[Exhibit 10.6]
PURCHASE AND SALE AGREEMENT
Dated as of September 30, 1998
among
▇▇▇▇▇▇▇ STREET, INC.,
as Seller and initial Servicer
and
WARNACO OPERATIONS CORPORATION,
as Buyer
TABLE OF CONTENTS
PAGE
ARTICLE I
AGREEMENT TO PURCHASE AND SELL
1.1. Agreement to Purchase and Sell ........................................... 2
1.2. Timing of Purchases ...................................................... 3
1.3. Consideration for Purchases .............................................. 3
1.4. Purchase and Sale Termination Date ....................................... 3
1.5. Intention of the Parties ................................................. 3
ARTICLE II
CALCULATION OF PURCHASE PRICE
2.1. Calculation of Purchase Price ............................................ 4
ARTICLE III
CONTRIBUTION OF RECEIVABLES;
PAYMENT OF PURCHASE PRICE
3.1. Contribution of Receivables .............................................. 5
3.2. Initial Purchase Price Payment ........................................... 5
3.3. Subsequent Purchase Price Payments ....................................... 5
3.4. Settlement as to Specific Receivables .................................... 6
3.5. Reconveyance of Receivables .............................................. 7
ARTICLE IV
CONDITIONS OF PURCHASES
4.1. Conditions Precedent to Initial Purchase ................................. 7
4.2. Certification as to Representations and Warranties ....................... 8
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER
5.1. Representations and Warranties; Covenants ................................ 8
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ARTICLE VI
ADDITIONAL RIGHTS AND OBLIGATIONS IN RESPECT OF THE RECEIVABLE
6.1. Rights of the Company .................................................... 8
6.2. Responsibilities of The Seller ........................................... 8
6.3. Further Action Evidencing Purchases ...................................... 9
6.4. Application of Collections ...............................................10
ARTICLE VII
PURCHASE AND SALE TERMINATION EVENTS
7.1. Purchase and Sale Termination Events .....................................10
7.2. Remedies .................................................................11
ARTICLE VIII
INDEMNIFICATION
8.1. Indemnities by the Seller ................................................12
ARTICLE IX
MISCELLANEOUS
9.1. Amendments, etc ..........................................................13
9.2. Notices, etc .............................................................14
9.3. No Waiver; Cumulative Remedies ...........................................14
9.4. Binding Effect; Assignability ............................................14
9.5. Costs, Expenses and Taxes ................................................14
9.6. Governing Law and Jurisdiction ...........................................15
9.7. Waiver of Jury Trial .....................................................15
9.8. Headings .................................................................16
9.9. Execution in Counterparts ................................................16
9.10. Acknowledgment and Agreement .............................................16
9.11. Assignment of Rights under Sale Agreements ...............................16
SCHEDULES
SCHEDULE I Office Locations
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SCHEDULE II Trade Names
EXHIBITS
EXHIBIT A Form of Purchase Report
EXHIBIT B Form of Subordinated Note
EXHIBIT C Representations and Warranties
EXHIBIT D Covenants
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (as amended, supplemented or modified
from time to time, this "Agreement"), dated as of September 30, 1998, is among
▇▇▇▇▇▇▇ STREET, INC., a Delaware corporation ("▇▇▇▇▇▇▇"), as Seller (the
"Seller") and as the initial Servicer (in such capacity, the "Servicer"), and
WARNACO OPERATIONS CORPORATION, a Delaware corporation (the "Company"), as
Buyer.
Definitions
Unless otherwise indicated, certain terms that are capitalized and
used throughout this Agreement are defined in Exhibit I to the Receivables
Purchase Agreement of even date herewith (as amended, supplemented or otherwise
modified from time to time, the "Receivables Purchase Agreement"), among the
Company, the Servicer, LIBERTY STREET FUNDING CORP. and CORPORATE ASSET FUNDING
COMPANY, INC. (the "Issuers"), THE BANK OF NOVA SCOTIA, as Agent (together with
its successors and assigns, the "Agent"), and CITICORP NORTH AMERICA, INC., as
Co-Agent (together with its successors and assigns, the "Co-Agent").
Background
1. The Company is a special purpose corporation, all of the capital
stock of which is wholly-owned by ▇▇▇▇▇▇▇.
2. The Seller wishes to sell or contribute certain Receivables and
Related Rights from time to time to the Company, and the Company is willing, on
the terms and subject to the conditions set forth herein, to purchase such
Receivables and Related Rights and accept such contribution from the Seller.
3. The Company intends to sell to the Issuers undivided variable
percentage interests in its Receivables and Related Rights pursuant to the
Receivables Purchase Agreement in order to finance its purchases of certain
Receivables and Related Rights hereunder.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
AGREEMENT TO PURCHASE AND SELL
1.1. Agreement to Purchase and Sell. On the terms and subject to the
conditions set forth in this Agreement (including Article IV), and in
consideration of the Purchase Price, the Seller agrees to sell to the Company,
and does hereby sell to the Company, and the Company agrees to purchase from the
Seller, and does hereby purchase from the Seller, without recourse and without
regard to collectibility, all of the Seller's right, title and interest in and
to:
(a) each Receivable in existence and owned by the Seller as of the
close of the Seller's business on the date of the initial purchase under the
Receivables Purchase Agreement (the "Closing Date") (other than the Receivables
and Related Rights contributed by the Seller to the Company pursuant to Section
3.1 (the "Contributed Receivables"));
(b) each Receivable purchased by the Seller from the close of the
Seller's business on the Closing Date to and including the Purchase and Sale
Termination Date;
(c) all rights to, but not the obligations under, all Related
Security;
(d) all monies due or to become due with respect to any of the
foregoing;
(e) all books and records related to any of the foregoing; and
(f) all proceeds thereof (as defined in the applicable UCC) received
on or after the date hereof including, without limitation, all funds which
either are received by the Seller, the Originators, the Company or the Servicer
from or on behalf of the Obligors in payment of any amounts owed (including,
without limitation, finance charges, interest and all other charges) in respect
of Receivables, or are applied to such amounts owed by the
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Obligors (including, without limitation, insurance payments, if any, that any
Originator, the Seller or the Servicer applies in the ordinary course of its
business to amounts owed in respect of any Receivable).
All purchases and contributions hereunder shall be made without recourse, but
shall be made pursuant to and in reliance upon the representations, warranties
and covenants of the Seller set forth in this Agreement and each other
Transaction Document. The Company's foregoing commitment to purchase such
Receivables and the proceeds and rights described in subsections (c) through (f)
of this Section 1.1 (collectively, the "Related Rights") is herein called the
"Purchase Facility."
1.2. Timing of Purchases.
(a) Closing Date Purchases. The Seller's entire right, title and
interest in (i) each Receivable owned by the Seller as of the close of the
Seller's business on the Closing Date (other than Contributed Receivables), and
(ii) all Related Rights with respect thereto shall be deemed to have been sold
to the Company on the Closing Date.
(b) Regular Purchases. After the Closing Date, each Receivable
purchased by the Seller and all Related Rights shall be purchased and owned by
the Company (without any further action) upon the purchase of such Receivable by
the Seller.
1.3. Consideration for Purchases. On the terms and subject to the
conditions set forth in this Agreement, the Company agrees to make all Purchase
Price payments to the Seller, and to reflect all contributions, in accordance
with Article III.
1.4. Purchase and Sale Termination Date. The "Purchase and Sale
Termination Date" shall be the earlier to occur of (a) the date of the
termination of this Agreement pursuant to Section 7.2 and (b) the Payment Date
immediately following the day on which the Seller shall have given notice to the
Company (with a copy to the Agent) that the Seller desires to terminate this
Agreement.
As used herein, "Payment Date" means (i) the Closing Date and (ii)
each Business Day thereafter that the Seller is open for business.
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1.5. Intention of the Parties. It is the express intent of the
parties hereto that the transfers of the Receivables and Related Rights by the
Seller to the Company, as contemplated by this Agreement be, and be treated as,
sales or contributions, as applicable, and not as loans secured by the
Receivables and Related Rights. If, however, notwithstanding the intent of the
parties, such transfers are deemed to be loans, the Seller hereby grants to the
Company a first priority security interest in all of the Seller's right, title
and interest in and to the Receivables and the Related Rights now existing and
hereafter created, all monies due or to become due and all amounts received with
respect thereto, and all proceeds thereof, to secure all of the Seller's
obligations hereunder.
ARTICLE II
CALCULATION OF PURCHASE PRICE
2.1. Calculation of Purchase Price. On each Monthly Report Date, the
Servicer shall deliver to the Company, the Agent and the Co-Agent a report in
substantially the form of Exhibit A (each such report being herein called a
"Purchase Report") with respect to the matters set forth therein and the
Company's purchases of Receivables from the Seller that:
(a) are to be made on the Closing Date (in the case of the Purchase
Report to be delivered on the Closing Date), or
(b) were made during the period commencing on the Monthly Report Date
immediately preceding such Monthly Report Date to (but not including) such
Monthly Report Date (in the case of each subsequent Monthly Report).
The "Purchase Price" (to be paid to the Seller in accordance with the terms of
Article III) for the Receivables and the Related Rights that are purchased
hereunder shall be determined in accordance with the following formula:
PP = OB X FMVD
where:
PP = Purchase Price for each Receivable as calculated on the
relevant Payment Date.
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OB = the Outstanding Balance of such Receivable.
FMVD = Fair Market Value Discount, as measured on such Payment
Date, which is equal to the quotient (expressed as
percentage) of (a) one divided by (b) the sum of (i) one,
plus (ii) the product of (A) the Prime Rate on such Payment
Date, and (B) a fraction, the numerator of which is the
Days' Sales Outstanding (calculated as of the last day of
the Fiscal Month next preceding such Payment Date) and the
denominator of which is 365.
"Prime Rate" means a per annum rate equal to the "prime rate" as
published in the "Money Rates" section of The Wall Street Journal or such other
publication as determined by the Agent in its sole discretion.
ARTICLE III
CONTRIBUTION OF RECEIVABLES;
PAYMENT OF PURCHASE PRICE
3.1. Contribution of Receivables. On the Closing Date, the Seller
shall, and hereby does, contribute to the capital of the Company, Receivables
and Related Rights with respect thereto consisting of each Receivable owned by
the Seller on the Closing Date, beginning with the oldest of such Receivables
and continuing chronologically thereafter, such that the aggregate Outstanding
Balance of all such contributed Receivables shall be equal to $25,000,000.
3.2. Initial Purchase Price Payment. On the terms and subject to the
conditions set forth in this Agreement, the Company agrees to pay to the Seller
the Purchase Price for the purchase of Receivables to be made on the Closing
Date, partially in cash in the amount of the proceeds of the purchases made by
the Issuers on the Closing Date under the Receivables Purchase Agreement, and
partially by issuing a promissory note in the form of Exhibit B to the Seller
with an initial principal balance equal to the remaining Purchase Price (as such
promissory note may be amended, supplemented, indorsed or otherwise modified
from time to time, together with all promissory notes issued from time to time
in substitution therefor or renewal thereof in accordance with the
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Transaction Documents, being herein called the "Subordinated Note").
3.3. Subsequent Purchase Price Payments. On each Business Day falling
after the Closing Date and on or prior to the Purchase and Sale Termination
Date, on the terms and subject to the conditions set forth in this Agreement,
the Company shall pay to the Seller the Purchase Price for the Receivables sold
by the Seller to the Company on such Business Day, in cash, to the extent
provided under Section 1.2 of the Receivables Purchase Agreement, and to the
extent any of such Purchase Price remains unpaid, such remaining portion of such
Purchase Price shall be paid by means of an automatic increase to the
outstanding principal amount of the Subordinated Note.
Servicer shall make all appropriate record keeping entries with
respect to the Subordinated Note or otherwise to reflect the foregoing payments
and to reflect adjustments pursuant to Section 3.4, and Servicer's books and
records shall constitute rebuttable presumptive evidence of the principal amount
of and accrued interest on any Subordinated Note at any time. Furthermore,
Servicer shall hold the Subordinated Note for the benefit of the Seller, and all
payments under the Subordinated Note shall be made to the Servicer for the
account of the Seller. The Seller hereby irrevocably authorizes Servicer to ▇▇▇▇
the Subordinated Note "CANCELLED" and to return the Subordinated Note to the
Company upon the final payment thereof after the occurrence of the Purchase and
Sale Termination Date.
3.4. Settlement as to Specific Receivables and Dilution.
(a) If on the day of purchase or contribution of any Receivable from
the Seller hereunder, any of the representations or warranties of the Seller set
forth in paragraph (d) or (g) of Exhibit C is not true with respect to such
Receivable or as a result of any action or inaction of the Seller, on any day
any of such representations or warranties set forth in paragraph(d) or (g) is no
longer true with respect to such a Receivable, then the Purchase Price (or in
the case of a Contributed Receivable, the Outstanding Balance of such Receivable
(the "Contributed Value")) with respect to such Receivables shall be reduced by
an amount equal to the Outstanding Balance of such Receivable and shall be
accounted to the Seller as provided in subsection (c) below; provided, that if
the Company thereafter receives payment on
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account of Collections due with respect to such Receivable, the Company promptly
shall deliver such funds to the Seller.
(b) If, on any day, the Outstanding Balance of any Receivable
(including any Contributed Receivable) purchased (or contributed) hereunder is
reduced or adjusted as a result of any defective, rejected, returned goods or
services, or any discount or other adjustment made by any Originator, the
Seller, the Company or the Servicer or any offset, setoff or dispute between
such Originator, the Seller, or the Servicer and an Obligor as indicated on the
books of the Company (or, for periods prior to the Closing Date, the books of
such Originator or the Seller), then the Purchase Price or the Contributed
Value, as the case may be, with respect to such Receivable shall be reduced by
the amount of such net reduction and shall be accounted to the Seller as
provided in subsection (c) below.
(c) Any reduction in the Purchase Price (or Contributed Value) of any
Receivable pursuant to subsection (a) or (b) above shall be applied as a credit
for the account of the Company against the Purchase Price of Receivables
subsequently purchased by the Company from the Seller hereunder; provided,
however, if there are no purchases of Receivables from the Seller (or
insufficiently large purchases of Receivables) to create a Purchase Price
sufficient to so apply such credit against, the amount of such credit
(i) shall be paid in cash to the Company by the Seller in the
manner and for application as described in the following proviso, or
(ii) shall be deemed to be a payment under, and shall be
deducted from the principal amount outstanding under, the Subordinated Note
payable to the extent permitted under Section 1(n) of Exhibit IV of the
Receivables Purchase Agreement;
provided, further, that at any time (y) when a Termination Event or Unmatured
Termination Event exists under the Receivables Purchase Agreement or (z) on or
after the Purchase and Sale Termination Date, the amount of any such credit
shall be paid by the Seller to the Company by deposit in immediately available
funds into the Collection Account for application by Servicer to the same extent
as if Collections of the applicable Receivable in such amount had actually been
received on such date.
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(d) Each Purchase Report (other than the Purchase Report delivered on
the Closing Date) shall include, in respect of the Receivables purchased by the
Seller (including the Contributed Receivables), a calculation of the aggregate
reductions described in subsection (a) or (b) relating to such Receivables since
the last Purchase Report delivered hereunder, as indicated on the books of the
Company (or, for such period prior to the Closing Date, the books of the
Seller).
3.5. Reconveyance of Receivables. In the event that the Seller has
paid to the Company the full Outstanding Balance of any Receivable pursuant to
Section 3.4, the Company shall reconvey such Receivable to the Seller, without
representation or warranty, but free and clear of all liens created by the
Company.
ARTICLE IV
CONDITIONS OF PURCHASES
4.1. Conditions Precedent to Initial Purchase. The initial purchase
and contribution hereunder is subject to the condition precedent that the
Company shall have received, on or before the Closing Date, the following, each
(unless otherwise indicated) dated the Closing Date, and each in form, substance
and date satisfactory to the Company, the Agent and the Co-Agent:
(a) The Receivables Purchase Agreement, duly executed by the parties
thereto, together with evidence that all conditions precedent to the initial
purchase thereunder shall have been met; and;
(b) Such other agreements, instruments, certificates, opinions and
other documents as the Company, the Agent or the Co-Agent shall reasonably
request.
4.2. Certification as to Representations and Warranties. The Seller,
by accepting the Purchase Price related to each purchase of Receivables (and
Related Rights), shall be deemed to have certified that the representations and
warranties contained in Exhibit C are true and correct on and as of such day,
with the same effect as though made on and as of such day.
ARTICLE V
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REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER
5.1. Representations and Warranties; Covenants. In order to induce
the Company to enter into this Agreement and to make purchases and accept
contributions hereunder, the Seller hereby makes the representations and
warranties and hereby agrees to perform and observe the covenants set forth in
Exhibits C and D, respectively.
ARTICLE VI
ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF THE RECEIVABLES
6.1. Rights of the Company. The Seller hereby authorizes the Company
and the Servicer or their respective designees to take any and all steps in the
Seller's name necessary or desirable, in their respective determination, to
collect all amounts due under any and all Receivables and Related Rights,
including, without limitation, endorsing the Seller's name on checks and other
instruments representing Collections and enforcing such Receivables and the
provisions of the related Contracts that concern payment and/or enforcement of
rights to payment.
6.2. Responsibilities of The Seller. Anything herein to the contrary
notwithstanding:
(a) The Seller agrees to (A) direct, and hereby grants to each of the
Company and the Agent the authority to direct, all Obligors of Receivables
purchased by the Seller to make payments of such Receivables directly to the
Collection Account or to post office boxes to which only the Collection Account
Bank has access, and (B) to transfer any Collections that it receives directly,
into the Collection Account within two Business Days of receipt thereof, and
agrees that all such Collections shall be deemed to be received in trust for the
Company.
(b) The Seller shall perform its obligations hereunder, and the
exercise by the Company or its designee of its rights hereunder shall not
relieve the Seller from such obligations.
(c) None of the Company, the Servicer, the Issuers, the Agent or
Co-Agent shall have any obligation or liability to any Obligor or any other
third Person with respect to any Receivables,
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Contracts related thereto or any other related agreements, nor shall the
Company, the Servicer, the Investors, the Agent or the Co-Agent be obligated
to perform any of the obligations of the Seller thereunder.
(d) The Seller hereby grants to the Company, the Servicer and the
Agent an irrevocable power of attorney, with full power of substitution, coupled
with an interest, to take in the name of the Seller all steps necessary or
advisable to indorse, negotiate or otherwise realize on any writing or other
right of any kind held or transmitted by the Seller or transmitted or received
by the Company (whether or not from the Seller) in connection with any
Receivable or Related Right.
6.3. Further Action Evidencing Purchases. The Seller agrees that from
time to time, at its expense, it will promptly execute and deliver all further
instruments and documents, and take all further action that the Company or the
Servicer may reasonably request in order to perfect, protect or more fully
evidence the Receivables (and the Related Rights) purchased by, or contributed
to, the Company hereunder, or to enable the Company to exercise or enforce any
of its rights hereunder or under any other Transaction Document. Without
limiting the generality of the foregoing, upon the request of the Company, the
Seller will (a) execute and file such financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or
notices, as may be necessary or appropriate and (b) ▇▇▇▇ the summary master
control data processing records with the following legend:
"THE RECEIVABLES DESCRIBED HEREIN HAVE BEEN SOLD TO WARNACO OPERATIONS
CORPORATION PURSUANT TO A PURCHASE AND SALE AGREEMENT, DATED AS OF
SEPTEMBER 30, 1998, AMONG ▇▇▇▇▇▇▇ STREET, INC., AND WARNACO OPERATIONS
CORPORATION; AND AN INTEREST IN THE RECEIVABLES DESCRIBED HEREIN HAS
BEEN GRANTED TO LIBERTY STREET FUNDING CORP. AND CORPORATE ASSET
FUNDING COMPANY, INC., PURSUANT TO A RECEIVABLES PURCHASE AGREEMENT,
DATED AS ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ OPERATIONS CORPORATION,
▇▇▇▇▇▇▇ STREET, INC., LIBERTY STREET FUNDING CORP., CORPORATE ASSET
FUNDING COMPANY, INC., THE BANK OF NOVA SCOTIA, AS AGENT AND, CITICORP
NORTH AMERICA, INC., AS CO-AGENT."
The Seller hereby authorizes the Company or its designee to file one or more
financing or continuation statements, and amendments
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thereto and assignments thereof, relative to all or any of the Receivables (and
the Related Rights) now owned by or hereafter acquired by the Seller. If the
Seller fails to perform any of its agreements or obligations under this
Agreement, the Company or its designee may (but shall not be required to) itself
perform, or cause performance of, such agreement or obligation, and the expenses
of the Company or its designee incurred in connection therewith shall be payable
by the Seller as provided in Section 8.1.
6.4. Application of Collections. Any payment by an Obligor in respect
of any indebtedness owed by it to any Originator or the Seller shall, except as
otherwise specified by such Obligor or otherwise required by contract or law and
unless otherwise instructed by the Company or the Administrator, be applied
first, as a Collection of any Receivables of such Obligor, in the order of the
age of such Receivables, starting with the oldest of such Receivables, and
second, to any other indebtedness of such Obligor.
ARTICLE VII
PURCHASE AND SALE TERMINATION EVENTS
7.1. Purchase and Sale Termination Events. Each of the following
events or occurrences described in this Section 8.1 shall constitute a "Purchase
and Sale Termination Event":
(a) The Facility Termination Date (as defined in the Receivables
Purchase Agreement) shall have occurred; or
(b) The Seller shall fail to make when due any payment or deposit to
be made by the Seller under this Agreement within three Business Days of the
date on which such payment or deposit is due; or
(c) Any representation or warranty made or deemed to be made by the
Seller (or any of its officers) under or in connection with this Agreement, any
other Transaction Document or any other information or report delivered pursuant
hereto or thereto shall prove to have been incorrect or untrue in any material
respect when made or deemed made or delivered; or
(d) The Seller shall fail to perform or observe in any material
respect any other term, covenant or agreement contained
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in this Agreement on its part to be performed or observed and such failure shall
remain unremedied for thirty (30) days after the Seller shall have obtained
actual knowledge or notice thereof; or
(e) (i) The Seller shall generally not pay its debts as such debts
become due, or shall admit in writing its inability to pay its debts generally,
or shall make a general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against the Seller seeking to adjudicate it
a bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, or other similar official for it or for all or any
substantial part of its property and, in the case of any such proceeding
instituted against it (but not instituted by it), such proceeding shall remain
undismissed or unstayed for a period of 60 days, or any of the actions sought in
such proceeding (including the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other similar official for, it
or for any substantial part of its property) shall occur; or (ii) the Seller
shall take any corporate action to authorize any of the actions set forth in
clause (i) above in this Section 7.1(e); or
(f) either: (i) a contribution failure shall occur with respect to any
Benefit Plan sufficient to give rise to a lien under Section 302(f) of ERISA,
(ii) the Internal Revenue Service shall file a notice of a lien asserting a
claim or claims pursuant to the Internal Revenue Code with regard to any of the
assets of the Seller or any ERISA Affiliate, or (iii) the Pension Benefit
Guaranty Corporation shall file notice of a lien asserting a claim pursuant to
ERISA with regard to any assets of the Seller or an ERISA Affiliate.
(g) There shall have occurred any event that would, with the giving of
notice or the passing of time or both, have a Material Adverse Effect.
7.2. Remedies.
(i) Optional Termination. Upon the occurrence of a Purchase and
Sale Termination Event, the Company shall have the option by notice to
the Seller (with a copy to the Agent)
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to declare the Purchase and Sale Termination Date to have occurred.
(ii) Remedies Cumulative. Upon any termination of the Purchase
Facility pursuant to this Section 7.2, the Company shall have, in
addition to all other rights and remedies under this Agreement or
otherwise, all other rights and remedies provided under the UCC of
each applicable jurisdiction and other applicable laws, which rights
shall be cumulative.
ARTICLE VIII
INDEMNIFICATION
8.1. Indemnities by the Seller. Without limiting any other rights
which the Company or any Purchase and Sale Indemnified Party may have hereunder
or under applicable law, the Seller hereby agrees to indemnify the Company and
each of its assigns, officers, directors, employees and agents (each of the
foregoing Persons being individually called a "Purchase and Sale Indemnified
Party"), forthwith on demand, from and against any and all claims, damages,
expenses, costs, losses and liabilities (including Attorney Costs) (all of the
foregoing being collectively referred to as "Purchase and Sale Indemnified
Amounts") awarded against or incurred by any of them arising out of or resulting
from this Agreement (whether directly or indirectly), the use of the proceeds
acquired by the Seller hereunder , the ownership of the Receivables and Related
Rights or in respect of any Receivable, Related Security or Contract. Without
limiting or being limited by the foregoing, and subject to the exclusions set
forth below, the Seller shall pay on demand to each Purchase and Sale
Indemnified Party any and all amounts necessary to indemnify such party from and
against any and all Purchase and Sale Indemnified Amounts resulting from any of
the following:
(a) the transfer by the Seller of an interest in any Receivable or
Related Right to any Person other than the Company;
(b) the breach of any representation or warranty made by the Seller
under or in connection with this Agreement or any other Transaction Document, or
any information or report delivered by the Seller pursuant hereto or thereto
which shall have been false or incorrect in any respect when made or deemed
made;
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(c) the failure by the Seller to comply with any applicable law, rule
or regulation with respect to any Receivable or the related Contract, or the
nonconformity of any Receivable or the related Contract with any such applicable
law, rule or regulation;
(d) the failure to vest and maintain vested in the Company an
ownership interest in the Receivables and the Related Rights free and clear of
any Adverse Claim;
(e) the failure of the Seller to file with respect to itself, or any
delay by the Seller in filing, financing statements or other similar instruments
or documents under the UCC of any applicable jurisdiction or other applicable
laws with respect to any Receivables or purported Receivables or any Related
Rights, whether at the time of any purchase or contribution or at any subsequent
time;
(f) any dispute, claim, offset or defense (other than discharge in
bankruptcy) of the Obligor to the payment of any Receivable or purported
Receivable (including, without limitation, a defense based on such Receivable or
the related Contract not being a legal, valid and binding obligation of such
Obligor enforceable against it in accordance with its terms), or any other claim
resulting from the goods or services related to any such Receivable or the
furnishing of or failure to furnish such goods or services;
(g) any product liability claim arising out of or in connection with
goods or services that are the subject of any Receivable;
(h) any litigation, proceeding or investigation against the Seller;
(i) any tax or governmental fee or charge (other than any tax excluded
pursuant to the proviso below), all interest and penalties thereon or with
respect thereto, and all out-of-pocket costs and expenses, including the
reasonable fees and expenses of counsel in defending against the same, which may
arise by reason of the purchase, contribution or ownership of the Receivables or
any Related Right connected with any such Receivables; and
(j) any failure of the Seller to perform its duties or obligations in
accordance with the provisions of this Agreement or any other Transaction
Document;
14
excluding, however, (i) Purchase and Sale Indemnified Amounts to the extent
resulting from gross negligence or willful misconduct on the part of a Purchase
and Sale Indemnified Party, (ii) any indemnification which has the effect of
recourse for non-payment of the Receivables due to credit reasons to any
indemnitor (except as otherwise specifically provided under this Section 8.1)
and (iii) any tax based upon or measured by net income or gross receipts.
ARTICLE IX
MISCELLANEOUS
9.1. Amendments, etc.
(a) The provisions of this Agreement may from time to time be amended,
modified or waived, if such amendment, modification or waiver is in writing and
consented to by the Company, the Servicer, the Agent and the Seller (with
respect to an amendment) or by the Company (with respect to a waiver or consent
by it).
(b) No failure or delay on the part of the Company, the Servicer, the
Seller or any third party beneficiary in exercising any power or right hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power or right preclude any other or further exercise thereof or the
exercise of any other power or right. No notice to or demand on the Company, the
Servicer or the Seller in any case shall entitle it to any notice or demand in
similar or other circumstances. No waiver or approval by the Company or Servicer
under this Agreement shall, except as may otherwise be stated in such waiver or
approval, be applicable to subsequent transactions. No waiver or approval under
this Agreement shall require any similar or dissimilar waiver or approval
thereafter to be granted hereunder.
9.2. Notices, etc. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing (which shall
include facsimile communication) and be sent or delivered to each party hereto
at its address set forth under its name on the signature pages hereof or at such
other address as shall be designated by such party in a written notice to the
other parties hereto. Notices and communications by facsimile shall be effective
when sent (and shall be followed by
15
hard copy sent by first-class mail) and notices and communications sent by other
means shall be effective when received.
9.3. No Waiver; Cumulative Remedies. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
9.4. Binding Effect; Assignability. This Agreement shall be binding
upon and inure to the benefit of the Company and the Seller and their respective
successors and permitted assigns; provided, however, that the Seller may not
assign its rights hereunder or any interest herein or delegate its duties
hereunder without the prior consent of the Company and the Agent. This Agreement
shall create and constitute the continuing obligations of the parties hereto in
accordance with its terms, and shall remain in full force and effect until the
date after the Purchase and Sale Termination Date on which the Seller has
received payment in full for all Receivables and Related Rights purchased
pursuant to Section 1.1 hereof. The rights and remedies with respect to any
breach of any representation and warranty made by the Seller pursuant to
Article V and the indemnification and payment provisions of Article VIII and
Section 9.5 shall be continuing and shall survive any termination of this
Agreement.
9.5. Costs, Expenses and Taxes. In addition to the obligations of the
Seller under Article XIII, the Seller agrees to pay on demand:
(a) all reasonable costs and expenses in connection with the
enforcement of this Agreement and the other Transaction Documents; and
(b) all stamp and other similar taxes and fees payable or determined
to be payable in connection with the execution, delivery, filing and recording
of this Agreement or the other Transaction Documents, and agrees to indemnify
each Purchase and Sale Indemnified Party against any liabilities with respect to
or resulting from any delay in paying or omission to pay such taxes and fees.
9.6. Governing Law and Jurisdiction.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH
PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE
16
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK) EXCEPT TO THE EXTENT THAT THE
VALIDITY OR PERFECTION OF A SECURITY INTEREST OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEW YORK.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF NEW YORK; AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE PARTIES HERETO CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE PARTIES
HERETO IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, THAT IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH OF THE PARTIES HERETO WAIVES
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH SERVICE
MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
9.7. Waiver of Jury Trial. EACH OF THE PARTIES HERETO WAIVES ITS
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN
ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT
CLAIMS, TORT CLAIMS OR OTHERWISE. EACH OF THE PARTIES HERETO AGREES THAT ANY
SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, EACH OF THE PARTIES HERETO FURTHER AGREES THAT
ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION
AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING THAT SEEKS, IN WHOLE OR IN
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY
PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
9.8. Headings. The captions and headings of this Agreement and any
Exhibit, Schedule or Annex hereto are for convenience of reference only and
shall not affect the interpretation hereof or thereof.
9.9. Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so
17
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same Agreement.
9.10. Acknowledgment and Agreement. By execution below, the Seller
expressly acknowledges and agrees that all of the Company's rights, title, and
interests in, to, and under this Agreement shall be assigned by the Company to
the Issuers pursuant to the Receivables Purchase Agreement, and the Seller
consents to such assignment. Each of the parties hereto acknowledges and agrees
that the Agent, the Co-Agent and the Issuers are third party beneficiaries of
the rights of the Company arising hereunder and under the other Transaction
Documents to which the Seller is a party.
9.11. Assignment of Rights under Sale Agreements. The Seller hereby
assigns to the Company all of the Seller's rights, title and interests under the
▇▇▇▇▇▇ ▇▇▇▇▇ Sale Agreement and the Warnaco Sale Agreement, including, without
limitation, the Seller's right to indemnification and payment under Sections
[8.1] and [9.5] of the ▇▇▇▇▇▇ ▇▇▇▇▇ Sale Agreement and Sections 8.1 and 9.5 of
the Warnaco Sale Agreement.
18
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.
▇▇▇▇▇▇▇ STREET, INC., as Seller
and Servicer
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_____________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Assistant Treasurer
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Assistant Treasurer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
WARNACO OPERATIONS CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
_____________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: President
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SCHEDULE I
OFFICE LOCATIONS
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
SCHEDULE II
TRADE NAMES
None.
EXHIBIT A
FORM OF PURCHASE REPORT
EXHIBIT B
FORM OF SUBORDINATED NOTE
EXHIBIT C
REPRESENTATIONS AND WARRANTIES
1. Representations and Warranties of the Seller. The Seller represents and
warrants as follows:
(a) The Seller is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, and is duly qualified to
do business and is in good standing as a foreign corporation in every
jurisdiction where the nature of its business requires it to be so qualified,
except where the failure to be so qualified would not have a Material Adverse
Effect.
(b) The execution, delivery and performance by the Seller of the Agreement
and the other Transaction Documents to which it is a party: (i) are within its
corporate powers; (ii) have been duly authorized by all necessary corporate
action; (iii) do not contravene in any material respect or result in a default
under or conflict with: (A) its charter or by-laws, (B) any law, rule or
regulation applicable to it, (C) any indenture, loan agreement, mortgage, deed
of trust or other agreement or instrument to which it is a party or by which it
is bound, or (D) any law or any order, writ, judgment, award, injunction or
decree binding on or affecting it or any of its property; and (iv) do not result
in or require the creation of any Adverse Claim upon or with respect to any of
its properties. The Agreement and the other Transaction Documents to which it is
a party have been duly executed and delivered by the Seller.
(c) No authorization, approval or other action by, and no notice to or
filing with, any Governmental Authority or other Person is required for the due
execution, delivery and performance by the Seller of the Agreement or any other
Transaction Document to which it is a party, other than the Uniform Commercial
Code filings referred to in Exhibit II to the Receivables Purchase Agreement,
all of which shall have been filed on or before the date of the first purchase
or contribution, as the case may be, hereunder.
(d) Each sale or contribution, as the case may be, of Receivables and
Related Rights made by the Seller pursuant to this Agreement shall constitute a
valid sale or contribution, as the case may be, transfer and assignment thereof
to the Company,
C-1
enforceable against creditors of, and purchasers from, the Seller; and each of
the Agreement and the other Transaction Documents to which the Seller is a party
constitutes its legal, valid and binding obligation of the Seller enforceable
against the Seller in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization or other similar laws
from time to time in effect affecting the enforcement of creditors' rights
generally and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(e) There is no litigation or, to the Seller's knowledge, any proceeding or
investigation pending before any court, regulatory body, arbitrator,
administrative agency, or other tribunal or governmental instrumentality (i)
asserting the invalidity of any Transaction Document, (ii) seeking to prevent
the sale or contribution of Receivables and Related Rights to the Company or the
consummation of any of the other transactions contemplated by any Transaction
Document, or (iii) seeking any determination or ruling that could reasonably be
expected to have a Material Adverse Effect.
(f) No proceeds acquired by the Seller under this Agreement will be used by
the Seller to acquire any equity security of a class that is registered pursuant
to Section 12 of the Securities Exchange Act of 1934.
(g) The Seller is the legal and beneficial owner of each Receivable
(together with the Related Rights) which is to be sold or contributed to the
Company hereunder, free and clear of any Adverse Claim. Whenever the Company
makes a purchase, or accepts a contribution, hereunder, it shall have acquired a
valid and enforceable perfected ownership interest in such Receivable and in the
Related Security, Collections and other proceeds with respect thereto, free and
clear of any Adverse Claim. No effective financing statement or other instrument
similar in effect covering any such Receivable is on file in any recording
office, except those filed in favor of (A) ▇▇▇▇▇▇▇ pursuant to the Warnaco Sale
Agreement and the ▇▇▇▇▇▇ ▇▇▇▇▇ Sale Agreement, (B) the Company pursuant to this
Agreement and (C) the Agent pursuant to the Receivables Purchase Agreement.
(h) Each Purchase Report (if prepared by the Seller or one of its
Affiliates, or to the extent that information contained therein is supplied by
the Seller or an Affiliate), information, exhibit, financial statement,
document, book, record or report furnished or to be furnished at any time by or
on behalf of the Seller to the Agent in connection with the Agreement or any
other Transaction Document to which it is a party is or will be complete and
accurate in all material respects as of its date or as of the date so furnished.
(i) The Seller's principal place of business and chief executive office (as
such terms are used in the UCC) is located at the address set forth under the
Seller's signature hereto, and the office where it keeps its records concerning
the Receivables are located at the address
C-2
specified on Schedule I (or at such other locations, notified to Servicer and
the Agent in accordance with paragraph 1(b) of Exhibit D, where all actions
required by Section 6.3 of this Agreement have been taken and completed.
(j) The Seller is not in violation of any order of any court, arbitrator or
Governmental Authority, the violation of which would have a Material Adverse
Effect on the Seller.
(k) No proceeds acquired by the Seller under this Agreement will be used
for any purpose that violates any applicable law, rule or regulation, including
Regulations T, U or X of the Federal Reserve Board.
(l) Unless otherwise identified to the Company in the related Purchase
Report, each Receivable sold or contributed hereunder is on the date of sale or
contribution an Eligible Receivable.
(m) No transaction contemplated hereby requires compliance with any sales
bulk act or similar law.
(n) The Seller has complied in all material respects with the Credit and
Collection Policy.
(o) The Seller has complied in all material respects with all of the terms,
covenants and agreements contained in the Agreement and the other Transaction
Documents that are applicable to it.
(p) The Seller's complete corporate name is set forth in the preamble to
the Agreement, and it does not use and has not since its incorporation used any
other corporate name, trade name, doing-business name or fictitious name, except
as set forth on Schedule II to the Agreement and except for names first used
after the date of the Agreement and set forth in a notice delivered to the Agent
pursuant to paragraph 1(b) of Exhibit D to the Agreement.
(q) The Seller is not an "investment company," or a company "controlled" by
an "investment company" within the meaning of the Investment Company Act of
1940, as amended. In addition, the Seller is not a "holding company," a
"subsidiary company" of a "holding company" or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company" within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
(r) The Seller has reviewed the areas within its business and operations
which could be adversely affected by, and has developed or is developing a
program to address on a timely basis, the risk that certain computer
applications used by the Seller may be unable to recognize and perform properly
date-sensitive functions involving dates prior to and after December 31,
C-3
1999 (the "Year 2000 Problem"). Based on such review and program, the Year 2000
Problem could not reasonably be expected to have any Material Adverse Effect.
(s) The Seller has filed all material tax returns and reports required by
law to have been filed by it and has paid all taxes and governmental charges
thereby shown to be owing, except any such taxes which are not yet delinquent or
are being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with generally accepted accounting
principles shall have been set aside on its books.
(t) (i) The Seller has not failed to obtain any licenses, permits,
franchises or other governmental authorizations necessary to the ownership of
its properties or to the conduct of its business, which violation or failure to
obtain would be reasonably likely to have a Material Adverse Effect; and
(ii) There are no labor controversies pending against the Seller that
have had (or are reasonably likely to have) a Material Adverse Effect.
(u) The Seller is in compliance, in all material respects, with the
requirements of (i) all applicable laws, rules, regulations, and orders of all
governmental authorities (including, without limitation, Regulation Z, laws,
rules and regulations relating to usury, truth in lending, fair credit billing,
fair credit reporting, equal credit opportunity, fair debt collection practices
and privacy and all other consumer laws applicable to the Receivables and
related Contracts) (excluding with respect to environmental matters which are
covered by clause (ii)), and (ii) to the best of its knowledge, all applicable
environmental laws, rules, regulations and orders of all governmental
authorities.
(v) The Seller is aware that the Investors, the Agent and the Co-Agent are
entering into the Transaction Documents to which they are parties in reliance
upon the Company's identity as a legal entity separate from the Seller and the
Originators.
(w) The purchase price payable by the Company to the Seller hereunder is
intended by the Seller and Company to be consistent with the terms that would be
obtained in an arm's length sale.
(x) On the date hereof, and on the date of each sale of Receivables by the
Seller to the Company (both before and after giving effect to such sale), the
Seller shall be Solvent.
(y) The balance sheets of Warnaco and its consolidated Subsidiaries as at
January 3, 1998, and the related income and retained earnings for the fiscal
year then ended, copies of which have been furnished to the Agent and the
Co-Agent, fairly present the financial condition of Warnaco and its consolidated
Subsidiaries as at such date and the results of the operations of Warnaco and
its Subsidiaries for the period ended on such date, all in accordance with
generally accepted accounting principles consistently applied, and since January
3, 1998 there has been no event or circumstance which has had a Material Adverse
Effect.
C-4
EXHIBIT D
COVENANTS
1. Covenants of the Seller. From the date hereof until the first day following
the Purchase and Sale Termination Date:
(a) Compliance with Laws, Etc. The Seller shall comply in all material
respects with all applicable laws, rules, regulations and orders, and preserve
and maintain its corporate existence, rights, franchises, qualifications and
privileges, except to the extent that the failure so to comply with such laws,
rules and regulations or the failure so to preserve and maintain such rights,
franchises, qualifications and privileges would not have a Material Adverse
Effect.
(b) Offices, Records and Books of Account, Etc. The Seller: (i) shall keep
its principal place of business and chief executive office (as such terms or
similar terms are used in the UCC) and the office where it keeps its records
concerning the Receivables at the address of the Seller set forth under its name
on the signature page to the Agreement or, upon 30 days' prior written notice to
the Company and the Agent, at any other locations in jurisdictions where all
actions reasonably requested by the Company or the Agent to protect and perfect
the interest of the Company in the Receivables and Related Rights have been
taken and completed and (ii) shall provide the Company and the Agent with at
least 30 days' written notice before making any change in the Seller's name or
making any other change in the Seller's identity or corporate structure
(including a Change in Control) that could render any UCC financing statement
filed in connection with this Agreement "seriously misleading" as such term (or
similar term) is used in the UCC; each notice to the Company or the Agent
pursuant to this sentence shall set forth the applicable change and the
effective date thereof. The Seller also will maintain and implement (or cause
the Servicer to maintain and implement) administrative and operating procedures
(including an ability to recreate records evidencing Receivables and related
Contracts in the event of the destruction of the originals thereof), and keep
and maintain (or cause the Servicer to keep and maintain) all documents, books,
records, computer tapes and disks and other information reasonably necessary or
advisable for the collection
D-1
of all Receivables (including records adequate to permit, as and when necessary,
the daily identification of each Receivable and all Collections of and
adjustments to each existing Receivable).
(c) Performance and Compliance with Credit and Collection Policy. The
Seller shall fully comply in all material respects with the Credit and
Collection Policy.
(d) Sales, Liens, Etc. The Seller shall not sell, assign (by operation of
law or otherwise) or otherwise dispose of, or create or suffer to exist any
Adverse Claim upon or with respect to, any or all of its right, title or
interest in, to or under any Receivable, Related Rights or Collections, or upon
or with respect to any account to which any Collections of any Receivables are
sent), or assign any right to receive income in respect of any items
contemplated by this paragraph; it being understood that the Servicer may sell a
Defaulted Receivable if the Servicer believes in good faith that such sale will
maximize the amount to be received by the Company with respect to such
Receivable.
(e) Change in Credit and Collection Policy. The Seller shall not make any
material change in the character of its business or the Credit and Collection
Policy that would materially adversely affect the collectibility of the
Receivables or the enforceability of any related Contract or the ability of the
Seller to perform its obligations under the Agreement.
(f) Audits. (i) The Seller shall from time to time during regular business
hours as reasonably requested in advance (unless a Purchase and Sale Termination
Event exists) by the Company, the Agent or the Co-Agent, permit the Company, the
Agent or the Co-Agent, or their agents or representatives: (A) to examine and
make copies of and abstracts from all books, records and documents (including
computer tapes and disks) in the possession or under the control of the Seller
relating to Receivables and the Related Security, including the related
Contracts, and (B) to visit the offices and properties of the Seller for the
purpose of examining such materials described in clause (i)(A) above, and to
discuss matters relating to Receivables and the Related Security or the Seller's
performance under the Transaction Documents with any of the officers, employees,
agents or contractors of the Seller, having knowledge of such matters; and (ii)
without limiting the provisions of
D-2
clause (i) next above, from time to time during regular business hours, upon
five Business Days prior written notice from the Company, the Agent or the
Co-Agent, permit certified public accountants or other auditors acceptable to
the Company, the Agent or the Co-Agent to conduct a review of the Seller's books
and records, at the Seller's expense, with respect to the Receivables.
(g) Change in Payment Instructions to Obligors. The Seller shall not, and
shall not permit the Servicer or any Originator to make any change in its
instructions to Obligors regarding payments to be made to the Seller, such
Originator, the Servicer or the Collection Account (or related post office box),
unless the Agent shall have consented thereto in writing (which consent shall
not be unreasonably withheld).
(h) Deposits to Collection Account. The Seller shall (or shall cause the
Servicer to): (i) instruct all Obligors to make payments of all Receivables to
the Collection Account or to post office boxes to which only the Collection
Account Bank has access (and shall instruct the Collection Account Bank to cause
all items and amounts relating to such Receivables received in such post office
boxes to be removed and deposited into the Collection Account on a daily basis),
and (ii) deposit, or cause to be deposited, any Collections received by it, the
Servicer or any Originator into the Collection Account not later than two
Business Days after receipt thereof. The Collection Account shall at all times
be subject to the Collection Account Agreement. The Seller will not (and will
not permit the Servicer to) deposit or otherwise credit, or cause or permit to
be so deposited or credited, to the Collection Account cash or cash proceeds
other than Collections.
(i) Reporting Requirements. The Seller shall provide to the Agent the
following:
(i) As soon as available and in any event within 45 days after the end
of each of the first three quarters of each fiscal year of the Seller, (a)
a copy of the unaudited balance sheet of the Seller, as at the end of such
quarter, together with unaudited statements of earnings and stockholders'
equity for such quarter and the portion of the fiscal year through such
quarter, prepared in accordance with GAAP and certified by the chief
financial officer, treasurer or chief accounting officer of the
D-3
Seller, and (b) a letter from the chief financial officer, treasurer or
chief accounting officer of the Seller, certifying to the best knowledge of
such officer, that neither a Purchase and Sale Termination Event nor an
Unmatured Purchase and Sale Termination Event has occurred and is
continuing;
(ii) As soon as available and in any event within 90 days after the
end of each fiscal year of the Seller, (a) a copy of the unaudited balance
sheet of the Seller, as at the end of such fiscal year, together with the
related statements of earnings and stockholders' equity for such fiscal
year, prepared in accordance with GAAP applied consistently throughout the
periods reflected therein, and (b) a letter from the chief financial
officer, treasurer or chief accounting officer of the Seller, certifying to
the best knowledge of such officer, that neither a Purchase and Sale
Termination Event nor an Unmatured Purchase and Sale Termination Event has
occurred and is continuing, in each case as at the end of each such fiscal
year and the date of delivery of such letter;
(iii) promptly after the filing or receiving thereof, copies of all
reports and notices that the Seller or any Affiliate files under ERISA with
the Internal Revenue Service, the Pension Benefit Guaranty Corporation or
the U.S. Department of Labor or that the Seller or any Affiliate receives
from any of the foregoing or from any multi employer plan (within the
meaning of Section 4001(a)(3) of ERISA) to which the Seller or any of its
Affiliates is or was, within the preceding five years, a contributing
employer, in each case in respect of the assessment of withdrawal liability
or an event or condition that could, in the aggregate, result in the
imposition of liability on the Seller and/or any such Affiliate;
(iv) promptly after the Seller obtains knowledge thereof, notice of
any: (A) material litigation, investigation or proceeding that may exist at
any time between the Seller and any Person or (B) material litigation or
proceeding relating to any Transaction Document;
(v) promptly after the occurrence thereof, notice of a change in the
business, operations, property or financial or other condition of the
Seller, the Servicer or any Originator which would have a Material Adverse
Effect; and
(vi) such other information respecting the Receivables or the
condition or operations, financial or otherwise, of
D-4
the Seller or any of its Affiliates as the Company, Agent or the Co-Agent
may from time to time reasonably request upon reasonable notice.
(j) Certain Agreements. Without the prior written consent of the Agent and
the Co-Agent, the Seller will not (and will not permit any Originator to) amend,
modify, waive, revoke or terminate any Transaction Document to which it is a
party.
(k) Extension or Amendment of Receivables. Except as provided in Section
4.2(a) of the Receivables Purchase Agreement and the Credit and Collection
Policy, the Seller shall not extend the maturity or adjust the Outstanding
Balance or otherwise modify the terms of any Receivable, or amend, modify or
waive any term or condition of any related Contract.
(l) Receivables Not to be Evidenced by Promissory Notes or Chattel Paper.
The Seller shall not take any action to cause or permit any Receivable purchased
by it to become evidenced by any "instrument" or "chattel paper" (as defined in
the applicable UCC) unless such "instrument" or "chattel paper" shall be
delivered to the Company (which in turn shall deliver the same to the Agent on
behalf of the Issuers.
(m) Mergers, Acquisitions, Sales, etc. The Seller shall not merge or
consolidate with another Person (except pursuant to a merger or consolidation
involving the Seller where the Seller is the surviving corporation), or convey,
transfer, lease or otherwise dispose of (whether in one or in a series of
transactions), all or substantially all of its assets (whether now owned or
hereafter acquired), other than pursuant to this Agreement).
(n) Accounting for Purchases. The Seller shall not account for or treat
(whether in financial statements or otherwise) the transactions contemplated
hereby in any manner other than as sales or contributions of the Receivables and
Related Rights by the Seller to the Company.
(o) Transaction Documents. The Seller shall not enter into, execute,
deliver or otherwise become bound by any agreement, instrument, document or
other arrangement that restricts the right of the Seller to amend, supplement,
amend and restate or otherwise modify, or to extend or renew, or to waive any
right under, this Agreement or any other Transaction Documents.
(p) Separate Existence. From and after the date hereof, the Seller shall
take all steps specifically required by the Agreement or reasonably required by
the Agent to continue the Company's identity as a separate legal entity and to
make it apparent to third Persons that the Company is an entity with assets and
liabilities distinct from those of the Seller and the Originators and any other
Person, and is not a division of the Seller, its Affiliates or any
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other Person. Without limiting the generality of the foregoing and in addition
to and consistent with the other covenants set forth herein, the Seller shall
take such actions as shall be required in order that:
(i) the Company's operating expenses (other than certain organization
expenses and expenses incurred in connection with the preparation,
negotiation and delivery of the Transaction Documents) will not be paid by
the Seller or its Affiliates;
(ii) the Company's books and records will be maintained separately
from those of the Seller and its Affiliates;
(iii) all financial statements of the Seller and its Affiliates that
are consolidated to include the Company will contain detailed notes clearly
stating that (A) all of the Company's assets are owned by the Company, and
(B) the Company is a separate entity with creditors who have received
interests in the Company's assets;
(iv) each of the Seller and its Affiliates will strictly observe
corporate formalities in its dealing with the Company;
(v) except as otherwise provided in the Receivables Purchase Agreement
in connection with the servicing of Receivables, the Seller shall not
commingle its funds with any funds of the Company;
(vi) each of the Seller and its Affiliates will maintain arm's length
relationships with the Company, and each of the Seller and its Affiliates
will be compensated at market rates for any services it renders or
otherwise furnishes to the Company; and
(vii) the Seller will not be, and will not hold itself out to be,
responsible for the debts of the Company or the decisions or actions in
respect of the daily business and affairs of the Company.
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