Exhibit 10.26
RECEIVABLES SALE AGREEMENT
DATED AS OF DECEMBER 19, 2000
AMONG
INTERFACE, INC.,
as Originator,
AND
INTERFACE SECURITIZATION CORPORATION,
as Buyer
TABLE OF CONTENTS
Page
----
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASE...................................................-2-
Section 1.1 Purchase of Receivables............................-2-
Section 1.2 Payment for the Purchase...........................-3-
Section 1.3 Purchase Price Credit Adjustments..................-5-
Section 1.4 Payments and Computations, Etc.....................-6-
Section 1.5 Transfer of Records................................-6-
Section 1.6 Characterization...................................-7-
ARTICLE II
REPRESENTATIONS AND WARRANTIES......................................................-7-
Section 2.1 Representations and Warranties of Originator........-7-
ARTICLE III
CONDITIONS OF PURCHASE.............................................................-11-
Section 3.1 Conditions Precedent to Purchase...................-11-
Section 3.2 Conditions Precedent to Subsequent Payments........-11-
ARTICLE IV
COVENANTS..........................................................................-12-
Section 4.1 Affirmative Covenants of Originator................-12-
Section 4.2 Negative Covenants of Originator...................-18-
ARTICLE V
TERMINATION EVENTS.................................................................-20-
Section 5.1 Termination Events.................................-20-
Section 5.2 Remedies...........................................-22-
ARTICLE VI
INDEMNIFICATION.....................................................................-22-
Section 6.1 Indemnities by Originator...........................-22-
Section 6.2 Other Costs and Expenses............................-25-
-i-
ARTICLE VII
MISCELLANEOUS......................................................................-26-
Section 7.1 Waivers and Amendments.............................-26-
Section 7.2 Notices............................................-26-
Section 7.3 Protection of Ownership Interests of Buyer.........-26-
Section 7.4 Confidentiality....................................-27-
Section 7.5 Bankruptcy Petition................................-28-
Section 7.7 CHOICE OF LAW......................................-29-
Section 7.8 CONSENT TO JURISDICTION............................-29-
Section 7.9 WAIVER OF JURY TRIAL...............................-29-
Section 7.10 Integration; Binding Effect; Survival of Terms.....-29-
Section 7.11 Counterparts; Severability; Section References.....-30-
Section 7.12 Subordination......................................-31-
-ii-
Exhibits and Schedules
----------------------
Exhibit I - Definitions
Exhibit II - Principal Place of Business; Location(s) of Records;
Federal Employer Identification Number
Exhibit III - Lock-Boxes; Collection Accounts; Collection Banks
Exhibit IV - Form of Compliance Certificate
Exhibit V - Credit and Collection Policies
Exhibit VI - [Intentionally Omitted.]
Exhibit VII - Form of Subordinated Note
Schedule A List of Documents to Be Delivered to Buyer Prior to
the Purchase
-iii-
RECEIVABLES SALE AGREEMENT
THIS RECEIVABLES SALE AGREEMENT, dated as of December 19, 2000, is by
and between Interface, Inc., a Georgia corporation ("Originator") and INTERFACE
SECURITIZATION CORPORATION, a Delaware corporation ("Buyer"). Unless defined
elsewhere herein, capitalized terms used in this Agreement shall have the
meanings assigned to such terms in Exhibit I hereto (or, if not defined in
Exhibit I hereto, the meaning assigned to such term in Exhibit I to the Purchase
Agreement).
PRELIMINARY STATEMENTS
Each of Bentley Mills, Inc., a Delaware Corporation
("Bentley"), Chatham Marketing Co., a North Carolina corporation
("Chatham"), Guilford of Maine Marketing Co., a Nevada corporation
("Guilford"), Intek Marketing Co., a Nevada corporation ("Intek"),
Interface Architectural Resources, Inc., a Michigan corporation
("Interface Architectural"), Interface Flooring Systems, Inc., a
Georgia corporation ("Interface Flooring"), Pandel, Inc., a Georgia
corporation ("Pandel"), Prince Street Technologies, Ltd., a Georgia
corporation ("Prince Street"), and Toltec Fabrics, Inc., a Georgia
corporation ("Toltec,") is a wholly-owned direct or indirect Subsidiary
of Originator.
Each of Chatham, Pandel and Interface Architectural (each, a
"New Original Seller" and, collectively, the "New Original Sellers")
now owns, and from time to time hereafter will own, Receivables.
Each of Bentley, Guilford and Interface Flooring is a party to
a Transfer Agreement, each dated August 4, 1995, between such Original
Seller and Buyer, and each of Intek, Prince Street and Toltec (each, an
"Existing Original Seller" and, together with Bentley, Guilford and
Interface Flooring, collectively, the "Existing Original Sellers") is
party to a Transfer Agreement, each dated December 27, 1996, between
such Original Seller and Buyer (each such Transfer Agreement, as
previously amended or modified and as in effect on the date hereof, an
"Existing Agreement" and, collectively, the "Existing Agreements"),
pursuant to which the Buyer purchases receivables from such Existing
Original Seller in accordance with the terms thereof. Each of the
Existing Original Seller wishes to terminate its respective Existing
Agreement in accordance with the terms thereof, and to enter into a
Receivables Transfer Agreement, dated as of the date hereof (as
amended, restated or otherwise modified from time to time, the
"Transfer Agreement"), pursuant to which the New Original Sellers and
the Existing Original Sellers will sell to Originator and Originator
will purchase from such New Original Sellers and Existing Original
Sellers their respective Receivables, together with the Related
Security and Collections with respect thereto, in accordance with the
terms and conditions thereof.
Originator wishes to sell to Buyer and Buyer wishes to
purchase from Originator, all of Originator's right, title and interest
in and to the Receivables, Related Security and Collections purchased
by Originator pursuant to the terms of the Transfer Agreement in
accordance with the terms hereof.
Each of Originator and Buyer intends 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 neither Originator nor Buyer intends these
transactions to be, or for any purpose to be characterized as, loans
from Buyer to Originator.
Following the purchase of Receivables from the 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 December 19, 2000 (as the same may from
time to time hereafter be amended, supplemented, restated or otherwise
modified, the "Purchase Agreement") among Buyer, Interface, Inc., as
Servicer, Jupiter Securitization Corporation ("Company"), the financial
institutions from time to time party thereto as "Financial
Institutions" and Bank One, NA (Main Office Chicago) or any successor
agent appointed pursuant to the terms of the Purchase Agreement, as
agent for Company and such Financial Institutions (in such capacity,
the "Agent").
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.
------------------------
(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 arising on or after the date hereof 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 consummation of the
Purchase Price for any 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.
-2-
(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 Originator; provided, however, that (i)
Originator shall be liable to Buyer 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 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.
Section 1.2 Payment for the Purchase.
------------------------
(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 the 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 offset by any amounts owed by
Originator to Buyer on account of the issuance of equity by
Buyer to Originator, and
-3-
(ii) the balance, by delivery of the proceeds of a
subordinated revolving loan from Originator to Buyer (a
"Subordinated Loan") in an amount not to exceed the least of
(A) the remaining 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 that 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 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;
second, by delivery of the proceeds of a Subordinated Loan,
provided that the making of any such Subordinated Loan shall be subject
to the provisions set forth in Section 1.2(a)(ii); and
third, unless Originator has declared the Termination Date to
have occurred pursuant to Section 5.2, by accepting a contribution to
Buyer's capital 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
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 that Buyer is not required under the
Purchase Agreement to set aside for the benefit of, or otherwise pay over to,
the Purchasers.
-4-
(c) From and after the Termination Date, Originator shall not
sell Receivables to Buyer.
(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 each Settlement Date with respect to
all Receivables coming into existence (i) if settlement is effected on
a monthly basis, during the same Calculation Period and based on
information contained in the Monthly Report delivered by the Servicer
pursuant to Article VIII of the Purchase Agreement for the Calculation
Period most recently ended or (ii) if settlement is effected on a
weekly basis, during the calendar week reported in the Weekly Report
most recently delivered by the Servicer pursuant to Article VIII of the
Purchase Agreement and based on the information contained in such
Weekly Report. Although settlement shall be effected in the foregoing
manner, increases or decreases in the amount owing under the
Subordinated Note made pursuant to Section 1.2(b) and any contribution
of capital by Originator to Buyer made pursuant to Section 1.2(b) shall
be 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:
--------------------------------
(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 otherwise by the Originator or the Original Seller of such
Receivable (other than cash Collections on account of the
Receivables),
(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
Receivable, or
(c) any Contract with respect to any Receivable shall fail to
create 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,
-5-
then, in such event, Buyer shall be entitled to a credit (each, a "Purchase
Price Credit") against the Purchase Price otherwise payable hereunder to
Originator equal 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 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 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, however, that such Default
Fee shall not at any time exceed the maximum rate permitted by applicable law.
All computations of interest payable hereunder shall be made on the basis of a
year of 360 days for the actual number of days (including the first but
excluding the last day) elapsed.
Section 1.5 Transfer of Records.
-------------------
(a) In connection with 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 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
hereunder, and (ii) shall use its reasonable efforts to ensure that
-6-
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 parties expressed in Section 1.1(b), any sale or contribution by Originator
to Buyer of Receivables hereunder shall not be characterized as a sale or such
sale shall for any reason be ineffective or unenforceable, then this Agreement
shall be deemed to, and hereby does, 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 valid and
enforceable 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, the Transfer Agreement, 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 aggregate outstanding 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 that 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 represents and warrants to Buyer on the date hereof, on the
date of the Purchase and on each date that any Receivable is purchased by Buyer
hereunder that:
(a) Corporate Existence and Power. Originator is a corporation
duly 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 do so
could not reasonably be expected to have a Material Adverse Effect.
(b) Power and Authority; Due Authorization, Execution and
Delivery. The execution and delivery by 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 any Purchase Price Payment 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.
-7-
(c) No Conflict. 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
do not contravene or violate (i) its certificate or articles of
incorporation or by-laws, (ii) any law, rule or regulation applicable
to it, (iii) any restrictions under any agreement, contract or
instrument to which it is a party or by which it or any of its property
is bound, 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), except, in any case,
where such contravention or violation could not reasonably be expected
to have a Material Adverse Effect. No transaction contemplated hereby
requires compliance with any bulk sales act or similar law.
(d) Governmental Authorization. Other than the filing of the
financing statements required hereunder, no authorization or approval
or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due execution and
delivery by Originator of this Agreement and each other Transaction
Document to which it is a party and the performance of its obligations
hereunder and thereunder.
(e) Actions, Suits. There are no actions, suits or proceedings
pending, or to the best of 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 that
could reasonably be expected to have a Material Adverse Effect.
(f) Binding Effect. This Agreement and each other Transaction
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 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 true and accurate in every material respect on the date
such information is stated or certified and does not contain any
material misstatement of fact or omit to state a material fact
-8-
or any fact necessary to make the statements contained therein not
misleading as of the date such information is stated or certified.
(h) Use of Proceeds. No proceeds of any Purchase Price payment
to Originator 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 that
is subject to Section 12, 13 or 14 of the Securities Exchange Act of
1934, as amended.
(i) Good Title. Immediately prior to each Purchase hereunder,
Originator is the legal and beneficial owner of the Receivables and the
Related Security with respect thereto, free and clear of any Adverse
Claim, except as created by the Transaction Documents. There have been
duly filed all financing statements or other similar instruments or
documents necessary under the UCC (or any comparable law) of all
appropriate jurisdictions to perfect Originator's ownership interest in
each Receivable, its Collections and the Related Security.
(j) Perfection. This Agreement, together with the filing of
the financing statements contemplated hereby, is effective to, and
shall, upon each Purchase hereunder, 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 or 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.
(k) Places of Business and Locations of Records. The principal
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 accordance with Section 4.2(a) in jurisdictions
where all action required by Section 4.2(a) has been taken and
completed. Originator's Federal Employer Identification Number is
correctly set forth on Exhibit II.
(l) Collections. The conditions and requirements set forth in
Section 4.1(j) have at all times been satisfied and duly performed. The
names and addresses of all Collection Banks, together with the account
numbers of the Collection Accounts of 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, 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.
-9-
(m) Material Adverse Effect. Since December 31, 1999, no event
has occurred that would have a Material Adverse Effect.
(n) Names. In the past five (5) years, Originator has not used
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
indirectly, 100% of the issued and outstanding capital stock of Buyer,
free and clear of any Adverse Claim. Such capital stock is validly
issued, fully paid and nonassessable, and there are no options,
warrants or other rights to acquire securities of Buyer.
(p) Not a Holding Company or an Investment Company. Originator
is not a "holding company" or a "subsidiary holding company" of a
"holding company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended, or any successor statute. 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
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, 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
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).
(s) Payments to Originator. The Purchase Price received by
Originator for each Receivable purchased hereunder or under any
Existing Agreement 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 or under any Existing Agreement is or may be voidable under
any section of the Bankruptcy Reform Act of 1978 (11 U.S.C. ss.ss. 101
et seq.), as amended.
(t) Enforceability of Contracts. Each Contract with respect to
each Receivable is effective to create, and has created, a legal, valid
and binding obligation of the related Obligor to pay the Outstanding
-10-
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
in the Net Receivables Balance as an Eligible Receivable was, (i) in
the case of the Existing Receivables, as of the date hereof, and, (ii)
in the case of all other Receivables, 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 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 Agreement is subject to the conditions precedent that Buyer shall have
received on or before the date of such purchase those documents listed on
Schedule A and all of the conditions to the initial purchase under the Purchase
Agreement shall have been satisfied or waived in accordance with the terms
thereof.
Section 3.2 Conditions Precedent to Subsequent Payments. Buyer's
obligation to pay for Receivables coming into existence after the Initial Cutoff
Date shall be subject to the further conditions precedent that 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 and correct 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.
-11-
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 to 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 this Agreement terminates in accordance with its terms, Originator hereby
covenants as set forth below:
(a) Reporting. Originator will maintain, for itself 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 120 days after the close
of each of its respective fiscal years, audited, unqualified
consolidated financial statements (which shall include balance
sheets, statements of income and retained earnings and a
statement of cash flows) Originator for such fiscal year
certified in a manner reasonably acceptable to Buyer (or its
assigns) by independent public accountants acceptable to Buyer
(or its assigns).
(ii) Quarterly Reporting. Within 60 days after the
close of the first three (3) quarterly periods of each of its
respective fiscal years, (A) consolidated balance sheets of
Originator as at the close of each such period and (B)
consolidated and consolidating 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 statements required hereunder, a compliance
certificate in substantially the form of Exhibit IV signed by
Originator's Authorized Officer and dated the date of such
annual financial statement or such quarterly financial
statement, as the case may be.
-12-
(iv) Shareholders Statements and Reports. Promptly
upon the 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 of all registration statements and annual, quarterly,
monthly or other regular reports that Originator or any of its
Subsidiaries files with the Securities and Exchange
Commission.
(vi) Copies of Notices. Promptly upon its receipt of
any notice, request for consent, financial statements,
certification, report or other communication under or in
connection with any Transaction Document from any Person other
than Buyer, the Agent or Company, copies of the same.
(vii) Change in Credit and Collection Policy. At
least thirty (30) days prior to the effectiveness of any
material change in or material amendment to the Credit and
Collection Policy, a copy of the Credit and Collection Policy
then in effect and a notice (A) indicating such change or
amendment, and (B) if such proposed change or amendment could
adversely affect the collectibility of the Receivables or
decrease the credit quality of any newly created Receivables,
requesting Buyer's consent thereto.
(viii) Other Information. Promptly, from time to
time, such other information, documents, records or reports
relating to the Receivables or the condition or operations,
financial or otherwise, of 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 writing of any of the following promptly upon learning of the
occurrence thereof, describing the same and, if applicable, the steps
being taken with respect thereto:
(i) Termination Events or Potential Termination
Events. The occurrence of each Termination Event and each
Potential Termination Event, by a statement of an Authorized
Officer of Originator.
(ii) Judgment and Proceedings. (A) The entry of any
judgment or decree against Originator or any of its
Subsidiaries if entry of such judgment or decree, either
individually or together with all other judgments and decrees
then outstanding against Originator and its Subsidiaries,
could reasonably be expected to have a Material Adverse
Effect, and (B) the institution of any litigation, arbitration
proceeding or governmental proceeding against Originator.
-13-
(iii) Material Adverse Effect. The occurrence of any
event or condition that has had, or could reasonably be
expected to have, a Material Adverse Effect.
(iv) Defaults Under Other Agreements. The occurrence
of a default or an event of default under any other material
financing arrangement pursuant to which Originator is a debtor
or an obligor.
(v) Downgrade of the Originator. Any downgrade 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.
(c) Compliance with Laws and Preservation of Corporate
Existence. Originator will comply in all respects with all applicable
laws, rules, regulations, orders, writs, judgments, injunctions,
decrees or awards to which it may be subject, except where the failure
to so comply could not reasonably be expected to have a Material
Adverse Effect. 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 preserve and maintain or
qualify could not reasonably be expected to have a Material Adverse
Effect.
(d) Audits. Originator will furnish to Buyer (or its assigns)
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) (subject to the last sentence of
this Section 4.1(d)), upon reasonable notice and at the sole cost of
Originator, permit Buyer (or its assigns) or their respective agents or
representatives (and shall cause each Original Seller to permit Buyer
(or its assigns) or their respective agents and representatives), (i)
to examine and make copies of and abstracts from all Records in the
possession or under the control of such Person
-14-
relating to the Receivables and the Related Security, including,
without limitation, the related Contracts, and (ii) to visit the
offices and properties of such person for the purpose of examining such
materials described in clause (i) above, and to discuss matters
relating to such Person's financial condition or the Receivables and
the Related Security or such Person's performance under any of the
Transaction Documents or such Person's performance under the Contracts
and, in each case, with any of the officers or employees of such Person
having knowledge of such matters. All such examinations and visits
shall be at the sole cost of Originator; provided, however, that (i)
for so long as no Termination Event or Potential Termination Event
shall have occurred and be continuing and (ii) the result of the
immediately preceding examination and/or visit of such Person shall
have been reasonably satisfactory to Buyer (and its assigns) (A) such
examinations and/or visits shall be limited to four times per calendar
year per Person and (B) such cost shall be borne by Originator not more
than once per Person per calendar year (although in no event shall the
foregoing be construed to limit Buyer (and its assigns) or their
respective agents or representatives to one such examination and/or
visit during such calendar year period with respect to each such
Person).
(e) Keeping and Marking of Records and Books.
(i) Originator will (and will cause each Original
Seller to) 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 (and will cause each Original Seller to) 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 (and will cause each Original
Seller to) (A) on or prior to the date hereof, mark its master
data processing records and other books and records relating
to the Receivables with a legend, acceptable to Buyer (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 and (B) upon the request of Buyer (or its assigns)
after the occurrence of a Termination Event, (x) mark each
Contract with a legend describing Buyer's ownership interests
in the Receivables and further describing the Purchaser
Interests of the Agent (on behalf of the Purchasers) and (y)
deliver to Buyer (or its assigns) all Contracts (including,
without limitation, all multiple originals of any such
Contract) relating to the Receivables.
(f) Compliance with Contracts and Credit and Collection
Policy. Originator will (and will cause each Original Seller to) 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.
-15-
(g) Performance and Enforcement of Transfer Agreement.
Originator will, and will require each Original Seller to, perform each
of their respective obligations and undertakings under and pursuant to
the Transfer Agreement, will purchase Receivables thereunder in strict
compliance with the terms thereof and will vigorously enforce the
rights and remedies accorded to Originator under the Transfer
Agreement. Originator will take all actions to perfect and enforce its
rights and interests (and the rights and interests of Buyer as assignee
of Originator and of the Agent as assignee of Buyer) under the Transfer
Agreement as Buyer (or its assigns) may from time to time reasonably
request, including, without limitation, making claims to which it may
be entitled under any indemnity, reimbursement or similar provision
contained in the Transfer Agreement.
(h) Ownership. Originator will (and will cause Original Seller
to) take all necessary action to (i) vest legal and equitable title to
the Receivables, the Related Security and the Collections purchased
under the Transfer Agreement irrevocably in Originator, 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 Originator's interest in such Receivables,
Related Security and Collections and such other action to perfect,
protect or more fully evidence the interest of Originator therein as
Buyer (or its assigns) may reasonably request), and (ii) take all
necessary action to establish and maintain, irrevocably in Buyer, (A)
legal and equitable title to the Receivables and the Collections and
(B) 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).
(i) Purchasers' Reliance. Originator acknowledges that the
Agent and the Purchasers are entering into the transactions
contemplated by the Purchase Agreement in reliance upon Buyer's
identity as a legal entity that is separate from Originator and any
Affiliates thereof. Therefore, from and after the date of execution and
delivery of 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
-16-
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 (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 ss.ss.1.1502-33(d) and 1.1552-1.
(j) Collections. Originator will cause (1) all proceeds from
all Lock-Boxes to be directly deposited by a Collection Bank into a
Collection Account and (2) 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
(A) if no Termination Event and no Amortization Event has then occurred
and is continuing, within two (2) Business Days following receipt
thereof, and at any time a Termination Event or an Amortization Event
has occurred and is continuing, immediately upon receipt thereof. 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.
(k) Taxes. Originator will file all tax returns and reports
required by law to be filed by it and promptly pay all taxes and
governmental charges at any time owing, except any such taxes which are
not yet delinquent or are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books. Originator will pay
when due any taxes payable in connection with the Receivables for all
periods during which such Receivables were owned by Originator,
exclusive of taxes on or measured by income or gross receipts of Buyer
and its assigns.
(l) Insurance. Originator will maintain in effect, or cause to
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 request. The foregoing requirements shall not be
construed to negate, reduce or modify, and are in addition to,
Originator's obligations hereunder.
-17-
(m) Payment to Original Seller. With respect to any Receivable
purchased by Originator from an Original Seller on or after the date
hereof, such sale shall be effected under, and in strict compliance
with the terms of, the Transfer Agreement, including without
limitation, the terms relating to the amount and timing of payments to
be made to such Original Seller with respect to the purchase price for
such Receivable.
(n) Accuracy of Information. All information 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 will not contain any material
misstatement of fact or omit to state a material face or any fact
necessary to make the statements contained therein not misleading as of
the date such information is stated or certified.
Section 4.2 Negative Covenants of Originator. Until the date on
which this Agreement terminates in accordance with its terms, Originator hereby
covenants that:
(a) Name Change, Offices and Records. In the event that
Originator shall change its name, Originator shall notify Buyer (and
its assigns) of such change immediately, and in any event within 10
days of the occurrence of any such change. In the event that Originator
shall change its 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 any material portion of
Records are kept, Originator shall notify Buyer (and its assigns) of
such change as soon as reasonably practicable, and in any event within
30 days of the occurrence of any such change.
(b) Change in Payment Instructions to Obligors. Originator
will not add or terminate any bank as a Collection Bank, or make any
change in the instructions to Obligors regarding payments to be made to
any Lock-Box or Collection Account, unless Buyer (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 acceptable to the Agent with respect to the new Collection
Account or Lock-Box; provided, however, that 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. Originator will not (and will not permit any Original Seller
to) make any material change or any material amendment to the Credit
and Collection Policy that could reasonably be expected to adversely
affect the collectibility of the Receivables or decrease the credit
-18-
quality of any newly created Receivables without the prior written
consent of Buyer (and its assigns). Except as otherwise permitted in
its capacity as Servicer pursuant to Article VIII of the Purchase
Agreement, Originator will not (and will not permit any Original Seller
to) extend, amend or otherwise modify the terms of any Receivable or
any Contract related thereto other than in accordance with its Credit
and Collection Policy.
(d) Sales, Liens. Originator will not sell, assign (by
operation of law or otherwise) or otherwise dispose of, or grant any
option with respect to, or create or suffer to exist any Adverse Claim
upon (including, without limitation, the filing of any financing
statement) or with respect to, any Receivable or any Related Security
or Collections with respect thereto, 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. 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
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 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 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 the following events shall constitute a Termination Event:
(a) Originator shall fail (i) to make any payment or deposit
consisting of principal required hereunder when due and, in the case of
any failure to make a timely payment or deposit solely by reason of any
mechanical delay in or malfunction of the Fedwire system, such failure
shall continue for one (1) Business Day and so long as Originator pays
immediately upon demand any and all losses, costs and expenses incurred
by the Buyer, any Purchaser or the Agent in connection with or as a
result of such failure to make a timely payment or deposit, (ii) to
make any payment or deposit (other than as referred to in clause (i) of
this paragraph (a)) of any other amounts when due hereunder and such
failure shall continue for three (3) consecutive Business Days, (iii)
to comply with the provisions of Section 4.1(b)(i), (ii) or (iii) or
4.2 and such failure shall continue for three (3) consecutive Business
Days, (iv) to comply with the provisions of Section 4.1 (c), (f), (g),
(h), (j), (m) or (n) and such failure shall continue for five (5)
consecutive Business Days or (v) to perform or observe any term,
covenant or agreement hereunder (other than as referred to in clauses
(i), (ii), (iii) or (iv) of this paragraph (a)) and such failure shall
continue for ten (10) consecutive Business Days.
-19-
(b) Any representation, warranty, certification or statement
made by Originator in this Agreement, any other Transaction Document to
which it is a party 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 when due in
an amount in excess of $10,000,000; 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 shall generally not pay its debts as such
debts become due or shall admit in writing its inability to pay its
debts generally or shall make a general assignment for the benefit of
creditors; or (ii) any proceeding shall be instituted by Originator
seeking to adjudicate it bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief
or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry
of an order for relief or the appointment of a receiver, trustee or
other similar official for it or any substantial part of its property;
or (iii) any proceeding shall be instituted against Originator 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
which proceeding is not dismissed within 30 days of the institution
thereof or (iv) Originator shall take any corporate action to authorize
any of the actions set forth in this subsection (d).
(e) An "Event of Default" (as defined therein) by Originator
of its obligations under Section 7.09 of the Interface Credit
Facilities.
(f) (i) A Change of Control shall occur or exist, or (ii) any
event or condition shall occur or exist that, pursuant to the terms of
any Change in Control
-20-
Provision, requires or permits the holder(s) of Interface Control Debt
to require that such Interface Control Debt be redeemed, repurchased,
defeased, prepaid or repaid, in whole or in part, or the maturity of
such Interface Control Debt to be accelerated in any respect; provided,
however, that no Termination Event hereunder shall be deemed to exist
upon the occurrence of any event or condition described in the
foregoing clauses (i) or (ii) until thirty (30) days after the first
occurrence or existence of such event or condition.
(g) One or more final judgments for the payment of money in an
amount in excess of $10,000,000, individually or in the aggregate,
shall be entered against 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 thirty (30)
consecutive days without a stay of execution.
(h) The "Termination Date" under and as defined in the
Transfer Agreement shall occur under the Transfer Agreement or the
Originator or any Original Seller shall fail to observe any term or
condition of the Transfer Agreement (taking into account any applicable
grace period set forth therein) or Originator shall waive its right to
enforce the terms and conditions of the Transfer Agreement or any
Original Seller shall for any reason cease to transfer, or cease to
have the legal capacity to transfer, or otherwise be incapable of
transferring Receivables to Originator under the Transfer Agreement.
(i) This Agreement shall terminate in whole or in part (except
in accordance with its terms), or shall cease to be effective or to be
the legally valid, binding and enforceable obligation of Originator, or
any Obligor shall directly or indirectly contest in any manner such
effectiveness, validity, binding nature or enforceability, or the Buyer
shall cease to have a valid ownership interest in the Receivables, the
Related Security and the Collections with respect thereto and the
Collection Accounts, free and clear of any Adverse Claims.
(j) Originator shall fail to own, free and clear of any
Adverse Claims, 100% of the voting stock of Buyer.
Section 5.2 Remedies. Upon the occurrence and during the continua-
tion of 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
upon the occurrence of a Termination Event described in Section 5.1(d), or 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
-21-
limitation, all rights and remedies provided under the UCC, all of which rights
shall be cumulative.
ARTICLE VI
INDEMNIFICATION
Section 6.1 Indemnities by Originator. Without limiting any other
rights 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 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 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, and any
jurisdiction in which such Indemnified Party is doing business (except
to the extent that any such tax is imposed by such jurisdiction based
upon this Agreement or any other Transaction Document), 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;
-22-
provided, however, that nothing contained in this sentence shall limit the
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,
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:
(i) any representation or warranty made by Originator
(or any officer of Originator) or any Original Seller (or any
officer of any Original Seller) under or in connection with
this Agreement, any other Transaction Document or any other
information or report delivered by Originator or any Original
Seller pursuant hereto or thereto that shall have been false
or incorrect when made or deemed made;
(ii) the failure by Originator or any Original
Seller, 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 or any Original Seller to keep or
perform any of its obligations, express or implied, with
respect to any Contract;
(iii) any failure of Originator or any Original
Seller 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;
-23-
(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 or any
Original Seller in which any Indemnified Party becomes
involved as a result of any of the transactions contemplated
hereby;
(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);
(x) any failure of Originator to acquire and maintain
legal and equitable title to, and ownership of any Receivable
and the Related Security and Collections with respect thereto
from the Original Seller thereof, free and clear of any
Adverse Claim (other than as created hereunder); or any
failure of Originator to give reasonably equivalent value to
the Original Seller thereof under the Transfer Agreement in
consideration of the transfer by such Original Seller of any
such Receivable, or any attempt by any Person to void such
transfer under statutory provisions or common law or equitable
action;
(xi) 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;
(xii) 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;
(xiii) any action or omission by Originator or any
Original Seller that reduces or impairs the rights of Buyer
with respect to any Receivable or the value of any such
Receivable;
-24-
(xiv) any attempt by any Person to void the Purchase
hereunder under statutory provisions or common law or
equitable action; 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. The Originator shall pay to
Buyer on demand all costs and out-of-pocket expenses actually incurred 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 actually incurred, if any, including reasonable counsel
fees and expenses (which such counsel may be employees of Buyer or its assigns
to the extent not duplicative of services provided by outside counsel, in which
case such fees may consist of internally allocated costs with respect to such
internal counsel; provided, that such internally-allocated costs shall not
include typically separately expressed items such as telephone, telecopier and
photocopy charges, each of which shall be separately stated in any invoice to
Originator; provided, further, that such fees shall be as may be reasonable and
customary for internal counsel of financial institutions) in connection with the
enforcement of this Agreement, the Receivables Purchase Agreement and the other
documents delivered hereunder and thereunder in connection with any
restructuring or workout of this Agreement or such documents, or the
administration of this Agreement following a Termination Event.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Waivers and Amendments.
(a) No failure or delay on the part of Buyer (or its assigns)
in exercising any power, right or remedy under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise
of any such power, right or remedy preclude any other further exercise
thereof or the exercise of any other power, right or remedy. The rights
and remedies herein provided shall be cumulative and nonexclusive of
any rights or remedies provided by law. Any waiver of this Agreement
shall be effective only in the specific instance and for the specific
purpose for which given.
(b) No provision of this Agreement may be amended,
supplemented, modified or waived except in writing signed by Originator
and Buyer and, to the extent required under the Purchase Agreement, the
Agent and the Financial Institutions or the Required Financial
Institutions.
-25-
Section 7.2 Notices. All communications and notices provided
for hereunder shall be in writing (including bank wire, telecopy or electronic
facsimile transmission or similar writing) and shall be given to the other
parties hereto at their respective addresses or telecopy numbers set forth on
the signature pages hereof or at such other address or telecopy number as such
Person may hereafter specify for the purpose of notice to each of the other
parties hereto. Each such notice or other communication shall be effective (i)
if given by 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.
Section 7.3 Protection of Ownership Interests of Buyer.
(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, 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 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 the 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
-26-
respect to the Agent and Company 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 Company 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 Company 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;
provided, that each such Person is informed of the confidential nature
of such information. 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).
(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 the 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 Company, (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 Company or
-27-
any Financial Institution that is a special purpose bankruptcy remote entity, it
will not institute against, or join any other Person in instituting against,
Company 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 Company, the
Agent or any Financial Institution, no claim may be made by Originator or any
other Person against Company, 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 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
OTHER THAN SECTION 5-1401 OF THE NEW YORK OBLIGATIONS LAW) OF THE STATE OF NEW
YORK.
Section 7.8 CONSENT TO JURISDICTION. ORIGINATOR HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW
YORK STATE COURT SITTING IN NEW YORK, NEW YORK 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 NEW YORK, NEW YORK.
-28-
Section 7.9. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, 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.
(b) This Agreement shall be binding upon and inure to the
benefit of Originator and 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. Delivery of an executed counterpart of a signature page to
this Agreement by facsimile shall be as effective as delivery of a manually
executed counterpart to this Agreement. Any provisions of this Agreement that
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.
-29-
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. 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]
-30-
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.
INTERFACE, INC.
By: /s/ Daniel T. Hendrix
--------------------------------------
Name: Daniel T. Hendrix
Title: Executive Vice President, CFO,
Treasurer and Assistant
Secretary
Address: 2859 Paces Ferry Road,
Suite 2000
Atlanta, GA 30339
INTERFACE SECURITIZATION CORPORATION
By: /s/ Daniel T. Hendrix
------------------------------
Name: Daniel T. Hendrix
Title: President, Treasurer and
Assistant Secretary
Address: c/o Interface, Inc.
2859 Paces Ferry Road,
Suite 2000
Atlanta, GA 30339
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 December
19, 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 that
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.
"Company" has the meaning set forth in the Preliminary Statements to
the Agreement.
"Credit and Collection Policy" means each Original Seller's credit and
collection policies and practices relating to Contracts and Receivables of such
Original Seller existing on the date hereof and summarized in Exhibit V, 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.
"Potential Termination Event" means an event that, 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.
Exh. I-2
"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 an
Original Seller (at the time it arises, and before giving effect to any transfer
or conveyance under the Transfer Agreement), Originator (after giving effect to
the transfers under the Transfer Agreement 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 an Original Seller, 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 an Original Seller, 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, further, that any
indebtedness, rights or obligations referred to in the immediately preceding
sentence shall be a Receivable regardless of whether the account debtor, the
Original Seller thereof or Originator treats such indebtedness, rights or
obligations as a separate payment obligation.
"Related Security" means, with respect to any Receivable:
(i) all of the interest of Originator or the Original
Seller thereof in the inventory and goods (including returned
or repossessed inventory or goods), if any, the sale or
financing of which by the Original Seller thereof 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,
Exh. I-3
(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,
(vii) all of Originator's interest in, to and under
the Transfer Agreement, and
(viii) 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 sixth 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 hereto as more fully described in Section 1.2 of the Agreement,
as the same may be amended, restated, supplemented or otherwise modified from
time to time.
"Termination Date" means 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), (iii) the Business Day specified
in a written notice from Buyer to the Originator following the occurrence of any
other Termination Event, and (iv) the date that is 30 Business Days after
Buyer's receipt of written notice from Originator that it wishes to terminate
the facility evidenced by this Agreement.
Exh. I-4
"Termination Event" has the meaning set forth in Section 5.1 of the
Agreement.
"Transaction Documents" means, collectively, this Agreement, the
Transfer Agreement each Collection Account Agreement, the Subordinated Note and
all other instruments, documents and agreements executed and delivered in
connection herewith.
"Transfer Agreement" has the meaning set forth in the preamble to the
Agreement.
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
New York, and not specifically defined herein, are used herein as defined in
such Article 9.
Exh I-5