Exhibit 10(c)
U.S. $ 150,000,000
RECEIVABLES PURCHASE AGREEMENT
Dated as of November 15, 1994
Among
INTERCO RECEIVABLES CORP.
as the Seller
and
ATLANTIC ASSET SECURITIZATION CORP.
as an Investor
and
CREDIT LYONNAIS NEW YORK BRANCH
as the Agent
TABLE OF CONTENTS
Section Page
PRELIMINARY STATEMENTS . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 1.01. Purchase Facility . . . . . . . . . . . . 1
SECTION 1.02. Making Purchases . . . . . . . . . . . . 2
SECTION 1.03. Receivable Interest Computation. . . . . 3
SECTION 1.04. Settlement Procedures . . . . . . . . . . 3
SECTION 1.05. Fees . . . . . . . . . . . . . . . . . . 6
SECTION 1.06. Payments and Computations, Etc. . . . . . 6
SECTION 1.07. Dividing or Combining Receivable
Interests. . . . . . . . . . . . . . . . . . . . . 6
SECTION 1.08. Increased Costs. . . . . . . . . . . . . 7
SECTION 1.09. Security Interest . . . . . . . . . . . . 8
ARTICLE II
REPRESENTATIONS AND WARRANTIES; COVENANTS;
EVENTS OF TERMINATION
SECTION 2.01. Representations and Warranties;
Covenants. . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.02. Events of Termination . . . . . . . . . . 9
ARTICLE III
INDEMNIFICATION
SECTION 3.01. Indemnities by the Seller. . . . . . . . 10
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Amendments, Etc. . . . . . . . . . . . . 12
SECTION 4.02. Notices, Etc . . . . . . . . . . . . . . 13
SECTION 4.03. Assignability . . . . . . . . . . . . . . 13
i
SECTION 4.04. Costs, Expenses and Taxes. . . . . . . . 14
SECTION 4.05. CL-NY and Affiliates. . . . . . . . . . . 16
SECTION 4.06. No Proceedings. . . . . . . . . . . . . . 16
SECTION 4.07. Confidentiality. . . . . . . . . . . . . 16
SECTION 4.08. Integration . . . . . . . . . . . . . . . 16
SECTION 4.09. Construction of the Agreement . . . . . . 17
SECTION 4.10. Right of Set-Off . . . . . . . . . . . . 17
SECTION 4.11. GOVERNING LAW. . . . . . . . . . . . . . 17
SECTION 4.12. No Recourse . . . . . . . . . . . . . . . 17
SECTION 4.13. Execution in Counterparts . . . . . . . . 18
SECTION 4.14. Survival of Termination . . . . . . . . . 18
ii
EXHIBITS
Exhibit I Definitions
Exhibit II Conditions of Purchases
Exhibit III Representations and Warranties
Exhibit IV Covenants
Exhibit V Events of Termination
ANNEXES
Annex A Form of Seller Report
Annex B Form of Lock-Box Agreement
Annex C Form of Opinion of Counsel to Seller and the
Originators
Annex D Form of Certificate of Assignment
SCHEDULES
Schedule I Lock Box Banks
Schedule II Credit and Collection Policy
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RECEIVABLES PURCHASE AGREEMENT
Dated as of November 15, 1994
INTERCO RECEIVABLES CORP., a Delaware corporation (the
"Seller"), ATLANTIC ASSET SECURITIZATION CORP., a Delaware
corporation (the "Issuer"), and CREDIT LYONNAIS NEW YORK BRANCH,
a branch of Credit Lyonnais, a French banking corporation, duly
licensed under the laws of the State of New York ("CL-NY"), as
agent (the "Agent") for the Investors (as defined in Exhibit I
hereto), agree as follows:
PRELIMINARY STATEMENTS. Certain terms that are
capitalized and used throughout this Agreement are defined in
Exhibit I to this Agreement. References in the Exhibits to "the
Agreement" refer to this Agreement, as amended, modified or
supplemented from time to time.
The Seller has acquired Receivables from the
Originators pursuant to the Originator Purchase Agreement, either
by purchase or by contribution to the capital of the Seller, as
determined from time to time by the Seller and each Originator.
The Seller is prepared to sell undivided fractional ownership
interests (referred to herein as "Receivable Interests") in the
Receivables. The Issuer is prepared to purchase such Receivable
Interests on the terms set forth herein. Accordingly, the
parties agree as follows:
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 1.01. Purchase Facility. (a) On the terms
and conditions hereinafter set forth, the Issuer may, in its sole
discretion, purchase Receivable Interests from the Seller from
time to time during the period from the date hereof to the
Facility Termination Date. Under no circumstances shall the
Issuer make any such purchase if after giving effect to such
purchase the aggregate outstanding Invested Amount of Receivable
Interests, together with the aggregate outstanding "Invested
Amount" of "Receivable Interests" under the Alternate Receivables
Purchase Agreement, would exceed the Purchase Limit.
Notwithstanding anything to the contrary contained herein, the
Issuer is not obligated to purchase Receivable Interests from the
Seller.
(b) The Seller may, upon at least 30 days' notice to
the Agent, terminate this purchase facility in whole or, from
time to time, reduce in part the unused portion of the Purchase
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Limit; provided that each partial reduction shall be in the
amount of at least $5,000,000 or an integral multiple thereof.
(c) Until the Agent gives the Seller the notice
provided in Section 2(b)(iv) of Exhibit II to this Agreement, the
Agent, on behalf of the Investors which own Receivable Interests,
shall have the proceeds of Collections attributable to such
Receivable Interests automatically reinvested pursuant to Section
1.04(b)(ii) in additional undivided percentage interests in the
Pool Receivables by making an appropriate readjustment of such
Receivable Interest.
SECTION 1.02. Making Purchases. (a) Each purchase of
a Receivable Interest shall be made (x) in the case of a purchase
of $20,000,000 or less, on at least one Business Day's notice
from the Seller to the Agent, and (y) in the case of a purchase
in excess of $20,000,000, on at least three Business Days' notice
from the Seller to the Agent; provided, however, that no such
notice shall be applicable to reinvestments pursuant to Section
1.04. Each such notice of a purchase shall specify (i) the
amount requested to be paid to the Seller (such amount, which
shall not be less than $1,000,000, being referred to herein as
the initial "Invested Amount" of each Receivable Interest then
being purchased) and (ii) the date of such purchase (which shall
be a Business Day). The Agent shall promptly thereafter notify
the Seller whether the Issuer has determined to make a purchase
and, if so, whether all of the terms specified by the Seller are
acceptable to the Issuer.
(b) Prior to 2:00 P.M., New York City time, on the
date of each such purchase of a Receivable Interest, the Issuer
shall, upon satisfaction of the applicable conditions set forth
in Exhibit II hereto, make available to the Seller in same day
funds, at Account No. 00-196-146 at Bankers Trust Company, ABA
No. 021-001-033, or at such other account in the United States as
the Seller may specify to the Agent in writing, an amount equal
to the initial Invested Amount of such Receivable Interest.
(c) Effective on the date of each purchase pursuant to
this Section 1.02 and each reinvestment pursuant to Section 1.04,
the Seller hereby sells and assigns to the Agent, for the benefit
of the Investors, an undivided percentage ownership interest, to
the extent of the Receivable Interest then being purchased, in
each Pool Receivable then existing and in the Related Security
and Collections with respect thereto.
SECTION 1.03. Receivable Interest Computation. Each
Receivable Interest shall be initially computed on its date of
purchase. Thereafter until the Termination Date for such
Receivable Interest, such Receivable Interest shall be auto-
matically recomputed (or deemed to be recomputed) on each day
other than a Liquidation Day. Any Receivable Interest, as com-
puted (or deemed recomputed) as of the day immediately preceding
the Termination Date for such Receivable Interest, shall there-
after remain constant. Such Receivable Interest shall become
zero when the Invested Amount thereof and Yield thereon shall
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have been paid in full, all other amounts owed by the Seller
hereunder to the Investors or the Agent are paid in full and the
Servicer shall have received the accrued Servicer Fee thereon.
SECTION 1.04. Settlement Procedures. (a) Collection
of the Pool Receivables shall be administered by a Servicer, in
accordance with the terms of this Agreement and the Servicer
Agreement. The Seller shall provide to the Servicer (if other
than the Seller) on a timely basis all information needed for
such administration, including notice of the occurrence of any
Liquidation Day and current computations of each Receivable
Interest.
(b) Subject to the provisions of paragraph (l) of
Exhibit IV, the Servicer shall, on each day on which Collections
of Pool Receivables are received by it with respect to any
Receivable Interest:
(i) set aside and hold in trust for the Investors
(but the Servicer shall not be required to segregate
into a separate account, unless the Agent shall so
specifically request), out of the percentage of such
Collections represented by such Receivable Interest, an
amount equal to the Yield and Servicer Fee accrued
through such day for such Receivable Interest and not
previously set aside;
(ii) if such day is not a Liquidation Day,
reinvest with the Seller, on behalf of the Investors,
the remainder of such percentage of Collections, to the
extent representing a return of Invested Amount, by
recomputation of such Receivable Interest pursuant to
Section 1.03;
(iii) if such day is a Liquidation Day, set
aside and hold in trust for the Investors (but the
Servicer shall not be required to segregate into a
separate account, unless the Agent shall so
specifically request) the entire remainder of such per-
centage of Collections; provided that if amounts are
set aside and held in trust on any Liquidation Day, and
thereafter during such Settlement Period the conditions
set forth in Paragraph 2 of Exhibit II are satisfied or
are waived by the Agent, such previously set aside
amounts shall, to the extent representing a return of
Invested Amount, be reinvested in accordance with the
preceding paragraph (ii) on the day of such subsequent
satisfaction or waiver of conditions; and
(iv) during such times as amounts are required
to be reinvested in accordance with the foregoing
paragraph (ii) or the proviso to paragraph (iii),
release to the Seller for its own account any
Collections in excess of such amounts and the amounts
that are required to be set aside pursuant to
paragraph (i) above.
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(c) The Servicer shall deposit into the Agent's
Account, on the last day of each Settlement Period for a
Receivable Interest, Collections held for the Investors that
relate to such Receivable Interest pursuant to Section 1.04(b).
(d) Upon receipt of funds deposited into the Agent's
Account, the Agent shall distribute them as follows:
(i) if such distribution occurs on a day that is
not a Liquidation Day, first to the Investors in
payment in full of all accrued Yield and then to the
Servicer in payment in full of all accrued Servicer
Fee.
(ii) if such distribution occurs on a
Liquidation Day, first to the Investors in payment in
full of all accrued Yield, second to the Investors in
reduction to zero of all Invested Amount, third to the
Investors or the Agent in payment of any other amounts
owed by the Seller hereunder, and fourth to the
Servicer in payment in full of all accrued Servicer
Fee.
After the Invested Amount and Yield and Servicer Fee
with respect to a Receivable Interest, and any other amounts
payable by the Seller to the Investors or the Agent hereunder,
have been paid in full, all additional Collections with respect
to such Receivable Interest shall be paid to the Seller for its
own account.
(e) For the purposes of this Section 1.04:
(i) if on any day the Outstanding Balance of any
Pool Receivable is reduced or adjusted as a result of
any defective, rejected, returned, repossessed or
foreclosed merchandise or services or any cash
discount, credit memo, rebate, cooperative advertising,
chargeback or other adjustment made by the Seller or
the relevant Originator, or any setoff or dispute
between the Seller and an Obligor due to a claim
arising out of the same or any other transaction, the
Seller shall be deemed to have received on such day a
Collection of such Pool Receivable in the amount of
such reduction or adjustment;
(ii) if on any day (x) any of the
representations or warranties in paragraph (h) of
Exhibit III is no longer true with respect to any Pool
Receivable, or (y) the Seller or the Agent determines
that any Pool Receivable which purports to be part of
the Net Receivables Pool Balance was a Defaulted
Receivable on the date of the initial creation of an
undivided ownership interest therein under this
Agreement, the Seller shall be deemed to have received
on such day a Collection of such Pool Receivable in
full equal to the Outstanding Balance thereof;
vii
(iii) except as provided in paragraph (i) or
(ii) of this Section 1.04(e), or as otherwise required
by applicable law or the relevant Contract, all Collec-
tions received from an Obligor of any Receivables shall
be applied to the Receivables of such Obligor in the
order of the age of such Receivables, starting with the
oldest such Receivable, unless such Obligor designates
its payment for application to specific Receivables;
and
(iv) if and to the extent the Agent or the
Investors shall be required for any reason to pay over
to an Obligor any amount received on its behalf
hereunder, such amount shall be deemed not to have been
so received but rather to have been retained by the
Seller and, accordingly, the Agent or the Investors, as
the case may be, shall have a claim against the Seller
for such amount, payable when and to the extent that
any distribution from or on behalf of such Obligor is
made in respect thereof.
SECTION 1.05. Fees. The Seller shall pay to the Agent
certain fees in the amounts and on the dates set forth in a
separate fee agreement of even date between the Seller and the
Agent, as amended or restated from time to time (the "Fee
Agreement").
SECTION 1.06. Payments and Computations, Etc.
(a) All amounts to be paid or deposited by the Seller or the
Servicer hereunder or under the Servicer Agreement shall be paid
or deposited no later than 11:00 A.M. (New York City time) on the
day when due in same day funds in United States dollars to the
Agent's Account.
(b) The Seller shall, to the extent permitted by law,
pay interest on any amount not paid or deposited by the Seller
(whether as Servicer or otherwise) when due hereunder, at an
interest rate per annum equal to 1.50% per annum above the CP
Rate, payable on demand.
(c) All computations of interest under subsection (b)
above and all computations of Yield, fees, and other amounts
hereunder shall be made on the basis of a year of 360 days for
the actual number of days elapsed. Whenever any payment or
deposit to be made hereunder shall be due on a day other than a
Business Day, such payment or deposit shall be made on the next
succeeding Business Day and such extension of time shall be
included in the computation of such payment or deposit.
SECTION 1.07. Dividing or Combining Receivable
Interests. The Agent, on notice to the Seller on or prior to the
last day of any Fixed Period, may either (i) divide any
Receivable Interest into two or more Receivable Interests having
aggregate Invested Amount equal to the Invested Amount of such
divided Receivable Interest, or (ii) combine any two or more
Receivable Interests originating on such last day or having Fixed
viii
Periods ending on such last day into a single Receivable Interest
having Invested Amount equal to the aggregate of the Invested
Amount of such Receivable Interests.
SECTION 1.08. Increased Costs. (a) If the Agent, an
Investor, any entity which enters into a commitment to purchase
Receivable Interests or interests therein, any entity which
enters into a commitment to lend against Receivable Interests or
interests therein, or any entity which provides credit
enhancement (each an "Affected Person"), or any of their
respective Affiliates, determines that compliance with any law or
regulation or any guideline or request from any central bank or
other governmental authority (whether or not having the force of
law) affects or would affect the amount of capital required or
expected to be maintained by such Affected Person or its
Affiliate and such Affected Person or its Affiliate determines
that the amount of such capital is increased by or based upon the
existence of any commitment to make purchases of or to lend
against or otherwise to maintain the investment in Pool
Receivables or interests therein related to this Agreement or to
the funding thereof or any related liquidity facility or credit
enhancement facility (or any participation therein) and other
commitments of the same type, then, upon demand by such Affected
Person (with a copy to the Agent), the Seller shall immediately
pay to the Agent, for the account of such Affected Person (as a
third-party beneficiary), from time to time as specified by such
Affected Person, additional amounts sufficient to compensate such
Affected Person or its Affiliate in the light of such
circumstances, to the extent that such Affected Person or its
Affiliate reasonably determines such increase in capital to be
allocable to the existence of any of such commitments. A
certificate as to such amounts submitted to the Seller and the
Agent by such Affected Person shall be conclusive and binding for
all purposes, absent manifest error.
(b) Subject to Section 4.04(f), if the
introduction of or any change in or in the interpretation of any
law, regulation or applicable accounting principle by any court
or government authority charged with the interpretation or
administration of any United States federal or state law or
foreign law applicable to an Affected Person or by any fiscal,
monetary or other authority having jurisdiction over such
Affected Person shall (i) subject any Affected Person to any
charge or withholding on or with respect to this Agreement or an
Affected Person's obligations with respect to Receivable
Interests, or change the basis of taxation of payments to any
Affected Person or any amounts payable under this Agreement
(except for changes in the rate of tax on the overall net income
of an Affected Person) or (ii) impose any other condition the
result of which is to (x) increase the cost to an Affected Person
of agreeing to purchase or purchasing or to lend against or to
maintain the ownership of Receivable Interests or (y) reduce the
amount of any sum received or receivable by an Affected Person
under this Agreement, then, upon demand by such Affected Person
(with a copy to the Agent), the Seller shall pay to the Agent for
the account of such Affected Person (as a third-party
ix
beneficiary), on each Settlement Date following such demand,
additional amounts sufficient to compensate such Affected Person
for such increased costs or reduction of amounts received, as the
case may be. A certificate as to such amounts submitted to the
Seller and the Agent by such Affected Person shall be conclusive
and binding for all purposes, absent manifest error. Such
Affected Person shall use reasonable efforts consistent with its
internal policy and legal and regulatory restrictions (including,
without limitation, by changing the office from which it agrees
to purchase, purchases or maintains its investment in Receivable
Interests to another office of such Affected Person regularly
available for such purpose) to mitigate the amounts payable
pursuant to this Section 1.08(b); provided, however, that nothing
in this sentence shall obligate such Affected Person to bear any
out-of-pocket expense for which it is not reimbursed by the
Seller.
(c) If any Affected Person makes a demand for
additional amounts pursuant to Section 1.08(a) or (b), then the
Seller may, within 30 calendar days after receipt of such demand,
by notice to such Affected Person (with a copy to the Agent)
designate another Eligible Assignee to purchase and assume the
relevant Investor's rights and obligations hereunder and the
Agent shall use its best efforts to replace such Investor and any
Person providing liquidity or credit enhancement for such
Investor with such designated Eligible Assignee under this
Agreement and any liquidity or credit enhancement agreement
relating to this Agreement and under the Alternate Receivables
Purchase Agreement pursuant to documentation reasonably
satisfactory to such Investor and the Agent. Any such Eligible
Assignee designated by the Seller shall be subject to the
approval of the Agent, which approval shall not be unreasonably
withheld provided that all of the short-term public senior debt
securities of such Eligible Assignee are rated at least A-1 by
Standard & Poor's Corporation and at least P-1 by Moody's
Investors Service, Inc.
SECTION 1.09. Security Interest. As collateral
security for the performance by the Seller of all the terms,
covenants and agreements on the part of the Seller (whether as
Seller or otherwise) to be performed under this Agreement or any
document delivered in connection with this Agreement in
accordance with the terms thereof, including the punctual payment
when due of all obligations of the Seller hereunder or
thereunder, whether for indemnification payments, fees, expenses
or otherwise, the Seller hereby assigns to the Agent for its
benefit and the ratable benefit of the Investors, effective on
the Initial Purchase Date, and hereby grants to the Agent for its
benefit and the ratable benefit of the Investors, a security
interest in, all of the Seller's right, title and interest in and
to (a) the Originator Purchase Agreement and the Interco
Agreement, including, without limitation, (i) all rights of the
Seller to receive moneys due or to become due under or pursuant
to the Originator Purchase Agreement or the Interco Agreement,
(ii) all security interests and property subject thereto from
time to time purporting to secure payment of monies due or to
x
become due under or pursuant to the Originator Purchase
Agreement, (iii) all rights of the Seller to receive proceeds of
any insurance, indemnity, warranty or guaranty with respect to
the Originator Purchase Agreement or the Interco Agreement,
(iv) claims of the Seller for damages arising out of or for
breach of or default under the Originator Purchase Agreement or
the Interco Agreement and (v) the right of the Seller to compel
performance and otherwise exercise all remedies thereunder, (b)
all of the Receivables, the Related Security with respect thereto
and the Collections, and (c) to the extent not included in the
foregoing, all proceeds of any and all of the foregoing
(excluding any proceeds representing the purchase price paid by
the Seller to any Originator for the purchase or contribution of
any of the foregoing).
ARTICLE II
REPRESENTATIONS AND WARRANTIES; COVENANTS;
EVENTS OF TERMINATION
SECTION 2.01. Representations and Warranties;
Covenants. The Seller hereby makes, as of the Initial Purchase
Date, the representations and warranties set forth in Exhibit III
hereto, and hereby agrees, commencing on the Initial Purchase
Date, to perform and observe the covenants set forth in Exhibit
IV hereto.
SECTION 2.02. Events of Termination. If any of the
Events of Termination set forth in Exhibit V hereto shall occur
and be continuing, the Agent may, by notice to the Seller, take
either or both of the following actions: (x) declare the
Facility Termination Date to have occurred (in which case the
Facility Termination Date shall be deemed to have occurred), and
(y) without limiting any right under the Servicer Agreement to
replace the Servicer, designate another Person to succeed the
Originators as the Servicer; provided that, automatically upon
the occurrence of any event described in paragraph (g) of Exhibit
V, the Facility Termination Date shall occur. Upon any such
declaration or designation or upon any such automatic
termination, the Investors and the Agent shall have, in addition
to the rights and remedies which they may have under this
Agreement, all other rights and remedies provided after default
under the UCC and under other applicable law, which rights and
remedies shall be cumulative.
ARTICLE III
INDEMNIFICATION
SECTION 3.01. Indemnities by the Seller. Without
limiting any other rights that the Agent or the Investors or any
of their respective Affiliates or agents (each, an "Indemnified
Party") may have hereunder or under applicable law, the Seller
hereby agrees to indemnify each Indemnified Party from and
against any and all claims, losses and liabilities (including
xi
reasonable attorneys' fees) (all of the foregoing being
collectively referred to as "Indemnified Amounts") arising out of
or resulting from this Agreement or the use of proceeds of
purchases or reinvestments or the ownership of Receivable
Interests or in respect of any Receivable or any Contract,
excluding, however, (a) Indemnified Amounts to the extent
resulting from gross negligence or willful misconduct on the part
of such Indemnified Party, (b) recourse (except as otherwise
specifically provided in this Agreement) for uncollectible
Receivables or (c) any income taxes or franchise taxes imposed on
such Indemnified Party (other than as provided in Section 1.08(b)
hereof) by (i) the jurisdiction under the laws of which such
Indemnified Party is organized (or any political subdivision
thereof), any jurisdiction in which an office of such Indemnified
Party funding or maintaining the ownership of Receivable
Interests is located (or any political subdivision thereof), or
(iii) any jurisdiction in which such Indemnified Party is already
subject to tax, and arising out of or as a result of this
Agreement or the ownership of Receivable Interests or in respect
of any Receivable or any Contract. Without limiting or being
limited by the foregoing, the Seller shall pay on demand to each
Indemnified Party any and all amounts necessary to indemnify such
Indemnified Party from and against any and all Indemnified
Amounts relating to or resulting from any of the following:
(i) the creation of an undivided percentage
ownership interest in any Receivable which purports to
be part of the Net Receivables Pool Balance but which
is not at the date of the creation of such interest an
Eligible Receivable or which thereafter ceases to be an
Eligible Receivable;
(ii) reliance on any representation or warranty
or statement made or deemed made by the Seller (or any
of its officers) under or in connection with this
Agreement which shall have been incorrect in any
material respect when made;
(iii) the failure by the Seller or any
Originator to comply with any applicable law, rule or
regulation with respect to any Pool Receivable or the
related Contract; or the failure of any Pool Receivable
or the related Contract to conform to any such
applicable law, rule or regulation;
(iv) the failure to vest in the Investors a
perfected undivided percentage ownership interest, to
the extent of each Receivable Interest, in the
Receivables in, or purporting to be in, the Receivables
Pool and the Related Security and Collections in
respect thereof, free and clear of any Adverse Claim;
(v) the failure to have filed, or any delay in
filing, financing statements or other similar instru-
ments or documents under the UCC of any applicable
jurisdiction or other applicable laws with respect to
xii
any Receivables in, or purporting to be in, the
Receivables Pool and the Related Security and Collec-
tions in respect thereof, whether at the time of any
purchase or reinvestment or at any subsequent time;
(vi) any dispute, claim, offset or defense
(other than discharge in bankruptcy of the Obligor) of
the Obligor to the payment of any Receivable in, or
purporting to be in, the Receivables Pool (including,
without limitation, a defense based on such Receivable
or the related Contract not being a legal, valid and
binding obligation of such Obligor enforceable against
it in accordance with its terms), or any other claim
resulting from the sale of the merchandise or services
related to such Receivable or the furnishing or failure
to furnish such merchandise or services or relating to
collection activities with respect to such Receivable
(if such collection activities were performed by the
Seller or any of its Affiliates acting as Servicer);
(vii) any failure of the Seller to perform its
duties or obligations in accordance with the provisions
hereof or to perform its duties or obligations under
the Contracts, or any failure of the Servicer (if the
Seller or an Affiliate of the Seller) to perform its
duties or obligations in accordance with the provisions
of the Servicer Agreement;
(viii) any products liability or other claim
arising out of or in connection with merchandise,
insurance or services which are the subject of any
Contract;
(ix) the commingling of Collections of Pool
Receivables at any time with other funds;
(x) any investigation, litigation or proceeding
related to this Agreement or the use of proceeds of
purchases or reinvestments or the ownership of
Receivable Interests or in respect of any Receivable,
Related Security or Contract, excluding, however, any
investigation, litigation or proceeding brought by any
taxing authority with respect to income taxes or
franchise taxes of the type described in clause (c) of
the first sentence of Section 3.01; or
(xi) any claim brought by any Person other than
an Indemnified Party arising from any activity by the
Seller or any Affiliate of the Seller in servicing,
administering or collecting any Receivable.
xiii
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Amendments, Etc. No amendment or waiver
of any provision of this Agreement or consent to any departure by
the Seller therefrom shall be effective unless in a writing
signed by the Agent, as agent for the Investors, and, in the case
of any amendment, also signed by the Seller, and then such
amendment, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
Notwithstanding the foregoing, no amendment or waiver of any
provision of this Agreement or consent to any departure by the
Seller therefrom shall be effective unless a written statement is
obtained from each of the Relevant Rating Agencies that the
rating of the Issuer's commercial paper notes will not be
downgraded or withdrawn solely as a result of such amendment,
waiver or consent. No failure on the part of the Investors or
the Agent 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.
SECTION 4.02. Notices, Etc. All notices and other
communications hereunder shall, unless otherwise stated herein,
be in writing (which shall include facsimile communication) and
faxed 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 hard copy sent by regular mail), and notices and
communications sent by other means shall be effective when
received.
SECTION 4.03. Assignability. (a) Each Investor may
assign to any Eligible Assignee all or a portion of its rights
and obligations under this Agreement (including any Receivable
Interests or interests therein owned by it); provided, however,
that no such assignment shall be made to an Eligible Assignee if,
immediately after giving effect thereto, the Seller would be
required to pay any additional amounts under Section 1.08(a),
1.08(b) or 4.04(d) that would not otherwise be payable in the
absence of such assignment.
(b) This Agreement and the rights and obligations of
the Agent herein shall be assignable by the Agent and its
successors and assigns.
(c) The Seller may not assign its rights or
obligations hereunder or any interest herein without the prior
written consent of the Agent. Notwithstanding the foregoing, no
assignment by the Seller of its rights or obligations hereunder
shall be effective unless a written statement is obtained from
each of the Relevant Rating Agencies that the rating of the
xiv
Issuer's commercial paper notes will not be downgraded or
withdrawn solely as a result of such assignment.
(d) Without limiting any other rights that may be
available under applicable law, the rights of the Investors may
be enforced through them or by their agents.
SECTION 4.04. Costs, Expenses and Taxes. (a) In
addition to the rights to indemnification granted under Sec-
tion 3.01 hereof, the Seller agrees to pay on demand all costs
and expenses in connection with the preparation, execution,
delivery and administration (including periodic auditing of
Receivables) of this Agreement, any asset purchase agreement or
similar agreement relating to the sale or transfer of interests
in Receivable Interests and the other documents and agreements to
be delivered hereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of one collective
counsel for the Agent, the Issuer and their respective Affiliates
and agents (which counsel shall be the same as the counsel whose
fees the Seller has agreed to pay pursuant to Section 4.04(a) of
the Alternate Receivables Purchase Agreement) with respect
thereto and with respect to advising the Agent, the Issuer and
their respective Affiliates and agents as to their rights and
remedies under this Agreement, and all costs and expenses, if any
(including reasonable counsel fees and expenses), of the Agent,
the Investors and their respective Affiliates and agents, in
connection with the enforcement of this Agreement and the other
documents and agreements to be delivered hereunder.
(b) In addition, the Seller shall pay (i) any and all
costs and expenses of any issuing and paying agent or other
Person responsible for the administration of the Issuer's
commercial paper program in connection with the preparation,
completion, issuance, delivery or payment of commercial paper
notes issued to fund the purchase or maintenance of any
Receivable Interest, and (ii) any and all stamp and other taxes
and fees payable in connection with the execution, delivery,
filing and recording of this Agreement or the other documents or
agreements to be delivered hereunder, and agrees to save each
Indemnified Party harmless from and against any liabilities with
respect to or resulting from any delay in paying or omission to
pay such taxes and fees.
(c) The Seller also shall pay on demand all other
costs, expenses and taxes (excluding income taxes) incurred by
the Issuer or any stockholder or agent of the Issuer ("Other
Costs"), including the cost of administering the operations of
the Issuer, the cost of auditing the Issuer's books by certified
public accountants, the cost of rating the Issuer's commercial
paper by independent financial rating agencies, the taxes
(excluding income taxes) resulting from the Issuer's operations,
and the reasonable fees and out-of-pocket expenses of counsel for
any stockholder or agent of the Issuer with respect to advising
as to rights and remedies under this Agreement, the enforcement
of this Agreement or advising as to matters relating to the
Issuer's operations; provided that the Seller and any other
xv
Persons who from time to time sell receivables or interests
therein to the Issuer ("Other Sellers") each shall be liable for
such Other Costs ratably in accordance with the usage under their
respective facilities; and provided further that if such Other
Costs are attributable to the Seller and not attributable to any
Other Seller, the Seller shall be solely liable for such Other
Costs.
(d) Subject to Section 4.04(f), any and all payments
made under this Agreement shall be made free and clear of and
without deduction for any and all present or future Taxes. If
any amount of Taxes shall be required by law to be deducted from
or in respect of any sum payable hereunder to any non-U.S.
Investor or the Agent, (i) the sum payable shall be increased as
may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under
this section 4.04(d)), such non-U.S. Investor or the Agent, as
the case may be, receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Seller
shall make such deductions and (iii) the Seller shall pay the
full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(e) Each non-U.S. Investor and the Agent, on or prior
to the date of its execution and delivery of this Agreement in
the case of the Agent and on the date of the assignment pursuant
to which it becomes an Investor in the case of each non-U.S.
Investor, and from time to time thereafter if requested in
writing by the Seller (unless such non-U.S. Investor can no
longer lawfully do so due to a change in law subsequent to the
date it became an Investor hereunder), shall provide the Seller
with Internal Revenue Service Form 1001 or 4224, as appropriate,
or any successor form prescribed by the Internal Revenue Service,
certifying that such non-U.S. Investor is entitled to benefits
under an income tax treaty to which the United States is a party
which reduces the rate of withholding tax on payments of interest
to zero or certifying that the income receivable pursuant to this
Agreement is effectively connected with the conduct of a trade or
business in the United States.
(f) For any period with respect to which a non-U.S.
Investor has failed to provide the Seller with the appropriate
form described in Section 4.04(e) (other than if such failure is
due to a change in law occurring subsequent to the date on which
a form originally was required to be provided), such non-U.S.
Investor shall not be entitled to payments of additional amounts
under Section 1.08(b) or 4.04(d).
SECTION 4.05. CL-NY and Affiliates. CL-NY and its
Affiliates may generally engage in any kind of business with the
Seller or any Obligor, any of their respective Affiliates and any
Person who may do business with or own securities of the Seller
or any Obligor or any of their respective Affiliates, all as if
CL-NY were not the Agent and without any duty to account therefor
to the Investors.
xvi
SECTION 4.06. No Proceedings. Each of the Seller, the
Agent, the Servicer, each Investor, each assignee of a Receivable
Interest or any interest therein and each entity which enters
into a commitment to purchase Receivable Interests or interests
therein hereby agrees that it will not institute against, or join
any other person in instituting against, the Issuer any
proceeding of the type referred to in paragraph (g) of Exhibit V
so long as any commercial paper issued by the Issuer shall be
outstanding or there shall not have elapsed one year plus one day
since the last day on which any such commercial paper shall have
been outstanding.
SECTION 4.07. Confidentiality. Unless otherwise
required by applicable law, the Seller agrees to maintain the
confidentiality of this Agreement (and all drafts thereof) in
communications with third parties and otherwise; provided that
this Agreement may be disclosed to (a) third parties to the
extent such disclosure is made pursuant to a written agreement of
confidentiality in form and substance reasonably satisfactory to
the Agent, and (b) the Seller's legal counsel and auditors (who
shall also be subject to the terms of this confidentiality
provision).
SECTION 4.08. Integration. This Agreement 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 among the parties hereto
with respect to the subject matter hereof, superseding all prior
oral or written understandings.
SECTION 4.09. Construction of the Agreement. The
parties hereto intend that the purchase and sale of Receivable
Interests from the Seller to the Issuer be treated as a sale of
such Receivable Interests and the proceeds thereof, and the
parties hereto shall reflect the purchase and sale of Receivable
Interests in their respective books and records and financial
statements as a purchase and sale. However, if a determination
is made that such transfer shall not be so treated, this
Agreement shall be deemed to constitute a security agreement and
the transactions effected hereby shall be deemed to constitute a
secured financing in each case under applicable law and to that
end, the Seller hereby grants to the Agent, for the benefit of
the Investors, a security interest in the Receivable Interests so
transferred to secure its obligations hereunder.
SECTION 4.10. Right of Set-Off. Without limiting the
foregoing, CL-NY is hereby authorized by the Seller at any time
and from time to time, to the fullest extent permitted by law, to
set-off and apply any and all deposits (general or special, time
or demand, provisional or final) at any time held and other
indebtedness at any time owing by CL-NY to or for the credit or
the account of the Seller, against any and all obligations of the
Seller now or hereafter existing under this Agreement, to any
Affected Party, any Indemnified Party or any Investor, or their
respective successors and assigns.
xvii
SECTION 4.11. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
PRINCIPLES THEREOF), EXCEPT TO THE EXTENT THAT THE PERFECTION OF
THE INTERESTS OF THE INVESTORS IN THE RECEIVABLES OR REMEDIES
HEREUNDER, IN RESPECT THEREOF, ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SECTION 4.12. No Recourse. The obligations of the
Issuer under this Agreement are solely the corporate obligations
of the Issuer. No recourse shall be had for the payment of any
amount owing by the Issuer under this Agreement, or for the
payment by the Issuer of any fee in respect hereof or any other
obligation or claim of or against the Issuer arising out of or
based on this Agreement, against Lord or against any stockholder,
employee, officer, director or incorporator of the Issuer. For
purposes of this Section 4.12, the term "Lord" shall mean and
include Lord Securities Corporation, a Delaware corporation, and
all affiliates thereof and any employee, officer, director,
incorporator, stockholder or beneficial owner of any of them;
provided, however, that the Issuer shall not be considered to be
an affiliate of Lord for purposes of this Section 4.12.
SECTION 4.13. Execution in Counterparts. This
Agreement may be executed in any number of 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.
SECTION 4.14. Survival of Termination. The provisions
of Sections 1.08, 3.01, 4.04, 4.06 and 4.07 shall survive any
termination of this Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
xviii
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.
SELLER: INTERCO RECEIVABLES CORP.
By: Lynn Chipperfield
Name: Lynn Chipperfield
Title: Vice President
101 South Hanley Road
St. Louis, Missouri 63105
Facsimile No.: (314) 863-5306
ISSUER: ATLANTIC ASSET SECURITIZATION CORP.
By: Credit Lyonnais New York Branch, as
Attorney-in-Fact
By: Jonathan Kaplan
Name: Jonathan Kaplan
Title: Vice President
1301 Avenue of the Americas
New York, New York 10019
Facsimile No.: (212) 459-3258
AGENT: CREDIT LYONNAIS NEW YORK BRANCH
By: Jonathan Kaplan
Name: Jonathan Kaplan
Title: Vice President
1301 Avenue of the Americas
New York, New York 10019
Facsimile No.: (212) 459-3258
xix
EXHIBIT I
DEFINITIONS
As used in the Agreement (including its Exhibits), the
following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of
the terms defined):
"Action" means Action Industries, Inc., a Virginia
corporation.
"Adjusted Consolidated EBITDA" shall mean, for any
period of determination, the remainder of (i) Consolidated EBITDA
for such period minus (or plus) (ii) the increase (or decrease),
if any, in Adjusted Consolidated Working Capital from the first
day to the last day of such period.
"Adjusted Consolidated Working Capital" at any time
shall mean Consolidated Current Assets (but excluding therefrom
all cash and Cash Equivalents) less Consolidated Current
Liabilities.
"Adverse Claim" means a lien, security interest or
other charge or encumbrance, or any other type of preferential
arrangement.
"Affiliate" means, as to any Person, any other Person
that, directly or indirectly, is in control of, is controlled by
or is under common control with such Person or is a director or
officer of such Person; provided, however, that with respect to
Broyhill, Lane, Action and the Seller, the term "Affiliate" shall
be deemed not to include any Apollo Entity.
"Affiliated Obligor" means any Obligor that is an
Affiliate of another Obligor.
"Agent's Account" means the special account (account
number 01-25680-0001-00-001) of the Agent maintained at the
office of the Agent, ABA No. 026-008073, in New York, New York
for the benefit of the Investors.
"Aggregate Invested Amount" at any time means the sum
of the outstanding Invested Amount of all Receivable Interests
plus the outstanding "Invested Amount" of all "Receivable
Interests" under the Alternate Receivables Purchase Agreement.
"Alternate Receivables Purchase Agreement" means the
Alternate Receivables Purchase Agreement, dated as of the date
hereof, among the Seller, CL-NY and the Agent, as the same may,
from time to time, be amended, modified or supplemented.
I-1
"Apollo Entity" means any of (i) Apollo Advisors, L.P.,
(ii) Lion Advisors, L.P., (iii) any accounts managed by Apollo
Advisors, L.P. or Lion Advisors, L.P. and (iv) any Person
directly or indirectly in control of, controlled by, or under
common control with Apollo Advisors, L.P. or Lion Advisors, L.P.,
other than Broyhill, Lane, Action, the Seller or Interco and any
of their respective Subsidiaries.
"Average Maturity" means at any time that period of
days equal to the weighted average maturity of the Pool
Receivables calculated by the Servicer in the then most recent
Seller Report; provided if the Agent shall disagree with any such
calculation, the Agent may recalculate such Average Maturity in a
commercially reasonable manner in accordance with industry
practice.
"Bank Credit Agreement" means the Credit Agreement
dated as of November 17, 1994, among Interco, Broyhill, Lane, the
banks named therein and Bankers Trust Company, as agent.
"Broyhill" means Broyhill Furniture Industries, Inc., a
North Carolina corporation.
"Business Day" means any day on which banks are not
authorized or required to close in New York City.
"Capitalized Lease Obligations" of any Person shall
mean all rental obligations which, under generally accepted
accounting principles, are or will be required to be capitalized
on the books of such Person, in each case taken at the amount
thereof accounted for as indebtedness in accordance with such
principles.
"Collection Delay Period" means 10 days or such other
number of days as the Agent may select upon three Business Days'
notice to the Seller.
"Collections" means, with respect to any Receivable,
(a) all funds which are received by the Seller or the Servicer in
payment of any amounts owed in respect of such Receivable
(including, without limitation, purchase price, finance charges,
interest and all other charges), or applied to amounts owed in
respect of such Receivable (including, without limitation,
insurance payments and net proceeds of the sale or other
disposition of repossessed goods or other collateral or property
of the related Obligor or any other party directly or indirectly
liable for the payment of such Receivable and available to be
applied thereon), (b) all Collections deemed to have been
received pursuant to Section 1.04 and (c) all other proceeds of
such Receivable.
"Consolidated Current Assets" shall mean, at any time,
the current assets of Interco and its Restricted Subsidiaries
determined on a combined basis.
I-2
"Consolidated Current Liabilities" shall mean, at any
time, the current liabilities of Interco and its Restricted
Subsidiaries determined on a combined basis at such time, but
excluding (i) the current portion of any Indebtedness under the
Bank Credit Agreement, the Agreement, the Alternate Receivables
Purchase Agreement, and any other long-term Indebtedness which
would otherwise be included therein, (ii) accrued but unpaid
interest with respect to the Indebtedness described in clause (i)
and with respect to Capitalized Lease Obligations, (iii) the
current portion of Indebtedness constituting Capitalized Lease
Obligations and (iv) any current portion of tax liabilities of
such Persons.
"Consolidated EBIT" shall mean, for any period, the
Consolidated Net Income of Interco and its Restricted
Subsidiaries, determined on a combined basis, before Consolidated
Net Interest Expense (to the extent deducted in arriving at
Consolidated Net Income) and provision for taxes or gains or
losses from sales of assets other than inventory sold in the
ordinary course of business, in each case that were included in
arriving at Consolidated Net Income.
"Consolidated EBITDA" shall mean, for any period,
Consolidated EBIT, adjusted by adding thereto the amount of all
amortization of intangibles and depreciation, in each case that
were deducted in arriving at Consolidated EBIT for such period.
"Consolidated Net Income" shall mean, for any period,
the net after tax income of Interco and its Restricted
Subsidiaries determined on a combined basis, minus Dividends paid
in respect of Disqualified Preferred Stock, without giving effect
to any extraordinary gains or losses, provided that no amount
should be included in the Consolidated Net Income of Interco for
amounts under the Services Agreement unless such amounts are paid
in cash to Interco.
"Consolidated Net Interest Coverage Ratio" for any
period shall mean the ratio of Adjusted Consolidated EBITDA to
Consolidated Net Interest Expense for such period; provided that
for any period which includes a period occurring before the date
of the Agreement, (x) with respect to the calculation of Adjusted
Consolidated EBITDA, such calculation shall be adjusted, on a Pro
Forma Basis, to give effect to the Transaction and (y) with
respect to the calculation of Consolidated Net Interest Expense,
the amount thereof shall be an amount equal to (i) Consolidated
Net Interest Expense from January 1, 1995 through the last day of
such period multiplied by (ii) (A) 4, in the case of the period
ending March 31, 1995, (B) 2, in the case of the period ending
June 30, 1995 and (C) 1.333, in the case of the period ending
September 30, 1995.
"Consolidated Net Interest Expense" shall mean, for any
period, the total consolidated interest expense of Interco and
its Restricted Subsidiaries for such period (calculated without
I-3
regard to any limitations on the payment thereof) plus, without
duplication, that portion of Capitalized Lease Obligations of
Interco and its Restricted Subsidiaries representing the interest
factor for such period, and capitalized interest expense, plus,
(i) all cash fees, service charges and other costs, as well as
all collections or other amounts retained by the Agent, the
Issuer and the "Banks" under the Alternate Receivables Purchase
Agreement which are in excess of amounts paid to the Seller under
the Agreement and the Alternate Receivables Purchase Agreement
for the purchase of receivables thereunder, and (ii) the product
of (x) the amount of all cash Dividend requirements (whether or
not declared or paid) on Disqualified Preferred Stock paid,
accrued or scheduled to be paid or accrued during such period,
times (y) a fraction, the numerator of which is one and the
denominator of which is one minus the then current effective
consolidated Federal, state, local and foreign tax rate
(expressed as a decimal number between one and zero) of Interco
as reflected in the audited consolidated financial statements of
Interco for its most recently completed Fiscal Year, which
amounts described in the preceding clauses (i) and (ii) shall be
treated as interest expense of Interco and its Restricted
Subsidiaries for purposes of this definition regardless of the
treatment of such amounts under generally accepted accounting
principles, in each case net of the total consolidated cash
interest income of Interco and its Restricted Subsidiaries for
such period, but excluding the amortization of any deferred
financing costs and all amounts in respect of the Interest Rate
Protection Agreements, all determined on a combined basis.
"Contract" means an agreement between an Originator and
any Obligor, pursuant to or under which such Obligor shall be
obligated to make payments to such Originator for merchandise,
insurance or services from time to time.
"Courtesy Receivable" means a Receivable which arises
out of the provision of transportation services but does not
arise out of the transportation of goods shipped by an Originator
to an Obligor.
"CP Rate" for any Fixed Period for any Receivable
Interest means an interest rate per annum equal to the per annum
yield equivalent to the published discount for one-month
commercial paper issued by firms whose bonds are rated AA by
Standard & Poor's Corporation (or the equivalent), which is
reported for the first day of such Fixed Period in "Selected
Interest Rates" (Publication H.15 (519)), Federal Reserve
Statistical Release, published by the Board of Governors of the
Federal Reserve System (or successor publication) (or, if such
yield is not published, such other rate as the Agent and the
Seller shall agree to in writing).
"Credit and Collection Policy" means those receivables
credit and collection policies and practices of the Seller in
I-4
effect on the date of the Agreement and described in Schedule II
hereto, as modified in compliance with the Agreement.
"Daily Settlement Trigger" means the occurrence of any
of the following:
(a) The Consolidated Net Interest Coverage Ratio for
any period of four consecutive fiscal quarters, in each case
taken as one accounting period, ended during a period set
forth below, shall be less than the amount set forth
opposite such period below:
Period Ratio
January 1, 1995 through
September 30, 1995 2.71:1.0
October 1, 1995 through
September 30, 1996 3.04:1.0
October 1, 1996 through
September 30, 1997 3.36:1.0
Thereafter 3.90:1.0
(b) The Adjusted Consolidated EBITDA for any period of
four consecutive fiscal quarters, in each case taken as one
accounting period, ended during a period (with any
calculation for any such period which includes a period
occurring prior to the date of the Agreement to be adjusted,
on a Pro Forma Basis, to give effect to the Transaction) set
forth below, shall be less than the amount set forth
opposite such period below:
Period Amount
January 1, 1995 through
September 30, 1995 $105,000,000
October 1, 1995 through
September 30, 1996 $110,000,000
October 1, 1996 through
September 30, 1997 $118,000,000
Thereafter $125,000,000
(c) The Leverage Ratio at any time during any fiscal
quarter ending during a period (with any calculation for any
such period which includes a period occurring prior to the
date of the Agreement to be adjusted, on a Pro Forma Basis,
I-5
to give effect to the Transaction) set forth below shall be
greater than the ratio set forth opposite such period below:
Period Ratio
November 17, 1994 through
September 30, 1995 4.46:1.0
October 1, 1995 through
September 30, 1996 4.02:1.0
October 1, 1996 through
September 30, 1997 3.57:1.0
Thereafter 3.16:1.0
(d) The Net Dilution Ratio shall be greater than 5%;
(e) The Default Ratio shall be greater than 5%;
(f) Any Event of Termination shall occur under
paragraph (e) or (g) of Exhibit V; or
(g) The Originators shall have repurchased Receivables
(pursuant to indemnity provisions or otherwise) from the
Seller in an aggregate amount exceeding $12,500,000 in any
Fiscal Year.
"Default Ratio" means the ratio (expressed as a
percentage) computed as of the last day of each fiscal month of
the Originators by dividing (i) the aggregate Outstanding Balance
of all Originator Receivables that (A) met the requirements of
clause (i) of the definition of Defaulted Receivable on such day
or (B) without duplication, met the requirements of clause
(ii) or (iii) of the definition of Defaulted Receivable on such
day or on the last day of any of the immediately preceding six
fiscal months (in the case of Receivables originated by Broyhill)
or eight fiscal months (in the case of Receivables originated by
Lane or Action) by (ii) the aggregate Outstanding Balance of all
Originator Receivables on such day. For purposes of this
definition, the terms "Outstanding Balance" and "Defaulted
Receivable" shall be interpreted as if all references in the
definitions thereof to "Receivables" were references to
"Originator Receivables."
"Defaulted Receivable" means a Receivable:
(i) as to which any payment, or part thereof,
remains unpaid for over 90 days from the original due
date for such payment; provided, however, that (A)
until such time as the Seller notifies the Agent that
Lane and Action are able to report receivables agings
without giving effect to grace periods, "Defaulted
Receivables" shall include all Receivables originated
I-6
by Lane or Action as to which any payment, or part
thereof, remains unpaid for 60 days from the original
due date for such payment, and (B) until such time as
the Seller notifies the Agent that Broyhill is able to
report receivables agings from due date rather than
invoice date, "Defaulted Receivables" shall include all
Receivables originated by Broyhill as to which any
payment, or part thereof, remains unpaid for 120 days
from the invoice date for such Receivable;
(ii) which is not a Priority DIP Receivable and
as to which the Obligor thereof or any other Person
obligated thereon or owning any Related Security in
respect thereof has taken any action, or suffered any
event to occur, of the type described in paragraph (g)
of Exhibit V; or
(iii) which, consistent with the Credit and
Collection Policy (as in effect at the time of the
creation of such Receivable), would be written off the
Seller's books as uncollectible.
"Designated Obligor" means, at any time, each Obligor
except any such Obligor as to which the Agent has, at least three
Business Days prior to the date of determination, given notice to
the Seller that such Obligor shall not be considered a Designated
Obligor by reason of the fact that in the reasonable opinion of
the Agent any one of the following shall exist as to such
Obligor: (i) the timely collectibility of the Receivables of
such Obligor has been impaired by reason of a material adverse
change in the financial condition, business, operations or
prospects of such Obligor, or (ii) such Obligor has demonstrated
an inconsistent payment history and in the reasonable opinion of
the Agent such inconsistent payment history materially impairs
the Agent's ability to rely on timely payment by such Obligor in
the future, or (iii) such Obligor is in a class of Obligors which
do not meet criteria of purchasers generally applicable to
obligors for companies which are similarly situated as the Seller
and which are selling receivables or undivided interests therein
in similar transactions.
"Dilution" means, with respect to any Originator
Receivable, the aggregate amount of (i) any reductions or
adjustments in the Outstanding Balance of such Originator
Receivable as a result of any defective, rejected, returned,
repossessed or foreclosed merchandise or services or any cash
discount, credit memo, rebate, cooperative advertising,
chargeback or other adjustment, dispute or setoff and (ii) any
unresolved disputes relating to such Originator Receivable, which
have not yet resulted in the reduction or adjustment of the
Outstanding Balance of such Originator Receivable.
"Dilution Reserve" for any Receivable Interest at any
time means an amount equal to the product of the Invested Amount
I-7
of such Receivable Interest on such date multiplied by the
greater of (a) 1% and (b) two times the Gross Dilution Ratio as
of the last day of the preceding fiscal month.
"Eligible Assignee" means CL-NY, any of its Affiliates,
any Person managed by CL-NY or any of its Affiliates, or any
financial or other institution acceptable to the Agent.
"Eligible Receivable" means, at any time, a Receivable:
(i) the Obligor of which is a United States
resident, is not an Affiliate of any of the parties
hereto, and is not a government or a governmental
subdivision or agency;
(ii) the Obligor of which, at the time of the
initial creation of an interest therein under the
Agreement, is a Designated Obligor;
(iii) which at the time of the initial creation
of an interest therein under the Agreement is not a
Defaulted Receivable;
(iv) which, according to the Contract related
thereto, is required to be paid in full (A) within 120
days of the original billing date therefor, (B) later
than 120 days but within 150 days of the original
billing date therefor, but only (x) if such Receivable
was originated by Lane or Action and (y) to the extent
that the Outstanding Balance of such Receivable at the
time of the initial creation of an interest therein
under the Agreement, when aggregated with the
Outstanding Balance of all other Pool Receivables
originated by Lane or Action and having similar payment
terms, does not exceed $23,000,000 or (C) later than
150 days but within 180 days of the original billing
date therefor, but only (x) if such Receivable was
originated by Lane or Action and (y) to the extent that
the Outstanding Balance of such Receivable at the time
of the initial creation of an interest therein under
the Agreement, when aggregated with the Outstanding
Balance of all other Pool Receivables originated by
Lane or Action and having similar payment terms, does
not exceed $7,000,000;
(v) which is an "account" or "general
intangible" within the meaning of the UCC of the
applicable jurisdictions governing the perfection of
the interest created by a Receivable Interest;
(vi) which was generated in the ordinary course
of an Originator's business and does not constitute a
Courtesy Receivable;
I-8
(vii) which is denominated and payable only in
United States dollars in the United States;
(viii) which arises under a Contract which is
substantially in the form of the form of contract or
the form of invoice (in the case of any open account
agreement) previously approved by the Agent; and which
Contract, together with such Receivable, is in full
force and effect and constitutes the legal, valid and
binding obligation of the Obligor of such Receivable to
pay a determinable amount and which is not subject to
any dispute, offset, counterclaim or defense whatsoever
(except payments for cooperative advertising and the
potential discharge in bankruptcy of such Obligor);
(ix) which, together with the Contract related
thereto, does not contravene in any material respect
any laws, rules or regulations applicable thereto
(including, without limitation, laws, rules and
regulations relating to usury, consumer protection,
truth in lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt
collection practices and privacy) and with respect to
which no party to the Contract related thereto is in
violation of any such law, rule or regulation in any
material respect if such violation would impair the
collectibility of such Receivable;
(x) which satisfies all applicable requirements
of the Credit and Collection Policy in a manner not
materially less stringent than the Credit and
Collection Policy in effect on the date of the
Agreement; provided, however, that for purposes of this
definition, any change in the Credit and Collection
Policy notified to the Agent pursuant to subsection (f)
of Exhibit IV by the Seller and not objected to within
30 Business Days of such notice, shall be deemed "not
materially less stringent";
(xi) which complies with such other criteria and
requirements (other than those relating to the
collectibility of such Receivable) as the Agent may
from time to time specify to the Seller upon 30 days'
notice; provided that such criteria and requirements
are specified in good faith, take into account current
market conditions, and are for the purpose of not
permitting the condition of the Receivables, taken as a
whole, to drop below the condition thereof as at the
date of the execution of this Agreement; and
(xii) the sale or transfer of which does not
contravene or conflict with any law.
I-9
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and the regulations
promulgated and rulings issued thereunder.
"ERISA Affiliate" means any trade or business (whether
or not incorporated) which together with the Seller would be
treated as a single employer under the provisions of Title I or
Title IV of ERISA.
"Event of Termination" has the meaning specified in
Exhibit V.
"Facility Termination Date" means the earliest of (a)
November 15, 1999 or (b) the date determined pursuant to Section
2.02 or (c) the date the Purchase Limit reduces to zero pursuant
to Section 1.01(b).
"Fixed Period" means, with respect to any Receivable
Interest, a period from each Rate Determination Date for such
Receivable Interest to the next succeeding Rate Determination
Date for such Receivable Interest; provided, however, that in the
case of any Fixed Period for any Receivable Interest which
commences before the Termination Date for such Receivable
Interest and would otherwise end on a date occurring after such
Termination Date, such Fixed Period shall end on such Termination
Date and the duration of each Fixed Period which commences on or
after the Termination Date for such Receivable Interest shall be
of such duration as shall be selected by the Agent.
"Gross Dilution Ratio" means, on the last day of any
fiscal month of the Originators, the ratio (expressed as a
percentage) computed by dividing (i) the aggregate Dilution with
respect to all Originator Receivables during such month by (ii)
the aggregate Outstanding Balance of all Originator Receivables
on such day; provided, however, that until such time as the
Seller notifies the Agent that Lane and Action are able to report
Dilution in accordance with the definition contained herein, the
aggregate Dilution of all Originator Receivables originated by
Lane or Action shall be deemed to be, for each fiscal month, an
amount equal to the Lane Dilution Reserve at the end of such
month plus the reserves carried on Lane's and Action's books and
records under the account designations LFS-256 and LFS-257 at the
end of such month. For purposes of this definition, the term
"Outstanding Balance" shall be interpreted as if all references
in the definition thereof to "Receivables" were references to
"Originator Receivables."
"Indebtedness" shall mean, as to any Person, without
duplication, (i) all indebtedness (including principal, interest,
fees and charges) of such Person for borrowed money or for the
deferred purchase price of property or services, (ii) the maximum
amount available to be drawn under all letters of credit issued
for the account of such Person and all unpaid drawings in respect
of such letters of credit, (iii) all Indebtedness of the types
I-10
described in clause (i), (ii), (iv), (v), (vi) or (vii) of this
definition secured by any Adverse Claim on any property owned by
such Person, whether or not such Indebtedness has been assumed by
such Person (to the extent of the value of the respective
property), (iv) the aggregate amount required to be capitalized
under leases under which such Person is the lessee, (v) all
obligations of such Person to pay a specified purchase price for
goods or services, whether or not delivered or accepted, i.e.,
take-or-pay and similar obligations, (vi) all obligations of such
Person under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of kinds
referred to in clauses (i) through (v) above or in clause (vii),
and (vii) all obligations under any Interest Rate Protection
Agreement or under any similar type of agreement. In addition to
the foregoing, for the purposes of calculating Consolidated Debt
and Consolidated Current Liabilities, and making adjustments on a
Pro Forma Basis, the Invested Amount under the Agreement and the
"Invested Amount" under the Alternate Receivables Purchase
Agreement shall constitute Indebtedness.
"Initial Purchase Date" means November 17, 1994.
"Interco" means Interco Incorporated, a Delaware
corporation.
"Interco Agreement" means the Interco Agreement dated
as of November 15, 1994 made by Interco in favor of the Seller,
as the same may be amended, modified or restated from time to
time.
"Interest Rate Protection Agreement" shall mean any
interest rate swap agreement, interest rate cap agreement,
interest collar agreement, interest rate hedging agreement,
interest rate floor agreement or other similar agreement or
arrangement.
"Invested Amount" of each Receivable Interest means the
original amount paid to the Seller for such Receivable Interest
at the time of its purchase by the Issuer pursuant to the
Agreement, or such amount divided or combined in accordance with
Section 1.07, in each case reduced from time to time by
Collections distributed on account of such Invested Amount
pursuant to Section 1.04(d); provided that if such Invested
Amount shall have been reduced by any distribution and thereafter
all or a portion of such distribution is rescinded or must
otherwise be returned for any reason, such Invested Amount shall
be increased by the amount of such rescinded or returned
distribution, as though it had not been made.
"Investor" means the Issuer and all other owners by
assignment or otherwise of a Receivable Interest or any interest
I-11
therein and, to the extent of the undivided interests so
purchased, shall include any participants.
"Issuer" means Atlantic Asset Securitization Corp. and
any successor or assign of the Issuer that is a receivables
investment company which in the ordinary course of its business
issues commercial paper or other securities to fund its
acquisition and maintenance of receivables.
"Lane" means The Lane Company, Incorporated, a Virginia
corporation.
"Lane Dilution Reserve" means, at any time, $2,000,000;
provided, however, that if a Daily Settlement Trigger shall have
occurred, such amount shall be increased by $1,000,000 for each
30-day period following the occurrence of such Daily Settlement
Trigger; provided, further, that if all events constituting a
Daily Settlement Trigger shall have been cured or shall no longer
be continuing, the Lane Dilution Reserve shall be equal to
$2,000,000.
"Leverage Ratio" shall mean on any date the ratio of
(i) Consolidated Debt on such date to (ii) Adjusted Consolidated
EBITDA for the period of four consecutive fiscal quarters most
recently ended on or prior to such date, in each case taken as
one accounting period.
"Liquidation Day" means, for any Receivable Interest,
(i) each day during a Settlement Period for such Receivable
Interest on which the conditions set forth in paragraph 2 of
Exhibit II are not satisfied, and (ii) each day which occurs on
or after the Termination Date for such Receivable Interest.
"Liquidation Fee" means, for any Fixed Period during
which a Liquidation Day occurs, the amount, if any, by which
(i) the additional Yield (calculated without taking into account
any Liquidation Fee or any shortened duration of such Fixed
Period pursuant to the proviso in the definition thereof) which
would have accrued during such Fixed Period on the reductions of
Invested Amount of the Receivable Interest relating to such Fixed
Period had such reductions remained as Invested Amount, exceeds
(ii) the income, if any, received by the Investors' investing the
proceeds of such reductions of Invested Amount.
"Lock-Box Account" means one or more accounts in the
name of the Agent maintained at a bank or other financial
institution for the purpose of receiving Collections.
"Lock-Box Agreement" means an agreement, in
substantially the form of Annex B, among an Originator, the
Seller, the Agent and each Lock-Box Bank.
"Lock-Box Bank" means any of the banks or other
financial institutions holding one or more Lock-Box Accounts.
I-12
"Loss Percentage" means, for any Receivable Interest on
any date, the greater of (i) three times the Default Ratio as of
the last day of the fiscal month immediately preceding such date
and (ii) 10%.
"Loss Reserve" means, for any Receivable Interest on
any date, an amount equal to
LP x IA
where:
LP = the Loss Percentage for such Receivable
Interest on such date.
IA = the Invested Amount of such Receivable
Interest at the close of business of the
Servicer on such date.
"Net Dilution Ratio" means on any date the ratio
(expressed as a percentage) computed as of the last day of the
preceding fiscal month of the Originators, by dividing (i) the
aggregate Dilution (other than Dilution arising out of
cooperative advertising payments) with respect to all Originator
Receivables during such month by (ii) the aggregate Outstanding
Balance of all Originator Receivables on such day; provided,
however, that until such time as the Seller notifies the Agent
that Lane and Action are able to report Dilution in accordance
with the definition contained herein, the aggregate Dilution of
all Originator Receivables originated by Lane or Action (other
than Dilution arising out of cooperative advertising payments)
shall be deemed to be, for each fiscal month, an amount equal to
the Lane Dilution Reserve at the end of such month plus the
reserve carried on Lane's and Action's books and records under
the account designation LFS-256 at the end of such month. Until
such time as the Seller notifies the Agent that it is able to
separately identify cooperative advertising payments for
Receivables originated by each Originator, the amount of Dilution
arising out of cooperative advertising payments for Receivables
originated by any Originator shall be deemed to be the total
credit memos of such Originator (plus miscellaneous discounts, in
the case of Broyhill) multiplied by a fraction, the numerator of
which shall be advertising unresolved disputes for such
Originator and the denominator of which shall be total unresolved
disputes for such Originator. For purposes of this definition,
the term "Outstanding Balance" shall be interpreted as if all
references in the definition thereof to "Receivables" were
references to "Originator Receivables."
"Net Receivables Pool Balance" means at any time the
Outstanding Balance of Eligible Receivables then in the Receiv-
ables Pool reduced by the sum of (i) the Outstanding Balance of
such Eligible Receivables that have become Defaulted Receivables,
plus (ii) the aggregate amount by which the Outstanding Balance
I-13
of Eligible Receivables (other than Defaulted Receivables) of
each Obligor then in the Receivables Pool exceeds the product of
(A), the Normal Concentration Percentage for such Obligor, or the
Special Concentration Percentage for such Obligor, as the case
may be, multiplied by (B) the Aggregate Invested Amount at such
time, plus (iii) until such time as the Seller notifies the Agent
that it is able to accurately track Courtesy Receivables
originated by Broyhill, $200,000, plus (iv) the excess, if any,
of the Outstanding Balance of Priority DIP Receivables over
$500,000.
"Normal Concentration Percentage" for any Obligor means
at any time 2%, or such other percentage ("Special Concentration
Percentage") set forth below for such Obligor; provided that in
the case of an Obligor with any Affiliated Obligor, the Normal
Concentration Percentage and the Special Concentration Percentage
shall be calculated as if such Obligor and such Affiliated
Obligor are one Obligor; provided further that the Agent may
cancel any Special Concentration Percentage upon three Business
Days' notice to the Seller. The Special Concentration
Percentages for J.C. Penney Company, Inc. and Sears Roebuck & Co.
shall be 15% and 10%, respectively, for so long as the short-term
public senior debt ratings of such Obligors by Standard & Poor's
Ratings Group and Moody's Investors Service, Inc. remain at least
equal to those in effect on the date of the Agreement; provided,
however, that such Special Concentration Percentages shall be
increased (subject to the Agent's right to cancel any Special
Concentration Percentage upon three Business Days' notice to the
Seller) or reduced based on subsequent changes in such debt
ratings as set forth below:
Short-Term Public Special Concentration
Senior Debt Rating Percentage
A-1/P-1 15%
A-2/P-2, A-1/P-2 or A-2/P-1 10%
A-3/P-3, A-2/P-3 or A-3/P-2 2%
The Special Concentration Percentage of Haverty Furniture
Companies, Inc. shall be 5%. At each annual anniversary of the
execution of the Agreement, the foregoing Special Concentration
Percentages may be revised by request of the Seller, provided
that such revision is consented to by the Agent (it being
understood that the Agent agrees to duly consider such request
but shall have no obligation to give such consent). The Agent
shall provide the Relevant Rating Agencies with prior notice of
any proposed increase in any Special Concentration Percentage or
the establishment of any new Special Concentration Percentage.
"Obligor" means a Person obligated to make payments to
any Originator pursuant to a Contract.
I-14
"Originator" means each of Lane, Action and Broyhill.
"Originator Purchase Agreement" means the Purchase and
Contribution Agreement dated as of November 15, 1994 between
Lane, Action and Broyhill, as sellers, and the Seller, as
purchaser, as the same may be amended, modified or restated from
time to time.
"Originator Receivables" means, collectively, all
receivables created by Lane, all receivables created by Action
and all receivables created by Broyhill (regardless of whether
such receivables have been transferred to the Seller or any
assignee or transferee of the Seller) and which receivables
constituted Eligible Receivables under the Agreement when they
were transferred to the Seller, or would have constituted
Eligible Receivables if they had been transferred to the Seller.
"Other Corporations" means Interco and all of its
Subsidiaries except the Seller.
"Outstanding Balance" of any Receivable at any time
means the then outstanding principal balance thereof; provided,
however, that in the case of any Receivable originated by
Broyhill which is subject to a third-party guarantee and entitled
to a cash discount for quick payment, the Outstanding Balance of
such Receivable shall be reduced by the amount of such cash
discount.
"Pension Plan" means any Plan which is subject to the
provisions of Title IV of ERISA.
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.
"Plan" shall mean any employee benefit plan within the
meaning of Section 3(3) of ERISA and which is maintained (in
whole or in part) for employees of Interco, any of its
Subsidiaries or any ERISA Affiliate.
"Pool Receivable" means a Receivable in the Receivables
Pool.
"Priority DIP Receivable" means a Receivable:
(i) the Obligor of which is the subject of a
federal bankruptcy case; and
(ii) the indebtedness of which constitutes a
priority under 11 U.S.C. Sec. 507(a)(1).
"Pro Forma Basis" shall mean, as to any Person, for any
of the following events which occur subsequent to the
I-15
commencement of a period for which the financial effect of such
event is being calculated, and giving effect to the event for
which such calculation is being made, such calculation will give
pro forma effect to such event as if same had occurred at the
beginning of such period of calculation, and
(i) for purposes of the foregoing calculation, the
transaction giving rise to the need to calculate the pro
forma effect to any of the following events shall be assumed
to have occurred on the first day of the four fiscal quarter
period last ended before the occurrence of the respective
event for which such pro forma effect is being determined
(the "Reference Period"), and
(ii) in making any determination with respect to the
incurrence or assumption of any Indebtedness or issuance of
any Disqualified Preferred Stock during the Reference Period
or subsequent to the Reference Period and on or prior to the
date of the transaction referenced in clause (i) above (the
"Transaction Date"), (w) all Indebtedness or Disqualified
Preferred Stock (including the Indebtedness or Disqualified
Preferred Stock incurred or assumed and for which the
financial effect is being calculated) incurred or
permanently repaid during the Reference Period shall be
deemed to have been incurred or repaid at the beginning of
such period, (x) Consolidated Net Interest Expense of such
Person attributable to interest or dividends on any
Indebtedness or Disqualified Preferred Stock, as the case
may be, bearing floating interest rates should be computed
on a pro forma basis as if the rate in effect on the
Transaction Date had been the applicable rate for the entire
period, (y) Consolidated Net Interest Expense of such Person
attributable to interest on any Indebtedness under any
revolving credit facility which was in effect during the
respective Reference Period shall be computed on a pro forma
basis based upon the average daily balance of such
Indebtedness outstanding during the applicable period (or,
if shorter, the portion of the period during which the
revolving credit facility was in effect) and (z)
Consolidated Net Interest Expense will be increased or
reduced by the net cost (including amortization of discount)
or benefit (after giving effect to amortization of discount)
associated with the Interest Rate Protection Agreements,
which will remain in effect for the twelve-month period
after the Transaction Date and which shall have the effect
of fixing the interest rate on the date of computation, and
(iii) in making any determination of Consolidated
EBITDA, pro forma effect shall be given to any acquisition
of part or all of a business or division of another Person
or any Significant Divestiture which occurred during the
Reference Period or subsequent to the Reference Period and
prior to the Transaction Date, Consolidated EBITDA shall be
determined as if such acquisition or Significant Divestiture
I-16
occurred on the first day of the Reference Period, taking
into account cost savings and expenses which would otherwise
be accounted for as an adjustment pursuant to Article 11 of
Regulation S-X under the Securities Act of 1933, as amended,
as if such cost savings or expenses were realized on the
first day of the Reference Period.
"Purchase Limit" means $150,000,000, as such amount may
be reduced pursuant to Section 1.01. References to the unused
portion of the Purchase Limit shall mean, at any time, the
Purchase Limit, as then reduced pursuant to Section 1.01(b) or
pursuant to the next sentence, minus the sum of the then
outstanding Invested Amount of Receivable Interests under the
Agreement and the then outstanding "Invested Amount" of
"Receivable Interests" under the Alternate Receivables Purchase
Agreement. Furthermore, on each day on which the Seller reduces
the unused portion of (or terminates) the "Total Commitment"
under the Alternate Receivables Purchase Agreement, the Purchase
Limit automatically shall reduce by the same amount (or so
terminate).
"Rate Determination Date" means, for any Receivable
Interest, the date of purchase of such Receivable Interest and
thereafter the eleventh day of each calendar month (provided that
(i) if the tenth day of any calendar month is not a Business Day,
the Rate Determination date for such month shall be the second
Business Day following the tenth day of such month, and (ii) if
the tenth day of any calendar month is a Business Day, but the
eleventh day is not, the Rate Determination Date for such month
shall be the first Business Day following the eleventh day of
such month) or any other day as shall have been agreed to in
writing by the Seller and the Agent prior to the immediately
preceding Rate Determination Date for such Receivable Interest.
"Rating Agency" means, collectively, Moody's Investors
Service, Inc. and Standard & Poor's Ratings Group, and their
respective successors in interest.
"Receivable" means the indebtedness of any Obligor
under a Contract (including the right to payment of any interest
or finance charges and other obligations of such Obligor with
respect thereto), which indebtedness has been acquired by the
Seller from one of the Originators by purchase or by capital
contribution pursuant to the Originator Purchase Agreement.
"Receivable Interest" means, at any time, an undivided
percentage ownership interest in (i) all then outstanding Pool
Receivables arising prior to the time of the most recent
computation or recomputation of such undivided percentage
interest pursuant to Section 1.03, (ii) all Related Security with
respect to such Pool Receivables, and (iii) all Collections with
respect to, and other proceeds of, such Pool Receivables and
Related Security. Each undivided percentage interest shall be
computed as
I-17
IA + YR + LR + SFR + DR
NRPB
where:
IA = the Invested Amount of each such
Receivable Interest at the time of
computation.
YR = the Yield Reserve of each such
Receivable Interest at the time of
computation.
LR = the Loss Reserve of each such Receivable
Interest at the time of computation.
SFR = the Servicer Fee Reserve of each such
Receivable Interest at the time of
computation.
DR = the Dilution Reserve of each such
Receivable Interest at the time of
computation.
NRPB = the Net Receivables Pool Balance at the
time of computation.
Each Receivable Interest shall be determined from time to time
pursuant to the provisions of Section 1.03.
"Receivables Pool" means at any time the aggregation of
each then outstanding Receivable in respect of which the Obligor
is a Designated Obligor at such time or was a Designated Obligor
on the date of the initial creation of an interest in such
Receivable under the Agreement or the Alternate Receivables
Purchase Agreement.
"Related Security" means with respect to any
Receivable:
(i) all of the Seller's right, title and interest
in and to all Contracts or other agreements that relate to
such Receivable;
(ii) all of the Seller's interest in any
merchandise (including returned merchandise) relating to any
sale giving rise to such Receivable;
(iii) all other security interests or liens and
property subject thereto from time to time purporting to
secure payment of such Receivable, whether pursuant to the
Contract related to such Receivable or otherwise, together
with all financing statements signed by an Obligor
describing any collateral securing such Receivable;
I-18
(iv) all guaranties, insurance and other agree-
ments or arrangements of whatever character from time to
time supporting or securing payment of such Receivable
whether pursuant to the Contract related to such Receivable
or otherwise; and
(v) all other books, records and other
information (including, without limitation, computer
programs, tapes, discs, punch cards, data processing
software and related property and rights) relating to such
Receivable and the related Obligor.
"Relevant Rating Agencies" means, collectively, each of
the Rating Agencies then rating the Issuer's commercial paper
notes at the request of the Issuer.
"Reportable Event" shall mean a Reportable Event as
defined in Section 4043(b) of ERISA.
"Required Rating" means, with respect to any Person's
long-term public senior debt securities, a rating of at least BB-
by Standard & Poor's Ratings Group and at least Ba3 by Moody's
Investors Service, Inc. If such Person does not have long-term
public senior debt securities outstanding, such Person shall be
deemed to have a senior debt rating of at least BB-/Ba3 (a) if
such Person has public subordinated debt securities outstanding
which are rated and the equivalent senior debt rating of such
Person based on standard benchmarks above such Person's
outstanding public subordinated rated debt is at least BB-/Ba3,
or (b) if such Person does not have public subordinated rated
debt securities outstanding, based on the Agent's commercially
reasonable determination that such Person's long-term public
senior debt securities would receive a rating of at least BB-/Ba3
if such Person did have such securities outstanding.
"Seller Report" means a report, in substantially the
form of Annex A hereto, furnished by the Servicer to the Agent
pursuant to the Servicer Agreement.
"Servicer" means, at any time, the Person or Persons
then authorized pursuant to the Servicer Agreement to administer
and collect Pool Receivables.
"Servicer Agreement" means an agreement among the
Originators, the Seller and the Agent (and, if the Originators do
not act as Servicer, consented to by the Originators), in form
and substance satisfactory to them, governing the appointment and
responsibilities of the Servicer as to administration and
collection of the Pool Receivables, and requiring the Servicer to
perform its obligations set forth in the Agreement.
"Servicer Fee" shall mean the servicer fee referred to
in the Servicer Agreement.
I-19
"Servicer Fee Reserve" for any Receivable Interest at
any time means the sum of (i) the unpaid Servicer Fee relating to
such Receivable Interest accrued to such time, plus (ii) an
amount equal to (a) the aggregate Pool Receivables relating to
such Receivable Interest on such date multiplied by (b) the
product of (x) the percentage per annum at which the Servicer Fee
is accruing on such date and (y) a fraction having the sum of the
Average Maturity plus the Collection Delay Period (each as in
effect at such date) as its numerator and 360 as its denominator.
"Settlement Date" for any Receivable Interest means the
last day of each Settlement Period for such Receivable Interest.
"Settlement Period" for any Receivable Interest means
each period commencing on the first day and ending on the last
day of each Fixed Period for such Receivable Interest and, on and
after the Termination Date for such Receivable Interest, such
period (including, without limitation, a period of one day) as
shall be selected from time to time by the Agent or, in the
absence of any such selection, each period of thirty days from
the last day of the immediately preceding Settlement Period.
"Subsidiary" means, with respect to any Person, any
corporation, partnership, association, joint venture, or other
business entity of which more than 50% of the total voting power
of shares of stock or other ownership interests entitled (without
regard to the occurrence of any contingency) to vote in the
election of the Person or Persons (whether directors, managers,
trustees or other persons performing similar functions) having
the power to direct or cause the direction of the management and
policies thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof.
"Tangible Net Worth" means at any time the excess of
(i) the Outstanding Balance of all Receivables plus cash and Cash
Equivalents of the Seller, minus (ii) the sum of (a) the
Outstanding Balance of such Receivables which have become
Defaulted Receivables, plus (b) Invested Amount, Yield Reserve,
Loss Reserve, Servicing Fee Reserve and Dilution Reserve, plus
(c) "Invested Amount", "Yield Reserve", "Loss Reserve",
"Servicing Fee Reserve" and "Dilution Reserve" under the
Alternate Receivables Purchase Agreement.
"Taxes" means, in the case of any Investor or the
Agent, taxes, levies, imposts, deductions, charges, withholdings
and liabilities, now or hereafter imposed, levied, collected,
withheld or assessed by any country (or any political subdivision
thereof), excluding income or franchise taxes imposed on it by
(i) the jurisdiction under the laws of which such Investor or the
Agent, as the case may be, is organized (or by any political
subdivision thereof), (ii) any jurisdiction in which an office of
such Investor or the Agent funding or maintaining the ownership
I-20
of Receivable Interests is located (or any political subdivision
thereof), or (iii) any jurisdiction in which such Investor or the
Agent is already subject to tax.
"Termination Date" for any Receivable Interest means
the earlier of (i) the Business Day which the Seller or the Agent
so designates by notice to the other at least one Business Day in
advance for such Receivable Interest and (ii) the Facility
Termination Date.
"UCC" means the Uniform Commercial Code as from time to
time in effect in the specified jurisdiction.
"Yield" means, for any Receivable Interest for any
Fixed Period:
CPR x IA x ED + LF
---
360
where:
CPR = the CP Rate for such Receivable Interest
for such Fixed Period
IA = the Invested Amount of such Receivable
Interest during such Fixed Period
ED = the actual number of days elapsed during
such Fixed Period
LF = the Liquidation Fee, if any, for such
Receivable Interest for such Fixed
Period;
provided that no provision of the Agreement shall require the
payment or permit the collection of Yield in excess of the
maximum permitted by applicable law; and provided further that
Yield for any Receivable Interest shall not be considered paid by
any distribution to the extent that at any time all or a portion
of such distribution is rescinded or must otherwise be returned
for any reason.
"Yield Reserve" for any Receivable Interest at any time
means the sum of (i) the Liquidation Yield at such time for such
Receivable Interest, plus (ii) the then accrued and unpaid Yield
for such Receivable Interest, plus (iii) the accrued and unpaid
program fee set forth in the Fee Agreement multiplied by a
fraction, the numerator of which is the Invested Amount of such
Receivable Interest and the denominator of which is the Aggregate
Invested Amount. For purposes of this definition, "Liquidation
Yield" means, for any Receivable Interest on any date, an amount
equal to:
[IA x (CPR + 1.0%) x (AM + CDP)] + [PL x PFR x IA x (AM + CDP)]
I-21
360 AIA 360
where:
IA = the Invested Amount of such Receivable
Interest on such date
CPR = the CP Rate for such Receivable Interest for
a 30-day Fixed Period deemed to commence on
the second Business Day preceding such date
(provided that such CP Rate for the Fixed
Period commencing November 17, 1994 shall be
5.3397%)
AM = the Average Maturity as in effect at such
date
CDP = the Collection Delay Period as in effect at
such date
PL = the Purchase Limit
PFR = the rate per annum at which the program fee
set forth in the Fee Agreement is accruing on
such date
AIA = the Aggregate Invested Amount on such date
- - - - - -
Other Terms. The terms "Cash Equivalents",
"Consolidated Debt", "Disqualified Preferred Stock", "Dividends",
"Fiscal Year", "Restricted Subsidiaries", "Services Agreement",
"Significant Divestiture" and "Transaction" shall have the
meanings attributed thereto in the Bank Credit Agreement as in
effect on the date hereof, without giving effect to any
amendments to the Bank Credit Agreement (unless the Agent shall
have consented to such amendments in writing), and regardless of
any subsequent expiration or termination of the Bank Credit
Agreement. All accounting terms not specifically defined herein
shall be construed in accordance with generally accepted
accounting principles. 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.
I-22
EXHIBIT II
CONDITIONS OF PURCHASES
1. Conditions Precedent to Initial Purchase. The
initial purchase of a Receivable Interest under the Agreement is
subject to the conditions precedent that the Agent shall have
received on or before the date of such purchase the following,
each (unless otherwise indicated) dated such date, in form and
substance satisfactory to the Agent:
(a) Certified copies of the resolutions of the Board
of Directors of the Seller approving the Agreement and certified
copies of all documents evidencing other necessary corporate
action and governmental approvals, if any, with respect to the
Agreement.
(b) A copy of the certificate or articles of
incorporation, as amended, of the Seller, certified as of a
recent date by the Secretary of State or other appropriate
official of Delaware, and a certificate as to the good standing
of the Seller from such Secretary of State or other official,
dated as of a recent date.
(c) A certificate of the Secretary or Assistant
Secretary of the Seller certifying (i) that attached thereto is a
true and complete copy of the By-Laws of the Seller as in effect
on the date of such certificate and at all times since a date
prior to the date of the resolutions described in paragraph (a)
above, (ii) that the certificate or articles of incorporation of
the Seller has not been amended since the date of the last
amendment thereto shown on the certificate of good standing
furnished pursuant to paragraph (b) above, and (iii) the names
and true signatures of the officers of the Seller authorized to
sign the Agreement and the other documents to be delivered by it
hereunder.
(d) Acknowledgment copies, or time stamped receipt
copies of proper financing statements, duly filed on or before
the date of such initial purchase under the UCC of all
jurisdictions that the Agent may deem necessary or advisable in
order to perfect the ownership and security interests
contemplated by the Agreement and the Originator Purchase
Agreement.
(e) Acknowledgment copies, or time stamped receipt
copies of proper financing statements, if any, necessary to
release all security interests and other rights of any Person in
the Receivables, Contracts or Related Security previously granted
by the Seller or any Originator.
(f) Completed requests for information, dated on or
before the date of such initial purchase, listing the financing
II-1
statements referred to in subsection (d) above and all other
effective financing statements filed in the jurisdictions
referred to in subsection (d) above that name the Seller or any
Originator as debtor, together with copies of such other
financing statements (none of which shall cover any Receivables,
Contracts or Related Security).
(g) Copies of executed Lock-Box Agreements with the
Lock-Box Banks.
(h) Certified copies of the resolutions of the Board
of Directors of each Originator approving the Originator Purchase
Agreement and the Servicer Agreement and certified copies of all
documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to the Originator
Purchase Agreement and the Servicer Agreement.
(i) A copy of the certificate or articles of
incorporation, as amended, of each Originator, certified as of a
recent date by the Secretary of State or other appropriate
official of the state of its organization, and a certificate as
to the good standing of each Originator from such Secretary of
State or other official, dated as of a recent date.
(j) A certificate of the Secretary or Assistant
Secretary of each Originator certifying (i) that attached thereto
is a true and complete copy of the By-Laws of such Originator as
in effect on the date of such certificate and at all times since
a date prior to the date of the resolutions described in
paragraph (i) above, (ii) that the certificate or articles of
incorporation of such Originator has not been amended since the
date of the last amendment thereto shown on the certificate of
good standing furnished pursuant to paragraph (i) above, and
(iii) the names and true signatures of the officers thereof
authorized to sign the Originator Purchase Agreement and the
Servicer Agreement.
(k) A favorable opinion of Morgan, Lewis & Bockius,
counsel for the Seller and the Originators, substantially in the
form of Annex C hereto and as to such other matters as the Agent
may reasonably request.
(l) The Servicer Agreement.
(m) The Certificate of Assignment, substantially in
the form of Annex E hereto, evidencing the assignment by the
Seller to the Agent for the benefit of the Investors of the
Receivable Interests.
(n) The fee agreement referred to in Section 1.05.
(o) The Originator Purchase Agreement and the Interco
Agreement, duly executed by the parties thereto, and evidence
II-2
that all of the conditions precedent to the initial purchase
under the Originator Purchase Agreement have been satisfied.
(p) A reliance letter from Morgan, Lewis & Bockius,
counsel for the Originators and Interco, stating that the Agent
and the Investors may rely on the opinion delivered to the Seller
pursuant to Section 3.01 (g) of the Originator Purchase Agreement
as if such opinion had been addressed to them.
(q) Evidence of payment of all fees and expenses,
including the fees and expenses of counsel to the Agent, incurred
in connection with the preparation, execution and delivery of
this Agreement and any other documents executed in connection
herewith and the transactions contemplated hereby.
(r) A certificate of the Secretary or Assistant
Secretary of Lane and Broyhill certifying that attached thereto
is a true and complete copy of the Bank Credit Agreement and the
Security Agreement referred to therein.
(s) An intercreditor agreement among Bankers Trust
Company, as agent, the Seller and the Agent, duly executed by the
parties thereto.
(t) Written confirmation from each of the Relevant
Rating Agencies that the rating of the Issuer's commercial paper
notes will not be downgraded or withdrawn solely as a result of
entering into the Agreement.
2. Conditions Precedent to All Purchases and Reinvest-
ments. Each purchase (including the initial purchase) and each
reinvestment shall be subject to the further conditions precedent
that
(a) the Servicer shall have delivered to the Agent on
or prior to such purchase or reinvestment, in form and substance
satisfactory to the Agent, a completed Seller Report containing
information covering the most recently ended reporting period for
which information is required pursuant to the Servicer Agreement
and, if requested by the Agent, a listing by Obligor of all Pool
Receivables and such additional information as may reasonably be
requested by the Agent,
(b) on the date of such purchase or reinvestment the
following statements shall be true (and acceptance of the
proceeds of such purchase or reinvestment shall be deemed a
representation and warranty by the Seller that such statements
are then true):
(i) On the Initial Purchase Date, the
representations and warranties contained in Exhibit III are
correct on and as of such date as though made on and as of
such date, and on the date of each subsequent purchase and
each reinvestment, the representations contained in
II-3
paragraphs (g), (h), (j), (k) and (o) of Exhibit III are
correct on and as of the date of such purchase or
reinvestment as though made on and as of such date,
(ii) No event has occurred and is continuing,
or would result from such purchase or reinvestment, that
constitutes an Event of Termination or that would constitute
an Event of Termination but for the requirement that notice
be given or time elapse or both (unless such event or Event
of Termination shall have been specifically waived in
writing by the Agent; provided that the parties hereto
acknowledge that the Events of Termination set forth in
paragraphs (g) and (h) of Exhibit V cannot be waived by the
Agent for this purpose),
(iii) No event described in paragraph (g) of
Exhibit V has occurred and is continuing (without giving
effect to the 30-day period provided therein for dismissal
or stay),
(iv) All of the long-term public senior debt
securities of Interco shall have the Required Rating,
(v) The Agent shall not have given the Seller at
least one Business Day's notice that the Investors have
terminated the reinvestment of Collections in Receivable
Interests, and
(c) the Agent shall have received such other approvals,
opinions or documents as it may reasonably request.
II-4
EXHIBIT III
REPRESENTATIONS AND WARRANTIES
The Seller represents and warrants as follows:
(a) The Seller is a corporation duly incorporated,
validly existing and in good standing under the laws of the state
of Delaware, and is duly qualified to do business, and is in good
standing, in every jurisdiction where the nature of its business
requires it to be so qualified.
(b) The execution, delivery and performance by the
Seller of the Agreement and the other documents to be delivered
by it thereunder, including the Seller's use of the proceeds of
purchases and reinvestments, (i) are within the Seller's
corporate powers, (ii) have been duly authorized by all necessary
corporate action, (iii) do not contravene (1) the Seller's
charter or by-laws, (2) any law, rule or regulation applicable to
the Seller, (3) any contractual restriction binding on or
affecting the Seller or its property or (4) any order, writ,
judgment, award, injunction or decree binding on or affecting the
Seller or its property, and (iv) do not result in or require the
creation of any lien, security interest or other charge or
encumbrance upon or with respect to any of its properties, other
than in favor of the Agent. The Agreement has been duly executed
and delivered by the Seller.
(c) No authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and
performance by the Seller of the Agreement or any other document
to be delivered thereunder; or to the extent authorization,
approval or other action by, or notice to or filing with, any
governmental authority or regulatory body is required, it has
been obtained, notice has been given or the appropriate filing
has been made.
(d) The Agreement constitutes the legal, valid and
binding obligation of the Seller enforceable against the Seller
in accordance with its terms.
(e) The consolidated and consolidating balance sheets
of Interco and its Subsidiaries as at December 31, 1993 and
September 30, 1994, and the related consolidated and
consolidating statements of income and cash flow and changes in
shareholders' equity of Interco and its Subsidiaries for the
fiscal year and nine-month period ended on such dates, copies of
which have been furnished to the Agent, fairly present the
financial condition of Interco and its Subsidiaries as at such
dates and the results of the operations of Interco and its
Subsidiaries for the periods ended on such dates, all in
accordance with generally accepted accounting principles
consistently applied, and since September 30, 1994 there has been
III-1
no material adverse change in the business, operations, property
or financial or other condition of Interco. The pro forma
balance sheet of the Seller as at October 29, 1994, giving effect
to the initial purchase under the Agreement, a copy of which has
been furnished to the Agent, fairly presents the financial
condition of the Seller as at such date, in accordance with
generally accepted accounting principles, and since October 29,
1994 there has been no material adverse change in the business,
operations, property or financial or other condition of the
Seller.
(f) There is no pending or threatened action or
proceeding affecting the Seller or Interco or any of its
Subsidiaries before any court, governmental agency or arbitrator
which may materially adversely affect the financial condition or
operations of the Seller, Interco or any Originator or the
ability of the Seller to perform its obligations under the
Agreement, or which purports to affect the legality, validity or
enforceability of the Agreement.
(g) No proceeds of any purchase or reinvestment will
be used to acquire any equity security of a class which is
registered pursuant to Section 12 of the Securities Exchange Act
of 1934.
(h) The Seller is the legal and beneficial owner of
the Pool Receivables and Related Security free and clear of any
Adverse Claim. Upon each purchase of or reinvestment in a
Receivable Interest, the Investors shall acquire a valid and
perfected first priority undivided percentage ownership interest
to the extent of the pertinent Receivable Interest in each Pool
Receivable then existing or thereafter arising and in the Related
Security and Collections with respect thereto. No effective
financing statement or other instrument similar in effect
covering any Contract or any Pool Receivable or the Related
Security or Collections with respect thereto is on file in any
recording office, except those filed in favor of the Agent
relating to the Agreement and the Alternate Receivable Purchase
Agreement and those filed in favor of the Seller pursuant to the
Originator Purchase Agreement.
(i) Each Seller 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 or the Investors in connection
with the Agreement is or will be accurate in all material
respects as of its date or (except as otherwise disclosed to the
Agent or the Investors, as the case may be, at such time) as of
the date so furnished, and no such document contains or will
contain any untrue statement of a material fact or omits or will
omit to state a material fact necessary in order to make the
statements contained therein, in the light of the circumstances
under which they were made, not misleading.
III-2
(j) The principal place of business and chief
executive office of the Seller and the office where the Seller
keeps its records concerning the Pool Receivables are located at
the address or addresses referred to in paragraph (b) of Exhibit
IV.
(k) The names and addresses of all the Lock-Box Banks,
together with the account numbers of the Lock-Box Accounts of the
Seller at such Lock-Box Banks, are specified in Schedule I hereto
(or at such other Lock-Box Banks and/or with such other Lock-Box
Accounts as have been notified to the Agent in accordance with
the Agreement).
(l) The Seller is a newly formed corporation
incorporated on November 4, 1994, and the Seller has not engaged
in any business activities prior to the date hereof. The Seller
has no Subsidiaries.
(m) Without limiting the generality of paragraph (f)
above, (i) there are no pending claims or litigation and (ii)
neither the Seller nor any of the Originators has received or
given any written communication from or to any governmental
authority or any other Person, in each case concerning the
possible presence of any asbestos or hazardous wastes including,
without limitation, toxic or hazardous substances, wastes or
contaminants and discharges of sewage or effluents, for which the
Seller or any Originator may be responsible under any applicable
federal, state or local law, rule, regulation or order, which in
the case of either clause (i) or (ii), may materially adversely
affect the financial condition or operations of the Seller or any
of the Originators or the ability of the Seller to perform its
obligations under the Agreement.
(n) The fair value of the property of the Seller is
greater than the total amount of liabilities, including
contingent liabilities, of the Seller, (ii) the present fair
salable value of the assets of the Seller is not less than the
amount that will be required to pay all probable liabilities of
the Seller on its debts as they become absolute and matured,
(iii) the Seller does not intend to, and does not believe that it
will, incur debts or liabilities beyond the Seller's abilities to
pay such debts and liabilities as they mature and (iv) the Seller
is not engaged in a business or a transaction, and is not about
to engage in a business or a transaction, for which the Seller's
property would constitute unreasonably small capital.
(o) With respect to each Pool Receivable, the Seller
(i) shall have received such Pool Receivable as a contribution to
the capital of the Seller by one of the Originators or (ii) shall
have purchased such Pool Receivable from one of the Originators
in exchange for payment (made by the Seller to such Originator in
accordance with the provisions of the Originator Purchase
Agreement) of cash in an amount which constitutes fair
consideration and reasonably equivalent value. Each such sale
referred to in clause (ii) of the preceding sentence shall not
have been made for or on account of an antecedent debt owed by an
III-3
Originator to the Seller and no such sale is or may be voidable
or subject to avoidance under any section of the Federal
Bankruptcy Code.
(p) On the Initial Purchase Date, and after giving
effect to the purchase on such date, the Tangible Net Worth of
the Seller shall be equal to at least 3% of the Aggregate
Invested Amount.
III-4
EXHIBIT IV
COVENANTS
Covenants of the Seller. Until the latest of the
Facility Termination Date, the date on which no Invested Amount
of or Yield on any Receivable Interest shall be outstanding or
the date all other amounts owed by the Seller hereunder to the
Investors or the Agent are paid in full:
(a) Compliance with Laws, Etc. The Seller will 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 existence, rights, franchises, qualifications, and
privileges would not materially adversely affect the collecti-
bility of the Receivables Pool or the ability of the Seller to
perform its obligations under the Agreement.
(b) Offices, Records and Books of Account. The Seller
will keep its principal place of business and chief executive
office and the office where it keeps its records concerning the
Pool 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 Agent, at any other locations in
jurisdictions where all actions reasonably requested by the Agent
to protect and perfect the interest in the Pool Receivables have
been taken and completed. The Seller also will maintain and
implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing
Pool Receivables and related Contracts in the event of the
destruction of the originals thereof), and keep and maintain all
documents, books, records and other information reasonably
necessary or advisable for the collection of all Pool Receivables
(including, without limitation, records adequate to permit the
daily identification of each Pool Receivable and all Collections
of and adjustments to each existing Pool Receivable).
(c) Performance and Compliance with Contracts and
Credit and Collection Policy. The Seller will, at its expense,
timely and fully perform and comply with all material provisions,
covenants and other promises required to be observed by it under
the Contracts related to the Pool Receivables, and timely and
fully comply in all material respects with the Credit and
Collection Policy in regard to each Pool Receivable and the
related Contract.
(d) Sales, Liens, Etc. The Seller will 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
IV-1
respect to, any Pool Receivable, Related Security, related
Contract or Collections, or upon or with respect to any account
to which any Collections of any Pool Receivable are sent, or
assign any right to receive income in respect thereof, other than
in favor of the Agent (with respect to the Agreement and the
Alternate Receivables Purchase Agreement).
(e) Extension or Amendment of Receivables. Except as
provided in the Servicer Agreement, the Seller will not extend
the maturity or adjust the Outstanding Balance or otherwise
modify the terms of any Pool Receivable, or amend, modify or
waive any term or condition of any Contract related thereto.
(f) Change in Business or Credit and Collection
Policy. The Seller will not make any change in the character of
its business or in the Credit and Collection Policy that would,
in either case, materially adversely affect the collectibility of
the Receivables Pool or the ability of the Seller to perform its
obligations under the Agreement without the prior written consent
of the Agent. The Seller shall not make any other change without
30 Business Days prior written notice to the Agent. The Agent
shall promptly forward to the Relevant Rating Agencies all
changes to the Credit and Collection Policy which it receives
from the Seller.
(g) Audits. The Seller will, and will obtain the
contractual agreement of each Originator to, from time to time
during regular business hours as may be reasonably requested by
the Agent, permit the Agent, or its agents or representatives, at
the Seller's expense, (i) to examine and make copies of and
abstracts from all books, records and documents (including,
without limitation, computer tapes and disks) in the possession
or under the control of the Seller or any Originator relating to
Pool Receivables and the Related Security, including, without
limitation, the related Contracts, and (ii) to visit the offices
and properties of the Seller or any Originator for the purpose of
examining such materials described in clause (i) above, and to
discuss matters relating to Pool Receivables and the Related
Security or the Seller's performance hereunder or under the
Contracts with any of the officers or employees of the Seller or
any Originator having knowledge of such matters.
(h) Change in Payment Instructions to Obligors. The
Seller will not add or terminate any bank as a Lock-Box Bank from
those listed in Schedule I to the Agreement, or make any change
in its instructions to Obligors regarding payments to be made to
the Seller or payments to be made to any Lock-Box Bank, unless
the Agent shall have received notice of such addition,
termination or change and executed copies of Lock-Box Agreements
with each new Lock-Box Bank.
(i) Deposits to Lock-Box Accounts. Commencing no
later than December 15, 1994, the Seller will deposit, or cause
to be deposited, all Collections of Pool Receivables into Lock-
IV-2
Box Accounts. The Seller will not deposit or otherwise credit,
or cause or permit to be so deposited or credited, to any Lock-
Box Account cash or cash proceeds other than Collections of Pool
Receivables.
(j) Marking of Records. At its expense, the Seller
will mark its financial statements and master data processing
records evidencing Pool Receivables and related Contracts with a
legend evidencing that Receivable Interests related to such Pool
Receivables and related Contracts have been sold in accordance
with the Agreement.
(k) Reporting Requirements. The Seller will provide
to the Agent (in multiple copies, if requested by the Agent) the
following:
(i) as soon as available and in any event within
45 days after the end of the first three quarters of each
fiscal year of the Seller, a balance sheet of the Seller and
a consolidated and consolidating balance sheet of Interco
and its Subsidiaries as of the end of such quarter and
statements of income and retained earnings of the Seller and
consolidated and consolidating statements of income and
retained earnings of Interco and its Subsidiaries for the
period commencing at the end of the previous fiscal year and
ending with the end of such quarter, certified by the chief
financial officer of the Seller and Interco, as the case may
be; provided, however, that the requirements of this clause
(i) as to financial statements of Interco and its
Subsidiaries may be satisfied by delivery of Interco's form
10-Q filed with the Securities and Exchange Commission;
(ii) as soon as available and in any event
within 90 days after the end of each fiscal year of the
Seller, a copy of the annual report for such year for the
Seller and Interco and its Subsidiaries, containing
financial statements for such year audited by Peat Marwick
or other independent public accountants acceptable to the
Agent; provided, however, that the requirements of this
clause (ii) as to financial statements of Interco and its
Subsidiaries may be satisfied by delivery of Interco's form
10-K filed with the Securities and Exchange Commission;
(iii) as soon as possible and in any event
within five days after the occurrence of each Event of
Termination or event which, with the giving of notice or
lapse of time, or both, would constitute an Event of
Termination, a statement of the chief financial officer of
the Seller setting forth details of such Event of
Termination or event and the action that the Seller has
taken and proposes to take with respect thereto;
(iv) promptly after the sending or filing
thereof, copies of all reports that Interco sends to any of
IV-3
its security holders, and copies of all reports and
registration statements that Interco or any of its
Subsidiaries files with the Securities and Exchange
Commission or any national securities exchange;
(v) promptly after the filing or receiving
thereof, copies of all reports and notices that Interco or
any Affiliate files under ERISA with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation or the
U.S. Department of Labor or that Interco or any Affiliate
receives from any of the foregoing or from any multiemployer
plan (within the meaning of Section 4001(a)(3) of ERISA) to
which Interco or any Affiliate 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 which could, in the aggregate, result in
the imposition of liability on Interco and/or any such
Affiliate in excess of $1,000,000;
(vi) at least ten Business Days prior to any
change in the name of the Seller or any Originator, a notice
setting forth the new name and the effective date thereof;
(vii) such other information respecting the
Receivables or the condition or operations, financial or
otherwise, of the Seller or any Originator as the Agent may
from time to time reasonably request;
(viii) promptly (and in any event within ten
Business Days) after the Seller obtains knowledge thereof,
notice of any (a) litigation, investigation or proceeding
which may exist at any time between the Seller or any
Originator and any governmental authority which, in either
case, if not cured or if adversely determined, as the case
may be, would have a material adverse effect on the
business, operations, property or financial or other
condition of the Seller or such Originator; (b) litigation
or proceeding adversely affecting the Seller's ability to
perform its obligations under this Agreement or the Servicer
Agreement; (c) litigation or proceeding adversely affecting
the Seller or any Originator in which the amount involved is
$1,000,000 or more and not covered by insurance or in which
injunctive or similar relief is sought; or (d) any "Event of
Termination" under the Originator Purchase Agreement;
(ix) promptly after the occurrence thereof,
notice of a material adverse change in the business,
operations, property or financial or other condition of the
Seller or any Originator;
(x) as soon as possible and in any event within
one Business Day after the occurrence thereof, notice of any
period of ten consecutive Business Days occurring prior to
the "Facility Termination Date" under the Originator
IV-4
Purchase Agreement during which no purchases of Receivables
by and no contributions of Receivables to the Seller are
made pursuant to the Originator Purchase Agreement;
(xi) promptly (and in any event within ten
Business Days) after the Seller's receipt thereof, a copy of
the quarterly and annual financial statements of Haverty
Furniture Companies, Inc.;
(xii) promptly, and in any event within three
Business Days after an executive officer of the Seller
obtains knowledge thereof, notice of the occurrence of any
event which constitutes a Daily Settlement Trigger; and
(xiii) at the time of the delivery of the
financial statements provided for in clauses (i) and (ii) of
this paragraph, a certificate of the chief financial officer
of the Seller to the effect that, to the best of such
officer's knowledge, no Event of Termination or Daily
Settlement Trigger has occurred and is continuing or, if any
Event of Termination or Daily Settlement Trigger has
occurred and is continuing, specifying the nature and extent
thereof, which certificate shall set forth the calculations
required to establish compliance with the ratios and tests
set forth in clauses (a), (b), (c) and (g) of the definition
of Daily Settlement Trigger.
(l) Daily Settlement Trigger. From and after the
occurrence of a Daily Settlement Trigger (but in no event prior
to the earlier of (i) the date the Seller notifies the Agent that
it has modified its accounting and computer systems so as to be
capable of producing daily settlements reports and (ii) February
1, 1995) the Seller shall (a) cause the Servicer to submit daily
settlement reports in form and substance satisfactory to the
Agent and (b) cause all Collections (and only Collections) to be
deposited daily, from the Lock-Box Accounts or other locations in
which Collections are received, into an account (the
"Concentration Account") maintained in a bank acceptable to the
Agent in the name of both the Seller and the Agent. Without in
any way affecting the provisions of Section 1.04 of the Agreement
relating to the disbursement of funds to the Agent or the
Investors, no funds in the Concentration Account shall be
distributed to or for the benefit of the Seller until the Agent
notifies the bank in which the Concentration Account is located
to release funds therein to the Seller; provided that the Agent
shall notify such bank to release funds to the Seller so long as
the Agent has received all daily settlement reports as required
by clause (a) above and the Agent is satisfied at the relevant
time that the Net Receivables Pool Balance is sufficient for the
Seller to meet its obligations under the Agreement. The funds in
the Concentration Account shall be invested in a manner
acceptable to the Agent. If all events constituting a Daily
Statement Trigger shall have been cured or shall no longer be
continuing, and no Event of Termination shall then exist, the
IV-5
Seller and Servicer may resume processing Collections as they did
immediately prior to the occurrence of a Daily Settlement Trigger
and the Servicer may resume delivery of the settlement report on
a monthly basis.
(m) Corporate Separateness. (1) The Seller shall at
all times maintain at least two independent directors each of
whom (x) is not currently and has not been during the five years
preceding the date of the Agreement an officer, director or
employee of an Affiliate of the Seller or any Other Corporation,
(y) is not a current or former officer or employee of the Seller
and (z) is not a stockholder of any Other Corporation or any of
their respective Affiliates.
(2) The Seller shall not direct or participate in the
management of any of the Other Corporations' operations.
(3) The Seller shall conduct its business from an
office separate from that of the Other Corporations (but
which may be located in the same facility as one or more of
the Other Corporations). The Seller shall have stationery
and other business forms and a mailing address and a
telephone number separate from that of the Other
Corporations.
(4) The Seller shall at all times be adequately
capitalized in light of its contemplated business.
(5) The Seller shall at all times provide for its own
operating expenses and liabilities from its own funds.
(6) The Seller shall maintain its assets and
transactions separately from those of the Other Corporations
and reflect such assets and transactions in financial
statements separate and distinct from those of the Other
Corporations and evidence such assets and transactions by
appropriate entries in books and records separate and
distinct from those of the Other Corporations. The Seller
shall hold itself out to the public under the Seller's own
name as a legal entity separate and distinct from the Other
Corporations. The Seller shall not hold itself out as
having agreed to pay, or as being liable, primarily or
secondarily, for, any obligations of the Other Corporations.
(7) The Seller shall not maintain any joint account
with any Other Corporation or become liable as a guarantor
or otherwise with respect to any Indebtedness or contractual
obligation of any Other Corporation.
(8) The Seller shall not make any payment or
distribution of assets with respect to any obligation of any
Other Corporation or grant an Adverse Claim on any of its
assets to secure any obligation of any Other Corporation.
IV-6
(9) The Seller shall not make loans, advances or
otherwise extend credit to any of the Other Corporations,
provided that such loans, advances or extensions are made on
arm's length terms and conditions and in accordance with the
consolidated cash management system for Interco and its
Subsidiaries.
(10) The Seller shall hold regular duly noticed
meetings of its Board of Directors and make and retain
minutes of such meetings.
(11) The Seller shall have bills of sale (or
similar instruments of assignment) and, if appropriate,
UCC-1 financing statements, with respect to all assets
purchased from any of the Other Corporations.
(12) The Seller shall not engage in any
transaction with any of the Other Corporations, except as
permitted by the Agreement and as contemplated by the
Originator Purchase Agreement.
(13) The Seller shall comply with (and cause to be
true and correct) each of the facts and assumptions
contained in paragraphs (a) - (r) on pages 3-6 of the
opinion of Morgan, Lewis & Bockius delivered pursuant to
paragraph 1 (k) of Exhibit II to the Agreement.
(n) Originator Purchase Agreement. The Seller will not
amend, waive or modify any provision of the Originator Purchase
Agreement or the Interco Agreement or waive the occurrence of any
"Event of Termination" under the Originator Purchase Agreement,
without in each case the prior written consent of the Agent. The
Seller will perform all of its obligations under the Originator
Purchase Agreement in all material respects and will enforce the
Originator Purchase Agreement and the Interco Agreement in
accordance with their respective terms in all material respects.
(o) Nature of Business. The Seller will not engage in
any business other than the purchase of Receivables, Related
Security and Collections from the Originators and the
transactions contemplated by this Agreement.
(p) Mergers, Etc. The Seller will not merge with or
into or consolidate with or into, or convey, transfer, lease or
otherwise dispose of (whether in one transaction or in a series
of transactions), all or substantially all of its assets (whether
now owned or hereafter acquired) to, or acquire all or
substantially all of the assets or capital stock or other
ownership interest of, or enter into any joint venture or
partnership agreement with, any Person, other than as
contemplated by the Agreement and the Originator Purchase
Agreement.
(q) Distributions, Etc. The Seller will not declare
or make any dividend payment or other distribution of assets,
IV-7
properties, cash, rights, obligations or securities on account of
any shares of any class of capital stock of the Seller, or return
any capital to its shareholders as such, or purchase, retire,
defease, redeem or otherwise acquire for value or make any
payment in respect of any shares of any class of capital stock of
the Seller or any warrants, rights or options to acquire any such
shares, now or hereafter outstanding; provided, however, that the
Seller may declare and pay cash dividends on its capital stock to
its shareholders so long as (i) no Event of Termination shall
then exist or would occur as a result thereof, (ii) after giving
effect to such dividends, the Tangible Net Worth of the Seller
shall be equal to at least 3% of the Aggregate Invested Amount,
(iii) such dividends are in compliance with all applicable law
including the Delaware General Corporation Law, and (iv) such
dividends have been approved by all necessary and appropriate
corporate action of the Seller.
(r) Indebtedness. The Seller will not incur any
Indebtedness, other than any Indebtedness incurred pursuant to
the Agreement or the Alternate Receivables Purchase Agreement.
(s) Certificate of Incorporation. The Seller will not
amend or delete Articles Third, Ninth or Tenth of its certificate
of incorporation.
(t) Daily Reporting. The Seller will, as promptly as
practical and in any event no later than February 1, 1995, modify
its accounting and computer systems so as to be capable of
producing daily settlement reports. The Seller will immediately
notify the Agent when it has achieved such capability.
(u) Advertising Payments. The Seller will, as
promptly as practical and in any event no later than February 1,
1995, modify its accounting and computer systems so as to be
capable of separately identifying cooperative advertising
payments for Receivables originated by Broyhill. The Seller will
immediately notify the Agent when it has achieved such
capability.
IV-8
EXHIBIT V
EVENTS OF TERMINATION
Each of the following shall be an "Event of
Termination":
(a) A "Servicer Default" shall occur under the
Servicer Agreement; or
(b) The Seller or the Servicer shall fail to transfer
to the Agent when requested any rights, pursuant to the Agreement
or the Servicer Agreement, which the Seller or the Servicer then
has as Servicer, or the Seller shall fail to make any payment
required under Section 1.04; or
(c) Any representation or warranty made or deemed made
by the Seller or the Servicer (or any of their respective
officers) under or in connection with the Agreement or the
Servicer Agreement or any information or report delivered by the
Seller pursuant to the Agreement or by the Servicer pursuant to
the Servicer Agreement shall prove to have been incorrect or
untrue in any material respect when made or deemed made or
delivered and (if correctable) shall remain incorrect or untrue
for ten days after the earlier of actual knowledge by the Seller
or the Servicer of such incorrectness or untruth or written
notice to the Seller or Servicer thereof; or
(d) The Seller shall fail to perform or observe (i)
any covenant contained in Exhibit IV, paragraph (a), (b) or (c)
and any such failure shall remain unremedied for twenty days
after the earlier of Seller's actual knowledge thereof or written
notice to the Seller thereof, or (ii) any other term, covenant or
agreement contained in the Agreement (other than as described in
paragraph (a) above or clause (i) of this paragraph (d)) or in
any other agreement delivered in connection herewith on its part
to be performed or observed and any such failure shall remain
unremedied for ten days after the earlier of Seller's actual
knowledge thereof or written notice thereof shall have been given
to the Seller by the Agent; or
(e) The Seller or Interco or any of its Subsidiaries
shall fail to pay any principal of or premium or interest on any
of its Indebtedness which is outstanding in a principal amount of
at least $10,000,000 in the aggregate when the same becomes due
and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), or any other event shall
occur or condition shall exist under any agreement or instrument
relating to any such Indebtedness, and such failure to pay, event
or condition shall continue after the applicable grace period, if
any, specified in such agreement or instrument, and as a result
thereof, the maturity of such Indebtedness is accelerated; or any
such Indebtedness shall be declared to be due and payable, or
V-1
required to be prepaid in full (other than by a regularly
scheduled required prepayment), redeemed, purchased or defeased,
or an offer to repay, redeem, purchase or defease such
Indebtedness in full shall be required to be made, in each case
prior to the final stated maturity thereof; or any such
Indebtedness shall fail to be paid at the final stated maturity
thereof; or
(f) Any purchase or any reinvestment pursuant to the
Agreement shall for any reason (other than pursuant to the terms
hereof) cease to create, or any Receivable Interest shall for any
reason cease to be, a valid and perfected first priority
undivided percentage ownership interest to the extent of the
pertinent Receivable Interest in each applicable Pool Receivable
and the Related Security and Collections with respect thereto;
provided, however, that no Event of Termination shall occur under
this paragraph (f) if (i) the aggregate Outstanding Balance of
the Pool Receivables in which the Investors cease to have a valid
and perfected first priority undivided percentage ownership
interest does not exceed $250,000 at any time and (ii) the Seller
makes any deemed Collection payment with respect thereto which is
required pursuant to Section 1.04(e)(ii) on or prior to the next
Settlement Date; or
(g) The Seller or any Originator shall make a general
assignment for the benefit of creditors; or any proceeding shall
be instituted by or against the Seller or any Originator 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, custodian or other similar official for it
or for any substantial part of its property and, in the case of
any such proceeding instituted against the Seller or any
Originator (but not instituted by any of them), either such
proceeding shall remain undismissed or unstayed for a period of
30 days, or any of the actions sought in such proceeding
(including, without limitation, 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 the Seller or any Originator shall take
any corporate action to authorize any of the actions set forth
above in this paragraph (g); or
(h) The sum of the Receivable Interests plus the
"Receivable Interests" under the Alternate Receivables Purchase
Agreement shall for a period of two consecutive Business Days be
greater than 100%; or
(i) (i) A Reportable Event shall have occurred with
respect to a Pension Plan, (ii) the filing by Interco, any ERISA
Affiliate, or an administrator of any Plan of a notice of intent
to terminate such a Plan in a "distress termination" under the
V-2
provisions of Section 4041 of ERISA, or (iii) the receipt of
notice by Interco, any ERISA Affiliate, or an administrator of a
Plan that the Pension Benefit Guaranty Corporation has instituted
proceedings to terminate (or appoint a trustee to administer)
such a Pension Plan, and in each case in clauses (i) through
(iii) of this paragraph (i), such event or conditions, if any,
could subject Interco or any ERISA Affiliate to any taxes,
penalties or other liabilities which, in the opinion of the
Agent, could have a material adverse effect on the financial
condition of Interco or any ERISA Affiliate; or
(j) An "Event of Termination" or "Facility Termination
Date" shall occur under the Originator Purchase Agreement, or the
Originator Purchase Agreement shall cease to be in full force and
effect; or
(k) All of the outstanding capital stock of the Seller
shall cease to be owned, directly or indirectly, by Interco.
V-3
SCHEDULE I
SCHEDULE II
LIST OF LOCK-BOX BANKS HOLDING ONE OR MORE
LOCK-BOX ACCOUNTS
Bank Lock-Box Account No.
First Union National Bank 2000000731225
Cash Management Division
Technical Services Department
213 South Jefferson
Roanoke, Virginia 24011
(With respect to Receivables
originated by Lane and/or Action)
First Union National Bank 7095100165
of North Carolina
Cash Management Division
Technical Services Department
301 South College Street, 9th Floor
Charlotte, North Carolina 28288-0800
(With respect to Receivables
originated by Broyhill)
II-2