one of its Affiliates is not then
acting as the Servicer,
second, to the reimbursement of the Agent's costs of
collection and enforcement of this Agreement,
third, to the payment of accrued and unpaid Discount and CP
Costs when and as due,
fourth, (if applicable) in reduction of Capital of the
Receivable Interests,
fifth, for the ratable payment of all other unpaid
Obligations, provided that to the extent such Obligations relate to the payment
of Servicer costs and expenses when the Seller or one of its
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Affiliates is acting as the Servicer, such costs and expenses will not be paid
until after the payment in full of all other Obligations, and
sixth, after the Aggregate Unpaids have been indefeasibly
reduced to zero, to the Seller.
Collections applied to the payment of Aggregate Unpaids shall be distributed in
accordance with the aforementioned provisions, and, giving effect to each of the
priorities set forth in Section 1.5.4 above, shall be shared ratably (within
each priority) among the Agent and the Purchasers in accordance with the amount
of such Aggregate Unpaids owing to each of them in respect of each such
priority.
Section 1.5.5. Payment Recission. No payment of any of the
Aggregate Unpaids shall be considered paid or applied hereunder to the extent
that, at any time, all or any portion of such payment or application is
rescinded by application of law or judicial authority, or must otherwise be
returned or refunded for any reason. The Seller shall remain obligated for the
amount of any payment or application so rescinded, returned or refunded, and
shall promptly pay to the Agent (for application to the Person or Persons who
suffered such recission, return or refund) the full amount thereof, plus, if
such amount represented a refund of Capital, CP Costs or Discount, as
applicable, with respect thereto from the date of any such recission, return or
refunding.
Section 1.5.6. Maximum of Purchasers' Receivable Interests.The
Seller shall ensure that the aggregate Receivable Interests of the Purchasers
shall at no time exceed 100%. If, on any day, the aggregate Receivable Interests
of the Purchasers exceeds 100%, the Seller shall immediately pay to the Agent an
amount to be applied to reduce the Capital of the Receivable Interests, such
that after giving effect to such payment the aggregate of the Receivable
Interest equals or is less than 100%. Such amount shall be applied to the
reduction of the Capital of the Receivable Interests of the Purchasers ratably
in accordance with the percentages of the Receivable Interests. Any amounts
received by the Investors pursuant to the preceding sentence shall be applied
ratably in accordance with their Pro Rata Shares.
Section 1.5.7. Clean Up Call. The Seller shall have the right,
on not less than thirty (30) Business Days' written notice to the Agent, at any
time following the reduction of the Capital to a level that is less than 5.0% of
the original Purchase Limit, to repurchase from the Purchasers all, but not less
than all, of the then outstanding Receivable Interests. The purchase price in
respect thereof shall be an amount equal to the Aggregate Unpaids through the
date of such repurchase, payable in immediately available funds. Such repurchase
shall be without representation, warranty or recourse of any kind by, on the
part of, or against any Purchaser or the Agent.
Section 1.6. FALCON Funding.
Section 1.6.1. CP Costs. The Seller shall pay CP Costs with
respect to the Capital associated with each Receivable Interest of FALCON for
each day that any Capital in respect of such Receivable Interest is outstanding.
Each Receivable Interest funded substantially with Pooled Commercial Paper will
accrue CP Costs each day on a pro rata basis, based upon the percentage share
the Capital in respect of such Receivable Interest represents in relation to all
assets held by FALCON and funded substantially with Pooled Commercial Paper.
Section 1.6.2. CP Costs Payments. On each Settlement Date, the
Seller shall pay to the Agent (for the benefit of FALCON) an aggregate amount
equal to all accrued and unpaid CP Costs in respect of the Capital associated
with all Receivable Interests of FALCON for the immediately preceding Accrual
Period in accordance with Section 1.5.
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Section 1.6.3. Calculation of CP Costs. On the 10th Business
Day immediately preceding each Settlement Date, FALCON shall calculate the
aggregate amount of CP Costs for the applicable Accrual Period and shall notify
the Seller of such aggregate amount.
Section 1.7. Investor Funding.
Section 1.7.1. Investor Funding. Each Receivable Interest of
the Investors shall accrue Discount for each day during its Tranche Period at
either the LIBOR Rate or the Base Rate in accordance with the terms and
conditions hereof. Until the Seller gives notice to the Agent of another
Discount Rate in accordance with Section 1.7.4, the initial Discount Rate for
any Receivable Interest transferred to the Investors pursuant to the terms and
conditions hereof, and the new Discount Rate for any Terminating Tranche, shall
be the Base Rate and the applicable Tranche Period shall be a period of one
Business Day commencing on the day requested in the Purchase Notice or on the
last day of a Terminating Tranche, as applicable. If the Investors acquire by
assignment from FALCON any Receivable Interest pursuant to Article II, each
Receivable Interest so assigned shall each be deemed to have a new Tranche
Period commencing on the date of any such assignment.
Section 1.7.2. Discount Payments. On the Settlement Date for
each Receivable Interest of the Investors, the Seller shall pay to the Agent
(for the benefit of the Investors) an aggregate amount equal to the accrued and
unpaid Discount for the entire Tranche Period of each such Receivable Interest
in accordance with Section 1.5.
Section 1.7.3. Selection and Continuation of Tranche Periods.
(a) With consultation from (and approval by) the Agent, the Seller shall from
time to time request Tranche Periods for the Receivable Interests of the
Investors, provided that, if at any time the Investors shall have a Receivable
Interest, the Seller shall always request Tranche Periods such that at least one
Tranche Period shall end on each date specified in clause (A) of the definition
of Settlement Date.
(b) The Seller or the Agent may, effective on the last day of
a Tranche Period (the "TERMINATING TRANCHE") for any Receivable Interest, divide
any such Receivable Interest into multiple Receivable Interests or combine any
such Receivable Interest with one or more other Receivable Interests which
either have a Terminating Tranche ending on such day or are newly created on
such day, provided, in no event may a Receivable Interest of FALCON be combined
with a Receivable Interest of the Investors.
Section 1.7.4. Investor Discount Rates. The Seller may select
the LIBOR Rate or the Base Rate for each Receivable Interest of the Investors.
The Seller shall by 11:00 a.m. (Chicago time): (i) at least three (3) Business
Days prior to the expiration of any Terminating Tranche with respect to which
the LIBOR Rate is being requested as a new Discount Rate and (ii) at least one
(1) Business Day prior to the expiration of any Terminating Tranche with respect
to which the Base Rate is being requested as a new Discount Rate, give the Agent
irrevocable notice of the new Discount Rate for the Receivable Interest
associated with such Terminating Tranche.
Section 1.7.5. Suspension of the LIBOR Rate. If any Investor
notifies the Agent that it has determined that funding its Pro Rata Share of the
Receivable Interests of the Investors at a LIBOR Rate would violate any
applicable law, rule, regulation, or directive of any governmental or regulatory
authority, whether or not having the force of law, or that (i) deposits of a
type and maturity appropriate to match fund its Receivable Interests at such
LIBOR Rate are not available or (ii) such LIBOR Rate does not accurately reflect
the cost of acquiring or maintaining a Receivable Interest at such LIBOR Rate,
then the
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Agent shall suspend the availability of such LIBOR Rate and require the Seller
to select the Base Rate for any Receivable Interest accruing Discount at such
LIBOR Rate. Section 1.7.6. Calculation of Discount. On the 10th Business Day
immediately preceding each Settlement Date for each Receivable Interest of the
Investors, the Agent shall calculate the aggregate amount of Discount for the
applicable Tranche Period and shall notify the Seller of such aggregate amount,
if any.
Section 1.8. Grant of Security Interest. The Seller hereby
grants to the Agent for the ratable benefit of the Purchasers a security
interest in all of its interest in the Receivables, Related Security,
Collections and proceeds thereof to secure payment of the Aggregate Unpaids,
including its indemnity obligations under Article VIII and all other obligations
owed hereunder to the Purchasers. If the conveyance by the Seller to the
Purchasers of interests in Receivables hereunder shall be characterized as a
secured loan and not a sale, it is the intention of the parties hereto that this
Agreement shall constitute a security agreement under applicable law, and that
the Seller shall be deemed to have granted to the Agent for the ratable benefit
of the Purchasers a duly perfected security interest in all of the Seller's
right, title and interest in, to and under the Receivables, the Collections,
each Collection Account, all Related Security, all payments on or with respect
to such Receivables, all other rights relating to and payments made in respect
of the Receivables, and all proceeds of any thereof prior to all other liens on
and security interests therein. After a Servicer Default, the Agent and the
Purchasers shall have, in addition to the rights and remedies which they may
have under this Agreement, all other rights and remedies provided to a secured
creditor after default under the UCC and other applicable law, which rights and
remedies shall be cumulative.
Section 1.9. Servicer Fee. To the extent of available
Collections in accordance with the priorities set forth in Sections 1.5.2 and
1.5.3, on the first Business Day of each month while any Aggregate Unpaids are
outstanding, the Servicer shall be paid a servicing and collection fee (the
"SERVICER FEE") equal to 2.0% per annum on the average daily amount of Capital
during the calendar month (or portion thereof) then most recently ended. The
Servicer Fee shall be computed for actual days elapsed on the basis of a year
consisting of 365 days.
ARTICLE II
LIQUIDITY FACILITY
Section 2.1. Transfer to Investors. Each Investor hereby
agrees, subject to Section 2.4, that immediately upon written notice from FALCON
delivered on or prior to the Liquidity Termination Date, it shall acquire by
assignment from FALCON, without recourse or warranty, its Pro Rata Share of one
or more of the Receivable Interests of FALCON as specified by FALCON. Each such
assignment by FALCON shall be made pro rata among the Investors, provided,
however, that FALCON may at any time and from time to time, in its sole and
absolute discretion, make any such assignment to any Affected Investor on a
non-pro rata basis. Each Investor shall, no later than 1:00 p.m. (Chicago time)
on the date of such assignment, pay in immediately available funds to the Agent
at an account designated by the Agent, for the benefit of FALCON, its
Acquisition Amount. Unless an Investor has notified the Agent that it does not
intend to pay its Acquisition Amount, the Agent may assume that such payment has
been made and may, but shall not be obligated to, make the amount of such
payment available to FALCON in reliance upon such assumption. FALCON hereby
sells and assigns to the Agent for the ratable benefit of the Investors, and the
Agent hereby purchases and assumes from FALCON, effective upon the receipt by
FALCON of the FALCON Transfer Price, the Receivable Interests of FALCON which
are the subject of any transfer pursuant to this Article II.
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Section 2.2. Transfer Price Reduction Discount. If the
Adjusted Liquidity Price is included in the calculation of the FALCON Transfer
Price for any Receivable Interest, each Investor agrees that the Agent shall pay
to FALCON the Reduction Percentage of any Discount received by the Agent with
respect to such Receivable Interest.
Section 2.3. Payments to FALCON. In consideration for the
reduction of the FALCON Transfer Prices by the FALCON Transfer Price Reductions,
effective only at such time as the aggregate amount of the Capital of the
Receivable Interests of the Investors equals the FALCON Residual, each Investor
hereby agrees that the Agent shall not distribute to the Investors and shall
immediately remit to FALCON any Discount, Collections or other payments received
by it to be applied pursuant to the terms hereof or otherwise to reduce the
Capital of the Receivable Interests of the Investors.
Section 2.4. Limitation on Commitment to Purchase from FALCON.
Notwithstanding anything to the contrary in this Agreement, no Investor shall
have any obligation to purchase any Receivable Interest from FALCON, pursuant to
Section 2.1 or otherwise, if: (i) FALCON shall have voluntarily commenced any
proceeding or filed any petition under any bankruptcy, insolvency or similar law
seeking the dissolution, liquidation or reorganization of FALCON or taken any
corporate action for the purpose of effectuating any of the foregoing; or (ii)
involuntary proceedings or an involuntary petition shall have been commenced or
filed against FALCON by any Person under any bankruptcy, insolvency or similar
law seeking the dissolution, liquidation or reorganization of FALCON and such
proceeding or petition shall have not been dismissed.
Section 2.5. Defaulting Investors. If one or more Investors
defaults in its obligation to pay its Acquisition Amount pursuant to Section 2.1
(each such Investor shall be called a "DEFAULTING INVESTOR" and the aggregate
amount of such defaulted obligations being herein called the "FALCON TRANSFER
PRICE DEFICIT"), then upon notice from the Agent, each Investor other than the
Defaulting Investors (a "NON-DEFAULTING INVESTOR") shall promptly pay to the
Agent, in immediately available funds, an amount equal to the lesser of (x) such
Non-Defaulting Investor's proportionate share (based upon the relative
Commitments of the Non-Defaulting Investors) of the FALCON Transfer Price
Deficit and (y) the unused portion of such Non-Defaulting Investor's Commitment.
A Defaulting Investor shall forthwith upon demand pay to the Agent for the
account of the Non-Defaulting Investors all amounts paid by each Non-Defaulting
Investor on behalf of such Defaulting Investor, together with interest thereon,
for each day from the date a payment was made by a Non-Defaulting Investor until
the date such Non-Defaulting Investor has been paid such amounts in full, at a
rate per annum equal to the Federal Funds Effective Rate plus 0.5% for the two
Business Days and 2.0% per annum thereafter. In addition, without prejudice to
any other rights that FALCON may have under applicable law, each Defaulting
Investor shall pay to FALCON forthwith upon demand, the difference between such
Defaulting Investor's unpaid Acquisition Amount and the amount paid with respect
thereto by the non-Defaulting Investors, together with interest thereon, for
each day from the date of the Agent's request for such Defaulting Investor's
Acquisition Amount pursuant to Section 2.1 until the date the requisite amount
is paid to FALCON in full, at a rate per annum equal to the Federal Funds
Effective Rate plus 2.0%.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Seller Representations and Warranties. The Seller
hereby represents and warrants to the Purchasers that:
(a) Corporate Existence and Power. The Seller is a corporation
duly organized, validly existing and in good standing under the laws of its
state of incorporation, and has all corporate power and all governmental
licenses, authorizations, consents and approvals required to carry on its
business in each jurisdiction in which its business is conducted.
(b) No Conflict. The execution, delivery and performance by
the Seller of this Agreement and each other Transaction Document, and the
Seller's use of the proceeds of purchases made hereunder, are within its
corporate powers, have been duly authorized by all necessary corporate action,
do not contravene or violate (i) its certificate or articles of incorporation or
by-laws, (ii) any law, rule or regulation applicable to it, (iii) any
restrictions under any agreement, contract or instrument to which it is a party
or by which it or any of its property is bound, or (iv) any order, writ,
judgment, award, injunction or decree binding on or affecting it or its
property, and do not result in the creation or imposition of any Adverse Claim
on assets of the Seller or its Subsidiaries (except created hereunder); and no
transaction contemplated hereby requires compliance with any bulk sales act or
similar law. This Agreement and each other Transaction Document has been duly
authorized, executed and delivered by the Seller.
(c) Governmental Authorization. Other than the filing of the
financing statements required hereunder, no authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance by
the Seller of the Transaction Documents.
(d) Binding Effect. The Transaction Documents constitute the
legal, valid and binding obligations of the Seller enforceable against the
Seller in accordance with their respective terms, except as such enforcement may
be limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally.
(e) Accuracy of Information. All information heretofore
furnished by the Seller or any of its Affiliates to the Agent or the Purchasers
for purposes of or in connection with this Agreement, any of the other
Transaction Documents or any transaction contemplated hereby or thereby is, and
all such information hereafter furnished by the Seller or any of its Affiliates
to the Purchasers will be, true and accurate in every material respect, on the
date such information is stated or certified and does not and will not contain
any material misstatement of fact or omit to state a material fact or any fact
necessary to make the statements contained therein not misleading.
(f) Use of Proceeds. No proceeds of any purchase hereunder
will be used (i) for a purpose which violates, or would be inconsistent with,
Regulation T, U or X promulgated by the Board of Governors of the Federal
Reserve System from time to time or (ii) to acquire any security in any
transaction which is subject to Section 13 or 14 of the Securities Exchange Act
of 1934, as amended.
(g) Title to Receivables. Each Receivable has been purchased
by the Seller from the Originator in accordance with the terms of the Sale
Agreement, and the Seller has thereby irrevocably obtained all legal and
equitable title to, and has the legal right to sell and encumber, such
Receivable, its Collections and the Related Security. Each such Receivable has
been transferred to the Seller free and
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clear of any Adverse Claim. Without limiting the foregoing, there has been duly
filed all financing statements or other similar instruments or documents
necessary under the UCC of all appropriate jurisdictions (or any comparable law)
to perfect the Seller's ownership interest in such Receivable.
(h) Good Title; Perfection. Immediately prior to each purchase
hereunder, the Seller shall be the legal and beneficial owner of the Receivables
and Related Security with respect thereto, free and clear of any Adverse Claim,
except as created by the Transaction Documents. This Agreement is effective to,
and shall, upon each purchase hereunder, transfer to the relevant Purchaser or
Purchasers (and such Purchaser or Purchasers shall acquire from the Seller) a
valid and perfected first priority undivided percentage ownership interest in
each Receivable existing or hereafter arising and in the Related Security and
Collections with respect thereto, free and clear of any Adverse Claim, except as
created by the Transactions Documents.
(i) Places of Business. The principal places of business and
chief executive office of the Seller and the offices where the Seller keeps all
its Records are located at the address(es) listed on Exhibit II or such other
locations notified to the Agent in accordance with Section 5.2(a) in
jurisdictions where all action required by Section 5.2(a) has been taken and
completed. The Seller's Federal Employer Identification Number is correctly set
forth on Exhibit II.
(j) Collection Banks; etc. Except as otherwise notified to the
Agent in accordance with Section 5.2(b):
(i) the Seller has instructed, or has caused the Originator to
instruct, all Obligors to pay all Collections directly to a segregated
lock-box identified on Exhibit III hereto,
(ii) in the case of all proceeds remitted to any such lock-box
which is now or hereafter established, such proceeds will be deposited
directly by the applicable Collection Bank into a concentration account
or a depository account listed on Exhibit III,
(iii) the names and addresses of all Collection Banks,
together with the account numbers of the Collection Accounts of the
Seller at each Collection Bank, are listed on Exhibit III, and
(iv) each lock-box and Collection Account to which Collections
are remitted shall be subject to a Collection Account Agreement that is
then in full force and effect.
In the case of lock-boxes and Collection Accounts identified on Exhibit III
which were established by the Originator or by any Person other than the Seller,
exclusive dominion and control thereof has been transferred to the Seller. The
Seller has not granted any Person, other than the Agent as contemplated by this
Agreement, dominion and control of any lock-box or Collection Account, or the
right to take dominion and control of any lock-box or Collection Account at a
future time or upon the occurrence of a future event.
(k) Material Adverse Effect. Since December 31, 1998, no event
has occurred which would have a Material Adverse Effect.
(l) Names. In the past five years, the Seller has not used any
corporate names, trade names or assumed names other than the name in which it
has executed this Agreement.
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(m) Actions, Suits. There are no actions, suits or proceedings
pending, or to the best of the Seller's knowledge, threatened, against or
affecting the Seller or the Originator, or any of the respective properties of
the Seller or the Originator, in or before any court, arbitrator or other body,
which are reasonably likely to (i) adversely affect the collectibility of a
material portion of the Receivables, (ii) materially adversely affect the
financial condition of the Seller or the Originator or (iii) materially
adversely affect the ability of the Seller or the Originator to perform its
obligations under the Transaction Documents. Neither the Seller nor the
Originator is in default with respect to any order of any court, arbitrator or
governmental body.
(n) Credit and Collection Policies. With respect to each
Receivable, each of the Originator, the Seller and the Servicer has complied in
all material respects with the Credit and Collection Policy.
(o) Payments to Originator. With respect to each Receivable
transferred to the Seller, the Seller has given reasonably equivalent value to
the Originator in consideration for such transfer of such Receivable and the
Related Security with respect thereto under the Sale Agreement and such transfer
was not made for or on account of an antecedent debt. No transfer by the
Originator of any Receivable is or may be voidable under any Section of the
Bankruptcy Reform Act of 1978 (11 U.S.C. ss.ss. 101 et seq.), as amended.
(p) Ownership of the Seller. The Originator owns, directly or
indirectly, 100% of the issued and outstanding capital stock of the Seller. Such
capital stock is validly issued, fully paid and nonassessable and there are no
options, warrants or other rights to acquire securities of the Seller.
(q) Not an Investment Company. The Seller is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended from time to time, or any successor statute.
(r) Purpose. The Seller has determined that, from a business
viewpoint, the purchase of Receivables and related interests from the Originator
under the Sale Agreement, and the sale of Receivable Interests to the Purchasers
and the other transactions contemplated herein, are in the best interest of the
Seller.
(s) Net Receivables Balance. Both before and after giving
effect to each Incremental Purchase and Reinvestment, the Net Receivables
Balance equals or exceeds the product of (i) 100% + the Aggregate Reserve
Percentage, multiplied by (ii) the aggregate Capital outstanding.
(t) Contracts Governing Excluded Receivables. Aside from
contracts applicable to Approved Offset Receivables, the only contracts listed
on Exhibit X hereto are contracts of the Originator that (i) by virtue of their
confidentiality provisions would preclude the Originator from disclosing to any
Person information that is included on an Invoice, and/or (ii) by their terms
preclude the assignment to any Person of any of the Originator's rights to
payment thereunder (notwithstanding the provisions of ss. 9-318 of the UCC).
(u) Year 2000. The Seller (i) has reviewed the areas within
its and the Originators' business and operations which could be adversely
affected by the Year 2000 Problem, (ii) has developed a Year 2000 Plan to
address the Year 2000 Problem on a timely basis, (iii) is taking all actions
necessary to meet the schedule and goals of the Year 2000 Plan and (iv) has
established adequate reserves to implement the Year 2000 Plan. The Seller does
not reasonably anticipate that the Year 2000 Problem could have a Material
Adverse Effect.
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Section 3.2. Investor Representations and Warranties. Each
Investor hereby represents and warrants to the Agent and FALCON that:
(a) Existence and Power. Such Investor is a corporation or a
banking association duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization, and has all
corporate power to perform its obligations hereunder.
(b) No Conflict. The execution, delivery and performance by
such Investor of this Agreement are within its corporate powers, have been duly
authorized by all necessary corporate action, do not contravene or violate (i)
its certificate or articles of incorporation or association or by-laws, (ii) any
law, rule or regulation applicable to it, (iii) any restrictions under any
agreement, contract or instrument to which it is a party or any of its property
is bound, or (iv) any order, writ, judgment, award, injunction or decree binding
on or affecting it or its property, and do not result in the creation or
imposition of any Adverse Claim on its assets. This Agreement has been duly
authorized, executed and delivered by such Investor.
(c) Governmental Authorization. No authorization or approval
or other action by, and no notice to or filing with, any governmental authority
or regulatory body is required for the due execution, delivery and performance
by such Investor of this Agreement.
(d) Binding Effect. This Agreement constitutes the legal,
valid and binding obligation of such Investor enforceable against such Investor
in accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws relating
to or limiting creditors' rights generally.
ARTICLE IV
CONDITIONS OF PURCHASES
Section 4.1. Conditions Precedent to Initial Purchase. The
initial purchase of a Receivable Interest under this Agreement is subject to the
conditions precedent that (a) the Agent shall have received on or before the
date of such purchase those documents listed on Schedule A hereto, and (b) the
Agent shall have been paid all fees required to be paid on such date pursuant to
the terms of the Fee Letter.
Section 4.2. Conditions Precedent to All Purchases and
Reinvestments. Each purchase of a Receivable Interest (other than pursuant to
Section 2.1) and each Reinvestment shall be subject to the further conditions
precedent that:
(a) in the case of each such purchase, the Servicer shall have
delivered to the Agent on or prior to the date of such purchase, in form and
substance satisfactory to the Agent, all Monthly Reports as and when due under
Section 6.5;
(b) on the date of each such purchase or Reinvestment, the
following statements shall be true both before and after giving effect to such
purchase or Reinvestment (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 set forth in Section
3.1 are correct on and as of the date of such purchase or Reinvestment
as though made on and as of such date; PROVIDED, HOWEVER, that the
representation and warranty set forth in Section 3.1(k) need
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only be true and correct as of the date of the initial purchase of
Receivable Interests hereunder;
(ii) no event has occurred, or would result from such purchase
or Reinvestment, that will constitute a Servicer Default, and no event
has occurred and is continuing, or would result from such purchase or
Reinvestment, that would constitute a Potential Servicer Default; and
(iii) the Liquidity Termination Date shall not have occurred,
the aggregate Capital of all Receivable Interests shall not exceed the
Purchase Limit and the aggregate Receivable Interests shall not exceed
100%; and
(c) the Agent shall have received such other approvals,
opinions or documents as it may reasonably request.
ARTICLE V
COVENANTS
Section 5.1. Affirmative Covenants of Seller. Until the date
on which the Aggregate Unpaids have been indefeasibly paid in full, the Seller
hereby covenants, individually and in its capacity as Servicer, that:
(a) Financial Reporting. The Seller will maintain a system of
accounting established and administered in accordance with generally accepted
accounting principles, and furnish to the Agent:
(i) Annual Reporting. Within 90 days after the close of each
of its fiscal years, financial statements for such fiscal year
certified in a manner acceptable to the Agent by the Chief Financial
Officer of the Seller.
(ii) Quarterly Reporting. Within 45 days after the close of
the first three quarterly periods of each of its fiscal years, balance
sheets as at the close of each such period and statements of income and
retained earnings and a statement of cash flows for the period from the
beginning of such fiscal year to the end of such quarter, all certified
by its Chief Financial Officer.
(iii) Compliance Certificate. Together with the financial
statements required hereunder, a compliance certificate in
substantially the form of Exhibit IV signed by the Seller's Chief
Financial Officer and dated the date of such annual financial statement
or such quarterly financial statement, as the case may be.
(iv) Copies of Notices, Etc. under Sale Agreement and Other
Transaction Documents. Forthwith upon its receipt of any notice,
request for consent, financial statements of the Originator,
certification, report or other communication under or in connection
with any Transaction Document from any Person other than the Agent or
FALCON, copies of the same.
(v) Change in Credit and Collection Policy. At least 30 days
prior to the effectiveness of any material change in or amendment to
the Credit and Collection Policy, a copy of the Credit and Collection
Policy then in effect and a notice indicating such change or amendment.
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(vi) Replacement of Contracts Applicable to Excluded
Receivables. Not less than once every 3 months while any Excluded
Receivables exist (or more frequently if the Seller desires), an
updated version of Exhibit X hereto.
(vii) Other Information. Such other information (including
non-financial information) as the Agent or any Purchaser may from time
to time reasonably request.
(b) Notices. The Seller will notify the Agent in writing of
any of the following immediately upon learning of the occurrence thereof,
describing the same and, if applicable, the steps being taken with respect
thereto:
(i) Servicer Defaults or Potential Servicer Defaults. The
occurrence of each Servicer Default or each Potential Servicer Default,
by a statement of the Chief Financial Officer of the Seller;
(ii) Judgment. The entry of any judgment or decree against the
Seller;
(iii) Litigation. The institution of any litigation,
arbitration proceeding or governmental proceeding against the Seller or
to which the Seller becomes party;
(iv) Termination Date under Sale Agreement. The declaration by
the Originator of the "Termination Date" under the Sale Agreement;
(v) Downgrade. Any downgrade in the rating of any Indebtedness
of the Seller, the Originator or Yellow Corporation by Standard &
Poor's Ratings Group or by Moody's Investors Service, Inc., setting
forth the Indebtedness affected and the nature of such change; and/or
(vi) Labor Strike, Walkout, Lockout or Slowdown. The
commencement or threat of any labor strike, walkout, lockout or
concerted labor slowdown which prevents, or could reasonably be likely
to prevent, pick-ups, shipments and/or deliveries by the Originator
(collectively, "LABOR ACTIONS").
(c) Compliance with Laws. The Seller will comply in all
material respects with all applicable laws, rules, regulations, orders writs,
judgments, injunctions, decrees or awards to which it may be subject.
(d) Audits. The Seller will furnish to the Agent from time to
time such information with respect to it and the Receivables as the Agent may
reasonably request. The Seller shall, from time to time during regular business
hours as requested by the Agent upon reasonable notice, permit the Agent, or its
agents or representatives (and shall cause the Originator to permit the Agent or
its agents or representatives) (i) to examine and make copies of and abstracts
from all Records in the possession or under the control of the Seller or the
Originator relating to Receivables and the Related Security, including, without
limitation, the related Invoices, and (ii) to visit the offices and properties
of the Seller or the Originator for the purpose of examining such materials
described in clause (i) above, and to discuss matters relating to the Seller's
or the Originator's financial condition or the Receivables and the Related
Security or the Seller's performance hereunder, or the Originator's performance
under any of the other Transaction Documents, or the Seller's or the
Originator's performance under the Invoices with any of the officers or
employees of the Seller or the Originator having knowledge of such matters.
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(e) Keeping and Marking of Records and Books.
(i) The Seller will, and will cause the Originator to,
maintain and implement administrative and operating procedures
(including, without limitation, an ability to recreate records
evidencing Receivables in the event of the destruction of the originals
thereof), and keep and maintain all documents, books, records and other
information reasonably necessary or advisable for the collection of all
Receivables (including, without limitation, records adequate to permit
the immediate identification of each new Receivable and all Collections
of and adjustments to each existing Receivable). The Seller will, and
will cause the Originator to, give the Agent notice of any material
change in the administrative and operating procedures referred to in
the previous sentence.
(ii) The Seller will, and will cause the Originator to, (a) on
or prior to the date hereof, mark its master data processing records
and other books and records relating to the Receivable Interests with a
legend, acceptable to the Agent, describing the Receivable Interests
and (b) upon the request of the Agent: (A) mark each Invoice with a
legend describing the Receivable Interests and (B) deliver to the Agent
all Invoices (including, without limitation, all multiple originals of
any such Invoice) relating to the Receivables.
(f) Compliance with Invoices and Credit and Collection Policy.
The Seller will, and will cause the Originator to, timely and fully (i) perform
and comply with all provisions, covenants and other promises required to be
observed by it under the Invoices (other than bills of lading) related to the
Receivables, and (ii) comply in all material respects with any bills of lading
included in the Invoices and with the Credit and Collection Policy. The Seller
will, and will cause the Originator to, pay when due any taxes payable in
connection with the Receivables.
(g) Purchase of Receivables from the Originator. With respect
to each Receivable purchased under the Sale Agreement, the Seller shall (or
shall cause the Originator to) take all actions necessary to vest legal and
equitable title to such Receivable and the Related Security irrevocably in the
Seller, including, without limitation, the filing of all financing statements or
other similar instruments or documents necessary under the UCC of all
appropriate jurisdictions (or any comparable law) to perfect the Seller's
interest in such Receivable and such other action to perfect, protect or more
fully evidence the interest of the Seller as the Agent may reasonably request.
(h) Ownership Interest. The Seller shall take all necessary
action to establish and maintain a valid and perfected first priority undivided
percentage ownership interest in the Receivables and the Related Security and
Collections with respect thereto, to the full extent contemplated herein, in
favor of the Agent and the Purchasers, including, without limitation, taking
such action to perfect, protect or more fully evidence the interest of the Agent
and the Purchasers hereunder as the Agent may reasonably request.
(i) Payment to the Originator. With respect to any Receivable
purchased by the Seller from the Originator, such sale shall be effected under,
and in strict compliance with the terms of, the Sale Agreement, including,
without limitation, the terms relating to the amount and timing of payments to
be made to the Originator in respect of the purchase price for such Receivable.
(j) Performance and Enforcement of Sale Agreement. The Seller
shall timely perform the obligations required to be performed by the Seller, and
shall vigorously enforce the rights and remedies accorded to the Seller, under
the Sale Agreement. The Seller shall take all actions to perfect and enforce its
rights and interests (and the rights and interests of the Purchasers and the
Agents, as assignees of the
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Seller) under the Sale Agreement as the Agent may from time to time reasonably
request, including, without limitation, making claims to which it may be
entitled under any indemnity, reimbursement or similar provision contained in
the Sale Agreement.
(k) Purchasers' Reliance. The Seller acknowledges that the
Purchasers are entering into the transactions contemplated by this Agreement in
reliance upon the Seller's identity as a legal entity that is separate from the
Originator. Therefore, from and after the date of execution and delivery of this
Agreement, the Seller shall take all reasonable steps including, without
limitation, all steps that the Agent or any Purchaser may from time to time
reasonably request to maintain the Seller's identity as a separate legal entity
and to make it manifest to third parties that the Seller is an entity with
assets and liabilities distinct from those of the Originator and any Affiliates
thereof and not just a division of the Originator. Without limiting the
generality of the foregoing and in addition to the other covenants set forth
herein, the Seller shall:
(i) conduct its own business in its own name and require that
all full-time employees of the Seller, if any, identify themselves as
such and not as employees of the Originator (including, without
limitation, by means of providing appropriate employees with business
or identification cards identifying such employees as the Seller's
employees);
(ii) compensate all employees, consultants and agents
directly, from the Seller's bank accounts, for services provided to the
Seller by such employees, consultants and agents and, to the extent any
employee, consultant or agent of the Seller is also an employee,
consultant or agent of the Originator, allocate the compensation of
such employee, consultant or agent between the Seller and the
Originator on a basis which reflects the services rendered to the
Seller and the Originator;
(iii) clearly identify its offices (by signage or otherwise)
as its offices and, if such office is located in the offices of the
Originator, the Seller shall lease such office at a fair market rent;
(iv) have a separate telephone number, which will be answered
only in its name and separate stationery, invoices and checks in its
own name;
(v) conduct all transactions with the Originator (including,
without limitation, any delegation of its obligations hereunder as
Servicer) strictly on an arm's-length basis, allocate all overhead
expenses (including, without limitation, telephone and other utility
charges) for items shared between the Seller and the Originator on the
basis of actual use to the extent practicable and, to the extent such
allocation is not practicable, on a basis reasonably related to actual
use;
(vi) at all times have at least two members of its Board of
Directors (each, an "INDEPENDENT DIRECTOR") who are not at such time,
and have not have been at any time during the preceding five years (A)
a director, officer, employee or affiliate of Yellow Corporation or any
of its subsidiaries or affiliates, or (B) the beneficial owner at the
time of such individual's appointment as an Independent Director or at
any time thereafter while serving as an Independent Director, of five
percent (5%) of the outstanding common shares of Yellow Corporation
having general voting rights; PROVIDED, HOWEVER, that a director who
otherwise meets the description of Independent Director as set forth
herein shall not be disqualified from serving as an Independent
Director of the Seller if he or she is also a
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director of another corporation that is an Affiliate of Yellow
Corporation with a certificate of incorporation substantially similar
to the certificate of incorporation of the Seller;
(vii) observe all corporate formalities as a distinct entity,
and ensure that all corporate actions relating to (A) the selection,
maintenance or replacement of the Independent Directors, (B) the
dissolution or liquidation of the Seller or (C) the initiation of
participation in, acquiescence in or consent to any bankruptcy,
insolvency, reorganization or similar proceeding involving the Seller,
are duly authorized by unanimous vote of its Board of Directors
(including the Independent Directors);
(viii) maintain the Seller's books and records separate from
those of the Originator and otherwise readily identifiable as its own
assets rather than assets of the Originator;
(ix) prepare its financial statements separately from those of
the Originator and insure that any consolidated financial statements of
the Originator or any Affiliate thereof that include the Seller and
which are filed with the Securities and Exchange Commission or any
other governmental agency have notes clearly stating that the Seller is
a separate corporate entity and that its assets will be available first
and foremost to satisfy the claims of the creditors of the Seller;
(x) except as herein specifically otherwise provided, not
commingle funds or other assets of the Seller with those of the
Originator and not maintain bank accounts or other depository accounts
to which the Originator is an account party, into which the Originator
makes deposits or from which the Originator has the power to make
withdrawals;
(xi) not permit the Originator to pay any of the Seller's
operating expenses (except pursuant to allocation arrangements that
comply with the requirements of this Section 5.1(k));
(xii) not permit the Seller to be named as an insured on the
insurance policy covering the property of the Originator or enter into
an agreement with the holder of such policy whereby in the event of a
loss in connection with such property, proceeds are paid to the Seller;
and
(xiii) take such other actions as are necessary on its part to
ensure that the facts and assumptions set forth in the opinion issued
by Skadden, Arps, Slate, Meagher & Flom, as counsel for the Seller, in
connection with the closing or initial purchase under this Agreement
and relating to substantive consolidation issues, and in the
certificates accompanying such opinion, remain true and correct in all
material respects at all times.
(l) Collections. The Seller shall instruct all Obligors, or
cause the Originator to instruct, all Obligors to pay all Collections directly
to a segregated lock-box or other Collection Account listed on Exhibit III, each
of which is subject to a Collection Account Agreement. In the case of payments
remitted to any such lock-box, the Seller shall cause all proceeds from such
lock-box to be deposited directly by a Collection Bank into a Collection Account
listed on Exhibit III, which is subject to a Collection Account Agreement. The
Seller shall maintain exclusive dominion and control (subject to the terms of
this Agreement) to each such Collection Account. In the case of any Collections
received by the Seller or the Originator, the Seller shall remit (or shall cause
the Originator to remit) such Collections to a Collection Account not later than
the Business Day immediately following the date of receipt of such Collections,
and,
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at all times prior to such remittance, the Seller shall itself hold (or, if
applicable, shall cause the Originator to hold) such Collections in trust, for
the exclusive benefit of the Purchasers and the Agent. In the case of any
remittances received by the Seller in any such Collection Account that shall
have been identified, to the satisfaction of the Servicer, to not constitute
Collections or other proceeds of the Receivables or the Related Security, the
Seller shall promptly remit such items to the Person identified to it as being
the owner of such remittances. From and after the date the Agent delivers to any
of the Collection Banks a Collection Notice pursuant to Section 6.3, the Agent
may request that the Seller, and the Seller thereupon promptly shall and shall
direct the Originator to, direct all Obligors on Receivables to remit all
payments thereon to a new depositary account (the "NEW CONCENTRATION ACCOUNT")
specified by the Agent and, at all times thereafter the Seller shall not deposit
or otherwise credit, and shall not permit the Originator or any other Person to
deposit or otherwise credit to the New Concentration Account any cash or payment
item other than Collections. Alternatively, the Agent may request that the
Seller, and the Seller thereupon promptly shall, direct all Persons then making
remittances to any Collection Account listed on Exhibit III which remittances
are not payments on Receivables to deliver such remittances to a location other
than an account listed on Exhibit III.
(m) Minimum Net Worth. The Seller shall at all times maintain
total assets which exceed its total liabilities by not less than 3% of the
Outstanding Balance of the Receivables at such time.
Section 5.2. Negative Covenants of Seller. Until the date on
which the Aggregate Unpaids have been indefeasibly paid in full, the Seller
hereby covenants, individually and in its capacity as Servicer, that:
(a) Name Change, Offices, Records and Books of Accounts. The
Seller will not change its name, identity or corporate structure (within the
meaning of Section 9-402(7) of any applicable enactment of the UCC) or relocate
its chief executive office or any office where Records are kept unless it shall
have: (i) given the Agent at least 45 days prior notice thereof and (ii)
delivered to the Agent all financing statements, instruments and other documents
requested by the Agent in connection with such change or relocation.
(b) Change in Payment Instructions to Obligors. The Seller
will not add or terminate any bank as a Collection Bank from those listed in
Exhibit III, 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,
Collection Account or Collection Bank, unless the Agent shall have received, at
least fifteen (15) Business Days before the proposed effective date therefor:
(i) written notice of such addition, termination or change,
and
(ii) with respect to the addition of a lock-box, Collection
Account or Collection Bank, an executed account agreement and an
executed Collection Account Agreement from such Collection Bank
relating thereto;
PROVIDED, HOWEVER, that the Seller may make changes in instructions to Obligors
regarding payments if such new instructions require such Obligor to make
payments to another existing lock-box or Collection Account that is subject to a
Collection Account Agreement then in effect.
(c) Modifications to Invoices and Credit and Collection
Policy. The Seller will not make any change to the Credit and Collection Policy
which would be reasonably likely to adversely affect the collectibility of any
material portion of the Receivables or decrease the credit quality of any newly
created
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Receivables. Except as provided in Section 6.2(c), the Seller, acting as
Servicer or otherwise, will not extend, amend or otherwise modify the terms of
any Receivable or any Invoice related thereto other than in accordance with the
Credit and Collection Policy.
(d) Sales, Liens, Etc. The Seller shall not sell, assign (by
operation of law or otherwise) or otherwise dispose of, or grant any option with
respect to, or create or suffer to exist any Adverse Claim upon (including,
without limitation, the filing of any financing statement) or with respect to,
any Excluded Receivable or any Receivable, Related Security or Collections, or
upon or with respect to any Invoice under which any Receivable arises, or any
lock-box or Collection Account or assign any right to receive income in respect
thereof (other than, in each case, the creation of the interests therein in
favor of the Agent and the Purchasers provided for herein), and the Seller shall
defend the right, title and interest of the Agent and the Purchasers in, to and
under any of the foregoing property, against all claims of third parties
claiming through or under the Seller or the Originator.
(e) Nature of Business; Other Agreements; Other Indebtedness.
The Seller shall not engage in any business or activity of any kind or enter
into any transaction or indenture, mortgage, instrument, agreement, contract,
lease or other undertaking other than the transactions contemplated and
authorized by this Agreement and the Sale Agreement. Without limiting the
generality of the foregoing, the Seller shall not create, incur, guarantee,
assume or suffer to exist any indebtedness or other liabilities, whether direct
or contingent, other than:
(i) as a result of the endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary
course of business,
(ii) the incurrence of obligations under this Agreement,
(iii) the incurrence of obligations, as expressly contemplated
in the Sale Agreement, to make payment to the Originator thereunder for
the purchase of Receivables from the Originator under the Sale
Agreement, and
(iv) the incurrence of operating expenses in the ordinary
course of business of the type otherwise contemplated in Section 5.1(k)
of this Agreement.
In the event the Seller shall at any time borrow a "Revolving Loan" under the
Sale Agreement, the obligations of the Seller in connection therewith shall be
subordinated to the obligations of the Seller to the Purchasers and the Agent
under this Agreement, on such terms as shall be satisfactory to the Agent.
(f) Amendments to Sale Agreement. The Seller shall not,
without the prior written consent of the Agent:
(i) cancel or terminate the Sale Agreement,
(ii) give any consent, waiver, directive or approval under the
Sale Agreement,
(iii) waive any default, action, omission or breach under the
Sale Agreement, or otherwise grant any indulgence thereunder, or
(iv) amend, supplement or otherwise modify any of the terms of
the Sale Agreement.
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(g) Amendments to Corporate Documents. The Seller shall not
amend its Certificate of Incorporation or By-Laws in any respect that would
impair its ability to comply with the terms or provisions of any of the
Transaction Documents, including, without limitation, Section 5.1(k) of this
Agreement.
(h) Merger. The Seller shall not merge or consolidate with or
into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions, and except as otherwise contemplated
herein) all or substantially all of its assets (whether now owned or hereafter
acquired) to, or acquire all or substantially all of the assets of, any Person.
(i) Restricted Junior Payments. The Seller shall not make any
Restricted Junior Payment if a Servicer Default or Potential Servicer Default
exists or would result therefrom.
ARTICLE VI
ADMINISTRATION AND COLLECTION
Section 6.1. Designation of Servicer.
(a) The servicing, administration and collection of the
Receivables shall be conducted by such Person (the "SERVICER") so designated
from time to time in accordance with this Section 6.1. The Seller is hereby
designated as, and hereby agrees to perform the duties and obligations of, the
Servicer pursuant to the terms of this Agreement. The Agent may at any time
designate as Servicer any Person to succeed the Seller or any successor
Servicer.
(b) The Seller is permitted to delegate, and the Seller hereby
advises the Purchasers and the Agent that it has delegated, to the Originator,
as subservicer of the Servicer, certain of its duties and responsibilities as
Servicer hereunder in respect of the Receivables transferred by the Originator
to the Seller. Notwithstanding the foregoing, (i) the Seller shall be and remain
primarily liable to the Agent and the Purchasers for the full and prompt
performance of all duties and responsibilities of the Servicer hereunder and
(ii) the Agent and the Purchasers shall be entitled to deal exclusively with the
Seller in matters relating to the discharge by the Servicer of its duties and
responsibilities hereunder, and the Agent and the Purchasers shall not be
required to give notice, demand or other communication to any Person other than
the Seller in order for communication to the Servicer and its subservicer or
other delegate in respect thereof to be accomplished. The Seller, at all times
that it is the Servicer, shall be responsible for providing its subservicer or
other delegate with any notice given under this Agreement.
(c) Without the prior written consent of the Required
Investors, (i) the Seller shall not be permitted to delegate any of its duties
or responsibilities as Servicer to any Person other than the Originator, and
then such delegation shall be limited to the activities of Servicer hereunder as
the same may relate to the Receivables originated by the Originator, and (ii) no
Originator shall be permitted to further delegate to any other Person any of the
duties or responsibilities of the Servicer delegated to it by the Seller. If at
any time the Agent shall designate as Servicer any Person other than the Seller,
all duties and responsibilities theretofore delegated by the Seller to the
Originator may, at the discretion of the Agent, be terminated forthwith on
notice given by the Agent to the Seller.
Section 6.2. Duties of Servicer.
(a) The Servicer shall take or cause to be taken all such
actions as may be necessary or advisable to collect each Receivable from time to
time, all in accordance with applicable laws, rules and
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regulations, with reasonable care and diligence, and in accordance with the
applicable Invoices and the Credit and Collection Policy.
(b) The Servicer shall administer the Collections in
accordance with the procedures described herein and in Article I. The Servicer
shall set aside and hold in trust for the account of the Seller and the
Purchasers their respective shares of the Collections of Receivables in
accordance with Sections 1.5.2 and 1.5.3. The Servicer shall upon the request of
the Agent after the occurrence of the Amortization Date, segregate, in a manner
acceptable to the Agent, all cash, checks and other instruments received by it
from time to time constituting Collections from the general funds of the
Servicer or the Seller prior to the remittance thereof in accordance with
Section 1.5. If the Servicer shall be required to segregate Collections pursuant
to the preceding sentence, the Servicer shall segregate and deposit with a bank
designated by the Agent such allocable share of Collections of Receivables set
aside for the Purchasers on the first Business Day following receipt by the
Servicer of such Collections, duly endorsed or with duly executed instruments of
transfer.
(c) The Servicer, may, in accordance with the Credit and
Collection Policy, extend the maturity of any Receivable or adjust the
Outstanding Balance of any Receivable as the Servicer may determine to be
appropriate to maximize Collections thereof; PROVIDED, HOWEVER, that such
extension or adjustment shall not alter the status of such Receivable as a
Delinquent Receivable or Defaulted Receivable or limit the rights of the Agent
or the Purchasers under this Agreement. Notwithstanding anything to the contrary
contained herein, from and after the occurrence of a Servicer Default, the Agent
shall have the absolute and unlimited right to direct the Servicer to commence
or settle any legal action with respect to any Receivable or to foreclose upon
or repossess any Related Security.
(d) The Servicer shall hold in trust for the Seller and the
Purchasers, in accordance with their respective interests in the Receivables,
all Records that evidence or relate to the Receivables, the related Invoices and
Related Security or that are otherwise necessary or desirable to collect the
Receivables and shall, as soon as practicable upon demand of the Agent, deliver
or make available to the Agent all such Records, (x) if such demand is made at
any time prior to the replacement of the Seller as Servicer hereunder, at the
chief executive office of the Originator and (y) if such demand is made at any
time after the replacement of the Seller as Servicer hereunder, to such location
as the Agent may designate in writing. The Servicer shall, as soon as
practicable following receipt thereof, turn over to the Seller (i) that portion
of Collections of Receivables representing the Seller's undivided fractional
ownership interest therein, less, in the event the Seller is not the Servicer,
all reasonable out-of-pocket costs and expenses of the Servicer of servicing,
administering and collecting the Receivables, and (ii) any cash collections or
other cash proceeds received with respect to indebtedness not constituting
Receivables. The Servicer shall, from time to time at the request of any
Purchaser, furnish to the Purchasers (promptly after any such request) a
calculation of the amounts set aside for the Purchasers pursuant to Section 1.5.
(e) Any payment by an Obligor in respect of any indebtedness
owed by it to the Seller shall, except as otherwise specified by such Obligor or
otherwise required by contract or law and unless otherwise instructed by the
Agent, be applied as a Collection of any Receivable of such Obligor (starting
with the oldest such Receivable) to the extent of any amounts then due and
payable thereunder before being applied to any other receivable or other
obligation of such Obligor.
Section 6.3. Collection Notices. The Agent is authorized at
any time to date and to deliver to the Collection Banks a Collection Notice
under any Collection Account Agreement. The Seller hereby transfers to the Agent
for the benefit of the Purchasers, effective when the Agent delivers such
notice, the exclusive ownership and control of the Collection Accounts. In case
any authorized signatory of the Seller
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whose signature appears on a Collection Account Agreement shall cease to have
such authority before the delivery of such notice, such Collection Notice shall
nevertheless be valid as if such authority had remained in force. The Seller
hereby authorizes the Agent, and agrees that the Agent shall be entitled to (i)
endorse the Seller's name on checks and other instruments representing
Collections, (ii) enforce the Receivables, the related Invoices and the Related
Security and (iii) take such action as shall be necessary or desirable to cause
all cash, checks and other instruments constituting Collections of Receivables
to come into the possession of the Agent rather than the Seller.
Section 6.4. Responsibilities of the Seller. Anything herein
to the contrary notwithstanding, the exercise by the Agent and the Purchasers of
their rights hereunder shall not release the Servicer or the Seller from any of
their duties or obligations with respect to any Receivables or under the related
Invoices. The Purchasers shall have no obligation or liability with respect to
any Receivables or related Invoices, nor shall any of them be obligated to
perform the obligations of the Seller.
Section 6.5. Reports. On the 15th day of each month (or, if
such date is not a Business Day, the next following Business Day), and at such
other times as the Agent shall request, the Servicer shall prepare and forward
to the Agent a Monthly Report. Promptly following any request therefor by the
Agent, the Seller shall prepare and provide to the Agent a listing by Obligor of
all Receivables together with an aging of such Receivables. If at any time an
Approved Offset Receivable or a Supplemental Approved Offset Receivable ceases
to be an Eligible Receivable because the Originator commences purchasing, on
credit, goods or services from the Obligor thereon, the Servicer shall, not
later than 5 Business Days thereafter, deliver to the Agent a restated Monthly
Report for the month preceding such occurrence deducting the Outstanding Balance
of such Approved Offset Receivable or Supplemental Approved Offset Receivable,
as the case may be, from the aggregate Outstanding Balance of Eligible
Receivables previously reflected thereon.
ARTICLE VII
SERVICER DEFAULTS
Section 7.1. Servicer Defaults. The occurrence of any one
or more of the following events shall constitute a Servicer Default:
(a) The Servicer or the Seller shall fail (i) to make when due
any payment or deposit required hereunder, or (ii) to perform or observe any
term, covenant or agreement hereunder (other than as referred to in clause (i)
of this paragraph (a)) and such failure shall remain unremedied for five (5)
Business Days following written notice thereof to the Servicer or the Seller, as
applicable.
(b) Any representation, warranty, certification or statement
made by the Seller, the Servicer or the Originator in this Agreement, any other
Transaction Document or in any other document delivered pursuant hereto shall
prove to have been incorrect in any material respect when made or deemed made.
(c) (i) The Seller or the Servicer 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 any proceeding shall be instituted by or against the Seller or the
Servicer seeking to adjudicate it 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 or other similar official for
it or any substantial part of its property, or
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(ii) the Seller or any Servicer shall take any corporate action to authorize any
of the actions set forth in clause (i) above in this subsection (c).
(d) As at the end of any calendar month:
(i) the average of the Delinquency Ratios for each of the
three consecutive calendar months then most recently ended shall exceed
2.75%;
(ii) the Dilution Ratio for any calendar month shall exceed
3.25%; or
(iii) the average of the Default Ratios for each of the three
consecutive calendar months then most recently ended shall exceed
2.50%.
(e) The Originator (i) shall fail to perform or observe any
term, covenant or agreement contained in any other Transaction Document, or (ii)
shall for any reason cease to transfer, or cease to have the legal capacity or
otherwise be incapable of transferring, Receivables to the Seller, as purchaser
under the Sale Agreement, or any "Event of Default" or "Potential Event of
Default" shall occur under the Sale Agreement.
(f) The aggregate Receivable Interests hereunder shall at any
time exceed 100%.
(g) A Change of Control shall occur.
(h) A "Default" under and as defined in that certain Revolving
Credit Agreement dated as of September 24, 1997 by and among the Originator,
various lenders, NationsBank, N.A., individually and as Documentation Agent, and
The First National Bank of Chicago, individually, as Issuer and as Agent, as
amended, modified or replaced from time to time with the consent of First
Chicago (the "REVOLVING CREDIT AGREEMENT"), shall occur and be continuing;
PROVIDED, HOWEVER, that any Servicer Default arising under this Section 7.1(h)
shall be deemed automatically waived if and to the extent that any "Default"
under the Revolving Credit Agreement is waived in accordance with the terms
thereof and First Chicago (or any of its Affiliates or successors) is one of the
lenders under the Revolving Credit Agreement who consents to such waiver.
ARTICLE VIII
INDEMNIFICATION
Section 8.1. Indemnities by the Seller. Without limiting any
other rights which the Agent or any Purchaser may have hereunder or under
applicable law, the Seller hereby agrees to indemnify the Agent and each
Purchaser and their respective officers, directors, agents and employees (each,
an "INDEMNIFIED PARTY") from and against any and all damages, losses, claims,
taxes, liabilities, costs, expenses and for all other amounts payable, including
reasonable attorneys' fees (which attorneys may be employees of the Agent or
such Purchaser) and disbursements (all of the foregoing being collectively
referred to as "INDEMNIFIED AMOUNTS") awarded against or incurred by any of them
arising out of or as a result of this Agreement or the acquisition, either
directly or indirectly, by a Purchaser of an interest in the Receivables,
excluding, however:
(a) Indemnified Amounts to the extent final judgment of a
court of competent jurisdiction holds such Indemnified Amounts resulted
from gross negligence or willful misconduct on the part of the
Indemnified Party seeking indemnification;
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(b) Indemnified Amounts to the extent the same includes losses
in respect of Receivables which are uncollectible on account of the
insolvency, bankruptcy or lack of creditworthiness of the related
Obligor; or
(c) taxes imposed by the jurisdiction in which such
Indemnified Party's principal executive office is located, on or
measured by the overall net income of such Indemnified Party to the
extent that the computation of such taxes is consistent with the
Intended Characterization;
PROVIDED, HOWEVER, that nothing contained in this sentence shall limit the
liability of the Seller or the Servicer or limit the recourse of the Purchasers
to the Seller or Servicer for amounts otherwise specifically provided to be paid
by the Seller or the Servicer under the terms of this Agreement. Without
limiting the generality of the foregoing indemnification, the Seller shall
indemnify the Agent and the Purchasers for Indemnified Amounts (including,
without limitation, losses in respect of uncollectible receivables, regardless
of whether reimbursement therefor would constitute recourse to the Seller or the
Servicer) relating to or resulting from:
(i) any representation or warranty made by the Seller, the
Originator or the Servicer (or any officers of the Seller, the
Originator or the Servicer) under or in connection with this Agreement,
any other Transaction Document, any Monthly Report or any other
information or report delivered by the Seller, the Originator or the
Servicer pursuant hereto or thereto, which shall have been false or
incorrect when made or deemed made;
(ii) the failure by the Seller, the Originator or the Servicer
to comply with any applicable law, rule or regulation with respect to
any Receivable or Invoice related thereto, or the nonconformity of any
Receivable or Invoice included therein with any such applicable law,
rule or regulation;
(iii) any failure of the Seller, the Originator or the
Servicer to perform its duties or obligations in accordance with the
provisions of this Agreement or any other Transaction Document;
(iv) any products liability or similar claim arising out of or
in connection with merchandise, insurance or services which are the
subject of any Invoice;
(v) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor) of any Obligor to the payment
of any Receivable (including, without limitation, a defense based on
such Receivable or the related Invoice not being a legal, valid and
binding obligation of such Obligor enforceable against it in accordance
with its terms), or any other claim resulting from the sale of the
merchandise or service related to such Receivable or the furnishing or
failure to furnish such merchandise or services;
(vi) the commingling of Collections of Receivables at any time
with other funds;
(vii) any investigation, litigation or proceeding related to
or arising from this Agreement or any other Transaction Document, the
transactions contemplated hereby or thereby, the use of the proceeds of
a purchase, the ownership of the Receivable Interests or any other
investigation, litigation or proceeding relating to the Seller or the
Originator in
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which any Indemnified Party becomes involved as a result of any of the
transactions contemplated hereby or thereby;
(viii) any inability to litigate any claim against any Obligor
in respect of any Receivable as a result of such Obligor being immune
from civil and commercial law and suit on the grounds of sovereignty or
otherwise from any legal action, suit or proceeding;
(ix) a Servicer Default described in Section 7.1(c);
(x) the failure to vest and maintain vested in the Agent and
the Purchasers, or to transfer to the Agent and the Purchasers, legal
and equitable title to, and ownership of, a first priority perfected
undivided percentage ownership (to the extent of the Receivable
Interests contemplated hereunder) in the Receivables, the Related
Security and the Collections, free and clear of any Adverse Claim;
(xi) any failure of the Seller to give reasonably equivalent
value to the Originator under the Sale Agreement in consideration of
the transfer by the Originator of any Receivable, or any attempt by any
Person to void any such transfer under statutory provisions or common
law or equitable action, including, without limitation, any provision
of the Bankruptcy Code; or
(xii) the Year 2000 Problem.
Section 8.2. Increased Cost and Reduced Return.
(a) If after the date hereof, any Funding Source shall be
charged any fee, expense or increased cost on account of the adoption of any
applicable law, rule or regulation (including any applicable law, rule or
regulation regarding capital adequacy) or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance with any request or directive (whether or
not having the force of law) of any such authority, central bank or comparable
agency (a "REGULATORY CHANGE"): (i) which subjects any Funding Source to any
charge or withholding on or with respect to any Funding Agreement or a Funding
Source's obligations under a Funding Agreement, or on or with respect to the
Receivables, or changes the basis of taxation of payments to any Funding Source
of any amounts payable under any Funding Agreement (except for changes in the
rate of tax on the overall net income of a Funding Source) or (ii) which
imposes, modifies or deems applicable any reserve, assessment, insurance charge,
special deposit or similar requirement against assets of, deposits with or for
the account of a Funding Source, or credit extended by a Funding Source pursuant
to a Funding Agreement or (iii) which imposes any other condition the result of
which is to increase the cost to a Funding Source of performing its obligations
under a Funding Agreement, or to reduce the rate of return on a Funding Source's
capital as a consequence of its obligations under a Funding Agreement, or to
reduce the amount of any sum received or receivable by a Funding Source under a
Funding Agreement or to require any payment calculated by reference to the
amount of interests or loans held or interest received by it, then, upon demand
by the Agent, the Seller shall pay to the Agent, for the benefit of the relevant
Funding Source, such amounts charged to such Funding Source or compensate such
Funding Source for such reduction.
(b) Payment of any sum pursuant to Section 8.2(a) shall be
made by the Seller to the Agent, for the benefit of the relevant Funding Source,
not later than ten (10) days after any such demand is made. A certificate of any
Funding Source, signed by an authorized officer claiming compensation under
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this Section 8.2 and setting forth the additional amount to be paid for its
benefit and explaining the manner in which such amount was determined shall be
conclusive evidence of the amount to be paid, absent manifest error.
Section 8.3. Costs and Expenses Relating to this Agreement.
The Seller shall pay to the Agent and FALCON on demand all costs and
out-of-pocket expenses in connection with the preparation, execution, delivery
and administration of this Agreement, the transactions contemplated hereby and
the other documents to be delivered hereunder, including without limitation, the
cost of FALCON's auditors auditing the books, records and procedures of the
Seller, reasonable fees and out-of-pocket expenses of legal counsel for FALCON
and the Agent (which such counsel may be employees of FALCON or the Agent) with
respect thereto and with respect to advising FALCON and the Agent as to their
respective rights and remedies under this Agreement. The Seller shall pay to the
Agent on demand any and all costs and expenses of the Agent and the Purchasers,
if any, including reasonable counsel fees and expenses in connection with the
enforcement of this Agreement and the other documents delivered hereunder and in
connection with any restructuring or workout of this Agreement or such
documents, or the administration of this Agreement following a Servicer Default.
ARTICLE IX
THE AGENT
Section 9.1. Authorization and Action. Each Purchaser hereby
designates and appoints First Chicago to act as its agent hereunder and under
each other Transaction Document, and authorizes the Agent to take such actions
as agent on its behalf and to exercise such powers as are delegated to the Agent
by the terms of this Agreement and the other Transaction Documents together with
such powers as are reasonably incidental thereto. The Agent shall not have any
duties or responsibilities, except those expressly set forth herein or in any
other Transaction Document, or any fiduciary relationship with any Purchaser,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities on the part of the Agent shall be read into this Agreement or any
other Transaction Document or otherwise exist for the Agent. In performing its
functions and duties hereunder and under the other Transaction Documents, the
Agent shall act solely as agent for the Purchasers and does not assume nor shall
be deemed to have assumed any obligation or relationship of trust or agency with
or for the Seller or any of its successors or assigns. The Agent shall not be
required to take any action which exposes the Agent to personal liability or
which is contrary to this Agreement, any other Transaction Document or
applicable law. The appointment and authority of the Agent hereunder shall
terminate upon the indefeasible payment in full of all Aggregate Unpaids. Each
Purchaser hereby authorizes the Agent to execute on behalf of such Purchaser
(the terms of which shall be binding on such Purchaser) each of the Uniform
Commercial Code financing statements, together with such other instruments or
documents determined by the Agent to be necessary or desirable in order to
perfect, evidence or more fully protect the interest of the Purchasers
contemplated hereunder.
Section 9.2. Delegation of Duties. The Agent may execute any
of its duties under this Agreement and each other Transaction Document by or
through agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
Section 9.3. Exculpatory Provisions. Neither the Agent nor any
of its directors, officers, agents or employees shall be (i) liable for any
action lawfully taken or omitted to be taken by it or them under or in
connection with this Agreement or any other Transaction Document (except for
its, their or
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such Person's own gross negligence or willful misconduct), or (ii) responsible
in any manner to any of the Purchasers for any recitals, statements,
representations or warranties made by the Seller contained in this Agreement,
any other Transaction Document or any certificate, report, statement or other
document referred to or provided for in, or received under or in connection
with, this Agreement, or any other Transaction Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement, or any other Transaction Document or any other document furnished in
connection herewith or therewith, or for any failure of the Seller to perform
its obligations hereunder or thereunder, or for the satisfaction of any
condition specified in Article IV, or for the perfection, priority, condition,
value or sufficiency or any collateral pledged in connection herewith. The Agent
shall not be under any obligation to any Purchaser to ascertain or to inquire as
to the observance or performance of any of the agreements or covenants contained
in, or conditions of, this Agreement or any other Transaction Document, or to
inspect the properties, books or records of the Seller. The Agent shall not be
deemed to have knowledge of a Servicer Default or Potential Servicer Default
unless the Agent has received notice from the Seller or a Purchaser.
Section 9.4. Reliance by Agent. The Agent shall in all cases
be entitled to rely, and shall be fully protected in relying, upon any document
or conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Seller), independent accountants and other experts selected by the Agent. The
Agent shall in all cases be fully justified in failing or refusing to take any
action under this Agreement or any other Transaction Document unless it shall
first receive such advice or concurrence of FALCON or the Required Investors or
all of the Purchasers, as applicable, as it deems appropriate and it shall first
be indemnified to its satisfaction by the Purchasers, provided that unless and
until the Agent shall have received such advice, the Agent may take or refrain
from taking any action, as the Agent shall deem advisable and in the best
interests of the Purchasers. The Agent shall in all cases be fully protected in
acting, or in refraining from acting, in accordance with a request of FALCON or
the Required Investors or all of the Purchasers, as applicable, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all the Purchasers.
Section 9.5. Non-Reliance on Agent and Other Purchasers. Each
Purchaser expressly acknowledges that neither the Agent, nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates has made
any representations or warranties to it and that no act by the Agent hereafter
taken, including, without limitation, any review of the affairs of the Seller,
shall be deemed to constitute any representation or warranty by the Agent. Each
Purchaser represents and warrants to the Agent that it has and will,
independently and without reliance upon the Agent or any other Purchaser and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations, property,
prospects, financial and other conditions and creditworthiness of the Seller and
made its own decision to enter into this Agreement, the other Transaction
Documents and all other documents related hereto or thereto.
Section 9.6. Reimbursement and Indemnification. The Investors
agree to reimburse and indemnify the Agent and its officers, directors,
employees, representatives and agents ratably according to their Pro Rata
Shares, to the extent not paid or reimbursed by the Seller (i) for any amounts
for which the Agent, acting in its capacity as Agent, is entitled to
reimbursement by the Seller hereunder and (ii) for any other expenses incurred
by the Agent, in its capacity as Agent and acting on behalf of the Purchasers,
in connection with the administration and enforcement of this Agreement and the
other Transaction Documents.
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Section 9.7. Agent in its Individual Capacity. The Agent and
its Affiliates may make loans to, accept deposits from and generally engage in
any kind of business with the Seller or any Affiliate of the Seller as though
the Agent were not the Agent hereunder. With respect to the acquisition of
Receivable Interests pursuant to this Agreement, the Agent shall have the same
rights and powers under this Agreement as any Purchaser and may exercise the
same as though it were not the Agent, and the terms "Investor," "Purchaser,"
"Investors" and "Purchasers" shall include the Agent in its individual capacity.
Section 9.8. Successor Agent. The Agent may, upon five days'
notice to the Seller and the Purchasers, and the Agent will, upon the direction
of all of the Purchasers (other than the Agent, in its individual capacity)
resign as Agent. If the Agent shall resign, then the Required Investors during
such five-day period shall appoint from among the Purchasers a successor agent.
If for any reason no successor Agent is appointed by the Required Investors
during such five-day period, then effective upon the termination of such five
day period, the Purchasers shall perform all of the duties of the Agent
hereunder and under the other Transaction Documents and the Seller shall make
all payments in respect of the Aggregate Unpaids directly to the applicable
Purchasers and for all purposes shall deal directly with the Purchasers. After
the effectiveness of any retiring Agent's resignation hereunder as Agent, the
retiring Agent shall be discharged from its duties and obligations hereunder and
under the other Transaction Documents and the provisions of this Article IX and
Article VIII shall continue in effect for its benefit with respect to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement and under the other Transaction Documents.
ARTICLE X
ASSIGNMENTS; PARTICIPATIONS
Section 10.1. Assignments. (a) The Seller and each Investor
hereby agree and consent to the complete or partial assignment by FALCON of all
of its rights under, interest in, title to and obligations under this Agreement
to the Investors pursuant to Section 2.1 or to any other Person, and upon such
assignment, FALCON shall be released from its obligations so assigned. Further,
the Seller and each Investor hereby agree that any assignee of FALCON of this
Agreement or all or any of the Receivable Interests of FALCON shall have all of
the rights and benefits under this Agreement as if the term "FALCON" explicitly
referred to such party, and no such assignment shall in any way impair the
rights and benefits of FALCON hereunder. The Seller shall not have the right to
assign its rights or obligations under this Agreement.
(b) Any Investor may at any time and from time to time assign
to one or more Persons ("PURCHASING INVESTORS") all or any part of its rights
and obligations under this Agreement pursuant to an assignment agreement, in a
form and substance satisfactory to the Agent (the "ASSIGNMENT AGREEMENT"),
executed by such Purchasing Investor and such selling Investor. The consent of
FALCON shall be required prior to the effectiveness of any such assignment. Each
assignee of an Investor must have a short-term debt rating of A-1 or better by
Standard & Poor's Ratings Group and P-1 by Moody's Investors Service, Inc. and
must agree to deliver to the Agent, promptly following any request therefor by
the Agent or FALCON, an enforceability opinion in form and substance
satisfactory to the Agent and FALCON. Upon delivery of the executed Assignment
Agreement to the Agent, such selling Investor shall be released from its
obligations hereunder to the extent of such assignment. Thereafter the
Purchasing Investor shall for all purposes be an Investor party to this
Agreement and shall have all the rights and obligations of an Investor under
this Agreement to the same extent as if it were an original party hereto and no
further consent or action by the Seller, the Purchasers or the Agent shall be
required.
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(c) Each of the Investors agrees that in the event that it
shall cease to have a short-term debt rating of A-1 or better by Standard &
Poor's Corporation and P-1 by Moody's Investors Service, Inc. (an "AFFECTED
INVESTOR"), such Affected Investor shall be obliged, at the request of FALCON or
the Agent, to assign all of its rights and obligations hereunder to (x) another
Investor or (y) another financial institution nominated by the Agent and
acceptable to FALCON, and willing to participate in this Agreement through the
Liquidity Termination Date in the place of such Affected Investor; provided that
the Affected Investor receives payment in full, pursuant to an Assignment
Agreement, of an amount equal to such Investor's Pro Rata Share of the Capital
and Discount owing to the Investors and all accruing but unpaid fees and other
costs and expenses payable in respect of its Pro Rata Share of the Receivable
Interests.
Section 10.2. Participations. Any Investor may, in the
ordinary course of its business at any time sell to one or more Persons (each, a
"PARTICIPANT") participating interests in its Pro Rata Share of the Receivable
Interests of the Investors, its obligation to pay FALCON its Acquisition Amounts
or any other interest of such Investor hereunder. Notwithstanding any such sale
by an Investor of a participating interest to a Participant, such Investor's
rights and obligations under this Agreement shall remain unchanged, such
Investor shall remain solely responsible for the performance of its obligations
hereunder, and the Seller, FALCON and the Agent shall continue to deal solely
and directly with such Investor in connection with such Investor's rights and
obligations under this Agreement. Each Investor agrees that any agreement
between such Investor and any such Participant in respect of such participating
interest shall not restrict such Investor's right to agree to any amendment,
supplement, waiver or modification to this Agreement, except for any amendment,
supplement, waiver or modification described in clause (i) of Section 11.1(b).
ARTICLE XI
MISCELLANEOUS
Section 11.1. Waivers and Amendments. (a) No failure or delay
on the part of any party hereto in exercising any power, right or remedy under
this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or remedy preclude any other further
exercise thereof or the exercise of any other power, right or remedy. The rights
and remedies herein provided shall be cumulative and nonexclusive of any rights
or remedies provided by law. Any waiver of this Agreement shall be effective
only in the specific instance and for the specific purpose for which given.
(b) Except as set forth in Section 7.1(h), no provision of
this Agreement may be amended, supplemented, modified or waived except in
writing in accordance with the provisions of this Section 11.1(b). FALCON, the
Seller and the Agent, at the direction of the Required Investors, may enter into
written modifications or waivers of any provisions of this Agreement, PROVIDED,
HOWEVER, that no such modification or waiver shall:
(i) without the consent of each affected Purchaser, (A) extend
the Liquidity Termination Date or the date of any payment or deposit of
Collections by the Seller or the Servicer, (B) reduce the rate or
extend the time of payment of Discount (or any component thereof), (C)
reduce any fee payable to the Agent for the benefit of the Purchasers,
(D) except pursuant to Article X hereof, change the amount of the
Capital of any Purchaser, an Investor's Pro Rata Share or an Investor's
Commitment, (E) amend, modify or waive any provision of the definition
of Required Investors or this Section 11.1(b), (F) consent to or permit
the assignment or transfer by the Seller of any of its rights and
obligations under this Agreement, (G) change the definition of
"Eligible Receivable," "Discount Reserve,"
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"Loss Reserve Percentage," "Aggregate Reserve Percentage" or "Default
Ratio," or (H) amend or modify any defined term (or any defined term
used directly or indirectly in such defined term) used in clauses (A)
through (G) above in a manner which would circumvent the intention of
the restrictions set forth in such clauses; or
(ii) without the written consent of the then Agent, amend,
modify or waive any provision of this Agreement if the effect thereof
is to affect the rights or duties of such Agent.
Notwithstanding the foregoing, (i) without the consent of the Investors, the
Agent may, with the consent of the Seller, amend this Agreement solely to add
additional Persons as Investors hereunder and (ii) without the consent of the
Seller, the Agent, the Required Investors and FALCON may enter into amendments
to modify any of the terms or provisions of Article II, Article IX, Article X or
Section 11.13 provided that such amendment has no negative impact upon the
Seller. Any modification or waiver made in accordance with this Section 11.1
shall apply to each of the Purchasers equally and shall be binding upon the
Seller, the Purchasers and the Agent.
Section 11.2. Notices.
(a) Except as provided in subsection (b) below, all
communications and notices provided for hereunder shall be in writing (including
bank wire, telecopy or electronic facsimile transmission or similar writing) and
shall be given to the other parties hereto at their respective addresses or
telecopy numbers set forth on the signature pages hereof. All such
communications and notices shall, when mailed, telecopied, telegraphed, telexed
or cabled, be effective when received through the mails, transmitted by
telecopy, delivered to the telegraph company, confirmed by telex answerback or
delivered to the cable company, respectively, except that communications and
notices to the Agent or any Purchaser pursuant to Article I or II shall not be
effective until received by the intended recipient.
(b) The Seller hereby authorizes the Agent to effect purchases
and Tranche Period and Discount Rate selections based on telephonic notices made
by any Person whom the Agent in good faith believes to be acting on behalf of
the Seller. The Seller agrees to deliver promptly to the Agent a written
confirmation of each telephonic notice signed by an authorized officer of the
Seller. However, the absence of such confirmation shall not affect the validity
of such notice. If the written confirmation differs from the action taken by the
Agent, the records of the Agent shall govern absent manifest error.
Section 11.3. Ratable Payments. If any Purchaser, whether by
setoff or otherwise, has payment made to it with respect to any portion of the
Aggregate Unpaids owing to such Purchaser (other than payments received pursuant
to Section 8.2 or 8.3) in a greater proportion than that received by any other
Purchaser entitled to receive a ratable share of such Aggregate Unpaids, such
Purchaser agrees, promptly upon demand, to purchase for cash without recourse or
warranty a portion of the Aggregate Unpaids held by the other Purchasers so that
after such purchase each Purchaser will hold its ratable proportion of the
Aggregate Unpaids; provided that if all or any portion of such excess amount is
thereafter recovered from such Purchaser, such purchase shall be rescinded and
the purchase price restored to the extent of such recovery, but without
interest.
Section 11.4. Protection of Ownership Interests of the
Purchasers. (a) The Seller agrees that from time to time, at its expense, it
will promptly execute and deliver all instruments and documents, and take all
actions, that may be necessary or desirable, or that the Agent may request, to
perfect, protect or more fully evidence the Receivable Interests, or to enable
the Agent or the Purchasers to exercise and
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enforce their rights and remedies hereunder. The Agent may, or the Agent may
direct the Seller to, notify the Obligors of Receivables, at any time following
the replacement of the Seller as Servicer and at the Seller's expense, of the
ownership interests of the Purchasers under this Agreement and may also direct
that payments of all amounts due or that become due under any or all Receivables
be made directly to the Agent or its designee. The Seller shall, at any
Purchaser's written request, withhold the identity of such Purchaser in any such
notification.
(b) If the Seller or the Servicer fails to perform any of its
obligations hereunder, the Agent or any Purchaser may (but shall not be required
to) perform, or cause performance of, such obligation; and the Agent's or such
Purchaser's costs and expenses incurred in connection therewith shall be payable
by the Seller (if the Servicer that fails to so perform is the Seller or an
Affiliate thereof) as provided in Section 8.3, as applicable. The Seller and the
Servicer each irrevocably authorizes the Agent at any time and from time to time
in the sole discretion of the Agent, and appoints the Agent as its
attorney-in-fact, to act on behalf of the Seller and the Servicer (i) to execute
on behalf of the Seller as debtor and to file financing statements necessary or
desirable in the Agent's sole discretion to perfect and to maintain the
perfection and priority of the interest of the Purchasers in the Receivables and
(ii) to file a carbon, photographic or other reproduction of this Agreement or
any financing statement with respect to the Receivables as a financing statement
in such offices as the Agent in its sole discretion deems necessary or desirable
to perfect and to maintain the perfection and priority of the interests of the
Purchasers in the Receivables. This appointment is coupled with an interest and
is irrevocable.
Section 11.5. Confidentiality.
(a) The Seller shall maintain and shall cause each of its
employees and officers to maintain the confidentiality of this Agreement and the
other confidential proprietary information with respect to the Agent and FALCON
and their respective businesses obtained by it or them in connection with the
structuring, negotiating and execution of the transactions contemplated herein,
except that the Seller and its officers and employees may disclose such
information to the Seller's external accountants and attorneys and as required
by any applicable law or order of any judicial or administrative proceeding. In
addition, the Seller may disclose any such nonpublic information pursuant to any
law, rule, regulation, direction, request or order of any judicial,
administrative or regulatory authority or proceedings (whether or not having the
force or effect of law).
(b) Anything herein to the contrary notwithstanding, the
Seller hereby consents to the disclosure of any nonpublic information with
respect to it (i) to the Agent, the Investors or FALCON by each other, (ii) by
the Agent or the Purchasers to any prospective or actual assignee or participant
of any of them or (iii) by the Agent to any rating agency, Commercial Paper
dealer or provider of a surety, guaranty or credit or liquidity enhancement to
FALCON or any entity organized for the purpose of purchasing, or making loans
secured by, financial assets for which First Chicago acts as the administrative
agent and to any officers, directors, employees, outside accountants and
attorneys of any of the foregoing, provided each such Person is informed of the
confidential nature of such information in a manner consistent with the practice
of the Agent for the making of such disclosures generally to Persons of such
type. In addition, the Purchasers and the Agent may disclose any such nonpublic
information pursuant to any law, rule, regulation, direction, request or order
of any judicial, administrative or regulatory authority or proceedings (whether
or not having the force or effect of law).
Section 11.6. Bankruptcy Petition. The Seller, the Agent and
each Investor hereby covenants and agrees that, prior to the date which is one
year and one day after the payment in full of all outstanding senior
indebtedness of FALCON, it will not institute against, or join any other Person
in
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instituting against, FALCON any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or other similar proceeding under the laws
of the United States or any state of the United States.
Section 11.7. Limitation of Liability. Except with respect to
any claim arising out of the willful misconduct or gross negligence of FALCON,
the Agent or any Investor, no claim may be made by the Seller, the Servicer or
any other Person against FALCON, the Agent or any Investor or their respective
Affiliates, directors, officers, employees, attorneys or agents for any special,
indirect, consequential or punitive damages in respect of any claim for breach
of contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement, or any act, omission or event
occurring in connection therewith; and the Seller hereby waives, releases, and
agrees not to sue upon any claim for any such damages, whether or not accrued
and whether or not known or suspected to exist in its favor.
Section 11.8. CHOICE OF LAW. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS)
OF THE STATE OF ILLINOIS.
Section 11.9. CONSENT TO JURISDICTION. THE SELLER HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY THE
SELLER PURSUANT TO THIS AGREEMENT AND THE SELLER HEREBY IRREVOCABLY AGREES THAT
ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER
HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A
COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT
THE RIGHT OF THE AGENT OR ANY PURCHASER TO BRING PROCEEDINGS AGAINST THE SELLER
IN THE COURTS OF ANY OTHER JURISDICTION WHEREIN ANY ASSETS OF THE SELLER OR THE
ORIGINATOR MAY BE LOCATED. ANY JUDICIAL PROCEEDING BY THE SELLER AGAINST THE
AGENT OR ANY PURCHASER OR ANY AFFILIATE OF THE AGENT OR A PURCHASER INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY THE SELLER PURSUANT TO
THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
Section 11.10. WAIVER OF JURY TRIAL. THE AGENT, THE SELLER AND
EACH PURCHASER HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS
AGREEMENT, ANY DOCUMENT EXECUTED BY THE SELLER PURSUANT TO THIS AGREEMENT OR THE
RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.
Section 11.11. Integration; Survival of Terms. This Agreement,
the Collection Account Agreements, and the Fee Letter contain the final and
complete integration of all prior expressions by the parties hereto with respect
to the subject matter hereof and shall constitute the entire agreement among the
parties hereto with respect to the subject matter hereof superseding all prior
oral or written understandings. The provisions of Article VIII and Section 11.6
shall survive any termination of this Agreement.
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Section 11.12. Counterparts; Severability. This Agreement may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
Agreement. Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Section 11.13. First Chicago Roles. Each of the Investors
acknowledges that First Chicago and certain of its Affiliates including (First
Chicago Capital Markets, Inc.) act, or may in the future act, (i) as
administrative agent for FALCON, (ii) as issuing and paying agent for the
Commercial Paper, (iii) to provide credit or liquidity enhancement for the
timely payment for the Commercial Paper and (iv) to provide other services from
time to time for FALCON (collectively, the "FIRST CHICAGO ROLES"). Without
limiting the generality of this Section 11.13, each Investor hereby acknowledges
and consents to any and all First Chicago Roles and agrees that in connection
with any First Chicago Role, First Chicago may take, or refrain from taking, any
action which it, in its discretion, deems appropriate, including, without
limitation, in its role as administrative agent for FALCON, the giving of notice
to the Agent of a mandatory purchase pursuant to Section 2.1.
Section 11.14. Characterization. It is the intention of the
parties hereto that each purchase hereunder shall constitute an absolute and
irrevocable sale, which purchase shall provide the applicable Purchaser with the
full benefits of ownership of the applicable Receivable Interest. Except as
specifically provided in this Agreement, each sale of a Receivable Interest
hereunder is made without recourse to the Seller; PROVIDED, HOWEVER, that (i)
the Seller shall be liable to each Purchaser and the Agent for all
representations, warranties and covenants made by the Seller pursuant to the
terms of this Agreement, and (ii) such sale does not constitute and is not
intended to result in an assumption by any Purchaser or the Agent or any
assignee thereof of any obligation of the Seller or the Originator or any other
person arising in connection with the Receivables, the Related Security, or the
related Invoices, or any other obligations of the Seller or the Originator.
[signature pages follow]
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<PAGE> 39
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their duly authorized officers as of
the date hereof.
YELLOW RECEIVABLES CORPORATION
By: /s/ Chet Lamkey
------------------------------
Name: Chet Lamkey
Title: VP Treasurer/Secretary
Address for Notices:
Yellow Receivables Corporation
10990 Roe Avenue
P.O. Box 7489
Overland Park, KS 66211
Attention: Chet Lamkey
Phone: (913) 344-3325
Fax: (913) 344-4849
FALCON ASSET SECURITIZATION CORPORATION
By:
---------------------------------
Authorized Signatory
Address for Notices:
Falcon Asset Securitization Corporation
c/o The First National Bank of Chicago
Asset-Backed Finance
One First National Plaza
Chicago, Illinois 60670-0596
Attention: Elizabeth Cohen
Fax: (312) 732-3205
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<PAGE> 40
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their duly authorized officers as of
the date hereof.
YELLOW RECEIVABLES CORPORATION
By:
--------------------------------
Name:
Title:
Address for Notices:
Yellow Receivables Corporation
10990 Roe Avenue
P.O. Box 7489
Overland Park, KS 66211
Attention: Chet Lamkey
Phone: (913) 344-3325
Fax: (913) 344-4849
FALCON ASSET SECURITIZATION CORPORATION
By: /s/ Jake C. Render
--------------------------------
Authorized Signatory
Address for Notices:
Falcon Asset Securitization Corporation
c/o The First National Bank of Chicago
Asset-Backed Finance
One First National Plaza
Chicago, Illinois 60670-0596
Attention: Elizabeth Cohen
Fax: (312) 732-3205
<PAGE> 41
INVESTORS:
COMMITMENT PRO RATA SHARE
- ---------- --------------
$175,000,000 100% THE FIRST NATIONAL BANK OF CHICAGO, as an
Investor and as Agent
By: /s/ Jake C. Render
----------------------------------
Authorized Agent
Address for notices:
The First National Bank of Chicago
Suite 0596, 1-21
One First National Plaza
Chicago, Illinois 60670-0596
Attention: Elizabeth Cohen
Fax:(312) 732-3205
===========
$175,000,000......PURCHASE LIMIT
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<PAGE> 42
EXHIBIT I
DEFINITIONS
AS USED IN THIS AGREEMENT, THE FOLLOWING TERMS SHALL HAVE THE
FOLLOWING MEANINGS (SUCH MEANINGS TO BE EQUALLY APPLICABLE TO BOTH THE SINGULAR
AND PLURAL FORMS OF THE TERMS DEFINED):
"ACCRUAL PERIOD" means each calendar month, provided that the
initial Accrual Period hereunder means the period from (and including) the date
of the initial purchase hereunder to (and including) the last day of the
calendar month thereafter.
"ACQUISITION AMOUNT" means, on the date of any purchase from
FALCON of Receivable Interests pursuant to Section 2.1, (i) with respect to each
Investor other than First Chicago, the lesser of (a) such Investor's Pro Rata
Share of the FALCON Transfer Price and (b) such Investor's unused Commitment and
(ii) with respect to First Chicago, the difference between (a) the FALCON
Transfer Price and (b) the aggregate amount payable by all other Investors on
such date pursuant to clause (i) above.
"ADJUSTED LIQUIDITY PRICE" means, in determining the FALCON
Transfer Price for any Receivable Interest, an amount equal to: [*]
Each of the foregoing shall be determined from the most recent Monthly Report
received from the Servicer.
"ADVERSE CLAIM" means a lien, security interest, charge or
encumbrance, or other right or claim in, of or on any Person's assets or
properties in favor of any other Person.
"AFFECTED INVESTOR" has the meaning provided in Section
10.1(c).
"AFFILIATE" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with such Person or any Subsidiary of such Person. A
Person shall be deemed to control another Person if the controlling Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management or policies of the other Person, whether through ownership of
voting securities, by contract or otherwise. In addition, for purposes of the
definitions of "Concentration Limit," "Eligible Receivable" and "Net Receivables
Balance," a Person shall be deemed to control another Person if such Person owns
more than 50% of any class of voting securities (or corresponding interest in
the case of non-corporate entities) of the other Person.
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"AGENT" means First Chicago in its capacity as agent for the
Purchasers pursuant to Article IX, and not in its individual capacity as an
Investor, and any successor Agent appointed pursuant to Article IX.
"AGGREGATE REDUCTION" has the meaning specified in
Section 1.3.
"AGGREGATE RESERVE PERCENTAGE" [*]
"AGGREGATE UNPAIDS" means, at any time, an amount equal to the
sum of all Capital and all other unpaid Obligations (whether due or accrued) at
such time.
"AGREEMENT" means this Amended and Restated Receivables
Purchase Agreement, as it may be amended or modified and in effect from time to
time.
"AMORTIZATION DATE" means the earliest to occur of (i) the day
on which any of the conditions precedent set forth in Section 4.2 are not
satisfied, (ii) the Business Day immediately prior to the occurrence of a
Servicer Default set forth in Section 7.1(c), (iii) the Business Day specified
in a written notice from the Agent following the occurrence of any other
Servicer Default, and (iv) the date which is 30 Business Days after the Agent's
receipt of written notice from Seller that it wishes to terminate the facility
evidenced by this Agreement.
"APPROVED OFFSET RECEIVABLE" means any Receivable arising
under contract numbers 39, 45, 56, 111, 146 and 152 on Exhibit X hereto for so
long as the Originator does not purchase goods or services on credit from the
Obligor thereon.
"BASE RATE" means a rate per annum equal to the corporate base
rate, prime rate or base rate of interest, as applicable, announced by the
Reference Bank from time to time, changing when and as such rate changes;
PROVIDED, HOWEVER, that from and after the occurrence of a Servicer Default, and
during the continuation thereof, the "BASE RATE" shall mean a rate per annum
equal to the sum of 2% per annum plus the corporate base rate, prime rate or
base rate of interest, as applicable, announced by the Reference Bank from time
to time, changing when and as such rate changes.
"BROKEN FUNDING COSTS" means for any Receivable Interest
which: (i) has its Capital reduced without compliance by the Seller with the
notice requirements hereunder or (ii) does not become subject to an Aggregate
Reduction following the delivery of any Reduction Notice or (iii) is assigned
under Article II or terminated prior to the date on which it was originally
scheduled to end; an amount equal to the excess, if any, of (A) the CP Costs or
Discount (as applicable) that would have accrued during the remainder of the
Tranche Periods or the tranche periods for Commercial Paper determined by the
Agent to relate to such Receivable Interest (as applicable) subsequent to the
date of such reduction, assignment or termination (or in respect of clause (ii)
above, the date such Aggregate Reduction was designated to occur pursuant to the
Reduction Notice) of the Capital of such Receivable Interest if such reduction,
assignment or termination had not occurred or such Reduction Notice had not been
delivered, over (B) the sum of (x) to the extent all or a portion of such
Capital is allocated to another Receivable Interest, the amount of CP Costs or
Discount actually accrued during the remainder of such period on such Capital
for the new Receivable Interest, and (y) to the extent such Capital is not
allocated to another Receivable Interest, the income, if any, actually received
during the remainder of such period by the holder of such Receivable Interest
from investing the portion of such Capital not so allocated. In the event that
the amount referred to
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in clause (B) exceeds the amount referred to in clause (A), the relevant
Purchaser or Purchasers agree to pay to the Seller the amount of such excess.
All Broken Funding Costs shall be due and payable hereunder upon demand.
"BUSINESS DAY" means any day on which banks are not authorized
or required to close in New York, New York or Chicago, Illinois and The
Depository Trust Company of New York is open for business, and, if the
applicable Business Day relates to any computation or payment to be made with
respect to the LIBOR Rate, any day on which dealings in dollar deposits are
carried on in the London interbank market.
"CAPITAL" of any Receivable Interest means, at any time, the
Purchase Price of such Receivable Interest (and after giving effect to any
adjustments contemplated in Section 1.5), minus the sum of the aggregate amount
of Collections and other payments received by the Agent which in each case are
applied to reduce such Capital in accordance with the terms of this Agreement;
provided that such Capital shall be restored in the amount of any Collections or
other payments so received and applied if at any time the distribution of such
Collections or payments are rescinded or must otherwise be returned or refunded
for any reason.
"CHANGE OF CONTROL" means (i) any Person or Persons acting in
concert shall acquire beneficial ownership (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission under the Securities Exchange Act of
1934) of 20% or more of the outstanding shares of voting stock of Yellow
Corporation; or (ii) during any period of twelve (12) consecutive months,
commencing before or after the date hereof, individuals who at the beginning of
such twelve-month period were directors of the Originator shall cease for any
reason to constitute a majority of the board of directors of the Originator; or
(iii) the Originator shall cease to own, free and clear of all Adverse Claims,
all of the outstanding shares of voting stock of the Seller on a fully diluted
basis; or (iv) Yellow Corporation shall cease to own, free and clear of all
Adverse Claims, all of the outstanding shares of voting stock of the Originator
on a fully diluted basis.
"COLLECTION ACCOUNT" means each concentration account,
depositary account, lock-box account or similar account in which any Collections
are collected or deposited.
"COLLECTION ACCOUNT AGREEMENT" means, in the case of any
actual or proposed Collection Account, an agreement in substantially the form of
Exhibit V hereto.
"COLLECTION BANK" means, at any time, any of the banks or
other financial institutions holding one or more Collection Accounts.
"COLLECTION NOTICE" means a notice, in substantially the form
of the Collection Notice contained in Exhibit V hereto, from the Agent to a
Collection Bank.
"COLLECTIONS" means, with respect to any Receivable, all cash
collections and other cash proceeds in respect of such Receivable, including,
without limitation, all cash proceeds of Related Security with respect to such
Receivable.
"COMMERCIAL PAPER" means promissory notes of FALCON issued by
FALCON in the commercial paper market.
"COMMITMENT" means, for each Investor, the commitment of such
Investor to purchase its Pro Rata Share of Receivable Interests from (i) the
Seller and (ii) FALCON, such Pro Rata Share not to
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exceed, in the aggregate, the amount set forth opposite such Investor's name on
the signature pages of this Agreement, as such amount may be modified in
accordance with the terms hereof.
"CONCENTRATION LIMIT" means: [*]
PROVIDED, HOWEVER, that:
(i) the Concentration Limit set forth in the preceding clause
(c) will automatically become zero (A) at all times while any Labor
Action remains is pending, and (B) immediately following the threat of
any Labor Action and for so long as the Agent, FALCON or the Required
Investors reasonably believe(s) such threat is likely to be carried
out, and
(ii) the Agent may from time to time designate other amounts
(each, a "SPECIAL CONCENTRATION LIMIT") for any Obligor or class of
Receivables, it being understood and agreed that the Agent, FALCON or
the Required Investors may, upon not less than three Business Days'
notice to the Seller, cancel any Special Concentration Limit.
"CP COSTS" means, for each day, the sum of (i) discount
accrued on Pooled Commercial Paper on such day, plus (ii) any and all accrued
commissions in respect of placement agents and Commercial Paper dealers, and
issuing and paying agent fees incurred, in respect of such Pooled Commercial
Paper for such day, plus (iii) other costs associated with funding small or
odd-lot amounts with respect to all receivable purchase facilities which are
funded by Pooled Commercial Paper for such day, minus (iv) any accrual of income
net of expenses received on such day from investment of collections received
under all receivable purchase facilities funded substantially with Pooled
Commercial Paper, minus (v) any payment received on such day net of expenses in
respect of Broken Funding Costs related to the prepayment of any Receivable
Interest of FALCON pursuant to the terms of any receivable purchase facilities
funded substantially with Pooled Commercial Paper. In addition to the foregoing
costs, if Seller shall request any Incremental Purchase during any period of
time determined by the Agent in its sole discretion to result in incrementally
higher CP Costs applicable to such Incremental Purchase, the Capital associated
with any such Incremental Purchase shall, during such period, be deemed to be
funded by FALCON in a special pool (which may include capital associated with
other receivable purchase facilities) for purposes of determining such
additional CP Costs applicable only to such special pool and charged each day
during such period against such Capital.
"CREDIT AND COLLECTION POLICY" means the Seller's credit and
collection policies and practices relating to Invoices and Receivables existing
on the date hereof and summarized in Exhibit VI hereto, as modified from time to
time in accordance with this Agreement. It is understood that the Credit and
Collection Policy of the Seller in respect of any Receivable shall be the credit
and collection policies of
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the Originator thereof. To the extent the Originator shall not have
comprehensively reduced to writing its credit and collection policies, the
Credit and Collection Policy in respect of Receivables originated by the
Originator shall be those credit and collection policies of the Originator in
effect on the date hereof and disclosed to the Agent on or prior to the date
hereof.
"DAYS OUTSTANDING" means, at any time: (a) one-half of the sum
of the beginning and ending Outstanding Balances of all Receivables during the
month most recently ended, multiplied by (b) the number of days in the month
most recently ended divided by the aggregate amount payable pursuant to Invoices
generated during that month.
"DEEMED COLLECTIONS" means the aggregate of all amounts the
Seller shall have been deemed to have received as a Collection of a Receivable.
The Seller shall be deemed to have received: (A) a Collection of a Receivable in
the amount of the reduction or cancellation if at any time the Outstanding
Balance of any such Receivable is reduced or canceled either as a result of (x)
any defective or rejected goods or services, any discount or any adjustment or
otherwise by Seller (other than cash Collections on account of the Receivables)
or (y) any setoff in respect of any claim by any Person (whether such claim
arises out of the same or a related transaction or an unrelated transaction),
and (B) a Collection in full of a Receivable if at any time any of the
representations or warranties in Section 3.1 prove to have been untrue when made
or deemed made with respect to any Receivable. The Seller hereby agrees to pay
all Deemed Collections immediately to the Servicer for application in accordance
with the terms and conditions hereof.
"DEFAULT RATIO" [*]
"DEFAULTED RECEIVABLE" means a Receivable: (i) as to which any
payment, or part thereof, remains unpaid for 150 days or more from the original
invoice date for such payment; (ii) as to which the Obligor thereof has taken
any action, or suffered any event to occur, of the type described in Section
7.1(c) (as if references to the Seller therein refer to such Obligor); (iii) as
to which the Obligor thereof, if a natural person, is deceased; or (iv) which
has been identified by the Seller as uncollectible.
"DEFERRED REVENUE" means any Receivable which has been booked
as an asset on the Originator's balance sheet (prior to giving effect to any
sale or contribution of such Receivable by the Originator to the Seller) but as
to which delivery of the underlying goods has not yet been completed in
accordance with the Invoice or underlying purchase order.
"DELINQUENCY RATIO" means, as of the last day of any calendar
month, a percentage equal to (i) the aggregate Outstanding Balance of all
Receivables that are then Delinquent Receivables, divided by (ii) the aggregate
Outstanding Balance of all Receivables as of such date.
"DELINQUENT RECEIVABLE" means a Receivable (other than a
Defaulted Receivable) as to which any payment, or part thereof, remains unpaid
for 120 days but less than 150 days from the original invoice date for such
payment.
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"DILUTION RATIO" means, as of the last day of any calendar
month, a percentage equal to (i) the aggregate amount of Dilutions which
occurred during such month, divided by (ii) the aggregate amount of Receivables
generated by the Originator 4 months prior to such month.
"DILUTIONS" means, at any time, the aggregate amount of
reductions in or cancellations of the Outstanding Balances of the Receivables
described in clauses (A)(x) and (A)(y) of the definition of "Deemed
Collections."
"DISCOUNT" means for each respective Tranche Period relating
to Receivable Interests of the Investors, an amount equal to the product of the
applicable Discount Rate for each Receivable Interest multiplied by the Capital
of such Receivable Interest for each day elapsed during such Tranche Period,
annualized on a 360 day basis.
"DISCOUNT RATE" means the LIBOR Rate or the Base Rate, as
applicable, with respect to each Receivable Interest of the Investors; provided
that from and after the occurrence of a Servicer Default, the Discount Rate in
respect of each Receivable Interest and Tranche Period shall be the Base Rate.
"DISCOUNT RESERVE" means, on any date of determination, the
amount determined pursuant to the following formula:
{ (D + F) + [ (C x 1.5 x DR) x 2 x DSO ] }
-------
360
where:
D = the accrued and unpaid Discount for all Receivable
Interests of the Purchasers as of the date of determination;
F = the aggregate amount of accrued and unpaid Servicer
Fees and other fees owing pursuant to the Fee Letter as of the date of
determination;
C = the aggregate Capital outstanding as of the date of
determination;
DR = the highest Discount Rate applicable on the date of
determination; and
DSO = the Days Outstanding.
"DISCOUNT RESERVE PERCENTAGE" means, on any date of
determination, a percentage equal to (i) the Discount Reserve divided by (ii)
the Net Receivables Balance.
"ELIGIBLE RECEIVABLE" means, at any time:
(i) a Receivable the Obligor of which (a) if a natural person,
is a resident of the United States or, if a corporation or other
business organization, is organized under the laws of the United States
or any political subdivision thereof and has its chief executive office
in the United States, and (b) is not an Affiliate of any of the parties
hereto,
(ii) a Receivable as to which no payment, or part thereof,
remains unpaid for 120 days or more from the original invoice date, and
such Receivable is not a Defaulted Receivable,
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(iii) a Receivable which arises under an Invoice that requires
payment within 60 days after the original invoice date therefor and has
not had its payment terms extended,
(iv) a Receivable which is an "account" within the meaning of
Section 9-106 of the UCC of all applicable jurisdictions,
(v) a Receivable which is denominated and payable only in
United States dollars in the United States,
(vi) a Receivable which arises under an Invoice in
substantially the form of one of the form invoices set forth on Exhibit
VII hereto or otherwise approved by the Agent in writing, which,
together with such Receivable, is in full force and effect and
constitutes the legal, valid and binding obligation of the related
Obligor enforceable by the Seller and its assignees against such
Obligor in accordance with its terms,
(vii) a Receivable which arises under an Invoice which (a)
does not require the Obligor under such Invoice to consent to the
transfer, sale or assignment of the rights and duties of the Originator
or any of its assignees under such Invoice and (b) is not subject to a
confidentiality provision that would have the effect of restricting the
ability of the Agent or any Purchaser to exercise its rights under this
Agreement, including, without limitation, its right to review the
Invoice,
(viii) a Receivable which arises under an Invoice that
contains an obligation to pay a specified sum of money,
(ix) a Receivable (A) which is not subject to any right of
rescission, counterclaim, any other defense (including defenses arising
out of violations of usury laws) of the applicable Obligor or the
Originator or any other Adverse Claim, and (B) which, unless such
Receivable is an Approved Offset Receivable or a Supplemental Approved
Offset Receivable, is not subject to any right of set-off in respect of
all or any portion of the Outstanding Balance thereof then being
proposed for inclusion in Net Receivables Balance as of any date,
(x) a Receivable as to which (A) at any time while any Labor
Action is pending or threatened, the Originator has satisfied and fully
performed all obligations on its part with respect to such Receivable
required to be fulfilled by it, and no further action is required to be
performed by any Person with respect thereto other than payment thereon
by the applicable Obligor, and (B) at any time while no such Labor
Action is pending or threatened, a Receivable as to which the
Originator has commenced shipment of the underlying goods in accordance
with the applicable Invoice or purchase order and no further action is
required to be performed by any Person with respect thereto other than
the completion of shipment by the Originator and payment thereon by the
applicable Obligor,
(xi) a Receivable all right, title and interest to and in
which has been validly transferred by the Originator directly to the
Seller under and in accordance with the Sale Agreement, and the Seller
has good and marketable title thereto free and clear of any Adverse
Claim,
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(xii) a Receivable which, together with the Invoice related
thereto, was created in compliance with each, and does not contravene
any, law, rule or regulation applicable thereto (including, without
limitation, any law, rule and regulation relating to truth in lending,
fair credit billing, fair credit reporting, equal credit opportunity,
fair debt collection practices and privacy) and with respect to which
no part of the Invoice related thereto is in violation of any such law,
rule or regulation,
(xiii) a Receivable which satisfies all applicable
requirements of the Credit and Collection Policy,
(xiv) a Receivable which was generated in the ordinary course
of the Originator's business in connection with the provision of
shipping services for the applicable Obligor by the Originator,
(xv) that portion of a Receivable which arises solely from the
sale of freight shipping and ancillary services to the related Obligor
by the Originator (and not that portion which arises from the provision
of services by an interline carrier), and the Originator shall have
transferred such Receivable to the Seller,
(xvi) a Receivable as to which the Agent has not notified the
Seller that the Agent has determined that such Receivable or class of
Receivables is not acceptable as an Eligible Receivable, including,
without limitation, because such Receivable arises under an Invoice
that is not acceptable to the Agent, and
(xvii) a Receivable the Obligor of which is not the Obligor
(or the Affiliate of an Obligor) in respect of Receivables of which
more than [*]
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"EXCLUDED RECEIVABLE" means any Receivable (other than an
Approved Offset Receivable) which arises under a contract listed on Exhibit X
hereto unless and until such contract is replaced, restated, amended or
otherwise modified to eliminate (i) any confidentiality provision, if
applicable, that purport to preclude the Originator from disclosing information
that would be included on an Invoice, and (ii) any provision that purports to
preclude the assignment of any of the Originator's rights to payment thereunder.
"EXISTING AGREEMENT" has the meaning specified in the preamble
to this Agreement.
"EXPECTED DILUTION" means, on any date of determination, the
average of the Dilution Ratios for the 12 months then most recently ended.
"FACILITY ACCOUNT" means the Seller's Account No. 55-66681 at
First Chicago.
"FALCON RESIDUAL" means the sum of the FALCON Transfer Price
Reductions.
"FALCON TRANSFER PRICE" means, with respect to the assignment
by FALCON of one or more Receivable Interests to the Agent for the benefit of
the Investors pursuant to Section 2.1, the sum of
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<PAGE> 50
(i) the lesser of (a) the Capital of each Receivable Interest and (b) the
Adjusted Liquidity Price of each Receivable Interest and (ii) all accrued and
unpaid Discount for such Receivable Interests.
"FALCON TRANSFER PRICE REDUCTION" means in connection with the
assignment of a Receivable Interest by FALCON to the Agent for the benefit of
the Investors, the positive difference between (i) the Capital of such
Receivable Interest and (ii) the Adjusted Liquidity Price for such Receivable
Interest.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a
fluctuating interest rate per annum equal for each day during such period equal
to (i) the weighted average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the preceding
Business Day) by the Federal Reserve Bank of New York in the Composite Closing
Quotations for U.S. Governments Securities; or (ii) if such rate is not so
published for any day which is a Business Day, the average of the quotations at
approximately 10:30 a.m. (Chicago time) for such day on such transactions
received by the Reference Bank from three federal funds brokers of recognized
standing selected by it.
"FEE LETTER" means that Amended and Restated Fee Letter dated
as of the date hereof between the Seller and the Agent, as it may be amended or
modified and in effect from time to time.
"FINANCE CHARGES" means, with respect to an Invoice, any
finance, interest, late payment charges or similar charges owing by an Obligor
pursuant to such Invoice.
"FIRST CHICAGO" means The First National Bank of Chicago in
its individual capacity and its successors.
"FUNDING AGREEMENT" means this Agreement and any agreement or
instrument executed by any Funding Source with or for the benefit of FALCON.
"FUNDING SOURCE" means (i) any Investor or (ii) any insurance
company, bank or other financial institution providing liquidity, credit
enhancement or back-up purchase support or facilities to FALCON.
"GOVERNMENT RECEIVABLE" means a Receivable as to which the
Obligor is the United States federal government, any political subdivision
thereof, or any agency of the foregoing.
"INCREMENTAL PURCHASE" means a purchase of one or more
Receivable Interests which increases the total outstanding Capital hereunder.
"INTENDED CHARACTERIZATION" means, for income tax purposes,
the characterization of the acquisition by the Purchasers of Receivable
Interests as a loan or loans by the Purchasers to the Seller secured by the
Receivables, the Related Security, the Collection Accounts and the Collections.
"INVESTORS" means the financial institutions listed on the
signature pages of this Agreement under the heading "Investors" and their
respective successors and assigns.
"INVOICE" means, collectively, with respect to any Receivable,
any and all instruments, bills of lading, invoices or other writings which
evidence such Receivable or the goods underlying such Receivable.
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"LABOR ACTIONS" has the meaning set forth in Section
5.1(b)(vi).
"LIBOR RATE" means the rate per annum equal to the sum of
(i)(a) the rate at which deposits in U.S. Dollars are offered by the Reference
Bank to first-class banks in the London interbank market at approximately 11:00
a.m. (London time) two Business Days prior to the first day of the relevant
Tranche Period, such deposits being in the approximate amount of the Capital of
the Receivable Interest to be funded or maintained, divided by (b) one minus the
Reserve Requirement (expressed as a decimal) applicable to such Tranche Period
plus (ii) 0.75%. The LIBOR Rate shall be rounded, if necessary, to the next
higher 1/16 of 1%.
"LIQUIDITY TERMINATION DATE" means July 30, 2000 (or if such
date is not a Business Day, the next preceding Business Day).
"LOSS RESERVE PERCENTAGE" [*]
"LOSS-TO-LIQUIDATION RATIO" means, for any month, a percentage
equal to: (i) the amount of Receivables which were written-off as uncollectible
any time during such month in accordance with the Credit and Collection Policy,
divided by (ii) the aggregate amount of Collections during each such month.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
(i) the financial condition, business or operations of the Seller or the
Originator, (ii) the ability of the Seller or the Originator to perform its
obligations under any Transaction Document, (iii) the legality, validity or
enforceability of this Agreement, any Transaction Document or any Collection
Account Agreement or Collection Notice relating to a Collection Account into
which a material portion of Collections are deposited, (iv) the Seller's or any
Purchaser's interest in the Receivables generally or in any significant portion
of the Receivables, the Related Security or the Collections with respect
thereto, or (v) the collectibility of the Receivables generally or of any
material portion of the Receivables.
"MONTHLY REPORT" means a report, in substantially the form of
Exhibit VIII hereto (appropriately completed), furnished by the Servicer to the
Agent pursuant to Section 6.5.
"NET RECEIVABLES BALANCE" means, at any time, the aggregate
Outstanding Balance of all Eligible Receivables at such time, reduced by the
aggregate amount by which the Outstanding Balance of all Eligible Receivables of
each Obligor and its Affiliates exceeds the Concentration Limit for such
Obligor.
"NEW CONCENTRATION ACCOUNT" has the meaning set forth in
Section 5.1(l).
"OBLIGATIONS" shall have the meaning set forth in
Section 1.5.1.
"OBLIGOR" means a Person obligated to make payments pursuant
to an Invoice.
"ORIGINATOR" means Yellow Freight System, Inc., an Indiana
corporation.
"OUTSTANDING BALANCE" of any Receivable at any time means the
then outstanding principal balance thereof, and shall exclude any interest or
finance charges thereon, without regard to whether any of the same shall have
been capitalized.
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"PERSON" means an individual, partnership, corporation,
limited liability company, association, trust, or any other entity, or
organization, including a government or political subdivision or agent or
instrumentality thereof.
"POOLED COMMERCIAL PAPER" means Commercial Paper notes of
FALCON subject to any particular pooling arrangement by FALCON, but excluding
Commercial Paper issued by FALCON for a tenor and in an amount specifically
requested by any Person in connection with any agreement effected by FALCON.
"POTENTIAL SERVICER DEFAULT" means an event which, with the
passage of time or the giving of notice, or both, would constitute a Servicer
Default.
"PRO RATA SHARE" means, for each Investor, the Commitment of
such Investor divided by the Purchase Limit, adjusted as necessary to give
affect to the application of the terms of Section 2.5.
"PURCHASE LIMIT" means the aggregate of the Commitments of the
Investors hereunder (which aggregate amount is $175,000,000 as of the date of
this Agreement).
"PURCHASE PRICE" means, with respect to any Incremental
Purchase, the least of:
(a) the amount of Capital requested by the Seller in the
applicable Purchase Notice,
(b) the remaining unused portion of the Purchase Limit on the
applicable purchase date, and
(c) the maximum amount by which the aggregate outstanding
Capital could be increased such that after giving effect to such
increase in Capital, the Net Receivables Balance will equal or exceed
the product of (i) the sum of 100% plus the Aggregate Reserve
Percentage, times (ii) the aggregate outstanding Capital after giving
effect to such Incremental Purchase.
"PURCHASER" means FALCON or an Investor, as applicable.
"RECEIVABLE" means the indebtedness and other obligations owed
(at the time it arises, and before giving effect to any transfer or conveyance
contemplated under the Sale Agreement or hereunder) to the Originator, whether
constituting an account, chattel paper, instrument or general intangible,
arising in connection with the provision of freight shipping and ancillary
services by the Originator and includes, without limitation, the obligation to
pay any Finance Charges with respect thereto; PROVIDED, HOWEVER, that the term
"Receivable" shall not include any Excluded Receivable. Indebtedness and other
rights and obligations arising from any one transaction, including, without
limitation, indebtedness and other rights and obligations represented by an
individual Invoice, shall constitute a Receivable separate from a Receivable
consisting of the indebtedness and other rights and obligations arising from any
other transaction.
"RECEIVABLE INTEREST" means, at any time, an undivided
percentage ownership interest associated with a designated amount of Capital
selected pursuant to the terms and conditions hereof in (i) each Receivable
arising prior to the time of the most recent computation or recomputation of
such undivided interest, (ii) all Related Security with respect to each such
Receivable, and (iii) all Collections
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with respect to, and other proceeds of, each such Receivable. Such undivided
percentage interest shall equal:
C
----------------
NRB - (ARP x NRB)
where:
C = the Capital of such Receivable Interest.
ARP = the Aggregate Reserve Percentage.
NRB = the Net Receivables Balance.
Such undivided percentage ownership interest shall be initially computed on its
date of purchase. Thereafter, until the Amortization Date, each Receivable
Interest shall be automatically recomputed (or deemed to be recomputed) on each
day prior to the Amortization Date. The variable percentage represented by any
Receivable Interest as computed (or deemed recomputed) as of the close of the
business day immediately preceding the Amortization Date shall remain constant
at all times thereafter.
"RECORDS" means, with respect to any Receivable, all Invoices
and other documents, books, records and other information (including, without
limitation, computer programs, tapes, disks, punch cards, data processing
software and related property and rights) relating to such Receivable, any
Related Security therefor and the related Obligor.
"REDUCTION NOTICE" has the meaning set forth in Section 1.3.
"REDUCTION PERCENTAGE" means, for any Receivable Interest
acquired by the Investors from FALCON for less than the Capital of such
Receivable Interest, a percentage equal to a fraction the numerator of which is
the FALCON Transfer Price Reduction for such Receivable Interest and the
denominator of which is the Capital of such Receivable Interest.
"REFERENCE BANK" means First Chicago or such other bank as the
Agent shall designate with the consent of the Seller.
"REINVESTMENT" has the meaning set forth in Section 1.5.2.
"RELATED SECURITY" means, with respect to any Receivable:
(i) all of the Seller's interest in the goods, the shipment of
which gave rise to such Receivable, and any and all insurance contracts
with respect thereto,
(ii) all other security interests or liens and property
subject thereto from time to time, if any, purporting to secure payment
of such Receivable, whether pursuant to the Invoice related to such
Receivable or otherwise, together with all financing statements and
security agreements describing any collateral securing such Receivable,
(iii) all guaranties, insurance and other agreements or
arrangements of whatever character from time to time supporting or
securing payment of such Receivable whether pursuant to the Invoice
related to such Receivable or otherwise,
(iv) all Records related to such Receivables,
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(v) all of the Seller's right, title and interest in, to and
under the Sale Agreement and each bill of lading, instrument, document
or agreement executed in connection therewith in favor of or otherwise
for the benefit of the Seller; and
(vi) all proceeds of any of the foregoing.
"REQUIRED INVESTORS" means, at any time, Investors with
Commitments in excess of 66-2/3% of the Purchase Limit.
"REQUIRED NOTICE PERIOD" means the number of days required
notice set forth below applicable to the Aggregate Reduction indicated below:
Aggregate Reduction Required Notice Period
------------------- ----------------------
greater than $100,000,000 two Business Days
$100,000,000 + five days
"RESERVE REQUIREMENT" means the maximum aggregate reserve
requirement (including all basic, supplemental, marginal and other reserves)
which is imposed against the Reference Bank in respect of Eurocurrency
liabilities, as defined in Regulation D of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
capital stock of the Seller now or hereafter outstanding, except a dividend
payable solely in shares of that class of stock or in any junior class of stock
to the Originator, (ii) any redemption, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or indirect, of any
shares of any class of capital stock of the Seller now or hereafter outstanding,
(iii) any payment or prepayment of principal of, premium, if any, or interest,
fees or other charges on or with respect to, and any redemption, purchase,
retirement, defeasance, sinking fund or similar payment and any claim for
rescission with respect to the Indebtedness evidenced by the Subordinated Note
(as defined in the Sale Agreement), (iv) any payment made to redeem, purchase,
repurchase or retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of capital stock of the
Seller now or hereafter outstanding, and (v) any payment of management fees by
the Seller.
"SALE AGREEMENT" means that certain Receivables Sale Agreement
of even date herewith between the Seller, as purchaser, and the Originator, as
seller, as the same may be amended, restated, supplemented or otherwise modified
from time to time.
"SECTION" means a numbered section of this Agreement, unless
another document is specifically referenced.
"SELLER" has the meaning set forth in the preamble to this
Agreement.
"SERVICER" means at any time the Person (which may be the
Agent) then authorized pursuant to Article VI to service, administer and collect
Receivables.
"SERVICER DEFAULT" has the meaning specified in Article VII.
"SERVICER FEE" has the meaning specified in Section 1.9.
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"SERVICER FEE RESERVE" means, on any date, an amount
determined pursuant to the following formula:
SFP x NRB x 2 x DSO
--------
360
where:
SFP = the Servicer Fee Percentage as of the date of
determination;
NRB = the Net Receivables Balance as of the opening of
business of the Servicer on such date; and
DSO = the Days Outstanding on such date of determination.
"SERVICER FEE PERCENTAGE" means 2% or such other percentage as
may be agreed upon between the Agent and the Servicer as an arms-length rate for
the Servicer Fee.
"SETTLEMENT DATE" means (A) the 20th day at each month (or, if
any such day is not a Business Day, the next succeeding Business Day), and (B)
the last day of the relevant Tranche Period in respect of each Receivable
Interest of the Investors.
"SETTLEMENT PERIOD" means (A) in respect of each Receivable
Interest of FALCON, the immediately preceding Accrual Period, and (B) in respect
of each Receivable Interest of the Investors, the entire Tranche Period of such
Receivable Interest.
"SUBSIDIARY" of a Person means (i) any corporation more than
50% of the outstanding securities having ordinary voting power of which shall at
the time be owned or controlled, directly or indirectly, by such Person or by
one or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (ii) any partnership, limited liability company, association,
joint venture or similar business organization more than 50% of the ownership
interests having ordinary voting power of which shall at the time be so owned or
controlled. Unless otherwise expressly provided, all references herein to a
"Subsidiary" shall mean a Subsidiary of the Seller.
"SUPPLEMENTAL APPROVED OFFSET RECEIVABLE" means any Receivable
arising under contract numbers 1, 9, 22, 67, 107, 110, 116 or 187 on Exhibit X
hereto from and after the time such Receivable is no longer an Excluded
Receivable but only for so long as the Originator does not purchase goods or
services on credit from the applicable Obligor.
"TERMINATING TRANCHE" has the meaning set forth in
Section 1.7.3(b).
"TRANCHE PERIOD" means, with respect to any Receivable
Interest held by an Investor:
(a) if Discount for such Receivable Interest is
calculated on the basis of the LIBOR Rate, a period of one,
two, three or six months, or such other period as may be
mutually agreeable to the Agent and Seller, commencing on a
Business Day selected by Seller or the Agent pursuant to this
Agreement. Such Tranche Period shall end on the day in the
applicable succeeding calendar month which corresponds
numerically to the beginning day of such Tranche Period,
provided, however, that if there is no such numerically
corresponding day in such succeeding
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month, such Tranche Period shall end on the last Business Day
of such succeeding month; or
(b) if Discount for such Receivable Interest is
calculated on the basis of the Base Rate, a period commencing
on a Business Day selected by Seller and agreed to by the
Agent, provided no such period shall exceed one month.
If any Tranche Period would end on a day which is not a Business Day, such
Tranche Period shall end on the next succeeding Business Day, provided, however,
that in the case of Tranche Periods corresponding to the LIBOR Rate, if such
next succeeding Business Day falls in a new month, such Tranche Period shall end
on the immediately preceding Business Day. In the case of any Tranche Period for
any Receivable Interest of which commences before the Amortization Date and
would otherwise end on a date occurring after the Amortization Date, such
Tranche Period shall end on the Amortization Date. The duration of each Tranche
Period which commences after the Amortization Date shall be of such duration as
selected by the Agent.
"TRANSACTION DOCUMENTS" means, collectively, this Agreement,
the Sale Agreement, the Fee Letter, each Collections Notice and all other
instruments, documents and agreements executed and delivered by the Seller or
the Originator in connection herewith.
"UCC" means the Uniform Commercial Code as from time to time
in effect in the specified jurisdiction.
"YEAR 2000 PLAN" means a plan to prevent the Year 2000 Problem
from having an adverse effect upon the business, financial condition,
operations, property or prospects of a Person.
"YEAR 2000 PROBLEM" means, with respect to the Seller or the
Originator, the risk that computer applications directly used by it cannot or
will not: (a) handle date information involving any and all dates before, during
and/or after January 1, 2000, including accepting input, providing output and
performing date calculations in whole or in part; (b) operate accurately without
interruption on and in respect of any and all dates before, during and/or after
January 1, 2000; and (c) store and provide date input information without
creating any ambiguity as to the century.
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 ILLINOIS, AND NOT SPECIFICALLY DEFINED
HEREIN, ARE USED HEREIN AS DEFINED IN SUCH ARTICLE 9.
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EXHIBIT II
CHIEF EXECUTIVE OFFICE OF THE SELLER; LOCATIONS OF RECORDS;
FEDERAL EMPLOYER IDENTIFICATION NUMBER
Chief Executive Office:
10990 Roe Avenue
Overland Park, KS 66211
Location of Records:
10990 Roe Avenue
Overland Park, KS 66211
Federal Employer Identification Number:
Yellow Receivables Corporation 52-1985649
Trade Names and Assumed Names:
None (other than its corporate name, Yellow Receivables
Corporation)
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EXHIBIT III
LOCKBOXES; COLLECTION ACCOUNTS;
CONCENTRATION ACCOUNTS; AND DEPOSITARY ACCOUNTS
YELLOW FREIGHT SYSTEM, INC.
TYPE OF ACCT ACCOUNT # BANK NAME CITY, STATE
- ----------------------------------------------------------------------------
Concentration..... 3750962424 Bank of America Dallas, TX
YELLOW RECEIVABLES CORPORATION
Collection........ 3750962356 Bank of America Dallas, TX
Collection........ 3750967393* Bank of America Dallas, TX
Depository........ 55-66681 First Chicago Chicago, IL
Concentration..... 55-03450* First Chicago Chicago, IL
Collection........ 03268-43* Bank One, Michigan Detroit, MI
* ASSIGNED TO YELLOW RECEIVABLES CORPORATION BY YELLOW FREIGHT SYSTEM, INC.
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EXHIBIT IV
FORM OF COMPLIANCE CERTIFICATE
To: The First National Bank of Chicago, as Agent
This Compliance Certificate is furnished pursuant to that
certain Amended and Restated Receivables Purchase Agreement dated as of July 30,
1999, among Yellow Receivables Corporation (the "SELLER"), the Purchasers party
thereto, and The First National Bank of Chicago, as agent for such Purchasers
(the "AGREEMENT").
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected _______________ of the Seller;
2. I have reviewed the terms of the Agreement and I have made,
or have caused to be made under my supervision, a detailed review of the
transactions and conditions of the Seller and its Subsidiaries during the
accounting period covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose,
and I have no knowledge of, the existence of any condition or event which
constitutes a Servicer Default or Potential Servicer Default, as each such term
is defined under the Agreement, during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate[, except as set forth below.
Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Seller has taken, is taking, or proposes to
take with respect to each such condition or event:]
The foregoing certifications, together with the computations
set forth in Schedule I hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this ______ day of
_________________________.
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SCHEDULE I TO COMPLIANCE REPORT
Schedule of Compliance with Section 7.1(d) of the Agreement.
Unless otherwise defined herein, the terms used in this Compliance Certificate
have the meanings ascribed thereto in the Agreement.
This schedule relates to the month ended: ______________
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EXHIBIT V
FORM OF COLLECTION ACCOUNT AGREEMENT
[On letterhead of Seller]
[Date]
[Lock-Box Bank/Concentration Bank/Depositary Bank]
Re: Yellow Receivables Corporation
Yellow Freight System, Inc.
Ladies and Gentlemen:
You have exclusive control of P.O. Box # __________ in
**[city, state, zip code]** (the "LOCK-BOX") for the purpose of receiving mail
and processing payments therefrom pursuant to that certain **[name of lock-box
agreement]** between you and Yellow Freight System, Inc. dated _________ (the
"AGREEMENT"). You hereby confirm your agreement to perform the services
described therein. Among the services you have agreed to perform therein, is to
endorse all checks and other evidences of payment, and credit such payments to
checking account no. ____________ maintained with you in the name of Yellow
Freight System, Inc. (the "LOCK-BOX ACCOUNT").
Yellow Freight System, Inc. ("YFSI") hereby transfers and
assigns all of its right, title and interest in and to, and exclusive ownership
and control over, the Lock-Box and the Lock-Box Account to Yellow Receivables
Corporation ("YELLOW-SPC"). YFSI and Yellow-SPC hereby request that the name of
the Lock-Box Account be changed to the Yellow Receivables Corporation, as
"Collection Agent" for the benefit of The First National Bank of Chicago
("FNBC"), as agent under that certain Amended and Restated Receivables Purchase
Agreement (the "RECEIVABLES PURCHASE AGREEMENT") dated as of July 30, 1999 among
Yellow-SPC, Falcon Asset Securitization Corporation, certain financial
institutions parties thereto and FNBC.
Yellow-SPC hereby irrevocably instructs you, and you hereby
agree, that upon receiving notice from FNBC in the form attached hereto as Annex
A: (i) the name of the Lock-Box Account will be changed to FNBC for itself and
as agent (or any designee of FNBC) and FNBC will have exclusive ownership of and
access to such Lock-Box Account, and neither YFSI, Yellow-SPC nor any of their
respective affiliates will have any control of such Lock-Box Account or any
access thereto, (ii) you will either continue to send the funds from the
Lock-Box to the Lock-Box Account, or will redirect the funds as FNBC may
otherwise request, (iii) you will transfer monies on deposit in the Lock-Box
Account, at any time, as directed by FNBC, (iv) all services to be performed by
you under the Agreement will be performed on behalf of FNBC, and (v) all
correspondence or other mail which you have agreed to send to either YFSI or
Yellow-SPC will be sent to FNBC at the following address:
The First National Bank of Chicago
Suite 0079, 21st Floor
One First National Plaza
Chicago, Illinois 60670
Attention: Credit Manager, Asset-Backed Finance
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Moreover, upon such notice, FNBC for itself and as agent will
have all rights and remedies given to YFSI or Yellow-SPC under the Agreement.
Each of YFSI and Yellow-SPC agrees, however, to continue to pay all fees and
other assessments due thereunder at any time.
You hereby acknowledge that monies deposited in the Lock-Box
Account or any other account established with you by FNBC for the purpose of
receiving funds from the Lock-Box are subject to the liens of FNBC for itself
and as agent under the Receivables Purchase Agreement, and will not be subject
to deduction, set-off, banker's lien or any other right you or any other party
may have against YFSI or Yellow-SPC, except that you may debit the Lock-Box
Account for any items deposited therein that are returned or otherwise not
collected and for all charges, fees, commissions and expenses incurred by you in
providing services hereunder, all in accordance with your customary practices
for the charge back of returned items and expenses.
This letter agreement and the rights and obligations of the
parties hereunder will be governed by and construed and interpreted in
accordance with the laws of the State of Illinois. This letter agreement may be
executed in any number of counterparts and all of such counterparts taken
together will be deemed to constitute one and the same instrument.
This letter agreement contains the entire agreement between
the parties, and may not be altered, modified, terminated or amended in any
respect, nor may any right, power or privilege of any party hereunder be waived
or released or discharged, except upon execution by all parties hereto of a
written instrument so providing. In the event that any provision in this letter
agreement is in conflict with, or inconsistent with, any provision of the
Agreement, this letter agreement will exclusively govern and control. Each party
agrees to take all actions reasonably requested by any other party to carry out
the purposes of this letter agreement or to preserve and protect the rights of
each party hereunder.
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Please indicate your agreement to the terms of this letter
agreement by signing in the space provided below. This letter agreement will
become effective immediately upon execution of a counterpart of this letter
agreement by all parties hereto.
Very truly yours,
YELLOW FREIGHT SYSTEM, INC.
By ______________________________
Title ___________________________
YELLOW RECEIVABLES CORPORATION
By ______________________________
Title ___________________________
Acknowledged and agreed to
this _____ day of ____________:
[COLLECTION BANK]
By: ______________________
Title: _____________________
Acknowledged and agreed to
this _______ day of ___________:
THE FIRST NATIONAL BANK OF CHICAGO (for itself and as Agent)
By: ______________________
Authorized Agent
* - indicates sections redacted at the request of the financial institution.
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ANNEX A
FORM OF COLLECTION NOTICE
[On letterhead of FNBC]
[Date]
[Collection Bank/Depositary Bank/Concentration Bank]
RE: YELLOW RECEIVABLES CORPORATION
Ladies and Gentlemen:
We hereby notify you that we are exercising our rights
pursuant to that certain letter agreement among Yellow Freight System, Inc.,
Yellow Receivables Corporation, you and us, to have the name of, and to have
exclusive ownership and control of, account number _________ (the "LOCK-BOX
ACCOUNT") maintained with you, transferred to us. Lock-Box Account will
henceforth be a zero-balance account, and funds deposited in the Lock-Box
Account should be sent at the end of each day to _________________. You have
further agreed to perform all other services you are performing under that
certain agreement dated ____________ between you and Yellow Freight System, Inc.
on our behalf.
We appreciate your cooperation in this matter.
Very truly yours,
THE FIRST NATIONAL BANK OF CHICAGO
(for itself and as agent)
By: _______________________________
Authorized Agent
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EXHIBIT VI
CREDIT AND COLLECTION POLICY
[attached]
58
<PAGE> 66
EXHIBIT VII
FORM OF INVOICE(S)
[attached]
59
<PAGE> 67
EXHIBIT VIII
FORM OF MONTHLY REPORT
[attached]
60
<PAGE> 68
EXHIBIT IX
FORM OF PURCHASE NOTICE
[Date]
The First National Bank of Chicago,
as Agent for the Purchasers parties
to the Receivables Purchase Agreement
referred to below
Suite 0596, 1-21
One First National Plaza
Chicago, Illinois 60670
Attention: Asset-Backed Finance
Gentlemen:
The undersigned, Yellow Receivables Corporation, refers to the
Amended and Restated Receivables Purchase Agreement, dated as of July 30, 1999
(the "RECEIVABLES PURCHASE AGREEMENT", the terms defined therein being used
herein as therein defined), among the undersigned, Falcon Asset Securitization
Corporation ("FALCON"), certain Investors parties thereto and The First National
Bank of Chicago, as Agent for FALCON and such Investors, and hereby gives you
notice, irrevocably, pursuant to Section 1.2 of the Receivables Purchase
Agreement that the undersigned hereby requests an Incremental Purchase under the
Receivables Purchase Agreement, and in that connection sets forth below the
information relating to such Incremental Purchase (the "PROPOSED PURCHASE") as
required by Section 1.2 of the Receivables Purchase Agreement:
(i) The Business Day of the Proposed Purchase is
______________________.
(ii) The requested Purchase Price in respect of the Proposed
Purchase is $ _______________.
(iii) The requested Purchaser[s] in respect of the Proposed
Purchase [is FALCON] [are the Investors].
(iv) If the Proposed Purchase is to be funded by the
Investors, the duration of the initial Tranche Period for the Proposed
Purchase is ____________ [days] [months].
(v) If the Proposed Purchase is to be funded by the Investors,
the Discount Rate related to such initial Tranche Period is requested
to be the [LIBOR] [Base] Rate.
The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Purchase (before and after giving effect to the Proposed Purchase):
(A) the representations and warranties set forth in Section
3.1 [(other than Section 3.1(k)] of the Receivables Purchase Agreement
are correct on and as of such date, as though made on and as of such
date;
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<PAGE> 69
(B) no event has occurred, or would result from the Proposed
Purchase that will constitute a Servicer Default, and no event has
occurred and is continuing, or would result from such Proposed
Purchase, that would constitute a Potential Servicer Default; and
(C) the Liquidity Termination Date has not occurred, the
aggregate Capital of all Receivable Interests of the Purchasers shall
not exceed the Purchase Limit and the aggregate Receivable Interests of
the Purchasers does not exceed 100%.
Very truly yours,
YELLOW RECEIVABLES CORPORATION
By:____________________________________
Title:
62
<PAGE> 70
EXHIBIT X
CONTRACTS APPLICABLE TO EXCLUDED CONTRACTS
[attached]
63
<PAGE> 71
SCHEDULE A
DOCUMENTS AND RELATED ITEMS TO BE DELIVERED TO THE AGENT
ON OR PRIOR TO THE EFFECTIVENESS OF THE AMENDED AND RESTATED RECEIVABLES
PURCHASE AGREEMENT
I. First-Step Agreement Amendment
A. Amendment No. 1 dated as of July 30, 1999 to Receivables
Sale Agreement dated as of August 2, 1996 (the "Sale Agreement") by and between
Yellow Freight System, Inc. , an Indiana corporation (the "Originator"), and
Yellow Receivables Corporation, a Delaware corporation ("Yellow-SPC") and
consented to by The First National Bank of Chicago, as Agent (the "Agent").
B. Certificate of the Originator's [Assistant] Secretary
certifying:
1. That there has been no change in the Originator's Articles
of Incorporation since the date of the Existing Agreement or, if such a
change has occurred, attaching a certified copy of such articles as
amended (certified within 30 days prior to closing by the Indiana
Secretary of State);
2. That there has been no change in the Originator's By-Laws
since the date of the Existing Agreement or, if such a change has
occurred, attaching a copy of such By-Laws as so amended;
3. An attached copy of resolutions of the Originator's Board
of Directors authorizing the Originator's execution, delivery and
performance of Amendment No. 1 to the Sale Agreement (unless amendments
were authorized in the original resolutions, in which case, certifying
that there has been no change in such original resolutions and that
they remain in full force and effect);
4. That there has been no change in the names, titles and
specimen signatures of the Originator's officers authorized to execute
and deliver the Sale Agreement, as amended, and related documents since
the date of the Existing Agreement; and
5. That the Originator remains in good standing in the State
of Indiana and Kansas.
C. CFO's Certificate re no Event of Default or Potential Event
of Default and absence of Material Adverse Effect since December 31, 1998.
II. Amended and Restated Receivables Purchase Agreement
A. Amended and Restated Receivables Purchase Agreement dated
as of July 30, 1999 (the "Investor Agreement") by and among Yellow-SPC, Falcon
Asset Securitization Corporation ("FALCON"), various Investors, and The First
National Bank of Chicago, as Agent (in such capacity, the "Agent").
B. Amended and Restated Fee Letter dated of July 30, 1999 by
and between Yellow-SPC and the Agent.
C. Certificate of Yellow-SPC's [Assistant] Secretary
certifying:
1. That there has been no change in Yellow-SPC's Certificate
of Incorporation since the date of the Existing Agreement or, if such a
change has occurred, attaching a
64
<PAGE> 72
certified copy of such articles as amended (certified within 30 days
prior to closing by the Delaware Secretary of State);
2. That there has been no change in Yellow-SPC's By-Laws since
the date of the Existing Agreement or, if such a change has occurred,
attaching a copy of such By-Laws as so amended;
3. An attached copy of resolutions of Yellow-SPC's Board of
Directors authorizing Yellow-SPC's execution, delivery and performance
of the Investor Agreement, as amended, and related documents; and
4. The names, titles and specimen signatures of Yellow-SPC's
officers authorized to execute and deliver the Investor Agreement and
related documents.
D. Good standing certificates for Yellow-SPC from the
following states certified within 30 days prior to closing:
1. Delaware
2. Kansas
E. Purchase Notice executed by Yellow-SPC.
F. Opinion of Yellow-SPC's re corporate/UCC issues
G. CFO's Certificate re no Servicer Default or Potential
Servicer Default and absence of Material Adverse Effect since December 31, 1998.
H. Collection Account Agreements for all Collection Accounts
for which no such agreement is currently in effect.
65
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1999
<CASH> 22,440
<SECURITIES> 0
<RECEIVABLES> 261,312
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 317,284
<PP&E> 2,094,912
<DEPRECIATION> 1,227,225
<TOTAL-ASSETS> 1,292,842
<CURRENT-LIABILITIES> 454,386
<BONDS> 274,973
0
0
<COMMON> 29,405
<OTHER-SE> 362,084
<TOTAL-LIABILITY-AND-EQUITY> 1,292,842
<SALES> 0
<TOTAL-REVENUES> 2,344,537
<CGS> 0
<TOTAL-COSTS> 2,274,614
<OTHER-EXPENSES> 1,629
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,295
<INCOME-PRETAX> 57,999
<INCOME-TAX> 24,355
<INCOME-CONTINUING> 33,644
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 33,644
<EPS-BASIC> 1.34
<EPS-DILUTED> 1.33
</TABLE>
