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RECEIVABLES PURCHASE AGREEMENT
Dated As Of September 19, 1997
Among
CNC FINANCE LLC,
As Seller,
COLTEC INDUSTRIES INC,
As Collection Agent,
ATLANTIC ASSET SECURITIZATION CORP.,
As Issuer,
And
CREDIT LYONNAIS NEW YORK BRANCH,
As a Bank and as Agent
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TABLE OF CONTENTS
Page
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PRELIMINARY STATEMENTS............................................................................................1
ARTICLE I - AMOUNTS AND TERMS OF THE PURCHASES...................................................................1
SECTION 1.01. Purchase Facility......................................................................1
SECTION 1.02. Making Purchases.......................................................................2
SECTION 1.03. Receivable Interest Computation........................................................3
SECTION 1.04. Settlement Procedures..................................................................4
SECTION 1.05. Fees. .................................................................................7
SECTION 1.06. Payments and Computations, Etc.........................................................7
SECTION 1.07. Dividing or Combining Receivable Interests.............................................8
SECTION 1.08. Increased Costs........................................................................8
SECTION 1.09. Additional Yield on Receivable Interests Bearing a Eurodollar Rate.....................9
SECTION 1.10. Inability to Determine Eurodollar Rate................................................10
SECTION 1.11. Requirements of Law...................................................................10
SECTION 1.12. Security Interest.....................................................................11
ARTICLE II - REPRESENTATIONS AND WARRANTIES;
COVENANTS; EVENTS OF TERMINATION....................................................................12
SECTION 2.01. Representations and Warranties; Covenants.............................................12
SECTION 2.02. Events of Termination.................................................................12
ARTICLE III - INDEMNIFICATION....................................................................................13
SECTION 3.01. Indemnities by the Seller.............................................................13
ARTICLE IV - ADMINISTRATION AND COLLECTION OF POOL RECEIVABLES..................................................15
SECTION 4.01. Designation of Collection Agent.......................................................15
SECTION 4.02. Duties of Collection Agent............................................................16
SECTION 4.03. Certain Rights of the Agent...........................................................17
SECTION 4.04. Rights and Remedies...................................................................18
SECTION 4.05. Further Actions Evidencing Purchases..................................................18
SECTION 4.06. Covenants of the Collection Agent and the Originators.................................19
SECTION 4.07. Indemnities by the Collection Agent...................................................20
ARTICLE V - THE AGENT..........................................................................................22
SECTION 5.01. Authorization and Action..............................................................22
SECTION 5.02. Agent's Reliance, Etc.................................................................22
SECTION 5.03. Credit Lyonnais and Affiliates........................................................26
SECTION 5.04. Bank's Purchase Decision..............................................................26
ARTICLE VI - MISCELLANEOUS......................................................................................26
SECTION 6.01. Amendments, Etc.......................................................................26
SECTION 6.02. Notices, Etc..........................................................................27
SECTION 6.03. Assignability.........................................................................28
SECTION 6.04. Costs, Expenses and Taxes.............................................................31
SECTION 6.05. No Proceedings........................................................................31
SECTION 6.06. Confidentiality.......................................................................31
SECTION 6.07. Construction of the Agreement.........................................................32
SECTION 6.08. GOVERNING LAW.........................................................................32
SECTION 6.09. Execution in Counterparts.............................................................33
SECTION 6.10. No Recourse...........................................................................33
SECTION 6.11. Survival of Termination...............................................................33
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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 -- Credit and Collection Policy
ANNEX B -- Lock-Box Agreement
ANNEX C -- Monthly Report
ANNEX D -- Special Obligors
ANNEX E -- Form of Opinion of Counsel for Seller
ANNEX F -- Lock-Box Banks
ANNEX G -- Form of Assignment and Acceptance Agreement
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RECEIVABLES PURCHASE AGREEMENT
Dated as of September 19, 1997
CNC FINANCE LLC, a North Carolina limited liability company (the "Seller"),
COLTEC INDUSTRIES INC, a Pennsylvania corporation (the "Collection Agent"),
ATLANTIC ASSET SECURITIZATION CORP., a Delaware corporation (the "Issuer"), THE
INDUSTRIAL BANK OF JAPAN, LIMITED ("IBJ"), LLOYDS BANK PLC ("Lloyds"), THE
SUMITOMO BANK, LIMITED ("Sumitomo") and CREDIT LYONNAIS, a French banking
corporation acting through its New York Branch ("Credit Lyonnais"), individually
and as agent (the "Agent") for the Investors and the Banks (as defined herein),
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, and may continue to acquire, Receivables from
Coltec North Carolina Inc, which has acquired, and may continue to acquire, such
Receivables from various Originators (as defined herein), either by purchase or
by contribution. The Seller is prepared to sell undivided fractional ownership
interests (referred to herein as "Receivable Interests") in the Receivables. The
Issuer may, in its sole discretion, purchase such Receivable Interests, and the
Banks are prepared to purchase such Receivable Interests, in each case 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, and the Banks
shall, ratably in accordance with their respective Bank Commitments, purchase
Receivable Interests from the Seller from time to time during the period
from the date hereof to the Facility Termination Date, in the case of the
Issuer, and to the Commitment Termination Date, in the case of the Banks. Under
no circumstances shall the Issuer make any such purchase, or the Banks be
obligated to make any such purchase, if after giving effect to such purchase the
aggregate outstanding Capital of Receivable Interests would exceed the Purchase
Limit.
(b) The Seller may, upon at least five Business 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 Limit; provided that each partial reduction
shall be in the amount of at least $1,000,000 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 the Receivable Interest
percentage. The Agent, on behalf of the Banks which own Receivable Interests,
shall have the 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 the Receivable Interest percentage.
SECTION 1.02. Making Purchases (a) Each purchase of a Receivable Interest
shall be made on at least two Business Days' notice from the Seller to the
Agent. 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 $500,000, being
referred to herein as the initial "Capital" of each Receivable Interest then
being purchased), (ii) the Settlement Date on which such Purchase is to be made
and (iii) the desired duration of the initial Fixed Period for each such
Receivable Interest. 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. If the Issuer
has determined not to make a proposed purchase, the Agent shall promptly send
notice of the proposed purchase to all of the Banks concurrently specifying the
date of such purchase (which shall be the Settlement Date if Yield will be
calculated based on the Alternate Base Rate or not more than three Business Days
after the Settlement Date if Yield will be calculated based on the Eurodollar
Rate, as specified by the
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Seller for such purchase), each Bank's Percentage multiplied by the aggregate
amount of Capital of the Receivable Interests being purchased, whether the Yield
for the Fixed Period for such Receivable Interest is calculated based on the
Eurodollar Rate (which may be selected only if such notice is given at least
three Business Days prior to the purchase date) or the Alternate Base Rate, and
the duration of the Fixed Period for such Receivable Interest (which shall be
one day if the Seller has not selected another period).
(b) On the date of each such purchase of a Receivable Interest, the Issuer
or the Banks, as the case may be, 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. 3750711743 at NationsBank of Texas ABA No.
111-000-012, an amount equal to the initial Capital 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 parties making such purchase, 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.
(d) Notwithstanding the foregoing, a Bank shall not be obligated to make
purchases under this Section at any time in an amount which would exceed such
Bank's Bank Commitment less the outstanding and unpaid purchase price of any
purchases made by such Bank under the Liquidity Asset Purchase Agreement. Each
Bank's obligation shall be several, such that the failure of any Bank to make
available to the Seller any funds in connection with any purchase shall not
relieve any other Bank of its obligation, if any, hereunder to make funds
available on the date of such purchase, and if any Bank shall fail to make funds
available, each remaining Bank shall (subject to the limitation in the preceding
sentence) make available its pro rata portion of the funds required for such
purchase.
SECTION 1.03. Receivable Interest Computation. Each Receivable Interest
shall be initially computed on its date of purchase based on the most recent
Monthly Report required to be delivered on or prior to the Settlement Date.
Thereafter until the Termination Date for such Receivable Interest, such
Receivable Interest shall be deemed recomputed on each day other than a
Liquidation Day. Any Receivable Interest, as computed (or deemed recomputed) as
of the day immediately preceding the Termination Date for such Receivable
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Interest, shall thereafter remain constant. Such Receivable Interest shall
become zero when Capital thereof and Yield thereon shall have been paid in full,
all other amounts owed by the Seller hereunder to the Investors, the Banks or
the Agent are paid in full and the Collection Agent shall have received the
accrued Collection Agent Fee thereon.
SECTION 1.04. Settlement Procedures. (a) Collection of the Pool Receivables
shall be administered by a Collection Agent, in accordance with the terms of
Article IV of this Agreement. The Seller shall provide to the Collection Agent
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) The Collection Agent shall, on each day on which Collections of Pool
Receivables are received by it with respect to any Receivable Interest:
(i) identify and hold in trust for the Investors or the Banks that
hold such Receivable Interest, out of the percentage of such Collections
represented by such Receivable Interest, an amount equal to the Yield and
Collection Agent 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 or the Banks that hold such Receivable Interest,
the remainder of such percentage of Collections, to the extent representing
a return of Capital, by recomputation of such Receivable Interest pursuant
to Section 1.03;
(iii) if such day is a Liquidation Day (other than a Liquidation Day
resulting from a Termination Date occurring (x) because notice has been
given by either the Agent or the Seller pursuant to clauses (i)(a) and
(ii)(a) of the definition of Termination Date or (y) because a Facility
Termination Date or a Commitment Termination Date has occurred as a result
of the operation of clause (a) of the definitions of Facility Termination
Date or Commitment Termination Date, respectively), set aside and hold in
trust (and, at the request of the Agent, within five days after such
request, segregate into a separate account into which no other funds are
deposited) for the Investors or the Banks that hold such Receivable
Interest the entire remainder of such percentage of Collections; if such
day is a Liquidation Day as a result of the situations described in the
first parenthetical of this clause (iii), identify and hold in trust for
the Investors or the Banks that hold such Receivable Interest the entire
remainder of
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such percentage of Collections (and if such Liquidation Day occurs because
notice has been given by the Seller, then the Seller will, at the Agent's
request, within five days after such request, segregate such remainder into
a separate account into which no other funds are deposited); and
(iv) during such times as amounts are required to be reinvested in
accordance with the foregoing paragraph (ii), 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.
(c) The Collection Agent shall deposit into the Agent's Account, on the
last day of each Settlement Period for a Receivable Interest, Collections held
for the Investors or the Banks 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,
after converting any Canadian dollars received into U.S. dollars, shall
distribute them as follows:
(i) if such distribution occurs on a day that is not a Liquidation
Day, first to the Investors or the Banks that hold the relevant Receivable
Interest in payment in full of all accrued Yield and then to the Collection
Agent in payment in full of all accrued Collection Agent Fee for such
Receivable Interest.
(ii) if such distribution occurs on a Liquidation Day, first to the
Investors or the Banks that hold the relevant Receivable Interest in
payment in full of all accrued Yield, second , if Coltec or an Affiliate of
Coltec is not the Collection Agent, to the Collection Agent in payment in
full of all accrued Collection Agent Fees for all Receivable Interests,
third to such Investors or Banks in reduction to zero of all Capital,
fourth to such Investors or Banks or the Agent in payment of any other
amounts owed by the Seller hereunder and fifth
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if Coltec or an Affiliate of Coltec is the Collection Agent, to the
Collection Agent in payment in full of all accrued Collection Agent Fees.
After the Capital and Yield and Collection Agent Fee with respect to a
Receivable Interest, and any other amounts payable by the Seller to the
Investors, the Banks 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 or
other adjustment made by the Seller or any Originator, or any setoff or
dispute between the Seller or an Originator 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 any of the representations or warranties in
paragraph (h) of Exhibit III is no longer true with respect to any Pool
Receivable, the Seller shall be deemed to have received on such day a
Collection of such Pool Receivable in full;
(iii) if and to the extent the Agent, the Investors or the Banks 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, the Investors or the Banks, 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.
(f) Except as provided in paragraph (i) or (ii) of Section 1.04(e), or as
otherwise required by applicable law or the relevant Contract, all Collections
received from an Obligor of any Receivables shall be applied to the Receivables
of
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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.
(g) The Seller shall forthwith deliver to the Collection Agent an amount
equal to all Collections deemed received by the Seller pursuant to Section
1.04(e)(i) or (ii) above and the Collection Agent shall hold or distribute such
Collections in accordance with Section 1.04(b). If Collections are then being
paid to the Agent, or Lock-Box Accounts directly or indirectly owned or
controlled by the Agent, the Collection Agent shall forthwith cause such deemed
Collections to be paid to the Agent or such Lock-Box Accounts. So long as the
Seller shall hold any Collections or deemed Collections required to be paid to
the Collection Agent or the Agent, it shall hold such Collections in trust and
separate and apart from its own funds and shall clearly mark its records to
reflect such trust.
SECTION 1.05. Fees. (a) Each Investor and Bank shall pay to the Collection
Agent its pro rata share (based on outstanding Capital of Receivable Interests
owned) of a fee (the "Collection Agent Fee") with respect to each Receivable
Interest equal to the product of (i) 1% per annum of the Outstanding Balance of
the Pool Receivables as of the last day of the immediately preceding Fiscal
Month (as shown on the Monthly Report), (ii) the decimal equivalent of the
relevant Receivable Interest and (iii) the decimal equivalent of a fraction the
numerator of which is the number of days in the related Settlement Period and
the denominator of which is 360. The Collection Agent Fee shall be payable on
the last day of each Settlement Period only from Collections pursuant to, and
subject to the priority of payment set forth in, Section 1.04.
(b) The Seller agrees to pay to the Agent certain fees in the amounts and
on the dates set forth in the Fee Agreement.
SECTION 1.06. Payments and Computations, Etc. (a) All amounts to be paid or
deposited by the Seller or the Collection Agent hereunder to or for the account
of the Agent, the Issuer or any other Investor or the Banks 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.
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(b) The Seller shall, to the extent permitted by law, pay interest on any
amount not paid or deposited by the Seller (whether as Collection Agent or
otherwise) when due hereunder, at an interest rate per annum equal to 2% per
annum above the Alternate Base 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 Capital equal to the Capital of such
divided Receivable Interest, or (ii) combine any two or more Receivable
Interests originating on such last day or having Fixed Periods ending on such
last day into a single Receivable Interest having Capital equal to the aggregate
of the Capital of such Receivable Interests.
SECTION 1.08. Increased Costs. (a) If Credit Lyonnais, the Agent, any
Investor, any Bank, any entity which enters into a commitment to purchase
Receivable Interests or interests therein or any entity which provides liquidity
or credit enhancement (each an "Affected Person") determines that compliance
with any change in law or regulation or any change in any guideline or
interpretation of 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 and such Affected
Person 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,
hereunder or under any commitments to an Investor related to this Agreement or
to the funding thereof or any related liquidity facility or credit enhancement
facility (or any participation therein), 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
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Affected Person, additional amounts sufficient to compensate such Affected
Person in the light of such circumstances, to the extent that such Affected
Person reasonably determines such increase in capital to be allocable to the
existence of any of such commitments. A certificate as to such amounts that
explains in reasonable detail the basis for 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) If, due to either (i) the introduction of or any change (other than any
change by way of imposition or increase of reserve requirements referred to in
Section 1.09) in or in the interpretation of any law or regulation or (ii)
compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the cost to an Investor or Bank of agreeing to purchase or
purchasing, or maintaining the ownership of Receivable Interests in respect of
which Yield is computed by reference to the Eurodollar Rate, then, upon demand
by such Investor or Bank (with a copy to the Agent), the Seller shall
immediately pay to the Agent, for the account of such Investor or Bank (as a
third-party beneficiary), from time to time as specified by such Investor or
Bank, additional amounts sufficient to compensate such Investor or Bank for such
increased costs. A certificate as to such amounts that explains in reasonable
detail the basis for such amounts submitted to the Seller and the Agent by such
Investor or Bank shall be conclusive and binding for all purposes, absent
manifest error.
(c) Upon request of the Seller, the Affected Person requesting such
additional amounts shall use its best efforts to assign its interests in this
Agreement and in any Receivable Interests owned by it hereunder to a third party
which is not subject to such increased costs.
SECTION 1.09. Additional Yield on Receivable Interests Bearing a Eurodollar
Rate.
The Seller shall pay to each Investor or Bank, so long as such Investor or
Bank shall be required under regulations of the Board of Governors of the
Federal Reserve System to maintain reserves with respect to liabilities or
assets consisting of or including Eurocurrency Liabilities, additional Yield on
the unpaid Capital of each Receivable Interest of such Investor or Bank during
each Fixed Period in respect of which Yield is computed by reference to the
Eurodollar Rate, for such Fixed Period, at a rate per annum equal at all times
during such Fixed
9
Period to the remainder obtained by subtracting (i) the Eurodollar Rate for such
Fixed Period from (ii) the rate obtained by dividing such Eurodollar Rate
referred to in clause (i) above by that percentage equal to 100% minus the
Eurodollar Rate Reserve Percentage of such Investor or Bank for such Fixed
Period, payable on each date on which Yield is payable on such Receivable
Interest. Such additional Yield shall be determined by such Investor or Bank and
notice thereof given to the Seller through the Agent within 60 days after any
Yield payment is made with respect to which such additional Yield is requested.
A certificate as to such additional Yield that explains in reasonable detail the
basis for such amounts submitted to the Seller and the Agent by such Investor or
Bank shall be conclusive and binding for all purposes, absent manifest error.
Upon request of the Seller, the Investor or Bank requesting such additional
amounts shall use its best efforts to assign its interests in this Agreement and
in any Receivable Interests owned by it hereunder to a third party which is not
subject to such additional Yield.
SECTION 1.10. Inability to Determine Eurodollar Rate.
In the event that the Agent shall have determined prior to the first day of
any Fixed Period (which determination shall be conclusive and binding upon the
parties hereto) by reason of circumstances affecting the interbank Eurodollar
market, either (a) dollar deposits in the relevant amounts and for the relevant
Fixed Period are not available or (b) adequate and reasonable means do not exist
for ascertaining the Eurodollar Rate for such Fixed Period, the Agent shall
promptly give telephonic notice of such determination, confirmed in writing, to
the Seller prior to the first day of such Fixed Period. If such notice is given,
the Assignee Rate applicable to the relevant Receivable Interest shall be
determined without reference to the Eurodollar Rate.
SECTION 1.11. Requirements of Law.
In the event that any requirement of law or any change therein or in the
interpretation or application thereof by the relevant governmental authority to
an Affected Person after the date hereof or compliance by an Affected Person
with any request or directive (whether or not having the force of law) from any
central bank or other governmental authority:
(a) does or shall subject such Affected Person to any tax of any kind
whatsoever with respect to this Agreement or change the basis of taxation of
payments to such Affected Person on account of Collections, Yield or any other
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amounts payable hereunder (excluding taxes imposed on the income of such
Affected Person, and franchise taxes imposed on such Affected Person);
(b) does or shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by, or
deposits or other liabilities in or for the account of, purchases, advances or
loans by, or other credit extended by, or any other acquisition of funds by,
such Affected Person which are not otherwise included in the determination of
the Eurodollar Rate or the Alternate Base Rate hereunder; or
(c) does or shall impose on such Affected Person any other condition;
and the result of any of the foregoing is to increase the cost to such Affected
Person of maintaining a Receivable Interest funded by reference to the
Eurodollar Rate or the Alternate Base Rate or to reduce any amount receivable
hereunder funded by reference to the Eurodollar Rate or the Alternate Base Rate,
then, in any such case, the Seller shall pay such Affected Person, upon its
demand, any additional amounts necessary to compensate such Affected Person for
such additional cost or reduced amount receivable with regard to such Affected
Person's Receivable Interest funded by reference to the Eurodollar Rate or the
Alternate Base Rate. All such amounts shall be payable as incurred. A
certificate from such Affected Person or the Agent, as the case may be, to the
Seller certifying, in reasonably specific detail, the basis for, calculation of,
and amount of such additional costs shall be conclusive in the absence of
manifest error. Upon request of the Seller, the Investor or Bank requesting such
additional amounts shall use its best efforts to assign its interests in this
Agreement and in any Receivable Interests owned by it hereunder to a third party
which is not subject to such additional amounts.
SECTION 1.12. 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
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Investors and the Banks, and hereby grants to the Agent for its benefit and the
ratable benefit of the Investors and the Banks, a security interest in, all of
the Seller's right, title and interest in and to (a) the CNCI Purchase
Agreement, including, without limitation, (i) all rights of the Seller to
receive moneys due or to become due under or pursuant to the CNCI Purchase
Agreement, (ii) all security interests and property subject thereto from time to
time purporting to secure payment of monies due or to become due under or
pursuant to the CNCI Purchase Agreement, (iii) all rights of the Seller to
receive proceeds of any insurance, indemnity, warranty or guaranty with respect
to the CNCI Purchase Agreement, (iv) claims of the Seller for damages arising
out of or for breach of or default under the CNCI Purchase Agreement, and (v)
the right of the Seller to compel performance and otherwise exercise all
remedies thereunder, (b) all Receivables, the Related Security with respect
thereto and the Collections and all other assets, including, without limitation,
accounts, instruments and general intangibles (as those terms are defined in the
UCC) owned by the Seller and not otherwise purchased or scheduled to be
purchased under this Agreement and (c) to the extent not included in the
foregoing, all proceeds of any and all of the foregoing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES; COVENANTS;
EVENTS OF TERMINATION
SECTION 2.01. Representations and Warranties; Covenants.
The Seller hereby makes the representations and warranties, and hereby
agrees to perform and observe the covenants, set forth in Exhibits III and IV,
respectively, 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, and at the request of the Majority Banks
shall, by notice to the Seller, take any or all of the following actions: (x)
declare the Facility Termination Date and the Commitment Termination Date to
have occurred (in which case the Facility Termination Date and the Commitment
Termination Date shall be deemed to have occurred) and (y) without limiting any
right under this Agreement to replace the Collection Agent, designate another
Person to succeed the Collection Agent; provided that, automatically upon the
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occurrence of any event (without any requirement for the passage of time or the
giving of notice) described in paragraph (g) of Exhibit V, the Facility
Termination Date and the Commitment Termination Date shall occur. Upon any such
declaration or designation or upon any such automatic termination, the
Investors, the Banks and the Agent shall have (a) the rights of a "Purchaser"
under the Originator Purchase Agreement, the Canadian Purchase Agreement and the
CNCI Purchase Agreement, to the extent expressly provided for in such agreements
and (b), 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 of
the appropriate jurisdiction or jurisdictions 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, the Investors, the Banks
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 reasonable attorneys' fees) (all of the foregoing being
collectively referred to as "Indemnified Amounts") arising out of or resulting
from this Agreement 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, 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:
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(a) 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;
(b) any representation or warranty or statement made or deemed made by the
Seller (or any of its members) under or in connection with this Agreement and
the other Transaction Documents to which the Seller is a party which shall have
been incorrect in any material respect when made;
(c) the failure by the Seller to comply with any applicable law, rule or
regulation with respect to any Pool Receivable; or the failure of any Pool
Receivable or the related Contract to conform to any such applicable law, rule
or regulation;
(d) the failure to vest in the Agent on behalf of the Investors and the
Banks (a) 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 or
(b) a perfected security interest as provided in Section 1.12, in each case free
and clear of any Adverse Claim;
(e) the failure to have filed, or any delay in filing, financing statements
or other similar instruments or documents under the UCC of any applicable
jurisdiction or other applicable laws with respect to any Receivables in, or
purporting to be in, the Receivables Pool and the Related Security and
Collections in respect thereof, whether at the time of any purchase or
reinvestment or at any subsequent time;
(f) 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;
(g) any failure of the Seller to perform its duties or obligations in
accordance with the provisions hereof or of the CNCI Purchase Agreement;
14
(h) any products liability or other claim (including claims for unpaid
sales or excise taxes) arising out of or in connection with merchandise,
insurance or services which are the subject of any Contract;
(i) the commingling by the Seller of Collections of Pool Receivables at any
time with other funds or the failure of Collections to be deposited into
Lock-Box Accounts;
(j) any investigation, litigation or proceeding related solely to the
Seller or the Transaction Documents to which the Seller is a party or the
transactions contemplated hereby and thereby or the ownership of Receivable
Interests or in respect of any Receivable, Related Security or Contract;
(k) any failure of the Seller to comply with its covenants contained in
Exhibit IV;
(l) any claim brought by any Person other than an Indemnified Party arising
from any activity by the Seller with respect to any Receivable.
ARTICLE IV
ADMINISTRATION AND COLLECTION
OF POOL RECEIVABLES
SECTION 4.01. Designation of Collection Agent.
The servicing, administration and collection of the Pool Receivables shall
be conducted by the Collection Agent so designated hereunder from time to time.
Until the Agent gives notice to the Seller of the designation of a new
Collection Agent, Coltec is hereby designated as, and hereby agrees to perform
the duties and obligations of, the Collection Agent pursuant to the terms
hereof. The Agent at any time, after the occurrence of an Event of Termination,
may designate as Collection Agent any Person (including itself) to succeed
Coltec or any successor Collection Agent, if such Person shall consent and agree
to the terms hereof. The Collection Agent may subcontract with any Originator of
Receivables for the servicing, administration or collection of the Pool
Receivables or, with the prior consent of the Agent, subcontract with any other
Person. Any such subcontract shall not affect the Collection Agent's liability
for performance of its duties and obligations pursuant to the terms hereof.
15
SECTION 4.02. Duties of Collection Agent.
(a) The Collection Agent shall take or cause to be taken all such actions
as may be necessary or advisable to collect each Pool Receivable (including
obtaining proceeds under any related insurance policy) from time to time, all in
accordance with applicable laws, rules and regulations, with reasonable care and
diligence, and in accordance with the Credit and Collection Policy. The Seller
and the Agent hereby appoint the Collection Agent, from time to time designated
pursuant to Section 4.01, as agent for themselves and for the Investors and the
Banks to enforce their respective rights and interests in the Pool Receivables,
the Related Security and the related Contracts. In performing its duties as
Collection Agent, the Collection Agent shall exercise the same care and apply
the same policies as it would exercise and apply if it owned such Receivables
and shall act in the best interests of the Seller, the Investors and the Banks.
(b) The Collection Agent shall administer the Collections in accordance
with the procedures described in Section 1.04.
(c) If no Event of Termination or an event that but for notice or lapse of
time or both would constitute an Event of Termination shall have occurred and be
continuing, the Collection Agent may, in accordance with the Credit and
Collection Policy, extend the maturity or adjust the Outstanding Balance or
otherwise modify the payment terms of any Receivable as the Collection Agent
deems appropriate to maximize Collections thereof.
(d) The Collection Agent shall hold in trust for the Seller and each
Investor and Bank, in accordance with their respective interests, all documents,
instruments and records (including without limitation, computer tapes or disks)
which evidence or relate to Pool Receivables.
(e) The Collection Agent shall, as soon as practicable following receipt,
turn over to the Seller any cash collections or other cash proceeds received
with respect to Receivables not constituting Pool Receivables and any cash
collections representing payment of GST.
16
(f) The Collection Agent shall, from time to time at the request of the
Agent, furnish to the Agent (promptly after any such request) a calculation of
the amounts set aside for the Investors and the Banks as of the last day of each
Settlement Period pursuant to Section 1.04.
(g) On or before the tenth Business Day after the end of each Fiscal Month,
the Collection Agent shall prepare and forward to the Agent a Monthly Report
relating to the Receivable Interests outstanding on the last day of such Fiscal
Month.
SECTION 4.03. Certain Rights of the Agent.
(a) The Agent is authorized at any time, after the occurrence of an Event
of Termination or an event that but for notice or lapse of time or both would
constitute an Event of Termination, to deliver to the Lock-Box Banks the notices
provided for in the Lock Box Agreements. The Seller hereby transfers to the
Agent, effective when the Agent delivers such notices, the exclusive ownership
and control of the Lock-Box Accounts to which the Obligors of Pool Receivables
shall make payments. The Seller shall take any actions reasonably requested by
the Agent to effect such transfer. All amounts in the Lock-Box Accounts which
represent Collections of Receivables may, in accordance with this Agreement, be
deposited into the Agent's Account, pro rata in accordance with outstanding
Capital, as the Agent may determine. The Agent, after the occurrence of an Event
of Termination, also may notify the Obligors of Pool Receivables, at any time
and at the Seller's expense, of the ownership of Receivable Interests under this
Agreement.
(b) At any time after the occurrence of an Event of Termination:
(i) The Agent may direct the Obligors of Pool Receivables that all
payments thereunder be made directly to the Agent or its designee; and
(ii) Upon the appointment of a successor Collection Agent, at the
Agent's request and at the Seller's expense, the Seller and the Collection
Agent shall (x) provide such successor Collection Agent with copies of all
instruments and other records (including, without limitation, computer
tapes and disks) that evidence or relate to the Pool Receivables and the
related Contracts (including Long Term
17
Contracts provided that such successor Collection Agent shall comply with
the confidentiality and non-disclosure obligations set forth in such Long
Term Contracts), and Related Security and that are otherwise necessary or
desirable to collect the Pool Receivables and (y) segregate all cash,
checks and other instruments received by it from time to time constituting
Collections of Pool Receivables in a manner acceptable to the Agent and,
promptly upon receipt, remit all such cash, checks and instruments, duly
endorsed or with duly executed instruments of transfer, to the Agent or its
designee.
SECTION 4.04. Rights and Remedies.
(a) If the Collection Agent fails to perform any of its obligations under
this Agreement, the Agent may (but shall not be required to) itself perform, or
cause performance of, such obligation; and the Agent's costs and expenses
incurred in connection therewith shall be payable by the Seller (if the
Collection Agent that fails to so perform is Coltec, the Seller or its
designee).
(b) The Seller and the Originators shall perform their respective
obligations under the Contracts related to the Pool Receivables to the same
extent as if Receivable Interests had not been sold and the exercise by the
Agent on behalf of the Investors and the Banks of their rights under this
Agreement shall not release the Collection Agent or the Seller from any of their
duties or obligations with respect to any Pool Receivables or related Contracts.
Neither the Agent, the Investors nor the Banks shall have any obligation or
liability with respect to any Pool Receivables or related Contracts, nor shall
any of them be obligated to perform any obligations thereunder.
SECTION 4.05. Further Actions Evidencing Purchases.
The Seller will ensure that each Originator from time to time, at its
expense, will promptly execute and deliver all further instruments and
documents, and take all further actions, that may be reasonably necessary or
desirable, or that the Agent may reasonably request, to perfect, protect or more
fully evidence the Receivable Interests purchased hereunder, or to enable the
Investors, the Banks or the Agent to exercise and enforce their respective
rights and remedies hereunder. Without limiting the foregoing, the Seller will
ensure that each Originator will:
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(a) upon the request of the Agent execute and file such financing or
continuation statements, or amendments thereto, and such other instruments and
documents, that may be reasonably necessary or desirable, or that the Agent may
reasonably request, to perfect, protect or evidence such Receivable Interests;
and
(b) mark its master data processing records evidencing such Pool
Receivables with such a legend.
SECTION 4.06. Covenants of the Collection Agent and the Originators.
(a) Audits. The Collection Agent will, and will ensure that the Originators
will, from time to time during regular business hours upon five Business Days
prior notice as requested by the Agent, permit the Agent, or its agents or
representatives (including independent public accountants, which may be the
Collection Agent's independent public accountants);
(i) to conduct an annual audit (or more frequently if an Event of
Termination occurs) of the Receivables, the Related Security and the
related books and records and collections systems of the Collection Agent
and the Originators, the first of which audits will occur prior to March 1,
1998,
(ii) semi-annually (or more frequently if an Event of Termination
occurs), 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 Collection Agent
relating to Pool Receivables and the Related Security, including, without
limitation, the Contracts (unless such Contract is a Long-Term Contract),
and
19
(iii) semi-annually (or more frequently if an Event of Termination
occurs), to visit the offices and properties of the Collection Agent and
the Originators for the purpose of examining such materials described in
clause (ii) above, and to discuss matters relating to Pool Receivables and
the Related Security or the Collection Agent's performance hereunder with
any of the officers or employees of the Collection Agent having knowledge
of such matters.
(b) Change in Credit and Collection Policy. Coltec will ensure that no
Originator will make any change in the Credit and Collection Policy that would
materially adversely impair the collectibility of any Pool Receivable or the
ability of Coltec (if it is acting as Collection Agent) to perform its
obligations under this Agreement.
SECTION 4.07. Indemnities by the Collection Agent.
Without limiting any other rights that the Agent, any Investor or any Bank
(each, a "Special Indemnified Party") may have hereunder or under applicable
law, and in consideration of its appointment as Collection Agent, the Collection
Agent hereby agrees to indemnify each Special Indemnified Party from and against
any and all claims, losses and liabilities (including reasonable attorneys'
fees) (all of the foregoing being collectively referred to as "Special
Indemnified Amounts") arising out of or resulting from any of the following
(excluding, however, (a) Special Indemnified Amounts to the extent resulting
from gross negligence or willful misconduct on the part of such Special
Indemnified Party, (b) recourse for uncollectible Receivables or (c) any income
taxes or any other tax or fee measured by income incurred by such Special
Indemnified Party 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):
(i) any representation or warranty or statement made or deemed made by
the Collection Agent under or in connection with this Agreement which shall
have been incorrect in any material respect when made;
(ii) the failure by the Collection Agent to comply with any applicable
law, rule or regulation with respect to any Pool Receivable or Contract;
20
(iii) any failure of the Collection Agent to perform its duties or
obligations in accordance with the provisions of this Agreement;
(iv) the commingling of Collections of Pool Receivables at any time by
the Collection Agent with other funds;
(v) any action or omission by the Collection Agent reducing or
impairing the rights of the Investors or the Banks with respect to any Pool
Receivable or the value of any Pool Receivable (without duplication for any
amount received as a deemed collection);
(vi) any claim brought by any Person other than a Special Indemnified
Party arising from any activity by the Collection Agent in servicing or
collecting any Pool Receivable;
(vii) any dispute, claim, offset or defense of the Obligor to the
payment of any Receivable in, or purporting to be in, the Receivables Pool
as a result of the collection activities with respect to such Receivable by
the Collection Agent; or
(viii) any investigation, litigation or proceeding related to the
conduct of due diligence in connection with this Agreement or the
Transaction Documents or the transactions contemplated hereby and thereby.
SECTION 4.08. Representations and Warranties of the Collection Agent. The
Collection Agent represents and warrants as follows:
(a) The Collection Agent is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, 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 Collection Agent of this
Agreement and the other documents to be delivered by it hereunder (i) are within
the Collection Agent's corporate powers, (ii) have been duly authorized by all
necessary corporate action and (iii) do not contravene (1) the Collection
Agent's charter or by-laws, (2) any law, rule or regulation applicable to the
Collection Agent, (3) any contractual restriction binding on or affecting the
Collection Agent or its property or (4) any order, writ, judgment, award,
injunction
21
or decree binding on or affecting the Collection Agent or its property. This
Agreement has been duly executed and delivered by the Collection Agent.
(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 Collection Agent of this
Agreement or any other document to be delivered by it hereunder.
(d) This Agreement constitutes the legal, valid and binding obligation of
the Collection Agent enforceable against the Collection Agent in accordance with
its terms subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of rights of
creditors generally and except to the extent that enforcement of rights and
remedies set forth herein may be limited to judicial discretion regarding the
enforcement of, or by applicable laws affecting, remedies (whether considered in
a court of law or a proceeding in equity.
(e) Each Monthly Report (if prepared by Coltec or one of its Affiliates, or
to the extent that information contained therein is supplied by Coltec, 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 Coltec to the Agent, the Investors or the Banks in connection with this
Agreement is correct in all material respects as of its date or (except as
otherwise disclosed to the Agent, the Investors or the Banks, as the case may
be, at such time) as of the date so furnished, and no such document contains any
untrue statement of a material fact or omits 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.
ARTICLE V
THE AGENT
SECTION 5.01. Authorization and Action.
Each Investor and each Bank hereby appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Agent by the terms hereof, together with such
powers as are reasonably incidental thereto.
22
SECTION 5.02. Agent's Reliance, Etc.
Neither the Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them as
Agent under or in connection with this Agreement (including, without limitation,
the Agent's servicing, administering or collecting Pool Receivables as
Collection Agent), except for its or their own gross negligence or willful
misconduct. Without limiting the generality of the foregoing, the Agent:
(a) may consult with legal counsel (including counsel for the Seller and
the Collection Agent), independent certified public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts;
(b) makes no warranty or representation to any Investor or Bank (whether
written or oral) and shall not be responsible to any Investor or Bank for any
statements, warranties or representations (whether written or oral) made in or
in connection with this Agreement;
(c) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement on the part of the Seller or the Collection Agent or to inspect the
property (including the books and records) of the Seller or the Collection
Agent;
(d) shall not be responsible to any Investor or Bank for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or any other instrument or document furnished pursuant hereto;
(e) shall incur no liability under or in respect of this Agreement by
acting upon any notice (including notice by telephone), consent, certificate or
other instrument or writing (which may be by telecopier or telex) believed by it
to be genuine and signed or sent by the proper party or parties; and
(f) may treat the Bank which funded any purchase of a Receivable Interest
as the owner of such Receivable Interest until the Agent receives and accepts an
Assignment and Acceptance entered into by such Bank, as assignor, and an
Eligible Assignee, as assignee, as provided in Section 6.03.
23
SECTION 5.03. Rights of the Agent. The Agent reserves the right, in its
sole discretion (subject to the next sentence), to exercise any rights and
remedies available under this Agreement or pursuant to applicable law, and also
to agree to any amendment, modification or waiver of the provisions of this
Agreement or any instrument or document delivered pursuant thereto.
Notwithstanding the foregoing, the Agent agrees that it shall not
(a) without the prior written consent of each Bank,
(i) amend the definitions of Eligible Receivable, Delinquent
Receivable or Defaulted Receivable contained in this Agreement or
(ii) amend, modify or waive any provision of this Agreement in any way
which would
A. reduce the amount of Capital or Yield that is payable on
account of any Receivable Interest or delay any scheduled date for
payment thereof or impair any rights expressly granted to an assignee
or participant under this Agreement or reduce fees payable by the
Seller to the Agent which relate to payments to Banks or delay the
dates on which such fees are payable or
B. modify any provisions relating to reserves for uncollectible
Receivables, Yield or the Collection Agent Fee or
(iii) amend or waive the Event of Termination relating to the
bankruptcy of the Seller or an Originator or
(iv) extend the Commitment Termination Date, and
(b) without the prior written consent of the Majority Banks (defined
below),
(i) amend the definitions of Default Ratio, Delinquency Ratio, Net
Receivables Pool Balance, Monthly Default Ratio or Monthly Delinquency
Ratio or
24
(ii) amend the Events of Termination to increase the maximum permitted
Default Ratio, Delinquency Ratio, Dilution Ratio, Monthly Default Ratio or
Monthly Delinquency Ratio or reduce the minimum required Receivable
Interest percentage or
(iii) increase any Special Concentration Percentage, establish any new
Special Concentration Percentage or modify the then existing Normal
Concentration Percentage and
(c) without the prior written consent of the applicable Bank, amend this
Agreement to increase such Bank's Bank Commitment.
As to any matters not expressly provided for by this Agreement (including,
without limitation, enforcement of the Agreement), the Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Banks and such
instructions shall be binding upon all Banks; provided, however, that the Agent
shall not be required to take any action which exposes the Agent to personal
liability or which is contrary to the Agreement or applicable law.
SECTION 5.04. Indemnification of Agent. Each Bank agrees to indemnify the
Agent (to the extent not reimbursed by the Seller), ratably in accordance with
its Percentage, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against the Agent in any way relating to or arising out of this
Agreement or any action taken or omitted by the Agent under this Agreement,
provided that no Bank shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Agent's gross negligence or willful
misconduct.
25
SECTION 5.05. Credit Lyonnais and Affiliates.
With respect to any Receivable Interest or interest therein owned by it,
Credit Lyonnais shall have the same rights and powers under this Agreement as
any Bank and may exercise the same as though it were not the Agent. Credit
Lyonnais and any of its Affiliates may generally engage in any kind of business
with the Seller, the Collection Agent, any Originator or any Obligor, any of
their respective Affiliates and any Person who may do business with or own
securities of the Seller, the Collection Agent, any Originator or any Obligor or
any of their respective Affiliates, all as if Credit Lyonnais were not the Agent
and without any duty to account therefor to the Investors or the Banks.
SECTION 5.06. Bank's Purchase Decision.
Each Bank acknowledges that it has, independently and without reliance upon
the Agent, any of its Affiliates or any other Bank and based on such documents
and information as it has deemed appropriate, made its own evaluation and
decision to enter into this Agreement. Each Bank also acknowledges that it will,
independently and without reliance upon the Agent, any of its Affiliates or any
other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own decisions in taking or not
taking action under this Agreement.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Amendments, Etc.
No amendment or waiver of any provision of this Agreement and no consent to
any departure by the Seller or the Collection Agent therefrom shall be effective
unless in a writing signed by the Agent, as agent for the Investors and the
Banks, 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; provided, however, that
no amendment shall, unless in writing and signed by the Collection Agent in
addition to the Agent, affect the rights or duties of the Collection Agent under
this Agreement. Notwithstanding the foregoing, no amendment or waiver of any
provision of this Agreement or consent to any departure by the Seller or the
Collection Agent
26
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, the Banks 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 6.02. Notices, Etc.
All notices, demands and other communications provided for hereunder shall,
unless otherwise stated herein, be in writing (which shall include electronic
transmission), shall be personally delivered, express couriered, electronically
transmitted or mailed by registered or certified mail and shall, unless
otherwise expressly provided herein, be effective when received at the address
specified below for the listed parties or at such other address as shall be
specified in a written notice furnished to the other parties hereunder.
If to the Seller:
CNC FINANCE LLC
3 Coliseum Centre
2550 West Tyvola
Charlotte, NC 28217
Attention: Treasury
Tel. No.: (704) 423-7028
Facsimile No.: (704) 423-7069
If to Coltec:
COLTEC INDUSTRIES INC
3 Coliseum Centre
2550 West Tyvola
Charlotte, NC 28217
Attention: Treasury
Tel. No.: (704) 423-7028
Facsimile No.: (704) 423-7069
27
If to the Agent:
CREDIT LYONNAIS NEW YORK BRANCH
1301 Avenue of the Americas
New York, NY 10019
Tel. No.: (212) 261-7812
Facsimile No.: (212) 459-3258
If to the Issuer:
ATLANTIC ASSET SECURITIZATION CORP.
c/o Lord Securities Corporation
Two Wall Street, 19th Floor
New York, NY 10005
Tel. No.: (212) 346-9000
Facsimile No.: (212) 346-9012
If to the Banks:
CREDIT LYONNAIS NEW YORK BRANCH
1301 Avenue of the Americas
New York, NY 10019
Tel. No.: (212) 261-7812
Facsimile No.: (212) 459-3258
THE INDUSTRIAL BANK OF JAPAN, LIMITED
1251 Avenue of the Americas
New York, NY 10020-1104
Attn: Mr. Takuya Honjo
Senior Vice President
Tel: (212) 282-3320
Fax: (212) 282-4490
28
LLOYDS BANK PLC
575 Fifth Avenue, 18th Floor
New York, NY 10017
Attn: Mr. Peter Kernick
Director
Tel: (212) 930-8913
Fax: (212) 930-5098
THE SUMITOMO BANK, LIMITED
277 Park Avenue
New York, NY 10172
Attn: Ms. Carolyn Schembri
Vice President
Tel: (212) 224-4025
Fax: (212) 224-5191
SECTION 6.03. Assignability.
(a) This Agreement and the Investors' rights and obligations herein
(including ownership of each Receivable Interest) shall be assignable by the
Investors and their successors and assigns with the prior written consent of the
Seller, which consent shall not be unreasonably withheld. Each assignor of a
Receivable Interest or any interest therein shall notify the Agent and the
Seller of any such assignment. Each assignor of a Receivable Interest may, in
connection with the assignment or participation, disclose to the assignee or
participant any information, relating to the Seller or the Receivables, which
was furnished to such assignor by or on behalf of the Seller or by the Agent;
provided that, prior to any such disclosure, the assignee or participant agrees
to preserve the confidentiality of any confidential information relating to the
Seller received by it from any of the foregoing entities.
(b) Each Bank may, with the prior written consent of the Seller, which
shall not be unreasonably withheld, assign to any Eligible Assignee or to any
other Bank all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Bank Commitment and any
Receivable Interests or interests therein owned by it). The parties to each such
assignment shall execute and deliver to the Agent an Assignment and Acceptance.
In addition, Credit Lyonnais or any of its Affiliates may assign any of its
rights
29
(including, without limitation, rights to payment of Capital and Yield) under
this Agreement to any Federal Reserve Bank without notice to or consent of the
Seller or the Agent.
(c) This Agreement and the rights and obligations of the Agent herein shall
be assignable by the Agent and its successors and assigns.
(d) The Seller may not assign its rights or obligations hereunder or any
interest herein without the prior written consent of the Agent.
(e) 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.
(f) Any assignment proposed to be made hereunder by a Bank shall be void
unless the assignee shall deliver to the Collection Agent either the certificate
or the opinion referred to in the definition of Eligible Assignee; provided
however, that, that each assignee organized under the laws of a jurisdiction
outside the United States agrees that it will deliver to the Seller and the
Collection Agent (i) two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224 or successor applicable form, as the case may be, (ii)
an Internal Revenue Service Form W-8 or W-9 or successor applicable form and
(iii) promptly upon the request of the Seller or the Collection Agent therefor,
such other forms or similar documentation as may be required from time to time
by any applicable law, treaty, rule or regulation in order to establish such
assignee's tax status for withholding purposes. If such assignee delivers a Form
1001 or 4224 and Form W-8 or W-9 pursuant to the preceding sentence, it shall
further undertake to deliver to the Seller and the Collection Agent two further
copies of such Form 1001 or 4224 and Form W-8 or W-9, or successor applicable
forms or other manner of certification, as the case may be on or before the date
that any such form expires or becomes obsolete or after the occurrence of any
event requiring a change in the most recent form previously delivered by it to
the Seller and the Collection Agent, and such extensions or renewals thereof as
may be requested by the Seller or the Collection Agent, unless in any such case
an event (including, without limitation, any change in treaty, law or
regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such assignee from duly completing and delivering any such form with
respect to it and such assignee so advises the Seller and the Collection Agent.
Such assignee shall
30
certify (x) in the case of a Form 1001 or 4224, that it is entitled to receive
payments under this Agreement without deduction or withholding of any United
States federal income taxes and (y) in the case of a Form W-8 or W-9, that it is
entitled to an exemption from United States backup withholding tax.
SECTION 6.04. Costs, Expenses and Taxes.
(a) In addition to the rights of indemnification granted under Section 3.01
hereof, the Seller agrees to pay on demand all costs and expenses in connection
with advising the Agent, the Issuer, Credit Lyonnais 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, the Banks 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 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.
The Seller 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, 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.
SECTION 6.05. No Proceedings.
Each of the Seller, the Agent, the Collection Agent, each Investor, each
Bank, 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 for one year and one day after the
latest maturing commercial paper note issued by the Issuer is paid.
SECTION 6.06. Confidentiality
Unless otherwise required by applicable law, regulation or court or
regulatory body order, the Seller, the Issuer, the Collection Agent and the
Agent
31
agree to maintain the confidentiality of this Agreement (and all drafts thereof)
in communications with third parties and otherwise; provided that this Agreement
(and drafts thereof) may be disclosed (a) to third parties to the extent such
disclosure is made pursuant to a written agreement of confidentiality, (b) to
the Seller's, the Collection Agent's and the Originators' legal counsel and
accountants, (c) to the financial institutions from time to time parties to the
Credit Agreement and their respective legal counsel, (d) in the event this
Agreement is or becomes public information (other than as a result of the
violation of the provisions of this Section 6.06 by the person making such
disclosure) and (e) to any of their officers, directors, managers, employees or
agents, provided that the person making such disclosure shall ensure that any
such officer, director, manager, employee or agent shall agree to keep this
Agreement confidential.
SECTION 6.07. Construction of the Agreement.
The parties hereto intend that the purchase and sale of Receivable
Interests from the Seller be treated as a sale of such Receivable Interests and
the proceeds thereof. 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 and the Banks, a
security interest in the Receivable Interests so transferred to secure its
obligations hereunder.
SECTION 6.08. 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 AND THE BANKS IN THE RECEIVABLES, THE CNCI PURCHASE AGREEMENT,
THE ORIGINATOR PURCHASE AGREEMENT, THE CANADIAN PURCHASE AGREEMENT OR REMEDIES
HEREUNDER, IN RESPECT THEREOF, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEW YORK.
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SECTION 6.09. 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. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile shall be
effective as delivery of a manually executed counterpart of this Agreement.
SECTION 6.10. 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
Securities Corporation, a Delaware corporation ("Lord") or against any
stockholder, employee, officer, director or incorporator of the Issuer. For
purposes of this Section, the term "Lord" shall mean and include Lord 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.
SECTION 6.11. Termination and Survival of Termination.
This Agreement shall terminate after the Capital, Yield and Collection
Agent Fees with respect to all Receivable Interests have been paid in full and
any other amounts payable by the Seller or the Collection Agent to the
Investors, the Banks or the Agent under this Agreement have been paid in full.
Upon termination of this Agreement, the Agent, as Agent for the Investors and
the Banks, shall execute appropriate termination statements prepared by the
Seller for any outstanding financing statements filed with respect to this
Agreement. The provisions of Sections 1.08, 1.09, 3.01, 6.04, 6.05 and 6.06
shall survive any termination of this Agreement.
Section 6.12. Revisions of Triggers.
The Default Ratio and Delinquency Ratio trigger percentages set forth in
clause (e) of Exhibit V hereof represent, in each case, a multiple of Pool
Receivables that are more than 60 days past due. If the Originators institute
33
reporting system enhancements reasonably acceptable to the Agent that enable the
Originators to report delinquencies in buckets of 1-30 days past due, 31-60 days
past due, 61-90 days past due, 91-120 days past due and over 120 days past due,
the Agent will use its best efforts to secure all necessary consents and
approvals from the Relevant Rating Agencies to revise these trigger percentages
to reflect the additional information available, it being understood that such
revised triggers will be derived from the multiples of the Default Ratio and the
Delinquency Ratio used to arrive at the triggers set forth in clause (e) of
Exhibit V.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
SELLER: CNC FINANCE LLC
By: CNC MEMBER INC.
By: _________________________
Name:
Title:
By: COLTEC NORTH CAROLINA INC
By: _________________________
Name:
Title:
COLLECTION AGENT: COLTEC INDUSTRIES INC
By: _________________________
Name:
Title:
ISSUER: ATLANTIC ASSET SECURITIZATION CORP.
By: CREDIT LYONNAIS NEW YORK BRANCH,
as Attorney-in-Fact
By: ____________________________
Name: David C. Fink
Title: First Vice President
BANKS: CREDIT LYONNAIS NEW YORK BRANCH
By: _______________________________
Name: David C. Fink
Title: First Vice President
Bank Commitment $30,000,000
Percentage 35.294118%
THE INDUSTRIAL BANK OF JAPAN,
LIMITED
By: _______________________________
Name: Takuya Honjo
Title: Senior Vice President
Bank Commitment $15,000,000
Percentage 17.647059%
LLOYDS BANK PLC
By: _______________________________
Name: Peter Kernick
Title: Director
By: _______________________________
Name:
Title:
Bank Commitment $25,000,000
Percentage 29.411765%
THE SUMITOMO BANK, LIMITED
By: _______________________________
Name: Takeo Yamori
Title: Joint General Manager
Bank Commitment $15,000,000
Percentage 17.647059%
AGENT: CREDIT LYONNAIS NEW YORK BRANCH
By: ________________________________
Name: David C. Fink
Title: First Vice President
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):
"Adverse Claim" means a lien, security interest or other charge or
encumbrance, or any other type of preferential arrangement other than inchoate
liens, such as for taxes not yet done.
"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.
"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.
"Alternate Base Rate" means a fluctuating interest rate per annum as shall
be in effect from time to time, which rate shall be at all times equal to the
lower of:
(a) the rate of interest announced publicly by Credit Lyonnais in New
York, New York, from time to time as its prime rate, less 1.50% and
(b) the Federal Funds Rate plus 0.50%.
"Assignee Rate" for any Fixed Period for any Receivable Interest means an
interest rate per annum equal to 0.40% per annum above the Eurodollar Rate for
such Fixed Period; provided, however, that in the case of
(a) any Fixed Period on or prior to the first day of which an Investor
or Bank shall have notified the Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it
unlawful, or any central bank or other governmental authority asserts that
it
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is unlawful, for such Investor or Bank to fund such Receivable Interest at
the Assignee Rate set forth above (and such Investor or Bank shall not have
subsequently notified the Agent that such circumstances no longer exist),
(b) any Fixed Period of one to and including 29 days (other than a
Fixed Period which corresponds to the month of February or which begins on
a day in the month of February and runs to the numerically corresponding
day of the following month),
(c) any Fixed Period as to which the Agent does not receive notice, by
no later than 12:00 noon (New York City time) on the third Business Day
preceding the first day of such Fixed Period, that the related Receivable
Interest will not be funded by issuance of commercial paper, or
(d) any Fixed Period for a Receivable Interest the Capital of which
allocated to the Investors or the Banks is less than $500,000,
the Assignee Rate for each such Fixed Period shall be an interest rate per annum
equal to the Alternate Base Rate in effect on the first day of such Fixed Period
and provided further, that during the continuance of an Event of Termination,
the Assignee Rate shall be an interest rate per annum equal to 2% per annum
above the Alternate Base Rate then in effect.
"Assignment and Acceptance" means an assignment and acceptance agreement
substantially in the form of Annex G to the Agreement, which is entered into by
a Bank, an Eligible Assignee and the Agent, pursuant to which such Eligible
Assignee may become a party to the Agreement as a Bank.
"Bank Commitment" of any Bank means (a) with respect to Credit Lyonnais and
each of the other Banks which have executed the Agreement, the amount set forth
beneath its name on the signature page of the Agreement or (b) with respect to a
Bank that has entered into an Assignment and Acceptance, the amount set forth
therein as such Bank's Bank Commitment, in each case as such amount may be
reduced by an Assignment and Acceptance entered into between a Bank and an
Eligible Assignee, and as may be further reduced (or terminated) pursuant to the
next sentence. Any reduction (or termination) of the Purchase Limit pursuant to
the terms of the Agreement shall reduce ratably (or terminate) each Bank's Bank
Commitment.
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"Banks" means Credit Lyonnais, The Industrial Bank of Japan, Limited,
Lloyds Bank PLC, The Sumitomo Bank, Limited and each Eligible Assignee that
shall become a party to the Agreement pursuant Section 6.03.
"Business Day" means any day on which (i) banks are not authorized or
required to close in New York City and (ii) if this definition of "Business Day"
is utilized in connection with the Eurodollar Rate, dealings are carried out in
the London interbank market.
"Canadian Exchange Rate" means the rate for the last Business Day of the
most recently ended Fiscal Month specified in the Wall Street Journal in the
table entitled "Currency Trading - Exchange Rates" under the heading "Canada -
(Dollar)" and the column "U.S. $ equiv."
"Canadian Purchase Agreement" means the (Canadian Subsidiaries) Receivables
Transfer and Administration Agreement, dated the date of the Agreement, among
Coltec, as sellers' agent, certain Originators, as sellers, and CNCI, as
purchaser, as the same may be amended, modified or restated from time to time.
"Capital" 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 or
a Bank 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 paid to the Agent's Account for distribution to the Investors or the
Banks on account of such Capital pursuant to Section 1.04(d) of the Agreement;
provided that if such Capital 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 Capital shall be increased by the amount of
such rescinded or returned distribution, as though it had not been made.
"CNCI" means Coltec North Carolina Inc, a North Carolina corporation.
"CNCI Purchase Agreement" means the Receivables Purchase and Contribution
Agreement, dated as of the date of the Agreement, between CNCI, as seller, and
the Seller, as purchaser, as the same may be amended, modified or restated from
time to time.
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"Collection Agent" means at any time the Person then authorized pursuant to
Article IV to administer and collect Pool Receivables.
"Collection Agent Fee" has the meaning specified in Section 1.05(a).
"Collection Agent Fee Reserve" for any Receivable Interest at any time
means the sum of (i) the unpaid Collection Agent Fee relating to such Receivable
Interest accrued to such time, plus (ii) an amount equal to the product of (a)
the Outstanding Balance of the Pool Receivables as of the last day of the
immediately preceding Fiscal Month (as shown on the Monthly Report), (b) the
decimal equivalent of the relevant Receivable Interest and (c) the product of
(x) the percentage per annum at which the Collection Agent Fee is accruing on
such date and (y) a fraction having the product of two times Days Sales
Outstanding as its numerator and 360 as its denominator.
"Collections" means, with respect to any Receivable, (a) all funds which
are received by the Seller or the Collection Agent 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.
"Coltec" means Coltec Industries Inc, a Pennsylvania corporation.
"Commitment Termination Date" means the earliest of (a) September 14, 1998,
unless, prior to such date (or the date so extended pursuant to this clause),
upon the Seller's request, made not more than 90 nor less than 45 days prior to
the then Commitment Termination Date, one or more Banks having Bank Commitments
equal to 100% of the Purchase Limit shall in their sole discretion consent,
which consent shall be given not less than 30 days prior to the then Commitment
Termination Date, to the extension of the Commitment Termination Date to the
date occurring 360 days after the then Commitment Termination Date; provided,
however, that any failure of any Bank to respond to the Seller's request
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for such extension shall be deemed a denial of such request by such Bank, (b)
the Facility Termination Date and (c) the date determined pursuant to Section
2.02.
"Contract" means an open account or other agreement between the Originator
and any Obligor, pursuant to or under which such Obligor shall be obligated to
pay for merchandise or services from time to time.
"Credit Agreement" means the credit agreement, dated as of March 24, 1992,
as amended and restated as of January 11, 1994 and further amended and restated
as of December 18, 1996, as the same may be further amended, supplemented or
restated from time to time, among Coltec, various banks, Bankers Trust Company,
as administrative agent, Bank of America Illinois, as documentation agent, and
The Chase Manhattan Bank, as syndication agent.
"Credit and Collection Policy" means those receivables credit and
collection policies and practices of the Originators and the Seller in effect on
the date of the Agreement and described in Annex A hereto, as modified in
compliance with the Agreement.
"Days Sales Outstanding" means the product of (i) the number of days in the
Fiscal Month most recently ended and (ii) the amount obtained by dividing (a)
the Outstanding Balance of Pool Receivables for the Fiscal Month most recently
ended by (b) the aggregate dollar amount of Pool Receivables created for the
Fiscal Month most recently ended.
"Default Ratio" means for any Fiscal Month the ratio (expressed as a
percentage) computed as of the last day of such Fiscal Month by dividing (i) the
sum of the aggregate Outstanding Balance of all Pool Receivables that were
Defaulted Receivables as of the last day of each of the preceding six Fiscal
Months or that would have been Defaulted Receivables on such day had they not
been written off the books of an Originator or the Seller during such month by
(ii) the sum of the aggregate Outstanding Balance of all Pool Receivables as of
the last day of each such six Fiscal Months.
"Defaulted Receivable" means a Receivable:
(a) as to which any payment, or part thereof, remains unpaid for 60 or
more days from the original due date for such payment (or 90 days, subject
to receipt by the Agent of all appropriate approvals and consents
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from the Relevant Rating Agencies, after the Originators revise their
reporting systems to further specify the aging of Receivables);
(b) 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
(c) which, consistent with the Credit and Collection Policy, would be
written off as uncollectible.
"Delinquency Ratio" means for any Fiscal Month the ratio (expressed as a
percentage) computed as of the last day of such Fiscal Month by dividing (i) the
sum of the aggregate Outstanding Balance of all Pool Receivables that were
Delinquent Receivables as of the last day of each of the preceding six Fiscal
Months by (ii) the sum of the aggregate Outstanding Balance of all Pool
Receivables as of the last day of each such six Fiscal Months.
"Delinquent Receivable" means a Receivable that is not a Defaulted
Receivable (other than as a result of the operation of clause (a) of the
definition thereof) and:
(a) as to which any payment, or part thereof, remains unpaid for 60 or
more days from the original due date for such payment; or
(b) which, consistent with the Credit and Collection Policy, would be
classified as delinquent.
"Dilution" means, with respect to any Receivable, the aggregate amount of
any reductions or adjustments in the Outstanding Balance of such Receivable as a
result of any defective, rejected, returned, repossessed or foreclosed
merchandise or services or any cash discount or other adjustment or setoff.
"Dilution Ratio" means for any Fiscal Month the ratio (expressed as a
percentage) computed as of the last day of such Fiscal Month, by dividing (i)
the sum of the aggregate reduction or adjustment in the Outstanding Balance of
any Pool Receivable as a result of any Dilution during each of the preceding six
Fiscal
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Months by (ii) the aggregate Outstanding Balance of all Pool Receivables as of
the last day of each such six Fiscal Months.
"Eligible Assignee" means a Person (a) residing in or formed under the laws
of the United States of America or any state or territory thereof, the short
term debt of which is rated A-1 by Standard & Poor's and P-1 by Moody's
Investors Service, Inc. and which is otherwise acceptable to the Agent, or (b)
not residing in or formed under the laws of the United States of America or any
state or territory thereof that
(i) represents and warrants to the Seller as follows in a certificate
delivered to the Collection Agent on the date such Person becomes an assignee
hereunder:
(x) the amount received by such assignee hereunder will be effectively
connected with the conduct of a trade or business within the United States
(without reference to the Agreement), within the meaning of the Internal
Revenue Code of 1986, as amended (hereinafter the "Code") section 881(a);
or
(y) it is not a banking institution making a loan in the ordinary
course of its business; it is not a "ten percent shareholder" of either the
Seller or the Collection Agent within the meaning of section 871 (h)(3)(B)
of the Code and it is not a controlled foreign corporation, as defined in
Code section 881(c)(3)(C); or
(ii) delivers to the Collection Agent an opinion of independent counsel to
the effect that no payment made or to be made hereunder by the Seller or the
Collection Agent will be subject to any United States withholding tax, such
opinion to be in form and substance satisfactory to the Collection Agent and
delivered on or before the date on which such Person becomes an Investor or
assignee hereunder.
"Eligible Receivable" means, at the relevant time of determination,
(a) the export Receivables of Garlock-Sealing Technologies covered by
an Export Insurance Policy or
(b) a Receivable:
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(i) the Obligor of which is a United States resident (provided
that up to 15% of Eligible Receivables may be due from Obligors
located within Canada), is not an Affiliate of any of the parties
hereto and is not a government or a governmental subdivision or agency
(provided that up to 10% of Eligible Receivables may be due from the
United States, state or local government within the United States);
(ii) the Obligor of which, at the time of the initial creation of
an interest therein under the Agreement is not the subject of
bankruptcy proceedings;
(iii) which is not a Defaulted or Delinquent Receivable;
(iv) which, according to the Contract related thereto, is
required to be paid in full within 60 days of the original billing
date therefor (provided that up to 15% of the Eligible Receivables may
be required to be paid in full within 120 days of the original billing
date therefor);
(v) which is an "account" within the meaning of the UCC of the
applicable jurisdictions governing the perfection of the interest
created by a Receivable Interest;
(vi) which is denominated and payable in United States dollars in
the United States or Canada (provided that up to 10% of the Eligible
Receivables may be payable in Canadian dollars, converted at the then
current Canadian Exchange Rate, subject to a further discount of 15%);
(vii) which was originated in the normal course of an
Originator's business and arises under a Contract which
(x) does not require the Obligor thereunder to consent to
the transfer, sale or assignment of the rights and duties of the
Seller or the Originator thereunder (unless such Contract is a
Long-Term Contract),
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(y) together with such Receivable, is in full force and
effect, constitutes the legal, valid and binding obligation of
the Obligor of such Receivable to pay a determinable amount and
(z) does not contain a confidentiality provision that
purports to restrict the ability of the Investors, the Banks or
their assignees to exercise their rights under the Agreement,
including, without limitation, their right to review the Contract
(unless such Contract is a Long-Term Contract);
(viii) 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) and with respect to which none of the
Seller, the Originator or the Obligor is in violation of any such law,
rule or regulation in any material respect;
(ix) which satisfies all applicable requirements of the Credit
and Collection Policy; and
(x) the transfer, sale or assignment of which does not contravene
any applicable law, rule or regulation (unless such Contract is
subject to the federal Assignment of Claims Act).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Rate" means, for any Fixed Period, an interest rate per annum
(expressed as a decimal and rounded upwards, if necessary, to the nearest one
hundredth of a percentage point) equal to the offered rate per annum for
deposits in U.S. dollars in a principal amount of not less than $1,000,000 for
such Fixed Period as of 11:00 A.M., London time, two Business Days before the
first day of such Fixed Period, which appears on the display designated as "Page
3750" on the Telerate Service (or such other page as may replace "Page 3750" on
that
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service for the purpose of displaying London interbank offered rates of major
banks) (the "Telerate LIBO Page"); provided that if on any Business Day on which
the Eurodollar Rate is to be determined, no offered rate appears on the Telerate
LIBO Page, the Agent will request the principal London office of Credit Lyonnais
(the "Eurodollar Reference Bank"), to provide the Agent with its quotation at
approximately 11:00 A.M., London time, on such date of the rate per annum it
offers to prime banks in the London interbank market for deposits in U.S.
dollars for the requested Fixed Period in an amount substantially equal to the
Capital associated with such Fixed Period; if the Eurodollar Reference Bank does
not furnish timely information to the Agent for determining the Eurodollar Rate,
then the Eurodollar Rate shall be considered to be the Alternate Base Rate for
such Fixed Period.
"Eurodollar Rate Reserve Percentage" of any Investor or any Bank for any
Fixed Period in respect of which Yield is computed by reference to the
Eurodollar Rate means the reserve percentage applicable two Business Days before
the first day of such Fixed Period under regulations issued from time to time by
the Board of Governors of the Federal Reserve System (or any successor) (or if
more than one such percentage shall be applicable, the daily average of such
percentages for those days in such Fixed Period during which any such percentage
shall be so applicable) for determining the maximum reserve requirement
(including, without limitation, any emergency, supplemental or other marginal
reserve requirement) for such Investor or Bank with respect to liabilities or
assets consisting of or including Eurocurrency Liabilities (or with respect to
any other category of liabilities that includes deposits by reference to which
the interest rate on Eurocurrency Liabilities is determined) having a term equal
to such Fixed Period.
"Event of Termination" has the meaning specified in Exhibit V.
"Export Insurance Policy" means the short term comprehensive multi-buyer
credit insurance policy no. MB-118388 between Foreign Credit Insurance
Association and Garlock Inc Mechanical Packing Division or such comparable
insurance policy that may be in place from time to time subject to the review
and approval by the Agent.
"Facility Termination Date" means the earliest of (a) September 19, 2000,
as such date may be extended by the Seller (for additional one year periods
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until the year 2005) with the consent of the Agent, or (b) the date determined
pursuant to Section 2.02 or (c) the date (not earlier than September 19, 1998)
the Purchase Limit reduces to zero pursuant to Section 1.01(b).
"Federal Funds Rate" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by it.
"Fee Agreement" means the separate fee agreement, of even date herewith,
between the Seller and the Agent, as the same may be amended or restated from
time to time.
"Fiscal Month" means the period specified as such by Coltec to the Agent
based on a schedule provided as of the beginning of each fiscal year of Coltec.
"Fixed Period" means with respect to any Receivable Interest:
(a) initially the period commencing on the date of purchase of such
Receivable Interest and ending such number of days as the Seller shall
select and the Agent shall approve pursuant to Section 1.02, up to 45 days
from such date; and
(b) thereafter each period commencing on the last day of the
immediately preceding Fixed Period for such Receivable Interest and ending
such number of days (not to exceed 45 days) as the Seller shall select and
the Agent shall approve on notice by the Seller received by the Agent
(including notice by telephone, confirmed by facsimile transmission only)
not later than 11:00 A.M. (New York City time) on such last day, except
that if the Agent shall not have received such notice or approved such
period on or before 11:00 A.M. (New York City time) on such last day, such
period shall be one day;
I-11
provided that
(i) any Fixed Period in respect of which Yield is computed by
reference to the Assignee Rate shall be a period from one to and including
29 days, or a period of one, two or three months, as the Seller may select
pursuant to notice given to the Agent as provided above in clause (b);
(ii) any Fixed Period (other than of one day) which would otherwise
end on a day which is not a Business Day shall be extended to the next
succeeding Business Day (provided, however, that if Yield in respect of
such Fixed Period is computed by reference to the Eurodollar Rate, and such
Fixed Period would otherwise end on a day which is not a Business Day, and
there is no subsequent Business Day in the same calendar month as such day,
such Fixed Period shall end on the next preceding Business Day);
(iii) in the case of any Fixed Period of one day, (A) if such Fixed
Period is the initial Fixed Period for a Receivable Interest, such Fixed
Period shall be the day of purchase of such Receivable Interest; (B) any
subsequently occurring Fixed Period which is one day shall, if the
immediately preceding Fixed Period is more than one day, be the last day of
such immediately preceding Fixed Period, and, if the immediately preceding
Fixed Period is one day, be the day next following such immediately
preceding Fixed Period; and (C) if such Fixed Period occurs on a day
immediately preceding a day which is not a Business Day, such Fixed Period
shall be extended to the next succeeding Business Day; and
(iv) 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 (other
than a Termination Date occurring because notice has been given by the
Agent pursuant to clause (i)(a) of the definition of Termination Date or
because a Facility Termination Date or a Commitment Termination Date has
occurred as a result of the operation of clause (a) of the definition of
Facility Termination Date or Commitment Termination Date, respectively),
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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.
"GST" means any tax imposed under Part IX of the Excise Tax Act (Canada)
and any other similar goods and services tax or value added tax or other sales
tax imposed by a Canadian province including Quebec Sales Tax.
"Indemnified Amounts" has the meaning specified in Section 3.01 of the
Agreement.
"Indemnified Party" has the meaning specified in Section 3.01 of the
Agreement.
"Investor" means the Issuer and all other owners by assignment or otherwise
of a Receivable Interest originally purchased by the Issuer or any interest
therein and, to the extent of the undivided interests so purchased, shall
include any participants.
"Investor Rate" for any Fixed Period for any Receivable Interest means, to
the extent the Issuer funds such Receivable Interest for such Fixed Period by
issuing commercial paper, the rate (or if more than one rate, the weighted
average of the rates) at which commercial paper notes of the Issuer having a
term equal to such Fixed Period and to be issued to fund such Receivable
Interest may be sold by any placement agent or commercial paper dealer selected
by the Agent on behalf of the Issuer, as agreed between each such agent or
dealer and the Agent and notice of which has been given by the Agent to the
Collection Agent; provided if the rate (or rates) as agreed between any such
agent or dealer and the Agent for any Fixed Period for any Receivable Interest
is a discount rate (or rates), then such rate shall be the rate (or if more than
one rate, the weighted average of the rates) resulting from converting such
discount rate (or rates) to an interest-bearing equivalent rate per annum.
"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.
I-13
"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 (other than a Liquidation Day resulting from a Termination Date
occurring because notice has been given by the Agent pursuant to clause (i)(a)
of the definition of Termination Date or because a Facility Termination Date or
a Commitment Termination Date has occurred as a result of the operation of
clause (a) of the definition of Facility Termination Date or Commitment
Termination Date, respectively), the amount, if any, by which (i) the additional
Yield (calculated without taking into account any Liquidation Fee or any
shortened duration of such Fixed Period pursuant to clause (iv) of the
definition thereof) which would have accrued during such Fixed Period on the
reductions of Capital of the Receivable Interest relating to such Fixed Period
had such reductions remained as Capital, exceeds (ii) the income, if any,
received by the Investors' or Banks' investing the proceeds of such reductions
of Capital.
"Liquidity Asset Purchase Agreement" means the liquidity asset purchase
agreement entered into by each Bank concurrently with this Agreement or the
Assignment and Acceptance pursuant to which it became a party to this Agreement.
"Lock-Box Account" means an account 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 (or as approved by the Agent), between the Seller and each Lock-Box Bank.
"Lock-Box Bank" means any of the banks or other financial institutions
holding one or more Lock-Box Accounts.
"Long-Term Contract" means any Contract, the term of which exceeds 12
months.
"Loss and Dilution Reserve" means, for any Receivable Interest on any date,
an amount equal to the outstanding Capital multiplied by the greater of
I-14
(a) 10% and (b) the sum of (i) 1.5 multiplied by the highest three Fiscal Month
rolling average of the Aged Receivables Ratio during the most recent six Fiscal
Month period and (ii) 1.5 multiplied by the highest three Fiscal Month rolling
average of the Dilution Reserve Ratio for the most recent six Fiscal Month
Period. For purposes of this definition,
(x) "Aged Receivables Ratio" means a fraction, the numerator of which
is the Outstanding Balance of Pool Receivables which were 60 or more days
past due for the most recent Fiscal Month-end and the denominator of which
is the aggregate dollar amount of Pool Receivables created during the
Fiscal Month ended three Fiscal Months prior to the most recent Fiscal
Month-end and
(y) "Dilution Reserve Ratio" means a fraction, the numerator of which
is the amount of any reductions or adjustments of the Outstanding Balance
of any Pool Receivable as a result of any defective, rejected or returned,
repossessed or foreclosed merchandise or services or any cash discount or
other adjustment made by the Seller, an Originator or the Collection Agent
or any setoff for the most recent Fiscal Month-end, and the denominator of
which is the aggregate dollar amount of Pool Receivables created during the
Fiscal Month prior to the most recent Fiscal Month-end.
"Majority Banks" means, at any time, Banks with Percentages aggregating
more than 50%.
"Monthly Default Ratio" means for any Fiscal Month the ratio (expressed as
a percentage) computed as of the last day of such Fiscal Month by dividing (i)
the aggregate Outstanding Balance of all Pool Receivables that were Defaulted
Receivables as of the last day of such Fiscal Month or that would have been
Defaulted Receivables on such day had they not been written off the books of an
Originator or the Seller during such month by (ii) the Outstanding Balance of
all Pool Receivables as of the last day of such Fiscal Month.
"Monthly Delinquency Ratio" means for any Fiscal Month the ratio (expressed
as a percentage) computed as of the last day of such Fiscal Month by dividing
(i) the sum of the aggregate Outstanding Balance of all Pool Receivables that
were Delinquent Receivables as of the last day of such Fiscal Month by
I-15
(ii) the Outstanding Balance of all Pool Receivables as of the last day of such
Fiscal Month.
"Monthly Report" means a report, in substantially the form of Annex C
hereto, furnished by the Collection Agent to the Agent pursuant to Article IV of
the Agreement.
"Net Receivables Pool Balance" means at any time the Outstanding Balance of
Eligible Receivables then in the Receivables Pool reduced by the aggregate
amount by which the Outstanding Balance of Eligible Receivables of each Obligor
then in the Receivables Pool exceeds the product of (a) the Normal Concentration
Percentage for such Obligor multiplied by (b) the Outstanding Balance of the
Eligible Receivables then in the Receivables Pool.
"Normal Concentration Percentage" for any Obligor means at any time 3%, or
such other percentage ("Special Concentration Percentage") if such Obligor is a
Special Obligor and is designated by the Agent in a writing delivered to the
Seller; provided that in the case of an Obligor with any Affiliated Obligor, the
Normal Concentration Percentage shall be calculated as if such Obligor and such
Affiliated Obligor are one Obligor.
"Obligor" means a Person (other than an employee, a division or a direct or
indirect Subsidiary of Coltec or its Affiliates) obligated to make payments
pursuant to a Contract; provided that in the event that any payments in respect
of a Contract are made by any other Person, such other Person shall be deemed to
be an Obligor.
"Originator" means each entity which becomes a party to the Originator
Purchase Agreement or the Canadian Purchase Agreement as a seller of
"Securitized Receivables," as defined in the Originator Purchase Agreement and
the Canadian Purchase Agreement.
"Originator Purchase Agreement" means the Receivables Transfer and
Administration Agreement, dated the date of the Agreement, among Coltec, as a
seller, collection agent and sellers' agent, certain Originators, as sellers and
as subcollection agents, certain other sellers and CNCI, as purchaser, as the
same may be amended, modified or restated from time to time.
I-16
"Other Corporations" means Coltec and all of its Subsidiaries except the
Seller.
"Outstanding Balance" of any Receivable at any time means the then
outstanding principal balance thereof.
"Percentage" of any Bank means, (a) with respect to Credit Lyonnais and
each of the other Banks which have executed the Agreement, the percentage set
forth beneath its name on the signature page to the Agreement, or (b) with
respect to a Bank that has entered into an Assignment and Acceptance, the amount
set forth therein as such Bank's Percentage, in each case as such amount may be
modified by an Assignment and Acceptance entered into between a Bank and an
Eligible Assignee.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, limited liability company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"Pool Receivable" means a Receivable in the Receivables Pool.
"Purchase Limit" means $85,000,000, as such amount may be reduced pursuant
to Section 1.01(b). 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), minus the then outstanding Capital of Receivable Interests under the
Agreement.
"Rating Agency" means, collectively, Moody's Investors Service, Inc. and
Standard & Poor's, and their respective successors in interest.
"Receivable" means the indebtedness of any Obligor resulting from the
provision or sale of merchandise or services by the Originators under a
Contract, and includes the right to payment of any interest or finance charges
and other obligations of such Obligor with respect thereto which has been
acquired by the Seller by purchase or by capital contribution pursuant to the
CNCI Purchase Agreement.
"Receivable Interest" means, at any time, an undivided percentage ownership
interest in (i) all then outstanding Pool Receivables arising prior to the
I-17
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
C + YR + LDR + CAFR
-------------------
NRPB
where:
C = the Capital of each such
Receivable Interest at the time of
computation.
YR = the Yield Reserve of each such
Receivable Interest at the time of
computation.
LDR = the Loss and Dilution Reserve of
each such Receivable Interest at the
time of computation.
CAFR = the Collection Agent Fee 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.
I-18
"Related Security" means with respect to any Receivable:
(a) all of the Seller's interest in any merchandise (including
returned merchandise) relating to any sale giving rise to such Receivable;
(b) all 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;
(c) all guaranties, proceeds from insurance (including the Export
Insurance Policies) and other agreements or arrangements of whatever
character from time to time supporting or securing payment of such
Receivable whether pursuant to the Contract related to such Receivable or
otherwise; and
(d) the Contract and 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 to the extent assignable or
licensable under such Contract or other agreement and under applicable law;
and
(e) the right to payment under any Contract which is a Long-Term
Contract.
"Relevant Rating Agencies" means, collectively, each of the Rating Agencies
then rating the Notes at the request of the Issuer.
"Required Rating" means, with respect to any entity's senior bank debt, a
rating of at least BB- by Standard & Poor's or Ba3 by Moody's Investors Service,
Inc.; provided, that if such entity does not have rated senior bank debt
outstanding, the Agent has in good faith determined, in its sole discretion,
that such entity's bank debt would receive at least such a rating.
"Settlement Date" means the thirteenth Business Day after the end of each
Fiscal Month, or such earlier date as the Agent and the Collection Agent may
agree.
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"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.
"Special Obligor" means an Obligor, so designated in writing by the Agent,
(i) having a short-term debt rating of at least P-1 from Moody's Investors
Service, Inc. and A-1 from Standard & Poor's, and (ii) as set forth in Annex D
to this Agreement, as such Annex may be amended from time to time.
"Specified Boeing Receivable" means any indebtedness of The Boeing Company
("Boeing") owed to Coltec Aerospace Ltd (formerly Menasco Aerospace Ltd)
("Menasco") that is subject to the terms and conditions of that certain Security
Agreement, dated as of September 26, 1988, by and between Boeing and Menasco.
"Subsidiary" means any corporation of which securities having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by the
Seller or Coltec, as the case may be, or one or more Subsidiaries, or by the
Seller or Coltec, as the case may be, and one or more Subsidiaries.
"Termination Date" for any Receivable Interest means (i) in the case of a
Receivable Interest owned by an Investor, the earlier of (a) 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 (b) the Facility
Termination Date and (ii) in the case of a Receivable Interest owned by a Bank,
the earlier of (a) the Business Day which the Seller so designates by notice to
the Agent at least one Business Day in advance for such Receivable Interest and
(b) the Commitment Termination Date.
"Transaction Document" means any of the Agreement, the CNCI Purchase
Agreement, the Originator Purchase Agreement, the Canadian Purchase Agreement
and all other agreements and documents delivered and/or related hereto or
thereto.
I-20
"UCC" means the Uniform Commercial Code as from time to time in effect in
the specified jurisdiction.
"Yield" means:
(a) for each Receivable Interest for any Fixed Period to the extent
the Issuer will be funding such Receivable Interest during such Fixed
Period through the issuance of commercial paper,
IR x C x ED + LF
---
360
(b) for each Receivable Interest for any Fixed Period, to the
extent the Investors will not be funding such Receivable Interest
during such Fixed Period through the issuance of commercial paper or
the Banks will be funding such Receivable Interest,
AR x C x ED + LF
---
360
where:
AR = the Assignee Rate for such
Receivable Interest for such
Fixed Period
C = the Capital of such Receivable
Interest during such Fixed Period
ED = the actual number of days elapsed
during such Fixed Period
IR = the Investor Rate for such
Receivable Interest for such Fixed
Period
LF = the Liquidation Fee, if any, for
such Receivable Interest for such
Fixed Period;
I-21
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 then accrued and unpaid Yield for such Receivable Interest plus (ii) an
amount equal to the outstanding Capital multiplied by the Investor Rate or
Assignee Rate, whichever is applicable, multiplied by two times the Days Sales
Outstanding divided by 360.
- - - - - -
Other Terms. All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting principles.
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) Copies of (i) the resolutions of the Board of Directors of each of
the members of the Seller, of CNCI and of each Originator approving the
Transaction Documents to which it is a party, (ii) the consent of the
members of the Seller to the Seller's entering into the transactions
contemplated by the Transaction Documents, (iii) the operating agreement of
the Seller and (iv) all documents evidencing other necessary action and
governmental approvals, if any, with respect to the Transaction Documents,
certified by the Secretary or Assistant Secretary of a member of the
Seller, CNCI or the Originator, as appropriate.
(b) Copies of (i) a power of attorney, executed by the members of the
Seller, appointing any and all officers of CNCI from time to time
designated by CNCI in an incumbency certificate delivered by CNCI to the
Seller, or any one of such officers, as the Seller's true and lawful agent
and attorney-in-fact and (ii) the incumbency certificate described in the
immediately preceding clause (i).
(c) A copy of (i) the articles of organization of the Seller,
certified as of a recent date by the Secretary of State or other
appropriate official of the state of its formation, and (ii) the operating
agreement of the Seller.
(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 desirable in order to perfect the ownership and security
interests contemplated by the Transaction Documents.
(e) Acknowledgment copies, or time stamped receipt copies of proper
financing statements, if any, necessary to release all security interests
II-1
and other rights of any Person in (i) the Receivables, Contracts (unless
such Contract is a Long-Term Contract) or Related Security previously
granted by the Seller, CNCI or the Originators and (ii) the collateral
security referred to in Section 1.12.
(f) Completed requests for information, dated on or before the date of
such initial purchase, listing the financing 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,
CNCI or any Originator as debtor, together with copies of such other
financing statements (none of which shall cover any Receivables, Related
Security or the collateral security referred to in Section 1.12).
(g) Copies of executed Lock-Box Agreements with the Lock-Box Banks.
(h) Favorable opinions of counsel for the Seller, CNCI and the
Originators, substantially in the form of Annex E hereto and as to such
other matters as the Agent may reasonably request.
(i) An executed copy of the Fee Agreement.
(j) An executed copy of the CNCI Purchase Agreement.
(k) An executed copy of the Originator Purchase Agreement.
(l) An executed copy of the Canadian Purchase Agreement.
(m) An executed copy of the First Amendment to Credit Agreement.
(n) 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.
(o) Satisfactory results of a review and audit of the
Originators' collection, operating and reporting systems, Credit and
Collection Policy, historical receivables data and accounts.
II-2
2. Conditions Precedent to All Purchases and Reinvestments. Each purchase
(including the initial purchase) and each reinvestment shall be subject to the
further conditions precedent that
(a) in the case of each purchase, the Collection Agent shall have
delivered to the Agent on or prior to such purchase, in form and substance
satisfactory to the Agent, a completed Monthly Report containing
information covering the most recently ended Fiscal Month;
(b) on the date of such purchase or reinvestment pursuant to Section
1.04(b)(ii) of the Agreement, 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), except that the statement in clause (iv) below is required to be
true only if such purchase or reinvestment is by an Investor:
(i) the representations and warranties contained in 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, following notice from the Agent, an event that but
for notice or lapse of time or both would constitute an Event of
Termination),
(iii) all of the senior bank debt securities of Coltec have the
Required Rating,
(iv) 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
(v) the Originators shall have sold to CNCI, pursuant to the
Originator Purchase Agreement and the Canadian Purchase Agreement, all
Receivables originated by such Originators arising on or prior to such
date and CNCI shall have sold or contributed to the Seller, pursuant
to the CNCI Purchase Agreement, all such Receivables; and
II-3
(vi) the Agent shall have received such other approvals, opinions
or documents as it may reasonably request.
3. Conditions Subsequent. The transactions contemplated by the Agreement
are subject to the following conditions subsequent:
(a) no later than December 19, 1997, all Obligor Collections will be
remitted, in all material respects, to the Lock-Box Accounts existing at
the date of the Agreement or to newly-established Lock-Box Accounts,
(b) no later than December 19, 1997, Lock-Box Agreements relating to
the newly-established Lock-Box Accounts will be executed and delivered to
the Agent,
(c) no later than December 19, 1997, only funds which are Collections
will go into Lock-Box Accounts with the exception of GST, Specified Boeing
Receivables and immaterial funds and
(d) no later than October 6, 1997, any documents required to be
delivered pursuant to Section 1(d) of this Exhibit II which were not
previously delivered shall be delivered.
II-4
EXHIBIT III
REPRESENTATIONS AND WARRANTIES
The Seller represents and warrants as follows:
(a) The Seller is a limited liability company validly existing and in
good standing under the laws of the State of North Carolina 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
Transaction Documents to which the Seller is a party and the other
documents to be delivered by it thereunder (i) are within the Seller's
powers, (ii) have been duly authorized by all necessary action, (iii) do
not contravene (1) the Seller's operating agreement (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 (except for the interest created pursuant to the
Agreement). Each of the Transaction Documents 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
Transaction Documents to which the Seller is a party or any other document
to be delivered thereunder, except for the filing of UCC financing
statements which are referred to therein.
(d) Each of the Transaction Documents to which the Seller is a party
constitutes the legal, valid and binding obligation of the Seller
enforceable against the Seller in accordance with its terms subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of rights of creditors generally and
except to the extent that enforcement of rights and remedies set forth
herein may be limited to judicial discretion regarding the enforcement of,
or by
II-5
applicable laws affecting, remedies (whether considered in a court of law
or a proceeding in equity).
(e) The balance sheets of Coltec and its consolidated Subsidiaries as
at the end of its most recent fiscal year, and the related statements of
income and retained earnings of Coltec and its consolidated Subsidiaries
for such fiscal year, copies of which have been furnished to the Agent,
fairly present the financial condition of Coltec and its consolidated
Subsidiaries as at such date and the results of the operations of Coltec
and its consolidated Subsidiaries for the period ended on such date, all in
accordance with generally accepted accounting principles consistently
applied, and since the last day of its most recent fiscal year there has
been no material adverse change in the business, operations, property or
financial or other condition of Coltec or its Subsidiaries. The opening pro
forma balance sheet of the Seller, giving effect to the initial purchase to
be made 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 the formation of the Seller there has been no material adverse change
in the business, operations, property or financial or other condition of
the Seller.
(f) There are no actions, suits or proceedings before any court,
governmental agency or arbitrator pending or, to the best knowledge of
Coltec, threatened (i) with respect to this Agreement or any documentation
executed in connection herewith or the transactions contemplated hereby,
(ii) with respect to the Credit Agreement or (iii) that are reasonably
likely to materially and adversely affect the business, property, assets,
condition (financial or otherwise) or prospects of Coltec or Coltec and its
Subsidiaries taken as a whole or the ability of the Seller or Coltec and
its Subsidiaries taken as a whole to perform their respective obligations
under the Transaction Documents, or which purports to affect the legality,
validity or enforceability of the Transaction Documents. Neither Coltec nor
any other Originator is in default with respect to any order of any court,
arbitration or governmental body except for defaults that are not material
to the business or operations of Coltec and its Subsidiaries taken as a
whole.
II-6
(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 or
the Banks, as the case may be, shall acquire a valid and perfected first
priority undivided percentage ownership interest or security 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 those filed pursuant to the CNCI Purchase Agreement, the
Originator Purchase Agreement and the Canadian Purchase Agreement.
(i) Each Monthly 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), written information, exhibit, financial
statement, document, book, record or report furnished by or on behalf of
the Seller to the Agent, the Investors or the Banks in connection with the
Agreement is accurate in all material respects as of its date (except as
otherwise disclosed to the Agent, the Investors or the Banks, as the case
may be, at such time) and no such document contains any untrue statement of
a material fact or omits 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.
(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
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Lock-Box Banks, are specified in Annex F 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 not known by and does not use any tradename or
doing-business-as name.
(m) The Seller was organized on July 30, 1997, and the Seller did not
engage in any business activities prior to the date of the Agreement. The
Seller has no Subsidiaries.
(n) (i) 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 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 (iii) 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 CNCI or (ii) shall have purchased such Pool Receivable from CNCI
in exchange for payment (made by the Seller to CNCI in accordance with the
provisions of the CNCI 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 has not been made
for or on account of an antecedent debt owed by CNCI to the Seller and no
such sale is voidable or subject to avoidance under any section of the
Federal Bankruptcy Code.
II-8
EXHIBIT IV
COVENANTS
Until the latest of the Facility Termination Date, the date on which no
Capital of or Yield on any Receivable Interest shall be outstanding or the date
all other amounts owed by the Seller hereunder to the Investors, the Banks 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 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 collectibility of the Receivables Pool or
the ability of the Seller to perform its obligations under the Transaction
Documents to which it is a party.
(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 in Section 4.02 of 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
or the Collection Agent on its behalf 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).
IV-1
(c) Performance and Compliance with Contracts and Credit and
Collection Policy. The Seller will ensure, at its expense, that the
Originators will timely and fully perform and comply with all material
provisions, covenants and other promises required to be observed by them
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 respect to, the Seller's undivided interest
in any Pool Receivable, Related Security, related Contract or Collections,
or upon or with respect to any account to which any Collections of any Pool
Receivables are sent, or assign any right to receive income in respect
thereof.
(e) Extension or Amendment of Receivables. Except as provided in
Section 4.02(c), the Seller will not, and will not permit the Collection
Agent to, extend the maturity or adjust the Outstanding Balance or
otherwise modify the payment terms of any Pool Receivable.
(f) Change in Business or Credit and Collection Policy. The Seller
will not make or permit 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.
(g) Change in Payment Instructions to Obligors. The Seller will not
make or permit any change in the instructions to Obligors regarding
payments to be made to the Seller or the Collection Agent or payments to be
made to any Lock-Box Bank, unless the Agent shall have received notice of
and agreed to such change, other than a change related solely to
instructions to Obligors to pay to a new Lock-Box Bank.
(h) Addition or Termination of Lock-Box Banks or Lock-Box Agreements.
The Seller will not add or terminate or cause or permit the addition or
termination of any bank as a Lock-Box Bank from those listed in Annex F to
the Agreement or terminate any Lock-Box Agreement, unless
IV-2
the Agent shall have received notice of such addition or termination of a
Lock-Box Bank, notice of the termination of the Lock-Box Account with any
terminated Lock-Box Bank and executed copies of Lock-Box Agreements with
each newly added Lock-Box Bank. The Seller will not permit any provision of
any Lock-Box Agreement to be changed, amended, modified or waived without
the prior written consent of the Agent.
(i) Deposits to Lock-Box Accounts. Subject to the provisions of
Section 3 of Exhibit II to the Agreement, the Seller will deposit, or cause
to be deposited, all Collections of Pool Receivables into Lock-Box Accounts
from the date of the Agreement and 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;
provided, however, that cash collections representing payment of GST or
Specified Boeing Receivables may be deposited or credited to any Lock-Box
Account.
(j) Marking of Records. At its expense, the Seller will mark its
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 Coltec,
balance sheets of Coltec and its consolidated Subsidiaries as of the
end of such quarter and statements of income and retained earnings of
Coltec and its consolidated 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 Coltec;
IV-3
(ii) as soon as available and in any event within 90 days after
the end of each fiscal year of Coltec, a copy of the Annual Report on
Form 10-K for such year for Coltec and its consolidated Subsidiaries,
containing financial statements for such year audited by Arthur
Andersen & Co. or other independent public accountants acceptable to
the Agent;
(iii) as soon as possible and in any event within five days after
the occurrence of each Event of Termination or event that but for
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 that but
for notice or lapse of time or both would constitute an Event of
Termination, and the action that the Seller has taken and proposes to
take with respect thereto;
(iv) promptly after the filing or receiving thereof, copies of
all reports and notices that Coltec 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 Coltec 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
Coltec 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 Coltec and/or any
such Affiliate in excess of $1,000,000;
(v) at least ten Business Days prior to any change in the name of
Coltec, any other Originator, CNCI or the Seller, a notice setting
forth the new name and the effective date thereof;
(vi) promptly after the Seller obtains knowledge thereof, notice
of any "Event of Termination" or "Facility Termination Date" under the
CNCI Purchase Agreement, the Originator Purchase Agreement or the
Canadian Purchase Agreement;
IV-4
(vii) so long as any Capital shall be outstanding, as soon as
possible and in any event no later than the day of occurrence thereof,
notice that an Originator has stopped selling to CNCI, pursuant to the
Originator Purchase Agreement or the Canadian Purchase Agreement, all
newly arising Receivables originated by such Originator and notice
that CNCI has stopped selling or contributing to the Seller, pursuant
to the CNCI Purchase Agreement, all Receivables acquired from
Originators under the Originator Purchase Agreement or the Canadian
Purchase Agreement;
(viii) at the time of the delivery of the financial statements
provided for in clause (ii) of this paragraph, a certificate of the
chief financial officer or the treasurer of a member of the Seller to
the effect that, to the best of such officer's knowledge, no Event of
Termination has occurred and is continuing or, if any Event of
Termination has occurred and is continuing, specifying the nature and
extent thereof;
(ix) promptly after receipt thereof, copies of all notices
received by the Seller from CNCI under the CNCI Purchase Agreement;
(x) promptly, from time to time, such other information,
documents, records or reports respecting the Receivables or the
condition or operations, financial or otherwise, of the Seller as the
Agent may from time to time reasonably request;
(xi) promptly after the Seller obtains knowledge thereof, notice
of any (a) litigation, investigation or proceeding which may exist at
any time between the Seller, CNCI or an 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, CNCI or Coltec and its Subsidiaries
taken as a whole; (b) litigation or proceeding adversely affecting the
Seller's, CNCI's or an Originator's ability to perform its obligations
under the Transaction Documents to which it is a party or (c)
litigation or proceeding adversely affecting the Seller, CNCI or an
IV-5
Originator in which the amount involved is $2,000,000 or more and not
covered by insurance or in which injunctive or similar relief is
sought; and
(xii) promptly after the occurrence thereof, notice of a material
adverse change in the business, operations, property or financial or
other condition of the Seller.
(l) Corporate Separateness.
(i) At least one member of the Seller shall at all times maintain
at least one independent director who (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 of any
Other Corporation (except for such member), (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.
(ii) The Seller shall not direct or participate in the management
of any of the Other Corporations' operations.
(iii) The Seller shall maintain a separate principal office
through which its business shall be conducted, which office may be
located in identifiable space within the headquarters of one of the
Other Corporations. The Seller shall have stationery and other
business forms and a telephone listing separate from that of the Other
Corporations.
(iv) The Seller shall at all times be adequately capitalized in
light of its contemplated business.
(v) The Seller shall at all times provide for its own operating
expenses and liabilities from its own funds.
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(vi) 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.
(vii) The Seller shall not maintain any joint account with any
Other Corporation or become liable as a guarantor or otherwise with
respect to any Debt or contractual obligation of any Other
Corporation.
(viii) 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.
(ix) The Seller shall not make loans, advances or otherwise
extend credit to any of the Other Corporations.
(x) The Seller shall hold regular duly noticed meetings of its
members and make and retain minutes of such meetings.
(xi) 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.
(xii) 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 CNCI Purchase Agreement.
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(xiii) The Seller shall comply with (and cause to be true and
correct) each of the facts and assumptions contained in the opinion of
Moore & Van Allen PLLC delivered pursuant to Exhibit II to the
Agreement.
(m) CNCI Purchase Agreement. The Seller will not amend, waive or modify any
provision of the CNCI Purchase Agreement (including any amendment which would
add any additional sellers) or waive the occurrence of any "Event of
Termination" under the CNCI Purchase Agreement or consent to any amendment,
modification or waiver by CNCI of any provision of the Originator Purchase
Agreement or the Canadian Purchase Agreement, without in each case the prior
written consent of the Agent. The Seller will perform all of its obligations
under the CNCI Purchase Agreement in all material respects and will enforce the
CNCI Purchase Agreement in accordance with its terms in all material respects.
(n) Nature of Business. The Seller will not engage in any business other
than the purchase of Receivables, Related Security and Collections from CNCI and
the transactions contemplated by the Agreement. The Seller will not create or
form any Subsidiary.
(o) 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 CNCI Purchase Agreement.
(p) Payments to Members. The Seller may pay cash profits to its members so
long as (i) no Event of Termination shall then exist or would occur as a result
thereof, (ii) such payments are in compliance with all applicable law including
the limited liability company law of the state of the Seller's formation, and
(iii) such payments have been approved by all necessary and appropriate action
of the Seller.
IV-8
(q) Debt. The Seller will not incur any Debt, other than any Debt incurred
pursuant to the Agreement.
(r) Operating Agreement. The Seller will not amend or delete Articles III
or IV of its operating agreement.
(s) Further Assurances.
(i) The Seller agrees from time to time, at its expense, promptly to
execute and deliver all further instruments and documents, and to take all
further actions, that may be necessary or desirable, or that the Agent may
reasonably request, to perfect, protect or more fully evidence the
Receivable Interests purchased under the Agreement, or to enable the
Investors, the Banks or the Agent to exercise and enforce their respective
rights and remedies under the Agreement. Without limiting the foregoing,
the Seller will, upon the request of the Agent, execute and file such
financing or continuation statements, or amendments thereto, and such other
instruments and documents, that may be necessary or desirable, or that the
Agent may reasonably request, to perfect, protect or evidence such
Receivable Interests.
(ii) The Seller authorizes the Agent to file financing or continuation
statements, and amendments thereto and assignments thereof, relating to the
Pool Receivables and the Related Security, the related Contracts (other
than an assignment with respect to a Contract which is a Long-Term
Contract) and the Collections with respect thereto without the signature of
the Seller where permitted by law. A photocopy or other reproduction of the
Agreement shall be sufficient as a financing statement where permitted by
law.
IV-9
EXHIBIT V
EVENTS OF TERMINATION
Each of the following, unless waived in writing by the Agent (other than as
set forth in clauses (g) and (h) which cannot be waived), shall be an "Event of
Termination":
(a) The Collection Agent (if Coltec or any of its Affiliates) (i)
shall fail to perform or observe any term, covenant or agreement under the
Agreement (other than as referred to in clause (ii) of this paragraph (a)),
such failure could reasonably be expected to have a material adverse effect
on the interests of the Investors or the Banks and such failure shall
remain unremedied for 30 days after written notice thereof shall have been
given to the Seller by the Agent or (ii) shall fail to make when due any
payment or deposit to be made by it under the Agreement; or
(b) The Seller shall fail (i) to transfer to the Agent when requested
any rights, pursuant to the Agreement, which the Seller then has as
Collection Agent, which failure could reasonably be expected to have a
material adverse effect on the interests of the Investors or the Banks, and
such failure shall remain unremedied for 30 days after written notice
thereof shall have been given to the Seller by the Agent, or (ii) to make
any payment required under Section 1.04; or
(c) Any representation or warranty made or deemed made by the Seller
or the Collection Agent (or any of their respective officers) under or in
connection with the Agreement or any other Transaction Document or any
written information or report delivered by the Seller or the Collection
Agent pursuant to the Agreement or any other Transaction Document shall
prove to have been incorrect or untrue in any material respect when made or
deemed made or delivered and the breach of such representation or warranty
or any such incorrect or untrue information could reasonably be expected to
have a material adverse effect on the interests of the Investors or the
Banks and shall remain unremedied for 30 days after written notice thereof
shall have been given to the Seller by the Agent ; or
V-1
(d) The Seller, CNCI or an Originator shall fail to perform or observe
any other term, covenant or agreement contained in a Transaction Document
to which it is a party on its part to be performed or observed, such
failure could reasonably be expected to have a material adverse effect on
the interests of the Investors or the Banks and such failure shall remain
unremedied for 30 days after written notice thereof shall have been given
to the Seller by the Agent (or, with respect to a failure to deliver the
Monthly Report pursuant to the Agreement, such failure shall remain
unremedied for five days, without a requirement for notice); or
(e) As of the last day of any Fiscal Month, either the Default Ratio
shall exceed 8% or the Delinquency Ratio shall exceed 8% or the Dilution
Ratio shall exceed 8% or the Monthly Default Ratio shall exceed 15% or the
Monthly Delinquency Ratio shall exceed 15%; 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 or
security interest to the extent of the pertinent Receivable Interest in
each applicable Pool Receivable and the Related Security and Collections
with respect thereto; or the security interest created pursuant to Section
1.12 shall for any reason cease to be a valid first priority security
interest in the collateral security referred to in that section; or
(g) The Seller, CNCI or an Originator shall generally not pay its
debts as such debts become due, or shall admit in writing its inability to
pay its debts generally, or shall make a general assignment for the benefit
of creditors; or any proceeding shall be instituted by or against the
Seller, CNCI or an Originator 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 it (but not instituted
by it), either such proceeding shall remain undismissed or unstayed for a
period of 60 days, or any of the actions sought in such proceeding
(including, without limitation, the entry
V-2
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, CNCI or an 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 shall be greater than 100% (i)
for a period of five consecutive Business Days after written notice in the
form of the Monthly Report, delivered not later than ten Business Days
after the Fiscal Month most recently ended or (ii) if such Monthly Report
is not delivered by such tenth Business Day, for a period of five
consecutive Business Days after such Monthly Report was required to be
delivered; or
(i) An "Event of Termination" or "Facility Termination Date" shall
occur under the CNCI Purchase Agreement or the Originator Purchase
Agreement or the Canadian Purchase Agreement or the CNCI Purchase Agreement
or the Originator Purchase Agreement or the Canadian Purchase Agreement
shall cease to be in full force and effect; or
(j) All of the outstanding ownership interests of the Seller shall
cease to be owned, directly or indirectly, by Coltec; or
(k) The senior bank debt of Coltec shall not have the Required Rating;
or
(l) An "Event of Default" under and as defined in the Credit Agreement
shall have occurred and remain unremedied for five days after written
notice is given by the Agent to the Seller; or
(m) Any of the conditions subsequent set forth in paragraph 3 of
Exhibit II to the Agreement shall not be satisfied on or after the date so
specified.
V-3
Annex D
Special Obligor Special Concentration
Percentage
Boeing Company 40%
United Technologies and Allied Signal 20% in aggregate
Any Obligor rated at least A-1 by
Standard & Poor's (or its equivalent long-term
rating as indicated by the chart below) and P-1 by
Moody's Investors Service, Inc. (or its equivalent
long-term rating as indicated by the chart below) 10%
If Boeing Company is rated at least A-2 by Standard & Poor's (or its equivalent
long-term senior unsecured rating as indicated by the chart below) and P-2 by
Moody's Investors Service, Inc., (or its equivalent long-term senior unsecured
rating as indicated by the chart below) the Special Concentration Percentage is
15%. If Boeing is not rated at least A-2 by Standard & Poor's (or its equivalent
long-term senior unsecured rating as indicated by the chart below) and P-2 by
Moody's Investors Service, Inc. (or its equivalent long-term senior unsecured
rating as indicated by the chart below) it will cease to be a Special Obligor.
If the securities of only one of United Technologies and Allied Signal are rated
at least A-1 by Standard & Poor's and P-1 by Moody's Investors Service, Inc.
then in no event shall the Concentration Percentage for United Technologies and
Allied Signal exceed 20% in the aggregate.
Moody's Investors Service, Inc. Equivalent Long-Term Ratings
Long-Term Short-Term
Aaa through A1 P-1
A2 through Baa1 P-2
Standard & Poor's Equivalent Long-Term Ratings
Long-Term Short-Term
AAA through AA- A-1+
A+ A-1
A through BBB+ A-2