Collins & Aikman Corp. Contracts
Sample Business Contracts
Receivables Transfer and Servicing Agreement - Carcorp. Inc. and Collins & AIkman Products Co.
EXECUTION COPY
CARCORP, INC.
COLLINS & AIKMAN PRODUCTS CO.,
as Master Servicer
RECEIVABLES TRANSFER AND SERVICING AGREEMENT
Dated as of July 13, 1994
CHEMICAL BANK,
as Administrative Agent
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TABLE OF CONTENTS
Page
ARTICLE I
Definitions . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . . . 1
ARTICLE II
Acquisition and Transfer of Participating Interest . 2
2.1 Acquisition and Transfer of Participating
Interest . . . . . . . . . . . . . . . . . . . . 2
2.2 Payment for Initial Transfer of a Participating
Interest and any Increase in Net Investment . . . 4
2.3 Acquisition and Transfer Procedure . . . . . . . 4
2.4 Commitment Fees . . . . . . . . . . . . . . . . . 5
2.5 Fee and Purchase Discount Amount Calculations . . 5
2.6 Interest on Overdue Payments . . . . . . . . . . 5
2.7 Establishment of Accounts; Allocation of
Collections; Reinvestment of Principal
Collections . . . . . . . . . . . . . . . . . . . 6
2.8 Payments; Pro Rata Treatment . . . . . . . . . . 9
2.9 Netting of Payments . . . . . . . . . . . . . . . 9
2.10 Termination or Reduction of Commitment . . . . . 10
2.11 Optional Retransfer; Reduction of Net
Investment . . . . . . . . . . . . . . . . . . . 10
2.12 Mandatory Reductions in Net Investment . . . . . 10
ARTICLE III
Increased Costs . . . . . . . . . . 12
3.1 Illegality . . . . . . . . . . . . . . . . . . . 12
3.2 Indemnity . . . . . . . . . . . . . . . . . . . . 12
3.3 Requirements of Law . . . . . . . . . . . . . . . 13
3.4 Inability to Determine Eurodollar Rate . . . . . 14
3.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV
Termination . . . . . . . . . . . 18
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4.1 Termination . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE V
Covenants, Representations and Warranties . . . 18
5.1 Representations and Warranties of the Company
Relating to the Company . . . . . . . . . . . . . . . 18
(a) Organization; Corporate Powers . . . . . . . . . 18
(b) Authorization . . . . . . . . . . . . . . . . . . 19
(c) Enforceability . . . . . . . . . . . . 19
(d) Consents . . . . . . . . . . . . . . . . . . . . 19
(e) Litigation, etc . . . . . . . . . . . . . . . . . 19
(f) No Default, etc . . . . . . . . . . . . . . . . . 20
(g) Ownership of Property; Liens . . . . . . . . . . 20
(h) Investment Company Act; Other Regulations . . . . 20
(i) Taxes . . . . . . . . . . . . . . . . . . . . . . 20
(j) Ownership; Subsidiaries . . . . . . . . . . . . . 21
(k) Accuracy and Completeness of Information . . . . 21
(l) Pro Forma Balance Sheet . . . . . . . . . . . . . 21
(m) No Material Adverse Change . . . . . . . . . . . 21
(n) Solvency . . . . . . . . . . . . . . . . . . 21
(o) Employee Benefit Plans . . . . . . . . . . . 22
5.2 Representations and Warranties of the Company
Relating to this Agreement and the Receivables . 22
5.3 Retransfer Obligation . . . . . . . . . . . . . . 24
5.4 Obligations Unaffected . . . . . . . . . . . . . 24
ARTICLE VI
Conditions to Effectiveness/Transfers/Reinvestments . 25
6.1 Effective Date . . . . . . . . . . . . . . . . . 25
6.2 Condition to each Increase in Net Investment . . 27
ARTICLE VII
Affirmative Covenants . . . . . . . . 28
7.1 Financial Statements . . . . . . . . . . . . . . 28
7.2 Certificates; Other Information . . . . . . . . . 29
7.3 Existence; Businesses and Properties; Insurance;
Receivables . . . . . . . . . . . . . . . . . . . 29
7.4 Taxes . . . . . . . . . . . . . . . . . . . . . . 30
7.5 Inspection of Property; Books and Records;
Discussions . . . . . . . . . . . . . . . . . . . 30
7.6 Notices . . . . . . . . . . . . . . . . . . . . . 30
7.7 ERISA . . . . . . . . . . . . . . . . . . . . . . 31
7.8 Use of Proceeds . . . . . . . . . . . . . . . . . 31
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7.9 Separate Corporate Existence . . . . . . . . . . 31
7.10 Facility Rating . . . . . . . . . . . . . . . . 31
7.11 Lockbox Agreements . . . . . . . . . . . . . . . 32
7.12 Eligible Letters of Credit . . . . . . . . . . . 32
7.13 Company Policies . . . . . . . . . . . . . . . . 32
ARTICLE VIII
Negative Covenants . . . . . . . . . 32
8.1 Accounting of Transfers . . . . . . . . . . . . . 32
8.2 Limitation on Indebtedness . . . . . . . . . . . 32
8.3 Limitation on Liens . . . . . . . . . . . . . . . 32
8.4 Limitation on Guarantees . . . . . . . . . . . . 33
8.5 Limitation on Fundamental Changes . . . . . . . . 33
8.6 Limitation on Sale of Assets . . . . . . . . . . 33
8.7 Limitation on Dividends and Payments on
Subordinated Notes . . . . . . . . . . . . . . . 33
8.8 Business of the Company . . . . . . . . . . . . . 33
8.9 Limitation on Investments, Loans and Advances . . 33
8.10 Limitation on Sales and Leasebacks . . . . . . . 33
8.11 Transactions with Affiliates . . . . . . . . . . 34
8.12 Capital Stock . . . . . . . . . . . . . . . . . 34
8.13 Amendments . . . . . . . . . . . . . . . . . . . 34
8.14 Receivables Sale Agreement, etc . . . . . . . . 34
8.15 Policies . . . . . . . . . . . . . . . . . . . . 34
8.16 No Powers of Attorney . . . . . . . . . . . . . 34
8.17 Receivables Not To Be Evidenced by Promissory
Notes . . . . . . . . . . . . . . . . . . . . . . 34
8.18 Ownership of Assets and Property . . . . . . . . 34
8.19 Rescission or Cancellation . . . . . . . . . . . 35
8.20 Ineligible Receivables . . . . . . . . . . . . . 35
8.21 Offices . . . . . . . . . . . . . . . . . . . . 35
8.22 Addition of Sellers . . . . . . . . . . . . . . 35
8.23 Optional Termination of Seller . . . . . . . . . 35
8.24 Operating Expenses . . . . . . . . . . . . . . . 35
ARTICLE IX
Events of Termination . . . . . . . . 36
ARTICLE X
The Administrative Agent . . . . . . . 39
10.1 Appointment . . . . . . . . . . . . . . . . . . 39
10.2 Delegation of Duties . . . . . . . . . . . . . . 40
10.3 Exculpatory Provisions . . . . . . . . . . . . 40
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10.4 Reliance by the Administrative Agent . . . . . . 40
10.5 Notice of Default or Termination Event . . . . . 41
10.6 Non-Reliance on the Administrative Agent and
Other Banks . . . . . . . . . . . . . . . . . . . 41
10.7 Indemnification . . . . . . . . . . . . . . . . 41
10.8 The Administrative Agent in Its Individual
Capacity . . . . . . . . . . . . . . . . . . . . 42
10.9 Successor Administrative Agent . . . . . . . . . 42
ARTICLE XI
Miscellaneous . . . . . . . . . . 42
11.1 Further Assurances . . . . . . . . . . . . . . . 43
11.2 Payments . . . . . . . . . . . . . . . . . . . . 43
11.3 Costs and Expenses . . . . . . . . . . . . . . . 43
11.4 Successors and Assigns; Participations;
Acquiring Banks . . . . . . . . . . . . . . . . . 44
11.5 GOVERNING LAW . . . . . . . . . . . . . . . . . 46
11.6 No Waiver; Cumulative Remedies . . . . . . . . . 47
11.7 Amendments and Waivers . . . . . . . . . . . . . 47
11.8 Severability . . . . . . . . . . . . . . . . . . 47
11.9 Notices . . . . . . . . . . . . . . . . . . . . 48
11.10 Counterparts . . . . . . . . . . . . . . . . . 48
11.11 Construction of Agreement as Security
Agreement . . . . . . . . . . . . . . . . . . . . 48
11.12 Adjustments; Set-off . . . . . . . . . . . . . 49
11.13 Jurisdiction; Consent to Service of Process . . 49
11.14 Acknowledgements . . . . . . . . . . . . . . . 50
11.15 Waiver of Jury Trial . . . . . . . . . . . . . 50
11.16 Confidentiality . . . . . . . . . . . . . . . . 51
11.17 No Bankruptcy Petition . . . . . . . . . . . . 51
11.18 Tax Treatment . . . . . . . . . . . . . . . . . 51
11.19 No Action by Banks . . . . . . . . . . . . . . 51
ARTICLE XII
Servicing
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
12.1 Servicing . . . . . . . . . . . . . . . . . . . 52
12.2 Collections by the Servicers . . . . . . . . . . 55
12.3 Maintenance of Records . . . . . . . . . . . . . 57
12.4 Rebates, Adjustments, Returns and Reductions;
Modifications . . . . . . . . . . . . . . . . . . 58
12.5 Daily Reports; Settlement Statements . . . . . . 58
12.6 Representations, Warranties and Covenants of
the Servicers . . . . . . . . . . . . . . . . . . 60
12.7 Acquisition Obligation . . . . . . . . . . . . . 65
12.8 Obligations Unaffected . . . . . . . . . . . . . 67
12.9 Addition of Servicers . . . . . . . . . . . . . 67
12.10 Optional Termination of Servicers . . . . . . . 67
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12.11 Interest on Overdue Payments . . . . . . . . . 67
12.12 Servicer Events of Defaults . . . . . . . . . . 67
12.13 Audit . . . . . . . . . . . . . . . . . . . . . 69
ANNEX X Definitions
SCHEDULES
1 Names, Addresses and Commitments of Banks
2 Location of Chief Executive Offices; Location of
Books and Records
3 Lockboxes
4 Transactions with Affiliates
5 Contractual Obligations
6 Local Counsel
EXHIBITS
A Form of Assignment and Acceptance
B Form of Lockbox Agreement
C Form of Subordination Agreement
*D-1 Form of Opinion of Cravath, Swaine & Moore
(Corporate)
*D-2 Form of Opinion of Cravath, Swaine & Moore
(Bankruptcy)
*D-3 Form of Opinion of Elizabeth R. Philipp, Esq.,
general counsel of Collins & Aikman Corporation
*D-4 Form of Opinion of Stikeman, Elliott, special
Canadian counsel
*D-5 Form of Opinion of Local Counsel
E Form of Settlement Statement
F Form of Additional Servicer Supplement
G Form of Responsible Officer's Certificate as to
Solvency, etc.
H Form of Daily Report
I Form of Receivables Sale Agreement
* Omitted
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RECEIVABLES TRANSFER AND SERVICING AGREEMENT, dated as of
July 13, 1994, among CARCORP, INC., a Delaware corporation (the
"Company"), COLLINS & AIKMAN PRODUCTS CO., a Delaware corporation
("C&A Products"), as master servicer (in
such capacity, the "Master Servicer"), C&A Products and each of the
subsidiaries of C&A Products from time to time parties hereto, in
their capacities as servicers of receivables (in such capacities,
the "Servicers"), the several financial institutions from time to
time parties to this Agreement (the "Banks") and CHEMICAL BANK, a
New York banking corporation, as administrative agent for the
Banks.
W I T N E S S E T H :
WHEREAS, the Company desires to assign and transfer to
the Banks, and the Banks desire to acquire a Participating Interest
(as hereinafter defined) in, all the Company's right, title and
interest in, to and under the Receivables (as hereinafter defined)
now existing or hereafter created and in the rights of the Company
in, to and under all other Related Property (as hereinafter
defined);
NOW, THEREFORE, in consideration of the premises and of
the mutual covenants herein contained, the parties hereto agree as
follows:
ARTICLE I
Definitions
1.1 Defined Terms. Capitalized terms used in this
Agreement shall have the respective meanings assigned to such terms
in Annex X hereto unless otherwise defined herein.
1.2 Other Definitional Provisions. (a) The words
"hereof", "herein" and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and article,
section, subsection, schedule and exhibit references are to this
Agreement unless otherwise specified.
(b) As used herein and in any certificate or other
document made or delivered pursuant hereto, accounting terms
relating to C&A Products and its Subsidiaries, unless otherwise
defined herein, shall have the respective meanings given to them
under GAAP.
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such
terms.
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ARTICLE II
Acquisition and Transfer of Participating Interest
2.1 Acquisition and Transfer of Participating Interest.
(a) By execution of this Agreement and subject to the terms and
conditions contained herein, the Company does hereby sell,
transfer, assign, set over and otherwise convey, without recourse
(except as expressly provided herein), to the Banks on the
Effective Date and from time to time during the Commitment Period,
and each Bank hereby severally agrees to acquire from the Company
on the Effective Date and from time to time during the Commitment
Period, a Participating Interest (up to the maximum amount
specified in subsection 2.3) in all right, title and interest of
the Company in, to and under the following, whether now owned or
hereafter acquired (collectively, with the property described in
subsections 2.1(b) and 2.1(c), the "Pooled Property"):
(i) all Receivables;
(ii) (A) all goods, if any, relating to the sale which
gave rise to any Receivable;
(B) all other security interests or liens and
property subject thereto from time to time purporting to
secure payment of any Receivable, whether pursuant to the
contract related to such Receivable or otherwise,
together with all financing statements or similar
instruments signed by an Obligor describing any
collateral securing such Receivable;
(C) all guarantees, insurance and other agreements
or arrangements of whatever character from time to time
supporting or securing payment of any Receivable whether
pursuant to the contract related to such Receivable or
otherwise; and
(D) all rights (including rescission, replevin or
reclamation) relating to any Receivable or arising
therefrom;
(iii) all monies due or to become due with respect to
the foregoing, including, without limitation, all Recoveries;
and
(iv) all proceeds of the foregoing, including, without
limitation, whatever is received upon the sale, exchange,
collection or other disposition of the foregoing or proceeds
thereof (the items described in clauses (ii), (iii) and (iv),
collectively, the "Related Property").
(b) The Company hereby assigns to the Administrative
Agent, for the benefit of the Banks, and grants to the
Administrative Agent, for the benefit of the Banks, a security
interest in, all its right, title and interest in, to and under the
Receivables Sale Agreement, including (i) all rights of the Company
to receive moneys due and to become due under or pursuant to such
agreement, whether payable as fees, expenses, costs or otherwise,
(ii) all rights of the Company to receive proceeds of any
insurance, indemnity, warranty or guaranty with
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respect to such agreement, (iii) claims of the Company for damages
arising out of or for breach of or default under such agreement,
(iv) the right of the Company to amend, waive or terminate such
agreement, to perform thereunder and to compel performance and
otherwise exercise all remedies thereunder and (v) all other
rights, remedies, powers, privileges and claims of the Company
under or in connection with such agreement (whether arising pursuant
to such agreement or otherwise available to the Company at law or
in equity), including the rights of the Company to enforce such
agreement and to give or withhold any and all consents, requests,
notices, directions, approvals, extensions or waivers under or in
connection therewith (the Pooled Property described in this
sentence being referred to herein as the "Transferred Agreement").
(c) In addition, to secure the obligations of the
Company hereunder, the Company hereby grants to the Administrative
Agent, for the benefit of the Banks, a security interest in all
right, title and interest of the Company in, to and under the
following, whether now owned or hereafter acquired:
(i) all equipment in all its forms, wherever located,
now or hereafter existing (including all software, data bases,
materials, books, records, magnetic tapes, disks and cassettes
relating to the Receivables and all other equipment in which
information concerning the Receivables is stored), and all
parts thereof and accessions thereto (any and all such
equipment, parts and accessions being the "Equipment");
(ii) all the following (the "Accounts"):
(A) each Concentration Account and each Lockbox
Account, all funds and other evidences of payment held
therein and all certificates and instruments, if any,
from time to time representing or evidencing any of such
Accounts or any funds and other evidences of payment held
therein;
(B) any operating account or other accounts of the
Company, all funds held therein and all certificates and
instruments, if any, from time to time representing or
evidencing any such operating account or any funds held
therein;
(C) all Cash Equivalents and all certificates and
instruments from time to time representing or evidencing
the Cash Equivalents;
(D) all notes, certificates of deposit and other
instruments from time to time hereafter delivered to, or
otherwise possessed by, the Administrative Agent for and
on behalf of the Company in substitution for or in
addition to any of the then existing Accounts; and
(E) all interest, dividends, cash, instruments and
other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for
any and all of the then existing Accounts; and
(iii) all proceeds of or payments in respect of any and
all of the foregoing (including proceeds that constitute
property of the types described in clauses (i) and (ii) above
and including Collections) and, to the extent not otherwise
included, all payments
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under insurance (whether or not the Administrative Agent is
the loss payee in respect thereof), or any indemnity, warranty
or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the Pooled Property.
2.2 Payment for Initial Transfer of a Participating
Interest and any Increase in Net Investment. The undivided
participating interest of the Banks in the Receivables and the
Related Property (the "Participating Interest"; a Bank's Commitment
Percentage of such Participating Interest shall equal such Bank's
"Participating Interest") shall equal, at any date of determination
thereof, the Net Investment at such date. The Company shall notify
the Banks of the amount of the initial transfer and assignment of a
Participating Interest or any request for an Increase in Net
Investment pursuant to subsection 2.3. The amount which the Banks
shall pay for such initial transfer and assignment or Increase in
Net Investment shall equal the amount of such initial transfer and
assignment or Increase in Net Investment, as the case may be.
After receipt by the Administrative Agent of the notice required by
subsection 2.3(a) from the Company, the Administrative Agent shall
promptly provide notice (which may be telephonic but shall be
confirmed in writing) to each Bank of the Closing Date and of the
portion of the Participating Interest or the Increase in Net
Investment allocable to such Bank on such Closing Date. Amounts
payable to the Company in respect of the initial transfer and
assignment of a Participating Interest or any Increase in Net
Investment on such Closing Date shall be obtained by the
Administrative Agent from the Banks and paid by the Administrative
Agent to the Company in accordance with the provisions of
subsection 2.8(a).
2.3 Acquisition and Transfer Procedure. (a) Subject to
subsections 2.3(b) and 6.2, the initial transfer and assignment of
a Participating Interest or an Increase in Net Investment of the
Banks shall occur, upon notice from the Company, on the Effective
Date and on any Business Day during the Commitment Period (each
date on which the initial transfer and assignment of a
Participating Interest in the Receivables or an Increase in Net
Investment of the Banks occurs hereunder being herein referred to
as the "Closing Date" applicable to such transfer and assignment or
such increase, as the case may be) and shall take place at the
office of the Administrative Agent or such other place as may be
mutually agreed upon, provided that the Company shall have given
the Administrative Agent irrevocable notice (effective upon
receipt) of such request no later than (i) if the initial transfer
and assignment of a Participating Interest or the Increase in Net
Investment on such date is to be priced solely with reference to
ABR, 12:00 Noon (New York City time) one Business Day prior to such
Closing Date or (ii) if all or a portion of the initial transfer
and assignment of a Participating Interest or the Increase in Net
Investment is to be allocated to a Fixed Tranche, 12:00 Noon (New
York City time) three Business Days prior to such Closing Date,
provided, further, that the provisions of this subsection 2.3 shall
not restrict the allocations of Collections pursuant to subsection
2.7. Such notice shall state (i) the Closing Date, (ii) the amount
of the initial transfer and assignment of a Participating Interest
or the Increase in Net Investment, as the case may be, for the
proposed transaction, (iii) what portion thereof will be allocated
to a Fixed Tranche and/or the Floating Tranche and (iv) if any
portion thereof is to be allocated to a Fixed Tranche, the length
of the Transfer Period therefor.
(b) Each Bank shall have no obligation to acquire a
Participating Interest or to increase its pro rata share of the Net
Investment on any Closing Date hereunder:
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(1) unless, in the case of an Increase in Net
Investment, the Increase in Net Investment on such Closing
Date is equal to at least $500,000 or an integral multiple
thereof;
(2) to the extent that, after giving effect to (A) in
the case of the initial transfer and assignment of a
Participating Interest, such transfer, and (B) in the case of
an Increase in Net Investment, such Increase in Net Investment
on such date, the Net Investment would exceed the Maximum
Transfer Amount; or
(3) if the Commitments of the Banks have terminated
pursuant to Article IX.
The initial transfer and assignment of the Participating Interest
or an Increase in Net Investment allocable to the Banks as a group
shall be allocated to each Bank according to the Commitment
Percentage of such Bank.
2.4 Commitment Fees. The Company agrees to pay to the
Administrative Agent, for the account of the Banks, a commitment
fee (the "Commitment Fee") for the Commitment Period, computed at
the rate of 3/8ths of 1% per annum on the average daily excess of
the Maximum Commitment over the Net Investment for each day during
the period for which such Commitment Fee is payable. Commitment
Fees shall be payable in arrears on each Settlement Date for the
relevant Settlement Period.
2.5 Fee and Purchase Discount Amount Calculations. (a)
Calculations of per annum rates under this Agreement shall be made
on the basis of a 360-day year for actual days elapsed, except that
Commitment Fees and Purchase Discount Amounts on the Floating
Tranche determined by reference to the Prime Rate shall be
calculated on the basis of a 365- (or 366-, as the case may be) day
year. Each determination of the Eurodollar Rate hereunder by the
Administrative Agent shall be conclusive and binding upon each of
the parties hereto in the absence of manifest error. Any change in
the Purchase Discount Amount resulting from a change in ABR or
Statutory Reserves shall become effective as of the opening of
business on the day on which such change is announced.
(b) Anything contained in this Agreement to the contrary
notwithstanding, (i) the portion of the Net Investment allocable to
any Fixed Tranche must be an amount equal to $10,000,000 or an
integral multiple of $1,000,000 in excess thereof, (ii) no more
than ten Fixed Tranches shall be outstanding at any one time, and
(iii) after the occurrence and during the continuance of any
Termination Event, at the end of the related Transfer Period all of
the Net Investment allocated to any Fixed Tranche shall be
reallocated to the Floating Tranche.
2.6 Interest on Overdue Payments. If any amount
payable by the Company to the Banks or the Administrative Agent
hereunder, whether on account of fees or expenses or on account of
amounts collected by the Company or amounts payable by the Company
pursuant to Article III or subsection 5.3, or otherwise, is not
paid by the Company or otherwise on the relevant Settlement Date or
other relevant date, such amount shall be payable together with
interest, payable on demand, for each day from such Settlement Date
or other relevant date, as the case may be, until such amount is
paid in full at a rate per annum equal to the ABR plus the
Applicable ABR Margin plus 2%.
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2.7 Establishment of Accounts; Allocation of
Collections; Reinvestment of Principal Collections.
(a) (i) The Administrative Agent shall establish and
maintain in the name of the Administrative Agent (x) with Chemical
one account in the United States (the "U.S. Concentration
Account"), (y) with a financial institution acceptable to the
Administrative Agent one account in Canada for the purpose of
receiving certain Collections in U.S. Dollars (the "Canada/U.S.
Dollar Concentration Account") and (z) with a financial institution
acceptable to the Administrative Agent one account in Canada for
the purpose of receiving Collections in Canadian Dollars (the
"Canada/Canadian Dollar Concentration Account"). Collections
deposited into each Lockbox Account will be transferred to the
relevant Concentration Account as set forth in Article XII (either
directly or through an intermediate Lockbox Account at the same
Lockbox Bank); provided that Collections may, at the option of the
applicable Obligor, be deposited directly into the relevant
Concentration Account by wire transfer from an account of such
Obligor to the Concentration Account or by means of transfer
through the Automated Clearing House System, as set forth in
Article XII. All Collections otherwise received by any Servicer,
the Master Servicer or the Company shall be deposited by it either
to a Lockbox Account or through the Automated Clearing House System
into the relevant Concentration Account as set forth in Article
XII. The Administrative Agent shall have sole and exclusive
dominion over and control of each Concentration Account and the
Company, the Servicers and the Master Servicer shall not have any
dominion over or control of any such account.
(ii) Amounts deposited in any Concentration Account
shall be invested by the Administrative Agent as directed by the
Master Servicer in Cash Equivalents maturing not later than the
next Business Day.
(iii) Any earnings (net of losses and investment expenses)
on such invested funds in any Concentration Account ("Investment
Earnings") will be treated as Collections and retained therein.
(iv) Neither the Company nor the Master Servicer nor any
Servicer nor any Person claiming by, through or under the Company,
any Servicer or the Master Servicer shall have any right, title or
interest in, or any control over the use of, or any right to
withdraw moneys from, any Concentration Account, except the right
to give directions for investments of amounts on deposit therein as
expressly provided for in paragraph (ii) above.
(b) Prior to the commencement of an Amortization Period,
the Collections, Retransfer Payments, Servicer Transfer Payments
and Adjustment Payments deposited in the Concentration Accounts
(collectively, "Receivables Proceeds") shall be applied by the
Administrative Agent on each Business Day, as follows:
(i) first, if such Business Day is a Settlement Date, to
the payment of the Monthly Servicing Fee of any Servicer that
is not an Affiliate of the Company, the Master Servicer or any
Seller;
(ii) second, on each Purchase Discount Amount Payment
Date occurring during the period commencing on the date of the
first transfer and assignment of the
<PAGE>
7
Participating Interest in Receivables and Related Property
pursuant to subsection 2.3(a) and ending on the date on which
the Net Investment is equal to zero and the Commitments of the
Banks have terminated, to the payment in arrears of accrued
Purchase Discount Amount on such Business Day to the Banks in
respect of the Participating Interest;
(iii) third, to the payment of (x) the Commitment Fees
and (y) any other amounts, if any, accrued and payable on such
Business Day to the Administrative Agent and the Banks in
respect of the Participating Interest;
(iv) fourth, to the payments, if any, required by
subsection 2.12 (Mandatory Reductions in Net Investment) on
such Business Day;
(v) fifth, to the payment of the Company's indemnity
obligations hereunder and, then, to the Company's operating
account for the payment of the operating expenses of the
Company incurred or reserved for on such Business Day,
provided that the aggregate amounts paid to the Company's
operating account pursuant to this clause (v) shall not
exceed, for any fiscal year of the Company, $250,000;
(vi) sixth, if such Business Day is a Settlement Date,
to the payment of the Monthly Servicing Fee of any Servicer
that is an Affiliate of the Company, the Master Servicer or
any Seller;
(vii) seventh, to the Company to enable the Company to
acquire Receivables from the Sellers pursuant to the
Receivables Sale Agreement in the aggregate amount specified
in the applicable Daily Report, provided that the Company may
elect to (A) retain all or any portion of such amounts in the
Concentration Accounts and (B) on the next Reduction Date, if
the Company shall have given the Administrative Agent
irrevocable notice in accordance with subsection 2.11(b), have
all or any portion of such amounts remitted to the Banks on
such Reduction Date and have the Net Investment reduced
accordingly (subject to the payment by the Company of any
amounts required pursuant to subsection 3.2);
(viii) eighth, at the Company's option and subject to
the terms of this Agreement and the Subordinated Notes, to
make payments on account of the Subordinated Notes, in the
aggregate amount specified in the applicable Daily Report;
(ix) ninth, to the extent such expenses are not paid
pursuant to clause (v) above, to the Company's operating
account for the payment of the operating expenses of the
Company incurred or reserved for such Business Day; and
(x) tenth, at the Company's option and subject to the
terms of this Agreement, to the Company to enable the Company
to make payments on account of Restricted Payments in the
aggregate amount specified in the applicable Daily Report, so
long as the outstanding principal amount of the Subordinated
Notes shall be zero at the time of such payment and all
accrued interest thereon shall have been paid in full;
<PAGE>
8
provided, that (I) in no event shall any Receivables Proceeds be
distributed from the Concentration Accounts with respect to clauses
(iii)(y) and (iv)-(x) above on the first or second Business Day
next preceding any Purchase Discount Amount Payment Date or
Settlement Date to the extent the amount remaining in the U.S.
Concentration Account would be less than the aggregate of the
amounts referred to in clauses (i), (ii) and (iii)(x) above payable
on such Purchase Discount Amount Payment Date or Settlement Date;
(II) in no event shall any Receivables Proceeds be distributed from
the Concentration Accounts with respect to clauses (iv)-(x) above
to the extent such distribution would necessitate a payment under
subsection 2.12; (III) in no event shall any Receivables Proceeds
be distributed from the Concentration Accounts with respect to
clauses (vii)-(x) above (other than a distribution in accordance
with the proviso in clause (vii)), if a Potential Termination Event
of a type set forth in subsection 9(b)(ii) has occurred and is
continuing; (IV) in no event shall any Receivables Proceeds be
distributed from the Concentration Accounts with respect to clauses
(viii)-(x) above if a Termination Event shall have occurred and be
continuing or would occur as a result of such payment; and (V)
Receivables Proceeds shall first be distributed out of the U.S.
Concentration Account and the Canada/U.S. Dollar Concentration
Account before any distributions are made out of the
Canada/Canadian Dollar Concentration Account (except in the case of
distributions to be applied to make payments in Canadian Dollars,
which shall instead be distributed out of the Canada/Canadian
Dollar Concentration Account so long as all obligations having a
prior claim to Receivables Proceeds have been paid in full).
(c) During any Amortization Period, all Receivables
Proceeds shall be applied by the Administrative Agent as follows:
(i) first, (x) to the payment of Monthly Servicing Fees of any
Servicer that is not an Affiliate of the Company, the Master
Servicer or any Seller and (y) to the payment of the reasonable
operating expenses of the Company and (to the extent approved by
the Required Banks) any Servicer that is an Affiliate of the
Company, the Master Servicer or any Seller, (ii) second, to the
payment to each Bank of its Commitment Percentage of such
Receivables Proceeds until such time as the Net Investment and
Purchase Discount Amounts thereon and the payment of all other
amounts that are payable to the Administrative Agent and its
Affiliates and the Banks shall have been paid in full and (iii)
after such time as the Net Investment and Purchase Discount Amounts
thereon and all other amounts that are due and payable to the
Administrative Agent and the Banks shall have been paid in full,
the remainder to the Company.
(d) The Master Servicer shall as soon as possible after
receipt of any Collections and other proceeds determine whether or
not they are with respect to Purchased Receivables and shall as
soon as possible notify the Administrative Agent of such
determination. The Administrative Agent shall as soon as possible
thereafter transfer any Collections that are not with respect to
Purchased Receivables from the relevant Concentration Account to
the Master Servicer for payment to the applicable Person, provided,
that with respect to any Collections for which the Administrative
Agent has not been provided such a determination by the Master
Servicer by the end of the Business Day five Business Days from the
date of receipt thereof, such Collections shall be deemed to be
Collections with respect to Purchased Receivables and no other
Person shall have any rights therein except to the extent provided
in applicable state laws governing the laws of restitution and
mistake. Notwithstanding the foregoing, during any Amortization
Period the Administrative Agent shall apply all cash collections
and other proceeds received in respect of an Obligor with respect
to all Receivables of such Obligor first, to pay the
<PAGE>
9
outstanding principal balance of Purchased Receivables (on the date
of such notification) of such Obligor until Purchased Receivables with
respect to such Obligor are paid in full and second, amounts in
excess thereof shall be paid to the Master Servicer for payment to
the Person legally entitled thereto to pay the outstanding
principal balance of all remaining Receivables with respect to such
Obligor. The Master Servicer agrees that in making each such
determination with respect to Collections and other proceeds, the
Master Servicer represents and warrants at such time, to the best
of the Master Servicer's knowledge, that such determination is true
and correct.
2.8 Payments; Pro Rata Treatment. (a) Not later than
11:00 a.m. (New York City time) on each date on which the Banks are
notified to remit payments to the Administrative Agent or as the
Administrative Agent shall direct on account of any Increase in Net
Investment, each Bank shall make available to the Administrative
Agent or as the Administrative Agent shall direct an amount in
immediately available funds equal to the amount of such remittance
calculated as provided herein. The Administrative Agent shall
credit the proceeds of such payments in a timely manner in
accordance with the instructions of the Company.
(b) Unless the Administrative Agent shall have been
notified in writing by any Bank prior to a Closing Date that such
Bank will not make the amount which would constitute its portion of
the Participating Interest or Increase in Net Investment on such
date available to the Administrative Agent, the Administrative
Agent may assume that such Bank has made such amount available to
the Administrative Agent on such Closing Date, and the
Administrative Agent may, in reliance upon such assumption, make
available to the Company, a corresponding amount. If such amount
is made available to the Administrative Agent on a date after such
Closing Date, such Bank shall pay to the Administrative Agent on
demand an amount equal to the product of (i) the daily average
Federal Funds Effective Rate during such period, times (ii) the
amount of such Bank's portion of the Participating Interest or
Increase in Net Investment, times (iii) a fraction the numerator of
which is the number of days that elapse from and including such
Closing Date to the date on which such Bank's funds shall have
become immediately available to the Administrative Agent and the
denominator of which is 360. A certificate of the Administrative
Agent submitted to any Bank with respect to any amounts owing under
this subsection 2.8(b) shall be conclusive, absent manifest error.
If such Bank's portion of the Participating Interest or Increase in
Net Investment is not in fact made available to the Administrative
Agent by such Bank within three Business Days of such Closing Date,
the Administrative Agent shall be entitled to recover such amount
with interest thereon at a per annum rate equal to the ABR plus the
Applicable ABR Margin, on demand, from the Company. No provision
contained in this subsection 2.8(b) shall prejudice any rights of
the Company against any Bank.
(c) Except where an amount is payable to a particular
Bank, the amount of such collections and amounts paid allocable to
the Banks to be remitted to each Bank shall be such Bank's
Commitment Percentage of the aggregate amount thereof allocable to
the Banks.
2.9 Netting of Payments. Anything contained in this
Agreement to the contrary notwithstanding, the Administrative Agent
may, in its sole discretion, net any amounts the Administrative
Agent is required to make available to the Company on any day
pursuant to subsection 2.7(b) or any other subsection of this
Agreement against any amounts the
<PAGE>
10
Administrative Agent is required to make available to the Banks on
such day pursuant to subsection 2.7(b) or any other provision of
this Agreement.
2.10 Termination or Reduction of Commitment. The
Company may on any Settlement Date, upon three Business Days' prior
written notice to the Administrative Agent (effective upon
receipt), (i) terminate the Banks' Commitments hereunder or
(ii) reduce the Maximum Commitment hereunder in an amount equal to
$5,000,000 or a whole multiple of $1,000,000 in excess thereof;
provided, that the Maximum Commitment may not be reduced below the
Net Investment. After receipt by the Administrative Agent of any
such notice from the Company, the Administrative Agent shall
promptly provide a copy of such notice to each Bank. Upon any such
reduction, the Commitment of each Bank shall be reduced pro rata
according to the Commitment Percentage of such Bank. Upon any such
termination or reduction as aforesaid, the Maximum Commitment of
the Banks shall terminate or be reduced, as the case may be. Any
such termination shall not in any way affect the Company's
obligations under Article III hereof. Once terminated or reduced,
the Commitments of the Banks cannot be reinstated unless otherwise
agreed in writing by all of the Banks.
2.11 Optional Retransfer; Reduction of Net Investment.
(a) On any Settlement Date during the Amortization Period on which
the Net Investment equals 10% or less of the Net Investment as of
the first day of the Amortization Period, the Company shall have
the option, exercisable upon three Business Days' prior notice to
the Administrative Agent (effective upon receipt), to acquire the
Banks' total Participating Interest at a transfer price equal to
the Net Investment plus all accrued and unpaid fees (including
without limitation, Purchase Discount Amounts) to the date of such
transfer plus any amounts payable pursuant to subsections 3.2 and
3.3. After receipt by the Administrative Agent of any such notice
from the Company, the Administrative Agent shall promptly provide a
copy of such notice to each Bank.
(b) The Company may, in accordance with subsection
2.7(b)(vii), reduce the Net Investment on any date (a "Reduction
Date") which is a Business Day, without premium or penalty (other
than amounts payable pursuant to subsection 3.2), upon at least
three Business Days' irrevocable notice to the Administrative
Agent, in the case of reductions in the Net Investment that are
part of any Fixed Tranche, and one Business Day's irrevocable
notice to the Administrative Agent, in the case of reductions in
the Net Investment that are part of the Floating Tranche,
specifying (a) the Tranches to be reduced, (b) the date and amount
of such reduction and (c) if such reduction is of a combination of
Fixed Tranche amounts and Floating Tranche amounts, the amount of
reduction allocable to each (and, with respect to such Fixed
Tranche, each Tranche thereof). Upon receipt of any such notice,
the Administrative Agent will promptly notify each Bank thereof.
If any such notice is given, amounts on deposit in the
Concentration Accounts shall be applied pursuant to subsection
2.7(b)(vii) on the date specified therein. Each reduction of the
Net Investment pursuant to this subsection 2.11(b) shall be in an
amount equal to the lesser of (x) a whole multiple of $1,000,000
and (y) the Net Investment then outstanding.
2.12 Mandatory Reductions in Net Investment. (a) On
any Business Day on which the Net Investment exceeds the Maximum
Transfer Amount (except to the extent Excess Application Amounts in
respect of such excess are being held in a cash collateral account
pursuant to subsection 2.12(c)), all Receivables Proceeds shall be
applied on such Business Day
<PAGE>
11
to reduce the Net Investment (and the Purchase Discount Amounts
accrued on the portion thereof so repaid) in such amount as shall
be necessary so that after giving effect to such payment there shall
be no such excess and, to the extent such Receivables Proceeds are
not sufficient to pay such excess (and the Purchase Discount Amount
accrued thereon) on such Business Day, all subsequent Receivables
Proceeds shall be applied to pay such excess (and the Purchase
Discount Amounts accrued thereon) until so paid.
(b) Notwithstanding anything to the contrary set forth
in this Agreement, any mandatory reduction hereunder shall be
applied, unless the Administrative Agent receives instructions from
the Company otherwise, (i) first, to the Floating Tranche, (ii)
second, to any Fixed Tranche the then applicable Transfer Period
with respect to which ends on the date of the relevant payment and
(iii) third, unless otherwise directed by the Company pursuant to
subsection 2.12(c), to the other Fixed Tranches as selected by the
Administrative Agent in its sole discretion, provided that, in any
event, the Company shall pay such amounts, if any, required by
subsection 3.2.
(c) In the event the amount of any mandatory reduction
required to be made on any date pursuant to this subsection 2.12
shall exceed the aggregate of the amounts described in clauses (i)
and (ii) of paragraph (b) above with respect to such date (the
amount of any such excess being called the "Excess Application
Amount"), the Company shall have the right, in lieu of making such
reduction in full, to first apply such reduction in the manner
contemplated by said clauses (i) and (ii) and to deposit an amount
equal to the Excess Application Amount with the Administrative
Agent in a cash collateral account maintained (pursuant to
documentation satisfactory to the Administrative Agent) by and in
the sole dominion and control of the Administrative Agent. Any
amounts so deposited shall be held by the Administrative Agent as
collateral for the obligations of the Company hereunder and applied
to the reduction of the applicable Fixed Tranches at the end of the
current Transfer Periods applicable thereto. On any Business Day
on which (x) collected amounts remain on deposit in or to the
credit of such cash collateral account after giving effect to the
payments made on such day pursuant to this paragraph (c) and (y)
the Company shall have delivered to the Administrative Agent a
written request or a telephonic request (which shall be promptly
confirmed in writing) that such remaining collected amounts be
invested in the Cash Equivalents specified in such request, the
Administrative Agent shall use its reasonable efforts to invest
such remaining collected amounts in such Cash Equivalents;
provided, that the Administrative Agent shall have continuous
dominion and full control over any such investments (and over any
interest that accrues thereon) to the same extent that it has
dominion and control over such cash collateral account and no Cash
Equivalent shall mature after the end of the Transfer Period for
which it is to be applied. Unless a Termination Event or Potential
Termination Event then exists or would result, the Company shall
have the right to withdraw any amount from such cash collateral
account if (i) the applicable Fixed Tranches have been reduced to
zero and accrued Purchase Discount Amount thereon has been paid in
full or (ii) the Net Investment has otherwise ceased to exceed the
Maximum Transfer Amount.
(d) All payments under this subsection 2.12 shall be
subject to subsection 3.2 but otherwise without premium or penalty.
All payments in reduction of the Net Investment under this
subsection 2.12 shall be accompanied by the Purchase Discount
Amounts on the amount being paid accrued to the date of payment.
<PAGE>
12
ARTICLE III
Increased Costs
3.1 Illegality. (a) Notwithstanding any other
provision herein, if the adoption of or any change in any law or
regulation or in the interpretation thereof by any Governmental
Authority charged with the administration or interpretation thereof
shall make it unlawful for any Bank to purchase or maintain a
Eurodollar Participating Interest as contemplated by this Agreement
or to give effect to its obligations as contemplated hereby with
respect to any portion of the Net Investment allocated to any Fixed
Tranche, then, by written notice to the Company and to the
Administrative Agent, such Bank may:
(i) declare that a Eurodollar Participating Interest
will not thereafter be purchased or maintained by such Bank
hereunder, whereupon any request by the Company for a
Eurodollar Participating Interest shall, as to such Bank only,
be deemed a request for an ABR Participating Interest unless
such declaration shall be subsequently withdrawn; and
(ii) require that the outstanding Eurodollar
Participating Interest of such Bank be converted to an ABR
Participating Interest, in which event such Eurodollar
Participating Interest shall be automatically converted to an
ABR Participating Interest as of the effective date of such
notice as provided in paragraph (b) below.
In the event any Bank shall exercise its rights under clause (i) or
(ii) above, all payments which would otherwise have been applied to
reduce the Eurodollar Participating Interest that would have been
held by such Bank or the converted Eurodollar Participating
Interest of such Bank shall instead be applied to reduce the ABR
Participating Interest made by such Bank in lieu of, or resulting
from the conversion of, such Eurodollar Participating Interest.
(b) For purposes of this subsection 3.1, a notice to the
Company by any Bank shall be effective as to each Fixed Tranche, if
lawful, on the last day of the Transfer Period currently applicable
to such Fixed Tranche; in all other cases such notice shall be
effective on the date of receipt by the Company.
3.2 Indemnity. The Company shall indemnify each Bank
against any loss or expense (other than taxes) which such Bank may
sustain or incur as a consequence of (a) any failure by the Company
to fulfill on the date of any Increase in Net Investment or
proposed Increase in Net Investment hereunder the applicable
conditions set forth in Article VI, (b) any failure by the Company
to effectuate an Increase in Net Investment or to convert or
continue any Fixed Tranche or Floating Tranche hereunder after
irrevocable notice of such increase, conversion or continuation has
been given pursuant hereto, (c) any reduction or conversion of a
Fixed Tranche required by any other provision of this Agreement or
otherwise made or deemed made on a date other than the last day of
the Transfer Period applicable thereto, (d) any default in
reduction in respect of the Net Investment or any part thereof or
the payment of Purchase Discount Amount accrued thereon, as and
when such reduction is required or such amount is due and payable,
as the case may be, or (e) the occurrence of any Termination Event,
including, in
<PAGE>
13
each such case, any loss or reasonable expense sustained or
incurred or to be sustained or incurred in liquidating
or employing deposits from third parties acquired to effect or
maintain any Participating Interest or any part thereof as a
Eurodollar Participating Interest. Such loss or reasonable expense
shall exclude loss of margin hereunder but shall include an amount
equal to the excess, if any, as reasonably determined by such Bank,
of (i) its cost of obtaining the funds for the Participating
Interest being reduced, converted or not transferred, converted or
continued (assumed to be the Eurodollar Rate applicable thereto)
for the period from the date of such reduction, conversion or
failure to transfer, convert or continue to the last day of the
Transfer Period for such Eurodollar Participating Interest (or, in
the case of a failure to transfer, convert or continue, the
Transfer Period for such Eurodollar Participating Interest which
would have commenced on the date of such failure) over (ii) the
amount of interest (as reasonably determined by such Bank) that
would be realized by such Bank in reemploying the funds in an
amount equal to the amount of such reduction or conversion or the
amount not transferred, converted or continued for such period or
Transfer Period, as the case may be. A certificate of any Bank
setting forth any amount or amounts which such Bank is entitled to
receive pursuant to this subsection 3.2 (and the reasons therefor)
shall be delivered to the Company through the Administrative Agent
and shall be conclusive absent manifest error.
3.3 Requirements of Law. (a) Notwithstanding any
other provision herein, if after the date of this Agreement any
change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with
the interpretation or administration thereof (whether or not having
the force of law) shall change the basis of taxation of payments to
any Bank in respect of the Eurodollar Participating Interest of
such Bank or any fees or other amounts payable hereunder (other
than changes in respect of (i) taxes imposed on the overall net
income of such Bank by the jurisdiction in which such Bank has its
principal office or by any political subdivision or taxing
authority therein and (ii) any Taxes described in subsection 3.5),
or shall impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets or deposits with or
for the account of or credit extended by such Bank (except any such
reserve requirement which is reflected in the Eurodollar Rate) or
shall impose on such Bank or the interbank eurodollar market any
other condition affecting this Agreement or the Eurodollar
Participating Interest of such Bank, and the result of any of the
foregoing shall be to increase the cost to such Bank of purchasing
or maintaining its Eurodollar Participating Interest or to reduce
the amount of any sum received or receivable by such Bank hereunder
(whether in repayment of the Net Investment, payment of any
Purchase Discount Amount or otherwise) by an amount deemed by such
Bank to be material, then the Company will pay to such Bank upon
demand such additional amount or amounts as will compensate such
Bank for such additional costs incurred or reduction suffered.
(b) If any Bank shall have determined that the adoption
after the date hereof of any law, rule, regulation or guideline
regarding capital adequacy, or any change after the date hereof in
any of the foregoing or in the interpretation or administration of
any of the foregoing by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or any purchasing office of
such Bank) or any Bank's holding company with any request or
directive regarding capital adequacy (whether or not having the
force of law) made or issued after the date hereof by any such
authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Bank's capital or on
the capital of such Bank's holding company, if any,
<PAGE>
14
as a consequence of this Agreement or its obligations pursuant hereto
to a level below that which such Bank or such Bank's holding company
would have achieved but for such adoption, change or compliance
(taking into consideration such Bank's policies and the policies of
such Bank's holding company with respect to capital adequacy) by an
amount deemed by such Bank to be material, then from time to time
the Company shall pay to such Bank such additional amount or
amounts as will compensate such Bank or such Bank's holding company
for any such reduction suffered.
(c) A certificate of each Bank setting forth such amount
or amounts as shall be necessary to compensate such Bank or its
holding company as specified in paragraph (a) or (b) above, as the
case may be, shall be delivered to the Company and shall be
conclusive absent manifest error. The Company shall pay each Bank
the amount shown as due on any such certificate delivered by it
within 10 days after its receipt of the same.
(d) In the event any Bank delivers a notice pursuant to
paragraph (e) below, the Company may require, at the Company's
expense and subject to subsection 3.2, such Bank to assign, at par
plus accrued Purchase Discount Amount and fees, without recourse
(in accordance with subsection 11.4) all its interests, rights and
obligations hereunder (including all of its Commitment and the
Participating Interests at the time held by it) to a financial
institution specified by the Company provided that (i) such
assignment shall not conflict with or violate any law, rule or
regulation or order of any court or other Governmental Authority,
(ii) the Company shall have received the written consent of the
Administrative Agent, which consent shall not unreasonably be
withheld, to such assignment and (iii) the Company shall have paid
to the assigning Bank all monies accrued and owing hereunder to it
(including pursuant to this subsection 3.3).
(e) Promptly after any Bank has determined, in its sole
judgment, that it will make a request for increased compensation
pursuant to this subsection 3.3, such Bank will notify the Company
thereof. Failure on the part of any Bank so to notify the Company
or to demand compensation for any increased costs or reduction in
amounts received or receivable or reduction in return on capital
with respect to any period shall not constitute a waiver of such
Bank's right to demand compensation with respect to such period or
any other period; provided that the Company shall not be under any
obligation to compensate any Bank under subsection 3.3(b) with
respect to increased costs or reductions with respect to any period
prior to the date that is six months prior to such request if such
Bank knew or could reasonably have been expected to be aware of the
circumstances giving rise to such increased costs or reductions and
of the fact that such circumstances would in fact result in such
increased costs or reduction; provided, further, that, the
foregoing limitation shall not apply to any increased costs or
reductions arising out of the retroactive application of any law,
regulation, rule, guideline or directive as aforesaid within such
six month period. The protection of this subsection 3.3 shall be
available to each Bank regardless of any possible contention of the
invalidity or inapplicability of the law, rule, regulation,
guideline or other change or condition which shall have occurred or
been imposed.
3.4 Inability to Determine Eurodollar Rate. In the
event, and on each occasion, that on the day two Business Days
prior to the commencement of any Transfer Period for a Fixed
Tranche the Administrative Agent shall have determined that dollar
deposits, in the respective amounts of the portion of each Bank's
Eurodollar Participating Interest comprising
<PAGE>
15
such Fixed Tranche, are not generally available in the interbank
eurodollar market, or that the rates at which such dollar deposits
are being offered will not adequately and fairly reflect the cost to
any Bank of purchasing or maintaining its Eurodollar Participating
Interest during such Transfer Period, or that reasonable means do
not exist for ascertaining the Eurodollar Rate, the Administrative
Agent shall, as soon as practicable thereafter, give written or telex
notice of such determination to the Company and the Banks. If such
notice is given, the Purchase Discount Amount applicable to that
portion of the Net Investment that was to be allocated to a Fixed
Tranche shall be determined by reference to the ABR. Until such
notice has been withdrawn by the Administrative Agent, no further
Eurodollar Rate elections shall be made. Each determination by the
Administrative Agent hereunder shall be conclusive absent manifest
error.
3.5 Taxes. (a) Any and all payments by the Company,
any Servicer or the Master Servicer (each, a "Tax Indemnifying
Party") to the Administrative Agent or the Banks hereunder shall be
made, in accordance with subsection 2.8, free and clear of and
without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding (i) in the case of each Bank and
the Administrative Agent, taxes that would not be imposed but for a
connection between such Bank or the Administrative Agent (as the
case may be) and the jurisdiction imposing such tax, other than a
connection arising solely by virtue of the activities of such Bank
or the Administrative Agent (as the case may be) pursuant to or in
respect of this Agreement, including, without limitation, entering
into, making purchases pursuant to, receiving payments under, or
enforcing, this Agreement, and (ii) in the case of each Bank and
the Administrative Agent, any United States withholding taxes
payable with respect to payments hereunder under laws (including,
without limitation, any statute, treaty, ruling, determination or
regulation) in effect on the Initial Date (as hereinafter defined)
for such Bank or the Administrative Agent, as the case may be, but
not excluding any United States withholding taxes payable solely as
a result of any change in such laws occurring after the Initial
Date (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). For purposes of this subsection 3.5, the term
"Initial Date" shall mean (i) in the case of the Administrative
Agent or any Bank, the date on which such Person became a party to
this Agreement and (ii) in the case of any assignment including any
assignment by a Bank to a new purchasing office, the date of such
assignment. If any Taxes shall be required by law to be deducted
from or in respect of any sum payable hereunder to any Bank or the
Administrative Agent (i) the sum payable by the relevant Tax
Indemnifying Party shall be increased as may be necessary so that
after making all required deductions (including deductions
applicable to additional sums payable under this subsection 3.5)
such Bank or the Administrative Agent (as the case may be) receives
an amount equal to the sum it would have received had no such
deductions been made, (ii) the relevant Tax Indemnifying Party
shall make such deductions and (iii) the relevant Tax Indemnifying
Party shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law. No
Tax Indemnifying Party shall, however, be required to pay any
amounts pursuant to clause (i) of the preceding sentence to any
Bank or the Administrative Agent not organized under the laws of
the United States of America or a state thereof if such Bank or the
Administrative Agent fails to comply with the requirements of
paragraphs (f) or (g), as the case may be, and paragraph (h) of
this subsection 3.5.
<PAGE>
16
(b) In addition, the Company agrees to pay any present
or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies which arise from the
execution, delivery or registration of, or otherwise with respect
to, this Agreement (hereinafter referred to as "Other Taxes").
(c) Each Tax Indemnifying Party will indemnify each Bank
and the Administrative Agent for the full amount of Taxes and Other
Taxes (including any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this subsection 3.5) paid by
such Bank or the Administrative Agent, as the case may be, and any
liability (including penalties, interest and expenses) arising
therefrom or with respect thereto whether or not such Taxes or
Other Taxes were correctly or legally asserted. Such
indemnification shall be made within 10 days after the date any
Bank or the Administrative Agent, as the case may be, makes written
demand therefor. If a Bank or the Administrative Agent shall
become aware that it is entitled to receive a refund or is
reasonably requested by the relevant Tax Indemnifying Party to
pursue a claim for a refund in respect of Taxes or Other Taxes, it
shall promptly notify such Tax Indemnifying Party of the
availability of such refund (unless instructed to pursue a claim by
such Tax Indemnifying Party) and shall, within 30 days after
receipt of a request by such Tax Indemnifying Party, pursue or
timely claim such refund at such Tax Indemnifying Party's expense.
If any Bank or the Administrative Agent receives a refund in
respect of any Taxes or Other Taxes for which such Bank or the
Administrative Agent has received payment from any Tax Indemnifying
Party hereunder, it shall promptly notify such Tax Indemnifying
Party of such refund and shall, within 30 days after receipt of a
request by such Tax Indemnifying Party (or promptly upon receipt,
if such Tax Indemnifying Party has requested application for such
refund pursuant hereto), repay such refund (plus any interest
received) to such Tax Indemnifying Party, provided that such Tax
Indemnifying Party, upon the request of such Bank or the
Administrative Agent, agrees to return such refund (plus any
penalties, interest or other charges required to be paid) to such
Bank or the Administrative Agent in the event such Bank or the
Administrative Agent is required to repay such refund.
(d) Within 30 days after the date of any payment of
Taxes or Other Taxes withheld by any Tax Indemnifying Party in
respect of any payment to any Bank or the Administrative Agent,
such Tax Indemnifying Party will furnish to the Administrative
Agent, at its address referred to in subsection 11.2, the original
or a certified copy of a receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other
agreement contained herein, the agreements and obligations
contained in this subsection 3.5 shall survive the termination of
this Agreement.
(f) This paragraph (f) shall apply to cases where the
Tax Indemnifying Party is a U.S. Person (within the meaning of the
Code). Each of each Bank and the Administrative Agent that is not
organized under the laws of the United States of America or a state
thereof agrees that at least 10 days prior to the first Purchase
Discount Amount Payment Date following the Initial Date in respect
of such Bank, it will deliver to the Company and the Administrative
Agent (if appropriate) two duly completed copies of either (i)
United States Internal Revenue Service Form 1001 or 4224 or
successor applicable form, as the case may be, certifying in each
case that such Bank or the Administrative Agent, as the case may
be, is entitled to receive
<PAGE>
17
payments under this Agreement payable to it without deduction or
withholding of any United States federal income taxes and backup
withholding taxes or is entitled to receive such payments at
a reduced rate pursuant to a treaty provision or (ii) in the case
of a Bank that is not a "bank" within the meaning of Section
881(c)(3) of the Code, United States Internal Revenue
Service Form W-8 or successor applicable form and a statement from
such Bank certifying to the fact that interest payable to it
hereunder (A) will not be described in Section 871(h)(3)(A) or
Section 881(c)(3)(A), (B) or (C) of the Code and (B) will not be
effectively connected with a trade or business carried on in the
United States by such Bank. Each of each Bank and the
Administrative Agent required to deliver to the Company and the
Administrative Agent a Form 1001, 4224 or W-8 pursuant to the
preceding sentence further undertakes to deliver to the Company and
the Administrative Agent (if appropriate) two further copies of
Form 1001, 4224 or W-8, or successor forms, or other similar manner
of certification and such extensions or renewals thereof as may
reasonably be requested by the Company and, in the case where a
Form W-8 has been delivered, a further statement certifying to the
fact set forth in clause (B) of the preceding sentence (i) at the
times reasonably requested by the Company, (ii) after the
occurrence of an event requiring a change in the most recent form
or statement previously delivered by it to the Company or (iii) in
the case of Form 1001, 4224 or W-8, on or before the date that any
such form expires or becomes obsolete, and, in the case of Form
1001 or 4224, certifying that such Bank is entitled to receive
payments under this Agreement without deduction or withholding of
any United States federal income taxes and backup withholding taxes
or is entitled to receive such payments at a reduced rate pursuant
to a treaty provision, unless such Bank advises the Company that it
is unable lawfully to provide such forms and other certifications
and notifies the Company to such effect. Unless the Company and
the Administrative Agent have received forms, certificates and
other documents satisfactory to them indicating that payments
hereunder to or for any Bank not incorporated under the laws of the
United States or a state thereof are not subject to United States
withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, the relevant Tax Indemnifying Party or the
Administrative Agent, as the case may be, shall withhold such taxes
from such payments at the applicable statutory rate.
(g) This paragraph (g) shall apply to cases where the
Tax Indemnifying Party is incorporated in or under the laws of
Canada. Each Bank and the Administrative Agent that is not
incorporated within or under the laws of Canada and that is
claiming such additional amounts agrees that within a reasonable
period of time following the request of the relevant Tax
Indemnifying Party, it will, to the extent it is legally entitled
to a reduction in the rate of or exemption from Canadian
withholding taxes, deliver to the such Tax Indemnifying Party and
the Administrative Agent (if appropriate) any form or document
required under the laws, regulations, official interpretations or
treaties enacted by, made or entered into with Canada properly
completed and duly executed by such Bank or Administrative Agent
establishing that any payments hereunder are exempt from Canadian
withholding tax or subject to a reduced rate of Canadian
withholding tax, as the case may be; provided that, in the sole
determination of such Bank or the Administrative Agent, such form
or document shall not be otherwise disadvantageous to such Bank or
the Administrative Agent.
(h) Any Bank claiming any additional amounts payable
pursuant to this subsection 3.5 shall use reasonable efforts
(consistent with legal and regulatory restrictions) to file any
certificate or document requested by the relevant Tax Indemnifying
Party or to change
<PAGE>
18
the jurisdiction of its applicable purchasing office if the
making of such a filing or change would avoid the need for or
reduce the amount of any such additional amounts which
may thereafter accrue and would not, in the sole determination of
such Bank, be otherwise disadvantageous to such Bank.
ARTICLE IV
Termination
4.1 Termination. This Agreement will terminate at such
time after the expiration of the Commitment Period when the Net
Investment has been reduced to zero and all other amounts owing to
the Banks and the Administrative Agent hereunder shall have been
paid in full; provided, however, that the indemnities of the
Company, the Servicers and the Master Servicer to the Banks and the
Administrative Agent set forth in this Agreement (including those
set forth in Article III) shall survive such termination. Upon (i)
the expiration of the Commitment Period and (ii) the reduction of
the Net Investment to zero and the payment in full of all other
amounts owing to the Banks and the Administrative Agent hereunder,
the Administrative Agent shall, at the expense of the Company,
execute such Uniform Commercial Code termination statements and
such other documents, and take such other actions, as the Company
may reasonably request to evidence the termination of the ownership
interest of the Banks in the Receivables and the payment of all
amounts owing pursuant to and in connection with this Agreement.
ARTICLE V
Covenants, Representations and Warranties
5.1 Representations and Warranties of the Company
Relating to the Company. The Company hereby represents and
warrants to the Administrative Agent and the Banks, (x) as of the
Effective Date, and (y) with respect to an Increase in Net
Investment, as of the related Closing Date, unless, in either case,
such representation or warranty expressly relates only to a prior
date, that:
(a) Organization; Corporate Powers. The Company (i) is
a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is incorporated,
(ii) has all requisite corporate power and authority, and all
material licenses, permits, franchises, consents and approvals, to
own or lease its property and assets and to carry on its business
as now conducted and as proposed to be conducted, (iii) is
qualified and in good standing as a foreign corporation to do
business in every jurisdiction where such qualification is
necessary, except where the failure so to qualify would not have a
Material Adverse Effect and (iv) has the corporate power and
authority to execute, deliver and perform each of the Transaction
Documents and each agreement or instrument contemplated hereby or
thereby to which it is or will be a party.
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19
(b) Authorization. The execution, delivery and
performance of each of the Transaction Documents to which the
Company is a party, the assignment and transfer of the
Participating Interests hereunder and the consummation of the other
transactions contemplated by any of the foregoing (collectively,
the "Transactions") (i) have been duly authorized by all requisite
corporate and, if required, stockholder action and (ii) will not
(x) violate (A) any provision of law, statute, rule or regulation
(including, without limitation, Regulations G, T, U and X) or the
certificate of incorporation or by-laws (or similar governing
documents) of the Company, (B) any applicable order of any court or
any rule, regulation or order of any Governmental Authority or (C)
any indenture, certificate of designation for preferred stock,
agreement or other instrument to which the Company is a party or by
which the Company or any of its property is bound, (y) be in
conflict with, result in a breach of or constitute (with notice or
lapse of time or both) a default under any such indenture,
agreement or other instrument where any such conflict, violation,
breach or default referred to in clause (ii)(x) or (ii)(y) of this
subsection 5.1(b), individually or in the aggregate, would have a
Material Adverse Effect or (z) result in the creation or imposition
of any Lien upon any property or assets of the Company, except for
Liens created by this Agreement.
(c) Enforceability. This Agreement has been duly
executed and delivered by the Company and constitutes, and each
other Transaction Document if and when executed and delivered by
the Company will constitute, a legal, valid and binding obligation
of the Company enforceable against the Company in accordance with
its terms, except as enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws
affecting creditors' rights generally and except as enforceability
may be limited by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity
or at law).
(d) Consents. All consents and approvals of, filings
and registrations with, and other actions in respect of, all
Governmental Authorities required in order to make or consummate
the Transactions have been obtained, given, filed or taken and are
in full force and effect, other than any such consents, approvals,
filings or other actions, the failure to obtain or make which could
not reasonably be expected to result in a Material Adverse Effect.
(e) Litigation, etc. (i) There are not any actions,
suits or proceedings at law or in equity or by or before any court
or Governmental Authority now pending or, to the knowledge of the
Company, threatened against or affecting the Company or any
property or rights of the Company as to which there is a reasonable
possibility of an adverse determination and which (x) if adversely
determined, could individually or in the aggregate result in a
Material Adverse Effect or (y) involve the Transaction Documents or
(z) if adversely determined could materially adversely affect the
Transactions.
(ii) The Company is not in default with respect to any
law, order, judgment, writ, injunction, decree, rule or regulation
of any Governmental Authority where such default could have a
Material Adverse Effect. The assignment and transfer of the
Participating Interests hereunder, the use of the proceeds thereof
and the other Transactions will not violate any applicable law or
regulation or violate or be prohibited by any judgment, writ,
injunction, decree or order of any court or Governmental Authority
or subject the Company to any civil or criminal penalty or fine.
<PAGE>
20
(f) No Default, etc. (i) The Company is not a party to
any agreement or instrument or subject to any corporate restriction
that has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(ii) No indenture, certificate of designation for
preferred stock, agreement or other instrument to which the Company
is a party will prohibit or materially restrain, or have the effect
of prohibiting or materially restraining, or imposing materially
adverse conditions upon, the consummation of any of the
Transactions.
(iii) The Company is not in default in any manner under
any provision of any indenture or other agreement or instrument
evidencing Indebtedness or any other material agreement or
instrument to which it is a party or by which it or any of its
properties or assets are or may be bound, in either case where such
default could result in a Material Adverse Effect. After giving
effect to the Transactions, no Termination Event or Potential
Termination Event shall have occurred and be continuing.
(g) Ownership of Property; Liens. The Company has good
and marketable title to, or valid leasehold interests in, or
easements on or other limited property interests in, all its
material properties and assets, except for minor defects in title
and limitations on property interests that do not interfere with
its ability to conduct its business as currently conducted or to
utilize such properties and assets for their intended purposes.
All such material properties and assets are free and clear of
Liens, other than Liens expressly permitted by subsection 8.3.
(h) Investment Company Act; Other Regulations. (i) The
Company is not an "investment company", or a company "controlled"
by an "investment company", within the meaning of the Investment
Company Act of 1940, as amended.
(ii) The Company is not a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
(iii) The Company is not engaged principally, or as one
of its important activities, in the business of extending credit
for the purpose of purchasing or carrying Margin Stock.
(iv) The assignment and transfer of the Participating
Interests hereunder and the use of the proceeds thereof and the
other Transactions will not violate or be inconsistent with the
provisions of the Regulations of the Board, including Regulations
G, T, U and X.
(i) Taxes. The Company has filed or caused to be filed
all Federal, and all material state and local, tax returns required
to have been filed by it and has paid or caused to be paid all
taxes shown thereon to be due and payable, and any assessments
received by it, except taxes that are being contested in accordance
with subsection 7.4. For purposes of this paragraph, "taxes" shall
mean any present or future tax, levy, impost, duty, charge,
assessment or fee of any nature (including interest, penalties and
additions thereto) that is imposed by any Governmental Authority.
<PAGE>
21
(j) Ownership; Subsidiaries. All the issued and
outstanding capital stock of the Company is owned, legally and
beneficially, by C&A Products. The Company has no Subsidiaries.
(k) Accuracy and Completeness of Information. The
information, reports, financial statements, exhibits and schedules
furnished by or on behalf of the Company to the Administrative
Agent or any Bank in connection with the negotiation of any
Transaction Document or included therein or delivered pursuant
thereto, when taken as a whole, did not contain, and as they may be
amended, supplemented or modified from time to time, will not
contain, as of the Effective Date any material misstatement of fact
and did not omit, and as they may be amended, supplemented or
modified from time to time, will not omit, to state as of the
Effective Date any material fact necessary to make the statements
therein, in the light of the circumstances under which they were,
are or will be made, not materially misleading in their
presentation of the Transactions or of the Company.
(l) Pro Forma Balance Sheet. The Company has heretofore
furnished to the Administrative Agent and each of the Banks its pro
forma balance sheet after giving effect to the transactions to take
place on the Effective Date. Such balance sheet (i) was prepared
in good faith on the basis of reasonable assumptions and (ii)
discloses all material liabilities, direct or contingent, of the
Company as of the date thereof.
(m) No Material Adverse Change. There has been no
material adverse change in the business, properties, assets,
operations or financial condition of the Company (after giving
effect to the Transactions contemplated to occur on or prior to the
Effective Date pursuant to the Transaction Documents) since the
date of the pro forma balance sheet referred to in paragraph (l)
above.
(n) Solvency. (i) The fair salable value of the assets
of the Company exceeds the amount that will be required to be paid
on or in respect of the existing debts and other liabilities
(including contingent liabilities) of the Company. After giving
effect to the Transactions to occur on the Effective Date or such
Closing Date, as applicable, the fair salable value of the assets
of the Company will exceed the amount that will be required to be
paid on or in respect of the existing debts and other liabilities
(including contingent liabilities) of the Company.
(ii) The assets of the Company do not constitute unreasonably
small capital to carry out its business as conducted or as proposed
to be conducted. After giving effect to the Transactions to occur
on the Effective Date or such Closing Date, as applicable, the
assets of the Company will not constitute unreasonably small
capital for the Company to carry out its business as now conducted
and as proposed to be conducted, including the capital needs of the
Company taking into account the particular capital requirements of
the business conducted by it and projected capital requirements and
capital availability thereof.
(iii) The Company does not intend to incur debts beyond its
ability to pay such debts as they mature, taking into account the
timing and amounts of cash to be received by the Company and of
amounts to be payable on or in respect of debt of the Company.
<PAGE>
22
(o) Employee Benefit Plans. The Company and each of its
ERISA Affiliates is in compliance in all material respects with the
applicable provisions of ERISA and the regulations and published
interpretations thereunder except for such noncompliance which
would not be expected to result in a Material Adverse Effect. No
Reportable Event has occurred as to which the Company or any of its
ERISA Affiliates was required to file a report with the PBGC, other
than reports for which the 30 day notice requirement is waived,
reports that have been filed and reports the failure of which to
file would not result in a Material Adverse Effect and, as of the
Effective Date, the present value of all benefit liabilities under
each Plan of the Company or any of its ERISA Affiliates (on a
termination basis and based on those assumptions used to fund such
Plan) did not, as of the last annual valuation report applicable
thereto, exceed by more than $7,500,000 the value of the assets of
such Plan. None of the Company or any of its ERISA Affiliates has
incurred or could reasonably be expected to incur any Withdrawal
Liability that could result in a Material Adverse Effect. None of
the Company or any of its ERISA Affiliates has received any
notification that any Multiemployer Plan is in reorganization or
has been terminated within the meaning of Title IV of ERISA, and no
Multiemployer Plan is reasonably expected to be in reorganization
or to be terminated where such reorganization or termination has
resulted or could reasonably be expected to result, through
increases in the contributions required to be made to such Plan or
otherwise, in a Material Adverse Effect.
The representations and warranties set forth in this
subsection 5.1 shall survive the initial transfer of a
Participating Interest and any Increase in the Net Investment.
Upon discovery by the Company, any Bank or the Administrative Agent
of a breach of any of the foregoing representations and warranties,
the Person discovering such breach shall give prompt written notice
to such other Persons.
5.2 Representations and Warranties of the Company
Relating to this Agreement and the Receivables. The Company hereby
represents and warrants to the Administrative Agent and the Banks,
(x) as of the Effective Date, and (y) with respect to an Increase
in Net Investment, as of the related Closing Date, unless, in
either case, such representation or warranty expressly relates only
to a prior date, that:
(a) The document or computer file delivered pursuant to
subsection 6.1(j) is an accurate and complete listing in all
material respects of all the Receivables as of the date set
forth therein and the information contained therein with
respect to the identity of such Receivables is true and
correct in all material respects as of such date. As of such
date, the aggregate amount of Eligible Receivables is as set
forth on such document or file.
(b) The Company has not sold, assigned or transferred,
or granted any existing Lien on, the Receivables or any of the
other Pooled Property, or any interest therein, to any Person,
except the Banks hereunder.
(c) Other than with respect to Receivables which the
Company shall have stated in writing (in the Daily Report or
otherwise) on the Closing Date therefor are not Eligible
Receivables on such date, with respect to each Receivable, all
consents, licenses, approvals or authorizations of or
registrations or declarations with any Governmental Authority
required to be obtained, effected or given by the Company in
connection with
<PAGE>
23
the conveyance of such Receivable to the Banks
have been duly obtained, effected or given and are in full
force and effect.
(d) This Agreement effects a valid transfer and
assignment to the Banks of an undivided, participating
ownership interest in all right, title and interest of the
Company in the Receivables, the Related Property and the
proceeds thereof, including Recoveries relating thereto, or,
if this Agreement does not effect a transfer and assignment of
such an ownership interest, it effects a grant of a "security
interest" (as defined in the Uniform Commercial Code as in
effect in the State of New York) in such property to the
Banks, which, in the case of existing Receivables, the Related
Property and the proceeds thereof, is enforceable upon
execution and delivery of this Agreement, and which will be
enforceable with respect to such Receivables hereafter created
and the proceeds thereof upon such creation. On or prior to
the initial Closing Date, all filings and other acts necessary
or advisable (including but not limited to all filings and
other acts necessary or advisable under the Uniform Commercial
Code of each relevant jurisdiction) have been made or
performed in order to grant the Banks a first priority
perfected ownership interest in respect of all Receivables and
Related Property. On the Effective Date and, in the case of
the Receivables hereafter created and the proceeds thereof,
upon the creation thereof, the Banks shall have a first
priority perfected ownership or security interest in such
property.
(e) This Agreement effects a grant of a "security
interest" (as defined in the Uniform Commercial Code as in
effect in the State of New York) in all of the Equipment, the
Transferred Agreement and the Accounts to the Banks, which, in
the case of such property and the proceeds thereof existing as
of the date hereof, is enforceable upon execution and delivery
of this Agreement, and which will be enforceable with respect
to such property hereafter created and the proceeds thereof
upon such creation. On or prior to the initial Closing Date,
all filings and other acts necessary or advisable (including
but not limited to all filings and other acts necessary or
advisable under the Uniform Commercial Code of each relevant
jurisdiction) have been made or performed in order to grant
the Banks a first priority perfected ownership interest in
respect of all such property. On the Effective Date and, in
the case of such property hereafter created and the proceeds
thereof, upon the creation thereof, the Banks shall have a
first priority perfected ownership or security interest in
such property.
(f) The chief executive office of the Company is listed
on Schedule 2, which office is the place where the Company is
"located" for the purposes of Section 9-103(3)(d) of the
Uniform Commercial Code of the State in which such office is
located, and the offices at which the Company keeps its
records concerning the Receivables are also listed on said
Schedule.
(g) No Termination Event or Potential Termination Event
has occurred and is continuing.
(h) Each Receivable that is included by the Company in
its determination of the aggregate Adjusted Principal Amount
of all Eligible Receivables shall be a Receivable
<PAGE>
24
with respect to which all of the criteria contained in the
definition of "Eligible Receivable" hereunder are satisfied.
The representations and warranties set forth in this
subsection 5.2 shall survive the initial transfer of a
Participating Interest and any Increase in Net Investment. Upon
discovery by the Company, any Bank or the Administrative Agent or
of a breach of any of the foregoing representations and warranties,
the Person discovering such breach shall give prompt written notice
to such other Persons.
5.3 Retransfer Obligation. (a) In the event of any
breach of any of the representations or warranties of the Company
contained in subsection 5.2(d), (e), (f) or (h), then upon the
earlier to occur of the discovery of such event by the Company, or
receipt by the Company of written notice of such event given by the
Administrative Agent, the outstanding Principal Amount of
Receivables shall be reduced by the Principal Amount of Receivables
as to which such representations and warranties were breached;
provided, however, that (i) prior to the Amortization Period, to
the extent that such a reduction would cause the Invested
Percentage to be more than the Maximum Invested Percentage, the
Company agrees to acquire such Receivables and any Related Property
with respect thereto on the terms and conditions set forth in
paragraph (b) below and (ii) during the Amortization Period, the
Company agrees to acquire such Receivables and any Related Property
with respect thereto on the terms and conditions set forth in
paragraph (b) below.
(b) If any breach of a representation or warranty which
necessitates the Company's reacquisition of a Receivable pursuant
to paragraph (a) above remains uncured on the date which is 30 days
after discovery or notice of such breach, the Company shall acquire
such Receivable and any Related Property with respect thereto by
depositing into the relevant Concentration Account in immediately
available funds on such 30th day (or, if such day is not a Business
Day, on the next succeeding Business Day, an amount equal to (i)
prior to an Amortization Period, the lesser of (A) the amount
necessary to cause the Invested Percentage to equal the Maximum
Invested Percentage and (B) the Principal Amount of such Receivable
or (ii) during an Amortization Period, the Principal Amount of such
Receivables (in either case, a "Retransfer Payment"). Upon deposit
of the Retransfer Payment, the Banks shall automatically and
without further action be deemed to transfer, assign, set-over and
otherwise convey to the Company, free and clear of any Lien created
by the Banks but otherwise without recourse, representation or
warranty, all the right, title and interest of the Banks in and to
such Receivable, all Related Property with respect thereto, all
monies due or to become due with respect thereto and all proceeds
thereof; and such reacquired Receivable shall be treated by the
Banks as collected in full as of the date on which it was
transferred. The Administrative Agent shall execute such documents
and instruments of transfer or assignment and take such other
actions as shall reasonably be requested by the Company to effect
the conveyance of such Receivables pursuant to this subsection 5.3.
The obligation to reacquire any Receivable shall constitute the
sole remedy respecting any breach of the representations,
warranties and covenants set forth in subsection 5.2(d), (e), (f)
or (h) with respect to such Receivables available to Banks or the
Administrative Agent on behalf of the Banks.
5.4 Obligations Unaffected. The obligations of the
Company to the Administrative Agent and the Banks under this
Agreement shall not be affected by reason of any
<PAGE>
25
invalidity, illegality or irregularity of any Receivable or any
transfer and assignment of a Receivable.
ARTICLE VI
Conditions to Effectiveness/Transfers/Reinvestments
6.1 Effective Date. This Agreement shall become
effective on the date (the "Effective Date") on which each of the
following conditions precedent are either (x) satisfied or (y)
waived by the Required Banks:
(a) The Company, each Servicer and the Master Servicer
shall have delivered to the Administrative Agent, with a copy
for each Bank, (i) a copy of the certificate or articles of
incorporation, including all amendments thereto, of such
Person, certified as of a recent date by the Secretary of
State of the state of incorporation thereof, and such
certificate or articles shall be in form and substance
satisfactory to the Administrative Agent, and a certificate as
to the good standing of such Person as of a recent date, from
such Secretary of State; (ii) a certificate of the Secretary
or Assistant Secretary of such Person dated the Effective Date
and certifying (A) that attached thereto is a true and
complete copy of the Bylaws of such Person as in effect on the
Effective Date and at all times since a date prior to the date
of the resolutions described in clause (B) below, (B) that
attached thereto is a true and complete copy of resolutions in
form and substance satisfactory to the Administrative Agent
and duly adopted by the Board of Directors of such Person
authorizing the execution, delivery and performance of the
Transaction Documents to which such Person is a party and the
transactions contemplated thereby, and that such resolutions
have not been modified, rescinded or amended and are in full
force and effect, (C) that the certificate or articles of
incorporation of such Person has not been amended since the
date of the last amendment thereto shown on the certificate of
good standing furnished pursuant to clause (i) above and (D)
as to the incumbency and specimen signature of each officer
executing any Transaction Document or any other document
delivered in connection herewith or therewith on behalf of
such Person; and (iii) a certificate of another officer as to
the incumbency and specimen signature of the Secretary or
Assistant Secretary executing the certificate pursuant to
clause (ii) above.
(b) There shall have been delivered to the
Administrative Agent, with a copy for each Bank, the written
opinions of (i) Cravath, Swaine & Moore, special counsel for
the Company, the Servicers and the Master Servicer, in
substantially the forms of Exhibits D-1 and D-2, (ii)
Elizabeth R. Philipp, Esq., general counsel of Collins &
Aikman Corporation, in substantially the form of Exhibit D-3,
(iii) Stikeman, Elliott, special Canadian counsel, in
substantially the form of Exhibit D-4, and (iv) each local
state counsel listed on Schedule 6, in substantially the form
of Exhibit D-5, in each case addressed to the Administrative
Agent and the Banks, dated the Effective Date, and in form and
substance satisfactory to the Administrative Agent, and such
additional opinions, if any, as may be reasonably requested by
the Administrative Agent.
<PAGE>
26
(c) Appropriate financing statements relating to the
Receivables shall have been executed and delivered and shall
be in proper form for filing in each appropriate filing office
in the jurisdiction in which the Company maintains its
principal executive office.
(d) The Administrative Agent shall have received search
reports satisfactory to the Administrative Agent dated a date
reasonably near to the Effective Date, listing all effective
financing statements which name the Company as debtor and
which are filed in the jurisdictions in which filings were
made pursuant to paragraph (c) above, together with copies of
such other financing statements or notices of assignment (none
of which shall cover any Receivables unless a corresponding
termination statement has been delivered to the Administrative
Agent).
(e) There shall have been delivered to the
Administrative Agent search reports acceptable to the
Administrative Agent dated a date reasonably near the
Effective Date confirming the absence of any tax lien and
judgment lien filings made against the Company or any of its
assets in any filing office in any jurisdiction where filings
were made pursuant to paragraph (c) above.
(f) The Administrative Agent shall have received a
certificate from the Company, dated the Effective Date and
signed by one of its Responsible Officers, in form and
substance satisfactory to the Administrative Agent, confirming
compliance with the conditions precedent set forth in
subsection 6.2.
(g) The Administrative Agent shall have received all
fees and other amounts due and payable on or prior to the
Effective Date.
(h) The Administrative Agent shall have received (i) a
copy of the Receivables Sale Agreement, duly executed on
behalf of C&A Products, each of the Sellers and the Company
and (ii) the Subordination Agreement, duly executed on behalf
of each of C&A Products, each of the Sellers and the Company.
(i) The initial funding under the Credit Agreement shall
have occurred or shall occur simultaneously with the initial
purchase under this Agreement.
(j) The Administrative Agent shall have received a
microfiche or other tangible evidence, as certified by a
Responsible Officer of the Company, acceptable to the
Administrative Agent, showing as of a date acceptable to the
Administrative Agent prior to the Effective Date the Obligors
whose Receivables have been transferred to the Company and the
balance of the Receivables with respect to each such Obligor
as of such date.
(k) A Responsible Officer of the Company shall have
certified that all conditions to the obligations of the
Company and each of the Sellers under the Receivables Sale
Agreement shall have been satisfied in all respects (or waived
by the Required Banks).
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27
(l) The Administrative Agent shall have received an
agreed-upon procedures letter relating to historical financial
information with respect to the Receivables from independent
auditors satisfactory to the Administrative Agent.
(m) The Administrative Agent shall have received, as
certified by a Responsible Officer of the Company, copies of
(i) the written Policies, or, to the extent that the credit
and collection policies of the Sellers are not in written form
at the Effective Date, a written description of the historical
credit and collection practices of the Sellers and proposed
practices for the Company, in each case in form and substance
acceptable to the Administrative Agent and (ii) the Company
Policies.
(n) The Administrative Agent shall have received
licenses or contingent licenses, or the Administrative Agent
shall otherwise be satisfied with its ability, to use any
computer programs, material tapes, disks, cassettes and data
necessary or advisable to permit the collection of the
Receivables by a Servicer without the participation of any
Seller or the Company.
(o) The Administrative Agent shall have reviewed the
computer programs, material, data and back-up plans of the
Sellers required for the collection of Receivables and shall
be satisfied that the foregoing, including the procedures of
the Sellers for the preparation, storage and retrieval
thereof, are sufficient to permit (i) the Company or the
Administrative Agent to collect the Receivables with or
without the participation of the Sellers or any servicer and
(ii) a third-party servicer to collect the Receivables with or
without the participation of the Sellers or the Company.
(p) The composition of the Company's Board of Directors
(including the independent director) shall be reasonably
acceptable to the Administrative Agent.
(q) The Administrative Agent shall have received the pro
forma opening balance sheet for the Company referred to in
subsection 5.1(l).
(r) The Administrative Agent shall have received a
certificate dated the Effective Date and signed by a
Responsible Officer of the Company, substantially in the form
of Exhibit G, to the effect that the Company will be solvent
after giving effect to the transactions occurring on the
Effective Date.
6.2 Condition to each Increase in Net Investment. The
obligations of the Banks to increase the Net Investment on any
Closing Date is subject to the conditions that:
(a) no Termination Event or Potential Termination Event
shall have occurred and then be continuing, and no such
Termination Event or Potential Termination Event shall occur
as a result of the proposed Increase in Net Investment on such
Closing Date;
(b) the representations and warranties of the Company
set forth in Article V shall be true and correct in all
material respects on and as of such Closing Date;
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28
(c) the representations and warranties of the Servicers
and the Master Servicer set forth in Article XII shall be true
and correct in all material respects on and as of such Closing
Date; and
(d) the Administrative Agent shall have timely received
all notices, statements and certificates relating to such
Closing Date required by subsections 2.3 and 12.5.
Each Increase in Net Investment on any Closing Date shall
constitute a representation and warranty by the Company that the
conditions to the transfer thereof on such Closing Date, as the
case may be, have been satisfied.
ARTICLE VII
Affirmative Covenants
The Company hereby agrees that, unless and until this
Agreement is terminated pursuant to subsection 4.1, the Company
shall:
7.1 Financial Statements. Furnish to each Bank:
(a) as soon as available, but in any event within
90 days after the end of each fiscal year of the Company, a
copy of the balance sheet of the Company as at the end of such
year and the related statements of income and retained
earnings and cash flows for such year, setting forth in each
case (beginning with the financial statements delivered for
the 1995 fiscal year) in comparative form the figures for the
previous year, reported on without a "going concern" or like
qualification or exception, or qualification arising out of
the scope of the audit, by Arthur Andersen & Co. or other
independent certified public accountants of nationally
recognized standing reasonably acceptable to the
Administrative Agent; and
(b) as soon as available, but in any event not later
than 45 days after the end of each of the first three
quarterly periods of each fiscal year of the Company, the
unaudited balance sheet of the Company as at the end of such
quarter and the related unaudited statements of income and
retained earnings and cash flows of the Company for such
quarter and the portion of the fiscal year through the end of
such quarter, setting forth in each case, with respect to any
such financial statements covering any fiscal quarter
commencing after the first anniversary of the Effective Date,
in comparative form the figures for the corresponding quarter
and portion of the previous year, certified by a Responsible
Officer of the Company as being fairly stated in all material
respects (subject to normal year-end audit adjustments);
all such financial statements shall be complete and correct in all
material respects and shall be prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods
reflected therein and with prior periods (except as approved by
such accountants or Responsible Officer, as the case may be, and
disclosed therein).
<PAGE>
29
7.2 Certificates; Other Information. Furnish to each
Bank:
(a) concurrently with the delivery of the financial
statements referred to in subsection 7.1(a), a certificate of
the independent certified public accountants reporting on such
financial statements stating that in making the examination
necessary therefor no knowledge was obtained of any
Termination Event or Potential Termination Event, except as
specified in such certificate;
(b) concurrently with the delivery of the financial
statements referred to in subsections 7.1(a) or (b), a
certificate of a Responsible Officer of the Company stating
that, to the best of such Responsible Officer's knowledge, the
Company during such period has observed or performed all of
its covenants and other agreements, and satisfied every
condition, contained in the Transaction Documents to which it
is a party to be observed, performed or satisfied by it, and
that such Responsible Officer has obtained no knowledge of any
Termination Event or Potential Termination Event, except as
specified in such certificate; and
(c) promptly, such additional financial and other
information as any Bank may from time to time reasonably
request by written notice to the Company (through the
Administrative Agent).
7.3 Existence; Businesses and Properties; Insurance;
Receivables. (a) Do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal
existence.
(b) Do or cause to be done all things necessary to
obtain, preserve, renew, extend and keep in full force and effect
the rights, licenses, permits, franchises, authorizations, patents,
copyrights, trademarks and trade names material to the conduct of
its business; comply in all material respects with all applicable
laws, rules, regulations and orders of any Governmental Authority,
whether now in effect or hereafter enacted; and at all times
maintain and preserve all property material to the conduct of such
business and keep such property in good repair, working order and
condition and from time to time make, or cause to be made, all
needful and proper repairs, renewals, additions, improvements and
replacements thereto necessary in order that the business carried
on in connection therewith, if any, may be properly conducted at
all times.
(c) Keep its insurable properties insured (including
through self-insurance) at all times by financially sound and
reputable insurers in such amounts as shall be customary for
similar businesses and maintain such other insurance, of such
types, to such extent and against such risks, as is customary with
companies in the same or similar businesses; and maintain such
other insurance as may be required by law.
(d) Defend the right, title and interest of the Banks
in, to and under the Receivables and the other Pooled Property,
whether now existing or hereafter created, against all claims of
third parties claiming through or under the Company, the Sellers,
the Master Servicer or the Servicers.
<PAGE>
30
(e) Duly fulfill all material obligations on its part to
be fulfilled under or in connection with each Receivable and do
nothing that could reasonably be expected to impair the rights of
the Banks in any Receivable.
7.4 Taxes. Pay and discharge promptly all taxes,
assessments and governmental charges or levies imposed upon it or
upon its income or profits or in respect of its property, before
the same shall become delinquent or in default, as well as all
lawful claims for labor, materials and supplies or otherwise which,
if unpaid, might give rise to a Lien upon such properties or any
part thereof; provided, however, that such payment and discharge
shall not be required with respect to any such tax, assessment,
charge, levy or claim so long as (a) the validity or amount thereof
shall be contested in good faith by appropriate proceedings and the
Company shall set aside on its books adequate reserves as required
by GAAP with respect thereto, (b) such tax, assessment, charge,
levy or claim is in respect of property taxes for property that the
Company has determined to abandon and the sole recourse for such
tax, assessment, charge, levy or claim is to such property or (c)
the amount of such taxes assessments, charges, levies and claims
and interest and penalties thereon does not exceed $1,000,000 in
the aggregate.
7.5 Inspection of Property; Books and Records;
Discussions. Maintain all financial records in accordance with
GAAP and permit any Persons designated by the Administrative Agent
(or, during the continuance of any Termination Event, any Bank) to
visit and inspect the financial records and the properties of the
Company at reasonable times, upon reasonable notice and as often as
reasonably requested and to make extracts from and copies of such
financial records, and permit any Persons designated by the
Administrative Agent (or, during the continuance of any Termination
Event, any Bank) to discuss the affairs, finances and condition of
the Company with the officers thereof and independent accountants
therefor (subject to reasonable requirements of confidentiality,
including requirements imposed by law or by contract).
7.6 Notices. Promptly give notice to the Administrative
Agent and each Bank of:
(a) the occurrence of any Termination Event, Potential
Termination Event, Servicer Default or Servicer Event of
Default, specifying the nature and extent thereof and the
corrective action (if any) proposed to be taken with respect
thereto;
(b) any Lien not permitted by subsection 8.3 on any
Receivable or any other Pooled Property other than the
conveyances and Liens hereunder and under the Receivables Sale
Agreement;
(c) the filing or commencement of any action, suit or
proceeding, whether at law or in equity or by or before any
Governmental Authority, against the Company in respect of
which there is a reasonable possibility of an adverse
determination and which, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;
and
(d) any development known to a Responsible Officer of
the Company that has resulted in, or could reasonably be
anticipated to result in, a Material Adverse Effect.
<PAGE>
31
7.7 ERISA. (a) Comply in all material respects with
the applicable provisions of ERISA and (b) furnish to the
Administrative Agent and each Bank (i) as soon as possible, and in
any event within 30 days after any Responsible Officer of the
Company or any ERISA Affiliate of any of them knows or has reason
to know that any Reportable Event has occurred that alone or
together with any other Reportable Event could reasonably be
expected to result in liability of the Company or any of its ERISA
Affiliates to the PBGC in an aggregate amount exceeding
$10,000,000, a statement of a Responsible Officer of the Company
setting forth details as to such Reportable Event and the action
proposed to be taken with respect thereto, together with a copy of
the notice, if any, of such Reportable Event given to the PBGC,
(ii) promptly after any Responsible Officer of the Company learns
of receipt thereof, a copy of any notice the Company or any of its
ERISA Affiliates may receive from the PBGC relating to the
intention of the PBGC to terminate any Plan or Plans (other than a
Plan maintained by any of their ERISA Affiliates which is
considered an ERISA Affiliate only pursuant to subsection (m) or
(o) of Section 414 of the Code) or to appoint a trustee to
administer any Plan or Plans, (iii) within 20 days after the due
date for filing with the PBGC pursuant to Section 412(n) of the
Code a notice of failure to make a required installment or other
payment with respect to a Plan, a statement of a Responsible
Officer of the Company setting forth details as to such failure and
the action proposed to be taken with respect thereto, together with
a copy of such notice given to the PBGC and (iv) promptly after any
Responsible Officer of the Company learns thereof and in any event
within 30 days after receipt thereof by the Company or any ERISA
Affiliate from the sponsor of a Multiemployer Plan, a copy of each
notice received by the Company or such ERISA Affiliate concerning
(A) the imposition of Withdrawal Liability or (B) a determination
that a Multiemployer Plan is, or is expected to be, terminated or
in reorganization, in each case within the meaning of Title IV of
ERISA.
7.8 Use of Proceeds. The Company shall use the proceeds
of the initial transfer and assignment of the Participating
Interest only to acquire all the Receivables owned by the Sellers
on the date of such transfer and assignment and to pay fees and
expenses pursuant to the Transaction Documents. The Company shall
use the proceeds of any Increases in Net Investment (a) to acquire
Receivables from the Sellers pursuant to the Receivables Sale
Agreement in an amount not to exceed the aggregate amount specified
in the applicable Daily Report, (b) to pay operating expenses of
the Company, (c) to make payments on account of the Subordinated
Notes in the aggregate amount specified in the applicable Daily
Report, and (d) to make payments on account of Restricted Payments
in the aggregate amount specified in the applicable Daily Report.
7.9 Separate Corporate Existence. The Company shall
take, or refrain from taking, as the case may be, all actions that
are necessary to be taken or not taken in order to (a) ensure that
the assumptions and factual recitations set forth in the Specified
Bankruptcy Opinion Provisions remain true and correct with respect
to the Company and (b) comply with those procedures described in
such provisions which are applicable to the Company.
7.10 Facility Rating. Promptly upon request of the
Administrative Agent, at the expense of the Company, cause the
receivables purchase facility created by this Agreement to be rated
by S&P or another nationally recognized rating agency designated by
the Administrative Agent.
<PAGE>
32
7.11 Lockbox Agreements. Within 60 days after the
Effective Date, deliver to the Administrative Agent one or more
confirmations that the Lockbox Accounts, in the name of the
Company, have been established in accordance with the terms of this
Agreement and deliver to the Administrative Agent an executed
Lockbox Agreement from each of the Lockbox Banks.
7.12 Eligible Letters of Credit. (a) Submit to the
relevant issuing bank all documentation necessary to effect a
drawing under any Eligible Letter of Credit immediately upon the
occurrence of any event entitling the Company to receive any
payment thereunder and (b) cause such payment to be deposited
directly into the U.S. Concentration Account.
7.13 Company Policies. Amend, supplement or otherwise
modify in any material respect (or permit to be amended,
supplemented or otherwise modified in any material respect) the
Company Policies or vary (or permit to be varied) the
implementation of the Company Policies other than (a) with the
consent of the Required Banks and (b) changes that are required by
applicable law; provided, that material changes to the Company
Policies shall include, without limitation, changes to the timing
of Charge-Offs of Receivables.
ARTICLE VIII
Negative Covenants
The Company hereby agrees that, unless and until this
Agreement is terminated pursuant to subsection 4.1, the Company
shall not directly or indirectly:
8.1 Accounting of Transfers. Prepare any financial
statements which shall account for the transactions contemplated
hereby (other than capital contributions contemplated hereby) in
any manner other than as sales of participating interests in the
Purchased Receivables by the Company to the Banks or in any other
respect account for or treat the transactions contemplated hereby
(including for financial accounting purposes, except as required by
law) (other than capital contributions and loans from Affiliates
contemplated hereby) in any manner other than as assignments and
transfers of participating interests in the Purchased Receivables
by the Company to the Banks, provided however that this subsection
8.1 shall not apply for any tax or tax accounting purposes.
8.2 Limitation on Indebtedness. Create, incur, assume
or suffer to exist any Indebtedness, except: (a) Indebtedness
evidenced by the Subordinated Notes; (b) Indebtedness representing
fees, expenses and indemnities payable pursuant to and in
accordance with the Transaction Documents; and (c) Indebtedness for
services supplied or furnished to the Company in an amount not to
exceed $50,000 at any time outstanding.
8.3 Limitation on Liens. Create, incur, assume or
suffer to exist any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, except for (a)
Liens created pursuant to this Agreement and (b) Liens for taxes
not yet due or which are being contested in good faith by
appropriate proceedings provided that adequate reserves with
respect thereto are maintained on the books of the Company in
conformity with GAAP.
<PAGE>
33
8.4 Limitation on Guarantees. Create, incur, assume or
suffer to exist any obligation constituting a Guarantee.
8.5 Limitation on Fundamental Changes. Enter into any
merger, consolidation or amalgamation, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), or
convey, sell, lease, assign, transfer or otherwise dispose of, all
or substantially all of its property, business or assets, or make
any material change in its present method of conducting business,
other than the assignments and transfers to the Banks contemplated
hereby.
8.6 Limitation on Sale of Assets. Convey, sell, lease,
assign, transfer or otherwise dispose of any of its property,
business or assets (including, without limitation, receivables and
leasehold interests), whether now owned or hereafter acquired,
other than (a) the assignments and transfers contemplated hereby
and (b) sales or other dispositions of property with an aggregate
book value not exceeding $10,000 in any period of twelve
consecutive fiscal months.
8.7 Limitation on Dividends and Payments on Subordinated
Notes. Declare or pay any dividend on, or make any payment on
account of, or set apart assets for a sinking or other analogous
fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any shares of any class of Capital Stock of the
Company, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of the Company (such
declarations, payments, setting apart, purchases, redemptions,
defeasances, retirements, acquisitions and distributions being
herein called "Restricted Payments"), or make, directly or
indirectly, payments in any form in respect of the Subordinated
Notes except that, so long as no Termination Event or Potential
Termination Event shall have occurred and be continuing or would
result therefrom, the Company may (a) make payments on the
Subordinated Notes and (b) make Restricted Payments, each pursuant
to subsection 2.7.
8.8 Business of the Company. Engage at any time in any
business or business activity other than the acquisition of
Receivables pursuant to the Receivables Sale Agreement, the
assignments and transfers hereunder and the other transactions
contemplated by the Transaction Documents, and any activity
incidental to the foregoing and necessary or convenient to
accomplish the foregoing, or enter into or be a party to any
agreement or instrument other than in connection with the
foregoing, except those agreements or instruments set forth on
Schedule 5.
8.9 Limitation on Investments, Loans and Advances. Make
any advance, loan, extension of credit or capital contribution to,
or purchase any stock, bonds, notes, debentures or other securities
of or any assets constituting a business unit of, or make any other
investment in, any Person, except for the Receivables and the other
Pooled Property.
8.10 Limitation on Sales and Leasebacks. Enter into any
arrangement with any Person providing for the leasing by the
Company of real or personal property which has been or is to be
sold or transferred by the Company to such Person or to any other
Person to whom funds have been or are to be advanced by such Person
on the security of such property or rental obligations of the
Company.
<PAGE>
34
8.11 Transactions with Affiliates. Sell or transfer any
property or assets to, or purchase or acquire any property or
assets from, or otherwise engage in any other transactions with,
any of its Affiliates except (a) as expressly contemplated by the
Transaction Documents; (b) as disclosed on Schedule 4; or (c) with
the unanimous approval or ratification of the Board of Directors of
the Company upon fair and reasonable terms no less favorable to the
Company than it could reasonably expect to obtain in a comparable
arm's length transaction with a Person which is not an Affiliate.
8.12 Capital Stock. Issue any Capital Stock to any
Person or permit any of its Capital Stock to be transferred to any
Person, except pursuant to the Pledge Agreement.
8.13 Amendments. Amend (or permit to be amended) its
Certificate of Incorporation.
8.14 Receivables Sale Agreement, etc. Amend, supplement
or otherwise modify (or permit to be amended, supplemented or
otherwise modified) the Receivables Sale Agreement or any of the
other Transaction Documents or give any consent or waiver to any
Seller thereunder, provided that, with respect to any Lockbox
Agreement, the Company shall be permitted to amend, supplement or
otherwise modify any such Lockbox Agreement so long as (a) such
amendment, supplement or modification could not be reasonably
expected to have a Material Adverse Effect and (b) the
Administrative Agent shall have received a substantially final
draft of such amendment, supplement or modification at least five
Business Days prior to the effective date thereof.
8.15 Policies. Amend, supplement or otherwise modify in
any material respect (or permit to be amended, supplemented or
otherwise modified in any material respect) the Policies or the
Company Policies or vary the implementation of the Policies or the
Company Policies other than (a) with the consent of the Required
Banks and (b) changes that are required by applicable law;
provided, that material changes to the Policies and the Company
Policies shall include, without limitation, changes to the timing
of Charge-Offs of Receivables and changes to the creditworthiness
criteria used in determining whether to extend credit to a Person
and in determining the amount of such credit to extend.
8.16 No Powers of Attorney. Grant any powers of
attorney to any Person for any purposes except (a) for the purpose
of permitting any Person to perform any ministerial functions on
behalf of the Company that are not prohibited by or inconsistent
with the terms of the Transaction Documents; (b) to the
Administrative Agent in connection herewith; or (c) as expressly
permitted by the Transaction Documents.
8.17 Receivables Not To Be Evidenced by Promissory
Notes. Take any action to cause any Receivable to be evidenced by
any "instrument" (as defined in the Uniform Commercial Code (or any
similar law) as in effect in any state in which the Company's or
any Seller's chief executive offices or books and records relating
to such Receivable are located) other than as expressly
contemplated by the Policies.
8.18 Ownership of Assets and Property. Own or lease any
material tangible assets other than as expressly contemplated
pursuant to the terms of this Agreement and the
<PAGE>
35
other Transaction Documents, or own or lease any facilities or
incur, create, assume or permit to exist any lease obligations other
than arms' length lease obligations to Affiliates or third parties
in respect of office space, equipment and computer time.
8.19 Rescission or Cancellation. Rescind or cancel any
Receivable or modify or extend any term or provision of any thereof
without the prior written consent of the Required Banks, except (a)
in the ordinary course of its business and consistent with the
Policies and the Company Policies or (b) as required by any
Requirement of Law, provided that the Company may cause Receivables
to become Charge-Offs and may allow Sellers to make Adjustments in
accordance with subsection 2.5 of the Receivables Sale Agreement.
8.20 Ineligible Receivables. Without the prior written
approval of the Required Banks, take any action to cause, or which
would permit, an Eligible Receivable to cease to be an Eligible
Receivable, except as otherwise expressly provided for in this
Agreement.
8.21 Offices. (a) Move outside the state where such
office is now located the location of its chief executive office or
of any of the offices where it keeps its records with respect to
the Receivables without (i) 30 days' prior written notice to the
Administrative Agent and (ii) taking all actions reasonably
requested by the Administrative Agent (including but not limited to
all filings and other acts necessary or advisable under the Uniform
Commercial Code of each relevant jurisdiction) in order to continue
the Banks' first priority perfected ownership interest in all
Receivables now owned or hereafter created or (b) fail to give the
Administrative Agent prompt notice of a change within the state
where such office is now located of the location of its chief
executive office or any office where it keeps its records with
respect to the Receivables.
8.22 Addition of Sellers. Agree to the addition of any
Subsidiary as an additional Seller pursuant to subsection 9.14 of
the Receivables Sale Agreement unless (a) the Required Banks have
approved such addition in writing and (b) such Subsidiary shall
have been simultaneously added as a Servicer party hereto pursuant
to subsection 12.9 hereof.
8.23 Optional Termination of Seller. Designate any
Seller as a Seller to be terminated as a Seller pursuant to
subsection 9.15(b) of the Receivables Sale Agreement unless (a) the
Required Banks have approved such designation in writing and (b) if
such Seller is a Servicer hereunder, such Seller shall have been
terminated as a Servicer pursuant to subsection 12.10 hereof.
8.24 Operating Expenses. Incur or otherwise become
liable for operating expenses other than expenses for office space,
equipment, personnel, office supplies, computer time, services of
third party professionals and other reasonable overhead expenses.
<PAGE>
36
ARTICLE IX
Events of Termination
If any of the following events (herein called
"Termination Events") shall have occurred and be continuing:
(a) the Company shall fail to deliver any Daily Report
or any Settlement Statement conforming in all material
respects to the requirements of subsection 12.5 and such
failure shall continue for two consecutive Business Days after
the Administrative Agent shall have delivered notice thereof
to the Company, provided that if a Force Majeure Delay shall
have occurred with respect to any Servicer or the Master
Servicer, as the case may be, (i) in the case of such an event
with respect to a Servicer, the failure of any Daily Report or
Settlement Statement to contain information with respect to
the Receivables serviced by such Servicer or (ii) in the case
of such an event with respect to the Master Servicer, the
failure of the Company to deliver any Daily Report or
Settlement Statement, shall not, in either case, constitute a
Termination Event unless such failure continues for longer
than the lesser of (x) ten consecutive Business Days and (y)
the length of such Force Majeure Delay (or, if greater, two
Business Days) after the Administrative Agent shall have
delivered notice of such failure to the Company;
(b) the Company shall fail to pay, or the Banks or the
Administrative Agent shall not be paid, any amount (i)
required to be paid hereunder in respect of reduction of the
Net Investment when due or (ii) required to be paid in respect
of Purchase Discount Amounts, any other amounts payable to the
Banks or Administrative Agent or any payment reflected in any
Daily Report or Settlement Statement as being required to be
made by the Company, in any case, with respect to this clause
(ii), within five Business Days after the date when due;
(c) default shall be made in the due observance or
performance by the Company of any covenant, condition or
agreement contained in subsection 7.3(a), 7.6(a) or 7.8 or in
Article VIII;
(d) the Company shall fail to observe or perform any
covenant or agreement applicable to it contained herein (other
than as specified in paragraph (a), (b) or (c) of this Article
IX), provided that no such failure shall constitute a
Termination Event under this paragraph (d) unless such failure
shall continue unremedied for a period of 30 consecutive days
in the case of subsection 7.3(b) or 7.3(c) and 15 consecutive
days in the case of all others, in each case after notice
thereof from the Administrative Agent or the Required Banks to
the Company;
(e) any representation, warranty, certification or
statement made or deemed made by the Company in this Agreement
or in any Settlement Statement or other certificate, financial
statement or other document delivered pursuant to this
Agreement shall prove to have been false or misleading in any
material respect on or as of the date made or deemed made;
provided that a Termination Event shall not be deemed to have
occurred under this paragraph (e) based upon a breach of a
representation or warranty contained in
<PAGE>
37
subsection 5.2(d), (e), (f) or (h) if the Company shall have
complied with the provisions of subsection 5.3(b) in respect
thereof;
(f) (i) an involuntary proceeding shall be commenced or
an involuntary petition shall be filed in a court of competent
jurisdiction seeking (A) relief in respect of the Company, or
of a substantial part of its property or assets, under Title
11 of the United States Code, as now constituted or hereafter
amended, or any other Federal or state bankruptcy, insolvency,
receivership or similar law, (B) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or
similar official for the Company or for a substantial part of
its property or assets or (C) the winding-up or liquidation of
the Company; and such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall be entered; or (ii) the
Company shall (A) voluntarily commence any proceeding or file
any petition seeking relief under Title 11 of the United
States Code, as now constituted or hereafter amended, or any
other Federal or state bankruptcy, insolvency, receivership or
similar law, (B) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or
the filing of any petition described in clause (i) above, (C)
apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar
official for the Company or for a substantial part of its
property or assets, (D) file an answer admitting the material
allegations of a petition filed against it in any such
proceeding, (E) make a general assignment for the benefit of
creditors, (F) become unable, admit in writing its inability
or fail generally to pay its debts as they become due or (G)
take any action for the purpose of effecting any of the
foregoing;
(g) Holdings or any Restricted Subsidiary or any
Significant Subsidiary (as each such term is defined in the
Credit Agreement as in effect on the Effective Date) shall (i)
fail to pay any principal or interest, regardless of amount,
due in respect of Indebtedness having an aggregate principal
or notional amount in excess of $7,500,000, when and as the
same shall become due and payable, or (ii) fail to observe or
perform any other term, covenant, condition or agreement
contained in any agreements or instruments evidencing or
governing any Indebtedness having an aggregate principal
amount in excess of $7,500,000 if the effect of any failure
referred to in this clause (ii) is to cause, or to permit the
holder or holders of such Indebtedness or a trustee on its or
their behalf to cause, such Indebtedness to become due prior
to its stated maturity;
(h) (i) a Reportable Event or Reportable Events, or a
failure to make a required installment or other payment
(within the meaning of Section 412(n)(1) of the Code), shall
have occurred with respect to any Plan or Plans that
reasonably could be expected to result in liability of the
Company or any of its ERISA Affiliates to the PBGC or to a
Plan in an aggregate amount exceeding $5,000,000 and, within
30 days after the reporting of any such Reportable Event to
the Administrative Agent or after the receipt by the
Administrative Agent of the statement required pursuant to
Section 7.7(b)(iii), the Administrative Agent shall have
notified the Company in writing that (x) the Required Banks
have made a determination that, on the basis of such
Reportable Event or Reportable Events or the failure to make a
required payment, there are reasonable grounds (A) for the
termination of such Plan or Plans by the PBGC, (B) for the
appointment by the appropriate United States District Court of
a trustee to administer
<PAGE>
38
such Plan or Plans or (C) for the imposition of a lien in favor
of a Plan and (y) as a result thereof a Termination Event exists
hereunder; or a trustee shall be appointed by a United States
District Court to administer any such Plan or Plans; or the
PBGC shall institute proceedings to terminate any Plan or
Plans; or (ii) (x) the Company or any of its ERISA Affiliates
shall have been notified by the sponsor of a Multiemployer Plan
that it has incurred Withdrawal Liability to such Multiemployer
Plan, (y) the Company or such ERISA Affiliate does not have
reasonable grounds for contesting such Withdrawal Liability or
is not in fact contesting such Withdrawal Liability in a timely
and appropriate manner and (z) the amount of the Withdrawal
Liability specified in such notice, when aggregated with all
other amounts required to be paid to Multiemployer Plans in
connection with Withdrawal Liabilities (determined as of the
date or dates of such notification), exceeds $7,500,000 or
requires payments exceeding $7,500,000 in any year; or (iii)
the Company or any of its ERISA Affiliates shall have been
notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being
terminated, within the meaning of Title IV of ERISA, if solely
as a result of such reorganization or termination the
aggregate annual contributions of the Company and its ERISA
Affiliates to all Multiemployer Plans that are then in
reorganization or have been or are being terminated have been
or will be increased over the amounts required to be
contributed to such Multiemployer Plans for their most
recently completed plan years by an amount exceeding
$7,500,000;
(i) there shall have occurred a Change in Control;
(j) (i) one or more judgments for the payment of money
in an aggregate amount in excess of $250,000 (to the extent
not covered by insurance) shall be rendered against the
Company and the same shall remain undischarged or stayed for a
period of 30 consecutive days during which execution shall not
be effectively stayed, or any action shall be legally taken by
a judgment creditor to levy upon assets or properties of the
Company to enforce any such judgment or (ii) one or more
judgments for the payment of money in an aggregate amount in
excess of $7,500,000 (to the extent not covered by insurance)
shall be rendered against Holdings or any Restricted
Subsidiary or any Significant Subsidiary (as each such term is
defined in the Credit Agreement as in effect on the Effective
Date) or any combination thereof and the same shall remain
undischarged or stayed for a period of 30 consecutive days
during which execution shall not be effectively stayed, or any
action shall be legally taken by a judgment creditor to levy
upon assets or properties of Holdings or any Restricted
Subsidiary to enforce any such judgment;
(k) any material provision of the Transaction Documents
shall not be in full force and effect, enforceable in
accordance with its terms, or the Company, a Seller, a
Servicer or the Master Servicer, or any Affiliate of any of
the foregoing, shall so assert in writing;
(l) the Participating Interest shall for any reason
cease to be a valid and perfected first priority undivided
participating interest in the Receivables;
(m) the Company shall have become an "investment
company" under the Investment Company Act of 1940;
<PAGE>
39
(n) a Purchase Termination Event shall have occurred and
be continuing under the Receivables Sale Agreement;
(o) the Company shall fail to pay the Purchase Price for
any newly created Receivable when due pursuant to subsection
2.3 of the Receivables Sale Agreement (including, without
limitation, by application of any restrictions in such
subsection); provided that no such failure shall constitute a
Termination Event under this paragraph (o) unless such failure
shall continue for five consecutive Business Days;
(p) a Servicer Event of Default shall have occurred and
be continuing;
(q) at the end of any fiscal month, the Loss to
Liquidation Ratio exceeds 5%;
(r) the ratio (expressed as a percentage) of (i) the
aggregate Adjusted Principal Amount of all Receivables that
are more than 60 days past due at the end of any fiscal month
(and are not Defaulted Receivables) to (ii) the aggregate
Adjusted Principal Amount of all Receivables (which are not
Defaulted Receivables) at the end of such fiscal month exceeds
10%;
(s) at the end of any fiscal month, Days Sales
Outstanding with respect to such fiscal month exceeds 75 days;
or
(t) the Net Investment exceeds the Maximum Transfer
Amount on the second Business Day following any Settlement
Date, after giving effect to the calculation of the Required
Reserve Percentage on such Settlement Date, and after
application of Collections and all other payments and amounts
to reduce the Net Investment to and including such second
Business Day (except to the extent Excess Application Amounts
in respect of such excess are being held in a cash collateral
account pursuant to subsection 2.12(c));
then, (x) if such event is (I) a Termination Event described in
paragraph (f) above or (II) a Termination Event described in
paragraph (n) above resulting from a Purchase Termination Event
described in paragraph (f) of Article VII of the Receivables Sale
Agreement, automatically the Commitment Period shall thereupon
terminate without notice of any kind, which is hereby waived by the
Company and (y) if such event is any other Termination Event, so
long as such Termination Event shall be continuing, with the
consent of the Required Banks the Administrative Agent may, or upon
the request of the Required Banks the Administrative Agent shall,
by notice to the Company terminate the Commitment Period.
ARTICLE X
The Administrative Agent
10.1 Appointment. Each Bank hereby irrevocably
designates and appoints the Administrative Agent as the agent of
such Bank under this Agreement and each Bank irrevocably authorizes
the Administrative Agent, as the agent for such Bank, to take
such action
<PAGE>
40
on its behalf under the provisions of this Agreement and to
exercise such powers and perform such duties as are expressly
delegated to the Administrative Agent by the terms of this
Agreement, together with such other powers as are reasonably
incidental thereto, including, but not limited to, the signing by
the Administrative Agent, as agent for the Banks, of any financing
statements related to the Receivables. Notwithstanding any
provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities,
except those expressly set forth herein, or any fiduciary
relationship with any Bank, the Company, any Servicer or the Master
Servicer, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into this
Agreement or otherwise exist against the Administrative Agent.
Each Bank acknowledges and consents to Chemical Bank's acting as
administrative agent for the lenders under the Credit Agreement and
the documents delivered pursuant thereto.
10.2 Delegation of Duties. The Administrative Agent may
execute any of its duties under this Agreement by or through agents
or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The
Administrative Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
10.3 Exculpatory Provisions. Neither the
Administrative Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by it or such Person
under or in connection with this Agreement or the transactions
contemplated hereby or thereby (except for its or such Person's own
gross negligence or willful misconduct), (ii) responsible in any
manner to any party hereto for any recitals, statements,
representations or warranties made by the Company, any Servicer,
the Master Servicer or any of the Banks or any officer thereof
contained in this Agreement, or in any certificate, report,
statement or other document referred to or provided for in, or
received by the Administrative Agent under or in connection with
this Agreement or the transactions contemplated hereby or thereby
or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or (iii) for any
failure of the Company, any Servicer, the Master Servicer, or any
of the Banks to perform their respective obligations hereunder.
The Administrative Agent shall not be under any obligation to any
party hereto to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions
of, this Agreement or to inspect the properties, books or records
of the Company, any Servicer, the Master Servicer or any of the
Banks.
10.4 Reliance by the Administrative Agent. The
Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telecopy, telex or
teletype message, statement, order or other document or
conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel (including, without
limitation, counsel to any of the Banks and counsel to the Company,
any Servicer or the Master Servicer), independent accountants and
other experts selected by the Administrative Agent, as the case may
be. The Administrative Agent shall be fully justified in failing
or refusing to take any action under this Agreement unless it shall
first receive such advice or concurrence of the Banks as it deems
appropriate or it shall first be indemnified to its satisfaction by
the Banks against any and all liability and expense which may be
incurred by it
<PAGE>
41
by reason of taking or continuing to take any such
action. The Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this
Agreement in accordance with a request of the Banks entitled to
give such a request hereunder, and such request and any action
taken or failure to act pursuant thereto shall be binding upon all
the Banks.
10.5 Notice of Default or Termination Event. The
Administrative Agent shall not be deemed to have knowledge or
notice of the occurrence of any default or Termination Event
hereunder unless the Administrative Agent has received notice from
a Bank, the Company, any Servicer or the Master Servicer referring
to this Agreement, describing such default or Termination Event and
stating that such notice is a "notice of default" or a "notice of
Termination Event", as the case may be. In the event that the
Administrative Agent receives such a notice, the Administrative
Agent shall give promptly notice thereof to the Banks and to the
Company. The Administrative Agent shall take such action with
respect to such default or Termination Event as shall be reasonably
directed by the Required Banks, provided that unless and until the
Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such
default or Termination Event as it shall deem advisable in the best
interests of the Banks.
10.6 Non-Reliance on the Administrative Agent and Other
Banks. Each Bank hereby expressly acknowledges that neither the
Administrative Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the
Administrative Agent hereinafter taken, including any review of the
affairs of the Company, any Servicer or the Master Servicer, shall
be deemed to constitute any representation or warranty by the
Administrative Agent to any Bank. Each Bank hereby represents to
the Administrative Agent that it has, independently and without
reliance upon the Administrative Agent or any other Bank, and based
on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business,
operations, property and financial and other condition and
creditworthiness of the Company, the Servicers and the Master
Servicer and made its own decision to acquire a Participating
Interest hereunder and enter into this Agreement. Each Bank hereby
also represents that it will, independently and without reliance
upon the Administrative Agent or any other Bank, and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own appraisals and decisions in taking or not
taking action under this Agreement, and to make such investigation
as it deems necessary to inform itself as to the business,
operations, property and financial and other condition and
creditworthiness of the Company, the Servicers and the Master
Servicer. Except for notices, reports and other documents
expressly required to be furnished to the Banks by the
Administrative Agent hereunder, the Administrative Agent shall not
have any duty or responsibility to provide any Bank with any
information concerning the business, operations, property,
condition (financial or otherwise), prospects or creditworthiness
of the Company, any Servicer or the Master Servicer which may come
into the possession of the Administrative Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or
affiliates.
10.7 Indemnification. Each Bank hereby agrees to
indemnify the Administrative Agent in its capacity as such (to the
extent not reimbursed by the Company and without limiting
<PAGE>
42
the obligation of the Company to do so), ratably according to their
respective Commitment Percentages in effect on the date on which
indemnification is sought under this subsection 10.7, from and
against any and all Indemnified Liabilities which may at any time
(including without limitation at any time following the termination
of the commitment of the Banks to increase their Participating
Interest hereunder) be imposed on, incurred by or asserted against
the Administrative Agent in any way relating to or arising out of
this Agreement, or any documents contemplated by or referred to
herein or the transactions contemplated hereby or any action taken
or omitted by the Administrative Agent under or in connection with
any of the foregoing, provided that no Bank shall be liable for the
payment of any portion of such Indemnified Liabilities resulting
from the Administrative Agent's gross negligence or willful
misconduct. The agreements in this subsection 10.7 shall survive
the termination of the commitments of the Banks to acquire a
Participating Interest hereunder, the collection of all
Receivables, the termination of this Agreement and the payment of
all amounts payable hereunder.
10.8 The Administrative Agent in Its Individual
Capacity. The Administrative Agent and its affiliates may make
loans to, accept deposits from and generally engage in any kind of
business with the Company, the Servicers, the Master Servicer or
any of their affiliates as though the Administrative Agent were not
the Administrative Agent. With respect to any Participating
Interests purchased or maintained by it under this Agreement, the
Administrative Agent shall have the same rights and powers
hereunder as any Bank and may exercise the same as though it were
not the Administrative Agent, and the term "Bank" shall include the
Administrative Agent in its individual capacity.
10.9 Successor Administrative Agent. Subject to the
appointment and acceptance of a successor Administrative Agent as
provided below, the Administrative Agent may resign at any time by
notifying the Banks and the Company. Upon any such resignation,
the Required Banks shall have the right to appoint a successor,
with the consent of the Company (not to be unreasonably withheld).
If no successor shall have been so appointed by the Required Banks
and shall have accepted such appointment within 30 days after the
retiring Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent may, on behalf of the Banks,
appoint a successor Administrative Agent, with the consent of the
Company (not to be unreasonably withheld), which shall be a bank
with an office in New York, New York, having a combined capital and
surplus of at least $500,000,000 or an Affiliate of any such bank
which is also a bank. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor bank, such successor
shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent and the
retiring Administrative Agent shall be discharged from its duties
and obligations hereunder. After the Administrative Agent's
resignation hereunder, the provisions of this Article X and of
subsection 11.3 shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was
acting as Administrative Agent.
ARTICLE XI
Miscellaneous
<PAGE>
43
11.1 Further Assurances. Each of the Company, the
Servicers and the Master Servicer agrees, from time to time, to do
and perform any and all acts and to execute any and all further
instruments reasonably required or requested by the Administrative
Agent at the request of any Bank more fully to effect the purposes
of this Agreement and the assignments and transfers of the
Participating Interest hereunder, including, without limitation,
the execution of any financing statements or continuation
statements relating to the Receivables for filing under the
provisions of the Uniform Commercial Code, or any similar law, of
any applicable jurisdiction.
11.2 Payments. Each payment to be made by any of the
Banks, the Company, any of the Servicers or the Master Servicer
hereunder shall be made on the required payment date in Dollars and
in immediately available funds at the office of the Administrative
Agent located at 270 Park Avenue, New York, New York 10017 or to
such other office as may be specified by the Administrative Agent
in a notice to the Company, the Servicers, the Master Servicer and
the Banks.
11.3 Costs and Expenses. (a) The Company agrees to pay
all reasonable out-of-pocket expenses incurred by the
Administrative Agent in connection with the preparation of this
Agreement and the other Transaction Documents, or by the
Administrative Agent in connection with the syndication of the
Commitments or the administration of this Agreement, or in
connection with any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions
hereby contemplated shall be consummated) or incurred by the
Administrative Agent or any Bank in connection with the enforcement
or protection of their rights in connection with this Agreement and
the other Transaction Documents or in connection with the purchases
made hereunder, including the reasonable fees, charges and
disbursements of Simpson Thacher & Bartlett, counsel for the
Administrative Agent, and, in connection with any such enforcement
or protection, the reasonable fees, charges and disbursements of
any other counsel (including the reasonable allocated costs of
internal counsel if a Bank elects to use internal counsel in lieu
of outside counsel) for the Administrative Agent or any Bank (but
no more than one such counsel for any Bank).
(b) The Company agrees to indemnify the Administrative
Agent, each Bank and each of their respective directors, officers,
employees and agents (each such Person being called an
"Indemnitee") against, and to hold each Indemnitee harmless from,
any and all losses, claims, damages, liabilities and related
expenses, including reasonable counsel fees, charges and
disbursements, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of (i)
the execution or delivery of this Agreement or any other
Transaction Document or any agreement or instrument contemplated
thereby, the performance by the parties thereto of their respective
obligations thereunder or the consummation of the Transactions and
the other transactions contemplated thereby, (ii) the use of the
proceeds of the initial transfer and assignment of the
Participating Interest and of any Increases in Net Investment,
(iii) any and all Canadian withholding taxes which may be imposed
in respect of the Receivables or in connection with the
Transactions (without duplication of any amounts in respect of such
taxes payable pursuant to subsection 3.3 or 3.5), or (iv) any
claim, litigation, investigation or proceeding relating to any of
the foregoing, whether or not any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages,
liabilities or related expenses (i) are determined by a
<PAGE>
44
court of competent jurisdiction by final and nonappealable judgment
to have resulted from the gross negligence or wilful misconduct of
such Indemnitee (treating, for this purpose only, any Bank and its
directors, officers, employees and agents as a single Indemnitee)
or (ii) arise from (x) any Receivable which becomes a Charge-Off as
a result of non-payment by the Obligor with respect thereto, (y)
any action taken, or omitted to be taken, by any Servicer which is
not an Affiliate of C&A Products, or (z) any action taken by the
Banks in collecting from an Obligor.
(c) The Company shall be entitled to assume the defense
of any action for which indemnification is sought hereunder with
counsel of its choice at its expense (in which case the Company
shall not thereafter be responsible for the fees and expenses of
any separate counsel retained by an Indemnitee except as set forth
below); provided, however, that such counsel shall be reasonably
satisfactory to each such Indemnitee. Notwithstanding the
Company's election to assume the defense of such action, each
Indemnitee shall have the right to employ separate counsel and to
participate in the defense of such action, and the Company shall
bear the reasonable fees, costs, and expenses of such separate
counsel, if (i) the use of counsel chosen by the Company to
represent such Indemnitee would present such counsel with a
conflict of interest; (ii) the actual or potential defendants in,
or targets of, any such action include both the Company and such
Indemnitee and such Indemnitee shall have reasonably concluded that
there may be legal defenses available to it that are different from
or additional to those available to the Company (in which case the
Company shall not have the right to assume the defense or such
action on behalf of such Indemnitee); (iii) the Company shall not
have employed counsel reasonably satisfactory to such Indemnitee to
represent it within a reasonable time after notice of the
institution of such action; or (iv) the Company shall authorize
such Indemnitee to employ separate counsel at the Company's
expense. The Company will not be liable under this Agreement for
any amount paid by an Indemnitee to settle any claims or actions if
the settlement is entered into without the Company's consent, which
consent may not be withheld unless such settlement is unreasonable
in light of such claims or actions against, and defenses available
to, such Indemnitee.
(d) Notwithstanding anything to the contrary in this
subsection 11.3, this subsection 11.3 (other than clause (iii) of
paragraph (b) thereof) shall not apply to taxes, it being
understood that the Company's only obligations with respect to
taxes shall arise under subsections 3.3 and 3.5 and under said
clause (iii).
(e) The provisions of this subsection 11.3 shall remain
operative and in full force and effect regardless of the expiration
of the term of this Agreement, the consummation of the transactions
contemplated hereby, the repayment of all or any portion of the Net
Investment, the invalidity or unenforceability of any term or
provision of this Agreement or any other Transaction Document, or
any investigation made by or on behalf of the Administrative Agent
or any Bank. All amounts due under this subsection 11.3 shall be
payable on written demand therefor.
11.4 Successors and Assigns; Participations; Acquiring
Banks. (a) The provisions of this Agreement shall be binding upon
and inure to the benefit of the Company, the Banks, the Master
Servicer, the Servicers, the Administrative Agent and their
respective successors and assigns, except that the Company, the
Servicers and the Master Servicer may not
<PAGE>
45
assign or transfer any of its or their rights or obligations under
this Agreement without the prior written consent of each Bank.
(b) Any Bank may, in the ordinary course of its business
and in accordance with applicable law, at any time sell to one or
more banks or other entities ("Participants") a participation in
the Participating Interest of such Bank, any Commitment of such
Bank or any other interests of such Bank hereunder. In the event
of any such sale by a Bank of a participation to a Participant,
such Bank's obligations under this Agreement to the other parties
to this Agreement shall remain unchanged, such Bank shall remain
solely responsible for the performance thereof, and the Company,
the Master Servicer, the Servicers and the Administrative Agent
shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under this
Agreement. The Company, the Servicers, and the Master Servicer
agree that if amounts outstanding under this Agreement are due or
unpaid, each Participant shall be deemed to have the right of
setoff in respect of its participation in amounts owing under this
Agreement to the same extent and subject to the same terms and
conditions as if the amount of its participation were owing
directly to it as a Bank under this Agreement, provided that such
right of setoff shall be subject to the obligation of such
Participant to share with the Banks, and the Banks agree to share
with such Participant, as provided in subsection 11.12. The
Company also agrees that each Participant shall be entitled to the
benefits of subsections 3.2, 3.3 and 3.5 with respect to its
Participating Interest; provided that, in the case of subsection
3.5, such Participant shall have complied with the requirements of
said subsection and provided further that no Participant shall be
entitled to receive any greater amount pursuant to such subsections
than the transferor Bank would have been entitled to receive in
respect of the amount of the participation transferred by such
transferor Bank to such Participant had no such transfer occurred.
Each Bank will disclose the identity of its participants to the
Company and Administrative Agent if requested by the Company or the
Administrative Agent.
(c) Each Bank agrees that any agreement between such
Bank and any Participant in respect of any participation shall not
restrict such Bank's right to agree to any amendment, supplement or
modification to this Agreement or any of the Transaction Documents
except (i) to extend the Scheduled Termination Date, or increase
the amount of such Bank's Commitment, or change the definition of
"Maximum Invested Percentage" so as to permit the Maximum Invested
Percentage to exceed 83%, or reduce the rate or extend the time of
payment of any Purchase Discount Amount or Commitment Fee, in each
case to the extent such Participant is directly affected thereby
and (ii) to release any substantial portion of the Pooled Property
(other than pursuant to subsection 5.3 or 12.7).
(d) Any Bank may, in the ordinary course of its business
and in accordance with applicable law, at any time sell (x) to any
Bank or any Lender (as defined in the Credit Agreement) or any
affiliate thereof, and (y) with the consent of the Company and the
Administrative Agent (which in each case shall not be unreasonably
withheld or delayed), to one or more additional financial
institutions ("Acquiring Banks") all or any part of its rights and
obligations under this Agreement pursuant to an Assignment and
Acceptance, substantially in the form of Exhibit A, executed by
such Acquiring Bank and such transferor Bank (and, in the case of a
Acquiring Bank that is not then a Bank or a Lender (as defined in
the Credit Agreement) or an affiliate thereof, by the
Administrative Agent and the Company) and delivered to the
<PAGE>
46
Administrative Agent for its acceptance and recording in the
register, provided that the Commitment transferred pursuant to any
such sale to a Acquiring Bank shall be in an amount not less than
the lesser of $5,000,000 and the amount of such transferor Bank's
Commitment, unless (i) otherwise agreed by the Company or (ii) the
assignment is to any Bank or any Lender (as defined in the Credit
Agreement) or any affiliate thereof. Upon such execution,
delivery, acceptance and recording, from and after the effective
date determined pursuant to such Assignment and Acceptance, (x) the
Acquiring Bank thereunder shall be a party hereto, shall be subject
to the requirements of subsections 3.5(f) and (g) and, to the
extent provided in such Assignment and Acceptance, shall have the
rights and obligations of a Bank hereunder with a Commitment
Percentage as set forth therein, and (y) the assigning Bank
thereunder shall, to the extent provided in such Assignment and
Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Bank's rights and obligations
under this Agreement, such assigning Bank shall cease to be a party
hereto).
(e) The Administrative Agent shall maintain at its
address referred to in subsection 11.2 a copy of each Assignment
and Acceptance delivered to it and a register (the "Register") for
the recordation of the names and addresses of the Banks and the
Commitment of, and principal amount of the Participating Interests
owing to, each Bank from time to time. The entries in the Register
shall be conclusive, in the absence of manifest error, and the
Company, the Servicers, the Master Servicer, the Administrative
Agent and the Banks may treat each Person whose name is recorded in
the Register as the owner of the Participating Interests recorded
therein for all purposes of this Agreement. The Register shall be
available for inspection by the Company, the Servicers, the Master
Servicer or any Bank at any reasonable time and from time to time
upon reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance
executed by an assigning Bank and a Acquiring Bank (and, in the
case of a Acquiring Bank that is not then a Bank or an affiliate
thereof, by the Administrative Agent and the Company) together with
payment to the Administrative Agent of a registration and
processing fee of $3,500, the Administrative Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) on the
effective date determined pursuant thereto record the information
contained therein in the Register and give notice of such
acceptance and recordation to the Banks and the Company.
(g) Subject to subsection 11.16, the Master Servicer,
each Servicer and the Company authorize each Bank to disclose to
any Participant or Acquiring Bank (each, a "Transferee") and any
prospective Transferee any and all financial information in such
Bank's possession concerning such Servicer, the Master Servicer,
the Company or any of its or their Affiliates which has been
delivered to such Bank by or on behalf of such Servicer, the Master
Servicer, the Company or such Affiliate in connection with such
Bank's credit evaluation of such Servicer, the Master Servicer or
the Company.
11.5 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK.
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47
11.6 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the
Administrative Agent or the Banks, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof
or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are
cumulative and not exhaustive of any rights, remedies, powers and
privileges provided by law.
11.7 Amendments and Waivers. Neither this Agreement nor
any terms hereof may be amended, supplemented or modified except in
accordance with the provisions of this subsection 11.7. The
Required Banks may, or, with the written consent of the Required
Banks, the Administrative Agent may, from time to time, (a) enter
into with the Company, the Master Servicer and the Servicers
written amendments, supplements or modifications hereto for the
purpose of adding any provisions to this Agreement or changing in
any manner the rights of the Banks, the Company, the Servicers or
the Master Servicer hereunder or (b) waive, on such terms and
conditions as the Required Banks or the Administrative Agent, as
the case may be, may specify in such instrument, any of the
requirements of this Agreement or any default or Termination Event
and its consequences; provided, however, that no such waiver and no
such amendment, supplement or modification shall (i) extend the
Scheduled Termination Date; or reduce the rate or extend the time
of payment of any Purchase Discount Amount or Commitment Fee; or
extend the time of payment of any mandatory reduction of the Net
Investment; or modify subsection 2.12 so that the fact that the Net
Investment exceeds the Maximum Transfer Amount does not necessitate
a mandatory reduction in the Net Investment; or change the
definition of "Maximum Invested Percentage" so as to permit the
Maximum Invested Percentage to exceed 83%; or increase the amount
of any Bank's Commitment; or amend, modify or waive any provision
of this subsection 11.7; or reduce the percentage specified in the
definition of Required Banks; or consent to the assignment or
transfer by the Company, any Servicer or the Master Servicer of any
of their respective rights and obligations under this Agreement
(except in accordance with Article XII); or release any substantial
portion of the Pooled Property (other than pursuant to subsection
5.3 or 12.7); in each case without the written consent of each Bank
directly affected thereby or (ii) amend, modify or waive any
provision of Article X without the written consent of the
Administrative Agent. Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Banks
and shall be binding upon the Company, the Servicers, the Master
Servicer, the Banks, the Administrative Agent and all future
holders of a Participating Interest. In the case of any waiver,
the Company, the Servicers, the Master Servicer, the Banks and the
Administrative Agent shall be restored to their former position and
rights hereunder, any default or Termination Event waived shall be
deemed to be cured and not continuing; but no such waiver shall
extend to any subsequent or other default or Termination Event, or
impair any right consequent thereon.
11.8 Severability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent 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.
<PAGE>
48
11.9 Notices. All notices, requests and demands to or
upon the respective parties hereto to be effective shall be in
writing (including by telecopy), and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made
when delivered by hand, or three days after being deposited in the
mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of the Company and the
Administrative Agent, as set forth under their signatures on the
signature pages hereof (in the case of the Master Servicer and the
Servicers) and as set forth on Schedule 1 hereto (in the case of
the Banks), or to such other address as may be hereafter notified
by the respective parties hereto:
The Company: Carcorp, Inc.
5025 S. Eastern Avenue
Suite 16, Number 205
Las Vegas, Nevada 89119
Attention:
Telecopy No.:
The Administrative Agent: Chemical Bank Agency Services
140 East 45th Street
New York, New York 10017
Attention: James Morgan
Telecopy: 212-622-0002
with a copy to: Chemical Bank
270 Park Avenue
New York, New York 10017
Attention: Suzanne Kjorlien
Telecopy: 212-972-0009
provided that any notice, request or demand to or upon the
Administrative Agent or the Banks pursuant to subsections 2.3,
2.7, 2.8, 2.10, 2.11 and 2.12 shall not be effective until
received.
11.10 Counterparts. This Agreement may be executed by
one or more of the parties to this Agreement on any number of
separate counterparts (including by telecopy), and all of said
counterparts taken together shall be deemed to constitute one and
the same instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Company and
the Administrative Agent.
11.11 Construction of Agreement as Security Agreement.
(a) It is the intent of the parties that the transactions
contemplated herein constitute assignments and transfers of the
Receivables and the Related Property with respect thereto to the
Banks. If, however, such transactions are deemed to be loans,
the Company hereby grants to the Administrative Agent, for the
benefit of the Banks, a first priority security interest in all
of the Company's right, title and interest in and to (i) the
Receivables and the Related Property now existing and hereafter
created, all monies due or to become due and all amounts received
with respect thereto, (ii) the Receivables Sale Agreement and
(iii) all "proceeds" of any of the foregoing, including, without
limitation, whatever is received upon the sale, exchange,
collection or other
<PAGE>
49
disposition of the foregoing or any proceeds
thereof, to secure all the Company's obligations hereunder.
(b) Each Servicer hereby grants to the Administrative
Agent on behalf of the Banks a first priority security interest
in all of the Servicer's right, title and interest in, to and
under its records relating to the Receivables and Related
Property serviced by it to secure all of the Company's
obligations hereunder.
(c) This Agreement shall constitute a security
agreement under applicable law.
11.12 Adjustments; Set-off. (a) If any Bank (a
"benefitted Bank") shall at any time receive any payment of all
or part of its Participating Interest of the Net Investment, or
any Purchase Discount Amount in respect thereof, or receive any
collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in paragraph (f) of Article IX, or
otherwise) in a greater proportion than any such payment to and
collateral received by any other Bank, if any, in respect of such
other Bank's Participating Interest of the Net Investment, or any
Purchase Discount Amount in respect thereof, such benefitted Bank
shall acquire for cash from the other Banks such portion of each
such other Bank's Participating Interest of the Net Investment,
or shall provide such other Banks with the benefits of any such
collateral, or the proceeds thereof, as shall be necessary to
cause such benefitted Bank to share the excess payment or
benefits of such collateral or proceeds ratably with each of the
Banks; provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such
benefitted Bank, such acquisition shall be rescinded, and the
transfer price and benefits returned, to the extent of such
recovery, but without interest.
(b) In addition to any rights and remedies of the
Banks provided by law, each Bank shall have the right, without
prior notice to the Company, any such notice being expressly
waived by the Company to the extent permitted by applicable law,
upon any amount, other than amounts in respect of the principal
amount of the Net Investment and the Purchase Discount Amounts
with respect thereto, becoming due and payable by the Company
hereunder (whether at the stated maturity, by acceleration or
otherwise) to set off and appropriate and apply against such
amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured,
at any time held or owing by such Bank or any branch or agency
thereof to or for the credit or the account of the Company. Each
Bank agrees promptly to notify the Company and the Administrative
Agent after any such set-off and application made by such Bank,
provided that the failure to give such notice shall not affect
the validity of such set-off and application.
11.13 Jurisdiction; Consent to Service of Process.
(a) Each of the Company, the Master Servicer and each Servicer
hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of any New York
State court or Federal court of the United States of America
sitting in New York City, and any appellate court from any
thereof, in any action or proceeding arising out of or relating
to this Agreement or the other Transaction Documents, or for
recognition or enforcement of any
<PAGE>
50
judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action
or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the
parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any
right that the Administrative Agent or any Bank may otherwise
have to bring any action or proceeding relating to this Agreement
or the other Transaction Documents against the Company, the
Master Servicer or any Servicer or their properties in the courts
of any jurisdiction.
(b) Each of the Company, the Master Servicer and each
Servicer hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or
relating to this Agreement or the other Transaction Documents in
any New York State or Federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents
to service of process in the manner provided for notices in
subsection 11.9. Nothing in this Agreement will affect the right
of any party to this Agreement to serve process in any other
manner permitted by law.
11.14 Acknowledgements. Each of the Company, the
Master Servicer and each Servicer hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other
Transaction Documents to which it is a party;
(b) neither the Administrative Agent nor any Bank has
any fiduciary relationship with or duty to the Company, the
Master Servicer or any Servicer arising out of or in
connection with this Agreement or any of the other
Transaction Documents, and the relationship between the
Administrative Agent and the Banks, on one hand, and the
Company, on the other hand, in connection herewith or
therewith is solely that of purchaser/creditor and
seller/debtor; and
(c) no joint venture is created hereby or by the other
Transaction Documents or otherwise exists by virtue of the
transactions contemplated hereby among the Banks or among
the Company, the Master Servicer or any Servicer and the
Banks.
11.15 Waiver of Jury Trial. Each party hereto hereby
waives, to the fullest extent permitted by applicable law, any
right it may have to a trial by jury in respect of any litigation
directly or indirectly arising out of, under or in connection
with this Agreement or any of the other Transaction Documents.
Each party hereto (a) certifies that no representative, agent or
attorney of any other party has represented, expressly or
otherwise, that such other party would not, in the event of
litigation, seek to enforce the foregoing waiver and (b)
acknowledges that it and the other parties hereto have been
induced to enter
<PAGE>
51
into this Agreement and the other Transaction
Documents, as applicable, by, among other things, the mutual
waivers and certifications in this subsection 11.15.
11.16 Confidentiality. Each of the Banks and the
Administrative Agent agrees that it shall maintain in confidence
any information relating to the Company, the Master Servicer or
any Servicer furnished to it by or on behalf of the Company, the
Master Servicer or any Servicer (other than information that (x)
has become generally available to the public other than as a
result of a disclosure by such party, (y) has been independently
developed by such party without violating this subsection 11.16
or (z) was available to such party from a third party having, to
such party's knowledge, no obligation of confidentiality to the
Company, the Master Servicer or such Servicer, as the case may
be) and shall not reveal the same other than (i) to its
directors, officers, employees and advisors with a need to know
and (ii) as contemplated by subsection 11.4(g), except: (a) to
the extent necessary to comply with law or any legal process or
the requirements of any Governmental Authority or of any
securities exchange on which securities of the disclosing party
or any Affiliate of the disclosing party are listed or traded,
(b) as part of normal reporting or review procedures to
Governmental Authorities or its parent companies, Affiliates or
auditors and (c) in order to enforce its rights under any
Transaction Document in a legal proceeding.
11.17 No Bankruptcy Petition. Each Servicer, the
Master Servicer, each Bank and the Administrative Agent covenants
and agrees that, prior to the date which is one year and one day
after the date of termination of this Agreement pursuant to
subsection 4.1, it will not institute against, or join any other
Person in instituting against, the Company any bankruptcy,
reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any federal or state
bankruptcy or similar law.
11.18 Tax Treatment. (a) The execution and delivery
of this Agreement shall constitute an acknowledgement by the
Banks, the Administrative Agent, the Company, the Master Servicer
and each Servicer that they do not intend to establish (for
Federal tax purposes) an association taxable as a corporation.
The powers granted and obligations undertaken in this Agreement
shall be construed so as to further such intent.
(b) It is the intent of the Company and the Banks
that, for federal, state and local income and franchise tax
purposes, the Participating Interest will be indebtedness of the
Company secured by the Pooled Property. The Company and the
Banks agree to treat the Company as the owner of the Pooled
Property and the Participating Interest as indebtedness of the
Company secured by the Pooled Property and the Purchase Discount
Amount as interest for federal, state and local income and
franchise tax purposes (including for reporting purposes), except
as otherwise required by law or any tax authorities. This
subsection 11.18 shall survive the termination of this Agreement
and shall be binding on all Transferees.
11.19 No Action by Banks. Each of the Banks and the
Administrative Agent hereby agrees that, until the occurrence of
a Purchase Termination Event, an Incipient Purchase Termination
Event or a Servicer Event of Default, the Banks will not
exercise, or otherwise direct the Administrative Agent to
exercise on their behalf, the rights of the Company pursuant to
subsection 5.15(d) of the Receivables Sale Agreement.
<PAGE>
52
ARTICLE XII
Servicing
12.1 Servicing. (a) Appointment of Servicers. The
Banks and the Company hereby appoint (i) the Servicers as their
agents to service and administer the Receivables originated by
such Persons in their capacities as Sellers and (ii) C&A Products
as their agent to coordinate the servicing of the Receivables by
the Servicers. Each of the Servicers and the Master Servicer
hereby consents to such appointment and agrees to service and
administer the Receivables in accordance with the terms and
conditions contained herein. The Company hereby appoints the
Master Servicer, and the Master Servicer hereby consents to such
appointment, to take any actions on behalf of the Company which
by the terms hereof have been delegated to the Master Servicer
and any further actions incidental thereto. The Company and the
Master Servicer may agree, in accordance with subsection 8.11,
that the Master Servicer may perform on behalf of the Company
certain of the Company's obligations under the Transaction
Documents. Prior to the occurrence of a Complete Servicing
Transfer, on each Settlement Date, the Servicers and the Master
Servicer shall receive the Monthly Servicing Fee for performing
their functions as Servicers and Master Servicer hereunder as
provided in subsection 2.7.
(b) Collection Procedures. (i) Each Collection shall
be deposited into a Lockbox Account and shall be transferred from
such Lockbox Account (either directly or through an intermediate
Lockbox Account (an "Intermediate Lockbox Account") at the same
Lockbox Bank) to the relevant Concentration Account at least as
often as once each day that is a business day for the applicable
Lockbox Bank and for Chemical, such transfer from such Lockbox
Account and from any such Intermediate Lockbox Account, in each
case, to be commenced in any event by 1:00 p.m. (New York City
time) on the business day following such day of deposit; provided
that Collections may, at the option of the applicable Obligor, be
deposited directly into the relevant Concentration Account by
wire transfer from an account of such Obligor to the
Concentration Account or by means of transfer through the
Automated Clearing House System. Each of the Company, the Master
Servicer and each Servicer acknowledges and agrees that it shall
not have any right to withdraw any funds or any remittance
advisements or payment invoices on deposit in any Concentration
Account or any Lockbox Account except as otherwise expressly
provided in this Agreement or in the Lockbox Agreements; provided
however that until the date which is 60 days after the Effective
Date (at which time a Lockbox Account in the name of the Company
shall have been established, as required hereunder), the
Servicers set forth on Schedule 3 which do not have, as of the
Effective Date, a Lockbox Account in place, shall be allowed to
continue to receive and deposit Collections in the same manner in
which such Servicer receives and deposits Collections as of the
Effective Date.
(ii) All Collections otherwise received by any
Servicer, the Master Servicer or the Company shall be deposited
by it either to a Lockbox Account or through the Automated
Clearing House System into the relevant Concentration Account as
soon as possible after receipt thereof, such transfer to commence
in no event later than the Business Day after such receipt.
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53
(iii) Each of the Company, the Master Servicer and
each Servicer represents, warrants, covenants and agrees that all
Collections shall be collected, processed and deposited pursuant
to, and in accordance with, the terms of this Agreement.
(iv) The Company represents, warrants, covenants and
agrees that it shall not make or maintain any deposits in any
bank account, deposit account or trust account with any financial
institution other than the Lockbox Accounts and the Concentration
Accounts as provided for by this Agreement and other than one
operating account funded solely with amounts disbursed as
operating expenses pursuant to subsection 2.7. The Company shall
provide the Administrative Agent with the account number and
location of such account, and any other information as the
Administrative Agent may reasonably request with respect thereto.
The Company represents, warrants, covenants and agrees that it
shall have no bank accounts, deposit accounts or trust accounts
other than the Lockbox Accounts and the Concentration Accounts
and such operating account. The Company represents, warrants,
covenants and agrees that no new bank accounts or deposit
accounts will be established unless and until the Company has
received the prior written consent of the Administrative Agent.
(v) Each of the Company, the Master Servicer and each
Servicer represents, warrants, covenants and agrees that no
location other than the Lockbox Accounts, and, with respect to
wire transfers, the Concentration Accounts, has been established
for the deposit of Collections; provided however that until the
date which is 60 days after the Effective Date (at which time a
Lockbox Account in the name of the Company shall have been
established, as required hereunder), the Servicers set forth on
Schedule 3 which do not have, as of the Effective Date, a Lockbox
Account in place, shall be allowed to continue to receive and
deposit Collections in the same manner in which such Servicer
receives and deposits Collections as of the Effective Date. Each
of the Company, the Master Servicer and each Servicer represents,
warrants, covenants and agrees that no new location for the
deposit of Collections will be established unless and until the
Company has received the prior written consent of the
Administrative Agent.
(vi) The Company agrees to pay all fees for the
services of the Lockbox Banks.
(vii) Notwithstanding anything to the contrary in this
Agreement, all Receivables Proceeds shall be deposited (directly
or through a Lockbox Account in the case of Collections) into the
U.S. Concentration Account; except that Receivables Proceeds in
respect of any Receivable as to which the Obligor and/or the
Seller is organized or located in Canada may instead be deposited
(directly or through a Lockbox Account in the case of
Collections) into the Canada/Canadian Dollar Concentration
Account (in the case of Receivables denominated in Canadian
Dollars) or the Canada/U.S. Dollar Concentration Account (in the
case of Receivables denominated in U.S. Dollars).
(c) Lockbox Accounts. Within 60 days after the
Effective Date, the Company shall deliver to the Administrative
Agent fully executed letter agreements in substantially the form
of Exhibit B (the "Lockbox Agreements") from each Lockbox Bank,
(x) with such changes as to which the Administrative Agent
reasonably consents or (y) in such form as the
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54
Lockbox Bank party thereto requires in the ordinary course of its
business for transactions of a type similar to those contemplated by
this Agreement.
(i) The Company shall instruct, or cause the Servicers
to instruct, each Lockbox Bank to transfer at least as often as
once each day that is a business day for such Lockbox Bank and
for Chemical and in any event by 1:00 p.m. (New York City time)
on the business day following each such day of deposit, via the
Automated Clearing House System, all available funds on deposit
in any Lockbox Account on such day to the relevant Concentration
Account (either directly or through an Intermediate Lockbox
Account) along with (unless otherwise provided in the related
Lockbox Agreement) any remittance advisements or payment invoices
on deposit therein.
(ii) In the event the Company (with the consent of the
Administrative Agent) or any Servicer or any Lockbox Bank shall,
after the date hereof, terminate the Lockbox Agreement with
respect to the maintenance of any Lockbox Account with any
Lockbox Bank for any reason, or, in the event (A) a Termination
Event or Potential Termination Event shall occur and be
continuing or (B) there has been a failure by any Lockbox Bank to
perform any of its material obligations under the applicable
Lockbox Agreement and such failure could have a Material Adverse
Effect on the Banks' interest in any Receivables or the
Administrative Agent's or the Banks' rights, or ability to
exercise any remedies, under this Agreement, if the
Administrative Agent shall demand such termination, the Company
agrees to notify, or cause the responsible Servicer to notify
(and, if the Company or such Servicer fails to so notify, the
Company irrevocably grants the Administrative Agent the authority
to notify) all Obligors that were depositing Collections into
such terminated Lockbox Account or Lockbox Bank to make all
future deposits to another Lockbox Bank with which the Company
has a Lockbox Agreement that has not been terminated by the
Company, by such Lockbox Bank or by demand from the
Administrative Agent; provided, however, that, if the
Administrative Agent shall demand termination of any Lockbox
Accounts of the Company with all Lockbox Banks, the Company
agrees to notify, or cause the responsible Servicer to notify
(and, if the Company or such Servicer fails to so notify, the
Company irrevocably grants the Administrative Agent the authority
to notify) all Obligors to make all future payments directly to
the relevant Concentration Account or any other account
designated by the Administrative Agent.
(iii) The Company represents, warrants, covenants and
agrees that (x) upon execution of a Lockbox Agreement with
respect thereto the Administrative Agent will be authorized to
receive mail delivered to any Lockbox Bank with respect to any
Lockbox Account and (y) within 60 days after the Effective Date,
a form of standing delivery order shall have been filed by the
Company with the United States Postal Service authorizing the
Administrative Agent to receive mail delivered to Lockbox Banks
with respect to any Lockbox Account.
(iv) The Administrative Agent shall have sole and
exclusive dominion over and control of each Lockbox Account and
the Company and the Servicer shall not have any dominion over or
control of any Lockbox Account, other than the right to authorize
transfers to the Concentration Accounts (and to any Intermediate
Lockbox Account) as set forth herein and pursuant to the terms
hereof.
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55
(v) Each of the Company, the Master Servicer and each
Servicer agrees that the Administrative Agent shall have the
unconditional right at any time, whether or not a Termination
Event or Potential Termination Event has occurred, (i) to
instruct any Lockbox Bank to transfer, via the Automated Clearing
House System, all available funds on deposit in any Lockbox
Account to the relevant Concentration Account or (ii) to instruct
any Lockbox Bank to thereafter transfer automatically at least as
often as once each day that is a business day for such Lockbox
Bank and for Chemical and in any event at the opening of business
on the business day following each such day of deposit, via the
Automated Clearing House System, all available funds on deposit
in any Lockbox Account to the relevant Concentration Account
along with any remittance advisements or payment invoices on
deposit therein. Any such instructions may be revoked only upon
the written direction of the Administrative Agent.
(d) The Administrative Agent shall treat all
collections received by it or deposited in any Concentration
Account as "Collections" for purposes of this Agreement as of the
Business Day Received (as defined in the immediately succeeding
sentence). As used herein, the term "Business Day Received"
shall mean (i) if funds are otherwise deposited in the
Concentration Account by 1:00 p.m. (New York City time), such day
of deposit and (ii) if funds are deposited in the Concentration
Account after 1:00 p.m. (New York City time), the Business Day
next following such day of deposit.
12.2 Collections by the Servicers. (a) Each
Servicer will, at its cost and expense and as agent for the Banks
and the Company, use its best efforts to collect, consistent with
its past practices, as and when the same becomes due, the amount
owing on each Receivable for which it is the Servicer. No
Servicer will make any material changes that deviate from the
Policies or the Company Policies in its administrative, servicing
and collection systems without the prior written approval of the
Required Banks. In the event of default under any Receivable,
the responsible Servicer shall have the power and authority, on
behalf of the Banks and the Company, to take such action in
respect of such Receivable as such Servicer may reasonably deem
advisable. In the enforcement or collection of any Receivable,
each Servicer shall be entitled to sue thereon in (i) its own
name, (ii) if, but only if, the Administrative Agent consents in
writing, as agent of the Banks, or (iii) if, but only if, the
Company consents in writing, as agent for the Company. In no
event shall any Servicer or the Master Servicer be entitled to
take any action which would make the Administrative Agent or any
of the Banks or the Company a party to any litigation without the
express prior written consent of the Administrative Agent or each
such Bank or the Company, as the case may be.
(b) The Master Servicer and the Servicers which are
Affiliates of the Company, jointly and severally, agree to defend
and indemnify the Banks and the Administrative Agent against all
reasonable costs, expenses, claims and liabilities in respect of
any action taken by the Master Servicer or any Servicer which is
an Affiliate of the Company arising out of its collection or
servicing efforts and relative to any Receivable or relative to
any failure of compliance of any Receivable with the provisions
of any law or regulation, whether Federal, state, local or
foreign, applicable thereto (including, without limitation, any
usury law). Each Master Servicer or Servicer which is not an
Affiliate of the Company agrees to defend and indemnify the Banks
and the Administrative Agent and the Company and the Sellers
against all reasonable costs, expenses, claims and liabilities in
respect of any
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56
action taken by such Servicer or such Master
Servicer, as the case may be, relative to any Receivable, or
arising out of any failure of compliance of any Receivable with
the provisions of any law or regulation, whether Federal, state,
local or foreign, applicable thereto (including, without
limitation, any usury law). The Administrative Agent and the
Banks shall have no obligation to, and unless and until the
occurrence of an event described in clause (i) or (ii) of the
second sentence of subsection 12.2(d) neither the Administrative
Agent nor the Banks shall, take any action or commence any legal
proceedings to realize upon any Receivable (including, without
limitation, any Defaulted Receivable) or to enforce any of their
rights or remedies with respect thereto. Notwithstanding
anything to the contrary contained in this subsection 12.2(b),
neither the Master Servicer nor any Servicer shall be obligated
to indemnify or otherwise hold any Person harmless with respect
to any losses arising from the nonpayment of any Receivable by or
on behalf of the related Obligor.
(c) The Servicers, the Master Servicer and the Company
each hereby irrevocably grant to the Administrative Agent an
irrevocable power of attorney, with full power of substitution,
coupled with an interest, to take in the name of the Master
Servicer, such Servicer or the Company or in its own name at any
time after the occurrence of a Complete Servicing Transfer all
steps necessary or advisable to endorse, negotiate or otherwise
realize on any writing or other right of any kind held or owned
by the Master Servicer, such Servicer or the Company or
transmitted to or received by the Administrative Agent as payment
on account or otherwise in respect of any Receivable.
(d) Upon the occurrence and during the continuance of
any Servicer Event of Default, the Administrative Agent shall, at
the request of the Required Banks, by giving two Business Days'
notice in writing to the Master Servicer (a "Transfer Notice"),
terminate any or all Servicer or Master Servicer administrative,
servicing and collection functions provided for herein as to any
or all of the Servicers and the Master Servicer (the termination
of all such functions with respect to all Servicers and the
Master Servicer being referred to as a "Complete Servicing
Transfer" and any other such termination being referred to as a
"Partial Servicing Transfer"). Upon the occurrence of either a
Partial Servicing Transfer or a Complete Servicing Transfer,
without limitation, (i) a designee of the Required Banks (for
purposes of paragraphs (d) through (e) of this subsection 12.2,
the term "Substitute Servicer" means such designee, as
appropriate) shall administer the administrative, servicing and
collection functions of each terminated Servicer (each, a
"Transferring Servicer") (in the case of a Partial Servicing
Transfer) or all Servicers and the Master Servicer (in the case
of a Complete Servicing Transfer) in any manner it deems fit
(which may include notifying any Obligor of the assignment to the
Banks of the interest in the affected Receivables and/or
directing any Obligor to make all payments in respect of the
affected Receivables in the name of the Substitute Servicer),
provided that the Substitute Servicer shall furnish or cause to
be furnished to the Company such information as such Company
needs to perform its obligations under this Agreement, and the
Company may, without independent investigation, rely on such
information for all purposes of this Agreement and (ii) the
Company, each Transferring Servicer (in the case of a Partial
Servicing Transfer) or each Servicer and the Master Servicer (in
the case of a Complete Servicing Transfer) shall, at its own
expense, (x) if so requested by the Substitute Servicer, endorse
each instrument, if any, evidencing any Receivable to the
Substitute Servicer in such manner as the Substitute Servicer
shall reasonably direct and (y) perform, or cause to be performed
by any Person involved in administrative, servicing or
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57
collection functions on behalf of or under the direction of each
Transferring Servicer (in the case of a Partial Servicing
Transfer) or each Servicer and the Master Servicer (in the case
of a Complete Servicing Transfer) or the Company, any and all
acts, any and all documents as, in each case, may be reasonably
requested by the Substitute Servicer in order to effect the
purposes of this Agreement and the transfer and assignment of the
Participating Interest and to perfect and protect the ownership
interest of the Banks in the Receivables and the Related
Property. Each Servicer agrees to serve as a Substitute Servicer
if so designated by the Required Banks at any time and from time
to time. Upon the occurrence of a Partial Servicing Transfer or
a Complete Servicing Transfer, each Transferring Servicer (in the
case of a Partial Servicing Transfer) or each Servicer and the
Master Servicer (in the case of a Complete Servicing Transfer)
shall promptly transfer its electronic records relating to its
Receivables to the Substitute Servicer in such electronic form as
the Substitute Servicer may reasonably request and shall promptly
transfer to the Substitute Servicer all other records,
correspondence and documents necessary for the continued
servicing of such Receivables in the manner and at such times as
the Substitute Servicer shall reasonably request; provided that
to the extent that such Transferring Servicer or such Servicer
and the Master Servicer, as the case may be, is required to have,
as a result of a continuing relationship with the related
Obligors, access to any such records in respect of its
Receivables, the Substitute Servicer shall allow such
Transferring Servicer or such Servicer and the Master Servicer,
as the case may be, to have reasonable access to such records
upon reasonable advance notice and so long as such access shall
not disrupt or otherwise interfere with the Substitute Servicer's
use of such records in performing its duties hereunder.
(e) Each Transferring Servicer (in the case of a
Partial Servicing Transfer) or each Servicer and the Master
Servicer (in the case of a Complete Servicing Transfer) and the
Company shall each execute and deliver such additional documents
and shall take such further action as the Substitute Servicer may
reasonably request to effect or evidence the transfer of
servicing and shall execute and deliver to the Substitute
Servicer such powers-of-attorney (in addition to the power of
attorney provided for in subsection 12.2(c)) as may be necessary
or appropriate to enable the Substitute Servicer, on behalf of
the Banks, to endorse for payment any check, draft or other
instrument delivered in payment of any amount under or in respect
of an affected Receivable. If, at any time when the provisions
of subsection 12.1(c) shall have become operative, any Servicer,
the Master Servicer or the Company receives any cash or checks,
drafts or other instruments for the payment of money on account
or otherwise in respect of the Purchased Receivables, such
Servicer, the Master Servicer or the Company shall segregate such
cash and other items, hold such cash and other items in trust for
the benefit of the Banks and cause such cash and other items
(properly endorsed, where required, so that such items may be
collected by the Substitute Servicer) to be transmitted or
delivered to the Substitute Servicer for deposit in the relevant
Concentration Account within one Business Day after the date any
such cash or other item shall have been identified and segregated
by such Servicer, the Master Servicer or the Company as being on
account of a Purchased Receivable.
12.3 Maintenance of Records. Each Servicer and the
Master Servicer will hold in trust for the Banks at the office of
such Servicer or Master Servicer set forth in Schedule 2 such
books of account and other records as it currently maintains for
its own purposes in the ordinary course of its business, provided
that, as of the date which is three
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58
months following the Effective Date, such books of account
and other records shall be in a form reasonably satisfactory
to the Administrative Agent to determine at any time the
status of the Receivables and all collections and
payments in respect thereof (including, without limitation,
an ability to recreate records evidencing Receivables
in the event of the destruction of the originals thereof). The
Administrative Agent may at any time and from time to time upon
reasonable prior notice during the regular business hours of any
Servicer or the Master Servicer inspect, audit, check and make
abstracts from the books, accounts, records, or other papers of
such Servicer or the Master Servicer pertaining to the
Receivables. From time to time upon the written request of the
Administrative Agent, which request shall be promptly made upon a
request therefor to the Administrative Agent by any Bank, each
Servicer or the Master Servicer, at its own expense, will as
promptly as is practicable deliver to the Administrative Agent a
schedule of the Receivables indicating as to each Receivables
information as to the Obligor thereon, the unpaid balance
thereof, the amount and delinquency of any Receivable that is
past due and such other information as the Administrative Agent
may reasonably request. Upon the written request of the
Administrative Agent, which request may only be made at any time
after a Partial Servicing Transfer or a Complete Servicing
Transfer, each terminated Servicer and the Master Servicer, at
its own expense, will deliver to the Administrative Agent, or to
any agent selected by the Administrative Agent, any records
pertaining thereto and evidence thereof as the Administrative
Agent may deem necessary to enable it to enforce the Banks'
rights thereunder; provided that to the extent that such
terminated Servicer or the Master Servicer is required to have,
as a result of a continuing relationship with the related
Obligors, access to any such records in respect of its
Receivables, the Administrative Agent (or the agent selected by
it) shall allow such terminated Servicer or the Master Servicer
to have reasonable access to such records upon reasonable advance
notice and so long as such access shall not disrupt or otherwise
interfere with the Administrative Agent's (or its agent's) use of
such records in performing its duties hereunder. Upon the
expiration of the Commitment Period, the reduction of the Net
Investment to zero and the payment in full of all amounts owing
to the Banks and the Administrative Agent hereunder, the
Administrative Agent will promptly return to the Servicers and
the Master Servicer any such records delivered to the
Administrative Agent or its agent.
12.4 Rebates, Adjustments, Returns and Reductions;
Modifications. From time to time a Servicer may make Adjustments
to Receivables in accordance with subsection 12.6(p). If the
Master Servicer or any Servicer makes any Adjustment, then, in
any such case, the amount of Receivables will be automatically
reduced by the principal amount of such Adjustment. Any
Adjustment shall be made on the Business Day on which such
adjustment obligation arises or is identified. In addition, if,
after giving effect to any such Adjustment, the Invested
Percentage would exceed the Maximum Invested Percentage, the
Company shall pay to the Administrative Agent, for the account of
the Banks, an amount equal to the lesser of (i) the dollar amount
of such Adjustment and (ii) the amount necessary to cause the
Invested Percentage to equal the Maximum Invested Percentage (the
amount of each such payment is referred to herein as an
"Adjustment Payment"). Such Adjustment Payment shall be treated
as a Collection and shall be distributed in accordance with the
applicable provisions of subsection 2.7.
12.5 Daily Reports; Settlement Statements. (a) (i)
On each Business Day the Master Servicer will prepare a written
report (the "Daily Report") in the form of Exhibit H,
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59
with such changes as may be agreed upon by the Administrative Agent
and the Master Servicer, setting forth for the second preceding
Business Day (the "Reporting Day") total Collections, the estimated
amount of Receivables and Eligible Receivables created, and such other
information as the Administrative Agent may request. The Master
Servicer shall complete such Daily Report and deliver it to the
Administrative Agent prior to 12:00 Noon (New York City time) on
the second Business Day following the Reporting Day. Each Daily
Report shall be transmitted by telecopy to the Administrative
Agent at the telecopy number specified in subsection 11.9.
(ii) On each Business Day, each Servicer shall provide
the Master Servicer with a written report (a "Seller Daily
Report") with respect to the Receivables serviced by such
Servicer, in a form to be agreed upon by such Servicer and the
Master Servicer, which report shall contain such information as
the Master Servicer shall need or otherwise request in order to
complete the Daily Report.
(b) (i) Not later than two Business Days prior to
each Settlement Date until the Participating Interest of the
Banks in the Receivables has been reduced to zero and the
Commitments of the Banks hereunder have been terminated, the
Master Servicer shall submit to the Administrative Agent a
statement (hereinafter, a "Settlement Statement"), substantially
in the form attached hereto as Exhibit E or such other form as
may be acceptable to the Administrative Agent. Promptly upon
receipt thereof, the Administrative Agent shall forward a copy of
each Settlement Statement to each Bank.
(ii) Not later than three Business Days prior to each
Settlement Date, each Servicer shall provide the Master Servicer
with a written report (a "Seller Settlement Statement") with
respect to the Receivables serviced by such Servicer, in a form
to be agreed upon by such Servicer and the Master Servicer, which
report shall contain such information as the Master Servicer
shall need or otherwise request in order to complete the
Settlement Statement.
(c) (i) Within 45 days after the end of each fiscal
quarter of C&A Products, the Master Servicer will deliver to the
Administrative Agent and each Bank a certificate of a Responsible
Officer of the Master Servicer stating that (a) a review of the
activities of the Master Servicer and each Servicer and its
performance hereunder during such fiscal quarter was made under
the supervision of such Responsible Officer, (b) to the best
knowledge of such Responsible Officer, based on such review, the
Master Servicer and each Servicer has accurately and correctly
performed its obligations hereunder in all material respects
throughout such quarter, or, if there has been a material default
in the performance of any such obligation, specifying the nature
and status of each such default and (c) to the best knowledge of
such Responsible Officer, based on such review, each Daily Report
and Settlement Statement was accurate and correct in all material
respects, except as specified in such certificate.
(ii) In connection with the annual audit of the Master
Servicer referred to in subsection 12.6(s)(i) and at the
Administrative Agent's prior request therefor, within 90 days
after the end of each fiscal year of C&A Products, the Master
Servicer shall cause a firm of independent certified public
accountants (who may also render other services to the Master
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60
Servicer, the Servicers and the Company) to deliver to the
Administrative Agent and each Bank a report of examination to the
effect that such firm has examined the activities of the Master
Servicer and each Servicer with respect to the Receivables and
its performance hereunder during such fiscal year and that such
examination included tests relating to Receivables serviced and
such other auditing procedures as such firm considered necessary
under the circumstances and, except as described in such report,
disclosed no material exceptions or errors in the records
relating to the Receivables serviced and its material performance
hereunder that, in such firm's opinion, are required to be
reported by such firm.
12.6 Representations, Warranties and Covenants of the
Servicers. Each Servicer and the Master Servicer hereby makes
the following representations, warranties and covenants to the
Banks and the Administrative Agent:
(a) Organization; Corporate Powers. Such Person (i)
is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it
is incorporated, (ii) has all requisite corporate power and
authority, and all material licenses, permits, franchises,
consents and approvals, to own or lease its property and
assets and to carry on its business as now conducted and as
proposed to be conducted, (iii) is duly qualified to do
business and is in good standing as a foreign corporation
(or is exempt from such requirements) and has obtained all
necessary licenses and approvals in each jurisdiction in
which the servicing of the Receivables as required by this
Agreement requires such qualification except where the
failure to so qualify or obtain licenses or approvals would
not have a Material Adverse Effect and (iv) has the
corporate power and authority to execute, deliver and
perform this Agreement.
(b) Authorization. The execution, delivery and
performance by such Person of this Agreement and the
consummation of the other Transactions (i) have been duly
authorized by all requisite corporate and, if required,
stockholder action and (ii) will not (x) violate (A) any
provision of law, statute, rule or regulation (including,
without limitation, Regulations G, T, U and X) or the
certificate of incorporation or by-laws (or similar
governing documents) of such Person, (B) any applicable
order of any court or any rule, regulation or order of any
Governmental Authority or (C) any indenture, certificate of
designation for preferred stock, agreement or other
instrument to which such Person is a party or by which such
Person or any of its property is bound, (y) be in conflict
with, result in a breach of or constitute (with notice or
lapse of time or both) a default under any such indenture,
agreement or other instrument where any such conflict,
violation, breach or default referred to in clause (ii)(x)
or (ii)(y) of this subsection 12.6(b), individually or in
the aggregate, would have a Material Adverse Effect or (z)
result in the creation or imposition of any Lien upon any
property or assets of the such Person.
(c) Enforceability. This Agreement has been duly
executed and delivered by such Person and constitutes a
legal, valid and binding obligation of such Person
enforceable against such Person in accordance with its
terms, except as enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other
similar laws affecting creditors' rights generally and
except as enforceability may be limited
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61
by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
(d) Litigation, etc. (i) There are not any actions,
suits or proceedings at law or in equity or by or before any
court or Governmental Authority now pending or, to the
knowledge of such Person, threatened against or affecting
such Person or any property or rights of such Person as to
which there is a reasonable possibility of an adverse
determination and which (x) if adversely determined, could
individually or in the aggregate result in a Material
Adverse Effect or (y) involve the Transaction Documents or
(z) if adversely determined could materially adversely
affect the Transactions.
(ii) Such Person is not in default with respect to any
law, order, judgment, writ, injunction, decree, rule or
regulation of any Governmental Authority where such default
could have a Material Adverse Effect. The Transactions will
not violate any applicable law or regulation or violate or
be prohibited by any judgment, writ, injunction, decree or
order of any court or Governmental Authority or subject such
Person to any civil or criminal penalty or fine.
(e) Taxes. Such Person and each of its Subsidiaries
has filed or caused to be filed all Federal, and material
state, local and foreign, tax returns required to have been
filed by it and has paid or caused to be paid all taxes
shown thereon to be due and payable, and any assessments
received by it, except taxes that are being contested in
good faith by appropriate proceedings and such Person or
such Subsidiary, as the case may be, shall set aside on its
books adequate reserves as required by GAAP with respect
thereto. For purposes of this paragraph, "taxes" shall mean
any present or future tax, levy, impost, duty, charge,
assessment or fee of any nature (including interest,
penalties and additions thereto) that is imposed by any
Governmental Authority.
(f) Consents. All consents and approvals of, filings
and registrations with, and other actions in respect of, all
Governmental Authorities required in order to make or
consummate the Transactions have been obtained, given, filed
or taken and are in full force and effect, other than any
such consents, approvals, filings or other actions, the
failure to obtain or make which could not reasonably be
expected to result in a Material Adverse Effect.
(g) Compliance with Requirements of Law. Such Person
(i) shall duly satisfy all obligations on its part to be
fulfilled under or in connection with the servicing and
collection of the Receivables, (ii) will maintain in effect
all qualifications required under Requirements of Law in
order to properly service the Receivables and (iii) will
comply in all respects with all Requirements of Law in
connection with servicing the Receivables, except, in each
case, where such conduct could not have a Material Adverse
Effect.
(h) Agreement to Cooperate. The Master Servicer shall
from time to time and at any time provide, and shall cause
its Subsidiaries to provide, information with
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62
respect to the business, operations, properties and financial
matters of the Master Servicer and such Subsidiaries to the
Company, its officers, employees, agents and professional
advisers in connection with the replacement or refinancing, in
whole or in part, of this Agreement and the other Transaction
Documents with a new receivables financing facility in which
ownership interests in, or notes, commercial paper,
certificates or other debt instruments secured by, the
Receivables shall be sold in one or more public offerings,
private placements or otherwise (such facility, the
"Replacement Facility"), and the Master Servicer shall
otherwise cooperate with, and cause its Subsidiaries to
cooperate with, the Company and such officers, employees,
agents and professional advisers in the negotiation,
development, preparation and execution of, such Replacement
Facility.
(i) Protection of Banks' Rights. Such Person shall
take no action, nor omit to take any action, which act or
omission would substantially impair the rights of Banks in
the Receivables, nor shall it reschedule, revise or defer
payments due on any Receivable except in accordance with the
Policies and the Company Policies or except as otherwise
expressly permitted by this Agreement; provided, that such
Person shall have no obligation to the Banks or the
Administrative Agent under this paragraph (i) in respect of
Receivables which become Charge-Offs as a result of non-
payment by the Obligor with respect thereto.
(j) Security Interest. Except for the conveyance
hereunder and under the Receivables Sale Agreement, such
Person will not sell, pledge, assign or transfer to any
other Person, or grant, create, incur, assume or suffer to
exist any Lien on any Receivable or other Pooled Property
transferred and assigned to the Banks, whether now existing
or hereafter created, or any interest therein, and such
Person shall defend the right, title and interest of the
Banks in, to and under any Receivable or other Pooled
Property transferred and assigned to the Banks, whether now
existing or hereafter created, against all claims of third
parties claiming through or under such Person, the Master
Servicer or any Seller.
(k) Location of Offices. The chief executive office
of each Servicer and the Master Servicer is listed on
Schedule 2, which office is the place where such Person is
"located" for the purposes of Section 9-103(3)(d) of the
Uniform Commercial Code of the State of New York, and the
offices of each Servicer and the Master Servicer where such
Servicer and the Master Servicer keeps its records
concerning the Receivables are also listed in said Schedule.
Such Person (i) will not move outside the State listed on
Schedule 2 under the heading "Chief Executive Office" the
location of its chief executive office or outside of the
State listed on Schedule 2 under the heading "Offices Where
Records Kept" the location of any of the offices where it
keeps its records with respect to the Receivables without 30
days' prior written notice to the Administrative Agent and
(ii) will promptly take all actions reasonably required
(including but not limited to all filings and other acts
necessary or advisable under the Uniform Commercial Code of
each relevant jurisdiction) in order to continue the first
priority perfected ownership interest of the Banks in all
Receivables and other Pooled Property now owned or hereafter
created. Such Person will give the Administrative Agent
prompt notice of a change within the State listed on
Schedule 2 of the location
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63
of its chief executive office or of a change within the State
listed on Schedule 2 of the location of any office where it
keeps its records with respect to the Receivables and the other
Pooled Property.
(l) No Adverse Change. There has not been since the
date of this Agreement any material adverse change in the
ability of such Person to perform its obligations under
Article XII of this Agreement.
(m) Lockboxes and other Payment Methods. Listed on
Schedule 3 is each Lockbox Account to which, as of the
initial Closing Date, the Obligors have been directed to
remit payments on account of the Receivables, except to the
extent that any of the Servicers, in the normal course of
their business and consistent with past practices, have
directed such Obligors to remit payments by (i) delivering
cash, a check or other instrument to or in care of the
Person delivering goods to such Obligor, (ii) a wire
transfer of such funds directly to the relevant
Concentration Account or (iii) delivering a check to the
business offices, agents or officers of such Servicer.
Neither the Master Servicer nor any Servicer shall (i) add
or terminate any bank as a bank at which a Lockbox Account
is maintained, (ii) add or terminate any such Lockbox
Account at any such bank or (iii) make any change in its
instructions to any Obligor regarding payments to be made to
any such bank or Lockbox Account; provided, that a Servicer
may at any time change its instructions to Obligors so as to
require such Obligors to make payments to a different
Lockbox Account, so long as such Servicer has previously
delivered to the Administrative Agent an executed Lockbox
Agreement in form and substance reasonably satisfactory to
the Administrative Agent regarding such Lockbox Account.
(n) Reports. The information with respect to the
Receivables serviced by such Person contained in each
Settlement Statement will be true and correct in all
material respects as of the date of such Settlement
Statement.
(o) Instruments. Such Person will not take any action
to cause any Receivable to be evidenced by any instrument
(other than an instrument which constitutes chattel paper)
(as each such term is defined in the Uniform Commercial Code
as in effect in the State of New York) except in connection
with the enforcement or collection of a Receivable.
(p) Extension of Receivables; Amendment of Policies.
Extend, make any Adjustment to, rescind, cancel, amend or
otherwise modify, or attempt or purport to extend, amend or
otherwise modify, the terms of any Purchased Receivables,
except (i) in accordance with the terms of the Policies and
the Company Policies, (ii) as required by any Requirement of
Law, (iii) in the case of Adjustments, upon making an
Adjustment Payment pursuant to subsection 12.4 or (iv) with
the consent of the Required Banks, provided the Servicers
may cause Receivables to become Charge-Offs. Neither the
Servicers nor the Master Servicer shall amend or otherwise
modify or waive any term or condition of the Policies or the
Company Policies except in accordance with subsection 5.8 of
the Receivables Sale Agreement.
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64
(q) Ineligible Receivables. Without the prior written
approval of the Required Banks, such Person shall not take
any action to cause, or which would permit, an Eligible
Receivable to cease to be an Eligible Receivable, except as
expressly permitted in this Agreement.
(r) Notices. Such Person will give written notice to
the Administrative Agent and each Bank promptly upon
obtaining knowledge of (i) the occurrence of any Termination
Event, Potential Termination Event, Servicer Default or
Servicer Event of Default (which notice shall specify what,
if any, action will be taken with respect thereto) and (ii)
a breach of any of the representations and warranties of the
Company set forth in Article V.
(s) Financial Statements. The Master Servicer shall
furnish to each Bank:
(i) as soon as available, but in any event within
90 days after the end of each fiscal year of the Master
Servicer, a copy of the consolidated balance sheet of
the Master Servicer and its consolidated Subsidiaries
as at the end of such year and the related consolidated
statements of income, shareholders' equity and retained
earnings and cash flows for such year, setting forth
the comparative amounts for the previous year and
certified without a "going concern" or like
qualification or exception, or scope limitation, by
Arthur Andersen & Co. or other independent certified
public accountants of nationally recognized standing
reasonably acceptable to the Administrative Agent;
(ii) as soon as available, but in any event not
later than 45 days after the end of each of the first
three quarterly periods of each fiscal year of the
Master Servicer, the unaudited consolidated balance
sheet of the Master Servicer and its consolidated
Subsidiaries as at the end of such quarter and the
related unaudited consolidated statements of income,
shareholders' equity and retained earnings and cash
flows of the Master Servicer and its consolidated
Subsidiaries for such quarter and the portion of the
fiscal year through the end of such quarter, setting
forth the comparative amounts for the corresponding
quarter and portion of the previous year, certified by
a Responsible Officer of the Master Servicer as being
fairly stated in all material respects (subject to
normal year-end audit adjustments); and
(iii) as soon as available, but in any event not
later than 45 days after the end of each month in each
fiscal year of the Master Servicer, the unaudited
consolidated balance sheet of the Master Servicer and
its consolidated Subsidiaries as at the end of such
month and the related unaudited consolidated statements
of income, shareholders' equity and retained earnings
and cash flows of the Master Servicer and its
consolidated Subsidiaries for such month and the
portion of the fiscal year through the end of such
month, setting forth the comparative amounts for the
corresponding month of the previous year, certified by
a Responsible Officer of the Master Servicer as being
fairly stated in all material respects (subject to
normal year-end audit adjustments);
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65
all such financial statements shall be complete and correct
in all material respects and shall be prepared in reasonable
detail and in accordance with GAAP applied consistently
throughout the periods reflected therein and with prior
periods (except as approved by such accountants or
Responsible Officer, as the case may be, and disclosed
therein) except that the monthly financial statements
provided pursuant to clause (iii) shall only be consistent
with GAAP in all material respects and that the monthly
financial statements provided pursuant to clause (iii) shall
not be required to include footnotes.
(t) Certificates; Other Information. The Master
Servicer shall furnish to each Bank:
(i) concurrently with the delivery of the
financial statements referred to in clause (s)(i), a
certificate of the independent certified public
accountants reporting on such financial statements
stating that in making the examination necessary
therefor no knowledge was obtained of any Servicer
Default or Servicer Event of Default, except as
specified in such certificate;
(ii) concurrently with the delivery of the
financial statements referred to in clause (s)(i) and
(ii), a certificate of a Responsible Officer of the
Master Servicer stating that, to the best of such
Responsible Officer's knowledge, each Transaction Party
during such period has observed or performed all of its
covenants and other agreements, and satisfied every
condition, contained in the Transaction Documents to
which it is a party to be observed, performed or
satisfied by it, and that such Responsible Officer has
obtained no knowledge of any Servicer Default or
Servicer Event of Default except as specified in such
certificate.
(u) Separate Corporate Existence of the Company. The
Master Servicer shall cause the Company to comply with the
provisions of subsection 7.9. Neither the Master Servicer
nor any Servicer shall take any action, or omit to take any
action, which is inconsistent with the provisions thereof.
The Master Servicer shall not assign, pledge, transfer or
otherwise dispose of the Capital Stock of the Company other
than pursuant to the terms of the Pledge Agreement.
Each of the Master Servicer and each Servicer agrees and
acknowledges that each of the representations and warranties
contained in this subsection 12.6 shall be deemed to have been
made by the Master Servicer or such Servicer, as the case may be,
(x) as of the Effective Date, and (y) with respect to an Increase
in Net Investment, as of the related Closing Date, unless, in
either case, such representation or warranty expressly relates
only to a prior date.
12.7 Acquisition Obligation. (a) In the event of any
breach of any of the representations, warranties or covenants of
the Master Servicer or any Servicer which is an Affiliate of the
Company contained in subsection 12.6(g), (i), (j), (k), (p) or
(q), then upon the earlier to occur of the discovery of such
event by a Responsible Officer of such Person, or receipt by such
Person of written notice of such event given by the
Administrative Agent, the outstanding Principal Amount of
Receivables shall be reduced by the Principal Amount of
<PAGE>
66
such Receivables in respect of which such representation or warranty
was incorrect or such covenant was breached; provided, however,
that (i) prior to the Amortization Period, to the extent that
such a reduction would cause the Invested Percentage to be more
than the Maximum Invested Percentage, the Master Servicer and the
Servicers which are Affiliates of the Company, jointly and
severally, agree to acquire such Receivable and any Related
Property with respect thereto on the terms and conditions set
forth in paragraph (b) below and (ii) during the Amortization
Period, the Master Servicer and the Servicers which are
Affiliates of the Company, jointly and severally, agree
(regardless of which such Servicer or Master Servicer shall have
been responsible for such breach) to acquire such Receivable and
any Related Property with respect thereto on the terms and
conditions set forth in paragraph (b) below. In the event of any
breach of any of the representations, warranties or covenants of
the Master Servicer or any Servicer which is not an Affiliate of
the Company contained in subsection 12.6(g), (i), (j), (k), (p)
or (q), then upon the earlier to occur of the discovery of such
event by such Person, or receipt by such Person of written notice
of such event given by the Administrative Agent, the outstanding
Principal Amount of Receivables shall be reduced by the Principal
Amount of such Receivables in respect of which such
representation or warranty was incorrect or such covenant was
breached upon the deposit by the Master Servicer or such Servicer
(which deposit the Master Servicer or such Servicer hereby agrees
to make) into the relevant Concentration Account in immediately
available funds an amount equal to the Principal Amount of such
Receivable (together with payments pursuant to paragraph (b),
"Servicer Transfer Payments").
(b) If any breach of a representation, warranty or
covenant by a Servicer or the Master Servicer which is an
Affiliate of the Company which necessitates the acquisition of a
Receivable by the Master Servicer and the Servicers pursuant to
paragraph (a) remains uncured on the day which is 30 days after
discovery or notice of such breach, the Master Servicer and such
Servicers shall acquire such Receivable and any Related Property
with respect thereto by depositing into the relevant
Concentration Account in immediately available funds on such 30th
day (or, if such day is not a Business Day, the immediately
succeeding Business Day, an amount equal to (i) prior to an
Amortization Period, the lesser of (A) the amount necessary to
cause the Invested Percentage to equal the Maximum Invested
Percentage and (B) the Principal Amount of such Receivable or
(ii) during an Amortization Period, the Principal Amount of such
Receivable (also, a "Servicer Transfer Payment"). Upon deposit
of the Servicer Transfer Payment, the Banks shall automatically
and without further action be deemed to sell, transfer, assign,
set-over and otherwise convey to such Person, free and clear of
any Lien created by the Banks but otherwise without recourse,
representation or warranty, all the right, title and interest of
the Banks in and to such Receivable, and all Related Property
with respect thereto; and such retransferred Receivable shall be
treated by the Banks as collected in full as of the date on which
it was transferred. The Administrative Agent shall execute such
documents and instruments of transfer or assignment and take such
other actions as shall reasonably be requested by the Master
Servicer to effect the conveyance of such Receivables pursuant to
this subsection 12.7. The obligation to acquire any Receivable
shall constitute the sole remedy respecting any breach of the
representations, warranties and covenants set forth in subsection
12.6(g), (i), (j), (k), (p) or (q) with respect to such
Receivables available to Banks or the Administrative Agent on
behalf of the Banks.
<PAGE>
67
12.8 Obligations Unaffected. The obligations of the
Master Servicer, each Servicer and the Company to the
Administrative Agent and the Banks under this Agreement shall not
be affected by reason of any invalidity, illegality or
irregularity of any Receivable or any transfer and assignment of
a Receivable.
12.9 Addition of Servicers. Subject to the terms and
conditions hereof, from time to time one or more Subsidiaries of
C&A Products which the Required Banks have approved as additional
Sellers pursuant to subsection 8.22 shall become additional
Servicers parties hereto upon (a) execution by each such
Subsidiary of an Additional Servicer Supplement and (b)
satisfaction of all conditions precedent set forth in subsection
3.4 of the Receivables Sale Agreement to such Subsidiary becoming
an additional Seller.
12.10 Optional Termination of Servicers. Any Servicer
which is terminated as a Seller pursuant to subsection 9.15 of
the Receivables Sale Agreement shall be released as a Servicer
party hereto and shall cease to be a party hereto on the date it
ceases to be a party to the Receivables Sale Agreement.
12.11 Interest on Overdue Payments. If any amount
payable by the Servicers or the Master Servicer to the Banks or
the Administrative Agent hereunder, whether on account of fees or
expenses or on account of amounts collected by the Servicers or
the Master Servicer or amounts payable pursuant to subsection
12.4 or 12.7, or otherwise, is not paid by such Servicer or the
Master Servicer, as the case may be, on the relevant Settlement
Date or other relevant date, such amount shall be payable
together with interest for each day from such Settlement Date or
other relevant date, as the case may be, until such amount is
paid in full at a rate per annum equal to ABR plus the Applicable
ABR Margin plus 2%.
12.12 Servicer Events of Defaults. If any of the
following events (herein called "Servicer Events Of Default")
shall have occurred and be continuing:
(a) any Servicer or the Master Servicer, as the case
may be, (1) shall fail to deliver any Daily Report or any
Settlement Statement conforming in all material respects to
the requirements of subsection 12.5 and such failure shall
continue unremedied for two consecutive Business Days after
the Administrative Agent shall have delivered notice thereof
to such Servicer or the Master Servicer, as the case may be,
provided that if a Force Majeure Delay shall have occurred
with respect to any Servicer or the Master Servicer, as the
case may be, (i) in the case of such an event with respect
to a Servicer, the failure of any Daily Report or Settlement
Statement to contain information with respect to the
Receivables serviced by such Servicer or (ii) in the case of
such an event with respect to the Master Servicer, the
failure of the Master Servicer to deliver any Daily Report
or Settlement Statement, shall not constitute, in either
case, a Servicer Event of Default unless such failure
continues for longer than the lesser of (x) ten consecutive
Business Days and (y) the length of such Force Majeure Delay
(or, if greater, two Business Days) after the Administrative
Agent shall have delivered notice of such failure to the
Company, or (2) shall fail to make any payment reflected in
such Daily Report or Settlement Statement as being required
to be made by it thereunder on the date such report or
statement is delivered;
<PAGE>
68
(b) any Servicer or the Master Servicer, as the case
may be, shall fail to pay any amount required to be paid by
it hereunder (other than those specified in paragraph (a) of
this subsection 12.12) within five Business Days after the
date when due;
(c) any Servicer or the Master Servicer, as the case
may be, shall fail to observe or perform any covenant or
agreement applicable to it contained herein (other than as
specified in subsections (a) and (b) of this subsection
12.12), provided that, except in the case of any failure to
observe or perform any covenant contained in subsection
12.6(r)(i), no such failure shall constitute a Servicer
Event of Default under this paragraph (c) unless such
failure shall continue unremedied for a period of 30
consecutive days after notice thereof from the
Administrative Agent, the Required Banks or the Company;
provided that a Servicer Event of Default shall not be
deemed to have occurred under this paragraph (c) based upon
a breach of a representation, warranty or covenant contained
in subsection 12.6(g), (i), (j), (k), (p) or (q) if the
Servicers and Master Servicer shall have complied with the
provisions of subsection 12.7 with respect thereto;
(d) any representation, warranty, certification or
statement made or deemed made by any Servicer or the Master
Servicer, as the case may be, in this Agreement or in any
Settlement Statement or other certificate, financial
statement or other document delivered pursuant to this
Agreement shall prove to have been false or misleading in
any material respect on or as of the date made or deemed
made; provided that a Servicer Event of Default shall not be
deemed to have occurred under this paragraph (d) based upon
a breach of a representation, warranty or covenant contained
in subsection 12.6(g), (i), (j), (k), (p) or (q) if the
Servicers and Master Servicer shall have complied with the
provisions of subsection 12.7 with respect thereto;
(e) (i) an involuntary proceeding shall be commenced
or an involuntary petition shall be filed in a court of
competent jurisdiction seeking (A) relief in respect of any
Servicer or the Master Servicer, as the case may be, or of a
substantial part of its property or assets, under Title 11
of the United States Code, as now constituted or hereafter
amended, or any other Federal, state or foreign bankruptcy,
insolvency, receivership or similar law, (B) the appointment
of a receiver, trustee, custodian, sequestrator, conservator
or similar official for the any Servicer or the Master
Servicer, as the case may be, or for a substantial part of
its property or assets or (C) the winding-up or liquidation
of the any Servicer or the Master Servicer, as the case may
be; and such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall be entered; or (ii) any
Servicer or the Master Servicer, as the case may be, shall
(A) voluntarily commence any proceeding or file any petition
seeking relief under Title 11 of the United States Code, as
now constituted or hereafter amended, or any other Federal,
state or foreign bankruptcy, insolvency, receivership or
similar law, (B) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding
or the filing of any petition described in clause (i) above,
(C) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar
official for such Servicer or the Master Servicer, as the
case may be, or for a substantial part of its
<PAGE>
69
property or assets, (D) file an answer admitting the material
allegations of a petition filed against it in any such
proceeding, (E) make a general assignment for the benefit of
creditors, (F) become unable, admit in writing its inability
or fail generally to pay its debts as they become due or (G)
take any action for the purpose of effecting any of the
foregoing; or
(f) a Purchase Termination Event shall have occurred
and be continuing under the Receivables Sale Agreement;
then, in any such event, so long as such Servicer Event of
Default shall be continuing, with the consent of the Required
Banks the Administrative Agent or the Company may, or upon the
request of the Required Banks the Administrative Agent or the
Company shall, terminate the rights of any or all of the
Servicers and the Master Servicer in accordance with subsection
12.2(d) by notice to each such Servicer and/or the Master
Servicer, as the case may be.
12.13 Audit. Upon the earlier of (a) the date which
is 270 days after the Effective Date and (b) the date on which
C&A Products shall have determined not to pursue the replacement
or refinancing, in whole, of this Agreement and the other
Transaction Documents with a Replacement Facility, the
Administrative Agent, at the expense of C&A Products, may select
and engage a third party to audit the Receivables and all
computer programs, material and data of the Sellers required for
the collection of Receivables by the Company. C&A Products
hereby agrees to give the Administrative Agent prompt written
notice of any determination referred to in clause (b) of the
preceding sentence.
<PAGE>
70
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized, all as of the day and year first above written.
CARCORP, INC.
By: Mark O. Remissong
Title: Senior Vice President
COLLINS & AIKMAN PRODUCTS CO.,
as Master Servicer
By: Mark O. Remissong
Title: Senior Vice President
Address for Notices:
701 McCullough Drive
Charlotte, North Carolina 28262
Attention: Chief Financial Officer
Telecopy: 704-548-2330
CHEMICAL BANK, as Administrative Agent
and as a Bank
By: Suzanne Kjorlien
Title: Vice President
<PAGE>
71
The Servicers:
COLLINS & AIKMAN PRODUCTS CO., as
Servicer for itself and for Ack-Ti-
Lining, Inc. and The Akro Corporation
By: Mark O. Remissong
Title: Senior Vice President
DURA ACQUISITION CORP.
By: Mark O. Remissong
Title: Senior Vice President
IMPERIAL WALLCOVERINGS, INC.
By: Mark O. Remissong
Title: Senior Vice President
IMPERIAL WALLCOVERINGS (CANADA), INC.
By: Mark O. Remissong
Title: Senior Vice President
WCA CANADA, INC.
By: Mark O. Remissong
Title: Senior Vice President
Address for Notices for all Servicers:
c/o Collins & Aikman Products Co.
701 McCullough Drive
Charlotte, North Carolina 28262
Attention: Chief Financial Officer
Telecopy: 704-548-2330
<PAGE>
SCHEDULE 1
NAMES, ADDRESSES AND COMMITMENTS OF BANKS
Commitment
CHEMICAL BANK . . . . . . . . . . . . . . . . . . . $150,000,000
270 Park Avenue
New York, New York 10017
Attention:
Telecopy No.:
<PAGE>
SCHEDULE 2
State of
Incorporat
Seller ion Location of Chief Executive Office Office Where Records are Kept
Carcorp, Inc. Delaware 5025 S. Eastern Avenue, Suite 16, No. 5025 S. Eastern Avenue, Suite 16, No.
25, Las Vegas, NV 89119 25, Las Vegas, NV 89119
Collins & Aikman Products Delaware 701 McCullough Drive, Charlotte, NC 701 McCullough Drive, Charlotte, NC
Co. 28262 28262
Dura Acquisition Corp. Delaware 1365 East Beecher Street, Adrian, MI 1365 East Beecher Street, Adrian, MI
49221 49221
Imperial Wallcoverings, Delaware 23645 Mercantile Road, Beachwood, OH 23645 Mercantile Road, Beachwood, OH
Inc. 44122 44122
Imperial Wallcoverings Ontario 1051 Rue Galt Est, Sherbrooke, Quebec, 1051 Rue Galt Est, Sherbrooke, Quebec,
(Canada), Inc. Canada J1G 1Y7 Canada, J1G 1Y7
WCA Canada, Inc. Ontario 150 Collins Street, Farnham, Quebec, 150 Collins Street, Farnham, Quebec,
Canada, J2N 2R6 Canada, J2N 2R6
<PAGE>
SCHEDULE 3
LOCKBOXES
Account No.
Seller Bank (including
Lockbox No.)
Collins & Aikman Products
Co.
Dura Acquisition Corp.
Imperial Wallcoverings,
Inc.
Imperial Wallcoverings
(Canada), Inc.
WCA Canada, Inc.
<PAGE>
SCHEDULE 4
TRANSACTIONS WITH AFFILIATES
1. The Company may become a party to a Tax Sharing Agreement among Collins
& Aikman Corporation, a Delaware corporation ("Parent"), C&A Products
and other subsidiaries of Parent and C&A Products.
2. The Company may, from time to time, make payments to C&A Products in the
form of intercompany loans to the extent, if any, that the payment of
the amounts so loaned would be permitted as Restricted Payments if paid
to C&A Products in the form of a dividend or other distribution with
respect to the Capital Stock of the Company.
<PAGE>
SCHEDULE 5
CONTRACTUAL OBLIGATIONS
See the agreements set forth as part of Schedule 4.
<PAGE>
SCHEDULE 6
LOCAL COUNSEL
State Counsel
Michigan Honigman Miller Schwartz and Cohn
Nevada Lionel, Sawyer & Collins
North Carolina Fennesbresque, Clark, Swindell & Hay
Ohio Baker & Hostetler
<PAGE>
EXHIBIT A TO THE
RECEIVABLES TRANSFER AGREEMENT
[FORM OF ASSIGNMENT AND ACCEPTANCE]
Reference is made to the Receivables Transfer and Servicing
Agreement, dated as of July 13, 1994 (as amended, supplemented or
otherwise modified from time to time, the "Receivables Transfer
Agreement"), among Carcorp, Inc., a Delaware corporation (the
"Company"), COLLINS & AIKMAN PRODUCTS CO., a Delaware corporation
("C&A Products"), as master servicer (in such capacity, the
"Master Servicer"), C&A Products and certain subsidiaries of C&A
Products in their capacities as servicers of receivables (in such
capacities, the "Servicers"), the several financial institutions
from time to time parties thereto (the "Banks") and Chemical
Bank, a New York banking corporation, as administrative agent for
the Banks (in such capacity, the "Administrative Agent"). Unless
otherwise defined herein, terms defined in the Receivables
Transfer Agreement and used herein shall have the meanings given
to them in the Receivables Transfer Agreement.
(the "Transferor Bank") and
(the "Acquiring Bank") agree as follows:
1. The Transferor Bank hereby irrevocably sells and assigns
to the Acquiring Bank without recourse to the Transferor Bank,
and the Acquiring Bank hereby irrevocably purchases and assumes
from the Transferor Bank without recourse to the Transferor Bank,
as of the Transfer Date (as defined below), a ___% interest (the
"Assigned Interest") in and to the Transferor Bank's rights and
obligations under the Receivables Transfer Agreement with respect
to the Participating Interests under the Receivables Transfer
Agreement as are set forth on SCHEDULE 1 hereto, in a principal
amount for such Assigned Interest as set forth on SCHEDULE 1
hereto.
2. The Transferor Bank (a) makes no representation or
warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in
connection with the Receivables Transfer Agreement or any other
instrument or document furnished pursuant thereto or the
execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Receivables Transfer Agreement or any
other instrument or document furnished pursuant thereto, other
than that it has not created any adverse claim upon the interest
being assigned by it hereunder and that such interest is free and
clear of any such adverse claim; and (b) makes no representation
or warranty and assumes no responsibility with respect to the
financial condition of the Company, C&A Products, any of the
Sellers or any of the Obligors under the Receivables or the
performance or observance by the Company, C&A Products, such
Sellers or such Obligors of any of their respective obligations
under the Receivables Transfer
<PAGE>
2
Agreement, the Receivables or any
other instrument or document furnished pursuant thereto.
3. The Acquiring Bank (a) represents and warrants that it
is legally authorized to enter into this Assignment and
Acceptance; (b) confirms that it has received a copy of the
Receivables Transfer Agreement, together with copies of the most
recent financial statements delivered pursuant to Section 7.1
thereof, copies of the other Transaction Documents and such other
documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this
Assignment and Acceptance; (c) agrees that it will, independently
and without reliance upon the Transferor Bank, the Administrative
Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action
under the Receivables Transfer Agreement or any other instrument
or document furnished pursuant thereto; (d) appoints and
authorizes the Administrative Agent to take such action as agent
on its behalf and to exercise such powers and discretion under
the Receivables Transfer Agreement, the other Transaction
Documents or any other instrument or document furnished pursuant
thereto as are delegated to the Administrative Agent by the terms
thereof, together with such powers as are incidental thereto; and
(e) agrees that it will be bound by the provisions of the
Receivables Transfer Agreement and will perform in accordance
with its terms all the obligations which by the terms of the
Receivables Transfer Agreement are required to be performed by it
as a Bank including, if it is organized under the laws of a
jurisdiction outside the United States, its obligation pursuant
to Section 3.5 of the Receivables Transfer Agreement.
4. The effective date of this Assignment and Acceptance
shall be , 19 (the "Transfer Date"). Following
the execution of this Assignment and Acceptance by the parties
hereto (including, if the Acquiring Bank is not then a Bank or a
Lender (as defined in the Credit Agreement) or an affiliate
thereof, by the Company), it will be delivered, together with the
payment to the Administrative Agent of a registration and
processing fee of $3,500, to the Administrative Agent for
acceptance by it and recording by the Administrative Agent
pursuant to Section 11.4(e) of the Receivables Transfer
Agreement, effective as of the Transfer Date (which shall not,
unless otherwise agreed to by the Administrative Agent, be
earlier than five Business Days after the date of such acceptance
and recording by the Administrative Agent).
5. Upon such acceptance and recording, from and after the
Transfer Date, the Administrative Agent shall make all payments
in respect of the Assigned Interest (including payments of
principal, Commitment Fees and other amounts) to the Acquiring
Bank whether such amounts have accrued prior to the Transfer Date
or accrue subsequent to the Transfer Date. The Transferor Bank
and the Acquiring Bank shall make all appropriate adjustments in
payments by the Administrative Agent for periods prior to the
Effective Date
<PAGE>
3
or with respect to the making of this assignment
directly between themselves.
6. From and after the Transfer Date, (a) the Acquiring Bank
shall be a party to the Receivables Transfer Agreement and, to
the extent provided in this Assignment and Acceptance, have the
rights and obligations of a Bank thereunder and shall be bound by
the provisions thereof and (b) the Transferor Bank shall, to the
extent provided in this Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Receivables
Transfer Agreement.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed as of the date first
above written by their respective duly authorized officers on
Schedule 1 hereto.
<PAGE>
SCHEDULE 1
TO ASSIGNMENT AND ACCEPTANCE
RELATING TO THE RECEIVABLES TRANSFER AGREEMENT,
DATED AS OF JULY 13, 1994, AMONG
CARCORP, INC.,
COLLINS & AIKMAN PRODUCTS CO.,
CERTAIN SUBSIDIARIES OF COLLINS & AIKMAN PRODUCTS CO.,
THE BANKS NAMED THEREIN AND
CHEMICAL BANK, AS ADMINISTRATIVE AGENT FOR THE BANKS
Name of Transferor Bank:
Name of Acquiring Bank:
Transfer Date of Assignment:
Commitment Principal Commitment Percentage
Assigned Amount Assigned Assigned
$____________ $_____________ __._________%
[Name of Acquiring Bank] [Name of Transferor Bank]
By:______________________ By:_______________________
Title: Title:
Address for Notices:
[Address]
Attention:
Telephone:
Telecopier:
[Consented To:]
CHEMICAL BANK, as CARCORP, INC.
Administrative Agent
By:_____________________ By:_______________________
Title: Title:
Accepted for Recordation in the Register:
CHEMICAL BANK, as
Administrative Agent
By:_____________________
Title:
<PAGE>
EXHIBIT B TO THE
RECEIVABLES TRANSFER AGREEMENT
[FORM OF LOCKBOX AGREEMENT]
________ __, 1994
[Name and address of Lockbox Bank]
________________________
________________________
Attention: _________________
Dear Sirs:
Carcorp, Inc., a Delaware corporation (the "Company"),
has agreed to purchase certain receivables (the "Receivables")
from a number of sellers (the "Sellers") pursuant to the
Receivables Sale Agreement, dated as of July 13, 1994, among the
Sellers, Collins & Aikman Products Co., as master servicer of the
receivables (in such capacity, the "Master Servicer") and the
Company. The Company has in turn sold the Receivables to the
several financial institutions (the "Banks") from time to time
parties to the Receivables Transfer and Servicing Agreement,
dated as of July 13, 1994 (as amended, supplemented or otherwise
modified from time to time, the "Receivables Transfer
Agreement"), among the Company, the Master Servicer, certain of
the Sellers, as servicer in respect of its related receivables
(each, in such capacity, a "Servicer"), the Banks and Chemical
Bank, as administrative agent for the Banks (in such capacity,
the "Administrative Agent"). Capitalized terms used herein but
not defined herein shall have the meanings assigned to such terms
in Annex X to the Receivables Transfer Agreement.
Pursuant to the terms of the Receivables Transfer
Agreement and except as otherwise provided therein, (i) each of
the Servicers has agreed to instruct all Obligors under the
Receivables to make all payments in respect of the Receivables to
a blocked deposit account (each, a "Lockbox Account") designated
by such Servicer to such Obligor and (ii) the Company has agreed
to grant a security interest in its right, title and interest in
each Lockbox Account and all funds and other evidences of payment
held therein to the Banks. Furthermore, the Company, the
Servicers, the Master Servicer and the Administrative Agent have
agreed, pursuant to the Receivables Transfer Agreement, to enter
into an agreement with each bank maintaining a Lockbox Account
and hereby request that [Name of Lockbox Bank] (the "Lockbox
Bank") act as, and the Lockbox Bank hereby agrees to act as, a
lockbox deposit bank for the Company with respect to the Lockbox
Account. This Letter Agreement defines certain rights and
obligations with respect to the appointment of the Lockbox Bank.
<PAGE>
2
Accordingly, the Company, the Master Servicer, on
behalf of itself and the Servicers, the Servicer party hereto,
the Administrative Agent and the Lockbox Bank agree as follows:
Reference is made to the Lockbox Account (Account No.
______), including box number ______ thereunder, maintained with
you by the related Servicer. The related Servicer hereby
transfers the Lockbox Account to the Company and hereafter the
Lockbox Account shall be maintained by the Lockbox Bank for the
benefit of the Company and the Administrative Agent, as set forth
herein. All funds and other evidences of payment received by the
Lockbox Bank in its capacity as Lockbox Bank in respect of the
Receivables shall be deposited in the Lockbox Account. Such
payments shall not be commingled with other funds. All funds and
other evidences of payment at any time on deposit in the Lockbox
Account shall be held by the Lockbox Bank for application
strictly in accordance with the terms of this Letter Agreement.
The Lockbox Bank agrees to give the Administrative Agent prompt
notice if the Lockbox Account shall become subject to any writ,
judgment, warrant of attachment, execution or similar process.
The Administrative Agent shall have the sole and
exclusive dominion over and control of the Lockbox Account and
all Collections and other property from time to time deposited
therein, and shall have the sole right of withdrawal from the
Lockbox Account. Each of the Company and the Master Servicer
acknowledges and agrees that neither it nor any Servicer shall
have any dominion over or control of the Lockbox Account or any
Collections or other property from time to time deposited therein
including any right to withdraw or utilize any funds or other
evidences of payment on deposit in the Lockbox Account, other
than the right to authorize transfers to the Concentration
Account (as defined below) as set forth herein and pursuant to
the terms of the Receivables Transfer Agreement. The Company or
the Administrative Agent shall initiate and the Lockbox Bank
shall permit, at least as often as once each day that is a
business day for the Lockbox Bank and for Chemical Bank (in such
capacity, the "Concentration Bank" or the "Collection Bank", as
the context requires), and in any event by 1:00 p.m., New York
time, on the Business Day following each such day, the transfer,
by means of the Automated Clearing House System, of all available
funds on deposit in the Lockbox Account, including all funds
transferred from Obligors on or before the end of such day, along
with, subject to the next succeeding sentence, all remittance
advisements and payment invoices on deposit therein, to the
deposit account (Account No. _________), maintained in the name
of the Administrative Agent at the Concentration Bank (the
"Concentration Account"). The Lockbox Bank acknowledges that,
until it receives instructions from the Administrative Agent to
the contrary, the Lockbox Bank shall return to the Company, upon
the Company's reasonable request therefor, any remittance
advisements and payment invoices deposited into the Lockbox
Account.
<PAGE>
3
As soon as practicable following (and in any event not
later than the day following) receipt of written notice from the
Administrative Agent and thereafter, the Lockbox Bank shall
transfer automatically at least as often as once each day that is
a business day for the Lockbox Bank and for the Concentration
Bank, as the case may be, and in any event at the open of
business on the Business Day following each such day of deposit,
by means of the Automated Clearing House System, all available
funds on deposit in the Lockbox Account to the Concentration
Account, as provided in such notice, along with any remittance
advisements and payment invoices on deposit therein. Any such
instructions may be revoked only upon written notice from the
Administrative Agent.
Deposited checks with respect to the Lockbox Account
returned to the Lockbox Bank for any reason will be charged
against the Lockbox Account. Nothing contained in the previous
sentence shall be construed to prejudice other rights of the
Lockbox Bank, which rights include the right of recourse against
the Company for any overdrafts in the Lockbox Account.
The Administrative Agent is authorized to receive mail
delivered to the Lockbox Bank with respect to the Lockbox Account
and the Company has filed a form of standing delivery order with
the United States Postal Service authorizing the Administrative
Agent to receive mail delivered to the Lockbox Bank with respect
to the Lockbox Account.
The Lockbox Bank shall also furnish the Administrative
Agent with statements, in the form and manner typical for the
Lockbox Bank, of amounts of deposits in, and amounts transferred
to the Concentration Account from, the Lockbox Account pursuant
to any reasonable request of the Administrative Agent but in any
event not less frequently than monthly and such other information
relating to the Lockbox Account at such times as shall be
reasonably requested by the Administrative Agent.
For purposes of this Letter Agreement, any officer of
the Administrative Agent shall be authorized to act, and to give
instructions and notice, on behalf of the Administrative Agent
hereunder.
The fees for the services of the Lockbox Bank shall be
mutually agreed upon between the Company and the Lockbox Bank and
paid by the Company. Such fees shall not be paid by means of the
withdrawal of funds from the Lockbox Account. Neither the
Administrative Agent nor any Bank shall have any responsibility
or liability for the payment of any such fee.
The Lockbox Bank may perform any of its duties
hereunder by or through its officers, employees or agents and
shall be entitled to rely upon the advice of counsel as to its
duties. The Lockbox Bank shall not be liable to the
Administrative Agent, the Master Servicer, any Servicer or the
<PAGE>
4
Company for any action taken or omitted to be taken by it in good
faith, nor shall the Lockbox Bank be responsible to the
Administrative Agent, the Master Servicer, any Servicer or the
Company for the consequences of any oversight or error of
judgment or be answerable to the Administrative Agent for the
same unless the same shall happen through the Lockbox Bank's
gross negligence or willful misconduct.
The Lockbox Bank may resign at any time as Lockbox
Bank hereunder by delivery to the Administrative Agent and the
Company of written notice of resignation not less than 10 days
prior to the effective date of such resignation. The Company
may, with the written consent of the Administrative Agent, and,
if the Company shall refuse any demand by the Administrative
Agent to do so in the event (i) a Termination Event shall occur
and be continuing or (ii) there has been a failure by the Lockbox
Bank to perform any of its material obligations hereunder and
such failure could materially adversely affect the Banks'
interest in any Receivable or the Administrative Agent's rights,
or ability to exercise any remedies, under this Letter Agreement
or the Receivables Transfer Agreement, the Administrative Agent
may close the Lockbox Account at any time by delivery of notice
to the Lockbox Bank and the Company at the addresses appearing
below. This Letter Agreement shall terminate upon receipt of
such notice of closing, or delivery of such notice of
resignation, except that the Lockbox Bank shall immediately
transfer to the Concentration Account, or any other account
designated by the Administrative Agent all available funds or,
subject to the Company's reasonable request to retain such items,
any remittances advises or payment invoices, if any, then on
deposit in, or otherwise to the credit of, the Lockbox Account
and deliver any available funds or such remittance advises or
payment invoices relating to the Receivables received by the
Lockbox Bank after such notice directly to the Concentration
Account or any other account designated by the Administrative
Agent.
Each of the Company, the Master Servicer and the
Servicers acknowledges that the Lockbox Bank shall incur no
liability to the Company, the Master Servicer or such Servicer as
a result of any action taken pursuant to an instruction given by
or on behalf of the Administrative Agent.
All notices and communications hereunder shall be in
writing (except where telephonic instructions or notices are
authorized herein) and shall be deemed to have been received and
shall be effective on the day on which delivered (including
delivery by telex) (i) in the case of the Administrative Agent,
to it at 270 Park Avenue (___ Floor), New York, New York 10017,
Attention: ______________ (Telecopy No. (212) ___-____), (ii) in
the case of the Lockbox Bank, to it at _______________,
________________, Attention: __________ (Telecopy No. (___) ___-
____), (iii) in the case of the Company, to it at
__________________, _________________, Attention: __________
<PAGE>
5
(Telecopy No. (___) ___-___), (iv) in the case of the Master
Servicer, c/o Collins & Aikman Products Co., _____________,
Attention: ___________ (Telecopy No. (___) ___-____), and (v) in
the case of the Servicer party hereto, to it at _______________,
________________, Attention: __________ (Telecopy No. (___) ___-
____).
The Lockbox Bank shall not assign or transfer any of
its rights or obligations hereunder (other than to the
Administrative Agent) without the prior written consent of the
Administrative Agent. This Letter Agreement may be amended only
by a written instrument executed by the Company, the Master
Servicer, the Servicer party hereto, the Administrative Agent and
the Lockbox Bank, acting by their representative officers
thereunto duly authorized. Except with respect to rights of
setoff available to the Lockbox Bank in the event that it is also
a Bank under the Receivables Transfer Agreement, the Lockbox Bank
hereby unconditionally and irrevocably waives (so long as the
Receivables Transfer Agreement is in effect) any rights of setoff
or banker's lien against, or to otherwise deduct from, any funds
or other evidences of payment held in any Lockbox Account for any
indebtedness or other claim owed by the Company, the Master
Servicer or any Servicer to the Lockbox Bank.
THIS LETTER AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST OR REMEDIES HEREUNDER IN
RESPECT OF ANY PARTICULAR RECEIVABLE MAY BE GOVERNED BY THE LAW
OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
This Letter Agreement (i) shall inure to the benefit
of, and be binding upon, the Company, the Servicers, the Master
Servicer, the Administrative Agent, the Lockbox Bank and their
respective successors and assigns and (ii) may be executed in two
or more counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same
instrument. Delivery of an executed counterpart of a signature
page to this Letter Agreement by facsimile transmission shall be
effective as delivery of a manually executed counterpart of this
Letter Agreement.
<PAGE>
6
IN WITNESS WHEREOF, the parties hereto have caused is
Letter Agreement to be executed by their duly authorized officers
as of the date first above written.
Very truly yours,
CARCORP, INC.
By:__________________________
Title:
COLLINS & AIKMAN PRODUCTS CO., as
Master Servicer and on behalf of
the Servicers
By:__________________________
Title:
[Servicer]
By:__________________________
Title:
Agreed to and accepted:
[NAME OF LOCKBOX BANK],
as Lockbox Bank
By:________________________
Title:
CHEMICAL BANK,
as Administrative Agent
By:__________________________
Title:
<PAGE>
EXHIBIT C TO THE
RECEIVABLES TRANSFER AGREEMENT
[FORM OF SUBORDINATION AGREEMENT]
SUBORDINATION AGREEMENT, dated as of July 13, 1994,
among CARCORP, INC., a Delaware corporation (the "Company"),
COLLINS & AIKMAN PRODUCTS CO., a Delaware corporation ("C&A
Products"), and the subsidiaries of the C&A Products from time to
time parties hereto (together with C&A Products, collectively,
the "Sellers") and CHEMICAL BANK, a New York banking corporation,
as administrative agent under the Receivables Transfer Agreement
referred to below (in such capacity, the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, the Banks (as defined below) have agreed to
make purchases from the Company of undivided interests in the
Receivables (as defined below) on the terms and subject to the
conditions set forth in the Receivables Transfer Agreement; and
WHEREAS, the obligations of the Banks to make purchases
under the Receivables Transfer Agreement are conditioned on,
among other things, the execution and delivery by the Company and
the Sellers of an agreement in the form hereof.
NOW THEREFORE, in consideration of the premises and of
the mutual covenants herein contained, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
1.1. Definitions; Construction. (a) Capitalized
terms used herein and not defined herein shall have the meanings
assigned to such terms in the Receivables Transfer and Servicing
Agreement, dated as of July 13, 1994 (as amended, supplemented or
otherwise modified from time to time, the "Receivables Transfer
Agreement"), among the Company, the C&A Products, as master
servicer (in such capacity, the "Master Servicer"), certain
Sellers in their capacities as servicers (in such capacities, the
"Servicers"), the several financial institutions from time to
time parties thereto (the "Banks") and the Administrative Agent.
Unless otherwise defined herein or in the Receivables Transfer
Agreement, terms used in Article 9 of the Uniform Commercial Code
of the State of New York are used herein as defined therein. For
all purposes of this Agreement, the following terms shall have
the following meanings:
"Agreement" shall mean this Subordination Agreement as
it may from time to time be amended, supplemented or otherwise
modified in accordance with its terms.
<PAGE>
2
"Senior Obligations" shall mean the obligations (other
than obligations of the Company to any Seller or to any Affiliate
of the Company or any Seller) of the Company now or hereafter
existing, and all Banks' rights to receive payment, under the
Receivables Transfer Agreement, whether for the payment of
principal, Purchase Discount Amount, Commitment Fees, other fees,
expenses or otherwise and any Monthly Servicing Fee.
"Senior Parties" shall mean the Administrative Agent,
the Banks, the Master Servicer in its capacity as such and the
Servicers in their capacities as such.
"Subordinated Debt" shall mean any obligations payable
from time to time by the Company to any of the Sellers under the
Subordinated Notes (and any extensions, renewals, refinancing,
refundings and replacements of all or any part of such
obligations).
"Subordinated Parties" shall mean the Sellers, as
holders of the Subordinated Notes.
(b) The definitions referred to or set forth in this
Article I shall apply equally to both the singular and plural
forms of the terms defined. Whenever the context may require,
any pronoun shall include the corresponding masculine, feminine
and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without
limitation". All references herein to Articles and Sections
shall be deemed references to Articles and Sections of this
Agreement unless the context shall otherwise require. Except as
otherwise expressly provided herein, all terms of an accounting
or financial nature shall be construed in accordance with GAAP.
ARTICLE II
SUBORDINATION
2.1. Subordination. (a) In consideration for the
entry by the Banks into the Receivables Transfer Agreement and
the other agreements to be delivered in connection therewith,
each of the Subordinated Parties hereby agrees that all rights of
such Subordinated Party to payments of principal and interest and
any other amounts in respect of the Subordinated Debt are hereby
expressly subordinated, to the extent and in the manner set forth
in this Article II, to the prior payment in full in cash of all
Senior Obligations in accordance with the terms thereof.
(b) Except as set forth in subsection 2.7 of the
Receivables Transfer Agreement, no payment (whether directly or
indirectly, by exercise of any right of set-off or otherwise) in
respect of the Subordinated Debt, whether as principal, interest
or otherwise, shall be made by the Company or received or
accepted, directly or indirectly, by or on behalf of any
<PAGE>
3
Subordinated Party or any of its Affiliates unless and until all
amounts (including Purchase Discount Amount accruing after the
commencement of any proceeding under any bankruptcy, insolvency,
receivership or similar law, regardless of whether a claim
therefor is allowable as a claim in such proceeding), however
denominated, payable to the Senior Parties in respect of the
Senior Obligations have been paid in full in cash and received by
the Senior Parties in cash.
2.2. Dissolution or Insolvency. Upon any distribution
of all or any of the assets of the Company or upon any
dissolution, winding up, total or partial liquidation,
reorganization, adjustment, protection, relief or composition of
the Company or its debts, whether in bankruptcy, insolvency,
reorganization, arrangement or receivership proceedings or
otherwise, or upon any assignment for the benefit of creditors or
any other marshalling of the assets and liabilities of the
Company, or otherwise:
(a) the Senior Parties shall first be entitled to
receive payment in full in cash of the Senior Obligations in
accordance with the terms of the Senior Obligations
(whenever arising) before any Subordinated Party shall be
entitled to receive any payment on account of any
Subordinated Debt, whether of principal, interest or
otherwise; and
(b) any payment or distribution of any kind (including
cash, property, securities and any payment or distribution
which may be payable or deliverable by reason of the payment
of any other Indebtedness of the Company being subordinated
to the payment of the Subordinated Debt) in respect of the
Subordinated Debt that otherwise would be payable or
deliverable upon or with respect to the Subordinated Debt,
directly or indirectly, by set-off or in any other manner,
including from or by way of collateral, shall be paid or
delivered by the Person making such payment or delivery
(whether a trustee in bankruptcy, a receiver, custodian or
liquidating trustee or otherwise) directly to the
Administrative Agent on behalf of the Banks for application
(in the case of cash) to, or as collateral (in the case of
noncash property or securities) for, the payment of the
Senior Obligations until the Senior Obligations shall have
been paid in full in cash.
2.3. Certain Termination Events. In the event of any
Termination Event under paragraph (f) of Article IX of the
Receivables Transfer Agreement arising in respect of the Company:
(a) the Administrative Agent, on behalf of the Banks,
is hereby irrevocably authorized and empowered (in its own name
or in the name of the Subordinated Parties or otherwise), but
shall have no obligation, to demand, sue for, collect and receive
every payment or distribution of any kind (including cash,
<PAGE>
4
property or securities) made in respect of the Subordinated Debt
and in connection with any Termination Event referred to in this
subsection 2.3, and give acquittance therefor and to file claims
and proofs of claim and take such other action (including
enforcing any security interest or other lien securing payment of
the Subordinated Debt) as the Administrative Agent, on behalf of
the Banks, may deem necessary or advisable for the exercise or
enforcement of any of the rights or interests of holders of
Senior Obligations hereunder, provided that in the event the
Administrative Agent, on behalf of the Banks, takes such action,
it shall apply all proceeds first to the payment of costs under
this Agreement, then to the payment of the Senior Obligations and
any surplus proceeds remaining thereafter to be paid over to
whomsoever may be lawfully entitled thereto; and
(b) each Subordinated Party shall duly and promptly
take such action as the Administrative Agent, on behalf of the
Banks, may request (i) to file appropriate claims or proofs of
claim in respect of the Subordinated Debt, (ii) to execute and
deliver to the Administrative Agent, on behalf of the Banks, such
powers of attorney, assignments, or other instruments as the
Administrative Agent, on behalf of the Banks, may request in
order to enable it to enforce any and all claims with respect to,
and any security interests and other liens securing payment of,
the Subordinated Debt, and (iii) to collect and receive any and
all payments or distributions which may be payable or deliverable
upon or with respect to the Subordinated Debt for account of the
Administrative Agent, on behalf of the Banks.
2.4. Certain Payments Held in Trust. All payments or
distributions upon or with respect to the Subordinated Debt that
are received by any Subordinated Party or any of its Affiliates,
directly or indirectly, by set-off or in any other manner,
including, without limitation, from or by way of collateral,
contrary to the provisions of this Agreement, the Receivables
Transfer Agreement or any Subordinated Note shall be received in
trust for the benefit of the Banks, shall be segregated from
other funds and property held by such Subordinated Party or such
Affiliate and shall be forthwith paid over to the Administrative
Agent on behalf of the Banks in the form received (with any
necessary endorsement or assignment) to be applied (in the case
of cash) to, or held as collateral (in the case of noncash
property or securities) for the payment of, the Senior
Obligations until the Senior Obligations shall have been paid in
full in cash. In the event that any Subordinated Party or its
Affiliate fails to make any endorsement or assignment required
hereby, the Administrative Agent, on behalf of the Banks, is
hereby irrevocably authorized to make such endorsement or
assignment as attorney-in-fact for such Subordinated Party or
such Affiliate.
2.5. Subrogation. Each Subordinated Party agrees that
no payment or distribution to the Administrative Agent or the
Banks pursuant to the provisions of this Agreement shall entitle
<PAGE>
5
any Subordinated Party to exercise any rights of subrogation in
respect thereof until the Senior Obligations shall have been paid
in full in cash. Each Subordinated Party agrees that the
subordination provisions contained herein shall not be affected
by any action, or failure to act, by any holder of Senior
Obligations which results, or may result, in affecting, impairing
or extinguishing any right of reimbursement or subrogation or
other right or remedy of any Subordinated Party.
2.6. Waiver of Notices, Etc. Each Subordinated Party
and the Company hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the Senior
Obligations and the Subordinated Debt and any requirement that
the Administrative Agent or any Bank protect, secure, perfect or
insure any security interest or lien on any property subject
thereto or exhaust any right or take any action against the
Company or any other Person or any Pooled Property.
2.7. No Security. (a) Without the prior written
consent of the Required Banks, the Company will not give to any
Person, and neither any of the Subordinated Parties nor any of
their Affiliates will receive or accept, any security of any
nature whatsoever in respect of the Subordinated Debt on any
property or assets, whether now existing or hereafter acquired,
of the Company.
(b) Each Subordinated Party agrees and confirms that
the Subordinated Debt held by it represents solely the right to
receive certain amounts from funds available under the
Receivables Transfer Agreement and only to the extent, in the
manner and at the times set forth in the Receivables Transfer
Agreement and that the Subordinated Debt held by it does not
represent a security or other interest in the Receivables or
their proceeds.
2.8. Subordination Legend; Further Assurances.
The Subordinated Parties will cause each instrument evidencing
the Subordinated Debt held by it to be endorsed with the
following legend:
"The indebtedness evidenced by this instrument is
subordinated to the prior payment in full of the Senior
Obligations (as defined in the Subordination Agreement
hereinafter referred to) pursuant to, and to the extent
provided in, the Subordination Agreement, dated as of
July 13, 1994, among the maker hereof, the payee named
herein and certain other parties."
Each of the Subordinated Parties will further mark its books of
account, in such a manner as shall be effective to give proper
notice of the effect of this Agreement and will cause all
Subordinated Debt held by it to be evidenced by all appropriate
instrument or instruments endorsed with the above legend. Each
of the Subordinated Parties will, at its expense and at any time
<PAGE>
6
and from time to time, promptly execute and deliver all further
instruments and documents, and take all further action, that may
be necessary or desirable or that the Administrative Agent, on
behalf of the Banks, may, at any time, request, in order to
protect any right or interest granted or purported to be granted
hereby or to enable the Administrative Agent, on behalf of the
Banks, to exercise and enforce its rights and remedies hereunder.
2.9. Representations and Warranties. Each Seller
hereby represents and warrants that this Agreement constitutes a
legal, valid and binding obligation of such Person, enforceable
in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditors' rights in general and
except as such enforceability may be limited by general
principles of equity (whether considered in a suit at law or in
equity).
ARTICLE III
OTHER MATTERS REGARDING THE SUBORDINATED DEBT
3.1. No Waiver. No right of the Senior Parties to
enforce this Agreement shall at any time or in any way be
prejudiced or impaired by any act or failure to act on the part
of any of the Senior Parties, the Company or any Subordinated
Party, or by any noncompliance by the Company or any Subordinated
Party with the terms, provisions and covenants herein, and the
Senior Parties are hereby expressly authorized to extend, renew,
increase, decrease, modify or amend the terms of the Senior
Obligations or any security therefor, and to release, sell or
exchange any such security and otherwise deal freely with the
Company, all without notice to or consent of any Subordinated
Party or any of its Affiliates hereunder and without affecting
the liabilities and obligations of the parties hereto.
3.2. Payment on Subordinated Debt and Remedies. Each
of the Subordinated Parties agrees that, except upon request of
the Administrative Agent, it will not ask, demand, accelerate,
sue or take or receive from the Company, directly or indirectly
(including from or by way of collateral), any payment of or
security for all or any part of the Subordinated Debt or exercise
any remedies or take any action or proceeding to enforce the same
until the Senior Obligations have been paid in full in cash, and
each Subordinated Party further agrees not to institute or join
with any other creditors of the Company in instituting any
petition commencing any bankruptcy, insolvency, reorganization,
arrangement, receivership or similar proceeding or any assignment
for the benefit of creditors against or in respect of the Company
or any other marshalling of the assets and liabilities of the
Company.
<PAGE>
7
3.3. No Transfer of or Change in Subordinated Debt.
Each Subordinated Party agrees that it will (a) not sell, assign,
transfer, hypothecate or otherwise dispose of all or any part of
the Subordinated Debt to any Person, including any of such
Subordinated Party's Affiliates, (b) permit the terms of any of
the Subordinated Debt to be changed in any manner or (c)
subordinate any Subordinated Debt for the benefit of any other
Person, in each case without the prior written consent of the
Administrative Agent.
3.4. Obligations Hereunder Not Affected. All rights
and interests of the Senior Parties hereunder, and all agreements
and obligations of the Subordinated Parties and the Company
hereunder, shall remain in full force and effect irrespective of:
(a) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Senior
Obligations, or any other amendment or waiver of or consent
to departure from the Receivables Transfer Agreement or any
other Transaction Document; or
(b) any exchange, release or nonperfection of any
security interest in any collateral, or any release or
amendment or waiver of or consent to departure from any
Transaction Document, in respect of all or any of the Senior
Obligations.
This Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of the
Senior Obligations or any part thereof is rescinded or must
otherwise be returned by any Senior Party upon the insolvency,
bankruptcy or reorganization of the Company or otherwise, all as
though such payment had not been made.
Each Subordinated Party hereby authorizes the Senior
Parties, without notice or demand hereunder and without affecting
or impairing any of the obligations of any Subordinated Party
hereunder, from time to time to (a) renew, compromise, extend,
increase, accelerate or otherwise change the time for payment of,
or otherwise change the terms of, the Senior Obligations or any
part thereof or any security therefor; (b) take or hold security
for the payment of the Senior Obligations and exchange, enforce,
foreclose upon, waive or release any such security; (c) apply
such security and direct the order or manner of sale thereof as
the Senior Parties, in their sole discretion, may determine; (d)
release and substitute one or more endorsers, warrantors,
borrowers or other obligors; and (e) exercise or refrain from
exercising any rights against any Subordinated Party, the Company
or any other Person and otherwise deal freely with the Company.
3.5. Reaffirmation of Representations and Warranties.
Each Subordinated Party party to the Receivables Sale Agreement
or the Receivables Transfer Agreement, as the case may be,
reaffirms and repeats its respective representations and
<PAGE>
8
warranties contained in such Agreements and agrees that the Banks
and the Administrative Agent may rely on such representations and
warranties as though set forth herein in full.
ARTICLE IV
MISCELLANEOUS
4.1. Notices. All notices, requests and demands to or
upon the respective parties hereto to be effective shall be in
writing (including by telecopy), and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made
when delivered by hand, or three days after being deposited in
the mail, postage prepaid, or, in the case of telecopy notice,
when received, addressed to the addresses in accordance with
subsection 11.9 of the Receivables Transfer Agreement.
4.2. Survival of Agreement. All covenants,
agreements, representations and warranties made by the Company
and each Subordinated Party herein and in the certificates or
other instruments prepared or delivered in connection with or
pursuant to this Agreement shall be considered to have been
relied upon by the Administrative Agent and the holders of the
Senior Obligations and shall survive the execution and delivery
of the Transaction Documents, regardless of any investigation
made by the Administrative Agent or the holders of the Senior
Obligations or on their behalf, and shall continue in full force
and effect as long as any Senior Obligation is outstanding and
unpaid and so long as the Commitments have not been terminated.
4.3. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Company, the
Administrative Agent and each Subordinated Party and thereafter
shall be binding upon and inure to the benefit of the Company,
each Subordinated Party, the Administrative Agent and the Banks
and their respective successors and assigns, except that neither
the Company nor any Subordinated Party shall have the right to
assign or delegate its rights or duties hereunder.
4.4. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK.
4.5. No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the
Administrative Agent or the Banks, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein
<PAGE>
9
provided are cumulative and not exhaustive of any rights,
remedies, powers and privileges provided by law.
4.6. Waivers; Amendment. Neither this Agreement nor
any terms hereof may be waived, amended, supplemented or modified
except pursuant to an agreement or agreements in writing entered
into by the Company, each affected Subordinated Party and the
Administrative Agent. Each Senior Party shall be bound by any
waiver, amendment, supplement or modification authorized by this
Section.
4.7. WAIVER OF JURY TRIAL. THE COMPANY, THE SELLERS
AND THE ADMINISTRATIVE AGENT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM
THEREIN.
4.8. Severability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent 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.
4.9. Counterparts. This Agreement may be executed by
one or more of the parties to this Agreement on any number of
separate counterparts (including by telecopy), and all of said
counterparts taken together shall be deemed to constitute one and
the same instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Company and
the Administrative Agent.
4.10. Addition of Sellers. Subject to the terms and
conditions of the Receivables Sale Agreement, from time to time
one or more Subsidiaries of the C&A Products may become
additional Sellers parties to the Receivables Sale Agreement.
Upon any such Subsidiary becoming an additional Seller under the
Receivables Sale Agreement, such Subsidiary shall automatically
be deemed for all purposes hereunder to be a Seller under this
Agreement, commencing on the related Seller Addition Date.
<PAGE>
10
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers,
all as of the date first above written.
CARCORP, INC.
By:___________________________
Title:
CHEMICAL BANK, as Administrative
Agent
By:___________________________
Title:
The Sellers:
COLLINS & AIKMAN PRODUCTS CO.
By:___________________________
Title:
ACK-TI-LINING, INC.
By:_________________________
Title:
WCA CANADA, INC.
By:_________________________
Title:
IMPERIAL WALLCOVERINGS (CANADA),
INC.
By:_________________________
Title:
<PAGE>
11
IMPERIAL WALLCOVERINGS, INC.
By:_________________________
Title:
THE AKRO CORPORATION
By:_________________________
Title:
DURA ACQUISITION CORP.
By:_________________________
Title:
<PAGE>
EXHIBIT E TO THE
RECEIVABLES TRANSFER AGREEMENT
COLLINS & AIKMAN
as Master Servicer for Carcorp
Monthly Settlement Report
For Fiscal Period:
Beginning
Ending
I. CALCULATION OF RECEIVABLES BALANCE
A. Beginning Gross Receivables Balance
B. Receivables Created During Fiscal Month
C. Less: Cash Collections Occurring During Fiscal Month
Cash Discounts
Returns
Other Credits
D. Less: Total Dilutive Credits
Writeoffs
Recoveries
E. Less: Writeoffs Net of Recoveries
F. Ending Gross Receivables Balances for Fiscal Month
II. CALCULATION OF ELIGIBLITY PERCENTAGE
A. Gross Receivables Balance on Eligibility Determination Date
B. Less Amounts in Gross Receivables Which:
C. the Entity does not have lawful/absolute title; subject to a
lien by another
D. the Buyer does not have a legal, valid, binding 1st priority
security interest
E. the Entity does not have a full right to assign and grant a
lien to Buyers
F. are not payable in US Dollars or are not enforceable
obligations of the debtor
Less: receivables denominated in Canadian dollars
G. are subject to any bona fide dispute, claim, setoff or
counterclaim by debtor
H. are not evidenced by an invoice but by an instrument or
chattel paper
I. are not bona fide accounts:
(i) accounts from goods shipped on consignment
<PAGE>
(ii) accounts of services not performed or completed
J. The Receivables Debtor is any of the following:
(i) incorporated outside the US
Less: Canadian accounts which are otherwise eligible
accounts of Japanese Receivables Debtors
accounts incorporated outside the U.S. but supported by an
LOC
(ii.) any direct or indirect subsidiary of Holdings
(iii) a domestic or foreign government or agency
Less: receivables of the United States Gov't or agencies
thereof
(iv) is subject to bankruptcy or reorganization
K. Invoices outstanding 90 days past original invoice date (120
days for Imperial)
L. payment in respect of receivable has been returned for
insufficient funds
M. are placed with attorneys for collection
N. is a consumer credit card receivable w/o all consumer
protection laws
O. is a consumer credit card receivable with two or more missed
payments
P. is an account specified by the Administrative Agent
Q. Sum of Ineligible Receivables Specified Above
R. Eligible Receivables
Less: Receivables supported by an LOC in excess of 15% of
Adjusted Principal
Amount of Eligible Receivables
Less: United States government or agency Receivables in excess
of 3% of the Adjusted Principal Amount of Eligible Receivables
Less: Receivables denominated in Canadian dollars in excess of
10% of Adjusted Principal Amount of Eligible Receivables
Less: Balances in excess of obligor percentage (zero until 270
days after closing)
S. Remaining Eligible Receivables
T. Eligiblity Percentage [ (R) / (S) ]
<PAGE>
III. CALCULATION OF MAXIMUM INVESTED PERCENTAGE
Loss Reserve Ratio
A. Aggregate Adjusted Principal Amount of Receivables which were
90-119 days past due as of the last day of such fiscal month
B. Aggregate Adjusted Principal Amount of Receivables generated
by the Sellers during the fifth month prior to such fiscal month
C. Default Ratio (A/B)
D. The highest three month rolling average of the Default Ratio
that occurred during the last twelve fiscal months
E. Factor
F. The Aggregate Adjusted Principal Amount of Receivables
generated during the last 3.5 fiscal months
G. The outstanding Adjusted Principal Amount of Eligible
Receivables as of the last day of such fiscal month.
H. Loss Reserve Ratio (D*(F/G)*E)
Yield Reserve Ratio
I. Discount Rate = (Weighted Average Purchase Discount Amount
Rate in effect at the end of the last fiscal month + accrued fees
(other than the servicing fee) for such fiscal month / average
daily Net Investment during such fiscal month)
J. Days Sales Outstanding = 91 * (Amount of receivables at the
end of the last fiscal month - aggregate bad debt reserve at the
end of such fiscal month) / aggregate net sales for last 3 fiscal
months
K. Factor
L. Yield Reserve Ratio (I*J*K)/360
Servicing Reserve Percentage
M. Servicing Reserve Percentage
Dilution Reserve Percentage
N. Factor
O. Aggregate Dilutive Credits for last 12 fiscal months
P. Aggregate Adjusted Principal Amount of Receivables generated
during last fiscal 12 months
<PAGE>
Q. Average Dilution Ratio (O / P)
R. The Peak Dilution Ratio during the last 12 fiscal months
S. The aggregate Adjusted Principal Amount of Receivables
generated in last fiscal month divided by the aggregate Adjusted
Amount of Eligible Receivables for such fiscal month
T. Dilution Reserve Ratio ((N*Q)+(R-Q)*(R/Q)))*S
Required Reserve Percentage:
Sum of:
Loss Reserve Ratio
Yield Reserve Ratio
Servicing Reserve Ratio
Dilution Reserve Ratio
V. Total Required Reserve Percentage
Maximum Invested Percentage
W. 100% minus greater of 17% and the Required Reserve
Percentage
IV. MONTHLY AGINGS SUMMARY
Total
Outstanding 1 - 29 30 - 59 60 - 89 90-119 120 +
Balance of Days Days Days Days Days
Receivables Current Past Due Past Due Past Due Past
$
%
V. CONCENTRATIONS - TOP 5 OBLIGORS
Excess
% of Applicable over
Eligible Obligor Obligor
Balance Receivables Percentage Percentage
1.
2.
3.
4.
5.
<PAGE>
FINANCIAL COVENANTS
ACTUAL COVENANT
VI. LOSS TO LIQUIDATION RATIO
A. Writeoffs net of Recoveries during the last 12 fiscal months
B. Four times the aggregate amount of Collections during the last
3 fiscal months
C. Loss to Liquidation Ratio (A / B)
VII. DAYS SALES OUTSTANDING
A. DSO
VIII. % OF RECEIVABLES > 60 DAYS PAST DUE
A. All Receivables more than 60 days past due at the end of last
fiscal month
B. Gross Receivables balance at the end of such fiscal month
C. (A / B)
<PAGE>
EXHIBIT C TO THE RECEIVABLES SALE AGREEMENT
EXHIBIT F TO THE RECEIVABLES TRANSFER AGREEMENT
[FORM OF ADDITIONAL SELLER/SERVICER SUPPLEMENT]
SUPPLEMENT, dated _________________, to (i) the
Receivables Sale Agreement, dated as of July 13, 1994 (as
amended, the "Receivables Sale Agreement"), among Collins &
Aikman Products Co., a Delaware corporation ("C&A Products"), and
each of the subsidiaries of C&A Products from time to time
parties thereto (the "Sellers"), C&A Products, as master servicer
(in such capacity, the "Master Servicer"), and Carcorp, Inc., a
Delaware corporation (the "Company"), (ii) the Receivables
Transfer and Servicing Agreement, dated as of July 13, 1994 (as
amended, the "Receivables Transfer Agreement"), among the
Company, the Master Servicer, certain of the Sellers, in their
capacities as servicers of the Receivables (in such capacities,
the "Servicers"), the several financial institutions from time to
time parties thereto (the "Banks") and Chemical Bank, as
administrative agent for the Banks (in such capacity, the
"Administrative Agent"), and (iii) the Subordination Agreement,
dated as of July 13, 1994 (as amended, the "Subordination
Agreement"), among the Company, the Sellers from time to time
parties thereto and the Administrative Agent.
W I T N E S S E T H :
WHEREAS, the Receivables Sale Agreement provides that
any Subsidiary of C&A Products, although not originally a Seller
thereunder, may become a Seller under the Receivables Sale
Agreement, with (i) the consent of the Company and the Required
Banks and (ii) the satisfaction of each of the conditions
precedent set forth in subsection 3.4 of the Receivables Sale
Agreement (one of which is the delivery to the Company of a
supplement in substantially the form of this Supplement);
WHEREAS, the Receivables Transfer Agreement provides
that any Subsidiary of C&A Products, although not originally a
Servicer thereunder, may become a Servicer under the Receivables
Transfer Agreement, with (i) the consent of the Company and the
Required Banks to such Subsidiary becoming a Seller under the
Receivables Sale Agreement, (ii) the delivery to the Company of a
supplement in substantially the form of this Supplement and (iii)
the satisfaction of each of the conditions precedent set forth in
subsection 3.4 of the Receivables Sale Agreement;
WHEREAS, the Subordination Agreement provides that any
Subsidiary of C&A Group, although not originally a Seller
thereunder, shall become a Seller under the Subordination
Agreement immediately upon such Subsidiary becoming a Seller
under the Receivables Sale Agreement; and
<PAGE>
2
WHEREAS, the undersigned was not an original Seller
under the Receivables Sale Agreement and the Subordination
Agreement or an original Servicer under the Receivables Transfer
Agreement but now desires to become a Seller and a Servicer,
respectively, thereunder.
NOW, THEREFORE, the undersigned hereby agrees as
follows:
1. The undersigned agrees to be bound by all of the
provisions of each of the Receivables Sale Agreement, the
Subordination Agreement and the Receivables Transfer
Agreement applicable to a Seller and a Servicer,
respectively, thereunder and agrees that it shall, on the
date this Supplement is accepted by the Company and the
Required Banks, become (a) in the case of the Receivables
Sale Agreement and the Subordination Agreement, a Seller and
(b) in the case of the Receivables Transfer Agreement, a
Servicer, for all purposes of the Receivables Sale
Agreement, the Subordination Agreement and the Receivables
Transfer Agreement, respectively, to the same extent as if
originally a party thereto.
2. Terms defined in Annex X to the Receivables
Transfer Agreement shall have their defined meanings when
used herein.
IN WITNESS WHEREOF, the undersigned has caused this
Supplement to be executed and delivered by a duly authorized
officer on the date first above written.
[Insert name of Seller/Servicer]
By________________________________
Title:
Accepted as of the date first
above written:
CARCORP, INC.
By:
Title:
[Required Banks]
By:
Title:
<PAGE>
EXHIBIT G TO THE
RECEIVABLES TRANSFER AGREEMENT
[FORM OF CLOSING CERTIFICATE]
[NAME OF CERTIFYING PARTY]
(a Delaware corporation)
Pursuant to subsection[s] 6.1(a)[, (f), (k), (m) and
(r)]* of the Receivables Transfer and Servicing Agreement, dated
as of July 13, 1994 (the "Receivables Transfer Agreement";
capitalized terms defined therein shall be used herein as therein
defined), among Carcorp, Inc., a Delaware corporation (the
"Company"), Collins & Aikman Products Co., a Delaware corporation
("C&A Products"), as master servicer (in such capacity, the
"Master Servicer"), C&A Products and each of the subsidiaries of
C&A Products from time to time parties thereto, in their
capacities as servicers (in such capacities, the "Servicers"),
the several financial institutions from time to time parties
thereto (the "Banks"), and Chemical Bank, a New York banking
corporation, as administrative agent for the Banks (in such
capacity, the "Administrative Agent"), the undersigned
___________ of __________________ (the "Certifying Party") hereby
certifies as follows:
[1. As of the date hereof, each of the conditions
precedent set forth in subsection 6.2 of the Receivables
Transfer Agreement has been satisfied;
2. As of the date hereof, all conditions to the
obligations of the Company and each of the Sellers under the
Receivables Sale Agreement have either been (i) satisfied or
(ii) waived by the Required Banks;
3. As of the date hereof (and after giving effect to
all of the transactions occurring on the Effective Date),
the Company is not "insolvent" under Section 101(32) of the
U.S. Bankruptcy Code (11 U.S.C. Section 101(32));
4. Attached hereto as Exhibit A is a true, correct and
complete copy of (a) the written Policies, or, to the extent
that the credit and collection policies of the Sellers are
not in written form at the date hereof, a written
description of the historical credit and collection
practices of the Sellers and proposed practices for the
Company and (b) the Company Policies;]*
5. As of the date hereof, the representations and
warranties of the Certifying Party set forth in
___________** of the Receivables Transfer Agreement are
true and correct in all material respects on and as of such
date;
*/ Insert bracketed language only in certificate of Company.
**/ Insert "Article V" in the case of the Company or subsection
12.6 in the case of the other Certifying Parties.
<PAGE>
2
6. ___________ is and at all times since ___ __, 199
has been, the duly elected and qualified [Secretary] of the
Certifying Party and the signature set forth for such
officer below is such officer's true and genuine signature;
and the undersigned [Secretary] of the Certifying Party certifies
as follows:
7. There are no liquidation or dissolution proceedings
pending or to my knowledge threatened against the Certifying
Party, nor has any other event occurred adversely affecting
or threatening the continued corporate existence of the
Certifying Party after the date hereof;
8. The Certifying Party is a corporation duly
organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation;
9. Attached hereto as Annex 1 is a correct and
complete copy of resolutions duly adopted by the Board of
Directors of the Certifying Party on __________ ___, 1994
authorizing (i) the execution, delivery and performance of
the Transaction Documents and the other documents executed
and delivered pursuant thereto to which it is a party and
(ii) the transactions contemplated by such Transaction
Documents and such other documents; such resolutions have
not in any way been amended, modified, revoked or rescinded
and have been in full force and effect since their adoption
to and including the date hereof and are now in full force
and effect; such resolutions are the only corporate
proceedings of the Certifying Party now in force relating to
or affecting the matters referred to therein; attached
hereto as Annex 2 is a correct and complete copy of the By-
Laws of the Certifying Party as in effect at all times since
____ __, 199 to and including the date hereof; and
attached hereto as Annex 3 is a correct and complete copy of
the Certificate of Incorporation of the Certifying Party as
in effect at all times since ____ __, 199 to and including
the date hereof, and such By-laws and Certificate have not
been amended, repealed, modified or restated;
10. The following persons are now duly elected and
qualified officers of the Certifying Party holding the
offices indicated next to their respective names below, and
such officers have held such offices with the Certifying
Party at all times since the date indicated next to their
respective titles to and including the date hereof, and the
signatures appearing opposite their respective names below
are the true and genuine signatures of such officers, and
each of such officers is duly authorized to execute and
deliver on behalf of the Certifying Party each of the
Transaction Documents and the other documents executed and
delivered pursuant thereto to which it is a party:
<PAGE>
3
Name Office Signature
IN WITNESS WHEREOF, the undersigned have hereunto set
our names as of the date set forth below.
By: By:
Title: Title:
Date: July __, 1994
<PAGE>
EXHIBIT H TO THE
RECEIVABLES TRANSFER AGREEMENT
CARCORP, INC.
Receivables Facility
Daily Report
Today's Date
Date of Processing
Daily Servicer Input
Gross Receivables Balance - Previous Date
Plus Can. dollar New Sales
Plus U.S. dollar New Sales
Less Can. dollar Collections
Less U.S. dollar Collections
Foreign Exchange Gain/(Loss)
Less Other Adjustments
Gross Receivables Balance - Today
Calculation of Maximum Transfer
Eligibility Percentage
Eligible Receivables
Required Reserve Percentage
Required Reserves
Maximum Transfer
Total in Cash Collateral Accounts
Beginning Balance
Plus New Earnings
Plus New Deposits
Less Contribution to Sources
Ending Balance
<PAGE>
Calculation of Net Investment
Net Investment - Previous
New Transfers Allowed / (Repmts. Req.'d)
Cash Received from New Transfers
Cash Repayments
Libor Tranche Maturities
ABR Balance
Cash Collateral Account
Net Investment - Today
Less Cash Collateral Balance
Aggregate Net Investment
Excess/(Shortfall) Maximum Transfer vs. Net Investment
Flow of Funds
SOURCES
Cash Collections Balance Available
Cash Collateral Balance Available
New Transfers
Capital Contribution
Total Sources
USES
Purchase Discount Payment
Bank Fee Payment
Net Investment Repayment
Operating Expense Payment
Servicer Fee Payment
Recvbls Purchase / Sub Note Repay / Dividends
Total Uses
<PAGE>
EXHIBIT I TO THE
RECEIVABLES TRANSFER AGREEMENT
CARCORP, INC.
RECEIVABLES SALE AGREEMENT
Dated as of July 13, 1994
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . . . . . . . 1
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
2.1 Purchase and Sale of Receivables . . . . . . . . . . . . 2
2.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . 3
2.3 Payment of Purchase Price . . . . . . . . . . . . . . . . 3
2.4 No Repurchase . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Rebates, Adjustments, Returns and Reductions;
Modifications . . . . . . . . . . . . . . . . . . . . . 5
2.6 Limited Repurchase Obligation . . . . . . . . . . . . . . 5
2.7 Obligations Unaffected . . . . . . . . . . . . . . . . . 6
2.8 Certain Charges . . . . . . . . . . . . . . . . . . . . . 6
2.9 Certain Allocations . . . . . . . . . . . . . . . . . . . 6
ARTICLE III
CONDITIONS TO PURCHASE AND SALE
3.1 Conditions Precedent to the Company's Initial Purchase of
Receivables . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Conditions Precedent to All the Company's Purchases of
Receivables . . . . . . . . . . . . . . . . . . . . . . 7
3.3 Conditions Precedent to Sellers' Obligations . . . . . . 8
3.4 Conditions Precedent to the Addition of a Seller . . . . 9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Sellers Relating to
the Sellers . . . . . . . . . . . . . . . . . . . . . . 10
(a) Organization, Corporate Powers . . . . . . . . . . 10
-i-
<PAGE>
Page
(b) Authorization . . . . . . . . . . . . . . . . . . 10
(c) Enforceability . . . . . . . . . . . . . . . . . . 11
(d) Capitalization . . . . . . . . . . . . . . . . . . 11
(e) Litigation; Compliance with Laws . . . . . . . . . 11
(f) Agreements . . . . . . . . . . . . . . . . . . . . 11
(g) Tax Returns . . . . . . . . . . . . . . . . . . 12
(h) No Material Misstatements . . . . . . . . . . . . 12
(i) Employee Benefit Plans . . . . . . . . . . . . . . 13
(j) Solvency . . . . . . . . . . . . . . . . . . . . . 13
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(l) Indebtedness to Company. . . . . . . . . . . . . . 13
(m) Lockboxes. . . . . . . . . . . . . . . . . . . . . 13
(n) Filings . . . . . . . . . . . . . . . . . . . . . 14
(o) Receivables Documents . . . . . . . . . . . . . . 14
4.2 Representations and Warranties of the Sellers Relating to
the Agreement and the Receivables . . . . . . . . . . . 14
ARTICLE V
AFFIRMATIVE COVENANTS
5.1 Certificates; Other Information . . . . . . . . . . . . . 16
5.2 Compliance with Laws, etc. . . . . . . . . . . . . . . . 16
5.3 Preservation of Corporate Existence . . . . . . . . . . . 16
5.4 Visitation Rights . . . . . . . . . . . . . . . . . . . . 16
5.5 Keeping of Records and Books of Account . . . . . . . . . 17
5.6 Location of Records . . . . . . . . . . . . . . . . . . . 17
5.7 Computer Files . . . . . . . . . . . . . . . . . . . . . 17
5.8 Policies . . . . . . . . . . . . . . . . . . . . . . . . 17
5.9 Taxes; ERISA . . . . . . . . . . . . . . . . . . . . . . 17
5.10 Collections . . . . . . . . . . . . . . . . . . . . . . 18
5.11 Lockbox Agreements; Lockbox Accounts . . . . . . . . . . 18
5.12 Furnishing Copies, etc . . . . . . . . . . . . . . . . . 19
5.13 Obligations with Respect to Obligors and Receivables . . 19
5.14 Responsibilities of the Sellers . . . . . . . . . . . . 19
5.15 Further Action . . . . . . . . . . . . . . . . . . . . . 20
5.16 Certain Procedures
6.1 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.2 Extension or Amendment of Receivables . . . . . . . . . . 22
6.3 Change in Payment Instructions to Obligors . . . . . . . 22
6.4 Change in Name . . . . . . . . . . . . . . . . . . . . . 22
-ii-
<PAGE>
6.5 Modification of Ledger . . . . . . . . . . . . . . . . . 22
6.6 Business of the Sellers . . . . . . . . . . . . . . . . . 23
6.7 Accounting of Purchases . . . . . . . . . . . . . . . . . 23
6.8 Chattel Paper . . . . . . . . . . . . . . . . . . . . . . 23
6.9 Ineligible Receivables . . . . . . . . . . . . . . . . . 23
ARTICLE VII
PURCHASE TERMINATION EVENTS . . . . . . . . 23
ARTICLE VIII
THE SUBORDINATED NOTES
8.1 Subordinated Notes . . . . . . . . . . . . . . . . . . . 25
8.2 Restrictions on Transfer of Subordinated Notes . . . . . 25
ARTICLE IX
MISCELLANEOUS
9.1 Further Assurances . . . . . . . . . . . . . . . . . . . 26
9.2 Payments . . . . . . . . . . . . . . . . . . . . . . . . 26
9.3 Costs and Expenses . . . . . . . . . . . . . . . . . . . 26
9.4 Successors and Assigns . . . . . . . . . . . . . . . . . 27
9.5 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . 27
9.6 No Waiver; Cumulative Remedies . . . . . . . . . . . . . 28
9.7 Amendments and Waivers . . . . . . . . . . . . . . . . . 28
9.8 Severability . . . . . . . . . . . . . . . . . . . . . . 28
9.9 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . 28
9.11 Construction of Agreement as Security Agreement . . . . 29
9.12 Waivers of Jury Trial . . . . . . . . . . . . . . . . . 29
9.13 Jurisdiction; Consent to Service of Process . . . . . . 29
9.14 Addition of Sellers . . . . . . . . . . . . . . . . . . 30
9.15 Optional Termination of Seller . . . . . . . . . . . . . 30
9.16 No Bankruptcy Petition . . . . . . . . . . . . . . . . . 31
9.17 Termination . . . . . . . . . . . . . . . . . . . . . . 31
9.18 Confidentiality . . . . . . . . . . . . . . . . . . . . 31
ANNEX X Definitions
-iii-
<PAGE>
Page
SCHEDULES
1 Locations of Chief Executive Offices; Locations of
Books and Records
2 Lockboxes
3 Discounted Percentage
4 Tax Matters
EXHIBITS
A Form of U.S. Dollar Subordinated Note
BB Form of Canadian Dollar Subordinated Note
CC Form of Additional Seller Supplement
-iv-
<PAGE>
RECEIVABLES SALE AGREEMENT, dated as of July 13, 1994,
among Collins & Aikman Products Co., a Delaware corporation ("C&A
Products"), Ack-Ti-Lining, Inc., WCA Canada, Inc., Imperial
Wallcoverings (Canada), Inc., Imperial Wallcoverings, Inc., The
Akro Corporation, Dura Acquisition Corp. and each of the other
subsidiaries of C&A Products from time to time parties hereto
(each of the foregoing, a "Seller"), C&A Products, as Master
Servicer (in such capacity, the "Master Servicer"), and Carcorp,
Inc., a Delaware corporation (the "Company").
W I T N E S S E T H :
WHEREAS, in the ordinary course of business, each
Seller generates accounts receivable; and
WHEREAS, each Seller desires to sell to the Company,
and the Company is willing to purchase from such Seller, all of
such Seller's right, title and interest in, to and under the
Receivables (as defined herein) now existing or hereafter created
and the rights of such Seller in, to and under all Related
Property (as so defined) related thereto;
NOW, THEREFORE, in consideration of the premises and of
the mutual covenants herein contained, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. Capitalized terms used in this
Agreement shall have the respective meanings assigned to such
terms in Annex X hereto unless otherwise defined herein.
1.2 Other Definitional Provisions. (a) The words
"hereof", "herein" and "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and
article, section, subsection, schedule and exhibit references are
to this Agreement unless otherwise specified.
(b) As used herein and in any certificate or other
document made or delivered pursuant hereto, accounting terms
relating to the Sellers and the Company, unless otherwise defined
herein, shall have the respective meanings given to them under
generally accepted accounting principles.
(c) The meanings given to terms defined herein shall
be equally applicable to both the singular and plural forms of
such terms.
<PAGE>
2
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
2.1 Purchase and Sale of Receivables. (a) By
execution of this Agreement, each of the Sellers does hereby
sell, transfer, assign, set over and otherwise convey, without
recourse (except as expressly provided herein), to the Company,
on the Effective Date, all Receivables owned by the Sellers at
the close of business on the Effective Date and all Related
Property in respect of such Receivables. Subject to Article VII,
as of each Payment Date, each of the Sellers does hereby sell,
transfer, assign, set over and otherwise convey, without recourse
(except as expressly provided herein), to the Company, all of its
right, title and interest in, to and under all Receivables owned
by the Sellers at the close of business on such Payment Date and
not theretofore conveyed to the Company and all Related Property
in respect of such Receivables. The foregoing sale, transfer,
assignment, set-over and conveyance and any subsequent sales,
transfers, assignments, set-overs and conveyances do not
constitute, and are not intended to result in, the creation or an
assumption by the Company or any other Person of any obligation
of the Sellers in connection with the Receivables or under any
agreement or instrument relating thereto, including any
obligation to any Obligor.
(b) On the Effective Date and on the date of creation
of each newly created Receivable, all of the applicable Seller's
right, title and interest in and to (i) in the case of the
Effective Date, all existing Receivables and Related Property in
respect of such Receivables and (ii) in the case of each such
date of creation, all such newly created Receivables and all
Related Property in respect of such Receivables shall be
immediately and automatically sold, assigned, transferred and
conveyed to the Company pursuant to paragraph (a) above without
any further action by such Seller or any other Person. If any
Seller shall not have received payment from the Company of the
Purchase Price for any newly created Receivable on the Payment
Date therefor in accordance with the terms of subsection 2.3(c),
such newly created Receivable and the Related Property with
respect thereto shall, upon receipt of notice from the applicable
Seller of such failure to receive payment, immediately and
automatically be sold, assigned, transferred and reconveyed by
the Company to such Seller without any further action by the
Company or any other Person.
(c) In connection with the foregoing conveyances, each
Seller agrees to record and file, or cause to be recorded and
filed, at its own expense, financing statements (and continuation
statements with respect to such financing statements when
applicable), and any other similar instruments, with respect to
the Receivables and Related Property now existing and hereafter
acquired by the Company from the Sellers meeting the requirements
of applicable law in such manner and in such jurisdictions as are
necessary to perfect the purchases of the Receivables and Related
Property by the Company from the Sellers, and to deliver evidence
of such filings to the Company on or prior to the Effective Date.
The parties hereto intend that the transfer of Receivables
effected by this Agreement be sales.
(d) In connection with the foregoing conveyances, each
Seller agrees at its own expense, as agent of the Company, that
it will (i) indicate or cause to be indicated on the
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3
computer files and other listings relating to the Receivables that all
Receivables and Related Property have been sold to the Company
and that the Company has sold an interest therein and has granted
a security interest in the Company's retained interest therein
and (ii) deliver or cause to be delivered to the Company computer
files, microfiche lists or typed or printed lists containing true
and complete lists of all such Receivables, identified by Obligor
and by the Receivables balance as of June 15, 1994.
2.2 Purchase Price. The amount payable by the Company
to a Seller (the "Purchase Price") for newly created Receivables
and Related Property on any Payment Date under this Agreement
shall be equal to the product of (a) the aggregate outstanding
Principal Amount of such Receivables as set forth in the
applicable Daily Report and (b) the Discounted Percentage with
respect to such Seller. To the extent the Purchase Price of any
Receivable is denominated in Canadian Dollars, the Dollar
equivalent of such Purchase Price shall be equal to the Canadian
Exchange Percentage thereof.
2.3 Payment of Purchase Price. (a) Upon fulfillment
of the conditions set forth in Article III, the Purchase Price
for Receivables and the Related Property shall be paid or
provided for in the manner provided below on each day for which a
Daily Report is prepared and delivered to the Company (each such
day, a "Payment Date"). Each Seller hereby appoints the Master
Servicer as its agent to receive payment of the Purchase Price
for Receivables sold by it to the Company and hereby authorizes
the Company to make all payments due to such Seller directly to,
or as directed by, the Master Servicer. The Master Servicer
hereby accepts and agrees to such appointment.
(b) The Purchase Price for Receivables and the Related
Property with respect thereto purchased by the Company on the
Effective Date from each Seller shall be paid by the Company as
follows:
(i) in cash from the net proceeds of the sale of an
interest in such Purchased Receivables by the Company to
other Persons; and
(ii) in cash from the proceeds of capital contributed
by C&A Products to the Company in respect of its equity
interest in the Company.
(c) The Purchase Price for Receivables and the Related
Property with respect thereto purchased by the Company on any
Payment Date after the Effective Date shall be paid by the
Company on such Payment Date as follows:
(i) by netting the amount of any Seller Adjustment
Payments or Seller Repurchase Payments pursuant to
subsection 2.5 or 2.6 against such Purchase Price;
(ii) to the extent available for such purpose, in cash
from Collections; it being understood that Canadian Dollar
cash Collections shall be applied solely to the Purchase
Price of Canadian Dollar denominated Receivables;
<PAGE>
4
(iii) to the extent available for such purpose, in cash
from the net proceeds of the sale of an interest in such
Purchased Receivables by the Company to other Persons;
(iv) at the option of the Company, by means of an
addition to the principal amount of the Canadian Dollar
Subordinated Note or U.S. Dollar Subordinated Note, as
appropriate in accordance with this subsection, in an
aggregate amount equal to the remaining portion of the
Purchase Price; provided, however, that the Company may pay
by means of additions to the principal amount of either
Subordinated Note only if, at the time of such payment and
after giving effect thereto, the fair market value of its
assets, including any beneficial interests or indebtedness
of a trust and all Receivables and Related Property it owns,
after giving effect for this purpose to any Adjustments with
respect to the Purchased Receivables or any participation
interest therein sold to the Banks under the Receivables
Transfer Agreement, is greater than the amount of its
liabilities including its liabilities on the Subordinated
Notes and in respect of the Purchase Discount Amounts and
all fees payable under the Receivables Transfer Agreement.
Any such addition to the principal amount of the
Subordinated Notes shall be allocated among the Sellers by
the Master Servicer provided, however, that additions to the
principal amount of the Canadian Dollar Subordinated Note
may only be made to evidence the purchase price of
Receivables denominated in Canadian Dollars and additions to
the U.S. Dollar Subordinated Note may only be made to
evidence the purchase price of Receivables denominated in
Dollars. The Master Servicer may evidence such payments by
means of additions to the principal amount of the
appropriate Subordinated Note by recording the date and
amount thereof on the books and records of the Master
Servicer or the Sellers or on the grid attached to such
Subordinated Note; provided that the failure to make any
such recordation or any error in such grid shall not
adversely affect any Seller's rights; and
(v) in cash from the proceeds of capital contributed
by C&A Products to the Company in respect of its equity
interest in the Company.
(d) The Master Servicer may allocate among the Sellers
the payment of the Purchase Price for Receivables and any amounts
netted therefrom pursuant to subsection 2.3(c)(i). The Company
shall be entitled to pay all amounts in respect of the Purchase
Price of Receivables to an account of the Master Servicer without
regard to whether or how such payments are allocated by the
Master Servicer to the Sellers. All payments under this
Agreement (i) to the extent such payments are made in Canadian
Dollars, shall be made on the date specified therefor in Canadian
Dollars in same day funds or by check, as the Master Servicer
shall elect, (ii) in all other cases, shall be made on the date
specified therefor in Dollars in same day funds or by check, as
the Master Servicer shall elect, (iii) in all cases, shall be
made not later than 3:00 p.m (New York City time) and (iv) shall
be made (x) if to any Seller, to the bank account for such Seller
designated in writing by the Master Servicer to the Company and
(y) if to the Master Servicer, to the bank account designated in
writing by the Master Servicer to the Company.
<PAGE>
5
(e) Whenever any payment to be made under this
Agreement shall be stated to be due on a day other than a
Business Day, such payment shall be made on the next succeeding
Business Day. Amounts not paid when due in accordance with the
terms of this Agreement shall bear interest at a rate equal at
all times to the ABR plus the Applicable ABR Margin plus 2%,
payable on demand.
2.4 No Repurchase. Except to the extent expressly set
forth herein, no Seller shall have any right or obligation under
this Agreement, by implication or otherwise, to repurchase from
the Company any Purchased Receivables or Related Property or to
rescind or otherwise retroactively effect any purchase of any
Purchased Receivables or Related Property after the Payment Date
relating thereto.
2.5 Rebates, Adjustments, Returns and Reductions;
Modifications. From time to time a Seller may make Adjustments
to Receivables in accordance with this subsection 2.5 and
subsection 6.2. The Sellers, jointly and severally, agree to pay
to the Company, on the Payment Date immediately succeeding the
date of the grant of any Adjustment (regardless of which Seller
shall have granted such Adjustment), the amount of any such
Adjustment (a "Seller Adjustment Payment"); provided, that, prior
to any Purchase Termination Event, any such payments to the
Company shall be netted against the Purchase Price of newly
created Receivables in accordance with subsection 2.3(c)(i). An
"Adjustment" shall mean any rebate, discount, refund or
adjustment (including, without limitation, as a result of the
application of any special or other discounts or any
reconciliations) of any Receivable, the amount owing for any
returns (including, without limitation, as a result of the return
of any stale goods) or cancellations and the amount of any other
reduction of any payment under any Receivable in each case
granted or made by the applicable Seller to the related Obligor,
provided, that, an "Adjustment" does not include any Charge-Off.
The amount of any Adjustment shall be set forth on the first
Daily Report prepared after the date of the grant thereof.
2.6 Limited Repurchase Obligation. In the event that
any of the representations or warranties contained in subsection
4.2 in respect of any Receivable shall be or have been incorrect
in any material respect as of the date made or deemed made, or
any Eligible Receivable shall become subject to any defense,
dispute, offset or counterclaim of any kind (other than as
expressly permitted by this Agreement) or any Seller shall breach
any covenant contained in subsection 5.2, 5.8, 6.1, 6.2, 6.3,
6.4, 6.5, 6.8 or 6.9 with respect to any Receivable (each of the
foregoing events or circumstances, a "Repurchase Event"), such
Receivable shall cease to be an Eligible Receivable on the date
on which such Repurchase Event occurs. In addition, if any
Repurchase Event shall occur with respect to any Receivable, then
the Sellers, jointly and severally, agree to pay to the Company
an amount (the "Repurchase Amount") equal to the Purchase Price
of such Receivable (whether the Company paid such Purchase Price
in cash or otherwise) less Collections received by the Company in
respect of such Receivable, regardless of which Seller shall have
been responsible for such Repurchase Event, such payment to occur
on the 30th day after the day such Repurchase Event becomes known
(or should have become known with due diligence) to any Seller
(except that if such 30th day is not a Business Day, such payment
shall be made on the Business Day immediately succeeding such
30th day) unless such Repurchase Event shall have been cured on
or before such 30th day; provided, that, prior to the occurrence of
<PAGE>
6
any Purchase Termination Event, any such payments to the
Company shall be netted against the Purchase Price of newly
created Receivables in accordance with subsection 2.3(c)(i). Any
payment by any Seller pursuant to this subsection 2.6 is referred
to as a "Seller Repurchase Payment". If, on or prior to such
30th day (or the Business Day immediately succeeding such 30th
day, as applicable), any Seller shall so reacquire any such
Receivable, then
the Company shall have no further remedy against the Sellers in
respect of the Repurchase Event with respect to such reacquired
Receivable. Upon a Seller Repurchase Payment, the Company shall
automatically and without further action be deemed to sell,
transfer, assign, set over and otherwise convey to the applicable
Seller, without recourse, representation or warranty, all the
right, title and interest of the Company in, to and under such
Receivable and the Related Property with respect thereto. The
Company shall execute such documents and instruments of transfer
or assignment and take such other actions as shall reasonably be
requested by such Seller to effect the conveyance of such
Receivable pursuant to this section 2.6.
2.7 Obligations Unaffected. The obligations of the
Sellers to the Company under this Agreement shall not be affected
by reason of any invalidity, illegality or irregularity of any
Receivable or any sale of a Receivable.
2.8 Certain Charges. Each of the Sellers and the
Company agrees that late charge revenue, reversals of discounts,
other fees and charges and other similar items, whenever created,
accrued in respect of Purchased Receivables shall be the property
of the Company notwithstanding the occurrence of an Early
Termination, and all Collections with respect thereto shall
continue to be allocated and treated as Collections in respect of
Purchased Receivables.
2.9 Certain Allocations. Each of the Sellers hereby
agrees that, following the occurrence of an Early Termination in
respect of any Seller, all Collections and other proceeds
received in respect of Receivables generated by such Seller shall
be applied first, to pay the outstanding Principal Amount of
Purchased Receivables (as of the date of such Early Termination)
of the Obligor to whom such Collections are attributable until
such Purchased Receivables are paid in full and, second, to such
Seller to pay Receivables of such Obligor not sold to the
Company; provided, however, that notwithstanding the foregoing,
if any such Seller can attribute a Collection to a specific
Obligor and a specific Receivable, then such Collection shall be
applied to pay such Receivable of such Obligor.
ARTICLE III
CONDITIONS TO PURCHASE AND SALE
3.1 Conditions Precedent to the Company's Initial
Purchase of Receivables. The obligation of the Company to
purchase the Receivables and the Related Property hereunder on
the Effective Date from any Seller is subject to the conditions
precedent, which may be waived by the Company, that (a) each of
the Sale Documents shall be in full force
<PAGE>
7
and effect and (b) the conditions set forth below shall have been
satisfied on or before the Effective Date:
(i) the Company shall have received copies of duly
adopted resolutions of the Board of Directors of each Seller
as in effect on the Effective Date and in form and substance
reasonably satisfactory to the Company, authorizing this
Agreement, the documents to be delivered by such Seller
hereunder and the transactions contemplated hereby,
certified by the Secretary or Assistant Secretary of such
Seller;
(ii) the Company shall have received duly executed
certificates of the Secretary or an Assistant Secretary of
each Seller, dated the Effective Date and in form and
substance reasonably satisfactory to the Company, certifying
the names and true signatures of the officers authorized on
behalf of such Seller to sign this Agreement and any
instruments or documents in connection with this Agreement;
(iii) each Seller shall have filed and recorded, at its
own expense, UCC-1 financing statements (and other similar
instruments) with respect to the Receivables and the Related
Property in such manner and in such jurisdictions as are
necessary or desirable to perfect the Company's ownership
interest thereof under the Uniform Commercial Code (or any
other similar law) and delivered evidence of such filings to
the Company on or prior to the Effective Date; and all other
action necessary or desirable, in the reasonable judgment of
the Company, to perfect the Company's ownership of the
Receivables shall have been duly taken;
(iv) each Seller shall have delivered to the Company a
microfiche, typed or printed list or other tangible evidence
reasonably acceptable to the Company showing as of a date no
later than five Business Days preceding the Effective Date,
the Obligors whose Receivables are to be transferred to the
Company on the Effective Date and the balance of the
Receivables with respect to each such Obligor as of such
preceding date; and
(v) the Company shall have received reports of UCC-1
and other searches of the Sellers with respect to the
Receivables and the Related Property reflecting the absence
of Liens thereon, except Liens created in connection with
the sale by the Company of an interest in the Purchased
Receivables and except for Liens as to which the Company has
received Uniform Commercial Code termination statements to
be filed on or prior to the Effective Date.
3.2 Conditions Precedent to All the Company's
Purchases of Receivables. The obligation of the Company to pay a
Seller for any Receivable and the Related Property with respect
thereto on each Payment Date (including the Effective Date) shall
be subject to the further conditions precedent, which may be
waived by the Company, that on such Payment Date:
(a) the following statements shall be true (and the
acceptance by such Seller of the Purchase Price for any
Receivables on any Payment Date shall constitute a
<PAGE>
8
representation and warranty by such Seller that on such
Payment Date such statements are true):
(i) the representations and warranties of such
Seller contained in subsections 4.1 and 4.2 shall be
true and correct in all material respects on and as of
such Payment Date as though made on and as of such
date, except insofar as such representations and
warranties are expressly made only as of another date;
and
(ii) no Purchase Termination Event or Incipient
Purchase Termination Event shall have occurred and be
continuing; and
(iii) there has been no material adverse change
since the date of this Agreement in the collectibility
of the Receivables (other than due to a change in the
creditworthiness of the Obligors);
(b) the Company shall be satisfied that such Seller's
systems, procedures and record-keeping relating to the
Purchased Receivables are in all material respects
sufficient and satisfactory in order to permit the purchase
and administration of the Purchased Receivables in
accordance with the terms and intent of this Agreement (it
being understood and agreed that as of the date hereof, the
Sellers' systems, procedures and record-keeping relating to
the Receivables are in all material respects sufficient and
satisfactory);
(c) the Company shall have received payment in full of
all amounts for which payment is due from such Seller
pursuant to subsection 2.5, 2.6 or 9.3;
(d) the Company shall have received such other
approvals, opinions or documents as the Company may
reasonably request; and
(e) such Seller shall have complied with all of its
covenants in all material respects and satisfied all of its
obligations in all material respects under this Agreement
required to be complied with or satisfied as of such date;
provided, however, that the failure of any Seller to satisfy any
of the foregoing conditions shall not prevent such Seller from
subsequently selling Receivables upon satisfaction of all such
conditions or exercising its rights under subsection 2.1(b).
3.3 Conditions Precedent to Sellers' Obligations.
(a) The obligations of each Seller on the Effective Date shall
be subject to the conditions precedent that such Seller shall
have received on or before the Effective Date the following, each
dated the Effective Date and in form and substance satisfactory
to such Seller:
(i) a copy of duly adopted resolutions of the Board of
Directors of the Company authorizing this Agreement, the
documents to be delivered by the Company
<PAGE>
9
hereunder and the transactions contemplated hereby, certified
by the Secretary or Assistant Secretary of the Company; and
(ii) a duly executed certificate of the Secretary or
Assistant Secretary of the Company certifying the names and
true signatures of the officers authorized on its behalf to
sign this Agreement and the other documents to be delivered
by it hereunder.
(b) The obligations of each Seller on each Payment
Date shall be subject to the condition precedent that no
Termination Event set forth in paragraph (f) of Article IX of the
Receivables Transfer Agreement shall have occurred and be
continuing.
3.4 Conditions Precedent to the Addition of a Seller.
No Subsidiary of C&A Products approved by the Company as an
additional Seller pursuant to subsection 9.14 shall be added as a
Seller hereunder unless the conditions set forth below shall have
been satisfied on or before the date designated for the addition
of such Seller (the "Seller Addition Date"):
(i) the Company shall have received an Additional
Seller Supplement substantially in the form of Exhibit C
hereto, duly executed and delivered by such Seller;
(ii) the Company shall have received copies of duly
adopted resolutions of the Board of Directors of such Seller
as in effect on the related Seller Addition Date and in form
and substance reasonably satisfactory to the Company,
authorizing this Agreement, the documents to be delivered by
such Seller hereunder and the transactions contemplated
hereby, certified by the Secretary or Assistant Secretary of
such Seller;
(iii) the Company shall have received duly executed
certificates of the Secretary or an Assistant Secretary of
such Seller dated the related Seller Addition Date and in
form and substance reasonably satisfactory to the Company,
certifying the names and true signatures of the officers
authorized on behalf of such Seller to sign the Additional
Seller Supplement or any instruments or documents in
connection with this Agreement;
(iv) a Lockbox Account with respect to Receivables to
be sold by such Seller shall have been established in the
name of the Company;
(v) such Seller shall have filed and recorded, at its
own expense, UCC-1 financing statements (and other similar
instruments) with respect to the Receivables and the Related
Property in such manner and in such jurisdictions as are
necessary or desirable to perfect the Company's ownership
interest thereof under the Uniform Commercial Code (or any
other similar law) and delivered evidence of such filings to
the Company on or prior to the date hereof; and all other
action necessary or desirable, in the opinion of the
Company, to perfect the Company's ownership of the
Receivables shall have been duly taken;
<PAGE>
10
(vi) such Seller shall have delivered to the Company a
microfiche, a typed or printed list or other tangible
evidence reasonably acceptable to the Company showing as of
a date acceptable to the Company prior to the related Seller
Addition Date the Obligors whose Receivables are to be
transferred to the Company and the balance of the
Receivables with respect to each such Obligor as of such
date; and
(vii) the Company shall have received reports of UCC-1
and other searches of such Seller with respect to the
Receivables and the Related Property reflecting the absence
of Liens thereon, except Liens created in connection with
the sale by the Company of an interest in the Purchased
Receivables and except for Liens as to which the Company has
received Uniform Commercial Code termination statements to
be filed on or prior to the related Seller Addition Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Sellers
Relating to the Sellers. Each Seller hereby represents and
warrants to the Company on the Effective Date and on each Payment
Date that:
(a) Organization, Corporate Powers. It (i) is a
corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is
incorporated, (ii) has all requisite corporate power and
authority, and all material licenses, permits, franchises,
consents and approvals, to own or lease its property and
assets and to carry on its business as now conducted and as
proposed to be conducted, (iii) is qualified and in good
standing as a foreign corporation to do business in every
jurisdiction where such qualification is necessary, except
where the failure so to qualify would not have a Material
Adverse Effect and (iv) has the corporate power and
authority to execute, deliver and perform this Agreement and
each of the other Sale Documents to which it is a party and
each other agreement or instrument contemplated hereby or
thereby to which it is or will be a party. It does not have
any assets or business, nor is it a party to any material
contract within the meaning of Item 6.01(b)(10) of
Regulation S-K of the Securities and Exchange Commission,
other than as disclosed or referred to in the registration
statement of which the Preliminary Prospectus is a part or
as contemplated hereby and thereby.
(b) Authorization. The execution, delivery and
performance by it of this Agreement and each of the other
Sale Documents to which it is a party, the sale of
Receivables by it hereunder and the consummation of the
other transactions contemplated by any of the foregoing
(collectively, the "Sale Transactions") (i) have been duly
authorized by all requisite corporate and, if required,
stockholder action and (ii) will not (x) violate (A) any
provision of law, statute, rule or regulation (including,
without limitation, Regulations G, T, U and X) or the
certificate of incorporation or by-laws (or similar
governing documents) of such Seller, (B) any applicable
order of
<PAGE>
11
any court or any rule, regulation or order of any
Governmental Authority or (C) any indenture, certificate of
designation for preferred stock, agreement or other
instrument to which such Seller is a party or by which it or
any of its property is bound, (y) be in conflict with,
result in a breach of or constitute (with notice or lapse of
time or both) a default under any such indenture, agreement
or other instrument where any such conflict, violation,
breach or default referred to in clause (ii)(x) or (ii)(y)
of this subsection, individually or in the aggregate, would
have a Material Adverse Effect or (z) result in the creation
or imposition of any Lien upon any of its property or
assets, except for Liens created under this Agreement and
Liens created in connection with the sale by the Company of
an interest in the Receivables.
(c) Enforceability. Each of this Agreement and each
of the other Sale Documents to which it is a party has been
duly executed and delivered by such Seller and constitutes a
legal, valid and binding obligation of such Seller
enforceable against it in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting
creditors' rights generally and except as enforceability may
be limited by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in
equity or at law).
(d) Capitalization. All of its Capital Stock is owned
directly or indirectly by C&A Products.
(e) Litigation; Compliance with Laws. (1) Except as
described in the registration statement of which the
Preliminary Prospectus is a part, there are not any actions,
suits or proceedings at law or in equity or by or before any
court or Governmental Authority now pending or, to the
knowledge of such Seller, threatened against or affecting
such Seller or any of its property or rights as to which
there is a reasonable possibility of an adverse
determination and which (i) if adversely determined, could
individually or in the aggregate result in a Material
Adverse Effect or (ii) involve the Transaction Documents or
(iii) if adversely determined, could materially adversely
affect the Sale Transactions.
(2) It is not in default with respect to any law,
order, judgment, writ, injunction, decree, rule or
regulation of any Governmental Authority where such default
could have a Material Adverse Effect. The sales hereunder
and the use of the proceeds thereof will not violate any
applicable law or regulation or violate or be prohibited by
any judgment, writ, injunction, decree or order of any court
or Governmental Authority or subject such Seller to any
civil or criminal penalty or fine. No Purchase Termination
Event or Incipient Purchase Termination Event has occurred
and is continuing.
(f) Agreements. (1) It is not a party to any
agreement or instrument or subject to any corporate
restriction that has resulted or could reasonably be
expected to result in a Material Adverse Effect.
<PAGE>
12
(2) It is not in default in any manner under any
provision of any indenture or other agreement or instrument
evidencing Indebtedness or any other material agreement or
instrument to which it is a party or by which it or any of
its properties or assets are or may be bound, in either case
where such default could result in a Material Adverse
Effect.
(g) Tax Returns. It has filed or caused to be filed
all Federal, and all material state, local and foreign, tax
returns required to have been filed by it and has paid or
caused to be paid all taxes shown thereon to be due and
payable, and any assessments in excess of $2,000,000 in the
aggregate received by it, except taxes the amount or
validity of which are currently being contested in good
faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on its
books and taxes, assessments, charges, levies or claims in
respect of property taxes for property that it has
determined to abandon where the sole recourse for such tax,
assessment, charge, levy or claim is to such property. It
has paid in full or made adequate provision (in accordance
with GAAP) for the payment of all taxes due with respect to
the periods ending on or before January 29, 1994, which
taxes, if not paid or adequately provided for, would have a
Material Adverse Effect. The tax returns of such Seller
have been examined by relevant Federal tax authorities for
all periods through January 26, 1985, and all deficiencies
asserted as a result of such examinations have been paid.
Except as set forth on Schedule 4, as of the Effective Date,
with respect to such Seller, (i) no material claims are
being asserted in writing with respect to any taxes, (ii) no
presently effective waivers or extensions of statutes of
limitation with respect to taxes have been given or
requested, (iii) no tax returns are being examined by, and
no written notification of intention to examine has been
received from, the Internal Revenue Service or any other
taxing authority and (iv) no currently pending issues have
been raised in writing by the Internal Revenue Service or
any other taxing authority. For purposes of this paragraph,
"taxes" shall mean any present or future tax, levy, impost,
duty, charge, assessment or fee of any nature (including
interest, penalties and additions thereto) that is imposed
by any Governmental Authority.
(h) No Material Misstatements. The information,
reports, financial statements, exhibits and schedules
furnished by or on behalf of such Seller to the Company in
connection with the negotiation of any Sale Document or
included therein or delivered pursuant thereto did not
contain and will not contain as of the Effective Date any
material misstatement of fact and did not omit and will not
omit to state as of the Effective Date any material fact
necessary to make the statements therein, in the light of
the circumstances under which they were, are or will be
made, not materially misleading in their presentation of the
Sale Transactions or such Seller.
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13
(i) Employee Benefit Plans. Each of such Seller and
each of its ERISA Affiliates is in compliance in all
material respects with the applicable provisions of ERISA
and the regulations and published interpretations thereunder
except for such noncompliance which would not be expected to
result in a Material Adverse Effect. No Reportable Event
has occurred as to which such Seller or any of its ERISA
Affiliates was required to file a report with the PBGC,
other than reports for which the 30 day notice requirement
is waived, reports that have been filed and reports the
failure of which to file would not result in a Material
Adverse Effect and, as of the Effective Date, the present
value of all benefit liabilities under each Plan of such
Seller or any of its ERISA Affiliates (on a termination
basis and based on those assumptions used to fund such Plan)
did not, as of the last annual valuation report applicable
thereto, exceed by more than $7,500,000 the value of the
assets of such Plan. None of such Seller or any of its
ERISA Affiliates has incurred or could reasonably be
expected to incur any Withdrawal Liability that could result
in a Material Adverse Effect. None of such Seller or any of
its ERISA Affiliates has received any notification that any
Multiemployer Plan is in reorganization or has been termi-
nated within the meaning of Title IV of ERISA, and no
Multiemployer Plan is reasonably expected to be in reorgan-
ization or to be terminated where such reorganization or
termination has resulted or could reasonably be expected to
result, through increases in the contributions required to
be made to such Plan or otherwise, in a Material Adverse
Effect.
(j) Solvency. The fair salable value of the assets of
such Seller exceeds the amount that will be required to be
paid on or in respect of the existing debts and other
liabilities (including contingent liabilities) of such
Seller. The assets of such Seller do not constitute
unreasonably small capital to carry out its business as
conducted or as proposed to be conducted. Such Seller does
not intend to, or believe that it will, incur debts beyond
its ability to pay such debts as they mature (taking into
account the Recapitalization Transactions but assuming that
the Overallotment Option is not exercised).
(k) Absence of Certain Restrictions. No indenture,
certificate of designation for preferred stock, agreement or
other instrument to which such Seller or any of its
Subsidiaries is a party will prohibit or materially
restrain, or have the effect of prohibiting or materially
restraining, or imposing materially adverse conditions upon,
the sale of Receivables or the granting of Liens thereon.
(l) Indebtedness to Company. Immediately prior to
consummation of the transactions contemplated hereby on the
Effective Date, it had no outstanding Indebtedness to the
Company.
(m) Lockboxes. Set forth in Schedule 2 is a complete
and accurate description as of the Effective Date of each
Lockbox Account currently maintained by such Seller. Each
of the Lockbox Agreements, once entered into, shall be the
legal, valid and binding obligation of the parties thereto,
enforceable against such parties in accordance with its
terms, except as such enforceability may be limited by
bankruptcy, insolvency,
<PAGE>
14
reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors'
rights in general and except as such enforceability may be
limited by general principles of equity (whether considered
in a suit at law or in equity).
(n) Filings. Upon the making of the filings and the
performance of the acts described in the legal opinions
delivered pursuant to subsections 6.1(b)(iii) and (iv) of
the Receivables Transfer Agreement (which shall be made or
performed no later than five Business Days after the
Effective Date), all filings and other acts necessary or
advisable (including but not limited to all filings and
other acts necessary or advisable under the Uniform
Commercial Code of each relevant jurisdiction) shall have
been made or performed in order to grant the Company a first
priority perfected ownership interest in respect of all
Receivables.
(o) Receivables Documents. Upon the delivery, if any,
by such Seller to the Company of licenses, rights, computer
programs, related materials, computer tapes, disks,
cassettes and data relating to the administration of the
Purchased Receivables pursuant to subsection 5.15(d)(5), the
Company shall have been furnished with all materials and
data necessary to permit immediate collection of the
Purchased Receivables without the participation of any
Seller in such collection.
4.2 Representations and Warranties of the Sellers
Relating to the Agreement and the Receivables. Each Seller
hereby represents and warrants to the Company on the Effective
Date and on each Payment Date that with respect to the
Receivables being paid for as of such date:
(a) Receivables Description. The microfiche, printed
or typed list or computer file delivered pursuant to
subsection 3.1(b)(iv) is an accurate and complete listing in
all material respects of all its Receivables as of June 15,
1994 and the information contained therein with respect to
the identity of such Receivables is true and correct in all
material respects as of such date.
(b) Eligible Receivable. Each Receivable sold by it
hereunder and included as an Eligible Receivable in the
calculation of Applicable Eligible Receivables Percentage
will be, on and as of the date of such inclusion, an
Eligible Receivable. The aggregate outstanding Principal
Amount of Receivables sold by it on any Payment Date is
correctly set forth on the Seller Daily Report with respect
to such Seller and with respect to such Payment Date. The
aggregate outstanding Adjusted Principal Amount of
Receivables denominated in Canadian Dollars and sold by it
on any Payment Date is correctly set forth on the Seller
Daily Report with respect to such Seller and with respect to
such Payment Date.
(c) Title; No Liens. Other than with respect to
Receivables which such Seller states in writing (in the
applicable Seller Daily Report or otherwise) are not
Eligible Receivables on such date, such Seller is the sole
legal and beneficial owner of its Receivables, and upon the
sale of each Receivable of such Seller, the Company will
<PAGE>
15
become the sole legal and beneficial owner of such
Receivable, free and clear of any Liens (except for Liens
granted by such Seller in favor of the Company and the
interest in such Purchased Receivables sold and the security
interest therein granted by the Company to other Persons and
except for Liens which are released on or prior to the
Effective Date), and no effective financing statement or
other instrument similar in effect covering all or any part
of such Purchased Receivable, Related Property or
Collections with respect thereto will at such time be on
file against such Seller in any filing or recording office
except such as have been filed in favor of the Company in
accordance with this Agreement.
(d) Governmental Consents. Other than with respect to
Receivables which such Seller states in writing (in the
applicable Seller Daily Report or otherwise) are not
Eligible Receivables on such date, all consents, licenses,
approvals or authorizations of or registrations or
declarations with any Governmental Authority required to be
obtained, effected or given by the Company in connection
with the conveyance of each Receivable pursuant to the
Receivables Transfer Agreement have been duly obtained,
effected or given and are in full force and effect.
(e) Compliance With Laws. Other than with respect to
Receivables which such Seller states in writing (in the
applicable Seller Daily Report or otherwise) are not
Eligible Receivables on such date, all laws, statutes, rules
and regulations (including, without limitation, usury laws),
applicable at the related Payment Date to any of the
Receivables have been duly complied with by such Seller
except to the extent any failure to so comply could not
affect the validity or collectibility of such Receivable.
(f) No Set-Off. Other than with respect to
Receivables which such Seller states in writing (in the
applicable Seller Daily Report or otherwise) are not
Eligible Receivables on such date, the Receivables are not
subject to any defense, dispute, offset or counterclaim,
whether arising out of the transactions represented by the
Receivables or independently thereof and whether arising out
of any assertion by any Obligor that its obligations in
respect of any Receivable are, or may be, payable to a third
party, instead of the owner of such Receivable, or
otherwise.
(g) Chief Executive Office. The chief executive
office of such Seller is listed opposite its name on
Schedule 1, which office is the place where such Person is
"located" for the purposes of Section 9-103(3)(d) of the
Uniform Commercial Code of the State of New York, and the
offices of such Seller where such Seller keeps its records
concerning the Receivables are also listed in said Schedule
opposite its name.
(h) Absence of Changes. As of the related Payment
Date, there has not been since the date of this Agreement
any material adverse change in the ability of such Seller,
acting as the Servicer, to perform its obligations hereunder
or under the Receivables Transfer Agreement.
<PAGE>
16
ARTICLE V
AFFIRMATIVE COVENANTS
Each Seller hereby agrees that, so long as there are any
amounts outstanding with respect to Purchased Receivables
previously sold by such Seller to the Company or until an Early
Termination with respect to such Seller, whichever is later, such
Seller or the Master Servicer on behalf of such Seller shall:
5.1 Certificates; Other Information. Furnish to the
Company:
(a) not later than 90 days after the end of each
fiscal year and not later than 45 days after the end of each
of the first three fiscal quarters of each fiscal year, a
certificate of a Responsible Officer of the Master Servicer
stating that, to the best of such Officer's knowledge, such
Seller during such period has observed or performed all of
its covenants and other agreements, and satisfied every
condition, contained in the Sale Documents to which it is a
party to be observed, performed or satisfied by it, and that
such Officer has obtained no knowledge of any Purchase
Termination Event or Incipient Purchase Termination Event
except as specified in such certificate; and
(b) promptly, such additional financial and other
information as the Company may from time to time reasonably
request.
5.2 Compliance with Laws, etc. Comply in all material
respects with its Certificate of Incorporation and by-laws and
all laws, rules, regulations and orders of any Governmental
Authority, whether now in effect or hereafter enacted, applicable
to the Purchased Receivables, except to the extent that failure
to comply therewith could not materially adversely affect the
rights of the Company in the Purchased Receivables or the
collectibility or validity thereof. Each Seller will comply, in
all material respects, with its obligations under contracts with
Obligors relating to the Purchased Receivables except to the
extent such compliance would result in a violation of a laws,
rules, regulations and orders of any Governmental Authority.
5.3 Preservation of Corporate Existence. Do or cause
to be done all things necessary to preserve, renew and keep in
full force and effect its legal existence and maintain such legal
existence separate from that of the Company, provided that any
Seller may be merged or consolidated with or into any other
Seller or C&A Products.
5.4 Visitation Rights. At any reasonable time during
normal business hours and from time to time, in each case upon
reasonable notice to such Seller and the Master Servicer, permit
(i) the Company, or any of its agents or representatives, (A) to
examine and make copies of and abstracts from the records, books
of account and documents (including computer tapes and disks) of
each Seller relating to the Purchased Receivables hereunder and
(B) following the termination of the appointment of C&A Products
as Master Servicer or of such Seller as Servicer with respect to
the Purchased Receivables, to be present at the offices and
properties of such Seller to administer and control the
collection of amounts owing on the
<PAGE>
17
Purchased Receivables and (ii) the Company, or any of its agents
or representatives, to visit the properties of such Seller
for the purpose of examining such records, books of account
and documents, and to discuss the affairs, finances and accounts
of such Seller relating to the Purchased Receivables or such
Seller's performance hereunder with any of its officers or
directors and with its independent certified public accountants
(subject to any requirements of confidentiality imposed by law
or contract).
5.5 Keeping of Records and Books of Account. Maintain
and implement, or cause to be maintained or implemented,
administrative and operating procedures reasonably necessary or
advisable for the collection of amounts owing on all Purchased
Receivables, and, until any delivery to the Company, keep and
maintain, or cause to be kept and maintained, all documents,
books, records and other information reasonably necessary or
advisable for the collection of amounts owing on all such
Purchased Receivables and the Related Property with respect
thereto.
5.6 Location of Records. Keep its chief place of
business and chief executive office, and the offices where it
keeps the records concerning the Purchased Receivables (and all
original documents relating thereto) at the locations referred to
for it on Schedule 1 hereto or, upon 30 days' prior written
notice to the Company, at such other locations in a jurisdiction
where all action required by subsection 5.15(a) shall have been
taken and completed and be in full force and effect.
5.7 Computer Files. At its own cost and expense,
retain the ledger used by such Seller as a master record of the
Obligors and retain copies of all documents relating to each
Obligor as custodian and agent for the Company and other Persons
with interests in the Purchased Receivables and mark the computer
tape or other physical records of the Purchased Receivables to
the effect that interests in the Purchased Receivables existing
with respect to the Obligors listed thereon have been sold to the
Company.
5.8 Policies. Perform its obligations in accordance
with and comply in all material respects with the Policies and
the Company Policies and neither change nor modify the Policies
or the Company Policies in any material respect, except with the
prior written consent of the Company or if such changes are
necessary under any law, rule, regulation or order of any
Governmental Authority applicable to it; it being understood that
material changes to the Policies and the Company Policies shall
include, without limitation, changes to the timing of Charge-Offs
of Receivables and changes to the creditworthiness criteria used
in determining whether to extend credit to a Person and in
determining the amount of such credit to extend.
5.9 Taxes; ERISA. (a) Pay and discharge promptly all
taxes, assessments and governmental charges or levies imposed
upon it or upon its income or profits or in respect of its
property, before the same shall become delinquent or in default,
as well as all lawful claims for labor, materials and supplies or
otherwise which, if unpaid, might give rise to a Lien upon such
properties or any part thereof; provided, however, that such
payment and discharge shall not be required with respect to any
such tax, assessment, charge, levy or claim so long as (i) the
validity or amount thereof shall be contested in good faith by
appropriate
<PAGE>
18
proceedings and Holdings or such Seller, as
applicable, shall set aside on its books adequate reserves as
required by GAAP with respect thereto, (ii) such tax, assessment,
charge, levy or claim is in respect of property taxes for
property that such Seller has determined to abandon and the sole
recourse for such tax, assessment, charge, levy or claim is to
such property or (iii) the amount of such taxes assessments,
charges, levies and claims and interest and penalties thereon
does not exceed $1,000,000 in the aggregate for the Master
Servicer and all Sellers taken as a whole.
(b) (i) Comply in all material respects with the
applicable provisions of ERISA and (ii) furnish to the Company
(w) as soon as possible, and in any event within 30 days after
any Responsible Officer of such Seller or any ERISA Affiliate of
such Seller knows or has reason to know that any Reportable Event
has occurred that alone or together with any other Reportable
Event could reasonably be expected to result in liability of the
Master Servicer, such Seller or any of their ERISA Affiliates to
the PBGC in an aggregate amount exceeding $10,000,000, a
statement of a Financial Officer setting forth details as to such
Reportable Event and the action proposed to be taken with respect
thereto, together with a copy of the notice, if any, of such
Reportable Event given to the PBGC, (x) promptly after any
Responsible Officer learns of receipt thereof, a copy of any
notice such Seller or any of its ERISA Affiliates may receive
from the PBGC relating to the intention of the PBGC to terminate
any Plan or Plans (other than a Plan maintained by any of their
ERISA Affiliates which is considered an ERISA Affiliate only
pursuant to subsection (m) or (o) of Section 414 of the Code) or
to appoint a trustee to administer any Plan or Plans, (y) within
20 days after the due date for filing with the PBGC pursuant to
Section 412(n) of the Code a notice of failure to make a required
installment or other payment with respect to a Plan, a statement
of a Financial Officer setting forth details as to such failure
and the action proposed to be taken with respect thereto,
together with a copy of such notice given to the PBGC and (z)
promptly after any Responsible Officer learns thereof and in any
event within 30 days after receipt thereof by such Seller or any
ERISA Affiliate from the sponsor of a Multiemployer Plan, a copy
of each notice received by such Seller or such ERISA Affiliate
concerning (I) the imposition of Withdrawal Liability or (II) a
determination that a Multiemployer Plan is, or is expected to be,
terminated or in reorganization, in each case within the meaning
of Title IV of ERISA.
5.10 Collections. Use its best efforts to cause any
Obligor which currently pays its Receivables by checks mailed to
such Seller to make future payments in respect of Receivables to
a Lockbox Account or by wire transfer to the Collection Account,
provided, that, prior to an Incipient Purchase Termination Event
or a Purchase Termination Event, no Seller shall be obliged to
make any such request of any such Obligor if such Seller
determines in its reasonable judgment that such request could be
detrimental to its ongoing business relationship with such
Obligor.
5.11 Lockbox Agreements; Lockbox Accounts. Within 60
days of the Effective Date,
(a) if such Seller has not established a Lockbox
Account on the Effective Date, it shall establish one and
enter into a Lockbox Agreement with respect thereto;
<PAGE>
19
(b) if such Seller shall not have entered into a
Lockbox Agreement with respect to any existing Lockbox
Account on the Effective Date, it shall enter into such a
Lockbox Agreement.
5.12 Furnishing Copies, etc. Furnish to the Company:
(a) within two Business Days of the Company's request,
but no more than once each month, a certificate of the chief
financial officer of such Seller or of the Master Servicer
on behalf of such Seller certifying, as of the date thereof,
to the best knowledge of such officer, that no Purchase
Termination Event has occurred and is continuing, and
setting forth the computations used by the chief financial
officer of such Seller in making such determination or if
one has so occurred specifying the nature and extent thereof
and any corrective action taken or proposed to be taken with
respect thereto;
(b) promptly upon obtaining knowledge of the
occurrence of any Purchase Termination Event or Incipient
Purchase Termination Event, written notice thereof;
(c) promptly following request therefor, such other
information, documents, records or reports regarding or with
respect to the Purchased Receivables of the applicable
Seller, as the Company may from time to time reasonably
request;
(d) promptly upon obtaining knowledge of the
occurrence thereof, written notice of any event of default
or default under any other Sale Document;
(e) promptly upon obtaining knowledge of the
occurrence thereof, written notice of any development that
has resulted in, or could reasonably be expected to result
in, a Material Adverse Effect; and
(f) promptly upon determining that any Purchased
Receivable designated as an Eligible Receivable on the
applicable Daily Report or Settlement Statement was not an
Eligible Receivable as of the date provided therefor,
written notice of such determination.
5.13 Obligations with Respect to Obligors and
Receivables. Take all actions on its part reasonably necessary
to maintain in full force and effect its material rights under
all contracts relating to the Purchased Receivables.
5.14 Responsibilities of the Sellers. Notwithstanding
anything herein to the contrary, (i) each Seller shall perform or
cause to be performed all its obligations under the Policies and
the Company Policies related to the Purchased Receivables to the
same extent as if such Purchased Receivables had not been
transferred to the Company hereunder, (ii) the exercise by the
Company of any of its rights hereunder shall not relieve any
Seller of its obligations with respect to such Purchased
Receivables and (iii) except as provided by law, the Company
shall not have any obligation or liability with respect to any
Purchased
<PAGE>
20
Receivables, nor shall the Company be obligated to
perform any of the obligations or duties of any Seller
thereunder.
5.15 Further Action. In addition to the foregoing:
(a) Each Seller agrees that from time to time, at its
expense, it will promptly execute and deliver all further
instruments and documents, and take all further action, that
may be necessary or desirable in such Seller's reasonable
judgment or that the Company may reasonably request, in
order to protect or more fully evidence the Company's right,
title and interest in the Purchased Receivables, or to
enable the Company to exercise or enforce any of its rights
in respect thereof. Without limiting the generality of the
foregoing, each Seller will upon the request of the Company
(A) execute and file such financing or continuation
statements, or amendments thereto, and such other
instruments or notices, as may be necessary or, in the
opinion of the Company, advisable, (B) indicate on its books
and records that the Purchased Receivables have been
purchased by the Company and that the Company has sold an
interest therein and has granted a security interest therein
in the Company's retained interest, and provide to the
Company, upon request, copies of any such records, and (C)
obtain the agreement of any Person having a Lien on any
Receivables owned by any Seller (other than any Lien created
or imposed hereunder or any Lien expressly permitted
pursuant to subsection 6.1) to release such Lien upon the
purchase of any such Receivables by the Company.
(b) Each Seller hereby irrevocably authorizes the
Company to file one or more financing or continuation
statements (and other similar instruments), and amendments
thereto, relative to all or any part of the Purchased
Receivables and the Related Property sold or to be sold by
such Seller without the signature of such Seller to the
extent permitted by applicable law.
(c) If any Seller fails to perform any of its
agreements or obligations under this Agreement, the Company
may (but shall not be required to) perform, or cause
performance of, such agreements or obligations, and the
expenses of the Company incurred in connection therewith
shall be payable by such Seller as provided in subsection
9.3.
(d) Each Seller agrees that, upon the occurrence and
during the continuation of a Purchase Termination Event,
Incipient Purchase Termination Event or a Servicer Event of
Default:
(1) the Company (and its assignees) shall have
the right at any time to notify, or require that any
Seller at such Seller's expense notify, the respective
Obligors of the Company's ownership of the Purchased
Receivables and may direct that payment of all amounts
due or to become due under the Purchased Receivables be
made directly to the Company or its designee;
<PAGE>
21
(2) the Company (and its assignees) shall have
the right to (x) sue for collection on any Purchased
Receivables or (y) sell any Purchased Receivables to
any Person for a price that is acceptable to the
Company. If required by the terms of Section 9-504 or
9-505 of the Uniform Commercial Code, the Company (and
its assignees) may offer to sell any Purchased
Receivable to any Person, together, at its option, with
all other Purchased Receivables created by the same
Obligor. Any Purchased Receivable sold hereunder shall
cease to be a Receivable for all purposes under this
Agreement as of the effective date of such sale;
(3) each Seller shall, upon the Company's written
request and at such Seller's expense, (x) assemble all
such Seller's documents, instruments and other records
(including credit files and computer tapes or disks)
that (1) evidence or will evidence or record
Receivables sold by such Seller and (2) are otherwise
necessary or desirable to effect Collections of such
Purchased Receivables (collectively, the "Documents")
and (y) deliver the Documents to the Company or its
designee at a place designated by the Company. In
recognition of each Seller's need to have access to any
Documents which may be transferred to the Company
hereunder, whether as a result of its continuing
business relationship with any Obligor for Receivables
purchased hereunder or as a result of its
responsibilities as Servicer, the Company hereby grants
to the applicable Seller an irrevocable license to
access the Documents transferred by such Seller to
Company and to access any such transferred computer
software in connection with any activity arising in the
ordinary course of such Seller's business or in
performance of such Seller's duties as Servicer,
provided that such Seller shall not disrupt or
otherwise interfere with the Company's use of and
access to the Documents and its computer software
during such license period;
(4) each Seller hereby irrevocably authorizes the
Company or its designee to take any and all steps in
such Seller's name necessary or desirable, in the
reasonable opinion of the Company, to collect all
amounts due under the Purchased Receivables, including
endorsing such Seller's name on checks and other
instruments representing Collections, enforcing the
Purchased Receivables and exercising all rights and
remedies in respect thereof; and
(5) upon written request of the Company, each
Seller will (x) deliver to the Company or a party
designated by the Company all licenses, rights,
computer programs, related material, computer tapes,
disks, cassettes and data necessary to the immediate
collection of the Purchased Receivables by the Company,
with or without the participation of any Seller
(excluding software licenses which by their terms are
not permitted to be so delivered, provided, that such
Seller shall use its best efforts to obtain the consent
of the relevant licensor to such delivery) and (y) make
such arrangements with respect to the collection of the
Purchased Receivables as may be reasonably required by
the Company.
<PAGE>
22
5.16 Certain Procedures. Each Seller shall take, or
refrain from taking, as the case may be, all actions that are
necessary to be taken or not taken in order to (a) ensure that
the assumptions and factual recitations set forth in the
Specified Bankruptcy Opinion Provisions remain true and correct
with respect to such Seller and (b) comply with those procedures
described in such provisions which are applicable to such Seller.
ARTICLE VI
NEGATIVE COVENANTS
Each Seller hereby agrees that, so long as there are
any amounts outstanding with respect to Purchased Receivables
previously sold by such Seller to the Company or until an Early
Termination with respect to such Seller, whichever is later, such
Seller shall not, directly or indirectly:
6.1 Liens. Except as otherwise expressly herein
provided, sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist any Lien upon
or with respect to, any Receivables or Related Property, or
assign any right to receive proceeds in respect thereof except
for Liens created or imposed hereunder or under the Receivables
Transfer Agreement.
6.2 Extension or Amendment of Receivables. Extend,
make any Adjustment to, rescind, cancel, amend or otherwise
modify, or attempt or purport to extend, amend or otherwise
modify, the terms of any Purchased Receivables, except (i) in
accordance with the terms of the Policies and the Company
Policies, (ii) as required by any Requirement of Law, (iii) in
the case of Adjustments, upon making an Adjustment Payment
pursuant to subsection 2.5, or (iv) with the consent of the
Company, provided that the applicable Servicer may cause
Receivables to become Charge-Offs.
6.3 Change in Payment Instructions to Obligors.
Instruct any Obligor of any Purchased Receivables to make any
payments with respect to any Receivables other than in accordance
with its current practices with respect to such Obligor; provided
that, in accordance with subsection 5.10, it may instruct any
Obligor to make such payments to a Lockbox Account or by wire
transfer to the Collection Account.
6.4 Change in Name. Change its name, identity or
corporate structure in any manner which would or might make any
financing statement or continuation statement (or other similar
instrument) relating to this Agreement seriously misleading
within the meaning of Section 9-402(7) of the Uniform Commercial
Code (or any other similar law) without 30 days' prior written
notice to the Company.
6.5 Modification of Ledger. Delete or otherwise
modify the marking on the ledger referred to in subsection 5.7.
<PAGE>
23
6.6 Business of the Sellers. (a) Engage at any time
in any business or business activity other than the business
currently conducted by it and business activities reasonably
incidental thereto or (b) fail to maintain and operate such
business in substantially the manner in which it is presently
conducted and operated if such failure would materially adversely
affect the interests of the Company under the Transaction
Documents.
6.7 Accounting of Purchases. Prepare any financial
statements which shall account for the transactions contemplated
hereby (other than capital contributions and the Subordinated
Notes) in any manner other than as sales of the Purchased
Receivables by such Seller to the Company or in any other respect
account for or treat the transactions contemplated hereby
(including for accounting purposes and, where taxes are not
consolidated, for tax reporting purposes, except as required by
law) (other than capital contributions and the Subordinated
Notes) in any manner other than as sales of the Purchased
Receivables by such Seller to the Company.
6.8 Chattel Paper. Not take any action to cause any
Receivable to be evidenced by any instrument (as defined in the
Uniform Commercial Code as in effect in the State of New York)
except in connection with the enforcement or collection of a
Receivable.
6.9 Ineligible Receivables. Without the prior written
approval of the Company, take any action to cause, or which would
permit, an Eligible Receivable to cease to be an Eligible
Receivable, except as otherwise expressly provided by this
Agreement.
ARTICLE VII
PURCHASE TERMINATION EVENTS
If any of the following events (herein called "Purchase
Termination Events") shall have occurred and be continuing:
(a) any Seller shall fail (i) to pay any amount due
pursuant to subsection 2.6 in accordance with the provisions
thereof and such failure shall continue unremedied for a
period of five days from the earlier of (A) the date any
officer of such Seller obtains knowledge of such default and
(B) the date such Seller receives notice of such default
from the Company or (ii) to pay any other amount required to
be paid by such Seller hereunder within two Business Days of
the date when due; or
(b) any Seller shall fail to observe or perform any
covenant or agreement applicable to it contained in
subsection 5.6, 5.7, 5.12 or 5.15(a), provided no such
failure shall constitute a Purchase Termination Event under
this paragraph (b) unless such default shall continue
unremedied for 10 consecutive days; or
(c) any Seller shall fail to observe or perform any
covenant or agreement applicable to it contained in
subsection 5.2, 5.8, 6.1, 6.2, 6.3, 6.4, 6.5, 6.8 or 6.9;
provided that a Purchase Termination Event shall not be
deemed to have occurred under this paragraph (c) based upon
a failure to observe a covenant contained in
<PAGE>
24
subsection 5.2, 5.8, 6.1, 6.2, 6.3, 6.4, 6.5, 6.8 or 6.9 if
the Sellers shall have complied with the provisions of
subsection 2.6 in respect thereof; or
(d) any Seller shall fail to observe or perform any
covenant or agreement applicable to it contained herein
(other than as specified in paragraph (a), (b) or (c) of
this Article VII), provided that no such failure shall
constitute a Purchase Termination Event under this paragraph
(d) unless such default shall continue unremedied for a
period of 30 consecutive days from the earlier of (A) the
date any Responsible Officer of such Seller obtains
knowledge of such default and (B) the date such Seller
receives notice of such default from the Company; or
(e) any representation, warranty, certification or
statement made or deemed made by any Seller in this
Agreement or in any statement, record, certificate,
financial statement or other document delivered pursuant to
this Agreement shall prove to have been false or misleading
in any material respect on or as of the date made or deemed
made, provided, that a Purchase Termination Event shall not
be deemed to have occurred under this paragraph (e) based
upon a breach of any representation or warranty set forth in
subsection 4.2 if the Sellers shall have complied with the
provisions of subsection 2.6 in respect thereof; or
(f) (i) an involuntary proceeding shall be commenced
or an involuntary petition shall be filed in a court of
competent jurisdiction seeking (x) relief in respect of any
Seller or of a substantial part of the property or assets of
any Seller under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other Federal,
state or foreign bankruptcy, insolvency, receivership or
similar law, (y) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for
any Seller or for a substantial part of the property or
assets of any Seller or (z) the winding-up or liquidation of
any Seller; and such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall be entered; or (ii) any
Seller shall (t) voluntarily commence any proceeding or file
any petition seeking relief under Title 11 of the United
States Code, as now constituted or hereafter amended, or any
other Federal, state or foreign bankruptcy, insolvency,
receivership or similar law, (u) consent to the institution
of, or fail to contest in a timely and appropriate manner,
any proceeding or the filing of any petition described in
clause (f)(i) above, (v) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for such Seller or for a
substantial part of the property or assets of such Seller,
(w) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (x) make a
general assignment for the benefit of creditors, (y) become
unable, admit in writing its inability or fail generally to
pay its debts as they become due or (z) take any action for
the purpose of effecting any of the foregoing; or
(g) there shall have occurred a Termination Event
under the Receivables Transfer Agreement or the Commitments
shall have terminated thereunder;
<PAGE>
25
then, (x) in the case of any Purchase Termination Event described
in paragraph (f) above with respect to any Seller, automatically
the obligation of the Company to purchase Receivables from such
Seller shall thereupon terminate without notice of any kind,
which is hereby waived by the Sellers and (y) in the case of any
Purchase Termination Event, so long as such Purchase Termination
Event shall be continuing, the Company may terminate its
obligation to purchase Receivables from any or all of the Sellers
by written notice to each such Seller (any termination pursuant
to clause (x) or (y) of this Article VII which affects a Seller
is herein called an "Early Termination" with respect to such
Seller).
ARTICLE VIII
THE SUBORDINATED NOTES
8.1 Subordinated Notes. On the Effective Date, the
Company shall issue to the Sellers (i) a subordinated note
substantially in the form of Exhibit A (the "U.S. Dollar
Subordinated Note") and (ii) a subordinated note substantially in
the form of Exhibit B (the "Canadian Dollar Subordinated Note";
each, a "Subordinated Note" and collectively, the "Subordinated
Notes"). The aggregate principal amount of the Subordinated
Notes at any time shall be equal to the difference between (a)
the aggregate principal amount on the issuance thereof and each
addition to the principal amount of each Subordinated Note with
respect to each Seller pursuant to the terms of subsection 2.3
minus (b) the aggregate amount of all payments made in respect of
the principal of the Subordinated Notes. All payments made in
respect of the Subordinated Notes shall be allocated among the
Sellers by the Master Servicer. Each Seller's interest in the
Subordinated Notes shall equal the sum of each addition thereto
allocated to such Seller pursuant to subsection 2.3(c) less the
sum of each repayment thereof allocated to such Seller. Interest
on the principal amount of each Subordinated Note shall accrue on
the last day of each fiscal month of the Sellers at the ABR from
and including the Effective Date and shall be paid on each
Settlement Date with respect to amounts accrued and not paid as
of the last day of the preceding Settlement Period and/or the
maturity date thereof provided, however, that accrued interest on
a Subordinated Note which is not so paid may be added to the
principal amount of such Subordinated Note. Principal not prepaid
pursuant to the terms hereof and of the other Sale Documents
shall be payable on the maturity date thereof. Default in the
payment of principal or interest under either Subordinated Note
shall not constitute a default or event of default or a Purchase
Termination Event hereunder or a Termination Event under the
Receivables Transfer Agreement.
8.2 Restrictions on Transfer of Subordinated Notes.
Neither any Subordinated Note, nor any right of any Seller to
receive payments thereunder, shall be assigned, transferred,
exchanged, pledged, hypothecated, participated or otherwise
conveyed; provided, however, that any Seller may pledge its
rights to receive payments under either Subordinated Note to the
lenders under the Credit Agreement subject to the conditions that
the Collateral Agent and any present or future holder or
beneficiary of such right to receive payments under a
Subordinated Note agrees, in its capacity as such, to be bound by
all the terms and conditions of this Agreement, including without
limitation, subsection 9.16 hereof.
<PAGE>
26
ARTICLE IX
MISCELLANEOUS
9.1 Further Assurances. (a) Each Seller agrees, from
time to time, to do and perform any and all acts and to execute
any and all further instruments reasonably required or requested
by the Company more fully to effect the purposes of this
Agreement and the sales of the Receivables hereunder, including,
without limitation, the execution of any financing statements or
continuation statements (and other similar instruments) relating
to the Receivables for filing under the provisions of the Uniform
Commercial Code, or any similar law, of any applicable
jurisdiction.
(b) From time to time at the request of a Seller, the
Company shall deliver to such Seller such documents, assignments,
releases and instruments of termination as such Seller may
reasonably request to evidence the reconveyance by the Company to
such Seller of a Receivable pursuant to the terms of subsection
2.1(b) or 2.6, provided that the Company shall have been paid all
amounts due thereunder; and the Company and the Master Servicer
shall take such action as such Seller may reasonably request, at
the expense of such Seller, to assure that any such Receivable,
the Related Property with respect thereto and the proceeds
thereof do not remain commingled with Collections hereunder.
9.2 Payments. Each cash payment to be made by any of
the Company or the Sellers hereunder shall be made on the
required payment date and in immediately available funds at the
office of the payee set forth below its signature hereto or to
such other office as may be specified by either party in a notice
to the other party hereto and (x) with respect to payments on
account of Receivables denominated in Canadian Dollars, in
Canadian Dollars except to the extent provided otherwise in
Article II hereof and (ii) in all other cases, in Dollars.
9.3 Costs and Expenses. The Sellers, jointly and
severally, agree (a) to pay or reimburse the Company for all its
out-of-pocket costs and expenses incurred in connection with the
preparation and execution of, and any amendment, supplement or
modification to, this Agreement, the other Sale Documents and any
other documents prepared in connection herewith and therewith,
the consummation and administration of the transactions
contemplated hereby and thereby, including, without limitation,
all reasonable and documented fees and disbursements of counsel,
(b) to pay or reimburse the Company for all its costs and
expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement and any of the
other Related Documents, including, without limitation, the
reasonable fees and disbursements of counsel to the Company, (c)
to pay, indemnify, and hold the Company harmless from, any and
all recording and filing fees and any and all liabilities with
respect to, or resulting from any delay in paying, stamp, excise
and other similar taxes, if any, which may be payable or
determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the
transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of,
this Agreement and any such other documents, (d) to pay,
indemnify, and hold the
<PAGE>
27
Company harmless from, any and all Canadian withholding taxes which
may be imposed in respect of the Receivables or in connection with
the Sale Transactions, and (e) to pay, indemnify, and hold the
Company harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever
(i) which may at any time be imposed on, incurred by or asserted
against the Company in any way relating to or arising out of this
Agreement or the transactions contemplated hereby or in connection
herewith or any action taken or omitted by the Company under or in
connection with any of the foregoing (all such other liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements being herein called
"Indemnified Liabilities") or (ii) which would not have been
imposed on, incurred by or asserted against the Company but for
its having purchased the Receivables hereunder, provided, that
such indemnity shall not be available to the extent that such
losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence
or wilful misconduct of the Company, and provided, further, that
the Sellers shall have no obligation under this subsection 9.3 to
the Company with respect to Indemnified Liabilities arising from
(i) any action taken, or omitted to be taken, by a Servicer which
is not an Affiliate of the Sellers, (ii) any Eligible Receivable
which becomes a Charge-Off as a result of non-payment by the
Obligor with respect thereto or (iii) any action taken by the
Banks or the Company at the direction of the Administrative Agent
in collecting from an Obligor. The agreements in this subsection
shall survive the collection of all Receivables, the termination
of this Agreement and the payment of all amounts payable
hereunder.
9.4 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Sellers and the
Company and their respective successors (whether by merger,
consolidation or otherwise) and assigns. Except as expressly
permitted pursuant to subsections 8.2 and 8.4, each Seller agrees
that it will not assign or transfer all or any portion of its
rights or obligations hereunder without the prior written consent
of the Company. The Sellers acknowledge that the Company shall
assign all of its rights hereunder to the Banks and, after the
termination of the Receivables Transfer Agreement, to another
entity or entities (each, a "Subsequent Financing Party") buying
an interest in the Receivables. Each Seller consents to such
assignment and agrees that the Administrative Agent and the
Banks, to the extent provided in the Receivables Transfer
Agreement, and each Subsequent Financing Party to the extent
provided in the documents to which it is a party, shall be
entitled to enforce the terms of this Agreement and the rights
(including, without limitation, the right to grant or withhold
any consent or waiver) of the Company directly against such
Seller, whether or not a Purchase Termination Event or a
Termination Event has occurred. Each Seller further agrees that,
in respect of its obligations hereunder, it will act at the
direction of and in accordance with all requests and instructions
from the Administrative Agent or such Subsequent Financing Party,
as the case may be, until all amounts due to the Banks or such
Subsequent Financing Party, as the case may be, are paid in full.
Each of the Administrative Agent and each such Subsequent
Financing Party shall have the rights of third-party
beneficiaries under this Agreement.
9.5 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE
<PAGE>
28
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK.
9.6 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Company,
any right, remedy, power or privilege hereunder, shall operate as
a waiver thereof, nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exhaustive of
any rights, remedies, powers and privileges provided by law.
9.7 Amendments and Waivers. Neither this Agreement
nor any terms hereof may be amended, supplemented or modified
except in a writing signed by the Company and any affected
Seller.
9.8 Severability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent 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.
9.9 Notices. All notices, requests and demands to or
upon the respective parties hereto to be effective shall be in
writing (including by telecopy), and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made
when delivered by hand, or three days after being deposited in
the mail, postage prepaid, or, in the case of telecopy notice,
when received, addressed as follows in the case of the Company
and C&A Products, and as set forth on Schedule 1 hereof in the
case of the Sellers, or to such other address as may be hereafter
notified by the respective parties hereto:
The Company: Carcorp, Inc.
5025 S. Eastern Avenue
Suite 16, Number 205
Las Vegas, Nevada 89119
Attention:
Telecopy:
C&A Products: Collins & Aikman Products Co.
701 McCullough Drive
Charlotte, North Carolina 28262
Attention: Mark Remissong
Telecopy: 704-548-2330
9.10 Counterparts. This Agreement may be executed by
one or more of the parties to this Agreement on any number of
separate counterparts (including by telecopy), and all of said
counterparts taken together shall be deemed to constitute one and
the same
<PAGE>
29
instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Company.
9.11 Construction of Agreement as Security Agreement.
(a) The parties to this Agreement intend that the transactions
contemplated hereby shall be, and shall be treated as, a purchase
by the Company and a sale by the applicable Seller of the
Purchased Receivables and Related Property with respect thereto
and not as a lending transaction. If, however, notwithstanding
the intent of the parties, such transactions are deemed to be
loans, each Seller hereby grants to the Company a first priority
security interest in all of such Seller's right, title and
interest in and to the Receivables and the Related Property now
existing and hereafter created, all monies due or to become due
and all amounts received with respect thereto, including, without
limitation, Recoveries, and all "proceeds" thereof, to secure all
such Seller's obligations hereunder.
(b) This Agreement shall constitute a security
agreement under applicable law.
9.12 Waivers of Jury Trial. Each party hereto hereby
waives, to the fullest extent permitted by applicable law, any
right it may have to a trial by jury in respect of any litigation
directly or indirectly arising out of, under or in connection
with this Agreement or any of the other Sale Documents. Each
party hereto (a) certifies that no representative, agent or
attorney of any other party has represented, expressly or
otherwise, that such other party would not, in the event of
litigation, seek to enforce the foregoing waiver and (b)
acknowledges that it and the other parties hereto have been
induced to enter into this Agreement and the other Sale
Documents, as applicable, by, among other things, the mutual
waivers and certifications in this subsection 9.12.
9.13 Jurisdiction; Consent to Service of Process. (a)
Each party hereto hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of
any New York State court or Federal court of the United States of
America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Sale Documents, or for
recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be
heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any
right that the Company may otherwise have to bring any action or
proceeding relating to this Agreement or the other Sale Documents
against any Seller or its properties in the courts of any
jurisdiction.
(b) Each party hereto hereby irrevocably and
unconditionally waives, to the fullest extent they may legally
and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the
other Sale Documents in any New York State or Federal court.
Each of the
<PAGE>
30
parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such
court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in
subsection 9.9. Nothing in this Agreement will affect the right
of any party to this Agreement to serve process in any other
manner permitted by law.
9.14 Addition of Sellers. Subject to subsection 3.4
hereof, subsection 8.22 of the Receivables Transfer Agreement and
the terms and conditions of this subsection 9.14, from time to
time one or more additional Subsidiaries of C&A Products may
become Sellers hereunder and parties hereto. If any such
Subsidiary wishes to become an additional Seller, it shall submit
a request to such effect in writing to the Company. The Company,
in its sole and absolute discretion, may agree to or deny any
such request, provided that, if the Company shall have failed to
respond to any such request within 30 days after receipt thereof,
such request shall be deemed to have been denied. If the Company
shall have agreed to any such request, such Subsidiary shall
become an additional Seller hereunder and a party hereto on the
related Seller Addition Date upon satisfaction of the conditions
set forth in subsection 3.4.
9.15 Optional Termination of Seller. (a) Any Seller
may be terminated as a Seller hereunder on the date such Seller
ceases to be a wholly owned direct or indirect Subsidiary of C&A
Products, provided (i) that the aggregate outstanding Adjusted
Principal Amount of Purchased Receivables sold by all Sellers
which so cease to be wholly owned Subsidiaries at such time
(together with the aggregate outstanding Adjusted Principal
Amount of Purchased Receivables sold by all Sellers which have
been terminated pursuant to this subsection 9.15 within the
preceding 90 days) shall not exceed 10% of the aggregate
outstanding Adjusted Principal Amount of all Purchased
Receivables and (ii) that no Purchase Termination Event or
Incipient Purchase Termination Event has occurred and is
continuing, or would result as a result thereof. From and after
the date any such Seller ceases to be a wholly owned Subsidiary
of C&A Products, the Company shall cease buying Receivables and
Related Property from such Seller. Each such Seller shall be
released as a Seller party hereto for all purposes and shall
cease to be a party hereto on the date on which there are no
amounts outstanding with respect to Purchased Receivables
previously sold by such Seller to the Company, whether such
amounts have been repurchased, collected or written off in
accordance with the Policies and the Company Policies. Prior to
such date, such Seller shall be obligated to perform its
servicing and other obligations hereunder and under the
Transaction Documents to which it is a party with respect to
Purchased Receivables previously sold by such Seller to the
Company, including, without limitation, its obligation to deposit
Collections into the appropriate Lockboxes.
(b) From time to time the Sellers, or the Master
Servicer on behalf of the Sellers, may request in writing that
the Company designate one or more Sellers as Sellers that shall
cease to be parties to this Agreement; provided that no Purchase
Termination Event or Incipient Purchase Termination Event has
occurred and is continuing, or would result as a result thereof.
Any such request shall specify the minimum aggregate Adjusted
Principal Amount of outstanding Purchased Receivables to have
been sold by the Sellers to be so designated by the Company. The
Company, in its sole and absolute discretion (subject to
<PAGE>
31
subsection 8.23 of the Receivables Transfer Agreement), shall,
within 45 days of receipt of such request, select the Sellers to
be so terminated, provided that the aggregate Adjusted Principal
Amount of outstanding Purchased Receivables previously sold by
such Sellers shall be substantially equal to the Adjusted
Principal Amount specified in such request. Promptly after
receipt of any such designation by the Company, the Sellers shall
either (i) elect not to terminate such designated Sellers or (ii)
select a date, which date shall not be later than 30 days after
the date of receipt of such designation, as the "Sale Termination
Date" for such designated Sellers. From and after such date, the
Company shall cease buying Receivables and Related Property from
such Sellers. Each such Seller shall be released as a Seller
hereunder and a party hereto for all purposes and shall cease to
be a party hereto on the date on which there are no amounts
outstanding with respect to Purchased Receivables previously sold
by such Seller to the Company, whether such amounts have been
repurchased in the manner provided in clause (a) above, collected
or written off in accordance with the Policies and the Company
Policies. Prior to such date, such Seller shall be obligated to
perform its servicing and other obligations hereunder and under
the Related Documents with respect to Purchased Receivables
previously sold by such Seller to the Company, including, without
limitation, its obligation to deposit Collections into the
appropriate Lockboxes.
(c) A terminated Seller shall have no obligation to
repurchase any Receivables other than Receivables previously sold
by it to the Company which are subject to a Repurchase Event.
9.16 No Bankruptcy Petition. Each Seller and C&A
Products by entering into this Agreement, and any present or
future holder of a Subordinated Note, by its acceptance thereof,
covenants and agrees that, prior to the date which is one year
and one day after the date of termination of this Agreement
pursuant to subsection 9.17, it will not institute against, or
join any other Person in instituting against, the Company any
bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any federal
or state bankruptcy or similar law.
9.17 Termination. This Agreement will terminate at
such time as (a) the commitment of the Company to purchase
Receivables from all Sellers hereunder shall have terminated and
(b) all Receivables purchased hereunder have been collected, and
the proceeds thereof turned over to the Company and all other
amounts owing to the Company hereunder shall have been paid in
full or, if Receivables sold hereunder have not been collected
such Receivables have become Defaulted Receivables and the
Company shall have completed its collection efforts in respect
thereto; provided, however, that the indemnities of the Sellers
to the Company set forth in this Agreement shall survive such
termination and provided, further, that, to the extent any
amounts remain due and owing to the Company hereunder, the
Company shall remain entitled to receive any collections on
Receivables sold hereunder which have become Defaulted
Receivables after it shall have completed its collection efforts
in respect thereof.
9.18 Confidentiality. The Company agrees that it
shall maintain in confidence any information relating to any
Seller furnished to it by or on behalf of such Seller (other than
information that (x) has become generally available to the public
other than as a result of
<PAGE>
32
a disclosure by such party, (y) has been independently developed
by such party without violating this subsection 9.18 or (z) was
available to such party from a third party having, to such
party's knowledge, no obligation of confidentiality to such Seller)
and shall not reveal the same other than to its directors, officers,
employees and advisors with a need to know except: (a) to the
extent necessary to comply with law or any legal process or the
requirements of any Governmental Authority or of any securities
exchange on which securities of the disclosing party or any
Affiliate of the disclosing party are listed or traded, (b) as
part of normal reporting or review procedures to Governmental
Authorities or its parent companies, Affiliates or auditors, (c) in
order to enforce its rights under any Sale Document in a legal
proceeding and (d) in connection with the collection of any
Purchased Receivable or the exercise of any remedy hereunder or
under the Receivables Transfer Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized, all as of the day and year first above written.
COLLINS & AIKMAN PRODUCTS CO., as Master
Servicer
By:
Title:
CARCORP, INC.
By:
Title:
The Sellers:
COLLINS & AIKMAN PRODUCTS CO.
By:
Title:
ACK-TI-LINING, INC.
By:
Title:
<PAGE>
33
WCA CANADA, INC.
By:
Title:
IMPERIAL WALLCOVERINGS (CANADA), INC.
By:
Title:
IMPERIAL WALLCOVERINGS, INC.
By:
Title:
THE AKRO CORPORATION
By:
Title:
DURA ACQUISITION CORP.
By:
Title:
<PAGE>
ANNEX X
"ABR": for any day, a rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Base CD
Rate in effect on such day plus 1% and (c) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. For
purposes hereof, "Prime Rate" shall mean the rate of
interest per annum publicly announced from time to time by
Chemical as its prime rate in effect at its principal office
in New York City; each change in the Prime Rate shall be
effective on the date such change is publicly announced as
being effective. "Base CD Rate" shall mean the sum of (a)
the product of (i) the Three-Month Secondary CD Rate and
(ii) Statutory Reserves and (b) the Assessment Rate.
"Three-Month Secondary CD Rate" shall mean, for any day, the
secondary market rate for three-month certificates of
deposit reported as being in effect on such day (or, if such
day shall not be a Business Day, the next preceding Business
Day) by the Board through the public information telephone
line of the Federal Reserve Bank of New York (which rate
will, under the current practices of the Board, be published
in Federal Reserve Statistical Release H.15(519) during the
week following such day), or, if such rate shall not be so
reported on such day or such next preceding Business Day,
the average of the secondary market quotations for
three-month certificates of deposit of major money center
banks in New York City received at approximately 10:00 a.m.,
New York City time, on such day (or, if such day shall not
be a Business Day, on the next preceding Business Day) by
the Administrative Agent from three New York City negotiable
certificate of deposit dealers of recognized standing
selected by it. "Federal Funds Effective Rate" shall mean,
for any day, the weighted average of the rates on overnight
Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average
of the quotations for the day of such transactions received
by the Administrative Agent from three Federal funds brokers
of recognized standing selected by it. If for any reason
the Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error)
that it is unable to ascertain the Base CD Rate or the
Federal Funds Effective Rate or both for any reason,
including the inability or failure of the Administrative
Agent to obtain sufficient quotations in accordance with the
terms thereof, the ABR shall be determined without regard to
clause (b) or (c), or both, of the first sentence of this
definition, as appropriate, until the circumstances giving
rise to such inability no longer exist. Any change in the
ABR due to a change in the Prime Rate, the Base CD Rate or
the Federal Funds Effective Rate shall be effective on the
effective date of such change in the Prime Rate, the Base CD
Rate or the Federal Funds Effective Rate, respectively.
"ABR Participating Interest": with respect to any
Bank, that portion of its Participating Interest in the
Receivables with respect to which the Purchase Discount
Amount is determined by reference to the ABR.
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"Accounts": as defined in subsection 2.1(c)(ii) of the
Receivables Transfer Agreement.
"Acquiring Banks": as defined in subsection 11.4(d) of
the Receivables Transfer Agreement.
"Additional Seller Supplement": an instrument
substantially in the form of Exhibit C to the Receivables
Sale Agreement by which a Subsidiary of C&A Products becomes
a Seller party to the Receivables Sale Agreement.
"Additional Servicer Supplement": an instrument
substantially in the form of Exhibit F to the Receivables
Transfer Agreement by which a Subsidiary of C&A Products
becomes a Servicer party to the Receivables Transfer
Agreement.
"Adjusted Principal Amount": (a) in the case of any
Receivable denominated in U.S. Dollars, the Principal Amount
in respect thereof and (b) in the case of any Receivable
denominated in Canadian Dollars, the Canadian Exchange
Percentage of the Principal Amount in respect thereof.
"Adjustment": as defined in subsection 2.5 of the
Receivables Sale Agreement.
"Adjustment Payment": as defined in subsection 12.4 of
the Receivables Transfer Agreement.
"Administrative Agent": Chemical, together with its
affiliates, as the arranger of the Commitments and as the
agent for the Banks under the Receivables Transfer
Agreement.
"Affiliate": as to any Person, any other Person that
directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with
the Person specified.
"Aggregate Eligible Receivables": the excess of (a)
the Applicable Eligible Receivables Percentage of the
aggregate outstanding Adjusted Principal Amount of all
Receivables over (b) the aggregate Excess Amounts with
respect to all Obligors.
"Agreement": the agreement wherein such term is used,
as the same may from time to time be amended, supplemented
or otherwise modified.
"Amortization Period": the period commencing after the
end of the Commitment Period and ending with the termination
of the Receivables Transfer Agreement pursuant to subsection
4.1 thereof.
"Applicable ABR Margin": (a) prior to the 270th day
after the Effective Date, 0% and (b) on and after such 270th
day, the "Applicable Margin" with respect to "ABR Loans" (as
each such term is defined in the Credit Agreement),
determined in
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3
accordance with the provisions of the Credit
Agreement as in effect on the Effective Date.
"Applicable Eligible Receivables Percentage": at any
date of determination, a fraction (expressed as a
percentage) equal to (a) the aggregate Adjusted Principal
Amount of all Eligible Receivables determined pursuant to
the most recent Settlement Statement divided by (b) the
aggregate Adjusted Principal Amount of all outstanding
Receivables generated by the Sellers determined pursuant to
such Settlement Statement.
"Applicable Eurodollar Margin": (a) prior to the 270th
day after the Effective Date, 0.625% and (b) on and after
such 270th day, the "Applicable Margin" with respect to
"Eurodollar Loans" (as each such term is defined in the
Credit Agreement), determined in accordance with the
provisions of the Credit Agreement as in effect on the
Effective Date.
"Applicable Obligor Percentage": with respect to any
Obligor, (a) 7.5%, in the case of any such Obligor having a
long-term senior unsecured debt rating of at least A- from
S&P or A3 from Moody's or a short-term deposit or commercial
paper rating of at least A-1 from S&P or P-1 from Moody's,
provided, that in the case of General Motors Corporation,
Chrysler Corporation, Ford Motor Company and Honda Motor
Co., the Applicable Obligor Percentage shall instead be
17.0% so long as such Obligor maintains a short-term deposit
or commercial paper rating of at least A-2 from S&P or P-2
from Moody's; (b) 5.0%, in the case of any such Obligor (not
described in clause (a) above) having a long-term senior
unsecured debt rating of at least BBB- from S&P or Baa3 from
Moody's or a short-term deposit or commercial paper rating
of at least A-3 from S&P or P-3 from Moody's; or (c) 2.0%,
in the case of any other such Obligor.
"Assessment Rate": for any date, the annual rate
(rounded upwards, if necessary, to the next 1/100 of 1%)
most recently estimated by the Administrative Agent as the
then current net annual assessment rate that will be
employed in determining amounts payable by Chemical to the
Federal Deposit Insurance Corporation (or any successor) for
insurance by such Corporation (or such successor) of time
deposits made in dollars at Chemical's domestic offices.
"Average Default Ratio": for any Settlement Period, a
percentage equal to (a) the sum of the Default Ratios for
such Settlement Period and each of the two preceding
Settlement Periods divided by (b) 3.
"Average Dilution Ratio": with respect to any
Settlement Period, a fraction (a) the numerator of which is
the aggregate amount of Dilutive Credits which are incurred
with respect to the Receivables during the twelve-month
period ended on the last day of such Settlement Period and
(b) the denominator of which is the aggregate Adjusted
Principal Amount of Receivables generated by the Sellers
during the twelve-month period ended on the last day of such
Settlement Period.
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4
"Bank": each financial institution listed on Schedule
1 to the Receivables Transfer Agreement and each financial
institution to which an assignment has been made pursuant to
the terms of the Receivables Transfer Agreement, and any
successor of the foregoing.
"benefitted Bank": as defined in subsection 11.12 of
the Receivables Transfer Agreement.
"Board": the Board of Governors of the Federal Reserve
System and any successor thereto.
"Business Day": any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of New York)
on which banks are open for business in New York City;
provided, however, that, when used in connection with any
Fixed Tranche or the determination of any Eurodollar Rate,
the term "Business Day" shall also exclude any day on which
banks are not open for dealings in dollar deposits in the
London interbank market.
"Business Day Received": as defined in subsection
12.1(d) of the Receivables Transfer Agreement.
"C&A Products": Collins & Aikman Products Co., a
Delaware corporation.
"Canada/Canadian Dollar Concentration Account": as
defined in subsection 2.7(a) of the Receivables Transfer
Agreement.
"Canada/U.S. Dollar Concentration Account": as defined
in subsection 2.7(a) of the Receivables Transfer Agreement.
"Canadian Dollars": dollars in lawful currency of
Canada.
"Canadian Dollar Subordinated Note": as defined in
subsection 8.1 of the Receivables Sale Agreement.
"Canadian Exchange Percentage": at any date, the rate
at which Canadian Dollars may be exchanged into Dollars
(expressed as the percentage of Dollars per Canadian
Dollar), determined by reference to the relevant Bloomberg
currency page. In the event that such rate does not appear
on any Bloomberg currency page, the "Canadian Exchange
Percentage" shall be determined by reference to such other
publicly available service for displaying exchange rates
with respect to Canadian Dollars as may be selected by the
Administrative Agent.
"Capital Lease Obligations": with respect to any
Person, the obligations of such Person to pay rent or other
amounts under any lease of (or other arrangement conveying
the right to use) real or personal property, or a combina-
tion thereof, which obligations are required to be classi-
fied and accounted for as capital leases on a
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5
balance sheet of such Person under GAAP and, for the purposes
hereof, the amount of such obligations at any time shall be
the capitalized amount thereof at such time determined in
accordance with GAAP.
"Capital Stock": any and all shares, interests,
participations or other equivalents (however designated) of
capital stock of a corporation, any and all equivalent
ownership interests in a Person (other than a corporation)
and any and all warrants, options or other rights to
purchase or acquire any of the foregoing.
"Cash Equivalents": book-entry securities, negotiable
instruments or securities represented by instruments in
bearer or registered form which evidence:
(a) direct obligations of, and obligations fully
guaranteed as to timely payment by, the United States of
America;
(b) demand deposits, time deposits or certificates of
deposit of any depository institution or trust company
incorporated under the laws of the United States of America
or any state thereof (or any domestic branch of a foreign
bank) and subject to supervision and examination by Federal
or State banking or depository institution authorities;
provided, that at the time of the investment or contractual
commitment to invest therein the commercial paper or other
short-term unsecured debt obligations (other than such
obligations the rating of which is based on the credit of a
Person other than such depository institution or trust
company) thereof shall have a credit rating from each of the
Rating Agencies in the highest investment category granted
thereby;
(c) commercial paper having, at the time of the
investment or contractual commitment to invest therein, a
rating of A-1 from S&P or of P-1 from Moody's;
(d) investments in money market funds having a rating
from each of the Rating Agencies in the highest investment
category granted thereby;
(e) demand deposits, time deposits and certificates of
deposit which are fully insured by the Federal Deposit
Insurance Corporation;
(f) bankers' acceptances issued by any depository
institution or trust company referred to in clause (b)
above;
(g) repurchase obligations with respect to any
security that is a direct obligation of, or fully guaranteed
by, the United States of America or any agency or
instrumentality thereof the obligations of which are backed
by the full faith and credit of the United States of
America, in either case entered into with (i) a depository
institution or trust company (acting as principal) described
in clause (b) above or (ii) so long as the Company takes
actual or constructive possession of each security subject
to such repurchase obligations, a depository institution or
trust company the deposits of which are insured by the
Federal Deposit Insurance Corporation; or
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6
(h) any other investment permitted by Moody's and S&P
for short-term investment of funds supporting securities
with a rating of A1/P1 or better.
"Change in Control": (a) any "Change in Control"
under the Credit Agreement (as such term is defined
therein on the Effective Date), (b) except upon the
exercise by the Collateral Agent of any of its remedies
in accordance with the terms of the Pledge Agreement
(as in effect on the Effective Date), the Company shall
at any time not be a direct wholly owned Subsidiary of
C&A Products or (c) except as permitted pursuant to
subsection 9.15 of the Receivables Sale Agreement and
subsection 12.10 of the Receivables Transfer Agreement,
any Seller or Servicer (other than C&A Products) shall
at any time not be wholly owned, either directly or
indirectly, by C&A Products.
"Charge-Offs": with respect to the Receivables
originated by any Seller, for any period, the aggregate
amount of such Receivables that are written off, or should
be written off, during such period as uncollectible in
accordance with the Company Policies.
"Chemical": Chemical Bank, a New York banking
corporation.
"Closing Date": as defined in subsection 2.3(a) of the
Receivables Transfer Agreement.
"Code": the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral Agent": as defined in the Credit
Agreement.
"Collections": all cash collections and other cash
proceeds received in respect of Receivables and Related
Property including, without limitation, Seller Repurchase
Payments and Seller Adjustment Payments and any Investment
Earnings.
"Commitment": of each Bank, the amount set forth
opposite the name of such Bank on Schedule 1 to the
Receivables Transfer Agreement, as such amount may be
changed pursuant to subsection 2.10 or 11.4 of the
Receivables Transfer Agreement.
"Commitment Fee": as defined in subsection 2.4 of the
Receivables Transfer Agreement.
"Commitment Percentage": as to any Bank, (a) on or
prior to the termination of the Commitments, the percentage
equivalent of a fraction the numerator of which is the
Commitment of such Bank and the denominator of which is the
Maximum Commitment and (b) thereafter, the percentage
equivalent of a fraction the numerator of which is the
Commitment of such Bank immediately prior to such
termination and the denominator of which is the Maximum
Commitment immediately prior to such termination.
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7
"Commitment Period": the period from and including the
Effective Date, up to but not including the first to occur
of (a) the Scheduled Termination Date, (b) any termination
of the Commitments pursuant to Article IX of the Receivables
Transfer Agreement and (c) termination (but not reduction)
of the Commitments pursuant to subsection 2.10 of the
Receivables Transfer Agreement.
"Company": Carcorp, Inc., a Delaware corporation.
"Company Policies": the written policies of the
Company with respect to Charge-Offs and Write-Offs of
Receivables.
"Complete Servicing Transfer": as defined in
subsection 12.2(d) of the Receivables Transfer Agreement.
"Concentration Accounts": the collective reference to
the U.S. Concentration Account, the Canada/U.S. Dollar
Concentration Account and the Canada/Canadian Dollar
Concentration Account.
"Contractual Obligation": as to any Person, any
provision of any security issued by such Person or of any
agreement, instrument or other undertaking to which such
Person is a party or by which it or any of its property is
bound.
"Control": the possession, directly or indirectly, of
the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of
voting securities, by contract or otherwise, and
"Controlling" and "Controlled" shall have meanings
correlative thereto.
"Credit Agreement": the Credit Agreement dated as of
June 22, 1994 among the Credit Agreement Borrower, WCA
Canada, Inc., as Canadian Borrower, Collins & Aikman
Corporation, as Guarantor, the Lenders named therein,
Continental Bank, N.A. and NationsBank, N.A., as Managing
Agents, and Chemical Bank, as Administrative Agent, as
amended, supplemented or otherwise modified from time to
time.
"Credit Agreement Borrower": C&A Products Co.
"Daily Report": as defined in subsection 12.5(a) of
the Receivables Transfer Agreement.
"Days Sales Outstanding": as of any day, the product
of (a) 91 and (b) the amount obtained by dividing (i) the
difference between (x) the aggregate Adjusted Principal
Amount of the Receivables and (y) the aggregate bad debt
reserve of the Sellers, in each case as at the end of the
fiscal month immediately preceding the most recent
Settlement Date, by (ii) aggregate net sales of the Sellers
for the three-fiscal-month period immediately preceding the
most recent Settlement Date.
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8
"Defaulted Receivable": any Receivable which has been
charged off, or should have been charged off, by the related
Servicer as uncollectible in accordance with the Policies of
such Servicer and the Company Policies.
"Default Ratio": (a) with respect to any Settlement
Period ending on or before April 30, 1994, a fraction (i)
the numerator of which is the aggregate Adjusted Principal
Amount of Receivables which first became 60 to 89 days past
due as of the last day of such month and (ii) the
denominator of which is the aggregate Adjusted Principal
Amount of Receivables generated by the Sellers during the
fourth preceding Settlement Period and (b) with respect to
any Settlement Period ending on any date thereafter, a
fraction (i) the numerator of which is the aggregate
Adjusted Principal Amount of Receivables which first became
90 to 119 days past due as of the last day of such month and
(ii) the denominator of which is the aggregate Adjusted
Principal Amount of Receivables generated by the Sellers
during the fifth preceding Settlement Period.
"Dilution Reserve Ratio": as of any day, the
percentage equivalent, determined pursuant to the most
recent Settlement Statement, of the product of (x) the sum
of clauses (i) and (ii) below and (y) clause (iii) below:
(i) (A) 2.0 times (B) the Average Dilution Ratio for
the most recently ended Settlement Period;
(ii) the product of (A)(x) the highest Peak Dilution
Ratio during the period of 12 fiscal months ended on the
last day of the most recently ended Settlement Period minus
(y) the amount determined pursuant to clause (i)(B) of this
definition and (B) the amount determined pursuant to clause
(A)(x) above divided by the amount determined pursuant to
clause (A)(y) above; and
(iii) (A) the aggregate Adjusted Principal Amount of
Receivables generated by the Sellers during the most
recently ended Settlement Period divided by (B) the
aggregate Adjusted Principal Amount of Eligible Receivables
on the last day of such Settlement Period.
"Dilutive Credits": for any period, the aggregate
amount of discount expense, rebates, refunds, billing error
expense, credits against Receivables and other adjustments
or allowances in respect of Receivables permitted or
incurred by the Seller or Servicer with respect thereto
during such period.
"Discount Rate": as of any day, the sum of (a) the
weighted average Purchase Discount Amount rate in effect
with respect to the Participating Interest as at the end of
the fiscal month immediately preceding the most recent
Settlement Date and (b) the amount obtained by dividing (i)
the aggregate amount of fees (other than the Monthly
Servicing Fee and the Purchase Discount Amount) accrued with
respect to the Participating Interest during the fiscal
month immediately preceding the most recent Settlement Date
by (ii) the average daily Net Investment during such fiscal
month.
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9
"Discounted Percentage": as defined in Schedule 3 to
the Receivables Sale Agreement.
"Documents": as defined in subsection 5.15(d)(3) of
the Receivables Sale Agreement.
"Dollars", "U.S. Dollars" and "$": dollars in lawful
currency of the United States of America.
"Early Termination": as defined in Article VII of the
Receivables Sale Agreement.
"Effective Date": as defined in subsection 6.1 of the
Receivables Transfer Agreement.
"Eligible Letter of Credit": any irrevocable direct
pay or standby letter of credit (a) issued in favor of the
Company by (i) any Bank or (ii) any commercial bank that (x)
has combined capital and surplus of not less than
$500,000,000 and (y) has (or the holding company parent of
which has) a long-term senior unsecured debt rating of at
least A from S&P or at least A2 from Moody's and (b) which
permits the Company to draw, upon notice to the issuing
bank, an amount equal to the entire face amount of any
Receivable supported thereby, in Dollars payable by the
issuing bank in the United States, no later than 90 days
after the original invoice date with respect to such
Receivable.
"Eligible Obligor": each Obligor that satisfies each
of the following eligibility criteria:
(a) it is not organized or located (within the
meaning of Section 9-103(3)(d) of the New York Uniform
Commercial Code) in a jurisdiction other than the
United States; provided, however, that (i) Receivables
which have Obligors organized or located in Canada or
which are Japanese Obligors or (ii) Receivables which
have Obligors not otherwise described in clause (i)
above which are located (within the meaning of Section
9-103(3)(d) of the New York Uniform Commercial Code)
outside the United States shall be excluded from this
clause (a) if (x) in the case of clauses (i) and (ii)
above, such Receivables would otherwise be Eligible
Receivables and (y) in the case of clause (ii) above,
(1) such Receivables are supported by an Eligible
Letter of Credit and (2) the aggregate Adjusted
Principal Amount of all such Receivables does not
exceed 15% of the Adjusted Principal Amount of the
Eligible Receivables;
(b) it is not a direct or indirect Subsidiary of
Holdings;
(c) it is not a domestic or foreign government or
any agency, department, or instrumentality thereof;
provided, however, that up to 3% of the aggregate
Adjusted Principal Amount of the Eligible Receivables
may be
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10
owing by the United States government or any
agency, department or instrumentality thereof; and
(d) it is not the subject of any reorganization,
bankruptcy, receivership, custodianship or insolvency,
unless the payment of Receivables from such Obligor is
secured in a manner satisfactory to the Administrative
Agent or, if such Receivables arise subsequent to a
decree or order for relief under the Bankruptcy Reform
Act of 1978, as amended, with respect to such Obligor,
the Administrative Agent shall have determined that
timely payment and collection of such Receivables will
not be impaired.
"Eligible Receivable": as of any date, each Receivable
in existence as of such date that is not subject to a
Repurchase Event and (i) which the Administrative Agent
determines, in its commercially reasonable judgment, to be
an "Eligible Receivable" or (ii) that satisfies each of the
following eligibility criteria:
(a) the Company has lawful title to such
Receivable, free and clear of all Liens other than the
security interest in favor of the Banks;
(b) the Banks have a Lien on such Receivable,
which Lien is legal, valid, binding, perfected and
first priority under the Uniform Commercial Code or
other applicable law;
(c) the Company has the full and unqualified
right to assign and grant a Lien on such Receivable to
the Banks;
(d) such Receivable is payable in Dollars in the
United States or Canada and is a legal, valid, binding
and enforceable obligation of the Obligor under such
Receivable; provided, however, that Receivables having
an aggregate Adjusted Principal Amount equal to no more
than 10% of the aggregate Adjusted Principal Amount of
all Eligible Receivables may be payable in Canadian
dollars in the United States or Canada;
(e) such Receivable is not subject to any bona
fide dispute, setoff, counterclaim or other claim or
defense on the part of the related Obligor denying
liability under such Receivable in whole or in part;
provided, however, that any such Receivable shall
constitute an Eligible Receivable to the extent it is
not subject to any such dispute, setoff, counterclaim
or other claim or defense;
(f) such Receivable is evidenced by an invoice
rendered to the related Obligor and is not evidenced by
any "instrument" or "chattel paper", as such terms are
defined in the Uniform Commercial Code;
(g) such Receivable is a bona fide Receivable
which arose in the ordinary course of business, and
with respect to which,
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(i) in the case of a Receivable arising from
the sale of goods, such goods have been shipped or
delivered to and accepted by the Obligor, such
Receivable was created as a result of a sale on an
absolute basis and not on a consignment, approval
or sale-and-return basis and all other actions
have been taken necessary to create a binding
obligation on the part of the Obligor for such
Receivable, and
(ii) in the case of a Receivable relating to
the sale of services, such services have been
performed or completed and accepted by the Obligor
and all other actions have been taken necessary to
create a binding obligation on the part of the
Obligor;
(h) the Obligor with respect to such Receivable
is an Eligible Obligor;
(i) such Receivable is not outstanding more than
90 days past the original invoice date with respect
thereto (which date, for all purposes of eligibility,
shall not be later than the shipment date of the goods
giving rise to such Receivable); provided, however,
that Receivables of Imperial Wallcoverings, Inc. and
Imperial Wallcoverings (Canada), Inc. (not to exceed an
aggregate Adjusted Principal Amount of $12,500,000) may
be outstanding for up to, but not in excess of, 120
days past such original invoice date;
(j) payment with respect to such Receivable, if
by check, has not been returned for insufficient funds;
(k) such Receivable has not been placed with an
attorney for collection;
(l) such Receivable, to the extent it represents
a consumer credit card receivable, conforms to all
federal and state consumer protection laws;
(m) if such Receivable represents a consumer
credit card receivable, the outstanding balance of such
Receivable does not reflect more than two arrearages;
and
(n) such Receivable has such other
characteristics or criteria as the Administrative
Agent, in its reasonable discretion, may specify in
writing to the Company.
"Equipment": as defined in subsection 2.1(c)(i) of the
Receivables Transfer Agreement.
"ERISA": the Employee Retirement Income Security Act
of 1974, as the same may be amended from time to time.
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"ERISA Affiliate": with respect to any Person, any
trade or business (whether or not incorporated) that is a
member of a group of which such Person is a member and which
is treated as a single employer under Section 414 of the
Code.
"Eurodollar Participating Interest": with respect to
any Bank, that portion of its Participating Interest in the
Receivables with respect to which the Purchase Discount
Amount is determined by reference to the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during
each Transfer Period pertaining to a Fixed Tranche, a rate
per annum (rounded upwards, if necessary, to the next 1/16
of 1%) equal to the product of (a) the Eurodollar Base Rate
in effect for such Transfer Period and (b) Statutory
Reserves. For purposes hereof, (a) if at least two offered
rates for deposits in dollars for a period comparable to the
applicable Transfer Period appear on page 3750 (or any
successor page) of the Dow Jones Telerate Screen as of 11:00
a.m., London time, on the day that is two Business Days
prior to the first day of such Transfer Period, the term
"Eurodollar Base Rate" shall mean the arithmetic mean of all
such offered rates and (b) if fewer than two such offered
rates so appear on page 3750 (or any successor page) of the
Dow Jones Telerate Screen, the term "Eurodollar Base Rate"
shall mean the rate (rounded upwards, if necessary, to the
next 1/16 of 1%) at which dollar deposits approximately
equal in principal amount to Chemical's portion of the
applicable Fixed Tranche and for a period comparable to the
applicable Transfer Period are offered to Chemical's office
in which its relevant eurodollar operations are being
conducted in immediately available funds in the eurodollar
market at approximately 11:00 a.m., New York time, on the
day that is two Business Days prior to the first day of such
Transfer Period.
"Excess Amount": at any time, with respect to any
Obligor, the excess (if any) of (a) the aggregate
outstanding Adjusted Principal Amount of the Eligible
Receivables owing by such Obligor over (b) the Applicable
Obligor Percentage of the aggregate outstanding Adjusted
Principal Amount of all Eligible Receivables; provided, that
the Excess Amount of each Obligor shall be deemed to be zero
until the first Settlement Date subsequent to the 270th day
after the Effective Date.
"Excess Application Amount": as defined in subsection
2.12(c) of the Receivables Transfer Agreement.
"Facility Amount": $150,000,000.
"Financial Officer": of any corporation, the chief
financial officer, Senior Vice President-Finance and
Accounting, Vice President-Finance, Controller, or Treasurer
of such corporation.
"Fixed Tranche": a portion of the Net Investment on
which the rate at which the Purchase Discount Amount accrues
is based upon the Eurodollar Rate.
<PAGE>
13
"Floating Tranche": that portion of the Net Investment
not allocated to a Fixed Tranche and the Purchase Discount
Amount in respect of which is based upon the ABR.
"Force Majeure Delay": with respect to any Servicer or
the Master Servicer, any cause or event which is beyond the
control and not due to the negligence of such Servicer or
the Master Servicer, as the case may be, which delays,
prevents or prohibits such Person's delivery of Seller Daily
Reports or Daily Reports and/or Seller Settlement Statements
or Settlement Statements, as the case may be, including,
without limitation, computer, electrical and mechanical
failures, acts of God or the elements and fire; provided
that no such cause or event shall be deemed to be a Force
Majeure Delay unless the affected Servicer or Master
Servicer shall have given the Company and the Administrative
Agent written notice thereof as soon as possible after the
beginning of such delay.
"GAAP": generally accepted accounting principles in
the United States of America as in effect from time to time.
"Governmental Authority": any international, Federal,
state, regional, local or foreign court or governmental
agency, authority, instrumentality or regulatory body.
"Guarantee": of or by any Person, shall mean (a) any
obligation, contingent or otherwise, of such Person guaran-
teeing or having the economic effect of guaranteeing any
Indebtedness of any other Person (the "primary obligor") in
any manner, whether directly or indirectly, and including
any obligation of such Person, direct or indirect, (i) to
purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness (whether arising by virtue
of partnership arrangements, by agreement to keep well, to
purchase assets, goods, securities or services, to take-
or-pay or otherwise) or to purchase (or to advance or supply
funds for the purchase of) any security for the payment of
such Indebtedness, (ii) to purchase property, securities or
services for the purpose of assuring the owner of such
Indebtedness of the payment of such Indebtedness, (iii) to
maintain working capital, equity capital or other financial
statement conditions or liquidity of the primary obligor so
as to enable the primary obligor to pay such Indebtedness or
(iv) entered into for the purpose of assuring in any other
manner the holders of such Indebtedness of the payment
thereof or to protect such holders against loss in respect
thereof (in whole or in part), or (b) any Lien on any assets
of such Person securing any Indebtedness of any other
Person, whether or not such Indebtedness is assumed by such
Person; provided, however, that the term Guarantee shall not
include endorsements for collection or deposit, in either
case in the ordinary course of business.
"Holdings": Collins & Aikman Corporation, a Delaware
corporation.
"Incipient Purchase Termination Event": any condition
or act specified in Article VII of the Receivables Sale
Agreement that, with the giving of notice or the lapse of
time or both, would become a Purchase Termination Event.
<PAGE>
14
"Increase in Net Investment": for any applicable
Closing Date, the Dollar amount by which the Net Investment
of the Banks is being increased on such Closing Date.
"Indebtedness": of any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services (other than
current trade liabilities incurred in the ordinary course of
business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which
is evidenced by a note, bond, debenture or similar
instrument, (c) all Capital Lease Obligations of such
Person, (d) all obligations of such Person in respect of
acceptances issued or created for the account of such
Person, (e) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on any
property owned or acquired by such Person even though such
Person has not assumed or otherwise become liable for the
payment thereof, (f) all obligations of such Person in
respect of interest rate protection agreements, foreign
currency exchange agreements or other interest or exchange
rate hedging arrangements and (g) all Guarantees by such
Person of Indebtedness of others. The Indebtedness of any
Person shall include the Indebtedness of any partnership in
which such Person is a general partner; provided that, if
the sole asset of such Person is its general partnership
interest in such partnership, the amount of such
Indebtedness shall be deemed equal to the value of such
general partnership interest and the amount of any
Indebtedness in respect of any Guarantee of such partnership
Indebtedness shall be limited to the same extent as such
Guarantee may be limited.
"Indemnified Liabilities": as defined in subsection
9.3 of the Receivables Sale Agreement.
"Indemnitee": as defined in subsection 11.3 of the
Receivables Transfer Agreement.
"Intermediate Lockbox Account": as defined in
subsection 12.1(b) of the Receivables Transfer Agreement.
"Invested Percentage": a fraction the numerator of
which is Net Investment and the denominator of which is
Aggregate Eligible Receivables.
"Investment Earnings": as defined in subsection
2.7(a)(iii) of the Receivables Transfer Agreement.
"Japanese Obligor": any of Fuji Heavy Industries,
Inc., Toyota Motor Co., Honda Motor Co., Ltd., Toyota Tsusho
Corp., or Kotobakiya Fronte Co., Inc.
"Lien": with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, encumbrance, charge or security
interest in or on such asset, (b) the interest of a vendor
or a lessor under any conditional sale agreement, capital
lease or title retention
<PAGE>
15
agreement relating to such asset and (c) in the case of
securities, any purchase option, call or similar right of a
third party with respect to such securities.
"Lockbox Account" means each blocked deposit account
identified by number and name of bank on Schedule 3 to the
Receivables Transfer Agreement, including the box identified
by location and number on such Schedule 3, and any
replacements therefor or additions thereto which are
acceptable to the Administrative Agent.
"Lockbox Agreement" means a lockbox agreement in form
and substance satisfactory to the Administrative Agent, as
the same may be amended, supplemented or otherwise modified
from time to time in accordance with subsection 8.14 of the
Receivables Transfer Agreement.
"Lockbox Bank" means each bank listed on Schedule 3,
and any replacements therefor or additions thereto agreed to
in writing by the Administrative Agent.
"Loss Reserve Ratio": as of any day thereafter, the
percentage equivalent, determined pursuant to the most
recent Settlement Statement, of the product of:
(i) the highest Average Default Ratio during the period
of twelve consecutive fiscal months ended on the last day of
the most recently ended Settlement Period; and
(ii) (A) the aggregate Adjusted Principal Amount of
Receivables generated by the Sellers during the 3.5
preceding Settlement Periods divided by the outstanding
Adjusted Principal Amount of Eligible Receivables as of the
last day of the preceding Settlement Period; and
(iii) 2.0.
"Loss to Liquidation Ratio": a ratio (expressed as a
percentage), as of the last day of any fiscal month, equal
to (a) the difference, if any, between (i) the aggregate
reduction in the outstanding Adjusted Principal Amount of
all Receivables as a result of Write-Offs during the
immediately preceding twelve-fiscal-month period and (ii)
the aggregate amount of Recoveries during such twelve-
fiscal-month period, divided by (b) four times the aggregate
amount of Collections during the immediately preceding
three-fiscal-month period.
"Margin Stock": as defined in Regulation U.
"Master Servicer": C&A Products, in its capacity as
Master Servicer under the Receivables Transfer Agreement.
"Material Adverse Effect": (a) with respect to the
Master Servicer, any Servicer or any Seller, (i) a materi-
ally adverse effect on the business, assets, properties,
operations or financial condition of C&A Products and its
Subsidiaries, taken as a whole, (ii) a material impairment
of the ability of the Master Servicer, any
<PAGE>
16
Servicer or any Seller to perform any of its material
obligations under any Transaction Document to which it is or
will be a party or to consummate the Transactions or the Sale
Transactions or (iii) an impairment of the validity or
enforceability of, or a material impairment of the rights,
remedies or benefits available to the Administrative Agent or
the Banks under, any Transaction Document or (b) with respect
to the Company, (i) a materially adverse effect on the
business, assets, properties, operations or financial condition
of the Company, (ii) a material impairment of the ability of the
Company to perform any of its material obligations under any
Transaction Document to which it is or will be a party or to
consummate the Transactions or the Sale Transactions or
(iii) an impairment of the validity or enforceability of, or
a material impairment of the rights, remedies or benefits
available to the Administrative Agent or the Banks under,
any Transaction Document.
"Maximum Commitment": $150,000,000, as such amount may
be reduced pursuant to subsection 2.10 of the Receivables
Transfer Agreement.
"Maximum Invested Percentage": at a particular date,
100% minus the greater of (a) 17% and (b) the Required
Reserve Percentage.
"Maximum Transfer Amount": at a particular date, the
lesser of (a) the Maximum Commitment at such date and (b)
the product of (i) the Maximum Invested Percentage at such
date and (ii) Aggregate Eligible Receivables (which, for
purposes of this definition, shall not include a Seller from
which the Company has ceased purchasing Receivables pursuant
to subsection 9.15 of the Receivables Sale Agreement and
shall not include, from the date which is 30 days after the
date of any such termination, a Seller with respect to which
the Company has terminated its obligation to acquire
Receivables pursuant to Article VII of the Receivables Sale
Agreement) as of the close of business on the Business Day
preceding such date.
"Monthly Servicing Fee": for each Settlement Period,
the product of (a) the number of days in such period, (b) 1%
and (c) the average daily principal balance of Purchased
Receivables during such period divided by 365.
"Moody's": Moody's Investors Service, Inc. and its
successors.
"Multiemployer Plan": with respect to any Person, a
multiemployer plan as defined in Section 4001(a)(3) of ERISA
to which such Person or any ERISA Affiliate of such Person
(other than one considered an ERISA Affiliate only pursuant
to subsection (m) or (o) of Section 414 of the Code) is
making or accruing an obligation to make contributions, or
has within any of the preceding five plan years made or
accrued an obligation to make contributions.
"Net Investment": at any time, the excess, if any, of
(a) the aggregate of the amount paid by the Banks pursuant
to subsections 2.2 and 2.3 of the Receivables Transfer
Agreement over (b) the aggregate amount of Collections
distributed to the
<PAGE>
17
Banks in repayment of the Net Investment
pursuant to the Receivables Transfer Agreement.
"Obligor": with respect to any Receivable, the Person
or Persons obligated to make payments with respect to such
Receivable, including any guarantor thereof.
"Overallotment Option": as defined in the Credit
Agreement.
"Partial Servicing Transfer": as defined in subsection
12.2(d) of the Receivables Transfer Agreement.
"Participants": as defined in subsection 11.4(b) of
the Receivables Transfer Agreement.
"Participating Interest": as defined in subsection 2.2
of the Receivables Transfer Agreement.
"Payment Date": as defined in subsection 2.3(a) of the
Receivables Sale Agreement.
"PBGC": the Pension Benefit Guaranty Corporation
referred to and defined in ERISA (or any successor).
"Peak Dilution Ratio": with respect to any Settlement
Period, a fraction (a) the numerator of which is the
aggregate amount of Dilutive Credits which are incurred with
respect to the Receivables during the two-month period ended
on the last day of such Settlement Period and (b) the
denominator of which is the aggregate Adjusted Principal
Amount of Receivables generated by the Sellers during the
two-month period ended on the last day of such Settlement
Period.
"Person": any natural person, corporation, business
trust, joint venture, association, company, partnership or
government, or any agency or political subdivision thereof.
"Plan": with respect to any Person, any pension plan
(other than a Multiemployer Plan) subject to the provisions
of Title IV of ERISA or Section 412 of the Code which is
maintained for employees of such Person or any ERISA
Affiliate of such Person.
"Pledge Agreement": the Pledge Agreement referred to
in the Credit Agreement.
"Policies": with respect to any Seller which has set
forth its credit and collection policies in writing, such
written credit and collection policies as they have been
applied by such Seller in the ordinary course of its
business prior to the Effective Date and, with respect to
any Seller which has not set forth its credit and collection
<PAGE>
18
policies in writing, its credit and collection policies as
in effect and applied by such Seller in the ordinary course
of its business prior to the Effective Date, in each case as
the same may be amended, supplemented or otherwise modified
from time to time in accordance with the Receivables
Transfer Agreement and the Receivables Sale Agreement.
"Pooled Property": as defined in subsection 2.1(a) of
the Receivables Transfer Agreement.
"Potential Termination Event": any Termination Event
and any event or condition that upon notice, lapse of time
or both would constitute a Termination Event.
"Preliminary Prospectus": the preliminary prospectus
of Holdings dated June 2, 1994, filed with the Securities
and Exchange Commission in connection with the underwritten
public offering of shares of common stock, par value $.01
per share, of Holdings, as amended or supplemented from time
to time.
"Principal Amount": with respect to any Receivable,
the amount due thereunder (expressed in U.S. Dollars or
Canadian Dollars, as the case may be), net of any available
prompt payment discount, volume discount or other
promotional discount or rebate.
"Purchase Discount Amount": a purchase discount which
(a) accrues to the Banks in respect of the Participating
Interest; (b) is payable in arrears on each Purchase
Discount Amount Payment Date (both prior to and after the
commencement of the Amortization Period) occurring during
the period commencing on the date of the first transfer and
assignment of the Participating Interest in Receivables and
Related Property pursuant to subsection 2.3(a) of the
Receivables Transfer Agreement and ending on the date on
which the Net Investment is equal to zero and the
Commitments of the Banks have terminated; and (c) is
calculated at a rate per annum equal to: (i) in respect of
that portion of the Net Investment allocated to any Fixed
Tranche, the sum of the Eurodollar Rate with respect thereto
plus the Applicable Eurodollar Margin and (ii) in respect of
that portion of the Net Investment not allocated to any
Fixed Tranche, the sum of the ABR in effect from time to
time during the period for which payment is made plus the
Applicable ABR Margin.
"Purchase Discount Amount Payment Date": (a) as to the
Floating Tranche, each Settlement Date, (b) as to any Fixed
Tranche having a Transfer Period of one, two or three
months, the last day of such Transfer Period, (c) as to any
Fixed Tranche having a Transfer Period longer than three
months, each day which is three months, or a whole multiple
thereof, after the first day of such Transfer Period, and
the last day of such Transfer Period and (d) as to any
Tranche, any date on which the principal portion of the Net
Investment represented thereby is paid, prepaid or is
otherwise due (by mandatory prepayment, acceleration or
otherwise).
<PAGE>
19
"Purchase Price": as defined in subsection 2.2 of the
Receivables Sale Agreement.
"Purchase Termination Event": as defined in Article
VII of the Receivables Sale Agreement.
"Purchased Receivable": any Receivable sold to the
Company by any Seller pursuant to, and in accordance with
the terms of, the Receivables Sale Agreement and not resold
to such Seller pursuant to subsection 2.1(b) or 2.6 thereof.
"Rating Agencies": Moody's and S&P.
"Recapitalization Transactions": as defined in the
Credit Agreement.
"Receivables": the indebtedness and payment
obligations of any Person to a Seller arising from a sale of
merchandise or services by such Seller, including, without
limitation, any right to payment for goods sold or leased or
for services rendered, and including the right of payment of
any interest, sales taxes, finance charges, returned check
or late charges and other obligations of such Person with
respect thereto.
"Receivables Sale Agreement": the Receivables Sale
Agreement, dated as of July 13, 1994, among the Sellers, the
Master Servicer and the Company, as buyer, as amended,
supplemented or otherwise modified from time to time.
"Receivables Transfer Agreement": the Receivables
Transfer and Servicing Agreement, dated as of July 13, 1994,
among the Company, as seller, the Master Servicer, the
Servicers, the Banks and the Administrative Agent, as
amended, supplemented or otherwise modified from time to
time.
"Recoveries": amounts collected in respect of
Defaulted Receivables.
"Reduction Date": as defined in subsection 2.11(b) of
the Receivables Transfer Agreement.
"Register": as defined in subsection 11.4(e) of the
Receivables Transfer Agreement.
"Regulation G, T, U or X": Regulation G, T, U or X,
respectively, of the Board as from time to time in effect
and all official rulings and interpretations thereunder or
thereof.
"Related Property": as defined in subsection
2.1(a)(iv) of the Receivables Transfer Agreement.
"Replacement Facility": as defined in subsection 12.6
of the Receivables Transfer Agreement.
<PAGE>
20
"Reportable Event": any reportable event as defined in
Section 4043(b) of ERISA or the regulations issued
thereunder with respect to a Plan (other than a Plan
maintained by an ERISA Affiliate which is considered an
ERISA Affiliate only pursuant to subsection (m) or (o) of
Section 414 of the Code).
"Reporting Day": as defined in subsection 12.5 of the
Receivables Transfer Agreement.
"Repurchase Amount": as defined in subsection 2.6 of
the Receivables Sale Agreement.
"Repurchase Event": as defined in subsection 2.6 of
the Receivables Sale Agreement.
"Required Banks": Banks having Commitment Percentages
the sum of which, in the aggregate, is equal to or exceeds
51%.
"Required Reserve Percentage": as of any day, the sum,
expressed as a percentage, of (a) the Loss Reserve Ratio,
(b) the Dilution Reserve Ratio, (c) the Yield Reserve Ratio
and (d) the Servicing Reserve Ratio.
"Requirement of Law": as to any Person, any law,
treaty, rule or regulation or determination of an arbitrator
or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is
subject.
"Responsible Officer": with respect to any Person, the
chief executive officer, the president, any senior vice
president or any vice president of such Person or, with
respect to financial matters, the chief financial officer,
Senior Vice President-Finance and Accounting, Vice
President-Finance, Controller, or Treasurer of such Person.
"Restricted Payments": as defined in subsection 8.7 of
the Receivables Transfer Agreement.
"Retransfer Payment": as defined in subsection 5.3(b)
of the Receivables Transfer Agreement.
"S&P": Standard & Poor's Ratings Group and its
successors.
"Sale Documents": the Receivables Sale Agreement, the
Subordinated Notes and the Subordination Agreement.
"Sale Termination Date": as defined in subsection
9.15(b) of the Receivables Sale Agreement.
<PAGE>
21
"Sale Transactions": as defined in subsection 4.1(b)
of the Receivables Sale Agreement.
"Scheduled Termination Date": the seventh anniversary
of the Effective Date.
"Seller Addition Date": as defined in subsection 3.4
of the Receivables Sale Agreement.
"Seller Adjustment Payment": as defined in subsection
2.5 of the Receivables Sale Agreement.
"Seller Daily Report": as defined in subsection
12.5(a) of the Receivables Transfer Agreement.
"Seller Repurchase Payment": as defined in subsection
2.6 of the Receivables Sale Agreement.
"Seller Settlement Statement": as defined in
subsection 12.5(b) of the Receivables Transfer Agreement.
"Sellers": as defined in the preamble to the
Receivables Sale Agreement.
"Servicer Default": any Servicer Event of Default and
any event or condition that upon notice, lapse of time or
both would constitute a Servicer Event of Default.
"Servicer Event of Default": as defined in subsection
12.12 of the Receivables Transfer Agreement.
"Servicer Transfer Payment": as defined in subsection
12.7 of the Receivables Transfer Agreement.
"Servicers": each Seller party to the Receivables
Transfer Agreement in its capacity as a servicer (excluding
any such Sellers which have been terminated as Servicers in
accordance with the provisions of the Receivables Transfer
Agreement) together with any other Person which has been
added as a Servicer in accordance with the provisions of the
Receivables Transfer Agreement, in their capacities as
servicers under the Receivables Transfer Agreement.
"Servicing Reserve Percentage": as of any day, 0.25%.
"Servicing Reserve Ratio": as of any day, (a) 2.0
times (b) the Servicing Reserve Percentage.
"Settlement Date": with respect to any fiscal month,
the day that is 22 calendar days following the last day of
such fiscal month (or if such 22nd calendar day is not a
Business Day, the next succeeding Business Day).
<PAGE>
22
"Settlement Period": each fiscal month.
"Settlement Statement": as defined in subsection
12.5(b) of the Receivables Transfer Agreement.
"Settlement Statement Date": with respect to any
fiscal month for which a Settlement Statement is required to
be prepared, the day that is 20 calendar days following the
last day of such fiscal month (or, if such 20th calendar day
is not a Business Day, the next succeeding Business Day).
"Single Employer Plan": any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"Specified Bankruptcy Opinion Provisions": the
provisions contained in the legal opinion delivered pursuant
to subsection 6.1(b)(i) of the Receivables Transfer
Agreement (and substantially in the form of Exhibit D-2
thereto) under the headings "Transactions", "Corporate
Procedures and Financial Effect" and "Disclosure of the
Transactions".
"Statutory Reserves": a fraction (expressed as a
decimal), the numerator of which is the number one and the
denominator of which is the number one minus the aggregate
of the maximum reserve percentages (including any marginal,
special, emergency or supplemental reserves) expressed as a
decimal established by the Board and any other banking
authority to which the Administrative Agent is subject (a)
with respect to the Base CD Rate (as such term is used in
the definition of "ABR"), for new negotiable nonpersonal
time deposits in dollars of over $100,000 with maturities
approximately equal to three months, and (b) with respect to
the Eurodollar Rate, for Eurocurrency Liabilities (as
defined in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such
Regulation D. Fixed Tranches shall be deemed to constitute
Eurocurrency Liabilities and to be subject to such reserve
requirements without benefit of or credit for proration,
exemptions or offsets which may be available from time to
time to any Bank under such Regulation D. Statutory
Reserves shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
"Subordinated Notes": as defined in subsection 8.1 of
the Receivables Sale Agreement.
"Subordination Agreement": the Subordination
Agreement, dated as of July 13, 1994 among the Sellers, the
Master Servicer, the Company and the Administrative Agent,
as amended, supplemented or otherwise modified from time to
time.
"Subsequent Financing Party": as defined in subsection
9.4 of the Receivables Sale Agreement.
<PAGE>
23
"Subsidiary": with respect to any Person (herein
referred to as the "parent"), any corporation, partnership,
association or other business entity (a) of which securities
or other ownership interests representing more than 50% of
the equity or more than 50% of the ordinary voting power or
more than 50% of the general partnership interests are, at
the time any determination is being made, owned, controlled
or held, or (b) which is, at the time any determination is
made, otherwise Controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent.
"Substitute Servicer": as defined in subsection
12.2(d) of the Receivables Transfer Agreement.
"Termination Event": as defined in Article IX of the
Receivables Transfer Agreement.
"Tranches": the collective reference to the Floating
Tranche and the Fixed Tranches.
"Transaction Documents": the Receivables Transfer
Agreement, the Receivables Sale Agreement, the Subordination
Agreement and the Lockbox Agreements.
"Transaction Parties": the Company, the Master
Servicer, the Sellers and the Servicers.
"Transactions": as defined in subsection 5.1(b) of the
Receivables Transfer Agreement.
"Transfer Notice": as defined in subsection 12.2(d) of
the Receivables Transfer Agreement.
"Transfer Period": with respect to any portion of the
Net Investment allocated to a Fixed Tranche:
(a) initially, the period commencing on the
Closing Date or conversion date, as the case may be,
with respect to such Fixed Tranche and ending one, two,
three or six months thereafter, as selected by the
Company in its notice of Closing Date or notice of
conversion, as the case may be, given with respect
thereto; and
(b) thereafter, each period commencing on the
last day of the next preceding Transfer Period
applicable to such Fixed Tranche and ending one, two,
three or six months thereafter, as selected by the
Company by irrevocable notice to the Administrative
Agent not less than three Business Days prior to the
last day of the then current Transfer Period with
respect thereto;
<PAGE>
24
provided that, all of the foregoing provisions relating to
Transfer Periods are subject to the following:
(1) if any Transfer Period would otherwise end on
a day that is not a Business Day, such Transfer Period
shall be extended to the next succeeding Business Day
unless the result of such extension would be to carry
such Transfer Period into another calendar month in
which event such Transfer Period shall end on the
immediately preceding Business Day;
(2) any Transfer Period that would otherwise
extend beyond the Scheduled Termination Date shall end
on the Scheduled Termination Date; and
(3) any Transfer Period that begins on the last
Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the
calendar month at the end of such Transfer Period)
shall end on the last Business Day of a calendar month.
"Transferee": as defined in subsection 11.4(g) of the
Receivables Transfer Agreement.
"Transferred Agreement": as defined in subsection
2.1(b) of the Receivables Transfer Agreement.
"Transferring Servicer": as defined in subsection
12.2(d) of the Receivables Transfer Agreement.
"U.S. Concentration Account": as defined in subsection
2.7(a) of the Receivables Transfer Agreement.
"U.S. Dollar Subordinated Note": as defined in
subsection 8.1 of the Receivables Sale Agreement.
"Withdrawal Liability": liability to a Multiemployer
Plan as a result of a complete or partial withdrawal from
such Multiemployer Plan, as such terms are defined in Part I
of Subtitle E of Title IV of ERISA.
"Write-Offs": with respect to any Seller, for any
period, the aggregate amount of Receivables that are written
off during such period as uncollectible in accordance with
the Company Policies.
"Yield Reserve Ratio": as of any day, the amount as of
such day obtained by dividing (a) the product of (i) 1.75,
(ii) Days Sales Outstanding as of the Settlement Date
immediately preceding such day and (iii) the Discount Rate
in effect as of the Settlement Date immediately preceding
such day by (b) 360.