Exhibit 10.1
RECEIVABLES SALE AGREEMENT
dated as of June 30, 2000
Between
GRAYBAR ELECTRIC COMPANY, INC.,
as Originator
and
GRAYBAR COMMERCE CORPORATION,
as Buyer
TABLE OF CONTENTS
Page
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ARTICLE I AMOUNTS AND TERMS
Section 1.1 Purchase of Receivables..................................2
Section 1.2 Payment for the Purchase.................................3
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
Section 2.1 Representations and Warranties of Originator.............7
ARTICLE III CONDITIONS OF PURCHASE
Section 3.1 Conditions Precedent to Purchase........................10
Section 3.2 Conditions Precedent to Subsequent Payments.............11
ARTICLE IV COVENANTS
Section 4.1 Affirmative Covenants of Originator.....................11
Section 4.2 Negative Covenants of Originator........................17
ARTICLE V TERMINATION EVENTS
Section 5.1 Termination Events......................................18
Section 5.2 Remedies................................................19
ARTICLE VI INDEMNIFICATION
Section 6.1 Indemnities by Originator...............................20
Section 6.2 Other Costs and Expenses................................22
ARTICLE VII MISCELLANEOUS
Section 7.1 Waivers and Amendments..................................23
Section 7.2 Notices.................................................23
Section 7.3 Protection of Ownership Interests of Buyer..............23
Section 7.4 Confidentiality.........................................24
Section 7.5 Bankruptcy Petition.....................................25
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Section 7.6 Limitation of Liability.................................25
Section 7.7 CHOICE OF LAW...........................................26
Section 7.8 CONSENT TO JURISDICTION.................................26
Section 7.9 WAIVER OF JURY TRIAL....................................26
Section 7.10 Integration; Binding Effect; Survival of Terms..........26
Section 7.11 Counterparts; Severability; Section References..........27
Section 7.12 Subordination...........................................27
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RECEIVABLES SALE AGREEMENT
THIS RECEIVABLES SALE AGREEMENT, dated as of June 30,
2000, is by and between Graybar Electric Company, Inc., a New York
corporation ("Originator"), and Graybar Commerce Corporation, a Delaware
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corporation ("Buyer"). Unless defined elsewhere herein, capitalized terms
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used in this Agreement shall have the meanings assigned to such terms in
Exhibit I hereto (or, if not defined in Exhibit I hereto, the meaning
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assigned to such term in Exhibit I to the Purchase Agreement).
PRELIMINARY STATEMENTS
Originator now owns, and from time to time hereafter will
own, Receivables. Originator wishes to sell and assign to Buyer,
and Buyer wishes to purchase from Originator, all of Originator's
right, title and interest in and to such Receivables, together with
the Related Security and Collections with respect thereto.
Originator and Buyer intend the transactions contemplated
hereby to be true sales of the Receivables from Originator to
Buyer, providing Buyer with the full benefits of ownership of the
Receivables, and Originator and Buyer do not intend these
transactions to be, or for any purpose to be characterized as,
loans from Buyer to Originator.
Following the purchase of Receivables from Originator,
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 30, 2000 (as the
same may from time to time hereafter be amended, supplemented,
restated or otherwise modified, the "Purchase Agreement"), among
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Buyer, Originator, as Servicer, Falcon Asset Securitization
Corporation ("Conduit"), the financial institutions from time to
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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 Conduit and such
Financial Institutions (in such capacity, the "Agent").
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NOW, THEREFORE, in consideration of the foregoing premises
and the mutual agreements herein contained and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
the parties hereto agree as follows:
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASE
Section 1.1 Purchase of Receivables.
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(a) Effective on the date hereof, in consideration for the Purchase
Price and upon the terms and subject to the conditions set forth herein,
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 Originator, all of Originator's right,
title and interest in and to all Receivables existing as of the close of
business on the Business Day immediately prior to the date hereof and all
Receivables thereafter arising through and including the Termination Date,
together, in each case, with all Related Security relating thereto and all
Collections thereof. In accordance with the preceding sentence, on the date
hereof Buyer shall acquire all of Originator's right, title and interest in
and to all Receivables existing as of the close of business on the Business
Day immediately prior to the date hereof and thereafter arising through and
including the Termination Date, together with all Related Security relating
thereto and all Collections thereof. Buyer shall be obligated to pay the
Purchase Price for the Receivables purchased hereunder in accordance with
Section 1.2. In connection with payment of the Purchase Price for any
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Receivables purchased hereunder, Buyer may request that Originator deliver,
and 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 the Purchase of
Receivables made hereunder shall constitute a sale, 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, the sale of Receivables hereunder is made without recourse to
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Originator; provided, however, that (i) Originator shall be liable to Buyer
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for all representations, warranties, covenants and indemnities made by
Originator pursuant to the terms of the Transaction Documents to which
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 Originator or any other Person arising in connection with the
Receivables, the related Contracts and/or other Related Security or any
other obligations of Originator. In view of the intention of the parties
hereto that the Purchase of Receivables made hereunder shall constitute a
sale of such Receivables rather than loans secured thereby, Originator
agrees that it will, on or prior to the date hereof and in accordance with
Section 4.1(e)(ii), mark its master data processing records relating to the
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Receivables 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), 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.
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Section 1.2 Payment for the Purchase.
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(a) The Purchase Price for the Purchase of Receivables in existence
on the close of business on the Business Day immediately preceding the date
hereof (the "Initial Cutoff Date") shall be payable in full by Buyer to
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Originator on the date hereof, and shall be paid to Originator in the
following manner:
(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; provided that a portion of such funds shall be
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offset by amounts owed by Originator to Buyer on account of the
issuance of equity in the manner contemplated in the Subscription
Agreement and having a total value of not less than the Required
Capital Amount, and
(ii) the balance, by delivery of the proceeds of a
subordinated revolving loan from Originator to Buyer (a "Subordinated
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Loan") in an amount not to exceed the least of (A) the remaining
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unpaid portion of such Purchase Price, (B) the maximum Subordinated
Loan that could be borrowed without rendering Buyer's Net Worth less
than the Required Capital Amount and (C) the maximum Subordinated
Loan that could be borrowed without rendering the Net Value less
than the aggregate outstanding principal balance of the
Subordinated Loans (including the Subordinated Loan proposed to be
made on such date). Originator is hereby authorized by Buyer to
endorse on the schedule attached to the 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.
The Purchase Price for each Receivable coming into existence after the
Initial Cutoff Date shall be due and owing in full by Buyer to Originator or
its designee on the date each such Receivable came into existence (except
that Buyer may, with respect to any such Purchase Price, offset against such
Purchase Price any amounts owed by Originator to Buyer hereunder and which
have become due but remain unpaid) and shall be paid to Originator in the
manner provided in the following paragraphs (b), (c) and (d).
(b) With respect to any Receivables coming into existence after the
Initial Cutoff Date, on each Settlement Date, Buyer shall pay the Purchase Price
therefor in accordance with Section 1.2(d) and in the following manner:
first, by delivery of immediately available funds, to the extent
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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;
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second, by delivery of the proceeds of a Subordinated Loan,
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provided that the making of any such Subordinated Loan shall be
subject to the provisions set forth in Section 1.2(a)(ii); and
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third, unless Originator has declared the Termination Date to have
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occurred pursuant to Section 5.2, by accepting a contribution to its
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capital pursuant to the Subscription Agreement in an amount equal to
the remaining unpaid balance of such Purchase Price.
Subject to the limitations set forth in Section 1.2(a)(ii), Originator
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irrevocably agrees to advance each Subordinated Loan requested by Buyer on
or prior to the Termination Date. The Subordinated Loans shall be evidenced
by, and shall be payable in accordance with the terms and provisions of the
Subordinated Note and shall be 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 Purchasers.
(c) From and after the Termination Date, Originator shall not be
obligated to (but may, at its option): (i) sell Receivables to Buyer, or
(ii) contribute Receivables to Buyer's capital pursuant to clause third of
Section 1.2(b) unless Originator reasonably determines that the Purchase
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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 due and payable in full by
Buyer to Originator on the date such Receivable came into existence, settlement
of the Purchase Price between Buyer and Originator shall be effected on a
monthly basis on Settlement Dates with respect to all Receivables coming
into existence during the same Calculation Period and based on the
information contained in the Monthly Report delivered by the Servicer
pursuant to Article VIII of the Purchase Agreement for the Calculation
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Period then most recently ended. Although settlement shall be effected on
Settlement Dates, increases or decreases in the amount owing under the
Subordinated Note made pursuant to Section 1.2(b) and any contribution of
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capital by Originator to Buyer made pursuant to Section 1.2(b) shall be
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deemed to have occurred and shall be effective as of the last Business Day
of the Calculation Period to which such settlement relates.
Section 1.3 Purchase Price Credit Adjustments. If on any day:
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(a) the Outstanding Balance of a Receivable is:
(i) reduced as a result of any defective or rejected or
returned goods or services, any discount or any adjustment or
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otherwise by Originator (other than cash Collections on account of
the Receivables) or
(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) any of the representations and warranties set forth in
Article II are not true when made or deemed made with respect to any
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Receivable,
then, in such event, Buyer shall be entitled to a credit (each, a "Purchase
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Price Credit") against the Purchase Price otherwise payable hereunder equal
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to the Outstanding Balance of such Receivable (calculated before giving
effect to the applicable reduction or cancellation). If such Purchase Price
Credit exceeds the Original Balance of the Receivables coming into existence
on any day, then Originator shall pay the remaining amount of such Purchase
Price Credit in cash immediately, provided that if the Termination Date has
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not occurred, Originator shall be allowed to deduct the remaining amount of
such Purchase Price Credit from any indebtedness owed to it under the
Subordinated Note.
Section 1.4 Payments and Computations, Etc. All amounts to be paid or
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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 Originator designated from time to time by Originator or as
otherwise directed by 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,
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however, that such Default Fee shall not at any time exceed the maximum rate
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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.
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(a) In connection with the Purchase of Receivables hereunder, Originator
hereby sells, transfers, assigns and otherwise conveys to Buyer all of
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 the Purchase. In connection with such transfer,
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 Originator to account for the Receivables, to the
extent necessary to administer the Receivables, whether such software is
owned by Originator or is owned by others and used by Originator under
license agreements with respect thereto, provided that
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should the consent of any licensor of such software be required for the
grant of the license described herein, to be effective, Originator hereby
agrees that upon the request of Buyer (or Buyer's assignee), Originator will
use its reasonable efforts to obtain the consent of such third-party
licensor. The license granted hereby shall be irrevocable until the
indefeasible payment in full of the Aggregate Unpaids, and shall terminate
on the date this Agreement terminates in accordance with its terms.
(b) 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 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. If, notwithstanding the intention of the
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parties expressed in Section 1.1(b), any sale or contribution by Originator
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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, Originator
hereby grants to Buyer a duly perfected security interest in all of
Originator's right, title and interest in, to and under all Receivables now
existing and hereafter arising, all Collections and 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 together with all
other obligations of 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.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of Originator. Originator hereby
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represents and warrants to Buyer on the date hereof, on the date of the
Purchase and on each date that any Receivable comes into existence that:
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(a) Corporate Existence and Power. Originator is a corporation duly
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organized, validly existing and in good standing under the laws of its state
of incorporation, and 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 where the failure to so qualify could not reasonably be
expected to have a Material Adverse Effect.
(b) Power and Authority; Due Authorization, Execution and Delivery.
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The execution and delivery by 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 Originator's use of the proceeds
of the Purchase 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
Originator is a party has been duly executed and delivered by Originator.
(c) No Conflict. The execution and delivery by Originator of this
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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 (or equivalent organizational documents) or any shareholder
agreements, voting trusts, and similar arrangements applicable to any of its
authorized shares, (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, 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 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
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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
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
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pending, or to the best of Originator's knowledge, threatened, against or
affecting 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. Originator is not in default with respect to any
order of any court, arbitrator or governmental body, which default,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
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(f) Binding Effect. This Agreement and each other Transaction
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Document to which Originator is a party constitute the legal, valid and
binding obligations of Originator enforceable against 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
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by 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 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 any Purchase Price payment
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hereunder will be used (i) for a purpose that violates, or would be
inconsistent with, any law, rule or regulation applicable to Originator or
(ii) 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) Good Title. Immediately prior to the Purchase hereunder and
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upon the creation of each Receivable coming into existence after the Initial
Cut-Off Date, Originator (i) is the legal and beneficial owner of the
Receivables and (ii) is the legal and beneficial owner of the Related
Security with respect thereto or possesses a valid and perfected security
interest therein, in each case, 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 Originator's ownership interest in each Receivable, its Collections
and the Related Security.
(j) Perfection. This Agreement, together with the filing of the
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financing statements contemplated hereby, is effective to transfer to
Buyer (and Buyer shall acquire from Originator) (i) legal and equitable
title to, with the right to sell and encumber each Receivable existing and
hereafter arising, together with the Collections with respect thereto, and
(ii) all of Originator's right, title and interest in the Related Security
associated with each Receivable, in each case, free and clear of any Adverse
Claim, except as created by the Transactions 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 ownership interest in the Receivables, the
Related Security and the Collections.
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(k) Places of Business and Locations of Records. The principal
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places of business and chief executive office of 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
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accordance with Section 4.2(a) in jurisdictions where all action required by
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Section 4.2(a) has been taken and completed. Originator's Federal Employer
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Identification Number is correctly set forth on Exhibit II.
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(l) Collections. The conditions and requirements set forth in
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Section 4.1(j) have at all times from and after the date of this Agreement
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been satisfied and duly performed. The names and addresses of all Collection
Banks, together with the account numbers of the Collection Accounts of
Originator at each Collection Bank and the post office box number of each
Lock-Box, are listed on Exhibit III. Originator has not granted any Person,
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other than Buyer (and its assigns) dominion and control of any Lock-Box or
Collection Account, or the right to take dominion and control of any such
Lock-Box or Collection Account at a future time or upon the occurrence of a
future event.
(m) Material Adverse Effect. Since December 31, 1999, no event has
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occurred that would have a Material Adverse Effect.
(n) Names. In the past five (5) years, Originator has not used
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any corporate names, trade names or assumed names other than the name in
which it has executed this Agreement.
(o) Ownership of Buyer. Originator owns, directly or
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indirectly, 100% of the issued and outstanding capital stock of Buyer, free
and clear of any Adverse Claim. Such capital stock is validly issued and
nonassessable and, upon the initial Purchase of Receivables hereunder, will
be fully paid, and there are no options, warrants or other rights to acquire
securities of Buyer.
(p) Not a Holding Company or an Investment Company. Originator
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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. 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. Originator has complied in all
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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, 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
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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. Originator
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has complied in all material respects with the Credit and Collection Policy
with regard to each Receivable and the related Contract, and has not made
any change to such Credit and Collection Policy, except such material change
as to which Buyer (or its assigns) has been notified in accordance with
Section 4.1(a)(vii).
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(s) Payments to Originator. With respect to each Receivable
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transferred to Buyer hereunder, the Purchase Price received by 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 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.
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(t) Enforceability of Contracts. Each Contract with respect to
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each Receivable 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 at any time
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in the Net Receivables Balance as an Eligible Receivable was, on the later
to occur of the date of the Purchase and the date it came into existence, an
Eligible Receivable on such date.
(v) Accounting. The manner in which Originator accounts for the
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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 Purchase. The Purchase under this
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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
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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
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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; (b) Buyer (or its
assigns) shall have received such other approvals, opinions or documents as
it may reasonably request and (c) on the date such Receivable came into
existence, the following statements shall be true (and acceptance of the
proceeds of any payment for such Receivable shall be deemed a representation
and warranty by Originator that such statements are then true):
(i) the representations and warranties set forth in Article II are true
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and correct in all material respects on and as of the date such Receivable
came into existence as though made on and as of such date; and
(ii) no event has occurred and is continuing that will constitute a
Termination Event or a Potential Termination Event.
Notwithstanding the foregoing conditions precedent, upon payment of the
Purchase Price for any Receivable (whether by payment of cash, through an
increase in the amounts outstanding under the Subordinated Note, by offset
of amounts owed to Buyer and/or by offset of capital contributions), title
to such Receivable and the Related Security and Collections with respect
thereto shall vest in Buyer, whether or not the conditions precedent to
Buyer's obligation to pay for such Receivable were in fact satisfied. The
failure of Originator to satisfy any of the foregoing conditions precedent,
however, shall give rise to a right of Buyer to rescind the related purchase
and direct Originator to pay to Buyer an amount equal to the Purchase Price
payment that shall have been made with respect to any Receivables related
thereto.
ARTICLE IV
COVENANTS
Section 4.1 Affirmative Covenants of Originator. Until the date on which
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this Agreement terminates in accordance with its terms, Originator hereby
covenants as set forth below:
(a) Financial Reporting. Originator will maintain, for itself
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and each of its Subsidiaries, a system of accounting established and
administered in accordance with GAAP, and furnish to Buyer (or its assigns):
(i) Annual Reporting. Within 105 days after the close of
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each of its respective fiscal years, audited financial statements
(which shall
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include balance sheets, statements of income and retained earnings
and a statement of cash flows) for Originator for such fiscal year,
together with an unqualified audit report (in form satisfactory to
Buyer or its assigns) on such financial statements of, and certified
in a manner acceptable to Buyer (or its assigns) by, Ernst & Young LLP
or other independent public accountants reasonably acceptable to Buyer
(or its assigns).
(ii) Quarterly Reporting. Within 45 days after the close of
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the first three (3) quarterly periods of each of its respective fiscal
years, balance sheets of Originator as at the close of each such period
and statements of income and retained earnings and a statement of
cash flows for Originator for the period from the beginning of such
fiscal year to the end of such quarter, all certified by its chief
financial officer.
(iii) Compliance Certificate. Together with the financial
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statements required hereunder, a compliance certificate in
substantially the form of Exhibit IV signed by Originator's Authorized
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Officer and dated the date of such annual financial statement or such
quarterly financial statement, as the case may be.
(iv) Shareholders Statements and Reports. Promptly upon the
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furnishing thereof to the shareholders of Originator, copies of all
financial statements, reports and proxy statements so furnished.
(v) S.E.C. Filings. Promptly upon the filing thereof, copies
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of all registration statements (other than registration statements on
Form S-8) and annual, quarterly, monthly or other regular reports which
Originator or any of its Subsidiaries files with the Securities and
Exchange Commission.
(vi) Copies of Notices. Promptly upon its receipt of any
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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
Conduit, copies of the same.
(vii) Change in Credit and Collection Policy. At least thirty
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(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
(A) indicating such change or amendment, and (B) if such proposed
change or amendment would be reasonably likely to adversely affect
the collectibility of the Receivables or
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decrease the credit quality of any newly created Receivables,
requesting Buyer's consent thereto; provided that if such change or
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amendment was required pursuant to any change in any applicable law,
rule or regulation, Originator shall only be required to give
prompt notice of such change or amendment and shall not be required
to request the consent of Buyer.
(viii) Other Information. Promptly, from time to time, such
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other information, documents, records or reports relating to the
Receivables or the condition or operations, financial or otherwise,
of 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. Originator will notify the Buyer (or its assigns) in
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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
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occurrence of each Termination Event and each Potential Termination
Event, by a statement of an Authorized Officer of Originator.
(ii) Judgment and Proceedings. (A) The entry of any judgment
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or decree against Originator or any of its Subsidiaries if the
aggregate amount of all judgments and decrees then outstanding against
Originator and its Subsidiaries exceeds $7,500,000 and (B) the
institution of any material litigation, arbitration proceeding or
governmental proceeding against Originator.
(iii) Material Adverse Effect. The occurrence of any event or
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condition that has had, or could reasonably be expected to have, a
Material Adverse Effect.
(iv) Defaults Under Other Agreements. The occurrence of any
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default or event of default under any other financing arrangement or
arrangements governing Indebtedness, individually or in the
aggregate, greater than or equal to $10,000,000 pursuant to which
Originator is a debtor or an obligor.
(v) Downgrade of the Originator. Any published downgrade
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in the rating of any Indebtedness of Originator by Standard and Poor's Ratings
Group or by Moody's Investors Service, Inc., setting forth the Indebtedness
affected and the nature of such change.
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(c) Compliance with Laws and Preservation of Corporate
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Existence. Originator will comply in all respects with all applicable laws,
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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. 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 so qualify or
remain in good standing could not reasonably be expected to have a Material
Adverse Effect.
(d) Audits. Originator will furnish to Buyer (or its assigns)
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from time to time such information with respect to it and the Receivables as
Buyer (or its assigns) may reasonably request. 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 Originator, permit Buyer (or
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 Originator relating to the Receivables and the Related
Security, including, without limitation, the related Contracts, and (ii) to
visit the offices and properties of Originator for the purpose of examining
such materials described in clause (i) above, and to discuss matters
relating to Originator's financial condition or the Receivables and the
Related Security or Originator's performance under any of the Transaction
Documents or Originator's performance under the Contracts and, in each case,
with any of the officers or employees of Originator having knowledge of such
matters.
(e) Keeping and Marking of Records and Books.
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(i) 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).
Originator will give Buyer (or its assigns) notice of any
material change in the administrative and operating procedures
referred to in the previous sentence.
(ii) Originator will (A) refer to Buyer's ownership interests
in the Receivables and to the Purchaser Interests of the Agent (on
behalf of the Purchasers) in a footnote in each of its financial
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statements which are made available to third parties and (B) refer
to Buyer's ownership interests in the Receivables and to the
Purchaser Interests of the Agent (on behalf of the Purchasers) on
each copy of its internal report relating to Receivables and
Collections (which report is Originator's GM-7.01 Report (District
Summaries), which is distributed widely among its board members and
district and branch management personnel).
(iii) Originator will, upon the request of Buyer (or its
assigns), (A) mark its master data processing records and other
books and records relating to the Receivables with a legend,
acceptable to Buyer (or 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, (B) 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 (C) 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.
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Originator will timely and fully (i) perform and comply with all 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. Originator will take all necessary action to
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establish and maintain, irrevocably in Buyer, (i) legal and equitable title
to the Receivables and the Collections and (ii) all of Originator's right,
title and interest in the Related Security associated with the Receivables,
in each case, 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).
(h) Purchasers' Reliance. Originator acknowledges that the Agent
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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 Originator and any Affiliates thereof. Therefore, from and
after the date of execution and delivery of
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this Agreement, 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 Originator and any Affiliates
thereof and not just a division of Originator or any such Affiliate. Without
limiting the generality of the foregoing and in addition to the other
covenants set forth herein, 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
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(iii) will cause all tax liabilities arising in connection with the
transactions contemplated herein or otherwise to be allocated between
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. Originator will cause (i) all proceeds from all
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Lock-Boxes to be directly deposited by a Collection Bank into a Collection
Account and (ii) each Lock-Box and Collection Account to be subject at all
times to a Collection Account Agreement that is in full force and effect. In
the event any payments relating to Receivables are remitted directly to
Originator or any Affiliate of Originator, Originator will remit (or will
cause all such payments to be remitted) directly to a Collection Bank and
deposited into a Collection Account within two (2) Business Days following
receipt thereof and, at all times prior to such remittance, 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. 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. Originator will file all tax returns and reports
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required by law to be filed by it and promptly pay all taxes and
governmental charges at any time owing. 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. Originator will maintain in effect, or cause to
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be maintained in effect, at Originator's own expense, such casualty and
liability insurance as Originator deems appropriate in its good faith
business judgement. Buyer and the Agent, for the benefit of the Purchasers,
shall be named as additional insureds with respect to all such liability
insurance maintained by Originator. Originator will pay, or cause to be
paid, the premiums therefor and deliver to Buyer and the Agent evidence
satisfactory to Buyer and the Agent of such insurance coverage. Copies of
each policy shall be furnished to Buyer, the Agent and any Purchaser in
certificated form upon Buyer's, the Agent's or such Purchaser's
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request. The foregoing requirements shall not be construed to negate, reduce
or modify, and are in addition to, Originator's obligations hereunder.
Section 4.2 Negative Covenants of Originator. Until the date on
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which this Agreement terminates in accordance with its terms, Originator
hereby covenants that:
(a) Name Change, Offices and Records. Originator will not change
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its name, identity or corporate structure (within the meaning of Section
9-402(7) of any applicable enactment of the UCC) or relocate its chief
executive office or any office where Records are kept unless it shall have:
(i) given Buyer (or its assigns) at least forty-five (45) days' prior
written notice thereof and (ii) delivered to Buyer (or its assigns) all
financing statements, instruments and other documents requested by Buyer (or
its assigns) in connection with such change or relocation.
(b) Change in Payment Instructions to Obligors. Originator will
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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 the Servicer
or to any Lock-Box or Collection Account, unless Buyer (or 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
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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.
(c) Modifications to Contracts and Credit and Collection Policy.
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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. Except as otherwise
permitted in its capacity as Servicer pursuant to Article VIII of the
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Purchase Agreement, Originator will not extend, amend or otherwise modify
the terms of any Receivable or any Contract related thereto other than in
accordance with the Credit and Collection Policy.
(d) Sales, Liens. Originator will not sell, assign (by operation
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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 Originator will defend the right,
title and interest of Buyer in, to and under any of the foregoing property,
against all claims of third parties claiming through or under Originator.
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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.
(e) Accounting for Purchase. Originator will not, and will not
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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, the Collections thereof and the
Related Security by 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, the Collections thereof and the Related Security by
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
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the following events shall constitute a Termination Event:
(a) Originator shall fail (i) to make any payment or deposit
required hereunder when due 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 three (3) consecutive Business Days.
(b) Any representation, warranty, certification or statement
made by Originator in this Agreement, any other Transaction Document or in
any other document delivered pursuant hereto or thereto shall prove to have
been incorrect when made or deemed made.
(c) Failure of Originator to pay any Indebtedness (other than
Indebtedness hereunder), which individually or together with other such
Indebtedness as to which any failure exists (other than Indebtedness
hereunder) has an aggregate outstanding principal amount equal to or greater
than $10,000,000, when due; or the default by Originator in the performance
of any term, provision or condition contained in any agreement under which
any 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; or any such
Indebtedness of Originator 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) Originator or any of its Subsidiaries shall generally
not pay its debts as such debts become due or shall admit in writing its
inability to pay its debts
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generally or shall make a general assignment for the benefit of creditors;
or (ii) any proceeding shall be instituted by or against Originator or any
of its Subsidiaries 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) Originator or any of its Subsidiaries 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.
(f) One or more final judgments for the payment of money in an
amount in excess of $7,500,000, individually or in the aggregate, shall be
entered against Originator 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 ten (10) consecutive days without a
stay of execution.
(g) (i) The Leverage Ratio, as of the last day of each fiscal
quarter of Originator, shall be greater than 4.0 to 1.0 or (ii) the Interest
Coverage Ratio, as of the last day of each fiscal quarter of Originator,
shall be less than 2.5 to 1.0 or (iii) the Consolidated Tangible Net Worth
shall at any time be less than $273,103,000, increased by the sum of (A) on
a cumulative basis as of the end of each fiscal quarter of Originator,
commencing with the fiscal quarter ending June 30, 1999, an amount equal to
50% of Consolidated Net Income (to the extent positive) for the fiscal
quarter then ended plus (B) an amount equal to 100% of the Net Cash Proceeds
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from any Equity Issuance occurring after July 30, 1999.
Section 5.2 Remedies. Upon the occurrence and during the continuation of
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a Termination Event, Buyer may take any of the following actions: (i) declare
the Termination Date to have occurred, whereupon the Termination Date shall
forthwith occur, without demand, protest or further notice of any kind, all
of which are hereby expressly waived by Originator; provided, however, that
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upon the occurrence of a Termination Event described in Section 5.1(d), or
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of an actual or deemed entry of an order for relief with respect to
Originator under the Federal Bankruptcy Code, the Termination Date shall
automatically occur, without demand, protest or any notice of any kind, all
of which are hereby expressly waived by 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 by Originator to
Buyer. The aforementioned rights and remedies shall be without limitation
and shall be in addition to all other rights and remedies of Buyer and its
assigns otherwise available under any other provision of 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.
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ARTICLE VI
INDEMNIFICATION
Section 6.1 Indemnities by Originator. Without limiting any other rights
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that Buyer may have hereunder or under applicable law, Originator hereby
agrees to indemnify (and pay upon demand to) Buyer and its assigns,
officers, directors, agents and employees (each an "Indemnified Party") from
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and against any and all damages, losses, claims, taxes, liabilities, costs,
expenses and for all other amounts payable, including reasonable attorneys'
fees (which attorneys may be employees of Buyer or any such assign) and
disbursements (all of the foregoing being collectively referred to as
"Indemnified Amounts") awarded against or incurred by any of them arising
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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
characterization for income tax purposes 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, among other
things, the Receivables, the Related Security and the Collections;
provided, however, that nothing contained in this sentence shall limit the
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liability of Originator or limit the recourse of Buyer to Originator for
amounts otherwise specifically provided to be paid by Originator under the
terms of this Agreement. Without limiting the generality of the foregoing
indemnification, subject to the limitations set forth in clauses (i) and
(iii) above, Originator shall indemnify Buyer for Indemnified Amounts
(including, without limitation, losses in respect of uncollectible
receivables, regardless of whether reimbursement therefor would constitute
recourse to Originator) relating to or resulting from:
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(i) any representation or warranty made by Originator (or any
officers of Originator) under or in connection with this Agreement, any
other Transaction Document or any other information or report
delivered by Originator pursuant hereto or thereto that shall have
been false or incorrect when made or deemed made;
(ii) the failure by 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 Originator to keep or perform any of its
obligations, express or implied, with respect to any Contract;
(iii) any failure of Originator to perform its duties,
covenants or other obligations in accordance with the provisions of
this Agreement or any other Transaction Document;
(iv) 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;
(v) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor) of the 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 service related to such Receivable or
the furnishing or failure to furnish such merchandise or services;
(vi) the commingling of Collections of Receivables at any time
with other funds;
(vii) 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 Price payment, the ownership of the Receivables or any
other investigation, litigation or proceeding relating to
Originator in which any Indemnified Party becomes involved as a
result of any of the transactions contemplated hereby;
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(viii) 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;
(ix) any Termination Event described in Section 5.1(d);
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(x) any failure to vest and maintain vested in Buyer, or to
transfer to Buyer, legal and equitable title to, and ownership of, the
Receivables and the Collections, and all of Originator's right,
title and interest in the Related Security associated with the
Receivables, in each case, free and clear of any Adverse Claim;
(xi) 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 the Purchase or at any subsequent time;
(xii) any action or omission by Originator which reduces or
impairs the rights of Buyer with respect to any Receivable or the
value of any such Receivable;
(xiii) any attempt by any Person to void the Purchase
hereunder under statutory provisions or common law or equitable action;
(xiv) the Year 2000 Problem; and
(xv) the failure of any Receivable included in the
calculation of the Net Receivables Balance as an Eligible Receivable
to be an Eligible Receivable at the time so included.
Section 6.2 Other Costs and Expenses. Originator shall pay to Buyer on
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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. Originator shall pay to Buyer on demand any and all 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
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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.
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(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 Originator and Buyer and, to
the extent required under the Purchase Agreement, the Agent and the
Financial Institutions or the Required Financial Institutions.
Section 7.2 Notices. All communications and notices provided for
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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 telecopy, upon the 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.
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Section 7.3 Protection of Ownership Interests of Buyer.
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(a) 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 necessary or desirable, or that Buyer (or its
assigns) may request, to perfect, protect or more fully evidence the
interest of Buyer hereunder and the Purchaser Interests, or to enable Buyer
(or its assigns) to exercise and enforce their rights and remedies
hereunder. At any time during the continuance of a Potential Termination
Event, Buyer (or its assigns) may, at Originator's sole cost and expense,
direct Originator to notify the Obligors of Receivables of the ownership
interests of Buyer under this Agreement and may also direct that payments of
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all amounts due or that become due under any or all Receivables be made
directly to Buyer or its designee.
(b) If 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 obligations, and Buyer's (or such
assigns') costs and expenses incurred in connection therewith shall be
payable by Originator as provided in Section 6.2. 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 Originator (i) to
execute on behalf of Originator as debtor and to file financing statements
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 interests in the
Receivables. This appointment is coupled with an interest and is
irrevocable.
Section 7.4 Confidentiality.
---------------
(a) Originator shall maintain and shall cause each of its
employees and officers to maintain the confidentiality of this Agreement and
the other confidential or proprietary information with respect to the Agent
and Conduit and their respective businesses obtained by it or them in
connection with the structuring, negotiating and execution of the
transactions contemplated herein, except that Originator and its officers
and employees may disclose such information to Originator's external
accountants and attorneys and as required by any applicable law or order of
any judicial or administrative proceeding.
(b) Anything herein to the contrary notwithstanding, Originator
hereby consents to the disclosure of any nonpublic information with respect
to it (i) to Buyer, the Agent, the Financial Institutions or Conduit by each
other, (ii) by Buyer, the Agent or the Purchasers to any prospective or
actual assignee or participant of any of them and (iii) by the Agent to any
rating agency, Commercial Paper dealer or provider of a surety, guaranty or
credit or liquidity enhancement to Conduit or any entity organized for the
purpose of purchasing, or making loans secured by, financial assets for
which Bank One 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).
-24-
(c) Buyer shall maintain and shall cause each of its employees
and officers to maintain the confidentiality of this Agreement and the other
confidential or proprietary information with respect to Originator, the
Obligors and their respective businesses obtained by it in connection with
the due diligence evaluations, structuring, negotiating and execution of the
Transaction Documents, and the consummation of the transactions contemplated
herein and any other activities of Buyer arising from or related to the
transactions contemplated herein provided, however, that each of Buyer and
-------- -------
its employees and officers shall be permitted to disclose such confidential
or proprietary information: (i) to the Agent and the other Purchasers, (ii)
to any prospective or actual assignee or participant of the Agent or the
other Purchasers who execute a confidentiality agreement for the benefit of
Originator and Buyer on terms comparable to those required of Buyer
hereunder with respect to such disclosed information, (iii) to any rating
agency, provider of a surety, guaranty or credit or liquidity enhancement to
Conduit, (iv) to any officers, directors, employees, outside accountants and
attorneys of any of the foregoing, and (v) to the extent required pursuant
to any applicable law, rule, regulation, direction, request or order of any
judicial, administrative or regulatory authority or proceedings with
competent jurisdiction (whether or not having the force or effect of law) so
long as such required disclosure is made under seal to the extent permitted
by applicable law or by rule of court or other applicable body.
Section 7.5 Bankruptcy Petition. (a) Originator 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 Conduit
or any Financial Institution that is a special purpose bankruptcy remote
entity, it will not institute against, or join any other Person in
instituting against, Conduit or any such entity 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.
(b) Originator covenants and agrees that, prior to the date that
is one year and one day after the payment in full of all outstanding
obligations of Buyer under the Purchase Agreement, it will not institute
against, or join any other Person in instituting against, Buyer 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 Limitation of Liability. Except with respect to any claim
-----------------------
arising out of the willful misconduct or gross negligence of Conduit, the
Agent or any Financial Institution, no claim may be made by Originator or
any other Person against Conduit, the Agent or any Financial Institution or
their respective Affiliates, directors, officers, employees, attorneys or
agents for any special, indirect, consequential or punitive damages in
respect of any claim for breach of contract or any other theory of liability
arising out of or related to the transactions contemplated by this
Agreement, or any act, omission or event occurring in connection therewith;
and Originator hereby waives, releases and agrees
-25-
not to sue upon any claim for any such damages, whether or not accrued and
whether or not known or suspected to exist in its favor.
Section 7.7 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED
-------------
IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE
STATE OF ILLINOIS.
Section 7.8 CONSENT TO JURISDICTION. 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 ORIGINATOR PURSUANT TO THIS AGREEMENT AND 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 ORIGINATOR IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY ORIGINATOR AGAINST BUYER (OR ITS
ASSIGNS) OR ANY AFFILIATE THEREOF INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS
AGREEMENT OR ANY DOCUMENT EXECUTED BY ORIGINATOR PURSUANT TO THIS AGREEMENT
SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
Section 7.9 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 THIS AGREEMENT, ANY DOCUMENT EXECUTED
BY ORIGINATOR PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER OR THEREUNDER.
Section 7.10 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.
-26-
(b) This Agreement shall be binding upon and inure to the
benefit of Originator, Buyer and their respective successors and permitted
assigns (including any trustee in bankruptcy). Originator may not assign any
of its rights and obligations hereunder or any interest herein without the
prior written consent of Buyer. Buyer may assign at any time its rights and
obligations hereunder and interests herein to any other Person without the
consent of Originator. Without limiting the foregoing, Originator
acknowledges that Buyer, pursuant to the Purchase Agreement, may assign to
the Agent, for the benefit of the Purchasers, its rights, remedies, powers
and privileges hereunder and that the Agent may further assign such rights,
remedies, powers and privileges to the extent permitted in the Purchase
Agreement. Originator agrees that the Agent, as the assignee of 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 Originator agrees to cooperate fully with the Agent in the
exercise of such rights and remedies. 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
Originator pursuant to Article II; (ii) the indemnification and payment
----------
provisions of Article VI; and (iii) Section 7.5 shall be continuing and
---------- -----------
shall survive any termination of this Agreement.
Section 7.11 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 7.12 Subordination. Originator shall have the right to receive,
-------------
and Buyer shall make, any and all payments relating to any indebtedness,
obligation or claim, Originator may from time to time hold or otherwise have
against Buyer or any assets or properties of Buyer, whether arising
hereunder or otherwise existing, provided that, after giving effect to any
--------
such payment, the aggregate Outstanding Balance of Receivables owned by
Buyer at such time exceeds the sum of (a) the Aggregate Unpaids under the
Purchase Agreement, plus (b) the aggregate outstanding principal balance of
the Subordinated Loans.
-27-
Originator hereby agrees that at any time during which the condition set
forth in the proviso of the immediately preceding sentence shall not be
satisfied, Originator shall be subordinate in right of payment to the prior
payment of any indebtedness or obligation of Buyer owing to the Agent or any
Purchaser under the Purchase Agreement.
[SIGNATURE PAGE FOLLOWS]
-28-
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.
GRAYBAR ELECTRIC COMPANY, INC.
By:
----------------------------
Name:
Title:
Address:
GRAYBAR COMMERCE CORPORATION
By:
----------------------------
Name:
Title:
Address:
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 30, 2000, between Originator and Buyer, as the same may be amended,
restated or otherwise modified.
"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 shall commence on the date of the Purchase of Receivables
hereunder and the final Calculation Period shall terminate on the
Termination Date.
"Change of Control" means the acquisition by any Person,
-----------------
or two or more Persons acting in concert, of beneficial ownership (within
the meaning of Rule 13d-3 of the Securities and Exchange Commission under
the Securities Exchange Act of 1934) of 20% or more of the outstanding
shares of voting stock of Originator; provided that a change in the identity
--------
of one or more trustees under a voting trust holding shares of voting stock
shall not be deemed to be such an acquisition.
"Conduit" has the meaning set forth in the Preliminary
-------
Statements to the Agreement.
"Credit and Collection Policy" means Originator's credit
----------------------------
and collection policies and practices relating to Contracts and Receivables
existing on the date hereof and summarized in Exhibit V to the Agreement, as
---------
modified from time to time in accordance with the Agreement.
"Default Fee" means a per annum rate of interest equal to
-----------
the sum of (i) the Prime Rate, plus (ii) 2% per annum.
----
"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. 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 made prior to the Calculation Period during which Originator and
Buyer agree to make such change.
"Initial Cutoff Date" has the meaning set forth in
-------------------
Section 1.2(a).
- --------------
"Material Adverse Effect" means a material adverse effect
-----------------------
on (i) the financial condition or operations of Originator and its
Subsidiaries, (ii) the ability of Originator to perform its obligations
under the Agreement or any other Transaction Document, (iii) the legality,
validity or enforceability of the Agreement or any other Transaction
Document, (iv) 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
----------------
coming into existence after the Initial Cutoff Date, the Outstanding Balance
of such Receivable on the date it was created.
"Originator" has the meaning set forth in the preamble to
----------
the Agreement.
Exh. I-2
"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 the purchase pursuant to Section 1.1(a)
-------- --------------
of the Agreement by Buyer from Originator of the Receivables and the Related
Security and 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 the Purchase, the
--------------
aggregate price to be paid by Buyer to Originator for such Purchase in
accordance with Section 1.2 of the Agreement for the Receivables,
-----------
Collections and Related Security being sold to Buyer, which price shall
equal on any date (i) the product of (x) the Outstanding Balance of such
Receivables on such date, multiplied by (y) one minus the Discount Factor in
-------------
effect on such date, minus (ii) any Purchase Price Credits to be credited
against the Purchase Price otherwise payable in accordance with Section 1.3
-----------
of the Agreement.
"Purchase Price Credit" has the meaning set forth in
---------------------
Section 1.3 of the Agreement.
- -----------
"Receivable" means all indebtedness and other obligations
----------
owed to Originator (at the times 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 Originator or Buyer 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 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 Originator treats such indebtedness, rights or obligations as a
separate payment obligation.
"Related Security" means, with respect to any Receivable:
----------------
(i) all of Originator's interest in the inventory and
goods (including returned or repossessed inventory or goods),
Exh. I-3
if any, the sale of which by 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, 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,
(iv) all service contracts and other contracts and
agreements associated with such Receivable,
(v) all Records related to such Receivable,
(vi) all of Originator's right, title and interest in
each Lock-Box and each Collection Account, and
(vii) all proceeds of any of the foregoing.
"Required Capital Amount" means, as of any date of
-----------------------
determination, an amount equal to the sum of (i) the twenty-four month
rolling average of Dilutions, plus (ii) the result obtained in the foregoing
----
clause (i) of this definition, multiplied by 10%.
"Settlement Date" means, with respect to each Calculation
---------------
Period, the date that is the 23rd calendar day of the month following such
Calculation Period.
"Subordinated Loan" has the meaning set forth in
-----------------
Section 1.2(a) of the Agreement.
- --------------
"Subordinated Note" means a promissory note in
-----------------
substantially the form of Exhibit VII to the Agreement 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.
"Subscription Agreement" means that certain Stockholder
----------------------
and Subscription Agreement, dated as of June 12, 2000, between Originator
and Buyer, substantially in the form of Exhibit VI to the Agreement.
----------
Exh. I-4
"Termination Date" means 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) of the
--------------
Agreement, (iii) the Business Day specified in a written notice from Buyer
to Originator following the occurrence of any other Termination Event, and
(iv) the date which is 15 Business Days after Buyer's receipt of written
notice from Originator that it wishes to terminate the facility evidenced by
the Agreement.
"Termination Event" has the meaning set forth in Section 5.1
----------------- -----------
of the Agreement.
"Transaction Documents" means, collectively, the
---------------------
Agreement, each Collection Account Agreement, the Subordinated Note, the
Subscription 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 GAAP. 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