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Exhibit 10.9
CONFORMED COPY
U.S. $85,000,000
THIRD AMENDED AND RESTATED
TRADE RECEIVABLES PURCHASE AND SALE AGREEMENT
Dated as of July 31, 1997
Among
THE GEON COMPANY
as Seller,
▇▇▇▇▇▇, ▇.▇.
and
CORPORATE RECEIVABLES CORPORATION
as Investors
and
CITICORP NORTH AMERICA, INC.
as Agent
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TABLE OF CONTENTS
SECTION PAGE
PRELIMINARY STATEMENTS ......................................................... 1
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms ........................................... 2
SECTION 1.02. Other Terms ..................................................... 21
SECTION 1.03. Computation of Time Periods ..................................... 21
SECTION 1.04. Accounting Terms ................................................ 21
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 2.01. Facility ........................................................ 21
SECTION 2.02. Making Purchases ................................................ 21
SECTION 2.03. Termination of Facility or Reduction of the Purchase Limit ...... 22
SECTION 2.04. Eligible Asset .................................................. 22
SECTION 2.05. Non-Liquidation Settlement Procedures ........................... 23
SECTION 2.06. Liquidation Settlement Procedures ............................... 24
SECTION 2.07. General Settlement Procedures ................................... 24
SECTION 2.08. Payments and Computations, Etc .................................. 25
SECTION 2.09. Dividing or Combining of Eligible Assets ........................ 25
SECTION 2.10. Fees and Payments ............................................... 26
SECTION 2.11. Increased Costs ................................................. 26
SECTION 2.12. Additional Yield on Eligible Assets Bearing a Eurodollar Rate ... 27
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.01. Conditions Precedent to Amendment and Restatement and to the
Initial Purchase After the Effective Date ....................... 28
SECTION 3.02. Conditions Precedent to All Purchases and Reinvestments ......... 29
SECTION 3.03. Conditions Precedent to Purchases and Reinvestments by ▇▇▇▇▇▇.... 30
SECTION 3.04. Conditions Precedent to Purchases and Reinvestments by CRC ...... 30
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Seller .................. 31
ARTICLE V
GENERAL COVENANTS OF THE SELLER
SECTION 5.01. Affirmative Covenants of the Seller ........................... 34
SECTION 5.02. Reporting Requirements of the Seller .......................... 35
SECTION 5.03. Negative Covenants of the Seller .............................. 37
ARTICLE VI
ADMINISTRATION AND COLLECTION
SECTION 6.01. Designation of Collection Agent ............................... 38
SECTION 6.02. Duties of Collection Agent .................................... 38
SECTION 6.03. Rights of the Agent ........................................... 40
SECTION 6.04. Responsibilities of the Seller ................................ 40
SECTION 6.05. Further Action Evidencing Purchases ........................... 41
ARTICLE VII
EVENTS OF INVESTMENT INELIGIBILITY
SECTION 7.01. Events of Investment Ineligibility ............................ 41
ARTICLE VIII
THE AGENT
SECTION 8.01. Authorization and Action ...................................... 44
SECTION 8.02. Agent's Reliance, Etc ......................................... 44
SECTION 8.03. CNAI and Affiliates ........................................... 45
SECTION 8.04. Investors' Purchase Decision .................................. 45
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ARTICLE IX
ASSIGNMENT
SECTION 9.01. Assignment .................................................... 45
SECTION 9.02. Annotation of Certificate ..................................... 46
ARTICLE X
INDEMNIFICATION
SECTION 10.01. Indemnities by the Seller .................................... 47
SECTION 10.02. Additional Indemnities ....................................... 48
SECTION 10.03. Limited Recourse ............................................. 49
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Amendments, Etc .............................................. 50
SECTION 11.02. Notices, Etc ................................................. 50
SECTION 11.03. No Waiver; Remedies .......................................... 50
SECTION 11.04. Restatement Effective Date; Restatement of the Original
Agreement; Binding Effect .................................... 50
SECTION 11.05. Governing Law ................................................ 51
SECTION 11.06. Costs, Expenses and Taxes .................................... 51
SECTION 11.07. No Proceedings ............................................... 52
SECTION 11.08. Confidentiality .............................................. 53
SECTION 11.09. Execution in Counterparts; Severability ...................... 53
SECTION 11.10. Grant of a Security Interest ................................. 54
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SCHEDULES
SCHEDULE I List of Lock-Box Banks
SCHEDULE II Description of Credit and Collection Policy
SCHEDULE III Form of Contracts
SCHEDULE IV List of Offices of Seller where Records Relating to the
Receivables are Kept
EXHIBITS
EXHIBIT A Form of Assignment
EXHIBIT B Form of Certificate
EXHIBIT C Seller Report
EXHIBIT D Form of Letter to Lock-Box Account Banks
EXHIBIT E-1 Form Of Opinion of Seller's In-house Counsel
EXHIBIT E-2 Form of Opinion of Seller's Counsel
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THIRD AMENDED AND RESTATED
TRADE RECEIVABLES PURCHASE AND SALE AGREEMENT
Dated as of July 31, 1997
THE GEON COMPANY, a Delaware corporation (the "Seller"), CORPORATE
RECEIVABLES CORPORATION ("CRC"), a California corporation, ▇▇▇▇▇▇, ▇.▇., a New
York limited partnership ("▇▇▇▇▇▇", and together with CRC, the "Investors"; each
of ▇▇▇▇▇▇ and CRC being individually an "Investor"), and CITICORP NORTH AMERICA,
INC., a Delaware corporation ("CNAI"), as agent for the Owners (as defined in
Section 1.01 hereof) (the "Agent"), agree as follows:
PRELIMINARY STATEMENTS. (1) Certain terms which are capitalized and
used throughout this Agreement (in addition to those defined above) are defined
in Article I of this Agreement.
(2) The Seller, the Investors and the Agent entered into a Trade
Receivables Purchase and Sale Agreement dated as of April 1, 1993, as amended
and restated on May 10, 1993 and as further amended and restated on August 16,
1994 (such agreement, as amended, supplemented or otherwise modified from time
to time, collectively being the "Original Agreement"), pursuant to which the
Seller had from time to time sold to the Investors, and the Investors had from
time to time purchased from the Seller, "Eligible Assets" (as defined in the
Original Agreement).
(3) The Seller intends to sell to the Investors, and the Investors
desire to purchase from the Seller, additional interests in Eligible Assets
hereunder.
(4) The parties hereto have agreed to further amend and restate the
Original Agreement on the terms and conditions hereinafter set forth.
(5) CNAI has been requested and is willing to act as Agent.
NOW THEREFORE, the parties hereby agree that, effective as of the
Restatement Effective Date the Original Agreement is hereby amended and restated
in its entirety to read as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Adverse Claim" means a lien, security interest, charge or
encumbrance, or other right or claim of any Person.
"Affiliate" when used with respect to a Person means any other
Person controlling, controlled by or under common control with such
Person.
"Affiliated Obligor" means any Obligor which is an Affiliate of
another Obligor.
"Agent's Account" means the special account (account number
4060-5071) of the Agent maintained at the office of Citibank at ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇.
"Alternate Base Rate" means a fluctuating interest rate per annum
in effect from time to time, which rate per annum shall at all times
be equal to the highest of:
(a) the rate of interest announced publicly by Citibank in
New York, New York, from time to time, as Citibank's base rate;
(b) the sum (adjusted to the nearest 1/4 of 1 % or, if there
is no nearest 1/4 of 1%, to the next higher 1/4 of 1%) of (i) 1/2
of 1% per annum, plus (ii) the rate obtained by dividing (A) the
latest three-week moving average of secondary market morning
offering rates in the United States for three-month certificates
of deposit of major United States money market banks, such
three-week moving average (adjusted to the basis of a year of
365/366 days) being determined weekly on each Monday (or, if such
day is not a Business Day, on the next succeeding Business Day)
for the three-week period ending on the previous Friday by
Citibank on the basis of such rates reported by certificate of
deposit dealers to and published by the Federal Reserve Bank of
New York or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates received by
Citibank from three New York certificate of deposit dealers of
recognized standing selected by the Agent, by (B) a percentage
equal to 100% minus the average of the daily percentages
specified during such three-week period by the Board of Governors
of the
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Federal Reserve System (or any successor) for determining the
maximum reserve requirement (including, but not limited to, any
emergency, supplemental or other marginal reserve requirement)
for Citibank with respect to liabilities consisting of or
including (among other liabilities) three-month U.S. dollar
non-personal time deposits in the United States, plus (iii) the
average during such three-week period of the annual assessment
rates estimated by Citibank for determining the then current
annual assessment payable by Citibank to the Federal Deposit
Insurance Corporation (or any successor) for insuring U.S. dollar
deposits of Citibank in the United States; and
(c) 1/2 of 1% per annum above the Federal Funds Rate.
"Applicable Margin" means, as of any date, a percentage per annum
determined by reference to the Public Debt Rating in effect on such
date and the Usage on such date as set forth below:
===================================================================
Public Debt Rating Usage Applicable Margin
S&P/▇▇▇▇▇'▇
===================================================================
Level 1 < 50% 0.150%
A-/A3 or above -------------------------------------------
> 50% 0.200%
-------------------------------------------------------------------
▇▇▇▇▇ ▇ < 50% 0.175%
BBB + /Baal -------------------------------------------
> 50% 0.225%
-------------------------------------------------------------------
▇▇▇▇▇ ▇ < 50% 0.225%
BBB/Baa2 -------------------------------------------
> 50% 0.300%
-------------------------------------------------------------------
▇▇▇▇▇ ▇ < 50% 0.2175%
BBB - /Baa3 -------------------------------------------
> 50% 0.2875%
-------------------------------------------------------------------
▇▇▇▇▇ ▇ < 50% 0.375%
BB + /Ba1 -------------------------------------------
> 50% 0.500%
-------------------------------------------------------------------
▇▇▇▇▇ ▇ < 50% 0.625%
BB/Ba2 -------------------------------------------
> 50% 0.750%
===================================================================
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"Assignee" means Citibank, CNAI or each Investor or any of their
respective Affiliates or any other Person acceptable to the Agent as
the assignee of an Eligible Asset pursuant to Section 9.01.
"Assignee Rate" for any Fixed Period for any Eligible Asset means
an interest rate per annum equal to the Eurodollar Rate for such Fixed
Period plus the Applicable Margin in effect from time to time,
provided, however, that in the case of
(i) any Fixed Period on or prior to the first day of which
the Owner shall have notified the Agent that, after reasonable
efforts by such Owner (consistent with its internal policy and
legal and regulatory restrictions) to designate a lending office
that would allow such Owner to fund an Eligible Asset at the
Assignee Rate set forth above and which would not, in the
judgment of such Owner, be otherwise disadvantageous to such
Owner, the introduction of or any change occurring on or after
the effective date of this Agreement or in the interpretation of
any law or regulation makes it unlawful, or any central bank or
other governmental authority asserts that it is unlawful, for the
Owner to fund such Eligible Asset at the Assignee Rate set forth
above (and the Owner shall not have subsequently notified the
Agent that such circumstances no longer exist),
(ii) any Fixed Period of 1 to (and including) 29 days,
(iii) any Fixed Period as to which the Agent does not
receive notice, by no later than 12:00 noon (New York City time)
on the third Business Day preceding the first day of such Fixed
Period, that the related Eligible Asset will not be funded by
issuance of commercial paper, or
(iv) any Fixed Period for an Eligible Asset the Capital of
which allocated to the Owner is less than $500,000,
the "Assignee Rate" for such Fixed Period for such Eligible Asset shall be
an interest rate per annum equal to the Alternate Base Rate in effect on
the first day of such Fixed Period; provided further, however, that the
Agent and the Seller may agree in writing from time to time upon a
different "Assignee Rate."
"Assignment" means an assignment, in substantially the form of Exhibit
A hereto, by which an Eligible Asset may be assigned pursuant to Section
9.01 dated as of the date of this Agreement.
"Average Maturity" means, on any day, that period (expressed in days)
equal to the average maturity of the Pool Receivables as shall be
calculated by the
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Collection Agent as set forth in the most recent Seller Report in
accordance with the provisions thereof; provided, however, that, if the
Agent shall disagree with any such calculation, the Agent may recalculate
the Average Maturity for such day.
"Borrowed Debt" shall have the meaning set forth in the Credit
Agreement in effect on the date hereof.
"Business Day" means any day on which (i) banks are not authorized or
required to close in New York City and (ii) if this definition of "Business
Day" is utilized in connection with the Eurodollar Rate, dealings are
carried out in the London interbank market.
"Capital" of any Eligible Asset means the original amount paid to the
Seller for such Eligible Asset at the time of its acquisition by an
Investor pursuant to Sections 2.01 and 2.02, or such amount divided or
combined by any dividing or combining of such Eligible Asset pursuant to
Section 2.09, in each case reduced from time to time by Collections
received and distributed on account of such Capital pursuant to Section
2.06; provided, however, that such Capital of such Eligible Asset shall not
be reduced by any distribution of any portion of Collections if at any time
such distribution is rescinded or must otherwise be returned for any
reason.
"Cash Interest Expense" means, for any period, interest expense on all
Debt of the Seller and its Subsidiaries, net of interest income, in
accordance with GAAP and including, without limitation, to the extent not
otherwise included in accordance with GAAP, (a) interest expense in respect
of Debt resulting from "Advances" under the Credit Agreement, (b) the
interest component of obligations under leases that have or should have
been or should be, in accordance with GAAP, recorded as capital leases, (c)
commissions, discounts and other fees and charges payable in connection
with letters of credit issued for the account of the Seller or any of its
Subsidiaries, (d) the net payment, if any, payable by the Seller or any of
its Subsidiaries in connection with Hedge Agreements and (e) fees paid
pursuant to Section 2.04(a) of the Credit Agreement, but excluding, in each
case, (w) any amounts accrued or payable in connection with the ▇▇▇▇▇▇▇
Financing or this Agreement or the Parallel Purchase Commitment, (x)
amortization of original issue discount, (y) the interest portion of any
deferred payment obligation and (z) other interest not payable in cash.
"Certificate" means a certificate of assignment by the Seller to the
Agent in the form of Exhibit B hereto, evidencing each Eligible Asset.
"Citibank" means Citibank, N.A., a national banking association.
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"Collection Agent" means at any time the Person (including the Agent)
then authorized pursuant to Article VI to service, administer and collect
Pool Receivables.
"Collection Agent Fee" has the meaning assigned to that term in
Section 2.10.
"Collection Agent Fee Reserve" for any Eligible Asset at any time
means the unpaid Collection Agent Fee relating to such Eligible Asset
accrued to such time.
"Collections" means, with respect to any Pool Receivable, all cash
collections and other cash proceeds of such Pool Receivable, including,
without limitation, all cash proceeds of Related Security with respect to
such Pool Receivable, and any Collection of such Pool Receivable deemed to
have been received pursuant to Section 2.07.
"Concentration Limit" for any Obligor means at any time 3-1/3%, or
such other percentage ("Special Concentration Limit") for any Obligor
designated by the Agent in a writing delivered to the Seller; provided,
that (i) in the case of an Obligor with any Affiliated Obligor, the
Concentration Limit shall be calculated as if such Obligor and such
Affiliated Obligor are one Obligor (ii) the Agent may cancel any Special
Concentration Limit upon three Business Days' notice to the Seller (iii) a
Special Concentration Limit of 5% is established for each of ▇▇ ▇▇▇▇▇▇▇▇
and Ashland Chemical Company.
"Confidential Information" shall have the meaning set forth in the
Credit Agreement in effect on the date hereof.
"Consolidated" refers to the consolidation of accounts in accordance
with GAAP.
"Contract" means an agreement between the Seller and an Obligor, in
substantially the form of one of the forms of written contract set forth in
Schedule III hereto or otherwise approved by the Agent, or in the case of
an open account agreement, as evidenced by one of the forms of invoices set
forth in Schedule III hereto or otherwise approved by the Agent, pursuant
to or under which such Obligor shall be obligated to pay for merchandise,
insurance or services from time to time.
"CP Fixed Period Date" means, for any Eligible Asset, the date of
Purchase of such Eligible Asset and thereafter the second Business day of
each calendar month or any other day as shall have been agreed to in
writing by the Agent and the Seller prior to the first day of the preceding
Fixed Period for such Eligible Asset, or, if there is no preceding Fixed
Period, prior to the first day of such Fixed Period.
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"Credit Agreement" means the Credit Agreement, dated as of August 16,
1994, among the Seller, the Banks party thereto and Citibank, as Agent, as
the same may be amended from time to time in accordance with its terms.
"Credit and Collection Policy" means those credit and collection
policies and practices in effect on the date hereof relating to Contracts
and Receivables described in Schedule II hereto, as modified in compliance
with Section 5.03(c).
"Debt" shall have the meaning set forth in the Credit Agreement in
effect on the date hereof; any capitalized terms used in the definition of
Debt set forth in the Credit Agreement shall have the meanings given to
such terms in the Credit Agreement as of such date and are hereby
incorporated herein by reference.
"Default Ratio" means the ratio (expressed as a percentage) computed
as of the last day of each calendar month by dividing (i) the aggregate
Outstanding Balance of all Pool Receivables that were Defaulted Receivables
on such date or would have been Defaulted Receivables on such date had they
not been written off the books of the Seller during such month by (ii) the
aggregate Outstanding Balance of all Pool Receivables on such date.
"Defaulted Receivable" means a Receivable:
(i) as to which any payment, or part thereof, remains unpaid for
91 days or more from the original due date for such payment,
(ii) as to which the Obligor thereof has taken any action, or
suffered any event to occur, of the type described in Section 7.01(g),
(iii) which is subject to any dispute, offset, counterclaim or
defense whatsoever (except the discharge in bankruptcy of the Obligor
thereof) or
(iv) which, consistent with the Credit and Collection Policy,
would be written off the Seller's books as uncollectible.
"Delinquency Ratio" means the ratio (expressed as a percentage)
computed as of the last day of each calendar month by dividing (i) the
aggregate Outstanding Balance of all Pool Receivables that were
Delinquent Receivables at the end of such month by (ii) the aggregate
Outstanding Balance of all Pool Receivables on such date.
"Delinquent Receivable" means a Receivable that is not a
Defaulted Receivable and:
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(i) as to which any payment, or part thereof, remains unpaid
for 61 to 90 days from the original due date for such payment; or
(ii) which, consistent with the Credit and Collection
Policy, would be classified as delinquent by the Seller.
"Designated Obligor" means, at any time, all Obligors; provided,
however, that any Obligor shall cease to be a Designated Obligor upon
three Business Days' notice by the Agent to the Seller or pursuant to
Section 10.03.
"Determination Date" has the meaning assigned to that term in
Section 10.03.
"Dilution Horizon" means, as of any date, a ratio computed by
dividing (i) the aggregate Outstanding Balance of all Pool Receivables
acquired by the Seller during the most recently ended prior calendar
month or during such other period as the Agent shall, in its sole
discretion, determine by (ii) the Outstanding Balance of Pool
Receivables as at the last day of the most recently ended calendar
month.
"Dilution Percentage" means, as of any date, the sum of (a) 1.5
times the product of (i) the average of the Dilution Ratios for each
of the twelve most recently ended calendar months and (ii) the
Dilution Horizon as at the last day of the most recently ended
calendar month plus (b) Dilution Volatility as of such date; provided,
however, that the "Dilution Percentage" shall be modified if, prior to
such modification, (i) the Agent shall have (a) requested the approval
of ▇▇▇▇▇'▇ and S&P or both and (b) set forth, in a written notice
delivered to the Seller, the proposed modification, together with
written evidence of the approval of ▇▇▇▇▇'▇ or S&P or both for such
modification, and (ii) the Seller shall have delivered to the Agent
its written consent to the proposed modification. Notwithstanding
anything to the contrary contained in this definition of "Dilution
Percentage," so long as the Seller's long-term senior debt securities,
if rated, are rated at least BBB- by S&P and Baa3 by ▇▇▇▇▇'▇, or, if
not rated, such securities are deemed to merit a BBB rating in the
sole discretion of the Agent, the "Dilution Percentage" shall be zero.
"Dilution Ratio" means the ratio (expressed as a percentage)
computed as of the last day of each calendar month by dividing (i) the
aggregate amount of credits, rebates, discounts, disputes,
chargebacks, returned inventory or equipment credits, allowances and
other reductions of the Receivables Pool the effect of which in each
case is to reduce the Outstanding Balance of any Pool Receivable
(other than any dilution factor resulting solely from any write-off of
any Pool Receivable by the Collection Agent and not from any of the
other factors specified above) provided to Obligors during such
calendar month in respect of the principal balance of any Pool
Receivable by (ii) the aggregate Outstanding Balance of all Pool
Receivables acquired
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by the Seller during the most recently ended prior calendar month or
during such other period as the Agent shall, in its sole discretion,
determine.
"Dilution Reserve" means, for any Eligible Asset at any date, an
amount equal to
DP x C
where:
DP = the Dilution Percentage of such Eligible Asset at the
close of business of the Collection Agent on such date.
C = the Capital of such Eligible Asset at the close of
business of the Collection Agent on such date.
"Dilution Volatility" means, as of any date, a ratio (expressed
as a percentage) equal to the product of (a) the highest of the
Dilution Ratios calculated for each of the twelve most recently ended
calendar months minus the average of the Dilution Ratios for each of
the twelve most recently ended calendar months and (b) a ratio
calculated by dividing the highest of the Dilution Ratios calculated
for each of the twelve most recently ended calendar months by the
average of the Dilution Ratios for each of the twelve most recently
ended calendar months.
"EBITDA" means, for any period, net income (or net loss) plus the
sum of (a) interest expense, (b) income tax expense, (c) depreciation
expense and (d) amortization expense, in each case determined in
accordance with GAAP for such period.
"Effective Date" shall have the meaning set forth in Section
11.04.
"Eligible Asset" means, at any time, an undivided percentage
ownership interest at such time in (i) all then outstanding Pool
Receivables arising prior to the time of the most recent computation
or recomputation of such undivided percentage interest pursuant to
Section 2.04, (ii) all Related Security with respect to such Pool
Receivables and (iii) all Collections with respect to, and other
proceeds of, such Pool Receivables. Such undivided percentage interest
for such Eligible Asset shall be computed as
C + LR + DR + YR + CAFR
-----------------------
NRPB
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where:
C = the Capital of such Eligible Asset at the time of such
computation.
LR = the Loss Reserve of such Eligible Asset at the time of such
computation.
DR = the Dilution Reserve of such Eligible Asset at the time
of such computation.
YR = the Yield Reserve of such Eligible Asset at the time of
such computation.
CAFR = the Collection Agent Fee Reserve of such Eligible Asset at
the time of such computation.
NRPB = the Net Receivables Pool Balance at the time of such
computation.
Each Eligible Asset shall be determined from time to time pursuant to
the provisions of Section 2.04.
"Eligible Receivable" means, at any time and with respect to any Eligible
Asset, a Receivable:
(i) the Obligor of which is a United States resident, is not an
Affiliate of any of the parties hereto, and is not a government or a
governmental subdivision or agency;
(ii) the Obligor of which at the time of the initial creation of an
interest therein hereunder is a Designated Obligor;
(iii) the Obligor of which at the time of the initial creation of an
interest therein hereunder is not the Obligor of any Defaulted Receivables
in the aggregate amount of 5% or more of the aggregate Outstanding Balance
of all Pool Receivables of such Obligor;
(iv) which at the time of the initial creation of an interest therein
hereunder is not a Defaulted Receivable or a Delinquent Receivable;
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(v) which, according to the Contract related thereto, is required to
be paid in full within 30 days (or, in the case of Receivables having an
Outstanding Balance not exceeding 25% of the Outstanding Balance of all
Pool Receivables, 90 days) of the original billing date therefor;
(vi) which is an account receivable representing all or part of the
sales price of merchandise, insurance and services within the meaning of
Section 3(c)(5) of the Investment Company Act of 1940, as amended;
(vii) a purchase of which with the proceeds of notes would constitute
a "current transaction" within the meaning of Section 3(a)(3) of the
Securities Act of 1933, as amended;
(viii) which is an "account" within the meaning of Section 9-106 of
the UCC of the State of Ohio;
(ix) which is denominated and payable only in United States dollars in
the United States;
(x) which arises under a Contract which has been duly authorized and
which, together with such Receivable, is in full force and effect and
constitutes the legal, valid and binding obligation of the Obligor of such
Receivable enforceable against such Obligor in accordance with its terms
and is not subject to any dispute, offset, counterclaim or defense
whatsoever (except the discharge in bankruptcy of such Obligor);
(xi) which, together with the Contract related thereto, does not
contravene in any material respect any laws, 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 practices and
privacy) and with respect to which no party to the Contract related thereto
is in violation of any such law, rule or regulation in any material
respect;
(xii) which (A) satisfies all applicable requirements of the Credit
and Collection Policy and (B) complies with such other criteria and
requirements (other than those relating to the collectibility of such
Receivable) as the Agent may from time to time specify to the Seller upon
30 days notice; and
(xiii) as to which, at or prior to the time of the initial creation of
an interest therein through a Purchase, the Agent has not notified the
Seller that the Agent has determined, in its sole discretion, that such
Receivable (or class
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of Receivables) is not acceptable for purchase by the Investor hereunder.
"ERISA" means the U.S. Employee Retirement Income Security Act of
1974, as amended from time to time and the regulations promulgated and
rulings issued thereunder.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Rate" means, for any Fixed Period, an interest rate per
annum at which deposits in U.S. dollars are offered by the principal office
of Citibank in London, England to prime banks in the London interbank
market at 11:00 A.M. (London time) two Business Days before the first day
of such Fixed Period in an amount substantially equal to the Capital
associated with such Fixed Period on such first day and for a period equal
to such Fixed Period.
"Eurodollar Rate Reserve Percentage" of any Owner for any Fixed Period
in respect of which Yield is computed by reference to the Eurodollar Rate
means the reserve percentage applicable during such Fixed Period (or, if
more than one such percentage shall be so applicable, the daily average of
such percentages for those days in such Fixed Period during which any such
percentage shall be so applicable) under regulations issued from time to
time by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including,
without limitation, any emergency, supplemental or other marginal reserve
requirement) for such Owner with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities (or with respect to any
other category of liabilities that includes deposits by reference to which
the interest rate on Eurocurrency Liabilities is determined) having a term
equal to such Fixed Period.
"Event of Investment Ineligibility" has the meaning assigned to that
term in Section 7.01.
"Excluded Obligors" has the meaning assigned to that term in Section
10.03.
"Excluded Receivables" has the meaning assigned to that term in
Section 10.03.
"Facility" means the willingness of the Investor to consider, in its
sole discretion pursuant to Article II, the purchase from the Seller of
undivided percentage interests in Pool Receivables by making Purchases of
Eligible Assets from time to time.
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"Facility Termination Date" means the earlier of December 19, 2002 or
the date of termination of the Facility pursuant to Section 2.03 or Section
7.01.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted
average of the rates on overnight federal funds transactions with members
of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the
average of the quotations for such day for such transactions received by
the Agent from three federal funds brokers of recognized standing selected
by it.
"Fixed Period" means with respect to any Eligible Asset:
(a) in the case of any Fixed Period in respect of which Yield is
computed by reference to the Investor Rate each successive period
commencing on each CP Fixed Period Date for such Eligible Asset and
ending on the next succeeding CP Fixed Period Date for such Eligible
Asset;
(b) in the case of any Fixed Period in respect of which Yield is
computed by reference to the Assignee Rate, each successive period of
from one to and including 29 days, or a period of one, two, three or
six months as the Seller shall select and the Agent shall approve on
notice by the Seller received by the Agent (including notice by
telephone, confirmed in writing) not later than 11:00 A.M. (New York
City time) on such last day, each such Fixed Period for any Eligible
Asset to commence on the last day of the immediately preceding Fixed
Period for such Eligible Asset (or, if there is no such Fixed Period,
on the date of Purchase of such Eligible Asset), except that if the
Agent shall not have received such notice or the Agent and the Seller
shall not have so mutually agreed before 11:00 A.M. (New York City
time) on such last day, such period shall be one day;
provided, however, that:
(i) any such Fixed Period (other than of one day) which would
otherwise end on a day which is not a Business Day shall be extended
to the next succeeding Business Day (provided, however, if Yield in
respect of such Fixed Period is computed by reference to the
Eurodollar Rate, and such Fixed Period would otherwise end on a day
which is not a Business Day, and there is no subsequent Business Day
in the same calendar month as such day, such Fixed Period shall end on
the next preceding Business Day);
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(ii) in the case of Fixed Periods of one day for any Eligible
Asset, (A) if such Fixed Period is such Eligible Asset's initial Fixed
Period, such Fixed Period shall be the day of the related Purchase;
(B) any subsequently occurring Fixed Period which is one day shall, if
the immediately preceding Fixed Period is more than one day, be the
last day of such immediately preceding Fixed Period, and, if the
immediately preceding Fixed Period is one day, be the day next
following such immediately preceding Fixed Period; and (C) which
occurs on a day immediately preceding a day which is not a Business
Day shall be extended to the next succeeding Business Day; and
(iii) in the case of any Fixed Period for any Eligible Asset
which commences before the Termination Date for such Eligible Asset
and would otherwise end on a date occurring after such Termination
Date, such Fixed Period shall end on such Termination Date and the
duration of each Fixed Period which commences on or after the
Termination Date for such Eligible Asset shall be of such duration as
shall be selected by the Agent.
"GAAP" has the meaning specified in Section 1.04.
"Hedge Agreements" means interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements,
currency future or option contracts and other similar agreements.
"Interest Coverage Ratio" means, with respect to any fiscal quarter,
the ratio of EBITDA for the Seller and its Subsidiaries to Cash Interest
Expense, in each case in the aggregate for the period of four consecutive
fiscal quarters ended at the end of such fiscal quarter.
"Investor" means Corporate Receivables Corporation, a California
corporation, ▇▇▇▇▇▇, ▇.▇., a New York limited partnership, and any of their
respective successors or assigns that is a receivables investment company
which in the ordinary course of its business issues commercial paper or
other securities to fund its acquisition and maintenance of receivables.
"Investor Rate" for any Fixed Period for any Eligible Asset means, to
the extent an Owner funds such Eligible Asset for such Fixed Period by
issuing commercial paper, the per annum rate equivalent to the weighted
average of the per annum rates paid or payable by such Owner from time to
time as interest on or otherwise (by means of interest rate ▇▇▇▇▇▇ or
otherwise) in respect of those promissory notes issued by such Owner that
are allocated, in whole or in part, by CNAI (on behalf of the Owner) to
fund the Purchase or maintenance of such Eligible Asset during such Fixed
Period, as determined by CNAI (on behalf of the Owner)
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and reported to the Seller and, if the Collection Agent is not the Seller,
the Collection Agent, which rates shall reflect and give effect to the
commissions of placement agents and dealers in respect of such promissory
notes, to the extent such commissions are allocated, in whole or in part,
to such promissory notes by CNAI (on behalf of the Owner); provided,
however, if the rate (or rates) as agreed between any such agent or dealer
and the Agent with regard to any Fixed Period for any Eligible Asset is a
discount rate (or rates), the "Investor Rate" for such Fixed Period shall
be the rate (or if more than one rate, the weighted average of the rates)
resulting from converting such discount rate (or rates) to an
interest-bearing equivalent rate per annum.
"▇▇▇▇▇▇▇ Financing" shall have the meaning set forth in the Credit
Agreement in effect on the date hereof.
"Level I" means, as of any date of determination, that the Seller
maintained for the most recent fiscal quarter included in a period for
which financial statements have been delivered to the Agent (i) an Interest
Coverage Ratio greater than or equal to 10.0:1.0 and (ii) a Leverage
Percentage of less than or equal to 47.0%.
"Level II" means, as of any date of determination, that the Seller
does not meet the requirements of Level I.
"Leverage Percentage" means, for any period, the ratio (expressed as a
percentage) computed by dividing (a) Consolidated Borrowed Debt of the
Seller and its Subsidiaries by (ii) the sum of such Consolidated Borrowed
Debt plus shareholder's equity of the Seller, calculated in each case as of
the last day of such period.
"Liquidation Day" for any Eligible Asset means either (i) each day
during any Settlement Period for such Eligible Asset on which the
conditions set forth in Section 3.02 are not satisfied (or such failure of
conditions is not waived by the Agent), or (ii) each day which occurs on or
after the Termination Date for such Eligible Asset.
"Liquidation Fee" means, for any Fixed Period during which a
Liquidation Day occurs, the amount, if any, by which (i) the additional
Yield (calculated without taking into account any Liquidation Fee or any
shortened duration of such Fixed Period pursuant to clause (iv) of the
definition thereof) which would have accrued during such Fixed Period on
the reductions of Capital of the Eligible Asset relating to such Fixed
Period had such reductions remained as Capital, exceeds (ii) the income, if
any, received by the Owner's investing the proceeds of such reductions of
Capital.
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"Liquidation Yield" means, for any Eligible Asset at any date, an
amount equal to the product of (i) the Capital of such Eligible Asset as at
such date and (ii) the product of (a) the Assignee Rate for such Eligible
Asset for a Fixed Period deemed to commence at such time for a period of 30
days and (b) a fraction having as its numerator the number of days in the
period equal to the Average Maturity (as in effect at such date) and 360 as
its denominator.
"Loan Documents" shall have the meaning set forth in the Credit
Agreement.
"Lock-Box Account" means an account maintained at a Lock-Box Bank for
the purpose of receiving Collections.
"Lock-Box Agreement" means an agreement, in substantially the form of
Exhibit D hereto, from the Seller to any Lock-Box Bank with such
modifications as may be acceptable to the Agent.
"Lock-Box Bank" means any of the banks holding one or more Lock-Box
Accounts.
"Loss Percentage" means, for any Eligible Asset at any date, the
greatest of (i) three times the highest Default Ratio as of the last day of
the 12 months ended immediately preceding such date, (ii) three times the
Concentration Limit and (iii) 10%.
"Loss Reserve" means, for any Eligible Asset at any date, an amount
equal to
LP x (C + YR)
where:
LP = the Loss Percentage for such Eligible Asset at the close of
business of the Collection Agent on such date.
C = the Capital of such Eligible Asset at the close of business of
the Collection Agent on such date.
YR = the Yield Reserve for such Eligible Asset at the close of
business of the Collection Agent on such date.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
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"Net Receivables Pool Balance" means, at any tune, the Outstanding
Balance of the Eligible Receivables in the Receivables Pool at such time
reduced by the sum of (i) the aggregate Outstanding Balance of the
Defaulted Receivables in the Receivables Pool at such time and (ii) the
aggregate amount by which the Outstanding Balance of Eligible Receivables
(other than Defaulted Receivables) of each Obligor then in the Receivables
Pool exceeds the product of (a) the Concentration Limit for such Obligor
multiplied by (b) the Outstanding Balance of the Eligible Receivables then
in the Receivables Pool.
"Obligor" means a Person obligated to make payments pursuant to a
Contract.
"Original Agreement" shall have the meaning set forth in the
Preliminary Statements.
"Outstanding Balance" of any Receivable at any time means the then
outstanding principal balance thereof.
"Owner" means, for each Eligible Asset, upon its Purchase, the
Investor which made such Purchase and all other owners by assignment or
otherwise of an Eligible Asset and, to the extent of the undivided
interests so purchased, shall include any participants.
"Parallel Purchase Commitment" means the Second Amended and Restated
Parallel Purchase Commitment, dated as of July 31, 1997 among the Seller,
the financial institutions party thereto and CNAI, as Agent, as the same
may be amended from time to time in accordance with its terms.
"Performance Level" means, as of any date, Level I or Level II, in
each case determined by reference to the most recent financial statements
delivered to the Agent pursuant to Section 5.02(a) or (b).
"Person" means an individual, partnership, corporation (including a;
business trust), joint stock company, trust, unincorporated association,
joint venture or other entity, or a government or any political subdivision
or agency thereof.
"Pool Receivable" means a Receivable in the Receivables Pool.
"Public Debt Rating" means for purposes of determining the Applicable
Margin, as of any date, the rating most recently announced by S&P and
Moody's, as the case may be, for any class of long-term senior unsecured
debt issued by the Seller. For purposes of the foregoing, (a) if only one
of S&P and Moody's shall have in effect a Public Debt Rating, the
Applicable Margin shall be determined by
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reference to the available rating; (b) if neither S&P nor Moody's shall
have in effect a Public Debt Rating, the Public Debt Rating for determining
the Applicable Margin will be deemed to be below BB by S&P and below Ba2 by
Moody's; (c) if the ratings established by S&P and Moody's shall fall
within different levels, the Applicable Margin shall be based upon the
higher rating; (d) if any rating established by S&P or Moody's shall be
changed, such change shall be effective as of the date on which such change
is first announced publicly by the rating agency making such change; and
(e) if S&P or Moody's shall change the basis on which ratings are
established, each reference to the Public Debt Rating announced by S&P or
Moody's, as the case may be, shall refer to the then equivalent rating by
S&P or Moody's, as the case may be.
"Purchase" means a purchase by the Investor of an Eligible Asset from
the Seller pursuant to Article II.
"Purchase Limit" means $85,000,000, as such amount may be reduced
pursuant to Section 2.03.
"Receivable" means the indebtedness of any Obligor under a Contract
arising from a sale by Seller, and includes the right to payment of any
interest or finance charges and other obligations of such Obligor with
respect thereto.
"Receivables Pool" means at any time the aggregation of each then
outstanding Receivable in respect of which the Obligor is a Designated
Obligor or, as to any Receivable in existence on such date, was a
Designated Obligor on the date of any Purchase or reinvestment pursuant to
Section 2.05, and which is not excluded from the Receivables Pool pursuant
to Section 10.03.
"Reinvestment Termination Date" for any Eligible Asset means that
Business Day which the Seller designates, or, if the conditions precedent
in Section 3.02 and, for each Eligible Asset owned by ▇▇▇▇▇▇, Section 3.03
and, for each Eligible Asset owned by CRC, Section 3.04, are not satisfied,
such Business Day which the Agent designates, as the Reinvestment
Termination Date for such Eligible Asset by notice to the Agent (if the
Seller so designates) or to the Seller (if the Agent so designates) at
least one Business Day prior to such Business Day.
"Related Security" means with respect to any Receivable:
(i) all of the Seller's interest in the merchandise (including
returned merchandise), if any, relating to the sale which gave rise to
such Receivable;
(ii) all other security interests or liens and property subject
thereto from time to time purporting to secure payment of such
Receivable, whether
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pursuant to the Contract related to such Receivable or otherwise,
together with all financing statements signed by an Obligor describing
any collateral securing such Receivable; and
(iii) all guarantees, insurance and other agreements or
arrangements of whatever character from time to time supporting or
securing payment of such Receivable whether pursuant to the Contract
related to such Receivable or otherwise.
"Responsible Officer" means the chief financial officer,
controller or chief accounting officer of the Seller.
"Restatement Effective Date" shall have the meaning set forth in
Section 11.04.
"S&P" means Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ companies.
"Seller Report" means a report, in substantially the form of
Exhibit C hereto, furnished by the Collection Agent to the Agent for
each Owner pursuant to Section 2.07.
"Settlement Period" for any Eligible Asset means each period
commencing on the first day of each Fixed Period for such Eligible
Asset and ending on the last day of such Fixed Period, and, on and
after the Termination Date for such Eligible Asset, such period
(including, without limitation, a daily period) as shall be selected
from time to time by the Agent or, in the absence of any such
selection, each period of thirty days from the last day of the
immediately preceding Settlement Period.
"Subsidiary" of any Person means any corporation, partnership,
joint venture, trust or estate of which (or in which) more than 50% of
(a) the issued and outstanding capital stock having ordinary voting
power to elect a majority of the Board of Directors of such
corporation (irrespective of whether at the time capital stock of any
other class or classes of such corporation shall or might have voting
power upon the occurrence of any contingency), (b) the interest in the
capital or profits of such partnership or joint venture or (c) the
beneficial interest in such trust or estate is at the time directly or
indirectly owned or controlled by such Person, by such Person and one
or more of its other Subsidiaries or by one or more of such Person's
other Subsidiaries.
"Termination Date" for any Eligible Asset means the earlier of
(i) the Reinvestment Termination Date for such Eligible Asset and (ii)
the Facility
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Termination Date.
"UCC" means the Uniform Commercial Code as from time to time in
effect in the specified jurisdiction.
"Usage" means, as of any date of determination, the ratio
(expressed as a percentage) computed by dividing the aggregate
principal amount of the Outstanding Balance of the Receivables Pool by
the Purchase Limit, calculated in each case as of the close of
business of the Collection Agent on such date.
"Yield" means:
(i) for each Eligible Asset for any Fixed Period to the
extent an Investor will be funding such Eligible Asset on the
first day of such Fixed Period through the issuance of commercial
paper,
IR x C x ED + LF
---
360
(ii) for each Eligible Asset for any Fixed Period to the
extent the Owner will not be funding such Eligible Asset on the
first day of such Fixed Period through the issuance of commercial
paper,
AR x C x ED + LF
---
360
where:
AR = the Assignee Rate for such Eligible Asset for such
Fixed Period.
C = the Capital of such Eligible Asset during such Fixed
Period.
IR = the Investor Rate for such Eligible Asset for such
Fixed Period.
ED = the actual number of days elapsed during such Fixed
Period.
LF = the Liquidation Fee, if any, for such Eligible Asset
for such Fixed Period.
provided, however, that no provision of this Agreement or the Certificate
shall require the payment or permit the collection of Yield in excess of
the maximum permitted by applicable law; and provided, further, that Yield
for any Eligible Asset shall not be
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considered paid by any distribution if at any time such distribution
is rescinded or must otherwise be returned for any reason.
"Yield Reserve" for any Eligible Asset at any time means the sum of
(i) the Liquidation Yield at such time for such Eligible Asset, and (ii)
the accrued and unpaid Yield for such Eligible Asset.
SECTION 1.02. Other Terms. All terms used in Article 9 of the UCC in
the State of New York, and not specifically defined herein, are used herein as
defined in such Article 9.
SECTION 1.03. Computation of Time Periods. Unless otherwise stated in
this Agreement, in the computation of a period of time from a specified date to
a later specified date, the word "from" means "from and including" and the words
"to" and "until" each mean "to but excluding."
SECTION 1.04. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the
financial statements referred to in Section 4.01(e) ("GAAP").
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 2.01. Facility. On the terms and conditions hereinafter set
forth, each Investor may, in its sole discretion, make Purchases from time to
time during the period from the date hereof to the Facility Termination Date.
Under no circumstances shall any Investor make any Purchase if, after giving
effect to such Purchase, the aggregate outstanding Capital of Eligible Assets,
together with the aggregate outstanding "Capital" of "Eligible Assets" under the
Parallel Purchase Commitment would exceed the Purchase Limit. The Owner of each
Eligible Asset shall, with the proceeds of Collections attributable to such
Eligible Asset, reinvest, pursuant to Section 2.05, in additional undivided
percentage interests in the Pool Receivables by making an appropriate
readjustment of such Eligible Asset. Nothing in this Agreement shall be deemed
to be or construed as a commitment by any Investor (or CNAI or Citibank) to
purchase any Eligible Asset at any time.
SECTION 2.02. Making Purchases. (a) Each Purchase shall be made on at
least one Business Days' notice from the Seller to the Agent or on such other
notice period as the Seller and the Agent shall agree. Each such notice of a
proposed Purchase shall specify the desired amount (which shall not be less than
$1,000,000), date and duration of
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the initial Fixed Period for the Eligible Asset to be purchased. The Agent shall
promptly notify the Seller whether such terms are acceptable to any Investor.
(b) On the date of each Purchase, each Investor making a Purchase
shall, upon satisfaction of the applicable conditions set forth in Article III,
make available to the Agent the amount of its Purchase by deposit of such amount
in same day funds to the Agent's Account, and, after receipt by the Agent of
such funds, the Agent will cause such funds to be made immediately available to
the Seller at Citibank's office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇. The
Agent shall notify the Seller and if the Seller's not the Collection Agent, the
Collection Agent, of the Investor Rate or Assignee Rate, as applicable, for each
Fixed Period for each Eligible Asset on the last day of such Fixed Period in the
case of the Investor Rate and on the first day of such Fixed Period in the case
of the Assignee Rate.
SECTION 2.03. Termination of Facility or Reduction of the Purchase
Limit. (a) Optional. The Seller may, upon at least five Business Days' notice
to the Agent, terminate the Facility in whole or reduce in part the unused
portion of the Purchase Limit; provided, however, that for purposes of this
Section 2.03(a), the unused portion of the Purchase Limit shall be computed as
the excess of (A) the Purchase Limit immediately prior to giving effect to such
termination or reduction over (B) the sum of (i) the aggregate Capital of
Eligible Assets outstanding at the time of such computation and (ii) the
aggregate "Capital" of "Eligible Assets" outstanding under the Parallel Purchase
Commitment at such time; provided further that each partial reduction shall be
in an amount equal to $5,000,000 or an integral multiple of $1,000,000 in excess
thereof.
(b) Mandatory. On each day on which the Seller shall, pursuant to
Section 2.03(a) of the Parallel Purchase Commitment, reduce in part the unused
portion of the Commitment (as defined in the Parallel Purchase Commitment), the
Purchase Limit shall automatically reduce by an equal amount. The Purchase Limit
shall automatically terminate in whole on any day on which the Seller shall
terminate in whole the Commitment pursuant to Section 2.03(a) of the Parallel
Purchase Commitment.
SECTION 2.04. Eligible Asset. (a) Each Eligible Asset shall be
initially computed as of the opening of business of the Collection Agent on the
date of Purchase of such Eligible Asset. Thereafter until the Termination Date
for such Eligible Asset, such Eligible Asset shall be automatically recomputed
as of the close of business of the Collection Agent on each day (other than a
Liquidation Day). Such Eligible Asset shall remain constant from the time as of
which any such computation or recomputation is made until the time as of which
the next such recomputation, if any, shall be made. Any Eligible Asset, as
computed as of the day immediately preceding the Termination Date for such
Eligible Asset, shall remain constant at all times on and after such Termination
Date. Such Eligible Asset shall become zero at such time as the Owner of such
Eligible Asset shall have
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received the accrued Yield for such Eligible Asset and shall have recovered the
Capital of such Eligible Asset, and the Collection Agent shall have received the
accrued Collection Agent Fee for such Eligible Asset.
(b) If any Eligible Asset would otherwise be reduced on any day on
account of Receivables arising as or becoming Pool Receivables, the Owner of
such Eligible Asset may prevent such reduction by giving notice to the
Collection Agent, before the close of business of the Collection Agent on such
day, that such Eligible Asset's interest in such Receivables is to be limited so
as to prevent such reduction. If such notice is given for any day for any
Eligible Asset, the Receivables Pool for such Eligible Asset, and the Net
Receivables Pool Balance for such Eligible Asset, will include, with respect to
Receivables arising as or becoming Pool Receivables on such day, only such
number of such Receivables or such portion of such Receivables as shall cause
such Eligible Asset to remain constant, such Receivables or portion thereof
being included in the Receivables Pool for such Eligible Asset in the order of
the Seller's account numbers for such Receivables up to an aggregate amount so
as to cause such Eligible Asset to remain constant, and the remainder of such
Receivables or portion thereof shall be treated as Receivables arising on the
next succeeding Business Day.
SECTION 2.05. Non-Liquidation Settlement Procedures. On each day (other
than a Liquidation Day) during each Settlement Period for each Eligible Asset,
the Collection Agent shall: (i) out of Collections of Pool Receivables
attributable to such Eligible Asset received on such day, set aside (and
segregate if instructed by the Agent to do so under Section 6.02(a)) and hold in
trust for the Owner of such Eligible Asset an amount equal to the Yield and
Collection Agent Fee accrued through such day for such Eligible Asset and not so
previously set aside and (ii) reinvest the remainder of such Collections, for
the benefit of such Owner, by recomputation of such Eligible Asset pursuant to
Section 2.04 as of the end of such day and the payment of such remainder to the
Seller; provided, however, that, to the extent that the Agent or any Owner shall
be required for any reason to pay over any amount of Collections which shall
have been previously reinvested for the account of such Owner pursuant hereto,
such amount shall be deemed not to have been so applied but rather to have been
retained by the Seller and paid over for the account of such Owner and,
notwithstanding any provision hereof to the contrary, such Owner shall have a
claim for such amount. On the second Business Day following the last day of each
Settlement Period for such Eligible Asset in the case of any Eligible Asset for
which Yield shall be determined for such Settlement Period with reference to the
Investor Rate, and on the last day of each Settlement Period for each other
Eligible Asset, the Collection Agent shall deposit to the Agent's Account for
the account of the Owner of such Eligible Asset the amounts set aside as
described in clause (i) of the first sentence of this Section 2.05. Upon receipt
of such funds by the Agent, the Agent shall distribute them to the Owner of such
Eligible Asset in payment of the accrued Yield for such Eligible Asset and to
the Collection Agent in payment of the accrued Collection Agent Fee payable with
respect to such Eligible Asset. If there shall be
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insufficient funds on deposit for the Agent to distribute funds in payment in
full of the aforementioned amounts, the Agent shall distribute funds, first, in
payment of the accrued Yield for such Eligible Asset, and second, in payment of
the accrued Collection Agent Fee payable with respect to such Eligible Asset.
SECTION 2.06. Liquidation Settlement Procedures. On each Liquidation
Day during each Settlement Period for each Eligible Asset, the Collection Agent
shall set aside (and segregate if instructed by the Agent to do so under Section
6.02(a)) and hold in trust for the Owner of such Eligible Asset the Collections
of Pool Receivables attributable to such Eligible Asset received on such day. On
the second Business Day following the last day of each Settlement Period for
such Eligible Asset in the case of any Eligible Asset for which Yield shall be
determined for such Settlement Period with reference to the Investor Rate, and
on the last day of each Settlement Period for each other Eligible Asset, the
Collection Agent shall deposit to the Agent's Account for the account of the
Owner of such Eligible Asset the amounts set aside pursuant to the preceding
sentence but not to exceed the sum of (i) the accrued Yield for such Eligible
Asset, (ii) the Capital of such Eligible Asset, (iii) the accrued Collection
Agent Fee payable with respect to such Eligible Asset and (iv) the aggregate
amount of other amounts owed hereunder by the Seller to the Owner of such
Eligible Asset. Any amounts set aside pursuant to the first sentence of this
Section 2.06 and not required to be deposited to the Agent's Account pursuant to
the preceding sentence shall be paid to the Seller by the Collection Agent;
provided, however, that, if amounts are set aside during such Settlement Period
pursuant to the first sentence of this Section 2.06 on any Liquidation Day and
thereafter during such Settlement Period the conditions set forth in Section
3.02 are satisfied or are waived by the Agent, such previously set aside amounts
shall, to the extent representing a return of Capital, be applied pursuant to
clause (ii) of the first sentence of Section 2.05 on the day of such subsequent
satisfaction or waiver of conditions. Upon receipt of funds deposited to the
Agent's Account pursuant to the preceding sentence or Section 7.07 of the Credit
Agreement, the Agent shall distribute them (i) to the Owner of such Eligible
Asset (a) in payment of the accrued Yield for such Eligible Asset, (b) in
reduction (to zero) of the Capital of such Eligible Asset and (c) in payment of
any other amounts owed by the Seller hereunder to such Owner and (ii) to the
Collection Agent in payment of the accrued Collection Agent Fee payable with
respect to such Eligible Asset. If there shall be insufficient funds on deposit
for the Agent to distribute funds in payment in full of the aforementioned
amounts, the Agent shall distribute funds, first, in payment of the accrued
Yield for such Eligible Asset, second, in reduction of Capital of such Eligible
Asset, third, in payment of other amounts payable to such Owner, and fourth, in
payment of the accrued Collection Agent Fee payable with respect to such
Eligible Asset.
SECTION 2.07. General Settlement Procedures. If on any day the
Outstanding Balance of a Pool Receivable is either (a) reduced as a result of
any defective, rejected or returned merchandise, insurance or services, any cash
discount, or any adjustment by the Seller, or (b) reduced or cancelled as a
result of a setoff in respect of any claim by the
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Obligor thereof against the Seller (whether such claim arises out of the same or
a related transaction or an unrelated transaction), the Seller shall be deemed
to have received on such day a Collection of such Receivable in the amount of
such reduction or cancellation. If on any day any of the representations or
warranties in Section 4.01(h) is no longer true with respect to a Pool
Receivable, the Seller shall be deemed to have received on such day a Collection
in full of such Pool Receivable. Except as stated in the preceding sentences of
this Section 2.07 or as otherwise required by law or the underlying Contract,
all Collections received from an Obligor of any Receivable shall be applied to
Receivables then outstanding of such Obligor in the order of the age of such
Receivables, starting with the oldest such Receivable, except if payment is
designated by such Obligor for application to specific Receivables. Prior to the
tenth Business Day of each month, the Collection Agent shall prepare and forward
to the Agent for each Owner of an Eligible Asset (i) a Seller Report, relating
to each Eligible Asset, as of the close of business of the Collection Agent on
the last day of the immediately preceding month, and (ii) at the request of the
Agent, a listing by Obligor of all Pool Receivables, together with an analysis
as to the aging of such Receivables. On or prior to the day the Collection Agent
is required to make a deposit with respect to a Settlement Period pursuant to
Section 2.05 or 2.06, the Seller will advise the Agent of each Liquidation Day
occurring during such Settlement Period and of the allocation of the amount of
such deposit to each outstanding Eligible Asset; provided, however, that, if the
Seller is not the Collection Agent, the Seller shall also advise the Collection
Agent of the occurrence of each such Liquidation Day occurring during such
Settlement Period on or prior to such day.
SECTION 2.08. Payments and Computations, Etc. All amounts to be paid or
deposited by the Seller hereunder shall be paid or deposited in accordance with
the terms hereof no later than 11:00 A.M. (New York City time) on the day when
due in lawful money of the United States of America in same day funds to the
Agent's Account. The Seller shall, to the extent permitted by law, pay to the
Agent interest on all amounts not paid or deposited when due hereunder at 2% per
annum above the Alternate Base Rate, payable on demand, provided, however, that
such interest rate shall not at any time exceed the maximum rate permitted by
applicable law. Such interest shall be retained by the Agent except to the
extent that such failure to make a timely payment or deposit has continued
beyond the date for distribution by the Agent of such overdue amount to an Owner
of an Eligible Asset, in which case such interest accruing after such date shall
be for the account of, and distributed by the Agent to the Owners ratably in
accordance with their respective interests in such overdue amount. All
computations of interest and all computations of Yield, Liquidation Yield and
fees hereunder shall be made on the basis of a year of 360 days for the actual
number of days (including the first but excluding the last day) elapsed.
SECTION 2.09. Dividing or Combining of Eligible Assets. The Seller may,
on notice received by the Agent not later than 11:00 A.M. (New York City time)
three Business Days before the last day of any Fixed Period for any then
existing Eligible Asset
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(an "Existing Eligible Asset"), divide such Existing Eligible Asset on such last
day into two or more new Eligible Assets, each such new Eligible Asset having
Capital as designated in such notice and all such new Eligible Assets
collectively having aggregate Capital equal to the Capital of such Existing
Eligible Asset. The Seller may, on notice received by the Agent not later than
11:00 A.M. (New York City time) three Business Days before the last day of any
Fixed Periods ending on the same day for two or more Existing Eligible Assets
owned by the same Owner or the date of any proposed Purchase (if the last day of
such Fixed Period is the date of such proposed Purchase), either (i) combine
such Existing Eligible Assets or (ii) combine such Existing Eligible Asset or
Eligible Assets, if owned by an Investor, and such proposed Eligible Asset to be
purchased, on such last day into one new Eligible Asset, such new Eligible Asset
having Capital equal to the aggregate Capital of such Existing Eligible Assets,
or such Existing Eligible Asset or Eligible Assets and such proposed Eligible
Asset, as the case may be. On and after any division or combination of Eligible
Assets as described above, each of the new Eligible Assets resulting from such
division, or the new Eligible Asset resulting from such combination, as the case
may be, shall be a separate Eligible Asset having Capital as set forth above,
and shall take the place of such Existing Eligible Asset or Eligible Assets or
proposed Eligible Asset, as the case may be, in each case under and for all
purposes of this Agreement, and the Agent shall annotate the Certificate
accordingly.
SECTION 2.10. Fees and Payments. (a) The Seller shall pay certain fees
to the Agent as more fully set forth in a letter agreement of even date
herewith.
(b) Each Owner shall pay to the Collection Agent a collection fee (the
"Collection Agent Fee") of 1/4 of 1% per annum on the average daily amount of
Capital of each Eligible Asset owned by such Owner, from the date thereof until
the later of the Facility Termination Date or the date on which such Capital is
reduced to zero, payable on the last day of each Settlement Period for such
Eligible Asset; provided, however, that, upon three Business Days' notice to the
Agent, the Collection Agent may (if not the Seller) elect to be paid, as such
fee, another percentage per annum on the average daily amount of Capital of each
such Eligible Asset, but in no event in excess of 110% of the costs and expenses
referred to in Section 6.02(b); and provided further that such fee shall be
payable only from Collections pursuant to, and subject to the priority of
payment set forth in, Sections 2.05 and 2.06.
SECTION 2.11. Increased Costs. (a) If, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation occurring on or after the effective date of this Agreement or (ii)
the compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) issued on or
after the effective date of this Agreement, there shall be any increase in the
amount of capital required or expected to be maintained by CNAI, an Owner, any
entity which enters into a commitment to purchase Eligible Assets or interests
therein, or any of
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their respective Affiliates (each an "Affected Person") or any corporation
controlling such Affected Person, as a result of or based upon the existence of
any commitment to make purchases of or otherwise to maintain the investment in
Pool Receivables or interests therein related to this Agreement or to the
funding thereof and other commitments of the same type relating to this
Agreement, then, within five Business Days after receipt of a written demand by
such Affected Person, (with a copy to the Agent), the Seller shall immediately
pay to the Agent, for the account of such Affected Person (as a third-party
beneficiary), from time to time as specified by such Affected Person, additional
amounts sufficient to compensate such Affected Person in the light of such
circumstances, to the extent that such Affected Person reasonably determines
such increase in capital to be allocable to the existence of any of such
commitments. A certificate as to such amounts setting forth in reasonable detail
the calculations used in determining, and the basis of the requirements for,
such amounts, submitted to the Seller and the Agent by such Affected Person,
shall be conclusive and binding for all purposes, absent evidence of error.
Notwithstanding anything to the contrary contained in this subsection (a), an
Owner shall only be entitled to receive reimbursement for such additional
amounts pursuant to this subsection (a) to the extent (i) incurred within 60
days prior to, and at any time after, the date on which such Owner gives to the
Seller a notice that an event has occurred as a result of which such additional
amounts will arise or a notice that the Seller is obligated to pay such
additional amounts, whichever first occurs and (ii) such Owner shall not have
been reimbursed for such additional amounts under a separate Section of this
Agreement.
(b) If, due to either (i) the introduction of or any change occurring
on or after the effective date of this Agreement (other than any change by way
of imposition or increase of reserve requirements referred to in Section 2.12)
in or in the interpretation of any law or regulation or (ii) the compliance with
any guideline or request from any central bank or other governmental authority
(whether or not having the force of law) issued on or after the effective date
of this Agreement, there shall be any increase in the cost to an Owner of
agreeing to purchase or purchasing, or maintaining the ownership of Eligible
Assets in respect of which Yield is computed by reference to the Eurodollar
Rate, then, within five Business Days after receipt of a written demand by such
Owner (with a copy to the Agent), the Seller shall pay to the Agent, for the
account of such Owner (as a third-party beneficiary), from time to time as
specified, additional amounts sufficient to compensate such Owner for such
increased costs. A certificate as to the amount of such increased cost setting
forth in reasonable detail the calculations used for determining, and the basis
of the requirements for, such increased costs, submitted to the Seller and the
Agent by such Owner shall be conclusive and binding for all purposes, absent
evidence of error. Notwithstanding anything to the contrary contained in this
subsection (b), an Owner shall only be entitled to receive reimbursement for
such increased costs to the extent (i) incurred within 60 days prior to, and at
any time after, the date on which such Owner gives to the Seller a notice that
an event has occurred as a result of which such increased costs will arise or a
notice that the Seller is obligated to pay increased costs, whichever first
occurs and (ii) such Owner shall
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not have been reimbursed for such increased cost under a separate Section of
this Agreement.
SECTION 2.12. Additional Yield on Eligible Assets Bearing a Eurodollar
Rate. The Seller shall pay to an Owner, so long as such Owner shall be required
under regulations of the Board of Governors of the Federal Reserve System to
maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities, additional Yield on the unpaid Capital of
each Eligible Asset of such Owner during each Fixed Period in respect of which
Yield is computed by reference to the Eurodollar Rate, for such Fixed Period, at
a rate per annum equal at all times during such Fixed Period to the remainder
obtained by subtracting (i) the Eurodollar Rate for such Fixed Period from (ii)
the rate obtained by dividing such Eurodollar Rate referred to in clause (i)
above by that percentage equal to 100% minus the Eurodollar Rate Reserve
Percentage of such Owner for such Fixed Period, payable on each date on which
Yield is payable on such Eligible Asset. A certificate as to such additional
Yield submitted to the Seller and the Agent by such Owner shall be conclusive
and binding for all purposes, absent evidence of error.
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.01. Conditions Precedent to Amendment and Restatement and to
the Initial Purchase After the Effective Date. The amendment and restatement of
the Original Agreement and the initial Purchase hereunder after the Effective
Date are subject to the condition precedent that the Agent shall have received
on or before the Effective Date the following, each of which (unless otherwise
indicated) shall be dated such date, in form and substance satisfactory to the
Agent:
(a) The Certificate;
(b) A copy of the resolutions adopted by the Board of Directors of the
Seller approving this Agreement, the Certificate and the other documents to
be delivered by it thereunder and the transactions contemplated thereby,
certified by its Secretary or Assistant Secretary;
(c) A certificate of the Secretary or Assistant Secretary of the
Seller certifying the names and true signatures of the officers authorized
on its behalf to sign this Agreement, the Certificate and the other
documents to be delivered by it hereunder (on which certificate the Agent
and each Owner shall be entitled to conclusively rely until such time as
the Agent shall have received from the Seller a revised certificate meeting
the requirements of this subsection (c));
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(d) Acknowledgment copies of proper Financing Statements (Form UCC-1),
dated a date reasonably near to the date of the initial Purchase, naming
the Seller as the assignor of Receivables and CNAI, as Agent, as assignee,
or other similar instruments or documents, as shall be necessary or, in the
opinion of the Agent, desirable under the UCC of all appropriate
jurisdictions or any comparable law to perfect the ownership interests in
all Receivables in which an interest could have been assigned thereunder;
(e) Certified copies of Requests for Information or Copies (Form UCC-1
1) (or a similar search report certified by a party acceptable to the
Agent), dated a date reasonably near to the date of the initial Purchase,
listing all effective financing statements (including those referred to
above in subsection (d)) which name the Seller (under its then present name
and any previous name) as debtor and which were used in the jurisdictions
in which filings were made pursuant to subsection (d) above, together with
copies of any such financing statements (none of which (other than the
financing statements filed pursuant to the Original Agreement), after
giving effect to the financing statements filed pursuant to clause (e)
above, shall cover any Receivables, Contracts or Related Security);
(f) Acknowledgment copies of proper Financing Statements (Form UCC-3),
if any, necessary to release all security interests and other rights of any
Person other than the Agent in the Receivables, Contracts or Related
Security previously granted by the Seller;
(g) Executed copies of Lock-Box Agreements duly executed by the Seller
and each Lock-Box Bank;
(h) Favorable opinions of counsel for the Seller, substantially in the
forms of Exhibits E-1 and E-2 hereto and as to such other matters as the
Agent may reasonably request;
(i) A favorable opinion of counsel for the Agent, as the Agent may
reasonably request; and
(j) Letters and certificates, in form and substance satisfactory to
the Agent, attesting to the solvency of the Seller after giving effect to
this Agreement and the transactions contemplated hereby, from the Seller's
treasurer or chief accounting officer.
SECTION 3.02. Conditions Precedent to All Purchases and Reinvestments.
Each Purchase (including the initial Purchase) hereunder and the right of the
Collection Agent to reinvest in Pool Receivables those Collections attributable
to an Eligible Asset pursuant to Section 2.05 or 2.06 shall be subject to the
further conditions precedent that:
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(a) With respect to any such Purchase, on or prior to the date of such
Purchase, the Collection Agent shall have delivered to the Agent, in form
and substance satisfactory to the Agent, a completed Seller Report, dated
within 35 days prior to the date of such Purchase, together with a listing
by Obligor of all Pool Receivables and such additional information as may
be reasonably requested by the Agent;
(b) On the date of such Purchase or reinvestment the following
statements shall be true (and the Seller by accepting proceeds of such
Purchase or by receiving the proceeds of such reinvestment shall be deemed
to have certified on the date of such purchase or reinvestment that):
(i) The representations and warranties contained in Section 4.01
hereof and contained in each other Loan Document are correct on and as
of such date as though made on and as of such date before and after
giving effect to such Purchase or reinvestment and to the application
of proceeds therefrom other than representations or warranties that,
by their terms, refer to a date other than the date of such Purchase,
(ii) No event has occurred and is continuing, or would result
from such Purchase or reinvestment or from the application of proceeds
therefrom, which constitutes an Event of Investment Ineligibility or
would constitute an Event of Investment Ineligibility but for the
requirement that notice be given or time elapse or both,
(iii) The Agent shall not have delivered to the Seller a notice
that no Investor shall not make any further Purchases hereunder and/or
that the Collection Agent shall not reinvest in any Pool Receivables
on behalf of the Owner of an Eligible Asset, and
(iv) On such date, the fee agreement noted in Section 2.10 of
this Agreement shall be effective; and
(c) The Agent shall have received such other approvals, opinions or
documents as the Agent may reasonably request.
SECTION 3.03. Conditions Precedent to Purchases and Reinvestments by
▇▇▇▇▇▇. Each Purchase (including the initial Purchase) hereunder by ▇▇▇▇▇▇ and
the right of the Collection Agent, pursuant to Section 2.05 or 2.06, to reinvest
in Pool Receivables those Collections attributable to an Eligible Asset owned by
▇▇▇▇▇▇ shall be subject to the further condition precedent that on such date,
all of the Seller's long-term public senior debt securities, if rated, are rated
at least BBB- by S&P and Baa3 by ▇▇▇▇▇'▇ or, if not rated,
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such securities are deemed to merit a BBB rating in the sole discretion of the
Agent.
SECTION 3.04. Conditions Precedent to Purchases and Reinvestments by
CRC. Each Purchase (including the initial Purchase) hereunder by CRC and the
right of the Collection Agent, pursuant to Section 2.05 or 2.06, to reinvest in
Pool Receivables those Collections attributable to an Eligible Asset owned by
CRC shall be subject to the further condition precedent that on such date, all
of the Seller's long-term public senior debt securities, if rated, are rated at
least BB- (but lower than BBB-) by S&P and Ba3 (but lower than Baa3) by ▇▇▇▇▇'▇
or, if not rated, such securities are deemed to merit at least a BB (but lower
than a BBB) rating in the sole discretion of the Agent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Seller. The Seller
represents and warrants as follows:
(a) The Seller is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and is duly
qualified to do business, and is in good standing, in every jurisdiction
where the nature of its business requires it to be so qualified, except
where the failure to so qualify would not have a material adverse effect on
the Seller.
(b) The execution, delivery and performance by the Seller of this
Agreement and all other instruments and documents to be delivered
hereunder, the transactions contemplated hereby and thereby, and the
Seller's use of the proceeds of Purchases, are within the Seller's
corporate powers, have been duly authorized by all necessary corporate
action, do not contravene (i) the Seller's charter or by-laws or (ii) law
or any contractual restriction binding on or affecting the Seller and do
not result in or require the creation of any lien, security interest or
other charge or encumbrance upon or with respect to any of its material
properties, other than as a result of the transactions contemplated by this
Agreement; and no transaction contemplated hereby requires compliance with
any bulk sales act or similar law.
(c) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required
for the due execution, delivery and performance by the Seller of this
Agreement or any other document or instrument to be delivered hereunder
except for the filing of the UCC Financing Statements referred to in
Article III, all of which, at the time required in Article III, shall have
been duly made and shall be in full force and effect.
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(d) This Agreement is, and the Certificate when delivered hereunder
will be, the legal, valid and binding obligation of the Seller enforceable
against the Seller in accordance with its terms except to the extent that
the enforceability thereof is limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and by equitable principles (regardless of whether
enforcement is sought in equity or at law).
(e) (i) The Consolidated balance sheet of the Seller and its
Subsidiaries as at December 31, 1996, and the related Consolidated
statement of income and cash flows of the Seller and its Subsidiaries for
the fiscal year then ended, accompanied by an opinion of Ernst & Young,
independent public accountants, copies of which have been furnished to the
Agent, fairly present, the Consolidated financial condition of the Seller
and its Subsidiaries as at such dates and the Consolidated results of the
operations of the Seller and its Subsidiaries for the periods ended on such
dates, all in accordance with generally accepted accounting principles
applied on a consistent basis, and (ii) since December 31, 1996, there has
been no material adverse change in any such condition or operations.
(f) There is no pending or overtly threatened action, suit,
investigation, litigation or proceeding against or affecting the Seller or
any of its Subsidiaries, or the property of the Seller or of any of its
Subsidiaries, in any court, or before any arbitrator of any kind, or before
or by any governmental body, which, taking into account its probability of
success, may materially adversely affect the financial condition of the
Seller or the Seller and its Consolidated Subsidiaries taken as a whole or
materially adversely affect the ability of the Seller to perform its
obligations under this Agreement; neither the Seller nor any of its
Subsidiaries is in default with respect to any order of any court,
arbitrator or governmental body except for defaults with respect to orders
of governmental agencies which defaults are not material to the business or
operations of the Seller or any of its Subsidiaries.
(g) No proceeds of any Purchase or reinvestment will be used by the
Seller to acquire any equity security (other than the Common Stock of the
Seller to the extent permitted under the Credit Agreement) of a class that
is registered pursuant to Section 12 of the Securities Exchange Act of
1934.
(h) Each Pool Receivable is (i) together with the Contract related
thereto owned by the Seller free and clear of any Adverse Claim except as
provided for herein and (ii) an Eligible Receivable; upon each Purchase or
reinvestment, the Owner making such Purchase or reinvestment will acquire
a valid and perfected first priority undivided percentage ownership
interest to the extent of the pertinent Eligible Asset in each Pool
Receivable then existing or thereafter arising and in the Related Security
and Collections with respect thereto free and clear of any Adverse Claim
except as
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provided hereunder; and no effective financing statement (other than the
financing statements filed pursuant to the Original Agreement) or other
instrument similar in effect covering any Contract or any Pool Receivable
or the Related Security or Collections with respect thereto is on file in
any recording office except such as may be filed in favor of CNAI, as
Agent, in accordance with this Agreement.
(j) Each Seller Report (if prepared by the Seller, or to the extent
that information contained therein is supplied by the Seller), information,
exhibit, financial statement, document, book, record or report furnished at
any time by the Seller to the Agent or any Owner in connection with this
Agreement is accurate in all material respects as of its date or (except as
otherwise disclosed to the Agent or such Owner, as the case may be, at such
time) as of the date so furnished, and no such document contains any
material misstatement of fact or omits to state a material fact or any fact
necessary to make the statements contained therein not
materially-misleading.
(j) The chief executive office of the Seller is located at the address
of the Seller set forth under its name on the signature pages hereof and
the chief place of business and the offices where the Seller keeps all its
books, records and documents evidencing Pool Receivables or the related
Contracts are located at the address specified in Schedule IV hereto (or at
such other locations, notified to the Agent in accordance with Section
5.01(f), in jurisdictions where all action required by Section 6.05 has
been taken and completed).
(k) The names and addresses of all the Lock-Box Banks, together with
the account numbers of the Lock-Box Accounts of the Seller at such Lock-Box
Banks, are specified in Schedule I hereto (or at such other Lock-Box Banks
and/or with such other Lock-Box Accounts as have been notified to the Agent
in accordance with Section 5.03(d)).
(1) Neither the Seller nor any Affiliate of the Seller has any direct
or indirect ownership or other financial interest in the Investor, the
Agent or any "Original Bank" (as such term is defined in the Parallel
Purchase Commitment).
(m) Each purchase of an Eligible Asset hereunder, and each
reinvestment of Collections in Pool Receivables made hereunder, will
constitute (i) a "current transaction" within the meaning of Section
3(a)(3) of the Securities Act of 1933, as amended, and (ii) a purchase or
other acquisition of notes, drafts, acceptances, open accounts receivable
or other obligations representing part or all of the sales price of
merchandise, insurance or services within the meaning of Section 3(c)(5) of
the Investment Company Act of 1940, as amended.
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ARTICLE V
GENERAL COVENANTS OF THE SELLER
SECTION 5.01. Affirmative Covenants of the Seller. Until the later of
the Facility Termination Date and the date upon which no Capital for any
Eligible Asset shall be existing, the Seller will, unless the Agent shall
otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply in all material respects with
all applicable laws, rules, regulations and orders with respect to it, its
business and properties and all Pool Receivables and related Contracts,
Related Security and Collections with respect thereto.
(b) Preservation of Corporate Existence. Preserve and maintain its
corporate existence, rights, franchises and privileges in the jurisdiction
of its incorporation, and qualify and remain qualified in good standing as
a foreign corporation in each jurisdiction where the failure to preserve
and maintain such existence, rights, franchises, privileges and
qualification would materially adversely affect the interests of the Owners
or the Agent hereunder or in the Pool Receivables and the Related Security,
or the ability of the Seller or the Collection Agent to perform their
respective obligations hereunder or the ability of the Seller to perform
its obligations under the Contracts.
(c) Audits. At any time and from time to time during regular business
hours and upon reasonable prior notice, permit the Agent, 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
Pool Receivables and the Related Security, including, without limitation,
the related Contracts, and (ii) to visit the offices and properties of the
Seller for the purpose of examining such materials described in clause (i)
above, and to discuss matters relating to Pool Receivables and the Related
Security or the Seller's performance hereunder or under the Contracts with
any of the officers or employees of the Seller having knowledge of such
matters.
(d) Keeping of Records and Books of Account. Maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing Pool Receivables in the event of the
destruction of the originals thereof), and keep and maintain all documents,
books, records and other information reasonably necessary or advisable for
the collection of all Pool Receivables (including, without limitation,
records adequate to permit the daily identification of each new Pool
Receivable and all Collections of and adjustments to each existing Pool
Receivable).
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(e) Performance and Compliance with Receivables and Contracts. At its
expense, timely and fully (i) perform and comply with all material
provisions, covenants and other promises required to be observed by it
under the Contracts related to the Pool Receivables and, (ii) as
beneficiary of any Related Security, enforce such Related Security as
reasonably requested by the Agent.
(f) Location of Records. Keep its chief place of business and chief
executive office, and the offices where it keeps its records concerning the
Pool Receivables and all Contracts related thereto (and all original
documents relating thereto), at the address(es) of the Seller referred to
in Section 4.01(j) or, upon 30 days' prior written notice to the Agent, at
such other locations in a jurisdiction where all action required by Section
6.05 shall have been taken and completed.
(g) Credit and Collection Policies. Comply in all material respects
with its Credit and Collection Policy in regard to each Pool Receivable and
the related Contract.
(h) Collections. Instruct substantially all Obligors to remit all
Collections directly to a Lock-Box Account and cause all Collections
received by the Seller to be deposited directly to a Lock-Box Account.
(i) Deposits to Lock-Box Accounts. Upon the request of the Agent, the
Seller shall instruct each Person that is not an Obligor to stop making
deposits to Lock Box Accounts.
SECTION 5.02. Reporting Requirements of the Seller. Until the later of
the Facility Termination Date and the date upon which no Capital for any
Eligible Asset shall be existing, the Seller will, unless the Agent shall
otherwise consent in writing, furnish to the Agent:
(a) as soon as available and in any event within 60 days after the end
of each of the first three quarters of each fiscal year of the Seller, a
Consolidated balance sheet of the Seller and its Subsidiaries as of the end
of such quarter and Consolidated statements of income and cash flow of the
Seller and its Subsidiaries for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, setting forth
in each case in comparative form the corresponding figures for the
corresponding period of the preceding fiscal year, all in reasonable
detail, duly certified (subject to year-end audit adjustments) by a
Responsible Officer of the Seller as having been prepared in accordance
with GAAP, it being agreed that delivery of the Seller's Quarterly Report
on Form l0-Q will satisfy this requirement, together with (i) a certificate
of said officer stating that, to his knowledge after reasonable
investigation, no Event of Investment Ineligibility has occurred and is
continuing or, if an Event of
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Investment Ineligibility has occurred and is continuing, a statement as to the
nature thereof and the action that the Seller has taken and proposes to take
with respect thereto and (ii) a certificate of said officer stating the Interest
Coverage Ratio and the Leverage Percentage as of the end of such quarter;
(b) as soon as available and in any event within 120 days after the
end of each fiscal year of the Seller, a copy of the annual report for such
year for the Seller and its Subsidiaries, containing a Consolidated balance
sheet of the Seller and its Subsidiaries as of the end of such fiscal year
and Consolidated statements of income and cash flows of the Seller and its
Subsidiaries for such fiscal year, in each case accompanied by an opinion
without qualification of independent public accountants of recognized
standing acceptable to the Agent, it being agreed that delivery of the
Seller's Annual Report on Form 10-K will satisfy this requirement, together
with (i) a certificate of such accounting firm to the Agent stating that in
the course of the regular audit of the business of the Seller and its
Subsidiaries, which audit was conducted by such accounting firm in
accordance with generally accepted auditing standards, such accounting firm
has obtained no knowledge that an Event of Investment Ineligibility has
occurred insofar as such Event of Investment Ineligibility relates to
accounting matters and is continuing, or if an Event of Investment
Ineligibility has occurred and is continuing, a statement as to the nature
thereof, (ii) a certificate of a Responsible Officer of the Seller stating
the Interest Coverage Ratio and the Leverage Percentage as of the end of
such fiscal year and (iii) a certificate of a Responsible Officer of the
Seller stating that, to his knowledge after reasonable investigation, no
Event of Investment Ineligibility has occurred and is continuing or, if a
Event of Investment Ineligibility has occurred and is continuing, a
statement as to the nature thereof and the action that the Seller has taken
and proposes to take with respect thereto;
(c) promptly after the sending or filing thereof, copies of all
reports which the Seller sends to any of its securityholders, and copies of
all reports and registration statements which the Seller or any of its
Subsidiaries files with the Securities and Exchange Commission or any
national securities exchange;
(d) promptly after the filing or receiving thereof, copies of all
reports and notices relating to the Seller and its significant domestic
subsidiaries with respect to any Reportable Event defined in Article IV of
ERISA which the Seller or any such subsidiary files under ERISA with the
Internal Revenue Service or the Pension Benefit Guaranty Corporation or the
U.S. Department of Labor or which the Seller or any subsidiary receives
from such corporation;
(e) as soon as possible and in any event within five days after the
occurrence of each Event of Investment Ineligibility or each event which,
with the giving of notice or lapse of time or both, would constitute an
Event of Investment Ineligibility, the
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statement of the chief accounting officer, treasurer or assistant treasurer of
the Seller setting forth details of such Event of Investment Ineligibility or
event and the action which the Seller proposes to take with respect thereto; and
(f) promptly, from time to time, such other information, documents,
records or reports respecting the Receivables or the conditions or
operations, financial or otherwise, of the Seller, or any subsidiary, as
the Agent may from time to time request in order to protect any Owner's or
the Agent's interests under or contemplated by this Agreement.
SECTION 5.03. Negative Covenants of the Seller. Until the later of the
Facility Termination Date and the date upon which no Capital for any Eligible
Asset shall be existing, the Seller will not, without the written consent of the
Agent:
(a) Sales, Liens, Etc. Except as otherwise provided herein, or
pursuant to the Parallel Purchase Commitment, sell, assign (by operation of
law or otherwise) or otherwise dispose of, or grant any option with respect
to or create or suffer to exist any Adverse Claim upon or with respect to,
the Seller's undivided interest in any Pool Receivable or Related Security
or Collections in respect thereof, or upon or with respect to any related
Contract, or upon or with respect to any lock-box account to which any
Collections of any Pool Receivable are sent, or assign any right to receive
income in respect thereof.
(b) Extension or Amendment of Receivables. Except as otherwise
permitted in Section 6.02(a), extend, amend or otherwise modify the terms
of any Pool Receivable, or amend, modify or waive any term or condition of
any Contract related thereto.
(c) Change in Business or Credit and Collection Policy. Make any
change in the character of its business or in the Credit and Collection
Policy, which change would, in either case, impair the collectibility of
any Pool Receivable.
(d) Change in Payment Instructions to Obligors. Add or terminate any
bank as a Lock-Box Bank from those listed in Schedule I hereto or make any
change in its instructions to Obligors regarding payments to be made to the
Seller or payments to be made to any Lock-Box Bank, unless the Agent shall
have received notice of such addition, termination or change and executed
copies of Lock-Box Agreements with each new Lock-Box Bank.
(e) Change in Corporate Name, Etc. Make any change to its name or
structure, or use any tradenames, fictitious names, assumed names or "doing
business as" names, unless, in the case of such name change or use and
prior to the effective
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date thereof, the Seller delivers to the Agent such financing statements or
amendments to financing statements (Form UCC-1 and UCC-3) executed by the
Seller which the Agent may request to reflect such name change or use,
together with such other documents and instruments that the Agent may
reasonably request in connection therewith.
(f) Mergers, Etc. Merge or consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions), all or substantially all of its assets (whether
now owned or hereafter acquired) to, any Person, or permit any of its
Subsidiaries to do so, except that any Subsidiary of the Seller may merge
or consolidate with or into, or dispose of assets to, any other Subsidiary
of the Seller, and except that any Subsidiary of the Seller may merge into
or dispose of assets to the Seller and the Seller may merge with any other
Person so long as the Seller is the surviving corporation, provided, in
each case; that no "Default" as defined in the Credit Agreement, and no
Event of Investment Ineligibility or event which would, with notice or the
lapse of time or both, constitute an Event of Investment Ineligibility
shall have occurred and be continuing at the time of such proposed
transaction or would result therefrom.
ARTICLE VI
ADMINISTRATION AND COLLECTION
SECTION 6.01. Designation of Collection Agent. The servicing,
administering and collection of the Pool Receivables shall be conducted by such
Person (the "Collection Agent ") so designated from time to time in accordance
with this Section 6.01. Until the Agent gives three Business Days' notice to the
Seller of a designation of a new Collection Agent, the Seller is hereby
designated as, and hereby agrees to perform the duties and obligations of, the
Collection Agent pursuant to the terms hereof. The Agent may at any time
designate as Collection Agent any Person (including itself) to succeed the
Seller or any successor Collection Agent if the Agent shall determine in its
reasonable discretion that such action is necessary to protect the interest of
any Owner in the Receivables, on the condition in each case that any such Person
so designated shall agree to perform the duties and obligations of the
Collection Agent pursuant to the terms hereof. The Collection Agent may, with
the prior consent of the Agent, subcontract with any other Person for servicing,
administering or collecting the Pool Receivables, provided that the Collection
Agent shall remain liable for the performance of the duties and obligations of
the Collection Agent pursuant to the terms hereof.
SECTION 6.02. Duties of Collection Agent. (a) The Collection Agent shall
take or cause to be taken all such actions as may be necessary or advisable to
collect each
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Pool Receivable from time to time, all in accordance with applicable laws, rules
and regulations, with reasonable care and diligence, and in accordance with the
Credit and Collection Policy, including, without limitation, the billing of Pool
Receivables as soon as possible under the Contracts related thereto, the
preparation and mailing of collection letters to any Obligor whose payment is
past due, the investigation and resolution of customer inquiries and complaints,
and the employment of one or more agents. Each of the Seller, each Owner and the
Agent hereby appoints as its agent the Collection Agent, from time to time
designated pursuant to Section 6.01, to enforce its respective rights and
interests in and under the Pool Receivables, the Related Security and the
Contracts. The Collection Agent shall set aside and hold in trust for the
account of the Seller and each Owner their respective allocable shares of the
Collections of Pool Receivables in accordance with Sections 2.05 and 2.06 but
shall not be required (unless otherwise requested by the Agent) to segregate the
funds constituting such portion of such Collections prior to the remittance
thereof in accordance with said Sections. If instructed by the Agent, the
Collection Agent shall segregate and deposit with a bank (which may be Citibank)
designated by the Agent such allocable share of Collections of Pool Receivables,
set aside for each Owner, on the first Business Day following receipt by the
Collection Agent of such Collections. Provided no Event of Investment
Ineligibility shall have occurred and be continuing, the Seller, while it is
Collection Agent, may, in accordance with the Credit and Collection Policy,
extend the maturity or adjust the Outstanding Balance of any Defaulted
Receivable as the Seller may determine to be appropriate to maximize Collections
thereof. The Seller shall deliver to the Collection Agent, and the Collection
Agent shall hold in trust for the Seller and each Owner in accordance with their
respective interests, all documents, instruments and records (including, without
limitation, computer tapes or disks) which evidence or relate to Pool
Receivables.
(b) The Collection Agent shall as soon as practicable following receipt
turn over to the Seller (i) that portion of Collections of Pool Receivables
representing its undivided interest therein, less, in the event the Seller is
not the Collection Agent, all reasonable and appropriate out-of-pocket costs and
expenses of such Collection Agent of servicing, collecting and administering the
Pool Receivables to the extent not covered by the Collection Agent Fee received
by it and (ii) the Collections of any Receivable which is not a Pool Receivable.
The Collection Agent, if other than the Seller, shall as soon as practicable
upon demand deliver to the Seller all documents, instruments and records in its
possession which evidence or relate to Receivables of the Seller other than Pool
Receivables, and copies of documents, instruments and records in its possession
which evidence or relate to Pool Receivables. The Collection Agent's
authorization under this Agreement shall terminate, after the Facility
Termination Date, upon receipt by each Owner of an Eligible Asset of an amount
equal to the Capital plus accrued Yield for such Eligible Asset plus all other
amounts owed to the Agent, each Owner and the Seller and (unless otherwise
agreed by the Agent and the Collection Agent) the Collection Agent under this
Agreement.
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SECTION 6.03. Rights of the Agent. (a) The Agent may notify, at any time
upon three Business Days' notice to the Seller if the Agent shall determine in
its sole discretion that such action is necessary to protect the interest of any
Owner in the Receivables, or at any time after the designation of a Collection
Agent other than the Seller and at the Seller's expense, the Obligors of Pool
Receivables, or any of them, of the ownership of Eligible Assets by the Owners.
(b) At any time following the designation of a Collection Agent other
than the Seller pursuant to Section 6.01:
(i) The Agent may direct the Obligors of Pool Receivables, or any of
them, that payment of all amounts payable under any Pool Receivable be made
directly to the Agent or its designee.
(ii) The Seller shall, at the Agent's request and at the Seller's
expense, give notice of such ownership to each said Obligor and direct that
payments be made directly to the Agent or its designee.
(iii) Seller shall, at the Agent's request, (A) assemble all of the
documents, instruments and other records (including, without limitation,
computer tapes and disks) which evidence the Pool Receivables, and the
related Contracts and Related Security, or which are otherwise necessary or
desirable to collect such Pool Receivables, and shall make the same
available to the Agent at a place selected by the Agent or its designee and
(B) segregate all cash, checks and other instruments received by it from
time to time constituting Collections of Pool Receivables in a manner
acceptable to the Agent and shall, promptly upon receipt, remit all such
cash, checks and instruments, duly endorsed or with duly executed
instruments of transfer, to the Agent or its designee.
(iv) Each of the Seller and each Investor hereby authorizes the Agent
to take any and all steps in the Seller's name and on behalf of the Seller
and the Owners necessary or desirable, in the determination of the Agent,
to collect all amounts due under any and all Pool Receivables, including,
without limitation, endorsing the Seller's name on checks and other
instruments representing Collections and enforcing such Pool Receivables
and the related Contracts.
SECTION 6.04. Responsibilities of the Seller. Anything herein to the
contrary notwithstanding:
(a) The Seller shall perform all of its obligations under the
Contracts related to the Pool Receivables to the same extent as if Eligible
Assets had not been sold hereunder and the exercise by the Agent of its
rights hereunder shall not relieve the
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Seller from such obligations or its obligations with respect to Pool
Receivables; and
(b) Neither the Agent nor the Owners shall have any obligation or
liability with respect to any Pool Receivables or related Contracts, nor
shall any of them be obligated to perform any of the obligations of the
Seller thereunder.
SECTION 6.05. Further Action Evidencing Purchases. The Seller agrees
that from time to time, at its expense, it will promptly execute and deliver all
further instruments and documents, and take all further action that the Agent
may reasonably request in order to perfect, protect or more fully evidence the
Eligible Assets purchased by the Owners hereunder, or to enable any of them or
the Agent to exercise and enforce any of their respective rights and remedies
hereunder. Without limiting the generality of the foregoing, the Seller will,
upon the request of the Agent: (i) execute and file such financing or
continuation statements, or amendments thereto or assignments thereof, and such
other instruments or notices, as may be necessary or appropriate; (ii) if the
Agent shall determine in its sole discretion that such action is necessary to
protect its interest in the Receivables, ▇▇▇▇ conspicuously each invoice
evidencing each Pool Receivable and the related Contract with a legend,
acceptable to the Agent, evidencing that such Eligible Assets have been sold in
accordance with this Agreement; and (iii) ▇▇▇▇ its master data processing
records evidencing such Pool Receivables and related Contracts with such legend.
The Seller hereby authorizes the Agent to file one or more financing or
continuation statements, and amendments thereto and assignments thereof,
relative to all or any of the Pool Receivables and the Related Security now
existing or hereafter arising without the signature of the Seller where
permitted by law. A photocopy or other reproduction of this Agreement or any
financing statement covering all or any of the Contracts, or Pool Receivables
and the Related Security and Collections with respect thereto shall be
sufficient as a financing statement where permitted by law. If the Seller fails
to perform any of its agreements or obligations under this Agreement, the Agent
may (but shall not be required to) itself perform, or cause performance of, such
agreement or obligation, and the expenses of the Agent incurred in connection
therewith shall be payable by the Seller as provided in Section 10.01.
ARTICLE VII
EVENTS OF INVESTMENT INELIGIBILITY
SECTION 7.01. Events of Investment Ineligibility. If any of the
following events ("Events of Investment Ineligibility") shall occur and be
continuing:
(a) (i) The Collection Agent (if other than the Agent or Citibank) (i)
shall fail to perform or observe any term, covenant or agreement hereunder
(other than as referred to in clause (ii) of this Section 7.01(a)) and such
failure shall remain
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unremedied for three Business Days or (ii) the Seller or the Collection
Agent (if other than the Agent or Citibank) shall fail to make any payment
or deposit to be made by it hereunder or under the letter agreement
described in Section 2.10(a) when due; or
(b) The Seller shall fail to perform or observe any term, covenant or
agreement contained in Section 5.03(e) or Section 6.03(a); or
(c) Any representation or warranty made or deemed to be made by the
Seller (or any of its officers) under or in connection with this Agreement,
the other Loan Documents or any Seller Report or other information or
report delivered pursuant hereto shall prove to have been false or
incorrect in any material respect when made; or
(d) The Seller shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement on its part to be
performed or observed and any such failure shall remain unremedied for
seven Business Days after written notice thereof shall have been given by
the Agent to the Seller; or
(e) The Seller shall fail to pay any Debt in excess of $10,OOO,OOO or
any interest or premium thereon, when due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise) and such failure
shall continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such Debt; or any other default under
any agreement or instrument relating to any such Debt, or any other event,
shall occur and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such default or
event is to accelerate, or to permit the acceleration of, the maturity of
such Debt; or any such Debt shall be declared to be due and payable or
required to be prepaid (other than by a regularly scheduled required
prepayment), redeemed, purchased or defeased, or an offer to prepay,
redeem, purchase or defease such Debt shall be required to be made, in each
case prior to the stated maturity thereof; or
(f) Any Purchase or any reinvestment pursuant to Section 2.05 shall
for any reason, except to the extent permitted by the terms hereof, cease
to create, or any Eligible Asset shall for any reason cease to be, a valid
and perfected first priority undivided percentage ownership interest to the
extent of the pertinent Eligible Asset in each applicable Pool Receivable
and the Related Security and Collections with respect thereto; or
(g) (i) The Seller shall generally not pay its debts as such debts
become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors;
or any proceeding shall be instituted by or against the Seller seeking to
adjudicate it a bankrupt or insolvent, or seeking
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liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any law relating
to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, or other similar official for it or for any substantial part of
its property and, if instituted against the Seller, either such proceeding
shall not be stayed or dismissed for 30 days or any of the actions sought
in such preceding (including, without limitation, the entry of an order for
relief against it or the appointment of a receiver, trustee, custodian or
other similar official for it or for any substantial part of its property)
shall occur; or (ii) the Seller shall take any corporate action to
authorize any of the actions set forth in clause (i) above in this
subsection (g); or
(h) The Default Ratio as at the last day of any calendar month shall
exceed 6% or the Delinquency Ratio as at the last day of any calendar month
shall exceed 4% and a repurchase, if required pursuant to Section 10.03, is
not made when due; or
(i) There shall have been any material adverse change in the financial
condition or operations of the Seller since December 31, 1996, or there
shall have occurred any event which materially adversely affects the
collectibility of the Pool Receivables, or there shall have occurred any
other event which materially adversely affects the ability of the Seller to
collect Pool Receivables or the ability of the Seller to perform hereunder;
or
(j) Any "Event of Default" shall have occurred and be continuing under
the Credit Agreement; or
(k) The aggregate undivided percentage interest for all Eligible
Assets and the "Eligible Assets" under the Parallel Purchase Commitment
shall exceed 100% for five consecutive days; or
(1) The Seller shall have failed to deliver to the Agent its written
consent to a proposed modification to the definition of Dilution Percentage
in accordance with the terms of such definition set forth in Section 1.01
within 5 days after receipt by the Seller of written notice from the Agent
setting forth such proposed modification, together with written evidence of
the approval of S&P or ▇▇▇▇▇'▇ or both for such modification;
then, and in any such event, the Agent may, by notice to the Seller, declare the
Facility Termination Date to have occurred, whereupon the Facility Termination
Date shall forthwith occur, without demand, protest or further notice of any
kind, all without any further actions on its part, which are hereby expressly
waived by the Seller; provided, however, that in the event of an actual or
deemed entry of an order for relief with respect to the Seller under the
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Federal Bankruptcy Code or the occurrence of any event described above in
subsection (f), the Facility Termination Date shall automatically occur, without
demand, protest or any notice of any kind, all of which are hereby expressly
waived by the Seller. Upon any such termination of the Facility, the Agent and
the Owners shall have, in addition to all other rights and remedies under this
Agreement or otherwise, all other rights and remedies provided under the UCC of
the applicable jurisdiction and other applicable laws, which rights shall be
cumulative. Without limiting the foregoing or the general applicability of
Article IX hereof, any Owner may elect to assign pursuant to Article IX hereof
any Eligible Asset owned by such Owner to an Assignee following the occurrence
of any Event of Investment Ineligibility.
ARTICLE VIII
THE AGENT
SECTION 8.01. Authorization and Action. Each Owner hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto.
SECTION 8.02. Agent's Reliance, Etc. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them as Agent under or in connection with this
Agreement (including, without limitation, the Agent's servicing, administering
or collecting Pool Receivables as Collection Agent pursuant to Section 6.01),
except for its or their own gross negligence or willful misconduct. Without
limiting the foregoing, the Agent:
(i) may consult with legal counsel (including counsel for the Seller),
independent public accountants and other experts selected by it and shall
not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts;
(ii) makes no warranty or representation to any Owner and shall not be
responsible to any Owner for any statements, warranties or representations
made in or in connection with this Agreement;
(iii) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of
this Agreement on the part of the Seller or to inspect the property
(including the books and records) of the Seller;
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(iv) shall not be responsible to any Owner for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of
this Agreement, the Certificate or any other instrument or document
furnished pursuant hereto; and
(v) shall incur no liability under or in respect of this Agreement by
acting upon any notice (including notice by telephone), consent,
certificate or other instrument or writing (which may be by facsimile)
believed by it to be genuine and signed or sent by the proper party or
parties.
SECTION 8.03. CNAI and Affiliates. With respect to any Eligible Asset
owned by CNAI, CNAI shall have the same rights and powers under this Agreement
as would any Owner and may exercise the same as though it were not the Agent.
CNAI and its Affiliates may generally engage in any kind of business with the
Seller or any Obligor, any of their respective Affiliates and any Person who may
do business with or own securities of the Seller or any Obligor or any of their
respective Affiliates, all as if CNAI were not the Agent and without any duty to
account therefor to the Owners.
SECTION 8.04. Investors' Purchase Decision. Each Investor acknowledges
that it has, independently and without reliance upon the Agent, any of its
Affiliates or any other Owner and based on such documents and information as it
has deemed appropriate, made its own evaluation and decision to enter into this
Agreement and, if it so determines, to purchase an undivided ownership interest
in Pool Receivables hereunder.
ARTICLE IX
ASSIGNMENT
SECTION 9.01. Assignment. (a) Each Investor may assign to any other
Assignee, and any such Assignee may assign to any other Assignee, any Eligible
Asset. Upon any such assignment, (i) the Assignee shall become the Owner of such
Eligible Asset for all purposes of this Agreement and (ii) the Owner assignor
thereof shall relin4uish its rights with respect to such Eligible Asset for all
purposes of this Agreement. Such assignments shall be upon such terms and
conditions as the assignor and the Assignee of such Eligible Asset may mutually
agree, the parties thereto shall deliver to the Agent an Assignment, duly
executed by such parties, and such assignor shall promptly execute and deliver
all further instruments and documents, and take all further action, that the
Assignee may reasonably request in order to perfect, protect or more fully
evidence the Assignee's right, title and interest in and to such Eligible Asset,
and to enable the Assignee to exercise or enforce any rights hereunder or under
the Certificate. The Agent shall provide notice to the Seller of any assignment
of an Eligible Asset hereunder.
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(b) By executing and delivering an Assignment, the Owner assignor
thereunder and the Assignee thereunder confirm to and agree with each other and
the other parties hereto as follows: (i) other than as provided in such
Assignment, such assigning Owner makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or Value of this Agreement,
the Certificate or any other instrument or document furnished pursuant hereto;
(ii) such assigning Owner makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Seller or the
performance or observance by the Seller of any of its obligations under, or the
perfection or priority of any ownership or security interest created or
purported to be created under or in connection with, this Agreement, the
Certificate or any other instrument or document furnished pursuant hereto; (iii)
such Assignee confirms that it has received a copy of this Agreement, together
with copies of the financial statements referred to in Section 4.01 and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and to purchase such
Eligible Asset; (iv) such Assignee will, independently and without reliance upon
the Agent, any of its Affiliates, such assigning Owner or any other Owner and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement; (v) such Assignee appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; (vi) such Assignee appoints as its
agent the Collection Agent from time to time designated pursuant to Section 6.01
to enforce its respective rights and interests in and under the Pool
Receivables, the Related Security and the related Contracts; and (vii) such
Assignee agrees that it will not institute against any Investor any proceeding
of the type referred to in Section 7.01(g) so long as any commercial paper
issued by such Investor shall be outstanding or there shall not have elapsed one
year plus one day since the last day on which any such commercial paper shall
have been outstanding.
(c) The Seller may not assign its rights or obligations hereunder or any
interest herein without the prior written consent of the Agent.
SECTION 9.02. Annotation of Certificate. The Agent shall annotate the
Certificate to reflect any assignments made pursuant to Section 9.01 or
otherwise.
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ARTICLE X
INDEMNIFICATION
SECTION 10.01. Indemnities by the Seller. Without limiting any other
rights which the Agent, any Owner or any of their respective Affiliates (each an
"Indemnified Party") may have hereunder or under applicable law, the Seller
hereby agrees to indemnify each Indemnified Party from and against any and all
damages, losses, claims, liabilities and related costs and expenses, including
reasonable attorneys' fees and disbursements (all of the foregoing being
collectively referred to as "Indemnified Amounts") awarded against or incurred
by any of them arising out of or as a result of this Agreement or the use of
proceeds of Purchases or the ownership of Eligible Assets or in respect of any
Receivable or any Contract, excluding, however, (a) Indemnified Amounts to the
extent resulting from gross negligence or willful misconduct on the part of such
Indemnified Party or (b) recourse (except as otherwise specifically provided in
this Agreement) for uncollectible Receivables. Without limiting or being limited
by the foregoing, the Seller shall pay on demand to each Indemnified Party any
and all amounts necessary to indemnify such Indemnified Party for Indemnified
Amounts relating to or resulting from:
(i) the creation of an undivided percentage ownership interest in any
Receivable which is not at the date of the creation of such interest an
Eligible Receivable or which thereafter ceases to be an Eligible
Receivable;
(ii) reliance on any representation or warranty made by the Seller (or
any of its officers) under or in connection with this Agreement, any Seller
Report or any other information or report delivered by the Seller pursuant
hereto, which shall have been false or incorrect in any material respect
when made or deemed made;
(iii) the failure by the Seller to comply with any applicable law,
rule or regulation with respect to any Pool Receivable or the related
Contract, or the nonconformity of any Pool Receivable or the related
Contract with any such applicable law, rule or regulation;
(iv) the failure to vest in the Owner of an Eligible Asset an
undivided percentage ownership interest, to the extent of such Eligible
Asset, in the Receivables in, or purporting to be in, the Receivables Pool
and the Related Security and Collections in respect thereof, free and clear
of any Adverse Claim;
(v) the failure to file, or any delay in filing, financing statements
or other similar instruments or documents under the UCC of any applicable
jurisdiction or other applicable laws with respect to any Receivables in,
or purporting to be in, the Receivables Pool and the Related Security and
Collections in respect thereof, whether
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at the time of any Purchase or reinvestment or at any subsequent time;
(vi) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of the Obligor to the payment of any Receivable
in, or purporting to be in, the Receivables Pool (including, without
limitation, a defense based on such Receivable or the related Contract not
being a legal, valid and binding obligation of such Obligor enforceable
against it in accordance with its terms), or any other claim resulting from
the sale of the merchandise or services related to such Receivable or the
furnishing or failure to furnish such merchandise or services;
(vii) any failure of the Seller, as Collection Agent or otherwise, to
perform its duties or obligations hereunder or to perform its duties or
obligations under the Contracts;
(viii) any products liability claim arising out of or in connection
with merchandise, insurance or services which are the subject of any
Contract; or
(ix) any investigation, litigation or proceeding related to this
Agreement or the use of proceeds of Purchases or the ownership of Eligible
Assets or in respect of any Receivable or any Contract; or
(x) the commingling of Collections of Pool Receivables at any time
with other funds provided, that without in any way limiting the scope of
the foregoing indemnity, such indemnity is not intended to restrict the
Seller from servicing Receivables as the Collection Agent pursuant to
Article 6 of this Agreement.
SECTION 10.02. Additional Indemnities. Section 8.04(b) of the Credit
Agreement is incorporated in this Agreement by reference, with the same force
and effect as if the same was set out in this Agreement in full; provided that
references to the "Borrower" and any "Lender" therein shall mean the Seller and
any Owner, respectively, and, without limitation, all references in such
incorporated provision to "Indemnified Party" and "Loan Documents" shall mean
and refer to Indemnified Party and Loan Documents under this Agreement,
respectively; likewise, to the extent any word or phrase is defined in this
Agreement, any such word or phrase appearing in the provision so incorporated by
reference from the Credit Agreement shall have the meaning given to it in this
Agreement; and provided further words or phrases used in such incorporated
provision and not otherwise defined in this Agreement shall be also incorporated
herein by reference; and provided further, that notwithstanding the foregoing,
such incorporated provision shall exclude recourse (except as otherwise
specifically provided in this Agreement) for uncollectible Receivables. The
incorporation by reference into this Agreement from the Credit Agreement is for
convenience only and this Agreement and the Credit Agreement shall at all times
be, and be deemed to be and treated as, separate and distinct facilities.
Incorporations by
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reference in this Agreement from the Credit Agreement shall not be affected or
impaired by any subsequent expiration or termination of the Credit Agreement,
nor by any amendment thereof or waiver thereunder unless the Agent, as Agent for
the Owners, shall have consented to such amendment or waiver in writing.
SECTION 10.03. Limited Recourse. On the first day (the "Determination
Date") on which (a) the Default Ratio or the Delinquency Ratio exceeds the
percentage therefor set forth in Section 7.01(h) and (b) such percentage would
not be exceeded if such ratio were calculated by excluding from the numerator
and denominator thereof all the Pool Receivables of either (i) the Obligor with
the largest, (ii) the Obligors with the two largest or (iii) the Obligors with
the three largest Outstanding Balances of Pool Receivables that on the
Determination Date are either Defaulted Receivables or Delinquent Receivables,
as the case may be (the amount of such Outstanding Balances of the minimum
number of such Obligors required so that such percentage would not be exceeded
being called the "Excluded Receivables", and the one, two or three Obligors
owing such Excluded Receivables being the "Excluded Obligors"), then the Seller
shall repurchase a portion of Eligible Assets ratably from each Owner by paying
to the Agent for the benefit of the Owners on the first Business Day after the
Determination Date:
(i) an amount of Capital equal to the product obtained by multiplying
all Capital outstanding as of the Determination Date by a fraction the
numerator of which shall be the Outstanding Balances of the Excluded
Receivables and the denominator of which shall be the Outstanding Balances
of all Pool Receivables, in each case as of the Determination Date, plus
(ii) all Yield accrued thereon through the date of such repurchase
plus
(iii) the amount, if any, by which (A) the additional Yield which
would have accrued on the portion of the Eligible Assets so repurchased
during the Fixed Period (computed without regard to clause (iv) of the
definition of "Fixed Period") during which such repurchase occurs if such
portion of such Eligible Assets had remained outstanding in its entirety
exceeds (B) the income, if any, received by the Owner by investing the
proceeds of such repurchase attributable to the portion of the Eligible
Assets so repurchased.
On and after the date on which such payment is made in full, each Excluded
Obligor shall automatically and immediately cease to be a Designated Obligor,
and the Receivables of such Obligor shall automatically and immediately be
excluded from the Receivables Pool. Upon receipt of funds paid to the Agent
pursuant to this Section 10.03, the Agent shall distribute such funds to the
Owners ratably (i) in payment of the accrued Yield for such portion of each
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Eligible Asset repurchased, (ii) in reduction of the Capital of such portion of
each Eligible Asset repurchased and (iii) in payment of any other amounts owed
by the Seller hereunder to such Owner.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement nor consent to any departure by the Seller
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Agent, as Agent for the Owners, and then such amendment,
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
SECTION 11.02. Notices, Etc. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing and
mailed, faxed or delivered, as to each party hereto, to its address set forth
under its name on the signature pages hereof or at such other address as shall
be designated by such party in a written notice to the other parties hereto.
Notices and communications by facsimile shall be effective when sent, and
notices and communications sent by other means shall be effective when received,
in each case addressed as aforesaid.
SECTION 11.03. No Waiver; Remedies. No failure on the part of the Agent,
Citibank or an Owner to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
SECTION 11.04. Restatement Effective Date; Restatement of the Original
Agreement; Binding Effect. The Original Agreement became effective when it was
executed by the Seller, each Investor and the Agent and the conditions precedent
set forth in Section 3.01 were satisfied or waived (the date on which all such
events shall have occurred being the "Effective Date"). This Agreement shall
become effective when it shall have been executed by the Seller, each Investor
and the Agent (such date being the "Restatement Effective Date"). Any Eligible
Asset outstanding on the Restatement Effective Date shall continue to be
calculated at the "Investor Rate" and for the selected "Interest Period" under
the Original Agreement until the earlier of the expiration of the "Interest
Period" or August 21, 1997 (each as defined under the Original Agreement). For
purposes of the foregoing sentence only, the provisions in the Original Credit
Agreement dealing with the "Investor Rate" and the calculation and payment
thereof shall survive until August 21, 1997. After August 21, 1997 all
calculations and payments with respect to the Investor Rate shall be
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governed by the provisions of this Agreement. On the Restatement Effective Date,
the Original Agreement and the Certificate issued thereunder shall each
automatically and without further action be amended and restated to read in its
entirety as set forth in this Agreement (other than as provided for above).
Thereafter each reference in the Original Agreement to "this Agreement",
"hereunder", "hereof", "herein" or words of like import, and each reference to
the Original Agreement in any Certificate or other document delivered and to be
delivered in connection with the Original Agreement shall mean and be a
reference to the Original Agreement as amended and restated pursuant to this
Agreement and each reference to the Certificate in the Original Agreement and in
any document delivered and to be delivered in connection with the Original
Agreement shall mean and be a reference to the Certificate issued under this
Agreement. Except as so amended and restated, the Original Agreement shall
remain in full force and effect and is hereby ratified and confirmed. The
execution, delivery and effectiveness of this Agreement shall not, except as
expressly provided herein, operate as a waiver of any right, power or remedy of
any Owner or the Agent under the Original Agreement, nor constitute a waiver of
any provision of the Original Agreement. The Original Agreement as so amended
and restated shall be binding upon and inure to the benefit of the Seller, the
Agent, the Owners and their respective successors and assigns. This Agreement
shall create and constitute the continuing obligations of the parties hereto in
accordance with its terms, and shall remain in full force and effect until such
time, after the Facility Termination Date, as no Capital of any Eligible Asset
shall be outstanding; provided, however, that rights and remedies with respect
to any breach of any representation and warranty made by the Seller pursuant to
Article IV, the indemnification provisions of Article X and the provisions of
Sections 11.06, 11.07 and 11.08 shall be continuing and shall survive any
termination of this Agreement for a period of three years.
SECTION 11.05. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE
EXTENT THAT THE VALIDITY OR PERFECTION OF THE INTERESTS OF THE OWNERS IN THE
RECEIVABLES, OR REMEDIES HEREUNDER, IN RESPECT THEREOF ARE GOVERNED BY THE LAWS
OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SECTION 11.06. Costs. Expenses and Taxes. (a) In addition to the rights
of indemnification granted to the Indemnified Parties under Article X hereof,
the Seller agrees to pay on demand all costs and expenses in connection with the
preparation, execution, delivery, administration, modification and amendment
(including periodic auditing) of this Agreement, the Certificate and the other
documents to be delivered hereunder, including, without limitation, the
reasonable fees and expenses of counsel for the Agent, each Investor, Citibank,
CNAI and their respective Affiliates with respect thereto and with respect to
advising the Agent, each Investor, Citibank, CNAI and their respective
Affiliates as to their respective rights and remedies under this Agreement. The
Seller further agrees to pay on demand all costs and expenses, if any (including
reasonable counsel fees and expenses), of the Agent, CNAI, the Owners and their
respective Affiliates, in connection with the
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enforcement (whether through negotiations, legal proceedings or otherwise) of
this Agreement, the Certificate and the other documents to be delivered
hereunder, including, without limitation, reasonable fees and expenses of
counsel for the Agent, CNAI, the Owners and their respective Affiliates in
connection with the enforcement of rights under this Section 11.06(a). A
certificate as to the amount of such costs and expenses setting forth the basis
thereof in reasonable detail and submitted to the Seller shall be conclusive and
binding for all purposes, absent manifest error.
(b) In addition, the Seller shall pay any and all commissions of
placement agents and commercial paper dealers in respect of commercial paper
notes of each Investor issued to fund the Purchase or maintenance of any
Eligible Asset and any and all stamp and other taxes and fees payable or
determined to be payable in connection with the execution, delivery, filing and
recording of this Agreement or the other documents to be delivered hereunder,
and agrees to indemnify the Agent, each Investor, Citibank; CNAI and their
respective Affiliates against any liabilities with respect to or resulting from
any delay in paying or omission to pay such taxes and fees.
(c) In addition, the Seller shall pay on demand all other costs,
expenses and taxes (excluding income taxes) incurred by each Investor or any
general or limited partner of each Investor ("Other Costs"), including, without
limitation, the cost of auditing each Investor's books by certified public
accountants, the cost of rating each Investor's commercial paper by independent
financial rating agencies, the taxes (excluding income taxes) resulting from
each Investor's operations, and the reasonable fees and out-of-pocket expenses
of counsel for each Investor or any counsel for any general or limited partner
of each Investor with respect to (i) advising such Investor or such general or
limited partner as to its rights and remedies under this Agreement, (ii) the
enforcement of this Agreement and the other documents to be delivered hereunder,
or (iii) advising such Investor or such general or limited partner as to matters
relating to such Investor's operations; provided, however that, if any Investor
enters into agreements for the purchase of interests in receivables from one or
more other Persons ("Other Sellers"), the Seller and such Other Sellers shall
each be liable for such Other Costs ratably in accordance with the usage under
the respective facilities of such Investor to purchase receivables or interests
therein from the Seller and each Other Seller; and provided further that if such
Other Costs are attributable to the Seller and not attributable to any Other
Seller, the Seller shall be solely liable for such Other Costs. A certificate as
to the amount of such costs and expenses setting forth the basis thereof in
reasonable detail and submitted to the Seller shall be conclusive and binding
for all purposes, absent manifest error.
SECTION 11.07. No Proceedings. Each of the Seller, the Agent, each
Owner, each assignee of an Eligible Asset or any interest therein and each
entity which enters into a commitment to purchase Eligible Assets or interests
therein hereby agrees that it will not institute against any Investor any
proceeding of the type referred to in clause (i) of Section
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7.01(g) 50 long as any commercial paper issued by such Investor shall be
outstanding or there shall not have elapsed one year plus one day since the last
day on which any such commercial paper shall have been outstanding.
SECTION 11.08. Confidentiality. (a) Except to the extent otherwise
required by applicable law, rule, regulation or judicial process, the Seller
agrees to maintain the confidentiality of this Agreement (and all drafts
thereof) in communications with third parties and otherwise; provided, however,
that the Agreement may be disclosed to third parties to the extent such
disclosure is (i) required in connection with a sale of securities of the
Seller, (ii) made solely to persons who are legal counsel for the purchaser or
underwriter of such securities, (iii) limited in scope to the provisions of
Articles V, VII, X and, to the extent defined terms are used in Articles V, VII
and X, such terms defined in Article I of this Agreement and (iv) made pursuant
to a written agreement of confidentiality in form and substance reasonably
satisfactory to the Agent; provided further, however, that the Agreement may be
disclosed to the Seller's legal counsel pursuant to an agreement of the type
referred to in clause (iv), above; and provided further, however, that the
Seller shall have no obligation of confidentiality in respect of any information
which may be generally available to the public or becomes available to the
public through no fault of the Seller.
(b) Each Owner understands that this Agreement is a confidential
document and no Owner will disclose it to any other Person without the Agent's
prior written consent other than (i) to such Owner's Affiliates and their and
their Affiliates' officers, directors, employees, agents, rating agencies,
counsel, auditors and advisors and then only on a confidential basis, (ii) to
actual or prospective Assignees and participants, and then only if such Assignee
has agreed in writing to maintain such information on a confidential basis,
(iii) as required by any law, rule or regulation or judicial process or (iv) as
requested or required by any state, federal or foreign authority or examiner
regulating banks or banking.
(c) Neither the Agent nor any Owner shall disclose any Confidential
Information to any Person without the consent of the Seller, other than (i) to
the Agent's or such Owner's Affiliates and their and their Affiliates' officers,
directors, employees, agents, rating agencies, counsel, auditors and advisors
and then only on a confidential basis, (ii) to actual or prospective Assignees
and participants, and then only if such Assignee has agreed in writing to
maintain such Confidential Information on a confidential basis, (iii) as
required by any law, rule or regulation or judicial process and (iv) as
requested or required by any state, federal or foreign authority or examiner
regulating banks or banking.
SECTION 11.09. Execution in Counterparts; Severability. This Agreement
may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telefax shall be effective as
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delivery of a manually executed counterpart of this Agreement. In case any
provision in or obligation under this Agreement should be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 11.10. Grant of a Security Interest. (a) The Seller hereby
assigns and pledges to the Agent for the benefit of itself, the Owners and each
other Indemnified Party from time to time, and hereby grants to the Agent for
the benefit of itself, the Owners and each other Indemnified Party from time to
time, a security interest in and to all of the Seller's right, title and
interest in and to all of the Pool Receivables, the Related Security with
respect thereto and the Collections and all proceeds of any and all of the
foregoing Collateral (including, without limitation, proceeds which constitute
property of the types described above in this clause (a)) (collectively the
"Collateral").
(b) The assignment, pledge and security interest granted under this
Section 11.10 secures the payment of all obligations of the Seller now or
hereafter existing from time to time under this Agreement, any other instruments
and documents furnished by the Seller pursuant hereto and otherwise in
connection with this Agreement, whether for Collections received or deemed to
have been received or otherwise payable by the Seller, either individually or as
Collection Agent, repurchases of interests in Pool Receivables, interest,
capital, yield, fees (including but not limited to any Collection Agent Fees),
costs, expenses, taxes, indemnification or otherwise (all such obligations being
the "Obligations").
(c) The Seller agrees that from time to time, at the expense of the
Seller, the Seller will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that the Agent may reasonably request, in order to perfect and protect the
assignment and security interest granted or purported to be granted hereby or to
enable the Agent to exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of the foregoing, the
Seller will execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be necessary
or reasonably desirable, or as the Agent may reasonably request, in order to
perfect and preserve the assignment and security interest granted or purported
to be granted hereby. The Seller hereby authorizes the Agent to file one or more
financing or continuation statements, and amendments thereto, relating to all or
any part of the Collateral without the signature of the Seller where permitted
by law, and the Agent shall notify the Seller of each such filing. A photocopy
or other reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.
(d) The Seller hereby irrevocably appoints the Agent as the Seller's
attorney-in-fact, with full authority in the place and stead of the Seller and
in the name of the
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Seller or otherwise, from time to time in the Agent's discretion following the
occurrence and during the continuance of an Event of Investment Ineligibility,
to take any action and to execute any instrument which the Agent may deem
necessary or advisable to accomplish the purposes of the assignment, grant and
security interest granted hereunder, including, without limitation:
(i) to ask, demand, collect, ▇▇▇ for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under or in
connection with the Collateral,
(ii) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper, if any, in connection therewith, and
(iii) to file any claims or take any action or institute any
proceedings which the Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
the Agent with respect to any of the Collateral.
(e) If the Seller fails to perform any agreement contained herein, the
Agent may itself perform, or cause performance of, such agreement, and the
expenses of the Agent incurred in connection therewith shall be payable by the
Seller under Section 11.06.
(f) The powers conferred on the Agent hereunder are solely to protect
its interest in the Collateral and shall not impose any duty upon it to exercise
any such powers. Except for the safe custody of any Collateral in its possession
and the accounting for moneys actually received by it hereunder, the Agent shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to any
Collateral. The Agent shall be deemed to have exercised reasonable care in the
custody and preservation of any Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which it accords its own
property.
(g) If any Event of Investment Ineligibility shall have occurred and be
continuing:
(i) The Agent may exercise any and all rights and remedies of the
Seller in respect of the Collateral.
(ii) The Agent may exercise in respect of the Collateral, in addition
to other rights and remedies provided for herein or otherwise available to
it, all the rights and remedies of a secured party on default under the UCC
in effect in the State of New York (whether or not such UCC applies to the
affected Collateral).
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(iii) All payments received by the Seller in respect of the Collateral
shall be received in trust for the benefit of the Agent, shall (upon
request by the Agent) be segregated from other funds of the Seller and
shall be forthwith paid over to the Agent in the same form as so received
(with any necessary endorsement).
(iv) All payments made in respect of the Collateral, and all cash
proceeds in respect of any sale of, collection from, or other realization
upon all or any part of the Collateral, received by the Agent may, in the
discretion of the Agent, be held by the Agent as collateral for, and/or
then or at any tune thereafter applied (after payment of any amounts
payable to the Agent pursuant to Section 11.06) in whole or in part by the
Agent for the Owners or the applicable Indemnified Parties against, all or
any part of the Obligations in such order as the Agent shall elect. Any
surplus of such payments or cash proceeds held by the Agent and remaining
after payment in full of all the Obligations shall be paid over to the
Seller or to whomsoever may be lawfully entitled to receive such surplus.
(h) Anything herein to the contrary notwithstanding, (i) the Seller
shall remain liable under each Contract to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (ii) the exercise by the Agent of any of the rights hereunder shall
not release the Seller from any of its duties or obligations under any Contract
and (iii) neither the Agent nor any Investor nor any other Indemnified Party
shall have any obligation or liability under any Contract by reason of this
Section 11.10, nor shall the Agent or any Investor or any other Indemnified
Party be obligated to perform any of the obligations or duties of the Seller
thereunder.
[The remainder of this page has been intentionally left blank.]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
THE GEON COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Treasurer
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
(Lorain County)
Attention: Treasurer
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
CORPORATE RECEIVABLES CORPORATION
By: Citicorp North America, Inc.
as Attorney-in-Fact
By:
--------------------------------
Title:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: CRC
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
63
58
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
THE GEON COMPANY
By:
--------------------------------
Title:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
(Lorain County)
Attention: Treasurer
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
CORPORATE RECEIVABLES CORPORATION
By: Citicorp North America, Inc.
as Attorney-in-Fact
By:
--------------------------------
Title V.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: CRC
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
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▇▇▇▇▇▇, ▇.▇.
By: Citicorp North America, Inc.
as Attorney-in-Fact
By:
--------------------------------
Title:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
CITICORP NORTH AMBRICA, INC.,
as Agent
By:
--------------------------------
Title: V.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Asset Funding
Department
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
65
EXHIBIT A
ASSIGNMENT
Dated as of _____________, 19_
Reference is made to the Trade Receivables Purchase and Sale Agreement
dated as of April 1, 1993 (the "Agreement") among The Geon Company (the
"Seller"), Corporate Receivables Corporation, ▇▇▇▇▇▇, ▇.▇. and Citicorp North
America, Inc., as Agent. Terms defined in the Agreement are used herein as
therein defined.
____________(the "Assignor") and ____________ (the "Assignee") agree as
follows:
1. In consideration of the payment of $________, being the existing
[aggregate] Capital of the Eligible Asset[s] referred to below, and of $____,
being the [aggregate] unpaid accrued Yield for such Eligible Asset[s], receipt
of which payment is hereby acknowledged, the Assignor hereby assigns to the
Agent for the account of the Assignee, and the Assignee hereby purchases from
the Assignor, all of the Assignor's right, title and interest in and to the
Eligible Asset[s] purchased by the undersigned in [a] Purchase[s] on ________,
19_; _________, 19_, [etc.]] under the Agreement.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the Eligible Asset[s] being assigned by it hereunder and
that such Eligible Asset[s] are free and clear of any Adverse Claim; (ii) makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Agreement, the Certificate or any other instrument
or document furnished pursuant thereto; and (iii) makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Seller or the performance or observance by the Seller of any of its
obligations under the Agreement, the Certificate or any other instrument or
document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of the
Agreement, together with copies of the financial statements referred to in
Section 4.01 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and purchase such Eligible Asset[s]; (ii) agrees that it will,
independently and without reliance upon the Agent, any of its Affiliates, the
Assignor or any other Owner and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking
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action under the Agreement; (iii) appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under the Agreement as
are delegated to the Agent by the terms thereof, together with such powers as
are reasonably incidental thereto; (v) appoints as its agent the Collection
Agent from time to time designated pursuant to Section 6.01 to enforce its
respective rights and interests in and under the Pool Receivables, the Related
Security and the related Contracts; and (vi) agrees that it will not institute
against any Investor any proceeding of the type referred to in Section 7.01(g)
50 long as any commercial paper issued by such Investor shall be outstanding or
there shall not have elapsed one year plus one day since the last day on which
any such commercial paper shall have been outstanding.
4. Following the execution of this Assignment by the Assignor and the
Assignee, it will be delivered to the Agent. The effective date of this
Assignment shall be the date above specified (the "Effective Date").
5. As of the Effective Date, (i) the Assignee shall be and become the
Owner of the Eligible Asset[s] referred to herein for all purposes of the
Agreement and (ii) the Assignor shall relinquish its rights with respect to such
Eligible Asset[s] for all purposes of the Agreement.
6. This Assignment shall be governed by, and construed in accordance
with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be
duly executed and delivered by their respective duly authorized officers or
agents as of the date first written above.
[NAME OF ASSIGNOR]
By
Title:
[NAME OF ASSIGNEE]
By
Title:
67
EXHIBIT B
CERTIFICATE OF ASSIGNMENT
Dated as of __________, 1994
Reference is made to the Trade Receivables Purchase and Sale Agreement
dated as of April 1, 1993 (the "Agreement") among The Geon Company (the
"Seller"), Corporate Receivables Corporation, ▇▇▇▇▇▇, ▇.▇. and Citicorp North
America, Inc., as Agent. Terms defined in the Agreement are used herein as
therein defined.
The Seller hereby sells and assigns to the Agent for the account of the
Owner thereof each Eligible Asset purchased under the Agreement.
Each Purchase of an Eligible Asset made by each Investor from the
Seller, each assignment of such Eligible Asset by its Owner to an Assignee and
each reduction in Capital in respect of each Eligible Asset evidenced hereby
shall be endorsed by the Agent on the grid attached hereto which is part of this
Certificate of Assignment. Such endorsement shall evidence the ownership of such
Eligible Asset initially by each Investor and upon any assignment, if any,
thereof by the Assignee thereof and the amount of Capital from time to time.
This Certificate of Assignment is made without recourse except as
otherwise provided in the Agreement.
This Certificate of Assignment shall be governed by, and construed in
accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the undersigned has caused this Certificate of
Assignment to be duly executed and delivered by its duly authorized officer as
of the date first above written.
THE GEON COMPANY
By
Title:
68
\
GRID(1)
Number of Capital Owner
Eligible (Giving Effect (Giving Effect
Asset Transaction(2) to Transaction) to Transaction)
----- -------------- --------------- ---------------
----------
(1) Eligible Assets will be numbered sequentially based upon date of Purchase.
(2) Transactions are Purchases, Reductions in Capital, Assignments, Divisions
of Eligible Assets and Combinations of Eligible Assets.
69
EXHIBIT C
SELLER REPORT
70
EXHIBIT D
FORM OF LOCK-BOX AGREEMENT
[DATE]
[Name and Address of Lock-Box Bank]
The Geon Companv
Ladies and Gentlemen:
The Geon Company (the "Company") hereby notifies you that the Company
has transferred exclusive ownership and control of its depository [lock-box]
account number [____________] maintained with you (the "Lock-Box Account") to
Citicorp North America, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(the "Agent").
The Company hereby irrevocably instructs you to make all payments to be
made by you out of or in connection with the Lock-Box Account pursuant only to
such written instructions as an officer of the Agent shall give you from time to
time.
The Company also hereby notifies you that the Agent shall be irrevocably
entitled to exercise any and all rights in respect of or in connection with the
Lock-Box Account.
By its signature below, the Agent hereby instructs you initially to make
all payments to be made by you out of or in connection with the Lock-Box Account
pursuant to such written instructions as an officer of the Company shall give
you from time to time.
Upon your receipt of further instructions from the Agent, you shall make
all payments to be made by you out of or in connection with the Lock-Box Account
directly to the account or accounts specified in those instructions. Those
accounts may include, but need not be limited to: Citibank, N.A., account no.
[_________ ] in the name of the Agent, at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention of U.S. Securitization, for the account of the Agent.
Notwithstanding anything to the contrary in any other agreement relating
to the Lock-Box Account, the Lock-Box Account is and will be maintained solely
for the benefit of the Agent, and will be entitled "Citicorp North America,
Inc., as Agent, re: The Geon Company." You will maintain a record of all checks
and other remittance items received in
71
2
the Lock-Box Account. In addition to providing the Agent and the Company with
the reports and other documents provided in the past, you will furnish to the
Agent and the Company for the Lock-Box Account (i) a monthly statement and (ii)
such other information as the Agent may request from time to time, to be
transmitted to the Agent at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and
to the Company at [Address]. Given the Agent's interest in the Lock-Box Account,
all transfers from the Lock-Box Account shall be made by you irrespective of,
and without deduction for, any counterclaim, defense, recoupment or set-off with
respect to the Company or any of its affiliates and shall be final, and you
shall not seek to recover from the Agent for any reason any such payment once
made.
Notwithstanding the foregoing, all service charges and fees with respect
to the Lock-Box Account shall be payable by the Company.
Please agree to the terms of, and acknowledge receipt of, this notice by
signing in the space provided below on a counterpart hereof. This letter may be
executed in any number of counterparts and by difference parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
letter by telefax shall be effective as delivery of a manually executed
counterpart of this letter. Your signing will also be a confirmation to the
Agent that the description of the Lock-Box Account above is correct and that you
have no notice of any other person or entity having any interest in, or pledge
or assignment of, the Lock-Box Account. Please send two signed copies of this
letter to the Agent at its address at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ______________________________. A third copy is enclosed for your
records.
Very truly yours,
THE GEON COMPANY
By:
--------------------------------
Title:
72
▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, INC.
By:
--------------------------------
Title:
Agreed and acknowledged:
[NAME OF LOCK-BOX BANK]
By:
------------------------------------
Title:
73
SCHEDULE I
LOCK-BOX BANKS
National City Bank, Cleveland
Lock-Box 73603-N The Geon Company
▇.▇. ▇▇▇ ▇▇▇▇▇-▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Trust and Savings Bank, Chicago
Lock-Box 71151 The Geon Company
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
74
_
SCHEDULE II
DESCRIPTION OF
CREDIT AND COLLECTION POLICY
75
SCHEDULE III
FORM OF CONTRACTS
76
SCHEDULE IV
LIST OF OFFICES OF SELLER WHERE RECORDS
RELATING TO THE RECEIVABLES ARE KEPT
One Geon Center
Avon Lake, Ohio
(▇▇▇▇▇▇▇ County)