EXHIBIT 4(a)
PURCHASE AND CONTRIBUTION AGREEMENT
Dated as of February 1, 2006
between
THE ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ COMPANY,
as the Originator
and
SWC RECEIVABLES FUNDING LLC,
as the Purchaser
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS........................................................................................ 1
SECTION 1.01. Certain Defined Terms........................................................................ 1
SECTION 1.02. Other Terms and Constructions................................................................ 5
SECTION 1.03. Computation of Time Periods.................................................................. 6
ARTICLE II AMOUNTS AND TERMS OF PURCHASES.................................................................... 6
SECTION 2.01. Purchases of Receivables; Agreement to Purchase.............................................. 6
SECTION 2.02. Payment for the Purchases; Settlements....................................................... 7
SECTION 2.03. Payments..................................................................................... 10
SECTION 2.04. Transfer of Records to the Purchaser......................................................... 10
SECTION 2.05. Lock-Box and Deposit Account Transfer; Rights of the Purchaser............................... 11
SECTION 2.06. Responsibilities of the Originator........................................................... 12
SECTION 2.07. Further Action Evidencing Purchaser's Interest............................................... 12
SECTION 2.08. Application of Collections................................................................... 12
ARTICLE III REPRESENTATIONS AND WARRANTIES................................................................... 12
SECTION 3.01. Representations and Warranties of the Originator............................................. 12
ARTICLE IV COVENANTS......................................................................................... 17
SECTION 4.01. Affirmative Covenants of the Originator...................................................... 17
SECTION 4.02. Reporting Requirements of the Originator..................................................... 21
SECTION 4.03. Negative Covenants of the Originator......................................................... 23
ARTICLE V PURCHASE TERMINATION EVENTS........................................................................ 24
SECTION 5.01. Purchase Termination Events.................................................................. 24
ARTICLE VI INDEMNIFICATION................................................................................... 26
SECTION 6.01. Indemnities by the Originator................................................................ 26
SECTION 6.02. Limited Liability of Originator Indemnified Parties.......................................... 29
ARTICLE VII MISCELLANEOUS.................................................................................... 29
SECTION 7.01. Amendments, Etc.............................................................................. 29
SECTION 7.02. Notices...................................................................................... 29
SECTION 7.03. No Waiver; Remedies.......................................................................... 29
SECTION 7.04. Binding Effect; Assignability................................................................ 29
SECTION 7.05. Consent to Jurisdiction...................................................................... 30
SECTION 7.06. WAIVER OF JURY TRIAL......................................................................... 30
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SECTION 7.07. GOVERNING LAW................................................................................ 30
SECTION 7.08. Costs, Expenses and Taxes.................................................................... 30
SECTION 7.09. Execution in Counterparts; Severability...................................................... 31
SECTION 7.10. Termination of this Agreement................................................................ 31
SECTION 7.11. Purchaser's Assignment of Rights to Program Agent............................................ 31
SECTION 7.12. Limited Recourse............................................................................. 32
SECTION 7.13. Integration.................................................................................. 32
EXHIBITS
Exhibit A Form of Subordinated Note
Exhibit B Chief Executive Offices; Locations of Books and Records; Form and Jurisdiction of
Organization; Organizational Identification Numbers; Trade Names
Exhibit C List of Deposit Account Banks; Deposit Accounts; Lock-Box Processors and Lock-Boxes
Exhibit D Purchaser Notice Address
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PURCHASE AND CONTRIBUTION AGREEMENT
This PURCHASE AND CONTRIBUTION AGREEMENT, dated as of February 1,
2006, is between THE ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ COMPANY, an Ohio corporation (the
"Originator"), and SWC RECEIVABLES FUNDING LLC, a Delaware limited liability
company (the "Purchaser").
PRELIMINARY STATEMENTS
WHEREAS, the Originator now owns, and from time to time hereafter
will own, Receivables that it wishes to sell to the Purchaser; and
WHEREAS, the Purchaser has agreed to purchase from the Originator,
all of the Originator's right, title and interest in and to such Receivables,
together with the Related Security and Collections with respect thereto upon the
terms and subject to the conditions set forth herein; and
WHEREAS, in order to finance its purchases of such Receivables,
Related Security and Collections from the Originator, the Purchaser has entered
into that certain Loan and Servicing Agreement, dated as of the date hereof (as
amended, restated, supplemented or otherwise modified from time to time, the
"Loan and Servicing Agreement") by and among the Purchaser, as Borrower, the
Originator, as Servicer, the commercial paper conduits from time to time party
thereto as Conduit Lenders, the financial institutions from time to time party
thereto as Committed Lenders, the financial institutions from time to time party
thereto as Managing Agents and Citicorp North America, Inc., as Program Agent;
NOW THEREFORE, in consideration of the premises, the mutual
covenants and agreements herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
effective as of the date above each party agrees as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. Capitalized terms used but not
otherwise defined herein are as defined in the Loan and Servicing Agreement. As
used in this Agreement, the following terms shall have the following meanings:
"Adverse Claim" means a Lien other than any Permitted Lien.
"Agreement" means this Purchase and Contribution Agreement, as
amended, restated, supplemented or otherwise modified from time to time.
"Base Rate" means a fluctuating interest rate per annum as shall be
in effect from time to time equal to the higher of: (A) the rate of interest
announced publicly by Citibank in
New York, New York from time to time as Citibank's base rate (such rate not
necessarily being the lowest or best rate charged by Citibank), and (B) the
Federal Funds Rate plus 0.50%.
"Collections" means, with respect to any Receivable, any and all
cash collections and other cash proceeds of such Receivable, including, without
limitation, all cash proceeds of Related Security with respect to such
Receivable, all finance charges, if any, all amounts collected as interest, fees
or charges for late payments with respect to such Receivable, all recoveries
with respect to each written off Receivable (net of amounts, if any, retained by
any third party collection agent), and any amounts deemed to have been received
with respect to such Receivable pursuant to Section 2.02(f).
"Contract" means an agreement or other arrangement, including a
purchase order or invoice, an installment sale agreement or a revolving credit
agreement/credit sale contract, pursuant to or under which a Person is obligated
to pay for goods purchased from, or services rendered by, the Originator from
time to time.
"Deemed Collection" shall have the meaning given to such term in
Section 2.02(f).
"Effective Date" means February 1, 2006
"Event of Bankruptcy" means, with respect to any Person:
(i) such Person shall fail generally to pay its debts as they come
due, or shall make a general assignment for the benefit of creditors; or any
case or other proceeding shall be instituted by such Person seeking to
adjudicate it as bankrupt or insolvent, or seeking liquidation, reorganization,
debt arrangement, dissolution, winding up, or composition or readjustment of
debts of it or its debts under the Federal Bankruptcy Code or any other law
relating to bankruptcy, insolvency, reorganization, winding up or composition or
adjustment of debts, or seeking the entry of an order for relief or the
appointment of a trustee, receiver, custodian, liquidator, assignee,
sequestrator or the like for such Person or all or substantially all of its
assets; or such Person shall take any corporate or limited liability company
action to authorize any of such actions; or
(ii) a case or other proceeding shall be commenced, without the
application or consent of such Person in any court seeking the liquidation,
reorganization, debt arrangement, dissolution, winding up, or composition or
readjustment of debts of such Person, the appointment of a trustee, receiver,
custodian, liquidator, assignee, sequestrator or the like for such Person or all
or substantially all of its assets, or any similar action with respect to such
Person under the Federal Bankruptcy Code or any other law relating to
bankruptcy, insolvency, reorganization, winding up or composition or adjustment
of debts, and (A) such case or proceeding shall continue undismissed, or
unstayed and in effect, for a period of sixty (60) consecutive days or (B) an
order for relief in respect of such Person shall be entered in such case or
proceeding or a decree or order granting such other requested relief shall be
entered.
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"Excluded Receivable" means all accounts receivable of
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ for which Honeywell, Inc. is the Obligor.
"Final Collection Date" means the date on or following the Purchase
Termination Date on which the aggregate Outstanding Balance of all Receivables
transferred hereunder by the Originator has been reduced to zero and the
Originator shall have paid all amounts payable to the Purchaser or its assigns
by the Originator pursuant to this Agreement.
"Incipient Judgment Event" means any Incipient Purchase Termination
Event that results from one or more judgments for the payment of money in an
aggregate amount in excess of $75,000,000 and not covered by insurance having
been rendered against ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, any of its Subsidiaries or any
combination thereof and the same remaining undischarged and not effectively
stayed, vacated or bonded pending appeal.
"Incipient Judgment Event Grace Period" means, with respect to an
Incipient Judgment Event, a period not to exceed 30 consecutive days following
the occurrence of such Incipient Judgment Event.
"Incipient Purchase Termination Event" means any event which, with
the giving of notice or lapse of time or both, would constitute a Purchase
Termination Event.
"Initial Purchase" means the first Purchase made pursuant to this
Agreement.
"Initial Purchase Date" means the date on which the Initial Purchase
shall occur which shall be the date specified in a written notice from the
Originator to the Purchaser; provided that the conditions precedent set forth in
Section 3.01 of the Loan and Servicing Agreement shall be satisfied on such
date.
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or otherwise), or preference,
priority, charge or other security agreement or preferential arrangement of any
kind or nature whatsoever that is intended as security.
"Loan and Servicing Agreement" is defined in the recitals hereto.
"Net Value" means, as of any date of determination, an amount equal
to (i) the aggregate Outstanding Balance of the Pool Receivables at such time,
minus (ii) the sum of (A) the Aggregate Principal Balance at such time, plus (B)
the Required Reserves at such time.
"Net Worth" means as of the last Business Day of each month
preceding any date of determination, the excess, if any, of (a) the aggregate
Outstanding Balance of the Pool Receivables at such time, over (b) the sum of
(i) the Aggregate Principal Balance at such time, plus (ii) the aggregate
outstanding principal balance of the Subordinated Loans (including any
Subordinated Loan proposed to be made on the date of determination).
"Originator" is defined in the recitals hereto.
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"Originator Indemnified Amount" has the meaning set forth in Section
6.01.
"Originator Indemnified Party" has the meaning set forth in Section
6.01.
"Permitted Lien" means any of the following:
(a) Liens for taxes and assessments (i) which are not yet due and
payable or (ii) the validity of which are being contested in good faith by
appropriate proceedings and with respect to which the Originator is maintaining
adequate reserves in accordance with GAAP;
(b) Liens in favor of the Program Agent or any Secured Party,
including any Liquidity Provider (but only in connection with the Loan and
Servicing Agreement); and
(c) Liens in favor of the Purchaser arising pursuant to this
Agreement.
"Program Agent" shall mean Citicorp North America, Inc., in its
capacity as "Program Agent" under the Loan and Servicing Agreement.
"Purchase" means a purchase of Transferred Assets by the Purchaser
from the Originator pursuant to Section 2.01 and shall include a transfer of
Transferred Assets by the Originator to the Purchaser as a capital contribution.
"Purchase Price" has the meaning set forth in Section 2.01(c).
"Purchase Termination Date" means the earliest of (i) the occurrence
of a Purchase Termination Event of the type described in Section 5.01(f) of this
Agreement, (ii) upon the occurrence and during the continuance of a Purchase
Termination Event other than the Purchase Termination Event described in Section
5.01(f), the date on which the Purchaser gives notice to the Originator
declaring its obligation to purchase Receivables hereunder to be terminated, and
(iii) that Business Day which the Originator designates as the Purchase
Termination Date by notice to the Purchaser at least five (5) days prior to such
Business Day.
"Purchase Termination Event" has the meaning set forth in Section
5.01.
"Purchased Receivable" means any Receivable Purchased or purported
to be Purchased hereunder.
"Receivable" means all indebtedness of an Obligor arising under a
Contract from the sale of goods or services by the Originator in the ordinary
course of its business to an Obligor of the Originator, including all interest,
finance charges, sales taxes and other taxes with respect thereto, provided that
"Receivable" shall not include any Excluded Receivable.
"Related Security" means, with respect to any Purchased Receivable:
(i) all security interests or liens and property subject thereto from time to
time purporting to secure
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payment of such Purchased Receivable, whether pursuant to the related Contract
or otherwise, (ii) all UCC financing statements or other filings covering any
collateral securing payment of such Purchased Receivable (it being understood
that such UCC financing statements will not be assigned of record to the
Purchaser (or the Program Agent as its assignee) unless requested by the
Purchaser (at the request of the Program Agent) after an "Event of Termination"
under, and as defined in, the Loan and Servicing Agreement), (iii) all
guarantees, prepayment penalties, cancellation fees, indemnities, warranties,
letters of credit, insurance policies and proceeds and premium refunds thereof
and other agreements or arrangements of whatever character from time to time
supporting or securing payment of such Purchased Receivable whether pursuant to
the related Contract or otherwise, (iv) all Records related to such Purchased
Receivable, (v) all of Originator's right, title and interest in, to and under
any contracts or agreements providing for the servicing of such Purchased
Receivable, including, without limitation, all Subservicing Agreements providing
for meter reading, administration and/or collections services, and (vi) all
proceeds of the foregoing.
"Required Capital Amount" means $30,000,000.
"Required Discount" shall have the meaning set forth in Section
2.01(c).
"Retail Receivable" means a Receivable arising under a revolving
credit agreement/credit sale agreement.
"Settlement Date" means the fifteenth (15th) day of each calendar
month (or, if such day is not a Business Day, the next succeeding Business Day.
"Subordinated Loan" shall have the meaning set forth in Section
2.02(a)(ii).
"Subordinated Note" means the promissory note in the form attached
hereto as Exhibit A dated the date hereof and delivered by the Purchaser to the
Originator.
"Transferred Assets" means, at any time, all Purchased Receivables,
Related Security with respect to such Purchased Receivables, the Deposit
Accounts, the Lock-Boxes and all proceeds of the foregoing, including, without
limitation, all Collections of Purchased Receivables.
SECTION 1.02. Other Terms and Constructions. Under this Agreement, all
accounting terms not specifically defined herein shall be construed in
accordance with GAAP as in effect in the United States, and all accounting
determinations made and all financial statements prepared hereunder shall be
made and prepared in accordance with GAAP. 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. The words "herein," "hereof," and
"hereunder" and other words of similar import refer to this Agreement as a
whole, including the exhibits and schedules hereto, as the same may from time to
time be amended or supplemented and not to any particular section, subsection,
or clause contained in this Agreement, and all references to Sections, Exhibits
and Schedules shall mean, unless the context clearly indicates otherwise, the
Sections hereof and the Exhibits and Schedules attached hereto, the terms of
which Exhibits and Schedules are hereby
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incorporated into this Agreement. The captions and section numbers appearing in
this Agreement are inserted only as a matter of convenience and do not define,
limit, construe or describe the scope or intent of the provisions of this
Agreement. Each of the definitions set forth in Section 1.01 hereof shall be
equally applicable to both the singular and plural forms of the defined terms.
Unless specifically stated otherwise, all references herein to any agreements,
documents or instruments shall be references to the same as amended, restated,
supplemented or otherwise modified from time to time.
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 means "to but excluding."
ARTICLE II
AMOUNTS AND TERMS OF PURCHASES
SECTION 2.01. Purchases of Receivables; Agreement to Purchase.
(a) On the terms and conditions hereinafter set forth, the Purchaser
shall make the Initial Purchase hereunder on the Initial Purchase Date by
purchasing from the Originator, and the Originator shall sell to the
Purchaser without recourse except as expressly provided herein, all of the
Originator's right, title and interest in and to all Receivables owned by
it existing as of the close of business on the Business Day immediately
prior to the Initial Purchase Date, together with all Related Security
relating to such Receivables and all Collections with respect to, and
other proceeds of, the foregoing. On each Business Day after the Initial
Purchase Date until the termination of this Agreement or the occurrence of
the Purchase Termination Date, the Purchaser shall purchase from the
Originator, and the Originator shall sell to the Purchaser without
recourse except as expressly provided herein, all of the Originator's
right, title and interest in and to all Receivables owned by the
Originator existing as of the close of business on the immediately
preceding Business Day which have not been previously Purchased hereunder,
together with all Related Security relating to such Receivables and all
Collections with respect to, and other proceeds of, the foregoing. Each
Purchase described in the preceding sentence shall automatically occur on
the date of such Purchase without any further action on the part of the
Purchaser.
(b) It is the intention of the parties hereto that each Purchase of
Transferred Assets to be made hereunder shall be absolute and irrevocable
and will provide the Purchaser with the full risks and benefits of
ownership of such Transferred Assets so purchased (such that the
Transferred Assets would not constitute property of the Originator's
estate in the event of the Originator's bankruptcy) and shall constitute a
"sale of accounts," as such term is used in Article 9 of the UCC of the
State of New York, to the extent applicable, and not a loan secured by
such Transferred Assets. If, notwithstanding such intention, the
conveyance of the Transferred Assets from the Originator to the Purchaser
shall ever be recharacterized as a secured loan and not as a sale, it is
the intention of the parties hereto that this Agreement shall constitute a
security
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agreement under applicable law, and that the Originator shall be deemed to have
granted, and the Originator hereby grants to the Purchaser, a duly perfected
first priority security interest in all of the Originator's right, title and
interest in, to and under the Transferred Assets, and all proceeds thereof, free
and clear of any Adverse Claims to secure loans deemed to have been made by the
Purchaser to the Originator and all other obligations of the Originator
hereunder. Each sale of Receivables by the Originator to the Purchaser is made
without recourse; provided, however, that (i) the Originator shall be liable to
the Purchaser for all representations, warranties and covenants made by the
Originator hereunder and (ii) such sale does not constitute and is not intended
to result in an assumption by the Purchaser or any assignee thereof of any
obligation or liability of the Originator or any other Person arising in
connection with the Transferred Assets or any other obligations or liabilities
of the Originator. In view of the intention of the parties hereto that the
Purchases of Receivables to be made hereunder shall constitute a sale of such
Receivables rather than a loan secured by such Receivables, the Originator
agrees to (i) note on its financial statements that such Receivables have been
sold to the Purchaser and (ii) on or prior to the Effective Date, ▇▇▇▇ its
master data processing records relating to the Receivables with a legend
acceptable to the Purchaser and the Program Agent, evidencing that the Purchaser
has purchased such Receivables as provided in this Agreement.
(c) The purchase price for each Purchase of Receivables by the Purchaser
under this Agreement (the "Purchase Price") shall be an amount equal to the
product obtained by multiplying (a) one minus the Required Discount (defined
below) as of the date of such Purchase by (b) the Outstanding Balance of the
Receivables purchased. The "Required Discount" shall be 2.00% or such other
percentage as may be determined from time to time (but no less frequently than
semiannually) by mutual agreement between the Originator and the Purchaser based
on their respective assessments of the prevailing cost of funds, recent
performance history of the Receivables being sold hereunder (including
write-offs and rate of collection) and other costs of ownership, all determined
on an arm's length basis.
SECTION 2.02. Payment for the Purchases; Settlements.
(a) The Purchase Price for each Purchase of Receivables (other than any
Receivables contributed to the Purchaser's capital) that are in existence on the
close of business on the Business Day immediately preceding the Initial Purchase
Date (the "Initial Cutoff Date") shall be payable in full by the Purchaser to
the Originator on the Initial Purchase Date, and shall be paid to the Originator
in the following manner:
(i) first, by delivery of immediately available funds, to the extent of
funds made available to the Purchaser in connection with a borrowing of Loans
under the Loan and Servicing Agreement or other cash on hand;
(ii) second, by delivery of the proceeds of a subordinated revolving loan
from the Originator to the Purchaser (a "Subordinated Loan") pursuant to the
Subordinated Note in an amount not to exceed the least of (A) the remaining
unpaid portion of such
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Purchase Price, and (B) the maximum Subordinated Loan that could be borrowed
without rendering the Purchaser's Net Worth less than the Required Capital
Amount and (C) the maximum Subordinated Loan that could be borrowed without
rendering the Net Value less than the aggregate outstanding principal balance of
the Subordinated Loans (including the Subordinated Loan proposed to be made on
such date); and
(iii) third, by accepting such Receivables as a capital contribution
to the Purchaser's capital in an amount equal to the remaining unpaid balance of
such Purchase Price.
Each Receivable coming into existence after the Initial Cutoff Date shall be
sold or contributed to the Purchaser on the Business Day immediately following
the day such Receivable was originated and the Purchase Price for such
Receivable shall be due and owing in full by the Purchaser to the Originator on
such Business Day (except that the Purchaser may, with respect to any such
Purchase Price, offset against such Purchase Price any amounts owed by the
Originator to the Purchaser hereunder and which have become due but remain
unpaid) and shall be paid to the Originator in the manner provided in the
following paragraphs (b), (c) and (d).
(b) The Purchase Price for each Receivable coming into existence
after the Initial Cutoff Date and the Related Security and Collections
shall be due and owing in full by the Purchaser to the Originator on the
date it is purchased hereunder and shall be paid to the Originator in the
following manner:
(i) first, by delivery of immediately available funds, to the extent
of funds made available to the Purchaser in connection with a borrowing of
Loans under the Loan and Servicing Agreement or other cash on hand;
(ii) second, by delivery of the proceeds of a Subordinated Loan,
provided that the making of any such Subordinated Loan shall be subject to
the provisions of Section 2.02(a)(ii); and
(iii) third, by accepting such Receivables as a contribution to the
Purchaser's capital in an amount equal to the remaining unpaid balance of
such Purchase Price; provided, that no such capital contribution shall be
made from and after the Purchase Termination Date.
Subject to the limitations set forth in Section 2.02(a)(ii) and Section 2.02(e),
the Originator irrevocably agrees to advance each Subordinated Loan requested by
the Purchaser on or prior to the Purchase Termination Date. The Subordinated
Loans shall be evidenced by, and shall be payable in accordance with the terms
and provisions of, the Subordinated Note and shall be payable solely from funds
which the Purchaser is not required under the Loan and Servicing Agreement to
set aside for the benefit of, or otherwise pay over to, the Program Agent or the
Lenders. The Originator is hereby authorized by the Purchaser to endorse on the
schedule attached to the Subordinated Note an appropriate notation evidencing
the date and amount of each advance thereunder, as well as the date of each
payment with respect thereto; provided that the failure to make such notation
shall not affect any obligation of the Purchaser thereunder.
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(c) Although the Purchase Price for each Receivable coming into existence
after the Initial Cutoff Date shall be paid in full by the Purchaser to the
Originator on the date such Receivable is purchased, a precise reconciliation of
the Purchase Price between the Purchaser and the Originator shall be effected on
a monthly basis on each Settlement Date with respect to all Receivables sold
during the month most recently ended prior to such Settlement Date and based on
the information contained in the Monthly Report most recently delivered by the
Servicer pursuant to Section 5.05 of the Loan and Servicing Agreement for such
month. Although such reconciliation shall be effected on Settlement Dates,
increases or decreases in the amount owing under the Subordinated Note made
pursuant to Section 2.02(b) and any contribution of capital by the Originator to
Purchaser made pursuant to Section 2.02(b) shall be deemed to have occurred and
shall be effective as of the date that the Purchase Price is paid. On each
Settlement Date, the Originator shall determine the net increase or the net
reduction in the outstanding principal amount of the Subordinated Note occurring
during the immediately preceding month and shall account for such net increase
or net reduction in its books and records. The Originator hereby agrees that
within three (3) Business Days after the Purchaser so requests, the Originator
will provide the Purchaser with a current report of daily sales giving rise to
Receivables purchased hereunder and a current daily report of Collections
received.
(d) Each contribution of a Receivable by the Originator to Purchaser shall
be deemed to be a Purchase of such Receivable by the Purchaser for all purposes
of this Agreement. The Purchaser hereby acknowledges that the Originator shall
have no obligation to make capital contributions to the Purchaser, in respect of
the Originator's equity interest in the Purchaser or otherwise, in order to
provide funds to pay the Purchase Price to the Originator under this Agreement
or for any other reason.
(e) If the Purchaser shall fail to make any payment of the applicable
Purchase Price in respect of any Purchase on the date such Purchase Price is due
hereunder then the Originator may, upon written notice to the Purchaser and the
Program Agent (as assignee of the Purchaser), elect to terminate its obligation
to sell Receivables, Collections and Related Security to the Purchaser hereunder
and its obligation to make advances under the Subordinated Note.
(f) If on any day, the Originator is deemed to have received a Deemed
Collection with respect to any Receivable sold by it to the Purchaser hereunder,
then, in such event, the Purchaser shall be entitled to a credit against the
Purchase Price otherwise payable to the Originator hereunder in an amount equal
to such Deemed Collection. If such Deemed Collection exceeds the Purchase Price
for the Receivables sold on such day, then the Originator shall pay the
remaining amount of such Deemed Collection in cash within five (5) Business Days
thereafter; PROVIDED that if the Purchase Termination Date has not occurred, the
Originator shall be allowed to deduct the remaining amount of such Deemed
Collection from any indebtedness owed to it under the Subordinated Note to the
extent permitted thereunder. Notwithstanding the foregoing, no credit to the
Purchase Price may be made and no deduction to the indebtedness under the
Subordinated Note may be made on or after the Termination
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Date under the Loan and Servicing Agreement or at any time a Borrowing
Base Deficiency exists under the Loan and Servicing Agreement. "DEEMED
COLLECTIONS" means the aggregate of all amounts the Originator shall have
been deemed to have received as a Collection of a Receivable sold by it.
The Originator shall be deemed to have received a Collection (but only to
the extent of the reduction or cancellation identified below) of a
Receivable sold by it if at any time (i) the Outstanding Balance of any
such Receivable is either (x) reduced or cancelled as a result of a
Dilution Factor or (y) reduced or canceled as a result of any specific
dispute, offset, counterclaim or defense whatsoever (in each case, except
any such reduction, cancellation, dispute, offset, counterclaim or defense
due to, or resulting from or relating to, the financial inability to pay
or insolvency of the related Obligor) or (ii) any of the representations
or warranties in Article III were not true with respect to such Receivable
at the time of its sale hereunder (in which case, the Originator shall be
deemed to have received a Collection in an amount equal to the Outstanding
Balance of such Receivable).
SECTION 2.03. Payments. All amounts to be paid by the Purchaser to the
Originator or by the Originator to the Purchaser hereunder shall be paid in
accordance with the terms hereof no later than 2:00 P.M. (New York City time) on
the day when due in immediately available funds to such account as the
Originator or the Purchaser, as the case may be, may from time to time specify
in writing. In the event that any payment becomes due on a day which is not a
Business Day, then such payment shall be made on the next succeeding Business
Day. To the extent permitted by law, the Originator shall pay to the Purchaser,
on demand, interest on all amounts not paid when due hereunder at 2% per annum
above the Base Rate in effect on the date such payment was due. All computations
of interest payable 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 2.04. Transfer of Records to the Purchaser.
(a) Each Purchase of Receivables hereunder shall include the transfer to
the Purchaser of all the Originator's right and title to and interest in the
Records relating to such Purchased Receivables, and the Originator hereby agrees
that such transfer shall be effected automatically with each such Purchase,
without any further action on the part of the parties hereto or any further
documentation.
(b) The Originator shall take such action reasonably requested by the
Purchaser, from time to time hereafter, that may be necessary or appropriate to
ensure that the Purchaser has an enforceable ownership interest in the Records
relating to the Purchased Receivables.
(c) In connection with such transfer, the Originator hereby grants to each
of the Purchaser, the Program Agent (as the Purchaser's assignee) and the
Servicer an irrevocable, non-exclusive license to use, without royalty or
payment of any kind, all software used by the Originator to account for the
Receivables, whether such software is owned by the Originator or is owned by
others and used by the Originator under license agreements with respect thereto;
provided that should the consent of any licensor of such
10
software to grant the license described herein be required, the Originator
hereby agrees that upon request by the Purchaser (or the Program Agent as the
Purchaser's assignee), the Originator will use its reasonable efforts to obtain
the consent of such third-party licensor. The license granted hereby shall be
irrevocable, and shall terminate on the date this Agreement terminates in
accordance with its terms.
SECTION 2.05. Lock-Box and Deposit Account Transfer; Rights of the Purchaser.
(a) The Originator hereby transfers to the Purchaser, as of the Effective
Date, the exclusive ownership and control of the Lock-Boxes and the Deposit
Accounts owned by it, and hereby agrees to take any further action necessary or
that the Purchaser may reasonably request to effect such transfer. From and
after the Effective Date, the Purchaser shall have the sole and exclusive right
to withdraw or order a transfer of funds from the Deposit Accounts and to direct
the investment of all funds therein, and each Deposit Account Bank shall be
instructed to remit any amounts deposited in its Deposit Accounts solely
according to the direction of the Purchaser. From and after the Effective Date,
if the Originator, or its agents or representatives, shall at any time receive
any cash, checks or other instruments constituting Collections, the Originator
shall, or shall cause such recipient, to hold such payment in trust for and in a
manner acceptable to the Purchaser and shall remit all such cash, checks and
instruments, duly endorsed or with duly executed instruments of transfer in
accordance with the instructions of the Purchaser.
(b) At any time following the occurrence and during the continuance of an
"Event of Termination" as defined in the Loan and Servicing Agreement, the
Purchaser may notify the Obligors of the Purchased Receivables of the
Purchaser's interest in the Transferred Assets and direct such Obligors that
payment of all amounts payable under any Purchased Receivable be made directly
to the Purchaser or its designee. At the Purchaser's request, the Originator
shall, at its expense, give notice of the Purchaser's ownership of Transferred
Assets to each related Obligor and assemble all related Records, and make the
same available to the Purchaser at a place selected by the Purchaser or its
designee. The Originator hereby grants to the Purchaser an irrevocable power of
attorney, with full power of substitution, coupled with an interest, to take in
the name of the Originator any and all steps which are necessary or advisable to
endorse, negotiate or otherwise realize on any writing or other right of any
kind in connection with any Purchased Receivable or other Transferred Asset.
(c) The Purchaser shall, as soon as practicable following receipt of
collections of any receivable which is not a Transferred Asset, turn over to the
Originator such collections less all reasonable and appropriate out-of-pocket
costs and expenses, if any, incurred by the Purchaser in collecting such
receivables. The Purchaser shall have no obligation to collect, enforce or
otherwise take any action with respect to any account receivable that is not a
Transferred Asset other than to deliver any collections with respect thereto in
accordance with Section 2.05(c).
11
SECTION 2.06. Responsibilities of the Originator. Anything herein to the
contrary notwithstanding, the Originator shall (i) perform all of its
obligations under the Contracts related to the Receivables transferred by it
hereunder to the same extent as if such Receivables had not been transferred
hereunder and the exercise by the Purchaser of its rights hereunder shall not
relieve the Originator from such obligations and (ii) pay when due all sales,
excise and personal property taxes payable in connection with the Purchased
Receivables.
SECTION 2.07. Further Action Evidencing Purchaser's Interest. The
Originator 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 Purchaser may reasonably request in order to perfect, protect
or more fully evidence the Purchaser's ownership of the Transferred Assets, or
to enable the Purchaser to exercise or enforce any of its rights hereunder.
Without limiting the generality of the foregoing, the Originator will (i) code
its master data processing records evidencing the Purchased Receivables to
evidence that the Purchaser has purchased all right and title thereto and (ii)
upon the request of the Purchaser, file such financing statements, continuation
statements or amendments thereto or assignments thereof, and execute and file
such other instruments or notices, as may be necessary or appropriate or as the
Purchaser or its assigns may reasonably request. The Originator hereby
authorizes the Purchaser or the Program Agent to file one or more financing or
continuation statements, and amendments thereto and assignments thereof,
relative to all or any of the Transferred Assets now existing or hereafter
arising without the signature of, or further authorization by, the Originator.
If after the occurrence and during the continuation of any Purchase Termination
Event, the Originator fails to perform any of its respective agreements or
obligations under this Agreement, the Purchaser may (but shall not be required
to) itself perform, or cause performance of, such agreement or obligation, and
the reasonable out-of-pocket expenses of the Purchaser incurred in connection
therewith shall be payable by the Originator upon the Purchaser's demand
therefor.
SECTION 2.08. Application of Collections. All Collections and other
proceeds received from an Obligor in respect of Purchased Receivables shall,
except as otherwise required by law, be applied to Purchased Receivables owed by
such Obligor in a timely manner in accordance with the Originator's servicing
practices.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the Originator. The
Originator hereby represents and warrants to the Purchaser on the Effective Date
and on the date of each Purchase hereunder as follows, provided that this
Section 3.01 shall not include any representations or warranties that are not
correct due to the occurrence and continuation of an Incipient Judgment Event
with respect to which the Incipient Judgment Event Grace Period has not lapsed:
(a) Due Formation and Good Standing. It is duly incorporated,
validly existing and in good standing under the laws of the jurisdiction
of its incorporation, has corporate power and authority to carry on its
business as now conducted and is duly qualified to do business, and is in
good standing, in every jurisdiction where the nature
12
of its business requires it to be so qualified except where the failure to
so qualify could not reasonably be expected to have a Material Adverse
Effect.
(b) Due Authorization and No Conflict. The execution, delivery and
performance by it of this Agreement and all other Facility Documents to
which it is a party, and the transactions contemplated hereby and thereby
are within its corporate powers, have been duly authorized by all
necessary corporate action, on its part and do not contravene or
constitute a default under, any provision of applicable law or of its
certificate or its articles of incorporation or by-laws, or of any
agreement, judgment, injunction, order, decree or other instrument binding
upon it that could have a Material Adverse Effect or result in the
creation or imposition of any Adverse Claim on any asset of it upon or
with respect to any of its properties. This Agreement and the other
Facility Documents to which it is a party have been duly executed and
delivered on behalf of the Originator.
(c) Governmental Approvals. No authorization or approval or other
action by, and no notice to or filing with, any Governmental Authority is
required for the due execution, delivery and performance by it of this
Agreement or any other agreement, document or instrument to be delivered
by it hereunder that has not already been given or obtained, except for
filings under the UCC required under Article II.
(d) Enforceability of Facility Documents. Each of this Agreement and
each other Facility Document to be delivered by it in connection herewith,
constitutes the legal, valid and binding obligation of it, enforceable
against it in accordance with its respective terms, subject to the
Enforceability Exceptions.
(e) No Litigation. Except as publicly disclosed in its filings with
the Securities and Exchange Commission, there are no actions, suits or
proceedings by or before any arbitrator or Governmental Authority pending
against, or to the knowledge of a Responsible Officer of the Originator
after due inquiry, threatened against the Originator or any of its
subsidiaries (i) that could reasonably be expected to be adversely
determined, and that, if adversely determined, could reasonably be
expected to result in a Material Adverse Effect or (ii) that seeks to
prevent the consummation of the transactions contemplated by this
Agreement and the other Facility Documents. The Originator is not in
default with respect to any order of any court, arbitrator or other
Governmental Authority, which default could reasonably be expected to have
a Material Adverse Effect or prevent the consummation of the transactions
contemplated by this Agreement and the other Facility Documents.
(f) Perfection of Interest in Transferred Assets. Each Receivable
transferred by it hereunder is owned by it immediately prior to such
transfer free and clear of any Adverse Claim, and, after such transfer,
the Purchaser will have acquired a valid and perfected first priority
ownership interest or security interest in each such Purchased Receivable
so transferred, and in the Related Security, Collections and other
Transferred Assets with respect thereto, in each case free and clear of
any Adverse Claim. No effective financing statement or other instrument
similar in effect, is filed in any
13
appropriate recording office listing the Originator as debtor or seller,
covering any Transferred Assets except such as may be filed in favor of
the Purchaser in accordance with this Agreement, or in favor of the
Program Agent in accordance with the Loan and Servicing Agreement.
(g) Compliance with Laws. The Originator has complied in all
respects with all applicable laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards applicable to it or its
property, except where such compliance is being contested in good faith
through appropriate proceedings and except where the failure to comply,
individually or in the aggregate, could not reasonably be expected to have
a Material Adverse Effect.
(h) Accuracy of Information. All written information heretofore
furnished by it or any of its Affiliates to the Purchaser, the Program
Agent, any Managing Agent or any Lender for purposes of or in connection
with this Agreement, the Loan and Servicing Agreement, any of the other
Facility Documents or any transaction contemplated hereby or thereby is,
and all such written information hereafter furnished by the Originator or
any of its Affiliates to the Purchaser, the Program Agent, any Managing
Agent or any Lender will be, true and accurate in every material respect
on the date such written information is stated or certified and does not
and will not contain any material misstatement of fact or omit to state a
material fact or any fact necessary to make the statements contained
therein not misleading.
(i) Location of Chief Executive Office and Records; Organizational
Identification Number. The location of its principal place of business and
chief executive office, the locations of the offices where it keeps all
the Records, its form of organization, sole jurisdiction of organization,
federal employer identification number and organizational identification
number (if any) are correctly set forth on Exhibit B. The Originator has
had no chief executive office in the past five (5) years other than that
set forth on Exhibit B.
(j) Collection Information. The names and addresses of all the
Alternate Payment Locations, Approved Sub-servicers, Deposit Account Banks
and Lock-Box Processors, together with the addresses of the Lock-Boxes and
the account numbers of the Deposit Accounts of the Originator are as
specified in Exhibit C. The Alternate Payment Locations and the Lock-Boxes
set forth on Exhibit C are the only addresses to which Obligors and
Approved Sub-servicers of Purchased Receivables are directed to make
payment. The Deposit Accounts set forth on Exhibit C are the only accounts
to which Obligors, Approved Sub-servicers or Lock-Box Processors remit
Collections of Purchased Receivables by wire transfer or electronic funds
transfer. The Originator has not granted any Person "control" (within the
meaning of Section 9-102 of any applicable enactment of the UCC) of any
Deposit Account or the right to take control of any Deposit Account at a
future time or upon the occurrence of a future event.
14
(k) No Trade Names. The Originator has no, and has not used, any
trade names, fictitious names, assumed names or "doing business as" names,
in connection with the Contracts or the Receivables other than those set
forth on Exhibit B.
(l) Ownership. As of the date hereof, all of the issued and
outstanding capital stock of the Purchaser are directly owned of record by
the Originator, all of which are validly issued, fully paid and
nonassessable and there are no options, warrants or other rights to
acquire any shares of capital stock of the Purchaser.
(m) Facility Documents. The Facility Documents represent all
agreements between the Originator and the Purchaser relating to the
transfer of the Purchased Receivables except for other agreements related
to the transactions that are permitted by Section 4.03(g).
(n) Solvency. The Originator: (i) is not "insolvent" (as such term
is defined in Section 101(32)(A) of the Bankruptcy Code), (ii) is able to
pay its debts as they come due; and (iii) does not have unreasonably small
capital for the business in which it is engaged or for any business or
transaction in which it is about to engage.
(o) Investment Company Act. The Originator is not an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
(p) Use of Proceeds. No proceeds of any Purchase will be used by it
to acquire any security in any transaction which is subject to Section 13
or 14 of the Securities Exchange Act of 1934, as amended.
(q) Taxes. The Originator has filed, caused to be filed or received
an extension of the time to file, all United States Federal income tax
returns (if any) and all other tax returns which are required to be filed
by it and has paid or caused to be paid all material taxes, assessments or
governmental charges of any kind that are due and payable by it pursuant
to such returns or pursuant to any assessment received by the Originator;
provided that the Originator may contest in good faith any such taxes,
assessments and other charges and, in such event, may permit the taxes,
assessments or other charges so contested to remain unpaid during any
period, including appeals, when the Originator is in good faith contesting
the same, so long as (i) adequate reserves have been established in
accordance with GAAP, (ii) enforcement of the contested tax, assessment or
other charge is effectively stayed for the entire duration of such contest
if such enforcement could reasonably be expected to have a Material
Adverse Effect, and (iii) any tax, assessment or other charge determined
to be due, together with any interest or penalties thereon, is promptly
paid as required after final resolution of such contest. The charges,
accruals and reserves on the books of the Originator in respect of taxes
and other governmental charges are, in the Originator's opinion, adequate.
(r) Eligibility of Purchased Receivables. Each Purchased Receivable
included as an Eligible Receivable in the calculation of the Net
Receivables Pool
15
Balance on the date of its purchase hereunder satisfies the requirements
of eligibility contained in the definition of "Eligible Receivable" as of
such date.
(s) Payments to Originator. With respect to each Receivable
transferred to the Purchaser hereunder, the Purchase Price received by the
Originator constitutes reasonably equivalent value in consideration
thereof. No transfer by the Originator to the Purchaser of a Receivable
has been made for or on account of an antecedent debt owned by the
Originator to the Purchaser and no such sale is or may be voidable or
subject to avoidance under any section of the Bankruptcy Code.
(t) Material Adverse Effect. Since December 31, 2004, no event has
occurred which would have a Material Adverse Effect.
(u) Compliance with Credit and Collection Policy. It has complied in
all material respects with the Credit and Collection Policy with regard to
its origination of each Purchased Receivable and the related Contract and
has not made any change to such Credit and Collection Policy other than as
permitted under Section 4.03(c).
(v) ERISA. No ERISA Event has occurred or is reasonably expected to
occur that, when taken together with all other ERISA Events, could
reasonably be expected to result in a Material Adverse Effect.
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ and the Subsidiaries have not incurred any material
accumulated funding deficiency within the meaning of ERISA. As used in
this Section, "material" means the measure of a matter of significance
that shall be determined as being an amount equal to 10% of Consolidated
Net Worth.
(w) Financial Statements.
(i) The consolidated balance sheet of the Originator and its
Consolidated Subsidiaries as of December 31, 2004 and the related
consolidated statements of income and cash flows for the fiscal year then
ended, reported on by Ernst & Young LLP, contained in the report on Form
10-K filed by the Originator with the Securities and Exchange Commission,
fairly present, in conformity with GAAP, the consolidated financial
position of the Originator and its Consolidated Subsidiaries as of such
date and their consolidated results of operations and cash flows for such
fiscal year.
(ii) The unaudited consolidated balance sheet of the Originator and
its Consolidated Subsidiaries as of September 30, 2005 and the related
unaudited consolidated statements of income and cash flows for the nine
months then ended, contained in the report on Form 10-K filed by the
Originator with the Securities and Exchange Commission, fairly present in
all material respects, in conformity with GAAP applied on a basis
consistent with the financial statements referred to in clause (i) above
(except as described in the notes thereto), the financial position of the
Originator and its Consolidated Subsidiaries as of such date and their
consolidated results of operations and cash flows for such nine-month
period (subject to normal year-end adjustments).
16
(x) No Purchase Termination Events. Immediately after giving effect
to each Purchase, no Purchase Termination Event has occurred.
(y) Accounting. The manner in which the Originator accounts for the
transactions contemplated by this Agreement is consistent with the "true
sale" opinion to be rendered by ▇▇▇▇▇ Day on the date hereof.
ARTICLE IV
COVENANTS
SECTION 4.01. Affirmative Covenants of the Originator. From the Effective
Date until the later of the Purchase Termination Date and the Final Collection
Date, the Originator shall, unless the Purchaser (and the Program Agent as its
assignee) shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply in all material respects with
all applicable laws, ordinances, orders, rules, regulations and
requirements of Governmental Authorities applicable to it or its property,
except where such compliance is being contested in good faith through
appropriate proceedings and except where the failure to comply,
individually or in the aggregate, could not reasonably be expected to have
a Material Adverse Effect.
(b) Preservation of Existence. (i) Observe all procedures required
by its certificate of incorporation and regulations and preserve and
maintain its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and (ii) qualify and remain qualified
in good standing as a foreign corporation in each other jurisdiction where
the nature of its business requires such qualification, and where, in the
case of clause (ii), failure to be so qualified could reasonably be
expected to have a Material Adverse Effect.
(c) Audits. At any time and from time to time during regular
business hours and upon reasonable prior notice, permit the Program Agent,
the Managing Agents or their agents or representatives:
(i) to conduct periodic audits of the Purchased Receivables and the
Related Security and the related Records and collection systems of the
Originator;
(ii) to examine and make copies of and abstracts from the Records in
its possession or control relating to the Purchased Receivables and
Related Security, including, without limitation, the related Contracts;
(iii) to visit the offices and properties of the Originator for the
purpose of examining the materials described in clause (ii) above; and
(iv) to discuss matters relating to the Receivables or the
Originator's performance hereunder with any of the officers or employees
of the Originator having knowledge of such matters.
17
(d) Keeping of Records and Books of Account. Maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing the Purchased Receivables in the
event of the destruction of the originals thereof) and keep and maintain
all documents, books, records and other information reasonably necessary
for the collection of all such Purchased Receivables, and in which timely
entries are made in accordance with GAAP. Such books and records shall
include, without limitation, records adequate to permit the daily
identification of each new Purchased Receivable and all Collections of and
adjustments to each existing Purchased Receivable, as well as its actual
experience with respect to any Dilution Factor. The Originator shall
promptly notify the Purchaser of any material conversion or substitution
(excluding, in each case, version upgrades) of the computer software used
by the Originator in its collection of Purchased Receivables.
(e) Performance and Compliance with Purchased Receivables and
Contracts. At its expense, timely and fully perform and comply in all
material respects with all provisions, covenants and other promises
required to be observed by it with respect to the Purchased Receivables
and the Contracts related thereto.
(f) Credit and Collection Policy. Comply in all material respects
with the Credit and Collection Policy in regard to the Purchased
Receivables and the related Contracts.
(g) Collections.
(i) Cause all Obligors to remit all payments in respect of the
Purchased Receivables to an Alternate Payment Location, a Lock-Box or a
Deposit Account;
(ii) Cause all Lock-Box Processors to deposit all Collections
received thereby or remitted to any Lock-Box into a Deposit Account within
two (2) Business Days following receipt thereof;
(iii) Cause all Persons receiving Collections at an Alternate
Payment Location, including Approved Sub-servicers, to remit such
Collections to a Lock-Box or deposit such Collections to a Wachovia
Collection Account within four (4) Business Days following receipt;
(iv) Cause all Deposit Account Banks to deposit all Collections
received thereby to a Deposit Account within one (1) Business Day
following receipt;
(v) (x) at any time the Debt Rating of Originator is less than BBB
by S&P or less than Baa2 by ▇▇▇▇▇'▇ (or either such Debt Ratings have been
withdrawn) establish a new Deposit Account at an Eligible Institution in
the name of Purchaser and (y) at any time the Debt Rating of Originator is
less than BBB- by S&P or less than Baa3 by ▇▇▇▇▇'▇ (or either such Debt
Ratings have been withdrawn) cause any Collections initially remitted into
the Wachovia Collection Account to be segregated from other
18
funds and deposited within two (2) Business Days following such remittance
into the Deposit Account established pursuant to the preceding clause (x);
(vi) On or prior to the Blocked Account Date, deliver, or cause to
be delivered, to the Program Agent, fully executed copies of (A) Lock-Box
Processor Agreements with respect to each Lock-Box Processor, (B) Blocked
Account Agreements with respect to each Deposit Account, and from and
after such date, (1) cause each Deposit Account to be subject at all times
to a Blocked Account Agreement, (2) cause each Lock-Box to be accessed
solely by a Lock-Box Processor and (3) cause each Lock-Box Processor with
respect to each Lock-Box to be subject at all times to a Lock-Box
Processor Agreement; (C) the Wachovia Collection Account Intercreditor
Agreement and (D) an opinion of ▇▇▇▇▇ Day regarding the priority of a
security interest obtained pursuant to Section 2.01 hereof and the Loan
and Servicing Agreement in form and substance reasonably acceptable to the
Program Agent;
(vii) prevent the remittance of any funds other than Collections
into any Lock-Box and if any funds other than Collections are remitted to
any Lock-Box, segregate and remit any such funds to the owner thereof
within two (2) Business Days following receipt;
(viii) Prevent the deposit of any funds other than Collections into
any Deposit Account (other than the Wachovia Collection Account) and if
any funds other than Collections are deposited into any Deposit Account
(other than the Wachovia Collection Account), segregate and remit any such
funds to the owner thereof within two (2) Business Days following such
deposit;
(ix) Separate Existence. Take all reasonable steps (including,
without limitation, all steps that the Purchaser may from time to time
reasonably request) to maintain the Purchaser's identity as a separate
legal entity from it and to make it manifest to third parties that the
Purchaser is an entity with assets and liabilities distinct from those of
it and each of its other Affiliates. Without limiting the generality of
the foregoing, it shall (i) maintain its books and records separate from
those of the Purchaser and maintain records of all intercompany debits and
credits and transfers of funds made by it on the Purchaser's behalf; (ii)
except as otherwise contemplated under the Loan and Servicing Agreement,
prevent the commingling of its funds or other assets with those of the
Purchaser, and not maintain bank accounts or other depository accounts to
which the Purchaser is an account party, into which the Purchaser makes
deposits or from which the Purchaser has the power to make withdrawals
except as otherwise contemplated hereunder or under the Facility Documents
with respect to the Purchaser's or the Servicer's administration of
Collections; (iii) not enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of
any property or the rendering of any service) with the Purchaser which is
on terms that are less favorable to it than those that might be obtained
in an arm's length transaction at the time from Persons who are not
Affiliates and which is not evidenced by or pursuant to a written
agreement; (iv) not pay the operating expenses and liabilities of the
Purchaser; (v) clearly identify its office space (by sign or otherwise) as
being separate and distinct from
19
the offices of, or any space occupied by, the Purchaser and allocate
fairly with the Purchaser any overhead, if relevant, for shared office
space or business facilities or equipment; (vi) act solely in its own
name, through its own officials or representatives where relevant, and not
hold the Purchaser out as a "division" or "part" of it; (vii) have
stationery and other business forms and a telephone number separate from
that of the Purchaser; and (viii) take all other actions reasonably
necessary on its part to operate its business and perform its obligations
under the Facility Documents in a manner consistent with the factual
assumptions described in the legal opinions with respect to
non-consolidation or true sale matters of ▇▇▇▇▇ Day delivered to the
Program Agent and the Managing Agents pursuant to Section 3.01 of the Loan
and Servicing Agreement to the extent applicable to it. In addition to the
foregoing, it will cause any financial statements consolidated with those
of the Purchaser to state that the Purchaser's business consists of the
purchase of Receivables from it and that the Purchaser is a separate legal
entity with its own separate creditors who, in any liquidation of the
Purchaser, will be entitled to be satisfied out of the Purchaser's assets
prior to any value in the Purchaser becoming available to the Purchaser's
equity holders.
(h) Location of Records. Keep its chief place of business and chief
executive office and the offices where it keeps the Records at (i) the
address(es) of the Originator referred to on Exhibit B hereto or (ii) upon
30 days' prior written notice to the Purchaser and the Program Agent, at
any other location in the United States where all actions reasonably
requested by the Purchaser or the Program Agent to protect and perfect the
interests of the Purchaser and the Program Agent have been taken and
completed.
(i) Taxes. File, cause to be filed or obtain an extension of the
time to file, all material tax returns and reports required by law to be
filed by it and will promptly pay or cause to be paid all taxes and
governmental charges at any time owing, provided that the Originator may
contest in good faith any such taxes, assessments and other charges and,
in such event, may permit the taxes, assessments or other charges so
contested to remain unpaid during any period, including appeals, when the
Originator is in good faith contesting the same, so long as (i) adequate
reserves have been established in accordance with GAAP, (ii) enforcement
of the contested tax, assessment or other charge is effectively stayed for
the entire duration of such contest if such enforcement could reasonably
be expected to have a Material Adverse Effect, and (iii) any tax,
assessment or other charge determined to be due, together with any
interest or penalties thereon, is promptly paid as required after final
resolution of such contest, and pay when due any taxes payable in
connection with the transfer of the Receivables.
(j) Ownership. Take all necessary action to (i) vest legal and
equitable title to the Receivables, the Related Security and the
Collections purchased under this Agreement irrevocably in the Purchaser,
free and clear of any Adverse Claims other than Permitted Liens
(including, without limitation, the filing of all financing statements or
other similar instruments or documents necessary under the UCC (or any
comparable law) of all appropriate jurisdictions to perfect the
Purchaser's interest in such Receivables, Related Security and Collections
and such other action to perfect, protect or more fully evidence the
interest of Purchaser therein as the Purchaser may reasonably
20
request), and (ii) cooperate (as the Purchaser or Program Agent may
reasonably request) in the establishment and maintenance, in favor of the
Program Agent, of a valid and perfected first priority perfected security
interest in all Receivables, Related Security and Collections to the full
extent contemplated herein and within the Loan and Servicing Agreement,
free and clear of any Adverse Claims other than Permitted Liens
(including, without limitation, the filing of all financing statements or
other similar instruments or documents necessary under the UCC (or any
comparable law) of all appropriate jurisdictions to perfect the Program
Agent's security interest in such Receivables, Related Security and
Collections and such other action to perfect, protect or more fully
evidence the interest of the Program Agent as the Program Agent may
reasonably request).
SECTION 4.02. Reporting Requirements of the Originator. From the Effective
Date until the later of the Purchase Termination Date and the Final Collection
Date, the Originator shall furnish or cause to be furnished to the Purchaser:
(a) Purchase Termination Event. As soon as reasonably practicable
and in any event within three (3) Business Days after any Responsible
Officer of the Originator obtains knowledge of the occurrence of each
Purchase Termination Event or Incipient Purchase Termination Event (if
such Incipient Purchase Termination Event is continuing on the date of
such notice), the statement of a Responsible Officer of the Originator
setting forth the details of such Purchase Termination Event or Incipient
Purchase Termination Event and the action which it is taking or proposes
to take with respect thereto.
(b) Financial Statements. (i) As soon as is available, and in any
event within ninety (90) days after the end of each fiscal year of the
Originator, a consolidated balance sheet of the Originator and its
Consolidated Subsidiaries as of the end of such fiscal year and a
statement of income and retained earnings of the Originator for such
fiscal year, all reported in accordance with GAAP by Ernst & Young LLP or
other independent public accountants of nationally recognized standing,
(ii) within forty-five (45) days after the end of the first, second and
third quarterly accounting periods in each fiscal year of the Originator,
a balance sheet of the Originator as of the end of such fiscal quarter and
a statement of income and retained earnings of the Originator for the
period commencing at the end of the previous fiscal year and ending as of
the end of such quarter, certified by the chief financial officer of the
Originator.
(c) Compliance Certificates. Concurrently with any delivery of
information under clause (b) above, a certificate of a Responsible Officer
of the Originator (i) setting forth in reasonable detail the calculations
required to establish whether an Event of Termination set forth in
Sections 7.01(p) and (q) of the Loan and Servicing Agreement has occurred
and (ii) certifying that no Purchase Termination Event or Incipient
Purchase Termination Event exists on the date of such certificate and, if
a Purchase Termination Event or Incipient Purchase Termination Event then
exists, setting forth the details thereof and the action which the
Originator is taking or proposes to take with respect thereto.
21
(d) Public Filings. Promptly after the filing thereof, copies of all
registration statements (other than exhibits thereto and any registration
statements on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q
and 8-K (or their equivalents) filed by the Originator with the Securities
and Exchange Commission.
(e) Defaults. Promptly and in no event more than three (3) Business
Days after any Responsible Officer of the Originator obtains knowledge of
any default by the Originator under any agreement other than the Facility
Documents to which the Originator is a party which could reasonably be
expected to have a Material Adverse Effect, the statement of a Responsible
Officer of the Originator setting forth the details of such default and
the action which the Originator is taking or proposes to take with respect
thereto.
(f) Reporting on Adverse Effects. Promptly and in no event more than
three (3) Business Days after any Responsible Officer of the Originator
obtains knowledge of the occurrence of any matter or the occurrence of any
event concerning it which could reasonably be expected to have a Material
Adverse Effect, notice thereof.
(g) Ratings. Promptly and in no event more than three (3) Business
Days after any Responsible Officer of the Originator obtains knowledge of
any downgrade or withdrawal of the Debt Rating of the Originator, notice
of such downgrade or withdrawal of such Debt Rating.
(h) Credit and Collection Policy. Promptly and in no event more than
three (3) Business Days after any Responsible Officer of the Originator
obtains knowledge of any amendment, modification, supplement or other
change to the Credit and Collection Policy that could have a material
adverse effect on the collectibility of the Receivables, the statement of
a Responsible Officer of the Originator setting forth the details of such
amendment, modification or supplement.
(i) Other Information. As soon as reasonably practicable, from time
to time, such other information, documents, records or reports respecting
the Receivables or the conditions or operations, financial or otherwise,
of the Originator as the Purchaser may from time to time reasonably
request.
As long as the Originator is required or permitted to file reports under the
Securities Exchange Act of 1934, as amended, a copy of its report on Form 10-K
shall satisfy the requirements of Section 4.02(b)(i) of this Agreement and a
copy of its report on Form 10-Q shall satisfy the requirements of Section
4.02(b)(ii) of this Agreement. Information required to be delivered pursuant to
clauses (b) or (d) of this Section 4.02 shall be deemed to have been delivered
on the date on which the Originator provides notice to the Purchaser that such
information has been posted on ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇' website on the Internet at
▇▇▇.▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇.▇▇▇ or at another website identified in such notices and
accessible to the Purchaser without charge; provided, however, that such notice
may be included in any certificate delivered pursuant to clause (c) above.
22
SECTION 4.03. Negative Covenants of the Originator. From the Effective
Date until the later of the Purchase Termination Date and the Final Collection
Date, the Originator shall not, without the written consent of the Purchaser and
the Program Agent:
(a) Sales, Liens, Etc. Against Transferred Assets. Sell, assign (by
operation of law or otherwise) or otherwise dispose of, or create or
suffer to exist any Adverse Claim upon or with respect to, any Purchased
Receivable or any other Transferred Asset, or assign any right to receive
income in respect thereof, except in each case as contemplated or provided
hereunder or under the Loan and Servicing Agreement.
(b) Extension or Amendment of Purchased Receivables. Extend, amend,
waive or otherwise modify, the terms of any Purchased Receivable or any
Contract related thereto, except (i) in accordance the Credit and
Collection Policy or (ii) as otherwise permitted hereunder (including,
without limitation, any such action permitted to be taken by the
Originator).
(c) Change in Business or Credit and Collection Policy. Make any
change in the character of its origination or servicing practices or make
or permit any change in the Credit and Collection Policy, which change, in
either case, could be reasonably expected to have a Material Adverse
Effect.
(d) Change in Payment Instructions to Obligors. Make any change in
its instructions to Obligors regarding the making of payments in respect
of the Receivables to any Alternate Payment Location, Lock-Box or Deposit
Account, other than instructing Obligors to remit payments to another
Alternate Payment Location, Lock-Box or Deposit Account.
(e) Changes to Alternate Payment Locations, Lock-Boxes, Deposit
Accounts, Lock-Box Processor Agreements and Blocked Account Agreements.
Add any account as a Deposit Account, any bank as a Deposit Account Bank,
any Person as a Lock-Box Processor or any lock-box as a Lock-Box with
respect to any Transferred Asset, in each case other than those listed in
Exhibit C, unless the Purchaser (and its assigns) shall have received (i)
thirty (30) days' prior written notice of each such addition; and (ii)
prior to the effective date of such addition, (x) executed copies of
Blocked Account Agreements (in the case of each new Deposit Account),
Lock-Box Processor Agreements (in the case of each new Lock-Box or
Lock-Box Processor) and Lock-Box Transfer Notices (in the case of each new
Lock-Box), executed by each Deposit Account Bank or Lock-Box Processor, as
applicable, the Originator, the Purchaser, and the Program Agent, (y)
copies of all material agreements signed by the Originator, the Purchaser
or the respective Deposit Account Bank or Lock-Box Processor, as
applicable, with respect to any new Deposit Account, Deposit Account Bank,
Lock-Box or Lock-Box Processor and (z) a revised Exhibit C. The Originator
shall provide the Purchaser with prompt written notice of any termination
of any bank as a Deposit Account Bank or any Person as a Lock-Box
Processor, together with a revised Exhibit C hereto. The Originator shall
provide the Purchaser with prompt written notice of any addition or
termination of any Alternate Payment Location, together with a revised
Exhibit C hereto.
23
(f) Change in Name; Jurisdiction of Organization. (i) Make any
change to its name (within the meaning of Section 9-507(c) of any
applicable enactment of the UCC) indicated on its certificate of formation
(or equivalent organizational document), or (ii) change its form of
organization or its jurisdiction of organization, unless, in either case,
prior to the effective date of such change, it delivers to the Purchaser
and the Program Agent such financing statements or amendments to financing
statements (Form UCC-1 or Form UCC-3, respectively) authorized by it which
the Purchaser or the Program Agent may request to reflect such name change
or change in form or jurisdiction of organization, together with such
other documents, legal opinions and instruments that the Purchaser or the
Program Agent may reasonably request in connection with the transaction
giving rise thereto.
(g) Limitation on Transactions with the Purchaser. Enter into, or be
a party to any transaction with the Purchaser, except for:
(i) the transactions contemplated by this Agreement and the other
Facility Documents;
(ii) capital contributions by the Originator to the Purchaser which
are in compliance with Section 4.01(h); and
(iii) to the extent not otherwise prohibited under this Agreement,
other transactions in the nature of employment contracts and directors'
fees, upon fair and reasonable terms materially no less favorable to the
Purchaser than would be obtained in a comparable arm's-length transaction
with a Person not an Affiliate.
(h) Accounting of Transfers. Account for or treat (whether in
financial statements or otherwise) the transactions provided for by this
Agreement in any manner other than as the sale and/or absolute conveyance
by it of Purchased Receivables to the Purchaser.
(i) Limitation on Creation of Liens. Grant any Lien in any
Receivable (other than any Purchased Receivable) or in any inventory of
the Originator unless the grantee of such Lien has entered into an
inter-creditor agreement with the Program Agent in form and substance
reasonably acceptable to the Program Agent.
ARTICLE V
PURCHASE TERMINATION EVENTS
SECTION 5.01. Purchase Termination Events. If any of the following events
(each a "Purchase Termination Event") shall occur:
(a) The Originator shall fail to make any payment or deposit
required to be made by it hereunder or under any other Facility Document
when due and such failure shall continue for two (2) Business Days;
24
(b) The Originator shall fail to perform or observe any term,
covenant or agreement contained in this Agreement or any other Facility
Document on its part to be performed or observed and any such failure
shall remain unremedied for thirty (30) days after the Purchaser or any
Affected Party gives notice thereof to a Responsible Officer of the
Originator or the Originator otherwise obtains knowledge thereof;
(c) Any representation or warranty made or deemed to be made by the
Originator under or in connection with this Agreement or any other
Facility Document shall prove to have been materially false or incorrect
(except that the materiality standard in this clause (c) shall not apply
to any such representation or warranty that is qualified by a materiality
standard by its terms) when made or deemed made or delivered;
(d) The Purchaser shall cease to have a valid and perfected first
priority ownership interest in each Purchased Receivable transferred
hereunder and the Related Security, Collections and other Transferred
Assets with respect thereto; or immediately prior to each Purchase
hereunder, the Originator shall cease to have a valid and perfected first
priority ownership interest therein;
(e) (i) An Event of Termination under the Loan and Servicing
Agreement shall occur, or (ii) the Termination Date under the Loan and
Servicing Agreement shall occur;
(f) An Event of Bankruptcy shall occur with respect to the
Originator;
(g) The Purchaser shall fail to make any payment in respect of any
Indebtedness when and as the same shall become due and payable or (B) an
event of default shall have occurred and be continuing under an agreement,
or related agreements, under which the Purchaser has outstanding
Indebtedness; or (ii) (A) the Originator or any Subsidiary (other than the
Purchaser) shall fail to make any payment (whether of principal or
interest and regardless of amount) in respect of any Material
Indebtedness, when and as the same shall become due and payable (subject
to any applicable grace period) or (B) any event or condition occurs and,
while continuing, results in any Material Indebtedness becoming due prior
to its scheduled maturity or that enables or permits (subject to any
applicable grace period) the holder or holders of any Material
Indebtedness or any trustee or agent on its or their behalf to cause any
Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; provided that this clause (B) shall not apply to secured
Indebtedness that becomes due as a result of the voluntary sale or
transfer of the property or assets securing such Indebtedness or to
Capital Leases that terminate as a result of the voluntary sale or
transfer of or a casualty or condemnation affecting the property or assets
subject thereto;
(h) One or more judgments for the payment of money in an aggregate
amount in excess of $75,000,000 and not covered by insurance shall be
rendered against ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, any Subsidiary of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
(other than the Purchaser) or any
25
combination thereof and the same shall remain undischarged for a period of
60 consecutive days during which execution shall not be effectively
stayed, vacated or bonded pending appeal, or any action shall be legally
taken by a judgment creditor to attach or levy upon material assets of
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ or any Subsidiary of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ (other than the
Purchaser) to enforce one or more judgments for the payment of money in an
aggregate amount in excess of $75,000,000;
(i) Any of this Agreement, the Loan and Servicing Agreement or the
Subordinated Note shall cease to be in full force and effect or the
Originator shall so assert in writing or otherwise seek to terminate or
disaffirm its obligations under any such Facility Document at any time
following the execution thereof;
(j) A Change in Control shall have occurred;
(k) An ERISA Event shall have occurred that, when taken together
with all other ERISA Events that have occurred, could reasonably be
expected to result in a Material Adverse Effect; or
(l) The Originator receives notice or becomes aware that a notice of
federal tax lien has been filed against it;
then, in any such event, the Purchaser may, by notice to the Originator, declare
the Purchase Termination Date to have occurred; provided, however, that, in the
case of any event described in subsection (f) above the Purchase Termination
Date shall be deemed to have occurred automatically upon the occurrence of such
event. Upon the declaration or automatic occurrence of the Purchase Termination
Date, the Purchaser shall cease to make Purchases from the Originator hereunder.
ARTICLE VI
INDEMNIFICATION
SECTION 6.01. Indemnities by the Originator. Without limiting any other
rights which the Purchaser may have hereunder or under applicable law
(including, without limitation, the right to recover damages for breach of
contract), the Originator hereby agrees to indemnify the Purchaser, its
successors, transferees and assigns, and the officers, directors, agents, and
employees of the foregoing (each, an "Originator Indemnified Party"), from and
against any and all damages, losses, claims, liabilities and related costs and
expenses, including reasonable external attorneys' fees and disbursements (all
of the foregoing being collectively referred to as "Originator Indemnified
Amounts") awarded against or incurred by any Originator Indemnified Party to the
extent relating to or arising from or as a result of this Agreement or the
acquisition by the Purchaser of the Transferred Assets, subject to the proviso
set forth below. Without limiting the generality of the foregoing
indemnification, the Originator shall indemnify the Originator Indemnified
Parties for Originator Indemnified Amounts to the extent relating to or
resulting from any of the following:
26
(i) the failure of any Purchased Receivable represented by the
Originator to be an Eligible Receivable hereunder to be an "Eligible
Receivable" at the time of such representation;
(ii) reliance on any representation or warranty made or deemed made
by the Originator under this Agreement or any other Facility Document to
which it is a party which shall have been false or incorrect when made or
deemed made;
(iii) the failure by the Originator to comply with any term,
provision or covenant contained in this Agreement or any other Facility
Document to which it is party or with any applicable law, rule or
regulation with respect to any Purchased Receivable, the related Contract,
or the Related Security, or the nonconformity of any Purchased Receivable,
the related Contract or the Related Security with any such applicable law,
rule or regulation;
(iv) any products liability claim or personal injury or property
damage suit or other similar or related claim or action of whatever sort
arising out of or in connection with services or goods the provision or
sale of which gave rise to or are the subject of any Purchased Receivable
or Contract;
(v) the failure to pay when due any taxes, including, without
limitation, sales, excise or personal property taxes payable by the
Originator in connection with the Transferred Assets;
(vi) the payment by such Originator Indemnified Party of taxes,
including, without limitation, any taxes imposed by any jurisdiction on
amounts payable and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, to the extent caused
by the Originator's actions or failure to act in breach of this Agreement;
(vii) the failure to vest and maintain vested in the Purchaser or to
transfer to the Purchaser a first priority perfected ownership interest in
the Purchased Receivables, together with all Collections, Related Security
and other Transferred Assets free and clear of any Lien except a Lien in
favor of any Affected Party, whether existing at the time such Purchased
Receivable arose or at any time thereafter;
(viii) the failure to file, or any delay in filing, financing
statements or other similar instruments or documents under the applicable
UCC or other applicable laws naming the Originator as "Debtor" with
respect to any Transferred Assets;
(ix) any dispute, claim, offset or defense (other than as a result
of the bankruptcy or insolvency of the related Obligor) of an Obligor to
the payment of any Purchased Receivable (including, without limitation, a
defense based on such Purchased Receivable 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 goods or
services related to such Purchased Receivable or the furnishing or failure
to
27
furnish such goods or services (other than as a result of the bankruptcy
or insolvency of the related Obligor);
(x) the commingling of Collections with any other funds;
(xi) any failure by the Purchaser to give reasonably equivalent
value to the Originator in consideration for the transfer by the
Originator to the Purchaser of any Transferred Assets, or any attempt by
any Person to void any such transfer under any statutory provision or
common law or equitable action, including, without limitation, any
provision or the Bankruptcy Code;
(xii) the failure of any Lock-Box Processor or Deposit Account Bank
to remit any amounts or items of payment held in a Deposit Account or in a
Lock-Box pursuant to the instructions of the Program Agent given in
accordance with the Loan and Servicing Agreement, the applicable Lock-Box
Processor Agreement, Blocked Account Agreement or the other Facility
Documents, whether by reason of the exercise of setoff rights or
otherwise;
(xiii) any investigation, litigation or proceeding related to this
Agreement or the use of proceeds of purchases made pursuant to this
Agreement or any other Facility Document delivered hereunder or in respect
of any of the Transferred Assets;
(xiv) any claim brought by any Person arising from any activity by
the Originator in servicing, administering or collecting any Purchased
Receivable;
(xv) the transfer by the Originator of any Purchased Receivable in
violation of any applicable law, rule or regulation;
(xvi) the failure of the Originator to furnish accurate and complete
documentation (including, without limitation, a Contract or invoice) to
any Obligor; or
(xvii) the failure of any Lock-Box Processor, Approved Sub-servicer
or any other third party with a contractual relationship with the
Originator for the acceptance or processing of Collections to remit any
Collections received by it to a Lock-Box or a Deposit Account within two
(2) Business Days of receipt;
provided, however, that the Originator shall not be required to indemnify any
Originator Indemnified Party to the extent of any amounts (x) resulting from the
gross negligence or willful misconduct of such Originator Indemnified Party, or
(y) constituting credit recourse for the failure of an Obligor to pay a
Purchased Receivable, or (z) constituting net income or franchise taxes that are
imposed by the United States or franchise taxes or net income taxes that are
imposed on such Originator Indemnified Party by the state or foreign
jurisdiction under the laws of which such Originator Indemnified Party is
organized or any political subdivision thereof. Any amounts subject to the
indemnification provisions of this Section 6.01 shall be paid by the Originator
to the related Originator Indemnified Party within ten (10) Business Days,
following written demand therefor.
28
SECTION 6.02. Limited Liability of Originator Indemnified Parties. No
Originator Indemnified Party shall have any liability (whether in contract, tort
or otherwise) to the Originator or any of their security holders or creditors
for or in connection with the transactions contemplated hereby, except to the
extent such liability is determined in a final non-appealable judgment by a
court of competent jurisdiction to have resulted primarily from such Originator
Indemnified Party's gross negligence or willful misconduct or breach of its
obligations under this Agreement. In no event, however, shall any Originator
Indemnified Party be liable on any theory of liability for any special,
indirect, consequential or punitive damages (including, without limitation, any
loss of profits, business or anticipated savings).
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendments, Etc. No amendment to or waiver of any provision
of this Agreement nor consent to any departure herefrom by the Originator shall
in any event be effective unless the same shall be in writing and signed by all
parties hereto and the Program Agent. Any such waiver, consent or approval shall
be effective only in the specific instance and for the specific purpose for
which given. No notice to or demand on the Originator in any case shall entitle
the Originator to any other or further notice or demand in the same, similar or
other circumstances. This Agreement and the Loan and Servicing Agreement,
together with the other written agreements required to be delivered hereunder
and thereunder and the exhibits and schedules hereto and thereto, contains a
final and complete integration of all prior expressions by the parties hereto
with respect to the subject matter hereof and shall constitute the entire
agreement (together with the exhibits hereto) among the parties hereto with
respect to the subject matter hereof, superseding all prior oral or written
understandings.
SECTION 7.02. Notices. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing (including
communication by facsimile copy) and shall be personally delivered or sent by
registered mail, return receipt requested, or by courier or by facsimile, to the
Purchaser at its address set forth on Exhibit E, and to the Originator, at the
address of its chief executive office set forth opposite its name on Exhibit B
or at such other address as shall be designated by such party in a written
notice to the other parties hereto. All such notices and communications shall be
effective, upon receipt, or in the case of overnight courier, two (2) days after
being deposited with such courier, or, in the case of notice by facsimile, when
electronic confirmation of receipt is obtained, in each case addressed as
aforesaid.
SECTION 7.03. No Waiver; Remedies. No failure on the part of the Purchaser
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 7.04. Binding Effect; Assignability. This Agreement shall be
binding upon and inure to the benefit of the Originator and the Purchaser and
their respective successors and permitted assigns. The Originator may not assign
any of its rights and obligations hereunder or
29
any interest herein without the prior written consent of the Purchaser and the
Program Agent. The Purchaser may not assign its rights hereunder and in the
Transferred Assets to any Person other than in connection with the Loan and
Servicing Agreement. 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 with respect to the Originator until the Final
Collection Date; provided, however, that the rights and remedies with respect to
(i) any breach of any representation and warranty made by the Originator
pursuant to Article III, (ii) the indemnification and payment provisions of
Article VI and (iii) Sections 7.06, 7.08 and 7.12 shall be continuing and shall
survive any termination of this Agreement.
SECTION 7.05. Consent to Jurisdiction.
(a) Each party hereto hereby irrevocably submits to the
non-exclusive jurisdiction of any New York State or Federal court sitting
in New York City in any action or proceeding arising out of or relating to
this Agreement, and each party hereto hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard and determined
in such New York State court or, to the extent permitted by law, in such
Federal court. The parties hereto hereby irrevocably waive, to the fullest
extent they may effectively do so, the defense of an inconvenient forum to
the maintenance of such action or proceeding. The parties hereto agree
that a final judgment in any such action or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in
any other manner provided by law.
(b) Each of the Purchaser and the Originator consents to the service
of any and all process in any such action or proceeding by the mailing of
copies of such process to it at its address specified in Section 7.02.
Nothing in this Section 7.05 shall affect the right of the Purchaser or
the Originator to serve legal process in any other manner permitted by
law.
SECTION 7.06. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH THIS AGREEMENT OR ANY OTHER FACILITY DOCUMENT.
SECTION 7.07. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7.08. Costs, Expenses and Taxes.
(a) In addition to the rights of indemnification under Article VI
hereof, the Originator agrees to pay to the Purchaser within thirty (30)
days after demand thereof (i) all reasonable costs and expenses incurred
by the Purchaser in connection with the periodic auditing of the
Originator pursuant to Section 4.01(c); provided, that the
30
Originator shall only be responsible for the reasonable costs and expenses
incurred in connection with one audit of the Originator during any twelve
(12) month period beginning on the date hereof and on each anniversary of
the date hereof, and in each case, so long as (x) no Purchase Termination
Event shall have occurred and be continuing and (y) the results of the
previous audits were complete and reasonably acceptable to the Program
Agent and (ii) all reasonable costs and expenses of the Purchaser in
connection with the preparation, execution and delivery (including any
requested amendments, waivers or consents) of this Agreement and the other
documents to be delivered hereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of special counsel for the
Purchaser with respect thereto and with respect to advising the Purchaser
as to its rights and remedies under this Agreement, and the other
agreements executed pursuant hereto and (iii) all costs and out-of-pocket
expenses (including fees and expenses of outside counsel), in connection
with the enforcement of this Agreement and the other agreements and
documents to be delivered hereunder after the occurrence of a Purchase
Termination Event.
(b) In addition, the Originator shall pay any and all stamp, sales,
transfer and other taxes and fees (including, without limitation, UCC
filing fees and any penalties associated with the late payment of any UCC
filing fees) payable or determined to be payable by it in connection with
the execution, delivery, filing and recording of this Agreement or the
other agreements and documents to be delivered hereunder (including any
UCC financing statements) and agrees to indemnify the Purchaser (and its
assigns) against any liabilities with respect to or resulting from any
delay by the Originator in paying or omission to pay such taxes and fees.
SECTION 7.09. 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 facsimile shall be effective as delivery of a manually executed
counterpart of this Agreement. In case any provision in or obligation under this
Agreement shall 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 7.10. Termination of this Agreement. The agreement of the
Originator to transfer Receivables hereunder and the agreement of the Purchaser
to Purchase Receivables shall automatically terminate on the Purchase
Termination Date. Notwithstanding any such termination described above, all
other provisions of this Agreement shall remain in full force and effect as
provided in Section 7.04. On or after the Final Collection Date, the Purchaser
will, at the request and expense of the Originator, execute and deliver to the
Originator such UCC termination statements and other documents as the Originator
may reasonably request to evidence such termination.
SECTION 7.11. Purchaser's Assignment of Rights to Program Agent. The
Originator acknowledges that all of the Purchaser's right, title and interest
in, to and under this Agreement
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and each other document, agreement or instrument executed in connection herewith
or therewith, constitutes part of the Collateral pledged to the Program Agent,
and that, pursuant to and subject to the limitations contained in, and the terms
and conditions of, the Loan and Servicing Agreement, the Purchaser has assigned
to the Program Agent, for the benefit of the Secured Parties, all benefits,
rights and remedies exercisable by the Purchaser under this Agreement and each
other document, agreement or instrument executed in connection herewith or
therewith. Such assignment includes, without limitation, (x) all monies due and
to become due to the Purchaser from the Originator, whether in connection with
forwarding Collections of Purchased Receivables or any expenses, costs,
indemnities, or damages for the breach of this Agreement or otherwise and (y)
all rights, remedies, powers, privileges and claims of the Purchaser against the
Originator under or with respect to this Agreement (whether arising pursuant to
the terms of this Agreement or as otherwise available at law or in equity). The
Originator acknowledges that the Program Agent shall have the sole right to
enforce the Purchaser's rights and remedies under this Agreement to the extent
permitted by the Loan and Servicing Agreement (including, without limitation,
the right to give or withhold any consents or approvals of the Purchaser to be
given or withheld hereunder, and, in any case, without regard to whether
specific reference is made to the Purchaser's assigns in the provisions of this
Agreement which set forth such rights and remedies) and the Originator agrees to
cooperate fully with the Program Agent and the Lenders in the exercise of such
rights and remedies; provided, however, that the Program Agent shall not be
obligated to perform any of the obligations of the Purchaser under this
Agreement. The Originator acknowledges that the rights of the Program Agent with
respect to the rights and remedies in connection with any indemnification or any
breach of any representation, warranty, or covenant made by the Originator under
this Agreement shall be continuing and shall survive any termination of this
Agreement. The Originator further agrees to give to the Program Agent copies of
all notices it is required to give to the Purchaser hereunder.
SECTION 7.12. Limited Recourse. Notwithstanding anything to the contrary
contained herein, the obligations of the Purchaser under this Agreement shall be
payable solely out of Collections as they are received by or are available to
the Purchaser to make such payments as provided pursuant to Section 2.06 or 2.07
of the Loan and Servicing Agreement, as applicable, and, to the extent
Collections are not available to pay such obligations, the claims relating
thereto shall not constitute a claim (as defined in Section 101 of Title 11 of
the Bankruptcy Code) against the Purchaser but shall continue to accrue. The
Originator agrees that the payment by the Purchaser of any claim of any the
Originator hereunder shall be subordinated in the priority for such claim in as
set forth in Section 2.07 of the Loan and Servicing Agreement. The Originator
hereby agrees that it will not institute any Event of Bankruptcy against the
Purchaser so long as any Borrower Obligations shall be outstanding or there
shall not have elapsed one year plus one day since the last day on which any
such Borrower Obligations shall have been outstanding.
SECTION 7.13. Integration. This Agreement executed by the parties hereto
on the date hereof contains the final and complete integration of all prior
expressions by the parties hereto with respect to the subject matter hereof and
shall constitute the entire agreement among the parties hereto with respect to
the subject matter hereof superseding all prior oral or written understandings.
32
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.
SWC RECEIVABLES FUNDING LLC, as Purchaser
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and Treasurer
THE ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ COMPANY, as
Originator
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President - Finance and Chief
Financial Officer
Signature Page to
Purchase and Contribution Agreement
EXHIBIT A
FORM OF SUBORDINATED NOTE
[Date]
1. Note. FOR VALUE RECEIVED, the undersigned, SWC Receivables
Funding LLC, a Delaware limited liability company (the "Borrower"), hereby
unconditionally promises to pay to the order of The ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company, an
Ohio Corporation (the "Lender"), in lawful money of the United States of America
and in immediately available funds, the aggregate unpaid principal sum provided
for in Section 3 hereof in accordance with the terms of that certain Purchase
and Contribution Agreement dated as of February 1, 2006 between the Lender and
the Borrower (as amended, restated, supplemented or otherwise modified from time
to time, the "Purchase Agreement"). Reference to Section 2.02 of the Purchase
Agreement is hereby made for a statement of the terms and conditions under which
the loans evidenced hereby have been and will be made. Capitalized terms used
but not defined herein shall have the meanings assigned to such terms in the
Purchase Agreement.
2. Interest. The Borrower further promises to pay interest on
the outstanding unpaid principal amount of this Subordinated Note from the date
hereof until payment in full hereof at a per annum rate (the "Interest Rate")
equal to the Base Rate in effect from time to time; provided, however, that if
the Borrower shall default in the payment of any principal hereof, the Borrower
promises to, on demand, pay interest at the rate of the Interest Rate plus 2% on
any such unpaid amounts, from the date such payment is due to the date of actual
payment. Interest shall be payable on the first Business Day of each accounting
month in arrears and shall be calculated on the basis of the actual number of
days elapsed during such accounting month and a year consisting of 360 days;
provided, however, that the Borrower may elect on the date any interest payment
is due hereunder to defer such payment and upon such election the amount of
interest due but unpaid on such date shall constitute principal under this
Subordinated Note.
3. Principal; Principal Payments. The aggregate outstanding
principal amount of this Subordinated Note at any time shall be equal to the
excess of (x) the aggregate principal amount of advances to the Borrower and
increases to such principal amount made pursuant to Section 2.02(b) of the
Purchase Agreement as of such time, over (y) the aggregate amount of all
payments made in respect of the principal of this Subordinated Note as of such
time; provided, however, that no increases to the principal amount of this
Subordinated Note shall be made to the extent that, as a result of such
addition, and after giving effect thereto, the Purchaser's Net Worth would be
less than the Required Capital Amount. The Lender is authorized and directed by
the Borrower to enter in its books and records the date and amount of each loan
made by it which is evidenced by this Subordinated Note and the amount of each
payment of principal made by the Borrower, and absent manifest error, such
entries shall constitute prima facie evidence of the accuracy of the information
so entered; provided that neither the failure of the Lender to make any such
entry nor any error therein shall expand, limit or affect the obligations of the
Borrower hereunder.
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4. Subordination. The indebtedness evidenced by this Subordinated
Note is subordinated to the prior payment in full of all of the Borrower's
obligations under that certain Loan and Servicing Agreement dated as of February
1, 2006 (as amended, supplemented, restated or otherwise modified from time to
time, the "Loan and Servicing Agreement") among the Borrower, the Lender, as
servicer (the "Servicer"), the entities from time to time party thereto as
conduit lenders (the "Conduit Lenders"), the financial institutions from time to
time party thereto as committed lenders and managing agents (the "Committed
Lenders" and "Managing Agents"), and Citicorp North America, Inc., as program
agent (the "Program Agent"). The subordination provisions contained herein are
for the direct benefit of, and may be enforced by, the Program Agent, the
Conduit Lenders, the Committed Lenders and/or any of their assignees
(collectively, the "Senior Claimants") under the Loan and Servicing Agreement.
Until the date (the "Senior Collection Date") on which the "Aggregate Principal
Balance" under and as defined in the Loan and Servicing Agreement has been
reduced to zero and all other "Borrower Obligations" thereunder, and as defined
therein (all such obligations, collectively, the "Senior Claims"), have been
indefeasibly satisfied in full, the Lender shall, except as permitted by Section
2.02(f) of the Purchase Agreement, not demand, accelerate or ▇▇▇ for, directly
or indirectly, in cash or other property or by set-off or any other manner
(including, without limitation, from or by way of collateral) any payment of, or
security for, all or any of the indebtedness under this Subordinated Note or
exercise any remedies or take any action or proceeding to enforce the same;
provided, however, that (i) the Lender hereby agrees that it will not institute
against the Borrower any Event of Bankruptcy unless and until one year and one
day have passed since the Senior Collection Date has occurred and (ii)
notwithstanding the foregoing, nothing in this paragraph shall restrict the
Borrower from paying, or the Lender from requesting, receiving or accepting, any
payments under this Subordinated Note so long as (x) the Borrower has funds
available therefor in accordance with the Loan and Servicing Agreement or the
Servicer has otherwise set aside funds for the benefit of the Senior Claimants
in the amount and manner required under the Loan and Servicing Agreement, (y) no
Event of Termination under (and as defined in) the Loan and Servicing Agreement
shall have occurred and then be continuing and (z) the making of such payment
would not otherwise violate the terms and provisions of the Loan and Servicing
Agreement. Should any payment, distribution or security or proceeds thereof be
received by the Lender in violation of the immediately preceding sentence, the
Lender agrees that such payment shall be segregated, received and held in trust
for the benefit of, and deemed to be the property of, and shall be immediately
paid over and delivered to the Program Agent for the benefit of the Senior
Claimants.
5. Bankruptcy; Insolvency. Upon the occurrence of any Event of
Bankruptcy involving the Borrower as debtor, then and in any such event the
Senior Claimants shall receive payment in full of all amounts due or to become
due on or in respect of the Senior Claims (including "Interest" accruing under
the Loan and Servicing Agreement after the commencement of any such proceeding,
whether or not any or all of such Interest is an allowable claim in any such
proceeding) before the Lender shall be entitled to receive payment on account of
this Subordinated Note, and to that end, any payment or distribution of assets
of the Borrower of any kind or character, whether in cash, securities or other
property, in any applicable insolvency proceeding, which would otherwise be
payable to or deliverable upon or with respect to any or all indebtedness under
this Subordinated Note, is hereby assigned to and shall be paid or delivered by
the Person making such payment or delivery (whether a trustee in bankruptcy, a
receiver, custodian or liquidating trustee or otherwise) directly to the Program
Agent for
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application to, or as collateral for the payment of, the Senior Claims
until such Senior Claims shall have been paid in full and satisfied.
6. Amendments; Termination. This Subordinated Note shall not be
amended, modified or terminated except in accordance with Section 7.01 of the
Purchase Agreement.
7. Governing Law. This Subordinated Note shall be deemed to have
been made at New York and shall be interpreted and the rights and liabilities of
the parties hereto determined in accordance with the laws and decisions of the
State of New York. Wherever possible each provision of this Subordinated Note
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Subordinated Note shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Subordinated Note.
8. Waivers. All parties hereto, whether as makers, endorsers, or
otherwise, severally waive presentment for payment, demand, protest and notice
of dishonor. The Lender additionally expressly waives all notice of the
acceptance by any Senior Claimant of the subordination and other provisions of
this Subordinated Note and expressly waives reliance by any Senior Claimant upon
the subordination and other provisions herein provided.
9. Assignment. This Subordinated Note may not be assigned, pledged
or otherwise transferred to any party without the prior written consent of the
Agent, and any such attempted transfer shall be void.
SWC RECEIVABLES FUNDING LLC
By:________________________
Name:
Title:
A-3
EXHIBIT B
CHIEF EXECUTIVE OFFICES; LOCATIONS OF BOOKS AND RECORDS;
FORM AND JURISDICTION OF ORGANIZATION;
FEDERAL AND ORGANIZATIONAL IDENTIFICATION NUMBERS; TRADE NAMES
The chief executive office of The ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company is:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
The ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company is an Ohio corporation, with the Ohio
organizational number 8027, and the Federal identification number ▇▇-▇▇▇▇▇▇▇.
The ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company conducts its business using the following trade
names:
Accurate Dispersions Fabulon Products Old Quaker Paint
Baltimore Paint Group Flex Bon Paints Paint-Safe
Bestt Liebco Formby's PQ Products Group
▇▇▇▇-▇▇▇▇▇ Company General Polymers ▇▇▇▇▇ & ▇▇▇▇▇▇▇
C Transportation Systems H&C Concrete ▇▇▇▇▇ & ▇▇▇▇▇▇▇ Company
CBD Group H&C Products Group ▇▇▇▇▇ & ▇▇▇▇▇▇▇ Industrial
Conco Paints Homeline Products Group Maintenance
Con-Lux Coatings Illinois Bronze ▇▇▇▇▇ & ▇▇▇▇▇▇▇ Paints
Consumer Brands Div. Independent Dealer Group ▇▇▇▇▇ & ▇▇▇▇▇▇▇ United
Contract Systems Co. ▇▇▇▇ Industries, Inc. Pro Line Paint
Cuprinol Group ▇▇▇▇ ▇▇▇▇▇ & Company ▇▇▇▇▇
Custom Aerosols Krylon Products Group ▇▇▇▇▇ Brushes
Custom Paint Products Group ▇.▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Paint
▇▇▇▇▇▇▇ Products ▇▇▇▇▇▇-▇▇▇▇▇▇ Company Rubberset Company
Diversified Brands ▇▇▇▇▇▇-▇▇▇▇▇▇ Paints ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Diversified
Dupli-Color Products ▇▇▇▇▇ Paints Brands
Duquesne Paint Co. Mercury Paints Sprayon Products
▇▇▇▇▇ Minwax The ▇▇▇▇▇▇▇▇ Minwax Company
▇▇▇▇▇ Paint & Wallcoverings Minwax Company The ▇▇▇▇▇▇▇▇'▇ Company
Dutch Boy Minwax, Wood Care Group United Coatings
Dutch Boy Group Modecor United Paint
Dutch Boy Paints National Aerosol Products ▇.▇. ▇▇▇▇▇▇▇▇ & Company
Company White Lightning Products
Norfolk Paint Company
B-1
The following offices, as well as those offices listed at
▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇.▇▇▇, include all of the offices where books and
records are kept.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
B-2
EXHIBIT C
LIST OF DEPOSIT ACCOUNTS; DEPOSIT ACCOUNT BANKS;
ALTERNATE PAYMENT LOCATIONS; LOCK BOXES; LOCK BOX PROCESSORS
Attached
List of Alternate Payment Locations
Stores and the ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company branches listed from time to time in the
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company internet web site under "Store Locations" at
▇▇▇.▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇.▇▇▇
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
C-1
EXHIBIT D
PURCHASER NOTICE ADDRESS
SWC Receivables Funding LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Vice President and Treasurer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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