EXHIBIT 10.10
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PURCHASE AND SALE AGREEMENT
Dated as of April 30, 2001
between
VARIOUS ENTITIES LISTED ON SCHEDULE I,
as the Originators
CSS INDUSTRIES, INC.
and
CSS FUNDING LLC
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Purchase and Sale Agreement
TABLE OF CONTENTS
Page
ARTICLE I
AGREEMENT TO PURCHASE AND SELL
SECTION 1.1 Agreement To Purchase and Sell ............................ 1
SECTION 1.2 Timing of Purchases ....................................... 3
SECTION 1.3 Consideration for Purchases ............................... 3
SECTION 1.4 Purchase and Sale Termination Date ........................ 3
SECTION 1.5 Intention of the Parties .................................. 3
ARTICLE II
PURCHASE REPORT; CALCULATION OF PURCHASE PRICE
SECTION 2.1 Purchase Report ........................................... 4
SECTION 2.2 Calculation of Purchase Price ............................. 4
ARTICLE III
PAYMENT OF PURCHASE PRICE
SECTION 3.1 Contribution of Receivables and Initial Purchase
Price Payment ............................................. 5
SECTION 3.2 Subsequent Purchase Price Payments ........................ 5
SECTION 3.3 Settlement as to Specific Receivables and Dilution ........ 6
SECTION 3.4 Reconveyance of Receivables ............................... 7
ARTICLE IV
CONDITIONS OF PURCHASES
SECTION 4.1 Conditions Precedent to Initial Purchase .................. 7
SECTION 4.2 Certification as to Representations and Warranties ........ 9
SECTION 4.3 Additional Originators .................................... 9
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR
SECTION 5.1 Organization and Good Standing ............................ 10
SECTION 5.2 Due Qualification ......................................... 10
SECTION 5.3 Power and Authority; Due Authorization .................... 10
Purchase and Sale Agreement
SECTION 5.4 Valid Sale; Binding Obligations .......................... 10
SECTION 5.5 No Violation ............................................. 10
SECTION 5.6 Proceedings .............................................. 11
SECTION 5.7 Bulk Sales Acts .......................................... 11
SECTION 5.8 Government Approvals ..................................... 11
SECTION 5.9 Financial Condition ...................................... 11
SECTION 5.10 Licenses, Contingent Liabilities, and Labor Controversies. 11
SECTION 5.11 Margin Regulations ....................................... 12
SECTION 5.12 Quality of Title ......................................... 12
SECTION 5.13 Accuracy of Information .................................. 12
SECTION 5.14 Offices .................................................. 12
SECTION 5.15 Trade Names .............................................. 12
SECTION 5.16 Taxes .................................................... 13
SECTION 5.17 Compliance with Applicable Laws .......................... 13
SECTION 5.18 Reliance on Separate Legal Identity ...................... 13
SECTION 5.19 Investment Company ....................................... 13
ARTICLE VI
COVENANTS OF THE ORIGINATORS
SECTION 6.1 Affirmative Covenants .................................... 13
SECTION 6.2 Reporting Requirements ................................... 15
SECTION 6.3 Negative Covenants ....................................... 15
SECTION 6.4 Lock-Box Banks ........................................... 16
SECTION 6.5 Accounting for Purchases ................................. 16
SECTION 6.7 Substantive Consolidation ................................ 16
ARTICLE VII
ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF RECEIVABLES
SECTION 7.1 Rights of the Company .................................... 18
SECTION 7.2 Responsibilities of the Originators ...................... 18
SECTION 7.3 Further Action Evidencing Purchases ...................... 19
SECTION 7.4 Application of Collections ............................... 19
ARTICLE VIII
PURCHASE AND SALE TERMINATION EVENTS
SECTION 8.1 Purchase and Sale Termination Events ..................... 20
SECTION 8.2 Remedies ................................................. 20
Purchase and Sale Agreement
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Indemnities by the Originators ........................... 21
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Amendments, etc .......................................... 22
SECTION 10.2 Notices, etc ............................................. 23
SECTION 10.3 No Waiver; Cumulative Remedies ........................... 23
SECTION 10.4 Binding Effect; Assignability ............................ 23
SECTION 10.5 Governing Law ............................................ 23
SECTION 10.6 Costs, Expenses and Taxes ................................ 24
SECTION 10.7 SUBMISSION TO JURISDICTION ............................... 24
SECTION 10.8 WAIVER OF JURY TRIAL ..................................... 24
SECTION 10.9 Captions and Cross References; Incorporation
by Reference ............................................. 25
SECTION 10.10 Execution in Counterparts ................................ 25
SECTION 10.11 Acknowledgment and Agreement ............................. 25
SECTION 10.12 No Proceeding ............................................ 25
SECTION 10.13 Limited Recourse ......................................... 25
SCHEDULES
Schedule I List of Originators
Schedule 5.6 Proceedings
Schedule 5.14A Chief Executive Office of Each Originator
Schedule 5.14B Location of Books and Records of Originators
Schedule 5.15 Trade Names
EXHIBITS
Exhibit A Form of Purchase Report
Exhibit B Form of Originator Assignment Certificate
Exhibit C Form of Joinder Agreement
Purchase and Sale Agreement
THIS PURCHASE AND SALE AGREEMENT (this "Agreement"), dated as of April
30, 2001, is entered into among the VARIOUS ENTITIES LISTED ON SCHEDULE I (each,
an "Originator"; and collectively, "Originators"), CSS INDUSTRIES, INC., a
Delaware corporation (the "Servicer") and CSS FUNDING LLC, a Delaware limited
liability company (the "Company").
DEFINITIONS
Unless otherwise indicated herein, capitalized terms used in this
Agreement are defined in Exhibit A to the Receivables Purchase Agreement of even
date herewith (as the same may be amended, supplemented or otherwise modified
from time to time, the "Receivables Purchase Agreement") among the Company, as
the Seller; CSS Industries, Inc. (individually, "CSS"), as the initial Servicer;
Market Street Funding Corporation (the "Issuer") and PNC Bank, National
Association, as the Administrator. All references herein to months are to
calendar months unless otherwise expressly indicated.
BACKGROUND:
1. The Company is a special purpose limited liability company, all of
the issued and outstanding membership interests of which are owned by the
Originators;
2. The Originators generate Receivables in the ordinary course of their
businesses;
3. The Originators, in order to finance their respective businesses,
wish to sell Receivables to the Company, and the Company is willing to purchase
Receivables from the Originators, on the terms and subject to the conditions set
forth herein;
4. The Originators and the Company intend this transaction to be an
absolute and irrevocable true sale of Receivables and the Related Rights by each
Originator to the Company, providing the Company with the full benefits of
ownership of the Receivables, and the Originators and the Company do not intend
the transactions hereunder to be, or for any purpose to be, characterized as a
loan from the Company to any Originator or for the Receivables to be a part of
any Originator's estate in the event of an Insolvency Proceeding of any
Originator;
5. The Company intends to sell the Purchased Interest in the
Receivables to the Issuer pursuant to the Receivables Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
Purchase and Sale Agreement
ARTICLE I
AGREEMENT TO PURCHASE AND SELL
SECTION 1.1 Agreement To Purchase and Sell. On the terms and subject to
the conditions set forth in this Agreement (including Article IV), each
Originator, severally and for itself, agrees to sell to the Company, and the
Company agrees to purchase from such Originator, from time to time on or after
the Closing Date, but before the Purchase and Sale Termination Date, all of such
Originator's right, title and interest in and to:
(a) each Receivable of such Originator that existed and was
owing to such Originator at the closing of such Originator's business on March
31, 2001 (the "Cut-off Date") other than Receivables contributed pursuant to
Section 3.1 (the "Contributed Receivables");
(b) each Receivable generated by such Originator from and
including the Cutoff Date to and including the Purchase and Sale Termination
Date;
(c) all rights to, but not the obligations of such Originator
under all Related Security;
(d) all monies due or to become due to such Originator with
respect to any of the foregoing;
(e) all books and records of such Originator related to any of
the foregoing, and all rights, remedies, powers and privileges of such
Originator in any accounts into which Collections are or may be received; and
(f) all collections and other proceeds and products of any of
the foregoing (as defined in the applicable UCC) that are or were received by
such Originator on or after the Cutoff Date, including, without limitation, all
funds which either are received by such Originator, the Company or the Servicer
from or on behalf of the Obligors in payment of any amounts owed (including,
without limitation, invoice price, finance charges, interest and all other
charges) in respect of Receivables, or are applied to such amounts owed by the
Obligors (including, without limitation, any insurance payments that such
Originator or the Servicer applies in the ordinary course of its business to
amounts owed in respect of any Receivable, and net proceeds of sale or other
disposition of repossessed goods or other collateral or property of the Obligors
in respect of Receivables or any other parties directly or indirectly liable for
payment of such Receivables).
All purchases and contributions hereunder shall be made without recourse, but
shall be made pursuant to, and in reliance upon, the representations, warranties
and covenants of the Originators set forth in this Agreement and each other
Transaction Document. No obligation or liability to any Obligor on any
Receivable is intended to be, or shall be, assumed by the Company hereunder, and
any such assumption is expressly disclaimed. The Company's
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foregoing commitment to purchase Receivables and the proceeds and rights
described in clauses (c) through (f) (collectively, the "Related Rights") is
herein called the "Purchase Facility."
SECTION 1.2 Timing of Purchases.
(a) Closing Date Purchases. Each Originator's entire right,
title and interest in, to and under (i) each Receivable that existed and was
owing to such Originator at the Cut-off Date (other than Contributed
Receivables), (ii) all Receivables created by such Originator from and including
the Cut-off Date, to and including the Closing Date (other than Contributed
Receivables), and (iii) all Related Rights with respect thereto automatically
shall be deemed to have been sold by such Originator to the Company on the
Closing Date.
(b) Subsequent Purchases. After the Closing Date, until the
Purchase and Sale Termination Date, each Receivable and the Related Rights
generated by each Originator shall be, deemed to have been sold by such
Originator to the Company immediately (and without further action) upon the
creation of such Receivable.
SECTION 1.3 Consideration for Purchases. On the terms and subject to
the conditions set forth in this Agreement, the Company agrees to make Purchase
Price payments to the Originators in accordance with Article III and to reflect
all contributions in accordance with Article III.
SECTION 1.4 Purchase and Sale Termination Date. The "Purchase and
Sale Termination Date" shall be the earliest to occur of (a) the date the
Purchase Facility is terminated pursuant to Section 8.2 and (b) the Payment Date
immediately following the day on which the Originators shall have given written
notice to the Company at or prior to 10:00 a.m. (New York City time) that the
Originators desire to terminate this Agreement.
SECTION 1.5 Intention of the Parties. It is the express intent of
the parties hereto that the transfers of the Receivables, Contributed
Receivables and Related Rights by the Originators to the Company, as
contemplated by this Agreement be, and be treated as sales or contributions, as
applicable (without recourse except as expressly provided in Sections 3.3, 3.4
and 9.1), of all of the Originators' right, title and interest in, to and under
the Receivables or the Contributed Receivables, as applicable, and Related
Rights, and not as loans secured by the Receivables, Contributed Receivables and
Related Rights. If, however, notwithstanding the intent of the parties, such
transactions are deemed to be loans, each Originator hereby grants to the
Company a first priority security interest in all of such Originator's right,
title and interest in and to: (i) the Receivables, Contributed Receivables and
the Related Rights now existing and hereafter created by such Originator, (ii)
all monies due or to become due and all amounts received with respect thereto,
(iii) all books and records of such Originator related to any of the foregoing,
and all rights, remedies, powers and privileges of such Originator in any
accounts into which Collections are or may be received; and (iv) all proceeds
and products of any of the foregoing to secure all of such Originator's
obligations hereunder.
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ARTICLE II
PURCHASE REPORT; CALCULATION OF PURCHASE PRICE
SECTION 2.1 Purchase Report. On the Closing Date and on each Settlement
Date, the Servicer shall deliver to the Company and each Originator a report in
substantially the form of Exhibit A (each such report being herein called a
"Purchase Report") identifying, among other things:
(a) Receivables purchased by the Company from each Originator on
the Closing Date (in the case of the Purchase Report to be delivered on the
Closing Date);
(b) Receivables purchased by the Company from each Originator
during the period commencing on, and including, the Settlement Date immediately
preceding such Settlement Date to (but not including) such Settlement Date (in
the case of each subsequent Purchase Report); and
(c) the calculations of reductions of the Purchase Price for any
Receivables as provided in Section 3.3 (a) and (b).
SECTION 2.2 Calculation of Purchase Price. The "Purchase Price" to
be paid to each Originator for the Receivables that are purchased hereunder from
such Originator shall be determined in accordance with the following formula:
PP = OB x FMVD
where:
PP = Purchase Price for each Receivable as calculated on
the relevant Payment Date.
OB = The Outstanding Balance of such Receivable on the
relevant Payment Date.
FMVD = Fair Market Value Discount, as measured on such
Payment Date, which is equal to the quotient (expressed
as percentage) of (a) one divided by (b) the sum of (i)
one, plus (ii) the product of (A) the Prime Rate on such
Payment Date plus 0.25% and (B) a fraction, the
numerator of which is the Turnover Rate (calculated as
of the last day of the Settlement Period next preceding
such Payment Date) and the denominator of which is 365.
"Payment Date" means (i) the Closing Date and (ii) each Business Day
thereafter that Originators are open for business.
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"Prime Rate" means a per annum rate equal to the "Prime Rate" as
published in the "Money Rates" section of The Wall Street Journal or if such
information ceases to be published in The Wall Street Journal, such other
publication as determined by the Administrator in its reasonable discretion.
ARTICLE III
PAYMENT OF PURCHASE PRICE
SECTION 3.1 Contribution of Receivables and Initial Purchase Price
Payment.
On the Closing Date, each Originator shall, and hereby does,
irrevocably and absolutely contribute to the capital of the Company Receivables
and Related Rights with respect thereto consisting of each Receivable of CSS
that existed and was owing to CSS on the Closing Date beginning with the oldest
of such Receivables and continuing chronologically thereafter such that the
aggregate Outstanding Balance of all such Contributed Receivables shall be not
less than the greater of (a) $1,000,000 and (b) 10% of (after giving effect to
all purchases and contributions on the Closing Date) the Net Receivables Pool
Balance (provided that no Receivables shall be contributed in part, but only in
their entirety).
SECTION 3.2 Subsequent Purchase Price Payments and Contributions. On
each Payment Date subsequent to the Closing Date, on the terms and subject to
the conditions set forth in this Agreement, the Company shall pay to each
Originator the Purchase Price for the Receivables generated by such Originator
on such Payment Date:
(a) First, in cash to the extent the Company has cash available
therefor; and
(b) Second, to the extent any portion of the Purchase Price remains
unpaid, the remainder shall be deemed a contribution by such Originator in an
amount equal to such remaining Purchase Price.
SECTION 3.3 Settlement as to Specific Receivables and Dilution.
(a) If, on the day of purchase or contribution of any Receivable
from an Originator hereunder, any of the representations or warranties set forth
in Sections 5.4 and 5.12 are not true with respect to such Receivable or as a
result of any action or inaction of such Originator, on any subsequent day, any
of such representations or warranties set forth in Sections 5.4 and 5.12 are no
longer true with respect to such Receivable, then the Purchase Price (or in the
case of a Contributed Receivable the Outstanding Balance of such Receivable (the
"Contributed Value")), with respect to such Receivable shall be reduced by an
amount equal to the Outstanding Balance of such Receivable and shall be
accounted to such Originator as provided in clause (c) below; provided, that if
the Company thereafter receives payment on account of Collections due with
respect to such Receivable, the Company promptly shall deliver such funds to
such Originator.
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(b) If, on any day, the Outstanding Balance of any Receivable
(including any Contributed Receivable) purchased or contributed hereunder is
reduced or adjusted as a result of any defective, rejected, returned goods or
services, or any discount or other adjustment made by any Originator, the
Company or the Servicer or any setoff or dispute between any Originator or the
Servicer and an Obligor as indicated on the books of the Company (or, for
periods prior to the Closing Date, the books of Originator), then the Purchase
Price or Contributed Value, as the case may be, with respect to such Receivable
shall be reduced by the amount of such net reduction and shall be accounted to
Originator as provided in clause (c) below.
(c) Any reduction in the Purchase Price or Contributed Value of any
Receivable pursuant to clause (a) or (b) above shall be applied as a credit for
the account of the Company against the Purchase Price of Receivables
subsequently purchased by the Company from such Originator hereunder; provided,
however, if there have been no purchases of Receivables from such Originator (or
insufficiently large purchases of Receivables) to create a Purchase Price
sufficient to so apply such credit against, the amount of such credit shall be
paid in cash to the Company by such Originator in the manner and for application
as described in the following proviso, provided, further, that at any time (y)
when a Termination Event or Unmatured Termination Event exists under the
Receivables Purchase Agreement or (z) on or after the Purchase and Sale
Termination Date, the amount of any such credit shall be paid by such Originator
to the Company by deposit in immediately available funds into the relevant
Lock-Box Account for application by the Servicer to the same extent as if
Collections of the applicable Receivable in such amount had actually been
received on such date.
SECTION 3.4 Reconveyance of Receivables. In the event that an
Originator has paid to the Company the full Outstanding Balance of any
Receivable pursuant to Section 3.3, the Company shall reconvey such Receivable
to such Originator, without representation or warranty, but free and clear of
all liens, security interests, charges, and encumbrances created by the Company.
ARTICLE IV
CONDITIONS OF PURCHASES
SECTION 4.1 Conditions Precedent to Initial Purchase. The initial
purchase hereunder is subject to the condition precedent that the Servicer (on
the Company's behalf) shall have received, on or before the Closing Date, the
following, each (unless otherwise indicated) dated the Closing Date, and each in
form and substance satisfactory to the Servicer (acting on the Company's
behalf):
(a) An Originator Assignment Certificate in the form of Exhibit B
from each Originator, duly completed, executed and delivered by each Originator;
Purchase and Sale Agreement
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(b) A copy of the resolutions of the Board of Directors of each
Originator approving the Transaction Documents to be delivered by it and the
transactions contemplated hereby and thereby, certified by the Secretary or
Assistant Secretary of such Originator;
(c) Good standing certificates for each Originator issued as of a
recent date acceptable to the Servicer by the Secretary of State of the
jurisdiction of such Originator's organization and each jurisdiction where such
Originator is qualified to transact business;
(d) A certificate of the Secretary or Assistant Secretary of each
Originator certifying the names and true signatures of the officers authorized
on such Person's behalf to sign the Transaction Documents to be delivered by it
(on which certificate the Servicer and the Company may conclusively rely until
such time as the Servicer shall receive from such Person a revised certificate
meeting the requirements of this clause (d));
(e) The certificate or articles of incorporation or other
organizational document of each Originator duly certified by the Secretary of
State of the jurisdiction of such Originator's organization as of a recent date,
together with a copy of the by-laws of such Originator, each duly certified by
the Secretary or an Assistant Secretary of such Originator;
(f) Originals of the proper financing statements (Form UCC-1) that
have been duly executed and are suitable for filing and name each Originator as
the debtor/seller and the Company as the secured party/purchaser (and the
Issuer, as assignee of the Company) of the Receivables generated by such
Originator as may be necessary or, in the Servicer's or the Administrator's
opinion, desirable under the UCC of all appropriate jurisdictions to perfect the
Company's ownership interest in all Receivables and such other rights, accounts,
instruments and moneys (including, without limitation, Related Security) in
which an ownership or security interest may be assigned to it hereunder;
(g) A written search report from a Person satisfactory to the
Servicer listing all effective financing statements that name the Originators as
debtors or sellers and that are filed in the jurisdictions in which filings were
made pursuant to the foregoing clause (f), together with copies of such
financing statements (none of which, except for those described in the foregoing
clause (f), shall cover any Receivable or any Related Rights which are to be
sold to the Company hereunder), and tax and judgment lien search reports from a
Person satisfactory to the Servicer showing no evidence of such liens filed
against any Originator;
(h) A favorable opinion of Morgan, Lewis & Bockius LLP, counsel to
the Originators, in form and substance satisfactory to the Servicer and the
Administrator;
(i) [Reserved]
(j) A certificate from an officer of each Originator to the effect
that the Servicer and such Originator have placed on the most recent, and have
taken all steps reasonably necessary to ensure that there shall be placed on
each subsequent, data processing report that it
Purchase and Sale Agreement
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generates which are of the type that a proposed purchaser or lender would use to
evaluate the Receivables, the following legend (or the substantive equivalent
thereof): "THE RECEIVABLES DESCRIBED HEREIN HAVE BEEN CONTRIBUTED OR SOLD
PURSUANT TO A PURCHASE AND SALE AGREEMENT, DATED AS OF APRIL 30, 2001, AS THE
SAME MAY FROM TO TIME TO TIME BE AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED,
AMONG CERTAIN ENTITIES LISTED ON SCHEDULE I THERETO, AS ORIGINATORS, CSS
INDUSTRIES, INC. AND CSS FUNDING LLC, AS PURCHASER, AND AN UNDIVIDED, FRACTIONAL
OWNERSHIP INTEREST IN THE RECEIVABLES DESCRIBED HEREIN HAS BEEN SOLD TO MARKET
STREET FUNDING CORPORATION PURSUANT TO A RECEIVABLES PURCHASE AGREEMENT, DATED
AS OF APRIL 30, 2001 AS THE SAME MAY FROM TO TIME TO TIME BE AMENDED,
SUPPLEMENTED OR OTHERWISE MODIFIED, AMONG CSS FUNDING LLC, AS SELLER, CSS
INDUSTRIES, INC., AS SERVICER, MARKET STREET FUNDING CORPORATION, AND PNC BANK,
NATIONAL ASSOCIATION, AS ADMINISTRATOR."
SECTION 4.2 Certification as to Representations and Warranties. Each
Originator, by accepting the Purchase Price related to each purchase of
Receivables generated by such Originator, shall be deemed to have certified that
the representations and warranties contained in Article V are true and correct
on and as of such day, with the same effect as though made on and as of such
day.
SECTION 4.3 Additional Originators. Additional Persons may be added as
Originators hereunder, with the consent of the Company and the Administrator,
provided that following conditions are satisfied on or before the date of such
addition:
(a) The Servicer shall have given the Administrator and the
Company at least thirty days prior written notice of such proposed addition and
the identity of the proposed additional Originator and shall have provided such
other information with respect to such proposed additional Originator as the
Administrator may reasonably request;
(b) such proposed additional Originator has executed and
delivered to the Company and the Administrator an agreement substantially in
the form attached hereto as Exhibit D (a "Joinder Agreement");
(c) such proposed additional Originator has delivered to the
Company and the Administrator each of the documents with respect to such
Originator described in Sections 4.1 and 4.2;
(d) the Administrator shall have received a written statement
from each of Moody's and Standard & Poor's confirming that the addition of such
Originator will not result in a downgrade or withdrawal of the current ratings
of the Notes; and
(e) the Purchase and Sale Termination Date shall not have
occurred.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF EACH ORIGINATOR
In order to induce the Company to enter into this Agreement and to make
purchases hereunder, each Originator hereby makes, with respect to itself, the
representations and warranties set forth in this Article V.
SECTION 5.1 Organization and Good Standing. Such Originator has been
duly incorporated or formed and is validly existing as a corporation, limited
liability company or partnership, as applicable, in good standing under the laws
of its jurisdiction of incorporation or formation, with power and authority to
own its properties and to conduct its business as such properties are presently
owned and such business is presently conducted.
SECTION 5.2 Due Qualification. Such Originator is duly licensed and in
good standing in each jurisdiction where its chief executive office is located
and is qualified to transact business as a foreign corporation, limited
liability company or partnership, as applicable, in good standing in all other
jurisdictions in which (a) the ownership or lease of its property or the conduct
of its business requires such licensing or qualification and (b) the failure to
be so licensed or qualified would be reasonably likely to have a Material
Adverse Effect.
SECTION 5.3 Power and Authority; Due Authorization. Such Originator has
(a) all necessary power, authority and legal right (i) to execute and deliver,
and perform its obligations under, each Transaction Document to which it is a
party and (ii) to generate, own, sell, contribute and assign Receivables on the
terms and subject to the conditions herein and therein provided; and (b) duly
authorized such execution and delivery and such sale, contribution and
assignment and the performance of such obligations by all necessary corporate
action.
SECTION 5.4 Valid Sale; Binding Obligations. Each sale or contribution,
as the case may be, of Receivables made by such Originator pursuant to this
Agreement shall constitute a valid sale or contribution, as the case may be,
transfer, and assignment of Receivables to the Company, enforceable against
creditors of, and purchasers from, such Originator; and this Agreement
constitutes, and each other Transaction Document to be signed by such
Originator, when duly executed and delivered, will constitute, a legal, valid,
and binding obligation of such Originator, enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
SECTION 5.5 No Violation. The consummation of the transactions
contemplated by this Agreement and the other Transaction Documents, and the
fulfillment of the terms hereof or thereof, will not (a) conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time) a default under (i) such Originator's
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9
certificate or articles of incorporation or bylaws, limited partnership
agreements, articles of organization or limited liability company agreements, as
applicable or (ii) any indenture, loan agreement, mortgage, deed of trust, or
other material agreement or instrument to which it is a party or by which it is
bound, (b) result in the creation or imposition of any Adverse Claim upon any of
its properties pursuant to the terms of any such indenture, loan agreement,
mortgage, deed of trust, or other agreement or instrument, other than the
Transaction Documents, or (c) violate any law or any order, rule or regulation
applicable to it of any court or of any state or foreign regulatory body,
administrative agency, or other governmental instrumentality having jurisdiction
over it or any of its properties.
SECTION 5.6 Proceedings. Except as set forth in Schedule 5.6, there is
no action, suit, proceeding or investigation pending before any court,
regulatory body, arbitrator, administrative agency, or other tribunal or
governmental instrumentality (a) asserting the invalidity of any Transaction
Document, (b) seeking to prevent such Originator from transferring any
Receivable hereunder (or in the case such transfer does not constitute a sale
under any applicable law, from granting or maintaining the security interest in
any Receivable) to the Company or the consummation of any of the transactions
contemplated by any Transaction Document or (c) seeking any determination or
ruling that is reasonably likely to have a Material Adverse Effect.
SECTION 5.7 Bulk Sales Acts. No transaction contemplated hereby
requires compliance with, or will be subject to avoidance under, any bulk sales
act or similar law.
SECTION 5.8 Government Approvals. Except for the filing of the UCC
financing statements referred to in Article IV, all of which, at the time
required in Article IV, shall have been duly made and shall be in full force and
effect, no authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for
Originator's due execution, delivery and performance of any Transaction Document
to which it is a party.
SECTION 5.9 Financial Condition.
(a) Material Adverse Effect. Since December 31, 2000, no event has
occurred that has had, or is reasonably likely to have, a Material Adverse
Effect.
(b) Solvent. On the date hereof, and on the date of each purchase
hereunder (both before and after giving effect to such purchase), such
Originator shall be Solvent.
SECTION 5.10 Licenses, Contingent Liabilities, and Labor Controversies.
(a) Such Originator has not failed to obtain any licenses, permits,
franchises or other governmental authorizations necessary to the ownership of
its properties or to the conduct of its business, which violation or failure to
obtain would be reasonably likely to have a Material Adverse Effect.
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(b) There are no labor controversies pending against such
Originator that have had (or are reasonably likely to have) a Material Adverse
Effect.
SECTION 5.11 Margin Regulations. No use of any funds acquired by any
Originator under this Agreement will conflict with or contravene any of
Regulations, T, U and X promulgated by the Federal Reserve Board from time to
time.
SECTION 5.12 Quality of Title.
(a) Each Receivable of such Originator (together with the
Related Rights with respect to such Receivable) which is to be sold to the
Company hereunder is or shall be owned by such Originator, free and clear of any
Adverse Claim, except as provided herein and in the Receivables Purchase
Agreement. Whenever the Company makes a purchase or accepts a contribution
hereunder, it shall have acquired and shall continue to have maintained a valid
and perfected ownership interest (free and clear of any Adverse Claim) in all
Receivables generated by such Originator and all Collections related thereto,
and in Originator's entire right, title and interest in and to the Related
Rights with respect thereto.
(b) No effective financing statement or other instrument
similar in effect covering any Receivable generated by such Originator or any
Related Rights is on file in any recording office except such as may be filed
in favor of the Company or the Originators, as the case may be, in accordance
with this Agreement or in favor of the Issuer in accordance with the
Receivables Purchase Agreement.
(c) Unless otherwise identified to the Company on the date of
the purchase or contribution hereunder, each Receivable purchased hereunder is
on the date of purchase or contribution an Eligible Receivable.
SECTION 5.13 Accuracy of Information. All factual written information
heretofore or contemporaneously furnished (and prepared) by such Originator to
the Company or the Administrator for purposes of or in connection with any
Transaction Document or any transaction contemplated hereby or thereby is, and
all other such factual written information hereafter furnished (and prepared) by
such Originator to the Company or the Administrator pursuant to or in connection
with any Transaction Document will be, true and accurate in all material
respects on the date as of which such information is dated or certified.
SECTION 5.14 Offices. Such Originator's principal place of business and
chief executive office is located at the address set forth in Schedule 5.14A and
the offices where such Originator keeps all its books, records and documents
evidencing its Receivables, the related Contracts and all other agreements
related to such Receivables are located at the addresses specified in Schedule
5.14B (or at such other locations, notified to the Servicer and the
Administrator in accordance with Section 6.1(f)), in jurisdictions where all
action required by Section 7.3 has been taken and completed.
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11
SECTION 5.15 Trade Names. Such Originator does not use any trade name
other than its actual corporate name and the trade names set forth in Schedule
5.15. From and after the date that fell five (5) years before the date hereof,
except as set forth in Schedule 5.15, such Originator has not been known by any
legal name other than its corporate name as of the date hereof, nor has such
Originator been the subject of any merger or other corporate reorganization.
SECTION 5.16 Taxes. Such Originator has filed all tax returns and
reports required by law to have been filed by it and has paid all taxes and
governmental charges thereby shown to be owing, except any such taxes or charges
which are being diligently contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP shall have been set
aside on its books.
SECTION 5.17 Compliance with Applicable Laws. Such Originator is in
compliance with the requirements of all applicable laws, rules, regulations and
orders of all governmental authorities, a breach of any of which, individually
or in the aggregate, would be reasonably likely to have a Material Adverse
Effect.
SECTION 5.18 Reliance on Separate Legal Identity. Such Originator
acknowledges that the Issuer and the Administrator are entering into the
Receivables Purchase Agreement in reliance upon the Company's identity as a
legal entity separate from such Originator.
SECTION 5.19 Investment Company. Such Originator is not an "investment
company," or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940 as amended. In addition, such
Originator is not a "holding company," a "subsidiary company" of a "holding
company" or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company" within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
ARTICLE VI
COVENANTS OF THE ORIGINATORS
SECTION 6.1 Affirmative Covenants. From the date hereof until the first
day following the Purchase and Sale Termination Date, each Originator will,
unless the Administrator and the Company shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply in all material respects
with all applicable laws, rules, regulations and orders with respect to the
Receivables generated by it and the Contracts and other agreements related
thereto except where the failure to so comply would not materially and adversely
affect the collectibility of such Receivables or the rights of the Company
hereunder.
(b) Preservation of Corporate Existence. Preserve and maintain
its existence as a corporation, partnership or limited liability company, as
applicable, and all rights, franchises and privileges in the jurisdiction of its
incorporation, and qualify and remain qualified in good
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standing as a foreign corporation, partnership or limited liability company, as
applicable, in each jurisdiction where the failure to preserve and maintain such
existence, rights, franchises, privileges and qualification would be reasonably
likely to have a Material Adverse Effect.
(c) Receivables Reviews. (i) At any time and from time to time
during regular business hours, as reasonably requested in advance (unless a
Purchase and Sale Termination Event or an Unmatured Purchase and Termination
Event exist) by the Company or the Administrator, permit the Company or the
Administrator, or their respective agents or representatives, (A) to examine and
make copies of and abstracts from all books, records and documents (including,
without limitation, computer tapes and disks) in possession or under the control
of each Originator relating to Receivables, including, without limitation, the
related Contracts and purchase orders and other agreements related thereto, and
(B) to visit the offices and properties of such Originator for the purpose of
examining such materials described in clause (A) above and to discuss matters
relating to Receivables originated by it or the performance hereunder with any
of the officers or employees of each Originator having knowledge of such
matters, and (ii) without limiting the foregoing clause (i) above, from time to
time on reasonable request of the Administrator, permit certified public
accountants or other auditors acceptable to the Company and Administrator to
conduct, at the Company's expense (but no more than once annually, unless a
Termination Event or Unmatured Termination Event exists or there shall be a
material variance in the performance of the Receivables), a review of such
Originator's books and records with respect to such Receivables.
(d) Keeping of Records and Books of Account. Maintain and
implement administrative and operating procedures (including, without
limitation, an ability to re-create records evidencing Receivables it generates
in the event of the destruction of the originals thereof), and keep and maintain
the Required Servicing Data for the Receivables it generates and all other
documents, books, records and other information reasonably necessary or
advisable for the collection of such Receivables (including, without limitation,
records adequate to permit the daily identification of each new Receivable and
all Collections of and adjustments to each existing Receivable).
(e) Performance and Compliance with Receivables and Contracts.
Timely and fully perform and comply with all material provisions, covenants and
other promises required to be observed by it under the Contracts and all other
agreements related to the Receivables that it generates to the extent necessary
to prevent an adverse impact on the Receivables Pool generally.
(f) Location of Records. Keep its principal place of business
and chief executive office, and the offices where it keeps its records
concerning or related to Receivables, at the address(es) referred to in Schedule
5.14 or, upon 15 days' prior written notice to the Company and the
Administrator, at such other locations in jurisdictions where all action
required by Section 7.3 shall have been taken and completed.
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(g) Credit and Collection Policies. Comply in all material
respects with its Credit and Collection Policy in connection with the
Receivables that it generates and all Contracts and other agreements related
thereto.
(h) Post Office Boxes. On or prior to the date hereof, deliver
to the Servicer (on behalf of the Company) a certificate from an authorized
officer of such Originator to the effect that (i) the name of the renter of all
post office boxes into which Collections may from time to time be mailed have
been changed to the name of the Company (unless such post office boxes are in
the name of the relevant Lock-Box Banks) and (ii) all relevant postmasters have
been notified that each of the Servicer and the Administrator are authorized to
collect mail delivered to such post office boxes (unless such post office boxes
are in the name of the relevant Lock-Box Banks).
(i) Transaction Documents. Comply in all material respects with
the Transaction Documents to which it is a party.
SECTION 6.2 Reporting Requirements. From the date hereof until the
first day following the Purchase and Sale Termination Date, each Originator
will, unless the Servicer (on behalf of the Company) shall otherwise consent in
writing, furnish to the Company and the Administrator:
(a) Purchase and Sale Termination Events. As soon as possible
after the Originator has knowledge of the occurrence of, and in any event within
five (5) days after the Originator has knowledge of the occurrence of each
Purchase and Sale Termination Event or each Unmatured Purchase and Sale
Termination Event in respect of such Originator, the statement of the chief
financial officer or chief accounting officer of such Originator describing such
Purchase and Sale Termination Event or Unmatured Purchase and Sale Termination
Event and the action that such Originator proposes to take with respect thereto,
in each case in reasonable detail;
(b) Proceedings. As soon as possible and in any event within
five (5) days after Originator otherwise has knowledge thereof, written notice
of (i) material litigation, investigation or proceeding of the type described in
Section 5.6 not previously disclosed to the Company and (ii) all material
adverse developments that have occurred with respect to any previously disclosed
litigation, proceedings and investigations; and
(c) Other. Promptly, from time to time, such other information,
documents, records or reports respecting the Receivables or the conditions or
operations, financial or otherwise, of such Originator as the Company, the
Issuer or the Administrator may from time to time reasonably request in order to
protect the interests of the Company, the Issuer or the Administrator under or
as contemplated by the Transaction Documents.
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14
SECTION 6.3 Negative Covenants. From the date hereof until the date
following the Purchase and Sale Termination Date, each Originator agrees that,
unless the Servicer (on behalf of the Company) and the Administrator shall
otherwise consent in writing, it shall not:
(a) Sales, Liens, Etc. Except as otherwise provided herein or in
any other Transaction Document, 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 Receivable or related Contract or Related Security, or any
interest therein, or any Collections thereon, or assign any right to receive
income in respect thereof; provided that an Originator may assign (or cause to
be assigned) any Insured Receivable to the applicable insurance provider after
the deposit of the proceeds of the insurance policy in relation to such Insured
Receivable in a Lock-Box Account.
(b) Extension or Amendment of Receivables. Except as otherwise
permitted in Section 4.2(a) of the Receivables Purchase Agreement, extend, amend
or otherwise modify the terms of any Receivable in any material respect
generated by it, or amend, modify or waive, in any material respect, any term or
condition of any Contract related thereto (which term or condition relates to
payments under, or the enforcement of, such Contract).
(c) Change in Business or Credit and Collection Policy. Make any
change in the character of its business or materially alter its Credit and
Collection Policy, which change or alteration would, in either case, materially
change the credit standing required of particular Obligors or potential Obligors
or impair, in any material respect, the collectibility of the Receivables
generated by it.
(d) Receivables Not to be Evidenced by Promissory Notes or
Chattel Paper. Take any action to cause or permit any Receivable generated by it
to become evidenced by any "instrument" or "chattel paper" (as defined in the
applicable UCC ); provided that in the context of an Obligor's Insolvency
Proceeding the Receivables of such Obligor may become evidenced by instruments
or chattel paper if such instruments are immediately delivered to the
Administrator.
(e) Mergers, Acquisitions, Sales, etc. (i) Be a party to any
merger or consolidation, except a merger or consolidation where such Originator
is the surviving entity or is merged or consolidated with another Originator, or
(ii) directly or indirectly sell, transfer, assign, convey or lease (other than
to another Originator or wholly-owned Subsidiary thereof) (A) whether in one or
a series of transactions, all or substantially all of its assets or (B) any
Receivables or any interest therein (other than pursuant to this Agreement).
(f) Pledge of Membership Interest. Pledge to any Person its
membership interest in the Company.
SECTION 6.4 Lock-Box Banks. Make any changes in its instructions to
Obligors regarding Collections or add or terminate any bank as a Lock-Box Bank
unless the requirements of paragraph 2(g) of Exhibit IV to the Receivables
Purchase Agreement have been met.
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SECTION 6.5 Accounting for Purchases. Account for or treat (whether in
financial statements or otherwise) the transactions contemplated hereby in any
manner other than as sales or contributions to capital of the Receivables and
Related Rights by such Originator to the Company.
SECTION 6.6 Transaction Documents. Enter into, execute, deliver or
otherwise become bound by any agreement, instrument, document or other
arrangement that restricts the right of such Originator to amend, supplement,
amend and restate or otherwise modify, or to extend or renew, or to waive any
right under, this Agreement or any other Transaction Document.
SECTION 6.7 Substantive Consolidation. Each Originator hereby
acknowledges that this Agreement and the other Transaction Documents are being
entered into in reliance upon the Company's identity as a legal entity separate
from such Originator and its Affiliates. Therefore, from and after the date
hereof, each Originator shall take all reasonable steps necessary to make it
apparent to third Persons that the Company is an entity with assets and
liabilities distinct from those of such Originator and any other Person, and is
not a division of such Originator, its Affiliates or any other Person. Without
limiting the generality of the foregoing and in addition to and consistent with
the other covenants set forth herein, such Originator shall take such actions as
shall be required in order that:
(a) such Originator shall not be involved in the day to day
management of the Company;
(b) such Originator shall maintain separate corporate records
and books of account from the Company and otherwise will observe corporate
formalities and have a separate area from the Company for its business;
(c) the financial statements and books and records of such
Originator shall be prepared after the date of creation of the Company to
reflect and shall reflect the separate existence of the Company; provided, that
the Company's assets and liabilities may be included in a consolidated financial
statement issued by an affiliate of the Company; provided, however, that any
such consolidated financial statement or the notes thereto shall make clear that
the Company's assets are not available to satisfy the obligations of such
affiliate;
(d) except as permitted by the Receivables Purchase Agreement,
(i) such Originator shall maintain its assets separately from the assets of the
Company, (ii) and the Originator's assets, and records relating thereto, have
not been, are not, and shall not be, commingled with those of the Company;
(e) all of the Company's business correspondence and other
communications shall be conducted in the Company's own name and on its own
stationery;
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16
(f) such Originator shall not act as an agent for the Company,
except in the capacity of Sub-Servicer;
(g) such Originator shall not conduct any of the business of the
Company in its own name;
(h) such Originator shall not pay any liabilities of the Company
out of its own funds or assets;
(i) such Originator shall maintain an arm's-length relationship
with the Company;
(j) such Originator shall not assume or guarantee or become
obligated for the debts of the Company or hold out its credit as being available
to satisfy the obligations of the Company;
(k) such Originator shall not acquire obligations of the
Company;
(l) such Originator shall allocate fairly and reasonably
overhead or other expenses that are properly shared with the Company, including,
without limitation, shared office space;
(m) such Originator shall identify and hold itself out as a
separate and distinct entity from the Company;
(n) such Originator shall correct any known misunderstanding
respecting its separate identity from the Company;
(o) such Originator shall not enter into, or be a party to, any
transaction with the Company, except in the ordinary course of its business and
on terms which are intrinsically fair and not less favorable to it than would be
obtained in a comparable arm's-length transaction with an unrelated third party;
and
(p) such Originator shall not pay the salaries of the Company's
employees, if any.
ARTICLE VII
ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF RECEIVABLES
SECTION 7.1 Rights of the Company. Each Originator hereby authorizes
the Company (who may further authorize another Person), the Servicer or their
respective designees to take any and all steps in such Originator's name
necessary or desirable, in their respective
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determination, to collect all amounts due under any and all Receivables,
including, without limitation, indorsing the name of such Originator on checks
and other instruments representing Collections and enforcing such Receivables
and the provisions of the related Contracts that concern payment and/or
enforcement of rights to payment.
SECTION 7.2 Responsibilities of the Originators. Anything herein to the
contrary notwithstanding:
(a) Collection Procedures. Each Originator agrees to direct its
respective Obligors to make payments of Receivables directly to a post office
box related to the relevant Lock-Box Account at a Lock-Box Bank. Each Originator
further agrees to transfer any Collections that it receives directly to the
Servicer (for the Company's account) within two (2) Business Days of receipt
thereof, and agrees that all such Collections shall be deemed to be received in
trust for the Company and shall be maintained and segregated separate and apart
from all other funds and monies of Originator until transfer of such Collections
to the Servicer.
(b) Each Originator shall perform its obligations hereunder, and
the exercise by the Company or its designee of its rights hereunder shall not
relieve such Originator from such obligations.
(c) None of the Company, the Servicer or the Administrator shall
have any obligation or liability to any Obligor or any other third Person with
respect to any Receivables, Contracts related thereto or any other related
agreements, nor shall the Company, the Servicer, the Issuer or the Administrator
be obligated to perform any of the obligations of such Originator thereunder.
(d) Each Originator hereby grants to the Company (who may
further grant to another Person) and the Servicer an irrevocable power of
attorney, with full power of substitution, coupled with an interest, to take in
the name of such Originator all steps necessary or advisable to endorse,
negotiate or otherwise realize on any writing or other right of any kind held or
transmitted by such Originator or transmitted or received by the Company
(whether or not from such Originator) in connection with any Receivable.
SECTION 7.3 Further Action Evidencing Purchases. Each Originator agrees
that from time to time, at its expense, it will promptly execute and deliver all
further instruments and documents, and take all further action that the Servicer
may reasonably request in order to perfect, protect or more fully evidence the
Receivables and Related Rights purchased by or contributed to the Company
hereunder, or to enable the Company to exercise or enforce any of its rights
hereunder or under any other Transaction Document. Without limiting the
generality of the foregoing, upon the request of the Servicer, such Originator
will:
(a) execute and file such financing or continuation statements,
or amendments thereto or assignments thereof, and such other instruments or
notices, as may be necessary or appropriate; and
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18
(b) mark the master data processing records that evidence or
list (i) such Receivables and (ii) related Contracts with the legend set forth
in Section 4.1(j).
Each Originator hereby authorizes the Company or its designee to file one or
more financing or continuation statements, and amendments thereto and
assignments thereof, relative to all or any of the Receivables and Related
Rights now existing or hereafter generated by Originator. If any Originator
fails to perform any of its agreements or obligations under this Agreement, the
Company or its designee may (but shall not be required to) itself perform, or
cause the performance of, such agreement or obligation, and the expenses of the
Company or its designee incurred in connection therewith shall be payable by
Originator as provided in Section 9.1.
SECTION 7.4 Application of Collections. Any payment by an Obligor in
respect of any amount owed by it to any Originator shall, except as otherwise
specified by such Obligor or otherwise required by contract or applicable law
and unless otherwise instructed by the Company (or any other Person to whom the
Company has assigned such right to instruct) (with the prior written consent of
the Administrator) or the Administrator, be applied as a Collection of any
Receivable or Receivables of such Obligor to the extent of any amounts then due
and payable thereunder (such application to be made starting with the oldest
outstanding Receivable or Receivables) before being applied to any other
indebtedness of such Obligor.
SECTION 7.5 Subservicer. Each Originator shall initially serve as a
Sub-Servicer under the Receivables Purchase Agreement, and shall perform the
duties and obligations of a Sub-Servicer thereunder unless and until such
Originator shall be removed as Sub-Servicer pursuant to the terms of the
Receivables Purchase Agreement.
ARTICLE VIII
PURCHASE AND SALE TERMINATION EVENTS
SECTION 8.1 Purchase and Sale Termination Events. Each of the following
events or occurrences described in this Section 8.1 shall constitute a "Purchase
and Sale Termination Event":
(a) A Termination Event (as defined in the Receivables Purchase
Agreement) shall have occurred and, in the case of a Termination Event (other
than one described in paragraph (f) of Exhibit V of the Receivables Purchase
Agreement), the Administrator, shall have declared the Facility Termination Date
to have occurred; or
(b) Any Originator shall fail to make any payment or deposit to
be made by it hereunder when due and such failure shall remain unremedied for
two (2) Business Days; or
(c) Any representation or warranty made or deemed to be made by
any Originator (or any of its officers) under or in connection with this
Agreement, any other
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19
Transaction Documents, or any other information or report delivered pursuant
hereto or thereto shall prove to have been false or incorrect in any material
respect when made or deemed made, and shall remain false or incorrect for 30
days after knowledge of, or notice to, such Originator of such inaccuracy; or
(d) Any Originator 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 such failure shall remain unremedied for thirty days
after written notice thereof shall have been given by the Servicer to such
Originator.
SECTION 8.2 Remedies.
(a) Optional Termination. Upon the occurrence of a Purchase and
Sale Termination Event, the Company (and not the Servicer) shall have the
option, by notice to the Originators (with a copy to the Administrator), to
declare the Purchase Facility as terminated.
(b) Remedies Cumulative. Upon any termination of the Purchase
Facility pursuant to Section 8.2(a), the Company shall have, in addition to all
other rights and remedies under this Agreement, all other rights and remedies
provided under the UCC of each applicable jurisdiction and other applicable
laws, which rights shall be cumulative.
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Indemnities by the Originators. Without limiting any other
rights which the Company may have hereunder or under applicable law, each
Originator, severally and for itself alone hereby agrees to indemnify the
Company and each of its officers, directors, employees and agents (each of the
foregoing Persons being individually called a "Purchase and Sale Indemnified
Party"), forthwith on demand, from and against any and all damages, losses,
claims, judgments, liabilities and related costs and expenses, including
reasonable attorneys' fees and disbursements (all of the foregoing being
collectively called "Purchase and Sale Indemnified Amounts") awarded against or
incurred by any of them arising out of or as a result of the failure of such
Originator to perform its obligations under this Agreement or any other
Transaction Document, or arising out of the claims asserted against a Purchase
and Sale Indemnified Party relating to the transactions contemplated herein or
therein or the use of proceeds thereof or therefrom, excluding, however, (i)
Purchase and Sale Indemnified Amounts to the extent resulting from gross
negligence or willful misconduct on the part of such Purchase and Sale
Indemnified Party, (ii) any indemnification which has the effect of recourse for
non-payment of the Receivables to any indemnitor (except as otherwise
specifically provided under this Section 9.1), and (iii) any tax based upon or
measured by net income property, or gross receipts. Without limiting the
foregoing, each Originator, severally for itself alone, shall indemnify each
Purchase and Sale Indemnified Party for Purchase and Sale Indemnified Amounts
relating to or resulting from:
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20
(a) the transfer by such Originator of an interest in any
Receivable to any Person other than the Company;
(b) the breach of any representation or warranty made by such
Originator (or any of its officers) under or in connection with this Agreement
or any other Transaction Document, or any information or report delivered by
Originator pursuant hereto or thereto, which shall have been false or incorrect
in any material respect when made or deemed made;
(c) the failure by such Originator to comply with any applicable
law, rule or regulation with respect to any Receivable generated by such
Originator or the related Contract, or the nonconformity of any Receivable
generated by such Originator or the related Contract with any such applicable
law, rule or regulation;
(d) the failure to vest and maintain vested in the Company an
ownership interest in the Receivables generated by such Originator free and
clear of any Adverse Claim, other than an Adverse Claim arising solely as a
result of an act of the Company, the Issuer or the Administrator whether
existing at the time of the purchase or contribution of such Receivables or at
any time thereafter;
(e) the failure to file, 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
or purported Receivables generated by such Originator, whether at the time of
any purchase or contribution or at any subsequent time;
(f) any dispute, claim, offset or defense (other than discharge
in bankruptcy) of the Obligor to the payment of any Receivable or purported
Receivable generated by such Originator (including, without limitation, a
defense based on such Receivable's or the related Contract's 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 services
related to any such Receivable or the furnishing of or failure to furnish such
services;
(g) any product liability claim arising out of or in connection
with services that are the subject of any Receivable generated by such
Originator; and
(h) any tax or governmental fee or charge (other than any tax
excluded pursuant to clause (iii) in the proviso to the preceding sentence), all
interest and penalties thereon or with respect thereto, and all out-of-pocket
costs and expenses, including the reasonable fees and expenses of counsel in
defending against the same, which may arise by reason of the purchase or
ownership of the Receivables generated by such Originator or any Related
Security connected with any such Receivables.
If for any reason the indemnification provided above in this Section 9.1 is
unavailable to a Purchase and Sale Indemnified Party or is insufficient to hold
such Purchase and Sale Indemnified Party harmless, then each of the Originators,
severally and for itself, shall
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21
contribute to the amount paid or payable by such Purchase and Sale Indemnified
Party to the maximum extent permitted under applicable law.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Amendments, etc.
(a) The provisions of this Agreement may from time to time be
amended, modified or waived, if such amendment, modification or waiver is in
writing and executed by the Company and each Originator (with respect to an
Amendment) or by the Company (with respect to a waiver or consent by it) (with
the prior written consent of the Administrator).
(b) No failure or delay on the part of the Company, the
Servicer, any Originator or any third party beneficiary in exercising any power
or right hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power or right preclude any other or further
exercise thereof or the exercise of any other power or right. No notice to or
demand on the Company, the Servicer or any Originator in any case shall entitle
it to any notice or demand in similar or other circumstances. No waiver or
approval by the Company or the Servicer under this Agreement shall, except as
may otherwise be stated in such waiver or approval, be applicable to subsequent
transactions. No waiver or approval under this Agreement shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder.
(c) The Transaction Documents contain a final and complete
integration of all prior expressions by the parties hereto with respect to the
subject matter thereof and shall constitute the entire agreement among the
parties hereto with respect to the subject matter thereof, superseding all prior
oral or written understandings.
SECTION 10.2 Notices, etc. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including facsimile communication) and shall be personally delivered or sent by
certified mail, postage prepaid, or by facsimile, to the intended party at the
mailing address or facsimile number of such party set forth under its name on
the signature pages hereof or at such other address or facsimile number as shall
be designated by such party in a written notice to the other parties hereto. All
such notices and communications shall be effective (i) if personally delivered,
when received, (ii) if sent by certified mail three (3) Business Days after
having been deposited in the mail, postage prepaid, and (iii) if transmitted by
facsimile, when sent, receipt confirmed by telephone or electronic means (and
shall be followed by a hard copy sent by first class mail).
SECTION 10.3 No Waiver; Cumulative Remedies. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Without limiting the foregoing, each Originator hereby authorizes the Company,
at any time and from time to time, to the fullest extent permitted by law, to
set off, against any obligations of such Originator to the Company arising in
connection with the Transaction Documents (including, without limitation,
amounts
Purchase and Sale Agreement
22
payable pursuant to Section 9.1) that are then due and payable or that are not
then due and payable but are accruing in respect of the then current Settlement
Period, any and all indebtedness at any time owing by the Company to or for the
credit or the account of such Originator.
SECTION 10.4 Binding Effect; Assignability. This Agreement shall be
binding upon and inure to the benefit of the Company and each Originator and
their respective successors and permitted assigns. No Originator may assign any
of its rights hereunder or any interest herein without the prior written consent
of the Company, except as otherwise herein specifically provided. 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 as the parties hereto shall agree. The rights and remedies with respect to
any breach of any representation and warranty made by any Originator pursuant to
Article V and the indemnification and payment provisions of Article IX and
Section 10.6 shall be continuing and shall survive any termination of this
Agreement.
SECTION 10.5 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 10.6 Costs, Expenses and Taxes. In addition to the obligations
of the Originators under Article IX, each Originator, severally and for itself
alone, agrees to pay on demand:
(a) to the Company (and any successor and permitted assigns
thereof) all reasonable costs and expenses incurred by such Person in connection
with the enforcement of this Agreement, the Originator Assignment Certificate
and the other Transaction Documents; and
(b) all stamp and other taxes and fees payable or determined to
be payable in connection with the execution, delivery, filing and recording of
this Agreement or the other Transaction Documents to be delivered hereunder, and
agrees to indemnify each Purchase and Sale Indemnified Party against any
liabilities with respect to or resulting from any delay in paying or omission to
pay such taxes and fees.
SECTION 10.7 SUBMISSION TO JURISDICTION. EACH PARTY HERETO HEREBY
IRREVOCABLY (a) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE OF NEW
YORK OR THE FEDERAL COURT OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW
YORK OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY TRANSACTION
DOCUMENT; (b) AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN SUCH STATE OR UNITED STATES FEDERAL COURT; (c)
WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
Purchase and Sale Agreement
23
PROCEEDING; (d) IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH
PERSON AT ITS ADDRESS SPECIFIED IN SECTION 10.2; AND (e) AGREES THAT A FINAL
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. NOTHING IN THIS SECTION 10.7 SHALL AFFECT THE COMPANY'S RIGHT
TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING ANY
ACTION OR PROCEEDING AGAINST ANY ORIGINATOR OR ITS PROPERTY IN THE COURTS OF ANY
OTHER JURISDICTIONS.
SECTION 10.8 WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES ANY RIGHT
TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
UNDER OR RELATING TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY RELATIONSHIP
EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT,
AND AGREES THAT (a) ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT
AND NOT BEFORE A JURY AND (b) ANY PARTY HERETO (OR ANY ASSIGNEE OR THIRD PARTY
BENEFICIARY OF THIS AGREEMENT) MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF ANY OTHER
PARTY OR PARTIES HERETO TO WAIVER OF ITS OR THEIR RIGHT TO TRIAL BY JURY.
SECTION 10.9 Captions and Cross References; Incorporation by Reference.
The various captions (including, without limitation, the table of contents) in
this Agreement are included for convenience only and shall not affect the
meaning or interpretation of any provision of this Agreement. References in this
Agreement to any underscored Section or Exhibit are to such Section or Exhibit
of this Agreement, as the case may be. The Exhibits hereto are hereby
incorporated by reference into and made a part of this Agreement.
SECTION 10.10 Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
Agreement.
SECTION 10.11 Acknowledgment and Agreement. By execution below, each
Originator expressly acknowledges and agrees that all of the Company's rights,
title, and interests in, to, and under this Agreement (but not its obligations),
shall be assigned by the Company pursuant to the Receivables Purchase Agreement,
and each Originator consents to such assignment. Each of the parties hereto
acknowledges and agrees that the Administrator,
Purchase and Sale Agreement
24
and the Issuer are third party beneficiaries of the rights of the Company
arising hereunder and under the other Transaction Documents to which any
Originator is a party.
SECTION 10.12 No Proceeding. Each Originator hereby agrees that it will
not institute, or join any other Person in instituting, against the Company any
Insolvency Proceeding for at least one year and one day following the day on
which the Company discharges all of its obligations under the Receivables
Purchase Agreement.
SECTION 10.13 Limited Recourse. Except as explicitly set forth herein,
the obligations of the Company and the Originators under this Agreement or any
other Transaction Documents to which each is a party are solely the obligations
of the Company and each such Originator. No recourse under any Transaction
Document shall be had against, and no liability shall attach to, any officer,
employee, director, or beneficiary, whether directly or indirectly, of the
Company or any Originator; provided, however, that this Section shall not
relieve any such Person of any liability it might otherwise have for its own
gross negligence or willful misconduct.
[Signature Pages Follow]
Purchase and Sale Agreement
25
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.
CSS FUNDING LLC
By:
----------------------------------------
Name:
----------------------------------
Title:
----------------------------------
Address: CSS Funding LLC
1845 Walnut Street, Suite 800
Philadelphia, Pennsylvania 19103-4755
Attention: Clifford Pietrafitta
Telephone: (215) 569-9900
Facsimile: (215) 569-9979
CSS INDUSTRIES, INC., as Servicer
By:
----------------------------------------
Name:
----------------------------------
Title:
----------------------------------
Address: CSS Industries, Inc.
1845 Walnut Street, Suite 800
Philadelphia, Pennsylvania 19103-4755
Attention: Clifford Pietrafitta
Telephone: (215) 569-9900
Facsimile: (215) 569-9979
Purchase and Sale Agreement
S-1
ORIGINATORS:
BERWICK INDUSTRIES LLC
By:
----------------------------------------
Name:
----------------------------------
Title:
----------------------------------
Address: Berwick Industries LLC
Bomboy Lane and Ninth Street
Berwick, PA 18603
Attention: Christopher J. Munyan
Telephone: (570) 752-5934
Facsimile: (570) 752-6531
CLEO INC
By:
----------------------------------------
Name:
----------------------------------
Title:
----------------------------------
Address: Cleo Inc
4025 Viscount
Memphis, TN 38118
Attention: Andrew W. Kelly
Telephone: (901) 369-6620
Facsimile: (901) 362-0864
Purchase and Sale Agreement
S-2
THE PAPER MAGIC GROUP, INC.
By:
----------------------------------------
Name:
----------------------------------
Title:
----------------------------------
Address: The Paper Magic Group, Inc.
401 Adams Avenue
Scranton, PA 18510
Attention: Frank Macero, Jr.
Telephone: (570) 961-3863
Facsimile: (570) 961-3930
Purchase and Sale Agreement
S-3