ES FUNDING CORPORATION
as Buyer
and
ENVIROTEST PARTNERS
as Seller
PURCHASE AND SALE AGREEMENT
Dated as of November 26, 1996
PURCHASE AND SALE AGREEMENT
PURCHASE AND SALE AGREEMENT, dated as of November 26, 1996,
between, ENVIROTEST PARTNERS, a Pennsylvania partnership (the "Seller"), and
ES FUNDING CORPORATION, a Delaware corporation (the "Buyer"). Any reference
to the "Buyer" in this Agreement shall include any person to whom an
assignment has been made pursuant to Section 10.5 hereof (after giving effect
to such assignment).
WITNESSETH:
WHEREAS, the Buyer desires to purchase the right, title and
interest in and to the Settlement Receivable Assets (as defined below) under
the Settlement Agreement (as defined below) (along with certain other rights
that may be incidental thereto) from the Seller;
WHEREAS, the Seller desires to sell and assign to the Buyer such
Settlement Receivable Assets upon the terms and conditions hereinafter set
forth;
WHEREAS, upon the purchase of such Settlement Receivable Assets,
the Buyer will enter into the Settlement Receivable Purchase Agreement (as
defined below) with MSCC (as defined below) and in accordance with the terms
thereof sell to MSCC all of the Buyer's right, title and interest in and to
such Settlement Receivable Assets;
WHEREAS, MSCC will enter into a Liquidity Loan Agreement, dated the
date thereof(the "Liquidity Loan Agreement"), with PNC Bank, National
Association, as Administrator (the "Administrator") and Liquidity Agent ("the
"Liquidity Lenders") from time to time parties thereto, whereby the rights of
MSCC under this Agreement and the Settlement receivable Purchase Agreement
may be pledged to the Liquidity Agent; and
WHEREAS, on or after the effective date of this Agreement MSCC may
assign its right, title and interest under this Agreement to MSFC (as defined
below).
NOW THEREFORE, it is hereby agreed by and between the Buyer and the
Seller as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 DEFINITIONS. For all purposes of this Agreement,
except as otherwise expressly provided herein or unless the contact otherwise
requires capitalized terms used herein shall have the following meanings
assigned to them:
"Affiliate" shall mean, with respect to any Person, (a) each Person
that, directly or indirectly, through one or more intermediaries, owns or
controls, either beneficially or as trustee, guardian or other fiduciary, any
of the capital stock having ordinary voting power in the election of
directors of such Person or of the ownership interests in any partnership or
joint venture, (b) each Person that controls, is controlled by or is under
common control with such Person or any Affiliate of such person or (c) each
of such Person's officers, directors, joint ventures and partners. For the
purpose of this definition, "control" of a Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of its
management or policies, by contract or otherwise.
"Business Day" shall mean any day which is not a Saturday, Sunday,
or a legal holiday under the laws of the State of Pennsylvania and is not a
day on which banking institutions located in the State of Pennsylvania are
authorized or permitted by law or other governmental action to close.
"Closing Date" shall mean December 11, 1996.
"Collections" shall mean all payments with respect to the
Settlement Receivable, in the form of cash, checks, wire transfers, or other
forms of payment.
"Commonwealth" shall mean the Commonwealth of Pennsylvania, a
governmental instrumentality.
"Escrow Agreement" means that certain Escrow Agent Agreement among
Seller, Envirotest Systems Corp., Envirotest Systems Corp., Envirotest
Technologies Inc., MSCC, MFSC, the Escrow Agent (as defined therein) and the
Liquidity Agent, dated as of November 26, 1996, as the same may be amended,
modified, supplemented or restarted from time to time.
"Governmental Authority" means (a) federal, state, county,
municipal, or foreign government, or political subdivision thereof, (b) any
governmental or quasi-governmental agency, authority, board, bureau,
commission, department, instrumentality or public body, (c) any court or
administrative tribunal or (d) with respect to any Person, any arbitration
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tribunal or other non-governmental authority to the jurisdiction of which
such Person has consented.
"Incremental Note Liability" means an amount determined in good
faith by MSFC as representing the shortfall between the discount received by
MSFC pursuant to Section 6.1 hereof and the amount due the Holder of such
Note on the Note Liability Date, but only to the extent that MSFC (i) has
used its reasonable best efforts to manage its securitization program so as
to minimize the potential amount of such Incremental Note Liability and (ii)
has in good faith invested amounts received by it pursuant to Section 6.1
hereof in such manner as to cause the application of the proceeds of any such
investments to reduce the amount of such Incremental Liability.
"Lien" shall mean any mortgage , pledge, hypothetical, assignment
for security, security interest, encumbrance, ▇▇▇▇, ▇▇▇▇ or charge of any
kind, whether voluntarily incurred or arising by operation of law or
otherwise, affecting any property, including any agreement to grant any of
the foregoing, any conditional sale or other title retention agreement, any
lease in the nature of a security interest, and the filing of or agreement to
file or deliver any financing statement (other than a precautionary financing
statement with respect to a lease that is note in the nature of a security
interest) under the UCC or comparable law of any jurisdiction.
"MSCC" shall mean Market Street Capital Corp., a Delaware
corporation.
"MSFC" shall man MarKet Street Funding Corporation, a Delaware
Corporation.
"Note" means any commercial paper note issued by MSFC that MSFC has
determined in good faith was issued to fund its acquisition of the
Settlement receivable Assets.
"Note Liability Date" means that date of which any note first
becomes due and payable (without taking into account any renewal,
"evergreen", or "roll-over" provisions thereof).
"Obligor" shall mean the Commonwealth of Pennsylvnia, a
governmental instrumentality.
"Person" means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, joint stock corporation, estate
entity or Governmental Authority.
"Purchase Price" shall have the meaning set forth in Section 3.1
hereof.
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"Requirements of Law" for any Person shall mean the certificate of
incorporation or articles of association and by-laws or other organizational
or governing documents of such Person, and any law, treaty, rule or
regulation, or determination of or settlement with an arbitrator or
governmental Authority, in each case applicable to or binding upon such
Person or to which such Person is subject.
"Seller" shall mean Envirotest Partners, a Pennsylvania
partnership.
"Settlement Agreement" shall mean the General Release and
Settlement Agreement dated December 15, 1995, as amended by Amendment No. 1
dated as of November 26, 1996, among the Obligor, the Seller, Envirotest
Systems Corp. and Envirotest Technologies, Inc.
"Settlement Receivable" shall mean the right of the Seller or its
assigns to receive payment of the outstanding balance of the Base Settlement
Amount (as defined in the Settlement Agreement) together with interest
thereon accruing from and after the Closing Date at the rate of six percent
(6.00%) per annum, calculated on the basis of actual days elapsed in a year
of 365 or 366 days, as the case may be. The Settlement Receivable shall not
include (i) the sums due on December 31, 1995 and July 31, 1996 under Section
4 of the Settlement Agreement, together with accrued interest through July
31, 1996 on the unpaid balance of the Base Settlement Amount pursuant to
Section 4 of the Settlement Agreement, which the Seller has previously
received and are no longer outstanding, (ii) accrued interest from and after
July 31, 1996 to and including the Closing Date on the unpaid balance of the
Base Settlement Amount pursuant to Section 4 of the Settlement Agreement,
which shall remain the property of the Seller, or (iii) any Settlement Amount
Increase (as defined in the Settlement Agreement) or any other amount (other
than the Base Settlement Amount) payable pursuant to the Settlement
Agreement, which shall remain the property of the Seller.
"Settlement Receivable Assets" shall have the meaning set forth in
Section 2.1 thereof.
"Settlement Receivable Purchase Agreement" shall mean the
Settlement Receivables Purchase Agreement, dated as of November 26, 1996
between the buyer and MSCC as the same may from time to time be amended,
modified, supplemented or renewed.
"UCC" shall mean the Uniform Commercial Code, as amended from time
to time, as in effect in any specified jurisdiction.
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Section 1.2 OTHER DEFINITIONAL PROVISIONS. The words "hereof",
"herein", and "hereunder"and words of similar import when used in this
Agreement shall refer to this agreement as a whole and not to any particular
provision of this Agreement; and Section, Subsection, Schedule, and Exhibit
references contained in this Agreement are references to Sections,
Subsections, Schedules, and Exhibits in or to this Agreement unless otherwise
specified.
ARTICLE II
PURCHASE AND CONVEYANCE OF
SETTLEMENT RECEIVABLE
Section 2.1 SALE. (a) Upon the terms and subject to the
conditions set forth herein, the Seller hereby irrevocably sells, assigns,
transfers and conveys (collectively, "Transfers") to the Buyer, without
recourse (Except to the extent expressly provided herein), and the Buyer
hereby irrevocably purchases from the Seller, on the terms and subject to the
conditions specifically set forth herein, all rights, title, and interest of
the Seller in and to the Settlement Receivable, all monies due or to become
due or to become due with respect thereto (along with certain rights that may
be incidental thereto including, without limitation, the right to declare the
outstanding balance of the base Settlement Amount (as defined in the
Settlement Agreement) due and payable pursuant to Section 4 (h) of the
Settlement Agreement) accruing from (but excluding) and after the Closing
Date, and all proceeds thereof (collectively, the "Settlement Receivable
Assets"). The execution by the Seller of this Agreement shall evidence the
Seller having relinquished all right, title and interest in and to and
control over the Settlement Receivable Assets; provided, however, the
foregoing sale, assignment, transfer and conveyance does not constitute an
assumption by the Buyer of any obligations of the Seller, or of any other
Person, to the obligor or to any other Person in connection with the
Settlement Receivable or under any other agreements or instruments relating
to the Settlement Receivable.
(b) In connection with the Transfer effected pursuant to this
Agreement, the Seller agrees, at its own expense, on or prior to the closing
Date to, (i) clearly and unambiguously ▇▇▇▇ its computer files, data
processing records, microfiche storage
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files and other records, and (ii) clearly label and ▇▇▇▇ any file cabinets
and other storage files or facilities where any information or records
relating to the Settlement Receivable are stored, in each case, with a legend
to the effect that the Settlement Receivable has been transferred to the
Buyer pursuant to this Agreement.
(c) It is the express intent of the Seller and the Buyer that the
purchase of the Settlement Receivable Assets hereunder shall constitute a
sale of "accounts", and/or of "general intangibles" as each such term is used
in Article 9 of the UCC, which sale is absolute and irrevocable and which
provides the Buyer with the full benefits of ownership of the Settlement
Receivable Assets. It is, further, not the intention of the Seller and the
Buyer that such conveyance be deemed a grant of a security interest in the
Settlement Receivable Assets by the Seller to the Buyer to secure a debt or
other obligation of the Seller. However, in the event that, notwithstanding
the intent of the parties, the Settlement Receivable Assets are held by a
court of law to continue to be property of the Seller, then (i) this
Agreement also shall be deemed to be and hereby is a security agreement
within the meaning of the UCC; and (ii) the conveyance by the Seller provided
for in this Agreement shall be deemed to be and the Seller hereby grants to
the Buyer a security interest in and to all of the Seller's right, title and
interest in and to the Settlement Receivable Assets, all monies due or to
become due with respect thereto on and after the Closing Date and all
proceeds of such Settlement Receivable Assets to secure (1) the rights of the
Buyer under this Agreement and (2) a loan to the Seller in the original
principal amount, together with any interest thereon, of the Purchase Price
as set forth in this Agreement. The Seller and the Buyer shall, to the
extent consistent with this Agreement, take such actions as may be necessary
to ensure that, if this Agreement were deemed to create a security interest
in the Settlement Receivable Assets, such security would be deemed to be a
perfected security interest of first priority in favor of the Buyer under
applicable law and will be maintained as such (subject only to any assignment
by the Buyer to MSFC as contemplated herein and in the Settlement Receivable
Purchase Agreement) throughout the term of this Agreement.
(d) Notwithstanding any other provisions hereof or of the
Settlement Receivable Purchase Agreement, the parties hereto hereby agree
that this Agreement is in addition to and in furtherance of the transactions
contemplated by the Settlement Receivable Purchase Agreement.
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ARTICLE III
CONSIDERATION AND PAYMENT
Section 3.1 PURCHASE PRICE. The Purchase Price for the Settlement
Receivable conveyed to the Buyer by the Seller under this Agreement shall be
$79,405,707.
Section 3.2 PAYMENT OF PURCHASE PRICE. The Purchase Price for the
Settlement Receivable shall be paid in full in immediately available funds on
the Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 SELLER'S REPRESENTATIONS AND WARRANTIES. The Seller
represents and warrants to the Buyer as of the Closing Date that:
(a) Organization and Good Standing. The Seller is a general
partnership duly organized under the laws of the State of Pennsylvania, and
has full power and authority to execute, deliver and perform its obligations
under this Agreement and each other document or instrument to be delivered by
it hereunder, including but not limited to the authority to sell, assign, and
transfer the Settlement Receivable in accordance with this Agreement, and, in
all material respects, to own its property and conduct its business as such
properties are presently owned and as such business is presently conducted.
(b) Due Authorization. The execution, delivery and performance of
this Agreement and each other document or instrument to be delivered
hereunder, and the consummation of the transaction provided in such documents
to which the Seller is party have been duly authorized by the Seller by' all
necessary partnership action on the part of the Seller.
(c) Binding Obligation. Assuming the due authorization,
execution, and delivery of this Agreement by the Buyer, this Agreement
constitutes legal, valid and binding obligations of the Seller, enforceable
in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or herein-after in effect, relating to the enforcement of
creditors' rights in general and except as such enforce-ability may be
limited by general principles of equity (whether considered in a proceeding
at law or in equity).
(d) No Conflict. The execution, delivery and performance of this
Agreement, the performance of the
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transactions contemplated hereby and the fulfillment of the terms hereof by
the Seller do not (a) contravene its partnership agreement, (b) violate any
provision of, or require any filing (except for the filings under the UCC
required hereunder, each of which will be duly made and will be in full force
and effect on the Closing Date) registration, consent or approval under, any
law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to the
Seller, except for such filings, registrations, consents or approvals as have
already been obtained and are in full force and effect, (c) result in a
breach of or constitute a default or require any consent under any indenture,
loan agreement, credit agreement, deed of trust or any other agreement,
contract, lease or instrument to which the Seller is a party or by which it
or its assets or properties may be bound or affected except those as to which
a consent or waiver has been obtained and is full force and effect and an
executed copy of which has been delivered to the Buyer, or (d) result in, or
require, the creation or imposition of any Lien upon or with respect to any
of the properties now owned or hereafter acquired by the Seller other than as
specifically contemplated hereby.
(e) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of the Seller, threatened against the
Seller, before any court, regulatory body, administrative agency, or other
tribunal or governmental instrumentality (i) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement or the
Settlement Agreement, (ii) seeking any determination or ruling that would
materially and adversely affect the performance by the Seller of its
obligations under this Agreement or the Settlement Agreement, or (iii)
seeking any determination or ruling that would materially and adversely
affect the validity or enforceability of this Agreement or the Settlement
Agreement. The Seller is not in violation of any order of any court,
arbitrator or governmental authority which would have the effect of any of
the foregoing.
(f) All Consents Required. All approvals, authorizations,
consents, orders or other actions of and registrations with any Person or of
any Governmental Authority required in connection with the execution and
delivery by the Seller of this Agreement, the performance by the Seller of
the transactions contemplated by this Agreement and the fulfillment by the
Seller of the terms hereof and thereof, have been obtained and are in full
force and effect.
(g) Settlement Agreement Amendments. The Seller has not amended
the Settlement Agreement prior to the date hereof, except for the amendment
evidenced by that certain Amendment No. 1 dated as of November 26, 1996.
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(h) Not an Investment Company. The Seller is
not an "investment company" or a company controlled by an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended, or is exempt from all provisions of such Act.
(i) Business Intent. The Seller has a valid business reason for
the sale of the Settlement Receivable. Such sale is not being made with any
intent to hinder, delay or defraud any entity to which the Seller is or will
become indebted on or after the date of transfer. The sale of the Settlement
Receivable by the Seller is not being done with any intent to evade any
applicable laws or public policy.
(j) Proceeds. No proceeds of the purchase will be used for any
purpose that violates Regulations G or U of the Federal Reserve Board.
(k) Valid Sale, etc. The Seller hereby represents and warrants as
of the Closing Date, with respect to the Settlement Receivable, that:
(l) the Seller is not insolvent and will not be rendered insolvent
upon sale of the Settlement Receivable to the Buyer; the Seller is not
engaged in business or about to engage in business for which the assets
remaining with it after the sale of the Settlement Receivable will be an
unreasonably small amount of capital; and the Seller does not intend to incur
or believe that it will incur debts beyond its ability to pay as such debts
mature;
(ii) the Seller is the legal and beneficial owner of all right,
title and interest in and to the Settlement Receivable Assets and the
Settlement Receivable Assets have been transferred to the Buyer free and
clear of any Lien;
(iii) This Agreement constitutes a valid sale, transfer and
assignment to the Buyer of all right, title and interest of the Seller in and
to the Settlement Receivable Assets;
(iv) the consideration received by the Seller upon the sale of the
Settlement Receivable will constitute reasonably equivalent value and fair
consideration for the property sold, consistent with terms that would be
arrived at on an arm's-length basis; and
(v) the Settlement Receivable is enforceable against the
Commonwealth in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now
9
or hereafter in effect, relating to the enforcement of creditors' rights in
general and except as such enforceability may be limited by general
principles of equity (whether considered in a proceeding at law or in equity).
The representations and warranties set forth in this Section 4.1
shall survive the transfer of the Settlement Receivable to the Buyer. Upon
discovery by the Seller or the Buyer of a breach of any of the foregoing
representations and warranties which adversely affects Seller's performance
of its obligations hereunder or any other material breach of any of the
foregoing representations and warranties, the party discovering such breach
shall give prompt written notice thereof to the other party hereto within
three Business Days of such discovery.
Section 4.2 SELLER'S REPRESENTATIONS AND WARRANTIES. The Seller
hereby represents and warrants that, with respect to the Settlement
Receivable Assets, as of the Closing Date and as of each date on which a Note
(as defined in the Liquidity Loan Agreement) and the date any Liquidity Loan
(as defined in the Liquidity Loan Agreement) is made that:
(a) Legal Ownership. No effective financing statement or other
instrument similar in effect with respect to the Seller in connection with
the Settlement Receivable Assets is on file in any recording office, except
those filed in favor of Buyer as contemplated by the terms of this Agreement.
(b) Place of Business. The principal place of business and chief
executive office of the Seller is located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the Seller keeps its records concerning the
Settlement Receivable at such office. Such office and the address thereof
shall not be changed without 30 days' prior written notice to the Buyer.
(c) Name. The Seller's complete partnership name is set forth in
the preamble to this Agreement, and the Seller does not use and has not
during the last six years used any other name, partnership name, trade name,
doing-business name or fictitious name other than Envirotest/Synterra
Partners.
(d) Ownership. Neither the Seller nor any Affiliate of the Seller
has any direct or indirect ownership or other financial interest in MSCC or
MSFC.
(e) No Transfer. The Seller has not sold, assigned, pledged,
conveyed, or otherwise transferred the Settlement Receivable Assets or
suffered to exist a material Lien thereon except for the sale and assignment
of the Settlement Receivable Assets to the Buyer as provided herein and as
provided in the Settlement Receivable Purchase Agreement and shall defend and
10
hold harmless the Buyer from any material Lien or other adverse claim in or
to the Settlement Receivable Assets.
(f) Commonwealth's Obligation. The Settlement Agreement,
including but not limited to the obligation of the Commonwealth to pay the
Settlement Receivable Assets, is a legal, valid and binding obligation of the
Commonwealth, enforceable against the Commonwealth in accordance with its
terms, except as (a) such enforcement may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, moratorium or other similar
laws affecting the rights of creditors generally and by equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) ; (b) the indemnification provisions in the Settlement
Agreement may not be enforceable to the extent that they may be deemed to be
against public policy or relate to or purport to govern indemnification
against liabilities under any securities laws; and (c) certain other rights,
remedies and other remedial provisions of the Settlement Agreement may not be
enforceable, provided that such unenforceability does not render the
Settlement Agreement invalid as a whole or substantially interfere with the
substantial realization of the principal benefits or security, or both, which
the Settlement Agreement purports to provide.
Section 4.3 NOTICE OF BREACH. The representations and warranties
set forth in this Section 4.2 shall survive the transfer of the Settlement
Receivable Assets hereunder to the Buyer. Upon discovery by the Seller the
Buyer of a material breach of any of the representations and warranties set
forth in Section 4.2, the party discovering such breach shall give prompt
written notice thereof to the other party hereto within three Business Days
of such discovery.
ARTICLE V
COVENANTS OF THE SELLER
Section 5.1 SELLER'S COVENANTS. During the term of this Agreement,
and until the Settlement Receivable Assets shall have been paid in full or
written-off as uncollectible and all amounts payable to the liquidity Agent
and the Liquidity Lenders under the Liquidity Loan Agreement have been paid
in full, and all amounts owed by the Seller pursuant to this Agreement shall
have been paid in full, unless the Buyer otherwise consents in writing, the
Seller hereby covenants and agrees with the Buyer as follows:
(a) Compliance with Laws, etc. The Seller shall satisfy all of
its obligations to be fulfilled under or in connection with the Settlement
Receivable Assets, maintain in effect all qualifications required under
Requirements of Law to
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the extent required to (i) maintain the effectiveness of the conveyance of
the Settlement Receivable Assets and (ii) to preserve the ability of the
Seller to bring an action to enforce the Commonwealth's obligation to pay the
Settlement Receivable Assess.
(b) Preservation of Partnership. The Seller shall preserve and
maintain its partnership existence.
(c) Audits. At any time and from time to time during the Seller's
regular business hours, on reasonable prior notice, the Seller shall, in
response to any reasonable request of the Buyer, permit the Buyer, or its
agents or representatives, (i) to examine and make copies of and abstracts
from all books, records and documents (including, without limitation,
computer tapes and disks) in the possession or under the control of the
Seller relating to the Settlement Receivable Assets, and (ii) to visit the
offices and properties of the Seller for the purpose of examining such
materials and to discuss matters relating to the Settlement Receivable Assets
or the Seller's performance hereunder with any of the officers or employees
of the Seller having knowledge thereof or the Seller's Independent
accountants.
(d) Keeping of Records and Books of Account. The Seller shall
maintain and implement administrative and operating procedures (including,
without limitation, the ability to recreate records evidencing the Settlement
Receivable Assets and the related property with respect thereto conveyed
hereunder in the event of the destruction of the originals thereof), and keep
and maintain all documents, books, microfiche, computer records and other
information reasonably necessary or advisable for the collection of the
Settlement Receivable Assets and such related property. Such books,
microfiche and computer records shall reflect all facts giving rise to the
Settlement Receivable Assets, all payments and credits with respect thereto,
and the computer records shall be clearly marked to show the interests of the
Buyer (and MSCC as the Buyer's assignee) in the Settlement Receivable Assets
and such related property. The Seller shall furnish MSFC a copy of each
servicing report delivered to the Commonwealth pursuant to the Settlement
Agreement.
(e) Performance and Compliance with Settlement Agreement. At its
expense the Seller shall timely and fully perform and comply with all
material provisions, covenants and other promises required to be observed by
the Seller under the Settlement Agreement directly related to the Settlement
Receivable Assets.
(f) Continuous Perfection. The Seller shall not change its name or
identity in any manner which might make any financing or continuation
statement filed here-under misleading within the meaning of Section 9-402(7)
of the UCC (or any other
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then applicable provision of the UCC) unless the Seller shall have given at
least 30 days' prior written notice thereof to the Buyer and shall have taken
all action prior to making such change (or made arrangements to take such
action substantially simultaneously with such change if it is impossible to
take such action in advance) necessary or advisable in the opinion of the
Buyer to amend such financing statement or continuation statement so that it
is not misleading. The Seller shall neither change its chief executive
office nor change the location of its principal records concerning the
Settlement Receivable Assets and the Collections from the locations specified
in Section 4.1(g) unless it has given the Buyer at least 30 days' prior
written notice of its intention to do so and has taken such action as is
necessary or advisable to cause the interest of the Buyer in the Settlement
Receivable Assets and the Collections to continue to be perfected with the
priority required by this Agreement. The Seller will at all times maintain
its principal executive office and any other office at which it maintains
records relating to the Settlement Receivable Assets within the United States
of America.
(g) Further Action. The Seller shall make, execute or endorse,
acknowledge, and file or deliver to the Buyer from time to time such
schedules, confirmatory assignments, conveyances, transfer endorsements,
powers of attorney, certificates, reports and other assurances or instruments
and take such further steps relating to the Settlement Receivable Assets and
the Collections and other rights covered by this Agreement, as the Buyer may
request and reasonably require including executing and delivering to the
Buyer any instruments, financing or continuation statements or other writings
reasonably necessary or desirable to maintain the perfection or priority of
the ownership interest of the Buyer in the Settlement Receivable Assets and
the Collections under the UCC or other applicable law. The Seller shall
provide the Buyer with copies of all monthly reports delivered to the
Commonwealth by the Seller relating to the Settlement Agreement and all
correspondence between the Commonwealth and the Seller relating to the
Settlement Receivable Assets. At any time at the request of the Buyer, the
Seller shall deliver and sign any bills, statements or letters or other
writings necessary to carry out the terms and provisions of this Agreement
and to facilitate the collection of the Settlement Receivable Assets for the
benefit of the Buyer.
(h) Sale. The Seller agrees to treat this conveyance for all
purposes (including, without limitation, tax and financial accounting
purposes) as a sale on all relevant books, records, tax returns, financial
statements and other applicable documents.
(i) Filings. The Seller shall record and file, at its expense, on
or prior to the Closing Date any financing
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statement wit resect to the Settlement Receivable meeting the requirement of
applicable state law in such manner and in such jurisdictions as are
necessary under the applicable UCC to perfect the sale of the Settlement
Receivable from the Seller to the Buyer, and shall deliver a file-stamped
copy of such financing statements or other evidence of such filings (which
may, for purposes of this paragraph, consist of telephone confirmations of
such filings) to the Buyer.
(j) Third Parties. If a third party, including a potential
purchaser of the Settlement Receivable, inquires, the Seller will promptly
indicate that the Settlement Receivable has been sold to the Buyer and
interests in the Settlement Receivable have been sold by the Buyer to MSCC,
and the Seller will not claim any ownership interest in the Settlement
Receivable.
(k) Payment Instructions. The Seller will instruct the
Commonwealth to remit payments of the Settlement Receivable and interest
thereon to account #▇▇▇▇▇▇▇ at PNC Bank National Association, Pittsburgh, PA,
TDCA #2037341, ABA #▇▇▇▇-▇▇▇▇-▇, Attn: ▇.▇. ▇▇▇▇▇▇, which shall be an account
segregated from other assets and proceeds of the Seller. Seller will in no
event provide alternate instructions to the Commonwealth that are
inconsistent with the foregoing, nor will Seller withdraw or revoke such
instructions without the prior written consent of the Liquidity Agent.
(l) Bankruptcy. The Seller will not institute any bankruptcy
proceedings against the Buyer before the expiration of one year and one day
after MSFC's Notes (as defined in the Liquidity Loan Agreement) shall have
been paid in full.
(m) Amendments. The Seller shall not make any amendments to (i)
its partnership agreement, (ii) any of the terms of, or waive any performance
under, this Agreement or (iii) any of the terms of the Settlement Agreement
which would affect the payment of the Settlement Receivable without the prior
written consent of MSCC, MSFC and the Liquidity Agent, which will not be
unreasonably withheld.
(n) Ownership. The Seller shall at all times be wholly-owned
(directly or indirectly) by Envirotest Systems Corp. or any Affiliate
thereof.
(o) Information. All Information, exhibits, financial statements,
documents, books, records or reports furnished or to be furnished at any time
by or on behalf of the Seller in connection with this Agreement is or will be
accurate in all material respects as of its date or as of the date so
furnished.
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ARTICLE VI
REPURCHASE OBLIGATION
Section 6.1 MANDATORY REPURCHASE. On and after the Closing Date,
in the event that any of the representations and warranties of the Seller
with respect to the Settlement Receivable Assets set forth in Section 4.1 and
4.2(b) and (c) shall not have been true and correct as of the date such
representation or warranty is made (which date shall be the Closing Date with
respect to Section 4.1), then, with respect to Section 4.1, no later than 180
days, and with respect to Section 4.2(b) and 4.2(c) no later than 90 days,
after receipt by the Seller of written notice of such breach given by the
Buyer, the Seller shall repurchase and accept a retransfer of such Settlement
Receivable Assets on the terms and conditions set forth below;
provided,however, that no such repurchase or retransfer shall be required to
be made with respect to the Settlement Receivable Assets if, on any day
within such 180 or 90 day period, as applicable, the representations and
warranties in Section 4.1, Section 4.2(b) and 4.2(c) that triggered such 180
or 90 day period shall then be true and correct in all material respects. In
the event that any of the representations and warranties set forth in Section
4.2 (other than Section 4.2(b) or Section 4.2(c)) shall not have been true
and correct as of the date made, then (i) as of the date of a payment default
by the Commonwealth with respect to the Settlement Receivable Assets or (ii)
if on and after the date of such payment default the Seller is diligently
pursuing its legal rights to cure such payment default and has a reasonable
basis to believe it will prevail in its efforts to cure said payment default
(and no non-appealable order has determined to the contrary) 90 days after a
payment default by the Commonwealth with respect to the Settlement Receivable
Assets,the Seller shall repurchase and accept a retransfer o the Settlement
Receivable Assets on the terms and conditions set forth below;
provided,however, that no such repurchase or retransfer shall be required to
be made with respect to the Settlement Receivable Assets if prior to such
payment default or such 90 day period (if applicable) the representation or
the warranty which triggered this provision shall then be true and correct in
all material respects. In consideration of such resale the Seller shall, on
the date of the resale of such Settlement Receivable Assets, pay to the Buyer
an amount equal to the sum of the unpaid principal balance of such Settlement
Receivable Assets on the date of repurchase and accrued and unpaid interest
thereupon accruing after the date hereof, any broken funding costs and any
swap breakage costs of the Buyer relating to interest rate hedging agreements
effected in connection with the transactions contemplated by this Agreement.
In addition, in consideration of such resale, the Seller shall on each Note
Liability Date pay an amount equal to
15
the Incremental Note Liability due on such Note Liability Date. Upon any
resale to the Seller of the Settlement Receivable Assets pursuant to this
Section 6.1, the Buyer shall automatically and without further action be
deemed to sell, transfer, assign and set-over to the Seller, without
recourse, representation or warranty, all right, title and interest of the
Buyer, in, to and under such Settlement Receivable Assets and all monies due
or to become due with respect thereto and all proceeds of such Settlement
Receivable Assets. The obligation of the Seller to repurchase and accept
resale of such Settlement Receivable Assets shall constitute the sole remedy
respecting any breach of the representations and warranties set forth in
Sections 4.1 and 4.2 with respect to the Settlement Receivable Assets.
Section 6.2 CONVEYANCE OF REASSIGNED SETTLEMENT RECEIVABLE ASSETS.
Upon any reconveyance of the Settlement Receivable Assets by the Buyer to the
Seller pursuant to Section 6.1, the Buyer shall execute and deliver to the
Seller instruments of sale and assignment in such form as shall reasonably be
requested by the Seller, MSCC, MSFC or the Administrator, in order to vest in
the Seller, or its designee or assignee, all right, title interest of the
Buyer in, to and under such Settlement Receivable Assets, provided, that any
such reconveyance shall expressly state that it is made by the Buyer without
any recourse, representation or warranty. Subject to the foregoing, the
Buyer shall execute such other documents or instruments of conveyance or take
such other actions as the Seller, MSCC, MSFC or the Administrator may
reasonably require to effect any repurchase of the Settlement Receivable
Assets pursuant to Section 6.1.
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1 CONDITIONS TO THE BUYER'S OBLIGATIONS REGARDING SETTLEMENT
RECEIVABLE. The obligations of the Buyer to purchase the Settlement
Receivable on the Closing Date hereunder shall be subject to the satisfaction
of each of the following conditions:
(a) All representations and warranties of the Seller contained in
this Agreement shall be true and correct with the same effect as though such
representations and warranties had been made on such date.
(b) All information concerning the Settlement Receivable provided
to the Buyer shall be true and correct in all material respects as of the
Closing Date.
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(c) At the Closing Date, the Seller shall have performed all other
obligations required to be performed by the provisions of this Agreement.
(d) The Seller shall have filed the financing statement(s)
required to be filed pursuant to Section 5.1(i) and shall have delivered
file-stamped copies thereof to the Buyer and MSFC.
(e) All partnership, corporate and legal proceedings and all
instruments, documents and legal opinions in connection with the transactions
contemplated by this Agreement, the Settlement Receivables Purchase Agreement
and the Liquidity Loan Agreement shall be satisfactory in form and substance
to the Buyer, MSCC, MSFC and the Administrator, and the Buyer, MSCC, MSFC and
the Administrator shall have received from the Seller copies of all documents
(including, without limitation, records of partnership proceedings) relevant
to the transactions herein contemplated as the Buyer, MSCC, MSFC and the
Administrator may reasonably have requested.
(f) The Settlement Receivable Purchase Agreement, dated as of the
date hereof, between the Buyer and MSCC, shall have been executed and
delivered by MSCC.
Section 7.2 CONDITIONS PRECEDENT TO THE SELLER'S OBLI- ATIONS. The
obligations of the Seller to sell the Settlement Receivable on the Closing
Date hereunder shall be subject to the satisfaction of each of the following
conditions (the execution by the Seller of this Agreement shall be conclusive
evidence of the satisfaction of such conditions):
(a) Payment of the Purchase Price in accordance with Section 3.2
shall have been made.
(b) The Settlement Receivable Purchase Agreement, dated as of the
date hereof, between the Buyer and MSCC, shall have been executed and
delivered by the Buyer and MSCC.
ARTICLE VIII
INDEMNITY
Notwithstanding any other provision of this Agreement, the Seller
hereby agrees to indemnify the Buyer for any reductIon in the Settlement
Receivable solely due to the exercise of set off rights by the Obligor under
Section 4(e) of the Settlement Agreement. The amount paid under any such
indemnity shall be deemed to be a reduction in the Settlement Receivable
amount outstanding hereunder. The payment obligation of the Seller under
this Article in respect of the exercise by the obligor of
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set off rights under Section 5(c) of the Settlement Agreement shall be
reduced by amounts paid by the Escrow Agent (as defined in the Escrow
Agreement) to the Liquidity Agent pursuant to Section 2(c) of the Escrow
Agreement. In addition, the Seller hereby agrees to Indemnify the Buyer for
any broken funding costs and any swap breakage costs of the Buyer relating to
interest rate hedging agreements effected in connection with the transactions
contemplated by this Agreement, including any such costs caused by any
repurchase by the Seller of the Settlement Receivable Assets or by a
prepayment by the Commonwealth (i.e., any payment in excess of the amounts
referenced in Section 4 of the Settlement Agreement or any payment in respect
of the amounts referenced in Section 4(b), (c) or (d) of the Settlement
Agreement before July 31, 1997 or July 31, 1998, respectively), and any
amounts constituting Incremental Note Liabilities.
ARTICLE IX
EFFECT OF TERMINATION
Section 9.1 EFFECT OF TERMINATION. No termination or rejection or
failure to assume the executory obligations of this Agreement in the
bankruptcy of the Seller or the Buyer shall be deemed to impair or affect the
obligations pertaining to any executed sale or executed obligations,
including, without limitation, pretermination breaches of representations and
warranties by the Seller or the Buyer. Without limiting the foregoing, prior
to termination, the failure of the Seller to deliver computer records of the
Settlement Receivable or evidence of the transfer thereof shall not render
such transfer or obligation executory, nor shall the continued duties of the
parties pursuant to Section 5 of this Agreement render an executed sale
executory.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1 AMENDMENT OF THIS AGREEMENT. This Agreement and the rights
and obligations of the parties hereunder may not be changed orally, but only
by an instrument in writing signed by the Buyer, MSFC, the Administrator and
the Seller. Any supplemental conveyance or reconveyance executed in
accordance with the provisions hereof shall not be considered amendments to
this Agreement.
Section 10.2 GOVERNING LAW. THIS AGREEMENT AND THE OTHER CONVEYANCE
DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
PENNSYLVANIA, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND
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REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
Section 10.3 NOTICES. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by registered mail, return receipt
requested, to:
(a) in the case of the Buyer, to:
ES Funding Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Chairman
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and
ES Funding CorporatIon
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) in the case of the Seller, to:
Envirotest Partners
c/o Envirotest Systems Corp.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Chairman
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and
Envirotest Partners
c/o Envirotest Systems Corp.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or, as to each party, at such other address as shall be designated by such
party in a written notice to each other party.
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Section 10.4 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements,
provisions, or terms shall be deemed severable from the remaining covenants,
agreements, provisions, or terms of this Agreement and shall in no way affect
the validity or enforceability of the other provisions of this Agreement.
Section 10.5 Assignment. The Seller acknowledges and agrees that
(i) the Buyer shall be entitled to assign its rights under this Agreement to
MSCC pursuant to the Settlement Receivable Purchase Agreement, (ii) MSCC may
pledge such rights to the Liquidity Agent for the benefit of the Liquidity
Lenders pursuant to the Liquidity Loan Agreement and (iii) MSCC may assign
its rights under this Agreement to MSFC. Except as provided in the preceding
sentence, this Agreement may not be assigned by the parties hereto.
Section 10.6 Further Assurances. The Buyer and the Seller agree to
do and perform, from time to time, any and all acts and to execute any and
all further instruments required or reasonably requested by the other party
more fully to effect the purposes of this Agreement, including, without
limitation, the execution of any financing statements or continuation
statements or equivalent documents relating to the Settlement Receivable for
filing under the provisions of the UCC or other laws of any applicable
jurisdiction.
Section 10.7 No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of the Buyer or the Seller, any right,
remedy, power or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of
any other right, remedy, power or privilege. The rights, remedies, powers
and privileges herein provided are cumulative and not exhaustive of any
rights, remedies, powers and privilege provided by law.
Section 10.8 Counterparts. This Agreement may be executed in two
or more counterparts including telefax transmission thereof (and by different
parties on separate counterparts), each of which shall be an original, but
all of which together shall constitute one and the same instrument.
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Section 10.9 Binding Effect; Third-Part; Beneficiaries. This Agreement
will inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns. Each assignee contemplated hereunder to
whom an assignment is effected (including, but not limited to, MSCC, MSFC and
the Liquidity Agent) is an express third party beneficiary of the obligations
of the Seller hereunder and may directly enforce the performance by Seller of
such obligations.
Section 10.10 Merger and Integration. Except as specifically
stated otherwise herein, this Agreement sets forth the entIre understanding
of the parties relating to the subject matter hereof, and all prior
understandings, written or oral, are superseded by this Agreement. This
Agreement may not be modified, amended, waived or supplemented except as
provided herein.
Section 10.11 Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or Interpretation
of any provisIon hereof.
IN WITNESS WHEREOF, the Buyer and the Seller
each have caused this Agreement to be duly executed by
their respective officers as of the day and year first
above written.
ENVIROTEST PARTNERS, as Seller
By Its partners:
ENVIROTEST SYSTEMS CORP.
By: /s/ C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------
Name : C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
ENVIROTEST TECHNOLOGIES, INC.
By: /s/ C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------
Name: C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
ES FUNDING CORPORATION, as Buyer
By: /s/ C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------
Name : C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
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