LADD FURNITURE, INC.
Buyer
and
CLAYTON-MARCUS COMPANY, INC.,
BARCLAY FURNITURE CO., and
LADD TRANSPORTATION, INC.
Sellers
RECEIVABLES PURCHASE AGREEMENT
Dated as of January 28, 1994
RECEIVABLES PURCHASE AGREEMENT
RECEIVABLES PURCHASE AGREEMENT, dated as of January 28,
1994, by and among CLAYTON-MARCUS COMPANY, INC., a North Carolina
corporation, BARCLAY FURNITURE CO., a Mississippi corporation,
and LADD TRANSPORTATION, INC., a North Carolina corporation,
(each a "Designated Subsidiary" or "Seller") and LADD FURNITURE,
INC., a North Carolina corporation ("the "Buyer").
W I T N E S E T H :
WHEREAS, the Buyer desires to purchase from time to
time certain trade accounts receivable of certain Obligors
existing on the Closing Date (as hereinafter defined) and
generated thereafter in the normal course of their respective
businesses pursuant to written agreements or with invoices on
open accounts;
WHEREAS, each Seller desires to sell and assign from
time to time certain trade accounts receivable to the Buyer upon
the terms and conditions hereinafter set forth;
NOW, THEREFORE, it is hereby agreed by and between the
Buyer and each Seller as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. All capitalized terms used
herein shall have the meanings specified herein or, if not so
specified, the meaning specified in the Transfer Agreement, and
shall include in the singular number the plural and in the plural
number the singular:
"Buyer" shall mean LADD Furniture, Inc., and its
successors and assigns.
"Collections" means, with respect to any Receivable,
all cash collections and other cash proceeds of such Receivable,
including, without limitation, all Finance Charges, if any, and
cash proceeds of Related Security with respect to such
Receivable.
"Contract" means an agreement or invoice in substan-
tially the form of one of the forms set forth in Exhibit A to the
Transfer Agreement or otherwise approved by the Buyer, pursuant
to or under which an Obligor shall be obligated to pay for
merchandise purchased or services rendered.
"Conveyance Papers" shall have the meaning set forth in
Section 4.1(b) hereof.
"Credit and Collection Policy" shall mean each Seller's
credit and collection policy or policies and practices, relating
to Contracts and Receivables as in effect on the Closing Date and
referred to in Exhibit B to the Transfer Agreement, as modified
by such Seller from time to time in accordance with Section
5.1(l).
"Designated Subsidiary" means each of Clayton-Marcus
Company Inc., Barclay Furniture Co., and LADD Transportation,
Inc., and such other wholly-owned subsidiaries of the Buyer as
(i) become parties to this Agreement and (ii) are consented to in
writing by the Buyer to be "Designated Subsidiaries" hereunder.
"Designated Subsidiary's Discount" shall mean for any
day for a Designated Subsidiary, an amount, calculated in good
faith by the Buyer, equal to the decimal equivalent of the sum of
(i) the product of (A) the "prime rate" then applied by the Buyer
to intercompany borrowings from it by its Subsidiaries and (B) a
fraction the numerator of which is 50 and the denominator at
which is 360 and (ii) the decimal equivalent of a charge-off
ratio, determined on the basis at historical losses on the
Receivables as a function of Receivables generated (as opposed to
Receivables outstanding).
"Eligible Receivable" means, at any time, any Re-
ceivable:
(i) which has been originated by a
Designated Subsidiary and to which such Designated
Subsidiary has good title thereto, free and clear of
all Adverse Claims;
(ii) the Obligor of which is a United
States resident, is a Designated Obligor at the time of
the initial creation of an interest therein hereunder,
is not an Affiliate of any of the parties hereto, and
is not a government or a governmental subdivision or
agency; provided, however, that Receivables with an
aggregate Outstanding Balance not greater than 2% of
the aggregate Outstanding Balance of all Receivables
may be originated by Obligors which are Canadian
residents;
(iii) which is not a Defaulted Receivable
at the time of the initial creation of an interest of
the Buyer therein;
(iv) which is not a Delinquent
Receivable at the time of the initial creation of an
interest of the Buyer therein;
(v) which, according to the Contract
related thereto, is required to be paid in full within
30 days of the original billing date therefor;
provided, that Receivables with an aggregate
Outstanding Balance not greater than 15% of the
aggregate Outstanding Balance of all Receivables may be
required to be repaid in full between 31 and 180 days
from the original billing date therefor;
(vi) which is an "eligible asset" as
defined in Rule 3a-7 under the Investment Company Act
of 1940, as amended;
(vii) a purchase of which with the pro-
ceeds of Commercial Paper would constitute a "current
transaction" within the meaning of Section 3(a)(3) of
the Securities Act of 1933, as amended;
(viii) which is an "account" within the
meaning of Article 9 of the UCC of all applicable ju-
risdictions;
(ix) which is denominated and payable
only in United States dollars in the United States;
(x) which arises under a Contract that
together with the Receivable related thereto, is in
full force and effect and constitutes the legal, valid
and binding obligation of the related Obligor en-
forceable against such Obligor in accordance with its
terms and is not subject to any offset, counterclaim or
other defense at such time;
(xi) which, together with the Contract
related thereto, does not contravene in any material
respect any laws, rules or regulations applicable
thereto (including, without limitation, laws, rules and
regulations relating to truth in lending, fair credit
billing, fair credit reporting, equal credit opportuni-
ty, fair debt collection practices and privacy) and
with respect to which no part of the Contract related
thereto is in violation of any such law, rule or
regulation in any material respect;
(xii) which (A) satisfies, in all
material respects, all applicable requirements of the
applicable Credit and Collection Policy, and (B) is
assignable without the consent of, or notice to, the
Obligor thereunder;
(xiii) which was generated in the ordinary
course of the Seller's business; and
(xiv) the Obligor of which has been
directed to make all payments to a specified account of
the Collection Agent with respect to which there shall
be a Lock-Box Agreement in effect.
"Enterprise" shall mean Enterprise Funding Corporation,
a Delaware corporation, and its successors and assigns.
"Permitted Assignee" shall have the meaning set forth
in Section 9.5 hereof.
"Purchase Price" shall have the meaning set forth in
Section 3.1 hereof.
"Receivable" means the indebtedness owed to any Seller
by any Obligor (without giving effect to any purchase hereunder
by the Buyer at any time) under a Contract whether constituting
an account, chattel paper, instrument or general intangible,
arising in connection with the sale of merchandise or services by
such Seller, and includes the right to payment of any Finance
Charges and other obligations of such Obligor with respect there-
to; provided however, that no indebtedness owed by Curtis Field,
Inc. to Barclay Furniture Co. shall be a Receivable hereunder.
"Related Security" means with respect to any Receiv-
able:
(i) all of the Seller's interest, if
any, in the merchandise (including returned merchan-
dise), if any, the sale of which by the Seller gave
rise to such Receivable;
(ii) all other security interests or
liens and property subject thereto from time to time,
if any, purporting to secure payment of such Re-
ceivable, whether pursuant to the Contract related to
such Receivable or otherwise, together with all fi-
nancing statements signed by an Obligor describing any
collateral securing such Receivable;
(iii) all guarantees, insurance or other
agreements or arrangements of any kind from time to
time supporting or securing payment of such Receivable
whether pursuant to the Contract related to such Re-
ceivable or otherwise; and
(iv) all Records.
"Seller" shall mean each of the Designated Subsidiaries
and their respective successors and assigns.
"Secured Obligations" shall have the meaning set forth
in Section 2.1(e) hereof.
"Transfer Agreement" shall mean the Transfer and
Administration Agreement dated as of January 28, 1994 among the
Buyer, as transferor, the Designated Subsidiaries and Enterprise,
as such agreement may be amended, modified or supplemented from
time to time.
Section 1.2 Other Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
generally accepted accounting principles. All terms used in
Article 9 of the UCC in the State of North Carolina, and not
specifically defined herein, are used herein as defined in such
Article 9.
Section 1.3 Computation of Time Periods. Unless
otherwise stated in this Agreement, in the computation of a
period of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and
"until" each means "to but excluding."
ARTICLE II
PURCHASE AND CONVEYANCE OF RECEIVABLES
Section 2.1 Sale. (a) Upon the terms and subject to
the conditions set forth herein, each Seller hereby sells,
assigns, transfers and conveys to the Buyer, and the Buyer hereby
purchases from each Seller, on the terms and subject to the
conditions specifically set forth herein, all of such Seller's
right, title and interest, whether now owned or hereafter
acquired, in, to and under all Receivables outstanding on the
Closing Date and thereafter created by such Seller, in each case,
together with all Related Security and Collections with respect
thereto and all proceeds of the foregoing. The foregoing sale,
assignment, transfer and conveyance does not constitute an
assumption by the Buyer of any obligations of any of the Sellers,
or any other Person to Obligors or to any other Person in con-
nection with the Receivables or under any Related Security or
other agreement and instrument relating to the Receivables.
(b) In connection with the foregoing sale, each Seller
agrees to record and file on or prior to the Closing Date, at its
own expense, a financing statement or statements with respect to
the Receivables and the other property described in Section
2.1(a) sold by such Seller hereunder meeting the requirements of
applicable state law in such manner and in such jurisdictions as
are necessary to perfect and protect the interests of the Buyer
created hereby under the applicable UCC against all creditors of
and purchasers from such Seller, and to deliver either the
originals of such financing statements or a file-stamped copy of
such financing statements or other evidence of such filings to
the Buyer on the Closing Date.
(c) [Reserved]
(d) Each Seller agrees that from time to time, at its
expense, it will promptly execute and deliver all instruments and
documents and take all actions as may be necessary or as the
Buyer may reasonably request in order to perfect or protect the
interest of the Buyer in the Receivables purchased hereunder or
to enable the Buyer to exercise or enforce any of its rights
hereunder. Without limiting the foregoing, the each Seller will,
upon the request of the Buyer, in order to accurately reflect
this purchase and sale transaction, execute and file such
financing or continuation statements or amendments thereto or
assignments thereof (as permitted pursuant hereto) as may be
requested by the Buyer and mark its master data processing re-
cords and other documents with a legend describing the purchase
by the Buyer of the Receivables and the subsequent transfer
thereof to Enterprise pursuant to the Transfer Agreement and
stating "An interest in these accounts receivable has been con-
veyed to Enterprise Funding Corporation pursuant to a Transfer
and Administration Agreement dated January 28, 1994." Each
Seller shall, upon request of the Buyer, obtain such additional
search reports as the Buyer shall request. To the fullest extent
permitted by applicable law, the Buyer shall be permitted to sign
and file continuation statements and amendments thereto and as-
signments thereof without the Seller's signature. Carbon,
photographic or other reproduction of this Agreement or any
financing statement shall be sufficient as a financing statement.
(e) It is the express intent of each of the Sellers
and the Buyer that the conveyance of the Receivables by each such
Seller to the Buyer pursuant to this Agreement be construed as a
sale of such Receivables by each such Seller to the Buyer. It
is, further, not the intention of any of the Sellers and the
Buyer that such conveyance be deemed a grant of a security
interest in the Receivables by any of the Sellers to the Buyer to
secure a debt or other obligation of such Seller. However, in
the event that, notwithstanding the intent of the parties, the
Receivables are held to continue to be property of any Seller,
then (i) this Agreement also shall be deemed to be and hereby is
a security agreement within the meaning of the UCC; and (ii) the
conveyance by such Seller provided for in this Agreement shall be
deemed to be and such Seller hereby grants to the Buyer a securi-
ty interest in and to all of such Seller's right, title and
interest in all Receivables outstanding on the Closing Date and
thereafter created by such Seller, in each case, together with
all Related Security and Collections with respect thereto and all
proceeds of the foregoing to secure (1) the rights of the Buyer
and (2) a loan to such Seller in the amount of the Purchase Price
as set forth in this Agreement (the "Secured Obligations"). Each
Seller and the Buyer shall, to the extent consistent with this
Agreement, take such actions as may be necessary to ensure that,
if this Agreement were deemed to create a security interest in
the Receivables, such security interest would be deemed to be a
perfected security interest of first priority in favor of the
Buyer under applicable law and will be maintained as such
throughout the term of this Agreement.
ARTICLE III
CONSIDERATION AND PAYMENT
Section 3.1 Purchase Price. The Purchase Price for
the Receivables and related property conveyed to the Buyer by
each Seller under this Agreement shall be a dollar amount equal
to (a) for Receivables transferred by such Seller on the date of
the initial Incremental Transfer under the Transfer Agreement,
the product of (i) the aggregate Outstanding Balance of all
Receivables as of the Closing Date and (ii) one minus the
Designated Subsidiary's Discount, and (b) for Receivables trans-
ferred by such Seller on any date thereafter, the product of the
aggregate Outstanding Balance of the Receivables transferred on
such date and (ii) one minus the Designated Subsidiary's Discount
on such date.
Section 3.2 Payment of Purchase Price. The Purchase
Price for Receivables shall be paid or provided for on the
Closing Date and on the last Business Day of each Fiscal Month
thereafter during which Receivables are sold hereunder.
Section 3.3 Monthly Report. At the end of each Fiscal
Month, each Seller shall deliver to the Buyer a monthly report
showing the aggregate Purchase Price of Receivables generated by
such Seller in the preceding month.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Sellers' Representations and Warranties.
Each Seller (as to itself) represents and warrants to the Buyer
as of the Closing Date, and shall be deemed to represent and war-
rant as of the date of the creation of any Receivable sold to the
Buyer pursuant to this Agreement that:
(a) Corporate Existence and Power. The Seller is
a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and
has all corporate power and all material governmental licenses,
authorizations, consents and approvals required to carry on its
business in each jurisdiction in which its business is now con-
ducted.
(b) Corporate and Governmental Authorization;
Contravention. The execution, delivery and performance by the
Seller of this Agreement and each other document or instrument to
be delivered by such Seller hereunder (collectively, "Conveyance
Papers") is within the Seller's corporate powers, have been duly
authorized by all necessary corporate action, require no action
by or in respect of, or filing with, any governmental body,
agency or official (except as contemplated by Section 2.1(d)),
and do not contravene, or constitute a default under, any provi-
sion of applicable law or regulation or of the Certificate of
Incorporation or Bylaws of the Seller or of any agreement, judg-
ment, injunction, order, decree or other instrument binding upon
the Seller or result in the creation or imposition of any lien on
assets of the Seller or any of its Subsidiaries (except as
contemplated by Section 2.1(d)).
(c) Binding Effect. This Agreement constitutes
the legal, valid and binding obligation of the Seller, enforce-
able in accordance with its terms, subject to applicable bank-
ruptcy, insolvency, moratorium or other similar laws affecting
the rights of creditors.
(d) Perfection. Immediately preceding each sale
hereunder, the Seller shall be the owner of all of the
Receivables sold by it hereunder, free and clear of all Adverse
Claims. On or prior to the Closing Date, all financing
statements and other documents required to be recorded or filed
in order to perfect and protect the Buyer's interest in the
Receivables against all creditors of and purchasers from the
Seller will have been either delivered to the Buyer or duly filed
in each filing office necessary for such purpose and all filing
fees and taxes, if any, payable in connection with such filings
shall have been either delivered to the Buyer or paid in full, as
applicable.
(e) Accuracy of Information. All information
heretofore furnished by the Seller to the Buyer for purposes of
or in connection with this Agreement or any transaction contem-
plated hereby is, and all such information hereafter furnished by
the Seller to the Buyer will be, true and accurate in every mate-
rial respect, on the date such information is stated or certi-
fied.
(f) Tax Status. The Seller and its Subsidiaries
have filed all United States Federal income tax returns and all
other material tax returns which are required to be filed by them
and have paid all taxes due pursuant to such returns or pursuant
to any assessment received by the Seller or any of its Subsidiar-
ies except to the extent that failure to file or pay would not
have a material adverse effect on the consolidated financial
condition of the Seller or the Buyer's interest in the
Receivables and except for any tax which is being contested in
good faith and by proper proceedings and against which adequate
reserves are being maintained. The charges, accruals and
reserves on the books of the Seller and its Subsidiaries in
respect of taxes and other governmental charges are, in the
opinion of the Seller, adequate.
(g) Action, Suits. Except as set forth in Exhib-
it H to the Transfer Agreement, there are no actions, suits or
proceedings pending, or to the knowledge of the Seller threat-
ened, against or affecting the Seller or any Affiliate of the
Seller or their respective properties, in or before any court,
arbitrator or other body, which may materially adversely affect
the financial condition of the Seller and its subsidiaries taken
as a whole or materially adversely affect the ability of Seller
to perform its obligations under this Agreement.
(h) Use of Proceeds. No proceeds of any sale
hereunder will be used by the Seller to acquire any security in
any transaction which is subject to Section 13 or 14 of the
Securities Exchange Act of 1934, as amended.
(i) Place of Business. The chief place of busi-
ness and chief executive office of the each Seller is as follows:
Clayton-Marcus Company, Inc., Hickory, North Carolina; for
Barclay Furniture Co., Sherman, Mississippi; for LADD
Transportation, Inc., High Point, North Carolina, and the offices
where the each respective Seller keeps all its Records, are
located at the address(es) described on Exhibit I to the Transfer
Agreement or such other locations notified to the Buyer in accor-
dance with Section 2.1(d) in jurisdictions where all action re-
quired by Section 2.1(d) has been taken and completed.
(j) Good Title. Upon each sale hereunder, the
Buyer shall acquire all right, title and interest of the Seller
in each Receivable originated by it that exists on the date of
such sale and in the Related Security and Collections with
respect thereto free and clear of any Adverse Claim.
(k) Tradenames, Etc. As of the date hereof: (i)
each Seller's chief executive office is located at the address
for notices set forth in this Section 4.1; (ii) each Seller has,
within the last five (5) years, operated only under the
tradenames identified in Exhibit J to the Transfer Agreement,
and, within the last five (5) years, has not changed its name,
merged with or into or consolidated with any other corporation or
been the subject of any proceeding under Title 11, United States
Code (Bankruptcy), except as disclosed in Exhibit J to the
Transfer Agreement hereto.
(l) Nature of Receivables. Each Receivable is an
"eligible asset" as defined in Rule 3a-7 under the Investment
Company Act, of 1940, as amended.
(m) Amount of Receivables. As of January 26,
1994, the aggregate Outstanding Balance of the Receivables owned
by Clayton-Marcus Company, Inc. and in existence was
$4,969,579.99. As of January 26, 1994, the aggregate Outstanding
Balance of the Receivables owned by Barclay Furniture Co. and in
existence was $4,168,656.49. As of January 26, 1994, the aggre-
gate Outstanding Balance of the Receivables owned by LADD Trans-
portation, Inc. and in existence was $187,511.32.
(n) Credit and Collection Policy. Since
January 13, 1994, there have been no material changes in the
Credit and Collection Policy; since such date, no material
adverse change has occurred in the overall rate of collection of
the Receivables.
(o) Not an Investment Company. The Seller is not
an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or is exempt from all provisions
of such Act.
(p) ERISA. The Seller is in compliance in all
material respects with ERISA and no ERISA lien on any of the
Receivables shall exist.
(q) Lock-Box Accounts. The names and addresses
of all the Lock-Box Banks, together with the account numbers of
the Lock-Box Accounts at such Lock-Box Banks, are specified in
Exhibit C to the Transfer Agreement (or at such other Lock-Box
Banks and/or with such other Lock-Box Accounts as have been
notified to the Buyer and for which Lock-Box Agreements have been
executed in accordance with Section 2.8(b) of the Transfer Agree-
ment and delivered to the Collection Agent).
Any document, instrument, certificate or notice
delivered to the Buyer hereunder shall be deemed a representation
and warranty by the Seller delivering such document.
Section 4.2 Reaffirmation of Representations and War-
ranties by the Sellers. On each day that a sale of a Receivable
is made hereunder, the applicable Seller, by accepting the
proceeds of such sale, shall be deemed to have certified that all
representations and warranties described in Section 4.1 are
correct with respect to such Seller on and as of such day as
though made on and as of such day.
Section 4.3 Representations and Warranties of the
Buyer. The Buyer hereby represents and warrants to, and agrees
with each Seller, as of the Closing Date, and shall be deemed to
represent and warrant as of the date of the creation of any
Receivable sold to the Buyer hereunder that:
(a) Organization and Good Standing. The Buyer is a
corporation duly organized and validly existing in good standing
under the laws of the State of North Carolina and has full power,
authority, and legal right to execute, deliver, and perform its
obligations under the Conveyance Papers, to conduct its business
as such business is presently conducted, and in all material re-
spects, to own its property and conduct its other businesses as
such properties are presently owned and such businesses are pres-
ently conducted.
(b) Due Qualification. The Buyer is duly qualified to
do business and is in good standing as a foreign corporation (or
is exempt from such requirements) and has obtained all necessary
licenses and approvals with respect to the Buyer in each
jurisdiction in which failure to so qualify or to obtain such
licenses and approvals would render any Contract or any
Receivable unenforceable by the Buyer.
(c) Corporate and Governmental Authorization;
Contravention. The execution, delivery and performance by the
Buyer of this Agreement is within the Buyer's corporate powers,
have been duly authorized by all necessary corporate action, re-
quire no action by or in respect of, or filing with, any govern-
mental body, agency or official, and do not contravene, or con-
stitute a default under, any provision of applicable law or
regulation or of the Certificate of Incorporation or Bylaws of
the Buyer or of any agreement, judgment, injunction, order,
decree or other instrument binding upon the Buyer or result in
the creation or imposition of any lien on assets of the Buyer.
(d) All Consents Required. All approvals, authoriza-
tions, licenses, consents, orders, or other actions of any Person
or of any governmental body required in connection with the
execution and delivery by the Buyer of the Conveyance Papers, the
performance by the Buyer of the transactions contemplated by the
Conveyance Papers, and the fulfillment of the terms of the
Conveyance Papers have been obtained and are in full force and
effect.
Section 4.3 Notice of Breach. The representations and
warranties set forth in Section 4.1 shall survive the conveyance
of the Receivables to the Buyer, and termination of the rights
and obligations of the Buyer and each Seller under this Agree-
ment. Upon discovery by the Buyer or any Seller of a breach of
any of the foregoing representations and warranties, the party
discovering such breach shall give prompt written notice to the
other within three Business Days of such discovery.
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ARTICLE V
COVENANTS OF EACH SELLER
Section 5.1 Sellers' Covenants. Each Seller with
respect to itself hereby covenants and agrees with the Buyer as
follows:
During the term of this Agreement, and until all
Receivables sold to the Buyer shall have been paid in full or
written-off as uncollectible, and all amounts owed by such Seller
pursuant to this Agreement have been paid, unless the Buyer
otherwise consents in writing, such Seller covenants and agrees
as follows:
(a) Conduct of Business. The Seller will, and will
cause each of its Subsidiaries to, carry on and conduct its busi-
ness in substantially the same manner and in substantially the
same fields of enterprise as it is presently conducted and do all
things necessary to remain duly incorporated, validly existing
and in good standing as a domestic corporation in its jurisdic-
tion of incorporation and maintain all requisite authority to
conduct its business in each jurisdiction in which its business
is conducted.
(b) Compliance with Laws. The Seller will, and will
cause each of its Subsidiaries to, comply in all material
respects with all laws, rules, regulations, orders, writs, judg-
ments, injunctions, decrees or awards to which it may be subject.
(c) Furnishing of Information and Inspection of -
Records. The Seller will furnish to the Buyer from time to time
such information with respect to the Receivables as the Buyer may
reasonably request, including, without limitation, listings
identifying the Obligor and the Outstanding Balance for each
Receivable. The Seller will at any time and from time to time
during regular business hours permit the Buyer, or its agents or
representatives upon three Business Days notice, (i) to examine
and make copies of and abstracts from all Records and (ii) to
visit the offices and properties of the Seller for the purpose of
examining such Records, and to discuss matters relating to
Receivables or the Seller's performance hereunder with any of the
officers, directors, employees or independent public accountants
of the Seller having knowledge of such matters.
(d) Keeping of Records and Books of Account. The
Seller 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 daily identi-
fication of each new Receivable and all Collections of and
adjustments to each existing Receivable). The Seller will give
the Buyer notice of any material change in the administrative and
operating procedures referred to in the previous sentence.
(e) Performance and Compliance with Receivables and
Contracts. The Seller will at its expense timely and fully
perform and comply with all material provisions, covenants and
other promises required to be observed by it under the Contracts
related to the Receivables.
(f) Credit and Collection Policies. The Seller will
comply in all material respects with the Credit and Collection
Policy in regard to each Receivable and the related Contract.
(g) Collections. The Seller shall instruct all
Obligors to cause all Collections to be deposited directly to a
Lock-Box Account. The Seller may, however, in connection with
Obligors which would otherwise be over their credit limit if
goods were shipped prior to payment, direct Obligors to make pay-
ments directly to the Seller which shall deposit such Collections
in a Lock-Box Account pursuant to Section 5.1(h) below.
(h) Collections Received. The Seller shall hold in
trust, and deposit, immediately, but in any event not later than
two Business Days of its receipt thereof, to a Lock-Box Account
all Collections received from time to time by the Seller.
(i) Sale Treatment. The Seller shall report the
transactions contemplated by this Agreement on its financial
statements as a sale of the Receivables to the Buyer.
(j) No Sales, Liens, Etc. Except as otherwise
provided herein, the Seller will not sell, assign (by operation
of law or otherwise) or otherwise dispose of, or create or suffer
to exist any Adverse Claim upon (or the filing of any financing
statement) or with respect to, any inventory or goods, the sale
of which may give rise to a Receivable or any Receivable or
related Contract, or upon or with respect to any account which
concentrates in a Lock-Box Bank to which any Collections of any
Receivable are sent, or assign any right to receive income in
respect thereof.
(k) No Extension or Amendment of Receivables. The
Seller will not extend, amend or otherwise modify the terms of
any Receivable, or amend, modify or waive any term or condition
of any Contract related thereto.
(l) No Change in Business or Credit and Collection
Policy. The Seller will not make any change in the character of
its business or in the Credit and Collection Policy, which change
would, in either case, impair the collectibility of any Receiv-
able.
(m) No Mergers, Etc. The Seller will not (i) consoli-
date or merge with or into any other Person, or (ii) sell, lease
or transfer all or substantially all of its assets to any other
person; provided, however, that the Seller may consolidate or
merge with a Person if the Seller shall be the surviving entity
and such merger or consolidation does not cause a Termination
Event or Potential Termination Event under the Transfer Agree-
ment.
(n) Change in Payment Instructions to Obligors. The
Seller will not add or terminate any bank as a Lock-Box Bank or
any account as a Lock-Box Account to or from those listed in
Exhibit C to the Transfer Agreement or make any change in its
instructions to Obligors regarding payments to be made to any
Lock-Box Account, unless (i) such instructions are to deposit
such payments to another existing Lock-Box Account or (ii) the
Buyer and the Administrative Agent shall have received written
notice of such addition, termination or change at least 30 days
prior thereto and the Buyer shall have received a Lock-Box Agree-
ment executed by each new Lock-Box Bank or an existing Lock-Box
Bank with respect to each new Lock-Box Account, as applicable.
(o) Deposits to Lock-Box Accounts. The Seller will
not deposit or otherwise credit, or cause or permit to be so
deposited or credited, to any Lock-Box Account cash or cash pro-
ceeds other than Collections of Receivables.
(p) Change of Name, Etc. The Seller shall not change
its name, identity or structure or its chief executive office,
unless at least 10 days prior to the effective date of any such
change the Seller delivers to the Buyer and the Collateral Agent
(i) UCC financing statements, executed by the Seller, necessary
to reflect such change and to continue the perfection of the
Buyer's interest in the Receivables and (ii) the Lock-Box Agree-
ments and, in the case of the Lock-Box Agreements, the Lock-Box
Banks necessary to reflect such change and to continue to enable
the Collateral Agent to exercise its rights contained in Section
2.8 of the Transfer Agreement.
(q) Indemnification. Each Seller agrees to indemnify,
defend and hold the Buyer and any Permitted Assignee harmless
from and against any and all loss, liability, damage, judgment,
claim, deficiency, or expense (including interest, penalties,
reasonable attorneys' fees and amounts paid in settlement) to
which the Buyer or such Permitted Assignee may become subject
insofar as such loss, liability, damage, judgment, claim, defi-
ciency, or expense arises out of or is based upon a breach by
such Seller of its representations, warranties and covenants
contained herein, or any information certified in any Schedule
delivered by such Seller hereunder, being untrue in any respect
at any time. The obligations of such Seller under this Section
5.1(q) shall be considered to have been relied upon by the Buyer
and shall survive the execution, delivery, performance and
termination of this Agreement regardless of any investigation
made by the Buyer, any Permitted Assignee or on the behalf of any
of them.
(r) ERISA. The Seller shall promptly give the Buyer
written notice upon becoming aware that the Seller is not in com-
pliance in all material respects with ERISA or that any ERISA
lien on any of the Receivables exists.
ARTICLE VI
REPURCHASE OBLIGATION
Section 6.1 Mandatory Repurchase.
(a) Breach of Warranty. In the event that any
Receivable sold by a Seller hereunder shall fail to meet the
conditions set forth in the definition of Eligible Receivable or
any representation or warranty made herein in respect of a
Receivable shall be false, the applicable Seller shall pay to the
Buyer the Outstanding Balance of any such Receivable.
(b) Reconveyance Under Certain Circumstances. Each
Seller agrees to accept the reconveyance from the Buyer of the
Receivables sold by it hereunder with respect to which the Seller
is required to re-acquire the Transferred Interest therein
pursuant to the Transfer Agreement.
Section 6.2 Dilutions. Each Seller agrees to pay to
the Buyer the amount required to be paid by the Buyer pursuant to
Section 2.9(a) of the Transfer Agreement in respect of any
Receivable sold by such Seller hereunder.
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1 Conditions to the Buyer's Obligations
Regarding Receivables. The obligations of the Buyer to purchase
the Receivables on any Business Day shall be subject to the
satisfaction of the following conditions:
(a) All representations and warranties of each Seller
contained in this Agreement shall be true and correct on the
Effective Date and on the day of creation of any Receivable
thereafter with the same effect as though such representations
and warranties had been made on such date;
(b) All information concerning the Receivables
provided to the Buyer shall be true and correct in all material
respects as of the Closing Date, in the case of Receivables sold
to the Buyer on the Closing Date, or the date such Receivables
are created, in the case of Receivables created after the Closing
Date;
(c) At the Closing Date, each Seller shall have sub-
stantially performed all other obligations required to be
performed by the provisions of this Agreement;
(d) With respect to Receivables sold to the Buyer by
the Closing Date, each Seller shall have either delivered to the
Buyer or filed the financing statement(s) required to be filed
pursuant to Section 2.1(d); and
(e) All corporate and legal proceedings and all
instruments in connection with the transactions contemplated by
this Agreement shall be satisfactory in form and substance to the
Buyer, and the Buyer shall have received from each Seller copies
of all documents (including, without limitation, records of
corporate proceedings) relevant to the transactions herein
contemplated as the Buyer may reasonably have requested.
Section 7.2 Conditions Precedent to Each Seller's
Obligations. The obligations of each Seller to sell Receivables
on any Business Day shall be subject to the satisfaction of the
following conditions:
(a) All representations and warranties of the Buyer
contained in this Agreement shall be true and correct with the
same effect as though such representations and warranties had
been made on such date;
(b) Payment or provision for payment of the Purchase
Price in accordance with the provisions of Section 3.3 hereof
shall have been made; and
(c) All corporate and legal proceedings and all
instruments in connection with the transactions contemplated by
this Agreement shall be satisfactory in form and substance to
such Seller, and such Seller shall have received from the Buyer
copies of all documents (including, without limitation, records
of corporate proceedings) relevant to the transactions herein
contemplated as such Seller may reasonably have requested.
ARTICLE VIII
TERM AND TERMINATION
Section 8.1 Term. This Agreement shall commence as of
the date of execution and delivery hereof and shall continue in
full force and effect until the earlier of: (a) the date on
which the Net Investment shall have been reduced to zero and all
other Aggregate Unpaids shall have been paid to Enterprise
pursuant to the Transfer Agreement; or (b) upon the occurrence of
an Event of Bankruptcy with respect to either the Buyer or any
Seller, or (c) either the Buyer or a Seller becomes unable for
any reason to purchase or re-purchase Receivables in accordance
with the provisions of this Agreement or default in its obli-
gations hereunder, which default continues unremedied for more
than 30 days after written notice (any such date being a "Ter-
mination Date"); provided, however, that the termination of this
Agreement pursuant to this Section 8.1 hereof shall not discharge
any Person from any obligations incurred prior to such termi-
nation, including, without limitation, any obligations to make
any payments with respect to Receivables sold prior to such
termination; provided, further, that the events of termination
referred to in clause (b) or (c) above shall only terminate the
Agreement with respect to the Seller who has been affected
thereby.
Section 8.2 Effect of Termination. No termination or
rejection or failure to assume the executory obligations of this
Agreement in the bankruptcy of any Seller or the Buyer shall be
deemed to impair or affect the obligations pertaining to any
executed sale or executed obligations, including, without
limitation, pre-termination breaches of representations and
warranties by such Seller or the Buyer. Without limiting the
foregoing, prior to termination, the failure of such Seller to
deliver computer records of Receivables or any reports regarding
the Receivables shall not render such transfer or obligation
executory, nor shall the continued duties of the parties pursuant
to Article 5 or Section 9.1 of this Agreement render an executed
sale executory.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.1 Amendment. This Agreement and any other
Conveyance Papers and the rights and obligations of the parties
hereunder may not be changed orally, but only by an instrument in
writing signed by the Buyer and each Seller. This Agreement and
any other Conveyance Papers may be amended from time to time by
the Buyer and the Sellers to correct or supplement any provisions
herein which may be inconsistent with any other provisions herein
or in any other Conveyance Papers or to add any other provisions
with respect to matters or questions arising under this Agreement
or any other Conveyance Papers which shall not be inconsistent
with the provisions of this Agreement or any other Conveyance
Papers. Any reconveyance executed in accordance with the provi-
sions hereof shall not be considered amendments to this Agree-
ment.
Section 9.2 Governing Law. Governing Law; Submission
to Jurisdiction; Integration.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA. THE
PARTIES HERETO HEREBY SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK AND OF ANY NEW YORK STATE COURT SITTING IN THE CITY OF NEW
YORK AND OF ANY FEDERAL OR STATE COURT SITTING IN CHARLOTTE,
NORTH CAROLINA FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY. Each party hereto hereby irrevocably waives, to the
fullest extent it may effectively do so, any objection which it
may now or hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an
inconvenient forum. Nothing in this Section 9.2 shall affect the
right of the Buyer to bring any action or proceeding against any
Seller or its property in the courts of other jurisdictions.
Section 9.3 Notices. All demands, notices and
communications hereunder shall be in writing and shall be deemed
to have been duly given if personally delivered at or mailed by
registered mail, return receipt requested, to
(a) in the case of the Buyer:
LADD Furniture, Inc.
William S. Creekmuir
Senior V.P. and CFO
One Plaza Center
Box HP3
High Point, N.C. 27261-1500
Telephone: (910) 889-0333
Telecopy: (910) 888-6344
(b) in the case of the Sellers:
c/o LADD Furniture, Inc.
William S. Creekmuir
Senior V.P. and CFO
One Plaza Center
Box HP3
High Point, N.C. 27261-1500
Telephone: (910) 889-0333
Telecopy: (910) 888-6344
or, as to each party, at such other address as shall be
designated by such party in a written notice to each other party.
Section 9.4 Severability of Provisions. If any one or
more of the covenants, agreements, provisions or terms of this
Agreement or any other Conveyance Paper shall for any reason
whatsoever be held invalid, then such covenants, agreements,
provisions, or terms shall be deemed severable from the remaining
covenants, agreements, provisions, or terms of this Agreement or
any other Conveyance Paper and shall in no way affect the
validity or enforceability of the other provisions of this
Agreement or of any other Conveyance Paper.
Section 9.5 Assignment. This Agreement and all other
Conveyance Papers may not be assigned by the parties hereto
except that the Buyer may assign its rights hereunder pursuant to
the Transfer Agreement to Enterprise and its successors and
assigns thereunder, or to another person approved in writing by
each Seller (each, a "Permitted Assignee"). The Buyer hereby
notifies (and each Seller hereby acknowledges that) the Buyer,
pursuant to the Transfer Agreement, has assigned its rights here-
under to Enterprise. All rights of the Buyer hereunder may be
exercised by Enterprise.
Section 9.6 Further Assurances. The Buyer and each
Seller agree to do and perform, from time to time, any and all
acts and to execute any and all further instruments required or
reasonably requested by the other party more fully to effect the
purposes of this Agreement and the other Conveyance Papers,
including, without limitation, the execution of any financing
statements or continuation statements or equivalent documents
relating to the Receivables for filing under the provisions of
the UCC or other laws of any applicable jurisdiction.
Section 9.7 No Waiver; Cumulative Remedies. No
failure to exercise and no delay in exercising, on the part of
the Buyer or any Seller, any right, remedy, power or privilege
hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein
provided are cumulative and not exhaustive of any rights,
remedies, powers and privilege provided by law.
Section 9.8 Counterparts. This Agreement and all
other Conveyance Papers may be executed in two or more counter-
parts including telefax transmission thereof (and by different
parties on separate counterparts), each of which shall be an
original, but all of which together shall constitute one and the
same instrument.
Section 9.9 Binding Effect; Third-Party Beneficiaries.
This Agreement and the other Conveyance Papers will inure to the
benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Any Permitted
Assignee shall be considered a third-party beneficiary of this
Agreement.
Section 9.10 Merger and Integration. Except as
specifically stated otherwise herein, this Agreement and the
other Conveyance Papers set forth the entire understanding of the
parties relating to the subject matter hereof, and all prior
understandings, written or oral, are superseded by this Agreement
and the other Conveyance Papers. This Agreement and the other
Conveyance Papers may not be modified, amended, waived or
supplemented except as provided herein.
Section 9.11 Headings. The headings herein are for
purposes of reference only and shall not otherwise affect the
meaning or interpretation of any provision hereof.
Section 9.12 Exhibits. The schedules and exhibits
referred to herein shall constitute a part of this Agreement and
are incorporated into this Agreement for all purposes.
IN WITNESS WHEREOF, the Buyer and the Sellers each have
caused this Agreement to be duly executed by their respective
officers as of the day and year first above written.
CLAYTON-MARCUS COMPANY, INC.
as Seller
By:
Name:
Title:
BARCLAY FURNITURE CO.
as Seller
By:________________________
Name:
Title:
LADD TRANSPORTATION, INC.
as Seller
By:
Name:
Title:
LADD FURNITURE, INC.,
as Buyer
By:________________________
Name:
Title: