EXHIBIT 10.4
EXECUTION COPY
RECEIVABLES SALE AGREEMENT
Dated as of June 27, 2003
by and among
ARMSTRONG AIR CONDITIONING INC.
and
LENNOX HEARTH PRODUCTS INC.,
as the initial Originators
and
LPAC CORP. II,
as Buyer
TABLE OF CONTENTS
Page
ARTICLE I
AMOUNTS AND TERMS............................................................................................ 1
Section 1.1 Purchases of Receivables................................................................... 1
Section 1.2 Payment for the Purchases.................................................................. 2
Section 1.3 Purchase Price Credit Adjustments.......................................................... 4
Section 1.4 Payments and Computations, Etc............................................................. 5
Section 1.5 Transfer of Records........................................................................ 5
Section 1.6 Characterization........................................................................... 6
ARTICLE II
REPRESENTATIONS AND WARRANTIES............................................................................... 7
Section 2.1 Representations and Warranties of Originators.............................................. 7
ARTICLE III
CONDITIONS OF PURCHASE....................................................................................... 10
Section 3.1 Conditions Precedent to Initial Purchase................................................... 10
Section 3.2 Conditions Precedent to Subsequent Payments................................................ 10
ARTICLE IV
COVENANTS.................................................................................................... 11
Section 4.1 Affirmative Covenants of Originators....................................................... 11
Section 4.2 Negative Covenants of Originators.......................................................... 14
ARTICLE V
TERMINATION EVENTS........................................................................................... 16
Section 5.1 Termination Events......................................................................... 16
Section 5.2 Remedies................................................................................... 17
ARTICLE VI
INDEMNIFICATION.............................................................................................. 17
Section 6.1 Indemnities by Originators................................................................. 17
Section 6.2 Other Costs and Expenses................................................................... 20
ARTICLE VII
MISCELLANEOUS................................................................................................ 20
Section 7.1 Waivers and Amendments..................................................................... 20
Section 7.2 Notices.................................................................................... 20
Section 7.3 Protection of Ownership Interests of Buyer................................................. 20
Section 7.4 Confidentiality............................................................................ 21
Section 7.5 Bankruptcy Petition........................................................................ 22
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Section 7.6 CHOICE OF LAW.............................................................................. 22
Section 7.7 CONSENT TO JURISDICTION.................................................................... 22
Section 7.8 WAIVER OF JURY TRIAL....................................................................... 22
Section 7.9 Integration; Binding Effect; Survival of Terms............................................. 23
Section 7.10 Counterparts; Severability; Section References............................................. 23
Section 7.11 Joinder of Originators..................................................................... 23
Exhibits and Schedules
EXHIBIT I -- Definitions
EXHIBIT II -- Principal Place of Business; Location(s) of Records; Federal Employer
Identification Number; Other Names
EXHIBIT III -- Lock-Boxes; Collection Accounts; Collection Banks
EXHIBIT IV -- Credit and Collection Policy
EXHIBIT V -- Form of Subordinated Note
EXHIBIT VI -- Form of Joinder Agreement
SCHEDULE A -- List of Documents to Be Delivered to Buyer Prior to Initial Purchase
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RECEIVABLES SALE AGREEMENT
THIS RECEIVABLES SALE AGREEMENT, dated as of June 27, 2003, is
by and among Armstrong Air Conditioning Inc., an Ohio corporation ("Armstrong"),
Lennox Hearth Products Inc., a California corporation ("Hearth") (each of
Armstrong and Hearth and each other Subsidiary of Lennox International which
hereafter enters into a Joinder Agreement, an "Originator" and collectively, the
"Originators"), and LPAC Corp. II, a Delaware corporation ("Buyer"). Unless
defined elsewhere herein, capitalized terms used in this Agreement shall have
the meanings assigned to such terms in Exhibit I.
PRELIMINARY STATEMENTS
Each Originator now owns, and from time to time hereafter will
own, Receivables. Each Originator wishes to sell and assign to Buyer, and Buyer
wishes to purchase from each Originator, all of such Originator's right, title
and interest in and to such Receivables, together with the Related Security and
Collections with respect thereto.
Each Originator and Buyer intend the transactions contemplated
hereby to be true sales of the Receivables from such Originator to Buyer,
providing Buyer with the full benefits of ownership of the Receivables, and none
of the Originators or Buyer intends these transactions to be, or for any purpose
to be characterized as, loans from Buyer to an Originator.
Following each purchase of Receivables from the Originators,
Buyer will sell undivided interests therein and in the associated Related
Security and Collections pursuant to that certain Receivables Purchase Agreement
dated as of June 27, 2003 (as the same may from time to time hereafter be
amended, supplemented, restated or otherwise modified, the "Purchase Agreement")
among Buyer, Lennox Industries Inc., as Servicer, Jupiter Securitization
Corporation ("Jupiter"), the financial institutions from time to time party
thereto as "Financial Institutions" and Bank One, NA (Main Office Chicago) or
any successor agent appointed pursuant to the terms of the Purchase Agreement,
as agent for Jupiter and such Financial Institutions (in such capacity, the
"Agent").
ARTICLE I
AMOUNTS AND TERMS
Section 1.1 Purchases of Receivables.
(a) In consideration for the Purchase Price and upon the
terms and subject to the conditions set forth herein, (i) effective on its
Closing Date, each Originator does hereby sell, assign, transfer, set-over and
otherwise convey to Buyer, without recourse (except to the extent expressly
provided herein), and Buyer does hereby purchase from each Originator, all of
such Originator's right, title and interest in and to all Receivables originated
by such Originator and existing as of the close of business on the Business Day
immediately prior to its Closing Date, together, in each case, with all Related
Security relating thereto and all Collections thereof and
(ii) from and after its Closing Date, each Originator hereby agrees to sell,
assign, transfer, set-over and otherwise convey to Buyer, without recourse
(except to the extent expressly provided herein), and Buyer hereby agrees to
purchase from each Originator, all of such Originator's right, title and
interest in and to all Receivables originated by such Originator from and after
its Closing Date, together, in each case, with all Related Security relating
thereto and all Collections thereof. In accordance with the preceding sentence,
Buyer shall acquire all of each Originator's right, title and interest in and to
all Receivables originated by such Originator existing as of the close of
business on the Business Day immediately prior to its Closing Date and
thereafter arising through and including its Termination Date, together with all
Related Security relating thereto and all Collections thereof, and Buyer shall
be obligated to pay the Purchase Price therefor in accordance with Section 1.2.
In connection with the payment of the Purchase Price for any Receivables
purchased hereunder, Buyer may request that the applicable Originator deliver,
and such Originator shall deliver, such approvals, opinions, information,
reports or documents as Buyer may reasonably request.
(b) It is the intention of the parties hereto that each
Purchase of Receivables made hereunder shall constitute a sale of "accounts" (as
such term is used in Article 9 of the UCC), which sale is absolute and
irrevocable and provides Buyer with the full benefits of ownership of the
Receivables. Except for the Purchase Price Credits owed pursuant to Section 1.3,
each sale of Receivables hereunder is made without recourse to the Originators;
provided, however, that (i) each Originator shall be liable to Buyer for all
representations, warranties and covenants made by such Originator pursuant to
the terms of the Transaction Documents to which such Originator is a party, and
(ii) such sale does not constitute and is not intended to result in an
assumption by Buyer or any assignee thereof of any obligation of such Originator
or any other Person arising in connection with the Receivables originated by
such Originator, the related Contracts and/or other Related Security or any
other obligations of such Originator. In view of the intention of the parties
hereto that the Purchases of Receivables made hereunder shall constitute a sale
of such Receivables rather than loans secured thereby, each Originator agrees
that it will, on or prior to its Closing Date and in accordance with Section
4.1(e)(ii), mark its master data processing records relating to the Receivables
originated by it with a legend acceptable to Buyer and to the Agent (as Buyer's
assignee), evidencing that Buyer has purchased such Receivables as provided in
this Agreement and to note in its financial statements that its Receivables have
been sold to Buyer. Upon the request of Buyer or the Agent (as Buyer's
assignee), each Originator will 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 to perfect and
maintain the perfection of Buyer's ownership interest in the Receivables and the
Related Security and Collections with respect thereto, or as Buyer or the Agent
(as Buyer's assignee) may reasonably request.
Section 1.2 Payment for the Purchases.
(a) The Purchase Price for the Purchase of Receivables of
each Originator that are in existence on the close of business on the Business
Day immediately preceding its Closing Date (the "Initial Cutoff Date") shall be
payable in full by Buyer to such Originator on its Closing Date, and shall be
paid to such Originator in the following manner:
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(i) by delivery of immediately available funds,
to the extent of funds made available to Buyer in connection with its
subsequent sale of an interest in such Receivables to the Purchasers
under the Purchase Agreement or other cash on hand;
(ii) by delivery of the proceeds of a
subordinated revolving loan from such Originator to Buyer (a
"Subordinated Loan") in an amount not to exceed the least of (A) the
remaining unpaid portion of such Purchase Price and (B) the maximum
Subordinated Loan that could be borrowed without rendering Buyer's Net
Worth less than the Required Capital Amount; and
(iii) by accepting such Receivables as a
contribution to Buyer's capital in exchange for shares of Series A
Preferred Stock in accordance with the terms of the Stock Purchase
Agreement.
Each Receivable coming into existence after the Initial Cutoff Date shall be
sold or contributed to the Buyer on the Business Day immediately following the
day such Receivable was originated and the Purchase Price for such Receivable
shall be due and owing in full by Buyer to the Originator of such Receivable or
its designee on such Business Day (except that Buyer may, with respect to any
such Purchase Price, offset against such Purchase Price any amounts owed by such
Originator to Buyer hereunder and which have become due but remain unpaid) and
shall be paid to such Originator in the manner provided in the following
paragraphs (b), (c) and (d).
(b) With respect to any Receivables sold or contributed
hereunder after the Initial Cutoff Date, on the first Business Day after such
Receivable is originated, such Receivable shall be transferred to Buyer and on
such date of Purchase, Buyer shall pay the Purchase Price therefor to the
applicable Originator in the following manner:
(i) first, by delivery of immediately available
funds, to the extent of funds available to Buyer from its subsequent
sale of an interest in the Receivables to the Agent for the benefit of
the Purchasers under the Purchase Agreement or other cash on hand;
(ii) second, by delivery of the proceeds of a
Subordinated Loan, provided that the making of any such Subordinated
Loan shall be subject to the provisions set forth in Section
1.2(a)(ii); and
(iii) third, by accepting such Receivables as a
contribution to Buyer's capital in exchange for shares of Series A
Preferred Stock in accordance with the terms of the Stock Purchase
Agreement; PROVIDED that no such capital contribution shall be made
from and after the date on which such Originator notifies Buyer in
writing that it has designated a date as such Originator's Termination
Date.
Subject to the limitations set forth in Section 1.2(a)(ii), each Originator
irrevocably agrees to advance each Subordinated Loan requested by Buyer on or
prior to such Originator's Termination Date. The Subordinated Loans shall be
evidenced by, and shall be payable in accordance with the terms and provisions
of such Originator's Subordinated Note and shall be
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payable solely from funds which Buyer is not required under the Purchase
Agreement to set aside for the benefit of, or otherwise pay over to, the Agent
or the Purchasers. Such Originator is hereby authorized by Buyer to endorse on
the schedule attached to its Subordinated Note an appropriate notation
evidencing the date and amount of each advance thereunder, as well as the date
of each payment with respect thereto, provided that the failure to make such
notation shall not affect any obligation of Buyer thereunder.
(c) From and after its Termination Date, no Originator
shall be obligated to (but may, at its option) sell Receivables to Buyer unless
such Originator reasonably determines that the Purchase Price therefor will be
satisfied with funds available to Buyer from sales of interests in the
Receivables pursuant to the Purchase Agreement, Collections, proceeds of
Subordinated Loans, other cash on hand or otherwise.
(d) Although the Purchase Price for each Receivable
coming into existence after the Initial Cutoff Date shall be paid in full by
Buyer to the applicable Originator on the date such Receivable is purchased, a
precise reconciliation of the Purchase Price between Buyer and such Originator
shall be effected on a monthly basis on Settlement Dates with respect to all
Receivables sold during the same Calculation Period most recently ended prior to
such Settlement Date and based on the information contained in the Monthly
Report delivered by the Servicer pursuant to Article VIII of the Purchase
Agreement for such Calculation Period. Although such reconciliation shall be
effected on Settlement Dates, increases or decreases in the amount owing under
the applicable Subordinated Note made pursuant to Section 1.2(b) and any
contribution of capital by the applicable Originator to Buyer made pursuant to
Section 1.2(b) shall be deemed to have occurred and shall be effective as of the
date that the Purchase Price is paid. On each Settlement Date, each Originator
shall determine the net increase or the net reduction in the outstanding
principal amount of its Subordinated Note occurring during the immediately
preceding Calculation Period and shall account for such net increase or net
reduction in its books and records. Each Originator hereby agrees that within
three (3) Business Days after Buyer so requests, such Originator will provide
Buyer with a current report of daily sales giving rise to Receivables purchased
hereunder and a current daily report of Collections received.
(e) Each contribution of a Receivable by an Originator to
Buyer shall be deemed to be a Purchase of such Receivable by the Buyer for all
purposes of this Agreement. Buyer hereby acknowledges that no Originator shall
have any obligations to make further capital contributions to Buyer, in respect
of Originator's equity interest in the Buyer or otherwise, in order to provide
funds to pay the Purchase Price to such Originator under this Agreement or for
any other reason.
Section 1.3 Purchase Price Credit Adjustments.
(a) If on any day the Outstanding Balance of a Receivable
is:
(i) reduced as a result of any defective or
rejected goods or services, any volume incentive discount, promotional
or advertising credits, any other discount or any adjustment or
otherwise by the applicable Originator (other than cash Collections on
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account of such Receivable and other than reductions resulting from
such Receivable being written off the applicable Originator's books as
uncollectible on account of the insolvency, bankruptcy or lack of
creditworthiness of the related Obligor),
(ii) reduced or canceled as a result of a setoff
in respect of any claim by any Person (whether such claim arises out of
the same or a related transaction or an unrelated transaction), or
(b) if any of the representations and warranties set
forth in Article II were not true with respect to any Receivable on the date of
its Purchase hereunder,
then, in such event, Buyer shall be entitled to a credit (each, a "Purchase
Price Credit") against the Purchase Price otherwise payable hereunder in an
amount equal to the amount of such reduction or cancellation in the case of
clause (a) or the Outstanding Balance of such Receivable in the case of clause
(b). If such Purchase Price Credit exceeds the Purchase Price for the
Receivables sold by such Originator on such day, then such Originator shall pay
the remaining amount of such Purchase Price Credit in cash within five (5)
Business Days thereafter, provided that if the Termination Date of such
Originator has not occurred, such Originator shall be allowed to deduct the
remaining amount of such Purchase Price Credit from any indebtedness owed to it
under its Subordinated Note to the extent permitted thereunder.
Section 1.4 Payments and Computations, Etc. All amounts to be
paid or deposited by Buyer hereunder shall be paid or deposited in accordance
with the terms hereof on the day when due in immediately available funds to the
account of the applicable Originator designated from time to time by such
Originator or as otherwise directed by such Originator. In the event that any
payment owed by any Person hereunder becomes due on a day that is not a Business
Day, then such payment shall be made on the next succeeding Business Day. If any
Person fails to pay any amount hereunder when due, such Person agrees to pay, on
demand, the Default Fee in respect thereof until paid in full; provided,
however, that such Default Fee shall not at any time exceed the maximum rate
permitted by applicable law. All computations of interest payable 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.
Section 1.5 Transfer of Records.
(a) In connection with each Purchase of Receivables
hereunder, each Originator hereby sells, transfers, assigns and otherwise
conveys to Buyer all of such Originator's right and title to and interest in the
Records relating to all Receivables sold hereunder, without the need for any
further documentation in connection with such Purchase. In connection with such
transfer, each Originator hereby grants to each of Buyer, the Agent and the
Servicer an irrevocable, non-exclusive license to use, without royalty or
payment of any kind, all software used by such Originator to account for the
Receivables, to the extent necessary to administer the Receivables, whether such
software is owned by such Originator or is owned by others and used by such
Originator under license agreements with respect thereto, provided that should
the consent of any licensor of such software to such grant of the license
described herein be required, such Originator hereby agrees that upon the
request of Buyer (or the Agent as Buyer's assignee), such Originator will use
its reasonable efforts to obtain the consent of such
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third-party licensor. The license granted hereby shall be irrevocable, and shall
terminate on the date this Agreement terminates in accordance with its terms.
(b) Each Originator (i) shall take such action requested
by Buyer and/or the Agent (as Buyer's assignee), from time to time hereafter,
that may be necessary or appropriate to ensure that Buyer and its assigns under
the Purchase Agreement have an enforceable ownership interest in the Records
relating to the Receivables purchased from such Originator hereunder, and (ii)
shall use its reasonable efforts to ensure that Buyer, the Agent and the
Servicer each has an enforceable right (whether by license or sublicense or
otherwise) to use all of the computer software used to account for the
Receivables and/or to recreate such Records.
Section 1.6 Characterization. (a) If, notwithstanding the
intention of the parties expressed in Section 1.1(b), any sale or contribution
by an Originator to Buyer of Receivables hereunder shall be characterized as a
secured loan and not a sale or such sale shall for any reason be ineffective or
unenforceable, then this Agreement shall be deemed to constitute a security
agreement under the UCC and other applicable law. For this purpose and without
being in derogation of the parties' intention that the sale of Receivables
hereunder shall constitute a true sale thereof, each Originator hereby grants to
Buyer a valid and perfected security interest in all of such Originator's right,
title and interest, now owned or hereafter acquired, in, to and under all
Receivables now existing and hereafter arising, and in all Collections, Related
Security with respect thereto, each Lock-Box and Collection Account, all other
rights and payments relating to the Receivables and all proceeds of the
foregoing to secure the prompt and complete payment of a loan deemed to have
been made in an amount equal to the Purchase Price of the Receivables originated
by such Originator together with all other obligations of such Originator
hereunder, which security interest shall be prior to all other Adverse Claims
thereto. Buyer and its assigns shall have, in addition to the rights and
remedies which they may have under this Agreement, all other rights and remedies
provided to a secured creditor under the UCC and other applicable law, which
rights and remedies shall be cumulative. Each Originator hereby authorizes the
Buyer (or its assigns), within the meaning of Section 9-509 of any applicable
enactment of the UCC, as secured party, to file, without the signature of the
debtor, the UCC financing statements contemplated hereby.
(b) Each Originator acknowledges that Buyer, pursuant to
the Purchase Agreement, shall assign to the Agent, for the benefit of the Agent
and the Purchasers thereunder, all of its rights, remedies, powers and
privileges under this Agreement and that the Agent may further assign such
rights, remedies, powers and privileges to the extent permitted by the Purchase
Agreement. Each Originator agrees that the Agent, as the assignee of the Buyer,
shall, subject to the terms of the Purchase Agreement, have the right to enforce
this Agreement and to exercise directly all of Buyer's rights and remedies under
this Agreement (including, without limitation, the right to give or withhold any
consents or approvals of Buyer to be given or withheld hereunder, and, in any
case without regard to whether specific reference is made to Buyer's assigns in
the provisions of this Agreement which set forth such rights and remedies) and
each Originator agrees to cooperate fully with the Agent and the Purchasers in
the exercise of such rights and remedies. Each Originator further agrees to give
to the Agent copies of all notices it is required to give to Buyer hereunder.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of Originators.
Each Originator hereby represents and warrants to Buyer on the date hereof and
on the date of each Purchase hereunder that:
(a) Corporate Existence and Power. Such Originator is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation. Such Originator is duly qualified to do business
and is in good standing as a foreign corporation, and has and holds all
corporate power and all governmental licenses, authorizations, consents and
approvals required to carry on its business in each jurisdiction in which its
business is conducted, except to the extent that the failure to qualify or to
hold such governmental licenses, authorizations, consents and approvals could
not reasonably be expected to have a Material Adverse Effect.
(b) Power and Authority; Due Authorization Execution and
Delivery. The execution and delivery by such Originator of this Agreement and
each other Transaction Document to which it is a party, and the performance of
its obligations hereunder and thereunder and, such Originator's use of the
proceeds of the Purchases made hereunder, are within its corporate powers and
authority and have been duly authorized by all necessary corporate action on its
part. This Agreement and each other Transaction Document to which such
Originator is a party has been duly executed and delivered by such Originator.
(c) No Conflict. The execution and delivery by such
Originator of this Agreement and each other Transaction Document to which it is
a party, and the performance of its obligations hereunder and thereunder do not
contravene or violate (i) its certificate or articles of incorporation or
by-laws, (ii) any law, rule or regulation applicable to it, (iii) any
restrictions under any agreement, contract or instrument to which it is a party
or by which it or any of its property is bound except to the extent such
contravention or violation could not reasonably be expected to have a Material
Adverse Effect or (iv) any order, writ, judgment, award, injunction or decree
binding on or affecting it or its property, and do not result in the creation or
imposition of any Adverse Claim on assets of such Originator or its Subsidiaries
(except as created hereunder); and no transaction contemplated hereby requires
compliance with any bulk sales act or similar law.
(d) Governmental Authorization. Other than the filing of
the financing statements required hereunder, 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 and delivery by such
Originator of this Agreement and each other Transaction Document to which it is
a party and the performance of its obligations hereunder and thereunder.
(e) Actions, Suits. There are no actions, suits or
proceedings pending, or to the best of such Originator's knowledge, threatened,
against or affecting such Originator, or any of its properties, in or before any
court, arbitrator or other body, that could reasonably be expected to have a
Material Adverse Effect. Such Originator is not in default with respect to any
order of any court, arbitrator or governmental body.
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(f) Binding Effect. This Agreement and each other
Transaction Document to which such Originator is a party constitute the legal,
valid and binding obligations of such Originator enforceable against such
Originator in accordance with their respective terms, except as such enforcement
may be limited by applicable bankruptcy, insolvency, reorganization or other
similar laws relating to or limiting creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(g) Accuracy of Information. All information heretofore
furnished by such Originator or any of its Affiliates to Buyer (or its assigns)
for purposes of or in connection with this Agreement, any of the other
Transaction Documents or any transaction contemplated hereby or thereby is, and
all such information hereafter furnished by such Originator or any of its
Affiliates to Buyer (or its assigns) will be, true and accurate in every
material respect on the date such information is stated or certified and does
not and will not contain any material misstatement of fact or omit to state a
material fact or any fact necessary to make the statements contained therein not
misleading.
(h) Use of Proceeds. No proceeds of the Purchases
hereunder will be used (i) for a purpose that violates, or would be inconsistent
with, Regulation T, U or X promulgated by the Board of Governors of the Federal
Reserve System from time to time or (ii) to acquire any security in any
transaction which is subject to Section 12, 13 or 14 of the Securities Exchange
Act of 1934, as amended.
(i) Good Title. Immediately prior to each Purchase of a
Receivable hereunder from such Originator, such Originator shall be the legal
and beneficial owner of each such Receivable and Related Security with respect
thereto, free and clear of any Adverse Claim, except as created by the
Transaction Documents. There have been duly filed all financing statements or
other similar instruments or documents necessary under the UCC (or any
comparable law) of all appropriate jurisdictions to perfect such Originator's
ownership interest in each such Receivable, its Collections and the Related
Security. Armstrong hereby represents and warrants that immediately prior to
each purchase under the Sale and Assignment, LPAC Corp. shall be the legal and
beneficial owner of the Receivables and Related Security with respect thereto
sold by it thereunder, free and clear of any Adverse Claim, except as created by
the Transaction Documents and there have been duly filed all financing
statements or other similar instruments or documents necessary under the UCC (or
any comparable law) of all appropriate jurisdictions to perfect Armstrong's
ownership interest in each Receivable, its Collections and the Related Security
purchased by it from LPAC Corp.
(j) Perfection. This Agreement, together with the filing
of the financing statements contemplated hereby, is effective to, and shall upon
each Purchase from such Originator hereunder, transfer to Buyer (and Buyer shall
acquire from such Originator) legal and equitable title to, with the right to
sell and encumber each Receivable originated by such Originator, whether now
existing or hereafter arising, together with the Related Security and
Collections with respect thereto, free and clear of any Adverse Claim, except as
created by the Transaction Documents. There have been duly filed all financing
statements or other similar instruments or documents necessary under the UCC (or
any comparable law) of all appropriate jurisdictions to perfect Buyer's security
interest in the Receivables, the Related Security and the Collections.
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(k) Places of Business. The principal places of business
and chief executive office of such Originator and the offices where it keeps all
of its Records are located at the address(es) listed on Exhibit II or such other
locations of which Buyer has been notified in accordance with Section 4.2(a) in
jurisdictions where all action required by Section 4.2(a) has been taken and
completed. The state of incorporation, Federal Employer Identification Number
and organizational identification number of each Originator is correctly set
forth on Exhibit II.
(l) Collections. The conditions and requirements set
forth in Section 4.1(j) have at all times been satisfied and duly performed. The
names and addresses of all Collection Banks, together with the account numbers
of the Collection Accounts of such Originator at each Collection Bank and the
post office box number of each Lock-Box, are listed on Exhibit III.
(m) Material Adverse Effect. Since December 31, 2002, no
event has occurred that would have a Material Adverse Effect.
(n) Names. Such Originator has not used any corporate
names, trade names or assumed names other than the name in which it has executed
this Agreement, other than as listed on Exhibit II.
(o) Ownership of Buyer. Lennox International indirectly
owns 100% of the issued and outstanding capital stock of Buyer, each Originator
directly owns 5% of the issued and outstanding common stock of Buyer, Heatcraft
Technologies Inc. directly owns 85% of the issued and outstanding common stock
of Buyer, and collectively the Originators directly own all of the issued and
outstanding preferred stock of Buyer, in each case free and clear of any Adverse
Claim. Such capital stock is validly issued, fully paid and nonassessable, and
there are no options, warrants or other rights to acquire equity securities of
Buyer.
(p) Not a Holding Company or an Investment Company. Such
Originator is not a "holding company" or a "subsidiary holding company" of a
"holding company" within the meaning of the Public Utility Holding Company Act
of 1935, as amended, or any successor statute. Such Originator is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or any successor statute.
(q) Compliance with Law. Such Originator has complied in
all respects with all applicable laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject, except
where the failure to so comply could not reasonably be expected to have a
Material Adverse Effect. Each Receivable originated by such Originator, together
with the Contract related thereto, does not contravene any laws, rules or
regulations applicable thereto (including, without limitation, laws, rules and
regulations relating to truth in lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection practices and
privacy), and no part of such Contract is in violation of any such law, rule or
regulation, except where such contravention or violation could not reasonably be
expected to have a Material Adverse Effect.
(r) Compliance with Credit and Collection Policy. Such
Originator has complied in all material respects with its Credit and Collection
Policy with regard to each Receivable originated by it and the related Contract,
and has not made any change to such Credit
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and Collection Policy, other than as permitted under Section 4.2 and in
compliance with the notification requirements of Section 4.1(a)(vii).
(s) Payments to Originator and LPAC Corp. With respect to
each Receivable originated by such Originator and transferred to Buyer
hereunder, the Purchase Price received by such Originator constitutes reasonably
equivalent value in consideration therefor and such transfer was not made for or
on account of an antecedent debt. No transfer by such Originator of any
Receivable hereunder is or may be voidable under any section of the Bankruptcy
Reform Act of 1978 (11 U.S.C. Sections 101 et seq.), as amended. With respect
to each Receivable transferred to Armstrong under the Sale and Assignment, the
purchase price paid by Armstrong constitutes reasonably equivalent value in
consideration therefor and such transfer was not made for or on account of an
antecedent debt. No transfer by LPAC Corp. of any Receivable under the Sale and
Assignment is or may be voidable under any section of the Bankruptcy Reform Act
of 1978 (11 U.S.C. Sections 101 et seq.), as amended.
(t) Enforceability of Contracts. Each Contract with
respect to each Receivable originated by such Originator is effective to create,
and has created, a legal, valid and binding obligation of the related Obligor to
pay the Outstanding Balance of the Receivable created thereunder and any accrued
interest thereon, enforceable against the Obligor in accordance with its terms,
except as such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws relating to or limiting creditors' rights
generally and by general principles of equity (regardless of whether enforcement
is sought in a proceeding in equity or at law).
(u) Eligible Receivables. Each Receivable included in the
Net Receivables Balance as an Eligible Receivable on the date of its purchase
hereunder was an Eligible Receivable on such date.
(v) Accounting. The manner in which such Originator
accounts for the transactions contemplated by this Agreement does not jeopardize
the characterization of the transactions contemplated herein as being true
sales.
ARTICLE III
CONDITIONS OF PURCHASE
Section 3.1 Conditions Precedent to Initial Purchase. The
initial Purchase under this Agreement is subject to the conditions precedent
that (a) Buyer shall have received on or before the date of such Purchase those
documents listed on Schedule A and (b) all of the conditions to the initial
purchase under the Purchase Agreement shall have been satisfied or waived in
accordance with the terms thereof.
Section 3.2 Conditions Precedent to Subsequent Payments.
Buyer's obligation to pay for Receivables coming into existence after the
Initial Cutoff Date shall be subject to the further conditions precedent that
(a) the Facility Termination Date shall not have occurred; and (b) Buyer (or its
assigns) shall have received such other approvals, opinions or documents as it
may reasonably request. Each Originator represents and warrants that the
representations and warranties set forth in Article II are true and correct in
all material respects (except that the
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foregoing materiality standard shall not apply to any such representation or
warranty which is qualified by a materiality standard by its terms) on and as of
the date each Receivable came into existence as though made on and as of such
date.
ARTICLE IV
COVENANTS
Section 4.1 Affirmative Covenants of Originators. Until the
date on which this Agreement terminates in accordance with its terms, each
Originator hereby covenants as set forth below:
(a) Reporting. Such Originator will maintain, for itself
and each of its Subsidiaries, a system of accounting established and
administered in accordance with generally accepted accounting principles, and
furnish to Buyer (and its assigns to the extent not furnished by Buyer under the
Purchase Agreement):
(i) Copies of Notices. Promptly upon its receipt
of any notice, request for consent, financial statements,
certification, report or other communication under or in connection
with any Transaction Document from any Person other than Buyer, the
Agent or Jupiter, copies of the same.
(ii) Change in Credit and Collection Policy. At
least thirty (30) days prior to the effectiveness of any material
change in or material amendment to the Credit and Collection Policy, a
copy of the Credit and Collection Policy then in effect and a notice
indicating such change or amendment.
(iii) Other Information. Promptly, from time to
time, such other information, documents, records or reports relating to
the Receivables or the condition or operations, financial or otherwise,
of such Originator as Buyer (or its assigns) may from time to time
reasonably request in order to protect the interests of Buyer (and its
assigns) under or as contemplated by this Agreement.
(b) Notices. Such Originator will notify the Buyer (and
its assigns) in writing of any of the following promptly upon learning of the
occurrence thereof, describing the same and, if applicable, the steps being
taken with respect thereto:
(i) Termination Events or Potential Termination
Events. The occurrence of each Termination Event and each Potential
Termination Event, by a statement of an Authorized Officer of such
Originator.
(ii) Judgment and Proceedings. (1) The entry of
any judgment or decree against such Originator or any of its
Subsidiaries if the aggregate amount of all judgments and decrees then
outstanding against such Originator and its Subsidiaries exceeds
$10,000,000, and (2) the institution of any litigation, arbitration
proceeding or governmental proceeding against such Originator or any of
its Subsidiaries which, individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect.
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(iii) Material Adverse Effect. The occurrence of
any event or condition that has had, or could reasonably be expected to
have, a Material Adverse Effect.
(iv) Defaults Under Other Agreements. The
occurrence of a default or an event of default under any other
financing arrangement pursuant to which such Originator is a debtor or
an obligor, which could reasonably be expected to have a Material
Adverse Effect.
(c) Compliance with Laws and Preservation of Corporate
Existence. (i) Such Originator will comply in all respects with all applicable
laws, rules, regulations, orders, writs, judgments, injunctions, decrees or
awards to which it may be subject, except where the failure to so comply could
not reasonably be expected to have a Material Adverse Effect. (ii) Such
Originator will preserve and maintain its corporate existence, rights,
franchises and privileges in the jurisdiction of its incorporation, and qualify
and remain qualified in good standing as a foreign corporation in each
jurisdiction where its business is conducted, except where the failure to be so
qualified could not reasonably be expected to have a Material Adverse Effect.
(d) Audits. Such Originator will furnish to Buyer (and
its assigns) from time to time such information with respect to it and the
Receivables as Buyer (or its assigns) may reasonably request. Such Originator
will, from time to time during regular business hours as requested by Buyer (or
its assigns), upon reasonable notice and at the sole cost of such Originator,
permit Buyer (and its assigns) or their respective agents or representatives,
(i) to examine and make copies of and abstracts from all Records in the
possession or under the control of such Person relating to the Receivables and
the Related Security, including, without limitation, the related Contracts, and
(ii) to visit the offices and properties of such Person for the purpose of
examining such materials described in clause (i) above, and to discuss matters
relating to such Person's financial condition or the Receivables and the Related
Security or such Person's performance under any of the Transaction Documents or
such Person's performance under the Contracts and, in each case, with any of the
officers or employees of such Person having knowledge of such matters; provided
that (A) during a Level One Enhancement Period and prior to the occurrence of an
Amortization Event, such Originator shall be responsible for the cost of only
one audit at each location of such Originator during any 12 month period
beginning on the date hereof or any anniversary of the date hereof and (B)
during a Level Two Enhancement Period and prior to the occurrence of an
Amortization Event, such Originator shall be responsible for the cost of only
two audits at each location of such Originator during any 12 month period
beginning on the date hereof or any anniversary of the date hereof.
(e) Keeping and Marking of Records and Books.
(i) Such Originator will maintain and implement
administrative and operating procedures (including, without limitation,
an ability to recreate records evidencing Receivables in the event of
the destruction of the originals thereof), and keep and maintain all
documents, books, records and other information reasonably necessary or
advisable for the collection of all Receivables (including, without
limitation, records adequate to permit the immediate identification of
each new Receivable and all Collections of and adjustments to each
existing Receivable). Such Originator will give
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Buyer (and its assigns) notice of any material change in the
administrative and operating procedures referred to in the previous
sentence.
(ii) Such Originator will (A) on or prior to the
date hereof, mark its master data processing records and other books
and records relating to the Receivables with a legend, acceptable to
Buyer (and its assigns), describing Buyer's ownership interests in the
Receivables and further describing the Purchaser Interests of the Agent
(on behalf of the Purchasers) under the Purchase Agreement and (B) upon
the request of Buyer (or its assigns), (x) mark each Contract with a
legend describing Buyer's ownership interests in the Receivables and
further describing the Purchaser Interests of the Agent (on behalf of
the Purchasers) and (y) deliver to Buyer (or its assigns) all Contracts
(including, without limitation, all multiple originals of any such
Contract) relating to the Receivables.
(f) Compliance with Contracts and Credit and Collection
Policy. Such Originator will timely and fully (i) perform and comply with all
material provisions, covenants and other promises required to be observed by it
under the Contracts related to the Receivables, and (ii) comply in all respects
with the Credit and Collection Policy in regard to each Receivable and the
related Contract.
(g) Ownership. Such Originator will take all necessary
action to establish and maintain, irrevocably in Buyer, legal and equitable
title to the Receivables, the Related Security and the Collections, free and
clear of any Adverse Claims other than Adverse Claims in favor of Buyer (and its
assigns) (including, without limitation, the filing of all financing statements
or other similar instruments or documents necessary under the UCC (or any
comparable law) of all appropriate jurisdictions to perfect Buyer's interest in
such Receivables, Related Security and Collections and such other action to
perfect, protect or more fully evidence the interest of Buyer as Buyer (or its
assigns) may reasonably request). Armstrong will take all necessary action to
establish and maintain, irrevocably in itself, legal and equitable title to the
Receivables, the Related Security and the Collections Armstrong purchased from
LPAC Corp., free and clear of any Adverse Claims other than Adverse Claims in
favor of Armstrong, Buyer and Buyer's assigns (including, without limitation,
the filing of all financing statements or other similar instruments or documents
necessary under the UCC (or any comparable law) of all appropriate jurisdictions
to perfect Armstrong's and Buyer's interest in such Receivables, Related
Security and Collections and such other action to perfect, protect or more fully
evidence the interest of Buyer as Buyer (or its assigns) may reasonably
request). Armstrong shall take all actions to perfect and enforce its rights and
interests under the Sale and Assignment as the Buyer or its assigns may from
time to time reasonably request.
(h) Purchasers' Reliance. Such Originator acknowledges
that the Agent and the Purchasers are entering into the transactions
contemplated by the Purchase Agreement in reliance upon Buyer's identity as a
legal entity that is separate from any Lennox Entity. Therefore, from and after
the date of execution and delivery of this Agreement, such Originator will take
all reasonable steps including, without limitation, all steps that Buyer or any
assignee of Buyer may from time to time reasonably request to maintain Buyer's
identity as a separate legal entity and to make it manifest to third parties
that Buyer is an entity with assets and liabilities distinct from those of such
Originator and not just a division of such Originator. Without
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limiting the generality of the foregoing and in addition to the other covenants
set forth herein, such Originator (i) will not hold itself out to third parties
as liable for the debts of Buyer nor purport to own the Receivables and other
assets acquired by Buyer, (ii) will take all other actions necessary on its part
to ensure that Buyer is at all times in compliance with the covenants set forth
in Section 7.1(i) of the Purchase Agreement and (iii) will cause all tax
liabilities arising in connection with the transactions contemplated herein or
otherwise to be allocated between such Originator and Buyer on an arm's-length
basis and in a manner consistent with the procedures set forth in U.S. Treasury
Regulations Sections 1.1502-33(d) and 1.1552-1.
(i) Collections. Such Originator will cause (1) all
Collections to be remitted by the Obligors directly to either a Lock-Box or a
Collection Account, (2) all proceeds from all Lock-Boxes to be directly
deposited by a Collection Bank into a Collection Account and (3) each Lock-Box
and Collection Account to be subject at all times to a Collection Account
Agreement that is in full force and effect; provided that Hearth shall have 30
days after the date hereof to deliver a fully executed Collection Account
Agreement with respect to the Lock-Box and Collection Account into which
Collections of Receivables originated by Hearth are deposited. In the event any
payments relating to Receivables are remitted directly to such Originator or any
Affiliate of such Originator, such Originator will remit (or will cause all such
payments to be remitted) directly to a Collection Bank for deposit into a
Collection Account within two (2) Business Days following receipt thereof and,
at all times prior to such remittance, such Originator will itself hold or, if
applicable, will cause such payments to be held in trust for the exclusive
benefit of Buyer and its assigns. Such Originator will transfer exclusive
ownership, dominion and control of each Lock-Box and Collection Account to
Buyer, and will not grant the right to take dominion and control of any Lock-Box
or Collection Account at a future time or upon the occurrence of a future event
to any Person, except to Buyer (or its assigns) as contemplated by this
Agreement and the Purchase Agreement.
(j) Taxes. Such Originator will file all tax returns and
reports required by law to be filed by it and will promptly pay all taxes and
governmental charges at any time owing except any such taxes which are not yet
delinquent or are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with generally
accepted accounting principles shall have been set aside on its books. Such
Originator will pay when due any taxes payable in connection with the
Receivables, exclusive of taxes on or measured by income or gross receipts of
Buyer and its assigns.
(k) Insurance. Such Originator will maintain in effect,
or cause to be maintained in effect, at such Originator's own expense, such
casualty and liability insurance covering the Equipment as such Originator deems
appropriate in its good faith business judgment.
Section 4.2 Negative Covenants of Originators. Until the date
on which this Agreement terminates in accordance with its terms, each Originator
hereby covenants that:
(a) Name Change, Offices and Records. Such Originator
will not (i) make any change to its name (within the meaning of Section 9-507(c)
of any applicable enactment of the UCC), identity, corporate structure or chief
executive office or location of its books and records unless, at least thirty
(30) days prior to the effective date of any such name change,
14
change in corporate structure, or change in location of its chief executive
office or books and records such Originator notifies Buyer (and its assigns)
thereof and delivers to the Agent such financing statements (Forms UCC-1 and
UCC-3) authorized or executed by such Originator (if required under applicable
law) which Buyer (or its assigns) may reasonably request to reflect such name
change, location change, or change in corporate structure, together with such
other documents and instruments that Buyer (or its assigns) may reasonably
request in connection therewith and has taken all other steps to ensure that
Buyer (and its assigns) continues to have a first priority, perfected security
interest in the Receivables originated by such Originator, the Related Security
related thereto and any Collections thereon, or (ii) change its jurisdiction of
organization unless the Buyer (and its assigns) shall have received from such
Originator, prior to such change, (A) those items described in clause (i)
hereof, and (B) if Buyer (or its assigns) shall so request, an opinion of
counsel, in form and substance reasonably satisfactory to such Person, as to
such organization and such Originator's valid existence and good standing and
the perfection and priority of Buyer's and the Agent's security interests in the
Receivables originated by such Originator, the Related Security and Collections.
(b) Change in Payment Instructions to Obligors. Such
Originator will not add or terminate any bank as a Collection Bank, or make any
change in the instructions to Obligors regarding payments to be made to any
Lock-Box or Collection Account, unless Buyer (and its assigns) shall have
received, at least ten (10) days before the proposed effective date therefor,
(i) written notice of such addition, termination or change and (ii) with respect
to the addition of a Collection Bank or a Collection Account or Lock-Box, an
executed Collection Account Agreement with respect to the new Collection Account
or Lock-Box; provided, however, that such Originator may make changes in
instructions to Obligors regarding payments if such new instructions require
such Obligor to make payments to another existing Collection Account or
Lock-Box.
(c) Modifications to Contracts and Credit and Collection
Policy. Such Originator will not make any change to the Credit and Collection
Policy that could adversely affect the collectibility of the Receivables or
decrease the credit quality of any newly created Receivables. Such Originator
will not extend, amend or otherwise modify the terms of any Receivable or any
Contract related thereto other than in accordance with its Credit and Collection
Policy.
(d) Sales, Liens. Such Originator will not sell, assign
(by operation of law or otherwise) or otherwise dispose of, or grant any option
with respect to, or create or suffer to exist any Adverse Claim upon (including,
without limitation, the filing of any financing statement) or with respect to,
any Receivable, Related Security or Collections, or upon or with respect to any
Contract under which any Receivable arises, or any Lock-Box or Collection
Account, or assign any right to receive income with respect thereto (other than,
in each case, the creation of the interests therein in favor of Buyer provided
for herein), and such Originator will defend the right, title and interest of
Buyer and its assigns in, to and under any of the foregoing property, against
all claims of third parties claiming through or under such Originator. Such
Originator shall not create or suffer to exist any mortgage, pledge, security
interest, encumbrance, lien, charge or other similar arrangement on any of its
inventory, the financing or lease of which gives rise to a Receivable.
15
(e) Accounting for Purchases. Such Originator will not,
and will not permit any Affiliate to, account for or treat (whether in financial
statements or otherwise) the transactions contemplated hereby in any manner
other than the sale of the Receivables originated by it and the Related Security
and Collections with respect thereto by such Originator to Buyer or in any other
respect account for or treat the transactions contemplated hereby in any manner
other than as a sale of the Receivables originated by it and the Related
Security and Collections with respect thereto by such Originator to Buyer except
to the extent that such transactions are not recognized on account of
consolidated financial reporting in accordance with generally accepted
accounting principles.
ARTICLE V
TERMINATION EVENTS
Section 5.1 Termination Events. The occurrence of any one or
more of the following events shall constitute a Termination Event with respect
to an Originator:
(a) Such Originator shall fail (i) to make any payment or
deposit required hereunder or under any other Transaction Document when due and
such failure shall continue for one (1) Business Day, or (ii) to perform or
observe any term, covenant or agreement hereunder (other than as referred to in
clause (i) of this paragraph (a)) or any other Transaction Document to which it
is a party and such failure shall continue for (A) in the case of any covenant
set forth in paragraphs (a)(iii), (e), (j) or (k) of Section 4.1, thirty (30)
days, (B) in the case of any covenant set forth in Section 4.1(a)(i) or Section
4.1(c)(i), ten (10) days and (C) except as provided in the preceding clauses (A)
and (B), five (5) Business Days.
(b) Any representation, warranty, certification or
statement made by such Originator or Performance Guarantor in this Agreement,
any other Transaction Document or in any other document delivered pursuant
hereto or thereto shall prove to have been incorrect in any material respect
when made or deemed made (except that the materiality standard in this
subsection (b) shall not apply to any such representation or warranty which is
qualified by a materiality standard by its terms).
(c) Failure of such Originator or Performance Guarantor
to pay any Indebtedness when due (after the passage of any applicable notice and
grace period) in excess of $10,000,000; or the default (after the passage of any
applicable notice and grace period) by such Originator or Performance Guarantor
in the performance of any term, provision or condition contained in any
agreement under which such Indebtedness was created or is governed, the effect
of which is to cause, or to permit the holder or holders of such Indebtedness to
cause, such Indebtedness to become due prior to its stated maturity; provided
that Bank One has not waived any such default in its capacity as a lender under
such agreement; or any such Indebtedness of such Originator or Performance
Guarantor shall be declared to be due and payable or required to be prepaid
(other than by a regularly scheduled payment) prior to the date of maturity
thereof.
(d) (i) Such Originator or Performance Guarantor 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 (ii) any proceeding shall be
16
instituted by or against any such Person seeking to adjudicate it bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee or other similar official for it or any substantial part of its property
or (iii) any such Person shall take any corporate action to authorize any of the
actions set forth in the foregoing clauses (i) or (ii) of this subsection (d).
(e) A Change of Control shall occur with respect to such
Originator or the Performance Guarantor.
(f) One or more final judgments for the payment of money
in an amount in excess of $10,000,000, individually or in the aggregate, shall
be entered against such Originator or Performance Guarantor on claims not
covered by insurance or as to which the insurance carrier has denied its
responsibility, and such judgment shall continue unsatisfied and in effect for
thirty (30) consecutive days without a stay of execution.
(g) Performance Guarantor shall fail to perform or
observe any term, covenant or agreement required to be performed by it under the
Performance Guaranty, or the Performance Guaranty shall cease to be effective or
to be the legally valid, binding and enforceable obligation of Performance
Guarantor, or Performance Guarantor shall directly or indirectly contest in any
manner such effectiveness, validity, binding nature or enforceability.
Section 5.2 Remedies. Upon the occurrence and during the
continuation of a Termination Event with respect to any Originator, Buyer may
take any of the following actions: (i) declare such Originator's Termination
Date to have occurred, whereupon its Termination Date shall forthwith occur,
without demand, protest or further notice of any kind, all of which are hereby
expressly waived by each Originator; provided, however, that upon the occurrence
of Termination Event described in Section 5.1(d), or of an actual or deemed
entry of an order for relief with respect to any Originator under the Federal
Bankruptcy Code, such Originator's Termination Date shall automatically occur,
without demand, protest or any notice of any kind, all of which are hereby
expressly waived by each Originator and (ii) to the fullest extent permitted by
applicable law, declare that the Default Fee shall accrue with respect to any
amounts then due and owing to Buyer by such Originator. The aforementioned
rights and remedies shall be without limitation and in addition to all other
rights and remedies of Buyer and its assigns available under this Agreement, by
operation of law, at equity or otherwise, all of which are hereby expressly
preserved, including, without limitation, all rights and remedies provided under
the UCC, all of which rights shall be cumulative.
ARTICLE VI
INDEMNIFICATION
Section 6.1 Indemnities by Originators. Without limiting any
other rights that Buyer may have hereunder or under applicable law, each
Originator hereby agrees to indemnify (and pay upon demand to) Buyer and its
assigns, and their respective assigns, officers, directors, agents and employees
(each an "Indemnified Party") from and against any and all damages,
17
losses, claims, taxes, liabilities, costs, expenses and for all other amounts
payable, including reasonable attorneys' fees (which attorneys may be employees
of Buyer or its assigns) and disbursements (all of the foregoing being
collectively referred to as "Indemnified Amounts") awarded against or incurred
by any of them arising out of or as a result of this Agreement or the
acquisition, either directly or indirectly, by Buyer of an interest in the
Receivables, excluding, however:
(i) Indemnified Amounts to the extent a final
judgment of a court of competent jurisdiction holds that such
Indemnified Amounts resulted from gross negligence or willful
misconduct on the part of the Indemnified Party seeking
indemnification;
(ii) Indemnified Amounts to the extent the same
includes losses in respect of Receivables that are uncollectible on
account of the insolvency, bankruptcy or lack of creditworthiness of
the related Obligor; or
(iii) taxes imposed by the jurisdiction in which
such Indemnified Party's principal executive office is located, on or
measured by the overall net income of such Indemnified Party to the
extent that the computation of such taxes is consistent with the
Intended Characterization;
provided, however, that nothing contained in this sentence shall limit the
liability of any Originator or limit the recourse of Buyer to any Originator for
amounts otherwise specifically provided to be paid by such Originator under the
terms of this Agreement. Without limiting the generality of the foregoing
indemnification, such Originator shall indemnify each Indemnified Party for
Indemnified Amounts (including, without limitation, losses in respect of
uncollectible receivables, regardless of whether reimbursement therefor would
constitute recourse to such Originator of Performance Guarantor) relating to or
resulting from:
(A) any representation or warranty made
by such Originator (or any officers of any such Originator)
under or in connection with this Agreement, any other
Transaction Document or any other information or report
delivered by any such Person pursuant hereto or thereto, which
shall have been false or incorrect when made or deemed made;
(B) the failure by such Originator to
comply with any applicable law, rule or regulation with
respect to any Receivable or Contract related thereto, or the
nonconformity of any Receivable or Contract included therein
with any such applicable law, rule or regulation or any
failure of such Originator to keep or perform any of its
obligations, express or implied, with respect to any Contract;
(C) any failure of such Originator to
perform its duties, covenants or other obligations in
accordance with the provisions of this Agreement or any other
Transaction Document;
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(D) any products liability, personal
injury or damage suit or other similar claim arising out of or
in connection with merchandise, insurance or services that are
the subject of any Contract or any Receivable;
(E) any dispute, claim, offset or
defense (other than discharge in bankruptcy of an Obligor) of
an Obligor to the payment of any Receivable (including,
without limitation, a defense based on such Receivable or the
related Contract not being a legal, valid and binding
obligation of such Obligor enforceable against it in
accordance with its terms), or any other claim resulting from
the sale of the merchandise or services related to such
Receivable or the furnishing or failure to furnish such
merchandise or services;
(F) the commingling of Collections of
Receivables at any time with other funds;
(G) any investigation, litigation or
proceeding related to or arising from this Agreement or any
other Transaction Document, the transactions contemplated
hereby, the use of the proceeds of any Purchase, the ownership
of the Receivables or any other investigation, litigation or
proceeding relating to such Originator in which any
Indemnified Party becomes involved as a result of any of the
transactions contemplated hereby;
(H) any inability to litigate any claim
against any Obligor in respect of any Receivable as a result
of such Obligor being immune from civil and commercial law and
suit on the grounds of sovereignty or otherwise from any legal
action, suit or proceeding;
(I) any Termination Event described in
Section 5.1(d);
(J) any failure to vest and maintain
vested in Buyer, or to transfer to Buyer, legal and equitable
title to, and ownership of, the Receivables, the Related
Security and the Collections, free and clear of any Adverse
Claim;
(K) in the case of Armstrong, any
failure of Armstrong to acquire and maintain legal and
equitable title to, and ownership of any Receivable
transferred to it under the Sale and Assignment and the
Related Security and Collections with respect thereto from
LPAC Corp., free and clear of any Adverse Claim (other than as
created hereunder); or any failure of Armstrong to give
reasonably equivalent value to LPAC Corp. under the Sale and
Assignment in consideration of the transfer by LPAC Corp. of
any Receivable, or any attempt by any Person to void such
transfer under statutory provisions or common law or equitable
action;
(L) the failure to have filed, or any
delay in filing, financing statements or other similar
instruments or documents under the UCC of any applicable
jurisdiction or other applicable laws with respect to any
Receivable, the Related Security and Collections with respect
thereto, and the proceeds of any thereof, whether at the time
of any Purchase or at any subsequent time;
19
(M) any action or omission by such
Originator which reduces or impairs the rights of Buyer or its
assigns with respect to any Receivable or the value of any
such Receivable; and
(N) any attempt by any Person to void
any Purchase hereunder under statutory provisions or common
law or equitable action.
Section 6.2 Other Costs and Expenses. The Originators, jointly
and severally, shall pay to Buyer, on demand, all reasonable costs and
out-of-pocket expenses in connection with the preparation, execution, delivery
and administration of this Agreement, the transactions contemplated hereby and
the other documents to be delivered hereunder. The Originators, jointly and
severally, shall pay to Buyer, on demand, any and all reasonable costs and
expenses of Buyer, if any, including reasonable counsel fees and expenses in
connection with the enforcement of this Agreement and the other documents
delivered hereunder and in connection with any restructuring or workout of this
Agreement or such documents, or the administration of this Agreement following a
Termination Event.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Waivers and Amendments.
(a) No failure or delay on the part of Buyer (or its
assigns) in exercising any power, right or remedy under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or remedy preclude any other further exercise thereof or the
exercise of any other power, right or remedy. The rights and remedies herein
provided shall be cumulative and nonexclusive of any rights or remedies provided
by law. Any waiver of this Agreement shall be effective only in the specific
instance and for the specific purpose for which given.
(b) No provision of this Agreement may be amended,
supplemented, modified or waived except in writing signed by each Originator and
Buyer, and consented to by the Agent.
Section 7.2 Notices. All communications and notices provided
for hereunder shall be in writing (including bank wire, telecopy or electronic
facsimile transmission or similar writing) and shall be given to the other
parties hereto at their respective addresses or telecopy numbers set forth on
the signature pages hereof or at such other address or telecopy number as such
Person may hereafter specify for the purpose of notice to each of the other
parties hereto. Each such notice or other communication shall be effective (i)
if given by facsimile transmission, upon confirmation of receipt thereof, (ii)
if given by mail, three (3) Business Days after the time such communication is
deposited in the mail with first class postage prepaid or (iii) if given by any
other means, when received at the address specified in this Section 7.2.
Section 7.3 Protection of Ownership Interests of Buyer.
(a) Each Originator agrees that from time to time, at its
expense, it will promptly execute and deliver all instruments and documents, and
take all actions, that may be
20
necessary or reasonably desirable, or that Buyer (or its assigns) may reasonably
request, to perfect, protect or more fully evidence the interests of the Buyer
hereunder and the Purchaser Interests under the Purchase Agreement, or to enable
Buyer (or its assigns) to exercise and enforce their rights and remedies
hereunder. At any time, Buyer (or its assigns) may, direct an Originator to
notify the Obligors of Receivables originated by it, at such Originator's
expense, of the ownership interests of Buyer under this Agreement and may also
direct that payments of all amounts due or that become due under any or all
Receivables be made directly to Buyer or its designee.
(b) If any Originator fails to perform any of its
obligations hereunder, Buyer (or its assigns) may (but shall not be required to)
perform, or cause performance of, such obligation, and Buyer's (or such
assigns') costs and expenses incurred in connection therewith shall be payable
by such Originator as provided in Section 6.2. Each Originator irrevocably
authorizes Buyer (and its assigns) at any time and from time to time in the sole
discretion of Buyer (or its assigns), and appoints Buyer (and its assigns) as
its attorney(ies)-in-fact, to act on behalf of such Originator (i) to execute on
behalf of such Originator as debtor and to file financing statements identifying
such Originator as debtor or seller necessary or desirable in Buyer's (or its
assigns') sole discretion to perfect and to maintain the perfection and priority
of the interest of Buyer in the Receivables and (ii) to file a carbon,
photographic or other reproduction of this Agreement or any financing statement
with respect to the Receivables as a financing statement in such offices as
Buyer (or its assigns) in their sole discretion deem necessary or desirable to
perfect and to maintain the perfection and priority of Buyer's and its assigns'
interests in the Receivables. This appointment is coupled with an interest and
is irrevocable.
Section 7.4 Confidentiality.
(a) Each Originator shall maintain and shall cause each
of its employees and officers to maintain the confidentiality of this Agreement
and the other confidential proprietary information with respect to the Agent and
Jupiter and their respective businesses obtained by it or them in connection
with the structuring, negotiating and execution of the transactions contemplated
herein, except that such Originator and its officers and employees may disclose
such information to such Originator's external accountants and attorneys and as
required by any applicable law, regulation or order of any judicial or
administrative proceeding whether or not having the force of law.
(b) Anything herein to the contrary notwithstanding, each
Originator hereby consents to the disclosure of any nonpublic information with
respect to it (i) to Buyer, the Agent, the Financial Institutions or Jupiter by
each other, (ii) by Buyer, the Agent or the Purchasers to any prospective or
actual assignee or participant of any of them or (iii) by the Agent to any
rating agency, Commercial Paper dealer or provider of a surety, guaranty or
credit or liquidity enhancement to Jupiter or any entity organized for the
purpose of purchasing, or making loans secured by, financial assets for which
Bank One, NA acts as the administrative agent and to any officers, directors,
employees, outside accountants and attorneys of any of the foregoing. In
addition, the Purchasers and the Agent may disclose any such nonpublic
information pursuant to any law, rule, regulation, direction, request or order
of any judicial, administrative or regulatory authority or proceedings (whether
or not having the force or effect of law).
21
(c) Anything herein to the contrary notwithstanding, each
of the Buyer, each Originator, each Indemnified Party and any successor or
assign of any of the foregoing (and each employee, representative or other agent
of any of the foregoing) may disclose to any and all Persons, without limitation
of any kind, the "tax treatment" and "tax structure" (in each case, within the
meaning of Treasury Regulation Section 1.6011-4) of the transactions
contemplated herein and all materials of any kind (including opinions or other
tax analyses) that are or have been provided to any of the foregoing relating to
such tax treatment or tax structure, and it is hereby confirmed that each of the
foregoing have been so authorized since the commencement of discussions
regarding the transactions.
Section 7.5 Bankruptcy Petition. The Originators and Buyer
each hereby covenants and agrees that, prior to the date that is one year and
one day after the payment in full of all outstanding senior Indebtedness of
Jupiter, it will not institute against, or join any other Person in instituting
against, Jupiter any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceeding under the laws of the United
States or any state of the United States.
Section 7.6 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS
(INCLUDING, BUT NOT LIMITED TO, 735 ILCS SECTION 105/5-1 ET SEQ., BUT OTHERWISE
WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS).
Section 7.7 CONSENT TO JURISDICTION. EACH ORIGINATOR HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED
BY SUCH PERSON PURSUANT TO THIS AGREEMENT AND EACH ORIGINATOR HEREBY IRREVOCABLY
AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL
LIMIT THE RIGHT OF BUYER (OR ITS ASSIGNS) TO BRING PROCEEDINGS AGAINST ANY
ORIGINATOR IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY
ANY ORIGINATOR AGAINST BUYER (OR ITS ASSIGNS) OR ANY AFFILIATE OF ANY SUCH
PARTIES INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH
ORIGINATOR PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A UNITED STATES
FEDERAL COURT OR AN ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS.
Section 7.8 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
22
THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ANY ORIGINATOR PURSUANT TO THIS
AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.
Section 7.9 Integration; Binding Effect; Survival of Terms.
(a) THIS AGREEMENT AND EACH OTHER TRANSACTION DOCUMENT
CONTAIN THE FINAL AND COMPLETE INTEGRATION OF ALL PRIOR EXPRESSIONS BY THE
PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SHALL CONSTITUTE
THE ENTIRE AGREEMENT AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER
HEREOF SUPERSEDING ALL PRIOR ORAL OR WRITTEN UNDERSTANDINGS.
(b) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns (including any trustee in bankruptcy). 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 terminated in
accordance with its terms; provided, however, that the rights and remedies with
respect to (i) any breach of any representation and warranty made by an
Originator pursuant to Article II, (ii) the indemnification and payment
provisions of Article VI, and Section 7.5 shall be continuing and shall survive
any termination of this Agreement.
Section 7.10 Counterparts; Severability; Section References.
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. Any provisions of this Agreement which are
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. Unless otherwise
expressly indicated, all references herein to "Article," "Section," "Schedule"
or "Exhibit" shall mean articles and sections of, and schedules and exhibits to,
this Agreement.
Section 7.11 Joinder of Originators. Subject to the approval
of the Agent, any wholly-owned domestic Subsidiary of Lennox International may
become an Originator hereunder by entering into a Joinder Agreement with Buyer.
From and after the effective date of such Joinder Agreement, subject to the
terms and conditions set forth therein, and upon the Agent's receipt of each
other agreement, document, lien search report, financing statement, opinion and
certificate requested by the Agent, such Subsidiary shall become a party hereto
as an Originator, entitled to the rights and subject to the obligations of an
Originator hereunder.
Section 7.12 Amendments Related to Credit Agreement. On or
prior to the date which is 30 days after the execution of the Credit Agreement,
the parties hereto agree to amend the dollar amounts set forth in Sections
4.1(b)(ii)(1), 5.1(c), and 5.1(f) to conform to the parallel provisions
contained in the Credit Agreement.
23
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date hereof.
ARMSTRONG AIR CONDITIONING INC., as
an Originator
By:____________________________________________
Name:
Title:
Address: 421 Monroe Street
Bellevue, Ohio 44811
Attention: David L. Inwan, Controller
Fax:
LENNOX HEARTH PRODUCTS INC., as an
Originator
By:____________________________________________
Name:
Title:
Address:
Attention:
Fax:
Signature Page to Receivables Sale Agreement
LPAC CORP. II, as Buyer
By:____________________________________________
Name:
Title:
Address: 2140 Lake Park Blvd.
Richardson, Texas 75080-2254
Attention: Gregg Moseman
Fax:
Copy to: Carl Edwards
General Counsel
Lennox International Inc.
P.O. Box 799900
Dallas, Texas 75379-9900
Physical address:
2140 Lake Park Blvd.
Richardson, Texas 75080-2254
Fax:
Signature Page to Receivables Sale Agreement
EXHIBIT I
DEFINITIONS
This is Exhibit I to the Agreement (as hereinafter defined).
As used in the Agreement and the Exhibits, Schedules and Annexes thereto,
capitalized terms have the meanings set forth in this Exhibit I (such meanings
to be equally applicable to the singular and plural forms thereof). If a
capitalized term is used in the Agreement, or any Exhibit, Schedule or Annex
thereto, and not otherwise defined therein or in this Exhibit I, such term shall
have the meaning assigned thereto in Exhibit I to the Purchase Agreement.
"Agent" has the meaning set forth in the Preliminary
Statements to the Agreement.
"Agreement" means the Receivables Sale Agreement, dated as of
June 27, 2003, among the Originators and Buyer, as the same may be amended,
restated or otherwise modified.
"Armstrong" has the meaning set forth in the Preliminary
Statements to the Agreement.
"Authorized Officer" means, with respect to an Originator, its
president, any vice president, corporate controller, treasurer, assistant
treasurer or chief financial officer.
"Bank Rate" means a per annum rate equal to the "prime rate"
announced by the Agent from time to time, changing when and as such rate
changes.
"Business Day" means any day on which banks are not authorized
or required to close in New York, New York, Dallas, Texas or Chicago, Illinois
and The Depository Trust Company of New York is open for business.
"Buyer" has the meaning set forth in the preamble to the
Agreement.
"Calculation Period" means each calendar month or portion
thereof which elapses during the term of the Agreement. The first Calculation
Period for each Originator shall commence on the date of the initial Purchase of
Receivables from such Originator hereunder and the final Calculation Period
shall terminate on the Termination Date for such Originator.
"Closing Date" means, in the case of any Originator that is a
party to this Agreement on the date hereof, the date hereof, and in the case of
any Originator that joins this Agreement pursuant to a Joinder Agreement, the
effective date of such Joinder Agreement.
"Collection Account" means each concentration account,
depositary account, lock-box account or similar account in which any Collections
are collected or deposited and which is listed on Exhibit III.
"Collections" means, with respect to any Receivable, all cash
collections and other cash proceeds in respect of such Receivable, including,
without limitation, all yield,
Exh.I-1
Finance Charges or other related amounts accruing in respect thereof and all
cash proceeds of Related Security with respect to such Receivable.
"Contract" means, with respect to any Receivable, any and all
instruments, agreements, invoices or other writings pursuant to which such
Receivable arises or which evidences such Receivable.
"Credit and Collection Policy" means each Originator's credit
and collection policies and practices relating to Contracts and Receivables
existing on the date hereof and summarized in Exhibit IV, as modified from time
to time in accordance with the Agreement.
"Dilutions" means, at any time, the aggregate amount of
reductions or cancellations described in Section 1.3(a) of the Agreement.
"Discount Factor" means a percentage calculated to provide
Buyer with a reasonable return on its investment in the Receivables after taking
account of (i) the time value of money based upon the anticipated dates of
collection of the Receivables and the cost to Buyer of financing its investment
in the Receivables during such period and (ii) the risk of nonpayment by the
Obligors. Each Originator and Buyer may agree from time to time to change the
Discount Factor based on changes in one or more of the items affecting the
calculation thereof, provided that any change to the Discount Factor shall take
effect as of the commencement of a Calculation Period, shall apply only
prospectively and shall not affect the Purchase Price payment in respect of a
Purchase which occurred during or prior to the Calculation Period during which
such Originator and Buyer agree to make such change.
"Federal Bankruptcy Code" means Title 11 of the United States
Code entitled "Bankruptcy", as amended and any successor statute thereto.
"Finance Charges" means, with respect to a Contract, any
finance, interest, late payment charges or similar charges owing by an Obligor
pursuant to such Contract.
"Hearth" has the meaning set forth in the Preliminary
Statements to the Agreement.
"Initial Cutoff Date" has the meaning set forth in Section
1.2(a).
"Intended Characterization" means, for income tax purposes,
the characterization of the acquisition by the Purchasers of Purchaser Interests
under the Purchase Agreement as a loan or loans by the Purchasers to Buyer
secured by the Receivables, the Related Security and the Collections.
"Joinder Agreement" means a Joinder Agreement substantially in
the form of Exhibit VI to the Agreement executed by a Subsidiary of Lennox
International and Buyer pursuant to Section 7.11 of the Agreement.
"Jupiter" has the meaning set forth in the Preliminary
Statements to the Agreement.
Exh.I-2
"Lock-Box" means each locked postal box with respect to which
a bank who has executed a Collection Account Agreement has been granted
exclusive access for the purpose of retrieving and processing payments made on
the Receivables and which is listed on Exhibit III.
"Material Adverse Effect" means a material adverse effect on
(i) the financial condition or operations of any Originator and its Subsidiaries
taken as a whole or the Performance Guarantor and its Subsidiaries taken as a
whole, (ii) the ability of any Originator to perform its obligations under the
Agreement or any other Transaction Document or the Performance Guarantor to
perform its obligations under the Performance Guaranty or any other Transaction
Document, (iii) the legality, validity or enforceability of the Agreement or any
other Transaction Document, (iv) any Originator's, Buyer's, the Agent's or any
Purchaser's interest in the Receivables generally or in any significant portion
of the Receivables, the Related Security or Collections with respect thereto, or
(v) the collectibility of the Receivables generally or of any material portion
of the Receivables.
"Net Value" means, as of any date of determination, an amount
equal to the sum of (i) the aggregate Outstanding Balance of the Receivables at
such time, minus (ii) the sum of (A) the aggregate Capital outstanding at such
time, plus (B) the Aggregate Reserves.
"Net Worth" means as of the last Business Day of each
Calculation Period preceding any date of determination, the excess, if any, of
(a) the aggregate Outstanding Balance of the Receivables at such time, over (b)
the sum of (i) the Aggregate Capital outstanding at such time, plus (ii) the
aggregate outstanding principal balance of the Subordinated Loans (including any
Subordinated Loan proposed to be made on the date of determination).
"Original Balance" means, with respect to any Receivable, the
Outstanding Balance of such Receivable on the date it was purchased by Buyer.
"Originators" has the meaning set forth in the Preliminary
Statements to the Agreement.
"Potential Termination Event" means an event which, with the
passage of time or the giving of notice, or both, would constitute a Termination
Event.
"Purchase" means each purchase or receipt of a contribution
pursuant to Section 1.1(a) of the Agreement by Buyer from each Originator of the
Receivables originated by such Originator and the Related Security and the
Collections related thereto, together with all related rights in connection
therewith.
"Purchase Agreement" has the meaning set forth in the
Preliminary Statements to the Agreement.
"Purchase Price" means, with respect to any Purchase from any
Originator on any date, the aggregate price to be paid by Buyer to such
Originator for the Receivables of such Originator that are the subject of such
Purchase in accordance with Section 1.2 of the Agreement for the Receivables,
Collections and Related Security being sold to Buyer by such Originator on such
date, which price shall equal (i) the product of (x) the Original Balance of
such Receivables, multiplied by (y) one minus the Discount Factor then in
effect, minus (ii) any Purchase Price
Exh.I-3
Credits to be credited against the Purchase Price otherwise payable to such
Originator in accordance with Section 1.3 of the Agreement.
"Purchase Price Credit" has the meaning set forth in Section
1.3 of the Agreement.
"Purchaser" means Jupiter or a Financial Institution, as
applicable.
"Receivable" means all indebtedness and other obligations owed
to the applicable Originator (at the time it arises, and before giving effect to
any transfer or conveyance under the Agreement) or Buyer (after giving effect to
the transfers under the Agreement) or in which the Buyer or such Originator has
a security interest or other interest, including, without limitation, any
indebtedness, obligation or interest constituting an account, chattel paper,
instrument or general intangible, arising in connection with the sale of goods
or the rendering of services by such Originator and further includes, without
limitation, the obligation to pay any Finance Charges with respect thereto.
Indebtedness and other rights and obligations arising from any one transaction,
including, without limitation, indebtedness and other rights and obligations
represented by an individual invoice, shall constitute a Receivable separate
from a Receivable consisting of the indebtedness and other rights and
obligations arising from any other transaction; provided, that any indebtedness,
rights or obligations referred to in the immediately preceding sentence shall be
a Receivable regardless of whether the account debtor or such Originator treats
such indebtedness, rights or obligations as a separate payment obligation.
"Records" means, with respect to any Receivable, all Contracts
and other documents, books, records and other information (including, without
limitation, computer programs, tapes, disks, punch cards, data processing
software and related property and rights) relating to such Receivable, any
Related Security therefor and the related Obligor.
"Related Security" means, with respect to any Receivable:
(i) all of the applicable Originator's interest
in the inventory and goods (including returned or repossessed inventory
or goods), if any, the sale, financing or lease of which by such
Originator gave rise to such Receivable, and all insurance contracts
with respect thereto,
(ii) all other security interests or liens and
property subject thereto from time to time, if any, purporting to
secure payment of such Receivable, whether pursuant to the Contract
related to such Receivable or otherwise, together with all financing
statements and security agreements describing any collateral securing
such Receivable,
(iii) all guaranties, letters of credit, letter of
credit rights, supporting obligations, 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,
Exh.I-4
(iv) all service contracts and other contracts
and agreements associated with such Receivable,
(v) all Records related to such Receivable, and
(vi) all proceeds of any of the foregoing.
"Required Capital Amount" means, as of any date of
determination, an amount equal to 3% of the Net Receivables Balance as of such
date.
"Sale and Assignment" means that certain Sale and Assignment
dated as of June 16, 2003 between LPAC Corp., a Delaware corporation, and
Armstrong, as the same may be amended, restated, supplemented or otherwise
modified from time to time.
"Settlement Date" means the date each month which is two (2)
Business Days after the applicable Monthly Report is due.
"Stock Purchase Agreement" means that certain Stock Purchase
Agreement dated as of June 27, 2003 among the Buyer, Hearth and Armstrong, as
such agreement may be amended, restated, supplemented or otherwise modified from
time to time in accordance with its terms and with the consent of the Agent.
"Subordinated Loan" has the meaning set forth in Section
1.2(a) of the Agreement.
"Subordinated Note" means each promissory note in
substantially the form of Exhibit V hereto as more fully described in Section
1.2 of the Agreement, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"Termination Date" means, with respect to any Originator, the
earliest to occur of (i) the Facility Termination Date, (ii) the Business Day
immediately prior to the occurrence of a Termination Event set forth in Section
5.1(d) with respect to such Originator, (iii) the Business Day specified in a
written notice from Buyer to such Originator following the occurrence of any
other Termination Event with respect to such Originator, and (iv) the date which
is 30 Business Days after Buyer's receipt of written notice from such Originator
that it wishes to terminate the facility evidenced by this Agreement with
respect to such Originator.
"Termination Event" has the meaning set forth in Section 5.1
of the Agreement.
"Transaction Documents" means, collectively, this Agreement,
the Performance Guaranty, each Collection Account Agreement, the Sale and
Assignment, each Subordinated Note, the Stock Purchase Agreement and all other
instruments, documents and agreements executed and delivered in connection
herewith.
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 Illinois, and not specifically
defined herein, are used herein as defined in such Article 9.
Exh.I-5
EXHIBIT II
PLACES OF BUSINESS; LOCATIONS OF RECORDS;
FEDERAL EMPLOYER IDENTIFICATION NUMBER(S); OTHER NAMES
1. Armstrong Air Conditioning Inc.
Chief executive office:
Armstrong Air Conditioning Inc.
421 Monroe St.
Bellevue, Ohio 44811
Location of records:
Armstrong Air Conditioning Inc.
421 Monroe St.
Bellevue, Ohio 44811
Business locations:
Armstrong Air Conditioning Inc.
421 Monroe St.
Bellevue, Ohio 44811
Federal Employer Identification Number:
34-1601572
Organizational Number:
737517
Corporate, Partnership Trade and Assumed Names:
2. Lennox Hearth Products Inc.
Chief executive office:
Lennox Hearth Products Inc.
1110 W. Taft Ave
Orange, California 92865
Location of records:
Lennox Hearth Products Inc.
1110 W. Taft Ave
Orange, California 92865
Business locations:
Exh.II-1
Lennox Hearth Products Inc.
1110 W. Taft Ave
Orange, California 92865
Federal Employer Identification Number:
95-3127770
Organizational Number:
C0795492
Corporate, Partnership Trade and Assumed Names:
Exh.II-2
EXHIBIT III
EXHIBIT IV
CREDIT AND COLLECTION POLICIES
Attached
Exh.IV-1
EXHIBIT V
FORM OF SUBORDINATED NOTE
SUBORDINATED NOTE
June 27, 2003
1. Note. FOR VALUE RECEIVED, the undersigned, LPAC CORP.
II, a Delaware corporation ("SPV"), hereby unconditionally promises to pay to
the order of [NAME OF APPLICABLE ORIGINATOR], a [____] corporation
("Originator"), in lawful money of the United States of America and in
immediately available funds, on the date following the Amortization Date which
is one year and one day after the date on which (i) the Outstanding Balance of
all Receivables sold under the "Sale Agreement" referred to below has been
reduced to zero and (ii) Originator has paid to the Buyer all indemnities,
adjustments and other amounts which may be owed thereunder in connection with
the Purchases (the "Collection Date"), the aggregate unpaid principal sum
outstanding of all "Subordinated Loans" made from time to time by Originator to
SPV pursuant to and in accordance with the terms of that certain Receivables
Sale Agreement dated as of June 27, 2003 among Originator, [Names of other
Originators] and SPV (as amended, restated, supplemented or otherwise modified
from time to time, the "Sale Agreement"). Reference to Section 1.2 of the Sale
Agreement is hereby made for a statement of the terms and conditions under which
the loans evidenced hereby have been and will be made. All terms which are
capitalized and used herein and which are not otherwise specifically defined
herein shall have the meanings ascribed to such terms in the Sale Agreement or
the Purchase Agreement described below.
2. Interest. SPV further promises to pay interest on the
outstanding unpaid principal amount hereof from the date hereof until payment in
full hereof at a rate equal to the Bank Rate; provided, however, that if SPV
shall default in the payment of any principal hereof, SPV promises to pay, on
demand, interest at the rate of the Bank Rate plus 2.00% per annum on any such
unpaid amounts, from the date such payment is due to the date of actual payment.
Interest shall be payable on the first Business Day of each month in arrears;
provided, however, that SPV may elect on the date any interest payment is due
hereunder to defer such payment and upon such election the amount of interest
due but unpaid on such date shall constitute principal under this Subordinated
Note. The outstanding principal of any loan made under this Subordinated Note
shall be due and payable on the Collection Date and may be repaid or prepaid at
any time without premium or penalty.
3. Principal Payments. Originator is authorized and
directed by SPV to enter on the grid attached hereto, or, at its option, in its
books and records, the date and amount of each loan made by it which is
evidenced by this Subordinated Note and the amount of each payment of principal
made by SPV, and absent manifest error, such entries shall constitute prima
facie evidence of the accuracy of the information so entered; provided that
neither the failure of Originator to make any such entry or any error therein
shall expand, limit or affect the obligations of SPV hereunder.
Exh.V-1
4. Subordination. The indebtedness evidenced by this
Subordinated Note is subordinated to the prior payment in full of all of SPV's
recourse obligations under that certain Receivables Purchase Agreement dated as
of June 27, 2003 by and among SPV, Lennox Industries Inc., as Servicer, various
"Purchasers" from time to time party thereto, and Bank One, NA (Main Office
Chicago), as the "Agent" (as amended, restated, supplemented or otherwise
modified from time to time, the "Purchase Agreement"). The subordination
provisions contained herein are for the direct benefit of, and may be enforced
by, the Agent and the Purchasers and/or any of their respective assignees
(collectively, the "Senior Claimants") under the Purchase Agreement. Until the
date on which all "Capital" outstanding under the Purchase Agreement has been
repaid in full and all other obligations of SPV and/or the Servicer thereunder
and under the "Fee Letter" referenced therein (all such obligations,
collectively, the "Senior Claim") have been indefeasibly paid and satisfied in
full, Originator shall not demand, accelerate, sue for, take, receive or accept
from SPV, directly or indirectly, in cash or other property or by set-off or any
other manner (including, without limitation, from or by way of collateral) any
payment or security of all or any of the indebtedness under this Subordinated
Note or exercise any remedies or take any action or proceeding to enforce the
same; provided, however, that (i) Originator hereby agrees that it will not
institute against SPV any proceeding of the type described in Section 5.1(d) of
the Sale Agreement unless and until the Collection Date has occurred and (ii)
nothing in this paragraph shall restrict SPV from paying, or Originator from
requesting, any payments under this Subordinated Note so long as SPV is not
required under the Purchase Agreement to set aside for the benefit of, or
otherwise pay over to, the funds used for such payments to any of the Senior
Claimants and further provided that the making of such payment would not
otherwise violate the terms and provisions of the Purchase Agreement. Should any
payment, distribution or security or proceeds thereof be received by Originator
in violation of the immediately preceding sentence, Originator agrees that such
payment shall be segregated, received and held in trust for the benefit of, and
deemed to be the property of, and shall be immediately paid over and delivered
to the Agent for the benefit of the Senior Claimants.
5. Bankruptcy; Insolvency. Upon the occurrence of any
proceeding of the type described in Section 5.1(d) of the Sale Agreement
involving SPV as debtor, then and in any such event the Senior Claimants shall
receive payment in full of all amounts due or to become due on or in respect of
Capital and the Senior Claim (including "CP Costs" and "Yield" as defined and as
accruing under the Purchase Agreement after the commencement of any such
proceeding, whether or not any or all of such CP Costs or Yield is an allowable
claim in any such proceeding) before Originator is entitled to receive payment
on account of this Subordinated Note, and to that end, any payment or
distribution of assets of SPV of any kind or character, whether in cash,
securities or other property, in any applicable insolvency proceeding, which
would otherwise be payable to or deliverable upon or with respect to any or all
indebtedness under this Subordinated Note, is hereby assigned to and shall be
paid or delivered by the Person making such payment or delivery (whether a
trustee in bankruptcy, a receiver, custodian or liquidating trustee or
otherwise) directly to the Agent for application to, or as collateral for the
payment of, the Senior Claim until such Senior Claim shall have been paid in
full and satisfied.
6. Amendments. This Subordinated Note shall not be
amended or modified except in accordance with Section 7.1 of the Sale Agreement.
The terms of this Subordinated Note may not be amended or otherwise modified
without the prior written consent of the Agent for the benefit of the
Purchasers.
Exh.VI-2
7. GOVERNING LAW. THIS SUBORDINATED NOTE HAS BEEN MADE
AND DELIVERED AT CHICAGO, ILLINOIS, AND SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS AND
DECISIONS OF THE STATE OF ILLINOIS. WHEREVER POSSIBLE EACH PROVISION OF THIS
SUBORDINATED NOTE SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND
VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS SUBORDINATED NOTE SHALL
BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE
INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY, WITHOUT
INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS
SUBORDINATED NOTE.
8. Waivers. All parties hereto, whether as makers,
endorsers, or otherwise, severally waive presentment for payment, demand,
protest and notice of dishonor. Originator additionally expressly waives all
notice of the acceptance by any Senior Claimant of the subordination and other
provisions of this Subordinated Note and expressly waives reliance by any Senior
Claimant upon the subordination and other provisions herein provided.
9. Assignment. This Subordinated Note may not be
assigned, pledged or otherwise transferred to any party without the prior
written consent of the Agent, and any such attempted transfer shall be void.
LPAC CORP. II
By: ________________________________________
Title:
Exh.VI-3
Schedule
to
SUBORDINATED NOTE
SUBORDINATED LOANS AND PAYMENTS OF PRINCIPAL
Amount of Amount of Unpaid
Subordinated Principal Principal Notation made
Date Loan Paid Balance by
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Exh. VI-4
EXHIBIT VI
FORM OF JOINDER AGREEMENT
JOINDER AGREEMENT
[DATE]
Reference is made to the Receivables Sale Agreement (as the
same may be amended, restated, supplemented or otherwise modified from time to
time, the "AGREEMENT") dated as of June 27, 2003, between the Originators from
time to time party thereto and LPAC CORP. II ("BUYER"). To the extent not
defined herein, capitalized terms used herein have the meanings assigned to such
terms in the Agreement.
______________________, a _____ [corporation] (the "NEW
ORIGINATOR") and Buyer agree as follows:
1. Pursuant to Section 7.11 of the Agreement, Buyer has
requested that the New Originator agree to become an "Originator" under the
Agreement.
2. The effective date (the "EFFECTIVE DATE") of this
Joinder Agreement shall be the later of (i) the date on which a fully executed
copy of this Joinder Agreement is delivered to, and agreed to and acknowledged
by, Bank One, NA, in its capacity as Agent under the Purchase Agreement (the
"AGENT") and each other agreement, document, lien search report, financing
statement, opinion and certificate requested by the Agent is delivered to the
Agent and (ii) the date of this Joinder Agreement.
3. By executing and delivering this Joinder Agreement,
the New Originator confirms to and agrees with Buyer that (i) it has received a
copy of the Agreement and such other documents and information as it has deemed
appropriate to make its own decision to enter into this Joinder Agreement, (ii)
it will perform all of the obligations which by the terms of the Agreement and
the Transaction Documents are required to be performed by it as an Originator,
(iii) its address for notices shall be the office set forth beneath its name on
the signature pages of this Joinder Agreement and (iv) as of the date hereof,
each of the representations and warranties set forth in Article II of the
Agreement is true and correct with respect to such Originator (including without
limitation that Annexes 1, 2 and 3 hereto correctly set forth all information
required to be provided by such Originator on Exhibits II, III and IV to the
Agreement, respectively, under Sections 2.1(k), (l) and (n) thereof).
4. On the Effective Date of this Joinder Agreement, the
New Originator shall join in and be a party to the Agreement and shall have the
rights and obligations of an Originator under the Agreement.
5. This Joinder Agreement may be executed by one or more
of the parties on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
Exh. VI-1
6. THIS JOINDER AGREEMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS
(INCLUDING, BUT NOT LIMITED TO, 735 ILCS SECTION 105/5-1 ET SEQ., BUT OTHERWISE
WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS).
IN WITNESS WHEREOF, the parties hereto have caused this
Joinder Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
[NEW ORIGINATOR]
By:_______________________
Name:
Title:
Address for notices:
[Address]
LPAC CORP. II, as Buyer
By:_______________________
Name:
Title:
AGREED AND ACKNOWLEDGED THIS ___ DAY
OF ___________, 200_ BY:
BANK ONE, NA (MAIN OFFICE CHICAGO), as Agent
By:_______________________
Name:
Title:
Exh. VI-2
ANNEX 1 TO JOINDER AGREEMENT
PLACES OF BUSINESS; LOCATIONS OF RECORDS;
FEDERAL EMPLOYER IDENTIFICATION NUMBER(S); JURISDICTION OF INCORPORATION;
ORGANIZATIONAL IDENTIFICATION NUMBER; OTHER NAMES
[NEW ORIGINATOR]
Jurisdiction of Organization:
Places of Business:
Locations of Records:
Organizational Identification Number:
Federal Employer Identification Number:
Legal, Trade and Assumed Names:
Exh. VI-3
ANNEX 2 TO JOINDER AGREEMENT
LOCK-BOXES; COLLECTION ACCOUNTS; COLLECTION BANKS
Exh. VI-4
ANNEX 3 TO JOINDER AGREEMENT
CREDIT AND COLLECTION POLICY
Exh. VI-5
SCHEDULE A
LIST OF DOCUMENTS TO BE DELIVERED TO BUYER PRIOR TO INITIAL PURCHASE
Attached.
Sch. A-1