Exhibit 10.3
[ORIGINATOR PCA]
PURCHASE AND CONTRIBUTION AGREEMENT
Dated as of May 22, 2001
Between
PLAYTEX PRODUCTS, INC.
AS SELLER
and
PLAYTEX A/R LLC
AS PURCHASER
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TABLE OF CONTENTS
Page
PRELIMINARY STATEMENTS 1
ARTICLE I DEFINITIONS...........................................................................1
SECTION 1.01. Certain Defined Terms.................................................1
SECTION 1.02. Other Terms..........................................................10
ARTICLE II AMOUNTS AND TERMS OF PURCHASES AND CONTRIBUTIONS.....................................10
SECTION 2.01. Facility.............................................................10
SECTION 2.02. Making Purchases.....................................................10
SECTION 2.03. Collections..........................................................11
SECTION 2.04. Settlement Procedures................................................11
SECTION 2.05. Payments and Computations, Etc.......................................12
SECTION 2.06. Contributions........................................................12
ARTICLE III CONDITIONS OF PURCHASES..............................................................13
SECTION 3.01. Conditions Precedent to Initial Purchase from the Seller.............13
SECTION 3.02. Conditions Precedent to All Purchases................................14
ARTICLE IV REPRESENTATIONS AND WARRANTIES.......................................................15
SECTION 4.01. Representations and Warranties of the Seller.........................15
ARTICLE V COVENANTS............................................................................18
SECTION 5.01. Covenants of the Seller..............................................18
SECTION 5.02. [Intentionally Omitted]..............................................23
SECTION 5.03. Covenant of the Seller and the Purchaser.............................23
ARTICLE VI ADMINISTRATION AND COLLECTION........................................................24
SECTION 6.01. Designation of Collection Agent......................................24
SECTION 6.02. Duties of Collection Agent...........................................25
SECTION 6.03. Collection Agent Fee.................................................26
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SECTION 6.04. Certain Rights of the Purchaser......................................26
SECTION 6.05. Rights and Remedies..................................................27
SECTION 6.06. Transfer of Records to Purchaser.....................................28
ARTICLE VII EVENTS OF TERMINATION................................................................28
SECTION 7.01. Events of Termination................................................28
ARTICLE VIII INDEMNIFICATION......................................................................30
SECTION 8.01. Indemnities by the Seller............................................30
ARTICLE IX MISCELLANEOUS........................................................................33
SECTION 9.01. Amendments, Etc......................................................33
SECTION 9.02. Notices, Etc.........................................................33
SECTION 9.03. Binding Effect; Assignability........................................33
SECTION 9.04. Costs, Expenses and Taxes............................................34
SECTION 9.05. No Proceedings.......................................................34
SECTION 9.06. Confidentiality......................................................35
SECTION 9.07. GOVERNING LAW........................................................35
SECTION 9.08. Third Party Beneficiary..............................................35
SECTION 9.09. Execution in Counterparts............................................35
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EXHIBITS
EXHIBIT A Credit and Collection Policy
EXHIBIT B Lock-Box Banks
EXHIBIT C Principal Place of Business and Chief Executive Office
of the Seller
ANNEX A Form of Invoice
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PURCHASE AND CONTRIBUTION AGREEMENT
Dated as of May 22, 2001
PLAYTEX PRODUCTS, INC., a Delaware corporation (the "SELLER"), and
PLAYTEX A/R LLC, a Delaware limited liability company (the "PURCHASER"), agree
as follows:
PRELIMINARY STATEMENTS. (1) Certain terms which are capitalized and
used throughout this Agreement (in addition to those defined above) are defined
in Article I of this Agreement.
(2) The Seller has Receivables that it wishes to sell to the Purchaser,
and the Purchaser is prepared to purchase such Receivables on the terms set
forth herein.
(3) The Seller may also wish to contribute Receivables to the capital
of the Purchaser on the terms set forth herein.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"ADVERSE CLAIM" means a lien, security interest, or other
charge or encumbrance, or any other type of preferential arrangement.
"AFFILIATE" means, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by or is under
common control with such Person or is a director or officer of such
Person.
"BUSINESS DAY" means any day on which banks are not authorized
or required to close in New York City.
"COLLECTION AGENT" means at any time the Person then
authorized pursuant to Section 6.01 to service, administer and collect
Transferred Receivables.
"COLLECTION AGENT DEFAULT" has the meaning ascribed to that
term in the Sale Agreement.
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"COLLECTION AGENT FEE" has the meaning specified in Section
6.03.
"COLLECTIONS" means, with respect to any Receivable, all cash
collections and other cash proceeds of such Receivable, including,
without limitation, all cash proceeds of Related Security with respect
to such Receivable, and all funds deemed to have been received by the
Seller or any other Person as a Collection pursuant to Section 2.04.
"CONTRACT" means an agreement between the Seller and an
Obligor, substantially in the form of one of the written contracts or
(in the case of any open account agreement) one of the invoices in the
form of Annex A or such other contract or invoice as may be approved by
the Purchaser, pursuant to or under which such Obligor shall be
obligated to pay for merchandise from time to time.
"CONTRIBUTED RECEIVABLE" has the meaning specified in Section
2.07.
"CREDIT AGREEMENT" means that certain Credit Agreement dated
as of May 22, 2001, among the Seller, as borrower, the several lenders
from time to time parties thereto and Credit Suisse First Boston, as
administrative agent, lead arranger and bookrunner, as the same from
time to time be amended, modified and/or restated.
"CREDIT AND COLLECTION POLICY" means those receivables credit
and collection policies and practices of the Seller in effect on the
date of this Agreement applicable to the Receivables and described in
Exhibit A hereto, as modified in compliance with this Agreement.
"CSFBNY" means Credit Suisse First Boston, New York Branch.
"DEBT" means (i) indebtedness for borrowed money, (ii)
obligations evidenced by bonds, debentures, notes or other similar
instruments, (iii) obligations to pay the deferred purchase price of
property or services, (iv) obligations as lessee under leases which
shall have been or should be, in accordance with generally accepted
accounting principles, recorded as capital leases, and (v) obligations
under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness
or obligations of others of the kinds referred to in clauses (i)
through (iv) above.
"DEFAULTED RECEIVABLE" means a Receivable:
(i) as to which any payment, or part thereof, remains
unpaid for 61 or more days from the original due date for such
payment;
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(ii) 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 Section 7.01(g); or
(iii) which, consistent with the Credit and
Collection Policy, would be written off as uncollectible.
"DELINQUENT RECEIVABLE" means a Receivable that is not a
Defaulted Receivable and:
(i) as to which any payment, or part thereof, remains
unpaid for 30 or more days from the original due date for such
payment or
(ii) which, consistent with the Credit and Collection
Policy, would be classified as delinquent by the Seller.
"DILUTED RECEIVABLE" means that portion (and only that
portion) of any Receivable which is either (a) reduced or canceled as a
result of (i) any defective, rejected or returned merchandise or
services or any failure by the Seller to deliver any merchandise or
provide any services or otherwise to perform under the underlying
Contract or invoice, (ii) any change in the terms of or cancellation
of, a Contract or invoice or any cash discount, discount for quick
payment or other adjustment by the Seller which reduces the amount
payable by the Obligor on the related Receivable (except any such
change or cancellation resulting from or relating to the financial
inability to pay or insolvency of the Obligor of such Receivable) or
(iii) any set-off by an Obligor in respect of any claim by such Obligor
as to amounts owed by it on the related Receivable (whether such claim
arises out of the same or a related transaction or an unrelated
transaction) or (b) subject to any specific dispute, offset,
counterclaim or defense whatsoever (except the discharge in bankruptcy
of the Obligor thereof); PROVIDED that Diluted Receivables are
calculated assuming that all chargebacks are resolved in the Obligor's
favor and do not include contractual adjustments to the amount payable
by an Obligor that are eliminated from the Receivables balance sold to
the Purchaser through a reduction in the purchase price for the related
Receivable.
"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, discount for quick payment or other adjustment or setoff.
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"DISCOUNT" means, in respect of each Purchase, 1% of the
Outstanding Balance of the Receivables that are the subject of such
Purchase; provided, however, the foregoing Discount may be revised
prospectively by request of either of the parties hereto to reflect
changes in recent experience with respect to write-offs, timing and
cost of Collections and cost of funds, provided that such revision is
consented to by both of the parties (it being understood that each
party agrees to duly consider such request but shall have no obligation
to give such consent).
"EFT OBLIGOR" has the meaning ascribed to that term in the
Sale Agreement.
"ELIGIBLE RECEIVABLE" means a Receivable:
(i) the Obligor of which is a United States resident,
is not an Affiliate of any of the parties hereto, and is not a
government or a governmental subdivision or agency;
(ii) which, at the time of the transfer thereof to
the Purchaser under this Agreement, is not a Defaulted
Receivable or a Delinquent Receivable;
(iii) which, according to the Contract related
thereto, is required to be paid in full within 30 days of the
original billing date therefor, or such other number of days
as may be agreed upon from time to time by the Seller and the
Purchaser except that (A) Contracts for Suncare Receivables
may have maturities of 240 days and (B) Contracts for
Receivables for sales to new stores and sales of new products
may have maturities of 60 days;
(iv) the Obligor of which has been directed to make
payment to a Lock-Box Account except for EFT Obligors,
provided for a period of 45 days after the date of this
Agreement that (i) there are not more than six EFT Obligors
and (ii) the aggregate Outstanding Balance of Receivables of
EFT Obligors does not exceed 10% of the aggregate Outstanding
Balance of all Transferred Receivables and, if such percentage
is greater than 10%, then such Receivables will not be
Eligible Receivables to the extent that the aggregate
Outstanding Balance thereof exceeds 10% of the aggregate
Outstanding Balance of all Transferred Receivables, in any
event such subject to the terms of Section 5.01(i);
(v) which is an "account" or a "general intangible"
within the meaning of Section 9-106 of the UCC of the
applicable jurisdictions;
(vi) which is denominated and payable only in United
States dollars in the United States;
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(vii) which arises under a Contract which, together
with such Receivable, is in full force and effect and
constitutes the legal, valid and binding obligation of the
Obligor of such Receivable and is not subject to any dispute,
offset, counterclaim or defense whatsoever (except the
potential discharge in bankruptcy of such Obligor);
(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,
consumer protection, truth in lending, fair credit billing,
fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy) and with respect to which no
party to the Contract related thereto is in violation of any
such law, rule or regulation in any material respect;
(ix) which arises under a Contract which (A) does not
require the Obligor under such Contract to consent to the
transfer, sale or assignment of the rights and duties of the
Seller under such Contract and (B) does not contain a
confidentiality provision that purports to restrict the
ability of the Purchaser and its assignees to exercise their
rights under this Agreement, including, without limitation,
their right to review the Contract;
(x) which was generated in the ordinary course of the
Seller's business;
(xi) which, at the time of the transfer of such
Receivable under this Agreement, has not been extended,
rewritten or otherwise modified from the original terms
thereof except to correct clerical errors;
(xii) the transfer, sale or assignment of which does
not contravene any applicable law, rule or regulation;
(xiii) which satisfies all applicable requirements of
the Credit and Collection Policy;
(xiv) as to which the goods or services delivered
thereunder, and the delivery thereof, comply in all material
respects with the terms of the related Contract and any other
related agreement and any applicable warranties and under
which the Seller has no further obligation to perform;
(xv) which has not been selected for purchase under
this Agreement in a manner which is adverse to the interests
of the Purchaser;
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(xvi) as to which the goods delivered thereunder are
not subject to return;
(xvii) which is not a sale of the type described in
Section 2-326 of the UCC; and
(xviii) which is an obligation representing all or
part of the sales price of merchandise, insurance or services
within the meaning of Section 3(c)(5) of the Investment
Company Act of 1940, as amended, and the nature of which is
such that its purchase with the proceeds of notes would
constitute a "current transaction" within the meaning of
Section 3(a)(3) of the Securities Act of 1933, as amended.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"EVENT OF TERMINATION" has the meaning specified in Section
7.01.
"FACILITY" means the willingness of the Purchaser to consider
making Purchases of Receivables from the Seller from time to time
pursuant to the terms of this Agreement.
"FACILITY TERMINATION DATE" means the earliest of (i) May 21,
2002, (ii) the date of termination of the Facility pursuant to Section
7.01 and (iii) the date which the Seller designates by at least two
Business Days' notice to the Purchaser.
"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 CSFBNY from three Federal funds brokers of
recognized standing selected by it.
"FISCAL MONTH" has the meaning ascribed to that term in the
Sale Agreement.
"FISCAL WEEK" has the meaning ascribed to that term in the
Sale Agreement.
"GENERAL TRIAL BALANCE" of the Seller on any date means the
Seller's accounts receivable trial balance (whether in the form of a
computer printout, magnetic tape or
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diskette) on such date, listing Obligors and the Receivables
respectively owed by such Obligors on such date together with the aged
Outstanding Balances of such Receivables, in form and substance
satisfactory to the Purchaser.
"INCIPIENT EVENT OF TERMINATION" means an event that but for
notice or lapse of time or both would constitute an Event of
Termination.
"INDEMNIFIED AMOUNTS" has the meaning specified in Section
8.01.
"INDENTURE" means the Indenture dated May 22, 2001, between
the Seller and The Bank of New York, as Trustee, relating to the
Seller's 9M% Senior Subordinated Notes due 2011, as the same may
from time to time be amended, modified and/or restated.
"LOCK-BOX ACCOUNT" means a post office box administered by a
Lock-Box Bank or one or more accounts, under the exclusive ownership
and control of the Purchaser (or its assignees or designees),
maintained for the purpose of receiving Collections.
"LOCK-BOX AGREEMENT" means an agreement among the Seller, the
Purchaser (or its assignees or designees) and any Lock-Box Bank in form
and substance satisfactory to the Purchaser (or its assignees or
designees).
"LOCK-BOX BANK" means any of the banks or other financial
institutions holding one or more Lock-Box Accounts.
"MATERIAL ADVERSE EFFECT" means with respect to the Seller a
material adverse effect on (i) its financial condition or operations or
any of its Subsidiaries or (ii) its ability or the ability of the
Seller to perform their respective obligations under this Agreement or
the legality, validity or enforceability of this Agreement or (iii) the
collectibility of the Transferred Receivables taken as a whole or the
Collection Agent's ability to collect Transferred Receivables.
"OBLIGOR" means a Person which is a United States resident
obligated to make payments to the Seller pursuant to a Contract.
"OUTSTANDING BALANCE" of any Receivable at any time means the
then outstanding principal balance thereof.
"PERSON" means an individual, partnership, corporation
(including a business trust), limited liability company, joint stock
company, trust, unincorporated association, joint venture or other
entity, or a government or any political subdivision or agency thereof.
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"PURCHASE" means a purchase by the Purchaser of Receivables
from the Seller pursuant to Article II.
"PURCHASE DATE" means each day on which a Purchase is made
pursuant to Article II.
"PURCHASED RECEIVABLE" means any Receivable which is purchased
by the Purchaser pursuant to Section 2.02.
"PURCHASE PRICE" for any Purchase means an amount equal to the
Outstanding Balance of the Receivables that are the subject of such
Purchase as set forth in the Seller's General Trial Balance, minus the
Discount for such Purchase.
"RECEIVABLE" means the indebtedness of any Obligor under a
Contract, and includes the right to payment of any interest or finance
charges and other obligations of such Obligor with respect thereto.
"RECEIVABLES PURCHASE REQUEST" has the meaning specified in
Section 2.02(a).
"RELATED SECURITY" means with respect to any Receivable:
(i) all of the Seller's interest in any merchandise
(including returned merchandise) relating to any sale giving
rise to such Receivable;
(ii) 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;
(iii) all guaranties, insurance and other agreements
or arrangements of whatever character from time to time
supporting or securing payment of such Receivable whether
pursuant to the Contract related to such Receivable or
otherwise; and
(iv) 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.
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"SALE AGREEMENT" means that certain Receivables Purchase
Agreement, dated as of the date hereof, among the Purchaser, as seller,
Gramercy Capital Corporation, as purchaser, CSFBNY, individually and as
agent, and the Seller, as collection agent and originator, as amended
or restated from time to time.
"SELLER REPORT" means a report, in form and substance
satisfactory to the Purchaser, furnished by the Collection Agent to the
Purchaser pursuant to Section 6.02(b).
"SETTLEMENT DATE" shall have the meaning as ascribed to that
term in the Sale Agreement.
"SUNCARE RECEIVABLES" means Receivables originated in the
Seller's Banana Boat(R) product line.
"TRANSFERRED RECEIVABLE" means a Purchased Receivable or a
Contributed Receivable.
"UCC" means the Uniform Commercial Code as from time to time
in effect in the specified jurisdiction.
SECTION 1.02. OTHER TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles. All terms used in Article 9 of the UCC in the State of
New York, and not specifically defined herein, are used herein as defined in
such Article 9.
ARTICLE II
AMOUNTS AND TERMS OF PURCHASES AND CONTRIBUTIONS
SECTION 2.01. FACILITY. On the terms and conditions hereinafter set
forth and without recourse to the Seller (except to the extent specifically
provided herein), the Seller may at its option sell or contribute to the
Purchaser all Receivables originated by it from time to time and the Purchaser
may at its option purchase or accept as a contribution from the Seller all
Receivables of the Seller from time to time, in each case during the period from
the date hereof to the Facility Termination
Date.
SECTION 2.02. MAKING PURCHASES.
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(a) INITIAL PURCHASE. The Seller shall give the Purchaser notice of its
request for the initial Purchase hereunder, which request shall specify the date
of such Purchase (which shall be a Business Day) and the proposed Purchase Price
for such Purchase. The Purchaser shall promptly notify the Seller whether it has
determined to make such Purchase. On the date of such Purchase, the Purchaser
shall, upon satisfaction of the applicable conditions set forth in Article III,
pay the Purchase Price for such Purchase in the manner provided in Section
2.02(c).
(b) SUBSEQUENT PURCHASES. On each Settlement Date following the initial
Purchase, unless either party shall notify the other party to the contrary, the
Seller shall sell to the Purchaser and the Purchaser shall purchase from the
Seller, upon satisfaction of the applicable conditions set forth in Article III,
all Receivables originated by the Seller which have not previously been sold or
contributed to the Purchaser; PROVIDED, HOWEVER, that the Seller may, at its
option on any Purchase Date, contribute all or any of such Receivables to the
Purchaser pursuant to Section 2.07, instead of selling such Receivables to the
Purchaser pursuant to this Section 2.02(b). On or within five Business Days
after the date of each such Purchase, the Purchaser shall pay the Purchase Price
for such Purchase in the manner provided in Section 2.02(c).
(c) PAYMENT OF PURCHASE PRICE. The Purchase Price for each Purchase
shall be paid on or within five Business Days after the Purchase Date therefor
by means of a deposit in same day funds to the Seller's account designated by
the Seller.
(d) OWNERSHIP OF RECEIVABLES AND RELATED SECURITY. On each Purchase
Date, after giving effect to the Purchase (and any contribution of Receivables)
on such date, the Purchaser shall own all Receivables originated by the Seller
as of such date (including Receivables which have been previously sold or
contributed to the Purchaser hereunder). The Purchase or contribution of any
Receivable shall include all Related Security with respect to such Receivable.
SECTION 2.03. COLLECTIONS. The Collection Agent shall, on each day,
deposit into an account of the Purchaser or the Purchaser's assignee all
Collections of Transferred Receivables then held by the Collection Agent.
(a) In the event that the Seller believes that Collections which are
not Collections of Transferred Receivables have been deposited into an account
of the Purchaser or the Purchaser's assignee, the Seller shall so advise the
Purchaser and, on the Business Day following such identification, the Purchaser
shall remit, or shall cause to be remitted, all Collections so deposited which
are identified, to the Purchaser's satisfaction, to be Collections of
Receivables which are not Transferred Receivables to the Seller.
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SECTION 2.04. SETTLEMENT PROCEDURES. If on any day a Purchased
Receivable shall become a Diluted Receivable, the Seller shall be deemed to have
received on such day a Collection of such Purchased Receivable in the amount of
the Diluted Receivable and the Seller shall promptly (and, in any event, no
later than the next succeeding Settlement Date) pay such amount to the Purchaser
or the Purchaser's assignee. If the Seller is not the Collection Agent, the
Seller shall pay to the Collection Agent on or prior to the next Settlement Date
all amounts deemed to have been received pursuant to this subsection.
(a) Upon discovery by the Seller or the Purchaser of a breach of any of
the representations and warranties made by the Seller in Section 4.01(j) with
respect to any Transferred Receivable, such party shall give prompt written
notice thereof to the other party, as soon as practicable and in any event
within five Business Days following such discovery. The Seller shall, upon not
less than two Business Days' notice from the Purchaser or its assignee or
designee, repurchase such Transferred Receivable on the next succeeding
Settlement Date for a repurchase price equal to the Outstanding Balance of such
Transferred Receivable. Each repurchase of a Transferred Receivable shall
include the Related Security with respect to such Transferred Receivable. The
proceeds of any such repurchase shall be deemed to be a Collection in respect of
such Transferred Receivable. If the Seller is not the Collection Agent, the
Seller shall pay to the Collection Agent on or prior to the next Settlement Date
the repurchase price required to be paid pursuant to this subsection.
(b) Except as stated in subsection (a) or (b) of this Section 2.04 or
as otherwise required by law or the underlying Contract, all Collections from an
Obligor of any Transferred Receivable will be held as unapplied cash, unless
such Obligor designates its payment for application to specific Receivables.
SECTION 2.05. PAYMENTS AND COMPUTATIONS, ETC. All amounts to be paid or
deposited by the Seller or the Collection Agent hereunder 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 to an account or accounts designated by the Purchaser from time
to time, which accounts, during the existence of the Sale Agreement, shall be
those set forth in the Sale Agreement.
(a) The Seller shall, to the extent permitted by law, pay to the
Purchaser 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 Yield then in effect under the Sale Agreement,
payable on demand.
(b) All computations of interest and all computations of fees hereunder
shall be made on the basis of a year of 360 days for the actual number of days
(including the first but excluding the last day) elapsed. Whenever any payment
or deposit to be made hereunder shall
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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 2.06. CONTRIBUTIONS. The Seller may from time to time at its
option, by notice to the Purchaser on or prior to the date of the proposed
contribution, identify Receivables which it proposes to contribute to the
Purchaser as a capital contribution. On the date of each such contribution and
after giving effect thereto, the Purchaser shall own the Receivables so
identified and contributed (collectively, the "CONTRIBUTED RECEIVABLES") and all
Related Security with respect thereto. The foregoing notwithstanding, on the
date of the initial Purchase hereunder the Seller agrees to contribute to the
Purchaser all Receivables which are not included in such initial Purchase.
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.01. CONDITIONS PRECEDENT TO INITIAL PURCHASE FROM THE SELLER.
The initial Purchase of Receivables from the Seller hereunder is subject to the
conditions precedent that the Purchaser 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 Purchaser:
(a) Certified copies of the resolutions of the Board of
Directors of the Seller approving this Agreement and certified copies
of all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to this Agreement.
(b) A certificate of the Secretary or Assistant Secretary of
the Seller certifying the names and true signatures of the officers of
the Seller authorized to sign this Agreement and the other documents to
be delivered by it hereunder.
(c) Executed copies or time stamped receipt copies of proper
financing statements, to be filed naming the Seller as the
seller/debtor and the Purchaser as the purchaser/secured party, or
other similar instruments or documents, as the Purchaser may deem
necessary or desirable under the UCC of all appropriate jurisdictions
or other applicable law to perfect the Purchaser's ownership of and
security interest in the Transferred Receivables and Related Security
and Collections with respect thereto.
(d) Executed copies or time stamped receipt copies of proper
financing statements, if any, necessary to release all security
interests and other rights of any Person
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in the Transferred Receivables, Contracts or Related Security
previously granted by the Seller.
(e) Completed requests for information, dated on or before the
date of such initial Purchase, listing the financing statements
referred to in subsection (c) above and all other effective financing
statements filed in the jurisdictions referred to in subsection (c)
above that name the Seller as debtor, together with copies of such
other financing statements (none of which shall cover any Transferred
Receivables, Contracts or Related Security).
(f) A favorable opinion of Paul, Weiss, Rifkind, Wharton &
Garrison, counsel for the Seller, in form and substance satisfactory to
the Purchaser, as to such matters as the Purchaser may reasonably
request.
(g) Lock-Box Agreements in respect of each Lock-Box Account,
duly executed by the Seller and the Lock-Box Bank holding such Lock-Box
Account.
(h) A favorable opinion of Moore & Van Allen PLLC, special
North Carolina counsel to the Seller, in form and substance
satisfactory to the Purchaser.
(i) A favorable opinion of Diserio, Martin, O'Connor &
Castiglioni LLP, special Connecticut counsel for the Seller, in form
and substance satisfactory to the Purchaser.
(j) A favorable opinion of Richards, Layton & Finger, P.A.,
special Delaware counsel to the Seller, in form and substance
satisfactory to the Purchaser
SECTION 3.02. CONDITIONS PRECEDENT TO ALL PURCHASES. Each Purchase
(including the initial Purchase) hereunder shall be subject to the further
conditions precedent that:
(a) with respect to any such Purchase, on or prior to the date
of such Purchase, the Seller shall have delivered to the Purchaser, (i)
if requested by the Purchaser, the Seller's General Trial Balance
(which if in magnetic tape or diskette format shall be compatible with
the Purchaser's computer equipment) as of a date not more than 31 days
prior to the date of such Purchase, and (ii) a written report
identifying, among other things, the Receivables to be included in such
Purchase and such additional information concerning such Receivables as
may reasonably be requested by the Purchaser;
(b) with respect to any such Purchase, on or prior to the date
of such Purchase, the Collection Agent shall have delivered to the
Purchaser, in form and substance
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satisfactory to the Purchaser, a completed Seller Report for the most
recently ended reporting period for which information is required
pursuant to Section 6.02(b) and containing such additional information
as may reasonably be requested by the Purchaser;
(c) the Seller shall have marked its master data processing
records and all other relevant records evidencing the Receivables which
are the subject of such Purchase with a legend, acceptable to the
Purchaser, stating that such Receivables, the Related Security and
Collections with respect thereto, have been sold in accordance with
this Agreement; and
(d) on the date of such Purchase the following statements
shall be true (and the Seller, by accepting the amount of such
Purchase, shall be deemed to have certified that):
(i) The representations and warranties contained in
Section 4.01 are correct on and as of the date of such
Purchase as though made on and as of such date,
(ii) No event has occurred and is continuing, or
would result from such Purchase, that constitutes an Event of
Termination or an Incipient Event of Termination and
(iii) The Purchaser shall not have delivered to the
Seller a notice that the Purchaser shall not make any further
Purchases hereunder; and
(e) the Purchaser shall have received such other approvals,
opinions or documents as the Purchaser may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller
represents and warrants as follows:
(a) The Seller is a corporation duly incorporated, validly
existing and in good standing under the laws of Delaware, and is duly
qualified to do business, and is in good standing, in every
jurisdiction where the nature of its business requires it to be so
qualified, unless the failure to so qualify would not have a Material
Adverse Effect.
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(b) The execution, delivery and performance by the Seller of
this Agreement and the other documents to be delivered by it hereunder,
including the Seller's sale and contribution of Receivables hereunder
and the Seller's use of the proceeds of Purchases, (i) are within the
Seller's corporate powers, (ii) have been duly authorized by all
necessary corporate action, (iii) do not contravene (1) the Seller's
charter or by-laws, (2) any law, rule or regulation applicable to the
Seller, (3) any contractual restriction binding on or affecting the
Seller or its property or (4) any order, writ, judgment, award,
injunction or decree binding on or affecting the Seller or its
property, and (iv) do not result in or require the creation of any
lien, security interest or other charge or encumbrance upon or with
respect to any of its properties (except for the transfer of the
Seller's interest in the Transferred Receivables pursuant to this
Agreement) except in the case of clauses (iii)(l), (iii)(3) and (iv),
where such conditions would not have a Material Adverse Effect. This
Agreement has been duly executed and delivered by the Seller.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
is required for the due execution, delivery and performance by the
Seller of this Agreement or any other document to be delivered by it
hereunder, except where the failure to obtain such authorization,
approval action or notice would not have a Material Adverse Effect.
(d) This Agreement constitutes the legal, valid and binding
obligation of the Seller enforceable against the Seller in accordance
with its terms, except as the enforceability hereof may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
or similar laws affecting creditors' rights generally and subject to
the effect of general principles of equity (regardless of whether
considered in a proceeding in equity or at law).
(e) Sales and contributions made pursuant to this Agreement
will constitute a valid sale, transfer, and assignment of the
Transferred Receivables to Purchaser, enforceable against creditors of,
and purchasers from, the Seller. The Seller shall have no remaining
property interest in any Transferred Receivable.
(f) The consolidated balance sheet of the Seller and its
consolidated subsidiaries as at December 30, 2000, and the related
statements of income and retained earnings of the Seller and its
consolidated subsidiaries for the fiscal year then ended, copies of
which have been furnished to the Purchaser, fairly present the
financial condition of the Seller and its consolidated subsidiaries as
at such date and the results of the operations of the Seller and its
consolidated subsidiaries for the period ended on such date, all in
accordance with generally accepted accounting principles consistently
applied,
20
and since December 30, 2000 there has been no material adverse change
in the business, operations, property or financial or other condition
of the Seller.
(g) There is no pending or threatened action or proceeding
affecting the Seller or any of its subsidiaries before any court,
governmental agency or arbitrator which may materially adversely affect
the financial condition or operations of the Seller and its
subsidiaries taken as a whole or the ability of the Seller to perform
its obligations under this Agreement, or which purports to affect the
legality, validity or enforceability of this Agreement.
(h) No proceeds of any Purchase 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.
(i) No transaction contemplated hereby requires compliance
with any bulk sales act or similar law.
(j) Each Receivable purported to be sold by the Seller
hereunder is an Eligible Receivable, and each such Receivable and each
Transferred Receivable, together with the Related Security, is owned
(immediately prior to its sale or contribution hereunder) by the Seller
free and clear of any Adverse Claim (other than any Adverse Claim
arising solely as the result of any action taken by the Purchaser).
When the Purchaser makes a Purchase it shall acquire valid and
perfected first priority ownership of each Purchased Receivable and the
Related Security and Collections with respect thereto free and clear of
any Adverse Claim (other than any Adverse Claim arising solely as the
result of any action taken by the Purchaser), and no effective
financing statement or other instrument similar in effect covering any
Transferred Receivable, any interest therein, the Related Security or
Collections with respect thereto is on file in any recording office
except such as may be filed in favor of Purchaser in accordance with
this Agreement or in connection with any Adverse Claim arising solely
as the result of any action taken by the Purchaser.
(k) Each Seller Report (if prepared by the Seller, or to the
extent that information contained therein is supplied by the Seller),
information, exhibit, financial statement, document, book, record or
report furnished or to be furnished at any time by the Seller to the
Purchaser in connection with this Agreement is or will be accurate in
all material respects as of its date or (except as otherwise disclosed
to the Purchaser at such time) as of the date so furnished, and no such
document contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary in order
to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading.
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(l) The principal place of business and chief executive office
of the Seller and the office where the Seller keeps its records
concerning the Transferred Receivables are located at the address or
addresses referred to in Section 5.01(b).
(m) The names and addresses of all the Lock-Box Banks,
together with the account numbers of the Lock-Box Accounts at such
Lock-Box Banks, are specified in Exhibit B (as the same may be updated
from time to time pursuant to Section 5.01(h)).
(n) The Seller is not known by and does not use any tradename
or doing-business-as name.
(o) The transfers of Transferred Receivables by the Seller to
the Purchaser pursuant to this Agreement, and all other transactions
between the Seller and the Purchaser, have been and will be made in
good faith and without intent to hinder, delay or defraud creditors of
the Seller.
ARTICLE V
COVENANTS
SECTION 5.01. COVENANTS OF THE SELLER. From the date hereof until the
first day following the Facility Termination Date on which all of the
Transferred Receivables are either collected in full or become Defaulted
Receivables:
(a) COMPLIANCE WITH LAWS, ETC. The Seller will comply in all
material respects with all applicable laws, rules, regulations and
orders and preserve and maintain its corporate existence, rights,
franchises, qualifications and privileges except to the extent that the
failure so to comply with such laws, rules and regulations or the
failure so to preserve and maintain such existence, rights, franchises,
qualifications, and privileges would not materially adversely affect
the collectibility of the Transferred Receivables or the ability of the
Seller to perform its obligations under this Agreement.
(b) OFFICES, RECORDS AND BOOKS OF ACCOUNT. The Seller will
keep its principal place of business and chief executive office and the
office where it keeps its records concerning the Transferred
Receivables at the address of the Seller set forth on Exhibit C to this
Agreement or, upon 30 days' prior written notice to the Purchaser, at
any other locations in jurisdictions where all actions required by
Section 5.01(j) shall have been taken and completed. The Seller also
will maintain and implement administrative and operating procedures
(including, without limitation, an ability to recreate records
evidencing Transferred Receivables and related Contracts in the event
of the destruction of the originals thereof), and keep and maintain all
documents, books, records and other
22
information reasonably necessary or advisable for the collection of all
Transferred Receivables (including, without limitation, records
adequate to permit the daily identification of each new Transferred
Receivable and all Collections of and adjustments to each existing
Transferred Receivable). The Seller shall make a notation in its books
and records, including its computer files, to indicate which
Receivables have been sold or contributed to the Purchaser hereunder.
(c) PERFORMANCE AND COMPLIANCE WITH CONTRACTS AND CREDIT AND
COLLECTION POLICY. The Seller will, at its expense, timely and fully
perform and comply with all material provisions, covenants and other
promises required to be observed by it under the Contracts related to
the Transferred Receivables, and timely and fully comply in all
material respects with the Credit and Collection Policy in regard to
each Transferred Receivable and the related Contract.
(d) SALES, LIENS, ETC. Except for the sales and contributions
of Receivables contemplated herein, 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, any
Transferred Receivable, Related Security, related Contract or
Collections, or upon or with respect to any account to which any
Collections of any Transferred Receivable are sent, or assign any right
to receive income in respect thereof.
(e) EXTENSION OR AMENDMENT OF TRANSFERRED RECEIVABLES. Except
as provided in Section 6.02(c), the Seller will not extend, amend or
otherwise modify the terms of any Transferred Receivable, or amend,
modify or waive any term or condition of any Contract related thereto
except to correct any clerical errors.
(f) CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY. The
Seller will not make any change in the character of its business or in
the Credit and Collection Policy that would, in either case, materially
adversely affect the collectibility of the Transferred Receivables or
the ability of the Seller to perform its obligations under this
Agreement.
(g) AUDITS. The Seller will, from time to time during regular
business hours as requested by the Purchaser or its assigns, permit the
Purchaser, or its agents, representatives or assigns, (i) to examine
and make copies of and abstracts from all books, records and documents
(including, without limitation, computer tapes and disks) in the
possession or under the control of the Seller relating to Transferred
Receivables and the Related Security, including, without limitation,
the related Contracts, and (ii) to visit the offices and properties of
the Seller for the purpose of examining such materials described in
clause (i) above, and to discuss matters relating to Transferred
Receivables and the Related Security or the Seller's performance
hereunder or under the Contracts
23
with any of the officers or employees of the Seller having knowledge of
such matters, PROVIDED, that (A) prior to the occurrence of an Event of
Termination, upon 48 hours' notice to the Seller, such audits,
examinations and visits may be conducted twice each calendar year, the
cost of the first of such audits, examinations and visits to be borne
by the Seller in an amount not to exceed when added to the cost of the
audits referred to in the Sale Agreement, $10,000 and the cost of the
second to be borne by the Purchaser or its assigns and (B) upon and
after the occurrence of an Event of Termination, such audits,
examinations and visits shall not be limited in number, shall be at the
discretion of the Purchaser or its assigns and the cost thereof shall
be borne by the Seller.
(h) CHANGE IN PAYMENT INSTRUCTIONS TO OBLIGORS. The Seller
will not add or terminate any bank or bank account as a Lock-Box Bank
or Lock-Box Account from those listed in Exhibit B to this Agreement,
or make any change in its instructions to Obligors regarding payments
to be made to any Lock-Box Bank, unless the Purchaser shall have
received notice of such addition, termination or change (including an
updated Exhibit B) and executed copies of Lock-Box Agreements with each
new Lock-Box Bank or with respect to each new Lock-Box Account.
(i) DEPOSITS TO LOCK-BOX ACCOUNTS. The Seller will instruct
all Obligors to remit all their payments in respect of Transferred
Receivables into Lock-Box Accounts. If the Seller shall receive any
Collections directly or from an EFT Obligor, it shall immediately (and
in any event within one Business Day) deposit the same to a Lock-Box
Account. 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 Transferred Receivables. The
foregoing notwithstanding, the Seller will immediately instruct the EFT
Obligors to make payment of their Receivables to the Lock-Box Account.
If any EFT Obligor has failed, within 45 days after the date of this
Agreement, to make payments or electronic funds transfers to the
Lock-Box Account, the Receivables of such EFT Obligor will no longer be
deemed to be Eligible Receivables until such time that such EFT Obligor
makes payments to the Lock-Box.
(j) FURTHER ASSURANCES. 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 Purchaser or its assignee may reasonably
request, to perfect, protect or more fully evidence the sale and
contribution of Receivables under this Agreement, or to enable the
Purchaser or its assignee to exercise and enforce its respective rights
and remedies under this Agreement. Without limiting the foregoing, the
Seller will, upon the request of the Purchaser or its assignee, (A)
execute and file such financing or continuation statements, or
amendments thereto, and such other instruments and documents, that may
be necessary or desirable to
24
perfect, protect or evidence such Transferred Receivables; and (B)
deliver to the Purchaser copies of all Contracts relating to the
Transferred Receivables and all records relating to such Contracts and
the Transferred Receivables, whether in hard copy or in magnetic tape
or diskette format (which if in magnetic tape or diskette format shall
be compatible with the Purchaser's computer equipment).
(i) The Seller authorizes the Purchaser or its assignee to
file financing or continuation statements, and amendments thereto and
assignments thereof, relating to the Transferred Receivables and the
Related Security, the related Contracts and the Collections with
respect thereto without the signature of the Seller where permitted by
law. A photocopy or other reproduction of this Agreement shall be
sufficient as a financing statement where permitted by law.
(ii) The Seller shall perform its obligations under the
Contracts related to the Transferred Receivables to the same extent as
if the Transferred Receivables had not been sold or transferred.
(k) REPORTING REQUIREMENTS. The Seller will provide to the
Purchaser the following:
(i) as soon as available and in any event within 50
days after the end of the first three quarters of each fiscal
year of the Seller, a balance sheet of the Seller and its
consolidated subsidiaries as of the end of such quarter and
statements of income and retained earnings of the Seller 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 the
Seller;
(ii) as soon as available and in any event within 100
days after the end of each fiscal year of the Seller, a copy
of the annual report for such year for the Seller and its
consolidated subsidiaries, containing financial statements for
such year audited by KPMG LLP or other nationally recognized
independent public accountants;
(iii) as soon as possible and in any event within
five days after the occurrence of each Event of Termination or
Incipient Event of Termination, a statement of the chief
financial officer of the Seller setting forth details of such
Event of Termination or Incipient Event of Termination and the
action that the Seller has taken and proposes to take with
respect thereto;
25
(iv) promptly after the sending or filing thereof,
copies of all reports and registration statements that the
Seller or any subsidiary files with the Securities and
Exchange Commission or any national securities exchange;
(v) promptly after the filing or receiving thereof,
copies of all reports and notices that the Seller 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 the Seller 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 the Seller 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 the Seller and/or any such
Affiliate in excess of $10,000,000;
(vi) at least ten Business Days prior to any change
in the Seller's name, a notice setting forth the new name and
the effective date thereof; and
(vii) such other information respecting the
Transferred Receivables or the condition or operations,
financial or otherwise, of the Seller as the Purchaser may
from time to time reasonably request.
(l) SEPARATE CONDUCT OF BUSINESS. The Seller will: (i)
maintain separate corporate records and books of account from those of
the Purchaser; (ii) conduct its business from an office separate from
that of the Purchaser; (iii) ensure that all oral and written
communications, including without limitation, letters, invoices,
purchase orders, contracts, statements and applications, will be made
solely in its own name; (iv) have stationery and other business forms
and a mailing address and a telephone number separate from those of the
Purchaser; (v) not hold itself out as having agreed to pay, or as being
liable for, the obligations of the Purchaser; (vi) not engage in any
transaction with the Purchaser except as contemplated by this Agreement
or as permitted by the Sale Agreement; (vii) continuously maintain as
official records the resolutions, agreements and other instruments
underlying the transactions contemplated by this Agreement; and (viii)
disclose on its annual financial statements (A) the effects of the
transactions contemplated by this Agreement in accordance with
generally accepted accounting principles and (B) that the assets of the
Purchaser are not available to pay its creditors.
SECTION 5.02. [Intentionally Omitted]
26
SECTION 5.03. COVENANT OF THE SELLER AND THE PURCHASER. The Seller and
the Purchaser have structured this Agreement with the intention that each
Purchase of Receivables hereunder be treated as a sale of such Receivables by
the Seller to the Purchaser for all purposes and each contribution of
Receivables hereunder shall be treated as an absolute transfer of such
Receivables by the Seller to the Purchaser for all purposes (except that, in
accordance with applicable tax principles, each purchase and contribution shall
be ignored for tax reporting purposes). The Seller and the Purchaser shall
record each Purchase and contribution as a sale or purchase or capital
contribution, as the case may be, on its books and records, and reflect each
Purchase and contribution in its financial statements as a sale or purchase or
capital contribution, as the case may be. In the event that, contrary to the
mutual intent of the Seller and the Purchaser, any Purchase or contribution of
Receivables hereunder is not characterized as a sale or absolute transfer, the
Seller shall, effective as of the date hereof, be deemed to have granted (and
the Seller hereby does grant) to the Purchaser a first priority security
interest in and to any and all Receivables, the Related Security and the
proceeds thereof to secure the repayment of all amounts advanced to the Seller
hereunder with accrued interest thereon, and this Agreement shall be deemed to
be a security agreement.
ARTICLE VI
ADMINISTRATION AND COLLECTION
SECTION 6.01. DESIGNATION OF COLLECTION AGENT. The servicing,
administration and collection of the Transferred Receivables shall be conducted
by such Person (the "COLLECTION AGENT") so designated hereunder from time to
time. Until the Purchaser or its assignee gives notice to the Seller of the
designation of a new Collection Agent following the occurrence and during the
continuance of a Collection Agent Default, the Seller is hereby designated as,
and hereby agrees to perform the duties and obligations of, the Collection Agent
pursuant to the terms hereof. Upon the Seller's receipt of such notice, the
Seller agrees that it will terminate its activities as Collection Agent
hereunder in a manner which the Purchaser (or its designee) believes will
facilitate the transition of the performance of such activities to the new
Collection Agent, and the Seller shall use commercially reasonable efforts to
assist the Purchaser (or its designee) to take over the servicing,
administration and collection of the Transferred Receivables, including, without
limitation, providing access to and copies of all computer tapes or disks and
other documents or instruments that evidence or relate to Transferred
Receivables maintained in its capacity as Collection Agent and access to all
employees and officers of the Seller responsible with respect thereto. The
Purchaser at any time after giving such notice may designate as Collection Agent
any Person (including itself) to succeed the Seller or any successor Collection
Agent, if such Person shall consent and agree to the terms hereof. The
Collection Agent may, with the prior consent of the Purchaser, subcontract with
any other Person for the servicing, administration or collection of Transferred
Receivables. Any such subcontract shall
27
not affect the Collection Agent's liability for performance of its duties and
obligations pursuant to the terms hereof.
SECTION 6.02. DUTIES OF COLLECTION AGENT. The Collection Agent shall
take or cause to be taken all such actions as may be necessary or advisable to
collect each Transferred Receivable from time to time, all in accordance with
applicable laws, rules and regulations, with reasonable care and diligence, and
in accordance with the Credit and Collection Policy. The Purchaser hereby
appoints the Collection Agent, from time to time designated pursuant to Section
6.01, as agent to enforce its ownership and other rights in the Transferred
Receivables, the Related Security and the Collections with respect thereto. 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 the Transferred Receivables and shall act in the best interests of the
Purchaser and its assignees.
(a) On or prior to Wednesday of each week, the Collection Agent shall
prepare and forward to the Purchaser (i) a Seller Report, relating to all then
outstanding Transferred Receivables, and the Related Security and Collections
with respect thereto, in each case, as of the close of business of the
Collection Agent on the last day of the immediately preceding Fiscal Week, and
(ii) if requested by the Purchaser, a listing by Obligor of all Transferred
Receivables correlating Purchased Receivables and Purchases, together with an
aging report of such Transferred Receivables. Prior to the [seventh] day of each
month, the Collection Agent shall prepare and forward to the Purchaser (i) a
Seller Report, relating to all then outstanding Transferred Receivables, and the
Related Security and Collections with respect thereto, in each case, as of the
close of business of the Collection Agent on the last day of the immediately
preceding Fiscal Month, and (ii) if requested by the Purchaser, a listing by
Obligor of all Transferred Receivables correlating Purchased Receivables and
Purchases, together with an aging report of such Transferred Receivables
(b) If no Collection Agent Default shall have occurred and be
continuing, the Seller, while it is the Collection Agent, may, in accordance
with the Credit and Collection Policy, extend the maturity or adjust the
Outstanding Balance of any Transferred Receivable as the Seller deems
appropriate to maximize Collections thereof, or otherwise amend or modify the
terms of any Transferred Receivable.
(c) The Seller shall deliver to the Collection Agent, and the
Collection Agent shall hold in trust for the Seller and the Purchaser in
accordance with their respective interests, all documents, instruments and
records (including, without limitation, computer tapes or disks) which evidence
or relate to Transferred Receivables.
28
(d) 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 Transferred Receivables, less, in
the event the Seller is not the Collection Agent, all reasonable and appropriate
out-of-pocket costs and expenses of the Collection Agent of servicing,
collecting and administering the Receivables to the extent not covered by the
Collection Agent Fee received by it.
(e) The Collection Agent also shall perform the other obligations of
the "Collection Agent" set forth in this Agreement with respect to the
Transferred Receivables.
SECTION 6.03. COLLECTION AGENT FEE. The Purchaser shall pay to the
Collection Agent, so long as it is acting as the Collection Agent hereunder, a
periodic collection fee (the "COLLECTION AGENT FEE") of 0.5% per annum on the
average daily aggregate Outstanding Balance of the Transferred Receivables,
payable on each fourth Settlement Date (or, if such day is not a Business Day,
the immediately succeeding Business Day) or such other day during each calendar
month as the Purchaser and the Collection Agent shall agree.
SECTION 6.04. CERTAIN RIGHTS OF THE PURCHASER. The Purchaser may, at
any time after the occurrence of an Event of Termination, give notice of
ownership and/or direct the Obligors of Transferred Receivables and any Person
obligated on any Related Security, or any of them, that payment of all amounts
payable under any Transferred Receivable shall be made directly to the Purchaser
or its designee. The Seller hereby transfers to the Purchaser (and its assigns
and designees) the exclusive ownership and control of the Lock-Box Accounts
maintained by the Seller for the purpose of receiving Collections.
(a) The Seller shall, at any time after the occurrence of an Event of
Termination, upon the Purchaser's request and at the Seller's expense, give
notice of such ownership to each Obligor of Transferred Receivables and direct
that payments of all amounts payable under such Transferred Receivables be made
directly to the Purchaser or its designee.
(b) At the Purchaser's request and at the Seller's expense, the Seller
and the Collection Agent shall, at any time after the occurrence of an Event of
Termination, (A) assemble all of the documents, instruments and other records
(including, without limitation, computer tapes and disks) that evidence or
relate to the Transferred Receivables, and the related Contracts and Related
Security, or that are otherwise necessary or desirable to collect the
Transferred Receivables, and shall make the same available to the Purchaser at a
place selected by the Purchaser or its designee, and (B) segregate all cash,
checks and other instruments received by it from time to time constituting
Collections of Transferred Receivables in a manner acceptable to the Purchaser
and, promptly upon receipt, remit all such cash, checks and instruments, duly
indorsed or with duly executed instruments of transfer, to the Purchaser or its
29
designee. The Purchaser shall also have the right to make copies of all such
documents, instruments and other records at any time.
(c) The Seller authorizes the Purchaser, at any time after the
occurrence of an Event of Termination, to take any and all steps in the Seller's
name and on behalf of the Seller that are necessary or desirable, in the
determination of the Purchaser, to collect amounts due under the Transferred
Receivables, including, without limitation, endorsing the Seller's name on
checks and other instruments representing Collections of Transferred Receivables
and enforcing the Transferred Receivables and the Related Security and related
Contracts.
SECTION 6.05. RIGHTS AND REMEDIES. If the Seller or the Collection
Agent fails to perform any of its obligations under this Agreement, the
Purchaser may (but shall not be required to) itself perform, or cause
performance of, such obligation, and, if the Seller (as Collection Agent or
otherwise) fails to so perform, the costs and expenses of the Purchaser incurred
in connection therewith shall be payable by the Seller as provided in Section
8.01 or Section 9.04 as applicable.
(a) The Seller shall perform all of its obligations under the Contracts
related to the Transferred Receivables to the same extent as if the Seller had
not sold or contributed Receivables hereunder and the exercise by the Purchaser
of its rights hereunder shall not relieve the Seller from such obligations or
its obligations with respect to the Transferred Receivables. The Purchaser shall
not have any obligation or liability with respect to any Transferred Receivables
or related Contracts, nor shall the Purchaser be obligated to perform any of the
obligations of the Seller thereunder.
(b) The Seller shall cooperate with the Collection Agent in collecting
amounts due from Obligors in respect of the Transferred Receivables.
(c) The Seller hereby grants to the Purchaser an irrevocable power of
attorney, with full power of substitution, coupled with an interest, to take in
the name of the Seller all steps necessary or advisable to endorse, negotiate or
otherwise realize on any writing or other right of any kind held or transmitted
by the Seller or transmitted or received by Purchaser (whether or not from the
Seller) in connection with any Transferred Receivable.
SECTION 6.06. TRANSFER OF RECORDS TO PURCHASER. Each Purchase and
contribution of Receivables hereunder shall include the transfer to the
Purchaser of all of the Seller's right and title to and interest in the records
relating to such Receivables and shall, to the extent legally permissible,
include an irrevocable non-exclusive license to the use of the Seller's computer
software system to access and create such records. Such license shall be without
30
royalty or payment of any kind, is coupled with an interest, and shall be
irrevocable until all of the Transferred Receivables are either collected in
full or become Defaulted Receivables.
The Seller shall take such action requested by the Purchaser, from time
to time hereafter, that may be necessary or appropriate to ensure that the
Purchaser has an enforceable ownership interest in the records relating to the
Transferred Receivables and rights (whether by ownership, license or sublicense)
to the use of the Seller's computer software system to access and create such
records.
In recognition of the Seller's need to have access to the records
transferred to the Purchaser hereunder, the Purchaser hereby grants to the
Seller an irrevocable license to access such records in connection with any
activity arising in the ordinary course of the Seller's business or in
performance of its duties as Collection Agent, provided that (i) the Seller
shall not disrupt or otherwise interfere with the Purchaser's use of and access
to such records during such license period and (ii) the Seller consents to the
assignment and delivery of the records (including any information contained
therein relating to the Seller or its operations) to any assignees or
transferees of the Purchaser provided they agree to hold such records
confidential.
ARTICLE VII
EVENTS OF TERMINATION
SECTION 7.01. EVENTS OF TERMINATION. If any of the following events
("EVENTS OF Termination") shall occur and be continuing:
(a) The Collection Agent (if the Seller or any of its
Affiliates) (i) shall fail to perform or observe any term, covenant or
agreement under this Agreement (other than as referred to in clause
(ii) of this subsection (a)) and such failure shall remain unremedied
for fifteen Business Days or (ii) shall fail to make when due any
payment or deposit to be made by it under this Agreement; or
(b) The Seller shall fail (i) to transfer to the Purchaser
when requested any rights, pursuant to this Agreement, which the Seller
then has as Collection Agent, or (ii) to make any payment required
under Section 2.04(a) or 2.04(b); or
(c) Any representation or warranty made or deemed made by the
Seller (or any of its officers) under or in connection with this
Agreement or any information or report delivered by the Seller pursuant
to this Agreement shall prove to have been incorrect or untrue in any
material respect when made or deemed made or delivered; or
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(d) The Seller shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement on its part to
be performed or observed and any such failure shall remain unremedied
for 15 days after written notice thereof shall have been given to the
Seller by the Purchaser; or
(e) [Intentionally Omitted]
(f) Any Purchase or contribution of Receivables hereunder, the
Related Security and the Collections with respect thereto shall for any
reason cease to constitute valid and perfected ownership of such
Receivables, Related Security and Collections free and clear of any
Adverse Claim; or
(g) The Seller shall generally not pay its debts as such debts
become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the
Seller seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment
of a receiver, trustee, 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 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 shall take any corporate action to authorize any of the
actions set forth above in this subsection (g); or
(h) an Event of Termination shall have occurred under the Sale
Agreement; or
(i) There shall have occurred any event which may materially
adversely affect the collectibility of the Transferred Receivables
taken as a whole or the ability of the Collection Agent to collect
Transferred Receivables or otherwise perform its obligations under this
Agreement; or
(j) A Collection Agent Default shall occur;
then, and in any such event, the Purchaser may, by notice to the Seller, take
either or both of the following actions: (x) declare the Facility Termination
Date to have occurred (in which case the Facility Termination Date shall be
deemed to have occurred) and (y) without limiting any right
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under this Agreement to replace the Collection Agent, designate another Person
to succeed the Seller as Collection Agent; PROVIDED, that, automatically upon
the occurrence of any event (without any requirement for the passage of time or
the giving of notice) described in paragraph (g) of this Section 7.01, the
Facility Termination Date shall occur, the Seller (if it is then serving as the
Collection Agent) shall cease to be the Collection Agent, and the Purchaser (or
its assigns or designees) shall become the Collection Agent. Upon any such
declaration or designation or upon such automatic termination, the Purchaser
shall have, in addition to the rights and remedies under this Agreement, all
other rights and remedies with respect to the Receivables provided after default
under the UCC and under other applicable law, which rights and remedies shall be
cumulative.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. INDEMNITIES BY THE SELLER. Without limiting any other
rights which the Purchaser may have hereunder or under applicable law, the
Seller hereby agrees to indemnify the Purchaser and its assigns and transferees
(each, an "INDEMNIFIED PARTY") from and against any and all damages, claims,
losses, liabilities and related costs and expenses, including reasonable
attorneys' fees and disbursements (all of the foregoing being collectively
referred to as "INDEMNIFIED AMOUNTS"), awarded against or incurred by any
Indemnified Party arising out of or as a result of this Agreement or the
purchase or contribution of any Transferred Receivables or in respect of any
Transferred Receivable or any Contract, including, without limitation, arising
out of or as a result of:
(i) the inclusion, or purported inclusion, in any
Purchase of any Receivable that is not an Eligible Receivable
on the date of such Purchase, or the characterization in any
Seller Report or other statement made by the Seller of any
Transferred Receivable as an Eligible Receivable which is not
an Eligible Receivable as of the date of such Seller Report or
statement;
(ii) any representation or warranty or statement made
or deemed made by the Seller (or any of its officers) under or
in connection with this Agreement, which shall have been
incorrect in any material respect when made;
(iii) the failure by the Seller to comply with any
applicable law, rule or regulation with respect to any
Transferred Receivable or the related Contract; or the failure
of any Transferred Receivable or the related Contract to
conform to any such applicable law, rule or regulation;
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(iv) the failure to vest in the Purchaser absolute
ownership of the Receivables that are, or that purport to be,
the subject of a Purchase or contribution under this Agreement
and the Related Security and Collections in respect thereof,
free and clear of any Adverse Claim;
(v) the failure of the Seller 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 that are, or that purport to be, the subject of a
Purchase or contribution under this Agreement and the Related
Security and Collections in respect thereof, whether at the
time of any Purchase or contribution or at any subsequent
time;
(vi) any dispute, claim, offset or defense (other
than discharge in bankruptcy of the Obligor) of the Obligor to
the payment of any Receivable that is, or that purports to be,
the subject of a Purchase or contribution under this Agreement
(including, without limitation, a defense based on such
Receivable or the related Contract not being a legal, valid
and binding obligation of such Obligor enforceable against it
in accordance with its terms), or any other claim resulting
from the sale of the merchandise or services related to such
Receivable or the furnishing or failure to furnish such
merchandise or services or relating to collection activities
with respect to such Receivable (if such collection activities
were performed by the Seller acting as Collection Agent);
(vii) any failure of the Seller, as Collection Agent
or otherwise, to perform its duties or obligations in
accordance with the provisions hereof or to perform its duties
or obligations under any Contract related to a Transferred
Receivable in each case after taking into account the
applicable cure periods herein;
(viii) any products liability or other claim arising
out of or in connection with merchandise, insurance or
services which are the subject of any Contract;
(ix) the commingling of Collections of Transferred
Receivables by the Seller or a designee of the Seller, as
Collection Agent or otherwise, at any time with other funds of
the Seller or an Affiliate of the Seller;
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(x) any investigation, litigation or proceeding
related to this Agreement or the use of proceeds of Purchases
or the ownership of Receivables, the Related Security, or
Collections with respect thereto or in respect of any
Receivable, Related Security or Contract;
(xi) any failure of the Seller to comply with its
covenants contained in this Agreement;
(xii) any Collection Agent Fees or other costs and
expenses payable to any replacement Collection Agent, to the
extent in excess of the Collection Agent Fees payable to the
Seller hereunder;
(xiii) any claim brought by any Person other than an
Indemnified Party arising from any activity by the Seller or
any Affiliate of the Seller in servicing, administering or
collecting any Transferred Receivable; or
(xiv) any Dilution with respect to any Transferred
Receivable.
It is expressly agreed and understood by the parties hereto (i) that the
foregoing indemnification is not intended to, and shall not, constitute a
guarantee of the collectibility or payment of the Transferred Receivables and
(ii) that nothing in this Section 8.01 shall require the Seller to indemnify any
Person (A) for Receivables which are not collected, not paid or uncollectible on
account of the insolvency, bankruptcy, or financial inability to pay of the
applicable Obligor, (B) for damages, losses, claims or liabilities or related
costs or expenses resulting from such Person's gross negligence or willful
misconduct, or (C) for any income taxes or franchise taxes incurred by such
Person arising out of or as a result of this Agreement or in respect of any
Transferred Receivable or any Contract.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement or consent to any departure by the Seller therefrom shall be
effective unless in a writing signed by the Purchaser 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. No failure on the part of the Purchaser to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right.
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SECTION 9.02. NOTICES, ETC. All notices and other communications
hereunder shall, unless otherwise stated herein, be in writing (which shall
include facsimile communication) and be faxed or delivered, to each party
hereto, at its address set forth under its name on the signature pages hereof or
at such other address as shall be designated by such party in a written notice
to the other parties hereto. Notices and communications by facsimile shall be
effective when sent (and shall be followed by hard copy sent by regular mail),
and notices and communications sent by other means shall be effective when
received.
SECTION 9.03. BINDING EFFECT; ASSIGNABILITY. This Agreement shall be
binding upon and inure to the benefit of the Seller, the Purchaser and their
respective successors and assigns; PROVIDED, HOWEVER, that the Seller may not
assign its rights or obligations hereunder or any interest herein without the
prior written consent of the Purchaser. In connection with any sale or
assignment by the Purchaser of all or a portion of the Transferred Receivables,
the buyer or assignee, as the case may be, shall, to the extent of its purchase
or assignment, have all rights of the Purchaser under this Agreement (as if such
buyer or assignee, as the case may be, were the Purchaser hereunder) except to
the extent specifically provided in the agreement between the Purchaser and such
buyer or assignee, as the case may be.
(a) This Agreement shall create and constitute the continuing
obligations of the parties hereto in accordance with its terms, and shall remain
in full force and effect until such time, after the Facility Termination Date,
when all of the Transferred Receivables are either collected in full or become
Defaulted Receivables; PROVIDED, HOWEVER, that rights and remedies with respect
to any breach of any representation and warranty made by the Seller pursuant to
Article IV and the provisions of Article VIII and Sections 9.04, 9.05 and 9.06
shall be continuing and shall survive any termination of this Agreement.
SECTION 9.04. COSTS, EXPENSES AND TAXES. In addition to the rights of
indemnification granted to the Purchaser pursuant to Article VIII hereof, the
Seller agrees to pay on demand all reasonable costs and expenses in connection
with the preparation, execution and delivery of this Agreement and the other
documents and agreements to be delivered hereunder, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Purchaser with respect thereto and with respect to advising the Purchaser as to
its rights and remedies under this Agreement, and the Seller agrees to pay all
costs and expenses, if any (including reasonable counsel fees and expenses), in
connection with the enforcement of this Agreement and the other documents to be
delivered hereunder EXCLUDING, HOWEVER, any costs of enforcement or collection
of Transferred Receivables which are not paid on account of the insolvency,
bankruptcy or financial inability to pay of the applicable Obligor.
(a) In addition, the Seller agrees to pay any and all stamp and other
taxes and fees payable in connection with the execution, delivery, filing and
recording of this Agreement
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or the other documents or agreements to be delivered hereunder, and 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.
SECTION 9.05. NO PROCEEDINGS. The Seller hereby agrees that it will not
institute against the Purchaser any proceeding of the type referred to in
Section 7.01(g) so long as there shall not have elapsed one year plus one day
since the later of (i) the Facility Termination Date and (ii) the date on which
all of the Transferred Receivables are either collected in full or become
Defaulted Receivables.
SECTION 9.06. CONFIDENTIALITY. Unless otherwise required by applicable
law, each party hereto agrees to maintain the confidentiality of this Agreement
in communications with third parties and otherwise; provided that this Agreement
may be disclosed to (i) third parties to the extent such disclosure is made
pursuant to a written agreement of confidentiality in form and substance
reasonably satisfactory to the other party hereto, and (ii) such party's legal
counsel and auditors and the Purchaser's assignees, if they agree in each case
to hold it confidential.
SECTION 9.07. GOVERNING LAW. THIS AGREEMENT, IN ACCORDANCE WITH SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES THEREOF THAT WOULD CALL FOR
THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION, EXCEPT TO THE EXTENT
THAT, PURSUANT TO THE UCC OF THE STATE OF NEW YORK, THE PERFECTION AND THE
EFFECT OF PERFECTION OR NON-PERFECTION OF THE PURCHASER'S OWNERSHIP OF OR
SECURITY INTEREST IN THE RECEIVABLES ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF NEW YORK.
SECTION 9.08. THIRD PARTY BENEFICIARY. Each of the parties hereto
hereby acknowledges that the Purchaser may assign all or any portion of its
rights under this Agreement and that such assignees may (except as otherwise
agreed to by such assignees) further assign their rights under this Agreement,
and the Seller hereby consents to any such assignments. All such assignees,
including parties to the Sale Agreement in the case of assignment to such
parties, shall be third party beneficiaries of, and shall be entitled to enforce
the Purchaser's rights and remedies under, this Agreement to the same extent as
if they were parties thereto, except to the extent specifically limited under
the terms of their assignment.
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SECTION 9.09. 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.
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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: PLAYTEX PRODUCTS, INC.
By: /s/ Glenn A. Forbes
--------------------------------------
Title: Executive Vice President
Address:
300 Nyala Farms Road
Westport, Connecticut 06880
Attention: Glenn Forbes
Facsimile No.: (203) 341-4260
WITH A COPY TO: Haas Wheat & Partners Incorporated
300 Crescent Court
Suite 1700
Dallas, Texas 75201
Attention: Robert B. Haas
Douglas D. Wheat
Facsimile No.: (214) 871-8317
WITH A COPY TO: Paul, Weiss, Rifkind,
Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019
Attention: Robert Hirsh
Facsimile No.: (212) 757-3990
PURCHASER: PLAYTEX A/R LLC
By: /s/ Glenn A. Forbes
--------------------------------------
Title: President
Address:
50 N. DuPont Highway
39
P.O. Box 1554
Dover, Delaware 19903-1516
Attention: John McColgan
Facsimile No.: (302) 678-6935
WITH A COPY TO: Haas Wheat & Partners Incorporated
300 Crescent Court
Suite 1700
Dallas, Texas 75201
Attention: Robert B. Haas
Douglas D. Wheat
Facsimile No.: (214) 871-8317
WITH A COPY TO: Paul, Weiss, Rifkind,
Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019
Attention: Robert Hirsh
Facsimile No.: (212) 757-3990
40
EXHIBIT A
CREDIT AND COLLECTION POLICY
41
EXHIBIT B
LOCK-BOX BANKS
42
EXHIBIT C
PRINCIPAL PLACE OF BUSINESS AND
CHIEF EXECUTIVE OFFICE OF THE SELLER
43
ANNEX A
FORM OF INVOICE