Receivables Sale Agreement - Collins & Aikman Products Co., Ack-Ti-Lining Inc., WCA Canada Inc., Imperial Wallcoverings (Canada) Inc., Imperial Wallcoverings Inc., The Akro Corp., Dura Acquisition Corp., C&A Products and Carcorp Inc.
EXECUTION COPY
CARCORP, INC.
RECEIVABLES SALE AGREEMENT
Dated as of July 13, 1994
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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
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(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
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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
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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
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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.
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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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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;
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(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.
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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
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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
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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.
<PAGE>
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;
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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: Paul W. Meeks
Title: Vice President & Treasurer
CARCORP, INC.
By: Mark O. Remissong
Title: President
The Sellers:
COLLINS & AIKMAN PRODUCTS CO.
By: Paul W. Meeks
Title: Vice President & Treasurer
ACK-TI-LINING, INC.
By: Paul W. Meeks
Title: Vice President & Treasurer
<PAGE>
33
WCA CANADA, INC.
By: Paul W. Meeks
Title: Assistant Treasurer
IMPERIAL WALLCOVERINGS (CANADA), INC.
By: Paul W. Meeks
Title: Vice President & Treasurer
IMPERIAL WALLCOVERINGS, INC.
By: Paul W. Meeks
Title: Vice President & Treasurer
THE AKRO CORPORATION
By: Paul W. Meeks
Title: Vice President & Treasurer
DURA ACQUISITION CORP.
By: Paul W. Meeks
Title: Vice President & Treasurer
<PAGE>
SCHEDULE 1
State of
Incorporation
Seller Location of Chief Executive Office Office Where Records are Kept
Ack-Ti-Lining, Inc. New York 210 Madison Avenue, 6th Floor, New 701 McCullough Drive, Charlotte, NC
York, NY 10016 28262
The Akro Corporation Delaware 1212 7th Street SW, P.O. Box 8650, 701 McCullough Drive, Charlotte, NC
Canton, OH 44711 28262
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 2
LOCKBOXES
<PAGE>
SCHEDULE 3
DISCOUNTED PERCENTAGE
The Discounted Percentage applicable to the Receivables purchased on any
date from any Seller shall equal the percentage obtained from the
following formula:
100% - (A + B + C + D)
all determined by the Company as of the related Payment Date,
Where
A = Adjusted Loss Reserve Percentage, which as of such Payment Date
will equal the ratio obtained by dividing (a) Charge-Offs (net of
recoveries in respect of Charge-Offs) with respect to such Seller
during the twelve-fiscal-month period immediately preceding the
Settlement Date most recently preceding such Payment Date by (b)
four times the aggregate amount of Collections during the three-
fiscal-month period immediately preceding the Settlement Date most
recently preceding such Payment Date with respect to Receivables
originated by such Seller.
B = Adjusted Yield Reserve Percentage, which as of such Payment Date
will equal the amount obtained by dividing (a) the product of (i)
1.5, (ii) Days Sales Outstanding and (iii) the Adjusted Discount
Rate by (b) 360.
C = Servicing Reserve Percentage.
D = Processing Expense Reserve Percentage, which will equal 1/2% and
reflects the cost of the Company's overhead, including costs of
processing the purchase of Receivables and other normal operating
costs and a reasonable profit margin.
None of the elements of the above-referenced formula, in respect of any
purchase of Receivables, will be adjusted following the related Payment
Date.
"Adjusted Discount Rate" means as of such Payment Date the sum of (a)
the weighted average of (i) the weighted average rate of interest
payable to the Banks or any Subsequent Financing Party with respect to
the outstanding Participating Interest and (ii) the rate of interest
payable to the Sellers with respect to the outstanding principal amount
of the Subordinated Notes as such rates are in effect as at the end of
the fiscal month immediately preceding the Settlement Date most recent
to such Payment Date and (iii) an assumed return on the shareholders'
equity in the Company at a rate to be determined from time to time by
the Master Servicer and (b) the amount obtained by dividing (i) the
aggregate amount of fees (other than the Monthly Servicing Fee) accrued
with respect to the Receivables Transfer Agreement during the fiscal
month immediately preceding the Settlement Date most recent to such
Payment Date by (ii) the average outstanding Adjusted Principal Amount
of the Receivables during such fiscal month.
With respect to each calculation set forth above with respect to a
Settlement Date, such calculation as calculated on each Settlement
Statement Date and included in the applicable Settlement Statement shall
remain in effect from and including the related Settlement Date to but
excluding the following Statement Date.
<PAGE>
SCHEDULE 4
TAX RETURNS
(i) Material Claims
The Internal Revenue Service has proposed adjustments which would disallow
approximately $177 million of the approximately $434 million of net operating
loss carryforwards at January 29, 1994.
The California Franchise Tax Board has proposed a tax assessment of
approximately $12 million for fiscal year 1987. The interest on this
assessment is estimated to be $9 million.
(ii) Statute Extensions
Taxing Type of Extension
Authority Tax Entity Period Date
Federal Income Collins & Aikman Holdings II Corp. & Subs. 1/89 - 1/90 06/30/95
Federal Income Collins & Aikman Holdings II Corp. & Subs. 1/91 12/31/95
Federal Income Collins & Aikman Group, Inc. & Subs. 1/89 - 4/89 06/30/95
Federal Income Collins & Aikman Export Corporation 1/91 12/31/95
Federal Income Collins & Aikman Export Corporation 1/89 - 1/90 06/30/95
Federal Withholding Collins & Aikman Group, Inc. & Subs. 12/88 -12/90 06/30/95
California Income Collins & Aikman Group, Inc. & Subs. 1/88 11/15/95
California Unemployment Collins & Aikman Group, Inc. 9/90 - 3/91 07/31/94
Illinois Sales/Use Collins & Aikman Corporation 1/91 - 2/94 12/31/94
NY City Income Collins & Aikman Group, Inc. 1/86 - 1/89 12/31/94
NY City Income Greeff Fabrics, Inc. 1/90 - 1/91 12/31/94
(iii) Tax Examinations
Taxing Type of
Authority Tax Entity Period Under Exam
Federal Income Collins & Aikman Holdings II & Subs. 1/89 - 1/92
Federal Income Collins & Aikman Group, Inc. & Subs. 1/89 - 4/89
Federal Income Collins & Aikman Export Corporation 1/89 - 1/91
Canada Customs/GST Imperial Wallcoverings (Canada) Inc. 6/91 - 6/94
California Income Collins & Aikman Group, Inc. & Subs. 1/88
California Unemployment Collins & Aikman Group, Inc. 9/90 - 12/93
Florida Sales/Use Imperial Wallcoverings, Inc. 3/88 - 2/93
Illinois Sales/Use Collins & Aikman Corporation 1/91 - 2/94
<PAGE>
2
Taxing Type of
Authority Tax Entity Period Under Exam
Massachusetts Income Collins & Aikman Group, Inc. 1/89 - 1/90
Massachusetts Income Collins & Aikman Group, Inc. 1/83
Massachusetts Income Wickes Manufacturing Co. 1/90
Mecklenburg
County (NC) Property Collins & Aikman Group, Inc. 1/92 - 12/93
New York Income Collins & Aikman Corporation 1/88 - 1/91
New York Income Wickes Manufacturing Company 1/88 - 1/91
New York City Income Collins & Aikman Group, Inc. 1/86 - 1/89
New York City Income Greeff Fabrics, Inc. 1/90 - 1/91
New York City Income Collins & Aikman Group, Inc. 4/89 - 1/92
North Carolina Income Collins & Aikman Corporation
and Collins & Aikman Lease Co. 1/91 - 1/93
Ohio Income Collins & Aikman Group, Inc. 1/91 - 1/92
Ohio Sales/Use Imperial Wallcoverings, Inc. 2/90 - 1/93
Philadelphia Income Collins & Aikman Corporation 1/88 - 1/93
Texas Sales/Use Collins & Aikman Group, Inc. 1/91 - 4/94
Texas Sales/Use Collins & Aikman Corporation 7/88 - 6/92
(iv) Pending Issues
The Internal Revenue Service has proposed adjustments which would disallow
approximately $177 million of the approximately $434 million of net operating
loss carryforwards at January 29, 1994.
The California Franchise Tax Board has proposed a tax assessment of
approximately $12 million for fiscal year 1987. The interest on this
assessment is estimated to be $9 million.
<PAGE>
EXHIBIT A TO THE
RECEIVABLES SALE AGREEMENT
[FORM OF U.S. DOLLAR SUBORDINATED NOTE]
New York, New York
July __, 1994
CARCORP, INC., a Delaware corporation (the "Company"),
hereby promises to pay to the order of Collins & Aikman Products
Co., a Delaware corporation ("C&A Products"), and to each of the
subsidiaries of C&A Products which is from time to time a party
to the Receivables Sale Agreement referred to below (together
with C&A Products, collectively, the "Sellers"), the principal
amount of this Subordinated Note, determined as described below,
together with interest thereon at a rate per annum equal to the
ABR (as defined in the Receivables Sale Agreement) in lawful
money of the United States of America. Capitalized terms used
herein but not defined herein shall have the meanings assigned to
such terms in the Receivables Sale Agreement, dated as of July
13, 1994, among the Company, the Sellers and C&A Products, as
Master Servicer (as amended, supplemented or otherwise modified
from time to time, the "Receivables Sale Agreement"). This
Subordinated Note is the U.S. Dollar Subordinated Note referred
to in the Receivables Sale Agreement.
The aggregate principal amount of this Subordinated
Note at any time shall be equal to the difference between (a) the
aggregate principal amount on the issuance hereof and each
addition to the principal amount of this Subordinated Note
pursuant to the terms of subsection 2.3 of the Receivables Sale
Agreement or pursuant to the proviso contained in the penultimate
sentence of this paragraph minus (b) the aggregate amount of all
payments made in respect of the principal of this Subordinated
Note, in each case, as recorded on Schedule 1 annexed to and
constituting a part of this Subordinated Note. All payments made
in respect of this Subordinated Note shall be allocated among the
Sellers by the Master Servicer. Principal not prepaid pursuant
to the terms of the Receivables Sale Agreement and of the other
Sale Documents shall be payable on the maturity date thereof (the
"Maturity Date"). Payments of interest on this Subordinated Note
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 (or, in the case of the first Settlement Date,
as of the date on which this Subordinated Note is issued) and on
the Maturity Date by wire transfer of immediately available funds
to such account of each Seller as such Seller may designate in
writing, provided, however, that accrued interest hereon which is
not so paid may instead be added to the principal amount hereof.
Notwithstanding the foregoing, no payments of interest or
principal may be made under this Subordinated Note at any time
<PAGE>
2
except as permitted under the Subordination Agreement referred to
below.
Default in the payment of principal or interest under
this Subordinated Note shall not constitute a default or event of
default hereunder or a Purchase Termination Event under the
Receivables Sale Agreement or a Termination Event under the
Receivables Transfer Agreement.
The indebtedness evidenced by this instrument is
subordinated to the prior payment in full of the Senior
Obligations pursuant to, and as defined in, the Subordination
Agreement, dated as of July 13, 1994, among the maker hereof, the
payees named herein and certain other parties. Each holder of
this Subordinated Note agrees that it shall have no right to be
paid, and shall have no claim to payment, except in accordance
with, and subject to the terms of, subsection 2.7 of the
Receivables Transfer Agreement.
The Company hereby waives diligence, presentment,
demand, protest and notice of any kind whatsoever. The failure
of any holder to exercise any of its rights hereunder in any
particular instance shall not constitute a waiver thereof in that
or any subsequent instance.
Neither this Subordinated Note, nor any right of any
Seller to receive payments hereunder, shall be assigned,
transferred, exchanged, pledged, hypothecated, participated or
otherwise conveyed.
THIS SUBORDINATED NOTE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
CARCORP, INC.
By:_________________________
Title:
<PAGE>
Schedule 1 to
Subordinated Note
SUBORDINATED LOANS AND PAYMENTS OF PRINCIPAL
Amount of Unpaid
Seller (if Amount of Principal Principal Notation
Date specified) Loans Repaid Balance Made By
____ __________ _________ _________ ________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ ________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
<PAGE>
EXHIBIT B TO THE
RECEIVABLES SALE AGREEMENT
[FORM OF CANADIAN DOLLAR SUBORDINATED NOTE]
New York, New York
July __, 1994
CARCORP, INC., a Delaware corporation (the "Company"),
hereby promises to pay to the order of Collins & Aikman Products
Co., a Delaware corporation ("C&A Products"), and to each of the
subsidiaries of C&A Products which is from time to time a party
to the Receivables Sale Agreement referred to below (together
with C&A Products, collectively, the "Sellers"), the principal
amount of this Subordinated Note, determined as described below,
together with interest thereon at a rate per annum equal to the
ABR (as defined in the Receivables Sale Agreement) in lawful
money of Canada. Capitalized terms used herein but not defined
herein shall have the meanings assigned to such terms in the
Receivables Sale Agreement, dated as of July 13, 1994, among the
Company, the Sellers and C&A Products, as Master Servicer (as
amended, supplemented or otherwise modified from time to time,
the "Receivables Sale Agreement"). This Subordinated Note is the
Canadian Dollar Subordinated Note referred to in the Receivables
Sale Agreement.
The aggregate principal amount of this Subordinated
Note at any time shall be equal to the difference between (a) the
aggregate principal amount on the issuance hereof and each
addition to the principal amount of this Subordinated Note
pursuant to the terms of subsection 2.3 of the Receivables Sale
Agreement or pursuant to the proviso contained in the penultimate
sentence of this paragraph minus (b) the aggregate amount of all
payments made in respect of the principal of this Subordinated
Note, in each case, as recorded on Schedule 1 annexed to and
constituting a part of this Subordinated Note. All payments made
in respect of this Subordinated Note shall be allocated among the
Sellers by the Master Servicer. Principal not prepaid pursuant
to the terms of the Receivables Sale Agreement and of the other
Sale Documents shall be payable on the maturity date thereof (the
"Maturity Date"). Payments of interest on this Subordinated Note
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 (or, in the case of the first Settlement Date,
as of the date on which this Subordinated Note is issued) and on
the Maturity Date by wire transfer of immediately available funds
to such account of each Seller as such Seller may designate in
writing, provided, however, that accrued interest hereon which is
not so paid may instead be added to the principal amount hereof.
Notwithstanding the foregoing, no payments of interest or
principal may be made under this Subordinated Note at any time
<PAGE>
2
except as permitted under the Subordination Agreement referred to
below.
Default in the payment of principal or interest under
this Subordinated Note shall not constitute a default or event of
default hereunder or a Purchase Termination Event under the
Receivables Sale Agreement or a Termination Event under the
Receivables Transfer Agreement.
The indebtedness evidenced by this instrument is
subordinated to the prior payment in full of the Senior
Obligations pursuant to, and as defined in, the Subordination
Agreement dated as of July 13, 1994 among the maker hereof, the
payees named herein and certain other parties. Each holder of
this Subordinated Note agrees that it shall have no right to be
paid, and shall have no claim to payment, except in accordance
with, and subject to the terms of, subsection 2.7 of the
Receivables Transfer Agreement.
The Company hereby waives diligence, presentment,
demand, protest and notice of any kind whatsoever. The failure
of any holder to exercise any of its rights hereunder in any
particular instance shall not constitute a waiver thereof in that
or any subsequent instance.
Neither this Subordinated Note, nor any right of any
Seller to receive payments hereunder, shall be assigned,
transferred, exchanged, pledged, hypothecated, participated or
otherwise conveyed.
THIS SUBORDINATED NOTE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
CARCORP, INC.
By:_________________________
Title:
<PAGE>
Schedule 1 to
Subordinated Note
SUBORDINATED LOANS AND PAYMENTS OF PRINCIPAL
Amount of Unpaid
Seller (if Amount of Principal Principal Notation
Date specified) Loans Repaid Balance Made By
____ __________ _________ _________ ________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ ________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
<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>
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.
<PAGE>
2
"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
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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,
<PAGE>
11
(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.
<PAGE>
12
"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;
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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.