EXHIBIT 10(h)

 

 

AMENDED AND RESTATED 

RECEIVABLES PURCHASEAGREEMENT

 

Datedas of August 8, 2001

Among

AIRBORNE CREDIT, INC.as the Seller

and

AIRBORNE EXPRESS, INC.as the Servicer

and

THE COMMITTED INVESTORS NAMED HEREIN

and

BLUE RIDGE ASSET FUNDING CORPORATIONas the Purchaser

and

WACHOVIA BANK, N.A.as the Administrative Agent

 

 

TABLE OF CONTENTS

 

ARTICLE I  PURCHASE ARRANGEMENTS..2

Section 1.1                    Purchase Facility.2

Section 1.2                    IncrementalPurchases.2

Section 1.3                    Decreases.3

Section 1.4                    Deemed Collections;Purchase Limit.3

Section 1.5                    Payment Requirementsand Computations.4

ARTICLE II  PAYMENTS AND COLLECTIONS ..5

Section 2.1                    Payments of RecourseObligations.5

Section 2.2                    Collections Prior tothe Facility Termination Date.5

Section 2.3                    Application ofCollections.6

Section 2.4                    Payment Recission.7

Section 2.5                    Clean Up Call.7

ARTICLE III  COMMERCIAL PAPER FUNDING ..7

Section 3.1                    CP Costs.7

Section 3.2                    Calculation of CPCosts.7

Section 3.3                    CP Costs Payments.8

Section 3.4                    Default Rate.8

ARTICLE IV  INVESTOR FUNDINGS AND LIQUIDITY FUNDINGS ..8

Section 4.1                    Investor Fundings andLiquidity Fundings.8

Section 4.2                    Yield Payments.8

Section 4.3                    Selection and Continuationof Tranche Periods.8

Section 4.4                    Investor Funding andLiquidity Funding Yield Rates.9

Section 4.5                    Suspension of the EurodollarRate (Reserve Adjusted).9

Section 4.6                    Default Rate.10

Section 4.7                    Replacement ofCommitted Investors on the Existing Commitment Termination Date; PurchaseAccount Deposit.10

ARTICLE V  REPRESENTATIONS AND WARRANTIES ..13

Section 5.1                    Representations andWarranties of the Seller Parties.13

ARTICLE VI  CONDITIONS OF PURCHASES ..17

Section 6.1                    Conditions Precedentto Effectiveness.17

Section 6.2                    Conditions Precedentto All Purchases and Reinvestments.17

ARTICLE VII  COVENANTS ..18

Section 7.1                    Affirmative Covenantsof the Seller Parties.18

Section 7.2                    Negative Covenants ofthe Seller Parties.25

ARTICLE VIII  ADMINISTRATION AND COLLECTION ..27

Section 8.1                    Designation ofServicer.27

Section 8.2                    Duties of Servicer.28

Section 8.3                    Collection Noticesand Delivery Orders.29

Section 8.4                    Responsibilities ofSeller.30

Section 8.5                    Monthly Reports.30

Section 8.6                    Servicing Fee.30

ARTICLE IX  AMORTIZATION EVENTS ..30

Section 9.1                    Amortization Events.30

Section 9.2                    Remedies.34

ARTICLE X  INDEMNIFICATION..34

Section 10.1                    Indemnities by theSeller Parties.34

Section 10.2                    Increased Cost andReduced Return.37

Section 10.3                    Other Costs andExpenses.38

Section 10.4                    Allocations.38

ARTICLE XI  THE ADMINISTRATIVE AGENT ..38

Section 11.1                    Authorization andAction.38

ARTICLE XII  ASSIGNMENTS AND PARTICIPATIONS ..39

Section 12.1                    Assignments andParticipations by Blue Ridge and the Committed Investors.39

Section 12.2                    Prohibition onAssignments by Seller Parties.39

ARTICLE XIII  MISCELLANEOUS ..40

Section 13.1                    Waivers andAmendments.40

Section 13.2                    Notices.41

Section 13.3                    Protection ofAdministrative Agent's Security Interest.41

Section 13.4                    Confidentiality.42

Section 13.5                    Bankruptcy Petition.43

Section 13.6                    Limitation ofLiability.43

Section 13.7                    CHOICE OF LAW.43

Section 13.8                    CONSENT TOJURISDICTION.43

Section 13.9                    WAIVER OF JURY TRIAL.44

Section 13.10                    Integration; BindingEffect; Survival of Terms.44

Section 13.11                    Counterparts;Severability; Section References.45

Section 13.12                    Characterization.45

 

 

 

Exhibits 

** **

Exhibit I                        Definitions

 

Exhibit II                        Form of Purchase Notice

 

Exhibit III      Places ofBusiness of the Seller Parties; Locations of Records; Federal EmployerIdentification Number(s)

 

Exhibit IV                        Lock-Boxes & Blocked Accounts

 

Exhibit V                        Form of Compliance Certificate

 

Exhibit VI                        Form of Blocked Account Agreement

 

Exhibit VII                        Form of Performance Undertaking

 

Exhibit VIII                        Form of Monthly Report

 

Exhibit IX                        Form of Contract(s)

 

Exhibit X                        Form of Delivery Order

 

Exhibit XI                        Form of Notice of Committed Investor Purchase

 

Exhibit XII                        Form of Notice of Conversion

 

Exhibit XIII                        Form of Assignment and Acceptance

 

Schedules

Schedule A                        Closing Documents

 

**AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT**

** **

****This AMENDED ANDRESTATED Receivables Purchase Agreement*,***dated as of August 8, 2001 is enteredinto by and among:

 

            (a)            Airborne Credit, Inc., a Virginia corporation ("*Seller*"),

 

            (b)            Airborne Express, Inc., (the "*Originator*")a Delaware corporation, as initial Servicer ("*Servicer*", theServicer together with Seller, the "*Seller Parties*" and each,a "*SellerParty*"),

 

            (c)            the financial institutions identified on the signaturepages of this Agreement as "Committed Investors" (together with theirsuccessors and assigns, the "*CommittedInvestors*")

 

            (d)            Blue Ridge Asset Funding Corporation, a Delawarecorporation ("*Blue Ridge*"), and

 

            (e)            Wachovia Bank, N.A., as administrative agent for BlueRidge, the Committed Investors and their respective assigns under theTransaction Documents and under the Liquidity Agreement (together with itssuccessors and assigns in such capacity, the"*AdministrativeAgent*"),

 

and amends and restates in its entirety that certainReceivables Purchase Agreement dated as of December 28, 2000 by and amongSeller, Servicer, Blue Ridge and the Administrative Agent.  Unless defined elsewhere herein, capitalizedterms used in this Agreement shall have the meanings assigned to such terms in ExhibitI.

 

**PRELIMINARYSTATEMENTS**

 

            Sellerdesires to transfer and assign Receivable Interests from time to time.

 

            Blue Ridgeand/or the Committed Investors shall purchase Receivable Interests from Sellerfrom time to time either by issuing its Commercial Paper or by availing itselfof a Liquidity Funding or an Investor Funding to the extent available.

 

            WachoviaBank, N.A. has been requested and is willing to act as Administrative Agent onbehalf of the Purchaser and the Committed Investors and their assigns inaccordance with the terms hereof.

 

# ARTICLE IPURCHASE ARRANGEMENTS

** **

## Section 1.1            Purchase Facility.

 

            (a)            Upon the terms and subject to the conditions of thisAgreement (including, without limitation, Article VI), from time to timeprior to the Facility Termination Date, Seller may request that Blue Ridgepurchase from Seller undivided ownership interests in the Receivables and theassociated Related Security and Collections, and Blue Ridge may, or, if BlueRidge shall decline to make such Purchase, the Committed Investors shall, makesuch Purchase; providedthatno Purchase shall be made by Blue Ridge or theCommitted Investors if, after giving effect thereto, either (i)theAggregate Invested Amount would exceed the Purchase Limit, or (ii) theaggregate of the Receivable Interests would exceed 100%; provided,however that no Committed Investor shall be required to make a Purchase if theCommitment Termination Date with respect to such Committed Investor hasoccurred.  It is the intent of BlueRidge to fund the Purchases by the issuance of Commercial Paper.  If for any reason Blue Ridge is unable, ordetermines that it is undesirable, to issue Commercial Paper to fund ormaintain its investment in the Receivable Interests, or is unable for anyreason to repay such Commercial Paper upon the maturity thereof, Blue Ridgewill avail itself of a Liquidity Funding or an Investor Funding to the extentavailable.  If Blue Ridge or anyCommitted Investor funds or refinances its investment in a Receivable Interestthrough one or more Liquidity Fundings and/or Investor Fundings, commencing onthe date of such Liquidity Funding or Investor Funding, as the case may be, inlieu of paying CP Costs on the Invested Amount pursuant to Article IIIhereof, Seller will pay Yield thereon at the Alternate Base Rate or theEurodollar Rate (Reserve Adjusted), selected in accordance with Article IVhereof.  Nothing herein shall be deemedto constitute a commitment of Blue Ridge to issue Commercial Paper.

 

            (b)            Seller may, upon at least 30Business Days' notice to the Administrative Agent, terminate in whole or reducein part, the unused portion of the Purchase Limit; providedthateach partial reduction ofthe Purchase Limit shall be in an amount equal to $10,000,000(or a larger integral multiple of$1,000,000 if in excess thereof).

 

## Section1.2            Incremental Purchases.

 

            Sellershall provide the Administrative Agent with at least two (2) Business Days'prior written notice in a form set forth as Exhibit II hereto of eachIncremental Purchase (each, a "*Purchase Notice*").  Each Purchase Notice shall be subject to Section6.2 hereof and, except as set forth below, shall be irrevocable (subject tothe proviso below) and shall specify the requested Purchase Price (which shallnot be less than $1,000,000 or alarger integral multiple of $100,000)and the Purchase Date (which, in thecase of any Incremental Purchase after the initial Purchase hereunder, shallonly be on a Settlement Date).Following receipt of a Purchase Notice, the Administrative Agent willdetermine whether Blue Ridge and/or the Committed Investors will fund therequested Incremental Purchase through the issuance of Commercial Paper orthrough a Liquidity Funding or an Investor Funding; provided, howeverthat if the Administrative Agent shall determine that such Incremental Purchaseshall be made through a Liquidity Funding or an Investor Funding, it shallnotify the Seller of such determination and the Seller may cancel such PurchaseNotice.  On each Purchase Date, uponsatisfaction of the applicable conditions precedent set forth in Article VI,unless otherwise instructed in the applicable Purchase Notice, Blue Ridge shalldeposit to the Facility Account an amount equal to the requested PurchasePrice, or if Blue Ridge shall decline to make the Purchase, each CommittedInvestor shall deposit to the Facility Account an amount equal to suchCommitted Investor's Pro Rata Share of the Purchase Price.

 

## Section1.3            Decreases.

 

            Seller shall provide the Administrative Agent with priorwritten notice in conformity with the Required Notice Period (a "*ReductionNotice*") of any proposed reduction of Aggregate Invested Amount.  Such Reduction Notice shall designate (a) the date (the "*ProposedReduction Date*") upon which any such reduction of Aggregate Invested Amountshall occur (which date shall give effect to the applicable Required NoticePeriod), and (b) the amount of AggregateInvested Amount to be reduced, which shall be applied to reduce the InvestedAmount of Receivable Interests selected by the Administrative Agent (the "*AggregateReduction*").  Only one (1)Reduction Notice shall be outstanding at any time.

 

## Section1.4            Deemed Collections; PurchaseLimit.

 

            (a)            If on any day:

 

                        (i)            the OutstandingBalance of any Receivable is reduced as a result of any defective, rejected orreturned goods or services, any cash discount or any other adjustment by theServicer, the Originator or any Affiliate thereof, or as a result of any tariffor other governmental or regulatory action, or

 

                        (ii)            the Outstanding Balance of anyReceivable is reduced or canceled as a result of a setoff in respect of anyclaim by the Obligor thereof (whether such claim arises out of the same or arelated or an unrelated transaction), or

 

                        (iii)            the Outstanding Balance of any Receivableis reduced on account of the obligation of the Seller, the Servicer, theOriginator or any Affiliate thereof to pay to the related Obligor any rebate orrefund, or

 

                        (iv)            the Outstanding Balance of anyReceivable is less than the amount included in calculating the Net Pool Balancefor purposes of any Monthly Report (for any reason other than receipt ofCollections or such Receivable becoming a Defaulted Receivable), or

 

                        (v)            any of the representations orwarranties of Seller set forth in Section 5.1(g), (i), (j),(r), (s), (t) or (u) were not true when made withrespect to any Receivable, or

 

                        (vi)            any Receivable is repurchased by theOriginator pursuant to the Receivables Sale Agreement,

 

then, on such day, Seller shall (x) be deemed to havereceived a Collection of such Receivable (A) in the case of clauses (i)-(iv)above, in the amount of such reduction or cancellation or the differencebetween the actual Outstanding Balance and the amount included in calculatingsuch Net Pool Balance, as applicable; and (B) in the case of clause (v)above, in the amount of the Outstanding Balance of such Receivable as of thedate on which such representation or warranty was made and (y) pay to theAdministrative Agent's Account the amount of any such Collection deemed to havebeen received on the date such Collection is so deemed to have been received.

 

            (b)            Seller shall ensure that the Aggregate Invested Amount atno time exceeds the lesser of (i)the Net Pool Balance and (ii)the Purchase Limit.  If at any time the AggregateInvested Amount exceeds the Purchase Limit, Seller shall pay to theAdministrative Agent not later than two (2) Business Days after the first daysuch excess exists an amount to be applied to reduce the Aggregate InvestedAmount (as allocated by the Administrative Agent), such that after givingeffect to such payment the Aggregate Invested Amount is less than or equal tothe Purchase Limit.

 

            (c)            Seller shall also ensure that the Receivable Interestsshall at no time exceed in the aggregate 100%.If the aggregate of the Receivable Interests exceeds 100%, Seller shallpay to the Administrative Agent not later than two (2) Business Days after thefirst day such excess exists an amount to be applied to reduce the AggregateInvested Amount (as allocated by the Administrative Agent), such that aftergiving effect to such payment the aggregate of the Receivable Interests equalsor is less than 100%.

 

## Section1.5            Payment Requirements andComputations.

 

            All amountsto be paid or deposited by any Seller Party pursuant to any provision of thisAgreement shall be paid or deposited in accordance with the terms hereof no laterthan 2:00 p.m. (New York time) on the day when due in immediately availablefunds, and if not received before 2:00 p.m. (New York time) shall be deemed tobe received on the next succeeding Business Day.  If such amounts are payable to the Administrative Agent for theaccount of Blue Ridge or the Committed Investors, they shall be paid to theAdministrative Agent's Account, for the account of Blue Ridge and/or theCommitted Investors, as the case may be, until otherwise notified by theAdministrative Agent.  Upon notice toSeller, the Administrative Agent may debit the Facility Account for all amountsdue and payable hereunder.  Allcomputations of CP Costs, Yield, *perannum* fees calculated as part of any CP Costs, *per annum* fees hereunder and *perannum* fees under the Fee Letter shall be made on the basis of a year of 360days for the actual number of days elapsed.If any amount hereunder shall be payable on a day which is not aBusiness Day, such amount shall be payable on the next succeeding Business Day.

 

# ARTICLE IIPAYMENTS ANDCOLLECTIONS

 

## Section 2.1            Payments of Recourse Obligations.

 

            Sellerhereby promises to pay the following (collectively, the "*Recourse Obligations*"):

 

            (a)            all amounts due and owing under Section 1.3 or 1.4on the dates specified therein;

 

            (b)            the fees set forth in the Fee Letter on the datesspecified therein;

 

            (c)            all accrued and unpaid Yield on the Receivable Interestsaccruing Yield at the Alternate Base Rate or the Default Rate on eachSettlement Date applicable thereto;

 

            (d)            all accrued and unpaid Yield on the Receivable Interestsaccruing Yield at the Eurodollar Rate (Reserve Adjusted), on the last day ofeach Tranche Period applicable thereto;

 

            (e)            all accrued and unpaid CP Costs on the ReceivableInterests funded with Commercial Paper on each Settlement Date; and

 

            (f)            all Broken Funding Costs and Indemnified Amounts upondemand.

 

## Section2.2            Collections Prior to the FacilityTermination Date.

 

            (a)            During the Revolving Period, any Deemed Collectionsreceived by the Servicer and Blue Ridge's Portion of any Collections receivedby the Servicer shall be set aside and held in trust by the Servicer for thepayment of any accrued and unpaid Aggregate Unpaids or for a Reinvestment asprovided in this Section 2.2.  Ifat any time any Collections are received by the Servicer during the RevolvingPeriod, Seller hereby requests and the Purchaser and the Committed Investorseach hereby agree to make subject to the terms and conditions set forth in theAgreement, simultaneously with such receipt, a reinvestment (each, a "*Reinvestment*") withBlue Ridge's Portion of the balance of each and every Collection received bythe Servicer such that after giving effect to such Reinvestment, the InvestedAmount of such Receivable Interest immediately after such receipt andcorresponding Reinvestment shall be equal to the amount of Invested Amountimmediately prior to such receipt.

 

            (b)            On each Settlement Date during the Revolving Period, theServicer shall remit to the Administrative Agent's Account the amounts setaside during the preceding Settlement Period that have not been subject to aReinvestment and apply such amounts (if not previously paid in accordance with Section2.1) to the Aggregate Unpaids in the order specified:

 

******first***,***ratably to the payment of all accrued and unpaid CP Costs, Yield and BrokenFunding Costs (if any) that are then due and owing,

 

second,to the accrued and unpaid Servicing Fee (so long as Servicer is not theOriginator or an Affiliate of the Originator)

 

third,ratably to the payment of all accrued and unpaid fees under the Fee Letter (ifany) that are then due and owing,

 

******fourth, ifrequired under Section 1.3 or 1.4, to the ratable reduction ofAggregate Invested Amount,

 

******fifth, for theratable payment of all other unpaid Recourse Obligations, if any, that are thendue and owing,

 

sixth,to the accrued and unpaid Servicing Fee (so long as Servicer is the Originatoror an Affiliate of the Originator)

 

seventh, thebalance, if any, to Seller or otherwise in accordance with Seller'sinstructions.

 

## Section2.3            Application of Collections.

 

            Onthe Facility Termination Date and on each day thereafter, the Servicer shallset aside and hold in trust, for the Secured Parties, all Collections receivedon each such day.  On and after theFacility Termination Date, the Servicer shall, on each Settlement Date and oneach other Business Day specified by the Administrative Agent (a) remit to the Administrative Agent'sAccount the amounts set aside pursuant to the immediately preceding sentence,and (b) apply such amounts to reduce the Aggregate Unpaids as follows:

 

first, to thereimbursement of the Administrative Agent's costs of collection and enforcementof this Agreement,

 

second*,*ratably to the payment of all accrued and unpaid CP Costs, Yield and BrokenFunding Costs,

 

third, to the accruedand unpaid Servicing Fee (so long as the Servicer is not the Originator or anAffiliate of the Originator);

 

fourth, ratably to thepayment of all accrued and unpaid fees under the Fee Letter,

 

fifth, to the ratablereduction of Aggregate Invested Amount,

 

sixth, for the ratablepayment of all other Aggregate Unpaids, 

 

seventh, to the accrued andunpaid Servicing Fee (so long as the Servicer is the Originator or an Affiliateof the Originator); and

 

eighth, after theFinal Payout Date, to Seller.

## Section 2.4            Payment Recission.

 

            No payment of any of the Aggregate Unpaids shall beconsidered paid or applied hereunder to the extent that, at any time, all orany portion of such payment or application is rescinded by application of lawor judicial authority, or must otherwise be returned or refunded for anyreason.  Seller shall remain obligatedfor the amount of any payment or application so rescinded, returned orrefunded, and shall promptly pay to the Administrative Agent (for applicationto the Person or Persons who suffered such recission, return or refund) thefull amount thereof, plus interest thereon at the Default Rate from the date ofany such recission, return or refunding.

 

## Section2.5    Clean Up Call.

 

            In additionto Seller's rights pursuant to Section 1.3, Seller shall have the right(after providing written notice to the Administrative Agent in accordance withthe Required Notice Period), at any time following the reduction of theAggregate Invested Amount to a level that is less than 10.0% of the originalPurchase Limit, to repurchase all, but not less than all, of the thenoutstanding Receivable Interests.  Thepurchase price in respect thereof shall be an amount equal to the AggregateUnpaids through the date of such repurchase, payable in immediately availablefunds to the Administrative Agent's Account.Such repurchase shall be without representation, warranty or recourse ofany kind by, on the part of, or against the Purchaser, any Committed Investoror the Administrative Agent.

 

# ARTICLE IIICOMMERCIAL PAPERFUNDING

** **

## Section3.1    CP Costs.

 

            Seller shall pay CP Costs with respect to the InvestedAmount of all Receivable Interests funded through the issuance of CommercialPaper.  Each Receivable Interest that isfunded with Pooled Commercial Paper will accrue CP Costs each day on a pro ratabasis, based upon the percentage share that the Invested Amount in respect ofsuch Receivable Interest represents in relation to all assets held by BlueRidge and funded substantially with related Pooled Commercial Paper.

 

## Section3.2            Calculation of CP Costs.

 

            Not laterthan the 3rd Business Day immediately preceding each MonthlyReporting Date, Blue Ridge shall calculate the aggregate amount of CP Costs applicableto its Receivable Interests for the Calculation Period then most recently endedand shall notify Seller of such aggregate amount.

 

## Section3.3    CP Costs Payments.

 

            On eachSettlement Date, Seller shall pay to the Administrative Agent (for the benefitof Blue Ridge) an aggregate amount equal to all accrued and unpaid CP Costs inrespect of the Invested Amount of all Receivable Interests funded withCommercial Paper for the Calculation Period then most recently ended inaccordance with Article II.

 

## Section3.4            Default Rate.

 

            From and after the occurrence of an Amortization Event,all Receivable Interests shall accrue Yield at the Default Rate.

 

# ARTICLE IVINVESTOR FUNDINGS ANDLIQUIDITY FUNDINGS

** **

## Section 4.1            Investor Fundings and LiquidityFundings.

 

            Prior tothe occurrence of an Amortization Event, the outstanding Invested Amount ofeach Receivable Interest funded with an Investor Funding or a Liquidity Fundingshall accrue Yield for each day during its Tranche Period at either theEurodollar Rate (Reserve Adjusted) or the Alternate Base Rate in accordancewith the terms and conditions hereof.Until Seller gives the required notice to the Administrative Agent ofanother Yield Rate in accordance with Section 4.4, the initial YieldRate for any Receivable Interest funded with an Investor Funding or a LiquidityFunding, shall be the Alternate Base Rate (unless the Default Rate is thenapplicable).  If any undivided interestin a Receivable Interest initially funded with Commercial Paper is sold to theLiquidity Banks pursuant to the Liquidity Agreement, such undivided interest insuch Receivable Interest shall be deemed to have a Tranche Period commencing onthe date of such sale.

 

## Section4.2    Yield Payments.

 

            On theSettlement Date for each Receivable Interest that is funded with a LiquidityFunding or an Investor Funding, Seller shall pay to the Administrative Agent(for the benefit of the Liquidity Banks or the Committed Investors, as the casemay be) an aggregate amount equal to the accrued and unpaid Yield thereon forthe entire Tranche Period of each such Liquidity Funding or Investor Funding inaccordance with Article II.

 

## Section4.3            Selection and Continuation ofTranche Periods.

 

            (a)            Tranche Periods for the ReceivableInterests funded with Liquidity Fundings and Investor Fundings shall beselected from time to time (i)prior to the occurrence of an Amortization Event, by Seller with consultationfrom (and approval by) the Administrative Agent providedthatif at any time anyInvestor Funding or Liquidity Funding is outstanding, Seller shall alwaysrequest Tranche Periods such that at least one Tranche Period shall end on thedate specified in clause (A) of the definition of Settlement Date and (ii) from andafter the occurrence of an Amortization Event, by the Administrative Agent; 

 

            (b)            The Administrative Agent or, priorto the occurrence of an Amortization Event, Seller (with the consent of theAdministrative Agent), upon notice to the other received at least three (3)Business Days prior to the end of a Tranche Period (the "*Terminating Tranche*") for anyInvestor Funding or Liquidity Funding may, effective on the last day of theTerminating Tranche:  (i)divide any such Investor Funding or Liquidity Funding into multiple InvestorFundings or Liquidity Fundings, as the case may be, (ii) combine any such InvestorFunding or Liquidity Funding with one or more other Investor Fundings orLiquidity Fundings, as the case may be, that have a Terminating Tranche endingon the same day as such Terminating Tranche or (iii) combine any such InvestorFunding or Liquidity Funding with a new Investor Funding or Liquidity Fundingto be made by the Committed Investors (with respect to any Investor Funding) orthe Liquidity Banks (with respect to any Liquidity Funding) on the day suchTerminating Tranche ends.

 

## Section4.4            Investor Funding and LiquidityFunding Yield Rates.

 

            Subject to Sections4.5 and 4.6, Seller may select the Eurodollar Rate (ReserveAdjusted) or the Alternate Base Rate for each Investor Funding and LiquidityFunding.  Seller shall by 12:00 noon(New York time):  (a) at least three (3) BusinessDays prior to the expiration of any Terminating Tranche with respect to whichthe Eurodollar Rate (Reserve Adjusted) is being requested as a new Yield Rateand (b) at least one (1) BusinessDay prior to the expiration of any Terminating Tranche with respect to whichthe Alternate Base Rate is being requested as a new Yield Rate, give theAdministrative Agent irrevocable notice of the new Yield Rate for the InvestorFunding or Liquidity Funding, as the case may be, associated with suchTerminating Tranche.  Until Seller givesnotice to the Administrative Agent of another Yield Rate, the initial YieldRate for any Receivable Interest assigned or participated to the LiquidityBanks pursuant to the Liquidity Agreement or any Receivable Interest acquiredwith an Investor Funding shall be the Alternate Base Rate (unless the DefaultRate is then applicable).

 

## Section4.5            Suspension of the Eurodollar Rate(Reserve Adjusted).

 

            (a)            If any Committed Investor or Liquidity Bank notifies theAdministrative Agent that it has determined that funding its ratable share ofthe Liquidity Fundings at a Eurodollar Rate (Reserve Adjusted) would violateany applicable law, rule, regulation, or directive of any governmental orregulatory authority, whether or not having the force of law, or that (i)deposits of a type and maturity appropriate to match fund its Investor Fundingor Liquidity Funding, as the case may be, at such Eurodollar Rate (ReserveAdjusted) are not available or (ii)such Eurodollar Rate (Reserve Adjusted) does not accurately reflect the cost ofacquiring or maintaining an Investor Funding or Liquidity Funding, as the casemay be, at such Eurodollar Rate (Reserve Adjusted), then the Eurodollar Rate(Reserve Adjusted) shall be suspended and the Alternate Base Rate shall applyto any Investor Funding or Liquidity Funding accruing Yield at such EurodollarRate (Reserve Adjusted).

 

            (b)            If less than all of the Liquidity Banks (with respect toany Liquidity Funding) or less than all of the Committed Investors (withrespect to any Investor Funding) give a notice to the Administrative Agentpursuant to Section 4.5(a), each Committed Investor or each LiquidityBank, as the case may be, which gave such a notice shall be obliged, at therequest of Seller, Blue Ridge or the Administrative Agent, to assign all of itsrights and obligations hereunder to (i)another Liquidity Bank or Committed Investor, as the case may be, or (ii) anotherfunding entity nominated by Seller or the Administrative Agent that is anEligible Assignee willing to participate in the Liquidity Agreement through theLiquidity Termination Date in the place of such notifying Liquidity Bank, or inthe case of an Investor Funding, willing to become a Committed Investor throughthe Commitment Termination Date for the related Committed Investor; providedthat (i)the notifying Committed Investor or Liquidity Bank, as the case may be,receives payment in full of all Aggregate Unpaids owing to it (whether due oraccrued), and (ii),in the case of a Liquidity Funding, the replacement Liquidity Bank otherwise satisfiesthe requirements of the Liquidity Agreement.

 

## Section4.6            Default Rate.

 

            From andafter the occurrence of an Amortization Event, all Liquidity Fundings andInvestor Fundings shall accrue Yield at the Default Rate.

 

## Section4.7            Replacement of CommittedInvestors on the Existing Commitment Termination Date; Purchase Account Deposit.

 

            (a)            With respect to any Committed Investor, Seller may, atits sole expense and effort, on the applicable Commitment Termination Date thenin effect with respect to such Committed Investor (the "*ExistingCommitment Termination Date*") replace any Non-Renewing Investorwith one or more other Committed Investors (which may include any existingCommitted Investor, each such Person prior to such existing CommitmentTermination Date, an "*Additional Investor*") each ofwhich Additional Investor shall have entered into an Assignment and Acceptancepursuant to which such Additional Investor shall, effective as of such ExistingCommitment Termination Date, undertake a commitment as a Committed Investor to makePurchases hereunder (and, if any such Additional Investor is already aCommitted Investor, its Commitment shall be increased by the applicable amounton such date).  The right of Seller toreplace any such Committed Investor with an Additional Investor shall besubject to the conditions that (i)the Commitment of the Additional Investor (determined as of such ExistingCommitment Termination Date) shall in no event be less than $7,500,000 and (ii) theAdditional Investor shall be an Eligible Assignee.  Any Additional Investor who is not an Existing Committed Investorshall become an Additional Investor only upon the consent of the AdministrativeAgent.

 

            (b)            If, at any time during the Revolving Period either (i)any Committed Investor has not agreed to extend its Commitment hereunder for anadditional 364 day period commencing on such Committed Investor's CommitmentTermination Date and such Committed Investor has not been replaced by anAdditional Investor (each such Committed Investor, a "*Non-RenewingInvestor*"), on and after the fifteenth (15th) day preceding suchCommitted Investor's Commitment Termination Date to and including suchCommitted Investor's Commitment Termination Date, or (ii) a Downgrading Eventshall occur with respect to a Committed Investor that has not been replaced (a"*Downgraded Investor*") then, Seller may request adeposit (a "*Purchase Account Deposit*") to be made to a PurchaseAccount by delivering to such Non-Renewing Investor or such DowngradedInvestor, as applicable, (with a copy to the Administrator) a Notice ofCommitted Investor Purchase in substantially the form attached hereto as ExhibitXI not later than 1:00 P.M. (New York City time), on the date of suchproposed funding of such Purchase Account Deposit.  Each such Notice of Committed Investor Purchase shall specify (i)the aggregate amount of such Purchase Account Deposit (which shall equal suchCommitted Investor's Commitment minus the Aggregate Invested Amount ofReceivable Interests owned by it, whether hereunder or pursuant to theLiquidity Agreement) and (ii) the requested date of such Purchase AccountDeposit (which shall be a Business Day).Each such Non-Renewing Investor or Downgraded Investor, as the case maybe, shall, by 2:00 P.M. (New York City time) on such requested date, (i)establish such Person's Purchase Account and (ii) deposit such Person's ProRata Share of the aggregate amount of Purchase Account Deposits to be made onsuch date by the deposit of such amount in same day funds to such Person'sPurchase Account.  Each suchNon-Renewing Investor or Downgraded Investor, as the case may be, may, in itssole discretion, invest the proceeds and the proceeds of any investments withrespect to such Person's Purchase Account Deposit from time to time.

 

            (c)            At any and all times prior to the Investment MaturityDate for the Purchase Account Deposits, Seller shall have the right to convertall or any portion of such Purchase Account Deposits to a Purchase ofReceivable Interests.  Whenever Sellerwishes to convert all or any portion of the Purchase Account Deposits to aPurchase of Receivable Interests, the Servicer, on behalf of Seller, shalldeliver to the Administrative Agent, who shall in turn deliver to theapplicable Committed Investors, a Notice of Conversion (each, a "*Noticeof Conversion*") in substantially the form of Exhibit XII heretoby no later than 1:00 P.M. (New York City time) on the proposed PurchaseDate.  Each such Notice of Conversionshall meet the requirements set forth in Section 6.2.  Each Non-Renewing Investor or DowngradedInvestor, as the case may be, shall, before 3:00 P.M. (New York City time) onthe proposed date of such conversion, subject to the applicable conditions setforth in Article VI, withdraw from its Purchase Account and makeavailable to Seller the aggregate amount requested to be converted intoReceivable Interests on such date by wire transfer in accordance with writtenwire transfer instruction provided by Servicer, on behalf of Seller.

 

            (d)            From and after the date on which any Purchase AccountDeposit is made by any Non-Renewing Investor or Downgraded Investor, as thecase may be, and until the earlier of (i)the assignment (with the consent of Seller (not to be unreasonably withheld or delayed))by such Non-Renewing Investor or Downgraded Investor, as the case may be, ofall of its rights pursuant to Section 12.1 and (ii) the Investment Maturity Date,all payments in respect of the Aggregate Invested Amount of the ReceivableInterests owned by such Non-Renewing Investor or Downgraded Investor, as thecase may be, (whether or not originally funded from such Person's PurchaseAccount) shall be made by depositing the related funds into such Purchase Account,whereupon such portion of such Receivable Interests shall be deemed to havebeen converted into a Purchase Account Deposit to the extent of the payment ofsuch Aggregate Invested Amount and available for conversion to Purchasespursuant to Section 4.7(c).  Foravoidance of doubt, if a Downgraded Investor becomes a Non-Renewing Investor,the Purchase Account Deposit of such Committed Investor shall remain availablefor Purchases pursuant to Section 4.6(c) until the Investment MaturityDate applicable to a Non-Renewing Investor.In addition, if at any time a Committed Investor is both a Non-RenewingInvestor and a Downgraded Investor, such Committed Investor is obligated tomake only one Purchase Account Deposit which shall be in the amount describedin Section 4.7(b).

 

            (e)            Upon the earlier of (i)the assignment by such Non-Renewing Investor or Downgraded Investor, as thecase may be, of all of its rights pursuant to Section 12.1 and (ii) theInvestment Maturity Date, all funds then held in the Purchase Accounts (aftergiving effect to any Purchases to be made on such date) shall be paid by suchPerson to its own account, and thereafter all payments in respect of theInvested Amount of all Receivable Interests owned by such Person shall be paiddirectly to such Person in accordance with the terms of this Agreement. Inaddition to the foregoing, if the Commitment of such Person is reduced in partpursuant to Section 1.3 or by reason of a partial assignment pursuant toSection 12.1 (with the consent of Seller (not to be unreasonablywithheld or delayed)), then, in either such event, such Person shall pay to itsown account an amount of funds then held in the Purchase Account equal to theamount of such partial reduction.  Uponthe occurrence of the Investment Maturity Date, all funds in each PurchaseAccount shall be immediately paid to the related Committed Investor.

 

            (f)            Each Non-Renewing Investor or Downgraded Investor, as thecase may be, shall pay to its own account on behalf of the applicable partyunder the definition of Purchase Account (the "*Purchase AccountParty*"), as interest on any Purchase Account Deposit, an amountequal to the amount of all realized interest and/or other income earned fromthe investment of such Purchase Account Deposit pursuant to the last sentenceof Section 4.7(b) received in connection with the investment of funds ondeposit in the Purchase Account of such Non-Renewing Investor or DowngradedInvestor, as the case may be, such payment to be made on each Settlement Datecommencing after the date the relevant Purchase Account Deposit was made bysuch Non-Renewing Investor or Downgraded Investor, as the case may be, (or morefrequently as may be acceptable to the Purchase Account Party and suchNon-Renewing Investor or Downgraded Investor, as the case may be).  No other interest shall be payable to suchCommitted Investor in respect of such Purchase Account Deposit, and neitherSeller nor Servicer, or the Purchase Account Party shall have any liabilitytherefor.  Notwithstanding anythingcontained herein to the contrary, neither Seller nor Servicer, or the PurchaseAccount Party shall have any liability for any loss arising from any investmentor reinvestment made with funds on deposit in any Purchase Account.  The parties hereto agree to reasonablycooperate as requested by any such party (including the execution of suchdocuments reasonably requested by such party) in connection with the PurchaseDeposit Accounts, if any, established pursuant hereto.

 

            (g)            After the Commitment Termination Date applicable to aCommitted Investor, such Committed Purchaser shall have no obligation to makePurchases hereunder; it being understood and agreed that funds on deposit insuch Committed Investor's Purchase Deposit Account shall remain available tofund, on a revolving basis, such Committed Investor's Pro Rata Share ofPurchases during the Revolving Period.Blue Ridge may, in its sole discretion, make its Pro Rata Share ofPurchases during the Revolving Period.

 

# ARTICLE VREPRESENTATIONS ANDWARRANTIES

** **

## Section5.1            Representations and Warranties ofthe Seller Parties.

 

            Each Seller Party hereby represents and warrants to theAdministrative Agent, the Purchaser and the Committed Investor, as to itself,as of the date hereof and as of the date of each Incremental Purchase and thedate of each Reinvestment that:

 

            (a)            Existenceand Power.  Such SellerParty's jurisdiction of organization is correctly set forth in the preamble tothis Agreement.  Such Seller Party isduly organized under the laws of that jurisdiction and no other state orjurisdiction, and suchjurisdiction must maintain a public record showing the organization to havebeen organized.  Such Seller Party isvalidly existing and in good standing under the laws of its state oforganization.  Such Seller Party is dulyqualified to do business and is in good standing as a foreign entity, and hasand holds all organizational power and all governmental licenses,authorizations, consents and approvals required to carry on its business ineach jurisdiction in which its business is conducted except where the failureto so qualify or so hold could not reasonably be expected to have a MaterialAdverse Effect.

 

            (b)            Power and Authority; DueAuthorization, Execution and Delivery.  The execution and delivery by such Seller Party of this Agreementand each other Transaction Document to which it is a party, and the performanceof its obligations hereunder and thereunder and, in the case of Seller,Seller's use of the proceeds of Purchases made hereunder, are within itscorporate powers and authority and have been duly authorized by all necessarycorporate action on its part.  ThisAgreement and each other Transaction Document to which such Seller Party is aparty has been duly executed and delivered by such Seller Party.

 

            (c)            NoConflict.  The execution anddelivery by such Seller Party of this Agreement and each other TransactionDocument to which it is a party, and the performance of its obligationshereunder and thereunder do not contravene or violate (i) its certificate or articlesof incorporation or by-laws, (ii)any law, rule or regulation applicable to it, (iii) any restrictions under anyagreement, contract or instrument to which it is a party or by which it or anyof its property is bound, or (iv)any order, writ, judgment, award, injunction or decree binding on or affectingit or its property, and do not result in the creation or imposition of anyAdverse Claim on assets of such Seller Party or its Subsidiaries (except ascreated hereunder) except, in any case, where such contravention or violationcould not reasonably be expected to have a Material Adverse Effect; and notransaction contemplated hereby requires compliance with any bulk sales act orsimilar law.

 

            (d)            Governmental Authorization.  Other than the filing of the financingstatements required hereunder, no authorization or approval or other action by,and no notice to or filing with, any governmental authority or regulatory bodyis required for the due execution and delivery by such Seller Party of thisAgreement and each other Transaction Document to which it is a party and theperformance of its obligations hereunder and thereunder.

 

            (e)            Actions, Suits.  There are no actions, suits or proceedingspending, or to the best of such Seller Party's knowledge, threatened, againstor affecting such Seller Party, or any of its properties, in or before anycourt, arbitrator or other body, that could reasonably be expected to have aMaterial Adverse Effect.  Such SellerParty is not in default with respect to any order of any court, arbitrator orgovernmental body.

 

            (f)            Binding Effect.  This Agreement and each other TransactionDocument to which such Seller Party is a party constitute the legal, valid andbinding obligations of such Seller Party enforceable against such Seller Partyin accordance with their respective terms, except as such enforcement may belimited by applicable bankruptcy, insolvency, reorganization or other similarlaws relating to or limiting creditors' rights generally and by generalprinciples of equity (regardless of whether enforcement is sought in aproceeding in equity or at law).

 

            (g)            Accuracy of Information.  All information heretofore furnished by suchSeller Party or any of its Affiliates to the Administrative Agent, thePurchaser or any Committed Investor for purposes of or in connection with thisAgreement, any of the other Transaction Documents or any transactioncontemplated hereby or thereby is, and all such information hereafter furnishedby such Seller Party or any of its Affiliates to the Administrative Agent, thePurchaser or any Committed Investor will be, true and accurate in everymaterial respect on the date such information is stated or certified and doesnot and will not contain any material misstatement of fact or omit to state amaterial fact or any fact necessary to make the statements contained thereinnot misleading.

 

            (h)            Use of Proceeds.  No proceeds of any Purchase hereunder willbe used (i)for a purpose that violates, or would be inconsistent with, (A) Section7.2(e) of this Agreement or (B) Regulation T, U or X promulgated by theBoard of Governors of the Federal Reserve System from time to time or (ii) toacquire any security in any transaction which is subject to Section 12, 13 or14 of the Securities Exchange Act of 1934, as amended.

 

            (i)            Good Title.  Seller is the legal and beneficial owner ofthe Receivables and Related Security with respect thereto, free and clear ofany Adverse Claim, except as created by the Transaction Documents.  There have been duly filed all financingstatements or other similar instruments or documents necessary under the UCC(or any comparable law) of all appropriate jurisdictions to perfect Seller'sownership interest in each Receivable, its Collections and the RelatedSecurity.

 

            (j)            Perfection.  This Agreement is effective to create avalid security interest in favor of the Administrative Agent for the benefit ofthe Secured Parties in the Purchased Assets to secure payment of the AggregateUnpaids, free and clear of any Adverse Claim except as created by the TransactionsDocuments.  There have been duly filedall financing statements or other similar instruments or documents necessaryunder the UCC (or any comparable law) of all appropriate jurisdictions toperfect the Administrative Agent's, for the benefit of the Secured Parties,security interest in the Purchased Assets.Such Seller Party's jurisdiction of organization is a jurisdiction whoselaw generally requires information concerning the existence of a nonpossessorysecurity interest to be made generally available in a filing, record orregistration system as a condition or result of such a security interest'sobtaining priority over the rights of a lien creditor which respect tocollateral.

 

            (k)            Places of Business andLocations of Records.  Theprincipal places of business and chief executive office of such Seller Partyand the offices where it keeps all of its Records are located at theaddress(es) listed on Exhibit III or such other locations of which theAdministrative Agent has been notified in accordance with Section 7.2(a)in jurisdictions where all action required by Section 13.3(a) has beentaken and completed.  Seller's FederalEmployer Identification Number is correctly set forth on Exhibit III.

 

            (l)            Collections.  The conditions and requirements set forth inSection 7.1(j) and Section 8.2 have at all times been satisfiedand duly performed.  The names,addresses and jurisdictions of organization of all Collection Banks, togetherwith the account numbers of the Blocked Accounts of Seller at each CollectionBank and the post office box number of each Lock-Box, are listed on ExhibitIV.  Seller has not granted anyPerson, other than the Administrative Agent as contemplated by this Agreement,dominion and control of any Lock-Box or Blocked Account, or the right to takedominion and control of any such Lock-Box or Blocked Account at a future timeor upon the occurrence of a future event.

 

            (m)            Material Adverse Effect.  (i)The initial Servicer represents and warrants that since March 31, 2001, no event has occurred that would have a materialadverse effect on the financial condition or operations of the initial Servicerand its Subsidiaries or the ability of the initial Servicer to perform itsobligations under this Agreement, and (ii)Seller represents and warrants that since the date of this Agreement, no eventhas occurred that would have a material adverse effect on (A) the financialcondition or operations of Seller, (B) the ability of Seller to perform itsobligations under the Transaction Documents, or (C) the collectibility of theReceivables generally or any material portion of the Receivables.

 

            (n)            Names.  The name in which Seller has executed thisAgreement is identical to the name of Seller as indicated on the public recordof its state of organization which shows Seller to have been organized.  In the past five (5) years, Seller has not used anycorporate names, trade names or assumed names other than the name in which ithas executed this Agreement.

 

            (o)            Ownership of Seller.****Except as provided in the Stock PledgeAgreement effective June 29, 2001 between the Performance Guarantor andWachovia Bank, N.A**.,**as Collateral Agent (as defined in the CreditAgreement), the Performance Guarantorowns, directly or indirectly, 100% of the issued and outstanding capitalstock of Seller, free and clear of any Adverse Claim.  Such capital stock is validly issued, fully paid andnonassessable, and there are no options, warrants or other rights to acquiresecurities of Seller.

 

            (p)            Not a Holding Company or anInvestment Company.  Such SellerParty is not a "holding company" or a "subsidiary holding company" of a"holding company" within the meaning of the Public Utility Holding Company Actof 1935, as amended, or any successor statute.Such Seller Party is not an "investment company" within the meaning ofthe Investment Company Act of 1940, as amended, or any successor statute.

 

            (q)Compliance with Law.  Such Seller Party has complied in allrespects with all applicable laws, rules, regulations, orders, writs,judgments, injunctions, decrees or awards to which it may be subject, exceptwhere the failure to so comply could not reasonably be expected to have aMaterial Adverse Effect.  EachReceivable, together with the Contract related thereto, does not contravene anylaws, rules or regulations applicable thereto (including, without limitation,laws, rules and regulations relating to truth in lending, fair credit billing,fair credit reporting, equal credit opportunity, fair debt collection practicesand privacy), and no part of such Contract is in violation of any such law,rule or regulation, except where such contravention or violation could notreasonably be expected to have a Material Adverse Effect.

 

            (r)            Compliance with Credit andCollection Policy.  Such SellerParty has complied in all material respects with the Credit and CollectionPolicy with regard to each Receivable and the related Contract, and has notmade any change to such Credit and Collection Policy, except for such changesmade in accordance with Section 7.1(a)(vii).

 

            (s)            Payments to Originator.  With respect to each Receivable transferredto Seller under the Receivables Sale Agreement, Seller has given reasonablyequivalent value to the Originator in consideration therefor and such transferwas not made for or on account of an antecedent debt.  No transfer by the Originator of any Receivable under theReceivables Sale Agreement is or may be voidable under any section of theBankruptcy Reform Act of 1978 (11 U.S.C. Sec. 101 *et seq.*), as amended.

 

            (t)            Enforceability of Contracts.  Each Contract with respect to eachReceivable is effective to create, and has created, a legal, valid and bindingobligation of the related Obligor to pay the Outstanding Balance of theReceivable created thereunder and any accrued interest thereon, enforceableagainst the Obligor in accordance with its terms, except as such enforcementmay be limited by applicable bankruptcy, insolvency, reorganization or othersimilar laws relating to or limiting creditors' rights generally and by generalprinciples of equity (regardless of whether enforcement is sought in aproceeding in equity or at law).

 

            (u)            Eligible Receivables.  Each Receivable included in the Net PoolBalance as an Eligible Receivable on the date of any Monthly Report was anEligible Receivable on such date.

 

            (v)            Purchase Limit and MaximumReceivable Interests.Immediately after giving effect to each Incremental Purchase hereunder,the Aggregate Invested Amount is less than or equal to the Purchase Limit andthe aggregate of the Receivable Interests does not exceed 100%.

 

            (w)            Accounting.  The manner in which such Seller Partyaccounts for the transactions contemplated by this Agreement and theReceivables Sale Agreement does not jeopardize the true sale analysis.

 

            (x)            Taxes.Such Seller Party has filed all tax returns and reports required by lawto be filed by it and has paid all taxes and governmental charges due andowing, except any such taxes which are not yet owing or are being diligentlycontested in good faith by appropriate proceedings and for which adequatereserves in accordance with GAAP have been set aside on its books.

 

# ARTICLE VICONDITIONS OF PURCHASES

 

## Section 6.1            Conditions Precedent toEffectiveness.

 

            Theeffectiveness of this Agreement is subject to the conditions precedent that (a) the Administrative Agentshall have received on or before the date of such Purchase those documentslisted on Schedule A and (b) the Administrative Agentshall have received all fees and expenses required to be paid on such datepursuant to the terms of this Agreement and the Fee Letter.

 

## Section6.2            Conditions Precedent to AllPurchases and Reinvestments.

 

            EachIncremental Purchase and each Reinvestment shall be subject to the furtherconditions precedent that (a) in the case of each suchPurchase:  (i) the Servicer shall havedelivered to the Administrative Agent on or prior to the date of such Purchase,in form and substance satisfactory to the Administrative Agent, all MonthlyReports as and when due under Section 8.5 and (ii) upon the AdministrativeAgent's request, the Servicer shall have delivered to the Administrative Agentat least three (3) days prior to such Purchase an interim Monthly Reportshowing the amount of Eligible Receivables; (b) the Administrative Agentshall have received no later than 30 days after the date hereof executed BlockedAccount Agreements with each Blocked Account Bank and such other approvals,opinions or documents as it may reasonably request and (c) on each Purchase Date, thefollowing statements shall be true (and acceptance of the proceeds of suchIncremental Purchase or Reinvestment shall be deemed a representation andwarranty by Seller that such statements are then true):

 

                        (i)            the representations and warrantiesset forth in Section 5.1 are true and correct on and as of the date ofsuch Incremental Purchase or Reinvestment as though made on and as of suchPurchase Date;

 

                        (ii)            no event has occurred and iscontinuing, or would result from such Incremental Purchase or Reinvestment,that will constitute an Amortization Event, and no event has occurred and iscontinuing, or would result from such Incremental Purchase or Reinvestment,that would constitute an Unmatured Amortization Event; and

 

                        (iii)            the Aggregate Invested Amount doesnot exceed the Purchase Limit and the aggregate Receivable Interests do notexceed 100%.

 

It is expressly understood that each Reinvestment shall,unless otherwise directed by the Administrative Agent on behalf of thePurchaser and the Committed Investors, occur automatically on each day that theServicer shall receive any Collections without the requirement that any furtheraction be taken on the part of any Person and notwithstanding the failure ofSeller to satisfy any of the foregoing conditions precedent in respect of suchReinvestment.  The failure of Seller tosatisfy any of the foregoing conditions precedent in respect of anyReinvestment shall give rise to a right of the Administrative Agent, whichright may be exercised at any time on demand of the Administrative Agent, torescind the related purchase and direct Seller to pay to the AdministrativeAgent's Account, for the benefit of the Purchaser and the Committed Investors,an amount equal to the Collections prior to the Facility Termination Date thatshall have been applied to the affected Reinvestment.

 

# ARTICLE VIICOVENANTS

 

## Section 7.1            Affirmative Covenants of theSeller Parties.

 

            Until the date on which the Aggregate Unpaids have beenindefeasibly paid in full and this Agreement terminates in accordance with itsterms, each Seller Party hereby covenants, as to itself, as set forth below:

 

            (a)            FinancialReporting.  The PerformanceGuarantor will maintain, for itself and each of its Subsidiaries, a system ofaccounting established and administered in accordance with GAAP, and furnish orcause to be furnished to the Administrative Agent:

 

                        (i)            Annual Reporting.  Within 90 days after the close of its FiscalYear, (A) audited, financial statements (which shall include balance sheets,statements of income and statements of cash flows) for the PerformanceGuarantor and its Consolidated Subsidiaries for such Fiscal Year setting forthin comparative form corresponding figures from the preceding Fiscal Year andcertified by Deloitte & Touche LLP or by any other nationally recognizedindependent public accountants, which certifications shall be free ofexceptions and qualifications not acceptable to the Administrative Agent, and(B) separate unaudited financial statements for the Seller consisting of atleast a balance sheet and a statement of income for such year, setting forth incomparative form corresponding figures for the preceding Fiscal Year andcertified by the Seller's chief financial officer.

 

                        (ii)            Quarterly Reporting.  Within 45 days after the close of the firstthree (3) quarterly periods of its fiscal year, (A) balance sheets of thePerformance Guarantor and its Consolidated Subsidiaries as at the close of eachsuch period and a statement of income and a statement of cash flows for eachsuch Person for the period from the beginning of such Fiscal Year to the end ofsuch Fiscal Quarter and (B) separate financial statements of Seller consisting ofat least a balance sheet as at the close of such quarter and for the periodfrom the beginning of the fiscal year to the close of such quarter, allcertified by the Performance Guarantor's or Seller's chief financial officer,as the case may be.

 

                        (iii)            Compliance Certificate.  Together with the financial statementsrequired hereunder, a compliance certificate in substantially the form of ExhibitV signed by the Performance Guarantor's Authorized Officer and dated thedate of such annual financial statement or such quarterly financial statement,as the case may be.

 

                        (iv)            Shareholders Statements andReports.  Promptly upon thefurnishing thereof to the shareholders of the Performance Guarantor or itsSubsidiaries copies of all financial statements, reports and proxy statementsso furnished.

 

                        (v)            S.E.C. Filings.  Promptly upon the filing thereof, copies ofall registration statements and annual, quarterly, monthly or other regularreports which the Performance Guarantor or its Subsidiaries or any of itsAffiliates files with the Securities and Exchange Commission.

 

                        (vi)            Copies of Notices.  Promptly upon its receipt of any notice,request for consent, financial statements, certification, report or othercommunication under or in connection with any Transaction Document from anyPerson other than the Administrative Agent, the Purchaser or any CommittedInvestor, copies of the same.

 

                        (vii)            Change in Credit and CollectionPolicy.  At least thirty (30) daysprior to the effectiveness of any material change in the Credit and CollectionPolicy, a notice (A) indicating such change and (B) if such proposed changewould be reasonably likely to adversely affect the collectibility of theReceivables or decrease the credit quality of any newly created Receivables,requesting the Administrative Agent's consent thereto.

 

                        (viii)            Other Information.  Promptly, from time to time, such otherinformation, documents, records or reports relating to the Receivables or thecondition or operations, financial or otherwise, of such Seller Party as theAdministrative Agent may from time to time reasonably request in order toprotect the interests of the Administrative Agent, for the benefit of theSecured Parties, under or as contemplated by this Agreement.

 

            (b)            Notices.  Such Seller Party will notify theAdministrative Agent in writing of any of the following promptly upon learningof the occurrence thereof, describing the same and, if applicable, the stepsbeing taken with respect thereto:

 

                        (i)            Amortization Events or UnmaturedAmortization Events.  The occurrenceof each Amortization Event and each Unmatured Amortization Event, by astatement of an Authorized Officer of such Seller Party.

 

                        (ii)            Judgments and Proceedings.  (A) (1) The entry of any judgment or decreeagainst the Performance Guarantor, the Servicer or any of their respective Subsidiaries if theaggregate amount of all judgments and decrees then outstanding against thePerformance Guarantor, the Servicer and theirrespective Subsidiaries exceeds $10,000,000 after deducting (I) theamount with respect to which the Performance Guarantor, the Servicer or anysuch Subsidiary, as the case may be, is insured and with respect to which theinsurer has assumed responsibility in writing, and (II) the amount for whichthe Performance Guarantor, the Servicer or any such Subsidiary is otherwiseindemnified if the terms of such indemnification are satisfactory to theAdministrative Agent, and (2) the institution of any litigation, arbitrationproceeding or governmental proceeding against the Performance Guarantor or theServicer which, individually or in the aggregate, could reasonably be expectedto have a Material Adverse Effect; and (B) the entry of any judgment or decreeor the institution of any litigation, arbitration proceeding or governmentalproceeding against Seller.

 

                        (iii)            Material Adverse Effect.  The occurrence of any event or conditionthat has had, or could reasonably be expected to have, a Material AdverseEffect.

 

                        (iv)            Termination Date.  The occurrence of the "Termination Date"under and as defined in the Receivables Sale Agreement.

 

                        (v)            Defaults Under Other Agreements.  The occurrence of a default or an event ofdefault under any other material financing arrangement pursuant to which suchSeller Party is a debtor or an obligor.

 

                        (vi)            Notices under Receivables SaleAgreement.  Copies of all noticesdelivered under the Receivables Sale Agreement.

 

                        (vii)            Downgrade of PerformanceGuarantor or Originator.  Anydowngrade in the rating of any Indebtedness of the Performance Guarantor orOriginator by S&P or Moody's, setting forth the Indebtedness affected andthe nature of such change.

 

            (c)            Compliancewith Laws and Preservation of Corporate Existence.  Such Seller Party will comply in allrespects with all applicable laws, rules, regulations, orders, writs,judgments, injunctions, decrees or awards to which it may be subject, exceptwhere the failure to so comply could not reasonably be expected to have aMaterial Adverse Effect.   Such SellerParty will preserve and maintain its corporate existence, rights, franchisesand privileges in the jurisdiction of its incorporation, and qualify and remainqualified in good standing as a foreign corporation in each jurisdiction whereits business is conducted, except where the failure to so preserve and maintainor qualify or remain qualified could not reasonably be expected to have aMaterial Adverse Effect.

 

            (d)            Audits.  Such Seller Party will furnish to theAdministrative Agent from time to time such information with respect to it andthe Receivables as the Administrative Agent may reasonably request.  Such Seller Party will, from time to timeduring regular business hours as requested by the Administrative Agent uponreasonable notice and at the sole cost of such Seller Party, permit theAdministrative Agent, or its agents or representatives (and shall cause theOriginator to permit the Administrative Agent or its agents orrepresentatives):  (i) toexamine and make copies of and abstracts from all Records in the possession orunder the control of such Person relating to the Purchased Assets, including,without limitation, the related Contracts, and (ii) to visit the offices andproperties of such Person for the purpose of examining such materials describedin clause (i) above, and to discuss matters relating to such Person'sfinancial condition or the Purchased Assets or any Person's performance underany of the Transaction Documents or any Person's performance under theContracts and, in each case, with any of the officers or employees of Seller orthe Servicer having knowledge of such matters (each of the foregoingexaminations and visits, a "*Review*"); provided, however,that, so long as noAmortization Event has occurred and is continuing, (A) the Seller Parties shallonly be responsible for the costs and expenses of one (1) Review in any onecalendar year, and (B) the Administrative Agent will not request more than two(2) Reviews in any one calendar year.

 

            (e)            Keepingand Marking of Records and Books.

 

                        (i)            The Servicer will (and will causethe Originator to) maintain and implement administrative and operatingprocedures (including, without limitation, an ability to recreate recordsevidencing Receivables in the event of the destruction of the originalsthereof), and keep and maintain all documents, books, records and otherinformation reasonably necessary or advisable for the collection of allReceivables (including, without limitation, records adequate to permit theimmediate identification of each new Receivable and all Collections of andadjustments to each existing Receivable).The Servicer will (and will cause the Originator to) give the AdministrativeAgent notice of any material change in the administrative and operatingprocedures referred to in the previous sentence.

 

                        (ii)            Such Seller Party will (and willcause the Originator to):  (A) on orprior to the date hereof, mark its master data processing records and otherbooks and records relating to the Receivables with a legend, acceptable to theAdministrative Agent, describing the Administrative Agent's security interest,for the benefit of the Secured Parties, in the Purchased Assets and (B) upon therequest of the Administrative Agent following the occurrence of an AmortizationEvent:  (x) mark each Contract with alegend describing the Administrative Agent's security interest and (y) deliverto the Administrative Agent all Contracts (including, without limitation, allmultiple originals of any such Contract constituting an instrument, acertificated security or chattel paper) relating to the Receivables.

 

            (f)            Compliancewith Contracts and Credit and Collection Policy.  Such Seller Party will (and will cause theOriginator to) timely and fully (i)perform and comply with all provisions, covenants and other promises requiredto be observed by it under the Contracts related to the Receivables, and (ii) complyin all respects with the Credit and Collection Policy in regard to eachReceivable and the related Contract.

 

            (g)            Performanceand Enforcement of Receivables Sale Agreement.  Seller will, and will require the Originatorto, perform each of their respective obligations and undertakings under andpursuant to the Receivables Sale Agreement, will purchase Receivablesthereunder in strict compliance with the terms thereof and will vigorouslyenforce the rights and remedies accorded to Seller under the Receivables SaleAgreement.  Seller will take all actionsto perfect and enforce its rights and interests (and the rights and interestsof the Administrative Agent, as Seller's assignee) under the Receivables SaleAgreement as the Administrative Agent may from time to time reasonably request,including, without limitation, making claims to which it may be entitled underany indemnity, reimbursement or similar provision contained in the ReceivablesSale Agreement.

 

            (h)            Ownership.  Seller will (or will cause the Originatorto) take all necessary action to (i)vest legal and equitable title to the Purchased Assets purchased under theReceivables Sale Agreement irrevocably in Seller, free and clear of any AdverseClaims (other than Adverse Claims in favor of the Administrative Agent, for thebenefit of the Secured Parties) including, without limitation, the filing ofall financing statements or other similar instruments or documents necessaryunder the UCC (or any comparable law) of all appropriate jurisdictions to perfectSeller's interest in such Purchased Assets and such other action to perfect,protect or more fully evidence the interest of Seller therein as theAdministrative Agent may reasonably request), and (ii) establish and maintain, infavor of the Administrative Agent, for the benefit of the Secured Parties, avalid and perfected first priority security interest in all Purchased Assets,free and clear of any Adverse Claims, including, without limitation, the filingof all financing statements or other similar instruments or documents necessaryunder the UCC (or any comparable law) of all appropriate jurisdictions toperfect the Administrative Agent's (for the benefit of the Secured Parties)security interest in the Purchased Assets and such other action to perfect,protect or more fully evidence the interest of the Administrative Agent for thebenefit of the Secured Parties as the Administrative Agent may reasonablyrequest.

 

            (i)            Reliance.  Seller acknowledges that the AdministrativeAgent, the Purchaser and the Committed Investors are entering into thetransactions contemplated by this Agreement in reliance upon Seller's identityas a legal entity that is separate from the Originator.  Therefore, from and after the date ofexecution and delivery of this Agreement, Seller shall take all reasonablesteps, including, without limitation, all steps that the Administrative Agent,the Purchaser or any Committed Investor may from time to time reasonablyrequest, to maintain Seller's identity as a separate legal entity and to makeit manifest to third parties that Seller is an entity with assets andliabilities distinct from those of the Originator and any Affiliates thereof (otherthan Seller) and not just a division of the Originator or any suchAffiliate.  Without limiting thegenerality of the foregoing and in addition to the other covenants set forthherein, Seller will:

 

                        (i)            conduct its own business in its ownname and require that all full-time employees of Seller, if any, identifythemselves as such and not as employees of the Originator (including, withoutlimitation, by means of providing appropriate employees with business oridentification cards identifying such employees as Seller's employees);

 

                        (ii)            compensate all employees,consultants and agents directly, from Seller's own funds, for services providedto Seller by such employees, consultants and agents and, to the extent anyemployee, consultant or agent of Seller is also an employee, consultant oragent of the Originator or any Affiliate thereof, allocate the compensation ofsuch employee, consultant or agent between Seller and the Originator or suchAffiliate, as applicable, on a basis that reflects the services rendered toSeller and the Originator or such Affiliate, as applicable;

 

                        (iii)            clearly identify its offices (bysignage or otherwise) as its offices and, if such office is located in theoffices of the Originator, Seller shall lease such office at a fair marketrent;

 

                        (iv)            have a separate telephone number,which will be answered only in its name and separate stationery and checks, ifit uses any, in its own name;

 

                        (v)            conduct all transactions with theOriginator and the Servicer (including, without limitation, any delegation ofits obligations hereunder as Servicer) strictly on an arm's-length basis,allocate all overhead expenses (including, without limitation, telephone andother utility charges) for items shared between Seller and the Originator onthe basis of actual use to the extent practicable and, to the extent suchallocation is not practicable, on a basis reasonably related to actual use;

 

                        (vi)            at all times have a Board ofDirectors consisting of three members, at least one member of which is anIndependent Director;

 

                        (vii)            observe all corporate formalities asa distinct entity, and ensure that all corporate actions relating to (A) theselection, maintenance or replacement of the Independent Director, (B) thedissolution or liquidation of Seller or (C) the initiation of, participationin, acquiescence in or consent to any bankruptcy, insolvency, reorganization orsimilar proceeding involving Seller, are duly authorized by unanimous vote ofits Board of Directors (including the Independent Director);

 

                        (viii)            maintain Seller's books and recordsseparate from those of the Originator and any Affiliate thereof and otherwisereadily identifiable as its own assets rather than assets of the Originator orany Affiliate thereof;

 

                        (ix)            prepare its financial statementsseparately from those of the Originator and insure that any consolidatedfinancial statements of the Originator or any Affiliate thereof that include Sellerand that are filed with the Securities and Exchange Commission or any othergovernmental agency have notes clearly stating that Seller is a separatecorporate entity and that its assets will be available first and foremost tosatisfy the claims of the creditors of Seller;

 

                        (x)            except as herein specificallyotherwise provided, maintain the funds or other assets of Seller separate from,and not commingled with, those of the Originator or any Affiliate thereof and onlymaintain bank accounts or other depository accounts to which Seller alone isthe account party, into which Seller and Servicer, for the account of Seller,make deposits and from which Seller alone (or the Administrative Agenthereunder) has the power to make withdrawals;

 

                        (xi)            pay all of Seller's operatingexpenses from Seller's own assets (except for certain payments by theOriginator or other Persons pursuant to allocation arrangements that complywith the requirements of this Section 7.1(i));

 

                        (xii)            operate its business and activitiessuch that:  it does not engage in anybusiness or activity of any kind, or enter into any transaction or indenture,mortgage, instrument, agreement, contract, lease or other undertaking, otherthan the transactions contemplated and authorized by this Agreement and theReceivables Sale Agreement; and does not create, incur, guarantee, assume orsuffer to exist any indebtedness or other liabilities, whether direct orcontingent, other than (1) as a result of the endorsement of negotiableinstruments for deposit or collection or similar transactions in the ordinarycourse of business, (2) the incurrence of obligations under this Agreement, (3)the incurrence of obligations, as expressly contemplated in the ReceivablesSale Agreement, to make payment to the Originator thereunder for the purchaseof Receivables from the Originator under the Receivables Sale Agreement, and(4) the incurrence of operating expenses in the ordinary course of business ofthe type otherwise contemplated by this Agreement;

 

                        (xiii)            maintain its corporate charter inconformity with this Agreement, such that it does not amend, restate, supplementor otherwise modify its Certificate of Incorporation or By-Laws in any respectthat would impair its ability to comply with the terms or provisions of any ofthe Transaction Documents, including, without limitation, Section 7.1(i)of this Agreement;

 

                        (xiv)            maintain the effectiveness of, andcontinue to perform under the Receivables Sale Agreement and the PerformanceUndertaking, such that it doesnot amend, restate, supplement, cancel, terminate or otherwise modify theReceivables Sale Agreement or the Performance Undertaking, or give any consent,waiver, directive or approval thereunder or waive any default, action, omissionor breach under the Receivables Sale Agreement or the Performance Undertakingor otherwise grant any indulgence thereunder, without (in each case) the priorwritten consent of the Administrative Agent;

 

                        (xv)            maintain its corporate separatenesssuch that it does not merge or consolidate with or into, or convey, transfer,lease or otherwise dispose of (whether in one transaction or in a series oftransactions, and except as otherwise contemplated herein) all or substantiallyall of its assets (whether now owned or hereafter acquired) to, or acquire allor substantially all of the assets of, any Person, nor at any time create,have, acquire, maintain or hold any interest in any Subsidiary.

 

                        (xvi)            maintain at all times the RequiredCapital Amount (as defined in the Receivables Sale Agreement) and refrain frommaking any dividend, distribution, redemption of capital stock or payment ofany subordinated indebtedness which would cause the Required Capital Amount tocease to be so maintained; and

 

                        (xvii)            take such other actions as arenecessary on its part to ensure that the facts and assumptions set forth in theopinion issued by Riddell Williams P.S.counsel for Seller, inconnection with the closing or initial Purchase under this Agreement andrelating to substantive consolidation issues, and in the certificatesaccompanying such opinion, remain true and correct in all material respects atall times.

 

            (j)            Collections.  Such Seller Party will cause (i) allCollections to be sent to a Blocked Account or a Lock-Box and cause all suchCollections to be deposited in one of the Blocked Accounts, (ii)from  no later than 30 days after thedate hereof, each Blocked Account shall be subject at all times to a BlockedAccount Agreement that is in full force and effect, and (iii) aDelivery Order to be executed and delivered with respect to each Lock-Box.  In the event any payments relating to thePurchased Assets are remitted directly to Seller or any Affiliate of Seller,Seller will deposit (or will cause all such payments to be deposited) directlyto a Blocked Account within two (2) Business Days following receipt thereof,and, at all times prior to such remittance, Seller will itself hold or, ifapplicable, will cause such payments to be held in trust for the exclusivebenefit of the Administrative Agent, the Purchaser and the CommittedInvestors.  Seller will maintainexclusive ownership, dominion and control (subject to the terms of thisAgreement) of each Lock-Box and Blocked Account and shall not grant the rightto take dominion and control of any Lock-Box or Blocked Account at a futuretime or upon the occurrence of a future event to any Person, except to theAdministrative Agent as contemplated by this Agreement. 

 

            (k)            Taxes.  Such Seller Party will file all tax returnsand reports required by law to be filed by it and will promptly pay all taxesand governmental charges at any time owing, except any such taxes which are notyet delinquent or are being diligently contested in good faith by appropriateproceedings and for which adequate reserves in accordance with GAAP shall havebeen set aside on its books.  Sellerwill pay when due any taxes payable in connection with the Receivables,exclusive of taxes on or measured by income or gross receipts of theAdministrative Agent, the Purchaser or the Committed Investors.

 

            (l)            Paymentto the Originator.  Withrespect to any Receivable purchased by Seller from the Originator, such saleshall be effected under, and in strict compliance with the terms of, theReceivables Sale Agreement, including, without limitation, the terms relatingto the amount and timing of payments to be made to the Originator in respect ofthe purchase price for such Receivable.

 

## Section7.2            Negative Covenants of the SellerParties.

 

            Until the date on which the Aggregate Unpaids have beenindefeasibly paid in full and this Agreement terminates in accordance with itsterms, each Seller Party hereby covenants, as to itself, that:

 

            (a)            NameChange, Offices and Records.Such Seller Party will not change its name, identity or structure(within the meaning of any applicable enactment of the UCC), relocate its chief executive office atany time while the location of its chief executive office is relevant toperfection of the Administrative Agent's security interest, for the benefit ofthe Secured Parties, in the Receivables, Related Security andCollections, or change any office where Recordsare kept unless it shall have:  (i)given the Administrative Agent at least forty-five (45) days' prior writtennotice thereof and (ii)delivered to the Administrative Agent all financing statements, instruments andother documents requested by the Administrative Agent in connection with suchchange or relocation.

 

            (b)            Changein Payment Instructions to Obligors.  Except as may be required by the Administrative Agent pursuant toSection 8.2(b), such Seller Party will not add or terminate any bank asa Blocked Account Bank, or make any change in the instructions to Obligorsregarding payments to be made to any Lock-Box or Blocked Account, unless theAdministrative Agent shall have received, at least ten (10) days before theproposed effective date therefor, (i)written notice of such addition, termination or change and (ii) withrespect to the addition of a Blocked Account Bank or a Blocked Account orLock-Box, an executed Blocked Account Agreement with respect to the new BlockedAccount and an executed Delivery Order with respect to the new Lock-Box; provided,however, that the Servicer may make changes in instructions to Obligorsregarding payments if such new instructions require such Obligor to makepayments to another existing Blocked Account.

 

            (c)            Modificationsto Contracts and Credit and Collection Policy.  Such Seller Party will not, and will notpermit the Originator to, change the character of its business or make anychange to the Credit and Collection Policy except in compliance with theprovisions of Section 7.1(a)(vii).Except as provided in Section 8.2(d), the Servicer will not, andwill not permit the Originator to, extend, amend or otherwise modify the termsof any Receivable or any Contract related thereto other than in accordance withthe Credit and Collection Policy.

 

            (d)            Sales,Liens.  Seller will not sell,assign (by operation of law or otherwise) or otherwise dispose of, or grant anyoption with respect to, or create or suffer to exist any Adverse Claim upon(including, without limitation, the filing of any financing statement) or withrespect to, any of the Purchased Assets, or assign any right to receive incomewith respect thereto (other than, in each case, the creation of a securityinterest therein in favor of the Administrative Agent, for the benefit of theSecured Parties, as provided for herein), and Seller will defend the right,title and interest of the Secured Parties in, to and under any of the foregoingproperty, against all claims of third parties claiming through or under Selleror the Originator.  Seller will notcreate or suffer to exist any mortgage, pledge, security interest, encumbrance,lien, charge or other similar arrangement on any of its inventory.

 

            (e)            Useof Proceeds.  Seller will notuse the proceeds of the Purchases for any purpose other than (i)paying for Receivables and Related Security under and in accordance with theReceivables Sale Agreement, including without limitation, making payments onthe Subordinated Notes to the extent permitted thereunder and under theReceivables Sale Agreement, (ii)paying its ordinary and necessary operating expenses when and as due, and (iii) makingRestricted Junior Payments to the extent permitted under this Agreement.

 

            (f)            TerminationDate Determination.  Sellerwill not designate the Termination Date, or send any written notice to theOriginator in respect thereof, without the prior written consent of theAdministrative Agent, except with respect to the occurrence of such TerminationDate arising pursuant to Section 5.1(d) of the Receivables Sale Agreement.

 

            (g)            RestrictedJunior Payments.  Seller willnot make any Restricted Junior Payment if after giving effect thereto, Seller'sNet Worth (as defined in the Receivables Sale Agreement) would be less than theRequired Capital Amount (as defined in the Receivables Sale Agreement).  From and after the occurrence of anUnmatured Amortization Event, Seller will not make any Restricted JuniorPayment.

            (h)            SellerIndebtedness.  Seller willnot incur or permit to exist any Indebtedness or liability on account ofdeposits except:  (i) theAggregate Unpaids, (ii)the Subordinated Loans (as defined in the Receivables Sale Agreement, and (iii) othercurrent accounts payable arising in the ordinary course of business and notoverdue.

 

            (i)            Prohibitionon Additional Negative Pledges.No Seller Party will enter into or assume any agreement (other than thisAgreement and the other Transaction Documents) prohibiting the creation orassumption of any Adverse Claim upon the Purchased Assets except ascontemplated by the Transaction Documents, or otherwise prohibiting orrestricting any transaction contemplated hereby or by the other TransactionDocuments, and no Seller Party will enter into or assume any agreement creatingany Adverse Claim upon the Subordinated Notes (as defined in the ReceivablesSale Agreement).

 

            (j)            NetPool Balance.  At no time prior tothe Facility Termination Date shall Seller permit the Net Pool Balance to beless than an amount equal to the sum of (i)the Aggregate Invested Amount and (ii)the Required Reserve.

 

            (k)            Prohibition on Additional Activities.  The Seller shall not engage in anyactivities other than those contemplated by this Agreement and the TransactionDocuments as such other activities are reasonably incidental hereto andthereto.

 

# ARTICLE VIIIADMINISTRATION ANDCOLLECTION

 

## Section 8.1            Designation of Servicer.

 

            (a)            The servicing, administration andcollection of the Receivables shall be conducted by such Person (the "*Servicer*") sodesignated from time to time in accordance with this Section 8.1.  Originator.is hereby designated as, and hereby agrees to perform the duties andobligations of, the Servicer pursuant to the terms of this Agreement.  The Administrative Agent may at any timeafter the occurrence of an Amortization Event designate as Servicer any Personto succeed Originator or any successor Servicer, providedthatthe Rating AgencyCondition is satisfied.

 

            (b)            Without theprior written consent of the Administrative Agent and the Required LiquidityBanks, Originator shall not bepermitted to delegate any of its duties or responsibilities as Servicer to anyPerson other than (i)Seller and (ii)with respect to certain Defaulted Receivables, outside collection agencies inaccordance with its customary practices.Seller shall not be permitted to further delegate to any other Personany of the duties or responsibilities of the Servicer delegated to it by Originator.  If at any time the Administrative Agent shall designate asServicer any Person other than Originator,all duties and responsibilities theretofore delegated by Originator to Seller may, at thediscretion of the Administrative Agent, be terminated forthwith on notice givenby the Administrative Agent to Originatorand to Seller.

 

            (c)            Notwithstanding the foregoing subsection(b):  (i) Originator shall be and remain primarily liable to theAdministrative Agent, the Purchaser and each Committed Investor for the fulland prompt performance of all duties and responsibilities of the Servicerhereunder and (ii)the Administrative Agent, the Purchaser and each Committed Investor shall beentitled to deal exclusively with Originatorin matters relating to the discharge by the Servicer of its duties andresponsibilities hereunder.  None of theAdministrative Agent, the Purchaser or any Committed Investor shall be requiredto give notice, demand or other communication to any Person other than Originator in order for communicationto the Servicer and its sub-servicer or other delegate with respect thereto tobe accomplished.  Originator, at all times that it isthe Servicer, shall be responsible for providing any sub-servicer or otherdelegate of the Servicer with any notice given to the Servicer under thisAgreement.

 

## Section8.2    Duties of Servicer.

 

            (a)            The Servicer shall take or cause tobe taken all such actions as may be necessary or advisable to collect eachReceivable from time to time, all in accordance with applicable laws, rules andregulations, with reasonable care and diligence, and in accordance with theCredit and Collection Policy.

 

            (b)            The Servicer will instruct allObligors to pay all Collections directly to a Lock-Box or a BlockedAccount.  The Servicer shall cause to beestablished and maintained one or more Lock-Boxes and Blocked Accounts in thename of the Seller and shall effect a Blocked Account Agreement substantiallyin the form of Exhibit VI with each bank party to a Blocked Account atany time and shall cause a Delivery Order to be executed and delivered withrespect to each Lock-Box at any time.In the case of any remittances received in any Lock-Box or BlockedAccount that shall have been identified, to the satisfaction of the Servicer,to not constitute Collections or other proceeds of the Receivables or theRelated Security, the Servicer shall promptly remit such items to the Personidentified to it as being the owner of such remittances.  From and after the date the AdministrativeAgent delivers to any Blocked Account Bank a Collection Notice pursuant to Section8.3, or delivers to the US Postal Service a Delivery Order relating to aLock-Box, the Administrative Agent may request that the Servicer, and theServicer thereupon promptly shall instruct all Obligors with respect to theReceivables, to remit all payments thereon to a new depositary account orLock-Box specified by the Administrative Agent and, at all times thereafter,Seller and the Servicer shall not deposit or otherwise credit, and shall not permit any other Person to depositor otherwise credit to such new depositary account any cash or payment itemother than Collections or, if a Delivery Order has been presented with respectto a Lock-Box, Seller and Servicer shall not remove any receipts from suchLock-Box, but the Administrative Agent or its designee shall remove all suchreceipts from such Lock-Box.

 

            (c)            The Servicer shall administer theCollections in accordance with the procedures described herein and in ArticleII.  The Servicer shall set asideand hold in trust for the account of Seller, the Purchaser and the CommittedInvestors their respective shares of the Collections in accordance with ArticleII.  The Servicer shall, upon therequest of the Administrative Agent, segregate, in a manner acceptable to theAdministrative Agent, all cash, checks and other instruments received by itfrom time to time constituting Collections from the general funds of theServicer or Seller prior to the remittance thereof in accordance with ArticleII and, if an Airborne Downgrade Event has occurred, the AdministrativeAgent may, in its sole discretion, require the Seller and the Servicer toimplement such procedures for the payment of Collections, including, withoutlimitation, establishing lockboxes, directing Obligors to pay directly to suchlockboxes and related lockbox accounts and holding all Collections in a BlockedAccount.  If the Servicer shall berequired to segregate Collections pursuant to the preceding sentence, the Servicershall segregate and deposit with a bank designated by the Administrative Agentsuch allocable share of Collections of Receivables set aside for the Purchaserand the Committed Investors on the first Business Day following receipt by theServicer of such Collections, duly endorsed or with duly executed instrumentsof transfer.

 

            (d)            The Servicer may, in accordance withthe Credit and Collection Policy, extend the maturity of any Receivable oradjust the Outstanding Balance of any Receivable as the Servicer determines tobe appropriate to maximize Collections thereof; provided, however, that such extensionor adjustment shall not alter the status of such Receivable as a DelinquentReceivable or Defaulted Receivable or limit the rights of the AdministrativeAgent, the Purchaser or the Committed Investors under this Agreement.  Notwithstanding anything to the contrarycontained herein, the Administrative Agent shall have the absolute and unlimitedright after the earlier to occur of an Unmatured Amortization Event and anAmortization Event to direct the Servicer to commence or settle any legalaction with respect to any Receivable or to foreclose upon or repossess anyRelated Security.

 

            (e)            The Servicer shall hold in trust forSeller and the Administrative Agent, the Purchaser and the Committed Investorsall Records that (i)evidence or relate to the Receivables, the related Contracts and RelatedSecurity or (ii)are otherwise necessary or desirable to collect the Receivables and shall, assoon as practicable upon demand of the Administrative Agent, deliver or makeavailable to the Administrative Agent all such Records, at a place selected bythe Administrative Agent.  The Servicershall, as soon as practicable following receipt thereof turn over to Seller anycash collections or other cash proceeds received with respect to Indebtednessnot constituting Receivables.  TheServicer shall, from time to time at the request of the Administrative Agent,the Purchaser or any Committed Investor, furnish to each such Person (promptlyafter any such request) a calculation of the amounts set aside for thePurchaser and the Committed Investors pursuant to Article II.

 

            (f)            Any payment by an Obligor in respectof any indebtedness owed by it to Originator or Seller shall, except asotherwise specified by such Obligor or otherwise required by contract or lawand unless otherwise instructed by the Administrative Agent, be applied as aCollection of any Receivable of such Obligor (starting with the oldest suchReceivable) to the extent of any amounts then due and payable thereunder beforebeing applied to any other receivable or other obligation of such Obligor.

 

## Section8.3            Collection Notices and DeliveryOrders.

 

            The Administrative Agent is authorized at any time afterthe occurrence of an Unmatured Amortization Event or an Amortization Event todate and to deliver to the Blocked Account Banks the Collection Notices anddeliver to the US Postal Service the Delivery Orders.  Seller hereby transfers to the Administrative Agent for thebenefit the Secured Parties, effective when the Administrative Agent deliverssuch notice, the exclusive ownership and control of each Lock-Box and theBlocked Accounts.  In case anyauthorized signatory of Seller whose signature appears on a Blocked AccountAgreement or a Delivery Order shall cease to have such authority before thedelivery of such notice, such Collection Notice or Delivery Order, as the casemay be, shall nevertheless be valid as if such authority had remained inforce.  Seller hereby authorizes theAdministrative Agent, and agrees that the Administrative Agent shall beentitled (a) at any time after deliveryof the Collection Notices and/or the Delivery Orders, to endorse Seller's nameon checks and other instruments representing Collections, (b) at any time after theoccurrence of an Amortization Event, to enforce the Receivables, the relatedContracts and the Related Security, and (c) at any time after theoccurrence of an Unmatured Amortization Event or an Amortization Event, to takesuch action as shall be necessary or desirable to cause all cash, checks andother instruments constituting Collections of Receivables to come into thepossession of the Administrative Agent rather than Seller.

 

## Section8.4            Responsibilities of Seller.

 

            Anythingherein to the contrary notwithstanding, the exercise by the AdministrativeAgent, on behalf of the Secured Parties, of the Administrative Agent's rightshereunder shall not release the Servicer, the Originator or Seller from any oftheir duties or obligations with respect to any Receivables or under therelated Contracts.  The AdministrativeAgent and the Secured Parties shall have no obligation or liability withrespect to any Receivables or related Contracts, nor shall any of them beobligated to perform the obligations of Seller or the Originator thereunder.

 

## Section8.5            Monthly Reports.

 

            TheServicer shall prepare and forward to the Administrative Agent (a) on each Monthly ReportingDate or, following the occurrence of an Airborne Downgrade Event on such morefrequent basis (but no more frequently than weekly) as may be required by theAdministrative Agent in its sole discretion, a Monthly Report and an electronicfile of the data contained therein and (b) at such times as theAdministrative Agent shall request, a listing by Obligor of all Receivablestogether with an aging of such Receivables.

 

## Section8.6            Servicing Fee.

** **

            As compensation for the Servicer's servicing activitieson their behalf, the Servicer shall be paid the Servicing Fee in arrears oneach Settlement Date out of Collections.

 

# ARTICLE IXAMORTIZATION EVENTS

** **

## Section9.1            Amortization Events.

 

            Theoccurrence of any one or more of the following events shall constitute anAmortization Event:

 

            (a)            Any Seller Party or the PerformanceGuarantor shall fail to make any payment or deposit required to be made by itunder the Transaction Documents when due and, for any such payment or depositwhich is not in respect of principal, such failure continues for five (5)consecutive Business Days.

 

            (b)            Any representation, warranty,certification or statement made by the Performance Guarantor or any SellerParty in any Transaction Document to which it is a party or in any otherdocument delivered pursuant thereto shall prove to have been materiallyincorrect when made or deemed made.

 

            (c)            Any Seller Party shall fail to performor observe any covenant contained in Section 7.2 or 8.5 when due.

 

            (d)            Any Seller Party or the PerformanceGuarantor shall fail to perform or observe any other term, covenant oragreement under any Transaction Documents and such failure shall continue forten (10) days.

 

            (e)            Failure of Seller to pay anyIndebtedness (other than the Aggregate Unpaids) when due or the default by Sellerin the performance of any term, provision or condition contained in anyagreement under which any such Indebtedness was created or is governed, theeffect of which is to cause, or to permit the holder or holders of suchIndebtedness to cause, such Indebtedness to become due prior to its statedmaturity; or any such Indebtedness of Seller shall be declared to be due andpayable or required to be prepaid (other than by a regularly scheduled payment)prior to the date of maturity thereof.

 

            (f)            Failure of the Performance Guarantor or any of its Subsidiaries to payIndebtedness in excess of $5,000,000 (or $10,750 in the case of Seller) inaggregate principal amount (hereinafter, "*Material Indebtedness*") whendue, the effect of which is to cause, or to permit the holder or holders ofsuch Material Indebtedness to cause, such Material Indebtedness to become dueprior to its stated maturity; or any Material Indebtedness of the Performance Guarantor or any ofits Subsidiaries shall be declared to be due and payable or required to beprepaid (other than by a regularly scheduled payment) prior to the date ofmaturity thereof.

 

            (g)            An Event of Bankruptcy shall occurwith respect to the Performance Guarantor, any Seller Party or any of their respective Subsidiaries.

 

            (h)            As at the end of any CalculationPeriod:

 

                        (i)            the three-month rolling averageDelinquency Ratio shall exceed 2.75%,

 

                        (ii)            the three-month rolling averageDefault Ratio shall exceed 2.50%, or

 

                        (iii)            the three-month rolling averageDilution Ratio shall exceed 3.00%.

 

            (i)            A Change of Control.

 

            (j)            (i)One or more final judgments for the payment of money in an aggregate amount of$10,750 or more shall be entered against Seller or (ii) one or more final judgmentsfor the payment of money in an amount in excess of $10,000,000, individually or in the aggregate, shall be enteredagainst the Performance Guarantor, the Originator or any of their Subsidiaries(other than Seller) on claims not covered byinsurance or as to which the insurance carrier has denied its responsibility,and such judgment shall continue unsatisfied and in effect for thirty (30)consecutive days without a stay of execution.

 

            (k)            The Termination Date under the ReceivablesSale Agreement shall occur or the Originator shall for any reason cease totransfer, or cease to have the legal capacity to transfer, or otherwise beincapable of transferring Receivables to Seller under the Receivables SaleAgreement.

 

            (l)            This Agreement shall terminate inwhole or in part (except in accordance with its terms), or shall cease to beeffective or to be the legally valid, binding and enforceable obligation ofSeller, or any Obligor shall directly or indirectly contest in any manner sucheffectiveness, validity, binding nature or enforceability, or theAdministrative Agent, for the benefit of the Secured Parties, shall cease tohave a valid and perfected first priority security interest in the PurchasedAssets.

 

            (m)            On any Settlement Date, after givingeffect to the turnover of Collections by the Servicer on such date and theapplication thereof to the Aggregate Unpaids in accordance with this Agreement,(i)the Receivables Interest shall exceed 100% or (ii) the Aggregate Invested Amountshall exceed the Purchase Limit.

 

            (n)            The Performance Undertaking shallcease to be effective or to be the legally valid, binding and enforceableobligation of Performance Guarantor, or Performance Guarantor shall directly orindirectly contest in any manner such effectiveness, validity, binding natureor enforceability of its obligations thereunder.

 

            (o)            The Internal Revenue Service shallfile notice of a lien pursuant to Section 6323 of the Tax Code with regard toany of the Purchased Assets and such lien shall not have been released withinseven (7) days, or the PBGC shall, or shall indicate its intention to, filenotice of a lien pursuant to Section 4068 of ERISA with regard to any of thePurchased Assets.

 

            (p)            Any Plan of the PerformanceGuarantor or any of its ERISA Affiliates:

 

                        (i)            shall fail to be funded inaccordance with the minimum funding standard required by applicable law, theterms of such Plan, Section 412 of the Tax Code or Section 302 of ERISA for anyplan year or a waiver of such standard is sought or granted with respect tosuch Plan under applicable law, the terms of such Plan or Section 412 of theTax Code or Section 303 of ERISA; or

 

                        (ii)            is being, or has been, terminated orthe subject of termination proceedings under applicable law or the terms ofsuch Plan; or

 

                        (iii)            shall require the PerformanceGuarantor or any of its ERISA Affiliates to provide security under applicablelaw, the terms of such Plan, Section 401 or 412 of the Tax Code or Section 306or 307 of ERISA; or

 

                        (iv)            results in a liability to thePerformance Guarantor or any of its ERISA Affiliates under applicable law, theterms of such Plan, or Title IV ERISA,

 

and there shall result from any such failure, waiver,termination or other event a liability to the PBGC or a Plan that would have aMaterial Adverse Effect.

 

            (q)            Any event shall occur which (i)materially and adversely impairs the ability of the Originator to originateReceivables of a credit quality that is at least equal to the credit quality ofthe Receivables sold or contributed to Seller on the date of this Agreement or(ii)has, or could be reasonably expected to have a Material Adverse Effect.

 

            (r)            The Seller or theOriginator shall become an "investment company" within the meaning of theInvestment Company Act of 1940, as amended, or any successor statute.

 

            (s)            At the end of each Fiscal Quarter commencing with thefiscal quarter ending June 30, 2001, the Debt Service Coverage Ratio of thePerformance Guarantor and its Consolidated Subsidiaries for the Fiscal Quarterjust ended and the three (3) previous quarters shall fail to be greater thanthe minimum levels as set forth below opposite such Fiscal Quarter ended:

 
| **Fiscal Quarter  Ending:**                    | **Minimum Level**

  |
|------------------------------------------------|---------------------------|
| June 30, 2001                                  | 1.65 to 1.00              |
| September 30, 2001                             | 1.65 to 1.00              |
| December 31, 2001                              | 1.65 to 1.00              |
| March 31, 2002                                 | 1.65 to 1.00              |
| June 30, 2002                                  | 1.65 to 1.00              |
| September 30, 2002                             | 1.75 to 1.00              |
| December 31, 2002                              | 1.75 to 1.00              |
| March 31, 2003                                 | 1.75 to 1.00              |
| June 30, 2003                                  | 1.75  to 1.00             |
| September 30, 2003 and at all times thereafter | 1.90 to 1.00              |

 

            (t)          At the end of each of the Performance Guarantor's FiscalQuarters, commencing with the Fiscal Quarter ending June 30, 2001, the sum ofConsolidated EBITDA of the Performance Guarantor and its ConsolidatedSubsidiaries for the Fiscal Quarter just ended and the three (3) immediatelypreceding quarters shall fail to be greater than the minimum levels as setforth below opposite such Fiscal Quarter:

 
| **Fiscal Quarter  Ending:**                   | **Minimum Level**

  |
|-----------------------------------------------|---------------------------|
| June 30, 2001                                 | $125,000,000              |
| September 30, 2001                            | $125,000,000              |
| December 31, 2001                             | $125,000,000              |
| March 31, 2002                                | $140,000,000              |
| June 30, 2002                                 | $140,000,000              |
| September 30, 2002                            | $160,000,000              |
| December 31, 2002                             | $160,000,000              |
| March 31, 2003                                | $180,000,000              |
| June 30, 2003                                 | $180,000,000              |
| September 30, 2003                            | $200,000,000              |
| December 31, 2003 and at all times thereafter | $200,000,000              |

 

## Section9.2            Remedies.

 

            Upon theoccurrence and during the continuation of an Amortization Event, theAdministrative Agent may, or upon the direction of the Required Liquidity Banksshall, take any of the following actions:(a) replace the Person thenacting as Servicer if the Administrative Agent has not already done so, (b) declare the FacilityTermination Date to have occurred, whereupon Reinvestments shall immediatelyterminate and the Facility Termination Date shall forthwith occur, all withoutdemand, protest or further notice of any kind, all of which are herebyexpressly waived by each Seller Party; provided, however, thatupon the occurrence of an Event of Bankruptcy with respect to any Seller Party,the Facility Termination Date shall automatically occur, without demand,protest or any notice of any kind, all of which are hereby expressly waived byeach Seller Party, (c) deliver the CollectionNotices to the Blocked Account Banks, (d) exercise all rights andremedies of a secured party upon default under the UCC and other applicablelaws, (e) deliver the Delivery Ordersto the US Postal Service, and (f) notify Obligors of theAdministrative Agent's security interest, for the benefit of the SecuredParties, in the Receivables and other Purchased Assets.  The aforementioned rights and remedies shallbe without limitation, and shall be in addition to all other rights andremedies of the Administrative Agent, the Purchaser and the Committed Investorsotherwise available under any other provision of this Agreement, by operationof law, at equity or otherwise, all of which are hereby expressly preserved,including, without limitation, all rights and remedies provided under the UCC,all of which rights shall be cumulative.

 

# ARTICLE XINDEMNIFICATION

 

## Section10.1            Indemnities by the Seller Parties.

 

            Withoutlimiting any other rights that the Administrative Agent, the Purchaser or anyCommitted Investor may have hereunder or under applicable law, (a) Seller hereby agrees toindemnify (and pay upon demand to) the Administrative Agent, the Purchaser,each Committed Investor, each of the Liquidity Banks and each of the respectiveassigns, officers, directors, agents and employees of the foregoing (each, an "*IndemnifiedParty*") from and against any and all damages, losses, claims, taxes,liabilities, costs, expenses and for all other amounts payable, includingreasonable attorneys' fees (which attorneys may be employees of theAdministrative Agent or another Indemnified Party) and disbursements (all ofthe foregoing being collectively referred to as "*Indemnified Amounts*") awardedagainst or incurred by any of them arising out of or as a result of thisAgreement or the acquisition, either directly or indirectly, by the Purchaser,any Committed Investor or any Liquidity Bank of an interest in the Receivables,and (b) the Servicer hereby agreesto indemnify (and pay upon demand to) each Indemnified Party for IndemnifiedAmounts awarded against or incurred by any of them arising out of theServicer's activities as Servicer hereunder excluding, however, in all of theforegoing instances under the preceding clauses (a) and (b):

 

                        (i)            Indemnified Amounts to the extent afinal judgment of a court of competent jurisdiction holds that such IndemnifiedAmounts resulted from gross negligence or willful misconduct on the part of theIndemnified Party seeking indemnification; 

 

                        (ii)            Indemnified Amounts to the extentthe same includes losses in respect of Receivables that are uncollectible onaccount of the insolvency, bankruptcy or lack of creditworthiness of therelated Obligor; or

 

                        (iii)            taxes imposed by the jurisdiction inwhich such Indemnified Party's principal executive office is located, on ormeasured by the overall net income of such Indemnified Party to the extent thatthe computation of such taxes is consistent with the characterization for incometax purposes of the acquisition by the Purchaser or any Committed Investor ofReceivables as a loan or loans by the Purchaser or such Committed Investor toSeller secured by the Receivables, the Related Security, the Blocked Accountsand the Collections;

 

provided, however, that nothing contained in this sentence shalllimit the liability of any Seller Party or limit the recourse of the Purchaseror any Committed Investor to any Seller Party for amounts otherwisespecifically provided to be paid by such Seller Party under the terms of thisAgreement.  Without limiting thegenerality of the foregoing indemnification, Seller shall indemnify theAdministrative Agent, the Purchaser and the Committed Investors for IndemnifiedAmounts (including, without limitation, losses in respect of uncollectiblereceivables, regardless of whether reimbursement therefor would constituterecourse to Seller or the Servicer) relating to or resulting from:

 

                        (i)            any representation or warranty madeby any Seller Party or the Originator (or any officers of any such Person)under or in connection with this Agreement, any other Transaction Document orany other information or report delivered by any such Person pursuant hereto orthereto, which shall have been false or incorrect when made or deemed made;

 

                        (ii)            the failure by Seller, the Serviceror the Originator to comply with any applicable law, rule or regulation withrespect to any Receivable or Contract related thereto, or the nonconformity ofany Receivable or Contract included therein with any such applicable law, ruleor regulation or any failure of the Originator to keep or perform any of itsobligations, express or implied, with respect to any Contract;

 

                        (iii)            any failure of Seller, the Serviceror the Originator to perform its duties, covenants or other obligations inaccordance with the provisions of this Agreement or any other TransactionDocument;

 

                        (iv)            any products liability, personalinjury or damage suit, or other similar claim arising out of or in connectionwith merchandise, insurance or services that are the subject of any Contract orany Receivable;

 

                        (v)            any dispute, claim, offset ordefense (other than discharge in bankruptcy of the Obligor) of the Obligor tothe payment of any Receivable (including, without limitation, a defense basedon such Receivable or the related Contract not being a legal, valid and bindingobligation of such Obligor enforceable against it in accordance with itsterms), or any other claim resulting from the sale of the merchandise orservice related to such Receivable or the furnishing or failure to furnish suchmerchandise or services;

 

                        (vi)            the commingling of Collections ofReceivables at any time with other funds;

 

                        (vii)            any investigation, litigation orproceeding related to or arising from this Agreement or any other TransactionDocument, the transactions contemplated hereby, the use of the proceeds of anyPurchase, the Purchased Assets or any other investigation, litigation orproceeding relating to Seller, the Servicer or the Originator in which anyIndemnified Party becomes involved as a result of any of the transactionscontemplated hereby;

 

                        (viii)            any inability to litigate any claimagainst any Obligor in respect of any Receivable as a result of such Obligorbeing immune from civil and commercial law and suit on the grounds ofsovereignty or otherwise from any legal action, suit or proceeding;

 

                        (ix)            any Amortization Event of the typedescribed in Section 9.1(g);

 

                        (x)            any failure of Seller to acquire andmaintain legal and equitable title to, and ownership of any of the PurchasedAssets from the Originator, free and clear of any Adverse Claim (other than ascreated hereunder); or any failure of Seller to give reasonably equivalentvalue to the Originator under the Receivables Sale Agreement in considerationof the transfer by the Originator of any Receivable, or any attempt by anyPerson to void such transfer under statutory provisions or common law orequitable action;

 

                        (xi)            any failure to vest and maintainvested in the Administrative Agent for the benefit of the Secured Parties, orto transfer to the Administrative Agent for the benefit of the Secured Parties,a valid first priority perfected security interest in the Purchased Assets,free and clear of any Adverse Claim (except as created by the TransactionDocuments);

 

                        (xii)            the failure to have filed, or anydelay in filing, financing statements or other similar instruments or documentsunder the UCC of any applicable jurisdiction or other applicable laws withrespect to any Purchased Assets, and the proceeds thereof, whether at the timeof any Purchase or at any subsequent time;

 

                        (xiii)            any action or omission by any SellerParty which reduces or impairs the rights of the Administrative Agent, thePurchaser or  the Committed Investorswith respect to any Purchased Assets or the value of any Purchased Assets;

 

                        (xiv)            any attempt by any Person to voidany Purchase or the Administrative Agent's security interest, for the benefitof the Secured Parties, in the Purchased Assets under statutory provisions orcommon law or equitable action; and

 

                        (xv)            the failure of any Receivableincluded in the calculation of the Net Pool Balance as an Eligible Receivableto be an Eligible Receivable at the time so included.

 

## Section10.2            Increased Cost and Reduced Return.

 

            If after the date hereof, any Funding Source shall becharged any fee, expense or increased cost on account of the adoption of anyapplicable law, rule or regulation (including any applicable law, rule orregulation regarding capital adequacy) or any change therein, or any change inthe interpretation or administration thereof by any governmental authority,central bank or comparable agency charged with the interpretation oradministration thereof, or compliance with any request or directive (whether ornot having the force of law) of any such authority, central bank or comparableagency (a "*RegulatoryChange*"):  (a) that subjects any Funding Source toany charge or withholding on or with respect to any Funding Agreement or aFunding Source's obligations under a Funding Agreement, or on or with respectto the Receivables, or changes the basis of taxation of payments to any FundingSource of any amounts payable under any Funding Agreement (except for changesin the rate of tax on the overall net income of a Funding Source or taxes excludedby Section 10.1) or (b) that imposes, modifies ordeems applicable any reserve, assessment, insurance charge, special deposit orsimilar requirement against assets of, deposits with or for the account of aFunding Source, or credit extended by a Funding Source pursuant to a FundingAgreement or (c) that imposes any othercondition the result of which is to increase the cost to a Funding Source ofperforming its obligations under a Funding Agreement, or to reduce the rate ofreturn on a Funding Source's capital as a consequence of its obligations undera Funding Agreement, or to reduce the amount of any sum received or receivable bya Funding Source under a Funding Agreement or to require any payment calculatedby reference to the amount of interests or loans held or interest received byit, then, upon demand by the Administrative Agent, Seller shall pay to theAdministrative Agent, for the benefit of the relevant Funding Source, suchamounts charged to such Funding Source or such amounts to otherwise compensatesuch Funding Source for such increased cost or such reduction.  Within 30 days after receipt by theAdministrative Agent of written notice from any Funding Source that it hasdetermined that a Regulatory Change has occurred which will result in theimposition of any additional costs or expenses under this Section 10.2,the Administrative Agent shall provide written notice to Seller of suchRegulatory Change.

 

## Section10.3  Other Costs and Expenses.

 

            Sellershall pay to the Administrative Agent, the Purchaser and each CommittedInvestor on demand all costs and out-of-pocket expenses in connection with thepreparation, execution, delivery and administration of this Agreement, thetransactions contemplated hereby and the other documents to be deliveredhereunder, including without limitation, the cost of each such Person'sauditors auditing the books, records and procedures of Seller, reasonable feesand out-of-pocket expenses of legal counsel for the Purchaser, each CommittedInvestor and the Administrative Agent (which such counsel may be employees of thePurchaser, such Committed Investor or the Administrative Agent) with respectthereto and with respect to advising the Purchaser, any Committed Investor orthe Administrative Agent as to their respective rights and remedies under thisAgreement.  Seller shall pay to theAdministrative Agent on demand any and all costs and expenses of theAdministrative Agent, the Purchaser and the Committed Investors, if any,including reasonable counsel fees and expenses in connection with theenforcement of this Agreement and the other documents delivered hereunder andin connection with any restructuring or workout of this Agreement or suchdocuments, or the administration of this Agreement following an AmortizationEvent.  Seller shall reimburse thePurchaser and the Committed Investors on demand for all other costs andexpenses incurred by each such Person ("*Other Costs*"),including, without limitation, the cost of auditing such Person's books bycertified public accountants, the cost of rating the Commercial Paper by independentfinancial rating agencies, and the reasonable fees and out-of-pocket expensesof counsel for the Purchaser, any Committed Investor or any counsel for anyshareholder of any such Person with respect to advising such Person or suchshareholder as to matters relating to such Person's operations.

 

## Section10.4            Allocations.

 

            ThePurchaser and each Committed Investor shall allocate the liability for OtherCosts among Seller and other Persons with whom each such Person has enteredinto agreements to purchase interests in or finance receivables and otherfinancial assets ("*Other Customers*").  If any Other Costs are attributable to Seller and notattributable to any Other Customer, Seller shall be solely liable for suchOther Costs.  However, if Other Costsare attributable to Other Customers and not attributable to Seller, such OtherCustomer shall be solely liable for such Other Costs.  All allocations to be made pursuant to the foregoing provisionsof this Article X shall be made by the Purchaser and each CommittedInvestor, as the case may be, in its sole discretion and shall be binding onSeller and the Servicer.

 

# ARTICLE XITHE ADMINISTRATIVEAGENT

 

## Section11.1            Authorization and Action.

 

            ThePurchaser and each Committed Investor, on behalf of itself and its assigns,hereby designates and appoints Wachovia to act as its agent under the LiquidityAgreement, this Agreement and under each other Transaction Document, andauthorizes the Administrative Agent to take such actions as agent on its behalfand to exercise such powers as are delegated to the Administrative Agent by theterms of the Liquidity Agreement, this Agreement and the other TransactionDocuments together with such powers as are reasonably incidental thereto,including, without limitation, the power to perfect all security interestsgranted under the Transaction Documents.The provisions of Section 6 of the Liquidity Agreement are herebyincorporated by this reference with the same force and effect as if fully setforth herein, and shall govern the relationship between the AdministrativeAgent, on the one hand, and the Purchaser and the Committed Investors, on theother.

 

# ARTICLE XIIASSIGNMENTS ANDPARTICIPATIONS

 

## Section12.1            Assignments and Participations byBlue Ridge and the Committed Investors.

 

            (a)            Each of the parties hereto, on behalf of its successorsand assigns, hereby agrees and consents to the complete or partial sale by BlueRidge of all or any portion of its rights under, interest in, title to andobligations under this Agreement to the Committed Investors or the LiquidityBanks pursuant to the Liquidity Agreement, regardless of whether such sale constitutesan assignment or the sale of a participation in such rights and obligations.

 

            (b)            Each of the parties hereto, on behalf of its successorsand assigns, hereby agrees and consents to the complete or partial sale by anyCommitted Investor of all or any portion of its rights under, interest in,title to and obligations under this Agreement to an Eligible Assigneeregardless of whether such sale constitutes an assignment or the sale of aparticipation in such rights and obligations; provided, however, thatany partial sale by a Committed Investor shall be in a minimum amount of$25,000,000 or an integral multiple of $1,000,000 in excess thereof; providedfurther that any complete or partial sale by a Committed Investor shall, priorto an Amortization Event, be subject to the prior written consent of the Seller(which consent shall not be unreasonably withheld).  Each Committed Investor shall deliver to each of its assignees anassignment in substantially the form the Assignment and Acceptance, which shallbe duly executed by such Committed Investor, assigning any such rights under,interest in, title to and obligations under this Agreement to theassignee.  Upon any assignment pursuantto this Section 12.1(b) the respective assignee receiving suchassignment shall have all the rights of the assigning Committed Investorhereunder and all references to the Committed Investors shall be deemed toapply to such assignee.

 

## Section12.2            Prohibition on Assignments by SellerParties.

 

            No Seller Party may assign any of its rights orobligations under this Agreement without (a)the prior written consent ofthe Administrative Agent, the Purchaser and the Committed Investors and (b) satisfying the Rating AgencyCondition.

 

# ARTICLE XIIIMISCELLANEOUS

** **

## Section13.1            Waivers and Amendments.

 

            (a)            No failure or delay on the part ofthe Administrative Agent, the Purchaser or the Committed Investors inexercising any power, right or remedy under this Agreement shall operate as awaiver thereof, nor shall any single or partial exercise of any such power,right or remedy preclude any other further exercise thereof or the exercise ofany other power, right or remedy.  Therights and remedies herein provided shall be cumulative and nonexclusive of anyrights or remedies provided by law.  Anywaiver of this Agreement shall be effective only in the specific instance andfor the specific purpose for which given.

 

            (b)            No provision of this Agreement maybe amended, supplemented, modified or waived except in writing in accordancewith the provisions of this Section 13.1(b).  The Purchaser, the Committed Investors, Seller and theAdministrative Agent, at the direction of the Required Liquidity Banks, mayenter into written modifications or waivers of any provisions of thisAgreement, provided, however, that no such modification or waivershall:

 

                        (i)            without the consent of thePurchaser, the Committed Investors and each affected Liquidity Bank, (A) extendthe Liquidity Termination Date or the date of any payment or deposit ofCollections by Seller or the Servicer, (B) reduce the rate or extend the timeof payment of Yield or any CP Costs (or any component of Yield or CP Costs),(C) reduce any fee payable to the Administrative Agent for the benefit of the Purchaserand the Committed Investors, (D) change the Invested Amount of any ReceivableInterest, (E) amend, modify or waive any provision of the definition ofRequired Liquidity Banks or this Section 13.1(b), (F) consent to orpermit the assignment or transfer by Seller of any of its rights andobligations under this Agreement, (G) change the definition of "EligibleReceivable," "Loss Reserve," "Dilution Reserve," "Yield Reserve," "ServicingReserve," "Servicing Fee Rate," "Required Reserve" or "Required Reserve FactorFloor" or (H) amend or modify any defined term (or any defined term useddirectly or indirectly in such defined term) used in clauses (A) through(G) above in a manner that would circumvent the intention of therestrictions set forth in such clauses; or

 

                        (ii)            without the written consent of thethen Administrative Agent, amend, modify or waive any provision of thisAgreement if the effect thereof is to affect the rights or duties of suchAdministrative Agent,

 

and any materialamendment, waiver or other modification of this Agreement shall requiresatisfaction of the Rating Agency Condition.

 

## Section 13.2            Notices.

 

            Except as provided in this Section13.2, all communications and notices provided for hereunder shall be inwriting (including bank wire, telecopy or electronic facsimile transmission orsimilar writing) and shall be given to the other parties hereto at theirrespective addresses or telecopy numbers set forth on the signature pageshereof or at such other address or telecopy number as such Person may hereafterspecify for the purpose of notice to each of the other parties hereto.  Each such notice or other communication shallbe effective (a) if given by telecopy, upon the receipt thereof, (b) if given by mail, three (3) Business Daysafter the time such communication is deposited in the mail with first classpostage prepaid or (c) if given by any other means, when receivedat the address specified in this Section 13.2.  Seller hereby authorizes the Administrative Agent to effectPurchases and Tranche Period and Yield Rate selections based on telephonicnotices made by any Person whom the Administrative Agent in good faith believesto be acting on behalf of Seller.Seller agrees to deliver promptly to the Administrative Agent a writtenconfirmation of each telephonic notice signed by an authorized officer ofSeller; provided,however, the absence of such confirmation shall not affect thevalidity of such notice.  If the writtenconfirmation differs from the action taken by the Administrative Agent, therecords of the Administrative Agent shall govern absent manifest error.

 

## Section 13.3            Protection of AdministrativeAgent's Security Interest.

 

            (a)            Seller agrees that from time totime, at its expense, it will promptly execute and deliver all instruments anddocuments, and take all actions, that may be necessary or desirable, or thatthe Administrative Agent may request, to perfect, protect or more fullyevidence the Administrative Agent's security interest, for the benefit of theSecured Parties, in the Purchased Assets, or to enable the Administrative Agent,the Purchaser or the Committed Investors to exercise and enforce their rightsand remedies hereunder.  At any time,the Administrative Agent may, or the Administrative Agent may direct Seller orthe Servicer to, notify the Obligors ofReceivables, at Seller's expense, of the ownership or security interests of theAdministrative Agent, for the benefit of the Secured Parties, under thisAgreement and may also direct that payments of all amounts due or that becomedue under any or all Receivables be made directly to the Administrative Agentor its designee.  Seller or the Servicer(as applicable) shall, at the Administrative Agent's request, withhold theidentities of the Administrative Agent, the Purchaser and the CommittedInvestors in any such notification.

 

            (b)            If any Seller Party fails to performany of its obligations hereunder, the Administrative Agent, the Purchaser orthe Committed Investors may (but shall not be required to) perform, or causeperformance of, such obligations, and the Administrative Agent's, thePurchaser's or the Committed Investor's costs and expenses incurred inconnection therewith shall be payable by Seller as provided in Section 10.3.  Each Seller Party irrevocably authorizes theAdministrative Agent at any time and from time to time in the sole discretionof the Administrative Agent, and appoints the Administrative Agent as itsattorney-in-fact, to act on behalf of such Seller Party (i) toexecute on behalf of Seller as debtor and to file financing statementsnecessary or desirable in the Administrative Agent's sole discretion to perfectand to maintain the perfection and priority of the interest of AdministrativeAgent for the benefit of the Secured Parties in the Receivables and (ii) to filea carbon, photographic or other reproduction of this Agreement or any financingstatement with respect to the Receivables as a financing statement in suchoffices as the Administrative Agent in its sole discretion deems necessary ordesirable to perfect and to maintain the perfection and priority of theAdministrative Agent's security interest in the Purchased Assets, for thebenefit of the Secured Parties.  Thisappointment is coupled with an interest and is irrevocable.  From and after July 1, 2001:  (A) each of the Seller Parties herebyauthorizes the Administrative Agent to file financing statements and otherfiling or recording documents with respect to the Receivables and RelatedSecurity (including any amendments thereto, or continuation or terminationstatements thereof), without the signature or other authorization of suchSeller Party, in such form and in such offices as the Administrative Agentreasonably determines appropriate to perfect or maintain the perfection of thesecurity interest of the Administrative Agent, for the benefit of the SecuredParties, hereunder, (B) each of the Seller Parties acknowledges and agrees thatit is not authorized to, and will not, file financing statements or otherfiling or recording documents with respect to the Receivables or RelatedSecurity (including any amendments thereto, or continuation or terminationstatements thereof), without the express prior written approval by theAdministrative Agent, consenting to the form and substance of such filing orrecording document, and (C) each of the Seller Parties approves, authorizes andratifies any filings or recordings made by or on behalf of the Administrative Agentin connection with the perfection of the security interests in favor of Selleror the Administrative Agent.

 

## Section 13.4            Confidentiality.

 

            (a)            Eachof the Seller Parties shall maintain and shall cause each of its employees andofficers to maintain the confidentiality of this Agreement and the otherconfidential or proprietary information with respect to the AdministrativeAgent, the Purchaser and each Committed Investor and their respectivebusinesses obtained by it or them in connection with the structuring,negotiating and execution of the transactions contemplated herein, except thatsuch Seller Party and its officers and employees may disclose such informationto such Seller Party's external accountants and attorneys and as required byany applicable law or order of any judicial or administrative proceeding.

 

            (b)            Anythingherein to the contrary notwithstanding, each Seller Party hereby consents tothe disclosure of any nonpublic information with respect to it (i) tothe Administrative Agent, the Liquidity Banks, the Purchaser or any CommittedInvestor by each other, (ii)by the Administrative Agent, the Purchaser or any Committed Investor to anyprospective or actual assignee or participant of any of them and (iii) by theAdministrative Agent to any rating agency, Commercial Paper dealer or providerof a surety, guaranty or credit or liquidity enhancement to the Purchaser orany Committed Investor or any entity organized for the purpose of purchasing,or making loans secured by, financial assets for which Wachovia acts as theagent and to any officers, directors, employees, outside accountants andattorneys of any of the foregoing, providedthat each such Personis informed of the confidential nature of such information.  In addition, the Purchaser, any CommittedInvestor and the Administrative Agent may disclose any such nonpublicinformation pursuant to any law, rule, regulation, direction, request or orderof any judicial, administrative or regulatory authority or proceedings (whetheror not having the force or effect of law).

 

## Section 13.5            Bankruptcy Petition.

 

            Seller, the Servicer, theAdministrative Agent, each Committed Investor and each Liquidity Bank herebycovenants and agrees that, prior to the date that is one year and one day afterthe payment in full of all outstanding senior indebtedness of Blue Ridge, itwill not institute against, or join any other Person in instituting against,Blue Ridge any bankruptcy, reorganization, arrangement, insolvency orliquidation proceedings or other similar proceeding under the laws of theUnited States or any state of the United States.

 

## Section 13.6            Limitation of Liability.

 

            Except with respect to any claimarising out of the willful misconduct or gross negligence of the Purchaser, anyCommitted Investor, the Administrative Agent or any Liquidity Bank, no claimmay be made by any Seller Party or any other Person against the Purchaser, anyCommitted Investor, the Administrative Agent or any Liquidity Bank or theirrespective Affiliates, directors, officers, employees, attorneys or agents forany special, indirect, consequential or punitive damages in respect of anyclaim for breach of contract or any other theory of liability arising out of orrelated to the transactions contemplated by this Agreement, or any act,omission or event occurring in connection therewith; and each Seller Partyhereby waives, releases, and agrees not to sue upon any claim for any suchdamages, whether or not accrued and whether or not known or suspected to existin its favor.

 

## Section 13.7            CHOICE OF LAW.

 

            THIS AGREEMENT SHALL BE GOVERNED ANDCONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARDTO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF OTHER THAN SECTION 5-1401 OF THEGENERAL OBLIGATIONS LAW (EXCEPT IN THE CASE OF THE OTHER TRANSACTION DOCUMENTS,TO THE EXTENT OTHERWISE EXPRESSLY STATED THEREIN) AND EXCEPT TO THE EXTENT THATTHE PERFECTION OF THE OWNERSHIP INTEREST OF SELLER OR THE SECURITY INTEREST OFTHE ADMINISTRATIVE AGENT, FOR THE BENEFIT OF THE SECURED PARTIES, IN ANY OF THECOLLATERAL IS GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OFNEW YORK.

 

## Section 13.8            CONSENT TO JURISDICTION.

 

            EACH PARTY TO THIS AGREEMENT HEREBYIRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATESFEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK, IN ANY ACTION ORPROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENTEXECUTED BY SUCH PERSON PURSUANT TO THIS AGREEMENT, AND EACH SUCH PARTY HEREBYIRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAYBE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTIONIT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION ORPROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENTFORUM.  NOTHING HEREIN SHALL LIMIT THERIGHT OF THE ADMINISTRATIVE AGENT OR ANY PURCHASER TO BRING PROCEEDINGS AGAINSTANY SELLER PARTY IN THE COURTS OF ANY OTHER JURISDICTION.  ANY JUDICIAL PROCEEDING BY ANY SELLER PARTYAGAINST THE ADMINISTRATIVE AGENT, ANY PURCHASER OR ANY COMMITTED INVESTOR ORANY AFFILIATE OF THE ADMINISTRATIVE AGENT, ANY PURCHASER OR ANY COMMITTEDINVESTOR INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUTOF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BYSUCH SELLER PARTY PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT INNEW YORK, NEW YORK.

 

## Section 13.9            WAIVER OF JURY TRIAL.

 

            EACH PARTY HERETO HEREBY WAIVESTRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANYMATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUTOF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ANYSELLER PARTY PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHEDHEREUNDER OR THEREUNDER.

 

## Section 13.10            Integration; Binding Effect; Survival ofTerms.

 

            (a)            This Agreement and each otherTransaction Document contain the final and complete integration of all priorexpressions by the parties hereto with respect to the subject matter hereof andshall constitute the entire agreement among the parties hereto with respect tothe subject matter hereof superseding all prior oral or written understandings.

 

            (b)            This Agreement shall be binding uponand inure to the benefit of the parties hereto and their respective successorsand permitted assigns (including any trustee in bankruptcy).  This Agreement shall create and constitutethe continuing obligations of the parties hereto in accordance with its termsand shall remain in full force and effect until terminated in accordance withits terms; provided, however, that the rights and remedies withrespect to (i)any breach of any representation and warranty made by any Seller Party pursuantto Article V, (ii)the indemnification and payment provisions of Article X, and Sections13.4 and 13.5 shall be continuing and shall survive any terminationof this Agreement.

 

            (c)            Eachof the Seller Parties, the Purchaser, the Committed Investors and theAdministrative Agent hereby acknowledges and agrees that the Liquidity Banksare hereby made express third party beneficiaries of this Agreement and each ofthe other Transaction Documents.

 

## Section 13.11            Counterparts; Severability; SectionReferences.

 

            This Agreementmay be executed in any number of counterparts and by different parties heretoin separate counterparts, each of which when so executed shall be deemed to bean original and all of which when taken together shall constitute one and thesame Agreement.  Delivery of an executedcounterpart of a signature page to this Agreement by facsimile shall beeffective as delivery of a manually executed counterpart to thisAgreement.  Any provisions of thisAgreement which are prohibited or unenforceable in any jurisdiction shall, asto such jurisdiction, be ineffective to the extent of such prohibition orunenforceability without invalidating the remaining provisions hereof, and anysuch prohibition or unenforceability in any jurisdiction shall not invalidateor render unenforceable such provision in any other jurisdiction.  Unless otherwise expressly indicated, allreferences herein to "Article," "Section," "Schedule" or "Exhibit" shall meanarticles and sections of, and schedules and exhibits to, this Agreement.

 

## Section 13.12            Characterization.

 

            (a)            It is the intention of the partieshereto that each Purchase hereunder shall constitute and be treated as anabsolute and irrevocable sale, which Purchase shall provide the Purchaser andthe Committed Investors with the full benefits of ownership of the applicableReceivable Interest.  Except asspecifically provided in this Agreement, each sale of a Receivable Interesthereunder is made without recourse to Seller; provided, however,that (i)Seller shall be liable to the Purchaser, the Committed Investors and theAdministrative Agent for all representations, warranties, covenants andindemnities made by Seller pursuant to the terms of this Agreement, and (ii) suchsale does not constitute and is not intended to result in an assumption by thePurchaser, any Committed Investor or the Administrative Agent or any assigneethereof of any obligation of Seller or the Originator or any other personarising in connection with the Receivables, the Related Security, or therelated Contracts, or any other obligations of Seller or the Originator.

 

            (b)            In addition to any ownershipinterest which the Administrative Agent, the Purchaser or the CommittedInvestors may from time to time acquire pursuant hereto, Seller hereby grantsto the Administrative Agent, for the benefit of the Secured Parties, a validand perfected security interest in all of Seller's right, title and interestin, to and under all Receivables now existing or hereafter arising, theCollections, each Lock-Box, each Blocked Account, all Related Security, allother rights and payments relating to such Receivables, and all proceeds of anythereof prior to all other liens on and security interests therein to securethe prompt and complete payment of the Aggregate Unpaids.  The Administrative Agent, on behalf of theSecured Parties, shall have, in addition to the rights and remedies that it mayhave under this Agreement, all other rights and remedies provided to a securedcreditor under the UCC and other applicable law, which rights and remediesshall be cumulative.

 

 

[signature pages follow]

* *

 

            IN WITNESS WHEREOF,the parties hereto have caused this Agreement to be executed and delivered bytheir duly authorized officers or attorneys-in-fact as of the date hereof.

 

                                                            AIRBORNE CREDIT, INC.,

                                                            as Seller

 

                                                            By:            /s/Diane M. Hackler                                    

                                                            Name:   Diane M.Hackler                                    

                                                            Title:            VicePresident                                              

 

Address:

Airborne Credit, Inc.

3101 Western Avenue 

Seattle,WA 98121-1043

Telephone:(206) 281-1003

Telecopy:(206) 281-1444

 

                                                            AIRBORNE EXPRESS, INC.,

                                                            as Servicer

 

                                                            By:            /s/Diane M. Hackler                                    

                                                            Name:   Diane M.Hackler                                    

                                                            Title:            Treasurer                                             

 

Address:

Airborne Express, Inc.

3101 Western Avenue 

Seattle,WA 98121-1043

Telephone:(206) 281-1003

Telecopy:(206) 281-1444

 

 

                                                            BLUE RIDGE ASSET FUNDING CORPORATION

 

                                                            BY:            WACHOVIA BANK, N.A., 

                                                                        ITS ATTORNEY-IN-FACT

 

                                                            By:            /x/Brian Mellone                           

                                                            Name:            BrianMellone                                                

                                                            Title:            VicePresident                                              

 

Address:

Blue Ridge Asset FundingCorporation

c/o Wachovia Bank, N.A., asAdministrative Agent

100  North Main Street

Winston-Salem, NC 27150

Telephone: (336) 735-6097

Telecopy: (336) 735-6099

 

                                                            WACHOVIA BANK, N.A., 

                                                            as Administrative Agent

 

                                                            By:            /s/Kenny Karpowicz                               

                                                            Name:            KennyKarpowicz                               

                                                            Title:            VicePresident                                              

 

Address:

Wachovia Bank, N.A.

191 Peachtree Street, N.E.

Atlanta, Georgia 30303

Telephone:  (404) 332-1398

                                                            Telecopy:  (404)332-5152

 

                                                            WACHOVIA BANK, N.A., 

                                                            as Committed Investor

 

                                                            By:            /s/Kenny Karpowicz                               

                                                            Name:            KennyKarpowicz                               

                                                            Title:            VicePresident                                              

 

Address:

Wachovia Bank, N.A.

191 Peachtree Street, N.E.

Atlanta, Georgia 30303

Telephone:  (404) 332-1398

                                                            Telecopy:  (404)332-5152

 

Commitment:$250,000,000.

**EXHIBIT IDEFINITIONS**

** **

As used in this Agreement, the following terms shall havethe following meanings (such meanings to be equally applicable to both thesingular and plural forms of the terms defined):

 

"Additional Investor" has the meaning set forth in Section4.7(a).

 

"Adjusted Dilution Ratio" means, at any time, the rollingaverage of the Dilution Ratio for the twelve (12) Calculation Periods then mostrecently ended.

 

"Administrative Agent" has the meaning set forth in thepreamble to this Agreement.

 

"Administrative Agent's Account" means account#8735-098787 at Wachovia Bank, N.A., ABA #053100494.

 

"Adverse Claim" means a lien, security interest, chargeor encumbrance, or other right or claim in, of or on any Person's assets orproperties in favor of any other Person.

 

"Affiliate" means, with respect to any Person, any otherPerson directly or indirectly controlling, controlled by, or under direct orindirect common control with, such Person or any Subsidiary of suchPerson.  A Person shall be deemed tocontrol another Person if the controlling Person owns 10% or more of any classof voting securities of the controlled Person or possesses, directly orindirectly, the power to direct or cause the direction of the management orpolicies of the controlled Person, whether through ownership of stock, bycontract or otherwise.

 

"Aggregate Invested Amount" means, on any date ofdetermination, the aggregate Invested Amount of all Receivable Interestsoutstanding on such date.

 

"Aggregate Reduction" has the meaning specified in Section1.3.

 

"Aggregate Unpaids" means, at any time, an amount equalto the sum of (i) the Aggregate Invested Amount, plus (ii) all RecourseObligations (whether due or accrued) at such time.

 

"Agreement" means this Receivables Purchase Agreement, asit may be amended or modified and in effect from time to time.

 

"Airborne Downgrade Event"  means a downgrade of the long-term unsecured unsubordinated debtrating of the Performance Guarantor or the Originator to below BB by S&P orto below Ba2 by Moody's.

 

"Alternate Base Rate" means for any day, the rate *per annum* equal to the higher as of suchday of (i) the Prime Rate, or (ii) one-half of one percent (0.50%) above theFederal Funds Rate.  For purposes ofdetermining the Alternate Base Rate for any day, changes in the Prime Rate orthe Federal Funds Rate shall be effective on the date of each such change.

 

"Amendment Closing Date" means August 8, 2001.

 

"Amortization Event" has the meaning specified in ArticleIX.

 

"Assignment and Acceptance" means an assignment andacceptance entered into by a Committed Investor and an Eligible Assignee, andaccepted by the Administrative Agent, in substantially the form of ExhibitXIII.

 

"Authorized Officer" means, with respect to any Person,its president, corporate controller, treasurer, chief executive officer orchief financial officer.

 

"Bank of America Blocked Account" means that depositaryaccount number 1233386558 maintained in the name of the Seller with Bank ofAmerica and in which any Collections are collected or deposited.

 

"Bank of Boston Blocked Account" means thatdepositary account number 580-35308 maintained in the name of the Seller withBank of Boston and in which any Collections are collected or deposited.

 

"Blocked Account Agreement" means an agreementsubstantially in the form of Exhibit VI among the Originator, Servicer,Seller, the Administrative Agent and a Blocked Account Bank.

 

"Blocked Account Bank" means, at any time, any of thebanks holding one or more Blocked Accounts.

 

"Blocked Accounts" mean the Bank of America BlockedAccount, the Bank of Boston Blocked Account and the Wachovia Blocked Account.

 

"Blue Ridge" has the meaning set forth in the preamble tothis Agreement.

 

"Blue Ridge's Portion" means, on any date ofdetermination, the sum of the percentages represented by the ReceivableInterests.

 

"Broken Funding Costs" means for any Receivable Interestwhich: (i) has its Invested Amount reduced without compliance by Seller withthe notice requirements hereunder or (ii) does not become subject to anAggregate Reduction following the delivery of any Reduction Notice or (iii) isassigned by Blue Ridge to the Liquidity Banks under the Liquidity Agreement orterminated prior to the date on which it was originally scheduled to end; anamount equal to the excess, if any, of (A) the CP Costs or Yield (asapplicable) that would have accrued during the remainder of the Tranche Periodsor the tranche periods for Commercial Paper determined by the AdministrativeAgent to relate to such Receivable Interest (as applicable) subsequent to thedate of such reduction, assignment or termination (or in respect of clause(ii) above, the date such Aggregate Reduction was designated to occurpursuant to the Reduction Notice) of the Invested Amount of such ReceivableInterest if such reduction, assignment or termination had not occurred or suchReduction Notice had not been delivered, over (B) the sum of (x) to the extentall or a portion of such Invested Amount is allocated to another ReceivableInterest, the amount of CP Costs or Yield actually accrued during the remainderof such period on such Invested Amount for the new Receivable Interest, and (y)to the extent such Invested Amount is not allocated to another ReceivableInterest, the income, if any, actually received during the remainder of suchperiod by the holder of such Receivable Interest from investing the portion ofsuch Invested Amount not so allocated.All Broken Funding Costs shall be due and payable hereunder upon demand.

 

"Business Day" means any day on which banks are notauthorized or required to close in New York, New York, Atlanta, Georgia, orColumbus, Ohio, and The Depository Trust Company of New York is open forbusiness.  

 

"Calculation Period" means a calendar month.

 

"Change of Control" means (a) the acquisition by anyPerson, or two or more Persons acting in concert, of beneficial ownership(within the meaning of Rule 13d-3 of the Securities and Exchange Commissionunder the Securities Exchange Act of 1934) of 20% or more of the outstandingshares of voting stock of the Performance Guarantor or Originator, (b) as of any date, a majorityof the board of directors of the Performance Guarantor or Originator consistsof individuals who were not either (i)directors of the Performance Guarantor or Originator as of the correspondingdate of the previous year, (ii)selected or nominated to become directors by the board of directors of thePerformance Guarantor or Originator of which a majority consisted ofindividuals described in clause (i), or (iii)selected or nominated to become directors by the board of directors of thePerformance Guarantor or Originator of which a majority consisted ofindividuals described in clauses (i) or (ii) or (c) the Performance Guarantorceases to own 100% of the outstanding sharesof voting stock of Seller.

 

"Collection Notice" means a notice, in substantially theform of Annex A to Exhibit VI, from the Administrative Agent to aBlocked Account Bank.

 

"Collections" means, with respect to any Receivable, allcash collections and other cash proceeds in respect of such Receivable,including, without limitation, all Finance Charges or other related amountsaccruing in respect thereof and all cash proceeds of Related Security withrespect to such Receivable.

 

"Commercial Paper" means promissory notes of Blue Ridgeissued by Blue Ridge in the commercial paper market.

 

"Commitment" means as to each Committed Investor, thedollar amount of its commitment to make Purchases under this Agreement, as setforth on the signature pages hereto, which Commitments in the aggregate shallequal the Facility Limit.

 

"Commitment Termination Date" means with respect to eachCommitted Investor, August 8, 2002 or such later date as may be agreed inwriting from time to time by Seller, the Servicer, the Administrative Agent andsuch Committed Investor.

 

"Committed Investor" has the meaning set forth in the preamble.

 

"Consolidated EBITDA" has the meaning ascribed to theterm "Consolidated EBITDA" in the Credit Agreement as of the Amendment ClosingDate.

 

"Consolidated Subsidiary" means at any date any Subsidiary orother entity the accounts of which, in accordance with GAAP, would beconsolidated with those of the Performance Guarantor in its consolidatedfinancial statements as of such date.

 

"Contingent Obligation" of a Person means any agreement,undertaking or arrangement by which such Person assumes, guarantees, endorses,contingently agrees to purchase or provide funds for the payment of, orotherwise becomes or is contingently liable upon, the obligation or liabilityof any other Person, or agrees to maintain the net worth or working capital orother financial condition of any other Person, or otherwise assures anycreditor of such other Person against loss, including, without limitation, anycomfort letter, operating agreement, take-or-pay contract or application for aletter of credit.

 

"Contract" means, with respect to any Receivable, any andall instruments, agreements, invoices or other writings pursuant to which suchReceivable arises or which evidences such Receivable.

 

"CP Costs" means, for each day, the sum of (i) discountor interest accrued on Pooled Commercial Paper on such day, plus (ii) any andall accrued commissions in respect of placement agents and Commercial Paperdealers, and issuing and paying agent fees incurred, in respect of such PooledCommercial Paper for such day, plus (iii) other costs associated with fundingsmall or odd-lot amounts with respect to all receivable purchase or financingfacilities 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 ofcollections received under all receivable purchase or financing facilitiesfunded substantially with Pooled Commercial Paper, minus (v) any paymentreceived on such day net of expenses in respect of Broken Funding Costs relatedto the prepayment of any investment of Blue Ridge pursuant to the terms of anyreceivable purchase or financing facilities funded substantially with PooledCommercial Paper.  In addition to theforegoing costs, if Seller shall request any Purchase during any period of timedetermined by the Administrative Agent in its sole discretion, to result inincrementally higher CP Costs applicable to such Purchase, the principalassociated with any such Purchase shall, during such period, be deemed to be fundedby Blue Ridge in a special pool (which may include capital associated withother receivable purchase or financing facilities) for purposes of determiningsuch additional CP Costs applicable only to such special pool and charged eachday during such period against such principal.

 

"Credit Agreement" means that certain Amended and RestatedCredit Agreement, dated as of June 29, 2001 by and among AirborneExpress, Inc. and ABX Air, Inc., as borrowers, Airborne, Inc., as parent, thelenders listed therein, Wachovia Bank, N.A., as administrative agent andcollateral agent, U.S. Bank, as documentation agent, Bank of America, N.A., assyndication agent and Wachovia Securities, Inc., as lead arranger.  The term "Credit Agreement" shall include (i) anyamendment, restatement, waiver or other modification to that Amended andRestated Credit Agreement made while Wachovia Bank, N.A. is a lender under suchagreement or if Wachovia Bank, N.A. is not a lender thereunder, any suchamendment, restatement, waiver or other modification made with the priorwritten consent of the Administrative Agent or (ii) any replacement creditfacility entered into with Wachovia Bank, N.A. as a lender. 

 

"Credit and Collection Policy" means Seller's reasonableand customary credit and collection policies and practices relating toContracts and Receivables existing on the date hereof, as modified from time totime in accordance with this Agreement.

 

"Cut-Off Date" means the last day of a CalculationPeriod.

 

"Days Sales Outstanding" means, as of any day, an amountequal to the product of (x) 91, multiplied by (y) the amount obtained bydividing (i) the aggregate outstanding balance of Receivables as of the most recentCut-Off Date, by (ii) the aggregate amount of Receivables created during thethree (3) Calculation Periods including and immediately preceding such Cut-OffDate.

 

"Debt Service Coverage Ratio"has the meaning ascribed to the term "Debt Service Coverage Ratio" in theCredit Agreement as of the Amendment Closing Date.

"Deemed Collections" meansCollections deemed received by Seller under Section 1.4(a).

"Default Horizon Ratio" means, as of any Cut-Off Date,the ratio (expressed as a decimal) computed by dividing (i) the aggregate salesgenerated by the Originator during the immediately preceding fourCalculationPeriods ending on such Cut-Off Date, by (ii) the Net Pool Balance as of suchCut-off Date.

 

"Default Rate" means a rate per annum equal to the sum of(i) the Alternate Base Rate plus (ii) 2.00%, changing when and as the AlternateBase Rate changes.

 

"Default Ratio" means, as of any Cut-Off Date, the ratio(expressed as a percentage) computed by dividing (x) the total amount ofReceivables which became Defaulted Receivables during the Calculation Periodthat includes such Cut-Off Date, by (y) the aggregate sales generated by theOriginator during the Calculation Period occurring four months prior to the Calculation Period ending on such Cut-OffDate.

 

"Defaulted Receivable" means a Receivable:  (i) as to which the Obligor thereof hassuffered an Event of Bankruptcy; (ii) which, consistent with the Credit andCollection Policy, would be written off Seller's books as uncollectible; (iii)as to which payments have been extended, or the terms of payment thereofrewritten, other than as permitted by Section 8.2(c); or (iv) as to which anypayment, or part thereof, remains unpaid for 121 days or more from the originalinvoice date of such Receivable.

 

"Delinquency Ratio" means, at any time, a percentageequal to (i) the aggregate Outstanding Balance of all Receivables that wereDelinquent Receivables at such time divided by (ii) the aggregate OutstandingBalance of all Receivables at such time.

 

"Delinquent Receivable" means a Receivable as to whichany payment, or part thereof, remains unpaid for 91-120days from the original invoice date of such Receivable.

 

"Delivery Order" means, with respect to any Lock-Box,a delivery order, in substantially the form attached hereto as Exhibit X,which permits the Person designated thereon to require delivery to such Personof all items in such Lock-Box.

 

"Dilution" means the amount of any reduction orcancellation of the Outstanding Balance of a Receivable as described in Section1.4(a).

 

"Dilution Horizon Ratio" meansas of any Cut-Off Date, a ratio (expressed as a decimal), computed by dividing(i)the aggregate dollar amount of Receivables generated by the Originator for thetwo (2) most recentSettlement Periods by (ii) the Net Pool Balance as of themost recent Cut-Off Date.

 

"Dilution Ratio" means, as ofany Cut-Off Date, a ratio (expressed as a percentage), computed by dividing (i)the total amount of decreases in Outstanding Balances due to Dilutions duringthe previous Calculation Periodending on such Cut-Off Date, by (ii) the aggregate sales generated by theOriginator during the secondpreceding Calculation Period prior to theCalculation Period ending on such Cut-Off Date.

 

"Dilution Reserve" means, for any Calculation Period, theproduct (expressed as a percentage) of:

 

            (a)            the sum of (i) two (2) times theAdjusted Dilution Ratio as of the immediately preceding Cut-Off Date, plus(ii) the Dilution Volatility Component as of the immediatelypreceding Cut-Off Date, times

 

            (b)            the Dilution Horizon Ratio as of theimmediately preceding Cut-Off Date.

 

"Dilution Volatility Component" means the product(expressed as a percentage) of (i) the difference between (a) the highest three(3)-month rolling average Dilution Ratio over the past 12 Calculation Periodsand (b) the Adjusted Dilution Ratio, and (ii) a fraction, the numerator ofwhich is equal to the amount calculated in (i)(a) of this definition and thedenominator of which is equal to the amount calculated in (i)(b) of thisdefinition.

 

"Dollar" means lawful currency of the United Statesof America.

 

"Downgraded Investor" has the meaning set forth in Section4.6.

 

"Downgraded Liquidity Bank"means a Liquidity Bankwhich has been the subject of a Downgrading Event.

 

"Downgrading Event" with respect to any Person means thelowering of the rating with regard to the short-term securities of such Personto below (i) A-1 by S&P, or (ii) P-1 by Moody's.

 

"Eligible Assignee" means a commercial bank having acombined capital and surplus of at least $250,000,000 with a rating of its (orits holding company's) short-term securities equal to or higher than (i) A-1 byS&P and (ii) P-1 by Moody's.

 

"Eligible Institution" means a depository institution ortrust company, organized under the laws of the United States or any statethereof, that (i)is a member of the Federal Deposit Insurance Corporation, (ii) has acombined capital and surplus of not less than $250,000,000 and (iii) has (oris a Subsidiary of a Person that has) a long-term unsecured debt rating of atleast A or better by S&P and A2 or better by Moody's.

 

"Eligible Receivable" means, at any time, a Receivable:

 

            (a)            the Obligor of which (i)if a natural person, is a resident of the United States or, if a corporation orother business organization, has a billing address in the United States; (ii) is notan Affiliate of any of Seller Parties or the Originator; and (iii) is nota government or a governmental subdivision or agency, 

 

            (b)            [reserved],

 

            (c)            which is not a Defaulted Receivable;

 

            (d)            which is not a Delinquent Receivable on the date on whichit was acquired by the Seller from the Originator,

 

            (e)            which by its terms is due and payable within 60 days of the original invoice datetherefor,

 

            (f)            the original term of which has not been extended and hasnot had its unpaid balance adjusted more than once, 

 

            (g)            as to which perfection of the Administrative Agent'ssecurity interest therein is governed by the laws of a jurisdiction where theUCC is in force, and which is an "account" within the meaning of Section 9-106of the UCC of all applicable jurisdictions,

 

            (h)            which is denominated and payable only in United Statesdollars in the United States,

 

            (i)            which arises under a Contract in substantially the form of one of the form contracts set forth on ExhibitIX hereto or otherwise approved by the Administrative Agent in writing,which, together with such Receivable, is in full force and effect andconstitutes the legal, valid and binding obligation of the related Obligorenforceable against such Obligor in accordance with its terms subject to nodispute, offset, counterclaim or other defense,

 

            (j)            which arises under a Contract which (i) doesnot require the Obligor under such Contract to consent to the transfer, sale,pledge or assignment of the rights of the Originator or any of its assigneesunder such Contract, (ii)does not contain a confidentiality provision that purports to restrict theability of the Purchaser or the Committed Investors to exercise their rightsunder this Agreement and (iii)to the extent that such Contract contains a confidentiality provision, permitsdisclosure of such Contract in accordance with applicable law,

 

            (k)            the sale of an undivided interest in which does notcontravene or conflict with any law,

 

            (l)            which arises under a Contract that contains an obligationto pay a specified sum of money, contingent only upon the sale of goods or theprovision of serves by the Originator,

 

            (m)            which, together with the Contract related thereto, doesnot 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 debtcollection practices and privacy) and with respect to which no party to theContract related thereto is in violation of any such law, rule or regulation inany material respect if such violation would impair the collectibility of suchReceivable,

 

            (n)            which satisfies in all material respects all applicablerequirements of the Credit and Collection Policy,

 

            (o)            which was generated in the ordinary course of theOriginator's business,

 

            (p)            which arises under a Contract solely from the sale ofgoods or the provision of services to the related Obligor by the Originator,and not by any other Person (in whole or in part),

 

            (q)            asto which the Administrative Agent has not notified Seller that theAdministrative Agent has determined that such Receivable or class ofReceivables is not acceptable as an Eligible Receivable, including, withoutlimitation, because such Receivable arises under a Contract that is notacceptable to the Administrative Agent,

 

            (r)            which is not subject to any dispute, counterclaim, rightof rescission, set-off, counterclaim or any other defense (including defensesarising out of violations of usury laws) of the applicable Obligor against theOriginator or any other Adverse Claim, and the Obligor thereon holds no rightas against the Originator to cause the Originator to repurchase the goods ormerchandise the sale of which shall have given rise to such Receivable (exceptwith respect to sale discounts effected pursuant to the Contract, or defectivegoods returned in accordance with the terms of the Contract); provided, however,that if such dispute, offset, counterclaim or defense affects only a portion ofthe Outstanding Balance of such Receivable, then such Receivable may be deemedan Eligible Receivable to the extent of the portion of such Outstanding Balancewhich is not so affected, and provided, further, that Receivables ofany Obligor which has any accounts payable by the Originator or by awholly-owned Subsidiary of the Originator (thus giving rise to a potentialoffset against such Receivables) may be treated as Eligible Receivables to theextent that the Obligor of such Receivables has agreed pursuant to a writtenagreement in form and substance satisfactory to the Administrative Agent, thatsuch Receivables shall not be subject to such offset,

 

            (s)            as to which the Originator has satisfied and fullyperformed all obligations on its part with respect to such Receivable requiredto be fulfilled by it, and no further action is required to be performed by anyPerson with respect thereto other than payment thereon by the applicableObligor,

 

            (t)            as to which each of the representations and warranties inthis Agreement and the Transaction Documents is true and correct, and

 

            (u)            all right, title and interest to and in which has beenvalidly transferred by the Originator directly to Seller under and inaccordance with the Receivables Sale Agreement, and Seller has good andmarketable title thereto free and clear of any Adverse Claim.

 

"ERISA" means the Employee Retirement Income Security Actof 1974, as amended from time to time, and any rule or regulation issuedthereunder.

 

"ERISA Affiliate" means any trade or business (whether ornot incorporated) under common control with the Performance Guarantor within the meaning of Section 414(b) or(c) of the Tax Code (and Sections 414(m) and (o) of the Tax Code for purposesof provisions relating to Section 412 of the Tax Code).

 

"Eurodollar Business Day" means any day on whichdealings in dollar deposits are carried on in the London interbank market.

 

"Eurodollar Rate" means for any Tranche Period of aLiquidity Funding, the rate per annum determined on the basis of the offeredrate for deposits in Dollars of amounts equal or comparable to the principalamount of the related funding under the Liquidity Funding offered for a termcomparable to such Tranche Period, which rates appear on the Telerate Page 3750effective as of 11:00 a.m., London time, two Eurodollar Business Days prior tothe first day of such Tranche Period, *providedthat* if no such offered rates appear on such page, the Eurodollar Rate forsuch Tranche Period will be the arithmetic average (rounded upwards, ifnecessary, to the next higher 1/100th of 1%) of rates quoted by not less thantwo major banks in New York City, selected by the Administrative Agent, atapproximately 10:00 a.m., New York City time, two Eurodollar Business Daysprior to the first day of such Tranche Period, for deposits in Dollars offeredby leading European banks for a period comparable to such Tranche Period in anamount comparable to the principal amount of such funding under a LiquidityFunding.

 

"Eurodollar Rate (Reserve Adjusted)"  means with respect to any Tranche Period ofa Liquidity Funding, a rate per annum equal to the sum of (a) the quotient obtained(rounded upwards, if necessary, to the next higher 1/100th of 1%) by dividing (i) theapplicable Eurodollar Rate for such Tranche Period by (ii) 1.0 minus the EurodollarReserve Percentage plus (b) the sum of (i) theProgram Fee Rate plus (ii)0.50%.

 

"Eurodollar Reserve Percentage" means with respect toany Tranche Period of a Liquidity Funding, the maximum reserve percentage, ifany, applicable to the Liquidity Bank under Regulation D during such TranchePeriod (or if more than one percentage shall be applicable, the daily averageof such percentages for those days in such Tranche Period during which any suchpercentage shall be applicable) for determining the Liquidity Bank's reserverequirement (including any marginal, supplemental or emergency reserves) withrespect to liabilities or assets having a term comparable to such TranchePeriod consisting or included in the computation of "Eurocurrency Liabilities"pursuant to Regulation D.  Withoutlimiting the effect of the foregoing, the Eurodollar Reserve Percentage shallreflect any other reserves required to be maintained by the Liquidity Bank byreason of any regulatory change.

 

"Event of Bankruptcy" shall be deemed to have occurredwith respect to a Person if either:

 

            (a)            a case or other proceeding shall be commenced, withoutthe application or consent of such Person, in any court, seeking theliquidation, reorganization, debt arrangement, dissolution, winding up, orcomposition or readjustment of debts of such Person, the appointment of atrustee, receiver, custodian, liquidator, assignee, sequestrator or the likefor such Person or all or substantially all of its assets, or any similaraction with respect to such Person under any law relating to bankruptcy,insolvency, reorganization, winding up or composition or adjustment of debts,and such case or proceeding shall continue undismissed, or unstayed and ineffect, for a period of 60 consecutive days; or an order for relief in respectof such Person shall be entered in an involuntary case under the federalbankruptcy laws or other similar laws now or hereafter in effect; or

 

            (b)            such Person shall commence a voluntary case or otherproceeding under any applicable bankruptcy, insolvency, reorganization, debtarrangement, dissolution or other similar law now or hereafter in effect, orshall consent to the appointment of or taking possession by a receiver,liquidator, assignee, trustee (other than a trustee under a deed of trust,indenture or similar instrument), custodian, sequestrator (or other similarofficial) for, such Person or for any substantial part of its property, orshall make any general assignment for the benefit of creditors, or shall beadjudicated insolvent, or admit in writing its inability to pay its debts generallyas they become due, or, if a corporation or similar entity, its board ofdirectors shall vote to implement any of the foregoing.

 

"Existing CommitmentTermination Date" has the meaning set forth in Section 4.7(a).

"Facility Account" means Seller's account no. 8736000912at Wachovia.

 

"Facility Termination Date" means the earliest to occurof (i)the day on which any of the conditions precedent set forth in Section 6.2are not satisfied, (ii)the Business Day immediately prior to the occurrence of an Event of Bankruptcywith respect to any Seller Party, (iii)the Business Day specified in a written notice from the Administrative Agentfollowing the occurrence of any other Amortization Event, (iv) the datewhich is 30 Business Days after the Administrative Agent's receipt of writtennotice from Seller that it wishes to terminate the facility evidenced by thisAgreement, (v)June 30, 2004, and (vi)the date on which the Purchaser shall become an "investment company" within themeaning of the Investment Company Act of 1940.

 

"Federal Bankruptcy Code" means Title 11 of the UnitedStates Code entitled "Bankruptcy," as amended and any successor statutethereto.

 

"Federal Funds Rate" means, for any period, a fluctuatinginterest rate *per annum* for each dayduring such period (rounded upwards if necessary, to the next higher 1/100thof 1%) equal to (i) the weighted average of the rates on overnight federalfunds transactions with members of the Federal Reserve System arranged byfederal funds brokers, as published for such day (or, if such day is not aBusiness Day, for the preceding Business Day) by the Federal Reserve Bank ofNew York in the Composite Closing Quotations for U.S. Government Securities; or(ii) if such rate is not so published for any day which is a Business Day, theaverage rate of the quotations at approximately 11:30 a.m. (New York time) forsuch day on such transactions received by the Administrative Agent from threefederal funds brokers of recognized standing selected by it.

 

"Fee Letter" means that certain Amended and Restated FeeLetter dated as of August 8, 2001 among Seller, Originator and theAdministrative Agent, as it may be amended, restated or otherwise modified andin effect from time to time.

 

"Final Payout Date" means the date on which all AggregateUnpaids have been paid in full and the Purchase Limit has been reduced to zero.

 

"Finance Charges" means, with respect to a Contract, anyfinance, interest, late payment charges or similar charges owing by an Obligorpursuant to such Contract.

 

"Fiscal Quarter" means any fiscal quarter of the PerformanceGuarantor and its Consolidated Subsidiaries.

 

"Fiscal Year" means any fiscal year of thePerformance Guarantor and its Consolidated Subsidiaries.

 

"Funding Agreement" means (i) this Agreement, (ii) theLiquidity Agreement and (iii) any other agreement or instrument executed by anyFunding Source with or for the benefit of Blue Ridge.

 

"Funding Source" means (i) any Liquidity Bank or (ii) anyinsurance company, bank or other funding entity providing liquidity, credit enhancementor back-up purchase support or facilities to Blue Ridge.

 

"GAAP" means generally accepted accounting principles ineffect in the United States of America as of the date of this Agreement.

 

"Incremental Purchase" means a purchase of one or more ReceivableInterests which increases the total outstanding Aggregate Invested Amounthereunder.

 

"Indebtedness" of a Person means such Person's (i)obligations for borrowed money, (ii) obligations representing the deferredpurchase price of property or services (other than accounts payable arising inthe ordinary course of such Person's business payable on terms customary in thetrade), (iii) obligations, whether or not assumed, secured by liens or payableout of the proceeds or production from property now or hereafter owned oracquired by such Person, (iv) obligations which are evidenced by notes,acceptances, or other instruments, (v) capitalized lease obligations, (vi) netliabilities under interest rate swap, exchange or cap agreements, (vii)Contingent Obligations and (viii) liabilities in respect of unfunded vestedbenefits under plans covered by Title IV of ERISA.

 

"Indemnified Amounts" has the meaning specified in Section10.1.

 

"Indemnified Party" has the meaning specified in Section10.1.

 

"Independent Director" shall mean a member of the Boardof Directors of Seller who is not at such time, and has not been at any timeduring the preceding five (5) years:(A) a director, officer, employee or affiliate of the Performance Guarantor,the Originator or any of their respective Subsidiaries or Affiliates (otherthan Seller), or (B) the beneficial owner (at the time of such individual'sappointment as an Independent Director or at any time thereafter while servingas an Independent Director) of any of the outstanding common shares of Seller,the Originator, or any of their respective Subsidiaries or Affiliates, havinggeneral voting rights.

 

"Invested Amount" of any Receivable Interest means, atany time, (A) the Purchase Price of such Receivable Interest, minus (B) the sumof the aggregate amount of Collections and other payments received by theAdministrative Agent which in each case are applied to reduce such InvestedAmount in accordance with the terms and conditions of this Agreement; providedthat such Invested Amount shall be restored (in accordance with Section2.5) in the amount of any Collections or other payments so received andapplied if at any time the distribution of such Collections or payments arerescinded, returned or refunded for any reason.

 

"Investment Maturity Date" means with respect to anyPurchase Account Deposit, the earlier of (a) the Facility TerminationDate and (b) (i) if established in respectof a Non-Renewing Investor, the earlier of the Facility Termination Date andthe close of business of the Administrative Agent on the third anniversary ofthe Amendment Closing Date or (ii)if established in respect of a Downgraded Investor, the earlier of the FacilityTermination Date and such Committed Investor's Commitment Termination Date or,if such Committed Investor is or becomes a Non-Renewing Investor, the earlierof (x) the Facility Termination Date and (y) the close of business of theAdministrative Agent on the third anniversary of the Amendment Closing Date.

 

"Investor Funding" means the portion of the InvestedAmount of a Receivable Interest that is funded by the Committed Investorspursuant to Section 1.1(a).

 

"Liquidity Agreement" means that certain Liquidity AssetPurchase Agreement dated as of December 28, 2000, by and among Blue Ridge, theAdministrative Agent and the banks from time to time party thereto, as the samemay be amended, restated and/or otherwise modified from time to time inaccordance with the terms thereof.

 

"Liquidity Bank" means each bank from time to time partyto the Liquidity Agreement (other than the Administrative Agent acting in itscapacity as the Administrative Agent thereunder).

 

"Liquidity Commitment"means, as to eachLiquidity Bank, its commitment under the Liquidity Agreement.  The Liquidity Commitments, in the aggregate,shall equal 102% of the Purchase Limit hereunder.

 

"Liquidity Funding" means a purchase by any LiquidityBank pursuant to its Liquidity Commitment of all or any portion of, or anyundivided interest in, a Receivable Interest.

 

"Liquidity Termination Date" means the earlier to occurof the following:

 

            (a)            the date on which the Liquidity Banks' LiquidityCommitments expire, cease to be available to Blue Ridge or otherwise cease tobe in full force and effect; or

 

            (b)            the date on which a Downgrading Event with respect to aLiquidity Bank shall have occurred and been continuing for not less than 45days, and either (i) the Downgraded Liquidity Bank shall not have been replacedby an Eligible Assignee pursuant to the Liquidity Agreement, or (ii) theLiquidity Commitment of such Downgraded Liquidity Bank shall not have beenfunded or collateralized in such a manner that will avoid a reduction in orwithdrawal of the credit rating applied to the Commercial Paper to which suchLiquidity Agreement applies by any of the rating agencies then rating suchCommercial Paper.

 

"Lock-Box" means each locked postal box which is listedon Exhibit IV.

 

"Loss Reserve" means, for any Calculation Period, theproduct (expressed as a percentage) of (a) 2.0, times (b) the highest three-month rolling average DefaultRatio during the 12 Calculation Periods ending on the immediately precedingCut-Off Date, times (c) the Default Horizon Ratio as of the immediatelypreceding Cut-Off Date.

 

"Material Adverse Effect" means a material adverse effecton (i) the financial condition or operations of any Seller Party and itsSubsidiaries, (ii) the ability of any Seller Party to perform its obligationsunder this Agreement or the Performance Guarantor to perform its obligationsunder the Performance Undertaking (iii) the legality, validity orenforceability of this Agreement or any other Transaction Document, (iv) theAdministrative Agent's security interest, for the benefit of the SecuredParties, in the Receivables generally or in any significant portion of theReceivables, the Related Security or the Collections with respect thereto, or(v) the collectibility of the Receivables generally or of any material portionof the Receivables.

 

"Material Indebtedness" has the meaning set forth in Section9.1(f).

 

"Monthly Report" means a report, in substantially theform of Exhibit VIII hereto (appropriately completed), furnished by theServicer to the Administrative Agent pursuant to Section 8.5.

 

"Monthly Reporting Date" means the first Friday after thethird Monday of each calendar month after the date of this Agreement (or if anysuch day is not a Business Day, the next succeeding Business Day thereafter).

 

"Moody's" means Moody's Investors Service, Inc.

 

"Net Pool Balance" means, at any time, the aggregateOutstanding Balance of all Eligible Receivables at such time reduced by theaggregate amount by which the Outstanding Balance of all Eligible Receivables ofeach Obligor and its Affiliates exceeds the Obligor Concentration Limit forsuch Obligor.

 

"Non-Renewing Investor" has the meaning set forth in Section4.7(b).

 

"Notice of Conversion" has the meaning set forth in Section4.7(c).

 

"Obligor" means a Person obligated to make paymentspursuant to a Contract.

 

"Obligor Concentration Limit" means, at any time, inrelation to the aggregate Outstanding Balance of Receivables owed by any singleObligor and its Affiliates (if any), the applicable concentration limit shallbe determined as follows: (a) for Obligors who have shortterm unsecured debt ratings currently assigned to them by S&P and Moody's(or in the absence thereof, the equivalent long term unsecured senior debtratings), the applicable concentration limit shall be determined according tothe following table:

 
| S&P Rating                                      | Moody's Rating                                      | Allowable % of Eligible Receivables |
|-----------------------------------------------------|-----------------------------------------------------|-------------------------------------|
| A-1+                                                | P-1                                                 | 10%                                 |
| A-1                                                 | P-1                                                 | 8%                                  |
| A-2                                                 | P-2                                                 | 6%                                  |
| A-3                                                 | P-3                                                 | 3%                                  |
| Below A-3 or Not Rated by either S&P or Moody's | Below P-3 or Not Rated by either S&P or Moody's | ****3%                              |

provided, however, that(i)if any Obligor has a split rating, the applicable rating will be the lower ofthe two, (ii)if any Obligor is not rated by either S&P or Moody's, the applicableObligor Concentration Limit shall be the one set forth in the last line of thetable above, and (iii)subject to satisfaction of the Rating Agency Condition and/or an increase inthe percentage set forth in clause (a)(i) of the definition of "RequiredReserve," upon the Seller's request from time to time, the Administrative Agentmay agree to a higher percentage of Eligible Receivables for a particularObligor and its Affiliates (each such higher percentage, a "*SpecialConcentration Limit*"), it being understood that any SpecialConcentration Limit may be cancelled by the Administrative Agent upon not lessthan five (5) Business Days' written notice to the Seller Parties; providedthat the Special Concentration Limit forUnishippersshall be5.5% until such time that it is cancelled by the Administrative Agent pursuanthereto.

 

"Original Closing Date"means December 28, 2000.

 

"Originator" means Airborne Express, Inc., in itscapacity as seller under the Receivables Sale Agreement.

 

"Other Costs" has the meaning set forth in Section10.3.

 

"Other Customers" has the meaning set forth in Section10.4.

 

"Outstanding Balance" of any Receivable at any time meansthe then outstanding principal balance thereof, excluding all late paymentcharges, delinquency charges and extension or collection fees.

 

"PBGC" means the Pension Benefit Guaranty Corporation, orany successor thereto.

 

"Pension Plan" means a pension plan (as defined inSection 3(2) of ERISA) subject to Title IV of ERISA which the PerformanceGuarantor or any of its ERISA Affiliates sponsors or maintains, or to which itmakes, is making, or is obligated to make contributions, or in the case of amultiple employer plan (as described in Section 4064(a) of ERISA) has madecontributions at any time during the immediately preceding five plan years.

 

"Performance Guarantor" means Airborne, Inc., aDelaware corporation.

 

"Performance Undertaking" means that certainPerformance Undertaking, dated as of December 28, 2000 by Performance Guarantorin favor of Seller, substantially in the form of Exhibit VII, as thesame may be amended, restated or otherwise modified from time to time.

 

"Person" means an individual, partnership, corporation(including a business trust), limited liability company, joint stock company,trust, unincorporated association, joint venture or other entity, or agovernment or any political subdivision or agency thereof.

 

"Plan" means an employee benefit plan (as defined inSection 3(3) of ERISA) which the Performance Guarantor or any of its ERISAAffiliates sponsors or maintains or to which the Performance Guarantor or anyof its ERISA Affiliates makes, is making, or is obligated to make contributionsand includes any Pension Plan, other than a Plan maintained outside the UnitedStates primarily for the benefit of Persons who are not U.S. residents.

 

"Pooled Commercial Paper" means all short-term CommercialPaper issued by the Purchaser from time to time, subject to any poolingarrangement by the Purchaser, but excluding short-term Commercial Paper issuedby the Purchaser both for a tenor and in an amount specifically requested byany Person in connection with any receivables purchase facility effected by thePurchaser.

 

"Prime Rate" means an interest rate *per annum* so denominated and set by Wachovia from time to time asan interest rate basis for the borrowings.The Prime Rate is but one of several interest rates used byWachovia.  Wachovia lends at interestrates above and below the Prime Rate.

 

"Program Fee Rate" has the meaning set forth in the Fee Letter.

 

"Proposed Reduction Date" has the meaning set forth in Section1.3.

 

"Pro Rata Share" means, at any time with respect to anythe Purchaser or any Committed Investor, (a) with respect to any paymentto be made to such Purchaser or Committed Investor, as the case may be, thepercentage equivalent of a fraction the numerator of which is equal to theportion of the Invested Amount that has been funded by such Person at such timeand the denominator of which is equal to the Aggregate Invested Amount at suchtime and (b) with respect to any Purchaseto be made by any Committed Investor, the percentage equivalent of a fraction,the numerator of which is equal to such Person's Commitment and the denominatorof which is equal to the Facility Limit.

 

"Purchase" means an Incremental Purchase or aReinvestment.

 

"Purchase Account" means a cash collateral account inthe name of Administrative Agent and maintained by a Committed Investor at anEligible Institution (which may include such Committed Investor, so long assuch Committed Investor is an Eligible Institution) and which is established tofund Purchases hereunder by such Committed Investor pursuant to Section 4.7.

 

"Purchase Account Deposit" has the meaning set forth in Section4.7(b).

 

"Purchase Account Party" has the meaning set forth in Section4.7(f).

 

"Purchase Date" means each Business Day on which aPurchase is made hereunder.

 

"Purchase Limit" means up to$250,000,000.

"Purchase Notice" has the meaning set forth in Section1.2.

 

"Purchase Price" means, with respect to any IncrementalPurchase of a Receivable Interest, the amount paid to Seller for suchReceivable Interest which shall not exceed the least of (i) the amountrequested by Seller in the applicable Purchase Notice, (ii) the unused portionof the Purchase Limit on the applicable purchase date and (iii) the excess, ifany, of the Net Pool Balance (less the Required Reserve) on the applicablepurchase date over the aggregate outstanding amount of Aggregate InvestedAmount determined as of the date of the most recent Monthly Report, taking intoaccount such proposed Incremental Purchase.

 

"Purchased Assets" means all of Seller's right, title andinterest, whether now owned and existing or hereafter arising in and to all ofthe Receivables, the Related Security, the Collections and all proceeds of theforegoing.

 

"Purchaser" means Blue Ridge Asset Funding Corporation and itssuccessors and assigns. 

 

"Rating Agency Condition" means that Blue Ridge hasreceived written notice from S&P and Moody's that an amendment, a change ora waiver will not result in a withdrawal or downgrade of the then currentratings on Blue Ridge's Commercial Paper.

 

"Receivable" means all indebtedness and other obligationsowed to Seller or the Originator (at the time it arises, and before givingeffect to any transfer or conveyance under the Receivables Sale Agreement) orin which Seller or the Originator has a security interest or other interest,including, without limitation, any indebtedness, obligation or interestconstituting an account, chattel paper, instrument or general intangible,arising in connection with the sale of goods or the rendering of services bythe Originator and further includes, without limitation, the obligation to payany Finance Charges with respect thereto.Indebtedness and other rights and obligations arising from any onetransaction, including, without limitation, indebtedness and other rights andobligations represented by an individual invoice, shall constitute a Receivableseparate from a Receivable consisting of the indebtedness and other rights andobligations arising from any other transaction; provided further, that anyindebtedness, rights or obligations referred to in the immediately precedingsentence shall be a Receivable regardless of whether the account debtor orSeller treats such indebtedness, rights or obligations as a separate paymentobligation.

 

"Receivable Interest" means, at any time, an undividedpercentage ownership interest (computed as set forth below) associated with adesignated amount of Invested Amount, selected pursuant to the terms andconditions hereof in (i) each Receivable arising prior to the time of the mostrecent computation or recomputation of such undivided interest, (ii) allRelated Security with respect to each such Receivable, and (iii) allCollections with respect to, and other proceeds of, each such Receivable.  Each such undivided percentage interestshall equal:

 

 
| *IA + RR* |
|-----------|
| *NPB*     |

 

                        where:

 

                        IA            =the Invested Amount of such Receivable Interest.

 

                        NPB            =the Net Pool Balance.

 

                        RR            =the Required Reserve.

 

Such undivided percentageownership interest shall be initially computed on its date of purchase.  Thereafter, until the Facility TerminationDate, each Receivable Interest shall be automatically recomputed (or deemed tobe recomputed) on each day prior to the Facility Termination Date.  The variable percentage represented by anyReceivable Interest as computed (or deemed recomputed) as of the close of the businessday immediately preceding the Facility Termination Date shall remain constantat all times thereafter.

"Receivables Sale Agreement" means that certainReceivables Sale Agreement, dated as of December 28, 2000, among the Originatorand Seller, as the same may be amended, restated or otherwise modified fromtime to time.

 

"Records" means, with respect toany Receivable, all Contracts and other documents, books, records and otherinformation (including, without limitation, computer programs, tapes, disks,punch cards, data processing software and related property and rights) relatingto such Receivable, any Related Security therefor and the related Obligor.

 

"Recourse Obligations" has the meaning set forth in Section2.1.

 

"Reduction Notice" has the meaning set forth in Section1.3.

 

"Regulatory Change" has the meaning set forth in Section10.2.

 

"Reinvestment" has the meaning set forth in Section2.2.

 

"Related Security" means, with respect to any Receivable:

 

            (a)            all of Seller's interest in the inventory and goods(including returned or repossessed inventory or goods), if any, the sale ofwhich by the Originator gave rise to such Receivable, and all insurancecontracts with respect thereto,

 

            (b)            all other security interests or liens and propertysubject thereto from time to time, if any, purporting to secure payment of suchReceivable, whether pursuant to the Contract related to such Receivable orotherwise, together with all financing statements and security agreementsdescribing any collateral securing such Receivable,

 

            (c)            all guaranties, letters of credit, insurance and otheragreements or arrangements of whatever character from time to time supportingor securing payment of such Receivable whether pursuant to the Contract relatedto such Receivable or otherwise,

 

            (d)            all service contracts and other contracts and agreementsassociated with such Receivable,

 

            (e)            all Records related to such Receivable,

 

            (f)            all of Seller's right, title and interest in, to andunder the Receivables Sale Agreement in respect of such Receivable and all ofSeller's right, title and interest in, to and under the PerformanceUndertaking.

 

            (g)            all proceeds of any of the foregoing.

 

"Required Liquidity Banks" means, at any time, LiquidityBanks with Liquidity Commitments in excess of 50% of the aggregate amount ofall Liquidity Commitments.

 

"Required Notice Period" means the number of days requirednotice set forth below applicable to the Aggregate Reduction indicated below:

 
| Aggregate  Reduction                     | Required  Notice Period |
|------------------------------------------|-------------------------|
| up to 25% of the Purchase Limit          | 2  Business Days        |
| 25% and up to 50% of the  Purchase Limit | 5  Business Days        |
| 50% or more of the Purchase  Limit       | 10  Business Days       |

 

 

"Required Reserve"means, on any day during aCalculation Period, the product of (a) the greater of (i) the Required ReserveFactor Floor and(ii) the sum of theLoss Reserve, the Yield Reserve, the Dilution Reserve and the ServicingReserve, times (b) the Net Pool Balance as of such date.

 

"Required Reserve Factor Floor" means the sum of (a) 14.5% and (b) the product of (i) theAdjusted Dilution Ratio and (ii)the Dilution Horizon Ratio.

 

"Restricted Junior Payment" means (i) any dividend orother distribution, direct or indirect, on account of any shares of any classof capital stock of Seller now or hereafter outstanding, except a dividendpayable solely in shares of that class of stock or in any junior class of stockof Seller, (ii) any redemption, retirement, sinking fund or similar payment,purchase or other acquisition for value, direct or indirect, of any shares ofany class of capital stock of Seller now or hereafter outstanding, (iii) anypayment or prepayment of principal of, premium, if any, or interest, fees or othercharges on or with respect to, and any redemption, purchase, retirement,defeasance, sinking fund or similar payment and any claim for rescission withrespect to the Subordinated Loans (as defined in the Receivables SaleAgreement), (iv) any payment made to redeem, purchase, repurchase or retire, orto obtain the surrender of, any outstanding warrants, options or other rightsto acquire shares of any class of capital stock of Seller now or hereafteroutstanding, and (v) any payment of management fees by Seller (except forreasonable management fees to the Originator or its Affiliates in reimbursementof actual management services performed).

 

"Review" has the meaning specified in Section7.1(d).

 

"Revolving Period" means the period from the Amendment ClosingDate to the Facility Termination Date.

 

"S&P" means Standard and Poor's Ratings Services, adivision of The McGraw Hill Companies, Inc.

 

"Secured Parties" means the Indemnified Parties.

 

"Seller" has the meaning set forth in the preamble tothis Agreement.

 

"Seller Parties" has the meaning set forth in thepreamble to this Agreement.

 

"Servicer" means at any time the Person (which may be theAdministrative Agent) then authorized pursuant to Article VIII toservice, administer and collect Receivables.

 

"Servicing Fee" means, for each day in a CalculationPeriod:

 

            (a)            an amount equal to (i) 0.50% per annum or 1.0% if theoriginal Servicer is replaced (the "*Servicing Fee Rate*") times(ii) theaggregate Outstanding Balance of all Receivables at the close of business onthe Cut-Off Date immediately preceding such Calculation Period, times (iii)1/360; or

 

            (b)            on and after the Servicer's reasonable request made atany time when no Airborne affiliate is acting as Servicer hereunder, analternative amount specified by the successor Servicer not exceeding (i) 110%of such successor Servicer's reasonable costs and expenses of performing itsobligations under this Agreement during the preceding Calculation Period,divided by (ii) the number of days in the current Calculation Period.

 

"Servicing FeeRate" means 1.0% per annum.

 

"Servicing Reserve" means, for any Calculation Period,the product (expressed as a percentage) of (a) the Servicing Fee Rate, times(b) a fraction, the numerator of which is the highest Days Sales Outstandingfor the most recent 12 Calculation Periods and the denominator of which is 360.

 

"Settlement Date" means (A) the 2nd Business Day aftereach Monthly Reporting Date, and (B) the last day of the relevant TranchePeriod in respect of each Receivable Interest funded through a LiquidityFunding, providedhowever, with respect to any Tranche Period forany Receivable Interest funded through a Liquidity Funding that is six months,the Settlement Date for such Tranche Period shall occur on the last day of thethird (3rd) month of such Tranche Period and on the last day of suchTranche Period.

 

"Settlement Period" means (A) in respect of eachReceivable Interest funded through the issuance of Commercial Paper, theimmediately preceding Calculation Period, and (B) in respect of each ReceivableInterest funded through a Liquidity Funding, the entire Tranche Period of suchLiquidity Funding.

 

"Subsidiary" of a Person means (i) any corporation morethan 50% of the outstanding securities having ordinary voting power of whichshall at the time be owned or controlled, directly or indirectly, by suchPerson or by one or more of its Subsidiaries or by such Person and one or moreof its Subsidiaries, or (ii) any partnership, association, limited liabilitycompany, joint venture or similar business organization more than 50% of theownership interests having ordinary voting power of which shall at the time beso owned or controlled.

 

"Tax Code"means the Internal Revenue Code of1986, as the same may be amended from time to time.

 

"Terminating Tranche" has the meaning set forth in Section4.3(b).

 

"Tranche Period" means, with respect to any ReceivableInterest funded through a Liquidity Funding:

 

            (a)            if Yield for such Receivable Interest is calculated onthe basis of the Eurodollar Rate (Reserve Adjusted), a period of one, two,three or six months, or such other period as may be mutually agreeable to theAdministrative Agent and Seller, commencing on a Business Day selected bySeller or the Administrative Agent pursuant to this Agreement.  Such Tranche Period shall end on the day inthe applicable succeeding calendar month which corresponds numerically to thebeginning day of such Tranche Period, provided, however, that ifthere is no such numerically corresponding day in such succeeding month, suchTranche Period shall end on the last Business Day of such succeeding month; or

 

            (b)            if Yield for such Receivable Interest is calculated onthe basis of the Alternate Base Rate, a period commencing on a Business Dayselected by the Administrative Agent, commencing on the day such LiquidityFunding occurs, providedthat no such period shall exceed onemonth.

 

If any Tranche Period would end on a day which is not aBusiness Day, such Tranche Period shall end on the next succeeding BusinessDay, provided,however, that in the case of Tranche Periods corresponding to theEurodollar Rate (Reserve Adjusted), if such next succeeding Business Day fallsin a new month, such Tranche Period shall end on the immediately precedingBusiness Day.  In the case of anyTranche Period which commences before the Facility Termination Date and wouldotherwise end on a date occurring after the Facility Termination Date, suchTranche Period shall end on the Facility Termination Date.  The duration of each Tranche Period whichcommences after the Facility Termination Date shall be of such duration asselected by the Administrative Agent.

 

"Transaction Documents" means, collectively, thisAgreement, each Purchase Notice, the Receivables Sale Agreement, each BlockedAccount Agreement, the Performance Undertaking, the Fee Letter, each Subordinated Note (as defined inthe Receivables Sale Agreement) and all other instruments, documents andagreements executed and delivered in connection herewith.

 

"UCC" means the Uniform Commercial Code as from time totime in effect in the specified jurisdiction.

 

"Unmatured Amortization Event" means an event which, withthe passage of time or the giving of notice, or both, would constitute anAmortization Event.

 

"Unishippers" means UniShippers Association.

 

"Wachovia" means Wachovia Bank, N.A. in its individualcapacity and its successors.

 

"Wachovia Blocked Account" means, collectively, thosedepositary account numbers 8735-028902 and 8736-000912 maintained in the nameof the Seller with Wachovia and in which any Collections are collected ordeposited.

 

"Yield" means for each Tranche Period relating to aReceivable Interest funded through a Liquidity Funding, an amount equal to theproduct of the applicable Yield Rate for such Receivable Interest multiplied bythe Invested Amount of such Receivable Interest for each day elapsed duringsuch Tranche Period, annualized on a 360 day basis.

 

"Yield Rate" means, with respect to each ReceivableInterest funded through a Liquidity Funding, the Eurodollar Rate (ReserveAdjusted), the Alternate Base Rate or the Default Rate, as applicable.

 

"Yield Reserve" means, for any Calculation Period, theproduct (expressed as a percentage) of (i) 1.5 times (ii) the AlternateBase Rate as of the immediately preceding Cut-Off Date times (iii) afraction the numerator of which is the highest Days Sales Outstanding for themost recent 12 Calculation Periods and the denominator of which is 360.

 

All accounting terms not specifically defined herein shallbe construed in accordance with GAAP.All terms used in Article 9 of the UCC in the State of New York, and notspecifically defined herein, are used herein as defined in such Article 9.

 

EXHIBIT II

 

FORM OF PURCHASENOTICE

 

 

**Airborne Credit,Inc.**

**PURCHASE NOTICE**

**dated ______________, 20__**

**for Purchase on ________________, 20__**

 

 

Wachovia Bank, N.A., as Administrative Agent

191 Peachtree Street, N.E., GA-31261

Atlanta, Georgia 30303

 

Attention:  ElizabethWagner, Fax No. (404) 332-5152

With a copy to:  JohnDillon, Fax No. (336) 735-6099

 

Ladies and Gentlemen:

 

            Referenceis made to the Amended and Restated Receivables Purchase Agreement dated as ofAugust 8, 2001 (as amended, supplemented or otherwise modified from time totime, the "*ReceivablesPurchase Agreement*") among Airborne Credit, Inc. (the "*Seller*"), AirborneExpress, Inc. (the "*Servicer*"), theCommitted Investors named therein, Blue Ridge Asset Funding Corporation, andWachovia Bank N.A., as Administrative Agent.Capitalized terms defined in the Receivables Purchase Agreement are usedherein with the same meanings.

 

            1.            The **[Servicer, on behalf of the]** Seller hereby certifies, representsand warrants to the Administrative Agent, the Purchaser and the CommittedInvestors that on and as of the Purchase Date (as hereinafter defined):

 

            (a)            all applicable conditions precedent set forth in ArticleVI of the Receivables Purchase Agreement have been satisfied;

 

            (b)            each of its representations and warranties contained inSection 5.1 of the Receivables Purchase Agreement will be true and correct, inall material respects, as if made on and as of the Purchase Date;

 

            (c)            no event will have occurred and is continuing, or wouldresult from the requested Purchase, that constitutes an Amortization Event orUnmatured Amortization Event;

 

            (d)            the Facility Termination Date has not occurred; and

 

            (e)            after giving effect to the Purchase requested below, theAggregate Invested Amount will not exceed the Purchase Limit and the aggregateReceivable Interests will not exceed 100%.

 

            2.            The **[Servicer, on behalf of the]** Seller hereby requests that Blue Ridgemake a Purchase on ___________, 20__ (the "*Purchase Date*") asfollows:

 

            (a)            Purchase Price:$_____________

 

            (b)            If the Purchase is funded with an Investor Funding or aLiquidity Funding, **[Servicer on behalfof the]** Seller requests that the Invested Amount (which will initiallyaccrue Yield at the Alternate Base Rate) begin to accrued Yield at a EurodollarRate (Reserve Adjusted) for a Tranche Period of _____ months on the thirdBusiness Day after the Purchase Date).

 

            3.            Please disburse the proceeds of thePurchase as follows:

 

**[Apply $________ topayment of Aggregate Unpaids due on the Purchase Date]**.  

**[Wire transfer$________ to account no. ________ at ___________ Bank, in [city, state], ABANo. __________, Reference:  ________]**.

*** ***

            IN WITNESS WHEREOF, the**[Servicer, on behalf of the]** Sellerhas caused this Purchase Request to be executed and delivered as of this ____day of ___________, _____.

 

**[_______________________,as Servicer, on behalf of:]**            ____________.,as Seller

 

 

            By:

            Name:

            Title:

 

 

EXHIBIT III

PLACES OF BUSINESS OF THE SELLER; LOCATIONS OF RECORDS;

FEDERAL EMPLOYER IDENTIFICATION NUMBER

** **

**Places of Business:**

 

**Airborne Credit, Inc.**

            21240Ridgetop Circle

            Sterling,VA 20166

 

            Tel.:(206) 830-4600

 

**AirborneExpress, Inc.**

            3101Western Avenue

            Seattle,WA  98121-1043

            MailingAddress:

            P.O.Box 662

            Seattle,WA  98111-0662

            Tel.:  (206) 830-4600

 

**Locations of Records:**

 

**AirborneCredit, Inc.**

            21240Ridgetop Circle

            Sterling,VA 20166

 

            Tel.:  (206) 830-4600

            And:

 

            AirborneCredit, Inc.

            3101Western Avenue 

            Seattle,WA 98121-1043

 

            MailingAddress:

            P.O.Box 662

            Seattle,WA 98111-0662

 

            Tel.:(206) 830-4600

 

**AirborneExpress, Inc.**

            3101Western Avenue

            Seattle,WA  98121-1043

            MailingAddress:

            P.O.Box 662

            Seattle,WA  98111-0662

            Tel.:  (206) 830-4600

 

**Federal Employer IdentificationNumber:**

 

**AirborneCredit, Inc.**: EIN #91-2092084

 

**Legal, Trade and Assumed Names:**

 

AirborneCredit, Inc. 

** **

 

EXHIBIT IV

LOCK-BOXES & BLOCKED ACCOUNTS

** **

| **style='font-family:"Times New Roman Bold";Lock-Box**                                                | **style='font-family:"Times New Roman Bold";Related Blocked Account**                                                                                                                                                                                           |
|-------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **

Airborne Credit, Inc.

(Current Name: Airborne Express)

P.O Box 91001

Seattle, WA 98111 | Name of Current Account Holder: 

Airborne Freight Corporation

 

**Bank of America**, N.T.S.A.

Account Number:  1233386558

ABA Number:  121000358

Contact Person:  Aaron Van Antwerp

Contact's Tel:  (925)  675-7052

Contact's Fax:  (877) 681-1132 |
|                                                                                                  | Name of Current Account Holder: 

Airborne Freight Corp.

 

**Wachovia Bank**, N.A.

Account Number:  8736-000912

ABA Number:  053100494

Contact Person:  Betty Howard

Contact's Tel:  (404) 332-6458

Contact's Fax:  (404) 332-5253                  |
|                                                                                                  | Name of Current Account Holder: 

Airborne Freight Corporation

 

**Wachovia Bank**, N.A.

Account Number:  8735-028902

ABA Number:  053100494

Contact Person:  Betty Howard

Contact's Tel:  (404) 332-6458

Contact's Fax:  (404) 332-5253            |

 

EXHIBIT V

 

FORM OF COMPLIANCE CERTIFICATE

** **

 

To:  Wachovia Bank,N.A., as Administrative Agent

 

            ThisCompliance Certificate is furnished pursuant to that certain Amended andRestated Receivables Purchase Agreement dated as of August 8, 2001 by and amongAirborne Credit, Inc. (the "*Seller*"), Airborne Express, Inc. (the"*Servicer*"), the Committed Investors named therein, Blue RidgeAsset Funding Corporation and Wachovia Bank, N.A., as Administrative Agent (the"*Agreement*").

 

            THEUNDERSIGNED HEREBY CERTIFIES THAT:

 

            1.            I am the duly elected_________________ of Seller.

 

            2.            I have reviewed the terms of theAgreement and I have made, or have caused to be made under my supervision, adetailed review of the transactions and conditions of Seller and itsSubsidiaries during the accounting period covered by the attached financialstatements.

 

            3.            The examinations described in paragraph2 did not disclose, and I have no knowledge of, the existence of anycondition or event which constitutes an Amortization Event or UnmaturedAmortization Event, as each such term is defined under the Agreement, during orat the end of the accounting period covered by the attached financialstatements or as of the date of this Certificate**[, except as set forth in paragraph 5 below]**.

 

            4.            Schedule I attached heretosets forth financial data and computations evidencing the compliance withcertain covenants of the Agreement, all of which data and computations aretrue, complete and correct.

 

**[5.            Describedbelow 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 existedand the action which Seller has taken, is taking, or proposes to take withrespect to each such condition or event:____________________]**

            Theforegoing certifications, together with the computations set forth in ScheduleI hereto and the financial statements delivered with this Certificate insupport hereof, are made and delivered as of ______________, 20__.

 

 

                                                                        By:

                                                                        Name:

                                                                        Title:

SCHEDULE I TO COMPLIANCE CERTIFICATE

** **

** **

            A.            Schedule of Compliance as of__________, ____ with Section ___ of the Agreement.  Unless otherwise defined herein, the terms used in thisCompliance Certificate have the meanings ascribed thereto in the Agreement.

 

            Thisschedule relates to the month ended: _______________

EXHIBIT VI

FORM OF BLOCKED ACCOUNT AGREEMENT

 

BLOCKEDACCOUNT AGREEMENT

 

 

_____________, 2001

 

**[Blocked Account Bank Name][Blocked Account Bank Address]**

Attn:  ____________________Fax No. (___) ______________

            Re:            **[Name of current Blocked Accountowner]/Airborne Credit, Inc.**

Ladies and Gentlemen:

            Referenceis hereby made to the bank account**[s]** number**[ed]** ___________(each, a "*Blocked Account*") of which **[Blocked Account Bank Name]**, a _________ banking association(hereinafter "*you*"), has exclusive control for the purpose ofprocessing deposits therefrom pursuant to the **[Account Agreement]** originally by and between Airborne Express,Inc. (the "*Company*") and you (the "*Account Agreement*").

 

            1.            The Company hereby informs you that it has transferred toits affiliate, Airborne Credit, Inc.,an Ohio corporation (the "*Seller*")all of the Company's right, title and interest in and to the items from time totime deposited in the Blocked Account, but that the Company has agreed tocontinue to service the receivables giving rise to such items.  Accordingly, the Company and Seller herebyrequest that the name of the Blocked Account be changed to "*Airborne Credit, Inc.*"****Sellerhereby further advises you that it has pledged the receivables giving rise tosuch items to Wachovia Bank, N.A., as administrative agent for various parties(in such capacity, the "*Administrative Agent*") and has granted asecurity interest to the Administrative Agent on behalf the Secured Parties inall of Seller's right, title and interest in and to the Blocked Account and thefunds therein.

 

            2.            Each of the Company and Seller hereby irrevocablyinstructs you, and you hereby agree, that upon receiving notice from theAdministrative Agent in the form attached hereto as Annex A:

 

                        (i)            the name of the Blocked Account willbe changed to "Wachovia Bank, N.A., asAdministrative Agent" (or any designee of the Administrative Agent), and theAdministrative Agent will have exclusive ownership of and access to theBlocked Account and none of the Company, Seller, nor any of their respectiveaffiliates will have any control of the Blocked Account or any access thereto,(ii)you will transfer monies on deposit in the Blocked Account to the followingaccount:

            Bank Name:              WachoviaBank, N.A.

            Location:                      Winston-Salem,SC

            ABA RoutingNo.:            ABA # 053100494

            CreditAccount No.:            For credit to BlueRidge Asset Funding Account #8735-098787.

Reference:  Blue Ridge/Airborne Credit, Inc.

Attention:  John Dillon, tel. (336) 732-2690

 

or to such other account as the Administrative Agent mayspecify, (iii)all services to be performed by you under the Account Agreement will beperformed on behalf of the Administrative Agent, and (iv) all correspondence or othermail which you have agreed to send to the Company or Seller will be sent to theAdministrative Agent at the following address:

 

                        Wachovia Bank, N.A., asAdministrative Agent

                        191 Peachtree Street

                        Mail Stop GA-31261

                        Atlanta, GA  30303

                        Attn:  Elizabeth K. Wagner,                         Asset-Backed Finance

                        FAX:  (404) 332- 5152

 

            Moreover,upon such notice, the Administrative Agent will have all rights and remediesgiven to the Company (and Seller, as the Company's assignee) under the AccountAgreement.  The Company agrees, however,to continue to pay all fees and other assessments due thereunder at any time.

 

            3.            You hereby acknowledge that monies deposited in theBlocked Account or any other account established with you by the AdministrativeAgent for the purpose of receiving funds from the Blocked Account are subjectto the liens of the Administrative Agent, and will not be subject to deduction,set-off, banker's lien or any other right you or any other party may haveagainst the Company or Seller except that you may debit the Blocked Account forany items deposited therein that are returned or otherwise not collected andfor all charges, fees, commissions and expenses incurred by you in providingservices hereunder, all in accordance with your customary practices for thecharge back of returned items and expenses.

 

            4.            You will be liable only for direct damages in the eventyou fail to exercise ordinary care.  Youshall be deemed to have exercised ordinary care if your action or failure toact is in conformity with general banking usages or is otherwise a commerciallyreasonable practice of the banking industry.You shall not be liable for any special, indirect or consequentialdamages, even if you have been advised of the possibility of these damages.

 

            5.            The parties acknowledge that you may assign or transferyour rights and obligations hereunder solely to a wholly-owned subsidiary of **[insert name of Blocked Account Bank'sholding company]**.

 

            6.            Seller agrees to indemnify you for, and hold you harmlessfrom, all claims, damages, losses, liabilities and expenses, including legalfees and expenses, resulting from or with respect to this letter agreement andthe administration and maintenance of the Blocked Account and the servicesprovided hereunder, including, without limitation:  (a) any action taken, or not taken, by you in regard thereto inaccordance with the terms of this letter agreement, (b) the breach of anyrepresentation or warranty made by Seller pursuant to this letter agreement,(c) any item, including, without limitation, any automated clearinghousetransaction, which is returned for any reason, and (d) any failure of Seller topay any invoice or charge to you for services in respect to this letteragreement and the Blocked Account or any amount owing to you from Seller withrespect thereto or to the service provided hereunder.

 

            7.            THIS LETTER AGREEMENT AND THE RIGHTS AND OBLIGATIONS OFTHE PARTIES HEREUNDER WILL BE GOVERNED BY AND CONSTRUED AND INTERPRETED INACCORDANCE WITH THE LAWS OF THE STATE OF _________, WHICH STATE SHALL BE YOUR"LOCATION" FOR PURPOSES OF THE UNIFORM COMMERCIAL CODE FROM AND AFTER JULY 1,2001.  This letter agreement may beexecuted in any number of counterparts and all of such counterparts takentogether will be deemed to constitute one and the same instrument.

 

            8.            This letter agreement contains the entire agreementbetween the parties, and may not be altered, modified, terminated or amended inany respect, nor may any right, power or privilege of any party hereunder bewaived or released or discharged, except upon execution by all parties heretoof a written instrument so providing.In the event that any provision in this letter agreement is in conflictwith, or is inconsistent with, any provision of the Account Agreement, thisletter agreement will exclusively govern and control.  Each party agrees to take all actions reasonably requested by anyother party to carry out the purposes of this letter agreement or to preserveand protect the rights of each party hereunder.

            Pleaseindicate your agreement to the terms of this letter agreement by signing in thespace provided below.  This letter agreementwill become effective immediately upon execution of a counterpart of thisletter agreement by all parties hereto.

 

                                                                        Verytruly yours,

 

****AIRBORNE EXPRESS, INC.

****

                                                                        By:

                                                                        Name:

                                                                        Title:

****

Acknowledged and agreed to as of thedate first above written:

** **

**[BLOCKED ACCOUNTBANK]**

 

 

By:

Name:

Title:

 

WACHOVIA BANK, N.A., ASADMINISTRATIVE AGENT

By:

Name:

Title:

 

AIRBORNE CREDIT, INC.

By:

Name:

Title:

 

** **

**[On letterhead of the Administrative Agent]**

 

**style='font-style:normal'> **

**[Date]**

 

 

 

**[Blocked Account Bank Name][Blocked Account Bank Address]**

Attn:____________________Fax No. (___) ______________

 

            Re:            **[Name of current Blocked Accountowner]/Airborne Credit, Inc.**

Ladies and Gentlemen:

 

            We herebynotify you that we are exercising our rights pursuant to that certain letteragreement dated ________ (the "*Letter Agreement*") among **[Name of current Blocked Account Owner]**,Airborne Credit, Inc., you and us, to have the name of, and to have exclusiveownership and control of, account no. __________ identified in the LetterAgreement (the "*Blocked Account*") maintained with you,transferred to us.  The Blocked Accountwill henceforth be a zero-balance account, and funds deposited in the BlockedAccount should be sent at the end of each day to the account specified inSection 2 of the Letter Agreement, or as otherwise directed by theundersigned.  You have further agreed toperform all other services you are performing under the "Account Agreement" (asdefined in the Letter Agreement) on our behalf.

 

            Weappreciate your cooperation in this matter.

 

                                                                        Verytruly yours,

 

                                                                        WACHOVIABANK, N.A., 

                                                                        ASADMINISTRATIVE AGENT

 

            By:

            Name:

            Title:

 

**FORM OF PERFORMANCE UNDERTAKING**

***This Performance Undertaking*** (this ***"Undertaking"***),dated as of December 28, 2000, is executed by Airborne, Inc., a Delawarecorporation (the ***"Performance Guarantor"***) in favor of Airborne Credit, Inc., a Virginia corporation (together with itssuccessors and assigns, ***"Recipient"***).

**RECITALS**

 

1.     Airborne Express, Inc. ("*Airborne Express*" orthe "*Originator*"), andRecipient have entered into a Receivables Sale Agreement, dated as of December28, 2000 (as amended, restated or otherwise modified from time to time, the "*SaleAgreement*"), pursuant to which Originator, subject to the terms andconditions contained therein, is selling and/or contributing its right, titleand interest in its accounts receivable to Recipient.

2.     Performance Guarantor owns one hundred percent (100%) of thecapital stock of the Originator and Recipient and accordingly, PerformanceGuarantor, is expected to receive substantial direct and indirect benefits fromits sale or contribution of receivables to Recipient pursuant to the SaleAgreement (which benefits are hereby acknowledged).

3.     As an inducement for Recipient to acquire Originator'saccounts receivable pursuant to the Sale Agreement, Performance Guarantor hasagreed to guaranty the due and punctual performance by Originator of itsobligations under the Sale Agreement, as well as Airborne Express's ServicingRelated Obligations (as hereinafter defined).

4.     Performance Guarantor wishes to guaranty the due and punctualperformance by Originator of its obligations to Recipient under or in respectof the Sale Agreement and Airborne Express' Servicing Related Obligations (ashereinafter defined), as provided herein.

**AGREEMENT**

** **

***NOW, THEREFORE,*** PerformanceGuarantor hereby agrees as follows:

Section 1.  Definitions.  Capitalized terms used herein and notdefined herein shall the respective meanings assigned thereto in the SaleAgreement or the Receivables Purchase Agreement (as hereinafter defined).  In addition:

***"Guaranteed Obligations"*** means,collectively:  (a) all covenants,agreements, terms, conditions and indemnities to be performed and observed bythe Originator under and pursuant to the Receivables Sale Agreement and eachother document executed and delivered by the Originator pursuant to the SaleAgreement, including, without limitation, the due and punctual payment of allsums which are or may become due and owing by the Originator under the SaleAgreement, whether for fees, expenses (including counsel fees), indemnifiedamounts or otherwise, whether upon any termination or for any other reason and(b) all obligations of Airborne Express (i) as Servicer under the ReceivablesPurchase Agreement, dated as of December 28, 2000 by and among Recipient, asSeller, Airborne Express, Inc., as Servicer, Blue Ridge Asset FundingCorporation, as Purchaser and Wachovia Bank, N.A., as Administrative Agent (the"*Administrative Agent*") (as amended, restated or otherwisemodified, the"*Receivables Purchase Agreement*" and, together with the SaleAgreement, the "*Agreements*") or (ii)which arise pursuant to Sections 8.2, 8.3 or 14.3(a) of the ReceivablesPurchase Agreement as a result of its termination as Servicer (all suchobligations under this clause (b), collectively, the "*Servicing Related Obligations*").

Section 2.  Guarantyof Performance of Guaranteed Obligations.Performance Guarantor hereby guarantees to Recipient, the full andpunctual payment and performance by the Originator of its GuaranteedObligations.  This Undertaking is an absolute,unconditional and continuing guaranty of the full and punctual performance ofall Guaranteed Obligations of the Originator under the Agreements and eachother document executed and delivered by the Originator pursuant to theAgreements and is in no way conditioned upon any requirement that Recipientfirst attempt to collect any amounts owing by the Originator to Recipient, theAdministrative Agent or the Purchaser from any other Person or resort to anycollateral security, any balance of any deposit account or credit on the booksof Recipient, the Administrative Agent or the Purchaser  in favor of the Originator or any otherPerson or other means of obtaining payment.Should the Originator default in the payment or performance of any ofits Guaranteed Obligations, Recipient (or its assigns) may cause the immediateperformance by Performance Guarantor of the Guaranteed Obligations and causeany payment of Guaranteed Obligations to become forthwith due and payable toRecipient (or its assigns), without demand or notice of any nature (other thanas expressly provided herein), all of which are hereby expressly waived byPerformance Guarantor.  Notwithstandingthe foregoing, this Undertaking is not a guarantee of the collection of any ofthe Receivables and Performance Guarantor shall not be responsible for anyGuaranteed Obligations to the extent the failure to perform such GuaranteedObligations by the Originator results from Receivables being uncollectible onaccount of the insolvency, bankruptcy or lack of creditworthiness of therelated Obligor; ***provided that*** nothing herein shall relieve the Originator fromperforming in full its Guaranteed Obligations under the Agreements orPerformance Guarantor of its undertaking hereunder with respect to the fullperformance of such duties.

Section 3.  PerformanceGuarantor's Further Agreements to Pay.Performance Guarantor further agrees, as the principal obligor and notas a guarantor only, to pay to Recipient (and its assigns), forthwith upondemand in funds immediately available to Recipient, all reasonable costs andexpenses (including court costs and reasonable legal expenses) incurred orexpended by Recipient in connection with the Guaranteed Obligations, thisUndertaking and the enforcement thereof, together with interest on amountsrecoverable under this Undertaking from the time when such amounts become dueuntil payment, at a rate of interest (computed for the actual number of dayselapsed based on a 360 day year) equal to the Prime Rate plus 2% *per annum*, such rate of interestchanging when and as the Prime Rate changes.

Section 4.  Waiversby Performance Guarantor.Performance Guarantor waives notice of acceptance of this Undertaking,notice of any action taken or omitted by Recipient (or its assigns) in relianceon this Undertaking, and any requirement that Recipient (or its assigns) bediligent or prompt in making demands under this Undertaking, giving notice ofany Termination Event, Amortization Event, other default or omission by theOriginator or asserting any other rights of Recipient under this Undertaking.  Performance Guarantor warrants that it hasadequate means to obtain from the Originator, on a continuing basis,information concerning the financial condition of such Originator, and that itis not relying on Recipient to provide such information, now or in thefuture.  Performance Guarantor alsoirrevocably waives all defenses (i) that at any time may be available inrespect of the Obligations by virtue of any statute of limitations, valuation,stay, moratorium law or other similar law now or hereafter in effect or (ii)that arise under the law of suretyship, including impairment ofcollateral.  Recipient (and its assigns)shall be at liberty, without giving notice to or obtaining the assent ofPerformance Guarantor and without relieving Performance Guarantor of anyliability under this Undertaking, to deal with the Originator and with eachother party who now is or after the date hereof becomes liable in any mannerfor any of the Guaranteed Obligations, in such manner as Recipient in its solediscretion deems fit, and to this end Performance Guarantor agrees that thevalidity and enforceability of this Undertaking, including without limitation,the provisions of Section 7 hereof, shall not be impaired or affected by any ofthe following:  (a) any extension, modificationor renewal of, or indulgence with respect to, or substitutions for, theGuaranteed Obligations or any part thereof or any agreement relating thereto atany time; (b) any failure or omission to enforce any right, power or remedywith respect to the Guaranteed Obligations or any part thereof or any agreementrelating thereto, or any collateral securing the Guaranteed Obligations or anypart thereof; (c) any waiver of any right, power or remedy or of anyTermination Event, Amortization Event, or default with respect to theGuaranteed Obligations or any part thereof or any agreement relating thereto;(d) any release, surrender, compromise, settlement, waiver, subordination ormodification, with or without consideration, of any other obligation of anyperson or entity with respect to the Guaranteed Obligations or any partthereof; (e) the enforceability or validity of the Guaranteed Obligations orany part thereof or the genuineness, enforceability or validity of anyagreement relating thereto or with respect to the Guaranteed Obligations or anypart thereof; (f) the application of payments received from any source to thepayment of any payment Obligations of the Originator or any part thereof oramounts which are not covered by this Undertaking even though Recipient (or itsassigns) might lawfully have elected to apply such payments to any part or allof the payment Obligations of such Originator or to amounts which are notcovered by this Undertaking; (g) the existence of any claim, setoff or other rightswhich Performance Guarantor may have at any time against the Originator inconnection herewith or any unrelated transaction; (h) any assignment ortransfer of the Guaranteed Obligations or any part thereof; or (i) any failureon the part of the Originator to perform or comply with any term of theAgreements or any other document executed in connection therewith or deliveredthereunder, all whether or not Performance Guarantor shall have had notice orknowledge of any act or omission referred to in the foregoing clauses (a)through (i) of this Section 4.

Section 5.  Unenforceabilityof Guaranteed Obligations Against Originators.  Notwithstanding (a) any change of ownership of the Originator orthe insolvency, bankruptcy or any other change in the legal status of theOriginator; (b) the change in or the imposition of any law, decree, regulationor other governmental act which does or might impair, delay or in any wayaffect the validity, enforceability or the payment when due of the GuaranteedObligations; (c) the failure of the Originator or Performance Guarantor tomaintain in full force, validity or effect or to obtain or renew when requiredall governmental and other approvals, licenses or consents required inconnection with the Guaranteed Obligations or this Undertaking, or to take anyother action required in connection with the performance of all obligationspursuant to the Guaranteed Obligations or this Undertaking; or (d) if any ofthe moneys included in the Guaranteed Obligations have become irrecoverablefrom the Originator for any other reason other than final payment in full ofthe payment Obligations in accordance with their terms, this Undertaking shallnevertheless be binding on Performance Guarantor.  This Undertaking shall be in addition to any other guaranty orother security for the Guaranteed Obligations, and it shall not be renderedunenforceable by the invalidity of any such other guaranty or security.  In the event that acceleration of the time forpayment of any of the Guaranteed Obligations is stayed upon the insolvency,bankruptcy or reorganization of the Originator or for any other reason withrespect to the Originator, all such amounts then due and owing with respect tothe Guaranteed Obligations under the terms of the Agreements, or any otheragreement evidencing, securing or otherwise executed in connection with theGuaranteed Obligations, shall be immediately due and payable by PerformanceGuarantor.

Section 6.  Representationsand Warranties.  PerformanceGuarantor hereby represents and warrants to Recipient that:

(a)            Existenceand Standing.  Performance Guarantoris a corporation duly organized, validly existing and in good standing underthe laws of its state of incorporation.Performance Guarantor is duly qualified to do business and is in goodstanding as a foreign corporation, and has and holds all corporate power andall governmental licenses, authorizations, consents and approvals required tocarry on its business in each jurisdiction in which its business is conductedexcept where the failure to so qualify or so hold could not reasonably beexpected to have a Material Adverse Effect.

(b)            Authorization,Execution and Delivery; Binding Effect.The execution and delivery by Performance Guarantor of this Undertaking,and the performance of its obligations hereunder, are within its corporatepowers and authority and have been duly authorized by all necessary corporateaction on its part.  This Undertakinghas been duly executed and delivered by Performance Guarantor.  This Undertaking constitutes the legal,valid and binding obligation of Performance Guarantor enforceable againstPerformance Guarantor in accordance with its terms, except as such enforcementmay be limited by applicable bankruptcy, insolvency, reorganization or othersimilar laws relating to or limiting creditors' rights generally and by generalprinciples of equity (regardless of whether enforcement is sought in aproceeding in equity or at law).

(c)         NoConflict; Government Consent.  Theexecution and delivery by Performance Guarantor of this Undertaking, and theperformance of its obligations hereunder do not contravene or violate (i) itscertificate or articles of incorporation or by-laws, (ii) any law, rule orregulation 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 itsproperty is bound, or (iv) any order, writ, judgment, award, injunction ordecree binding on or affecting it or its property, and do not result in thecreation or imposition of any Adverse Claim on assets of Performance Guarantoror its Subsidiaries (except as created hereunder) except, in any case, wheresuch contravention or violation could not reasonably be expected to have aMaterial Adverse Effect.

(d)            FinancialStatements.  The consolidatedfinancial statements of Performance Guarantor and its consolidated Subsidiariesdated as of December 31, 1999and September 30, 2000 heretofore delivered to Recipient have been prepared inaccordance with generally accepted accounting principles consistently appliedand fairly present in all material respects the consolidated financialcondition and results of operations of Performance Guarantor and itsconsolidated Subsidiaries as of such dates and for the periods ended on suchdates.  Since the later of (i) September 30, 2000 and (ii) the lasttime this representation was made or deemed made, no event has occurred whichwould or could reasonably be expected to have a Material Adverse Effect.

(e)         Taxes.  Performance Guarantor has filed all UnitedStates federal tax returns and all other tax returns which are required to befiled and have paid all taxes due pursuant to said returns or pursuant to anyassessment received by Performance Guarantor or any of its Subsidiaries, exceptsuch taxes, if any, as are being contested in good faith and as to whichadequate reserves have been provided.The United States income tax returns of Performance Guarantor have beenaudited by the Internal Revenue Service through the fiscal year ended December 31, 1999.  No federal or state tax liens have beenfiled and no claims are being asserted with respect to any such taxes.  The charges, accruals and reserves on thebooks of Performance Guarantor in respect of any taxes or other governmental chargesare adequate.

(f)            Litigationand Contingent Obligations.  Exceptas disclosed in the filings made by Performance Guarantor with the Securitiesand Exchange Commission, there are no actions, suits or proceedings pending or,to the best of Performance Guarantor's knowledge threatened against oraffecting Performance Guarantor or any of its properties, in or before anycourt, arbitrator or other body, that could reasonably be expected to have aMaterial Adverse Effect on (i) the business, properties, condition (financialor otherwise) or results of operations ofPerformance Guarantor and its Subsidiaries taken as a whole, (ii) theability of Performance Guarantor to perform its obligations under thisUndertaking, or (iii) the validity or enforceability of any of this Undertakingor the rights or remedies of Recipient hereunder.  Performance Guarantor does not have any material ContingentObligations not provided for or disclosed in the financial statements referredto in Section 6(d).

Section 7.  Subrogation;Subordination.  Notwithstandinganything to the contrary contained herein, until the Guaranteed Obligations arepaid in full Performance Guarantor:  (a)will not enforce or otherwise exercise any right of subrogation to any of therights of Recipient, the Administrative Agent or any Lender against theOriginator, (b) hereby waives all rights of subrogation (whether contractual,under Section 509 of the United States Bankruptcy Code, at law or in equity orotherwise) to the claims of Recipient, the Administrative Agent and thePurchaser against the Originator and all contractual, statutory or legal orequitable rights of contribution, reimbursement, indemnification and similarrights and "claims" (as that term is defined in the United States Bankruptcy Code)which Performance Guarantor might now have or hereafter acquire against theOriginator that arise from the existence or performance of PerformanceGuarantor's obligations hereunder, (c) will not claim any setoff, recoupment orcounterclaim against the Originator in respect of any liability of PerformanceGuarantor to such Originator and (d) waives any benefit of and any right toparticipate in any collateral security which may be held by Beneficiaries, theAdministrative Agent or the Purchaser.The payment of any amounts due with respect to any indebtedness of theOriginator now or hereafter owed to Performance Guarantor is herebysubordinated to the prior payment in full of all of the GuaranteedObligations.  Performance Guarantoragrees that, after the occurrence of any default in the payment or performanceof any of the Guaranteed Obligations, Performance Guarantor will not demand,sue for or otherwise attempt to collect any such indebtedness of the Originatorto Performance Guarantor until all of the Guaranteed Obligations shall havebeen paid and performed in full.  If,notwithstanding the foregoing sentence, Performance Guarantor shall collect,enforce or receive any amounts in respect of such indebtedness while anyObligations are still unperformed or outstanding, such amounts shall becollected, enforced and received by Performance Guarantor as trustee forRecipient (and its assigns) and be paid over to Recipient (or its assigns) onaccount of the Guaranteed Obligations without affecting in any manner theliability of Performance Guarantor under the other provisions of thisUndertaking.  The provisions of thisSection 7 shall be supplemental to and not in derogation of any rights andremedies of Recipient under any separate subordination agreement whichRecipient may at any time and from time to time enter into with PerformanceGuarantor.

Section 8.  Terminationof Performance Undertaking.Performance Guarantor's obligations hereunder shall continue in fullforce and effect until all Obligations are finally paid and satisfied in fulland the Credit and Security Agreement is terminated, ***provided that*** thisUndertaking shall continue to be effective or shall be reinstated, as the casemay be, if at any time payment or other satisfaction of any of the GuaranteedObligations is rescinded or must otherwise be restored or returned upon thebankruptcy, insolvency, or reorganization of the Originator or otherwise, asthough such payment had not been made or other satisfaction occurred, whetheror not Recipient (or its assigns) is in possession of this Undertaking.  No invalidity, irregularity orunenforceability by reason of the federal bankruptcy code or any insolvency orother similar law, or any law or order of any government or agency thereofpurporting to reduce, amend or otherwise affect the Guaranteed Obligationsshall impair, affect, be a defense to or claim against the obligations ofPerformance Guarantor under this Undertaking.

Section 9.  Effectof Bankruptcy.  This PerformanceUndertaking shall survive the insolvency of the Originator and the commencementof any case or proceeding by or against the Originator under the federalbankruptcy code or other federal, state or other applicable bankruptcy,insolvency or reorganization statutes.No automatic stay under the federal bankruptcy code with respect to theOriginator or other federal, state or other applicable bankruptcy, insolvencyor reorganization statutes to which the Originator is subject shall postponethe obligations of Performance Guarantor under this Undertaking.

Section 10.  Setoff.  Regardless of the other means of obtainingpayment of any of the Guaranteed Obligations, Recipient (and its assigns) ishereby authorized at any time and from time to time, without notice toPerformance Guarantor (any such notice being expressly waived by PerformanceGuarantor) and to the fullest extent permitted by law, to set off and apply anydeposits and other sums against the obligations of Performance Guarantor underthis Undertaking, whether or not Recipient (or any such assign) shall have madeany demand under this Undertaking and although such Obligations may becontingent or unmatured.

Section 11.  Taxes.  All payments to be made by PerformanceGuarantor hereunder shall be made free and clear of any deduction orwithholding.  If Performance Guarantoris required by law to make any deduction or withholding on account of tax orotherwise from any such payment, the sum due from it in respect of such paymentshall be increased to the extent necessary to ensure that, after the making ofsuch deduction or withholding, Recipient receive a net sum equal to the sumwhich they would have received had no deduction or withholding been made.

Section 12.  FurtherAssurances.  Performance Guarantoragrees that it will from time to time, at the request of Recipient (or itsassigns), provide information relating to the business and affairs ofPerformance Guarantor as Recipient may reasonably request.  Performance Guarantor also agrees to do allsuch things and execute all such documents as Recipient (or its assigns) mayreasonably consider necessary or desirable to give full effect to thisUndertaking and to perfect and preserve the rights and powers of Recipienthereunder.  

Section 13.  Successorsand Assigns.  This PerformanceUndertaking shall be binding upon Performance Guarantor, its successors andpermitted assigns, and shall inure to the benefit of and be enforceable byRecipient and its successors and assigns.Performance Guarantor may not assign or transfer any of its obligationshereunder without the prior written consent of each of Recipient and theAdministrative Agent. Without limiting the generality of the foregoingsentence, Recipient may assign or otherwise transfer the Agreements, any otherdocuments executed in connection therewith or delivered thereunder or any otheragreement or note held by them evidencing, securing or otherwise executed inconnection with the Guaranteed Obligations, or sell participations in anyinterest therein, to any other entity or other person, and such other entity orother person shall thereupon become vested, to the extent set forth in theagreement evidencing such assignment, transfer or participation, with all therights in respect thereof granted to the Beneficiaries herein.

Section 14.  Amendmentsand Waivers.  No amendment or waiverof any provision of this Undertaking nor consent to any departure byPerformance Guarantor therefrom shall be effective unless the same shall be inwriting and signed by Recipient, the Administrative Agent and PerformanceGuarantor.  No failure on the part ofRecipient to exercise, and no delay in exercising, any right hereunder shalloperate as a waiver thereof; nor shall any single or partial exercise of anyright hereunder preclude any other or further exercise thereof or the exerciseof any other right.

Section 15.  Notices.  All notices and other communicationsprovided for hereunder shall be made in writing and shall be addressed asfollows:  if to Performance Guarantor,at the address set forth beneath its signature hereto, and if to Recipient, atthe addresses set forth beneath its signature hereto, or at such otheraddresses as each of Performance Guarantor or any Recipient may designate inwriting to the other.  Each such noticeor other communication shall be effective (1) if given by telecopy, upon thereceipt thereof, (2) if given by mail, three (3) Business Days after the timesuch communication is deposited in the mail with first class postage prepaid or(3) if given by any other means, when received at the address specified in thisSection 15.

Section 16.  GOVERNINGLAW.  THIS UNDERTAKING SHALL BECONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK (ANDNOT THE LAW OF CONFLICTS OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERALOBLIGATIONS LAW).

Section 17.  CONSENTTO JURISDICTION.  EACH OFPERFORMANCE GUARANTOR AND RECIPIENT HEREBY IRREVOCABLY SUBMITS TO THENON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURTSITTING IN THE BOROUGH OF MANHATTAN IN ANY ACTION OR PROCEEDING ARISING OUT OFOR RELATING TO THIS UNDERTAKING, THE AGREEMENTS OR ANY OTHER DOCUMENT EXECUTEDIN CONNECTION THEREWITH OR DELIVERED THEREUNDER AND EACH OF THE PERFORMANCEGUARANTOR AND RECIPIENT HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OFSUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT ANDIRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUEOF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCHCOURT IS AN INCONVENIENT FORUM.

Section 18.  BankruptcyPetition.  Performance Guarantorhereby covenants and agrees that, prior to the date that is one year and oneday after the payment in full of all outstanding senior Indebtedness ofRecipient, it will not institute against, or join any other Person ininstituting against, Recipient any bankruptcy, reorganization, arrangement,insolvency or liquidation proceedings or other similar proceeding under thelaws of the United States or any state of the United States.

Section 19.  Miscellaneous.  This Undertaking constitutes the entireagreement of Performance Guarantor with respect to the matters set forthherein. The rights and remedies herein provided are cumulative and notexclusive of any remedies provided by law or any other agreement, and thisUndertaking shall be in addition to any other guaranty of or collateralsecurity for any of the Guaranteed Obligations.  The provisions of this Undertaking are severable, and in anyaction or proceeding involving any state corporate law, or any state or federalbankruptcy, insolvency, reorganization or other law affecting the rights ofcreditors generally, if the obligations of Performance Guarantor hereunderwould otherwise be held or determined to be avoidable, invalid or unenforceableon account of the amount of Performance Guarantor's liability under thisUndertaking, then, notwithstanding any other provision of this Undertaking tothe contrary, the amount of such liability shall, without any further action byPerformance Guarantor or Recipient, be automatically limited and reduced to thehighest amount that is valid and enforceable as determined in such action orproceeding.  Any provisions of thisUndertaking which are prohibited or unenforceable in any jurisdiction shall, asto such jurisdiction, be ineffective to the extent of such prohibition orunenforceability without invalidating the remaining provisions hereof, and anysuch prohibition or unenforceability in any jurisdiction shall not invalidateor render unenforceable such provision in any other jurisdiction.  Unless otherwise specified, referencesherein to "Section"shall mean a reference to sections of this Undertaking.

***IN WITNESS WHEREOF,*** PerformanceGuarantor has caused this Undertaking to be executed and delivered as of thedate first above written.

AIRBORNE,INC.

 

By: ______________________________

Name: ____________________________

Title:_____________________________

 

Address:

3101Western Avenue 

Seattle,WA 98121-1043

Telephone:(206) 281-1003

Fax:(206) 281-1444

 

EXHIBIT VIII

 

FORM OF MONTHLY REPORT

 

**[EXHIBIT IX**

** **

**FORM OF CONTRACT(S)]**

** **

**[SeeAttached]**

** **

EXHIBIT X

 

FORM OF DELIVERY ORDER

 

**[On letterhead of the Airborne Credit, Inc.]**

 

**[Date]**

 

**United States PostalService**

**[Address]**

** **

Attn:  ____________________Fax No. (___) ______________

 

            Re:            **Post Office Box Number [___________](the "*P.O. Box*").**

Ladies and Gentlemen:

 

            We herebynotify you that we have assigned all of our rights, titles and interests,including, without limitation, all of our rights to control the P.O. Box and/orremove any or all of the items from the P.O. Box to Wachovia Bank, N.A and itssuccessors and designees.  From the datehereof, immediately upon the receipt of any item in the P.O. Box, pleaseforward all such items to the following address:

 

Wachovia Bank, N.A., asAdministrative Agent

191 Peachtree Street

Mail Stop GA-31261

Atlanta, GA  30303

Attn:  Elizabeth K. Wagner, Asset-Backed Finance

FAX:  (404) 332- 5152

 

            Weappreciate your cooperation in this matter.

 

                                                                        Verytruly yours,

 

                                                                        AIRBORNECREDIT, INC.

 

            By:

            Name:

            Title:

EXHIBIT XI

FORM OFNOTICE OF COMMITTED INVESTOR PURCHASE

 

To:       [Non-Renewing Investor/Downgraded Investor]

            Attention:__________________

 

Ladies and Gentlemen:

 

            Theundersigned, Airborne Express, Inc. ("*Airborne Express*") refersto the Amended and Restated Receivables Purchase Agreement, dated as of August8, 2001 among Airborne Credit, Inc., as seller (the "*Seller*"),Airborne Express, as servicer, the committed investors from time to time partythereto, Blue Ridge Asset Funding Corporation, as purchaser ("*Blue Ridge*")and Wachovia Bank, N.A., as administrative agent (the "Administrative Agent")(as the same may be amended, supplemented, or otherwise modified from time totime, the "*Purchase Agreement*").Capitalized terms not otherwise defined herein being used shall have themeanings assigned to such terms in the Purchase Agreement.

 

            TheServicer hereby gives you, a **[Non-Renewing Purchaser][Downgraded Purchaser]**,notice, irrevocably, pursuant to Section 4.7(b) of the Purchase Agreement thatthe Seller hereby requests a Purchase Account Deposit under the PurchaseAgreement, and in connection therewith sets forth below the informationrelating to such Purchase Account Deposit (the "*Proposed Deposit*")as required by Section 4.7(b) of the Purchase Agreement:

 

            (a)            The deposit date of the Proposed Deposit is______________.

            (b)            The aggregate amount of the Proposed Deposit is$______________ which is your Commitment minus the Aggregate InvestedAmount of the portion of Receivables Interests owned by you, whether hereunderor pursuant to the Liquidity Agreement (after giving effect to any assignmentby Wachovia Bank, N.A. of Receivables Interests to you).

            IN WITNESS WHEREOF, theServicer, on behalf of the Seller hascaused this Notice of Conversion to be executed and delivered as of this ____day of ___________, _____.

                                                            AIRBORNEEXPRESS, INC., 

style='font-size:11.0pt;'>asServicer, on behalf of Airborne Credit, Inc., as Seller

                                                            By:

                                                            Name:

                                                            Title:

EXHIBIT XII

FORM OFNOTICE OF CONVERSION

 

To:              Wachovia Bank, N.A., asAdministrative Agent

            191Peachtree Street, N.E., GA-31261

            Atlanta, GA30303

            Attention:Elizabeth Wagner, Fax No. (404) 332-5152

 

Ladies and Gentlemen:

 

            Theundersigned, Airborne Express, Inc. ("*Airborne Express*") refersto the Amended and Restated Receivables Purchase Agreement, dated as of August8, 2001 among Airborne Credit, Inc., as seller (the "*Seller*"),Airborne Express, as servicer (the "*Servicer*"), the committedinvestors from time to time party thereto, Blue Ridge Asset FundingCorporation, as purchaser ("*Blue Ridge*") and Wachovia Bank, N.A.,as administrative agent (the "Administrative Agent") (as the same may beamended, supplemented, or otherwise modified from time to time, the "*PurchaseAgreement*").  Capitalized termsnot otherwise defined herein being used shall have the meanings assigned tosuch terms in the Purchase Agreement.

 

            1.  The Servicer hereby gives you notice,irrevocably, pursuant to Section 4.7(c) of the Purchase Agreement that theSeller hereby requests to convert **[all/a portion]** of the PurchaseAccount Deposit of **[Name of Non-Renewing Investor(s)][Name of DowngradedInvestor(s)]** to a Purchase of Receivable Interests under the PurchaseAgreement, and in connection therewith sets forth below the informationrelating to such Purchase (the "*Proposed Purchase*") as requiredby Section 4.7(c) of the Purchase Agreement:

 

            (a)            The Purchase Date of the Proposed Purchase is______________.

            (b)            The aggregate amount of the Proposed Purchase is$______________.

            2.  The Servicer, on behalf of the Seller herebycertifies, represents and warrant to the Administrative Agent, the Purchaserand the Committed Investors that on and as of the Purchase Date of the ProposedPurchase:

            (a)            all applicable conditions precedent set forth in ArticleVI of the Purchase Agreement have been satisfied;

            (b)            each of its representations and warranties contained inSection 5.1 of the Purchase Agreement will be true and correct, in all materialrespects, as if made on and as of the Purchase Date;

            (c)            no event will have occurred and is continuing, or wouldresult from the requested Purchase, that constitutes an Amortization Event orUnmatured Amortization Event;

            (d)            the Facility Termination Date has not occurred; and

            (e)            after giving effect to the Purchase requested below, theAggregate Invested Amount will not exceed the Purchase Limit and the aggregateReceivable Interests will not exceed 100%.

            IN WITNESS WHEREOF, theServicer, on behalf of the Seller hascaused this Notice of Conversion to be executed and delivered as of this ____day of ___________, _____.

                                                            AIRBORNEEXPRESS, INC., 

style='font-size:11.0pt;'>asServicer, on behalf of Airborne Credit, Inc., as Seller

                                                            By:

                                                            Name:

                                                            Title:

 

 

EXHIBIT XIII

FORM OFASSIGNMENT AND ACCEPTANCE

 

Dated __________

 

 

                        Reference is made to theAmended and Restated Receivables Purchase Agreement dated as of August 8, 2001(as amended, supplemented or otherwise modified from time to time, the "*ReceivablesPurchase Agreement*") among Airborne Credit, Inc. (the "*Seller*"), AirborneExpress, Inc. (the "*Servicer*"), theCommitted Investors named therein, Blue Ridge Asset Funding Corporation, andWachovia Bank N.A., as Administrative Agent.Capitalized terms defined in the Receivables Purchase Agreement are usedherein with the same meanings.

 

**[Name of Non-Renewing Investor]**(the "*Assignor*") and **[Nameof Additional Investor]** (the "*Assignee*")agree as follows:

 

1 .            TheAssignor hereby sells and assigns to the Assignee, and the Assignee herebypurchases and assumes from the Assignor, that interest in and to all of theAssignor's rights and obligations under the Purchase Agreement as of the datehereof which represents the percentage interest specified in Section 1of Schedule 1 of all outstanding rights and obligations of the Assignor underthe Purchase Agreement, including, without limitation, such interest in theportion of the Receivables Interest funded by the Assignor.  After giving effect to such sale andassignment, the amount of Aggregate Invested Amount with respect to theAssignee will be as set forth in Section 2 of Schedule 1.

 

                        2.            TheAssignor (i) represents and warrants that it is the legal and beneficial ownerof the interest being assigned by it hereunder and that such interest is freeand clear of any adverse claim; (ii) makes no representation or warranty andassumes no responsibility with respect to any statements, warranties orrepresentations made in or in connection with the Purchase Agreement or theexecution, legality, validity, enforceability, genuineness, sufficiency orvalue of the Purchase Agreement or any other instrument or document furnishedpursuant thereto; and (iii) makes no representation or warranty and assumes noresponsibility with respect to the financial condition of Blue Ridge or theperformance or observance by Blue Ridge of any of its obligations under thePurchase Agreement or any other instrument or document furnished pursuantthereto.

 

                        3.            TheAssignee (i) confirms that it has received a copy of the Purchase Agreement,together with copies of such financial statements and such other documents andinformation as it has deemed appropriate to make its own credit analysis anddecision to enter into this Assignment and Acceptance; (ii) agrees that itwill, independently and without reliance upon the Administrative Agent, theAssignor or any other Committed Investor and based on such documents andinformation as it shall deem appropriate at the time, continue to make its owncredit decisions in taking or not taking action under the Purchase Agreement;(iii) confirms that it is an Eligible Assignee; (iv) appoints andauthorizes the Administrative Agent to take such action as agent on its behalfand to exercise such powers under the Purchase Agreement as are delegated tothe Administrative Agent, by the terms thereof, together with such powers asare reasonably incidental thereto; and (v) agrees that it will perform inaccordance with their terms all of the obligations which by the terms of theAgreement are required to be performed by it as a Committed Investor.

 

                        4.            Followingthe execution of this Assignment and Acceptance by the Assignor and theAssignee, it will be delivered to the Administrative Agent for acceptance andrecording by the Administrative Agent.The effective date of this Assignment and Acceptance (the "*Transfer Date*") shall be the dateof acceptance thereof by the Administrative Agent , unless a later date isspecified in Section 3 of Schedule 1 hereof.

 

                        5.            Uponsuch acceptance by the Administrative Agent and upon such recording by theAdministrative Agent, as of the Transfer Date, (i) the Assignee shall be aparty to the Agreement and, to the extent provided in this Assignment andAcceptance, have the rights and obligations of a Committed Investor thereunderand (ii) the Assignor shall, to the extent provided in this Assignment andAcceptance, relinquish its rights and be released from its obligations underthe Purchase Agreement.

 

                        6.            Uponsuch acceptance by the Administrative Agent and upon such recording by theAdministrative Agent, from and after the Transfer Date, the AdministrativeAgent shall make, or cause to be made, all payments under the PurchaseAgreement in respect of the interest assigned hereby (including, withoutlimitation, all payments of principal and interest with respect thereto) to theAssignee.  The Assignor and Assigneeshall make all appropriate adjustments in payments under the Purchase Agreementfor periods prior to the Transfer Date directly between themselves.

 

7 .            ThisAssignment and Acceptance shall be governed by, and construed in accordancewith, the laws of the State of New York.

 

[remainderof page intentionally left blank]

                        IN WITNESS WHEREOF, the partieshereto have caused this Assignment and Acceptance to be executed by theirrespective officers thereunto duly authorized, as of the date first abovewritten.

 

**[NAME OF ASSIGNOR]**

 

 

                                                            By:______________________________________

                                                                Name:

                                                                Title:

 

Address for notices

**[Address]**

 

**[NAME OF ASSIGNEE]**

 

 

                                                            By:______________________________________

                                                                Name:

                                                                Title:

 

Address for notices

**[Address]**

 

Acknowledged and accepted

this ___ day of ___________, ____

 

WACHOVIA BANK, N.A.,

as Administrative Agent

 

By:____________________________________

    Name:

Title:

      Schedule1

                   to

Assignmentand Acceptance

              Dated_________

 

 

Section1.

 

                         PercentageInterest:                        ________%

 

 

Section2.

 

                        Assignee's Commitment:             $____________

 

                        Invested Amount

                        Owing to the Assignee:$_____________

 

 

Section3.

 

                        Transfer Date: ___________________

 

 

 

SCHEDULE A

 

** **

DOCUMENTS TO BE DELIVERED TO THEADMINISTRATIVE AGENT

ON OR PRIOR TO THE AMENDMENT CLOSING DATE

            1.            Executedcopies of the Agreement, duly executed by the parties thereto.

 

            2.            Copy of the Resolutions of the Board of Directors of eachSeller Party certified by its Secretary authorizing such Person's execution,delivery and performance of this Agreement and the other documents to bedelivered by it hereunder.

 

            3.            Articles or Certificate of Incorporation of thePerformance Guarantor and each Seller Party certified by the Secretary of Stateof its jurisdiction of incorporation on or within thirty (30) days prior to theAmendment Closing Date.

 

            4.            Good Standing Certificate for the Performance Guarantorand each Seller Party issued by the Secretaries of State of its state ofincorporation and each jurisdiction where it has material operations, each ofwhich is listed below:

 

(a)         Seller: Virginia, Washington

 

(b)            Servicer:Delaware, Washington

 

(c)            Performance Guarantor:Delaware, Washington

 

            5.            A certificate of the Secretary of each Seller Partycertifying (i) the names and signatures of the officers authorized on itsbehalf to execute this Agreement and any other documents to be delivered by ithereunder and (ii) a copy of such Person's By-Laws.

 

            6.            Time stamped receipt copies of proper amendments to UCC-1financing statements, duly filed under the UCC on or before the AmendmentClosing Date, in all jurisdictions as may be necessary or, in the opinion ofthe Administrative Agent, desirable, under the UCC of all appropriate jurisdictionsor any comparable law in order to perfect the ownership interests contemplatedby this Agreement.

 

            7.            A favorable opinion of legal counsel for the SellerParties reasonably acceptable to the Administrative Agent which addresses dueauthorization, execution, delivery, enforceability and other corporate mattersof the Seller Parties as to the Transaction Documents and the creation of afirst priority perfected security interest in favor of the Administrative Agenton behalf of the Purchaser and the Committed Investors in (1) all of theReceivables and Related Security (and including specifically any undividedinterest therein retained by the Seller hereunder), the Receivables SaleAgreement and other Transaction Documents and (2) all proceeds of any of theforegoing.

 

           8.            A Compliance Certificate.

 

            9.            The Fee Letter.

 

            10.            A Monthly Report as at June 30, 2001.

 

            11.            Executed copies of (i) all consents from andauthorizations by any Persons and (ii) all waivers and amendments to existingcredit facilities, that are necessary in connection with this Agreement.